9911796707
TMI Blog2015 (6) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Therefore, we confirm the finding of the CIT(A) that proportionate disallowance is to be made in respect of the transactions which have been made subsequent to the introduction of clauses (e) and (f) to sec. 80- IB(10) as well as the flats where there is violation u/s 80-IB(10)(c) of the Act. We find that sub-sec.(5) of sec.80A prohibits the allowability of any claim u/s 10A, 10AA or 10B or sec.10BA C or under chapter C of the Act unless and until the assessee had made such a claim in its return of income. In the case before us there is no dispute that the assessee had made a claim of deduction 80-IB(10) and the question is only about quantification of the deduction and not the deduction itself. In such circumstances, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,80,417/- as its gross total income and claimed deduction u/s 80-IB(10) of the Act on its entire income. The assessee was, therefore, asked to substantiate its claim of deduction by issuance of a show cause notice dated 30/11/2012. The assessee furnished details and after verification of the same, the AO observed that Mandovi Pearl City Project of the assessee consists of 195 flats out of which some owners have joined two flats and hence there are 186 flats as on date. It was further found from the building sanction plan and other documents that some of residential units are having floor area of more 1500 sq.ft. and therefore there is a violation of provisions of section 80-IB(10) of the Act. The AO further observed that the assessee has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of few flats and the assessee has not claimed deduction u/s 80-IB(10) in respect of these flats. As regards the applicability of clause (e) and (f) of sec. 80-IB(10) of the Act, and the alleged violation of the said provision, he submitted that the said clauses have been brought into statute w.e.f. 01/04/2010 whereas the assessee had entered into agreement with the prospective buyers as early as 2007 and 2008 and some in 2009. He submitted that the assessee cannot be expected to do what was not even in the statute book at the time of allotment of flats. He submitted that since no such prohibition was existing at the time of allotment of flats, the said provisions cannot be made applicable to the assessee subsequently. He relied upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be eligible for proportionate deduction u/s 80-IB(10) of the Act. 5. The learned Departmental Representative, Dr.K.Shankar Prasad, on the other hand, supported the orders of the AO and submitted that the deduction is for the project and not for individual units of the project and where there is violation even in respect of one unit of the project, the assessee is not eligible for any deduction u/s 80-IB(10) of the Act. Further he also brought to our notice that in two of the transactions which were executed by the assessee after insertion of clauses (e) and (f) to sec. 80- IB(10) of the Act, to demonstrate that the assessee has clearly violated the provisions and is not entitled to any deduction at all u/s 80-IB(10) of the Act. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s come into effect from 1/4/2010. As seen from the details given in the assessment order, except for two transactions, all the transactions have been entered into by the assessee by allotment of flats to the respective persons in the year 2007 and 2008. It is also noticed that first receipt and the blockings have also been made in the respective financial years. Therefore, we agree with the contention of the learned counsel for the assessee that the assessee could not have foreseen the amendment to sec. 80-IB(10) and could not have restricted the allotment of more than one flat to the same individual or to somebody related to such a person. Further, as held by the Hon'ble Supreme Court in the case of Sanjeev Lal & another (cited supra) a ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 80-IB(10)(c) of the Act. 8. During the assessment proceedings, the AO also noticed that the assessee has received on-money of ₹ 42,03,280/- for sale of flats. The assessee admitted that these amounts have been received in cash against specific flats proposed and on the basis of the said admission the AO treated it as assessee's business income and brought it to tax. 9. Aggrieved, the assessee preferred an appeal before the CIT(A) and also made an alternative claim that deduction u/s 80-IB(10) may be allowed on the additional income. The CIT(A), however, rejected this claim by relying upon clause(5) of sec.80A of the Act which has been introduced by the Finance Act, 2009 with retrospective effect from 1/4/2003. Aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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