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TMI Blog2020 (9) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... ce deduction u/s 80 IB is available in respect of eligible housing project. Therefore profits derived by assessee from eligible housing project including the profit from sale of car-parking/PLC HEC as discussed has been rightly allowed by the Ld CIT(A). Therefore, we do not deem it necessary to interfere in the impugned order of the ld. CIT(A) and accordingly, ground No.1 2 raised by the revenue are dismissed. Addition for compensation paid u/s. 37(i) and 40(a)(ia) - CIT- A deleted the addition - HELD THAT:- Payment has been made through banking channel, which fact has not been disputed by the revenue. The assessee has given justification for compensation of payment to the said persons. The AO has alleged that the assessee failed to deduct TDS on such payment. And the AO disallowed the expenditure u/s. 37(1) read with section 40(a)(ia) of the Act. However, we note that there is no specific provision specified in Chapter XVII(B) of the Act by virtue of which assessee is obliged to deduct tax at source. We note that if these two persons were not evicted the assessee could not have completed the housing project and these two would not have vacated unless they were paid compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the details with regard to the housing-project along with the necessary mandatory permissions granted by the Municipal Corporation and other authorities for the commencement of the project. The AO notes that the housing-project in question in the instant case Ideal Heights situated at 302, A.P.C Road, Kolkata-700 009. The AO notes that during the course of hearing the Ld.AR (Authorized representative of assessee) produced the certified copy of the Sanction Plan of the project and list of flats on for which deduction u/s. 80IB(10) has been availed by the assessee. And the project consists of three (3) towers namely, Stratus, Nimbus and Cumulus on which deduction u/s. 80IB(10) has been availed by the assessee. The AO noted that the fourth (4th ) tower was under construction and no sales were recorded. Thereafter the AO reproduces the provision of section 80IB(10) of the Act and thereafter directed the assessee to furnish the details of computation of deduction u/s. 80 IB(10) of the Act as claimed by the assessee along with specific query as to whether the (i)car-parking space sale proceeds, (ii)customers preferential location charges (PLC) and (iii)Height Escalation Charges (HEC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une of ₹ 23,00,56,633/-( ₹ 14,20,33,832/-, ₹ 8, 80,22 801/-, is no eligible for deduction u/s 80IB(10). Total deduction claimed-by the assessee u/s. 80IB is ₹ 46,93,10,980/- and the total sales of the undertaking is ₹ 53,678, ,484/- as per Form 10CCB submitted by the assessee. Applying the same ratio the deduction us 80IB disallowed with respect to sales on account of Car Parking and PLC comes to ₹ 7,.02,.59, 296/- . Accordingly, an amount of ₹ 702,59,2961- is disallowed u/s 80IB(10) of ne Act. [Disallowance u/s 80IB: ₹ 7,02,58,296/-] 5. Thus, the AO made disallowance of ₹ 7,02,58,296/- from the assessee s claim made u/s. 80IB(10) of the Act to the tune of ₹ 46,93,10,980/-. Aggrieved, by the said disallowance as made by the AO, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to allow the same by holding as under:- I have gone through the submissions of the assessee and the findings of the Assessing Officer. The basic issue is whether the realization on account of car parking charges, preferential location charges and height escalation charges qualify for the deduction u/s. 80IB or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the claim a/the assessee i811 issue of stilt parking. We, therefore, in view of the above findings of the Tribunal, find no infirmity in the order of the CIT(A). On perusal or the above it is observed that the Hon 'ble Mumbai ITAT has given a clear finding that profit attributable to the car parking charges are eligible for deduction u/s. 81B(10). Further preferential location charges and height escalation charges charged by the builder are for residential units which are occupying a preferential location or a better floor on higher location. Not all flats can be sold at the same rate. Therefore the flats which are in an advantageous location are sold by the builder for a premium which is part and parcel of the realization of the project revenue. This is common trade practice that apartments having more coveted location are sold for a premium. The premium charged therefore is basically for realization n of project revenue. Therefore the profits derived on this account, in my considered opinion is also eligible for deduction u/s.80IB. In view of tile above the claim of the appellant for deduction u/s.80IB of ₹ 7,02,58,296/- is hereby allowed. 6. Aggrieved, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of Liberty India Vs. CIT reported in 317 ITR 218 decided by the Hon ble Supreme Court is in fact, applicable in favour of assessee since the first degree nexus has been proved by the assessee for claiming the deduction. According to the Ld. AR, the car parking space is sold along with the residential unit and without car parking space/area for the residential unit the local authority would not have given the permission to build the housing project, which is essential from the angle of usage as well as for selling the flats because without car space, the buyers won t buy the flats and thus it was pointed out by the Ld. AR that the case laws of Bengal Ambuja Housing Development as cited by the AO is applicable in favour of the assessee and not in support of the Revenue. Therefore, he does not want us to interfere with the impugned order of the Ld. CIT(A). 9. We have heard both the parties and perused the records. We note from a perusal of the statement of facts that the assessee is a company engaged in the business of Real Estate Development. During the relevant previous year, the assessee completed the construction of a housing project named Ideal Heights situated at 302 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO is that the profits derived from sale of car parking space, preferential location charges (PLC) Height Escalation Charges (HEC)to the tune of ₹ 7,02,58,296/- cannot be allowed, since it is not part and parcel of the residential unit and if car parking is included it will exceed 1500 sq. ft as envisaged u/s. 80 IB of the Act. We note that the car parking space has been allotted only to those persons, who has purchased residential units/flats which is part parcel of the housing project on which the assessee has claimed deduction u/s. 80IB (10) of the Act. According to us, car parking space is insisted by the buyers/persons, who intends to reside in the flats of housing project. And since car parking space was part and parcel of the housing project and has to be provided for as required by local Municipal law, the profit derived from sale of car parking area/space is also eligible for claiming deduction u/s. 80IB (10) of the Act as it was derived from the same source i.e, housing project Ideal Heights. We note that the Ld. CIT(A) while giving relief to the assessee has relied on the decisions of the Co-ordinate Bench of Mumbai Tribunal in the case of M/s.Vaman Estate (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition for compensation paid of ₹ 28 lacs u/s. 37(i) and 40(a)(ia) without remand report from AO and any speaking order by Ld. CIT(A) 12. The fact as noted by the AO are as under:- It is observed from the records that the assessee had paid an amount of ₹ 28,00,000/- on account of Occupant Compensation . During the assessment, the Ld. A/R made a submission that such expenditure was made on account of procuring of space/land from persons occupying the same, who would otherwise not have vacated the concerned area resulting in failure of the project. However, Ld. A/R was neither able to provide any specific reason for payment of such compensation nor furnish any justification of the quantification of such compensation. Furthermore, the assessee had not deducted TDS on the said amount. Therefore, an amount of ₹ 28,00,000/- is disallowed u/s. 371(1) read with 40(a)(ia) and added back to the total income of the assessee. [Addition: ₹ 28,00.000] 13. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to allow the same by holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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