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TMI Blog2023 (4) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal of the Revenue stands dismissed and the cross objection filed by the assessee is partly allowed. Deduction u/s 80IB(10) - AO observed that assessee has violated the condition for claiming deduction under section 80IB(10) of the Act in respect of the said project since built up area of the flat was exceeding 1000 sq.ft. - CIT(A) has allowed the claim of deduction under section 80IB(10) on prorate basis - HELD THAT:- As perused the decision of Models Construction Pvt Ltd [ 2020 (12) TMI 88 - BOMBAY HIGH COURT] wherein allowing of deduction under section 80IB(10) on prorate basis was upheld - no infirmity in the decision of Ld.CIT(a). Accordingly, grounds 3 4 of the Revenue are dismissed. Disallowance u/s 14A - HELD THAT:- Appeal of the assessee are partly allowed by directing the Assessing Officer to restrict the disallowance to the extent of exempt income earned by the assessee. Disallowance of Work-in- Progress (WIP) - HELD THAT:- As the assessee has failed to provide relevant supporting evidence to substantiate that M/s Jitnat Infrastructure Pvt Ltd has provided project management services during the year. Even during the course of appellate proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Shri Nimesh Yadav, CIT DR ORDER PER : SHRI AMARJIT SINGH (ACCOUNTANT MEMBER): These four appeals filed by the Revenue and assessee and two cross objections filed by the assessee are arising from the common order of Ld.CIT(A)-37, Mumbai dated 25/06/2014, based on common issue and on identical facts. Therefore, for the sake of convenience, all these appeals and cross objections are adjudicated together by taking ITA No.5631/Mum/2014 as lead case and its finding will be applied mutatis mutandis to other appeals, wherever these are applicable. ITA No.5631/Mum/2014 (Revenue s Appeal) CO No.175/Mum/2018 A.Y. 2010-11 2. Facts in brief are that return of income declaring total income at Nil after claiming set off of brought forward loss amounting to Rs.44,11,03,164/- was filed on 01/10/2010. A search and seizure action under section 132(1) of the Act was conducted in the case of Rustomjee Evershine group on 21/10/2010 and assessee s case was also covered in the said search action. The assessee was engaged in the business of builders and developers during previous year under consideration. The assessee has filed revised return of income on 26/10/2011 declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose to make any further disallowance under section 14A of the Act. However, the Assessing Officer has not agreed with the submission of the assessee and he has computed the disallowance under section 14A alongwith provisions of Rule 8D of the I.T. Rules, 1962 to the amount of R.40,25,86,078/- and added to the total income of the assessee. Aggrieved, assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) has restricted the disallowance to the extent of Rs.4,23,20,580/-. In the additional ground of cross objection filed by the assessee it has contended that the disallowance ought to have been restricted to the extent of exempt income earned during the year. 6. Heard both the sides and perused the material on record on this issue. It is undisputed fact that as per para 4.1 of the order of the Assessing Officer passed under section 143(3) read with section 153A of the Act on 31/03/2013 that assessee company itself had made only disallowance of Rs.2,501/- under section 14A of the Act. However, the Assessing Officer, after taking into consideration the revaluation made in the investments, computed the disallowance under section 14A as per provisions of Rule 8D to the amount of Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the floor level of the balcony was 0.3 metres which is one feet below the level of the floor of the room in the flat were not at the same level as stipulated in the definition of built up area under section 80IB(10) of the Act. The assessee further submitted that only if the floor level of the balconies was same as with the flat, then it can be considered as part of the built up area. However, the Assessing Officer has not agreed with the submission of the assessee and determined the area of the flats after including the built up area of the balconies as under:- Flat Built up area of flat Built up area of balconies / Projections Total built up area 2BHK 840.67 sq.ft. 125 sq.ft. 965.67 sq.ft. 2.5 BHK 978.23 sq.ft. 122 sq.ft. 1100.23 sq.ft. 8. The Assessing Officer considered that built up are as per section 80IB(10) means the inner measurements of the residential units at the floor level including the projections and balconies as increased by the thickness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the project 19.5.11. In ITO vs AIR Developers (2010) 122 ITD 125 (Nag), the Hon'ble ITAT held that the profits pertaining to residential units whose built up area exceeded 1500 sq ft will be excluded for the quantification of deduction u/s 80IB(10) and thereby allowed pro rata deduction for profits from eligible residential units. Similar view was taken by ITAT in the case of S J R Builder vs ACIT (2010) 3 ITR (Trib) 569 (Bang). 19.5.12. The alternative argument of the AR is supported by the decisions referred above. I therefore direct the assessing officer to allow deduction u/s 80IB(10) in respect of eligible units comprising of 2 BHK units whose area is less than 1000 sq ft even after including the area of balconies. The quantum of deduction allowable on prorata basis as per appellant's computation is Rs 12,08,36,323/- The assessing officer is directed to allow the deduction after verifying the computation. 10. During the course of appellate proceedings before us, the Ld.DR has supported the order of Assessing Officer and also referred to the decision of Hon ble Supreme Court in the case of Mettur Chemical Industrial Corporation Ltd vs CIT (1996) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has set aside the Commissioner (Appeals') order dated 26.08.2015 and restored the AO's order dated 31.03.2014. Hence the present appeal by the assessee on the aforesaid substantial questions of law. 7. Mr. Pangam, the learned counsel for the appellants submits that the substantial question of law at (B) is required to be answered in favour of the assessee and against the Revenue because of the decision of this Court in CIT v. Bramha Associates (2019) 414 ITR 47 (BOM). He pointed out that the decision in Bramha Associates (supra) was followed by another Division Bench of this Court in Tax Appeal No.13/2014 concerning this very assessee, which was disposed of by Judgment and Order dated 20.03.2014. 8. Mr. Pangam submits that in any case, the pro-rata deduct/on, as was granted by the Commissioner (Appeals) by his order dated 26.08.2015 could not have been disturbed by the ITAT. He submits that the High Courts of Madras, Delhi, and Karnataka have held that such prorata deduction is required to be granted in the following decisions: (i) Viswas Promoters Pvt. Ltd. v. Assistant CIT, Circle I, Madras- (2013) 29 TaxMan.Com 19 (Madras); (II) CIT Chennai v. Arun E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional substantial question of law, which, according to us, arises in this appeal: Whether, in the facts and circumstances of the present case and given the law laid down by various High Courts, the ITAT was justified in denying even pro-rata deductions to the assessee under Section 80IB(10) of the said Act? 14. It is necessary to note that in the appeal memo, grounds to the aforesaid effect were raised by the assessee as ground Nos. (M), (N) and (0). However, such a question was not framed at the time of admission of this appeal. Such a question undoubtedly arises in this matter and therefore, taking into consideration the provisions in Section 260A(4) read with the provisions in Section 260A(7) of the said Act, we frame the aforesaid additional substantial question of law which is involved in this appeal. 15. This appeal was taken up along with connected Tax Appeal Nos.4 to 8 of 2016 and Tax Appeal Nos.49 and 52 of 2016, in which the issue of pro-rata deductions under Section 80IB(10) of the said Act was involved. In the said connected appeals as well, Ms. Linhares, relying upon the very same decisions had urged that Section 80IB(10) of the said Act does not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the order of the Ld.CIT(A) in ITA No.5631/Mum/2014 for A.Y. 2010-11. Therefore, since the facts and issue involved in the grounds raised by the Revenue are akin to ground 3 4 of Revenue s appeal in ITA No.5631/Mum/2014, applying the findings therein, the grounds raised by the Revenue are dismissed. 16. In the result, appeal filed by the Revenue is dismissed. ITA No.3003/Mum/2019 (Assessee s appeal) 17. Grounds 1 raised by the assessee in this appeal pertains to disallowance under section 14A. The facts and issue are identical to the facts and issue agitated in CO No.175/Mum/2018 CO No.175/Mum/2018, which we have decided in favour of the assessee. Here, the assessee itself has made suo motu disallowance under section 14A to the amount of Rs.1,98,998/- only whereas the assessee has earned exempt income of Rs.3,11,152/-. Therefore, applying the finding of No.5631/Mum/2014 CO No.175/Mum/2018, these grounds of appeal of the assessee are partly allowed by directing the Assessing Officer to restrict the disallowance to the extent of exempt income earned by the assessee. 18. Ground 2 raised by the assessee pertains to disallowance of Work-in- Progress (WIP) of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is now allowable in the assessment year 2012-13 as per the First Proviso to section 40(a)(ia) as the TDS was deducted and paid. The assessee also submitted before the Ld.CIT(A) that in the original return of income for A.Y.2012-13, it has duly made this claim. However, while filing the revised return of income, the same remained to be claimed. The Ld.CIT(A) has, however, dismissed the claim of the assessee. 21. Heard both the sides. During the course of appellate proceedings before us, the Ld.Counsel has relied on the decision of Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd (1998) 229 ITR 383 (SC). 22. On the other hand, the Ld.DR supported the orders of lower authorities. 23. Heard both the sides and perused the materials on record. The assessee filed the grounds of appeal before the Ld.CIT(A) stating that it had already disallowed the claim of Rs.27,58,53,742/- under section 40(a)(ia) for non compliance of TDS provisions in computation of income for A.Y. 2011-12 and the same was now allowable under section 40(a)(ia) as the TDS was deducted and paid. These facts were disclosed by the assessee in the original return of income. However, ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given specific finding on the aforesaid ground of appeal filed by the assessee against levying the penalty by the Assessing Officer without mentioning the limb under which the penalty was initiated. 26. During the course of appellate proceedings before us, the Ld.Counsel also submitted copy of notice issued under section 274 read with section 271(1)(c) of the Act. 27. Heard both the sides and perused the materials on record. The Ld.CIT(A) has restricted the penalty levied under section 271(1)(c) of the act to the extent of quantum addition on account of sale of scrap which was confirmed in appeal. During the course of appellate proceedings before us, the assessee has also raised cross objection that in the notice under section 274 read with section 271(1)(c) of the Act dated 31/03/2013 that the Assessing Officer has not specified whether the penalty is levied for concealment of income or furnishing of inaccurate particulars of income. 28. The Ld.Counsel has also referred the decision of Hon ble jurisdictional High Court in the case of Mohd Farhan A Shaikh vs DCIT 434 ITR 1 (Bom) wherein it was held that if there is a defect in notice by not striking off the irrelevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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