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TMI Blog2025 (4) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... y of this consolidated order. ITA No. 3765/Mum./2024 Assessee's appeal - A.Y. 2008-09 3. In this appeal, the assessee has raised the following grounds: - "1. On the facts and circumstances of case and in law, Ld. ITO erred in disallowing deduction u/s.80-IB of Rs. 2,51,07,390/-. 2. The Ld. ITO erred in charging interest u/s. 234B, 234C of the Income Tax Act. 3. The Ld. ITO erred in invoking penalty provisions u/s.271(1)(c) of the Income Tax Act." 4. The solitary grievance of the assessee is against the denial of deduction under section 80-IB(10) of the Act. 5. The brief facts of the case pertaining to this issue, as is evident from the record, are: The assessee is a partnership firm engaged in the business of building and development. For the year under consideration, the assessee undertook the construction of a housing project, namely "Aakash Nidhi" at Mira Road (East), District-Thane, and declared a total profit of Rs. 2,51,07,392. The entire profit earned by the assessee was claimed as a deduction under section 80-IB(10) of the Act. Hence, for the year under consideration, the assessee filed its return of income on 30/09/2008, declaring a total income of Rs. Nil. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act was disallowed, and the total income of the assessee was assessed at Rs. 2,51,07,390. 7. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the disallowance of deduction claimed under section 80-IB(10) of the Act. Being aggrieved, the assessee is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. In the present case, there is no dispute regarding the following facts: - a) The project of the assessee consisted of 7 buildings viz. Wings A to G. b) The first commencement certificate in the project was issued on 02/05/2000. c) As per the provisions of section 80IB(10), the assessee was required to get the project completed prior to 31/03/2008. d) The assessee obtained completion certificates only in respect of Wings A to F, prior to 31/03/2008. e) The "G" wing was not completed as on 31/03/2008. 9. Since the construction of all the seven buildings, namely Wing-A to Wing-G, was not completed by the assessee and the completion certificate for all the seven Wings was not obtained by the assessee prior to 31/03/2008, the AO denied the deduction claimed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the original project. Though the appellant has claimed so and Ld. A.O. has also approved wings A to G to be forming part of a single project, it is very apparent from the sequence of events described above that the project commenced consisted only of six buildings. The seventh building which came up after conversion of the contiguous plot of land into non-agricultural use, cannot be considered to be forming part of the original plan. In this manner any number of contiguous wings can be added to the original project and claimed to be forming a single project. Therefore, it is held that only wings A to F forms part of the project and the wing G which got subsequently appended has to be considered as a separate project altogether notwithstanding the fact that this separate project may draw upon the common amenities of the earlier six wings. Having held so, the reason given as per points No.1 and 2 of the grounds for allowance of deduction u/s.80IB(10) for all the seven wings of a single project cannot be approved." 11. We find that while deciding the cross-appeal by the assessee and the Revenue against the aforesaid decision of the learned CIT(A) for the assessment year 2007-08, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 485 and the judgment of Hon'ble Jurisdictional High Court in Vandana Properties (supra) is absolutely correct and we do not find any reason to deviate from such a finding. Consequently, the conclusion drawn by the learned Commissioner (Appeals) right from Para- 3.4 to Para-3.5.1 are thus, upheld. Thus, grounds raised by the Revenue and the Assessee are treated as dismissed." 12. It is further evident from the record that the Revenue's appeal against the aforesaid decision of the coordinate bench of the Tribunal for the assessment year 2007-08 was dismissed by the Hon'ble Jurisdictional High Court vide order dated 04/02/2016 passed in CIT v/s Aakash Nidhi Builders and Developers, reported in [2016] 76 taxmann.com 73 (Bom.). In further appeal, the Hon'ble Supreme Court dismissed the Special Leave Petition filed by the Revenue in CIT v/s Aakash Nidhi Builders and Developers, reported in [2016] 76 taxmann.com 86 (SC), against the aforesaid order of the Hon'ble High Court. 13. Thus, from the careful perusal of the orders passed in assessee's own case for the assessment year 2007-08, it is evident that the claim of deduction under section 80-IB(10) of the Act was allowed to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , notice under section 148 of the Act was issued on 31/03/2017 and proceedings under section 147 of the Act were initiated. During the pre-assessment proceedings, it was, inter-alia, noticed that the units of the housing project "Aakash Nidhi" were allotted to persons having relationships as described in clause (f) of the Explanation to section 80-IB(10) of the Act. Accordingly, the assessee was asked to show cause as to why the deduction claimed under section 80-IB(10) of the Act should not be disallowed and added back to the total income of the assessee. After considering the submissions of the assessee, the Assessing Officer ("AO"), vide order dated 07/12/2017 passed under section 143(3) read with section 147 of the Act, held that as per the details submitted during the assessment proceedings, it is seen that so many flats were sold to the spouse of the existing flat owners and, therefore, the conditions as laid down in clause (f) of the Explanation to section 80-IB(10) of the Act are not fulfilled. Accordingly, the AO, inter-alia, disallowed the deduction claimed under section 80-IB(10) of the Act. 20. The learned CIT(A), vide impugned order, directed the AO to verify and with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both sides, we are of the considered view that whether the flats were allotted to the spouse of the existing flat owners or the same were allotted to the major children of the flat owners requires verification. Therefore, we deem it appropriate to restore this aspect of the issue to the file of the jurisdictional AO for necessary examination of the details placed reliance upon by the assessee. We direct that if, upon verification, it is found that the provisions of clause (f) of the Explanation to section 80-IB(10) of the Act are violated, then to that extent only the deduction under section 80-IB(10) of the Act be disallowed on a pro-rata basis. We order accordingly. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. Accordingly, Ground No. 1 raised in assessee's appeal is allowed for statistical purposes. 23. The issue arising in Ground No. 2, raised in assessee's appeal, pertains to the levy of interest under section 234B and section 234C, which is consequential in nature. Therefore, this ground needs no separate adjudication. 24. Ground No. 3, raised in assessee's appeal, pertains to levy of pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dequate opportunity of hearing to the assessee. Accordingly, with the above directions, the solitary ground raised by the Revenue is partly allowed for statistical purposes. 29. In the result, the appeal by the Revenue for the assessment year 2010- 11 is partly allowed for statistical purposes. ITA No. 2343/Mum./2024 - Assessee's appeal - A.Y. 2013-14 ITA No. 3053/Mum./2024 - Revenue's appeal - A.Y. 2013-14 30. In this appeal, the assessee has raised the following grounds: - "1. On the facts and circumstances of case and in law, Ld. CIT(A) erred in disallowing deduction u/s 80-IB(10) of Rs. 78,80,716/-. 2. The Ld. CIT(A) erred in charging interest u/s 234B, 234C of the Income Tax Act. 3. Ld. CIT(A) erred in invoking penalty provisions u/s 271(1)(c) of the income tax Act." 31. While in its appeal, the Revenue has raised the following ground: - "1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the exemption under section 80IB(10) of the Income Tax Act on proportionate basis without appreciating the fact that the assessee has not satisfied the conditions stipulated as per the provisions of section 80IB(10)." 32. The solitary issue arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change in facts and law, our findings/conclusions as rendered in the appeal for the assessment year 2010-11 shall apply mutatis mutandis to the present case. Accordingly, insofar as the claim of the assessee in respect of Wing-A to Wing-F deduction under section 80-IB(10) of the Act is allowed respectfully following the settled position in assessee's own case for the assessment year 2007-08. Further, insofar as the claim of the assessee in respect of Wing-G of the housing project "Aakash Nidhi", we deem it appropriate to restore the issue to the file of the jurisdictional AO for de novo adjudication in light of the decision of the Hon'ble Jurisdictional High Court in Vandana Properties (supra). 36. Similarly, as regards the issue of violation of the provisions of section 80-IB(10)(f) of the Act, our findings/conclusions as rendered in the appeal for the assessment year 2010-11 shall apply mutatis mutandis to the present case. Accordingly, this aspect of the issue is also restored to the file of the jurisdictional AO for necessary examination of the details placed reliance upon by the assessee. We direct that if, upon verification, it is found that the provisions of clause (f) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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