Tribunal directs deduction under Section 80IB, deletes Rs. 26,75,338 addition based on AS-7 estimation.

The Tribunal partially allowed the appeal, directing the Assessing Officer to permit the deduction under Section 80IB upon receipt of the completion certificate. Additionally, the Tribunal ordered the deletion of the Rs.26,75,338 addition based on AS-7 estimation, highlighting the error in re-taxing income already accounted for in previous years.

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Issues:
1. Denial of deduction claimed u/s.80IB
2. Adoption of AS-7 by the Assessing Officer

Issue 1: Denial of deduction claimed u/s.80IB

The appellant contested the denial of deduction u/s.80IB amounting to Rs.45,92,548 by the Assessing Officer. The appellant, engaged in real estate business, followed a consistent revenue recognition method as per AS-9 and Guidance Note for Recognition of revenue by Real Estate Developers. The Assessing Officer disallowed the claimed deduction and added the estimated income from work-in-progress to the total income. The CIT(A) upheld the disallowance based on the completion certificate issuance date for the housing project. The appellant argued that the completion certificate delay should not deny the deduction and requested allowance upon certificate receipt. The CIT-DR suggested restoring the issue to the Assessing Officer for deduction allowance upon project completion approval within four years. The Tribunal directed the Assessing Officer to allow the deduction upon obtaining the completion certificate from local authorities, aligning with Section 80IB provisions.

Issue 2: Adoption of AS-7 by the Assessing Officer

The second issue revolved around the Assessing Officer adopting AS-7 for estimating income from incomplete projects, leading to an addition of Rs.26,75,338. The appellant contended that AS-7 was inapplicable to their case, and the estimation method was arbitrary and unjustified. They argued that the Assessing Officer changing the accounting method should allow adjustments in subsequent years. The Tribunal found the estimation method erroneous and directed deletion of the Rs.26,75,338 addition. The Tribunal emphasized that the income already taxed on project completion should not be re-taxed based on work-in-progress percentage. The Tribunal concluded that the Assessing Officer's approach was incorrect, and the CIT(A) erred in confirming the addition, leading to the deletion of the Rs.26,75,338 addition.

In conclusion, the Tribunal partly allowed the appeal, directing the Assessing Officer to allow the deduction u/s.80IB upon obtaining the completion certificate. Additionally, the Tribunal ordered the deletion of the Rs.26,75,338 addition based on AS-7 estimation, emphasizing the incorrectness of re-taxing income already accounted for in previous years.

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