2018 (9) TMI 1905 - AT - Income Tax

Tribunal upholds assessee's deductions under section 80IB(10) for projects Namrata Magic and Leelawati Greens.

The Tribunal dismissed the Revenue's appeals and allowed the assessee's cross objections for the years 2012-13 and 2013-14 regarding deductions under ... Deduction u/s 80IB(10) - project where plot was divided into two parts due to 30 meters reservation on DP road and 30 meters reservation for HCMTR - CIT-A allowed the claim - HELD THAT:- As decided in own case the total area of plot was 6900 sq.mtrs. and after reducing 300 sq.mtrs. for project road, remaining area was 6600 sq.mtrs. The first approval of PMC authorities was given on 28.04.2005 and in the said approval, area of land was shown at 6600 sq.mtrs. 30 mtrs. wide DP road as well as 30 mtrs for HCMTR reservation was there in between the plot and because of which the plot was divided into two parts i.e. Plot No.I and Plot No.II in the area statement. The Tribunal held that the issue regarding two plots had arisen because of the mistake of Architect where the plot was only one, but only for the sake of convenience, numbering was shown as plot No.I and plot No.II by the Architect - reservation on account of DP road as well as HCMTR would not alter the fact that the said plot was one plot and mere division on account of reservation would not change the character of existing plot. The conditions stipulated in section 80IB(10) of the Act, of the project being one acre of plot, was held to be fulfilled and hence, the assessee was held entitled to claim of deduction under section 80IB(10) of the Act. Following the same parity of reasoning, we hold that the assessee for the year under consideration is also entitled to claim the aforesaid deduction under section 80IB(10) of the Act. Project had commenced on 28.04.2005 as per first approved plan and the said project has been completed within stipulated time allowed under section 80IB(10) of the Act i.e. by 31.03.2011, for which necessary evidence has been filed on record. Consequently, the assessee is entitled to claim the deduction under section 80IB(10) of the Act. Thus, grounds of appeal raised by the Revenue are dismissed. Prorata deduction u/s 80IB - Violation to the provisions of section 80IB(10)(f) of the Act had made multiple allotments of the flats to family members - HELD THAT:- CIT(A) was of the view that two units allotted to spouses of individual being A8-302 and A2-103 had violated the conditions of section 80IB(10)(f) of the Act. He relied on the ratio laid down by the Hon’ble High Court of Madras in CIT Vs. Arun Excello Foundation Pvt. Ltd. (2012 (12) TMI 415 - MADRAS HIGH COURT ) and Vishwas Promoters Pvt. Ltd. Vs. ACIT [2012 (11) TMI 1117 - MADRAS HIGH COURT] and was of the view that the assessee was entitled to claim prorata deduction on the profits of balance project excluding two flats which were allotted to spouses of individuals. We are in conformity with the findings of CIT(A), where the violation of clause (f) of section 80IB(10) of the Act has been made by the assessee, then in respect of profits on flats allotted to spouses of individuals is to be excluded and is not entitled to the claim of deduction under section 80IB(10) of the Act. The CIT(A) has already directed the Assessing Officer to verify the correctness of profits worked out by the assessee on sale of above said flats and consequently, upholding the said directions, we dismiss the grounds of appeal raised by the Revenue. Claim of deduction u/s 80IB(10) though on prorata basis - completion certificate had not been received from the State Authorities - HELD THAT:- In the present case, no completion certificate has been received by the applicant till date. The learned Authorized Representative for the assessee pointed out that certificate of Architect that construction of Club house was completed on 29.03.2011, was filed before the CIT(A). Merely because the completion certificate had not been received from the State Authorities would not disentitle the assessee to the aforesaid claim of deduction under section 80IB(10) of the Act though on prorata basis. We find merit in the plea of assessee, wherein it had completed the construction of Club house within stipulated period and had also applied for completion certificate on the basis of certificate issued by the Architect that construction of Club house was completed on 29.03.2011. It is not case of the Department that assessee had not applied for completion certificate. However, merely because the completion certificate has not been issued by the State Authorities would not disentitle the assessee to its claim of deduction under section 80IB(10) of the Act on prorata basis. Accordingly, we hold so and direct the Assessing Officer to allow the said claim in the hands of assessee. Issues Involved:1. Deduction under section 80IB(10) of the Income-tax Act, 1961 for the project 'Namrata Magic'.2. Multiple allotments of flats to family members in the project 'Leelawati Greens' under section 80IB(10)(f) of the Act.3. Deduction under section 80IB(10) on prorata basis for profits from the Club house in 'Leelawati Greens' without completion certificate.Issue-wise Detailed Analysis:1. Deduction under section 80IB(10) for 'Namrata Magic':The Revenue challenged the CIT(A)'s decision allowing the deduction under section 80IB(10) despite the plot being divided due to reservations for DP road and HCMTR, reducing the plot area to less than one acre. The Tribunal found that the issue was already decided in favor of the assessee in previous years. The project 'Namrata Magic' commenced on 28.04.2005 and was completed within the stipulated time, receiving the necessary completion certificates. The Tribunal held that the division of the plot due to reservations did not alter the fact that it was a single plot, thus fulfilling the conditions of section 80IB(10). Consequently, the assessee was entitled to the deduction, and the Revenue's appeal was dismissed.2. Multiple Allotments of Flats in 'Leelawati Greens':The Revenue contested the CIT(A)'s decision to allow prorata deduction under section 80IB(10) despite multiple allotments of flats to family members, which violated section 80IB(10)(f). The assessee had allotted flats to spouses, which the Assessing Officer claimed disqualified the entire project from the deduction. The CIT(A) allowed prorata deduction, excluding profits from the flats allotted to spouses. The Tribunal upheld the CIT(A)'s decision, referencing the Madras High Court rulings that supported prorata deduction in such cases. Thus, the Revenue's appeal was dismissed.3. Deduction for Profits from Club House in 'Leelawati Greens':The assessee's cross objections involved the denial of deduction for profits from the Club house due to the lack of a completion certificate. The CIT(A) had denied this claim despite the assessee submitting an application for the certificate within the allowed timeframe. The Tribunal found merit in the assessee's argument, citing the Bombay High Court's decision that mere non-receipt of the completion certificate should not disqualify the deduction if the application was made on time. The Tribunal directed the Assessing Officer to allow the prorata deduction for the Club house profits, thus allowing the assessee's cross objections.Summary of Judgments:The Tribunal dismissed all appeals by the Revenue and allowed the cross objections by the assessee for the years 2012-13 and 2013-14, maintaining consistency with previous rulings and legal precedents. The decision emphasized adherence to the conditions of section 80IB(10) and the allowance of prorata deductions in cases of partial compliance.