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of <h1>ITAT rules in favor of assessee on section 80IB(10) disallowance and parking space sales addition</h1> <h3>Sonam Builders Versus Dy. CIT, Central Circle-3 Thane And (Vice-Versa)</h3> Sonam Builders Versus Dy. CIT, Central Circle-3 Thane And (Vice-Versa) - TMI Issues Involved:1. Disallowance of deduction under section 80IB(10) of the Income Tax Act.2. Addition on account of sale of parking spaces.Detailed Analysis:Issue No. 1: Disallowance of Deduction under Section 80IB(10) of the Income Tax ActThe primary issue revolves around the disallowance of the assessee's claim for deduction under section 80IB(10) of the Income Tax Act. The assessee's project, Golden Nest Phase XV, was scrutinized for compliance with the prescribed area limits for flats to qualify for the deduction. Initially, a Government Approved Valuer, Mr. Nitin M. Lele, reported that all flats were below the 1000 sq.ft. limit. However, the Assessing Officer (AO) appointed another Valuation Officer who reported that 24 flats exceeded the 1000 sq.ft. limit. Consequently, the AO disallowed the deduction claim of Rs. 40,41,60,131/-.The CIT(A) partially confirmed the AO's findings, restricting the disallowance to the 24 flats only. The assessee contested this, arguing that the Valuation Officer incorrectly included areas such as projections and open-to-sky areas in the built-up area calculation.Upon reassessment, the ITAT directed a joint inspection of the flats, resulting in a report confirming that the flats were indeed below 1000 sq.ft. The ITAT referenced the case of M/s. Nahar Enterprises Vs. DCIT, which excluded certain areas like service ducts and window projections from the built-up area. Consequently, the ITAT found that the CIT(A) wrongly upheld the AO's findings and directed the AO to allow the assessee's full claim under section 80IB(10).Issue No. 2: Addition on Account of Sale of Parking SpacesThe second issue pertains to the addition of Rs. 8,09,32,500/- made by the AO on the assumption that the assessee sold 305 parking spaces at Rs. 3,50,000/- each, based on seized documents. The CIT(A) deleted this addition, noting that the AO's calculations were arbitrary and not supported by evidence. The seized documents indicated that parking spaces were either sold along with flats (included in the flat's sale price) or separately, with the latter shown as 'not included.'The CIT(A) observed that the assessee had recorded the sale of parking spaces in its books and accounted for Rs. 3,13,30,000/- in the sales account for the A.Y. 2013-14. The AO's addition was based on conjecture without concrete evidence of unaccounted cash transactions.The ITAT upheld the CIT(A)'s findings, noting that the AO's addition lacked satisfactory evidence and the assessee's records were consistent with the seized documents. Thus, the ITAT dismissed the revenue's appeal on this issue.Conclusion:In conclusion, the ITAT allowed the assessee's appeal regarding the disallowance under section 80IB(10) and dismissed the revenue's appeal concerning the addition on account of parking space sales. The ITAT directed the AO to allow the full deduction under section 80IB(10) and upheld the CIT(A)'s deletion of the arbitrary addition for parking space sales.
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