2019 (11) TMI 139 - AT - Income Tax

Tribunal Upholds Proportionate Deduction for Housing Project Despite Violations

Asstt. Commissioner of Income Tax, Circle – 7, Pune Versus M/s. Eisha Supershwa Developers

The tribunal upheld the Commissioner's decision to allow proportionate deduction u/s. 80IB(10) on the housing project developed by the assessee. The ... Pro-rata deduction u/s. 80IB(10) on a housing project developed by the assessee - assessee has violated conditions of clause (e) and (f) of section 80IB(10) of the Act in respect of two flats out of entire project - HELD THAT:- Undisputedly, the assessee has violated conditions set out in clause (e) and (f) of section 80IB(10) in respect of only two flats. The Commissioner of Income Tax (Appeals) has granted proportionate deduction u/s. 80IB(10) in respect of remaining housing project. The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. M/s. Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT] has approved the concept of proportionate deduction u/s. 80IB(10) of the Act. The Hon’ble Madras High Court in the case of Viswas Promoters Private Limited Vs. Assistant Commissioner of Income Tax [2012 (11) TMI 1117 - MADRAS HIGH COURT] has held that the assessee is eligible to claim proportionate relief on the units of a housing project satisfying the conditions laid down u/s. 80IB(10) of the Act. Thus, the Hon’ble High Court upheld allowability of proportionate deduction u/s. 80IB(10) of the Act. The Tribunal in various decisions has been consistently allowing proportionate deduction to the extent housing project complies with all the conditions under the provisions of section 80IB(10) We find no infirmity in the order of Commissioner of Income Tax (Appeals) in allowing proportionate deduction u/s. 80IB(10) of the Act on eligible units of housing project. The impugned order is upheld and the appeal of Revenue is dismissed being devoid of any merit. Issues:- Allowability of pro-rata deduction u/s. 80IB(10) on a housing project developed by the assessee.Detailed Analysis:The appellate tribunal heard an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) concerning the allowance of pro-rata deduction u/s. 80IB(10) for the assessment year 2012-13. The Revenue contested the findings of the Commissioner in allowing the deduction on a housing project developed by the assessee, specifically challenging the treatment of two flats in the project. The Assessing Officer initially denied the deduction on the entire project due to violations of conditions under section 80IB(10) related to the two flats. The Commissioner, however, following the decision of the Hon'ble Madras High Court, allowed a proportionate deduction on eligible units of the project, leading to the Revenue's appeal.The assessee argued for the well-settled principle of allowing pro-rata deduction u/s. 80IB(10) on eligible units of a housing project, citing various legal precedents to support their case. The Revenue, represented by Shri S.B. Prasad, opposed the Commissioner's decision and sought to reverse it. The tribunal analyzed the contentions of both parties and reviewed the lower authorities' orders. It was noted that the only issue in the appeal pertained to the allowance of proportionate deduction u/s. 80IB(10) on eligible residential units of the housing project, considering the violations in only two flats. The tribunal referred to decisions by the Hon'ble Bombay High Court and the Hon'ble Madras High Court, which upheld the concept of proportionate deduction under section 80IB(10) of the Act.Further, the tribunal highlighted its consistent practice of allowing proportionate deduction when a housing project complies with all conditions under section 80IB(10). It referenced a case involving the assessee's sister concern, where a similar violation occurred, and proportionate deduction was allowed on the unaffected units. The tribunal emphasized that where violations exist, the assessee is not entitled to claim deduction under section 80IB(10) for those specific units but can claim proportionate deduction on the remaining units of the project. Citing precedents and legislative mandates, the tribunal upheld the Commissioner's decision to allow proportionate deduction on eligible units of the housing project, dismissing the Revenue's appeal for lack of merit.In conclusion, the tribunal upheld the order of the Commissioner, affirming the allowance of proportionate deduction u/s. 80IB(10) on the housing project developed by the assessee. The appeal of the Revenue was dismissed, and the order was pronounced on September 20, 2019.