Proportionate Deduction Allowed for Housing Projects; Units Over 1500 sq.ft Excluded; Revenue's Appeal Dismissed.

The ITAT upheld the CIT(A)'s decision, allowing a proportionate deduction under section 80IB(10) for a partnership firm involved in housing projects. The deduction was granted for eligible units, excluding Bungalows/Row Houses exceeding 1500 sq.ft. The Revenue's appeal was dismissed, affirming the CIT(A)'s reliance on jurisdictional ITAT precedents.

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Issues:
Whether the Commissioner of Income Tax (Appeals) was justified in allowing proportionate deduction u/s 80IB(10) for a partnership firm engaged in developing housing projects.

Analysis:
The appeal was filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals) for A.Y. 2011-12. The main issue to be decided was whether the Commissioner was correct in allowing proportionate deduction u/s 80IB(10) in the given circumstances. The assessee, a partnership firm developing housing projects, claimed a deduction of Rs. 11,36,15,109 under section 80IB(10) of the Income Tax Act. The Assessing Officer referred the matter to the Valuation Officer to verify the claim, who reported that the built-up area of the Bungalows/Row Houses exceeded 1500 sq.ft. The Assessing Officer disallowed the deduction due to the violations in construction, adding the amount to the total income of the assessee.

Before the Commissioner of Income Tax (Appeals), the assessee raised an alternative plea for the deduction under section 80IB(10) related to eligible units. The Commissioner considered the submissions and previous Tribunal orders, allowing the proportionate deduction for eligible units but denying it for Bungalows/Row Houses exceeding 1500 sq.ft. The Commissioner relied on the decisions of the jurisdictional ITAT and ITAT Mumbai, supporting the pro-rata deduction for eligible units. The Commissioner's order was found justified based on the findings and discussions, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner's decision, dismissing the Revenue's appeal and pronouncing the order on 28th September 2020.

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