2021 (1) TMI 1047 - HC - Income Tax

Court affirms deduction under Section 80IB(10) for residential unit sales below 1500 Sq. Ft.

THE PR. COMMISSIONER OF INCOME-TAX, THE ASST. COMMISSIONER OF INCOME TAX Versus M/s. SN BUILDERS & DEVELOPERS

THE PR. COMMISSIONER OF INCOME-TAX, THE ASST. COMMISSIONER OF INCOME TAX Versus M/s. SN BUILDERS & DEVELOPERS - [2022] 440 ITR 351 (Kar) Issues:Appeal under Section 260-A of the Income Tax Act for Assessment Year 2013-14 - Whether proportionate deduction under Section 80IB(10) of the Act justified when no such apportionment prescribedRs. - Entitlement to claim deduction under Section 80IB(10) of the Act for profits from sale of residential units below 1500 Sq. Ft.Analysis:The appeal involved the question of whether the Tribunal was correct in directing the Assessing Officer to allow proportionate deduction under Section 80IB(10) of the Income Tax Act, even when no specific apportionment was prescribed under the scheme of the Act. The Tribunal held that the assessee is entitled to claim deduction under Section 80IB(10) for profits derived from the sale of residential units below 1500 Sq. Ft. The Commissioner of Income Tax (Appeals) allowed the appeal, concluding that the assessee is entitled to proportionate deduction under Section 80IB(10) for units conforming to the Act's limits. The Revenue challenged this decision, arguing that the provision does not envisage such deduction, emphasizing the condition that the total built-up area should not exceed 1500 square feet. The Tribunal's reliance on the project completion method was also contested, alleging errors in recognizing this method without proper examination.The Revenue further argued that the Tribunal's decision was flawed as the assessee failed to meet the condition regarding the total built-up area of residential units. They also questioned the application of the project completion method without regular books of accounts. The Tribunal's reliance on a previous decision was challenged, citing a different ruling by the Court. In response, the Senior Counsel for the assessee referenced a judgment from a previous case involving the same assessee for the year 2009-10, arguing that the issues raised were addressed in that judgment and similar orders should be passed in the present appeal.Upon careful review of the previous judgment related to the same assessee for the assessment year 2009-10, the Court found that the decision rendered in that case was applicable to the present appeal for the assessment year 2013-14. Based on the reasons recorded in the previous decision, the Court concluded that the appeal failed and subsequently dismissed it. The judgment upheld the principles established in the earlier case, providing a consistent legal interpretation for the current appeal.