Tribunal grants deduction under section 80IB(10) for on-money in flat sales

The Tribunal allowed the appeal, granting the deduction u/s 80IB(10) on the on-money received by the assessee. The Tribunal emphasized that the on-money, acknowledged and included in total income, qualified for the deduction as it related to flat sales. It rejected the Revenue's argument of unexplained income, citing the consistency principle and the doctrine of approbate and reprobate. The decision highlighted the significance of income sources in determining eligibility for tax deductions under the Income-tax Act, 1961.

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Issues:
Denial of deduction u/s 80IB(10) on on-money received by the assessee.

Analysis:
The appeal pertains to the denial of deduction u/s 80IB(10) of the Income-tax Act, 1961 concerning on-money received by the assessee, which was also declared as income. The assessee, a builder, promoter, and developer, received on-money amounting to Rs. 5.57 crores on flat bookings during a survey. Initially, this amount was not recorded in the books of account but was later offered for taxation. The assessee filed a revised return claiming deduction u/s 80IB(10) amounting to Rs. 5,27,70,356, which was not claimed initially. The Assessing Officer (AO) requested details of the on-money and the persons involved, which the assessee provided. However, the AO concluded that the assessee failed to prove the on-money receipts were related to flat bookings, thus denying the deduction. The CIT(A) upheld this decision, leading the assessee to appeal to the Tribunal.

Upon review, the Tribunal found that the denial of the deduction was solely based on the inability to prove the income source as flat sales. The Tribunal examined the statement of the assessee during the survey, where the assessee acknowledged the on-money receipts. The Tribunal noted that the on-money was declared as additional income and accounted for during the return filing. Rejecting the Revenue's stance that the source of income was unexplained, the Tribunal emphasized that the on-money, being received from flat bookings, qualified for the deduction under section 80IB(10). The Tribunal invoked the doctrine of approbate and reprobate, highlighting the inconsistency in accepting the on-money as income but denying the deduction based on the same source. Consequently, the Tribunal overturned the previous decision and allowed the deduction u/s 80IB(10) on the on-money amount.

In conclusion, the Tribunal allowed the appeal, emphasizing that the on-money received by the assessee, acknowledged and included in the total income, qualified for deduction u/s 80IB(10) as it pertained to the sale of flats. The decision underscored the importance of consistency in tax assessments and the relevance of income sources in determining eligibility for deductions under the Income-tax Act, 1961.

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