Appeal allowed for deduction under section 80IB(10) for sale proceeds of flats in housing project

The Tribunal allowed the appeal, holding that the assessee was entitled to claim deduction u/s. 80IB(10) for the sale proceeds of flats in both 'A' and 'B' Wings of the housing project. The Completion Certificate Part-1 certified the completion of flats in both wings, supporting the assessee's claim. Previous Tribunal decisions allowing pro-rata deduction for eligible units within a composite housing project were relied upon. The denial of deduction by the CIT(A) was deemed unjustified, and the assessee's appeal was upheld. The judgment was pronounced on 3rd August 2021.

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Issues:
- Denial of deduction u/s. 80IB(10) in respect of sale of one flat in 'B' Wing.

Analysis:
The case involved an appeal by the assessee against the order passed by the Commissioner of Income Tax (Appeals) regarding the denial of deduction u/s. 80IB(10) for the assessment year 2014-15. The primary issue to be decided was whether the CIT(A) was justified in denying the deduction in relation to the sale of one flat in the 'B' Wing of a housing project. The assessee, a partnership firm engaged in the business of promoters, builders, and contractors, had claimed proportionate deduction u/s. 80IB(10) for the sale of flats in both 'A' and 'B' Wings of the project. The AO had denied the deduction, stating that the project completion did not meet the conditions specified under the Act.

Upon examination, it was revealed that the Pune Municipal Corporation had approved the construction of 48 flats in 'A' Wing and 20 flats in 'B' Wing under the project named 'Twin Nest.' The completion certificate Part-1 was issued for 47 flats in 'A' Wing and 16 flats in 'B' Wing by the Pune Municipal Corporation. The assessee had sold flats in both wings and claimed deduction accordingly. The AO had denied the deduction for the sale of a flat in 'B' Wing, citing incomplete project status. However, the Completion Certificate Part-1 clearly showed certification for the flat in 'B' Wing, indicating project completion.

In a similar case for the assessment year 2012-13, the Tribunal had allowed pro-rata deduction for the sale of a flat in 'B' Wing, supporting the assessee's claim. The Tribunal relied on precedents and held that proportionate deduction for eligible units within a composite housing project is permissible. In the current case, the assessee had sold flats in both 'A' and 'B' Wings, covered by the Completion Certificate Part-1. The absence of evidence to refute the certification led to the conclusion that the assessee was entitled to claim deduction u/s. 80IB(10) for the relevant flats in both wings.

Therefore, the Tribunal allowed the appeal, stating that the assessee was entitled to claim deduction u/s. 80IB(10) for the sale proceeds of flats in both 'A' and 'B' Wings, as supported by the Completion Certificate and previous Tribunal decisions. The order of the CIT(A) denying the deduction was deemed unjustified, and the sole ground raised by the assessee was upheld.

In conclusion, the appeal of the assessee was allowed, and the judgment was pronounced on 3rd August 2021.

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