2022 (7) TMI 1286 - AT - Income Tax

Tribunal decision on property issues: garden area, completion date, 'on money' receipts.

The tribunal dismissed the assessee's appeals and partly allowed the Revenue's cross-appeals. It affirmed the CIT(A)'s decisions on issues such as the ... Deduction u/s 80IB(10) - AO denying section 80IB(10) deduction holding that the corresponding residential units had built up “BUA” area exceeding 1500 sq.ft. - HELD THAT:- We first of all note that the CIT(A)’s common order herein as followed his conclusion drawn in A.Y. 2009-10’s which has been reproduced in the preceding paragraphs. The same appears to have attained finality as there is no material on record to suggest the contrary. This is coupled with the fact that the corresponding site plan of these four units O1-1, O1-2, O2-1 and O2-2 in issue is on record (page 10) wherein it is clearly indicates that this garden area is meant for the concerned allottees’ exclusive use and ownership and falls within the walls only than any common area not covered u/s 80IB(14)(a) of the Act. We further wish to reiterate here that legislature has not only defined “inner measurements” of the residential unit “at the floor level” in section 80IB(14)(a) but also the same has to be increased by the thickness of the walls.” It is in this backdrop that this tribunal’s order in Kumar Builders Consortium [2013 (11) TMI 465 - ITAT PUNE] has already decided the issue in Revenue’s favour. We therefore, adopt judicial consistency to affirm both the lower authorities’ action disallowing the assessee’s 80IB(10) deduction claim to this effect. Assessee had allotted more than one flat to one person i.e. Smt. Sandhya Rakesh Sharma and therefore, the same violates section 80IB(10)(f) - The fact remains that Mr. Jain has neither placed on record the corresponding joint sale deed that Ms.Syamlee only owned or possessed the entire share in Flat I-1 independently. This is in addition to the fact that the Commission’s report in assessee’s paper book dated 22.01.2015 at pages number 1 to 9 held that it had allotted “more than one flat “to Smt.Sandhya Rakesh Sharma and therefore, we find no merit in the taxpayer’s stand. The Revenue succeeds in all of its corresponding substantive ground(s) to this effect. Assessee’s scheduled date of completion of its residential project “Flora City” was 31.03.2012 whereas the last completion certificate stood issued only on 02.09.2011 which disentitles’ it for the impugned deduction - HELD THAT:- We note that the instant issue is hardly res-integra as this tribunal co-ordinate bench in A.Y. 2009-10 involving Revenue and assessee’s cross appeals [2014 (7) TMI 1366 - ITAT PUNE] rejects the former’s very stand - Revenue is fair enough in not pin-pointing any distinction on facts as well as in law. We thus adopt the judicial consistency to affirm the CIT(A)’s foregoing findings under challenge. This second substantive issue is decided in assessee’s favour. Assessee’s residential unit(s) sold in the impugned assessment year had not exceeded the prescribed area 1500 sq.ft thereby excluding “terrace” part - HELD THAT:- As it has come on record that the foregoing judicial precedents have already held that such that a “terrace” in a residential unit does not satisfy the section 80IB(14)(a) basic benchmark of “inner measurement” since open to sky. We, thus, adopt the very reasoning mutatis-mutandis to uphold the CIT(A) action deleting the impugned disallowance qua this “terrace” inclusion issue. This third substantial ground canvassed at the Revenue behest stands declined. Treating the assessee’s alleged “on money’ receipts as eligible for sec 80IB(10) deduction - HELD THAT:- As the assessee is eligible for sec 80IB(10) deduction on proportionate basis only as it has already failed on the foregoing “garden area” and “multiple allotment” issues in preceding paras. We make it clear that it has not filed any evidence on record that the impugned ‘on-money’ pertains to sec 80IB(10)’s eligible units only. Or that the remaining allottees except Smt.Sharma or those having garden area only had paid the entire sum. Faced with this situation, we restore the impugned disallowance on account of the assessee’s failure to prove all the foregoing clinching factual aspects. The Revenue succeeds in all of its corresponding substantive grounds to this effect. Whether CIT(A) has further erred in granting the assessee’s proportionate sec 80IB(10) deduction regarding the eligible housing units only? - HELD THAT:- Revenue could not pin-point any judicial precedent to the contrary. We accordingly uphold the CIT(A) foregoing directions granting proportionate section 80IB(10) deduction to the assessee. Ordered accordingly. Issues Involved:1. Section 80IB(10) deduction claim.2. Inclusion of garden area in built-up area.3. Allotment of more than one flat to one person.4. Completion date of the residential project.5. Inclusion of terrace area in built-up area.6. Treatment of 'on money' receipts.7. Pro-rata deduction for eligible housing units.Detailed Analysis:1. Section 80IB(10) Deduction Claim:The primary issue involves the assessee's claim for deduction under section 80IB(10) of the Income Tax Act, which was denied by the lower authorities on various grounds. The appellate tribunal examined the validity and eligibility of the assessee's claim for the deduction.2. Inclusion of Garden Area in Built-Up Area:The assessee contended that the garden area should be excluded from the built-up area calculation. However, the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] included the garden area based on the precedent set by the jurisdictional Tribunal in the case of Kumar Builders Consortium. The tribunal upheld this inclusion, stating that the garden area was exclusively for the use of the allottee and fell within the walls, thus violating clause (c) of section 80IB(10).3. Allotment of More Than One Flat to One Person:The Revenue argued that the assessee violated section 80IB(10)(f) by allotting more than one flat to a single person. The CIT(A) found that the assessee had indeed allotted multiple flats to Smt. Sandhya Rakesh Sharma, which was against the provisions of the Act. The tribunal upheld this finding due to the lack of evidence to the contrary from the assessee.4. Completion Date of the Residential Project:The Revenue claimed that the project was not completed by the stipulated date of 31.03.2012. However, the tribunal referred to a previous decision where it was established that the project was completed by 31.03.2011, and even if the last completion certificate was issued on 02.09.2011, it still fell within the permissible limit. Thus, the tribunal affirmed the CIT(A)'s decision in favor of the assessee.5. Inclusion of Terrace Area in Built-Up Area:The AO included the terrace area in the built-up area calculation, which the assessee contested. The CIT(A) excluded the terrace area based on judicial precedents that terraces open to the sky should not be included in the built-up area. The tribunal upheld this exclusion, aligning with the established legal position.6. Treatment of 'On Money' Receipts:The assessee argued that 'on money' receipts should be eligible for deduction under section 80IB(10). The CIT(A) allowed this claim, referencing the Bombay High Court's decision in Sheth Developers. However, the tribunal emphasized that the assessee failed to prove that the 'on money' pertained solely to eligible units. Consequently, the tribunal restored the disallowance due to the lack of evidence.7. Pro-Rata Deduction for Eligible Housing Units:The CIT(A) granted proportionate deduction under section 80IB(10) for units that met the stipulated conditions, following various judicial precedents. The tribunal upheld this decision, noting the absence of any contrary judicial precedent presented by the Revenue. The tribunal directed the AO to withdraw deductions for units violating the conditions and to allow deductions for compliant units.Conclusion:The assessee's four appeals (ITA No.1679 to 1682/PUN/2016) were dismissed, and the Revenue's cross appeals (ITA No.1684 to 1687/PUN/2016) were partly allowed. The tribunal affirmed the CIT(A)'s decisions on various issues, including the inclusion of garden area, multiple allotments, completion date, terrace area exclusion, and proportionate deductions. The tribunal restored the disallowance of 'on money' receipts due to insufficient evidence from the assessee.