TaxTMI 
TaxTMI 
2018 (11) TMI 550
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....o the assessee on 24-08-2011. The Assessing Officer in scrutiny assessment proceedings made following additions in the income returned by the assessee : i. Sales [Reduction in sales] Rs.1,10,00,000/-. ii. Receipts not related to 80IB [Receipts not eligible for deduction u/s. 80IB(10)] Rs.25,62,908/-. iii. Deduction u/s. 80IB(10) Rs.1,25,56,840/-. iv. Liquidated Damages Rs.1,32,19,200/-. Aggrieved by the assessment order dated 14-03-2013 passed u/s. 143(3), the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) deleted all the additions made by the Assessing Officer and allowed the appeal of assessee in toto. Against the findings of Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal. 3. Shri Amol Kamat representing the Department in respect of grounds raised by the Revenue submitted as under : Sales Rs. 1,10,00,000/-. 3.1 The assessee sold commercial shops to M/s. National Reality Limited in period relevant to assessment year 2009-10. The assessee allegedly received Rs. 1,10,00,000/- for carrying out some modification work. The modification contract did not materialize....
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....is allowable in assessment year 2010-11. However, the expenditure on liquidated damages does not pertain to the assessment year 2010-11 and hence, cannot be allowed as deduction in the assessment year under appeal. 4. On the other hand Shri Pramod Shingte appearing on behalf of the assessee vehemently defended the order of Commissioner of Income Tax (Appeals) and prayed for dismissing the appeal by the Revenue. The ld. AR submitted that the assessee entered into an agreement with M/s. National Reality Ltd. for sale of commercial premises admeasuring 43200 sq. ft. for a consideration of Rs. 9,41,00,000/-. The assessee further agreed to carry out certain modifications in the commercial area sold to M/s. National Reality Ltd. for which an amount of Rs. 1,10,00,000/- was paid by the said company to the assessee. Subsequently, the modification to be carried out by the assessee were dropped, consequently the amount of Rs. 1,10,00,000/- received on account of modifications was refunded by the assessee. The accounting treatment for recording the aforesaid transaction could have been either by reducing the sales or debiting the amount to P & L account. The assessee preferred the former and....
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.... to M/s. National Reality Limited on 03-10-2008. The assessee disputed the payment as delay occurred for the reasons beyond the control of assessee. On 10-01-2010 a settlement took place between both the sides, according to which the assessee was required to pay liquidated damages amounting to Rs. 1,32,19,200/- within a period of 18 months. Since, liquidated damages payable to M/s. National Reality Ltd. got crystallized in the year under appeal i.e. on 10-01-2010, therefore, the said expenditure is correctly claimed in assessment year 2010-11. 5. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. In first ground of appeal the Revenue has assailed deleting the addition of Rs. 1,10,00,000/- on account of „reduction of sales‟. A perusal of purchase accounts of the assessee reveal that the assessee has received payment of Rs. 10,51,00,000/- from M/s. National Reality Ltd. on account of sale of commercial mall premises. The aforesaid payment includes sale consideration Rs. 9,41,00,000/- and advances for modifications Rs. 1,10,00,000/-. Later on modifications were cancelled and the amount paid by the M/s. Na....
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.... and building housing project would qualify for such deduction. It is not the case that the deduction is available in respect of sale consideration of constructed units only. The concerned receipts have arisen in the process of development of eligible housing project and therefore, the income derived there from would be entitled for deduction u/s. 80IB(10). The decisions relied by the appellant also support the claim. Accordingly, I hold that the AO was not justified in denying the deduction u/s. 80IB(10) in respect of profits derived from the concerned receipts to the tune of Rs. 25,62,908/-. Ground no. 2C is accordingly allowed." 7. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing deduction u/s. 80IB(10) on the aforesaid receipts. The receipts are in-extricably linked to development of the housing project. Accordingly, ground No. 2 raised in the appeal by Revenue is dismissed. 8. In ground No. 3 of the appeal, the Revenue has assailed allowing of deduction u/s. 80IB(10) despite the fact two residential units were having built up area exceeding 1500 sq. ft. The Flat Nos. C-401 and C-404 were combined to make one residential unit havi....