TaxTMI 
TaxTMI 
2016 (2) TMI 1260
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.... u/s. 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") on its residential project. The case of the assessee was selected for scrutiny and accordingly notice u/s. 143(2) was issued to the assessee on 29- 08-2011. During the course of scrutiny assessment proceedings the Assessing Officer observed that the assessee had allotted Flat Nos. 15 and 16 in Building-B, Wing-A to Shri Ajay Kate. The said flats were horizontally merged. Further, Flat Nos. 1 and 2 on 1st floor in Building- A and Flat Nos. 5 and 6 on 3rd floor of the same building were allotted to Shri Kishore Pahuja. The aforementioned flats were also horizontally joined. Further, the assessee had allotted Flat Nos. 3 and 4 on the 2nd floor, and 7 and 8 on the 4th floor to Ms. Meena Pahuja. The aforesaid flats were also horizontally joined. The Assessing Officer observed that since the assessee has violated the condition laid down u/s. 80IB(10)(e), the assessee is not eligible to claim deduction u/s. 80IB(10) of the Act. Thus, the Assessing Officer made addition of Rs. 9,16,23,159/- in the income returned by the assessee vide order dated 28-03-2013. Aggrieved by the assessment order dated 28-03-2013, ....
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.... claiming deduction, the Commissioner of Income Tax (Appeals) has granted prorata relief to the assessee. There is no concept of prorata deduction under the provisions of section 80IB(10) of the Act. The ld. DR vehemently supported the findings of the Assessing Officer and prayed for reversing the findings of the Commissioner of Income Tax (Appeals) in so far as grant of relief on prorata basis to the assessee. 5. On the other hand Shri V.L. Jain appearing on behalf of the assessee submitted that the Commissioner of Income Tax (Appeals) has erred in restricting the deduction u/s. 80IB(10) on prorata basis to the assessee. Admittedly, the assessee had allotted multiple flats in the name of same persons/family members of the same person. However, these flats were allotted prior to the insertion of Clause (e) and (f) to section 80IB(10). The ld. AR submitted that as regards allotment of flats to Shri Ajay Kate is concerned, the same were allotted in accordance with the development agreement executed on 30-11-2006. The land on which the project was developed was owned by Shri Ajay Kate. The flats were allotted to him as part of the consideration. With regard to the sale of flats to ....
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....2006; iv. Sanghvi & Doshi Enterprises Vs. ITO (Chennai), 141 TTJ 1; v. CIT Vs. Arun Excello Foundation (P) Ltd. (Mad), 86 DTR 99. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the documents on which the ld. AR of the assessee has placed reliance. It is an undisputed fact that the assessee in its housing project 'Sai Saheb" has allotted multiple flats in the name of individual persons. The Finance (No.2) Act, 2009 has inserted Clause (e) and (f) in section 80IB(10) of the Act which reads as under: "80IB(10) xxxxxxxxxxx (a) xxxxxxxx xxxxxxxxxxxxx (e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:- (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individu....
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....e Finance Bill are effective from date when it was passed by the Parliament, even in that case the transactions in the present case relating to sale of flats was complete before the passing of the Finance (No. 2) Act, 2009 on 19-08-2009. 8. Further, a perusal of Explanatory Note to the provisions of the Finance (No. 2) Act, 2009 would show, that the restrictions on allotment of multiple residential units to an individual would not apply in respect of allotment made before 19-08-2009. The relevant extract of the CBDT Circular No. 5 of 10 dated 03-06-2010 reads as under: "33.8 Applicability - These amendments have been made applicable with effect from 1st April, 2010 and will accordingly apply in relation to assessment year 2010-11 and subsequent years. The amendments relate to restrictions on specific transactions (i.e., allotment of residential units). Therefore, they would apply to transactions after a specified date during the year. Since the Finance (No.2) Act, 2009 became law on 19th August, 2009, the restrictions regarding allotment of residential units shall not apply in respect of allotments made before 19.08.2009." 9. Thus, in the facts and circumstances of t....
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....ld stand rejected under Section 80IB(10) of the Income Tax Act. Thus, going by the definition of "housing project" under Explanation to Section 80HHBA of the Act as referred to above as the construction of "any building" and the wordings in Section 80IB(10) of the Act, the question of rejection in entirety of the project on account of any one of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10) (c) of the Act, we have already upheld the case of the assessee in T.C. Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court in CIT v. Brahma Associates [2011] 333 ITR 289/197 Taxman 459/9 taxmann.com 289. Thus applying the decision of this Court in T.C. Nos. 1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referring to construction o....