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2016 (5) TMI 1555 - AT - Income TaxChange of method of accounting - recognized method of accounting - validity of Project Completion Method followed by the assessee - HELD THAT:- The assessee, in this case, has followed project completion method which is one of the prescribed methods by the Institute of Chartered Accountants of India. Even in terms of the revised accounting standard which was applicable for most part of the work done by the assessee the income had been correctly declared as per project completion method in the year of completion. The assessee has followed project completion method which was one of the prescribed methods and the same method has been accepted by the department in the earlier years. Department, therefore, cannot reject the method and apply percentage completion method in a subsequent year. Project Completion Method followed by the appellant is a recognized method of accounting prescribed by the ICAI which has been regularly followed by the assessee. The assessee being a real estate developer and not a construction contractor, Project Completion Method is the right method for determining the profits. The Project Completion Method being followed should not have been disturbed by the Assessing Officer as it was being regularly followed by the assessee in earlier years also and there is no cogent reason to change the method. We, accordingly, uphold the findings of the Ld. CIT(A) on this issue. Deduction u/s 80IB (10) - Proportionate deduction - As per the Department, the claim u/s 80IB(10) was not allowable as no separate approval for the four projects viz. Vista A, B, D & E was taken and only a consolidated approval for the entire Vista Project was taken from the GDA containing seven projects (Vista A to F and one Commercial) - HELD THAT:- We concur with the finding of the Ld. CIT(A) that the assessee was eligible to get proportionate deduction u/s 80IB(10) of the Act in respect of flats sold during the year on fulfilling the prescribed conditions. Requirement of a separate approval for each housing project - A Housing Project may comprise of both eligible as well as ineligible units. The deduction will be available and limited to the claim on eligible units irrespective of the fact that the entire project comprising of eligible and ineligible units has been approved by the authority by way of a single approval/composite approval. Section 80IB(10) refers to the approval of a housing project but does not prescribe a pre-condition that the deduction will be available in respect of only that unit or part of the project which has been separately approved by the local authority. Hence, it is our considered view that a separate approval for each eligible unit or project is not the intention of the Act. The Hon’ble Madras High Court in the case of Viswas Promoters (P) Ltd. vs ACIT [2012 (11) TMI 1117 - MADRAS HIGH COURT] has held that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq ft per se, would not result in nullifying the claim of the assessee for the entire project. Consequently, it was held, that assessee was entitled to the benefit of deduction u/s 80IB (10(c) of the Act in respect of each of the blocks. The Pune Bench of the ITAT has held in the case of Siddhivinayak Kohinoor Venture [2013 (10) TMI 1295 - ITAT PUNE] that construction of even one building with several residential projects of the prescribed size would constitute a housing project for the purpose of section 80IB(10) of the Act. The Pune Bench further held that each block in a particular project has to be taken as an independent building and hence is to be considered a housing project for the purpose of claiming deduction u/s 80IB(10). Whether the projections open to sky are to be included or excluded in the calculation of the built-up area of a particulars residential unit? - We find that this issue is covered in favour of the assessee by the decision of the ITAT Pune Bench in the case of Naresh T. Wadhwani [2014 (11) TMI 689 - ITAT PUNE] In the proceedings before us, the Department could not point out any judgment/judicial precedent to the contrary. We accordingly hold that the balconies open to the sky are to be excluded from the calculation of the built-up area of a particular residential unit. We, therefore, direct that the assessee be allowed the claim of deduction u/s 80IB (10) in respect of flats which have been excluded from the benefit of deduction by including the balconies open to sky for the purpose of calculating the built-up area of the individual units. Assessee challenging the measurements of the DVO in respect of flats at Sl. no. 1 & 4 of the chart - It is the assessee’s contention that the correct measurement is 988.79 sq ft whereas the DVO has calculated the build up area at 1029.28 sq. ft. It is also the assessee’s plea that it had not been afforded a proper opportunity to explain the discrepancy before the Ld. CIT (A). Hence in the interest of justice, we deem it proper to restore this limited issue of discrepancy in measurement, as claimed by the assessee, to the file of the Assessing Officer for fresh examination and adjudication thereon after giving due opportunity to the assessee to present its case. In the result, the appeal of the assessee is partly allowed.
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