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2022 (7) TMI 124 - AT - Income TaxDeduction claimed u/s.80IB(10) on account of 'extra work’ - HELD THAT:- It is an admitted position that the assessee is otherwise eligible for deduction u/s.80IB(10) in respect of one of its projects, namely, ‘Khinvasara Fort’. AO did not dispute the otherwise allowability of deduction of income from the ‘Khinvasara Fort’ project, but observed that the assessee could not furnish any evidence as to the nature of ‘extra work’ on which the deduction was also claimed. Similar position remained before CIT(A) as well that the assessee could lead no evidence to demonstrate the nature of extra work. Here, it is relevant to note that section 80IB(10) provides deduction at 100% of profit derived from the housing project which fulfils the requisite conditions. It is only the profit from the eligible project which qualifies for deduction. If the developer also undertakes certain other works unconnected with development of project and charges separately from customers, that income cannot qualify for the deduction. Thus, the examination of nature of work done and the resultant income becomes sine qua non for granting or not granting of deduction u/s.80IB(10). Here is a case in which the AO did not dispute the otherwise eligibility of deduction u/s. 80IB(10) on the ‘Khinvasara Fort’. The assessee himself carved out a separate figure of `extra work’ done worth Rs.2.99 lakh on which deduction was claimed. However, he failed to show the nature of ‘extra work’ done for examination by the AO as to whether that also qualified for the deduction. Similar position prevailed before the CIT(A) as well inasmuch as the assessee could not state the nature of `extra work’. There is no change in the factual scenario before the Tribunal as well on this score. In view of the fact that the assessee failed to lead any evidence whatsoever to show the nature of extra work done, the action taken by the authorities below cannot be taken exception to. Addition being Architect fees - AO on perusal of details of Legal and professional charges, observed that a sum was paid to Ms. Monali Mutha and Mr. Sujit S. Mutha towards interior designing, drafting and consultancy charges for Resort Project “Nirvana” at Shoolibanjan, Aurangabad - Since the Nirvana project was not eligible for deduction u/s.80IB(10) and there was no revenue from the `Nirvana’ project, the AO disallowed this sum - CIT(A) countenanced the view of the AO - HELD THAT:- The architect has mentioned the name of ‘Nirvana’ project. However, the claim of the assessee has been that such Legal charges pertained to all the on-going projects. Assessee’s Profit and loss account depicts figure of Legal and professional charges in total, which impliedly includes the amount of Rs.11.00 lakh under consideration. Page 16 contains allocation of Legal and professional expenses involved in these projects, having been allocated to the Fort project eligible for deduction u/s.80IB(10) - If disallowance of any expenditure from the eligible housing project is made, it means that the income from it would correspondingly increase, resulting into higher amount of deduction u/s.80IB(10) also. Out of total Legal and professional expenses incurred by the assessee share of the expenses allocated to eligible project - Applying the same proportion to the disputed payment of Rs.11.00 lakh, the share of the Fort project in such total amount disallowed comes - As the eligible project claimed deduction for this sum, which got disallowed by the AO, the amount of deduction u/s. 80IB(10) will accordingly have to go up - To sum up, the disallowance of Rs.11.00 lakh is sustained and the amount of deduction u/s.80IB(10) is increased by a sum of Rs.5.43 lakh.
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