TMI Blog2010 (9) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... le and therefore, the deduction shall be given on the entire amount - In case the assessee has not earned any profit, the question of grant of deduction under SECTION80IB(10) does not arise for consideration - If any profit is not included in the total income, then the deduction u/section 80IB(10) does not arise for consideration - Tribunal after considering the provisions of SECTION145 of the Act and Accounting Standard- 7 found that profit has to be ascertained year after year and in respect of the construction business - Accordingly, the same is confirmed and the grounds of the assessee in this appeal are rejected - ITA No. 722/Hyd/2009 & 822/Hyd/09 - - - Dated:- 30-9-2010 - Akber Basha Accountant Member J. N.R.S.Ganesan Judicial Member. J. Assessee by: Shri K.C.Devadas Revenue by: Shri K.V.N.Acharya ORDER Per N.R.SECTIONGanesan, Judicial Member Both these appeals of the assessee and the Department are directed against the order of the CIT(A) VI, Hyderabad dated 25.3.2009 and they pertain to assessment year 2005-06. Since common issues are involved, these appeals are being disposed off by this common order for the sake of convenience. Revenue's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abad Metropolitan Development Authority (HMDA) and the local civic body granted approval only for two residential blocksection Even though development charges were paid for the entire land, the plan permission was obtained only for construction of two blocksection Therefore, this is not correct to say that the assessee has to complete the entire project for the purpose of claiming deduction under SECTION80IB. Referring to the Circular issued by the CBDT, copy of which is available at page 85 of the paper book in Instruction No.4 dated 30.6.2009, the learned representative submitted that the assessee can claim deduction on year to year basis, where the assessee is showing profit from partial completion of the project for every year. In view of this circular, according to the learned representative the CBDT has approved the method of computation of profit on year to year basisection In case the assessee has to claim deduction after completion of the entire project, it may result in disadvantageous position to the assessee, if there is change in law in future or if something happens to the assessee due to various reasonsection In that circumstance, the assessee may lose the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cks, as evident from the plan permission granted by the HMDA and the local civic body. Admittedly, the area of the land in which the project was completed is more than one acre and the assessee was permitted to construct about 120 residential unitsection The Plan permission was obtained during the period for which the assessee is eligible for deduction under SECTION80IB of the Act, as provided in SECTION80IB(10) of the Act. CBDT vide circular dated 30.6.2009 clarified that deduction can be claimed on year to year basis, where the assessee is showing the profit from partial completion of the project in every year. in case it is found that the project was not completed within four years, the deduction granted to the assessee in earlier years shall be withdrawn. In view of this Circular, it is not necessary for the assessee to complete the entire project in a particular year. Even on partial completion of the project, assessee is eligible for deduction under SECTION80IB of the Act. An option was also given to the assessee to claim the deduction in the year of completion of project. This circular of the CBDT was not brought to the notice of the Madras High Court in the case of Viswas P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 194C of the Act. In the absence of any material, we do not find any infirmity in the order of the CIT(A), which is accordingly upheld and the ground of the Revenue is rejected. Assessee's Appeal : ITA No.722/Hyd/09: 9. Now let us take the assessee's appeal, ITA No.722/Hyd/09. Shri Devadas, learned counsel for the assessee submitted that the CIT(A) by following Accounting Standard 7 of the Institute of Chartered Accountants of India found that the deduction under SECTION80IB(10) will be provided on the profit for the year under consideration only. According to the learned representative, Accounting Standard 7 was not notified by the government of India under SECTION145 of the Income-tax Act. The only accounting standard notified by the Government of India under the Income-tax Act is Accounting Standard 2. Therefore, Accounting Standard 7, which is not notified by the Government of India, has no statutory force at all. Therefore, according to the learned representative for the assessee, the direction of the CIT(A) to compute the deduction under SECTION80IB on the basis of the financial results for the assessment year 2005-06 is not sustainable. The learned representative for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Block was not included in the total income. The deduction u/section 80IB(10) has to be granted only on the profit which is included on the total income for the assessment year under consideration. If any profit is not included in the total income, then the deduction u/section 80IB(10) does not arise for consideration. Therefore, in our opinion, the CIT(A) has rightly restricted the deduction in respect of the profit for the year under consideration on the basis of the decision of the Tribunal in the case of Bhagyanagar Construction P.Ltd. (Supra). We have also carefully gone through the decision of the Tribunal in the case of Bhagyanagar Constructions P. Ltd. This Tribunal after considering the provisions of SECTION145 of the Act and Accounting Standard- 7 found that profit has to be ascertained year after year and in respect of the construction businessection In view of the above, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is confirmed and the grounds of the assessee in this appeal are rejected. 12. In the result, appeal of the Revenue, viz. ITA No.822/Hyd/2009 as well as the appeal of the assessee, viz. ITA No. 722/Hyd/2010 are dismissed.Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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