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M/s. Kumar Company Capital Versus Addl. CIT, Range-5, Pune

Eligibility for the deduction u/s. 80IB(10) - non-completion of the few buildings - Held that:- The assessee is entitled to pro-rata deduction in respect of the buildings/units of the housing project ‘Kumar Padmalaya’ which have complied with the conditions laid down in section 80IB(10) of the Act. In other words, the AO cannot reject the claim of deduction u/s.80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO .....

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y the Tribunal vide order dated 30- 04-2014. Subsequently, the assessee filed a Miscellaneous Application stating that one of the issues, i.e. disallowance u/s.80IB(10) in respect of the housing project Kumar Padmalaya remained unadjudicated. The Tribunal vide M.A.Nos. 75 & 76/PN/2014 order dated 22-05-2015 recalled the order of the Tribunal for the limited purpose of deciding the above issue. Hence, this is a recalled matter. 3. The grounds relating to disallowance of deduction u/s.80IB(10) .....

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wed. 4. Facts of the case, in brief, are that the assessee, in the return of income, claimed deduction u/s.80IB(10) in respect of 3 projects namely, Padmalaya, Pragati and Priyadarshan. In order to examine the allowability of deduction u/s.80IB(10) in respect of these 3 projects the AO referred the matter for verification by the Government approved valuer. The DVO reported that the project Padmalaya which is over an area of land of 3.46 Acres started commencement on 11-12-2000. However, building .....

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laya the final completion certificate was not issued by the local authority on or before 31-03-2008, therefore, the AO asked the assessee to explain as to why the claim of deduction u/s.80IB(10) in respect of the project Padmalaya should not be disallowed. The assessee submitted that if the portions A02, B04, B05 and B06 buildings which were not completed are segregated from the rest of the portion, the rest of the portion independently satisfy all the conditions of section 80IB(10). Relying on .....

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t the will of the assessee. According to the AO for the purpose of granting deduction u/s. 80IB(10) all relevant facts have to be considered in respect of whether the whole residential project, as approved by the local authority, fulfils all the conditions u/s.80IB(10). Part fulfillment of the conditions disentitles the assessee from claiming deduction u/s. 80IB(10). Similarly if only part of a project complied with the conditions u/s.80IB(10) and the balance part does not comply, the assessee w .....

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₹ 1,01,94,782/- u/s.80IB(10) in respect of the Padmalaya Project. 7. In appeal the Ld.CIT(A) upheld the action of the AO. While doing so, he distinguished the various decisions cited by the assessee and held that those decisions were rendered on a different set of facts and in all those cases the profits were derived from approved housing projects and in that context it was held that deduction can be allowed on standalone basis or proportionate basis, if other conditions for availing the b .....

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ee at the outset submitted that the decision of the Chennai Bench of the Tribunal in the case of Viswas Promoters Pvt. Ltd. (Supra) relied on by the CIT(A) has been reversed by the Hon ble Madras High Court which has been reported as 255 CTR 149. In the said decision it has been held that within composite housing project where there are eligible and ineligible units the assessee can claim deduction in respect of the eligible units in the project and even within the block the assessee is entitled .....

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er hand heavily relied on the order of the CIT(A). Referring to the decision of the Hon ble Bombay High Court in the case of CIT Vs. Brahma Associates reported in 197 taxmann 459 he submitted that the Hon ble High Court in the said decision has held that section 80IB(10) allows deduction to the entire project approved by the local authority and not to a part of the project. Therefore, pro-rata deduction cannot be allowed where some of the units are incomplete or do not comply with the conditions .....

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e orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the impugned grounds raised by the assessee is regarding allowability of pro-rata deduction u/s.80IB(10) in respect of the housing project Kumar Padmalaya where admittedly some of the units have not been completed before 31-03-2008. According to the revenue, for claiming deduction u/s.80IB(10) the assessee has to fulfil all the condi .....

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jra", there are number of flats which are below 1500 sq.ft., and the relevant built-up area requirement is specified underSection 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the .....

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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 reported in [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in .....

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claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court reported in [2012] 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee's case before us. 15. In the lig .....

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assessee would be entitled to the relief on a proportionate basis. 14. We find following the above decision the Pune Bench of the Tribunal in the case of Padmavati Developers (Supra) has decided the issue of prorata deduction in favour of the assessee by holding that assessee is entitled to pro-rata deduction in respect of the residential units which have complied with the conditions and were eligible for the deduction u/s.80IB(10). The relevant observation of the Tribunal at Paras 36 to 38 of t .....

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omposite housing project, where there are eligible and inelligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief against the units satisfying the extent of built-up area. 38. Similar proposition has been laid down by the Bangalore Bench of the Tribunal in DCIT vs. Brigade Enterprises (P.) Ltd., (2008) 119 TTJ 269 (Bang) and the Pune Bench of the Tribunal in Runwal Multihousing .....

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