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TMI Blog2017 (12) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... examination, he found that the assessment made by the A.O. under section 143(3) was suffering from the following errors which were prejudicial to the interest of the revenue: "(i) It was observed from the Profit & Loss A/c for the year 2011-12 that the total receipts of Rs. 48,38,66,198/- included other income of Rs. 1,81,42,455/- (Club Membership Fees of Rs. 77,30,000/- and Electrical & Installation charges of Rs. 1,04,12,455/-). As per Section 80IB(10) of Income Tax Act, 1961, deduction is allowable only on the profit by constructing flats & selling the ready Flats (including Electric installation & other installations etc.). In the instant case, the assessee firm booked the other income along with the sale value of the Flats and expenditure for earning other income along with the expenditure for construction of the flats in the P & L A/c for getting deduction u/s 80IB. In practice, as the other income from 'Club Membership' & 'Electric Installation' are received from some of the selective allotees as per their additional requirement for alteration & modernization work other than mandatory work to make the flat saleable to a customer, it is no way related to the business for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order u/s 143(3) of the I.T. Act dated 26.03.2015. 3. A show cause notice under section 263 accordingly was issued by the Ld. CIT (A) to the assessee pointing out the above errors and seeking the explanation of the assessee thereto. In reply, the following explanation was offered by the assessee in writing: "(i) The buyers of the flat were given an incentive to have the club membership which was an incentive for promotional sale. Both the above items part and parcel of collection towards cost incurred for the housing reject and as a measure of accountancy prudency and promotional sales the same have been collected under different heads. This is further certified by the auditors in their report under section 10CCB, where the gross sales have been shown to be inclusive of club membership and electric installation charges. [copy enclosed]. As per section 80IB(10) of the Income Tax Act, 1961, deduction is allowable on the 'hundred percent of the profits derived in the previous year relevant to any assessment year from such housing project'. Club and electrical installation are the part of the housing project. Accordingly 'club membership fees' and 'electrical installation ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llation charges, applied his mind for the same and then considered it as part of receipts for housing project. Therefore any change of opinion or review of the issue under the provisions of section 263 are unauthorised unwarranted. (ii) The assessee has allotted more than one flats to same person / individual. The said allotment was made in the Financial Year 08-09 i.e. relevant to Financial Year ending 31.03.2009. The clause (e) and clause (f) enumerating the condition restricting allotment of 1(one) Flat admeasuring 1500 sq.ft. against 1)one) individual / company has been inserted by the Finance No. 2 Act, 2009, w.e.f 1.4.2010 i.e. relevant to AY 2010-11. The aforesaid clause does not restricts sale of 1(one) Flat admeasuring 1500 sq.ft. against 1(one) individual / company during the relevant previous year when allotment was made. Thus it may be stated that the assessee did not fail to fulfil the conditions (e) & (f) for availing eligible deduction under section 80IB(10). Therefore profit component on abovementioned flats was not required to be taxed at all. The law regarding allowability of deduction u/s 80IB(10) is applicable as prevailing on the date of commencement of proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the restriction regarding sale flat to the same individual or his relatives came into force by way of the condition laid down in clause (f) of sub-section (10) of section 80IB w.e.f. 01.04.2010, the deduction under section 80IB was allowed by the A.O. without verifying the fulfilment of the condition laid down therein by the assessee. He accordingly, set aside the assessment order passed by the A.O. under section 143(3) in respect of point no 1 and 2 of the show cause notice issued by him under section 263 and directed the A.O. to pass a fresh assessment order on the said points in accordance with the relevant provisions of law after carefully going through all the materials on record. Aggrieved by the order of the Ld. CIT passed under section 263, the assessee has preferred this appeal before the Tribunal. 5. At the outset, it is noted there is delay of 3 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein which are duly supported by an affidavit filed by the authorised representatives of the assessee, we are satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that there is no discussion whatsoever made by the A.O. on the issue of the assessee's claim for deduction u/s 80IB. He contended that the said order passed by the A.O. in a very brief and cryptic manner shows complete non-application of mind. He contended that the assessee is entitled for deduction under section 80IB only in respect of profit derived from the housing project and the issue as to whether the electrical installation charges and club membership fees received by the assessee can be treated as profit derived from the project was not at all considered or examined by the A.O. during the course of assessment proceedings. He submitted that the issue of ownership of club, whether it remained with the assessee or was handed over to the flat holders, was vital in this regard and no enquiry was made by the A.O. on this vital aspect before allowing the claim of the assessee for deduction under section 80IB fully. He contended that similarly the nature of electrical installation charges received by the assessee was not verified or examined by the A.O. He also contended that even if the housing project of the assessee was sanctioned before the relevant amendment made in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the assessee, Hon'ble Delhi High Court has held that housing schemes are not only consisted of built up residential building, but also separate common facilities and amenities provided for residential unit of housing project. It was held that such common facilities and amenities are an integral part of the housing project and the assessee, therefore, would be entitled to deduction under section 80IB. Keeping in view the decision of Hon'ble Delhi High Court in the case of Omaxe Buildhome (P) Ltd. and having regard to the facts of the present case which clearly show that the copy of the relevant sample agreement was filed by the assessee before the A.O. during the course of assessment proceedings to explain the nature of electrical installation charges and club membership fees received by the assessee, we are of the view that that there was no error in the order of the A.O. in allowing the claim of the assessee for deduction under section 80IB in respect of electrical installation charges and club membership fees received from the flat holders of the project. 12 As regards the other error allegedly pointed out by the Ld. CIT in the order of the A.O, we find merit in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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