TMI Blog2018 (11) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... :- The assessee has developed a housing project Green Meadows and claimed deduction u/s. 80IB on the said project. During the course of assessment proceedings the Assessing Officer observed that certain receipts viz. amount received on account of area difference, electricity charges, extra amenities, extra work, legal charges, society charges and parking charges have no direct nexus with the profits of housing project. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing deduction u/s. 80IB(10) on the aforesaid receipts. The receipts are in-extricably linked to development of the housing project. Allowing of deduction u/s. 80IB(10) on pro-rata basis - Held that:- Despite the fact two residential units were having built up area exceeding 1500 sq. ft. Commissioner of Income Tax (Appeals) has disallowed proportionate deduction u/s. 80IB(10) on the said flats. Allowability of pro-rata deduction u/s. 80IB(10) on eligible residential units is no more res integra. No infirmity in the action of Commissioner of Income Tax (Appeals) in allowing proportionate deduction. Accordingly, ground No. 3 raised in the appeal by the Revenue is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s. 143(3), the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) deleted all the additions made by the Assessing Officer and allowed the appeal of assessee in toto. Against the findings of Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal. 3. Shri Amol Kamat representing the Department in respect of grounds raised by the Revenue submitted as under : Sales ₹ 1,10,00,000/-. 3.1 The assessee sold commercial shops to M/s. National Reality Limited in period relevant to assessment year 2009-10. The assessee allegedly received ₹ 1,10,00,000/- for carrying out some modification work. The modification contract did not materialize, hence the assessee refunded ₹ 1,10,00,000/- to M/s. National Reality Limited and reduced the said amount from the sales pertaining to the period relevant to assessment year 2010-11. Since, the amount refunded is in respect of sales for assessment year 2009-10, the reduction of sales in assessment year 2010-11 is not allowable. If the assessee has committed mistake in recording the sale for assessment year 2009-10 then it can be correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. The ld. AR submitted that the assessee entered into an agreement with M/s. National Reality Ltd. for sale of commercial premises admeasuring 43200 sq. ft. for a consideration of ₹ 9,41,00,000/-. The assessee further agreed to carry out certain modifications in the commercial area sold to M/s. National Reality Ltd. for which an amount of ₹ 1,10,00,000/- was paid by the said company to the assessee. Subsequently, the modification to be carried out by the assessee were dropped, consequently the amount of ₹ 1,10,00,000/- received on account of modifications was refunded by the assessee. The accounting treatment for recording the aforesaid transaction could have been either by reducing the sales or debiting the amount to P L account. The assessee preferred the former and reduced the amount from the sales. It is not disputed by the Revenue that the amount has not been refunded by the assessee to M/s. National Reality Ltd. in the impugned assessment year. The ld. AR referred to book entries at pages 105, 106 and 130 of the paper book. The Commissioner of Income Tax (Appeals) appreciated the facts on record and deleted the addition. 4.1 In respect of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. National Reality Ltd. got crystallized in the year under appeal i.e. on 10-01-2010, therefore, the said expenditure is correctly claimed in assessment year 2010-11. 5. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. In first ground of appeal the Revenue has assailed deleting the addition of ₹ 1,10,00,000/- on account of reduction of sales‟. A perusal of purchase accounts of the assessee reveal that the assessee has received payment of ₹ 10,51,00,000/- from M/s. National Reality Ltd. on account of sale of commercial mall premises. The aforesaid payment includes sale consideration ₹ 9,41,00,000/- and advances for modifications ₹ 1,10,00,000/-. Later on modifications were cancelled and the amount paid by the M/s. National Reality Ltd. towards modifications was refunded. The same is reflected in the books of the assessee at pages 105 and 106 of the paper book. The assessee at the time of refund of amount instead of debiting the amount to P L account reduce the same from the sales consideration. This fact has not been disputed by the Revenue. Only contention raised by the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions relied by the appellant also support the claim. Accordingly, I hold that the AO was not justified in denying the deduction u/s. 80IB(10) in respect of profits derived from the concerned receipts to the tune of ₹ 25,62,908/-. Ground no. 2C is accordingly allowed. 7. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing deduction u/s. 80IB(10) on the aforesaid receipts. The receipts are in-extricably linked to development of the housing project. Accordingly, ground No. 2 raised in the appeal by Revenue is dismissed. 8. In ground No. 3 of the appeal, the Revenue has assailed allowing of deduction u/s. 80IB(10) despite the fact two residential units were having built up area exceeding 1500 sq. ft. The Flat Nos. C-401 and C-404 were combined to make one residential unit having approximate area of 2540 sq. ft. Similarly, Flat Nos. C-402 and C-403 were combined into one residential unit having approximate area of 2540 sq. ft. The Commissioner of Income Tax (Appeals) has disallowed proportionate deduction u/s. 80IB(10) on the said flats. Allowability of pro-rata deduction u/s. 80IB(10) on eligible residential units is no more res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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