9911796707
TMI Blog2019 (10) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of deduction u/s. 80IB(10) of the Act of Rs. 1,58,94,590/-? (2). Whether, in the facts and circumstances of the case, has the Income Tax Appellate Tribunal erred in law and on facts in remitting the matter back to the Assessing Officer for verification when all the details were on record and duly examined by lower authorities? (3). Whether, on the facts and circumstances of the case, has the Income Tax Appellate Tribunal erred in not holding that the appellant had rightly claimed deduction u/s. 80IB(10) on Rs. 1,58,94,590/- being the charge collected from the customers for AEC, AUDA and legal charges?" Notify this Tax Appeal for final hearing on 30/07/2019 on top of the Board." 3. The facts giving rise to this tax appeal may be summarized as under:- 3.1 The appellant-assessee is a limited company engaged in the business of Real Estate and Infrastructure Development activities. For the Assessment Year 2011-12, the appellant filed its return of income at Rs. 11,99,50,930/-. The assessment was undertaken and the Assessing Officer made addition of Rs. 1,61,95,404/- and assessed the total income at Rs. 13,64,40,540/-. The order of assessment was challenged before the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o above could be termed as substantial questions of law. In such circumstances referred to above, Ms. Bhatt prays that there being no merit in this appeal, the same may be dismissed and the substantial questions of law framed by this Court may be answered in favour of the Revenue and against the appellant - assessee. 8. The Assessing Officer while disallowing the claim under Section 80IB( 10) of the Act, observed as under:- 5.3 The reply of the assessee has been considered carefully but it was not acceptable because as per section 80IB( 10) of the Act, the assessee is eligible for the deduction only for the income which is derived from such housing project. The reason for nonacceptance are discussed below: 5.3.1 It is settled proposition that the deduction is to be allowed on the income derived from the eligible activity only. For this is important to reproduce the provisions of section 80IB( 14) wherein the definition of "built up area" is mentioned. 80IB(10) For the purpose of this section:( a) "built up area" means the inner measurement of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the wall but do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO observes that the nexus between the fixed sum received and the expenses, in the form of payment to AEC, AUDA and legal charges, was not evident in this case. AO relied on a sample sale deed executed between the appellant and one of the flat purchaser for Flat No.52 which was reproduced in support of its contention vide para 5.34 of its order. The AO also pointed out that the relevant guidance made on accounting for real estate transaction issued by ICAI does not bind the appellant to take such charges taken from the purchasers as a part of income eligible for deduction u/s.80IB(10). 10.1 The appellant has primarily relied on number of judgments indicating that of Hon'ble Supreme Court namely Liberty India and couple of other Tribunal decision to claim that deduction u/s.80IB(10) is allowed on charges paid to AUDA, AEC and the legal charges paid. 10.2 The appellant is drawn my attention indicating that such charges are recovered from the customers and are integral part of the sale consideration. The appellant pointed out that AO has not noticed despite pointing out so the clause19 of each of the sale deed which is reproduced as under:" If any amount becomes payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricity supply & meter, transformer & electric substation including provision for generator. It is a part and parcel of the entire activity of developing and building a housing project and without which the project developed could not be said to be complete. We observe that as per agreement, it is provided that each of the purchasers is required to pay an additional amount @ Rs. 55/per sq. ft. of super builtup area of the said flat by way of consideration for installation of generator for the common portions and for providing power to the said flats and also for providing electricity supply & meter etc. for common purposes. We agree that charging of extra amount for providing the above essential common facilities as per the agreement is in the capacity of developing and constructing the housing project by the assessee and not to act as a middleman/agent, as alleged by A.O. These activities, we are of the considered view, are part and parcel of the entire activity of developing and completing the housing project. Hence we hold that charging of the said additional amount, i.e.@ Rs. 55/per sq. ft. of super builtup area from flat owners/purchasers is having direct nexus with the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feature brought on record by the Revenue, we respectfully following the order of the Tribunal (supra) hold that the assessee is entitled to deduction u/s 80IB(10) of the Act in respect of Development charges, legal charges, society formation charges, water, electricity & meter charges. As regards the deduction u/s 80IB(10) on corpus fund charges, in the absence of any relevant material available on record, we respectfully following the order of the Tribunal (supra) set aside the issue to the file of the A.O. to decide the same afresh in the light of the direction given by the Tribunal in the said case (supra) and according to law after providing reasonable opportunity of being heard to the assessee. Accordingly the ground taken by the Revenue is partly allowed for statistical purpose. 10.6 I may hastened to add that decision given by the Hon'ble Gujarat High Court in the case of CIT vs Pratham Developers (33 Taxman.com 272) wherein the Hon'ble High Court has decided that any income arising out of the developing housing project is eligible for deduction u/s.80IB(10) of the Act. The operative part of this judgment i.e. para7 is reproduced below for ready reference:- "6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to the respective authorities. It is also not disputed that such sum so paid to the authorities like AUDA, AEC and Legal charges were recovered from the respective customers as per the agreement clause9 reproduced above and it is also not disputed that payment to AUDA, AEC and Legal charges is essential for development, completion and execution of a housing project. I am not inclined to agree that for providing such activities the appellant has acted as a middleman for the customers who in turn bought flat. Speaking also in normal commercial environment of builders, on behalf of customers, interact and pay with respective authorities for development for provision of water and electricity and to complete legal formalities. 10.8 Considering the discussion above, I am of the view that the appellant is eligible for deduction u/s.80IB(10) for an amount of Rs. 1,58,94,590/, the appellant thus gets the relief. The AO is directed to delete this disallowance. This ground is therefore allowed. 12. The appellate tribunal while partly allowing the appeal preferred by the Revenue observed in one paragraph as under:- 9. We have gone through the impugned order and duly considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go to reduce the assessee's cost of acquisition of the supply. Such amount therefore, cannot be dissociated or divested from assessee's business. Such receipt therefore, cannot be stated to be not arising out of the assessee's business of development of housing project.
14. The only question we need to consider is whether the appellate tribunal justified in remitting the matter to the Assessing Officer, more particularly, when all the facts were on record before the appellate tribunal. If the facts are on record, then the appellate tribunal is duty bound to look into the same and decide the matter accordingly. Remitting the matter without any justifiable reason will be nothing, but sheer waste of time.
15. In such circumstances referred to above, this tax appeal succeeds and is hereby allowed. The impugned order passed by the appellate tribunal is hereby quashed and set aside and the order passed by the CIT [Appeals] to the extent of eligible deduction under Section80IB (10) of the Act is concerned, is hereby affirmed. The three questions of law are answered accordingly in favour of the appellant - assessee and against the revenue. X X X X Extracts X X X X X X X X Extracts X X X X
|
