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TMI Blog2017 (9) TMI 1855X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Aggrieved by the order of AO, assessee carried the matter before CIT(A), who vide order dated 23.03.2015 (in appeal No.PN/CIT(A)-6/Addl. CIT. Rg-8/173/13-14) granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee and revenue are now in appeal before us. 3. The grounds raised by the assessee in its appeal No.697/PUN/2015 reads as under : "1. The appellant firm claimed deduction of Rs. 8,35,95,698/- under section 8018(10) of the IT Act 1961 in respect of the housing project named "Sukhwani Oasis" constructed at Sector II, Chikhali, Pradhikaran. The learned assessing officer disallowed the deduction claimed under section 80IB(10) on account of violation of the provision of sub-clause (f) of section 80IB(10) of the Income Tax Act 1961 for the reason that the appellant had sold Row House no. 38 and 39 to husband and wife. The honourable CIT(A) allowed the proportionate deduction under section 80IB(10) denying the deduction in respect of profit derived from the sale of Row House no. 38 and 39. On the facts and in the circumstances of the case and in law the honourable CIT(A) erred and is not justified in denying the deduction in respect of prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khatrrie). He also noticed that Jeet Kaur was in fact wife of Mr. Anneel Khatrrie. AO after making further inquiries and on the basis of report of his Inspector concluded that allotment of adjoining row houses Nos.38 and 39 of the project to husband and wife did not meet the conditions stipulated in Sec.80IB(10)(f) of the Act and that the assessee was in full knowledge that the adjacent row houses were sold to husband and wife. The submissions of the assessee inter-alia that in the booking forms the purchasers had used the names as J K Rohida and Anneel Khatrrie, the addresses given them were different, the possession letters was signed by the respective purchasers as J K Rohida and Anneel Khatrrie and that the assessee was under the genuine impression that the two purchasers were not related to each other were not found acceptable to the AO. AO was of the view that for claiming deduction u/s 80IB(10) of the Act, the assessee is required to cumulatively fulfill all the required conditions stipulated in clauses (a) to (f) of Sec.80(IB)(10) of the Act and non-fulfillment of even one clause would entail disallowance of deduction u/s 80IB(10) of the Act. AO was of the view that the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove facts, booking forms and Sale Deeds, I am of the view that there is sufficient merit in the case made out by the Assessing Officer that the appellant firm has failed to exercise due diligence expected of it. It is seen from the booking Forms as well as Registered Sale Deed that Signature of J. A. Khatrrie has been shown on both the documents. The similarity of surname and proximity of the units being 38 & 39 is too glaring to be missed out. The fact that both the documents were registered on the same day in the sub-registrar's office on 08.06.2010 is also difficult to be ignored. Though one can argue as claimed by the appellant as to what benefit the appellant will derive in indulging into such complicity as alleged by the Assessing Officer so as to jeopardize its claim of deduction u/s. 80IB(10) of Income6 tax Act with such a huge tax implication, the fact remains that conditions stipulated in Sec. 80IB(10)(f) of Income-tax Act have been breached by lack of due diligence on the part of the appellant. One may also say that of all the Sale Deeds why the appellant would have submitted the copies of these two Sale Deeds to the Assessing Officer as sample copies if there was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach of the provisions of Sec.80IB(10)(f) of Income-tax Act in respect of just two units that too on peculiar facts and circumstances of the case will be a bit too harsh on the appellant. Hon'ble Pune Tribunal had occasion to deal with almost similar issue in case of Pharande Developers in ITA No.715/PN/2009 for A.Y. 2005-06 in respect of violation of clause (c) of Sec. 80IB(10) of Income-tax Act in respect of two bunglow units G1 & G2 in "Lakshdweep" Project which were sold to one family and area of the two units aggregated to 1975 sqft. The Bunglows were treated as one unit as the same were amalgamated into one. The Tribunal while examining the claim of deduction u/s. 80IB(10) held that the appellant was entitled to deduction u/s. 80IB(10) of Income-tax Act excluding Bunglow No. G1 & G2. The relevant portion of the order is reproduced as under: ............. 16. Therefore, considering the peculiar facts of the case leading to violation of clause (f) of Sec.80IB(10) of Incometax Act and also relying upon the above referred decision of Hon'ble Pune Tribunal in the case of Pharande Developers(supra), the Assessing Officer is directed to recompute the deduction u/s. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the disallowance of Sec.80IB(10) be restricted to the two row houses only and not to the entire project. Ld DR on the other hand took us through the findings of AO and supported the order of AO. 8. We have heard the rival submissions and perused the material on record. On the issue of Revenue's appeal wherein Revenue is aggrieved by the order of Ld.CIT(A) whereby he has held that disallowance be restricted only with respect to parties of row houses 38 and 39, we find that Ld.CIT(A) while granting partial relief had relied on the decision of Income Tax Appellate Tribunal, Pune Bench in the case of Pharande Developers (ITA No.715/PN/2009). Before us, no material has been placed by Revenue to demonstrate that the aforesaid decision of Pune ITAT in the case of Pharande Developers (supra) has been set aside by higher Judicial Authority. On the issue of proportionate deduction, we also find that Hon'ble Madras High Court in the case of CIT Vs. Arun Excello Foundations (P.) Ltd [2013] 29 taxmann.com 149 (Madras) has approved the principle of proportionate deduction to the extent the assessee has complied with the provisions of Sec.80IB(10) of the Act. Following the aforesaid decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.39, the agreement was signed in the name of Jeetkaur Rohida though she had got her name changed to Jeetkaur Anil Khatri vide Government of Maharashtra Gazette notification dated 16th November 2006 and the copy of the PAN card furnished also having her old name i.e. Jeetkaur Rohida. The possession letters dated 20.7.2010 signed by the respective purchasers were signed as Jeetkumar Rohida and Anneel Khatrrie respectively. We are of the view that at the time of making sale/booking a unit and for complying with the requirement of clause (e) and (f), the assessee is required to exercise normal due diligence expected of a normal businessman and proceed on the basis of the documents/information furnished by the other person and is not supposed to act like a detective and microscopically investigate and go behind the documents and verify the background of those submissions. Further no guidelines have issued by Revenue Department to show as to what and how the verification has to be conducted and therefore it is not a case of Revenue that the required guidelines issued by Revenue Department so as to check the compliance of clause (e) and (f) have not been followed by assessee. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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