Case Note & Summary
The appeal was filed by the Revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT), Pune dated 13th January, 2017 for the assessment year 2011-12. The assessee, a firm engaged in developing residential projects in Pune, had claimed a deduction of Rs.28,49,87,583/- under Section 80IB(10) of the Act in respect of two projects: Kumar Shantiniketan and Kumar Kruti. The Assessing Officer (AO) disallowed the deduction on the ground that in Kumar Shantiniketan, two flats exceeded the prescribed limit of 1500 sq.ft., and in Kumar Kruti, eight flats exceeded that limit. Additionally, the AO noted that the project Kumar Kruti was part of a larger project, Kumar City, sanctioned on 8th August, 2003, and the assessee failed to complete the project by 31st March, 2008. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal on 18th August, 2014, following the ITAT's decision dated 15th April, 2013 in the assessee's own case for assessment years 2008-09 and 2009-10, which directed the AO to allow pro rata deduction for eligible flats not exceeding 1500 sq.ft. The Revenue challenged the CIT(A)'s order before the ITAT, which dismissed the appeal on 13th January, 2017, following its earlier orders for the assessee for assessment years 2008-09, 2009-10, and 2010-11. The Revenue then filed the present appeal. The court framed the substantial question of law: whether the ITAT was justified in allowing the deduction on a pro rata basis. The court noted that the ITAT had consistently followed its earlier decisions in the assessee's own case, which had become final as the Revenue did not challenge them. The court found no reason to interfere and dismissed the appeal, upholding the ITAT's order.
Headnote
A) Income Tax - Deduction under Section 80IB(10) - Pro Rata Deduction - The issue was whether deduction under Section 80IB(10) of the Income Tax Act, 1961 can be allowed on a pro rata basis when some flats in the project exceed the prescribed limit of 1500 sq.ft. - The court held that the ITAT was justified in directing the Assessing Officer to allow pro rata deduction in respect of eligible flats not exceeding the prescribed limit, following earlier decisions of the ITAT in the assessee's own case for earlier assessment years. (Paras 1-5)
Issue of Consideration
Whether the Income Tax Appellate Tribunal was justified in allowing the assessee's claim of deduction under Section 80IB(10) on a pro rata basis considering that the assessee did not comply with the condition of not having any flat with a built-up area exceeding 1500 sq.ft.
Final Decision
The appeal is dismissed. The order of the ITAT is upheld. No order as to costs.
Law Points
- Pro rata deduction under Section 80IB(10) of the Income Tax Act
- 1961 is permissible when some flats exceed the prescribed area limit
- provided the project otherwise qualifies
- the deduction is to be allowed in respect of eligible flats not exceeding 1500 sq.ft.
