ITO Vs Reliance Enterprises

Landmark Judgment : Deduction claimed u/s 80IB is allowable on proportionate basis on those residential units of the housing project which fulfills the conditions u/s 80IB(10) by excluding those units which otherwise violate such stipulations.

– Revenue’s appeal dismissed/ Assessee’s cross objection dismissed: MUMBAI ITAT

Whether deduction claimed u/s 80IB is allowable on proportionate basis on those residential units of the housing project which fulfills the conditions u/s 80IB(10) by excluding those units which otherwise violate such stipulations – YES: ITAT

 the conditions of section 80IB(10)(e) is not applicable to the assessee, since, the such provision does not apply to individuals. To that extent, the AO has wrongly applied the provision to make the disallowance. However, it is a fact that the provision of section 80IB(10)(f) is applicable to the assessee. On the very same reasoning, the AO had disallowed assessee’s claim of deduction u/s 80IB(10) in AY 2013–14 which was set aside by the ITAT on pro–rata basis. Therefore, adhering to the norms of judicial discipline, the decision of the Tribunal in assessee’s own case, the decision of CIT(A) has to be upheld;

 the jurisdictional High Court in ITA no.583/2013, dated October 01 2014, has allowed assessee’s claim of deduction u/s 80IB(10) on the ground that the housing project having been approved prior to the provisions of section 80IB(10) was amended from 1st April 2005, the amended provisions should not apply. In fact, in case of Om Swamy Smaran Developers Pvt. Ltd., the Co–ordinate Bench following the decision in CIT v/s Brahma Associates, has held that deduction claimed u/s 80IB(10) can be disallowed on pro–rata basis by restricting it to the residential units which have violated the condition of section 80IB(10). In any case of the matter, in assessee’s own case for the AY 2013–14 and 2014–15, the Tribunal has allowed assessee’s claim of deduction on pro–rata basis under identical facts and circumstances. Moreover, the violation having been made in FY 2012–13, the pro–rata disallowance has to be made in AY 2013–14 and not in the AY under question. In the result, Revenue’s appeal is dismissed.

ITA NO.337/MUM./2017