S.N. Builders & Developers, Bangalore V. DCIT, Bangalore

ITA 1366/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80795 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO . 1366 / BANG /20 1 3 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. S.N. BUILDERS & DEVELOPERS, SNN AGORA, RAJ LAKE V IEW, NO.3761, 29 TH MAIN, BTM II STAGE, N.S. PALYA MAIN ROAD, BANGALORE - 560 076 . . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX , CIRCLE 4(1), BA NGALORE . .. RESPONDENT. ITA NO.1707/BANG/2013 (ASSESSMENT YEAR : 2010 - 11) (BY REVENUE) S.P. NO.128/BANG/2014 (IN ITA NO.1366/BANG/2013) ASSESSEE / PETITIONER BY : SHRI B.S. SUDHEENDRA, C.A. REVENUE BY : S HRI FA RHAT HUSSAIN QURESHI, CIT (D.R) DATE OF H EARING : 13.11.2014. DATE OF P RONOUNCEMENT : 3.12. 2014. O R D E R PER S HRI JASON P. BOAZ : THESE ARE CROSS APPEALS BY REVENUE AND THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - II, BANGALORE DT.5.9.2013 FOR ASSESSMENT YEAR 2010 - 11. ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 2 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UND ER : - 2.1 THE ASSESSEE, A FIRM ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL BUILDING PROJECTS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 - 11 ON 26.3.2011 DECLARING TOTAL INCOME OF RS.72,80,690. THE ASSE SSEE SUBSEQUENTLY FILED A REVISED RETURN OF INCOME ON 30.3.2011 , ADMITTING THE SAME INCOME, IN ORDER TO CORRECT THE TAX PAYABLE AND CLAIM TDS OF RS.28,069. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE A CT') AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS ENGAGED IN THE DEVELOPMENT OF A RESIDENTIAL BUILDING P ROJECT RAJ LAKE VIEW IN TWO P HASES I AND II, COMMENCED IN THE FINANCIAL YEARS 2006 - 07 AND 2009 - 10 RESPECTIVELY. THE ASSESSEE FOLLOWED THE PROJECT COMPLETION METHOD FOR RECOGNISING REVENUES, COSTS AND PROFITS / LOSSES FROM THE DEVELOPMENT AND CONSTRUCTION OF REAL ESTATE PROJECTS. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE OR DER DT.28.2.2013 WHEREIN THE ASSESSEE'S INCOME WAS ASSESSED AT RS.7,62,57,807 AS AGAINST THE RETURNED INCOME OF RS.72,80,690 IN VIEW OF AN ADDITION THERETO OF A SUM OF RS.6,89,77,117 AS PROFITS ASSESSABLE UNDER THE PERCENTAGE COMPLETION METHOD AS THE ASS ESSING OFFICER WAS OF THE VIEW THAT PHASE I OF THE RAJ LAKE VIEW PROJECT HAD BEEN SUBSTANTIALLY COMPLETED TO THE EXTENT OF 90%. THE ASSESSING OFFICER, HOWEVER, DID NOT BRING TO TAX PROFITS OF PHASE II OF THIS PROJECT AS HE WAS OF THE VIEW THAT PHASE II HAD JUST COMMENCED IN THE PERIOD UNDER CONSIDERATION. IN DOING SO, I.E. MAKING THE ADDITION, THE ASSESSING OFFICER ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 3 FOLLOWED THE ORDER OF THE CIT(APPEALS) IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10. 2.2 AS REGARDS THE ASSESSEE'S CLAIM FOR D EDUCTION UNDER SECTION 80 IB(10) OF THE ACT IN RESPECT OF THE PROFITS BROUGHT TO TAX UNDER THE PERCENTAGE COMPLETED METHOD , THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE BUILT UP AREA OF 26 FLATS WERE IN EXCESS OF THE PRESCRIBED LIMIT OF 1500 SQ. FT., DEDUCTION CLAIMED UNDER SECTION 80 IB(10) OF THE ACT CANNOT BE ALLOWED , EVEN IN RESPECT OF THE OTHER FLATS HAVING BUILT UP AREA NOT EXCEEDING THE PRESCRIBED LIMIT OF 1500 SQ. FT. 3. AGGRIEVED BY THE ORDER OF ASSESSMENT DT.28.2.2013 FOR ASSESSMEN T YEAR 2010 - 11, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) - II, BANGALORE. THE LEARNED CIT (APPEALS) DISPOSED OFF THE ASSESSEE'S APPEAL VIDE ORDER DT.5.9.2013 ALLOWING THE ASSESSEE PARTIAL RELIEF. IN THIS ORDER, THE LEARNED CIT (APPEALS) CON FIRMED THE ADDITION OF RS.6,89,77,177 MADE ON ACCOUNT OF THE INCOME ASSESSABLE TO TAX ARISING TO THE ASSESSEE UNDER THE PERCENTAGE COMPLETED METHOD . THE LEARNED CIT (APPEALS), HOWEVER, ALLOWED THE ASSESSEE PROPORTIONATE DEDUCTION UNDER SECTION 80 IB (10 ) OF THE ACT IN RESPECT OF THOSE FLATS IN THE PHASE I OF RAJ LAKE VIEW PROJECT WHICH CONF O RMED TO THE PRESCRIBED LIMIT OF 1,500 SQ. FT. 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS) II, BANGALORE FOR ASSESSMENT YEAR 2010 - 11 DT.5.9.2013, BO TH THE ASSESSEE AND REVENUE HAVE FILED APPEALS BEFORE THIS ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 4 TRIBUNAL ON THE ISSUES HELD AGAINST THEM BY THE LEARNED CIT (APPEALS) IN THE IMPUGNED ORDER. ASSESSEE'S APPEAL IN ITA NO.1366/BANG/2013 FOR A.Y.2010 - 11. 5. IN ITS APPEAL, THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS : - 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED CIT (APPEALS) HAS ERRED IN PARTIALLY CONFIRMING THE SAME. 2. THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT APPELLA NT IS REQUIRED TO MAINTAIN THE ACCOUNTS ON PERCENTAGE COMPLETION METHOD AS AGAINST THE PROJECT COMPLETION METHOD CONSISTENTLY FOLLOWED BY THE APPELLANT. THE CONCLUSION OF AUTHORITIES BELOW BEING NOT IN CONFORMITY WITH APPLICABLE ACCOUNTING PRINCIPLES ARE TO BE DISREGARDED AND THE METHOD OF ACCOUNTING ADOPTED BY APPELLANT BEING CORRECT IS TO BE ACCEPTED. 3. THE LEARNED ASSESSING OFFICER HAD ERRED IN COMPUTING PROFIT OFRS.6,89,77,117 BY ADOPTING PERCENTAGE COMPLETION METHOD AND THE LEARNED CIT (APPEALS), H AS ERRED IN CONFIRMING THE SAME. ON PROPER APPRECIATION OF FACTS AND THE LAW APPLICABLE THE COMPUTATION AS MADE BY ASSESSING OFFICER BEING NOT CORRECT IS TO BE DISREGARDED. 4. THE APPELLANT HAS RIGHTLY COMPUTED THE PROFITS IN ACCORDANCE WITH PROJECT COM PLETION METHOD. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE METHOD ADOPTED BY THE APPELLANT AND THE PROFIT COMPUTED CONSEQUENT THERETO ARE TO BE ACCEPTED. 5. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST U/S.234A AND 234B OF THE ACT. THE INTERE ST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 6. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER PASSED BE QUASHED OR ATLEAST THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT BE ACCEPTE D AND THE INCOME BE COMPUTED ACCORDINGLY AND INTEREST LEVIED BE ALSO DELETED. 6. THE GROUNDS RAISED AT S.NOS.1 AND 6 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 7.1 THE GROUNDS AT S.NOS.2 TO 4 , RAISED BY THE ASSESS EE , CHALLENGE THE FINDINGS AND ACTION IN THE ORDERS OF THE AUTHORITIES BELOW TO BE ERRONEOUS IN HOLDING THAT THE ASSESSEE IS REQUIRED TO MAINTAIN THE ACCOUNTS ON THE PERCENTAGE COMPLETED METHOD AND COMPUTING THE TAXABLE PROFITS AT RS.6,89,77,117 AS AGAI NST THE PROJECT COMPLETED METHOD ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 5 CONSISTEN TLY FOLLOWED BY THE ASSESSEE C ONS ISTENTLY, AS THEIR CONCLUSIONS ARE NOT IN CONFORMITY WITH ACCOUNTING PRINCIPLES. IT IS SUBMITTED THAT THE ASSESSEE HAS CORRECTLY COMPUTED ITS PROFITS IN ACCORDANCE WITH THE P ERCENTAGE COMPLETED METHOD . THE LEARNED AUTHORISED REPRESENTATIVE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED AND SUBMITTED THAT THE ISSUE IN QUESTION IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRI BUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 IN ITA NOS.487 & 654/BANG/2013 DT.11.4.2014. THE LEARNED AUTHORISED REPRESENTATIVE PRAYED THAT IN VIEW OF THIS DECISION OF THE CO - ORDINATE BENCH IN THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2009 - 1 0 (SUPRA), THE ASSESSEE'S APPEAL OUGHT TO BE ALLOWED ON THIS ISSUE. 7.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULL Y CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISION CITED AND PLACED RELIANCE UPON. WE FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS CONSIDERED AND DECIDED THIS SAME ISSUE IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 (SU PRA), IN FAVOUR OF THE ASSESSEE. AT PARAS 16 TO 19 OF THIS ORDER (SUPRA), THE CO - ORDINATE BENCH OF THIS TRIBUNAL HELD AS UNDER : - 16. THE QUESTION AS TO WHETHER AS - 7 HAS TO BE MANDATORILY FOLLOWED IN THE CASE OF REAL ESTATE DEVELOPERS WAS CONSIDERED B Y THIS TRIBUNAL IN THE CASE OF M/S. PRESTIGE ESTATE PROJECTS PVT. LTD. (SUPRA). THE TRIBUNAL FOR AY 05 - 06 IN ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 6 THE CASE OF PRESTIGE ESTATES PROJECTS PVT.LTD. (SUPRA) HELD THAT U/S. 145(2) AND (3) OF THE ACT, ACCOUNTING STANDARDS NOTIFIED IN THE OFFICIAL GAZ ETTE FOR THE PURPOSE OF THE ACT HAS TO BE MANDATORILY FOLLOWED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT AS - 7 IS NOT A NOTIFIED ACCOUNTING STANDARD AND THE AO CANNOT THRUST AN ACCOUNTING STANDARD WHICH IS NOT NOTIFIED TO BE FOLLOWED BY THE ASSESSEE. IT HAS BEEN ONE OF THE PLEA PUT FORTH BY THE ASSESSEE THAT UNDER AS - 9 NOTIFIED BY THE ICAI, IN CASES WHERE SERVICE IS PROVIDED, IT ONLY WHEN SUBSTANTIAL RENDERING OF SERVICES IS COMPLETED THAT THE REVENUE SHOULD BE RECOGNIZED. THE ASSESSEE SEEKS TO JUSTIFY F OLLOWING THE PROJECT COMPLETION METHOD BASED ON AS - 9. THE RECOGNIZED METHOD OF ACCOUNTING U/S.145(1) OF THE ACT IS EITHER CASH SYSTEM OR MERCANTILE SYSTEM. THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AS PER THE ORDER OF ASSESSMENT IS MERCANTILE SY STEM . THE MANNER IN WHICH THE ASSESSING OFFICER DETERMINED THE INCOME OF THE ASSESSEE FOR AY 09 - 10 IS NOT IN TUNE WITH THE MERCANTILE SYSTEM OF ACCOUNTING. IF MERCANTILE SYSTEM OF ACCOUNTING IS TO BE APPLIED THEN IN THE YEAR OF ENTERING INTO AGREEMENT F OR SALE WITH A PROSPECTIVE PURCHASER OF FLAT THE AGREED SALE CONSIDERATION HAS TO BE ACCOUNTED AS INCOME/CREDIT SIDE OF PROFIT AND LOSS ACCOUNT AND THE EXPENSES INCURRED INCLUDING THE COST OF CONSTRUCTION HAS TO BE DEBITED. IF THAT IS DONE THAN THE PROFIT S IN THE INITIAL YEARS OF THE PROJECT, ASSUMING THAT GOOD NUMBER OF FLATS IN THE PROJECT ARE SOLD IN THE FIRST YEAR, WOULD BE HIGH AND WOULD DECLINE TOWARDS THE COMPLETION OF THE PROJECT. IN THAT VIEW OF THE MATTER, THE PERCENTAGE COMPLETION METHOD WOULD NOT BE STRICTLY IN TUNE WITH THE MERCANTILE SYSTEM OF ACCOUNTING. FOR THE VERY SAME REASON EVEN PROJECT COMPLETION METHOD OF ACCOUNTING WOULD NOT BE STRICTLY IN TUNE WITH THE MERCANTILE SYSTEM OF ACCOUNT. 17. WE ARE ALSO OF THE VIEW THAT THE AO CANNOT THRUST ANY PARTICULAR METHOD OF ACCOUNTING ON THE ASSESSEE. IN THIS REGARD, EVEN THE UNAMENDED AS - 7 WHICH APPLIED TO CONSTRUCTION CONTACTS COULD NOT HAVE BEEN THRUST UPON THE ASSESSEE WHO IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. UNDER SECTION 145(2 ) OF THE ACT, THE ASSESSEE IS FREE TO ADOPT EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING. WHEN A METHOD OF ACCOUNTING IS FOLLOWED BY THE ASSESSEE, THE JURISDICTION OF THE AO ONLY EXTENDS U/S. 145(2) OF THE ACT TO VERIFY AS TO WHETHER THE METHOD OF ACCOU NTING IS BEING REGULARLY FOLLOWED BY THE ASSESSEE. BEYOND THIS, THE AO HAS NO JURISDICTION IN THE MATTER OF ACCOUNTING FOLLOWED BY THE ASSESSEE. ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 7 18. THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. REMA COUNTRY HOLDINGS LTD. ITA NO.1041 & 1042/2 006 ORDER DATED 26.9.2011 HAS ALSO TAKEN THE VIEW THAT PROJECT COMPLETION METHOD IS A RECOGNIZED METHOD OF ACCOUNTING AND CAN BE FOLLOWED BY ASSESSEE. WE MAY ALSO ADD THAT R EAL ESTATE DEVELOPERS ARE NOT PURE CONTRACTORS BUT ARE SELLERS OF FLATS. IT IS NOT MANDATORY FOR ALL REAL ESTATE DEVELOPERS TO FOLLOW PERCENTAGE COMPLETION METHOD AS PER AS - 7 PRESCRIBED BY ICAI. THE AS - 7 RECOGNIZES THE POSITION THAT IN THE CASE OF CONSTRUCTION CONTRACTS THE ASSESSEE COULD FOLLOW EITHER THE PROJECT COMPLETION METHOD OR P ERCENTAGE COMPLETION METHOD. THE APEX COURT IN THE CASE OF CIT V. HYUNDAI HEAVY INDUSTRIES CO. LTD., [2007] 161 TAXMAN 191 (SC) ALSO TOOK THE SIMILAR VIEW AND HELD THAT BOTH THE METHODS OF ACCOUNTING ( I.E., PROJECT COMPLETION METHOD AND COMPLETED CONTRACT METHOD) WERE RECOGNIZED METHODS OF ACCOUNTING. THE ASSESSEE WAS AT LIBERTY TO CHOOSE ANY OF THE ABOVE METHODS AND IF ANY ONE OF THE METHOD OF ACCOUNTING WAS CONSISTENTLY FOLLOWED BY THE ASSESSEE, THE AO COULDN T CHANGE SUCH METHOD OF ACCOUNTING. THE COMP LETED CONTRACT METHOD FOLLOWED BY THE ASSESSEE, IN THE INSTANT CASE, THEREFORE, COULD NOT BE FAULTED WITH BY THE REVENUE AUTHORITIES AND ON THAT BASIS IT WAS NOT CORRECT TO SAY THAT THE ACCOUNTS OF ASSESSEE DID NOT PRESENT CORRECT AND COMPLETE PICTURE OF I TS PROFITS. THEREFORE, THERE WAS NO JUSTIFICATION IN CHANGING THE METHOD FROM PROJECT COMPLETION TO PERCENTAGE COMPLETION METHOD BY THE AO, WHICH WAS UPHELD BY THE CIT(A). THEREFORE, THE ORDER OF THE COMMISSIONER (APPEALS) IS SET ASIDE. 19. FOR THE REAS ONS GIVEN ABOVE, WE ALLOW THE APPEAL OF THE ASSESSEE AND HOLD THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE HAS TO BE ACCEPTED. FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEA R 2009 - 10 (SUPRA), WE ALLOW THE APPEAL OF THE ASSESSEE ON THIS ISSUE, HOLDING THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE I.E. PROJECT COMPLETED METHOD HAS TO BE ACCEPTED. 8. IN THE GROUND RAISED AT S.NO.5 , THE ASSESSEE DENIES ITS LIABILIT Y TO PAY INTEREST U/S.234A AND 234B OF THE ACT THAT HAS BEEN WRONGLY CHARGED. THE CHARGING OF INTEREST IS ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 8 CONSEQUENTIAL AND MANDATORY AND THE ASSESSING OFFICER HAS NO DISCRETION IN THE MATTER AND IN THIS VIEW OF THE MATTER, WE UPHOLD HIS ACTION IN CHARGIN G THE SAID INTEREST. THIS PROPOSITION HAS BEEN UPHELD BY THE HON'BLE APEX COURT IN THE CASE OF ANJUM H GHASWALA & OTHERS REPORTED IN 252 ITR 1 (SC). THE ASSESSING OFFICER IS , HOWEVER , DIRECTED TO RECOMPUTE THE INTEREST CHARGEABLE U/S.234A AND 234B OF THE ACT, IF ANY, WHILE GIVING EFFECT TO THIS ORDER. 9. IN THE RESULT, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS PARTLY ALLOWED. REVENUE S APPEAL FOR A.Y. 2010 - 11 IN ITA NO.1707/BANG/2013 10.1 IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWI NG GROUNDS : - 1. THE ORDER OF LEARNED CIT (APPEALS) IS CLEARLY OPPOSED TO LAW AS FAR AS THE FINDINGS ARE PERVERSE, CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE NOT SUSTAINABLE. 2. THE CIT (APPEALS) ERRED IN GRANTING PROPORTIONATE DED UCTION U/S. 80IB(10) IN RESPECT OF PROFITS EARNED ON FLATS WHICH COMPLIED WITH THE PRESCRIBED LIMIT OF BUILT UP AREA, ALTHOUGH THE PROVISIONS OF SECTION 80IB(10) DO NOT EXPRESSLY ALLOW SUCH PROPORTIONATE DEDUCTION AND THE SECTION ENVISAGES TOTAL COMPLIANCE OF THE HOUSING PROJECT AS A WHOLE WITH THE CONDITIONS MENTIONED THEREIN. 3. THE CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ISSUE OF GRANTING PROPORTIONATE DEDUCTION UNDER SECTION 80IB(10) IN THE ABOVE MANNER HAS NOT BECOME FINAL AS THE DEPARTMENT S APPEALS U/S.260A ON BANGALORE ITAT ORDERS ON IDENTICAL ISSUE IN MANY CASES ARE PENDING BEFORE THE HON'BLE HIGH COURT. 4. THE CIT (APPEALS) ERRED IN ALLOWING PROPORTIONATE DEDUCTION UNDER SECTION 80IB(10) ALTHOUGH NO SUCH ALTERNATIVE CLAIM WAS MADE IN THE ORIGINAL RETURN AND ACCORDINGLY CONTRAVENED THE PROVISIONS OF SECTION 80A(5). THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED AND VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 9 10.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT (APPEALS) ON THIS ISSUE IN ALLOWING THE ASSESSEE PROPORTIONATE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTAT IVE THAT THE ISSUE IN QUESTION IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). IT WAS SUBMITTED THAT, IN VIEW OF THE DECISION OF THE CO - ORDINATE BENCH (SUPRA), REVENUE S APPEAL OUGHT TO BE DISMISSED. 10.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISION RELIED ON BY THE LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE (SUPRA). WE FIND THAT THE SINGLE ISSUE IN REVENUE S APPEAL , AGAINST THE ALLOWABILITY OF PROPORTIONATE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT , WAS CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE BY A CO - ORDINATE BENCH OF THIS TRIBUN AL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10(SUPRA) WHEREIN AT PARA 11 THEREOF IT HAS BEEN HELD AS UNDER : - 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS FAR AS THE APPEAL OF THE REVENUE IS CONCERNED, WE ARE OF THE VIEW THAT THE QUESTION AS TO WHETHER DEDUCTION U/S. 80IB(10) OF THE ACT HAS TO BE ALLOWED PROPORTIONATE TO THE PROFITS DERIVED FROM SALE OF RESIDENTIAL UNITS WHOSE BUILT - UP AREA IS LESS THAN 1500 SQ.FT., EVEN THOUGH SOME OF THE RESIDENTIAL UNITS IN THE VERY SAME PROJECT EXCEEDS THE BUILT - UP AREA OF 1500 SQ.FT., THE SAME HAS BEEN DECIDED BY THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. SJR BUILDERS IN ITA NO.32 OF 2010 DATED 19.03.12. THE HON BLE HIGH COURT HAS TAKEN THE VIEW CONFIRMING THE ORDER OF THE TRIBUNAL, BY HOLDING THAT WHERE RESIDENTIAL UNITS ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 10 EXCEED THE BUILT - UP AREA OF 1500 SQ.FT., SUCH UNITS MAY BE EXCLUDED FOR DEDUCTION, BUT THE ASSESSEE WILL NOT LOSE THE BENEFIT OF DEDUCTION U/S. 80IB(10) IN ITS ENTIRETY. IT IS ONLY WITH REFERENCE TO THE FLATS WHICH IS MORE THAN THE PRESCRIBED AREA THAT THE ASSESSEE WILL LOSE THE BENEFIT OF DEDUCTION. THE TRIBUNAL IN ITS DECISION HAD FOLLOWED THE RULING OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES V. JCIT (313 ITR (AT) 268 (PUNE) (SB). SEVERA L OTHER DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL WERE FILED IN THE PAPER BOOK TAKING SIMILAR VIEW. IN VIEW OF THE AFORESAID DECISION OF THE HON BLE HIGH COURT OF KARNATAKA, WE ARE NOT MAKING ANY REFERENCE TO THOSE DECISIONS. IN VIEW OF THE AFORESAID DECISION OF THE HON BLE KARNATAKA HIGH COURT, WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE APPEALS OF THE REVENUE AND THE SAME ARE DISMISSED. 10.3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V S JR BUILDERS IN ITA NO.32 OF 2010 DT.19.3.2012 AND OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THIS APPEAL OF REVENUE AND THEREFORE DISMISS THE GROUND S RAISED. 11. IN THE RESULT, REVENUE S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. STAY PETITION IN ITA NO.128/BANG/2014 FOR A.Y. 2010 - 11. 12. IN VIEW OF THE CROSS APPEALS FOR ASSESSMENT YEAR 2010 - 11 IN ITA NOS.1366 & 1707/BANG/2013 BEING DISPO SED OFF AS ABOVE, THIS STAY PETITION PREFERRED BY THE ASSESSEE IS RENDERED INFRUCTUOUS AND IS THEREFORE ACCORDINGLY DISMISSED. ITA NO S . 1366 & 1707 /BANG/ 2013 & S.P. NO.128/BANG/2014 11 13. TO SUM UP, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS PARTLY ALLOWED WHILE REVENUE S APPEAL FOR THE SAM E YEAR IS DISMISSED. THE ASSESSEE'S STAY PETITION FOR A.Y. 2010 - 11 IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DEC., 201 4 . SD/ - SD/ - ( RAJPAL YADAV ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPE LLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, BANGALORE