The Pr Commissioner Ofincome Tax vs M/S S N Builders And Developers
2021 Latest Caselaw 1241 Kant

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     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 20TH DAY OF JANUARY, 2021

                       PRESENT

     THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA

                         AND

        THE HON'BLE MR. JUSTICE V. SRISHANANDA

                 I.T.A. NO.739 OF 2018

BETWEEN:

1.     THE PR. COMMISSIONER OF INCOME-TAX
       BENGALURU-4, B.M.T.C. COMPLEX
       80 FEET ROAD, KORAMANGALA,
       BENGALURU-560 095

2.   THE ASST. COMMISSIONER OF INCOME TAX
     CIRCLE-4(3)(1), BENGALURU,
     BMTC COMPLEX,
     80 FEET ROAD, KORAMANGALA,
     BENGALURU-560 095
                                     .... APPELLANTS
(BY MR. T.N.C. SRIDHAR, ADVOCATE)

AND:

M/S. S N BUILDERS & DEVELOPERS
SNN AGORA, RAJ LAKE VIEW
NO.3761, 29TH MAIN, BTM II STAGE
N.S.PALYA MAIN ROAD
BANGALORE-560 076.
                                      ... RESPONDENT
(BY MR. A. SHANKAR, SR. COUNSEL FOR
    MR. M. LAVA, AND MR BHAIRAV KUTTAIAH, ADVS.,)
                         ---
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      THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME
TAX ACT 1961, ARISING OUT OF ORDER DATED 20.04.2018
PASSED IN ITA NO.731/BANG/2017 FOR THE ASSESSMENT
YEAR 2013-14, PRAYING TO:
      (i) DECIDE THE FOREGOING QUESTION OF LAW AND /
OR SUCH OTHER QUESTIONS OF LAW AS MAY BE
FORMULATED;
      (ii) SET ASIDE THE APPELLATE ORDER DATED
20.4.2018 PASSED BY THE INCOME TAX APPELLATE
TRIBUNAL, 'B' BENCH, BANGALORE, AS SOUGHT FOR, IN
THE      RESPONDENT-ASSESSEE'S    CASE,    IN   APPEAL
PROCEEDINGS IN ITA NO.731/BANG/2017 ASSESSMENT
YEAR 2013-14. AND ETC.,

     THIS I.T.A. COMING ON FOR ADMISSION, THIS DAY,
V. SRISHANANDA. J., DELIVERED THE FOLLOWING:


                        JUDGMENT

The Revenue is in appeal under Section 260-A of the

Income Tax Act, 1961 (hereinafter referred to as 'the Act',

for short). The subject matter of the appeal pertains to the

Assessment Year 2013-14.

2. Though this appeal is listed for admission, the

matter is taken up for final hearing with the consent of the

parties.

3. In the appeal Memorandum following substantial

questions of law are framed:

"(i) Whether on the facts and circumstances of the case, the Tribunal was justified in directing the Assessing Officer to allow proportionate deduction under Section 801B(10) of the Act to the extent of profits attributable to the units where the built up area is below 1500 Sq. Ft.

even when no such apportionment is
prescribed          under   the      scheme      of
Section 801B(10)(C) of             the Income-
Tax Act?

      (ii)         Whether, on the facts and

circumstances of the case, the Tribunal was justified in law holding that the assessee is entitled to claim deduction under Section 801B(10) of the Act in respect of profits derived from the sale of residential units where in built up area is below 1500 Sq. Ft without appreciating that deduction under Section 801B(10) of the Act is project based rather than unit and there is no concept of proportionate deduction under Section 801B(10)(C) of the Act?"

4. Heard Sri S.Shankar, learned Senior Counsel

representing Sri Lava M. and Sri. Bhairav Kuttaiah for

respondent-assessee and Sri T.N.C. Sridhar, learned counsel

for the revenue.

5. Facts in brief for disposal of this appeal are as

under:

The assessee is a firm engaged in the business of real

estate and construction of apartments. For the Assessment

Year 2013-14, the assessee filed returns declaring the

income of Rs.9,02,72,260/- under the head business and

other sources. In the said return, the assessee claimed

deduction in a sum of Rs.11,16,20,995/- as deduction under

Section 801B(10) of the Income Tax Act. The assessing

Officer, on examination of the eligibility criteria as is

stipulated under Section 801B(10) of the Income Tax Act

concluded that the respondent did not fulfill the condition 'C'

laid down in the said provision and disallowed the deduction

vide assessment order dated 5.3.2016 (Annexure-B)

6. Being aggrieved by the said assessment order,

assessee preferred an appeal before the Commissioner of

Income Tax (Appeals). The Commissioner of Income Tax, by

his order dated 24.12.2016, in ITA No.359/ACIT-

C4(3)(1)/CIT(A)-4/2015-16, allowed the appeal and set

aside the assessment order, inter alia, holding that derivation

of profit based on percentage completion method by the

assessee is correct and assessee is entitled to proportionate

deduction under Section 801B(10) of the Act in respect of

the flats which conform to the limits prescribed under the

relevant provisions of the Act.

7. The Revenue being aggrieved by the order passed

by the Commissioner of Income Tax (Appeals) approached

the Income Tax Appellate Tribunal (hereinafter referred to as

'the Tribunal' for short). The Tribunal by Order dated

20.04.2018 dismissed the appeal of the Revenue by placing

reliance on the order of this Court reported in 'CIT Vs. SJR

BUILDERS' in ITA No.32/2010 dated 19.03.2012 and

confirmed the order passed by the Commissioner and held

that the assessee is eligible for deduction under Section

80IB(10) of the Act proportionately. The present appeal is

filed by the Revenue against the order of the Tribunal with

the substantial questions of law referred to supra.

8. Learned counsel for the revenue argued that the

Tribunal grossly erred in dismissing the appeal of the

Revenue and confirming the order of the Commissioner

whereby the assessee has been granted the benefit of

proportionate deduction under Section 80IB(10) of the Act.

It is further argued that the assessee is not entitled for

proportionate deduction under Section 80IB(10) of the Act as

the provision do not envisage such deduction and one of the

conditions which is required is a cine qua non for claiming

deduction under Section 80IB(10) of the Act is that the total

built up area of the residential units in the housing project

should not exceed 1500 square feet.

9. In the case on hand, assessee has failed to satisfy

the said condition. It is also urged that the Tribunal erred in

holding that the project completion method is a recognized

method of accounting without properly examining as to

whether the assessee is entitled to project completion

method in the absence of assessee placing regular books of

accounts. It is also pointed out that the Tribunal has placed

reliance on the decision rendered in 'M/S. PRESTIGE

ESTATE PROJECTS PVT. LTD. Vs. DCIT'.. However, the

aforesaid order of the Tribunal was the subject matter of the

appeal before this Court in ITA No.84/2010 wherein this

Court by order dated 05.05.2020 held that the percentage

completion method is applicable to the assessee and

therefore, the assessee should have followed the percentage

completion method for the Assessment Year 2013-14 also.

10. Per contra, the learned Senior counsel representing

the assessee submitted that the substantial questions of law

raised in the appeal memorandum is answered by this Court

in ITA No.393/2014 passed on 7.1.2021 in respect of the

same assessee for the year 2009-10, which has been made

available to this court. The learned Senior Counsel further

contended that since the issue involved in the present appeal

is squarely covered by the judgment of this Court in ITA

No.393/2014 and similar orders are required to be passed in

the present appeal also.

11. We have carefully perused the order dated

7.1.2021 passed by the co-ordinate bench of this Court in

ITA No.393/2014. The said order pertains to the very same

assessee for the assessment year 2009-10.

12. For the reasons recorded in the said judgment,

since this appeal is for the assessment year 2013-14, we are

of the considered opinion that the decision rendered in ITA

No.393/2014 dated 7.1.2021 would be squarely applicable to

the present appeal also.

In the light of the reasons recorded in the aforesaid

decision, the appeal fails and accordingly, it is dismissed.

SD/-

JUDGE

SD/-

JUDGE

PL*