Examination of Nature of Work and Income necessary for granting Deduction for Housing projects u/s801B (10): ITAT [Read Order]

Income Tax Appellate Tribunal (ITAT), Pune held that examination of nature of work and income necessary for granting deduction for housing projects u/s801B (10).

The assessee, Ravindra Champalal Khinvasara is a developer and promoter in real estate. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee claimed deduction u/s.80IB (10), inter alia, on receipts from ‘extra work’ done amounting to Rs.2,99,910/-. The assessee was asked to furnish the details of such extra work, which he could not. In the absence of such details, the AO rejected the claim of deduction on it. The CIT(A), too, upheld the disallowance pro tanto. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

R S Syal, Vice President observed that “It is an admitted position that the assessee is otherwise eligible for deduction u/s.80IB (10) in respect of one of its projects, namely, ‘Khinvasara Fort’. The AO did not dispute the otherwise allowability of deduction of income from the ‘Khinvasara Fort’ project, but observed that the assessee could not furnish any evidence as to the nature of ‘extra work’ on which the deduction was also claimed.

Similar position remained before the CIT(A) as well that the assessee could lead no evidence to demonstrate the nature of extra work. Here, it is relevant to note that section 80IB (10) provides deduction at 100% of profit derived from the housing project which fulfils the requisite conditions. It is only the profit from the eligible project which qualifies for deduction. If the developer also undertakes certain other works unconnected with development of project and charges separately from customers, that income cannot qualify for the deduction.

Thus, the examination of nature of work done and the resultant income becomes sine qua non for granting or not granting of deduction u/s.80IB (10). In view of the fact that the assessee failed to lead any evidence whatsoever to show the nature of extra work done, the action taken by the authorities below cannot be taken exception to.”

To Read the full text of the Order CLICK HERE

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