The Income Tax Appellate Tribunal (ITAT), Pune Bench ruled that Deduction under section 80IB(10) of the Income Tax Act, 1961 allowable on the sum received as ‘On-Money’ on flat bookings.
The assessee, M/s. Surana Mutha Bhasali Developers is a builder, promoter, and developer. A survey was conducted during which it transpired that it received on-money amounting to Rs.5.57 crores on flat bookings in the Sri Shantisagar Project, which was not recorded in the books of account. Such a sum was offered for taxation and the return was accordingly filed declaring total income at Rs.5,30,50,000 including the amount surrendered at Rs.5.57 crores. Later on, the assessee filed a revised return declaring total income at Rs.2,79,640 by claiming deduction under section 80IB(10) of the Act amounting to Rs.5,27,70,356 which was not claimed in the original return of income.
The AO called upon the assessee to submit details of Rs.5.57 crores with the name and address of the persons who allegedly gave on-money along with their address etc. The assessee complied with the same and furnished a list of such 42 persons. Thereafter, the AO required the assessee to produce the persons, for which the assessee expressed its inability. The AO issued notices u/s 133(6) of the Act and also recorded statements of 12 persons u/s 131 of the Act, all of whom denied having given any on-money to the assessee. In view of these facts, the AO came to the conclusion that the assessee could not prove that the sum of Rs.5.57 crores was received as on-money on flat bookings, and hence such an amount was not eligible for deduction u/s 80IB(10) of the Act. The CIT(A) echoed the assessment order, against which the assessee has come up in appeal before the Tribunal.
The Coram headed by the Vice President R.S.Syal and Judicial Member S.S. Viswanethra Ravi said that the doctrine of approbate and reprobate does not allow the Department to blow hot and cold in the same breath, thereby accepting one consequence arising from the statement of the assessee while rejecting the other one. When the assessee made a surrender with the clear backdrop of having received `on money’ and the Revenue accepted the same while including it in the total income, it cannot, later on, claim that no deduction u/s 80IB(10) can be granted on the same as the assessee failed to prove that the flat bookers gave such on-money.
“If we accept the viewpoint of the Revenue that source of the income is unexplained and does not pertain to the housing project, then, in the given facts, when there is no positive material other than the assessee’s statement of receiving such an amount as `on money, then there is no income in the first instance calling for its inclusion in the total income. Once it is agreed to be `on money from the flats-bookings at the time of its inclusion in the total income, a fortiori, such an income, being from the sale of flats albeit received as on-money, qualifies for the deduction as well,” the ITAT said.
Therefore, the ITAT overturned the impugned order on this score and ordered a deduction under section 80IB(10) on such an amount.
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