The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the sales proceeds of car parking spaces being an integral part of the housing project shall be eligible for income tax deduction under section 80-IB(10) of income tax Act, 1961.
The assessee company, M/s Bharat Agri Fert & Realty Ltd, is engaged in the business of construction and manufacturing of fertilisers. The AO had rejected the deduction claim of the assessee on the ground that the income earned by sale of car parking cannot be part of business income and the same has to be assessed under the head ‘Income from other sources’.
The Assessing Officer further to this has relied on the decision of the Apex Court in the case of Nahalchand Laloochand PvT Ltd vs Panchali Cooperative Housing Society which held that stilt car parking spaces are part of the common amenities and cannot be sold independently as a flat nor appurtenant or attachment to a flat. The AO disallowed the assessee’s claim for deduction under section 80-IB(10) on this proposition of law laid down by the Apex Court.
On appeal, the CIT(A) has also reiterated this proposition emphasised by the AO and held that the charges of car parking are inclusive of the total consideration of the flat and had distinguished the facts of the case in M/s Vaman Estate.
A bench of Shri B.R Baskaran (Accountant Member) & Smt. Kavitha Rajagopal (Judicial Member) observed that the assessee company has declared income of Rs. 28,80,000/- on sale of car parking and had claimed deduction on the same under section 80IB (10).
Allowing relief to the assessee, the Tribunal held that “As there is no distinguishing feature brought on record by the Revenue in this present appeal, we are hereby deciding this issue in favour of the assessee. It is also pertinent to point out that the decision by the Apex Court in Nahalchand Laloochand PvT Ltd vs Panchali Cooperative Housing Society (supra), the issue pertains to whether stilt / open parking space can be sold by the promoter as ‘flat’ within the meaning of section 2(a-1) of Maharashtra Apartment Ownership Act, 1970 was the issue before Hon’ble Supreme Court and this decision is distinguishable with the facts of the present appeal as the issue in the present appeal pertains to deduction under section 80-IB(10) of the Income Tax Act, 1961.”
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