TMI Blog2011 (6) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... passed. 4) On facts and circumstances of the case and in law learned CIT(A) has erred in following the decision of Pune Special Bench in case of Bramha Associates Vs. JCIT (2009) 122 TTJ (Pune) SR 433 where Hon'ble ITAT has erred in directing to allow deduction u/s. 80IB(10) if commercial area is less than 10% of total constructed area which is not provided in section 80IB(10). 5) The order of learned CIT(A) may be vacated and that of the Assessing Officer be restored. 2. Facts of the issue i.e. before us is brought out by the Assessing Officer in the assessment order on page No. 10 to 18. To mention briefly, assessee claimed deduction u/s. 80IB(10) on construction of residential flats under the name and style M/s. Rashmi Complex. A Government approved valuer, in the presence of the assessee and the Assessing Officer undertook measurement and found that only one flat exceeded the built up area of 1000 square feet. When questioned, the assessee replied that they are two flats bearing No. 5 6 and they were sold under different agreements and they were approved as two different flats and it was only on the request of the purchaser that the structure was changed. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested that the appellant be allowed the deduction as the project has fulfilled all the conditions. He also relied upon the decisions in the case of M/s. Saroj Sales Organisation and M/s. Brahma Associates. The argument is heard and considered. In view of the decisions in the case of M/s. Brahma Associates, I hold that the appellant cannot be denied the deduction on the ground that the commercial area has exceeded 2000 square ft. and in view of the decision in the case of M/s. Bengal Ambuja Housing Developing Ltd., I hold that the appellant is entitled for allowance of deduction on prorate basis. Accordingly, the Assessing Officer is directed to allow deduction in respect of income of the residential units up area of which has not exceeded 1000 square feet. 6. Aggrieved, the revenue is in appeal on the grounds that were extracted above. 7. We have heard Mr. M.R. Kubal, Senior Departmental Representative and Shri Ramesh R. Pandey, learned counsel for the assessee. Following two issues have come up before us for consideration. (a) Whether first appellate authority was right in holding that the assessee is entitled to proportionate deduction as single residential unit exceede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27(1)(c) for wrong claim of deduction under section 80IB(10). ii) The issue as to whether, some of the residential units in the assessee s project exceeding the built up area of 1,000 sq.ft. or not, need not be adjudicated by us as no deduction under section 80IB(10) is claimed on income derived from the units by the assessee. The short point for our adjudication is, on the facts and circumstances of the case, whether the assessee is entitled to proportionate deduction under section 80IB(10). iii) The Nagpur Bench of this Tribunal in AIR Developers (supra), held as follows:- Therefore, A.O. is directed to determine the built-up area of the residential units by applying the Development Control Regulation, 2000, and to allow proportionate deduction under section 80IB(10) if he finds that the built-up area of some of the residential units exceeds 1,500 sq.ft. iv) Bangalore Bench of this Tribunal in DCIT v/s Brigade Enterprises Pvt. Ltd., has held as under:- Therefore, if a particular unit satisfies the condition of section 80IB, the assessee is entitled for deduction and it should be denied in respect of those units only which do not satisfy the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) by reversing the order of the A.O. vi) Bangalore A Bench of this Tribunal in SJR Builders (supra), held that merely because some flats are larger than 1,500 sq.ft., the assessee will not lose the benefit in its entirety but only with reference to the flats which has more than pescribed built up area, the assessee will lose the benefit . vii) Thus, different Benches of the Tribunal have taken a view that, in case, some residential house have a built up area in excess of 1,000 sq.ft., the assessee would not lose the total exemption under section 80IB(10) in its entirety but will only lose the proportionate exemption, under section 80IB(10). viii) We now examine the applicability of the decision of the Hon'ble Bombay High Court in Brahma Associates (supra) to the facts of this case. On a careful reading of this judgment, we find that nowhere it is stated that proportionate deduction should not be allowed, in case certain residential units had built up area in excess of prescribed limit of 1,000 sq.ft. In fact, this issue was not before the Hon'ble Jurisdictional High Court. The questions before the Hon'ble Jurisdictional High Court were different and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and hence the assessee was entitled to section 80IB(10) deduction on the entire project approved by the local authority. However, the assessee has not challenged the decision of the Tribunal in restricting the deduction to a part of the project. Therefore, while holding that in law, the assessee was entitled to section 80IB(10) deduction on the profits of the entire project, in the facts of the present case, since the assessee has not challenged the decision of the Tribunal, we are not inclined to disturb the decision of the Tribunal in restricting the section 80IB(10) deduction only in respect of the profits derived from 15 residential buildings. ix) Thus, it could be seen that the Hon ble High Court do not approve the findings of the Tribunal that a residential building with commercial user up to 10% of the plot area would alone be entitled to deduction under section 80IB(10). The issue that, in case where certain residential units are of a built up area in excess of the prescribed limit of 1,000 sq.ft. in residential project, this would result in the entire exemption being lost, or whether the assessee would be entitled to a proportionate deduction was not before the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction on eligible residential units. Thus, respectfully following the above judgments of the various ITAT and Courts and particularly the jurisdictional ITAT in the case of Saroj Sales Organisation (supra), I hold that assessee is entitled for deduction under section 80IB on pro-rata basis. The A.O. is therefore, directed to allow the deduction under section 80IB(10) on pro-rata basis as discussed above. This ground of appeal is allowed. 12. In the result, Revenue s appeal is dismissed. 9. Respectfully following the same, that issue is decided in favour of the assessee. 10. Coming to the issue whether the law is amended by the Finance Act 2004 with effect from 1.4.2005 applies to plan approved prior to 1.4.2005 we find that Mumbai E Bench of the Tribunal in the case of Saroj Sales Organisation Vs. ITO (2008) 115 TTJ (Mum) 485 at paragraph 13 held as follows :- 13. As regard the objection of the Assessing Officer that the permissible shopping area of housing project exceeds 5 per cent, the assessee is not entitled for relief under section 80IB(10). We are of the view that the housing project were approved before 31st March, 2005 and for such project which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oj Sales Organisation (supra) and at paras 24 to 27 have held as under: 24. Now we will deal with main issue in this appeal, i.e., whether the law as it existed in the asst. yr. 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17th Nov., 2003 and when the assessee commenced development is to be applied or the law as amended by the Finance Act, 2005 w.e.f. 1st April, 2005 whereby it was laid down that the built-up area of the shops and commercial establishment included in the housing project should not be more than5 per cent of the total built-up are of the project or 2,000 sq. ft. whichever is less is to be applied ? On the above issue, we have already noticed that co-ordinate Benches of Tribunal have already expressed opinion. The decision in the case of Saroj Sales Organisation (supra) is directly on the issue. Judicial discipline demands that we should follow decision of a Co-ordinate Bench on identical facts. 25. The provisions of s. 80-IB (10) as it stood at different periods have already been given by us. An analysis of the same shows the following conditions were required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval was given on or after 1-4- 2004. (e) Size of the plot of land for the project should have a minimum of 1 acre. (f) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. (g) The built-up area of the shops and commercial establishment included in the housing project should not be more than 5% of the total built-up area of the project or 2,000 sq. ft. whichever is less. It is noticed that the provisions as it stood at different point of time uniformly contemplates approval by local authority. From asst. yr. 2002-03 time of approval by the local authority assumed importance. Commencement of project is not of any importance because it dates back to 1st Oct., 1998 the starting point when the incentive provision providing for deduction of profits from housing projects were introduced. Up to asst. yr. 2004-05, the provision did not impose any period within which the project has to be completed, except in asst. yrs. 2000-01 and 2001-02. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee commenced development is to be applied. Therefore, the submissions of the learned Departmental Representative in this regard cannot be accepted. We are of the view that the legislature would not have intended to take away a vested right without clear words to that effect in the provisions of s. 80-IB(10) as amended by the Finance Act, 2005, w.e.f. 1st April, 2005. We, therefore, hold following the decision in the case of Saroj Sales Organisation (supra) that the law as it existed in the asst. yr. 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17th Nov., 2003 and when the assessee commenced development is to be applied. 7 Respectfully following the decision of the coordinate Benches of the Tribunal in the case of Hiranandani Akruti, JV (supra) and the decision in the case of Saroj Sales Organisation (supra) and in absence of any contrary decision or distinguishable feature brought on record by the ld DR, we find no infirmity in the order of the ld CIT(A) deleting the disallowance. The grounds raised by the revenue are accordingly dismissed. 12. This view that the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
