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2010 (2) TMI 1187 - AT - Income TaxDeduction u/s 80IB(10) - non adherence to condition is that the housing project should be on the size of plot of land which has a minimum area of one acre - claim denied as the project was not a 100% residential project - assessee submitted that there is no such strict condition prescribed in the section and at any rate the commercial construction amounted only to 1.36% of the total project area of 136475 sq.ft. and there is thus substantial compliance with the condition, if at all there is any, prescribed by the section and at any rate the area occupied by the commercial space was very very negligible - CIT(A) agreed with the view taken AO and took the view, total area of the plot was 4600 sq. metres, the area of 656.75 sq. metres had to be excluded for the D.P. Road and if this is excluded, the size of the plot would be reduced to 3943.25 sq.metres, which is less than one acre (one acre equals 4050 sq. metres). HELD THAT:- On issue of housing project was not entirely residential but was partially commercial, the same is governed by the order Brahma Associates [2009 (4) TMI 215 - ITAT PUNE] as held that the margin of 10% can be given for commercial area and so long as the commercial space in the built up area is less than 10% of the total built up area, the claim for deduction u/s 80IB(10) cannot be denied. This order supports the assessee’s claim that the commercial area of ‘Umiya Complex’ being only 1.36% of the total built up area, the deduction cannot be refused. Assessee’s claim cannot be refused on this ground namely the ground that the assessee did not satisfy the condition prescribed by clause (c) of section 80IB(10). Denial on basis of clause (b) of section 80IB(10) - In addition to the fact that the assessee itself has treated the entire project as a single project, though it was spread over two plots of land, we find from the annexure to the development agreement that both the plots are contiguous to each other. There is no condition in the clause that recreation area has to be excluded while examining whether the plot is of the size of one acre or less. If the recreation area of 591.49 sq. metres is added to the total plot area of 3597.91 sq. metres, it gives an area of 4189 sq. metres which is the size of the plot. The total plot area has been arrived at by MNP 3597.51 only for the purpose of calculating the permissible FSI. The permissible FSI as per column 9 of the area statement is one, which means that the assessee can build 3597.91 sq.metres in the said plot. However, for the purpose of clause (b) of section 80IB(10), the plot area has been taken at 4189 sq. metres, if not at 4600 sq. metres, even on this basis, the size of the plot is more than one acre. In our opinion, the CIT(A) committed an error in simply excluding 656.75 sq.metres from the area of 4600 sq.metres without appreciating that the exclusion is only for the purpose of D.P. Road which does not reduce the size of the plot as a whole. We are therefore satisfied that there is no violation of the conditions prescribed by clause(b). Direct AO to allow the deduction claimed by the assessee u/s 80IB(10) - Decided in favour of assessee.
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