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2015 (3) TMI 980 - AT - Income TaxEligibility for deduction u/s. 80IB(10) on profits arising from commercial building - Held that:- The claim of the assessee qua decision in the case of Brahma Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] is totally misplaced because in the case what the Hon’ble High Court held that clause (d) was inserted to Sec. 80IB(10) w.e.f. 1.4.2005 and is prospective and not retrospective and hence could not be applied for the period prior to 1.4.2005 which means that the amendment is not applicable to the projects approved before 1.4.2005. Further it has been mentioned that since the expression Housing Project is not defined in the Act nor defined under regulation framed by the Local authorities from whether the project would qualify as a housing project has to be gathered from the rules/regulation framed by the local authority. Since the local authorities could approve a project to be a housing project with or without the commercial user, it is evident that the legislature intended to allow Sec. 80IB(10) deduction to all housing projects approved by local authority without all with commercial user to the extent permitted under the rules. This is further verified by clause (d) of Sec. 80IB(10) inserted with effect from 1.4.2005. It provides that even though shops and commercial establishments are included in the housing project, deduction u/s. 80IB(10) w.e.f. 1.4.2005 would be allowable where such commercial user does not exceed 5% of the aggregate built up area of the housing project or 2000 Sq.ft whichever is lower. By the Finance Act, 2010, clause (d) was amended to the effect that the commercial user should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft whichever is higher. The expression “included” in clause (d) makes it amply clear that commercial user is an integral part of a housing project. Applying the above ratio of the Hon’ble High Court to the facts of the present case, the assessee itself vide letter dt. 18.12.2007 has admitted that four buildings are approved as purely residential buildings and one is approved as commercial and the assessee has kept separate project-wise accounts in respect of Rehab Component i.e. 17 Rehab buildings, 4 Residential buildings and one free sale commercial premises. Thus in assessee’s own submission, it is clear that the commercial building is a separate project and is not included as an integral part of the Housing project. Once again the assessee in its letter dt. 27.12.2007 have itself mentioned that as far as the Commercial Project is concerned, it is totally independent project and not integrated to any of the residential project or Rehab Projects. The detailed layout plan submitted to your kind selves fully supports the factual position. The assessee in the same reply have further mentioned that the said project is a housing project and not residential cum commercial project. Thus the claim of the assessee for deduction u/s. 80IB(10) on the sale of the commercial user is declined. - Decided against assessee.
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