TMI Blog2014 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... Mittal, JM: The assessee has filed this appeal for assessment year 2007-08 against order dated 10.3.2010 of ld CIT(A)-26, Mumbai on following grounds: 1. On the facts and circumstances of the case and in law, ld CIT(A) has erred in confirming the disallowance of the deduction u/s.80IB(10) of Rs.11,37,50,000 made by the AO without appreciating the facts of the case. 2. On the facts and circumstances of the case and in law, ld CIT(A) has erred in coming to the conclusion that the appellant has not satisfied the condition as contained in section 80IB(10) (c) of the I.T.Act, 1961. 3. On the facts and circumstances of the case and in law, ld CIT(A) has erred in coming to the conclusion that the appellant is not entitled for proportionate deduction u/s.80IB(10) of the I.T.Act, 1961. 2. The relevant facts giving rise to this appeal are that assessee an (AOP) developed a housing project in the name of Ekta Meadows on plot bearing No. CTS No.279, Village Megathane, Borivali-East, Mumbai-66. The area of the plot, relatable to the project, was 18004 sq.mtrs. The date of approval of the project, by the Local Authority, was 13/05/2005. However, the initial commencement certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessment year, from housing project. Thus, the housing project, as a whole, either satisfies the prescribed conditions or fails to satisfy and, accordingly, either becomes eligible for 100% of profits derived from the project or ineligible of profits derived from the project. In the scheme of things of section 80IB(10), there are no enabling provisions to allow proportionate deduction. Since 35% of the project of the assessee has violated the prescribed conditions, there is no way that balance 65% of the project can be held to be eligible for deduction. Hence, the entire profits of the project will have to be taxed accordingly. AO after distinguishing the case cited by the assessee of ITAT Kolkata in the case of Bengal Ambuja Housing Development Ltd vs DCIT (I.T.A. No.1735/Kol/2005) order dated 24.3.2006 as also the decision of ITAT Nagpur Bench in the case of ITO vs. AIR Developers, 25 DTR 287(Nag) held that project of the assessee is not eligible for proportionate deduction of Rs.11,37,50,000 and, therefore, the entire profit of Rs.17.50 crores is to be taxed. Being aggrieved, assessee filed appeal before the first appellate authority. 5. On behalf of assessee, assessee mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269 4) ACIT vs. Sheth Developers (P)Ltd., 33 SOT 277(Mum) 5) M/s. SJR Builders vs ACIT, 3 ITR 569(Bang) 6) M/s. G.V. Corporation vs ITO, 133 TTJ (Mum) 178 7) Smt. Manju Gupta vs ACIT, 134 ITD 503(Mum) 8) M/s. Sreevatsa Real Estates (P)Ltd vs. ITO, (2011) 9 ITR 808 7. Ld A.R. submitted that case of M/s. Ekta Housing Pvt Ltd (supra) is the case of the assessee s sister concern, wherein, facts are identical to the case of the assessee and the Tribunal confirmed the order of ld CIT(A), wherein, ld CIT(A) vide para 2.8 of his order observed as under: 2.8 The appellant s claim is supported by the decision of Hon ble Mumbai ITAT in case of M/s. Saroj Sales Organisation ITA no.4008/ Mum./2007 order 24.1.2008, wherein on identical facts the Hon ble ITAT following the Hon'ble Supreme Court decision in the case of Bajaj Tempo Ltd. reported in 196 ITR 188 has observed that the provisions should be interpreted liberally. Further, following the Hon ble ITAT decision in the case of Bengal Ambuja Housing Development Ltd. Kolkata, the Hon ble Mumbai ITAT allowed the assessee s claim on prorata basis on qualifying units which satisfied the conditions laid down by section 80IB(10). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 sq.ft and not entitled for deduction in respect of those flats having their built up area exceeding 1500 sq.ft. Therefore, deduction to the assessee was allowed on pro-rata basis under section 80IB(10) of the Act. Ld A.R. submitted that the decision of Third Member is on the same footing as of a larger bench and to substantiate his submission, placed reliance on the decision of Hon ble Delhi High Court in the case of PC Puri vs CIT, 151 ITR 584(Del). He submitted that in view of the decisions of Co-ordinate Benches of the Tribunal, claim of the assessee for proportionate deduction u/s.80IB(10) of the Act of Rs.11,37,50,000 be allowed. 9. On the other hand, ld D.R. did not dispute any of the contentions of ld A.R. but dutifully relied on orders of authorities below. 10. We have considered submissions of ld representatives of parties and orders of authorities below. We have also gone through the cases cited before us (supra). 11. We observe that assessee has developed one housing project by name Ekta Meadows at Borivali(E), Mumbai. This housing project is having two buildings consisting of Wings A,B,C,D, E,F G and 528 residential units. In the return of income filed for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee further objected to the disallowance of deduction on account of pro-rata income from 150 units under section 80IB(10) on the ground that all the units in Udita-III did not have individual flat size of less than 1500 sq.ft. The assessee contended before the Id. CIT(A) that even section 80IB(l0) itself did not contain the condition that all the units should have individual, flat size of less than 1500 sq.ft.. It has been submitted by the Id,. Counsel for the assessee that since the profit attributable to such units having an individual area of less than 1500 sq. ft. were quantifiable in monetary terms and, therefore, the A.O. should have allowed deduction under section 8O IB(10). It has further been submitted by the assessee that, the assessee in this case has fulfilled the substantive condition to enable it for claiming deduction under section 80IB(l0), which has not been disputed by the A.O. and the AO has only disallowed the claim considering the fact that there were some other units which had individual flat size of more than 1500 sq.fi. The assessee pleaded that since the land area attributable to 150 resident units was more than I acre in size, the claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 dismissed the appeal of department by observing as under: . The appeal is now taken up for hearing and after hearing the ld Counsel for the parties and perusing the order passed by the Tribunal, we find that no substantial question of law is involved in this matter. Hence, we dismiss the appeal .. 15. Therefore, it is evident that Hon ble High Court confirmed the order of the Tribunal to allow proportionate deduction to the assessee u/s.80IB(10) of the Act. We observe that similar issue came before the ITAT Nagpur Bench in the case of AIR Developers (supra) and the Tribunal upheld the claim of pro-rata deduction u/s.80IB(10) of the Act observing as under 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 1500 sq.ft. 16. Further ITAT Bangalore Bench in the case of DCIT vs. Brigade Enterprises Pvt Ltd (supra) also held as under: Therefore, if a particular unit satisfies the condition of section 80IB, the assessee is entitled for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore me as a Third Member is covered by the judgment of the Hon ble Calcutta High Court rendered in the case of CIT vs. Bengal Ambuja Housing Development Ltd. in ITA No.458 of 2006 dated 5-1-2007. In the light of the findings arrived at above, I agree with the view taken by the Hon ble Vice President, where he has held that the assessees are entitled for deduction u/s.80IB(10) in respect of flats having built up area not exceeding 1500 sq. ft and not entitled for deduction in respect of those flats having their built up area exceeding 1500 sq.ft. 20. Similar issue came up before the ITAT Chennai Bench in the case of Sreevatsa Real Estates (P)Ltd (supra) and it was held that assessee is entitled for deduction u/s.80IB(10) pro-rata for the housing units having built up area less than 1500 sq.ft as some housing units were having more than 1500 sq. ft built up area. 21. Considering above decisions of co-ordinate benches and the decision of Hon ble Kolkata High Court in the case of Bengal Ambuja Housing Development Ltd (supra) and also considering the fact that similar issue was considered by the Tribunal in the case of sister concern of the assessee in I.T.A. No. 3649/Mum./2009 v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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