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TMI Blog2014 (5) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the appellant by withdrawing deduction u/s. 80-IB(10) of the Act amounting to Rs. 44, 42, 20, 424/- in the impugned order. The CIT (A) ought to have held that the appellant is eligible for deduction u/s. 80-IB(10) of the Act amounting to Rs. 51, 58, 84, 600/- being 100% of the profit derived from the project. 4. The CIT(A) ought to have held that the Assessing Officer was not justified in passing the order u/s. 154 of the Act, there being no mistake apparent from the record. 5. The CIT(A) has erred in law and on facts in confirming the order u/s. 154 of the Act which was assessed in violation of the principles of natural justice. 6. The CIT(A) has erred in law and on facts in passing Corrigendum dated 29. 11. 2013 (received on 10. 01. 2014). The action of the CIT(A)in passing the Corrigendum and thereby initiating the penalty u/s. 271(1)(c) of the Act is without jurisdiction and bad in law. 7. The appellant craves leave to add to, amend, alter or delete all or any. of the foregoing grounds of appeal. " Brief history of the case: 2. The assessee is an Association of Persons (AOP) and is a Joint Venture (JV) between Akruti City Limited and Hiranandani Group. It u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. However, the AO vide his order dated 31. 01. 2012 allowed its claim of deduction u/s. 80IB(10) to the extent of Rs. 44, 42, 20, 424/- after excluding 13% commercial component of the project. Aggrieved by the order passed u/s. 154 of the Act, assessee preferred further appeal. In the course of appellate proceedings, before the First Appellate Authority(FAA), assessee submitted that the decision of the Hon'ble Bombay High Court in the case of BA envisaged deduction to the entire project approved by the local authority and not to a part of the project, that if the conditions set out in Section 80-IB(10) were satisfied then deduction was allowable on the entire project approved by the local authority, that the AO was not justified in restricting deduction only to the residential component of the project, that the SRA project of the assessee was approved before 31. 03. 2004 and was within limits as prescribed by the DC Rules and Regulations, that considering the direction of the Hon'ble High Court, the restraining clauses with regard to commercial units were not applicable to it, as same could not be applied retrospectively to projects approved before 01. 04. 2004, that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17800 sq ft approximately, that the built up area of residential units in comparison to the total area was 87% while the commercial component accounted for the balance 13%, that it had been held by the Hon'ble High Court that deduction u/s. 80-IB(10) was allowable on the profits derived from the housing projects approved by the local authority as a whole and not to a part of it, that the AO had allowed deduction to the assessee to the extent of 87% after excluding 13% commercial component of the project, that the order of the AO was not in accordance with the ratio of the judgment of the Hon'ble High Court delivered in the case of BA, that the housing project undertaken by the assessee was approved by the local authority on 17. 11, 2003 and the project was completed vide Occupation Certificates issued in July 2005 and December, 2005, that the commercial area included in the housing project of the assessee was 1, 17, 800 sq. feet which was much higher than the prescribed limit, that the assessee satisfied all conditions except the one laid down in the clause (d) of Section 80IB(10), that the true, clear and dominant objective of the incentive provision of Section 80-IB(10)was to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claim to have any vested right to the deduction under the said section based on the pre-amended provisions and its eligibility to such deduction had to be examined with reference to the legal provisions in force in the AY. under consideration. Finally, he held that while giving effect to the order of the ITAT in MA filed by the assessee the AO failed to apply the ratio of judgment of the Hon'ble jurisdictional High Court in the case of BA correctly to the facts of the present case and thereby wrongly allowed deduction of Rs. 44, 42, 20, 424/-to the assessee, whereas he ought to have disallowed the deduction in full as the appellant had not satisfy the mandatory requirement of clause (d) of Section 80-IB(10) of the Act, that the total income assessable in hands of the assessee for the AY. under consideration would remain unchanged at Rs. 51, 58, 84, 600/- as originally assessed. As it resulted in enhancement of income of the assessee 'owing to wrong allowance of deduction u/s. 80-IB(10) of the Act', so he directed the AO to revise the total income of the assessee accordingly while giving effect to this order. FAA had issued a notice u/s. 251(2)of the Act to the assessee before en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round of introducing the section and it had held that that amendment introduced in section 80IB(10)(d) was not applicable to a project which was approved prior to 01. 04. 2005. In the case under consideration project was approved prior to 01. 04. 2005, so, thus the matter is covered by the pre amended section. We are of the opinion that pre amended section did not mandate the ceiling of commercial area. We find that in the case of M/s. Magnet Enterprises ITA/5802/ Mum/ 2012-AY. 2008-09 dated 27. 11. 2013, to which one of us was the party, has discussed the issue of allowability of deduction u/s. 80 IB as under : "5. We have heard the rival submissions and perused the material before us. We find that issue before us was discussed and decided by the Hon'ble High Court of Gujarat conclusively in the case of Manan Corporation(supra). Hon'ble Court has held under : "20. In our opinion, the Tribunal has misdirected itself in interpreting paragraph 25 of the said judgment and thereby denying the benefit of Section 801B(1 0) to the appellant herein in as much as before the Bombay High Court it was Revenue's case that residential project having commercial construction cannot be held entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumably the requirement of large townships. However, the projects essentially remained residential housing projects and that is also quite apparent from the certificates issued by the local authority and, therefore neither on the ground of absence of such provision of commercial shops nor on account of such commercial construction having exceeded the area contemplated in the prospective amendment can be made applicable to the appellant assessee whose plans are sanctioned as per the prevalent rules and regulations by the local authority for denying the benefit of deduction of profit derived in the previous year relevant to the assessment year as made available otherwise under the statue. 24. Karnataka High Court in the case of Commissioner of Income Tax, Central Circle vs. Anriya Project Management Services (P. ) Ltd. reported in [2012J 21 taxmann. com140 (Karnataka)was also examining this provision where the question was whether the definition of 'built-up area' inserted by Finance (No. 2) Act, which became effective from 1. 4. 2005 is prospective or retrospective in nature and it held that the same to be prospective in nature. It held that amendment provision would have no appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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