TMI Blog2015 (6) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of row houses D-3 and D-4 and for the balance units the assessee would be entitled to the said deduction under section 80IB(10) of the Act. Thus, the grounds of appeal raised by the Revenue are dismissed. - Decided in favour of assessee - ITA No. 583/PN/2013, CO No. 16/PN/2014 - - - Dated:- 31-3-2015 - G. S. Pannu, AM And Sushma Chowla, JM,JJ. For the Appellant : Shri Sunil Ganoo For the Respondent : Shri A K Modi Shri B C Malakar ORDER Per Sushma Chowla,JM. The Revenue has filed an appeal against the order of CIT(A), Kolhapur dated 13.12.2012 relating to assessment year 2007-08 against order passed under section 143(3) of the Income Tax Act, 1961. The assessee has also filed Cross Objection against the appeal filed by the Revenue. 2. Both the appeal and Cross Objection relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The Revenue has raised the following grounds of appeal:- 1. In facts and circumstances of the case, and in law, the Hon'ble CIT(A) is not justified in accepting the assessee's claim of pro-rata deduction u/s 80IB of the Act, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief facts of the case are that the assessee was engaged in the business of construction. During the year under consideration the assessee had constructed the project called Pushpendranagar in Nachane Grampanchyat Area, against which it claimed the deduction under section 80IB(10) of the Act. The Assessing Officer made certain enquiries from the Gramvikas Adhikari / Sarpanch of Nachane Grampanchyat, which revealed that two row units i.e. D-3 and D-4 in Plot Nos.37 and 38 had been converted into one row bungalow and its built up area was 1871 sq. ft. On further enquiries, the Assessing Officer observed that the assessee had constructed and sold one independent row bungalow having plot size of 1754 sq. ft. and built up area 1871 sq. ft. for ₹ 12,00,000/-, which was not as per the approved plan of the local authority. The Assessing Officer further observed that the unit under consideration had violated the maximum permissible area of 1500 sq. ft. as specified under section 80IB(10) of the Act and as such, the whole project Pushpendranagar was disqualified from getting the benefit of deduction under section 80IB(10) of the Act. Further, the assessee had not constructed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IB(10) of the Act on pro-rata basis. 8. The Revenue is in appeal against the order of CIT(A). The Ld. DR for the Revenue placed reliance on the order of the Assessing Officer. 9. The Ld. AR for the assessee placed reliance on the ratio laid down in the Pune Bench of the Tribunal in the case of Pharande Developers, Vs. The Income Tax Officer in ITA No. 715/PN/2009 and ITA No. 175/PN/2011 relating to assessment year 2005-06 order dated 25.06.2013. 10. We have heard the rival contentions and perused the record. The issue arising before us in the captioned appeal is against the violation of provisions of section 80IB(10)(c) of the Act by amalgamation of two units i.e. row houses D-3 and D-4 and whether deduction under section 80IB(10) of Act should be allowed for the balance eligible units constructed in the project. Admittedly, after merging of the two units i.e. row houses D-3 and D-4, the total covered area was more than 1500 sq. ft. which is the condition stipulated in section 80IB(10)(c) of the Act. The assessee had violated the said condition while constructing the said units in project Pushpendranagar . However, the alternate claim made by the assessee was that pro-ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligible units. Particularly, the Tribunal also considered the decision of the Hon'ble Bombay High Court in the case of Brahma Associates (supra) and held that the same does not envisage denial of proportionate deduction in such circumstances. The relevant discussion, as contained in paragraphs 8 and 9 of the order of the Tribunal in the case of M/s Ekta Housing Pvt. Ltd. (supra) reads as under : - 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 judgement, we find that nowhere it is stated that proportionate deduction should 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, hence the judgement cannot be said to be on this issue. The only issue before the High Court is when there is a commercial element in a residential project, will be assessee be denied the entire exemption. In this case, the Hon'ble High Court has obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. Therefore, while holding that in law, the assessee was entitled to section 80-IB(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 80-IB(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 be entitled to deduction under section 80-IB(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 Court. Thus, in our opinion, the decision of Hon'ble Jurisdictional High Court in the case of Brahma Associates (supra) does not come to the rescue of the Revenue. 22. Following the aforesaid precedent, we, therefore, hold that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said deduction under section 80IB(10) of the Act in respect of balance units which have been constructed as per the conditions laid down in section 80IB(10)(c) of the Act. Only in respect of two units i.e. D-3 and D-4, deduction under section 80IB(10) of the Act would be denied to the assessee. Accordingly, we uphold the order of CIT(A) in directing the Assessing Officer to re-compute the deduction under section 80IB(10) of the Act in relation to the said project by limiting the denial only in respect of row houses D-3 and D-4 and for the balance units the assessee would be entitled to the said deduction under section 80IB(10) of the Act. Thus, the grounds of appeal raised by the Revenue are dismissed. 12. Now, coming to the Cross Objection filed by the assessee. The ground No. 2 of the Cross Objection is not pressed by the assessee. As the ground No. 2 is not pressed by the assessee, the same is dismissed as not pressed. 13. The ground No.1 of the Cross Objection filed by the assessee is that there was violation of judicial propriety as the CIT(A) who had passed the impugned appellate order, had acting as Commissioner of Income Tax Administration authorized the present appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided the issues on the basis of various case laws. However, when acting as Commissioner of Income Tax Administration and in view of the facts that there was no legal precedent by the Hon'ble Supreme Court or by the Hon'ble jurisdictional High Court on the said issue, directed the Assessing Officer to file appeal against the impugned order. It is not a case where the present person was setting in judgment of the earlier order passed by him but was acting in the capacity of administrator wherein the issues were put before higher forum to adjudicate the same. 16. The reliance by the Ld. AR for the assessee on the ratio laid down by the Allahabad High Court in the case of Mohd. Chand And Another (supra) is misplaced as in the facts before the Hon'ble High Court, the person who had passed the basic order was later sitting in appeal and was hearing the appeal against his own order. In such circumstances, the Hon'ble High Court held that the principles of natural justice that no man can be a judge in his own cause, was attracted. Further the Ld. AR for the assessee placed reliance on the ratio laid down by the Hon'ble Supreme Court in the case of Ashok Kumar Yadav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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