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Commissioner of Income Tax-I Versus Shreenathji Construction

2015 (6) TMI 461 - GUJARAT HIGH COURT

Eligibility of deduction u/s. 80IB(10) on housing project - ITAT allowed claim - whether the built up area of commercial units exceeded the limits of 2000 sq.ft. Prescribed in section 80IB(10) (d) of the Act and therefore, the assessee was not eligible for deduction under section 80IB(10) of the Act? - Held that:- Applying the law laid down in CIT Central Pune V/s M/s. Veena Developers [2015 (5) TMI 193 - SUPREME COURT] and CIT-I V/s. CHD Developers Limited [2014 (1) TMI 1542 - DELHI HIGH COURT] .....

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the permissible commercial use.

In the present case, however, the assessee alternatively claimed that deduction section 80IB(10) of the Act may be permitted proportionately with respect to the residential construction only and it came to be accepted by the learned CIT(A) and the learned tribunal and the assessee has been allowed deduction under section 80IB(10) of the Act proportionately with respect to the residential construction only and the same has been accepted by the assessee. .....

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l by the development authority in accordance with the Development Rules. - Decided in favour of assessee. - Tax Appeal No. 36/2015 - Dated:- 5-5-2015 - M R Shah And S H Vora,JJ. For the Appellant : Mr K M Parikh, Adv. For the Respondent : Mr B S Soparkar, Adv. ORDER (Per : Honourable Mr. Justice M. R. Shah) 1.00. Feeling aggrieved and dissatisfied with the impugned Judgement and Order passed by the learned Income Tax Appellate Tribunal, "B" Bench, Ahmedabad (hereinafter referred to as .....

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ithout appreciating the fact that the built up area of commercial units exceeded the limits of 2000 sq.ft. Prescribed in section 80IB(10) (d) of the Act and therefore, the assessee was not eligible for deduction under section 80IB(10) of the Act? (B). Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that though the amended provisions of Section 80IB(10)(d) of the Act came into operation w.e.f. 1/4/2005, it was not a .....

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of ₹ 54,53,349/- under section 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as "the Act" for short) with respect to the housing project.2.02. The return was processed under section 143(1) of the Act and was selected for scrutiny. The Assessing Officer (hereinafter referred to as "the A.O. for short) finalised the assessment on 14/12/2009. After disallowing the deduction claimed by the assessee of ₹ 54,53,349/- under section 80IB(10) Act and assessed t .....

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ect included construction of commercial complex admeasuring 729.34 sq.mtrs. The assessee firm had obtained approval for 25 shops on the ground floor of the flats designated as Type F & G. The total FSI demarcated for 25 shops was 468.54 sq.mtr. The A.O. disallowed the claim of the assessee made under section 80IB(10) of the Act for the reasons that the land was not in the name of developer and the built up area in the commercial construction of the housing project was more than 5% which exce .....

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mitted the Remand Report on 9/7/2009. That relying upon the decision of the learned tribunal in the case of M/s. Radhe Developers and others rendered in ITA No.2482/Ahd/2006, which has been confirmed upto the Hon'ble Supreme Court and after observing that the assessee was defacto owner of the land and risk and cost was entirely his, while developing the project, the learned CIT(A) also held that the A.O. was not justified in rejecting the deduction under section 80IB(10) of the Act on the is .....

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in the housing project exceeds the limit prescribed under section 80IB(10) of the Act, the learned CIT(A) observed and held that all conditions mentioned in section 80IB(10) of the Act are to be cumulatively satisfied before granting deduction under section 80IB(10) of the Act and in the case of assessee, condition No.6 i.e. built up area of shops and other commercial establishment, does not exceed 5% of the total built up are of housing project or 2000 sq.ft. whichever is less, is not satisfied .....

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learned CIT(A) further held that new provisions of section 80IB(10) of the Act though perspective w.e.f. A.Y. 2005-2006, the same has nothing to do with the date of approval granted by the local authority. Consequently, the learned CIT(A) held that the assessee has committed breach of mandatory condition of commercial area being below 2000 sq.ft. However, the learned CIT(A) accepted the alternative plea of the assessee i.e. it is eligible for proposed deduction in respect of the residential area .....

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n under section 80IB(10) of the Act when he is not owner of the land on which the housing project is developed, but in view of the decision of the Jurisdictional High Court in the case of CIT Vs. Radhe Developers, reported in (2012) 341 ITR 403 (Gujarat). That by the impugned judgement and order, the learned tribunal has also confirmed the order passed by the learned CIT(A) in so far as allowing deduction under section 80IB(10) of the Act on proportionate basis with respect to total built up are .....

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n the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in allowing deduction u/s. 80IB(10) of the Act to the housing project without appreciating the fact that the built up area of commercial units exceeded the limits of 2000 sq.ft. Prescribed in section 80IB(1) (d) of the Act and therefore, the assessee was not eligible for deduction under section 80IB(10) of the Act? (B). Whether, on the facts and in the circumstances of the case and in law .....

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K.M. Parikh, learned advocate appearing on behalf of the revenue at length.3.01. At the outset, it is required to be noted that the dispute is with respect to deduction claimed by the assessee under section 80IB(10) of the Act in respect of housing project which was admittedly approved by the local authority on 6.1.2001 / 6.2.2003. It is required to be noted that both, the learned CIT(A) as well as the learned tribunal found from the certificate of the Architect that out of total land area appro .....

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the case of Commissioner of Income Tax-I V/s. CHD Developers Limited, rendered in ITA No.298 of 2013, the Delhi High Court had an occasion to consider deduction claimed under section 80IB(10) of the Act with respect to housing project approved prior to 1/4/2005, the date from which amendment in clause (d) in section 80IB(10) of the Act came to force and it is held that where approval of the housing project was given by the development authority prior to 1/4/2005 i.e. by inserting clause (d) to s .....

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, the questions raised in the appeal are answered thus :-a) Upto 31/3/2005 (subject to fulfilling other conditions), deduction under Section 80IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under Dy.Collector Rules / Regulations framed by the respective local authority.b) In such a case, where the commercial user permitted by the local authority is within the limits prescribed under the Dy.Collector Ru .....

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of the total built up area of the plot.d) Since deductions under Section 80IB(10) is on the profits derived from the housing projects approved by the local authority as a whole, the Tribunal was not justified in restricting Section 80IB(10) deduction only to a part of the project. However, in the present case, since the assessee has accepted the decision of the tribunal in allowing Section 80IB(10) deduction to a part of the project, we do not disturb the findings of the Tribunal in that behalf .....

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(b), the Hon'ble Supreme Court further clarified that the same shall be read in that context where the project is predominantly housing / residential project but the commercial activity in the residential units is permitted.3.03. Now, applying the law laid down in the aforesaid decisions by the Hon'ble Supreme Court as well as Delhi High Court to the facts of the case on hand, it cannot be said that any error has been committed by the learned CIT(A) and the learned tribunal holding that .....

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