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2015 (6) TMI 798 - ITAT AHMEDABAD

2015 (6) TMI 798 - ITAT AHMEDABAD - TMI - Rejection of the claim u/s. 80IB(10) - assessee failed to satisfy the conditions laid in the Act - Held that:- The issue under consideration is squarely covered by the decision of the Hon’ble jurisdictional High Court in the case of Manan Corporation vs. ACIT [2012 (9) TMI 700 - Gujarat High Court] wherein held Section 80IB(10) originally indicated 100% deduction on the profits derived from housing projects approved by local authority subject to certain .....

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uthority in accordance with rules and regulations, keeping in mind presumably the requirement of large townships. However, the projects essentially remained residential housing projects and that was also quite apparent from the certificates issued by the local authority and, therefore, neither the absence of such provision of commercial shops nor on account of such commercial construction having exceeded the area contemplated in the prospective amendment could the deduction be denied to the asse .....

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e CIT (A) to the file of the A.O. with certain direction against which no appeal has been filed by both the parties. Therefore, those directions remained and A.O. is directed to consider the issue in light of the said directions of the CIT (A). - Decided in favour of assessee. - I.T.A.No.3262/Ahd/2009,I.T.A.No.276 /Ahd/2013,I.T.A. Mo.277/Ahd/2013 - Dated:- 19-6-2015 - Shri N.S. Saini and Shri Rajpal Yadav, JJ. For the Petitioner : Mr. Sakar Sharma. For the Respondent : Mr. Nimesh Yadav, Sr.D.R. .....

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he case are that during the course of assessment proceedings it was submitted that assessee is a developer of Sun Bungalows scheme on the land measuring 5386.619 sq. mtr. was belonging to Faridbhai Abdulbhai Mohibi and others which was acquired and in the possession of assessee by entering into agreement dated 26-7-2002. The total area under construction for residential units was more than 1 acre and assessee offered the profit on sale of commercial portion for taxation and claimed benefit u/s. .....

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9/- for A.Y. 2007-08, and ₹ 64,28,640/- for A.Y. 2008-09 for the following reasons:- i) that the project included construction of commercial complex measuring 836.04 sq.mtr which was more than 5% of the aggregate built up area. Thus the firm has violated the prescribed condition in Clause (d) of Sec. 80IB(10). ii) That the project was approved by a single approval letter and that the assessee will have to satisfy all the conditions from year to year irrespective of the fact that the commer .....

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y permission to construct. iv) Assessee in the instant case has acted merely as an agent for collection of the land consideration on behalf of the land owner and a contractor for the construction of the house on behalf of the unit holders. v) The approval of the project is not in the name of the assessee firm. 5. Against the aforesaid disallowance assessee filed appeal before the CIT (A). 6. Before the CIT (A) assessee reiterated the arguments made before the A.O. and drawn attention to the deci .....

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r back to the file of the CIT (A) to readjudicate the issue considering the decision of the Special Bench of the Tribunal in the case of M/s. Brahma Associates vs. JCIT 119 ITD 255 and the provisions of Sec. 80-IB (10) of the Act. 9. In the set aside proceedings the CIT (A) passed order on 4-8- 2014 allowing the claim for deduction u/s. 80 IB (10) to the assessee for an amount of ₹ 6,15,848/-. It was the submission of the Authorised Representative of the assessee that the Revenue has not f .....

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evenue has accepted the claim in A.Y. 2005-06, therefore no disallowance u/s. 80 IB (10) can be made for subsequent years. 11. We have heard the rival submissions perused the orders of the lower authorities and material available on record. In the instant case the CIT (A) has held that the assessee is not eligible for deduction u/s. 80-IB (10) by observing as under:- 5. Coming to the second argument regarding applicability of Clause (d) to the facts of the appellant s case, it is noted that admi .....

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l be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, - (a) Such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction, - (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004 on or before the 31st day of March, 2008. (ii) In a case where a housing project .....

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al authority; (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or State Government for reconst .....

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rea of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less.] A perusal of the above section suggests that it is applicable to all the housing projects which were approved before 31-03- 2007. 5.1.1. Further, the deduction is admissible if all the conditions (a) to (d) are cumulatively satisfied. The claim of the appellant is to be considered .....

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f deduction. In view of above, even if it is found that the facts of the case fulfil the observations of Hon ble ITAT in the case of M/s. Shakti Corporation the claim of deduction u/s. 80 IB (10) is not admissible as condition laid down in Clause (d) is not satisfied. 12. Being aggrieved by the above observation the assessee is in appeal before us. 13. It is not in dispute that the commercial built up area of the assessee is 836.04 sq. mt., which is 7.52% of the total built up area. The contenti .....

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and hence cannot be applied for the period prior to 1-4-2005. 14. We find that the issue under consideration is squarely covered by the decision of the Hon ble jurisdictional High Court in the case of Manan Corporation vs. ACIT [2013] 356 ITR 44 (Guj.) wherein it was held as under :- The object of section 80-IB (10) of the Income-tax Act, 1961, was essentially to provide incentive to undertakings in developing and building housing projects. Section 80-IB (10) originally indicated 100 per cent. .....

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-up area of the shops and other commercial establishments included in the housing project should not exceed 3 per cent. (with effect from April 1, 2005) of the aggregate built up area of housing project or 5,000 sq. ft., whichever is higher or 2000 sq. ft., whichever is less from April 1, 2010. The amendment could not be held to be retrospective as there was no explicit and specific wording expressing retrospectively and even if it is assumed for the sake of argument that it is to be read by imp .....

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f Income-tax and all Directors-General of Income-tax to the effect that the deduction in respect of section 80-IB (10) of the Act would be available on year to year basis where the assessee showing profits on partial completion or on the year of completion of the project. From a reading of the instruction, it can be also said that the Government being aware of both the accounting methods has expected either of them to be followed in cases of individual assessees. However, in the postamendment pe .....

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B(10) in the assessment year 2006-07 . The whole project was approved and completed prior to the insertion of the amended provision of section 80- IB(10) of the Act with effect from April 1, 2005. The Assessing Officer denied the deduction on two counts, namely, that the assessee failed to carry out its obligation necessary for claiming such deduction and that the assessee violated the condition laid down under the provision. The principal objection was of nonfulfilment of the condition of limit .....

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