TMI Blog2015 (8) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Petitioner : Shri Ajay R Singh For the Respondent : Shri Asghar Zain V P -DR ORDER Per Joginder Singh (Judicial Member) All these three appeals by the Revenue against the impugned order all dated 29/02/2012 of the ld. First Appellate Authority, Mumbai, for assessment years 2006-07 to 2008-09 allowing deductions of ₹ 11,80,433/- (AY 2006- 07), ₹ 11,35,004/- (AY 2007-08) and ₹ 24,16,765/- (AY.2008-09) u/s 80IB (10) of the Income Tax Act, 1961 (hereinafter the Act) ignoring the fact that the assessee constructed residential cum commercial complex in violation of the Act, placing reliance upon the decision from Hon'ble jurisdictional High Court in CIT vs Brahma Associates (2011) 333 ITR 289 (Bom.) . 2. During hearing of these appeals, ld. DR, Shri Asghar Zain, V.P., advanced his arguments which are identical to the ground raised. On the other hand, Shri Ajay R. Singh, ld. counsel for the assessee, defended the conclusion, arrived at in the impugned orders. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .80IB(10) vide Finance (No.2) Act, 2004, was a restriction on use of built up area for commercial purposes, and not a relaxation to use the built-up area for commercial purposes - This indicates that there was no such limit in force for the earlier years - Restriction of 5 per cent is applicable only with prospective effect and there is no justification to presume that such a limit or prohibition was in place in the earlier years as well on the commercial use of area - It would be reasonable to grant benefit of incentive provision to projects in which built up area for commercial purposes does not exceed 10 per cent of total area - Where approximately 90 per cent or more of the total area is utilized for building dwelling units and other conditions of s. 80-IB(10) are fulfilled, there is no justification to deny the benefit where the project has been passed as residential-commercial project - Where the total built-up commercial area is more than 10 percent of total area, such projects normally should not get benefit of deduction unless the undertaking can show that the income from construction of residential dwelling units can be worked out separately, and even after excluding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the profits from these exclusively residential buildings could be determined on standalone basis. In our opinion that would not be proper, because, section 80IB(10) allows deduction to the entire project approved by the local authority and not to a part of the project. If the conditions set out in section 80IB(10) are satisfied, then deduction is allowable on the entire project approved by the local authority and there I no question of allowing deduction to a part of the project. In the present case, the commercial user is allowed in accordance with the DC Rules and hence the assessee was entitled to section 80IB(10) deduction on the entire project approved by the local authority. 4.8. Regarding the applicability of the amended provisions of section 80IB(10)(d) for the projects commenced before 01.04.2005, the ITAT, Mumbai 'F' Bench in the case of M/s. Saroj Sales Corporation vs. ITO Wd. 45(2) (3), Mumbai, has held that- As regards the objection of the AO that the permissible shopping area of housing project exceed 5%, the assessee is not entitled for relief u/s. 80IB(10), we are of the view that the housing projects which were approved before 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Gagan Vihar complex comprises of eight buildings in which two buildings were consisting of shopping complex, on the ground floor, duly approved as housing project by CIDCO, the local authority. For Assessment year 2006-07, the assessee returned nil income after claiming deduction u/s 80IB (10) of the Act amounting to ₹ 19,58,236/- (Rs.11,80,433/- for Gagan Vihar complex and ₹ 7,77,803 in Gagan Sarita Complex). The Assessing Officer allowed the claimed deduction on the project Gagan Sarita Complex as it was consisting of residential units and disallowed the claimed deduction with respect to Gagan Vihar Complex amounting to ₹ 11,80,433/- on the ground that two out of eight buildings, the shopping complex is not allowable. This conclusion was drawn disregarding the certificate issued by CIDCO certifying that the said project is housing project and also ignoring the independent enquiry made by Assessing Officer for AY 2003-04 wherein, it was held that Ganga Vihar Complex is a housing project. On appeal, before the ld. Commissioner of Income Tax (Appeals), the facts were considered and ultimately, the claimed deduction was allowed as discussed hereinabove. The Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation vs DCIT supports our view. The issue is otherwise, settled by Hon'ble jurisdiction High Court in the case of Brahma Associated vs Joint Commissioner of Income Tax (2009) 122 TTJ (Pune)(SB), 433 , wherein it was held as under :- merely because a part of the plot is used for commercial purposes, the character of housing project is not vitiated and the availability of tax benefits is not M/s Akash Land Developers 11 confined to only such housing projects which are purely residential projects - So far as assessment years prior to A. Y. 2005-06 are concerned, approval by the local authority as a housing project constitutes admissible material to come to the conclusion that the housing project is eligible for deduction u/s. 80IB(10) - What was brought into effect by insertion of cl.(d) in s.80IB(10) vide Finance (No.2) Act, 2004, was a restriction on use of built up area for commercial purposes, and not a relaxation to use the built-up area for commercial purposes - This indicates that there was no such limit in force for the earlier years - Restriction of 5 per cent is applicable only with prospective effect and there is no justification to presume that such a limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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