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2015 (8) TMI 1148 - ITAT MUMBAI

2015 (8) TMI 1148 - ITAT MUMBAI - TMI - Deductions u/s 80IB(10)(10) - whether the assessee constructed residential cum commercial complex in violation of the Act? - CIT(A) allowed claim - Held that:- If the totality of facts available on record is kept in juxtaposition with the order of the Hon'ble jurisdictional High Court in Brahma Associated vs JCIT (2011 (2) TMI 373 - BOMBAY HIGH COURT), we find that the cases of the assessee falls within the parameters set out by Hon'ble High Court. Our vie .....

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in favour of assessee. - ITA No. 730 to 732/Mum/2012 - Dated:- 1-5-2015 - Joginder Singh, JM And B R Baskaran, AM,JJ. For 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 .....

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and, 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 order:- 4.1. I have perused the order of the AO and also gone through the written submissions made by the appellant carefully and I intend to agree with the above arguments of the appellant. In a number .....

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3.95% of the total built up area. These commercial establishments in the residential housing project are in accordance with the rules and regulations prescribed by Development Control Regulations of the local authority, which are part and parcel of the housing project. Even the CBDT has clarified that if the project is approved as Housing Project by the local authority, it becomes eligible for deduction under section 80IB(10). The view that the beneficial deduction under section 80IB(10) is allo .....

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ne Special Bench in the case of Brahma Associated Vs Joint Commissioner of Income Tax (2009) 122 TTJ (Pune)(SB) 433, wherein has been held that- "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 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 .....

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pective 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 justifica .....

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asis". 4.4. It was further observed by the Hon'ble ITAT Pune Special Bench in the case of Brahma Associated Vs Joint Commissioner of Income Tax (Supra) that "it would be reasonable to grant benefit of the incentive provision to projects in which the built up area for the commercial purpose does not exceed 10 percent of the total areawhere approximately 90 percent or more of the total area is utilized for building dwelling unit and other conditions of 80IB(10) are fulfilled, there i .....

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than 10% of the total built up area and therefore covered by the above decision ITAT Pune Special Bench in the case of Brahma Associated Vs Joint Commissioner of Income Tax (2009) 122 TTJ (Pune)(SB) 433. 4.6. The issue as to whether commercial establishments are. permitted in housing project is now settled by the decision of the Hon'ble Bombay High Court in the case of CIT Vs Brahma Associates 333 ITR 289 (2011) (Born) wherein it has been held that the deduction u/s. 801B(10) is admissible .....

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ase of ClT Vs. Brahma Associates (supra), while deciding the issue of commercial area in the housing project has held that - "In the present case, though the commercial user is more than 10% of the plot area, the Tribunal has allowed section 80IB(10) deduction in respect of 15 residential building 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 deduc .....

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l 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 be .....

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mently opposed the above observations of the AO and has contended that such occupation certificates in respect of all the 8 buildings of the Gagan Vihar Complex were obtained after the completion of the buildings which was much before 31/03/2008. Therefore there is no violation of the provisions of section 80IB(10) on this account. 4.10. The above contention of the appellant is correct. The AO has not pointed out as to how the appellant has not completed the housing project on or before 31/03/20 .....

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ar under consideration i.e. A.Y. 2006-07, in my considered opinion, is allowable to the appellant. Accordingly, the AO is directed to allow the same for the year under consideration. 5. In the result, the appeal of the appellant is allowed." 2.2. If the observation made in the assessment order, denying the claimed deduction, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that .....

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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 .....

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r of Income Tax (Appeals), the facts were considered and ultimately, the claimed deduction was allowed as discussed hereinabove. The Revenue is aggrieved and is in appeal before this Tribunal. 2.3. We find that the claimed deduction was denied to the assessee broadly on the ground that the conditions enshrined in the section are not fulfilled on account of built up area of shops exceeded the prescribed limit and further the assessee did not obtain completion certificate on or before 31/03/2008 f .....

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f eight buildings was approved by the local authority under a single project under group housing scheme. In such a situation, in our view, the project as whole should fulfill the pre-condition of "housing project" before qualifying for the purposes of deduction u/s 80IB (10) of the Act. The provision of section 80IB(10) of the Act was amended with effect from 01/04/2005, clause (d) was introduced relevant to assessment year 2005-06 allowing for shops and other commercial establishments .....

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ce in the assessment year unless otherwise, provided expressly or by necessary implication. The project was approved by the CIDCO/local authority and since the construction of the project was completed during the previous year relevant to AY 2003-04 and the amended provision was introduced w.e.f. 01/04/2005, therefore, the assessee is not expected to follow the prospective amendment. Further, the assessee is not expected to alter the constructed portion and to adhere to the subsequent amendment .....

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d 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 .....

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tal 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 builtup 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 resi .....

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