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2015 (11) TMI 424 - ITAT PUNE

2015 (11) TMI 424 - ITAT PUNE - TMI - Deduction u/s.80IB(10) in respect of its housing project namely “Treasure Park” - AO denied the benefit of deduction u/s.80IB(10) on the ground that the project consisted of commercial area of 12,325 sq.ft. - Held that:- It has been held by the Hon’ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders reported in [2012 (7) TMI 158 - BOMBAY HIGH COURT] that an assessee is entitled to raise not merely additional legal submissions before .....

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re may be several factors justifying the reason of a new plea in an appeal and each case must be considered on its own facts. Therefore, the first ground of the revenue that when the claim of deduction u/s.80Ib(10) was not made for the entire project in the return of income filed or in the course of assessment proceedings or in Form 10CCB filed before the AO, the CIT(A) erred in allowing the claim of deduction u/s.80IB(10) of the Act to the project is devoid of any merit and accordingly the same .....

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to apply to projects where approval of local authority was granted prior to 01-04-2005 even if project is completed thereafter.Since in the instant case admittedly, the project has been sanctioned prior to 01-04-2005 and the project has been completed after 01-04-2005, therefore, the restriction on the area of commercial building is not applicable to the facts of the present case. Therefore, this objection of the Revenue being devoid of merit is dismissed.

So far as the objection of t .....

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rior to 01-04-205.

Since in the instant case the built up area of all the units of building F are less than 1500 sq.ft. after excluding the balconies and terraces, therefore, the CIT(A) was fully justified in allowing the claim of deduction u/s.80IB(10) in respect of building F. See CIT Vs. Prime Properties [2015 (11) TMI 341 - BOMBAY HIGH COURT]

So far as denial of deduction u/s.80IB(10) in respect of the 2 units of building D are concerned, we find the assessee has not .....

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). We find the Ld.CIT(A) admitted the additional evidence and on the basis of the declaration of the customers held that it is the customers who have combined the units and the assessee has sold separate units to the customers where the built up area of each unit is less than 1500 sq.ft. When the two adjacent flats were approved by the local authority as separate units and the completion certificate issued on that basis the 2 flats cannot be treated as one unit to compute the built up area for t .....

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combined the adjacent units for their own requirements, therefore, in view of the decision of the Hon’ble Bombay High Court in the case cited supra and in absence of any contrary material brought to our notice, the assessee cannot be denied the benefit of deduction u/s.80IB(10) in respect of the 2 units of building D. In view of our above discussion, we are of the considered opinion that the order of the Ld.CIT(A) is in consonance with law. We accordingly uphold the same and the grounds raised .....

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promoters and builders, sale of flats/commercial units, apartments, houses etc. It filed its return of income on 16-09-2008 declaring total income of ₹ 4,12,06,910/- after claiming deduction of ₹ 9,51,90,486/- as deduction u/s.80IB(10) in respect of its housing project namely Treasure Park . During the course of assessment proceedings the AO noted the facts of the housing project Treasure Park at Para 5.1.1 of the order which reads as under : 1. There are 10 buildings A,B,C,D,E,F,G, .....

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dential built-up area is 4,35,295 sq. ft. out of which the total built-up area in respect of building F and part of building D which is non-80IB(10) is 51,302 sq. ft. 4. The other buildings A, B, C, E, G & H and part of building D have put together a built-up area of 383993 sq. ft. where the built-up-area of each flat is less than 1500 sq. ft. 5. The buildings J & K named as Sant Nagar shops are exclusive commercial buildings which has total built-up area of 12,325 sq. ft. 6. The total r .....

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ercial space sold as statement of year-wise sale of units of entire project vide its submission dated 18/11/2010 which is annexed as Annexure-III of this order forming part of this order. 8. The project treasure park is situated on S. No. 61 and consists of total 352 residential units, 23 shops and 3 showrooms. The relevant details have been given by the assessee along with its submission dated 03.11.2010, which is annexed as Annexure - IV of this order forming part of this order. 3. From the ab .....

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0IB(10) in respect of the residential units having built up area of less than 1500 sq.ft. Further in Form No.10CCB under the declaration he observed that the following points have been mentioned : 1. The housing project/undertaking for which deduction u/s.80IB(10) has been claimed comprises of residential units having built-up area of less than 1500 sq.ft. and built-up area of more than 1500 sq.ft. Relying on the ITAT judgment in the case of Bengal Ambuja Housing Development Ltd. Vs. DCIT ITA No .....

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ed to us by the assessee that no deduction u/s.80IB(10) is claimed of the profits attributable to commercial part of the project. 4. From the above facts, the AO noted that the assessee has claimed deduction u/s.80IB(10) in respect of the project which is residential and commercial project and where the residential units in one full Building and also in part of one Building have built up area of more than 1500 sq.ft. Further, there are 2 exclusive commercial/shop building with total built up are .....

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disallowed. 5. It was submitted by the assessee that it has claimed deduction in respect of buildings A, B,C, D (Part) and E which complied with the conditions laid down in section 80IB(10) of the Act. It was submitted that even if all the buildings are considered as part of the entire housing project, then also, all the conditions of the section are complied with except for the conditions relating to maximum built up area of residential flats as per clause (c) of section 80IB(10) and maximum bu .....

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of Bramha Associates Vs. JCIT (119 ITD 255) (Pune). 6. However, the AO was not satisfied with the arguments advanced by the assessee. He noted that the entire project Treasure Park is one single project and that it is residential and commercial project which has been mentioned in Form 10CCB. The approval letter, i.e. the commencement certificate given by the PMC shows the approval as residential + commercial. The commencement certificate also mentions the completion of shops and establishments, .....

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ect as a whole and not for a portion thereof. 7. The AO further noted that the various decisions relied on by the assessee are for the period prior to the amendment to section 80IB(10). In the post amendment scenario, there is a specific condition added that the built up area of the shops and other commercial establishments included in the housing project does not exceed 5% of the aggregate built up area of the housing project or 2000 sq.ft. whichever is higher. This stipulation has been brought .....

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eligible for the claim of deduction u/s.80IB(10) amounting to ₹ 9,51,90,486/-. He accordingly disallowed the same and added to the total income of the assessee. 9. Before CIT(A) it was submitted that the firm constructed a project Treasure Park where there are total 10 buildings A to H and J and K. The buildings A to H were residential buildings and J and K were commercial buildings and the claim of deduction u/s.80IB(10) was in respect of the profits out of the said project. The assessee .....

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e area of the units exceeds 1500 sq.ft and the 4 flats of building D were not considered as part of the eligible housing project for the purpose of computing deduction u/s.80IB(10). However, the other buildings have satisfied the conditions laid down u/s.80IB(10) and therefore the AO was not justified in disallowing the claim of the assessee for such building. However, the assessee is entitled for claiming of deduction even in respect of the 3 buildings J, K and F and 4 flats of building D. 10. .....

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to claim deduction u/s.80IB(10) for the entire housing project including 3 buildings viz.,J, K and F and 4 flats of building D. It was argued that the commencement certificate in respect of the housing project was received on 17-12-2004 and therefore the limit of 5% or 2000 sq.ft. whichever is less criteria introduced w.e.f. 01-04-2005 is not applicable to the assessee. Relying on the decision of the Hon ble Bombay High Court in the case of Brahma Associates reported in 333 ITR 289 it was submi .....

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year involved in appeal is. 2008-09, still the limit is not applicable because the project was sanctioned prior to the amendment. Relying on various decisions it was argued that there is no estoppels against law and if the income is not taxable the same cannot be taxed simply because the assessee offered it in the return of income. 11. The assessee further argued that in respect of the building F the deduction had not been claimed on the ground that the built up area of all the units exceeded 15 .....

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ea as per provisions of section 80IB(14)(a) is not applicable. 12. It was argued that for the project started prior to 01-04-2005, the built up area has to be calculated as per the definition provided in the Development Control Rules of PMC or the DC Rules whereby the area covered by terraces and balconies are not to be included in built up area. The assessee filed a revised certificate showing calculation of the area of the residential units from the architect Shri Jagdish Deshpande as per the .....

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s and the remaining 4 flats were combined into 2 flats by the customers where the area exceeded the prescribed limit of 1500 sq.ft. To avoid litigation the assessee has not claimed deduction u/s.80IB(10) in respect of the above 4 flats of Building D. 14. It was argued that the AO denied deduction for all the flats in the project. It was explained that the flats which are combined were sanctioned as separate flats by the PMC and the completion certificate issued also noted the said units to be in .....

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the benefit of deduction u/s.80IB(10). For the above proposition, the assessee relied on various decisions. The assessee on a without prejudice basis submitted that if the contentions raised above are not accepted, still the deduction u/s.80IB(10) be allowed for the units whose built up area is less than 1500 sq.ft. For the above proposition, the assessee relied on various decisions. 15. Based on the various submissions made by the assessee including the additional evidences filed before him und .....

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is not acceptable to the department since an appeal has been filed before the Hon ble Supreme Court. 17. After considering the remand report of the AO and the counter comments of the assessee to such remand report, the Ld.CIT(A) allowed the claim of deduction u/s.80IB(10) made by the assessee on the entire housing project. While doing so, he held that the housing project in the present case started prior to 01-04-2005, i.e. vide commencement certificate dated 17-12-2004. Therefore, the contenti .....

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idential units. Once the terraces and balconies are excluded the built up area of none of the units of building F exceed 1500 sq.ft. Therefore, the assessee is entitled to claim deduction u/s.80IB(10) in respect of building F. 18. So far as the claim of deduction u/s.80IB(10) in respect of commercial shops/establishments of buildings J and K which comprise of commercial area of 12,325 sq.ft. is concerned he held that the contention of the assessee that the limit of 5% or 2000 sq.ft. whichever is .....

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e earlier years. Even though the assessment year involved in 2008-09, still the limit is not applicable because the project was sanctioned prior to the said amendment. For the above proposition, he relied on the decision of the Pune Bench of the Tribunal in the case of Opel Shelters Pvt. Ltd. vide ITA No.219/PN/2009 and the decision of the Mumbai Bench of the Tribunal in the case of Hiranandani Akruti J.V Vs. DCIT reported in 39 SOT 498 where it has been held that clause (d) of section 80IB(10) .....

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im, he noted that Flat Nos. 1104 and 1204 of building D have been purchased by Mr. Keskar Laxmikant and Mrs. Keskar on 09-03-2006 and after taking possession of the 2 flats separately on 07-12-2007 they have categorically stated that as per their requirement necessary internal changes were made from a labour contractor. Similarly, Flat No.1101 and 1202 were purchased by Mrs Nisha Bhalerao and Mr. Sarnaik Prabhanjan and in their declaration it has been stated that the possession of the 2 flats we .....

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receipts etc. The materials brought on record clearly indicate that the assessee had constructed separate flats and it was the customers who had combined them which is evident from the declaration of both the customers who had purchased the 2 units and made necessary internal changes as per their requirement from a labour contractor. Relying on various decisions he held that the benefit cannot be denied since the residential units were sold to 4 different individuals. The individual ownership i .....

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owing the deduction u/s.80IB(10) of the Act to the project 'Treasure Park' even when the claim of deduction u/s.80IB(10) was not made for the entire project in the return of income filed, in the course of assessment proceedings and in Form No.35 filed before the CIT(Appeals)? 2. The learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the project had been approved as a "residential + commercial project" which had also been confirmed by the PMC an .....

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ed in holding that though the amended provision of section 80IB(10)(d) and 80IB(14)(a) came into operation w.e.f 01.04.2005, those were not applicable in the case of assessee relating to A. Y.2005-06 without appreciating and applying the principle laid down by Hon'ble Supreme Court in the case of CIT Vs Isthmian Steamship Line, 20 ITR 52 and Karimtharuvi Tea Estate Ltd., 60 ITR 262 ? 6. The learned Commissioner of Income-tax (Appeals) erred in not appreciating that even if the amended law wa .....

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Court in the case of CIT Vs. Sarkar Builders reported in 375 ITR 392, the decision of Hon ble Bombay High Court in the case of CIT Vs. Prime Properties vide ITA No.237/2013 order dated 27-07-2015 and the decision of Hon ble Bombay High Court in the case of CIT Vs. Ankit Enterprises vide ITA (LOD) 1795/2012 order dated 18-02-2013 submitted that in the aforementioned cases all the issues raised by the revenue have been answered. Therefore, this being a covered matter in favour of the assessee the .....

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residential buildings and the buildings J &K are exclusively commercial buildings/shops. The total residential built up area of the project is 97.25% and that of the commercial/shop is 2.75% whose area totals to 12,325 sq.ft. We find the assessee in its return of income had claimed deduction only in respect of the residential units having built up area less than 1500 sq.ft which is evident from the Form 10CCB filed along with the return of income wherein it has been mentioned that the housi .....

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both residential and commercial (b) the projected consisted of commercial area of 12,325 sq.ft. (c) the built up area of all the units in building F exceeded 1500 sq.ft. and (d) the built up area of 4 flats after being combined exceeded 1500 sq.ft. in respect of building D. 25. We find before the CIT(A) the assessee took additional ground that it is entitled to claim deduction u/s.80IB(10) in respect of building F as well as J and K and the 4 flats of building D. We find after considering the v .....

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entitled to deduction u/s.80IB(10). So far as buildings J and K are concerned he held that since the project is approved prior to 01-04-2005, therefore, the limit of 5% or 2000 sq.ft. whichever is less is not applicable to the project of the assessee. For the above proposition he relied on the decision of the Hon ble Bombay High Court in the case of Brahma Associates reported in 333 ITR 289 where it has been held that prior to the amendment there was no restriction in the area of commercial bui .....

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1500 sq.ft. and the customers after purchasing the flats have combined them and therefore the assessee cannot be denied the benefit of deduction u/s.80IB(10). 27. It is the grievance of the revenue that when the claim of deduction u/s.80IB(10) was not made for the entire project in the return of income filed and when the project has been approved as a residential cum commercial project, therefore, the assessee is not entitled to deduction u/s.80IB(10) and the CIT(A) was not justified in allowing .....

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have jurisdiction to deal not merely with additional grounds which became available on account of change of circumstances or law but with additional grounds which were available when the return was filed. The words could not have been raised must be construed liberally and not strictly. There may be several factors justifying the reason of a new plea in an appeal and each case must be considered on its own facts. Therefore, the first ground of the revenue that when the claim of deduction u/s.80I .....

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ioned earlier, the project has been approved by the PMC on 17-12-2004, i.e. prior to 01-04-2005. The Hon ble Supreme Court in the case of Sarkar Builders (Supra) has held that where housing projects were sanctioned before the amendment but have been completed after 01-04-2005 when the amended provisions came into operation the assessee would be entitled to the deduction u/s.80IB(10)and the conditions mentioned in clause (d) would not apply. Thus, the benefit restricted to cases where the area ut .....

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able to the facts of the present case. Therefore, this objection of the Revenue being devoid of merit is dismissed. 31. So far as the objection of the AO that the built up area of all the flats in building F exceeded 1500 sq.ft., we find the Ld.CIT(A) has given a categorical finding that after exclusion of the balconies and terraces none of the flats of building F exceeded 1500 sq.ft. could not be controverted by the Ld. Departmental Representative. It is an admitted fact that the commencement c .....

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a) Whether on the facts and in the circumstances of the case and in law, the Tribunal did not err in holding that the clarification of the built up area introduced by way of section 80IB(14)(a) with effect from 01- 04-2005 can only be applied to projects which have been sanctioned after 01-04-2005? (b) Whether on the facts and in the circumstances of the case and in law, the order of the Tribunal passed without appreciating and evaluating all the relevant facts and evidences including circumstan .....

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2005 would the provision of section 80IB(14)(a) of the Act, have any application. 4. Mr. Suresh Kumar, Ld. Counsel for the Revenue fairly states that the present controversy stands concluded in favour of the Respondent Assessee by the decision of this Court in Income Tax Appeal No.1628 of 2013 (CIT Vs. Raviraj Kothari Punjabi Associates) rendered on 24th April, 2015 in respect of section 80IB(14)(a) of the Act. Further, it is submitted that the ratio of decision of the Apex Court in CIT Vs. M/s .....

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l of deduction u/s.80IB(10) in respect of the 2 units of building D are concerned, we find the assessee has not claimed deduction in respect of the above 2 units in the return of income on the ground that the combined area of the adjoining flats exceed 1500 sq.ft. However, before CIT(A) the assessee took an additional ground and claimed the deduction in respect of the above 2 units on the ground that assessee has sold independent units to the respective customers which were less than 1500 sq.ft. .....

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