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Deputy Commissioner of Income-tax Versus M/s. Bengal Ambuja Housing Development Ltd.

2015 (12) TMI 363 - ITAT KOLKATA

Disallowance of deduction u/s. 80IB(10) in respect to profit derived from housing project (luxury) - CIT(A) deleted the addition - Held that:- As decided in in the case of Shriram Properties (P) Ltd [2013 (9) TMI 446 - ITAT CHENNAI] for determining the amount which qualifies for deduction u/s 80IB(1), one has to compute the income from eligible business as if the eligible business was the only source of income of the assessee. In other words, the income or loss from other business or other activ .....

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than the gross total income. Thus the Assessing Officer as well as the ld. CIT(A) erred in interpreting the relevant provisions when they held that the losses suffered by the assessee from two projects, viz. 'Shreyas' and 'Coimbatore' be reduced from the profits of the other two units viz. 'Spandhana' and 'Samruddhi' for granting deduction u/s 80IB. Accordingly, the impugned orders of the lower authorities are set aside. The Assessing Officer is directed to allow deduction u/s 80IB on the profit .....

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f common order of CIT(A)-XXXII, Kolkata in Appeal Nos. 208 & 12/CIT(A)-XXXII/08-09/Cir-12/R&T/Kol dated 12.02.2010. Assessments were framed by ACIT/DCIT, Cir-12, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for AYs 2004-05 and 2005-06 vide their separate orders dated 28.12.2006 and 03.12.2007 respectively. 2. The only common issue in these two appeals of revenue is against the order of CIT(A) in deleting the disallowance of deduction u/s. 80IB(10) .....

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0IB of the Act in respect to housing project named Luxury (HIG) at New Town, Rajarhat, Kolkata. According to AO, assessee has claimed deduction u/s. 80IB of the Act in respect to housing project namely, HIG (Luxury) but the assessee has also incurred loss in LIG (Efficiency) and MIG (Comfort) but not claimed in the return of income. According to AO, the approval for this project Utsa-the-Condoville was granted vide single approval letter No. 638/Hidco/Ping/141/(2001) dated 23.10.2002. According .....

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600/C/05 Plan, Elevations, Sections of LIG According to him, the deduction u/s. 80IB of the Act is allowable to the assessee at the entire project including the loss incurred in LIG (Efficiency) and MIG (Comfort) Projects and he computed the deduction u/s. 80IB of the Act as under: Income of Efficiency (LIG): (-) ₹ 57,23,499/- Income of Comfort (MIG) (-) ₹ 52,89,908/- Income of Luxury (HIG) Rs.3,63,02,849/- Income of the eligible housing project: Rs.2,52,89,442/- Deduction u/s. 80IB( .....

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having accepted profit or loss disclosed by individual Profit & Loss A/c prepared for each project; aggregated the profit and loss of all projects for the purpose of computing deduction permissible u/s 80IB(l0). I therefore find that the AO per se did not dispute the fact that appellant maintained separate books for each project and the profit and loss of each project was separately identifiable. 6.11 It also appeared that in the past the appellant had similarly executed "UDOTA-THE CO .....

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e and documents executed by the parties from time to time I find force in the submissions for the A/R that "Luxury" housing project was separate and independent project, and therefore for the purpose of allowing deduction u/s. 80IB(10) of the Act profit of the said housing project alone should have been considered by the AO. 6.12 In so far as A.Y. 2005-06 the Assessing Officer has given an additional reason for disallowing the deduction u/s. 80IB(10). As per the amendment effected by t .....

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2 Acres land and the same did not form part of "Utsa-The Condoville Luxury" housing project in respect of which the deduction was claimed. 6.13 For the reasons discussed hereinabove therefore I hold that the assessee was entitled to claim deduction u/s. 80IB(10) with reference to profits derived by "Utsa the Condoville Luxury" housing project and AO was not justified in aggregating loss of "Utsa the Condoville- Efficiency- Comfort" housing project with such profit. .....

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The Board granted development rights of housing project to assessee in respect of land admeasuring 5 acres vide agreement dated 26.08.2002. The assessee after taking possession of land, bifurcated the same into two parts - (i) admeasuring 3 acres and (ii) admeasuring 2 acres. The building plans for HIG, MIG and LIG projects were separately approved by West Bengal Housing Infrastructure Development Corporation Ltd. (in short WBHIDCL) i.e. the Regulatory Authority for New Town Rajarhat granted app .....

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ery of flat was made on 19.02.2002. Luxury housing project was launched much latter in November, 2002 and draw of lottery was made on 29.11.2002. The assessee claimed that these are three different projects entirely different and distinct. Ld. Counsel for the assessee before us stated that the projects of the assessee constructing apartments did not mean that the purpose and objective of all the three projects was same and all the three projects together does not form one single housing project. .....

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or project are common or same. But if the business objective, the quality of product, the customer base intended to be served fundamentally the same can be said to be one and the same undertaking. According to him, there are different purpose, objective, product and customer base in the present case for all the three projects. Ld. Counsel for the assessee drew our attention to the primary condition required to be fulfilled for claiming deduction u/s. 80IB(10) of the Act, for the relevant AY 200 .....

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me indicated that since beginning the assessee consciously planned and executed two separate housing projects. The purpose and objective behind these housing projects was different and therefore, merely because two projects were undertaken on a contiguous plot of land; did not make all segments to form one single composite undertaking. He also argued that the documents on record show that after taking possession of the land the assessee consciously demarcated the land in 2 parts to promote two s .....

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to constitute one single composite housing project. 7. Ld. Counsel for the assessee also argued that the issue of the assessee s appeal is squarely covered by the decision of Coordinate bench in the case of Shriram Properties (P) Ltd. Vs. ACIT (2013) 36 Taxmann 398 (Chennai Trib.). 8. We have gone through the precedents cited by Ld. Counsel for the assessee and found that the Coordinate Bench in the case of Shriram Properties (P) Ltd., supra has dealt with the similar issue in para 9 to 17, whi .....

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ertaking which fulfills all the conditions stipulated in this sub-section. Sub-section (4) of section 80-IB states that "the amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter.......". In the instant case, it is not in dispute that the a .....

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not be any point in claiming deduction under this section. As this sub-section provides for granting deduction on the profits and gains derived from "such industrial undertaking", it is clear pointer for granting deduction in respect of profit earned by each of such eligible industrial undertakings separately. If there is a profit derived from such industrial undertaking, the deduction under section 80-IB will follow. The loss from such eligible industrial undertaking will go out of re .....

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en aggregate of profits and gains derived from such industrial undertakings . It is, therefore, abundantly clear that there is no reference to the aggregate of profits from all the eligible industrial undertakings. We are, therefore, of the considered opinion that if there is profit derived from a particular industrial undertaking, that will qualify for deduction without reduction of loss suffered by any other eligible industrial undertaking(s). 10. Section 80IB(13) reads as under: (13) The prov .....

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y succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. 12. Thus, a reading of the above provisions shows that for determining the amount which qualifies for deduction u/s 80IB(1), one has to compute the .....

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vides that the aggregate amount of deductions under this Chapter shall not in any case exceed the gross total income of the assessee. The gross total income has been defined under section 80B (5) to mean the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter. It therefore follows that the primary step for considering the grant of deductions under Chapter VI-A is to determine the gross total income, which, in turn, is computed by ag .....

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ion 80-IB at ₹ 150, then the amount of deduction under section 80-IB will be restricted to ₹ 100 as per the mandate of section 80A which provides that the deductions shall be allowed from the gross total income and the aggregate amount of all the deductions shall not in any case exceed the gross total income of the assessee. If however the amount of eligible relief under section 80-IB is say ₹ 90, then full amount will be eligible for deduction because the amount of the eligibl .....

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taining the amount which is allowable deduction u/s 80IB are - (i) Amount of profit derived from eligible business; and (ii) The amount of gross total income of the assessee The amount of profit derived from eligible business qualifies for deduction u/s 80IB subject to the amount of gross total income of the assessee. There is absolutely no relevance for this purpose of the amount which is arrived at by aggregating income from all the different business of the assessee which is the amount assess .....

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ndustry covered in the Fifth Schedule. The assessee sustained loss in the alloy steel industry but profit in the other industry. It claimed deduction in respect of the profit without reducing the loss from the alloy steel industry. The ITO held that the assessee will be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture. The High court decided the point in assessee s favour. The revenue assail .....

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on the entire profits of the automobile parts industry included in the total income without deducting there from the loss in the alloy steel manufacture. Facts involved in the instant appeal are mutatis mutandis similar. 16. The Hon ble Andhra Pradesh High Court in the case of CIT v. Visakha Industries Ltd. [2001] 251 ITR 4711 has also taken the similar view by holding that the deductions contemplated under section 80HH and 80-I are to be allowed with reference to the profits of the particular i .....

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