TMI Blog2013 (12) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... erred on facts and in law in confirming the disallowance of the claim u/s. 80IB(10) of ₹ 11,618,359/- . 2. The assessee has also filed an application seeking leave of the Tribunal to raise the following additional ground: Without prejudice to the above, the learned CIT(A) has erred in not allowing a pro-rata claim with reference to the eligible portion of the housing project . 3. On the admission of the additional ground, we have heard the parties. In our opinion the additional ground raised by the assessee raises purely legal issue which can be adjudicated on the basis of the facts available on record. We, therefore, following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT, 229 ITR 283 admit the additional ground. 4. The facts which are revealed from the record as under. The assessee is a partnership firm engaged in the business of builder and developer. The assessee has undertaken a housing project from which the assessee declared the net profit of ₹ 1,16,18,359/- and the entire profit was claimed as deduction u/s. 80IB(10) of the Income-tax Act. The Assessing Officer raised certain queries on the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer was not convinced with the explanation of the assessee. In his opinion amenities space is nothing but it is a commercial area and it is the part of the assessee s housing project and the said area is exceeded 2000 sq. ft. which is maximum limit put by the amendment to Sec. 80IB(10), hence the assessee is not eligible for deduction u/s. 80IB(10). The reasons given by the Assessing Officer for denying the deduction to the assessee are as under: 3.2. The assessee's contention that amenity space is as separately carved out area from the total plot area of 8200 sq. mtrs leaving the balance area of 6970 sq. mtrs on which the housing project has been executed is not acceptable. It is true that it is a mandatory condition for the assessee to reserve 15% of area as amenity space. However assessee is not compelled to construct buildings of commercial nature in the amenity space by any order of any Authority. The assessee by its own free will has ventured into the activity of constructing buildings such as bakery, consumer store, books stall, market, hospital, library, exhibition hall dispensary yoga centre training institute etc., which are patently of commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer the amenities space is nothing but it is a commercial space and it is more than 2000 sq. ft. hence the assessee is not eligible for deduction u/s. 80IB(10). There is no other reason given by the Assessing Officer for denying deduction to the assessee. The assessee challenged the action of the Assessing Officer denying the deduction before the Ld. CIT(A) but without success. The Ld. CIT(A) confirmed the order of the Assessing Officer. The relevant discussion and finding of the Ld. CIT(A) are as under: 3.4. I have considered the submissions and the material available on record. It is noticed that the appellant has made the same submission as made before the Assessing Officer including the citing of various tribunal decisions in the case of Vandana Properties, Saroj Sales Corporation, Subhash Bafna, etc. One CBDT letter dated 4.5.2001 was cited, in which it was stated that an additional housing project on existing housing project can also quality u/s. 80IB(10). Moreover, a recent decision of Pune Tribunal in the case of Apoorva Properties and Estates in ITA No. 1550/PN/2008 dated 21.8.2009 for A.Y. 2005-06 was also cited. The appellant has also placed reliance on certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has not been undertaken by a separate undertaking having separate books of accounts etc. Therefore, this clarification is also of no help to appellant. 3.6. In accordance with the above discussion it is held that since 1230 sq. ft. of amenities space was converted into a commercial area by choice by the appellant, the restriction of clause (d) of 80IB(10) would necessarily apply to this particular area. Accordingly, since the commercial area envisaged in the project has thus exceeded limit provided u/s. 80IB(10)(d) of the Act, the appellant is not entitled to deduction u/s. 80IB(10) of the I.T. Act, 1961. Ground No. 1 is, therefore, dismissed. Now the assessee is in appeal before us. 8. We have heard the rival submissions of the parties and perused the record. The main plank of the argument of the Ld. Counsel is that the amenities space cannot be equated with commercial space and even if assuming it is a commercial space but still as the assessee s project is sanctioned prior to 01-04-2005, the limitation put on the maximum commercial area in any housing project is not applicable to the assessee s project as the original lay out and buildings plan were first sanctioned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see going with the case of the Assessing Officer that the amenity building is nothing but it is commercial building only and part of the assessee s housing project. In this case the assessee s original layout and the building plan were sanctioned on 14-06-2004 even if the N.A. order of the plot is dated 16- 09-2003 (copy of the plan placed at Page Nos. 13 and 14 of the Compilation). As per the layout plan sanctioned on 14-06-2004, the total area of the plot is shown at 4100 Sq. Mtrs. and area under the amenity space 15% i.e. 615 Sq. Mtrs. It appears that subsequently the assessee sought the revision in the sanctioned layout and plan but the area of the plot was 4100 Sq. Mtrs. Till 01-04-2005 the assessee has not done anything on the plot. It appears that the assessee acquired the adjoining land and filed the further revised plan and layout for the approval to the local authority and the approval was given to the said plan on 05-08-2006. In the said layout the total area of the plot is shown at 8400 Sq. ft. (copy of the plan and layout is at Page Nos. 28 and 30 of Compilation). From this factual aspect, it can safely be concluded that in fact the plan sanctioned on 05-08-2006 is alm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also referred to Sec. 22 of the MRTP Act, 1966 to impress his argument on the point that the reservation of the amenity space is governed by the relevant statute and is not the matter of choice of the developer. The assessee has also filed the copy of the sanctioned plan of the amenity building on the reserve space of 1230 Sq. Mtrs. which is place at Page No. 40 of the Compilation. We further find that for the construction of the building of the amenity space separate permission has been granted by the District Collector being competent local authority vide order dated 07-06-2008. If the building on the amenity space has been granted specific permission separately, in our opinion it partake the character of independent project and cannot be tagged with the assessee s other projects. The Ld. Counsel also submitted that not a single unit in the said building has been sold till today even though given on lease and no profit from the amenity building space is included in the eligible profit on which the deduction u/s. 80IB(10) has been claimed. The Ld. Counsel has relied on the plethora of the decisions on this limb of argument but in our opinion the decision of the Hon'ble jurisdi ..... 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