TMI Blog2013 (3) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,97,59,989/-. The Assessing Officer denied the claim of the assessee for deduction u/s.80IB(10) in relation to both the projects. The CIT(A) has since allowed the claim in relation to Citadel Enclave project i.e. for ₹ 1,97,59,989/- and for the other project, i.e. Citadel amounting to ₹ 18,42,022/-, the claim has been denied. Against the denial of its claim u/s.80IB(10) for Citadel project at ₹ 18,42,022/- the assessee is in further appeal before us. 3. The Citadel project of the assessee consisted of 7 residential buildings and 3 commercial buildings (D, D1 and D2) which was denied claim u/s.80IB(10) of the Act in the instant year on the basis of stand of the Revenue in the earlier years. In earlier years the claim was denied u/s.80IB(10) on account of commercial area in the project exceeding the limits prescribed in section 80IB(10)(d) of the Act. The claim was also denied on the basis of some of the flats having built-up area exceeding 1500 sq.ft after including the exclusive terrace area attached with those flats. The Assessing Officer referred to the order of the CIT(A) for Assessment Years 2003-04 and for 2004-05 dated 06-11-2006 and 12-07- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts can be understood as follows: The project Citadel constructed by the assessee was approved by the Pune Municipal Corporation (in short PMC) vide Commencement Certificate dated 16-7-2002 and the final completion of construction certificate was issued by the PMC on 22-2-2004. The other salient features noted by the Assessing Officer were that the total built up area of all the shops was 13,246.96 (1230.87 sq. mtrs) while the total built up area of all the residential flats was 1,99,299.79 sq. ft. (18,493.94 sq. mtrs). As per the Assessing Officer, the assessee had thus constructed commercial area of 13,248.96 sq. ft. which was 6.67% (approximately) of the total constructed area of the project. In this background, the Assessing Officer held that the same was violative of clause (d) of sec. 80-IB(10) of the Act, inserted by the Finance (No. 2) Act, 2004 with effect from 1-4-2005. According to the Assessing Officer, the assessee had constructed commercial area in excess of 2000 sq.ft. which was the limit prescribed in clause (d) of sec. 80-IB(10) of the Act. According to the Revenue, the aforesaid facts also show that the project was not a pure housing project which was the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C dated 6-12-2005 wherein it has been stated that the project in question was approved by PMC as a residential-cum-commercial project. Factually, it is also clear that out of the total constructed area, an area of 13,248.96 sq. ft. is consisting of commercial area which is approximately 6.7% of the total constructed area of the project. 8. At this point, we may refer to clause (d) to sec. 80-IB(10) of the Act which has been inserted by the Finance (No. 2) Act, 2004 w.e.f. 1-4-2005 which reads as under: the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever isles. 9. In terms of the aforesaid provision, the case of the Revenue is that the same reflects the meaning of expression housing project which is to be understood as a purely residential project not involving any commercial area. Secondly, it is pointed out that the commercial area in the instant case is 13,248.96 sq.ft. which is more than the permissible area of 2000 sq.ft. or 5% of the total built-up area whichever is less as provided in clause (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue whereby, it is stated that the built-up area of some of the units exceeded 1500 sq.ft., which was the limit prescribed in clause (c) of sec. 80-IB(10) of the Act. As per the Revenue, since some of the units violated the condition prescribed in clause (c) of sec. 80-IB(10), profits from such project are ineligible for claiming deduction u/s 80-IB(10) of the Act. 12. On this aspect, the facts are that after including the area covered by terrace and balconies, the built-up area exceeded 1500 sq.ft. On this aspect, the CIT(A) has held that expression built-up area has been explained in section 80-IB(14)(a) of the Act to include projections and balconies and therefore, the stand of the Assessing Officer to the effect that some of the residential units violated the conditions prescribed in clause (c) of sec. 80-IB(10) of the Act was in order. 13. In this background, the claim of the assessee is that the project in question commenced prior to 1-4-2005 and therefore, the definition of built-up area prescribed in sec. 80-IB(14)(a) would not apply as the said section was inserted by the Finance (No 2) Act, 2004 w.e.f. 1-4-2005. The learned counsel relied on the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of G.K. Builders (supra) the aforesaid proposition was affirmed following the earlier decisions of the Tribunal in the case of Tushar Developers in ITA No. 165/PN/2007 and 94/PN/2007 for A.Y. 2003-04 and 2004-05 vide order dated 31-5-2011 and Haware Constructions (P) Ltd. Vs. ITO (2011) 64 DTR (Mum) 251. The following discussion in the order of the Tribunal in the case of G.K. Builders (supra) is relevant:- After going through the above submissions and material on record, we are not inclined to concur with the finding of the CIT(A). The deduction under question has been rejected by the AO and confirmed by the CIT(A) on the ground that it exceeded the prescribed limit with respect to Row House No. 36. Accordingly, the whole project was rejected. The AO has reached to the conclusion after including the terrace area of 108 sq.ft. In Brahma Builders (supra) whether the terrace in built up area comes only w.e.f 1-4-2005 because the decision is introduction in the section w.e.f. the said date. For the period prior to 1-4-2005, no such definition was on the statute and hence, the built up area has to be considered as per the DC rule of the sanctioning authority. The DC rules do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would squarely apply to the said assessment years also. However, one of the aspects which requires a little discussion is as follows: For the earlier assessment year, the objection of the Revenue based on clause (d) of sec. 80-IB(10) of the Act has been negated by us on the ground that such amendment was made by the Finance (No. 2) Act, 2004 w.e.f. 1-4-2005 and would not operate retrospectively. Since in the assessment year under consideration viz. 2005-06 and 2006-07, the aforesaid amendment is on the statute, the case set up by the Revenue is that the claim for deduction be governed on the basis of such amendment. On this aspect, the point to be considered is as to whether the restriction of commercial area prescribed in sec. 80-IB(10)(d) of the Act as inserted by the Finance (No. 2) Act, 2004 w.e.f 1-4-2005 can be made applicable to a project which has been approved and commenced prior to 1-4-2005. Similar controversy has been the subject matter of consideration by Pune Bench of the Tribunal in the case of Opel Shelters (supra) as also in the case of Hiranandani Akruti JV (supra). In the aforesaid precedents, it has been held that the provisions of sec. 80- IB(10)(d) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided by the Tribunal in the assessee s own case for the Assessment Years 2003-04 to 2006-07 vide its order dated 23-11-2012 (Supra). The Tribunal had concluded that the amendment made by the Finance (No.2) Act 2004 w.e.f. 01-04-2005 by insertion of Clause (d) of section 80IB(10) would not operate retrospectively and that it would be prospective in nature. According to the Tribunal, the assessee had commenced its project in question prior to 01-04-2005 in terms of the approval granted by a local authority and the said project also stands completed on 20-03-2004 and thus the amendment made by the Finance (No.2) Act 2004 cannot be invoked to dis-entitle assessee s claim of deduction u/s.80IB(10) for the Assessment Years 2005-06 and 2006-07 as well. The aforesaid conclusion of the Tribunal was also based on certain precedents which are as under : 1. Open Shelters Pvt. Ltd. Vs. ACIT (ITA No.219/PN/2010 for A.Y. 2005-06 order dated 31-05-2010 2. G.K. builders in ITA No.1077 and 1078/PN/2010 for A.Y. 2005-06 and 2006-07 order dated 30-07-2012 3. Hiranandani Akruti JV Vs. Dy. CIT reported in 39 SOT 498 (Mumbai) The Tribunal also considered the judgments of the Hon ble Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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