TMI Blog2012 (11) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... original lay out plan of this commercial building was mentioned as ‘residential plus commercial’ in the original commencement. It is therefore, held that appellant was entitled for deduction u/s 80-IB(10) - Decided in favour of assessee. - ITA No. 164 & 1438/PN/2007 & 751 & 280/PN/2010, ITA No. 164 & 1438/PN/2007 & 751 & 280/PN/2010 - - - Dated:- 23-11-2012 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER For the Appellant: Shri V.L. Jain For the Respondent: Shri S.K. Singh, CIT DR ORDER PER G.S. PANNU, A.M.: The captioned appeals four by the assessee for A.Ys. 2003-04 to 2006-07 and one by the Revenue for A.Y. 2005-06, are directed against the respective orders of the Commissioner of Income-tax (Appeals)-II Pune which, in turn, have arisen from orders passed by the Assessing Officer, under section 143(3) of the Income-tax Act, 1961 (in short the Act). Since the issues involved in all these appeals are common, they were heard together and are being disposed off by this consolidated order for the sake of convenience and brevity. 2. In all these, the common point relates to assessee s claim of deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 requirement for availing deduction u/s 80- IB(10) of the Act. 5. On this aspect, the learned counsel for the assessee has vehemently pointed out that reliance placed by the Revenue on clause (d) of sec. 80-IB(10) of the Act inserted by way of Finance (No. 2) Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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) of sec. 80-IB(10) of the Act. 10. In our considered opinion, reliance placed by the Revenue on clause (d) to sec. 80-IB(10) of the Act to defeat the assessee s claim for deduction in the present case is quite misplaced. Firstly, the Hon ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 following decisions in support of his submission:- i) ITO Vs. Prime Properties (ITA No. 887, 888 889/PN/2010 for A.Y. 2003-04 to 2005-06) vide order dated 26-4-2012 ii) Haware Constructions (P) Ltd. Vs. ITO (2011) 64 DTR (Mum) 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not include terrace in the built up area. So the amendment which has come in this regard w.e.f. 1-4-2005 will not affect the projects which have commencement prior to 1-4-2005. This issue has been decided following Tushar Deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, as inserted by the Finance (No. 2) Act, 2004 w.e.f. 1-4- 2005, shall apply to the projects commencing on or after 1-4-2005. The primary reason made out is to the effect that the assessee having commenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. 21. The brief background with regard to assessee s claim for deduction relating to project Citadel Enclave is as follows: In the A.Y. 2005-06, originally the assessment was made u/s 143(3) on 26- 12-2007 wherein claim of deduction u/s 80-I(B(10) of the Act amounting to ₹ 2,02,18,046/- was denied. The Assessing Officer claimed the two projects as one project in such assessment proceedings. Further, in relation to Citadel Enclave project the Assessing Officer relied upon the report of the approved valuer to hold that six flats had a built-up area of more than 1500 sq.ft. Against the aforesaid assessment, the assessee moved an application for revision u/s 264 of the Act, before the Commissioner of Income-tax-II Pune (for short CIT II). The CIT II vide his order dated 4-5-2008 u/s 264 of the Act, set aside the matter back to the file of the Assessing Officer for purposes of examining deduction u/s 80-IB(10) of the Act with certain directions. Hence, the impugned order passed by the Assessing Officer u/s 143(3) r.w.s. 264 of the Act. In his order, the CIT-II held that the Assessing Officer had not confronted the report of the valuer to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer was misconceived, inasmuch as, factually the commercial building in question was not developed by the assessee-AOP but belonged to another firm M/s. Wide Angle Associates, which was supported by a registered development agreement dated 24-12-2003, a copy of which was very much before the Assessing Officer and the same has been rightly appreciated by the CIT(A). In this manner, the claim of the assessee for deduction u/s 80-IB(10) of the Act in relation to the project Citadel Enclave has been defended. 25. We have carefully considered the rival submissions. On the aforesaid aspect, in our considered opinion, the CIT(A) has recorded two findings which have not been assailed by the Revenue in a cogent manner before us. Firstly, as per the CIT(A) the commercial building referred to by the Assessing Officer was not developed by the assessee-AOP, but by another firm M/s. Wide Angle Associates and therefore, such a building cannot be considered as commercial building developed by the assessee in its project Citadel Enclave . Secondly, it has also been recorded by the CIT(A) that such an issue was neither raised in the original assessment order and nor mandated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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