TMI Blog2016 (5) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has also demonstrated that it has not claimed 80IB deduction qua the commercial space. Apart from above, this issue is now covered by the decision of the Hon’ble Supreme Court rendered in the case of CIT Vs. Sarkar Builders (2015 (5) TMI 555 - SUPREME COURT ) wherein held that projects which were sanctioned and commenced prior to 1.4.2005 and completed by the stipulated date, then, 80IB(10)(d) would not be applicable on those projects. Therefore, even if the action of the CIT taken under section 263 is justified, then also on merit, the disallowance cannot be made - Decided in favour of assessee - ITA. No. 841/RJT/2010, ITA No. 522/RJT/2012 - - - Dated:- 17-3-2016 - Shri Rajpal Yadav, Judicial Member And Shri Manish Borad, Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the return has claimed deduction under section 80IB of ₹ 29,17,359/-. The ld.AO has allowed this deduction to the assessee. On perusal of the record, the ld.CIT has harboured a belief that in the Asstt.Year 2004-05, similar issue has come up before the AO. The ld.AO has observed that housing project on which the assessee has claimed deduction under section 80IB(10), it has constructed commercial space to the extent of 9.38% of the total space. The ld.AO disallowed the deduction admissible to the assessee in the Asstt.Year 2004-05. The assessee took this issue in appeal before the ld.CIT(A) who has allowed the deduction and the appeal of the Revenue stands dismissed upto the Hon ble High Court. The ld.Commissioner was of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for A.Y.2004-05 also. This deduction was disallowed to the assessee on the ground that there was commercial construction in the housing project comprised of 9.38% of the built up area. The Hon ble High Court has observed that prior to 1.4.2005, there was no ceiling prescribed for commercial construction. The assessee has also demonstrated that it has not claimed 80IB deduction qua the commercial space. The observation of the Hon ble High Court read as under: 3) We may notice that during the year under consideration, section 80IB (10) of the Act did not prescribe any maximum limit of commercial construction in a housing project to be eligible for deduction under such provisions. The Commissioner (Appeals) as well as the Tribunal both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Control Rules/Regulations. Therefore, the argument of the Revenue that the restriction on the size of the residential unit in section 80-IB(10) as it stood prior to April 1, 2005 is suggestive of the fact that the deduction is restricted to housing projects approved for residential units only cannot be accepted. 28) The above conclusion is further fortified by clause (d) of section 80-IB(10) inserted with effect from April 1, 2005. Clause (d) of section 80-IB(10) inserted with effect from April 1, 2005 provides that even though shops and commercial establishments are included in the housing project, deduction under section 80-IB(10) with effect from April 1, 2005 would be allowable where such commercial user does not exceed five pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Hon ble Court has held that projects which were sanctioned and commenced prior to 1.4.2005 and completed by the stipulated date, then, 80IB(10)(d) would not be applicable on those projects. Therefore, even if the action of the CIT taken under section 263 is justified, then also on merit, the disallowance cannot be made. We set aside the order of the CIT on merit and delete the disallowance of ₹ 29,17,359/- made by the CIT. In other words, assessment order dated 20.12.2007 is restored. ITA No.522/RJT/2012 8. As observed earlier, CIT himself has adjudicated the issue on merit and made addition of ₹ 29,17,359/- in the total income of the assessee. The ld.CIT has not remitted any issue to the AO for readjudication. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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