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2016 (5) TMI 312 - ITAT RAJKOT

2016 (5) TMI 312 - ITAT RAJKOT - TMI - Revision u/s 263 - disallow deduction under section 80IB(10) - Held that:- The project of the assessee was approved by the local authorities on 25.10.2002. This project was subsequently revised and approved on 3.1.2004. The assessee has claimed deduction under section 80IB(10) on this project for A.Y.2004-05 also [2012 (10) TMI 1093 - GUJARAT HIGH COURT]. This deduction was disallowed to the assessee on the ground that there was commercial construction in t .....

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re 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, Accountant Member For the Petitioner : Shri M.J. Ranpura, CA For t .....

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n 143(3) r.w.s section 263 on 28.12.2010. This order was challenged before the ld.CIT(A), which has given rise to this appeal. 3. First we take up the ITA No.841/RJT/2010. In this appeal, the grievance of the assessee is that the ld.CIT has erred in taking action under section 263 of the Income Tax Act, and thereby, directing the AO to disallow deduction under section 80IB(10) of the Act amounting to ₹ 29,1,359/-. 4. Brief facts of the case are that the assessee has filed its return of inc .....

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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 b .....

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section 80IB. The ld.CIT set aside the assessment order and disallowed the claim made by the assessee himself by exercising power under section 263 of the income Tax Act. The total income has been determined by the CIT at ₹ 29,40,399/-. He directed the AO to take total income of the assessee at this figure in place of ₹ 23,040/- taken in the assessment order passed under section 143(3) on 20.12.2007. 5. While impugning the order of the ld.CIT, the ld. counsel for the assessee contend .....

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25.10.2002. This project was subsequently revised and approved on 3.1.2004. The assessee has claimed deduction under section 80IB(10) on this project 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 .....

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s provided the daily utility supplies of the residents. We are convinced that the Tribunal committed no error in upholding the Commissioner's order granting benefit of deduction to the assessee under section 80IB(10) of the Act, particularly when such deduction was confined to the exclusion of the area occupied by the commercial construction. 4) The Bombay High Court in the case of C.I.T. Vs. Brahma Associates (supra) had considered a very similar issue and rejected the revenue's appeal, .....

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ake available a large number of affordable houses to the common man and not with a view to deny commercial user in residential buildings. In other words, the restriction under section 80- IB(10) regarding the size of the residential unit would in no way curtail the powers of the local authority to approve a project with commercial user to the extent permitted under the Development Control Rules/Regulations. Therefore, the argument of the Revenue that the restriction on the size of the residentia .....

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under section 80-IB(10) with effect from April 1, 2005 would be allowable where such commercial user does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet whichever is lower. By the Finance Act, 2010, clause (d) is amended to the effect that the commercial user should not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet whichever is higher. The expression included in clause (d) make .....

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fore, the argument of the Revenue that with effect from April 1, 2005 the Legislature for the first time allowed section 80-IB(10) deduction to housing projects having commercial user cannot be accepted. 5) This takes care of questions No. A and D 7. 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, 57 taxmann.com 313 (SC). The question before the Hon ble Supreme Court was whether section 80IB(10)(d) of the I .....

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