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2012 (10) TMI 1140 - ITAT PUNE

2012 (10) TMI 1140 - ITAT PUNE - TMI - ITA No. 1231/PN/2008 & 1382/PN/2010 - Dated:- 31-10-2012 - Shailendra Kumar Yadav (Judicial Member) And R. K. Panda (Accountant Member) For the Assessee : V. L. Jain For the Department : Ann Kapthuama ORDER Shailendra Kumar Yadav (Judicial Member) Both these appeals pertain to same assessee. So they are being disposed of by this common order for the sake of convenience. 2. In ITA.No.1231/PN/2008, the assessee raised the following grounds: 1. The learned CIT .....

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ent order, that in first three cases independent units have been merged with single entry. In fourth case also, even though there are multiple entries, interiors have been merged into single unit. Thus these residential units have more than the maximum built up area specified u/s.80IB(10). According to the Assessing Officer, legislative intendment for giving tax exemption u/s. 80IB(10) was to increase of stock of house for low and middle income group. This legislative intendment cannot be allowe .....

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ons is violated, the assessee would not be entitled to deduction u/s.80IB. In view of this, two units of dwelling units were clubbed into one unit where the built up area in the combined units exceeded 1500 sq.ft. It was clear that the condition for deduction u/s.80IB have been violated. The fact that assessee has made two separate agreements will be of no help to the assessee because such an action on the part of the assessee violates the letter as well as spirit of the law. The action of the a .....

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the Assessing Officer and upheld by the CIT(A). 4. Before us, the Ld. Authorised Representative submitted that the CIT(A) was not justified in confirming the disallowance u/s.80IB(10) of ₹ 1,04,58,412/-. Without prejudice to above, the CIT(A) was not justified in not allowing pro-rata allowance of deduction for the residential units of the housing project not exceeding 1500 sq.ft. In this regard Ld. Authorised Representative drew our attention to the order of the ITAT Pune Bench in the ca .....

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. The Mumbai Bench after noticing the precedents in the case of - i) ITO v/s Air Developers, 25 DTR 287 (Nag.); ii) DCIT v/s Brigade Enterprises Pvt. Ltd., 14 DTR 371 (Bang.); iii) ACIT v/s Sheth Developers P. Ltd., 33 SOT 277 (Mum.); iv) Bengal Ambuja Housing Development Ltd. v/s DCIT; v) SJR Builders v/s ACIT, 3 ITR 569 (Mum.) held that the assessee would not loose the exemption u/s. 80 IB (10) in entirety where some of the residential units wings had a 'built- up area' in excess of th .....

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the Tribunal in the case of M/s Ekta Housing Pvt. Ltd. reads as under : "viii) We now examine the applicability of the decision of the Hon'ble Bombay High Court in Brahma Associates (supra) to the facts of this case. On a careful reading of this judgment, we find that nowhere it is stated that proportionate deduction should not be allowed, in case certain residential units had built up area in excess of prescribed limit of 1,000 sq.ft. In fact, this issue was not before the Hon'ble .....

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entitled to claim for deduction under section 80IB(10) even if the project had commercial element in excess of 10%. At Paras-27 and 28, the Court observed as follows :- "27. The question then to be considered is, whether the Special Bench of the Tribunal was justified in holding that the projects having commercial area upto 10% of the built-up area of the plot are eligible for deduction under section 80IB(10) on the entire project upto 1.4.2005. Once the basic argument of the revenue that t .....

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lause (d) to section 80IB (10) with effect from 1.4.2005. Therefore, it was not open to the Tribunal to hold that prior to 1.4.2005, projects having commercial user upto10% of the plot area alone would be eligible for section 80IB(10) deduction. 28. In the present case, though the commercial user is more than 10% of the plot area, the Tribunal has allowed section 80IB(10) deduction in respect of 15 residential buildings on the ground that the profits from these exclusively residential buildings .....

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the DC Rules and hence the assessee was entitled to section 80IB(10) deduction on the entire project approved by the local authority. However, the assessee has not challenged the decision of the Tribunal in restricting the deduction to a part of the project. Therefore, while holding that in law, the assessee was entitled to section 80IB(10) deduction on the profits of the entire project, in the facts of the present case, since the assessee has not challenged the decision of the Tribunal, we are .....

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area in excess of the prescribed limit of 1,000 sq.ft. in residential project, this would result in the entire exemption being lost, or whether the assessee would be entitled to a proportionate deduction was not before the High Court. Thus, in our opinion, the decision of Hon'ble Jurisdictional High Court in Brahma Associates (supra) does not come to the rescue of the Revenue." 22. Following the aforesaid precedent, we, therefore, hold that merely because the assessee has violated the .....

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identical. In this year also, in our considered opinion, our decision in the aforesaid paragraph fully applies. Though in A.Y. 2005-06, the definition of 'built-up area' as per Section 80 IB (14)(a) was on Statute, but, admittedly, assessee's project was approved and commenced prior to 1.4.2005, therefore, the calculation of 'built- up area' shall not be governed by such definition. Therefore, for the A.Y. 2005-06 also, the project DSK Frangipani is eligible for deduction u/ .....

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peals are partly allowed." 4.1. We also find that the ITAT Mumbai 'G' Bench in the case of G.V.Corporation vs. ITO in ITA.No.4512/Mum/2007, has held as under: "Condition under sub-s.(2) of s.80-IB that the assessee should be an industrial undertaking is not applicable for claiming the deduction under sub-s.(10); further, merely because 9 out of 140 purchasers desired to join the flats purchased by them into one single unit, which exceeded 1,000 sq.ft. of built-up area, cannot d .....

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ave carefully considered the rival submissions. Quite clearly, for availing the benefit envisaged u/s.80IB(10) of the Act, certain conditions have been prescribed thereof. In the present case, the only controversy is in respect of clause (c) of section 80IB(10) of the Act which prescribes that the built up area of the residential unit should not exceed 1500 sq.ft. where such residential unit is situated in the city of Pune. In the present case, the project of the assessee has 83 different flats .....

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r. 10. Factually speaking, it is emerging from the orders of the authorities below that the four flats are separate units in the building sanctioned plans as approved by the local authorities. Further, it is also noticeable from para 5.2 of the order of the CIT(A) that they have been booked by the customers and sold individually under separate agreements. Further, the flats have different entrances, kitchens, lobbies etc. The flats have been issued completion certificates by the municipal author .....

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ng discussion by the CIT(A) is relevant: "5.5. The facts narrated above carefully indicate that the merger of flats occurred in the hands of the flat purchasers after the sale of flats. The appellant has no control on what the purchaser does in his flat after the possession is handed over. No evidence is brought on record by the A.O. to show that the appellant has artificially given two flat numbers to one single flat. The Valuer's report states that four flats were combined into two un .....

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ed units were combined by the appellant before handing over possession of flats to the purchasers in violation of the condition in clause (c) of sec. 80IB(10). If each residential unit does not exceed the built-up area of 1500 sq.ft. as per approved plan, the fact that they were joined together by the flat holders for better living or for more space or for any other reason does not disentitle the appellant to the claim for deduction under section 80-IB, particularly when these changes in the fla .....

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V. Corporation reported in 133 TTJ 178, wherein it is held as under: "It was not also the case of the Commissioner that each flat in the housing projects undertaken by the assessee could not have been used as an independent or self-contained residential unit not exceeding 1,000 square feet of built-up area and that there would be a complete, habitable residential unit only if two or more flats were jointed with each other, which would ultimately exceed 1,000 square feet of built-up area. In .....

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IB." 11. Ostensibly the conclusion reached by the CIT(A) is based on factual material and there is no material brought on record before us which would enable us to interfere with the order of the CIT(A). Having regard to the aforesaid discussion in the order of the CIT(A), we therefore hold that there is no substance in the assertion of the Revenue that the assessee undertook development and building of a housing project which involved construction of a residential units with built up area .....

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