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TMI Blog2021 (1) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the deduction as claimed u/s 80/8(10)"? 4. The CIT(Appeals) erred in not considering the fact that even if some of the residential units of the housing project exceeded the prescribed limit of 1500 sq ft, the benefit of section 8018(10) cannot be given to the entire project". 5. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. 6. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above. 2. The notice of hearing was served on the assessee but none appeared on behalf of the assessee. Hence, we proceed to decide the appeal after hearing the submissions of the learned DR. 3. The assessee, a partnership firm and is engaged in the business of constructing residential buildings at Eagleton, Bidadi, Bangalore Rural District. The firm had undertaken construction of two housing projects viz., County-I and County-II in the past and continuing these projects in this year also. Separate P&L a/c for County-I and County-II, and the consolidated balance sheet were filed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sanctioned plant as there could have been some deviations resulting in excess built up area. Since the assessee did not satisfy the condition that built up area of each residential unit should be less than 1500 sq.ft, the AO held that assessee is not eligible for deduction u/s 80IB(10). Accordingly, the deduction claimed was rejected. 7. Besides the non-compliance of condition of built up area in respect of some residential units, the AO also noticed that as per the plan sanction obtained from Secretary, Manchanayakana Halli, Ramanagar Taluk on 11.4.2005,the site area of each plot is mentioned along with number of those plots and the proposed built-up area was shown as 48,243/- sq.ft. Besides these details, the plot area was mentioned as 10.385 acres. This plot area is the total plot area inclusive of County-I & County-II, etc. However, the plot area of County-I has not been separately mentioned. The AO also noticed that the project consists of individual residential houses spread over different portions of a big land with certain intervening areas demarcated as lands for future development and some area of the land shown as area meant of landscaping. In other words, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore not entitled to deduction under section 80IB(1) of the Act. The CIT(A), in paragraphs 11.1 and 11.2 of his order, held that the assessee waw a developer and had taken the risk and rewards in developing and constructing the housing project. This finding of the CIT(A) has not been challenged by the Revenue in this appeal. 10. The next issue that the CIT(A) took up for consideration was as to whether the deduction under section 80IB(10) can be allowed on proportionate basis in respect of residential units having a built up area of 1500 sq.ft. or less. On this aspect, the CIT(A) held that the assessee would be entitled to deduction under section 80IB(10) of the Act on a proportionate basis in respect of housing units which are 1500 sq.ft. or less in built up area. Incidentally, the CIT(A) also held that in respect of an independent residential units, assessee would be entitled to claim deduction under section 80IB(10) of the Act. The final conclusions of the CIT(A) were as follows: "13. As regards to the alternative grounds of appeal that the deduction should be allowed on proportionate basis in respect of the residential units having built up area of 1500 Sft and be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see duction under Section 80IB(10) of the Act to the extent of Rs. 25,08,21,669/- in respect of profits of two projects viz., Brigade Gateway and Brigade Metropolis. The Assessing Officer made disallowance of the claims of the assessee under Section 80IB(10). The Commissioner of Income Tax (Appeals) who by an order dated 14.11.2012 allowed the claim of the assessee for deduction under Section 80IB(10) of the Act. On further appeal by the revenue the Income Tax Appellate Tribunal by an order dated 21.03.2014 upheld the order of the CIT(A). On further appeal by the Revenue, the Hon'ble Karnataka High Court answered the question of law in favour of the Assessee by following its own order in the case of the assessee by this court vide orders dated 22.09.2020 passed in Commissioner of Income Tax vs. Brigade Enterprises Ltd., in I.T.A.Nos.54/2013 and 55/2013. The following were the relevant observations of the Hon'ble High Court in respect of proportionate deduction u/s.80IB(1) of the Act in the judgment dated 22.9.2020: "B. REQUIREMENT OF RESIDENTIAL UNIT HAVING A MAXIMUM BUILT UP AREA OF 1,500 SQUARE FEET: 16. The Assessing Officer has held that 32% of the units of the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident that the same does not exclude the principle of proportionality in any manner. Therefore, we hold that the Commissioner of Income Tax (Appeals) as well as the Tribunal have rightly found that the assessee has complied with the requirement contained in clause (c) of Section 80IB(10) of the Act." In view of the aforesaid decision of the Hon'ble Karnataka High Court, we are of the view that there is no merit in the stand taken by the revenue in this appeal. 13. Even in respect of ground No.3, it is clear from the perusal of the submissions of the assessee before CIT(A) that the DVO has not considered the units in County - I project and therefore the report of the DVO cannot be said to be final in the matter. In these circumstances, we do not find any merit in the ground No.3 raised by the Revenue. In any event, the physical measurement has to be taken by the AO and the AO is at liberty to take physical measurement in an appropriate manner and therefore there cannot be any grievance to the Revenue. For the reasons given above, we find no merit in the appeal by the Revenue. Consequently, the appeal by the Revenue is dismissed. 14. In the result, the appeal of the Revenue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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