HERITAGE HOUSING DEVELOPMENT CORPORATION, MUMBAI V. ASST CIT 15(2), MUMBAI

CO 196/MUM/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0419 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 21-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 27-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURINDERJEET SINGH
• Keywords: Condonation of delay
• Section: 143(3); 80IB; 6; 263; 12

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BE NCH, MUMBAI , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NOS. 2607, 4097 & 4098/MUM/2011 ( ' ' ' ' / ASSESSMENT YEARS : 2005-06 TO 2007-08 THE ACIT 15(2), MATRU MANDIR, TARDEO MUMBAI-400 008 / VS. M/S. HERITAGE HOUSING DEVELOPMENT CORPN., 9 TH FLOOR, DHEERAJ ARMA, DR. A.K. MARG, BANDRA(E), MUMBAI-400 051 ./I .T.A. NOS. 5394, 5395 & 5396/MUM/2012 ( ' ' ' ' / ASSESSMENT YEARS : 2005-06 TO 2007-08 M/S. HERITAGE HOUSING DEVELOPMENT CORPN., 9 TH FLOOR, DHEERAJ ARMA, DR. A.K. MARG, BANDRA(E), MUMBAI-400 051 / VS. THE ACIT 15(2), MATRU MANDIR, TARDEO MUMBAI-400 008 C.O. NOS. 196, 197 & 198/MUM/2012 (ARISING OUT OF I .T.A. NOS. 2607, 4097 & 4098/MUM/2011) ( ' ' ' ' / ASSESSMENT YEARS : 2005-06 TO 2007-08 THE ACIT 15(2), MATRU MANDIR, TARDEO MUMBAI-400 008 / VS. M/S. HERITAGE HOUSING DEVELOPMENT CORPN., 9 TH FLOOR, DHEERAJ ARMA, DR. A.K. MARG, BANDRA(E), MUMBAI-400 051 ( % ./ ) ./ PAN/GIR NO. :AADFH 7531A ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / DEPARTMENT BY: SHRI SURINDER JEET SINGH +,(* . - / ASSESSEE BY: DR. K. SHIVARAM SHRI RAHUL HAKANI M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 2 . /0% / DATE OF HEARING :25.02.2015 12' . /0% / DATE OF PRONOUNCEMENT :11.03.2015 3 / O R D E R PER BENCH: ITA NO. 2607,4097 & 4098/M/2011 ARE APPEALS BY THE REVENUE FOR A.YRS 2005-06 TO 2007-08, ITA NOS. 5394, 5395 & 5396/M/2012 ARE CROSS APPEALS BY THE ASSESSEE FOR A.YRS 2005-06 TO 2007-08 AND C.O. NO. 196, 197 & 198 ARE CROSS OBJECTIONS BY THE ASSESSEE FOR A.YRS 2005-06 TO 2007-08. AS THE ISSUE INVOLVED IS COMMON IN THIS B UNCH OF APPEALS, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BEFORE PROCEEDING FURTHER, LET US FIRST UNDERSTA ND THE FACTUAL MATRIX WHICH WILL BE CLEAR FROM THE FOLLOWING SUBMISSIONS OF THE ASSESSEE MADE DURING THE ASSESSMENT PROCEEDINGS FOR A.Y. 2005-06 VIDE LETTER DT. 18 TH DECEMBER, 2007 PLACED AT PAGE-183-184 OF THE PAPER BOOK. THE ASSESSEE FIRM HERITAGE HOUSING DEVELOPMENT CORPORATION (HHDC) IS ENGAGED IN BUILDING CONSTRUCT ION ACTIVITIES FOR THE LAST SEVERAL YEARS. IT HAS COMMENCED CONSTR UCTION OF ONE PROJECT ENTITLED HERITAGE ON VARIOUS PLOTS OF LAN D BEARING PLOT F. P. 18-19/11 TO 15, 16B (18-19/109), 20 PT, 28, 2 9, 31, 32, 33, 88, 89, 90 TO 99, 100, 102, 106, 107 OF TPS VI OF SANTA CRUZ (W), ADMEASURING ABOUT 88,251.34 SQ. MTRS. THEREAFTER TH E SAID HHDC GOT PREPARED A SCHEME OF DEVELOPMENT OF SAID LARGE PROPERTY UNDER SLUM REHABILITATION SCHEME UNDER SECTION 45 OF MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 TO ERECT BUILDINGS ON SAID PLOT OF LAND. THE SAID AUTHORITY HAS GIVEN LETTER OF INTENT VIDE NO.SRA/ENN/448//GI/LOI DATED 25/05/2 000 ALREADY SUBMITTED IN OUR EARLIER SUBMISSION AND PRINCIPALLY APPROVED THE DEVELOPMENT SCHEME UNDER WHICH THE REHABILITATION C OMPONENT IS 72966.66 SQ. METERS, AND SALE COMPONENT PERMISSIBLE IS 72966.66 M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 3 SQ. METERS TAKING INTO ACCOUNT BOTH SLUM PLOT AND N ON-SLUM PLOT. THE SALE COMPONENT PERMISSIBLE IS HEREINAFTER CALLE D THE FREE SALE RESIDENTIAL COMPONENT ,FREE SALE COMMERCIAL COMPONENT AND REHABILITATION COMPONENT IS HEREINAFTER CALLED THE REHAB COMPONENT. THE DEVELOPERS HAVE ALSO PREPARED THE P LANS FOR CONSTRUCTION OF 17 REHAB BUILDINGS, 4 RESIDENTIAL B UILDINGS AND 1 COMMERCIAL BUILDING WHICH HAVE BEEN APPROVED UNDER INTIMATION OF APPROVAL ALREADY SUBMITTED IN OUR EARLIER SUBMIS SION. THE ENTIRE HOUSING SCHEME UNDERTAKEN BY THE ASSESSE E FIRM IS SUMMARIZED IN THE FOLLOWING LINES. 1) THE ASSESSEE IS REQUIRED TO CONSTRUCT 17 REHAB BUIL DINGS ADMEASURING ABOUT 72966.66 SQ.MTRS TO PROVIDE 2467 RESIDENTIAL PREMISES FOR THE BENEFIT OF SLUM DWELLERS 2) IN CONSIDERATION OF DEVELOPMENT OF SUCH REHAB HOUSI NG PROJECT, THE ASSESSEE FIRM IS ENTITLED TO HAVE F.S.I FOR CONSTRU CTION OF SALE BUILDINGS EQUIVALENT TO 72966.66 SQ.MTR. THEREFORE THE ASSESSEE FIRM HAS CHOSEN TO CONSTRUCT 5 BUILDINGS ON THE SAI D F.S.I GRANTED BY THE LOCAL AUTHORITY OUT OF WHICH 4 BUILDINGS ARE APPROVED AS PURELY RESIDENTIAL PURPOSES AND 1 IS APPROVED AS CO MMERCIAL. FOR THE PURPOSE OF PROPER ACCOUNTING THE ASSESSEE FIRM HAS CREATED SEPARATE PROJECT WISE ACCOUNTING IN RESPECT OF (1.) REHAB COMPONENT THAT IS 17 REHAB BUILDINGS (2). 4 FREE SA LE RESIDENTIAL PREMISES AND (3). 1 FREE SALE COMMERCIAL PREMISES. ACCORDINGLY THE INCOME DERIVED FROM REHAB COMPONENT AND THAT FROM F REE SALE RESIDENTIAL COMPONENT IS TREATED AS ELIGIBLE FOR DE DUCTION U/S 8OIB-10 AND THE INCOME ARISING OUT OF SALE COMPONEN T NOT BEING ELIGIBLE FOR SUCH DEDUCTION IS OFFERED FOR TAXATION IN THE RETURN OF THE INCOME FILED BY THE ASSESSEE FIRM FOR THE YEAR UNDER REVIEW. 2.1. AFTER UNDERSTANDING THE FACTS OF THE CASE, THE ASSESSING OFFICER NOTICED THAT THE SCHEME APPROVED BY THE LOCAL AUTHO RITY HAVE COMMERCIAL SHOPS EXCEEDING 2000 SQ. FT. DRAWING SUPPORT FROM THE PROVISIONS OF SEC. 80IB(10(D), THE AO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS CONTRAVENED THE SAID PROVISIONS OF THE ACT. A SHO W CAUSE NOTICE WAS ACCORDINGLY ISSUED. THE ASSESSEE FILED A DETAILED R EPLY WHICH IS INCORPORATED BY THE AO FROM PAGES- 2 TO 5 OF THE AS SESSMENT ORDER. IT M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 4 WAS STRONGLY SUBMITTED THAT THE SRA HAS APPROVED TH E RESIDENTIAL HOUSING PROJECT AND THE COMMERCIAL PROJECT AS SEPARATE PROJ ECTS. THE AO OBSERVED THAT FROM THE COPY OF THE APPROVED PLAN CO NSTRUCTION OF COMMERCIAL BUILDING IS AN INTEGRATED PART OF THE TO TAL SCHEME APPROVED BY THE SRA UNDER ITS LETTER DT. 25.5.2000. ACCORDING TO THE AO, THE SCHEME APPROVED BY THE LOCAL AUTHORITY IS NOT A PURELY RES IDENTIAL PROJECT. THE AO PROCEEDED BY DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT AND COMPLETED THE ASSESSMENT FOR ASSESSMENT YEA R 2005-06. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED ITS CLAIM. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS OF THE OPINION THAT SINCE THE HOUSIN G PROJECT WAS APPROVED BEFORE 31.3.2005, THE AMENDED PROVISIONS D O NOT APPLY TO THE FACTS OF THE CASE. AFTER DRAWING SUPPORT FROM VARI OUS DECISIONS OF THE TRIBUNAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE U/S. 80IB(10) OF THE ACT. 4. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 5. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE R EVENUE FOR ASSESSMENT YEAR 2005-06 IS THAT THE LD. CIT(A) ERRE D IN ALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT EVEN TH OUGH THE ASSESSEE HAS NOT COMPLIED WITH THE MANDATORY CONDITION FOR THE C LAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. 6. IN ASSESSMENT YEAR 2006-07, WHILE SCRUTINIZING T HE RETURN OF INCOME, THE AO NOTICED THAT THE ASSESSEE HAS ALLOCA TED MAINTENANCE EXPENSES TO RESIDENTIAL AND COMMERCIAL BUILDING. T HE AO WAS OF THE OPINION THAT THE ALLOCATION BY THE ASSESSEE IS HIGH LY DISPROPORTIONATE. THE AO FOUND THAT THE ASSESSEE HAS ALLOCATED MAINTENANC E EXPENSES TO M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 5 COMMERCIAL BUILDING AT RS. 98,84,148/- AND TOWARDS RESIDENTIAL BUILDING AT RS. 88,63,017/-. THE AO WAS OF THE FIRM BELIEF THAT WHEN THE TOTAL FSI RECEIVED HAS BEEN ALLOCATED IN RATIO OF 64.48:35.52 . THE MAINTENANCE EXPENSES SHOULD ALSO HAVE BEEN ALLOCATED ON THE TOT AL SALEABLE AREA OF THE RESIDENTIAL AND COMMERCIAL BUILDING IN THE SAME RAT IO. THE ASSESSEE WAS ASKED TO JUSTIFY ITS ALLOCATION. ON RECEIVING NO P LAUSIBLE REPLY, THE AO PROCEEDED BY ALLOCATING MAINTENANCE EXPENSES BETWEE N RESIDENTIAL AND COMMERCIAL BUILDINGS ON THE BASIS OF SALEABLE AREA. 7. PROCEEDING FURTHER, THE AO VERIFIED THE CLAIM OF DEDUCTION U/S. 80IB(10) IN THE LINE OF HIS FINDING IN A.Y. 2005-06 . ONCE AGAIN EXAMINING THE PROJECT, THE AO WAS OF THE OPINION TH AT 4 RESIDENTIAL BUILDINGS CLEARLY CONSTITUTED 4 DIFFERENT PROJECTS AND THEREFORE EACH PROJECT HAS TO BE ON PLOT AREA OF MORE THAN ONE ACR E. IN ASSESSEES CASE THE FOUR RESIDENTIAL BUILDINGS ARE ON 4 DIFFERENT P LOT OF LAND AND ALL THESE 4 PLOTS OF LAND ARE SEPARATE FROM EACH OTHER, THE ARE A OF EACH OF THESE FOUR PLOTS OF LAND IS LESS THAN ONE ACRE. THE AO WAS CO NVINCED THAT PROVISIONS OF CLAUSE (B) OF 80IB(10) IS THUS VIOLATED BY THE A SSESSEE. 7.1. PROCEEDING FURTHER, THE AO NOTICED THAT SOME O F THE FLATS HAVE EXCEEDED THE CARPET AREA OF 1000 SQ FT. ON PHYSICA L INSPECTION, IT WAS FOUND THAT 3 FLATS WERE ACTUALLY A SINGLE UNIT. TH E DETAILS OF PHYSICAL INSPECTION OF THE FLAT ARE MENTIONED AT PARA-12.1. OF THE ASSESSMENT ORDER. THE ASSESSEE WAS ASKED TO EXPLAIN. THE ASSESSEE EXP LAINED THAT ALL THE FLATS WERE SOLD SEPARATELY AND ARE INDEPENDENT FLAT . FURTHER, THE FLATS ARE SOLD BY SEPARATE SALE AGREEMENTS HAVING SEPARATE EL ECTRICITY BILLS, MAINTENANCE AND SOCIETY CHARGES EVEN THE POSSESSION LETTERS WERE GIVEN SEPARATELY. THE AO RUBBISHED THE SUBMISSION OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAS VIOLATED TH E PROVISIONS OF CLAUSE M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 6 (C) OF SEC. 80IB(10) AND HENCE NOT ELIGIBLE FOR DED UCTION. ONCE AGAIN, DRAWING SUPPORT FROM THE FINDINGS IN A.Y. 2005-06, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS EXCEEDED THE COMMERCI AL AREA INCLUDED IN SUCH PROJECT BY THE LIMIT PRESCRIBED IN CLAUSE (D) OF SEC. 80IB(10) AND HENCE VIOLATED THE SAID CONDITION AND THEREFORE NOT ELIGIBLE FOR DEDUCTION. THE AO DENIED THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. 8. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFOR E THE LD. CIT(A). IN SO FAR AS ALLOCATION OF MAINTENANCE EXPENSE IS C ONCERNED, THE LD. CIT(A) WAS CONVINCED WITH THE SUBMISSIONS MADE BY T HE ASSESSEE AND OBSERVED THAT THE AO HAS NOT PROPERLY APPRECIATED T HE FULL FACTS OF THE CASE NOR HAS VERIFIED THE RESPECTIVE EXPENDITURE OF RESIDENTIAL BUILDING AND COMMERCIAL BUILDING. THE LD. CIT(A) FURTHER OB SERVED THAT WHEN TWO SEPARATE ACCOUNTS ARE THERE WITH REFERENCE TO R ESIDENTIAL AS WELL AS COMMERCIAL BUILDING, CAN SUCH APPORTIONMENT BE DON E ON ASSUMPTION BASIS. THE LD. CIT(A) REJECTED THE APPORTIONMENT O F EXPENDITURE AS MADE BY THE AO AND DELETED THE ADDITION. 8.1. IN SO FAR AS THE CLAIM OF DEDUCTION U/S. 80IB IS CONCERNED, THE LD. CIT(A) FOLLOWED THE FINDINGS GIVEN IN ASSESSMENT YE AR 2005-06 AND AFTER RELYING UPON THE SAME DECISIONS AS RELIED UPON IN A .Y 2005-06, THE LD. CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. FA CTS OF ASSESSMENT YEAR 2007-08 ARE IDENTICAL TO THE FACTS OF ASSESSME NT YEAR 2006-07 IN SO FAR AS APPORTIONMENT OF MAINTENANCE EXPENDITURES AR E CONCERNED. THE CLAIM OF ASSESSEE FROM DEDUCTION U/S. 80IB(10) WAS ALLOWED BY THE LD. CIT(A). IN THE SIMILAR LINE AS THAT OF A.YRS 2005- 06 AND 2006-07. THE GRIEVANCE OF THE REVENUE IS IN THE SAME LINE AS T HAT OF A.Y. 2006-07 IN SO FAR AS APPORTIONMENT OF MAINTENANCE EXPENDITURE IS CONCERNED, AND IN M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 7 SO FAR AS THE ALLOWABILITY OF DEDUCTION U/S. 80IB(1 0) IS CONCERNED, IN THE SAME LINE AS THAT OF A.Y.2005-06 AND A.Y 2006-07. 10. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUBMITTED THAT THE DOCUMENTS RELATING TO THE APPROVAL BY THE SLUM REHABILITATION AUTHORITY, THE NOTIFICATION ISSUED BY THE CBDT AS E XHIBITED IN THE PAPER BOOK HAVE NEVER BEEN EXAMINED BY THE LOWER AUTHORIT IES. IT IS THE SAY OF THE LD. DR THAT IT APPEARS THAT THESE DOCUMENTS HAV E BEEN SUBMITTED FOR THE FIRST TIME. POINTING TOWARDS THE COMMENCEMENT CERTIFICATE IN THE PAPER BOOK, THE LD. DR STATED THAT THE ASSESSEE HAS ONLY SUBMITTED THE CERTIFICATES OF COMMENCEMENT OF PROJECT BUT HAS NOT SUBMITTED THE CERTIFICATE OF COMPLETION OF THE PROJECT. THE LD. DR FURTHER STATED THAT IT IS NOT CLEAR FROM THE SANCTION MAP WHETHER 4 REHABI LITATION BUILDINGS ARE APPROVED AS A SINGLE PROJECT OR FOUR DIFFERENT PROJ ECTS. THE LD. DR FURTHER CONTENDED THAT THERE IS NO DOCUMENTARY EVID ENCE TO SUGGEST THAT THE PROJECT HAS BEEN APPROVED AS A HOUSING PROJECT. THE LD. DR WHILE SUPPORTING THE FINDINGS OF THE AO SUBMITTED THAT CE RTAIN DOCUMENTARY EVIDENCES NEEDS RE-VERIFICATION AND THEREFORE THE A PPEALS SHOULD BE RESTORED TO THE FILE OF THE AO FOR RE-VERIFICATION OF CERTAIN DOCUMENTARY EVIDENCES. 11. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE S TRONGLY OBJECTED TO THE SUBMISSIONS MADE BY THE DR. IT IS THE SAY OF T HE LD. COUNSEL THAT NONE OF THE LOWER AUTHORITIES HAVE RAISED THIS ISSU E THAT WHETHER THE PROJECT IS APPROVED AS HOUSING PROJECT OR NOT THERE FORE THE POINT RAISED BY THE LD. DR IS NOT COMING OUT OF THE ORDER OF THE LD . CIT(A). SUPPORTING THE CLAIM OF DEDUCTION U/S. 80IB(10), THE LD. COUNS EL FOR THE ASSESSEE STATED THAT THE AO HAS DENIED THE CLAIM ON THE BAS IS OF THE AMENDMENT BROUGHT TO THE PROVISIONS OF SEC. 80IB(10)(D) OF TH E ACT. THE LD. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 8 COUNSEL STATED THAT THIS CONTROVERSY HAS NOW BEEN S ETTLED BY THE HONBLE JURISDICTIONAL HIGH COURT THAT THE AMENDMENT BROUGH T FROM A.Y. 2005-06 WILL NOT APPLY TO THE PROJECTS SANCTIONED PRIOR TO 1.4.2005. THE LD. COUNSEL REFERRED TO THE DECISION OF THE HONBLE HIG H COURT OF BOMBAY IN THE CASE OF HAPPY HOME ENTERPRISES 271 CTR 524. TH E LD. COUNSEL CONCLUDED BY STATING THAT THE CLAIM CANNOT BE DENIE D ON THE GROUND OF COMMERCIAL AREA. IN SO FAR AS THE OBJECTION OF THE AO THAT CERTAIN FLATS WERE SOLD AS ONE UNIT, THE LD. COUNSEL STATED THAT THE RESPONSIBILITY OF THE BUILDER IS ONLY UPTO THE DATE OF HANDING OVER OF TH E POSSESSION, WHAT THE PURCHASERS DO AFTER TAKING THE POSSESSION CANNOT BE USED AGAINST THE BUILDER. THEREFORE, THE OBSERVATIONS OF THE AO ARE WITHOUT A NY BASIS AND THE LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT DO CUMENTARY EVIDENCES BROUGHT ON RECORD AND REFERRED TO DURING THE COURSE OF THE HEARING. THERE IS NO DISPUTE THAT THE SLUM REHABILITATION AUTHORIT Y HAS APPROVED THE SLUM REHABILITATION SCHEME U/S. 45 OF MAHARASHTRA REGION AL AND TOWN PLANNING ACT, 1966 AND ALLOWED THE ASSESSEE TO EREC T BUILDING AS PER THE SCHEME ON THE LAND APPROVED BY THE SRA. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS PREPARED THE PLANS FOR CONSTRUCTION OF 17 REHAB BUILDINGS, 4 RESIDENTIAL BUILDINGS AND ONE COMMERCIAL BUILDING. THE DISPUTE RAISED RELATES TO THE COMMERCIAL PART INVOLVED IN THIS PRO JECT. THIS ISSUE IS NO MORE RES-INTEGRA AS THE JURISDICTIONAL HIGH COURT H AS SETTLED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY H OLDING THAT THE AMENDMENT BROUGHT TO SEC. 80IB(10) W.E.F. 2005-06 A RE NOT APPLICABLE TO THE PROJECTS SANCTIONED PRIOR TO 1.4.2005. THE ASS ESSEE PASSES THIS TEST AS IT ITS PROJECT WERE APPROVED PRIOR TO 1.4.2005. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 9 12.1. IN SO FAR AS THE OBSERVATIONS OF THE AO THAT 3 FLATS/2 FLATS WERE SOLD AS ONE COMPOSITE UNIT, THEREBY THE BUILT UP AREA EX CEEDED 1000 SQ. FT IS CONCERNED, WE FIND THAT ALL THE FLATS WERE SOLD BY SEPARATE SALE DEEDS WHICH FACT IS ALSO NOT DISPUTED BY THE AO. EVEN ON PHYSICAL VERIFICATION, A SEPARATE ELECTRICITY METERS WERE FOUND AND THE OW NERS WERE PAYING SEPARATE MAINTENANCE CHARGES TO THE SOCIETY. IN OU R CONSIDERED OPINION, THE FLATS WERE SOLD SEPARATELY, THERE IS A POSSIBIL ITY THAT THE OWNERS OF THE FLAT MAY HAVE JOINED 3/2 FLATS TOGETHER. HOWEVER, THIS ACT OF THE BORROWERS CANNOT GO AGAINST THE BUILDER AS THE LIAB ILITY/RESPONSIBILITY OF THE BUILDER IS ONLY UP TO THE DATE OF SALE AND ON T HE DATE OF SALE THE FLATS SOLD WERE LESS THAN 1000 SQ. FT IN BUILT UP AREA, H ENCE ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 12.2. ANOTHER ALLEGATION MADE BY THE AO IS THAT 4 R ESIDENTIAL BUILDINGS ARE ON 4 SEPARATE PLOTS, EACH PLOT IS LESS THAN ONE ACRE, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION. 12.3. THE CLAIM OF THE ASSESSEE THAT THE FOUR TOWER S OF RESIDENTIAL UNITS ARE IN COMPLIANCE WITH THE MINIMUM AREA MENTIONED I N SEC. 80IB(10) OF THE ACT BECAUSE IT IS SLUM REHABILITATION PROJECT A PPROVED BY THE GOVERNMENT OF INDIA. 12.4. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO T HIS SUBMISSION OF THE ASSESSEE. WE FIND THAT THE NOTIFICATION IS ISSUED ON 3 RD AUGUST, 2010 NO. 67/2010-INCOME TAX S.O. 1898(E) WHEREIN IT HAS BEEN MENTIONED THAT THE NOTIFICATION SHALL COME INTO FORCE W.E. F THE DATE OF ITS PUBLICATION. 12.5. VIDE CORRIGENDUM ISSUED IN RESPECT OF THE NOT IFICATION MENTIONED HEREINABOVE, THE CORRECTION HAS BEEN MADE BY THE CB DT WHICH READS AS UNDER: M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 10 THIS NOTIFICATION SHALL COME INTO FORCE W.E.F THE DATE OF ITS PUBLICATION HAS TO BE READS AS UNDER: THIS NOTIFICATION SHALL BE DEEMED TO APPLY TO PROJ ECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID S CHEME ON OR AFTER THE 1 ST DAY OF APRIL, 2004 AND BEFORE 31ST DAY OF MARCH, 2008 THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) FROM THE ASSESSMENT YEAR 2005-06 ONWARDS. 12.6. IN THE FOOTNOTE TO THIS CORRIGENDUM, THERE IS AN EXPLANATORY MEMORANDUM WHICH READS AS UNDER: AS THE PROVISIONS OF SEC. 80-IB(10) APPLY ONLY TO H OUSING PROJECTS APPROVED BEFORE 31.3.2008, THE ABOVE NOTIF ICATION WOULD ALSO BE DEEMED TO APPLY TO HOUSING PROJECTS A PPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1 ST DAY OF APRIL, 2004 AND BEFORE 31 ST DAY OF MARCH, 2008. 12.7. GOING THROUGH THE NOTIFICATION, WE FIND THAT THE NOTIFICATION HAS BEEN ISSUED FOR THE SCHEME CONTAINED IN REGULATION 33(10) OF DEVELOPMENT CONTROL REGULATION FOR GREATER MUMBAI 1 991 SUBJECT TO THE FOLLOWING CONDITIONS: I) SLUM DEVELOPMENT FALLING IN CATEGORY VII MENTIONED IN NOTIFICATION NO. TPB-4391/4080(A)/UD-11(RDP) DT. 3 RD JUNE, 1992 SHALL BE EXCLUDED FROM THE SCHEME. II) SLUM DEVELOPMENT FALLING WITHIN CLAUSE 7.7 OF THE APPENDIX IV OF REGULATION 33(10) WHICH PROVIDES FOR M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 11 JOINT DEVELOPMENT OF SLUM AND NON-SLUM AREAS SHALL BE EXCLUDED FROM THE SCHEME; AND III) ANY AMENDMENT IN THE SCHEME HEREBY NOTIFIED SHALL BE REQUIRED TO BE RE-NOTIFIED BY THE BOARD. 12.8. CLAUSE (II) HEREINABOVE IS RELEVANT ON THE FA CTS OF THE CASE IN HAND. SINCE THIS NOTIFICATION HAS BEEN ISSUED AFTER THE C OMPLETION OF THE ASSESSMENT AND THE APPELLATE PROCEEDINGS AND HAS BE EN SUBMITTED BEFORE US FOR THE FIRST TIME, WE UNDERSTAND THAT THE LOWER AUTHORITIES HAD NO OCCASION TO CONSIDER THE FACTS OF THE CASE IN HAND IN THE LIGHT OF THIS NOTIFICATION AND THE CONDITIONS MENTIONED THEREIN. 12.9. TO BE FAIR TO THE REVENUE, WE RESTORE THIS IS SUE TO THE FILES OF THE AO ONLY FOR THE LIMITED PURPOSE FOR THE VERIFICATIO N OF THE SCHEME UNDER WHICH THE ASSESSEE HAS MADE THE CONSTRUCTION AND HA S CLAIMED DEDUCTION U/S. 80IB(10). THE AO IS DIRECTED TO VERIFY THE SC HEME IN THE LIGHT OF THE NOTIFICATION MENTIONED HEREINABOVE. THE ASSESSEE I S DIRECTED TO FURNISH NECESSARY DETAILS BEFORE THE AO. THE AO SHALL DECI DE THIS ISSUE AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THIS GRIEVANCE OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 13. IN SO FAR AS THE ISSUE RELATING TO THE ALLOCATI ON OF MAINTENANCE EXPENSE IS CONCERNED, WE FIND THAT AN IDENTICAL ISS UE WAS CONSIDERED BY THE TRIBUNAL, THIRD MEMBER, IN ITA NO. 6484/M/09 WH EREIN THE TRIBUNAL WAS CEASED WITH THE ISSUE RELATING TO THE ORDER MAD E BY THE COMMISSIONER U/S. 263 OF THE ACT WHEREIN THE CIT WAS OF THE OPIN ION THAT THE APPORTIONMENT OF THE MARKET VALUE OF F.S.I. AMOUNTI NG TO RS. 29.29 CRORES SHOULD BE APPORTIONED BETWEEN RESIDENTIAL BUILDING AND COMMERCIAL BUILDING IN THE RATIO OF 48:52. THE TRIBUNAL HAS U PHELD THE ORDER OF THE M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 12 CIT MADE U/S. 263 OF THE ACT. THE AO HAS RIGHTLY A LLOCATED THE MAINTENANCE EXPENDITURE IN THE RATIO OF SALEABLE AR EA BETWEEN RESIDENTIAL AND COMMERCIAL BUILDING. WE, ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND UPHOLD THE ASSESSMENT ORDER ON THIS ISSUE. REVENUES APPEAL ON THIS ISSUE IS ALLOWED. 14. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE . 15. COMING TO THE CROSS APPEALS AND THE CROSS OBJEC TIONS FILED BY THE ASSESSEE, THE COMMON GRIEVANCE IN ALL THE YEARS IS THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE AO TO ALLOW THE ASSESSEE DEDUCTION U/S. 80IB(10) EVEN ON PROFIT RELATING TO COMMERCIAL BUI LDING. 15.1. IT IS PERTINENT TO MENTION HERE THAT APPEAL F OR A.Y. 2005-06 IS LATE BY 1211 DAYS AND APPEAL FOR A.YRS. 2006-07 AND 20 07-08 ARE LATE BY 465 DAYS. SIMILARLY, THE C.O FOR 2005-06 IS LATE BY 1047 DAYS AND C.O. FOR A.YRS 2006-07 AND 2007-08 ARE LATE BY 156 DAYS . IN ALL THESE APPEALS AND CROSS OBJECTIONS, IDENTICAL APPLICATION FOR CONDONATION OF DELAY IS FILED BY THE ASSESSEE. 16. LET US UNDERSTAND THE FACTS FOR A.Y. 2005-06, THE ASSESSMENT ORDER WAS MADE ON 28.12.2007 U/S. 143(3) OF THE ACT . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) ON 28.1.2008 . MEANWHILE, THE CIT ISSUED NOTICE U/S. 263 OF THE ACT FOR ALLOCATIO N OF THE MARKET VALUE OF F.S.I BETWEEN RESIDENTIAL AND COMMERCIAL BUILDINGS. ACCORDING TO THE CIT, THIS ASPECT NEEDED VERIFICATION. IN THE MEANT IME, THE LD. CIT(A) VIDE ORDER DT. 24.2.2009 ALLOWED ASSESSEES APPEAL. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 13 17. THE REVENUE PREFERRED AN APPEAL AGAINST THE ORD ER OF THE LD. CIT(A) ON 23.4.2009. THE CIT U/S. 263 OF THE ACT D IRECTED THE AO TO DO THE ALLOCATION ON REASONABLE BASIS VIDE ORDER DT. 2 9.8.2009. AGAINST THIS ORDER OF THE CIT, ASSESSEE PREFERRED AN APPEAL BEFO RE THE TRIBUNAL WHICH WAS DISPOSED OFF BY THE TRIBUNAL ON 29.6.2012 UPHOL DING THE ORDER OF THE CIT. THIS ORDER OF THE TRIBUNAL WAS RECEIVED ON 13 .7.2012. THE ASSESSEE HAS FILED THE APPEALS FOR THE ASSESSMENT YEARS UNDE R CONSIDERATION AND THE CROSS OBJECTIONS ONLY AFTER RECEIVING THE ORDER OF THE TRIBUNAL. THIS CONDUCT OF THE ASSESSEE CANNOT BE CONSIDERED AS A R EASONABLE AND SUFFICIENT CAUSE FOR THE DELAY IN FILING OF THE APP EAL. ONCE THE ASSESSEE WAS AWARE OF THE ORDER OF THE LD. CIT(A), IT WAS IN CUMBENT UPON THE ASSESSEE TO PREFER THE APPEAL OR OTHERWISE. IT IS WORTHWHILE TO MENTION THAT ON 23.4.2009, THE ASSESSEE WAS WELL AWARE THAT THE REVENUE HAS PREFERRED AN APPEAL AGAINST THE ORDER OF THE TRIBUN AL. THE ASSESSEE COULD WELL HAVE FILED THE CROSS OBJECTIONS WITHIN THE PER IOD OF LIMITATION , IF THE ASSESSEE WAS NOT INCLINED TO FILE THE APPEAL. BUT T HE FACTUAL MATRIX SHOW THAT THE ASSESSEE WAITED FOR THE ORDER OF THE TRIBU NAL TO SEE WHETHER TRIBUNAL UPHELD THE ORDER OF THE LD. CIT MADE U/S. 263 OF THE ACT OR DISMISSES THE SAME. THE CLAIM OF THE ASSESSEE THAT THE DELAY WAS NEITHER DELIBERATE NOR WITH MALICIOUS, INTENTION IS TOTALLY FALSE AND AGAINST THE FACTS OF THE CASE AS DEMONSTRATED HEREINABOVE, THE ASSESSEE HAS WAITED FOR THE OUTCOME OF THE DECISION OF THE TRIBUNAL AGAINST 263 ORDER OF THE CIT. THEREFORE, THE RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT IN 167 ITR 471 WOULD NOT DO ANY GOOD TO THE ASSESSEE. CONSIDERING THE PECULIAR FACTS OF THE CASE, ALL THE THREE APPEALS O F THE ASSESSEE ALONGWITH 3 CROSS OBJECTIONS FOR THE ASSESSMENT YEARS UNDER CON SIDERATION ARE DISMISSED AS UNADMITTED. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 14 18. TO COMPLETE THE ADJUDICATION, LET US SEE THE CL AIM OF THE ASSESSEE. THE ASSESSEE CLAIMS THAT IN THE LIGHT OF THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES 333 ITR 289, THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB(10) ON PR OFITS ARISING FROM COMMERCIAL BUILDING. THE CLAIM OF THE ASSESSEE QUA DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) IS TOTALLY MISPLACED B ECAUSE IN THE CASE OF BRAHMA ASSOCIATES, WHAT THE HONBLE HIGH COURT IS HELD THAT CLAUSE (D) WAS INSERTED TO SEC. 80IB(10) W.E.F. 1.4.2005 AND I S PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE COULD NOT BE APPLIED FOR TH E PERIOD PRIOR TO 1.4.2005 WHICH MEANS THAT THE AMENDMENT IS NOT APPL ICABLE TO THE PROJECTS APPROVED BEFORE 1.4.2005. FURTHER IT HAS BEEN MENTIONED THAT SINCE THE EXPRESSION HOUSING PROJECT IS NOT DEFINED IN THE ACT NOR DEFINED UNDER REGULATION FRAMED BY THE LOCAL AUTHORITIES FR OM WHETHER THE PROJECT WOULD QUALIFY AS A HOUSING PROJECT HAS TO BE GATHER ED FROM THE RULES/REGULATION FRAMED BY THE LOCAL AUTHORITY. SI NCE THE LOCAL AUTHORITIES COULD APPROVE A PROJECT TO BE A HOUSING PROJECT WIT H OR WITHOUT THE COMMERCIAL USER, IT IS EVIDENT THAT THE LEGISLATURE INTENDED TO ALLOW SEC. 80IB(10) DEDUCTION TO ALL HOUSING PROJECTS APPROVED BY LOCAL AUTHORITY WITHOUT ALL WITH COMMERCIAL USER TO THE EXTENT PERM ITTED UNDER THE RULES. THIS IS FURTHER VERIFIED BY CLAUSE (D) OF SEC. 80IB (10) INSERTED WITH EFFECT FROM 1.4.2005. IT PROVIDES THAT EVEN THOUGH SHOPS AND COMMERCIAL ESTABLISHMENTS ARE INCLUDED IN THE HOUSING PROJECT, DEDUCTION U/S. 80IB(10) W.E.F. 1.4.2005 WOULD BE ALLOWABLE WHERE S UCH COMMERCIAL USER DOES NOT EXCEED 5% OF THE AGGREGATE BUILT UP AREA O F THE HOUSING PROJECT OR 2000 SQ.FT WHICHEVER IS LOWER. BY THE FINANCE A CT, 2010, CLAUSE (D) WAS AMENDED TO THE EFFECT THAT THE COMMERCIAL USER SHOULD NOT EXCEED 3% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJE CT OR 5000 SQ.FT WHICHEVER IS HIGHER. THE EXPRESSION INCLUDED IN CLAUSE (D) MAKES IT AMPLY CLEAR THAT COMMERCIAL USER IS AN INTEGRAL PAR T OF A HOUSING PROJECT. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 15 19. APPLYING THE ABOVE RATIO OF THE HONBLE HIGH CO URT TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE ITSELF VIDE LETTER D T. 18.12.2007 EXHIBITED AT PAGE-183 OF THE PAPER BOOK HAS ADMITTED THAT FOUR B UILDINGS ARE APPROVED AS PURELY RESIDENTIAL BUILDINGS AND ONE IS APPROVED AS COMMERCIAL AND THE ASSESSEE HAS KEPT SEPARATE PROJECT-WISE ACCOUNTS IN RESPECT OF REHAB COMPONENT I.E. 17 REHAB BUILDINGS, 4 RESIDENTIAL BU ILDINGS AND ONE FREE SALE COMMERCIAL PREMISES. THUS IN ASSESSEES OWN S UBMISSION, IT IS CLEAR THAT THE COMMERCIAL BUILDING IS A SEPARATE PROJECT AND IS NOT INCLUDED AS AN INTEGRAL PART OF THE HOUSING PROJECT. 19.1. ONCE AGAIN THE ASSESSEE IN ITS LETTER DT. 27 .12.2007 WHICH IS EXHIBITED AT PAGE-187 AND AT PARTICULAR PAGE-189 HA VE ITSELF MENTIONED AS UNDER: AS FAR AS THE COMMERCIAL PROJECT IS CONCERNED, IT IS TOTALLY INDEPENDENT PROJECT AND NOT INTEGRATED TO ANY OF T HE RESIDENTIAL PROJECT OR REHAB PROJECTS. THE DETAILED LAYOUT PLAN SUBMITTED TO YOUR KIND SELVES FULLY SUPPORTS T HE FACTUAL POSITION. 19.2. THE ASSESSEE IN THE SAME REPLY HAVE FURTHER M ENTIONED THAT THE SAID PROJECT IS A HOUSING PROJECT AND NOT RESIDENTIAL CU M COMMERCIAL PROJECT. CONSIDERING THE RATIO OF THE DECISION OF THE HONBL E BOMBAY HIGH COURT IN THE LIGHT OF ASSESSEES OWN ADMISSION, THE CLAIM OF THE ASSESSEE IS NOT TENABLE IN LAW AND TO COMPLETE THE ADJUDICATION, T HE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB(10) ON THE SALE OF THE COMM ERCIAL USER IS DECLINED. M/S. HERITAGE HOUSING & DEVELOPMENT CORPN. 16 20. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED AND THE APPEALS AND THE CROSS OBJECTIONS FILED BY T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2015 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 11 TH MARCH, 2015 . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI