ACIT, Pune V. M/s. Brahma Associates, Pune

ITA 1202/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49851 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 07-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: SUNIL PATHAK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 1202/PN/2009 (ASSTT. YEAR : 2004-05) ASSTT. COMMISSIONER OF INCOME TAX , ... APPELLANT CIRCLE-4, PUNE V. M/S. BRAHMA ASSOCIATES , RESPONDENT 250-251 M.G. ROAD PUNE 411 001 PAN AAFFB 6764 P ITA NO. 1 184/PN/2009 (ASSTT. YEAR : 2004-05) M/S. BRAHMA ASSOCIATES, APPELLANT 250-251 M.G. ROAD PUNE 411 001 PAN AAFFB 6764 P ASSTT. COMMISSIONER OF INCOME TAX, ... RESPONDENT CIRCLE-4, PUNE ASSESSEE BY : SHRI SUNIL PATHAK DEPARTMENT BY : SHRI HARESHWAR SHARMA ORDER PER I.C. SUDHIR, JM ITA NO.1202/PN/2009 THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER O N SEVERAL GROUNDS. GROUND NOS. 1 TO 5 ARE ON THE ISSUE AS TO WHETHER LD CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE MADE BY THE A.O ON THE ASSESSEES CLAIM OF DEDUCTION U/S. 80 IB(10) TO THE EXTENT OF COMMERCIAL BUILDINGS INSTEAD OF CONFIRMING THE DISALLOWANCE IN FULL I.E. IN RESPECT OF RESIDENTIAL BUILDINGS AS WELL. THE GROUND NOS. 6 & 7 INVOLVES THE ISSUE AS TO WHETHER LD CIT(A) HAS ERRED IN DIRECTING THE A.O . TO EXCLUDE PROFIT OF RS.13,67,687/- ON UNDISCLOSED SALE OF RS. 30,98,52 0/- AFTER VERIFYING IF SUCH PROFIT HAVE BEEN CONSIDERED AND ADDED IN THE A .Y. 2003-04. ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 2 2. THE ASSESSEE (ITA NO. 1184/PN/2009), ON THE OTH ER HAND, QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING G ROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DISALLOWING THE APPELLANT AOPS CLAIM OF DEDUCTI ON U/S 80 IB (10) OF THE INCOME TAX ACT, 1961, IN RESPECT OF PROFIT FROM THE COMMERCIAL PORTION OF THE PROJECT BRAMHA ESTAT E. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT DEDUCTION FOR COST OF LAND OUGHT T O HAVE BEEN ALLOWED FOR COMPUTING THE CORRECT TOTAL INCOME OF T HE APPELLANT. GROUND NOS. 1 TO 5 (REVENUE) & GROUND NO. 1 (ASSESS EE) 3. WE FIND THAT THE ISSUE RAISED IN GROUND NOS. 1 T O 5 OF THE APPEAL PREFERRED BY THE REVENUE AND THE ISSUE RAISED IN GR OUND NO. 1 OF THE APPEAL PREFERRED BY THE ASSESSEE ARE CONNECTED, HEN CE THESE ARE BEING DISPOSED OFF VIDE A CONSOLIDATED ORDER. THE RELEVA NT FACTS ARE THAT THE ASSESSEE AN A.O.P HAD EXECUTED A PROJECT BRAMHA ESTATE. THERE WERE TOTAL 17 BUILDINGS BEING A1 TO A 9, B 7 TO B 12, C1 & C 2, OUT OF WHICH C1 AND C2 WERE COMMERCIAL BUILDINGS. THE A.O ON T HE BASIS OF ASSESSMENT ORDER FOR THE A.Y. 2003-04 DENIED THE CL AIMED DEDUCTION U/S. 80IB (10) OF THE ACT MADE DURING THE YEAR . IN THE A.Y. 2003-04, DEDUCTION U/S. 80 IB(10) WAS DISALLOWED ON THE BASI S THAT TOTAL AREA OF THE COMMERCIAL BUILDINGS C1 AND C 2 IS MORE THAN 70 00 SQ. MTRS. OUT OF THE TOTAL LAID DOWN PLAN AREA OF 22, 290 SQ. MTRS WHICH WAS MORE THAN 20% OF THE TOT AL BUILT UP AREA. THE CLAIMED DEDUCTION WAS ALSO DENIED BY THE A.O ON TH E BASIS THAT THE PUNE MUNICIPAL CORPORATION (PMC) HAD SANCTIONED THE PROJ ECT AS RESIDENTIAL + COMMERCIAL, WHEREAS AS PER SEC. 80 IB (10) DEDUCTI ON WAS ALLOWABLE ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 3 ONLY TO HOUSING PROJECT. THE A.O ALSO REFERRED TO THE AMENDMENT TO SECTION 80 IB (10), BROUGHT OUT BY THE FINANCE ACT, 2004 W.E.F. 1.4.2005 TO WHICH THE LIMITATION OF COMMERCIAL AREA WAS PROV IDED AT 2000 SQ FT. OR 5 % OF THE TOTAL BUILT UP AREA WHICHEVER IS LESS. ACCORDING TO HIM, THIS AMENDMENT IS CLARIFICATORY IN NATURE AND WAS ALSO APPLICABLE TO THE A.Y UNDER CONSIDERATION. 4. THE LD CIT(A) FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES & OTHERS IN ITA NOS. 1417/PN/2006 FOR A.Y. 2005-04 AND OTHERS REPORTED I N 30 SOT 155 (2009) (PUNE) DIRECTED THE A.O TO ALLOW DEDUCTION U/S. 80IB(10) ON THE RESIDENTIAL PORTION , IN CASE THE CONDITIONS MENTIO NED IN SEC. 80IB(10) ARE FULFILLED IN RESPECT OF THE RESIDENTIAL BUILDIN GS OF THE ASSESSEE. HE MENTIONED THAT THE SPECIAL BENCH HAVE ADDRESSED TO THE QUESTION AS TO WHETHER IN A HOUSING PROJECT, COMMERCIAL USE OF BUI LT UP AREA WAS AT ALL PERMISSIBLE IN THE A.YS. BEFORE 2005-06. THE SPECI AL BENCH HELD THAT CONSTRUCTION OF COMMERCIAL AREA TO THE EXTENT OF 1 0% WAS POSSIBLE UP TO A.Y. 2004-05 AND EARLIER YEARS AS STILL 90% OF THE BUILT UP AREA WILL BE RESIDENTIAL PORTION WHICH WILL NOT VITIATE THE TRUE CHARACTER OF THE HOUSING PROJECT. FOLLOWING THE DECISION OF SPECIAL BENCH, THE LD CIT(A) HELD THAT SINCE IN THE ASSESSEES CASE, BUILT UP AREA OF COMM ERCIAL UNITS EXCEEDED 10% OF THE TOTAL BUILT UP AREA, ASSESSEE WILL NOT B E ELIGIBLE FOR DEDUCTION U/S. 80IB(10) IN RESPECT OF PROFITS FROM THE SALE OF COMMERCIAL BUILDINGS. NOW BEFORE THE TRIBUNAL, THE REVENUE HAS QUESTIONED ACTION OF THE LD CIT(A) IN ALLOWING CLAIMED DEDUCTION U/S. 80 IB ( 10) ON THE PROFITS EARNED OUT OF THE CONSTRUCTION OF RESIDENTIAL BUIL DINGS WHEREAS THE ASSESSEE HAS IMPUGNED THE FIRST APPELLATE ORDER WHE REBY THE LD CIT(A) HAS NOT FOUND THE ASSESSEE ELIGIBLE TO CLAIM DEDUCT ION U/S. 80 IB (10) IN RESPECT OF PROFITS EARNED FROM THE SALE OF THE COMM ERCIAL BUILDINGS. ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 4 5. IN SUPPORT OF THE GROUND NOS. 1 TO 5, APPEAL PRE FERRED BY THE REVENUE, THE LD. D.R. SUBMITTED THAT LD CIT(A) HAS FAILED TO APPRECIATE THAT PROVISIONS OF SEC. 80 IB (10) AS WERE APPLICAB LE TO THE A.Y. 2004-05 I.E. PRIOR TO THE AMENDMENT W.E.F. 2005-06, UNAMBIG UOUSLY REFERRED TO A HOUSING PROJECT IN ITS TOTALITY AND DID NOT PROVIDE FOR BIFURCATION OF A HOUSING PROJECT INTO RESIDENTIAL AND COMMERCIAL UNI TS. THE LD CIT(A) ALSO FAILED TO APPRECIATE THAT HOUSING PROJECT OF T HE ASSESSEE DID NOT FULFIL THE CONDITIONS MENTIONED IN SEC. 80 IB(10) IN AS M UCH AS IT INCLUDED BUILT UP AREA OF COMMERCIAL UNITS WHICH WAS NOT AT ALL PERMISSIBLE PRIOR TO A.Y. 2005-06. 6. THE LD. A.R. ON THE OTHER HAND TRIED TO JUSTIFY THE RELIEF GRANTED BY THE LD CIT(A) TOWARDS CLAIMED DEDUCTION U/S. 80 IB (10) IN RESPECT OF PROFITS EARNED OUT OF SELLING OF RESIDENTIAL UNITS. IN SUPPORT OF THE GROUND NO.1 OF THE APPEAL PREFERRED BY THE ASSESSEE, HE SU BMITTED THAT THE ASSESSEE WAS ALSO ELIGIBLE TO CLAIM DEDUCTION U/S. 80 IB(10) OF THE ACT IN RESPECT OF PROFITS EARNED FROM THE SELLING OF THE C OMMERCIAL PORTION OF THE PROJECT. IN THIS REGARD, PLACED RELIANCE ON THE RE CENT DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT V/S. M/S. BRAHMA ASSOCIATES, INCOME TAX APPEAL NO. 1194 OF 2010 DAT ED 22 ND FEBRUARY 2011 (COPY SUPPLIED). HE SUBMITTED THAT AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT V/S. BRAHMA A SSOCIATES (SUPRA), UP TO 31 ST MARCH 2005, DEDUCTION U/S. 80 IB (10) IS ALLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RES IDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE D C RULES/REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORITY. HE SUBM ITTED FURTHER THAT THE HONBLE HIGH COURT HAS BEEN PLEASED TO HOLD THAT IN ABSENCE OF ANY PROVISIONS UNDER THE INCOME TAX ACT, THE TRIBUNAL W AS NOT JUSTIFIED IN HOLDING THAT UP TO MARCH 2005, DEDUCTION U/S. 80 IB (10) WOULD BE ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 5 ALLOWABLE TO THE PROJECTS APPROVED BY THE LOCAL AUT HORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10% OF THE TOTAL BUILT UP AREA OF THE PLOT. THE HONBLE HIGH COURT HAS BEEN FURTHER PLEASED TO HOLD FURTHER THAT SINCE DEDUCTIONS U/S. 80 IB (10) IS ON THE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORI TY, AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING SEC. 80 I B (10) DEDUCTION ONLY TO A PART OF THE PROJECT. THE LD A.R POINTED OUT THAT DURING THE YEAR, THE PORTION OF COMMERCIAL AREA TO THE TOTAL BUILT UP A REA IS ONLY 20.83%. HE SUBMITTED THAT THE PROJECT WAS COMMENCED ON 14.8.20 00 AND COMPLETED IN THE YEAR 2005. HE SUBMITTED THAT BUILT UP AREA OF THE RESIDENTIAL FLATS WAS 24583.31 SQ. MTRS AND BUILT UP AREA OF THE COMM ERCIAL PREMISES WERE 7128.87 SQ. MTRS. THE LD. A.R. ACCORDINGLY SU BMITTED THAT IN VIEW OF THE ABOVE DECISION OF HONBLE BOMBAY HIGH COURT, THE LD CIT(A) WAS NOT JUSTIFIED IN DISALLOWING THE CLAIMED DEDUCTION U/S. 80 IB(10) OF THE ACT IN RESPECT OF PROFITS FROM THE COMMERCIAL PORTI ON OF THE PROJECT ON THE BASIS THAT IT EXCEEDS 10% OF THE TOTAL BUILT UP AR EA ON THE PLOT AS HELD BY THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES, WHIC H HAS BEEN REVERSED BY THE HONBLE HIGH COURT. 7. THE LD. DR REJOINED WITH THIS SUBMISSION THAT I N PARA NO. 28 OF THE DECISION IN THE CASE OF CIT V/S. BRAHMA ASSOCIATES (SUPRA), HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD THAT IF THE CONDITIONS SET OUT IN SEC. 80 IB (10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE I S NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT. HE S UBMITTED THAT SINCE IN THE PRESENT CASE, BUILT UP COMMERCIAL AREA WAS EXCE EDING THE PRESCRIBED LIMIT, THE ENTIRE PROJECT WAS NOT ELIGIBLE FOR DEDU CTION U/S 80 IB (10). ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 6 8. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT ONE OF THE BASIS ON WHICH THE A.O HAS DISALLOWED THE CLAIMED DEDUCTI ON U/S. 80 IB (10) REMAINED THAT AS PER CLAUSE (D) TO SUB-SECTION (10) TO SECTION 80 IB INSERTED W.E.F. 1.4.2005 HAVING RETROSPECTIVE EFFEC T AS PER HIM THAT THE ASSESSEE EXCEEDS COMMERCIAL AREA PROVIDED THEREIN. CIT(A) HAS ALLOWED CLAIMED DEDUCTION ON RESIDENTIAL UNITS FULFILLING CONDITIONS LIKE PRESCRIBED AREA ETC. ENVISAGED IN DIFFERENT CLAUSES OF THE SE CTION 80 IB(10) BUT DENIED THE CLAIMED DEDUCTION ON COMMERCIAL UNITS, SINCE EVEN AS PER SPECIAL BENCH DECISION IN THE CASE OF ASSESSEE ITSE LF AND OTHERS (SUPRA) IT WAS EXCEEDING THE LIMIT OF 10%. THE PARTIES ARE AC CORDINGLY IN APPEALS AGAINST THIS FIRST APPELLATE ORDER. 8.1. UNDISPUTEDLY, THE BUILT UP AREA OF THE COMMER CIAL PREMISES IS 20.83% OF THE TOTAL BUILT UP AREA. NOW WE HAVE BEN EFIT OF THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT ON THE IS SUES INVOLVED IN THE CASE OF CIT VS. M/S BRAHMA ASSOCIATES & OTHERS, INC OME TAX APPEAL NO. 1194 OF 2010 JUDGMENT DATED 22.2.2011. ON GOING TH ROUGH THIS DECISION ESPECIALLY PARA NOS. 28 AND 30 THEREOF, WE FIND TH AT THE HONBLE HIGH COURT HAS NOT APPROVED THE VIEW OF GRANTING DEDUCTI ON ON STAND ALONE BASIS I.E. IF THE ASSESSEE FULFILLS THE REQUIREMEN T OF RESIDENTIAL UNITS AS PER S. 80 IB(10), IT IS ELIGIBLE TO CLAIM DEDUCTION U/S. 80 IB (10) TO THAT EXTENT EVEN IF THERE IS VIOLATION IN THE CONSTRUCTI ON OF COMMERCIAL PREMISES I.E. EXCEEDING THE PRESCRIBED AREA LIMIT. THE HONBLE HIGH COURT ALSO DID NOT APPROVE THE STAND OF THE SPECIAL BENCH IN RESTRICTING THE DEDUCTION CLAIMED U/S. 80IB(10) ON THE COMMER CIAL AREA UP TO 10% OF THE TOTAL BUILT UP AREA IN ABSENCE OF ANY PROVIS ION TO THIS EFFECT IN THE INCOME TAX ACT. THE HONBLE HIGH COURT HELD THAT THE AMENDED PROVISIONS OF SECTION 80 IB(10) W.E.F. 1.4.2005 IS NOT RETROSPECTIVE IN EFFECT AND THAT DEDUCTION U/S. 80 IB (10) IS AVAIL ABLE ON THE HOUSING ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 7 PROJECT APPROVED BY THE PMC AS RESIDENTIAL + COMME RCIAL. THE RELEVANT PARA NOS. 28 AND 30 OF THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF CIT VS. M/S BRAHMA ASSOCIATES & OTHERS (SU PRA) ARE BEING REPRODUCED HEREUNDER FOR A READY REFERENCE : 28. IN THE PRESENT CASE, THOUGH THE COMMERCIAL USE R IS MORE THAN 10% OF THE PLOT AREA, THE TRIBUNAL HAS ALLOWED SECT ION 80IB(10) DEDUCTION IN RESPECT OF 15 RESIDENTIAL BUILDINGS ON THE GROUND THAT THE PROFITS FROM THESE EXCLUSIVELY RESIDENTIAL BUIL DINGS COULD BE DETERMINED ON STAND ALONE BASIS. IN OUR OPINION TH AT WOULD NOT BE PROPER, BECAUSE, SECTION 80 IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80IB( 10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT A PPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWIN G DEDUCTION TO A PART OF THE PROJECT. IN THE PRESENT CASE, THE COM MERCIAL USER IS ALLOWED IN ACCORDANCE WITH THE DC RULES AND HENCE T HE ASSESSEE WAS ENTITLED TO SECTION 80IB(10) DEDUCTION ON THE E NTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY. HOWEVER, THE ASSE SSEE HAS NOT CHALLENGED THE DECISION OF THE TRIBUNAL IN RESTRICT ING 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 TR IBUNAL, WE ARE NOT INCLINED TO DISTURB THE DECISION OF THE TRIBUNA L IN RESTRICTING THE SECTION 80IB(10) DEDUCTION ONLY IN RESPECT OF THE P ROFITS DERIVED FROM 15 RESIDENTIAL BUILDINGS. - 30. IN THE RESULT, THE QUESTIONS RAISED IN THE APP EAL ARE ANSWERED THUS :- A) UPTO 31/3/2005 (SUBJECT TO FULFILLING OTHER COND ITIONS), DEDUCTION UNDER SECTION 80IB(10) IS ALLOWABLE TO HO USING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE D C RULES / REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORIT Y. ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 8 B) IN SUCH A CASE, WHERE THE COMMERCIAL USER PERMIT TED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UND ER THE DC RULES / REGULATION, THE DEDUCTION UNDER SECTION 80IB(10) UP TO 31/3/2005 WOULD BE ALLOWABLE IRRESPECTIVE OF THE FACT THAT TH E PROJECT IS APPROVED AS HOUSING PROJECT OR RESIDENTIAL PLUS COMMERCIAL. C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOM E TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31/3/2005 DEDUCTION UNDER SECTION 80IB(10) WOULD BE ALLOWABLE TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RES IDENTIAL BUILDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT-UP AREA OF THE PLOT. D) SINCE DEDUCTIONS UNDER SECTION 80IB(10) IS ON TH E PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE L OCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTR ICTING SECTION 80IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HAS ACCEPTED THE D ECISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(10) DEDUCTION TO A PART OF THE PROJECT, WE DO NOT DISTURB THE FINDINGS OF THE TRIB UNAL IN THAT BEHALF. E) CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFF ECT FROM 1/4/2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND H ENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1/4/2005. 9. WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE BOMBAY HIGH COURT HOLD THAT THE LD. CIT(A) WAS NOT JUSTIF IED IN ALLOWING THE CLAIMED DEDUCTION U/S. 80 IB(10) ON THE RESIDENTIAL UNITS ON STAND ALONE BASIS, BUT AT THE SAME TIME HE WAS NOT JUSTIFIED I N UPHOLDING THE DENIAL OF THE CLAIM ON COMMERCIAL UNITS ON THE BASIS THAT IT WAS EXCEEDING 10% OF THE TOTAL BUILT UP AREA, ESPECIALLY WHEN CLAUSE (D) TO SECTION 80 IB(10) INSERTED W.E.F. 1.4.2005 (I.E. A.Y. 2005-06) WAS NO T AVAILABLE TO APPLY BY ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 9 THE REVENUE DURING THE A.Y. UNDER CONSIDERATION, AN D PMC DOES NOT PUT SUCH RESTRICTION IN THE PLAN APPROVED. 10. THE ISSUE RAISED IN GROUND NO.1 TO 5 OF THE APP EAL PREFERRED BY THE REVENUE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE W ITH THIS FINDING THAT LD CIT(A) WAS JUSTIFIED IN ALLOWING CLAIMED DEDUCTION U/S. 80 IB (10) ON THE PROFITS EARNED FROM THE SALE OF RESIDENTIAL UNITS A S DIRECTED BY HIM TO THE A.O. THE ISSUE RAISED IN GROUND NO. 1 OF THE APPEAL PREFERRED BY THE ASSESSEE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE WITH THIS FINDING THAT IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT V/S. BRAHMA ASSOCIATES (SUPRA), THE LD CIT(A) WAS NOT SA TISFIED IN DENYING THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT ON THE PROFITS EARNED FROM THE SALE OF COMMERCIAL AREA BY RESTRICTING P ERMISSIBLE LIMIT AT 10% OF THE TOTAL BUILT UP AREA,IN ABSENCE OF ANY SUCH R ESTRICTION IN SEC. 80 IB(10) OF THE ACT APPLICABLE DURING THE A.Y. UNDER CONSIDERATION. THE GROUND NOS. 1 TO 5 OF THE APPEAL PREFERRED BY THE R EVENUE ARE THUS REJECTED AND GROUND NO. 1 OF THE APPEAL PREFERRED B Y THE ASSESSEE IS ACCORDINGLY ALLOWED WITH DIRECTION TO THE A.O TO AL LOW THE CLAIMED DEDUCTION U/S. 80 IB (10) ON THE PROFITS EARNED FRO M SELLING OF THE COMMERCIAL AREA DURING THE YEAR. GROUND NO. 6 & 7 (REVENUE) 11. THE RELEVANT FACTS ARE THAT THE AO DID NOT ALL OW DEDUCTION OF RS.13,67,687/- BEING PROFIT ON UNDISCLOSED SALES OF RS. 30,98,520/- OF THE COMMERCIAL UNIT. THE CONTENTION OF THE ASSESS EE BEFORE THE AUTHORITIES BELOW REMAINED THAT THIS PROFIT WAS AL READY ASSESSED IN THE A.Y. 2003-04. IT WAS FURTHER CONTENDED THAT THE PROFIT ON SALE OF THE PARTICULAR COMMERCIAL UNIT COMES TO RS. 30,98,520/ - WHICH WAS ALREADY ADDED IN THE A.Y. 2003-04, HAS IN FACT, BEEN OFFERE D DURING THE A.Y. ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 10 2004-05, THEREFORE, A DEDUCTION TO THIS EXTENT OF T HE PROFIT ASSESSED IN THE EARLIER YEARS SHOULD BE ALLOWED IN THIS YEAR. THE LD CIT(A) AGREED WITH THE SUBMISSION OF THE ASSESSEE THAT IN CASE TH E PROFIT PERTAINING TO SAME COMMERCIAL UNIT ON WHICH SALES OF RS. 30,98,52 0/- WERE CONSIDERED AND ADDED IN A.Y. 2003-04, THE SAME SHOULD BE EXCLU DED FROM THE PROFIT OF THE CURRENT YEAR I.E. A.Y. 2004-05. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DIR ECTING THE A.O TO VERIFY THE ABOVE SUBMISSIONS AND IN CASE THE CORRESPONDING SALES HAVE BEEN INCLUDED BY THE ASSESSEE IN A.Y. 2003-04, THE SAME SHOULD BE EXCLUDED FROM THE PROFIT OF THE A.Y. 2004-05 UNDER CONSIDERA TION TO PREVENT TAXATION OF THE SAME AMOUNT TWICE. WE THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER ON THE ISSUE. THE SAME IS UP HELD. THE GROUND NOS. 6 & 7 INVOLVING THIS ISSUE ARE THUS REJECTED. GROUND NO.2 (ASSESSEE) 12. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. A.R. DID NOT PRESS THIS ALTERNATIVE GROUND. THE SAME IS REJECTE D AS SUCH. 13. CONSEQUENTLY, APPEAL PREFERRED BY THE REVENUE I S DISMISSED AND THAT PREFERRED BY THE ASSESSEE IS PARTLY ALLOWED. ITA . NOS.1202 & 1184/PN/2009 BRAHMA ASSOCIATES A.Y 2004-05 PAGE OF 11 11 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27TH JUNE 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 27TH JUNE, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-II, PUNE 4. THE CIT(A)- II, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE