ACIT CEN CIR 2, THANE V. VEENA DEVELOPERS, THANE

ITA 1345/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56024 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHIVRAMAN
• Assessee Lawyers: C G K NAIR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1345/MUM/2010 (ASSESSMENT YEAR: 2006-07) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -2, THANE ....... APPELLANT VS M/S. VEENA DEVELOPERS, NIKUNJ HOUSE, MANAV MANDIR, AMBADI ROAD, VASAI ROAD (W), DIST. THANE ..... RESPONDENT PAN: AAEFV 3871 C APPELLANT BY: DR. K. SHIVRAMAN RESPONDENT BY: SHRI C.G.K. NAIR DATE OF HEARING: 08.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A) DATED 23.11.2009 FOR THE A.Y. 2006- 07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- 1. THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S.80IB(10) TO THE TUNE OF ` 23,80,587/-. 2. THE LD. CIT (A)0 HAS ERRED IN HOLDING THAT THE A SSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT WITH OUT APPRECIATING THAT THE PROJECT CONSISTS OF COMMERCIA L UNITS. ITA 1345/MUM/2010 M/S. VEENA DEVELOPERS 2 3. THE DECISION OF HONBLE SPL. BENCH ITAT, PUNE IN THE CASE OF BRAMHA ASSOCIATES VS. JOINT COMMISSIONER OF INCO ME TAX (2009) (122 TTJ (PUNE) (SB) 433) IS APPLICABLE ONLY FOR A.Y. 2004-05 AND EARLIER YEAR AND NOT FOR A.Y. 2006 -07 OR SUBSEQUENT YEAR. HOWEVER, CIT (A) BASED ON THIS DE CISION ALLOWED RELIEF IN ASSESSEES FAVOUR FOR A.Y. 2006-0 7. 2. THE FACTS OF THIS APPEAL ARE IN NARROW COMPASS. THE ASSESSEE IS A DEVELOPER AND A BUILDER. THE ASSESSEE CLAIMED DE DUCTION U/S.80IB(10). THE ASSESSEE HAS UNDERTAKEN HOUSING PROJECT UNDER THE NAME OF M/S. VEENA SARANG WHICH IS HAVING ONE BUILDING CONSISTING OF FIVE WINGS. AS NOTED BY THE A.O. TOT AL BUILT-UP AREA WAS 98517 SQ.FT OUT OF WHICH AREA OF HAVING 4637 SQ.FT. WAS COVERED BY THE SHOPS AND BALANCE BUILT UP AREA OF 93880 SQ.FT. WAS TOWARDS THE RESIDENTIAL FLATS. AS NOTED BY THE A.O. THE SAID P ROJECT WAS APPROVED BY THE BMC (LOCAL AUTHORITY) AS RESIDENTIAL-CUM-COM MERCIAL-HOUSING- PROJECT. THE A.O. HAD RESERVATION FOR ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE BECAUSE IN THE RESIDENTIAL PROJECT THE ASSESSEE HAD CONSTRUCTED SHOPS HAVING TOTAL BUILT-UP AREA OF 463 7 SQ.FT. THE A.O. WAS OF THE OPINION THAT AS PER THE AMENDMENT MADE B Y THE FINANCE ACT, 2004 TO SECTION 80IB(10) A MAXIMUM PERMISSIBLE COMMERCIAL SHOPPING AREA SHOULD NOT HAVE BEEN MORE THAN 2000 S Q.FT. AND THE ASSESSEE IS HAVING MORE THAN THE SAID LIMIT, HENCE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80IB(10). THE A.O., THE REFORE, DISALLOWED THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE U/S.80 IB(10). WE FIND THAT NO OTHER REASON IS GIVEN BY THE A.O. FOR DISAL LOWING THE CLAIM OF THE ASSESSEE OTHER THAN ABOVE REASON. THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. BEFORE THE LD. CIT (A) AND FOUND FAVOUR. THE LD. CIT (A) FOLLOWED THE DECISION OF THE SPECIAL BENCH OF T HE ITAT, PUNE IN THE CASE OF JT. CIT VS. BRAHMA ASSOCIATES 122 TTJ (PUN E)(SB) 433 AND DIRECTED THE A.O. TO ALLOW THE DEDUCTION TO THE ASS ESSEE AS CLAIMED U/S.80IB(10) OF THE ACT. NOW, THE REVENUE IS IN AP PEAL BEFORE US. ITA 1345/MUM/2010 M/S. VEENA DEVELOPERS 3 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. WE FIND THAT NOW THE DECISION IN THE CASE OF BRAHMA ASSOCIA TES (SUPRA) HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT OF BOMBAY REPORTED IN 239 CTR (BOM) 30. THE ARGUMENT OF THE LD. D.R. IS THAT SEC. 80IB(10) HAS UNDERGONE AMENDMENT W.E.F. A.Y. 2005-06 AND FROM TH E SAID YEAR THE RESTRICTION PUT BY THE PARLIAMENT IS OPERATIVE. WE FIND THAT OTHER CO- ORDINATE BENCHES HAVE TAKEN A VIEW THAT THE AMENDME NT WILL BE ONLY APPLICABLE IF THE PROJECT ARE APPROVED AFTER 1.4.20 05 VIZ. ACIT VS. LATE. SMT. SAROJ P. VHORA ITA 3530/M/2010 DATED 24.8.2011 (ITAT BENCH J MUMBAI). 4. I N THE CASE OF BRAHMA ASSOCIATES (SUPRA), THEIR LORD SHIPS HAVE HELD AS UNDER:- 25. THE ABOVE CONCLUSION IS FURTHER FORTIFIED BY C L. (D) TO S.80- IB(10) INSERTED W.E.F. 1ST APRIL, 2005 PROVIDES THAT EVEN THOUGH SHOPS AND COMMERCIAL ESTABLISHMENTS ARE INCLUDED IN THE HOUSI NG PROJECT, DEDUCTION UNDER S.80-IB(10) W.E.F. 1ST APRIL, 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 T WO THOUSAND SQUARE FEET WHICHEVER IS LOWER. BY FINANCE ACT, 2010, CL. (D) IS AMENDED TO THE EFFECT THAT THE COMMERCIAL USER SHOULD NOT EXCEED T HREE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR F IVE THOUSAND SQUARE FEET WHICHEVER IS HIGHER. THE EXPRESSION INCLUDED IN CL. (D) MAKES IT AMPLY CLEAR THAT COMMERCIAL USER IS AN INTEGRAL PAR T OF A HOUSING PROJECT. THUS, BY INSERTING CL. (D) TO S. 80-IB(10) THE LEGISLATURE HAS MADE IT CLEAR THAT THOUGH THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITIES WITH COMMERCIAL USER TO THE EXTENT PERM ISSIBLE UNDER DC RULES / REGULATIONS WERE ENTITLED TO S. 80-IB(10) D EDUCTION, W.E.F. 1ST APRIL, 2005 SUCH DEDUCTION WOULD BE SUBJECT TO THE RESTRICTION SET OUT IN CL. (D) OF S. 80-IB(10). THEREFORE, THE ARGUMENT OF THE REVENUE THAT W.E.F. 1ST APRIL, 2005 THE LEGISLATURE FOR THE FIRST TIME ALLOWED S. 80-IB(10) ITA 1345/MUM/2010 M/S. VEENA DEVELOPERS 4 DEDUCTION TO HOUSING PROJECTS HAVING COMMERCIAL USE R CANNOT BE ACCEPTED. 26. THE ALTERNATIVE ARGUMENT OF THE REVENUE IS THA T THE PROJECTS WITH CONVENIENT SHOPPING COULD BE CONSIDERED AS HOUSING PROJECTS UNDER S. 80-IB(10) UP TO 1ST APRIL, 2005. THAT ARGUMENT IS A LSO WITHOUT ANY MERIT, BECAUSE, SO LONG AS THE DC RULES PERMIT CONV ENIENT SHOPPING AS ALSO OTHER COMMERCIAL USER IN A HOUSING PROJECT, IT WOULD NOT BE OPEN TO THE IT AUTHORITIES TO CONTEND THAT THE PROJECT WITH CONVENIENT SHOPPING ALONE COULD BE CONSIDERED AS HOUSING PROJECTS. IN T HE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PROJECT IS APPROVED FOR RES IDENTIAL AND COMMERCIAL BUILDINGS AS PER THE DC RULES, PUNE. THE FACT THAT THE RESIDENTIAL BUILDINGS UNDER THE DC RULES CAN HAVE C OMMERCIAL USER UP TO 50 PER CENT OF THE BUILT-UP AREA OF THE PLOT CAN NOT BE A GROUND TO HOLD THAT THE PROJECT IS NOT A HOUSING PROJECT. IT IS FO R THE LEGISLATURE TO IMPOSE RESTRICTIONS ON COMMERCIAL USER IN A PROJECT FOR TH E PURPOSES OF AVAILING S. 80-IB(10) DEDUCTION AND THAT HAS BEEN DONE BY IN SERTING CL.(D) TO S. 80-IB(10) W.E.F. 1ST APRIL, 2005. THEREFORE, THE DE CISION OF THE TRIBUNAL IN HOLDING THAT A PROJECT WITH RESIDENTIAL AND COMM ERCIAL USER TO THE EXTENT PERMITTED UNDER DC RULES WOULD BE A HOUSING PROJECT AND HENCE ELIGIBLE FOR DEDUCTION UNDER S. 80-IB(10) UP TO 31S T MARCH, 2005 CANNOT BE FAULTED. 5. ADMITTEDLY, IN THE PRESENT CASE, THE ASSESSEES PROJECT IS APPROVED PRIOR TO 1.4.2005 HENCE THE AMENDMENT TO S EC.80IB(10) BY THE FINANCE ACT, 2004 PUTTING THE RESTRICTION ON TH E BUILT-UP ARE IN THE HOUSING PROJECT WILL NOT BE APPLICABLE AND AS RIGHT LY HELD BY THE LD. CIT (A), THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S .80IB(10). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CI T (A) AND SAME IS CONFIRMED. 6. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ITA 1345/MUM/2010 M/S. VEENA DEVELOPERS 5 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 8TH NOVEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 18TH NOVEMBER, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- II, THANE. 4) THE CIT-III, THANE. 5) THE D.R. F BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 1345/MUM/2010 M/S. VEENA DEVELOPERS 6 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 08.11.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 08.11.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER