The ITO, Ward 2(4), Baroda V. M/s. Prakash Builders, Baroda

ITA 1802/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8856 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 19-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; TDS; Set aside; Deduction Disallowance
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 40(a)(ia); 80IB; 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NOS. 1802 & 1803/AHD/2013 (ASSESSMENT Y EARS: 2005-06 & 2007-08) INCOME-TAX OFFICER, WARD-2(4), BARODA APPELLAN T VS. M/S. PRAKASH BUILDERS, 241, KADAM NAGAR SOCIETY, NIZAMPURA, BARODA RE SPONDENT PAN: AAHFM5601M /BY REVENUE : SHRI DEEPAK SUTARIA, SR. D.R. /BY ASSESSEE : SHRI SAKAR SHARMA /DATE OF HEARING : 27.03.2017 /DATE OF PRONOUNCEMENT : 29.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE TWO REVENUES APPEALS FOR ASSESSMENT YEARS 20 05-06 & 2007-08 ARISE AGAINST THE CIT(A)-II, BARODAS COMMON ORDER DATED 28.03.2013 IN CASE NOS. CAB/II-82/11-12 & CAB/II-83/11-12; RESPECTIVEL Y, IN PROCEEDINGS U/S.143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT HEARD BOTH PARTIES. CASE FILES PERUSED. 2. THE REVENUES FIRST SUBSTANTIVE GROUND IDENTICAL LY PLEADED IN THE TWO APPEALS PLEADS THAT THE CIT(A) HAS ERRED IN REVERSI NG ASSESSING OFFICERS ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 2 - ACTION DISALLOWING ASSESSEES DEDUCTIONS OF RS.22,6 0,540/- AND RS.42,10,093/- U/S.80IB(10) OF THE ACT ON THE GROUN D THAT ITS COMMERCIAL AREA IN THE RESIDENTIAL PROJECT IN QUESTION EXCEEDED THE 5% LIMIT IMPOSED UNDER THE ABOVE STATUTORY PROVISION. 3. THIS ASSESSEE IS A FIRM ENGAGED IN CIVIL CONSTRU CTION BUSINESS. IT RAISED THE ABOVE DEDUCTION CLAIMS U/S.80IB(10) OF THE ACT IN FIRST ROUND. THE ASSESSING OFFICER FRAMED REGULAR ASSESSMENT DISALLO WING THE SAME AND AFTER FURTHER HOLDING THAT PROFIT DERIVED FROM SALE OF UN UTILIZED FSI WOULD ALSO NOT QUALIFY FOR THE SAID RELIEF. THE CIT(A) FOLLOWED T HIS TRIBUNALS ORDER IN RADHE BUILDERS CASE ITA NO.2482/AHD/2006 DECIDED O N 29.06.2007 TO REVERSE ASSESSING OFFICERS FINDINGS. HE HOWEVER O BSERVED THAT THE ASSESSEE WAS STILL NOT ELIGIBLE FOR THE ABOVE DEDUCTION SINC E ITS PROJECT WAS IN THE NATURE OF A RESIDENTIAL-CUM-COMMERCIAL ONE. THE AS SESSEE FILED ITA NOS. 710 & 3470/AHD/2008 AND ITA NO.2267/AHD/2010 BEFORE THIS TRIBUNAL. A CO-ORDINATE BENCH TOOK UP THESE APPEALS TOGETHER AL ONG WITH ONE PERTAINING TO ASSESSMENT YEAR 2004-05. THE ASSESSEE APPEARS TO H AVE FILED ITS REVISED APPROVAL SANCTIONED ON 21.06.2005 INDICATING IT TO HAVE CONSTRUCTED 123 UNITS WITHOUT ANY COMMERCIAL AREA. LEARNED CO-ORDINATE B ENCH TOOK NOTE OF THE SAME TO REMIT THE ISSUE BACK TO THE ASSESSING OFFIC ER WITH THE FOLLOWING REMARKS: 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ASSESSEE HAS REVISED THE PLAN AND ALSO APPROVED BY VADODARA MUNI CIPAL CORPORATION ORIGINALLY VIDE DATED 30TH DECEMBER, 2003 AND SUBSEQUENTLY THE REVISED PLAN WAS SANCTIONED VIDE DATED 21-06-2005. THE ASSESSEE STATED THAT IN THE REVISED PLANT THERE IS NO PERMISSION FOR CONSTRUCTION OF COMMERCIAL AREA. THE RELEVANT REVISED PERMISSION DATED 21-06-2005, WHICH READS AS UNDER:- 'FREE ELGLISH TRANSLATION (FROM ORIGINAL IN GUJARAT I LANGUAGE) CONSTRUCTION-20,000-1/2003-L/13 VADODARA MUNICIPAL CORPORATION LAY OUT WARD-L 82 2005-06 _______AND AP PENDIX 'E' FORM NO.-5 _____5.1 ______/RAJACHITTHI NO. [R/L-285 /03-04] APPLICANT: SHRI VELJIBHAI M PATEL AND OTHERS ... MOHANBHAI R P RAJAPATI, MAHENDRAKUMAR AMRUTLAL AND NARENDRAKUMAR AMRUTLAL I TA NO. 710, ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 3 - 3470/AHD/2008 & 2267/AHD/2010 A.YS04-05, 05-06 07-0 8 M/S. PRAKASH BUILDERS V. ITO WD-2(4), BRD PAGE 3 RESIDENT OF : S HREEJI TOWNSHIP AND___ NO._______ CITY SURVEY NO.________ T.P.NO.__ ______ _____ F.P. NO._________ ________ MOJE VILLAGE: DATSHWAR_______________232,233, 231/P IN NOTICE NO 24, DTD. 13/04/05 FOR CONSTRUCTION OF BUILDIG, THE TYPE FOR CONSTRUCT ION ACCORDING TO LAY OUT, IN RESPECT OF CONSTRUCTION / LAYOUT, ACCORDING TO R ULE-3 OF CHAPTER 12 OF MUNICIPAL CORPORATION ACT AND AS PER SECTION - 29(1 ), 29() (2), 29 (1)(3)34 AND SECTION 1(B) OF GUJARAT NAGAR AYOJAN AND____ 19 69, THE APPLICANT'S SEAT NO.____CITY / REVENUE SURVEY NO._____ BY WHICH ____ THE _____ AND THE LIMITS PRESCRIBED ACCORDING TO MEASUREMENT OF L AY OUT AND AS PER RULE AND BYLAWS OF MUNICIPALA CORPORATION/ ACT AND IN RE SPECT OF GUJARAT NAGAR AYOJAN AND ____ 1976, ___________________________________________________ _________ ______________ ____________ PERMISSIBLE LAY OUT PLA N AND BUILDING PLAN MAP, THE INDICATION WITH RED INK, A- UNIT GROU ND FLOOR ONLY IS ENCLOSED HEREWITH, THE PERMISSION IS GIVEN TO CONSTRUCT \ ON LY THESE PRESCRIBED UNITS. VUDA DEVELOPMENT CHARGES ARE PAID. CONDITIONS: 1) THE RESPONSIBILITY FOR MEASUREMENT, OWNERSHIP AN D EASEMENT LIE WITH APPLICANT 2) APPLICANT HAS TO FOLLOW ALL CONDITIONS OF EARLIE R RAJACHITTHI NO.I, 285/03-04, 3) N.A. PERMISSION HAS BEEN FURNISHED -C.D. HAS BEEN EARLIER VIDE RAJACHITTHI NO.1,285/03 -04. DATE: 21/06/2005 SD- SD- (CLERK) (NAYAB NAGAR DEVELOPMENT OFFICER) VADODARA MUNICIPALITY CORPORATION BY ORDER OF T.D.O. SHRI IN VIEW OF THIS, LD. COUNSEL FOR ASSESSEE STATED TH AT THERE IS REVISED CERTIFICATE OF ARCHITECT WHICH CLEARLY STATES THAT M/S. PRAKASH BUILDERS HAS DEVELOPED RESIDENTIAL PROJECT FOR 123 HOUSES AND TH ERE IS NO COMMERCIAL CONSTRUCTION DONE BY THIS DEVELOPER. THE RELEVANT C ERTIFICATE READS AS UNDER:- ' TO WHOM SOEVER IT MAY CONCERN THIS IS TO CERTIFY THAT M/S. PRAKASH BUILDER, 20-NALINI PARK SOCIETY, B/H SHREYA SH SCHOOOL, MANIJALPUR, VADODARA HAS DEVELOPED HOUSING PROJECT ON R.S. NO.232, 233, 231 PALKI OF VILLAGE: DANTESHWAR, DABHOI WAGHODIA R ING ROAD, VADODARS, UNDER THE NAME OF 'SHREEJI TOWNSHIP' LAY OUT BUILDING PLANS ARE APPROVED BY THE LOCAL AU THORITY I.E. VADODARA MUNICIPAL CORPORATION. FIRST LAY OUT BUILDING PLAN WAS APPROVED WITH RESIDENTIAL & COMMERCIAL PERMISSION. THIS APPROVAL WAS RECEIVED ON 30TH DEC'03, WHILE RAJA CHITTHI NO.L-285. SUBSEQUENTLY T HE SAME WAS REVISED ON 21ST JUNE'05 BY RAJA CHITTHI NO. L-82, AND THE C OMMERCIAL PERMISSION ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 4 - WAS REVISED INTO RESIDENTIAL HOUSES BY THE LOCAL AU THORITY I.E. VADODARA MUNICIPAL CORPORATION. AS PER FIRST PERMISSION THERE WAS 114 RESIDENTIAL H OUSES AND 22 SHOPS WERE THERE, THIS WAS THE RESIDENTIAL AREA AND THERE WERE NO MAR KET FOR THE COMMERCIAL PREMISES AND THEREFORE IT WAS REVISED AND AS PER IT A NO. 710, 3470/AHD/2008 & 2267/AHD/2010 A.YS04-05, 05-06 07-08 M/S. PRAKASH B UILDERS V. ITO WD-2(4), BRD PAGE 4 REVISED PLAN TOTAL NO OF HOUSES WEERE123 , COMMERCIAL ARE IS NEITHER CONSTRUCTED NOR IT IS SOLD OUT BECAUSE THE TOTAL PE RMISSION WAS FOR THE RESIDENTIAL HOUSE. COMPLETION CERTIFICATE WE HAVE RECEIVED IN THREE PA RTS AS UNDER:- SR. DATENO. OF HOUSE COMPLETED AS PE R NO. COMPLE TION CERTIFICATE. TH 1 13 APRIL'05 10 UNITS TH 2 12 SEPT.05 65 UNITS 3 4TH SEPT.06 48 UNITS TOTAL 123 UNITS THUS M/S PRAKASH BUILDERS HAS DEVELOPED RESIDENTIAL PROJECT FOR 123 HOUSES AND THERE IS NO COMMERCIAL CONSTRUCTION DONE BY THIS PA RTNERSHIP FIRM. THIS CERTIFICATE IS PREPARED ON THE BASIS OF APPROV AL OF LAY OUT BUILDING PAN AND COMPLETION CERTIFICATE GIVEN BY LOCAL AUTHORITY I.E . VADODARA MUNICIPAL CORPORATION. ORIGINAL AND REVISED PERMISSION OF CONSTRUCTION FRO M LOCAL AUTHORITY WITH LAY OUT BUILDING PLAN & COMPLIATION CERTIFICATE IS ENCLOSED HEREWITH.' IN VIEW OF THESE FACTS, LD. COUNSEL FOR THE ASSESSE E STATED THAT THE ASSESSING OFFICER OR CIT(A), NONE THE AUTHORITIES BELOW HAVE GONE INT O THESE REVISED DOCUMENTS AND ACCORDINGLY THE ENTIRE ASSESSMENTS FOR THREE YEARS REQUIRE RECONSIDERATION, HENCE, REQUESTED FOR SETTING ASIDE THE ISSUE TO THE FILE O F ASSESSING OFFICER. 4. ON THE OTHER HAND LD. DR HAS NOT OBJECTED TO SET TING ASIDE OF THE CASE. 5. WE FIND FROM THE FACTS OF THE CASE THAT NONE OF THE AUTHORITIES BELOW HAVE GONE INTO THE ABOVE DOCUMENTS AND WITHOUT THAT THE ISSUE CANNOT BE DECIDED. ACCORDINGLY, THIS ISSUE IN ALL THE THREE YEARS IS S ET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRESH IN ACCORDANCE WITH THE PRO VISIONS OF LAW. THIS ISSUE OF THREE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT ISSUE IN ITA NO.3470/AHD/2008 AND ITA N O.2267/AHD/2010 IS AS REGARDS TO DISALLOWANCE OF DEDUCTION U/S.80IB(10) O N THE DISALLOWANCE ITA NO. 710, 3470/AHD/2008 & 2267/AHD/2010 A.YS04-05, 05-06 07-08 M/S. PRAKASH BUILDERS V. ITO WD-2(4), BRD PAGE 5 MADE BY THE ASS ESSING OFFICER ON THE AMOUNTS BY INVOKING THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT. ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 5 - 7. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE REFER RED TO THE TRIBUNAL'S DECISION IN THE CASE OF CHIRAG PLAST V. ITO IN ITA NO.2196/AHD/ 2009 FOR ASSESSMENT YEAR 2005-06 DATED18-09-2009, WHEREIN THE TRIBUNAL HAS D ECIDED THIS ISSUE VIDE PARA- 6, WHICH READS AS UNDER:- '6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF 100% OF THE PROFITS AND GAINS DERIVED FROM ITS INDUSTRIAL UNDER TAKING. THE LEARNED ASSESSING OFFICER FOUND THAT A SUM OF RS.1,25,073/- IS NOT ALLOWABLE AS BUSINESS EXPENDITURE OF THE YEAR UNDER CONSIDERATIO N BECAUSE OF THE PROVISIONS OF SECTION 40(A)(IA) ARE THAT DEDUCTION IN RESPECT OF THIS BUSINESS EXPENDITURE WILL BE ALLOWED TO THE ASSESSEE IN THE SUBSEQUENT YEAR WHEN TDS IN RESPECT OF THIS EXPENDITURE IS DEPOSITED BY THE ASSESSEE. HOWEVER, THE LEARNED ASSESSING OFFICER HAS TREATED THIS AMOU NT OF DISALLOWABLE EXPENDITURE AS INCOME FROM OTHER SOURCES AND THEREB Y NOT ALLOWED DEDUCTION UNDER SECTION 80IB IN RESPECT OF THAT AMO UNT. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ABOVE ACTION OF THE LEARNED ASSESSING OFFICER ON THE GROUND THAT AL LOWANCE OF DEDUCTION UNDER SECTION 80IB IN THE YEAR WILL TANTAMOUNT TO D OUBLE DEDUCTION TO THE ASSESSEE. WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT BUSINESS EXPENDITURE OF ELIGIBLE UNIT STANDS DISALLOW I THE YEAR UNDER CONSIDERATION DUE TO APPLICATION OF PROVISIONS OF SECTION 40(A)(I A). THUS, IN OTHER WORDS, THE SAID AMOUNT IS DEEMED AS EXPENDITURE NOT INCURR ED BY THE ASSESSEE FOR COMPUTING ITS BUSINESS INCOME. THUS, AS THE EXPENDI TURE OF ELIGIBLE UNIT STANDS DISALLOWED CONSEQUENTLY THE SAME RESULTS IN INCREASE OF THE PROFIT OF THE ELIGIBLE UNIT. THE DEDUCTION UNDER SECTION 80IB IS ALLOWABLE IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE INDUSTRIAL UN DERTAKING. SUCH PROFITS AND GAINS ARE TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 28 TO 44AC WHICH INCLUDES SECTION 40(A)(IA) ALSO. THEREFORE, ANY DISALLOWANCE OF BUSINESS EXPENDITURE OF THE ELIGIBLE UNIT WILL LOGICALLY RESULT IN ENHANCEMENT OF DEDUCTION ALLOWA BLE UNDER SECTION 80IB OF THE ACT. THE FEAR EXPRESSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN OUR CONSIDERED OPINION IS UNFOUNDED AND BASELESS. D URING THE YEAR AS THE EXPENDITURE OF THE ELIGIBLE BUSINESS IS DISALLOWED THE ASSESSEE'S BUSINESS INCOME DERIVED FROM THE ELIGIBLE BUSINESS OF THE INDUSTRIA L UNDERTAKING STANDS AT INCREASED FIGURE AND THEREFORE, THE ASSESSEE WILL BE ELIGIBLE FOR DEDUCTION OF ENHANCED AMOUNT UNDER SECTION 80IB OF THE ACT. HOWEVER, IN T HE SUBSEQUENT YEAR IN WHICH TDS IS PAID BY THE ASSESSEE, THE EXPENDITURE WILL B E ALLOWED ITA NO. 710, 3470/AHD/2008 & 2267/AHD/2010 A.YS04-05, 05-06 07-0 8 M/S. PRAKASH BUILDERS V. ITO WD-2(4), BRD PAGE 6 AS DEDUCTION FROM THE EL IGIBLE PROFITS OF THE SUBSEQUENT YEAR AND THEREBY THE ELIGIBLE PROFIT OF THE INDUSTRIAL UNDERTAKING WILL BE REDUCED DIN THE SUBSEQUENT YEAR AND CONSEQUENTLY TH E ASSESSEE WILL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB AT THE REDUCED AMOUNT ONLY. THUS, THERE CANNOT BE A DOUBLE DEDUCTION TO THE ASSESSEE. IN VIEW OF THE AB OVE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE LEARNED ASSESS ING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB IN RESPECT OF ENTIRE PROFIT DERI VED FROM INDUSTRIAL UNDERTAKING, AFTER TAKING INTO CONSIDERATION THE PROVISIONS SUND ER SECTION 40(A)(IA). THUS, THE GROUND OF APPEAL OF ASSESSEE IS ALLOWED.' ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 6 - 8. WE FIND THAT THE ASSESSING OFFICER HAS NOT DISCU SSED THIS ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN THE CASE OF CHIRAG PLAS TS (SUPRA) BECAUSE, THIS DECISION WAS NOT AVAILABLE BEFORE HIM AT THAT TIME. ACCORDIN GLY, WE DIRECT THE ASSESSING OFFICER TO DECIDE THIS ISSUE IN THE LIGHT OF THE AB OVE DECISION OF THIS TRIBUNAL (SUPRA). ACCORDINGLY, THIS COMMON ISSUE OF BOTH THE APPEALS OF THE ASSESSEE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER AND ALLOWED FOR STATISTICAL PURPOSES. 4. THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL AS SESSMENT. THE ASSESSEE FILED ITS ORIGINAL AS WELL AS REVISED PLAN S. THE FORMER ONE DATED 30.12.2003 INDICATED 140 RESIDENTIAL UNITS ALONG WI TH 22 SHOPS AS AGAINST THE LATTER ONE DATED 21.06.2005 DISCLOSING CONSTRUCTION OF 123 RESIDENTIAL UNITS ONLY WITHOUT ANY COMMERCIAL AREA AS EXTRACTED IN PR ECEDING PARAGRAPH. THE ASSESSING OFFICER HOWEVER WENT BY THE ORIGINAL PLAN ONLY STATING TOTAL BUILT UP AREA OF THE PROJECT MEASURING 5168SQ.MTRS. CONTA INING 464.55SQ.MTRS. OF COMMERCIAL AREA I.E. EXCEEDING 5% OF THE TOTAL BUIL T UP AREA. HE OBSERVED THAT ASSESSEES REVISED APPROVAL DATED 03.05.2006 W AS NOT FOR THE ENTIRE PROJECT BUT PERTAINED TO 42 RESIDENTIAL UNITS AS AG AINST THE FORMER APPROVAL DEALING WITH THE PROJECT. HE THEREFORE MADE THE IM PUGNED DISALLOWANCE ON IDENTICAL LINES IN THE TWO ASSESSMENT YEARS. 5. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION TO DELETE THE IMPUGNED DISALLOWANCE AS FOLLOWS: 3.3 DECISION: I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED A UTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. SO FAR AS ISSUE OF COMMERCIAL AREA AS APPROVED BY THE LOCAL AUTHORITY IS CONCERNED, THE C ASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT OF GUJARAT IN MANAN CORPN. VS CIT [2013] 29 TAXMANN.COM 15 (GUJ.) IN IT A NO. 1053 OF 2011 WHICH HAS DISCUSSED IN DETAILS THE APPLICABILITY OF AMEND MENT MADE IN PROVISIONS OF SECTION 80-IB(10)(D) WITH EFFECT FROM 1-4-2005 VIDE ORDER DATED 03.09.2012. THEIR LORDSHIPS HAVE HELD THAT NEITHER THE ASSESSEE NOR L OCAL AUTHORITY RESPONSIBLE TO APPROVE THE CONSTRUCTION PROJECTS ARE EXPECTED TO C ONTEMPLATE FUTURE AMENDMENT IN THE STATUTE AND APPROVE AND/OR CARRY OUT CONSTRU CTIONS MAINTAINING THE RATIO OF RESIDENTIAL HOUSING AND COMMERCIAL CONSTRUCTION AS PROVIDED BY THE AMENDED ACT BEING 3% OF THE TOTAL BUILT UP AREA OR 5000 SQ. FEE T WHICHEVER IS HIGHER (NOW IN POST 2010 PERIOD) OR 5% OF THE AGGREGATE BUILT UP A REA OR 2000 SQ. FEET WHICHEVER IS LESS. REVENUE IS ALSO IN ERROR TO SUGGEST THAT E VEN IF SUCH CONDITIONS ARE ONEROUS, ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 7 - THEY ARE REQUIRED TO BE FULFILLED. THE ENTIRE OBJEC T OF SUCH DEDUCTION IS TO FACILITATE THE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE WAS NO SUCH RESTRICTION IN TAX ING STATUTE AND THE PERMISSIBLE RATIO FOR COMMERCIAL USER MADE 5% TO THE TOTAL BUIL T UP AREA BY WAY OF AMENDMENT AND REDUCTION OF WHICH BY FURTHER AMENDMENT TO 3% O F THE TOTAL BUILT UP AREA, HAS TO BE NECESSARILY CONSTRUED ON PROSPECTIVE BASIS. T HE DECISION OF BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES [2011] 333 ITR 259 (BOM.) HAS ALSO BEEN DISCUSSED AT LENGTH. IT HAS BEEN HELD BY THE HIGH C OURT THAT 'AS IS VERY APPARENT FROM THE RECORD, THERE WAS NO CRITERIA FOR MAKING COMMERCIAL CONSTRUCTION PRIOR TO THE AMENDED SECTIO N AND THE PLANS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY FOR BOTH THE PROJECTS OF THE APPELLANT. PERMISSION FOR CONSTRUCTION OF SHOPS HAS BEEN ALLOWED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH RULES AND REGULA TIONS, KEEPING IN MIND PRESUMABLY THE REQUIREMENT OF LARGE TOWNSHIPS. HOWE VER, THE PROJECTS ESSENTIALLY REMAINED RESIDENTIAL HOUSING PROJECTS A ND THAT IS ALSO QUITE APPARENT FROM THE CERTIFICATES ISSUED BY THE LOCAL AUTHORITY AND, THEREFORE NEITHER ON THE GROUND OF ABSENCE OF SUCH PROVISION OF COMMERCIAL SHOPS NOR ON ACCOUNT OF SUCH COMMERCIAL CONSTRUCTION HAVI NG EXCEEDED THE AREA CONTEMPLATED IN THE PROSPECTIVE AMENDMENT CAN BE MA DE APPLICABLE TO THE APPELLANT ASSESSEE WHOSE PLANS ORE SANCTIONED AS PE R THE PREVALENT RULES AND REGULATIONS BY THE LOCAL AUTHORITY FOR DENYING THE BENEFIT OF DEDUCTION OF PROFIT DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR AS MADE AVAILABLE OTHERWISE UNDER THE STATUTE.' THUS, THE AMENDMENT MADE IN PROVISIONS OF SECTION 8 0IB(10)(D) WITH EFFECT FROM 01.04,2005 ARE NOT RETROSPECTIVE AND THE DEDUC TION IS AVAILABLE TO THE APPELLANT FOR THE PLAN APPROVED BEFORE THIS DATE IN ORIGINAL FORM. ITAT HAS ALSO OBSERVED BEFORE SETTING ASIDE THE ORDER THAT IN ACT UAL, THE ASSESSEE HAS NOT MADE ANY COMMERCIAL CONSTRUCTION AND THE ASSES SING OFFICER HAS NOT CONTROVERTED THIS FACT. THE FIRST LAY OUT BUILDING PLAN WAS APPROVED WITH RESIDENTIAL & COMMERCIAL PERMISSION. THIS AP PROVAL WAS RECEIVED ON 30 DECEMBER, 2003, WHILE RAJA CHITTHI NO.L-285. SUB SEQUENTLY THE SAME WAS REVISED ON 21 ST JUNE'05 BY RAJA CHITTHI NO. L-82, AND THE COMMERCI AL PERMISSION WAS REVISED INTO RESIDENTIAL HOUSES BY THE LOCAL AU THORITY I.E. VADODARA MUNICIPAL CORPORATION. AS PER THE FIRST LETTER OF PERMISSION, THERE WERE 114 RESIDENTIAL HOUSES AND 22 SHOPS. WHEREAS, IN THE REVISED PLAN, TOTAL NO OF HOUSES WERE 123 AND NO COMMERCIAL AREA WAS EITHER CONSTRUCTED OR IT IS SOLD BY THE ASSESSEE. FROM THE RECORD, IT TRANSPIRES THAT COMPLETION CERTIFICA TE WERE RECEIVED BY THE ASSESSEE IN THREE PARTS AS UNDER:- SR. NO. DATE NO. OF HOUSE COMPLETED AS PER COMPLETION CERTIFICATE. 1 13 TH APRIL05 10 UNITS 2 12 TH SEPT.05 65 UNITS 3 4 TH SEPT.06 48 UNITS ------------ TOTAL 123 UNITS ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 8 - THUS, THE APPELLANT HAS DEVELOPED RESIDENTIAL PROJE CT FOR 123 HOUSES AND THERE IS NO COMMERCIAL CONSTRUCTION DONE BY IT. THE CONSTRUCTION HAS BEEN COMPLETED WITHIN PRESCRIBED TIME AND THE COMPLETION CERTIFICATES HAVE BEEN OBTAINED. FROM THE ABOVE FACTS AND JUDICIAL PRONOU NCEMENTS, IT IS CLEAR THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S.80IB(10). T HE ASSESSING OFFICER IS DIRECTED TO GRANT THE SAME IN ACCORDANCE TO THE LAW. 6. WE HAVE HEARD BOTH THE PARTIES. THE REVENUE STR ONGLY ARGUES IN FAVOUR OF THE ASSESSING OFFICERS REASONING IN SEEK ING TO RESTORE THE IMPUGNED SECTION 80IB(10) DEDUCTION DISALLOWANCE. LEARNED DEPARTMENTAL REPRESENTATIVE STATES THAT THE ASSESSEE IS NOT ELI GIBLE FOR THE SAID DEDUCTION SINCE VIOLATING COMMERCIAL AREA LIMIT OF 5% VIS--V IS THE TOTAL BUILT UP AREA OF THE PROJECT. WE DEEM IT APPROPRIATE AT THIS STAGE TO ONCE AGAIN RECAPITULATE THE ENTIRE FACTS. THERE IS NO DISPUTE THAT THE ASS ESSEES ORIGINAL APPROVAL IS DATED 30.12.2003 INDICATING COMMERCIAL AREA OF 464. 55 SQ.MTRS. OUT OF THE TOTAL BUILT UP AREA OF THE PROJECT ADMEASURING 5168 SQ. MTRS. THIS PLAN ADMITTEDLY STOOD REVISED ON 03.05.2006 TAKING AWAY THE ABOVE COMMERCIAL CONSTRUCTION AREA. THE REVENUE DOES NOT INDICATE A NY EVIDENCE IN THE CASE FILE TO PROVE THAT THE ASSESSEE HAS RAISED ANY COMM ERCIAL CONSTRUCTION IN ITS RESIDENTIAL PROJECT IN QUESTION. WE REPEAT THAT THI S FACT HAS COME OUT OF A CONSEQUENTIAL ROUND (SUPRA) NOT REBUTTED TILL DATE. THE REVENUES ARGUMENT BEFORE US PLACED RELIANCE UPON SECTION 80IB(10)(D) OF THE ACT IN ALLEGING THE ABOVESTATED VIOLATION AT ASSESSEES BEHEST. WE FI ND THAT THIS CLAUSE CAME IN THE STATUTE BY WAY OF AMENDED PROVISION APPLICABLE W.E.F 01.04.2005 WHEREAS ASSESSEES PROJECT STOOD APPROVED MUCH EARLIER THAN THAT. HONBLE JURISDICTIONAL HIGH COURTS DECISION IN MANAN CORPO RATIONS CASE (SUPRA) ALREADY HOLDS THAT THE PROJECTS APPROVED BEFORE 01. 04.2005 DO NOT COME WITHIN THE PURVIEW OF THE SAID AMENDED PROVISION SI NCE NOT HAVING RETROSPECTIVE DEFECT. WE THUS FIND NO REASON TO IN TERFERE IN THE CIT(A)S CONCLUSION HEREINABOVE HOLDING THE ASSESSEE TO BE E NTITLED FOR SECTION 80IB(10) DEDUCTION IN TWO ASSESSMENT YEARS IN QUEST ION. THE REVENUES FIRST SUBSTANTIVE GROUND IDENTICAL IN BOTH APPEALS FAILS. ITA NOS. 1802 & 1803/AHD/2013 (ITO VS. M/S. PRAKAS H BUILDERS) A.YS. 2005-06 & 2007-08 - 9 - 7. THE REVENUES NEXT SUBSTANTIVE GROUND IDENTICAL IN THE TWO APPEALS PLEADS THAT THE CIT(A) HAS ERRED IN DIRECTING THE A SSESSING OFFICER TO ALLOW SECTION 80IB(10) DEDUCTION ON SECTION 40(A)(IA) DIS ALLOWANCES/ADDITIONS OF RS.32,81,744/- AND RS.8,63,896/-; RESPECTIVELY. HE RE AGAIN WE NOTICE THAT LEARNED CO-ORDINATE BENCHS FINDINGS EXTRACTED IN P RECEDING PARAGRAPH ALREADY REFERRED TO THIS TRIBUNALS DECISION IN CHI RAG PLAST CASE (SUPRA) TO DECIDED THE ISSUE IN ASSESSEES FAVOUR. LEARNED DE PARTMENTAL REPRESENTATIVE FAILS TO INDICATE ANY DISTINCTION ON FACTS. THE RE VENUES LATTER SUBSTANTIVE GROUND IS ACCORDINGLY DECLINED. NO OTHER ARGUMENT HAS BEEN RAISED IN THE COURSE OF HEARING BEFORE US. 8. THESE TWO REVENUES APPEALS ARE DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF MARCH, 2017.] SD/- S D/- ( AMARJIT SINGH ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 29/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0