ITO WD 4(3), THANE V. RAMBABU P. AGARWAL, MUMBAI

ITA 2121/MUM/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7420 (ITAT-MUMBAI)
• Duration Of Justice: 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B SENTHIL KUMAR
• Assessee Lawyers: ANIL J SATHE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 2121/MUM/2010 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER - 4(3) SHRI RAMBABU P. AGRAWAL QURESHI MANSION, 2ND FLOOR PROP. AGRAWAL REALITIES NAUPADA, THANE (W) 400602 VS. 1, SHANTA NIKETAN, AGASHI RD. VIRAR (W), VASARI, THANE 401303 PAN - ABAP0A 3595 P APPELLANT RESPONDENT APPELLANT BY: DR. B. SENTHIL KUMAR RESPONDENT BY: SHRI ANIL J. SATHE O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL FILED BY THE REVENUE CHALLENGES THE IMP UGNED ORDER OF THE LEARNED CIT(A)-II, THANE DATED 03.12.2009 FOR A.Y. 2006-07. 2. REVENUE HAS TAKEN MULTIPLE GROUNDS BUT THE ONLY ISS UE ARISING FOR CONSIDERATION IS WHETHER THE LEARNED CIT(A) IS JUST IFIED IN DIRECTING THE A.O. TO ALLOW THE DEDUCTION TO THE ASSESSEE UNDER SECTIO N 80IB(10) IN SPITE OF THE FACT THAT THE ASSESSEE HAS COMMERCIAL AREA IN HIS P ROJECT.. 3. THE BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS R UNNING A PROPRIETARY FIRM UNDER THE NAME AND STYLE OF M/S. AGARWAL REALT IES AND IS IN BUSINESS OF BUILDING CONSTRUCTION AND DEVELOPMENT. ASSESSEE CON STRUCTED A HOUSING PROJECT NAMELY GOKUL HEIGHTS AT S. NO. 164 AT VILLA GE BOLINJI, TAL. VASAI. THE SAID PROJECT HAS BEEN APPROVED BY CIDCO, WHICH IS T HE LOCAL AUTHORITY FOR THE SAID AREA, AS A RESIDENTIAL WITH SHOP LINE BUIL DINGS. THE SAID PROJECT COMPRISED OF 111 FLATS AND 17 SHOPS. THE TOTAL BUIL T UP AREA OF THE RESIDENTIAL FLATS COMES TO 67220 SQ. FT. AND THE CO MMERCIAL/SHOP AREA IN THE PROJECT IS 3155 SQ.FT., WHICH WORKS OUT TO 4.69% OF THE TOTAL BUILT UP AREA OF THE PROJECT. ASSESSEE CLAIMED DEDUCTION UNDER SECTI ON 80IB(10). THE A.O. DECLINED TO GIVE DEDUCTION TO THE ASSESSEE ON THE R EASON THAT IT DOES NOT ITA NO. 2121/MUM/2010 SHRI RAMBABU P. AGRAWAL 2 FULFIL THE CONDITIONS LAID DOWN IN CLAUSE (D) OF SE CTION 80IB(10) OF THE ACT. ASSESSEE CONTENDED THAT THE AMENDED PROVISIONS OF S ECTION 80IB(10) ARE APPLICABLE TO THE PROJECT COMMENCED AFTER 01.04.200 4 AND SINCE THE PROJECT OF THE ASSESSEE HAS COMMENCED BEFORE 01.04.2004 THE SAID AMENDMENT IS NOT APPLICABLE TO THE PROJECT. ASSESSEE ALSO CONTEN DED THAT OTHERWISE ALSO THE ASSESSEE IS ELIGIBLE FOR 5% OF THE TOTAL BUILT UP AREA IN THE HOUSING PROJECT. AS THE ASSESSEE HAS COMMERCIAL AREA LESS T HAN 5% OF THE TOTAL BUILT UP AREA OF THE PROJECT ASSESSEE CANNOT BE DEPRIVED OF DEDUCTION UNDER SECTION 80IB(10). THE A.O. REFUSED TO ALLOW THE DED UCTION TO THE ASSESSEE UNDER SECTION 80IB(10). ASSESSEE CHALLENGED THE ACT ION OF THE A.O. BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A), FOLLOWING THE D ECISION IN THE CASE OF BRAHMA ASSOCIATES VS. CIT 122 TTJ (PUNE) (SB) 433, DIRECTED THE A.O. TO ALLOW THE DEDUCTION TO THE ASSESSEE. NOW THE REVENU E IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. IT SEEMS THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'B LE PUNE BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). THE OPERATIVE PA RT OF THE DECISION IS AS UNDER: - MERELY BECAUSE A PART OF THE PLOT IS USED FOR COMM ERCIAL PURPOSES THE CHARACTER OF HOUSING PROJECT IS NOT VITIATED AN D THE AVAILABILITY OF TAX BENEFITS IS NOT CONFINED TO ONLY SUCH HOUSIN G PROJECTS WHICH ARE PURELY RESIDENTIAL PROJECTS SO FAR AS ASSESSM ENT YEARS PRIOR TO A.Y. 2005-06 ARE CONCERNED, APPROVAL BY THE LOCA L AUTHORITY AS HOUSING PROJECT CONSTITUTES ADMISSIBLE MATERIAL TO COME TO THE CONCLUSION THAT THE HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) WHAT WAS BROUGHT INTO EFFECT BY INSERTIO N OF CL. (D) IN S. 80IB(10) VIDE FINANCE (NO.2) ACT, 2004, WAS A RESTR ICTION ON USE OF BUILT UP AREA FOR COMMERCIAL PURPOSES THIS INDICA TES THAT THERE WAS NO SUCH LIMIT IN FORCE FOR THE EARLIER YEARS RESTRICTION OF 5 PER CENT IS APPLICABLE ONLY WITH PROSPECTIVE EFFECT AND THERE IS NO JUSTIFICATION TO PRESUME THAT SUCH A LIMIT OR PROHI BITION WAS IN PLACE IN THE EARLIER YEARS AS WELL ON THE COMMERCIAL USE OF AREA IT WOULD BE REASONABLE TO GRANT BENEFIT OF INCENTIVE P ROVISION TO PROJECTS IN WHICH BUILT UP AREA FOR COMMERCIAL PURP OSES DOES NOT EXCEED 10 PER CENT OF TOTAL AREA WHERE APPROXIMAT ELY 90 PER CENT OR MORE OF THE TOTAL AREA IS UTILIZED FOR BUILDING DWELLING UNITS AND OTHER CONDITIONS OF S. 80-IB(10) ARE FULFILLED, THE RE IS NO JUSTIFICATION TO DENY THE BENEFIT WHERE THE PROJECT HAS BEEN PASS ED AS RESIDENTIAL-COMMERCIAL PROJECT WHERE THE TOTAL BUILT-UP ITA NO. 2121/MUM/2010 SHRI RAMBABU P. AGRAWAL 3 COMMERCIAL AREA IS MORE THAN 10 PERCENT OF THE TOTA L AREA, SUCH PROJECTS NORMALLY SHOULD NOT GET BENEFIT OF DEDUCTI ON UNLESS THE UNDERTAKING CAN SHOW THAT THE INCOME FROM CONSTRUCT ION OF RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT SEPARA TELY, THE EVEN AFTER EXCLUDING THE COMMERCIAL USE OF PLOT, THE PRO JECT SATISFIES ALL THE REQUIREMENTS OF S. 80-IB(10) ON STANDALONE BASI S..THEREFORE, THERE WOULD B NO JUSTIFICATION TO DENY BENEFIT OF S TATUTORY PROVISIONS TO CASE WHERE 90 PER CENT OR MORE OF THE TOTAL AREA HAS BEEN UTILISED FOR BUILDING DWELLING UNITS OF SPECIF IED AREA AND OTHER CONDITIONS OF THE SECTION ARE FULFILLED. THE PURPOS E OF THE LEGISLATURE IN SUCH CASE IS CLEARLY MET. TO SUM UP, A HOUSING P ROJECT WOULD FULFIL THE REQUIREMENT OF S. 80-IB(10) IF 90 PER CE NT OF THE AREA IS UTILISED FOR BUILDING OF DWELLING UNITS AND UTILISA TION OF COMMERCIAL BUILDING IS RESTRICTED TO 10 PER CENT OF THE BUILT UP AREA. SUCH PROJECT SHOULD BE HELD TO BE PREDOMINANTLY RESIDENT IAL PROJECT AND, THEREFORE, SATISFYING DESCRIPTION OF HOUSING PROJE CTS AS ENVISAGED UNDER THE STATUTORY PROVISION PRIOR TO ASST. YR. 20 05-06. IT WILL NOT BE JUST AND FAIR OR EVEN LEGAL TO DENY EXEMPTION OF THE SECTION TO THE AFORESAID TYPE OF PROJECTS CARRIED BY AN UNDERT AKING IDEAL REALTORS (ITA NO. 4292/MUM/2007), ARUN EXCELLO FOUN DATIONS (P) LTD. VS. ASSTT. CIT (2007) 108 TTJ (CHENNAI) 71, HA RSHAD P. DOSHI VS. ASSTT. ACIT (2007) 109 TTJ (MUMBAI) 335 AND SAR OJ SALES ORGANIZATION VS. ITO (2008) 115 TTJ (MUMBAI) 485 AP PROVED; LAUKIK DEVELOPERS VS. DY. CIT (2007) 108 TTJ (MUMBA I) 364: (2007) 105 ITD 657 (MUMBAI) OVERRULED. 5. IN OUR OPINION, AS THE ASSESSEE HAS COMMERCIAL AREA LESS THAN 5% OF THE TOTAL BUILT UP AREA AND ADMITTEDLY THE PROJECT OF THE ASSESSEE HAS COMMENCED BEFORE 01.04.2004, THE BENEFIT OF DEDUCTI ON UNDER SECTION 80IB(10) CANNOT BE DENIED. MOREOVER THE ISSUE IS SQ UARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE BRAHMA ASSOC IATES (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 31 ST MARCH 2011. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31 ST MARCH 2011 ITA NO. 2121/MUM/2010 SHRI RAMBABU P. AGRAWAL 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) II, THANE 4. THE CIT III, THANE 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.