DCIT CEN CIR 6, MUMBAI V. PANCHSHEEL DEVELOPERS, MUMBAI

ITA 3204/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48436 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA

Judgement Text

1 ITA NOS.3204 & 3237/MUM2010 ASSTT. YEARS : 2004-05 & 2002-03. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER. I.T.A. NO. 3204/MUM/2010 ASSESSMENT YEAR : 2004-05. I.T.A. NO. 3237/MUM/2010 ASSESSMENT YEAR : 2002-03. DY. COMMISSIONER OF INCOME-TAX , M/S PANCHSHEEL DEVELOPERS, CENTRAL CIRCLE-6, MUMBAI. VS. DYNAMIX HOUSE, YASHODHAM, GEN. A.K. VAIDYA MARG, GOREGAON (E), MUMBAI-400 063. APPELLANT. RESPONDENT. APPELLANT BY : SHRI AJI T KUMAR SINHA. RESPONDENT BY: M S. AARTI VISANJI. O R D E R PER J. SUDHAKAR REDDY : BOTH THESE APPEALS ARE FILED BY THE REVENUE DIRECT ED AGAINST THE SEPARATE ORDERS OF THE CIT(APPEALS)-36, MUMBAI DATED 15-02-2 010 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN HOLDING THAT THE DEDUCTION U/S 80IB(10) OF THE ACT, AS APPLICABLE PRIOR TO 1 ST APRIL, 2005, IS ADMISSIBLE IN CASE OF A HOUSING P ROJECT COMPRISING RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. 2 ITA NOS.3204 & 3237/MUM2010 ASSTT. YEARS : 2004-05 & 2002-03. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN HOLDING THAT THE RESIDENTIAL PROJECTS, HAV ING COMMERCIAL AREA UPTO 10% OF THE PROJECT, IS ELIGIBLE FOR THE CLAIM OF DEDUCTION FOR ENTIRE PROJECT U/S 80IB(10) OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN HOLDING THAT THE LIMIT ON COMMERCIAL USE O F BUILT UP AREA AS PRESCRIBED BY CLAUSE (A) OF SECTION 80IB(0) OF THE ACT HAS NO RETROSPECTIVE APPLICATION, AND IT APPLIES ONLY W.E. F. THE ASSESSMENT YEAR. 2. AFTER HEARING BOTH THE PARTIES, WE UPHOLD THE OR DER OF THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY FOLLOWED T HE JUDGMENT OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAMHA ASSOCIATE AND OTHERS IN ITA NO. 1417/PN/06 FOR A.Y. 2003-04. THE HONBLE BOMBAY HIGH COURT IN THIS VERY CASE OF CIT VS. BRAHMA ASSOCIATES 230 CTR 30 HAS HELD AS FOLLOWS : PRE AY 05-06, A PROJECT APPROVED AS HOUSE PROJEC T BY LOCAL AUTHORITY ELIGIBLE FOR DEDUCTION U/S 80-IB(10) IRRESPECTIVE O F EXTENT OF COMMERCIAL USER IN AY 2003-04 THE ASSESSEE UNDERTOOK THE CONSTRUCTI ON OF A PROJECT AT PUNE WHICH WAS APPROVED AS A RESIDENTIAL PLUS COMMERCIA L PROJECT. THE COMMERCIAL AREA OF THE PLOT WAS 20.83% OF THE TOTAL AREA. THE ASSESSEE CLAIMED DEDUCTION U/S 80-IB(10) WHICH WAS DENIED BY THE AO & CIT(A) ON THE GROUND THAT THE EXPRESSION HOUSING PROJECT I N S.80IB(10) APPLIED ONLY TO PROJECTS CONSISTING OF RESIDENTIAL UNITS AND NOT TO PROJECTS HAVING COMMERCIAL UNITS. ON APPEAL, THE SPECIAL BENCH (119 ITD 255) HELD THAT PRE AMENDMENT IN A.Y. 2005-06, IF THE PROJECT WAS APPRO VED BY THE LOCAL AUTHORITY AS A HOUSING PROJECT OR IF THE PROJECT WAS APPROVED AS RESIDENTIAL PLUS COMMERCIAL AND THE COMMERCIAL US ER DID NOT EXCEED 10% OF THE BUA, DEDUCTION WAS ALLOWABLE IN ENTIRETY. H OWEVER, IF THE COMMERCIAL USER EXCEEDED 10%, DEDUCTION WAS ALLOWAB LE ONLY ON THE RESIDENTIAL UNITS. ON APPEAL BY THE DEPARTMENT TO T HE HIGH COURT, HELD: (I) S. 80-IB(10) (PRE AMENDMENT W.E.F. AY 2005-06) DOES NOT DEFINE THE EXPRESSION HOUSING PROJECT BUT REFERS TO HOUSING PROJECTS WHICH ARE APPROVED BY THE LOCAL AUTHORITIES. UNDER THE LOCAL LAWS, THE AUTHORITIES ARE 3 ITA NOS.3204 & 3237/MUM2010 ASSTT. YEARS : 2004-05 & 2002-03. EMPOWERED TO APPROVE PROJECTS AS HOUSING PROJECTS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DC RULES FRAMED B Y THE RESPECTIVE LOCAL AUTHORITY. ACCORDINGLY, IF THE LEGISLATURE INTENDED TO RESTRICT THE BENEFIT OF DEDUCTION ONLY TO THE PROJECTS APPROVED EXCLUSIVELY FOR RESIDENTIAL PURPOSES, THEN IT WOULD HAVE STATED SO. HOWEVER, AS THE LEGIS LATURE HAS PROVIDED THAT THE DEDUCTION IS AVAILABLE TO ALL HOUSING PROJECTS APPROVED BY A LOCAL AUTHORITY, THE RESULT IS THAT EVEN PROJECTS WITH CO MMERCIAL USER APPROVED AS A HOUSING PROJECT ARE ELIGIBLE FOR DEDUCTION; (II) WHILE THE SPECIAL BENCH WAS RIGHT IN HOLDING T HAT A PROJECT WITH RESIDENTIAL AND COMMERCIAL USER TO THE EXTENT PERMI TTED UNDER DC RULES WOULD BE A HOUSING PROJECT AND ELIGIBLE FOR DEDUC TION, IT WAS NOT JUSTIFIED IN CONFINING THE DEDUCTION ONLY TO PROJECTS HAVING COMMERCIAL AREA UPTO 10% OF THE BUA BECAUSE ONCE THE BASIC ARGUMENT OF T HE REVENUE THAT THE HOUSING PROJECT WITH COMMERCIAL USER ARE NOT ENTITL ED TO SECTION 80IB(10) DEDUCTION IS REJECTED, NO RESTRICTION COULD BE IMPO SED. IF THE PROJECT IS APPROVED AS A HOUSING PROJECT DEDUCTION U/S 80-IB IS ALLOWABLE IRRESPECTIVE OF THE COMMERCIAL AREA; (III) THE INSERTION OF CLAUSE (D) TO S. 80-IB(10) W ,.E.F. 1.4.2005 TO DENY S. 80- IB(10) DEDUCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE PRESCRIBED LIMITS IS NOT RETROSPECTIVE. 3. IN VIEW OF THE ABOVE JUDGMENT, WE HAVE TO NECESS ARILY UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS BOTH THE APPEALS OF THE REVENUE. 4. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED ON THIS 8 TH DAY OF APRIL, 2011. SD/- SD/- (VIJAY PAL RAO) (J. SUDHAKAR RED DY) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED: 8 TH APRIL, 2011. WAKODE 4 ITA NOS.3204 & 3237/MUM2010 ASSTT. YEARS : 2004-05 & 2002-03. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, C-BENCH (TRUE COPY) BY ORDE R ASSTT. REGIST RAR, ITAT, MUMBAI BEN CHES