DCIT CIR-4, V. Sri. SANDEEP BUILDERS, MUMBAI

ITA 3233/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1303 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 16-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 09-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL J SATHE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3233/MUM/2008 (ASSESSMENT YEAR: 2004-05) DCIT, CIRCLE - 4 M/S. SANDEEP BUILDERS QURESHI MANSION, 2ND FLOOR SHOP NO. 10, SHRIPAL SHO PPING NAUPADA, THANE (W) 400602 VS. CENTRE , VIRAR (W) PAN - AATFS 8718 G APPELLANT RESPONDENT APPELLANT BY: SHRI ABANI KANTA NAYAK RESPONDENT BY: SHRI ANIL J. SATHE O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A)-II, THANE DATED 21.02.2008 AGAINST THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10). THE REVENUE IS AGGRIEVED AND RAISED ALL T HE GROUNDS ON THE ISSUE THAT THE ASSESSEE FIRM HAD CONSTRUCTED A RESIDENTIA L-CUM-COMMERCIAL COMPLEX THUS VIOLATING ONE OF THE PRE-CONDITIONS LA ID DOWN UNDER SECTION 80IB(10). 2. BRIEFLY STATED, THE ASSESSEE IS A BUILDER AND DEVEL OPER AND FOR THE ASSESSMENT YEAR DECLARED PROJECT INCOME CLAIMING DE DUCTION OF RS.32,95,987/- UNDER SECTION 80IB(10). THE A.O. NO TICED THAT THE ASSESSEE HAS COMPLETED THE PROJECT INDRA PRASTHA AND RADHA K UNJ AND THIS PROJECT WAS APPROVED BY CIDCO AS A HOUSING PROJECT WITH SHO PLINE. THERE BEING 15 SHOPS WITH A TOTAL BUILT UP AREA OF 1,977 SQ.FT. TH E A.O. WAS OF THE VIEW THAT THE ASSESSEE HAS NOT COMPLETED A HOUSING PROJECT AN D ACCORDINGLY PROVISIONS OF SECTION 80IB(10) ARE NOT FULFILLED AND THEREFORE HE REJECTED THE CLAIM OF DEDUCTION OF THE ENTIRE AMOUNT. BEFORE THE CIT(A) I T WAS CONTENDED THAT THE ASSESSEE HAS GOT THE APPROVAL OF CIDCO AS A HOUSING PROJECT AND THE TOTAL ITA NO. 3233/MUM/2008 M/S. SANDEEP BUILDERS 2 AREA AVAILABLE FOR CONSTRUCTION WAS 88,944 SQ.FT. (IN 2.55 ACRES) AT VILLAGE BOLINJ, TALUKA VASI, DISTRICT THANE AND THE SANCTIO NED BUILT UP AREA WAS FOR 166 FLATS TOTALLING TO 94333 SQ.FT. AND SHOPPING LI NE OF 17 SHOPS TOTALLING TO 1977 SQ.FT., WHICH IS AROUND 2% OF THE TOTAL RESIDE NTIAL AREA. THE CIT(A), AFTER CONSIDERING THE FACTS AND ALSO VARIOUS APPROV ALS AND THE DEFINITION OF HOUSING PROJECT AND RELYING ON VARIOUS ITAT DECISIO NS, ALLOWED ASSESSEES CLAIM OF BUSINESS PROFIT DERIVED OUT OF SALE OF RES IDENTIAL COMPONENT ONLY. HE, HOWEVER, REJECTED THE BUSINESS PROFIT EARNED OU T OF SALE OF COMMERCIAL COMPONENT. THE REVENUE IS AGGRIEVED. 3. AT THE OUTSET IT WAS SUBMITTED THAT THE ISSUE WAS C OVERED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES VS. CIT 315 ITR 268 (PUNE) (SB) WHEREIN IT WAS HELD THAT TH E PROVISIONS RESTRICTING COMMERCIAL AREA TO 2000 SQ.FT. OR 5% OF THE AGGREGATE BUILT UP AREA IS APPLICABLE ONLY FROM ASSESSMENT YEAR 205-06 . IT WAS FURTHER HELD AS UNDER: - FOR A PROJECT TO BE ELIGIBLE FOR THIS TAX CONCESSI ON FOR PERIODS PRIOR TO APRIL 1, 2005, IT HAS TO BE A HOUSING PROJECT FOR R ESIDENTIAL DWELLING UNITS AND NOT A PROJECT TO SERVE COMMERCIAL PURPOSES. IT SHOU LD PREDOMINANTLY BE A PROJECT FOR DWELLING UNITS. IT WOULD BE ILLEGAL TO APPLY THE CEILING OF 5 PER CENT TO THE ASSESSMENT YEARS PRIOR TO THE ASSESSMENT YEA R 2005-06 THOUGH NO SUCH CEILING WAS PROVIDED UNDER THE STATUTE, AND DENY BE NEFIT TO BORDERLINE CASES. AT THE SAME TIME THERE IS NO JUSTIFICATION TO ALLOW EXEMPTION TO PROJECTS NOT CARRIED AS PER THE DOMINANT OBJECTIVE OF THE PROVIS ION. THE LEGISLATURE ITSELF HAVING ACCEPTED 5 PER CENT, AS THE PERMISSIBLE COMM ERCIAL USE FROM THE ASSESSMENT YEAR 2005-06 ONWARDS, IN THE PERIOD WHEN SUCH A LIMIT WAS NOT IN FORCE, 10 PER CENT COULD BE SAFELY TAKEN AS THE MAXIMUM PERMISSIBLE COMMERCIAL USE IN A HOUSING PROJECT. WHERE APPROXIM ATELY 90 PER CENT OR MORE OF THE TOTAL AREA IS UTILISED FOR BUILDING DWELLING UNITS OF SPECIFIED AREA AND OTHER CONDITIONS OF THE SECTION ARE FULFILLED, THER E IS NO JUSTIFICATION TO DENY THE BENEFIT MERELY BECAUSE THE PROJECT HAD BEEN PASSED AS RESIDENTIAL- COMMERCIAL PROJECT. SUCH PROJECT SHOULD BE HELD TO BE PREDOMINANTLY A RESIDENTIAL PROJECT FULLY SATISFYING THE DESCRIPTIO N OF THE TERM HOUSING PROJECT AS ENVISAGED UNDER THE STATUTORY PROVISION PRIOR TO THE ASSESSMENT YEAR 2005- 06. WHERE 90 PER CENT IS BUILT-UP FOR RESIDENTIAL U NIT, AND COMMERCIAL USE IS 10 PER CENT, OR LESS, THERE IS SUBSTANTIAL COMPLIANCE WITH THE STATUTORY PROVISIONS AND THE PURPOSE OF THE PROVISION IS DULY MET. 4. SINCE THE BUILT UP ARE OF THE SHOPS IS 1977 SQ.FT. AND IS AROUND 2% OF THE TOTAL RESIDENTIAL AREA, RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF ITA NO. 3233/MUM/2008 M/S. SANDEEP BUILDERS 3 BRAHMA ASSOCIATES(SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A) WHICH IS IN ACCORDANCE WITH TH E ABOVE PRINCIPLE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE 2010. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JUNE 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) II, THANE 4. THE CIT III, THANE 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.