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

ITA 3336/MUM/2010

• Counselvise Citation: 333619914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUBAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3336/MUM/2010 (ASSESSMENT YEAR: 2004-05) DCIT, CENTRAL CIRCLE 6 M/S. PANCHSHEEL DEVELOPERS 9TH FLOOR, OLD CGO BLDG. ANNEX DYNAMIX HOUSE, YASHO DHAM M.K. ROAD, MUMBAI 400020 VS. GEN. A.K. VAIDYA MARG GOREGAON (E), MUMBAI 400063 PAN - AADFD 7871 P APPELLANT RESPONDENT APPELLANT BY: SHRI M.R. KUBAL RESPONDENT BY: SMT. AARTI VISSANJI DATE OF HEARING: 11.08.2011 DATE OF PRONOUNCEMENT: 24.08.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT(APPEALS)-36, MUMBAI DATED 15-02-2010 ON THE FOL LOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, 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 PROJECT COMPRISING RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE RESIDENTIAL PROJEC TS, HAVING COMMERCIAL AREA UPTO 10% OF THE PROJECT, IS ELIGIBL E 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 I N LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE LIMIT ON COMMERCIA L USE OF BUILT UP AREA AS PRESCRIBED BY CLAUSE (A) OF SECTION 80IB (10) OF THE ACT HAS NO RETROSPECTIVE APPLICATION, AND IT APPLIES ON LY W.E.F. THE ASSESSMENT YEAR. ITA NO. 3336/MUM/2010 M/S. PANCHSHEEL DEVELOPERS 2 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO AL LOWANCE OF DEDUCTION U/S 80IB(10) ON PROJECT-1 WHERE IN THERE WAS ALSO S OME COMMERCIAL AREA/SHOPPING AREA PERMITTED IN THE HOUSING PROJECT . IT WAS SUBMITTED THAT SIMILAR ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT MUMBAI C BENCH IN ITA NOS. 3204 & 3237/MUM/2010 F OR ASSESSMENT YEARS 2003-04 & 2002-03 IN ASSESSEES OWN CASE WHER EIN IT WAS HELD AS UNDER: - 2. AFTER HEARING BOTH THE PARTIES, WE UPHOLD THE O RDER OF THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY FOLLOWED THE JUDGMENT OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E 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 239 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 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 THE R EVENUE THAT THE HOUSING PROJECT WITH COMMERCIAL USER ARE NOT ENTITLED TO SE CTION 80IB(10) DEDUCTION IS REJECTED, NO RESTRICTION COULD BE IMPOSED. IF TH E PROJECT IS APPROVED AS A ITA NO. 3336/MUM/2010 M/S. PANCHSHEEL DEVELOPERS 3 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, WE UPHOLD THE ORDER OF THE CIT(A) REJECTING THE GROUNDS OF THE REVENUE. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH AUGUST 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXVI, MUMBAI 4. THE CIT CENTRAL I, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.