FORTALEZA DEVELOPERS, MUMBAI V. ITO 15(1)(3), MUMBAI

ITA 3686/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5037 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Keywords: Business income; Maximum Marginal Rate; Retrospective amendment
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL I II I BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, AM , AM , AM , AM ./ I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.3686/MUM/2012 3686/MUM/2012 3686/MUM/2012 3686/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR :2008-09) ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.3687/MUM/2012 3687/MUM/2012 3687/MUM/2012 3687/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR :2009-10) M/S FORTALEZA DEVELOPERS, 601, COMMERCE HOUSE, 140, NAGINDAS MASTER ROAD, FORT, MUMBAI-400023 / VS. ITO 15(1), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 ( '( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*'( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.449 449 449 4492 22 2/MUM/2012 /MUM/2012 /MUM/2012 /MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR :2008-09) ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.449 449 449 4492 22 2/MUM/2012 /MUM/2012 /MUM/2012 /MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR :2009-10) ITO 15(1), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 / VS. M/S FORTALEZA DEVELOPERS, 601, COMMERCE HOUSE, 140, NAGINDAS MASTER ROAD, FORT, MUMBAI-400023 $' ' ./ + ./ PAN/GIR NO. :AAAJF0056B ( '( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*'( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) '( '( '( '( , , , , / APPELLANT BY : SHRI VIJAY MEHTA )*'( )*'( )*'( )*'( - -- - , , , , /RESPONDENT BY : SHRI P. K. SHUKLA - -- - .' .' .' .' / DATE OF HEARING : 3 RD SEPTEMBER 2013 /0& /0& /0& /0& - -- -.' .' .' .' /DATE OF PRONOUNCEMENT: 13 TH SEPTEMBER 2013 #1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THESE TWO SET OF CROSS APPEALS ARE DIRECTED AGAINS T TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS) B OTH DATED 4.4.2012 FOR THE ASSESSMENT YEAR 2008-09 AND 2009-10 RESPECT IVELY. ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 2 2. THE ASSESSEE HAS RAISED ONE COMMON GROUND IN THE SE APPEALS. THE GROUND RAISED FOR THE ASSESSMENT YEAR 2008-09 AS UN DER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE REDUCTION OF BUSINESS INCOME BY ` 14,64,64,961/- BEING THE SHARE OF PROFI T OF ONE THE MEMBERS OF THE APPELLANT AOP ERRONEOUSLY HOLDING TH AT THE AGREEMENT ENTERED INTO BETWEEN THE MEMBERS OF THE A OP IS FOR SHARING OF THE REVENUE AND NOT FOR SHARING OF THE N ET PROFIT. REDUCTION OF BUSINESS INCOME BEING BAD IN LAW, THE SAME NEEDS TO BE CANCELLED AND RETURNED BUSINESS INCOME AND CO NSEQUENTIAL CLAIM U/S 80IB(10) ON THAT AMOUNT NEEDS TO BE ACCEP TED. 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IS ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 12 .10.2012 IN ITA NO. 2648/2012 IN PARA 5.5 TO 5.7 AS UNDER: 5.5 WE HAVE CAREFULLY CONSIDERED THE VERSION OF LD . CIT IN THE LIGHT OF AVAILABLE ON OUR RECORD. WE HAVE CAREFULLY GONE THROUGH THE CLAUSE-7 OF THE AGREEMENT AND THE DISTRIBUTION OF REVENUE BY THE ASSESSEE IN ITS ACCOUNT. THE DISTRIBUTION OF TH E REVENUE IN THE ACCOUNT OF THE ASSESSEE IS IN ACCORDANCE WITH INTEN T AND PURPOSE OF CLAUSE-7 OF THE AGREEMENT. ACCORDING TO CLAUSE-7 OF THE AGREEMENT SPPL IS ENTITLED TO 35% SHARE OF THE GROS S SALE PROCEEDS OF THE UNITS INCLUSIVE OF THE VALUE OF THE LAND. ACCORDING TO DISTRIBUTION IN THE ACCOUNT OF THE ASSESSEE SPPL HAS RECEIVED RS. 15.11 CRORE WHICH IS 35% OF GROSS SALE PROCEEDS OF THE UNIT AMOUNTING TO RS.43. 17 CRORES. A SUM OF RS. 11.62 C RORE IS CREDITED TO THE ACCOUNT OF SPPL ON ACCOUNT OF LAND ETC. AND RS.3.49 CRORE IS CONSIDERED AS PROFIT SHARE OF SPPL . OUT OF BALANCE 65%, AFTER INCLUDING THE MSEB AND INCIDENTA L CHARGES AND REDUCING THE DEVELOPMENTAL CHARGES A SUM OF RS. 10.76 CRORE HAS BEEN CONSIDERED AS PROP SHARE OF RRKC. TH EREFORE, THE DISTRIBUTION OF PROFIT MADE BY THE ASSESSEE BETWEEN ITS MEMBERS IS IN ACCORDANCE WITH CLAUSE 7 OF THE AGREEMENT. TH E INTERPRETATION OF CLAUSE-7 SOUGHT TO BE ADOPTED BY LD. CIT WILL BE AGAINST THE VERY INTENT AND PURPOSE FOR WHICH THE A SSESSEE AOP HAS BEEN FORMED AND IF SUCH INTERPRETATION IS ADOPT ED IT WILL TANTAMOUNT TO DENIAL OF EXISTENCE OF AOP WHICH IS N OT EVEN THE CASE OF LD. CIT. IT HAS ALREADY BEEN POINTED OUT TH AT AOP IS A SEPARATE AND DISTINCT ASSESSABLE ENTITY AND IS ALSO ENTITLED TO ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 3 CLAIM THE DEDUCTIONS PERMITTED UNDER THE INCOME TAX ACT PROVIDED IT FULFIL THE CONDITIONS LAID DOWN IN THE SECTION GOVERNING THAT DEDUCTION. THE ASSESSEE AOP IN THE PRESENT CAS E HAS BEEN ASSESSED AS AOP AND FOUND TO HAVE FULFILLED THE CON DITION LAID DOWN IN SECTION 80 IB(L0) AND HAS BEEN HELD TO BE E LIGIBLE FOR SUCH DEDUCTION. THE QUANTUM OF DEDUCTION UNDER SECT ION 80 LB (10) WILL DEPEND ON THE INCOME EARNED FROM ELIGIBLE PROJECT. THE QUANTUM OF DEDUCTION WILL NOT DEPEND UPON THE MODE OF DISTRIBUTION OF SHARES AMONGST THE MEMBERS OF AOP A S INCOME OF AOP IS TAXABLE AT MAXIMUM MARGINAL RATE. THEREFORE, MANNER IN OVER ELIGIBLE QUANTUM OF DEDUCTION UNDER SECTION U/ S. 801B (10) AS THE ELIGIBLE QUANTUM WILL BE GROSS RECEIPTS FROM THE PROJECT REDUCED BY EXPENSES INCURRED ON THE PROJECT. IT IS NOT EVEN THE CASE OF LD. CIT THAT ASSESSEE AOP IS NOT ENTITLED T O GET THE BENEFIT OF DEDUCTION UNDER SECTION 80 LB (10). THE ONLY OBJECTION OF LD. CIT IS THAT DISTRIBUTION OF REVENUE IN THE A CCOUNT OF THE ASSESSEE IS INAPPROPRIATE AND BY THIS MANNER ASSESS EE HAS BEEN BENEFITED BY LARGER DEDUCTION IN PLACE OF SMALLER D EDUCTION AVAILABLE TO IT. IN OUR OPINION SUCH OBSERVATIONS O F LD. CIT ARE INCORRECT, FIRSTLY, ON THE GROUND THAT EVEN DISTRIB UTION OF REVENUE IN THE BOOKS OF ACCOUNT OF THE-ASSESSEE CANNOT BE S AID TO BE CONTRARY TO THE PURPOSE AND INTENT DESCRIBED IN CLA USE-7 OF THE AGREEMENT. SECONDLY, THE ALLOWABILITY OR OTHERWISE OF DEDUCTION UNDER SECTION 80 IB (10) IS NOT DEPENDENT UPON THE MANNER IN WHICH THE PROFIT HAS BEEN DISTRIBUTED AMONG THE MEM BERS OF AOP BUT IT DEPEND UPON THE FULFILMENT OF THE CONDITIONS LAID DOWN IN THAT SECTION AND ALSO THE DEDUCTION IS AVAILABLE TO AN UNDERTAKING AND NOT TO THE INDIVIDUAL CONSTITUENT OF AN UNDERTA KING. 5.6 WE HAVE ALSO NOT FOUND ANY FORCE IN THE SUBMISS ION LD. DR THAT 35% SHARE ALLOCABLE TO SPPL WAS IN THE NATURE OF OVERRIDING TITLE. CLAUSE-7 OF THE AGREEMENT WHICH HAS BEEN SOU GHT TO BE INTERPRETED BY LD. CIT DR IN THIS MANNER DOES NOT I NDICATE THAT 35% OF THE GROSS REVENUE TO BE SHARED BY SPPL WAS I N THE NATURE OF OVERRIDING TITLE, THEREFORE, THIS ARGUMENT OF LD . CIT DR HAS TO BE REJECTED AND IT IS TO BE HELD THAT 35% SHARE REC EIVED BY SPPL WAS NOT IN THE NATURE OF OVERRIDING TITLE TO THE RE VENUE BUT IT IS ONLY SHARE OF PROFIT OF SPPL. 5.7 IN VIEW OF ABOVE DISCUSSION IT IS HELD THAT THE IMPUGNED ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF REVENUE ON ACCOUNT OF ALLOCATION OF PRO FIT BETWEEN MEMBERS AS PER ACCOUNTS OF THE ASSESSEE AS ALLOCATI ON OF PROFIT IN THE ACCOUNTS OF THE ASSESSEE IS IN ACCORDANCE WI TH CLAUSE-7 OF THE AGREEMENT AND MANNER OF ALLOCATION OF PROFIT IN THE ACCOUNT CANNOT ALTER THE QUANTUM OF DEDUCTION AVAILABLE TO AOP UNDER SECTION 80 18(10). ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 4 4. THE FACTS FOR THE ASSESSMENT YEAR 2007-08 AND FO R THE ASSESSMENT YEARS UNDER CONSIDERATION ARE IDENTICAL AS THIS ISS UE IS REGARDING THE CLAUSE 7 OF AOP AGREEMENT DATED 29.4.2003. ACCORDIN GLY FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. THE ORDERS OF THE AUTHORITIES BELOW QUA T HIS ISSUE SET ASIDE. 5. THE REVENUE HAS RAISED THE COMMON GROUNDS IN THE SE APPEALS. THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2008-09 ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LD. CIT(A) ERRED IN DIRECTING AO TO GRANT DEDUC TION U/S. 801B(10) OF THE INCOME TAX ACT, 1961 WITHOUT CONSID ERING THE FACTS THAT AREA OF SOME OF THE FLATS EXCEEDS 1500 S Q.FT. IN CONTRAVENTION OF PROVISIONS OF SECTION 801B(10)(C) DISENTITLING THE ASSESSEE TO CLAIM DEDUCTION U/S. 801B (10) . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CJT(A) HAS ERRED IN LAW TO ALLOW DEDUCTION U/S. 801B(10) IGNORING THE FACT THAT ONLY ONE COMBINED PROJECT WA S APPROVED WHICH WAS CONVENIENTLY DIVIDED LATER ON INTO TWO SE PARATE PROJECTS I.E. RESIDENTIAL PROJECT AND COMMERCIAL PR OJECT TO BE RUN BY THE ASSESSEE AND M/S. R. K ASSOCIATES (SISTER CO NCERN OF THE ASSESSEE) RESPECTIVELY IN ORDER TO CIRCUMVENT THE P ROVISIONS OF 801B(1 0) TO CLAIM DEDUCTION U/S. 801B(10) WHICH OT HERWISE DISQUALIFIES THE ASSESSEE TO CLAIM DEDUCTION U/S. 8 01B(10). 6. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM O F DEDUCTION U/S 80IB ON THE GROUND THAT AREA OF SOME OF THE FLATS EXCEED S THE MAXIMUM PERMISSIBLE LIMIT OF 1500 SQUARE FEET AS WELL AS ON THE GROUND OF COMMERCIAL PROJECT. ON APPEAL, THE CIT(A) DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER FOR THE ASSESSM ENT YEAR 2007-08 WHEREIN THE DECISION OF SPECIAL BENCH OF THIS TRIBU NAL IN CASE OF BRAHMA ASSOCIATES HAD BEEN FOLLOWED. ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 5 7. WE HAVE HEARD THE LD. DR AS WELL LD. AR AND CONS IDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR OF THE ASSE SSEE HAS SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IS ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08. HE HAS POINTE D OUT THAT THE AO HAS REPRESENTED THE ADDITION ON THE BASIS OF THE FINDIN G FOR THE ASSESSMENT YEAR 2007-08. ON THE OTHER HAND, THE LD. DR HAS SUB MITTED THAT DURING THE COURSE OF SURVEY CERTAIN PAPERS WERE IMPOUNDED AND AS PER PAGE NO. 15, 17 AND 22 TO 27 OF THE IMPOUNDED PAPERS SOME FL ATS WERE HAVING THE AREA OF MORE THAN 1500 SQUARE FEET. HE HAS REFERRED PARA 3.II OF THE AO IN THIS RESPECT. THE LD. DR HAS ALSO RELIED UPON THE D ECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN CASE OF ITO VS EVEREST HO ME CONSTRUCTION INDIA PVT. LTD. 26 TAXMAN.COM 246 IN REJOINDER THE LD. AR OF THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN CASE OF MANAN CORPORATION VS ACIT 255 CTR (GUJ.) 415 AND SUBMITTE D THAT THE ISSUE IN CASE OF EVEREST HOME CONSTRUCTION INDIA PVT. LTD. D ECIDED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IS NOW COVERED BY T HE DECISION OF HONBLE GUJARAT HIGH COURT. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY GONE THROUGH THE RELEVANT RECORD AS WELL AS THE DECISIONS RELIED UPON BY THE PARTIES WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AN D DECIDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 25.4.2012 IN ITA NO. 4327/2010 IN PARA 2 TO 6.2 AS UNDER: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 01 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LD. CIT(A) ERRED IN DIRECTING ASSESSING OF FICER TO ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 6 DELETE THE ADDITION MADE OF RS.4,43,366/- TOWARDS R ECEIPTS NOT SHOWN IGNORING MATERIAL FACTS AVAILABLE ON RECO RD. 02 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LD. CIT(A) ERRED IN DIRECTING ASSESSING OFFICER TO GRANT DEDUCTION U/S. 801B (10) OF THE INCOME TAX AC T, 1961 WITHOUT CONSIDERING THE FACTS THAT AREA OF SOME OF THE FLATS EXCEEDS 1500 SQUARE FEET SECTION 8OLB(10) (10)(C) DISENTITLING THE ASSESSEE TO CLAIM DEDUCTION U/S. 8 01B (10). 03 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, THE LD. CIT(A) ERRED IN LAW TO ALLOW DEDUCT ION U/S.801B(10) IGNORING THE FACT THAT ONLY ONE COMBIN ED PROJECT WAS APPROVED WHICH WAS CONVENIENTLY DIVIDED LATER ON, INTO TWO SEPARATE PROJECTS THAT IS RESIDENTIAL PROJECT AND COMMERCIAL PROJECT TO BE RUN BY THE ASSESSEE AN D MIS. R. K. ASSOCIATES (SISTER CONCERN OF THE ASSESSEE) RESPECTIVELY IN ORDER TO CIRCUMVENT THE PROVISIONS OF 80(IB(10)(D) TO CLAIM DEDUCTION U/S 8OLB(10) WHICH OTHERWISE DISQUALIFIES THE ASSESSEE TO CLAIM DEDUCT ION U/S 801 B(10). 3. FIRST WE WILL TAKE UPON THE GROUND NO.2 REGARDIN G THE DISALLOWING THE CLAIM ON THE GROUND THAT SOME OF TH E FLATS HAVE EXCEEDS 1500 SQ.FT AREA IN CONTRAVENTION OF PROVISI ONS OF SEC. 80IB(10(E). 4 . WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. TH E LD DR HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE AREA OF THE FLATS SHOWN IN THE SALE AGREEMENT I S MORE THAN 1500 SQ.FT; THEREFORE, THERE IS A VIOLATION OF SEC. 80IB (10), 4.1 ON THE OTHER HAND, THE LD AR OF THE OF THE ASS ESSEE HAS POINTED OUT THAT THERE IS NO DISPUTE REGARDING THE BUILT UP AREA OF THE FLATS IS LESS THAN 1500 SQ.FT AND THE ASSESSING OFFICER HAS TAKEN INTO CONSIDERATION THE SALEABLE AREA AND NOT THE BUILT UP AREA. HE HAS REFERRED THE IMPUGNED ORDER OF THE CI T(A) AND SUBMITTED THAT THE CIT(A) HAS REPRODUCED ALL THE DE TAILS OF THE AREA OF EACH AND EVERY FLATS AT PAGES 12 & 13 OF THE IMPUGNED ORDER, WHICH CLEARLY SHOWS THAT THE AREA OF THE FLA T IS LESS THAN 1500 SQ.FT. 4.2 AFTER CONSIDERING THE RIVAL CONTENTION AND PERU SAL OF RECORDS, WE FIND THAT THE THERE IS NO DISPUTE ON THE POINT T HAT THE FLATS CONSTRUCTED AS PER THE SANCTIONED PLAN HAVING LESS THAN 1500 SQ.FT AREA. THEREFORE, THE BUILT UP AREA OF THE FL ATS IN THE PROJECT IS NOT DISPUTED AS IT IS LESS THAN 1500 SQ.FT. HOW EVER, THE ASSESSEE HAS RECEIVED THE CONSIDERATION IN SOME OF THE FLATS FOR MORE THAN 1500 SQ.FT AREA WHICH INCLUDES BUILT UP A REA PLUS THE COMMON AREA AND MAY BE CALLED AS SUPER BUILT UP AR EA. IT IS ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 7 PERTINENT TO NOTE THAT WHEN THE PROJECT HAS BEEN SA NCTIONED AND THE COMPLETION CERTIFICATE HAS BEEN ISSUED AS PER T HE SANCTIONED PLANT WHICH IS FOR THE RESIDENTIAL FLATS HAVING LES S THAN 1500 SQ.FT, THEN EVEN IF THE ASSESSEE HAS RECEIVED THE CONSIDER ATION FOR MORE THAN 1500 SQ.FT IN SOME OF THE FLATS, WHICH WO ULD NOT CONSTITUTE VIOLATION OF CONDITIONS AS PRESCRIBED U/ S 80IB(10)( C) BECAUSE THE BUILT UP AREA IS LESS THAN 1500 SQ.FT. THE CIT(A) HAS GIVEN THE DETAILS OF THE FLATS IN QUESTION AT PAGE 12 & 13 AS UNDER: COPA CABNA A AND C FLAT REFERR ED IN IMPOU NDED PAPER S BUILD UP AREA OF FLATS INCLUDING CARPET AREA, THICKNESS OF WALLS AND ENCLOSED BALCONY (IN SQ.MT) BUILD UP AREA (IN SQ.FTS) 1001 94.88 1021.28 1002 94.87 1021.18 BONITA, AND EVORA 102 132.81 1429.57 103 132.81 1429.57 201 132.33 1424.40 202 132.81 1429.57 203 132.63 1427.63 301 132.34 1424.51 302 132.81 1429.57 303 132.81 1429.57 401 132.84 1424.51 402 132.84 1429.57 403 132.63 1427.63 501 132.34 1424.51 502 132.81 1429.57 503 132.81 1429.57 601 132.34 1424.51 602 132.81 1429.57 603 132.63 1427.63 701 132.34 1424.51 702 132.81 1429.57 703 132.81 1429.57 801 132.34 1424.51 802 132.81 1429.57 803 132.63 1427.63 901 132.34 1424.51 902 132.81 1429.57 903 132.81 1429.47 RIOGRANDE AND SALVAVIDA ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 8 102 128.99 1388.45 103 128.94 1387.91 201 129.47 1393.62 202 129,02 1388.77 203 129.02 1388.77 301 129.47 1393.62 302 129.03 1388.88 303 129.02 1388.77 401 129.47 1393.62 402 129.02 1388.77 403 129.02 1388.77 501 129.47 1393.62 502 129.03 1388.88 503 129.03 1388.88 601 129.47 1393.62 602 129.02 1388.77 603 129.02 1388.77 701 129.47 1393.62 702 129.03 1388.88 703 129.02 1388.77 801 129.47 1393.62 802 129.03 1388.88 803 129.02 1388.77 901 129.47 1393.62 902 129.03 1388.88 903 129.02 1388.77 4.3 THIS FACTUAL ASPECT HAS NOT BEEN DISPUTED BEFOR E US. THEREFORE, WHEN EACH OF THE FLATS HAVE BEEN CONSTRU CTED AS PER THE BUILDING PLAN DULY APPROVED BY THE LOCAL AUTHOR ITIES AND ALSO COMPLETED AS PER THE COMPLETION CERTIFICATE, WHEREI N THE BUILT UP AREA OF EACH FLATS HAS BEEN SHOWN LESS THAN 1500 S Q.FT, THEN RECEIVING THE CONSIDERATION BY THE ASSESSEE FOR MOR E THAN 1500 AQ.FT SHOWING AS SALEABLE AREA OF THE FLATS WOULD N OT ENHANCE THE BUILT UP AREA OF THE FLATS/RESIDENTIAL UNITS AS PER THE SANCTIONED PLANT AND COMPLETION CERTIFICATE. 4.4 IN VIEW OF THE ABOVE DISCUSSION AS WELL AS IN T HE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A), QUA THIS ISSUE. 5 GROUND NO.3 IS REGARDING DISALLOWANCE OF DEDUCTIO N U/S 80IB(10) ON THE GROUND THAT THE ASSESSEE IS HAVING COMMERCIAL PROJECT IN CONTRAVENTION OF PROVISIONS OF SEC. 80I B(10)(D). 5.1 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. TH E ASSESSING ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 9 OFFICER HAS CONSIDERED THE RESIDENTIAL FLAT AND COM MERCIAL PROJECT AS ONE INTEGRATED PROJECT AND THEREBY HELD THAT THE AREA OF COMMERCIAL ESTABLISHMENT IN THE PROJECT IS MORE TH AN THE LIMIT PRESCRIBED U/S 80IB(10)(D). 5.2 ON APPEAL, THE CIT(A) HELD THAT THE RESIDENTIAL AND COMMERCIAL PROJECTS ARE TOTALLY INDEPENDENT; THEREF ORE, THE CLAIM CANNOT BE DISALLOWED. 6. WE FIND THAT THE LAYOUT PLAN OF THE ENTIRE BUIL DING, WHICH WAS REDEVELOPED BY THE ASSESSEE AND ASSESSEES SISTER C ONCERN M/S R ASSOCIATES WAS APPROVED BY THE PUNE MUNICIPAL CORPO RATION (PMC) BY ONE APPROVAL ORDER AND SUBSEQUENTLY TWO S EPARATE PROJECTS FOR RESIDENTIAL AND COMMERCIAL WAS SANCTI ONED BY THE PMC. THEREFORE, THE ASSESSING OFFICER TOOK THE ENT IRE PROJECT AS ONE AS THE LAYOUT OF THE DEVELOPMENT OF THE BUILDIN G WAS APPROVED BY THE PMC BY ONE APPROVAL. WITHOUT GOIN G INTO THE CONTROVERSY, WHETHER THE RESIDENTIAL OR COMMERCIAL PROJECT ARE TWO SEPARATE PROJECTS OR PARTS OF ONCE PROJECT, WE ARE OF THE VIEW THAT AS PER THE PRE- AMENDED PROVISIONS OF SEC . 80IB(10), THERE IS NO SUCH CONDITION OF COMMERCIAL AREA IN TH E PROJECT; THEREFORE, ONCE A PROJECT HAS BEEN APPROVED PRIOR TO 1.4.2005 BY THE MUNICIPAL AUTHORITIES, THEN IN THE ABSENCE O F ANY SUCH CONDITION IN THE PROVISIONS OF SEC. 80IB(10) AS EXI TS AT THE RELEVANT POINT OF TIME, THE SUBSEQUENT AMENDMENT W. E.F 1.4.2005 CANNOT BE APPLIED WITH RETROSPECTIVE EFFE CT. WHEN THE AMENDMENT ITSELF TAKES EFFECT FROM 1.4.2005, THEN I T CANNOT BE PRESUMED TO BE APPLIED FROM RETROSPECTIVE EFFECT. O UR VIEW HAS BEEN SUPPORTED BY THE DECISION OF THE TRIBUNAL IN T HE CASE OF SAROJ SALES ORGANISATION VS ITO REPORTED IN 115 TTJ 485(MUM). 6.1 EVEN OTHERWISE, THE LAW ON THE POINT IS VERY CL EAR THAT UNLESS PROVIDED IN THE STATUTE, THE LAW IS ALWAYS PRESUMED TO BE PROSPECTIVE IN NATURE. THE CIT(A) HAS FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF CO MMISSIONER OF INCOME-TAX V. BRAHMA ASSOCIATES, WHICH HAS BEEN UPH ELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN 333 ITR 289(BO M). THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD IN PARA 33 AS UNDER: IN THE RESULT, THE QUESTIONS RAISED IN THE APPEAL ARE ANSWERED THUS : (A) UP TO MARCH 31, 2005 (SUBJECT TO FULFILLING OTH ER CONDITIONS), DEDUCTION UNDER SECTION 80-IB(10) IS ALLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORIT Y HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTE NT PERMITTED UNDER THE DEVELOPMENT CONTROL RULES/ REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORIT Y. ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 10 (B) IN SUCH A CASE, WHERE THE COMMERCIAL USER PERMI TTED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCR IBED UNDER THE DEVELOPMENT CONTROL RULES/REGULATION, THE DEDU CTION UNDER SECTION 80-IB(10) UP TO MARCH 31, 2005 WOULD BE ALLOWABLE IRRESPECTIVE OF THE FACT THAT THE PROJECT IS APPROVED AS 'HOUSING PROJECT' OR 'RESIDENTIAL PLUS COMMERCIAL'. (C) IN THE IN THE IN THE IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOME ABSENCE OF ANY PROVISIONS UNDER THE INCOME ABSENCE OF ANY PROVISIONS UNDER THE INCOME ABSENCE OF ANY PROVISIONS UNDER THE INCOME- -- -TAX TAX TAX TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THA T UP TO ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THA T UP TO ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THA T UP TO ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THA T UP TO MARCH 31, 2005 DEDUCTION UNDER SECTION 80 MARCH 31, 2005 DEDUCTION UNDER SECTION 80 MARCH 31, 2005 DEDUCTION UNDER SECTION 80 MARCH 31, 2005 DEDUCTION UNDER SECTION 80- -- -IB(10) WOULD BE IB(10) WOULD BE IB(10) WOULD BE IB(10) WOULD BE ALLOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHOR ITY HAVING ALLOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHOR ITY HAVING ALLOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHOR ITY HAVING ALLOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHOR ITY HAVING RESIDENTIAL BUILDING WITH CO RESIDENTIAL BUILDING WITH CO RESIDENTIAL BUILDING WITH CO RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10 PER CENT. MMERCIAL USER UP TO 10 PER CENT. MMERCIAL USER UP TO 10 PER CENT. MMERCIAL USER UP TO 10 PER CENT. OF THE TOTAL BUILT OF THE TOTAL BUILT OF THE TOTAL BUILT OF THE TOTAL BUILT- -- -UP AREA OF THE PLOT. UP AREA OF THE PLOT. UP AREA OF THE PLOT. UP AREA OF THE PLOT. (D) SINCE THE DEDUCTION UNDER SECTION 80-IB(10) IS ON THE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT J USTIFIED IN RESTRICTING THE SECTION 80-IB(10) DEDUCTION ONLY T O A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE T HE ASSESSEE HAS ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80-IB(10) DEDUCTION TO A PART OF THE PROJECT, WE DO NOT DISTURB THE FINDINGS OF THE TRI BUNAL IN THAT BEHALF. (E) CLAUSE (D) INSERTED TO SECTION 80-IB(10) WITH E FFECT FROM APRIL 1, 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO AP RIL 1, 2005. 6.2 THEREFORE, AS PER THE PRE-A-MENDED PROVISIONS O F SEC 80IB(10), ONCE THE PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITIES, THEN IN THE ABSENCE OF ANY SUCH CONDIT ION OF COMMERCIAL AREA IN THE PROVISIONS OF SEC. 80IB(10) , DEDUCTION CANNOT BE DENIED ON THIS POINT. HENCE, WE DO FIND A NY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT(A), QU A THIS ISSUE. 9. IT IS TO BE NOTED THAT THE ISSUE HAS BEEN DECIDE D BY THIS TRIBUNAL ON THE BASIS OF THE PECULIAR FACT AND IT WAS FOUND THA T THE BUILD UP AREA OF EACH FLAT WAS LESS THAN 1500 SQUARE FEET AND FURTHE R THE COMMERCIAL PROJECT WAS FOUND A SEPARATE PROJECT. THE DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF BRAHMA ASSOCIATES 333 ITR 289 HAS BEEN FOLLOWED. ITA NO.3686& 3687, 4492 & 4491/M/2012 FORTALEZA DEVELOPERS 11 THEREFORE, THE DECISION RELIED UPON B Y THE LD. DR WOULD NOT HELP THE CASE OF THE REVENUE WHEN THE ISSUES HAVE BEEN DECIDED ON THE FACTS. ACCORDINGLY FOLLOWING THE EARLIER ORDER OF THIS TRI BUNAL WE DECIDE THE ISSUE OF DEDUCTION U/S 80IB IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF SEPTEMBER 2013 SD/- SD/- ( . . ! ) ' #$ (N. K. BILLAIYA) ACCOUNTANT MEMBER ( ) % #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 13 TH SEPTEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI