ITO 15(2)(4), MUMBAI V. S.R. DEVELOPERS, MUMBAI

ITA 3847/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0816 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 01-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: JIGNESH P SHAH
• Keywords: Search and seizure; Reassessment proceedings
• Section: 143(3); 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH , JM AND SHRI SANJAY ARORA, AM ./ I. T.A. NO S . 3847 & 5148/MUM/2011 ( / ASSESSMENT YEAR S : 2006 - 07 & 2005 - 06 ) ITO - 15(2)(4), MATRU MANDIR, TARDEO, GRANT ROAD, MUMBAI - 400 007 / VS. S. R. DEVELOPERS A - 3, ANJUMAN NURAL TRUST, MOHALI VILLAGE, SAKI NAKA, MUMBAI - 400 072 ./ ./ PAN/GIR NO. ABBPS 0073 R ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NEIL PHILIP / RESPONDENT BY : SHRI JIGNESH P. SHAH / DATE OF HEAR ING : 01.05 .2015 / DATE OF PRONOUNCEMENT : 31 .0 7 .2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO A PPEAL S BY THE REVENUE , I.E., FOR TWO CONSECUTIVE YEARS, BEING ASSESSMENT YEARS (A.YS.) 2005 - 06 AND 2006 - 07, PARTLY ALLO WING THE ASSESSEES APPEAL S CONTESTING ITS ASSESSMENT S VIDE ORDERS U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 21.04.2011 AND 25.02.2011 FOR THE TWO CONSECUTIVE YEARS RESPECTIVELY . 2. WE SHALL BEGIN BY RECALLING THE BACKGROUND FA CTS OF THE CAS E , WHICH ARE BRIEF AND LARGELY UNDISPUTED, A S ALSO REFLECT THE RESPECTIVE CASES OF BOTH THE PARTIES. THE 2 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS ASSESSEE IS AN ASSOCIATION OF PERSONS (AOP), WITH THE COMING TOGETHER OF SEVEN PERSONS, T W O A S V ENTURERS AND THE OTHER FIVE AS CO - VENTURE RS. A RESIDENTIAL HOUSING PROJECT , TITLED RITU PARADISE , COMPRISING 222 RESIDENTIAL FLATS AND 39 SHOPS, SPREAD OVER SEVEN BUILDINGS , WAS COMMENCED DURING THE RELEVANT FINANCIAL YEAR ON LAND ADMEASURING 10316 SQ. MTRS. AT VILLAGE NAVAHAR, TALUKA: BHAYANDA R, DIST RICT THANE, AFTER OBTAINING APPROVAL ON 06.10.2004 FROM MIRA BHAYANDAR MUNICIPAL CORPORATION (MBMC), FOLLOWED BY THE COMMENCEMENT CERTIFICATE FROM THE SAME, I.E., MBMC , ON 06.12.2004. THE PROJECT SATISFYING THE CONDITIONS OF SECTION 80 - IB(10), INCOM E FOR A.Y. 2005 - 06 WAS RETURNED ON 26.10.2005 AT RS.5,26,606/ - , I.E., AFTER CLAIMING DEDUCTION U/S.80 - IB(10) AT RS.1,10,71,119/ - . THE SAME WAS NOT SUBJECT TO THE VERIFICATION PROCEDURE U/S. 143(2) R/W S. 143(3) OF THE ACT. FOR THE SU CCEEDING YEAR, I.E., A. Y. 2006 - 07, THE ASSESSEE HOWEVER DID NOT CLAIM DEDUCTION ON A PART OF THE PROJECT, DESCRIBING IT AS P HASE II OF THE ORIGINAL PROJECT, RETURN ING INCOME ON 18.10.2006 QUA THE SAME AT RS.9,86,590/ - , WHILE CLAIMING DEDUCTION US/.80 - IB(10) CORRESPONDING TO THE PROFIT ATTRIBUTABLE TO P HASE I OF THE PROJECT , AT RS.14,66,326/ - . GIVING THE DETAILS, AS UNDER, IT WAS EXPLAINED DURING THE ASSESSMENT PROCEEDINGS FOR THAT YEAR (A.Y. 2006 - 07) , THAT P HASE I OF THE PROJECT, COMPRISING FIVE BUILDINGS , DESCRIBE D AS WINGS A TO E , WITH NO SHOPPING AREA, INDEPENDENTLY SATISFIED THE CONDITIONS OF SECTION 80 - IB(10): WINGS CERTIFICATE AREA TOTAL 10870.00 SQ. MTRS. PROJECT I 4790.40 SQ. MTRS. 98/0/4 09.07.05 & 21.06.06 39636 SQ. FT. PROJECT II 6079 SQ. MTRS. 124/39/4 11.09.0 6 & 25.01.07 74641 SQ. FT. CLAUSE (D) OF SECTION 80 - IB(10), PRESCRIBING THE SAME, I.E., THE STIPULATION WITH REGARD TO THE MAXIMUM SHOPPING AREA PERMISSIBLE FOR AN ELIGIBLE PROJECT U/S.80 - I B (10), C AME ON THE STATUTE BOOK BY FINANCE (NO. 2) ACT, 2004 W. E.F. 01.04.2005. 3 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS HOWEVER, AS CONSTRUCTION OF THE OTHER TWO BUILDINGS HA D NOT COMMENCED, THE ASSESSEE HAD , BY WAY OF ABUNDANT CAUTION , SP LIT THE PROJECT INTO TWO SEPARATE PARTS, WHICH COULD BE UNDERTAKEN INDEPENDENT OF EACH OTHER. PHASE I INDEPENDENTLY SATI SFYING THE QUALIFYING CONDITIONS OF SECTION 80 - IB(10), ONLY THE PROFIT THEREFROM, ASCERTAINED ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED SEPARATELY FOR EACH PROJECT (OR PHASE OF THE PROJECT), WERE CLAIMED FOR DEDUCTION U/S.80 - IB(10). IN THE REVENUES VIEW, THE SAME WAS NOT ACCEPTABLE IN LAW. THE PROJECT WAS SANCTIONED AND APPROVED AS A SINGLE PROJECT, WITH A SINGLE OR ONE COMPLET ION CERTIFICATE FOR THE ENTIRE PROJECT. THE SAME COULD BE EXECUTED IN DIFFERENT PHASES, BUT THAT WOULD NOT MAKE IT AS DIFFERE NT PROJECTS. THERE WAS ACCORDINGLY NO SCOPE FOR BIFURCATING OR ALLOCATING THE PROFITS THERE - FROM INTO TWO (OR MORE) . THE SAME WAS DONE ONLY TO ENABLE CLAIM OF DEDUCTION U/S. 80 - IB(10) IN VIEW OF THE AMENDED LAW, I.E., BY FINANCE (NO. 2) ACT, 2004 W.E.F. A. Y. 2005 - 06. TWO, THE AMENDED PROVISION ALSO SPECIFIED THE CONDITION AS TO THE DATE OF COMPLETION, I.E., WITH REFERENCE TO TH E DATE OF APPROV AL BY THE LOCAL AUTHORITY, FOR A HOUSING PROJECT TO BE ELIGIBLE , PER CLAUSE (A) THEREOF. THE APPROVAL IN THE INSTANT CASE WAS GRANTED ON 06.12.2004. NO COMPLETION CERTIFICATE HAD BEEN OBTAINED BY 20.11.2008. EACH OF THE CONDITIONS PER CLAUSE S (A) TO (D) OF SECTION 80 - IB(10) HAD TO BE INDEPENDENTLY SATISFIED FOR A PROJECT TO BE AN ELIGIBLE PROJECT. DEDUCTION U/S.80 - IB(10 ) WAS, ACCORDINGLY, DENIED. THE ASSESSMENT FOR A.Y. 2005 - 06 WAS, ACCORDINGLY, REOPENED AFTER RECORDING THE REASONS (REPRODUCED AT PARA 2 OF THE ASSESSMENT ORDER) , BY ISSUE OF NOTICE U/S.148 ON 29.03.2010. THE ASSESSEE RESPONDED BY FILING N IL RETURN OF INCO ME ON 13.04.2010, CLAIMING DEDUCTION U/S.80 - IB(10) AT RS.1,15,97,725/ - , I.E., AS AGAINST AT RS.110.71 LACS CLAIMED EARLIER PER THE ORIGINAL RETURN, WHICH WAS AGAIN, AND FOR THE SAME REASONS THAT PREVAIL ED FOR A.Y. 2006 - 07, DISALLOWED IN ASSESSMENT. THE ASS ESSEE, HOWEVER, FINDING FAVOUR WITH THE LD. CIT(A) IN APPEAL, THE REVENUE IS IN APPEAL, RAISING THE FOLLOWING GROUNDS: 4 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS FOR A.Y. 2005 - 06 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 ,10,71,119/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE U/S.80 - IB(10) OF THE INCOME TAX ACT, 1961 AND NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT FULFILLED AND THE CONDITIONS LAID DOWN U/S.80 - IB(10). FOR A.Y. 2006 - 07 1. ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S.80 - IB(10) IGNORING THE POINT THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE FACT OF THE COMPLETION OF THE PROJECT BEFORE 31.03.2009, AGAINST W HICH THE COMMENCEMENT CERTIFICATE WAS OBTAINED ON 06.12.2004. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE POINT THAT THE COMPLIANCE OF CONDITIONS U/S.80 - IB(10) HAS TO BE SEEN WITH REFERE NCE TO THE PROJECT (ELIGIBLE BUSINESS) FOR WHICH COMMENCEMENT CERTIFICATE WAS OBTAINED ON 06.12.2004. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION E VEN THOUGH THE COMMERCIAL AREA IN THE PROJECT IS MORE THAN 2000 SQ. FT., WHILE THE SAME RESULTS IN VIOLATION OF SECTION 80 - IB(1)(D) AS PER THE AMENDMENT INSERTED BY THE FINANCE (NO.2) ACT, 2004 WHICH IS CLARIFICATORY AND DECLARATORY IN NATURE. 3. WE HAV E HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 3.1 THE FIRST ISSUE BEFORE US IS AS TO WHAT WOULD CONSTITUTE A HOUSING PROJECT, I.E., WHETHER THE ENTIRE PROJECT, C HRISTENED RITU PARADISE, CONSISTING OF, AS IT APPEARS , 7 BUILDINGS, BEING WINGS A TO D, CLASSIFIED AS P HASE I OF THE PROJECT , AND WINGS G, H AND K, CATEGORIZED AS P HASE II, OR AS PROJECT II BY THE ASSESSEE, I.E., GOING BY THE LIST OF THE DOCUMENTS, WHICH INCLUDE THE DIFFERENT COMPLETION CERTIFICATES ISSUED BY THE ARCHITECT (REFER: PGS. 9 - 10 AND 7 OF THE APPELLATE ORDERS FOR THE TWO CONSECUTIVE YEARS RESPECTIVELY). THE ISSUE, IN OUR VIEW, IS NO LONGER RES INTEGRA , I.E., POST THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . BRAHMA ASSOCIATES [2011] 5 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS 333 ITR 289 (BOM.). FACED WITH THE SAME QUESTION, THOUGH IN THE CONTEXT OF INCLUSION OR OTHERWISE OF THE SHOPPING AREA, THE HONBLE JURISDICTIONAL HIGH COURT EXPLAINED THAT THE HOUSING PROJECT BEING NOT DEFINED EITHER UNDER THE RELEVANT PROVISION OR EVEN THE ACT, THE SAME WOULD HAVE TO BE TAKEN AS THE HOUSING PROJECT AS APPROVED BY THE LOCAL AUTHORITY, I.E., FOLLOWING THE DEVELOPMENT CONTROL REGULATION/RULES. WE MAY THOUGH AT THE OUTS ET CLARIFY THAT THE DATE 06.10.2004 , REFERRED TO ABOVE (PARA 2 OF THIS ORDER) , IS A TYPOGRAPHICAL ERROR , AND ONLY REFERS TO THE DATE 06.1 2 .2004. THIS IS AS THE DATE 06.10.2004 IS MENTIONED NOWHERE E LSE , I.E., EXCEPT AT PARA 2 OF THE ASSESSMENT ORDER FOR A.Y. 2005 - 06, REPRODUCING THE REASONS RECORDED U/S.148(2), AND THE ONLY DATE REFER RED TO BY BOTH THE PARTIES , AND THROUGHOUT , IS 06.12.2004 ONLY. IN FACT, IT WOULD BE OF NO CONSEQUENCE WHETHER THE APPROVAL DATE 06.10.2004 OR 06.12.2004 IN - AS - MUCH AS THE AMENDED P ROVISION WOULD APPLY EQUALLY FOR BOTH THE SITUATIONS, WHICH ARE THUS PARA LLEL OR EQUIVALENT, I.E., VIS - - VIS THE LAW. CONTINUING FURTHER, IT WAS CLARIFIED BY IT THAT THE HOUSING PROJECT, AS APPROVED , IS A SINGLE PROJECT . IT IS THIS PROJECT WHICH HAS TO BE EXAMINED F OR THE SATISFACTION OR OTHERWISE OF ALL THE QUALIFYING CONDITIO NS OF SECTION 80 - IB(10), AND ONLY UPON CUMULATIVE SATISFACTION THEREOF WOULD THE HOUSING PROJECT QUALIFY TO BE AN ELIGIBLE PROJECT, AND PROFIT DERIVED THERE - FROM ENTITLED TO DEDUCTION U/S. 80 - IB(10). THE SAID PROJECT WOULD, ACCORDINGLY, HAVE ONE SET OF DAT ES, I.E., OF APPROVAL AND/OR COMMENCEMENT AND COMPLETION. THERE IS, AS SUCH, NO SCOPE FOR BIFURCATING THE PROJECT INTO TWO (OR MORE) PROJECTS , I.E., THAT SUBJECT TO DEDUCTION U/S. 80 - IB, AND THE OTHER/S NOT . MERELY BECAUSE THE LAW STANDS SINCE AMENDED, PRO VIDING A CAP ON THE AREA FOR CONVENIENT SHOPPING IN A RESIDENTIAL COMPLEX AS A ELIGIBILITY CRITERIA FOR THE HOUSING PROJECT WOULD NOT IN ANY MANNER IMPLY THAT THE ASSESSEE CAN SEGREGATE COMPOSITE AND INTEGRATED HOUSING PROJECT, ALLOCATING, AS IT WERE, THE SHOPPING AREA , TO A SET OF BUILDINGS FOR WHICH CONSTRUCTION HAD NOT COMMENCED, OR TO THOSE BUILDINGS WHEREIN OR WHEREAT THE SAID SHOPPING COMPLEX IS OR IS TO BE ACTUALLY, I.E., PHYSICALLY, LOCATED. THE SHOPPING AREA IS EVEN OTHERWISE AN 6 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS INTEGRAL PART OF TH E APPROVED, SINGLE HOUSING PROJECT, ME A NT AS A FACILITY OR AMENITY FOR THE RESIDEN TS THEREOF , AND IS THUS TO SERVE THE ENTIRE PROJECT. MAINTENANCE OF SEPARATE SET OF ACCOUNTS FOR DIFFERENT PARTS ( OR PHASES ) OF A PROJECT, OR THE SAME BEING COMPLETED ON DIFF ERENT DATES, WOULD BE OF NO MOMENT. THE HOUSING PROJECT RITU PARADISE , APPROVED ON 06.12.2004 , IS THUS TO BE REGARDED AND CONSIDERED AS A SINGLE HOUSING PROJECT. THERE WAS, ACCORDINGLY, NO SCOPE FOR BIFURCATING ITS PROFIT INTO TWO, I.E., THAT SUBJECT TO DEDUCTION U/S.80 - IB(10) , AND THAT NOT SO. 3.2 COMING TO THE CASE LAW RELIED UPON BY THE ASSESSEE, WE HAVE PASSED OUR DECISION ON THE JUDGMENT BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) WHICH IN RATIO, UNEQUIVOCALLY S TATES THAT IT IS A SINGLE PROJECT, AS APPROVED BY THE LOCAL AUTHORITY, THAT WOULD STAND TO BE REGARDED AS EITHER AN ELIGIBLE PROJECT, OR NOT SO, I.E., IN TERMS OF SECTION 80 - IB(10), AND TOWARD WHICH WE MAY REPRODUCE THE FOLLOWING CAPSULING THE GIST OF THE DECISION, AS UNDER, SO THAT WE FOUND THE SAID ISSUE AS SQUARELY COVERING THE PRESENT CASE, RAISING THE SAME ISSUE . WHY, IN BRAHMA ASSOCIATES (SUPRA) THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80 - IB(10) ONLY QUA THE RESIDENTIAL AREA, I.E., PROPORTIONATELY, BY EX CLUDING THE PROFIT RELATABLE TO THE SHOPPING AREA, AND WHICH WAS DISAPPROVED BY THE HONBLE COURT. THE FOLLOWING WORDS CAPTURE THE SAID DECISION, WHICH FOLLOWS A COMPREHENSIVE DISCUSSION ON THE VARIOUS ASPECTS, AND IN HARMONY AND AGREEMENT WITH ITS UNDERS TANDING, OF THE MATTER (REFER PARA 31 AT PGS. 302 - 303, ALSO CATCH NOTES AT PGS. 290 - 291): SECTION 80 - IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80 - I B(10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO THE PART OF THE PROJECT . [EMPHASIS OURS] THE MATTER STANDS ALSO DISCUSSED AT LENGTH BY THE TRIBUNA L IN THE CASE OF ASST. CIT VS. EKTA SANKALP DEVELOPERS (IN ITA NOS. 3316 & 3318/MUM/2012 DATED 7 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS 12.09.2014), WHEREIN AGAIN THIS ISSUE AR OSE AS IN THE CONTEXT OF THE ASSESSEES CLAIM FOR THE PROPORTIONATE DEDUCTION U/S.80 - IB(10) BY LIMITING IT TO THE AREA CO VERED BY THE RESIDENTIAL UNITS SATISFYING THE CONDITION OF SECTION 80 - IB(10)(C), WHICH THE REVENUE DISPUT ES IN - AS - MUCH AS THE HOUSING PROJECT IS A SINGLE PROJECT . D EDUCTION U/S.80 - IB(10) COULD OR WAS TO BE ON THE PROJECT AS A WHOLE AND THAT THERE WAS NO SC OPE FOR ALLOWING PROPORTIONATE DEDUCTION FOR CONSIDERING A PART THEREOF AS ELIGIBLE AND LIMITING THE DEDUCTION TO THE PROFIT ATTRIBUTABLE THERETO. THE QUANTIFICATION COULD , AS OPINED BY THE TRIBUNAL , ONLY FOLLOW ELIGIBILITY, WHICH IS I N FACT AXIOMATIC. RE LYING EXTENSIVELY ON THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) , EVEN OTHERWISE BINDING ON IT, THE TRIBUNAL REJECTED THE ASSESSEES CLAIM, DISTINGUISHING THE DECISIONS BY THE TRIBUNAL RELIED UPON BY IT, CULLING OUT OF ITS RATIO AT PARA 4.3 OF IT S ORDER, WHICH WE MAY AGAIN REPRODUCE FOR READY REFERENCE, AS UNDER: THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA): 4.3 IN THE FACTS OF THAT CASE, THE ASSESSMENT YEAR BEING 2003 - 04, THE REVENUE SIMILARLY DENIED DEDUCTION ON THE GROUND THAT THE ASS ESSEES HOUSING PROJECT, WHICH HAD A COMMERCIAL AREA OF 50% OF THE TOTAL AREA, WAS NOT AN ELIGIBLE HOUSING PROJECT U/S.80 - IB(10). THE ASSESSEE HAD CLAIMED DEDUCTION CORRESPONDING TO 50% AREA COVERING THE RESIDENTIAL CONSTRUCTION, WHICH CLAIM WAS UPHELD BY THE TRIBUNAL. ON THE REVENUE CARRYING THE MATTER IN APPEAL BEFORE IT, THE HONBLE JURISDICTIONAL HIGH COURT CLARIFIED AS UNDER: A) THE TERM HOUSING PROJECT BEING NOT DEFINED UNDER THE ACT, THE PROJECT AS APPROVED BY THE LOCAL AUTHORITY, I.E., AS PER THE D EVELOPMENT CONTROL RULES/REGULATIONS, IRRESPECTIVE OF THE EXTENT OF COMMERCIAL AREA, IS A HOUSING PROJECT AS CONTEMPLATED U/S.80 - IB(10). THE TRIBUNAL WAS ACCORDINGLY CORRECT IN HOLDING THAT THE HOUSING PROJECT SO APPROVED SHALL QUALIFY FOR DEDUCTION THERE - UNDER; B) SECTION 80 - IB(10)(D) STANDS BROUGHT ON THE STATUTE BY FINANCE (NO. 2) ACT, 2004 W.E.F. 01.04.2005. THE PROVISION IS NOT RETROSPECTIVE BUT PROSPECTIVE, SO THAT IT WOULD HAVE EFFECT FOR ASSESSMENT YEARS COMMENCING ON OR AFTER 01.04.2005, I.E., A.Y . 2005 - 06 ONWARDS; 8 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS C) THERE BEING NO STIPULATION WITH REGARD TO THE COMMERCIAL USER PRIOR TO THE INSERTION OF CLAUSE (D) TO SECTION 80 - IB(10), NO SUCH LIMITATION COULD BE READ IN THE PROVISION. THE LEGISLATURE CAN ONLY BE CONSIDERED AS AWARE THAT THE LOCA L AUTHORITY MAY APPROVE A HOUSING PROJECT WITHOUT OR WITH COMMERCIAL AREA. AS SUCH, WHEN NO STIPULATION QUA COMMERCIAL USER STANDS PROVIDED FOR BY THE STATUTE, A HOUSING PROJECT COULD NOT BE OUSTED ON THE GROUND THAT THE COMMERCIAL AREA THERE - UNDER EXCEEDS A PARTICULAR LIMIT. THE TRIBUNAL FELL IN ERROR IN PRESCRIBING SUCH A LIMIT AT 10% OF THE TOTAL AREA, WHICH WAS PLAINLY ARBITRARY AND DE HORS ANY RULE OF INTERPRETATION OF STATUTES. IT IS THE ENTIRE HOUSING PROJECT, I.E., AS APPROVED BY THE LOCAL AUTHORITY ; THE EXTENT OF COMMERCIAL AREA NOTWITHSTANDING, WHICH WOULD QUALIFY TO BE AN ELIGIBLE PROJECT U/S.80 - IB(10) ; AND D) THE TRIBUNAL WAS THUS WRONG IN CONFIRMING THE DEDUCTION TO THE AREA ATTRIBUTABLE TO THE RESIDENTIAL UNITS. HOWEVER, AS THE ASSESSEE WAS N OT IN APPEAL, THE DEDUCTION AS AFFIRMED BY THE TRIBUNAL WAS APPROVED. THE HONBLE JURISDICTIONAL HIGH COURT HAS CLEARLY HELD THAT AN ELIGIBLE HOUSING PROJECT U/S.80 - IB(10) IS THE WHOLE PROJECT, SO THAT IT EITHER QUALIFIES, OR NOT SO, THERE - UNDER, IN TERMS OF THE RELEVANT PROVISION. ACCORDINGLY, EITHER THE PROFITS DERIVED FROM A PROJECT WOULD BE SUBJECT TO DEDUCTION UNDER THE PROVISION, I.E., WHOLLY, OR NOT SO, AND THERE IS NO SCOPE FOR DEDUCTION ON A PROPORTIONATE BASIS, I.E., AS ATTRIBUTABLE TO THE RESIDE NTIAL AREA IN THE FACTS OF THAT CASE, FINDING THE SAME AS WITHOUT BASIS IN LAW. IT ACCORDINGLY APPROVED THE DEDUCTION QUA THE PROFITS OF THE ENTIRE PROJECT . THE RATIO OF THE SAID DECISION IS SQUARELY APPLICABLE IN THE FACTS OF THE CASE. EACH OF THE CONDITI ONS OF S. 80 - IB(10) IS A QUALIFYING CONDITION, AND IS TO BE INDEPENDENTLY SATISFIED. THERE IS, ACCORDINGLY, NO CONCEPT OF PRO RATA DEDUCTION WHERE A CONDITION IS PARTLY SATISFIED. THE PRINCIPLE THAT QUANTIFICATION FOLLOWS ELIGIBILITY IS AXIOMATIC. WE ARE, THUS, IN PRINCIPLE, IN COMPLETE AGREEMENT WITH THE REVENUE THAT THE PRESCRIPTION AND MANDATE OF THE DECISION IN BRAHMA ASSOCIATES (SUPRA) DOES NOT ADMIT OF PROPORTIONATE DEDUCTION IN - AS - MUCH AS EITHER HOUSING PROJECT QUALIFIES, OR NOT SO, UNDER S.80 - IB(10) . CONTINUING FURTHER, THAT THE ASSESSEE FOUND FAVOUR WITH THE TRIBUNAL BASED ON THE INTERPRETATION OF CLAUSE 80 - IB(10)(C) IS AN ALTOGETHER DIFFERENT MATTER. WE MAY 9 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS NEXT ADVERT TO THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V S. VANDANA PROPERTIES [2012] 206 TAXMAN 584 (BOM), ALSO RELIED UPON BY THE ASSESSEE. IN THE FACTS OF THAT CASE, THE ASSESSEES HOUSING PROJECT CONSISTING OF FOUR BUILDINGS, A TO D, ON A PLOT OF LAND ADMEASURING 2.63 ACRES, WHICH WERE CONSTRUCTED PRIOR TO 0 1.10.1998. A FTER TAKING PERMISSION FROM THE STATE GOVERNMENT IN THE YEAR 2002, ANOTHER BUILDING E WAS CONSTRUCTED ON THE SAME PLOT OF LAND. THE REVENUE DENIED THE ASSESSEES CLAIM FOR DEDUCTION U/S.80 - IB(10) ON THE PROFITS FROM BUILDING E ON THE GROUND THA T THE SAME DID NOT CONSTITUTE AN INDEPENDENT HOUSING PROJECT, BEING ONLY AN EXTENSION OF THE EARLIER PROJECT. THE MATTER TRAVEL ED TO THE HONBLE HIGH COURT, WHICH CLARIFIED THAT THE HOUSING PROJECT BEING NOT DEFINED, IT HAD TO BE CONSTRUED AS COMMONLY UNDE RSTOOD, AND IN THAT SENSE EVEN ONE BUILDING WITH SEVERAL RESIDENCE BUILDINGS COULD CONSTITUTE A HOUSING PR OJECT. BUILDING E WAS NOT EVEN IN CONTEMPLATION AT THE TIME OF THE ORIGINAL PROJECT, WHICH CAME ABOUT ONLY ON A CHANGE IN THE BUILDING NORMS, I.E., TH E PERMISSIBLE FSI ON THE SUBJECT LAND. THERE WAS NO MENTION IN THE COMMUNICATIONS FROM THE MUNICIPAL CORPORATION OF IT BEING AN EXTENSION OF THE ORIGINAL PROJECT. THERE WAS ALSO NOTHING TO SUGGEST THAT THE PLOT ON WHICH THE PROJECT IS EXECUTED IS A VACANT LAND, NOR ANY BASIS FOR WORKING OUT THE LAND AREA QUA THE PROJECT E PROPORTIONATELY (AT LESS THAN ONE ACRE), WHICH CONSISTED THE OTHER OBJECT ION BY THE REVENUE. L AND COULD ONLY MEAN CONTIGUOUS LAND AND , ACCORDINGLY, PROJECT E WAS ALSO ON THE LAND AREA OF M ORE THAN ONE ACRE, THE MINIMUM SIZE OF THE PLOT OF LAND FOR AN ELIGIBLE PROJECT UNDER CLAUSE (C) OF SECTION 80 - IB(10). THE ASSESSEES CLAIM WAS ACCORDINGLY UPHELD. WE ARE UNABLE TO, WE ARE AFRAID, SEE TO HOW THE SAID DECISION, AGAIN BINDING ON US, ASSIST T HE ASSESSEES CASE IN ANY MANNER, WHICH WE HAVE FOUND AS BEING SQUARELY COVERED AGAINST IT BY THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WITH THE MATTER BEING ALSO DEALT AT LENGTH BY THE TRIBUNAL IN THE CASE OF EKTA SANKALP DEVELOPERS (SUPRA). THAT THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) OPERATED IN FAVOUR OF THE ASSESSEE IN THE FACTS OF THAT 10 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS CASE, IS ANOTHER MATTER, WHAT BEING BINDING, AND HAS PRECEDENCE VALUE, IS A RATIO OF THE DECISION. RATHER, AS WE SEE IT, THE TWO DECISIONS, I .E., IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND VANDANA PROPERTIES (SUPRA), ARE IN HARMONY. BOTH ADVOCATE AND EMP HASIZE A COMMON SENSE APPROACH TO THE MATTER AND, ACCORDINGLY APPLY T HE CONCEPT OF A HOUSING PROJECT, SO THAT THE PROJECT, AS CONCEPTUALIZED , DESIGNED AND APPROVED BY THE LOCAL AUTHORITY, I.E., FOLLOWING THE DC RULES, IS TO BE REGARDED AS A SINGLE PROJECT AND , FURTHER , EXAMINED FOR THE S ATISFACTION OR OTHERWISE OF THE OTHER QUALIFYING CONDITIONS OF THE BENEFICIAL PROVISION OF SECTION 80 - IB(10). ANOTHER DECISION RELIED UPON BY THE ASSESSEE, WHICH WE MAY ALSO MENTION IS THAT BY THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO [2008] 115 TTJ MUM 485 (TRIB). THE SAME STANDS DISCUSSED BY THE A.O. AT PARA 11 OF HIS ORDER FOR A.Y. 2006 - 07 , T O NO REBUTTAL BY THE LD. CIT(A) , OR EVEN BY THE ASSESSEE BEFORE US. THE SAME STANDS PERUSED. THE SAME IS , IN FACT , NOT ON PROPORTIONATE DEDUCTION AND , ACCORDINGLY, INAPPLICABLE IN THE FACTS OF THE PRESENT CASE. 3.3 SO HOWEVER, BEFORE THE PRONOUNCEMENT OF THIS ORDER, THE DECISION BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HAPPY HOME ENTERPRISES [2014] 51 TAXMANN.COM 281 (BOM) CAME TO THE NOTICE OF THE BENCH. PER THE SAID DECISION (COPY ON RECORD), THE HONBLE COURT HAS CLARIFIED THAT THE AMENDM ENT T O SECTION 80 - IB(10), WHICH IS BY WAY OF SUBSTITUTION, I.E., BY FINANCE (NO.2) ACT, 2004 W.E.F. 01.04.2005 IS NOT RETROSPECTIVE. THOUGH THIS ASPECT OF THE MATTER HAD ALSO BEEN CONSIDERED BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA), THE SAME O NLY MEANT THAT FROM A.Y. 2005 - 06 ONWARDS, THE SUBSTITUTE D SECTION SHALL APPLY. HOWEVER, PER HAPPY HOMES ENTERPRISES (SUPRA), IT STANDS FURTHER CLARIFIED BY THE HONBLE HIGH COURT THAT THE AMENDED PROVISION SHALL APPLY ONLY TO THE PROJECTS APPROVED AFTER 31.03. 2005, AND THAT THE PROJECTS APPROVED PRIOR TO THE SAID DATE SHALL CONTINUE TO BE GOVERNED BY THE UNAMENDED PROVISION, AND WHICH DID NOT CONTAIN ANY PROVISION OR LIMITATION WITH RESPECT TO THE SHOPPING AREA IN AN ELIGIBLE HOUSING PROJECT/COMPLEX. THE PROJEC T RITU 11 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS PARADISE IN THE INSTANT CASE HAVING BEEN APPROVED PRIOR TO 31.03.2005, IT SHALL STAND TO BE IMPACT ED BY THE SAID DECISION. IT WAS, ACCORDINGLY, CONSIDERED PROPER TO PUT THIS DECISION TO THE PARTIES, FOR WHICH THE CASE WAS P OST ED FOR HEARING AGAIN. THE REVENUE , IN THE SAID PROCEEDINGS, CO NCEDED TO THE ISSUE BEING SQUARELY COVERED BY THE DECISION IN HAPPY HOME ENTERPRISES (SUPRA) IN - AS - MUCH AS THE PROJECT UNDER REFERENCE STANDS APPROVED BY THE LOCAL AUTHORITY ON 16.12.2004, I.E., BEFORE 31.03.2005. C LEARLY, THEREFORE, THE PROVISION OF THE UNAMENDED (UNSU BSTITUTED), I.E., BY FINANCE (NO.2) ACT, 2004 , SHALL CONTINUE TO GOVERN THE DEDUCTION U/S.80 - IB(10) , SO THAT ITS ENTIRE PRO FIT , IRRESPECTIVE OF ITS PHASE OR PART, SHALL STAND TO BE DEDUCTED U/S.80 - IB(1 0). THOUGH THE PR O POSITION DOES RAISE A QUERY FOR BEING ADDRESSED, I.E., THE EARLIER PROVISION OF SECTION 80 - IB(1 0 ) HAVING BEEN SINCE SUBSTITUTED , SO THAT IT IS NO LONGER IN EXISTENCE W.E.F. 01.04.2005, UNDER WHICH PROVISION OF LAW THE DEDUCTION QUA THE PR OFITS OF THE PROJECTS APPROVED PRIOR TO THAT DATE WOULD STAND TO BE CLAIMED FOR THE YEARS COMMENCING ON OR AFTER 01.04.2005. THEN , AGAIN, THE AMENDED LAW IS EFFECTIVE FROM ASSESSMENT YEAR COMMENCING 01.04.2005, I.E., A.Y. 2005 - 06 , ONWARDS. THE CORRESPONDIN G PREVIOUS YEAR BEING THE FINANCIAL YEAR 2 004 - 05, WOULD NOT THE HOUSING PROJECTS APPROVED PRIOR TO THE COMING INTO EFFECT OF THE AMENDED LAW, I.E., 01.04.2004, AND NOT 01.04.2005, THAT WOULD BE GOVERNED BY, OR WOULD BE THE CUT - OFF DATE FOR THE APPLICATION OF, THE AMENDED LAW? TH E S E POSER S NOTWITHSTANDING, RESPECTFULLY FOLLOWING THE DECISION BY THE HON'BLE J URISDICTIONAL HIGH COURT, WE CONFIRM THE DEDUCTION OF THE TOTAL PROFITS OF THE PROJECT RITU PARADISE U/S.80 - IB(10) FOR BOTH THE YEARS UNDER REFERENCE, I.E., A.YS. 2005 - 06 AND 2006 - 07. THE DEDUCTION FOR A.Y. 2005 - 06 , WE MAY FURTHER CLARIFY , STANDS CLAIMED BY THE ASSESSEE AT THE ENHANCED AMOUNT OF ` .115.98 LACS, I.E., AS AGAINST THE ORIGINAL DEDUCTION AT ` .110.71 LACS. THE SAME WOULD, THEREFORE, STAND TO BE LIMITED TO THE AMOUNT AS ORIGINALLY CLAIMED AND ALLOWED IN ASSESSMENT (I.E., AT ` .110.71 LACS). THIS IS AS THE ASSESSMENT FOR THAT YEAR UNDER REFERENCE IS U/S.147 R/W S. 143(3) , AND THE 12 ITA NO S. 3847 & 5148/MUM/2011 (A.YS. 20 06 - 07 & 20 05 - 06) ITO VS. S. R. DEVELOPERS REASSESSMENT PROCEEDINGS ARE NOT FOR THE BENEFIT OF THE ASSESSEE BU T OF THE REVENUE, EVEN AS EXPLAINED BY THE HONBLE APEX COURT IN CIT VS. SUN ENGINEERING WORKS P. LTD. [1992] 198 ITR 297 (SC). SUBJECT TO THIS MODIFICATION FOR A.Y. 2005 - 06, WE CONFIRM THE ORDERS BY THE FIRST APPELLATE AUTHORITY, DISMISSING THE REVENUE S APPEALS. 4. IN THE RESULT, THE REVENUES APPEALS ARE DISMISSED ON THE AFORE - SAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 31 , 201 5 SD/ - SD/ - ( JOGINDER SINGH ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 31 . 0 7 .201 5 . . ./ ROSHANI , SR. PS / COP Y OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI