ITO 15(3)2, MUMBAI V. CHHEDA CONSTRUCTION CO, MUMBAI

ITA 3857/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59924 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T C SUBRAMANIAN
• Assessee Lawyers: JIGNESH P SHAH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI RAJENDRA SINGH, A.M. AND SHRI V.D. RAO , J.M. ITA NO. : 3857/MUM/2011 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD-15(3)(2) MATRU MANDIR, 1 ST FLOOR,TARDEO ROAD MUMBAI-400 007. MS/. CHHEDA CONSTRUCTION CO. (JOINT VENTRE) 101, GOYAL SHOPPING CENTRE, S.V. ROAD, BORIVALI (W) MUMBAI-400 092. PAN NO: AAAAC 2560 Q (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI T.C. SUBRAMANIAN RESPONDENT BY : SHRI JIGNESH P. SHAH DATE OF HEARING : 14.3.12 DATE OF PRONOUNCEMENT : 20.3.2012 O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 22.2.2011 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10). 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHO IS A BUIL DER AND DEVELOPER HAD DEVELOPED A RESIDENTIAL-CUM-COMMERCIAL PR OJECT VASUNDHARA-IV & V ON THE PLOT OF LAND ADMEASURING 716 8.54 SQ.MTRS. ITA NO. 3857/M/11 A.Y.06-07 2 THE CONSTRUCTION OF HOUSE PROJECT COMMENCED ON 19.7.2003 AND WAS COMPLETED DURING FINANCIAL YEAR 2005-06. THE ASSESSEE CL AIMED INCOME FROM THE PROJECT AS EXEMPT UNDER SECTION 80IB(10) AMOUNTING TO RS.97,50,455/-. THE AO NOTED THAT TOTAL BUILT UP AREA OF THE PROJECT WAS 94255 SQ.FT. WHICH INCLUDED BUILT UP AREA OF 7935.6 2 SQ.FT. PERTAINING TO THE SHOP AND OTHER COMMERCIAL ESTABLISHMEN TS. THE AO REFERRED TO THE PROVISIONS OF CLAUSE(D) OF SECTION 80IB( 10) INSERTED FROM 1.4.2005 AS PER WHICH, FOR ALLOWABILITY OF DEDUC TION UNDER SECTION 80IB(10), THE BUILT UP AREA OF SHOPS AND OTHER COMMERCI AL ESTABLISHMENTS SHOULD NOT EXCEED 5% OF BUILT UP AREA T HE AGGREGATE OF 2000 SQ.FT. WHICHEVER IS LESS. THE AO OBSERVED THAT 5% O F BUILT UP AREA CAME TO BE 3858.11 SQ.FT. WHEREAS THE ASSESSEE HAD CON STRUCTED COMMERCIAL AREA OF 7935.62 SQ.FT. THERE WAS THUS VIOLAT ION OF PROVISIONS OF CLAUSE(D). HE ALSO REFERRED TO THE DECISIO N OF THE TRIBUNAL IN CASE OF LAUKIK DEVELOPERS VS. DCIT (105 ITD 657) IN WHICH IT WAS HELD THAT DEDUCTION UNDER SECTION 80IB(10) WAS NO T ALLOWABLE IN CASE HOUSING PROJECT ALSO INCLUDED COMMERCIAL AREA. THE A O THEREFORE, DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) . 2.1 THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE CIT(A) THAT CLAUSE(D) HAD BEEN INSERTED FROM 1.4.2005 WHEREAS THE HOUSING PROJECT OF THE ASSESSEE HAD COMMENCED ON 19.7.2003 I.E. PRIOR TO THE AMENDMENT TO SECTION 80IB(10) AND, THERE FORE, AMENDED ITA NO. 3857/M/11 A.Y.06-07 3 PROVISION WAS NOT APPLICABLE IN CASE OF THE ASSESSEE. THE ASSESSEE REFERRED TO THE DECISION OF THE TRIBUNAL IN CASE OF M/ S. SAROJ SALES CORPORATION VS. DCIT (115 TTJ 485) IN SUPPORT OF THE PLEA. IT WAS ALSO SUBMITTED THAT THERE WERE SEVERAL DECISIONS OF THE TRIBU NAL AS PER WHICH ONCE THE PROJECT WAS APPROVED BY CORPORATION AS HO USING PROJECT DEDUCTION UNDER SECTION 80IB (10) WAS ALLOWABLE EVEN IF IT INCLUDED SOME COMMERCIAL AREA. CIT(A) CONSIDERING THE SUB MISSION OF THE ASSESSEE OBSERVED THAT THE SPECIAL BENCH OF THE TRIBUN AL IN CASE OF BRAHMA ASSOCIATES VS. JCIT (119 ITD 255), HAD HELD THAT IN CASE PROJECT WAS APPROVED AS HOUSING PROJECT DEDUCTION HAD TO BE ALLOWED IF COMMERCIAL AREA DID NOT EXCEED 10% OF TOTAL AREA. CIT( A) ALSO NOTED THAT THE TRIBUNAL IN CASE OF SAROJ SALES CORPORATION ( SUPRA), HAD HELD THAT CLAUSE(D) OF SECTION 80IB(10) WOULD NOT APPLY IN CA SE OF PROJECT APPROVED PRIOR TO 1.4.2005, CIT(A) THEREFORE DIRECTE D THE AO TO ALLOW CLAIM AGGRIEVED BY WHICH REVENUE IS IN APPEAL BEFORE T HE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. TH E LD. AR REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) THAT CLAIM WAS ALLOWABLE IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF BRAHMA ASSOCIATES (SUPRA), WHICH HAS ALSO BEEN UPHELD BY THE HONBLE HIGH COURT OF BOMBAY AND BY DECISION OF THE TRI BUNAL IN CASE OF SAROJ SALES CORPORATION(SUPRA). THE LD. DR PLACED R ELIANCE ON THE ORDER OF THE AO. ITA NO. 3857/M/11 A.Y.06-07 4 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWA BILITY OF DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF HOUSING PR OJECT WHICH ALSO INCLUDED SHOPPING AREA AND COMMERCIAL AREA WHICH E XCEEDED BOTH 5% OF TOTAL AREA AND 2000 SQ.FT. EARLIER, THE TRIBU NAL IN THE CASE OF LAUKIK DEVELOPERS (SUPRA), HAD HELD THAT DEDUCTION, U NDER SECTION 80IB (10) WAS NOT ALLOWABLE IN CASE HOUSING PROJECT INCL UDED ANY COMMERCIAL AREA LIKE SHOPS ETC. HOWEVER, SUBSEQUENTLY SPECIA L BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) , HAS HELD THAT ONCE PROJECT WAS APPROVED AS HOUSING PROJECT DEDUCTION UND ER SECTION 80IB (10) HAS TO BE ALLOWED IF COMMERCIAL AREA WAS UPTO 10% OF THE TOTAL AREA. THE DECISION OF THE SPECIAL BENCH OF THE T RIBUNAL IN CASE OF BRAHMA ASSOCIATES HAS BEEN UPHELD BY HONBLE HIGH COURT OF BOMBAY AS REPORTED IN (333 ITR 289) IN WHICH IT HAS ALSO BEEN HELD THAT ONCE THE PROJECT HAS BEEN APPROVED AS HOUSING PROJECT CONTAINI NG BOTH RESIDENTIAL AND COMMERCIAL AREA, THE DEDUCTION HAS TO BE ALLOWED WITHOUT ANY LIMIT ON THE COMMERCIAL AREA. AS REGARDS CL AUSE(D) OF SECTION 80IB (10) WHICH PUTS LIMIT ON COMMERCIAL AREA, HO NBLE HIGH COURT HELD THAT AMENDMENT WAS PROSPECTIVE IN NATURE A ND WILL NOT APPLY TO PERIOD PRIOR TO 1.4.2005. THE TRIBUNAL IN CASE OF SAROJ SALES CORPORATION (SUPRA), ALSO HAS HELD THAT CLAUSE(D) OF SECTI ON 80 IB(10) ITA NO. 3857/M/11 A.Y.06-07 5 WILL NOT APPLY TO PROJECTS APPROVED PRIOR TO 1.4.2005 . IN THIS CASE THERE IS NO DISPUTE THAT THE PROJECT HAD NOT ONLY BEEN APPRO VED BUT ALSO COMMENCED MUCH BEFORE 1.4.2005 AND THEREFORE, RESPECTFU LLY FOLLOWING THE RULINGS AFORESTATED, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE. THE ORDER OF CIT(A) IS THEREFORE UPHELD. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 20.3.2012. SD/- SD/- ( V.D. RAO ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 20.3.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.