U.K. BUILDERS, MUMBAI V. ACIT CEN CIRE 2, THANE

ITA 3922/MUM/2012

• Counselvise Citation: 392219914 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Keywords: Question of law; Competent authority
• Section: 153A; 80IB; 10

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S HRI R.C. SHARMA , ACCOUNTANT MEMBER & SHRI VIVEK VARMA , J UDICIAL MEMBER I.T.A. NO. 3920 TO 3922 /MUM/20 1 2 ( ASSESSMENT YEAR S : 20 06 - 07, 2007 - 08 & 2008 - 09 I.T.A. NO. 6557 /MUM/2012 ( ASSESSMENT YEARS: 2009 - 2010 M/S U.K. BUILDERS, 308, NEW MAJESTIC SHOPPING CENTRE, 144 JSS ROAD, M UMBAI 400 0 04 . VS. ASSTT. COMMISSIONER OF I NCOME TAX CENTRAL CIRCLE - 2, THANE, POWER INDUSTRIAL ESTATE, 2 ND FLOOR, EDULJI ROAD, CHARAI, THANE 400 601. PAN : AABFU 2463 L ( APPELLANT ) .. ( RESPONDENT ) AND I.T.A. N O. 4673 TO 4675 /MUM/2012 ( ASSESSMENT YEARS: 2006 - 07, 2007 - 08 & 2008 - 09 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2, THANE, POWER INDUSTRIAL ESTATE, 2 ND FLOOR, EDULJI ROAD, CHARAI, THANE 400 601. M/S U.K. BUILDERS, 308, NEW MAJESTIC SHOPPING CENTRE, 144 JSS ROAD, MUMBAI 400 004. PAN : AABFU 2463 L ( APPELLANT ) .. ( RESPONDENT ) ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 2 A SSESSEE BY SHRI VIMAL PUNMIYA R E SPONDENT BY : S HRI RAJESH RANJAN PRASAD DATE OF HEARING : 1 4 - 01 - 201 5 / DATE OF PRONOUNCEMENT : 20 - 0 2 - 2015 [ O R D E R PER R.C. SHARMA , A .M . : THESE ARE THE CROSS APPEAL S FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. CIT(A) FOR ASSESSMENT YEARS 2006 - 07 TO 2009 - 10. 2. THE COMMON GRIEVANCE IN ALL THESE APPEALS RELATES TO THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961. 3. RIVA L CONTENTIONS HAVE BEEN HEARD THE RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. I N . TH I S CASE, A SEARCH & SEIZURE OPERATION WAS CARRIED OUT ON 21 . 02.2007. ' HOWEVER, AFTE R THE SEARCH & SEIZURE OPERATION, THE ASSESSEE HAS FILED A RETURN OF INCOME FOR THE A.Y. 2006 - 07 ON 30.05.2008 SHOWING TOTAL INCOME OF R S. 21,21,835/ - IN RESPONSE TO A NOTICE ISSUED U/S 153A ON 25 - 04 - 2008. IN THE RETURN OF INCOME FILED IN RESPONSE TO THE N OTICE U/S 153A, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE HAS CLAIMED THAT, IT HAS CONSTRUCTED TWO PROJECTS ON A LAND OF 17.67 ACRE AT BOLSAR, ONE IS CALLED AS U.K. RESIDENTIAL AND OTHER S U.K. COMMERCIAL. IN CASE OF THE U.K. COMMERCIAL, THE DEDUCTION U/S 80IB(10) HAS NOT BEEN CLAIMED AND DUE TAX HAS ALSO BEEN PAID. IN RESPECT OF U.K. RESIDENTIAL, CONSISTING OF 30 BUILDINGS THE CONVENIENCE SHOPPING AREA IS 70,269.60 SQ. FT. AND RESIDENTIAL AREA IS 5,21,094.70 SQ. FT. THUS, T HE CONVENIENCE SHOPPING AREA IN THE U.K. RESIDENTIAL PROJECT WORKS OUT TO 13.485% OF TOTAL BUILT ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 3 UP AREA OF 5,91,365 SQ. FT. THE PROJECT HAS BEEN STATED TO BE APPROVED ON 08 - 04 - 2003 AS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT BY THE LOCAL AUTHORITY. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. EXAMINED THE CLAIM OF ASSESSEE MADE U/S 80IB(10) OF THE ACT VIS - - VIS SUBMISSION OF THE ASSESSEE. THE MAIN SUBMISSIONS OF THE ASSESSEE BEFORE THE A.O. WERE AS UNDER: - 1. M/S U.K. RESIDENTIAL IS A RESIDEN TIAL PROJECT APPROVED TO BE ON A PLOT OF LAND MEASURING 17.67 ACRE, WHICH IS MORE THAN ONE ACRE. II. THE PROJECT HAS 30 RESIDENTIAL BUILDINGS HAVING A TOTAL CONSTRUCTED RESIDENTIAL AREA OF 5,21,094.70 SQ. FT. AND 70,369.60 SQ. FT. OF COMMERCIAL AREA.. III . THE IT ACT HAS NOT DEFINED HOUSING PROJECT. IN THE CLARIFICATION ADDRESSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRIES (MCHI) BY CBDT, ANY HOUSING PROJECT APPROVED AS HOUSING PROJECT BY THE LOCAL AUTHORITY SHALL BE TAKEN AS HOUSING PROJECT FO R THE PURPOSE OF SECTION 80IB(10). IV. THE PROJECT COMMENCED ON 8 - 4 - 03 V. THE RESIDENTIAL UNITS DID NOT EXCEED 1500 SQ. FT. OF BUILT UP AREA. VI. OCCUPATION CERTIFICATE IS RECEIVED IN RESPECT OF ALL THE BUILDINGS FROM GRAMPANCHAYAT AND THE SAME IS ENDORSED BY THE ZILLA PARISHAD. VII. THE ALLOWANCE OF DEDUCTION NEEDS TO BE ENHANCED BY RS. 21,21,835/ - SINCE LESSER DEDUCTION IS CLAIMED IN THE RETURN FILED, I.E. DEDUCTION N RESPECT OF RESIDENTIAL UNITS ONLY CLAIMED THROUGH APPELLANT IS ELIGIBLE FOR FULL DEDUCTI ON. 2.3 HOWEVER, THE A.O. DISALLOWED THE DEDUCTION U/S 80IB(10) IN FULL ON THE BASIS OF FOLLOWING REASONINGS: ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 4 (I) THE HOUSING PROJECT IS APPROVED AS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT AND NOT AS HOUSING PROJECT AS IS EVIDENT FROM THE APPROVED CERTIFICAT E. (II) THE P R OJECT HAS NOT BEEN COMPLETED WI T H I N THE SP E CIFIED TIME I.E. UPTO 31 - 08 - 2008. F URTHER, COMPLETION CERTIFICATE HAS NOT B E EN GRANTED BY THE COMPETENT AUTHORITY I.E. ZILLA PARISHAD, THANE. (III) THE COMMERCIAL AREA EXCEEDED THE PRESCRIBED LIMIT OF 5% OF TO TAL BUILT UP AREA OR 2000 SQ. FT. WHICHEVER IS LOWER. IV) BUILT UP AREA OF THREE RESIDENTIAL ROW HOUSES EXCEEDED 1500 SQ. FT. V) SINCE U.K. COMMERCIAL WAS UNDER CONSTRUCTION AS ON 31 -- 03 - 2008 WHICH WAS PART OF THE SAME PROJECT, THE PROJECT WAS NOT COMPLET ED BEFORE THE SPECIFIED DATE. VI) SINCE THE CONDITIONS OF SECTION 80IB(10 WERE NOT SATISFIED, THE ASSESSEE WAS NOT ENTITLED TO CLAIM EVEN PROPORTIONATE DEDUCTION. IN HIS REGARD, THE A.O. HAS RELIED UPON THE DECISION OF HONBLE ITA, MUMBAI IN THE CASE OF L AUKIK DEVELOPERS (2008) 108 TJ 364. 4. BY THE IMPUGNED ORDER THE LD. CI(A) ALLOWED PROPORTIONATE CLAIM OF DEDUCTION U/S 80IB(10) ATTRIBUTABLE TO RESIDENTIAL BUILDING, AFTER HAVING THE FOLLOWING OBSERVATION: - NOW COMING TO THE ADMISSIBILITY OF CLAIM OF DED UCTION U/S 80IB(10), I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, SUBMISSION OF APPELLANT AND JUDICIAL PRONOUNCEMENTS ON THE SUBJECT. THE A.O. HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) ON VARIOUS GROUNDS AS DISCUSSED ABOVE. THE SAME ARE BEI NG TAKEN UP FOR CONSIDERATION AND ADJUDICATION AS UNDER: - 3.2.1. THE PROJECT IS APPROVED AS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT AND NOT AS HOUSING PROJECT . ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 5 (A) IN THIS REGARD, THE SUBMISSION OF APPELL ANT IS AS UNDER: - UK RESIDENTIAL AND U.K. COMME RCIAL BOTH THE PROJECTS ARE APPROVED IN THE SAME BLOCK PLAN: - THERE CANNOT BE ANY EFFECT WHETHER THERE ARE TWO PROJECTS OR FIVE PROJECTS IN ONE APPROVED BLOCK PLAN. BLOCK PLANS ARE APPROVED BY THE LOCAL AUTHORITY AS PER DEVELOPMENT PLAN OF THE AREA. THER E IS NO PROJECT WISE APPROVAL AND ONCE PARTICULARS BLOCK PLAN IS APPROVED THAN ALSO LET IT BE FIVE DIFFERENT DEVELOPERS, PLAN WILL BE APPROVED ONCE AND EVERY DEVELOPERS HAS TO CARRY OUT PROJECT ACCORDING TO THAT ONLY. THIS DEDUCTION IS AVAILABLE TO ANY UN DERTAKING OF THE ASSESSEE WHO HAS CARRIED OUT THE PROJECTS. THEREFORE, LET US FIRST UNDERSTAND MEANING OF UNDERTAKING. AS PER THE DICTIONARY MEANING AND GENERALLY USED IN INDIAN INCOME TAX ACT, 1961, IT IS DOING A BUSINESS OR AN ENTERPRISE. IT MEANS AN ASS OCIATION CAN HAVE MANY UNDERTAKING OR UNITS OF BUSINESS. SO IN THIS CASE WE SHOULD CONFINE TO PROFIT OF UNDERTAKING NOT TO ENTIRE ACTIVITY OF THE ASSESSEE. IT MAY HAVE LAND PURCHASES AND ALSO TRANSACTIONS OR ANY OTHER BUSINESS BUT IT IS VERY IMPORTANT WH ETHER BUSINESS UNIT HAS CLAIMED ANY DEDUCTION IN RESPECT OF PROFIT ON LAND TRANSACTION THEN SUCH PROFIT FROM THE LAND WILL NOT BE ALLOWED. TO DEVELOP HOUSING PROJECT ITSELF IS ACTIVITY OF THE UNDERTAKING OF THE ASSESSEE THEN PROFIT OF SUCH UNIT SHALL BE A LLOWED AS DEDUCTION. IN THIS CASE ALSO THERE ARE TWO DIFFERENT UNDERTAKING OF THE PARTNERSHIP FIRM IE. (1) U.K. RESIDENTIAL (2) U.K. COMMERCIAL AND BOTH ARE MAINTAINING SEPARATE BOOKS OF ACCOUNTS. THE ENTIRE COMMERCIAL UNITS ARE CONSTRUCTED BY U.K. COMME RCIAL AND PAID INCOME TAXES ON TOTAL INCOME. THEREFORE, BOTH THE UNDERTAKING ARE WORKING ONE BLOCK OF PLAN SHOULD NOT AFFECT ELIGIBILITY TO CLAIM THE DEDUCTION U/S 80IB (10) OF THE INCOME TAX ACT. OUR CLIENT ALSO RELIED ON ITAT MUMBAI F BENCH JUDGMENT ITA NO. 1253 MUMBAI IN THE CASE OF VANDANA PROPERTIES WHERE IT HAS BEEN HELD THAT EACH WING CAN BE SEPARATE HOUSING PROJECTS. WE ALSO QUOT FROM THE JUDGMENT ALL THE BUILDING PROJECTS HAVE PLANNED I.E. A, B, C, D & E THOUGH SOME OF THE BUILDINGS DO NOT QU ALIFY FOR DEDUCTION U/S 80IB (10) OF THE ACT AND ADMITTEDLY, THE SAME IS ALSO NOT CLAIMED. WE, THEREFORE, DO NOT AGREE WITH THE VIEW TAKEN BY THE A.O. AS WELL AS THE LEARNED CIT(A) THAT THE ASSESSEE HAS VIOLATED THE ANOTHER CONDITION IN RESPECT OF THE SIZ E OF THE PLOT. WE GIVE FEW MORE JUDGMENTS FOR YOUR KIND PERUSAL IN THIS MATTER. 6. PROJECT IS NOT APPROVED AS A HOUSING PROJECT BUT IT WAS A RESIDENTIAL CUM COMMERCIAL PROJECT: - THE LEARNED ASSESSING OFFICER IS NOT AWARE ABOUT DEVELOPMENT REGULATION OF MAHARASHTRA GOVERNMENT FOR THE HOUSING DEVELOPMENT. THERE IS NO CATEGORY LIKE HOUSING COMPLEX. WHENEVER ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 6 THERE IS COMMERCIAL PORTION IS APPROVED ALONG WITH RESIDENTIAL THEN CATEGORY WILL BE RESIDENTIAL CUM COMMERCIAL. UNDER THE HOUSING COMPLEX IT IS RE QUIREMENT OF DEVELOPMENT AUTHORITY TO CONSTRUCTION OF CERTAIN TYPE OF SHOPPING THEN ONLY RESIDENTIAL COMPLEX BECOME HOUSING COMPLEX. THERE ARE FEW JUDGMENT WHICH SUPPORT OUR VIEWS IN THIS MATTER. (B) ON PLAIN READING OF THE PROVISIONS OF THE ACT, I FIND THAT THE DEDUCTION U/S 80IB(10) IS AVAILABLE ON THE INCOME DERIVED FROM AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT AND NOT ON THE INCOME OF AN ASSESSEE AS A WHOLE. THUS AN ASSESSEE CAN RUN AS MANY UNDERTAKINGS AS HE DESIRES. IN THE INSTANT CAS E, THE APPELLANT HAS GOT A RESIDENTIAL AS WELL AS COMMERCIAL HOUSING PROJECT APPROVED FROM THE LOCAL AUTHORITY ON THE SAME PLOT, BUT DEVELOPED THEM SEPARATELY. THE APPELLANT HAS ALSO MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR BOTH THE UNDERTAKINGS NAMED AS U K RESIDENTIAL AND U.K. COMMERCIAL AND CLAIMED T HE DEDUCTION U/S 80IB(10) ON THE PROFITS DERIVED FROM UK RESIDENTIAL PROJECT. UNDISPUTEDLY CONDITIONS REGARDING APPROVAL BY LOCAL AUTHORITY AND SIZE OF PLOT UNDER UK RESIDENTIAL ARE FULLY SATISFIED BY THE APP ELLANT. THEREFORE, SUBMISSIONS OF APPELLANT IN THIS REGARD ARE ACCEPTABLE. MOREOVER, THIS ISSUE HAS BEEN DECIDED BY THE HONBLE ITAT IN THE CASE OF VANDANA PROPERTIES VS. ACIT (2009) 31 SOT 392 (MUM) IN THE FAVOUR OF ASSESSEE BY HOLDING THAT EACH WING CAN BE A SEPARATE HOUSING PROJECT AND THOSE SATISFYING THE CONDITIONS ARE ELIGIBLE FOR DEDUCTION U/S 80IB(10). FURTHER, HONBLE HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, 239 CR 30 (BOM) HAS HELD THAT THE SECTION 80IB(10) (PRE - AMENDMENT W.E.F. A.Y. 2005 - 06), DOES NOT DEFINE THE EXPRESSION HOUSING PROJECTS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE D.C. RULES. THE DECISION OF SPECIAL BENCH OF ITAT THAT A PROJECT WITH RESIDENTIAL AND COMMERCIAL USER WOULD BE A HOUSING PROJECT HAS BEEN U PHELD ACCORDINGLY.' RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT AND TRIBUNAL AS ABOVE, I' HOLD HAT THE APPELLANT CANNOT BE DENIED DEDUCTION U IS: 801B(10) MERELY ON THE GROUND THAT THE PROJECT WAS APPROVED AS RESIDENTIAL AS WE LL COMMERCIAL PROJECTS ON THE SAME PLOT OR WAS NOT APPROVED AS RESIDENTIAL PROJECT EXCLUSIVELY. THE GROUND IS, THUS, DECIDED IN THE FAVOUR OF APPELLANT. ON CAREFUL CONSIDERATION OF FACTS ON RECORD AND SUBMISSION OF APPELLANT, I FIND THAT THE APPROVAL OF TH E PROJECT WAS GRANTED BY GRAMPANCHAYATS AS WELL ZILLA PARISHAD BEFORE 31.03.2004 AND COMPLETION CERTIFICATES HAVE ALSO BEEN OBTAINED BY THE APPELLANT FROM RESPECTIVE GRARNPANCHAVATS BETWEEN 24.11.2005 TO 18.03.2005. THE APPELLANT HAS APPLIED FOR OBTAINING OCCUPATION CERTIFICATE TO THE RESPECTIVE GRAMPANCHAYATS ON THE ADVICE OF ARCHITECT AS GRAMPANCHAYAT IS STATED TO BE COMPETENT AUTHORITY FOR THIS PURPOSE BECAUSE ALL THE NECESSITIES ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 7 AND' INFRASTRUCTURE FACILITIES ARE PROVIDED BY THEM. FURTHER, THE HOUSE TAX HAS ALSO BEEN COLLECTED BY THE GRAMPANCHAYATS FROM 2006 ONWARDS, RECEIPTS OF WHICH FOR THE PERIOD FROM 2006 TO 2008 ARE PLACED ON THE RECORD. MOST IMPORTANTLY, THE APPELLANT HAS ALSO APPLIED TO ZILLA PARLSHA D , THANE, FOR OBTAINING COMPLETION CERTIFICATE O N 12.10.205 AND 19.03.2008 WELL BEFORE THE SPECIFIED DATE. IT IS ALSO NOTICED THAT THE ZILLA PARISHAD, THANE, VIDE ITS LETTER DT. 28.12.2009 HAS VERY CLEARLY STATED THAT ALL THE BUILDINGS WERE COMPLETED BEFORE 31.03.2008. THIS LETTER OF ZILLA PARISHAD, THA NE, WAS ALSO FORWARDED TO AO VIDE LETTER DT . 04.0L.20 11 HAS STATED THAT ON ENQU IRY FRORN ZILLA PARISHAD, THANE, IT IS NOTICED THAT THE BUILDING COMPLETION CERTIFICATE HAS NOT BEEN ISSUED. HOWEVER, THERE IS NO DENIAL THAT THE BUILDINGS HAVE BEEN COMPLETED B EFORE 31.03.2008. SINCE VILLAGE PANCHAYATS WHICH ATE ALSO THE LOCAL AUTHORITIES [EX PLANATLO N BELOW SECTION 10(20)] HAVE ISSUED COMPLETION CERTIFICATES AND APPLICATIONS ARE ALSO MADE FOR THE SAME TO ZILLA PARTSHAD, THANE, BEFORE THE SPECIFIED DATE, I AM OF THE VIEW THAT THE PROJ EC T UNDER CONSIDERATION HAS BEEN COMPLETED BEFORE THE DUE DATE L.E. 31.03.2008. THE LETTER DT, 28.12.2.009 OF' ZILLA PARLSFRAD, THANE, ADDRESSED TO PARTNERS OF APPELLANT FIRM WHICH IS AVAILABLE ON RECORD, MAKES ITS ABUNDANTLY CLEA R TH AT THE HOUSING PROJECT WAS COMPLETED BEFORE 31.03.2.008. THE A.O HAS ALSO PERSONALLY VISITED THE SITE AND FOUND ALL RESIDENTIAL UNITS COMPLETED BY MARCH, 2007 EXCEPT SOME PORTION OF UPPER FLOORS OF E & G BUILDINGS WHICH ARE COMMERCIAL ONES NOT CONSIDERED B Y THE APPELLANT U/S 80IB(10) DEDUCTION. EVEN IF IT IS PRESUMED THAT THE HOUSING PROJECT IN THE CASE OF APPELLANT WAS NOT COMPLETED BEFORE 31.03.2008, THEN THE APPELLANT'S ARGUMENTS THAT SINCE THE PROJECT WAS APPROVED BEFORE 31.03.2005, THE AMENDED PROVISI ONS W.E.F. 01.04.2005 SPECIFYING THE DATE OF COMPLETION AS 31.03.2008 FOR THE PROJECTS APPROVED BEFORE 01.04.2004 ARE NOT APPLICABLE, ARE FOUND TO BE CONVINCING. IN SUPPORT O F ARGUMENTS, RELIANCE OF APPELLANT ON THE DECISIONS OF HON'BLE ITAT, MUMBAI, IN TH E CASES OF SAROJ SALES ORGANIZATION VS. ITO, 115 TTJ 485 (MUM), BHU MIRAJ HOMES LTD. VS. DCIT (A.Y. 2005 - 06), ITA NO. 506 / MUM / 2009 DT. 20.05.2011, AND HIRANANDANI AKRUTI J.V. V DCIT (A.Y. 2006 - 07) ITA NO. 5416 / MUM / 2009 DT. 30.03.2010 IS WELL FOUNDED. IN TH ESE CASES, AFTER ANALYZING THE PROVISIONS OF SECTION 80IB(10) AS AMENDED FROM TIME TO TIME, IT HAS BEEN HELD THAT THE LAW AS STOOD AT THE TIME OF SUBMISSION OF PROPOSAL AND ITS APPROVAL WILL APPLY AND HENCE THE AMENDED PROVISIONS W. E.F . 01.04.2005 SPECIFYI NG DATE OF COMPLETION WILL NOT APPLY TO THE PROJECTS APPROVED BEFORE 01.04. 2 004. IN VEW OF THESE DECISIONS OF HONBLE JURISDICTIONAL TRIBUNAL WHICH ARE BINDING I N NATURE, I HOLD THAT I N THE CASE OF APPELLANT THE CONDITION THAT THE HOUSING PROJECT SHOULD BE COMPLETED ON OR B EFORE 31.03.2008 WILL NOT OTHERWISE APPLY. THUS, I FURTHER HOLD THAT THERE I S NO VIOLATION OF ANY CONDITIONS I N THIS REGARD AND ACCORDINGLY APPELLANT CANNOT BE DENIED CLAIM OF DEDUCTION U/S 8 OIB( 10 ) ON THE GROUND THAT THE COMPLETION CERTI FICATE WAS NOT OBTAINED ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 8 FROM ZLLLA PARLSHAD, THANE, ON OR BEFORE 31.03.200B. 3.2.3 COMMERCIAL AREA IN U.K. RESIDENTIAL IS MORE THAN PRESCRIBED LIMIT. (A) THE APPELLANT HAS MADE A DETAILED WRITTEN SUBMISSION IN THIS REGARD WHICH IS AS BELOW: - '3. U.K. RE SIDENTIAL IS HAVING COMMERCIAL AREAS MORE THAN 2000 SQ . FT.: - SIR, THE PROJECT U. K. RESIDENTIAL WAS STARTED FROM 8TH APRIL 2003 VERY MUCH BEFORE AMENDMENT PROPOSED BY FINANCE ACT, 2004 W H ERE THERE WAS NO RESTRICTION ON COMMERCIAL AREA OF 2000 SQ. FT. IN U.K. RESIDENTIAL HOUSING COMPLEX CONVENIENT SHOPPING ARE PARTS OF HOUSING COMPLEX AS PER D. C. REGULATION OF AUTHORITY. THE LEARNED ASSESSING OFFICER HAS NOT UNDERSTOOD PROPER MEANING OF HOUSING PROJECT. SHE EVEN NOT CONSIDERED THE PROPER SPIRIT OF NOTIFIC ATION NO. 205 / 3 / 200 1/ITA 11 DATED 4TH MAY 2001 ISSUED BY THE C.B . D.T. I N THE ASSESSMENT ORDER U / S 153A ASSESSING OFFICER HAS NOT ALLOWED THE DEDUCTION BECAUSE OF SOME CONVENIENT SHOPPING ARE CONSTRUCTED ACCORDING TO APPROVED PLAN FROM ZILLA PARISHAD, THANE AND DISALLOWED DEDUCTION U /S 80 IB AND THIS APPEAL IS PREFERRED. THE ASSESSING OFFICER HAS RAISED THE POINT IN THE ASSESSMENT ORDER THAT SUCH UNDERTAKING SHOULD HAVE ACTIVITY OF HOUSING ONLY; IN THIS CASE ALSO U.K . RESIDENTIAL UNDERTAKING IS HAVING ACTIV ITY OF HOUSING ONLY ALONG WITH CONVENIENT SHOPPING. A HOUSING COMPLEX MEANS RESIDENTIAL BUILDINGS WITH 15% TO 20% CONVENIENCE SHOPPING AS ALLOWED BY THE AUTHORITIES WHICH ARE APPROVED UNDER THE RESIDENTIAL CATEGORY. WHAT IS CONVENIENT SHOPPING AS DEFINE IN DEVELOPMENT CONTROL REGULATIONS OF ZILLA PARISHAD AUTHORITY IS AS UNDER: CONVENIENCE SHOPPING MEANS SHOPS, EACH WITH A CARPET ARE NOT EXCEEDING 20 SQ. MTS. E XCEPT WHERE OTHERWISE INDICATED AND COMPRISING THOSE DEALING WITH DAY - TO - DAY REQUIREMENTS. AS D ISTINGUISHED FROM WHOLESALE TRADE OR SHOPPING, IT INCLUDES: - I) FOOD GRAIN OR RATION SHOPS, EACH WITH CARPET AREA NOT EXCEEDING 50 SQ.MTS. II) PAN SHOPS ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 9 III) TOBACCONISTS IV) SHOPS FOR COLLECTING AND DISTRIBUTION OF CLOTHES AND OTHER MATERIALS FOR CLEANING AND DYEING ESTA BLISHMENTS V) TAILOR OR DARNER SHOPS. VI) GROCERIES, CONFECTIONERIES, WINE AND GENERAL PROVISION SHOPS, EACH WITH A CARPEL AREA NOT EXCEEDING 50 SQ.M. VII) HAIR DRESSING SALOONS AND BEAUTY PARLORS. VIII) BICYC L ES HIRE AND REPAIR SHOPS . IX) VEGETABLE AND FRUIT SHOPS. X) MILK AND MILK PRODUCT SHOPS. XI) MEDICAL AND DENTAL PRACTITIONERS DISPENSARIES OR CLINICS, PATHOLOGICAL OR DIAGNOSTIC CLINICS AND PHARMACIES, EACH WITH A CARPET ARE NOT EXCEEDING 50 SQ.M. XI FLORISTS. XIII) SHOPS DEALING IN LADIES ORNAMENTS SUCH AS B A NGLES E TC. XIV) SHOPS SELLING BAKERY PRODUCTS. XV) NEWSPAPER, MAGAZINE STALL AND CIRCULATING LIBRARIES. XVI) WOOD, COAL AND FUEL SHOPS, EACH WITH A CARPET AREA NOT EXCEEDING 30 SQ. MTS. XVII) BOOKS AND STATIONERY SHOPS OR STORES. XVIII) CLOTH AND GA RMENT SHOPS. XIX) PLUMBERS, ELECTRICIANS, RADIO, TELEVISION AND VIDEO EQUIPMENT REPAIR SHOPS AND VIDEO LIBRARIES. XX) RESTAURANTS AND EATING HOUSES EACH WITH A CARPET AREA NOT EXCEEDING 50 SQ.MTS. XXI) SHOES AND SPORTS SHOPS EACH NOT EXCEED 15 SQ. MT. W ITH CARPET AREA. ALL THESE SHOPPING ARE PART OF HOUSING COMPLEX WHERE 100% PROFIT SHOULD BE ALLOWED AS DEDUCTION 80IB OF THE INCOME TAX ACT AND THEREFORE IN THIS CASE ALSO YOUR APPELLANT AS CLAIMED 100% DEDUCTION. FURTHER, WE ALSO DRAW YOUR ATTENTION ON FOLLOWING JUDGMENTS: (1) COMMISSIONER OF INCOME TAX (APPEALS)1 THANE, DATED 20111 SEPTEMBER 2006 IN CASE OF VEENA DEVELOPERS HAS ALLOWED PROPORTIONATE DEDUCTION IN RESPECT PROFIT ON RESIDENTIAL PORTION OF PROJECTS, WHICH I S DIRECTLY APPLICABLE TO OUR CLIENT , (2) COMMISSIONER OF INCOME TAX (APPEALS) - II THANE, DATED 17 TH SEPTEMBER 2007 IN CASE OF SONAM BUILDERS HAS ALLOWED ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 10 PROPORTIONATE DEDUCTION IN RESPECT PROFIT ON RESIDENTIAL PORTION OF PROJECTS, WHICH IS DIRECTLY APPLICABLE TO OUR CLIENT . (3) COMMISSIONER OF IN COME TAX (APPEALS)' THANE, DATED 17TH SEPTEMBER 2008 IN CASE OF SHREE OSTWAL BUILDERS LIMITED HAS ALLOWED PROPORTIONATE DEDUCTION IN RESPECT PROFIT ON RESIDENTIAL PORTION OF PROJECTS. (4) BRAHMA ASSOCIATES VS JT. CIT PUNE SPECIAL BENCH 122 TTJ (SB PUNE) 433 ORDER DATED 6'1 APRIL, 2009 WHERE IT WAS HELD THAT 'WHAT WAS BROUGHT INTO EFFECT BY INSERTION OF CL.(D) IN S.80 - IB (10) VIDE FIN A NCE (NO.2) ACT,2004, WAS A RESTRICTION ON USE OF BUILT - UP AREA FOR COMMERCIAL PURPOSES, AND NOT A RELAXATION TO USE' THE BUILD - UP AREA FOR COMMERCIAL PURPOSE - THIS INDICATES THAT THERE WAS NO SUCH LIMIT IN FORCE' FOR THE EARLIER YEARS'. THE LIMIT OF COMMERCIAL USE OF BUILT UP AREA HAS NO RETROSPECTIVE APPLICATION AND THEREFORE 100% DEDUCTION SHA LL BE ALLOWED WHICH HAS BEEN CONFIRME D BY TH E BOMBAY HIGH COURT. (5) HERSHED P. DOSHI VS. ACIT 109 TTJ 335 WHERE IT HAS BEEN HELD THAT FULL DEDUCTION OF PRO F IT FROM SUCH ELIGIBLE UNDERTAKING SHOULD BE A LL OWED. (6) HON'BLE TRIBUNAL SMC BENCH, MUMBAI JUDGMENT IN CASE OF ITO WARD 4(1) THANE VS M /S IDE AL REALTORS VASAI D IST. THANE ITA NO. 4292 / MUM / 2007 WHERE M / S LAUKIK DEVELOPMENT HAS BEEN DISCUSSED AND ALLOWED TOTAL DEDUCTION EVEN THERE IS SHOPPING BECAUSE WHOLE PROJECT IS APPROVED UNDER HOUSING CATEGORY. (7) HONBLE TRIBUNAL C BENCH, MUMBAI JUDGMENT IN CASE OF ACIT 22(3) VASHI VS. M/S SHREE BALAJI DEVELOPER ITA NO. 2592/MUM/2006 WHERE PROPORTIONATE DEDUCTION IS ALLOWED. THE ASSESSING OFFICER HAS RELIED ON THE ITAT ORDER IN CASE OF LAUKIK DEVELOPERS 108 TTJ 364 BUT WITHOUT CONSIDERING THAT IT HAS BEEN R ECONSIDERED BY THE NEXT TRIBUNAL ORDER IN CASE OF CIT VS HARSHAD DOSHI 109 TTJ 335 WHERE THE JUDGMENT OF LAUKIK DEVELOPERS CONSIDERED AND ALLOWED THE FULL DEDUCTION. A COPY OF BOTH THE JUDGMENTS ARE ALREADY SUBMITTED TO YOUR HONOUR. LEARNED ASSESSING OFFI CER HAS ALSO REFERRED PURSHOTTAM DAS, 112 TAXMAN 0122, 247 ITR 516, WHICH WE TOTALLY DISAGREE WITH COMMENTS APPEARED IN ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 11 POINT NO. 11 ON PAGE 18 OF ASSESSMENT ORDER BY REFERRING DELHI HIGH COURT JUDGMENT (SUPRA) GIVEN UNWANTED REFERENCE OF SUBMISSION MADE B Y LEARNED COUNSEL FOR THE REVENUE. SHE HAS JUST PUT ONE PARAGRAPH OF THE JUDGMENT WITHOUT MENTIONING ACTUAL FACTS OF THE CASE. EVEN SHE IS NOT AWARE THAT BY THE SAME JUDGMENT REFERENCE APPLICATION OF REVENUE WAS DISMISSED THIS JUDGMENT WAS WITH REFERENCE T O TEMPORARY USE OF THE RESIDENTIAL PRE MISES FOR THE COMMERCIAL PURPOSE DOES NOT CHANGE THE CHARACTER OF RESIDENTIAL HOUSING PROPERTY. WE ALSO DISAGREE WITH COMMENT OF ASSESSING OFFICER IN POINT NO. 12 TREATING DEDUCTION U/S 80 IB (10) ARE IN NATURE OF EXC EPTION PROVISION TO GENERAL CHARGEABILITY OF THE INCOME TO TAX BY GIVING REFERENCE OF DELHI HIGH COURT FOR JUDGMENT (SUPRA) THAT PRINCIPAL OF BENEFICIAL CONSTRUCTION IN FAVOUR OF ASSESSEE AS DECIDED IN NOVOPAN INDIA LIMITED VS . CCE JT. 1994 (SC) IS NOT APP LICABLE. THIS IS A JUST REFERENCE FROM REVENUE SIDE QUOTED IN THE JUDGMENT BUT THAT IS NOT RELEVANT AND ALSO NOT FROM FINAL JUDGMENT. THE ASSESSING OFFICER HAS REFERRED RELIANCE JUTE IND. VS CIT REPORTED IN 120 ITR 921 (SC), CIT VS. ISTHMAIN SEAMSHIP LINE S REPORTED IN 20 ITR 573 (SC) AND KESIM THARUVI TEA ESTATE LTD REPORTED IN 60 ITR 262 (SC) IN THE ASSESSMENT ORDER WITHOUT ANY REASON. THE ASSESSEE HAS CLAIMED DEDUCTION, AS PER PROVISION OF THE ACT APPLICABLE TO PARTICULARS ASSESSMENT YEAR. FURTHER SHE HAS MENTIONED FOLLOWING FOUR JUDGMENTS WHERE ABOVE JUDGMENT OF RELIANCE JUTE IND. IS APPLIED. ( 1 ) 279 ITR 310 (SC) 2005 (2) 203 CTR 195 (ALLAHABAD) (3) 205 CTR 481 (MAD) (4) 296 ITR 516 (ALL) WE DID NOT UNDERSTAND RELEVANCE OF ABOVE JUDGMENTS TO THIS CAS E. OUR CLIENT FURTHER RELIED ON JUDGMENT IN CASE OF SAROJ SALES ORGANISATION VS. ITO MUMBAI E BENCH 115 TTJ (MUMBAI) 485 WHERE IT HAS BEEN HELD THE DATE OF APPROVAL OF PLAN IS IMPORTANT I.E. BEFORE AMENDMENT THEREFORE OLD PROVISIONS WILL BE APPLICABLE IT IS ALSO VERY IMPORTANT TO MENTION RELEVANT PORTION OF THE JUDGMENT AS REGARDS THE OBJECTION OF THE AO THAT THE PERMISSIBLE SHOPPING ARE OF HOUSING PROJECT EXCEEDS 5 PER CENT, THE ASSESSEE IS NOT ENTITLED FOR RELIEF UNDER SECTION 80 - IB (10). WE ARE OF THE VIEW THAT THE HOUSING PROJECT WERE APPROVED BEFORE 31 ST MARCH, 2005 AND FOR SUCH PROJECT WHICH WERE SO APPROVED, THERE WAS NO STIPULATION AS TO THE SHOPPING COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. AS ALREADY STATED EARLIER THAT THE AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING (HE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROVED UPTO 31 ST MARCH 2007, THE DENIAL OF DEDUCTION, IN OUR VIEW, IS CLEARLY NOT IN ACCORDANCE WITH LAW,' ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 12 THERE IS A DEFINITE VESTED RIGHTS POSSESSED BY THE ASSESSEE WITH RE FERENCE TO SUCH A PROJECT AND THE PROVISION GRANTING RELIEF SHALL HAVE TO BE READ IN A MANNER AS WAS AVAILABLE AT THE TIME WHEN RELIEF WAS GRANTED AND THE SUBSEQUENT AMENDMENT SHALL NOT AFFECT THE CLAIM FOR SUCH A RELIEF. RELIANCE FOR THIS PROPOSITION IS P LACED ON THE SUPREME COURT DECISIONS IN CIT VS. SHAH SADIQ & SONS (166 ITR 102) AND THE MADRAS HIGH COURT DECISION IN CIT VS. SSC. SHOES LTD. (259 ITR 674). EXPECTING THE ASSESSEE TO BE COMPLIANT IN SUBSEQUENT YEARS UNDER THE AMENDED POSITION WITH REFERENC E TO A PROJECT WHICH IS ALREADY UNDERWAY AND WHICH IS COMPLIANT WITH THE THEN PREVAILING PROVISIONS, IS EXPECTING IMPOSSIBILITY. IN FACT, IT WOULD BE ASKING THE ASSESSEE TO DO THE IMPOSSIBLE WHICH CANNOT BE THE INTENT OF ANY STATUTE. [CIT VS. SHAPOORJL PAL LONJI MISTRI 44 ITR 891 (SC); ACIT VS. JINDAL IRRIGATION SYSTEMS LTD. 56 ITT 164 (HYD) ]. ACCORDING TO AGREEMENT & PLAN ACTUAL AREA IS LESS THAN 1500 SQ. FT. BUT ASSESSING OFFICER HAS NOT GIVEN MEASUREMENT REPORT TO APPELLANT HOW SHE HAS CALCULATED AREA MO RE THAN 1500 SQ. FT. THE LEARNED ASSESSING OFFICER ERRED IN NOT ACCEPTING ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) II FOR THE ASSESSMENT YEAR 2003 - 04 AT 2004 - 05 IN CASE OF SHREE OSTWAL BUILDERS LTD ON THE SAME MATTER. THE APPELLANT HAS SUBMITTED M ANY T RIBUNAL JUDGMENTS, WHERE FULL DEDUCTIONS AS WELL AS PROPORTIONATE DEDUCTION WERE ALLOWED. HOWEVER WE ARE SUBMITTING HEREWITH FEW MORE JUDGMENT FOR YOUR KI N D PERUSAL. 5. BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLOWED PROPORTIONATE DEDUCTION U/S 80IB(1 0) OF THE ACT ON PROFITS OF RESIDENTIAL UNITS OF U.K. RESIDENTIAL COMPLEX AFTER HAVING THE FOLLOWING OBSERVATIONS : - A S IS EVIDENT FROM THE FACTS OF THE CASE THAT THE A SSESSE HAS CONSTRUCTED COMMERCIAL AREA OF 70,269.69 SQ. FT. AS CONVENIENCE SHOPPING OU T OF TOTAL BUILT UP AREA OF 5,21,094.70 SQ. FT. OF U.K. RESIDENTIAL COMPLEX WHICH IS 13.485% I.E. MORE THAN THE PRESCRIBED LIMIT OF 5% OR 2000 SQ. FT. WHICHEVER IS LESS. HOWEVER, UNDISPUTEDLY THE PROJECT HAS BEEN APPROVED BY' THE LOCAL AUTHORITY ALONG WIT H CONVENIENCE SHOPPING AREA AS PER THEIR DEVELOPMENT CONTROL REGULATIONS. THUS, I FIND THAT THE I SSUE UNDER CONSIDERATION HAS BEEN DEALT WITH BY THE HON'BLE ITAT, PUNE, AND HON'BLE HIGH COURT BOMBAY IN THE LAND MARK JUDGMENT OF BRAHMA ASSOCIATES, RESPECTIV ELY, REPORTED IN BRAHMA ASSOCIATES VS. JT.CIT, 122 TTJ 433 ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 13 (PUNE) (S.B) AND CIT VS. BRAHMA ASSOCIATES, 239 CTR 30 (BOMB) WHEREIN IT HAS BEEN CLEARLY HELD THAT A PROJECT WITH RESIDENTIAL AND COMMERCIAL USER TO THE EXTENT PERMITTED UNDER DC RULES WOULD BE A 'HOUSING PROJECT' AND ELIGIBLE FOR DEDUCTION U/S 80IB(10). HOWEVER, THE HON'BLE ITAT, PUNE ( SB ) WAS OF THE VIEW THAT IN CASE OF COMMERCIAL USER EXCEEDED 10% OF THE TOTAL BUILT UP AREA, THE DEDUCTION WAS ALLOWABLE ONLY ON THE PROFITS DERIVED FROM RESIDENTIA L UNITS I.E. THE APPELLANT WAS ENTITLED TO PROPORTIONATE DEDUCTION. THE APPELLANT HAS ALSO RELIED UPON VARIOUS JUDGMENTS IN ITS SUBMISSION WHEREIN PROPORTIONATE DEDUCTION RELATING TO RESIDENTIAL UNITS HAS BEEN APPROVED AND KEEPING IN VIEW SUCH AN ESTABLISH ED LEGAL POSITION, THE PROPORTIONATE DEDUCTION U/S 80 I B(10) HAD BEEN CLAIMED IN RETURN OF INCOME FILED U/S 153A. ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT CLAIMED FULL DEDUCTION. NOW DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT HAS ALSO RAISED ADDITIONAL GROUNDS BEFORE ME VIDE ITS LETTER DATED 31.01.2012 FILED ON 02.02.2012 IN THIS REGARD WHICH ARE AS FOLLOWS: - 1. THE ASSESSING OFFICER ERRED IN NOT ALLOWING ADDITIONAL DEDUCTION UNDER SECTION 80IB OF RS. 21,21,835/ - CLAIM ED DURING THE ASSESSMENT PROCEEDING AS NOTED ON PAGE NO. 9 AND 10 OF THE ASSESSMENT ORDER. 2. THE LEARNED ASSESSING OFFICER ERRED IN DISALLOWING 100% DEDUCTION U/S 80IB IN CASE OF THE U.K. RESIDENT PROJECTS OF RS. 1,45,80,138/ - . 3. THE LEARNED ASSESSING OF FICER SHOULD HAVE CONSIDERED THE FULL DEDUCTION IN THE ASSESSMENT ORDER 4. THE LEARNED ASSESSING OFFICER MAY BE DIRECTED TO ALLOW FULL DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961. 5. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. IN SUPPORT OF ITS CLAIM OF FULL DEDUCTION, THE A SSESSEE HAS RELIED UPON THE DECISION I N THE CASE OF HARSHAD P. DOSHI VS. ACIT 109 TTJ 335 (MUM). HOWEVER, ON GOING THROUGH VARIOUS JUDGMENTS ON THE ISSUE OF HON'BLE COURT/TRIBUNALS AS AL SO OF CIT(A) - I & II, THANE, I ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 14 FIND THAT THE MAJORITY VIEW I S IN FAVOUR OF PROPORTIONATE DEDUCTION WHERE COMMERCIAL USER EXCEEDED THE PRESCRIBED LIMIT. THUS, RESPECTIVELY FOLLOWING THE MAJORITY VIEW, I HOLD THAT THE APPELLANT IS ENTITLED TO A PROPORTIONATE DEDUCTION U/S. 80IB(10) I.E. ON THE PROFITS DERIVED FROM RESIDENTIAL UNITS OF UK RESIDENTIAL COMPLEX ONLY. THE A. O IS ACCORDINGLY, DIRECTED TO ALLOW THE RELIEF. EVENTUALLY, ADDITIONAL GROUNDS RAISED, STAND DISMISSED. 6 . THE LD. CIT(A) ALSO ALLOWED CLAIM OF DEDUCTION IN RESPECT OF THREE ROW HOUSES AFTER HAVING THE FOLLOWING OBSERVATION : - ON CAREFUL CONSIDERATION OF FACTS OF THE CASE AND SUBMISSION OF APPELLANT, I FIND THAT THE 3 ROW HOUSES HAVE BEEN APPROVED FOR BUILT UP AREA OF 1471 SQ.FT. EACH AND ONL Y ON INCLUSION OF 50% AREA OF OPEN TERRACE I.E. 306.62 SQ:FT., THE BUILT UP AREA EXCEEDED THE PRESCRIBED' LIMIT OF 1500 SQ.FT. AS PER THE DEFINITION OF 'BUILT UP AREA' WHICH CAME ON THE STATUTE ONLY W.E.F. 01.04.2005, THE 'BUILT UP AREA' MEANS THE INNER ME ASUREMENTS OF THE RESIDENTIAL UNITS AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THUS, EVEN AS PER THIS DEFINITION, THE OP EN TERRACE CANNOT BE INCLUDED IN THE BUILT UP AREA. MOREOVER, SINCE THE PROJECT OF APPELLANT WAS APPROVED IN F.Y. 2003 - 04, THE BUILT UP AREA HAS TO BE CONSIDERED AS PER D.C. RULES WHICH UNDISPUTEDLY IS 1471 SQ.FT. I.E. BELOW PRESCRIBED LIMIT. THIS VIEW GET S SUPPORT FROM THE DECISION OF ITO VS. AIR DEVELOPERS (2009) 122 ITD 125 (NAG). IN THE CASE OF AMALTAS ASSOCIATES VS. ITO (2011) 131 ITD 142 (AHD.}, IT HAS BEEN VERY CLEARLY HELD THAT THE 'OPEN TERRACE' CANNOT BE CONSIDERED IN 'BUILT UP AREA' EVEN AS PER T HE DEFINITION OF THE SAME GIVEN IN SECTION 80 IB ( 10 ) OF THE ACT. ACCORDINGLY THIS ISSUE IS DECIDED IN THE FAVOUR OF APPELLANT. 7 . WITH REGARD TO A.O.S OBSERVATION THAT U.K. RESIDENTIAL & U.K. C OMMERCIAL ARE PART OF ONE APPROVAL AND SOME PORTION OF COMME RCIAL WAS UNDER CONSTRUCTION , THEREFORE, THE CLAIM OF DEDUCTION U/S 80IB(10) CANNOT BE ALLOWED TO THE ASSESSEE. T HE A SSESSEES SUBMISSION ON THIS GROUND WAS UNDER: - '4. UK R ESIDENTIAL AND UK COMMERCIAL IS PART OF ONE ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 15 APPROVAL A ND SOME PORTION OF THE UK CO MMERCIAL IS STILL UNDER CONSTRUCTION ; - AS EXPLAINED TO ABOVE THE APPELLANT IS HAVING TWO UNDERTAKING OF WHICH U. K. COMMERCIAL HAVING SHOPPING ON GROUND & OFFICES AT FIRST & SECOND FLOOR. DURING THE ASSESSMENT YEAR 2006 - 07 THERE WAS NO SALE IN U. K . C OMMER CIAL AND TOTAL PROJECT WAS UNDER CONSTRUCTION WHICH HAS BEEN SHOWN AS CLOSING WOI* IN PROGRESS. THE UNDERTAKING WHICH HAS NOT CLAIMED ANY DEDUCTION U/S 80 IB THAN THERE IS NO PROVISION IN THE INCOME TAX WHICH SAYS U.K. C OMMERCIAL SHOULD GET COMPLETION CERT IFICATE. YOUR APPELLANT DOESN'T AGREE WITH ASSESSING OFFICER TO SAY THAT IF U.K. C OMMERCIAL IS NOT OBTAIN COMPLETION CERTIFICATE THAN SHE WILL NOT ALLOW DEDUCTION U/S 80 IB IN CASE OF U.K. R ESIDENTIAL. BOTH UNDERTAKINGS ARE HAVING SEPARATE SET OF ACCOUNTS WHICH WERE, ALREADY SUBMITTED TO ASSESSING OFFICER FOR HER VERIFICATION DURING THE, ASSESSMENT PROCEEDING/ THEREFORE T HIS CANNOT REASON TO D ISALLOW DEDUCTION.' 8 . BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLOWED ASSESSEES CLAIM BY TREATING THE SAME AS TWO D IFFERENT PROJECTS AFTER OBSERVING AS UNDER: - (B) SINCE I HAVE ALREADY HELD THAT U.K. COMMERCIAL & U.K. RESIDENTIAL ARE TWO DIFFERENT PROJECTS ON THE SAME PIECE OF LAND OF 17.67 ACRES, THE NON - COMPLETION OF COMMERCIAL PROJECT WILL NOT IN ANY WAY AFFECT TH E ELIGIBILITY OF U.K. RESIDENTIAL PROJECT FOR DEDUCTION U/S. 80IB( 10 ). THUS, THIS ISSUE, UNDOUBTEDLY NEEDS TO BE DECIDED IN THE FAVOUR OF APPELLANT AND HENCE THE SAME DECIDED ACCORDINGLY. IN RESPECT OF STRICT INTERPRETATION OF PROVISIONS RELATING TO EX EMPTION AS STATED BY THE A.O, THE APPELLANT HAS HEAVILY RELIED UPON THE DECISION OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF CI VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN I.T. APPEAL NO . 458 OF 2006 DATED 05.01.2007 WHEREIN THE APPEAL OF REVENUE WAS D ISMISSED ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW I S I NVOLVED IN THE MATTER. THUS, THE DECISION OF HON'BLE ITAT KOLKATA IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT (ITA NO. 1595/KOL/200S DT. 24.03.2006) STANDS CONFIRMED. THE HON 'BLE I TAT, KOLKATA HAS .HELD THAT THE SECTION 80 IB (10) HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE FOR BUSINESSMEN TO UNDERTAKE ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 16 CONSTRUCTION OF RESIDENTIAL ACCOMMODATION OF SMALLER RESIDENTIAL UNITS AND THE DEDUCTION WAS INTENDED TO BE RESTRICTED TO THE PROFIT DERIVED FROM SMALL UNITS AND NOT FROM LARGER ONES. SINCE THE ASSESSEE HAD CLAIMED D EDUCTION ONLY ON ACCOUNT OF SMALLER UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAINED IN SECTION 80 IB (10), THE DEDUCTION CANNOT BE DISALLOWED ON PROFIT OF HOUSING PROJECT CONTAINING BOTH SMALL AND LARGER UNITS AS THE SECTION ALSO DOES NOT SPEAK OF SUCH DENIAL. IT IS ALSO HELD THAT DENIAL OF SUCH DEDUCTION IS ON ACCOUNT OF RATHER RESTRICTED AD NARROW INTERPRETATION OF THE PROVISIONS OF CLAUSE (C) OF SECTIO N 80 IB (10) WHILE THE PROVISIONS SHOULD BE LIBERALLY INTERPRETED IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO L TD. 1 96 ITR 188 (SC). THUS, THE CLAIM OF ASSESSEE ON PRO - RATA INCOME ON QUALIFYING UNITS WAS RIGHTLY ALLOWED BY THE CIT(A). 10 . SINCE THE ISSUE REGARDING INTERPRETATION OF PROVISIONS FOR DEDUCTION U/S 80IB(10) IS SPECIFICALLY COVERED BY THE ABOVE DECISIONS IN THE FAVOUR OF ASSESSEE, I ALSO HOLD THAT THE APPELLANT IS ENTITLED TO PROPORTIONATE DEDUCTION ON INCOME ARISIN G FROM THE RESIDENTIAL PORTION OF THE U.K. RESIDENTIAL PROJECT WHICH OTHERWISE SATISFIES ALL THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. THE A.O IS DIRECTED TO WORK OUT THE DEDUCTION U/S. 80(10) ACCORDINGLY AND ALLOW THE SAME TO THE A SSESSEE . 9. AGAINS T THE ABOVE ORDER OF THE LD. CIT(A) BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 1 0 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT WAS DECLINED BY THE A.O. ON THE PLEA THA T HOUSING PROJECT OF ASSESSEE WAS APPROVED BY THE LOCAL AUTHORITY AS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT AND NOT AS HOUSING PROJECT. THE A.O. ALSO STATED THAT ASSESSEE HAS NOT COMPLETED THE PROJECT WITHIN THE SPECIFIED TIME I.E. 31 - 08 - 2008 AND C OMPLETION CERTIFICATE HAS NOT BEEN GRANTED BY THE COMPETENT AUTHORITY. THE A.O. ALSO OBSERVED THAT THE COMMERCIAL AREA EXCEEDED THE PRESCRIBED LIMIT OF 5%. THE A.O. ALSO FOUND THAT BUILT UP AREA OF ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 17 THREE RESIDENTIAL ROW HOUSES EXCEEDED 1500 SQ. FT. BY THE IMPUGNED ORDER, THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSEES SUBMISSION AS WELL AS JUDICIAL PRONOUNCEMENTS HELD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION WITH RESPECT TO THE RESIDENTIAL PORTION AND NOT ON THE ENTIRE PROJECT . THE LD. C IT(A) HELD THAT PROJECT OF ASSESSEE WAS APPROVED BEFORE 1 - 4 - 2005 AND AT THAT TIME THERE WAS NOTHING WAS MENTIONED RELATING TO COMMERCIAL AREA. ACCORDINGLY BY RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES [20 11] 333 ITR 289, ALLOWED ASSESSEES CLAIM ON THE RESIDENTIAL PORTION. THE LD. CIT(A) HAD DEALT WITH EACH AND EVERY OBJECTION OF A.O. AND AFTER RECORDING DETAILED FINDING ALLOWED PROPORTIONAL CLAIM OF DEDUCTION ON RESIDENTIAL PORTION OF PROJECT. 1 1 . WE FOU ND THAT ASSESSEE HAS CLAIMED DEDUCTION ONLY WITH RESPECT TO UK RESIDENTIAL PROJECT AND NOT WITH RESPECT TO UK COMMERCIAL PROJECT. THE PROJECT WAS APPROVED ON 8 - 4 - 2003 I.E. BEFORE INTRODUCTION O F LIMIT OF COMMERCIAL AREA. COMMERCIAL AREA WAS CONSTRUCTED AS PER D.C. RULES. THE ISSUE WITH RESPECT TO CLAIM U/S 80IB(10) HAVING COMMERCIAL AREA HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HAPPY HOME ENTERPRISES [2014) 51 TAXMANN.COM 281 (BOMBAY) AND CIT VS. KANAKIA SPACES PVT. LTD. I TXA NO. 308 OF 2012 VIDE ORDER DATED 19 TH SEPTEMBER, 2014 WHEREIN IT WAS HELD THAT THERE WAS NO RESTRICTION ON THE QUANTUM OF COMMERCIAL AREA THAT COULD BE INCLUDED IN THE SAID HOUSING PROJECT AND THE SAME WAS TO BE DETERMINED BY THE LOCAL AUTHORITY IN ACC ORDANCE WITH ITS OWN RULES AND REGULATIONS. IN RESPECT OF PROJECT WHICH HAS BEEN APPROVED BEFORE 31 - 3 - 2005, THE CONDITION IMPOSED BY FINANCE (NO.2) ACT 2 0 04 W.E.F. 1 - 4 - 2005 REGARDING THE QUANTUM OF COMMERCIAL AREA IS NOT APPLICABLE. THE PRECISE OBSERVATIO N OF THE HONBLE BOMBAY HIGH COURT IS AS UNDER: - ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 18 IT WOULD BE IMPORTANT TO NOTE ANOTHER AMENDMENT THAT WAS BROUGHT ABOUT BY FINANCE (NO.2) ACT, 2004 TO SUB - SECTION (14) OF SECTION 80 - IB, W.E.F. IST APRIL 2005, SECTION 80 - IB(14) WAS ALSO AMENDED BY THE SAME FINANCE (NO.2) ACT, 2004 AND FOR THE FIRST TIME UNDER CLAUSE (A) THEREOF, THE WORDS 'BUILT - UP AREA' WERE DEFINED. SECTION 80 - IB(14)(A) READS THUS: - (14) FOR THE PURPOSES OF THIS SECTION, - (A) 'BUILT - UP AREA' MEANS THE INNER MEASUREMENTS OF THE RESIDENT IAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS;' 23. PRIOR TO INSERTION OF SECTION 80 - IB(14)(A), IN MANY OF THE RUL ES AND REGULATIONS OF THE LOCAL AUTHORITY APPROVING PROJECT, 'BUILT - UP AREA' DID NOT INCLUDE PROJECTIONS AND BALCONIES. PROBABLY, TAKING ADVANTAGE OF THIS FACT, BUILDERS PROVIDED LARGE BALCONIES AND PROJECTIONS MAKING THE RESIDENTIAL UNITS FAR BIGGER THAN AS STIPULATED IN SECTION 80 - I B ( 10 ), AND YET CLAIMED THE DEDUCTIO N UNDER THE SAID PROVISION. TO PLUG THIS LACUNA, CLAUSE (A) WAS INSERT ED IN SECTION 8 0 - IB(14) DEFINING THE WORDS 'BUILT - UP AREA' TO MEAN THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE F LOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS, BUT DID NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THE REASON WE' ARE REFERRING TO THIS PROVISION IS BECAUSE IT TOO WAS BROUGHT ABOUT FO R THE FIRST TIME W.E.F. 1 ST APRIL, 2005 AND THE KARNATAKA HIGH COURT HAD THE OCCASION TO CONSIDER WHETHER IT WOULD APPLY TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY BEFORE 31 ST MARCH, 2005. WE HAVE RELIED UPON THE REASONING OF THE JUDGEMENT OF TH E KARNATAKA HIGH COURT FOR COMING TO THE FINDINGS THAT WE HAVE, IN THIS JUDGEMENT. 1 2 . IN VIEW OF THE ABOVE , SINCE THE PROJECT OF THE ASSESSEE HAS BEEN APPROVED PRIOR TO 1 - 4 - 2005, THE OLD LAW SHALL APPLY AND THE CONDITIONS WITH REGARD TO COMMERCIAL ESTAB LISHMENT WHICH HAS BEEN INSERTED W.E.F. 1 - 4 - 2005 WILL NOT BE APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MANAN CORPORATION VS. ACIT (2012) 78 DTR 205 (GUJ.), MUMBAI ITAT IN THE CASE S OF RAMPRASAD AGARWAL IN ITA NO. 2435 & 2163/MUM/2010 DATED 5 - 9 - 2012 AND ITO VS. SAI KRUPA DEVELOPERS IN ITA NO. 3661/MUM/2011 DATED 13 - 3 - 2012. IN VIEW OF THE ABOVE, WE MODIFY THE ORDER OF LD. CIT(A) AND DIRECT THE ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 19 A.O. TO ALLOW THE FULL CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT WIT H RESPECT TO THE ENTIRE PROJECT WITHOUT RESTRICTING THE SAME TO RESIDENTIAL AREA. THUS, THE GROUNDS TAKEN BY THE ASSESSEE IN ALL HE YEARS FOR ALLOWING FULL CLAIM OF DEDUCTION U/S.80IB(10) ARE ALLOWED. 1 3 . WITH REGARD TO THE COMPLETION CERTIFICATE, THE LD. CIT(A) AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE HELD THAT IN RESPECT OF PROJECT APPROVED PRIOR TO 1 - 4 - 2005, NO COMPLETION CERTIFICATE WAS REQUIRED . THE VIEW OF THE LD. CIT(A) IS ALSO SUPPORTED BY THE DECISION OF HONBLE MADRAS HIGH COURT IN TH E CASE OF CIT VS. JAIN HOUSING & CONSTRUCTION LTD. (2013) 30 TAXMANN.COM 131. 1 4 . IN RESPECT OF A.O.S OBJECTION IN RESPECT OF THREE RAW HOUSES, THE LD. CIT(A) HELD THAT OPEN TERRACE AREA CANNOT BE INCLUDED IN BUILT UP AREA IN RESPECT OF PROJECT APPROVED PRIOR TO 1 - 4 - 2005. THE BUILT UP AREA HAS TO BE CONSIDERED AS PER DC RULES ACCORDING TO WHICH THE AREA WORKED OUT TO BE 1471 SQ. FT. IE. BELOW THE PRESCRIBED LIMIT. 1 5 . WITH REGARD TO THE A.O.S ALLEGATION REGARDING UK COMMERCIAL AND UK RESIDENTIAL ARE PART OF ONE APPROVAL, THEREFORE, ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION IN RESPECT OF UK RESIDENTIAL PROJECT ALSO , THE LD. CIT (A) HELD THAT THESE ARE TWO DIFFERENT PROJECTS ON THE SAME PIECE OF LAND OF 17.67 ACRES. SINCE THE ASSESSEE HAS NOT CLAIMED ANY D EDUCTION IN RESPECT OF UK COMMERCIAL PROJECT, THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) CANNOT BE DECLINED IN RESPECT OF UK RESIDENTIAL PROJECT HAVING LAND OF MORE THAN ONE ACRE. IN VIEW OF THE ABOVE DISCUSSION, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF M/S HAPPY HOME ENTERPRISES AND M/S KANAKIA SPACES PVT. LTD. (SUPRA), WE DIRECT THE A.O. TO ALLOW FULL CLAIM OF THE DE DUCTION U/S ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 20 80IB(10) OF THE ACT IN RESPECT OF ENTIRE RESIDENTIAL PROJECT IN ALL THE RELE VANT ASSESSMENT YEARS UNDER CONSIDERATION. 1 6 . IN THE RESULT, ALL APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY , 201 5 . 20/02/2015 SD/ - SD/ - ( VIVEK VARMA ) ( R.C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 20/02/2015 RK , SR. PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT CONCERNED , MUMBAI 4. / CIT - CONCERNED, MUMBAI 5. / DR, ITAT, MUMBA I F BENCH 6. GUARD FILE . / BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI ITA 39 20 TO 3922 /M/1 2 & ITA 4673 TO 4675/M/12 ITA 6557/M/12 21