ACIT 24(2), MUMBAI V. SUMMAIYA ENTERPRISES, MUMBAI

ITA 4966/MUM/2010

• Counselvise Citation: 496619914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2002-2003
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: M P MAKHIJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.4966/MUM/2010 (ASSESSMENT YEAR: 2002-03) DCIT -24(2), ROOM NO. 601, 6TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI -400 051 ....... APPELLANT VS M/S. SUMMAIYA ENTERPRISES, HUMARA PARK, SURVEY NO.273, PATHANWADI, MALAD (E), MUMBAI -400 097 ..... RESPONDENT PAN: AAGFS 8814 E APPELLANT BY: SHRI V.V. SHASTRI RESPONDENT BY: SHRI M.P. MAKHIJA DATE OF HEARING: DATE OF PRONOUNCEMENT: 02.08.2011 30.08.2011 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-34, MUMBAI DATED 30.03.2010 FOR THE A.Y. 2002-03 BY TAKING THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING THE AO TO A LLOW DEDUCTION U/S.80IB(10) TO THE ASSESSEE, AS ASSESSEE S PROJECT WAS RESIDENTIAL AND NOT COMMERCIAL AND THE ITA 4966/MUM/2010 M/S. SUMMAIYA ENTERPRISES 2 AMENDMENT IN THE FINANCE ACT ON THIS ISSUE CAME IN TO EFFECT FROM 01.04.2005 ONLY. 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSESSE E IS A BUILDER AND DEVELOPER. THE ASSESSEE CLAIMED THE DEDUCTION U/S.80IB(10) OF ` 75,20,031/-. IT WAS NOTICED BY THE A.O. THAT THE A SSESSEES PROJECT WAS CONSISTING OF THE COMMERCIAL UNITS ALSO. AS PE R THE DATA GIVEN BY THE A.O. THE SHOPPING AREA WAS APPROXIMATELY 5.5% O F THE TOTAL BUILD UP AREA. THERE IS NO DISPUTE THAT THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY AS A RESIDENTIAL-CUM-SHOPPING-PROJE CT AND PROJECT WAS STARTED ON 15.01.1999. THE A.O. WAS OF THE OPINION THAT IN VIEW OF THE DECISION OF THE ITAT IN THE CASE OF LAUKIK DEVELOPE RS, IF THE PROJECT IS NOT A HOUSING PROJECT THEN THE DEDUCTION CANNOT BE ALLOWED U/S.80IB. THE A.O. WAS ALSO OF THE VIEW THAT AS LEGISLATIVE A MENDMENT BY INSERTION OF CLAUSE (D) TO SECTION 80IB(10) W.E.F. 1.4.2005, IF THE PROJECT IS HAVING A COMMERCIAL AREA OF MORE THAN 5% OF THE TOTAL BUILT-UP AREA THEN NO DEDUCTION CAN BE ALLOWED. THE A.O., FINALL Y DECLINED TO ALLOW THE DEDUCTION U/S.80IB(10) AND BROUGHT TO TAX THE E NTIRE PROFIT ON THE PROJECT. THE ASSESSEE CHALLENGED THE ASSESSMENT OR DER BEFORE THE LD. CIT (A) AND FOUND FAVOUR AND NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORDS . WE FIND THAT THIS ISSUE STANDS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES 239 CTR (BOM) 30 AND THEIR LO RDSHIPS HAVE HELD AS UNDER: 4. 25. THE ABOVE CONCLUSION IS FURTHER FORTIFIED BY C L. (D) TO S.80- IB(10) INSERTED W.E.F. 1ST APRIL, 2005 PROVIDES THA T EVEN THOUGH SHOPS AND COMMERCIAL ESTABLISHMENTS ARE INCL UDED IN THE HOUSING PROJECT, DEDUCTION UNDER S.80-IB(10) W.E.F. 1ST APRIL, 2005 WOULD BE ALLOWABLE WHERE SUCH COMME RCIAL ITA 4966/MUM/2010 M/S. SUMMAIYA ENTERPRISES 3 USER DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET WHICHEVER IS LOWER. BY FINANCE ACT, 2010, CL. (D) IS AMENDED TO THE EFFECT THAT THE COMMERCIAL USER SHOU LD NOT EXCEED THREE PER CENT OF THE AGGREGATE BUILT-UP ARE A OF THE HOUSING PROJECT OR FIVE THOUSAND SQUARE FEET WHICHE VER IS HIGHER. THE EXPRESSION INCLUDED IN CL. (D) MAKES IT AMPLY CLEAR THAT COMMERCIAL USER IS AN INTEGRAL PART OF A HOUSING PROJECT. THUS, BY INSERTING CL. (D) TO S. 80-IB(10 ) THE LEGISLATURE HAS MADE IT CLEAR THAT THOUGH THE HOUSI NG PROJECTS APPROVED BY THE LOCAL AUTHORITIES WITH COM MERCIAL USER TO THE EXTENT PERMISSIBLE UNDER DC RULES / REGULATIONS WERE ENTITLED TO S. 80-IB(10) DEDUCTION , W.E.F. 1ST APRIL, 2005 SUCH DEDUCTION WOULD BE SUBJECT TO THE RESTRICTION SET OUT IN CL. (D) OF S. 80-IB(10). TH EREFORE, THE ARGUMENT OF THE REVENUE THAT W.E.F. 1ST APRIL, 2005 THE LEGISLATURE FOR THE FIRST TIME ALLOWED S. 80-IB(10) DEDUCTION TO HOUSING PROJECTS HAVING COMMERCIAL USER CANNOT B E ACCEPTED. 26. THE ALTERNATIVE ARGUMENT OF THE REVENUE IS THAT THE PROJECTS WITH CONVENIENT SHOPPING COULD BE CONSIDERED AS HOU SING PROJECTS UNDER S. 80-IB(10) UP TO 1ST APRIL, 2005. THAT ARGUMENT IS ALSO WITHOUT ANY MERIT, BECAUSE, SO LON G AS THE DC RULES PERMIT CONVENIENT SHOPPING AS ALSO OTHER COMMERCIAL USER IN A HOUSING PROJECT, IT WOULD NOT BE OPEN TO THE IT AUTHORITIES TO CONTEND THAT THE PROJECT W ITH CONVENIENT SHOPPING ALONE COULD BE CONSIDERED AS HO USING PROJECTS. IN THE PRESENT CASE, IT IS NOT IN DISPUT E THAT THE PROJECT IS APPROVED FOR RESIDENTIAL AND COMMERCIAL BUILDINGS AS PER THE DC RULES, PUNE. THE FACT THAT THE RESID ENTIAL BUILDINGS UNDER THE DC RULES CAN HAVE COMMERCIAL US ER UP TO 50 PER CENT OF THE BUILT-UP AREA OF THE PLOT CAN NOT BE A ITA 4966/MUM/2010 M/S. SUMMAIYA ENTERPRISES 4 GROUND TO HOLD THAT THE PROJECT IS NOT A HOUSING PR OJECT. IT IS FOR THE LEGISLATURE TO IMPOSE RESTRICTIONS ON COMME RCIAL USER IN A PROJECT FOR THE PURPOSES OF AVAILING S. 80-IB( 10) DEDUCTION AND THAT HAS BEEN DONE BY INSERTING CL.(D ) TO S. 80-IB(10) W.E.F. 1ST APRIL, 2005. THEREFORE, THE D ECISION OF THE TRIBUNAL IN HOLDING THAT A PROJECT WITH RESIDEN TIAL AND COMMERCIAL USER TO THE EXTENT PERMITTED UNDER DC RU LES WOULD BE A HOUSING PROJECT AND HENCE ELIGIBLE FOR D EDUCTION UNDER S. 80-IB(10) UP TO 31ST MARCH, 2005 CANNOT BE FAULTED. 4. ADMITTEDLY, IN THE PRESENT CASE, THE PROJECT IS APPROVED PRIOR TO 1.04.2005 AND ASSESSMENT BEFORE US IS 2002-03, HENC E, THE AMENDMENT HAS NO APPLICATION TO THE ASSESSEES CASE . WE, ACCORDINGLY, UPHOLD THE ORDER OF THE LD. CIT (A). 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH AUGUST 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATED : 30TH AUGUST 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)34, MUMBAI. 4) THE CIT-24, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH AUGUST 2011 SD/- SD/- ( J. SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER ITA 4966/MUM/2010 M/S. SUMMAIYA ENTERPRISES 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 24.08.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 25.08.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER