ACIT, New Delhi V. M/s. Tulip Infratech Pvt. Ltd., New Delhi

ITA 5045/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6881 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 16-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT MOHAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NOS. 2325/DEL/ 2010 ASSESSMENT YEAR: 2007-08 DCIT, CIRCLE 16(1) VS. M/S TULIP INFRATECH PVT . LTD. CR BUILDING, 1201-1204, INDRA PRAKASH BUILDING, NEW DELHI 21, BARAKHAMBA ROAD, NEW DELHI (PAN: AACCT3755E) (APPELLANT) (RESPONDENT) AND ITA NO. 5045/DEL/2012 ASSESSMENT YEAR : 2009-10 ACIT, CIRCLE 16(1) VS. M/S TULIP INFRATECH PV T. LTD. CR BUILDING, 1107, ARUNACHAL BUILDING, NEW DELHI 19, BARAKHAMBA ROAD, NEW DELHI 110 001 (PAN: AACCT3755E) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. AMIT MOHAN, CIT( DR) ASSESSEE BY : SH. SALIL AGGARWA L, ADV. & SH. SHAILE SH GUPTA, ADV. DATE OF HEARING : 16-12-2016 DATE OF ORDER : 18-02-2016 ORDER PER H.S. SIDHU, J.M. THESE TWO APPEALS FILED BY THE DEPARTMENT ARE DI RECTED AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A)-XIX, NEW D ELHI PERTAINING TO ASSESSMENT YEARS 2007-08 AND 2009-10. SINCE THE IS SUES INVOLVED IN THE THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THEY ARE BEING CONSOLIDATED AND DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF BREVITY, BY DEALING WITH ITA NO. 2325/DEL/2010 (AY 2007-08). ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 2 2. THE GROUNDS RAISED IN ITA NO. 2325/DEL/2010 (AY 2007-08) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 11,07,67,172/- BEING 90% OF LAND COST AND EDC, MADE BY THE AO MATCHING PRINCIPLE BASIS, IGNORING THE FA CT THAT THE ASSESSEE, FOLLOWING THE PERCENTAGE OF COMPLETION METHOD, HAD DECLARED RECEIPTS OF RS. 1.7 2 CRORES BEING 10% OF THE TOTAL PROJECT VALUE ON THE BASIS OF CERTIFICATION THAT 10% WORK WAS COMPLETED DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R REFERENCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, FOLLOWING THE PRINCIPLE OF MATCHING COST WITH REVE NUES, CIT(A) SHOULD HAVE UTMOST ALLOWED THE EDC CHARGES A T RS. 1,45,04,750/- BEING 10% OF THE TOTAL EDC CHARGE S OF RS. 14,50,47,500/- PAYABLE TO GOVT. OF HARYANA A ND NOT THE EDC CHARGES OF RS. 4,00,48,000/- CLAIMED PERTAINING TO THE YEAR UNDER REFERENCE. 4. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS. 1,46,57,405/- U/S. 80IB OF INCOME TAX ACT, 1961 HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR PROPORTIO NATE DEDUCTION U/S. 80IB(10) IN RESPECT OF THE 71% OF TH E PROFITS WHICH REPRESENT THE PROFITS FROM ELIGIBLE RESIDENTIAL UNITS IGNORING THE FACT THAT THE ELIGIB ILITY CONDITION FOR DEDUCTION U/S. 10IB(10) IS THAT THE B UILT UP AREA OF EACH UNIT SHOULD NOT EXCEED THE PRESCRIB ED LIMIT AND THE SAME IS APPLICABLE TO THE ENTIRE PROJ ECT. 5. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , LD. CIT(A) HAS GROSSLY ERRED IN NOT SUSTAINING THE ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 3 DISALLOWANCE OF DEDUCTION U/S. 80IB(10) IN RESPECT OF INTEREST INCOME OF RS. 8,87,967/- IGNORING THE FACT THAT INTEREST INCOME WAS NOT DERIVED FROM BUSINESS. 3. THE GROUNDS RAISED IN ITA NO. 5045/DEL/2012 (AY 2009-10) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE ASS ESSEE DEDUCTION UNDER SECTION 80IB(10) OF THE I.T. ACT, 1 961 ON PROPORTIONATE BASIS. 2. THE APPELLANT CRAVES FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPE AL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE AO MAD E THE ADDITION OF RS. 1170,67,172/- BEING THE COST OF LAND MEASURING 13 .168 ACRES OF RS. 90026636/- AND ED CHARGES OF RS. 40048000/- WHICH W AS DEBITED ENTIRELY. ACCORDING TO THE AO 10% OF THE SAID AMOUN TS ARE TO BE ALLOWED AS EXPENDITURE, SINCE 10% OF THE PROJECT IS COMPLET ED. THE AO MADE THE OBSERVATIONS IN THE ASSESSMENT ORDER AT PAGES 7-8, PARA 8.3 TO 8.5. ON APPEAL FILED BY THE LD. CIT(A) DELETED THE ADDITION IN DISPUTE BY GIVING HIS FINDING IN PARA NO. 9 TO 10.5 AT PAGE 5 TO 6 IN THE IMPUGNED ORDER. AGGRIEVED WITH THE SAME THE REVENUE HAS FILED THE P RESENT APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORDER OF THE AO AND STATED THAT THE AO HAS NOTICED THAT RS. 9,00,26,63 6/- BEING THE COST OF LAND OF 13.168 ACRES AND ED CHARGES OF RS. 4,00,48 ,000/- WERE DEBITED ENTIRELY AND ACCORDING TO HIM 10% OF THE SAID AMOU NT ARE TO BE ALLOWED AS EXPENDITURE SINCE 10% OF THE PROJECT IS COMPLETE D. THEREFORE, THE ORDER OF THE AO IS AS PER LAW AND LD. CIT(A) HAS WR ONGLY DELETED THE ADDITION IN DISPUTE BY OBSERVING THAT THE AO HAS NO T FOUND ANY IRREGULARITY IN THE ACCOUNTING SYSTEM FOLLOWED BY T HE ASSESSEE AND THERE IS NO ESCAPEMENT OF INCOME OR POSTPONEMENT OF THE INCOME. HE ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 4 REQUESTED THAT AO ORDER MAY BE UPHELD AND THE IMPUG NED ORDER ON THE ISSUE MAY BE CANCELLED. 6. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE REL IED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PA SSED THE WELL REASONED ORDER ON THE BASIS OF THE ACCOUNTING SYSTEM FOLLOWE D BY THE ASSESSEE WHICH IS A RECOGNIZED METHOD OF ACCOUNTING AND ACCO UNTING STANDARDS. HE FURTHER STATED THAT THE TITLE, SIZE OF PLOT IS 1 3.168 ACRES. AS PER THE BUILDING PLAN 14 STORIED BUILDING ARE TO BE BUILT W ITHIN A PERIOD OF 4 YEARS OVER THE AREA OF 981850 SQFT. THAT COMES TO 1.626 A CRES. ALL THE BUILDINGS AFTER COMPLETION IS GOING TO COVER ONLY 1 2.38% OF THE TOTAL LAND, REMAINING 87.62% (11.542 ACRES) IS GOING TO BE CONV ERTED INTO THE GIVEN AREA WHICH NO STRUCTURE IS GOING TO BE CREATED. SI NCE, FOUNDATION HAD BEEN DEMARCATED FOR ALL THE BUILDINGS IN THE FINANC IAL YEAR 2006-07, IT IMPLIED THAT THE COMPANY HAD STARTED WORK ON THE WO RKABLE / SANCTIONED AREA IN THE SAID YEAR ITSELF. THE COMPANY IMMEDIA TELY AFTER PURCHASING THE LAND STARTED WORKING ON THE ENTIRE SANCTIONED A REA IN THE YEAR 2006- 07 ITSELF AND OUTSIDE THE ENTIRE VALUE OF LAND TO R EVENUE IN EVERY SAME YEAR BECAUSE MORE THAN 87% OF THE TOTAL AREA HAD BE EN EARMARKED FOR LANDSCAPING AND WOULD NOT BE USED FOR CONSTRUCTIO N PURPOSES. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE TOTAL LAND COMES TO RS. 90026636/- HAS BEEN CHARGED. THE REVENUE ON THE BA SIS OF THE TOTAL ESTIMATED PROJECT COST THAT THE DEVELOPMENT OF LAND AND CONSTRUCTION ARE OF LAND WHICH IS NOT BE ERECTED (87.62%) PASSED ON WHICH THE CERTIFIED CIVIL ENGINEER HAS SHOWN AS APPROXIMATE COMPLETION OF THE PROJECT AT 10%. IN THE CASE THE TOTAL LAND COST IS NOT CONS IDERED THE LEVEL OF APPROXIMATE COMPLETION WOULD BE LESS THAN AS ACTUAL LY BOOKED TO REVENUE (SALES). IN VIEW OF THE AFORESAID CIRCUMSTA NCES, THE LAND COST CHARGED TO REVENUE HAS GOT DIRECT CO-RELATION WITH SALES SHOWN IN THIS REGARD. A CERTIFICATE FROM THE CERTIFIED CIVIL ENG INEER WAS ALSO ATTACHED ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 5 WITH THE PAPER BOOK. AS REGARDS THE EXTERNAL DEVE LOPMENT CHARGES OF ITS DUE DATE FOR PAYMENT DURING THE YEAR UNDER CONS IDERATION WHICH IS TO BE PAID OVER A PERIOD OF 4 YEARS RS. 40048000/- WHI CH HAS BECOME DUE AND HAS BEEN PAID TOWARDS EDC DURING THE YEAR UNDER CONSIDERATION IS CHARGED TO REVENUE ACCORDINGLY. HE HAS ALSO FILED THE PROOF OF THE SAME. AS REGARDS THE LICENSE FEE OF RS. 2,07,57,728/- PAI D DURING THE YEAR UNDER CONSIDERATION FOR THE LIFE OF PROJECT OF 4 YE ARS. HE STATED THAT 1/4 TH OF THE TOTAL AMOUNT PAID IS RS. 5189682/- HAS BEEN CHARGED TO REVENUE DURING THE YEAR UNDER CONSIDERATION. HE ALSO DRA W OUR ATTENTION TOWARDS THE ADVERTISING AND PUBLICITY; CHARGES OF T HE SAMPLE FLAT AND SITE DEVELOPMENT. HE STATED THAT THESE EXPENSES ARE DIR ECT BEARING ON THE PROJECT IN DISPUTE DURING THE YEAR UNDER CONSIDERAT ION AND HE HAS ALSO FILED THE DOCUMENTARY EVIDENCE SUPPORTING ALL THE C ONTENTIONS RAISED BY THE ASSESSEE BEFORE THE AO, LD. CIT(A) AS WELL AS B EFORE US AND LASTLY STATED THAT THE IMPUGNED ORDER PASSED BY THE LD. CI T(A) MAY BE UPHELD BY DISMISSING THE APPEAL FILED BY THE REVENUE. 7. WE HAVE HARD BOTH THE PARTIES AND PERUSED THE RE CORDS. ON THE ISSUE INVOLVED IN GROUND NO. 1 TO 2 REGARDING DISAL LOWANCE OF RS. 11,70,67,177/-, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER ON THE BASIS OF THE DOCUMENTA RY EVIDENCE PRODUCED BY THE ASSESSEE AND ON THE BASIS OF THE WRITTEN SUB MISSIONS FILED BY THE ASSESSEE. WE ARE OF THE VIEW THAT IT IS VERY MUCH R ELEVANT TO REPRODUCE THE FINDING OF THE AO AS WELL AS LD. CIT(A) IN DISP UTE WHICH IS MENTIONED IN THE ASSESSMENT ORDER VIDE PARA NO. 8.3 TO 8.5 AT PAGE NOS. 7 & 8 AND MENTIONED VIDE PARA NO. 9 TO 10.5 AT PAGES 5 & 6 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). THESE FINDINGS OF THE AO AS WELL AS LD. CIT(A) ARE REPRODUCED HEREUNDER:- AOS FINDING 8.3 THEREFORE, IN ACCORDANCE TO THE APPLICABLE ACCOUNTING PRACTICES, THE ASSESSEE HAS ITSELF CREDI TED INCOME OF RS. 17.28 CRORES IN THE P&L A/C. IN THIS YEAR, ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 6 AND IN THIS REGARD THE ASSESSEE IN ITS REPLY DATED 1.12.2009 HAS STATED THAT: WORK CERTIFIED / SALES IS BOOKED 210% OF THE TOTA L VALUE OF THE PROJECT (I.E. 10% OF RS. 172 CRORES). HERE, 10% REPRESENTS PERCENTAGE OF COMPLETION OF THE PROJECT DURING THE YEAR 2006-07. THIS ELIGIBLE PROJECT WAS CERTIFIED BY A QUALIFIED CIVIL ENGINEE R ON THE BASIS OF THE EXTENT OF THE ADVANCEMENT OF THE PROJECT AS ON 31 ST MARCH, 2007. IN VIEW OF ABOVE, SINCE THE WORK CERTIFIED BY ENGIN EER IS 10% OF THE TOTAL VALUE OF THE PROJECT, HENCE, THE C OST OF LAND AND EDC CHARGED TO THE P&L A/C SHOULD ALSO TO BE RESTRICTED TO 10% ONLY INSTEAD OF CHARGING FULL COS T TO P&L A/C. MOREOVER THE COST OF LAND USED FOR LANDSCA PING / GREEN AREA IS ALSO BE THE PART OF SALE PRICE OF T HE FLATS. HENCE, RECOVERED FROM THE CUSTOMERS AND NEEDS TO BE ACCOUNTED FOR. 8.4 THE OTHER CONTENTION OF THE ASSESSEE THAT IN C ASE THE TOTAL LAND COST IS NOT CONSIDERED THE LEVEL OF APPROXIMATE COMPLETION WOULD BE LESS THAN AS ACTUAL LY BOOKED TO REVENUE (SALES) IS NOT ACCEPTABLE AS THE ASSESSEE HAS ALREADY INCURRED THE COST OF LAND AND EDC CHARGES THEREFORE THE AMOUNT PAID IS REQUIRED TO BE INCLUDED ONLY FOR CALCULATION OF PERCENTAGE OF COMP LETION AS PER POCM (PERCENTAGE OF COMPLETION METHOD) BUT I S NOT ALLOWED TO CHARGE 100% OF LAND COST & EDC IN TH IS YEAR, I.E. IN ONE YEAR ONLY. 8.5 THEREFORE, THE CONTENTION OF THE ASSESSEE IN VI EW O FTHE ABOVE STATED REASONS IS REJECTED. AND AN ADDI TION OF RS. 11,70,67,172 [90% OF RS. 13,00,74,636 (SUM O F COST OF LAND RS. 90026636 AND EDC CHARGES OF RS. ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 7 40048000/-) IS MADE TO THE INCOME OF THE ASSESSEE . FURTHER AS I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS WITH REGARD TO THE ABOVE CLAIM. THEREFORE, PENALTY PROCEEDINGS UNDER SECTION 271(1) OF THE INCOME TAX ACT ARE INITIATED SEPARATELY. LD. CIT(A)S FINDING 9. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE DETAILED WRITTEN SUBMISSIONS FILED BY THE AR IN THI S REGARD. 10.1 THE MAIN CONTENTION OF THE AR IS THAT RS. 17. 2 CRORES (LOADED WITH PROFIT) WHICH WAS RECOGNIZED AS INCOME (SINCE 10% OF PROJECT WAS COMPLETED AS CERTI FIED BY THE ENGINEER) INCLUDED THE COST OF THE LAND, EDC AND THE OTHER EXPENSES INCURRED UNDER THE OTHER HEADS. THE ASSESSEE FOLLOWED THE PROJECT COMPLETION METHOD FOR RECOGNIZING THE REVENUE. THE AR FURTHER STATED THAT THE PRINCIPLE OF MATCHING OF EXPENDITURE AND REVENUE WA S FOLLOWED WHILE RECOGNIZING THE INCOME. 10.2 IT IS SEEN THAT DURING THE YEAR THE EXPENDITUR E OF RS. 15,42,82,890.60/- (WHICH INCLUDED LAND COST OF RS. 9,00,26,636/- AND EDC CHARGES OF RS. 4,00,48,000/-) WAS WRITTEN OFF TO THE P & L ACCOUNT. 10.3 IF THE CONTENTION OF THE AO IS ACCEPTED ONLY 1 0% OF LAND COST I.E. RS. 90,02,663/- AND 10% OF EDC I.E. RS. 40,04,800/- ARE TO BE CHARGED TO THE P & L ACCOUNT. 10.4 THE REMAINING 90% OF THE LAND COST AND ED CHARGES BEING RS.11,70,67,172/- SHOULD GO AS WORK I N PROGRESS. IT IS FURTHER SEEN THERE IS NO POSSIBILIT Y OF REVENUE ARISING FROM THE AREA EAR MARKED AS GREEN A REA ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 8 SINCE NO CONSTRUCTION IS POSSIBLE. ALL THESE FACTS WERE CONSIDERED WHILE WORKING OUT THE COST OF THE PROJEC T BY THE ASSESSEE. 10.5 AFTER GOING THROUGH THE FACTS BROUGHT ON RECOR D THERE IS NO IRREGULARITY IN THE ACCOUNTING SYSTEM FOLLOWE D BY THE ASSESSEE AND THERE IS NO ESCAPEMENT OF INCOME O R POSTPONEMENT OF INCOME. IF THE CONTENTION OF THE AO IS ACCEPTED THE REVENUE TO BE RECOGNIZED IS LESSER THA N RS. 17.2 CRORES AS RECOGNIZED BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, THE METHOD FOLLOWE D BY THE ASSESSEE IS IN ACCORDANCE WITH THE RECOGNIZED METHOD OF ACCOUNTING AND ACCOUNTING STANDARDS. ACCORDINGLY, ADDITIONS OF RS. 8,10,23,972/- (BEING 90% OF LAND COST) & RS. 3,60,43,200/- (BEING 90% OF EDC) A RE HEREBY DELETED. 8. FROM THE ABOVE WE FIND THAT THERE IS NO IRREGULA RITY IN THE ACCOUNTING SYSTEM FOLLOWED BY THE ASSESSEE AND THER E IS NO ESCAPEMENT OF INCOME OR POSTPONEMENT OF INCOME. IF THE CONTENT ION OF THE AO IS ACCEPTED THE REVENUE TO BE RECOGNIZED IS LESSER THA N RS. 17.2 CRORES AS RECOGNIZED BY THE ASSESSEE. THEREFORE, IN VIEW OF T HE ABOVE, THE METHOD FOLLOWED BY THE ASSESSEE IS IN ACCORDANCE WITH THE RECOGNIZED METHOD OF ACCOUNTING AND ACCOUNTING STANDARDS. HENCE, THE AD DITION IN DISPUTE WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES N OT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, THE SAME IS U PHELD AND ACCORDINGLY, THE GROUND NO. 1 AND 2 RAISED BY THE REVENUE STAN D DISMISSED. 9. AS REGARDS GROUND NO. 3 LD. COUNSEL OF THE ASSE SSEE STATED THAT SIMILAR ISSUE INVOLVED IN GROUND NO. 3 HAS ALREADY BEEN ADJUDICATED AND DECIDED BY THE ITAT SPECIAL BENCH, PUNE REPORTED IN 119 ITD 255 IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT. LD. COUNSEL OF THE ASSESSEE TO SUPPORT THE IMPUGNED ORDER INVOLVED IN GROUND NO. 3 IS ALSO RELIED UPON ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 9 THE VARIOUS CASE LAWS MENTIONED IN THE CIT(A)S ORD ER IN PARA NO. 18.2 AT PAGE. 9. 9.1 LD. DR RELIED UPON THE ORDER PASSED BY THE AO. 10. AFTER HEARING BOTH THE PARTIES ON THE ISSUE I NVOLVED IN GROUND NO. 2 REGARDING ALLOWING THE DEDUCTION OF RS. 1,46,57,4 05/- U/S. 80IB OF THE I.T. ACT, 1961 BY THE LD. CIT(A) BY HOLDING THAT TH E ASSESSEE IS ELIGIBLE FOR PROPORTIONATE DEDUCTION U/S. 80IB(10) IN RESPECT OF THE PROPERTIES WHICH REPRESENT THE PROFITS FROM ELIGIBLE RESIDENTIAL UN IT. BY RESPECTFULLY FOLLOWING THE ORDER OF THE SPECIAL BENCH, ITAT, PUN E (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT IT IS VERY MUCH RELEVANT TO REPRODUCE THE RELEVANT PORTION OF THE IMPUGNED ORDER ADJUDICATIN G THE ISSUE IN DISPUTE VIDE PARA NOS. 20 TO 23 AND PAGES 10 TO 11 WHICH AR E REPRODUCED HEREUNDER:- 20. THE ONLY CONTENTION OF THE AO IS THAT THERE IS NO CASE FOR PROPORTIONATE DEDUCTION ON THE REASONING THAT THE P ROVISIONS DO NOT CONFER SUCH METHOD OF PROPORTIONATE CALCULAT ION AND DEDUCTION. THERE IS NO DISPUTE WITH REGARD TO 81% O F FLATS SATISFYING THE REQUIREMENT OF BUILT UP AREA 1000 SQ FT OR LESS FOR WHICH DEDUCTION U/S 80IB(10) IS APPLICABLE IN T HIS CASE. 21. THE HON'BLE ITAT (PUNE) (SPECIAL BENCH) IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT, 122 TTJ 433 RECOGNIZED THE PRINCIPLE OF PROPORTIONATE DEDUCTION IN RESPECT OF PROFIT DERIVED FROM ELIGIBLE RESIDENTIAL UNITS SATISFYING THE PRESCRIBED CONDITIONS ON STANDALONE BASIS. 22. THE OBSERVATIONS OF HON'BLE ITAT, PUNE (SPECIAL BENCH) IN THIS REGARD ARE AS UNDER: '130. TO SUM UP, THE CONCLUSIONS ARRIVED AT BY THIS SPECIAL BENCH ARE AS FOLLOWS: (A) THE DEDUCTION UNDER S. 80IB( W), AS APPLICABLE PRIOR TO 1 ST APRIL, 2005, SUBJECT TO AND IN THE LIGHT OF THE ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 10 OBSERVATION MADE IN THE PRECEDING PARAS, IS ADMISSI BLE IN CASE OF A 'HOUSING PROJECT' COMPRISING RESIDENTI AL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. IN CAS E THESE PROJECTS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY, SUCH AN APPROVAL AS HOUSING PROJEC T IS SUFFICIENT FOR THE PURPOSES OF ELIGIBILITY. IN ANY OTHER CASE, WHERE 90 PERCENT OR MORE OF THE TOTAL BUILT-U P AREA IS USED FOR DWELLING UNITS, IN ACCORDANCE WITH THE SCHEME OF S. 80IB( I0), THE BENEFIT OF DEDUCTION UN DER S. 80IB(10) WILL NOT BE DECLINED. IN CASE COMMERCIAL U SE OF BUILT-UP AREA IS MORE THAN 10 PER CENT BUT THE RESIDENTIAL SEGMENT OF THE PROJECT SATISFIES REQUIR EMENTS OF S. 80B (IO)ON STANDALONE BASIS. I.E (I) THE SIZE OF THE PLOT, EXCLUDING PORTION UNDER COMMERCIAL UNIT, IS M ORE THAN MINIMUM AREA OF ONE ACRE, (II) RESIDENTIAL UNI TS BUILT ON SUCH AREA MUST SATISFY CONDITION OF CL. (C ) OF THE PROVISION, AND (III) OTHER NECESSARY CONDITIONS ARE FULFILLED, AND WHERE INCOME FROM CONSTRUCTION OF RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT ON STANDALONE BASIS, DEDUCTION UNDER S. 80IB( 10) WILL BE AVAILABLE IN RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. (B) THE DEDUCTION UNDER S. 80IB(10)IS AVAILABLE IN RESPECT OF PROFITS OF HOUSING PROJECT AS A WHOLE, A ND, AS SUCH; IT IS NOT RELEVANT AS TO WHAT IS THE PORTION OF PROFIT WHICH CAN BE SAID TO BE ATTRIBUTABLE TO RESIDENTIAL UNITS. THIS IS SUBJECT TO THE RIDER THAT IN CASE COMMERCIA L USE OF BUILT-UP AREA IN A PROJECT IS MORE THAN 10 PER C ENT AND; FOR THIS REASON THE PROJECT CANNOT BE SAID TO BE A PREDOMINANTLY HOUSING PROJECT, BUT, IN TERMS OF OBSERVATIONS MADE IN PARA 115 ABOVE, THE ASSESSEE I S ENTITLED TO DEDUCTION IN RESPECT OF RESIDENTIAL UNI T ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 11 SEGMENT OF THE OVERALL PROJECT ON FULFILLMENT OF NE CESSARY CONDITIONS, THE ENTITLEMENT OF INCENTIVE DEDUCTION WILL BE CONFINED TO ONLY TO THE PROFITS TO THE RESIDENTIAL SEGMENT OF THE OVERALL PROJECT.' 23. AFTER APPLYING THE RATIO LAID DOWN IN THE CASES REFERRED ABOVE, THE ASSESSEE IS ELIGIBLE FOR PROPORTIONATE D EDUCTION U / S 80IB( 10) IN RESPECT OF THE 81% OF THE PROFITS WH ICH REPRESENT THE PROFITS FROM ELIGIBLE RESIDENTIAL UNITS. 10.1 AFTER GOING THROUGH THE FINDINGS OF THE IMP UGNED ORDER ON THE ISSUE INVOLVED IN GROUND NO. 3 REGARDING THE DEDUCT ION OF RS. 1,46,57,405/- U/S. 80IB OF THE ACT, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY ALLOWED THE DEDUCTION U/S. 80IB OF THE ACT TO THE ASSESSEE BY RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT SPECIA L BENCH, PUNE REPORTED IN 119 ITD 255 IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT. (SUPRA) AND VARIOUS OTHER CASES MENTIONED IN THE IMPUGNED ORDER . RESPECTFULLY FOLLOWING THE SPECIAL BENCH DECISION IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT. (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO . 3 RAISED BY THE REVENUE. 11. AS REGARDS GROUND NO. 4 RELATING TO DISALLOWA NCE OF DEDUCTION U/S. 80IB(10) IN RESPECT OF INTEREST INCOME OF RS. 8,87, 967/- IS CONCERNED, LD. DR HAS NOT ARGUED THE ISSUED INVOLVED IN GROUND NO. 4 BECAUSE IT DOES ARISE FROM THE IMPUGNED ORDER, THEREFORE, TH E SAME IS DISMISSED AS SUCH. 12. AS REGARDS ITA NO. 5045/DEL/2012 (AY 2009-10) R ELATING TO ISSUE OF ALLOWING THE ASSESSEE DEDUCTION U/S. 80IB(10) OF T HE I.T. ACT, ON PROPORTIONATE BASIS IS CONCERNED, SINCE WE HAVE ALR EADY DECIDED THE SIMILAR ISSUE WHILE DEALING WITH ITA NO. 2325/DEL/2 010 (AY 2007-08) VIDE PARA NO. 10 TO 10.1 AS AFORESAID, IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE AND UPHELD THE DECISION OF THE LD. CIT(A) OF ALLOWING ITA NOS. 2325/DEL/2010 & 5045/DEL/2012 12 THE DEDUCTION U/S. 80IB(10). FOLLOWING THE CONSISTE NT VIEW THEREIN, WE UPHOLD THE LD. CIT(A) ORDER AND DECIDE THE ISSUE AG AINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE AND DISMISS THE APPEA L OF THE REVENUE. 13. IN THE RESULT, BOTH THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/02/2016. SD/- SD/- (O.P. KANT) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 18/02/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR