Amardeep Enterprse, Baroda V. The Income tax Officer,Ward-3(1), Baroda

ITA 550/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0108 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 14-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU S JHA
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Opportunity of being heard; Initiation of penalty proceedings; Competent authority; Set aside
• Section: 80IB; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.550-551/AHD/2008 ASSESSMENT YEARS :2003-04 & 2004-05 DATE OF HEARING:27.7.10 DRAFTED:27.8.10 AMARDEEP ENTERPRISE, MADHURAM FARM, NEAR ABHINAV PARK, SAMA ROAD, BARODA-390 002 PAN NO.AFFA8110G V/S . INCOME TAX OFFICER, WARD-3(1), BARODA (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S.N.SOPARKAR, SR-AR REVENUE BY:- SHRI SUDHANSHU S JHA, DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, BARODA IN APPEAL NOS.CAB/II-87 & 598/06- 07 DATED 22-01-2008. THE ASSESSMENTS WERE FRAMED BY ITO WARD-3(1), BARODA U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HER ORDER DATED 23-03-2006 AND 08-12-2006 FOR ASSESSMEN T YEARS 2003-04 AND 2004-05 RESPECTIVELY. 2. SINCE THESE TWO APPEALS CONTAINS COMMON ISSUE EX CEPT AMOUNT, HENCE, THESE ARE CLUBBED TOGETHER, HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY AND ARE BEING DECIDED BY CONSOLIDATED ORDER. THE GR OUNDS RAISED IN THESE APPEALS ARE COMMON AND FACTS ARE EXACTLY IDENTICAL. WE WILL TAKE THE GROUNDS RAISED IN ITA ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 2 NO.550/AHD/2008 AS REGARDS TO THE CLAIM OF THE ASSESSEE OF DEDUCTIO N U/S.80IB(10) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED GROUNDS :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II , BARODA HAS ERRED IN LAW AND IN ACTS IN CONFIRMING THE ACTION OF THE LD. A.O. IN REJECTING THE CLAIM OF THE APPELLANT WITH RESPECT TO CLAIM OF DEDUCTION U/ S.80IB(10) AMOUNTING TO RS.62,98,530/- BEING IN ACCORDANCE WITH LAW MY PLEA SE BE ALLOWED. 2. THE LD. CIT(A)-II, BARODA HAS ERRED IN LAW AND I N FACTS IN IGNORING THE FACT THAT THE HOUSING PROJECT DEVELOPED BY THE APPELLANT WAS APPROVED BY THE LOCAL AUTHORITY AS A RESIDENTIAL HOUSING PROJECT AND, THE REFORE, THE CLAIM OF THE APPELLANT WAS TO BE ALLOWED. IT MAY PLEASE BE HELD THAT THE PROJECT DEVELOPED BY THE APPELLANT BEING A HOUSING PROJECT IS ELIGIBL E FOR DEDUCTION U/S.80IB(10). 3. THE BRIEF FACTS ARE THAT ASSESSEE HAS CLAIMED DE DUCTION U/S 80IB(10) OF THE ACT @ RS.65,26,370/- WHICH IS 100% OF PROFIT ON RES IDENTIAL UNITS OF THE PROJECT AS PER THE WORKING OF THE ASSESSEE. THE CLAIM OF EXEMPTION U/S.80IB(10) OF THE ACT WAS RE- WORKED OUT TO REWORKED OUT TO RS.62,98,530/- ON THE BASIS OF REWORKING OF THE PROFIT FROM SALE OF SHOPS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OTHER DETAILS OF THE PROJECT SUCH AS DEVELOPMENT AGREEMENT, DEVELOPMENT PERMISSION FROM THE LOCAL AUTHORITY, APPROVED PLAN, BASIS FOR CALCULATION OF THE WIP COMPLETION CERTIFICATE ETC. HAVE ALSO BEEN CALLED BY THE ASSESSING OFFICER AND HE NOTED THAT THE LAND ON WHICH THE PROJECT IS SITUATED IS OWNED BY SHRI SANJAY PAT EL, SMT. VEENA PATEL, SHRI JASHWANTKUMAR K PATEL AND SHRI JASHBHAI R PATEL AND THE FIRM ENTERED INTO A DEVELOPMENT AGREEMENT WITH THESE LANDOWNERS ON 31-0 3-2000. THE APPROVAL OF THE LOCAL AUTHORITY WAS OBTAINED VIDE PERMISSION NO. VU DA/PERMISSION/5/32/2000 DATED 31-03-2000 WHICH IS ISSUED IN THE NAME OF ORIGINAL LAND OWNERS. AS PER THE SAID DEVELOPMENT PERMISSION, THE PROJECT IS TO CONSTRUCT TWELVE SHOPS, TWENTY SEVEN DUPLEXES/TENEMENT AND THIRTY FOUR FLATS. FINALLY, T HE ASSESSING OFFICER HELD THAT THE ASSESSEE-FIRM HAS NOT COMPLIED WITH THE CONDITION L AID DOWN AS PER THE SECTION 80IB(10) OF THE ACT SUCH AS OBTAINING THE APPROVAL OF THE LOCAL AUTHORITY AND COMPLYING WITH THE RESTRICTION OF BUILD-UP AREA OF COMMERCIAL AREA OF THE PROJECT, DISALLOWED THE CLAIM OF DEDUCTION VIDE PARA-4.6 AND 4.7 OF THE ASSESSMENT ORDER. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY FOLLOWING THE DE CISION OF MUMBAI TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS V. DCIT (2007) 105 ITD 657 (MUM). AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE US. ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 3 4. LD. SR-COUNSEL FOR THE ASSESSEE, SHRI S.N.SOPARK AR STATED THAT THE CIT(A) HAS NOT CONSIDERED THE FOLLOWING CASE LAWS:- I) HARSHAD P DOSHI V. ACIT 109 TTJ 335 II) ARUN EXCELLO FOUNDATION PVT. LTD. V. ACIT 108 T TJ 71 (CHENNAI) III) ACIT V. BENGAL AMBUJA HOUSING DEV. LTD. ITA NO.1735/KOL/2005 (KOL) IV) BRAHMA ASSOCIATES VS. JT. CIT (2009) 119 ITD 2 55 (PUNE)(SB) THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SI MILAR ISSUE HAS BEEN ARGUED BEFORE THIS TRIBUNAL B IN THE CASE OF M/S RAJ DEVELOPERS V. ITO BARODA WHEREIN ONE OF US, J.M IS PARTY, AND FURTHER STATED THAT THE FACTS ARE EXACTLY IDENTICAL AND WHERE IT WAS INDICA TED THAT THE ISSUE IS BEING SET ASIDE TO THE FILE OF THE ASSESSING OFFICE R FOR FRESH ADJUDICATION IN VIEW OF THE ABOVE DECISIONS CITED B Y LD. COUNSEL FOR THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE REQUESTED FO R SETTING ASIDE OF THE ISSUE ON SIMILAR LINES. THE LD. SR-DR HAS NOT O BJECTED TO THE PROPOSAL. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE T RIBUNAL IN THE CASE OF M/S. RAJ DEVELOPERS (SUPRA) HAS SET ASIDE THIS ISSUE IN TERMS AS UNDE R:- 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. WE FIND THAT THE AO DISALLOWED THE CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT IN THESE TWO ASSESSMENT YEARS ON THE GROUND THAT THE A SSESSEE WAS NOT THE OWNER OF THE LAND ON WHICH CONSTRUCTION ACTIVITIES WERE CARRIED OUT WHILE THE APPROVAL OF THE HOUSING PROJECT ISSUED BY THE COMPETENT AUTHORITY WAS IN THE NAME OF OTHER PERSONS I.E SANJEEV DIGMBAR BHARMBHE P.A OF FABHSINH MANGALSINH DODIA & AARTIBEN FATEHSINH DODIA AND THAT THE LAND OWNERS SOLD PIECES OF LAND TO THE UNIT HOLDERS DIRECTLY AND ASS ESSEE ACTED MERELY AS CONFIRMING PARTY AND A CONTRACTOR FOR THE PROJECT AND NEVER SOLD THE HOUSES TO THE UNIT HOLDERS AS THERE WAS NO REGISTERED DOCUMENT IN RESPECT THEREOF. THE LD. CIT (A) DID NOT ACCEPT THESE FINDINGS OF THE AO, RELYING ON THE DEC ISION OF THE ITAT IN THE CASE OF RADHE DEVELOPERS(SUPRA). THE RE VENUE HAVE NOT DISPUTED BEFORE US THESE FINDINGS OF THE L D. CIT(A) NOR APPEARS TO HAVE FILED ANY APPEAL ON THESE ISSUES. I N ANY CASE, THE LD. CIT(A) WHILE RELYING ON THE DECISION OF T HE MUMBAI TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS VS. DCIT (MUM) 108 TT J 364 UPHELD THE ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 4 DISALLOWANCE IN THE AY 2004-05 ON THE GROUND THAT THE ASSESSEE'S PROJECT WAS NOT APPROVED AS HOUSING PRO JECT WITHIN THE MEANING OF PROVISIONS OF SEC. 80IB(10) OF THE ACT AND INSTEAD WAS APPROVED AS RESIDENTIAL-CUM-COMMERCIAL PROJECT. APPARENTLY, THE LD. CIT(A) WENT BY THE NOMENCLATURE OF THE PROJECT AS CLASSIFIED BY THE AP PROVING AUTHORITY . UNDISPUTEDLY, THE COMMERCIAL CONSTRUCTION WAS CARRI ED OUT BY THE ASSESSEE TO THE EXTENT OF 549.36 SQ. MT. BEFORE PROCEEDING F URTHER, WE MAY HAVE A LOOK AT THE RELEVANT PROVISIONS APPLICABLE IN THE C ASE. THE PROVISIONS RELATING TO THE BENEFIT OF DEDUCTION OF PROFITS DERIVED BY A N UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS WERE FIRST INTRODUCE D BY THE FINANCE ACT, 1998 W.E.F. 1-4-99 IN SUB-SECTION (4F) TO SEC.80IA OF TH E ACT, WHICH READ AS UNDER: THIS SECTION APPLIES TO AN UNDERTAKING ENGAGED IN DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL AUTHO RITY SUBJECT TO THE CONDITION THAT THE SIZE OF A PLOT OF LAND HAS A MIN IMUM AREA OF ONE ACRE AND THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A NOT EXCEEDING ONE THOUSAND SQUARE FEET; PROVIDED THAT THE UNDERTAKING SUCH UNDERTAKING COMM ENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJEC T ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES THE SAME BEFORE 31 ST DAY OF MARCH, 2001; 7.1 . FINANCE ACT, 1999 W.E.F. 1-4-2000 CONFERRE D THE BENEFIT OF THE AFORESAID DEDUCTION IN TERMS OF THE FOLLOWING PRO VISIONS OF SEC.80-IB(10) OF THE ACT: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL A UTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES THE SAME BEFORE 31ST T DAY OF MARCH, 2003; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OT HER PLACE; 7.2. IN THE FINANCE ACT, 2000 W.E.F.1-4-2001, THE WORDS BEFORE 31ST DAY OF MARCH, 2001 WERE INSERTED AFTER THE WORDS HOUSING PROJECT APPROVED. THUS ALL CONDITIONS FOR GRANT OF DEDUCTION REMAINED THE SAME EXCEPT THAT THE APPROVAL OF LOCAL AUTHORITY FOR THE DEVELOPMENT HAS TO BE OBTAINED BEFORE 31ST DAY OF MARCH, 2001. ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 5 7.3 FOR THE AY 02-03, THE LAW APPLICABLE WAS THA T THE CONDITION REGARDING COMPLETION OF THE PROJECT BEFORE 31ST MARCH, 2003 W AS DISPENSED WITH. 7.4. FOR THE AY 03-04 AND 04-05, ALL THE CONDITIO NS REMAINED THE SAME EXCEPT THE CONDITION REGARDING APPROVAL OF THE PROJ ECT BY THE LOCAL AUTHORITY WAS STIPULATED TO BE BEFORE 31ST DAY OF MARCH, 2005 WHILE THE PERIOD OF COMPLETION OF THE CONSTRUCTION ON OR BEFORE 31ST MA RCH, 2003 WAS DISPENSED WITH AND THERE WAS NO TIME LIMIT GIVEN FOR COMPLETI ON OF THE CONSTRUCTION. 7.5. BY THE FINANCE ACT, 2004 W.E.F. 1.4.2005,CLAU SE (D) TO SECTION 80IB(10) WAS INTRODUCED, WHICH PROVIDED THAT BUILT UP AREA O F SHOPS OR OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED 5% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PR OJECT OR 2000 SQ.FT., WHICHEVER IS LESS. THUS, THE RELEVANT PROVISIONS OF SEC. 80IB(10) APPLICABLE IN THESE TWO ASSESSMENT YEARS READ AS UNDER: THE PROVISIONS AS ON 1.4.2004 80IB (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKIN G DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2005; BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,--- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE. EXPLANATION.-FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY T O ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTR ACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNME NT). THE PROVISIONS AS ON 1.4.2005 80IB(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRE D PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO AN Y ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 6 (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SH ALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH T HE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANC E WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF E XISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWEN TY-FIVE KILOM- ETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; AN D (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS L ESS. EXPLANATION.-FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY TO ANY ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 7 UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CON- TRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 7.6.1 AS IS APPARENT FROM A BARE PERUSAL OF THE AFO RESAID PROVISIONS, THE CLAUSE (D) RELATING TO INCLUSION OF SHOPS AND OTH ER COMMERCIAL ESTABLISHMENTS IN A HOUSING PROJECT DID NOT EXIST P RIOR TO 1.4.2005 AND IT IS NOT IN DISPUTE BEFORE US THAT THE SAID CLAUSE IS PROSPECTIVE IN OPERATION, AS HELD BY THE LD. CIT(A) AS ALSO IN TH E CASE OF BRAHMA ASSOCIATES VS. JT. CIT (2009) 119 ITD 255 (PUNE)(SB ) AND ARUN EXCELLO FOUNDATIONS (P) LTD. VS. ACIT, CIRCLE-1(1), CHENNAI, 108 TTJ (MAD) 71. THE ONLY DISPUTE BEFORE US IS AS TO WHET HER THE EXPRESSION HOUSING PROJECTS INCLUDES RESIDENTIAL CUM COMMER CIAL PROJECTS AND WHETHER THE CLAUSE (D) OF SEC. 80IB(10) OF THE AC T IS APPLICABLE IN THE AY 2005-06 FOR THE PROJECTS ALREADY APPROVED BY THE COMPETENT AUTHORITY IN THE PRECEDING YEARS AND/OR ENJOYING T HE BENEFITS OF THE SAID DEDUCTION ON FULFILLING THE CONDITIONS STIPULA TED IN THE EXTANT PROVISIONS OF SEC. 80IB(10) OF THE ACT . THE LD. C IT(A) DISALLOWED THE CLAIM FOR DEDUCTION IN THESE TWO ASSESSMENT YEARS ON THE GROUND THAT PROJECT IN QUESTION WAS APPROVED AS A RESIDENTIAL C UM HOUSING PROJECT AND NOT AS A HOUSING PROJECT AND THEREFORE ,IN TE RMS OF DECISION OF THE ITAT IN THE CASE OF LAUKIK DEVELOPERS VS. DCIT,108 TTJ 364(MUM.), THE ASSESSEE WAS NOT ELIGIBLE FOR THE SAID DEDUCTIO N. THIS DECISION WAS CONSIDERED BY THE SPECIAL BENCH IN BRAHMA ASSOCIATE S (SUPRA). BEFORE ADVERTING TO THE DECISIONS RELIED UPON BY TH E LD. CIT(A) OR THE LD. AR, WE MAY POINT OUT THAT THE EXPRESSION HOUSING PROJECTS HAS NOT BEEN DEFINED IN SECTION 80IB OF THE ACT. HOWEVER, I N SECTION 80HHBA, WHICH PROVIDES FOR A DEDUCTION IN RESPECT OF PROFIT S AND GAINS DERIVED FROM THE EXECUTION OF THE HOUSING PROJECT WHICH ARE AWARDED ON THE BASIS OF GLOBAL TENDER AND ALSO AIDED BY THE WORLD BANK, THE EXPRESSION 'HOUSING PROJECT' BY WAY OF EXPLANATION HAS BEEN DEFINED TO MEAN A PROJECT FOR THE CONSTRUCTION OF ANY BUILDING , ROAD, BRIDGE OR OTHER STRUCTURE IN ANY PART OF INDIA; AND THE EXECU TION OF SUCH OTHER WORK (OF WHATEVER NATURE) AS MAY BE PRESCRIBED. THU S, THE CONCEPT OF HOUSING PROJECT IN SECTION 80HHBA IS VERY WIDE. THE CONCISE OXFORD DICTIONARY, SIXTH EDITION, GIVES ITS MEANING IN NOU N FORM AS A PLAN, SCHEME, PLANNED UNDERTAKING. AS PER CHAMBERS TWEN TIETH CENTURY DICTIONARY (REVISED EDITION) PROJECT MEANS A SCHEM E OF SOMETHING TO BE DONE; A PROPOSAL FOR AN UNDERTAKING; AN UNDERTAK ING. THESE DEFINITIONS INDICATE THAT A PROJECT MUST BE A PLANN ED AFFAIR OR A SCHEME OF SOMETHING UNDERTAKEN TO BE DONE. SINCE A HOUSING PROJECT IS REQUIRED TO BE APPROVED BY A LOCAL AUTHORITY, IT WO ULD BE FAIR TO CONSTRUE THAT THE SCHEME OR PLAN OF THE HOUSING PROJECT MUST BE IN KEEPING WITH SCHEMES LAID DOWN BY THE APPROVING LOCAL AUTHORITY. IF THERE ARE CONVENIENCE SHOPS OR COMMERCIAL AREA BUILT UP BY T HE ASSESSEE WITHIN THE PROJECT, CAN THE PROJECT BE STILL CONSIDERE D AS HOUSING PROJECT WITHIN THE MEANING OF PROVISIONS OF SEC. 80IB(10) O F THE ACT. THE CBDT VIDE CIRCULAR F. NO. 205/3/2000/ITA II DATED 4-5-20 01 IN REPLY TO A QUERY POSED BY THE MAHARASHTRA CHAMBER OF HOUSING I NDUSTRY CLARIFIED THAT ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 8 AS HOUSING PROJECT SHOULD BE CONSIDERED AS ADEQUATE FOR PURPOSE OF SECTION 80IB(10). IN THEIR INSTRUCTION DATED 30.6.2009, THE CBDT ALS O CLARIFIED THAT THE DEDUCTION CAN BE CLAIMED ON A YE AR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL C OMPLETION OF THE PROJECT IN EVERY YEAR. IN SAROJ SALES ORGANIZATION VS. ITO 115 TTJ 485 (MUM), THE ITAT FOUND THAT THERE WERE TWO PROJECTS BEING CONSTRUCTED BY NAME NISARG AND BREEZY CORNER. FOR THE AY 05-06, THE ASSESSEE IN THE SAID CASE CLAIMED DEDUCTION U/S.80-IB(10) OF TH E ACT ON THE PROFITS OF NISARG PROJECT. THE AO TREATED BOTH THE PROJECTS AS ONE PROJECT AND FOUND THAT IN THE PROJECT BREEZY CORNER THE BUILT U P AREA OF SOME OF FLATS WAS MORE THAN 1000 SQ.FT. AND HE, THEREFORE, HELD T HAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S.80-IB(10) OF THE ACT. ANOTHER REASON GIVEN BY THE AO FOR DISALLOWING THE CLAIM WAS THAT THE SHOPPING AREA OF NISARG PROJECT WAS 7.60% OF THE TOTAL BUILT UP AREA OF THE SAID PROJECT. THE AO RELIED ON THE CLAUSE (D) INTRODUCED IN THE A MENDED PROVISIONS OF SEC.80-IB(10) OF THE ACT W.E.F. 1-4-05 AND REJE CTED THE CLAIM. THE TRIBUNAL ON THE SECOND ISSUE HELD THAT THE HOUSING PROJECT NISARG WAS APPROVED BEFORE 31ST MARCH, 2005 AND WHEN APPROVAL WAS OBTAINED THERE WAS NO SUCH STIPULATION REGARDING THE SHOPPIN G COMPLEX AREA OR COMMERCIAL SPACE IN THE PROJECT. THE AMENDMENT HAVI NG BEEN MADE SUBSEQUENTLY WHILE EXTENDING THE DEDUCTION OF INCOM E FROM HOUSING PROJECT APPROVED UPTO 31ST MARCH, 2007, THE ITAT CO NCLUDED THAT ON THIS GROUND DEDUCTION U/S.80IB(10) OF THE ACT CANN OT BE DENIED . 7.7 NOW ADVERTING TO THE DECISIONS RELIED UPON B Y BOTH THE SIDES, AS ALREADY STATED, THE LD. CIT(A) UPHELD THE DISALLOWANCE OF C LAIM ,RELYING INTER ALIA, ON THE DECISION OF THE ITAT IN THE CASE OF LAUKIK DEV ELOPERS(SUPRA), WHICH HAS NOT BEEN APPROVED BY THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES(SUPRA). THE LD. CIT(A) THOUGH ACCEPTED THE CONTENTION ON BEHALF OF THE ASSESSEE THAT CLAUSE (D) INTRODUCED BY THE FINANCE ACT,2004 W.E.F. 1.4.2005 WAS PROSPECTIVE IN OPERATION, HE INFERRED IN THE AY 2005-06 THAT THE SAID CLAUSE WAS APPLICABLE EVEN TO THE PROJECTS ALR EADY APPROVED BY THE COMPETENT AUTHORITY IN THE PRECEDING YEARS. AS REG ARDS COMMERCIAL AREA BUILT UP INCLUDED IN THE HOUSING PROJECT, THE ITAT CHENN AI BENCH IN THE CASE OF ARUN EXCELLO FOUNDATIONS (P) LTD.(SUPRA) CONCLUDED THAT THE FORESAID CLAUSE (D) BROUGHT IN THE STATUTE BOOK WI TH EFFECT FROM 1- 4-2005 BY THE FINANCE (NO.2) ACT, 2004 WAS PROSPEC TIVE IN OPERATION. AS REGARDS THE OTHER ISSUE OF COMMERCIAL SPACE BUILT UP IN THE HOUSING PROJECT, THE ITAT WHILE ACCEPTING THE ALTERNATIVE PLEA ON BEHALF OF THE ASSESSEE DIRECTED THE AO TO A LLOW THE CLAIM OF THE ASSESSEE ON THE RESIDENTIAL UNITS CONSTRUCTE D ON PRO RATA BASIS AND THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 80-IB(10) ON THE COMMERCIAL AREA CONSTRUCTE D IN THE PROJECT TO THE EXTENT OF 9.31 PER CENT OF THE TOTAL CONSTRUCTED AREA. THE DECISION OF THE CHENNAI BENCH IN ARUN EXC ELLO FOUNDATIONS (P) LTD.(SUPRA) AND THAT OF THE MUMBAI BENCH IN LAUKIK DEVELOPERS(SUPRA) WERE CONSIDERED BY THE SPE CIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES(SUPRA). IN THE SAID CASE, THE TRIBUNAL WHILE CONSIDERING THE ISSUE OF DEDUCTION U/S 80IB(10) OF THE ACT FOR THE ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 9 AY 2003-04 IN RESPECT OF A HOUSING PROJECT, WHICH A LSO INCLUDED BUILT UP COMMERCIAL AREA ,CONCLUDED IN THE FOLLOWIN G TERMS: 121. WE HAVE ALSO NOTED REVENUES PLEA THAT AS LON G AS IT IS USE OF BUILT-UP AREA FOR COMMERCIAL PURPOSES IS CONFINED TO CONVENIENCE SHOPPING WITHIN PERMISSIBLE LIMITS A ND SUBJECT TO THE CONDITIONS AS PER DEVELOPMENT CONTRO L RULES, ELIGIBILITY FOR DEDUCTION UNDER S. 80-IB(10) REMAIN S INTACT AND THAT THE MOMENT SUCH USAGE GOES BEYOND WHAT IS PERMISSIBLE AS CONVENIENCE SHOPPING AS PER DEVELOPM ENT CONTROL RULES, THE ELIGIBILITY FOR DEDUCTION UNDER S. 80- IB(10) IS LOST. WE ARE UNABLE TO APPROVE THIS PLEA EITHER, AS IT GOES WELL BEYOND THE LIMITATIONS SET OUT EVEN IN POST-2004 AMENDMENTS. CLAUSE (D) OF S. 80-IB(10), WHICH WAS INTRODUCED VIDE FINANCE (NO. 2) ACT, 2004, PROVIDES THAT 'THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIA L ESTABLISHMENTS, INCLUDED IN THE HOUSING PROJECT, DO ES NOT EXCEED FIVE PER CENT OF AGGREGATE BUILT-UP AREA OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS'. THIS HAS NOTHING TO DO WITH CONVENIENCE SHOPPING WHICH NOT ONLY REST RICTS THE SIZE OF EACH SHOP TO 20 SQ. MTRS. BUT ALSO LIMITS T HE PURPOSES FOR WHICH THESE SHOPS CAN BE USED. TAKE FO R EXAMPLE A SITUATION IN WHICH A HOUSING PROJECT HAS ONLY ONE COMMERCIAL UNIT OF 185 SQ. MTRS. WHICH IS CLEARLY N OT PERMISSIBLE IN TERMS OF THE PROVISIONS OF CONVENIEN CE SHOPPING WHICH RESTRICTS THE SIZE OF UNIT TO 20 SQ. MTRS., BUT IT IS JUST WITHIN 2,000 SQ. FTS. LIMIT LAID DOWN UN DER S. 80- IB(10)(D). THIS DOES NOT VIOLATE THE REQUIREMENT OF S.80- IB(10), BUT, IF WE ARE TO ACCEPT THE PROPOSITION AD VANCED BY THE LEARNED SPECIAL COUNSEL, WILL RENDER ASSESSEES CLAIM FOR DEDUCTION UNDER S. 80-IB(10) INADMISSIBLE. IT ALSO DEMOLISHES THE THEORY THAT BY THE VIRTUE OF INTRODU CTION OF CL. (D) IN S. 80-IB(10), WHAT WAS IMPLICIT (I.E. PE RMISSION TO BUILD CONVENIENCE SHOPPING) IN A HOUSING PROJECT HA S BEEN MADE EXPLICIT IN THE SECTION ITSELF. THERE CAN ALSO BE SITUATIONS IN WHICH EVEN MINIMUM REQUIREMENT OF CONVENIENCE SHOPPING COULD RENDER THE PROJECT INELI GIBLE FOR DEDUCTION UNDER S. 80-IB(10), SAY, FOR EXAMPLE, IN CASES IN WHICH TOTAL PLOT AREA IS MORE THAN 1,00,000 SQ. FT. IN VIEW OF THESE DISCUSSIONS, IN OUR CONSIDERED VIEW, LINKAGE OF CONVENIENCE SHOPPING TO THE LIMITATION ON USE OF BU ILT-UP AREA AS COMMERCIAL SPACE IS A LEGALLY UNSUSTAINABLE PROPOSITION. 122. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF TH E CONSIDERED VIEW THAT DEDUCTION UNDER S. 80-IB (10), AS APPLICABLE PRIOR TO 1ST APRIL, 2005, IS INDEED ADMI SSIBLE IN CASE OF A HOUSING PROJECT COMPRISING RESIDENTIA L HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. QUESTION NO. 1 , THEREFORE, MUST BE ANSWERED IN THE AFFIRMATIVE. ACC ORDINGLY, ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 10 WE APPROVE DECISIONS OF THE DIVISION BENCHES IN THE CASES OF ARUN EXCELLO FOUNDATIONS (P) LTD. (SUPRA), HARSH AD P. DOSHI (SUPRA) AND SAROJ SALES ORGANISATION (SUPRA) IN THIS RESPECT, AND WE DECLINE TO CONCUR WITH THE VIEW EXP RESSED IN THE CASE OF LAUKIK DEVELOPERS (SUPRA). AS A MATT ER OF FACT, THE VIEW EXPRESSED BY THE DIVISION BENCH IN T HE CASE OF LAUKIK DEVELOPERS (SUPRA), AS WE HAVE NOTED EARL IER IN THIS ORDER, HAS NOT EVEN BEEN CANVASSED BEFORE US B Y THE REVENUE. 123. THE NEXT QUESTION IS WHETHER OR NOT THE DEDUCT ION UNDER S. 80-IB(10) IS TO BE GRANTED IN RESPECT OF O NLY OF SUCH PROFITS AS ARE ATTRIBUTABLE TO THE RESIDENTIAL UNITS. 124. THERE IS NOT MUCH OF A DISPUTE ON THIS ASPECT ALSO. LEARNED REPRESENTATIVES AGREE THAT THERE ARE NO ENA BLING PROVISIONS SO FAR AS ALLOCATION OF PROFITS INTO PRO FITS RELATABLE TO RESIDENTIAL UNITS AND COMMERCIAL UNITS ARE CONCERNED. WE HAVE NOTED THAT S. 80-IB(10) CATEGORI CALLY REFERS TO THE 'PROFITS DERIVED IN THE PREVIOUS YEAR , RELEVANT TO ANY ASSESSMENT YEAR, FROM SUCH HOUSING PROJECT'. WHAT IS DEDUCTIBLE IS PROFIT OF THE HOUSING PROJECT, A ND NOT THE PROFIT ATTRIBUTABLE TO THE RESIDENTIAL UNITS'. ONCE , THEREFORE, WE HOLD THAT THE PROJECT IN QUESTION IS A HOUSING P ROJECT, ENTIRE PROFITS OF THE HOUSING PROJECT ARE DEDUCTIBL E UNDER S. 80-IB(10). THE QUESTION OF PROPORTIONATE DEDUCTION IS, THEREFORE, NOT AT ALL RELEVANT IN THIS CONTEXT. 125. WE HAVE ALSO TAKEN NOTE OF THE FACT THAT IN AR UN EXCELLO FOUNDATIONS (P) LTD. CASE (SUPRA), CHENNAI DIVISION BENCH HAS GRANTED PROPORTIONATE DEDUCTION @ 90.69 P ER CENT BASED ON THE PERCENTAGE OF RESIDENTIAL UNITS I N THE HOUSING PROJECT, BUT, INTERESTINGLY, THAT WAS THE A LTERNATE PLEA RAISED BY THE ASSESSEE AND THE DIVISION BENCH PROCEEDED TO ACCEPT THE ALTERNATE PLEA WITHOUT DEAL ING WITH THE MAIN PLEA AT ALL. THE QUESTION OF DEALING WITH ALTERNATE PLEA ARISES ONLY WHEN THE MAIN PLEA IS REJECTED. NE ITHER WE APPROVE SUCH AN APPROACH OF THE DIVISION BENCH IN PRINCIPLE, NOR, AS DISCUSSED ABOVE, ARE WE INCLINED TO APPROVE, ON MERITS, THE DECISION OF DIVISION BENCH IN THE CASE OF ARUN EXCELLO FOUNDATIONS (P) LTD. CASE (SUP RA) ON THE QUESTION OF GRANT OF PROPORTIONATE DEDUCTION. 126. AN EXCEPTION, HOWEVER, WILL HAVE TO BE MADE OU T IN A CASE WHERE COMMERCIAL USE OF BUILT-UP AREA IS MORE THAN 10 PER CENT OF THE TOTAL AREA, AND YET, IN TERMS OF OU R OBSERVATIONS IN PARA 115 ABOVE, THE ASSESSEE IS ELI GIBLE FOR ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 11 DEDUCTION IN RESPECT OF PROFITS OF THE RESIDENTIAL UNITS SEGMENT OF THE PROJECT. IN SUCH A SITUATION, SINCE RESIDENTIAL UNIT SEGMENT IS BEING TREATED ON A STANDALONE BASIS FOR ELIGIBILITY TO DEDUCTION UNDER S. 80-IB(10), THE EL IGIBILITY FOR SUCH DEDUCTION CAN ONLY BE FOR THE PROFITS WHICH AR E IN RESPECT OF RESIDENTIAL UNIT SEGMENT OF THE OVERALL PROJECT, BECAUSE, IN THE LIGHT OF THE DISCUSSIONS, ONLY THAT PART OF THE OVERALL PROJECT CAN BE SAID TO BE HOUSING PROJECT. ACCORDINGLY, ELIGIBILITY FOR DEDUCTION UNDER S. 80- IB(10) MUST REMAIN CONFINED TO THE SAME. 127. THE ANSWER TO QUESTION NO. 2 IS THUS IN NEGATI VE, THOUGH WITH THE RIDER AS SET OUT ABOVE. 128. THE LAST QUESTION BEFORE US IS (WHETHER) THE L IMIT UNDER CL. (D) OF S. 80-IB(10) WILL OPERATE RETROSPECTIVEL Y AND WILL ALSO APPLY FOR THE ASSESSMENT YEAR BEFORE US. 129. THERE IS NO DISPUTE ON THIS QUESTION ALSO. LEA RNED REPRESENTATIVES HAVE AGREED THAT CL. (D) IS NOT TO BE TREATED AS RETROSPECTIVE IN APPLICATION. THAT ASPECT OF THE MATTER IS ALSO NOT IN DISPUTE BEFORE US. WE, ACCORDINGLY, HOL D THAT THE LIMIT UNDER CL. (D) OF S. 80-IB(10) WILL NOT APPLY. 130. TO SUM UP, THE CONCLUSIONS ARRIVED AT BY THIS SPECIAL BENCH ARE AS FOLLOWS : (A) THE DEDUCTION UNDER S. 8 0-IB(10), AS APPLICABLE PRIOR TO 1ST APRIL, 2005, SUBJECT TO AND IN THE LIGHT OF THE OBSERVATIONS MADE IN THE PRECEDING PAR AS, IS ADMISSIBLE IN CASE OF A HOUSING PROJECT COMPRISIN G RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHM ENTS. IN CASE THESE PROJECTS ARE APPROVED AS HOUSING PROJECT S BY THE LOCAL AUTHORITY, SUCH AN APPROVAL AS HOUSING PROJEC T IS SUFFICIENT FOR THE PURPOSES OF ELIGIBILITY. IN ANY OTHER CASE, WHERE 90 PER CENT OR MORE OF THE TOTAL BUILT-UP ARE A IS USED FOR DWELLING UNITS, IN ACCORDANCE WITH THE SCHEME O F S. 80- IB(10), THE BENEFIT OF DEDUCTION UNDER S. 80-IB(10 ) WILL NOT BE DECLINED. IN CASE COMMERCIAL USE OF BUILT-UP ARE A IS MORE THAN 10 PER CENT BUT THE RESIDENTIAL SEGMENT O F THE PROJECT SATISFIES REQUIREMENTS OF S. 80-IB (10) ON STANDALONE BASIS, I.E. (I) THE SIZE OF THE PLOT, EXCLUDING POR TION UNDER COMMERCIAL UNIT, IS MORE THAN MINIMUM AREA OF ONE A CRE, (II) RESIDENTIAL UNITS BUILT ON SUCH AREA MUST SATISFY C ONDITION OF CL. (C) OF THE PROVISION, AND (III) OTHER NECESSARY CONDITIONS ARE FULFILLED, AND WHERE INCOME FROM CONSTRUCTION O F RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT ON STA NDALONE BASIS, DEDUCTION UNDER S. 80-IB(10) WILL BE AVAILAB LE IN ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 12 RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. (B) THE DEDUCTION UNDER S. 80-IB(10) IS AVAILABLE IN RESPEC T OF PROFITS OF HOUSING PROJECT AS A WHOLE, AND, AS SUCH , IT IS NOT RELEVANT AS TO WHAT IS THE PORTION OF PROFITS WHICH CAN BE SAID TO BE ATTRIBUTABLE TO RESIDENTIAL UNITS. THIS IS SUBJECT TO THE RIDER THAT IN CASE COMMERCIAL USE OF BUILT-UP A REA IN A PROJECT IS MORE THAN 10 PER CENT AND, FOR THIS REAS ON THE PROJECT CANNOT BE SAID TO BE A PREDOMINANTLY HOUSIN G PROJECT, BUT, IN TERMS OF OBSERVATIONS MADE IN PARA 115 ABOVE, THE ASSESSEE IS ENTITLED TO DEDUCTION IN RES PECT OF RESIDENTIAL UNIT SEGMENT OF THE OVERALL PROJECT ON FULFILLMENT OF NECESSARY CONDITIONS, THE ENTITLEMENT OF INCENTI VE DEDUCTION WILL BE CONFINED TO ONLY TO THE PROFITS T O THE RESIDENTIAL SEGMENT OF THE OVERALL PROJECT. (C) THE LIMIT ON COMMERCIAL USE OF BUILT-UP AREA AS PRESCRIBED BY CL . (D) OF S. 80-IB(10) HAS NO RETROSPECTIVE APPLICATION, AND IT APPLIES ONLY W.E.F. THE ASST. YR. 2005-06 7.8 IN THE LIGHT OF VIEW TAKEN BY THE SPECIAL BENC H IN THEIR AFORESAID DECISION, ESPECIALLY WHEN THE AO DID NOT EXAMINE THE ISSUE AS TO WHETHER OR NOT THE RESIDENTIAL- CUM- COMMERCIAL PROJECT UNDERTAKEN BY THE ASSESSEE IN TERMS OF APPROVAL DATED 24.1.2002 OF THE COMPETENT AUTHORITY WAS A HOUSING PROJECT WITHIN THE MEANING PROVISIONS OF SEC. 80IB(10) OF T HE ACT WHILE NEITHER THE AO NOR THE LD. CIT(A) HAD THE BENEFIT OF AFORESAID DE CISION IN THE CASE OF BRAHMA ASSOCIATES(SUPRA) AND THE PERCENTAGE OF BUIL T AREA FOR THE SHOPS AND COMMERCIAL ESTABLISHMENTS IS NOT EVID ENT FROM THE ORDERS OF THE LOWER AUTHORITIES NOR THE LD. REPRESE NTATIVES OF BOTH THE PARTIES COULD THROW ANY LIGHT ON THIS ASPECT AN D IT HAS NOT BEEN EXAMINED AS TO WHETHER OR NOT THE AFORESAID CLAUSE (D) IN THE SEC. 80IB(10) INTRODUCED W.E.F.1.4.2005 IN THE AMENDED PROVISIONS IS APPLICABLE TO THE PROJECTS ALREADY APPROVED BY THE COMPETENT AUTHORIT Y IN THE PRECEDING YEARS AND/OR ENJOYING THE BENEFITS OF THE SAID DEDUCTION ON FULFILLING THE CONDITIONS STIPULATED IN THE EXTANT PROVISIONS OF SEC. 80IB(10 ) OF THE ACT, WE FIND MERIT IN THE CONTENTIONS OF THE LD. AR AND ACCORDINGLY, CONS IDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTOR E THE ISSUES RAISED IN GROUND NOS.1 & 2 OF THESE TWO APPEALS TO THE FILE OF THE AO FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR A FORESAID OBSERVATIONS, KEEPING IN VIEW THE VARIOUS JUDICIAL PRONOUNCEMENTS , INCLUDING THOSE REFERRED TO ABOVE AND OF COURSE AFTER ALLOWING SUFFICIENT OP PORTUNITY TO THE ASSESSEE. WITH THESE OBSERVATIONS, GROUND NOS. 1 & 2 IN THESE TWO APPEALS ARE DISPOSED OF. 8. GROUND NO. 3 IN THESE APPEALS RELATES TO INITIAT ION OF PENALTY PROCEEDINGS WHILE GROUND NO. 5 PERTAINS TO LEVY OF INTEREST U/S 234A,234B & 234C OF THE ACT. THE LD. AR DID NOT MAKE ANY SUBMISSIONS ON THE SE GROUNDS. MERE INITIATION OF PENALTY PROCEEDINGS IS NOT APPEALABLE WHILE THE LEVY OF INTEREST U/S 234A,234B & 234C OF THE ACT BEING MANDATORY [COMMI SSIONER OF INCOME TAX.VS ANJUM M. H. GHASWALA AND OTHERS,252 ITR 1(SC ), AFFIRMED BY HON'BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWE LLERS ITA NO550-551/AHD/2008 A.YS 03-04 & 04-05 AMARDEEP ENTERPRISE V. ITO WD-3(1) BRD PAGE 13 [2003] 264 ITR 564 (SC) ], THESE TWO GROUNDS ARE DISMISSED. HOWEVER, THE AO SHALL ALLOW CONSEQUENTIAL RELIEF WHILE GIVING EF FECT TO OUR AFORESAID DIRECTIONS. 6. AS THE FACTS IN THE PRESENT CASE IS EXACTLY IDEN TICAL TO THE FACTS OF THE CASE DECIDED BY THIS TRIBUNAL IN THE CASE OF RAJ DEVELOP ERS (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE APPEAL TO THE FILE OF TH E ASSESSING OFFICER TO DECIDE IN LINE OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF RAJ DEVELOPERS (SUPRA). THE FACTS ARE EXACTLY IDENTICAL IN ASSESSMENT YEAR 2004-05, HENCE , TAKING A CONSISTENT VIEW, WE SET ASIDE THESE TWO APPEALS OF THE ASSESSEE TO THE FILE OF ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSING OFFICER WILL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING A SPEAKING ORD ER. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 27/08/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 27/08/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-II, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD