Income-tax Officer, V. M/s. Akshay Builders & Associates, Pune

ITA 563/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2765 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAVE
• Keywords: Question of law
• Section: 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 563/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD 9(1), PUNE ....... / APPELLANT ' / V/S. M/S. AKSHAY BUILDERS & ASSOCIATES, S. NO. 15/2, AKSHAY PARK, AUNDH CHINCHWAD ROAD, THERGAON, CHINCHWAD, PUNE 411033 PAN : AAKFA9511G / RESPONDENT *+& / CO NO. 22/PN/2015 %' ( ')( / ASSESSMENT YEAR : 2009-10 M/S. AKSHAY BUILDERS & ASSOCIATES, S. NO. 15/2, AKSHAY PARK, AUNDH CHINCHWAD ROAD, THERGAON, CHINCHWAD, PUNE 411033 PAN : AAKFA9511G ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 9(1), PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI SUHAS BORA REVENUE BY : SHRI HITENDRA NINAVE / DATE OF HEARING : 31-12-2015 / DATE OF PRONOUNCEMENT : 03-02-2016 2 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 , / ORDER PER VIKAS AWASTHY, JM : THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF COMMISS IONER OF INCOME TAX (APPEALS)-V, PUNE DATED 24-12-2013 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS FILED CROSS OBJECTION AG AINST THE SAME ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AN D CONSTRUCTION OF PROPERTIES. THE ASSESSEE DEVELOPED A PR OJECT UNDER THE NAME AKSHAY PARK AT AUNDH CHINCHWAD ROAD, THERGAON, PUNE. THE ASSESSEE CLAIMED DEDUCTION OF ` 1,57,99,619/- U/S. 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE AC T) IN RESPECT OF THE AFORESAID PROJECT IN THE ASSESSMENT YEAR 2009-10. THE PROJECT WAS SANCTIONED VIDE COMMENCEMENT CERTIFICATE DATED 31-03-200 1 AND WAS COMPLETED AS PER THE COMPLETION CERTIFICATES DATED 28-11- 2007 AND 31-03-2008. DURING THE COURSE OF SCRUTINY ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER AFTER SEEKING THE REPORT FROM GOVT. V ALUATION OFFICER, SOLAPUR DENIED THE ENTIRE BENEFIT OF DEDUCTION U/S. 80 IB(10) ON THE GROUND THAT BUILT UP AREA OF TWO UNITS IN THE HOUSING PROJECT I.E. RH/D-6 AND RH-3 EXCEEDED THE PERMISSIBLE LIMIT OF 1500 SQ. FT. AS PER THE REPORT OF GOVT. VALUER THE BUILT UP AREA INCLUDING BAL CONIES AND CUPBOARD PROJECTIONS IS 1318.18 SQ. FT. AND 1316.93 SQ. FT., RESPECTIVELY AND THE AREA OF PROJECTED TERRACE IS 242.62 SQ. FT. AND 2 44.92 SQ. FT., RESPECTIVELY. THUS, THE TOTAL AREA OF THE ABOVE SAID 2 HOUSES IS 1560.80 SQ. FT. AND 1561.86 SQ. FT., RESPECTIVELY. 3 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 AGGRIEVED BY THE ASSESSMENT ORDER DATED 27-12-2011, T HE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER WITH RESPECT TO THE TWO UN ITS OF THE HOUSING PROJECT HAVING EXCESSIVE BUILT UP AREA. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO ALLOW PROPORTIONATE DEDUCTION U/S. 80IB(10) BY EXCLUDING THE TWO UNITS. AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), T HE REVENUE HAS FILED THE PRESENT APPEAL AND THE ASSESSEE H AS FILED CROSS OBJECTION. 3. THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS IN APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN NOT REJECTING THE ASSES SEE'S CLAIM OF DEDUCTION U/S 80IB(10) OF THE IT ACT, 1961, WHEN THE CIT(A) H IMSELF HAS AGREED THAT THE BUILT UP AREA OF 2 DWELLING UNITS I.E. RH/D-6 A ND RH-3 IN THE PROJECT EXCEEDED THE RESTRICTION RESULTING INTO CLEAR VIOLA TION OF CLAUSE (C) OF SUB- SECTION (10) OF SECTION 80IB RW CLAUSE (A) OF SUB-S ECTION (14) OF SECTION 80IB OF THE IT ACT, 1961 ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE W AS ENTITLED TO DEDUCTION U/S 80IB(10) OF THE IT. ACT, 1961 ON PRO- RATA BASIS IN RESPECT OF ELIGIBLE UNITS, WHEN THERE IS NO SUCH PROVISION IN THE ACT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN GRANTING DEDUCTION U/S 80IB (10) ON PROPORTIONATE BASIS TO INDIVIDUAL DWELLING UNITS WHEREAS AS PER S ECTION 80IB(10), THE DEDUCTION IS ALLOWABLE TO THE PROJECT AS A WHOLE ON THE FULFILLMENT OF PRESCRIBED CONDITIONS BY THE ENTIRE PROJECT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE ABOVE GROUNDS OF APPEAL. 4 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 4. IN CROSS OBJECTION THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS): THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER-ON FACTS AND IN LAW, 1) THE LEARNED C1T(A) ERRED IN HOLDING THAT THE BUILT UP AREA OF ROW HOUSE NO D6 AND 3 WAS MORE THAN 1500 SQ. FT. AND HE NCE, THE ENTIRE PROFITS OF THE HOUSING PROJECT CONSTRUCTED B Y THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10). 2) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AS SESSEE HAD COMMENCED THE HOUSING PROJECT NAMED 'AKSHAV PARK' P RIOR TO 01.04.2005 AND AS PER THE D.C. RULES OF THE LOCAL A UTHORITY, THE BUILT UP AREA OF ALL THE UNITS IN THE HOUSING PROJE CT WAS LESS THAN 1500 SQ. FT AND ACCORDINGLY, THE ASSESSEE WAS ENTIT LED TO CLAIM DEDUCTION U/S. 801B( 1 0) IN RESPECT OF THE ENTIRE PROFITS OF THE SAID PROJECT. 3) THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE CROSS OBJECTIONS. 5. SHRI HITENDRA NINAVE REPRESENTING THE DEPARTMENT SUB MITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN GRANTING DEDUCTION U/S. 80IB(10) OF THE ACT TO THE ASSESSEE ON PR O RATA BASIS. THE ASSESSEE HAS HIMSELF ADMITTED THE FACT THAT THE TWO DWELLING UNITS I.E. RH/D-6 AND RH-3 IN THE PROJECT HAS BUILT UP AREA IN E XCESS OF THE PERMISSIBLE LIMIT. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE TO CLA IM THE BENEFIT U/S. 80IB(10) ON THE HOUSING PROJECT AKSHAY PAR T. AS PER THE PROVISIONS OF SECTION 80IB(10) DEDUCTION IS GRANTED TO TH E WHOLE PROJECT IF THE CONDITIONS LAID DOWN IN SUB-SECTION (10) OF SECTION 80IB ARE COMPLIED WITH. DEDUCTION CANNOT BE ALLOWED TO THE INDIVIDUA L UNITS OF THE PROJECT. THE LD. DR VEHEMENTLY SUPPORTED THE ASSE SSMENT ORDER AND PRAYED FOR SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 6. ON THE OTHER HAND SHRI NIKHIL PATHAK AND SHRI SUHAS B ORA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN COMING TO THE CONCLUS ION THAT THE BUILT UP AREA OF TWO DWELLING UNITS I.E. RH/D-6 AND RH-3 EXC EEDED THE PERMISSIBLE LIMIT OF 1500 SQ. FT. THE LD. AR SUBMITTED THAT AS PER THE ARCHITECT OF THE ASSESSEE THE BUILT UP AREA OF THE TWO UNITS UNDER QUESTION INCLUDING PROJECTED TERRACE IS 1454 SQ. FT EACH. THE AREA CALCULATED BY THE GOVT. VALUER IN RESPECT OF THE ABOVE SA ID TWO DWELLING UNITS IN EXCESS OF 1500 SQ. FT. AFTER INCLUDING BALCONIES, COVER PROJECT TERRACE IS NOT CORRECT. THE ITO IN HIS COMMENTS ADDRE SS TO COMMISSIONER OF INCOME TAX (APPEALS) HAS ADMITTED THE FACT THAT BOTH THE DWELLING UNITS HAVE TWO TERRACE/BALCONIES WHICH ARE OP EN TO SKY, AND IS NOT COVERED BY WALLS. THE LD. AR MADE AN ALTERNATE SUBMISSION THAT THE DEFINITION OF BUILT UP AREA HAS BEEN INSERTED IN SECTION 80IB(14) BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 01-04-2005. W HEREAS, THE PROJECT UNDER QUESTION WAS SANCTIONED ON 31-03-20 01 WHICH IS MUCH PRIOR TO THE DATE OF INTRODUCTION OF THE DEFINITION OF BUILT UP AREA. THE ASSESSEE HAD COMPLETED THE PROJECT ON 31- 03-2008. THUS, THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT, 200 4 WILL NOT APPLY IN THE CASE OF ASSESSEE. THE LD. AR FURTHER CONTE NDED THAT THE TRIBUNAL HAS BEEN CONSISTENTLY HOLDING THAT PROJECTIONS AND BALCONIES ARE NOT TO BE INCLUDED WHILE COMPUTING THE TOTAL BUILT UP A REA OF A SINGLE UNIT OF A PROJECT APPROVED PRIOR TO 1 ST APRIL, 2005. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DEC ISIONS OF THE TRIBUNAL: I. HAWARE CONSTRUCTIONS (P) LTD. VS. INCOME TAX OFFICER, 64 DT R (MUMBAI)(TRIB.) 251; 6 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 II. INCOME TAX OFFICER VS. M/S. PRIME PROPERTIES IN ITA NO. 889/PN/2010 FOR ASSESSMENT YEAR 2005-06 DECIDED ON 26 -04- 2012; III. SHRI NARESH T. WADHWANI VS. DY. COMMISSIONER OF INCOME TAX IN ITA NOS. 18, 19 & 20/PN/2013 FOR ASSESSMENT YEAR 2007 -08 TO 2009-10 DECIDED ON 28-10-2014. 7. THE LD. AR CONTROVERTING THE SUBMISSIONS MADE ON BEHA LF OF THE DEPARTMENT IN RESPECT OF PROPORTIONATE DISALLOWANCE U/S. 8 0IB(10) CONTENDED, THAT NOW IT IS A WELL SETTLED LAW THAT PRO RA TA DEDUCTION CAN BE CLAIMED UNDER THE PROVISIONS OF SECTION 80IB(10) ON THE ELIGIBLE UNITS OF A PROJECT. IN SUPPORT OF HIS CONTENTIONS THE LD. AR PLA CED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE C ASE OF M/S. ROHAN HOMES VS. ASSTT. COMMISSIONER OF INCOME TAX IN ITA NO. 423/PN/2011 FOR ASSESSMENT YEAR 2007-08 DECIDED ON 31-01-20 13 AND IN THE CASE OF BELVALKAR HOUSING SCHEMES VS. INCOME TAX OFFICER IN ITA NO. 524/PN/2013 FOR ASSESSMENT YEAR 2009-10 DECIDED O N 24-08- 2015. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR OF T HE ASSESSEE HAS PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT THE P ROJECT AKSHAY PARK WAS SANCTIONED VIDE COMMENCEMENT CERTIFICATE DATED 31-03-2001 AND THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB(10) ON THE SAID PROJECT. THE ONLY REASON FOR REJECTING THE CLAIM OF THE ASSESSEE GIVEN IN THE ASSESSMENT ORDER IS THAT TWO DWELLING UNITS I.E. RH/D-6 AND RH-3 ARE HAVING BUILT UP AREA IN EXCESS OF 1500 SQ. FT. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE FINDINGS OF THE 7 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 ASSESSING OFFICER WITH RESPECT TO EXCESSIVE BUILT UP AREA OF THE TWO RESIDENTIAL UNITS. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) GRANTED DEDUCTION U/S. 80IB(10) ON THE PROJECT ON PROPO RTIONATE BASIS BY EXCLUDING THE TWO DWELLING UNITS WHICH PURPORTEDLY HAVE BUILT UP AREA IN EXCESS OF THE LIMIT SPECIFIED UNDER SUB-SECTION (10) OF SECTION 80IB. THE REVENUE IN ITS APPEAL HAS ASSAILED THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS) IN GRATING DEDUCTION U /S. 80IB(10) ON THE PRO RATA BASIS. THE CONTENTION OF THE LD. DR IS THAT THERE IS NO PROVISION OF GRANTING DEDUCTION U/S. 80IB(10) ON PRO RATA BASIS IN RESPECT OF ELIGIBLE UNITS ALONE. 9. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. DR. T HE TRIBUNAL IN VARIOUS DECISIONS HAS HELD THAT THE ASSESSEE IS ELIGIBLE T O CLAIM DEDUCTION U/S. 80IB(10) ON THE ELIGIBLE DWELLING UNITS. THE VIEW OF THE TRIBUNAL HAS BEEN UPHELD BY VARIOUS HON'BLE HIGH COURTS. IN THE CASE OF CIT VS. ARUN EXCELLO FOUNDATIONS (P.) LTD.; 86 DTR (MAD) 99 THE QUESTION OF LAW BEFORE THE HON'BLE MADRAS HIGH COURT WAS : 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE TRIBUNAL WAS RIGHT IN HOLDING THAT DEDUCTION UNDER SECTION 80IB( 10) IS ALLOWABLE ONA PRORATA BASIS, WHERE BOTH COMMERCIAL AND RESIDENTIA L HOUSES HAVE BEEN BUILT, WHEN THERE IS NO SUCH PROVISION UNDER THE ST ATUTE TO GRANT THE SAME?' WHILE DECIDING THE QUESTION IN FAVOUR OF ASSESSEE AND UPHOL DING THE ORDER OF TRIBUNAL, THE HON'BLE HIGH COURT IN PARA 40 O F THE JUDGMENT OBSERVED : 40. THUS, IN THE FACE OF THE CLEAR PROVISIONS AND GOING BY THE STRICT CONSTRUCTION, ONE CANNOT READ ANY LIMITATION INTO T HE EXPRESSION'HOUSING PROJECT' TO MEAN THE RESIDENTIAL PROJECT ALONE AND THAT IF AND WHEN THE PROJECTS HAVE MIXED BUILT-UP AREA OF COMMERCIAL AND RESIDENTIAL, THE QUESTION OF DISALLOWANCE WILL ARISE ONLY IF AND WHE N THE RESIDENTIAL FLATS ARE BEYOND THE LIMIT AS PROVIDED UNDER SUB CLAUSE (C ) OF SECTION 80-IB(10) OF THE ACT AND NOT OTHERWISE. EVEN HEREIN, THE DISA LLOWANCE COULD BE ONLY 8 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 PROPORTIONATE TO THE EXTENT OF UNITS IN VIOLATION O F THE AREA PRESCRIBED UNDER CLAUSE (C). IN A PURE COMMERCIAL HOUSING PROJ ECT, THE QUESTION OF APPLICABILITY OF SUB-CLAUSE (C) DOES NOT ARISE AT A LL. THUS, THE HON'BLE HIGH COURT APPROVED THE PRO RATA DE DUCTION ON THE ELIGIBLE UNITS. 10. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. ROHAN HOMES VS. ASSTT. COMMISSIONER OF INCOME TAX (SUPRA) IN SIMILAR CASE WHERE DEDUCTION U/S. 80IB(10) WAS CLAIMED AND SOME OF TH E RESIDENTIAL UNITS WERE HAVING BUILT UP AREA IN EXCESS OF SPECIFIED LIMIT, T HE TRIBUNAL GRANTED PROPORTIONATE DEDUCTION TO THE ELIGIBLE UN ITS. WHILE HOLDING SO, THE TRIBUNAL REFERRED TO VARIOUS DECISIONS OF THE TRIBUNAL, WHEREIN PROPORTIONATE DEDUCTION U/S. 80IB(10) WAS GRANT ED TO THE HOUSING PROJECTS. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL READS AS UNDER: 12. IN THIS CASE, FACTUALLY, IT IS NOT IN DISPUTE THAT SO FAR AS THE BUILT- UP AREA OF 17 FLATS IS CONCERNED, THE SAME IS BEYON D THE LIMIT PRESCRIBED IN CLAUSE (C) TO SECTION 80-IB(10) OF THE ACT. THE PLEA OF THE ASSESSEE IS THAT THE ENTIRE PROJECT COULD NOT BE HELD INELIGIBL E FOR DEDUCTION U/S 80- IB(10) OF THE ACT. THE ASSESSEE CONTENDS THAT THE DEDUCTION U/S 80- IB(10) OF THE ACT BE ALLOWED WITH RESPECT TO THE PR OFITS DERIVED FROM THE DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL UNITS I N THE SAID PROJECT WHICH FULFIL THE REQUIREMENT OF BUILT-UP AREA SPECI FIED IN CLAUSE (C) TO SEC. 80-IB(10) OF THE ACT. IN OTHER WORDS, AS PER THE A SSESSEE, THE DEDUCTION U/S 80-IB(10) BE ALLOWED PRO-RATA TO THE INCOME FRO M THE UNITS QUALIFYING IN TERMS OF SEC. 80-IB(10)(C) OF THE ACT. 13. THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA) HELD AS UNDER: IT IS APPARENT FROM THE PERUSAL OF SEC. 80-IB(10) THAT THIS SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE F OR BUSINESSMEN TO UNDERTAKE CONSTRUCTION OF RESIDENTIA L ACCOMMODATION FOR SMALLER RESIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE PROFIT DERIVED FRO M THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER RESIDENTIAL UN ITS. THOUGH THE 9 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 AO HAS DENIED THE CLAIM OF THE ASSESSEE OBSERVING T HAT LARGER UNITS WERE ALSO CONSTRUCTED BY THE ASSESSEE, AT THE SAME TIME, IT IS SMALLER RESIDENTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAINED IN SEC. 80-IB(10) AND THE SAME HAS NOT BEEN DISPUTED BY THE AO ALSO. WE HAVE ALSO NOTED DOWN T HE FACT THAT EVEN THE PROVISION AS LAID DOWN IN SEC. 80-IB(10) F ROM A HOUSING COMPLEX CONTAINING BOTH THE SMALLER AND LARGE RESID ENTIAL UNITS AND SINCE THE ASSESSEE HAS ONLY CLAIMED DEDUCTION O N ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLING ALL THE COND ITIONS AS LAID DOWN UNDER SECTION 80(IB(10), THE DENIAL OF CLAIM B Y THE ASSESSEE IS ON ACCOUNT OF RATHER RESTRICTED AND NARROW INTER PRETATION OF PROVISIONS OF CLAUSE (C) OF SEC. 80-IB(10) WHILE CO MING TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. (SUPR A) WHEREIN IT WAS HELD THAT PROVISIONS SHOULD BE INTERPRETED LIBE RALLY AND SINCE IN THE PRESENT CASE ALSO, THE ASSESSEE BY CLAIMING PRO-RATA INCOME ON QUALIFYING UNITS HAS COMPLIED WITH CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LEARNED CIT(A) BY REVERSING THE ORDER OF THE AO. 14. SIMILARLY, THE BOMBAY BENCH OF THE TRIBUNAL IN T HE CASE OF EKTA HOUSING PVT. LTD. IN ITA NO. 3649/MUM/2009 DATED 20 -5-2011 PERTAINING TO A.Y. 2004-05 RELIED UPON THE CALCUTT A BENCH OF THE TRIBUNAL, AS ALSO THE DECISIONS IN THE CASES OF BRI GADE ENTERPRISES PVT. LTD., SHETH DEVELOPERS PVT. LTD. AND OBSERVED THAT DEDUCTION U/S 80- IB(10) OF THE ACT WAS TO BE ALLOWED ON PROPORTIONAT E BASIS WITH REFERENCE TO QUALIFYING RESIDENTIAL UNITS AND THAT THE ASSESS EE WOULD NOT BE DENIED CLAIM FOR DEDUCTION U/S 80-IB(10) OF THE ACT IN EN TIRETY IF SOME OF ITS RESIDENTIAL UNITS WERE OF A BUILT-UP AREA EXCEEDING THE LIMIT PRESCRIBED IN CLAUSE (C) TO SEC. 80-IB(10) OF THE ACT. 15. PERTINENTLY, IT WOULD ALSO BE APPROPRIATE TO NO TICE THAT THE AFORESAID DECISION OF THE KOLKATA BENCH OF THE TRIB UNAL HAS SINCE BEEN CONFIRMED BY THE HONBLE CALCUTTA HIGH COURT VIDE I TS ORDER IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DATED 5-1- 2007. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. (SUPRA) HAS ALSO UPHELD SIMILAR PROPOSITION FOLLOWING THE A FORESAID PRECEDENTS. 16. FOLLOWING THE AFORESAID PRECEDENTS, WE ARE THER EFORE, OF THE VIEW THAT MERELY THE ASSESSEE HAS VIOLATED THE CONDITION U/S 80-IB(10)(C) OF THE ACT IN RELATION TO 17 FLATS, IT CANNOT BE DENIE D THE DEDUCTION U/S 80- IB(10) OF THE ACT ON ENTIRE PROFITS OF THE PROJECT WHICH PERTINENTLY INCLUDE PROFITS IN RELATION TO RESIDENTIAL UNITS WHICH COMP LY WITH THE LIMITS PRESCRIBED IN SEC. 80-IB(10)(C) OF THE ACT. OF COU RSE, THE DEDUCTION U/S 10 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 80-IB(10) OF THE ACT SHALL BE DENIED ON THE PROFITS PROPORTIONATE TO 17 FLATS WHICH ARE IN VIOLATION OF SEC. 80-IB(10) OF T HE ACT. FOR BALANCE OF THE RESIDENTIAL UNITS, THE PLEA OF THE ASSESSEE FOR DED UCTION U/S 80-IB(10)OF THE ACT, IN OUR VIEW, IS FAIR AND REASONABLE. WE H OLD SO. IN VIEW OF THE DECISION OF CO-ORDINATE BENCH AND THE DECIS ION OF HON'BLE MADRAS HIGH COURT, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE, ACCORDINGLY, THE SAME IS DISMISSED. 11. NOW, WE TAKE UP THE CROSS OBJECTIONS RAISED BY TH E ASSESSEE. THE ASSESSEE IN CROSS OBJECTIONS HAS ASSAILED THE FINDINGS OF C OMMISSIONER OF INCOME TAX (APPEALS) IN EXCLUDING RESIDENTIAL UNITS RH/D-6 AND RH-3 OF PROJECT AKSHAY PARK FROM THE PURVIEW OF DEDUC TION U/S. 80IB(10) ON THE GROUND THAT THE BUILT UP AREA OF SAID UNITS ARE IN EXCESS OF 1500 SQ. FT. THE CONTENTION OF THE LD. AR IS THA T IN THE FIRST INSTANCE THE AREA OF THE SAID DWELLING UNIT IS WITHIN THE PER MISSIBLE LIMIT OF 1500 SQ. FT. SECONDLY, EVEN IF IT IS PRESUMED TO BE MORE THAN 1500 SQ. FT. THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT, 2004 BY INSERTING THE DEFINITION OF BUILT UP AREA WOULD NOT APP LY IN THE CASE OF ASSESSEE. THE PROJECT UNDER QUESTION WAS APPROVED IN THE YEAR 2001 I.E. MUCH PRIOR TO THE INSERTION OF THE DEFINITION OF BUILT UP A REA. THE AMENDMENT IS PROSPECTIVE IN NATURE AND IS EFFECTIVE FROM 01-04-2005. 12. THE FINANCE (NO. 2) ACT, 2004 INSERTED THE DEFINITION OF BUILT UP AREA IN SUB-SECTION (14) OF SECTION 80IB. THE NEWLY INSER TED CLAUSE (A) READS AS UNDER: BUILT-UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALC ONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS; 11 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 THE AMENDED PROVISIONS OF SECTION 80IB(14) ARE EFFECTIVE FROM 01-04-2005. 13. THE ISSUE, WHETHER THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT, 2004 BY INSERTING THE DEFINITION OF BUILT UP AREA IN SECTION 80IB(14) WOULD APPLY ON THE PROJECT WHICH HAD COMMENCED PRIOR TO 2005 HAD COME UP BEFORE THE TRIBUNAL ON SEVERAL OCCASION S. THIS ISSUE WAS CONSIDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HAWARE CONSTRUCTIONS (P) LTD. VS. INCOME TAX OFFICER (SUPRA ). IN THE SAID CASE THE PROJECT WAS APPROVED ON 10-10-2003 I.E. P RIOR TO 1 ST APRIL, 2005. THE REVENUE AUTHORITIES INCLUDED BALCONIES/TERRACE WHILE CALCULATING BUILT UP AREA OF THE DWELLING UNITS AND DENIED THE BENEFIT OF DEDUCTION U/S. 80IB(10) OF THE ACT. THE TRIBUNAL HELD THAT THE DEFINITION OF BUILT UP AREA GIVEN IN SUB-SECTION (14) OF SECTIO N 80IB WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 01-04-2005 AND THEREFORE, THE SAME IS APPLICABLE ONLY IN RESPECT OF PROJEC T APPROVED AFTER 1 ST APRIL, 2005. THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED HERE- IN-UNDER: 32. NOW COMING TO THE THIRD ALLEGATION OF THE REVE NUE THAT THE BUILT UP AREA OF SOME OF THE FLATS IS MORE THAN 1000 SQ. FT, WE FIND THE ASSESSEE HAS ALREADY SUBMITTED THE CHART WHICH GIVES THE BUI LT UP AREA AS ANALYZED BY THE AO. IT IS THE CASE OF THE REVENUE T HAT IF THE TERRACE AREA IS INCLUDED, THE TOTAL BUILT UP AREA IN SOME OF THE CASES EXCEEDS 1000 SQ. FT. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DEFINITION OF 'BUILT UP AREA' AS GIVEN IN SUB SECTI ON 14(A) OF SECTION 80IB IS INSERTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01.04.2005 AND, THEREFORE, THE SAME IS APPLICABLE ONLY IN RESPECT O F THE PROJECTS APPROVED AFTER 01.04.2005. WE FIND MERIT IN THE ABOVE SUBMIS SIONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE CO- ORDINATE BENCHES OF THE TRIBUNAL ARE TAKING THE CONSISTENT VIEW THAT WHEN THE ASSESSEE S UBMITS THE PROPOSAL FOR CARRYING OUT THE DEVELOPMENT OF A HOUSING PROJE CT, THEN WHATEVER LAW IS THERE ON THAT DAY, THAT WOULD REGULATE THE RIGHT S OF THE ASSESSEE. IN THE INSTANT CASE, UNDISPUTEDLY THE PROJECT WAS APPR OVED ON 10.10.2003 12 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 I.E. PRIOR TO 01.04.2005, THEREFORE, WE ARE OF THE OPINION, THAT THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN INCLUDING THE BALC ONY/TERRACE IN THE BUILT UP AREA SO AS TO DENY THE BENEFIT OF DEDUCTION U/S. 80IB(10). FURTHER THE ASSESSEE HAS GIVEN THE CHART, COPY OF WHICH IS PLAC ED AT PG. NO. 165, ACCORDING TO WHICH THE AO IN SOME OF THE CASES HAS ADOPTED THE WRONG FIGURE, ALTHOUGH THE BUILT UP AREA INCLUDING THE BA LCONY PUT TOGETHER DOES NOT EXCEED 1000 SQ. FT. 32.1 IT HAS BEEN HELD IN VARIOUS DECISIONS THAT IF SOME OF THE FLATS IN A HOUSING PROJECT EXCEED THE PERMISSIBLE LIMIT, THAN T HE BENEFIT OF DEDUCTION U/S.80IB(10) HAS TO BE GRANTED ON PRO-RATE BASIS AN D THE ASSESSEE CANNOT BE DENIED THE EXEMPTION. HOWEVER, SINCE THE AREA OF NONE OF THE FLATS EXCEEDS 1000 SQ. FT. AFTER EXCLUDING THE BALC ONY/TERRACE, THE ASSESSEE, IN OUR OPINION, HAS NOT VIOLATED THIS CON DITION. 33. CONSIDERING THE TOTALITY OF THE FACTS OF THE CA SE AND IN VIEW OF THE DECISIONS CITED ABOVE, WE DO NOT FIND ANY REASON WH Y THE ASSESSEE SHALL NOT BE GRANTED THE BENEFIT OF DEDUCTION U/S. 80IB(1 0). WE THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO GRANT THE BENEFIT OF DEDUCTION U/S.80IB(10). THE GROUNDS OF APPEAL NO. 1 (I) AND 1(II) BY THE ASSESSEE ARE ALLOWED. 14. IN THE CASE OF INCOME TAX OFFICER VS. M/S. PRIME PROPER TIES (SUPRA) THE TRIBUNAL AFTER PLACING RELIANCE ON THE DECISION RE NDERED IN THE CASE OF D.S. KULKARNI & ASSOCIATES IN ITA NO. 17/PN/2 009 DECIDED ON 31-05-2011 HAS HELD AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT THE PROJECT WA S APPROVED PRIOR TO 1.4.2004. THEREFORE, THE DEFINITION OF BUILT UP ARE A AS PER SEC. 80 IB (14)(A) WHICH IS INSERTED W.E.F. 1.4.2004 DOES NOT APPLY TO PROJECTS APPROVED PRIOR TO THAT DATE. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF D.S. KULKARNI & ASSOCIATES (SUPRA) AT PARA 20 OF THE ORDER HAS OBSERVED AS UNDER : '20. BY APPLYING THE PRINCIPLE OF HARMON IOUS CONSTRUCTION TO INTERPRET THE PROVISIONS UNDER SUB-SECTION (10) TO SECTION 80IB AS AMENDED W.E.F. 1.4,2005 WE COME TO THE CONCLUSIO N THAT THE LEGISLATURE ALWAYS INTENDED THAT THE PROJECT MUST B E APPROVED BY THE LOCAL AUTHORITY, THUS IN THOSE APPROVED PROJECT S WHERE CONSTRUCTION HAS BEEN STARTED MUCH EARLIER THAN 1.4 .2005, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLAN AS IT H AS BEEN APPROVED. AS PUTTING SUCH ASSESSEES TO COMPLETE THE PLAN MEETING 13 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 OUT CONDITION UNDER CLAUSE (D) OF THE SUB-SECTION W OULD LEAD INTO ABSURDITY AND IMPOSSIBILITY FOR THE ASSESSEE AND IN CONTRADICTION TO THE PROVISIONS U/S. 80 1B(10) AS PREVAILED AT TH E TIME OF APPROVAL AND COMMENCEMENT OF THE CONSTRUCTION OF TH E PROJECT WELL BEFORE 1.4.2005. BOMBAY BENCH OF THE TRIBUNAL IN TH E CASE OF HIRANANDANI AKRUTI J. V (SUPRA) HAS DISCUSSED ALL T HESE RELEVANT ASPECTS RAISED BY THE DEPARTMENT. IN THE CASE OF HI RANANDANI AKRUTI J,V V/S. DCIT, IT HAS BEEN HELD THAT THE LAW AS EXISTED WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL AND PERMIS SION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. IN THE PRESENT CASES, AS PER PAGE NOS. 17 AND 20 OF THE PAPER BOOK IN THE CASE OF OPEL SHELTER THE PROJECT WAS COMMENCED ON 23.2.2001 AND EVEN COMPLETED ON 14.5.2004, SIMILARLY AS PER THE CONTEN TS OF PAGE NO.2 OF THE ASSESSMENT ORDER AND PAGE NO. 41 OF THE PAPER BOOK IN THE CASE OF D.S. KULKARNI AND ASSOCIATES, THE PROJE CT WAS COMMENCED ON 12.4.2001 AND COMPLETED IN THE MONTH O F NOVEMBER 2003. THUS, THE ASSESSEES WERE SUPPOSED TO COMPLETE THE PROJECTS AS PER THE LAW AS EXISTED IN THE A.Y. 2001-02 IN THE CASE OF OPEL SHELTERS AND IN THE A.Y. 2002-03 IN TH E CASE OF D.S. KU/KARNI AND ASSOCIATES. WE THUS FOLLOWING THE DECI SION IN THE CASE OF HIRANANDANI AKRUTI JV V/S. DCIT (SUPRA) HOL D THAT AMENDED PROVISIONS UNDER SECTION 80 IB(10) W.E.F. 1 .4.2005 ARE NOT APPLICABLE IN THE PRESENT CASE, HENCE ASSESSEES ARE ELIGIBLE FOR THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT. W E ACCORDINGLY DIRECT THE A,O TO ALLOW THE CLAIMED DEDUCTION TO TH E ASSESSEES.' 12. WE FIND SIMILAR VIEW HAS BEEN TAKEN BY THE MUMB AI BENCH OF THE TRIBUNAL IN THE CASE OF HAWARE CONSTRUCTIONS (P) LT D. (SUPRA). SINCE THE PROJECTS HAS BEEN APPROVED PRIOR TO 1.4.2004 AND SI NCE AFTER EXCLUDING THE BALCONY/TERRACE, THE TOTAL BUILT UP AREA OF NON E OF THE FLATS EXCEEDS 1500 SQ. FT., THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS CITED (SUPRA) WE HOLD THAT THE BENEFIT OF DEDUCTION U/S. 80 IB (1 0) CANNOT BE DENIED TO THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE SET AS IDE THE ORDERS OF THE CIT(A) AND DIRECT THE A.O TO ALLOW THE BENEFIT OF D EDUCTION U/S. 80 IB (10) CLAIMED BY THE ASSESSEE. 15. THUS, THE ISSUE WHETHER THE DEFINITION OF BUILT UP AREA AS DEFINE D U/S. 80IB(10) IS TO BE APPLIED IN CASE OF PROJECTS APPROVED PRIOR TO 01- 04-2005 IS NO MORE RES-INTEGRA. IN VIEW OF THE DECISIONS OF CO-ORDINATE 14 ITA NO. 563/PN/2014 & CO NO. 22/PN/2015, A.Y. 2009-10 BENCH ON THE ISSUE, WE HOLD THAT PRIOR TO THE INSERTION OF DEFINITION OF BUILT UP AREA BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 01-04 -2005, PROJECTIONS, BALCONIES AND OPEN TERRACE CANNOT BE CONSID ERED AS PART OF THE BUILT UP AREA OF THE RESIDENTIAL UNIT. THE NEWLY INSE RTED DEFINITION OF BUILT UP AREA WOULD BE APPLICABLE ONLY ON THE PROJECT S WHICH ARE APPROVED/SANCTIONED AFTER 01-04-2005. IN VIEW OF THE FAC TS OF THE CASE AND VARIOUS DECISIONS DISCUSSED ABOVE, WE ALLOW THE CROSS OBJECTIONS BY THE ASSESSEE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 03 RD DAY OF FEBRUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 03 RD FEBRUARY, 2016 RK ,-*%./#0#). / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT-V, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE