Dy. CIT, Circle 1(2), Pune V. D.S. Kulkarni Developers Ltd., Pune

ITA 576/PUN/2013

• Counselvise Citation: 57624514 RSA 2013
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 576/PN/2013 (ASSTT.YEAR : 2006-07) DY.CIT, CIRCLE-1(2), PUNE .. APPELLANT VS. D.S. KULKARNI DEVELOPERS LTD., 1187/60, J.M. ROAD, SHIVAJINAGAR, PUNE-411004 .. RESPONDENT PAN NO.AAACD6413H APPELLANT BY : SHRI P.L. PATHADE RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 25-11-2013 DATE OF PRONOUNCEMENT : 29-11-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 07-12-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSESS MENT YEAR 2006-07. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY THE REVENUE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN ALLOWING T HE CLAIM OF DEDUCTION U/S.80IB(10) AMOUNTING TO RS.2,50,18,089/- TO THE A SSESSEE WHICH WAS DENIED BY THE ASSESSING OFFICER. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF DEVELOPING LANDS , CONSTRUCTION OF THE BUILDINGS/TENAMENTS AND SALE THEREOF. DURING THE I MPUGNED ASSESSMENT YEAR THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME OF RS.4,91,92,810/- AFTER CLAIMING DEDUCTION OF RS.14, 75,78,428/- U/S.80IB(10) FOR THE FOLLOWING PROJECTS : 2 SR.NO. NAME OF SITE PROFIT CLAIMED U/S.80IB(10) LOCATION OF SITE 1 DSK CHANDRADEEP PHASE-II 64,625 MUKUNDNAGAR, PUNE 2 DSK VISHWA PHASE PHASE-III 87,92,544 S.NO. 126/1, DHAIRY, PUNE 3 DSK FRANGIPANI 1,62,25,545 OFF : SADHU VASWANI CHOWK, PUNE 4 DSK SUNDARBAN 4,66,88,386 S.NO.173, 174, HADAPSAR, PUNE 5 DSK GARDEN ENCLAVE 3,52,55,283 S.NO.37/H.NO.24 & 25, KONDHWA, PUNE 6 DSK VISHWA PHASE -IV (SAPTASUR) 4,05,52,045 S.NO.122/1, DHAIRY, PUNE TOTAL DEDUCTION 14,75,78,428 3.1 FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE THE ASSESSING OFFICER NOTED THAT THE TWO CLUSTER BUILDINGS VIZ., PAWAN AND VARUN IN THE HOUSING PROJECT OF THE ASSESSEE CALLED DSK VISHWA P HASE-III HAS COMMERCIAL AREA OF 2486 SQ.FT. AND 3646 SQ.FT. RESP ECTIVELY. THE PROJECT WAS STATED TO HAVE COMMENCED ON 13-10-2000 IN TERMS OF COMMENCEMENT CERTIFICATE NO. DPD/7386/NEW MERGED CHAYARI + KIRKA TWADI ISSUED BY THE PUNE MUNICIPAL CORPORATION. SINCE SEC.80IB(10) AS IT STOOD THEN, DID NOT ENVISAGE ANY COMMERCIAL AREA IN RESPECT TO A HOUSIN G PROJECT, THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE DEDUCTION CLAIMED U/S.80IB(10). IN RESPECT OF THE PROJECT DSK FRANGIPANI, THE ONLY OBJ ECTION OF THE ASSESSING OFFICER WAS THAT THE FLATS CONSTRUCTED BY THE ASSES SEE DO NOT CONFORM TO THE CONDITIONS PRESCRIBED IN CLAUSE (C) TO SEC.80IB(10) . THIS OBJECTION AROSE FROM THE PHYSICAL INSPECTION OF THE ASSESSING OFFIC ER TO THE FLATS LOCATED IN THE PROJECT DUE TO A SURVEY U/S.133A CONDUCTED AT T HE SITE PREMISES ON 24-11- 2005. IT WAS NOTED THAT UNITS 1101B AND 1102B WERE PROVIDED ONLY ONE ENTRANCE AND SEPARATE KITCHEN, PLUMBING ETC. WAS NO T PROVIDED. FURTHER, AS PER THE REVISED PLAN AND SANCTION NO.1615/04 DATED 30-07-2004 THE ASSESSEE PROPOSED TO CONSTRUCT 40 FLATS IN A AND B WINGS CON SISTING OF 4 BHK PENT HOUSES, 3 BHK FLATS AND 2 BHK FLATS. SUBSEQUENTLY, BY REVISED PLAN DATED 3 22-06-2006, THE 4 BHK PENT HOUSES WERE DROPPED FROM THE PLAN AND INSTEAD CONVERTED INTO TWO UNITS EACH. THE ASSESSING OFFIC ER FOLLOWED HIS PREDECESSORS ORDER FOR A.Y. 04-05 AND 05-06 AND DI SALLOWED THE CLAIM OF THE ASSESSEE U/S.80IB(10) SINCE THE BUILT-UP AREA P ARAMETERS SPECIFIED U/S.80IB(10) WERE NOT MET IN RESPECT OF DSK FRANGIP ANI. 4. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.Y. 200 4-05 AND 2005-06 THE ASSESSING OFFICER DENIED THE BENEFIT OF DEDUCTION U /S.80IB(10) IN RESPECT OF PROJECT DSK VISHWA PHASE-III AND DSK FRANGIPANI. I N APPEAL THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2004-05 AND 2005-06 WHICH HAS BEEN UPHELD BY THE TRIBUNAL ALLOWED THE CLAIM OF TH E ASSESSEE. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 & 2005-06 VIDE ITA NOS.1428 A ND 1429/PN/2008 ORDER DATED 08-08-2012 HAS HELD AS UNDER: 11. NOW, WE MAY DEAL WITH THE REVENUES AFORESAID OB JECTION WITH REGARD TO THE DSK VISHWA PROJECT III FOR THE A.Y. 2005-06. AS PER THE REVENUE, CLAUSE (D) OF SEC. 80 IB (10) IS INSERTED W.E.F. 1.4. 2005 PRESCRIBING RESTRICTION ON THE PRESENCE OF COMMERCIAL AREA IN A HOUSING PROJE CT, AND AS THE COMMERCIAL AREA IN THIS CASE, BEING 6232 SQ.FT., EX CEEDS THE RESTRICTION CONTAINED IN 80 IB (10)(D), THEREFORE, FOR A.Y. 2 005-06, THE DEDUCTION IS NOT ALLOWABLE. IN THIS CONTEXT, THE ISSUE IS AS TO WHETHER THE RESTRICTION CONTAINED IN SEC. 80 IB (10)(D), INSERTED BY THE FINANCE (NO.2 ) ACT, 2004 W.E.F. 1.4.2005, CAN BE MADE APPLICABLE TO A PROJECT WHEREIN THE CO NSTRUCTION COMMENCED PRIOR TO 1.4.2005. IT HAS BEEN POINTED OUT THAT SIMI LAR CONTROVERSY WAS A SUBJECT MATTER OF CONSIDERATION BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD. (ITA NO. 219/PN/09 DATED 31. 5.2011). THE TRIBUNAL CONSIDERED AN EARLIER DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI JV VS. DCIT, ITA NO. 5416/ MUM/2009 DATED 30-3- 2010 RELATING TO A.Y. 2006-07 AND HELD THAT THE AM ENDED SEC. 80 IB (10)(D) WOULD APPLY ONLY TO PROJECTS COMMENCING AFTER 1.4.2 005. THE PRIMARY REASON MADE OUT IS TO THE EFFECT THAT WHEN THE PROJEC T COMMENCED, THE 4 ASSESSEE COULD NOT HAVE ENVISAGED THAT THE LEGISLATURE WO ULD PUT SUCH A RESTRICTION IN FUTURE. AS PER THE TRIBUNAL, RESTRICTIO N INSERTED IN THE STATUTE BY FINANCE (NO. 2) ACT 2004, W.E.F. 01.4.2005 IN TERM S OF CLAUSE (D) TO SEC. 80 IB (10) CANNOT BE APPLIED TO THE PROJECTS WHICH HAVE C OMMENCED PRIOR TO 01.4.2005. IN OUR CONSIDERED OPINION, THE AFORESAI D PROPOSITION LAID DOWN BY THE TRIBUNAL SQUARELY COVERS THE CONTROVERSY BEFORE US. IN THE CASE BEFORE US, THE PROJECT IN QUESTION HAS COMMENCED PRIOR TO 01.4.2005 AND ALSO STANDS COMPLETED ON 31.12.2004 I.E. PRIOR TO 31.3.200 5, AND IN THIS VIEW OF THE MATTER, THE NEWLY INSERTED CLAUSE (D) TO SEC. 80 IB (10) CANNOT BE INVOKED TO DIS-ENTITLE THE ASSESSEE FROM THE CLAIM OF DEDUCTION U /S. 80 IB (10) OF THE ACT FOR THE A.Y. 2005-06. THEREFORE, IN SO FAR AS THE PR OJECT DSK VISHWA PHASE III IS CONCERNED, THE OBJECTIONS MADE OUT BY THE REVE NUE FOR THE A.YS. 2004- 05 AND 2005-06 IN ORDER TO DENY THE CLAIM OF DEDUCT ION U/S. 80 IB (10) ARE UNFOUNDED AND DESERVE TO BE NEGATED. WE HOLD SO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CONNECTION, THE FIRST AND FOREMOST ISSUE IS WITH REGARD TO THE MEANING OF THE EXPRESSION BUILT UP AREA FOR THE PURPOSES OF CLAUSE (C ) TO SEC. 80 IB(10) OF THE ACT. SEC. 80 IB (14)(A) WAS INSERTED BY THE FINA NCE (NO.2) ACT, 2004 W.E.F. 01.4.2005 PRESCRIBING THE DEFINITION OF THE EXPRESSION BUILT UP AREA. IN TERMS OF THE SAID DEFINITION, THE BUILT UP AREA INTER ALIA, INCLUDES THE AREA OF PROJECTIONS AND BALCONIES. THE MOOT POINT IS AS TO WHE THER THE SUCH DEFINITION IS APPLICABLE IN RESPECT OF THE PROJECT IN QUESTION BEFORE US. ADMITTEDLY, IT IS EMERGING FROM THE ORDERS OF THE AUT HORITIES BELOW THAT THE PROJECT DSK FRANGIPANI COMMENCED ON 12.12.2003 I.E. PRIOR TO THE 01.4.2005. THEREFORE, REVENUE AUTHORITIES ARE NOT JUSTIFIED IN I NCLUDING THE BALCONIES/OPEN TERRACES IN THE CALCULATION OF BUILT -UP AREA AND THE DEFINITION OF BUILT-UP AREAIN TERMS OF SEC. 80 IB (14)(A) OF THE ACT CANNOT BE APPLIED TO PROJECTS COMMENCED PRIOR TO 1.4.2005.. T HE AFORESAID PROPOSITION IS IN LINE WITH THE DECISION OF THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF HAWARE CONSTRUCTIONS (SUPRA) AS ALSO THE DECISION OF TH E PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIME PROPERTIES (SUPRA). NO W COMING TO THE ISSUE OF INCLUSION OF AREA OF CAR PARKING, THE ASSESSING OFFICER HAS INCLUDED THE SAME IN THE CALCULATION OF BUILT- UP AREA AND SUCH ARE A HAS BEEN CONSIDERED BY HIM AT 300 SQ.FT. FOR EACH OF THE RESIDENTIAL UNITS. AS NOTED BY US EARLIER, THE DEFINITION OF BUILT- UP AREA CONTAINED IN SEC. 80 IB (14)(A) OF THE ACT IS NOT APPLICABLE IN THE PRESENT CASE, BEING A PROJECT HAVIN G COMMENCED PRIOR TO 01.4.2005, AND THEREFORE FOR SUCH LIKE PROJECTS, IT WOULD BE IN FITNESS OF THE THINGS THAT THE EXPRESSION BUILT UP AREA IS UNDERSTOO D AS PER THE DEVELOPMENT CONTROL RULES OF THE LOCAL AUTHORITY, WH ICH HAS APPROVED SUCH A PROJECT. IN THIS CONNECTION, CLAUSE 2.13 OF THE DEVEL OPMENT CONTROL RULES, PUNE, DEFINES BUILT-UP AREA AS UNDER : 2.13 BUILT-UP AREA AREA COVERED IMMEDIATELY ABOVE THE PLINTH LEVEL BY THE BUILDING OR EXTERNAL AREA OF ANY UPPER FLOOR WHICHEVER IS MORE EXCEPTING THE AREAS COVERED BY RULE NO. 15.4.2 OSTENSIBLY, A PERUSAL OF ABOVE DEFINITION SHOWS THAT AN AREA COVERED BY RULE 15.4.2 IS NOT INCLUDIBLE IN THE MEANING OF BUILT U P AREA. THE EXTRACT OF RULE 15.4.2, HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 36, AND IT REFLECTS THAT A MULTI STORIED STILT FLOORING SPACE CONSTRUCTED UNDER A BUILDING IS ALLOWED TO BE USED AS A PARKING SUBJECT TO HEIGHT RESTRICTIONS. I N TERMS THEREOF, IT IS SOUGHT TO BE MADE OUT THAT THE AREA OF CAR PARKING I S SPECIFICALLY EXCLUDIBLE WHILE CALCULATING BUILT- UP AREA AS PER THE DEVEL OPMENT CONTROL RULES AND THEREFORE, THE ASSESSING OFFICER WAS WRONG IN CONSIDERING SUCH AREA FOR THE PURPOSE OF COMPUTING BUILT- UP AREA OF THE RESIDEN TIAL UNITS. A BARE PERUSAL OF THE DEVELOPMENT CONTROL RULES, IN OUR VIEW, SUPPOR TS THE ASSERTIONS PUT 5 FORTH BY THE ASSESSEE AND THEREFORE, THE AREA OF CAR P ARKING IS NOT TO BE INCLUDIBLE FOR THE PURPOSES OF COMPUTING BUILT- UP A REA OF RESIDENTIAL UNITS IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 19. NOW, WE MAY TAKE UP FOR CONSIDERATION THE THIRD OBJECTION OF THE REVENUE WITH REGARD TO THE FOUR FLATS IN EACH WING W HICH HAVE BEEN COMBINED INTO TWO DUPLEX FLATS ON 11 TH FLOOR WHEREBY UPON COMBINING THE TWO FLATS, THE AREA EXCEEDED THE LIMIT OF 1500 SQ.FT. IN THIS CON NECTION, WE FIND THAT THE ASSESSING OFFICER HAS CONCLUDED, AFTER CARRYING OUT A SUR VEY THAT TWO ADJOINING FLATS WERE COMBINED INTO ONE UNIT IN AS MU CH AS THERE WAS NO SEPARATE KITCHEN. THOUGH, THE ASSESSEE HAS CANVASSED THAT THE TWO FLATS ARE CONSIDERED SEPARATE FLATS BY THE MUNICIPAL AUTHORITIES, HOWEVER, THE ASSESSING OFFICER HAS ASSERTED THAT THE TWO FLATS HAVE BE EN COMBINED BY THE ASSESSEE AND THEREAFTER SOLD. THE AFORESAID FACTUAL FIND ING OF THE ASSESSING OFFICER HAS NOT BEEN DISPROVED BY THE ASSESSEE AND THERE IS NO MATERIAL TO SUGGEST THAT THE FLATS HAVE BEEN COMBINED BY THE PURCH ASERS. THEREFORE, IN OUR CONSIDERED OPINION, HAVING REGARD TO THE FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE, THE BUILT- UP AREA OF THE FLATS HAVE TO BE CONSIDERED AFTER COMBINING THE TWO FLATS EACH. IF IT IS SO DONE, CLEAR LY, THE BUILT- UP AREA OF THE COMBINED RESIDENTIAL UNITS ON THE 11 TH FLOOR, EXCEEDS THE PRESCRIBED LIMIT OF 1500 SQ. FT., THEREBY, NOT ADHERING TO THE CONDI TIONS PRESCRIBED IN SEC. 80 IB (10)(C ) OF THE ACT. 20. IN THIS BACKGROUND, THE ALTERNATIVE PLEA OF THE ASSESSEE SPRINGS UP. THE PLEA IS THAT THE DEDUCTION U/S. 80 IB (10) BE DEN IED ONLY WITH RESPECT TO THE UNITS WHICH DO NOT CONFORM TO THE CONDITION CONT AINED IN SEC. 80 IB (10)(C) AND FOR THE BALANCE ELIGIBLE RESIDENTIAL UNI TS, THE DEDUCTION SHOULD BE ALLOWED. THE REVENUE HAS OPPOSED THE SAID PLEA ON TH E GROUND THAT THE ASSESSEE IS NOT ENTITLED TO A PROPORTIONATE DEDUCTION U /S. 80 IB (10) OF THE ACT. 21. ON THIS ASPECT, WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. EKTA HOUSING PVT. LTD. (SUPRA) HAS UPHELD THE PLEA OF THE ASSESSEE FOR A PROPORTIONATE DEDUCTION U/S. 80 IB (10) O F THE ACT WHERE SOME OF THE RESIDENTIAL UNITS IN THE PROJECT VIOLATED THE CONDITION CONTAINED IN SEC. 80 IB (10)(C ) OF THE ACT. THE MUMBAI BENCH AFTER NOTICING THE PRECEDENTS IN THE CASE OF I) ITO V/S AIR DEVELOPERS, 25 DTR 287 (NAG.); II) DCIT V/S BRIGADE ENTERPRISES PVT. LTD., 14 DTR 3 71 (BANG.); III) ACIT V/S SHETH DEVELOPERS P. LTD., 33 SOT 277 (MUM.); IV) BENGAL AMBUJA HOUSING DEVELOPMENT LTD. V/S DCIT ; V) SJR BUILDERS V/S ACIT, 3 ITR 569 (MUM.) HELD THAT THE ASSESSEE WOULD NOT LOOSE THE EXEMPTION U/ S. 80 IB (10) IN ENTIRETY WHERE SOME OF THE RESIDENTIAL UNITS WINGS H AD A BUILT- UP AREA IN EXCESS OF THE LIMIT PRESCRIBED IN CLAUSE (C ) OF SEC . 80 IB (10) BUT, IT WOULD BE ENTITLED TO PROPORTIONATE DEDUCTION U/S. 80 IB (10) OF THE ACT WITH REGARD TO THE PROFITS EARNED ON THE ELIGIBLE UNITS.. PARTICULA RLY, THE TRIBUNAL ALSO CONSIDERED THE DECISION OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND HELD THAT THE SAME DOES NO T ENVISAGE DENIAL OF PROPORTIONATE DEDUCTION IN SUCH CIRCUMSTANCES. THE RELEVANT DISCUSSION, AS CONTAINED IN PARAGRAPHS 8 & 9 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. READS AS UNDER : 6 VIII) WE NOW EXAMINE THE APPLICABILITY OF THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN BRAHMA ASSOCIATES (SUPRA) TO THE F ACTS OF THIS CASE. ON A CAREFUL READING OF THIS JUDGMENT, WE FIND THAT NOWHERE IT IS STATED THAT PROPORTIONATE DEDUCTION SHOULD NOT BE A LLOWED, IN CASE CERTAIN RESIDENTIAL UNITS HAD BUILT UP AREA IN EXCE SS OF PRESCRIBED LIMIT OF 1,000 SQ.FT. IN FACT, THIS ISSUE WAS NOT BEFOR E THE HONBLE JURISDICTIONAL HIGH COURT. THE QUESTIONS BEFORE THE H ONBLE JURISDICTIONAL HIGH COURT WERE DIFFERENT AND, HENCE THE JUDGMENT CANNOT BE SAID TO BE ON THIS ISSUE. THE ONLY ISSUE BEFOR E THE HIGH COURT IS WHEN THERE IS A COMMERCIAL ELEMENT IN A RESID ENTIAL PROJECT, WILL BE ASSESSEE BE DENIED THE ENTIRE EXEMPTION. IN THI S CASE, THE HONBLE HIGH COURT HAS OBSERVED THAT WHEN THE LOCAL A UTHORITY APPROVED A PLAN AS A HOUSING PROJECT OR A RESIDENTIAL CUM COMMERCIAL PROJECT, THE ASSESSEE WOULD BE ENTITLED TO CLAIM FOR DE DUCTION UNDER SECTION 80IB(10) EVEN IF THE PROJECT HAD COMMERCIAL ELEMENT IN EXCESS OF 10%. AT PARAS-27 AND 28, THE COURT OBSERVED AS FO LLOWS :- 27. THE QUESTION THEN TO BE CONSIDERED IS, WHETHER TH E SPECIAL BENCH OF THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT T HE PROJECTS HAVING COMMERCIAL AREA UPTO 10% OF THE BUILT-UP AREA OF TH E PLOT ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) ON THE ENTIRE PROJECT UPTO 1.4.2005. ONCE THE BASIC ARGUMENT OF THE REVENUE TH AT THE HOUSING PROJECTS WITH COMMERCIAL USER ARE NOT ENTITLED TO SECT ION 80IB(10) DEDUCTION IS REJECTED, THEN IN THE ABSENCE OF ANY RE STRICTION IMPOSED UNDER THE ACT, IT WAS NOT OPEN TO THE TRIBUNAL TO HO LD THAT THE PROJECTS APPROVED BY THE LOCAL AUTHORITIES HAVING RESIDENTIA L BUILDINGS WITH COMMERCIAL USER UPTO 10% OF THE PLOT AREA WOULD ALON E BE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10). AS NOTED EARLIER, R ESTRICTION REGARDING COMMERCIAL USER HAS BEEN IMPOSED FOR THE FIR ST TIME BY INTRODUCING CLAUSE (D) TO SECTION 80IB (10) WITH EFF ECT FROM 1.4.2005. THEREFORE, IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT PRIOR TO 1.4.2005, PROJECTS HAVING COMMERCIAL USER UPTO10% OF THE PLOT AREA ALONE WOULD BE ELIGIBLE FOR SECTION 80IB(10) DEDUCTI ON. 28. IN THE PRESENT CASE, THOUGH THE COMMERCIAL USER I S MORE THAN 10% OF THE PLOT AREA, THE TRIBUNAL HAS ALLOWED SECTI ON 80IB(10) DEDUCTION IN RESPECT OF 15 RESIDENTIAL BUILDINGS ON T HE GROUND THAT THE PROFITS FROM THESE EXCLUSIVELY RESIDENTIAL BUILDINGS COU LD BE DETERMINED ON STAND ALONG BASIS. IN OUR OPINION, THAT WOULD NOT BE PROPER, BECAUSE SECTION 80IB(10) ALLOWS DEDUCTION TO T HE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80IB(10) ARE SATISF IED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVE D BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUC TION TO A PART OF THE PROJECT. IN THE PRESENT CASE, THE COMMERCIAL USER IS ALLOWED IN ACCORDANCE WITH THE DC RULES AND HENCE THE ASSESSEE WAS E NTITLED TO SECTION 80IB(10) DEDUCTION ON THE ENTIRE PROJECT APP ROVED BY THE LOCAL AUTHORITY. HOWEVER, THE ASSESSEE HAS NOT CHALLENGED THE DECISION OF THE TRIBUNAL IN RESTRICTING THE DEDUCTION TO A PART OF THE PROJECT. THEREFORE, WHILE HOLDING THAT IN LAW, THE ASSESSEE WAS E NTITLED TO SECTION 80IB(10) DEDUCTION ON THE PROFITS OF THE ENTI RE PROJECT, IN THE FACTS OF THE PRESENT CASE, SINCE THE ASSESSEE HAS NOT CHALLE NGED THE DECISION OF THE TRIBUNAL, WE ARE NOT INCLINED TO DIST URB TO DISTURB THE DECISION OF THE TRIBUNAL IN RESTRICTING THE SECTION 8 0IB(10) DEDUCTION ONLY IN RESPECT OF THE PROFITS DERIVED FROM 15 RESIDEN TIAL BUILDINGS. IX) THUS, IT COULD BE SEEN THAT THE HONBLE HIGH CO URT DO NOT APPROVE THE FINDINGS OF THE TRIBUNAL THAT A RESIDEN TIAL BUILDING WITH COMMERCIAL USER UP TO 10% OF THE PLOT AREA WOULD ALO NE BE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10). THE ISSUE THAT, IN CASE WHERE 7 CERTAIN RESIDENTIAL UNITS ARE OF A BUILT UP AREA IN E XCESS OF THE PRESCRIBED LIMIT OF 1,000 SQ.FT. IN RESIDENTIAL PROJEC T, THIS WOULD RESULT IN THE ENTIRE EXEMPTION BEING LOST, OR WHETHER THE ASSESSEE WOULD BE ENTITLED TO A PROPORTIONATE DEDUCTION WAS NOT BEFORE THE HIGH COURT. THUS, IN OUR OPINION, THE DECISION OF HONBLE JURISDIC TIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA) DOES NOT COME TO THE RESCUE OF THE REVENUE. 22. FOLLOWING THE AFORESAID PRECEDENT, WE, THEREFORE , HOLD THAT MERELY BECAUSE THE ASSESSEE HAS VIOLATED THE CONDITION U/S. 80 I B(10)(C ) IN RELATION TO THE FLATS ON THE 11 TH FLOOR, THE DEDUCTION U/S. 80 IB(10) CANNOT BE DENIE D IN ITS ENTIRETY, BUT, THE DENIAL SHALL BE LIMITED TO THE PROFITS IN RESPECT OF THE FLATS ON THE 11 TH FLOOR ALONE. FOR THE BALANCE OF THE RESIDENTIAL UN ITS, THE PLEA OF THE ASSESSEE FOR DEDUCTION U/S. 80 IB(10) OF THE ACT IS JUSTIF IED, AND THE ASSESSEE SUCCEEDS ON THIS ASPECT. 23. WITH REGARD TO THE PROJECT DSK FRANGIPANI FOR T HE A.Y. 2005-06 ALSO, THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. IN THIS YEA R ALSO, IN OUR CONSIDERED OPINION, OUR DECISION IN THE AFORESAID PARAGRAPH FULL Y APPLIES. THOUGH IN A.Y. 2005-06, THE DEFINITION OF BUILT-UP AREA AS PER SE CTION 80 IB (14)(A) WAS ON STATUTE, BUT, ADMITTEDLY, ASSESSEES PROJECT WAS APPROVE D AND COMMENCED PRIOR TO 1.4.2005, THEREFORE, THE CALCULATION OF B UILT- UP AREA SHALL NOT BE GOVERNED BY SUCH DEFINITION. THEREFORE, FOR THE A.Y . 2005-06 ALSO, THE PROJECT DSK FRANGIPANI IS ELIGIBLE FOR DEDUCTION U/S. 80 IB(1 0), ALBEIT ON A PROPORTIONATE BASIS IN RESPECT OF THE FLATS WHOSE BUILT UP AREA DOES NOT SUCCEED 1500 SQ.FT. AS PRESCRIBED U/S. 80 IB (10)(C ) O F THE ACT. IN THIS VIEW OF THE MATTER, THE ORDER OF THE CIT(A) FOR BOTH THE YE ARS IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE DEDUCTIO N ALLOWABLE TO THE ASSESSEE U/S. 80 IB (10) OF THE ACT IN TERMS OF OUR ABOVE DISCUSSIONS. RESULTANTLY, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLO WED. 5.1 SINCE THE LD.CIT(A) WHILE ALLOWING THE CLAIM OF THE ASSESSEE HAS FOLLOWED THE ORDERS OF HIS PREDECESSOR FOR THE PREC EDING YEARS WHICH HAS BEEN UPHELD BY THE TRIBUNAL, THEREFORE, RESPECTFULL Y FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-0 5 & 2005-06 AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29-11-2013. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 29 TH NOVEMBER, 2013 SATISH 8 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE