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2015 (11) TMI 424 - AT - Income TaxDeduction u/s.80IB(10) in respect of its housing project namely Treasure Park - AO denied the benefit of deduction u/s.80IB(10) on the ground that the project consisted of commercial area of 12,325 sq.ft. - Held that - It has been held by the Hon ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders reported in 2012 (7) TMI 158 - BOMBAY HIGH COURT that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds which became available on account of change of circumstances or law but with additional grounds which were available when the return was filed. The words could not have been raised must be construed liberally and not strictly. There may be several factors justifying the reason of a new plea in an appeal and each case must be considered on its own facts. Therefore, the first ground of the revenue that when the claim of deduction u/s.80Ib(10) was not made for the entire project in the return of income filed or in the course of assessment proceedings or in Form 10CCB filed before the AO, the CIT(A) erred in allowing the claim of deduction u/s.80IB(10) of the Act to the project is devoid of any merit and accordingly the same is dismissed. Where housing projects were sanctioned before the amendment but have been completed after 01-04-2005 when the amended provisions came into operation the assessee would be entitled to the deduction u/s.80IB(10)and the conditions mentioned in clause (d) would not apply. Thus, the benefit restricted to cases where the area utilized for shops and commercial establishments does not exceed 5% of aggregate built up area of housing project or 2000 sq.ft which was less does not to apply to projects where approval of local authority was granted prior to 01-04-2005 even if project is completed thereafter.Since in the instant case admittedly, the project has been sanctioned prior to 01-04-2005 and the project has been completed after 01-04-2005, therefore, the restriction on the area of commercial building is not applicable to the facts of the present case. Therefore, this objection of the Revenue being devoid of merit is dismissed. So far as the objection of the AO that the built up area of all the flats in building F exceeded 1500 sq.ft., we find the Ld.CIT(A) has given a categorical finding that after exclusion of the balconies and terraces none of the flats of building F exceeded 1500 sq.ft. could not be controverted by the Ld. Departmental Representative. It is an admitted fact that the commencement certificate is dated 17- 12-2004 which is prior to 01-04-2005. Section 80IB(14)(a) w.e.f. 01-04-2005 is not applicable to housing projects approved prior to 01-04-205. Since in the instant case the built up area of all the units of building F are less than 1500 sq.ft. after excluding the balconies and terraces, therefore, the CIT(A) was fully justified in allowing the claim of deduction u/s.80IB(10) in respect of building F. See CIT Vs. Prime Properties 2015 (11) TMI 341 - BOMBAY HIGH COURT So far as denial of deduction u/s.80IB(10) in respect of the 2 units of building D are concerned, we find the assessee has not claimed deduction in respect of the above 2 units in the return of income on the ground that the combined area of the adjoining flats exceed 1500 sq.ft. However, before CIT(A) the assessee took an additional ground and claimed the deduction in respect of the above 2 units on the ground that assessee has sold independent units to the respective customers which were less than 1500 sq.ft. It is the customers who have combined the flats and therefore the assessee is entitled to deduction u/s.80IB(10). We find the Ld.CIT(A) admitted the additional evidence and on the basis of the declaration of the customers held that it is the customers who have combined the units and the assessee has sold separate units to the customers where the built up area of each unit is less than 1500 sq.ft. When the two adjacent flats were approved by the local authority as separate units and the completion certificate issued on that basis the 2 flats cannot be treated as one unit to compute the built up area for the purpose of section 80IB(10). Since in the instant case the Ld.CIT(A) has categorically given a finding that the assessee has sold the residential units to different individuals, the individual ownership is legally enforceable, the individuality of the ownership exists before the different authorities/organisations like PMC for corporation tax, MSEB for electricity meters and housing society for membership etc. and since he has also given a finding that it is the customers who have combined the adjacent units for their own requirements, therefore, in view of the decision of the Hon ble Bombay High Court in the case cited supra and in absence of any contrary material brought to our notice, the assessee cannot be denied the benefit of deduction u/s.80IB(10) in respect of the 2 units of building D. In view of our above discussion, we are of the considered opinion that the order of the Ld.CIT(A) is in consonance with law. We accordingly uphold the same and the grounds raised by the revenue are dismissed.
Issues Involved:
1. Eligibility for deduction under Section 80IB(10) of the Income Tax Act. 2. Applicability of amended provisions of Section 80IB(10)(c) and 80IB(10)(d). 3. Inclusion of commercial area in the housing project. 4. Built-up area exceeding 1500 sq.ft. 5. Combining of adjacent flats by customers. Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 80IB(10): The assessee, a partnership firm engaged in the business of promoters and builders, filed its return of income declaring a total income of Rs. 4,12,06,910 after claiming a deduction of Rs. 9,51,90,486 under Section 80IB(10) for its housing project "Treasure Park." The AO disallowed the deduction on the grounds that the project included residential units exceeding 1500 sq.ft. and commercial spaces totaling 12,325 sq.ft., which did not comply with Section 80IB(10). The CIT(A) allowed the deduction, stating that the project commenced before the amendment to Section 80IB(10), and therefore, the restrictions on commercial area and built-up area were not applicable. 2. Applicability of Amended Provisions of Section 80IB(10)(c) and 80IB(10)(d): The AO argued that the amended provisions, which limit the built-up area of commercial establishments to 5% of the aggregate built-up area or 2000 sq.ft., whichever is higher, should apply. However, the CIT(A) and the Tribunal held that since the project received its commencement certificate on 17-12-2004, prior to the amendment effective from 01-04-2005, the amended provisions were not applicable. This position was supported by the Hon'ble Bombay High Court's decision in Brahma Associates and the Hon'ble Supreme Court's decision in Sarkar Builders. 3. Inclusion of Commercial Area in the Housing Project: The AO contended that the project, being a residential plus commercial project, was not eligible for the deduction. However, the CIT(A) and the Tribunal concluded that for projects approved before 01-04-2005, the restriction on commercial area was not applicable. The Tribunal noted that the total commercial area was 2.75% of the project, which was less than the 5% limit introduced later. 4. Built-up Area Exceeding 1500 sq.ft.: The AO disallowed the deduction for buildings with units exceeding 1500 sq.ft., specifically building F and part of building D. The CIT(A) accepted the assessee's revised calculation, which excluded terraces and balconies from the built-up area, bringing the units within the 1500 sq.ft. limit. This approach was supported by the Tribunal, referencing the Hon'ble Bombay High Court's decision in Prime Properties, which stated that the definition of built-up area introduced in Section 80IB(14)(a) was not applicable to projects approved before 01-04-2005. 5. Combining of Adjacent Flats by Customers: The AO denied the deduction for four flats in building D, which were combined by customers, resulting in units exceeding 1500 sq.ft. The CIT(A) and the Tribunal held that the assessee sold these flats as separate units, and the combination by customers did not affect the eligibility for deduction. This decision was supported by declarations from the customers and the Hon'ble Bombay High Court's decision in Ankit Enterprises, which stated that separate units approved by local authorities should be treated individually for the purpose of Section 80IB(10). Conclusion: The Tribunal upheld the CIT(A)'s order allowing the deduction under Section 80IB(10) for the entire housing project, dismissing the Revenue's appeal. The Tribunal emphasized that the project, approved before the amendments to Section 80IB(10), was not subject to the new restrictions on commercial area and built-up area. Additionally, the Tribunal recognized the individual sale of units and the subsequent combination by customers as not affecting the eligibility for the deduction.
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