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TMI Blog2011 (3) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... to the claim are satisfied - Whether the Special Bench of the Tribunal was justified in holding that the projects having commercial area upto 10 per cent of the built-up area of the plot are eligible for deduction section 80-IB(10) on the entire project upto 1-4-2005 - The deduction was declined on the ground that the project was not a housing project and because some of the flats, after including the balcony area, exceed the requisite size of one thousand square feet - Decided in the favour of the assessee - IT APPEAL NO. 6431 (MUM.) OF 2007 - - - Dated:- 30-3-2011 - R.V. EASWAR, PRAMOD KUMAR, JJ. S.R. Wadhva for the Appellant. Narendra Singh for the Respondent. ORDER Pramod Kumar, Accountant Member. By way of this appeal, the assessee has called into question correctness of CIT(A)'s order dated 2-8-2007, in the assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2004-05. 2. The assessee is engaged in construction of the building projects and the short issue that we are required to adjudicate in this appeal is whether or not the CIT(A) was justified in upholding the action of Assessing Officer in declining deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admeasuring 48.13 square meters, to the assessee) modifies the original assessment retrospectively, the fact remains that the original plot of 4000.27 square meters only was utilized for housing project, and there was no development on additional plot for the simple reason that the additional plot was not available to the assessee at all" and "even otherwise, additional plot is actually a separate plot (plot 8B) distinct from the original plot (plot 8A)". It was thus concluded that, "the assessee's contention that area of additional plot should also be included for considering area of housing project is, therefore, unacceptable". Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee's plea to the effect that subsequent allotment of an adjacent plot, admeasuring 48.13 square meters, by CIDCO, as plot number 8B, made good this deficiency in eligibility for entitlement to deduction under section 80-IB(10), was rejected by the CIT(A) on the ground that "it is certainly not the intention of legislature that housing projects, which have already been completed on a smaller plot, will also be eligible for deduction (under section 80-IB(10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, satisfy the condition that (b) the project is on the size of a plot which was a minimum area of one acre. It is clearly area of the plot and not built up area which is important to determine eligibility in terms of section 80-IB(10)(b). In our considered view, the size of the plot includes entire area of the project which is developed by the builder for the residents of the project, including all common areas and public amenities for the residents of the project, and cannot be confined to only such area on which construction is permissible. Whether construction is permissible on the additional land or not is wholly irrelevant as long it is not in dispute that the said additional land was actually allotted, with or without conditions, for the purposes of the project. We have also noted that, vide allotment dated 6-4-2004 (pages 27-30 of paperbook, at the rate of page 28), the land use permitted, for the additional land so allotted, was only "for the purpose of development of green belt or children playground for the members of the society" (emphasis supplied by us), but then development of green belt or children playground "for the members of the society" cannot but be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as the same are approved by local authority in accordance with the regulations in force. It is, therefore, not correct to proceed on the basis that areas not used for construction, such as garden and roads etc., will not be included in the area of the project. The local authority in the present case is CIDCO itself as the housing project has been approved by CIDCO (page 14 of the paper-book) and commencement and completion certificates have been issued by CIDCO (pages 15-7 and 37-38 of the paper-book), and it is in accordance with the specific permission of CIDCO that the additional land has been developed, for the use of members of the society, as green belt and children's playground. The use of additional land, therefore, has to be treated as a part of the approved project. The other objection of the Assessing Officer was that plot No. 8B is a distinct plot and, therefore, it cannot be included in the housing project. We see no substance in this plea either. As evident from location plan attached to the modified lease agreement, plots 8A and 8B are adjacent to each other and are collectively shown as belonging to this project. It is not even necessary that area of each plot, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he size of additional plot of land which is just 48.13 meters, and this decision should, therefore, not be construed as of general applications in all such cases where additional plot of land has been added subsequently in the project. As regards the commercial built up area being in excess of 2,000 square feet, we have noted that the issue is now squarely covered by Hon'ble Bombay High Court's judgment in the case of CIT v. Brahma Associates [2011] 197 Taxman 459/9 taxmann.com 289 wherein Their Lordships have held that the restriction on the area of commercial use of built up area comes into play only with effect from 2005. The assessment year before us is 2004-05 and, therefore, use of commercial are in excess of 2,000 square feet does not vitiate assessee's claim for deduction under section 80-IB(10). In view of these discussions and bearing in mind entirety of the case, we hold that the assessee was eligible for deduction under section 80-IB(10) in respect of Shantiniketan project. We direct the Assessing Officer to grant the said deduction. 7. Grievance of the assessee, against CIT(A)'s upholding the disallowance of deduction under section 80-IB(10) in respect of Shantiniket ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant ineligible for deduction under section 80-IB(10). The appeal of the appellant, on this point, is, accordingly, dismissed." 9. The assessee is aggrieved and is in appeal before us. 10. We have heard the rival contentions, perused the material on record and duly considered factul matrix of the case as also the applicable legal position. 11. We find that the basic reason of the impugned disallowance of deduction is that the project was not approved as a housing project but as a housing cum commercial project, and because the project had substantial commercial area. The issue as to what should be done in such cases came up before a Special Bench of this Tribunal in the case of Brahma Associates v. Jt. CIT [2009] 119 ITD 255. That was a case in which the project was not approved as a housing project but as 'residential + commercial project', and deduction under section 80-IB(10) was declined, following coordinate bench decision in the case of Laukik Developers (supra), on the ground that it was not a housing project. The Special Bench, inter alia, held that " as long as the residential use of built-up area is 90 per cent or more, it cannot be said that the project is not a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court's judgment in the case of Brahma Associates (supra), as long as project is an approved project, even as commercial cum residential - as was the position in Brahma Associates case (supra) and as the position in the present case, deduction under section 80-IB(10) cannot be declined on the ground that it is not a purely residential project or on the ground that it has substantial commercial built up area. As for the co-ordinate bench decision in the case of Laukik Developers (supra), it was overruled by the Special Bench decision in the case of Brahma Associates (supra) and Hon'ble Bombay High Court has upheld the action of the Special Bench in this regard. The very foundation of impugned disallowance thus does not hold good in law any longer. 13. The other objection of the Assessing Officer was that the size of some of the residential units was more than one thousand square feet. However, even according to the Assessing Officer, this working was "calculated as predetermined percentage of super built up area/saleable area mentioned in the agreement and after taking into consideration the area of attached terrace". The expression 'built up area' has been defined, with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on clause declares that they shall include. So normal meaning of built-up area, but for the definition including projection and balcony, would definitely exclude the latter. Even according to the Assessing Officer himself, built-up area as normally understood in common parlance means area enclosed within the external lines of the external walls. Therefore, there can be no doubt that prior to the introduction of the definition clause aforesaid, built-up area would not include projections and balconies as normally understood. Now the question whether the definition clause mentioned above can be deemed as retrospective, we are afraid we have to answer against the revenue. Number one, the enactment itself clearly specifies that clause will have effect from 1-4-2005. Number two, it is not a procedural section but a definition section, where an enlarged meaning is given to the term 'built-up area' and such enlarged meaning would not have been in the realm of understanding of any person, prior to its introduction, and assessees would have gone ahead with their respective projects based on a common understanding of the term built-up area. Thus, the enlarged meaning, if given a retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of this project, in the preceding assessment years, by Settlement Commission, and following the principles of consistency, we must allow the same for this year as well. Some arguments were advanced on the issue as to whether orders of settlement commission have precedential value. However, having regard to the fact that the issue has been decided on merits, we do not consider it necessary to deal with these arguments and adjudicate upon the same. 16. One more argument of the assessee has been that as far as assessee is concerned, its project is only for the residential units and the assessee constructed other commercial area for lessee of the land, in consideration of so using the land and FSI for residential purposes. It is submitted that land was allotted to Danik Pundhir and, it was in consideration of assessee doing construction for their needs as press, the assessee was allowed to use the area for residential use. The project of the assessee was thus only with regard to the housing units built by the assessee, and what has been built as commercial units and for press, is in fact consideration for allowing the assessee to develop residential segment of the overall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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