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TMI Blog2012 (12) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2005-06 and 2006-07 respectively. Since common grounds have been taken by the assessee in both these appeals, therefore, these were heard together and are being disposed of by this common order. ITA No. 1484/PN/2009 (A.Y. 2005-06) : 2. Facts of the case, in brief, are that the assessee is a partnership form carrying on business of Builders and Developers and is executing a housing project called NISARGA CITY . The assessee filed its return of income on 27-10-1005 declaring income of Rs. 8,49,620 after claiming deduction u/s. 80IB(10) of the I.T. Act. at Rs. 90,93,502. In this case a survey was conducted on 09-02-2005 during which it was observed that the shopping area in the housing project Nisarg City is 3494.83 sq.ft. in the total built up area of 1,07,930 sq.ft. After discussing the various issues in this case and after considering the various submissions made by the assessee from time to time the AO disallowed the claim of deduction u/s.80IB(10) of the I.T. Act on the following grounds : 1. Built up area of shops is more than 2000 sq.ft. 2. Built of area of Flat No. 502 is more than 1500 sq.ft. 3. Built up area of all the row houses is more than 1500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 80IB(10) do not apply to projects approved prior to 31-03-2005. Therefore, clause (d) of section 80IB(10) and clause (a) of section 80IB (14) do not apply to the case of the assessee. For this proposition he relied on the following decisions : a. Hiranadani Akruti JV Vs. DCIT reported in 39 SOT 498 (Mum.) b. Opel shelters Pvt. Ltd. Vs. ACIT ITA No. 219/PN2009 (2005-06) c. CIT Vs. Aniriya Project Management Services Pvt. Ltd. ITA No. 138/2010 (Karnataka High Court) d. Brahma Associates Vs. JCIT reported in 333 ITR 289 4.1 Referring to the decision of the Pune Bench of the Tribunal in the case of ITO Vs. Prime Properties vide ITA Nos. 887, 888, 889/PN/2010 order dated 26- 04-2012 for the assessment years 2003-04 to 2005-06 he drew the attention of the Bench to Para 6 of the order and submitted that the Tribunal in the said decision after considering the various decisions cited before it has held that provisions of sub section 14(a) of section 80IB which defines built up area to include projections and balconies are applicable only in respect of the projects approved after 01-04-2005 and consequently balconies/terrace cannot be included in the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was not justified in holding that upto 31/3/2005 deduction under Section 80IB(10) would be allowable to the projects approved by the local authority having residential building with commercial user upto 10% of the total built-up area of the plot. d) Since deductions under Section 80IB(10) is on the profits derived from the housing projects approved by the local authority as a whole, the Tribunal was not justified in restricting Section 80IB(10) deduction only to a part of the project. However, in the present case, since the assessee has accepted the decision of the Tribunal in allowing Section 80IB(10) deduction to a part of the project, we do not disturb the findings of the Tribunal in that behalf. e) Clause (d) inserted to Section 80IB(10) with effect from 1/4/2005 is prospective and not retrospective and hence cannot be applied for the period prior to 1/4/2005. Since in the present case the total commercial area permitted by the local authority is within the limits prescribed under the DC Rules/Regulations therefore the deduction u/s. 80IB(10) upto 31-03-2005 would be allowable irrespective of the fact that the project is approved as housing project or resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order has observed as under : 20. By applying the principle of harmonious construction to interpret the provisions under Sub-section (10) to Section 80IB as amended w.e.f. 1.4.2005 we come to the conclusion that the Legislature always intended that the project must be approved by the local authority, thus in those approved projects where construction has been started much earlier than 1.4.2005, the assessees are required to complete the plan as it has been approved. As putting such assessees to complete the plan meeting out condition under clause (d) of the sub-section would lead into absurdity and impossibility for the assessee and in contradiction to the provisions u/s. 80 IB(10) as prevailed at the time of approval and commencement of the construction of the project well before 1.4.2005. Bombay Bench of the Tribunal in the case of Hiranandani Akruti J.V (supra) has discussed all these relevant aspects raised by the Department. In the case of Hiranandani Akruti J.V V/s. DCIT, it has been held that the law as existed when the assessee submitted its proposal and permission for carrying out the development was accorded and when the assessee commenced development is to be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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