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TMI Blog2013 (9) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted to the extent of noncompliance of the provisions. This rule of proportionately is well founded in the income tax law and is recognized under various provisions of the Act. The Hon’ble ITAT Chennai in the case of Arun Excello Foundation Pvt. Ltd. v/s ACIT (2007 (2) TMI 264 - ITAT MADRAS-A) has also upheld the pro-rata deduction on eligible residential units. Thus, respectfully following the above judgments of the various ITAT and Courts and particularly the jurisdictional ITAT in the case of Saroj Sales Organisation (supra), Assessee is entitled for deduction under section 80IB on pro-rata basis. The A.O. is therefore, directed to allow the deduction under section 80IB(10) on pro-rata basis as discussed above - Decided against Revenue. - ITA No. 3649/Mum./2009 - - - Dated:- 20-5-2011 - Shri N. V. Vasudevan And Shri J. Sudhakar Reddy,JJ. For the Petitioner : Mrs. Kusum Ingole For the Respondent : Mr. S. C. Tiwari ORDER Per J. Sudhakar Reddy, A. M. This appeal preferred by the Revenue, is directed against the impugned order dated 31st March 2009, passed by the Commissioner (Appeals)-IX, Mumbai, for assessment year 2004-05. 2. The brief facts, as broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1000 sq.ft. as per the plans approved by the BMC, however, to bye peace and get the case settled before the Hon ble Settlement Commission, the assessee had withdrawn the proportionate deduction attributable to the larger flats. The case was admitted before the Hon ble Settlement Commission and the assessee paid the tax with interest. In the said application, adhoc income of Rs. 5 lacs was also declared and the proportionate deduction withdrawn of Rs. 24214242 was also offered. The final order was not passed by the Hon ble Settlement Commission till 31.3.2008 and accordingly, as per the provisions of section 245HA of the Act, the Settlement Application stood abated and the proceedings before the A.O. were reviewed. 2.4 During the course of assessment proceedings, it was submitted by the assessee that the total built-up area of all the flats of the housing project is 160849 sq.ft. and the built up area of flats are 38016 sq.ft. which comes to 23.64% of the total area of the project. The land area of the plot is 6010 sq.mt. The proportionate land area for remaining flat area is 4568 sq.mt. (76%) of 6010 sq.mt. One acre = 4046 sq.mt. and therefore the proportionate land area for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) erred in allowing deduction under section 80IB(10) of the Act to the assessee on pro-rata basis without appreciating that during the course of survey operation some of the residential flats having built up area exceeding 10000 sq.ft. were sold by two separate agreements to the same family members violating the conditions laid down under section 80IB(10) of the Act. 8. Learned Departmental Representative, Mrs. Kusum Ingole, filed a copy of survey report under section 133A of the Act dated 4th December 2006, and submits that the survey has taken place in the assessee s premise on 27th September 2006 and the Assessing Officer has proven that the assessee had constructed three bed room flats which has built up area of more than 1,000 sq.ft. She points out that the material gathered during the survey conclusively proved that the assessee had flats admeasuring 1,350 sq.ft. in each floor in B , C , D and F Wings and that the brochure published by the builders also talks about Rs. 1,350 per sq.ft. She points out that in respect to the question, Mr. Ashok Mohanani agreed that in the brochure of Ekta Woods, three bed room flat was @ Rs. 1,350 sq.ft. Post survey, however, Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there were two separate sale deeds. Referring to the various case laws relied upon by the assessee, she points out that in none of these case laws, the judgment of Hon'ble Bombay High Court in Brahma Associates (supra) was considered. 9. Learned Counsel, on the other hand, controverted the submissions made by the learned Departmental Representative and points out that the short point for consideration in this appeal is whether the assessee is entitled to proportionate deduction under section 80IB(10), in case the condition that the residential unit should not be of more than 1,000 sq.ft. built up area, has been violated in some flats. According to learned Counsel, the issue stands covered by a number of decisions of Tribunal, which are listed below:- i) ITO v/s Air Developers, 25 DTR 287 (Nag.); ii) DCIT v/s Brigade Enterprises Pvt. Ltd., 14 DTR 371 (Bang.); iii) ACIT v/s Sheth Developers P. Ltd., 33 SOT 277 (Mum.); iv) Bengal Ambuja Housing Development Ltd. v/s DCIT; v) Arpanna Development Corp. v/s ITO; vi) SJR Builders v/s ACIT, 3 ITR 569 (Mum.); vii) G.V. Corp. v/s ITO, 43 DTR 329 (Mum.); and viii) CIT v/s Brahma Associates, judgment dated 22.2.2011 (Bom.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s housing project undisputedly includes some residential units, which are of an area exceeding 1,000 sq.ft. (built-up), one of the conditions of section 80IB(10) stands violated and therefore, the whole of the profit of the housing project is not eligible for deduction under section 80IB(10). Accordingly, the deduction under section 80IB(10) allowed earlier is hereby withdrawn. Since the assessee has furnished inaccurate particulars of income and concealed the particulars of income, the penalty proceedings are initiated under section 27(1)(c) for wrong claim of deduction under section 80IB(10). ii) The issue as to whether, some of the residential units in the assessee s project exceeding the built up area of 1,000 sq.ft. or not, need not be adjudicated by us as no deduction under section 80IB(10) is claimed on income derived from the units by the assessee. The short point for our adjudication is, on the facts and circumstances of the case, whether the assessee is entitled to proportionate deduction under section 80IB(10). iii) The Nagpur Bench of this Tribunal in AIR Developers (supra), held as follows:- Therefore, A.O. is directed to determine the built-up area of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10), the denial of claim by the assessee is on account of rather restricted and narrow interpretation of provisions of clause (c) of section 80IB(10) while coming to such conclusion, we also find support from the order of the Hon'ble Supreme Court in case of Bajaj Tempo Ltd. (supra) wherein it was held that provisions should be interpreted liberally 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 A.O. vi) Bangalore A Bench of this Tribunal in SJR Builders (supra), held that merely because some flats are larger than 1,500 sq.ft., the assessee will not lose the benefit in its entirety but only with reference to the flats which has more than pescribed built up area, the assessee will lose the benefit . vii) Thus, different Benches of the Tribunal have taken a view that, in case, some residential house have a built up area in excess of 1,000 sq.ft., the assessee would not lose the total exemption under section 80IB(10) in its entirety but will only lose the proportionate exemption, under section 80IB(10). viii) We now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined on stand along basis. In our opinion, that would not be proper, because section 80IB(10) allows deduction to the 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 satisfied, then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction 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 entitled to section 80IB(10) deduction on the entire project approved 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 entitled to section 80IB(10) deduction on the profits of the entire project, in the facts of the present case, since the assessee has not challenged the decision of the Tribunal, we are not inclined to disturb the decision of the Tribunal in restricting the section 80IB(10) deduction only in respect of the profits derived from 15 residential buildings. ix) Thus, it could be seen that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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