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TMI Blog2013 (10) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... llant : Dr. Sunil Pathak And Shri R.G. Nahar For the Respondent : Shri Mukesh Verma, CIT ORDER Per G. S. Pannu, A. M. This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-II Pune dated 23-3- 2011 which, in turn, has arisen from order dated 31-12-2009 passed by the Assessing Officer, under section 143(3) of the Income-tax Act, 1961 (in short the Act ), pertaining to the assessment year 2007-08. 2. In this appeal, the substantive dispute relates to denial of assessee s claim for deduction u/s 80-IB(10) of the Act of Rs. 14,28,01,695/-. Briefly put, the relevant facts giving rise to the said controversy are as follows. The assessee is a partnership firm engaged in the business of promoters, builders and developers. The assessee undertook development and construction of housing project named Rohan Tapovan at Shivajinagar, Pune. In the return of income filed for the assessment year 2007-08, assessee claimed deduction u/s 80- IB(10) of the Act of Rs. 14,28,01,695/- in respect of profits derived from the said project. The Assessing Officer denied the claim of deduction u/s 80-IB(10) on two grounds. Firstly, as per the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing project in question exceeded 1500 sq.ft. each, and therefore, the project of the assessee was violative of the condition prescribed in sub-clause (c) of section 80-IB(10) of the Act. The plea of the assessee before the lower authorities as well as before us is to the effect that the built-up area of 17 flats exceeded 1500 sq.ft. only after combining the two flats. It was pointed out that in the case of aforesaid flats, the individual units were combined at the instance of the respective buyers of the flats and in support, request letters from the respective buyers were produced before the Assessing Officer. The assessee explained that individual flats units were actually sold separately by separate agreements and the registration and stamp duty were also paid separately for each of the 17 flats and the built up area of each of the individual unit did not exceed 1500 sq.ft. The Assessing Officer as well as the CIT(A) however, emphasized that the assessee had combined the adjacent flats during the construction phase of project itself and therefore, it was not a case where individual flat owners have combined the flats on their own subsequent to completion of the project and conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Vishwas Promoters P. Ltd. (supra), for the proposition that if built-up area of some of the residential units of a project exceed the prescribed limit, then the benefit of section 80-IB(10) of the Act could not be extended to the entire project. Before us, the learned CIT-DR has sought to make out that the said decision of Chennai Bench of the Tribunal has been impliedly upheld by Hon ble High Court of Madras in terms of its judgment dated 11-9-2009 reported in (2010) 323 ITR 114 (Mad). 9. We have carefully examined the aforesaid proposition. The Hon ble High Court of Madras in its judgment dated 11-9-2009 was considering a Writ Petition filed by the assessee against an order of the Tribunal dated 30-1-2009 passed in a Misc. Application moved u/s 254(2) of the Act pointing out a mistake in an earlier order passed by the Tribunal dated 13-10-2008. Quite clearly, the Hon ble High court dismissed the said petition by specifically mentioning that the same was misconceived. In fact, the Hon ble High Court has not considered anything concerning the merit of the issue that whether in the circumstances of the case, the assessee could claim deduction u/s 80-IB(10) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 80-IB(10) of the Act. 11. We have carefully considered the aforesaid plea set up by the learned CIT-DR. On a careful reading of the entire judgment of Bombay High Court in the case of Vandana Properties (supra), we do not find any support to the proposition that proportionate deduction u/s 80-IB(10) of the Act is not available in case, certain residential units in a project have a built-up area in excess of prescribed limit of 1500 sq.ft. In fact, the said issue was not before the Hon ble Bombay High court. The question before the Bombay High Court was entirely different and hence certain observations in the said judgment rendered in the context of the subject matter of dispute before the Court, cannot be considered as conclusive so far as the question which is before us. The only issue before the Hon ble High court was as to whether the construction of one building containing multiple residential units could be considered as a project by itself considering that it was a part of an earlier approved project. The judgment of the Hon ble High court in the case of Vandana Properties (supra) has to be appreciated only in this context. Therefore, the issue before us i.e. in case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (c) of sec. 80-IB(10) while coming to such conclusion, we also find support from the order of the Hon ble supreme court in the 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 AO. 14. Similarly, the Bombay Bench of the Tribunal in the case of Ekta Housing Pvt. Ltd. in ITA No. 3649/MUM/2009 dated 20-5- 2011 pertaining to A.Y. 2004-05 relied upon the Calcutta Bench of the Tribunal, as also the decisions in the cases of Brigade Enterprises Pvt. Ltd., Sheth Developers Pvt. Ltd. and observed that deduction u/s 80-IB(10) of the Act was to be allowed on proportionate basis with reference to qualifying residential units and that the assessee would not be denied claim for deduction u/s 80-IB(10) of the Act in entirety if some of its residential units were of a built-up area exceeding the limit prescribed in clause (c) to sec. 80-IB(10) of the Act. 15. Pertinently, it would also be appropriate to notice that the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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