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TMI Blog2014 (2) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... project – Decided in favour of Assessee. Deduction u/s. 80IB(10) of the Act allowed in contravention - Area of the flats exceeds the area qualified for exemption - Held that:- The decision in M/s FORTALEZA DEVELOPERS Versus THE COMMISSIONER OF INCOME TAX 15, MUMBAI [2012 (12) TMI 693 - ITAT MUMBAI] followed - The project has been sanctioned and the completion certificate has been issued as per the sanctioned plant which is for the residential flats having less than 1500 sq.ft, then even if the assessee has received the consideration for more than 1500 sq.ft in some of the flats, which would not constitute violation of conditions as prescribed u/s 80IB(10)(c) because the built up area is less than 1500 sq.ft. - each of the flats have been constructed as per the building plan duly approved by the local authorities and also completed as per the completion certificate, wherein the built up area of each flats has been shown less than 1500 sq.ft, then receiving the consideration by the assessee for more than 1500 sq.ft showing as saleable area of the flats would not enhance the built up area of the flats/residential units as per the sanctioned plant and completion certificate – there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48/2012 in para 5.5 to 5.7 as under: 5.5 We have carefully considered the version of Ld. CIT in the light of available on our record. We have carefully gone through the clause-7 of the agreement and the distribution of revenue by the assessee in its account. The distribution of the revenue in the account of the assessee is in accordance with intent and purpose of clause-7 of the agreement. According to clause-7 of the agreement SPPL is entitled to 35% share of the gross sale proceeds of the units inclusive of the value of the land. According to distribution in the account of the assessee SPPL has received Rs. 15.11 crore which is 35% of gross sale proceeds of the unit amounting to Rs.43. 17 crores. A sum of Rs. 11.62 crore is credited to the account of SPPL on account of land etc. and Rs.3.49 crore is considered as profit share of SPPL. Out of balance 65%, after including the MSEB and incidental charges and reducing the developmental charges a sum of Rs. 10.76 crore has been considered as prop share of RRKC. Therefore, the distribution of profit made by the assessee between its members is in accordance with clause 7 of the agreement. The interpretation of clause-7 sought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL was in the nature of overriding title, therefore, this argument of Ld. CIT DR has to be rejected and it is to be held that 35% share received by SPPL was not in the nature of overriding title to the revenue but it is only share of profit of SPPL. 5.7 In view of above discussion it is held that the impugned assessment order is neither erroneous nor prejudicial to the interest of revenue on account of allocation of profit between members as per accounts of the assessee as allocation of profit in the accounts of the assessee is in accordance with clause-7 of the agreement and manner of allocation of profit in the account cannot alter the quantum of deduction available to AOP under section 80 18(10). 4. The facts for the assessment year 2007-08 and for the assessment years under consideration are identical as this issue is regarding the clause 7 of AOP agreement dated 29.4.2003. Accordingly following the earlier order of this Tribunal we decide this issue in favour of the assessee. The orders of the authorities below qua this issue set aside. 5. The Revenue has raised the common grounds in these appeals. The grounds raised for the assessment year 2008-09 are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Home Construction India Pvt. Ltd. decided by the Coordinate Bench of this Tribunal is now covered by the decision of Hon ble Gujarat High Court. 8. Having considered the rival submissions and carefully gone through the relevant record as well as the decisions relied upon by the parties we note that an identical issue has been considered and decided by this Tribunal in assessee s own case for the assessment year 2007-08 vide order dated 25.4.2012 in ITA No. 4327/2010 in para 2 to 6.2 as under: 2. The revenue has raised the following grounds: 01 On the facts and circumstances of the case as well as in law, the Ld. CIT(A) erred in directing Assessing Officer to delete the addition made of Rs.4,43,366/- towards receipts not shown ignoring material facts available on record. 02 On the facts and circumstances of the case as well as in law, the Ld. CIT(A) erred in directing Assessing Officer to grant deduction u/s. 80IB (10) of the Income Tax Act, 1961 without considering the facts that area of some of the flats exceeds 1500 square feet Section 8OlB(10) (10)(c) disentitling the assessee to claim deduction u/s. 80IB (10). 03 On the facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ats, which would not constitute violation of conditions as prescribed u/s 80IB(10)(c) because the built up area is less than 1500 sq.ft. The CIT(A) has given the details of the flats in question at page 12 13 as under: COPA CABNA A AND C Flat referred in impounded papers Build up area of flats including carpet area, thickness of walls and enclosed Balcony (in sq.mt) Build up area (in sq.fts) 1001 94.88 1021.28 1002 94.87 1021.18 BONITA, AND EVORA 102 132.81 1429.57 103 132.81 1429.57 201 132.33 1424.40 202 132.81 1429.57 203 132.63 1427.63 301 132.34 1424.51 302 132.81 1429.57 303 132.81 1429.57 401 132.84 1424.51 402 132.84 1429.57 403 132.63 1427.63 501 132.34 1424.51 502 132.81 1429.57 503 132.81 1429.57 601 132.34 1424.51 602 132.81 1429.57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of sec. 80IB(10)(d). 5.1 We have heard the ld DR as well as the ld AR of the assessee and considered the relevant material on record. The Assessing Officer has considered the residential flat and commercial project as one integrated project and thereby held that the area of commercial establishment in the project is more than the limit prescribed u/s 80IB(10)(d). 5.2 On appeal, the CIT(A) held that the residential and commercial projects are totally independent; therefore, the claim cannot be disallowed. 6. We find that the layout plan of the entire building, which was redeveloped by the assessee and assessee s sister concern M/s R Associates was approved by the Pune Municipal Corporation (PMC) by one approval order and subsequently two separate projects for residential and commercial was sanctioned by the PMC. Therefore, the Assessing Officer took the entire project as one as the layout of the development of the building was approved by the PMC by one approval. Without going into the controversy, whether the residential or commercial project are two separate projects or parts of once project, we are of the view that as per the pre- amended provisions of sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B(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 80-IB(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 80-IB(10) with effect from April 1, 2005 is prospective and not retrospective and hence cannot be applied for the period prior to April 1, 2005. 6.2 Therefore, as per the pre-a-mended provisions of sec 80IB(10), once the project has been approved by the local authorities, then in the absence of any such condition of commercial area in the provisions of sec. 80IB(10), deduction cannot be denied on this point. Hence, we do find any reason to interfere with the impugned order of the CIT(A), qua this issue. 9. It is to be noted that the issue has been decided by this Tribunal on the basis of the peculiar fact and it was found that the build up area of each flat was less than 1500 square feet and further the commercial project was found a separate project. The decision of Hon ble Jurisdiction High Court in case of Brahma Associates 333 ITR 289 has been followed. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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