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TMI Blog2015 (3) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... anakia Spaces Pvt. Ltd. [ 2014 (9) TMI 707 - BOMBAY HIGH COURT] wherein it was held that there was no restriction on the quantum of commercial area that could be included in the said housing project and the same was to be determined by the local authority in accordance with its own rules and regulations. In respect of project which has been approved before 31-3-2005, the condition imposed by Finance (No.2) Act 2004 w.e.f. 1-4-2005 regarding the quantum of commercial area is not applicable. In view of the above, we modify the order of ld. CIT(A) and direct the A.O. to allow the full claim of deduction u/s 80IB(10) of the Act with respect to the entire project without restricting the same to residential area. Thus, the grounds taken by the assessee in all he years for allowing full claim of deduction u/s.80IB(10) are allowed. - Decided against revenue. With regard to the completion certificate, the ld. CIT(A) after careful consideration of the facts of the case correctly held that in respect of project approved prior to 1-4-2005, no completion certificate was required. The view of the ld. CIT(A) is also supported by the decision of Hon”ble Madras High Court in the case of CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has claimed that, it has constructed two projects on a land of 17.67 acre at Bolsar, one is called as U.K. Residential and other s U.K. Commercial. In case of the U.K. Commercial, the deduction u/s 80IB(10) has not been claimed and due tax has also been paid. In respect of U.K. Residential, consisting of 30 buildings the convenience shopping area is 70,269.60 sq. ft. and residential area is 5,21,094.70 sq. ft. Thus, the convenience shopping area in the U.K. residential project works out to 13.485% of total built up area of 5,91,365 sq. ft. The project has been stated to be approved on 08-04-2003 as residential as well as commercial project by the Local Authority. During the course of assessment proceedings, the A.O. examined the claim of assessee made u/s 80IB(10) of the Act vis- -vis submission of the assessee. The main submissions of the assessee before the A.O. were as under:- 1. M/s U.K. Residential is a residential project approved to be on a plot of land measuring 17.67 acre, which is more than one acre. ii. The project has 30 residential buildings having a total constructed residential area of 5,21,094.70 sq. ft. and 70,369.60 sq. ft. of commercial area.. iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- 3.2.1. The project is approved as residential as well as commercial project and not as Housing Project. (a) In this regard, the submission of appellant is as under:- UK RESIDENTIAL AND U.K. COMMERCIAL BOTH THE PROJECTS ARE APPROVED IN THE SAME BLOCK PLAN:- There cannot be any effect whether there are two projects or five projects in one approved block plan. Block plans are approved by the local authority as per development plan of the area. There is no project wise approval and once particulars block plan is approved than also let it be five different developers, plan will be approved once and every developers has to carry out project according to that only. This deduction is available to any undertaking of the assessee who has carried out the projects. Therefore, let us first understand meaning of undertaking. As per the dictionary meaning and generally used in Indian Income Tax Act, 1961, it is doing a business or an enterprise. It means an association can have many undertaking or units of business. So in this case we should confine to profit of undertaking not to entire activity of the assessee. It may have land purchases and also transactions or any other bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect approved from the Local Authority on the same plot, but developed them separately. The appellant has also maintained separate books of account for both the undertakings named as UK Residential and U.K. Commercial and claimed the deduction u/s 80IB(10) on the profits derived from UK Residential project. Undisputedly conditions regarding approval by Local Authority and size of plot under UK Residential are fully satisfied by the appellant. Therefore, submissions of appellant in this regard are acceptable. Moreover, this issue has been decided by the Hon ble ITAT in the case of Vandana Properties vs. ACIT (2009) 31 SOT 392 (Mum) in the favour of assessee by holding that each wing can be a separate housing project and those satisfying the conditions are eligible for deduction u/s 80IB(10). Further, Hon ble High Court in the case of CIT vs. Brahma Associates, 239 CR 30 (Bom) has held that the section 80IB(10) (pre-amendment w.e.f. A.Y. 2005-06), does not define the expression housing projects with commercial user to the extent permitted under the D.C. Rules. The decision of Special Bench of ITAT that a project with residential and commercial user would be a housing project has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso personally visited the site and found all residential units completed by March, 2007 except some portion of Upper floors of E G Buildings which are commercial ones not considered by the appellant u/s 80IB(10) deduction. Even if it is presumed that the Housing project in the case of appellant was not completed before 31.03.2008, then the appellant's arguments that since the project was approved before 31.03.2005, the amended provisions w.e.f. 01.04.2005 specifying the date of completion as 31.03.2008 for the projects approved before 01.04.2004 are not applicable, are found to be convincing. In support of arguments, reliance of appellant on the decisions of Hon'ble ITAT, Mumbai, in the cases of Saroj Sales Organization Vs. ITO, 115 TTJ 485 (Mum), Bhumiraj Homes Ltd. Vs. DCIT (A.Y. 2005-06), ITA No. 506/Mum/2009 dt. 20.05.2011, and Hiranandani Akruti J.V. v DCIT (A.Y. 2006-07) ITA No. 5416/Mum/2009 dt. 30.03.2010 is well founded. In these cases, after analyzing the provisions of section 80IB(10) as amended from time to time, it has been held that the law as stood at the time of submission of proposal and its approval will apply and hence the amended provisions w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Food grain or ration shops, each with carpet area not exceeding 50 sq.mts. ii) Pan shops iii) Tobacconists iv) Shops for collecting and distribution of clothes and other materials for cleaning and dyeing establishments v) Tailor or darner shops. vi) Groceries, confectioneries, wine and general provision shops, each with a carpel area not exceeding 50 sq.m. vii) Hair dressing saloons and beauty parlors. viii) Bicycles hire and repair shops . ix) Vegetable and fruit shops. x) Milk and milk product shops. xi) Medical and dental practitioners dispensaries or clinics, pathological or diagnostic clinics and pharmacies, each with a carpet are not exceeding 50 sq.m. xi Florists. xiii) Shops dealing in ladies ornaments such as bangles etc. xiv) Shops selling bakery products. xv) Newspaper, magazine stall and circulating libraries. xvi) Wood, coal and fuel shops, each with a carpet area not exceeding 30 sq. mts. xvii) Books and stationery shops or stores. xviii) Cloth and garment shops. xix) Plumbers, electricians, radio, television and video equipment repair shops and video libraries. xx) Restaurants and eating houses each with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 108 TTJ 364 but without considering that it has been reconsidered by the next Tribunal order in case of CIT Vs Harshad Doshi 109 TTJ 335 where the judgment of Laukik Developers considered and allowed the full deduction. A copy of both the judgments are already submitted to your honour. Learned Assessing officer has also referred Purshottam Das, 112 Taxman 0122, 247 ITR 516, which we totally disagree with comments appeared in point no. 11 on page 18 of Assessment Order by referring Delhi High Court judgment (supra) given unwanted reference of submission made by learned Counsel for the revenue. She has just put one paragraph of the judgment without mentioning actual facts of the case. Even she is not aware that by the same judgment reference application of revenue was dismissed this judgment was with reference to temporary use of the residential premises for the commercial purpose does not change the character of residential housing property. We also disagree with comment of Assessing officer in point no. 12 treating deduction u/s 80 IB (10) are in nature of exception provision to general chargeability of the income to tax by giving reference of Delhi High Court for judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in subsequent years under the amended position with reference to a project which is already underway and which is compliant with the then prevailing provisions, is expecting impossibility. In fact, it would be asking the assessee to do the impossible which cannot be the intent of any statute. [CIT vs. Shapoorjl Pallonji Mistri 44 ITR 891 (SC); ACIT vs. Jindal Irrigation Systems Ltd. 56 ITT 164 (Hyd)]. According to Agreement Plan actual Area is less than 1500 sq. ft. but assessing officer has not given Measurement Report to appellant how she has calculated area more than 1500 sq. ft. The learned assessing officer erred in not accepting order of commissioner of income tax (appeals) - II for the assessment year 2003-04 at 2004-05 in case of Shree Ostwal Builders Ltd on the same matter. The appellant has submitted many Tribunal judgments, where Full deductions as well as proportionate deduction were allowed. However we are submitting herewith few more judgment for your kind perusal. 5. By the impugned order, the ld. CIT(A) allowed proportionate deduction u/s 80IB(10) of the Act on profits of residential units of U.K. Residential complex after having the following obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act, 1961. 5. The appellant craves leave to amend, alter or delete any of the above grounds of appeal. In support of its claim of full deduction, the assessee has relied upon the decision in the case of Harshad P. Doshi Vs. ACIT 109 TTJ 335 (Mum). However, on going through various judgments on the issue of Hon'ble Court/Tribunals as also of CIT(A)- I II, Thane, I find that the majority view is in favour of proportionate deduction where commercial user exceeded the prescribed limit. Thus, respectively following the majority view, I hold that the appellant is entitled to a proportionate deduction u/s. 80IB(10) i.e. on the profits derived from residential units of UK Residential Complex only. The A.O is accordingly, directed to allow the relief. Eventually, additional grounds raised, stand dismissed. 6. The ld. CIT(A) also allowed claim of deduction in respect of three row houses after having the following observation :- On careful consideration of facts of the case and submission of appellant, I find that the 3 row houses have been approved for Built up area of 1471 sq.ft. each and only on inclusion of 50% area of open terrace i.e. 306.62 sq:ft., the Built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 8. By the impugned order, the ld. CIT(A) allowed assessee s claim by treating the same as two different projects after observing as under:- (b) Since I have already held that U.K. Commercial U.K. Residential are two different projects on the same piece of land of 17.67 Acres, the non-completion of commercial project will not in any way affect the eligibility of U.K. Residential project for deduction u/s. 80IB(10). Thus, this issue, undoubtedly needs to be decided in the favour of appellant and hence the same decided accordingly. In respect of strict interpretation of provisions relating to exemption as stated by the A.O, the appellant has heavily relied upon the decision of Hon'ble Kolkata High Court in the case of CI vs. Bengal Ambuja Housing Development Ltd. In I.T. Appeal No. 458 of 2006 dated 05.01.2007 wherein the appeal of revenue was dismissed on the ground that no substantial question of law is involved in the matter. Thus, the decision of Hon'ble ITAT Kolkata in the case of Bengal Ambuja Housing Development Ltd. Vs. DCIT (ITA No. 1595/Kol/200S dt. 24.03.2006) stands confirmed. The Hon'ble ITAT, Kolkata has .held that the section 80IB(10) has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is eligible for deduction with respect to the residential portion and not on the entire project. The ld. CIT(A) held that project of assessee was approved before 1-4-2005 and at that time there was nothing was mentioned relating to commercial area. Accordingly by relying on the decision of Hon ble Bombay High Court in the case of CIT vs. Brahma Associates [2011] 333 ITR 289, allowed assessee s claim on the residential portion. The ld. CIT(A) had dealt with each and every objection of A.O. and after recording detailed finding allowed proportional claim of deduction on residential portion of project. 11. We found that assessee has claimed deduction only with respect to UK Residential Project and not with respect to UK Commercial Project. The project was approved on 8-4-2003 i.e. before introduction of limit of commercial area. Commercial area was constructed as per D.C. Rules. The issue with respect to claim u/s 80IB(10) having commercial area has been considered by the Hon ble Bombay High Court in the case of CIT vs. Happy Home Enterprises [2014) 51 taxmann.com 281 (Bombay) and CIT vs. Kanakia Spaces Pvt. Ltd. ITXA No. 308 of 2012 vide order dated 19th September, 2014 wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en approved prior to 1-4-2005, the old law shall apply and the conditions with regard to commercial establishment which has been inserted w.e.f. 1-4-2005 will not be applicable. Similar view has been taken by the Hon ble Gujarat High Court in the case of Manan Corporation vs. ACIT (2012) 78 DTR 205 (Guj.), Mumbai ITAT in the cases of Ramprasad Agarwal in ITA No. 2435 2163/Mum/2010 dated 5-9-2012 and ITO vs. Sai Krupa Developers in ITA No. 3661/Mum/2011 dated 13-3-2012. In view of the above, we modify the order of ld. CIT(A) and direct the A.O. to allow the full claim of deduction u/s 80IB(10) of the Act with respect to the entire project without restricting the same to residential area. Thus, the grounds taken by the assessee in all he years for allowing full claim of deduction u/s.80IB(10) are allowed. 13. With regard to the completion certificate, the ld. CIT(A) after careful consideration of the facts of the case held that in respect of project approved prior to 1-4-2005, no completion certificate was required. The view of the ld. CIT(A) is also supported by the decision of Hon ble Madras High Court in the case of CIT vs. Jain Housing Construction Ltd. (2013) 30 taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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