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TMI Blog2012 (11) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt u/s.80IB(10). He noted that during the year under consideration the assessee has carried out the following projects : S. No. Name and address of the project Date of approval by local authorities Date of completion of Housing Project Size of plot of land 1 Maestros S.No.60/7,Wanowrie, Pune (Building, G.H.I) 07/09/1999 26/03/2003 (G and H) 5732 (Sqmtr.) 61700 Sq.ft. 2 Mistry Moor S.No.13/1/1, Undri, Pune 06/05/1999 Refer Note 5400 sq.mtr. 3 Rose Parade S.No.18(Part)/21(Part) Kondhwa Khurd, Pune 29/06/2001 15/04/2004 (Bldg. C5, C4, C3, B1 (Part) Row House (Part) 4.14 Acres 4 Lapiz Lazuli FP.411, Plot B 414+415, Plot B, Koregaon Park, Pune 14/12/2001 31/12/2003 14523.05 sq.mtr. 3. So far as the Maestros Project is concerned the AO observed that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity meter and single kitchen, single entrance etc. Rejecting the various explanations given by the assessee the AO disallowed the claim of deduction u/s.80IB(10) in respect of Lapiz Lazuli project. Thus, in effect, the AO disallowed the entire claim of deduction u/s.80IB(10) at ₹ 4,20,79,790/-. 7. In appeal the learned CIT(A) following the decision of his predecessor for A.Y. 2003-04 allowed the claim of deduction u/s.80IB(10) in respect of the two projects namely Maestros and Mistry Moor . So far as the Project Rose Parade is concerned he also allowed the claim of deduction u/s.80IB(10) made by the assessee by holding that even after 2 units were combined together the built up area of the flats/row houses is less than 1500 sq.ft. after excluding the terrace and balcony. He further noted that the amendment to provisions of section 80IB(14) was not applicable for A.Y. 2004-05 and since the built up area of none of the combined integrated entities worked out to more than 1500 sq.ft., therefore, the assessee is entitled to deduction u/s.80IB(10) in respect of the project Rose Parade . 8. So far as the claim of deduction u/s.80IB(10) in respect of the project La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially approved by the local authority on 29-09-2005 and commenced before 01-10-1998, whereas, for being eligible for the claim of deduction nu/s.80IB(10), the project was required to be first approved and commenced after 01-10-1998 in accordance with Explanation (i) to the said section. 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the project Maestroe was consisting of units exceeding the prescribed threshold build-up area of 1500 sq.ft. as witnessed in buildings G and H of the said project, where adjoining flats in most of the cases were sold to one individual or his relative which have been combined, thereby exceeding the prescribed area. 4. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the project Mistry Moor was initially approved by the local authority on 29-09-1995 and commenced before 01-10-1998, whereas, for being eligible for the claim of deduction u/s.80IB(10), the project was required to be first approved and commenced after 01-10-1995 in accordance with Explanation (i) to the said section. 5. In the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal in the case of D.S. Kulkarni Developers Ltd. Vs. ACIT vide ITA Nos. 1428 and 1429/PN/2008 order dated 08-08-2012 for A.Y. 2004-05 and 2005-06 submitted that proportionate deduction has to be allowed in respect of flats which confirmed to built up area prescribed u/s.80IB(10). Since in the instant case, out of 214 flats, 76 flats have built up area of less than 1500 sq.ft., therefore, the assessee should be allowed proportionate deduction u/s.80IB(10) in respect of profit of the 76 flats. 12. The learned DR on the other hand heavily relied on the order of the AO. So far as the claim of deduction u/s.80IB(10) in respect of the projects Maestros and Mistry Moor are concerned he submitted that the Tribunal has decided the issue in favour of the assessee for the A.Y. 2001-02 to 2003-04. Therefore, the same view may be taken. However, so far as the project Rose Parade is concerned he submitted that the learned CIT(A) without giving any opportunity to the AO has held that the built up area of each of the combined units is less than 1500 sq.fts. He submitted that the learned CIT(A) has neither called for a remand report from the AO nor gave an opportunity to the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding in the present case) would constitute a 'housing project' under Section 80IB (10) of the Act. 26. The object of Section 80IB (10) in granting deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make available large number of medium size residential units for the benefit of the common man. However, in the absence of defining the expression' housing project' and in the absence of specifying the size or the number of housing projects required to be constructed on a plot of land having minimum area of one acre, even one housing project containing multiple residential units of a size not exceeding 1000 square feet constructed on a plot of land having minimum area of one acre would be eligible for Section 80IB (10) deduction. He accordingly subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary material brought to our notice against the order of the Tribunal, we, respectfully following the decision of the Tribunal dismiss the grounds raised by the revenue challenging the order of the CIT(A) in allowing the claim of deduction u/s.80IB(10) in respect of the projects Maestros and Mistry Moor . 15.1 So far as the allowability of claim of deduction u/s.80IB(10) in respect of the project Rose Parade is concerned, we find the DVO in response to the reference made by the AO has submitted his report giving the built up area of each flat in the project Rose Parade . We find the learned CIT(A) after considering the report of the DVO has given a factual finding that the built up area of none of the flats in the project Rose Parade exceeds 1500 sq.ft. The submission of the learned counsel for the assessee that even after combining the 2 adjacent flats the built up area of none of the flats as determined by the DVO exceeds 1500 sq.ft. could not be controverted by the learned DR. Under these circumstances, we find no infirmity in the order of the CIT(A) allowing the claim of deduction u/s.80IB(10) in respect of the project Rose Parade . 15.2 So far as the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wings had a built- up area in excess of the limit prescribed in clause (c ) of Sec. 80 IB (10) but, it would be entitled to proportionate deduction u/s. 80 IB (10) of the Act with regard to the profits earned on the eligible units.. Particularly, the Tribunal also considered the decision of the Hon ble Bombay High Court in the case of Brahma Associates (Supra) and held that the same does not envisage denial of proportionate deduction in such circumstances. The relevant discussion, as contained in paragraphs 8 9 of the order of the Tribunal in the case of M/s Ekta Housing Pvt. Ltd. reads as under : viii) We now examine the applicability of the decision of the Hon ble Bombay High Court in Brahma Associates (supra) to the facts of this case. On a careful reading of this judgment, we find that nowhere it is stated that proportionate deduction should not be allowed, in case certain residential units had built up area in excess of prescribed limit of 1,000 sq.ft. In fact, this issue was not before the Hon ble Jurisdictional High Court. The questions before the Hon ble Jurisdictional High Court were different and, hence the judgment cannot be said to be on this issue. The only is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Hon ble High Court do not approve the findings of the Tribunal that a residential building with commercial user up to 10% of the plot area would alone be entitled to deduction under section 80IB(10). The issue that, in case where certain residential units are of a built up area in excess of the prescribed limit of 1,000 sq.ft. in residential project, this would result in the entire exemption being lost, or whether the assessee would be entitled to a proportionate deduction was not before the High Court. Thus, in our opinion, the decision of Hon ble Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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