9911796707
TMI Blog2011 (11) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and therefore, in contravention of the provision of sec. 80A(5) amended retrospectively." 3. "On the facts and in the circumstances of the case and law, the Ld. CIT(A)has erred in holding that Nerul and Kharghar are not in same vicinity, though, both are located in Navi Mumbai and allowing excess labour expenses of ₹ 24,04,494/-, related to M/s. Shah Heritage Project, without any proper justification for variation in the higher expenditure of the Shah Heritage Project in comparison to Shah Arcade Project." 2. Ground Nos.1 & 2: After hearing both the parties, we find that during the assessment proceedings AO noticed that assessee had made a claim for deduction u/s.80IB(10) for ₹ 8,41,50,236/- which was later on revised to ₹ 9,03,03,389/-. The deduction was denied mainly on the basis of assessment orders for A.Yrs. 2005-06 and 2006- 07. Further, it was observed that assessee has constructed the commercial area of more than 10% and in view of the amendment that where commercial area is more than 5% deduction should not be allowed. 3. On appeal, Ld. CIT(A) decided the issue in favour of the assessee following earlier year's orders for A.Yrs. 2005-06 and 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue is dismissed. Further, we find that already the project had been approved by the CIDCO on 26-3-2004 and even the revised approval has been given on 22-2-2005 which makes it clear that the project has been approved before 31-3-2005. In the case of DCIT vs. PNK Corporation [supra] it was held vide paras 7 to 10 as under: 7. In Saroj Sales Organisation (supra) since reported in (2008) 115 TTJ 485 (Mum) it has been held by the Tribunal in para 13 of its order as under :- "As regards the objection of the AO that the permissible shopping area of housing project exceeds 5 per cent, the assessee is not entitled for relief under s. 801B(10). We are of the view that the housing project were approved before 31st March, 2005 and for such project which were so approved, there was no stipulation as to the shopping complex area is permissible in the project. As already stated earlier that the amendments were subsequently made while extending the deduction of income from housing project approved upto 31st March, 2007, the denial of deduction, in our view, is clearly not in accordance with law." 8. In Hiranandani Akruti JV vs. DCIT reported in 39 SOT 498 (Mum), it has been held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n approved before 31-3-2005 then even if commercial area is more than restricted area, cl. (d) in sec.80IB(10) will not be attracted. This position has been further approved by the Hon'ble Bombay High Court in the case of CIT vs. Brahma Associates [supra, wherein it was observed as under: "The assessee had undertaken construction project at Pune under the layout approved by the Pune Municipal Corporation which is the local authority. The project consisted of fifteen residential buildings and two commercial buildings. The local authority had approved the project as "residential plus commercial". The percentage of the commercial area to the total area of the plot was 20.83 per cent. The project commenced on August 14,2000 and was completed on October 3, 2005. The assessee claimed special deduction in respect of the profits. The claim was rejected by the Assessing Officer and the Commissioner [Appeals]. The Tribunal held that where the project is approved as residential plus commercial, the deduction u/s.80IB(10) would be allowable only if the total built-up area used for residential units in the project was 90 per cent. or more; where the commercial user was more than 10 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses 7,576,445 234.96 26,172,780 224.50 105% 11 Advertisement Expenses 11,020,883 341.79 120.98 273% 12 Admin & Other Expenses 18,687,686 579.56 14,103,629 37,483,731 321.53 From the above he concluded that the rate per square feet in the case of Shah Heritage Project was ₹ 2569 per sq. ft. whereas it was ₹ 1736 in the case of Shah Arcade project. Therefore, he concluded that cost in the case of Shah Heritage Project has been inflated particularly because no deduction was available u/s.80IB(10). Accordingly, he made a disallowance for possible hike of labour charges @ 10% and disallowed a sum of ₹ 24,92,590/-. 8. On appeal, before the Ld. CIT(A) it was mainly submitted that cost of almost 12 items was more in the case of Shah Heritage Project because Shah Arcade Project was very large project of all most four times than that of Shah Heritage Project. In the case of Shah Heritage Project area was 32244 sq.ft., whereas in the case of Shah Arcade it was 116580 sq.ft. Therefore mere size of the project has made Shah Arcade project a very efficient and cost effective project. It was further submitted that AO had no basis for the allegation that labou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age were incurred by Shri Nalin V Shah, which were recorded in his books of accounts and the AO had no occasion to examine the books of accounts of Shri Nalin V Shah. The project Shah Heritage was started by Shri Nalin V Shah during the pervious year relevant to the AY 2005-06 and most of the expenditure related to the construction of the project were incurred by Shri Nalin V Shah during the pervious years relevant to the AYs 2005- 06, 2006-07 and 2007-08 (upto 20.11. 2006) The project Shah Heritage was taken over by the appellant from Shri Nalin V Shah w.e.f. 21.11.2006 at its book value and therefore, no part of the said expenditure can be disallowed in the hands of the appellant unless it is proved that first owner has inflated the expenditure or having no evidence of such expenses. It is seen that the appellant in the P&L Account for the year ended 31.03.2007 has debited the following expenditure: Sr.No. Particulars Amount (Rs.) 1 Opening Stock of WIP 87,232,730.29 2 Site purchases 33,307,697.03 3 Extra work 72,395.00 4 Project Expenses 3,266,579.00 5 Bank Interest 511,107.51 6 Electricity Expenses 637,437.00 7 Advertisement Exps 939,269. 13 8 Architec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
