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TMI Blog2011 (5) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 27.08.2003/28.08.2003 and second one is CIDCO/MM-II/CLT/KHR/36 dated 27.08.2003/28.08.2003. The Appellant has computed profit @ 8% on the cost of construction i.e. WIP of ₹ 11,84,75,650/- in respect of the project Shah Arcade on estimation basis and has shown estimated profit of ₹ 94,78,052/- While filing the Return of Income Appellant had claimed deduction u/s 80IB (10 at ₹ 86,63,749/- after excluding the profit attributable to commercial area of the project. The Ld. AO in assessment order appealed against has disallowed appellant s claim of deduction on the ground that the commercial area of the project exceeds 5% of aggregate built-up area and even more than 2000 sq.ft. against the amendment provision of section 80IB (10) by the Finance Act (2) 2004 w. e. f. 01.04.2005. 3. According to the AO the deduction u/s 80IB(10) of the Act is allowable to an undertaking developing and building housing projects approved by a local authority. With the very same social objective, the local authorities have also been empowered to approve the projects under various categories with conditions prescribed over the commercial content in such projects. To be eligible to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l authorities approving the housing projects also limit the commercial area content in such projects to a maximum 5% of the total built-up area. The projects having commercial area in excess of 5% are considered to be commercial projects and are not termed as housing projects at all. In the assessee s case, the commercial area is in excess of 8% of the total built-up area This is ascertainable from the approved plans details submitted and from the fact that the assessee has excluded the profits to the extent of 8.59% of the total profits, being attributable to commercial content. Thus, the assessee s undertaking is not an eligible undertaking u/s 80IB(10) as it is not developing and constructing eligible housing project as per the conditions laid down in section 80IB(10)and even as per the conditions laid down by the local authority approving the project is not fulfilled . Hence no deduction u/s 80IB(10) of the Act is allowable in the case of the assessee. Further AO has mentioned that appellant has excluded 8.59% of the profits attributable to or derived from commercial area which is not allowable as there is no provision u/s 80IB(10) to allow partial or proportion deduction. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project is situated in residential zone only which is being governed by Development Control Act, 1991. It is an admitted position that in residential zone, commercial or industrial building cannot be approved by the local authority. The project Shah Arcade is situated exclusively in the residential zone and hence is to be treated as residential housing project. But in the residential housing projects convenience shopping / easement shopping are allowed by the local authority to take care to the needs of the occupants This term is mandatory, Considering the requirements of the local residents, the local authority approves the plans of housing project with some convenience shopping area in the said building., But the project remains a housing project only, which includes some area of convenience shopping. According to the Ld. AR a housing project in order to be a self sufficient would require to support/ provide the amenities such as banking, post office, market, shops, schools, etc. Keeping all these factors in view only the local authority grants the approval. Since projects were approved as housing projects, though include some inconvenient shopping, satisfy the requirement of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LD AR has referred to the decision of Hon ble Mumbai ITAT the case of Harshad P. Doshi (Appeal No. ITA/2305/M/2006) dated 28.02.2007 wherein the full amount of deduction was granted. The facts of that case were that the housing projects had some shops and in which the proportionate disallowance for profit attributable to shops was made by the AO while granting deduction u/s 80IB(10). The ITAT allowed the full claim of that assessee. Further the Ld. AR has referred to the Hon ble Supreme Court in the case of Bajaj Temppo Ltd., vs CIT 196 ITR 188 has held that since all the provisions indicated for promoting growth has to be interpreted liberally the restriction on it has to be construed so as to advance the objective of the promotion and not frustrate the same. Similar were the views in the cases CIT vs Madho Jatia 105 ITR 179 CIT vs Vegetable products 188 ITR 192. It is also settled position in law that where provision in statute admits two interpretations, a view which is favourable to the subject (assessee) must be adopted. The restriction of maximum commercial area in the housing project of 2000 sq.ft. or 5% of the aggregate built-up area, whichever is less, has been brought o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in respect of the entire profits of the project. Without prejudice to the above, it is submitted that the plot area of the residential portion of the project on a standalone basis is more that one acre and therefore, the appellant is entitled to get deduction u/s 80IB(10) since all other conditions laid down in clauses (a), (b) (c) are fulfilled. For your honour s kind perusal and consideration we are enclosing a paper book comprising of approval/ sanction, occupancy certificate, approved plans etc., which shows that the appellant is entitled to get deduction u/s 80IB(1). 9. After receipt of reply a show cause notice No. CIT(A) XV/SB D/2009-10 dated 15.07.2009 was issued and served upon Assessee. In response to the same LD AR has submitted reply dated 25.8.2009 stating that CIDCO has allotted Commercial-Cum-Residential Plot No. 4 5 by allotment letter dated 28.8.2003 and subsequently Appellant has executed these agreement lease agreement with CIDCO in respect of Residential-Cum-Commercial Plot Nos. 4 5, Se ctor-6 at Kharghar, Navi Mumbai vide lease agreement dated 16.2.2004 in respect of aggregate land area of 7,225.05 Sq. Mtrs. The said lease agreement is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose built up area is approximately 46.82 Sq.Mtrs. which are not meant for sale but meant for the use of the residents of the buildings and therefore, the total built up area for the commercial use is less than 10% of the total built up area and the total built up area of residential use is more than 90% of the total built up area. It is further submitted that instead of Commercial-Cum-Residential Project . There is Residential-cum- Commercial Project and thereafter case of Brahma Associates vs JCIT has again been referred to and relevant paragraph of the decision has been reproduced. 10. The copy of the reply of the Appellant/AR was also sent to the Assessing Officer for representation and counter comments, who has submitted his representation by letter No./ ACIT/15(3)/Scrutiny Asst./2009-10 dated 09.09.2009. 11. Further, the appellant was given opportunity along with copy of representation of AO dated 09.09.2009 as reproduced above, for counter comments. In compliance, the Ld.A.R has submitted a written reply dated 23.09.2009 reiterating the earlier submissions and pointing out the relevant paragraph of the decision of ITAT of Brahma Associates (supra) to be considered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re are so many other points as mentioned in para 5 of rejoinder dated 23.09.2009 of Ld.AR which reveals the fact that there is no comparison of that case with Appellant s case. Therefore, considering full facts and circumstances of the case and decision of Brahma Associates Vs JCIT (supra), I reach to the conclusion that Appellant is entitled for deduction u/s.80IB(10) and has rightly offered profit for taxation attributable to the commercial area of the Housing Project at ₹ 13,14,696/- and claimed deduction of ₹ 86,63,749/-, the AO is, therefore, directed to assess the net taxable income @ 8% being presumptive estimated income on Work-in-Progress Method and allow the deduction u/s.80IB(10) in respect of Housing Project. 13. Aggrieved, Revenue is in appeal before us and has raised the following grounds of appeal. 14. We have heard both the parties. We find that this issue is squarely covered by the decision of the Hon ble Bombay High Court in the case of CIT Vs Brahma Associates 239 CTR 30 wherein it has been held as follows: Uto 31st March, 2005, deduction u/s. 80IB(10) is allowable to housing projects approved by the local authority having residential units ..... X X X X Extracts X X X X X X X X Extracts X X X X
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