Tribunal grants section 80IB(10) deduction for residential project despite separate commercial project.

The Tribunal allowed the appeal, directing the Assessing Officer to grant the deduction under section 80IB(10) to the assessee for the residential project. It was held that the commercial project developed separately by another entity did not impact the eligibility of the residential project for the deduction. The Tribunal concluded that the residential project met the conditions under section 80IB(10) and should receive the deduction.

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Issues Involved:
1. Entitlement to deduction under section 80IB(10) for the housing project.
2. Whether the commercial area is part of the housing project developed by the assessee.
3. Whether the commercial area exceeds the prescribed limit under section 80IB(10).

Issue-wise Detailed Analysis:

1. Entitlement to Deduction under Section 80IB(10):
The primary issue in this appeal is whether the assessee is entitled to a deduction under section 80IB(10) for the housing project. The assessee firm had acquired development rights from Centurion Bank Ltd. for the development of a plot in Kharghar, Navi Mumbai. The plot was initially granted for residential use, and a commencement certificate for the residential building was issued on 20.02.2006. The assessee claimed a deduction under section 80IB(10) for the residential project named Eden Garden, which was completed on 16.10.2008. The Assessing Officer (AO) had allowed the deduction in earlier assessment years (2007-08 and 2008-09), but disallowed it for the assessment year 2009-10, leading to this appeal.

2. Whether the Commercial Area is Part of the Housing Project:
The dispute centers on whether the commercial area, which was later approved for construction by CIDCO and sold to M/s Pyramid Developers, is part of the housing project. The commercial area was approved on 18.10.2006 and developed separately by M/s Pyramid Developers, with the occupation certificate issued on 04.08.2010. The assessee argued that the commercial portion is not part of the housing project and was not developed by it. The AO and CIT(A) contended that the commercial area is part of the same project, thus exceeding the permissible limit under section 80IB(10).

3. Whether the Commercial Area Exceeds the Prescribed Limit:
According to section 80IB(10), the commercial area should not exceed 2000 sq ft or 5% of the built-up area, whichever is less. The AO disallowed the deduction on the grounds that the commercial area exceeded this limit. The assessee relied on several case laws to support its claim that the commercial project is separate and the residential project satisfies the conditions for deduction.

Judgment Analysis:

1. Entitlement to Deduction:
The Tribunal referred to the case of CIT vs. Vandana Properties, where it was held that the construction of even one building with several residential units constitutes a 'housing project' under section 80IB(10). The Tribunal noted that the AO had allowed the deduction in earlier years for the same project, and the only dispute was whether the commercial project is part of the housing project.

2. Commercial Area as Part of the Housing Project:
The Tribunal examined the facts and found that the commercial project was developed separately by M/s Pyramid Developers and was not contiguous to the residential project developed by the assessee. The Tribunal concluded that the commercial building is a separate project and not part of the housing project developed by the assessee.

3. Commercial Area Exceeding Prescribed Limit:
The Tribunal referred to the case of DCIT vs. Neel Sidhi Enterprises, where it was held that if the commercial area is segregated and developed by another entity, the residential project qualifies for deduction under section 80IB(10). The Tribunal also cited the case of Saroj Sales Organisation vs. ITO, where it was held that independent units or blocks that satisfy the conditions should be eligible for deduction, even if other ineligible units are part of the same sanction plan.

Conclusion:
The Tribunal held that the residential project developed by the assessee satisfies the conditions prescribed under section 80IB(10) and is eligible for deduction. The commercial project developed by M/s Pyramid Developers is separate and does not affect the eligibility of the residential project for deduction. The Tribunal directed the AO to allow the deduction under section 80IB(10) for the residential project Eden Garden.

Order:
The appeal of the assessee is allowed, and the AO is directed to allow the deduction under section 80IB(10).

Result:
The appeal is allowed, and the order was pronounced in the open court on 14th August 2013.

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