Section 80IB(10) relief denied for a separately identified commercial project; area-based maintenance apportionment also upheld.

Deduction under section 80IB(10) was not available for profits attributable to a separately identified commercial building, even though the amendment introducing clause (d) to section 80IB(10) could not operate retrospectively against projects sanctioned before 1 April 2005. The Tribunal treated the commercial building as an independent project on the assessee's own records and correspondence, so the deduction claim failed on that footing. It also upheld the Assessing Officer's area-based apportionment of maintenance expenditure between the residential and commercial components, holding that the Commissioner (Appeals) had wrongly deleted the adjustment.

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Issues: (i) Whether deduction under section 80IB(10) was allowable in respect of the commercial component of the project and on the ground that the statutory amendment relating to commercial area did not apply to projects sanctioned before 1 April 2005; (ii) Whether the maintenance expenditure had to be apportioned between the residential and commercial components on the basis adopted by the Assessing Officer.

Issue (i): Whether deduction under section 80IB(10) was allowable in respect of the commercial component of the project and on the ground that the statutory amendment relating to commercial area did not apply to projects sanctioned before 1 April 2005.

Analysis: The project was sanctioned prior to 1 April 2005, so the amendment introducing clause (d) to section 80IB(10) could not be applied retrospectively to deny relief on that basis. However, the assessee's own correspondence and project classification showed that the commercial building was treated as a separate project and not as an integral part of the housing project. On that footing, the claim for deduction on profits attributable to the commercial building was not sustainable.

Conclusion: Deduction under section 80IB(10) could not be allowed on the profits relating to the commercial building; the issue was, therefore, decided against the assessee.

Issue (ii): Whether the maintenance expenditure had to be apportioned between the residential and commercial components on the basis adopted by the Assessing Officer.

Analysis: The apportionment made by the Assessing Officer was accepted as proper in view of the allocation of the saleable area and the Tribunal's view on similar facts. The Commissioner (Appeals) had erred in deleting the adjustment.

Conclusion: The Assessing Officer's apportionment of maintenance expenditure was upheld and the relief granted by the Commissioner (Appeals) was reversed.

Final Conclusion: The Revenue obtained partial relief on the maintenance expense issue, while the assessee failed on the claim for deduction in respect of the commercial component; the assessee's delayed appeals and cross-objections did not survive.

Ratio Decidendi: A deduction under section 80IB(10) cannot be extended to a separately identified commercial project merely because it is connected with a broader development scheme, and maintenance expenditure may be apportioned on a rational area-based basis where the facts justify it.

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