TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 407
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....ing projects. During the year under consideration, two projects, namely, "Ostwal Nagari" and "Asha Nagar" were being executed by the assessee company and in the return originally filed, the deduction u/s.80IB was claimed in respect of profit derived from the said projects. A search and seizure action under section 132 of the Act was conducted in the case of the assessee on 21.02.2007. Thereafter, notice under section 153C read with section 153A(a) was issued to the assessee, in response to which the return was filed by the assessee declaring its total income at Rs. 98,44,014/-. During the course of assessment proceedings, the claim of the assessee for deduction u/s.80IB in respect of Ostwal Nagari project was examined by the Assessing Officer. On such examination, he found that the said project was claimed to be started by the assessee in the month of March 2001 and it was divided into four housing sector complexes. The land of each complex was more than one acre and the plan was finally sanctioned by CIDCO vide letter dated 4.1.2004 addressed to M/s. Sonal Ventures from whom the assessee had purchased the land along with F.S.I. Out of the four housing complexes, Complex Nos. 1 and....
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....eduction u/s.80IB(10). He, therefore, disallowed the deduction claimed by the assessee u/s.80IB in respect of Ostwal Nagari Project in the assessment completed u/s.153A/153C read with section 143(3) vide order dated 31.12.2008. 6. Against the order passed by the Assessing Officer under section 153A/153C read with section 143(3), an appeal was filed by the assessee before the learned CIT(A) challenging therein, inter alia, the disallowance made by the Assessing Officer on account of its claim for deduction u/s.80IB(10) in respect of Ostwal Nagari Project. During the course of appellate proceedings before the learned CIT(A) elaborate submissions were made on behalf of the assessee in support of its claim of deduction u/s.80IB(10) in respect of Ostwal Nagari Project. A gist of such submission as given by the learned CIT(A) in para Nos. 5.8 and 5.10 of his impugned order is extracted below: i) For the same AY(04-05) prior to search, the order u/s.143(3) was passed on 27/12/06 wherein the deduction was denied. ii) CIT(A)-II, Thane allowed deduction u/s.80IB(10) on proportionate basis, the Revenue's appeal before the I.T.A.T is pending. iii) All the 4 sect....
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....), wherein it was held that deduction u/s.80IB(10), as applicable prior to 1.4.2005, is admissible in the case of a housing project comprising residential housing units and commercial establishment. It was held that in case such projects are approved as housing project by the local authority, such approval is sufficient for the purposes of eligibility. It was also held that in any other case, where 90% or more of the total built up area is used for dwelling units in accordance with the scheme of section 80IB(10), the benefit of deduction under section 80IB(10) will not be denied. Since the commercial area in the assessee's Ostwal Nagari Project constituted 8.25% of the total constructed area, the learned CIT(A) held that the benefit of deduction u/s.80IB(10) could not be denied in respect of the said project on the ground of commercial area as held by the Special Bench of I.T.A.T in the case of Brahma Associates (supra). The claim of the assessee for deduction u/s.80IB in respect Ostwal Nagari Project thus was allowed by the learned CIT(A). 8. The learned Departmental Representative submitted before us that although the issue relating to denial of benefit of deduction u/s.8....
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....98. In the present case, the condition was held to be not satisfied in respect of assessee's Ostwal Nagari Project by the Assessing Officer on the ground that the building plans were approved by CIDCO prior to 01.10.1998. According to the Assessing Officer, the activities culminating into approval of building plans were integral part of the project and the project thus had commenced prior to 1.10.1998. It is observed that the land on which the said project was to be constructed was purchased by the assessee in the month of August 2001 from M/s. Sonal Venture and till the date of the said purchase, there was no construction activity which had commenced in respect of Ostwal Nagari Project. As a matter fact, the assessee company revised the building plans which were originally prepared by M/s. Sonal Venture and approved by CIDCO and the plans so revised got sanctioned by CIDCO only on 4.01.2002 as is evident from the copy of the sanction letter placed at page 100 of the assessee's paper book. Only after that date, the assessee thus started the construction work of Ostwal Nagari project and this position was substantiated from the fact that construction expenses in respect of Ostwal Na....
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.... as the said project was stated to be exclusively residential project without any shops or other commercial area. During the course of search, it was, however, revealed that built up area of Asha Nagar project to the extent of 5315.25 sq.ft. was commercial and not residential as claimed by the assessee. According to the Assessing Officer, Asha Nagar project thus was not eligible for deduction u/s.80IB(10) in view of the existence of commercial area and the assessee was, therefore, called upon by him to show cause as to why the deduction claimed by it u/s.80IB in respect of the said project should not be disallowed. In reply, it was submitted by the assessee that the building plan of Asha Nagar project was approved by the competent authority purely as residential project without any commercial area. It was submitted that the buildings in Asha Nagar project were constructed and sold purely as residential area as per the plan sanctioned by the competent authority and only after completion of project, some of the purchasers had converted the residential units into godowns. It was thus contended that Asha Nagar project was developed and completed by the assessee company as housing proje....
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....of the said project was approved by the competent authority purely as a residential project and conversion of residential units into commercial units by some of the purchasers after the completion of the project cannot be the basis for denying the deduction claimed by the assessee under section 80IB(10). 16. The learned Departmental Representative submitted that even though the building plan of Asha Nagar project as approved by the competent authority was totally for residential area, the assessee company constructed commercial area of 5315.25 sq.ft. as found during the course of search and seizure action. He contended that this material adverse finding of the search action, however, has been completely overlooked by the learned CIT(A) while allowing the assessee's claim for deduction u/s.80IBV(10) in respect of Asha Nagar project. He contended when the existence of commercial area was duly established in the Asha Nagar project as a result of search, the deduction claimed by the assessee u/s.80IB(10) in respect of the said project was rightly disallowed by the Assessing Officer. 17. The learned counsel for the assessee submitted that the deduction claimed by the ass....