TaxTMI 
TaxTMI 
TaxTMI 
2014 (2) TMI 593
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....ies below and have gone through material available on record and the decisions relied upon by the parties. 5. The facts in brief are that in the cae of Open Shelters Pvt. Ltd., the A.O denied the claimed deduction u/s. 80 IB(10) of Rs. 22,07,049/- mainly on the basis that the project which contained shop/commercial establishment was outside the purview of the provisions of Sec. 80 IB(10) and the 'Housing Project' which included the shops/commercial establishments did not remain a 'Housing Project'. It was held by him that the Legislature had extended the benefit of commercial construction which was available to a housing project only in the subsequent year and not prior to the amendment in Section 80IB(10). In this case, the A.O noted that the assessee had constructed 66 shops being commercial premises included in the project admeasuring 9404 sq. ft. As per the assessee, the commercial construction is about 11.88% of the built up area which as per the A.O is about 12.41%. The Ld CIT(A) has upheld the action of the A.O with this observation that the commercial construction is more than 5% or 2000 sq.ft. whichever is less as per the amended provisions of Sec. 80IB (10) w.e.f. 1.4.20....
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....at letter clarified that any project which is approved as a housing project by local authority would be eligible. The Ld. A.R. referred page No. 17 of the Paper Book filed on behalf of the assessee in the case of Opel Shelters showing that the project commenced on 23.2.2001 and also referred page No. 21 thereof to support his submission that the project was completed by 14.5.2004. Likewise, he referred page No. 41 of the Paper Book filed on behalf of the assessee in the case of D.S. Kulkarni & Associates to support his argument that the project was started on 12.4.2001 and completed in November 2003. 8. The Ld. A.R. submitted that when the assesees started the project, the old provisions of Section 80 IB(10) were on the Statute in which there was no ceiling on the portion of the commercial area. The projects in both the cases were housing projects and the Special Bench in the case of Bramha Associates 119 ITD 255 (SB)(Pune), has held that the housing project can include the commercial portion along with the residential portion. Hence, in view of the decision of the Special Bench, the assessees are entitled to deduction u/s. 80 IB (10). The ld. AR pointed out that the decision of S....
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....was clearly stated therein that the Legislature decied that the concession would be liberalized. In this regard, the Ld. A.R referred page Nos. 1 to 3 of the Paper Book (Volume 2) filed in the case of Opel Shelters. He submitted that in the present cases, the projects have been completed prior to the amendment and hence it was not in the hands of the assessees to adhere to the condition in clause (d) of Section 80IB(10) which restricts the commercial area in a project. Hence, it was not possible for the assessee and it was beyond its power and control to comply with the new amendment. The question of insisting that the clause applies in these cases thus does not arise. In this regard, he placed reliance on the following cases : 1) CIT V/s. M/s. Papilion Investments Pvt. Ltd., reported in 2009 [IT1] GJX 0904 (Bom.) 2) CIT v/s. Teja Singh, 35 ITR 408 (S.C) 3) K.P. Verghese V/s. ITO, 131 ITR 597 (SC) 10. The Ld. A.R. submitted that generally any amendment which is introduced comes into effect from 1st April, as mentioned there against i.e., the amended Section 80IB(10) is mentioned to be appcable with effect from 1.4.2005, but this principle is not sacrosanct. Depending upon the i....
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....ld have been taxable in the earlier years as the project was completed earlier to the amendment and in that case, as per the old provsion, the assessee would have been eligible for the deduction. But, just because the assessee has followed the "Project Completion Method " in these cases, the deduction is being denied because it falls in A.Y. 2005-06. On these basis, the Mumbai Bench of the Tribunal in the said case of Hiranandani Akruti J.V. (Supra) has held that the amendment should be applicable to the projects which are started after 1.4.2005. 12. An alternative argument was also advanced without prejudice to the above submission that on the portion of commercial area exceeding limit under Clause (d), the deduction u/s. 80 IB(10) may not be granted but on the balance project, the deduction should be allowed. The Ld. A.R. placed reliance on the decision of Kolkatta Bench of the Tribunal in the cae of Bengal Ambuja Housing Development Ltd., ITA No. 1595/Kol/2005. He also pointed out that the appeal preferred against that order of the Tribunal before the Hon'ble High Court has also been rejected. The Ld. A.R also cited following decisions : 1) ITO V/s. Air Developers, 122 ITD 125....
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....nce the accrued right of the assessee under the old provision when the project was commenced had to be protected. The question is as to how to apply the provision when the assessee had already finished the project before the provision came into force. It is in this context only, the Mumbai Bench of the Tribunal in the case of Hiranandani Akruti J.V. (supra) has clearly held that the provision should be applicable to the projects started on or after 1.4.2005. Thus, to the above general rule, there are exceptions made as in the case of Asean Tech (Supra). 16. On the contention of the Ld. D.R., that Special Bench in the case of Bramha Associates had decided this issue by holding that the amended provision will apply from A.Y. 2005-06, the Ld. A.R submitted that first of all, this issue was not there before the Special Bench at all. The issue was as to whether this mendment is retrospective and it was in that context, they held that it was not retrospective. There is no discussion on this issue which is covered in Hiranandani Akruti J.V. (supra) case, that is as to whether the amended provision applies to projects approved before 1.4.2005 or for all the assessments before and after A.....
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....Section 80IB (10) is retrospective in operation and it was in that context, they held that it was not retrospective. Thus, discussion on the issue which is covered in Hiranandani Akruti J.V. case is as to whether the amended provision applies to the projects started on or after 1.4.2005 or for all the assessments from the A.Y. 2005-06. We find that the Mumbai Bench while deciding the issue in the case of Hiranandani Akruti J.V. has already discussed the decision of the Special Bench in the case of Brahma Associates. The A.Y. involved in the case of Hiranandani is 2006-07. The total commercial space in the project in that case was 117800 sq.ft. According to the A.O, as the provisions of Section 80IB(10)(d) is applicable w.e.f. 1.4.2005, the limit for having commercial space in the housing project is 5% of the total built up area or 2000 sq.ft whichever is less. Accordingly, the assessee was asked to explain why deduction claimed by it u/s. 80IB(10) amounting to Rs. 51,06,05,521/- should not be disallowed. The Tribunal after discussing the arguments of the parties and the decisions cited by them including the decision of Special Bench in the case of Bramha Associates (supra), has com....
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....10) as amended by the Finance Act, 2005, w.e.f. 1-4-2005. We therefore hold following the decision in the case of Saroj Sales Organisation (Supra) that the law as it existed in the A.Y. 04-05 when the Assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17.11.2003 and when the Assessee commenced development is to be applied." So far as the issue as to what is 'housing project' and as to whether commercial area can be constructed in a housing project is concerned, the Mumbai Bench of the Tribunal in the case of Hiranandani Akruti J.V. (Supra) has held as under : "28. We have already held that on the issue on what is a housing project and whether commercial area can be constructed in a housing project and if so constructed whether the Assessee would loose exemption under the law as applicable upto A.Y. 04-05 has been settled by the Special Bench of ITAT in the case of Bramha Associates 122 TTJ 433(SB) (Pune). The AO held the law as amended by the Finance Act, 2005 w.e.f. 1-4- 2005 whereby it was laid down that the built up area of the shops and commercial establishment included in the housing project should not ....
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....its derived from the housing projects approved by the local authority as a whole, the Tribunal was not justified in restricting Section 80IB(10) deduction only to a part of the project. However, in the present case, since the assessee has accepted the decision of the Tribunal in allowing Section 80IB(10) deduction to a part of the project, we do not disturb the findings of the Tribunal in that behalf. e) Clause (d) inserted to Section 80IB(10) with effect from 1/4/2005 is prospective and not retrospective and hence cannot be applied for the period prior to 1/4/2005." 19. We, thus, find that the issues raised in the present appeals are fully covered in favour of the assessee by the decision of Mumbai Bench of the Tribunal in the case of Hiranandani Akruti J.V v/s. DCIT (Supra). Respectfully followig the said decision in the case of Hiranandani Akruti J.V. (Supra), we decide the issues in favour of the assessees that a housing project will also consist of commercial area to a permissible limit, as settled by the Special Bench of the Tribunal in the case of Bramha Assocates (Supra) (now upheld by the Hon'ble Bombay High Court) as applicable upto A.Y. 2004-05. And secondly, the law a....