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TaxTMI 
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2012 (5) TMI 640
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....terial on record, found that the assessee is not entitled for deduction u/s 80-IB(10) in respect of 'Brahma Aangan Project' for the following reasons. "(a) The project 'Brahma Aangan' was approved by the PMC vide commencement certificate No. 6894 dt. 31-5-2003, as a residential cum commercial project, whereas only residential project is eligible for the claim of deduction u/s 80-IB(10) and not residential cum commercial project. (b) The project 'Brahma Aangan' consists of 702.216 sq. mtrs i.e. 7562.85 sq.ft. commercial built up area. As per introduction of clause (d) of section 80-IB(10) vide Finance Act (No. 2) w.e.f. 1- 4-2005, the permissible commercial area in the eligible project is 5% of the aggregate built up area of the project or 2000 sq.ft. whichever is less. The last commencement certificate (No. 0261/05 dated 20-4-2005 was obtained much after the introduction of the clause (d) in section 80-IB(10). (c) In B4 and B5 buildings, duplex flats (flats on 6th and 7th floor are internally connected with staircase) are having built up area of 1595 sq.ft. thus the area of the residential unit in the project "Brahma Aangan' exceeds 1500 sq.ft. and thus there is violation to the....
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....ect. Thus, one of the conditions laid down in section 80-B(10) r.w.r. Rule 18BBB(2) was not satisfied, so assessee was not entitled for deduction u/s 80-IB(10) of the Act. The Assessing Officer has allowed such deduction without going to the above aspects so on this single issue itself, the order of the Assessing Officer was erroneous in law. 4.1 The CIT further observed that "Brahma Aangan" project was a residential cum commercial project, as it comprised more than 2000 sq.ft. of commercial area. Section 80-IB(10) nowhere defines what is a housing project. It is only from A.Y. 2005-06, the concept of area of commercial unit in housing project was introduced by way of clause (d) to section 80-IB(10), according to which, commercial area should not be more than 5% of built up area of the project or 2000 sq.ft. whichever is less. In other words, as per the assessee, in earlier year wherever a housing project is approved by local authority and is as per DC rules then same should be considered as a housing project. According to DC rules, convenience shopping units were allowed in housing project provided it fulfills the conditions laid down by them. In the present case, the project con....
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....ions of law and rule. It is because of erroneous order of the Assessing Officer the revenue is losing tax liability payable by a person, as a result, the order of the Assessing Officer was prejudicial to the interest of revenue. In view of the above, the assessment order being erroneous and prejudicial to the interest of revenue on account of issue of claim of deduction 80-IB(10) the Assessing Officer was directed to withdraw such claim of Rs. 29,67,171/- in respect of Brahma Aangan project. The same has been opposed before us. 5. The assessee has submitted that the order u/s 263 be declared bad in law as the assessment order u/s 143(3) which is sought to be revised by the order of the CIT u/s 263 is neither erroneous nor prejudicial to the interest of the revenue. 5.1 The CIT erred in holding that the assessee was not entitled to claim the deduction u/s 80-IB(10) in respect of Brahma Aangan project on the following grounds: (a) The form No. 10CCB filed by the assessee was incomplete and the assessee had not given various details as asked for in the said form and accordingly, the assessee had not satisfied one of the conditions laid down in section 80IB(10) r.w.r. 18BBB(2). (b....
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....is not entitled for deduction u/s 80-IB(10) of the Act; Brahma Aangan project is a residential cum commercial project as it comprised more than 2000 sq.ft. of commercial area. As per amended provisions of clause (d) to section 80-IB(10), commercial area more than 2000 sq.ft. was not permissible, though this clause is introduced w.e.f. 1-4-2005, but being clarificatory in nature, it applies to earlier years also. There were other errors in the order of Assessing Officer passed u/s. 80IB(10) of the Act. In view of the above, the CIT was justified in setting aside the order of the Assessing Officer and directing him to withdraw the claim in respect of Brahma Aangan project. The same should be upheld. 7. After going through the rival submissions and perusing the material on record, we find that the CIT in his order u/s 263 has disallowed the claim u/s 80- IB(10) in respect of Brahma Aangan project which was originally allowed by the Assessing Officer in the assessment order passed u/s 143(3) on 21-12-2006. The CIT has given four reasons in the order u/s 263 for holding that the assessee is not entitled to the deduction u/s 80-IB(10) which are as under: (a) The CIT has held that the....
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....lowable to a housing project and not a commercial project. This issue has been settled by the Bombay High Court in the case of Brahma Associates (2011) 333 ITR 289 wherein it has been held that in case project is having some commercial area, it does not mean that it is not a housing project. Secondly, it was pointed out on behalf of the assessee that the project had commenced much before 1-4-2005 from which date the sub clause (d) of section 80-IB(10) was introduced. On page 59, the assessee has given details of the commencement certificates which reveals that the project commenced on 17-3-2001 and the last revised commencement certificate was dated 31-5- 2003. The assessee had no occasion to comply with the new condition introduced w.e.f. 1-4-2005 that the commercial portion should not exceed 2000 sq.ft. and hence it was not applicable in respect of the projects which have commenced prior to 1-4-2005. This proposition is supported by various decisions given by the ITAT including the decision in the case of Opel Shelters Pvt. Ltd., and D.S. Kulkarni Developers in ITA No. 219/PN/2009 and 17/PN/2009 for A.Y. 2005-06 dated 31-5-2010. Secondly, the assessment year involved in the prese....
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.... as under: "So far as the issue of application of definition of 'Built up area' as brought on the Statute by Finance Act (2004) vide sub-section 14 to section 80-IB of the Act we.f. 1-4-2005 is concerned, we respectfully following the decision of Hon'ble Bombay High Court in the case of CIT Vs. Brahma Associates (supra) hold that the amended provision is stated to come w.e.f. 1-4-2005 is having prospective effect only. We are however, of the view that in absence of such definition before 1-4-2005 in section 80-IB, the definition "built up area' as per the local law i.e. is related provisions available with the local municipal corporation will be helpful to decide the issue, as to whether terrace area and garden exclusive domain of the flat/row house owners will be included in the area of the flat while examining as to whether the same is well within the prescribed area of the flat/row house i.e. 1500 sq.ft. as per section 80-IB(10) as prevailing during the year under consideration. We, thus, set aside the matter on the issue for fresh consideration to the AO to decide the same as per our above finding in this regard after affording opportunity of being heard to the assessee." In ....
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....requirement of section 80-IA(7) would be met. The Tribunal was also held right in holding that the Commissioner did not even call for any explanation of the assessee and the issue of fulfillment of the conditions of section 80-IA had not been part of the show-cause notice. Therefore, it could not form the basis for revision of the assessment order under section 263. Without prejudice to above argument raised on behalf of assessee the Ld.AR submitted that in set aside proceeding the Assessing Officer has not addressed the issue which has not been disputed on behalf of revenue. In view of this, this issue does academic. 8. In view of above legal and factual discussion order of the CIT is set aside. 9. In the result, this appeal of the assessee is allowed. ITA No. 1003/PN/2010 for A.Y. 2003-04 (department's appeal) 10. This appeal has been filed by the department against the order of CIT(A)-II Pune dated 28-4-2010 on following grounds. "1. The order of the learned CIT(Appeals) is contrary to law and to the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) grossly erred in allowing the deduction u/s.80IB....
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....such flats. 10. For these and such other grounds as may be urged at the time of the hearing, the order of the learned CIT (Appeals) may be vacated and that of the Assessing Officer be restored." 11. The assessee claimed deduction u/s 80-IB(10) of the Act amounting to Rs. 1,90,19,493/- in respect of Brahma Aangan Project. The Assessing Officer disallowed the deduction on the ground that the commercial area constructed was 7555 sq.ft. and therefore, it was not a housing project. The second issue on which the deduction was disallowed was that the built up area of certain flats in building B4 and B5 exceeded 1500 sq.ft. as per the definition of built up area given in section 80IB(14) and therefore, the assessee was not entitled to claim the deduction. On appeal, the CIT(A) held that the project Brahma Aangan was approved by commencement certificate dated 17-3-2001 and hence in view of the Special Bench decision in the case of Brahma Associates, (2009) 122 TTJ 433 (SB) (Pune) the contention of the Assessing Officer that since there was commercial area, it was not a housing project, was not accepted. The CIT(A) accordingly directed the Assessing Officer to allow the deduction claimed u....
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.... Associates and others (supra) which has been confirmed by Hon'ble Bombay High Court. Furthermore the introduction of definition of built up area in section 80-IB (14) was w.e.f. 1-4-2005 and not retrospective in nature. 13. In view of above it is undisputed that the project had started prior to 1-4-2005 the definition of built up area as given in section 80IB(14) is not applicable and the built up area as per the DC rules of PMC was less than 1500 sq.ft. The Assessing Officer has included the area covered by the terrace in the built up area. The terrace is not includible in the built up area computed as per DC rules. Accordingly, the built up area of the flat is less than 1500 sq.ft. and therefore, the CIT(A) was justified in allowing the deduction as claimed by the assessee. 14. In the result, the appeal of the revenue is dismissed on both account. ITA No. 649/PN/2009 for A.Y. 2005-06 (assessee's appeal) 15. Assessee has raised following grounds in this appeal. "1] The learned CIT(A) erred in confirming the disallowance of deduction of Rs. 9,28,026/- u/s. 80IB(10) claimed in respect of Brahma Angan Project only on the ground that the said project consisted of little commerci....
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.... on the commercial area includible in the housing project. c. The amendment restricting the total commercial area in the housing project was not retrospective and was applicable only to the projects which had commenced construction after the insertion of the amendment and accordingly, there was no reason to deny the deduction in respect of the profits for this year. 3] The assessee submits that the commercial area constructed by the assessee in the above referred projects was lesser than 10% of the total built up area and therefore, the deduction u/s. 80IB (10) was allowable in view of the Special Bench ITAT decision in the case of Brahma Associates. 4] Without prejudice, the assessee prays for the deduction u/s. 80IB (10) in respect of the profits from the residential portion of the above two projects. 5] The appellant crave leave to add, alter, amend or delete any of the above grounds of appeal." 16. We find that appeal has been filed by the assessee against the order of the CIT()-II Pune dated 25-3-2009 for A.Y. 2005-06 on the point of confirmation of disallowance of deduction of Rs. 9,28,026/- u/s 80- IB(10) of the Act in respect of Brahma Aangan Project on the ground that....