TaxTMI 
TaxTMI 
2012 (3) TMI 500
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.... has erred in allowing deduction u/s.80IB(10) to the tune of `.2,37,29,264/-. 2. The Ld. CIT(A) has erred in holding that the assessee is eligible for deduction u/s.80IB(10) of the Act without appreciating that the project consists of commercial units. 3. The decision of Hon'ble Spl. Bench ITAT, Pune in the case of Brhamha Associates v/s. Joint Commissioner of Income Tax (2009) (122 TTJ (Pune) (SB) 433), is applicable only for A.Y. 2004-05 and earlier year and not for A.Y. 2005- 06 or subsequent year. However CIT(A) based on this decision allowed relief in assessee' favour for A.Y. 2005-06. 4. The order of the CIT(A) may be vacated and that of the Assessing Officer be restored." 3. The brief facts of the case are that the appellant is a partnership firm engaged in the business of developing housing projects. A search and seizure action u/s.132 was carried out on 04.10.2006 at the business premises and in consequent to that, a notice u/s.153A was sent to the appellant for filing of return of income for all the years involved here in these appeals. For the Assessment Year 2005-06, the return of income was filed on a total income of `.87,92,450/- after claiming a deduction ....
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.... Mumbai. 4. Before the CIT(Appeals), the contention of the assessee remained same that after the process of acquisition was completed from CIDCO Ltd., it entered into a negotiation with "M/s. Thakkar Enterprises" for transferring the development rights in respect of the portion of plot area on which compulsory commercial area was required to be developed as per the regulation of local authority and NMMC. Accordingly, the portion of the plot on which commercial component was required to be developed as per the requirements of local authority, was transferred to different party under MOU dated 06.09.2002. Thus the assessee divested itself fromthe development rights in respect of 777 sq. mtrs of commercial plot and, therefore, the balance area was wholly and exclusively a housing project. It was also contented that the market value in which the development rights was transferred has been accepted u/s.143(3) in the Assessment Year 2004-05 and, therefore, same cannot be roped in this year for taking any adverse inference. Thus what the assessee firm has developed is exclusively a residential housing project on the balance plot of 6993 sq. mtrs retained by it and, therefore, it was full....
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....vinced that, the appellant has fulfilled the conditions laid down by Sec 80IB(10) of the Act. The decisions rendered in the cases of Brahma Associates and Saroj Sales Organisation are binding on me in view of the decisions of Mumbai High Court in the case of Bank of Baroda Vs. H.C. Srivastava (256 ITR 385) and the decisions of the Hon'ble Madhya Pradesh High Court in the cases of Govindram Seksaria Charity Trust Vs. ITO (168 ItR 387) and Agarwal warehousing and Leasing Ltd. (257 ITR 235/240). Accordingly, I hold that the assessee is entitled to deduction u/s. 80IB (10) in full. I direct the AO to delete the addition made on account of denial of claim of deduction u/s.80IB(10)." 5. The learned CIT DR submitted, that the project has been approved as 'housing cum commercial complex and was allotted to the assessee firm only, therefore, segregation of part of the same which has been sold to other concern will not render project as a housing project. If the entire area i.e. 7770 sq. mtrs is considered (including 777 sq mtrs sold to the other for commercial development), then per unit area would be more than 2000 sq. ft. and, therefore, deduction u/s.80IB(10) will not be available. ....
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....orders of the CIT(Appeals) and the Assessing Officer and also the rival contentions of the parties. The undisputed fact is that the assessee was allotted a plot of land admeasuring 7770 sq. mtrs from CIDCO Ltd. to develop a residential and commercial complex, out of which the component for commercial complex was 10% of the allotted land. The assessee has sold the development rights of this commercial unit to 'M/s. Thakker Enterprises' at a portion of plot admeasuring 777 sq. mtrs, which is 10% of the total plot of land. Now, the issue before us is, whether the plot area of 777 sq. mtrs. for commercial unit sold to the other party i.e. 'M/s. Thakker Enterprises' should be segregated from the overall plot, so that the balance area remained with the assessee for the development of residential units is purely a housing project and consequently the area per unit would be less than 1500 sq. fts. The second issue is that if the entire plot allotted to the assessee i.e. 7770 sq. mtrs. (which includes 777 sq. mtrs for development of commercial unit) is treated as one integrated project solely with the assessee then the residential block and commercial block can be segregated, so as to work ....
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....oup of building and only then the same would be called as "housing project" and if the project contains independent building, then each unit in the said building has to be taken independently. Thus following the ratio of above decisions, we hold that the residential unit as has been developed by the assessee is less than 1500 sq.mtr, as it will not include the area embedded for commercial unit in the whole of the project. 7.2 As regards, whether the housing project which has been approved by the local authority as 'residential cum commercial project' would be entitled for deduction u/s.80IB(10). This issue has now been settled by the Hon'ble Jurisdictional High Court in the case of CIT vs. Brahma Associates & Others vs. JCIT (supra), wherein the decision of Special Bench has been approved partly after observing and holding as under :- "30. In the result, the questions raised in the appeal are answered thus : (a) Up to March 31, 2005 (subject to fulfilling other conditions), deduction under section 80-IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under the Development Control Rul....
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....or such project which were so approved, there was no stipulation as to the shopping complex area is permissible in the project. As already stated earlier that the amendments were subsequently made while extending the deduction of income from housing project approved upto 31st March, 2007, the denial of deduction, in our view, is clearly not in accordance with law." ii) Hiranandani Akruti JV vs. DCIT reported in (2010) 39 SOT 498 (Mumbai), wherein it has been held as under :- "We are of the view that we are not supplying any words to the "statue but are only holding that the law as it existed in the asst. yr, 2004-05 when the assesse submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17th Nove, 2003 and when the assessee commenced development is to be applied. Therefore, the submissions of the learned Departmental Representative in this regard cannot be accepted. We are of the view that the legislature would not have intended to take away a vested right without clear words to that effect in the provisions of s. 80IB(10) as amended by the Finance Act, 2005, w.e.f. 1st April, 2005. We, therefore, hold following the dec....