TaxTMI 
TaxTMI 
2012 (11) TMI 1159
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....aged in the business of promoters, builders and land developers. It undertook development and constructing of a housing project named as 'Citadel' at B.T. Kawde Patil Road, Pune and claimed deduction for the captioned assessment years in respect of profits derived from such project in terms of section 80-IB(10) of the Act. The Revenue has denied the claim of assessee primarily for the reason that the project undertaken by the assessee does not fulfill the conditions prescribed u/s 80-IB(10) of the Act. It was a common point between the parties that the facts and circumstances in the captioned assessment years stand on a similar footing and therefore, we take up for discussion, the facts in relation to assessment year 2003-04 to facilitate adjudication of the dispute. 3. In so far as assessment year 2003-04 is concerned, the relevant facts are that assessee declared total sales in relation to its project 'Citadel' at Rs. 13,97,83,157/- on which net profit in the profit and loss account was shown at Rs. 4,88,52,973/-. After adjusting the brought forward losses of Rs. 48,15,337/-, the gross total income was computed at Rs. 4,40,37,636/- which was claimed as exempt u/s 80-IB(10) of th....
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....at the restriction on the area ear-marked for commercial purposes in a housing project laid down in clause (d) of sec. 80- IB(10) of the Act would not be applicable to the projects which have commenced prior to 1-4-2005, inasmuch as the law as applicable at the time of commencement of the project did not contain such a restriction. It is submitted that Hon'ble Bombay High Court in the case of Brahma Associates Vs. JCI 333 ITR 289 (Bom) clearly laid down that such amended provision did not operate retrospectively and that the same would be applicable from 1-4-2005 prospectively. Apart therefrom, reliance has also been placed on the decisions of Pune Bench of the Tribunal in the case of Opel Shelters Pvt. Ltd. Vs. ACIT (ITA No. 219/PN/2009 for A.Y. 2005-06 vide order dated 31-5- 2010, G.K. Builders in ITA No. 1077 and 1078//PN/2010 for A.Y. 2005-06 and 2006-07 vide order dated 30-7-2012 and Bombay Bench of the Tribunal in the case of Hiranandani Akruti JV Vs. Dy. CIT (2010) 39 SOT 498 (Mumbai). 6. On the other hand, the learned DR appearing for the Revenue has defended the stand of the Revenue by pointing out that phraseology of sec. 80-IB(10) contained an expression 'housing proje....
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....t cannot be applied retrospectively. Further, the plea of the Revenue that only a pure housing project is eligible for deduction is also completely misplaced having regard to the judgment of Hon'ble Bombay High court in the case of Brahma Associates (supra). In the case before the Hon'ble Bombay High Court, the project consisted of 15 residential buildings and two commercial buildings and it was noticed that local authority had approved the project as residential-cum-commercial. The Hon'ble Bombay High Court explained that since expression 'housing project' was not defined under the Act, its meaning would have to be gathered from the Rules and Regulations framed by the approving local authority. The Hon'ble High court explained that since a 'local authority' could approve the project to be a housing a project with or without commercial user, it was therefore, the intent of the legislature that deduction envisaged u/s 80-IB(10) of the Act was allowable to such housing projects approved by the local authority without or with commercial user to the extent permitted by the rules of local authority. Though, the assessment year before the Hon'ble Bombay High Court was prior to 1-4-2005, ....
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....ction 80-IB(10) of the Act. Sub-clause (c) of section 80-IB(10) of the Act required that in order to be eligible for deduction, built up area of residential units in cities other than Delhi or Bombay shall not exceed 1500 sq.ft. As per the Revenue few residential units contained in the housing project undertaken by the assessee had a built up area exceeding 1500 sq.ft. Since few units violated the condition prescribed in sub-clause (c) of section 80-IB(10) of the Act deduction for the entire project was denied In coming to such computation of built up area, the Revenue has relied upon subclause (a) of section 80-IB(14)(a) which explains the expression "built up area' to mean the inner measurement of the residential units at the floor level including the projections and balconies as increased by the thickness of walls but excluding the common areas shared with other residential units. No doubt, on an application of such a definition of built up area, the case set up by the Revenue is potent. So however, in the present case, the issue is as to whether such definition of the built-up area inserted by the Finance (No. 2) Act, 2004 w.e.f. 1-4-2005 is applicable or not. Ostensibly, prior....
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....ludible in built up area of the flat prior to 1-4-2005 and hence for the project commenced before 1-4-2005, terrace is not includible in the built up area. In view of this, assessee is entitled for deduction u/s 80-IB(10) as claimed." 15. Following the aforesaid observations, we therefore, hold that since the project of the assessee commenced prior to 1-4-2005 the definition of 'built up area' as provided in sec. 80-IB(14)(a) cannot be applied in this case so as to evaluate the condition prescribed in sub-clause (c) of section 80IB(10) of the Act. Under these circumstances, the limit of 'built up' area prescribed in sub-clause (c) of section 80-IB(10) of the Act has to be understood on the basis of local development Rules which does not include terrace/canopy. If the areas covered by the terrace/canopy are excluded, the built up area of the three Row houses in question does not exceed the limit of 1500 sq.ft. prescribed in sec. 80-IB(10)(c) of the Act. In this view of the matter, the aforesaid objection raised by the Revenue to disentitle the assessee from claiming of deduction u/s 80-IB(10) of the Act is untenable. In view of the aforesaid discussions, therefore, we set aside the....
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....) of the Act w.e.f. 1-4-2005. In this background of the matter, we find that even for A.Y. 2005-06 and 2006-07 the objection of the Revenue is unsustainable. Pertinently, the project of the assessee in question i.e. 'Citadel' commenced development and construction prior to 1-4-2005 and in fact stands completed on 23-2- 2004 as noted by the CIT(A) in para 2.1 of the impugned order. Therefore, clause (d) to sec. 80IB(10) of the Act inserted by the Finance (No. 2) Act, 2004 w.e.f. 1-4-2005 cannot be invoked to disentitle the assessee's claim for deduction u/s 80-IB(10) of the Act for A.Y. 2005-06 and 2006-07 as well. 17. On the similar parity of reasoning, further objection of the Revenue based on built-up area inserted by the Finance (No. 2) Act, 2005 w.e.f. 1-4-2005 in section 80-IB(14)(a) would also not hinder the assessee's claim for deduction u/s 80-IB(10) for the reason that its project had commenced prior to 1-4-2005. Therefore, appeals for A.Y. 2005-06 and 2006-07 are also allowed. 18. In the result, the appeals of the assessee pertaining to assessment years 2003-04, 2004-05, 2005-06 and 2006-07 are allowed as above. 19. The only appeal now remaining is ITA No. 1008....
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....ng a continuous project with other project i.e. 'Citadel' was concerned, the CIT-II held that the stand of the Assessing Officer was not correct. In this regard, the CIT-II noticed the order passed by the Assessing Officer in A.Y. 2006-07 u/s 143(3) of the Act dated 31-12-2009 wherein the projects 'Citadel' and 'Citadel Enclave' were treated as single project. The aforesaid dispute has not been raised by the Assessing Officer in the impugned assessment order dated 31-12-2009. The only point on the basis of which the assessee's claim for deduction u/s 80-IB(10) of the Act for the 'Citadel Enclave' project has been denied, is to the effect that the commercial area of this project exceeded 2000 sq.ft. which was violative of clause (d) of section 80-IB(10) of the Act. 22. In appeal before the CIT(A), the assessee contended that the commercial building noticed by the Assessing Officer in the project 'Citadel Enclave' was not owned by the assessee but it was the project carried out by another firm viz. Wide Angle Associates. Secondly, it was further pointed out by the assessee that the aforesaid point raised by the Assessing Officer neither emerged from the original assessment o....
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....e CIT-II Pune passed u/s 264 of the Act. Both the above assertions of the CIT(A) find an echo in para 3.8 of the impugned order which reads as under: "The Assessing Officer has stated that since in the original lay out plan this commercial building was shown and the project was also mentioned as 'residential plus commercial' in the original commencement certificate dated 6-6-2003, the commercial area as treated to be part and parcel of the Citadel Enclave project only. Before the Assessing Officer as well as during the appellate proceedings, it has been explained by the appellant that the commercial building comprising of 22 shops was not a part of the project citadel Enclave but was a project of the firm 'Wide Angle Associates'. For this, the appellant pointed out to the report of the Registered Valuer appointed by the Assessing Officer, and explained that the particular land on which the commercial building was located was transferred by the AOP to the firm M/s. Wide Angle Associates by a Registered Development Agreement dated 24-12-2003, of which a copy was filed before the Assessing Officer as well as during appellate proceedings. Considering this explanation of the appellant,....