TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 1246
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..... On the facts and in the circumstances of the case and in law, learned CIT(A) erred in disallowing the deduction u/s.80IB(10) on prorata basis for 16 flats out of the entire housing project with the presumption that the area of these flats exceed 1500 sq. ft. 4. The Revenue in ITA No.2034/PN/2014 has raised the following grounds of appeal :- 1. The learned Commissioner of Income-tax (Appeals) erred in allowing the assessee's claim of deduction u/s 80IB(10) on pro-rata basis. 2. The learned Commissioner of Income-tax (Appeals) erred in not appreciating the import of Section 80IB(10)(c) which clearly lays down that in order to envisage the benefits of this section, all the conditions laid down therein has to be fulfilled. 3. The learned Commissioner of Income-tax (Appeals) erred in allowing the deduction u/s 80IB(10) on pro-rata basis even though he has accepted that 16 flats of the project exceeded the area of 1500 sq.ft., as per the section 80IB(14)(a) of the Act. 4. The learned Commissioner of Income-tax (Appeals) erred in allowing prorata claim of deduction u/s.80IB(10) in respect of eligible flats in the project inspite of violation of clause (c) without appreciati....
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....03.2013 and pointed out that the report of Government Valuer was factually incorrect. The assessee in turn, got the verification done through another Government Valuer and the valuation report was filed along with submissions. The assessee pointed out that the verification carried out by its Valuer was correct and according to them, the built up area of none of the residential units exceeded 1500 sq. ft. The assessee claimed that the Government Valuer had not visited the project site but his assistant had visited and carried out verification of few of the flats only. Another contention raised by the assessee before the Assessing Officer was that all the flats bearing odd number in a particular building were of same size, whereas the Government Valuer had given two measurements in respect of odd numbers of flats in building E. He stressed that the findings were not based on measurement of sites but on table calculation from building plans for different flats. Reliance was placed on the Valuation Report submitted by the assessee in this regard and it was pointed out that the Valuer had visited and measured all the flats. The Assessing Officer has tabulated the measurements by the Gov....
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....r:- "10. We have heard the rival contentions and perused the record. The issue arising before us in the captioned appeal is against the violation of provisions of section 80IB(10)(c) of the Act by amalgamation of two units i.e. row houses D-3 and D-4 and whether deduction under section 80IB(10) of Act should be allowed for the balance eligible units constructed in the project. Admittedly, after merging of the two units i.e. row houses D-3 and D-4, the total covered area was more than 1500 sq. ft. which is the condition stipulated in section 80IB(10)(c) of the Act. The assessee had violated the said condition while constructing the said units in project "Pushpendranagar". However, the alternate claim made by the assessee was that pro-rata deduction should be allowed to the assessee in respect of the balance eligible units contained in the project. We find the similar issue arose before the Pune Bench of the Tribunal in the case of Pharande Developers (supra) and in turn reliance was placed on the ratio laid down by the Pune Bench of the Tribunal in the case of D.S. Kulkarni Developers Ltd. Vs. ACIT in ITA Nos. 1428 & 1429/PN/2008, order dated 08.08.2012 and also the subsequent judg....
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....ision of the Hon'ble Bombay High Court in Brahma Associates (supra) to the facts of this case. On a careful reading of this judgement, we find that nowhere it is stated that proportionate deduction should be allowed, in case certain residential units had built-up area in excess of prescribed limit of 1,000 sq.ft.. In fact, this issue was not before the Hon'ble Jurisdictional High Court. The questions before the Hon'ble Jurisdictional High Court were different and, hence the judgement cannot be said to be on this issue. The only issue before the High Court is when there is a commercial element in a residential project, will be assessee be denied the entire exemption. In this case, the Hon'ble High Court has observed that when the local authority approved a plan as a housing project or a residential cum commercial project, the assessee would be entitled to claim for deduction under Section 80-IB(10) even if the project had commercial element in excess of 10%. At paras 27 and 28, the Court observed as follows :- "27. The question then to be considered is, whether the Special Bench of the Tribunal was justified in holding that the projects having commercial area upto 10% of the buil....
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....t do not approve the findings of the Tribunal that a residential building with commercial user up to 10% of the plot area would be entitled to deduction under section 80-IB(10). The issue that, in case where certain residential units are of a built-up area in excess of the prescribed limit of 1,000 sq.ft. in residential project, this would result in the entire exemption being lost, or whether the assessee would be entitled to a proportionate deduction was not before the High Court. Thus, in our opinion, the decision of Hon'ble Jurisdictional High Court in the case of Brahma Associates (supra) does not come to the rescue of the Revenue." 22. Following the aforesaid precedent, we, therefore, hold that merely because the assessee has violated the condition under Section 80-IB(10)(c) in relation to the flats on the 11th floor, the deduction under Section 80-IB(10) cannot be denied in its entirety, but, the denial shall be limited to the profits in respect of the flats on the 11th floor alone. For the balance of the residential units, the plea of the assessee for deduction under Section 80-IB(10) of the Act is justified, and the assessee succeeds on this aspect." 11. Following the ....
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....turn, reported that 16 flats out of total 248 flats exceeded the built up area limit eligible for claiming the deduction under section 80IB(10) of the Act. The said report of the DVO is dated 21.03.2013. On 22.03.2013, the Assessing Officer show caused the assessee to explain as to why the said report should not be applied and the deduction claimed under section 80IB(10) of the Act be withdrawn. On the next date of hearing i.e. on 23.03.2013, the assessee pointed out that the verification exercise carried out by the DVO was only in respect of four flats of which the measurements were taken and for the balance flats, the area was worked out on the basis of other documents but no physical verification was carried out. In order to meet the requirement of built up area in respect of various flats built by it, the assessee furnished report from another Valuer Smt. Arti Sanghvi. The assessee also explained that where it was constructing the building, the odd numbers flats were similarly built and hence, no question of deviation in their areas and exact instances in this regard were pointed out. It was also explained that the lady Valuer had carried out the necessary verification exercise....