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TaxTMI 
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TaxTMI 
2016 (2) TMI 1045
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....d was completed as per the completion certificates dated 28-11-2007 and 31-03-2008. During the course of scrutiny assessment proceedings, the Assessing Officer after seeking the report from Govt. Valuation Officer, Solapur denied the entire benefit of deduction u/s. 80IB(10) on the ground that built up area of two units in the housing project i.e. RH/D-6 and RH-3 exceeded the permissible limit of 1500 sq. ft. As per the report of Govt. Valuer the built up area including balconies and cupboard projections is 1318.18 sq. ft. and 1316.93 sq. ft., respectively and the area of projected terrace is 242.62 sq. ft. and 244.92 sq. ft., respectively. Thus, the total area of the above said 2 houses is 1560.80 sq. ft. and 1561.86 sq. ft., respectively. Aggrieved by the assessment order dated 27-12-2011, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the findings of the Assessing Officer with respect to the two units of the housing project having excessive built up area. However, the Commissioner of Income Tax (Appeals) directed the Assessing Officer to allow proportionate deduction u/s. 80IB(10) by excluding the....
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.... above cross objections." 5. Shri Hitendra Ninave representing the Department submitted that the Commissioner of Income Tax (Appeals) has erred in granting deduction u/s. 80IB(10) of the act to the assessee on pro rata basis. The assessee has himself admitted the fact that the two dwelling units i.e. RH/D-6 and RH-3 in the project has built up area in excess of the permissible limit. Therefore, the assessee is not eligible to claim the benefit u/s. 80IB(10) on the housing project 'Akshay Part'. As per the provisions of section 80IB(10) deduction is granted to the whole project if the conditions laid down in sub-section (10) of section 80IB are complied with. Deduction cannot be allowed to the individual units of the project. The ld. DR vehemently supported the assessment order and prayed for setting aside the order passed by the Commissioner of Income Tax (Appeals). 6. On the other hand Shri Nikhil Pathak and Shri Suhas Bora appearing on behalf of the assessee submitted that the Commissioner of Income Tax (Appeals) has erred in coming to the conclusion that the built up area of two dwelling units i.e. RH/D-6 and RH-3 exceeded the permissible limit of 1500 sq. ft. The ld. AR subm....
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....15. 8. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the ld. AR of the assessee has placed reliance. It is an undisputed fact that the project 'Akshay Park' was sanctioned vide commencement certificate dated 31-03-2001 and the assessee had claimed deduction u/s. 80IB(10) on the said project. The only reason for rejecting the claim of the assessee given in the assessment order is that two dwelling units i.e. RH/D-6 and RH-3 are having built up area in excess of 1500 sq. ft. In first appeal, the Commissioner of Income Tax (Appeals) confirmed the findings of the Assessing Officer with respect to excessive built up area of the two residential units. However, the Commissioner of Income Tax (Appeals) granted deduction u/s. 80IB(10) on the project on proportionate basis by excluding the two dwelling units which purportedly have built up area in excess of the limit specified under sub-section (10) of section 80IB. The Revenue in its appeal has assailed the order of Commissioner of Income Tax (Appeals) in grating deduction u/s. 80IB(10) on the pro rata basis. The ....
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.... dispute that so far as the builtup area of 17 flats is concerned, the same is beyond the limit prescribed in clause (c) to section 80-IB(10) of the Act. The plea of the assessee is that the entire project could not be held ineligible for deduction u/s 80- IB(10) of the Act. The assessee contends that the deduction u/s 80- IB(10) of the Act be allowed with respect to the profits derived from the development and construction of residential units in the said project which fulfil the requirement of built-up area specified in clause (c) to sec. 80-IB(10) of the Act. In other words, as per the assessee, the deduction u/s 80-IB(10) be allowed pro-rata to the income from the units qualifying in terms of sec. 80-IB(10)(c) of the Act. 13. The Calcutta Bench of the Tribunal in the case of Bengal Ambuja Housing Development Ltd. (supra) held as under: "It is apparent from the perusal of sec. 80-IB(10) that this section has been enacted with a view to provide incentive for businessmen to undertake construction of residential accommodation for smaller residential units and the deduction is intended to be restricted to the profit derived from the construction of smaller units and not from lar....
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....violated the condition u/s 80-IB(10)(c) of the Act in relation to 17 flats, it cannot be denied the deduction u/s 80- IB(10) of the Act on entire profits of the project which pertinently include profits in relation to residential units which comply with the limits prescribed in sec. 80-IB(10)(c) of the Act. Of course, the deduction u/s 80-IB(10) of the Act shall be denied on the profits proportionate to 17 flats which are in violation of sec. 80-IB(10) of the Act. For balance of the residential units, the plea of the assessee for deduction u/s 80-IB(10)of the Act, in our view, is fair and reasonable. We hold so." In view of the decision of Co-ordinate Bench and the decision of Hon'ble Madras High Court, we do not find any merit in the appeal of the Revenue, accordingly, the same is dismissed. 11. Now, we take up the cross objections raised by the assessee. The assessee in cross objections has assailed the findings of Commissioner of Income Tax (Appeals) in excluding residential units RH/D-6 and RH-3 of project 'Akshay Park' from the purview of deduction u/s. 80IB(10) on the ground that the 'built up area' of said units are in excess of 1500 sq. ft. The contention of the ld. A....
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....he assessee that the definition of "built up area" as given in Sub Section 14(a) of Section 80IB is inserted by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 and, therefore, the same is applicable only in respect of the projects approved after 01.04.2005. We find merit in the above submissions of the Ld. Counsel for the assessee. The Co- ordinate Benches of the Tribunal are taking the consistent view that when the assessee submits the proposal for carrying out the development of a housing project, then whatever law is there on that day, that would regulate the rights of the assessee. In the instant case, undisputedly the project was approved on 10.10.2003 i.e. prior to 01.04.2005, therefore, we are of the opinion, that the revenue authorities are not justified in including the balcony/terrace in the built up area so as to deny the benefit of deduction u/s. 80IB(10). Further the assessee has given the chart, copy of which is placed at pg. no. 165, according to which the AO in some of the cases has adopted the wrong figure, although the built up area including the balcony put together does not exceed 1000 sq. ft. 32.1 It has been held in various decisions that if some of the flats....
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....held that the law as existed when the assessee submitted its proposal and permission for carrying out the development was accorded and when the assessee commenced development is to be applied. In the present cases, as per page nos. 17 and 20 of the paper book in the case of Opel Shelter the project was commenced on 23.2.2001 and even completed on 14.5.2004, similarly as per the contents of page No.2 of the assessment order and page no. 41 of the paper book in the case of D.S. Kulkarni and Associates, the project was commenced on 12.4.2001 and completed in the month of November 2003. Thus, the assessees were supposed to complete the projects as per the law as existed in the A.Y. 2001-02 in the case of Opel Shelters and in the A.Y. 2002-03 in the case of D.S. Ku/karni and Associates. We thus following the decision in the case of Hiranandani Akruti JV V/s. DCIT (Supra) hold that amended provisions under Section 80 IB(10) w.e.f. 1.4.2005 are not applicable in the present case, hence assessees are eligible for the claimed deduction u/s. 80 IB (10) of the Act. We accordingly direct the A,O to allow the claimed deduction to the assessees." 12. We find similar view has been taken by the ....