TaxTMI 
TaxTMI 
2011 (11) TMI 801
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....laimed the same in the return of Income and therefore, in contravention of the provision of sec. 80A(5) amended retrospectively." 3. "On the facts and in the circumstances of the case and law, the Ld. CIT(A)has erred in holding that Nerul and Kharghar are not in same vicinity, though, both are located in Navi Mumbai and allowing excess labour expenses of Rs. 24,04,494/-, related to M/s. Shah Heritage Project, without any proper justification for variation in the higher expenditure of the Shah Heritage Project in comparison to Shah Arcade Project." 2. Ground Nos.1 & 2: After hearing both the parties, we find that during the assessment proceedings AO noticed that assessee had made a claim for deduction u/s.80IB(10) for Rs. 8,41,50,236/- which was later on revised to Rs. 9,03,03,389/-. The deduction was denied mainly on the basis of assessment orders for A.Yrs. 2005-06 and 2006- 07. Further, it was observed that assessee has constructed the commercial area of more than 10% and in view of the amendment that where commercial area is more than 5% deduction should not be allowed. 3. On appeal, Ld. CIT(A) decided the issue in favour of the assessee following earlier year's o....
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....ully following the decision of the Jurisdictional High Court, the ground raised by the Revenue is dismissed. Further, we find that already the project had been approved by the CIDCO on 26-3-2004 and even the revised approval has been given on 22-2-2005 which makes it clear that the project has been approved before 31-3-2005. In the case of DCIT vs. PNK Corporation [supra] it was held vide paras 7 to 10 as under: 7. In Saroj Sales Organisation (supra) since reported in (2008) 115 TTJ 485 (Mum) it has been held by the Tribunal in para 13 of its order as under :- "As regards the objection of the AO that the permissible shopping area of housing project exceeds 5 per cent, the assessee is not entitled for relief under s. 801B(10). We are of the view that the housing project were approved before 31st March, 2005 and for 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 wi....
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....e grounds taken by the Revenue are, therefore, rejected. From the above it is clear that if a project has been approved before 31-3-2005 then even if commercial area is more than restricted area, cl. (d) in sec.80IB(10) will not be attracted. This position has been further approved by the Hon'ble Bombay High Court in the case of CIT vs. Brahma Associates [supra, wherein it was observed as under: "The assessee had undertaken construction project at Pune under the layout approved by the Pune Municipal Corporation which is the local authority. The project consisted of fifteen residential buildings and two commercial buildings. The local authority had approved the project as "residential plus commercial". The percentage of the commercial area to the total area of the plot was 20.83 per cent. The project commenced on August 14,2000 and was completed on October 3, 2005. The assessee claimed special deduction in respect of the profits. The claim was rejected by the Assessing Officer and the Commissioner [Appeals]. The Tribunal held that where the project is approved as residential plus commercial, the deduction u/s.80IB(10) would be allowable only if the total built-up are....
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.... 197:38 140% 6 Flooring & Tiling Work 3,388,995 105.10 11,492,681 98.58 107% 7 Plumbing Work 1,219,724 37.83 4,236,784 36.34 104% 8 Steel 4,493,93 5 139.37 11,072,8 16 94.98 147% 9 Others 469,909 14.57 1,654,328 14. 19 103% 10 Interest Expenses 7,576,445 234.96 26,172,780 224.50 105% 11 Advertisement Expenses 11,020,883 341.79 120.98 273% 12 Admin & Other Expenses 18,687,686 579.56 14,103,629 37,483,731 321.53 From the above he concluded that the rate per square feet in the case of Shah Heritage Project was Rs. 2569 per sq. ft. whereas it was Rs. 1736 in the case of Shah Arcade project. Therefore, he concluded that cost in the case of Shah Heritage Project has been inflated particularly because no deduction was available u/s.80IB(10). Accordingly, he made a disallowance for possible hike of labour charges @ 10% and disallowed a sum of Rs. 24,92,590/-. 8. On appeal, before the Ld. CIT(A) it was mainly submitted that cost of al....
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....ly considered the facts of the case. The net profit ratio of Shah Heritage is low because of the fact that the cost of land is almost 3 times more as compared to the cost of land of Shah Arcade. The AO's allegation that most of the expenses relating to labour and contract payment were made by cash is also not borne out from the material available with the AO in view of the fact that almost the entire construction expenditure in respect of project Shah Heritage were incurred by Shri Nalin V Shah, which were recorded in his books of accounts and the AO had no occasion to examine the books of accounts of Shri Nalin V Shah. The project Shah Heritage was started by Shri Nalin V Shah during the pervious year relevant to the AY 2005-06 and most of the expenditure related to the construction of the project were incurred by Shri Nalin V Shah during the pervious years relevant to the AYs 2005- 06, 2006-07 and 2007-08 (upto 20.11. 2006) The project Shah Heritage was taken over by the appellant from Shri Nalin V Shah w.e.f. 21.11.2006 at its book value and therefore, no part of the said expenditure can be disallowed in the hands of the appellant unless it is proved that first owner has inflate....