TaxTMI 
TaxTMI 
2022 (12) TMI 251
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....ng is given in the order of AO and CIT(A) for A.Y. 2011-12 and based on such finding, assessments for A.Y. 2009-10 and 2010-11 have been completed under section 143(3)/147; therefore, as a lead case we are taking up the appeal for the A.Y. 2011-12. Our finding given therein on merits will apply mutatis mutandis in the appeals for the A.Ys. 2009-10 & 2010-11. 3. The grounds raised by the revenue reads as under: "On the facts and in the circumstances of the case and in law, the Lt. CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below : (1) "Whether on the facts and in the circumstances of the case and in law, the Ld CITI(A) has erred in directing the AO to allow deduction a/s 80IB(10) of the Act, fully in respect of residential units of A & B Wings of housing project and on pro-rata basis in respect of C Wing without appreciating the fact that the violation of the any of the criterion for claim of deduction u/s 80IB(10) leads to disallowance of the deduction for the entire projects"? (2) "Whether on the facts and in the circumstances of the case and in law, the LA CIT(A) has erred in directing the A.O....
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....801B (10) may kindly be granted to the appellant as claimed in the return of income." 5. Thus, the main issue involved is with regard to disallowance of deduction under Section 80IB (10). Brief facts of the case are that assessee is an individual carrying out the business of builders & developers in the name of his proprietary firm, M/s. Jai Gurudeo Builders & Developers. In the year under appeal, the appellant has developed a housing project on a plot bearing nos. 16 to 19 and 21 to 25 of Sector 17, Kamothe, Navi Mumbai. During the year under assessment, profit derived from development of the said housing project was offered to tax in accordance with the method of accounting regularly followed by the assessee. The return of income for the year under appeal was e-filed by the assessee on 30.09.2009 declaring total income of Rs.24,58,950/- The appellant has claimed deduction u/s 80IB (10) to the extent of Rs. 9,76,62,309 for A.Y. 2011-12. The assessee had declared income of Rs. 1,69,41,520/- after claiming deduction of Rs.11,78,42,627/- under section 80IB(10). The assessee"s project had 3 wings with 2 wings having 12 floors and 3rd wing having 13 floors named as A, B & C wing. Th....
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.... counted from this check naka and if the distance by road from this place to the assessee"s project is measured as per Google Earth then the road distance between Mankhurd station and sector 17 Kamothe is around 21 kms. The learned Assessing Officer in support of his conclusion has also placed reliance on the decision of ITAT, Mumbai bench in the case of Laukik developers versus DCIT (2007) 105 ITD 657, wherein the Tribunal has held that distance of 25 kilometers has to be measured from the outer limit of jurisdiction of BMC. 7. In so far as controversy, whether the areas of the flats in some of the floors were not more than 1000Sq. ft., Assessing Officer on perusal of the drawings and map noted that these flats has a larger area because of "flower bed" and "terrace". He thus, included this area into built up area specially the flower bed part. 8. One of the contentions of the assessee was that in so far as residential units of A & B wings were concerned, the same were below 1000 Sq. ft., which fact has not been denied by the Assessing Officer. The assessee has given the following details of each wing and the profit shown therein: Wing Area Sq. ft. Profit (in Rs..) ....
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....0IB(10) was not justified. The appellant has also submitted that the working of built up area of "C" wing of the housing project by including terrace/flower bed area as part of built up area was not justified. Alternatively, the appellant has also pointed out that the built up area of residential units of wing A & wing B of the housing project are undisputedly below 1000 sq. ft. and therefore deduction u/s 80IB(10) should have been granted on pro-rata basis in respect of the profit from A & B wing of the housing project as built up area in these wings was below permissible limit. In support of the arguments, the appellant has relied upon various decisions. (ii) The issue of eligibility of area for the housing project i.e. whether the appellant is entitled for built up area of 1000 sq. ft. or 1500 sq. ft. was raised by the appellant before the AO also. The arguments made before me and evidences filed were also submitted before the AO during assessment proceedings. The AO has at Para 5.3 of the asst. order for A.Y. 2011-12 considered the submission of the appellant and concluded that the distance of the project is to be calculated from Mumbai Panvel Octroi Check Naka at Mank....
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....e worked out on pro-rata basis in line with our discussion in the preceding para." The Hon. Tribunal directed the AO to verify and allow deduction on pro-rata basis in respect of flats having built up area less than 1000 sq. ft. Respectfully following the above decision of the Hon. jurisdictional tribunal as well as the other decisions holding the assessee to be eligible for deduction u/s 80IB(10) on pro-rata basis in respect of units of the housing project not exceeding 1000 sq ft, I direct the AO as under: (i) The residential units of A & B wing of the housing project have built up area below 1000 sq ft. Accordingly, deduction u/s 80IB(10) is to be fully allowed in respect of profit arising from development of "A"&"B" wing of the project. (ii) In respect of C wing, deduction u/s 80IB(10) is to be disallowed only in respect of those units which have built up area exceeding 1000 sq ft. In respect of other units of the C wing, where the built up area is less than 1000 sq. ft., deduction u/s 80IB(10) is to be allowed on pro-rata basis. The AO is directed to work out allowable deduction u/s 80IB(10) as per above direction on pro-rata basis. The appeal is dec....
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....wance of deduction u/s 80IB (10) has been made by the ld. AO for the reason that certain units of "C" Wing of the housing project marginally exceeded 1000 sq. ft. built-up area is unjustified on facts and circumstances of the case. The ld. Assessing Officer has erred in including the terrace area of residential units which is open to sky and therefore, cannot be part of inner measurement of residential units in determining the built-up area of the residential units. The AO has failed to appreciate that such terrace area is not part of built up area as defined by sec. 80IB (14)(a) of the IT Act, 1961. He pointed out that, after reducing the terrace area from the area of disputed flats of the housing project, many of the flats of 'C' wing of the project have built up area less than 1000 sq. ft. He then submitted that the flower bed as taken by the Assessing Officer has to be excluded, because as per the architectural design of the residential units of the housing project "flower beds" was in the form of cantilever projection given in front of a habitable room to be used for the limited purpose of plantation only. Such cantilever projection is beyond the building line habitabl....
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....he other hand, learned DR has given his written statement submissions which for the sake of ready reference: The appellant in relation to Ground Nos. (2) to (4) on allowability of the deduction claimed under sections 800(10) of the Income-tax Act, 1961 (the Act) has argued that the Ld CIT (Appeals) ed in approving the order of the Assessing Officer holding that maximum permissible built up area in the case of appellant is 1000 sq ft and not 1500sq ft since the project was within 25 kms from the Municipal Limits of the City of Mumbai. 2.1 The argument canvassed by the assessee is that its housing project was at Kamothe, Navi Mumbai and the same was located more than 25 kms from the Municipal Limits of the City of Mumbai and therefore, the maximum built up area permitted as per sub-section (c) of section 80IB(10) is 1500 sq ft and not 1000 sq ft As, none of the residential units have area exceeding 1500 sq ft no disallowance of deduction was warranted. The appellant has further submitted that: i. The word used in section 801B(10Xc) is Municipal Limit of the city of Mumbai and that it would be incorrect to assume it to mean Municipal limit of Municipal Corporation, i.e.....
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....elp" However, the intent of granting a tax benefit is no longer a basis for the assessee to seek a favourable interpretation. Even if purely for the sake of argument it is presumed that there is an ambiguity in the said deduction provision, it may be mentioned that a Constitutional Bench of the Hon'ble Apex Court in Commissioner of Customs (Import). Mumbai v Dilip Kumar & Company reported [2018] 95 in taxmann.com 327, held that for an exemption notification, the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. Thus, the Hon'ble Supreme Court has overruled the rule of interpretation adopted in earlier cases (such as Sun Export Corpn Collector of Customs) that whenever there is an ambiguity in a tax exemption provision or notification, the same must be interpreted in the manner favourable to the assessee allowing the assessee to claim the exemption. 2.5 Adverting to the decisions relied upon by the assessee, in the case of Shri Mavji Mulji Merchant vs State Of Maharashtra And Ors [1993 (3) BomCR 220], the writ petition related to the non-agricultural assessment under the Maharashtra Land Revenue Code, 1966, which is far removed from the pro....
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....se "where such residential unit is situated within the city of Delhi or Mumbai or within twenty five kilometres from the municipal limits of these cities" 3. On the other hand, reliance in support of the impugned order of assessment is placed on the judgment dated 10 July, 2006 passed by Hon'ble ITAT Mumbai in the case of Laukik Developers vs DCIT, reported in [2007] 105 ITD 657 (copy enclosed). The relevant portion of the aforesaid judgment is reproduced as under: 8. The other issue is with regard to measurement of 25 Kms distance from the city of Mumbai. The case of the assessee is that the six residential units of whose built up area exceeds 1000 sq ft constructed by the assessee are not hit by provisions of Section 80IB(10)(c) of the Act for the reason that the assessee's site is outside the 25 KMs distance from the limits of city of Mumbai. In the provisions of Section 801B(10)(c) the word 25 Kms from the municipal limits of city of Mumbai is mentioned. The case of the Department is that the distance of 25 Km has to be measured from the outer limits of municipality of Mumbai and there being only "BMC having jurisdiction over the municipal limits of Mumbai, ....
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....at which has been confirmed by the learned CIT (A). 16. We have heard the rival submissions, perused the relevant finding given in the impugned orders as well as material referred to before us at the time of hearing. In both the cross appeals mainly two issues are involved, firstly, whether on the facts and circumstances the assessee is eligible for claim of deduction under section 80IB(10) where maximum permissible built up area in the projects have marginally exceeded 1000 Sq. ft., but are below 1500 Sq. ft. is eligible for deduction or not on the ground that it is beyond 25 Kms from the municipal limits of city of Mumbai; and secondly, whether proportionate deduction on pro-rata basis can be given on the units which are less than 1000 Sq. ft. specially in two of the three wings, i.e., A & B wings wherein all the flats are below 1000 Sq. ft. therefore the entire disallowance of deduction relating to all the three wings, A, B & C were entire project should not be denied. 17. First we will take up the first issue, whether project is within 25 Kms of the municipal limit of city of Mumbai as per the words used in clause (c) of section 80 IB (10). The main thrust of the learned ....
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....n. What the statue has provided is the municipal limit of the city and not the limit of any administrative limit. In Mumbai there is only one Municipal Corporation and therefore the limit has to be seen from the municipal limit of BMC and not "city of Mumbai" as understood under the various enactments for the purpose of district division. Thus, we agree with the contention of the learned DR as incorporated above and we are tandem with his reasoning given by him. Moreover, this issue is also squarely covered by the decision of ITAT, Mumbai in case of Laukik Developers Vs DCIT Supra as incorporated in the submissions of the learned DR in the 14 paragraph. Thus, this issue is resided against the assessee. 19. Now in so far as controversy, whether the terrace is part of the built up area or the flower bed area is to be excluded from the built up floor area. We find that Assessing Officer has discussed in detail as to how the flower bed area and some of the terrace area is part of the floor area and covered in the built up area. Even the learned counsel at the time of hearing has not rebutted the findings of the Assessing Officer as described by him in detail in the assessment order.....