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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 18.04.2016 passed by the Commissioner of Income Tax (Appeals) - 28, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011- 12.
The revenue has raised the following grounds:- “l. On the facts and in the circumstances of the ease and in Law, the Ld. CIT(A) has erred in directing the AO to all the deduction of Rs. 1,17,,28,829/- without appreciating the facts that the area of the flats under consideration is more than 1500square feet.
ITA No.4607/M/2016 A.Y.2011-12 i) On the facts and circumstances of the case and in law, the learned CJT(A) has erred in holding that the definition of built up area as inserted by the Finance Act of 2004 would not apply to projects which are completed prior to April 01,2005, ii) On the facts and circumstances of the case and in law the learned CIT(A) has erred in not appreciating the fact that the above interpretation of the provision of section S01B (10) of the Act. As propounded by the Bombay high Court in the own ease of the assessee as reported in 370ITR 38, and in the case of C1T vs Tinnwala Industries in Income Tax Appeal No. 3315 of 210 dated 13/04/2012 has not been accepted by the Department and SLP in both the cases is pending for disposal. 2. "The appellant prays that the order of the AO should be restored and order of the CIT(A) should be set aside/' 3."The appellant craves leave to amend or alter any ground or add a new ground which may be necessary."
The brief facts of the case are that the assessee filed its return of income on 24.09.2011, declaring income to the tune of Rs.35,76,412/- after claiming deduction u/s 80IB of the I.T. Act, 1961 of Rs.1,17,28,829/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Subsequently, the case was selected for scrutiny and notice u/s 143(2) of the Act dated 27.09.2012 was issued and served upon the assessee. Thereafter, the notice u/s 142(1) of the Act dated 04.01.2013 was issued and served upon the assessee. Thereafter, upon change of incumbent another notice u/s 142(1) of the Act dated 17.07.2013 was issued and served upon the assessee. The assessee is engaged in the business of development of property. The assessee claimed the deduction u/s 80IB of the I.T. Act, 1961 to the tune of Rs.1,17,28,829/-. The claim of the assessee u/s 80IB of the Act was rejected for the A.Y. 2009-10 & 2010-11. Therefore the notice was given to the assessee and after filing the reply of the assessee, the claim raised by assessee u/s 80IB of the Act was disallowed mainly on the ground of that the built up area of flat was more than 1500 per sq. per unit. Therefore, the ITA No.4607/M/2016 A.Y.2011-12 claim of the assessee u/s 80IB of the Act to the tune of Rs.1,17,28,829/- was disallowed and the total income of the assessee was assessed to the tune of Rs.1,53,05,240/-. The assessee has filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.
ISSUE NO.1:-
Under this issue the revenue has challenged the deletion of the disallowance of deduction of Rs.1,17,28,829/- u/s 80IB of the Act. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record: -
“I have carefully considered the facts of the case, grounds of appeal and written submissions made before me. 5.1. These grounds related to the action of the AO in disallowing deduction u/s80IB(10) of Rs.1172889. I have considered theh facts of the case and perused the order of the ITAT in the appellant’s own case for the A.Y. 2003-04 to 2006-07, in to 146/M/2012 dated 04/05/2012, wherein the Hon’ble ITAT has directed the AO to grant the deduction u/s 80IB(1) as claimed by the appellant. In para 12 of their order, the Hon’ble ITAT H Bench has allowed the deduction u/s 80IB to the appellant. I further find that the matter was carried to the Hon’ble Bombay High Court by the AO. The order of the Hon’ble Bombay High Court for the AYs 2003-04 to 2006-07 is now available in (2015) 56 taxmann.com 50 (Bombay). The Hon'ble Court has dismissed the appeals of the AO and upheld the decision of the Hon'ble IT AT. Quoting from the same: -
6. Having considered the facts of the case, we find that the issue in these appeals relates only to section 80-IB(10)(b) and (c). Various amendments have been made to section RO-IB(IO) by the Finance Act 2003-04 which are as follows: "By the Finance Act, 2003, further amendments were made to section 80-18(10} and they read as '(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 3 1st day of ITA No.4607/M/2016 A.Y.2011-12 March 2005, by a local authority, shall be hundred per cent of The profits derived in any previous year relevant to any assessment year from such hunting project if,— (a) finch undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October 1998, fb) the project is on the size of a plot of land which has a minimum area of one acre and (c) the residential unit has a maximum built-up area oj one thousand square feel where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometer-, from the municipal limits of these cities and one thousand and five hundred square feet at arty other place. '" As can be seen from the aforesaid provision, now the only changes that were brought about were that with effect from 1st April, 2002, (i) the housing project had to be approved before March 31, 2005, and (ii) there was no time limit prescribed far of the said project. Though the changes were brought about by the Finance 2003, the Legislature thought it fit that these changes be deemed Io have been brought into effect from April 1, 2002. AH the remaining provisions remained unchanged.
Thereafter, by the Finance (Nt, 2) Act, 2004, with effect from April 1, 2005, section 80-IB(IO) was substituted and substantial changes were effected in the newly substituted sub-section (10) of section SO-IB. It read: "(10) The amount of deduction in the case of art undertaking developing and building housing projects approved before the 31s! day of March; 2007, by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year housing project if, — undertaking has commenced or commences development and construction of the housing project and or after the 1st day of October, 1998, and completes such construction, — (i) in a case where a housing project has been approved by the heal authority before the 1st day of April* 2004, on or before the 3 1st day of March. 2008 ii) in a case where a housing project has been, or, is approved by the ITA No.4607/M/2016 A.Y.2011-12
authority on or after the hi day of April r 2004. within four years from the end of the financial year in which the housing project is approved by the local authority. Explanation, — For the purpose of this clause, — (i) in a case where the approval in respect of I the housing project is obtained more than once, such housing project shall he deemed nor have been approved on the date on which the building plan of such housing project is first approved by {he local authority. (i) the dare of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such hawing project iv issued by the local authority, (b) the project is on the size of a plot of (and which has a minimum area of one nothing contained in clause (a) or clause fb) shall apply to a project carried out in accordance with a scheme framed by {he Central Government or a. Stale Government for reconstruction or redevelopment of existing buildings in area* declared (o be slum areas under tiny law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up urea of one Thousand square feet where such residential unit w situated within the of Delhi 'or Mumbai 'or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place, and (d) the built-up urea of the shops and other commercial establishments included in the housing project does not exceed five per cent, of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. " (Emphasis supplied} '. furthermore, as the Tribunal has correctly observed the concept of 'super built-up' area issued by builders to get higher price and the super built-up area includes common area on the lair-case and the balcony area. Since the super built-up area cannot be equated with built-up area it cannot be slated in the instant case that the area of the flat is more than 1,500. '. There is no doubt that it is the housing project and it does not include any commercial Built-up area is also defined in section 80-1 & (a) to read as follows '"built-up area' mean.\ inner measurement of the residential units al the floor level, including the projections and balconies, increased by thickness of walls but not include (he common area shared with other residential units."
ITA No.4607/M/2016 A.Y.2011-12
The words "including projection and balconies" were inserted with effect from April /, 2005, by the Finance Act of 2004. The question whether the definition of built-up area with effect from April 1, 2005, was prospective for retrospective in nature has been considered by this in income Tax Appeal Net. 3315 of 2010 between CIT Tinnwala Industries which holds this definition which has been brought on the statute book with effect from April, 2005, not apply to such projects which are completed prior to April], 2005 There are no distinguishing features brought on record which calls for arty interference The Tribunal view is a well-reasoned and cannot be said to be perverse Mr. Chhotaray’s submission flat the matter should be seen! back to the Tribunal has mi merit. In the preset! set of facts, even if the definition of built-up area is considered is makes no difference to the assesses case. II, In the circumstances we answer the question retired in the present batch of appeals in the affirmative that is in favour of the assessee and against the Revenue. As far as differently worded questions in Income Tax Appeal 1603 of 2013 and 1757 of 2013 are concerned, there is no doubt that the area of entire project is more than one acre and the area of flat is within limit of 1,500 sq. ft. as has been observed by the Tribunal which is fast fact finding authority. In the circumstances those questions are also answered in favour of the assesses and against the Revenue. In view of this, the matter has attained finality now in favour of the appellant. Respectfully following the decision of the Hon’ble ITAT and the Hon’ble Bombay High Court in the appellants own case, I delete the disallowance of Rs.1,17,28,829/- made by the AO.”
The CIT(A) has relied upon the order of the ITAT in the assessee’s own case for the A.Y. 2003-04 to 2006-07 in to 146/M/2012 dated 04.05.2012. The matter went up to jurisdictional High Court which has been decided in favour of the assessee. The finding has been discussed by CIT(A) mentioned above. Since the matter of controversy is squarely
ITA No.4607/M/2016 A.Y.2011-12 covered by decision of the Bombay High Court and CIT(A) has passed the order on the basis of the said decision, therefore, we nowhere found any illegality and irregularity in the finding of the CIT(A) hence, we decide this issue in favour of the assessee against the revenue.