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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI B.R.BASKARAN (AM) & SHRI RAM LAL NEGI (JM)
The assessee has filed for the Asst. year 2008-09 against orders dt. 19/10/2012 passed by the Ld. CIT(Appeals)-I Vardaan Thane, and the revenue has filed Cross appeal ITA No. 1108/M/2013 against the same order. Similarly the assessee has filed the ITA No. 874/M/2013 for the Asst. year 2009-10 against the order dt. 30/11/2012 passed by the Ld. CIT(A)-II, Thane and the revenue has filled Cross appeal ITA No. 1173/M/2013 against the same order. Since all the four appeals pertain to the assessee Shri. Ramprasad Agarwal, for Asst. year 2008-09 & 2009-10 and the issues involved are identical, the same were heard together and are being disposed of by this common order for the sake of convenience. ITA 866/M/2013 for A.Y. 2008-09
2. The assessee has challenged the impugned order on the following effective grounds:- “1. The Hon’ble Commissioner of Income Tax(Appeals)-I, Thane (CIT(A)) erred in law and in facts by proportionately disallowing the deduction u/s. 80IB(10), in respect of residential units, whose built up areas exceed the prescribed limit of 1000Square feet as computed by the amended provisions of Sec. 80IB(14), disregarding the fact that-
(i) the amended provisions of Sec. 80IB(14) are to be applied prospectively for projects approved after 01/04/2005 and not retrospectively, whereas in the instance case the housing project has commenced on 28/05/2003.
(ii) as per the pre-amended provisions, the maximum built-up area of none of the residential units exceed the prescribed limit of 1000square feet as computed and certified by the Architect
2. The Ld. CIT(A) further erred in this connection by not honoring and following the order of the Hon ITAT, Mumbai ‘D’ Bench dated 05/09/2012 in the appellant’s own case for A.Y. 2006-07 wherein this particular issue is decided in favor of the appellant.
3. Alternatively, the project being situated at Bhayandar(W), it is beyond 25 kilo meters from the Municipal Limits of Mumbai and thus as per provisions of Sec.80IB(10)(c), the maximum built-up area per residential unit can exceed 1000 square feet up to a maximum of 1500 square feet. Even if computed as per the amended Sec. 80IB(14), the maximum built-up area of none of the residential units of the project exceed this limit of 1500 square feet.”
Brief facts of the case are that the appellant/assessee engaged in building construction activities filed its return of income for the A.Y. 2008-09 declaring total income of Rs. 6,47,129/-, after claiming deduction u/s 80IB(10) amounting to Rs. 2,55,10,143/-. The case was selected for assessment u/s 143(2). Accordingly the details were called for by the Assessing Officer and in response thereof, the assessee filed the relevant documents along with explanations in order to justify its claim. The A.O being not convinced, passed assessment order disallowing the entire claim of deduction u/s 80IB(10) of the Act.
4. Aggrieved by the assessment order, the appellant filed an appeal before the first appellate authority who in turn passed order dt. 19/10/2012 partly allowing the appeal of the assessee by directing the A.O to allow the deduction u/s 80IB (10) in respect of flats, built up area of which does not exceed the prescribed limit. The assessee is in appeal before this tribunal against the impugned order passed by the Ld. CIT(A).
The controversy cropped up in this case after insertion of definition of ‘Built up area’ under section 80IB(14), applicable w.e.f. 1/4/2005. The contention of the assessee is that the new definition of built up area is not applicable to his case since the project in question was approved prior to 1/4/2005.
The Ld. AR reiterated the stand taken by the assessee before the income tax authorities and further submitted that the case of the assessee is covered by the decision of ITAT Mumbai passed in assessee’s own case for the A.Y. 2006- 07 ITA 2435/M/2010. In the said case identical issue has been decided in favour of the assessee. Therefore, the findings of the Ld. CIT(A) and direction to the AO to allow the claim of deduction u/s 80IB(10) on proportionate basis, excluding the area of flat/flats having area more than 1000sq. feet for the year under consideration and allow the deduction u/s 80IB(10) on all other flats below 1000sq. feet, is erroneous. The Hon’ble Supreme Court in CIT vs. Sarkar Builders, (2015)375 ITR392,SC, has held that the amended provisions of section 80 IB (14) are to be applied prospectively for projects approved after 01/ 04/2005 and not retrospectively, whereas in the instant case the housing project has commenced on 28.5.2003. On the other hand the learned DR submitted that allowing deduction under section 80 IB (10) of the act on the proportionate basis in case where the area of each residential unit exceeds 1000 sq. feet is violation of the provisions of the act.
We have heard the rival submissions and also produced the material placed before us including the case law relied upon by both the parties. The second ground of the appeal is connected to the first ground raised
by the assessee. The coordinate bench of ITAT Mumbai has decided the identical issue in favour of the assessee in appeal filed by the revenue in assessee’s own case for the assessment year 2006-07, holding as under:- “
9. In the cross appeal, the issue raised by the department revolves around the allowance of deduction u/s 80IB(10), but from a different angle, i.e. some of the flats exceeded 1000sq. ft. this issue has been deal with by the Co-ordinate Bench at Mumbai in the case of Saroj Sales Organisation v/s ITO reported in 115 TTJ 485 (Mumbai), Hiranandani Akruti JV v/s DCIT, reported in 39 SOT 498 (Mum) and also by the Special Bench in the case of Braham Associates, reported in 119 ITD 255(Pune SB), wherein the coordinate Benches have held that for the projects approved prior to 01/04/2005, old law shall apply.
10. Respectfully, following the decisions, we dismiss the appeal filed by the department, as the flats whose measurements were taken to be exceeding 1000 sq. ft. included the balcony, which had to be excluded for the measurement. In these circumstances, we dismiss the appeal.”
8. The case of the assessee is further covered by the judgment of the Hon’ble Supreme Court passed in CIT vs. Sarkar Builders, (supra) in which one of the issues before the Hon’ble Court was whether section 80IB(10)(d) applies to a housing project approved before 31/03/2005 but completed on or after 01/04/2005. The Hon’ble Supreme Court has held that it was clear from amendment that this provision could not be applied to those projects which have sanctioned and commenced prior to 1/4/2005 and completed by stipulated date, though such stipulated date fell after 1/4/2005.
In view of the finding of the ITAT, Mumbai in assessee’s own case for the A.Y. 2006-07 and the law laid down by the Hon’ble Supreme Court in CIT vs. Sarkar Builders (supra), we decide the first ground of appeal in favour of the assessee. In our opinion since we have allowed the first ground of the appeal of the assessee, there is no need to adjudicate the alternative ground taken by the assessee. The appeal of the assessee is allowed accordingly.
ITA 1108/M/2013 for A.Y. 2008-09 The revenue has filed this cross appeal against the impugned order dt. 19/10/2012 passed by the Ld. CIT(Appeals)-I on the following effective grounds :- 1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting an amount of Rs. 2,55,10,148/- being disallowance made on account of wrong claim of deduction u/s 80IB(10) of the IT Act, 1961.
2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing deduction u/s 80IB(10) even though the commercial area of 7947 sq.ft. in the housing project exceeds 5% or 2000 sq.ft. of the built up area whichever is less
3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. to allow deduction u/s 80IB(10) on proportionate basis in case where the area of commercial unit exceeds 2000 sq.ft. This is a violation of the criteria specified under the provisions of the Act.
4) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing deduction u/s 80IB(10) even when the project was not completed before 31/03/2008 as per the provisions of the section. 5) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. to allow deduction u/s 80IB(10) on proportionate basis in case where the area of each residential unit exceeds 1000 sq.ft. which is a violation of the provision of the Act.
2. Before us the Ld. DR submitted that the Ld. CIT(A) has erred in deleting the amount of Rs. 2,55,10,143/- being disallowance made on account of wrong claim of deduction u/s 80IB(10) of the Act. Ld. CIT(A) has erred in allowing deduction u/s 80IB(10) even though the commercial area of 7947 sq.ft. in the housing project exceeds 5% or 2000 sq. ft. of the built up area whichever is less. The Ld. CIT(A) has further wrongly allowed deduction u/s 80IB(10) on proportionate basis in violation of criteria specified under the provisions of the Act.
3. On the other hand the Ld. AR relying upon the ratio laid down by Hon’ble Bombay High Court in CIT vs. Brahma Associates (2011) 333 ITR 0289 and the Hon’ble Supreme Court in CIT vs. Sarkar Builders (2015)375 ITR392,SC, submitted that the assessee’s case is squarely covered by aforesaid judgments in favour of the assessee therefore, the appeal filed by revenue has no merit and the same is liable to be dismissed.
We have perused the material on record and also gone through the judgments relied upon the assessee. Ground No 1 and 5 of the appeal are connected and since we have decided the issues involved in these grounds in favour of the assessee in these grounds need no separate adjudication. Hence, both the grounds raised by the revenue are dismissed. So far as ground No 2 and 3 are concerned, the Hon’ble jurisdictional High court while adjudicating the similar issues in CIT vs. Brahma Associates (supra) has held as under (a) Upto 31st March, 2005 (subject to fulfilling other conditions), deduction u/s 80-IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under the DC Rules/Regulations framed by the respective local authority. (b) In such a case, where the commercial user permitted by the local authority is within the limits prescribed under the DC Rules/Regulations, the deduction u/s 80-IB(10) upto 31st March, 2005 would be allowable irrespective of the fact that the project is approved as ‘housing project’ or ‘residential plus commercial’. (c) In the absence of any provisions under the IT Act, the Tribunal was not justified in holding that upto 31st March, 2005 deduction u/s 80-IB(10) would be allowable to the projects approved by the local authority having residential building with commercial user upto 10 per cent of the total built-up area of the plot. (d) Since deduction u/s 80-IB(10) is on the profits derived from the housing projects approved by the local authority as a whole, the Tribunal was not justified in restricting sec. 80-IB(10) deduction only to a part of the project. However, in the present case, since the assessee has accepted the decision of the Tribunal in allowing sec. 80-IB(10) deduction to a part of the project, we do not disturb the findings of the Tribunal in that behalf. (e) Clause (d) inserted to sec. 80-IB(10) w.e.f. 1st April, 2005 is prospective and not retrospective and hence cannot be applied for the period prior to 1st April, 2005.
5. The Supreme Court has confirmed the decision of the Hon’ble High court. Since, both the grounds of appeal are covered by the aforesaid cases in favour of the assessee, we dismiss ground no. 2 & 3 appeal of the revenue.
6. Ground no. 4 is covered by the decision rendered by the Hon’ble Delhi Court in case CIT vs. CHD Developers Ltd. (2014) 43 taxmann.com 249(Delhi) in favour of the assessee. In the said case the approval of project was given by Mathura Vrindhavan Development Authority on 16/03/2005 i.e. approval related to period prior to 01/04/2005. The assessing officer applying the provisions of sub-section (10) of section 80I(B) substituted by the Finance Act 2004 disallowed the claim of deduction on the ground that completion certificate in terms of Explanation (ii) of clause (a) of section80I(B) had not been granted to the assessee so as to enable it to avail benefit provided by section 80-IB(10). The Hon’ble High Court upholding the findings of the ITAT held that the assessee was not required to produce completion certificate. In the present case also the project had been approved prior to 1/4/2005 therefore, the assessee was not required to complete the project before 31/3/2008. Since the issue in this case is identical to the issue decided in CIT vs. CHD Developers Ltd., and the Hon’ble court has decided the identical issue in favour of the assessee, we decide this ground of appeal in favour of the assessee. Accordingly, we dismiss ground No 4 of appeal raised by the revenue.
ITA 874/M/2013 for A.Y. 2009-10 This appeal has been filed by the assessee against the order dt. 30/11/2012 passed by the Ld. CIT(Appeals)-II, Thane for the Asst. year 2009- 10. The assessee has challenged the impugned order on the following effective grounds:- “1. The Hon’ble Commissioner of Income Tax(Appeals)-II, Thane (CIT(A)) erred in law and in facts by proportionately disallowing the deduction u/s. 80IB(10), in respect of residential units, whose built up areas exceed the prescribed limit of 1000Square feet as computed by the amended provisions of Sec. 80IB(14), disregarding the fact that- (i) the amended provisions of Sec. 80IB(14) are to be applied prospectively for projects approved after 01/04/2005 and not retrospectively, whereas in the instance case the housing project has commenced on 28/05/2003.
(ii) as per the pre-amended provisions, the maximum built-up area of none of the residential units exceed the prescribed limit of 1000square feet as computed and certified by the Architect. 2. The Ld. CIT(A) further erred in this connection by not honoring and following the order of the Hon ITAT, Mumbai ‘D’ Bench dated 05/09/2012 in the appellant’s own case for A.Y. 2006-07 wherein this particular issue is decided in favor of the appellant.
3. Alternatively, the project being situated at Bhayandar(W), it is beyond 25 kilo meters from the Municipal Limits of Mumbai and thus as per provisions of Sec.80IB(10)(c), the maximum built-up area per residential unit can exceed 1000 square feet up to a maximum of 1500 square feet. Even if computed as per the amended Sec. 80IB(14), the maximum built-up area of none of the residential units of the project exceed this limit of 1500 square feet.”
2. Since the facts of the present case are similar to the facts of the assessee’s own case, for the A.Y. 2008-09, discussed herein above, we do not consider it necessary to reproduce the same here to avoid repetition. Similarly, the grounds of appeals in this case are identical to the grounds of appeal in the case ITA No 866/M/2013(supra). In view of the fact that we have already allowed the appeal filed by the assessee for the assessment year 2008- 09, on the identical grounds of appeal, we set aside the impugned order passed by the learned CIT(A) and allow the appeal filed by the assessee.
ITA 1773/M/2013 for A.Y. 2009-10 The revenue has filed the cross appeals against the order dt. 30/11/2012 passed by the Ld. CIT(Appeals)-II, Thane for the Asst. year 2009-10. The revenue has filed the said appeal on the following effective grounds:-
1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting an amount of Rs. 1,28,84,895/- being disallowance made on account of wrong claim of deduction u/s 80IB(10) of the IT Act, 1961.
2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing deduction u/s 80IB(10) even though the commercial area of 7947 sq.ft. in the housing project exceeds 5% or 2000 sq.ft. of the built up area whichever is less.
3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. to allow deduction u/s 80IB(10) on proportionate basis in case where the area of commercial unit exceeds 2000 sq.ft. This is a violation of the criteria specified under the provisions of the Act.
4) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing deduction u/s 80IB(10) even when the project was not completed before 31/03/2008 as per the provisions of the section.
5) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O. to allow deduction u/s 80IB(10) on proportionate basis in case where the area of each residential unit exceeds 1000 sq.ft. which is a violation of the provision of the Act.
Since the facts of the present case are similar to the facts of the assessee’s own case for the A.Y. 2008-09, discussed herein above, we do not consider it necessary to reproduce the same here in order to avoid repetition. Similarly, the grounds of appeals raised by the revenue in this case are identical to the grounds of appeal raised in assessee’s case ITA No 866/M/2013(supra). In view of the fact that we have already dismissed the appeal filed by the assessee for the assessment year 2008-09, on the identical issues, we dismiss all the five grounds of appeal raised by the revenue.
3. In the result, both the appeals filed by the assessee are allowed and both the cross appeals filed by the revenue are dismissed. Order pronounced in the open court on 31st March, 2016 Sd/- Sd/- (B.R.BASKARAN) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated: 31/03/2016 आदेश ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT(A)- 4. आयकर आयु�त / CIT 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.