Income Tax Appellate Tribunal - Mumbai
Krish Developers, Mumbai vs Department Of Income Tax on 19 August, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "I",
MUMBAI
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
ITA No. 1002/Mum/2011
Assessment Year : 2007-08
Asstt. CIT-15(2) M/s. Krish Developers
Matru Mandir, Room No.113 B-3, Akhil Tower, Ratan Nagar
Tardeo Vs. Borivali (E)
Mumbai-400 008. Mumbai-400 068.
PAN No.AAHFK 0744 J
(Appellant) (Respondent)
Assessee by : None
Revenue by : Shri O.P. Singh
Date of hearing : 19/08/2013
Date of Pronouncement : 23/08/2013
ORDER
PER B. RAMAKOTAIAH, AM:
This is a Revenue appeal against the order of CIT(A)-26, Mumbai dated 25.11.2010. The revenue raised the grounds on the issue of allowing deduction u/s. 80IB(10) by the CIT(A) following the decision of ITAT Special Bench Pune 30 SOT 155 in the case of M/s. Brahma Associates. The revenue's contention is that the commercial area has exceeded 2000 sq.ft. in terms of cl.(d) of section 80IB(10) which was effective from 01.04.2005.
2 When the case was posted none appeared on behalf of the assessee and on earlier occasion also none appeared on 18.062013. In view of this we have considered the appeal exparte respondent.
3. Briefly stated, the assessee is a partnership firm engaged in the business of developing a housing project at Nallasopara(W), Thane 2 ITA No.1002/M/11 A.Y.07-08 Krish Developers known as 'Agarwal Krish Garden' started in assessment year 2005-06 and the project has satisfied all conditions laid down u/s. 80IB(10). The commercial area approved is only1760.26 sq.ft. which is less than 5% of the total constructed area. AO added the gymnasium at ground floor of 858.65 sq.ft. also as commercial area so as to come to the conclusion that the total commercial area exceeded 2000 sq.ft. AO accordingly disallowed the deduction u/s. 80IB(10).
4. Before the CIT(A), it was submitted that area of commercial usage was less than 2000 sq.ft. and also less than 5% of total constructed area and project was approved by the CIDCO Municipal Corporation as a residential project and gymnasium was excluded for the purpose of FSI as per the development control rules and that was provided as part of common amenities provided to the residents and no commercial benefit has been derived by the builder. It was further submitted that AO examined the issues and allowed the deduction in assessment years 2005-06 and 2006-07.
5. Considering the facts and also relying on the Special Bench decision of the ITAT in the case of Brahma Associates, the ld. CIT(A) allowed the deduction by saying the following:-
"5.1 It is pertinent to mention that in the case of Brahma Associates vs. JCTT ITA No. 1417 Spl. Bench (Pune) has also approved the decision of M/s. Saroj Sales Organization vs. ITO Ward 25(2)(3) ITA No. 4008/M/2007, the same finding has also been given by the Ld. CIT(A)-25 in the case of Ms Kinjal Associates in order Appeal No. CIT(A) XXV/ITO 25(1)(1)/ITA 290/08-09 dated 12.08.2009. Further, in the case of M/s Happy Home Enterprises, the Ld. CIT(A) 27 (supra) has given the same finding and decision over the same issue related with applicability of clause (d) of section 801B(10). It is relevant to mention that the Hon'ble Pune Spl. Bench has given categorical finding in the case of Brahma Associates vs. JCIT in ITA No. 1417/Pn/2006 (A.Y.2003-04) dated 06.04.2009, wherein the Hon'ble Members have held as under:
"So far as Assessment Years prior to AY 2005-06 are concerned approval by the local authorities for the housing 3 ITA No.1002/M/11 A.Y.07-08 Krish Developers project constitutes admissible material to come to the conclusion the housing project is eligible for deduction u/s 80IB (10)- what was brought into effect by insertion of clause
(d) in section 80IB(10) vide Finance Act, 2004, was a restriction on use of built-up area for commercial purposes --
This indicates that there was no such limit in force for the earlier years -- Restriction of 5% is applicable only with prospective effect and there is no justification to presume that such a limit or prohibition was in place in the earlier years as well on the commercial use of area- It would be reasonable to grant benefit of incentive provision to projects in which built-up area/or commercial purposes does not exceed 10% of total area -- Where approximately 90% or more of the total area is utilized for building dwelling where the project has been passed as 'residential-commercial projects', - Where the total built-up commercial area is more than 10% of total area, such projects normally should not get benefit of deduction unless the undertaking can show that the income from construction of residential dwelling units can be worked out separately and even after excluding the commercial use of plot, the project satisfies all the requirements of section 80IB (10) on standalone basis."
5.2 Thus, according to this decision, even 10% of commercial area can be allowed whereas, Appellant's shops area is less than 10% of the total housing project or residential area. Therefore, the issue regarding applicability of provision of law under clause (d) of sub- section (10) of section 80IB of Act, is relevant for the housing project approved after 01.04.2005 and it cannot be presumed to be decisive as applicable for the old housing project approved much earlier than amended provision of law prospectively. Further, the arguments of the Ld.AR is worth acceptable that judicial consistency has to be maintained hence it would be unjustifiable on the part of successor Appellate Authority to interpret the applicability of law with different approach or on the basis of strange-logic, specially when facts are identical and there is no perversity of interpretative- understanding of the same set of facts. It is worthwhile to mention that in interpreting a provision, it will not be proper to look at a piece of subsequent legislation unless there is some ambiguity or obscurity. However, subsequent legislation may be looked at in order to see what is the proper interpretation to be put upon the earlier Act where the earlier Act is obscure or ambiguous or readily capable of more than one interpretation vide CIT Vs. Deepchand Kishanlal (1990) 183 ITR 299 (Kar); CIT Vs. India Exchange Trader's Association (1992) 197 ITR 356 (Cal). Therefore, considering the facts and circumstances of the case viz-a-viz decision of Hon'ble ITATs, 4 ITA No.1002/M/11 A.Y.07-08 Krish Developers specially of jurisdictional ITAT and decisions of fellow worthy CIT(Appeals)-25 and 27 and predecessors Ld. CIT(A), I hold that the Appellant is entitled to deduction u/s 80IB( 10) and therefore AO is directed to allow the deduction as claimed by the Appellant of Rs. 27,09,199/-.
5.1 After considering the submissions of the ld. DR, we do not see any reason to interfere with the order of CIT(A). First of all the order of ITAT Special Bench in the case M/s. Brahma Associates was more or less approved and in fact the Hon'ble High Court has even not approved the restrictions placed by the Special Bench to 10% of the total built up area for commercial usage when such restriction was not there before the Act was amended w.e.f. 2005-06. Therefore there is no merit in revenue appeal. Further as seen from the order of AO, the common amenities provided to the residents were also considered as commercial area thereby enhancing the area of commercial, so as deny deduction u/s.80IB(10). The gymnasium area provided was part of amenities to the residents and providing free of cost to the residents can not be considered as commercial area. Therefore, assessee is fully eligible for deduction, which was infact examined and allowed by Assessing Officer in earlier two assessment years. The grounds are rejected.
6. In the result, Revenue appeal is dismissed.
Order pronounced in the open court on 23rd August, 2013.
Sd/- Sd/-
(SANJAY GARG ) (B. RAMAKOTAIAH )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated: 23/08/2013.
Jv.
5 ITA No.1002/M/11
A.Y.07-08
Krish Developers
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR " " Bench
True Copy
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.