Income Tax Appellate Tribunal - Mumbai
Veena Developers , Thane vs Department Of Income Tax on 8 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
"F" BENCH: MUMBAI
BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No.1345/Mum/2010
(Assessment Year: 2006-07)
Asstt. Commissioner of Income Tax,
Central Circle -2,
Thane .......... Appellant
Vs
M/s. Veena Developers,
Nikunj House, Manav Mandir,
Ambadi Road, Vasai Road (W),
Dist. Thane ........ Respondent
PAN: AAEFV 3871 C
Appellant by: Dr. K. Shivraman
Respondent by: Shri C.G.K. Nair
Date of Hearing: 08.11.2011
Date of Pronouncement: 18.11.2011
ORDER
PER R.S. PADVEKAR, JM
In this appeal the revenue has challenged the impugned order of the Ld. CIT (A) dated 23.11.2009 for the A.Y. 2006-07. The revenue has taken the following effective grounds:-
"1. The Ld. CIT (A) has erred in allowing deduction u/s.80IB(10) to the tune of ` 23,80,587/-.
2. The Ld. CIT (A)0 has erred in holding that the assessee is eligible for deduction u/s.80IB(10) of the Act without appreciating that the project consists of commercial units.
2 ITA 1345/Mum/2010 M/s. Veena Developers
3. The decision of Hon'ble Spl. Bench ITAT, Pune in the case of Bramha Associates vs. Joint Commissioner of Income Tax (2009) (122 TTJ (Pune) (SB) 433) is applicable only for A.Y. 2004-05 and earlier year and not for A.Y. 2006-07 or subsequent year. However, CIT (A) based on this decision allowed relief in assessee's favour for A.Y. 2006-07."
2. The facts of this appeal are in narrow compass. The assessee is a developer and a builder. The assessee claimed deduction u/s.80IB(10). The assessee has undertaken housing project under the name of 'M/s. Veena Sarang' which is having one building consisting of five wings. As noted by the A.O. total built-up area was 98517 sq.ft out of which area of having 4637 sq.ft. was covered by the shops and balance built up area of 93880 sq.ft. was towards the residential flats. As noted by the A.O. the said project was approved by the BMC (Local authority) as residential-cum-commercial-Housing- project. The A.O. had reservation for allowing the deduction claimed by the assessee because in the residential project the assessee had constructed shops having total built-up area of 4637 sq.ft. The A.O. was of the opinion that as per the amendment made by the Finance Act, 2004 to section 80IB(10) a maximum permissible commercial shopping area should not have been more than 2000 sq.ft. and the assessee is having more than the said limit, hence, the assessee is not entitled for deduction u/s.80IB(10). The A.O., therefore, disallowed the entire deduction claimed by the assessee u/s.80IB(10). We find that no other reason is given by the A.O. for disallowing the claim of the assessee other than above reason. The assessee challenged the action of the A.O. before the Ld. CIT (A) and found favour. The Ld. CIT (A) followed the decision of the Special Bench of the ITAT, Pune in the case of Jt. CIT vs. Brahma Associates 122 TTJ (Pune)(SB) 433 and directed the A.O. to allow the deduction to the assessee as claimed u/s.80IB(10) of the Act. Now, the revenue is in appeal before us.
3 ITA 1345/Mum/2010 M/s. Veena Developers
3. We have heard the parties and perused the records. We find that now the decision in the case of Brahma Associates (supra) has been confirmed by the Hon'ble High Court of Bombay reported in 239 CTR (Bom) 30. The argument of the Ld. D.R. is that Sec. 80IB(10) has undergone amendment w.e.f. A.Y. 2005-06 and from the said year the restriction put by the Parliament is operative. We find that other co- ordinate Benches have taken a view that the amendment will be only applicable if the project are approved after 1.4.2005 viz. ACIT vs. Late. Smt. Saroj P. Vhora ITA 3530/M/2010 dated 24.8.2011 (ITAT Bench 'J' Mumbai).
4. In the case of Brahma Associates (supra), their Lordships have held as under:-
"25. The above conclusion is further fortified by cl. (d) to s.80- IB(10) inserted w.e.f. 1st April, 2005 provides that even though shops and commercial establishments are included in the housing project, deduction under s.80-IB(10) w.e.f. 1st April, 2005 would be allowable where such commercial user does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet whichever is lower. By Finance Act, 2010, cl. (d) is amended to the effect that the commercial user should not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet whichever is higher. The expression 'included' in cl. (d) makes it amply clear that commercial user is an integral part of a housing project. Thus, by inserting cl. (d) to s. 80-IB(10) the legislature has made it clear that though the housing projects approved by the local authorities with commercial user to the extent permissible under DC Rules / Regulations were entitled to s. 80-IB(10) deduction, w.e.f. 1st April, 2005 such deduction would be subject to the restriction set out in cl. (d) of s. 80-IB(10). Therefore, the argument of the Revenue that w.e.f. 1st April, 2005 the legislature for the first time allowed s. 80-IB(10) 4 ITA 1345/Mum/2010 M/s. Veena Developers deduction to housing projects having commercial user cannot be accepted.
26. The alternative argument of the Revenue is that the projects with convenient shopping could be considered as housing projects under s. 80-IB(10) up to 1st April, 2005. That argument is also without any merit, because, so long as the DC Rules permit convenient shopping as also other commercial user in a housing project, it would not be open to the IT authorities to contend that the project with convenient shopping alone could be considered as housing projects. In the present case, it is not in dispute that the project is approved for residential and commercial buildings as per the DC Rules, Pune. The fact that the residential buildings under the DC Rules can have commercial user up to 50 per cent of the built-up area of the plot cannot be a ground to hold that the project is not a housing project. It is for the legislature to impose restrictions on commercial user in a project for the purposes of availing s. 80-IB(10) deduction and that has been done by inserting cl.(d) to s. 80-IB(10) w.e.f. 1st April, 2005. Therefore, the decision of the Tribunal in holding that a project with residential and commercial user to the extent permitted under DC Rules would be a housing project and hence eligible for deduction under s. 80-IB(10) up to 31st March, 2005 cannot be faulted."
5. Admittedly, in the present case, the assessee's project is approved prior to 1.4.2005 hence the amendment to Sec.80IB(10) by the Finance Act, 2004 putting the restriction on the built-up are in the housing project will not be applicable and as rightly held by the Ld. CIT (A), the assessee is entitled for deduction u/s.80IB(10). We find no reason to interfere with the order of the Ld. CIT (A) and same is confirmed.
6. In the result, revenue's appeal stands dismissed.
5 ITA 1345/Mum/2010 M/s. Veena Developers Order pronounced in the open court on this day of 18th November 2011.
Sd/- Sd/-
(P.M. JAGTAP) (R.S. PADVEKAR)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 18th November, 2011
Copy to:-
1) The Appellant.
2) The Respondent.
3) The CIT (A)- II, Thane.
4) The CIT-III, Thane.
5) The D.R. "F" Bench, Mumbai.
By Order
/ / True Copy / /
Asstt. Registrar
I.T.A.T., Mumbai
*Chavan
6 ITA 1345/Mum/2010
M/s. Veena Developers
Sr.N. Concerned
Episode of an order Date Initials
1 Draft dictated on 08.11.2011 Sr.PS
2 Draft placed before author 08.11.2011 Sr.PS
3 Draft proposed & placed before the second Member JM/AM
4 Draft discussed/approved by Second Member JM/AM
5 Approved Draft comes to the Sr.PS/PS Sr.PS/PS
6 Kept for pronouncement on Sr.PS/PS
7 File sent to the Bench Clerk Sr.PS/PS
8 Date on which file goes to the Head Clerk
9 Date of dispatch of Order