Deputy Commissioner of Income-tax,, v. Nirajkumar Associates (P) Pvt. Ltd.,, Pune

ITA 2034/PUN/2014 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 203424514 RSA 2014
Assessee PAN AAACN6424G
Bench Pune
Appeal Number ITA 2034/PUN/2014
Duration Of Justice 1 year(s) 10 month(s) 15 day(s)
Appellant Deputy Commissioner of Income-tax,,
Respondent Nirajkumar Associates (P) Pvt. Ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 27-09-2016
Next Hearing Date 27-09-2016
Assessment Year 2010-2011
Appeal Filed On 14-11-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NO. 1 839 /PN/20 1 4 / ASSESSMENT YEAR: 20 1 0 - 11 NIRAJKUMAR ASSOCIATES (P) LTD. S.NO.129/2 MONT VERT MARC S.NO.129/2 MONT VERT MARC PASHAN SUS ROAD PUNE 411021 . / APPELLANT PAN: AAACN6424G VS. THE DY. COMMISSIONER OF INCOME TAX CIRCLE - 2 PUNE . / RESPONDENT . / ITA NO. 2034 /PN/201 4 . / ITA NO. 2034 /PN/201 4 / ASSESSMENT YEAR: 20 1 0 - 11 THE DY. COMMISSIONER OF INCOME TAX CIRCLE - 2 PUNE . / APPELLANT VS. NIRAJKUMAR ASSOCIATES (P) LTD. S.NO. 129/2 MONT VERT MARC PASHAN SUS ROAD PASHAN SUS ROAD PUNE 411021 . / RESPONDENT PAN: AAACN6424G ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 7 .0 9 .201 6 / DATE OF PRONOUNCEMENT: 30 . 0 9 .201 6 ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 2 / ORDER PER SUSHMA CHOWLA JM: THE CROSS APPEAL S FILED BY THE ASSESSEE AND REVENUE ARE AGAINST ORDER OF CIT (A) - I I PUNE DATED 1 3 . 0 8 .201 4 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST THE ORDER PASSED UNDER SECTION 1 43(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) . 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 . THE ASSESSEE IN ITA NO. 1 839 /PN/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE F AC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN UPHOLDING THE FINDING OF AO THAT BASED ON THE REPORT OF THE DVO OF THE PROJECT BEING FLATS EXCEEDING THE AREA OF 1500 SQ. FT. AS PER SEC.80IB(14)(A) OF THE INCOME TAX ACT 1961 BY DISREGARDING APPELLANTS SEC.80IB(14)(A) OF THE INCOME TAX ACT 1961 BY DISREGARDING APPELLANTS CONTENTION IN THIS REGARD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN DISALLOWING THE DEDUCTION U/S.80IB(10) ON PRORATA B ASIS FOR 16 FLATS OUT OF THE ENTIRE HOUSING PROJECT WITH THE PRESUMPTION THAT THE AREA OF THESE FLATS EXCEED 1500 SQ. FT. 4. THE REVENUE IN ITA NO.2034/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEAL S) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80 IB (10) ON PRO - RATA BASIS. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE IMPORT OF SECTION 80 IB (10)(C) WHICH CLEARLY LAYS DOWN THAT IN ORDER TO ENVISAGE THE B ENEFITS OF THIS SECTION ALL THE CONDITIONS LAID DOWN THEREIN HAS TO BE FULFILLED. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING THE DEDUCTION U/S 80 IB (10) ON PRO - RATA BASIS EVEN THOUGH HE HAS ACCEPTED THAT 16 FLATS OF THE PROJECT EXCEEDED THE AREA OF 1500 SQ.FT. AS PER THE SECTION 80 IB (14)(A) OF THE ACT. 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING PRO - RATA CLAIM OF DEDUCTION U/S.80 IB (10) IN RESPECT OF ELIGIBLE FLATS IN THE PROJECT INSPITE OF VIOLATION OF CLAUSE (C) WITHOUT APPRECIATING THE FACT THAT JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B RAHMA ASSOCIATES 333 ITR 289 HELD THAT DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DED UCTION TO A PART OF THE PROJECT. ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 3 5. THE ISSUE ARISING IN THE CROSS APPEALS IS IN RELATION TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 6. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD DECLARED INCOME FROM DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT NAMED MONT VERT GRANDE AT PASHAN SUS ROAD PUNE. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THE PROFITS AND GAINS OF BUSINESS AMOUNTING TO RS. 3 21 92 617/ - . T HE ASSESSEE HAD FURNISHED THE AUDIT REPORT IN THIS REGARD AND THE CLAIM OF ASSESSEE WAS THAT IT HAD COMPLIED WITH ALL THE CONDITIONS NECESSARY IN ORDER TO AVAIL THE SAID DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER IN ORDER TO VERIFY THE CLAIM MADE BY THE ASSESSEE MADE REFERENCE TO THE GOVERNMENT APPROVED VALUER VIDE LETTER DATED 27.02.2013 . ON SUCH REFERENCE NECESSARY VERIFICATION WAS CARRIED OUT BY THE DVO AND HE SUBMITTED HIS REPORT VIDE LETTER DATED 21.03.2013. HE REPORTED THA T THE AREA OF PLOT OF LAND WAS 5.7410 ACRE S AND THE DATE OF HE REPORTED THA T THE AREA OF PLOT OF LAND WAS 5.7410 ACRE S AND THE DATE OF COMMENCEMENT OF PROJECT WAS 12.07.20 05 WHICH WAS COMPLETED ON 31.03.2011. HE FURTHER REPORTED THAT OUT OF APPROVED RESIDENTIAL BUILDINGS A TO F BUILDING D WAS NOT COMPLETED AND ONLY PARKING SLA B WAS COMPLETED AND THE WORK WAS STOPPED. THE ASSESSEE HAD CONSTRUCTED 248 RESIDENTIAL UNITS AND 5 COMMERCIAL ESTABLISHMENTS. THE DVO REPORTED THAT IN RESPECT OF 16 FLATS IN DIFFERENT BUILDINGS THE BUILT UP AREA EXCEEDED 1500 SQ. FT. THE ASSESSING OFFI CER NOTED THAT IN ORDER TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ONE OF THE CONDITIONS LAID DOWN IS THAT THE BUILT UP AREA OF RESIDENTIAL UNIT SHOULD NOT EXCEED 1500 SQ. FT. THE DEFINITION OF BUILT UP AREA WAS REFERRED TO IN SECTION 80IB( 14)(A) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS EXHAUSTIVE DEFINITION AND HENCE THE ASSESSEE HAD NOT COMPLIED WITH THE SAID SECTION. THE ASSESSEE WAS THEREAFTER ISSUED SHOW CAUSE NOTICE ON 22.03.2013 IN THIS REGARD AS TO WHY THE DE DUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT SHOULD NOT BE WITHDRAWN. IN RESPONSE THERETO THE ASSESSEE FURNISHED SUBMISSIONS ON 23.03.2013 AND POINTED OUT THAT ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 4 THE REPORT OF GOVERNMENT VALUER WAS FACTUALLY INCORRECT. THE ASSESSEE IN TURN GOT THE V ERIFICATION DONE THROUGH ANOTHER GOVERNMENT VALUER AND THE VALUATION REPORT WAS FILED ALONG WITH SUBMISSIONS. THE ASSESSEE POINTED OUT THAT THE VERIFICATION CARRIED OUT BY ITS VALUER WAS CORRECT AND ACCORDING TO THEM THE BUILT UP AREA OF NONE OF THE RESI DENTIAL UNITS EXCEEDED 1500 SQ. FT. THE ASSESSEE CLAIMED THAT THE GOVERNMENT VALUER HAD NOT VISITED THE PROJECT SITE BUT HIS ASSISTANT HAD VISITED AND CARRIED OUT VERIFICATION OF FEW OF THE FLATS ONLY. ANOTHER CONTENTION RAISED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT ALL THE FLATS BEARING ODD NUMBER IN A PARTICULAR BUILDING WE RE OF SAME SIZE WHEREAS THE GOVERNMENT VALUER HAD GIVEN TWO MEASUREMENTS IN RESPECT OF ODD NUMBERS OF FLATS IN BUILDING E. HE STRESSED THAT THE FINDINGS WERE NOT BASE D ON MEASUREMENT OF SITE S BUT ON TABLE CALCULATION FROM BUILDING PLANS FOR DIFFERENT FLATS. RELIANCE WAS PLACED ON THE VALUATION REPORT SUBMITTED BY THE ASSESSEE IN THIS REGARD AND IT WAS POINTED OUT THAT THE VALUER HAD VISITED AND MEASURED ALL THE FLATS. THE ASSESSING OFFICER HAS TABULATED THE MEASUREMENTS BY THE GOVERNMENT VALUER AND MEASUREMENTS BY THE TABULATED THE MEASUREMENTS BY THE GOVERNMENT VALUER AND MEASUREMENTS BY THE VALUER OF ASSESSEE AND POINTED OUT THAT DIFFERENCE IN BUILT UP AREA CALCULATED BY THEM AROSE BECAUSE OF INCLUSION OF THICKNESS OF WALLS IN THE BUILT UP AREA AND MEASUREMENT OF AREA OF DINING ROOM IN RESPECT OF FLAT NO.E - 101 AND B - 304. THE ASSESSING OFFICER JUSTIFIED THAT THE REPORT OF GOVERNMENT VALUER WAS CORRECT AND HELD THAT IN VIEW OF THE ASSESSEE NOT COMPLYING WITH THE PROVISIONS OF SECTION 80IB(10) OF THE ACT THE SAID DEDUCTION WAS NOT AVAILABLE TO THE ASSESSEE. THE ADDITION WAS MADE OF AN AMOUNT OF RS. 3.39 CRORES. 7. THE CIT(A) DID NOT ACCEPT THE PLEA OF ASSESSEE VIS - - VIS MEASUREMENTS OF BUILT UP AREA OF THE FLATS AND HELD THAT THE FINDING OF A SSESSING OFFICER BASED ON THE REPORT OF DVO OF THE PROJECT BEING 16 FLATS EXCEEDING THE AREA OF 1500 SQ.FT. AS PER SECTION 80IB(14)(A) OF THE ACT IS LIABLE TO BE UPHELD. HOWEVER THE SECOND CLAIM OF ASSESSEE OF PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THOSE UNITS WHICH SATISFY THE CONDITIONS STIPULATED UNDER SECTION 80IB(10) OF THE ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 5 ACT WAS ALLOWED BY THE CIT(A) IN TURN RELYING ON DIFFERENT DECISIONS OF TRIBUNAL AND THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN VISWAS PRO MOTERS PVT. LTD. VS. ACIT (2013) 255 CTR 149 (MAD). 8. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN ALLOWING THE PRORATA DEDUCTION WHEREAS THE ASSESSEE IS IN APPEAL AGAINST THE DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON 16 FLATS ON THE PREMISE THAT THE AREA OF SAID FLATS EXCEEDED 1500 SQ.FT. 9. SHRI PRAMOD SHINGTE APPEARED ON BEHALF OF THE ASSESSEE AND SHRI HITENDRA NINAWE APPEARED ON BEHALF OF THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 10. WE HAVE HEARD THE RIVAL CONTENTION S AND PERUSED THE RECORD. FIRST WE SHALL TAKE UP THE APPEAL OF REVENUE WHICH IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON SUCH FLATS WHICH COMPLIED WITH THE CONDITIONS LAID DOWN UNDER THE SAID SEC TION I.E. WHERE THE AREA WAS LESS THAN 1500 SQ.FT. WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED IN DIFFERENT DECISIONS OF PUNE BENCH OF TRIBUNAL. HOWEVER FOR ADJUDICATING THE ISSUE WE MAKE REFERENCE TO THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN I TO VS. M/S. PARAS BUILDERS IN ITA NO.583/PN/2013 AND CO NO.16/PN/2014 RELATING TO ASSESSMENT YEAR 2007 - 08 ORDER DATED 31.03.2015 WHEREIN IT WAS HELD AS UNDER: - 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BEFORE US IN THE CAPTIONED APPEAL IS AGAINST THE VIOLATION OF PROVISIONS OF SECTION 80IB(10)(C) OF THE ACT BY AMALGAMATION OF TWO UNITS I.E. ROW HOUSES D - 3 AND D - 4 AND WHETHER DEDUCTION UNDER SECTION 80IB(10) OF ACT SHOULD BE ALLOWED FOR THE BALANCE ELIGIBLE UNITS C ONSTRUCTED IN THE PROJECT. ADMITTEDLY AFTER MERGING OF THE TWO UNITS I.E. ROW HOUSES D - 3 AND D - 4 THE TOTAL COVERED AREA WAS MORE THAN 1500 SQ. FT. WHICH IS THE CONDITION STIPULATED IN SECTION 80IB(10)(C) OF THE ACT. THE ASSESSEE HAD VIOLATED THE SAID CON DITION WHILE CONSTRUCTING THE SAID UNITS IN PROJECT PUSHPENDRANAGAR. HOWEVER THE ALTERNATE CLAIM MADE BY THE ASSESSEE WAS THAT PRO - RATA DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE IN RESPECT OF THE BALANCE ELIGIBLE UNITS CONTAINED IN THE PROJECT. WE FIN D THE SIMILAR ISSUE AROSE BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PHARANDE DEVELOPERS (SUPRA) AND IN TURN RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. VS. ACIT IN ITA NOS. 1428 & 1429/PN/2008 ORDER DATED 08.08.2012 AND ALSO THE SUBSEQUENT JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTERS (P) LTD. (2013) 29 TAXMAN.COM 19 (MADRAS) AND IT WAS HELD AS UNDER: - ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 6 10. ON THIS ASPECT WE HAVE CONSIDERE D THE PLEA OF THE ASSESSEE IN THE LIGHT OF THE PRECEDENTS. A SIMILAR SITUATION HAS BEEN CONSIDERED BY THIS BENCH IN THE CASE OF D.S. KULKARNI DEVELOPERS LTD. (SUPRA) WHEREIN THE FOLLOWING DISCUSSION IS RELEVANT : - 20. IN THIS BACKGROUND THE ALTERNATIVE PLEA OF THE ASSESSEE SPRINGS UP. THE PLEA IS THAT THE DEDUCTION UNDER SECTION 80 - IB(10) BE DENIED ONLY WITH RESPECT TO THE UNITS WHICH DO NOT CONFORM TO THE CONDITION CONTAINED IN SECTION 80 - IB(10)(C) AND FOR THE BALANCE ELIGIBLE RESIDENTIAL UNITS THE DE DUCTION SHOULD BE ALLOWED. THE REVENUE HAS OPPOSED THE SAID PLEA ON THE GROUND THAT THE ASSESSEE IS NOT ENTITLED TO A PROPORTIONATE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT. 21. ON THIS ASPECT WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF M/S EKTA HOUSING PVT. LTD. ITA NO.3649/MUM/2009 DATED 20.05.2011 HAS UPHELD THE PLEA OF THE ASSESSEE FOR A PROPORTIONATE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT WHERE SOME OF THE RESIDENTIAL UNITS IN THE PROJECT VIOLATED THE CONDITION CONTAINED IN SECTION 80 - IB(10)(C) OF THE ACT. THE MUMBAI BENCH AFTER NOTICING THE PRECEDENTS IN THE CASE OF I) ITO VS. AIR DEVELOPERS 25 DTR 287 (NAG.); II) DCIT VS. BRIGADE ENTERPRISES PVT. LTD. 14 DTR 371 (BANG.); III) ACIT VS. SHETH DEVELOPERS P. LTD. 33 SOT 277 (MUM.); IV) BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT; V) SJR BUILDERS VS. ACIT 3 ITR 569 (MUM.) HELD THAT THE ASSESSEE WOULD NOT LOOSE THE EXEMPTION UNDER SECTION 80 - IB(10) IN ENTIRETY WHERE SOME OF THE RESIDENTIAL UNITS WINGS HAD A BU ILT - UP AREA IN EXCESS OF THE LIMIT PRESCRIBED IN CLAUSE WINGS HAD A BU ILT - UP AREA IN EXCESS OF THE LIMIT PRESCRIBED IN CLAUSE (C) OF SECTION 80 - IB(10) BUT IT WOULD BE ENTITLED TO PROPORTIONATE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT WITH REGARD TO THE PROFITS EARNED ON THE ELIGIBLE UNITS. PARTICULARLY THE TRIBUNAL AL SO CONSIDERED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND HELD THAT THE SAME DOES NOT ENVISAGE DENIAL OF PROPORTIONATE DEDUCTION IN SUCH CIRCUMSTANCES. THE RELEVANT DISCUSSION AS CONTAINED IN PARAGRAPHS 8 AND 9 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. (SUPRA) READS AS UNDER : - VIII) WE NOW EXAMINE THE APPLICABILITY OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN BRAHMA ASSOCIATES (SUPRA) TO THE FACTS OF THIS CASE. ON A CARE FUL READING OF THIS JUDGEMENT WE FIND THAT NOWHERE IT IS STATED THAT PROPORTIONATE DEDUCTION SHOULD BE ALLOWED IN CASE CERTAIN RESIDENTIAL UNITS HAD BUILT - UP AREA IN EXCESS OF PRESCRIBED LIMIT OF 1 000 SQ.FT.. IN FACT THIS ISSUE WAS NOT BEFORE THE HONB LE JURISDICTIONAL HIGH COURT. THE QUESTIONS BEFORE THE HONBLE JURISDICTIONAL HIGH COURT WERE DIFFERENT AND HENCE THE JUDGEMENT CANNOT BE SAID TO BE ON THIS ISSUE. THE ONLY ISSUE BEFORE THE HIGH COURT IS WHEN THERE IS A COMMERCIAL ELEMENT IN A RESIDENTIAL PROJECT WILL BE ASSESSEE BE DENIED THE ENTIRE EXEMPTION. IN THIS CASE THE HONBLE HIGH COURT HAS OBSERVED THAT WHEN THE LOCAL AUTHORITY APPROVED A PLAN AS A HOUSING PROJECT OR A RESIDENTIAL CUM COMMERCIAL PROJECT THE ASSESSEE WOULD BE ENTITLED TO CLAIM FOR DEDUCTION UNDER SECTION 80 - IB(10) EVEN IF THE PROJECT HAD COMMERCIAL ELEMENT IN EXCESS OF 10%. AT PARAS 27 AND 28 THE COURT OBSERVED AS FOLLOWS : - ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 7 27. THE QUESTION THEN TO BE CONSIDERED IS WHETHER THE SPECIAL BENCH OF THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROJECTS HAVING COMMERCIAL AREA UPTO 10% OF THE BUILT - UP AREA OF THE PLOT ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 - IB(10) ON THE ENTIRE PROJECT UPTO 01.04.2005. ONCE THE BASIC ARGUMENT OF THE REVENUE THAT THE HOUSING PROJECTS WITH COMM ERCIAL USER ARE NOT ENTITLED TO SECTION 80 - IB(10) DEDUCTION IS REJECTED THEN IN THE ABSENCE OF ANY RESTRICTION IMPOSED UNDER THE ACT IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT THE PROJECTS APPROVED BY THE LOCAL AUTHORITIES HAVING RESIDENTIAL BUILDINGS WITH COMMERCIAL USER UPTO 10% OF THE PLOT AREA WOULD ALONE BE ENTITLED TO DEDUCTION UNDER SECTION 80 - IB(10). AS NOTED EARLIER RESTRICTION REGARDING COMMERCIAL USER HAS BEEN IMPOSED FOR THE FIRST TIME BY INTRODUCING CLAUSE (D) TO SECTION 80 - IB(10) WITH EFF ECT FROM 01.04.2005. THEREFORE IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT PRIOR TO 01.04.2005 PROJECTS HAVING COMMERCIAL USER UPTO 10% OF THE PLOT AREA ALONE WOULD BE ELIGIBLE FOR SECTION 80 - IB(10) DEDUCTION. 28. IN THE PRESENT CASE THOUGH THE COMMER CIAL USER IS MORE THAN 10% OF THE PLOT AREA THE TRIBUNAL HAS ALLOWED SECTION 80 - IB(10) DEDUCTION IN RESPECT OF 15 RESIDENTIAL BUILDINGS ON THE GROUND THAT THE PROFITS FROM THESE EXCLUSIVELY RESIDENTIAL BUILDINGS COULD BE DETERMINED ON STAND ALONG BASIS. I N OUR OPINION THAT WOULD NOT BE PROPER BECAUSE SECTION 80 - IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80 - IB(10) ARE SATISFIED THEN DEDUCTION IS ALLOW ABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO PART OF THE PROJECT. IN THE PRESENT CASE THE COMMERCIAL USER IS ALLOWED IN ACCORDANCE WITH THE DC RULES AND HENCE THE ASSESSEE WAS ENTITLED TO SEC TION 80 - IB(10) DEDUCTION ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY. HOWEVER THE ASSESSEE HAS NOT CHALLENGED THE DECISION OF THE TRIBUNAL IN RESTRICTING THE DEDUCTION TO A PART OF THE PROJECT. THEREFORE WHILE HOLDING THAT IN LAW THE ASSESSEE WAS ENTITLED TO SECTION 80 - IB(10) DEDUCTION ON THE PROFITS OF THE ENTIRE PROJECT IN THE FACTS OF THE PRESENT CASE SINCE THE ASSESSEE HAS NOT CHALLENGED THE DECISION OF THE TRIBUNAL WE ARE NOT INCLINED TO DISTURB THE DECISION OF THE TRIBUNAL IN RESTRICTI NG THE SECTION 80 - IB(10) DEDUCTION ONLY IN RESPECT OF THE PROFITS DERIVED FROM 15 RESIDENTIAL BUILDINGS. IX) THUS IT COULD BE SEEN THAT THE HONBLE HIGH COURT DO NOT APPROVE THE FINDINGS OF THE TRIBUNAL THAT A RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10% OF THE PLOT AREA WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 80 - IB(10). THE ISSUE THAT IN CASE WHERE CERTAIN RESIDENTIAL UNITS ARE OF A BUILT - UP AREA IN EXCESS OF THE PRESCRIBED LIMIT OF 1 000 SQ.FT. IN RESIDENTIAL PROJECT THIS WOULD RESULT IN THE ENTIRE EXEMPTION BEING LOST OR WHETHER THE ASSESSEE WOULD BE ENTITLED TO A PROPORTIONATE DEDUCTION WAS NOT BEFORE THE HIGH COURT. THUS IN OUR OPINION THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) DOES NO T COME TO THE RESCUE OF THE REVENUE. 22. FOLLOWING THE AFORESAID PRECEDENT WE THEREFORE HOLD THAT MERELY BECAUSE THE ASSESSEE HAS VIOLATED THE CONDITION UNDER ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 8 SECTION 80 - IB(10)(C) IN RELATION TO THE FLATS ON THE 11TH FLOOR THE DEDUCTION UNDER SECTIO N 80 - IB(10) CANNOT BE DENIED IN ITS ENTIRETY BUT THE DENIAL SHALL BE LIMITED TO THE PROFITS IN RESPECT OF THE FLATS ON THE 11TH FLOOR ALONE. FOR THE BALANCE OF THE RESIDENTIAL UNITS THE PLEA OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 - IB(10) OF THE A CT IS JUSTIFIED AND THE ASSESSEE SUCCEEDS ON THIS ASPECT. 11. FOLLOWING THE AFORESAID PRECEDENT WE HOLD THAT MERELY BECAUSE ASSESSEE VIOLATED THE CONDITION PRESCRIBED UNDER SECTION 80 - IB(10)(C) OF THE ACT IN RELATION TO THE AMALGAMATED BUNGLOW G1 & G2 THE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT CANNOT BE DENIED IN ITS ENTIRETY. IN OTHER WORDS THE DENIAL OF DEDUCTION SHALL BE LIMITED TO THE PROFITS IN RESPECT OF THE AMALGAMATED BUNGLOW G1 & G2 ALONE. FOR BALANCE OF THE RESIDENTIAL UNITS WHICH CO MPLIED WITH THE REQUIREMENTS OF CLAUSE (C) OF SECTION 80 - IB(10) OF THE ACT ASSESSEE SHALL BE ELIGIBLE FOR DEDUCTION. THE HONBLE MADRAS HIGH COURT IN THE CASE OF ARUN EXCELLO FOUNDATIONS (P) LTD. VS. CIT (2013) 29 TAXMANN.COM 149 (MADRAS) CONSIDERED AN AR GUMENT ON BEHALF OF THE REVENUE SIMILAR TO WHAT HAS BEEN ARGUED BEFORE US TO THE EFFECT THAT IN THE ABSENCE OF ANY CONTEMPLATION UNDER SECTION 80 - IB(10) OF THE ACT FOR PROPORTIONATE RELIEF ON PARTIAL COMPLIANCE SECTION CANNOT BE INTERPRETED TO GRANTED P RO RATA RELIEF. THE AFORESAID ARGUMENT OF THE REVENUE HAS BEEN NEGATED BY THE HONBLE MADRAS HIGH COURT AND THEREFORE THE CLAIM OF THE ASSESSEE FOR PROPORTIONATE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT CANNOT BE DENIED. 11. FURTHER THE CALCUTTA BEN CH OF THE TRIBUNAL IN BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT IN ITA NO.1595/KOL/2005 RELATING TO ASSESSMENT YEAR 2002 - 03 ORDER DATED 24.03.2006 HAS LAID DOWN SIMILAR PROPOSITION. 12. THE ISSUE ARISING IN THE PRESENT APPEAL IS THUS SQUARELY COVE RED BY DIFFERENT DECISIONS OF TRIBUNAL AND EVEN BY THE HONBLE MADRAS HIGH COURT IN VISWAS PROMOTERS PVT. LTD. VS. ACIT (SUPRA) AND HENCE THE ASSESSEE IS ENTITLED TO PRORATA DEDUCTION OF THE COMPLETED FLATS WHICH FULFILL THE CONDITIONS LAID DOWN IN SECTI ON 80IB(10) OF THE ACT. UPHOLDING THE ORDER OF CIT(A) WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 1 3 . NOW COMING TO THE APPEAL FILED BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY DENIAL OF THE SAID DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON 16 FLATS ON THE SURMISE THAT THE SAME DO NOT FULFILL THE BASIC CONDITIONS OF THE AREA OF FLATS BEING 1500 SQ. FT. OR LESS. UNDER THE PROVISIONS OF SECTION 80IB(14)(A) OF THE ACT THE DEFINITION OF BUILT UP AREA IS PROVIDED WHERE THE BUILT UP AREA OF FLATS SHOULD NOT EXCEED 1500 SQ.FT. IN THE CASE OF THE ASSESSEE THE ASSESSING OFFICER IN ORDER TO VERIFY THE CLAIM OF ASSESSEE HAD MADE A REFERENCE TO THE DVO WHO IN ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 9 TURN REPORTED THAT 16 FLATS OUT OF TOTAL 248 FLATS EXCEEDED THE BUILT UP AR EA LIMIT ELIGIBLE FOR CLAIMING THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE SAID REPORT OF THE DVO IS DATED 21.03.2013. ON 22.03.2013 THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID REPORT SHOULD NOT BE APPLIED AND T HE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT BE WITHDRAWN. ON THE NEXT DATE OF HEARING I.E. ON 23.03.2013 THE ASSESSEE POINTED OUT THAT THE VERIFICATION EXERCISE CARRIED OUT BY THE DVO WAS ONLY IN RESPECT OF FOUR FLATS OF WHICH THE MEASUREMENTS WERE TAKEN AND FOR THE BALANCE FLATS THE AREA WAS WORKED OUT ON THE BASIS OF OTHER DOCUMENTS BUT NO PHYSICAL VERIFICATION WAS CARRIED OUT. IN ORDER TO MEET THE REQUIREMENT OF BUILT UP AR EA IN RESPECT OF VARIOUS FLATS BUIL T BY IT THE ASSESSEE FURNISHED REPORT FROM ANOTHER VALUER SMT. ARTI SANGHVI. THE ASSESSEE ALSO EXPLAINED THAT WHERE IT WA S CONSTRUCTING THE BUILDING THE ODD NUMBERS FLATS WERE SIMILARLY BUILT AND HENCE NO QUESTION OF DEVIATION IN THEIR AREAS AND EXACT INSTANCES IN THIS REGARD WERE PO INTED OUT. IT WAS ALSO EXPLAINED THAT THE LADY VALUER HAD CARRIED OUT THE NECESSARY VERIFICATION EXERCISE EXPLAINED THAT THE LADY VALUER HAD CARRIED OUT THE NECESSARY VERIFICATION EXERCISE BY VISITING THE SITES AND ACTUALLY MEASURING THE AREA OF INDIVIDUAL FLATS WHICH ADMITTEDLY WAS NOT DONE BY THE DVO WHOSE ASSISTANT VISITED THE PRO JECT AND MEASURED ONLY FEW OF THE FLATS. THE REQUEST OF THE ASSESSEE WAS TO VERIFY THE CLAIM WHICH WAS REJECTED BY THE ASSESSING OFFICER AND ALSO BY THE CIT(A) ON VARIOUS ISSUES. 1 4 . WITHOUT GOING INTO THE SAID ISSUES THE ONLY THING TO BE SEEN IS WHET HER THE AREA OF THE FLATS IS WITHIN LIMITS PRESCRIBED UNDER THE ACT IN ORDER TO AVAIL THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND IN CASE IT IS SO THEN THE SAID DEDUCTION CANNOT BE DENIED TO THE ASSESSEE. THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH THE REPORT OF THE DVO WHO IN TURN SUBMITTED ANOTHER REPORT CLAIMING THAT THE MEASUREMENTS MADE BY ITS VALUER WERE CORRECT AS AGAINST THE APPROXIMATION OF THE DVO. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND IN ORDER TO ME ET THE ENDS OF JUSTICE WE ARE OF THE VIEW THAT THE ITA NO . 1 839 /PN/201 4 ITA NO.2034/PN/2014 NIRAJKUMAR ASSOCIATES (P) LTD. 10 ISSUE NEED S TO BE LOOKED INTO AT THE LEVEL OF ASSESSING OFFICER WHO SHALL DIRECT THE DVO TO MEASURE EACH OF 16 FLATS WHICH ACCORDING TO HIM EXCEEDS AREA OF 1500 SQ.FT. THE ASSESSING OFFICER SHALL ALSO CONSIDER THE VALUATION REPORT SUBMITTED BY THE ASSESSEE IN THIS REGARD AND AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED FOR STATIS TICAL PURPOSES. 1 5 . IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER 201 6 . SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 30 TH SEPTEMBER 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. ( ) / THE CIT(A) - II PUNE ; 4. / THE CIT - I I PUNE ; 5. / DR B ITAT PUNE ; 6. / GUARD FILE . / BY ORDER // TRUE COPY // / SR. PRIVATE SECRETARY / ITAT PUNE