Agarwal Constructions, Pune v. ACIT (OSD), Pune, Pune

ITA 872/PUN/2006 | 2003-2004
Pronouncement Date: 23-03-2011 | Result: Allowed

Appeal Details

RSA Number 87224514 RSA 2006
Assessee PAN AAIFA1665R
Bench Pune
Appeal Number ITA 872/PUN/2006
Duration Of Justice 4 year(s) 7 month(s) 13 day(s)
Appellant Agarwal Constructions, Pune
Respondent ACIT (OSD), Pune, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-03-2011
Assessment Year 2003-2004
Appeal Filed On 10-08-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER S.NO . ITA NO. ASSTT.YEAR 1. 872/PN/06 2003-04 2. 1318/PN/07 2004-05 M/S AGARWAL CONSTRUCTIONS .. APPELLANT 248 JEDHE PARK NEAR HOTEL SHANTAI RASTA PETH PUNE PAN AAIFA1665R VS. ASSTT.COMMISSIONER OF INCOME-TAX (OSD) PUNE .. RESPONDENT APPELLANT BY : S/SHRI SUNIL PATHAK & NIKHIL PATHAK RESPONDENT BY : SHRI H. C. LEUVA ORDER PER G.S.PANNU A.M: THE TWO CAPTIONED APPEALS ARE FILED BY THE ASSESS EE AGAINST SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (AP PEALS)-II PUNE DATED 22.5.2010 & 3.7.2007 WHICH IN TURN HAVE ARISEN FR OM ORDERS OF THE ASSESSING OFFICER DATED 30.12.2005 & 15.11.2006 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAININ G TO ASSESSMENT YEARS 2003-04 & 2004-05 RESPECTIVELY. IN BOTH THE APPEALS THE IS SUES INVOLVED ARE COMMON AND THEREFORE A COMMON ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN THE CAPTIONED APPEALS THE SUM AND SUBSTANCE OF THE DISPUTE RELATES TO THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT WITH RESPECT TO THE PROFITS DERIVED FROM HOUSING PROJECT . WE MAY REFER TO THE FACTS AND CIRCUMSTANCES AS EMERGING FROM THE ORDERS OF THE AS SESSMENT YEAR 2003-04. IN ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 2 THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE AS SESSMENT YEAR 2003-04 THE ASSESSING OFFICER EXAMINED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB(10) IN RESPECT OF THE SHRIKRISHNA COM PLEX HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE AT HADAPSAR PUNE. AS PE R CLAUSE (B) OF SECTION 80- IB(10) ONE OF THE CONDITIONS FOR THE CLAIM OF DEDU CTION IS THAT THE PROJECT SHALL BE ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. THE ASSESSING OFFICER EXAMINED THE SAID CONDITION AND F OUND THAT OUT OF THE TOTAL PLOT OF 6800 SQ. MTS. WITH THE LAND OWNERS ASSESSEE HAD DEVELOPMENT RIGHTS FOR AN AREA OF 5026 SQ. MTS. ONLY. FURTHER-MORE AN AREA O F 753.43 SQ. MTS. WAS EARMARKED TO BE COVERED UNDER GREEN BELT AND AN ARE A OF 280.60 SQ. MTS WAS SUBSUMED FOR ROAD WIDENING. THEREFORE OUT OF AN AR EA OF 5026 SQ. MTS. ACTUAL AREA AVAILABLE FOR DEVELOPMENT OF THE PROJECT WAS 3 991.97 SQ. MTS. ONLY AND THIS SHOWED THAT THE SIZE OF THE PLOT OF LAND FOR THE PR OJECT WAS LESS THAN ONE ACRE AND THEREFORE ACCORDING TO THE ASSESSING OFFICER ASSESSEE DID NOT SATISFY THE REQUIREMENTS OF CLAUSE (B) OF SECTION 80-IB(10) OF THE ACT. THE ASSESSING OFFICER ALSO REFERRED TO THE CASE OF M/S BUNTY BUILDERS PU NE WHEREIN EXCLUSION OF THE AREA MEANT FOR AMENITIES AND ROAD WIDENING FOR THE PURPOSE OF DETERMINING THE LIMIT OF ONE ACRE UNDER SECTION 80-IB(10)(B) WAS UP HELD BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II PUNE. THUS AS PER THE ASS ESSING OFFICER ASSESSEE WAS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80-IB(10) IN RESPECT OF THE PROFITS OF THE SHRIKRISHNA COMPLEX PROJECT. RESULTANTLY THE PROFI TS OF SHRIKRISHNA COMPLEX OF RS 8 91 379/- WERE HELD INELIGIBLE FOR THE DEDUCTIO N UNDER SECTION 80-IB(10) OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) H AS SINCE SUSTAINED THE DISALLOWANCE AGAINST WHICH THE ASSESSEE IS IN FURTH ER APPEAL BEFORE US. 3. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE POIN TED OUT THAT THE LOWER AUTHORITIES HAVE WRONGLY HELD THAT THE AREA COVERED UNDER THE GREEN BELT AND RESERVED FOR ROAD-WIDENING OF 753.43 SQ. MTS. AND 2 80.60 SQ. MTS. RESPECTIVELY WAS TO BE EXCLUDED FOR DETERMINING THE SIZE OF PLOT FOR THE PURPOSE OF CLAUSE (B) OF SECTION 80-IB(10) OF THE ACT. ON BOTH THE ASPECT S IT WAS SOUGHT TO BE POINTED OUT THAT THE ISSUES ARE COVERED BY THE EARLIER DECI SIONS OF THE PUNE BENCH OF THE ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 3 TRIBUNAL IN THE CASES OF M/S BUNTY BUILDERS PUNE V IDE ITA NO 1808/PN/05 DATED 16.02.2010 AND M/S NAVNIRMAN DEVELOPERS NASHIK VI DE ITA NO 7 TO 9/PN/2007 DATED 04.05.2010 COPIES OF THE SAID DECISIONS HAVE BEEN PLACED ON RECORD. IT HAS ALSO BEEN EXPLAINED BY THE LEARNED COUNSEL WIT H REFERENCE TO THE PRECEDENTS THAT THE ISSUES HAVE BEEN DECIDED IN TH E LIGHT OF THE CIRCULAR NO 5 OF 2005 DATED 15.7.2005 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES REPORTED AT 276 ITR 151 (ST.) RELEVANT PORTION AS APPEARING AT PAGE 170 (ST.) OF THE SAID REPORT. 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. THE PRIMARY DISPUTE RELATES TO THE DETERMINATION OF SIZE OF THE PLOT OF LAND FOR THE PURPOSES OF SECTION 80-IB(10)(B) OF THE ACT. CLAUSE (B) OF SECTION 80-I B(10) REQUIRES THAT THE HOUSING PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. AS PER THE ASSESSING OFFICER IN ASCERTAINING THE PRES CRIBED AREA OF ONE ACRE THE AREAS EARMARKED FOR GREEN BELT AND FOR ROAD-WIDENI NG BE EXCLUDED. SIMILAR ISSUE WAS THE SUBJECT-MATTER OF CONSIDERATION BY OU R CO-ORDINATE BENCH IN THE CASES OF M/S BUNTY BUILDERS PUNE (SUPRA) AND M/S N AVNIRMAN DEVELOPERS NASHIK (SUPRA). FOR THE SAKE OF CONVENIENCE WE THI NK IT APPROPRIATE TO REPRODUCE BELOW THE RELEVANT PORTION OF THE ORDER OF THE TRIB UNAL IN THE CASE OF M/S BUNTY BUILDERS PUNE (SUPRA): 8.1 AS PER THE REVENUE AUTHORITIES BOTH AO AND LD CIT (A) SINCE THE NET AREA AVAILABLE FOR THE PURPOSE OF CONSTRUCTION WAS LESS THAN 1 ACRE THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR CLAIM OF DEDUCTION U/S 80-IB(1 0). HOWEVER WE ARE NOT IN AGREEMENT WITH SUCH AN APPROACH OF THE REVENUE AUTHORITIES. T O GIVE STRENGTH TO OUR REASONS FOR SUCH DISAGREEMENT WE HEREBY REFER ONE OF THE POINT AS EXPLAINED IN THE CBDT CIRCULAR CITED IN 276 ITR 170 (STATUTE) WHEREIN THE GUIDELI NES ISSUED WERE AS FOLLOWS: EXTENSION OF THE TIME-LIMIT FOR OBTAINING APPROVAL OF HOUSING PROJECT FOR THE PURPOSE OF TAX HOLIDAY UNDER SECTION 80-IB AND ALL OWING DEDUCTION FOR RE- DEVELOPMENT OR RECONSTRUCTION OF EXISTING BUILDING IN SLUM AREAS. THIS SECTION DOES NOT SPECIFICALLY PROVIDE AREA LIM IT FOR THE GARDEN THE DEVELOPMENT PLAN ROADS INTERNAL MEANS OF ACCESS E TC. IN THE HOUSING PROJECT. THEREFORE THE SAME SHOULD CONFORM TO THE PROJECT P LAN APPROVED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH THE REGULATIONS IN FOR CE. ALSO THE AREA LIMIT OF THE PLOT HAS TO BE CONSTRUED WITH REFERENCE TO THE AREA OF THE SITE ON WHICH THE HOUSING PROJECT IS CONSTRUCTED AND NOT WITH REFEREN CE TO THE DEMARCATION OF LAND DONE BY THE LAND DEVELOPMENT AUTHORITY. 9. THIS CIRCULAR THUS GIVES A CLEAR INDICATION THAT THOUGH THE SECTION DO NOT SPECIFICALLY PROVIDE FOR THE DEVELOPMENT PLAN ROADS OR GRANT OF OTHER FACILITIES ETC. IN A ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 4 HOUSING PROJECT BUT THE SAME SHOULD CONFORM TO THE PROJECT PLAN APPROVED BY THE LOCAL AUTHORITY. OUR NEXT REASONING IS ON THE BASIS OF AB OVE DISCUSSION THAT THE LIMIT OF THE PLOT HAS TO BE CONSTRUED WITH REFERENCE TO THE AREA AVAI LABLE ON THE SITE ON WHICH THE HOUSING PROJECT IS TO BE CONSTRUCTED AND NOT WITH REFERENCE TO THE DEMARCATION OF LAND. MEANING THEREBY THE HOUSING PROJECT THUS CONSTITUTE DEVELOP MENT PLAN ROADS AND GRANT OF OTHER FACILITIES THEREFORE THOSE AREAS SHOULD EXIST WITH IN THE PRESCRIBED LIMITS AND TO BE CONSIDERED AS PART AND PARCEL OF THE PROJECT. EVEN IN THE PRESENT CASE THE FACTS HAVE REVEALED THAT THE PLAN WOULD NOT HAVE BEEN APPROVED IF THE ASSESSEE WOULD NOT HAVE MADE 15% AMENITY SPACE AVAILABLE TO THE CORPORATION . THOUGH AMENITY PACE WAS STATED TO BE SURRENDERED TO THE CORPORATION BUT SUCH SACRI FICE OF THE BUILDER WAS DULY RECOGNIZED AND COMPENSATED BY GRANTING ADDITIONAL FSI FOR THE SAID PROJECT. IF WE ACCEPT THE PROPOSITION OF THE REVENUE DEPARTMENT THAT THE AREA WHICH WAS DIRECTLY UNDER THE BUILDING CONSTRUCTION SHOULD ONLY BE HELD AS THE PR OJECT FOR CONSTRUCTION THEN A BUILDER HAS TO ACQUIRE A LAND MORE THAN 1 ACRE OF LAND. THE N ONLY AFTER THE SET-APART OF THE AMENITY SPACE HE COULD BE LEFT WITH THE BALANCE ONE ACRE FOR PROJECT DEVELOPMENT. BUT SUCH A PROPOSITION WAS NOT INTENDED IN THE LEGISLAT URE. THE LANGUAGE OF THE SECTION DID NOT PRESCRIBE SUCH HYPOTHETICATION. THEREFORE AN AN OTHER REASONING OF OUR REJECTION OF SUCH A PROPOSITION OF THE REVENUE DEPARTMENT IS THA T IT WOULD BE ILLOGICAL TO EXPECT FROM A BUILDER TO HAVE EXCESS LAND AREA THAN ONE ACRE; AT LEST 15% EXCESSIVE AREA APPLICABLE FOR PUNE CORPORATION SO THAT AFTER SETTING APART 15% A REA THE BALANCE SHOULD REMAIN ONE ACRE FOR THE PURPOSE OF CONSTRUCTION. THIS SUGGESTI ON OR APPROACH OF INTERPRETATION OF A STATUTE IS NOT IDEALISTIC BECAUSE WE CANNOT READ BE YOND THE SCOPE OF THE STATUTE. NORMAL RULE OF INTERPRETATION OF STATUTES IS THAT THE GENE RAL WORDS MUST RECEIVE GENERAL CONSTRUCTION UNLESS THERE IS SOMETHING OTHERWISE EX PRESSLY PROVIDED IN THE STATUTE. GENERAL WORDS HAVE ORDINARILY A GENERAL MEANING TH EN THE FIRST TASK IN INTERPRETATION IS TO GIVE THE WORDS THEIR PLAIN AND ORDINARY MEANING. TH IS IS WHAT WE HAVE GATHERED FROM THE BOOKS AVAILABLE ON THIS SUBJECT WITH AN ATTEMPT TO SUBSCRIBE A SIMPLE AND REALISTIC MEANING TO THE CLAUSE (B) TO SECTION 80-IB(10) OF I .T. ACT. NOTHING MORE CAN BE ADDED HENCE WE HAVE TO RESTRICT THE INTERPRETATION THAT T HE AREA OF ONE ACRE SHOULD BE AVAILABLE FOR THE HOUSING PROJECT INCLUSIVE OF AMENITIES REQU IRED TO BE SET APART AS PER THE NORMS OF A CORPORATION. THEREFORE A JUSTIFIABLE CONSTRUCTION IS THAT WHEN THERE IS NO DOUBT MORE SO IT IS NOT IN DISPUTE THAT A PORTION OF THE LAND IN THE PRESENT CASE IT IS 15% TO BE EARMARKED OR SET-APART OR RESERVED OR SEGREGATED OU T OF THE TOTAL LAND IN QUESTION MINIMUM ONE ACRE MEANT FOR THE PURPOSE OF PROJECT IN TERMS OFL RULES/REGULATION OF A LOCAL BODY I.E. PUNE MUNICIPAL CORPORATION AND WITHOUT THAT SEGREGATION THE PROJECT COULD NOT BE SANCTIONED THEN THAT PORTION BEING MANDATORY FOR AMENITY PURPOSES HAS TO BE TAKEN AS A PART AND PARCEL OF THE LAND AVAILABLE FOR THE PRO JECT. IN THE PRESENT CASE SINCE THE AREA AVAILABLE FOR THE HOUSING PROJECT WAS 4600 SQ. MTR. THAT IS MORE THAN 1 ACRE (4046 SQ. MTR.) THEREFORE THE APPELLANT IS ENTITLED FOR THE C LAIM OF DEDUCTION U/S 80-IB(10)(B) ON THIS PORTION OF LAND. WE HOLD ACCORDINGLY. 6. SUBSEQUENTLY THE PUNE BENCH CONSIDERED A SIMILA R CONTROVERSY IN THE CASE OF M/S NAVNIRMAN DEVELOPERS (SUPRA). AFTER CON SIDERING THE PRECEDENT IN THE CASE OF M/S BUNTY BUILDERS (SUPRA) AND THE C.B. D.T. CIRCULAR 15.7.2005 (SUPRA) IT HAS BEEN HELD THAT THE AREA SPECIFIED F OR GARDEN AND DEVELOPMENT PLAN ROAD ARE TO BE TREATED AS A PORTION OF THE HOUSING PROJECT. THE BENCH HAS FURTHER OBSERVED THAT SUCH AREAS SHOULD CONFORM TO THE STAN DARDS AND RULES/REGULATIONS IN FORCE AND MANDATED BY THE LOCAL AUTHORITY. THE F OLLOWING OBSERVATION BY THE BENCH IS WORTHY OF NOTICE: OUR NEXT ENQUIRY WAS ABOUT THE CONTROVERSY OF D.P. ROAD WHETHER IT WAS PART OF THE PROJECT IN QUESTION OR IT HAD ALREADY EXISTED AT TH E SITE AND WHETHER BEING PROVIDED BY THE MUNICIPAL CORPORATION. IN OTHER WORDS WHETHER IT W AS THE MUNICIPAL ROAD OR IT WAS CARVED OUT FROM THE LAND OF THE PROJECT AND HANDED OVER TO THE CORPORATION. IT WAS EXPLAINED THAT OUT OF THE TOTAL AMALGATED AREA OF 4 264.10 SQ. MTS. THE DEVELOPER HAD TO RESERVE APPORTION FOR THE ROAD. THERE WAS A QUESTIO N ABOUT THE HANDING OVER OF THE SAID D.P. ROAD AND THE CLARIFICATION GIVEN TO THE AO WAS THAT THE ROAD WAS TENDERED AND ACTUALLY ACQUIRED IN JULY 2001. THE FACT OF ACQUISI TION OF ROAD BY THE NMC WAS STATED TO BE SUPPORTED BY THE EVIDENCE OF DEVELOPMENT RIGHT CERTIFICATE GRANTED BY NMC ON 24.7.2001. IT WAS EXPLAINED THAT THE PROPERTY SO AC QUIRED SHALL REST TO THE CORPORATION ON ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 5 PAYMENT OF CONSIDERATION. RATHER THE OWNERSHIP RIGH T OF D. P. ROAD AREA WERE TRANSFERRED TO NMC AS PER ENTRY NO 48388 DATED 1.4.2003. THEREF ORE THE VEHEMENT CONTENTION WAS THAT THE DP ROAD WAS CARVED OUT OF THE IMPUGNED HOU SING PROJECT AND VERY MUCH PART AND PARCEL OF THE SAID PROJECT. IT WAS GIVEN TO NMC BY THIS APPELLANT AT A MUCH LATER DATE AFTER THE PROJECT WAS STARTED. TO FURTHER STRENGTHE N THIS PLEA IT WAS ALSO SUBMITTED THAT THE TDR RIGHTS GRANTED ON ACQUISITION OF LAND AREA HAVE DIRECT CLOSE NEXUS WITH THE PROJECT AND THEREFORE THAT FSI WAS UTILIZED BY THE ASSESSEE DEVELOPER IN THE BUILDING CONSTRUCTION OF THE VERY SAID PROJECT. IN THE LIGHT OF THE ABOVE BACKGROUND AND CONSIDERI NG THE FACTUAL AS WELL AS LEGAL ASPECT OF THE ISSUE WE CAN HOLD THAT THE RATIO LAID DOWN BY THE RESPECT CO-ORDINATE BENCH IN THE CASE OF M/S BUNTY BUILDERS (SUPRA) APPLIES T O THE FACTS OF THE RESENT APPEAL. OUR FIRST OBSERVATION IN THIS REGARD IS THAT CONSIDERIN G CBDT CIRCULAR NO 5/2005 CITED IN 276 ITR 151 (STATUTE) THE AREA SPECIFIED FOR GARDEN DE VELOPMENT PLAN ROAD ARE INTERNAL MEANS OF ACCESS HAVE TO BE TREATED AS A PORTION OF THE HOUSING PROJECT. HOWEVER IT WAS SPECIFICALLY MENTIONED IN THE SAID CIRCULAR THAT TH OSE AREAS SHOULD CONFORM TO THE PROJECT PLAN AS APPROVED BY THE LOCAL AUTHORITY. MEANING TH EREBY THAT THE ROADS AND GARDENS SHOULD COMPLY WITH THE STANDARDS AND THE RULES AND REGULATIONS IN FORCE AND MANDATED BY LOCAL AUTHORITY. FROM THAT AREA OF THE SITE THE BUILDER HAS TO CARVE OUT AND SACRIFICE THE OPEN SPACE FOR GARDEN AND DEVELOPMENT PLAN ROAD. SINCE A BUILDER H AS TO FOLLOW NORMS OF THE LOCAL AUTHORITY THEREFORE IT WAS MANDATORY ON HIS PART TO SACRIFICE THE OPEN SPACE FOR THIS VERY PURPOSE. IN THE PRESENT CASE OUT OF THE TOTAL AREA AVAILABLE ON THE SITE OF 4264.10 SQ.MTS. THE COLONY ROAD AND OPEN SPACE WAS CARVED OUT. HOWE VER THE LOCAL AUTHORITY GIVES INCENTIVE IN LIEU OF THE SAID SACRIFICE BY GRANTING FSI ON THAT AREA LEFT OPEN FOR ROAD ETC. IN THE PRESENT APPEAL IT HAS BEEN ESTABLISHED THAT THE SAID FSI WAS DIRECTLY USED IN THE SAME HOUSING PROJECT HAVING DIRECT NEXUS WITH THE O PEN SPACE LEFT FOR ROAD WITH THE ADDITIONAL CONSTRUCTION MADE ON ACCOUNT OF THE GRAN T OF FSI. UPTO THIS EXTENT THE VIEW GOES IN FAVOUR OF THE ASSESSEE NOT ONLY BY OR VERDI CT BUT AS NOTICED BY US THE SAME ISSUE WAS ALSO HELD BY THE FIRST APPELLATE. FOLLOWING THE AFORESAID PRECEDENTS IN PRINCIPLE TH E ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE SUBJECT TO VERIFICATION THAT THE AREA S ON ACCOUNT OF GARDEN AREA AND ROAD WIDENING COMPLY WITH THE PROJECT PLAN AS A PPROVED BY THE LOCAL AUTHORITY. FOR THIS PURPOSE THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO CARRY OUT THE NECESSARY VERIFICATION WIT H RESPECT TO THE SHRIKRISHNA COMPLEX PROJECT IN THE LIGHT OF THE OBSERVATIONS OF THE TRIBUNAL IN THE CASES OF M/S BUNTY BUILDERS (SUPRA) AND M/S NAVNIRMAN DEVELO PERS (SUPRA). NEEDLESS TO MENTION THE ASSESSING OFFICER SHALL ALLOW THE ASSE SSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND THEREAFTER PASS AN ORDER IN ACCO RDANCE WITH LAW. THUS ON THIS GROUND ASSESSEE SUCCEEDS AS ABOVE. 6. THE NEXT SUBSTANTIVE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04 READS AS FOLLOWS: THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALL OWANCE OF DEDUCTION U/S 80IB(10) ON THE GROUND THAT THE PROJECT CONSTRUCTED WAS NOT A H OUSING PROJECT SINCE THE BUILT UP AREA OF SHOPS AND COMMERCIAL ESTABLISHMENTS EXCEEDED 200 0 SQ. FT. ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 6 IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER FURTHER NOTICED THAT IN SHRIKRISHNA COMPLEX ASSESSEE HAD ALSO CONST RUCTED SOME SHOPS AND COMMERCIAL ESTABLISHMENTS WITH BUILT UP AREA OF MOR E THAN 2000 SQ.FT. HE THEREFORE DISALLOWED THE DEDUCTION UNDER SECTION 8 0-IB(10) ON THE GROUND THAT THE BUILT UP AREA OF COMMERCIAL ESTABLISHMENT CANNO T EXCEED 2000 SQ.FT. THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS OF THE VIE W THAT A PROJECT WHICH CONTAINS SHOPS AND COMMERCIAL ESTABLISHMENTS IS OU TSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 80-IB(10) AS THE PROVISIONS OF LAW AS IT THEN STOOD AND AS APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL WERE APPLICABLE ONLY TO RESIDENTIAL PROJECTS WHICH CANNOT BE SAID TO INCLU DE SHOPS AND COMMERCIAL ESTABLISHMENTS AND THEREFORE IF THERE WAS ANY SHO P OR COMMERCIAL ESTABLISHMENT CONTAINED IN A PROJECT SUCH PROJECT DID NOT REMAIN AS A HOUSING PROJECT. IN THIS VIEW OF THE MATTER THE COMMISSION ER OF INCOME-TAX (APPEALS) AFFIRMED THE DECISION OF THE ASSESSING OFFICER AGA INST WHICH THE ASSESSEE HAS RAISED THE IMPUGNED GROUND OF APPEAL 7. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE APPELLANT REFERS TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT PUNE VS. M/S BRAHMA ASSOCIATES PUNE IN INCOME-TAX APPEAL NO 119 4 OF 2010 DATED 22.02.2011 WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER: A) UPTO 31.3.2005 (SUBJECT TO FULFILLING OTHER CON DITIONS) DEDUCTION UNDER SECTION 80- IB(10) IS ALLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTEN T PERMITTED UNDER THE DC RULES/REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AU THORITY. B) IN SUCH A CASE WHERE THE COMMERCIAL USER PERMIT TED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UNDER THE DC RULES/REG ULATION THE DEDUCTION UNDER SECTION 80-IB(10) UPTO 31.3.2005 WOULD BE ALLOWABLE IRRESPECTIVE OF HE FACT THAT THE PROJECT IS APPROVED S HOUSING PROJECT OR RES IDENTIAL PLUS COMMERCIAL. C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOM E TAX ACT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31.3.2005 DEDUCTION UNDER SECTION 80IB(10) WOULD BE ALLOWABLE TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT-UP AREA OF THE PLOT. D) SINCE DEDUCTIONS UNDER SECTION 80IB(10) IS ON TH E PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING SECTION 80IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER IN THE PRESENT CASE SINCE THE ASSESSEE HA S ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(10) DEDUCTION TO A PART OF THE PROJECT WE DO NOT DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BE HALF. E) CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFF ECT FROM 1.4.2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED F OR THE PERIOD PRIOR TO 1.4.2005. ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 7 IN THE LIGHT OF THE AFORESAID JUDGMENT IT WAS SUBM ITTED ON BEHALF OF THE APPELLANT THAT THE MATTER BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED IN THE LIGHT OF THE ABOVE. IN VIEW OF THE BINDING J UDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT THE MATTER IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO EXAMI NE THE ASSESSEES CLAIM FOR GRANT OF DEDUCTION UNDER SECTION 80-IB(10) OF THE A CT. IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT (SUPRA) THE ASSESSIN G OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD A ND THEREAFTER PASS AN ORDER IN ACCORDANCE WITH LAW. THUS ON THIS GROUND ALSO A SSESSEE SUCCEEDS. 8. IN THE RESULT APPEAL OF THE ASSESSEE FOR THE AS SESSMENT YEAR 2003-04 IS ALLOWED AS ABOVE. 9. AS THE FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR 2004-05 ARE SIMILAR OUR DECISION IN THE ASSESSMENT YEAR 2003-0 4 APPLIES MUTATIS MUTANDIS TO THE ASSESSMENT YEAR 2004-05 ALSO. 10. RESULTANTLY BOTH THE APPEALS ARE ALLOWED AS A BOVE. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF MARCH 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 23 RD MARCH 2011 COPY TO:- 1) M/S AGARWAL CONSTRUCTION PUNE 2) ACIT (OSD) PUNE 3) THE CIT(A)-II PUNE 4) THE CIT II PUNE. 5) THE DR B BENCH ITAT PUNE BY ORDER TRUE COPY ASST. REGISTRAR I.T.A.T. PUNE B ITA NOS 872/PN/06 & 1318/PN/07 M/S AGARWAL CONSTRUCT IONS PUNE 8