{"id":2734,"date":"2011-02-23T12:59:05","date_gmt":"2011-02-23T07:29:05","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=2734"},"modified":"2011-02-23T12:59:05","modified_gmt":"2011-02-23T07:29:05","slug":"cit-vs-ms-brahma-associates-bombay-high-court-pre-ay-05-06-a-project-approved-as-housing-project-by-local-authority-eligible-for-deduction-us-80-ib10-irrespective-of-extent-of-commercial-user","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-ms-brahma-associates-bombay-high-court-pre-ay-05-06-a-project-approved-as-housing-project-by-local-authority-eligible-for-deduction-us-80-ib10-irrespective-of-extent-of-commercial-user\/","title":{"rendered":"CIT vs. M\/s Brahma Associates (Bombay High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (brahma_associates_80_IB_10_housing_project.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

Pre AY 05-06, a project approved as \u201chousing project\u201d by local authority eligible for deduction u\/s 80-IB(10) irrespective of extent of commercial user<\/strong><\/p>\n

In AY 2003-04 the assessee undertook the construction of a project at Pune which was approved as a “residential plus commercial<\/em>” project. The commercial area of the plot was 20.83% of the total area. The assessee claimed deduction u\/s 80-IB(10) which was denied by the AO & CIT (A) on the ground that the expression “Housing Project” in s. 80IB(10) applied only to projects consisting of residential units and not to projects having commercial units<\/em>. On appeal, the Special Bench (119 ITD 255)<\/a> held that pre the amendment in AY 2005-06, if the project was approved by the local authority as a \u201chousing project\u201d or if the project was approved as \u201cresidential plus commercial\u201d and the commercial user did not exceed 10% of the BUA, deduction was allowable in entirety. However, if the commercial user exceeded 10%, deduction was allowable only on the residential units. On appeal by the department to the High Court, HELD: <\/p>\n

(i) S. 80-IB(10) (pre amendment w.e.f. AY 2005-06) does not define the expression ‘housing project’ but refers to housing projects which are approved by the local authorities. Under the local laws, the authorities are empowered to approve projects as \u201chousing projects\u201d with commercial user<\/em> to the extent permitted under the DC Rules framed by the respective local authority. Accordingly, if the legislature intended to restrict the benefit of deduction only to the projects approved exclusively for residential purposes, then it would have stated so. However, as the legislature has provided that the deduction is available to all housing projects approved by a local authority, the result is that even projects with commercial user approved as a \u201chousing project\u201d are eligible for deduction<\/em><\/strong>;<\/p>\n

(ii) While the Special Bench was right in holding that a project with residential and commercial user to the extent permitted under DC Rules would be a \u201chousing project\u201d and eligible for deduction, it was not justified in confining the deduction only to projects having commercial area upto 10%<\/em> of the BUA because once the basic argument of the revenue that the housing projects with commercial user are not entitled to Section 80IB(10) deduction is rejected, no restriction could be imposed<\/strong>. If the project is approved as a \u201chousing project\u201d deduction u\/s 80-IB(10) is allowable irrespective of the commercial area<\/em><\/strong>; <\/p>\n

(iii) The insertion of clause (d) to s. 80-IB(10) w.e.f. 1.4.2005 to deny s. 80-IB (10) deduction to projects having commercial user beyond the prescribed limits is not retrospective<\/em><\/strong>. <\/p>\n","protected":false},"excerpt":{"rendered":"

While the Special Bench was right in holding that a project with residential and commercial user to the extent permitted under DC Rules would be a \u201chousing project\u201d and eligible for deduction, it was not justified in confining the deduction only to projects having commercial area upto 10% of the BUA because once the basic argument of the revenue that the housing projects with commercial user are not entitled to Section 80IB(10) deduction is rejected, no restriction could be imposed<\/strong>. If the project is approved as a \u201chousing project\u201d deduction u\/s 80-IB(10) is allowable irrespective of the commercial area<\/em><\/strong><\/p>\n

Read more ›<\/a><\/div>\n

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