[CIT v. M/s. Brahma Associates (Bom.), ITA No. 1194 of 2010 dated 22-2-2011]
In this case, the following questions of law were raised before the Bombay High Court:
“(i) Whether in the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the deduction u/s. 80IB(10), as applicable prior to 1-4-2005 is admissible to a ‘Housing project’ comprising residential housing units and commercial establishments?
(ii) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that a project having commercial area up to 10% of the project is eligible for deduction on the entire profits of the project u/s. 80IB(10) up to 1-4-2005?
(iii) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that the projects wherein the commercial area is more than 10% of the project and the profits from the residential dwelling units in that project can be worked out separately, then subject to fulfilling other conditions, deduction on the profits relatable to the residential part of the project would be eligible for deduction u/s.80IB(10)?
(iv) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding that the limit on commercial use of built-up area as prescribed by clause (d) of section 80IB(10) has no retrospective application and it applies only w.e.f. the A.Y. 2005-06?”
The Bombay High Court answered the questions as under:
“(i) Up to 31-3-2005 (subject to fulfilling other conditions), deduction u/s.80IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under the DC Rules/Regulations framed by the respective local authority.
(ii) In such a case, where the commercial user permitted by the local authority is within the limits prescribed under the DC Rules/ Regulations, the deduction u/s.80IB(10) up to 31-3-2005 would be allowable irrespective of the fact that the project is approved as ‘housing project’ or ‘residential plus commercial’.
(iii) In the absence of the provisions under the Income-tax Act, the Tribunal was not justified in holding that up to 31-3-2005 deduction u/s.80IB(10) would be allowable to the projects approved by the local authority having residential building with commercial user up to 10% of the total built-up area of the plot.
(iv) Since deductions u/s.80IB(10) is on the 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 has 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 behalf.
(e) Clause (d) inserted to section 80IB(10) w.e.f. 1-4-2005 is prospective and not retrospective and hence cannot be applied for the period prior to 1-4-2005.”
