Bhumiraj Homes Ltd. v. DCIT ITAT ‘B’ Bench, Mumbai Before R. S. Syal (AM) and Asha Vijayaraghavan (JM) ITA No. 2170/Mum./2009 A.Y.: 2004-05. Decided on : 25-3-2011 Counsel for assessee/revenue: Pradip Kapasi/ Naresh Kumar Balodia

Facts:
The assessee, a builder developer had claimed a deduction of Rs.2.55 crore u/s.80IB(10) representing the profits of the housing project. In the original assessment deduction u/s.80IB(10) was disallowed to the extent it was relatable to profits of the commercial area. In the re-assessment proceeding u/s.147, the AO disallowed the remaining part of the deduction which was earlier allowed as in his opinion only the projects approved as ‘housing projects’ were eligible and not those approved as ‘residential as well as commercial projects’ by the local authority.

Before the Tribunal the Revenue contended that the commercial area exceeded 10% of the total built-up area computed on the following basis, hence, the order of the AO was to be upheld. It was submitted that:

• Built-up area for commercial purpose should include proportionate area covered by staircase, passage, lift area and lift-room;
• While considering the size of the plot, unbuiltup area should be bifurcated in proportion to commercial as well as residential area. Plot size so calculated was less than 1 acre. It also relied on the decision of the Kolkata Tribunal decision in the case of Bengal Abuja Housing Development Ltd. v. DCIT, (ITA No. 1595/Kol./2005, dated 24-3-2006).

Held:
The Tribunal did not agree with the Revenue’s contention that unbuilt-up area should be bifurcated in proportion to commercial as well as residential area. According to it, in any project there would always be some portion of the area which remains unbuilt and is required to be kept open as per the plans approved. According to the Tribunal the decision of the Kolkata Tribunal was not on the point advocated by the Revenue. As regards the contention to include proportionate area covered by staircase, passage, lift area and lift-room, the Tribunal noted that since all shops and commercial establishments were in the ground floor, such areas cannot be considered to compute built-up area for commercial purpose. Further, relying on the decision of the Bombay High Court in the case of Brahma Associates (ITA No. 1194 of 2010), it allowed the appeal of the assessee.