G.S Pannu, A.M:— These appeals by the assessee are directed against a combined order of the Commissioner of Income-tax (Appeals)-I, Pune dated 06.08.2008 which, in turn, has arisen from the respective orders of the Assessing Officer passed under section 143(3) of the Income-tax Act, 1961 (in short “the Act”), pertaining to the assessment year 2004-2005 and 2005-2006.

2. In both these appeals, the common dispute relates to the claim of the assessee for deduction under section 80-IB(10) of the Act. The appellant before us is a Company incorporated under the provisions of Companies Act, 1956 and, inter alia, engaged in the business of undertaking of development and building of housing projects. The assessee Company claimed deductions for the captioned assessment years under section 80-IB(10) of the Act in respect of the profits derived from undertaking of development and building of housing projects. The deductions have been denied by the income-tax authorities primarily for the reason that the projects undertaken by the assessee do not fulfill the conditions prescribed under section 80-IB(10) of the Act. The facts and circumstances in the two assessment years are quite similar and, therefore, we deem it fit and proper to take up for detailed discussion the issues arising in the assessment year 2004-2005 initially.

3. For the assessment year 2004-2005, the assessee company filed its return of income declaring an income of Rs. 20,01,590/- which, inter alia, included a claim of deduction under section 80-IB(10) of the Act of the Act amounting to Rs. 1,51,13,133/- in relation to the profits from the housing project. The assessee claimed such deduction in relation to two of its projects, namely, DSK Vishwa III amounting to Rs. 1,11,66,314/- and DSK Frangipani amounting to Rs. 39,46,818/-. The claim of the assessee that profits from both the two housing projects were eligible for deduction under section 80-IB(10) of the Act was rejected by the Assessing Officer and the total income in the assessment finalized under section 143(3) of the Act dated 29.12.2006 was determined at Rs. 1,71,14,720/-. The appeal of the assessee before the Commissioner of Income-tax (Appeals) also met with the same fate and accordingly, assessee is in appeal before us.

4. In the above background, the rival parties have made their submissions. The assessee has filed voluminous Paper Book containing details of the two projects and also copies of catalogues, etc., to support its plea that the objections raised by the Revenue are untenable.

5. In this background, we may now take up for discussion the objections raised by the Revenue and the respective stand of the assessee. In so far as DSK Vishwa III project is concerned, the details thereof have been noted by the Assessing Officer at page 12 of the assessment order as well as the salient features have also been tabulated at page 1 of the Paper Book. The said project is stated to be on an area of 171050 sq.mts and consisted of residential buildings and a portion was also earmarked for shops. The project consisted of Phase I, Phase II and Phase III (Varun & Pawan), and as per the details noted by the Assessing Officer Phase I, and II were already constructed and sold out. The project DSK Vishwa Phase III under consideration consisted of 436 flats and 32 shops, the total commercial area being 6132 Sq. ft. as noted by the Assessing Officer. The project is stated to have commenced on 13.10.2000 as noted by the Assessing Officer in terms of commencement certificate No. DPD/7386.new merged Dhayari + Kirkatwadi issued by the Pune Municipal authority. The first and the foremost plea of the Assessing Officer is that as the project in question consisted of area for shops and commercial establishments and, therefore, it could not be considered as a pure housing project so as to be eligible for deduction under section 80-IB(10) of the Act. On this aspect, the Commissioner of Income-tax (Appeals) has not only concurred with the Assessing Officer, but also further noticed that even in terms of clause (d) to section 80-IB(10) of the Act, the assessee was not eligible for deduction envisaged in the said section, inasmuch as the built-up area of shops and commercial establishments included in the project was 6132 Sq. ft. which exceeded the limits prescribed therein. In view of the aforesaid reasons, the Revenue has contended that the assessee is ineligible for the claim of deduction under section 80-IB(10) of the Act in relation to DSK Vishwa III project.

6. On the above aspect, the learned Counsel for the assessee pointed out that reference made to clause (d) of section 80-IB(10) of the Act by the Revenue in order to dis-entitle the assessee is misplaced, inasmuch as the said amendment is placed in section 80-IB(10) of the Act with effect from 1.4.2005 by way of Finance (No. 2) Act, 2004. The plea raised is that prior to its substitution, section 80IB(10) of the Act did not provide for any restriction on the area earmarked for commercial purposes in a housing project. The Legislature has imposed the ceiling of 2000 Sq. ft. or 5% of the total area whichever is less in relation to commercial area only by the Finance (No. 2) Act, 2004 and it has been vehemently pointed out that such restriction cannot be applicable to the projects which have commenced prior to the assessment year 2005-2006, inasmuch as the law as applicable at the time of commencement of such project did not contain such a restriction. Therefore, it is sought to be made out that the condition prescribing for a restriction on commercial area has been wrongly invoked by the authorities in the present case and in fact, it has been canvassed that the Hon'ble Bombay High Court in the case of CIT v. Brahma Associates 333 ITR 289 (Bom) has upheld the proposition that such amended provisions cannot be applied with retrospective effect and that the same would be applicable with effect from 1.4.2005 alone and cannot be applied for the period prior to 1.4.2005 The learned Counsel further pointed out that the case of Brahma Associates (supra) involved assessment year 2003-2004 and the project therein involved commercial area and in this background, it was held that a housing project could be consisting of residential as well as commercial portion and that it was not necessary that the project be purely a residential project as the restriction on the commercial area came up only with effect from 1.4.2005 It was thus held by the Hon'ble High Curt that prior to 1.4.2005, the entire profits of the project were eligible for deduction under section 80-IB(10) of the Act as long as the project qualifies to be called a housing project having regard to approval accorded by the concerned local authority. In this context, it is sought to be made out that the project of the assessee has been accorded sanction by the local authority as a residential cum commercial complex and therefore the deduction is allowable to the assessee.

7. On the other hand, the learned Departmental Representative has defended the stand of the Revenue by pointing out that the phraseology of section 80-IB(10) of the Act shows that the deduction is available only in relation to profits in case of an undertaking developing and building a housing project. According to the learned Departmental Representative, it is inconceivable that the term ‘housing project’ would also include commercial area and, therefore, having regard to the understanding of the expression ‘housing project’, the presence of the commercial area in the instant project would dis-entitle the assessee from deduction under section 80-IB(10) of the Act, even if the amendment to Sec. 80IB(10)(d) of the Act is held to be prospective in nature.

8. We have carefully considered the rival pleas with regard to the presence of commercial area in the housing project DSK Vishwa project III carried out by the assessee. Admittedly, the assessee has commenced development and construction of the DSK Vishwa project III project in terms of the approval by the Pune Municipal Corporation, which is the prescribed ‘local authority’ in this case within the meaning of section 80-IB(10) of the Act. The project consisted of 436 residential flats and 13 shops, entailing commercial area of 6132 sq. ft. It is not disputed that the local authority had approved the project as residential-cum-commercial. It has also been sought to be pointed out by the appellant, as is also emerging from page 1 of the Paper Book, that the proportion of the commercial area to the total area of the project was less than 2%. It is also not in dispute that the project commenced on 13.10.2000 as noted by the Assessing Officer at page 12 of the assessment order and that the same was also completed prior to 31.3.2005 and to be precise the date of completion of the project has been stated as 31.12.2004, as evident from page 1 of the Paper Book filed before us.

9. Now, we may refer to clause (d) to section 80-IB(10) of the Act, which has been inserted by the Finance (No 2) Act, 2004 with effect from 1.4.2005 which reads as under:

“(d) - the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less.”

In terms thereof, the case of the Revenue is that firstly the said amendment, though applicable from 1.4.2005 seeks to show that the meaning of the expression ‘housing project’ has to be understood as a purely residential project not involving any commercial area. Secondly, it is pointed out the commercial area in the case of the assessee is 6132 sq.ft which is more than the permissible area of 2000 sq.ft or 5% whichever is less, prescribed in clause (d) to section 80-IB(10) of the Act.

10. In our considered opinion, the reliance by the Revenue on the provisions of clause (d) to section 80-IB(10) of the Act in the present case is quite misplaced, inasmuch as the said provision has been held to be prospective and not retrospective in nature by the Hon'ble High Court in the case of Brahma Associates (supra) and, therefore, it cannot be applied for the period prior to 1.4.2005 In so far as the plea that for period prior to 1.4.2005 only a pure housing project is eligible for deduction, in our view, the said plea is also misplaced. The Hon'ble Bombay High Court noticed that the expression ‘housing project’ has not been defined under the Act. So, however, having regard to the fact that the phraseology of section 80-IB(10) of the Act refers to ‘housing project’ as approved by local authorities, therefore as per the Hon'ble High Court, a project would qualify to be called a housing project on the basis of the meaning gathered from the rules and regulations framed by the approving local authority. The Hon'ble High Court held that since a local authority could approve a project to be a housing project with or without commercial user, it was therefore the intent of the Legislature that deduction envisaged under section 80-IB(10) of the Act is allowable to all housing projects approved by a local authority without or with commercial user to the extent permitted by the rules of the local authority. The project before the Hon'ble High Court consisted of fifteen residential buildings and two commercial buildings, and local authority had approved the project as “residential cum commercial”. The assessment year before the Hon'ble High Court was prior to 1.4.2005, and after considering clause (d) to section 80- IB(10) of the Act as inserted by the Finance (No. 2) Act, 2004 and which has also been relied by the Revenue before us, the Hon'ble High Court decided the issue in favour of the assessee and held the assessee eligible for deduction u/s. 80IB(10) of the Act. The assessment year before us is also prior to 1.4.2005 and, in our view, having regard to the fact that in the instant case the project in question has been approved by the local authority as a residential cum commercial project, therefore, the same qualifies to be seen in the same manner as seen by the Hon'ble Bombay High Court in the case of Brahma Associates (supra). Therefore, in this view of the matter, the plea of the Revenue for the assessment year 2004-2005 is untenable.

11. Now, we may deal with the Revenue's aforesaid objection with regard to the DSK Vishwa Project III for the A.Y 2005-2006. As per the Revenue, Clause (d) of Sec. 80 IB (10) is inserted w.e.f 1.4.2005 prescribing restriction on the presence of commercial area in a housing project, and as the commercial area in this case, being 6232 Sq.ft, exceeds the restriction contained in 80 IB (10)(d), therefore, for A.Y 2005-2006, the deduction is not allowable. In this context, the issue is as to whether the restriction contained in Sec. 80 IB (10)(d), inserted by the Finance (No. 2) Act, 2004 w.e.f 1.4.2005, can be made applicable to a project wherein the construction commenced prior to 1.4.2005 It has been pointed out that similar controversy was a subject matter of consideration by Pune Bench of the Tribunal in the case of Opel Shelters Pvt. Ltd. (ITA No. 219.PN/09 dated 31.5.2011). The Tribunal considered an earlier decision of the Mumbai Bench of the Tribunal in the case of Hiranandani Akruti JV v. DCIT, ITA No. 5416.Mum/2009 dated 30-3-2010 relating to A.Y 2006-2007 and held that the amended Sec. 80 IB (10)(d) would apply only to projects commencing after 1.4.2005 The primary reason made out is to the effect that when the project commenced, the assessee could not have envisaged that the Legislature would put such a restriction in future. As per the Tribunal, restriction inserted in the statute by Finance (No. 2) Act 2004, w.e.f 01.4.2005 in terms of clause (d) to Sec. 80 IB (10) cannot be applied to the projects which have commenced prior to 01.4.2005 In our considered opinion, the aforesaid proposition laid down by the Tribunal squarely covers the controversy before us. In the case before us, the project in question has commenced prior to 01.4.2005 and also stands completed on 31.12.2004 i.e prior to 31.3.2005, and in this view of the matter, the newly inserted clause (d) to Sec. 80 IB (10) cannot be invoked to dis-entitle the assessee from the claim of deduction u/s. 80 IB (10) of the Act for the A.Y 2005-2006. Therefore, in so far as the project DSK Vishwa - Phase III is concerned, the objections made out by the Revenue for the A.Ys 2004-2005 and 2005-2006 in order to deny the claim of deduction u/s. 80 IB (10) are unfounded and deserve to be negated. We hold so.

12. Now we may take up for discussion the objections raised by the Revenue with regard to the assessee's claim for deduction claimed in relation to profits of the other project, namely, DSK Frangipani. In the A.Y 2004-2005, the assessee claimed deduction in relation to project DSK Frangipani amounting to Rs. 39,46,818/-. In so far as the details of the project are concerned, the same has been noted by the Assessing Oficer at page 14 of the assessment order and the salient features have also been tabulated by the assessee at page 2 of the Paper Book. The solitary objection of the Assessing Officer is that the flats constructed by the assessee do not conform to the condition prescribed in clause (c) to Sec. 80 IB (10) of the Act. As per Assessing Officer built-up area of the flats exceeded the limit prescribed in clause (c) to Sec. 80 IB (10) of the Act in as much as the built up area of individual residential units exceeded 1500 Sq. ft. In coming to such conclusion, the Assessing Officer has differred with assessee on three counts. Firstly, as per Assessing Officer, the area covered by balconies and terraces was includible while calculating the built-up area of the residential units. Secondly, as per the Assessing Officer, the area covered by the car parking provided to occupier of each tenement was also includible for the purpose of calculating built-up area of a residential unit. Thirdly, as per the Assessing Officer, the assessee had combined four flats in each wing into two duplex flat on 11th floor and the area of such combined flats have to be considered. Accordingly, the Assessing Officer has considered the built-up area of such flats by combining the two flats in terms of which the built-up area exceeded 1500 sq. ft. For the above three reasons, as per the Assessing Officer, the residential units of the assessee did not meet with the requirements of clause (c) to Sec. 80 IB (10) of the Act and, therefore, deduction u/s. 80 IB (10) was denied in relation to the project DSK Frangipani. The stand of the Assessing Officer has been affirmed by the CIT(A), against which, the assessee is in appeal before us.

13. Before us, the Ld. Counsel for the assessee referred to pages 13 to 21 of the Paper Book wherein is placed the details of built up area of each and every flat in the project DSK Frangipani. It is sought to be explained that in so far as the flats upto the 10th floor are concerned, the objections relate to the inclusion of balconies and terrace and car parking areas for the purpose of calculating built-up area of the individual residential units. Only in relation to the flats on the 11th floor, the objection related to calculating the built up area after combining two flats each.

14. In this context, the Ld. Counsel pointed out that the project of the assessee commenced prior to 01.4.2005 and the definition of the “built up area” including the area of balconies and the terrace was inserted by Finance (No. 2) Act 2004 only w.e.f 01.4.2005 and therefore, for the purpose of present claim, such areas cannot be includible for calculating ‘built-up area’. In this connection, reliance has been placed on the decision of the Mumbai Bench of the Tribunal in the case of Haware Construction (P) Ltd. v. ITO, 64 DTR (Mumbai) (Trib) 251 and also the decision of the Pune Bench of the Tribunal in the case of Prime Properties (ITA Nos. 887.PN/2010 & Others) dated 26.4.2012 It has been further submitted that prior to 01.4.2005, the ‘built-up area’ had to be calculated as per the relevant Development Control Rules of the local authority and on that basis, the area of balconies and terrace are not includible, and, for this proposition reliance has been placed on the decision of Pune Bench of the Tribunal in the case of Brahma Builders, ITA No. 647 and 649.PN/2009 related to A.Ys 2004-2005 & 2005-2006, order dated 15 May, 2012. In this matter, by referring to the details placed in pages 13 to 21, it is sought to be made out that after excluding the area of balconies and open terrace, the built up area of the residential units upto 10th floor do not exceed 1500 sq. ft.

15. Even with regard to the inclusion of area of car parking, the Ld. Counsel for the assessee referred to the definition of ‘built-up area’ as contained in clause 2.13 of the Development Control Rules, Pune, to justify that the same is not includible while calculating ‘built-up area’ of a unit.

16. With regard to the flats on the 11 floor in each wing which have been combined, the assessee submitted that such flats are considered as separate flats by the Municipal authority, and therefore, their ‘built-up area’ has to be considered individually and not after combining the same. The Ld. Counsel pointed out that even if the plea of the Assessing Officer is to be upheld, the deduction u/s. 80 IB) (10) be granted in respect of the flats upto the 10th floor and it be denied only in relation to the combined flat on the 11th floor and therefore, the claim of deduction cannot be not denied in entirety. For the aforesaid proposition, reliance has been placed on the following decisions:

(1) Ekta Housing Pvt. Ltd., ITA No. 3649.Mum/2009, order dated 20th May 2011

(2) Sanghavi & Joshi, 139 ITD 151, Chennai (TM)

(3) Bengal Housing Development Ltd. v. DCIT, ITA No. 1595.KOL/2005 dated 24.3.2006

17. On the other hand, the Ld. D.R appearing for the Revenue has contested the plea of the assessee by pointing out that the assessee is not entitled to a proportionate deduction, in as much as the project, as a whole, has to be considered and if the condition is not fully complied with, the deduction shall be denied on the entire project.

18. We have carefully considered the rival submissions. In this connection, the first and foremost issue is with regard to the meaning of the expression ‘built up area’ for the purposes of clause (c) to Sec. 80IB(10) of the Act. Sec. 80IB(14)(a) was inserted by the Finance (No. 2) Act, 2004 w.e.f 01.4.2005 prescribing the definition of the expression ‘built up area’. In terms of the said definition, the built up area inter alia, includes the area of projections and balconies. The moot point is as to whether the such definition is applicable in respect of the project in question before us. Admittedly, it is emerging from the orders of the authorities below that the project DSK Frangipani commenced on 12.12.2003 i.e prior to the 01.4.2005 Therefore, Revenue authorities are not justified in including the balconies/open terraces in the calculation of ‘built-up area’ and the definition of ‘built-up area’ in terms of Sec. 80IB(14)(a) of the Act cannot be applied to projects commenced prior to 1.4.2005. The aforesaid proposition is in line with the decision of the Mumbai Bench of the Tribunal in the case of Haware Constructions (Supra) as also the decision of the Pune Bench of the Tribunal in the case of Prime Properties (Supra). Now coming to the issue of inclusion of area of car parking, the Assessing Officer has included the same in the calculation of ‘built-up area’ and such area has been considered by him at 300 Sq. ft. for each of the residential units. As noted by us earlier, the definition of ‘built-up area’ contained in Sec. 80IB(14)(a) of the Act is not applicable in the present case, being a project having commenced prior to 01.4.2005, and therefore for such like projects, it would be in fitness of the things that the expression ‘built up area’ is understood as per the Development Control Rules of the local authority, which has approved such a project. In this connection, clause 2.13 of the Development Control Rules, Pune, defines ‘built-up area’ as under:

“2.13 Built-up Area - Area covered immediately above the plinth level by the building or external area of any upper floor whichever is more excepting the areas covered by rule No. 15.4.2”

Ostensibly, a perusal of above definition shows that an area covered by Rule 15.4.2 is not includible in the meaning of ‘built up area’. The extract of Rule 15.4.2, has been placed in the Paper Book at page 36, and it reflects that a multi storied stilt flooring space constructed under a building is allowed to be used as a parking subject to height restrictions. In terms thereof, it is sought to be made out that the area of car parking is specifically excludible while calculating ‘built-up area’ as per the Development Control Rules and therefore, the Assessing Officer was wrong in considering such area for the purpose of computing ‘built-up area’ of the residential units. A bare perusal of the Development Control Rules, in our view, supports the assertions put forth by the assessee and therefore, the area of car parking is not to be includible for the purposes of computing ‘built-up area’ of residential units in the facts and circumstances of the present case.

19. Now, we may take up for consideration the third objection of the Revenue with regard to the four flats in each wing which have been combined into two duplex flats on 11 floor whereby upon combining the two flats, the area exceeded the limit of 1500 Sq. ft. In this connection, we find that the Assessing Officer has concluded, after carrying out a survey that two adjoining flats were combined into one unit in as much as there was no separate kitchen. Though, the assessee has canvassed that the two flats are considered separate flats by the Municipal authorities, however, the Assessing Officer has asserted that the two flats have been combined by the assessee and thereafter sold. The aforesaid factual finding of the Assessing Officer has not been disproved by the assessee and there is no material to suggest that the flats have been combined by the purchasers. Therefore, in our considered opinion, having regard to the facts and circumstances of the present case, the ‘built-up area’ of the flats have to be considered after combining the two flats each. If it is so done, clearly, the ‘built-up area’ of the combined residential units on the 11 floor, exceeds the prescribed limit of 1500 Sq. ft., thereby, not adhering to the conditions prescribed in Sec. 80IB(10)(c) of the Act.

20. In this background, the alternative plea of the assessee springs up. The plea is that the deduction u/s. 80IB(10) be denied only with respect to the units which do not conform to the condition contained in Sec. 80IB(10)(c) and for the balance eligible residential units, the deduction should be allowed. The Revenue has opposed the said plea on the ground that the assessee is not entitled to a proportionate deduction u/s. 80IB(10) of the Act.

21. On this aspect, we find that the Mumbai Bench of the Tribunal in the case of Ekta Housing Pvt. Ltd. (Supra) has upheld the plea of the assessee for a proportionate deduction u/s. 80IB(10) of the Act where some of the residential units in the project violated the condition contained in Sec. 80IB(10)(c) of the Act. The Mumbai Bench after noticing the precedents in the case of-

i) ITO v. Air Developers, 25 DTR 287 (Nag.);

ii) DCIT v. Brigade Enterprises Pvt. Ltd., 14 DTR 371 (Bang.);

iii) ACIT v. Sheth Developers P. Ltd., 33 SOT 277 (Mum.);

iv) Bengal Ambuja Housing Development Ltd. v. DCIT;

v) SJR Builders v. ACIT, 3 ITR 569 (Mum.)

held that the assessee would not loose the exemption u/s. 80IB(10) in entirety where some of the residential units wings had a ‘built-up area’ in excess of the limit prescribed in clause (c) of Sec. 80IB(10) but, it would be entitled to proportionate deduction u/s. 80IB(10) of the Act with regard to the profits earned on the eligible units.. Particularly, the Tribunal also considered the decision of the Hon'ble 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 & 9 of the order of the Tribunal in the case of Ekta Housing Pvt. Ltd. reads as under:

“viii) We now examine the applicability of the decision of the Hon'ble Bombay High Court in Brahma Associates (supra) to the facts of this case. On a careful reading of this judgment, we find that nowhere it is stated that proportionate deduction should not 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 Hon'ble Jurisdictional High Court. The questions before the Hon'ble Jurisdictional High Court were different and, hence the judgment 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 Hon'ble 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 80IB(10) even if the project had commercial element in excess of 10%. At Paras-27 and 28, the Court observed as follows:—

“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 80IB(10) on the entire project upto 1.4.2005 Once the basic argument of the revenue that the housing projects with commercial user are not entitled to section 80IB(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 80IB(10). As noted earlier, restriction regarding commercial user has been imposed for the first time by introducing clause (d) to section 80IB(10) with effect from 1.4.2005 Therefore, it was not open to the Tribunal to hold that prior to 1.4.2005, projects having commercial user upto 10% of the plot area alone would be eligible for section 80IB(10) deduction.

28. In the present case, though the commercial user is more than 10% of the plot area, the Tribunal has allowed section 80IB(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. In our opinion, that would not be proper, because section 80IB(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 80IB(10) are satisfied, then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a 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 section 80IB(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 80IB(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 to disturb the decision of the Tribunal in restricting the section 80IB(10) deduction only in respect of the profits derived from 15 residential buildings.”

ix) Thus, it could be seen that the Hon'ble 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 alone be entitled to deduction under section 80IB(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 Hon'ble Jurisdictional High Court in Brahma Associates (supra) does not come to the rescue of the Revenue.”

22. Following the aforesaid precedent, we, therefore, hold that merely because the assessee has violated the condition u/s. 80IB(10)(c) in relation to the flats on the 11 floor, the deduction u/s. 80IB(10) cannot be denied in its entirety, but, the denial shall be limited to the profits in respect of the flats on the 11 floor alone. For the balance of the residential units, the plea of the assessee for deduction u/s. 80IB(10) of the Act is justified, and the assessee succeeds on this aspect.

23. With regard to the project DSK Frangipani for the A.Y 2005-2006 also, the facts and circumstances are identical. In this year also, in our considered opinion, our decision in the aforesaid paragraph fully applies. Though in A.Y 2005-2006, the definition of ‘built-up area’ as per Section 80IB(14)(a) was on Statute, but, admittedly, assessee's project was approved and commenced prior to 1.4.2005, therefore, the calculation of ‘built-up area’ shall not be governed by such definition. Therefore, for the A.Y 2005-2006 also, the project DSK Frangipani is eligible for deduction u/s. 80IB(10), albeit on a proportionate basis in respect of the flats whose built up area does not succeed 1500 Sq. ft. as prescribed u/s. 80IB(10)(c) of the Act. In this view of the matter, the order of the CIT(A) for both the years is set aside and the Assessing Officer is directed to re-compute the deduction allowable to the assessee u/s. 80IB(10) of the Act in terms of our above discussions. Resultantly, the appeals of the assessee are partly allowed.

24. In the result, assessee's appeals are partly allowed.