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Sanghvi & Doshi Enterprises, CHENNAI v. ITO, CHENNAI

Income Tax Appellate Tribunal

Feb 26, 2013

Judgment

Subsequent
References

CaseIQ

Smart Summary (Beta)

Concise Analytical Summary of the Tribunal Opinion (Chennai) — dated 26 February 2013

Factual and Procedural Background

The appeals arise from orders of the CIT(Appeals)-XII, Chennai dated 01-08-2012 in relation to assessment years 2007-08 and 2008-09. The assessee is a firm engaged in construction of a housing project named "Vimalachal" at No. 1088, P.H. Road, Vepery, Chennai, developing land owned by M/s. Hotel Mullai Pvt. Ltd. under a joint agreement dated 24-04-2003, whereby landowners were to be compensated per sq.ft. The assessee filed returns claiming deductions under section 80-IB(10) and adopted percentage completion method for multiple years.

The Assessing Officer disallowed the section 80-IB(10) deduction for the years under appeal (and brought entire profits to tax) primarily on three grounds: (i) the assessee was not the land owner, (ii) the assessee was a works contractor within the Explanation to section 80-IB(10), and (iii) some flats exceeded the threshold built-up area of 1500 sq.ft. The assessee appealed to the CIT(Appeals), which allowed the deduction, relying in part on an earlier ITAT decision in the assessee's own case for AYs 2005-06 and 2006-07. The Revenue appealed to the Tribunal; the assessee filed several cross-objections (some delayed, delay condoned).

Legal Issues Presented

Whether the assessee (though not the registered landowner) is eligible for deduction under section 80-IB(10) as a developer/builder (i.e., whether it is more than a mere works contractor).
Whether flats whose built-up area exceeds 1500 sq.ft. are eligible for deduction under section 80-IB(10), and if not, how to calculate proportionate deduction for the project.
Whether private/open terrace area should be included in built-up area for the 1500 sq.ft. threshold.
Whether project completion certificates dated before 31 March 2008 can be treated as relating back for purposes of eligibility under section 80-IB(10).
Whether commercial area exceeding 2000 sq.ft. in the project is excluded from deduction under section 80-IB(10), and how the commercial area should be measured.
Whether the delay in filing the assessee's cross-objections (23 days) should be condoned.

Arguments of the Parties

Assessee's Arguments

The assessee contended it conceived the housing project, obtained necessary approvals, invested its own funds, bore the construction risk and enjoyed sale proceeds — therefore it was the real developer/builder and eligible for deduction under section 80-IB(10), notwithstanding that land title remained in the name of Hotel Mullai Pvt. Ltd.
The assessee relied on earlier favorable decisions in its own case for AYs 2005-06 and 2006-07 (ITA Nos. 259–263/Mds/2010) as well as on decisions of the jurisdictional High Court (CIT v. M/s. Sanghvi And Doshi Enterprises and Income Tax v. Mahalakshmi Housing) to support entitlement and related points (e.g., treatment of terrace area).
Where issue was raised on built-up area measurement, the assessee proposed measurement as directed earlier by the ITAT (departmental valuer in presence of the assessee's approved valuer) and that deduction should be allowed proportionately based on flats not exceeding 1500 sq.ft.
Regarding cross-objections, the assessee explained delay (23 days) by affidavit saying papers were misplaced at its Chartered Accountant's office and asked for condonation; the assessee did not press certain grounds (ground 1 in cross-objections).

Revenue's / Department's Arguments

The Assessing Officer's case (as advanced before the Tribunal) was that the assessee was not the landowner, was only a works contractor within the Explanation to section 80-IB(10), and some flats exceeded 1500 sq.ft., thus disallowing section 80-IB(10) deductions.
At the Tribunal hearing the learned DR (Departmental Representative) fairly conceded that the issues were covered in favour of the assessee by the earlier Tribunal and High Court decisions on identical facts.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
ITA Nos. 259–263/Mds/2010 (Hon'ble ITAT, Third Member Bench, Chennai) — order dated 17-06-2011 (assessee's own case)	Held that the assessees were builders/developers and hence eligible for deduction under section 80-IB(10); held that where purchasers combine two flats (exceeding 1500 sq.ft.) it could still comply with section 80-IB(10) requirements for the remaining flats; directed measurement of flats by departmental valuer in presence of assessee's valuer; held private terrace area should be included in built-up area for threshold computation; project completion certificates could relate back in certain circumstances.	The Tribunal bench in the present matter treated the ITAT decision in the assessee's own case as squarely applicable to AYs 2007-08 and 2008-09 (same project and facts) and directed that the Assessing Officer grant deduction under section 80-IB(10) accordingly, including following ITAT directions on measurement and proportionate allowance.
CIT v. M/s. Sanghvi And Doshi Enterprises — Tax Case (Appeal) Nos. 581 & 582 of 2011 and 314 & 315 of 2012 — High Court order dated 01-11-2012	The jurisdictional High Court upheld the Tribunal's order in the assessee's own case (confirming the Tribunal view in favour of assessee on eligibility and related points for earlier assessment years).	The Tribunal in the present opinion respectfully followed the High Court's confirmation of the ITAT decision and dismissed Revenue's grounds that were identical to those decided earlier (i.e., the assessee is eligible for deduction under s.80-IB(10) on these facts).
Income Tax v. Mahalakshmi Housing — Tax Case (Appeals) Nos. 583 & 584 of 2011 and 316 & 317 of 2012 — High Court order dated 02-11-2012	The jurisdictional High Court held that an open terrace cannot be part of the built-up area for the purpose of the 1500 sq.ft. threshold under section 80-IB(10).	The Tribunal directed the Assessing Officer to follow Mahalakshmi Housing and decide the terrace inclusion issue accordingly (i.e., do not include open/private terrace as part of built-up area where High Court so held).

Court's Reasoning and Analysis

The Tribunal's reasoning proceeds from fact identity and precedent. Key steps in its analysis (as expressly recorded) are:

Identity of facts: The Tribunal observed that the present assessment years (2007-08 and 2008-09) involve the same housing project and the same factual matrix as earlier years (AYs 2005-06 and 2006-07) in which the ITAT had already held the assessee eligible for deduction under section 80-IB(10). Because the project continued across years, the earlier decision applied squarely.
Precedential binding (or persuasive) effect: The Tribunal noted that the earlier ITAT decision was confirmed by the jurisdictional High Court in CIT v. M/s. Sanghvi And Doshi Enterprises. The combination of the Tribunal's own previous order and the High Court confirmation meant the Tribunal found no infirmity in the CIT(Appeals) allowing deduction.
Concession by Department: The learned DR conceded that the issue was covered in favour of the assessee, reinforcing the Tribunal's view that the CIT(Appeals) order should be sustained.
Flats exceeding 1500 sq.ft.: The Tribunal accepted the approach taken in the assessee's earlier case: income relating to flats exceeding the 1500 sq.ft. built-up area threshold is to be excluded from eligible profits; deduction should be allowed proportionately for flats not exceeding 1500 sq.ft. The CIT(A) had prescribed a formula to compute the proportionate deduction (ratio of total income of project during the FY attributable to flats with built-up area ≤1500 sq.ft. to total built-up area of all flats including those >1500 sq.ft.); the Tribunal directed the Assessing Officer to apply this approach.
Measurement directions: Where there is a dispute about whether particular flats exceed 1500 sq.ft., the Tribunal's earlier direction (in the assessee's own case) to measure flats by a departmental valuer in the presence of the assessee's registered valuer was accepted and adopted for the present years. The Tribunal therefore directed re-measurement as necessary and to adopt the same measurements for current years.
Terrace treatment: There were conflicting strands (the earlier ITAT's observation that private terrace area should be included vs. the High Court decision in Mahalakshmi Housing that open terrace cannot be part of built-up area). For the cross-objection issues, the Tribunal directed the Assessing Officer to follow the jurisdictional High Court decision in Mahalakshmi Housing and decide terrace inclusion accordingly.
Project completion certificates: The Tribunal noted that the jurisdictional High Court in Sanghvi & Doshi had decided the completion certificate point in favour of the assessee; the Tribunal confirmed the CIT(A)'s action in allowing deduction on that score.
Commercial area >2000 sq.ft.: The Tribunal observed that the issue had previously been remitted (in earlier proceedings) for measurement and decision in accordance with law; because the commercial area was the same project area, the Assessing Officer was directed to measure the commercial area and decide the issue (the Tribunal left the actual verification to the AO as per earlier directions).
Condonation of delay: For cross-objections delayed by 23 days, the Tribunal examined the affidavit explanation (misplaced papers at Chartered Accountant's office) and found the delay neither wanton nor intentional; accordingly, it exercised discretion to condone delay and admit the cross-objections.

Holding and Implications

Holding (core rulings):

The appeals filed by the Revenue in ITA Nos. 2176 & 2177/Mds/2012 are dismissed.
The appeals filed by the Revenue in ITA Nos. 2178 & 2179/Mds/2012 are partly allowed for statistical purposes (see directions on measurement of commercial area and confirmation on other points).
The appeals filed by the Revenue in ITA Nos. 2180 & 2181/Mds/2012 are dismissed.
The cross-objections filed by the assessees in C.O. Nos. 21 to 26/Mds/2013 are partly allowed for statistical purposes; delays in filing the cross-objections (23 days) are condoned where applicable.

Immediate consequences and directions:

The Assessing Officer is directed to grant the benefit of deduction under section 80-IB(10) to the assessee for the assessment years under consideration, in line with the earlier ITAT decision and the High Court confirmation.
Where certain flats reportedly exceed 1500 sq.ft., the AO must measure the flats (as per the earlier ITAT direction: departmental valuer in presence of the assessee's approved valuer) and exclude incomes attributable to flats exceeding 1500 sq.ft., allowing deduction proportionately for flats not exceeding 1500 sq.ft., using the formula indicated by the CIT(A).
On the terrace issue, the AO is directed to follow the jurisdictional High Court decision in Income Tax v. Mahalakshmi Housing (open terrace not part of built-up area) when deciding whether terrace areas are includible in built-up area calculations.
The AO is directed to verify and measure the commercial area where required (as remitted earlier) and decide entitlement in accordance with law; the Tribunal left verification to the AO where fact-sensitive measurement is needed.

The Tribunal's order primarily applies existing decisions in the assessee's own case and jurisdictional High Court rulings to the facts before it; the Tribunal did not purport to create new binding precedent but followed and applied prior decisions to resolve the disputes.

Show all summary ...

PER BENCH : These appeals by the Revenue and the cross objections by the assessees are directed against the orders of the CIT(Appeals)-XII, Chennai dated 01-08-2012 and relate to the assessment years 2007-08 and 2008-09. As common issues are involved in these appeals and the cross objections, they were heard together and are being disposed of by this common order for the sake of convenience.

2. ITA Nos. 2176 & 2177/Mds/2012: Ground No. 1 is general in nature and requires no adjudication. Grounds 2.1 to 2.4 relate to deduction under section 80-IB(10) of the Income Tax Act, 1961 ('the Act' for short).

3. Facts in brief are that the assessee in these appeals is a firm and filed returns of income for the assessment years 2007-08 and 2008-09 on 31-10-2007 and 30-09-2008 admitting total income of ` 73,370/- and ` 1,19,665/- respectively after claiming deduction under section 80-IB(10) of the Act. The Assessing Officer completed the assessment u/s 143(3) of the Act disallowing the claim of the assessee ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 4 : under section 80-IB(10) of the Act and brought the entire profits to tax. The assessee firm is engaged in the construction of housing project. The assessee was carrying on a housing project named Vimalachal at No. 1088, P.H. Road, Vepery, Chennai-7. The housing project is being developed on the land owned by M/s. Hotel Mullai Pvt. Ltd. by entering into a joint agreement in the financial year 2003-04, on 24-04- 2003. According to the agreement the land owners were to be compensated at the rate of ` 600/- per sq.ft of super built up area. The assessee undertook the development of the housing project and claimed deduction under section 80-IB(10) of the Act in the assessment years 2005-06, 2006-07, 2007-08, 2008-

09 and so on, on percentage completion method. The Assessing Officer rejected the claim of deduction under section 80-IB(10) of the Act on the ground that (i) the assessee is not the owner of the land, (ii) the assessee is only a works contractor covered by the Explanation to section 80-IB(10) and

(iii) some of the flats have exceeded the basic threshold limit of 1500 s.ft.

4. On being aggrieved, the assessee carried the matter before the CIT(Appeals). It was submitted before the ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 5 : CIT(Appeals) that even the land in the name of M/s. Hotel Mullai Pvt. Ltd. the assessee firm conceived the project, obtained all necessary approvals, invested its own money and constructed the buildings and therefore submitted that it is eligible for the deduction under section 80-IB(10) of the Act. It was further submitted before the CIT(Appeals) that the assessee is not a mere works contractor. The assessee conceived the housing project, obtained all the permits, invested the necessary funds for the construction activity bearing all risks and enjoyed the sale consideration of the flats. Therefore it was submitted that the assessee is the real developer and builder of the housing project and eligible for the deduction under section 80-IB(10) of the Act. It was submitted before the CIT(Appeals) that in respect of the same project for the assessment years 2005-06, 2006-07 the Assessing Officer had disallowed the claim but the Tribunal ultimately allowed the deduction to the assessee u/s. 80- IB(10) of the Act. Therefore the same may be followed and the claim may be allowed for this year also. The CIT(Appeals) after considering the submissions of the assessee allowed the ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 6 : deduction u/s 80-IB(10) to the assessee by observing as under: I have considered the submissions of the assessee. The main contentions of the Assessing Officer before disallowing the assessees claim of deduction u/s 80IB(10) were that the assessee is not the owner of the land, the assessee acted as a mere works contractor and also some of the flats exceeded the threshold limit of 1500 sq.ft. As claimed by the assessee, the assessees housing project, on which it has claimed deduction u/s 80-IB(10) of the Act, commenced in the financial year 2003-04, relevant to the A.Y.2005-06. Since A.Y. 2005-06, the assessee has been claiming the deduction u/s 80-IB(10) of the Act on this project on percentage completion basis. In the assessments of A.Ys. 2005-06 and 2006-07, the Assessing Officer disallowed the assessees claim of deduction u/s 80-IB(10) of the Act, on the ground that (a) The assessee is not the owner of the land. (b) The assessee is only a works contractor covered by the Explanation to section 80-IB(10). (c) Some of the flats have exceeded the basic threshold limit of 1500 sq.ft. On appeal the Honble ITAT (Third Member Bench), Chennai, vide its combined order in the case of assessee and its two sister concerns having identical facts) in ITA Nos. 259 to 263/Mds/2010 dated 17.06.2011, held that the assessee is eligible for deduction u/s 80-IB(10) of the Act. The gistu of the order is:

(i) Assessees were builders/developers and therefore eligible for deduction u/s 80-IB(10).

(ii) Even where the purchasers of the flats combined two flats together thereby exceeding the limit of built-up area of 1500 sq.ft., it could still be considered as proper compliance of the stipulation provided in section 80-IB(10) that the built-up area should not exceed 1500 sq.ft. and hence, assessees are eligible for deduction under section 80-IB(10).

(iii) Even though the assessee had furnished project completion certificates which are dated before 31st March 2008, these certificates related back to the date on which ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 7 : the applications for such certificates were made by the assessees and therefore, assessees are eligible for deduction under section 80-IB(10).

(iv) In so far as the issue whether built-up area of certain flats measuring more than 1500 sq.ft. is concerned, it is restored to the files of the Assessing Officer with a direction to measure a flat in the presence of DVO as well as Registered Valuation Officer appointed by the assessee.

(v) Private terrace area should be included in the built up area of the flats for the purpose of working out statutory extent of the built-up area; and

(vi) Based on majority view, deduction should be allowed to the assessees under Section 80IB(10) in respect of flat having built-up area not exceeding 1500 sq.ft. are not entitled for deduction in respect of these flats having built- up area exceeding 1500 sq.ft. The facts of the current assessment years (i.e. A.Ys 2007-08 and 2008- 09) under consideration are exactly the same and identical to those of A.Ys. 2005-06 and 2006-07, where the ITAT held that the assessee is eligible for deduction u/s 890-IB(10) of the Act. In fact, it is the same housing project, which is continuing from the A.Y. 2005-06 to till the current assessment years. Hence the above decision of ITAT for A.Ys. 2005-06 and 2006-07 is squarely applicable for the current assessment years (i.e. A.Ys. 2007-08 and 2008-09) under consideration also. Like the earlier A.Ys. 2005-06 and 2006-07, the assessee, during the financial years relevant to the current assessment years also, received and accounted the sale consideration of the flats of the housing project, in its P&L account, offered the income in its hands and claimed deduction u/s 80-IB(10) of the Act. In view of the decision of the ITAT in assessees own case, the Assessing Officers action in treating the assessee as a mere works contractor and rejecting the claim of deduction u/s 80-IB(10) of the Act is not justified. The Assessing Officer is, therefore, directed to grant the benefit of deduction u/s 80-IB(10) of the Act to the assessee. The assessee succeeds in its appeals in this regard. ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 8 :

5. The Revenue has carried the matter in appeal before the Tribunal. At the time of hearing the learned counsel for the assessee submitted that the issue is covered in favour of the assessee for the assessment years 2005-06 and 2006-07 and even the matter traveled to the jurisdictional Honble High Court and the Honble jurisdictional High Court has upheld the order of the Tribunal and decided the issue in favour of the assessee in Tax Case (Appeal) Nos. 581 & 582 of 2011 and

314 & 315 of 2012 and M.P. No. 1 of 2011 by order dated 01- 11-2012 in the case of CIT v. M/s. Sanghvi And Doshi Enterprises.

6. On the other hand, the learned DR fairly conceded that the issue is covered in favour of the assessee.

7. We have heard both the sides, perused the records and gone through the orders of the authorities below. We find that the Tribunal on similar facts has confirmed the order of the CIT(Appeals). The matter was taken before the Honble jurisdictional High Court and the Honble jurisdictional High Court confirmed the view taken by the Tribunal. Therefore, respectfully following the decision of the co-ordinate Bench of this Tribunal as well as the decision of the Honble jurisdictional High Court, we find no infirmity in the order ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 9 : passed by the CIT(Appeals). These grounds of appeal raised by the Revenue are dismissed.

8. Grounds 2.5. 2.6 and 3 relating to exceeding the built up area of 1500 sq.ft. are concerned, the Assessing Officer has denied the claim of the assessee on the ground that the built up area is more than 1500 s.ft. On appeal, the CIT(Appeals) allowed the claim of the assessee by observing as under : Regarding the flats exceeding the built-up area of 1500 sq.ft. each, the Honble ITAT, in assessees own case for the earlier years, held that income relating the said flats (whose built-up area is more than 1500 sq.ft.) is to be excluded from the eligible profits of the business for the purpose of deduction u/s 80- IB(10) of the Act. In other words, the deduction u/s 80-IB(10) of the Act is available proportionate to the flats whose built-up area is not more that 1500 sq.ft. each. Hence the Assessing Officer is directed to allow the deduction u/s.80-IB(10) of the Act proportionate to the total built-up area of all the flats whose built-up area is not more that 1500 sq.ft. each, by using the following formula: ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 10 : Total income of the Total built-up area of all the flats Project during the x whose built up area is not more Financial year that 1500 sq.ft. each _________________________ Total built-up area of all the flats of the project (including the flats with Built-up area > 1500 sq.ft. Further, while determining the built-up area of the flats, wherever exclusive rights in the terrace are assigned/given to any a flat owner, the such area of the terrace is to be treated as projection and included in the built-up area of the flats. It is also important to mention here that the Honble ITAT in the assessees own case (in A.Ys. 2005-06 and 2006-07), directed the Assessing Officer to get the flats measured by the departmental valuer in the presence of the assessees approved valuer and determine the built up area of the flats, wherever the revenue feels that the flats exceeded the threshold limits 1500 sq.ft. Since it is the same project (with the same flats) which is continuing in the current assessment years 2007-08 and 2008-09 also, the Assessing Officer is required to adopt the same measurements of the flats (i.e. to be measured as per the directions of the ITAT) for the purpose of deciding flats exceeding 1500 sq.ft. and the total built-up area of the flats exceeding the 1500 sq.ft. for the purpose of allowing the proportionate allowance/disallowance of deduction ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 11 : u/s 80-IB(10) of the Act, for the A.Ys. 2007-08 and 2008-09 also.

9. On being aggrieved, the Revenue has carried the matter before the Tribunal. At the time of hearing, the learned counsel for the assessee submitted that the issue is covered by the decision of the jurisdictional High Court in the case of CIT v. Sanghvi And Doshi Enterprises (supra).

10. On the other hand, the learned DR fairly conceded that the issue is covered.

11. We have heard both the sides, perused the records and gone through the orders of the authorities below. The CIT(Appeals) by following the decision in the assessees own case for the assessment years 2005-06 and 2006-07 directed the Assessing Officer to get the flats measured by the Departmental Valuer and thereafter directed to proportionately allow deduction u/s 80IB(10) of the Act for assessment years 2007-08 and 2008-09 also. In view of the decision of the co- ordinate Bench of this Tribunal in the assessees own case and also the decision of the Honble jurisdictional High Court in the ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 12 : assessees own case, these grounds of appeal raised by the Revenue are dismissed.

12. In the result, both the appeals filed by the Revenue in ITA Nos.2176 & 2177/Mds/2012 are dismissed.

13. C.O. Nos. 21 & 22/Mds/2013: There is a delay of 23 days in filing the cross objections by the assessee. One of the partners of the assessee, Shri Pravin Kumar Jain has filed an affidavit wherein he has explained that the delay had occurred as the papers were misplaced in the office of the Chartered Accountant of the assessee and that the delay was neither wanton nor intentional. After considering the explanation of the assessee, we find that this is a fit case to condone the delay in filing the cross objections. Accordingly we condone the delay and admit the cross objections of the assessee.

14. In the cross objection, ground 1 is not pressed. Therefore, the same is dismissed as not pressed.

15. Insofar as grounds 2, 3 and 4 are concerned, the learned counsel for the assessee submitted that the private terrace would not form part of the built-up area of the flats and submitted that the issue is covered by the decision of the ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 13 : jurisdictional High Court in the case of Income Tax v. Mahalakshmi Housing dated 02-11-2012 in Tax Case (Appeals) Nos. 583 & 584 of 2011 and 316 & 317 of 2012, wherein the Honble jurisdictional High Court has held that open terrace cannot be part of the built-up area. Therefore, the assessee was held to be entitled to the deduction u/s 80-IB(10) of the Act.

16. The learned DR on the other hand has fairly conceded that the issue is covered by the aforementioned decision of the Honble jurisdictional High Court.

17. We have heard both the sides, perused the records and gone through the orders of the authorities below. In view of the decision of the jurisdictional High Court in the case of CIT

v. Mahalakshmi Housing (supra), we direct the Assessing Officer to follow the said decision and decide the issue accordingly.

18. In the result, the cross objections filed by the assessee are partly allowed for statistical purposes.

19. ITA Nos. 2178 & 2179/Mdss/2012: Ground No.1 raised by the Revenue is general in nature and requires no adjudication. ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 14 :

20. Ground Nos. 2.1 to 2.4 relate to the claim of deduction under section 80-IB(1) of the Act. For the reasons given by us while dealing with ITA Nos. 2176 & 2177/Mds/2012 (supra), the grounds raised by the Revenue are dismissed and the appeals of the Revenue stand dismissed.

21. Ground No. 2.5 is regarding proportionate deduction for flats having maximum area of 1500 sq.ft. We have dealt with this issue in the preceding paragraphs while dealing with the appeals in ITA Nos. 2176 & 2177/Mds/2012. For the reasons stated therein, this ground of appeal raised by the Revenue is dismissed.

22. So far as ground No. 2.6 is concerned, it relates to the commercial area of the project. In the assessment order the Assessing Officer has observed that the commercial area exceeding 2000 sq.ft. in the project is not eligible for claiming deduction u/s 80-IB(10) of the Act. The CIT(Appeals) in his order has observed that similar issue came up before the Assessing Officer in the assessees own case for the assessment year 2005-06, where the Assessing Officer has observed that commercial area in the project exceeded the threshold limit of 2000 sq.ft. and hence not eligible for ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 15 : deduction u/s 80-IB(10) of the Act. The Tribunal vide its order in ITA Nos. 259 to 263/Mds/2010 dated 17-06-2011 set aside the issue of measuring the area of the commercial area and decide the issue in accordance with law (as held at para

33 of the said order), which is as under :

33. In the assessment year 2006-07, there is one more issue which pertains to the area of commercial part constructed by the assessee. On perusal of the order of the CIT(A), it appears that the assessee is not agreeing with the manner in which the department has computed the area. Therefore, the matter is restored to the file of the Assessing Officer for the limited purpose of measuring the commercial area and decide about the deduction in accordance with law. The CIT(Appeals) held that since it is the same project (with the same commercial area)which is continuing in the current assessment years 2007-08 and 2008-09 also, the Assessing Officer was required to adopt the same measurements of the commercial area (i.e. measured as per the directions of the Tribunal) for the purpose of deciding the commercial area for the purpose of allowing or disallowing the deduction u/s 80- IB(10) of the Act, in the present assessment years 2007-08 and 2008-09 as well as contained in the directions of the Tribunal in the above order.

23. At the time of hearing the learned counsel for the assessee submitted that as directed by the CIT(Appeals) the ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 16 : Assessing Officer may verify the same and decide accordingly as directed by the CIT(Appeals). However, he submitted that commercial area is not exceeding 2000 s.ft. On the other hand, the learned DR had no objection if the matter is being sent back for verification as directed by the CIT(Appeals).

24. We have heard both the sides, perused the records and gone through the orders of the authorities below. When the similar issue came up before the Tribunal for the assessment year 2006-07 the Tribunal directed the Assessing Officer to measure the commercial area and decide the matter in accordance with law. The learned counsel for the assessee himself has submitted that the commercial area is not exceeding 2000 sq.ft. However, he submitted that the same may be examined by the Assessing Officer. The learned DR has also no objection in this regard. We, therefore, direct the Assessing Officer to measure the commercial area and calculate the deduction as per law. Accordingly, this ground of appeal raised by the Revenue is partly allowed for statistical purposes.

25. In respect of the grounds relating to the completion certificate, the issue has been decided by the Honble ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 17 : jurisdictional High Court in the case of CIT v. M/s. Sanghvi And Doshi Enterprises vide order dated 01-11-2012 (supra) and the order of the Tribunal allowing the claim in this regard was confirmed. Accordingly, we confirm the order passed by the CIT(Appeals) in this regard.

26. In the result, both the appeals in ITA Nos. 2178 & 2179/Mds/2012 are partly allowed for statistical purposes.

27. C.O. Nos. 23 & 24/Mds/2013: There is a delay of 23 days in filing the cross objections by the assessee. One of the partners of the assessee, Shri Pravin Kumar Jain, has filed an affidavit wherein he has explained that the delay had occurred as the papers were misplaced in the office of the Chartered Accountant of the assessee and that the delay was neither wanton nor intentional. After considering the explanation of the assessee, we find that this is a fit case to condone the delay in filing the cross objections. Accordingly we condone the delay and admit the cross objections of the assessee.

28. In the cross objection, ground 1 is not pressed. Therefore, the same is dismissed as not pressed. ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 18 :

29. We have already dealt with similar grounds 2, 3 & 4 in the cross objections filed by the assessee in C.O. Nos. 21 & 22/Mds/2013 (supra) and for the reasons given in those cross objections vide paragraphs 15 to 17 above, the cross objections filed by the assessee are partly allowed for statistical purposes.

30. In the result, the cross objections filed by the assessee are partly allowed for statistical purposes.

31. ITA Nos. 2180 & 2181/Mds/2012: Ground No.1 raised by the Revenue is general in nature and requires no adjudication.

32. Ground Nos. 2.1 to 2.4 relate to the claim of deduction under section 80-IB(1) of the Act. For the reasons given by us while dealing with ITA Nos. 2176 & 2177/Mds/2012 (supra), the grounds raised by the Revenue are dismissed and the appeals of the Revenue stand dismissed.

33. Ground No. 2.5 is regarding proportionate deduction for flats having maximum area of 1500 sq.ft. We have dealt with this issue in the preceding paragraphs while dealing with the appeals in ITA Nos. 2176 & 2177/Mds/2012. For the reasons ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 19 : stated therein, this ground of appeal raised by the Revenue is dismissed.

34. In respect of the grounds relating to completion certificate, we have already dealt with this issue above and for the reasons given in paragraph 23 (supra) while dealing with ITA Nos. 2178 & 2179/Mds/2012, we have confirmed the order passed by the CIT(Appeals). Therefore, these grounds raised by the assessee are dismissed.

35. In the result, the Revenues appeals in ITA Nos. 2180 & 2181/Mds/2012 are dismissed.

36. C.O. Nos. 25 & 26/Mds/2013: There is a delay of 23 days in filing the cross objections by the assessee. One of the partners of the assessee, Shri Pravin Kumar Jain, has filed an affidavit wherein he has explained that the delay had occurred as the papers were misplaced in the office of the Chartered Accountant of the assessee and that the delay was neither wanton nor intentional. After considering the explanation of the assessee, we find that this is a fit case to condone the delay in filing the cross objections. Accordingly we condone the delay and admit the cross objections of the assessee. ITA Nos. 2176- 2181/Mds/2012 & C.O. Nos. 21-26/Mds/2013 : 20 :

37. In the cross objection, ground 1 is not pressed. Therefore, the same is dismissed as not pressed.

38. We have already dealt with similar grounds 2, 3 & 4 in the cross objections filed by the assessee in C.O. Nos. 21 & 22/Mds/2013 (supra) and for the reasons given in those cross objections vide paragraphs 15 to 17 above, the cross objections filed by the assessee are partly allowed for statistical purposes.

39. In the result, the Revenues appeals in ITA Nos. 2176 & 2177/Mds/2012 are dismissed, in ITA Nos. 2178 & 2179/Mds/2012 are partly allowed for statistical purposes and in ITA Nos. 2180 & 2181/Mds/2012 are dismissed. The cross objections filed by the assessees in C.O. Nos. 21 to 26/Mds/2013 are partly allowed for statistical purposes. Order pronounced on Tuesday, the 26th of February, 2013, at Chennai. Sd/- Sd/- (Abraham P. George) (V.Durga Rao) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated the 26th February, 2013. Copy to: Assessees/AO/CIT(A)/CIT/D.R./Guard file

Sanghvi &amp; Doshi Enterprises, CHENNAI v. ITO, CHENNAI

CO 22/CHNY/2013,CO 21/CHNY/2013