Case Law Details
RELEVANT PARAGRAPH
6.5 In the case of Bengal Ambuja Housing Development Ltd. (supra), the ITAT, Kolkata Bench held as under:
“It is apparent from the perusal of section 80IB(10) that this section has been enacted with a view to provide incentive for businessmen to undertake construction of residential accommodation for smaller residential units and the deduction is intended to be restricted to the profit derived from the construction of smaller units and not from larger residential units. Though the A.O. has denied the claim of the assessee observing that larger units were also constructed by the assessee, at the same time, it is also a fact on record that the assessee had claimed deduction only on account of smaller residential units which were fulfilling all the conditions as contained in section 80IB (10) and the same has not been disputed by the A.O. also. We have also noted down the fact that even the provision as laid down in section 80IB(10) does not speak regarding such denial of deduction in case of profit from a housing complex containing both the smaller and large residential units and since the assessee has only claimed deduction on account of smaller qualifying units by fulfilling all the conditions as laid down under section 80IB(10), the denial of claim by the assessee is on account of rather restricted and narrow interpretation of provisions of clause(c) of section 80IB(10) while coming to such conclusion, we also find support from the order of the Hon ‘ble Supreme Court in case of Bajaj Tempo Ltd. (supra), wherein it was held that provisions should be interpreted liberally and since in the present case also, the assessee by claiming pro-rata income on qualifying units has complied with all the provisions as contained in the said section, in our considered opinion, such claim of the assessee was rightly allowed by the Id. CIT(A) by reversing the order of A. (9).”
6.6 The above decision of the ITAT, Kolkata Bench is also upheld by the Hon’ble ITAT, Kolkata High Court in ITA No. 453 of 2006 wherein the Hon’ble High Court vide order dated 5.1.2007 held as under:
“The appeal is now taken up for hearing and after hearing the learned counsel for the parties and perusing the order passed by the Tribunal, we find that no substantial question of law is involved in this matter. Hence we dismiss the appeal.”
6.7 The ratio of the above decision of the ITAT, Kolkata Bench would be squarely applicable to the case under consideration before us because the facts are identical. Moreover, even if it is held that in view of the above two decisions of the ITAT, two views are possible with regard to interpretation of section 80IB(10). It is a settled law that the view favourable to the assessee should be adopted .Section 80IB(10) is a beneficial provision and it has been held by the Hon’ble Apex Court in the case of Bajaj Tempo Ltd. 196 ITR 188 that a beneficial provision should be interpreted liberally. If an assessee has developed a housing project, wherein the majority of the residential units has a built-up area of less than 1500 sq.ft. i.e., the limit prescribed by section 80IB(10) and only a few residential units are exceeding the built-up area of 1500 sq.ft., there would be no justification to disallow the entire deduction under section 80IB(10). It would be fair and reasonable to allow the deduction on proportionate basis i.e. on the profit derived from the construction of the residential unit which has a built-up area of less than 1500 sq.ft. i.e. the limit prescribed under section 80IB(10). In view of the above, we direct the AO that if he finds that the built-up area of some of the residential units is exceeding 1500 sq.ft., he will allow the proportionate deduction under section 80IB(10). Accordingly, the appeal of the Revenue is dismissed and cross objection of the assessee is deemed to be partly allowed as above.
