Dy. CIT v. Macro Marvel Projects Ltd.

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The Tax Publishers2013 TaxPub(DT) 1174 (Chen-Trib) : (2013) 051 (II) ITCL 0205 : (2013) 140 ITD 0472 : (2013) 154 TTJ 0242 : (2013) 087 DTR 0234 INCOME TAX ACT, 1961 --Deduction under section 80-IB(10)--Development and construction of housing project Independent project vis-a-vis combined single project/unit--Assessee was engaged in business of property development. In return of income it claimed deduction under section 80-IB(10) on fire building projects. However, during course of assessment proceedings it claimed deduction on dwelling units having built up area of less than 1,500 sq.ft. on proportionate basis. In revised claim it was also stated that each building project should be treated as a separate undertaking/project. Assessing officer held that revised claim could not be allowed as it was not claimed through revised return. Further, pro rata claim of dwelling unit having built up area less than 1,500 sq.ft. could not be allowed. Further, in view of revised claim each project was not considered independent project. Commissioner (Appeals) allowed proportionate claim on built up area less than 1,500 sq. ft. Commissioner (Appeals) also held that assessee had furnished revised claim and not a fresh claim. Further, he was also of the view that each project should be treated independent project for computing deduction under section 80-IB(10). *Held:* Partly right. Assessee had entitled to deduction under section 80-IB on dwelling units having built up area not exceeding 1,500 sq.ft. However, there was no evidence to treat each project as independent housing project to allow deduction under section 80-IB(10). Commissioner (Appeals) was justified in considering the revised computation as a valid one for the purpose of claiming deduction under section 80-IB(10). There is a clear finding by the Commissioner (Appeals) that assessee had made a claim under section 80-IB(10) in the-original return itself. This position has not been disputed. Revised computation was filed by the assessee whereby it re-worked the quantum of the claim considering each of the project separately or in other words, by omitting out those projects which resulted in a loss. This, cannot be construed as a fresh claim. Admittedly, assessee had made a claim under section 80-IB(10) in the return of income. Through the revised computation, it had only enhanced the quantum of the claim. There was no fresh claim as such. Therefore, such a revised computation could not have been ignored by the assessing officer. There is no infirmity in the order of the Commissioner (Appeals) in this regard. [Para 11] Vis-a-vis the issue whether assessee could claim deduction under section 80-IB(10) even where some of the dwelling units had built-up area exceeding 1500 sq. ft., it stands clearly answered by the Third Member decision of this Tribunal in the case of Sanghvi & Doshi Enterprise. [Para 12] Accordingly, assessee is entitled for claiming deduction under section 80-IB(10) in respect of those flats having built-up area not exceeding 1500 sq. ft. [Para 12] Assessee admittedly was having only one homogeneous business activity that was construction and selling of flats. No doubt, it was having five projects, but the question is whether each of the projects were forming part and parcel of one unit or part of one industrial undertaking. There is no claim for the assessee that each of these projects were separate and there was no interlacing, interconnection or interdependence. Assessee was only doing housing project development which is a homogeneous business and vis-a-vis the five projects, there was no demarcation of identity, in such a manner that each of the project could be considered as independent units. Section 80-IB(10) clearly specifies that deduction under that sub-section is to be given to an undertaking developing and building housing projects. There is nothing in this sub-section which would require each of the housing projects to be considered by itself as independent undertaking while working out the deduction. No doubt, if an assessee is able to show that each of its projects were independent with no interlacing, interconnection or interdependence, then it might be able to canvass a claim for deduction under section 80-IB(10). Here, there is nothing on record to show that each of the projects were independent, with no interlacing, interconnection or interdependence of various units. The business was a homogeneous one. Therefore, all these projects together had to be considered as a single unit for the purpose of working out deduction under section 80-IB(10) and the methodology adopted by the assessee in the revised computation filed by it, cannot accepted. In the result this question is answered in favour of the revenue. [Para 14] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1174 (Chen-Trib) : (2013) 051 (II) ITCL 0205 : (2013) 140 ITD 0472 : (2013) 154 TTJ 0242 : (2013) 087 DTR 0234

INCOME TAX ACT, 1961

--Deduction under section 80-IB(10)--Development and construction of housing project Independent project vis-a-vis combined single project/unit--Assessee was engaged in business of property development. In return of income it claimed deduction under section 80-IB(10) on fire building projects. However, during course of assessment proceedings it claimed deduction on dwelling units having built up area of less than 1,500 sq.ft. on proportionate basis. In revised claim it was also stated that each building project should be treated as a separate undertaking/project. Assessing officer held that revised claim could not be allowed as it was not claimed through revised return. Further, pro rata claim of dwelling unit having built up area less than 1,500 sq.ft. could not be allowed. Further, in view of revised claim each project was not considered independent project. Commissioner (Appeals) allowed proportionate claim on built up area less than 1,500 sq. ft. Commissioner (Appeals) also held that assessee had furnished revised claim and not a fresh claim. Further, he was also of the view that each project should be treated independent project for computing deduction under section 80-IB(10). Held: Partly right. Assessee had entitled to deduction under section 80-IB on dwelling units having built up area not exceeding 1,500 sq.ft. However, there was no evidence to treat each project as independent housing project to allow deduction under section 80-IB(10).

Commissioner (Appeals) was justified in considering the revised computation as a valid one for the purpose of claiming deduction under section 80-IB(10). There is a clear finding by the Commissioner (Appeals) that assessee had made a claim under section 80-IB(10) in the-original return itself. This position has not been disputed. Revised computation was filed by the assessee whereby it re-worked the quantum of the claim considering each of the project separately or in other words, by omitting out those projects which resulted in a loss. This, cannot be construed as a fresh claim. Admittedly, assessee had made a claim under section 80-IB(10) in the return of income. Through the revised computation, it had only enhanced the quantum of the claim. There was no fresh claim as such. Therefore, such a revised computation could not have been ignored by the assessing officer. There is no infirmity in the order of the Commissioner (Appeals) in this regard. [Para 11] Vis-a-vis the issue whether assessee could claim deduction under section 80-IB(10) even where some of the dwelling units had built-up area exceeding 1500 sq. ft., it stands clearly answered by the Third Member decision of this Tribunal in the case of Sanghvi & Doshi Enterprise. [Para 12] Accordingly, assessee is entitled for claiming deduction under section 80-IB(10) in respect of those flats having built-up area not exceeding 1500 sq. ft. [Para 12] Assessee admittedly was having only one homogeneous business activity that was construction and selling of flats. No doubt, it was having five projects, but the question is whether each of the projects were forming part and parcel of one unit or part of one industrial undertaking. There is no claim for the assessee that each of these projects were separate and there was no interlacing, interconnection or interdependence. Assessee was only doing housing project development which is a homogeneous business and vis-a-vis the five projects, there was no demarcation of identity, in such a manner that each of the project could be considered as independent units. Section 80-IB(10) clearly specifies that deduction under that sub-section is to be given to an undertaking developing and building housing projects. There is nothing in this sub-section which would require each of the housing projects to be considered by itself as independent undertaking while working out the deduction. No doubt, if an assessee is able to show that each of its projects were independent with no interlacing, interconnection or interdependence, then it might be able to canvass a claim for deduction under section 80-IB(10). Here, there is nothing on record to show that each of the projects were independent, with no interlacing, interconnection or interdependence of various units. The business was a homogeneous one. Therefore, all these projects together had to be considered as a single unit for the purpose of working out deduction under section 80-IB(10) and the methodology adopted by the assessee in the revised computation filed by it, cannot accepted. In the result this question is answered in favour of the revenue. [Para 14]