TaxTMI 
TaxTMI 
2004 (8) TMI 370
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.... projects. The old project was at Adityanagar and had also started a new project styled as 'Nirmiti Vihar' The assessee has maintained separate books of account in respect of both the projects. During the assessment year under consideration, the assessee-firm had claimed deduction under s. 80-IB(10) of the IT Act, 1961, in respect of its project known as Nirmiti Vihar. The total claim was at Rs. 4,40,049. During the course of assessment proceedings, the assessee submitted that it had fulfilled all the conditions laid down under s. 80-IB(10) of the Act in respect of total land area, constructed area, area of each residential unit and that the project has started after the specified date, i.e., 1st Oct., 1998. The assessee claimed that the project work was started after opening a separate bank account in respect of Nirmiti Vihar on 29th Oct., 1998, and the assessee had intimated the AO vide its letter dt. 11th Nov., 1999, regarding its intention to avail the deduction. It was also claimed by the assessee that various expenditures on this project were incurred after 29th Oct., 1998, i.e. after opening separate bank account. Accordingly, it was contended by the assessee before ....
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....1,140, it was submitted by the assessee that the same was incurred for Pooja expenses. It was also brought to the notice of the CIT(A) by the assessee that the development right agreement and irrevocable power of attorney were entered into for having the possession of the said property for developing and constructing the same in future. It was also submitted by the assessee that the said land was agricultural land and it was, therefore, necessary to convert the said land into non-agricultural land and for that purpose, it was necessary to secure preliminary sanction from the Solapur Municipal Corporation. It was also stated that the preliminary sanction was required to be given which constituted 'no objection' from Solapur Municipal Corporation for allowing the assessee to have the construction on the said property. It was also contended that on the basis of preliminary sanction, the assessee made an application for converting the said land into non-agricultural land. This application was made on 25th Nov., 1998, and the Revenue authorities converted the said agricultural land into non-agricultural land on 13th June, 1999. It was also brought to the notice of the CIT(A) by ....
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....e expenses were part of work in progress of Nirmiti Vihar and the work had already commenced in 1998. According to him, the development is a series of process, right from acquisition of land for development, including layout, work of architect, permission to construct,, necessary permission from various authorities and then the physical activity of construction after all the paraphernalia has been gone through. He also took the view that the development invariably includes procuring the land for development, making layout of the land for development for construction, submitting the layout along with application to the municipal corporation for its approval. He further observed that provisions of s. 80-IB(10) have been introduced to attract new housing project and not which were commenced earlier. In view of the above, the learned CIT(A) held that the development of the project had commenced before 1st Oct., 1998. According to him, the development agreement, irrevocable power of attorney, making of layout plan for the project, expenditure on land revenue charges, submission of application for sanction to the Solapur Municipal Corporation along with the layout plan and the sanctio....
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....espectively. The learned counsel for the assessee also submitted that the expenditure on land revenue charges were incurred after 1st Oct., 1998, and, therefore, the CIT(A) was not justified in stating that these expenses were incurred prior to 1st Oct., 1998. Similarly, the actual sanction for construction was accorded by the Solapur Municipal Corporation after 1st Oct., 1998. However, preliminary permission given before 1st Oct., 1998, i.e., on 11th Aug., 1998, was obtained since it was required for N.A. permission. In view of the above, Shri K.A. Sathe, the learned counsel for the assessee, submitted that the order of the CIT(A) is not based on correct appreciation of the facts and, therefore, deserves to be quashed and the claim of the assessee may be allowed. 7. Shri M.M. Srivastava, the learned Departmental Representative, heavily relied on the orders of the authorities below. He further submitted that the order of the learned CIT(A) is based on correct appreciation of the facts and, therefore, no interference is required. 8. We have carefully considered the rival submissions land have also perused the orders of the authorities below. It is an admitted fact that the ....
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....rea of one acre; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place." 9. The deduction under s. 80-IB(10) was admissible to those undertakings which commenced the development and construction of housing project on or after 1st Oct., 1998. In the instant case, it is the contention of the assessee that the development and construction of housing project was commenced after 1st Oct., 1998. However, the Department took the stand that in this case the development commenced with the development agreement and acquiring irrevocable power of attorney and more so, when layouts were furnished to the Solapur Municipal Corporation for preliminary sanction on 6th June, 1998. As per sub-s. 7 of s. 2 of the Maharashtra Regional and Town Planning Act, 1966 (1966: Mah. XXXVII), the expression 'development' with its grammatical variations means the carrying out of buildings, engineering, mining or other operations in, or over, or unde....
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...., apply to the Collector for permission in accordance with the form prescribed." 10. Sec. 45 of the Maharashtra Land Revenue Code, 1966, provides for penalty for using the land without permission. In the instant case, the N.A. permission was obtained on 13th June, 1999. Admittedly, the application for N.A. permission was submitted to the Collector, Solapur, on 25th Nov., 1998. This fact alone shows that the assessee had commenced the development and construction after 1st Oct., 1998. Without obtaining the permission of the Collector, the assessee could not have commenced development and construction of the housing project. It is also admitted fact that the assessee presented the building plan to the Solapur Municipal Corporation and the said corporation sanctioned the building plan on 23rd July, 1999. It means that the Solapur Municipal Corporation granted the permission of construction on 23rd July, 1999. In our view, the activities, viz., approval of the plan, marketing for booking the residential units, availing of finance, receipt of advance booking money, etc., could not be construed to mean commencement of development and construction of housing project. As per the certifi....