TaxTMI 
TaxTMI 
2011 (9) TMI 446
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..... Counsel for assessee and Shri Arun Dewan, ld. Sr. DR. The crux of arguments on behalf of the assessee is that the municipal corporation granted sanction of the project on 22.3.2001 and the project was sanctioned before insertion of section 80IB(10) w.e.f. 1.4.2005, therefore, it does not include under the definition. It was also pleaded that application was made by the assessee on 16.1.2008, the site was inspected by the Inspector, Municipal Corporation on 27.2.2008 and the project was completed on 27.2.2008 for which our attention was invited to clarification issued by Municipal Corporation on 23.3.2011. Reliance was placed upon the decision in Smt. Saroj Kapoor (ITA No.217/Ind/2008) and D.K. Construction (17 ITJ 1) (I.T.A.T., Indore). On the other hand, the ld. Sr. DR strongly defended the impugned order by contending that the covered area/built-up area is more than the prescribed limit, completion certificate was issued on the later date by the Municipal Authorities, therefore, the deduction was rightly denied to the assessee. Reliance was placed upon the decisions in Moosa (AM) vs. CIT (294 ITR 1) (SC) and Reliance Jute & Industries Ltd. vs. CIT (120 ITR 921) (SC). 3. We h....
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.... be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; 6b[and] (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.] The following clauses (e) and (f) shall be inse....
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.... the provisions of the Act have been duly complied with. 5. The another reason for denial of claimed deduction by the Assessing Officer is that the built-up area of the bungalows is more than the maximum prescribed limit of 1500 sq.ft. of the dwelling unit. The stand of the Assessing Officer is that definition of the built-up area was inserted w.e.f. 1.4.2005 by the Finance Act, 2004 vide sec. 80IB(14)(a), consequently, the ld. Assessing Officer disallowed the claimed deduction. During appellate proceedings, the denial was strongly contested by the assessee by preferring written submission,3 which are reproduced hereunder: "It is submitted that the land was originally purchased by Shri Anup Singh and Awtar Singh under the purchase deed dated 04/07/1968 and was sold to Prarivesh Grih Nirman Sahakari Sanstha in the year '1905'. However, since Parivesh Grih Nirman Sahakari Sanstha could not abide by the conditions of sale, the part of the landat 1.84 acres was restored back to Shri Awtar Singh under the court order dated 29/01/2001. In the mean time M/s Parivesh Grih Nirman Sahakari Sanstha had obtained the permission from local authority to develop a project with two types of B....
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....vident from the map approved by the Municipal Corporation. (vi) The appellant build up the bungalow 'Regal' and Royal' as per map approved by the Municipal Corporation. The measurement of the built up area are absolutely in accordance with the map approved by the Municipal Corporation on 22/03/2001 and renewed on 26/02/2002 and no fault has been found with the ultimate construction and the map approved. (vii) The appellant relied upon the provisions of sec. 80IB(10) and launched its project in the year 2001. The appellant declared the built up area of 1329 sq. ft. and 1461 sq. ft as per the map approved by Municipal Corporation. The appellant fixed up the prices of the duplex bungalows after taking in to consideration, the fact that the appellant will not be liable to pay any income tax and accordingly, transferred the part of benefit of deduction to customers. He started booking of the bungalows in the year '2001' and most of bungalows were booked much before 01/04/2005. (viii) After the insertion of the definition of the 'built up area' in sec. 80IB(14)(a), the appellant was not able to change the 'built up area' or the price fixed with the customers. (ix) Your honour....
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.... bunglows by Regd. Engineer, the ld. Assessing Officer found that the 'built up area' of Regal bungalows was 1994 sq. ft., which was claimed by the appellant to be at1329 sq. ft. and of classic bunglows was 1919 sq. ft as against 1461 claimed by the appellant. In this connection, the further submissions of the appellant are as under:- (a) It is submitted that the measurements taken by the above said regd. Valuer are said to be in accordance with the definition of 'built up area' given in section 80IB(14(a). On perusal of the section. Your kind attention is invited to the definition given in sec. 80IB14(a) of the Income Tax Act, which is reproduced as under :- "built - up area" means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units]; On plain reading of section, it will be evident that 'the built up area' does not include any projection or balconies, which are not surrounded by the walls as the section states that the 'built up area' includes projection and balconies as increased by thickness of walls....
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....se projections into open spaces shall not reduce the minimum required open front, rear or side spaces. (2) Accessory Building - The following accessory building may be permitted in the open spaces. (a) in existing buildings, sanitary block 2.4 meters in height subject to a maximum of 4 square meters in the rear open space at a distance of 1.5 meters from the rear boundary may be permitted. (b) Parking lock up garages not exceeding 2.6 metres from plinth level in height and an area not exceeding 20 square metres shall be permitted in the side or rear open spaces at a distance of 7.5 metres from any road line or the front boundary of the plot. Provided that the space allowed for garage may be permitted to be used for any other purpose and construction up to one more floor on it may be allowed. However, the area so allowed shall be included in the covered area but shall be treated as an exception to open space; and (c) Suction tank and pump room each up to 2.5 square metre in area (3) Projections into street - In existing built up or congested areas no projection of any sort whatever except sun-shades extending more than 23 centimetres below a height of 4.3 metres sh....
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....efinition of the 'built up area' till then an therefore, all the builders and the appellant relied upon the 'built up area' given in the map approved by the local authority and the said 'built up area' approved by the map in the case of the appellant was less than 1500 sq. ft. as evident from the map approved by the local authority. (iv) The appellant relied upon the provisions of sec. 80IB(10) and launched its project on 25/02/2002. The appellant declared the 'built up area' as per map approved by local authority. The appellant fixed up the prices of the duplex bunglows after taking into consideration, the fact that the appellant will not be liable to pay any income tax and accordingly, transferred the part of the benefit of deduction to the customers. He started booking of the bunglows in the year 2002 and many of the bunglows were booked much before 10-09-2004 (when the Finance Act (No. 2)2004 was passed). (v) After the insertion of the definition of the 'built up area' in sec. 80IB(14)(a), by the Finance Act No. 2 passed on 10/09/2004, the appellant was not able to change the 'built up area' or the prices fixed with customers or the prospective customers of the same bunga....
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....alls. At the same time, the projections and balconies which are not surrounded by the walls, as section states, cannot be included in 'built-up area', meaning thereby that the projections and balconies cannot be included in 'built-up area'. Built-up area was defined for the first time by the Finance Act No.2 of 2004 (received the assent of the President of the India on 10.9.2004) and was made effective from 1.4.2005. Earlier the I.T. Act had not given any particular definition of built-up area and accordingly the position as emerging from the general laws like M.P. Nagar Tatha Grih Nirman Adhiniyam and M.P. Bhumi Vikas Niyam, 1984 has to be accepted for the purposes of I.T. Act as well for the State of Madhya Pradesh. The built-up area is defined in the definition of floor area ratio in rule 2(29) r.w. rule 58 of M.P. Bhumi Vikas Rule, which reads as under: "rule-2(29). "The "built up area" as stated would construe the total built up area on all floors with the exception of lift wells, service ducts, machine room for lifts, water tanks, covered parking area, one entrance lobby/foyer on ground floor, corridors, arcades, mumptee, staircase but inclusive of covered projection ex....
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.... level or the water pipe may be permitted in accordance with the drainage plan: Provided that in congested shopping streets not having heavy vehicular traffic, the Authority may as a special case allow projection of balconies not more than 0.75 metre in width over footpaths at a height not lower than 3.65 metres from the centre line of the street. (4) Porticoes in existing developed area Porticoes in Bazar areas of existing developed areas may be permitted to project on road land subject to the following limitation:- (a) Porticoes may be allowed on such roads leaving a minimum clear space of 19 metres between kerps; (b) It shall not be less than 3 metres wide; (c) Nothing shall be allowed to be constructed on the portion, which shall be used as an open terrace; (d) Nothing shall be allowed to project beyond the line or arcades; and (e) The space under the portico shall be paved and channelled according to the directions of the authority. (5) Sunshades over windows and ventilators - Projections of sunshades over windows or ventilators in existing built-up or congested areas when permitted by the Authority shall fulfil the following conditions:- (a) No s....
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.... the case of D.K. Construction, 17 ITJ 1 (Indore ITAT) wherein it was held that date of issue of completion certification is not crucial but date of completion of project is relevant, therefore, delay in obtaining the certificate will not affect adversely the assessee because the assessee can only apply within the prescribed limit and the powers of the issuance of the certificate lies with the authorities. If there is any delay on the part of the Municipal Authorities, the assessee should not be penalised especially when it was clarified by the Municipal Authorities vide clarification dated 23.3.2011 mentioning the date of completion as 27.3.2008. The dates are summarised as under: Permission No. 834/0103 Permission No. 2428/0301 Permission No. 2190/1200 Date of approval 2.1.2003 PB page18 22.3.2001 PB page 22 16.12.2000 PB page 26 Application for obtaining completion certificate 16.1.2008 16.1.2008 16.1.2008 Completion certificate 4.3.2010 PB page 20 4.3.2010 PB page 20 28.8.2009 PB page 28 Clarification by Municipal Corporation dt. 23.3.2011 PB page 21 23.3.2011 PB page 25 23.3.2011 PB p....
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....quired to demolish its projects and again reconstruct the same so that the assessee fits into exemption. This is not the intention of the legislature because it may affect the vested rights of the assessee, consequently, cannot be said to be of retrospective effect. The Section requires the assessee to build the project within this specified limit already approved when the amendment was not on the statute books, consequently, if the Section is interpreted to be applicable even to the existing projects, the same will lead to the absurdity and that is not the intention of the legislature because ultimately it will lead to a national loss. The intention of this legislature and the ratio laid down in ACIT vs. Seth Developers P. Ltd. (33 SOT 277) (Mum) supports the case of the assessee wherein it was held as under: "Now the question whether the definition clause mentioned above can be deemed as retrospective, we are afraid we have to answer against the revenue. Number one, the enactment itself clearly specifies that clause will have effect from 1.4.2005. Number two, it is not a procedural Section but a definition Section, where an enlarged meaning is given to the term 'built-up area'....
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....s no question of issuance of completion certificate. We further find that as per the sanctioned plan (page 15 of the paper book), the total built up area is 123.54 sq. mtr. As per registered sale deed (pages 8 to 12 of the paper book), the area sold is also 125.4 sq. mtr. As mentioned in Schedule (page 11 of the paper book) in the case of Regal-6 residential unit, which is a duplex house and the built up area on ground floor is 70.54 sq. mtr. and 62.00 sq. mtr. on the first floor, meaning thereby that there is no deviation from the sanctioned plan. If the exempted areas as per the definition of rule 2(29) read with rule 58 of the M.P. Bhumi Vikas Rules (reproduced hereinabove) are kept in juxtaposition with the facts of the present appeal then the clear position is emerging that the total built up area remains within the specified limit of 1500 sq.ft. as provided under section 80IB(14)(a) of the Act. Sub-section (10) of section 80IB of the Act was inserted by the Finance (No.2) Act, 2004 with effect from 1.4.2005. Prior to its substitution, sub-section (10) as amended by the Finance Act, 2000, with effect from 1.4.2001 and Finance Act, 2003 with effect from 1.4.2002 reads as under ....