AI Drafter 
TaxTMI 
TaxTMI 
2013 (11) TMI 465
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...., once the garden area was included, the built up area was exceeding 1500 sq.ft. and therefore, the appellant was not entitled to claim the deduction u/s 80IB(10) in respect of the said project. 3) The learned CIT(A) failed to appreciate that the area covered by the garden was not to be included in the total built up area and once the said area was excluded, the total built up area of the residential units was less than 1500 sq.ft. and accordingly, the appellant was entitled to claim the deduction in respect of the project Kumar Shantiniketan. 4) Without prejudice to the above grounds, assuming without admitting that the built up area of a few flats exceeded 1500 sq.ft., the appellant submits that the deduction u/s 80IB(10) should have been allowed on proportionate basis in respect of the balance flats whose built up area was less than 1500 sq.ft. 5) The learned CIT(A) erred in denying the deduction of Rs.30,13,04,843/- in respect of the project Kumar Kruti on the ground that the said project did not satisfy the various conditions laid down u/s 80IB(10). 6) The learned CIT(A) erred in holding that the project Kumar Kru....
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....ing 1500 sq.ft. and therefore, the appellant was not entitled to claim the deduction u/s 80IB(10) in respect of the said project. 10) The learned CIT(A) failed to appreciate that the area covered by the garden was not to be included in the total built up area and once the said area was excluded, the total built up area of the residential units was less than 1500 sq.ft. and accordingly, the appellant was entitled to claim the deduction in respect of the project Kumar Shantiniketan. 11) Without prejudice to the above grounds, assuming without admitting that the built up area of a few flats exceeded 1500 sq.ft., the appellant submits that the deduction u/s 80IB(10) should have been allowed on proportionate basis in respect of the balance flats whose built up area was less than 1500 sq.ft. 3. The assessee is a firm engaged in the business of real estate promoters and builders. The first issue in A.Y. 2008-09 is with regard to disallowance of deduction u/s.80IB(10) of Rs.15,30,13,661/- claimed in respect of project Kumar Shantiniketan on the ground that built up area of few residential units exceeded 1500 sq.ft. Grounds Nos.1 to 4 are in respect of thi....
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....whatsoever. The findings of the A.O. clearly indicate that the garden area was in the exclusive domain of the buyer and the same had been sold by the appellant and thus was part of the residential unit sold by the appellant. As long as the terrace area is not for exclusive use of any particular flat owner there will be no difficulty because it would be treated as a common area, but if it is exclusive area it may be treated as a projection or a balcony and, therefore, such exclusive area like terrace or projection has to be considered for the purpose of the limit of built-up area. The total area thus arrived at was a clear violation of the condition contained in clause (c) of section 80IB(10) of the Act. The eligibility conditions u/s 801B(10) include, inter alia, that the built-up area should not exceed 1500 sq. ft in the context of cities other than Delhi and Mumbai. This restriction is applicable to the entire project. If some of the residential units of the project comprised area exceeding the prescribed limit, the benefit as per the language of the section cannot be extended to the project. In such a situation, it is difficult to disagree with the findings of the A.O. and, ther....
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.... 1500 sq.ft. Even if built up area of some of the units exceed 1500 sq.ft., deduction is to be allowed in respect of those units whose built up area is less than 1500 sq.ft. In this regard, reliance was placed on following decisions: a) Rohan Homes vs ACIT [ITA No.423/PN/2011] b) Ankit Enterprises [ITA.No.156 and 172/PN/2011] c) Ekta Housing Pvt. Ltd. [ITA No.3649/Mum/2009] d) Sanghvi & Doshi Enterprises [139 ITD 151 (Chennai)(TM)] e) Bengal Housing Development Ltd. vs. DCIT [ITA.No.595/Kol/2005] f) D.S.Kulkarni Developers Ltd. [ITA No.1428 and 1429/PN/2008] In view of above, the assessee submitted that deduction should be allowed on proportionate basis. 8. On the other hand, Ld. Departmental Representative on prorata basis submitted that once in the project any flat exceeds prescribed limit of 1500 sq.ft., project looses character of housing project which is precondition for claiming deduction u/s.80IB(10). In this regard, Ld. Departmental Representative relied on the decision of the ITAT, Chennai Bench in the case of ACIT vs. Vishwas Promoters Pvt. Ltd. (2010) 5 ITR (Trib) 449 (C....
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....ect' is neither defined under Section 2 of the Act nor under Section 80IB (10) of the Act. Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulation for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in Section 80IB (10) would have to be construed as commonly understood. 19. As rightly contended by Mr.Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr.Mistri, Learned Senior Advocate and Mr.Joshi, learned Advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the explanation in Section 80IB (10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQUARE FEET ('E' building in the present case) would constitute a 'housing project' under Section 80IB (10) of the Act." 8.2. The ....
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....et up by the learned CIT-DR. On a careful reading of the entire judgment of Bombay High Court in the case of Vandana Properties (supra), we do not find any support to the proposition that proportionate deduction u/s 80-IB(10) of the Act is not available in case, certain residential units in a project have a built-up area in excess of prescribed limit of 1500 sq.ft. In fact, the said issue was not before the Hon'ble Bombay High court. The question before the Bombay High Court was entirely different and hence certain observations in the said judgment rendered in the context of the subject matter of dispute before the Court, cannot be considered as conclusive so far as the question which is before us. The only issue before the Hon'ble High court was as to whether the construction of one building containing multiple residential units could be considered as a project by itself considering that it was a part of an earlier approved project. The judgment of the Hon'ble High court in the case of Vandana Properties (supra) has to be appreciated only in this context. Therefore, the issue before us i.e. in case where certain residential units of a project have built-up area in excess of 1500 s....
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.... sec. 80-IB(10) while coming to such conclusion, we also find support from the order of the Hon'ble supreme court in the 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 prorata income on qualifying units has complied with claim of the assessee was rightly allowed by the learned CIT(A) by reversing the order of the AO." 14. Similarly, the Bombay Bench of the Tribunal in the case of Ekta Housing Pvt. Ltd. in ITA No. 3649/MUM/2009 dated 20-5-2011 pertaining to A.Y. 2004-05 relied upon the Calcutta Bench of the Tribunal, as also the decisions in the cases of Brigade Enterprises Pvt. Ltd., Sheth Developers Pvt. Ltd. and observed that deduction u/s 80-IB(10) of the Act was to be allowed on proportionate basis with reference to qualifying residential units and that the assessee would not be denied claim for deduction u/s 80-IB(10) of the Act in entirety if some of its residential units were of a built-up area exceeding the limit prescribed in clause (c) to sec. 80-IB(10) of the Act. 15. Pertinently, it would also be appropriate to notice that th....
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....onate profit. Needless to say, the AO shall give due opportunity of being heard to the assessee while determining such proportionate deduction. 17. So far as the decisions relied on by the learned DR we find those are distinguishable and not applicable to the facts of the present case. As regards the decision of the Chennai Bench of the Tribunal in the case of Viswas Promoters (supra) we find the Chennai Bench of the ITAT (TM) in the case of Sanghvi & Doshi Enterprise (supra) has reversed the same and following the decision of Hon'ble Calcutta High Court in the case of CIT vs. Bengal Ambuja Housing Development Ltd. vide ITA No.458 of 2006 order dated 5-1-2007 has held that the assessee is entitled to deduction u/s.80IB(10) in respect of flats having built up area not exceeding 1500 sq.ft., and not entitled to deduction in respect of those flats having their built up area exceeding 1500 sq.ft. Therefore, the decision of the Chennai Bench of the Tribunal relied on by the learned DR is not applicable. 18. So far as the decision of the jurisdictional High Court in the case of Vandana Properties (supra) is concerned we find the said decision is also not a....
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.... when assessee obtained all sanctions, permissions and certificates for such eligible units separately - Assessee undertook a development project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s. 80IB(10) in respect of two residential units only which if taken separately, were eligible for the relief - AO treated the entire project as a single unit and denied relief under s.80IB(10) in entirety - CIT(A) allowed relief under s. 80IB(10) treating the said two units as independent units - Justified - Material on record showed that the various local authorities duly inspected the plot and sanctioned plan for each of the blocks separately - Group housing approval was approval of a master plan as a concept - Further, the use of the words "residential units" in cl.(c) of s.80IB(10) means that deduction should be computed unit-wise - Therefore, if a particular unit satisfies the condition of s.80IB, the assessee is entitled for deduction and it should be denied in respect of those units only which do not satisfy the conditions - Again, the accounting principles woul....
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....that assessee is eligible for deduction on prorata basis with respect to the eligible flats in the project vide para 9 of this order. 11. As discussed above, the Assessing Officer has mentioned that project Kumar Kruti is a part of big project called Kumar City. The Assessing Officer in para 5.2 has mentioned that project Kumar Kruti is a part of lay out plan dated 08.08.2003. He has observed that once project Kumar Kruti is part of lay out plan dated 08.08.2003, it is obvious that project Kumar Kruti is part and parcel of Kumar City project. The Assessing Officer further observed that when there is a common lay out for project Kumar Kruti and Kumar City project, it is one project for the purpose of claiming benefit of deduction u/s.80IB(10) of the Act. As there was commercial area in Kumar City project, the Assessing Officer held that on this ground as well, deduction is not allowable. The Assessing Officer held that as lay out plan was sanctioned on 08.08.2003, assessee should have completed construction of the project by 31.03.2008 and since the project Kumar Kruti is not complete by 31.03.2008, deduction was not allowable. The CIT(A) has discussed this issue in para 4.3 and ....
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....erification of the plan 'Kumar City - DP Layout' sanctioned on 08.08.2003 vide DP No.0/3466/H/26. Thus the A.O. contended that the appellant had violated the provision of clause (d) of section 80IB(10) of the I.T. Act. No submission in this regard has been made by the appellant and as nothing contrary has been brought on record the action of the A.O. in disallowing the claim of deduction on account of violation of clause (d) of section 80IB(10) is liable to be upheld. Moreover, the facts as brought on record and the finding of the Assessing Officer that the project 'Kumar Kruti' is only a part of the larger project 'Kumar City' also does not call for any interference as nothing contrary has been brought out by the appellant to justify the claim made/ground raised in this regard." Thus CIT(A) has stated that assessee has not been able to demonstrate that project Kumar Kruti is an independent project and not part of Kumar City project. Accordingly, he confirmed the order of the Assessing Officer on the issue as discussed above. 12. The Ld. Authorised Representative before us submitted that project Kumar Kruti is an independent project and not a part of Kumar City project. The A....
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.... 13. Thus according to Ld. Authorised Representative, building plan for project Kumar Kruti was sanctioned independent of Kumar City project. The Assessing Officer without disputing this fact has denied deduction on the ground that there is a common lay out plan. In this regard stand of the assessee is that there is difference between lay out plan and building plan. The lay out plant is only a conceptual plan giving general idea of the development of the land, however, building plan as per which construction is promoted as per relevant building bye-laws applicable to the area. Since building plan was sanctioned on 26.07.2006 pertaining to project Kumar Kruti, no justification in holding that project Kumar Kruti is a part of Kumar City project. The assessee submitted that even if there is a common lay out plan but independent building plan, project approved under separate building plans is to be considered as independent projects and not part of larger project as mentioned in the lay out. In this regard, Ld. Authorised Representative relied on the following decisions: a. Apoorva Properties and Estates Pvt. Ltd. [ITA No.113/PN/07] b. Aditya Develope....
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....the project by 31.03.2008. Further, the commercial area in Kumar City project is more than limits prescribed, the said condition has also been violated and lastly built up area of eight flats exceed 1500 sq.ft., which is also violation of conditions prescribed u/s.80IB(10). As discussed above, following the reasoning in project Kumar Shantiniketan, we have allowed deduction on prorata basis with regard to completed eligible flats vide para 9 of this order. Accordingly Assessing Officer is directed to rework deduction of claim u/s.80IB(10) on eligible flats after excluding eight flats whose area exceed prescribed limit of area. 18. Regarding two remaining issues we find no dispute that project Kumar Kruti is a part of Kumar City project as far as lay out dated 08.08.2003 is concerned. There is no dispute that there are common lay out for project Kumar Kruti and Kumar City project. The stand of the assessee has been that project Kumar Kruti is an independent project and not part of Kumar City project. Simply because project Kumar Kruti is a part of Kumar City project in the lay out, it is not justified in holding that project Kumar Kruti is a part of Kumar City project. It is obvi....
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....ctions based on which the impugned claim of deduction u/s.80-IB(10) is rejected have been considered by the co-ordinate Benches on a few occasions as also the Special Bench of the Tribunal in the case of Brahma Associates vs. Joint CIT (OSD) Cir.4, Pune (2009) 119 ITD 255. As regards the question of commercial use of built up area the Special Bench has opined that as long as it does not exceed 10% of the total built up area, the project will continue to have the character of housing project and accordingly, the deduction u/s.80-IB(10) cannot be declined for that reason alone. In the present case, the commercial built up area is hardly less than 10%. As regards the question about size of the flats we have taken note of the factual position that even according to the Assessing Officer none of the flats in phase II exceeds the size of 1500 sq.ft. In any event in the course of remand proceedings, the matter was examined by the Assessing Officer again. The Assessing Officer is not able to point out any specific violation of the said provision. Learned Departmental Representative very fairly accepted that he is not in a position to point out any such instance. That leaves us a question a....
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....e any difference in deciding the assessee's claim for deduction under s. 80-IB(10). It must be appreciated that the main developer wax CAPL. The sanction plan have only approved the construction of the dwelling units of less than 1000 sq.ft. in all the wings of the said project. There is no dispute that till the flats in the wings in block 'N' contain the eligible units. It is not open to the Revenue to include the next project 'BC' block as part of the earlier housing project just to deny the statutory relief, which the assessee is entitled in respect of the eligible housing project. In that way the legislative intention to give relief to the assessee who is undertaking the law housing projects will get defeated. 'BC' project was meant for higher strata of the society. The assesses has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the lest laid down under s. 80-IB(10). Combining these two projects into one will lead to a result, which manifestly will be unjust and absurd and defeat the ....
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.... 21970 35481 3 Area covered by amenities** 1060 1596 2656 4 Commercial Area 1090 - 1090 Total (2+3+4) 15661 23566 39228 ** Please note that the area covered by common amenities is divided amongst Phase-I & Phase-II considering the total residential saleable area of the respective Phases. 9. In this view of the matter and bearing in mind the entirety of the case, we are unable to approve the order of the CIT(A) in declining deduction u/s.80-IB(10) of the Act. In our considered view and in the light of the decisions of the coordinate benches, the assessee is entitled to deduction u/s.80- IB(10) of the Act. We accordingly direct the Assessing Officer to grant the same. In the result, the appeal of the assessee is allowed." 19. Nothing contrary was brought to our knowledge by the Revenue. According to us, the ratio of Apoorva Properties (supra) supports the case of the assessee. We find that ITAT Pune 'A' Bench in DCIT vs. Aditya Developers had occasion to discuss and decide the similar issue in favour of the assessee by observing as under: ....
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.... sq.ft. We got the building plans sanctioned on 9-3-2001 and 29-3-2001 and work of the project started only after the building plans sanction in March 2001. It is very important to note that the land of 8966 sq.mtr was vacant and according to rules of PMC (Local Authority), all the sanctions prior to 9-3-2001 & 29-3-2001 get cancelled and lapsed on vacant land of 8966 sq.mtr. at S.No.1(Part) Kondhwa. 4. We have constructed the buildings K,M,N,I,O & P on vacant land at Survey No. 1(A) (Part) Kondhwa Khurd, Pune which is carved out separately on site. TDR used is less than 40% of area of land of 8966 sq.mtr. We got sanctioned new building plans as per norms of 80IB(10) provisions in March 2001 & constructed all flats following all these norms. Since our new housing project is as per the plans sanctioned in March 2001, it is no way concerned with earlier lapsed sanctions. We have never started any development or construction prior to March 2001 on the rear area of land of 8966 sq.mtr on which buildings K,M,N,I,O,P have been constructed. In support of this we are enclosing herewith photocopy of letter of PMC dt. 5-10-2006. English translation of ....
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....project. It is no way concerned with the residential & commercial unit of earlier constructed building on separate portion of land and same has been reflected in separate books of accounts and we have already paid taxes on it." The submission of the Ld. D.R. remained that the decision of Pune Bench in the case of Nirmiti Construction Vs. DCIT (Supra) followed by the Ld CIT(A), having different facts is not applicable in the case of the assessee. Having gone through that decision, we do not agree with the above contention of the Ld. D.R. The decision fully covers the case of the assessee on the issue. It appears that the whole confusion on the issue in the mind of the A.O was due to his understanding of lay out plan and building plan one and the same thing, hence he has committed error in treating the date of approval of the] lay out plan by the Municipal Corporation as the date of approval of the building plan to compute the period of completion of the building plan to verify the eligibility of the claimed deduction u/s. 80IB(10) of the Act. Pune Bench of the Tribunal has occasion to discuss the distinction between the lay out plan and building plan in the case of N....
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.... only then same is called a " housing project" . It was further held that building/wing 'E" cannot be passed with earlier buildings i.e. A, B,C & D which work was commenced in the year 1993 whereas plan for wing 'E' was approved for only once in the year 2002. It was held further that the conclusion drawn by the authorities below that the commencement of wing 'E' is a continuation of the existing project is erroneous. 6.2. In the case of Saroj Sales Organisation Vs. ITO (Supra), the Mumbai Bench has again expressed the same view and held that the commencement certificates in respect of these wings in block "N" were separately received by the assessee and all the flats in block "N" were of less than 1000 sq.ft., hence it is not open to the revenue to include block "B, C" as part of block "N" just to deny relief u/s. 80IB(10) of the Act. The Bangalore Bench of the Tribunal has also got occasion to discuss distinction between the sanction of lay out plan and approval of building plans by the local authority for consideration of the eligibility of U/s. 80 IB (10) deduction in the case of DCIT Vs. Brigade Enterprises (P) Ltd. (Supra). In that case before the Bangalore Be....
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....ion of buildings in wings K, M, N, I, O, P, K1 and K2 in the project "KKT". In this project, 188 residential units were there each having built up area upto 1500 sq.ft. The building plans of the project "KKT" were approved on 9.3.2001 (wings K1 and K2) and 29.3.2001(wings I, M,N,O, P) which were completed on 10.10.2002 and 10.2.2003 respectively. Copy of building plan approved on 9.3.2001 has been made available at page No. 104 of the paper book, whereas the building plan approved on 29.3.2001 has been made available at page No. 103 of the paper book. There is no dispute on the dates of completion of the buildings in the housing project. The CBDT in its letter dated 4th May 2001 (page No. 110 of the paper book) has also made it clear that the definition of "housing project" is any project which has been approved by the local authority as a "housing project" should be considered adequate for purpose of Sec. 10(23 G) and 80 IB (10). We also find from the Explanation (i) to S. 801B(10) that the housing project and building plan of such housing project are two different concept. For a ready reference Explanation (i) to the Section is being reproduced hereunder : &....
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....ration, decided the similar issue in favour of assessee wherein sanction of building plan has been made basis for holding independent project for the purpose of claiming deduction u/s.80IB(10). We find that ITAT Pune Bench in P.V.Mahadkar & Associates in ITA No.1117/PN/2010 has discussed and decided similar issue in favour of assessee by observing as under: "6. After going through the rival submissions and the material on record, we find that it is undisputed that the original key plan was submitted on 1-10-1998. The said project was sanctioned in the name of Smt Sunita Mahadkar with regards to whole of land in question and the said key plan was revised on 8-1-2001. Subsequent to this, the assessee entered into development rights with regards to the project in question and the said development right of the land itself was acquired by the assessee on 2-8-2004. Plot of this development right was part of key plan submitted on 1-10-998 as mentioned above. Subsequently, the building plan/commencement certificate was granted by the PMC on 8- 10-2004. The date of 8-1-2001 was merely the date when Mrs. Sunita Mahadkar, the original owner of the land had got her revised its ....
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....n of claim u/s.80IB(10) in respect of project Kumar Kruti in question. Regarding prorata deduction u/s.80IB(10) of the Act, we have already held that the assessee is eligible for deduction in respect of eligible flats not exceeding prescribed limit of 1500 sq.ft. after excluding flats exceeding 1500 sq.ft. and the Assessing Officer has been directed to rework deduction accordingly. In view of above, the Assessing Officer is directed to allow the claim of assessee in respect of project Kumar Kruti for the reasons discussed above. 22. As a result, this appeal of the assessee is partly allowed. 23. In ITA.No.2210/PN/2012, for A.Y. 2009-10, the assessee has raised following grounds: 1 (a) The learned CIT(A) erred in denying the deduction claimed u/s 80IB(10) of Rs.10,29,34,512/- in respect of the project Kumar Kruti on the ground that the said project did not satisfy the conditions laid down u/s 80IB(10). The AO and CIT(A) may please be directed to allow the deduction claimed u/s 80IB(10) of Rs. 10,29,34,512/- for Project Kumar Kruti. (b) Without prejudice to the above ground, assuming without admitting that the condition of built u....