TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 719
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.... to add, alter, amend any of the grounds of appeal. 2. Adverting first to ground nos.1 to 3 in the appeal, facts, in brief, as per relevant orders are that return declaring gross total income of Rs.29,78,820/- filed on 29-8-2005 by the assessee, carrying on the business of housing project, was selected for scrutiny with the service of a notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 14-8-2006.During the course of assessment proceedings, the Assessing Officer[AO in short] noticed that the assessee claimed deduction of Rs.29,78,820/- u/s. 80-IB (10) of the Act. The assessee sold a bungalow no.54-55 Saundarya to Koikla J. Vora and others built on a plot admeasuring 221.66 sq. mtrs. The built up area admeasured 263.76 sq. mts. In response to summons u/s.131 of the Act dated 12-10-2007 Shri Mehul J.Vora, submitted that bungalow no.54-55 was owned by 3 co-owners namely Kokilaben J. Vora, Mehul J. Vora and Dr. Nimisha M. Vora. Since the built up area of the said unit exceeded 1500 sq. ft., the A.O. asked the assessee to show cause as to why claim for deduction u/s. 80IB (10) be not disallowed. In response, the assessee submitted vide his letter dat....
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.... Rs.4,24,935/-. 3. On appeal, the ld. CIT(A) following the decision of ITAT in the case of Radhe Developers & Others in ITA No.2482/Ahd/2006 allowed the claim of the assessee in the following terms:- 2.2. It is contended by the counsel that similar issue came up before the Hon'ble ITAT, Ahmedabad, in ITA No.2482/Ahd./2006 in the case of M/s. Radhe Developers & Others. The ITAT, Ahmedabad held that for the purpose of claiming deduction u/s.80IB(10) of the Act, it is not necessary for the assessee to own the land. Since such condition is not mentioned in the section it would not be correct to deny deduction on this ground. The counsel has requested to delete the additions made and allow deductions u/s.80IB(10) and in respect of unutilized FSI. The appellant referred relevant Paras of the order of ITAT. "28. The contention of revenue authority that to claim deduction u/s 80IB(10), there is a condition precedent that the assessee must be owner of the land on which housing project is constructed has no force we do not find any such condition as appearing in the provision of the section extracted above. A plain reading of subsection (10) of Sec. 80IB reveals and makes it evident that ....
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....oject, though the title does not vest in it." 2.2.1. Further, in respect of unutilized FSI, the Hon. ITAT, Ahmedabad, has observed has follows: "63. A question has also been raised by the Revenue that the profit earned by the assessee are not for developing and building housing project alone but for the sale of extra FSI, which has not been utilized for developing and building housing project. On a perusal of the provisions of Sec. 80IB(10). We find that it is not mandatory requirement to fully utilize permissible FSI; there is no condition as to FSI under the scheme of the provisions of Sec. 80IB(10) of the Act; there is no question of selling unused FSI to the individual buyer for each project and also there is no question of calculating the profitability on FSI as the same has not been contemplated u/s 80IB(10) of the Act On verification of the sale deed executed in favour of buyers of the residential houses, it is clear that the assessee had made this sale deed for sale of plot of land. Further, on verification of development agreement with the land owner, we find that here also the reference is with respect to land area only. In both the -documents assessee had not acquired ....
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....trictive bundle of rights attached with the sale of land plot. As aforesaid, there is no requirement as to the FSI under the scheme of provisions of Sec. 80IB(1). In any case the assessee has not sold FSI of plot, even if the unutilized FSI rights are available with the assessee, it is the only way left out of utilizing such unutilized FSI is to make construction on top of the ground floor, which is already being sold to prospective buyers. With this so called unutilized SI rights, if the assessee wishes to make further construction than it will practically impossible as the assessee is left with no Easement rights for making construction or access to go on top of the ground floor as the ground level rights are already sold to prospective customer. In this situation it would be practically impossible to make either construction or to give access for construction made. Thus, the concept of element of unutilized FSI sold is imaginary and based on surmises and conjunctures. 2.3. I have considered the submissions of the Id. counsel and facts of the case and the recent decision of Hon'ble ITAT, Ahmedabad, in the case of M/s. Radhe Developers & Other vide order in ITA No. 2482/Ahd/2006 ....
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....ed as a single unit, then, the disallowance of claim u/s.80IB(l) of the Act, is required to be restricted to the proportionate profit attributable to the said units only and disallowance of profit attributable to the other units is uncalled for. Appellant relied on the following decisions : 1. Bengal Ambuja Housing Development Ltd. Vs ACIT in ITA No.l595/Kol/2005 2. Saroj Sales Organisation 115 TTJ 484 (ITAT, Mumbai) 3.3. I have considered the submissions of the counsel and facts of the case. From the inquiries conducted and statement of buyers recorded by the Assessing Officer, it is established that unit No.54 and 55 in the project are one unit only and the same exceeds 1500 sq. ft. Therefore, it is not in dispute that all the units constructed by the appellant do not fulfill the criteria. Therefore, the alternative argument of the appellant is only discussed in detail. The deduction u/s.80IB(10) is allowable on fulfillment of certain conditions as mentioned in the said provision. "80IB(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent ....
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....imum built up area of 1500 sq. ft. If the housing project approved by the local authority does not fulfill any of the condition precedent to such deduction, the entire project goes out of the purview of section 80IB(10). In the case of the appellant the project completed by the appellant had two units above 1500 sq. ft. Therefore, the condition (c) u/s.80IB(10) is not fulfilled. In my considered view which is also supported by the decision of Bombay ITAT in the case of Laukik Developers reported in 108 TTJ 364 that if the condition precedent to the eligibility of deduction is not fulfilled, deduction cannot be allowed for the whole project. There is no question of allowing deduction for proportionate construction which are below 1500 sq. ft. Coming to the decision of IT AT, Calcutta, in the case of Bengal Ambuja Housing Development Ltd., a copy of the same was submitted by the appellant. No doubt the housing project in that case had large number of units with built up area more than 1500 sq, ft. The conclusion reached by the Tribunal is based on the reasoning that the provision should be interpreted liberally in view of apex court decision in the case of Bajaj Tempo Ltd., It is m....
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....f an incentive provision cannot hold good when it impairs the legislative requirement and spirit of provision. These are the supreme court's decisions relevant on this issue 1. Ipca Laboratories Vs DCIT 266 ITR 521 (SC) 2. Pandian Chemicals Ltd., Vs CIT 262 ITR 278 (SC) 3. CIT Vs N C Buddhiraj & Co, 204 ITR 412 (SC) These decisions clearly laid down that when the provision is clear, the word cannot be ignored or misinterpreted to confer an unintended benefit. When appellant does not fulfill the requirement of clause (c) in respect of some units, the project become ineligible. There is no scope for dividing the project as eligible part and ineligible part. The denial of deduction in case of residential unit above 1500 sq. ft, is clearly in-built in the section itself where certain precondition are mentioned before allowing deduction. Therefore, with due respect to the decision of Hon. Calcutta ITAT, the same is not in conformity with the clear provision of section 80IB(10) and Hon. Supreme Court decisions referred above. Appellant also referred decision of Mumbai ITAT, E Bench in the case of Saroj Sales Organisation reported in 115 TTJ 485. The said decision is not applicable s....
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....roject exceeded 1500 sq. ft. We find that in the case of G.V. Corporation(supra), the assessee joined some of its flats/residential units as a result of which built-up area of those flats exceeded 1,000 sq. ft. . In these circumstances, the Bench relied on decision of the Special Bench in the case of Brahma Associates vs. Jt. CIT [2009] 119 ITD 255(Mumbai SB) and concluded as under: 13. Even assuming for the sake of argument that there was a violation of the condition (c) prescribed by section 80-IB(10), the result thereof would not be denial of the claim for deduction as has been held by the Special Bench (Pune) in the case of Brahma Associates v. Jt. CIT [2009] 119ITD 255. In this case, it was found that a small part of the building was built for commercial use. The condition that the entire building should have been built for residential use was, thus, not satisfied. However, the portion used for commercial purposes was minimal and less than 10 per cent of the total built-up area. In such circumstances, the Tribunal held that the deduction under section 80-IB( 10) cannot be totally denied and if it is found that even if the commercial use exceeds 10 per cent, but the residentia....
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....h of the Tribunal (Pune) (supra) as well as the Chennai and Bangalore Benches took in the cases cited above. Even while proposing action under section 263 of the Act to the CIT, the Assessing Officer has not referred to any violation of the condition that the residential unit should not be more than 1,000 sq.ft of built-up area. Thus, the Assessing Officer seems to have taken a plausible view of the provisions of law and the consequences of the violation, a view which has also appealed to the Special Bench of the Tribunal and two other Benches. It is now well-settled that no action can be taken under section 263 on the footing that the assessment order is erroneous and prejudicial to the interest of the revenue merely because the Assessing Officer adopted one of the several plausible views that can be reasonably taken. Reference in this connection may be made to the judgments of the Supreme Court in the cases of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 and CIT v. Max India Ltd. [2007] 295 ITR 2822 where this aspect has been highlighted. In these, circumstances, it is not possible to uphold the view taken by the CIT that the assessee having violated one of the conditions....
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.... 6.2 In CIT vs. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) 104 CTR (SC) 243 : AIR 1992 SC 1782, the Supreme Court observed as under : 'The contextual meaning has to be ascertained and given effect to. A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee." 6.3 In the case of Bqjqj Tempo Ltd. vs. CIT (1992) 104 CTR (SC) 116 : (1992) 196 ITR 188 (SC), approving decisions of Bombay High Court reported in Capsulation Services (P) Ltd. vs. CIT (1973) 91 ITR 566 (Bom) and Punjab and Haryana High Court in Phagoo Mal Sant Ram vs. CIT (1969) 74 ITR 734 (P&H), the apex Court held : "A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to- be construed so as to advance the objective of the provision and not to frustrate it." This would thus mean where there is partial or nominal non-compliance of the requirements of law there should not be a complete disallowance of deductions. The disallowance, if any, will have to be restricted to the extent of non....
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....n our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion." 7. On the facts and in the circumstances of the case, the deduction under s. 80-IB(10) is available in respect of both the blocks and the learned CIT(A) was justified in upholding the claim of the assessee. It is ordered accordingly. 5.2 Similarly, in the case of SJR Builders vs. ACIT,[2010] 3 ITR(Trib) 569(Bangalore), the ITAT following their own decision in Brigade Enterprises(supra) the case before the Bangalore Bench of I.T.A.T., concluded as under:- 12. The assessee s representative further relied on the decision of the Chennai Tribunal in the case of Arun Excello Foundations P. Ltd. v. ACIT (2007) 108 TTJ (71, and submitted that deduction under section 80IB(10) on the residential units constructed be given on pro rata basis. The above proposition was accepted by the Tribunal in this case. Again the assessee's representative referred to the decision of the Kolkata Bench of the Tribunal in Bengal Ambuja Housing Development Ltd., in I. T. A. 1735/Kol/2005, wherein the Tribunal was seized of a case involving a project consisting of 261 residential uni....