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TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 690
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....enied the deduction because, as per the AO, 1 BHK flats do not conform to the conditions for the claim of deduction u/s 80IB(10), as the majority of the flats have been joined together and exceeded the limit of 1000 sq.ft. 3. In the assessment proceedings, it was pleaded by the assessee that it was the purchasers who joined the flats. But the explanation was not accepted by the AO. 4. From the order it is seen that in the preceding years the issue reached the ITAT and coordinate Bench of the ITAT had allowed the claim of deduction by the assessee u/s 80IB(10). 5. At the time of hearing, the AR submitted that the issue is identical and coming from the preceding year in ITA No. 2443/Mum/2012 in assessment year 2009-10, wherein it was observed, "13. Before us, in connection with the appeal of the assessee, Shri J.D. Mistry, Ld counsel for the assessee made various submissions/ arguments. On facts, he mentioned that the project under consideration made a beginning in the A.Y. 2005- 06 after obtaining due approvals and the same is completed in the current assessment year 2009-10. In the initial A.Ys. of the project, there was difference of opinion between he assessee and the AO on t....
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....ession of the flats and in six other flats, there is no such conversion or merger of flats. Assessee has merely made a provision for such merger or combining and in such case, it can not be said that assessee violated the names under the provision u/s 80IB(10) of the Act. The counsel argued that in a case where the joining of the flats is done by the purchaser, it cannot be stated that the assessee who merely provided for such merger, has constructed flats in violation of the area prescribed for each flats. Referring to the provision of clause (c) of Explanation to section 80IB(10) of the Act, ld. counsel mentioned that the assessee is entitled to the deduction of 100% of the profits of housing projects, if apart from the other condition, the residence unit has maximum built up area of less than 1,000 sq. Ft. in Mumbai. Construction of a residential unit (1-BHK flats) with a provision of a squarish hole in the roof/ceiling, does not make the assessee ineligible for claim of deduction merely when the said provision was made by the assessee. It is for the flat buyer to use of reject the said provision. The assessee should be declared eligible for claim of the said deduction. In this ....
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....ch 24 one-BHK flats. The dispute revolves around (a) developer making a provision (a square shaped hole in the ceiling /floor) for construction of the staircase connecting the lower 1-BHK flat to generate a 'duplex flat' with single kitchen and (b) the impounding from the assessee's premises of a 'brochure with the design' on how to merge two 1-BHK flats into a duplex flat. AO made use of the same to interpret that the assessee always intended to constructed duplex flats, each of which has the built up area exceeding the specified areas in said clause (c) of the Explanation to section 80IB(10) of the Act. In the survey as well as the assessment proceedings, assessee pleaded that the assessee merely made provision as a part of the marketing strategy for selling the 1-BHK flats and such a provision was made use of by the flat buyers after taking possession of the flats. As per the assessee, construction of duplex flats was never a part of his project. He never constructed such duplex flats. Assessee filed confirmation letters from the flat buyers before the AO and the same were not considered. During the assessment proceedings, AO also varied the said claim of the assessee by issuing....
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....merger of 1-BHK flats into a duplex, cannot be used against the assessee as it only provides the design of merger. It is not case of the revenue that the developer constructed the duplex flats by merger of two 1-BHK flats with it own money and then sold as such to the buyers. It is on the records that the owners of duplex have merged the flats after taking possession of their flats using the design provisions supplied by the assessee in the brochure. There is evidence contrary to the same. B. Relevance of the Intention of the assessee: 20. Both AO and he CIT(A) interpreted the discrepancies noted during the survey action to read into the intention of the developer and denied the deduction in respect of the profits of the project. Of course, CIT(A) restricted the disallowance and details are already discussed above. Interpreting the 'provision of hole and the impounding of the brochure, IRS officers are of the opinion that the assessee has the intention from the very beginning of the project that the assessee intends to construct the duplex flats and not the 1-BHK flats. Therefore, such very intention is made use by the AO to deny the benefits of deduction u/s 80IB (10) of the Act....
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....e assessee constructed the duplex flats: 22. We have examined the orders of the revenue and the papers filed before us in search of the material that establishes conclusively to the effect that the assessee constructed duplex flats whose built up area exceeded the specified limits in clause (c) of the said Explanation. There is such material or direct evidence to demonstrate the AO's allegation. In our opinion, when 1-BHK flats are otherwise built and sold as such, mere making a provision to help the flat buyers to merge them to suit their convenience during the post-sale, should not disentitle to the assessee to make claim of deduction u/s 80IB(10) of the Act. It is undisputed fact that few 1-BHK flats remain so without any merger despite the provision of 'hole' left and others are merged into duplex during the post sale using such provision. In our opinion, the developer cannot be penalized by denying the deduction. As such claim of deduction was found allowable by the then CIT(A) who decided the issues in earlier asst years. Of course, these orders are not relevant now considering the order of the Tribunal. E. Flat buyers owns up the fact of merger of flats into duplex flats b....
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.... will be entitled to 100% deduction claimed u/s 80 IB(10) of Act. We have also perused the order of the Tribunal in the case of Baba promoters and developers (supra) and perused the contents of para 13 and relevant portions read as follows,- 'So far as merger of flats and thereby exceeding the prescribed limit .......... denial of the deduction ........., is concerned there is no substance since it is undisputed fact that each of prescribed limit..... area and if after purchasing of two flats owners of flats merges it into a larger flat, the claim of deduction to the assessee cannot denied on this basis.' Further also, we perused the decision of coordinate Bench ITAT, Mumbai in the case of G.V. Corporation 38 SOT 174 and find para 12 is relevant and the same read as follows,- "It is common knowledge that members of the same family who purchase separate residential units adjacent or contiguous to each other often join them by breaking down a wall or by opening a door way or in many other ways so that the entire family lives together and gets more space to live. In many cases, a request is made by the purchasers to the builder or developer of the housing project to join the flats/re....