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TaxTMI 
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TaxTMI 
2015 (11) TMI 920
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....the impugned order by contending that survey was carried out in the year 2006, when the work was in progress, wherein, everything was found in order. It was pleaded that second survey was carried out on 01/12/2011, when certain discrepancies were pointed out with respect to area of few flats. It was asserted that the assessee completed the project on 28/03/2008 for which completion/occupancy certificate was issued to the assessee by the competent authority by further claiming that the entire building was sold up to 2011, therefore, if any, merger of flats was done by the occupants themselves, the assessee cannot be held liable as the assessee was not having any control over the flats. Reliance was placed upon the decision in Haware Construction Pvt. Ltd. vs ITO 64 DTR 251 (Mum. Trib.), Emgeen Holdings Pvt. ltd. vs DCIT 47 SOT 98 (Mum. Trib.) and in DCIT vs Magarpatta Township Development & Construction Company ITA No.822/Pn/2011. In reply, the ld. DR, placed heavy reliance upon the advertisement and the addition made by the Assessing Officer. 2.2. We are usefully reproducing hereunder certain findings/conclusions from the decision from Pune Bench of the Tribunal in the case of CIT....
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..../s.80IB(10). The Tribunal held that the concept of housing project does not mean that should be the group of buildings and 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." 22.2. We also find that the Pune Bench in the case of Rahul Construction Co. Vs. ITO [ITA.No.1250/PN/09 & 707/PN/2010] has observed as under: "10. In view of above discussion, we come to the conclusion that for verification of eligibility of benefit claimed u/s. 80 IB (10) of the Act by the assessee on buildings A1 to A5 in "Atul Nagar" and buildings B1 to B6 in "Rahul Nisarg Co- Operative Housing Society Ltd.", the assessing authority has to verify as to when the building plans for these buildings were firstly approved by the local authority and taking the said date of approval a starting point, he has to verify as to whether these buildings....
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.... favour of the assessee. We thus while setting aside the orders of the authorities below on the issue, direct the A.O to allow the claimed deduction u/s. 80 IB(10) in question. The related grounds are accordingly allowed. 11. In result, appeal is allowed." 22.3. We find that ITAT Mumbai Bench in the case of Mudhit Madanlal Gupta vs. ACIT [51 DTR 271(Mum)(Trib)] has observed as under: "Deduction under s.80-IB - Income from developing and building housing project - Conditions precedent - Assessee engaged in construction business entered into a joint development agreement for construction of residential flats - Total plot measured approximately 7633.82sq.mtrs. - Deduction was denied by AO on the grounds that (i) assessee had completed only A, B and C wings upto 31st March, 2008 and D wing was not completed (ii) total project area was 1.88 acres and since assessee's share was only 51 per cent of the built-up area, the project area was of less than one acre and (iii) in some of the flats units area exceeded 1000sq.ft. - Not justified - CIT(A) was satisfied that each unit of the residential flat in all the three wings was less than 1000 sq.ft. and some of those flats were later con....
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.... - Further, the use of the words "residential unit" in cl.(c) of s.80- IB(10) means that deduction should be computed unitwise - Therefore, if a particular unit satisfies the condition of s.80-IB, 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 would also mandate recognition of profits from each unit separately." 23. As regards the two flats combined in Building I, it is submitted that the flats are combined by the customers. The assessee has received completion certificate independently for the two units and therefore, the Assessing Officer is not justified in calculating the built up area by combining the two units. The assessee submits that if units are combined by the customers, the built up area should be computed independently and the assessee cannot be denied the deduction. For this proposition, the assessee places reliance on the following decisions - a. Haware Constructions Pvt. Ltd. [64 DTR 251 (Mum)] b. Emgeen Holdings P. Ltd. vs. DCIT [ITA.No.3594 & 3595/Mum/09] c. DCIT vs. Arcade Bhoomi Enterprises [ITA.No.366/Mum/10] 23.1. We find that the ITA....
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....s important to bear in mind the fact that what section 80IB(10) refers to is 'residential unit' and, in the absence of anything to the contrary in the Income tax Act, the expression 'residential units' must have the same connotations as assigned to it by local authorities granting approval to the project. The local authority has approved the building plan with residential units of less than 1,000 sq.ft, and granted completion certificate as such. That leaves no ambiguity about the factual position. We have further noted that the prohibition against sale of more than one flat in ,a housing project to members of a family has been inserted specifically with effect from 1st April 2010, and, in our humble understanding, this amendment in law can only be treated as prospective in effect. What is, therefore, clear is that so far as pre-amendment position is concerned, as long a residential unit has less than specified area, is as per the duly approved plans and is capable of being used for residential purposes on standalone basis, deduction u/s.8018(10) cannot be declined in respect of the same merely because the end user, by buying more than one such unit in the name of f....
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....oever to suggest that these restrictions need to be applied with retrospective effect. The amendment seeks to plug a loophole but restricts the remedy with effect from 1st day of April 2010, i.e. AY 2010-2011. The law is very clear that unless provided in the Statute, the law is always presumed to be prospective in nature. It will therefore, be contrary to the scheme of law to proceed on the basis that wherever adjacent residential units are sold to family members, all these residential units are to be considered as one unit. If law permitted so, there was no need of the insertion of clause (f) to section u/s 80IB(10). It will be unreasonable to proceed on the basis that legislative amendment was infructuous or uncalled for -particularly as the amendment is not even stated to be 'for removal of doubts'. On the contrary, this amendment shows that no such eligibility conditions could be read into pre-amendment legal position. 9. As regards the AO's stand that the assessee himself has offered the deduction u/s.80IB(10) in respect of these units during the course of survey proceedings, it is only elementary that neither statement recorded ujs.133A has an evidentiary value....
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....de in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, and the conclusion drawn in the aforementioned cases including cited from both sides, if kept in juxtaposition and analyzed, the facts, in brief, are that the assessee is engaged in the business of construction and development. The assessee declared nil income in its return filed on 29/09/2009, which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter the Act) accepting the returned income. The assessee follows project completion method. The case of the assessee was selected for scrutiny, therefore, requisite notices were issued and served upon the assessee to which the assessee attended the proceedings and filed necessary details/submissions (as is evident from page 1 of the assessment order). The whole case of the department is demolished by the observation made in the assessment order itself (para-3), wherein, the ld. Assessing Officer himself concluded that the project was completed in the preceding year relevant to assessment year, whereas, the second survey was conducted on ....