AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 607
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....B(10) of Rs. 99,67,125/- in respect of the profits derived from the housing project - DSK Sundarban on the ground that the commercial area in the said project exceeded the limit prescribed in section 80IB(10) and therefore, the deduction was not available to the appellant. 2.1] The learned CIT(A) erred in holding that - a. As there was a consolidated approval and common layout plan in respect of the residential and amenity area, for the purposes of section 80IB(10), the project included both residential and commercial area and hence, the deduction was not available to the assessee. b. The area of commercial establishments in the form of Amenity Space exceeded the maximum limit for commercial area prescribed under the provisions of section 80IB(10)(d) and hence, the deduction u/s 80IB(10) was not allowable in respect of the profits derived from the said housing project. 3] The learned CIT(A) failed to appreciate that the Amenity Space - I and Amenity Space - II were independent projects and not part of the residential project constructed by the assessee and hence, there was no reason to deny the deduction u/s 80IB(10). 3.1] The learned CIT(A) erred in not appreciating....
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.... against denial of deduction under section 80IB(10) of the Act. 4. Briefly, in the facts of the present case, the assessee had claimed the said deduction under section 80IB(10) of the Act in respect of various projects including DSK Sundarban and DSK Vishwa Phase-V - Meghmalhar Phase - I. The Assessing Officer while completing assessment had denied the aforesaid deduction in the hands of assessee in respect of above two projects. In relation to the first project i.e. DSK Sundarban though the assessee had complied with all the conditions laid down under section 80IB(10) of the Act vis-a-vis the area of flats along with projections being less than 1500 sq.ft., the project having been completed within four years from the date of commencement and also there being no commercial units in the said project, but the Assessing Officer noted that there was amenities space - I and amenities space - II on west side and east side respectively, measuring 4904.01 meters, which was an integral part of the plan sanctioned by the District Collector in respect of plot 'A'. Since the amenities space - I and amenities space - II existed in the very lay out plan of the housing project DSK Sunderban and ....
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.... in the project DSK Sundarban. Considering the above facts, the Assessing Officer has held that the commercial area included in the said project exceeded more than 2000 sq. ft. and therefore, the assessee was not entitled to claim deduction u/s 80IB(10). The CIT(A) has confirmed the order of the Assessing Officer. The CIT(A) refers to the order of the Collector, Pune granting N.A. permission. According to the CIT(A), the Collector has granted permission to the assessee to convert 47,323 sq. mtrs. out of the total land of 50525 sq. mtrs for non agricultural use. The CIT(A) has stated that the sanction of the Collector is for non agricultural use and permission for construction of buildings was subject to certain conditions. The CIT(A) refers to clause 12 of the sanction granted wherein it was mentioned that the use of land is permitted for construction of residential buildings and shops. The CIT(A) has held that the permission given by Collector is for mixed use i.e. both residential and commercial construction. According to the CIT(A), the permission for construction of residential houses was intrinsically linked to the sanction received by the assessee for commercial use. Thus, th....
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.... The building plans were sanctioned separately for the residential and the amenity space. The building plan for the residential project wing 'A' Sunderban is placed on pages 30 of the Paper Book. Similarly for sanctioned plans in respect of other wings for example wing 'H' on plot 'A' has been placed on pages 31 of the Paper Book filed by the assessee. The amenity space and residential project in plot 'A' with wings A to H are separated by compound wall. 2.5.2 Considering the fact that the building plans were separately sanctioned, the assessee stated that the amenity space cannot be considered as part of the residential project. The plot area in respect of the building plan for the amenity space refers to the plot of land on which the amenity space was constructed and not the plot of land on which the residential project was constructed. Considering the above facts, the assessee stated that the amenity space - I and amenity space - II are independent projects and not part of the residential project. The assessee has claimed that he has paid taxes on the profits arising on sale of amenity space and no deduction u/s 80IB(10) has been claimed, which is not disputed by the revenue ....
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....amenities space cannot be equated with commercial space and even if assuming it is a commercial space but still as the assessee's project is sanctioned prior to 01-04-2005, the limitation put on the maximum commercial area in any housing project is not applicable to the assessee's project as the original lay out and buildings plan were first sanctioned on 14-06-2004. He submits that amenities building which is said to be commercial is an independent building and is built up on specific marked area of 1230 sq. mtrs. which is an independent plot carved out of the total area of 8200 sq. mtrs. He submits that initially the project was on the plot of land of 4300 sq. mtrs. but subsequently adjoining plot was acquired and hence, the separate demarcation was made. He relied on the decision of the Hon'ble High Court of Gujarat in the case of Manan Corporation Vs. CIT 78 DTR 205 (Guj) and CIT Vs. Brahma Associates 333 ITR 289 (Bom). He submits that assuming without going into controversy whether it is a single project or independent project otherwise also the assessee's project sanctioned prior to 01-04-2005, the assessee is not hit by the definition of the built up are which is applica....
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....d layout for the approval to the local authority and the approval was given to the said plan on 05-08-2006. In the said layout the total area of the plot is shown at 8400 Sq. ft. (copy of the plan and layout is at Page Nos. 28 and 30 of Compilation). From this factual aspect, it can safely be concluded that in fact the plan sanctioned on 05-08-2006 is almost a new plan and it was not merely the revision of the existing plan, even though in the application to the local authority the assessee has stated revision of the plan and layout. In consequence of acquisition of the additional land, the area of the amenities space was also increased so it cannot be said that the plan sanctioned on 05-08-2006 is only the revised plan. We are unable to accept the argument of the Ld. Counsel that as the project was sanctioned on 16-06-2004, hence the definition of the built up area introduced in Sec. 80IB(10) by the Finance (No. 2) Act, 2004 w.e.f. 01-04- 2005 is not applicable. After anxiously perusing the documents on record, including the layout plan and other permissions, in our opinion the effective sanctioned to the assessee's housing project is on 05-08-2006 and hence, the assessee was very....
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....nit in the said building has been sold till today even though given on lease and no profit from the amenity building space is included in the eligible profit on which the deduction u/s. 80IB(10) has been claimed. The Ld. Counsel has relied on the plethora of the decisions on this limb of argument but in our opinion the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. Vandana Property 353 ITR 36 (Bom) is applicable to the facts of this case. We, accordingly, hold that the amenity building is an independent project itself and it cannot be tagged with other projects of the assessee. We, further hold that the assessee has not violated any of the conditions of Sec. 80IB(10) to gain eligibility for claiming the deduction and hence both the authorities below erred by denying the deduction to the assessee. We, accordingly, allow the assessee's claim of deduction on the above reason and direct the Assessing Officer to allow the deduction u/s. 80IB(10). We also make it clear that as the amenity building is treated as an independent project, the assessee is not entitled to include the profit earned from the sale of any of the unit in the said building for claiming ....
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....t started and will not be complete before March 2011 C,D,E,F, K ,L,M,N,R,S,T,U, V,W (14 building) P + 7 Floors Completed and Completion Certificate given by Gram Panchayat Kirkitwadi dated 31.1.2011 22 Row Houses G + 1 Floor Not yet started and will not be completed before March 2011 10. The case of the assessee before the authorities below was that the buildings for which sanction was received from the Corporation for parking + seven floors constitute the eligible project, against which it had claimed deduction under section 80IB(10) of the Act. The buildings for which sanction was received for parking + first floor and 22 row houses were not part of the eligible project. The Assessing Officer however, rejecting the claim of assessee held that all the buildings from 'A' to 'W' and 22 row houses were part of the same project and since all the buildings were not completed and the built up area of the proposed row houses exceeded 1500 sq.ft., hence, the assessee was not entitled to the claim of deduction under section 80IB(10) of the Act. 11. The CIT(A) confirmed the order of Assessing Officer. 12. We find that an identical issue arose before the Tribunal in assessee....
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....ted in respect of the housing project consisting the "E" building. As rightly contended by the counsel for the assessee and the intervenors, section 80-IB(10)(b) specifies the size of the plot of land but not the size of the housing project. The size of the plot of land, as per section 80-IB(10), must have minimum area of one acre. The section does not lay down that the plot having minimum area of one acre must be a vacant plot. The question, therefore, to be considered is, whether the Revenue is justified in reading the expression "plot of land" in section 80-IB(10)(b) as "vacant plot of land" ? The object of section 80-IB(10) in granting deduction equal to one hundred per cent. of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the Legislature is to make available a large number of medium size residential units for the....
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....he provisions of section 10(23G), separately financing arrangements and also, if it separately fulfils all other statutory conditions listed in sections 10(23G) and 80(B(10). With regard to your query regarding the definition of housing project, it is clarified that any project which has been approved by a local authority as a housing project should be considered adequate for the purpose of sections 10(23G) and 80-IB (10)." From the aforesaid letter of the Central Board of Direct Taxes, it is clear that for the purposes of section 80-IB(10) it is not the mandate of the section that the housing project must be on a vacant plot of land having minimum area of one acre and that where a new housing project is constructed on a plot of land having minimum area of one acre but with existing housing projects would qualify for section 80-IB(10) deduction. Even otherwise, the argument of the Revenue does not stand to reason because, in the city of Mumbai where there is acute space crunch, it is difficult to find a vacant plot having minimum area of one acre and even if few such plots are existing it cannot be said that section 80- IB(10) deduction was intended to give benefit only to the u....
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....n the Tribunal ha s held that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. Similar view has been taken by ITAT Mumbai in the case of Mudhit Gupta [51 DTR 217]. In view of above in the absence of any definition of housing project, the Assessing Officer and the CIT(A) were not justified in holding that all the buildings sanctioned in the revised plan dated 15.10.2008 constitute the housing project as discussed above. In view of above discussion, the choice is for the assessee to determine which buildings would form part of the housing project and the conditions laid down in Section 80IB(10) of the Act should be checked vis-a-vis those buildings with respect to which the deduction is claimed. Since the assessee has completed all the buildings for which sanction is received for parking + 7 floors and all the conditions laid down in Section 80IB(10) of the Act were complied with, the assessee is entitled for claiming deduction u/s.80IB(10) of the Act. It is settled legal position that beneficial provisions have to be interpreted liberally in favour of assessee. Regarding the contention of the Assessing Offic....