TaxTMI 
TaxTMI 
2014 (7) TMI 1166
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....and hence, there was no reason to deny the deduction u/s 80IB(10) in respect of profits derived from the above referred projects. 2] The learned CIT(A) erred in holding that the appellant was not entitled to claim deduction u/s 80IB(10) of Rs. 3,51,55,308/- 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 ....
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.... of development of lands, constructions of the buildings / tenements and sell thereof. The issues before us are with regard to deduction in respect of projects DSK Sunderban, DSK Vishwa Phase-V (Meghmallar). 2.1 The first issue in assessee's appeals is with regard to the claim of deduction u/s.80IB(10) of the I.T. Act in respect of profits derived from DSK Sunderban. This project of assessee located at Hadapsar, Pune was disallowed by the Assessing Officer in view of the specific provisions of section 80IB(10) of the Act. The Assessing Officer considered the various submissions made on behalf of assessee during the assessment proceedings from time to time and rejected the claim of the assessee for A.Y. 2007-08 and the same was followed for A.Ys.2008-09 and 2009-10. In appeal, the CIT(A) confirmed the same. The stand of the assessee has been that the housing project is an independent of amenity space provided in DSK Sundarban in accordance with the existing D.S. Rules. In view of above, approval of the Collector, Pune who is the appropriate authority of NA permission as well as building permission vide PMH/MASR 263/2005 dated 06.03.2006 was examined by the CIT(A). The approval sa....
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....unaffected area for residential purpose is admissible. The applicant has submitted Affidavit and Indemnity Bond in the prescribed formats as provided in Circular No. MH- 2/Land/General RR/772/03 dated 22/9/2003 of Hon. Divisional Commissioner, Pune. The Applicant, in the said affidavit, has mentioned that provisions of below mentioned Acts are not the violated with respect to the area/land under reference. - 1) Mumbai Tenancy & Agricultural Land Act, 1948 and its Rules. 2) Maharashtra Land Revenue Code, 1996. 3) Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, 4) Various Acts related to Abolition of Inami lands/Tebyres, 5) The Bombay Prevention and Consolidation of Holdings Act, 1947. 6) Maharashtra Restoration of Lands to Scheduled Tribes Act, 1974. 7) Private Forests Acquisition Act, Maharashtra 1975. 8) The Urban Land (Ceiling & Regulations) Act, 1976. Project Affected Persons Rehabilitation Act Maharashtra, 1986. Mention of non-violation of provisions of any of the abovementioned Acts and that of said land is not under category of Occupiers Class-2 in the Affidavit. Accordingly, as per the request application of the Applica....
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....ghboring land owner. 6) Water supply and drainage system should be satisfactorily provided by the applicant at his own expenses. 7) The applicant will be responsible for any dispute regarding ownership, limits, customs. 8) Structural Engineer should be appointed for development work of the area and applicant should obtain certificate regarding Structural Stability. 9) Fulfillment of factors as mentioned in Rule No.6.2.6.1. of "A" Class regulations and implementation of measures for prevention of fire as per Appendix "P" with approval of Fire Advisor to the Govt. of Maharashtra should be done by the applicant at his own expenses and on his own responsibility. 10) The applicant should provide lift facility as per rule No. 18.1 of "A'' Class regulations. 11) Provisions like necessary water supply for said development (including for fire prevention system in addition to regular use), system for water flow, (drainage system, garbage disposal etc. should be done by the applicant at his own expenses and at his own responsibility. 12) Use of the said area should be done only for residences and shops and construction should be as per approved layout. 1....
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....y the Town Planning Department and Collector Pune for development of two amenity spaces admeasuring 2053.24 sq.mtr and 2850.77 sq.mtrs., named amenity spaces 1 and 2 respectively. Similarly, open spaces 1 and 2 admeasuring 1673.71 sq.mtrs. and 1595.67 sq.mtrs. respectively were also approved by the Town Planning Department and Collector Pune. This is as per the layout plan submitted as discussed above. The club house was provided in both the open spaces. The assessee has submitted that the balance area admeasuring 24520.05 sq.mtrs. was utilized for the construction of residential project and that the amenity space was, later on independently developed. The Assessing Officer has thus touched upon this aspect relating to construction of shops, gym and multi-purpose hall in the assessment order which is much in excess of the 2000 sq. ft. built up area of commercial space which is provided / allowed u/s. 80IB(10)(d) of the Act. The Assessing Officer has noted that the assessee itself showed the shops available for sale in its website which goes to show that the assessee himself treated the same as part of the housing project. 2.3 From the permission given by the Collector for NA and....
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....deduction u/s 80IB(10). The CIT(A) erred in not appreciating that the assessee was under an obligation as per the Development Control regulations to develop Amenity Space - I and Amenity Space - II for the purposes of general public utility and hence, the same were developed independently of the housing project - DSK Sundarban. For this proposition he drew our attention to the various pages of paper book having different site plan to establish that the residential project was independent of Amenity Project and it was eligible for deduction u/s 80IB(10) of the Act. For this proposition, he also drew our attention which is being dealt in the following paras. On the other hand, the learned Departmental Representative has submitted that the CIT(A) was justified in denying deduction u/s.80IB(10) in respect of profits derived from DSK Sunderban because all conditions laid down in the said section were not complied with by the assessee. The CIT(A) had rightly held that the assessee was not entitled to claim deduction in respect of profits derived from housing project of DSK Sunderban on the ground that the commercial area in the said project exceeded the limit prescribed u/s.80IB(10), ....
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....ch includes Amenity Space of 4904.01 sq. mtrs. According to revenue authorities, the Amenity Space is part of the project constructed by the assessee and therefore, the Assessing Officer has stated that the commercial area has exceeded the limit specified in section 80IB(10). The Assessing Officer refers to the master lay out wherein the Amenity Space was included in the same lay out. He also refers to the fact that the assessee has shown shops available 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....
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....he permission of the Collector in order to justify that, the Collector had granted permission for use of land for residential and commercial purposes. This is not in dispute. The issue is that the permission of layout by the Collector is for the land admeasuring 47,323.09 sq. mtrs as stated above. It was a general permission granting non agricultural use for the land and the same could not be termed as a sanction for constructing housing project on the said land. 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....
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....ed amenity space and had contended that the amenity space was an independent project. In appeal, the Tribunal after considering the facts has held that the building plan for amenity space was sanctioned separately and therefore, it constitutes an independent project and accordingly, the deduction was allowed by observing as under: "8. We have heard the rival submissions of the parties and perused the record. The main plank of the argument of the Ld. Counsel is that the 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 a....
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....and 14 of the Compilation). As per the layout plan sanctioned on 14-06- 2004, the total area of the plot is shown at 4100 Sq. Mtrs. and area under the amenity space 15% i.e. 615 Sq. Mtrs. It appears that subsequently the assessee sought the revision in the sanctioned layout and plan but the area of the plot was 4100 Sq. Mtrs. Till 01-04-2005 the assessee has not done anything on the plot. It appears that the assessee acquired the adjoining land and filed the further revised plan and 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 onl....
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....e No. 40 of the Compilation. We further find that for the construction of the building of the amenity space separate permission has been granted by the District Collector being competent local authority vide order dated 07-06-2008. If the building on the amenity space has been granted specific permission separately, in our opinion it partake the character of independent project and cannot be tagged with the assessee's other projects. The Ld. Counsel also submitted that not a single unit 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 gai....
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....ldings which were sanctioned in the revised plan dated 15.10.2008 are as under: A,B,G to J,O, P P + 1 Floor C to F, K to N, R to W P + 7 Floors 22 Row Houses G + 1 Floor 3.1 The stand of the assessee has been that the buildings for which the sanction was received from the Corporation for parking + 7 floors constituted the eligible project. It was submitted to the Building Details Assessing Officer that the buildings for which the sanction was received for parking + 1 Floor and the 22 row houses were not part of the eligible project. The Assessing Officer has not appreciated the contention of the assessee. According to him, all the buildings A to W and 22 Raw Houses are part of the same project and therefore, the claim of the assessee was not found correct. The Assessing Officer further stated that the built up area of the proposed row houses exceeded 1500 sq. ft. and therefore, the assessee had not complied with one of the essential conditions of section 80IB(10) of the Act. The CIT(A) has confirmed the order of the Assessing Officer. The relevant operative portion is in para 6.3 of its order which reads as under: "6.3 It is also seen that buildings which ar....
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....e on the size of a vacant plot of land which has minimum area of one acre. In the present case, there are five buildings (A, B, C, D and E) on a plot admeasuring 2.36 acres, hence, the proportionate area for each building would be less than one acre and, therefore, the benefit of section 80-IB(10) could not be granted 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 ....
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....e can qualify as infrastructure facility under sections 10(23G) and 80- IB(10) provided it is taken up by a separate undertaking, having separate books of account, so as to ensure that correct profits can be ascertained for the purpose of section 80-IB and also to identify receipts and repayments of long-term finances under the 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 otherwi....
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....0) of the Act. The ratio of Viswas Promoters Pvt. Ltd. (supra) supports the facts of the assessee case, wherein, the profits derived from parking + 7 buildings should be allowed as deduction u/s.80IB(10) of the Act. We also find that the ITAT Pune in the case of Runwal Multihousing Pvt. Ltd. [ITA No. 1015 - 1017/PN/11] wherein the Tribunal has 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 par....
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....ime of hearing, the order of the Ld. Commissioner of Income-tax(Appeals) may be vacated and that of the Assessing Officer, be restored. 8. The appellant craves leave to add, alter or amend any or all the grounds of appeal 5. The first issue is with regard to disallowance of claim of the assessee of Rs. 25,28,715/- in respect of the housing project DSK Vishwa-III. In appeal, the CIT(A) observed that the Assessing Officer had followed his predecessor order in respect of eligibility of housing project as was held in A.Y. 2004-05, 2005-06 and 2006- 07. The matter was travelled to ITAT and the Tribunal in ITA No.219/PN/2009 and ITA No.17/PN/2009 has decided the issue relating to application of amended provisions of section 80IB(10) w.e.f. 01.04.2005 to the housing project already approved and started in earlier years as per the then prevailing law has to be decided as per ratio laid down by the Mumbai Bench of ITAT in the case of Hiranandani Akruti JV and also the Hon'ble Jurisdictional Bombay High Court in the case of Brahma Associates wherein, it has been held that the assessee is entitled to deduction u/s.80IB(10) of the Act in respect of the housing project. This reasoned find....