TaxTMI 
TaxTMI 
2009 (6) TMI 1001
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....cording to him, the AO neither made enquiries about the date of completion of the projects, nor made required enquiries to determine the maximum built up area of the residential unit of the projects, the sanctioned area of some of the units being admittedly more than one thousand square feet, nor resorted to any disallowance U/S 14A in respect of dividend income and found out whether any expenditure was attributable to dividend income. This according to him made the order of the AO both erroneous as well as prejudicial to revenue in view of the decisions of the Supreme Court in the cases of Rampyari Devi Saraogi vs. CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal vs. on, (1973) 88 ITR 323 (SC) and the jurisdictional High Court in the case of Gee Vee Enterprises vs. Addl. CIT, (1975) 99 ITR 375, 386 (Del). He, therefore, set-aside the assessment for making it afresh. 4. According to the assessee the deduction u/s 80IB (10) had been allowed to the assessee after the AO had made proper enquiries in this regard and on being satisfied that the conditions prescribed under this section were met. The assessee filed the following: i) A certificate of Statutory Tax Auditors dated 6.10.20....
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....as not erroneous in so far as prejudicial to the interest of revenue and the CIT is wrong in setting aside the same. 7. We have heard the parties and considered the rival submissions. We find that the AO made enquiries about the claim of the assessee and discussed the claim in order of assessment as under: "In its revised return of income, the assessee has claimed deduction u/s 80IB(10) of the I. Tax Ac, for the following three projects.: Golf Link- I, Greater Noida Rs.1,42,85,683 Golf Link -II, Great Noida Rs.36,77,850 Avantika - Akirti Rs.1,09,43,137 Rs.2,89,06,670 As per provision of section 8018(10), the assessee was required to have these projects completed by 31.03.2003. In this regard, the assessee produced completion certificates issued by the competent authority. However, the assessee failed to produce completion certificates in respect of following projects (houses): Golf Link-1, Greater Noida Rs.5,80,883 Golf Link -II, Great Noida Rs.3,27,061 Avantika - Akirti Rs.3,26,578 Rs.12,34,522 Since the assessee has failed to produced completion certificates in respect of projects valued at Rs. '12,34,522, deduction of this amount is being disallowed in....
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....e housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." 9. On a close reading of the provision of this section, it would be evident that the deduction under this section is available on satisfaction of the following conditions: i) The project is approved by a local authority; ii) The size of the plot of land is of a minimum 1 acre; iii)The residential unit should have a built-up area not exceeding 1,000 sq. ft. ; iv) The undertaking commences development and construction of the housing project on or after 1st October, 1998 v) The undertaking completes the development and construction before 31st March, 2001. 10. There is no dispute as regards first two conditions, that the project was approved by a local authority and that the project was being developed on land exceeding 1 acre. This also stands certified by the auditors and details of which are as under: Project Size of the land Date of approval of lay out plan of residential colony Golf Link I, Greater Noida 100 acres 30th May 1997 Golf Link II Greater Noida 38.86 acres 11th March 1999 Avantika Aakriti 82.69 ac....
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....r 2001-02 on 26.3.2004, much before the insertion of definition of 'built-up area' under section 80IB. The amendment introduced by the Finance (No.2) Act, 2004 from 1.4.2005, seems to be substantive in nature and shall have effect for assessment years 2005-06 and N onwards and not prior to that. 13. Deduction under section 80IB(10) of the Act claimed by the assessee, however, is to be disallowed as the built-up area exceeded 1000 sq. feet., as pointed above. Even if some flats have area exceeding 1000 sq. feet, that would not disentitle the assessee to deduction and the proportionate deduction on flats which exceed the statutory limit of 1,000 sq ft can only be disallowed, as held in Bengal Ambuja Housing Developments Ltd. (ITA No. 1735 and 1595/Kol)/07; ii) Delhi Iron and Steel Pvt. Ltd. (ITA No.497/Del/07) and iii) DCIT vs. Brigade Enterprises Pvt. Ltd (ITA No.1198/Bang./2007 dated 29.8.2009. On the balance units the deduction is to be allowed. 14. In the case of Delhi Iron and Steel Pvt. Ltd. (supra), the Tribunal allowed the proportionate deduction in similar circumstances by observing in paragraphs 12.3, 12.4 and 12.5 as under : "12.3 On examination of the abov....
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....TA No.1198/Bang./2007 order dated 29th August 2009, the Bangalore Bench of the Tribunal similarly allowed the case of the assessee to the profits relating to eligible houses which were within the prescribed area limit by observing in paragraphs 5.1 and 5.2 of the order as under : "5.1 From the facts it transpires that the authorities like BESCOM, BWSSB and Fire Service Department duly inspected the plot and sanctioned plans for each of the blocks separately after satisfying themselves. Further, it is seen that the group housing approval was a master plan. It was an approval of a concept. The components of project like residential area, school, and civic amenities were detailed therein. As per clause (c) of section 80-IB(10), a residential unit should have a maximum built up area of 1500 sq. ft. Clause (c) refers to "area" of "residential area". Then use of words "residential unit" means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the condition of 80-IB, the assessee is entitled for deduction. So considered, it is only in respect of those units which have not fulfilled the stipulated conditions, deduction....
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....rence to such profits that the deduction u/s 80-IB would be allowed. The manner of accounting fro profits would also support a conclusion that the deduction u/s 80-IB is to be computed qua each residential unit." 17. Respectfully following the aforesaid three decisions, we hold that the deduction to the assessee can be allowed with respect to the units which did not exceed the statutory limit of 1000 sq. ft. and the assessee would not be entitled to reductions of the built up area in 5 houses in East End Loni and 6 houses in Aavantika Aakriti, as referred to in paragraph 10 of the order aforesaid. We order accordingly. 18. The completion certificates issued by the relevant approving authorities certifying the area constructed by the assessee were also submitted before the assessing officer. Therefore the next condition of completion of housing projects before March 31, 2001, (as extended to March 31, 2003 by the Finance Act, 2000 and thereafter removed), was also complied with. In fact a query to the aforesaid effect was specifically raised by the assessing officer, and replied by the assessee vide letter dated 15 March 2003 during the course of assessment proceedings for th....
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....plan submitted by the developer and in that case, the developer would need to submit revised plan. On a perusal of the sequence of events, we find that building plans of each house submitted by the assessee were not sanctioned as such by the relevant authority before 1.10.98. The same were rejected and time and again modifications in plans were proposed by the authority. The approval of building plan was after 1.10.98 except for 26 houses in Avantika Aakriti project. 20. In the case of Nirmiti Construction vs. DCIT : 95 TTJ 1117 (Pune), that merely because some expenses like cleaning of land or Puja expenses, etc. after purchase of land, were incurred before 1.10.1998. The building plan were sanctioned by the relevant municipal authority after that date. The Tribunal held it could not be said that the assessee had commenced construction before 1.10.98 to deny deduction under section 80-IB(10) of the Act. Mumbai Bench of Tribunal also held similarly in the case of Ganga Developers vs. DCIT: (ITA No.9136/Mum/04) where also construction of commercial building was undisputedly started by the assessee before 1.10.98 but the approval for conversion of such constructed commercial buildin....