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2017 (4) TMI 246
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....authority as a single project. 2. The Id.CIT(A) failed to appreciate that section 80IB(10) provides for deduction to the entire housing project and not to a part of the project on proportionate basis. 3. On fact and circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the AO. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the A.Q. be restored to the above extent. 3. In the Asstt.Year 2008-09, the assessee has filed its return of income on 30.9.2008. Similarly, returns in other years were filed within the time limit available under section 139(1) of the Income Tax Act. This aspect is not disputed by the parties. 4. A search under section 132 of the Income Tax Act was carried out at the residential premises of the partners and business premises of the assessee. Accordingly, notices under section 153A were issued upon the assessee in all these four years. The assessee has filed returns in response to these notices on 18.10.2011. It is pertinent to mention that in the Asstt.Year 2008-09, the assessee has original declared income at Rs. 76,98,600/-. This return was revised on 30.11.2010 showing a tot....
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.... furnished complete details and documentary evidences explaining the learned AO that one part of its project individually fulfilled all the conditions as laid down in Section 80IB(10) of the Act and accordingly, deduction amounting to Rs. 1,38,55,205/- in respect of profit from the said housing project should be granted to it. The details and explanations as submitted to the learned AO during the course of assessment proceedings are furnished herein below, for the immediate reference of your honour. The appellant firm "M/s. Rushivan Enterprise" is engaged in activity of developing and building housing project in the name of 'Ratna Jyoti Apartment' comprising of 8 High-rise buildings, on a total area of land admeasuring 22529 sq. mtrs. i.e. 5.567 acres, consisting of 2 different plots of land situated at Vill. Vesu, Dist. Surat. The detail of these 2 plots of land is as follows. (i) F. P. No. 107, 108 & 109, T. P. S. No. 2, admeasuring 15034 sq.mtrs. i.e. 3.715 acre and (ii) F. P. No. 05, T. P. S. No. 7, admeasuring 7495 sq. mtrs. i.e.1.852 acre. On the first plot of land bearing T. P. S. No. 2, F.P. No. 107, 108 & 109, s....
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....ate i.e. 31-03-2008, for which the copy of plan approval and building plan is enclosed herewith in Exhibit-3. 2. The size of the plot of the land is a minimum of 1 acre. The size of the plot of land for 80IB of the project "Ratna Jyoti Apartment" is 15034 sq. mts. i.e. 3.715 acres. 3 The undertaking commences development and construction of the housing project after 30-09-1998 and should complete construction within 5 years from the end of financial year in which the project was first approved by the local authority. The firm has been incorporated on 02-08-2005 i.e. the development and construction of the project "Ratna Jyoti Apartment" has commenced after the specified date of 30-09-1998 and BUG has been obtained on 15-05-2009 for 4 towers E, F, G & H and on 15-05- 2010 for other 2 towers A & B, thus the entire 801B project stands completed within 5 years from the end of the financial year in which the housing project was first approved expiring on 31-03- 2012. A Copy of Building Usance Certificate (BUG) dtd. 15-05- 2009 and 15-05-2010 as issued by Local Authority is enclosed herewith in Exhibit- 4. 4 The built-up area of the shops and other commercial esta....
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....red Accountant as required u/s. 80IB. From the above facts and documentary evidences, your honour would appreciate that the first project of the appellant firm consisting of towers A, B, E, F, G & H fulfils all the conditions u/s. 80IB(10) of the Act and accordingly is eligible for deduction u/s. 80IB(10) of the Act. However, the said claim was inadvertently not made in the return of income filed u/s. 139(1) of the Act but the same was claimed in the return of income filed in response to notice u/s. 153A. It may be noted that for the year under consideration, the appellant firm has claimed deduction u/s. 80IB(10) of the Act at Rs. 1,38,55,205/- in respect of the profit derived from the sale of flats in tower A, B, E, F, G & H, out of the total income of Rs. 3,08,66,120/- of the entire firm. The learned AO has failed to appreciate the aforesaid facts and rejected the appellant firm's claim of deduction u/s. 80IB(10) of the Act, on various allegations, which are rebutted herein after. In Para 8(i) on Page No. 20 of the impugned order, the learned AO has alleged that the appellant firm has constructed one common project by the name Ratna Jyoti A....
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....h Court of Madras in the case of CIT v. M/s. Arun Exello Foundations Pvt. Ltd. 2012-TIOL-1005-HC-MAD-IT has held that given the object of the provisions u/s. 80IB(10), when the deduction to be granted is on the profits and gains of undertaking developing and constructing approved housing projects, in the absence of restrictive covenant under sub-section (10) of Section 80IB, it is not justifiable to hold that on the mere fact of some of the units having the built-up area exceeding the conditions specified under Clause (c), the claim for deduction would stand rejected on the entire project. The court further held that it is no doubt true that the Section does not provide any such working of allowing deduction on pro- rata basis yet, this being a deduction provision and there being no such indication that the conditions have to be cumulatively satisfied in the context of the meaning of a 'housing project' to include residential cum commercial complex, it is fair that theproportionate relief has to be read into the provisions, so that deduction provisions are sustained. In view of the above facts and direct decisions applicable thereto, it is most humbly subm....
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....thereby violating the time limit section 153A. (iv) Moreover, the audit report as required u/s. 80(lB) of the Act has also not been submitted by the assessee along with its return of income but has been submitted at the time of assessment. Hence the assessee's claim of deduction u/s. 80IB is not entertained being not admissible as per law." 6. On appeal, the ld.CIT(A) has appreciated the facts and allowed the claim of the assessee. 7. Before us, the ld.DR relied upon the order of the AO and contended that whole project is to be considered one project, which cannot be segregated in two parts i.e. one eligible for grant of deduction under section 80IB and other not eligible. Since the assessee violated conditions enumerated in section 80IB in respect of two towers i.e. "C" and "D", therefore, it is not entitled for deduction under section 80IB. He further contended that the assessee originally did not claim this deduction in the return field under section 139(1). The assessee is precluded to claim such deduction in the return filed under section 153A of the Act. Similarly, the assessee has not filed return within time limit given to it in the notice under ....
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....of other conditions contemplated under section 80IB of the Income Tax Act, 1961. His objections are very limited. A perusal of the assessee's note would indicate that it has developed and built a housing project in the name of Ratna Jyoti Apartments. Total area of land used for development of this housing project was 22529 sq.meters i.e. 5.567 acres. It consists of two different plots viz. FP No.107, 108 & 109 of TPS No.2 admeasuring 15034 sq.meters i.e. 3.715 acre, and (ii) F.P.No.05 T.P. Scheme No.7, admeasuring 7495 sq.meters i.e. 1.852 acre. The assessee has constructed eight high rise towers on this area. On the first plot it has constructed tower bearing no.A, B, E, F, G & H, whereas on the plot bearing F.P.No.5 it has constructed towers C and D. The flats constructed in tower C & D were having more than 1500 sq.feet area. Therefore, these towers do not qualify the conditions for grant of deduction under section 80IB of the Act. As far as other towers are concerned, the assessee has fulfilled all conditions. The AO has rejected the claim of the assessee on the ground that both the plots are to be taken as a single project, and if the assessee has violated conditions of 80I....