TaxTMI 
TaxTMI 
2017 (4) TMI 913
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....he Ld. AO which was passed Under section 143(3) r.w.s 153A on non-existing entity, is void-ab-initio and hence same is liable to be quashed under the provisions of Income Tax Act 1961. 2. On the facts and circumstances of the appellant case and under Law, the CIT(A) as well as Ld. AO erred in solely placing the reliance of the valuation report issued by the Ld. DVO, the appointment of which itself was bad in law as ld.DVO was not the member of the Search Party. 3. On the facts and circumstances of the appellant case and under the Law, Ld. CIT (A) erred in denying the claim of deduction u/s 801B(10) of Rs. 179,28,44,008/ - by including the following areas as a part of Built up are prescribed u/s 80IB(14)(a) of the Act: a) "Flower Bed area" which are "Open to Sky" and not at "Floor Level"; b) "50% of Common Wall area even though the "Common area" is specifically excluded from the said definition. 4. On the facts and circumstances of the appellant case and under the Law, Ld. CIT (A) as well as Ld. AO erred in not appreciating the understated material facts: a) The local authority is the appropriate Government Authority for development of housing pro....
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....l buildings from the assessment years 2006-07 to 2011-12 6. A search action u/s 132(1) and also survey action u/s 133A were carried out on 2.2.2012 on Nahar Group of cases and its associate concerns. The search was concluded on 28.3.2012 being the last date on which authorization was executed. The assessee and its entire group of concerns were engaged in the business of development of commercial and residential projects. A search warrant was issued in the name of erstwhile firm "M/s Nahar Enterprises" a non existent entity and so was the search whereas as a matter of fact the business of M/S Nahar Enterprises was taken over by "M/s Nahar Builders Ltd" upon dissolution on the date of search and was non-existent. The assessee firm was dissolved on 20.11.2011 and not in existence when the warrant was served on 2.2.2012. Thus, the warrant was issued in the name of assessee firm which was dissolved with effect from 20.11.2011 even though the department was informed to this fact of dissolution of assessee firm by a letter dated 1.12.2011. Whereas in Punchanama No. 9303, dated 27.3.2012 and in the Punchanana dated 28.3.2012 the name was mentioned as "Nahar Enterprises" (now known as "M....
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....terprises (now known as M/s. Nahar Builders Ltd.), though the other Panchnama drawn at Chandivali carries the name of M/s.Nahar Enterprises only and the name of M/s. Nahar Builders Ltd. has not been' mentioned. But that may be because of some oversight. 14. From the assessment order, therefore, it appears that warrant of authorization for search was apparently issued in the name of M/s. Nahar Enterprises (now known as M/ s. Nahar Builders Ltd.) and the correct address of the office premises as also the project site were mentioned therein. On conclusion of the search proceedings, the Panchnama has been drawn in the name of M/s. Nahar Enterprises (now known as M/s. Nahar Builders Ltd.) and the entire proceedings were carried out in the presence of two independent Panchas, who have signed and verified the Panchnamas. Further, the Panchnamas have also been signed and verified by Shri Sukhraj Nahar, the main person of the group. Accordingly, the objections raised by the learned AR about the validity of the search proceedings are misplaced and untenable and the same are therefore rejected. Accordingly, the proceedings initiated u] s.153A of the Act and assessment completed u/s 143....
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....nd void ab- initio. The ld. AR further submitted that the entity on which the search warrant was served was holding PAN AAAFN1599D which was disallowed on 20.11.2011 meaning thereby that the assessment proceedings were initiated against the non-existing person and ultimately the assessment order was passed on the very same entity which is not in existence and therefore the assessments made on such entity u/s 143(3) r.w.s.153A were bad in law and prayed that the same should be quashed as being invalid and void-abinitio. 10. The ld. DR , on the other hand, strongly opposed the arguments of the ld. AR and submitted that there is only one Punchanama bearing No.9303 dated 27.3.2012 which was executed in the name of several parties out of which one name appearing was "NAHAR ENTERPRISES" whereas other Punchanama bearing No.9302 dated 28.3.2012 was issued in the name of M/s Nahar Enterprises (now known as M/s Nahar Builders Ltd) and thus correctly issued. The ld. DR argued that Punchanama was drawn in the name of M/s Nahar Enterprises (now known as M/s Nahar Builders Ltd) and thus cannot be said to be it was issued invalidly. The ld. DR also argued that since both the entities were at t....
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.... issued in the name of dissolved entity or the existing company and whether the consequent assessments were void abinitio and non-est. It is an admitted fact and also apparent from the AO in the assessment order that the search warrant was issued in the name of the erstwhile firm i.e.Nahar Enterprises and the same is evident from the Punchanama itself. The AO observed that while drawing up the Punchanama some clerical mistake or by one sight the full name was not mentioned but just it was mentioned as Nahar Enterprises. It is the observation of the AO that it is a procedural mistake and no way affects the legality of the search as the warrant is correctly issued according to law. The relevant observations are as under : " The above allegation is absolutely unfounded, baseless and arbitrary and it seems has been made with a motive to divert attention from the main issue and/ or to dilute the sanctity of search action conducted u/s 132(1) of the Income Tax Act, 1961. In support of your allegation you have taken support of the copy of Panchnama enclosed by you. A per this in Col A it is written as- Warrant in the case of Nahar Enterprises. This Panchnama relates to warrant no.93....
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.... person with extreme powers bestowed on the department. Search action u/s 132(1) of the Act cannot be allowed to be taken place without proper evidence and information in the hands of the department. The revenue is expected to exercise utmost precaution while exercising these powers as search action is normally conducted after detailed enquiry and investigation by investigating authority after analyzing the background of group companies, partners, and directors, their PAN, residential status, address etc. We are therefore not in agreement with the conclusion of the authorities below that mistake is simply a clerical and procedural mistake of either side in mentioning the full name of the existing entity. Moreover, the appellant has duly informed the department vide its letter dated 1.12.2011 which was acknowledged by the office of the Dy.CIT on 1.12.2011 with reference to the dissolution of the firm. For the sake of convenience, we reproduce the letter dated 30.11.2011 intimating the AO about the dissolution as under : "Udani Mehta and Co, Chartered Accountants Tushar D Udani B.Com(Hon)LLB(Gen),FCA, Ref :No:------------------- Date November 30th, 2011 ACIT/NE/2....
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....ch a company is a mere procedural defect which can be cured. The appeals were, thus, finally admitted and heard on the following questions of law : "(i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of the AO in framing assessment in the name of 'Spice Corp. Ltd.', after the said entity stood dissolved consequent upon its amalgamation with MCorp (P) Ltd. w.e.f 1st July, 2003, was a mere procedural defect ? (ii) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that in view of the provisions of s. 292B of the Act, the assessment, having in substance and effect, been framed on the amalgamated company which could not be regarded as null and void ?" 4. The rationale given by the Tribunal, giving it to be a mere procedural defect is summed up as under : (i) Spice Corporation Ltd. (the amalgamating company) was an income-tax assessee in the status of a company incorporated under the provisions of Companies Act, 1956. (ii) The amalgamating company was in existence during the relevant asst. yrs. 2002-03 and 200304. (iii) The returns of income....
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....n respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company along with the name of amalgamating company in the body of assessment against the item 'name of the assessee' is not fatal to the validity of assessment but is a procedural defect covered by s. 292B of the Act. We hold accordingly." 7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary to law. No doubt, M/s Spice was an assessee and as an incorporated company and was in existence when it filed the returns in respect of two assessment years in question, however, before the case could be selected for scrutiny and assessment proceedings could be initiated, M/s Spice got amalgamated with MCorp (P) Ltd. It was the result of the scheme of the amalgamation filed before the Company Judge of this Court which was duly sanctioned vide orders dt. 11th Feb., 2004. With this amalgamation made effective from 1st July, 2003, M/s Spice ceased to exist. That is the plain and simple effect in law. The scheme of amalgamation itself provided for this consequence, inasmuch as s....
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....bstantially the shareholders in the company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly amalgamation does not cover the mere acquisition by a company of the share capital of other company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to include such an acquisition. See Halsburys Laws of England 4th Edition Vol. 7 para 1539. Two companies may join to form a new company, but there may be absorption or blending of one by the other, both amount to amalgamation. When two companies are merged and are so joined, as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its entity." 9. The Court referred to its earlier judgment in General Radio & Appliances Co. Ltd. vs. M.A. Khader (1986) 60 Comp Cas 1013 (SC). In view of the aforesaid clinching position in law, it is difficult to digest the circuitous route adopted by the Tribunal holding that the assessment was in fact in the n....
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....the intent and purpose of this Act. 13. The Punjab & Haryana High Court stated the effect of this provision in CIT vs. Norton Motors (2006) 200 CTR (P&H) 604 : (2005) 275 ITR 595 (P&H) in the following manner : "A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, s. 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to s. 292B."....
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....ith M/s Intel Technology India Pvt. Ltd.. We do not see any good ground to differ with the said judgment of the Delhi High Court. 8. Accordingly, for the reasons given in the judgment of the Delhi High Court in the case of Spice Infotainment Ltd. (supra), these appeals are dismissed and we decide the substantial questions of law in favour of the assessee and against the revenue." 18. In the case of CIT V/s Micron Steels (P.) Ltd. [2015] 372 ITR 386 (Delhi), the Hon'ble High Court of Delhi has held as under : "The Revenue in these appeals claims to be aggrieved by the order of the Income-tax Appellate Tribunal ("the ITAT"), dated February 19, 2013. The Income-tax Appellate Tribunal had affirmed the order of the Commissioner of Income-tax (Appeals) who had set aside the block assessment of M/s. Micron Steels Pvt. Ltd. (the original assessee which subsequently amalgamated with M/s. Lakhanpal Infrastructure Pvt. Ltd. with effect from February 1, 2008, by virtue of an order dated February 19, 2010). The assessment years in question are 2003-04 to 2008-09. 2. The grounds on which the Commissioner of Income-tax (Appeals) and later the Income-tax Appellate Tribunal set aside th....
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.... Appeal No. 475 of 2011, dated August 3, 2011] the Income-tax Appellate Tribunal held as follows : "8. We have carefully considered the submission in this regard and perused the records. We fully concur with the finding of the learned Commissioner of Income-tax (Appeals) that a company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with incorporation and it dies with the dissolution as per the provisions of the Companies Act. On amalgamation, the company ceases to exist in the eye of the law. Thus, assessment upon a dissolved company is impermissible as there is no provision in the Income-tax Act to make an assessment thereupon. The learned Commissioner of Income-tax (Appeals), in our view, has, therefore, rightly held that the assessment on a company which has been dissolved by amalgamation under sections 391 and 394 of the Companies Act, 1956, is invalid. Admittedly, the assessee-company in the present case stood dissolved on September 19, 2010, on amalgamation with M/s. Lakhanpal Infrastructure Pvt. Ltd. and the assessment order in the present case was framed on December 31, 2010. Hence, we uphold the order of the lear....
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....o action can be brought in its name. Thus, an insurance company which was subrogated to the rights of another insured company was held not to be entitled to maintain an action in the name of the company after the latter had been dissolved." 19. In the case of CIT V/s Micra India (P) Ltd (2015) 231 Taxman 809 (Delhi), the Hon'ble Delhi High Court has held as under: "10. In the present case, no doubt there was participation during the course of assessment; however, the AO, despite being told that the original company was no longer in existence, did not take remedial measures and did not transpose the transferee as the company which had to be assessed. Instead, he resorted to a peculiar procedure of describing the original assessee as the one in existence; the order also mentioned the transferee's name below that of M/s Micra India Pvt. Ltd. Now, that did not lead to the assessment being completed in the name of the transferee company. According to the AO, M/s Micra India Pvt. Ltd. was still in existence. Clearly, this was a case where the assessment was contrary to law, as having being completed against a non-existent company. The ITAT's decision is, in the circumstance....
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....ervice area, window projection, cupboard projection, sunken area (flower bed) and common wall area in arriving at the eligible limit of 1000 sq.ft. of built up area of each flat. The AO observed that after inclusion of these areas in built up area, the total built up area is exceeding 1000 sq.ft and therefore he denied the assessee the benefit of deduction 80IB(10) of the Act on various flats. 24. However, the ld. CIT(A) sustained the action of the AO in including sunken area (flower bed) and 50% of common wall area for the purpose of computing eligible area of 1000 sq. ft of built up area for the purpose of computing deduction u/s 80IB(10) of the Act. 25. The assessee before us filed detailed written submissions and argued extensively and submitted that the flower bed area should not be included in the definition of built up area as the flower bed area is below the floor level open to sky and outside the scope of definition of built up area. It was submitted that the flower bed area is open to sky and area open to sky including terrace shall not be included in the built up area. The ld. Counsel also contended that when the survey was carried out on 2.2.2012 the allowability ....
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.... we read the definition word by word it is get clear that only habitable area is covered under the definition. First word "inner measurements of the residential unit at the floor level": These words covers the carpet area which is actual habitable area used by the resident of the flat. Such areas are enclosed and surrounded by four walls and are at floor level. Second Word ", including the projections and balconies, " The word start from "," and end with "," and rest of the word are in continuity and independently. Thus, the second word is attached with first word. Means i.e. area inside & outside but at floor level. Because when inner area is considered only when at floor level. therefore, the outer area will also be consider at floor level. The whole weight age is given in section is to word "at the floor level". After calculation of area as per first and second word, the area was further extended by third word independently which is as under: Third word "as increased by the thickness of the walls" As without wall residential unit will be open and under open area person cannot live. Therefore the WALL area will also be included. It is important to point that ....
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....rewith: "17. It is well settled principle that a subject is not be taxed unless he is taxable within the strict meaning of the taxing statute. The principle has been applied is a plethora of cases, some of which are cited below. 18. A frequently-cited dictum of Rowlatt J. in his judgment in case of Cape Brandy Syndicate v. IRC [1921) 1KB 64 at 71 is: " ... in a taxing statute one has to look merely at what is clearly said There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used" 19. Further, His Lordship the Hori'ble Bhagwati J. of the Supreme Court of India, in his judgment in the case of A. V. Femandez v. State of Kerala [AIR 1957 SC 657] stated the aforesaid principle as follows: "In construing fiscal statues and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed If on the other hand, the case is not covered within the four corners of the provision....
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....erpretation of statues, the provisions of Section 80-IB(14)(a) of the Act must be interpreted strictly . Therefore, for the purposes of Section 80-IB(10) of the Act, the areas of the . projections and balconies can be included, if and only if, the same are at the same floor level as the residential unit. 26. Another well settled principle of interpretation of statutes is that the Legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the Legislature will not be accepted except for compelling reasons. This principle has been applied by the Hon'ble Supreme Court in case Aswini Kumar Ghose Arabinda Bose [AIR 1952 SC 369J wherein it was held that: "it is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage. if they' can have appropriate application in circumstances conceivably within the contemplation of the statute" 27. The aforesaid judgment was cited with approval by the Hon 'ble Supreme Court in the case of State of Orissa & Ors. v. Joginder Patjoshi & Anr. [AIR 2004 SC 1039J. In view of the aforesaid. in the present case, as the projections and ....
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....he words "means" and "includes", the said definition should be read broadly and not narrowly. According to GP Singh on Interpretation of Statutes, the definition which defines a word or a term [like BUA in this case} to mean A and to include Band C, cannot in its application be construed to exclude A and to include only Band C. [see : Page 130, 13th edition). The word "includes" enlarges the meaning of the words in the the first part, but the word "includes" cannot exclude the words "at the floor level", which expression finds place in the "means" part of the definition of BUA u/s.80IB [14j(a}. If the ornamental projections are not at the floor level, they cannot be included in the BUA. The AO has erred in not giving weightage to the words "at the floor level" in the "means" .part of the definition. Accordingly on the basis of the above, there is no conflict between definition of BUA in section 80 IB[14[(a} and DC Regulations" • Even department appointed valuer in case of M/s Sonam Builders while calculating the area as per section 80IB (14)(a) excluded the area of flower bed which are below the floor level from the calculation of Built-up area. In support of ....
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.... in the relevant provision without any meaning or reason. The areas stipulated under the DCR to be with the level difference to the floor level are chajjas , flower beds, dry balcony etc. which are to be provided for proper ventilations, light and protection from weather to the actual useable flat area of the flat. They are not on the same floor level as the useable area for the occupant and therefore under the definition of built up area, these areas are not includable. However, inner built-up area and projection and balconies and thickness of wall is to be included as per IT Act, 1961. The counsel referring to the sanctioned plans filled before me which was also filed before the AO, submits that the DCR allows a part of the balcony not exceeding 10% of the carpet area of the flat to be on the same floor level and the same could be enclosed with the wall. He submits that the DCR however does not take such balcony area as consumption of FSI available in relation to the plot area. It is free of FSI under the DCR. But, the same being on the floor level as that of the flat, the appellant has included the balcony area in The calculation of the built up area. To the same effect is the c....
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....e manner. They need to be harmonious and in consonance with each other. In case of development of housing projects also, the local Authority has to work in consonance with Environment Act Regulations to maintain the Natural Environment. Likewise the intention of Income Tax Act and the legislation also works in consonance with DC Rules& Regulations provided by the Local Authority. The definition of Built up areas as per IT Act providing the floor level concept has greater significance and importance attached to it. The DC Rules have provisions of floor level difference in case of ornamental projections to claim areas of free FSI and accordingly, the definition of Built -up area was amended w.e.f. 01..04.2005 specifying the floor level concept with regards to projections and balconies so that any areas including projections and balconies, if at floor level shall form a part of Built -up area. This proves beyond doubt that intention of legislature was to have harmony with local development laws. Even the section was designed on the basis of DRC Rules. The concept of at floor level and area open to Sky was based on the Section 30 DRC Rules, for ready ref. Sec. 30 were produced below:- ....
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.... Corporation Act and Sec. 43, 44 & 45 of the MR&TP Act, 1966. These approved plans provide detailed calculations of various areas included for working out the FSI consumed on the plot and the detailed plans of each Plot consisting of various Flats. The calculations are of Carpet areas, Balcony areas, "Built up area" of each floor and various elevation features are also shown on the Plan in terms of Plan and cross sections through the Building. These Plans clearly show the Floor Levels as also Levels of various projections permitted in the sanctioned Building Plans. It is clear from scrutiny of the Plans that Balconies are permitted in level with the Floor of the entire Flat whereas there is definitely a level difference between the floor of the flat and the various elevation features such as Flower Beds, Service Slabs, Ducts, Voids: and various such elevation features incorporated thereat. v] After completion of the Building, the Building Completion Certificate/occupation Certificate is granted by Municipal Corporation and these Plans show the work actually carried out at side. Accordingly it couyld be said beyond doubt that the local authority is the sole authority to govern an....
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....ntire development of housing projects. Moreover to substantiate further the purpose of projections such as Flower bed, and their interpretation as per the definition of Built up area, an expert opinion of Licensed Engineer and Surveyor Mr. Rajesh Shah has been: enclosed herewith for your reference (Paper Book Page No. 175-180) (viii) However it is pertinent to note that department has grossly erred in not appreciating the working mechanism and the role of the governing authority in respect of Development of Housing Projects and its approval mechanisms which is the heart of the provisions of sec 801B(10). The relevant extract from the Ld. A.O. assessment order u/s 143(3) r.w.s 153. is reproduced as under: "17.2.1 The assessee is under firm intention that BMC (Brihmumbai Municipal Corporation (hereinafter it will be referred as the MMC) is the ultimate authority in deciding the area as the Income Tax Act, 1 961. In this regard it is vital and irrefutable to note in view of the following points that the BMC is not the ultimate authority to rely, to decide, to certify and prove that the construction of the each unit! block/flat is less that 1000 sq ft and as per the wording....
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....roval mechanism, monitoring of day to day working of construction work and issue of completion certificate. The above comments on the working of MCGM by the Ld. AO is not correct, baseless and without any reasoning. It is further submitted that MCGM is the highest and ultimate Government authority entrusted with the task of regulating housing construction, approval of plan till issue of completion certificate, stopping unauthorized constructions etc. The local authority also takes a serious view on any lapses and imposes a heavy monetary penalty and other penal measures. Further the appellant had complied with all the terms and conditions of building plans and approvals and accordingly the MCGM has approved and certified that Buildings are duly constructed as per sanctioned plans and the appellant has been issued the Occupation certificate including water connections etc. Hence it is submitted that no cognizance of the comments of the Ld.AO on MCGM and its working mechanism should be taken into consideration. Reliance is placed on the following: "The Tribunal pointed out that as far as the construction of the building is concerned, the Local Authority, the Chennai Corporation....
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....t he had purchased 3 flats 1407, 1408 and 1409 in Building no 24 and the same was purchased as a single flat. The Inspector sent by the AO has not found any single instance wherein in the sale deed the fiat is of more than 1000 sq. ft. Neither the Addl CIT nor the AO has found any discrepancy in the following evidence filed by the appellant. a) Approved building plans b) Area stated in the title deed registered with the Sub registrar c) Area for which the sale amount was obtained d) Area which was stated in the occupation certificate issued by the local authority. ACIT V/s M/s Samartha Development Corporation -ITA No.5477 to 5482/Mum/2012 We have heard both the sides, perused the record and gone through the orders of the authorities below. The CIT(A) after considering the paper book filed by the assessee gave a specific finding that as per the agreement, the carpet area of the three flats 780 sq.ft. only. He further gave a finding that built up area and super built up area worked out separately by the assessee. On perusal of the details of sale of flats with agreement value, the built up area comes to 1092 sq.ft. Thereefore, the assessee fulfilled the condition....
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.... Harware Construction Pvt. Ltd vs ITO (2011) 64 DTR 251 (Mum) b. Sanghavi & Doshi Enterprises vs ITO (2011) 60 DTR 406 (Chennai)(TM)(Trib.) c. ITO vs AIR Developers (ITA No.447/Nag/2007) d. M/s Global Reality vs ITO (2012) 134ITD 407 (Indore) e. ITO VS M S VARDHAN BUILDERS ITA NO. 4635 MUM 2013 There is no evidence on record to suggest that the builder has constructed the residential unit with a built-up area of more than 1000 Sq. ft. in violation of the master plan and sold to the purchasers. There is no dispute in fact that as per the approved plans built up area of each residential unit is less than 1000 Sq. ft, and the residential units were sold by executing separate sale deeds. In such circumstances, merely because the purchaser has joined the flats and the built-up area of the flat is exceeded more than 1000 Sq. ft., the assessee cannot be denied benefit u/s. 80IB(10) of the Act. More or less an identical issue has been considered by the Mumbai Bench in the case of Haware Constructions (P) Ltd. VS.ITO. ACIT vs M/S SAMARTHA DEVELOPMENT CORPORATION ITA NO. 5477 TO 5482/MUM/201 "In such a situation, it is not possible....
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....l purposes would not render the construction of these flats as non-residential units. It is pertinent to note that what is required under section 80-IB(10) is residential unit and in the absence of anything to the contrary in the IT Act, the expression 'residential units' must have the same connotation as assigned to it by the local authorities granting approval to the project. When there is no dispute about the facts that these flats were constructed as standalone residential unit as per the approved plan and also as per the completion certificate, then any use of non-residential purpose of these flats by the end-user being transferred by the assessee would not change the nature of the residential unit in the housing Smt Manju Gupta V/s ACIT (2011) 15 taxmann.com 287 (Mum) The measurement taken by the ;d.DVO were not taken accurately and were rough and approximate. The wall thickness adopted by the Ld. DVO for calculation purpose wee on he higher side as compared to those approved as per the plan sanctioned by the MCGM. The appellant totally disagrees with the measurement undertaken by the Income tax valuer. The measurements of various flats taken by ....
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....irected by Ld. CIT(A) to bifurcate the total wall area as calculated by the DVO into wall area and wall of sunken areas such as service slabs, flower bed and window projection. The exercise was undertaken and a detailed bifurcation of the same was provided during the appellate proceedings which was duly accepted by Ld. CIT -(A) and on that basis, the relief was adjudicated by Ld. CIT (A) in respect of flats whose Built up area did not exceed 1000 sq.ft. The relevant finding of the same is reflected on Pg. 58 (Para 29) of the Ld. CIT-(A) order dated 02/03/2015. Hence taking the base of areas of Ld. DVO and duly accepted and adjudicated by Ld. CIT (A) during the appellate proceedings, we hereby attach the detailed working of the residential units measured by the Ld. DVO as per "Annexure A" to this submission. • Common area and area open to sky is not part of the built-up area. Common area defined in section 80IB(10) is clearly stated that a area which is shared with any other unit i.e. shared' with even a single unit is consider as common area. Hence, common area will be excluded from the built-up area calculation. The Above issue is also elaborated by hon'....
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....essee has not preferred any appeal against the said order, it will not be appropriate for this Court to extend the said benefit in these proceedings. However, as the law stands today, in view of the interpretations placed by them on the aforesaid provisions, the assessee has not violated the provisions of Section 80- IB (10) of the Act and in fact was entitled to 100% tax exemption on the profits derived from the project. Therefore the substantial question of law framed is answered in favour of the assessee and against the revenue. In present case also service areas are common areas whereas flower bed are areas open to s not surrounded by four walls and hence shall not form a part of Built up area. Further bed area is open to sky hence, cannot be considered while calculating built-up a as decided by various judicial authority as under:- Finding Judgment We are unable to uphold the stand of the Assessing Officer to include area of terrace as a part of the 'built up in a case where such terrace is a projection attached to the residential unit and there being no room. under such terrace, even if the same is available exclusively for use of the respective unit holder....
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.... beauty/aesthetic of the building." 26. We find considerable force in the submissions of the assessee that the flower bed area and common wall area are not includible in the definition of built up area while calculating the eligible limit of 1000 sq. ft for the purpose of allowing deduction u/s 80IB(10) of the Act. The flower bed area is open to sky and not covered by any sides whereas balcony is covered with three sides. The flower bed area is few inches below floor level. It is the submission of the assessee that the flower bed area is outside the balcony area and the starting point for the flower bed area is a point where the balcony area ends. 27. In the case of ITO V/s Poddar Ashish Developers in ITA No.3408/M/2010 dated 12-03-2014, the co-ordinate Bench of the Tribunal has considered the situation as to whether the areas of a unit which is not on floor level whether should be includible in the definition of built area or not and the co-ordinate Bench held: "10.9 By a combined reading of the provisions of the IT Act and the Development control regulations, it transpires that the area of a unit the floor level used in the IT Act and the exception of area with the level....
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....flower beds which are below the floor level can not form part of constructed area of flat for the purpose of determining the eligibility of the assessee to deduction u/s 80(IB)(10) of the Act. 31. Coming to the Revenue's appeals, the department has challenged the orders of the ld.CIT(A) in directing the AO to exclude the service area, window area, window projection, cupboard projection from the definition of built up area for calculating the deduction u/s 80IB(10) of the Act and the eligible area of 1000 sq. ft. The ld. CIT(A) excluded the said services area, cupboard projection and window projection by observing as under : c. Cupboard projections: The next objection is about inclusion of cupboard area. It is gathered that cupboards are normally carved out of wall area only. In some cases, cupboards may be projected a few inches outside the walls. Considering the facts of the case, I am of the view that as cupboard area is already included in the wall area itself, so separate addition on this account may not be warranted in built-up area. In some cases, when it is projected in other room, it would have already included in the area of other room. Therefore, separate additio....
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....g a washing machine or a LPG cylinder, they are doing it on their own accord. Moreover, there is no evidence to suggest that the assessee has sold these areas to respective buyers, or otherwise, buyers own such areas. Therefore, the observation of the AO that such area was under exclusive possession of flat owners, remains unsubstantiated, as in my opinion, the flat owners may be using the area, but largely the area is meant for common facilities for all the flats and acts as duct for various kinds of facilities for all the floors. In any case, it does not alter the material position. Considering the overall facts of the case, I am of the opinion that this area. should not form part of the BUA, as it is in the nature of common area meant for all the flat owners from top floor to ground floor, and purpose of this area is to provide a platform for repair, and replacement of the service pipes, including soil pipe, waste water pipes, water mains, etc. Similar opinion' has been given by the other experts. Accordingly, considering overall facts of the case, I direct the AO to exclude this area from the BUA. e) Window projections: It is gathered that the Valuation Officer, in re....
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....of for allowing the deductions u/s 80IB(10). " 34. The facts in brief are that the assessee part completed the the buildings namely Janquille, Jamaica, Laurel and Lilac upto 10th floor during the year and profits accruing therefrom of Rs. 61,56,52,158/- were claimed as deduction u/s 80(IB)(10) of the Act after obtaining a completion certificate from the municipal corporation qua the 10 floors on 31.3.2011.However the AO disallowed the said deduction by holding that the for the purpose of claim of deduction , the completion has to be of entire project and in parts. The appeal of the assessee was also dismissed by the ld CIT(A) upholding the action of the AO that the entire project has to be completed and not in part as has been done in the instant case. 35. As regards profits derived of Rs. 6156.52 lacs from housing projects comprising of the buildings, Jonquille, Jamaica, Laurel and Lilac, the ld AR submitted that the 10 floors in the said housing projects had been completed during impugned year and the completion certificate (OC) had been duly obtained on 30/3/2011 and according to the audited balance sheet as on 31.3.2011, the profits of the said project (10 floors) worked ....
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....dings namely, Jonquille-Jamaica and Laurel- Lilac in the housing project had been completed ,in all respects of 10 floors before 31/3/2011 and even the completion certificate (also known as Occupation certificate {O.C}) from the local competent authority {BMC} had been obtained on 30/3/2011. In defense of his arguments the ld AR relied and referred to a numbers of decisions. In the case of CIT Vs Vandana Properties [2012J 76 DTR 363 (Bom), Bombay High Court has interpreted the meaning of the expression 'housing project'. It was held in this context that the expression 'housing project" is neither defined under section 2, nor under section 80-IB(10) of the Act. Even under the Mumbai Municipal Corporation Act, 1988, and also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80-IB(10) would have to be construed as understood in common parlance. The expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In effect, the Explanation in secti....
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....to withdraw the claim of deduction u/s 801B(10) of Rs. 61,56,52,158/- and relevant extract of the recorded statement is reproduced as under ;- "i) Sir, M/ s. Nahar Enterprises has claimed a deduction of Rs. 28,31,72,619/- on Jonquille and Jamaica and Rs. 33,24,79,539/- on Laurel and Lilac for AY 2011-12. The Part OC up to 10th Floor was obtained from BMC on 30.03.2011 for the purposes of shifting the furniture and not for actual occupation. Since as I understand, in this case, the firm will not be eligible for the deduction, since the project has actually not been fully completed till 31.3.2011, I as the chairperson of the group admit this fallacy and the same shall be withdrawn immediately" The above statement clearly shows that the appellant, in recorded statement. had merely agreed to withdraw the claim of the deduction u/s 80IB(10) and had not actually withdrawn its claim otherwise eligible under the law. In fact, the said director had also stated that as Occupation certificate of 10 floors is obtained, thus the appellant had even allowed the flat buyers to shift their furniture with a general advice to reside after some time since internal construction work of balance 12....