TaxTMI 
TaxTMI 
2017 (1) TMI 1794
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....essee (in Appeal No.(PN/CIT(A)-II/DCIT Cir-4/110/2013-14/30). Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds :- "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing deduction u/s. 80IB(10) of the Act in respect of project 'Parkland' even though the provisions of sec. 80IB(10)(a)(iii) and sec. 80IB(10)(c) of the Act are not satisfied in the case of the said project. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating the fact that the house project had not been completed by 31/03/2012, thus violating the conditions provided in clause (a) to section 80IB(10) of the Act. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating the import of Section 80IB(10) of the Act which speaks about sanction to the 'housing project' and not to the individual building in the project. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata claim of deduction u/s. 80IB( 10) of....
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....ot exist and therefore the project "Park Land" was incomplete as on 31.03.2012. AO also noticed that five row houses (F1 to F5) had area in excess of 1500 Sq.Ft. AO therefore concluded that there were violation of conditions of Sec.80IB(10) namely that the project was not completed within 5 years from the date of commencement and secondly 5 Units of the Housing Project were measuring more than 1500 Sq.Ft. and therefore assessee was not eligible for deduction u/s80IB(10). The submission of the assessee that the construction of the project was as per the sanctioned plans and revised sanctioned plans and as per the plans the building "C" was covered only till plinth stage due to FSI issues was not found acceptable to AO. Its submission with respect to areas exceeding 1500 Sq.Ft that for considering the built-up area, the terrace area needs to excluded was also not found acceptable to the AO. AO therefore denied the claim of deduction u/s 80IB(10). Aggrieved by the order of AO, assessee carried the matter before CIT(A), who decided the issue in favour of the assessee by holding as under : 3.6 I have considered the submission made by the appellant and perused material on record....
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....nity space and the 9 meter DP road to them by the appellant firm. The delay in handing over of the amenity space and the DP road is not completed because the PMC has shifted the 9 meter DP road in the development plan of Baner and Balewadi through EP 32. The appellant has filed the copy of the notification dated 18-9-2008 issued by the govt. of Maharashtra, Urban Development Dept in this regard. Thus on the final sanction of Development plan by the govt. of Maharashtra the process of handing over of the areas of amenity space and DP road will be completed. However, as the development plan is pending for sanction before the State Govt. and the appellant firm for the said reasons could not start and complete the building 'C' of the project. However, the construction, sanction and approval by the original and subsequent revised plans has been fully completed by the appellant firm and the required occupancy/completion certificate also obtained prior to the specified date i.e. 31-3-2012. Thus it can be noticed that the construction of building 'C' could not be completed because of the fact that the required FSI for construction has not yet been sanctioned and allowed by the PMC and no p....
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....0IB(10) of the Act. We find that in case of Johar Hassan Zojwalla (supra), wherein condition of completion as laid down in section 80IB(10)(a) could not be complied with because of a stay being granted by MRTP Court. Thus fault of non completion of construction was not attributable to assessee. In case such a contingency emerges which makes the compliance with provision impossible, then benefit bestowed on an assessee cannot be completely denied. Such liberal interpretation should be used in favour of assessee when he is incapacitated in completing project in time for the reasons beyond his control. In case before us, as stated on behalf of assessee, that assessee submitted certain modifications/rectifications for top floors of buildings. The said modification/rectification could not be completed as local authority could not approve the modification as their files have been taken over by concern intelligence department for investigation of violation of urban land ceiling Act applicable to land in question at relevant point of time. This fact has not been disputed on behalf of revenue. Thus, assessee was prevented by sufficient reasonable cause which compelled the impossibility on p....
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....mit any proportionate deduction under s. 80-IB(10) of the Act. However, in view of the decision in Ramsukh Properties (supra) as discussed above, the CIT(A) rightly allowed the proportionate deduction in respect of project completed during the impugned assessment year. The provisions of taxing statute should be construed harmoniously with the object of statute to effectuate the legislative intention. Under the circumstances, proportionate deduction under s. 80-IB(10) of the Act is justified. Accordingly, the order of CIT(A) on this issue needs no interference from our side. We uphold the same............" In the present case the construction of the project has the sanctioned plan dated 4-8-2006 and further revised commencement dated 18-11-2006, 3-2-2007, 13-2-2008, 21-7- 2011 has been totally completed before the specific date i.e. 31- 3-2012. The construction of the 'C' wing has not started till date as the required FSI for construction of the building 'C' is not available with the appellant firm and which will be given in lieu of amenity space and 9.0 meter DP road to be sanctioned by the local authority. However, the PMC has shifted 9 mtr. DP road in development plan of....
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.... which certainly raises doubts with respect to the working of the correct area of the each row house. The area as calculated by the govt. authorized valuer and that by the architect of the appellant is as under: Sr. No. Row House Area as per assessee (sq. ft.) Area actually measured (sq. ft.) 1 F1 1451 1919 2 F2 1495 1603 3 F3 1360 1534 4 F4 1421 1618 5 F5 1423 1632 It is found that there is one or two terrace area exclusively for each row house. The details are as below: Sr. No. Row House Terrace-1(sq. ft.) Terrace-2(sq. ft.) Total 1 F1 216.33 222.11 438.44 2 F2 90.18 - 90.18 3 F3 120.24 - 120.24 4 F4 128.12 - 128.12 5 F5 128.12 - 128.12 The authorized valuer has added the area of the car porch, terrace area above porch, formed open to sky terraces area above living room and bedroom in the measurement of row house whereas the appellant's architect has excluded the aforesaid areas in its calculation for the built up area of the row houses F1 to F5. Thus, if the terrace area which is open to sky is exclude....
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....p area would mean the inner measurements of the residential unit at the floor level including the projections and balconies as increased by the thickness of the wall but does not include the common area shared with other residential unit. In such circumstances, the built-up area is to be worked out from the wall of the residential unit. The question of extending it to mean that the area within the compound around an open land is erroneous. the Division Bench of the Madras High Court in the judgment reported in - 2012-TIOL-951-HC-MAD-IT in the case of the CIT, Channai V/s M/s Mahalakshmi Housing has held that the open terrace area cannot form part of the built up area; in the result, the assessee would be entitled to deduction u/s 80-IB(10) and that the assessee would be entitled to proportionate relief as regards the units having built up area not more than 1500 square feet. Considering the ratio laid down in the aforesaid judgments, we find that the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10). Tribunal was not justified to come to the conclusion that the said area of the courtyard is to be included to calculate the built-up ar....
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....he Act". Comment on Government Valuation Report regarding Area of Residential Unit..............................................................." 3.7.3 The contention of the appellant that balconies and projections can be included in the definition of built-up area also find support in the decision of the ITAT Ahmedabad in the case of Safal Associates Vs ITO ITA No.520/Ahd/2011 and ACIT Vs Yug Corporation ITA No.2703/Ahd/2009. In the case of Amaltas Associates Vs ITO (2011) 142 TTJ 849 (Ahd)., the ITAT with respect to the inclusion of terrace in the built-up area - the head note reads as follows: "As per the terms of the development agreement between the parties, planning, sanction of plan, construction work, development of property, labour engagement activities are to be carried out by the assessee .................................................................................... There was no bar on the assessee to construct more flats or units than that originally stipulated in the agreement- Once the plan was approved by the municipal authorities on the basis of the papers submitted by the real owner, it could be deemed as approval....
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....05 Kolkatta Tribunal. 8. Vishwas Promoters (P) Ltd. Vs ACIT & Ors (2013) 50 (I) TICL - 274 (Mad) 9. DCIT Vs Ekta Housing (P) Ltd. (2011) 41 (II) ITCL 404 (Mum) 3.8.1 In the case of Brigade Enterprises (P) Ltd. (supra), the facts were that the assessee formed a single project by name 'Brigade Millennium' comprising a total area of 22 acres and 19 guntas in Survey Nos.44, 45 and 51/1 of Bangalore South Taluka. This macro project comprised certain housing blocks, community hall etc. as its micro components. It comprised, among other things, 5 residential blocks by name Mayflower, Cassia, Magnolia, Jacaranda and Laburnum. Approval had been obtained from BDA on 24-5-2002. The assessee took two blocks separately, viz., Mayflower and Cassia, and claimed the benefit of deduction u/s.80IB of the Act in respect of the said two blocks, claiming them to be separate projects, as only the said two blocks could fulfill the requirements prescribed u/s.80IB of the Act. The AO, however, denied the claim of deduction u/s.80IB treating Brigade Millennium as only one project. The Tribunal, after considering the facts, observed that the use of the words "residential units" mea....
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....vided below clause (a) to subsection (10 ) to section 80-1B. The very reading of above Explanation (i), makes it clear that for the eligibility of the deduction provided under section 80-IB(10), the date on which building plan of a housing project has been firstly approved by the local authority will be treated as approval in respect of the housing project. When Explanation (ii) is read with Explanation (i), it makes clear that the date of completion of construction of such housing project would be taken when completion certificate has been issued by the local authority. In other words, in clause (i) of the Explanation, it has been made clear that date of first approval of housing project by the local authority would be taken as starting point of the housing project and in clause No. (ii), it has been made clear that the date of completion certificate in respect of such housing project issued by local authority will be considered to compute the prescribed time-limit for verification of eligibility of assessee for the claimed deduction. In view of the above Explanation, approval of the housing project and approval of building plan are two different concepts. Thus Part A of ....
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.... units by fulfilling all the conditions as laid down u/s.80IB(10), the denial of claim by the A.O. was not justified. 3.8.8 In Vishwas Promoters (P) Ltd Vs ACIT & Ors (2013) 50(I) TICL - 274 (Mad) it was held that the assessee was entitled to claim deduction in respect of all the blocks forming part of the project called Agrini and Vajra, but to the extent of each of the blocks satisfying the conditions u/s 80IB(10) of the Act and the assessee would be entitled to the relief on a proportionate basis. Similar view was also taken by the Madras High Court in the case of CIT Vs Arun Excello Foundation (P) Ltd (2013) 212 taxman 342 (Mad) wherein it was held that in a given case when the housing project @ 100% residential units satisfies other clauses (a) and (b) and the built up area given under clause (c) of sec 80IB(10) of the Act, there would be no difficulty for the revenue to grant the deduction. The question becomes a little complicated when 100% residential housing project has built up area of mixed nature while few of the units may satisfy the criteria of the built up area of less than 1500 sq.ft, there may be units which have built up area crossing the limit as specifi....