Gujarat High Court
Principal Commissioner Of Income Tax vs Nagjua Developers on 11 June, 2019
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, A.C. Rao
C/TAXAP/23/2019 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 23 of 2019
With
R/TAX APPEAL NO. 24 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
==========================================================
1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
==========================================================
PRINCIPAL COMMISSIONER OF INCOME TAX
Versus
NAGJUA DEVELOPERS
==========================================================
Appearance:
MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1
for the Opponent(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
Date : 11/06/2019
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Since the proposed substantial questions of law are the Page 1 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT same in both the captioned Tax Appeals, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience the Tax Appeal No.23/2019 is treated as the lead matter.
3. This Tax Appeal under Section 260-A of the Income Tax Act, 1961 (for short, 'the Act, 1961') is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Surat Bench, Surat dated 03.08.2018 in the ITA No.2666/AHD/2011/SRT for the Assessment Years 2007-08. The Appellate Tribunal vide its impugned order dismissed the appeal preferred by the Revenue & thereby affirmed the order passed by the Commissioner of Income-Tax (Appeals), Valsad in Appeal No. CIT(A)/VLS/399/09-10 dated 29.07.2011.
4. The Revenue has proposed the following substantial question of law:
"Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in allowing the deduction u/s. 80IB of the I-T Act, 1961 ?"Page 2 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019
C/TAXAP/23/2019 JUDGMENT
5. The facts giving rise to this Tax Appeal may be summarised thus:
5.1 The respondent - assessee filed its Return of Income on 11.10.2007 declaring total income of Rs.14,61,560/-. The Return was processed under Section 143(1) of the Act,1961.
In the case on hand, a survey was undertaken under Section 133(A)of the Act on 05.09.2006 relevant to the Assessment Year under consideration and accordingly, the case was taken up for scrutiny. The notice under Section 143(2) of the Act was issued upon the assessee in this regard. The assessee is engaged in the business of construction and development of Housing Project. According to the case of the Revenue, the assessee floated a Housing Project in the name "Park City".
It appears from the materials on record that the project was in two parts. One part of the project was in the form of row houses and the second part of the project was in the form of residential flats of less than 1500 sq. ft. area. The assessee claimed its entire profit of Housing Project in respect of sale of flats as deduction under section 80IB(10) to the tune of Rs.2,65,52,967/-. In the course of the assessment proceedings, the assessee was called upon to justify the deduction under section 80IB(10) of the Act. The case of the assessee before the AO was that the two projects were altogether different.
Page 3 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019C/TAXAP/23/2019 JUDGMENT One project comprised of row houses and the other project comprised of residential flats of less than 1500 sq. ft. area.
5.2 The Assessing Officer took the view that the assessee is not entitled to claim deduction under Section 80IB(10) of the Act. The Assessing Officer assigned the following reasons in taking such view.
"For the year under consideration, the assessee has developed a. project known as "Park City". As submitted by the assessee, this Park city project is a complete project having residential tenaments without any shopping or commercial area. The project is divided into several type of tenaments i.e. Row houses, smaller Flats, bigger flats etc. The area of row houses is much bigger than the prescribed area eligible for deduction u/s. 80IB(10) of the IT Act. It is to be mentioned that in a claim of deduction u/s. 801B (10), whole project has to be considered in toto and not on piecemeal basis. In a very clever manner, the assessee has tried to hide this vital fact on the plea that, on row houses, 80IB(10) deduction has not been claimed, but while considering the eligibility u/s. 80IB(10) project cannot be compartmentalized. The 80IB(10) deduction is granted on a project not part of the project. In this case, the row houses are situated within the Park city project itself. There is no, demarcation of row houses by any wall fencing etc. Row houses are located on the same land and enjoying common facilities. Nowhere, in the eligibility criteria u/s. 80IB(10), such exception has been given. For the sake of clarity, the relevant sub clause(c) of section 80IB(10) is reproduced hereunder;
''C) the Residential unit has a maximum built-up area of one thousand square feet where such residential units is situated within the city of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five Page 4 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT hundred square feet at any other place;"
From the above, it can be seen that nowhere part, sub part; sub project, such demarcation have been mentioned. The eligibility demands, a water tight compartment wherein, if the area of the residential unit exceeds 1500 sq. ft in a place like Silvassa, then the assessee becomes ineligible in terms of eligibility of provisions of section 80IB(10). No exceptional clause or proviso has been given in 80IB(10). As accepted by the assessee, (by virtue of 'submission) that, in the project itself area of the row house exceeds' 1500 sq. ft. and hence the assessee is not eligible for deduction u/s. 80IB of the IT Act as claimed in the return of income."
6. The assessee being dissatisfied with the order of the AO, preferred an appeal before the Commissioner of Income Tax (Appeals), Valsad under section 246-A of the Act. The CIT (Appeals) took the view that the assessee was entitled to claim deduction under Section 80IB(10) of the Act. The CIT (Appeals) in taking such view observed as under:
"Let us examine whether the appellant had fulfilled the conditions in this case; The appellant submitted that within the meaning of the provisions of Section 80IB.(10), the Appellant is entitled for deduction of the entire profit derived from the sale of the Flats in the said Park City Housing Project as:
1) The Housing Project is approved in the year 2005-
06 i.e. before 31st March, 2007.
2)Construction work of the said housing project was started after the 1st day of October, 1998
3)The size of the land is not less than 1 Acre.
Page 5 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019C/TAXAP/23/2019 JUDGMENT
4) The Built area of any of the residential flats is less than 1500 Sq. Fts.
5) There is no construction of shops/commercial establishment.
In my view, the appellant has fulfilled all the conditions as stipulated in the said provisions. Further, the appellant has contested that it had not claimed the tax benefits for the profits derived from the Row Houses for which, the appellant had maintained separate account. The appellant's case is also supported by various judicial pronouncements. The Jurisdictional Hon'ble ITAT, Ahmedabad in the case of Radhe Developers V/s. I.T.O. Ahmedabad 'A' Bench of Ahmedabad Tribunal (FA No. 2482/Ahd./2006) & Income-tax Officer, Ward-2(5), Ahmedabad VS. Shakti Corporation. Ahmedabad ITAT Appeal No. 1503 of 2008 aptly support the case of the appellant. Thus in my opinion, for claiming deduct U/s. 80IB(10) the ownership of the Land is not a condition and subject to fulfillment of conditions of Section 80llB(10) of the Act,. deduction is available, to an Undertaking, which derives profit from developing and & hiding of housing projects. Further, from the perusal of Assessment Order I find that Assessing Officer has nowhere observed that the area of the Flats sold by the appellant is more than the area prescribed except on the Row Houses for which the appellant had paid tax. In support of it's certifying the appellant has submitted Certificate, of an Architect certifying that the Built up area of none of the Flats is more than 1500 Sq. Fts. On the other hand, though Assessing Officer has deputed Inspector for the verification of the areas of Flats in the said Housing Project, he has just relied on the observations of the Survey Party. Ignoring the fact that the appellant has not claimed deduction U/s. 80IB(10) in respect of Profit from the Sale of Row Houses Assessing Officer is not justified in denying the claimed deduction U/s.: 80IB(10) in respect of Profit from the sale of the Flats. Having regards to the legal provisions I am of the opinion that in respect of the profit from the sale of the Flats the appellant has not violated any of the conditions of section 80IB(10) and as the appellant has not claimed deduction U/s. 80IB(10) in respect of the profit from the Sale of the Row Houses, appellant is eligible for Page 6 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT deduction U/s. 80IB(10) of the Act in respect of Profit from the Sale of Flats. The appellant also further buttress its case by citing two more judgements of Honble ITAT Essem Capital Market Ltd. vs. ITO (2011) TIOL 196 (Mum.) and ITO vs. M.S.Vishnu Developers. (Ahm. ITAT). In view of the factual and legal position narrated above, the A0 is directed to allow benefits U/s.80IB(10) of the Act claimed by the appellant. The appellant succeeds on this ground of appeal."
7. The Revenue being dissatisfied with the order passed by the CIT (Appeals) preferred appeal before the Income Tax Appellate Tribunal, Surat Bench at Surat. The Appellate Tribunal dismissed the appeal preferred by the Revenue thereby affirming the order passed by the CIT (Appeals). The Appellate Tribunal while dismissing the appeal preferred by the Revenue held as under:
"14. In view of contentions of the AO and findings and observations recorded by the Id. CIT(A) in the impugned first appellate order, we observe that undisputedly the appellant though had purchased the land survey No.882/1/2/2, Amli, Silvasaa vide agreement dated 18.01.2005 and due to civil dispute pending before the Court final sale deed in favour of appellant was executed on 31.03.2008. Therefore, air necessary permissions for development of housing project, building and developing of housing project on the said land was obtained in the name of land owner under agreement dated 18.01.2005. The crux of these, facts is that, the assessee build and develop housing project under agreement dated 18.01.2005 and due to civil dispute pending before the Court final sale deed in favour of appellant was executed on 31.03.2008. Therefore, all the necessary permissions [or development of housing project, building and developing of housing project on the said land was obtained in the name of land owner under agreement Page 7 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT dated 18.01.2005. the crux of these facts is that the assessee build and develop housing project under agreement dated 18.01.2005 and became owner of the said land on 3.03.2008 when the sale deed executed in favour of the assessee. At this Juncture, the ratio of the order of the 'A' Bench of ITAT, Ahmedabad in the case of Radhe Developets vs. ITO (ITA No.2482/Ahd/2006). It was held that to claim deduction u/s. 80IB(10) of the Act there is no condition precedent that the assessee must be the owner of the land on which housing project is to be constructed and hence, contention of the AO in this regard is not sustainable and ld. CIT(A) was right in dismiss the same.
15. So far as second allegation and basis taken by the AP for disallowing deduction u/s. 8OIB(10) of the Act i.e., entire housing project is to be treated as single unit is concerned, we are of the view that neither the AO nor Id. DR during the arguments before us, could not controvert the fact that the assessee maintained separate books of accounts for flats and row houses and he has not claimed any deduction on the row houses which are measuring from 2000 sq. ft. to 2200 sq. ft. and claim of s. 80IB(10) of the Act has been made only on the income from sale of flats, which are measuring less than 1500 sq. ft. On this issue the ratio of the decision of Hon'ble High Court of Madras in the case of Vishwas Promoters Pvt. Ltd. (supra), as has been vehemently relied by the Id. AR, provides support to the claim of the assessee wherein it has been held that the mere fact one of the blocks have units exceeding built-up area of 1500 sq. ft. per se, would not result in nullifying the each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement u/s. 80IB(10) of the Act. Their lordship in para 15, answering the substantial question of law against the Revenue and in favour of the assessee further held that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the Projects but to the extent of each of the, blocks satisfying, conditions u/s. 80IB(10) of the Act and the assessee would be entitled to the relief on the proportionate basis.Page 8 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019
C/TAXAP/23/2019 JUDGMENT
16. In the present case undisputedly the assessee has maintained separate accounts for flats and row houses and no claim has been made on the row houses measuring area of more than 1500 sq. ft. and the claim u/s. 80IB(10) of the Act has been made only on the flats which are measuring less than 1500 sq. ft.
this fact is clearly discernable with the computation of income filing along with return of income (assessee paper book pg.1 & 2) wherein net profit as per P&L a/c. on flat sale amounting to Rs. 2,68,88,714lhas been shown and amount of Rs. 2,65,52,967/ has been claimed as deduction u/s. 80IB(10) of the Act. Thus, in view of ratio of decision of Hon'ble Madras High Court in the case of Vishwas Promoters (supra) claim of the assessee, on the flats which fulfill the conditions laid down provision of u/s. 80IB(10) of the Act is allowable and the ld. CIT(A) was right in allowing the same.
17. So far as last contention of the AO that the entire housing project has to be treated as single unit is concerned, in the case of Vishwas Promoters (supra) Hon'ble High Court of Madras also made it clear that each residential block in a housing project is a Housing project in itself for purpose of claiming deduction u/s. 80IB(10) of the Act. Therefore, this contention of, the AO is also not correct and sustainable and the first appellate authority was right in dismissing the same. The conclusion arrived by the Id. CIT(A) also gets strong support from the decision of Hon'ble Jurisdictional High Court of Gujarat in the case of Pushkar Construction (supra), wherein their lordship in pars 7 held that when the project fulfilled the criteria for being approved as a housing project, the deduction u/s. 80IB(10) of the Act could not be denied. As per decision of Hon'ble High Court of Bombay in the case of Vandana Properties (supra), which was also referred by Hon'ble High Court of Madras in the case of Vishwas Promoters Ltd. (supra), it was held that the 8OIB deduction on construction of a housing project on a plot having area of one acre is available, irrespective of fact that other housing projects exist on said land. In the present case, it is not an allegation of the AO that the housing project has been build or develop on a land having area of less than one acre, but he denied the deduction on the allegation that entire housing project to be Page 9 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT treated as single unit which is not correct and justified in view of the conclusion arrived by us in the earlier part of this order.
18. On the basis of foregoing discussion, we reach to a logical conclusion that the AO disallowed the claim by taking a hyper technical approach and on his own whims and surmises which is clearly by the scheme and mandate of provision of u/s. 80IB(10) of the Act and ratio of the decision of Honble High Court of Bombay, High Court of Madras and Honble Jurisdictional High Court of Gujarat as respectfully noted above. We, therefore, are unable to see, any ambiguity, perversity or any other valid reason to interfere with the findings arrived by the ld. CIT(A) in dismissing the allegations and contentions of the AO and in allowing deduction u/s. 80IB(10) of the Act to the assessee on the amount accrued to him on sale of flats measuring less than 1500 sq. ft. per unit. Consequently, we hold that the AO disallowed the claim without any Justified and correct reasons which was rightly allowed by the Id. CIT(A) and thus, we uphold the findings recorded by him in the first appellate order. Accordingly, sole ground of Revenue being devoid of merits is dismissed."
8. The Revenue being dissatisfied with the order passed by the Appellate Tribunal is here before this court with the present appeal under Section 260-A of the Act, 1961.
9. Ms. Kalpana Rawal, the learned Senior Standing Counsel appearing for the department vehemently submitted that the CIT (Appeals) as well as the Appellate Tribunal committed a serious error in taking the view that the assessee is entitled to claim deduction under section 80IB(10) of the Act, 1961. The main thrust of the submission of Ms. Rawal is that the Tribunal Page 10 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT committed a serious error in not appreciating the fact that the case on hand is of one composite project. It is submitted that the project put up by the assessee of row houses and the project of the residential flats are contiguous to each other. To put it in other words, both the projects are on one common land. It is also submitted that not only the parcel of land is same but the construction could also be termed as a part of the same project. In such circumstances, according to the learned counsel appearing for the Revenue, the assessee is not entitled to the deduction under section 80IB(10) of the Act.
10. We have carefully considered the contentions of the Revenue in the light of the elaborate discussion of the issue, both by the CIT(A) & Tribunal and have gone through the records.
11. The provisions of Section 80-IB(10) of the Act prior to its substitution by the Finance (No. 2) Act, 2004 and the provisions after 1st April, 2005 are reproduced below:
"Prior to 1st April, 2005 The amount of deduction in case of an undertaking developing and building housing projects approved before the 31st March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if:Page 11 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019
C/TAXAP/23/2019 JUDGMENT
(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st Oct., 1998;
(b) the project is on the size of a plot of land which has minimum area of one acre; and
(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place.
After 1st April 2005 The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if:
(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st Oct., 1998 and completes such construction:
(i) in a case where a housing project has been approved by the local authority before the 1st April, 2004, on or before the 31st March, 2008,
(ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st April, 2004, within four years from the end of the financial year in which the housing project is approved by the local authority.
Explanation-For the purposes of this clause:
(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;
(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;Page 12 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019
C/TAXAP/23/2019 JUDGMENT
(b) the project is on the size of a plot of land which has a minimum area of one acre;
Provided that nothing contained in Clause (a) or Clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf;
(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place; and
(d) the built-up area of the shops and other commercial establishments included in the 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.
The comparative provision before 1st April, 2005 and after 1st April, 2005 will emerge to the following position of law.
------------------------------------------------------------------------------------------------------- Before 1.4.2005 After 1.4.2005 Remarks
---------------------------------------------------------------------
Housing projects Housing projects Cut off date of approved before the approved before the approval till March, 31st day of March, 31st day of March, 2007 after 2005 2007 amendment
--------------------------------------------------------------------- Has commenced or Has commenced or Date of commences commences commencement is development and development and same construction of the construction of the housing project on or housing project on or after the 1st day of after the 1st day of October, 1998. October, 1998.
---------------------------------------------------------------------
Completes such No completion
construction- requirement before
1.4.2005
(i) in a case where a
housing project has
been approved by the
local authority before
the 1st day of April,
2004 on or before the
Page 13 of 18
Downloaded on : Wed Jul 03 05:05:12 IST 2019
C/TAXAP/23/2019 JUDGMENT
31st day of March,
2008. (ii) in a case
where a housing
project has been or is
approved by the local
authority on or after
the 1st day of April,
2004 within four years
from the end of the
financial year in which
the housing project is
approved by the local
authority.
---------------------------------------------------------------------
In a case where the No such stipulation approval in respect of before 1.4.2005 the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority.
---------------------------------------------------------------------
The date of completion No such requirement of construction of the before 1.4.2005 housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority.
--------------------------------------------------------------------- The project is on the The project is on the Same in both size of a plot of land size of a plot of land which has a minimum which has a minimum area of one acre. area of one acre.
---------------------------------------------------------------------
Nothing contained in No such provision Clause (a) or Clause (b) shall before 1.4.2005 apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf
---------------------------------------------------------------------
Page 14 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019C/TAXAP/23/2019 JUDGMENT The residential unit The residential unit Same in both has a maximum built- has a maximum built- up area of one up area of one thousand square feet thousand square feet
where such residential where such residential unit is situated within unit is situated within the cities of Delhi or the cities of Delhi or Mumbai or within Mumbai or within twenty five kilometers twenty-five kilometers from the municipal from the municipal limits of these cities limits of these cities and one thousand and and one thousand and five hundred square five hundred square feet at any other place.feet at any other place.
---------------------------------------------------------------------
The built-up area of No such stipulation
the shops and other before 1.4.2005
commercial
establishments
included in the
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.
---------------------------------------------------------------------
12. The legislature has nowhere provided the definition of a housing project either in the section or anywhere in the IT Act.
Is it open for the Revenue to consider all the housing activities undertaken by the assessee as one project or different projects ? The Concise Oxford Dictionary (9th Edition) defines a 'project' as "a plan, a scheme, a planned undertaking, a usually long-term task undertaken by a student to be submitted for assessment.
13. We are not impressed by the submission canvassed on behalf of the Revenue that as both the projects were put up on the same parcel of land, the same would be one composite Page 15 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT project and therefore the assessee would not be entitled to claim the deduction under Section 80IB(10) of the Act. This aspect has been well dealt with by both i.e. the CTI (Appeals) as well as the Appellate Tribunal. We are of the view that it is not open to the Revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled to in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who are undertaking the low housing projects will get defeated.
14. The assessee has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the test laid down under Section 80- IB(10) of the Act. In our view, combining these two projects into one will lead to a result which manifestly will be unjust and absurd and defeat the very provisions of the deduction sections. Unless there is a clear intention of the legislature the Revenue cannot be permitted to do so. After all the assessee have obtained different commencement certificates and started on different periods of time. They are separate by time, Page 16 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue, in our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion.
15. In the case of Commissioner of Income Tax vs. Vandana Properties, reported in 353 ITR 36, the Bombay High Court confirmed the decision of the Tribunal and observed as under:
"26. 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 to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make available large number of medium size residential units for the benefit of the common man. However, in the absence of defining the expression 'housing project' and in the absence of specifying the size or the number of housing projects required to be constructed on a plot of land having minimum area of one acre, even one housing project containing multiple residential units of a size not exceeding 1000 square feet constructed on a plot of land having minimum area of one acre would be eligible for Section 80IB (10) deduction. If the construction of Section 80IB (10) put forth by the Revenue is accepted, it would mean that if on a vacant plot of land, one housing project fulfilling all conditions is undertaken, then deduction would be available to that housing project and if thereafter several other housing projects are undertaken on the very same plot of land, the deduction would not be available to those housing projects as the plot ceases to be a vacant plot after the construction of the first housing Page 17 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019 C/TAXAP/23/2019 JUDGMENT project. Such a construction if accepted would defeat the object with which Section 80IB(10) was enacted."
16. In the case of Commissioner of Income Tax vs. Voora Property Develop P. Ltd. the Madras High Court held and observed that when the project fulfilled the criteria for being approved as a housing project, the deduction under Section 80IB(10) could not be denied on the ground that the assessee had obtained a separate plan permits for the six blocks. In this case also, the assessee had claimed deduction on the basis of composite development of housing project under six different blocks, the combined area of which exceeded one acre. In this case, the Madras High Court followed the decision of Bombay High Court in case of Commissioner of Income Tax vs. Vandana Properties (supra).
17. In the overall view of the matter, we see no good reason to disturb the order passed by the Tribunal affirming the order passed by the CIT (Appeals). In the result, this appeal fails and is hereby dismissed. Consequently, the connected Tax Appeal also fails and is hereby dismissed.
(J. B. PARDIWALA, J) (A. C. RAO, J) MAYA Page 18 of 18 Downloaded on : Wed Jul 03 05:05:12 IST 2019