Income Tax Appellate Tribunal - Indore
Global Reality, Bhopal vs Assessee on 6 September, 2011
1
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
AND
SHRI R.C. SHARMA, ACCOUNTANT MEMBER
ITA No.145/Ind/2011
ITA No.434/Ind/2010
ITA No.86/Ind/2011
A.Ys. - 2004-05 to 2006-07
M/s. Global Reality, Bhopal
PAN - AADFG 6679 E ... Appellant
Vs
ITO-3(1), Bhopal ... Respondent
ITA Nos. 81 to 85/Ind/2011
A.Ys. - 2002-03 to 2006-07
M/s. Global Estates, Bhopal
PAN - AADFG 6681 Q ... Appellant
Vs
ITO-3(1), Bhopal ... Respondent
Appellants by : S/Shri H.P. Verma & Ashish Goyal
Respondent by : Shri Arun Dewan, Sr. DR
Date of Hearing : 6.9.2011
Date of Pronouncement : 29.9.2011
2
O R D E R
PER JOGINDER SINGH These appeals are by the assessees against the different orders dated 10.2.11, 22.3.10, 10.2.11, 31.1.11 & 10.2.11 of ld. CIT(A)-II, Bhopal. First, we shall take up the appeals in the cases of M/s. Global Reality, wherein, the only ground contested by the assessee is that on the facts and in the circumstances of the case and within the provisions of Income- tax Act, the ld. first appellate authority was not justified in upholding the withdrawal of deduction u/s 80IB(10) at Rs.35,42,526/- (AY 2004-05), Rs.23,42,464/- (AY 2005-06) and Rs.9,62,915/- (AY 2006-07) and in confirming the impugned additions.
2. During hearing of the appeals, we have heard Shri H.P. Verma along with Shri Ashish Goyal, Ld. Counsel for assessee and Shri Arun Dewan, ld. Sr. DR. The crux of arguments on behalf of the assessee is that the municipal corporation granted sanction of the project on 22.3.2001 and the project was sanctioned before insertion of section 80IB(10) 3 w.e.f. 1.4.2005, therefore, it does not include under the definition. It was also pleaded that application was made by the assessee on 16.1.2008, the site was inspected by the Inspector, Municipal Corporation on 27.2.2008 and the project was completed on 27.2.2008 for which our attention was invited to clarification issued by Municipal Corporation on 23.3.2011. Reliance was placed upon the decision in Smt. Saroj Kapoor (ITA No.217/Ind/2008) and D.K. Construction (17 ITJ 1) (I.T.A.T., Indore). On the other hand, the ld. Sr. DR strongly defended the impugned order by contending that the covered area/built-up area is more than the prescribed limit, completion certificate was issued on the later date by the Municipal Authorities, therefore, the deduction was rightly denied to the assessee. Reliance was placed upon the decisions in Moosa (AM) vs. CIT (294 ITR 1) (SC) and Reliance Jute & Industries Ltd. vs. CIT (120 ITR 921) (SC).
3. We have considered the rival submissions of ld. representatives of both sides and perused the material available on record. Brief facts are that the assessee declared 4 nil income in its return after claiming deduction u/s 80IB(10) of the Act amounting to Rs. 35,42,526/- (AY 04-05), Rs.23,42,464/- (AY 05-06) and Rs.9,62,915 (AY 06-07). The Assessing Officer was of the view that the claimed deduction is only available in respect of eligible housing project, subject to fulfilment of conditions laid down in the Section. The Assessing Officer held that the deduction is not allowable to the assessee especially when the assessee has not satisfied the conditions laid down under the provisions of Section 80IB(10) of the Act. On appeal, the ld. CIT(A) approved initiation of proceedings u/s 147 as the built-up area of two bungalows was more than 1500 sq. ft., consequently, he affirmed withdrawal of deduction u/s 80IB(10) of the Act, being inadmissible. The assessee is in further appeal before this Tribunal.
4. Before coming to any conclusion, we are reproducing hereunder the provisions of Section 80IB(10) of the Act:
[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 6a[2008] 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,--5
(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,--
(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 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.
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;
(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 kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; 6b[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 following clauses (e) and (f) shall be inserted after clause (d) of sub-section (10) of section 6 80-IB by the Finance (No. 2) Act, 2009, w.e.f. 1-4- 2010 :
(e) not more than one residential unit in the housing project is allotted to any person not being an individual; and
(f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:--
(i) the individual or the spouse or the minor children of such individual,
(ii) the Hindu undivided family in which such individual is the karta,
(iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta.
6c [Explanation.--For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government).] If the aforesaid Section is analysed, it speaks about fulfilment of certain conditions and further if kept in juxtaposition with the facts of the present appeal, the housing project was approved by the local authority on 22.3.2001 (before 1st day of 2004) then the same has to be completed on or before 31st day of March, 2008. The assessee made application to the Municipal Authorities on 16.1.2008 (paper book page 26) and the site was claimed to be inspected by the officials of 7 Municipal Corporation on 27.2.2008 (paper book page 32). The completion certificate was issued to the assessee on 4.5.2010 (paper book pages 30 & 31) wherein the date of completion has not been mentioned. The assessee claimed that vide letter dated 23.3.2011 (paper book page 32), clarification was issued by the Municipal Corporation wherein the date of completion has been mentioned as 27.2.2008. In view of these facts, it can be said that the assessee has complied with the conditions as contained in sub-section (10) of sec. 80IB. As per sub-clause
(ii) to Explanation, the date of completion of the construction of the housing project shall be taken on the date on which the completion certificate in respect of such housing project is issued by the local authority. Since the clarification was issued by the Municipal Corporation regarding completion of the project, therefore, the provisions of the Act have been duly complied with.
5. The another reason for denial of claimed deduction by the Assessing Officer is that the built-up area of the bungalows is more than the maximum prescribed limit of 1500 8 sq.ft. of the dwelling unit. The stand of the Assessing Officer is that definition of the built-up area was inserted w.e.f. 1.4.2005 by the Finance Act, 2004 vide sec. 80IB(14)(a), consequently, the ld. Assessing Officer disallowed the claimed deduction. During appellate proceedings, the denial was strongly contested by the assessee by preferring written submission,3 which are reproduced hereunder:
"It is submitted that the land was originally purchased by Shri Anup Singh and Awtar Singh under the purchase deed dated 04/07/1968 and was sold to Prarivesh Grih Nirman Sahakari Sanstha in the year '1905'. However, since Parivesh Grih Nirman Sahakari Sanstha could not abide by the conditions of sale, the part of the landat 1.84 acres was restored back to Shri Awtar Singh under the court order dated 29/01/2001. In the mean time M/s Parivesh Grih Nirman Sahakari Sanstha had obtained the permission from local authority to develop a project with two types of Bungalows with built area of 1329 sq. ft. and 1461 sq. ft which was renewed by the appellant on 26/02/2002. As per the permission, the built up area of the appellant was less than 1500 sq. ft. as per parameters laid down by the Municipal Corporation Act./Rules. However, by the Finance Act (No.2) 2004, the definition of "built up area"
was inserted in sub-clause (14) of sec. 80IB as under:
"Sub-clause -14"
(a) 'Built up area' means the inner measurements of the residential unit at the floor level including the projections and balconies as increased by the 9 thickness of the walls but does not include the common areas shared with other residential units]"
The ld. Assessing Officer relied upon the definition of build up area which was made effective from 01/04/2005 as the assmt. year under consideration was assmt. year 2005-06 and accordingly, held that the appellant was not entitled to deduction u/s 80IB(10) of the IT Act. In this connection, it is submitted as under:-
(i) The ld. Assessing Officer of satisfied that the appellant fulfils all the condition laid down in sec.
80IB(10) except the condition about built up area being less than 1500 sq. ft.
(ii) The built up area was not defined under the IT Act by insertion of the provisions of sec.80IB (14)(a) as stated above from 01/04/2005.
(iii) Earlier, the Income Tax Act had not given any particular definition of built up area and accordingly, the position as emerging from M.P. Nagar Tatha Grah Nirman Adhiniyam was to be accepted for the purpose of IT Act as well.
(iv) As per said position, the Porch area, Stair case area, Trrace area, Balcony area, lobby area, Duct area and Tower area were not includible in the building area (as per different provisions market in yellow and red colour at different pages of Bhopal development plan 2005 and M.P. Nagar Tatha Grah Nirman Adhiniyam and Bhumi Vikas Nigam '1984' enclosed herewith.
(v) The provision of sec. 80IB was introduced from 01/04/99 to give a boost to the housing industry. Since Income Tax Act did not provide any definition of the built up area the builders all over India took the clue above the definition of built up area from other acts prevailing at the said time in M.P. all the builders and the appellant relied upon the 'built up area' given in the approved map and the said built up area approved by the map was less than 1500 sq.ft. as evident from the map approved by the Municipal Corporation.
(vi) The appellant build up the bungalow 'Regal' and Royal' as per map approved by the Municipal Corporation. The measurement of the built up area 10 are absolutely in accordance with the map approved by the Municipal Corporation on 22/03/2001 and renewed on 26/02/2002 and no fault has been found with the ultimate construction and the map approved.
(vii) The appellant relied upon the provisions of sec.
80IB(10) and launched its project in the year 2001. The appellant declared the built up area of 1329 sq. ft. and 1461 sq. ft as per the map approved by Municipal Corporation. The appellant fixed up the prices of the duplex bungalows after taking in to consideration, the fact that the appellant will not be liable to pay any income tax and accordingly, transferred the part of benefit of deduction to customers. He started booking of the bungalows in the year '2001' and most of bungalows were booked much before 01/04/2005.
(viii) After the insertion of the definition of the 'built up area' in sec. 80IB(14)(a), the appellant was not able to change the 'built up area' or the price fixed with the customers.
(ix) Your honour will appreciate that the appellant has acted upon the provisions of sec. 10(B) as prevailing in the year-2001 & 2002 (sec.
80IB(14(a) was not in place) and as per said provisions, the appellant was entitled to the benefit of deduction u/s 80IB(10) of the IT Act.
(x) Such a benefit can not withdrawn from through appellant has acted upon the legally assured position. In this connection, the appellant relies upon the following M.P. High Court and Supreme Court decisions.
(a) G.S.Dall & Floor Mills vs. State of M.P. (1987) 20 v.k.n 117
(b) State of M.P. vs. G.S.Dall & Floor Mills (1990) 187 ITR 478.
(xi) The facts of the said case are identical with the case of appellant, which are discussed below:
© The state Govt. issued a notification on 23/10/1981, which exempted the claim of dealers from payment of sales tax, who had set up an industry in the specified districts.11
(d) Following the said order dated 12/01/1983 giving a classification that the benefit of exemption from Sales Tax will be available to the Industries other than the traditional Industries.
(e) The honourable M.P. High Court and letter on the honourable Supreme Court held that the entitlement of the benefit can not be withdrawn from the beneficiary on the later date if the beneficiary has bonafidely acted upon the assurance of the Govt.
(f) In the present case also the appellant has acted upon in the year '2001 and 2002 on definition the 'built up area' as per map approved by the Municipal Corporation as per there Act and Rules and became entitled to the benefit of deduction u/s 80IB. Such a benefit can not be withdrawn from the appellant on the basis of definition coming into existence after 01/04/2005.
In view of the above, it is requested that the deduction claimed by the appellant u/s 80IB be kindly allowed and disallowance of deduction at Rs.23,42,464/- be kindly restored to the appellant. Accordingly, the appeal be kindly allowed." In continuation of the earlier submissions, the assessee has also submitted as under :
"Your honour will appreciate that ld. Assessing Officer has denied the deduction u/s. 80IB(10) to the appellant in the assmt. year 2005-06 on the sole ground that the 'built up area' of the bunglows of the Hamiltion project as per definition provide in section 80IB(14)(a) from 01-04-2005 are more than 1500 sq. ft. On inspection/measurement of the two bunglows by Regd. Engineer, the ld. Assessing Officer found that the 'built up area' of Regal bungalows was 1994 sq. ft., which was claimed by the appellant to be at1329 sq. ft. and of classic bunglows was 1919 sq. ft as against 1461 claimed by the appellant. In this connection, the further submissions of the appellant are as under:-12
(a) It is submitted that the measurements taken by the above said regd. Valuer are said to be in accordance with the definition of 'built up area' given in section 80IB(14(a). On perusal of the section. Your kind attention is invited to the definition given in sec. 80IB14(a) of the Income Tax Act, which is reproduced as under :-
"built - up area" means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units]; On plain reading of section, it will be evident that 'the built up area' does not include any projection or balconies, which are not surrounded by the walls as the section states that the 'built up area' includes projection and balconies as increased by thickness of walls and it implies that if there are no surrounding walls, the projections and balconies can not be included as a 'built up area' while the regd. Valuer has included even the 'Porch' in the built up area. As per said interpretation of sec.80IB(14)(a), the built up area of both the bungalows is much less than 1500 sq. ft. even as per definition provided in the above said section.
(b)(i) Without prejudice to the above, it is submitted that the built up area was defined in the IT Act for the first time by the Finance Act No.2 of 2004 (received assent of president of India on 10/09/2004) on 10/09/2004 and was made effective from 01/04/2005.
(ii) Earlier, the Income Tax Act had not givenany particular definition of "built up area" and accordingly, the position as emerging from the general laws like M.P. Nagar Tatha Grah Nirman Adhiniyam and M. P. Bhumi Vikas Niyam '1984 has to be accepted for the purpose of IT Act as well. The "built up area" is defined in the definition of floor area ratio in rule-2(29) read with rule-58 of M.P. Bhumi Vikas rules, which read as under:-
Rule-2(29). "The "built up area" as stated would construe the total built up area on all floors with the exception of lift wells, service ducts, machine 13 room for lifts, water tanks, covered parking area, one entrance lobby/foyer on ground floor, corridors, arcades, mumptee, staircase but inclusive of covered projection exceeding the limits prescribed under rule-58".
Rule-58.
"(I) Projection into open spaces-Every open space provided either interior or exterior shall be kept free any erection thereon and shall be open to the sky except as below:-
a. Cornice, roof or weather shade not more than 0.75 meter wide;
b. Sunshade over windows/ventilators or other opening not more than 0.75 meter wide;
c. Canopy at level not lower than lintel level of the first floor, but not to be used as a sit out with clearance of 1.5 metres between the plot boundary and the canopy;
d. Projected balcony at higher floor of width not more than 1.20 meter; Provided that the balcony area may be merged with the adjoining room to the extent of 10 per cent of the floor area, and] e. Projecting rooms balconies (see clause [d]) at alternate floors such that rooms of the lower two floors get light and air and the projection being not more than the height of the storey immediately below:-
However, these projections into open spaces shall not reduce the minimum required open front, rear or side spaces.
(2) Accessory Building - The following accessory building may be permitted in the open spaces.
(a) in existing buildings, sanitary block 2.4 meters in height subject to a maximum of 4 square meters in the rear open space at a distance of 1.5 meters from the rear boundary may be permitted.
(b) Parking lock up garages not exceeding 2.6 metres from plinth level in height and an area not exceeding 20 square metres shall be permitted in the side or rear open spaces at a distance of 7.5 14 metres from any road line or the front boundary of the plot.
Provided that the space allowed for garage may be permitted to be used for any other purpose and construction up to one more floor on it may be allowed. However, the area so allowed shall be included in the covered area but shall be treated as an exception to open space; and
(c) Suction tank and pump room each up to 2.5 square metre in area (3) Projections into street - In existing built up or congested areas no projection of any sort whatever except sun-shades extending more than 23 centimetres below a height of 4.3 metres shall project over the road or over any drain or over any portion outside the boundaries of the side provided that the projection arising out of the vertical part of the rain water spouts projecting at the road level or the water pipe may be permitted in accordance with the drainage plan:
Provided that in congested shopping streets not having heavy vehicular traffic, the Authority may as a special case allow projection of balconies not more than 0.75 metre in width over footpaths at a height not tower than 3.65 metres from the centre time of the street.
(4) Porticoes in existing developed area Porticoes in Bazar areas of existing developed areas may be permitted to project on road land subject to the following limitation:-
(a)Porticoes may be allowed on such roads leaving (a) minimum clear space of 19 metres between kerbs;
(b) It shall not be less than 3 metres wide;
(c) Nothing shall be allowed to be constructed on the portion, which shall be uses as an open terrace;
(d) Nothing shall be allowed to project beyond the line or arcades; and
(e) The space under the portico shall be paved and channelled according to the directions of the authority.15
(5) Sunshades over windows and ventilators -
Projections of sunshades over windows or ventilator in existing built - up or congested areas when permitted by the Authority shall fulfil the following conditions:-
(a) No Sun-shade shall be permitted over the road or over any drain or over any porten outside the boundaries of the site below a height of 2.8 metres from the road level.
(b) Sunshades provided above a height of 2.8 metres from the ground level shall be permitted to project up to a maximum width of 60 centimetres if the road over which they project exceeds 9 metres in width; and
(c) No sunshade shall be permitted on roads less than 9 metres width or on roads having no footpaths.
On perusal of the above said rules, it may be seen that the parking area (porch) projection for stairs and Veranda (entrance lobby) stair case covered wash room with shade and projections for balcony and elevations are not included in the built up area defined in M.P. Bhumi Vikas Rules '1984.
(iii) The provisions of sec.80IB(10) was introduces by the finance Act'99 and was made effective from 01/04/2000 to mitigate the housing problem faced by the country. Since Income Tax Act did not provide any definition of the 'built up area' till then an therefore, all the builders and the appellant relied upon the 'built up area' given in the map approved by the local authority and the said 'built up area' approved by the map in the case of the appellant was less than 1500 sq. ft. as evident from the map approved by the local authority.
(iv) The appellant relied upon the provisions of sec. 80IB(10) and launched its project on 25/02/2002. The appellant declared the 'built up area' as per map approved by local authority. The appellant fixed up the prices of the duplex bunglows after taking into consideration, the fact that the appellant will not be liable to pay any income tax and accordingly, transferred the part of the benefit of deduction to the customers. He 16 started booking of the bunglows in the year 2002 and many of the bunglows were booked much before 10-09-2004 (when the Finance Act (No.
2)2004 was passed).
(v) After the insertion of the definition of the 'built up area' in sec. 80IB(14)(a), by the Finance Act No. 2 passed on 10/09/2004, the appellant was not able to change the 'built up area' or the prices fixed with customers or the prospective customers of the same bungalows in the same premises.
(vi) Your honour will appreciate that the appellant has acted upon the provisions of sec 80(IB) as prevailing in the year 2003 (Sec.80IB(14)(a) was not in place) and as per said provisions the appellant was entitled to the benefit of deduction u/s 80IB(10) of the IT Act. Such a benefit can not withdrawn from the appellant when the appellant has acted upon the legally assured position emerging from the enactments. In this connection, the appellant relies upon the following M.P. High Court and Supreme Court decisions.
(a) S.Dal & Floor Mills Vs. State of M.P.(1987) 20 V.K.N.117
(b) State of M.P. Vs. G.S.Dall Mills (1990) 187 ITR 478
(vii) In the present case also the appellant has acted upon in the year '2003 on definition of the 'built up area' as per map approved by the local authority as per their Act and Rules and became entitled to the benefit of deduction u/. 80IB. Your honour will appreciated that entitlement of any project for the benefit of sec.80IB have to be in the light of the law prevailing on the date of commencement of the project.
(viii) On the above said facts and legal position as stated above, the objections of the Assessing Officer that the 'built up area' of dwelling unit exceeds 1500 sq. ft. can not be accepted. It may be seen that Income Tax Act as prevailing at the time of launch of the project did not define the 'built up area' and by the definition given in M.P. Nagar Grih Nirman Adhiniyam and M.P. Bhumi Vikas Niyas 1984, the built up area of the unit are 17 1329 and 1461 sq. ft and therefore, the assessee is entitled to the deduction u/s 80IB(10) of the IT Act. In this connection, your kind attention is invited to the ITAT Nagpur bench decision in the case of ITO vs. AIR Developers as reported on (2009) 123 TTJ (Nagpur) 959."
6. If the submissions of the assessee are kept in juxtaposition with the facts of the present appeal, we are supposed to analyse "built-up area" as per definition provided in sec. 80IB(14)(a) with effect from 1.4.2005, which means the inner measurement of the residential unit at the floor level including the projection and the balconies, as increased by the thickness of walls but does not include the common areas shared with the other residential unit whereas the ld. Assessing Officer has included the area covered by the outer walls also in place of taking thickness of walls. At the same time, the projections and balconies which are not surrounded by the walls, as section states, cannot be included in 'built-up area', meaning thereby that the projections and balconies cannot be included in 'built-up area'. Built-up area was defined for the first time by the Finance Act No.2 of 2004 (received the assent of 18 the President of the India on 10.9.2004) and was made effective from 1.4.2005. Earlier the I.T. Act had not given any particular definition of built-up area and accordingly the position as emerging from the general laws like M.P. Nagar Tatha Grih Nirman Adhiniyam and M.P. Bhumi Vikas Niyam, 1984 has to be accepted for the purposes of I.T. Act as well for the State of Madhya Pradesh. The built-up area is defined in the definition of floor area ratio in rule 2(29) r.w. rule 58 of M.P. Bhumi Vikas Rule, which reads as under:
"rule-2(29). "The "built up area" as stated would construe the total built up area on all floors with the exception of lift wells, service ducts, machine room for lifts, water tanks, covered parking area, one entrance lobby/foyer on ground floor, corridors, arcades, mumptee, staircase but inclusive of covered projection exceeding the limits prescribed under rule- 58".
rule-58.
"(1) Projection into open spaces - Every open space provided either interior or exterior shall be kept free any erection thereon and shall be open to the sky except as below:-
a. Cornice, roof or weather shade not more than 0.75 metre wide;19
b. Sunshade over windows/ventilators or other opening not more than 0.75 metre wide; c. Canopy at level not lower than lintel level of the first floor, but not to be uses as a sit out with clearance of 1.5 metres between the plot boundary and the canopy;
d. Projected balcony at higher floors of width not more than 1.20 metre; provided that the balcony area may be merged with the adjoining room to the extent of 10 percent of the floor area, and] e. Projecting rooms balconies (see clause [d]) at alternate floors such that rooms of the lower two floors get light and air and the projection being not more than the height of the storey immediately below: However, these projections into open spaces shall not reduce the minimum required open front, rear or side spaces.
(2) Accessory Building - The following accessory buildings may be permitted in the open spaces.
(a) in existing buildings, sanitary block 2.4 metres in height subject to a maximum of 4 square metres in the rear open space at a distance of 1.5 metres from the rear boundary may be permitted.
(b) Parking lock up garages not exceeding 2.6 metres from plinth level in height and an area not exceeding 20 square metres shall be permitted in the side or rear open space at a distances of 7.5 metres from any road line or the front boundary of the plot.
Provided that the space allowed for garage may be permitted to be used for any other purpose and construction up to one more floor on it may be allowed. However, the area so allowed shall be included in the covered area but shall be treated as an exception to open space; and
(c) Suction tank and pump room each up to 2.5 square metre in area.
(3) Projections into street - In existing built up or congested areas no projection of any sort whatever except sun-shades extending more than 23 centimetres below a height of 4.3 metres shall project over the road or over any drain or over any portion 20 outside the boundaries of the side provided that the projection arising out of the vertical part of the rain water spouts projecting at the road level or the water pipe may be permitted in accordance with the drainage plan:
Provided that in congested shopping streets not having heavy vehicular traffic, the Authority may as a special case allow projection of balconies not more than 0.75 metre in width over footpaths at a height not lower than 3.65 metres from the centre line of the street.
(4) Porticoes in existing developed area Porticoes in Bazar areas of existing developed areas may be permitted to project on road land subject to the following limitation:-
(a) Porticoes may be allowed on such roads leaving a minimum clear space of 19 metres between kerps;
(b) It shall not be less than 3 metres wide;
(c) Nothing shall be allowed to be constructed on the portion, which shall be used as an open terrace;
(d) Nothing shall be allowed to project beyond the line or arcades; and
(e) The space under the portico shall be paved and channelled according to the directions of the authority.
(5) Sunshades over windows and ventilators -
Projections of sunshades over windows or ventilators in existing built-up or congested areas when permitted by the Authority shall fulfil the following conditions:-
(a) No sun-shade shall be permitted over the road or over any drain or over any porten outside the boundaries of the site below a height of 2.8 metres from the road level.
(b) Sunshades provided above a height of 2.8 metres from the ground level shall be permitted to project up to a maximum width of 60 centimetres if the road over which they project exceeds 9 metres in width; and 21
(c) No sunshade shall be permitted on roads less than 9 metres width or on roads having no footpaths."
7. If the aforesaid rules are analysed, it may be seen that parking area (porch), projection for stairs and varanda (entrance lobby), staircase and covered washroom with shade and projection for balconies and elevation are not included in the built-up area as defined in M.P. Bhumi Vikas Rule, 1984.
8. The provision of sec. 80IB(10) was introduced by the Finance Act, 1999 and was made effective from 1.4.2005 to mitigate the housing problems faced by the nation. Since I.T. Act did not provide definition of the built-up area till then, therefore, the assessee conveniently relied upon the built-up area map approved by the local authority, which was less than 1500 sq.ft. as is evident from the map approved by the local authority. The project was approved on 22.3.2001 before the introduction of sec. (i.e. 1.4.2005), therefore, the definition shall not be application to the assessee. The measurement of the unit is summarised as under:
Per DVO Per Assessee Per Registered Sale Deed 22 Per Section 80IB(14)(a) Per Bhumi Vikas introduced w.e.f. Adhiniyam, 1973.
1.4.2005 PB 14-15
Regal 6 1994.16 1315.02 1330.53
AO page 2 PB 11 Page 11 (Synopsis)
Royal 22 1919.98 1315.02 1050.00
AO page 3 PB 11 (Same size as Page 19 (sale of
Regal 6) incomplete structure. Map
approved for 1461 sq.ft.,
page 28
9. Another objection raised by the ld. Sr. DR is that the completion certificate was issued by the local authority on 4.5.2010 for which our attention was invited to paper book page 30 & 31. It was clarified by the ld. Counsel for the assessee that clarification was issued vide letter dated 23.3.2011 (paper book page 32) wherein the date of completion was mentioned as 27.2.2008. This assertion of the assessee was not controverted by the Revenue, therefore, the case of the assessee finds support from the decision in the case of D.K. Construction, 17 ITJ 1 (Indore ITAT) wherein it was held that date of issue of completion certification is not crucial but date of completion of project is relevant, therefore, delay in obtaining the certificate will not affect adversely the assessee because the assessee can only apply within the prescribed limit and the powers of the issuance of the certificate lies with the authorities. If there is 23 any delay on the part of the Municipal Authorities, the assessee should not be penalised especially when it was clarified by the Municipal Authorities vide clarification dated 23.3.2011 mentioning the date of completion as 27.3.2008. The dates are summarised as under:
Permission No. Permission No. Permission No. 834/0103 2428/0301 2190/1200 Date of approval 2.1.2003 22.3.2001 16.12.2000 PB page18 PB page 22 PB page 26 Application for 16.1.2008 16.1.2008 16.1.2008 obtaining completion certificate Completion 4.3.2010 4.3.2010 28.8.2009 certificate PB page 20 PB page 20 PB page 28 Clarification by 23.3.2011 23.3.2011 23.3.2011 Municipal PB page 21 PB page 25 PB page 29 Corporation dt.
Date of 23.3.2008 8.3.2008 14.3.2008 completion PB page 21 PB page 25 PB page 29 mentioned
If the aforesaid dates are analysed, it can be said that the project was completed on 23.3.2008, 8.3.2008 & 14.3.2008, respectively, which are within time and as per the provisions of the Act. The definition of 'built-up area' u/s 80IB, therefore, applied to project approved on or after 1.4.2005, consequently, the definition does not apply to the present appellants as their projects were approved on 8.10.1998. Even otherwise, at the 24 inception, Section 80IB is a beneficial legislation, therefore, a liberal construction, under the facts stated above, in favour of the assessee should be adopted. Similarly, where two interpretations are possible, the view favouring the assessee should be preferred. This proposition is supported by the decisions in Govind Das (103 ITR 123) (SC), Gem Granites (271 ITR 322) (SC), Bajaj Tempo Ltd. (196 ITR 188) (SC), CIT vs. Madhav Pal Jatia (105 ITR 179) (SC) and Vegetable Products (88 ITR 192) (SC).
10. Section 80IB provides deduction for certain undertakings which commence their business within the specified period. Section 80IB(3)(i) provides, whereby deduction is provided for industrial undertaking commencing business between 1.4.1991 and up to 31.3.1995. Similarly, u/s 80IB(3)(ii) provides deduction for cold storages commenced business between 1.4.1995 up to 31.3.2002. If the business commences within this period, the deduction is allowable for ten consecutive assessment years whereas Section 80IB(10) provides deduction for housing projects which are approved on 25 or after 1.10.1998 and up to 31.3.2008. Therefore, Section 80IB(10)(a) clearly differentiates the projects (approved between (a) 1.10.1998 to 31.3.2004, (b) 1.4.2004 to 31.3.2005 and (c) 1.4.2005 to 31.3.2008). In case the project is approved between these specified dates, the entire project may be allowable to the assessee. If the impugned Section is analysed, it is based upon the approval of the project. The amendment by Finance (No.2) Act, 2004, therefore, requires to be interpreted harmoniously considering the scheme of the Act. In the present appeals, the projects were approved prior to amendments, therefore, if the definition is said to be applied to the projects already approved prior to 1.4.2005, it would mean that the assessee would be required to demolish its projects and again reconstruct the same so that the assessee fits into exemption. This is not the intention of the legislature because it may affect the vested rights of the assessee, consequently, cannot be said to be of retrospective effect. The Section requires the assessee to build the project within this specified limit already approved when the amendment was not on the 26 statute books, consequently, if the Section is interpreted to be applicable even to the existing projects, the same will lead to the absurdity and that is not the intention of the legislature because ultimately it will lead to a national loss. The intention of this legislature and the ratio laid down in ACIT vs. Seth Developers P. Ltd. (33 SOT 277) (Mum) supports the case of the assessee wherein it was held as under:
"Now the question whether the definition clause mentioned above can be deemed as retrospective, we are afraid we have to answer against the revenue. Number one, the enactment itself clearly specifies that clause will have effect from 1.4.2005. Number two, it is not a procedural Section but a definition Section, where an enlarged meaning is given to the term 'built-up area' and such enlarged meaning would not have been in the realm of understanding of any person, prior to its introduction, and assessees would have gone ahead with their respective projects based on a common understanding of the term built-up area. Thus, the enlarged meaning, if given a retrospective effect, will definitely affect the vested rights of an assessee. Therefore, we have no hesitation to conclude that the definition had only prospective effect from 1.4.2005."
Various Hon'ble Courts have decided that the definition of "built-up area" u/s 80IB(14) is not retrospective but only 27 prospective. The following judicial pronouncements support the case of the assessee:
1. ACIT vs. Saroj Kapoor (14 ITJ 585) (I.T.A.T., Indore);
2. Brahma Associates vs. JCIT (122 TTJ (Pune) (SB) 433);
3. GV Corporation (133 TTJ 178) (Mum);
4. DCIT vs. Brigade Enterprises (119 TTJ 269) (Bang);
5. ACIT vs. Seth Developers (33 SOT 277) (Mum);
6. Brahma Associates (315 ITR (AT) 268) (Pune) (SB);
7. Air Developers (14 ITJ 206) (I.T.A.T., Nagpur).
If the aforesaid judicial pronouncements are kept in juxtaposition with the facts of the present appeals, it can be said that the assessees are governed by the M.P. Vikas Adhiniyam read with Bhopal Master Plan, 2005, the assessees have taken the built-up area as per definition given under Master Plan, 2005 (Paper book page 24) which defines "buildable area" which excludes the common areas, mumtee, balcony etc., consequently, the areas of these exempted structures is not to be included in the built up area. The State of Madhya Pradesh has framed Madhya Pradesh State Bhumi Vikas Rules, 1984 in this regard to control and regulate the development and construction for the entire State. The mumtee area and porch/covered parking is not included in the built up 28 area. The same rule is enforced in the jurisdiction of Bhopal Municipal Corporation. The approval granted by the Bhopal Municipal Corporation after processing and computing the covered area and floor area is based on these Bhumi Vikas Rules, 1984 only.
11. The assessee has constructed the houses as per sanctioned plan approved by the Municipal authorities and no deviation was pointed out. Even otherwise, finally completion certificate was also issued to the assessee. If there would have been any deviation in the construction contrary to the sanctioned plan, there was no question of issuance of completion certificate. We further find that as per the sanctioned plan (page 15 of the paper book), the total built up area is 123.54 sq. mtr. As per registered sale deed (pages 8 to 12 of the paper book), the area sold is also 125.4 sq. mtr. as mentioned in Schedule (page 11 of the paper book) in the case of Regal-6 residential unit, which is a duplex house and the built up area on ground floor is 70.54 sq. mtr. and 62.00 sq. mtr. on the first floor, meaning thereby that there is no deviation 29 from the sanctioned plan. If the exempted areas as per the definition of rule 2(29) read with rule 58 of the M.P. Bhumi Vikas Rules (reproduced hereinabove) are kept in juxtaposition with the facts of the present appeal then the clear position is emerging that the total built up area remains within the specified limit of 1500 sq.ft. as provided under section 80IB(14)(a) of the Act. Sub-section (10) of section 80IB of the Act was inserted by the Finance (No.2) Act, 2004 with effect from 1.4.2005. Prior to its substitution, sub-section (10) as amended by the Finance Act, 2000, with effect from 1.4.2001 and Finance Act, 2003 with effect from 1.4.2002 reads as under :-
"(10) The amount of profit in case of an undertaking developing and building housing projects approved before 31st day of March, 2005 by a local authority, shall be 100% of the profit derived in any 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 Ist day of October, 1998
(b) The project is on the size of the plot of land which has a minimum area of 1 acre and 30
(c) The residential unit has a maximum built up area of 1000 sq.ft. where such residential unit is situated within the cities of Delhi or Mumbai or within 25 kms from the Municipal limits of these cities and 1500 sq.ft. at any other place"
The assessee acted upon the provision of section 80IB as prevailing in the year 2003 (as section 80IB(14)(a) was not on the statute book as the same was inserted by the Finance (No.
2), 2004 with effect from 1.4.2005, therefore, the assessee is entitled to the benefit of section 80IB(10) of the Act and such benefit cannot be withdrawn from the assessee especially when the assessee has acted upon legally assured position emerging from the enactments. It is pertinent to mention here that the Income Tax Act prevailing at the time of launch of the project, did not define the "built up area" and by the definition provided in M.P. Nagar Grah Nirman Adhiniyam and M.P. Bhumi Vikas Niyam, 1984, the built up area of the unit is less than the prescribed limit of 1500 sq. ft., consequently, the assessee is entitled to deduction u/s 80IB(10) of the Act. The ratio laid down by the Nagpur Bench of the Tribunal in the case 31 of ITO vs. Air Developers (2009) 123 TTJ (Nag) 959 further supports the case of the assessee. In view of these facts and judicial pronouncements, the appeals of the assessee are allowed.
12. Now we shall take up the appeals of M/s Global Estates (ITA Nos. 81 to 85/Ind/2011). We have gone through the orders of the lower authorities. The issue in all these appeals is common to the issue raised in the case of Global Realilties. We have verified the permission no. 834/01-03, certificate dated 2.1.2003, completion certificate by the assessee's engineer dated 3.1.2008 and also the completion certificate dated 4.3.2010 issued by the Municipal Corporation and also the certificate by the Municipal Corporation dated 23.3.2011 clarifying the date of completion on 23.3.2008. We have also verified permission no. 2428/03-04, the permission certificate dated 22.3.2001 and completion certificate of the assessee's engineer dated 3.1.2008, the completion certificate dated 4.3.2010 issued by the Municipal Corporation as well as letter of clarification issued by the Municipal Corporation dated 32 23.3.2011 wherein the date of completion has been clarified as 8.3.2008. We have also verified the permission no. 2190/1200, the permission certificate dated 16.12.200, the completion certificate of the assessee's engineer dated 3.1.2008 and the completion certificate issued by the Municipal Corporation dated 28.8.2009. We have also verified the clarification letter issued by the Municipal Corporation dated 23.3.2011. All these documents are placed on record and were also before the lower authorities. During hearing of these appeals, the learned representatives of both the sides submitted that the issues and facts of these appeals are identical with the facts contained in the appeals of M/s Global Reality (supra). The learned representatives also asserted that the arguments in these appeals will remain the same.
13. In view of our above decision in the case of M/s Global Reality (supra), as the facts and issues are identical, these appeals of the assessee are also allowed.
Finally, all the appeals of the assessee are allowed. 33 Order pronounced in the open Court on 29.9.2011.
sd sd
(R.C.SHARMA) (JOGINDER SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 29.9.2011
Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File !vyas!