Income Tax Appellate Tribunal - Pune
Assistant Commissioner Of ... vs Sonalty Realty,, Pune on 13 January, 2017
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
सु ी सष
ु मा चावला, या यक सद य एवं
ी अ नल चतव
ु द
# , लेखा सद य के सम&
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं. / ITA No.1837/PUN/2014
नधा(रण वष( / Assessment Year : 2010-11
Assistant Commissioner of Income Tax, .......... अपीलाथ /
Circle - 4 , Pune, Room No.111, 1st Floor,
Appellant
PMT Commercial Complex, Swargate,
Pune - 411 037.
बनाम v/s
Sonata Realty,
102, Kumar Vastu, Range Hills,
Bhosale Nagar, .......... यथ /
Pune - 411 020. Respondent
PAN :ABDFS 5072 N.
अपीलाथ क ओर से / Appellant by : Smt. Reena Jha Tripathi
यथ क ओर से / Respondent by : Shri Suhas Bora
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 29.12.2016 Date of Pronouncement: 13.01.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal filed by the Revenue is emanating out of the order of Commissioner of Income Tax (A) - II, Pune dt.28.05.2014 for the assessment year 2010-11.
2 ITA No.1837/PUN/2014AY.No.2010-11
2. The relevant facts as culled out from the material on record are as under :-
2.1 Assessee is a partnership firm stated to be engaged in the business of building and construction. Assessee electronically filed its return of income for A.Y. 2010-11 on 14.10.2010 declaring total income of Rs.36,33,810/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) vide order dt.28.03.2013 and the total income was determined at Rs.11,77,93,387/-. Aggrieved by the order of AO, assessee carried the matter before ld. CIT(A) who vide order dt.28.05.2014 granted substantial relief to the assessee (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.3 ITA No.1837/PUN/2014
AY.No.2010-11
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 the Act in respect of eligible blocks 1 buildings and units 1 flats in the project without appreciating the fact that jurisdictional High Court in the case of CIT vs. Brahma Associates, 333 ITR 289 held deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project.
5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the terrace area cannot form part of built up area as defined in the sec 80IB(14)(a) of the Act. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to section 80IB(10) of the Act.
6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to section 80IB(10) of the Act.
7. The appellant craves to add, alter or amend any or all the grounds of appeal."
3. Before us, at the outset, ld. D.R. submitted that though the Revenue has raised various grounds but the sole controversy which requires adjudication is with respect to the deduction u/s 80IB(10) of the I.T. Act.
4. During the course of assessment proceedings, AO noticed that assessee had claimed deduction of Rs.11,41,59,577/- u/s 80IB(10) of the Act in respect of profit and gains from housing and residential Project named "Park land". AO on perusing the details noticed that the project of the assessee commenced on 18.11.2006 and as per plan, there was a building "C" which was not constructed till date. He also noticed that assessee got part 4 ITA No.1837/PUN/2014 AY.No.2010-11 completion certificate on 28.03.2012 for building A, B, D, E, & F and did not include for "C" Wing. AO also noticed that as per the valuation report of the Government Authorized Valuer and on the spot verification, the building "C Wing" was not completed till 04.03.2013 and no structure was found on the plot area which was similar to "C Wing. He therefore concluded that since "C"
Wing of the building did not 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. The only issue raised by the appellant relates to the disallowance of the claim of deduction u/s 80IB(10) amounting to Rs. 11,41,59,573/-. The 5 ITA No.1837/PUN/2014 AY.No.2010-11 Assessing Officer during the assessment proceedings disallowed the said claim of the appellant firstly on the ground that as per the valuation report of the govt. authorized valuer the building 'C' was not yet completed and hence the project 'Park land' was held to be incomplete and secondly, five units of the said housing project were found to be admeasuring more than 1500 sq.ft. The fact of the case is that the appellant firm undertook a housing project "Park land" at Balewadi, Pune. The project was originally sanctioned on 4th Aug. 2006 and further the plan was revised on subsequent dates i.e. 18-11-2006, 3-2-2007, 13-2-2008, and 21-
7-2011. The project comprised of 6 buildings viz. Wing A, B, C, D E & F. The due date for the completion of the project is 31-3-2012 as the said project commenced in F.Y. 2006-07 as per the provisions of sec 80IB(10)(a). The appellant received part completion certificate issued on 28-3-2012 with respect to Building A, B, D & E comprising of 32 units and Building F of 5 units. The construction of building C could not commence and, therefore, the same could not be completed within the specific dates. The total plot area as per the sec 80IB(10)(b) is more than 1 acre being 78077.77 sq. meters or 1.93 acres. There is no commercial shopping area in the project as per the provision of sec 80IB(10)(d). The Assessing Officer during the assessment proceedings also referred the matter to the govt. approved valuer who after examining and verifying the project has also found the project to be in order with respect to the size of the plot, commercial area, flats in buildings A, B, D & E to be less than 1500 sq.ft. The valuer however, noted that the row houses F1 & F5 in building C of the project had not been completed, however, apart from the above no other irregularity was found by him. The construction of the building 'C' is stated to have not started till date as the FSI required for its construction is not available with the appellant firm till 31-3-2012 and even up till date as the aforesaid FSI is to be given in lieu of amenity space and 9 meter DP road which is to be sanctioned by the PMC and thus the said FSI will be sanctioned for the project by the local authority on handing over of amenity 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 pending compliance remains on the part of the appellant. In such a situation and circumstances wherein the compliance of the provision has 6 ITA No.1837/PUN/2014 AY.No.2010-11 become impossible on the part of the appellant and therefore, the claim of deduction prima facie cannot be denied. The appellant in this regard has placed reliance on the decision of the Pune ITAT in the case of Ramsukh Properties Vs DCIT(cited supra) wherein it was held as under:
"Assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not completed within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee's housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT (A). The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s.80IB (10) could not be granted to assessee on incomplete construction at relevant point of time. Regarding proportionate deduction in respect of 173 of 205 flats of project completed as recognized by local authority, i.e., PMC in its completion certificate No.BCO/03/01333 dated 31.03.2008, the Ld. Authorised Representative heavily relied on decision of Bengal Ambuja Housing Development Ltd. (supra), Brigade Enterprises P. Ltd. (supra), AIR Developer (supra), Sheth Developers (supra) and also G.V.Corporation (supra), wherein deduction u/s.80IB(10) was denied as size of some of the residential units exceeded prescribed limit as laid down u/s.80IB(10) of the Act. Above mentioned decisions are applicable in their own sphere, i.e. on point of excess area of some of the flats which hold good in its own sphere. However, in case before us, deduction u/s.80IB(10) of the Act has been rejected on the ground that condition of completion of project before the due date i.e., 31.03.2008 as laid down u/s.80IB(10)(c) of the Act, has not been complied by assessee which is basic condition for allowability of deduction u/s.80IB(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 7 ITA No.1837/PUN/2014 AY.No.2010-11 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 part of the assessee to have completion certificate in time.
It is settled legal position that the law always give remedy and the law does wrong to no one. We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing statute should be construed harmoniously with the object of statue to effectuate the legislative intention. In view of above facts and circumstances, we hold that assessee is entitled for benefit u/s.80IB (10) of the Act in respect of 173 flats completed before prescribed limit. The Assessing Officer is directed accordingly."
3.6.1 Similarly in a Pune Bench ITAT decision in the case of ITO Vs Satyanarayan Ramswaroop Agarwal (2014) 163 TTJ (Pune) 17, the Hon'ble Pune ITAT held as under:
............................
8.2 In view of above, it is clear that assessee received approval for C building from PMC vide certificate dated 3rd Feb., 2005 but work on C building could not start since additional FSI in lieu of road widening was not received from PMC. The assessee could not plan the work for C building since engineers and architects could not design the structure of building in the absence of FSI. The details of follow-up done by assessee with PMC have been duly appreciated by CIT(A). The legislative intent read that the clear provisions of the requisite section, do not permit 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 8 ITA No.1837/PUN/2014 AY.No.2010-11 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 Baner & Balewadi and only on 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 and the said development plan is pending for sanction before State Govt. However, appellant has completed the construction of the approved, sanctioned and revised plans by the PMC. Thus the construction of building 'C' cannot be completed because the FSI required for the said construction is not allowed by PMC. The aforesaid issue is not within the purview of the appellant and in such a circumstance which makes the compliance with the provisions impossible, then the benefit bestowed on an assessee cannot be completely denied and, therefore, on the first issue the appellant becomes liable for claim of deduction u/s 80IB(10) on a proportionate basis. The appellant for this proposition has relied on a host of judicial decisions which are being discussed in succeeding paras.
3.7 The second issue on which the Assessing Officer found the appellant to have violated the provisions and conditions is with respect to area of the 5 row houses in Building 'F' of the project where the same was found to be exceeding 1500 sq ft. as per sec 80IB(10)(c). The Assessing Officer referred the matter to the Govt. approved valuer who in its report dated 4- 3-2013 submitted that the built-up area of the five row houses in building / Wing F was more than 1500 sq ft. The appellant, however, has pointed out to the definition of the built up area given in sec 80IB(14)(a) whereby built up area means the inner measurement of the residential units 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. The appellant's contention that the govt. approved valuer has taken the 'outer measurement' of the row house and calculated the area of the row houses which is contrary to the definition contained in sec 80IB(14)(a) is found to be correct as on perusal of the report of the valuer it is clearly seen in the report that the valuer has mentioned the 'outer measurement' of the row houses in the valuation report submitted by him. The valuation report submitted by the valuer and as also contended by the appellant indicates that the detailed working of the calculation has not been shown by him 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:
9 ITA No.1837/PUN/2014AY.No.2010-11 Sr. No. Row House Area as per Area actually assessee (sq. ft.) 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 excluded from calculation of area the built up area, the total area of the units do not exceed the 1500 sq ft limit as per sec 80IB(10)(c) in respect to three units. It has been the contention of the appellant that the valuer has wrongly included the area of the terraces which are open to sky and which are top terraces which cannot form part of the built up area and without the slab for top terrace the building cannot be covered and hence the said area ought not be considered in the definition of built up area. The definition of the built up area u/s 80IB(14)(a) includes projection and balconies, but does not mention terrace area opening to sky which the appellant has also mentioned in the building plan. The term 'balcony' and 'projection' are not defined under the Act. The appellant's contention that if the legislature wanted to include terrace in the built up area, the same would have been specifically provided and since the terrace has been omitted while balcony considered there is no reason for including the terrace in built up area certainly has some force. The apex court in the case of Controller of Estate Duty Vs V R Kankasabai, 89 ITR 251 has held that the words found in the statute must be given their natural meaning.
3.7.1 The appellant has drawn attention towards the decision of the Hon'ble Bombay High Court in the case of Common Wealth Developers CD Fountain Head Vs ACIT wherein it was held -
THE issues before the Bench are - Whether the area of the rear courtyard enclosed by walls of a residential unit is to be taken into account to compute built up area for the purpose of Sec 80IB(10) benefits; Whether in case there is no construction activity on the area of the courtyard which is open to the sky, it can still be included to compute the 10 ITA No.1837/PUN/2014 AY.No.2010-11 built-up area u/s 80IB and Whether the Tribunal can inquire into and get measured the courtyard which is not included in the built-up area and which is not the lis between the parties. And the verdict favours the assessee. Thus, unless and until it is shown that some construction is put up the area of the courtyard which is open to the sky cannot be included to compute the built-up area. The definition of the words 'built-up area' was introduced by the Finance Act of 2004 w.e.f. 1.4.2005, which is not otherwise applicable to the facts of the present case, also clearly provides that the built-up 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 area and thereby holding that the residential unit was more than 1500 square feet which would disentitle the appellant to claim such deduction. The contention of the counsel appearing for the respondent that the findings of the fact arrived at by the Tribunal cannot be interfered in the present appeal cannot be accepted in the facts of the present case as the Tribunal has misconstrued the provisions of Income Tax Act and the material on record to deny the benefit of deduction to the appellant in terms of Section 80-IB(10). The first substantial question of law is answered accordingly. In view of the findings on the first substantial question of law, there is no need to examine the second substantial question of law. Thus, the appeal is allowed. The impugned judgment dated 13.09.2013 passed by the earned Income Tax Appellate Tribunal is quashed and set aside. The appeal stands disposed of accordingly.
3.7.2 In the case of CIT Vs Mahalakshmi Housing also relied upon by the appellant the High court held as under:
Deduction u/s. 80IB--Allowability--Assessee entered into an agreement M and others, for joint development of property, claimed deduction u/s 80-IB--Rejection of claim by AO on ground that assessee is not an owner of property, thus, not entitled to claim deduction u/s. 80- 11 ITA No.1837/PUN/2014 AY.No.2010-11 IB(10) and built up area of flats exceeded conditions prescribed u/s. 80-IB(10)(c)--CIT(A) allowed Assessee's claim of deduction--Tribunal held that open terrace area includible in built up area--Held, open terrace area cannot form part of built up area and assessee would be entitled to deduction u/s. 80-IB(10)--For purpose of Section 80-IB(10) deduction, it was not required that assessee should be owner of property--Appeal filed by revenue is dismissed.
In Para 7 of order it was held that , "As far as the issue in respect of inclusion of open terrace area with the built up area is concerned, this court had already held the said issue against the Revenue in the decision rendered in T.C. Nos. 581, 1186 of 2008 and 136 of 2009 CEEBROS HOTELS PVT LTD v. DEPUTY COMMISSIONER OF INCOME TAX dated 19.10.2012 and accordingly, the order the Tribunal is set aside. The Assessee's appeal viz., T.C.(A).No. 318 of 2012 stands allowed holding 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) of the 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 in favour of the assessee, more so, as the assessee entered into an agreement to sell the whole of the property--Hence, the objection of the authorities below that the assessee constructed 110 units as against 94 units mentioned in the agreement is not sustainable in law--As per the definition given in s. 80- IB(14)(a), built-up area means inner measurement 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--Open terrace is open to sky and would not be part of the inner measurement of the residential unit 12 ITA No.1837/PUN/2014 AY.No.2010-11 at any floor level--Thus, the authorities below were not justified in rejecting the assessee's claim by taking the open terrace as balcony/verandah--Excluding such open terrace, the built-up area of each of the 110 units is less than 1500 sq. ft.--Thus, assessee has complied with all the requirements of s. 80-IB(10)--AO is directed to allow deduction under s. 80-IB(10) to the assessee."
3.7.4 In such a situation and the legal view on the matter it is noticed that out of the five row houses even if the 'outer measurement' area as taken by the Govt. approved valuer is taken into account it is noticed that the built-up area of three of the row houses viz. F1, F3 & F4 clearly falls below 1500 sq. ft. and the other two i.e. F2 and F5 are marginally above the limit as provided in the definition of built-up area without taking into account the difference between the 'inner measurement' and the 'outer measurement'.
3.8 Further, in ground of appeal no. 6 raised without prejudice to grounds no. 1 to 5 it has been contended that the claim of deduction u/s 80IB(10) shall be tenable on pro rata basis in respect of balance of the project in respect of those units and buildings which satisfies the conditions stipulated u/s 80IB(10) and reliance has been placed on the following decisions:
1. DCIT Vs Brigade 119 TTJ 269 (Bang)
2. ITO Vs AIR Developers 122 ITD 125 (Nag)
3. Sheth Developers 33 SOT 277 (Mum)
4. G.V. Corporation Vs ITO 38 SOT 174
5. Rahul Construction Co. Vs ITO ITA No. 1250/PN/2009 & ITA No. 707/PN/2010
6. Runwal Multihousing Pvt. Ltd., ITA No. 1015, 1016 and 1017/PN/2011
7. Bengal Ambuja Housing Development Ltd. Vs DCIT ITA No. I595/Kol/2005 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 13 ITA No.1837/PUN/2014 AY.No.2010-11 "residential units" means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the conditions of sec.80IB, the assessee is entitled for deduction. Therefore, the Tribunal upheld the order of Id. CIT(A) in allowing deduction u/s.80IB(10) in respect of two blocks as claimed by the assessee.
3.8.2 In ITO Vs AIR Developers (supra) The tribunal held that "Assessing Officer is directed to determine the built up area of the residential units by applying the development control Regulation, 2000 and to allow proportionate deduction u/s 80IB(10) if he finds that the built up area of some of the residential units exceed 1500 sq.ft."
3.8.3 In Sheth Developers (supra) the Mumbai ITAT held "as regards the A project assessee is eligible for relief on pro rata basis in respect of the flats which did not have a built-up area exceeding 1000 sq. ft. - quantum of deduction in respect of the flats which have built-up area less than 1000 sq. ft., has to be worked out on pro rata basis - AO accordingly directed to verify the claim of the assessee and allow the deduction on pro rata basis in respect of flats in A project."
3.8.4 In the case of' G.V. Corporation vs. ITO (supra), the assessee, at the request of purchasers, joined some of its flat/residential units, as a result of which built up area of those flats exceeded 1,000 sq. ft. Deduction was denied u/s.80IB(10) on the ground that the aforesaid act of the assessee resulted in violation of the provisions of sec.80IB(10). The Tribunal, following the Special Bench decision of the Tribunal in the case of Brahma Associates vs. Jt. CIT (2009) 119 ITD 255, held that deduction could not be totally denied and it would be eligible for proportionate deduction"
3.8.5 In the case of Rahul Construction Co. (cited supra) is relevant and which has held as under:
"9. There is no dispute on from material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time- limit up to 31-3-2008. The lay out plan in respect of entire complex was sanctioned by PMC vide order dated 3-4- 2003 and the building plan was sanctioned vide commencement certificate dated 29-4-2003. Admittedly, the term 'housing project' has not been defined in the Act but in the context of deduction under section 80-IB(10) an Explanation has been provided below clause (a) to sub- section (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 14 ITA No.1837/PUN/2014 AY.No.2010-11 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 the project comprising of building A1 and A2 is a separate project and which satisfies all the conditions stipulated u/s 80IB(10) and hence the appellant is very much entitled to claim the deduction u/s 80IB(10) of the Act on Part A of the buildings A1 and A2............"
3.8.6 In the case of M/s Runwal Multihousing Pvt. Ltd Vs ACIT (Supra) after considering various judicial precedents of different High courts and co-ordinate benches, the Pune Tribunal held that "21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. The various decisions relied on by the revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction u/s 80IB(10) in respect of building no. A, C, D, E and the 17 row houses. The grounds raised by the assessee on this issue are accordingly allowed."
3.8.7 In the case of Bengal Ambuja Housing Development Ltd. (supra), the facts were that the housing project consisted of 261 residential units and the individual flat size varied between 800 sq.ft. to 3000 sq.ft. and the total built up area of this housing project was 346599 sq. ft. This project contained 150 residential units with a built up area of individual unit of less than 1500 sq.ft. aggregating to 169500 sq.ft. The remaining built up area of 187593 sq. ft. was consumed by other residential units wherein the size of individual unit exceeded 1500 sq. ft. of built up area. Under these circumstances, the assessee had claimed deduction u/s.80IB(10) with reference to the profit attributable to the built up area which was occupied by residential units having individual flat size of less than 1500 sq.ft. The A.O. rejected the claim of the assessee u/s.80IB(10), inter alia, observing that as per the terms of sec.80IB(10), all the units comprised in the housing project should have had individual flat size of less than 1500 sq.ft. In the backdrop of these facts, the Tribunal observed that the provisions laid down in sec.80IB(10) do not speak regarding such denial of deduction in case of profit from a housing complex containing both the smaller and large residential units and since the assessee had claimed only deduction on account of smaller qualifying units by fulfilling all the conditions as laid down u/s.80IB(10), the denial of claim by the A.O. was not justified.
15 ITA No.1837/PUN/2014AY.No.2010-11 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 specified in clause (a) of sec 80IB(10) of the Act. In such event on a reading of the provision, it is held that the assessee would not be entitled to have the benefit of 100% absolute deduction u/s 80IB(10) of the Act in respect of the entire project, but would be entitled to pro rata deduction on the units satisfying the conditions........."
3.8.9 In DCIT Vs Ekta Housing (P) Ltd (2011) 41 (II) ITCL 404 (Mum) it was held that in cases certain residential house has built up area in excess of 1500 sq.ft, the assessee would not lose the total exemption u/s 80IB(10) in its entirety but will lose the proportionate exemption u/s 80IB(10). Deduction u/s 80IB(10) on pro rate basis was therefore allowable.
Thus in view of the above facts, the ratio of the judicial decisions and the appellant having satisfied the other condition as stipulated u/s 80IB(10) such as regarding the area of the plot having no commercial area the appellant gets entitled to the deduction u/s 80IB(10) on pro rata basis with respect to the blocks and units satisfying the conditions u/s 80IB(10) of the Act."
5. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us.
6. Before us, ld. D.R. took us through the various observations and findings of the AO and supported the order of AO. Ld.A.R. on the other hand, reiterated the submissions made before AO and ld. CIT(A) and relied on the various decisions cited in the order of ld. CIT(A). He thus supported the order of ld.
CIT(A).
16 ITA No.1837/PUN/2014AY.No.2010-11
7. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to allowing deduction u/s 80IB(10) of the Act. The deduction u/s 80IB(10) was denied by AO mainly for two reasons. 1) that the Project was incomplete and 2) the area of 5 Row Houses that were constructed was more than 1500 Sq.Ft. With respect to non-completion of project, namely building "C" and therefore denying the deduction, we find that ld.CIT(A) has given a finding that "Building C" could not be completed because the required FSI for construction was not sanctioned / allowed by PMC and that no pending compliance remained on the part of the assessee. He has further noted that when the compliance of provision had become impossible on the part of the assessee the claim of deduction could not be denied and for which he placed reliance on the decision of Pune Tribunal in the case of M/s.Ramsukh Properties Vs. DCIT Order dt. 25.07.2012. He had also relied on decision of Pune Tribunal in the case of ITO Vs. Satyanarayan Ramswaroop Agarwal reported in (2014) 163 TTJ 0017 (Pune) and other decisions. He has further given a finding that the construction of the 'Park Land' which was sanctioned on 04.08.2006 was subsequently revised and has been totally completed before 31.03.2012 and in such a situation, the claim of deduction u/s 80IB(10) of the assessee was allowable on a proportionate basis. With respect to the violation of provisions of the Act on account of the area of 5 Row Houses being in excess of 1500 Sq.Ft., he has given a finding that Government Approved Valuer had taken the outer 17 ITA No.1837/PUN/2014 AY.No.2010-11 measurement of the Row Houses and calculated the area which is contrary to the definition contained in Sec.80IB(14)(a). He has further noticed that the Authorized Valuer had added the area of car porch, terrace above porch while measuring the area of Row Houses and if the terrace area is excluded from calculation of area, the total area of the units do not exceed 1500 Sq.Ft. For excluding the area of terrace, Ld. CIT(A) had relied on the decisions of Hon'ble High Court in the case of M/s. Commonwealth Developers CD Fountain Head Vs. CIT Foundation Vs. ACIT., reported in 2014(4) TMI 222 (Bom) and the decision in the case of CIT Vs. Mahalakshmi Housing (2012) TIOL 951 HC (Mad) and other Tribunal decisions.
Before us Revenue has not placed any material on record to controvert the findings of ld. CIT(A) nor has placed any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A). Thus, the grounds of the Revenue are dismissed.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 13th January, 2017.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 13th January, 2017.
Yamini
18
ITA No.1837/PUN/2014
AY.No.2010-11
आदे श क* + त,ल-प अ.े-षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. Commissioner of Income Tax-II (A), Pune.
4. Commissioner of Income Tax-II, Pune..
5. #वभागीय &त&न'ध, आयकर अपील य अ'धकरण, "बी" / DR, ITAT, "B" Pune;
6. गाड, फाईल / Guard file आदे शानस ु ार/ BY ORDER,स // या////// True Copy //T // // True // //Copy // // True Copy //////// सहायक रिज12ार/ Assistant Registrar, आयकर अपील य अ'धकरण ,पुणे / ITAT, Pune.