Income Tax Appellate Tribunal - Pune
Kumar Builders Consortium, Pune vs Department Of Income Tax on 27 February, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member,
and Shri R.K.Panda, Accountant Member.
ITA.No.819/PN/2011
(Asstt. Year : 2007-08)
ACIT, Circle-4,
Pune. .. Appellant
Vs.
Kumar Builders Consortium,
2413, Kumar Capital,
East Street, 2nd Floor, Camp,
Pune - 411001. .. Respondent
PAN: AAHFK7992A
Assessee by : Shri Nikhil Pathak
Department by : Shri S.K.Singh
Date of Hearing : 27.02.2013
Date of Pronouncement : 20.03.2013
ORDER
PER SHAILENDRA KUMAR YADAV, JM:
This appeal has been filed by the Revenue against the order of the CIT(A) wherein deletion of disallowance of deduction u/s.80IB(10) in respect of its profit from Kumar Sansar Project has been opposed by the Revenue.
2. The assessee is a firm in the business of real estate, promoters and builders. The Assessing Officer disallowed the deduction u/s.80IB(10) amounting to Rs.6,85,84,507/- on the ground that Kumar Sansar project was an extension of an old existing project Kumar Suraksha. Based on the commencement certificate of Kumar Suraksha project which was prior to 31.03.2004 and since the assessee's project Kumar Sansar was not completed by 31.03.2008. Therefore, he held that deduction u/s.80IB(10) was not allowable. The Assessing Officer observed that the assessee had income from two projects Kumar Shantiniketan and Kumar Sansar 2 during the year on which deduction u/s.80IB(10) amounting to Rs.19,17,01,920/- was claimed. The Assessing Officer allowed the deduction u/s.80IB(10) from Kumar Shantiniketan project, which amounted to Rs.13,98,39,769/-, which is not subject matter before us. However, for the claim on deduction on Kumar Sansar project at S.No.37 of village Kondhwa Khurd, having gross plot area of 50,308 sq.mt., the Assessing Officer stated that first layout plan was approved vide commencement certificate dated 19.11.2003 by the Pune Municipal Corporation (PMC), which considered the project of 20,052.62 sq.mt. in which the revised layout plan was on total area of 34,630.14 sq.mt. and the proposed tenements were also increased vide commencement certificate dated 08.10.2004. The Assessing Officer noticed that the assessee had stated the date of commencement on 09.06.2006 in respect of Kumar Sansar project on which the word 'revised' was mentioned and the area pertaining to this was 8692 sq.mt. The Assessing Officer also stated that in the revised commencement certificate dated 09.06.2006 a total of 8 buildings A to I were mentioned, whereas the assessee has claimed only 3 buildings in respect of Kumar Sansar project. The Assessing Officer inferred that the assessee had bifurcated entire project into two projects for claiming deduction u/s.80IB(10). He further stated that instead of completing the housing project before 31.03.2008, since the project in the name of Kumar Suraksha had started before 01.04.2004, the assessee has tried to secure time by revising the plan as approved by PMC as on 09.06.2006 for gaining additional four years for completion. The Assessing Officer also pointed out that for the year ending 31.03.2006, for the Kumar Suraksha project there was an allocation made of land cost, development cost and initial overhead cost segregated and transferred to the Kumar Sansar project. In view of above, the Assessing Officer observed that the housing project was for 8 buildings proposed in the layout dated 08.10.2004, and it was not completed as on date. The revised plan dated 09.06.2006 for the Kumar Sansar project was stated to be revision of the original plan dated 19.11.2003 with addition of more 3 land and buildings. According to him, there was no separate layout plan or building plan approved by PMC for the Kumar Sansar project. Therefore, it was held that it was merely an extension of Kumar Suraksha project, which was approved on 19.11.2003. Therefore, it was held that the income derived from Kumar Sansar project was not eligible for deduction u/s.80IB(10), as it was continuation of the old project and it is still incomplete at the relevant point of time. Matter was carried before the First Appellate Authority wherein various contentions were raised with regard to the claim of deduction u/s.80IB(10), and the CIT(A) having considered the same has granted relief to the assessee by observing as under:
"3.6 I have carefully considered the submission of the appellant and the material available on record. It is noticed that the A.O. has disallowed the claim u/s 80IB(10) on the appellant's project 'Kumar Sansar', which was claimed to have commenced vide CC dated 09.06.2006. It was observed that the word 'revised' was mentioned on top of this CC, thus it was a revised commencement certificate for the entire plot. It was further observed that while it is contended that the 'Kumar Sansar' project had only three buildings, G, H and I, the CC dated 09.06.2006 showed eight buildings A to I, i.e., buildings A to E were also shown, which actually were of the old project 'Kumar Suraksha' developed by Kumar Urban Development Ltd., earlier known as Kumar Housing and Land Development Co. Ltd. (hereinafter mentioned as KHLDC). The A.O's inference was therefore that actually it was the same project which was extended, and the appellant has bifurcated the same as two projects. On the other hand, the appellant has made detail clarifications which have already been reproduced above. In the letter dated 26.07.2010 it has been mentioned that actually the appellant firm came into existence vide partnership deed dated 20.09.2005, i.e. much after the commencement of 'Kumar Suraksha' project by Kumar Housing & Land Development Co. Ltd. It was contended that when this 'Kumar Suraksha' project commenced vide CC dated 19.11.2003, the appellant firm Kumar Builders' Consortium was not in existence at all. Actually, the land for this 'Kumar Sansar' project of the appellant was transferred by Kumar Housing & Land Development Co. Ltd. to the appellant firm through a registered development agreement dated 15.10.2005 after which the appellant firm, having been constituted by partnership deed dated 20.09.2005, obtained the CC dated 09.06.2006 for the buildings G, H and I, which were named as 'Kumar Sansar'. It is contended that the same 4 was completed vide CC No. 720 dated 23.03.2010. The appellant has thus emphasised that 'Kumar Suraksha' and 'Kumar Sansar' were separate and independent projects, having independent commencement and completion certificates, independent amenities and support functions, independent approach road, and boundaries, both are separated by a 20 mtr. wide D.P. road, both having different housing societies and are carried out by two different entities. It was further emphasised that the project 'Kumar Sansar' was developed by the appellant firm, which was altogether a different legal entity than the company Kumar Housing & Land Development Co. Ltd., and when the project 'Kumar Suraksha' was started by the Kumar Housing & Land Development Co. Ltd., the appellant firm was not even in existence. The appellant has thus explained and reiterated above with various layout plans/building plans attached with commencement certificate for the two projects, which were all submitted before the A.O. also. It was stated that on standalone basis, both of these projects had land area exceeding 1 acre.
3.7 The appellant then goes on to explain the difference between the layout plan approval and building plan approval, and it is contended that in the layout plan initially taken by the company Kumar Housing & Land Development Co. Ltd. also, the proposed buildings G, H and I might have been shown, but the building plan approval for the latter buildings was not taken. For this purpose, the appellant was specifically asked to explain the development charges payable, which were clarified by letter dated 24.03.2011 reproduced above. This explanation made it clear that the development charges for building plan approval for buildings G, H and I, which were named as 'Kumar Sansar', were paid on 08.06.2006 and 14.06.2006, and the earlier company Kumar Housing and Land Development Ltd. had paid the development charges only for buildings A to E known as 'Kumar Suraksha' and not for buildings G, H and I. 3.8 The appellant has further explained that as a consequence of development agreement, transfer of land took place from KHLDC to the appellant firm at a price of Rs. 3.35 crores, and as per the accounting practice, the expenses apportionable to that portion of land for development cost etc. was also included in this consideration. This explanation has been given in response to the observations of the A.O. in paras 8 and 9 of the assessment order, and it is stated that the interpretation of the A.O. is actually beneficial to the assessee, as the projects are entirely different from each other. This explanation of the appellant is plausible in the sense that when development rights of a portion of the land has been transferred by a duly registered development agreement dated 15.10.2005 to Kumar Builder Consortium, which is the 5 appellant firm, by the company KHLDC which was holding the entire development rights, there is no legal infirmity as such. The appellant firm is a different legal entity than the company KHLDC, and the transfer of the development right has been made validly. Though in the original layout plan in the case of the company, the buildings G, H and I, which were later developed by the appellant firm, might have been shown, actually no building plan approval was taken for buildings G, H and I, by KHLDC, which had not paid any development charges for G, H & I either. It has been stressed that when approval was taken for buildings A to E named as 'Kumar Suraksha' project of the company KHLDC, the appellant firm was not even in existence, since it came into existence by partnership deed dated 20.09.2005 only. Merely because in the CC dated 09.06.2006 the word 'revised' has been mentioned on the top by the Local Authority, and the buildings A to E have also been shown, it does not imply that the buildings G, H and I of 'Kumar Sansar' project were extension of the same project earlier developed by the company KHLDC. This is a procedure adopted by the Municipal Corporation for the same survey number or for an amalgamated plan that they show the entire layout plan including the earlier buildings. By the letter dated 28.01.2011, the appellant has made a comparison of the facts of its case with the facts in the order of ITAT Pune Bench, in the case of Apoorva Properties and Estate Pvt. Ltd. in ITA No. 562/PN/2008, as also the case of Saroj Sales Organisation of ITAT Mumbai Bench (supra). It has been vehemently argued after comparison with the appellant's case that the facts and the decision of these cases do support the appellant's claim that the project 'Kumar Sansar' developed by the appellant firm comprising of buildings G, H and I was different and distinct from the earlier project developed by a different legal entity i.e. KHLDC. The appellant has made submission under the head additional clarifications on 28.01.2011, and the salient features of the appellant's case and additional clarifications have already been reproduced above, and therefore, are not being repeated for the sake of brevity. Having carefully perused the points mentioned of this clarification along with the decisions in the case of Apoorva Properties and Estate Pvt. Ltd., and Saroj Sales Organisation cited by the appellant, there appears to be considerable force in the appellant's argument. In my considered opinion, since the appellant firm came into existence only on 20.09.2005, and the development rights in land was transferred to it by KHLDC by a valid registered development agreement dated 15.10.2005, it cannot be held that the project developed by the appellant firm was extension of the earlier project developed by the company KHLDC. There was no legal bar on such transfer of development rights on a part of land. Since the payment of development charges for the building plan approval was made as per CC dated 09.06.2006 for the buildings G, H and I, it is 6 held to be a separate project developed by the appellant firm. All other conditions u/s 80IB(10) of the IT. Act, have been found to be satisfied in respect of this separate project, and accordingly the appellant was entitled to the deduction u/s 80IB(10). In view of this extensive discussion made from paras 3.6 onwards, the appellant's claim is held to be allowable. Ground no. 1 of appeal is allowed."
3. Same has been opposed before us and the Ld. Departmental Representative who submitted that the CIT(A) was not justified in holding that the assessee is entitled to deduction u/s.80IB of the act in respect of its profit from the Kumar Sansar project without appreciating that the said project is not an independent housing project and instead is a mere extension/revision of the Kumar Suraksha project which had been approved prior to 31.03.2004. The CIT(A) erred in accepting the assessee's claim to the effect that the Kumar Sansar project is a separate housing project on the irrelevant difference between layout plan approval and building plan approval in failing to appreciate that the commencement certificate dated 09.09.2006 was categorically a revised certificate, i.e., on revision of the earlier certificate dated 19.11.2003 which was in respect of Kumar Suraksha. Without prejudice to the above the Ld. Departmental Representative submitted that the CIT(A) erred in failing to appreciate that even if the Kumar Sansar project is assumed, without accepting, to be an independent housing project it should have been completed by 31.03.2008 in view of the commencement certificate dated 19.11.2003 and the assessee had not been able to complete the Kumar Sansar project by 31.03.2008, it was not entitled to deduction u/s.80IB(10) of the Act in respect thereof. The CIT(A) also erred in failing to appreciate that even though the original building plan had 8 buildings, the same had been bifurcated into two separate projects only with a view to unduly securing extension of time beyond 31.03.2008 so as to avail added u/s.80IB(10) of the Act, which amounts to defeating the very purpose of law. Accordingly the order of the CIT(A) be vacated and that of the Assessing Officer be restored.
74. On the other hand Ld. Authorised Representative supported the order of the CIT(A) and submitted that the assessee is a builder, promoter and developer. During the year assessee has recognized revenue from two projects viz., Kumar Shantiniketan and Kumar Sansar. The assessee claimed deduction u/s.80IB(10) of the Act in respect of income from these projects. However, the claim for deduction u/s.80IB(10) amounting to Rs.6,85,84,507/- in respect of Kumar Sansar project was rejected by the Assessing Officer. According to the Ld. Authorised Representative,
(i) the project Kumar Sansar is on a plot area of 8692 sq.mt i.e., 2.33 acres.
(ii) Date of commencement of the project is 09.06.2006 vide commencement certificate No.922 whereas the same was completed vide completion certificate No.720 dated 23.03.2010.
(iii) It consists of three buildings, viz. buildings No.G, H and I.
(iv) The entire project is a residential project without any commercial area. Thus, on standalone basis the project complied with all the requirements of section 80IB(10) of the Act.
Another housing project viz. Kumar Suraksha was under
construction at relevant point of time which was being executed by Kumar Housing Land Development Ltd. It consisted of 5 buildings viz. A, B, C, D & E. The total area of the plot is 50,308 sq.mt. In the first layout the proposed floor space was 2141.45 sq.mt. out of area of plot of 20,052.2 sq.mt. (net of area left for 20 meter road, defer development road, defer development open space, amenity space and internal road). The commencement certificate No.700 dated 19.11.2003 was issued by Building Control Department of Pune Municipal Corporation. In the revised layout, total area of plot was worked out at 34,630.14 sq.mt. as against the original plan at 20,052 sq.mt. The commencement certificate No.2519/04 8 dated 08.10.2004 was issued. The assessee obtained a separate commencement certificate No.922 dated 09.06.2006 for Kumar Sansar Project. The assessee has claimed to be constructing only 3 buildings as per details filed in respect of the Kumar Sansar Project. In view of above, the Assessing Officer was not justified in holding that assessee had single project instead of two different projects viz., Kumar Suraksha and Kumar Sansar. He failed to appreciate difference between lay out plan and building plan. Thus he failed to appreciate that these are independent projects. The assessee firm has come into existence vide partnership deed dated 20.09.2005, i.e., much after commencement of Kumar Suraksha project by Kumar Housing and Land Development Company, which has been placed before us in paper book. According to the Ld. Authorised Representative, land was purchased by Kumar Housing and Land Development Company vide deed of sale dated 30.08.1993 and 03.08.1993, 05.08.1993, 12.08.1993, 19.06.1998, 30.08.2002 from the original land owners. The project Kumar Suraksha was started by Kumar Housing and Land Development Co. Ltd. vide Commencement Certificate No.700 dated 19.11.2003 consisting of 5 buildings viz. A, B, C, D & E. At the relevant point of time, assessee firm Kumar Builders Consortium was not in existence.
5. The land for the said project Kumar Sansar (inclusive of land cost, land development cost and initial overhead cost) was transferred by Kumar Housing & Land Development Co. Ltd., to the assessee firm through registered Agreement for Development dated 15.10.2005, a copy of the same is placed at page 62 to 76 of the paper book filed by the assessee, which is part of letter dated 26.07.2010 submitted before the CIT(A). Upon transfer of land as mentioned above, the assessee firm launched the project named Kumar Sansar vide Commencement certificate No.922 dated 09.06.2006 having buildings G, H and I and got the same completed by Completion Certificate No.720 dated 23.03.2010.
Thus, according to the Ld. Authorised Representative, both projects 9 Kumar Suraksha and Kumar Sansar are separate and independent projects as both have independent
(i) commencement and completion certificates
(ii) independent set of amenities and support functions
(iii) independent approach road
(iv) independent boundaries
(v) both are separated by 20 mt. wide D.P. Road
(vi) both the projects have different housing societies and
(vii) both are carried out by two different entities, and above all project Kumar Suraksha was started by Kumar Housing & Land Development Company Ltd., much before the assessee firm came into existence.
Only after coming into existence assessee firm started the project Kumar Sansar. It was also submitted that both projects Kumar Suraksha and Kumar Sansar are separate and independent projects on sand alone basis, they are carried out on a plot of land of more than 1 acre. The assessee has deposited a sum of Rs.22,76,880/- in respect of development charges paid to PMC in respect of Kumar Sansar project vide receipt No.CE/BP/2818/06. The development charges are required to be paid before commencement of each project. The development charges for Kumar Sansar as per the receipt are paid on 02.06.2006 which establishes that assessee commenced its project in question in 2006 and not in time before as contemplated by the Assessing Officer. The Ld. Authorised Representative relied on the decisions in the cases of (1) DCIT vs. Brigade Enterprises Pvt. Ltd. 14 DTR (Bang) (Trib) 371, (2) Saroj Sales Organisation vs ITO (2008) 115 TTJ (Mumbai) 485 (3) Assessee also relied on decision of Hon'ble Bombay High Court in the case of Vandana Properties vide I.T.Appeals No.3633 of 2009 with I.T.Appeals No.4361 of 2010, where it has been held as under:
17. The first question to be considered herein is, whether, in the facts of the present case, construction of 'E' building constitutes building a 'housing project' under Section 80IB (10) of the Act.10
18. The expression 'housing project' is neither defined under Section 2 of the Act nor under Section 80IB (10) of the Act.
Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in Section 80IB (10) would have to be construed as commonly understood.
19. As rightly contended by Mr.Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr.Mistri, learned Senior Advocate and Mr.Joshi, learned Advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in Section 80IB (10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 square feet ('E' building in the present case) would constitute a 'housing project' under Section 80IB (10) of the Act.
20. The question, then, to be considered is, whether construction of 'E' building is an independent housing project or extension of the housing project already existing on the plot in question. It is the contention of the Revenue that since the approval for construction of 'E' building was granted by the local authority subject to the conditions set out in the first approval granted on 12th May 1993 for construction of A and B building, construction of 'E' building must be considered to be the extension of the earlier housing project for which approval was granted prior to 1 st October 1998 and, therefore, the benefit of Section 80IB (10) cannot be granted. There is no merit in the above argument, because, when the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of 'E' building was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from surplus vacant land into within the ceiling limit land by the State Government, an additional building could be constructed on the plot in question and accordingly building plan for construction of 'E' building was submitted and the same was approved by the local authority on 11th October 2002.
21. The fact that the local authority, namely the Municipal Corporation approved the building plan for 'E' building on the condition that all the objections raised in the Intimation of Disapproval dated 12th May 1993 relating to the earlier housing project on the same plot of land shall be applicable and should be complied with, cannot be a ground to hold that 'E' building is extension of the earlier housing project because the earlier housing project was completed prior to 1st October 11 1998 and the housing project for construction of 'E' building was approved for the first time on 11th October 2002. Nowhere in the Intimation for Disapproval granted for construction of 'E' building on 11th October 2002, it is stated that building 'E' constitutes extension of the earlier housing project which is already completed. The fact that the objections raised while approving the earlier housing project on the same plot of land were made applicable to the housing project in question, it cannot be inferred that the housing project in question constitutes extension of the earlier housing project. Therefore, in the facts of the present case, where, neither the assessee had sought approval of the building plan for construction of 'E' building as extension of the earlier housing project, nor the Municipal Corporation has granted approval for the housing project consisting of 'E' building as extension of the earlier housing project, it is not open to the income-tax authorities to contend that approval to the housing project granted by the Municipal Corporation on 11th October 2002 constitutes extension of the housing project which was approved in the year 1993.
22. Reliance placed by the Revenue on the Explanation to Section 80IB (10)(a) which was introduced with effect from 1st April 2005 is also misplaced. What the said Explanation contemplates is that where the approval in respect of a housing project is granted more than once, then, that 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. For example, in respect of a housing project, the assessee may seek amendment of the building plan at several stages of the construction and the same may be approved. In such a case, the explanation provides that for the purposes of Section 80IB (10) the housing project shall be deemed to have been approved on the date on which the first approval was granted by the local authority. Thus, the Explanation to Section 80IB (10)(a) refers to the approval granted to the same housing project more than once and the said Explanation would not apply where the approval is granted to different housing projects. In the present case, as noted earlier, construction of 'E' building constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of 'E' building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question.
23. The next argument of the Revenue is that to avail the deduction under Section 80IB (10), the housing project must be on the size of a vacant plot of land which has minimum area of one acre. In the present case, there are five buildings (A, B, C, D and E) on a plot ad-measuring 2.36 acres, hence, the proportionate area for each building would be less than 12 one acre and, therefore, the benefit of Section 80IB (10) could not be granted in respect of the housing project consisting 'E' building.
24. As rightly contended by the counsel for the assessee and the intervenors, Section 80IB (10)(b) specifies the size of the plot of land but not the size of the housing project. The size of the plot of land, as per Section 80IB (10) must have minimum area of one acre. The Section does not lay down that the plot having minimum area of one acre must be a vacant plot.
25. The question, therefore, to be considered is, whether the Revenue is justified in reading the expression 'plot of land' in Section 80IB (10)(b) as 'vacant plot of land' ?
26. The object of Section 80IB (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 project. Such a construction if accepted would defeat the object with which Section 80IB (10) was enacted.
27. Moreover, plain reading of Section 80IB (10) does not even remotely suggest that the plot of land having minimum area of one acre must be vacant. The said Section allows deduction to a housing project (subject to fulfilling all other conditions) constructed on a plot of land having minimum area of one acre and it is immaterial as to whether any other housing projects are existing on the said plot of land or not. In these circumstances, construing the provisions of Section 80IB (10) by adding words to the statute is wholly unwarranted and 13 such a construction which defeats the object with which the Section was enacted must be rejected.
28. Apart from the above, the Central Board of Direct Taxes (CBDT) by its letter dated 4th May 2001 addressed to the Maharashtra Chamber of Housing Industry has stated thus :
"The undersigned is directed to refer to your letter No.MCHI:RSA:m:388/19799/3 dated 1st January 2001 and to state that the additional housing project on existing housing project site can qualify as infrastructure facility under Section 10(23G) and 80IB (10) provided it is taken up by a separate undertaking, having separate books of accounts, so as to ensure that correct profits can be ascertained for the purpose of Section 80IB and also to identify receipts and repayments of long term finances under the provisions of Section 10(23G), separately financing arrangements and also, if it separately fulfills all other statutory conditions listed in Sections 10(23G) and 80(B(10). With regard to your query regarding the definition of Housing Project, it is clarified that any project which has been approved by a local authority as a housing project should be considered adequate for the purpose of Section 10(23G) and 80IB (10)."
29. From the aforesaid letter of CBDT, it is clear that for the purposes of Section 80IB (10) it is not the mandate of the Section that the housing project must be on a vacant plot of land having minimum area of one acre and that where a new housing project is constructed on a plot of land having minimum area of one acre but with existing housing projects would qualify for Section 80IB (10) deduction. Even otherwise, the argument of the Revenue does not stand to reason because, in the city of Mumbai where there is acute space crunch, it is difficult to find a vacant plot having minimum area of one acre and even if few such plots are existing it cannot be said that Section 80IB (10) deduction was intended to give benefit only to the undertakings who construct housing projects on those few plots. Therefore, it is clear that on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out under Section 80IB (10), the deduction thereunder cannot be denied to all those housing projects. Section 80IB (10) while specifying the size of the plot of land, does not specify the size or the number of housing projects that are required to be undertaken on a plot having minimum area of one acre. As a result, significance of the size of the plot of land is lost and, therefore, the assessee subject to fulfilling other conditions becomes entitled to Section 80IB (10) deduction on construction of a housing project on a plot having area of one acre, irrespective of the fact that there exist other housing projects or not. In these circumstances, the 14 decision of the Tribunal in rejecting the contention of the Revenue regarding the size of the plot cannot be faulted.
30. The last argument of the Revenue in declining to grant deduction under Section 80IB (10) is that two flats on the ground floor of building 'E' were merged in to one flat, as a result whereof the maximum size of the residential unit exceeded 1000 square feet which is in violation of the condition set out in Section 80IB (10) and, therefore, the assessee is not entitled to the deduction. The Tribunal on appreciation of the facts and the evidence on record arrived at the conclusion that there was no merger of flats and in fact both the flats in question were neither sold nor any application was made before the local authority seeking merger of two flats on the ground floor of 'E' building. Thus, no fault can be found with the decision of the Tribunal in rejecting the argument of the Revenue relating to the merger of the flats.
31. In the result, the common question of law framed in these two appeals are answered in favour of the assessee and against the Revenue.
According to Ld. Authorised Representative ratio of this case is applicable to facts of assessee's case as well.
6. Referring to the decision of the Pune Bench of the Tribunal in the case of Apporva Properties and Estates Pvt. Ltd., in ITA No.113/PN/2007, ITAT Pune Bench, he drew the attention of the Bench wherein it has been held as under:
"7. We find that the objections based on which the impugned claim of deduction u/s 80-18(10) is rejected have been considered by the coordinate Benches on a few occasions as also the Special Bench of the Tribunal in the case of Brahma Associates Vs. Joint CIT (OSD) Cir. A, Pune (2009) 119 ITD
255. As regards the question of commercial use of built up area the Special Bench has opined that as long as it does not exceed 10% of the total built up area, the project will continue to have the character of housing project and accordingly, the deduction u/s 80-16(10) cannot be declined for that reason alone. In the present case, the commercial built up area is hardly less than 10%. As regards the question about size of the flats we have taken note of the factual position that even according to the Assessing Officer none of the flats in phase 11 exceeds the size of 1500 sq.ft. In any event in the course of remand proceedings, the matter was examined by the Assessing Officer again. The Assessing Officer is not able to point out any specific violation of the said provision. Learned Departmental Representative very fairly accepted that he is not in a position to point out any such instance. That leaves us a question as to whether Kumar Karishma is to be treated as an 15 integral and inseparable project or various projects of this project can be considered on a standalone basis. One of the major arguments in support of the entire project being treated as one project is common facilities used by the flat owners but then we are unable to appreciate as to how mere fact of facilities being common can be used against the assessee's claim of separate project. It is very well possible that the amenities of one project can be used by residents of the other project and that alone cannot alter the character of independent project. As we mentioned earlier, there are number of decisions of co-ordinate Benches including Saroj Sales Organization Vs. 1TO (2008) 115 TTJ (Bom) 485 and CIT Vs. Brigade Enterprises (2008) 119 TTJ (Bang) 269 wherein it is held that as long as different blocks can satisfy the requirement of section 80-18(10) on a standalone basis, their claim cannot be rejected merely on the ground that they are part of larger lay out. In the present case, there is no dispute that the assessee has constructed different blocks of residential buildings and he has not claimed deduction u/s 80-16(10) in respect of building which was not eligible for the same. It is also not disputed that separate sanctions were granted by the Pune Municipal Corporation for the phase II of the project and that it satisfies the conditions of section 80- IB(10) on a standalone basis. As has been held by the co- ordinate benches the concept of housing project does not mean that there should be a group of buildings and only then the same can be collectively called as a housing project. In the case of Saroj Sales Organization (supra), while dealing with this contention, the coordinate Bench has observed as follows:
"The commencement certificates in respect of building No.1 consisting of wings A and B were received by CAPL on 7th March, 2001 and 30th March, 2001 respectively. But the commencement certificates for various wings in block N were approved by the municipality on various dates between 10th Sept., 2001 to 23rd Sept., 2003. All the six wings are part of N block and independently satisfies the necessary approval of a housing project. It really makes no difference whether CAPL had applied for or the assesses had applied to the Municipal Corporation to make any difference in deciding the assessee's claim for deduction under s. 80-IB(10). It must be appreciated that the main developer was CAPL. The sanction plan have only approved the construction of the dwelling units of less than 1000 sq.ft. in all the wings of the said project. There is no dispute that all the flats in the wings in block 'N' contain the eligible units. It is not open to the Revenue to include the next project 'BC' block, as part of the earlier housing project just to deny the statutory relief, which the assesses is entitled in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who is 16 undertaking the law housing projects will get defeated. 'BC' project was meant for higher strata of the society. 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 s. 80-IB(10). Combining these two projects into one will lead to a result, which manifestly will be unjust and absurd and defeat the very provisions of deduction sections. Unless there is a clear intention of the legislator the Revenue cannot tie permitted to do so. After all the assessee has obtained different commencement certificates and started on different periods of time. They are separate by time, space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue is not right in treating both the projects as one and integrated without the facts warranting for such conclusion. Objection of the AO that as the permissible shopping area of housing project exceeds 5 per cent, the assessee is not entitled for relief under s. 80-IB(10) is not sustainable. The housing projects were approved before 31st March, 2005 and for such project, which were so approved, there was no stipulation as to the shopping complex area is permissible in the project. The amendments were subsequently made while extending the deduction of income from housing project approved upto 31st March, 2007, and the denial of deduction is clearly not in accordance with taw. As the occupation certificate in respect of the wings F, Fl and G have been issued on 20th Dec., 2006, i.e. prior to 31st March, 2008, the condition relating to completion of the construction as prescribed in s.80-IB(10)(a) should also be taken to be satisfied. -Bengal Ambuja Housing Development Ltd. vs. Dy. CIT (ITA Nos.1594 and 1737/Kol/2005 dtd. 24th April. 2006) relied on.
Assessee having completed the construction of various wings of the building finder the approved plan in two different blocks under different certificates of commencement, was eligible for deduction u/s 80-IB(10) in respect of one block in respect of which claim for deduction was made and which satisfied the requirement of sec. 80-IB(10); claim could not be denied by clubbing the two blocks especially when the second block had been kept separate by the assessee and for which deduction under sec. 80-IB(10) was not claimed. "
8. We have also noted that as evident from the following chart, the conditions of plot size as required by section 80- IB(10) of the Act are independently specified by phase II.
17 Sr. Particulars Phase-I Phase-II Total
No.
1 Total Plot Area 7723 20577 28300
(in acres - 1 .99) (in acres - 5.08)
2 Residential 13511 21970 35481
(Saleable Built-up
area)
3 Area covered by 1060 1596 2656
amenities"
4 Commercial Area 1090 - 1090
Total (2+3+4) 15661 23566 39228
** Please note that the area covered by common amenities is divided amongst Phase-l & Phase-11 considering the total residential saleable area of the respective Phases.
8. In this view of the matter and bearing in mind the entirety of the case, we are unable to approve the order of the CIT(A) in declining deduction u/s 80-IB(10) of the Act. In our considered view and in the light of the decisions of the co-ordinate benches, the assessee is entitled to deduction u/s 80-IB(10) of the Act. We accordingly direct the Assessing Officer to grant the same."
According to Ld. Authorised Representative ratio of this case support assessee's claim of deduction u/s.80IB(10) of the Act.
7. He submitted that the ITAT, Pune Bench, in the case of DCIT vs. Aditya Developers in ITA.No.791 & 792/PN/2008, has held as under:
"6. We have considered the above submissions and have gone through the orders of the authorities below, material available on the record and the decisions relied upon by the parties. The facts in details submitted by the assessee before the A.O vide letter dated 16.10.2006 have also been gone through. For a ready reference, para nos. 1 to 8 of the letter dated 16.10.2006 submitted by the assessee before the A.O are being reproduced hereunder:
"1. M/s Aditya Developers purchased a plot of land bearing Survey No. 1/A(Part) of Kondhwa Khurd, Pune from Ranade and their relatives. Thereafter M/s. Aditya Developers got the clearance from Urban and Land Ceiling Department vide order dated 17-8-1988. Then we got layout plans sanctioned from the PMC vide order dated 25-5-1990. As per the terms of the ULC we have to show 25 s1.mtr corehouse plots and building in layout plan and get it sanctioned from PMC. If we don't implement their order ad show the vacant land in the plan, the ULC 18 department might have initiated acquisition procedure. The total land area was 28905 sq.mtr. It was not possible for us to start construction and development of entire land. So we started development and construction of front area of land. In the year 1994, we have requested govt. of Maharashtra to accept the consideration in lieu of certain conditions stipulated in their order for deleting construction of corehouse plots & small area flats. After a long hearings they accepted our request and on payment made, issued us order on 14-12-1994 because of which we were entitled to cancel the certain building and 112 corehousesof 25 Sq.M. proposed for weaker section. We got our land reverted back from ULC Dept. on payment of consideration to Govt. by order on 14-12-1994.
2. We have completed the development and construction of the buildings A,B,C,D,E,F,G,H & J on portion of land bearing S.No.1(Part), Kondhwa Khurd.
3. Thereafter the provision of the section 80IB(10) came into force. The vacant land area of 8966 s1.mtr was available for the new project with us. So we planned a new project as per the norms of provisions of 80IB(10) on vacant land of 8966 sq.mtr at S.No.1(Part), Kondhwa, The building plans were prepared in such a way that area of each unit will be less than 1500 sq.ft. We got the building plans sanctioned on 9-3-2001 and 29-3-2001 and work of the project started only after the building plans sanction in March 2001. It is very important to note that the land of 8966 sq.mtr was vacant and according to rules of PMC (Local Authority), all the sanctions prior to 9-3-2001 & 29- 3-2001 get cancelled and lapsed on vacant land of 8966 sq.mtr. at S.No.1(Part) Kondhwa.
4. We have constructed the buildings K,M,N,I,O & P on vacant land at Survey No. 1(A) (Part) Kondhwa Khurd, Pune which is carved out separately on site. TDR used is less than 40% of area of land of 8966 sq.mtr. We got sanctioned new building plans as per norms of 80IB(10) provisions in March 2001 & constructed all flats following all these norms. Since our new housing project is as per the plans sanctioned in March 2001, it is no way concerned with earlier lapsed sanctions. We have never started any development or construction prior to March 2001 on the rear area of land of 8966 sq.mtr on which buildings K,M,N,I,O,P have been constructed. In support of this we are enclosing herewith photocopy of letter of PMC dt. 5-10-2006. English translation of the same is as under:
PUNE MUNICIPAL CORPORATION Construction Control Dept. Outward No. BCO/5102 19 Date: 5-10-2006 To, M/s Aditya Develooers, Residing at Sadashiv Peth No. 619,Pune 30 Sub: Regarding construction on S.No.1(Part), Kondhwa, Pune Ref: Your letter dt. 3-10-2006 On the above mentioned subject and under the letter referred above, it is being informed that permission for construction of 'K' building at S.No. 1(Part) Kondhwa Khurd, Pune was given vide No. 4975 dt. 9-3-01 and certificate of plinth checking was given under No. BCO/03/74 DT. 27-9-2001. Also permission for building MNIOP was given vide letter No. 4981 dt. 29-3-2001 As per the available record there is no mention of any building construction of whatsoever nature was found on the land of above buildings before sanctioning permission for above construction.
Sd/-
Sd Asst. Engineer Building Inspector Pune Municipal Corporation
_________________________________________________
5. Certificates of our Architect dated 14-10-2006 confirming this fact is also enclosed for your consideration.
6. The TDR was purchased from the open market and utilized as well as debited to Profit & Loss account in books of account was not more than 40% of 8966 sq.mtr. We have utilized TDR by purchasing it from outside land owners from the open market and then prevailing market price.
7. We have brought all these facts to notice of assessing officer during the scrutiny of our accounts for A.Y. 2001-2002. It is clearly evident in the assessment order of A.Y. 2001-2002 that the two projects are separate and P/L account as well as works in progress are separately shown in assessment order also.
8. We have constructed all the residential units each having area of less than 1500 sq.ft. in the buildings K, M,N,I,O,P in our new housing project. It is no way concerned with the residential & commercial unit of earlier constructed building on separate portion of land and same has been reflected in separate books of accounts and we have already paid taxes on it."20
The submission of the Ld. D.R. remained that the decision of Pune Bench in the case of Nirmiti Construction Vs. DCIT (Supra) followed by the Ld CIT(A), having different facts is not applicable in the case of the assessee. Having gone through that decision, we do not agree with the above contention of the Ld. D.R. The decision fully covers the case of the assessee on the issue. It appears that the whole confusion on the issue in the mind of the A.O was due to his understanding of lay out plan and building plan one and the same thing, hence he has committed error in treating the date of approval of the] lay out plan by the Municipal Corporation as the date of approval of the building plan to compute the period of completion of the building plan to verify the eligibility of the claimed deduction u/s. 80IB(10) of the Act. Pune Bench of the Tribunal has occasion to discuss the distinction between the lay out plan and building plan in the case of Nirmiti Construction (Supra). In that case before the Tribunal, the lay outs were furnished to the Municipal Corporation for sanction on 6th June 1998 and construction work was commenced after building permission was sanctioned by the Municipal Corporation on 23rd July 1999. Department took the stand that the development commenced with the development agreement and acquiring irrecoverable power of attorney and more so that lay outs were furnished to the municipal corporation for preliminary sanction on 6th June 1998, the assessees submitted that the preliminary sanction was required to be given which constituted "no objection" from municipal corporation for allowing assessee to have the construction on the said property. It was contended that on the basis of preliminary sanction, the assessee made an application for converting the said land into Non- agricultural land. This application was made on 25th November 1998 and the revenue authorities converted the said agricultural land into Non-agricultural land on 13th June 1999. It was also contended by the assessee that the building plan was submitted to the municipal corporation and the said corporation sanctioned the building plan on 23rd July 1999. In other words, the municipal corporation gave the permission of construction on 23rd July 1999. After discussing the cases of the parties, the Tribunal has accepted the above contentions of the assessee that the housing project has been approved by the local authority on 23rd July 1999 i.e. after 1st October1998, hence the assessee was eligible for the claimed deduction u/s. 80 IB (10) of the Act since it was fulfilling all other requirements of the provisions.
6.1. Likewise, in the case of Vandana Properties Vs. ACIT (Supra), the Mumbai Bench of the Tribunal has decided the issue in favour of the assessee . In that case, the assessee had plan for 4 independent buildings 'A','B', 'C' & 'D' but, so far as 'E' is concerned only planned when the status of 'the surplus land was converted as "within ceiling limit" and the assessee could get additional FSI for launching Wing 'E' . Wing 'E' was 21 planned and construction was commenced after 1st October 1998 and building/Wing 'E' was an independent housing project as contemplated u/s. 80 IB (10). The Tribunal held that the concept of housing project does not mean that should be the group of the buildings and only then same is called a "
housing project" . It was further held that building/wing 'E"
cannot be passed with earlier buildings i.e. A, B,C & D which work was commenced in the year 1993 whereas plan for wing 'E' was approved for only once in the year 2002. It was held further that the conclusion drawn by the authorities below that the commencement of wing 'E' is a continuation of the existing project is erroneous.
6.2. In the case of Saroj Sales Organisation Vs. ITO (Supra), the Mumbai Bench has again expressed the same view and held that the commencement certificates in respect of these wings in block "N" were separately received by the assessee and all the flats in block "N" were of less than 1000 sq.ft., hence it is not open to the revenue to include block "B, C" as part of block "N" just to deny relief u/s. 80IB(10) of the Act. The Bangalore Bench of the Tribunal has also got occasion to discuss distinction between the sanction of lay out plan and approval of building plans by the local authority for consideration of the eligibility of U/s. 80 IB (10) deduction in the case of DCIT Vs. Brigade Enterprises (P) Ltd. (Supra). In that case before the Bangalore Bench, the assessee undertook a development project in an area of 22 Acres 19 guntas consisting of 5 residential block raw houses, Oak Tree Place, a Club, and Community Centre, a School, a Park and claimed deduction u/s. 80 IB (10) in respect of 2 residential units which if deducted separately were eligible for the relief. The A.O treated the entire project as a single unit and denied relief u/s. 80 IB (10) in entirety. The Tribunal justified the action of the Ld CIT(A) in allowing relief u/s. 80 IB(10) treating the said 2 units as independent units. The Tribunal observed that the group housing approval was approval of a master plan as a concept and if a particular unit satisfies the condition of Section 80 IB (10), the assessee is entitled for deduction. The Tribunal held that Plan for development was only a work order and not final plans sanctioned by local authority. For any project, there could not have been a plan without submission of the detailed building plans by the architect and on the requisite details required to be submitted for approval of the building plans by the local authorities. In other words, the Tribunal accepted the contention of the assessee that the development plan is only conceptual and the detailed construction plans are not submitted nor approved without which no construction can even commence, and this is done only subsequently where the assessee submits the construction plans which are approved by the authority. This is done for each project. The Pune Bench in the cases of Apoorva Properties and Estate Pvt. Ltd. Vs. DCIT, ITA No. 22 113/PN/2007, A.Y. 2003-04, order dated 21st August 2009 and Mumbai Bench in the case of Mudhit Madanlal Gupta Vs/ ACIT (Supra), 51 DTR (Mum ) Trib 217 have expressed the similar view.
7. There is no reason to dispute on facts in the present case that initially the proposed buildings ( except wings I, M, N, O, P and K in the present form) lay out plan was approved by the PMC on 25.5.1990 ( Page 94 of the paper book). The proposed building lay out plan was revised on 31.3.2001 (Page No. 5 of the paper book). The total area of land was 28905 sq. mtrs. The assessee had firstly completed development and construction of buildings A,B, C,D,E,F,G,H & J in the area of 17,392 sq. mtrs of project KKN, leaving the land area of 8966 sq.mtrs vacant. In that vacant land, the assessee started the construction of buildings in wings K, M, N, I, O, P, K1 and K2 in the project "KKT". In this project, 188 residential units were there each having built up area upto 1500 sq.ft. The building plans of the project "KKT" were approved on 9.3.2001 (wings K1 and K2) and 29.3.2001(wings I, M,N,O, P) which were completed on 10.10.2002 and 10.2.2003 respectively. Copy of building plan approved on 9.3.2001 has been made available at page No. 104 of the paper book, whereas the building plan approved on 29.3.2001 has been made available at page No. 103 of the paper book. There is no dispute on the dates of completion of the buildings in the housing project. The CBDT in its letter dated 4th May 2001 (page No. 110 of the paper book) has also made it clear that the definition of "housing project" is any project which has been approved by the local authority as a "housing project" should be considered adequate for purpose of Sec. 10(23 G) and 80 IB (10). We also find from the Explanation (i) to S. 801B(10) that the housing project and building plan of such housing project are two different concept. For a ready reference Explanation (i) to the Section is being reproduced hereunder :
"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;"
From the very reading of the Explanation (i) makes it clear that the date on which building plan of such housing project is approved shall be deemed the date of approval of the housing project. We thus find that the assessee is very much eligible for the claimed deduction u/s. 80 IB (10) on the project 'KKT' in view of the above cited decisions including decision of Pune Bench of the Tribunal in the case of Nirmiti Construction Vs. DCIT (Supra), following which, in our view, the Ld CIT(A) has rightly allowed the claimed deduction. The same is upheld. The issue raised are thus decided in favour of the assessee.
238. So far as decision of Chennai Bench of the Tribunal in the case of ACIT Vs. Viswas Promotrs (P) Ltd. (Supra) relied upon by the Ld. D.R. is concerned, we find that the facts therein are distinguishable as in that case, assessee had completed 4 housing projects, out of those 4 projects, in 2 projects assessee had constructed flats exceeding 1500 sq.ft. and also flats of less than 1500 sq.ft. in area, the assessee claimed deduction u/s. 80 IB (10) in respect of flats having area less than 1500 sq.ft., A.O. denied said deduction on the ground that housing project comprised of residential units exceeding 1500 sq. ft., thus all conditions stipulated in statute were not satisfied. The Tribunal has justified the action of the A.O. This decision is thus not relevant in the facts of the present case wherein the project KKT is fulfilling all the requirements of Sec. 80 IB(10) of the Act and approval to the building plans of the project were given separately by the Municipal Corporation from the earlier project KKN. The grounds are thus rejected.
9. In result, appeals are dismissed."
The Ld. Authorised Representative submitted that ratio of this case also supports assessee claim.
8. The Ld. Counsel for the assessee submitted that the ITAT, Pune Bench, in the case of Ankit Enterprises vs. DCIT, in ITA.No.1146/PN/10, has held as under:
"7. We find that the facts of the present case-before us are on better footing than the case of Vandana Properties Vs. DCIT (Supra) as in the present case, admittedly, the land on which the assessee has constructed the buildings G, H and I was shown lying vacant in the original plan got approval by the KPDL and assessee had obtained commencement certificate for construction of those building from the local authority on 16.12.1998. The assessee had submitted the building plan to the Municipal Authority on 13.11.98 on which they got the commencement certificate issued on 16.12.1998 and thereafter the construction of the building started got completed on 26.3.2003 as per the completion certificate.
Thus, in view of the aforecited decision of Hon'ble Bombay High Court in the case of Vandana Properties Vs. DCIT (Supra) the approval of the plan submitted by KPDL for the construction of buildings B, C, D, E and F on 29th Sep, 1995 is not going to effect the building plan consisting buildings G, H and I approved and commenced by the assessee as per the commencement certificate issue on 16.12.98. In other words the date 29.9.95 on which the KPDL had taken approval for the construction of the buildings B, C, D, E and F cannot be 24 taken as first date of approval in the case of assessee for construction of the buildings G, H and I on the vacant land of the project commenced on 16.12.98 as per the commencement certificate issued by the Municipal Authority on the building plan submitted by the assessee on 13.11.98, to deny the claimed deduction in view of Explanation to Section 80 IB (10)(a) of the Act. In these circumstances, we do not find substance in the contention of the Ld. DR that the project was not developed by the assessee but by KPDL. His contentions remained that as per Rule 2.23 of Development Controlled Rules (in short DC Rules), the moment lay out is approved, development starts. Thus in the present, case as per the Ld. DR development of the project started on 29.9.95 when the lay out was firstly approved. He contended that under u/s 80 IB (10) of the Act both development and construction are required to be seen to compute the date of commencement and completion of the project. He submitted that transfer only shifts the ownership of the land but the date of commencement of the project on the land will remain the same. Ld. DR referred page No. 2 of the paper book filed on behalf of the assessee and submitted that it is revised lay out of the building. He submitted that to verify the date of commencement of the project the survey was carried out at the premises of the assessee. In that survey statement of partner of the assessee firm was recorded as per which the project was started on 29.9.95. In this regard he referred page No. 3 to 5 of the assessment order wherein relevant statement of the partner in question answer form has been reproduced.
8. We do not find substance in the above contention of the Ld. DR since admittedly in the present case the land on which assessee has constructed buildings G, H and I has been shown vacant in the lay out plan, a copy whereof has been made available at page No. 2 of the paper book. The said vacant land was transferred by KPDL to the assessee and assessee got the building plan to construct building Nos. G, H and I approved by the local authority on 16.12.98 as it is evident from the commencement certificate dated 16.12.1998 issued by the Pune Municipal Corporation (PMC) copy made available at page no. 1 of the paper book. Vide Explanation (i) to Section 80 IB (10) (a) it has been made clear that for computation of the prescribed time limit the starting date will be the first approval of the building plan of the housing project approved by the local authority. For a ready reference the said Explanation (i) is being reproduced here under :
"Explanation.-For the purpose 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 25 which the building plan of such housing project is issued by the local authority,"
9. Thus it is clear from the above reproduced Explanation that "housing project" and "building plan" of such housing project are two different terminologies. For the purpose of computation of the prescribed time limit for completion of the construction of the housing project, the first date would be the first approval of the building plan which in the present case is 16.12.1998. In the case of DCIT Vs. Aditya Developers (Supra) the Pune Bench has occasion to deliberate on the issue. It has been held therein that the lay out plan is only conceptual and construction commences subsequently when the assessee submits the construction plan which are approved by the authority thus it is clear that approval of building plans by the local authority along with commencement certificate is the relevant date to compute the date of commencement of the construction on the building plan. Undisputedly, the first approval of the building plan for buildings G, H and I by the local authority in the case of the assessee is 16.12.98 as per the above cited decisions. We therefore, hold as such. The first appellate order in this regard is thus upheld."
9. In this background it was submitted that the CIT(A) was justified in granting relief to assessee with regard to profits from Kumar Sansar for deduction claimed u/s.80IB(10). This should be upheld.
10. After going through the above submissions and material on record, we find that the Assessing Officer has disallowed the claim of the assessee u/s.80IB(10) of the Act with regard to its project Kumar Sansar which was commenced vide completion certificate dated 09.06.2006. He observed that word 'revised' was mentioned on top of this completion certificate. Thus it was a revised completion certificate for entire project. He further observed that Kumar Sansar project had only three buildings G, H & I while commencement certificate dated 09.06.2006 mentioned buildings A to I, i.e., A, B, C, D & E were also shown. The Kumar Suraksha was developed by Kumar Urban Development Ltd., which was earlier known as Kumar Housing & Land Development Co. According to Assessing Officer, it was same project which was extended and assessee has bifurcated the same as two projects. As 26 discussed above, assessee has made detailed clarification with regard to its claim as discussed above. The assessee vide its letter dated 26.07.2008 before the CIT(A) clearly mentioned that actually the assessee firm came into existence vide partnership deed dated 20.09.2005, i.e, much after the commencement of Kumar Suraksha project by Kumar Housing & Land Development Co. It was the stand of the assessee that Kumar Suraksha project commenced vide commencement certificate dated 19.11.2003, the assessee firm Kumar Builders Consortium was not in existence at that relevant point of time. Actually the land of this Kumar Sansar project of assessee was transferred by Kumar Housing & Land Development Co., to the assessee firm through a registered development agreement dated 15.10.2005 and assessee's firm came into existence vide partnership deed dated 20.09.2005 and assessee firm obtained commencement certificate dated 09.06.2006 for buildings G, H & I which were named as Kumar Sansar. The said project was completed vide completion certificate CC No.720 dated 23.03.2010. Thus, Kumar Suraksha and Kumar Sansar projects are separate and independent projects having different commencement and completion certificates, independent amenities and support functions, independent approach road and boundaries, both are separated by 20 mt. wide DP road and both are having different housing societies. The Kumar Sansar project was developed by assessee firm which was altogether different legal entity than Kumar Housing & Land Development Co., when Kumar Suraksha was started by Kumar Housing & Land Development Co., the assessee firm was not even in existence. The assessee has thus explained the above distinction through different commencement certificates and lay outs placed in the Paper book with regard to both projects. Both these projects fulfilled all the conditions of section 80IB(10) in its own spheres. Lay out plan approval and building plan approval are two different sanctions given by concerned competent authorities. Initially lay out approval was taken by Kumar Housing & Land Development Co., wherein proposed G, H & I buildings were also conceived but building plan 27 approved for later buildings was not taken by Kumar Housing & Land Development Co., which is independent from the fact that development charges paid for both projects are different. The development charges for building plan approval for buildings G, H & I were in the name of assessee in its project Kumar Sansar was paid on 08.06.2006 and 14.06.2006. The earlier Company, Kumar Housing & Land Development Co., had paid the development charges only for buildings A to E known as Kumar Suraksha and not for building, G, H & I. Vide separate development agreement dated 15.10.2005, transfer of land took place from KHLD to assessee firm at a price of 3.34 crores and as per accounting practice, the expenses apportionable to that portion of land for development cost etc., were also included in this consideration. This has been appreciated in paras 8 and9 of the assessment order. Thus, the development rights of the portion of the land has been transferred by duly registered development agreement dated 15.10.2005 to Kumar Builders Consortium, which is the assessee firm, by earlier company Kumar Housing & Land Development Company which was holding entire development rights. Thus assessee firm is different legal entity than company Kumar Housing & Land Development Company and transfer of development rights have been made through valid documentation. Though in original lay out plan in case of Kumar Housing & Land Development Company, the buildings G, H & I were mentioned but they were not developed by said firm but by the assessee firm after obtaining due building plan approved for buildings G, H & I and assessee has paid development charges for the same. There is nothing on record to suggest that earlier M/s. Kumar Housing & Land Development Company has paid development charges with regard to buildings G, H & I of this Kumar Sansar Project. Kumar Housing & Land Development Company has approval for buildings A, B, C, D & E under the name as Kumar Suraksha when the assessee was not in existence at all because assessee came into existence vide partnership deed dated 20.09.2005 only. Mere mentioning in Completion Certificate dated 09.06.2006 as 'revised' on top by local 28 authority and buildings A to E shown thereon does not imply that buildings G, H & I of Kumar Sansar Project were extension of same project earlier developed by Kumar Housing & Land Development Company. This may be the procedure adopted by the municipal corporation for same survey numbers or for an amalgamation that they show the entire lay out plan including earlier buildings vide letter dated 20.01.2001. The assessee has made comparison of the facts of its case with the facts of similar issues which came before ITAT, in the case of Apoorva Properties (supra) and also in the case of Saroj Sales Organisation (supra), as discussed above. Similar view has been taken by Hon'ble Bombay High Court in the case of Vandana Properties (supra) and by ITAT Pune Bench in the case of Ankit Enterprises (supra). The ratio of above decisions supports the claim of the assessee that Kumar Sansar Project developed by the assessee firm comprises of buildings G, H & I, which are different and distinct from earlier project developed by different legal entity, i.e., Kumar Housing & Land Development Company. Thus, it is abundantly clear that assessee came into existence only on 20.09.2005 and development rights in the land was transferred to it by Kumar Housing & Land Development Company by valid agreement. It cannot be said that project developed by the assessee firm was extension of earlier project developed by Kumar Housing & Land Development Company. There is a valid transfer of development rights on a part of the said land. The payment of development charges for the building for the building approval was made as CC dated 09.06.2006 for buildings G, H & I which is independent project and entitled for deduction u/s.80IB(10). This view of the CIT(A) is well fortified by the decisions of the Tribunal in the cases of Apoorva Properties (supra), Saroj Sales Organisation (supra), Ankit Enterprises (supra) and decision of jurisdictional High Court in Vandana Properties (supra), as discussed above. Moreover, both projects are independent having independent commencement and completion certificates, independent amenities and separate functions, independent approach and boundaries, both are separated by 20 mt. DP Road, both are having different 29 housing societies and are carried out by different entities. In view of above, the CIT(A) was justified in granting the deduction u/s.80IB(10) claimed by the assessee. This reasoned finding based on facts and law needs no interference from our side. We uphold the same.
11. As a result, the appeal filed by the Revenue is dismissed.
Pronounced in the open court on this the 20th day of March, 2013.
Sd/- Sd/-
( R.K.PANDA ) ( SHAILENDRA KUMAR YADAV )
ACCOUNTANT MEMBER JUDICIAL MEMBER
gsps
Pune, dated the 20th March, 2013
Copy of the order is forwarded to:
1. The Assessee
2. The ACIT, Circle-4, Pune.
3. The CIT(A)-II, Pune.
4. The CIT-II, Pune..
5. The DR "B" Bench, Pune.
6. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.