Income Tax Appellate Tribunal - Mumbai
Om Trinetri Builders & Contractors , ... vs Assessee on 25 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "C",
MUMBAI
BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI.RAJENDRA (A.M.)
ITA NO. 7147/MUM/2010(A.Y.2006-07)
ITA NO.7148/MUM/2010(A.Y.2007-08)
M/s. Om Trinetri Builders & The ITO, Ward 20(2)(3),
Contractors, Mumbai.
7/14, United CHS Ltd., Koldongri, Vs.
Andheri (E), Mumbai - 400 069.
PAN:AAAFO 3066E
(Appellant)
(Respondent)
Appellant by : Shri Rakesh Joshi
Respondent by : Shri V. Saxena
Date of hearing : 25/04/2012
Date of pronouncement : 02/05/2012
ORDER
PER N.V.VASUDEVAN, J.M
ITA No.7147/M/2010 is an appeal by the assessee against the order
dated 20/8/2010 of CIT(A)-31, Mumbai relating to the assessment year 2006-07. ITA No.7148/M/2010 is also an appeal by the assessee against order dated 20/8/2010 of CIT(A) relating to the assessment year 2007-08. The ground of appeal raised by the assessee in both the appeals are identical.
2. The grounds raised by the assessee in ITA No.7147/M/2010 Read as under:-
1) On the facts and circumstances of the case as welt as in Law, the Learned CIT(A) has erred in passing the order without giving an opportunity to the appellant by rejecting the adjournment seeked, reasons assigned by him for doing the same are wrong and insufficient.2 ITA NO. 7147/MUM/2010(A.Y.2006-07)
ITA NO.7148/MUM/2010(A.Y.2007-08)
2) On the facts & circumstances of the case as well as in Law, the Learned CIT (A) has erred in confirming the action of A.O. in rejecting the claim for deduction u/s.8018(1O) of the income Tax Act' 1961 of Rs. ................/-
3) On the facts a circumstances of the case as welt as in Law, the Learned CIT (A) has erred in holding that the Appellant has failed to satisfy the various conditions Laid down for claiming the deduction u/s.801B(1O) of the income Tax Act' 1961.
4) The appellant craves Leave to add, amend, alter or delete the said ground of appeal.
ITA No.7147/M/2010 (A.Y. 2006-07):2. The assessee is a partnership firm. It is engaged in the business of builder and contractor. The assessee was developing a project in an area admeasuring 1459.7 Sq.mts. and forming part of lands bearing Survey No.45, Hissa No.9 (Part) and CTS No.230, 230/1 to 29 and Survey No.45, Hissa No.10, C.S.No.247, 247/1 to 12 of Village Vile Parle (East) Taluka Andheri, Mumbai and another area measuring 595 Sq.mts. forming part of lands bearing Survey No.45, Hiss No.2 (Part) and 9 (Part) and CTS No.229 (Part) and 231 of Village Vile Parle (East), Andheri, Mumbai. It is not in dispute that the housing project carried out by the Assessee in the aforesaid properties was a single project and was being done in accordance with a scheme framed by the State Government for reconstruction or redevelopment of existing building in areas declared to be slum area under the law for the time beings in force. The project had the approval of Slum Rehabilitation Authority (SRA), Government of Maharashtra. The assessee had claimed deduction under section 80 IB(10) of the Income Tax Act,1961(the Act) in respect of the profits derived from development of the aforesaid project. The provisions of Sec.80-IB(10) of the Act as applicable from AY 05-06 is as follows:
3 ITA NO. 7147/MUM/2010(A.Y.2006-07)ITA NO.7148/MUM/2010(A.Y.2007-08) "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,
(a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction
(i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008;
(ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, within four years from the end of the financial year in which the housing project is approved by the local authority.
Explanation. For the purposes of this clause,
(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;
(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;
Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under
any law for the time being in force and such scheme is notified by the Board in this behalf;
(b) the project is on the size of a plot of land which has a minimum area of one acre:
(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place;
(d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed 4 ITA NO. 7147/MUM/2010(A.Y.2006-07) ITA NO.7148/MUM/2010(A.Y.2007-08) five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less."
3. The AO denied the claim for deduction u/s.80-IB(10) of the Act, for non- fulfillment of two conditions.
(1) As we have already seen what the Assessee was developing was a slum redevelopment project duly approved by SRA. As per the proviso to Sec.80-IB(10)(a) of the Act, a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force need not satisfy the conditions laid down in Sec.80-IB(10)(a) of the Act but such scheme should be notified by the Board (CBDT) in this behalf. Admittedly there is no CBDT notification in respect of the project developed by the Assessee. (2) the residential unit constructed in the project should have a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place for the following reasons.
The case of the revenue on the fulfillment of the second condition is that on 30/9/2008 a survey under section 133A of the Act was carried out in the place where the project were constructed by the assessee in the course of survey it turned out that the following flats which were sold under one agreement to one person had total area as per the agreement which was much more than thousand sq.ft. Flats i.e. B-101 and 102 (Mr. Vijay Choudhary) A-401 and 402 (Smt. Archana Sankhe). Further, it was also 5 ITA NO. 7147/MUM/2010(A.Y.2006-07) ITA NO.7148/MUM/2010(A.Y.2007-08) admitted that in case of certain flats as below there was single agreement and it has been sold to joint owners:
S.No. Flat No. Name of the owner Combined area Built up area of of flat sq.ft. the flat sq.ft.
(carpet area)
1. B-201&B202 Mr.Kishore Gada 880.60 1235
2. A301 & A302 Mrs. Kamal J Sankhe 875.11 1235
3. A303 & A304 Mr. Damji N Nishar 1075.81 1506.29
4. B301 & B302 Mr. Laxmiben Nishar 880.60 1235
5. A 401 & A 402 Mrs. Dimpal K. Chhadva 880.60 1235
6. A 501 & A 502 Mr. Purshottam K. 875.11 1235 Sankhe
7. B 501 & B 502 Mrs. Mana Colaco 880.60 1235
8. A 601 & A 602 Mrs. Kalpana K. Sankhe 875.11 1235
9. B 601 & B 602 Mr. vipin J Sankhe 880.60 1235
10. A 701 & A 702 Mr. Narayan J. Sankhe 875.11 1235 11 B 701 & B 702 Mr. Deepak S Naik 880.60 1235 12 A 101 & A 102 Mr. Raikar 875.11 1235 Since one of the condition for eligibility of deduction under section 80 IB (10) of the Act was that the area of flat developed should not be more than 1000 sq.ft. and since two adjacent flats have been combined to one flat and sold to one person a single agreement, the AO held that the assessee was not entitled to the deduction under section 80 IB(10) of the Act. Since the scheme was not notified y the CBDT the AO denied the claim for deduction under section 80 IB(10) of the Act.
4. On appeal by the assessee the CIT(A) confirmed the order of AO, giving rise to the present appeal before the Tribunal.
5. We have heard the rival submissions. As far as approval of the Slum Rehabilitation Authority is concerned we find that CBDT has issued a notification dated 3/8/10, whereby it is now notified that any scheme approved under Regulation 33(10) of DCR for Greater Mumbai 1991, and by the SRE for Slum Rehabilitation would be valid for the purpose of Clause- a and b of section 80 IB (10) of the Act. We are of the view that it would be 6 ITA NO. 7147/MUM/2010(A.Y.2006-07) ITA NO.7148/MUM/2010(A.Y.2007-08) appropriate to set aside the order of the CIT(A) on this issue and restore the same to the AO for consideration of the issue afresh in the light of the notification issued by the CBDT.
6. As far as the individual flats exceeding the built up area of more than 1000 sq. ft. is concerned we find that the Co-ordinate Bench of the Tribunal in the case of Emgee Holding Pvt. Ltd. vs. DCIT, (2011) 12 Taxman.com 468 (Mum) has held as follows:
"It was noted that the size of each fiat, as evident from building plan as duly approved by Municipal authorities, was less than 1,000 sq. ft. It was not even revenues case that each of flat on stand alone basis was not a residential unit. Even flats were constructed or planned in such a way that two flats could indeed be merged into one larger unit, as long each flat was an independent residential unit, deduction under section 80-lB (10) could not be declined. What section 80-lB (10) refers to is 'residential unit' and in the absence of anything to the contrary in the Act, the expression 'residential units' must have the same connotations as assigned to it by local authorities granting approval to the project. The local authority had approved the building plan with residential units of less than 1,000 sq.fi. and granted completion certificate as such. There was no ambiguity about the factual position. Further, the prohibition against sale of more than one flat in a housing project to members of a family has been inserted specifically with effect from 1-4-2010 and, said amendment in law can only be treated as prospective in effect. So far as pre-amendment position is concerned, as long as residential unit has less than specified area, is as per the duly approved plans and is capable of being used for residential purposes on stand alone basis, deduction under section 80-IB(10) cannot be declined in respect of the same merely because the end user, by buying more than one such unit in the name of family members, has merged these residential units into a larger residential unit of a size which is in excess of specified size. It is useful to take note of legislative amendment by virtue of which the legislature put certain restrictions on sale of residential units to certain family members of a person who has been sold a residential unit in the housing project. Section 80-IB(10) now provides an additional eligibility condition that in a case where a residential unit in the housing project is allotted to any person being an individual, no other residential unit in such housing project is allotted to any of the following person, namely (1) the individual or the spouse, or the minor children of such individual, (ii) the HUF in which such individual, is a karta' (iii) any person representing such individual the spouse or 7 ITA NO. 7147/MUM/2010(A.Y.2006-07) ITA NO.7148/MUM/2010(A.Y.2007-08) minor children of such individual, or the HUF in which such individual is a karta. [Para 7] It is clear that the amendment has been brought with prospective effect from 1-4-2010, and there is no indication whatsoever to suggest that these restrictions need to be applied with retrospective effect. The amendment seeks to plug a loophole but restricts the remedy with effect from 1-4-2010, i.e., assessment year 2010-11. The law is very clear that unless provided in the statute, the law is always presumed to be prospective in nature. It will, therefore, be contrary of the scheme of law to proceed on the basis that wherever adjacent residential units are sold to family members, all these residential units are to be considered as one unit. If law permitted so, there was no need of the insertion of clause (f) to section under section 80-lB (1 0) It will be unreasonable to proceed on the basis that legislative amendment was infructuous or uncalled for - particularly as the amendment is not even stated to be for removal of doubts': On the contrary, this amendment shows that no such eligibility conditions could be read into pre-amendment legal position. [Para 8] In view of aforesaid discussion, the deduction under section 80-lB(10) was to be allowed to the assessee entirely. [Para 9)"
7. In the present case admittedly the amended provisions of law will not apply and, therefore, so long as per the plans approved by the concerned authorities, the built up area of each flat is less than 1000 sq.ft. the deduction under section 80IB(10) of the Act cannot be denied to the Assessee on the ground that two flats as per approved plan lying adjacent to each other have been combined into one flat and owned by one owner or jointly with some of the members of his family. In this regard we also find from the approved plan copy of which is at Page 66 of the Paper Book that as per the approval the built up area of each flat is less than 1000 sq.ft. In the circumstances we hold that the rejection of the claim of the assessee for deduction under section 80 IB(10) on this account cannot be sustained.
8. In the result, the appeal by the assessee is partly allowed.
8 ITA NO. 7147/MUM/2010(A.Y.2006-07)ITA NO.7148/MUM/2010(A.Y.2007-08) ITA No.7148/M/10,A.Y 2007-08:
9. The parties agreed that the facts and circumstances in this assessment are identical to that of A.Y 2006-07. The deduction under section 80 IB(10) of the Act in this assessment year has to be considered on the same basis on which we have decided the case of the assessee for assessment year 2006-07. The AO is directed to follow the directions given in A.Y 2006-06 in this assessment year also. In all other respect the decision given in A.Y 2006-07 will apply to this assessment year also. The appeal of the assessee is thus partly allowed.
10. In the result, both the appeals by the assessee are partly allowed.
Order pronounced in the open court on the 2nd day of May 2012
Sd/- Sd/-
(RAJENDRA) (N.V.VASUDEVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 2nd May 2012
Copy to: 1. The Appellant 2. The Respondent 3. The CIT City -concerned
4. The CIT(A)- concerned 5. The D.R"C" Bench.
(True copy) By Order
Asst. Registrar, ITAT, Mumbai Benches
MUMBAI.
Vm.