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4. The issue arising in both the appeals is with regard to the claim of deduction under section 80IB(10) of the Act.

5. Briefly, in the facts of the case, the assessee for the year under consideration had filed return of income declaring total income of Rs.1,25,59,327/-. The assessee was engaged in the business of builders, developers, dealers in real estate. During the year under construction, the assessee had constructed two projects i.e. 'Parmar Garden' at Survey No.66A/2A+2B/1A/1 (P), Wanawadi, Pune City, Pune and KPCT, a commercial project, situated at Survey No.16, Wanawadi, Pune.. For the year under consideration, the assessee had claimed the deduction under section 80IB(10) of the Act at Rs.4,09,79,023/- for the project 'Parmar Garden'. The said project consisted of buildings B-1 (Lily), B-2 (Lotus), B-3 (Daffodil), A-1 (Tulip). These are four nine storied buildings, in addition to the buildings called as C-1, C-2, C- 3, which were also called as Marigold. The Assessing Officer has noted that the project was completed during assessment year 2003-04 and had received the completion certificate from Pune Municipal Corporation. Part completion certificate was received on 16.07.2002 in respect of flats of buildings C-1, C-2 and some of the flats of building B-1. The said completion certificate was issued with reference to building commencement certificates No.2098, dated 19.12.1998 and 1032, dated 16.03.2002. Subsequently, the assessee received final completion certificate on 20.03.2003. As per final completion certificate, the same was issued with reference to building commencement certificate No.1032, dated 16.03.2002. The said completion certificate was for the remaining flats of buildings B-1, B-2, B-3, A-1, C-3 and remaining flats of C-1 & C-2. By certificate M/s. Parmar Properties Pvt. Ltd.

dated 20.03.2003, the assessee claims that it had completed project called 'Parmar Garden'. During the course of assessment proceedings statements of certain officials of assessee company were recorded under section 131 of the Act. In addition to the same, Investigation Wing of Income Tax Department, Pune had recorded statement of Mr. Vilas Parmar, Director on 05.12.2005 and 27.12.2005. The statement of Mr. Kantilal C. Parmar was recorded during survey under section 133A of the Act on 24.11.2005. Subsequently, statement of Mr. Kantilal C. Parmar was recorded on 27.12.2005 by the Investigation Wing. In this case, survey under section 133A of the Act was conducted by the Investigation Wing on 24.11.2005. The statements of certain customers were also recorded under section 131 of the Act during the course of assessment proceedings for assessment year 2003-04, who were the occupants of flats in C- 2, Marigold and Row House No.5, C-2 Marigold and 3-4 Row House No.6, C-1 Marigold, Row House No.1 and also flats of A-1 Tulip. The Assessing Officer noted the eligibility of deduction under section 80IB(10) of the Act and observed that primary condition for obtaining deduction under section 80IB(10) of the Act was that the same was allowable for only housing project approved by local authority. Further, development and construction of housing project should start after 01.10.1998 and the residential units should have maximum built up area of 1500 sq.ft. The Assessing Officer thereafter, analyzed the entire project of 'Parmar Garden' from the aspect of built up area and found that there was one big hall in building B-1 of Carpet area 2576 which was violative of conditions laid down in section 80IB(10) of the Act. Further, Row Houses in buildings C-1 and C-2 also exceeded 1500 sq.ft. The Assessing Officer noted that in building C-1, there were eight flats, however, in reality, there were only four Row Houses. Similarly, in C-2, there were eight flats as against which in reality, there were four Row Houses. The investigation made by the Assessing Officer from the statements recorded of the employees of assessee company and of the M/s. Parmar Properties Pvt. Ltd.

• Statement recorded of sales executive, site engineer, brochure obtained from site office & website of company confirm that these were row houses & 3 bedroom flats - Tulip & Marigold -

exceeding 1500sq. ft.

• Statement of flats holders recorded confirming the sale as single unit to them & that it was explained to them that 2 agreements would save registration & stamp duties.

• All the flats in Tulip building - actual 33 on paper 66-in Marigold, actual 9 - on paper 22, are exceeding 1500 sq. ft. & there is not a single case where flats are actually constructed as 2 flats as per the building plan. There is single electricity meter.

area of combined flat was found to be more than 1500 sq.ft. and as such, the CIT(A) held that even building A1 Tulip was not as per plan approved by the local authority. In view of assessee having constructed shopping plaza, whose built up area was more than 1500 sq.ft. and further the units B1, C1, C2, C3 and A1 Tulip were constructed in contravention of specific provisions of section 80IB(10) of the Act, wherein the area of residential units after combination was more than 1500 sq.ft. and also the buildings constructed did not conform with the plan approved by the local authority, the CIT(A) held that the assessee was not entitled to the claim of deduction under section 80IB(10) of the Act. Furthermore, the development of housing project had commenced prior to 01.10.1998 and on this account also, it was held that the assessee is not entitled to the claim of deduction under section 80IB(10) of the Act.