2008 (1) TMI 420 - ITAT BOMBAY-E

Deduction u/s 80IB - Housing Projects - Construction of 6 wings of the same building treated as a separate independent housing project - two blocks 'Nisarg' and 'Breezy Corner' are a combined project and some of the flats in 'Breezy Corner' have a built-up area of more than 1,000 sq. ft. - Permissible shopping area of housing project exceeds 5 per cent - failure to obtain a completion certificate in respect of 6 wings in the block 'Nisarg' - HELD THAT:- There is no dispute that the housing project in the case of 'Nisarg' is approved before 31st March, 2005. The substituted section extended the benefit of 100 per cent deduction of income derived from housing projects approved upto 31st March, 2007 but simultaneously imposed a, restriction on the area of shopping complex that is permissible to be Included in the housing project by inserting the sub-s. 80-IB(10)(d) w.e.f. 1st April, 2005. The legislature nowhere provided the definition of a housing project either in the section or anywhere in the IT Act. Is it open for the Revenue to consider all the housing activities undertaken by the assessee as one project or different projects.

All the above wings are part of 'Nisarg' block and independently satisfies the necessary approval of a housing project. It really makes no difference whether M/s Conwood Agencies had applied for or the assessee had applied to the municipal corporation to make any difference in deciding the assessee's claim for deduction under s. 80-IB(10) of the Act. It must be appreciated that the main developer was M/s Conwood Agencies (P) Ltd. The sanction plan have only approved the construction of the dwelling units of less than 1,000 sq. ft. in all the wings of the said project. There is no dispute that all the flats in these wings contain the eligible units. It is not open to the Revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled in respect of the eligible housing project.

In our view, 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 legislature the Revenue cannot be permitted to do so. After all the assessee have 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, in our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion.

The ratio laid down by this Tribunal order in Bengal Ambuja Housing Development Ltd., in our view, based on the same set of facts as exist in our present case are equally applicable and the assessee's claim for deduction of s. 80-IB(10) in respect of the eligible units of this housing project is therefore, deserves to be accepted.

Area of shopping complex exceeded 5 per cent of the limit prescribed - We are of the view that the housing project 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. As already stated earlier that the amendments were subsequently made while extending the deduction of income from housing project approved upto 31st March, 2007, the denial of deduction, in our view, is clearly not in accordance with law.

Failure to obtain a completion certificate in respect of 6 wings in the block 'Nisarg' from which it has returned the income in the asst. yr. 2005-06 - It was explained that since the housing project in this case has been approved by the local authorities before 1st April, 2004 and the construction is required to be completed before 31st March, 2008. As the occupation certificate in respect of the wings F, F1 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.

Therefore, assessee's claims for deduction under s. 80-IB(10) are accepted and the appeal is to be treated as allowed - AO is directed to allow the deduction as claimed by the assessee in the light of the above discussions.