TMI Blog2011 (9) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the existing projects, the same will lead to the absurdity and that is not the intention of the legislature because ultimately it will lead to a national loss. - Decided in favour of assessee. - ITA No.145/Ind/2011, 434/Ind/2010, 86/Ind/2011 & ITA Nos. 81 to 85/Ind/2011 - - - Dated:- 29-9-2011 - SHRI JOGINDER SINGH, AND SHRI R.C. SHARMA, JJ. Appearances by: Appellants by : S/Shri H.P. Verma Ashish Goyal Respondent by : Shri Arun Dewan, Sr. DR ORDER PER JOGINDER SINGH These appeals are by the assessees against the different orders dated 10.2.11, 22.3.10, 10.2.11, 31.1.11 10.2.11 of ld. CIT(A)-II, Bhopal. First, we shall take up the appeals in the cases of M/s. Global Reality, wherein, the only ground contested by the assessee is that on the facts and in the circumstances of the case and within the provisions of Income tax Act, the ld. first appellate authority was not justified in upholding the withdrawal of deduction u/s 80IB(10) at Rs.35,42,526/- (AY 2004-05), Rs.23,42,464/- (AY 2005-06) and Rs.9,62,915/- (AY 2006-07) and in confirming the impugned additions. 2. During hearing of the appeals, we have heard Shri H.P. Verma along with Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oping and building housing projects approved before the 31st day of March, 6a[2008] 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 1 st 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, the housing project was approved by the local authority on 22.3.2001 (before 1st day of 2004) then the same has to be completed on or before 31st day of March, 2008. The assessee made application to the Municipal Authorities on 16.1.2008 (paper book page 26) and the site was claimed to be inspected by the officials of Municipal Corporation on 27.2.2008 (paper book page 32). The completion certificate was issued to the assessee on 4.5.2010 (paper book pages 30 31) wherein the date of completion has not been mentioned. The assessee claimed that vide letter dated 23.3.2011 (paper book page 32), clarification was issued by the Municipal Corporation wherein the date of completion has been mentioned as 27.2.2008. In view of these facts, it can be said that the assessee has complied with the conditions as contained in sub-section (10) of sec. 80IB. As per sub-clause (ii) to Explanation, the date of completion of the construction of the housing project shall be taken on the date on which the completion certificate in respect of such housing project is issued by the local authority. Since the clarification was issued by the Municipal Corporation regarding completion of the project, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea was not defined under the IT Act by insertion of the provisions of sec.80IB (14)(a) as stated above from 01/04/2005. (iii) Earlier, the Income Tax Act had not given any particular definition of built up area and accordingly, the position as emerging from M.P. Nagar Tatha Grah Nirman Adhiniyam was to be accepted for the purpose of IT Act as well. (iv) As per said position, the Porch area, Stair case area, Trrace area, Balcony area, lobby area, Duct area and Tower area were not includible in the building area (as per different provisions market in yellow and red colour at different pages of Bhopal development plan 2005 and M.P. Nagar Tatha Grah Nirman Adhiniyam and Bhumi Vikas Nigam 1984 enclosed herewith. (v) The provision of sec. 80IB was introduced from 01/04/99 to give a boost to the housing industry. Since Income Tax Act did not provide any definition of the built up area the builders all over India took the clue above the definition of built up area from other acts prevailing at the said time in M.P. all the builders and the appellant relied upon the built up area given in the approved map and the said built up area approved by the map was less than 1500 sq.ft. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be withdrawn from the beneficiary on the later date if the beneficiary has bonafidely acted upon the assurance of the Govt. (f) In the present case also the appellant has acted upon in the year 2001 and 2002 on definition the built up area as per map approved by the Municipal Corporation as per there Act and Rules and became entitled to the benefit of deduction u/s 80IB. Such a benefit cannot be withdrawn from the appellant on the basis of definition coming into existence after 01/04/2005. In view of the above, it is requested that the deduction claimed by the appellant u/s 80IB be kindly allowed and disallowance of deduction at Rs.23,42,464/- be kindly restored to the appellant. Accordingly, the appeal be kindly allowed. In continuation of the earlier submissions, the assesse has also submitted as under : Your honour will appreciate that ld. Assessing Officer has denied the deduction u/s. 80IB(10) to the appellant in the assmt. year 2005-06 on the sole ground that the built up area of the bunglows of the Hamiltion project as per definition provide in section 80IB(14)(a) from 01-04-2005 are more than 1500 sq. ft. On inspection/measurement of the two bunglows by R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service ducts, machine room for lifts, water tanks, covered parking area, one entrance lobby/foyer on ground floor, corridors, arcades, mumptee, staircase but inclusive of covered projection exceeding the limits prescribed under rule-58 . Rule-58. (I) Projection into open spaces-Every open space provided either interior or exterior shall be kept free any erection thereon and shall be open to the sky except as below:- a. Cornice, roof or weather shade not more than 0.75 meter wide; b. Sunshade over windows/ventilators or other opening not more than 0.75 meter wide; c. Canopy at level not lower than lintel level of the first floor, but not to be used as a sit out with clearance of 1.5 metres between the plot boundary and the canopy; d. Projected balcony at higher floor of width not more than 1.20 meter; Provided that the balcony area may be merged with the adjoining room to the extent of 10 per cent of the floor area, and] e. Projecting rooms balconies (see clause [d]) at alternate floors such that rooms of the lower two floors get light and air and the projection being not more than the height of the storey immediately below:- However, these projections into open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Projections of sunshades over windows or ventilator in existing built up or congested areas when permitted by the Authority shall fulfil the following conditions:- (a) No Sun-shade shall be permitted over the road or over any drain or over any porten outside the boundaries of the site below a height of 2.8 metres from the road level. (b) Sunshades provided above a height of 2.8 metres from the ground level shall be permitted to project up to a maximum width of 60 centimetres if the road over which they project exceeds 9 metres in width; and (c) No sunshade shall be permitted on roads less than 9 metres width or on roads having no footpaths. On perusal of the above said rules, it may be seen that the parking area (porch) projection for stairs and Veranda (entrance lobby) stair case covered wash room with shade and projections for balcony and elevations are not included in the built up area defined in M.P. Bhumi Vikas Rules 1984. (iii) The provisions of sec.80IB(10) was introduces by the finance Act 99 and was made effective from 01/04/2000 to mitigate the housing problem faced by the country. Since Income Tax Act did not provide any definition of the built up area till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng unit exceeds 1500 sq. ft. can not be accepted. It may be seen that Income Tax Act as prevailing at the time of launch of the project did not define the built up area and by the definition given in M.P. Nagar Grih Nirman Adhiniyam and M.P. Bhumi Vikas Niyas 1984, the built up area of the unit are 1329 and 1461 sq. ft and therefore, the assessee is entitled to the deduction u/s 80IB(10) of the IT Act. In this connection, your kind attention is invited to the ITAT Nagpur bench decision in the case of ITO vs. AIR Developers as reported on (2009) 123 TTJ (Nagpur) 959. 6. If the submissions of the assessee are kept in juxtaposition with the facts of the present appeal, we are supposed to analyse built-up area as per definition provided in sec. 80IB(14)(a) with effect from 1.4.2005, which means the inner measurement of the residential unit at the floor level including the projection and the balconies, as increased by the thickness of walls but does not include the common areas shared with the other residential unit whereas the ld. Assessing Officer has included the area covered by the outer walls also in place of taking thickness of walls. At the same time, the projections and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight subject to a maximum of 4 square metres in the rear open space at a distance of 1.5 metres from the rear boundary may be permitted. (b) Parking lock up garages not exceeding 2.6 metres from plinth level in height and an area not exceeding 20 square metres shall be permitted in the side or rear open space at a distances of 7.5 metres from any road line or the front boundary of the plot. Provided that the space allowed for garage may be permitted to be used for any other purpose and construction up to one more floor on it may be allowed. However, the area so allowed shall be included in the covered area but shall be treated as an exception to open space; and (c) Suction tank and pump room each up to 2.5 square metre in area. (3) Projections into street In existing built up or congested areas no projection of any sort whatever except sun-shades extending more than 23 centimetres below a height of 4.3 metres shall project over the road or over any drain or over any portion outside the boundaries of the side provided that the projection arising out of the vertical part of the rain water spouts projecting at the road level or the water pipe may be permitted in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the introduction of sec. (i.e. 1.4.2005), therefore, the definition shall not be application to the assessee. The measurement of the unit is summarised as under: Per DVO Per Assessee Per Registered Sale Deed Per Section 80IB(14)(a) introduced w.e.f. 1.4.2005 Per Bhumi Vikas Adhiniyam, 1973. PB 14-15 Regal 6 1994.16 AO page 2 1315.02 PB 11 1330.53 Page 11 (Synopsis) Royal 22 1919.98 AO page 3 1315.02 PB 11 (Same size as Regal 6) 1050.00 Page 19 (sale of incomplete structure. Map approved for 1461 sq.ft., page 28 9. Another objection raised by the ld. Sr. DR is that the completion certificate was issued by the local authority on 4.5.2010 for which our attention was invited to paper book page 30 31. It was clarified by the ld. Counsel for the assessee that clarification was issued vide letter dated 23.3.2011 (paper book page 32) wherein the date of completion was mentioned as 27.2.2008. This assertion of the assessee was not controverted by the Revenue, therefore, the case of the assessee finds support from the decision in the case of D.K. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir business within the specified period. Section 80IB(3)(i) provides, whereby deduction is provided for industrial undertaking commencing business between 1.4.1991 and up to 31.3.1995. Similarly, u/s 80IB(3)(ii) provides deduction for cold storages commenced business between 1.4.1995 up to 31.3.2002. If the business commences within this period, the deduction is allowable for ten consecutive assessment years whereas Section 80IB(10) provides deduction for housing projects which are approved on or after 1.10.1998 and up to 31.3.2008. Therefore, Section 80IB(10)(a) clearly differentiates the projects (approved between (a) 1.10.1998 to 31.3.2004, (b) 1.4.2004 to 31.3.2005 and (c) 1.4.2005 to 31.3.2008). In case the project is approved between these specified dates, the entire project may be allowable to the assessee. If the impugned Section is analysed, it is based upon the approval of the project. The amendment by Finance (No.2) Act, 2004, therefore, requires to be interpreted harmoniously considering the scheme of the Act. In the present appeals, the projects were approved prior to amendments, therefore, if the definition is said to be applied to the projects already approved prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeals, it can be said that the assessees are governed by the M.P. Vikas Adhiniyam read with Bhopal Master Plan, 2005, the assessees have taken the built-up area as per definition given under Master Plan, 2005 (Paper book page 24) which defines buildable area which excludes the common areas, mumtee, balcony etc., consequently, the areas of these exempted structures is not to be included in the built up area. The State of Madhya Pradesh has framed Madhya Pradesh State Bhumi Vikas Rules, 1984 in this regard to control and regulate the development and construction for the entire State. The mumtee area and porch/covered parking is not included in the built up area. The same rule is enforced in the jurisdiction of Bhopal Municipal Corporation. The approval granted by the Bhopal Municipal Corporation after processing and computing the covered area and floor area is based on these Bhumi Vikas Rules, 1984 only. 11. The assessee has constructed the houses as per sanctioned plan approved by the Municipal authorities and no deviation was pointed out. Even otherwise, finally completion certificate was also issued to the assessee. If there would have been any deviation in the construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon legally assured position emerging from the enactments. It is pertinent to mention here that the Income Tax Act prevailing at the time of launch of the project, did not define the built up area and by the definition provided in M.P. Nagar Grah Nirman Adhiniyam and M.P. Bhumi Vikas Niyam, 1984, the built up area of the unit is less than the prescribed limit of 1500 sq. ft., consequently, the assessee is entitled to deduction u/s 80IB(10) of the Act. The ratio laid down by the Nagpur Bench of the Tribunal in the case of ITO vs. Air Developers (2009) 123 TTJ (Nag) 959 further supports the case of the assessee. In view of these facts and judicial pronouncements, the appeals of the assessee are allowed. 12. Now we shall take up the appeals of M/s Global Estates (ITA Nos. 81 to 85/Ind/2011). We have gone through the orders of the lower authorities. The issue in all these appeals is common to the issue raised in the case of Global Realilties. We have verified the permission no. 834/01-03, certificate dated 2.1.2003, completion certificate by the assessee s engineer dated 3.1.2008 and also the completion certificate dated 4.3.2010 issued by the Municipal Corporation and also the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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