TMI Blog2010 (4) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... neral public at affordable prices. Therefore, if the units having built-up area of more than 1500 sq. ft. are excluded from the project, the remaining project still fulfils the objects of the legislature and thus entitles for the claim under section 80-IB(10) on proportionate basis as all other conditions prescribed under the provision are satisfied. Thus assessee was eligible for claiming deduction under section 80-IB(10), pro rata for the housing units having less than 1500 sq. ft. for both the year. - IT APPEAL NOS. 2505 AND 2506 (MAD.) OF 2006 - - - Dated:- 23-4-2010 - ABRAHAM P. GEORGE, VIJAY PAL RAO, JJ. T. Vasudevan for the Appellant. Omkareshwar Chidra for the Respondent. ORDER Abraham P. George, Accountant Member In these appeals of the assessee, its sole effective grievance is that it was denied deduction under section 80-IB(10) of the Income-tax Act, 1961, (in short "the Act") for the respective assessment years. 2. The short facts apropos are that the assessee a company engaged in property development had for the impugned assessment year claimed deduction under section 80-IB(10) of the Act. For the assessment year 2003-04, the claim was for 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units, came to 1,54,050 sq.ft. working out to 3.54 acres in the total project area of 6.47 acres. Hence it was submitted that all the conditions, namely approval of local authority and area being more than one acre, were satisfied. Strong reliance was placed on the decision of the co-ordinate Bench in the case of Dy. CIT v. S. Ravi (IT Appeal Nos. 1784 to 1786 (Mad.)/08 dated 19-1-2010) and Arun Excello Foundation (P.) Ltd. v. Asstt. CIT [2007] 166 Taxman 53 (Chennai - Mag.), decision of the Kolkata Bench in the case of Bengal Ambuja Housing Development Ltd. v. Dy. CIT (IT Appeal No. 1595 (Kol.) of 2004 dated 24-3-2006), and a decision of the Bangalore Bench in the case of Dy. CIT v. Brigade Enterprises (P.) Ltd. [2009] 28 SOT 7 (Bang) (URO). 6. Per contra the learned Departmental representative submitted that no project approval from the local authorities was furnished by the assessee, and the assessee's role was only that of a building contractor. Further according to him, when some of the houses built exceeded 1500 sq. ft., and if it was still given benefit of section 80-IA(10), it would defeat the intention behind enacting the said provision, which was only for providing hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction shall mention all the references made in this approval." 8. Now if we see sub-section (10) of section 80-IB, it specifies approval by a local authority and who or what is such local authority is not defined anywhere. We cannot say that a Village Administrative Officer or a Deputy Director of Town Planning is not a local authority. Hence the question now boils down to whether the approval obtained by the assessee was for a housing project. The Assessing Officer himself has admitted that the assessee had produced a certificate dated February 2, 2005 from the Village Administrative Officer, but he rejected it on a reasoning that the Village Administrative Officer was not an authority for issuing a certificate of approval. In any case paragraphs reproduced above, from the letter of the Deputy Director, Town Planning would show that such approval was for construction in the plots. It is also specified that the applicant should get sanction for building from local panchayat. Pursuant to this, the individual owners to whom plots were given had obtained sanction for constructing the units, and constructions carried out by the assessee. The approved layout placed at paper book page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, there is no impediment in allowing the claim of section 80-IB(10) on the ground of approval of the project. As regards the built-up area is more than 1500 sq. ft., we have already pointed out elsewhere in this order that out of 366 housing units, only 83 units were having built-up area of more than 1500 sq. ft., if the total area of units having built-up area of more than 1500 sq. ft. is excluded from the total built-up area of the project, even then, the project area would be more than one acre as required under clause (b) of section 80-IB(10). Therefore, by excluding the residential units having more than 1500 sq. ft. area, the remaining project comprising of the units having less than 1500 sq. ft. built-up area still fulfils all the requirements and conditions prescribed under section 80-IB(10) and sub-serves the object and scheme of the statute or the Legislature. The deduction under section 80-IB(10) is provided as an incentive and motivation for construction of the housing project so as to make the maximum residential houses available for the general public. The built-up area restriction is provided under the provision to achieve the object of houses available within the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be given to it.' Here, in this case, we find that clause (c) prescribed in section 80-IB(10) has been violated. Hence, the exemption provision is not applicable to the assessee. In the background of the aforesaid discussion and precedents, we set aside the order of the learned Commissioner of Income-tax (Appeals) in this regard and restore that of the Assessing Officer." 11. In the abovesaid order, the co-ordinate Bench of this Tribunal has observed that if there is a violation of the condition of the built-up area of 1500 sq. ft. in any of the residential units, there is a clear violation of the provisions of the Act. 12. On the other hand, the Kolkata Bench of this Tribunal in the case of Bengal Ambuja Housing Development Ltd. (supra) in paragraph 22 has held as under : "22. It is apparent from the perusal of section 80-IB(10) that this section has been enacted with a view to provide incentive for businessmen to undertake construction of residential accommodation for smaller residential units and the deduction is intended to be restricted to the profit derived from the construction of smaller units and not from larger residential units. Though the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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