TMI Blog2012 (6) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... .C. SUDHIR, G.S. PANNU, JJ. Sunil Pathak and Nikhil Pathak for the Appellant. Narendra Kumar for the Respondent. ORDER ITA No. 1250/PN/2009 I.C. Sudhir, Judicial Member The assessee has questioned the first appellate order on following grounds : "(1) The CIT(A) erred in confirming the disallowance of deduction of Rs. 4,42,18,673/- u/s. 80IB(10) in respect of the housing project constructed by the assessee at Warje, Pune. (2) The CIT(A) erred in holding that the assessee's project consisted of 16 buildings as per the sanctioned layout plan of the plot of land of about 20 acres and as all these buildings were not constructed before 31.3.2008, it did not satisfy the basic condition of section 80IB(10) and therefore, the assessee was not entitled to the deduction u/s. 80IB(10) of the Act. (3) The CIT(A) was not justified in holding that - ( a ) the condition for completion of the project within four years of the year in which the first building plan was passed applied to the assessee's case although the first building plan was passed before the introduction of this condition in section 80IB(10). ( b ) the project consisted of 16 buildings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant facts emerging from the orders of the authorities below are that the assessee firm engaged in the business of promoters and builders had claimed deduction u/s. 80IB(10) of Rs. 4,42,18,673/-. The same was denied by the A.O mainly on that basis that out 16 buildings in the project in which one single approval and sanction was taken, only 11 buildings were complete within the prescribed time limit upto 31st March 2008. The A.O. stated that the first lay out plan in respect of entire complex was sanctioned by Pune Municipal Corporation (PMC) vide order No. DPO/45/D/646 dated 3.4. 2003 and the building plan was sanctioned vide commencement certificate No. 4269 dated 29.4.2003. The entire project sanctioned by these orders comprised of A, B, C D type of buildings were subjected to amendments later. Referring Explanation below Sec. 80IB(10)(a) of the I.T. Act, the A.O held that as per the Explanation (i) when the approval in respect of the housing project was obtained more than once, the very first approval was the date to be taken for the approval of the project for the purpose of Sec. 80IB(10)(a) of the Act. The A.O. stated that in this case, the date of approval of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. For a ready reference, it is reproduced hereunder : "(1) In this case, the only issue is regarding the disallowance of claim u/s 80IB(10) of Rs. 4,43,37,400/-. The assessee is a promoter and builder. It has constructed a project on the land admeasuring about 20 acres at S. No. 79/B, Warje, Pune. The first layout plan was sanctioned by Pune Municipal Corporation on 3.4.2003 vide their order No. DPO/45/D/646. The sanctioned layout was for 16 buildings consisting of 680 tenements. The details are given in para 6 of the asst. order. As per the condition laid down in section 80IB(10), the assessee has to complete the project within four years of the year in which the first plan is sanctioned. In this case, therefore, according to the A.O., the assessee had to construct the entire project by 31.3.2008. The A.O. holds that the assessee has completed only A B type of buildings by this date and the other buildings in C D type are still under construction and therefore, he held that the assessee had not completed this project within four years and accordingly, he has disallowed the claim of deduction u/s 80IB(10). (2) In the paper book on page no. 4 the assessee has given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er revised plan sanction on 20/3/2004 wide cc no. 2225 page no 17 ( iv ) The project consists of 396 flats and is completed as per the details hereunder - ( a ) Completion certificate no. BCO/0218/06/1576 BCO/0218/06/1577 BCO/0218/06/1578 BCO/0218/06/1579 BCO/0218/06/1580 BCO/0218/06/1581 Date 14/7/2006 14/7/2006 14/7/2006 14/7/2006 14/7/2006 14/7/2006 No. of flats 72 54 72 72 54 72 396 ( v ) The built up area of the flats does not exceed 1500 sq.ft. The building plan/brochure is enclosed on page 18 to 23. ( vi ) This project is entirely a residential project and there is no commercial area therein." The Ld. A.R. submitted that the term ''housing project" is not defined anywhere under the Income Tax Act, therefore, there is a possibility of different views on the subject leading to protracted litigation. The Maharashtra Chamber of Housing Industry vide its letter dated 1 st January 2001 had requested for clarification under the provisions of Sec. 10(23G) of the I.T. Act 1961 from the Hon'ble Finance Minister, Government of India. It was requested in the said letter that suitable cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 231 ITR 308/97 Taxman 435 (SC). (2) Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188/62 Taxman 480 (SC) 7. The Ld. D.R. on the other hand tried to justify the orders of the authorities below. He submitted that the assessee had completed only the part of the project upto the prescribed time limit i.e. 31st March 2008 from the date of first approval of the housing project, hence, as per Explanation (i), the assessee was not entitled for the benefit of claimed deduction u/s. 80IB(10) of the Act. He submitted that benefit of deduction u/s. 80IB(10) cannot be given on the basis of CBDT letter dated 4th May 2001 as relied upon by Ld. A.R. since the said letter was addressed to clarify problem of an individual. 8. Considering the above submission, and having gone through the orders of the authorities below, material available on record and the decisions relied upon, we find that the issue involved is as to whether the assessee had completed the housing project within the prescribed time limit since the date of first approval of the project by the PMC. 9. To decide the above issue, it is necessary to decide firstly as to what would be first date of approval of the housing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation, we find substance in the contention of the ld. A.R. that approval of the housing project and approval of building plan are two different concepts. The Bangalore Bench of the Tribunal in the case of Brigade Enterprises (P.) Ltd. ( supra ) has held that plan for development is only a work order and not final plan sanctioned by the local authority. For any project, there could not have been a plan without submission of the detailed building plans, by the architect and what requisite details required to be submitted for approval of the building plans by the local authority. In the case of Saroj Sales Organisation ( supra ), before Mumbai Bench, almost similar facts as before us were there. The commencement certificate in respect of six wings in Block 'N' was separately received by the assessee and all the flats in Block were less than 1000 sq.ft. It was held by the Tribunal that it is not upon to the revenue to include block 'BC' as part of block 'N' just to deny relief to the assessee u/s. 80 IB(10). The Tribunal observed that Block "BC" was meant for higher strata of the Society had been kept separately by assessee in all the respect, assessee had not claimed relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstructed on land area of 138203 sq.ft., has not been denied by the authorities below. They have also not denied these material facts that the first building plan was sanctioned on 29.4.2003 vide Commencement Certificate No. 4269 issued by the PMC (Page No. 16 of the Paper Book). The other material facts like actual construction was executed as per the revised plan sanction on 20th March 2004 vide CC No. 2225 (page No. 17), the project consists of 396 flats and construction of these flats have been completed on 14.7.2006 as per the Completion Certificate issued by the PMC (Page Nos. 13 to 18 of paper book) are not in dispute. The authorities below have also not denied that built up area of each of these flats does not exceed 1500 sq.ft. It is also not in dispute that both the projects are entirely a residential project and there is no commercial area therein. Under the above circumstances, we are of the view that the assessee is very much entitled to the claimed deduction u/s. 80 IB (10) of the Act on the buildings A1 to A5 in "Atul Nagar" and buildings B1 to B6 in "Rahul Nisarg Co-operative Housing Society Ltd." The issue is therefore decided in favour of the assessee. We thus wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was passed before 1.4.2004 and hence, the condition for completion of the project within four years was not applicable in this case and the deduction u/s 80IB(10) had to be allowed to the assessee as per the provision of section 80IB(10) applicable on the date of passing of the first plan. ( b ) The assessee had completed 11 buildings namely A1 to A5 and B1 to B6 by 30.7.2006 and therefore, as they were constructed on a portion of land occupying more than one acre, they constituted a project and the deduction u/s 80IB(10) was allowable in respect of the profits from these buildings. ( c ) There was no definition of the term 'Project' in section 80IB(10) and the same could not be equated with the entire sanctioned layout. ( d ) the cluster of 11 buildings namely, A1 to A5 and B1 to B6 satisfied all the conditions of section 80IB(10) and therefore, the profits from these buildings were entitled to deduction under that section. ( e ) Even, the dept. in A.Y. 2005-06 had accepted that the said 11 buildings constituted one project for the purpose of section 80IB(10) and therefore, there was no reason to deny the deduction on the ground that the assessee had not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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