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TMI Blog2012 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Section 80-IB(10) of the Act. In the course of survey, it was noticed that the construction of the residential flats at G.R. Grand Residency and the commercial complex in the said complex was undertaken with many deviations from the sanctioned plan and that the assessee firm had contravened the provisions of Section 80-IB(10) of the Act. The said deviations are set out. Further it was noticed that the sanctioned plan provided for 84 units and a swimming pool was at the centre, open to sky but as per actual construction, one of the units was replaced by the swimming pool resulting in 83 units, as certified by the Principal Architect of the assessee Shri K.V. Harsha Babu on 06 01.2006. It was also noticed that the project called G.R Grand Residency also contains some flats with penthouses on the 3rd floor. In the said pent houses, a room was constructed on the terrace, which was called as head rooms. It was noticed that these head rooms were constructed in similar design with spiral staircases with same type of materials, designs and colours. It. was further found that these constructions were constructed with the help of the engineers of the assessee with the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is put up by the assessee. The purchasers of the said flats would have engaged the same masons and the engineer who were working with the assessee for the construction of said flats. When once the occupation Certificate is issued by the municipal authorities being satisfied with the construction put up and held that the same is in accordance with the sanctioned plan and thereafter, if construction are put up by the owners of the building, the assessee cannot be held responsible. The provision of Section 80-IB(14)(a) cannot be interpreted with retrospective effect so as to deny the benefit of Section 80-IB(10) to the assessee. It was further held that a housing project approved by a local authority may include a commercial building also 'and therefore, the conditions prescribed under Section 80IB(10) is satisfied and the assessee is entitled to the benefit and therefore, the appeal was allowed granting benefit to the assessee. Aggrieved by the said order, the revenue is in appeal. 2. This appeal was admitted on 14.12.2010 to consider the following substantial questions of law: (i) Whether the Tribunal was correct in holding that the Assessing Officer had failed to prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ened the requirement of Section 80-IB. The material on record does not disclose that the assessee put up the said construction prior to the sale of those flats and excluded the said construction in the sale deed with an intention of getting benefit of Section 80-IB(10). 3(a) Insofar as balconies are concerned, prior to 01.04.2005, the area covered by them has to be excluded in calculating the built-up area. As the housing project was approved on 14.06.2002 and in the said plan, all these balconies are shown and excluding those balconies, the construction put up is admittedly less than 1,500 sq. ft. After 01.04.2005, the authorities cannot add the balcony area to the built up area and deny the benefit to the assessee. Therefore, as the material on record discloses that all the 84 or 83 flats constructed are less than the 1,500 sq. ft., the assessee cannot be denied the benefit and taxed on the ground that it exceeds 1,500 sq. ft. Hence this question of law is answered in favour of the assessee and against the revenue. 4. Second Substantial Question of Law: The question is whether the definition of "built-up area" as inserted by Finance (No.2) Act of 2004 with effect from 01.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an undertaking developing and building housing projects approved before the 31st day of March, [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 of where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; (iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five 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.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract awarded by any person (including the Central or State Government)]. 7(a) Whereas the section which was on the statute book earlier read as under:- "(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any 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; (b) The Project is on the size of a plot of land which has a minimum area of one acre; and (c) The residential unit has a maximum built-up are of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilimetres from the municipal limits of these cities and one thousand and five hundred square feet at any other place." 8. From the aforesaid provision, it is clear that the first condition to be satisfied for application of this provision is that the housing project requires to be approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2005 cannot be held to be retrospective; it applies only to such housing projects, which are approved subsequent to 01.04.2005. In that view of the matter, the assessee, in the instant case, is entitled to the benefit of the aforesaid provision and hence the said substantial question of law is answered in favour of the assessee and against the revenue. 10. Third and Fourth Substantial Questions of Law: The question is whether a housing project includes a commercial complex. In other words, if in the housing projects approved by the local authority, a commercial complex is also constructed, does it cease to be a housing project so as to disentitle the assessee from the benefit of Section 80-IB (10) of the Act. 11. The first condition to be satisfied for application of the said provision is that which applies to a case of an undertaking developing and building housing projects approved by a local authority. In the instant case, what is approved is a housing project. The said housing project consists of a building where 84 residential units are constructed and a commercial building measuring about 17600 sq. ft. of built up area is constructed. The total area covered by these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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