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TMI Blog2012 (8) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said project vide a separate agreement made with the same landlords from whom the above stated area of 3995.34 Sq. Mtrs. of land was purchased. The assessee contended that requirement of 1 acre of land in view of Section 80IB(10) was fulfilled as the area of the approach road cannot be excluded from the area of the project for the simple reason that if that area would not have been acquired, the PMC would not have sanctioned the Plan and issued Commencement Certificate. The A.O. visited the site and being satisfied with the fulfillment of the required area of land and accepting the explanation of the assessee regarding other discrepancies, the A.O had allowed the claimed deduction u/s. 80 IB(10) of the Act in the assessment framed u/s. 143(3) of the Act. The Ld CIT found the assessment order as erroneous as well as prejudicial to the interest of the Revenue on the following reasons : 1) The area of the project is less than 1 acre. 2) As per Sale Agreement of row house, the saleable area mentioned is more than 1500 Sq.ft, similar position is there in unit Nos. 2, 8 & 5. 3) In A.Y. 2005-06, the I.T.O. in its order passed u/s. 143(3) has denied the deduction u/s. 80 IB (10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Mumbai Bench of the Tribunal in the case of Haware Engineers and Builders (P) Ltd. v/s. ACIT (2011), 11 Taxman .Com 286 (Mum), ITAT, copy supplied. The Ld. A.R. submitted that in that case also, the Department had declined deduction u/s. 80 IB(10) on the ground that additional plot acquired subsequently by allotment was a distinct plot which cannot be included in computation of the area of the plot. The Tribunal held the approach of the Department neither factually correct nor sustainable in law and accordingly, the claimed deduction was allowed holding that area of the plot acquired subsequently is also to be included in the measurement of the total area and thus the total area was as per the requirement of Section 80 IB(10) of the Act. 5. The Ld. A.R. submitted further that the project consists of 37 residential flats and 11 row houses, out of which, the built up area of the none of the flats and row house exceeds 1500 Sq. ft.. The built up area of row house No. 11C in Building 'D' does not exceed 1500 Sq.ft. area. The residential units has a maximum built up area of 1500 Sq.ft. The built up area of the shops and other commercial establishments included in the housing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t application of law involved on the issue by the A.O. He placed reliance on the following decisions : i) CIT v/s. Export House, 256 ITR 603 (Pun. & Har.) ii) Moffusil Warehouse v/s. CIT, 238 ITR 867 (Mad.) iii) Arvee International v/s. ACIT, 290 ITR 80 (AT)8 (Mum.) iv) Dhariwal Indusries Ltd. v/s. ACIT, 300 ITR 90(SB)(Pune) v) Bunty Builders v/s. ITO (2010) 127 ITD 286 (Pune) vi) Radhe Developers & Ors. v/s. ITO 113 TTJ (Ahd.) 300 vii) ACIT v/s. Smt. C. Rajini (2011) 9 Taxman.com 115 (Chennai) viii) Nikhil Associates v/s. ITO (2011) 12 Taxman.com 76 (Ahd.) 9. The Ld. D.R., on the other hand, submitted that the A.O. while allowing the claimed deduction u/s. 80 IB(10) of the Act has accepted the claim blindly without making independent verification of the claim. He failed to appreciate that approval by the PMC was granted on the plan having area of less than 1 acre of land. No approval for 5 Are land used for road was granted by the PMC. This road was due to arrangement with neighbors. The story of acquisition of 5 Are land for road purpose is nothing but an after-thought by assessee as the agreement for acquisition of land is dated 20th March 2004 and no amount of consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10) allowed by the A.O. The Ld CIT has alleged that the A.O has allowed the deduction without verifying the correctness of the claimed deduction u/s. 80IB of the Act as in the lay out plan approved by PMC, the area of the plot has been shown to be 3995.34 Sq.mtrs. only, which is marginally lesser than the prescribed minimum limit of 1 acre; one of the dwelling units is more than the prescribed ceiling of 1500 Sq.ft. and merger of 2 flats exceeding the prescribed ceiling of 1500 sq.ft. We have already discussed hereinabove the explanation of assessee to these basis. In brief, the assessee tried to explain that the plan was approved by the PMC with this condition that making availability of approach road to a society is the responsibility of assessee and the assessee by a separate agreement dt. 20th March 2004 had acquired 5 'Are' of land for the road purpose and it is the only road available to the society for ingress and outgress. It was submitted that if the land of 5 'Are' is included in the land area shown in the plan, the total area exceeds 1 acre of land. His further contention remained that in view of the decision of Mumbai Bench of the Tribunal in the case of Haware Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his agreement. The A.O. in the assessment order has mentioned about his personal visit at the site and thereafter, being satisfied with the explanation of the assessee regarding fulfillment of requirements of Section 80IB(10) he has accepted the claim. In the case of Haware Engineers and Builders (P) Ltd., the assessee was engaged in construction of the building project. During the course of scrutiny assessment proceedings, the A.O noticed that the assessee in that case had claimed deduction u/s. 80IB(10) in respect of residential project developed by assessee on 4000.02 Sq. Mtr land allotted by CIDCO. He disallowed the said deduction on the grounds that size of the plot was admittedly less than 1 acre i.e. 4046.82 Sq. Mtrs., with subsequent allotment of adjacent plot measuring 48.13 Sq.mtr. did not make good the deficiency in eligibility for entitlement to deduction u/s. 80 IB(10) as it was allotted for purpose of playing ground/green area and nondevelopment/ construction was permitted therein and that additional plot was actually a separate plot distinct from original plot. On appeal, the Commissioner(Appeals) confirmed the disallowance on the ground that the assessee had tried t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 80IB(10). It was further held that once the assessee had taken possession of the immovable property and retained it in part performance of a contract of a nature referred to Sec. 53A of the Transfer of Property Act 1882, it amounts to transfer u/s. 2(47)(V) of the I.T. Act 1961. Likewise, the Chennai Bench of the Tribunal in the case of ACIT v/s. Smt C. Rajini (2011) 9 Taxman.Com 115 Chennai has held that in order to claim deduction u/s. 80 IB(10) assessee was not required to be owner of land on record. The Ahmedabad Bench of the Tribunal in the case of Nikhil Associates v/s. ITO (Supra) (2011) 12 Taxman.Com 76 (Ahd.) has held that legal ownership over the land has never been any relevant criteria for allowing or not allowing deduction u/s. 80IB(10), what is necessary is that assessee should have complete control, dominions or right to carry on project as sanctioned by local authority. Department in the present case before us has not disputed the claim of the assessee that there is a dominion of the assessee developer over the land in as much as the possession of land is given to the assessee and the land has been marked and used as road meant for the society. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no specific allegation that during the year also, row house in Building 'D' was having built up area exceeding 1500 Sq.ft. but the Ld CIT has made general allegation that in some row houses, the area was exceeding the prescribed limit of 1500 Sq.ft. which we have already dealt with hereinabove. The submission of Ld. A.R. regarding built up area of row house No. 11C in D building has been discussed hereinabove wherein he has mentioned that the surveyor had wrongly taken store/gym. Room area in built area of the said row house ignoring this fact that the said store/gym. room is common area of residence/owners of the said society. It was further submitted that Ground Floor area of the said row huse is 518.5 Sq.ft. whereas the surveyor has mentioned in his report the area as 783.21 Sq.ft., hence the difference of 264.79 Sq.ft (store/gym. Room area) will be reduced from total built up area shown as 783.21 sq.ft. which comes to 518.42 Sq.ft. and first floor area 890.29 sq.ft., thus total comes to 1408.79 Sq.ft. We do not find reasons to disbelieve this explanation of the assessee as the same has also been verified by the A.O in his personal visit of the site. Personal visit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er these circumstances, the assessment order in question can not be held as erroneous and prejudicial to the interest of the revenue. We thus set aside the revisional order impugned and restore the assessment order in question, holding that the assessment order is neither erroneous nor prejudicial to the interest of revenue as discussed above. The grounds questioning the validity of the revisional order in question are thus allowed in favour of the assessee. 14. In result, appeal is allowed. ITA No. 159/PN/2010 15. The assessee has questioned first appellate order on the ground that Ld CIT(A) has erred in confirming the disallowance of deduction of Rs. 98,66,499/- claimed u/s. 80IB(10) of the Income Tax Act 1961 made by the A.O without appreciating the facts of the case in proper perspective. 16. We have already discussed the general facts of the case hereinabove while adjudicating the ITA No. 629/PN/2009. During the year, the A.O denied the claimed deduction u/s. 80IB(10) of the Act on the basis that in the lay out plan sanctioned by the PMC on 5.12.2002, the total area of plot has been shown 3995.34 Sq. Mtrs, which was lesser than 1 Acre. The A.O also mentioned the report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongly included the common area of store/gym room while computing the total area of row house and if the area of the said store room/gym room (39.60 x 52.93 Sq.ft.) is excluded, then the total area of the row house is well within 1500 Sq.ft. The Ld. A.R. also furnished a photograph to support his contention that the gym. Room had basement floor level in 'D' building is meant for common use of the residents of the Society and access to it is provided from outside not under the domain of the owner of the row house. 20. On verification of the plan of the row house made available at page No. 14 of the paper book, we find that if the area of store room/gym. as claimed by the approved valuer is really excluded from the total area of the row house, it does not exceed 1500 sq.ft. limit. The approved valuer though has mentioned in his report referred in para 3.2 of the first appellate order that the area of gym. Room at basement floor level in 'D' building was not included in the built up area of 1673.50 sq.ft. but in reality, we find that the valuer has not excluded the area of gym. Room/store room. We thus do not find substance in this ground, on the basis of which, the A.O had denied the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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