9911796707
TMI Blog2012 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of deduction of Rs. 8,24,36,363 in AY 2004-05, Rs. 2,66,09,494 in AY 2005-06 and Rs. 2,91,58,525 in AY 2006-07 under section 80IB(10) without appreciating the facts of the case. 3. Briefly stated, assessee undertook a project named "Gold Coast" at Lohegaon, Pune. The Project was initiated in 1995-96 by purchase of land and showing some work in progress of Rs. 4,67,701/-. First lay out plan was sanctioned on 28.8.1997. Subsequently the plans were revised twice, once on 30/05/2000 and then on 22/01/2002. The assessee got non-agricultural use permission (NA order) by 5/4/2012. Assessee started the project after the plan was approved on 22.01.2002. The first plinth checking certificate was issued by the Pune Municipal Corporation on 17.7.2002. It is also on record that Bhumi Puja of the project was started on 26.01.2002 and subsequently the assessee received advance for sale of apartment. 3.1 There was a survey on the assessee's business on 10/01/2006 and in the course of the survey, some apartments were measured by the Assessing Officer which indicated that the built up area exceed 1500 sft. A statement was recorded from one of the Director who on the basis of the meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing findings on the two issues as under: (A) on Project commencement: I have carefully considered the stand of the A.O. as well as the submission of the appellant. The facts which emerge are - (a) The NA order was granted by the Collector of Pune on 5th April 2002 and this is a crucial date for reckoning the whole issue. (b) The construction of housing project is in accordance with the building layout plan approved on 22nd January,2002 and is not in accordance with earlier approved plan dated 20th August 1997. The A.O. is not justified in holding that the placement of the plinths of the buildings is not an important issue as the appellant changed the building layout plan in the middle of the project. If the project would have started - before 1 October 1998 the placement of the plinths of the building would have according to the building layout plan sanctioned on 20th August 1997. In this connection, I am in agreement with the appellant that it is not possible to remove plinths. (c) The building commencement certificate is dated 22nd January 2002 which has not been properly appreciated by the A.O. (d) The first plinth checking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the above facts and issues involved, I am of the view that the housing project indeed commenced during the financial year 2002-03 and not before 1st October 1998". (B) With reference to the area of each flat: The issues raised in this ground has been carefully perused and examined. The facts which come to light are as under:- (a) The statement of the director of the appellant company was taken after 27 hours of survey action. (b) The reconfirmation of the withdrawal of claim was recorded in the office of the A.O. with a gap of one day after the conclusion of the survey. The appellant did not get any opportunity to carry out the measurement independently. (c) Mr. Kantilal Lunkad made admission of withdrawal of claim on the basis of built up measurement of flat no. D 1/701+701A was shown to him. The declaration was under the mistaken belief of fact that the built up area of the adjoining units taken together exceeds 1500 Sq. ft built up. (d) Mr. Vipin Gujarathi, Chartered Accountant advised Mr. Kantilal Lunkad on the basis of the measurement carried out by survey party and therefore, the counsel was also under mistaken belief of fact. (e) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area and the air handling unit area is considered and the thickness of the wall is added the built up area of the unit cannot exceed 1500 Sq. ft. Mrs. Priti Berry stated the super built up area of the flat no. D-1/701+701A at 1800 sq. ft. of the flat under consideration is 1347 sq. ft. it is surprising to note that the measured the same flat at 1700 sq. ft (Carpet area) and 2040 built up. The appellant has submitted the reconciliation between the measurement taken by survey party and measurement certified by valuer. The A.O. has preferred not to address the reconciliation issue. There is no whisper about the same in the assessment order. Similarly, the appellant is not allowed the opportunity to cross examine Mrs. Priti Berry. The claim of the appellant that Mrs. Priti Berry is not the flat purchaser and therefore, her statement cannot be relied upon. I have verified the agreement of flat purchase. It is between the appellant and Mr. Sunil Berry. During the course of survey action statements of the employees of the appellant Mr. Ratiesh Malhotra and Mr. Ramesh Kadam were recorded. No specific instances of any flat more than 1500 Sq. ft built up is shown by any of these two empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified by architect is mentioned. From the list it is clear that the area mentioned in the sales register is super built up area and not the built up area. The Assessing Officer did not accept the built up area certified by Assistant Valuation Officer entirely on the ground that the AVO has considered ½ area of the balcony and did not considered the terrace area. Accordingly to the Assessing Officer if 50% of the balcony area and terrace area is added the built up area of the flat will exceeds 1600 sft. The Assessing Officer in arriving at this conclusion has relied on the definition of "Built Up Area" as per newly inserted section 80-IB(14) of the Act. Section 801B(14) is brought on statue by the Finance (No. 2) Act, 2004 with effect from P' April 2005. The section and the Notes on the clauses makes it clear that the newly inserted section is applicable prospectively and not retrospectively. The amendment is not clarificatory. The appellant has relied on two Supreme Court cases namely Govindas and Others v. Income Tax Officer 103 ITR 123 (1976) Virtual Soft Systemts Ltd v. CIT 289 ITR 83 to substantiate the proposition that while interpreting the amending provision it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards purchase of land and construction of compound wall, municipal taxes etc. and relied on the findings of the CIT(A). 5. We have examined the issue, rival contentions and facts on record. The learned Departmental Representative relied on the Explanation to section 80IB(10) that where the approval was 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. This Explanation was brought on statute when the said provision was amended with effect from 01-04-2005. So claim in AY 2004-05, being first year of claim, cannot be disallowed on this reason. Moreover the Explanation cannot be invoked for the projects approved earlier. For these reasons we are not impressed by the argument of Ld. DR. Further what was approved in 1997 was only a lay out plan and not a building plan. The entire plan was revised and the constructed project was based on the project approved in 2002. 5.1 Benefit of deduction to developers of housing projects was first introduced by the Finance Act, 1998 with effect from 1-4-1999 in the form of sub-section (4F) to section 80-IA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensed with and there was no time-limit given for completion of the construction. 5.6 By the Finance Act, 2004 with effect from 1-4-2005, clause (d) to section 80-IB(10) was introduced which provided that built-up area of shops or other commercial establishments included in the housing project should not exceed 5 per cent of the aggregate built-up area of the housing project or 2,000 sq.ft., whichever is less. The provision as they read applicable from assessment year 2005-06 is as follows: "(10) The amount of deduction in the case of an undertaking developing and building housing projects approved 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2002 and accordingly they are within the provisions of Section 80-IB(10). 7. Moreover, the statute prescribes that 'such undertaking commenced or commences development and construction of the housing project on or after 1st day of October, 1998. Approval of plans and the date thereof has no relevance unless the project commences or commenced as prescribed. The Revenue could not counter the findings of the CIT(A) that project commenced only in 2002. These findings are based on record with which we agree. AO relies on certain amounts spent prior to 2002 from A.Y 1995-96 onwards to state that the project has started much earlier. As seen from the nature of expenditure, they cannot be considered as evidencing that the project has commenced before 1st October 1998 as only cost of land, construction of compound wall and Municipal taxes and various expenditures for plan approvals were incurred. There is no expenditure on construction activity on the project. Principles laid down by Hon'ble Bombay High Court in the case of CIT v. Vandana Properties also support our view. For these reasons, we uphold the orders of the CIT(A) and agree with his findings that assessee is eligible for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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