TMI Blog2013 (10) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction was complete as on 26.03.2008 which, in our view, is in substantive compliance with the requirements of section 80-IB(10)(a)(i) read with Explanation (ii) thereof. In so far as the balance of 293 row houses is concerned there is no dispute that the completion certificate has been issued by PCMC prior to 31.03.2008. Therefore, considered in respect of entire 295 units comprised in 'SWRH' project, the date of completion of construction is to be understood as on or before 31.03.2008 thereby complying with the requirement of section 80-IB(10)(a)(i) read with Explanation (ii) thereof. We therefore hold that assessee is eligible for deduction u/s. 80-IB(10) of the Act of ₹ 12,76,88,137/- with respect to the profits derived from 'SWRH' project for assessment year 2006-07. - Decided in favour of assessee. - ITA Nos. 1112 & 1527/PN/2011 - - - Dated:- 31-10-2013 - Shri G.S. Pannu And Shri R.S. Padvekar JJ. For the Appellant : Shri Sunil Pathak For the Respondent : Shri Mukesh Verma ORDER PER G. S. PANNU, AM The captioned two appeals relating to the same assessee involve a common issue and therefore they have been clubbed and heard together a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first day of April, 2004 and therefore in terms of section 80- IB(10)(a)(i) of the Act construction of the project ought to have been completed on or before 31.03.2008. In terms of Explanation (ii) to clause (a) of section 80-IB(10) of the Act, the completion certificate in respect of the construction of the housing project was thus required to be obtained from the 'local authority' on or before 31.03.2008. The aforesaid requirement of section 80-IB(10)(a) of the Act is the subject-matter of dispute before us inasmuch as the stand of the Revenue is that the assessee has not been able to complete the construction of the entire project by 31.03.2008. Accordingly, the claim of deduction u/s. 80- IB(10) of the Act has been denied for non-adherence with the condition prescribed in section 80-IB(10)(a) of the Act with respect to the permissible period of construction of the project. In the aforesaid background, now we may bring out the relevant facts which have a bearing on the aforesaid controversy. 4. The relevant background and the nitty-gritty of the project undertaken by the assessee has been elaborately noted by the Assessing Officer and the same can be summarized as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Woods Row Houses' (in short 'SWRH') while the project of 144 flats has been styled as S-cube (in short 'S3'). The copies of the relevant plans approved by the PCMC dated 29.03.2005 and also the corresponding certificate permitting commencement of construction have been placed at pages 273-274 and 283 to 286 of the Paper Book respectively. 7. In order to complete the facts regarding the lands acquired by the assessee, it is also relevant to observe that on 27.09.2005 assessee acquired another contiguous plot of land measuring 5100 sq.mtrs., which was also amalgamated with the earlier land area of 66300 sq.mtrs. and thus the total plot area increased to 71400 sq.mtrs. Assessee filed another revised plan with the PCMC and vide its approval dated 31.03.2006, PCMC gave approval for construction of 282 flats in addition to the 295 row houses which were already approved in the plan dated 29.03.2005. Copies of such sanctioned plan as well as the relevant commencement certificates have been again been furnished in the Paper Book at pages 477-478 and 481-482 respectively. In- fact, it transpires that assessee filed another revised plan for approval with the PCMC whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject and the other project of 316 flats styled as 'S3' project. Assessee explained that the row houses project i.e. 'SWRH' project comprising of 295 units was independent of the 'S3' project and that the deduction u/s. 80-IB(10) of the Act was claimed only with regard to the profits derived from the 'SWRH' project. As per the submissions of the assessee, which have been extensively reproduced by the Assessing Officer in the assessment order, assessee pointed out that 'SWRH' project was constructed on a plot area of 55950 sq.mtrs. while 'S3' project was on the balance land area of 15450 sq.mtrs.. As per the assessee the two projects were conceived as independent projects and they were also marketed as separate projects; and, the claim of deduction u/s.80-IB(10) of the Act was confined to the profits derived from the construction of 'SWRH' project. With respect to the 'SWRH' project, assessee also asserted that the construction of all 295 units was completed before the stipulated date of 31.03.2008 and accordingly it fulfilled the requirements of section 80-IB(10)(a)(i) of the Act. 9. At this point, we may also brie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent and separate projects for the purpose of section 80IB(10) of the Act. The Assessing Officer, after noticing the chronology of events which we have dealt in the earlier paragraphs, pointed out that 'SWRH' project comprising of 295 row houses did not come into existence by way of any specific approval of PCMC. As per the Assessing Officer, in the Plan approvals dated 10.09.2003 and 29.03.2005, PCMC has approved construction of row houses as well as construction of flats. In para 12(3) at page 20 of the assessment order, the assertion of the Assessing Officer is that the two projects, i.e. 'SWRH' project for row houses and 'S3' project for flats, have a 'single umbilical cord' by way of a common building permission granted by the PCMC on 29.03.2005. 11. The second point made by the Assessing Officer to show that the two projects are a composite project is contained in para 12(6) of the assessment order wherein it is observed that the PCMC allowed the assessee to use the unutilized extra FSI of 24645 sq.mtrs. of the row houses area to build the flats because the construction of row houses and flats was considered as a composite project. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of its 'SWRH' project before 31.03.2008 and therefore on this ground also he denied the claim of deduction u/s. 80-IB(10) of the Act. 15. In the above background, the rival counsels have made their submissions before us. In so far as the appellant is concerned, the point canvassed is that both the lower authorities have erred in not appreciating that for the purposes of section 80IB(10) of the Act, 'SWRH' project comprising of row houses was a separate project than the 'S3' project comprising of flats. It was reiterated that assessee's claim of deduction u/s. 80-IB(10) of the Act was only in respect of the 'SWRH' project and therefore it is only in the context of this project, the conditions of section 80-IB(10) of the Act have to be examined. According to the learned counsel, Assessing Officer erred in observing that on account of a common approval granted by PCMC, the two projects were one and not separate. According to him, though the construction of two projects have been sanctioned by way of common approval at a certain point of time, the same cannot be taken to mean that the two constituted a single project for the purposes of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel emphasized that the 295 row houses project can independently constitute a 'housing project' and the eligibility of assessee's claim for deduction u/s. 80-IB(10) of the Act is to be considered in that light. It was submitted that no deduction, either in this year or in the subsequent years, have been claimed with regard to the 'S3' project and that on this aspect there is not dispute. 18. A reference was also made to the Audit Report submitted in Form No.10CCB whereby the assessee's claim for deduction u/s. 80-IB(10) of the Act was enumerated. In the said report, the total land area stated is 55950 sq.mtrs., which is the area on which assessee undertook development of 'SWRH' project consisting of 295 row houses, thus showing that 'SWRH' project was conceived as a separate project for the purposes of section 80IB(10) of the Act. 19. In the course of hearing, the learned counsel has referred and relied on the following decisions : (i) Pune Bench of the Tribunal in the case of M/s. Rahul Construction Co. vs. ITO, ITA No.1250/PN/2009 dated 30.03.2012; (ii) Mumbai Bench of the Tribunal in the case of Saroj Sales Organisation v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.03.2008 in the present case and thus assessee fulfills the condition of completing the construction prior to 31.03.2008 contained in section 80IB(10)(a)(i) of the Act. 21. In contrast, the learned Departmental Representative appearing for the Revenue has justified the orders of the authorities below by pointing out that the 'SWRH' and 'S3' projects could not be considered as separate projects undertaken by the assessee. According to the learned Departmental Representative, the sanction for 'SWRH' and 'S3' projects have been given by the PCMC under a single common approval and therefore the combined project of 'SWRH' and 'S3' would constitute a 'housing project' for the purposes of section 80-IB(10) of the Act also. It was pointed out that even as per the explanation rendered by Chief Engineer, PCMC the two projects were not seen as separate projects by the PCMC. The learned Departmental Representative pointed out that merely because the two projects were advertised and marketed separately cannot be interpreted to mean that assessee undertook development of two separate projects because the fact remained that they have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as the claim for deduction u/s. 80-IB(10) of the Act is confined to the profits derived from the said 'SWRH' project and as per the assessee it is a separate and independent project which fulfills all the conditions for the purposes of section 80-IB(10) of the Act. 25. Ostensibly, the pertinent issue which is required to be adjudicated in the present case is as to whether 'SWRH' project and 'S3' project are two independent projects or a single project for the purposes of determining assessee's eligibility for the claim of deduction u/s. 80-IB(10) of the Act. We may emphasize here that the claim of the assessee for deduction u/s. 80-IB(10) of the Act is confined to the profits derived in respect of the 'SWRH' project alone. Section 80-IB(10) of the Act allows exemption of profits derived from developing and building of a housing project, subject to the conditions prescribed therein. Notably, the expression 'housing project' is not been defined in section 80-IB(10) of the Act, a situation that has also been noted by the Hon'ble Bombay High Court in the case of M/s. Vandana Properties (supra). In-fact, the Hon'ble High Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the approval for construction of 'E' building was granted by the local authority subject to the conditions set out in the first approval granted on 12th May 1993 for construction of A and B building, construction of 'E' building must be considered to be the extension of the earlier housing project for which approval was granted prior to 1st October 1998 and, therefore, the benefit of section 80IB(10) cannot be granted. There is no merit in the above argument, because, when the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of 'E' building was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from surplus vacant land into within the ceiling limit land by the State Government, an additional building could be constructed on the plot in question and accordingly building plan for construction of 'E' building was submitted and the same was approved by the local authority on 11th October 2002. 26. Similarly, the Hon'ble Madras High Court in the case of Viswas Promoters Pvt. Ltd. vs. ACIT, (2013) 255 CTR 149 (Mad) also noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled. It was explained that 'housing project' does not necessarily have to be various group of buildings constructed on a particular land but it can also be a particular building or buildings, which is part of a larger project. Whatever portion of the larger project which satisfied the conditions of section 80-IB(10) of the Act was held to be considered as a 'housing project' for the purposes of section 80-IB(10) of the Act. The following observations of the Tribunal are worthy of notice :- Coming to the second objection raised by the Revenue i.e., that the assessee has not completed the project. This objection is raised on the basis that since the project consisted of four wings i.e., A, B, C and D and since completion certificate has not been filed for D wing and, therefore, the project cannot be said to have been completed. This would lead one to the question as to what is the meaning of a housing project. Legislature has not provided any definition of the housing project and, therefore, the definition has to be construed by making reference to the dictionary and as long as the segregated blocks are being eligible for deduction under s. 80-IB(10), then sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PMC to compute the time limit prescribed for completion of the project to take benefit of deduction u/s. 80 IB (10) of the Act. There is no dispute on some material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time limit upto 31st March 2008. The lay out plan in respect of entire complex was sanctioned by PMC vide order No. DPO/45/D/646 dated 3.4.2003 and the building plan was sanctioned vide Commencement Certificate No. 4269 dt. 29.4.2003. Admittedly, the term housing project has not been defined in the Income Tax Act but in the context of deduction u/s. 80IB(10) an Explanation has been provided below clause (a) to sub-section (10) to Section 80 IB. For a ready reference, the said Explanation is being reproduced hereunder : (i) in a case where the approval in respect of the housing project is 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. (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed relief u/s. 80IB in respect of Block BC . In the case of Mudhit Madanlal Gupta Vs. ACIT (Supra ) before the Mumbai Bench, it has been held that the housing project does not necessarily have to be various group of buildings constructed on that particular land, but it can also be a particular building or any building which is part of a large project. It has been further held that whatever portion of the housing project is otherwise found to be eligible has to be considered as a housing project for the purpose of deduction u/s. 80 IB (10) of the Act. Similar view has been expressed by Mumbai Bench of the Tribunal in the case of Vandana Properties Vs. ACIT (Supra). 10. In view of above discussion, we come to the conclusion that for verification of eligibility of benefit claimed u/s. 80 IB (10) of the Act by the assessee on buildings Al to A5 in AtuI Nagar and buildings Bl to B6 in Rahul Nisarg Co-Operative Housing Society Ltd. , the assessing authority has to verify as to when the building plans for these buildings were firstly approved by the local authority and taking the said date of approval a starting point, he has to verify as to whether these buildings were complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. We thus while setting aside the orders of the authorities below on the issue, direct the A.O to allow the claimed deduction u/s. 80 IB(10) in question. The related grounds are accordingly allowed. 21.2 We find that Bangalore Bench of the ITAT in the case of Dy.CIT Vs. Brigade Enterprises (P) Ltd. [119 TTJ 269 (Bang.)] has observed as under : Deduction under S.80IB - Income from developing and building housing project -Different units of a group project - where some of the residential units in a bigger housing project, treated independently, are eligible for relief under s.80IB(10), relief should be given pro rata and should not be denied by treating the bigger project as a single unit, more so, when assessee obtained all sanctions, permissions and certificates for such eligible units separately - Assessee undertook a development project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s. 80IB(10) in respect of two residential units only which if taken separately, were eligible for the relief-AO treated the entire project as a single unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is an independent project for the purpose of considering a claim of deduction u/s. 80-IB(10) of the Act cannot be shut-out merely because PCMC approved it alongwith the 'S3' project. Therefore, while evaluating the compliance with the condition of completion of construction of the project contained in section 80-IB(10)(a)(i) of the Act, we uphold assessee's plea that 'SWRH' project be construed as a 'housing project', especially when the claim for deduction u/s. 80-IB(10) of the Act is confined to the profits of 'SWRH' project. 31. Apart from the aforesaid, factually speaking also, it emerges that 'SWRH' project has been developed and executed by the assessee independent of the 'S3' project. Firstly, by its very nature the two projects are different inasmuch as 'SWRH' project consists of row houses on a contiguous plot size of more than one acre; whereas, the 'S3' project consists of only multi-storeyed flats. Secondly, it is also notable that assessee marketed and advertised the two projects separately. At pages 255 to 260 of the Paper Book is placed the Brochure of 'SWRH' project in which there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is approved by a 'local authority'. Moreover, the expression 'housing project' is not defined in the Development Control Rules for PCMC i.e. the 'local authority' in the case before us and thus, the said enactment cannot be resorted to for the purpose of understanding the meaning of expression 'housing project' contained in section 80IB(10) of the Act. Therefore, so long as the claim of deduction is in relation to a 'housing project', which has been approved by the 'local authority', it would satisfy the requirement of section 80IB(10) of the Act. Pertinently, if the proposition of the Revenue is to be upheld, the same would be quite contrary to the manner in which the expression 'housing project' contained in section 80IB(10) of the Act has been understood by the Hon'ble Bombay High Court in the case of Vandana Properties (supra) and also by the Hon'ble Madras High Court in Viswas Promoters Pvt. Ltd. (supra) and Arun Excello Foundations (P) Ltd. (supra). It may also be pertinent to observe that the Hon'ble Bombay High Court in M/s. Vandana Properties (supra) not only noted that the expression 'housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the assessee submitted on 26.03.2008, the completion certificate has been issued by PCMC for the remaining two row houses also, a copy of the said certificate is placed at page 293 of the Paper Book. The aforesaid certificate provides that it is being issued w.e.f. 26.03.2008. On this basis, it has been vehemently argued that the construction was complete even at the time of submission of application to PCMC on 26.03.2008, and the delay in issuance of completion certificate by PCMC could not be attributed to the assessee inasmuch as no objections were confronted to the assessee at any stage. Be that as it may, we find that the said certificate dated 28.06.2012 was not before the lower authorities and is an additional piece of evidence now sought to be relied by the assessee. We deem it fit and proper to admit such evidence because the certificate is issued by a 'local authority' duly constituted in law and it is relevant to decide the issue on hand. Moreover, it does not enable the assessee to make out a new case inasmuch as the same has been obtained from PCMC in response to an application made of an earlier date, which is in the knowledge of the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering that (i) the certificate of the Architect confirming that the construction was complete; and, (ii) the application for obtaining completion certificate was moved before the local authority before the specified date. The Tribunal noted that delay in issuing completion certificate was not attributable to the assessee or to any non-completion of construction. In our view, the decision of the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. (supra) is clearly applicable in the present case inasmuch as the assessee applied for obtaining completion certificate for the two row houses before 31.03.2008 i.e. on 26.03.2008 and the said application was based on a certificate issued by the Architect. Factually also, the facts on record, supported by the Property Tax bills, Architect's certificate, occupation by users, etc. support the position that prior to 31.03.2008 construction of the two row houses was complete. Pertinently, the completion certificate of PCMC regarding the two row houses in question which is dated 28.06.2012, clearly states that it is issued with effect from 26.03.2008. Therefore, even the PCMC certification supports the position that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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