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TMI Blog2015 (5) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal or add to the same if deemed necessary. 3. The issue raised in the present appeal is with regard to the claim of deduction under section 80IB(10) of the Act. 4. The brief facts of the case are that, the assessee was a partnership firm engaged in the activity of property development and builders. During the year under consideration, the assessee had offered a sum of Rs. 7,06,90,849/- as income from business and had claimed the deduction under section 80IB(10) of the Act declaring net income at Rs.Nil. During the year under consideration, the assessee had undertaken one residential project viz. 'Daffodil Avenue' at Survey No.17/271(1)(c) of the Act/A/1+17/2/A, 18/1 Bavdhan Khurd, Pune. The commencement of project consisted of residential buildings A, B and C was approved on 31.10.2005. The assessee however, made certain changes in the layout plan. As per the commencement certificate dated 29.03.2007 and 11.12.2009 under which, the building plans were revised and also the layout. As per the revised layout, one more building No.D was included in the project. The Assessing Officer during the course of assessment proceedings, noted the conditions which had to be fulfilled while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification, should not be disallowed. The reply of the assessee is reproduced under para 10, pages 8 and 9 of the assessment order and in view of the assessee not possessing the final completion certificate and also the completion certificate for building 'D', the Assessing Officer held the assessee as not eligible for claim of deduction under section 80IB(10) of the Act. 6. The CIT(A) upheld the order of Assessing Officer observing as under:- "5.7 From the above stated discussion it is seen that the housing project of the appellant which was approved initially on 31.10.2005 was to be completed within 5 years from the end of the financial year in which the housing project was first approved by the local authority viz. by 31.3.2011. A perusal of sec.80IB(10)(a) which was introduced by the Finance Act 2004 w.e.f. 1.4.2005 shows that there are specified time limits for completion of the development and construction of housing projects approved on or after 1.10.1998. In fact, builders and developers whose projects were approved after 1.4.2005 were given an extended period of one year from the end of financial year in which housing projects stood approved by local authority, beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs A to D were not one project as the building 'D' was not part of the commencement certificate sanctioning construction of buildings A, B and C. Our attention was drawn to series of case laws on this issue. 8. The learned Departmental Representative for the Revenue pointed out that the assessee's claim that building 'D' completed by 31.03.2011 was incorrect as the letter placed at page 65 of the Paper Book dated 15.03.2011 reflects that only plinth was completed by that date. The learned Departmental Representative for the Revenue further pointed out that it is difficult to understand how the Architect certifies that the building was completed by 31.03.2011. Our attention was drawn to the letter of PMC dated 26.12.2011 which was issued in response to the summons issued under section 133(6) of the Act placed at page 66 of the Paper Book and also the English transaction of the said letter under para 8.4 of assessment order in which, the PMC clearly certified that the building 'D' was not completed. 9. The learned Authorized Representative for the assessee pointed out that there was an alternate plea that prorata claim of deduction under section 80IB(10) of the Act in respect of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of the land as per original sanctioned plan was 4638.65 sq. mtrs. However, the revised area of the plot was 3443 sq. mtrs., and after adding open space of 463.86 sq. mtrs., the total plot area was 3906.86 sq. mtrs. i.e. 0.9654 acres, which was less than one acre. The plea of the learned Authorized Representative for the assessee before us in this regard was that initially the Assessing Officer had taken note of the factum of area of land, but while completing the assessment, the only addition made in the hands of the assessee was for non-completion of project vis-à-vis building No.D. Our attention was drawn to the concluding paras of the assessment order and it was pointed out that the explanation with regard to the said aspect was accepted by the Assessing Officer i.e. the net area of plot of 3443 sq. mtrs. was after excluding 463.86 sq. mtrs. on account of recreation ground and 695.79 sq. mtrs. on account of amenities space. The total area of the plot was 5600 sq. mtrs. and after deducting the road acquisition area of 961.35, the net area of the plot was 4638.65 sq. mtrs., which was more than one acre and hence, the condition prescribed in section 80IB(10)(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C were issued by the local authority on 31.10.2005 and the assessee was to complete the said building by 31.03.2011, which had been completed and hence, the assessee was eligible for deduction under section 80IB(10) of the Act. Further, the building No.D was first sanctioned vide commencement certificate issued on 29.03.2007 as against which the expected date of completion, as per the provisions of the Act, was 31.03.2012. Since the building No.D was completed on 15.03.2012, then the assessee was entitled to the claim of deduction under section 80IB(10) of the Act in respect of the same. Reliance in this regard was placed on the ratio laid down by Pune Bench of Tribunal in M/s. Siddhivinayak Kohinoor Venture Vs. ACIT in ITA Nos.1112 & 1527/PN/2011, relating to assessment years 2006-07 and 2007-08, vide order dated 31.10.2013 for the proposition that even a building or a group of buildings comprised in larger projects approved by local authority can be construed as a housing project for the purpose of deduction under section 80IB(10) of the Act. Another reliance was placed on the ratio laid down by Hon'ble Bombay High Court in CIT Vs. Vandana Properties (supra), wherein, it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. In the case of assessee, the project was approved by the local authority on 31.10.2005 and in case, the explanation under section 80IB(10)(a) of the Act is to be applied, then the assessee is supposed to complete the said housing project within five years from the end of financial year in which the first commencement certificate was obtained i.e. on or before 31.03.2011. The assessee received part completion certificate for the building Nos.A, B and C before the due date i.e. 31.03.2011. However, as per the information collected by the Assessing Officer in respect of the newly commenced building No.D of 'Daffodil Avenue', the certificate of assessee's architect Shri A.N. Watve, dated 21.03.2011 and addressed to City Engineer, Pune Municipal Corporation certified that he had verified the foundation starta available on site and found it to be concurrent to the design assumptions. It was further certified "the work of RCC construction up to plinth has been done as per my drawing and design". Another certificate was from Mr. Zuber Rashid Shaikh of Space Designers Syndicate dated 15.03.2011, who in respect of building No.D of 'Daffodil Avenue' stated that the construction upto p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (2013) 29 taxman.com 19 (Madras) and it was held as under:- "10. On this aspect, we have considered the plea of the assessee in the light of the precedents. A similar situation has been considered by this Bench in the case of D.S. Kulkarni Developers Ltd. (supra) wherein the following discussion is relevant :- "20. In this background, the alternative plea of the assessee springs up. The plea is that the deduction under Section 80- IB(10) be denied only with respect to the units which do not conform to the condition contained in Section 80-IB(10)(c) and for the balance eligible residential units, the deduction should be allowed. The Revenue has opposed the said plea on the ground that the assessee is not entitled to a proportionate deduction under Section 80-IB(10) of the Act. 21. On this aspect, we find that the Mumbai Bench of the Tribunal in the case of M/s Ekta Housing Pvt. Ltd., ITA No.3649/Mum/2009 dated 20.05.2011 has upheld the plea of the assessee for a proportionate deduction under Section 80-IB(10) of the Act where some of the residential units in the project violated the condition contained in Section 80-IB(10)(c) of the Act. The Mumbai Bench after noticing the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.04.2005. Once the basic argument of the revenue that the housing projects with commercial user are not entitled to Section 80-IB(10) deduction is rejected, then in the absence of any restriction imposed under the Act, it was not open to the Tribunal to hold that the projects approved by the local authorities having residential buildings with commercial user upto 10% of the plot area would alone be entitled to deduction under Section 80-IB(10). As noted earlier, restriction regarding commercial user has been imposed for the first time by introducing clause (d) to Section 80-IB(10) with effect from 01.04.2005. Therefore, it was not open to the Tribunal to hold that prior to 01.04.2005, projects having commercial user upto 10% of the plot area alone would be eligible for Section 80-IB(10) deduction. 28. In the present case, though the commercial user is more than 10% of the plot area, the Tribunal has allowed Section 80-IB(10) deduction in respect of 15 residential buildings on the ground that the profits from these exclusively residential buildings could be determined on stand along basis. In our opinion, that would not be proper, because Section 80-IB(10) allows deduction to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-IB(10)(c) of the Act in relation to the amalgamated Bunglow G1 & G2, the deduction under Section 80-IB(10) of the Act cannot be denied in its entirety. In other words, the denial of deduction shall be limited to the profits in respect of the amalgamated Bunglow G1 & G2 alone. For balance of the residential units, which complied with the requirements of clause (c) of Section 80-IB(10) of the Act, assessee shall be eligible for deduction. The Hon'ble Madras High Court in the case of Arun Excello Foundations (P) Ltd. vs. CIT (2013) 29 taxmann.com 149 (Madras) considered an argument on behalf of the Revenue, similar to what has been argued before us, to the effect that in the absence of any contemplation under Section 80-IB(10) of the Act for proportionate relief on partial compliance, section cannot be interpreted to granted pro rata relief. The aforesaid argument of the Revenue has been negated by the Hon'ble Madras High Court and therefore the claim of the assessee for proportionate deduction under Section 80-IB(10) of the Act cannot be denied. 12. Thus, on the aforesaid aspect, assessee succeeds and we direct the Assessing Officer to re-compute the deduction under Section 80-IB( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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