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ITO WD 3 (3) , Thane and others Versus M/s S.B. Developers, Thane (W) and others

2015 (7) TMI 516 - ITAT MUMBAI

Claim of deduction u/s.80IB(10) - CIT(A) allowed the claim - Held that:- The building plan of the housing project has been first approved by the Thane Municipal Corporation on 21.9.2004 which was sanctioned by the Executive Engineer, Thane Municipal corporation on 17.09.2004. Once it is established that the building plan of the housing project was first approved on 21.9.2004 and no plan was approved prior to that date, we need to go into the other aspects of question.

Accordingly the .....

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ts arising from development of 12 residential units of buildings Varsha and Grishma of the housing project “Prakruti Park”at Thane - Held that:- The proportionate deduction is allowable when the other conditions regarding the area of plot is fulfilled after reducing the proportionate area of the plot representing the residential units which have the area exceeding 1000 sq.ft.. In the case in hand, the learned AR of the assessee has pointed out from the record that the total area of plot is 18742 .....

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in the order of the CIT(A) qua this issue - Decided against assessee. - ITA No.1767/Mum/2013,Cross Objection No.80/Mum/2014 - Dated:- 3-7-2015 - Shri R.C.Sharma & Shri Sanjay Garg, JJ. For the Petitioner : Shri Neil Philip For the Respondent : Shri Shri Sunil U Pathak & Shri Subodh Ratnaparkhi ORDER PER R.C.SHARMA, (AM) : This is an appeal filed by the revenue and cross objection by the assessee against the order of CIT(A)-1, Thane for the assessment year 2009-2010, in the matter of orde .....

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re that the appellant, a partnership firm, is engaged in the business as developer & builder and has undertaken the construction of a housing project called 'Prakruti Park' at Ghodbunder Road, Thane. The appellant had filed return of income showing income at Rs. NIL for the year under consideration after claiming deduction u/s. 80IB(10) amounting to ₹ 4,48,97,145/-. The project 'Prakruti Park' was found to have been constructed on a plot of land admeasuring 18,704.22 sq .....

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ft. and therefore the assessee was not eligible for deduction u/s. 80IB(10). These findings were first given by the AO. during the assessment year 2005-06 for denying the deduction u/s. 80IB(10) to the assessee. For the year under consideration, the AO has not given any specific finding on the issue but has simply followed the orders of his predecessor for AY. 2005-06 to AY. 2008-09 and on the basis of reasons given in these assessment orders proceeded to deny the deduction u/s. 80IB(10) for the .....

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The precise observation of the CIT(A) are as under :- 5.1. I have considered the various facets of these grounds in the background of the provisions of law. I have also deliberated at length with the AO as well as the authorized representative of the appellant, both of whom have argued their cases in detail. I have also gone through the voluminous record on this issue forming part of the appeal proceedings for the earlier asst. years as well as for the year under appeal. 5.2. The case of the ap .....

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ed that if the date of first approval is considered to be 27.2.2004, being the date of grant of development permission, then the project should have been completed by 31.3.2008. However, if the date of commencement certificate i.e. 21.9.2004 is considered to be the date of first approval, then the project should be completed by 31.3.2009. There is no dispute about the act that last occupancy certificate in-respect of the project has been granted on 19.06.2008. 5.4. In the assessment order, the A .....

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assessment as well as during the course of appellate proceedings, the AO has relied upon the various clauses of the development regulations for the City of Thane to justify the argument that the approval of building plans was first granted on 27.02.2004. 5.6. In the appeal proceedings, the AO also filed a letter dated 02.7.2012 wherein he has raised issue of commencement certificate dated: 21.09.2004 being signed by Executive Engineer, Town Planning Department, whereas the Development Permissio .....

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behalf of the Corporation under the powers delegated to them by the Commissioner Municipal Corporation and all the decisions are taken on behalf of the commissioner. All the approvals are in reality issued in the name of the Commissioner - TMC but the relevant papers are signed by different officers to whom powers have been delegated by the corporation. This has been clarified by the Thane Municipal Corporation vide its letter dated: 15.03.2004 which is placed on record. Thus the above contenti .....

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t orders for AY. 2005-06 to 2008-09 in support of the disallowance. The AO also personally attended the appeal proceedings and vehemently argued for upholding the disallowance and mostly reiterated the same arguments taken in the assessment order. 5.10. The perusal of the assessment records and the appellate orders on the issue in the earlier years reveal that the issue has been discussed elaborately and the threadbare in the appellate orders in the case of the appellant in the years from the AY .....

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he Thane Municipal Corporation. The correspondence between the assessee and the Thane Municipal Corporation prior to that approval of the building is not relevant to decide the date of approval as per the explanation to section 8018(10). 17. In view of the above discussion, we decide this issue against the revenue and in favour of the assessee. The order of the CIT(A) is confirmed qua this issue". 5.11. It is also noticed from the clarifications received by my predecessor during the appella .....

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uot;(3}, Thane vide letter dated: 30/08/2011 was about the process of approval of Development Permission and Commencement Certificate. The perusal of sanction letters dated: 27/02/2004 and 21/09/2004 reveals that both the letters are in same proforma with the heading- SANCTION OF DEVELOPMENT PERMISSION 1 COMMENCEMENT CERTIFICATE and in the letter dated: 27/02/2004, the words "COMMENCEMENT CERTIFICATE" have been struck off while in the second letter dated: 21/09/2004, nothing has been s .....

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nd Commencement Certificate can be issued simultaneously at the first instance itself, if all the conditions provided by Development Control Regulations are satisfied before submitting the proposal. As regards the observations of AD. that expenditure of ₹ 21,86,495/- was incurred before the issuance of Commencement Certificate i.e. immediately after approval on 27.02,04, the AR.'s submission that the expenses referred to as recorded in the books of the appellant by the Id AO. pertain t .....

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roject plot area of 18704.22 sq. mtrs. i.e. about 4 % acres and requirement of such expenditure before start of any project is the basic requirement before the start of such a huge project. 5.12. From the facts and circumstances explained above, it can be concluded that the issue at hand regarding the commencement and completion of the housing project of the appellant has already been decided by the IT AT in the case of the appellant itself for the A. Y. 2006-07 as outlined in the preceding para .....

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btaining a final occupation certificate on 19/06/2008 well within the time available to the appellant as per the provisions of Income-tax Act, the grounds of appeal No. 3A to 3F are allowed. Accordingly, the issue in question is decided in the favour of appellant. 5.13. My predecessor vide his order dated: 30101/2012 (A.Y. 2008-09), has also decided the alternate plea taken by the appellant in its favour that if, the date of 27/02/04 is to be considered as the date of approval of Housing Project .....

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um/09 (A.Y. 06-07) dated: 30103/2010. Since it has already been held in the preceding paras that the Housing Project was approved only on 21-09-2004, in my view, no specific adjudication on alternate plea is necessary. 5.14. In view of the facts stated above and the legal position on the issue, the deduction u/s. 801B(10) is to be allowed to the assessee for the A.Y. 2009-10 and therefore the ground nos. 3A to 3C of the appellant are allowed. The grounds raised under 3D to 3F are in-fructuous an .....

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Corporation. The AO held that the project was approved on 27.2.2004 which is prior to 1.4.2004 and therefore the completion on 19.6.2008 is after 31.3.2008. Thus, the AO was of the view that the assessee is not entitled for deduction u/s.80IB(10). The CIT(A) held that the housing project to be considered as approved when both the sanction of development permission and commencement certificate are issued as both are essential. There is no ambiguity about the requirement of the provisions of Sect .....

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ount of deduction in the case of 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) ………… Explanation.-For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be de .....

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ip;….. [Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government). It is manifest from the explanation that in case the approval is obtained on more than once the date on which the building plan of such house housing project first approved shall be deemed to have been the date of approval of t .....

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.Road, CTs No.95-Hissa No.1,2,3, 4(Pai) 5,6,7,9,11,12,13, survey no.13, hissa no.1,2,3 H.No.-T No._____ the development permission/the commencement certificate is granted subject to the following conditions; 1. The land vacated in consequences of the enforcement the set back line shall form part of the public street; 2. No new building or part thereof shall be occupied or allowed to be occupied or permitted to be used by any person until occupancy permission has been granted. 3. The development .....

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ricultural permission required to be presented. 14. …….. 15. …….. 13. As it is evident from the above letter, the Thane Municipal Corporation had set out certain conditions to be fulfilled by the assessee for development permission. Accordingly, the assessee obtained the necessary approval from the various authorities such as the permission of non-agricultural use of the land was obtained used on 15.07.2004 and permission from Urban Land Ceiling authority was taken on .....

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rence to your application no.13510 dated 17.07.2003 for development permission/grant of commencement certificate under section 45 and 69 of the Maharashtra Regional and Town Planning act, 1966 to carry out development work and or to erect building no. as above in village Kollshet section no.5, ward no.1 situated at road/street 40 mtrs. D.P.Road CTS No.95-Hissa No.1, No.1,2,3, 4(Pai) 5,6,7,9,11,12,13, survey no.13, hissa no.1,2,3 H.No.-T No._____ the development permission/the commencement certif .....

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ed you to develop the land which does not vest in you. 14. The assessee claimed that the approval of the project is only 21.9.2004 because before that the assessee was not authorized or allowed to start construction work. It is pertinent to note that as per requirement of the provisions the approval of the housing project is deemed to be on the date when the plan of the housing project is for the first time approved by the authorities. 15. We have carefully considered the plan filed by the asses .....

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2004 and no plan was approved prior to that date, we need to go into the other aspects of question. 16. Accordingly the housing project in question was approved on 21.09.2004 when the plan was approved by the Thane Municipal Corporation. The correspondence between the assessee and the Thane Municipal Corporation prior to that approve of the building is not relevant to decide the date of approval as per the Explanation to section 80IB(10). 17. In view of the above discussion, we decide this issue .....

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units of buildings Varsha and Grishma of the housing project Prakruti Park at Thane by arriving at the conclusion that these 12 residential units were combined into 6 residential units, each having area exceeding 1000 sq. ft. and accordingly the condition prescribed under sub-section (c) of section 80 IB (la) was breached in respect of these 12 residential units ignoring the evidence that (i) the local authority, Thane Municipal Corporation had confirmed that none of the residential units of the .....

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s also taken the following grounds in its cross objection:- 2. On the facts and in law, the Id. CIT (Appeals) erred in holding that the six combined residential units of the appellant's housing project had area exceeding the permissible maximum built up area of 1000 sq. feet prescribed under sub section ( c) to sec. 80IB(10) by not appreciating the fact that the location of the appellants housing project was situated more than 25 Kms. from the Municipal limit of the "City" of Mumba .....

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