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Smt. Swapna Cherukuri, Hyderabad Versus Dy. Commissioner of Income-Tax, Central Circle 6, Hyderabad

2015 (9) TMI 444 - ITAT HYDERABAD

Disallowance of deduction under S.80IB(10) - the commercial space of 11,913 sq. ft. in the project developed by the assessee was more than the prescribed limit of 5% of the total built up area of the project - Held that:- In the present case, the plot of land on which the commercial complex was built had already been sold by the assessee and since the commercial complex on the said plot of land was developed by the owners of the land and not by the assessee, we are of the view that the same coul .....

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Out of total 136 units constructed by the assessee in the project, two units bearing Nos.118 and 121 (correct No. is 21, as pointed out by the learned counsel for the assessee) were having built up area of more than the maximum area of 1,500 sq. ft. permissible as per the relevant provisions - Held that:- As explained on behalf of the assessee before the authorities below as well as before us, the said unit was built on a corner plot and keeping in view the location as well as the size of .....

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the area of the duplex unit constructed by the assessee as residential unit No.21 was having less than 1,500 sq. ft. built up area and the approved plan annexed to the sale deed further established this position. As demonstrated by the learned counsel for the assessee at the time of hearing before us, this position is duly supported by the copy of the sale deed dated 3.9.2010, placed at page Nos.67 to 78 of the paper-book, which clearly shows that the residential unit No.118 comprising of plot .....

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ere having built up area of less than1,500 sq. ft. as developed and sold by the assessee and in our opinion, there was no violation of any condition as alleged by the authorities below, for claiming deduction under S.80IB(10). - Decided in favour of assessee. - ITA No. 183/Hyd/2014 - Dated:- 12-6-2015 - P. M. Jagtap, AM And Saktijit Dey, JM, JJ. For the Appellant : Shri J J Varun For the Respondent : Shri Ramakrishna Bandi ORDER Per P. M. Jagtap, Accountant Member This appeal filed by the asse .....

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concern, M/s. Lahari Constructions. The return of income for the year under consideration was filed by her on 17.11.2009 declaring total income of ₹ 6,38,627 after claiming deduction of ₹ 3,29,78,844 under S.80IB(10) of the Act. The said deduction was claimed by the assessee in respect of profit derived from housing project developed by her at Bhanoor Village in Medak District. For the said project 16 Acres and 7 Guntas of land was purchased by the assessee and after obtaining the a .....

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of ₹ 3,29,78,844. 3. During the course of assessment proceedings, the claim of the assessee for deduction under S.80IB(10) was examined by the Assessing Officer. In this regard, a commission under S.131(1)(d) of the Act was also issued by the Assessing Officer to the DVO, who inspected the project site of the assessee on 17.12.2011 with his team of engineers. The Assessing Officer also accompanied the DVO during the said visit. On the basis of the report received from the DVO on 20.12.2011 .....

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e upto 31st March, 2012 to complete the project. The Assessing Officer did not dispute the position that the time limit available for completion of project was upto March,2012. He however did not accept the stand of the assessee that the housing project was nearing completion. According to him, as found during the physical inspection, 30% of the residential units were under construction and there was no possibility of completing the entire project by March, 2012 and to obtain completion certific .....

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nd that another residential unit No.121 was a duplex under construction and the area thereof was also more than 1,500 sq. ft, resulting into violation of the conditions stipulated. In this regard, the explanation offered by the assessee before the Assessing Officer was that the Residential Unit No.118 with plot of land and ground floor having less than built up area of 1500 sq. ft. was completed and sold on 3.9.2010 and the construction of the first floor on the said plot was being done at the r .....

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accepted by the Assessing Officer. He held that although the assessee has generally followed 1,500 sq. ft. norm of each residential units, there was violation of that norm in respect of two residential units, which disentitled the assessee to claim deduction under S.80IB(10). 5. As further found during the physical inspection of the project site of the assessee, there was a big commercial complex at plot No.10 within the project. According to the report of the DVO the built up area of the said .....

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ty was introduced by the assessee for the purposes of constructing a commercial complex. Since the total commercial area of 11,913 sq. ft. was more than 5% of the total built up area of the project, the Assessing Officer held that there was a violation of other condition also stipulated for claiming deduction under S.80IB(10). Accordingly, the claim of the assessee for deduction under S.80IB was disallowed by the Assessing Officer for non-completion of the project in time, as well as violation o .....

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e concerned local authority on 12.3.2012 was produced by the assessee, to show that the project was completed before the stipulated date of 31.3.2012. Keeping in view the said certificate filed by the assessee, the learned CIT(A) accepted that the project of the assessee was completed before the stipulated date of 31.3.2012 and the condition stipulated in this regard for claiming deduction under S.80IB(10) was duly satisfied. 7. As regards the claim of the assessee regarding norm of 1,500 sq. ft .....

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one at the relevant point of time by the owner of the plot and not by the assessee. 8. As regards the residential unit No.121, it was submitted on behalf of the assessee before the learned CIT(A) that although the same was a duplex house having been built up on a corner plot, the total built up area was only 1,475 sq.ft. Copy of the relevant sale deed was also produced by the assessee as evidence to show that the total built up area of housing unit no.121 was less than 1,500 sq. ft. According to .....

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ial space, it was submitted by the assessee before the learned CIT(A) that the commercial complex was not part of the project. It was submitted that the land on which commercial complex was constructed had been sold by the assessee vide sale deed dated 13.9.2007 to Md. Zaheeruddin and Md. Zamiluddin and the commercial complex was developed and built by them on the said plot of land. This stand of the assessee was also not found acceptable by the learned CIT(A). According to him, the plot of land .....

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ercial area exceeded the limit of 5% of the total built up area of the project, there was a clear violation of the condition for claiming deduction under S.80IB(10). The learned CIT(A) thus held that even though the project of the assessee was completed well within the time specified under S.80IB(10), there was violation of other norms in terms of maximum built up area of each unit and maximum built up commercial space. Accordingly, the disallowance made by the Assessing Officer on account of as .....

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t. He submitted that the residential unit No.118, comprising of plot of land with built up area of 1,475 sq. ft was actually sold by the assessee to one Shri Sk. Md. Rafi vide sale deed executed on 3rd September, 2010. He submitted that the said purchaser subsequently undertook the construction of first floor on his own and when the DVO alongwith the Assessing Officer visited the project, the said construction being made by the owner was in progress. He submitted that the area of the unit as sol .....

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page nos.57 to 66 of the paper-book to point out that the total built up area of duplex house was only 1,364 sq. ft., which was less than the prescribed limit of 1,500 sq. ft. He contended that there was thus no violation of the norm of maximum area of 1,500 sq. ft. built up area even in respect of these two units, as alleged by the authorities below. He also contended alternatively that even if it is assumed that there is such violation either in respect of one unit or even two units, the clai .....

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lakhs arising from the said sale was duly offered to tax by the assessee in assessment year 2008-09. He submitted that the purchasers of the said plot actually built up the commercial area and since the assessee neither constructed nor sold the commercial area, the commercial area did not form part of the housing project developed by the assessee and no deduction under S.80IB(10) was claimed by the assessee in respect of the said commercial complex. He submitted that the commercial area develope .....

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to disallow her claim for deduction under S.80IB(10) of the Act. 12. The Learned Departmental Representative, on the other hand, strongly relied on the orders of the authorities below in support of the Revenue's case that the assessee having violated the norms of maximum built up area of individual housing units and maximum commercial area as permissible in the project, is not entitled to claim deduction under S.80IB(10). He contended that both these norms involve appreciation of facts and .....

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n respect of profit derived from the housing project undertaken by her was confirmed by the learned CIT(A) by his impugned order on two grounds. Firstly, he held that the commercial space of 11,913 sq. ft. in the project developed by the assessee was more than the prescribed limit of 5% of the total built up area of the project. Secondly, he held that the out of total 136 units constructed by the assessee in the project, two units bearing Nos.118 and 121 (correct No. is 21, as pointed out by the .....

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a is concerned, there is no dispute that the relevant plot of land on which the commercial complex was built had already been sold by the assessee to Md. Zaheeruddin and Md. Zamiluddin vide sale deed dated 13.9.2007 and the profit arising from the said sale was duly offered to tax by the assessee for the relevant assessment year, assessment year 2008-09. There is also no dispute that the commercial complex on the said plot of land was constructed by the owners and not by the assessee and the pro .....

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of land was found mentioned even in the completion certificate dated 12.3.2012 issued by the concerned authority, which again strengthened the fact that the land on which the commercial complex was built up was a part and parcel of the project developed by the assessee. In this regard, it is observed that a similar issue had come up for consideration before the Chennai Bench of this Tribunal in the case ofLavanya Property Developers Pvt. Ltd. V/s. ACIT (ITA No.148/Mds/2010 dated 16.9.2011) wher .....

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and the area of the flats in the said block exceeded 1,500 sq. ft. On appeal, the learned CIT(A) confirmed the order of the Assessing Officer, observing that the approval obtained from the local authority for development of the project included the land in relation to one block which was sold by the assessee. On further appeal, it was held by the Tribunal that just because the assessee hived off one block in the project and hived off block had violated the condition prescribed under S.80IB(10), .....

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ssessee, we are of the view that the same could not be considered as part of the project of the assessee, especially when the project of the assessee excluding that plot of land independently complied with all the conditions for claiming deduction under S.80IB(10). It is also pertinent to note here that profit arising from the development and sale of commercial complex was duly offered by the owners to tax in their returns of income, and neither they nor the assessee claimed any deduction under .....

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uilt up area as 1,364 sq. ft. in the description of the property sold and even the building plan annexed to the said sale deed as approved by the concerned authorities, shows the total area of the ground and first floors as 1336 sq. ft. It is observed that the Assessing Officer, however, presumed the area of this unit as more than 1,500 sq. ft. merely on the basis that the duplex house was having two floors. As explained on behalf of the assessee before the authorities below as well as before us .....

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q. ft. prescribed under S.80IB(10). In our opinion, the said sale deed was sufficient to show that the area of the duplex unit constructed by the assessee as residential unit No.21 was having less than 1,500 sq. ft. built up area and the approved plan annexed to the sale deed further established this position. 15. As regards the residential unit No.118, is observed that the built up area of the said unit was considered by the Assessing Officer as in excess of 1,500 sq. ft. on the basis that in a .....

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sit on 17.12.2011, was being done by the owner of the said plot and not by the assessee. As demonstrated by the learned counsel for the assessee at the time of hearing before us, this position is duly supported by the copy of the sale deed dated 3.9.2010, placed at page Nos.67 to 78 of the paper-book, which clearly shows that the residential unit No.118 comprising of plot of land as well as a residential unit having only ground floor with built up area of 1,4765 sq. ft. duly completed, was sold .....

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