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2015 (9) TMI 842 - ITAT AHMEDABAD

2015 (9) TMI 842 - ITAT AHMEDABAD - [2015] 43 ITR (Trib) 293 (ITAT [Ahm]) - Disallowance for deduction u/s. 80IB(10) - claim denied by the A.O for the reason that the plot size of the land on which the project was undertaken was less than 1 acre. - Held that:- Hon’ble Bombay High Court in the case of CIT vs. Vandana Properties reported in (2012 (4) TMI 54 - BOMBAY HIGH COURT) had an occasion to decide on the issue of deduction u/s. 80IB(10) wherein it has held that the expression “housing projec .....

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ut the fulfillment of other conditions stipulated u/s. 80IB(10) by the Assessee.

As far as denial of deduction on the ground of flat size being in excess of 1500 sq. ft. is concerned, we find that the Assessee had sold 4 flats namely C-401, 402, 403 and 404 to 4 different purchasers vide separate sale deeds which have also been confirmed by the respective purchasers and at the time of its sale each flat was less than 1500 sq. ft. It is also a fact that the inspection was carried out b .....

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ssessee has sold flat whose area was in excess of 1500 sq. ft. In view of the aforesaid facts, we are of the view that the Assessee is eligible for deduction u/s. 80IB(10) and therefore set aside the order of A.O on this ground. - Decided in favour of assessee.

Disallowance u/s. 40(a)(ia) - late deduction tax at source from payments - Held that:- With respect to the payment made to Anar Builders Pvt. Ltd., we find that though Assessee had submitted that the payee has already included .....

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CIT(A) and in the light of the factual submission made by the Assessee the issue needs re-verification. We therefore restore the issue to the file of A.O for verification and thereafter decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes. - I.T.A. No. 1544/AHD/2010 - Dated:- 28-8-2015 - SHRI ANIL CHATURVEDI AND SHRI S.S. GODARA, JJ. For The Appellant : Shri P.M. Mehta For The Respondent : Shri D.C. Mishra, Sr. D.R. ORDER PER ANIL CHATURVEDI, ACCOUNT .....

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or scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 26.12.2008 and the total income was determined at ₹ 1,07,31,760/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 24.02.2010 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and the grounds raised by the Assessee which have been subsequently concised, reads as under:- 1. In law .....

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fter referred as the Act ) amounting to ₹ 62,83,272/-, when she ought to have allowed the claim of the appellant. 2.2. In law and in the facts and circumstances of the appellant s case, the learned CIT(A) has grossly erred in holding that the appellant has not fulfilled conditions u/s. 80IB (10) (b) & (c) of the Act, without considering the submission by the appellant and certain important observations in the DVO s report, as highlighted by the appellant. 2.3 In law and in the facts an .....

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eeds to be deleted. 4. In law and in the facts and circumstances of the appellant s case, the CIT(A) has grossly erred in upholding the disallowance of ₹ 5,48,483/-, on account of alleged non deduction tax at source from some payments, by wrongly invoking the provisions of section 40(a)(ia) of the Act. The same needs to be deleted. 5. In law and in the facts and circumstances of the appellant s case, the CIT(A) has grossly erred in upholding the charging of interest u/s. 234B of the Act, a .....

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80IB(10). 5. During the course of assessment proceedings, A.O noticed that Assessee had entered into 3 Development Agreements on various dates for the construction of housing project though the land owners were same in the 3 Development Agreements. He also noticed that Assessee s entering into 3 Development Agreements cannot be considered to be for one housing project and the approval and B.U permission granted by the local authorities for various Blocks were different. He was therefore of the v .....

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the A.O. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 12. After going through rival submissions it is seen that the appellant entered into 3 Development Agreements on three different dates for three plots of land each below 1 acre: Sr. No. Date of agreement Plot Area 1 08.10.2004 1463 sq. mtr. 2 14.12.2005 1608.21 sq. mtr. 3 20.03.2006 1544 sq. mtr. AMC gave permissions on different dates for construction of diffe .....

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piece of land was below I acre to begin with. Thus the condition stipulated in section 80 IB (10 )( b) is not found fulfilled. 13. The condition with respect to 1500 sq. ft. limit for each residential flat was not found fulfilled on the date of inspection of the DVO i.e. 24.8.2009. It is common knowledge that changes in flats are always in connivance with the builder. On one hand the appellant is stating that no changes can be undertaken even by the buyers without approval of the local authorit .....

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has not been proved. 14. During the course of appellate proceedings the Id. AR in the presence of the AO pleaded that even if two flats were made into one on the top floor of Block C then too 1500 sq.ft. limit did not exceed. This argument is not factually correct because the BU permission for Block C dated 9.7.2007 (enclosed as Annexure-2 of this order) shows 599.44 sq.mts built-up area for 8 residential units on fourth floor i.e. the top floor plus stair cabin 62.83 sq.mtrs. Even if the area .....

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our were found by the DVO. As conditions 80IB(10)(b) & (c) are found violated the denial of 80IB(10) by the AO is upheld. 6. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 7. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee s project named Pushkar Residency was approved by Ahmedabad Municipal Corporation (AMC) with plot area of 4717 sq. mtrs, which is equivalent to 1.166 acres in its first .....

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ed to make the payment of substantial amount of charges to local authorities for getting permission for construction and in order to avoid financial squeeze, Assessee had carried out the construction of the project in a phased manner. He therefore submitted that the project remained as a one whole project only. With respect to ld. CIT s observation that in Block-C on the 5th Floor, Assessee had constructed only 2 flats, the area of which exceeded 1500 sq. ft, he submitted that ld. CIT(A) had rel .....

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on after receiving the possession they had clubbed the flats from two units to one unit each after the purchase of flats from the Assessee. He therefore submitted that once the Assessee has handed over the possession of the flats to the buyers and if later on the buyers clubbed or combines the unit, the Assessee s claim of deduction u/s. 80IB(10) cannot be denied. Ld. A.R. also pointed to the confirmations of the sale deed of the 4 flats which are placed at page 196 to 259 of the paper book and .....

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val submissions and perused the material on record. The issue in the present ground is with respect to deduction u/s. 80IB(10) of the Act which was denied by the A.O for the reason that the plot size of the land on which the project was undertaken was less than 1 acre. From the copy of the lay out plan dated 19.10.2005 which has been certified by the AMC, it is seen that the total project by AMC has been approved for 3 Blocks namely Block-A, B & C for the total plot area of 4615.21 sq. mtrs. .....

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Act and therefore the expression housing Project in Section 80IB(10) would have to be construed as commonly understood Housing Project in common parlance and it would mean constructing a building or group of buildings consisting of several residential units. It further, at para 26 has noted as under:- 26.…………………… However, in the absence of defining the expression housing project and in the absence of specifying the size or the number of hou .....

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n deduction would be available to that housing project and if thereafter several other housing projects are undertaken on the very same plot of land, the deduction would not be available to those housing projects as the plot ceases to be a vacant plot after the construction of the first housing project. Such a construction if accepted would defeat the object with which Section 80IB (10) was enacted. 27. Moreover, plain reading of Section 80IB (10) does not evenremotely suggest that the plot of l .....

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which the Section was enacted must be rejected. 29.…………………………………… Therefore, it is clear that on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out under Section 80IB (10), the deduction thereunder cannot be denied to all those housing projects. Sectio .....

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ousing projects or not. In these circumstances, the decision of the Tribunal in rejecting the contention of the Revenue regarding the size of the plot cannot be faulted. 9. Subsequently, we have also come across the decision of Hon ble Madras High Court in the case of CIT vs. Voora Property Developers P. Ltd. reported in (2015) 373 ITR 317 (Mad), where the Hon ble High Court after referring to the decision of Hon ble Bombay High Court in the case of Vandana Properties (supra) decided the issue a .....

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ssessee cannot be denied deduction u/s. 80IB(10) on the ground that the area of project is less than 1 acre and more so when Revenue has not disputed about the fulfillment of other conditions stipulated u/s. 80IB(10) by the Assessee. 11. As far as denial of deduction on the ground of flat size being in excess of 1500 sq. ft. is concerned, we find that the Assessee had sold 4 flats namely C-401, 402, 403 and 404 to 4 different purchasers vide separate sale deeds which have also been confirmed by .....

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lting into the area of are combined flat being excess of 1500 sq. ft. cannot be said to be done by Assessee and therefore it cannot be said that Assessee has sold flat whose area was in excess of 1500 sq. ft. 12. Before us, Revenue has not brought any contrary binding decision in its support. In view of the aforesaid facts, we are of the view that the Assessee is eligible for deduction u/s. 80IB(10) and therefore set aside the order of A.O on this ground. Thus this ground of Assessee is allowed. .....

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he payments were made/credited on different dates up to 31st March, 2006 but TDS was deducted only at the end of the year. A.O was of the view that Assessee was required to deduct TDS at the time of payment or credit whichever is earlier and TDS should have been paid to the Government account within the prescribed time. Since the Assessee had deducted the tax on 31st March, 2006 on the various amounts paid on various dates before 31st March, 2006, provisions of Section 40(a)(ia) were applicable .....

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- (comprising of ₹ 39 lacs and 5,48,483/-). Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who confirmed the order of A.O and decided the issue against the Assessee by holding as under:- 15. Ground No.3: The Id. AO has erred in making a disallowance of ₹ 39,00,000 on accounted of alleged late deduction tax at source from payments by wrongly invoking the provisions of section 40(a)(ia). During the course of appellate proceedings it was conceded that ther .....

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m the addition made by the AO u/s.40(a)(ia) of ₹ 39,00,000. 16. Ground No.4 the AO erred in making disallowance of ₹ 5,48,483 on account of alleged non-deduction of tax at source u/s.40(a)(ia), The format enclosed by the appellant through its reply dated 10.8.2009 which is enclosed as Annexure 3 of this order shows no TDS was made on certain payments made to the sub-contractors, therefore the addition made by the AO is upheld. 14. Aggrieved by the aforesaid order of ld. CIT(A), Asses .....

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0 where it is held that the provisions of amendment have to be applied retrospectively and for the aforesaid submission he placed reliance on the decision of Gujarat High Court in the case of Omprakash Chaudhary (T. A No. 412 of 2013). With respect to the payment of ₹ 2 lac to Anar Builders Pvt. Ltd. which was disallowed by A.O is concerned, he submitted that the payee namely Anar Builders has already filed its return of income wherein the amount paid by the Assessee has been included and .....

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material on record. The issue in the present ground is with respect to disallowance u/s. 40(a)(ia). With respect to the disallowance of ₹ 39 lacs being the payment made to Shreenath Builders, and on perusing Annexure-3 of CIT s order, it is seen that the TDS was deducted on 31st March, 2006 and the same was deposited on 31st May, 2006 and the return of income was filed by the Assessee on 20.10.2006. Thus it is seen that the entire TDS that was deducted by the Assessee has been paid to the .....

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t is retrospective from the date of insertion of the provision ie., 1st April 2005 therefore needs to be answered in affirmation. It can be seen that the amendment made by the Finance Act 2010 allows additional time upto the due date of filing of the return in respect of even those instances where TDS has been deducted during the first eleven months of the previous year. The additional time till the due date of filing of the return, in case of TDS made during the last month of the previous year .....

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5 [1st April 2005], the amendment by Finance Act 2010 with regard to other limb of time limit for payment of TDS has to be held retrospective not from 1st April 2010 only. If we recall at this stage the speech of Finance Minister while introducing this provision by way of Finance Act, 2010, this amendment essentially has been brought for relaxing the current provision on disallowance of expenditure. The tax, if is deducted at any time during the financial year and paid before the date of filing .....

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f March till due date of filing of the return under section 139 (1) of the Act, considered the apparent difference where an unintended benefit was given to the assessee who deducted the entire year s TDS in the month of March of the previous year which were eligible to pay TDS so deducted to the Government by due date of filing of the return under Section 139 (1) of the Act. However, the assesses who may have deducted the tax in earlier months beginning from April to the end of February of the p .....

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with effect from 1st April 2005. 18. From the discussion held hereinabove, we answer the substantial / question of law raised in these Appeals in favour of the assessee and against the Revenue by holding the amendment made in Section 40 (a)(ia) of the Income Tax Act, 1961 by the Finance Act 2010, as retrospective in operation, having effect from 1st April 2005 ie., from the date of insertion of Section 40 (a) (ia) of the Act. 17. With respect to the payment made to Anar Builders Pvt. Ltd., we fi .....

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