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Bhujbal Brothers Construction Company Versus Dy. Commissioner of Income Tax, Circle – 3, Pune

2015 (11) TMI 582 - ITAT PUNE

Eligibility of benefit of section 80IB(10) - Held that:- The housing project of the assessee at Bhujbal Township is eligible for deduction u/s. 80IB(10) of the Act.

In respect of housing project at Damodar Residency is concerned assessee has claimed deduction u/s. 80IB(10) in respect of residential buildings A2 and A3 only. Thus, the total area of plot on which the residential project is developed by the assessee stands on land measuring more than 1 acre (conversion 1 acre = 4047 Sq. .....

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that the land on which the housing project is developed is not owned by the assessee and is still undivided, we do not find any merit. The Hon'ble Madras High Court in the case of CIT Vs. Sanghvi and Doshi Enterprise (2012 (12) TMI 84 - MADRAS HIGH COURT) has held that ownership of land is not a criteria to decide status of developer to claim deduction u/s. 80IB(10). The provisions of section 80IB(10) does not require that the developer who owns the land is only eligible to claim deduction u/s. .....

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t Damodar Residency. - Decided in favour of assessee. - ITA Nos. 583 & 2086/PN/2012, ITA No. 1920/PN/2013, ITA Nos. 707 & 2115/PN/2012 - Dated:- 30-9-2015 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Assessee : Shri C.H. Naniwadekar For The Revenue : Shri S.K. Rastogi ORDER PER VIKAS AWASTHY, JM : These are five appeals, three appeals are by the assessee and two appeals are by the Revenue. ITA No. 583/PN/2012 has been filed by the assessee against the order of Commissioner of .....

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assessee is against the order of Commissioner of Income Tax (Appeals)-II, Pune dated 15-05-2013 for the assessment year 2010-11. Since, the facts in all the impugned assessment years and the issues raised in the appeals are similar, these appeals are taken up together for adjudication. The assessee in all the three appeals have impugned the findings of Commissioner of Income Tax (Appeals) in disallowing deduction u/s. 80IB(10) of the Income Tax Act, 1961, claimed by the assessee in respect of pr .....

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situated in S. No. 67, Kothrud, Pune on land measuring 40,700 Sq. Mtrs. The entire property on which the project is developed is an ancestral property of Bhujbal Family. The assessee is a partnership firm, consisting of two Bhujbal brothers and their family members. In the mutual understanding with larger family, an area of 4,902 Sq. Mtrs. out of the total area of 40,700 Sq. Mtrs. was allocated to the assessee firm vide registered agreement dated 13-04-2006 and 21-08-2007. In Bhujbal Township to .....

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is less than 1 acre i.e. less than the minimum area specified under the provisions of section 80IB(10) of the Act. The Commissioner of Income Tax (Appeals) vide order dated 22-02-2011 accepted the claim of the assessee and held that the assessee is eligible to claim deduction u/s. 80IB(10) on the housing project comprising in Bhujbal Township. Against the findings of Commissioner of Income Tax (Appeals), the Department carried appeal to the Tribunal in ITA No. 641/PN/2011 for the assessment yea .....

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the Hon'ble Bombay High Court. 2.1 The second project on which the assessee had claimed deduction u/s. 80IB(10) is at Damodar Residency comprising in S. No. 8, Kothrud, Pune. In the said housing project total seven buildings were proposed to be constructed i.e. from A1 to A5, B1 and B2. Buildings A1 to A5 are residential, whereas buildings B1 and B2 are commercial. The assessee entered into a development agreement with the owners of the land in respect of buildings A2, A3 and part of B1 out .....

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ort dated 14-12-2009 observed that the total area of the plot on which the project Damodar Residency is developed is 14,400 Sq. Mtrs. and the gross area of the plot after deduction is 12,300 Sq. Mtrs. The assessee has claimed the area of plot on which the buildings A2, A3 and B1 are constructed as 4370.92 Sq. Mtrs. but there is no separate sanction or demarcation of the land on which the buildings A2, A3 and B1 are constructed. There is no separate demarcation by way of sub-division of the plot .....

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assessee is not eligible for deduction u/s. 80IB(10). Similar reasons were given by the Assessing Officer for denying deduction u/s. 80IB(10) in the assessment years 2009-10 and 2010-11. Aggrieved by the assessment order for the respective assessment years, the assessee filed appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order allowed the claim of assessee with respect to the housing project at Bhujbal Township by placing relianc .....

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ect at Bhujbal Township . 3. Shri C.H. Naniwadekar appearing on behalf of the assessee submitted, that the authorities below have erred in coming to the conclusion that the total area of plot on which buildings A2, A3 and B1 have been constructed is less than 1 acre. The assessee has claimed deduction only in respect of residential buildings i.e. buildings A2 and A3 which are constructed on the plot measuring 4100 Sq. Mtrs. The conversion of 1 acre is 4047 Sq. Mtrs. Thus, the buildings on which .....

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se measurements have been wrongly mentioned in the orders of the authorities below. The area of the plot on which the residential buildings A2 and A3 are constructed is 4100 Sq. Mtrs. Even otherwise the total area on which the project Damodar Residency is being developed is approximately 3 acres. The residential buildings constructed and developed by the assessee are part of the larger project. It is an undisputed fact that the assessee has complied with all other conditions as envisaged u/s. 80 .....

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partment in its appeals is squarely covered in favour of the assessee by the order of Tribunal in the assessee s own case for the assessment year 2007-08 decided on 25-02-2013 in ITA No. 641/PN/2011. 4. Shri S.K. Rastogi representing the Department vehemently defended the findings of Commissioner of Income Tax (Appeals) in disallowing the claim of deduction u/s. 80IB(10) in respect of housing project Damodar Residency. The ld. DR submitted that the area of project developed by the assessee has n .....

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ize of the plot i.e. 1 acre, as required u/s. 80IB(10) of the Act. The ld. DR strongly relied on the order of Commissioner of Income Tax (Appeals) as regards the findings on the project Damodar Residency and prayed for dismissing the appeals of the assessee. In so far as the appeals by the Revenue, the ld. DR relied on the order of Assessing Officer and prayed for reversing the findings of the Commissioner of Income Tax (Appeals) in respect of housing project of the assessee at Bhujbal Township .....

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s developed on land measuring 3 acres. The assessee has claimed deduction u/s. 80IB(10) on the housing projects which are integrated part of the larger housing projects. 6. In so far as the residential project comprising of buildings B5, B9 and B2 in Bhujbal Township is concerned, the issue whether the assessee is eligible to claim deduction u/s. 80IB(10) on the said buildings was raised before the Co-ordinate Bench of the Tribunal in ITA No. 641/PN/2011 by the Department. The Tribunal upheld th .....

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of 40,700 sq.mtrs. and the entire property belong to Bhujbal family and it is the ancestral property. The present assessee firm is consisting of the family members as partners. There was a MOU with the bigger Bhujbal family and an area of 4902 sq.mtrs. out of the total area of 40700 sq.mtrs. in the survey no.67 was acquired by the said Partnership firm for the development vide agreement dated 13.4.2006 and 21.8.2007 which is also duly registered with the sub-registrar. The assessee firm proceede .....

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belong to the Bhujbal family or Bhujbal (HUF). Out of the said area, 4902 sq.mtrs. has been acquired by agreement by the assessee firm. In our opinion, we have to only consider the project on which the assessee has claimed the deduction u/s 80IB(10) of the Act, more particularly, in the context of the area of the plot. We find that the finding of the A.O. is erroneous on this issue. The Ld. CIT(A) has explained the area statement in his order which does not require any interference. We according .....

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o-ordinate Bench and dismiss the appeals of the Revenue. Thus, we hold that the housing project of the assessee at Bhujbal Township is eligible for deduction u/s. 80IB(10) of the Act. 8. In respect of housing project at Damodar Residency is concerned the deduction u/s. 80IB(10) has been denied primarily on two counts - (i) the area of the housing project is less than 1 acre, and (ii) the land on which the housing project has been developed does not belong to the assessee. So far as the first obj .....

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1 Sq. Mtrs. has not been disputed by the Revenue. A supplementary agreement dated 12-05-2008 was executed between the owners and the assessee confirming the lay out plan of the total plot of land on which buildings A2, A3 and B1 and open area was to be developed by the assessee. As per the lay out plan the area on which buildings A2 and A3 were developed is measuring 4100 Sq. Mtrs. The assessee has claimed deduction u/s. 80IB(10) in respect of residential buildings A2 and A3 only. Thus, the tota .....

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ea more than 1 acres, even if some other residential projects are already in existence thereon. 9. The Hon'ble Bombay High Court in the case of CIT Vs. Vandana Properties (supra) has held that the provisions of section 80IB(10) does not mandate that the housing project should be on a vacant plot having minimum area. The housing project is eligible for deduction u/s. 80IB(10) subject to fulfilling other conditions, if it is on a plot where other housing projects are already in existence. The .....

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ts are existing on the said plot of land or not. In these circumstances, construing the provisions of Section 80IB (10) by adding words to the statute is wholly unwarranted and such a construction which defeats the object with which the Section was enacted must be rejected. 28. Apart from the above, the Central Board of Direct Taxes (CBDT) by its letter dated 4th May 2001 addressed to the Maharashtra Chamber of Housing Industry has stated thus: The undersigned is directed to refer to your letter .....

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financing arrangements and also, if it separately fulfills all other statutory conditions listed in Sections 10(23G) and 80(B(10). With regard to your query regarding the definition of Housing Project, it is clarified that any project which has been approved by a local authority as a housing project should be considered adequate for the purpose of Section 10(23G) and 80IB(10)" 29. From the aforesaid letter of CBDT, it is clear that for the purposes of Section 80IB(10) it is not the mandate .....

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n if few such plots are existing it cannot be said that Section 80IB (10) deduction was intended to give benefit only to the undertakings who construct housing projects on those few plots. 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 there under cannot be denied to all those .....

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