TMI Blog2015 (11) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate was issued by the competent authority after examining whether the assessee has fulfilled the conditions stipulated in the Act and also whether construction has been completed as per the sanctioned plan dated 15/04/2002. If, at the later stage, the allottees/occupants of the flats makes any addition, the assessee cannot be held liable for their omissions/acts, if any. - Decided in favour of assessee. - ITA NO.4635/Mum/2013 - - - Dated:- 28-10-2015 - Shri Joginder Singh, Judicial Member, and Shri Ramit Kochar, Accountant Member For The Revenue : Shri Chandip Singh -DR For The Assessee : Shri Vijay C Kothari ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 14/03/2013 of the ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to allowing deduction u/s 80IB(10) of the Act when there is no compliance of the requirement of the provision of the Act in some flats, the built up area was more than the stipulated condition of 1,000 sq. ft. 2. During hearing, the ld. DR, advanced his arguments which are broadly identical to the ground raised by contending that area of some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tood. 19. As rightly contended by Mr.Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr.Mistri, learned Senior Advocate and Mr.Joshi, learned Advocate appearing on behalf of the intervenors, the expression housing project in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in section 80IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 square feet ( E building in the present case) would constitute a housing project under section 80IB(10) of the Act. 22.1. We find that the Pune Bench in the case of DCIT vs. Aditya Developers [ITA.No.791 792/PN/2008] has observed as under: 6.1. Likewise, in the case of Vandana Properties vs. ACIT (supra), the Mumbai Bench of the Tribunal has decided the issue in favour of the assessee. In that case, the assessee had plan for 4 independent buildings A , B , C D but, so far as E is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the construction has been completed between 10.1.2005 to 31.8.2005 (page Nos. 6 to 9 of paper book). The authorities below have also not disputed this material fact that residential units has a maximum built up area of 1500 sq.ft. Likewise, these material facts that B Group buildings in Rahul Nisarg Cooperative Housing Society Ltd., have been constructed on land area of 138203 sq.ft., has not been denied by the authorities below. They have also not denied these material facts that the first building plan was sanctioned on 29.4.2003 vide Commencement Certificate No. 4269 issued by the PMC (Page No. 16 of the Paper Book). The other material facts like actual construction was executed as per the revised plan sanction on 20th March 2004 vide CC No. 2225 (page No. 17), the project consists of 396 flats and construction of these flats have been completed on 14.7.2006 as per the Completion Certificate issued by the PMC (Page Nos. 13 to 18 of paper book) are not in dispute. The authorities below have also not denied that built up area of each of these flats does not exceed 1500 sq.ft. It is also not in dispute that both the projects are entirely a residential project and there is no co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was meant for development and which is more than one acre and, therefore, deduction cannot be denied on this ground Assessee was therefore entitled to deduction under s.80- IB(10). 22.4. We find that ITAT Bangalore Bench in the case of Dy.CIT vs. Brigade Enterprises (P) Ltd. [119 TTJ 269 (Bang.)] has observed as under: Deduction under s.80-IB Income from developing and building housing project Different units of a group project Where some of the residential units in a bigger housing project, treated independently, are eligible for relief under s.80-IB(10), relief should be given pro rata and should not be denied by treating the bigger project as a single unit, more so, when assessee obtained all sanctions, permissions and certificates for such eligible units separately Assessee undertook a development project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s.80-IB(10) in respect of two residential units only which if taken separately, were eligible for the relief AO treated the entire project as a single unit and denied relief und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined residential unit and that there would be a complete habitable residential unit only if two or more flats are joined together-Therefore, merely because some of the purchasers have purchased more than one flat and combined the same, assessee's claim for deduction under s. 80-IB(10) cannot be disallowed-Further, the condition that not more than one residential unit in the housing project is allotted to one person not being an individual has been inserted by Finance (No.2) Act, 2009, w.e.f. 1st April, 2010, and hence, it is not applicable to the facts of the case. 23.2. We find that the ITAT Mumbai Bench in the case of Emgeen Holdings P. Ltd. vs. DCIT in ITA.No.3594 3595/Mum/09, has observed as under: 7. We find that the deduction u/s.80IB(10) has been declined by the Assessing Officer on the ground that size of the residential unit was in excess of 1,000 sq.ft which, in turn, proceeds on the basis that the flats sold to the family members admittedly by separate agreements, should be treated as one unit. We are unable to approve this approach. We have noted that the size of each flat, as evident from building plan as duly approved by Municipal authorities was l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person representing such individual the spouse or minor children of such individual or the HUF in which such individual is a karta. The explanation memorandum explained the legislative amendment as follows: (314 ITR(St) 203) Further, the object of the tax benefit for housing projects is to build housing stock for low and middle income households. This has been ensured by limiting the size of the residential unit. However, this is being circumvented by the developer by entering into agreement to sell multiple adjacent units to a single buyers. Accordingly. it is proposed to insert new clauses in the said sub-section to provide that the undertaking which develops and builds the housing project shall not be allowed to allot more than one residential unit in the housing project to the same person, not being an individual and where the person is an individual no other residential unit in such housing project is allotted to any of the following person:- (I) Spouse or minor children of such individual; (II) The Hindu undivided family in which such individual is the karta; (III) Any person representing such individual the spouse or minor children of such indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to suggest that assessee has claimed deduction in respect of building Prime wherein built up area of its units is exceeding 1500 sq.ft. In fact there were 25 buildings in Cosmos Project out of which except building Prime, all other buildings satisfy the conditions of built up area limit of 1500 sq.ft. Therefore, deduction u/s.80IB(10) should be allowed in respect of profit from such buildings. This view is fortified by the decisions in Vandana Properties (supra) and Aditya Developers (supra) discussed above. As regards two flats combined together, the allegation is that some units were combined into one, so deduction u/s.80IB(10) should not be allowed. In this regard, assessee s stand has been that assessee conceived the flats as independent units and these were constructed as independent units. There is nothing on record to suggest that assessee himself has joined the adjacent flats. In this situation, assessee should not suffer for its no fault if purchaser join the adjoining flats. This view is fortified by the decision of Mumbai Bench of ITAT in Haware Constructions Pvt. Ltd. (supra), Emgeen Holdings P. Ltd. (supra) and Arcade Bhoomi Enterprises (supra), etc., as discussed abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area in the alleged flats after the sale to the respective purchasers. The obvious reply is NO because the project of the assessee was completed on 28/03/2008 after examining the area of each flat of the project by the competent authority and only then the completion certificate was issued to the assessee. The case of the assessee is further fortified by the fact that the assessee started construction on 15/04/2002 and during second survey carried out in 2006, everything was found in order. It can be said the basic structure of the flats must have been completed or at least the base should have been completed above plinth area, on which the further construction would have been made. There is no allegation by the survey team (during first survey in 2006) that the assessee was not constructing as per the approved plan. The completion certificate was issued by the competent authority after examining whether the assessee has fulfilled the conditions stipulated in the Act and also whether construction has been completed as per the sanctioned plan dated 15/04/2002. If, at the later stage, the allottees/occupants of the flats makes any addition, the assessee cannot be held liable for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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