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2016 (1) TMI 173 - ITAT DELHI

2016 (1) TMI 173 - ITAT DELHI - TMI - Validity of claim of deduction under sec. 80IB (10) - non fulfilment of 46 clause(c) of section 80IB (l0) of I.T. Act, 1961 that some of the residential units do not confirm to the requirements of built up area i.e. 1500 sq. ft. - Held that:- In this project also for no. of eligible Towers are 24 where each residential unit is having constructed area less than 1500 sq. ft. as per the requirement of clause (c) of section 80IB (l0), where as ineligible no. of .....

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on facilities. Ld. AR has relied upon various Judicial pronouncements on similar lines as in Omaxe Green Land, Sector 93B, Noida. As considered entire facts & circumstances of the case. Present eligible projects is similar to Omaxe Green Land project. Therefore, treat the eligible projects as a separate housing project on similar lines of Noida project.

Commercial area of entire housing scheme is more than permissible limit as per clause (d) of Section 80IB(10) - CIT(Appeals) did not .....

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housing projects and, therefore, deduction under sec. 80IB (10) is available. The further contention of the assessee that the commercial area is not developed and right to develop the same is transferred to other company and the said transfer is duly intimated to the local authority and that a transfer is not a mere book entry as claimed by the Assessing Officer was kept open by him in view of his above findings and treating the same as not relevant. We are agreeable to this finding of the Lear .....

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PER I.C. SUDHIR: JUDICIAL MEMBER Assessment year: 2008-09: In the case of Omaxe Ltd., the parties are in cross appeals against the common First Appellate Order. The grounds are revolving on the issue of validity of claimed deduction under sec. 80IB (10) of the Income-tax Act, 1961. 2. We have heard and considered the arguments advanced by the parties, orders of the authorities below and the material available on the record in view of the decisions relied upon. 3. The assessee is a public limite .....

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In the assessment completed vide order dated 31st December, 2010 under section 143(3) of the Act, the assessing officer assessed the income of the assessee at ₹ 454,03,62,210 against income of ₹ 265,77,67,830 declared by it. In the assessment order, the assessing officer denied the aforesaid deduction claimed under section 80IB(10) of the Act to the extent of ₹ 188,25,94,379. 5. In the first appeal, the learned CIT(A) allowed partial relief in respect of claim u/s 80IB(10) allo .....

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. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in allowing deduction u/s. 10IB(10) of the Income-tax Act, 1961 in respect of profits from housing projects which are Group housing schemes of multistoried flats in the projects namely Omaxe Heights, Faridabad, Omaxe Heights, Badadurgarh, Omaxe Heights, Sonepat, Omaxe Parkwood, Baddi and Omaxe Reviera, Pant Nagar. 2. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in hold .....

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ea is not part of Group housing projects of housing projects namely Omaxe Heights Faridabad, Omaxe Heights, Bahadurgarh, Omaxe Heights, Sonepat, Omaxe Parkwood, Baddi and Omaxe Reviera, Pant Nagar. 4. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the commercial area of housing projects namely Omaxe Heights, Faridabad, Omaxe Heights, Bahadurgarh, Omaxe Heights, Sonepat, Omaxe Parkwood, Baddi and Omaxe Reviera, Panat Nagar which, though, exce .....

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ase, the Learned CIT(Appeals) has erred in allowing deduction u/s. 10IB(10) of the Income-tax Act, 1961 on profits from the sale of villas included in the projects namely Omaxe City, Sonepat, Omaxe City, Lucknow, Omaxe City, Jaipur and Omaxe City, Palwal. 7. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the plots and villas included in the projects namely Omaxe City, Sonepat Omaxe City, Lucknow, Omaxe City, Jaipur and Omaxe City, Palwal are .....

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of commercial area in the projects namely Omaxe City, Sonepat Omaxe City, Lucknow, Omaxe City, Jaipur and Omaxe City, Palwal, to the group companies was not a mere book entry. 10. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the project Omaxe Heights, Sonepat and plots and villas included in Omaxe City, Sonepat as district housing projects, when the assessee himself has considered the projects Omaxe City, Sonepat which contains plots and .....

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g the action of the Learned Assessing Officer in disallowing the deduction under sec. 80IB(10) of the Income-tax Act, 1961 (the Act) claimed by the appellant in respect of following eligible housing projects. Name of the project Deduction claimed and disallowed under sec. 80IB(10) in Rs. Omaxe City, Rohtak 1,91,34,660 Omaxe Parkswood II, Chakkan Baddi 2,26,45,075 Omaxe City Mayakheri, Indore 6,86,87,350 Omaxe City-II, Mangaliya, Indore 19,17,82,533 PDA Omaxe City Patiala 48,82,09,699 By holding .....

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sec. 80IB(10) in Rs. Omaxe City, Lucknow 13,54,30,598 Omaxe City, Jaipur 8,39,27,677 Omaxe City, Palwal 46,86,6233 By holding that deduction u/s. 80IB(10) of the Act in respect of profits derived from that part of housing projects which consists of unbuilt housing sites cannot be allowed. (iii) Misinterpreted the provisions of sec. 80IB(10) by holdng that the conditions (a) and (c) of the aforesaid section regarding commencement of construction of the housing project and maximum built up area o .....

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in law in confirming charging interest under sec. 234B of the Act ont the revised income of the appellant. 8. The assessee is the developer of large scale housing projects. Some of the projects undertaken by the assessee are Group Housing projects consisting of Residential multi storied buildings and Convenient Shopping/ Commercial complexes. Some of the housing projects undertaken by the assessee are large scale townships consisting of group housing and independent residential units some of whi .....

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tial units having built up area within the prescribed limit and unbuilt residential units. Detailed project wise chart has been submitted during course of hearing. No deduction was claimed on commercial area of any project and residential units having built up area more than the prescribed limit. This fact is undisputed. 10. Departmental Appeal: The primary issue raised in the present case relates to the aforesaid projects undertaken by the assessee satisfying some of the conditions prescribed i .....

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hould not exceed the prescribed limit, whereas the consolidated projects consisted of commercial area more than the prescribed limit. It was alleged that Transfer of commercial area by the assessee was merely a book entry to circumvent the provisions of section 80IB(10). (iii) As per the Assessing Officer, fulfillment of various conditions for claiming deduction under section 80IB(10) of the Act have to be examined vis-à-vis the entire housing project as originally approved by the local a .....

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ion in respect of eligible housing projects having built up residential units within the prescribed limit on the basis of various judicial precedents that deduction can be allowed in respect of eligible portion of the housing project on a standalone basis, even if the project as a whole consists of residential units and commercial area having built up area more than the prescribed limit. Department is in appeal before us against the order of learned CIT(A) to the extent of relief allowed to the .....

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lding that deduction under sec. 80IB(10), provided to a project and if there is violation of condition in any of the residential units no deduction under sec. 80IB(10) can be allowed to the assessee . Similar view has been expressed by the ITAT, Chennai Bench in the case of ACIT vs. Viswas Promoters Pvt. Ltd. in ITA No. 1912/MDS/2007 (A.Y. 2004-05) order dated 13.10.2008. The learned CIT(DR) also cited the decision of Hon ble Supreme Court in the case of Padmasundara Reassessment order & Ors .....

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rities below and the decisions cited there. He submitted that in the case of the assessee, various township projects were undertaken on large plots with size varying from 10 acres to 329 acres. Having regard to the fact that the size of the plots were very large, merely as a matter of administrative convenience, the assessee filed consolidated application with the local authority for approval of the township project. Accordingly, the consolidated application was considered and approved by the lo .....

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ority. Such eligible projects have clearly demarcated the area/ layout in the approved plans and one can easily separate the eligible part therein; (b) separate books of account are maintained and profits of the eligible housing project are identifiable and can easily be deduced from such books of account as being maintained by the appellant; (c) eligible housing project satisfies all the conditions prescribed in section 80IB(10) of the Act; (d) separate occupation certificates are received for .....

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e license granted by the local authority and examine the satisfaction of conditions with reference to the entire project as approved. It may be appreciated that where the developer proposes to develop a township on a large plot of land, consolidated application is filed with the local authority for approval of the housing project, merely as a matter of administrative convenience. It is also open to the assessee to apply for approval of the housing project on part of the plot of land, rather than .....

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ible housing project, which independently and separately satisfies the various conditions for claiming deduction under section 80IB(10) of the Act or not. If any part of the consolidated project consists of eligible independent/ separate housing project, which satisfies all the conditions of that section, there is, no reason to deny deduction in respect of the profits derived from such eligible housing project. Further, the commercial area, also, did not form part of the eligible housing project .....

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actually transferred the commercial area to other companies is supported by the following documents: (i) MOU entered into between the assessee and transferee company(ies) for transfer of commercial area; (ii) Intimation filed before the DTCP/ other regulatory authorities intimating transfer of commercial area. It may be pertinent to mention here in cases where commercial area was transferred in the financial year 2008-09, intimation was given to the regulatory authorities in March, 2009, much pr .....

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Completion certificates in respect of the commercial area forming part of some of the projects were issued by the local authority in the name of the transferee company(ies). (vii) In the revised map/ layout plans of some of the projects approved by the local authority, commercial area is clearly demarcated in the name of the transferee company(ies). : 12.2 The aforesaid documentary evidences, the Learned AR submitted, clearly establish beyond any reasonable doubt that the commercial area was tr .....

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ircumvent provisions of section 80IB(1) of the Act. 12.3 The Learned AR further reiterated that the assessing officer failed to appreciate that commercial area, in any case, was not at all claimed by the assessee to be part of the eligible housing project in respect of which deduction was claimed. The assessing officer had proceeded on the ground that the entire housing project has to be seen with reference to the consolidated approval granted by the local authority and, therefore, the commercia .....

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respect of profits of the eligible housing project. 12.4 In view of the aforesaid, it was submitted by the Learned AR that the assessing officer totally misconstrued the provisions of section 80IB(10) of the Act to hold that if the consolidated project does not satisfy all the conditions prescribed in the said section, then no deduction is admissible even in respect of profits derived from eligible housing projects forming part of the consolidated project. 12.5 The Learned AR placed reliance on .....

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duction claimed under section 80IB(10) of the Act (Tribunal order was relied upon by the Assessing Officer while denying deduction). The following questions were referred for consideration before the Hon ble Court (i) Whether on the facts and circumstances of the case, the Appellate Tribunal is right in denying under Section 80IB(10) in respect of project Agrini and Vajra for flats less than 1500 sq.ft. on proportionate basis? (ii) Whether on the facts and circumstances of the case, the Appellat .....

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00 sq.ft., and the relevant built-up area requirement is specified under Section 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the entire claim of the assessee in respect of these two .....

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ed the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the assessee in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court reported in [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is .....

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cks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court reported in [2012] 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee s case before us…. It will, thus, kindly be observed from the above discussion, that Hon ble Chennai High Court has eve .....

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On behalf of the Revenue, it was contended that there is no provision for pro-rata deduction, as under: 10. As regards the claim of proportionate relief, learned standing counsel pointed out that if the law contemplated proportionate relief to be granted on a partial compliance, the Section itself would have provided for such a situation. However, in the absence of any such contemplation stated so in clear terms under Section 80IB of Act, it is not open to the Tribunal to dilute the said Sectio .....

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little complicated when 100% residential housing project has built-up area of mixed nature. While few of the units may satisfy the criteria of the built-up area of less than 1500 sq.ft., there may be units which have built-up area crossing the limit as specified in clause (c) of Section 80-IB(10) of the Act. In such an event, on a reading of the provision, we hold that the assessee would not be entitled to have the benefit of 100% absolute deduction under Section 80-IB(10) of the Act in respect .....

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ng the built-up area exceeding the condition specified under clause (c), the claim for deduction would stand rejected on the entire project. As pointed out in the decision of the Bombay High Court reported in [2011] 333 ITR 289 CIT v. BRAHMA ASSOCIATES, with zones classification permitting commercial establishment in residential flats too, once the local authorities approved the project with or without the commercial use as permitted under the Rules, the project approved is eligible for deductio .....

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t by way of negative condition to reject a claim where the housing projects have units with the built-up area exceeding the prescribed limit as well as within the limits. So too, in a case where the project contains commercial as well as residential area. (emphasis supplied) 12.6 Though the aforesaid decision relates to pre-amendment period, i.e. before insertion of clause (d) w.e.f. 01.04.2005, it is however pertinent to note that the Hon ble High Court after considering the amended law held th .....

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High Court considered the possibility of granting the proportionate relief on pro-rata basis to the extent of compliance of the provisions. It is no doubt true that the Section does not provide any such working. Yet, this being a deduction provision and there being no such indication that the conditions have to be cumulatively satisfied in the context of the meaning of a housing project to include residential-cum-commercial complex, we feel, in fairness to the claim of the assessee, the proporti .....

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ing minimum area of one acre and it is immaterial as to whether any other housing projects are existing on the said plot of land or not.. 12.7 In the aforesaid case, the project of the assessee consisted of buildings A, B, C, D and E, out of which only building E was eligible for deduction under section 80IB(10) of the Act. The assessing officer, however, denied deduction on the ground that the size of the plot in relation to Building E did not exceed the prescribed area of 1 acre and therefore, .....

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on cannot be denied on portion of the housing project, even though the eligible portion was construction on plot of land less than the prescribed area. 12.8 In case of Bengal Ambuja Housing Development Ltd., Kolkata Bench of the Tribunal similarly held as under: It is apparent from the perusal of s. 80-IB(10) that this section has been enacted with a view to provide incentive for businessmen to undertake construction of residential accommodation for smaller residential units and the deduction is .....

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have also noted down the fact that even the provision as laid down in s. 80-IB(10) does not speak regarding such denial of deduction in case of profit from a housing complex containing both the smaller and large residential units and since the assessee has only claimed deduction on account of smaller qualifying units by fulfilling all the conditions as laid down under s. 80-IB(10), the denial of claim by the assessee is on account of rather restricted and narrow interpretation of provisions of c .....

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eversing the order of AO. The aforesaid decision of the Tribunal has been upheld by the Hon ble, Calcutta High Court in IT Appeal No. 453 of 2006 wherein the Hon ble High Court vide order dated 5th Jan., 2007 held as under: The appeal is now taken up for hearing and after hearing the learned counsel for the parties and perusing the order passed by the Tribunal, we find that no substantial question of law is involved in this matter. Hence we dismiss the appeal. 12.9 The Special Bench of the Tribu .....

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was eligible for deduction; (iii) However, in case commercial area is 10% or more of the built up area, but residential segment on a standalone basis satisfies the conditions of section 80-IB(10) of the Act, then, deduction would be admissible in respect of residential segment of the project. 12.10 In further appeal preferred by the Revenue against the aforesaid decision of the Special Bench of the Tribunal, the Bombay High Court has partly affirmed the decision in CIT v. Brahma Associates: 333 .....

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of the Tribunals, in the aforesaid circumstances was approved. It will, thus, kindly be appreciated that the Hon ble High Court did not agree with the Tribunal in imposing 10% limit to the commercial area. The legal position that emerges from the aforesaid decisions is that: (a) Prior to assessment year 2005-06, entire profits from the approved housing project was eligible for deduction under section 80IB(10) of the Act, irrespective of the commercial area; (b) From assessment year 2005-06, pro .....

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esaid, the Third Member of the Tribunal in the case of Sanghvi & Doshi Enterprise v. ITO: 131 ITD 151 (Chennai) ™ held that the assessee was entitled to pro-rata deduction under section 80IB(10) of the Act in respect of flats having built up area not exceeding 1500 sq ft and not entitled to deduction in respect of those flats having built up area exceeding 1500 sq.ft. On further appeal by Revenue to the Hon ble High Court, decision of the Tribunal has been affirmed. 12.12 In case of An .....

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as under: For the above reasons, we are of the view that no substantial question of law arises for our consideration in ITA Nos.485/2010 & 480/2010. The orders of the Tribunal are accordingly upheld and the appeals filed by the Revenue are dismissed. 12.13 Pro-rata deduction has similarly been held allowable in the following decisions: - Brigade Enterprises (P) Ltd.: [2009] 28-SOT-7 (Bang.) - ITO v. AIR Developers: [2010] 122 ITD 125 (Nag) - G.V. Corporation V. ITO: [2010] 38 SOT 174 (Mum.) .....

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(10) of the Act. 12.15 The Learned AR submitted further that once pro-rata deduction has been held to be admissible in respect of eligible area of the project, the location of the eligible residential units, within the larger housing project, is irrelevant. Being so, irrespective of the fact that some of the eligible units are located in the same tower or building or vicinity or are located at distant location, but is part of the larger approved housing project, pro-rata deduction is admissible .....

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ve cited decisions. Para Nos. 5 to 5.3 of the First Appellate Order are relevant which deal with the issues raised in the grounds of the appeal before us. For ready reference, these paragraphs are being reproduced hereunder: 5. FINDINGS: I have considered the assessment order, written submission, argument of Ld. AR and various Judicial pronouncements on the issue. The appellant company during the year under consideration has claimed deduction u/s .80IB (10) of 1. T. Act on percentage completion .....

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-storeyed residential tower during the year, the appellant has following projects :- 1. Omaxe Heights, Faridabad 2. Omaxe Heights, Bahadurgarh 3. Omaxe Heights, Sonepat 4. Omaxe Parkwocd. Baddi 5.Omaxe Reviera, Pant Nagai In all the above projects, there are various residential towers. Out of the above five projects, projects at Sr. No. 2,3,4 i.e. Bahadurgarh, Sonepat & Baddi all the residential towers have residential units satisfying the criteria of constructed maximum built up area of 100 .....

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al authority. The assessing officer has denied the deduction on one of the ground that since some of residential towers have residential units more than constructed area of 1000 sq. ft. or 1500 sq. ft. as the case may be, therefore conditions contained in clause (c) is violated as there is consolidated approval from local Authority. Therefore, the assessing officer has treated entire project as one housing project & has held that the condition contained in clause (c) is not fulfilled. Second .....

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ated approval of Local Authority. He argued that these towers which are separate housing projects are in demarcated area, and having all amenities such as separate green area, separate road etc. and stand on there own. These towers have different section plan for its residential units, separate completion certificate. Therefore, these towers are satisfying all the criteria of Section 80lB Cl 0) separately. The fulfilment of criteria of clause (b) & (c) are as under :- Ld. AR argued that thes .....

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parate section plan approval & completion certificate. These eligible housing projects are having separate road, separate green area & other amenities. All the residential projects are spread over vast area of Land. Therefore, I hold that these residential towers of each project are separate housing projects. Ld. AR argued that Judicial pronouncements are m favour of even allowing deduction on prorata basis in same Tower if some of the flats do not conform to the requirement of clause (c .....

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are separate, having separate infrastructure & does not have any residential unit which have constructed area in violation of clause (c) of section 80m (l0). Second issue raised for all the projects by the assessing officer is violation of clause (d) of Section 80m (l0). There has been amendment in clause (d) w.e.f. 01-04-2010. Prior to amendment the permissible commercial area in the housing project was five percent of the agreegate built up area of the housing project or two thousand sq. f .....

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view of Ld. AR that the amendment in clause (d) is clarificatory & apply retrospectively. The amendment has been made prospectively w.e.f 01-04-2010 & not retrospectively. If the purpose of amendment was clarificatory then it should have been made retrospectively as it is substantive provision. Accordingly I do not agree with arguments of Ld. AR on this issue. Second arguments of Ld. AR is that the development right of commercial area has been transferred to other companies. The transfer .....

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e entire facts and circumstances of the case. All five projects are developed on large area of Land. Though there is consolidated approval of local authority for the entire project, these housing projects are separately identifiable in consolidated map having separate green area, road & other amenities to stand on its own. There is no dependence of these housing projects on other parts of the consolidated projects. Section map of each residential unit in these towers are approved separately .....

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hese housing projects & claimed deduction on the profits of these housing project. The assessing officer has relied upon the decision of hon able ITA T Chennai, in the case of Vishwas promoters Pvt. Ltd. & chitra Construction Pvt. Ltd. cited supra where it has been held that if there is violation of any residential unit having constructed area more than 1000 sq. ft. or 1500 sq. as applicable, the conditions contained in section 80IB are net fulfilled. Ld. AR argued that hon able Chennai .....

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ion; hence had gone for planning approval by the competent planning authority. In the background of this, the question that arises/or consideration is as to whether the assessee would lose its claim: for deduction in respect of those blocks which satisfied the conditions under Section 80lE (la) of the Act by reason of some of the stocks not satisfying the condition under Section 80lE (la) of the Act. 14. On the facts admitted by the Revenue in the projects Agrini and Vajra there are number of fl .....

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e assessee in respect of these two projects would stand rejected under Section 80lE (la) of the Income Tax Act. Thus, going by the definition of housing project under Explanation to Section 80HHBA of the ACT as referred to above as the construction of any building and the wordings in Section 80lB (la) of the Act. the question of rejection in entirety of the project on account of anyone of the blocks not complying with the condition: does not arise. Even in the case .J.l each one of the blocks, w .....

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nd 1349 of2007 dated 10-10-2012, we hold that the assessee is entitled 10 succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression housing project as referring to construction of any building and the wordings in Section 80IB (10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1 500 sq. ft. per se, would not result in nullifying the claim of the assessee for .....

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clearly reveals that hon able High Court has taken and interpreted the definition of housing project u/s 80HHA to arrived at the concept of composite housing project which has eligible & ineligible units in the project for the purpose of Section 80IB (10) for eligible units on proportion basis. The assessing officer has relied on the Judgement of honable Mumbai High Court in the case Brahma Associates (citied supra). Ld. AR argued that the said judgment was delivered in the context of comme .....

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Ltd. in ITA No. 453 of 2006. Ld. AR further has relied on numerous decisions of honable IT AT in assessees favour holding that prorata deduction is available with respect to residential unit which satisfies the requirement of maximum constructed area where the other residential units violates the maximum built up area that the appellant s case is on much better footings where these eligible residential houses are identifiable cluster of Towers, having separate identified Land & Various faci .....

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d that these housing project is separate entities, the commercial area is not part of such eligible housing project violation of condition contained in clause (d) will not come in the way of allowing deduction u/s 80IB (10). Considering all the facts & circumstances of the case & Judicial pronouncements, I hereby allow the deduction u/s. 80IB (10) to the extent of Profits from such eligible housing projects which are Group housing scheme of multistoried flats. 5.1.3 Another issue of disa .....

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econdly commercial area in the said project exceeds the limit prescribed in clause (d) of Section 80B (10). 5.2 All the nine projects numerated above has been approved as plotted housing colony. It was ascertained during the appellate proceeding that the appellant has in some colony only sold the residential plot & in some colony it sold residential plot as well as villas after the construction on the plot. In all the projects, there are commercial area. The assessing officer has denied dedu .....

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ings, Ld. AR has segrated the projects where only plot were sold & where the appellant has sold both plot & villas. 5.2.2 In following projects, the appellant has sold only residential plots without construction of residential units. 1. Omaxe City, Rohtak 2. Omaxe Parkwood II, chakkan Baddi. 3. Omaxe City-II, Mangaliya, Indore 4. Omaxe City, Mayakheri, Indore 5. PDA Omaxe City, Patiala 5.2.3 In following projects, the appellant has sold residential plots as well as villas. 1. Omaxe City, .....

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ted Supra. In that case the issue was whether there was approval of local authority. Facts of the case is as under :- Now if we see sub-section (lO) of section 80-IB, it specifies approval by a local authority and who or what is such local authority is not defined anywhere. We cannot say that a Village Administrative Officer or a Deputy Director of Town Planning is not a local authority. Hence the question now boils down to whether the approval obtained by the assessee }vas for a housing project .....

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sanction for building from local panchayat. Pursuant to this, the individual owners to whom plots were given had obtained sanction for constructing the units, and constr uctions carried out by the assessee. The approved layout placed at paper book page J 3, shows the bifurcation of/he site to various plots, areas earmarked for shops and houses. All these would lead to an irresistible conclusion that the project had the approval of a local authority. and each individual house ,vere only part of a .....

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w the conditions contained in Section 80IB (10) will be fulfilled. Condition contained in clause (a) i.e. talks about commencement of construction of housing project. Similarly clause (c) specifically refers to ceiling of maximum built up area of a residential unit. If there is no construction, only plot is allotted. how conditions relating to construction of Section 80IB are fulfilled. Considering these facts and circumstances, I am of the strong view that deduction uls 80IB in respect of sale .....

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ruction area is less than the prescribed limit as per condition c of section 80IB (10). The Ld. AR has argued that the appellant has taken approval for each residential units for its sectioned construction plan and completion certificate for each villas are separately issued in favour of the appellant. Therefore, Ld. AR argued that assessing officer s claim that the approval is for plotted colony & there is no approval of construction of residential units is not proper. The total constructed .....

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ity Palwal (Total area 102.46 acres) Plots Villas and G+2 Commercial 836 133 92.03 6.41 4.02 4. Omaxe City Jaipur (Total area 342.66 acres) Plots Villas GH Commercial 1952 487 Ld. AR argued that though there is a consolidated approval for colony. the area _ for plots and villas are specifically marked & satisfies the conditions of Section 80IB. These plots & villas constitute together a housing project which stand on their own. This housing project is demarcated from commercial area. I a .....

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constructed villas. Ld. AR has relied upon various Judicial pronouncement. I have considered the plea of Ld. A & has given the findings after analyzing Judicial pronouncements that on pro-rata basis, deduction is allowable for eligible housing projects in earlier parts of this order. The facts are similar i.e. constructed villas constitutes eligible housing projects & pro-rata deduction is allowable. Ld. AR specially argued that pro-rata deduction was allowed u/s 80IB (l0) in the case o .....

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area is three percent of the aggregate built up area of the housing project or five thousand sq. ft. whichever is higher. On factual aspect Ld. AR has argued that total commercial area in entire project is not conforming to the condition prior to 01-C4-201O, but conforms to the condition in clause (d) after 01-04- 2010. However, he h •. -s argued, that amendment w.e.f. 01-04-2010 is curative & clarificatory. I do not agree with the view of Ld. AR that the amendment in clause (d) is c1a .....

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ciation & is duly intimated to local Authority which has recognized the same. Ld. AR argued that as commercial area was transferred, there it proves that the said commercial area was a separate unit & hence clause (d) of Section 80IB (10) will not come as obstacle in providing deduction. 5:2.7 After considering the entire facts & circumstances of the case, I direct the assessing officer to allow profit on the villas whose constructed area is less than the prescribed limit as per cond .....

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by the assessee in respect of following housing projects under sec. 80IB(10) of the Income-tax Act, 1961 (the Act ). Name of the Project Amount (Rs.) Omaxe Heights, Sonepat 3,54,67,703 Omaxe City, Sonepat Omaxe Heights, Faridabad 7,85,67,605 Omaxe City, Lucknow 16,55,75,848 Omaxe City, Jaipur 13,50,33,053 Omaxe City, Rohtak 1,91,34,660 Omaxe Heights, Bahadurgarh 16,59,89,596 Omaxe City, Palwal 84,48,158 Omaxe Parkwood-I, Baddi 5,08,14,862 Omaxe Parkwood-II, Chakkan Baddi 2,26,45,075 Omaxe City, .....

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ection 80IB(10) of the Act. The conditions laid down in clause (c) of the section is that the residential unit should have maximum built up area of 1500 sq. feets as the project is not located within 25 kilometers from the municipal limit of Delhi and 1000 sq. ft. where project falls in the said 25 kilometers. As per the Assessing Officer, this condition was not satisfied as the prescribed area was exceeding in some of the flats of the projects. The Assessing Officer was also of the view that th .....

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ity in the First Appellate Order in this regard as it is well supported by the decisions of Hon ble High Courts and different Benches of the ITAT followed by the Learned CIT(Appeals). The same is upheld. The ground Nos. 1 to 10 of the appeal preferred by the Revenue revolving on the issue of allowability of the claimed deduction by the assessee under sec. 80IB (10) of the Act on the profit arising out of the sale of the housing project approved by the local authorities are accordingly rejected. .....

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eal against the order of CIT(A) to the extent, as per Grounds of Appeal. 13.1 The submissions of the Learned AR in support of the above grounds (reproduced in Para No. 7) of the appeal preferred by the assessee are as under: (i) Deduction under section 80IB(10) of the Act is allowed to an assessee in respect of profit derived from a housing project approved by the local authority. In the present case, all the projects undertaken by the appellant, involving inter alia, development of plots, const .....

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ip; Explanation: (a) housing project means a project for- (i) the construction of any building, road, bridge or other structure in any part of India; (ii) the execution of such other work (of whatever nature) as may be prescribed; The assessee did undertake construction of roads, other structures like STP, water tanks, bridges etc. in its housing projects. It also undertook construction of residential houses/flats in the housing projects, albeit, in some cases, profits from the same were booked .....

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ts are as under: …………..There is no definition of housing project under Section 80IB(10) of the Act. This, however, does not pose any difficulty. For reading Section 80HHBA and Section 80IA, it is clear that Section 80IB is concerned about housing project namely, construction of any building other than what is contemplated as an infrastructure facility under Section 80IA. Thus when under the very same Chapter dealing with deduction, the expression housing project has a .....

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the purpose of understanding the said expression of housing project under Section 80-IB of the Act. 31. As seen already, housing project defined under Section 80HHBA refers not only building, but also road, bridge or other structure in any part of India………………………………………………….. ……………………………&he .....

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emorandum dt. 1st Jan., 2001 in which, inter alia amongst other matters, it was also requested that a suitable clarification be made to define the term housing project . Consequently, CBDT, Department of Revenue, addressed a reply under F. No. 205/3/ 2001/IT A-II dt. 4th May, 2001, giving the following clarification: 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 c .....

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ification by the CBDT is of no help to the case of the assessee for the reason that the Building Project of the assessee was not approved by the local authority namely KDMC as a Housing Project and was in fact approved as a residential as well as commercial project by them. Though the aforesaid case was decided against the assesse as his project was approved not as a housing project but as a residential and commercial project , but Hon ble ITAT has reached on this conclusion by placing reliance .....

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IB(10) of the Act. Further, the expression housing project , in the absence of any specific definition in section 80IB(10) ought to be give a wider/ purposive meaning/ interpretation, similar to the one given in Explanation to section 80HHBA of the Act. (iii) Construction/ development of housing sites, constitutes development of the housing project, which is the heart and soul of allowance of deduction under section 80IB(10) of the Act. Further, in the absence of any specific bar in section 80IB .....

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a housing project involves various activities for providing housing facility, which primarily involves creation of infrastructure for housing, as has, undisputedly, been done by the assessee. (v) Ld. CIT(A) has totally misconstrued the expression development and construction of housing project in section 80IB(10) of the Act in an extremely narrow sense to development and construction of residential unit which, is neither legally unsustainable nor does the same accord with the legislative intent. .....

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on; on the contrary, the aforesaid condition only provides maximum built-up area of 1,000/ 1,500 sq. ft.; there is, however, no condition/ stipulation regarding the minimum built up area. (vi) It was admitted by the Learned AR that both development and construction of the housing project are preconditions for claiming deduction under section 80IB(10). However Ld. CIT(A) has interpreted this provision in a very narrow manner. What is specified is development and construction of housing project an .....

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f basic amenities like community centre, schools, dispensary, crèches, playground etc. Provision for units reserved for economically weaker section Providing developed and demarcated housing sites in the residential township as per the approved lay out plan. (vii) The Learned AR submitted that various activities are involved in the development and construction of a housing project, of which construction of residential units is a very small part as compared to other activities, which may b .....

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ain conditions and approves layout plan as per norms prescribed in Development rules and regulations; - Once the project is approved, development and construction work is undertaken by the colonizer as under. - Land cleaning and leveling; - Demarcation of different constituents of the project such as roads, parks, residential, commercial, community, EWS, STP, etc.; - Provision of space for educational, medical, recreational and community sites; - Laying of water supply lines, drainage pipelines, .....

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. It is thereafter, up to the developer to either undertake to construct the residential units also thereon or sell the developed housing sites/ plots as it is for construction by the buyer, according to his individual requirement/ needs and the financial capacity. The critical part of the development/ construction of a residential colony, however, are creation of the basic infrastructure facilities, so as to make any plot of land fit for housing a residential colony. (viii) The intention of the .....

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(i) Creation of adequate housing stock both on rental and ownership basis. (ii) Facilitating accelerated supply of serviced land and housing with particular focus to EWS and LIG categories and taking into account the need for development of supporting infrastructure and basic services to all categories. (iii) Facilitate Upgradation of infrastructure of towns and cities and to make these comparable to the needs of the times. (iv) Ensuring that all dwelling units have easy accessibility to basic s .....

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oo has to be so construed so as to advance the objective of the provision and not to frustrate it [refer Bajaj Tempo Limited v. CIT 196 ITR 188 (SC), P.R. Prabhakar V. CIT: 284 ITR 548 (SC)]. 13.2 Without prejudice to the aforesaid submissions, the Learned AR submitted that one of the assessee s subsidiary companies, M/s Navratan Techbuild (P) Ltd had also claimed deduction in respect of its project u/s 80IB(10) consisting of mainly housing sites. Deduction in that case was also disallowed by th .....

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for profit derived from development of those residential colonies where houses are also built by the developer. 13.3 On further appeal, the Tribunal vide order dated 30.07.2013 affirmed the order passed by the learned CIT(A). It is of utmost importance to note that the Tribunal, in para 8 agreed that the approval had been granted for development of housing project. Still, however, the Tribunal held that deduction was not admissible in respect of profit on sale of developed plots as construction .....

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eld that the grant of permission with respect to the aforesaid project which would have made the assessee eligible for exemption, requires not only development of the residential plots, but also construction of the plots, which was admittedly not done. Accordingly, in the opinion of the Hon ble High Court construction of residential plots or construction of some plots in later years would not qualify the assessee for exemption. The Hon ble Court further observed that the legal issues were clearl .....

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orities below on the above issues. 15. Considering the above submission, we fully concur with the orders of the authorities below that deduction under sec. 80IB(10) of the Act in respect of profits derived from the housing project consisting of unbuilt housing sites cannot be allowed. We also do not find reason to agree with the contention of the Learned AR that activity of mere developing housing site along with construction of all infra-structural facility and amenities with unbuilt residentia .....

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evious year relevant to any assessment year from such housing project if, - (a) Such undertaking has commenced or commences development and construction of the housing project on or after the Ist day of October, 1998 and completes such construction, - x x x x x x x x x x x x x x x x (b) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty five kilometers from the municipal limits o .....

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on. 16. The appeal of the assessee is accordingly dismissed. 17. The Revenue in the case of Omaxe Buildhome (P) Ltd. in its appeal bearing ITA No. 4031/Del/2013 for the assessment year 2008-09 has questioned First Appellate Order on the following grounds: 1. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in allowing deduction u/s. 80IB(10) of the Income-tax Act, 1961 amounting to ₹ 24,92,55,574 in respect of profits derived from group housing scheme G .....

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lowing deduction u/s. 80IB(10) of the Income-tax Act, 1961 amounting to ₹ 16,82,15,090 in respect of profits derived from 24 towers in project Omaxe Palms, Greens, Sec. MU, Gr. Noida where each residential unit is having constructed area less than 1500 sq. ft. 4. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the 24 towers in project Omaxe Palms Greens, Sec. MU, Gr. Noida where each residential unit is having constructed area less than .....

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tion u/s. 80IB(10) of the Incometax Act, 1961. The order of the Learned CIT(Appeals) is erroneous and is not tenable on facts and in law. 18. The facts of the case are that the Assessing Officer had denied the deduction of ₹ 47,74,70,664 claimed by the assessee in respect of the following housing project under sec. 80IB(10) of the Act: Name of the Project Amount (Rs.) Omaxe Grandwoods, Sector 93B, Noida. 24,92,55,574 Omaxe Palm Greens Sector MU, Greater Noida 16,82,15,090 Total 41,74,70,66 .....

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e allowed under sec. 80IB(10) of the Act. The Learned CIT(Appeals) has allowed the claimed deduction on proportionate basis on the residential units not exceeding the prescribed area. The Revenue has questioned this action of the Learned CIT(Appeals) in ground Nos. 1 and 2 before the ITAT. 18.2 The Assessing Officer also denied the deduction claimed by the assessee under sec. 80IB(10) of the Act in respect of group housing project Omaxe Palm Greens , Sector-MU, Greater Noida holding that the con .....

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fact that blocks/pockets consisting of residential unit having a built-up area within the limit prescribed under sec. 80IB(10) forms an independent, distinct and separate project which satisfies all the conditions laid down in sec. 80IB(10) of the Act on standalone basis. The Assessing Officer also held that proportionate deduction cannot be allowed under sec. 80IB(10) of the Act. The Learned CIT(Appeals) has allowed the claimed deduction on those residential units complying the conditions laid .....

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her which is regarding allowability of deduction under sec. 80IB(10) of the Act in respect of profit derived from Group Housing Scheme GH-03 in Housing Project, Omexe Grand Woods, Sector 93B, Noida and as to whether the group housing scheme GH-03 in housing project, Omexe Grandwood, Sector-93, Noida constitutes a separate housing project despite a single approval by the competent authority in respect of group housing scheme GH-01, GH-02 and GH-03 . 20.1 We have already discussed the related fact .....

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T-12 to T-25 are under group housing schemes 01 and 02 namely GH-01 and GH-02, having bigger flats. The assessee company had maintained separate books of accounts for GH-01, GH-02 and GH-03 claimed deduction under sec. 80IB in respect of profits derived from GH-03. These are undisputed facts by the Assessing Officer. 20.2 The objection of the Assessing Officer against the claimed deduction of the assessee relating to profit derived from group housing scheme GH-03 remained that entire project, na .....

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-03 and in support, master plan, allotment of Noida dated 03.10.2006 were furnished. The Learned CIT(Appeals) meeting out the objections raised by the Assessing Officer and those explained by the assessee has come to the following findings: 4.8 Findings: I have considered the assessment order, written submission and arguments of Ld. AR. The assessing officer s main basis of disallowing deduction U/S 80IB (10) is the non fulfilment of condition (c) of Section 801B (l0) which is basically that eac .....

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was revised to 14 towers T-12 to T-25 are under Group Housing Scheme 01 & 02 namely GH-O 1 & GH-02, having bigger flats. The appellant company has maintained separate Books of accounts for GH-Ol, GH-02 & OH-03 claimed deduction uls. 80IB in respect of profit derived from GH-03. These facts are not disputed by the assessing officer. The basic issued raised by the assessing officer is that entire projects namely Omaxe Greenwood consisting of 33 Towers is a single housing projects & .....

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ically approval of the Local authority. That being the case, this approval recognizes separate Group Housing schemes namely GH-OI, GH-02 & OH-03. Ld. AR has drawn my attention to the master plan which reveals that there is separate identifiable plot for group housing GH-OI, GH-02 & OH-03 separated by road. Each Group housing Scheme has its own green field & other separate amenities. Section plan for 2 bed room & bigger flats for different group housing schemes are different & .....

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0IB (l0), and conditions contained in section 80IB have to satisfied separately for this project. It may be mentioned here that the local authority at the time of allotment of Land has already envisaged three types of housing schemes, GH-01, GH-02 & GH-03 on vast area of Land admeasuring 119020.12 square meters (29.41 acres) out of which Land measuring 8.4 acres is relatable to GH-03. Therefore, local authority has given a consolidated allotment order 3 Separate housing schemes namely GH-Ol, .....

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s promoters Pvt. Ltd. & Chitra Construction Pvt. Ltd. cited supra where it has been held that if there is violation of any residential unit having constructed area more than 1000 sq. ft. or 1500 sq. as applicable, the conditions contained in section 80IB are not fulfilled. Ld. AR argued that Hon ble Chennai High Court in case of Vishwas promoters Pvt. Ltd. cited supra has reversed the decision of Hon ble ITAT, Chennai. The relevant portion of Judgement is reproduced as under :- 11. It is an .....

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e its claim for deduction in respect of those blocks which satisfied the conditions under Section BOIB (] 0) of the Act by reason of some of the stocks not satisfying the condition under Section BOIB (10) of the Act. 14. On the facts admitted by the Revenue in the projects Agrini and Vajra there are number of flats which are below 1500 sq. ft. and the relevant built-up area requirement is specified under Section BOIB (IO)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in .....

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of the Act as referred to above as the construction of any building and the wordings in Section 80lB (10) of the Act, the question of rejection in entirety of the project on account of anyone of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80lB (lO)(c) of the Act, we have already upheld the case of the assessee in TiC, Nos. 1348 and .....

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ousing project as referring to construction of any building and the wordings in Section 80lB (10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq. ft. per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Sectio .....

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le units in the project for the purpose of Section 80IB (10) for eligible units on proportion basis. The assessing officer has relied on the Judgement of Hon ble Mumbai High Court in the case Brahma Associates (citied supra). Ld. AR argued that the said judgment was delivered in the context of commercial area & argued that the said judgment has been considered by Hon ble Madaras High Court in the case of Vishwas Promoters Pvt. Ltd. and after analyzing the Judgement of Mumbai High Court, Madr .....

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atisfies the requirement of maximum constructed area where the other residential units violates the maximum built up area that the appellant s case is on much better footings where these eligible residential houses are identifiable cluster of Towers, having separate identified Land & Various facilities. These residential towers do not contain even a single residential unit which violates the maximum constructed area norm. Further, Ld. AR has argued the findings of surveys narrated by the ass .....

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e housing project satisfying the condition of Section 80IB (l0). Accordingly I direct the assessing officer to delete the addition. This ground of appeal is hereby allowed . 20.3 On perusal of orders of the authorities below, we find that before the first appellate authority, the assessee has been able to meet out the objections raised by the Assessing Officer against the claimed deduction under sec. 80IB(10) of the Act on the profits derived from group housing scheme GH-03 and in coming to the .....

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ng schemes, namely, GH-01, GH-02 and GH-03 and as per master plan, there was separate identifiable plots for group housing GH-01, GH-02 and GH-03 separated by roads. Each group housing scheme was having its own green field and other separate amenities. Sanctioned plan for two bed rooms and bigger flats for different housing schemes were different and approved separately. The assessee has been able to submit a letter from Noida that towers of GH-03 was constructed on separate piece of land which .....

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available with respect to residential unit which satisfied the requirement of maximum constructed area. It has not been disputed in the present case that these eligible residential houses were identifiable cluster of towers, having separate identified land and various facilities. We thus do not find reason to interfere with the first appellate authority. In this regard, the same is upheld. Ground Nos. 1 and 2 are accordingly rejected. 21. Ground Nos. 3 to 5: It is regarding eligibility of deduct .....

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0 under sec. 80IB(10) of the Act. 22. The learned CIT(DR) has placed reliance on the assessment order. He contended that the 24th tower in project Omaxe Palm Greens, Sec. MU, Greater Noida having residential unit with constructed area less than 1500 sq. fts. are not separate housing project as a single approval by the competent authority has been given for the entire project. He contended that the Learned CIT(Appeals) was also not justified in holding that the commercial area of 4004.24 sq. mtr. .....

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ould be given in respect of the residential units having built up area of less than 1500 sq. fts. 23.1 Considering the above submission, we find that the Assessing Officer had denied the claimed deduction under sec. 80IB(10) of the Act to the extent of ₹ 16,82,15,090 in the project Omaxe Palm Green , Sector MU, Greater Noida on the basis that claim of the assessee that it had carried out two projects on the plot of land and cannot be accepted as the lease deed dated 26.3.2007 between the a .....

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duction only in respect of the flats showing built up area of less than the maximum permissible limit. The Assessing Officer observed that the lease deed dated 26.3.2007 between Greater Noida Industrial Development Authority and the assessee in respect of the said plot is with reference to Project and not Projects . The Assessing Officer noted further that the commercial area included in the project is 404.24 sq. mtr. which is much more than the prescribed limit. The assessee tried to meet out a .....

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weet will. He held that the approved commercial area is on integral part of the entire project. Meeting out objections raised by the Assessing Officer and explanation thereto provided by the assessee, the Learned CIT(Appeals) has come to the following conclusion vide para No. 5.4 of his order: 5.4 Findings: I have considered entire facts & circumstances of the case. The assessing officer has raised two objection for satisfaction of conditions contained in Section 8OIB (l0) of LT. Act. The fi .....

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o. of towers are 11 spread over on 24.174 acres & these towers are separately Located and separated from other Towers. Hence these towers together is a separate housing projects spread over 25.83 acres of Land & Satisfying all the conditions of section 80IB (l0) separately. Though there is a common approval of entire 50 acres of Land consisting of eligible housing project along with commercial area on 24.174 acres of Land. Both eligible & non eligible projects are separate by road &a .....

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ible limit as per clause( d) of Section 80IB (l0). Ld. AR has firstly argued that the eligible projects is a separate housing projects, therefore, eligible for deduction u/s 80IB (l0). Alternatively, Ld. AR has tried to argue that the commercial area are within the limit of amended permissible area as per clause (d) of Section 80IB (l0) introduced by finance Act, 2010. Ld. AR has made argued that amendment in clause (d) of Section 80IB (l0) is only clarificatory as it would apply to project star .....

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uction u/s 80IB (10). However as I have held earlier that these eligible Towers are separate housing projects, therefore deduction u/s 80IB (10) is available. In view of the above, I allow deduction u/s 80IB (l0) in respect of profit of the eligible housing projects U/S 80IB (l0). I, accordingly allow the deduction U/S 80IB (l0) on the project. As a result, this ground of appeal is allowed . 23.2 On perusal of the orders of the authorities below, we find that the Learned CIT(Appeals) has rightly .....

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of entire housing scheme is more than permissible limit as per clause (d) of Section 80IB(10) is concerned, the Learned CIT(Appeals) did not agree with the assessee that the commercial area are within the limit of amended permissible area as per clause D of section 80IB(10) introduced by Finance Act, 2010 as clarificatory in nature as it would apply to the project started before 31.3.2008. We concur with this finding of the Learned CIT(Appeals) that amendment in the said clause (d) is not clarif .....

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fficer was kept open by him in view of his above findings and treating the same as not relevant. We are agreeable to this finding of the Learned CIT(Appeals) especially when the assessee was found eligible to claim deduction under sec. 80IB(10) of the Act on the projects having residential units constructed within the prescribed limit of 1500 sq. fts. The same is upheld. The ground Nos. 3 to 5 are accordingly rejected. 24. In result, the appeal preferred by the Revenue is dismissed. 25. In the a .....

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U, Greater Noida having each residential unit constructed area less than 1500 sq. fts. are separate housing projects (Ground Nos. 3 & 4). For a ready reference, the grounds of the appeal for the assessment year 2007-08 are being reproduced hereunder: 1. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the project GH-03 constitute a separate housing project. 2. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has .....

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the Learned CIT(Appeals) has erred in allowing deduction u/s. 80IB(10) of the Income-tax Act, 1961 amounting to ₹ 41,18,93,907 in respect of income arising from 24 towers in project Omaxe Palms Greens, Plot No. GH-02, Sec. MU, Gr. Noida where each residential unit is having constructed area less than 1500 sq. ft. 26. In the appeal for the assessment year 2009-10, the Revenue has raised only one issue i.e. allowability of deduction under sec. 80IB(10) in respect of profits derived from grou .....

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