TMI Blog2016 (1) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal:- 1] The learned CIT(A) erred in denying the deduction u/s 80 IB(10) in respect of the profits derived from housing projects - DSK Sundarban and DSK Vishwa Phase-V Meghmalhar Phase-I without appreciating that all the conditions laid down u/s 80IB(10) were complied by the assessee and hence, there was no reason to deny the deduction u/s 80IB(10) in respect of profits derived from the above referred projects. 2] The learned CIT(A) erred in holding that the appellant was not entitled to claim deduction u/s 80IB(10) of ₹ 99,67,125/- in respect of the profits derived from the housing project - DSK Sundarban on the ground that the commercial area in the said project exceeded the limit prescribed in section 80IB(10) and therefore, the deduction was not available to the appellant. 2.1] The learned CIT(A) erred in holding that - a. As there was a consolidated approval and common layout plan in respect of the residential and amenity area, for the purposes of section 80IB(10), the project included both residential and commercial area and hence, the deduction was not available to the assessee. b. The area of commercial establishments in the form of Ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roportionate basis in respect of the part of the project complying with the conditions laid down in section 80IB(10). 8] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 3. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the order of Tribunal in assessee s own case relating to assessment years 2007-08 to 2009-10, wherein an identical issue as before the Tribunal was raised. The issue raised in the present appeal is against denial of deduction under section 80IB(10) of the Act. 4. Briefly, in the facts of the present case, the assessee had claimed the said deduction under section 80IB(10) of the Act in respect of various projects including DSK Sundarban and DSK Vishwa Phase-V Meghmalhar Phase - I. The Assessing Officer while completing assessment had denied the aforesaid deduction in the hands of assessee in respect of above two projects. In relation to the first project i.e. DSK Sundarban though the assessee had complied with all the conditions laid down under section 80IB(10) of the Act vis-a-vis the area of flats along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the assessee in this regard. According to him, the Collector had given sanction for development of plot 'A' which includes Amenity Space of 4904.01 sq. mtrs. According to revenue authorities, the Amenity Space is part of the project constructed by the assessee and therefore, the Assessing Officer has stated that the commercial area has exceeded the limit specified in section 80IB(10). The Assessing Officer refers to the master lay out wherein the Amenity Space was included in the same lay out. He also refers to the fact that the assessee has shown shops available in the project DSK Sundarban. Considering the above facts, the Assessing Officer has held that the commercial area included in the said project exceeded more than 2000 sq. ft. and therefore, the assessee was not entitled to claim deduction u/s 80IB(10). The CIT(A) has confirmed the order of the Assessing Officer. The CIT(A) refers to the order of the Collector, Pune granting N.A. permission. According to the CIT(A), the Collector has granted permission to the assessee to convert 47,323 sq. mtrs. out of the total land of 50525 sq. mtrs for non agricultural use. The CIT(A) has stated that the sanction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mts. Thus, the Building Plans of the residential and the Amenity Space are sanctioned separately. The CIT(A) s harpings on the permission of the Collector in order to justify that, the Collector had granted permission for use of land for residential and commercial purposes. This is not in dispute. The issue is that the permission of layout by the Collector is for the land admeasuring 47,323.09 sq. mtrs as stated above. It was a general permission granting non agricultural use for the land and the same could not be termed as a sanction for constructing housing project on the said land. The building plans were sanctioned separately for the residential and the amenity space. The building plan for the residential project wing A Sunderban is placed on pages 30 of the Paper Book. Similarly for sanctioned plans in respect of other wings for example wing H on plot A has been placed on pages 31 of the Paper Book filed by the assessee. The amenity space and residential project in plot A with wings A to H are separated by compound wall. 2.5.2 Considering the fact that the building plans were separately sanctioned, the assessee stated that the amenity space cannot be considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the claim on the ground that the commercial area in the said project exceeded 2000 sq. ft. In that case also, the Collector had sanctioned amenity space and had contended that the amenity space was an independent project. In appeal, the Tribunal after considering the facts has held that the building plan for amenity space was sanctioned separately and therefore, it constitutes an independent project and accordingly, the deduction was allowed by observing as under: 8.We have heard the rival submissions of the parties and perused the record. The main plank of the argument of the Ld. Counsel is that the amenities space cannot be equated with commercial space and even if assuming it is a commercial space but still as the assessee s project is sanctioned prior to 01-04-2005, the limitation put on the maximum commercial area in any housing project is not applicable to the assessee s project as the original lay out and buildings plan were first sanctioned on 14-06-2004. He submits that amenities building which is said to be commercial is an independent building and is built up on specific marked area of 1230 sq. mtrs. which is an independent plot carved out of the total area of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal layout and the building plan were sanctioned on 14-06-2004 even if the N.A. order of the plot is dated 16-09- 2003 (copy of the plan placed at Page Nos. 13 and 14 of the Compilation). As per the layout plan sanctioned on 14-06-2004, the total area of the plot is shown at 4100 Sq. Mtrs. and area under the amenity space 15% i.e. 615 Sq. Mtrs. It appears that subsequently the assessee sought the revision in the sanctioned layout and plan but the area of the plot was 4100 Sq. Mtrs. Till 01-04-2005 the assessee has not done anything on the plot. It appears that the assessee acquired the adjoining land and filed the further revised plan and layout for the approval to the local authority and the approval was given to the said plan on 05-08-2006. In the said layout the total area of the plot is shown at 8400 Sq. ft. (copy of the plan and layout is at Page Nos. 28 and 30 of Compilation). From this factual aspect, it can safely be concluded that in fact the plan sanctioned on 05-08-2006 is almost a new plan and it was not merely the revision of the existing plan, even though in the application to the local authority the assessee has stated revision of the plan and layout. In consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer. The assessee has also filed the copy of the sanctioned plan of the amenity building on the reserve space of 1230 Sq. Mtrs. which is place at Page No. 40 of the Compilation. We further find that for the construction of the building of the amenity space separate permission has been granted by the District Collector being competent local authority vide order dated 07-06-2008. If the building on the amenity space has been granted specific permission separately, in our opinion it partake the character of independent project and cannot be tagged with the assessee s other projects. The Ld. Counsel also submitted that not a single unit in the said building has been sold till today even though given on lease and no profit from the amenity building space is included in the eligible profit on which the deduction u/s. 80IB(10) has been claimed. The Ld. Counsel has relied on the plethora of the decisions on this limb of argument but in our opinion the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. Vandana Property 353 ITR 36 (Bom) is applicable to the facts of this case. We, accordingly, hold that the amenity building is an independent project itsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd issues arising before us are identical to the facts before the Tribunal and following the same parity of reasoning, we hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act in respect of DSK Sunderban. 9. Further, second issue raised before us is in respect of deduction claimed under section 80IB(10) of the Act of the housing project Meghmalhar Phase I. Under the said project, building plans were sanctioned for building Nos.A to W and row houses. The details of the building sanctioned as per the revised plan dated 15.10.2008 were as under:- Building Details Status A,B,G,H,I,J,O, P P + 1 Floor Not yet started and will not be complete before March 2011 C,D,E,F, K ,L,M,N,R,S,T,U, V,W (14 building) P + 7 Floors Completed and Completion Certificate given by Gram Panchayat Kirkitwadi dated 31.1.2011 22 Row Houses G + 1 Floor Not yet started and will not be completed before March 2011 10. The case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anctioned building plan which is not in dispute. The dispute is with regard to completion as per sanctioned plan. In this regard, we find that the term 'housing project' is not defined in the Income Tax Act but the Hon'ble Bombay High Court in the case of Vandana Properties [(2013) 353 ITR 36 (Bom)] has held that housing project would mean a building or a group of buildings. Secondly, Hon'ble High Court has held as under: The next argument of the Revenue is that to avail of the deduction under section 80-IB(10), the housing project must be on the size of a vacant plot of land which has minimum area of one acre. In the present case, there are five buildings (A, B, C, D and E) on a plot admeasuring 2.36 acres, hence, the proportionate area for each building would be less than one acre and, therefore, the benefit of section 80-IB(10) could not be granted in respect of the housing project consisting the E building. As rightly contended by the counsel for the assessee and the intervenors, section 80-IB(10)(b) specifies the size of the plot of land but not the size of the housing project. The size of the plot of land, as per section 80-IB(10), must have min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construing the provisions of section 80-IB(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. Apart from the above, the Central Board of Direct Taxes (CBDT) by its letter dated May 4, 2001, addressed to the Maharashtra Chamber of Housing Industry has stated thus : The undersigned is directed to refer to your letter No. MCHI : RSA : m : 388/19799/3, dated January 1, 2001, and to state that the additional housing project on existing housing project site can qualify as infrastructure facility under sections 10(23G) and 80-IB(10) provided it is taken up by a separate undertaking, having separate books of account, so as to ensure that correct profits can be ascertained for the purpose of section 80-IB and also to identify receipts and repayments of long-term finances under the provisions of section 10(23G), separately financing arrangements and also, if it separately fulfils 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 appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not defined in section 80-IB(10) of the Act, and, by referring to the definition of 'housing project' under Explanation to section 80HHBA of the Act observed that the expression 'housing project' under section 80-IB(10) of the Act refers to any 'building' other than 'road', 'bridge' or other structure. According to the ratio of Viswas Promoters Pvt. Ltd. (supra) each block in a larger project has to be taken as an independent building and hence a 'housing project' for the purpose of considering the claim of deduction u/s. 80-IB(10) of the Act. The ratio of Viswas Promoters Pvt. Ltd. (supra) supports the facts of the assessee case, wherein, the profits derived from parking + 7 buildings should be allowed as deduction u/s.80IB(10) of the Act. We also find that the ITAT Pune in the case of Runwal Multihousing Pvt. Ltd. [ITA No. 1015 - 1017/PN/11] wherein the Tribunal ha s held that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. Similar view has been taken by ITAT Mumbai in the case of Mudhit Gupta [51 DTR 217]. In view of above in the absence of any definition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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