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2016 (1) TMI 607 - ITAT PUNE

2016 (1) TMI 607 - ITAT PUNE - TMI - Deduction under section 80IB(10) - Held that:- The assessee had completed all the buildings, for which sanction was received for parking + seven floors and further all the conditions laid down under section 80IB(10) of the Act were complied with, then the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. The Assessing Officer is directed to compute the said deduction under section 80IB(10) of the Act in line with the directions .....

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t the Act ). 2. The assessee has raised the following grounds of 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 CI .....

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al 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 Amenity Space exceeded the maximum limit for commercial area prescribed under the provisions of section 80IB(10)(d) and hence, the deduction u/s 80IB(10) was not allowable in respect of the profits derived from the said housing project. 3] The learned CIT(A) failed t .....

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ly of the housing project- DSK Sundarban and therefore, there was no reason to deny the deduction u/s 80IB(10) of the Act in respect of the above project. 4] The learned CIT(A) erred in denying the deduction u/s 80IB(10) of ₹ 1,18,79,470/- in respect of the profits derived from the housing project - Meghmalhar Phase -1. 5] The learned CIT(A) erred in holding that the projects Meghmalhar Phase - I and Meghmalhar Phase - II were one integrated housing project and hence, since the assessee ha .....

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the assesse submits that the building nos. C,D,E,F, K,L,M,N,R,S,T,U,V and W comprising the Meghmalhar phase - I were constructed on a land area of more than 1 acre and since, these buildings independently satisfied all the conditions laid down u/s 80IB(10) of the Act, there was no reason to deny the deduction u/s 80IB(10) in respect of the profits derived from the above buildings. 7] Without prejudice to the above grounds, assuming without admitting that the assessee had not complied with the v .....

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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 .....

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that there was amenities space - I and amenities space - II on west side and east side respectively, measuring 4904.01 meters, which was an integral part of the plan sanctioned by the District Collector in respect of plot A . Since the amenities space - I and amenities space - II existed in the very lay out plan of the housing project DSK Sunderban and the said commercial space including shops were part and parcel of the said project, the Assessing Officer held the assessee to have violated the .....

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in assessee s own case in ITA Nos. 723 to 725/PN/2013 & 769 to 771/PN/2013 relating to assessment years 2007-08 to 2009-10 and vide order dated 31.07.2014, it was observed as under:- 2.5 After going through the rival submissions and material on record, we find that the issue before us is with regard to the claim u/s.80IB(10) of the Act in respect of DSK Sunderban. In this year, the assessee has claimed deduction u/s.80IB(10) of ₹ 3,51,55,308/- in respect of the profits derived from th .....

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see has been that it has constructed a residential project and the same is eligible for deduction u/s 80IB(10) of the Act. The Assessing Officer has not accepted the contention 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 tha .....

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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 the Collector is for non agricultural use and permission for construction of buildings was subject to certain conditions. The CIT(A) .....

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assessee and has held that the Amenity Area is part of the residential project and therefore, the assessee has violated the condition laid down in section 80IB(10). Accordingly, the CIT(A) has confirmed the disallowance in question. 2.5.1 We find that the stand of the assessee has been that it owned total land of 50,525 sq. mtrs. Out of the total land, the Collector has granted N.A. permission to convert land admeasuring 47,323 sq. mtrs. which consists of Plots A, B, C and E. A copy of the N.A. .....

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the lay out. As discussed above, there is no dispute that the Layout Plan is common for both. However, the Building Plans of the residential project i.e. Buildings A to H are separately sanctioned. The copy of the said building plan is placed on pages 30-31 of the Paper Book filed by the assessee. The net plot area mentioned while sanctioning the plan is 24,520.05 sq. mtrs. at which buildings A to H were conceived. The Building Plans for the Amenity Space were sanctioned separately and the relev .....

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ential 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 .....

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ct of the building plan for the amenity space refers to the plot of land on which the amenity space was constructed and not the plot of land on which the residential project was constructed. Considering the above facts, the assessee stated that the amenity space - I and amenity space - II are independent projects and not part of the residential project. The assessee has claimed that he has paid taxes on the profits arising on sale of amenity space and no deduction u/s 80IB(10) has been claimed, .....

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nceptual plan giving general idea of the development of the land while building plans are the plans as per which construction is permitted as per the details sanctioned in the said plan. Since the building plan was sanctioned independently for the residential and amenity space, so they are independent of each other. If there is a common layout plan but independent building plan, the project approved under separate building plan is to be considered as an independent project and not part of the la .....

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anctioned separately as an independent unit, hence otherwise also it was to be treated as independent project. The assessee took the stand that housing project does not mean that there should be the group of buildings and even a single building may constitute a housing project. The Assessing Officer disallowed 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 .....

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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 o .....

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s project sanctioned prior to 01-04-2005, the assessee is not hit by the definition of the built up are which is applicable to the project which have been approved after 01-04-2005. Alternatively we pleaded that the prorata deduction may be allowed by excluding the area covered under the amenities space. For that proposition he relied on the following decision: a) M/s. G K Associates Vs. ITO (ITA No. 1137/PN/2010) (Para 7) b) M/s. Aditya Developers Vs. DCIT (Pune) (ITA No. 791/Pn/2008) (Para 6 & .....

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authorities below. We find that the assessee s original lay out and building plan was sanctioned for first time on 14-06-2004 i.e. before 31-03-2005 (Page 12 of the Paper Book). It appears that subsequently the assessee acquired some additional land and the original plan was revised and in the sanctioned lay out 15% space of the total area is reserve for amenities building. The Ld. Counsel pointed out that till today not a single unit in the amenities space is sold out. The further argument of .....

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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 revise .....

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ssee has stated revision of the plan and layout. In consequence of acquisition of the additional land, the area of the amenities space was also increased so it cannot be said that the plan sanctioned on 05-08-2006 is only the revised plan. We are unable to accept the argument of the Ld. Counsel that as the project was sanctioned on 16-06-2004, hence the definition of the built up area introduced in Sec. 80IB(10) by the Finance (No. 2) Act, 2004 w.e.f. 01-04- 2005 is not applicable. After anxious .....

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hold that amendment introduced to Sec. 80IB(10), putting, ceiling on commercial area is applicable to the assessee s project. 11. Now we address the next limb of the argument of the Ld. Counsel i.e. amenities space itself is a separate project. We find force in the said contention of the assessee. As per the information on record, we find that the assessee was required to reserve 15% area of his plot for amenities space even though the Ld. Counsel has taken lot of efforts to convince that ameni .....

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and Maharashtra Regional Town Planning Act, 1966 (in short MRTP Act ) mandates that if the plot area is more than 1 acre in the residential zone then amenities space to the extent of 15% of the plot area shall have to be provided in the layout. The Ld. Counsel also referred to Sec. 22 of the MRTP Act, 1966 to impress his argument on the point that the reservation of the amenity space is governed by the relevant statute and is not the matter of choice of the developer. The assessee has also filed .....

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d 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 V .....

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on the above reason and direct the Assessing Officer to allow the deduction u/s. 80IB(10). We also make it clear that as the amenity building is treated as an independent project, the assessee is not entitled to include the profit earned from the sale of any of the unit in the said building for claiming the deduction u/s. 80IB(10). 12. In the result, the assessee s appeal is allowed. 2.5.5 In view of the above discussion, the facts of Shroff Developers (supra) are identical to the facts of the a .....

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lowance was not rightly rejected on this account. Accordingly, the Assessing Officer was not justified in rejecting claim of the assessee under the provisions of section 80IB(10) of the Act in respect of DSK Sundarban. The Assessing Officer is directed accordingly. Similar issue arose with regard to DSK Sundarban in assessee s appeals in ITA Nos.724 & 725/PN/2013 for A.Ys.2008-09 & 2009-10 respectively. Facts being similar, so following the same reasoning, the Assessing Officer is direct .....

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ng plans of amenities space. 8. The facts and 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 .....

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assessee before the authorities below was that the buildings for which sanction was received from the Corporation for parking + seven floors constitute the eligible project, against which it had claimed deduction under section 80IB(10) of the Act. The buildings for which sanction was received for parking + first floor and 22 row houses were not part of the eligible project. The Assessing Officer however, rejecting the claim of assessee held that all the buildings from A to W and 22 row houses we .....

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. The Tribunal vide para 3.2 to 3.4 has observed as under:- 3.2 According to the CIT(A), the contention of the assessee that there were 2 separate projects, namely Meghmalhar Phase -1 and Meghmalhar Phase - II is not correct. Relying upon the permission of the Collector while sanctioning the layout plan, the CIT(A) has stated that since the assessee has not been able to complete construction of all the buildings, the project was not complete and therefore, the deduction u/s 80IB(10) is not allow .....

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ne acre. The other buildings wherein sanction was received for Parking + 1 floor, the construction had not started since it was not found economically viable to construct a building with only one floor. In commercial sense, the eligible housing project constituted only those buildings wherein the sanction was received for parking + 7 floors and the construction was carried out as per sanctioned building plan which is not in dispute. The dispute is with regard to completion as per sanctioned plan .....

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imum 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 h .....

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an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the Legislature is to make available a large number of medium size residential units for the benefit of the .....

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10) put forth by the Revenue is accepted, it would mean that if on a vacant plot of land, one housing project fulfilling all conditions is undertaken, then deduction would be available to that housing project and if thereafter several other housing projects are undertaken on the very same plot of land, the deduction would not be available to those housing projects as the plot ceases to be a vacant plot after the construction of the first housing project. Such a construction if accepted would def .....

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struing 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 th .....

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her 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 sections 10(23G) and 80-IB (10)." From the aforesaid letter of the Central Board of Direct Taxes, it is clear that for the purposes of section 80-IB(10) it is not the mandate of the section that the housing pro .....

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t cannot be said that section 80- IB(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 80-IB(10), the deduction thereunder cannot be denied to all those housing projects. Section 80-IB( .....

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ng projects or not. In these circumstances, the decision of the Tribunal in rejecting the contention of the Revenue regarding the size of the plot cannot be faulted. In view of above, the building for which sanction was received for Parking + 7 floors constitute a housing project on standalone basis and eligible for claiming deduction u/s.80IB(10) of the Act as claimed by the assessee. 3.4 We also find that Hon'ble Madras High Court in the case of Viswas Promoters Pvt. Ltd. vs. ACIT, (2013) .....

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ger 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 .....

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e discussion, the choice is for the assessee to determine which buildings would form part of the housing project and the conditions laid down in Section 80IB(10) of the Act should be checked vis-a-vis those buildings with respect to which the deduction is claimed. Since the assessee has completed all the buildings for which sanction is received for parking + 7 floors and all the conditions laid down in Section 80IB(10) of the Act were complied with, the assessee is entitled for claiming deductio .....

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