9911796707
TMI Blog2016 (1) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal :- 1. The order of the Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in allowing the assessee's claim of deduction of Rs. 45,40,947/- uls 80 IB(10) in respect of the project undertaken by 'M/s Suman Constructions' which is a residential cum commercial project and in which the commercial area exceeded the prescribed limits. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that in the original plan commercial area was very much part of the project undertaken by 'M/s Suman Constructions' and that 'M/s Suman Developers', the concern to which the said commercial project is claimed to belong, came into existence only on 15.06.2007 i.e. after the initiation of the project in 2004. 4. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that it was only in July, 2007 that the plan was revised thereby separating the commercial portion from the residential portion and in which the commercial portion was shown as undertaken by 'M/s Suman Develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under section 80IB(10) of the Act against the housing project known as M/s. Suman Construction. The first aspect of the said claim of deduction under section 80IB(10) of the Act is where the assessee in the original plan had included commercial area exceeding 2000 sq.ft, then is the assessee entitled to the aforesaid claim of deduction. The second aspect of the issue is that certain flats in the project had adjacent canopy, which could be accessed from the first floor and after including the area of canopy to the built up area of the row houses, the total area exceeded 1500 sq.ft. and hence, there was violation of provisions of section 80IB(10) of the Act. The third aspect of the issue is the non-completion of the project before stipulated date i.e. 31.03.2008. 6. Briefly, in the facts of the present case, the assessee was engaged in the business of construction under the name and style of M/s. Suman Constructions. The assessee had undertaken residential cum commercial project at Sr. No.23/B, Konark Vihar, Farandenagar, Wadi Budurk, Nanded and had claimed deduction under section 80IB(10) of the Act. In assessment year 2008-09, the assessee had claimed deduction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer was that the assessee had plan to construct 129 residential bungalows in the said project, whereas 26 bungalows out of the same exceeded the area of 1500 sq.ft. on account of projection at the first floor, which was not included while calculating the built up area of the bungalows. The Certificate submitted by the assessee of Grampanchayat regarding built up area of bungalows and drawings of the bungalows, was not accepted by the Assessing Officer holding that the said area is includable in the hands of assessee. Since the assessee had failed to comply with the provisions of section 80IB(10) of the Act, the claim of deduction was denied to the assessee. 7. Before the CIT(A), the assessee made elaborate submissions which have been reproduced by the CIT(A) under para 3.1 at pages 6 to 13 of the appellate order. The said submissions were forwarded to the Assessing Officer, who in turn furnished report dated 21.10.2010, which is reproduced under para 3.3 at pages 14 and 15 of the appellate order. In reply, the assessee furnished further arguments to the report of the Assessing Officer, which is reproduced at pages 15 to 20 of the appellate order. The said reply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant consisted of 129 dwelling/residential units which was completed before 31-3-2008. The necessary completion certificates for the same has been obtained by the appellant from the local authority. 4.3 The other project which was commenced in 2007 in the other proprietary concern of the appellant Suman developers started as per the commencement certificate on 26th July 2007 which again reduced from 3 plots into 2 plots. 1) Plot A + 15,216 sq.ft recorded as C1 2) Plot B & C amalgamated and recorded as C2 admeasuring 23,612 sq.ft. On C 1 & C2 plots two buildings are constructed with ground + 3 floors titled as Suman Heights 1 and Suman Heights 2. In Suman Height 1 - 14 flats are constructed from 1st to 3rd floor and 25 shops on the ground floor. In Suman Heights 2 - 42 flats are constructed from 1st to 3rd floor and 24 shops are constructed on the ground floor. The appellant has also stated that separate books of accounts, separate bank accounts, separate offices, separate shop and establishment licenses for the two proprietary concerns Suman construction and Suman developers were taken, service tax registration, which is not applicable to residential housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the remand report the Assessing Officer has not commented on the submissions of the appellant, but has only reiterated the findings of the Assessing Officer as recorded in the assessment order. The facts brought on record clearly indicates that the two projects are not one integral project but two separate projects as even the timing of the project with respect to its construction are separate as the marketing done by the appellant by way of advertisement have been done for two projects separately. 4.7 Thus on going through the various fact and aspect of the projects as brought out by the appellant and also on going into the details of the separate layout plan and the approval granted by the local authority and also the timing of construction do clearly indicate prima facie existence of two separate and distinct projects and which were demarcated." 9. The Revenue is aggrieved by the aforesaid findings of CIT(A) that the assessee had two separate projects i.e. one residential project and the other is commercial cum residential project. The second objection of the Assessing Officer that the total built up area of the commercial cum residential units exceeded 2000 sq.ft., was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II had called for a remand report from the A.O. on the issue of 'whether canopy could have been included within the definition of built up area as provided u/s 80IB(10)(14)(a) of the IT Act 1961 and also whether the 'canopy' could be covered under the ambit of the terms 'projections' and 'balconies' as mentioned in 80IB(14)(a). In the remand report dated 23-11-2011. the A.O. has held as under: "I have gone through the above submission. In the case of ACIT Vs Smt. Saroj Kapoor (2010) 38 OTR (Ind)(Trib) 475 ITAT Indore Bench decided that cognizance to the certificate issued by technical expert i.e. Architect and certificates issued by the Local Authority to be given. Certificate issued by the Gram Panchayat dated 28.10.2007 and dated 3103.2008 and certificate issued by Architect dated 25.03.2008 are kept on record. From these certificates it is clear that built-up area of any unit (bungalow) does not exceed the prescribed limit of 1500 sq.ft. In view of this the certificate issued by local authority dated 28.10.2007 and certificate issued by architect dated 25.03.2008 is conclusive for taking cognizance in the case. I have gone though the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the dwelling units No. 12, 13 & 15, the appellant has contended that the relevance of the commencement date mentioned in the audit report is with reference to the expenses incurred and not the stipulated and prescribed u/s 80lB (10). Regarding the reference made by the A.O. of non-completion of the bunglow No 12, 13 & 15 as held by the A.O. the appellant has drawn attention towards the Question No. 17 which were put to the site engineer where the statement was recorded during the survey action clearly indicates that the pending works were related to renewal and replacement such as glass & door & windows work etc and the major construction work of Suman construction was completed by 31-3-2008. The appellant has also submitted the copy of the completion certificates issued by the local authority, the Grampanchayat, Wadi Budruk, Nanded which has certified that the construction of the 129 units of Suman constructions has been completed before 31-3-2008. On going through the submission of the appellant and also the statement of the site engineer and finally the certificate issued by the local authority, it becomes clear that the project has been completed before 31-3-2008 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the covered area, then the total area was more than 1500 sq.ft., though the assessee claims that the canopy area was lower to the first floor covered area. The reliance was placed on the ratio laid down by Pune Bench of Tribunal in Kumar Builders Consortium Vs. ACIT in ITA Nos.1164 & 2210/PN/2012 , relating to assessment years 2008-09 and 2009-10, order dated 15.04.2013 for the proposition that the garden area is to be included in the covered area to compute the total area of the row houses. The learned Departmental Representative for the Revenue was of the view that if the assessee claimed that it has separate two projects in 2007, then the onus was on the assessee to establish separate projects. The learned Departmental Representative for the Revenue also pointed out that the row houses even if were completed by March, 2008, were sold subsequently. 13. The learned Authorized Representative for the assessee in reply, submitted that the issue in the present appeal is whether there were two projects or one project. Our attention was drawn to the lay out plan placed at page 74 of the Paper Book, where the commercial area was in respect of plots 1 to 4 and there were 136 row houses. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween C1 and C2 on one side and row houses on the other side. He further pointed out that during the course of Survey, the assessee has submitted that he was undertaking two projects, which were independent of each other. As per the learned Authorized Representative for the assessee, 127 row houses satisfied the conditions of being housing project and consequently, entitled to the claim of deduction under section 80IB(10) of the Act. Further, reliance was placed on the decision of Pune Bench of Tribunal in Siddhivinayak Kohineer Venture Vs. Addl.CIT . (2014) 97 DTR 68 (Pune) (Trib) and in M/s. Rohan Homes Vs. ACIT in ITA No.423/PN/2011, relating to assessment year 2007-08, order dated 31.01.2013. The learned Authorized Representative for the assessee further stressed that commencement was in May, 2004, which in any case was completed by 31.03.2008 and there was no dispute in this regard. 14. As far as 26 row houses are concerned, where the canopy area was provided, the learned Authorized Representative for the assessee referred to the remand report, wherein the Assessing Officer had certified that the canopy area was not useable. It was further pointed out by him that since the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the assessee received the completion certificate of 129 units of row houses on 31.03.2008. The completion certificate with its English transaction is placed at pages 104 and 105 of the Paper Book. The certificate of the Grampanchayat, Wadi dated 31.03.2008 that the construction has been completed before 31.03.2008 is placed at page 106 of the Paper Book along with the list of unit numbers and their built up area at pages 107 to 109 of the Paper Book. The perusal of the said list placed at pages 107 to 109 of the Paper Book of row houses numbering 127 reflect that none of the units are having built up area of more than 1500 sq.ft. The above said documents reflect that the sanction for C1 and C2 was granted much later than the sanction granted for the construction of row houses. Further, revised layout plan placed at page 79 reflects that the commercial area constructed by the assessee under the name and style of M/s. Suman Developers was not part of the residential project constructed by the assessee under the name of M/s. Suman Constructions. Even the sanction for constructing C2 unit, commercial area was granted after the completion of 129 row houses. The CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the same could be submitted. Further, the CIT(A) noted that in the remand report, the Assessing Officer had not commented upon the submissions of the assessee, but had only reiterated the findings of Assessing Officer in the assessment order. In the above said facts and circumstances, we hold that the two projects which have been commenced on different dates after taking separate approvals cannot be said to be a single project, in which the residential row houses also included the commercial area. We hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act in respect of residential project. The commercial project which has been sanctioned, commenced and completed on a later date and on which, no deduction under section 80IB(10) of the Act has been claimed by the assessee, is a separate project from the residential project of row houses completed by the assessee. Accordingly, we find no merit in the order of Assessing Officer in this regard and upholding the order of CIT(A), we hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. In view thereof, there is no merit in the observations of Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plan i.e. commencement certificate has been issued on 15.05.2004, the obligation on the assessee to complete the project was before 31.03.2009 as per the conditions stipulated under section 80IB(10) of the Act. However, the assessee claims to have completed before 31.03.2008. The Assessing Officer had come to a conclusion that the project was not completed based on date of commencement mentioned in the audit report and the documents found during the course of search from the premises of the assessee. In respect of first objection of the Assessing Officer, it was clarified by the assessee that in the audit report, the reference was to the expenses incurred and not the stipulated date of commencement of project as prescribed under section 80IB(10) of the Act. Further, in respect of the bills found during the course of Survey, the same related to renewal and replacement work to be carried out in bungalow Nos.12, 13 and 15. The major construction work was completed by 31.03.2008. The completion certificate in this regard was issued by the Grampanchayat, Wadi, against construction of 129 units for completion before 31.03.2008. In view of the above said facts and circumstances, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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