TMI Blog2016 (1) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the claim of deduction under section 80IB(10) of the Act since the commercial area exceeded 2000 sq.ft. Denial of deduction to the assessee was since the total built up area of some units exceeded 1500 sq.ft., by including the area of canopy / porch in the built up area - Admittedly, as pointed out by us from the certificate of Grampanchayat, the built up area of each unit of row houses was below 1500 sq.ft. However, in respect of the first floor, there was an area of canopy which was lower than the first floor unit. The case of the assessee was that the area of canopy could not be included in the built up area since it was not a projection on floor level or ground floor, it was projection on the first floor. The said canopy / porch was only a shelter to be provided to the person from sun and rain while getting down from the vehicle and entering the premises. The CIT(A) during the course of appellate proceedings had sought remand report in this regard from the Assessing Officer and under para 6.2, the finding of the Assessing Officer is that the canopy was not a habitable area. In view thereof, the CIT(A) allowed the claim of the assessee and the Revenue vide ground of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in allowing the assessee's claim of deduction of ₹ 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 Developers', a newly started concern. 5. The learned Commissioner of Income-tax (Appeals) grossly er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 section 80IB(10) of the Act at ₹ 45,40,947/-. Survey under section 133A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential 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 of the assessee was also confronted to the Assessing Officer. The repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,862 sq.ft. The number of plots for bungalows was reduced from 136 to 129 and a new road was laid from the main road to the housing colony. Thus the housing project of Suman construction, the proprietary concern 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment recorded in Question no. 23, the Site Engineer had also explained that the said delivery challans pertained to Suman Developers as in the very same statement he has stated that the corresponding bills for the delivery challan can be submitted. Even in 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to protect the person from sun and rain while getting down from the vehicle and entering the premises, thus it is a weather shed without any side wall and not a habitable room. 6.2 On the basis of the submission made by the appellant my predecessor CIT(A) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, the assessee has completed the project before 31-3-2008. It has been further submitted that the AO had come to a conclusion that the project was not completed based on the date of commencement mentioned in the audit report and the finding during the survey action u/s 133A with reference 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order. The learned Departmental Representative for the Revenue also stated that the Assessing Officer had denied the deduction because both the projects were a single project and their commercial area exceeded 2000 sq.ft. and secondly, the canopy area of some of row houses when added to 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 Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances for row houses placed at pages 126 and 127 of the Paper Book and also at pages 131 and 132, separate advance being received for C1 and C2. The learned Authorized Representative for the assessee further drew our attention to the plan placed at page 160 and pointed out that there was road between 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and the copy of sanctioned letter is placed at pages 84 and 85 of the Paper Book. Thereafter, the assessee received permission to construct C2 portions of commercial area i.e. flats + commercial area on 24.04.2008. The copy of the sanctioned letter is placed at pages 88 and 89 of the Paper Book. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee since during the course of Survey, certain delivery challans were impounded which included the bills of two concerns. The said engineer during the course of Survey itself, had explained that the said challans pertain to M/s. Suman Developers and he also stated that the corresponding bills 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 complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of flat nos.120 to 135, which is dated 15.05.2004, copy of which is placed at pages 75 and 76 of the Paper Book. Later, a revised layout plan was submitted for construction of 129 row houses in all as against the original plan for 136 row houses. In view thereof, where the first sanction of the 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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