9911796707
TMI Blog2016 (2) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... se" at Hadapsar, Pune. The project was commenced on 21-10-2003 vide commencement certificate No.CC/0362/03 issued by the PMC on 21-10-2003 and continued even after 31-03-2008, i.e. the date on which the project should have been completed as per the provisions of section 80IB(10) of the Act. The AO noted that the previously revised and sanctioned plan on 28-06-2006 was again revised on 22-06-2010 sanctioning 276 tenements in total. Thus, it is clear that as on 31-03-2008 the housing project was not complete. The AO, therefore, issued a show cause notice asking the assessee to explain as to why the deduction claimed u/s.80IB(10) should not be disallowed since the housing project was not complete within the stipulated period. 2.1 The assessee vide letter dated 24-10-2011 inter alia submitted as under which has been reproduced by the AO at page 5 of his order: "As regards B 2 building, said building is not completed. However, without considering B 2 building the project fulfills all the conditions on stand alone basis. Relying on the decision in the case of Saroj Sales Organisation V. ITO (115 TTJ 486 (Mum), DCIT v. Brigade Enterprises Pvt. Ltd., 119 TTJ 269 (Bang). Support can also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject is issued by the local authority. In view of the above, the AO held that assessee has not fulfilled the conditions laid down in sub-clause (a) of section 80IB(10) of the Act. According to him, what is required to be completed by the assessee is the housing project in totality and not the individual flats as claimed by the assessee. In view of the above, the AO disallowed the claim of deduction made u/s.80IB(10) of the Act. 5. Before CIT(A) it was submitted that the assessee has commenced development and construction of housing project "Kumar Paradise" at Plot No.2, at Survey No.134/1/1A/1, Hadapsar, Pune on 08-01-2004. The DP layout plan was sanctioned on 21-10- 2003. The said plan is divided into 2 parts, i.e. Part A and Part B which is evident from the sanctioned plan. The sanctioned plan for Part A consisting of Buildings A1 and A2 was obtained on 08-01-204 and 18-05-2004. The sanctioned plan for Part B consisting of Buildings B1 and B2 was separately obtained on 28-06-2006. Thus, the complete venture of the assessee was divided into construction of A1 and A2 of Part A and construction of B1 and B2 of Part B. The following statistics was also submitted before the CIT(A) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s.80IB(10) of Rs. 2,82,73,541/- in respect of the project. The Assessing Officer noticed that the project was commenced on 21-10-2003 and subsequently revised on 8-1-2004, 18- 5-2004, 28-6-2006 and on 22-6-2010. The occupancy/completion certificates issued by the Pune Municipal Corporation (PMC for short) were on 6-1-2006 for 108 units, 54 in A-1 wing and A & B having 54 units each; 6-11-2007 for another 108 units in A-2, A&B wing; on 18-3- 2007 for 44 units in B-1 wing. The Assessing Officer also noticed that the project continued even after 31-3-2008 i.e. the date on which the project should have been completed as per the provisions of see 80IB(10), as the previously revised and sanctioned plan dated 28-06-2006 was again revised on 22-06-2010 sanctioning further 276 tenements. The Assessing Officer thus held the housing project to be incomplete. The appellant, however, admitting that B-2 building was not completed requested for allowance of the claim of deduction on a proportionate basis which was rejected by the Assessing Officer, who also relied upon the decision of the Bombay High court in the case of CIT Vs Bramha Associates - declined the claim of the appellant being v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2006 and there was no revision/additional sanction granted. The appellant has filed the copies of the sanctioned plans of 2006 and 2010 during the appellate proceedings to support its claim. The appellant has thus contended that Building B1 on a standalone basis satisfies all the conditions u/s 80IB(10). The appellant has placed reliance on the following authorities for the aforesaid proposition: 1. CBDT Notification 2. CIT Vs Vandana Properties (2012) 76 DTR 363/ (2013) 353 ITR 36(Bom) 3. CIT Vs. Apoorva Properties and Estates Pvt. Ltd, ITA No.113/PN/2007 4. Rahul Construction Co. Vs ITO (2012) 51 SOT 192 (Pune)(URO) 5. Mudhit Madanlal Gupta Vs ACIT (2011) 51 DTR 217 (Mumbai)(Trib) 6. DCIT Vs Brigade Enterprises (P) Ltd. (2008) 119 TT J (Bang) 269 7. Saroj Sales organization Vs ITO (2008) 115 TT J 485 (Mumbai) 3.4 The appellant has also distinguished the decision of the Bombay High Court in the case of Bramha Associates (2011) 333 ITR 289 (Bom) relied upon by the Assessing Officer. It has been submitted that the assessee in that case had undertaken project comprising of 15 residential and 2 commercial buildings sanctioned by the local authority as 'residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Assessing Officer. The appellant has also submitted that the legislative intent for providing benefit u/s 80IB(10) is to encourage development of residential tenements for the people and such tax incentive provided u/s 80IB (10) should not be denied and the said proposition is supported by judicial precedents wherein it has been held that incentive provisions should be interpreted liberally so as to advance the object sought to be achieved and not frustrate it. The appellant has placed reliance on the following decisions in support: 1. Bajaj Tempo Ltd Vs CIT 196 ITR 188 (SC) 2. CIT Vs Gwalior Rayon Silk Manufacturing Co Ltd 196 ITR 129 (SC) The appellant has thus contended that the buildings covered under Part A and Part B on the plot are different projects which gets substantiated based on the following fact: 1. Separate commencement certificates obtained for Part A comprising of buildings A 1 & A2 and for Part B comprising of buildings B1 & B2 and there is a considerable gap of 30 months between the commencement of the two projects i.e. Part A and Part B. 2. Separate completion/occupancy certificate obtained for building A 1 & A2 and building B-1 3. Part A an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of the building A 1 vide commencement certificate dated 8-1-2004 and the said building A 1 comprising of 108 units was completed on 6-7-2006. The other building of Part A i.e. building A2 commenced construction vide commencement certificate dated 18th May 2004 and the said building also comprised of 108 Units was completed on 06-11-2007. Thus the appellant had completed the construction of Part A with 216 residential units much before the stipulated date i.e. 31-3-2008. The other project B comprised of 10,394.66 sq.mtr of Part Band 1606.02 sq.mtr of Part C. The building B1 commenced construction vide commencement certificate dated 28- 06-2006 and the same comprised of 44 residential units and the said building B2 was completed on 18-3-2008. The other building B2 was commenced vide commencement certificate dated 28-6-2006, however, the same was not completed as there was not adequate FSI to complete the entire building as the same was sanctioned with only 16 units with an FSI of 677.64 sq.mtr with two floors to be feasible as the area of one flat would have been merely 62.35 sq. mtrs., which was too small and hence commercially not viable. The appellant did not find the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s contention that Part A and B are one and the same project is not correct in the given set of facts of the case. 3.6 The reliance placed by the appellant on the decision of the Pune ITAT in the case of Rahul Construction Co. (cited supra) is relevant and which has held as under: "9. There is no dispute on from material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time-limit up to 31-3-2008. The layout plan in respect of entire complex was sanctioned by PMC vide order dated 3-4- 2003 and the building plan was sanctioned vide commencement certificate dated 29-4-2003. Admittedly, the term 'housing project' has not been defined in the Act but in the context of deduction under section 80-IB(10) an Explanation has been provided below clause (a) to sub-section (10) to section 80-IB. The very reading of above Explanation (i), makes it clear that for the eligibility of the deduction provided under section 80-IB(10), the date on which building plan of a housing project has been firstly approved by the local authority will be treated as approval in respect of the housing project. When Explanation ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not complete within the stipulated time. There is no dispute with regard to other conditions laid u/s. 801B(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee's housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT(A). The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s.80IB(10) could not be granted to assessee on incomplete construction at relevant point of time. Regarding proportionate deduction in respect of 173 of 205 flats of project completed as recognized by local authority, i.e., PMC in its completion certificate No.BC0/03/01333 dated 31.03.2008, the Ld. Authorised Representative heavily relied on decision of Bengal Ambuja Housing Development Ltd. (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to com lete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing statute should be construed harmoniously with the object of statute to effectuate the legislative intention. In view of the above facts and circumstances, we hold that assessee is entitled for benefit u/s 80IB(10) of the Act in respect of 173 flats completed before prescribed limit. The Assessing Officer is directed accordingly. " 3.8 The building B1 has been contended by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of 'E' building was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from surplus vacant land into within the ceiling limit land by the State Government, an additional building could be constructed on the plot in question and accordingly building plan for construction of 'E' building was submitted and the same was approved by the local authority on 11th October 2002. 21. The fact that the local authority, namely the Municipal Corporation approved the building plan for 'E' building on the condition that all the objections raised in the Intimation of Disapproval dated 12th May 1993 relating to the earlier housing project on the same plot of land shall be applicable and should be complied with, cannot be a ground to hold that 'E' building is extension of the earlier housing project because the earlier housing project was completed prior to 1st October 1998 and the housing project for construction of 'E' building was approved for the first time on 11th October 2002. Nowhere in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question." Thus the set of reasoning of the Hon'ble Bombay High Court which has held that the expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in Section 80IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project that construction of even one building with several residential units of size not excluding 1000 "sq. ft. would constitute a housing project u/s 80IB." The Hon'ble Bombay High Court while arriving at the conclusion has also relied on the CBDT Notification referred to above. Thus the building 'B1' of part B of the project on a standalone basis satisfies all the conditions stipulated u/s.80IB(10) and hence eligible for the claim of deduction under the said section. 3.9 The other contention raised by the appellant on without prejudice basis of allowing proportionate deduction on completed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment cannot be said to be on this issue. The only issue before the High Court is when there is a commercial element in a residential project, will be assessee be denied the entire exemption. In this case, the Hon'ble High Court has observed that when the local authority approved a plan as a housing project or a residential cum commercial project, the assessee would be entitled to claim for deduction under section 80IB(10) even if the project had commercial element in excess of 10%. At Paras 27 and 28, the Court observed as follows :- "27. The question then to be considered is, whether the Special Bench of the Tribunal was justified in holding that the projects having commercial area upto 10% of the built-up area of the plot are eligible for deduction under section 80IB(10) on the entire project upto 1.4.2005. Once the basic argument of the revenue that the housing projects with commercial user are not entitled to section 80IB(10) deduction is rejected, then in the absence of any restriction imposed under the Act, it was not open to the Tribunal to hold that the projects approved by the local authorities having residential buildings with commercial user upto 10% of the plot ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : "10. In view of the above discussion, for verification of eligibility of benefit claimed under section 80-IB(10) by the assessee on buildings A1 to A5 in 'AN' and buildings B 1 to B6 in 'RN, the assessing authority has to verify as to when the building plans for these buildings were firstly approved by the local authority and taking the said date of approval as a starting point, he has to verify as to whether these buildings were completed within the prescribed time-limit, i.e., 31-3- 2008 on the basis of the completion certificate in respect of such housing project issued by the PMC. The authorities below have not disputed the fact furnished in this regard by the assessee that under the project AN' consisting of buildings AI to A5, the first building plan for a type was approved by the PMC on 29-42003. However, actual construction of A type building was executed as per the revised plan dated 27-6-2003. The project A type building, i.e., A1 to A5 consists of 360 residential units and the construction has been completed between 10-1-2005 to 31-8-2005. The authorities below have also not disputed this material fact that residential units have a maximum built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing on record to suggest that the assessee itself has joined the adjacent flats. In this situation, the assessee should not suffer for its no fault if purchaser join the adjoining flats. Therefore, the assessee was entitled for deduction under section 80-IB(10) in respect of entire profits computed after making additions/disallowances in respect of cosmos project consisting of 24 buildings excluding 'Prime building'. " 3.9.3 The Madras High court in the case of Viswas Promoters (P) Ltd Vs ACIT (Supra) also relied upon by the appellant has held as under: "13. Going by the definition of 'housing project' under section 80HHBA, to mean the construction of 'any building' and going by the deduction available under section 80-IB to be hundred per cent of the profits derived in the previous year relevant to the assessment year from such housing project complying with the condition, each block in the larger project by name Agrini' and 'Vajra', has to be taken as an independent building and hence a housing project, for the purpose of considering a claim of deduction. The undertaking qualifying for deduction under section 80-IB is an 'undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that since the project was not completed before the specified date, therefore, the CIT(A) was not justified in allowing the claim of deduction u/s.80IB(10) of Building B1 of the housing project on standalone basis when Building B2 of Part B of the housing project was incomplete. 10. Referring to the decision of Hon'ble Bombay High Court in the case of CIT Vs. Brahma Associates reported in 333 ITR 289 he submitted that the Hon'ble High Court in the said decision has held that if the condition set out in 80IB(10) are satisfied then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project. 11. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A). He submitted that the housing project consists of Part A and Part B. Part A consists of Buildings A1 and A2 which was completed before 31-03-2008 with 108 flats of each. Similarly, Part B consists of Buildings B1 and B2. B1 consists of 44 flats and B2 consists of 16 flats. Because of no FSI the assessee converted B2 to parking place and did not construct B2 portion. However, A1 and A2 and B1 were co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory conditions which are present on the statute book on the date of approval of the housing project needs to be fulfilled for claiming deduction under the Act : 1. System Enterprises Vs. ITO - ITA No.1123/PN/2013 2. CIT Vs. Happy Homes Enterprises - ITA No. 201 of 2012 and 308 of 2012 (Bom.) 3. CIT Vs. Viraj Properties Bombay - ITA No.451 of 2013 17. Referring to the recent decision of the Tribunal in the case of Padmavati Developers Vs. DCIT he submitted that under identical circumstances the Tribunal has allowed the claim of proportionate deduction. He accordingly submitted that in view of the series of decisions relied on by the CIT(A) as well as the decisions now submitted the matter stands squarely covered in favour of the assessee. Therefore, the order of the CIT(A) should be upheld and the grounds raised by the Revenue should be dismissed. 18. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has constructed the housing project namely "Kumar Paradise" at H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.80IB(10) was allowed in order passed u/s.143(3). In A.Y. 2008-09 the deduction claimed was allowed in the order passed u/s.143(3)/147. Therefore, there is no justification for denying the claim of benefit of deduction u/s.80IB(10). 20. We find merit in the above submissions of the Ld. Counsel for the assessee. The AO in the assessment proceedings for A.Y. 2007- 08 has accepted the contention of the assessee that Part A and Part B are separate projects and accordingly allowed the claim of deduction u/s.80IB(10) for part A of the project. Similarly, in the assessment order for A.Y. 2008-09 the AO in the order passed u/s.143(3) r.w.s. 147 has allowed the claim of deduction u/s.80IB(10) in respect of A1 and A2 units. There is no dispute to the fact that the assessee in the instant case has completed the B1 building consisting of 44 flats. As mentioned earlier the building B1 is having built up area of more than 1 acre. The built up area of all the residential units are less than 1,500 sq.ft. and there is no commercial construction and the building independently on standalone basis satisfies all the conditions u/s.80IB(10). It has been held by various decisions that deduction u/s.80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .7. Consequently, the ground of appeal raised by the assessee is partly allowed." 22. Since the assessee in the instant case has completed the 44 units of project B1 before 31-03-2008, a fact brought on record by the AO at page 2 of the order, therefore, the assessee is entitled to pro-rata deduction in respect of said units. The various decisions relied on by Ld. Departmental Representative are distinguishable and not applicable to the facts of the present case. In view of the above discussion and in view of the detailed reasoning given by the CIT(A) we find no infirmity in his order. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed. CO No.104/PN/2014 : 23. The Ld. Counsel for the assessee at the outset submitted that the grounds in the Cross Objection raised by the assessee are merely in support of the order of the CIT(A). 24. After hearing both the sides, we find the grounds raised by the assessee in the C.O. are merely in support of the order of the CIT(A). We have already upheld the order of the CIT(A) and the grounds raised by the Revenue have been dismissed. Therefore, the C.O. filed by the assessee becomes infructuous. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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