TMI Blog2016 (3) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) of the Act on this ground by the Learned AO is not in order. - Decided in favour of assessee. - ITA No. 12/Kol/2014 - - - Dated:- 22-1-2016 - Shri Mahavir Singh, Judicial Member, and Shri M. Balaganesh, Accountant Member For The Appellant: Shri Subash Agarwal, and Miss Varsha Jalan, Advocates, ld.ARs of the assessee For The Respondent: Shri Uday Kr. Sardar, JCIT/ld. Sr.DR ORDER SHRI M.BALAGANESH, AM This appeal of the assessee arises out of the Order of the Learned CIT(A)-XIX, Kolkata in ITA No.446/CIT(A)-XIX/Ward-33(1)/Kol/12-13 dated 21-10-2013 for the assessment year 2010-11 against the order of assessment framed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue to be decided in this appeal is as to whether the assessee is entitled for deduction u/s 80IB(10) of the Act in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee is engaged in the business of construction and sale of flats by developing and building Housing Projects. The assessee had undertaken a housing project styled as Ashiana Amarbagh Jodhpur, in Phase I, stituated at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the CIT (A) has erred in confirming the disallowance made by the A.O. for the deduction claimed by the appellant u/s 80-IB (10)(c) on the ground that appellant has violated the restrictions of the built up area of the residential units which should be maximum at lS00 square Feet at places other than cities of Delhi and Mumbai. The CIT(A) has wrongly confirmed the re-calculation of the built up area made by the A.O. without considering the full facts of the case. The disallowance made by the CIT(A) on this ground is not correct and misleading the fact of the case. 4) That on the facts and in the circumstances of the case, the CIT (A) has erred in confirming the addition made by the A.O. u/s 80-IB(10)(d) of the Act on the alleged ground that the appellant has violated the conditions stated in clause(d) of sub-section(10) of section 80-18 in relation to built-up area of the shops and other commercial establishments included in the housing project exceeding the specified percentage of the built up area of the residential project when the appellant has duly fulfilled the conditions stated in the said Act. The observation of the learned CIT(A) on this ground is not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our letter, since the height of the houses constructed in your residential project is less than 15 metres, the same does not fall within the purview of the requirement of the issue of Completion Certificates as provided in the housing bye-laws. Thus, there is no necessity to issue Completion Certificate for your Residential Project. If you want, you can obtain a Completion Certificate from a Registered Architect or Engineer. Executive Engineer (South) Jodhpur Development Authority Jodhpur 4.1.1. We find that the Registered Architect had indeed given the completion certificate vide letter dated 18.2.2010 which is reproduced below:- Biswajit Sengupta. architect b.arch.fiia.,aiiid ph-9887488263 01493-515305 A 305,Block 2, RANGOLI, Ashina Village Bhiwadi 301019, Alwar, Rajasthan Email: ahfil_sen@yahoo.com Dated 18 Feb 2010 Ashina Amar Developers Village Kuri Bhagtasani, Jodhpur Pali Road, Jodhpur-342001 Sub: Completion Certificate of Phase I, Ashiana Amerbagh, A Housing Project of Ashina Amarbagh Developers At Village Kuri Bhagtasani, Fatwar Jhalamand, Tehsil District Jodhpur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possibly perform. The law itself and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases. 4.1.4. Reliance is placed on the decision of Hon ble Gujarat High Court in the case of CIT vs Tarnetar Corporation reported in (2014) 362 ITR 174 (Guj) wherein it was held that : It is equally true that Explanation to Clause (a) to section 80IB(10) of the Act links the completion of the construction to the Building Use Permission being granted by the local authority. However, not every condition of the statute can be seen as mandatory. If substantial compliance thereof is established on record, in a given cases, the court may take the view that minor deviation thereof would not vitiate the very purpose for which the deduction was being made available. 4.1.5. Reliance is also placed on the decision of Hon ble Karnataka High Court in the case of CIT vs Ittina Properties (P) Ltd in ITA No. 556 of 2013 dated 15.7.2014 , wherein it was held that : 6. One of the project has been sanctioned subsequent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue were to insist on production of a completion certificate, they are asking the assessee to do something which is impossible and which is not proper in law. It is high time the Revenue, keeping in mind the relevant law governing the State of Karnataka, would suitably amend the law or issue appropriate circulars enabling the assesses to comply with the legal requirement so that they could have the benefit extended to them by the Parliament. 4.1.6. It is also not in dispute that the project was completed within the allotted time frame and possession certificates were also duly furnished before the Learned AO. In view of the aforesaid findings and judicial precedents relied upon, it could be safely concluded that expecting the assessee to produce the completion certificate from a local authority would only result in impossibility of performance on the part of the assessee. Accordingly, the rejection of deduction u/s 80IB(10) of the Act on this ground by the Learned AO is not in order. 4.2. Built up area exceeding 1500 sq.ft including terrace area We find that the meaning of the term built up area is given in section 80IB(14)(a) of the Act as under : built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee duly made available the copies of the brochure issued in order to attract prospective buyers and also copies of original sale deeds before the Learned AO which were duly returned by the Learned AO after verification. We find that the Learned AO calculated the super built up area of each building based on the brochures by including the area of open terrace and therefrom estimated the built up area by taking 90% of the super built up area of each building as built up area. We find that the Learned AO brushed aside the argument of the assessee that the brochures are only indicative in nature and the actuals may vary from what is stated in the brochures. The assessee also tried to explain that as per the sale deed which was registered with Registrar for stamp duty purposes, the total built up area of each building was below the maximum area specified in section 80IB(10) of the Act. The Learned AO simply ignored the sale deeds that were produced before him and placed reliance on the brochures issued by the assessee to attract prospective buyers and estimated the built up area by including the terrace area. We find that the actual built up area of residential building should not ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal is right in law in holding that the private terrace area should be included in the built up area of the flats for the purpose of making out statutory extent of built up area as per Clause (a) of Section 80IB(14) of the Income Tax Act ? Held: 5. It is seen from the facts narrated herein that the assessee is engaged in the business of construction. The assessee entered into an agreement of sale with one Ashok Kumar for joint development of the property. The assessee's claim for deduction under Section 80IB(10) of the Income Tax Act is rejected on the ground that the assessee was not the owner of the land. Aggrieved by the same, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who dismissed the appeal. Aggrieved by the same, the assessee went on further appeal before the Income Tax Appellate Tribunal. 6. The Tribunal considered the assessee's appeal along with two other assessees' appeals involving similar questions of law and passed a common order. One such assessee's case came up for consideration in T.C.Nos.581, 1186 of 2008 and 136 of 2009 in the case of Ceebros Hotels P\It. Ltd. Vs. Deputy Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts located at the 7th floor. After considering the above aspect, the builtup area of the flats located at the 7th floor exceeded 1500 sq.ft. and hence the Assessing Officer held that the condition prescribed in clause (c) of section 8018(10) of the Act was not fulfilled. The said position taken by the Assessing Officer was upheld right up to the Tribunal. However, the Hon'ble High Court disagreed with the stand of the Revenue and held that such open terrace would not be includible in the calculation of 'built-up area' for the purpose of examining the condition prescribed in clause (c) of section 8018(10) of the Act. In this view of the matter, the aforesaid judgement of the Hon'ble Madras High Court and which has been further affirmed in a subsequent decision in the case of Sanghvi and Doshi Enterprise (supra), covers the issue before us. 19. However, in the course of hearing, the learned CIT -OR attempted to distinguish the judgement of the Hon'ble High Court by pointing out that the same related to assessment year 2003-04, a period during which the definition of 'built-up area' contained in section 801B(14)(a) of the Act was not on the statute an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area for the purpose of sub-clause (c) of section 80-IB(10). As already seen in the preceding paragraphs, an assessee having an Approved Plan project alone has the right to claim deduction under section 80-IB. Any project undertaken not approved by the Local Authority is outside the purview of the Act. Thus, when a Local Authority, endowed with the jurisdiction to grant the approval is guided in its approval by Regulation as to what constitutes the plinth area, which is the builtup area, it is difficult for us to agree with the contention of the Revenue as well as the reasoning of the Tribunal that for the purpose of considering the claim under section 80-IB, the built-up area would be different from what has been given approval by the Local Authority, on a building project. Given the fact that during 2003-04 there was no definition at all on what a built-up area is, the understanding of the Revenue, which is evidently contrary to the approval of the Local Authority based on the Rules and Regulations could not be sustained. Consequently, we have no hesitation in agreeing with the assessee's contention that open terrace area, even if be private terrace cannot form part of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land and more fully described in Article 5.0 hereunder. Article 5.0 PROJECT 5.1. The Project of the Firm shall be to design, develop and construct a residential housing colony on the Project Land consisting of several residential units so that the residential status of the Project is maintained and the Firm gets exemption under section 80IB of the Income Tax Act, 1961. 4.3.2. We find from the Partnership Deed dated 27.2.2007 entered into between Miras Properties Pvt Ltd, Narayan Ladha, Suresh Kewlani (collectively called Miras Partners) and Ashiana Housing and Finance India Limited , the following expressions assume greater significance :- the Firm means the partnership firm hereby formed by the parties hereto and named as Ashiana Amar Infrastructure . the Project means the commercial and residential colony to be developed and marketed on the Project Land and more fully described in Article 5.0 hereunder. Article 5.0 PROJECT 5.1. The Project of the Firm shall be to design, develop and construct a Commercial and residential colony on the Project Land consisting of several units. We find from this partnership deed that the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and balconies and if it exclusively belongs to the residential untis, then, that also has to be taken into consideration for deciding the built up area. However, if the residential unti is provided the facility of common area shared with other residential units such common area have to be excluded while computing the built up area. The language employed in defining built up area as the common area shared with other residential unit, it does not mean that every common area should be shared with other residential units. If that area does not exclusively belong to the owner of residential unit and if he has to share that common area with the owner of another residential unit, then that common area has to be excluded from the built up area. If this principle is kept in mind and applied to the facts of this case, in respect of 16 flats, the common area is shared by these 16 owners of residential units. In respect of A-1 and A-2 the common area is shared by the owners of flats A-1 and A-2. This common area is not the subject matter of sale as is clear from the recitals in the sale deed. In other words, the owners of the residential units do not have exclusive right to use these bal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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