9911796707
TMI Blog2016 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The appellant craves for to leave, add, alter, modify, delete above ground of appeal before or at the time of hearing, in the interest of natural justice. 3. The issue raised in the present appeal is in relation to the claim of deduction under section 80IB(10) of the Act. 4. Briefly, in the facts of the present case, the assessee was carrying on the activity of builder and developer and was also Consultant in various construction activities. For the year under consideration, the assessee had efiled the return of income declaring total income of Rs. 13,58,990/- and agricultural income of Rs. 2,17,700/-. The assessee had claimed deduction under section 80IB(10) of the Act at Rs. 91,51,076/-. During the course of assessment proceedings the assessee was asked to justify his claim of deduction under section 80IB(10) of the Act i.e. the year of approval, size of plot area, size of residential unit, date of completion and area of commercial units included in the housing project. In reply, the assessee explained that the Scheme was being developed at S.No.36/5, Kale Padal, Near Indrayani Nagar, Hadapsar, Pune. The said Scheme was started on 11.03.2005 on a plot of land admeasuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs., which was less than one acre of plot size. Second objection of the Assessing Officer for rejection of claim of deduction was that the housing project was sanctioned initially for three buildings covering 3358.62 sq.mtrs. of total built up area i.e. comprising of 71 residential tenements and 16 commercial establishments. However, the assessee revised the plan in 2007 in which two buildings covering 2398.16 sq.mtrs. of total built up area, one building covering 966.62 sq.mtrs. was sanctioned. As per the Assessing Officer, against the sanctioned three buildings of total built up area of 3358.62 sq.mtrs. in 2005, the assessee had completed construction of two buildings of total built up area of 2398.16 sq.mtrs. only and hence, partly constructed the housing project. Further, the commercial establishment in the housing project as per the sanctioned plan by the PMC was 210.92 sq.mtrs., which was more than 3% of aggregate built up area as permitted under section 80IB(10) of the Act. Further, the assessee had commenced the construction of third building in 2010-11 and as per the Assessing Officer, the housing project was n ot completed within prescribed four years from the date of fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said plot of land was an agricultural land and the sanction vide NA order was received on 17.10.2005, after which only work of both the buildings started, which clearly established that the housing project could have been commenced only after 17.10.2005. Reliance was placed on the ratio laid down by Pune Bench of Tribunal in the case of Nirmiti Construction reported in 4 SOT 383 (Pune), wherein, preliminary sanction from the local authority for development of housing project was contemplated was converted into non-agricultural land on 30.01.1999 and the NA permission was obtained on 30.06.1999. The Tribunal in such circumstances, held that the assessee had commenced the development and construction of project only after 01.10.1998 and applying the said simile to the facts of the present case before him, the CIT(A) held that though initial building plan was sanctioned on 03.02.2005 or 11.03.2005, the actual development of project commenced only after NA order dated 17.10.2005 and therefore, the restriction on commercial area, which was introduced w.e.f. 01.04.2005 was applicable to the projects developed by the assessee. The CIT(A) also notes that the entire building plan was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted after 01.04.2005 were not applicable. Reliance in this regard was placed on the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Sarkar Builders (2015) 375 ITR 392 (SC). It was pointed out that since the assessee had not received FSI, the building 'C' could not be started within time frame and further when the same was completed, no deduction under section 80IB(10) of the Act has been claimed. 11. The learned Departmental Representative for the Revenue placing reliance on the orders of authorities below pointed out that commencement was on 03.02.2005 and it had to be completed before 31.03.2009 and since the project was not completed by 31.03.2009 since it comprised of buildings 'A', 'B' and 'C', the assessee was not entitled to claim of deduction under section 80IB(10) of the Act. The learned Departmental Representative for the Revenue raised the issue that the assessee was not entitled to the claim of deduction under section 80IB(10) of the Act in the absence of completion certificate. He placed reliance on the ratio laid down by the Hon'ble High Court of Madhya Pradesh in CIT Vs. Global Reality (2015) 62 taxmann.com 204 (MP). 12. The learned Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer was the size of plot being less than one acre. The area earmarked for road widening is excluded from total area available with the assessee. The CIT(A) in this regard has given a finding that the area of plot is inclusive of roads earmarked for development and hence, the total area is more than one acre available for housing project and hence, the condition laid down in clause (b) to section 80IB(10) of the Act stands fulfilled. Further, the said project as pointed out by us in the paras hereinabove was approved on 11.03.2005 and the profits from the part of project were declared in 2009-10 and the assessee had claimed deduction under section 80IB(10) of the Act in this regard. The Tribunal in assessee's own case vide order dated 28.04.2014 vide paras 4 and 5 has held that the size of said plot was 4134.00 sq.mtrs., out of which 182.99 sq.mtrs. was acquired for road widening by the PMC, making balance size of plot 3952 sq.mtrs. However, it was held that the area earmarked for road and amenities is included in project approved by the local authority and hence, it means that the plot area of one acre is available for housing project inclusive of amenities. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11) 333 ITR 289 (Bom), wh erein, it has been held that up to 31.03.2005 (subject to fulfilling of other conditions) deduction u/s.80IB(10) is allowable to housing project approved by local authority having residential units which with commercial user to the extent permitted under DC Rules / Regulations framed by respective authority. The jurisdictional Bombay High Court in the case of Brahma Associates held that amendment in clause (d) of sub-section specifying commercial area up to 10% of project in housing project applies to the project approved after 01.04.2005 and the amendment affected by Finance Act (No.2) of 2004 w.e.f. 01.04.2005 would not have retrospective effect and that approval of housing project prior to 01.04.2005 with commercial user permitted under DC Rules / Regulations framed by respective local authority would still be exempt u/s.80IB(10). This issue of commercial limit is fortified by the decision of Hon'ble Bombay High Court in the case of Brahma Associates (supra). This reasoned finding of CIT(A) on the issue of commercial limit needs no interference from our side. We uphold the same." 15. The Tribunal had already allowed this claim of assessee on the argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been held as under:- "(c) The provisions of section 80-IB(10) mention not only a particular date before which such a housing project is to be approved by the local authority, even a date by which the housing project is to be completed, is fixed. These dates have a specific purpose which gives time to the deve lopers to arrange their affairs in such a manner that the housing project is started and finished within those stipulated dates. This planning, in the context of facts in these appeals, had to be much before April 1, 2005. (d)... (e)... (f) Clause (d) makes it clear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built-up area of shops and establish ments to 5 per cent. of the aggregate built-up area or 2,000 sq.ft., which ever is less. However, the Legislature itself felt that this much commercial space would not meet the requirements of the residents. Therefore, in the year 2010, Parliament has further amended this provision by providing that it should not exceed 3 per cent. of the aggregate built-up area of the hous ing project or 5,000 square feet, whichever is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing project within the prescribed period of four years. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) granted relief to the assessee on this account as well. The same has been opposed before us on behalf of revenue. On the other hand, the learned Authorized Representative has supported the order of CIT(A) on the issue. 8.1 After going through the rival submissions and material on record, we find that the issue before us is with regard to prorata deduction u/s.80IB(10). On the issue of prorata deduction, the ITAT Pune Bench has allowed prorata deduction u/s.80IB(10) in the case of Ramsukh Properties Vs. DCIT, Circle 1, Pune in ITA No.84/P N/2011 vide its order dated 25.07.2012. For the convenience, the relevant portion of the order reads as under: "We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in normal circumstances. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 'A' and 'B' has been completed by 31.03.2009 and where non-completion of building 'C' was beyond the control of assessee, since it had not received FSI within stipulated period, we find no merit in the orders of authorities below in denying deduction under section 80IB(10) of the Act to the assessee for prorata units completed by the assessee before stipulated date. The issue in this regard is settled by various decisions of the High Courts including the decision of Hon'ble Bombay High Court in CIT Vs. Vandana Properties reported in 353 ITR 36 (Bom), wherein it has been held that the developer is entitled to prorata deduction under section 80IB(10) of the Act on the completed units. 18. Another aspect raised in the present appeal is an issue not considered by the Assessing Officer or the CIT(A) i.e. whether the assessee is entitled to the claim of deduction under section 80IB(10) of the Act since no completion certificate has been received by the assessee till the stipulated date i.e. 31.03.2008. First of all, in the order of Assessing Officer, there is mention that the assessee has received the completion certificate before the aforesaid date. However, this aspect needs ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation u/s.133(6) of the Act from the PMC and its response did not reveal any objection on the part of the PMC that the construction was not complete with respect to the sanctioned plans. Therefore, factually speaking, there is no controversion to the assertions of the assessee that it's project was otherwise complete as per the sanctioned plans within the stipulated date. In this background, in our view, the CIT(A) made no mistake in allowing the claim of the assessee and her approach is not only consistent with the decision of the Pune Bench of the Tribunal in the case of Satish Bora and Associates (supra) but it is also in line with the judgement of the Hon'ble Gujarat High Court in the case of CIT vs. Tarnetar Corporation, (2014) 362 ITR 174 (Guj). The relevant portion of the judgement of the Hon'ble Gujarat High Court in the case of Tarnetar Corporation (supra) is reproduced hereinunder :- "In the present case, therefore, the fact that the assessee had completed the construction well before 31st March 2008 is not in doubt. It is, of course, true that formally BU permission was not granted by the Municipal Authority by such date. It is equally true that explanation to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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