TMI Blog2009 (6) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... ther made enquiries about the date of completion of the projects, nor made required enquiries to determine the maximum built up area of the residential unit of the projects, the sanctioned area of some of the units being admittedly more than one thousand square feet, nor resorted to any disallowance U/S 14A in respect of dividend income and found out whether any expenditure was attributable to dividend income. This according to him made the order of the AO both erroneous as well as prejudicial to revenue in view of the decisions of the Supreme Court in the cases of Rampyari Devi Saraogi vs. CIT, (1968) 67 ITR 84 (SC) and Tara Devi Aggarwal vs. on, (1973) 88 ITR 323 (SC) and the jurisdictional High Court in the case of Gee Vee Enterprises vs. Addl. CIT, (1975) 99 ITR 375, 386 (Del). He, therefore, set-aside the assessment for making it afresh. 4. According to the assessee the deduction u/s 80IB (10) had been allowed to the assessee after the AO had made proper enquiries in this regard and on being satisfied that the conditions prescribed under this section were met. The assessee filed the following: i) A certificate of Statutory Tax Auditors dated 6.10.2001 in which it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous in so far as prejudicial to the interest of revenue and the CIT is wrong in setting aside the same. 7. We have heard the parties and considered the rival submissions. We find that the AO made enquiries about the claim of the assessee and discussed the claim in order of assessment as under: In its revised return of income, the assessee has claimed deduction u/s 80IB(10) of the I. Tax Ac, for the following three projects.: Golf Link- I, Greater Noida Rs.1,42,85,683 Golf Link -II, Great Noida Rs.36,77,850 Avantika - Akirti Rs.1,09,43,137 Rs.2,89,06,670 As per provision of section 8018(10), the assessee was required to have these projects completed by 31.03.2003. In this regard, the assessee produced completion certificates issued by the competent authority. However, the assessee failed to produce completion certificates in respect of following projects (houses): Golf Link-1, Greater Noida Rs.5,80,883 Golf Link -II, Great Noida Rs.3,27,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place; and (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. 9. On a close reading of the provision of this section, it would be evident that the deduction under this section is available on satisfaction of the following conditions: i) The project is approved by a local authority; ii) The size of the plot of land is of a minimum 1 acre; iii)The residential unit should have a built-up area not exceeding 1,000 sq. ft. ; iv) The undertaking commences development and construction of the housing project on or after 1st October, 1998 v) The undertaking completes the development and construction before 31st March, 2001. 10. There is no dispute as regards first two conditions, that the project was approved by a local authority and that the project was being develope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate. East End Loni 1. A/c 184 1397.49 2. A/c 185 1397.49 7. A/c 1890 1097.93 22. A/d 103 1255.94 23. A/d 104 1255.94 Aavantika Aakriti 5 AD0/047 1301.91 16 AD0/076 1301.91 66 BDo/269 1301.91 76 BDo/295 1301.91 145 DD1/009 1301.91 148 DD1/012 1301.91 12. Subsequent to the completion of assessment, the definition of built up area for the purposes of section 80-IB(10) of the Act was inserted in clause (a) to sub-section (14) thereof by the Finance (No.2) Act, 2004, with effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing 40% will be ₹ 91,65,983/-. Hence deduction shall not be allowable u/s 80-IB in respect of this amount. 12.5 On the remaining business profit, relating to sale of flats of less than 1000 sq. ft. (built up area the assessee shall be entitled for deduction u/s 80-IB. The AO is therefore directed to work out deduction u/s 80-IB according to law, after proper verification of figures given by the assessee which have been referred to above. The ground is therefore disposed of accordingly. 15. In Kolkata Bench of the Tribunal in the case of ACIT vs. Bengal Ambuja Housing Development Ltd. the deduction under section 80-IB (10) was claimed with respect to profit attributable to the built up area, which was occupied by the residential units having individual flat size of less than 1500 sq. ft. out of the 26 residential units wherein the individual flats varies from 800 to 3000 sq. ft. The Tribunal held that section 80-IB(10) does not provide for denial of deduction, if a housing complex contains both the smaller and larger residential units and concluded that profits attributable to eligible residential units are entitled to deduction inspite of the fact that other residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt of work order. Further it is seen that the assessee had sought for approval from the BDA only as an independent and individual plan for each of the blocks including commercial part of the project. Further from the sanction order issued by the BDA dated 14.6.2002 for 'Mayflower', dated 5.2.2003 for 'Cassla' it is apparent that the plan sanctions were approved for each of the blocks independently. We have had the benefit of each of the approvals, plan sanction and certificates issued by the Government authorities. Even though the projects of the assessee are bigger one consisting of independent units, the assessee had claimed the benefit u/s 80-IB only in respect of block 'A' and 'C' namely 'Mayflower' and 'Cassla'. In respect of other units viz. Magnolia, Jacaranda and Laburnum the assessee did not avail or claim the benefit u/s 80-IB. The learned CIT (A), after having considered the facts in detail, is justified in concluding that 'Mayflower' and 'Cassla' are independent projects for the purposes of section 80-IB. Further, profits from the units will have to be arrived based on the method of accounting emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects constituting subject matter of consideration in the assessment years and there is no dispute as regards commencement of construction with respect to two housing projects, viz., Golf Link II and East End Loni, which commenced after 1.10.98. The lay out plan for the construction of the housing colony, Golf Link II was approved by the approving authority on 11th March 1999 itself. Similarly, lay out plan for development of housing colony at East End Loni was approved by the relevant authority on 16th January, 1999. As regards other two housing projects, viz., Golf Link I and Avantika Aakriti, date of construction has to be seen from the date when the construction of the building plan of each house is approved by the relevant authority. The assessee had submitted sequence of events between assessee and the approving authority, as elaborated on page 2-7 of paper book. The relevant clause of building regulation provides that construction of residential building can be commenced after submission of the building plan. If within 30 days of the receipt of such plan no order, either sanctioning or refusing such building plan, is passed by the approving authority, the plan shall stand san ..... X X X X Extracts X X X X X X X X Extracts X X X X
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