TMI Blog2011 (4) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... by the commencement certificate and occupation certificate issued by the local authority are all in the name of Shri Naresh Khetwani Jagdish Khetwani and Probhudas Thakkar, who are the original holder of development rights in respect of the said land. As such the assessee does not hold any legal standing for the claim of deduction us/80IB(10) in respect of the project developed on the said land 3. On the facts and circumstances of the case and in law, the ld. CIT(A) was not justified in allowing deduction u/s 80IB(10) of the IT Act on proportionate basis 3. The first grounds of appeal is regarding the dispute on the date of approval of project. 4. The assessee is engaged in the business of builder and developer and has undertaken the projects Prakruti Park on a plot of land, consisting of various survey nos. situated near Brahmand Phase-4, Opp. Swastick Park, Azadnagar, Off Ghodbunder road, Thane. During the course of assessment proceedings, the AO noticed that the plan of the project of the assessee was first approved by the Thane Municipal Corporation on 27.02.2004 (i.e. before 1.04.2004). The AO further noticed that that the assessee submitted many amendments in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst approval to the housing project of the assessee was given vide VP no. 2003/59/TMC TDD/4640 dated 27.2.2004 which is before 1.4.2004, therefore, completion of the project should have been on or before 31.3.2008. Whereas the project was completed on 19.06.2008 which is beyond the prescribed limit of time as per the provisions of section 80IB(10). He has contended that as per the development agreement between the assessee and the owner of the land under clause (T), it has been specifically mentioned that the project was approved vide VP no. 2003/59/TMC JDB/4640 dated 27.2.2004. A copy of the said approval letter was also annexed with the development agreement before the project was taken over by the assessee vide the development agreement. The learned DR has thus submitted that when it was accepted by the parties at the time of development agreement that the project has already been approved on 27.2.2004 then the subsequent approval of the project is immaterial and only first approval has to be taken into account. The learned DR has then referred the letter dated 7.02.2008 of Executive Engineer, Thane Municipal Corporation which is placed at page 133 of the paper book and submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val of plan and for commending construction work. The learned AR contended that this is the first step towards the approval of housing project for construction purposes. Therefore, he submitted that the term approval of housing project as referred to in section 80IB (10)(a)(i) and (ii) is not the sanction of development permission granted in our case by the local authority on 27.02.2004. But only after compliance with the requisite conditions laid down under the local authority letter dated 27.2.2004 the assessee was granted commencement certificate. 9. The learned AR submitted that the assessee granted approval by the local authority on 21.9.2004. Hence, the project was required to be completed prior to 31.3.2009. The assessee completed the housing project and the Thane Municipal Corporation granted occupancy certificate on 19.6.2008 and hence the conditions laid down u/s 80IB(10) have been fully complied with. 10. The learned AR has referred to the sanction plan at page 21 of the paper book and submitted that the plan of the project was sanctioned/approved only on 21.09.2004 and there was no sanction of the approval as such prior to that date. Only a letter dated 24.2.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to 1.4.2004 and therefore the completion on 19.6.2008 is after 31.3.2008. Thus, the AO was of the view that the assessee is not entitled for deduction u/s 80IB(10). The CIT(A) held that the housing project to be considered as approved when both, the sanction of development permission and commencement certificate are issued as both are essential. There is no ambiguity about the requirement of the provisions of section 80IB(10) that if the project is approved prior to 1.4.2004 then same has to be completed on or before 31.3.2008. As per explanation to section 80IB(10) in case where approval in housing project is obtained more than once such housing project shall be deemed to have been approved on the date on which the building plan of such housing project first accorded by the local authority. Explanation to section 80IB(1) for the sake of ready reference is reproduced below: 80IB(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. ....... 11. Before CC, NOC from ULC department required in respect of units as per sanctioned plant to be given to government. 12. ....... 13. Before CC, Non-agricultural persmission required to be presented. 14. ..... 15. ..... 13. As it is evident from the above letter, the Thane Municipal Corporation had set out certain conditions to be fulfilled by the assessee for development permission. Accordingly, the assessee obtained the necessary approval from the various authorities such as the permission of non-agricultural use of the land was obtained used on 15.07.2004 and permission from Urban Land Ceiling authority was taken on 26.07.2004. After compliance of certain conditions as set out in the letter dated 24.2.2008 the Thane Municipal Corporation has issued a sanction letter/commencement certificate vide letter dated 21.9.04. the contentions of which are reproduced as under: VP 2003/59 TMC/TDD/2060 dated 21.9.2004 to Shri M/s Arketype Consultant (I) P ltd Shri Dhansorabji Kharas and ors (-owner, Shri Naresh Khetwani and Shri Jagdish Khetwani and Shri Prabhudhas Thakkar(power of attorney holder). Sir, With reference to your application no. 13510 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval as per the Explanation to section 80IB(10). 17. In view of above discussion, we decide this issue against the revenue and in favour of the assessee. The order of the CIT(A) is confirmed qua this issue. 18. Grounds of appeal no.2 is regarding the disallowance of deduction on the ground that the assessee is not the owner of the land on which the project is constructed. 19. We have heard the learned DR and the learned AR and considered the relevant record. At the outset we note that this issue does not emanate from the impugned order of CIT(A). Even the AO has also not recorded such objection in the assessment order while addressing the issue of deduction u/s 80IB. Therefore, we dismiss grounds of appeal no.2 in limine as it does not arise from the impugned order. 20. Grounds of appeal no.3 is regarding disallowance of reduction on the ground that some of the plots in the project are more that the area of 1000 sq.ft. 21. We have heard the learned DR as well as the learned AR and considered the relevant record. It was found by the AO that 12 flats were merged and converted into 6 units and resulting a total area of the unit exceeding 1000 sq. ft. The ld. DR has subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of M/s Laukik Developers that the proportionate deductions is not allowable is no longer a good law in view of the decision of the Special Bench of ITAT in the case of M/s Brahma Associates. 9.1 In view of the facts and legal position mentioned above, I am of the view that the appellant is entitled for deduction u/s 80IB (10) on all the residential units which fully comply with the conditions laid down in section 80IB(10). In this case, only 12 flats combined into 6 residential units, as mentioned above, do not qualify for deduction u/s 80IB(10). The AO is directed to compute the quantum of deduction u/s 80IB(10) on all the residential units complying with the conditions laid down in the statute except only the 12 flats or 6 residential units having combined maximum build up area exceeding 1000 sq. ft. The grounds of appeal no. 1 and 4 are partly allowed 25. Both the assessee as well as the revenue has challenged the order of the CIT(A) on this issue, the revenue has challenged the proportionate allowance of claim by the CIT(A) whereas the assessee has challenged in the cross-objection proportionate disallowance confirmed by the CIT(A). 26. As evident from the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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