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TMI Blog2018 (3) TMI 1712X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of Rs. 19,83,97,563/- in the return of income. Before we proceed to adjudicate the respective grievances, we deem fit and proper to reproduce hereinafter the respective Grounds of appeal raised before us. 4. The following grounds have been taken by assessee:- "1.On the facts and in law, the Hon. CIT (A) erred in re-computing the profit of the housing project eligible for deduction u/s 80IB (10) thereby confirming addition to the extent of Rs. 1,02,02,930/- on the basis of provisions of sec. 80IB (13) r.w.s. sec. 80IA(10) not appreciating that such disallowance was not justified by law and by facts. 2. Your appellant craves leave to add, alter, amend, delete and/or vary any of the above ground of appeal/relief claimed at any time before the decision of the appeal." 5. The Grounds taken by Revenue are as under:- 01. "Whether the Ld. CIT(A) erred in not appreciating the fact that FSI consumed by the 3 buildings MN-6 , MN-7 and MN-8 itself is only 4067.45 Sq. Mts, or 43,782 Sq. Ft. and the condition of the requirements of land which should be more than 1 Acre as per provisions of section 80IB(10) plot of land is not fulfilled. 02. Whether on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) of the Act partially in as much as according to him the deduction was liable to be scaled down by a sum of Rs. 1,02,02,930/- and not Rs. 6,18,67,801/- as done by the Assessing Officer. 7. In this background, Revenue in its appeal has challenged the action of the CIT(A) in holding the assessee eligible for a claim u/s.80IB(10) of the Act in terms of aforestated Grounds of appeal whereas, assessee in its cross appeal has assailed decision of the CIT(A) in part sustaining the scaling down of deduction u/s.80IB(10) of the Act. Since the cross appeals relate to same issue of the claim of deduction u/s.80IB(10) of the Act, the same are being dealt with together. 8. Now, we may take up for consideration the relevant facts and the basis for the Assessing Officer to deny the claim of deduction u/s.80IB(10) of the Act. Notably, the assessee claimed the deduction in relation to the profits derived from construction of three buildings viz., MN-6, MN-7 and MN-8 which covered the total estimated area of 43,782 sq.ft. situated on LBS Road, Thane (W). 9. It was noticed that the land on which the housing project is constructed was originally owned by one M/s. FGP Ltd., (Formerly known as Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., was already in progress and if the development of the land under the new FSI was also to be undertaken by it, the same would not be eligible for Section 80IB(10) benefits and therefore, according to the Assessing Officer this prompted the incorporation of the assessee-firm in which M/s. Kashish Park Realty Pvt. Ltd., is also a partner. All these aspects have been made out by the Assessing Officer to doubt the genuineness of the assessee firm and its claim u/s.80IB(10) of the Act. However, when all these aspects were challenged by the assessee in appeal before CIT(A), he has disagreed with the Assessing Officer. Quite clearly in para 4 (a) at page 40 of his order, the CIT(A) concludes "that there is nothing on the record to doubt the genuineness of the appellant firm and accordingly, the arguments of the Ld. A.R. on this account are found acceptable". Pertinently, when we peruse the Grounds of appeal raised by the Revenue before us, there is no challenge to this finding of the CIT(A) and rather the challenge is based only on the other objections raised by the Assessing Officer, namely, non-adherence of assessee's project to the requirement of being on a land measuring not less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buildings of the housing projects developed by the appellant firm have been constructed on the open plot of land and none of the buildings has been constructed on the existing buildings. During the yea under consideration, the appellant firm has constructed buildings MN-6, MN-7 & MN-8 covering total area of 4067.46 sq.mtrs. Further, during the immediately succeeding assessment year, the appellant firm has constructed Towers "A" & "B" on total area of 4885 sqmtrs. on which deduction u/s.80IB(10) has also been claimed. Thus, the total area covered under housing projects constructed by the appellant firm works out to 8952.45 Sq.. mtrs. These facts are also verifiable from the para 9 of the assessment order where A.O. himself has considered total area at 96,364 sq.fts. equivalent to 8842.36 sq.mtrs. From the approved lay out plan dt. 29/3/2006, it is also clear that the FSI utilized is 0.98 only and hence, the plot area is certainly more than the built up area. However, the A.O. has erroneously considered the area of building constructed during the year under consideration only ignoring the area of the buildings constructed in subsequent assessment year. In view of this factual po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the TMC vide commencement certificate dated 10/11/2006, a copy of which has been placed at page 63 of the paper book. It was therefore, pointed out that prior to this date, no development plan of the buildings MN-6, MN-7, MN-8 and Tower-A were available and therefore, it cannot be said that assessee's project was a part of an existing project. Therefore, according to him, the project of the assessee was independent project eligible for the benefits of Section 80IB(10) of the Act. 18. We have carefully considered the rival submissions. The first objection of the Assessing Officer is based on Sub-Clause (b) of Section 80IB(10) of the Act which prescribes that in order to claim the deduction, the housing project shall, interalia, be on the size of a plot of land which has minimum area of one acre. The case made out by the Assessing Officer is that since the claim of deduction is with respect to the profits derived from construction and development of three buildings namely MN-6, MN-7 and MN-8, the land covered by such buildings alone should be considered to examine its compliance with Sub-Clause (b) of Section 80 IB(10) of the Act. On this aspect, in our considered opinion, the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the Assessing Officer, if M/s. Kashish Park Realty Pvt. Ltd., would have developed the project by acquiring TDR-FSI, it would not be entitled to the claim of deduction u/s.80IB(10) of the Act. In this context, the CIT(A) has noted that the CBDT communication dated 04/05/2001(supra) permitted the claim of deduction u/s.80IB(10) of the Act even where the additional housing project was constructed by consuming TDR's on an existing housing project, provided the project is taken up by a separate undertaking having books of accounts maintained in such manner to ensure ascertaining of correct profits. On this basis, the CIT(A) found Assessing Officer's objection as untenable because as per the CBDT, the deduction was available even on construction of a housing project on TDR-FSI acquired in respect of existing housing project site. In our considered opinion no fault can be found with the conclusion by the CIT(A) on this aspect. The charge made by the Assessing Officer is that there is a collusive arrangement in order to claim the benefit u/s.80IB(10) of the Act; this charge, in our view, is not maintainable because even if M/s. Kashish Park Realty Pvt. Ltd., would have carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits which was to be restricted in terms of Section 80IA(10) and 80IB(13) of the Act. The CITA) determined an amount of Rs. 1,02,02,903/- on this account on proportionate basis considering the area sold during the year and the balance of the addition has been deleted by him. 21. Before us, learned representative for the assessee pointed out that the CIT(A) ought to have allowed complete relief in as much as the provisions u/s.80IA(10) read with Section 80IB(13) of the Act are not applicable at all, since assessee has no close connection with M/s.FGP Ltd., from whom the development rights have been purchased. 22. On this aspect, learned DR has primarily relied on the order of the CIT(A), which we have already narrated in the earlier parts and not repeated for the sake of brevity. 23. We have carefully considered the rival submissions. Section 80IB(13) of the Act prescribes that provisions of Section 80IA(10) of the Act, so far as may be, shall apply to the eligible business referred to in Section 80IB(10) also. Section 80IA(10) which has been invoked by the Assessing Officer in the present case reads as under:- Sec.80IA(10) "Where it appears to the Assessing Officer that, owin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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