TMI Blog2017 (3) TMI 1790X X X X Extracts X X X X X X X X Extracts X X X X ..... ard. We hold that where the permission has been granted to the assessee for the first time for constructing the building vide commencement certificate No.2098, dated 19.12.1998, the assessee fulfills the basic conditions of starting the project on or after 01.10.1998 and hence, is eligible to claim the deduction u/s 80IB(10) Assessee had incurred certain expenses which are on account of several activities including payment of land development charges, Architect fees, MSEB, bore well drilling charges, designing and development of press advertisements and the advertisement charges, designing of brochures and also purchase of GI sheets, bricks, water storage tanks, etc and also invitation cards for Bhoomi Puja - Activity to construct would only happen once the permission is received by the assessee i.e. building plan commencement certificate. The authorities below have also referred to certain communication of the Architect that the development had started prior to 1998 and the site visits on 01.08.1997 and 25.08.1997 which as per authorities below is the factum of commencement in addition to excavation and construction of roads prior to 01.04.1998. The above said stand of aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the area of flat is more than 1500 sq.ft., the assessee is not entitled to the deduction, having not fulfilled the conditions of said section. In this regard, we place reliance on the ratio laid down in Bangalore Bench of Tribunal in ITO Vs. Mahaveer Calyx [ 2012 (11) TMI 508 - ITAT BANGALORE] Usage i.e. extra commercial usage as against sanctioned commercial usage - Again this facet is to be looked into by State Authorities. The assessee before us has not claimed deduction on account of units of commercial usage. Area of flat - As per the provisions of the Statute in the relevant years, it is the area within four boundaries which has to be taken into consideration and if the same is up to 1500 sq.ft., then the assessee is entitled to avail the deduction, in case it exceeds 1500 sq.ft., then the deduction to such units can be denied. The denial of deduction under section 80IB(10) of the Act is unit-wise. In other words, the assessee is entitled to prorata deduction under section 80IB(10) of the Act in respect of all those residential units which fulfill the conditions laid down in the section of having built up area of 1500 sq.ft. Accordingly, the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and on facts in concurring with the learned AO that construction of tenements in B-1 and C-3 buildings of the housing project of the appellant were not fulfilling conditions laid down in section 80IB(10) of the ITA, 1961, leading to denial of deduction thereto. 5. The learned CIT(A)-II, Pune also erred in not appreciating that the appellant was denied the opportunity of cross verification of parties / customers, etc. of the appellant. He ought to have appreciated that under principles of natural justice, cross verification of evidences should have been ensured. 6. Alternatively and without prejudice (to Ground Numbers 3 and 4 above), the learned CIT(A)-II, Pune erred in law in not permitting a proportionate deduction u/s 80IB(10) of the ITA, 1961 with respect to such tenements of the housing project, which lead to satisfaction of conditions of section 80-IB(10). 4. The issue arising in both the appeals is with regard to the claim of deduction under section 80IB(10) of the Act. 5. Briefly, in the facts of the case, the assessee for the year under consideration had filed return of income declaring total income of ₹ 1,25,59,327/-. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were the occupants of flats in C2, Marigold and Row House No.5, C-2 Marigold and 3-4 Row House No.6, C-1 Marigold, Row House No.1 and also flats of A-1 Tulip. The Assessing Officer noted the eligibility of deduction under section 80IB(10) of the Act and observed that primary condition for obtaining deduction under section 80IB(10) of the Act was that the same was allowable for only housing project approved by local authority. Further, development and construction of housing project should start after 01.10.1998 and the residential units should have maximum built up area of 1500 sq.ft. The Assessing Officer thereafter, analyzed the entire project of Parmar Garden from the aspect of built up area and found that there was one big hall in building B-1 of Carpet area 2576 which was violative of conditions laid down in section 80IB(10) of the Act. Further, Row Houses in buildings C-1 and C-2 also exceeded 1500 sq.ft. The Assessing Officer noted that in building C-1, there were eight flats, however, in reality, there were only four Row Houses. Similarly, in C-2, there were eight flats as against which in reality, there were four Row Houses. The investigation made by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or construction expenses of this project. Similar disclosure was made in the Directors Report relating to assessment year 199697. The Assessing Officer further noted that the commencement certificate from Pune Municipal Corporation was received on 01.08.1996, under which permission was granted to carry out development at Wanawadi, Pune. The Assessing Officer was of the view that the assessee had received the permission for development on 01.08.1996. Thereafter, the Assessing Officer referred to the application made to MSEB dated 11.03.1997 and the NA order dated 30.12.1996. The Assessing Officer noted that the NA order referred to the commencement certificate dated 01.08.1996 and it also categorically stated that the building was to be constructed strictly in accordance with the plans sanctioned by PMC vide commencement certificate dated 01.08.1996. Further, reference was made by the Assessing Officer to the work-in-progress shown by the assessee in the returns of income for assessment years 1996-97, 1997-98 and 1998-99. Even in the Directors Report, there was acknowledgement that the development had started of the project Parmar Garden at Wanawadi. Further, statement of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding related work unless the plot is developed. He held that development of plot was a pre-condition for starting construction work and since the assessee had started road work, had done excavation, plantation and even constructed borewell, these were all activities, which were essential activities before starting construction work. As per the Assessing Officer, the assessee had started development work which was integral part of construction of building prior to 01.10.1998 and hence, the assessee was not eligible to claim the deduction under section 80IB(10)(a) of the Act. The reliance placed upon by the learned Authorized Representative for the assessee on the decision of Pune Bench of Tribunal in Nirmitee Constructions Vs. DCIT in ITA No.1389/PN/2003, was held to be distinguishable on facts and hence, the ratio was held to be not applicable. In the facts of the case before the Pune Bench of Tribunal, NA permission was received on 13.06.1999 and after that it got the commencement certificate, hence the Tribunal had allowed the claim of assessee, though the land was purchased prior to that. In the case of assessee, the Assessing Officer noted that the expenditure incurred was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the building plan. There is single electricity meter. 2) Commercial area exceeding 2000 sq. ft. In the brochure a shopping mall is shown. On verification it was found to be actually constructed as a hall on ground first floor, connected from inside, but used as a sales office - carpet area 2576 sq. ft. On paper it has been shown as 3 flats. This was referred to the PMC who have issued a Show cause notice to the assessee for construction in violation of sanctioned plan. Even if it is treated as residential unit, the area exceeds 1500 sq. ft. Final completion certificate is received on 20/03/2003 3) Project has Commenced prior to 01/10/1998 First commencement certificate of PMC is dated 01/08/1996. Balance sheet filed with returns for AY 1997-98 1998-99 show WIP for this project exclusive of cost of land. Directors Report of relevant period shows development in this project was started. Statement recorded of site engineer architect, who confirmed that roads were made, boundary wall was erected land was excavated prior to 01/10/98. Material purchase bills impounded also conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan was dated 24.06.1998 which also had pre-printed activities / conditions to be completed before building construction could be permitted. In this revised plan, there was change in number of floors and the total number of tenements were 93 along with proposal for club house and swimming pool. As per the assessee, no work was carried out consequent to layout sanction plan dated 01.08.1996 and the same lapsed after one year. 9. The next plea of the assessee before the CIT(A) was that whatever expenditure was made before 01.10.1998 on the project was to protect the land from encroachment and dispute, by way of boundary wall construction, shed for watchman, plantation, etc. and the expenditure related to the land / site / area and not the space in the project. The assessee further claimed that building construction had started only after the construction commencement certificate dated 10.05.1999 in consequence to commencement certificate dated 19.12.1998 issued by the PMC. With regard to C1 and C2 buildings, the CIT(A) observed that the contentions of assessee that the development / layout plan sanctioned vide certificate dated 01.08.1996 was not acted upon and the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66A, Hissa No.2A+2B/1, Village Wanawadi, Pune (plan enclosed) subject to the following conditions. As per the CIT(A), the assessee had received permission for development on 01.08.1996. Further, NA permission was received from Collector, Pune vide order dated 30.12.1996, which admittedly was pre-requisite for development and construction of any land. The CIT(A) concluded by holding as under:- 3.5 From the details in Para 3.4 above, and facts discussed above, it is clear that by March, 1997 the land was fully developed and ready for construction activity to commence. Statements of Shri Ghuge, engineer of the company and Shri Laxman Thite, architect, confirm the fact that development had started prior to 1998. The site visit reports of Shri Azim Shaikh, junior of the architect of the appellant, are contemporaneous dated 01-08-1997 and 25-08-1997. The fact of commencement is evident from these reports. Excavation and construction of roads within the plot, Bhoomi Pujan, advertisements in newspaper hoardings and receipt of advance booking show development work had infact started prior to 01-04-1998. In view of the above, it is held that ratio of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d prior to 01.10.1998 and on this account also, it was held that the assessee is not entitled to the claim of deduction under section 80IB(10) of the Act. 11. The assessee is in appeal against the order of CIT(A). 12. The learned Authorized Representative for the assessee elaborately took us through the factual aspects of the case and pointed out that both the authorities below had not allowed the deduction claimed under section 80IB(10) of the Act. The learned Authorized Representative for the assessee at the outset pointed out that it was not disputed that Lity-I i.e. B1 area was constituted of basement which was more than 1500 sq.ft. and was the shopping area and the assessee was not claiming any deduction in respect of the same. Further, it was also not claiming the deduction in respect of Marigold C3. The learned Authorized Representative for the assessee thereafter, took us through the contentions of CIT(A) in various paragraphs and tried to meet the same. The first contention raised by the assessee was with regard to area of combined flats. The learned Authorized Representative for the assessee pointed out that even after combination of flats, the total a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PMC which is not the material permission for construction of project. He stressed that first certificate dated 01.08.1996 was the layout plan which has been so accepted by the CIT(A) in para 3.1 of the appellate order. The second layout plan was dated 24.06.1998 under which the assessee had to carry out certain activities for making the plot ready for construction purpose. The building plans were sanctioned firstly for C1, C2 on 10.05.1998 and thereafter on 19.12.1998. Our attention was drawn to the list of expenses which are tabulated at pages 24 and 25 of CIT(A) s order totaling ₹ 8,34,752/- and it was pointed out that the assessee is not disputing all the said facts but the development is not material development but activities undertaken to make the land suitable for development. The word development used in section is material development and not activities undertaken to make the land suitable for development. The learned Authorized Representative for the assessee in this regard placed reliance on the following decisions:- a. Ravi Appasamy Vs. ACIT (2016) 69 taxmann.com 305 (Madras) b. Nirmiti Construction Vs. DCIT (2005) 95 TTJ (Pune) 1117 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had completed the building by 20.03.2003. He further referred to the letters of PMC, Pune placed at page 344 of the Paper Book, where in respect of combination of flats, PMC asked to the assessee to file record plans for regularization. He stressed that as far as PMC is concerned, the assessee was not in default vis- -vis the amalgamation of flats. 17. The next argument of learned Authorized Representative for the assessee was the dimension of violation by the assessee i.e. combination of two flats. He pointed out that even in case of violation, if any, where the area of combined flats was less than 1500 sq.ft., then the deduction under section 80IB(10) of the Act was to be allowed. In any case, prorata deduction is to be allowed to the assessee. He fairly admitted that the Assessing Officer may carry out the necessary verification exercise by deputing the DVO to verify the area of flats within boundaries and in case the same is found even after amalgamation, at less than 1500 sq.ft., then the assessee is entitled to claim the said deduction. 18. Coming to the violation of building plans he pointed first of all, PMC has regularized the violation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per approved plans and hence, even prorata deduction is not to be allowed. The learned Departmental Representative for the Revenue stressed that the assessee is not even aware when the construction had started as in different documents different statements were made. However, the documents found during the course of Survey, established the case of Revenue. 20. The learned Authorized Representative for the assessee in rejoinder pointed out that the layout plan was passed without building plans being passed and till the same are passed, nothing can be constructed. He further stressed that laying of internal roads was part of layout plan. He further referred to the decision in Nirmiti Construction Vs. DCIT (supra) and pointed out that real ratio laid down was that the development would lead to material change in land and in the absence of the same, it cannot be said that the assessee had started construction. As far as the decision of Hon ble High Court of Madras in Ravi Appasamy Vs. ACIT (supra) is concerned, the learned Authorized Representative for the assessee pointed out that the Hon ble High court has laid down the proposition that under section 80IB(10) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Bombay High Court held that as a result significance of size of plot of land is lost and therefore the assessee subject to fulfilling other conditions, becomes eligible to section 80IB(10) of the Act deduction on construction of housing project on a plot having minimum area of one acre irrespective of the fact that there existed other housing projects or not. 23. The Hon ble Supreme Court in CIT Vs. Sarkar Builders (2015) 277 CTR 301 (SC) was abreast of the issue of restriction imposed by clause (d) to section 80IB(10) of the Act in respect of commercial space in a housing project. The Hon ble Supreme Court observed that section 80IB(10) of the Act stipulates certain conditions which are to be satisfied in order to avail the benefit of said provisions. Further, it was held that the benefit was available to those undertakings which are developing and building housing projects approved by a local authority. The section was applicable in respect of housing projects but at the same time, certain commercial establishments and shops were held to be needed even in the housing project. The extent of commercial area which could be constructed earlier was as per local law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts were sanctioned. The Hon ble Supreme Court further noted that another important amendment by this Act to sub-section (14) to section 80IB(10) of the Act w.e.f. 01.04.2005 and clause (a) was inserted in section 80IB(14) of the Act defining the words built-up area to mean the inner measurements of residential units at the floor level. including the projections and balconies, as increased by thickness of walls, but did not include common area shared with other residential units. The Hon ble Supreme Court further observed that in order to avail the benefit in assessment years after 01.04.2005 holding that the balconies should be removed though these were permitted earlier would lead to absurd results as one cannot expect an assessee to comply with a condition which was not part of Statute when housing project was approved. 26. The Hon ble Supreme Court in CIT Vs. M/s. Veena Developers with SLP(C) No.24329/2011 along with bunch of appeals including the appeal against order of Hon ble Bombay High Court in CIT Vs. Brahma Associates (supra), deliberated upon the aforesaid issue of grant of deduction under section 80IB(10) of the Act i.e. provisions which stood prior to 01.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be interpreted without taking an extraneous aid for definition of expression development . It was further held by the Hon ble High Court that the requirement under section 80IB(10) of the Act was twin requirement, which speaks both about development and construction of the housing project. It was further held that conjunction between development and construction, by the use of word and , cannot be made a dead letter, by applying the definition of the expression development to the phrase development and construction . The Hon ble High Court held that the expenses incurred by the assessee in removing the hut dwellers, digging of bore wells, getting electricity connection, putting up compound walls and security cabins, etc. have all been taken by the Tribunal to be part of construction activity and accordingly, pre-pone date of development and construction. The Hon ble High Court held that where the actual date of commencement of construction was 15.10.1998, the correct interpretation is to be then offered to the composite expression development and construction of the housing project and hence, the conditions of section 80IB(10) of the Act were held to be fulfilled. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ats are beyond the limits provided under section 80IB(10) of the Act and not otherwise. The relevant findings of the Hon ble High Court were as under:- 40. Thus, in the face of the clear provisions and going by the strict construction, one cannot read any limitation into the expression housing project to mean residential project alone and that if and when the projects have mixed built-up area of commercial and residential, the question of disallowance will arise only if and when the residential flats are beyond the limit as provided under sub-clause (c) of section 80IB(10) and not otherwise. Even herein, the disallowance could be only proportionate to the extent of units in violation of the area prescribed under clause (c). In a pure commercial housing project, the question of applicability of sub-clause (c) does not arise at all. 31. Now, coming to the facts of the present case, the assessee has filed exhaustive events chart, under which various transactions relating to the acquisition of the plot of land by the assessee from original landholder and also dispute created by the original landholder by selling the same piece of land to another person are tabul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Free Translation) 238 238 5 19/04/1995 Complain to police station by Vilas Parmar Stating that unauthorized persons are creating temporary structures on our land and they are also filling the water well with sand / dubber 239 239 5A (Free Translation) 240 240 6 21/04/1995 Notice from the police station regarding the disputes Notice given by police authorities to all the parties, i.e. Parmar properties and Sharda Group (Mr.APD, Partner, Sharda Shelters). It is stated that considering the disputes, ensure status quo and do not disturb peace and create any disturbance. 241 241 6A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 274 276 11 20/03/1996 Development Agreement 66 That Sharda Group has left rights on Sr.no 66 and Parmars have left rights in Survey No.65. Hence, this new Development Agreement (between Parmar Properties Kedari Family and others) 277 300 11A (Free Translation) 301 302 32. The assessee claims that in view of the above said scenario, it had to file a petition before the Civil Court, wherein an injunction was passed on 25.04.1995, under which the original landholder Mr. Kedari s family was directed not to create any disturbance in the possession of the assessee. Consequent thereto, on 13.06.1995, a memorandum of understanding was reached between the interested parties, who had separately negotiated with the original landholder and as per the understanding, survey No.65 was executed to the other party i.e. to Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by PMC. Yet, considering some frivolous old complaints, the building plans not sanctioned 310 312 17 16/09/1997 Letter from Architect Mr. Laxman Thite Stating that not to start any development work till the sanctioning of plans 313 313 18 04/04/1998 Development Agreements with new land owners on S. No. 66 at ₹ 410,000/- 66 Agreement between Parmar Properties Limited Jijaba Pandurang Jadhav and others giving rights in the said Property and also permitted to demolish old structure. 314 328 18A (Free Translation) 329 329 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-2: 3-8 = 6 C-3: 1-6 = 6 Total = 165 341 341 23A (Free Translation) 342 342 24 04/03/2006 Letter from PMC regarding internal changes in flats 66 a) That in B-1 building, due to the internal changes, flats no.1, 1A 2 are converted into office. b) That in A-1 building (i.e. TULIP), 2 flats are merged into 1 and on every floor, instead of 8 flats, only 4 flats are made out c) That in C-1 C-2 building, 8 flats made out in 4 flats d) That in C-3 building, flat nos. 1+2 3+4 are merged, internal changes made and the same is used commercially and rented out to a computer company for commercial use. e) Society office made in Parking without PMC permission. f) Construct as per plans else appropriate action will be taken. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eive various permissions before asking for building permission. The perusal of plan which is annexed to the said commencement certificate which is placed at page 307 of Paper Book, very clearly mentions it to be a layout plan. Where the area of the land lays reservations are provided in the area statement of plot and balance area available for development of 8124 sq.mtrs.; undoubtedly, the project is mentioned as proposed building layout of survey No.66A, H.No.2/A/2B/1, Wanawadi, Pune. The perusal of said plan reflects the area calculation for H.C.M.T.R road Ring Railway, play ground, DP road and also FSI statement for various buildings and the area to be occupied. Further, it provides the plan for division of area available for development, but does not provide any structural or engineering plans for buildings to be constructed. 35. The assessee on 30.12.1996 received NA permission i.e. conversion of agricultural land into non-agricultural land, copy of which is placed at pages 308 and 309 of the Paper Book. As pointed out earlier, the commencement certificate for the layout plan was issued on 01.08.1996 and the same was valid for period of one year, that means all condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance to be submitted before asking for building permission. One more clause which was in the revised plan was that the existing structure should be demolished before starting any development. The layout plan is also annexed, wherein it is mentioned that it is DP layout plan which makes the calculations and area statement under which the balance area which is available for development of plot is worked out at 8124.93 sq. mtrs. and all the conditions are also mentioned in the plan itself. 36. The above said clearly establishes that till date 24.06.1998, the assessee had not received the building plans but conditions were laid upon the assessee to carry out certain activities of clearance of the land and plotting of the land and also making the provisions for colony roads, water lines, drainage, etc. The said layout plan also lays down that the development work would not start unless peripheral permanent fencing is constructed on site. One of the conditions laid down by the PMC was that existing structure should be demolished before starting any development. In this regard, the assessee wrote a letter to the PMC on 30.11.1998, wherein it was pointed out that the demarcati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given by the PMC for construction of proposed building at the site of the assessee, which was given vide Certificate No.2098, dated 19.12.1998. All the earlier communications which are also called commencement certificate were for the layout of plot and are separate and distinct from the commencement certificate issued by the PMC for construction of the building. The assessee has been given the permission to construct the buildings which were plotted as per the layout plans. Accordingly, we hold that where the assessee has got permission on 19.12.1998 to construct the building, then the assessee has fulfilled the basic conditions laid down in section 80IB(10) of the Act in order to avail the benefits of the said section; since the deduction under the said section is available to such projects which commenced construction on or after 01.10.1998. The previous commencement certificates were in respect of layout plan of the said project and are at variance with the commencement certificate issued for construction of building and in such circumstances, it could not be held that the assessee had received the permission to construct the building prior to 01.10.1998 and hence, was not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain advances from the buyers and such receipt vouchers were impounded during the course of Survey. However, the assessee has clarified that as the project did not take off, the said advances were returned. The Revenue has not brought on record anything to contrary. The Assessing Officer and the CIT(A) thereafter refers to the commencement certificate issued by the PMC on 01.08.1996 which mentions that the permission is granted to carry out the development of survey No.66 with plan, is subject to the following conditions. The conclusion of the authorities below is that the assessee had received permission for development on 01.08.1996, which is ironic that the authorities come to conclusion that the assessee had received the so-called permission on 01.08.1996 i.e. on the date when the land in question was an agricultural land. The NA permission for the said land was received from the Collector, Pune office on 30.12.1996 which is placed at pages 308 and 309 of the Paper Book. This NA permission received on 30.12.1996 is admittedly, a pre-requisite for the development and construction of any land and it makes the land ready for construction activity. However, the activity to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f building B1 and C3, wherein there is violation of not only usage but also the area occupied. The learned Authorized Representative for the assessee at the outset pointed out that despite the stand of assessee before the authorities below, but the assessee is withdrawing its claim of deduction under section 80IB(10) of the Act in respect of B1 and C3, the assessee has agreed that the total area on merger was more than stipulated area of 1500 sq.ft. and hence, the assessee was not entitled to claim the aforesaid deduction. In the first instance, where the assessee has withdrawn is claim, the same stands decided against the assessee. However, the next aspect of the same issue is that the authorities below are of the view that since the assessee has violated building plans in making the aforesaid construction, hence, the assessee should be denied the deduction under section 80IB(10) of the Act. First of all, while deciding the issue of grant of deduction under section 80IB(10) of the Act, the role of authorities of Income Tax is to see whether the conditions laid down in the Act are satisfied. The violation, if any of merging the flats and having area more than the sanctioned area an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities, wherein suitable fines and fees are levied after the assessee submits the record plans. Similar issue of combination of flats and entitlement to deduction to flats if the area of combined flats was within the prescribed limit of 1500 sq.ft. has been decided in following cases of various Benches of Tribunal and we place reliance on the same:- a) Kura Homes P. Ltd. Vs. ITO reported in 139 ITD 445 (Hyd) b) ITO Vs. Ashray Premises P. Ltd. reported in 54 SOT 209 (Mum) c) ITO Vs. Siddhivinayak Homes in ITA No.8726/MUM/2010 d) Kasturi Housing Construction P Ltd. Vs. ACIT in ITA No.1370/PN/2007 41. Even if the assessee has made extra construction than the approval received from the local authority, then such extra construction has to be looked into by the municipal authorities and the Income Tax authorities are to ensure that the conditions laid down under section 80IB(10) of the Act are fulfilled in respect of such flats for which the said deduction is to be allowed. Where the area of flat is more than 1500 sq.ft., the assessee is not entitled to the deduction, having not fulfilled the conditions of said section. In this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 44. The learned Authorized Representative for the assessee before us has pleaded that physical verification exercise of measurement of flats i.e. within boundaries of the flats and not the super built up area can be verified by the Assessing Officer by directing the DVO and after the verification, the claim of assessee may be looked into and decided on the basis of said verification. In the totality of the above said facts and circumstances of the case and because of conflicting reports of DVO in the two years i.e. assessment years 2003-04 and 2004-05, we find merit in the plea of the assessee. As per the provisions of the Statute in the relevant years, it is the area within four boundaries which has to be taken into consideration and if the same is up to 1500 sq.ft., then the assessee is entitled to avail the deduction, in case it exceeds 1500 sq.ft., then the deduction to such units can be denied. The denial of deduction under section 80IB(10) of the Act is unit-wise. In other words, the assessee is entitled to prorata deduction under section 80IB(10) of the Act in respect of all those residential units which fulfill the conditions laid down in the section of havin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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