TMI Blog2014 (12) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the said 80 flats in building Nos.A and B which were completed within the stipulated period as provided under section 80IB(10)(b) of the Act, for which an occupancy certificate was also issued by the local authority. Merely because the assessee had received the sanction for the construction of 12 additional flats in the same building itself against the purchase of TDR rights, which admittedly, was not constructed before 31.03.2009 does not dis-entitle the assessee to the claim of deduction under section 80IB(10) of the Act in respect of the originally sanctioned 80 flats. The provisions of section 80IB(10) of the Act are benevolent and have to be interpreted in the manner which is beneficial to the assessee. The assessee admittedly, has not claimed any deduction in respect of balance 12 flats which were not constructed before 31.03.2009. In the entirety of the above facts and circumstances, we hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act on the completion of the project which comprised of construction of 80 flats, which was originally sanctioned vide commencement certificate dated 21.05.2004 against which, the occu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s 80IB(10) was not allowable to the assessee in respect of the said project. 2.1] The learned CIT(A) erred in holding that the area of plot mentioned in the 7/12 extract and the audit report of the assessee was less than 1 acre and therefore, the deduction u/s 80IB(10) was not allowable to the assessee. 3] The learned CIT(A) failed to appreciate that the area of plot computed by applying the triangulation method as stated in PMC's sanctioned plan was more than 1 acre and hence, the deduction u/s 80IB(10) was allowable to the assessee in respect of the project 'Ved Vihar'. 3.1] The learned CIT(A) erred in not appreciating that the triangulation method was a more appropriate method and hence, the area computed by applying the same could not be rejected by relying on the area stated on 7/12 extracts and hence, the deduction u/s 80IB(10) was allowable to the assessee. 3.2] The learned CIT(A) ought to have appreciated that the PMC's sanctioned plan was also produced before the learned A.O. and hence, there was no reason to doubt the genuineness of the same and therefore, the deduction u/s 80IB(10) should have been allowed to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the stipulated time period. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 3. The issue raised in the present appeal is in relation to the claim of deduction under section 80IB(10) of the Act. 4. The brief facts of the case are that, the assessee was engaged in construction activity and had constructed a housing project named Ved Vihar in Pune. The assessee had claimed deduction under section 80IB(10) of the Act in respect of the profits from the said project at ₹ 2,31,16,226/-. However, the Assessing Officer had denied the said deduction claimed under section 80IB(10) of the Act for the violation of conditions prescribed in sub-clauses (a) and (b) of section 80IB(10) of the Act. The first objection raised by the Assessing Officer was that the project constructed was on land area which was not more than 1 acre and secondly, the said project was not constructed within the time limit since all the flats were not fully completed within 4 years. It has been noted by the Assessing Officer that the project was first sanctioned on 21.05.2004 for the construction of 80 flats. Subsequently, the sanctioned plans wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the assessee had only received part occupancy certificate dated 30.03.2009 for 80 flats only as against 92 flats in building Nos.A and B and thus, the assessee was held to have not completed the project within the stipulated period and as such, had violated the provisions of section 80IB(10)(a) of the Act. The CIT(A) observed that the local authority had sanctioned additional 12 units in building Nos.A and B as part of the existing project and the assessee was not claiming the deduction under section 80IB(10) of the Act, as the same had not been completed within the stipulated time period, where the sanction was received only on 16.03.2009. Where the local authority i.e. PMC had issued the commencement certificate for 12 flats as part of the same project, the assessee was found not to have fulfilled the conditions laid down in section 80IB(10) of the Act and the deduction claimed under section 80IB(10) of the Act was denied to the assessee. The alternate plea of the assessee for allowing the deduction under section 80IB(10) of the Act on proportionate basis in respect of 80 flats for which, the completion certificate had been received, was also rejected for the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no claim of deduction under section 80IB(10) of the Act on the said 12 flats. Our attention was drawn to the copy of letter placed at page 50 of the Paper Book, under which clarification was sought under the provisions of section 10(23G) of the Act i.e. in respect of the TDR rights. It was the plea of the learned Authorized Representative for the assessee the construction on the basis of TDR purchase on existing building entitles the assessee for deduction under section 80IB(10) of the Act. Further, the learned Authorized Representative for the assessee referred to the clarification given by the CBDT vide letter dated 04.05.2001 in which, it was clarified that where there is an additional housing project on existing housing project sought, then the same would qualify as infrastructure facility under section 10(23G) and section 80IB(10) of the Act, provided it is taken up by a separate undertaking having separate books of account in order to ensure the correct profits of the business can be ascertained for the purposes of section 80IB(10) of the Act. The learned Authorized Representative for the assessee has placed reliance on the ratio laid down by Pune Bench of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of deduction. First condition under clause (a) of section 80IB(10) of the Act is the date of start of commencement of the construction of the housing project and its completion within the stipulated period for the projects which have been approved by the local authority on or before 01.04.2005 and on or after 01.04.2005. The project needs to be completed within 5 years from the end of financial year in which the housing project was approved by the local authority after 01.04.2005 and if approved on or after 01.04.2004 but not later than 31.03.2005, then project to be completed within 4 years. As per explanation under the said clause (a) to section 80IB(10) of the Act where the approval in respect of the housing project was obtained more than once, then it is provided that such housing project shall be deemed to have been approved on the date on which the building plan of such housing project was first approved by the local authority. Further, the date of completion of the construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project has been issued by the local authority. 13. Under clause (b) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f plot by calculation was 4048.46 sq. mtrs. The said tabulation is clearly available on the sanctioned plan itself which reads as under:- Plot area calculation As per D.C. By Triangulation Method A) 0.5 X 99.30 X 40.77 = 2024.23 SQ.M B) 0.5 X 99.30 X 40.77 = 2024.23 SQ.M ____________________________________________ AREA OF THE PLOT = 4048.46 SQ.M AREA OF PLOT AS PER 7/12 = 4000.00 SQ.M AREA OF PLOT BY CALCULATION = 4048.46 SQ.M 17. The explanation of the assessee was not accepted by the CIT(A) since the said evidence was not filed before the Assessing Officer. The CIT(A) accepts the fact that as per 7/12 extract, the area of plot was 4000 sq. mtrs. and on the sanctioned plan as per the triangulation method, the area of the plot was 4048.46 sq. mtrs. 18. We find that while deciding similar issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plot has been mentioned at 4123 sq.mtrs. Even CBDT Circular No. 5 of 2005 dt. 15.7.2005 (276 ITR 151 at P 171) says that the area limit of the plot has to be construed with reference to the area of the site on which the housing project is constructed and not with reference to the demarcation of land done by the land development Authority. We find the A.O and CIT(A) were not having advantage of the demarcation report about the area of the site because the same was not available with them at the relevant point of time. In any case, it goes to the root of the issue i.e. size of the plot. Therefore, we, in the interest of justice, admit the additional evidence and restore this issue to the file of the A.O with the direction to decide the actual measurement of the plot for the purpose of allowability of deduction u/s. 80 IB (10) and decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. Revenue authorities are at liberty to verify the measurement done by land revenue authorities after providing due opportunity of being heard to all the concerned parties. Since we have restored this issue on the preliminary issue of the measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lats was not completed by 30.03.2009. Where the revised commencement certificate related to the same existing project being constructed by the assessee, the Assessing Officer denied the deduction claimed under section 80IB(10) of the Act. In view of the explanation (1) to section 80IB(10) of the Act, in cases where the approval of the construction of the housing project is obtained more than once, then there is a deeming provision that the approval of construction of the housing project shall be deemed to be on the date on which the building plans of the project were first approved by the local authority. In the facts of the present case before us, the first approval for the construction of 80 flats was given by the PMC on 21.05.2004. Thereafter, the assessee received another commencement certificate dated 16.03.2009 for the construction of 12 more flats against the TDR rights. Admittedly, in respect of the said housing project, the first approval was granted on 21.05.2004. Then as per clause (2) to section 80IB(10)(a) of the Act, where the housing project has been approved by the local authority on or after 01.04.2004 but before 31.03.2005, then such project shall be completed wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 flats in building Nos.A and B. The assessee thus, was entitled to the claim of deduction under section 80IB(10) of the Act in respect of the said 80 flats in building Nos.A and B which were completed within the stipulated period as provided under section 80IB(10)(b) of the Act, for which an occupancy certificate was also issued by the local authority. Merely because the assessee had received the sanction for the construction of 12 additional flats in the same building itself against the purchase of TDR rights, which admittedly, was not constructed before 31.03.2009 does not dis-entitle the assessee to the claim of deduction under section 80IB(10) of the Act in respect of the originally sanctioned 80 flats. The provisions of section 80IB(10) of the Act are benevolent and have to be interpreted in the manner which is beneficial to the assessee. Further, the assessee admittedly, has not claimed any deduction in respect of balance 12 flats which were not constructed before 31.03.2009. In the entirety of the above facts and circumstances, we hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act on the completion of the project which comprised o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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