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TMI Blog2017 (4) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... was selected for scrutiny by issuing notice u/s 143(2) of the Act and the assessment was completed u/s 143(3) vide order dated 27/03/2014 at total income of Rs. 10,36,88,014/-. The disparity between returned income and the assessed income is on account of disallowing the claim of deduction of a sum of Rs. 10,29,94,124/- under sub-section (10) of section 80-IB of the Act. 5. Brief facts leading to this addition are as under: The assessee undertaken construction of a housing project called 'Epitome Project' in the land bearing survey No.51/ 54/2 of Bilekahally, Bengaluru South Taluk, Bengaluru. The assessee has started construction of the project on 30/03/2007 and the assessee has been claiming deduction under the provisions of sub-section (10) of section 80-IB of the Act since assessment year 2008-09. During the course of assessment proceedings, the Assessing Officer (AO) made a reference to the District Valuation Officer (DVO) vide his letter dated 25/10/2010 requesting the DVO to measure size of flats built in order to find out whether the built-up area of each flat of the project exceeds 1500 sq.ft. The DVO submitted a report dated 17/02/2014 wherein he mentioned Wing 2 meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31/03/2011 goes to prove that the project was completed as per sanctioned plan. It was submitted that the assessee had entered into an agreement in the form of Memorandum of Sale Agreement in respect of each flats separately details of such agreements are mentioned below: Alterations to the sanctioned plan were carried out by the purchaser of the flats subsequently and therefore, he submitted that the project was completed as per sanctioned plan. As regards failure of clause (f) of sub-section (10) of section 80-IB, learned authorized representative of the assessee submitted that agreements of sale or memorandum have been entered into prior to insertion of clause (f) of sub-section (10) to section 80-IB. Therefore, he submitted that the provisions of clause (f) of subsection (10) of section 80-IB, have no application to the facts of the case. He relied on the decision of the Hon'ble Karnataka High Court decision in CIT vs. Gopalan Enterprises; CIT vs. Classic Developers; CIT vs. G.R.Developers, CIT vs. Anriya Project Management Services, Hon'ble Madras High Court decision in CIT vs. Sanghvi & Doshi Enterprises and the decision of the Hon'ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed to show that any consideration was paid on the date of agreement and the possession was handed over nor the memorandum of sale agreements were registered. Thus, he prayed for sustenance of the addition. 9. We heard rival submissions and perused material on record. The issue that comes up for consideration in the present appeal is whether the assessee is entitled to deduction u/s 80-IB(10) of the Ac t. For better appreciation of the law on the issue, the relevant provisions of sub-section (10) of section 80-IB are extracted below: "80-IB(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,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta. Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government)." 9.1 From the bare perusal of the above provisions of the Act, it is clear that the provisions of sub-section (10)of section 80-IB of the Act provide for 100% deduction of profits derived by an undertaking from developing and building housing project. The deduction is available subject to fulfillment of the following conditions: i. The project is approved by a local authority before 31/3/2008 ii. The project is constructed on a plot of land having minimum area of one acre. iii. The built-up area of each residential unit should not exceed 1,000 sq.ft. in the cities of Delhi and Mumbai (including areas fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght on record except making a bald statement that the assessee is not responsible for such conversion of the flats. The onus lies on the assessee to prove the same, as he is know of facts. iv) The assessee has also not chosen to controvert the finding of the AO that the assessee had paid fine for violation of the sanctioned plan at the time of obtaining occupancy certificate on 31/3/2011. These facts clinch the issue against the assessee to hold that the assessee violated the provisions of clause (c) of section 80-IB(10) of the Act. 9.3 As regards violation of clause (f) of sub-section (10) of section 80-IB, the submission of the appellant, that the agreements for sale were entered before insertion of clause (f) and therefore, have no substance, for the simple reason that in respect of M.Vani M Rao, the date of agreement is 15th April 2013 which is clearly after insertion of clause (f). Clause (f) was inserted into the Act by the Finance (No.2) Act, 2009 w.e.f 1/4/2010. Since the Finance (No.2) Act, 2009 became law w.e.f. 19/08/2009, restrictions regarding allotment of residential units shall not apply in respect of allotments made before 20/08/2009 Whereas in this case, allotm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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