TMI Blog2017 (1) TMI 1794X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 was subsequently revised and has been totally completed before 31.03.2012 and in such a situation, the claim of deduction u/s 80IB(10) of the assessee was allowable on a proportionate basis. Violation of provisions of the Act on account of the area of 5 Row Houses being in excess of 1500 Sq.Ft. - CIT-A has given a finding that Government Approved Valuer had taken the outer measurement of the Row Houses and calculated the area which is contrary to the definition contained in Sec.80IB(14)(a). He has further noticed that the Authorized Valuer had added the area of car porch, terrace above porch while measuring the area of Row Houses and if the terrace area is excluded from calculation of area, the total area of the units do not exceed 1500 Sq.Ft. For excluding the area of terrace, Ld. CIT(A) had relied on the decisions of M/s. Commonwealth Developers CD Fountain Head [ 2014 (4) TMI 122 - BOMBAY HIGH COURT] and the decision of CIT Vs. Mahalakshmi Housing [ 2012 (11) TMI 1121 - MADRAS HIGH COURT] and other Tribunal decisions. Before us Revenue has not placed any material on record to controvert the findings of ld. CIT(A) nor has placed any contrary binding decision in its s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uildings and units 1 flats in the project without appreciating the fact that jurisdictional High Court in the case of CIT vs. Brahma Associates, 333 ITR 289 held deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the terrace area cannot form part of built up area as defined in the sec 80IB(14)(a) of the Act. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to section 80IB(10) of the Act. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to 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 disallowance of the claim of deduction u/s 80IB(10) amounting to Rs. 11,41,59,573/-. The Assessing Officer during the assessment proceedings disallowed the said claim of the appellant firstly on the ground that as per the valuation report of the govt. authorized valuer the building C was not yet completed and hence the project Park land was held to be incomplete and secondly, five units of the said housing project were found to be admeasuring more than 1500 sq.ft. The fact of the case is that the appellant firm undertook a housing project Park land at Balewadi, Pune. The project was originally sanctioned on 4th Aug. 2006 and further the plan was revised on subsequent dates i.e. 18-11-2006, 3-2-2007, 13-2-2008, and 21- 7-2011. The project comprised of 6 buildings viz. Wing A, B, C, D E F. The due date for the completion of the project is 31-3-2012 as the said project commenced in F.Y. 2006-07 as per the provisions of sec 80IB(10)(a). The appellant received part completion certificate issued on 28-3-2012 with respect to Building A, B, D E comprising of 32 units and Building F of 5 units. The construction of building C could not commence and, therefore, the same could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In such a situation and circumstances wherein the compliance of the provision has become impossible on the part of the appellant and therefore, the claim of deduction prima facie cannot be denied. The appellant in this regard has placed reliance on the decision of the Pune ITAT in the case of Ramsukh Properties Vs DCIT(cited supra) wherein it was held as under: Assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not completed within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee s housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT (A). The request for granting whole deduction in respect of whole project has rightly been rejected be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is settled legal position that the law always give remedy and the law does wrong to no one. We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e process of handing over of the areas of amenity space and DP road will be completed and the said development plan is pending for sanction before State Govt. However, appellant has completed the construction of the approved, sanctioned and revised plans by the PMC. Thus the construction of building C cannot be completed because the FSI required for the said construction is not allowed by PMC. The aforesaid issue is not within the purview of the appellant and in such a circumstance which makes the compliance with the provisions impossible, then the benefit bestowed on an assessee cannot be completely denied and, therefore, on the first issue the appellant becomes liable for claim of deduction u/s 80IB(10) on a proportionate basis. The appellant for this proposition has relied on a host of judicial decisions which are being discussed in succeeding paras. 3.7 The second issue on which the Assessing Officer found the appellant to have violated the provisions and conditions is with respect to area of the 5 row houses in Building F of the project where the same was found to be exceeding 1500 sq ft. as per sec 80IB(10)(c). The Assessing Officer referred the matter to the Govt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90.18 - 90.18 3 F3 120.24 - 120.24 4 F4 128.12 - 128.12 5 F5 128.12 - 128.12 The authorized valuer has added the area of the car porch, terrace area above porch, formed open to sky terraces area above living room and bedroom in the measurement of row house whereas the appellant s architect has excluded the aforesaid areas in its calculation for the built up area of the row houses F1 to F5. Thus, if the terrace area which is open to sky is excluded from calculation of area the built up area, the total area of the units do not exceed the 1500 sq ft limit as per sec 80IB(10)(c) in respect to three units. It has been the contention of the appellant that the valuer has wrongly included the area of the terraces which are open to sky and which are top terraces which cannot form part of the built up area and without the slab for top terrace the building cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an open land is erroneous. the Division Bench of the Madras High Court in the judgment reported in - 2012-TIOL-951-HC-MAD-IT in the case of the CIT, Channai V/s M/s Mahalakshmi Housing has held that the open terrace area cannot form part of the built up area; in the result, the assessee would be entitled to deduction u/s 80-IB(10) and that the assessee would be entitled to proportionate relief as regards the units having built up area not more than 1500 square feet. Considering the ratio laid down in the aforesaid judgments, we find that the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10). Tribunal was not justified to come to the conclusion that the said area of the courtyard is to be included to calculate the built-up area and thereby holding that the residential unit was more than 1500 square feet which would disentitle the appellant to claim such deduction. The contention of the counsel appearing for the respondent that the findings of the fact arrived at by the Tribunal cannot be interfered in the present appeal cannot be accepted in the facts of the present case as the Tribunal has misconstrued the provisions of Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Associates Vs ITO (2011) 142 TTJ 849 (Ahd)., the ITAT with respect to the inclusion of terrace in the built-up area - the head note reads as follows: As per the terms of the development agreement between the parties, planning, sanction of plan, construction work, development of property, labour engagement activities are to be carried out by the assessee There was no bar on the assessee to construct more flats or units than that originally stipulated in the agreement- Once the plan was approved by the municipal authorities on the basis of the papers submitted by the real owner, it could be deemed as approval in favour of the assessee, more so, as the assessee entered into an agreement to sell the whole of the property-Hence, the objection of the authorities below that the assessee constructed 110 units as against 94 units mentioned in the agreement is not sustainable in law-As per the definition given in s. 80- IB(14)(a), built-up area means inner measurement of the residential unit at the floor level including the projections and balconies as increased by the thickness of the walls but does not include the common areas shared with oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential blocks by name Mayflower, Cassia, Magnolia, Jacaranda and Laburnum. Approval had been obtained from BDA on 24-5-2002. The assessee took two blocks separately, viz., Mayflower and Cassia, and claimed the benefit of deduction u/s.80IB of the Act in respect of the said two blocks, claiming them to be separate projects, as only the said two blocks could fulfill the requirements prescribed u/s.80IB of the Act. The AO, however, denied the claim of deduction u/s.80IB treating Brigade Millennium as only one project. The Tribunal, after considering the facts, observed that the use of the words residential units means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the conditions of sec.80IB, the assessee is entitled for deduction. Therefore, the Tribunal upheld the order of Id. CIT(A) in allowing deduction u/s.80IB(10) in respect of two blocks as claimed by the assessee. 3.8.2 In ITO Vs AIR Developers (supra) The tribunal held that Assessing Officer is directed to determine the built up area of the residential units by applying the development control Regulation, 2000 and to allow proportionate deduction u/s 80IB(10) if he finds tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, in clause (i) of the Explanation, it has been made clear that date of first approval of housing project by the local authority would be taken as starting point of the housing project and in clause No. (ii), it has been made clear that the date of completion certificate in respect of such housing project issued by local authority will be considered to compute the prescribed time-limit for verification of eligibility of assessee for the claimed deduction. In view of the above Explanation, approval of the housing project and approval of building plan are two different concepts. Thus Part A of the project comprising of building A1 and A2 is a separate project and which satisfies all the conditions stipulated u/s 80IB(10) and hence the appellant is very much entitled to claim the deduction u/s 80IB(10) of the Act on Part A of the buildings A1 and A2 3.8.6 In the case of M/s Runwal Multihousing Pvt. Ltd Vs ACIT (Supra) after considering various judicial precedents of different High courts and co-ordinate benches, the Pune Tribunal held that 21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (P) Ltd (2013) 212 taxman 342 (Mad) wherein it was held that in a given case when the housing project @ 100% residential units satisfies other clauses (a) and (b) and the built up area given under clause (c) of sec 80IB(10) of the Act, there would be no difficulty for the revenue to grant the deduction. The question becomes a little complicated when 100% residential housing project has built up area of mixed nature while few of the units may satisfy the criteria of the built up area of less than 1500 sq.ft, there may be units which have built up area crossing the limit as specified in clause (a) of sec 80IB(10) of the Act. In such event on a reading of the provision, it is held that the assessee would not be entitled to have the benefit of 100% absolute deduction u/s 80IB(10) of the Act in respect of the entire project, but would be entitled to pro rata deduction on the units satisfying the conditions ... 3.8.9 In DCIT Vs Ekta Housing (P) Ltd (2011) 41 (II) ITCL 404 (Mum) it was held that in cases certain residential house has built up area in excess of 1500 sq.ft, the assessee would not lose the total exemption u/s 80IB(10) in its entirety but will lose the proportiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being in excess of 1500 Sq.Ft., he has given a finding that Government Approved Valuer had taken the outer measurement of the Row Houses and calculated the area which is contrary to the definition contained in Sec.80IB(14)(a). He has further noticed that the Authorized Valuer had added the area of car porch, terrace above porch while measuring the area of Row Houses and if the terrace area is excluded from calculation of area, the total area of the units do not exceed 1500 Sq.Ft. For excluding the area of terrace, Ld. CIT(A) had relied on the decisions of Hon ble High Court in the case of M/s. Commonwealth Developers CD Fountain Head Vs. CIT Foundation Vs. ACIT., reported in 2014(4) TMI 222 (Bom) and the decision in the case of CIT Vs. Mahalakshmi Housing (2012) TIOL 951 HC (Mad) and other Tribunal decisions. Before us Revenue has not placed any material on record to controvert the findings of ld. CIT(A) nor has placed any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A). Thus, the grounds of the Revenue are dismissed. 8. In the result, the appeal of the Revenue is dismissed. Order pronounc ..... 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