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2014 (12) TMI 1373 - AT - Income TaxDeduction u/s 80IB(10) - project was constructed was less than 1 acre - Claim denied on profits derived from the housing project 'Ved Vihar' - CIT(A) held that the area of the plot on which the said project was constructed was less than 1 acre and hence, the deduction u/s 80IB(10) was not allowable to the assessee in respect of the said project - HELD THAT - Assessee had bought the TDR rights and had been sanctioned to construct 12 additional flats in the existing building Nos.A and B of the said project and where it had already completed the originally sanctioned 80 flats within the stipulated period, the assessee was eligible to the claim of deduction under section 80IB(10) of the Act. The assessee had constructed 80 flats originally sanctioned by the commencement certificate dated 21.05.2004 before 31.03.2009 and the PMC had issued occupancy certificate on 30.03.2009 for the said 80 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. 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 occupancy certificate dated 30.03.2009 has been issued. Under the provisions of section 80IB(10)(a) of the Act, the assessee had to complete the construction on or before 31.03.2009 and the assessee having been issued the occupancy certificate dated 30.03.2009 had also complied with the said provisions of the said Act and was entitled to the claim of deduction under section 80IB(10) of the Act, subject to fulfillment of the basic condition that the plot area of the project was one acre or more. We have also remitted the said issue of measurement of the plot back to the file of Assessing Officer and in case, it is established that the assessee has fulfilled the said condition, wherein area of the plot on which the project has been constructed is one acre or more, then the assessee would be entitled to the claim of deduction under section 80IB(10) of the Act. Assessee's alternate plea as to allowance of proportionate deduction on account of the flats constructed , is not maintainable in either case, where the claim of the assessee under section 80IB(10) of the Act has been found to be maintainable. However, if the assessee fails to justify the basic condition of the area of plot being one acre or more, even the alternate plea of the assessee is not maintainable. Grounds of appeal raised by the assessee are thus, allowed as indicated above.
Issues Involved:
1. Denial of deduction under section 80IB(10) due to the plot area being less than 1 acre. 2. Denial of deduction under section 80IB(10) due to non-completion of the project within the stipulated time frame. 3. Consideration of additional flats as part of the same project or a separate project for deduction purposes. 4. Claim for proportionate deduction under section 80IB(10) for completed units. Issue-wise Detailed Analysis: 1. Denial of Deduction under Section 80IB(10) Due to Plot Area Being Less Than 1 Acre: The assessee claimed a deduction under section 80IB(10) for the profits derived from the housing project 'Ved Vihar'. The Assessing Officer (AO) denied this deduction, arguing that the project was constructed on a plot less than 1 acre (4046.85 sq. mtrs.), based on the area mentioned in the 7/12 extract and the audit report. The assessee contended that the plot area, calculated using the triangulation method, was 4048.46 sq. mtrs., which exceeds 1 acre. The CIT(A) rejected the assessee's plea, noting that this triangulation method was not raised during the assessment proceedings. The Tribunal restored the issue to the AO to verify the actual plot size, allowing the assessee to furnish a certificate from the Revenue Authorities to substantiate the claim. 2. Denial of Deduction under Section 80IB(10) Due to Non-Completion of the Project Within the Stipulated Time Frame: The AO also denied the deduction on the grounds that the project was not completed within the stipulated period. The original plan for 80 flats was sanctioned on 21.05.2004, and a part completion certificate for these flats was received on 30.03.2009. However, a revised plan for an additional 12 flats was sanctioned on 16.03.2009, and these were not completed by 31.03.2009. The CIT(A) upheld the AO's decision, stating that the additional flats were part of the same project. The Tribunal held that the assessee was entitled to the deduction for the 80 flats completed by 31.03.2009, as the original project was completed within the stipulated period. The additional 12 flats were not considered for the deduction since they were not completed within the required timeframe. 3. Consideration of Additional Flats as Part of the Same Project or a Separate Project for Deduction Purposes: The assessee argued that the additional 12 flats constructed using TDR rights should be considered a separate housing project. The Tribunal referred to the CBDT's clarification that additional housing projects on existing sites could qualify for deductions if taken up as separate undertakings with separate books of account. The Tribunal concluded that the additional 12 flats were not part of the original 80 flats project and thus did not affect the eligibility for the deduction of the original project. 4. Claim for Proportionate Deduction under Section 80IB(10) for Completed Units: The assessee also sought a proportionate deduction for the 80 completed flats if the entire project did not qualify. The Tribunal, however, found this plea unnecessary since the assessee's claim for the original 80 flats was found to be maintainable. The Tribunal directed the AO to verify the actual plot size to ensure compliance with the area requirement under section 80IB(10). Conclusion: The Tribunal allowed the appeal, directing the AO to verify the plot size and grant the deduction for the 80 completed flats if the plot size condition was met. The additional 12 flats were not considered for the deduction as they were not completed within the stipulated period. The claim for proportionate deduction was deemed unnecessary given the main claim's maintainability.
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