9911796707
TMI Blog2004 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... of housing project had been commenced before 1st Oct., 1998. Rs. 6,000 was incurred for cleaning the land, so that correct measurement of the land could be done. As per the provisions of the Maharashtra Land Revenue Code, 1966, mentioned hereinabove, there is a procedure for conversion of use of land from one purpose to another and there is a provision for penalty also for violating the provisions of s. 44 of the said Code. There is no material on record to show that the assessee had made any material change on the land before 1st Oct., 1998. Thus, it would be clear that the assessee had commenced the development and construction of the housing project after 1st day of October, 1998, and completed the same before the specified date. There is no dispute that the assessee had fulfilled the remaining conditions under the law for claiming deduction u/s 80-IB(10) of the Act. Accordingly, we reverse the findings of the CIT(A) and direct the AO to allow the deduction to the assessee. In the result, the appeal is allowed. - HON'BLE H.L. KARWA, J.M. AND AHMAD FAREED, A.M. For the Appellant : K.A. Sathe, Adv. For the Respondent : M.M. Shrivastava, Adv. ORDER H.L. Karwa, J.M.: 1. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g year 1998-99 that the assessee had already incurred expenditure on development of land before 1st Oct., 1998. He further noted that the assessee had debited a sum of Rs. 6,000 on 10th Aug., 1998, towards land levelling charges and Rs. 1,140 was debited on 28th Aug., 1998. According to him, the land development had started much before 1st Oct., 1998. He further observed that the assessee executed development agreement on 13th April, 1998, executed irrevocable power of attorney on 18th April, 1998, applied to municipal corporation for sanction on 6th June, 1998, and obtained preliminary sanction from Solapur Municipal Corporation on 11th Aug., 1998. Accordingly, it was observed by the AO that activity in the form of development had commenced before 1st Oct., 1998. However, the assessee submitted that it is the date of construction which is relevant to decide the allowability of the claim and expenditure on development incurred prior to 1st Oct., 1998, has no relevancy for claiming deduction under s. 80-IB(10) of the Act. Considering the entire facts, the AO held that the assessee was not entitled to deduction under s. 80-IA(10) of the Act, since development of Nirmiti Vihar project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted to mean commencement of development and construction of the housing project. The assessee also furnished a certificate from the architect wherein it was stated that the project of constructing the housing units started after 1st Oct., 1998. The assessee also furnished the auditor's certificate in Form No. 10CB. In view of the above, it was submitted by the assessee before the CIT(A) that the development and commencement started only after 1st Oct., 1998, and, therefore, the assessee was entitled and eligible to avail the deduction provided under s. 80-IB(10) of the Act. 5. The learned CIT(A) did not accept the submissions made by the assessee before him. The CIT(A) observed that the project came into existence by the very fact that the assessee entered into a development agreement for the land way back on 13th April, 1998, and paid the full amount of Rs. 24 lakhs on the date of agreement. He further took the view that the intention for development and the acquisition of raw material for the conduct of business was already acquired on 13th April, 1998. On the same date, irrevocable power of attorney was given to the assessee to deal with the said land as a developer. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the authorities below have failed to appreciate that under s. 80-IB(10) what is contemplated is commencing development and construction of the housing project on or after the first day of October, 1998. According to the learned counsel for the assessee, the development of housing project is different from development of land and steps taken by the assessee before 1st Oct., 1998, were steps for converting the agricultural land into non-agriculture without which commencement would not have taken place. He, therefore, submitted that the assessee was entitled to deduction under s. 80-IB(10) of the Act. He further submitted that in order to develop this land for housing project, it was first step to get the agricultural land converted into non-agricultural (N.A.) and N.A. permission was to be obtained from Revenue authorities, and for getting N.A. permission, preliminary sanction from the Town Planning Department of Municipal Corporation, Solapur, was necessary. Accordingly, the assessee applied for preliminary sanction on 6th June, 1998, and the preliminary sanction was accorded on 11th Aug., 1998. He also submitted that the only debits prior to 1st Oct., 1998, were in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Municipal Corporation and to Collector and other appropriate authorities. It is also an admitted position that the assessee-firm submitted an application on 6th June, 1998, to the Solapur Municipal Corporation seeking permission and for sanction of development and construction plan of the said land enclosing the layout and plan for which Solapur Municipal Corporation gave preliminary sanction on 11th Aug., 1998. It is also an admitted position that along with the application dt. 6th June, 1998, the assessee submitted a layout plan of 53,300 sq. mt. of the land and the area under plot was taken at 28,284 sq. mt. There is no dispute that during the assessment year under consideration, the assessee claimed the deduction under s. 80-IB(10) of the Act. Sec. 80-IB(10), as applicable to the relevant period, reads as under: 80-IB.(1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-ss. (3) to (11) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made any material change as far as the land is concerned. Admittedly, construction work was commenced after building permission (Bandhkam Parwangi) was sanctioned by the Solapur Municipal Corporation on 23rd July, 1999. The only debits prior to 1st Oct., 1998 were in respect of land purchased and two items, viz., Rs. 6,000 and Pooja expenses of Rs. 1,140. Admittedly, the bank account in the name of housing project, Nirmiti Vihar, was opened on 20th Oct., 1998. The assessee also incurred land measurement charges of Rs. 10,350 on 25th Nov., 1998. Admittedly, non-agricultural tax was paid on 15th Jan., 1999, of Rs. 1,25,150. The assessee also informed the AO regarding commencement of the housing project on 23rd Nov., 1999. It is also admitted position that the land was converted into non-agriculture on 30th Jan., 1999. The procedure for conversion of the use of land from one purpose to another is provided in s. 44 of the Maharashtra Land Revenue Code, 1966, which reads as under: 44. Procedure, for conversion of use of land from one purpose to another : (1) If an occupant of un-alienated land or a superior holder of alienated land or a tenant of such land- (a) which is assessed or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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