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TMI Blog2008 (8) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the assessee was granted approval separately for each of the blocks A and C by the BDA shows that though it was a group project, the consideration therefrom is a separate and independent unit. We have had the benefit of each of the approvals, plan sanction and certificates issued by the Government authorities. Even though the projects of the assessee are bigger ones consisting of independent units, the assessee had claimed the benefit u/s 80IB only in respect of blocks A and C namely Mayflower and Cassia , In respect of other units viz. Magnolia, Jacaranda and Laburnum the assessee did not avail or claim the benefit u/s. 80IB. The ld CIT(A), after having considered the facts in detail, is justified in concluding that Mayflower and Cassia are independent projects for the purposes of s. 80IB. Further, profits from the units will have to be arrived, based on the method of, accounting employed. Accounting principles would mandate recognition of profits from each unit separately. It is with reference to such profits that the deduction u/s. 80IB would be allowed. The manner of accounting for profits would also support a conclusion that the deduction u/s. 80IB is to be computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... macro project, as individual projects and allowed deduction under Section 80IB for the said two blocks. The bits and parts cannot be considered as projects even in terms of the approval sanctioned by the BDA to promote housing. The stipulation mentioned in the provisions of Section 80-IB(10) is totally misinterpreted and therefore the conditions prescribed to provide exemption under Section 80-IB(10) are not fulfilled. Thus, the action of Commissioner (Appeals) in severing two bits of a macro project and treating them as individual projects for allowing the benefits under Section 80-IB is opposed to law and also to the facts of the case. 3. The learned departmental Representative submitted that the assessee has constructed and developed Brigade Millennium consisting of 5 residential blocks namely, Mayflower, Cassia, Magnolia, Jacaranda and Laburnum; row houses - The Oak Tree Place, a club, a community centre, a school and a park. All these projects are to be held as one single housing project under the purview of Section 80-IB(10) of the Income Tax Act, 1961 ("the Act" for short). This is also based on the development plan approved by the BDA. The learned departmental Representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, row houses, school, convention centre and a club. Each of the said projects required an independent plan approval and sanctions for construction and completion apart from permissions and approval from various other regulatory bodies and Government authorities. Learned Counsel for the assessee further submitted that the said approval referred to by the assessing officer is only a work order approved by the BDA on 24-5-2002, and was in pursuance to the new housing policy notification of the Government of Karnataka No. HUD/341/MNX/95, dated 17-11-1995. Once the development plan was in place, the assessee proceeded with the submission of detailed plans for each of the projects contemplated therein and obtained plan sanctions in respect of each of the projects. This includes two projects namely Cassia and Mayflower in respect of which the assessee has claimed exemption under Section 80-IB(10) of the Act. Learned Counsel for the assessee further submitted that it is both pertinent and important to point out that the development plan is only conceptual and the detailed construction plans are not submitted nor approved without which no construction can even commence. This is done only s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like BESCOM, BWSSB and Fire Service department duly inspected the plot and sanctioned plans for each of the blocks separately, after satisfying themselves. Further, it is seen that the group housing approval was a master plan. It was an approval of a concept. The components of projects like residential area, school, and civic amenities were detailed therein. As per Clause © of Section 80-IB(10), a residential unit should have a maximum built-up area of 1,500 sq. ft. Clause © refers to "area" of "residential unit". The use of words "residential unit" means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the condition of Section 80-IB, the assessee is entitled for deduction. So considered, it is only in respect of those units which have not fulfilled the stipulated conditions, deduction should be denied. The law prescribes maximum permissible area with reference to each residential unit. In the case in hand, each of the blocks A and C constructed by the assessee, after obtaining plan sanction from the local authority namely BDA and plan approval from other departments, are within the conditions stipulated under the Act. This fact is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct sought to be achieved and not frustrate it. 6.1 In the case of Union of India and Ors. V. Wood Papers Ltd. And Anr. AIR 1991 SC 2049 the Supreme Court, in the context of interpreting exemption provisions held as under: Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential units wherein the individual flat sizes varied between 800 to 3,000 sq. ft. Deduction under Section 80-IB(10) was claimed with reference to profit attributable to the built-up area, which was occupied by the residential units having individual flat size of less than 1,500 sq. ft. The Tribunal, upholding the order of the Commissioner (Appeals) noted that the provisions of Section 80-IB(10)do not provide for denial of deduction, if a housing complex contains both the smaller and larger residential units. It concluded that profits attributable to eligible residential units are entitled for deduction in spite of the fact that other residential units are greater than 1,500 sq. ft. built-up area. 6.6 The Mumbai Bench of the Tribunal, in the case of Saroj Sales Organisation v. ITO (2008) 115 TTJ (Mumbai) 485 granted deduction for two blocks comprising of 9 wings out of total 11 wings on the ground that each such block complied with the conditions of Section 80-IB(10). The Tribunal held as under: In our view, combining these two projects into one will lead to a result which manifestly will be unjust and absurd and defeat the very provisions of deduction sections. Unless ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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