9911796707
TMI Blog2009 (4) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Mumbai. It was noticed by the Assessing Officer that the area of the plot was of 2.36 Acres on which, the assessee has constructed five Wings of the residential buildings namely A, B, C, D and E. The Commencement Certificate (CC) for the construction on the said plot was granted on 9-6-1993, which was subsequently extended over the years for the entire work of the four Wings namely A, B, C and D till 22-4-1998. The assessee-firm again filed Plan in respect of the Wing 'E' for which CC was further extended. The Assessing Officer has also noted that the plan in respect of 'E' Building was approved on 25-5-2003. The assessee had not claimed any deduction in respect of the profits relating to Wings- A, B, C and D under section 80-IB(10) of the Income-tax Act and claim of the assessee is only in respect of the Building Wing- "E". As noted by the Assessing Officer, assessee was recognizing the revenue on percentage of Work Completed method. The assessee has declared the profit of the Project at Rs. 3.57 crores for the assessment year 2004-05 and Rs. 2.20 crores for the assessment year 2005-06. There was a survey action against the assessee under section 133A of the Act and during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered for taxation from assessment year 1995-96 to assessment year 2004-05. I am giving hereunder details regarding building-wise date of project approval corresponding permission to commence construction. Building Number Date of I.O.D. (day of approval) Date of Permission to Commence construction A, B 12-5-1993 9-6-1993 C 18-12-1993 12-8-1996 D 1-8-1996 12-8-1996 E 11-10-2002 10-3-2003 Assessee-firm would have been eligible for deduction under section 80-IB in respect of income from building A, B, C and D if commencement of construction was after 1-10-1998. Building numbered "E" project is different project for assessee-firm and its approval is taken on 11-10-2002. The profit of "E" Wing project is worked put separately by your assessee. Expenses of "E" wing project are identifiable and accordingly shown separately. In view of above fact your honour's conclusion the "E" Wing project was approved in the year 1993 is factually incorrect. You have mentioned that commencement certificate was granted on 9-6-1993 which is earlier than 1-10-1998 i.e., one of the conditions for eligibility to claim deduction under section 80-IB of Income-tax Act, 1961. In this regard my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cre, if total land 2.36 acre is divided proportionately among other buildings i.e., A, B, C and D, I would like to state that neither it is specified in the section itself nor explanation to that effect is added by the draftsmen while framing the law. A Local Authority authorized to approve building projects have communicated approval vide reference CHE/8173/BP/WS/AR of 11-10-2002 shows building "E" is on Plot CTS Nos. 54.55, and 63 of Village Kandivali and area of such land is 2.36 acre i.e., more than 1 acre. Further my client while selling residential units in building A, B, C, D and E has not put any demarcation for use of land among unit holders and also there is no physical demarcation of land meant for building A, B, C, D and E. Regarding reply of Architect Mr. Prakash Sapre that and occupied by "E" wing is less than 1 acre is true in the sense that construction of plinth area of building "E" is less than 1 acre. Section does not specify that (i) proposed construction of building must have plinth area that occupy at least 1 acre land, (ii) total construction area must be constructed as allowable for plot of minimum 1 acre i.e., as per D.C. Rules for the construction of buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floor of 'E' Building. It should be noted that Jain Sadhus and Sadhvis never possess a flat or stay in a Flat but they stay in Upashrayas temporarily and keep going from one place to another. Reply to Q.6 Site Supervisor Mr. Viren Gosar confirmed that total area of both the flat is 1,466 sq.fts. if they are measured together. Reply to Q. 7 Site Supervisor Mr. Viren Gosar confirms that there is no kitchen in the said flat but there is a provision of one kitchen in the said flat. As stated above internal work of both the flats is pending and hence there was no kitchen on the day of visit. Regarding provision of one kitchen as stated by the site supervisor has no base since plan was approved so as to have two independent flats and naturally containing two kitchens. Regarding reply of Architect Mr. Prakash Sapre in response to Q. No. 8 since construction was going on my client has constructed a wall to separate flat no. 138 and flat no. 153 so as to make them according to approved plan. Further since both the flats are ground floor and it was convenient to keep sanitary, bathroom fitting, pipes, cement bags and flooring materials and accordingly internal walls were not built. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building project on plot bearing City Survey No. 54C and 54D at Kandivali village. As the permission was only granted to the assessee by virtue of the conversion of the land status from Surplus Vacant Land (SVL) into Within Ceiling Limit (WCL) by the State Government in the year 2001. 5.2 It is argued that as per the original plan in respect of Buildings 'A' to 'D', the same was approved without considering the future conversion. It is argued that the fresh project in respect of Building 'E' was also become possible due to the fact in the status of the land by the Government of Maharashtra. Learned Counsel referred to the copy of the order passed by the Principal Secretary, Deptt. of Urban Development, Government of Maharashtra dated 30-3-2001 as well as subsequent Corrigendum dated 23-4-2001 by the Addl. Collector, MCA (ULC), Greater Mumbai. It is submitted that the request was made by the original land owners to the Government to allow them land admeasuring 68.5 sq. mts. out of CTS No. 54A and Land admeasuring 138 sq. mts. out of City Survey No. 69 of the village Kandivali as a land "within ceiling limit" (WCL) which was declared as a surplus vacant land. He further argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the area of the unit, both the flats were under construction on the date of the visit by the Income-tax officials during the course of the survey action under section 133A. Both the flats are at the ground level, and these were utilized for the purpose of storing the raw materials, cement etc. It is argued that it does not help the case of the Assessing Officer as both the flats were not complete in all respects and the same were under construction. Moreover, the Assessing Officer has admitted that subsequently, the wall was constructed and both the flats are separate, having the independent access from two different staircases. It is argued that there is no proof whatsoever for alleging the violation of the total area of the flat. He vehemently assailed the observations of the ld. Assessing Officer and CIT(A) on this issue by stating that when the flats were under construction, how the Assessing Officer came to the conclusion that the area of the flat is more than 1,000 sq.ft. when he himself admitted that as per the approved plan, the area of the flat is less than 1,000 sq.ft. The ld. Counsel relied on the following decisions :-- (1)Saroj Sales Organization v. ITO [2008] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, then the assessee conveniently put the wall to show that both the flats are independent one. He, therefore, pleaded that the order of the ld. CIT(A) may be confirmed. 8. We have heard the rival submissions of the party. We also carefully considered all the facts which are placed before us. The core controversy in respect of the deduction claimed by the assessee under section 80-IB(10) of the Act in respect of building 'E' constructed on plot bearing City Survey Nos. 54C and 54D at Kandivali village, Borivali (W), Mumbai is that there is no dispute that assessee has constructed the five different residential buildings which are named as Wings - 'A', 'B', 'C', 'D' and 'E'. In respect of the buildings 'A' to 'D', the assessee has not claimed any deduction under section 80-IB(10) of the Act. For the first time, the assessee has claimed deduction for the assessment years 2004-05 and 2005-06 in respect of building 'E'. There is also no dispute about the fact that in respect of building 'A' and 'B', the C.C. was granted on 9-6-1993 and in respect of buildings No. 'C' and 'D', C.C. was granted on 12-8-1996 but in respect of Building No. 'E', the C.C. was granted on 10-3-2003. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in respect of the Housing Projects are concerned, those are not relevant to the issues before us hence, we are not referring the same. Relevant part of sub-section (10) to section 80-IB as applicable from 1-4-2005 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-sections (3) to (11), (11A) and (11B) (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 from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. (2) to (9) ****** (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31-3-2007 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 1-10-1998 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, deduction is allowed as prescribed in sub-section (1) to section 80HHBA. In the said section, the Legislature had defined the expression "Housing Project" by way of explanation to mean that project for the construction of any building, road, bridge or other structure in any part of India. The concept of Housing Project in section 80HHBA is much more wider, but so far as section 80-IB(10) is concerned, as there is no definition of expression "Housing Project", then definition given in section 80HHBA will be internal aid to decide whether Housing Project means the project of the group of the buildings or whether it can be the project of a single building also. As per the definition of Housing Project in section 80HHBA, Housing Project includes construction of "any building". If the Legislature was desiring to define nature of the Housing Project for the purpose of section 80-IB(10), then either the specific definition would have been incorporated in the Act or it would have been explained by way of Explanation to section 80-IB. 11. In our opinion, the concept of Housing Project does not mean that there should be the group of the buildings and only then same is called as "Hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any difference in deciding the assessee's claim for deduction under section 80-IB(10) of the Act. It must be appreciated that the main developer was M/s. Conwood Agencies (P.) Ltd. The sanction plan have only approved the construction of the dwelling-units of less than 1,000 sq.ft. in all the wings of the said project. There is no dispute that all the flats in these wings contain the eligible units. It is not open to the revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who are undertaken the low housing projects will get defeated. "Breezy" project which was meant for higher strata of the society. The assessee has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the test laid down under section 80-IB(10) of the Act. In our view, combining these two projects into one will lead to a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the another Co-ordinate Bench of Tribunal at Kolkata in the case of Bengal Ambuja Housing Development Ltd. (supra). 12. In the present case, Building 'E' is planned and construction was commenced after 1-10-1998 and in our opinion, Building/Wing 'E' itself is a independent Housing Project as contemplated under section 80-IB(10) of the Act and it cannot be fastened with earlier buildings i.e. 'A', 'B', 'C' and 'D' which work was commenced in the year 1993. In respect of the argument of the ld. DR that in view of Explanation 2, which is newly inserted with effect from 1-4-2005, as the assessee has commenced construction of building "E" for which permission was originally granted cannot be accepted for our elaborate discussion on this issue hereinabove. We therefore reject the same as plan for Building-'E' was only approved for only once in the year 2002. We, therefore, hold that the conclusion drawn by both the authorities that the commencement of Wing 'E' is a continuation of the existing project is erroneous. 13. Now the next objection is in respect of the size of the plot of the land. There is no dispute about the fact that assessee acquired the Development Right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lats 138 and 153 were merged together and hence, the total area of those two plots became 1466 sq.ft., in short it was more than 1000 sq.ft. The Assessing Officer has relied on the statements of the site supervisor Mr. Viren Gosar as well as Mr. Prakash L. Sapre, architect of the assessee company. The Assessing Officer has reproduced the questions and answers on page No. 3 of the assessment order. Now we have to deal with the statements of both these persons first. It is pertinent to note here that nowhere the Assessing Officer has recorded the statements of any of the partner to clarify this issue. So far as the site supervisor is concerned, it appears that there is a direct question put by the Assessing Officer being question No. 5 and Question No. 6 in respect of the alleged merger of two flats i.e., 138 and 153 on the Ground Floor in 'E' Wing. The site supervisor replied that the said two flats were combined for the convenience of the Jain Sadhus for religious purpose. In respect of the provision for kitchen, it is replied that there is no kitchen in the said flat i.e., Flat No. 138 and 153 but there is a provision of one kitchen in the said flat. So far as the statement of Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer that assessee has written off the deposit of Rs. 1,58,900 which were given to the Corporation of Greater Bombay. The Assessing Officer disallowed the claim of the assessee as the deposit given to the Municipal Corporation, Greater Bombay cannot be treated as revenue loss as the same is in the nature of capital loss. On appeal before the learned CIT(A), the same was confirmed. 17. We have heard the rival submissions of the parties. The argument of the learned Counsel is that the deposits were given to the BMC for water connection, sewage connection etc. in the earlier years. As the assessee did not claim the said deposits in time, the same were forfeited and hence, the loss arose to the assessee is on account of revenue and cannot be said that it is a capital loss. No evidence or any material is filed before us to support the claim. At least, the assessee should have placed before us the relevant correspondence as well as the receipts of the deposits given to the BMC. The Assessee had already occasion to place the relevant material and evidence in the form of documents before the ld. CIT(A). In our opinion, as the assessee has failed to substantiate the claim and he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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