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TMI Blog2012 (6) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... sanctioned earlier and assessee has not satisfied the conditions u/s 80IB(10) - Held that:- Tulsi Project is separately approved project as a residential housing project and amended provisions of section 80IB(10) effective from 01/04/2005 are applicable and those conditions are satisfied by assessee as the project is a residential project and commercial area is less than the prescribed area and other conditions are satisfied, so we hold that Tulsi project is also eligible for deduction u/s 80IB(10). - ITA Nos.393/Mum/2009 & ITA No.685/Mum/2010 - - - Dated:- 4-5-2012 - B Ramakotaiah, S S Godara, JJ. For Appellants: Shri S R Wadhwa Shri S K Mutsaddi For Respondent: Shri V V Shastri, DR ORDER Per: B Ramakotaiah: These two appeals are filed by assessee for assessment years 2005-06 and 2006-07 against the orders of the CIT (A) dated 10/11/2008 and 2/12/2009. We have heard Ld. Counsel and Ld. DR in detail, perused the paper book and orders placed on record. 2. Briefly stated, assessee is a private limited company, engaged in the business of real estate and construction of housing projects. It was incorporated on 10.01.1996. The issue involved in both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balaji Tower , Plot No.29,32,36 37 Sector-30 Vashi Press NMMC/TPO/BP/4 188 dt 27.9.02. Residential-cum-Commercial Complex 1,58,26,406 89,53,978 2. Silicon Tower , Sanpada, Vashi 46- C/30A Sanpada Vashi NMMC/TPO/BP/3854 dt 20.11.2000 Press Residentialcum-Commercial Complex 1,40,57,113 Loss-1,50,40,265 3. Kaveri , Plot No.4, Sector-5 Kharghar. CIDCO/EE/BP/AT P/O/758 dt 30.10.2001 Residential Loss 5,21,198/- 11,77,997 4. Panchavati, Plot No.92 to 96, Sector-5 Ghansoli. CIDCO/EE/BP/AT P/O/341 dt 9.9.02 Residential-cum-Commercial building 1,31,52,889 1,57,33,163 5. Vrindavan, Plot No.52, Sector-9, Panvel. CIDCO/EE/BP/AT P/O/1124 dt 1.2.02 Residential Cum Commercial Building 3,35,62,319 2,44,40,391 6. Tulsi, Plot No.52 Sector-9 Panvel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that it has substantial commercial built up area. As far as co ordinate bench decision in the case of Laukik Enterprises 105 ITD 657, it was overruled by the Special Bench decision in the case of Brahma Associates and Hon ble Bombay High Court has upheld the action of the Special Bench in this regard. The very foundation of impugned disallowance thus does not hold good in law any longer . 9. With regard to the issue at (b) above, namely, the size of some of the residential units being more than 1000 sq. fts, the Hon ble ITAT in assessee s own case, in para-14 of its order have observed that we have also noted that as noted by the Special Auditor appointed by the revenue authorities (page 116 of the paper book), if area of the balcony is to be excluded, none of the flats will exceed the area of one thousand square feet. There is thus no legally sustainable merit in Assessing Officer s objections with regard to the size of the flat as well. Once balcony area is excluded, even according to the revenue authorities, no flat is of more than one thousand square feet . 10. The above view is also confirmed by the order of Tribunal in the following cases: (i) AC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plot No. 4, Sector-5, Kharghar 16. Deduction in respect of this project was allowed by the AO in A.Y. 2004-05. It has been denied in A.Ys. 2005-06 and 2006-07 because one Flat No.E-101 sold to M/s Mand Lal Pranab K. Pallav measures about 1240 sq. ft (super built-up area) and the net built up area, including the balcony area, works out at 1006 sq. ft. 5. Vrindavan Project, Plot No.52, Sector 9, Panvel. 17. Deduction in respect of Vrindavan Project was allowed in A.Y. 2004-05. In respect of Vrindavan Project, deduction has been denied for A.Ys. 2005- 06 and 2006-07 on the ground that the total commercial area of the project exceeded the maximum permissible built up area of 2000 sq. ft. as stipulated in section 80-IB(10). 18. Submissions regarding the projects (3) Panchavati. (4) Kaveri and (5) Vrindavan Project were that the deduction in respect of the above three projects was duly allowed by the Ld. Assessing Officer in respect of the A.Y. 2004-05. For the earlier years, i.e. A.Ys. 2002- 03 and 2003-04, the Hon ble Settlement Commission allowed the deduction in respect of these three projects (3) Panchavati Project, (4) Kaveri project, and (5) Vrindavan Project, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilt on C-Wing and is a 15 storied structure known as Tulsi Tower. Being in the inner loop, there are no shops which are in the outer loop E to W which was part of the Vrindavan Project as is also mentioned in para-7 of the assessment order. Thus, Tulsi project was completely residential project having a covered area of 4515.102 sq. ft. with each unit of less than 1000 sq. ft. 22. It commenced on 22.12.2006 and was completed on 31.03.2008. The project satisfies the conditions regarding the approval of the project being after 01 .04.2005 and its completion within 5 years as laid down in sub-clause (iii)to clause (a) of section 80-IB(10) being on 31.03.2008. 23. As regards the point that it is an extension of the Vrindavan Project, it was submitted that the Hon ble Bombay High Court has precisely dealt with this issue in its order dated 28.03.2012 in the case of CIT v. Vandana Properties ITA Nos. 3633 of 2009 and 4361 of 2010 at pages 127-142/PB. In that case also, the land of plot admeasuring 2.36 acres had constructed building A, B, C and D over a period during 1993-1996. Pursuant to the decision of the State Government permitting conversion of the status of land, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t April, 2005, approved projects were duly complied with as submitted before authorities. General Submissions: 26. A. It was submitted that the time limit for approval of projects under section 80-IB (10) was amended several times. For the two years under consideration, the time limits amended are the ones substituted by the Finance (No.2) Act 2004 w.e.f. 01.04.2005. Newly substituted sub-section states as under:- (10) the amount of deduction in the case of an undertaking developing building housing projects approved before 31.03.2007 by a local authority (Emphasis supplied). B. Prior to its substitution, sub-section 10 (relevant Para) as amended by the Finance Act, 2003 read as under: (10) the amount of deduction in the case of an undertaking developing building housing projects approved before 31.03.2005 by a local authority (Emphasis supplied). C. From the above two versions of the section 80-IB(10) it would be noticed that the section contemplates satisfaction of the conditions for the projects in the two categories, depending upon the date of approval of the projects by the local authority. The projects approved before 31.03.2005 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly not in accordance with law . G. Similar view has been taken by ITAT, Mumbai in the case of Hiranandani Akruti JV v. DCIT (2010) 39 SOT 498 (Mum) and ACIT v. Sheth Developers 33 SOT 277 (Bom) wherein they have followed the judgment of ITAT in Saroj Sales Organization (supra). The ITAT, Ahmedabad in the case of Raj Developers v. ITO (2011) 43 SOT 184 (Ahmd) have also followed the decision of Division Benches in the case Aruna Excello Foundation Pvt. Ltd. v. ACIT (2007) 108 TTJ (Chennai) 71 and Saroj Sales Organization (supra). In recent judgments of the ITAT, Mumbai in:- (a) Chheda Construction Co. - ITA No. 2767/Mum/2009 - A.Y. 2005- 06; (b) ACIT v. Girdharilal K. Lulla - ITA No. 4207/Mum/2009 (A.Y. 2006- 07) and (c) Haware Construction Pvt. Ltd v. ITO - ITA No. 547/Mum/ 2011 (A.Y. 2007-08); G. The Hon ble Supreme Court in the case of Govindas v. ITO (1976)103 ITR 123 held on page 132 of the report that: it is well settled rule of interpretation hallowed by time and sanctified by judicial decisions that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was considered as under. Balaji Towers Project 8. As far as this project is concerned, the relevant material facts are like this. During the course of the assessment proceedings, the Assessing Officer noticed that land, on which this project was developed, was leased by CIDCO to a partnership firm by the name of Danik Pundhari. This land consisted of plot nos. 29 to 32 and 36 to 37 situated at Sector 30, Vashi, Navi Mumbai, and the total land area was 7,999.79 square meters. The Assessing Officer noted that, out of total built up area of 11,997.813 square meter, permissible FSI being 1.5 of the plot size i.e. 7,999.79 square meters, only 6,231.742 square meter. The Assessing Officer was of the view that, thus it can be clearly seen that the development undertaken on the said plot of land is predominantly and substantially in nature of commercial establishment . It was also noted that certain residential units, viz. A/105, B/107, C/102, C/106, C/107, C/207, C/607, C/707 and C/303, have built up area exceeding 1,000 sq. fts (calculated as predetermined percentage of super built up area/saleable area mentioned in the agreement and after taking into consideration the area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not vitiate the entitlement for deduction under section 80 IB (10). However, when matter travelled in further appeal before Hon'ble Bombay High Court, Their Lordships held that no such limit on commercial use were justified. On the facts of this very case, in which the project was admittedly a residential cum commercial project, Their Lordships, inter alia, observed as follows: ........In the present case, it is not in dispute that the project is approved for residential and commercial buildings as per the DC Rules, Pune. The fact that the residential buildings under the DC Rules can have commercial user upto 50% of the built- up area of the plot cannot be a ground to hold that the project is not a housing project. It is for the legislature to impose restrictions on commercial user in a project for the purposes of availing Section 80IB(10) deduction and that has been done by inserting clause (d) to Section 80IB(10) with effect from 1/4/2005. Therefore, the decision of the Tribunal in holding that a project with residential and commercial user to the extent permitted under DC Rules would be a housing project and hence eligible for deduction under Section 80IB(10) upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t include the common areas shared with other residential units . However, so far as the relevant assessment year is concerned, admittedly the expression 'built up area' was an undefined expression under the Income Tax Act, 1961, and, therefore, meaning assigned to this expression were as understood in common parlance. As to the question whether area of balconies could be included in the definition of 'built up area' for assessment years prior to 2005-06, we find this issue is now covered by a coordinate bench decision in the case of ACIT Vs Sheth Developers Pvt. Ltd (33 SOT 277) wherein coordinate bench has, inter alia, observed as follows: 18. Now coming to the second question which is whether balcony is to be construed as a part of the built-up area. According to the Assessing Officer if the balcony area is also added, the built-up area would exceed 1000 sq. ft. per unit in number of cases. For resolving this we have to once again go back to the definition of built-up area introduced by the Finance (No. 2) Act, 2004, as clause (a) to sub- section (14) of section 80-IB and first decide whether it is retrospective or not. For brevity, this definition is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly prospective effect from 1-4- 2005. We are roboranted in taking this view by the decision of the Special Bench in Brahma Associates' case (supra), where amendment to section 80-IB(10) also effected through same Finance (No.2) Act, 2004, were considered to have only prospective effect, vis-a-vis sub-clause (d) thereof. No doubt in the case of Dy. CIT v. Ansal Properties Industries Ltd. [2009] 116 ITD 253 Delhi Bench of the Tribunal has taken a view that extension of time-limit for completion of project, brought into the statute through an amendment which came into effect from 1-4-2001 would apply prior to that as well. However, there the issue was the extension of a benefit of time-limit and this cannot be treated as equivalent to introduction of a definition which hitherto before had a different meaning as understood in common business parlance. Even otherwise, revenue is precluded from taking the plea that such definition is having retrospective effect for the simple reason that Assessing Officer himself had accepted it to be only prospective. Various contentions of the learned DR that there can be no estoppel against law even if the Assessing Officer himself had taken a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of Brahma Associates (supra), is not coming in the way of assessee's entitlement for deduction under section 80 IB(10), we see no need to adjudicate upon, or deal with, these contentions either. 17. In view of the above discussions, we uphold assessee's claim of deduction under section 80 IB (10) in respect of Balaji Towers project as well. The impugned disallowance is deleted. The assessee will get the relief accordingly . 30. With regard to Silicon Towers, vide Para 18 and 19 of the ITAT order, the issue was discussed as under: Silicon Tower Project: 18. The facts relating to Silicon Tower Projects are broadly the same as Balaji Towers Project. It was a case in which 8,200 square meter plot, i.e. plot no. 46 at Sector No. 30 A Sanapada, Navi Mumbai, was allotted by CIDCO to Parbhodhan Prakashan, and, in collaboration with the said concern, the assessee constructed the residential cum commercial project. Out of total built up area of 12,295 square meters, residential area was only 9,036 square meters. The deduction was declined on the ground that the project was not a housing project and because some of the flats, after including t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT, Ahmedabad in the case of Raj Developers v. ITO (2011) 43 SOT 184 (Ahmd) have also followed the decision of Division Benches in the case Aruna Excello Foundation Pvt. Ltd. v. ACIT (2007) 108 TTJ (Chennai) 71 and Saroj Sales Organization (supra). Therefore we hold that these projects (Kaveri, Panchavati Vrindavan) are eligible for deduction and AO is directed accordingly. 32. With reference to the Tulsi Project, the contention was whether Tulsi Towers is a separate project or extension of Vrindavan Project. AO held that Tulsi Towers is only an extension of Vrindavan Project and accordingly he disallowed the claim as he has not allowed the claim for Vrindavan Project. The CIT (A) upheld the contention by holding as under vide Para 3.3.2. 3.3.2 1 now come to the deduction for the Tulsi Project. Looking into the facts brought on record by the Assessing Officer, the documents relied upon and the provisions of section 801B(10), I find that the Assessing Officer has rightly held this project as only an extension of the Vrindavan project. To this end, I note the following significant features: i) The Tulsi Tower is only the C wing of the Vrindavan project which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80IB (10). Even if one were to accept that this is an extension of Vrindavan Project, since Vrindavan Project itself was allowed 80IB (10) deduction, there cannot be any reason for disallowance of 80IB deduction on Tulsi Towers, as part of Vrindavan Project. Looking at it either way, a claim under section 80IB on the Tulsi project cannot be disallowed as all the conditions applicable to 80IB(10) are fulfilled. The Hon ble Bombay High Court has dealt with the issue of new project on existing plot in its order dated 28.03.2012 in the case of CIT v. Vandana Properties ITA Nos. 3633 of 2009 and 4361 of 2010 . In that case also, the land of plot admeasuring 2.36 acres had constructed building A, B, C and D over a period during 1993- 1996. Pursuant to the decision of the State Government permitting conversion of the status of land, assessee became entitled to construct an additional building E on that plot of land. The plot known as Building No.E was constructed for which the approval of the building plan was granted on 11.10.2002 and commencement certificate was issued on 10.03.2003. Even though the land pertained to E-Building was less than one acre, the Hon ble Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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