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TMI Blog2012 (11) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years under consideration at 100% of the profits. 2.2 During the course of assessment proceedings for both assessment years, the Assessing Officer found that the sanctioned plan for construction of the housing project showed that the assessee was to build the following area : Basement 92,565.00 sq. ft. Ground Floor 45,937.10 sq. ft. First Floor 45,937.10 sq. ft. Second Floor 45,937.10 sq. ft. Third Floor 45,937.10 sq. ft. Total : 1,83,748.40 sq. ft. However, the Assessing Officer noticed from the data of sale deeds executed by the assessee, that the built up area sold by the assessee in respect of 180 flats totaled 1,91,346 sq. ft. After adding 18.5% towards common area, the Assessing Officer found that the total built up area comes to 2,26,851.60 sq. ft. In this view of the matter, the Assessing Officer held that as the assessee had got the project approved for construction of 1,83,748.40 sq. ft. as the total built up area (i.e. the total of flats built on the ground, first, second and third floors) whereas, it had constructed 2,26,851.60 sq. ft. this meant that the project as constructed by the assessee did not have the approval of the local authority. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was entitled for deduction under section 80IB of the Act was followed for the Assessment Year 2008-09 wherein the finding of the learned CIT(A) was as under : "4.10 The same issue came up for consideration in the appeal before my predecessor in the appellant's own case for the Assessment Year 2007-08 who has, in his order ITA No.160/W-4(3)/CIT(A)II/09-10 dated 10.11.2010, discussed this issue at length. The facts remain the same other than that the compounding fee as claimed to have been paid by the appellant has actually not been paid. My predecessor has examined the issue in depth in order referred to above and held as under : "3.6 However, according to the Assessing Officer, since the appellant has built the flats in excess of the approved plans, the project of the appellant is held to be not approved one in as much as what has been approved is not built. 3.7 At the time of appeal hearing, the appellant argued that, at the relevant point of time, the bye law of the local authority permitted a certain Floor Area Ratio (in short FAR) that could be constructed by the appellant and based on the then prevailing FAR, the appellant, submitted the plan and obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to confer the benefit on the so called developer cum builder. Law s fairly settled in this regard by a number of decisions of the apex court referred to by it at (i), (ii), (iii), (iv) of page 291 of 315 ITR of Hon'ble ITAT, Pune Special Bench in the case of Brahma Associates. "(i) Petron Engineering Construction (P) Ltd. v. CBDT [1989] 175 ITR 523 (SC) - Liberal interpretation of an incentive provision can be resorted to only when it is possible without imparing the legislative requirement and the spirit of the provision. Where the phraseology of a particular provision takes within its sweep the transactions which are taxable, it is not for the Courts to strain and stress the language so as to enable the tax payer to escape the tax. (ii) Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278 (SC) - Rules of interpretation would come into play only if there is any doubt with regard to the express language used in the provision. Where the words are unequivocal, there is no scope for importing the rule of liberal interpretation of an incentive provision. (iii) CIT v. N.C. Budharaja & Co. & Anr. Etc. Etc. [1993] 204 ITR 412 (SC) - Liberal interpretation of an incentive pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the project, which has been approved by the local authority as a 'housing project,' should be considered adequate for the purpose of section 80-IB(10) following the CBDT's circular dated 4.5.2001 and the decision of the ITAT, Mumbai given that all other conditions have been met. The Assessing Officer's disclosure in his remand report regarding the non-payment of compounding fee for regularisation of the excess area constructed by the appellant for the disallowance of the deduction. 80-IB(10) would not in itself alter the decision in totality as what is relevant is that the conditions laid down in section 80-IB(10) in substance are met as discussed above. Moreover, it is for the BBMP to look into the violation, if any, of the approved plan. In my opinion, merely this discrepancy will not disentitle the appellant of the deduction otherwise allowable under section 80IB(10). I hold that on facts and circumstances of the case, as decided in the immediately preceding assessment year, the appellant is entitled to deduction under section 80IB(10). The Assessing Officer is, therefore, directed to allow deduction of the sum of Rs. 1,83,44,410/- as claimed by the appellant." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after completion is also a necessity. It was argued that when the construction in the housing project is not in accordance with the approved plan, the same becomes illegal and therefore the question of granting deduction under section 80IB of the Act does not arise. The learned Departmental Representative placed reliance on the decision of the Hon'ble High Court of Gujarat in the case of CIT v. Jolly Polymers [2012] 342 ITR 87 for the proposition that deduction cannot be given to an industrial undertaking without a factory licence. It was contended by the learned Departmental Representative that the learned CIT(A) erred in holding that non-payment of compounding fee would not alter the decision and therefore, he pleaded that the orders of the learned CIT(A) require to be set aside and those of the Assessing Officer restored. 5.3 Per contra, the learned counsel for the assessee supported the orders of the learned CIT(A) that the assessee has complied with all the conditions under section 80IB (10) of the Act and the mere fact that the assessee had constructed an area little larger than the sanctioned plan would not mean that the housing project constructed by the assessee is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a local authority requires to be given full effect to. Therefore, it cannot be construed that what the assessee has constructed is not a housing project. 5.4.3 Coming to the crucial question as to whether the housing project constructed by the assessee is an approved housing project or not, we do not find the view of the Assessing Officer that the project should be considered as unapproved because of excess construction put up by the assessee to be on sound footing. This is because the municipal authorities are vested with the power to look into the violations, if any, of the approved/sanctioned plan. The Assessing Officer while examining the issue of granting of deduction under section 80IB of the Act has to satisfy himself with regard to the following conditions mentioned in section 80IB (10) : (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land, which has a minimum area of one acre; (c) the residential unit has a maximum built up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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