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TMI Blog2013 (11) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... is no condition that all units in the housing project should have the built up area of less than 1500 sq.ft. Even if built up area of some of the units exceed 1500 sq.ft., deduction is to be allowed in respect of those units whose built up area is less than 1500 sq.ft. - - Held that:- Held that:- Reliance has been placed upon the decision in various cases s.a. Rohan Homes [2013 (10) TMI 758 - ITAT PUNE], wherein it has been held that prorata deduction is to be allowed – Also, as per ITAT Kolkata Bench in its decision in the case of Brigade Enterprises [2008 (8) TMI 453 - ITAT BANGALORE-A], it has been held that deduction u/s.80IB(10) was to be allowed on prorata basis with reference to qualifying residential units and assessee would not be denied claim for deduction u/s.80IB(10) if some of its residential units are of built up area exceeding prescribed limit in clause (c) of section 80IB(10) of the Act – In view of the above decisions, in the present case it is held that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction - Accordingly held that the assessee is eligible for deduction u/s.80IB(10) in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim the deduction. 2) The learned CIT(A) erred in holding that the garden area which was in the exclusive use of the particular flat owner was includible in the total built up area and hence, once the garden area was included, the built up area was exceeding 1500 sq.ft. and therefore, the appellant was not entitled to claim the deduction u/s 80IB(10) in respect of the said project. 3) The learned CIT(A) failed to appreciate that the area covered by the garden was not to be included in the total built up area and once the said area was excluded, the total built up area of the residential units was less than 1500 sq.ft. and accordingly, the appellant was entitled to claim the deduction in respect of the project Kumar Shantiniketan. 4) Without prejudice to the above grounds, assuming without admitting that the built up area of a few flats exceeded 1500 sq.ft., the appellant submits that the deduction u/s 80IB(10) should have been allowed on proportionate basis in respect of the balance flats whose built up area was less than 1500 sq.ft. 5) The learned CIT(A) erred in denying the deduction of Rs.30,13,04,843/- in respect of the project Kumar Kruti on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 10) The learned CIT(A) failed to appreciate that the area covered by the garden was not to be included in the total built up area and once the said area was excluded, the total built up area of the residential units was less than 1500 sq.ft. and accordingly, the appellant was entitled to claim the deduction in respect of the project Kumar Shantiniketan. 11) Without prejudice to the above grounds, assuming without admitting that the built up area of a few flats exceeded 1500 sq.ft., the appellant submits that the deduction u/s 80IB(10) should have been allowed on proportionate basis in respect of the balance flats whose built up area was less than 1500 sq.ft. 3. The assessee is a firm engaged in the business of real estate promoters and builders. The first issue in A.Y. 2008-09 is with regard to disallowance of deduction u/s.80IB(10) of Rs.15,30,13,661/- claimed in respect of project Kumar Shantiniketan on the ground that built up area of few residential units exceeded 1500 sq.ft. Grounds Nos.1 to 4 are in respect of this claim of deduction u/s.80IB(10) in respect of project Kumar Shantiniketan. According to the Assessing Officer, the built up area of two flats (Nos.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. As long as the terrace area is not for exclusive use of any particular flat owner there will be no difficulty because it would be treated as a common area, but if it is exclusive area it may be treated as a projection or a balcony and, therefore, such exclusive area like terrace or projection has to be considered for the purpose of the limit of built-up area. The total area thus arrived at was a clear violation of the condition contained in clause (c) of section 80IB(10) of the Act. The eligibility conditions u/s 801B(10) include, inter alia, that the built-up area should not exceed 1500 sq. ft in the context of cities other than Delhi and Mumbai. This restriction is applicable to the entire project. If some of the residential units of the project comprised area exceeding the prescribed limit, the benefit as per the language of the section cannot be extended to the project. In such a situation, it is difficult to disagree with the findings of the A.O. and, therefore, the disallowance of deduction u/s 80IB(10) amounting to Rs. 15,30,13,661/- is upheld. 4.12 In view of the above facts and discussion, the ground no. 1(c) raised by the appellant is liable to be dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : a) Rohan Homes vs ACIT [ITA No.423/PN/2011] b) Ankit Enterprises [ITA.No.156 and 172/PN/2011] c) Ekta Housing Pvt. Ltd. [ITA No.3649/Mum/2009] d) Sanghvi Doshi Enterprises [139 ITD 151 (Chennai)(TM)] e) Bengal Housing Development Ltd. vs. DCIT [ITA.No.595/Kol/2005] f) D.S.Kulkarni Developers Ltd. [ITA No.1428 and 1429/PN/2008] In view of above, the assessee submitted that deduction should be allowed on proportionate basis. 8. On the other hand, Ld. Departmental Representative on prorata basis submitted that once in the project any flat exceeds prescribed limit of 1500 sq.ft., project looses character of housing project which is precondition for claiming deduction u/s.80IB(10). In this regard, Ld. Departmental Representative relied on the decision of the ITAT, Chennai Bench in the case of ACIT vs. Vishwas Promoters Pvt. Ltd. (2010) 5 ITR (Trib) 449 (Chennai), wherein it has been held as under: For enabling the benefit of section 80IB(1) it is necessary that profits must be derived in the previous year from housing project. The eligibility conditions include, inter alia, that the built-up area should not exceed 1500 sq.ft. in the contest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB (10) would have to be construed as commonly understood. 19. As rightly contended by Mr.Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr.Mistri, Learned Senior Advocate and Mr.Joshi, learned Advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the explanation in Section 80IB (10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQUARE FEET ('E' building in the present case) would constitute a 'housing project' under Section 80IB (10) of the Act." 8.2. The Ld. Departmental Representative also relied on para 26 of the said order of Brahma Associates (supra) wherein Hon'ble High Court has held as under: "26. The object of Section 80IB (10) in granting deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 sq.ft. In fact, the said issue was not before the Hon ble Bombay High court. The question before the Bombay High Court was entirely different and hence certain observations in the said judgment rendered in the context of the subject matter of dispute before the Court, cannot be considered as conclusive so far as the question which is before us. The only issue before the Hon ble High court was as to whether the construction of one building containing multiple residential units could be considered as a project by itself considering that it was a part of an earlier approved project. The judgment of the Hon ble High court in the case of Vandana Properties (supra) has to be appreciated only in this context. Therefore, the issue before us i.e. in case where certain residential units of a project have built-up area in excess of 1500 sq.ft. would result in the loss of exemption for the entire project or not and whether the assessee would be entitled to a proportionate deduction, was not an issue before the Hon ble Jurisdictional High court in the case of Vandana Properties (supra). Therefore, the said decision does not come to the rescue of the Revenue. 12. In this case, factually, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AO. 14. Similarly, the Bombay Bench of the Tribunal in the case of Ekta Housing Pvt. Ltd. in ITA No. 3649/MUM/2009 dated 20-5-2011 pertaining to A.Y. 2004-05 relied upon the Calcutta Bench of the Tribunal, as also the decisions in the cases of Brigade Enterprises Pvt. Ltd., Sheth Developers Pvt. Ltd. and observed that deduction u/s 80-IB(10) of the Act was to be allowed on proportionate basis with reference to qualifying residential units and that the assessee would not be denied claim for deduction u/s 80-IB(10) of the Act in entirety if some of its residential units were of a built-up area exceeding the limit prescribed in clause (c) to sec. 80-IB(10) of the Act. 15. Pertinently, it would also be appropriate to notice that the aforesaid decision of the Kolkata Bench of the Tribunal has since been confirmed by the Hon ble Calcutta High Court vide its order in the case of Bengal Ambuja Housing Development Ltd. dated 5-1-2007. The Pune Bench of the Tribunal in the case of D.S. Kulkarni Developers Ltd. (supra) has also upheld similar proposition following the aforesaid precedents. 16. Following the aforesaid precedents, we are therefore, of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) has reversed the same and following the decision of Hon'ble Calcutta High Court in the case of CIT vs. Bengal Ambuja Housing Development Ltd. vide ITA No.458 of 2006 order dated 5-1-2007 has held that the assessee is entitled to deduction u/s.80IB(10) in respect of flats having built up area not exceeding 1500 sq.ft., and not entitled to deduction in respect of those flats having their built up area exceeding 1500 sq.ft. Therefore, the decision of the Chennai Bench of the Tribunal relied on by the learned DR is not applicable. 18. So far as the decision of the jurisdictional High Court in the case of Vandana Properties (supra) is concerned we find the said decision is also not applicable to the facts of the present case since the issue there was not of pro-rata deduction. The Hon'ble High Court in the said decision has held that construction of even 1 building with several residential units of the size not exceeding 1000 sq.ft. would constitute a housing project u/s.80IB(10). We accordingly hold that the decisions relied on by the DR are distinguishable and not applicable to the facts of the present case. Thus, the assessee s ground relating to pro-rata deduction is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) allowed relief under s. 80IB(10) treating the said two units as independent units Justified Material on record showed that the various local authorities duly inspected the plot and sanctioned plan for each of the blocks separately Group housing approval was approval of a master plan as a concept Further, the use of the words residential units in cl.(c) of s.80IB(10) means that deduction should be computed unit-wise Therefore, if a particular unit satisfies the condition of s.80IB, the assessee is entitled for deduction and it should be denied in respect of those units only which do not satisfy the conditions Again, the accounting principles would also mandate recognition of profits from each unit separately . 21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. The various decisions relied on by the revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction u/s.80IB(10) in respect of building No. A,C,D, E and the 17 row house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Assessing Officer further observed that when there is a common lay out for project Kumar Kruti and Kumar City project, it is one project for the purpose of claiming benefit of deduction u/s.80IB(10) of the Act. As there was commercial area in Kumar City project, the Assessing Officer held that on this ground as well, deduction is not allowable. The Assessing Officer held that as lay out plan was sanctioned on 08.08.2003, assessee should have completed construction of the project by 31.03.2008 and since the project Kumar Kruti is not complete by 31.03.2008, deduction was not allowable. The CIT(A) has discussed this issue in para 4.3 and 4.4 and held as under: 4.3 The submission given in this regard and the material available on record has been perused. The appellant during the appellate proceedings has contended that the distinguishing provisions relating to commencement of the project are exactly similar to that of Kumar Sansar project and that the interpretation of the commencement date on which the A.O. had relied upon have been subsequently discussed and distinguished in the cases of Apoorva Properties Estates Pvt. Ltd. vs. DCIT, Pune A Bench 2008 and Saroj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Kruti is only a part of the larger project Kumar City also does not call for any interference as nothing contrary has been brought out by the appellant to justify the claim made/ground raised in this regard. Thus CIT(A) has stated that assessee has not been able to demonstrate that project Kumar Kruti is an independent project and not part of Kumar City project. Accordingly, he confirmed the order of the Assessing Officer on the issue as discussed above. 12. The Ld. Authorised Representative before us submitted that project Kumar Kruti is an independent project and not a part of Kumar City project. The Assessing Officer in assessment order has stated that buildings which are part of project Kumar Kruti are part of layout plant dated 08.08.2003. In this regard, stand of the assessee has been that in said plan, project Kumar Kruti has been mentioned as evident from copy of lay out plant dated 08.08.2003 as enclosed on page 3 of the Paperbook filed on behalf of the assessee. The stand of the assessee has been that simply because said project is a part of lay out plan, does not justify to hold that project Kumar Kruti is part of Kumar City project. According to the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the area. Since building plan was sanctioned on 26.07.2006 pertaining to project Kumar Kruti, no justification in holding that project Kumar Kruti is a part of Kumar City project. The assessee submitted that even if there is a common lay out plan but independent building plan, project approved under separate building plans is to be considered as independent projects and not part of larger project as mentioned in the lay out. In this regard, Ld. Authorised Representative relied on the following decisions: a. Apoorva Properties and Estates Pvt. Ltd. [ITA No.113/PN/07] b. Aditya Developers [ITA No.791 792/PN/08] c. Ankit Enterprises [ITA No.1146/PN/10] d. Brigade Enterprises Pvt. Ltd. [119 TTJ 269 (Bang)] e. P.V.Mahadkar Associates [ITA No.1117/PN/10] 14. In view of above decisions, the assessee submitted that project Kumar Kruti was independent project since building plan of the said project was sanctioned independently on 26.07.2006. Accordingly, deduction in respect of this project Kumar Kruti should be allowed u/s.80IB(10) of the Act. 15. The Ld. Authorised Representative further submitted that the Assessing Officer has denied deduction also on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18. Regarding two remaining issues we find no dispute that project Kumar Kruti is a part of Kumar City project as far as lay out dated 08.08.2003 is concerned. There is no dispute that there are common lay out for project Kumar Kruti and Kumar City project. The stand of the assessee has been that project Kumar Kruti is an independent project and not part of Kumar City project. Simply because project Kumar Kruti is a part of Kumar City project in the lay out, it is not justified in holding that project Kumar Kruti is a part of Kumar City project. It is obviously clear from building plan of Kumar City project dated 13.10.2003 as enclosed on page 5 of the Paperbook wherein area on which Kumar Kruti project was to be constructed had been shown blank. It makes abundantly clear that the assessee has not conceived the building plant for project Kumar Kruti prior to 01.04.2004. In fact building plan for project Kumar Kruti was sanctioned on 26.07.2006 for the first time which is evident from building plan sanction placed on page 8 of the Paperbook. Thus, project Kumar Kruti has been independently sanctioned vide building plan dated 26.07.2006. In this situation, the Assessing Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss than 10%. As regards the question about size of the flats we have taken note of the factual position that even according to the Assessing Officer none of the flats in phase II exceeds the size of 1500 sq.ft. In any event in the course of remand proceedings, the matter was examined by the Assessing Officer again. The Assessing Officer is not able to point out any specific violation of the said provision. Learned Departmental Representative very fairly accepted that he is not in a position to point out any such instance. That leaves us a question as to whether Kumar Karishma is to be treated as an integral and inseparable project or various projects of this project can be considered on a stand alone basis. One of the major arguments in support of the entire project being treated as one project is common facilities used by the flat owners but then we are unable to appreciate as to how mere fact of facilities being common can be used against the assessee s claim of separate project. It is very well possible that the amenities of one project can be used by residents of the other project and that alone cannot alter the character of independent project. As we mentioned earlier, there a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the law housing projects will get defeated. 'BC' project was meant for higher strata of the society. The assesses 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 lest laid down under s. 80-IB(10). 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 there is a clear intention of the legislator the Revenue cannot be permitted to do so. After all the assessee has obtained different commencement certificates and started on different periods of time. They are separate by time, space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue is not right in treating both the projects as one and integrated without the facts warranting for such conclusion. Objection of the AO that as the permissible shopping area of housing project exceeds 5 per cent, the assessee is not entitled for relief under s. 80-IB(10) is not sustainable. The ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he coordinate benches, the assessee is entitled to deduction u/s.80- IB(10) of the Act. We accordingly direct the Assessing Officer to grant the same. In the result, the appeal of the assessee is allowed. 19. Nothing contrary was brought to our knowledge by the Revenue. According to us, the ratio of Apoorva Properties (supra) supports the case of the assessee. We find that ITAT Pune A Bench in DCIT vs. Aditya Developers had occasion to discuss and decide the similar issue in favour of the assessee by observing as under: 6. We have considered the above submissions and have gone through the orders of the authorities below, material available on the record and the decisions relied upon by the parties. The facts in details submitted by the assessee before the A.O vide letter dated 16.10.2006 have also been gone through. For a ready reference, para nos. 1 to 8 of the letter dated 16.10.2006 submitted by the assessee before the A.O are being reproduced hereunder: 1. M/s Aditya Developers purchased a plot of land bearing Survey No. 1/A(Part) of Kondhwa Khurd, Pune from Ranade and their relatives. Thereafter M/s. Aditya Developers got the clearance from Urban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese norms. Since our new housing project is as per the plans sanctioned in March 2001, it is no way concerned with earlier lapsed sanctions. We have never started any development or construction prior to March 2001 on the rear area of land of 8966 sq.mtr on which buildings K,M,N,I,O,P have been constructed. In support of this we are enclosing herewith photocopy of letter of PMC dt. 5-10-2006. English translation of the same is as under: PUNE MUNICIPAL CORPORATION Construction Control Dept. Outward No. BCO/5102 Date: 5-10-2006 To, M/s Aditya Develooers, Residing at Sadashiv Peth No. 619,Pune 30 Sub: Regarding construction on S.No.1(Part), Kondhwa, Pune Ref: Your letter dt. 3-10-2006 On the above mentioned subject and under the letter referred above, it is being informed that permission for construction of K building at S.No. 1(Part) Kondhwa Khurd, Pune was given vide No. 4975 dt. 9-3-01 and certificate of plinth checking was given under No. BCO/03/74 DT. 27-9-2001. Also permission for building MNIOP was given vide letter No. 4981 dt. 29-3-2001 As per the available record there is no mention of any building construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the lay outs were furnished to the Municipal Corporation for sanction on 6th June 1998 and construction work was commenced after building permission was sanctioned by the Municipal Corporation on 23rd July 1999. Department took the stand that the development commenced with the development agreement and acquiring irrecoverable power of attorney and more so that lay outs were furnished to the municipal corporation for preliminary sanction on 6th June 1998, the assessees submitted that the preliminary sanction was required to be given which constituted no objection from municipal corporation for allowing assessee to have the construction on the said property. It was contended that on the basis of preliminary sanction, the assessee made an application for converting the said land into Non- agricultural land. This application was made on 25th November 1998 and the revenue authorities converted the said agricultural land into Non-agricultural land on 13th June 1999. It was also contended by the assessee that the building plan was submitted to the municipal corporation and the said corporation sanctioned the building plan on 23rd July 1999. In other words, the municipal corporation g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting of 5 residential block raw houses, Oak Tree Place, a Club, and Community Centre, a School, a Park and claimed deduction u/s. 80 IB (10) in respect of 2 residential units which if deducted separately were eligible for the relief. The A.O treated the entire project as a single unit and denied relief u/s. 80 IB (10) in entirety. The Tribunal justified the action of the Ld CIT(A) in allowing relief u/s. 80 IB(10) treating the said 2 units as independent units. The Tribunal observed that the group housing approval was approval of a master plan as a concept and if a particular unit satisfies the condition of Section 80 IB (10), the assessee is entitled for deduction. The Tribunal held that Plan for development was only a work order and not final plans sanctioned by local authority. For any project, there could not have been a plan without submission of the detailed building plans by the architect and on the requisite details required to be submitted for approval of the building plans by the local authorities. In other words, the Tribunal accepted the contention of the assessee that the development plan is only conceptual and the detailed construction plans are not submitted n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; From the very reading of the Explanation (i) makes it clear that the date on which building plan of such housing project is approved shall be deemed the date of approval of the housing project. We thus find that the assessee is very much eligible for the claimed deduction u/s. 80-IB (10) on the project KKT in view of the above cited decisions including decision of Pune Bench of the Tribunal in the case of Nirmiti Construction Vs. DCIT (Supra), following which, in our view, the Ld CIT(A) has rightly allowed the claimed deduction. The same is upheld. The issue raised are thus decided in favour of the assessee. 8. So far as decision of Chennai Bench of the Tribunal in the case of ACIT Vs. Viswas Promoters (P) Ltd. (Supra) relied upon by the Ld. D.R. is concerned, we find that the facts therein are distinguishable as in that case, assessee had completed 4 housing projects, out of those 4 projects, in 2 projects assessee had constructed flats exceeding 1500 sq.ft. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a)(ii) of the Act the time was available upto 31-3-2009 for completion of the project which is evident from the completion certificate issued by the PMC on 3-7-2008. This fact has not been disputed by the revenue authorities, because the Assessing Officer himself made an inquiry directly with the PMC vide his letter dated 12-12-2008. Layout/key plan dated 1-10-1998 was in respect of whole property of earlier owner Smt. Sunita Mahadkar. Lay out plan/key plan is different from sanction of plan and commencement thereof. Assessee entered into development agreement dated 2-8-2004 with regards to portion of property of Smt. Sunita Mahadkar. So there is no question of any sanction and commencement prior to it. The commencement took place on this property of assessee admeasuring 52245 sq.ft. out of holding of Smt. Sunita Mahadkar acquired by assessee vide development agreement dated 28-2004. So, there was no question of commencement prior to 2-8-2004. The date of layout of previous owner i.e. 1-10-1998 should not be confused with date of sanction of plan and commencement thereof as held in the case of Aditya Developers (supra). Considering all the facts and circumstances, we are not incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as less than 1500 sq.ft. 2 (a) The learned CIT (A) erred in disallowing the deduction u/s 80IB(10) of Rs.4,17,74,015 /- claimed in respect of the project Kumar Shantiniketan on the ground that the said project did not satisfy the conditions laid down u/s 80IB(10). The AO and CIT(A) may please be directed to allow the deduction claimed u/s 80IB(10) of Rs.4,17,74,015/- for Project Kumar Shantiniketan. (b) Without prejudice to the above ground, assuming without admitting that the condition of built up area is not satisfied for few flats, i.e. the built up area of few flats exceeded 1500 sq.ft, the appellant submits that the deduction u/s 80IB (10) should have been allowed on proportionate basis in respect of the balance flats whose built up area was less than 1500 sq.ft. The first issue is with regard to prorata claim of deduction u/s.80IB(10) in respect of eligible flats in the project Kumar Kruti while few flats exceeded the prescribed limit of 1500 sq.ft. The issue of prorata deduction has been allowed by us in A.Y. 2008-09 vide para 16 of this order. Facts being similar, the Assessing Officer is directed to rework the deduction in respect of eligible flats as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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