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TMI Blog2014 (2) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... ihousing Pvt. Ltd. Vs. ACIT [2014 (2) TMI 595 - ITAT PUNE] Followed - It is the case of the Revenue that since the completion certificate for Building D has not been obtained before 31-03-2008, therefore, deduction u/s.80IB(10) should not be allowed. There was substance in the contention of the AR that approval of the housing project and approval of building plan are two different concepts - plan for development is only a work order and not final plan sanctioned by the local authority - the assessee has claimed deduction u/s.80IB(10) in respect of Buildings A, B, C on which profit has been earned on sale of units and the completion certificate has been obtained before the statutory date and none of the units in the above building is in excess 1500 sq.ft. - thus, the assessee is entitled to deduction u/s. 80IB(10) in respect of buildings A, B and C of the project "Hill View Residency" – thus, the order of the CIT(A) set aside and the AO is directed to allow the claim of deduction u/s 80IB(10) in respect of the housing projects "Leela Garden" and "Hill View Residency" – Decided in favour of Assessee. - ITA. No. 1328/PN/2009 - - - Dated:- 3-2-2014 - Shri Shailendra Kumar Yadav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) according to which the taxing statute granting incentives for promoting the growth and development should be considered liberally so as to help the growth and development and therefore the proposed disallowance of the claim u/s.80IB(10) amounting to Rs.4,90,97,649/- should be dropped. As regards the project "Hill View Residency" is concerned it was argued that the final completion certificate in respect of Buildings D and E is not issued. Relying on various decisions it was submitted that proportionate allowance of deduction should be allowed to the assessee on the projects which are completed and for which completion certificate has been issued by competent authority. 3. However, the AO was not fully satisfied with the explanation given by the assessee. He noted that the claim of the assessee regarding completion in respect of project "Leela Garden" is accepted because the PMC vide its letter dated 19-12-2008 has clarified that the project is complete and the part completion certificate issued on 12-05-2006 should be treated as final completion certificate. However, as regards the claim of the assessee for giving proportionate allowance of the deduction, the AO noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs.81,71,409/- be deleted and claim of deduction u/s.80IB(10) be allowed in full as the profit has been made out on "Completion Contract Method" which is followed consistently by the assessee" 5. The Ld. Counsel for the assessee strongly opposed the order of the CIT(A). Referring to Page 6 of the Paper Book he submitted that out of the total 83 flats in the project "Leela Garden" 61 flats are having area less than 1500 sq.ft. and only 22 flats are having area of more than 1500 sq.ft. Referring to page 21 22 of the Paper book he submitted that the assessee has claimed deduction only in respect of those flats whose built up area was less than 1500 sq.ft. Referring to the decision of the Pune Bench of the Tribunal in the case of M/s. Rahul Construction Co. Vs. ITO vide ITA No.1250/PN/2009 and ITA No.707/PN/2010 order dated 30-03-2012 for A.Y. 2006-07 and 2007-08 and the decision of the Mumbai Bench of the Tribunal in the case of Mudhit Madanlal Gupta Vs. ACIT reported in 51 DTR 217 he submitted that assessee is entitled to proportionate deduction. He submitted that following the decision of the Hon'ble Calcutta High Court in the case of Bengal Ambuja Housing Development and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s.80IB(10) in respect of the Buildings, A, B, C and E for which the completion certificate has been obtained by the assessee before 31-03-2008. 5.2 The Ld. Counsel for the assessee also relied on the following decisions : "1. DCIT Vs. Brigade Enterprises (P) Ltd. reported in 119 TTJ 269 (Bang). 2. DCIT Vs. Aditya Developers - ITA No.791 792/PN/2008 order dated 30-01-2012. 3. CIT Vs. Vandana Properties in ITA No.3633/2009 and ITA No.4361/2010 order dated 28-03-2012. 4. Bengal Ambuja Housing Development Ltd. Vs. DCIT-ITA No.1595/Kol/05 order dated 24-03-2006. 5. Magarpatta Township Development Construction Co. Vs. DCIT- ITA No.822/PN/2011 and ITA No.04/PN/2012 order dated 18-09-2012. 6. CIT Vs. Arun Excello Foundations Pvt. Ltd. reported in 212 Taxman 342 (Madras). 7. Suresh L. Wadhwa (HUF)- ITA No.4743/Mum/2009 order dated 31- 12- 2012. 8. Siddhivinayak Kohinoor Venture Vs. Addl. CIT-ITA Nos.1112 1527/PN/2011 order dated 31-10-2013." 6. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that in the case of "Leela Garden" project out of 83 flats only 61 flats conformed to the area prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbuja Housing Development Ltd. We find the Kolkata Bench of the Tribunal in the aforesaid case vide ITA No.1295/Kol/05 order dated 24- 03-2006 for the A.Y. 2002-03 has allowed the claim of pro-rata deduction u/s.80IB(10) in respect of units having individual area of less than 1500 sq.ft. When the Revenue challenged the order of the Tribunal the Hon'ble High Court confirmed the order of the Tribunal vide its order dated 05-01-2007 and the appeal filed by the Revenue has been dismissed. 7.2 We find the Pune Bench of the Tribunal in the case of D.S. Kulkarni Developers Ltd. and various other cases has upheld similar proposition following the aforesaid precedents. The Coordinate Benches of the Tribunal are consistently taking the view that deduction u/s.80IB(10) has to be allowed on proportionate basis with reference to the qualified residential units and that the assessee would not be denied claim of deduction u/s.80IB(10) of the Act, in entirety, if some of its residential units were of built up area exceeding the limit prescribed in clause (c) to section 80IB(10) of the Act. 7.3 Since in the instant case the assessee has obtained the completion certificate before 31-03-2008 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed for completion of the project to take benefit of deduction u/s. 80 IB (10) of the Act. There is no dispute on some material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time limit upto 31st March 2008. The lay out plan in respect of entire complex was sanctioned by PMC vide order No. DPO/45/D/646 dated 3.4.2003 and the building plan was sanctioned vide Commencement Certificate No. 4269 dt. 29.4.2003. Admittedly, the term "housing project" has not been defined in the Income Tax Act but in the context of deduction u/s. 80IB(10) an Explanation has been provided below clause (a) to sub-section (10) to Section 80 IB. For a ready reference, the said Explanation is being reproduced hereunder : (i) in a case where the approval in respect of the 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. (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Mudhit Madanlal Gupta Vs. ACIT (Supra ) before the Mumbai Bench, it has been held that the housing project does not necessarily have to be various group of buildings constructed on that particular land, but it can also be a particular building or any building which is part of a large project. It has been further held that whatever portion of the housing project is otherwise found to be eligible has to be considered as a housing project for the purpose of deduction u/s. 80 IB (10) of the Act. Similar view has been expressed by Mumbai Bench of the Tribunal in the case of Vandana Properties Vs. ACIT (Supra). 10. In view of above discussion, we come to the conclusion that for verification of eligibility of benefit claimed u/s. 80 IB (10) of the Act by the assessee on buildings A1 to A5 in "Atul Nagar" and buildings B1 to B6 in "Rahul Nisarg Co-Operative Housing Society Ltd.", the assessing authority has to verify as to when the building plans for these buildings were firstly approved by the local authority and taking the said date of approval a starting point, he has to verify as to whether these buildings were completed within the prescribed time limit i.e. 31st March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities below on the issue, direct the A.O to allow the claimed deduction u/s. 80 IB(10) in question. The related grounds are accordingly allowed." 21.2 We find that Bangalore Bench of the ITAT in the case of Dy.CIT Vs. Brigade Enterprises (P) Ltd. [119 TTJ 269 (Bang.)] has observed as under: Deduction under S.80IB - Income from developing and building housing project - Different units of a group project - where some of the residential units in a bigger housing project, treated independently, are eligible for relief under s.80IB(10), relief should be given pro rata and should not be denied by treating the bigger project as a single unit, more so, when assessee obtained all sanctions, permissions and certificates for such eligible units separately - Assessee undertook a development project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s. 80IB(10) in respect of two residential units only which if taken separately, were eligible for the relief - AO treated the entire project as a single unit and denied relief under s.80IB(10) in entirety - CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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