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TMI Blog2014 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80IB(10) of the Income Tax Act, 1961 for the project "Neptune" on the alleged ground that two contigoues flats purchase by buyers is only one residential unit which were having built up area more than 1000 sq.ft. 2. The Learned CIT(A) failed to appreciate that two contiguous flats are separate residential unit constructed in the project "Neptune" and built up area of each unit is less than 1000 sq.ft. and that all the conditions of section 80IB(10) are satisfied by the appellant. 3. The appellant prays that, deduction under section 80IB(10) amounting to Rs. 6,40,64,437/- be allowed considering that, the contiguous flats are separate residential units constructed in the project "Neptune" and built up area of each units is less than 1000 sq.ft. 4. Without Prejudice to the above, the Learned CIT(A) fails to appreciate that, the built up area of even merged single flat is less than 1000 sq.ft. and therefore all the conditions of the section 801B (10) are satisfied by the appellant. 5. The appellant prays that, deduction under section 80IB(10) in respect of merged flats in project "Neptune" amounting to Rs,6,40,64,437/- be allowed considering that two contiguous flats sold by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted that all the eligibility conditions for deduction under section 80IB(10) were satisfied which were verified by the competent local body authorities. The site plans were duly approved, there were separate registered sale deeds, separate electricity meters in the flats, and even the municipal corporation had approved the plan in respect of the entire 94 flats of the building and not for 47 flats. No application of merger of the flats was ever made by the assessee or anybody else to the Bombay Municipal Corporation (BMC). Even, in the records of BMC the same were recorded as separate flats. The observation of the AO that the assessee had converted the two units on a floor into a single unit and thereby 97 flats were clubbed and thereby converted into 47 flats having total carpet area of 1260 sq. ft. was wrong. It was also submitted that the pamphlets found during the survey action was a part of advertising gimmick of the builder so as to attract the intended purchasers. The said type of advertisement gimmick is generally prepared by the professionals employed for advertising the projects. The said pamphlet was not a document depicting the actual and 100% details of fla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 94 flats the BMC had given the occupancy certificate in respect of all the 94 flats on 30.03.09 which was given after the survey of the premises and after verification of the fact that whether the construction was as per the approved plans. After thorough verification BMC gave the occupancy certificate. The sales had already been affected before the date of survey. Thus, even the contention of the Revenue for the sake of argument is admitted that the flats were adjoined by the purchasers, even then no fault can be attributed on the part of the assessee. The assessee had not violated any conditions of section 80IB(10). The further contention of the ld. A.R. has been that even in the sale deeds, the carpet area for the 2BHK flat was mentioned as 59.55 sq. meter and carpet area for 1BHK flat was mentioned as 24.76 sq. meter. Even, if the contention of the Revenue is assumed, the aggregating area of both the units will come to 84.31 sq. meter which comes to 907 sq. meter. The stamp duty is paid on the built up area as calculated by the Revenue Authorities. As per the formula adopted by the Revenue Authorities, 10% of the carpet area is added to arrive at the built up are of the unit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, [but not later than the 31st day of March, 2005]within four years from the end of the financial year in which the housing project is approved by the local authority. [(iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority] Explanation.-For the purposes of this clause,- (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 housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... q. ft. The case of the Revenue is that the flats were later on joined to make it a one unit. After the completion of the project, the BMC had given the occupancy certificate to the assessee which shows that the flats were constructed by the assessee as per the approved plan and thereafter sold as separate units. Even separate electric connections were obtained by the users/purchasers for the said 94 flats. There was no provision at that time in the act that more than one flat could not have been purchased by an individual or that the individual after purchasing the flat could not join the two flats, so far so the provisions of section 80IB(10) are concerned. Under such circumstances, it cannot be said that any violation was committed by the assessee of the provisions of section 80IB(10) as were in operation during the relevant period. We may note that to plug such a loophole, clause (e) has been inserted in the section 80IB(10) by Finance Act of 2009 w.e.f. 01.04.09. The effect of the said clause is prospective i.e. from 01.04.10. If the said clause was to be applied retrospectively, the legislature would have pointed it so in clear terms, but has not been done so. The reason may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st April, 2010, and, in our humble understanding, this amendment in law can only be treated as prospective in effect. What is, therefore, clear is that so far as pre- amendment position is concerned, as long a residential unit has less than specified area, is as per the duly approved plans and is capable of being used for residential purposes on standalone basis, deduction u/s.80113(10) cannot be declined in respect of the same merely because the end user, by buying more than one such unit in the name of family members, has merged these residential units into a larger residential unit of a size which is in excess of specified size. That precisely is the case before us. While on the subject, it is useful to take note of legislative amendment by the virtue of which legislature put certain restrictions on sale of residential units to certain family members of a person who has been sold a residential unit in the housing project. Section 80113(10) now provides an additional eligibility condition that in a case where a residential unit in the housing project is allotted to any person being an individual, no other residential unit in such housing project is allotted to any of the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative amendment was infructuous or uncalled for -particularly as the amendment is not even stated to be 'for removal of doubts'. On the contrary, this amendment shows that no such eligibility conditions could be read into preamendment legal position. 9. As regards the AO's stand that the assessee himself has offered the deduction u/s.80IB(10) in respect of these units during the course of survey proceedings, it is only elementary that neither statement recorded u/s.133A has an evidentiary value, nor a legal claim can be declined only because ass essee, at some stage, decided to give up the same. In view of these discussions, and bearing in mind entirety of the case, are of the considered view that the deduction u/s.801B(10) ought to have been allowed to the assessee entirely. To this extent, we modify the order of the CIT(A) and allow further relief to the assessee. 10. As we have held the admissibility of deduction u/s.801B(10) in respect of entire project, revenue's grievance against partial relief granted to the assessee is infructuous and academic, we, accordingly, dismiss the same. Grievances against reopening of assessment, in the absence of specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y buying more than one such unit in the name of family members, has merged these residential units into a larger residential unit of a size which is in excess of specified size.
10. In view of our above observations and also being in agreement with the decision of the Tribunal cited supra, we hold that the assessee is entitled to deduction under section 80IB(10) of the Act in respect of the 94 flats in question. Accordingly, the appeal of the assessee is thus allowed.
ITA No.4877/M/2012:
11. The Revenue through its grounds of appeal has raised the issue relating to the allowability of deduction under section 80IB(10) by the ld. CIT(A) on proportionate basis in respect of the flats which were found having area less than 1000 sq. ft. by the Revenue Authorities.
12. Since we have already allowed the admissibility of deduction under section 80IB(10) in respect of all the flats in question, hence in view of our findings given above, the appeal of the Revenue has to become infructuous and the same is accordingly dismissed.
13. In the result, the appeal of the assessee is hereby allowed and that of the Revenue is hereby dismissed.
Order pronounced in the open court on 17.09.2014. X X X X Extracts X X X X X X X X Extracts X X X X
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