9911796707
TMI Blog2015 (9) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the assessee in respect of profit derived from housing project developed by her at Bhanoor Village in Medak District. For the said project 16 Acres and 7 Guntas of land was purchased by the assessee and after obtaining the approval from the Gram Panchayat on 20.10.2006, 138 residential units were proposed to be constructed with the average size of plot of 325 sq. yards and built up area of 1475 sq. ft. During the previous years relevant to assessment years 2009-10, 2010- 11 and 2011-12, 38, 16 and 37 residential units were sold by the assessee and deduction under S.80IB(10) for the profits derived from the said project for the year under consideration, i.e. 2009-10 was claimed in the return of income to the extent of Rs. 3,29,78,844. 3. During the course of assessment proceedings, the claim of the assessee for deduction under S.80IB(10) was examined by the Assessing Officer. In this regard, a commission under S.131(1)(d) of the Act was also issued by the Assessing Officer to the DVO, who inspected the project site of the assessee on 17.12.2011 with his team of engineers. The Assessing Officer also accompanied the DVO during the said visit. On the basis of the report recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was thus no violation of the condition stipulated for claiming deduction under S.80IB(10). This contention of the assessee was not accepted by the Assessing Officer. He held that although the assessee has generally followed 1,500 sq. ft. norm of each residential units, there was violation of that norm in respect of two residential units, which disentitled the assessee to claim deduction under S.80IB(10). 5. As further found during the physical inspection of the project site of the assessee, there was a big commercial complex at plot No.10 within the project. According to the report of the DVO the built up area of the said commercial complex was 11,913 sq. ft. In this regard, the explanation offered by the assessee before the Assessing Officer was that the plot No.10 was sold to Md. Zaheeruddin and Md. Zamiluddin, who constructed the commercial complex thereon, which had nothing to do with the project of the assessee. According to the Assessing Officer, the said commercial complex, however, was a part and parcel of the project undertaken by the assessee and in order to circumvent the provisions of law, a third party was introduced by the assessee for the purposes of constructing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess than 1,500 sq. ft. According to the learned CIT(A), this evidence produced by the assessee, however, was not sufficient to prove that the built up area of unit No.121 was less than the limits prescribed under S.80IB(10). He also observed that there was no confirmation from the concerned purchaser filed by the assessee in support of her claim. He therefore, held that there was a violation of the norm of 1,500 sq.ft. in respect of two residential units bearing Nos.118 and 121. 9. As regards the violation in the norms of commercial space, it was submitted by the assessee before the learned CIT(A) that the commercial complex was not part of the project. It was submitted that the land on which commercial complex was constructed had been sold by the assessee vide sale deed dated 13.9.2007 to Md. Zaheeruddin and Md. Zamiluddin and the commercial complex was developed and built by them on the said plot of land. This stand of the assessee was also not found acceptable by the learned CIT(A). According to him, the plot of land on which the commercial complex was constructed, did form part of the total project as approved by the concerned authority. He also noted that even the completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l built up area of duplex house was only 1,364 sq. ft., which was less than the prescribed limit of 1,500 sq. ft. He contended that there was thus no violation of the norm of maximum area of 1,500 sq. ft. built up area even in respect of these two units, as alleged by the authorities below. He also contended alternatively that even if it is assumed that there is such violation either in respect of one unit or even two units, the claim of the assessee for deduction under S.80IB(10) can be disallowed only proportionately and not entirely as done by the authorities below. 11. As regards the violation of the norm of maximum commercial area allowed in the project, the learned counsel for the assessee submitted that no commercial area was actually built up by the assessee in the project undertaken by her. He submitted that one vacant plot in the project was sold by the assessee in the year 2007 itself and the profit of Rs. 3 lakhs arising from the said sale was duly offered to tax by the assessee in assessment year 2008-09. He submitted that the purchasers of the said plot actually built up the commercial area and since the assessee neither constructed nor sold the commercial area, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) held that there was thus violation of at least two norms in the respect of project developed by the assessee to be eligible for deduction under S.80IB(10) and the said project therefore, was not entitled to deduction under S.80IB(10), as rightly held by the Assessing Officer. 14. In so far as the norm relating to commercial area is concerned, there is no dispute that the relevant plot of land on which the commercial complex was built had already been sold by the assessee to Md. Zaheeruddin and Md. Zamiluddin vide sale deed dated 13.9.2007 and the profit arising from the said sale was duly offered to tax by the assessee for the relevant assessment year, assessment year 2008-09. There is also no dispute that the commercial complex on the said plot of land was constructed by the owners and not by the assessee and the profit arising from the sale of the commercial complex so constructed was duly offered to tax by the said owners in their returns of income. The learned CIT(A), however, still confirmed the disallowance made by the Assessing Officer on account of assessee's claim for deduction under S.80IB(10) on the ground that the plot of land on which the commercial complex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It is also pertinent to note here that profit arising from the development and sale of commercial complex was duly offered by the owners to tax in their returns of income, and neither they nor the assessee claimed any deduction under S.80IB(10) in respect of the said profit. 14. In so far as the residential units No.21 and 118 are concerned, which allegedly were having more than the permissible maximum built up area of 1,500 sq. ft. each, the learned counsel for the assessee has filed before us a copy of the relevant sale deed dated 11th September, 2008, whereby the residential unit No.21 comprising of plot of land and duplex house built thereon was sold by the assessee. A perusal of the said sale deed clearly mentions the built up area as 1,364 sq. ft. in the description of the property sold and even the building plan annexed to the said sale deed as approved by the concerned authorities, shows the total area of the ground and first floors as 1336 sq. ft. It is observed that the Assessing Officer, however, presumed the area of this unit as more than 1,500 sq. ft. merely on the basis that the duplex house was having two floors. As explained on behalf of the assessee before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were having built up area of less than1,500 sq. ft. as developed and sold by the assessee and in our opinion, there was no violation of any condition as alleged by the authorities below, for claiming deduction under S.80IB(10). We also find merit even in the alternative contention raised by the assessee that even if one or two units of the project are found to be having built up area of more than 1,500 sq. ft, the deduction under S.80IB(10) is liable to be disallowed only on proportionate basis and the claim of the assessee under S.80IB(10) cannot be disallowed in its entirety, as done by the authorities below. 16. In the light of the above discussion and considering all the facts and circumstances of the case, we are of the view that there was no violation of any condition in respect of the project developed by the assessee for the purpose of claiming deduction under S.80IB(10) and the learned CIT(A) was not justified in confirming the disallowance made by the Assessing Officer on account of assessee's claim for deduction under S.80IB(10). We therefore, set aside the impugned order of the learned CIT(A) on this issue, and direct the Assessing Officer to allow the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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