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TMI Blog2015 (10) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80IB(10). In view of the aforesaid, as approval by local authority for the four blocks, namely, Prime Rose, Lilly, Jasmine and Morning Glory was granted by local authority on 06/02/06, assessee, in our opinion, would be eligible to avail deduction u/s 80IB(10) since these four blocks were completed within the stipulated period of five years. As far as the second allegation of AO that few of the residential unit in the housing project exceeded the prescribed limit of 1550 sq.ft., it is to be noted that assessee before AO itself has stated that the total number of units which exceeded prescribed built up area limit of 1500 sq.ft. constitute 9% of the total housing project. It was further brought to the notice of AO, assessee itself has not claimed deduction u/s 80IB(10) in respect of those units. In our view, ld. CIT(A) was justified in allowing assessee’s claim of deduction u/s 80IB(10) in respect of the residential units comprising housing project, which adhered to conditions of section 80IB(10). Since the provision contained u/s 80IB(10) is a beneficial provision, a liberal approach has to be taken as a literal interpretation would lead to a situation where the very inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, permission was granted by HUDA on 20/01/2006 and these four blocks were constructed on land admeasuring 3.28 acres. AO referring to the provisions of section 80IB(10) observed, a housing project approved before 01/04/04, has to be completed on or before 31/03/08, for claiming deduction u/s 80IB(10). Whereas, four blocks for which assessee has claimed deduction u/s 80IB(10) were not completed within the stipulated period. When this was brought to the notice of assessee, he submitted that permission for construction of the four blocks was granted by HUDA on 20/01/06 and construction of these four blocks were completed in the FY 2009-10 relating to AY 2010-11, therefore, assessee is eligible for claiming deduction u/s 80IB(10). AO, however, observed that as per the details submitted by assessee, the entire housing project on 7.39 acres of land was approved by HUDA on 07/05/01 for construction of six blocks. Thus, approval obtained for construction of four blocks under consideration subsequently, merges with the approval obtained from HUDA on 07/05/01 and also the local authority i.e. Grampanchayat, Kompalli on 10/05/01, since, the original permission granted was for the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of deduction u/s 80IB(10). Being aggrieved of the assessment order so passed, assessee preferred appeal before ld. CIT(A). 4. Reiterating the stand taken before AO, it was submitted by assessee before ld. CIT(A) that the approval for the four blocks in respect of which assessee has claimed deduction u/s 80IB(10) was granted by HUDA on 20/01/06 and building plan was approved by Grampanchayat, Kompalli on 06/02/06. Since assessee has completed the project within the stipulated period of five years from the date of approval assessee is eligible to claim deduction u/s 80IB(10). As far as allegation of AO that assessee has violated the condition of built up area of less than 1500 sq.ft. for each residential unit, it was submitted by assessee that deduction u/s 80IB(10) can be proportionately restricted to residential units which are having built up area of less than 1500 sq.ft. 5. Ld. CIT(A) after considering the submissions of assessee in the context of facts and materials on record found that first approval granted by local authority i.e. Grampanchayat, Kompalli on 10/05/01 is in respect of two blocks, namely, Lotus and Daffodils- whose profits were allowed as deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting the period of completion. Ld. DR submitted, in the light of explanation to section 80IB(10) since the approval from HUDA for the entire integrated housing project was granted on 07/05/01, assessee should have completed the entire housing project on or before 31/03/08. Since assessee did not complete the entire housing project within the stipulated period, it is not eligible for deduction. Ld. DR submitted, even otherwise also, assessee is not eligible to claim deduction u/s 80IB(10) since one more condition has been violated by assessee. He submitted that as all the residential units in the housing project are not having built up area of less than 1500 sq.ft., assessee is not eligible to claim deduction. As far as claim of assessee that revised approval from HUDA and local authority in respect of the four blocks were given in February, 2006, Ld. DR submitted, such revised approval cannot be taken into consideration in view of the Explanation to section 80IB(10). Further, he submitted, revised approval granted by HUDA and local authority were never brought to the notice of AO. He, therefore, submitted, since assessee has not fulfilled the conditions of section 80IB(10), AO was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and perused the materials on record as well as the orders of revenue authorities. We have also applied our mind to the decisions relied upon by ld. AR. As is evident from record, AO has rejected assessee s claim of deduction u/s 80IB(10) for the following reasons: 1. The housing project has not been completed on or before 31/03/08. 2. Some of the residential units have exceeded the prescribed built up area of 1500 sq.ft. 8.1 Before deciding the issue whether the aforesaid conclusion drawn by AO are valid or not, it is very much necessary to bear in mind certain important factual aspects. It is not in dispute that the housing project conceived by assessee stands on an area of 7.9 acres consisting of six blocks and club house. The approval for the housing project was granted by HUDA on 07/05/01. As it appears from record, the local authority i.e. Kompally Grampanchayat granted approval for construction initially for two blocks, named, as Daffodils and Lotus on 10/05/01. It is further evident from record that as far as the aforesaid two blocks are concerned, assessee has been allowed deduction u/s 80IB(10) of the Act. As far as remaining four blocks, named as, Prime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at being the case, since approval by local authority for the four blocks was granted only on 06/02/06 that should be taken as the date of approval for the purpose of granting deduction u/s 80IB(10). As far as the argument of ld. DR that entire housing project is an integrated one consisting of six blocks, it is to be observed that the term housing project has not been defined u/s 80IB(10) of the Act. As held by the Hon ble Bombay High Court in case of CIT Vs. Vandana Properties, 353 ITR 36, since the term housing project has not been defined under section 80IB(10), meaning as per common parlance has to be taken. The Hon ble High Court observed that the expression housing project in common parlance would mean constructing a building or group of buildings consisting of several units. Referring to explanation u/s 80IB(10), the hon ble court observed, the language used in the explanation to the effect that approval granted to a building plan would suggest that housing project would mean a building consisting of several units. Thus, the Hon ble Court ultimately held that construction of a building with several residential units having prescribed built up area would constitute a h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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