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TMI Blog2019 (1) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... signed profit and loss account was furnished - Held that:- Deduction u/s 80-IB(10) of the Act, cannot be disallowed on the ground that separate books of account were not maintained by the assessee and on the ground that signed profit and loss accounts, project-wise, were not submitted. This issue is decided in favour of the assessee. Under the scheme of the Act, no more than one residential unit can be allotted any individual and the assessee had not filed the details in this regard - Held that:- as per the details filed by the assessee it is clear that out of both the projects only 8 flats were sold to persons who were relatives. This fact is not disputed by the Assessing Officer or the ld. D/R before us. Under these circumstances the question is whether deduction can be denied for the profits earned on entire housing projects or it can be denied proportionately. As decided in case of Viswas Promoters Pvt. Ltd [2012 (11) TMI 1117 - MADRAS HIGH COURT] principle of proportionate disallowance was approved. No contrary judgment is brought to our notice. Hence we hold that the Assessing Officer could at best disallowed at 1.9% of the claim made by the assessee u/s 80-IB(10) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities created in the project which is accessible to all the allottees of the project. As per the agreement with the Government Agency ADDA, the project is not only for housing but for development of an integrated township which consists of commercial, in addition to residential and township project at Kanyapur, Asansol. Hence the residential projects Poorvi and Triveni cannot be held as a housing project for the purpose of Section 80-IB of the Act. b) No evidence is placed on record that the size of all the flats constructed in the two projects do not exceed the limit of 1500 sq. ft. c) No separate accounts have been have been maintained for the two projects, profits from which are claimed to be exempt u/s 80-IB of the Act. d) A perusal of the audit report in Form No. 10CCB under Rule 18BBB points out that copies of approvals, evidence as regards the area, were not placed on record. All the necessary details required for grant of deduction are not filed by the assessee. e) In the audit report, it was wrongly stated against clause 23(f) as not applicable. The Assessing Officer completed assessment u/s 143(3) on 19/03/2013, assessing total income at ₹ 4,52,54, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that approval granted by the municipal authorities would be construed as approval granted to housing projects. He further submitted that the claim of the assessee u/s 80-IB(10) of the Act, was allowed to the assessee in the earlier Assessment Years on the same facts and on the principle of consistency, deduction should be allowed. It was also contended that maintenance of separate accounts is not required when the assessee has filed separate statements of accounts and profit and loss account and the Assessing Officer has not found any deficiencies in these profit and loss accounts. He argued that all details as required, has been filed in relation to sale to the same individual/relative which are 8 in number. The ld. CIT(A) rejected the contentions of the assessee by holding as follows:- I have perused the order of the A.O., grounds of appeal and written arguments submitted by the appellant. In this case the appellant has not controverted the fact that his projects are constructed as per agreement with the ADDA and Bengal Shrishti Infrustructure Development Ltd. for entire land of 74.97 acres. It is also not controverted that the common facility would be available for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally rested his objections only on three aspects. The arguments of the ld. A/R are summarized as follows:- a) It is not necessary that the assessee should be exclusively engaged in the housing projects and phase of the project which fulfil the conditions laid down u/s 80-IB of the Act, if separately approved by the local authority is eligible for deduction. b) The nature of business of the assessee, i.e., agreement with ADDA, requires infrastructural development and, construction of commercial, residential and township projects. This continued to be the same for all the earlier years and also the subsequent years and the claim of the assessee for deduction u/s 80-IB of the Act, was allowed in the assessment orders passed u/s 143(3), for the Assessment Years 2005-06 2006-07. Hence on the ground of consistency the claim of the assessee should have been allowed. Reliance in this regard was placed on the judgments in the following case-law:- CIT vs. Excel Industries Ltd. 358 ITR 295 SC Radhasoami Satsang v. Commissioner of Income-tax [1992] 193 ITR 321 (SC) CIT vs. JK Charitable Trust (2009) 308 ITR 161 (SC) 4.1. Copy of the map of plan sanctioned by the municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 205/3/2001/ITA-II dated 4th May 2001 Bengal Ambuja Housing Development Ltd. vs. DCIT( ITA NO. 1595 and 1735/Kol/2005; dt. 24th April, 2006 (Cal HC) For the proposition that maintenance of separate books of account is not necessary:- Leo Meridian Infrastructure Projects Hotels Ltd. vs. DCIT; 144 ITD 445 DCIT vs. SMR Builders Pvt. Ltd.; 54 SOT 105 On the issue of amendment with regard to the sale to the same person or relatives not applicable prior to the amendment coming into force:- Ravi Appasamy vs. ACIT; [2016] 69 taxmann.com 305 Mad For the proposition of proportional disallowance:- ACIT vs. Ekta Sankalp Developers; 53 taxmann.com 75 Mumbai HC On the issue of consistency to be maintained:- CIT vs. Excel Industries Ltd. 358 ITR 295 SC Radhasoami Satsang v. Commissioner of Income-tax [1992] 193 ITR 321 (SC) CIT vs. JK Charitable Trust (2009) 308 ITR 161 (SC) 4.3. On the issue of deduction of interest u/s 194A of the Act, it was submitted that ADDA was granted registration by the ITAT and hence no tax was required to be deducted at source even as per the order of the ld. CIT(A). It was argued that ADDA was a statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(d) of the Act, which specifies that the shop and commercial shop built up area should not exceed 3% of the aggregate built up area of the housing project. 5.1. The ld. D/R submitted that under the agreement of the assessee with ADDA, more than 40% space was utilised for commercial and non-residential construction and that the claim also shows that the space for bungalow required more than 1500 sq.ft. This, he pointed out, violated Section 80-IB(10)(d) of the Act. He further argued that the agreement of sale with the buyers clearly shows that the housing project in question is part of the township project and submitted that phase-wise development of the entire town ship cannot be treated as a separate project. He further submitted that the assessee failed to maintain separate books of account and hence the profits from these residential projects cannot be properly ascertained. He further submitted that the assessee had violated the condition that more than one unit cannot be sold to the same person or related person as per the amendment to the Act. Alternatively and without prejudice to the above submissions he relied on the decision of the Hon ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the assessee with ADDA shows space for bungalow requires more than 1500 sq.ft., which violates conditions stipulate u/s 80-IB(10) of the Act. c) The phase wise development of the entire township cannot be broken up into separate projects. 7.2. Before we deal with the issue, we find that there is no dispute on the issue that the denial of deduction by the Assessing Officer on the ground that the requisite details were not submitted, has been addressed during the course of appellate proceedings before the ld. CIT(A). Copy of Form No. 10CCB with all the required annexure is placed at page 263 of the paper book. At pages 274 to 277 of the paper book, the copy of the agreement with ADDA, sanction plan of the municipal corporation, in respect of the two housing projects on which deduction 80-IB(10) was claimed i.e., Poorvi and Triveni, details of the size of the plot and block-wise and floor-wise list of flats and flat wise area as well as computation of separate profit in respect of the housing project as submitted by the lower authorities have been placed before us. At page 293 of the paper book, we find a copy of the letter written by the Assessing Officer in the remand p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT vs. Vandana Properties (supra) held as follows:- Whether construction of building 'E' constitutes a 'housing project under section 80- IB(10) The expression 'housing project' is neither defined under section 2 of the Act nor under section 80-IB(10). Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80-IB(10) would have to be construed as commonly understood. [Para 18] 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 80-IB(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 would constitute a 'housing project' under section 80-IB(10). [Para 19] Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-4-2005 is also misplaced. What the said Explanation contemplates is that where the approval in respect of a housing project is granted more than once, then that 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. For example, in respect of a housing project, the assessee may seek amendment of the building plan at several stages of the construction and the same may be approved. In such a case, the Explanation provides that for the purposes of section 80-IB(10) the housing project shall be deemed to have been approved on the date on which the first approval was granted by the local authority. Thus, the Explanation to section 80-IB(10)(a) refers to the approval granted to the same housing project more than once and the said Explanation would not apply where the approval is granted to different housing projects. In the present case, construction of building 'E' constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of building 'E' m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of any building and the deduction under Section 80IB of the Act is hundred per cent of the profits derived in the previous year relevant to the assessment year from such housing project complying with the condition, each block in the larger project by name Agrini and Vajra , has to be taken as an independent building and hence a housing project, for the purpose of considering a claim of deduction. Section 80IB(10) begins by stating: (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction, ** ** ** Thus the undertaking qualifying for deduction under Section 80IB of the Act is an undertaking developing and building housing projects and the deduction is in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted accordingly. 8.1. In view of the above discussion and in line with the decisions cited above, we hold that the deduction u/s 80-IB(10) of the Act, cannot be disallowed on the ground that separate books of account were not maintained by the assessee and on the ground that signed profit and loss accounts, project-wise, were not submitted. This issue is decided in favour of the assessee. 9. We now come to the issue whether deduction u/s 80-IB(10) of the Act, can be disallowed when more than one residential unit has been allotted to the same individuals and/or his/her relatives. 9.1. As per the details filed by the assessee it is clear that out of both the projects only 8 flats were sold to persons who were relatives. This fact is not disputed by the Assessing Officer or the ld. D/R before us. Under these circumstances the question is whether deduction can be denied for the profits earned on entire housing projects or it can be denied proportionately. The Hon ble Madras High Court in the case of Viswas Promoters Pvt. Ltd. (supra), held as follows:- 14. On the facts admitted by the Revenue, in the projects Agrini and Vajra , there are number of flats which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on similar lines as in the assessee's case before us. 15. In the light of the above reasoning, we have no hesitation in allowing the cases filed by the assessee in respect of assessment years 2004-05, 2005-06, 2006-07, 2007- 08 and 2008-09, thereby answering the substantial questions of law in favour of the assessee, that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the projects called Agrini and Vajra, but to the extent of each of the blocks satisfying the conditions under Section 80IB(10) of the Act, the assessee would be entitled to the relief on a proportionate basis. 9.2. The judgment of the Hon ble Bombay High Court in the case of Commissioner of Income-tax-II, Pune v. Brahma Associates, was followed by the Hon ble Madras High Court and the principle of proportionate disallowance was approved. No contrary judgment is brought to our notice. 9.3. Hence we hold that the Assessing Officer could at best disallowed at 1.9% of the claim made by the assessee u/s 80-IB(10) of the Act, as out of the total of 224 flats of Poorvi and 234 flats of Triveni, only 8 flats were sold to the same individual or their relatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) wherein it was said: Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. 30. Reference was also made to Parashuram Pottery Works Ltd. v. ITO [1977] 106 ITR 1 (SC) and then it was held: We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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