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TMI Blog2019 (6) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... come-Tax (Appeals), Valsad in Appeal No. CIT(A)/VLS/399/09-10 dated 29.07.2011. 4. The Revenue has proposed the following substantial question of law: "Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in allowing the deduction u/s. 80IB of the I-T Act, 1961 ?" 5. The facts giving rise to this Tax Appeal may be summarised thus: 5.1 The respondent - assessee filed its Return of Income on 11.10.2007 declaring total income of Rs. 14,61,560/-. The Return was processed under Section 143(1) of the Act,1961. In the case on hand, a survey was undertaken under Section 133(A)of the Act on 05.09.2006 relevant to the Assessment Year under consideration and accordingly, the case was taken up for scrutiny. The notice under Section 143(2) of the Act was issued upon the assessee in this regard. The assessee is engaged in the business of construction and development of Housing Project. According to the case of the Revenue, the assessee floated a Housing Project in the name "Park City". It appears from the materials on record that the project was in two parts. One part of the project was in the form of row houses and the second part of the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be seen that nowhere part, sub part; sub project, such demarcation have been mentioned. The eligibility demands, a water tight compartment wherein, if the area of the residential unit exceeds 1500 sq. ft in a place like Silvassa, then the assessee becomes ineligible in terms of eligibility of provisions of section 80IB(10). No exceptional clause or proviso has been given in 80IB(10). As accepted by the assessee, (by virtue of 'submission) that, in the project itself area of the row house exceeds' 1500 sq. ft. and hence the assessee is not eligible for deduction u/s. 80IB of the IT Act as claimed in the return of income." 6. The assessee being dissatisfied with the order of the AO, preferred an appeal before the Commissioner of Income Tax (Appeals), Valsad under section 246-A of the Act. The CIT (Appeals) took the view that the assessee was entitled to claim deduction under Section 80IB(10) of the Act. The CIT (Appeals) in taking such view observed as under: "Let us examine whether the appellant had fulfilled the conditions in this case; The appellant submitted that within the meaning of the provisions of Section 80IB.(10), the Appellant is entitled for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the sale of the Flats the appellant has not violated any of the conditions of section 80IB(10) and as the appellant has not claimed deduction U/s. 80IB(10) in respect of the profit from the Sale of the Row Houses, appellant is eligible for deduction U/s. 80IB(10) of the Act in respect of Profit from the Sale of Flats. The appellant also further buttress its case by citing two more judgements of Honble ITAT Essem Capital Market Ltd. vs. ITO (2011) TIOL 196 (Mum.) and ITO vs. M.S.Vishnu Developers. (Ahm. ITAT). In view of the factual and legal position narrated above, the A0 is directed to allow benefits U/s.80IB(10) of the Act claimed by the appellant. The appellant succeeds on this ground of appeal." 7. The Revenue being dissatisfied with the order passed by the CIT (Appeals) preferred appeal before the Income Tax Appellate Tribunal, Surat Bench at Surat. The Appellate Tribunal dismissed the appeal preferred by the Revenue thereby affirming the order passed by the CIT (Appeals). The Appellate Tribunal while dismissing the appeal preferred by the Revenue held as under: "14. In view of contentions of the AO and findings and observations recorded by the Id. CIT(A) in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee wherein it has been held that the mere fact one of the blocks have units exceeding built-up area of 1500 sq. ft. per se, would not result in nullifying the each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement u/s. 80IB(10) of the Act. Their lordship in para 15, answering the substantial question of law against the Revenue and in favour of the assessee further held that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the Projects but to the extent of each of the, blocks satisfying, conditions u/s. 80IB(10) of the Act and the assessee would be entitled to the relief on the proportionate basis. 16. In the present case undisputedly the assessee has maintained separate accounts for flats and row houses and no claim has been made on the row houses measuring area of more than 1500 sq. ft. and the claim u/s. 80IB(10) of the Act has been made only on the flats which are measuring less than 1500 sq. ft. this fact is clearly discernable with the computation of income filing along with return of income (assessee paper book pg.1 & 2) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Madras and Honble Jurisdictional High Court of Gujarat as respectfully noted above. We, therefore, are unable to see, any ambiguity, perversity or any other valid reason to interfere with the findings arrived by the ld. CIT(A) in dismissing the allegations and contentions of the AO and in allowing deduction u/s. 80IB(10) of the Act to the assessee on the amount accrued to him on sale of flats measuring less than 1500 sq. ft. per unit. Consequently, we hold that the AO disallowed the claim without any Justified and correct reasons which was rightly allowed by the Id. CIT(A) and thus, we uphold the findings recorded by him in the first appellate order. Accordingly, sole ground of Revenue being devoid of merits is dismissed." 8. The Revenue being dissatisfied with the order passed by the Appellate Tribunal is here before this court with the present appeal under Section 260-A of the Act, 1961. 9. Ms. Kalpana Rawal, the learned Senior Standing Counsel appearing for the department vehemently submitted that the CIT (Appeals) as well as the Appellate Tribunal committed a serious error in taking the view that the assessee is entitled to claim deduction under section 80IB(10) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing project has been approved by the local authority before the 1st April, 2004, on or before the 31st March, 2008, (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st April, 2004, within four 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 carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... size of a plot of land which has a minimum area of one acre. Same in both Nothing contained in Clause (a) or Clause (b) apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf No such provision shall before 1.4.2005 The residential unit has a maximum built- builtup area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place. The residential unit has a maximum builtup up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place. Same in both The built-up area of the shops and other commercial establishments included in the housing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax vs. Vandana Properties, reported in 353 ITR 36, the Bombay High Court confirmed the decision of the Tribunal and observed as under: "26. The object of Section 80-IB (10) in granting deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make available large number of medium size residential units for the benefit of the common man. However, in the absence of defining the expression 'housing project' and in the absence of specifying the size or the number of housing projects required to be constructed on a plot of land having minimum area of one acre, even one housing project containing multiple residential units of a size not exceeding 1000 square feet constructed on a plot of land having minimum area of one acre would be eligible for Section 80IB (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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