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TMI Blog2017 (1) TMI 1794X X X X Extracts X X X X X X X X Extracts X X X X ..... given a finding that the construction of the Park Land which was sanctioned on 04.08.2006 was subsequently revised and has been totally completed before 31.03.2012 and in such a situation, the claim of deduction u/s 80IB(10) of the assessee was allowable on a proportionate basis. Violation of provisions of the Act on account of the area of 5 Row Houses being in excess of 1500 Sq.Ft. - CIT-A has given a finding that Government Approved Valuer had taken the outer measurement of the Row Houses and calculated the area which is contrary to the definition contained in Sec.80IB(14)(a). He has further noticed that the Authorized Valuer had added the area of car porch, terrace above porch while measuring the area of Row Houses and if the terrace area is excluded from calculation of area, the total area of the units do not exceed 1500 Sq.Ft. For excluding the area of terrace, Ld. CIT(A) had relied on the decisions of M/s. Commonwealth Developers CD Fountain Head [ 2014 (4) TMI 122 - BOMBAY HIGH COURT] and the decision of CIT Vs. Mahalakshmi Housing [ 2012 (11) TMI 1121 - MADRAS HIGH COURT] and other Tribunal decisions. Before us Revenue has not placed any material on record to controvert th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and units 1 flats in the project without appreciating the fact that jurisdictional High Court in the case of CIT vs. Brahma Associates, 333 ITR 289 held deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the terrace area cannot form part of built up area as defined in the sec 80IB(14)(a) of the Act. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to section 80IB(10) of the Act. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing prorata deduction u/s. 80IB(10) in respect of eligible flats inspite of the fact that built up area of five row houses of the project exceeded the prescribed area of 1,500 sq.ft., violating clause (c) to section 80IB(10) of the Act. 7. The appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of deduction u/s 80IB(10) amounting to Rs. 11,41,59,573/-. The Assessing Officer during the assessment proceedings disallowed the said claim of the appellant firstly on the ground that as per the valuation report of the govt. authorized valuer the building 'C' was not yet completed and hence the project 'Park land' was held to be incomplete and secondly, five units of the said housing project were found to be admeasuring more than 1500 sq.ft. The fact of the case is that the appellant firm undertook a housing project "Park land" at Balewadi, Pune. The project was originally sanctioned on 4th Aug. 2006 and further the plan was revised on subsequent dates i.e. 18-11-2006, 3-2-2007, 13-2-2008, and 21- 7-2011. The project comprised of 6 buildings viz. Wing A, B, C, D E & F. The due date for the completion of the project is 31-3-2012 as the said project commenced in F.Y. 2006-07 as per the provisions of sec 80IB(10)(a). The appellant received part completion certificate issued on 28-3-2012 with respect to Building A, B, D & E comprising of 32 units and Building F of 5 units. The construction of building C could not commence and, therefore, the same could not be completed within the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances wherein the compliance of the provision has become impossible on the part of the appellant and therefore, the claim of deduction prima facie cannot be denied. The appellant in this regard has placed reliance on the decision of the Pune ITAT in the case of Ramsukh Properties Vs DCIT(cited supra) wherein it was held as under: "Assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not completed within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee's housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT (A). The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s.80IB (10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the law always give remedy and the law does wrong to no one. We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of development plan by the govt. of Maharashtra the process of handing over of the areas of amenity space and DP road will be completed and the said development plan is pending for sanction before State Govt. However, appellant has completed the construction of the approved, sanctioned and revised plans by the PMC. Thus the construction of building 'C' cannot be completed because the FSI required for the said construction is not allowed by PMC. The aforesaid issue is not within the purview of the appellant and in such a circumstance which makes the compliance with the provisions impossible, then the benefit bestowed on an assessee cannot be completely denied and, therefore, on the first issue the appellant becomes liable for claim of deduction u/s 80IB(10) on a proportionate basis. The appellant for this proposition has relied on a host of judicial decisions which are being discussed in succeeding paras. 3.7 The second issue on which the Assessing Officer found the appellant to have violated the provisions and conditions is with respect to area of the 5 row houses in Building 'F' of the project where the same was found to be exceeding 1500 sq ft. as per sec 80IB(10)(c). The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the appellant that the valuer has wrongly included the area of the terraces which are open to sky and which are top terraces which cannot form part of the built up area and without the slab for top terrace the building cannot be covered and hence the said area ought not be considered in the definition of built up area. The definition of the built up area u/s 80IB(14)(a) includes projection and balconies, but does not mention terrace area opening to sky which the appellant has also mentioned in the building plan. The term 'balcony' and 'projection' are not defined under the Act. The appellant's contention that if the legislature wanted to include terrace in the built up area, the same would have been specifically provided and since the terrace has been omitted while balcony considered there is no reason for including the terrace in built up area certainly has some force. The apex court in the case of Controller of Estate Duty Vs V R Kankasabai, 89 ITR 251 has held that the words found in the statute must be given their natural meaning. 3.7.1 The appellant has drawn attention towards the decision of the Hon'ble Bombay High Court in the case of Common Wealth Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the respondent that the findings of the fact arrived at by the Tribunal cannot be interfered in the present appeal cannot be accepted in the facts of the present case as the Tribunal has misconstrued the provisions of Income Tax Act and the material on record to deny the benefit of deduction to the appellant in terms of Section 80-IB(10). The first substantial question of law is answered accordingly. In view of the findings on the first substantial question of law, there is no need to examine the second substantial question of law. Thus, the appeal is allowed. The impugned judgment dated 13.09.2013 passed by the earned Income Tax Appellate Tribunal is quashed and set aside. The appeal stands disposed of accordingly. 3.7.2 In the case of CIT Vs Mahalakshmi Housing also relied upon by the appellant the High court held as under: Deduction u/s. 80IB-Allowability-Assessee entered into an agreement M and others, for joint development of property, claimed deduction u/s 80-IB-Rejection of claim by AO on ground that assessee is not an owner of property, thus, not entitled to claim deduction u/s. 80- IB(10) and built up area of flats exceeded conditions prescribed u/s. 80-IB(10)(c)-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as approval in favour of the assessee, more so, as the assessee entered into an agreement to sell the whole of the property-Hence, the objection of the authorities below that the assessee constructed 110 units as against 94 units mentioned in the agreement is not sustainable in law-As per the definition given in s. 80- IB(14)(a), built-up area means inner measurement of the residential unit at the floor level including the projections and balconies as increased by the thickness of the walls but does not include the common areas shared with other residential units-Open terrace is open to sky and would not be part of the inner measurement of the residential unit at any floor level-Thus, the authorities below were not justified in rejecting the assessee's claim by taking the open terrace as balcony/verandah-Excluding such open terrace, the built-up area of each of the 110 units is less than 1500 sq. ft.-Thus, assessee has complied with all the requirements of s. 80-IB(10)-AO is directed to allow deduction under s. 80-IB(10) to the assessee." 3.7.4 In such a situation and the legal view on the matter it is noticed that out of the five row houses even if the 'outer measurement' are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if a particular unit satisfies the conditions of sec.80IB, the assessee is entitled for deduction. Therefore, the Tribunal upheld the order of Id. CIT(A) in allowing deduction u/s.80IB(10) in respect of two blocks as claimed by the assessee. 3.8.2 In ITO Vs AIR Developers (supra) The tribunal held that "Assessing Officer is directed to determine the built up area of the residential units by applying the development control Regulation, 2000 and to allow proportionate deduction u/s 80IB(10) if he finds that the built up area of some of the residential units exceed 1500 sq.ft." 3.8.3 In Sheth Developers (supra) the Mumbai ITAT held "as regards the A project assessee is eligible for relief on pro rata basis in respect of the flats which did not have a built-up area exceeding 1000 sq. ft. - quantum of deduction in respect of the flats which have built-up area less than 1000 sq. ft., has to be worked out on pro rata basis - AO accordingly directed to verify the claim of the assessee and allow the deduction on pro rata basis in respect of flats in A project." 3.8.4 In the case of' G.V. Corporation vs. ITO (supra), the assessee, at the request of purchasers, joined some of its fla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions stipulated u/s 80IB(10) and hence the appellant is very much entitled to claim the deduction u/s 80IB(10) of the Act on Part A of the buildings A1 and A2…………" 3.8.6 In the case of M/s Runwal Multihousing Pvt. Ltd Vs ACIT (Supra) after considering various judicial precedents of different High courts and co-ordinate benches, the Pune Tribunal held that "21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. The various decisions relied on by the revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction u/s 80IB(10) in respect of building no. A, C, D, E and the 17 row houses. The grounds raised by the assessee on this issue are accordingly allowed." 3.8.7 In the case of Bengal Ambuja Housing Development Ltd. (supra), the facts were that the housing project consisted of 261 residential units and the individual flat size varied between 800 sq.ft. to 3000 sq.ft. and the total built up area of this housing project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee would not be entitled to have the benefit of 100% absolute deduction u/s 80IB(10) of the Act in respect of the entire project, but would be entitled to pro rata deduction on the units satisfying the conditions……..." 3.8.9 In DCIT Vs Ekta Housing (P) Ltd (2011) 41 (II) ITCL 404 (Mum) it was held that in cases certain residential house has built up area in excess of 1500 sq.ft, the assessee would not lose the total exemption u/s 80IB(10) in its entirety but will lose the proportionate exemption u/s 80IB(10). Deduction u/s 80IB(10) on pro rate basis was therefore allowable. Thus in view of the above facts, the ratio of the judicial decisions and the appellant having satisfied the other condition as stipulated u/s 80IB(10) such as regarding the area of the plot having no commercial area the appellant gets entitled to the deduction u/s 80IB(10) on pro rata basis with respect to the blocks and units satisfying the conditions u/s 80IB(10) of the Act." 5. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 6. Before us, ld. D.R. took us through the various observations and findings of the AO and supported the order of AO. Ld.A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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