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TMI Blog2023 (10) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute or disprove the factual findings made by the CIT(A) on this issue, which are to the effect that the approval with respect to POR Project was granted to the assessee on 30.03.2007. CIT(A) has also observed that in view of the provisions of Section 80(IB)(10) of the Act, when the approval 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 local authorities, which in the present case is 30.03.2007. Accordingly CIT(A) has not erred in holding that the assessee was eligible for deduction u/s 80(IB)(10) with respect to POR Project. PMC Project - BU Permission was obtained in respect of only 349 Units out of a total of 376 Units - entire project was not approved within five years from the end of the Financial Year in which project was approved - HELD THAT:- , we are of the considered view that the assessee is eligible to claim deduction under Section 80-IB(10) of the Act with respect to those blocks, where BU Permission was obtained since the same were separate and distinguishable from those blocks for which BU Permission was not ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo projects namely Parshwanath Om Residency Project ( POR Project) and Parshwanath Metro City ( PMC Project). While passing the order, the Assessing Officer observed that the assessee has claimed that the approval of the Project POR was taken on 30.03.2007, but according to the Assessing Officer such certificate is not an approval issued by the GUDA and the final approval was to be granted after fulfillment of certain conditions as per letter issued by GUDA dated 30.03.2007. As per the Assessing Officer, the actual approval from GUDA was taken on 27.10.2010 and accordingly, the Project POR was not approved before 31.03.2008. As per the Assessing Officer, as on 31.03.2007, GUDA has merely accepted the application of approval filed by the assessee and in light of the above facts, the Assessing Officer held that the assessee is not entitled for deduction under Section 80(IB)(10) of the Act for the POR Project. Further, the Assessing Officer observed that so far as the deduction with respect of PMC Project is concerned, the Assessing Officer observed that the said project was approved for 376 units, whereas the completion certificate stated that BU permission was only given for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... POR is concerned, it is observed that deduction under Section 80-16(10) on entire profit derived from this project was denied by AO on the ground that approval of the project was taken on 27th October, 2010 whereas provisions of the Act requires that project should be approved before 31st March, 2008. The AO has referred to letter dated 19th January, 2016 filed by Gandhinagar Urban Development Authority (GUDA) in response to notice under Section 133(6) of the Act wherein approval dated 27th October, 2010 for 234 units on above land at Survey No. 1367 of TPS 10 of Village Adalaj was provided. It is observed that Appellant has submitted approval dated 30th March, 2007 given by GUDA on very same land but same was not accepted by AO on the ground that GUDA has merely accepted the application and stated that permission will be granted on final submission of layout plan and building plan as per circular of Revenue Department dated 16th February, 2004. On perusal of these documents it is found that Appellant has made an application for obtaining the approval on 28th March, 2007 which is very much before the cut-off date prescribed under the Act. Even in approval dated 30th March, 2007, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial, carting, labour expenditure, advertisement and other expenditure as shown in Profit Loss Account. The Audited Annual Accounts for AY 2010-11 and 2011-12 are already on record of AO which support the contention of Appellant that expenditure pertaining to this project was incurred in such years and AO has not doubted that this expenditure is not pertaining to this project. In addition to above it is found that AO has not disputed any other conditions specified in Section 80-IB(10). Considering these facts, it is found that Appellant has clearly demonstrated that it has satisfied all the conditions prescribed under Section 80-IB(10) and project is approved on 30th March, 2007. Considering these facts, contention of AO that Appellant is not entitled to deduction under Section 80-IB(10) for POR project cannot be accepted. Thus, AO is directed to allow deduction under Section 80-IB(10) on above project as claimed by Appellant in its return of income. So far as disallowance of deduction under Section 80-IB(10) for PMC project is concerned, deduction under Section 80-IB(10) on profit derived from this project was denied on the ground that though Appellant has taken approval f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everal 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] Even in above case, building - A to D were already constructed on very same land and building - E was constructed on a later date and still the Hon'ble Court has considered building - E as a housing project and allowed deduction under Section 80-IB(10) of the Act. The Appellant has relied upon decision of Hon'ble Pune ITAT in the case of M/s Sai Siddhi Atul in ITA No. 2420/PN/2016 dated 15.11. 201 Swherein it is held as under: 6. In so far as first issue is concerned a perusal of assessment order shows that the assessee has developed housing project with three Wings A, B and C. The housing project was approved on 30-03-2007. As per the provisions of section 80IB(10)(a)(iii) the project should have been completed on or before 31-03-2012. During sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment undertakings (Housing project) - Assessment years 2010-11 and 2011-12 - Assessee company was engaged in business of construction of residential apartments/housing projects - In terms of construction agreement, assessee had to construct six residential blocks - Within stipulated period of five years, assessee completed construction of three blocks - Assessee filed its return claiming deduction under section 80-IB (10) in respect of completed blocks - Revenue authorities rejected assessee's claim on ground that entire housing project had not been completed within stipulated period - Whether even a single building consisting of a number of residential units can be considered to be a housing project by itself, hence, will be eligible for deduction under section 80-IB(10), if it otherwise fulfils conditions of section 80-IB(10) - Held, yes - Whether, therefore, even though assessee had not completed construction of all blocks of housing project, that would not deprive assessee from availing deduction under section 80-IB (10) in respect of each of completed block on stand-alone basis - Held, yes [Para 8] [In favour of assessee] In the above referred case, Hon'ble I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed in appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed. No infirmity in the order of the CIT(A) granting pro-rata deduction to the assessee in respect of Buildings B and C which were completed. We find the Pune Bench of the Tribunal in the case of M/s. Kumar Company [2016 (2) TMI 231 - ITAT PUNE] while deciding identical issue had allowed the claim of pro-rata deduction wherein held AO cannot rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties Vs. DCIT, Circle 1, Pune in ITA No.84/PN/2011 vide its order dated 25.07.2012. For the convenience, the relevant portion of the order reads as under: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Pune ITAT in case of M/s Varun Developers in ITA No. 1624/PN/2011 dated 22.03.2013 In view of detailed discussion made herein above and the contention of AO that BU permission was not received by Appellant within prescribed period for all the blocks for which approval was given are already discussed by various Courts and AO has not brought any other contrary decision on record nor stated as to how decision relied upon by Appellant in Assessment Proceedings are not applicable to its facts, following the ratio laid down by various Courts, it is held that Appellant has rightly claimed deduction under Section 80-18(10) on project PMC in return of income. The AO is directed to delete the addition made in Assessment Order. In nutshell, Appellant is entitled for deduction under Section 80-18(10) for Rs. 20,85,60,286/-. The ground no. 1 2 have overlapping as far as issues are concerned. The first issue raised is to allow the deduction us. 8018(10) stands disposed off in favour of appellant. Hence, this issue raised in ground no. 1 2 is allowed . The AO is directed to issue revised demand notice after allowing deduction u/s 80IB (10). 5. The Second issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Units before 31.03.2012 as against original approval for 396 residential Units which was given on 30.03.2007. Therefore, the Assessing Officer was correct in holding that the entire project was not completed within prescribed time limit i.e. 3.103.2012 i.e. five years from the end of the Financial Year in which the housing project was first approved. The Ld. D.R. also placed on record certain judicial precedents in support of its contention. 7. In response, Ld. Counsel for the assessee submitted that firstly the Department has allowed deduction under Section 80(IB)(10) in assessee s own case for A.Y. 2012-13 on identical set of facts. It was submitted that though the PCIT had initiated 263 proceedings against the aforesaid order passed by Ld. AO for A.Y. 2012-13 however, the ITAT vide order dated 25.10.2019 in ITA No. 900/Ahd/2017 quashed the order under Section 263 passed by the Ld. PCIT. It was submitted that the issue of disallowance under Section 80(IB)(10) is covered by the judgment of Hon ble Gujarat High Court in the case of Saurashtra Cement Chemical Industries Ltd. 123 ITR 669 (Guj.), which has laid down the proposition that if relief is granted in the earlier year th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts. We observe that in the case of Saurashtra Cement Chemical Industries Ltd. 123 ITR 669 (Guj.) the Hon ble Gujarat High Court has held that in respect of income from newly established industrial undertakings, the assessee s claim under Section 80J for the subsequent year cannot be rejected when such claim has been accepted in the earlier assessment years, but not withdrawn. Again, in the case of PCIT vs. Maps Enzymes Ltd. 111 taxmann.com 73 (Guj.) , the Gujarat High Court held that where Assessing Officer rejected the assessee s claim for deduction under Section 80JJA on the ground that the business of assessee was commenced in A.Y. 2000-01 and thus, prescribed period of five years had expired, in view of the fact that assessee was allowed deduction under Section 80JJA in A.Y. 2004- 05, and thus, A.Y. 2008-09 was a fifth and final year, impugned order was to be set-aside and assessee s claim was to be allowed. In the case of Simple Food Products Pvt. Ltd. 84 taxmann.com 239 , the Bombay High Court held that where deduction under section 80-IB of the Act was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of its entire Housing Project and applied for BU Permission / Completion Certificate within prescribed time limit, it would be entitled to deduction under Section 80(IB)(10) notwithstanding the fact the it could not receive permission for its entire project. In the present case, the Ld. CIT(A) has given a specific finding that the assessee had obtained BU Permission subsequently for remaining three blocks as well, however, no deduction under Section 80(IB)(10) of the Act was claimed with respect to the aforesaid three blocks. Further, with respect to the claim of proportionate deduction only with respect those Units for which BU permission had been received, the Pune ITAT in the case of M/s. Sai Siddhi Atul in ITA No. 2420/PN/2016 vide order dated 15.11.2018 has made the following important observations:- 6. In so far as first issue is concerned a perusal of assessment order shows that the assessee has developed housing project with three Wings A, B and C. The housing project was approved on 30-03-2007. As per the provisions of section 80IB(10)(a)(iii) the project should have been completed on or before 31-03-2012. During scrutiny assessment proceedings the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no disallowance of entire claim if built area of some of units exceeded 1500 sq. ft. In the case of Arun Excello Foundations (P.) Ltd. 29 taxmann.com 149 (Madras) , the High Court held that where housing project has both commercial and residential units, proportionate deduction, to extent of compliance of provisions under section 80-IB(10), is allowable. In the case of Harshvardhan Constructions 117 taxmann.com 818 (Mumbai - Trib.) , the ITAT held that within a composite housing project, where there are eligible and ineligible units, assessee can claim proportionate deduction in respect of eligible units. In the case of Paras Builders 58 taxmann.com 286 (Pune - Trib.) , the ITAT held that where assessee had violated provisions of section 80-IB(10)(C) in respect of two units of housing project, denial of deduction under section 80-IB would be limited only to said two units and for balance units assessee would be entitled to deduction. 11. In view of the facts of the instant case and judicial precedents on the subject cited above, we are of the considered view that the assessee is eligible to claim deduction under Section 80-IB(10) of the Act with respect to those blocks, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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