M/s Som Power Ltd, V. The ACIT 1(1),

ITA 108/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2880 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 02-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KHAA
• Assessee Lawyers: APARNA KARAN
• Section: 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NO.326/IND/2008 A.YS. 2005-06 ASSTT. COMMISSIONER OF INCOME TAX 3(1) BHOPAL APPELLANT VS M/S SOUMYA HOMES PRIVATE LIMITED BHOPAL PAN AAFCS-3503C RESPONDENT APPELLANT BY : SMT. APARNA KARAN, SR. DR RESPONDENT BY :SHRI ANIL KHABYA O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 25 TH APRIL, 2008 ON THE FOLLOWING GROUNDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN 1. THAT THE APPROVAL/PERMISSION FOR BUILDING THE P ROJECT WAS NOT IN ITS NAME BUT IN THE NAMES OF OTHER PERSONS I.E. PRA KASH DEVELOPERS & HORIZON CONSTRUCTION. 2. IGNORING THE DEFINITION OF BUILT UP AREA GIVEN I N 80IB (14) WHICH PROVIDES FOR INCLUDING WHOLE AREA OF PROJECTIONS AN D BALCONIES & PLACING RELIANCE ON SOME ISO GUIDELINES NOT RELEVAN T FOR THE PURPOSE. 2 3. IGNORING THE BASIC AND VITAL POINT THAT MANY RES IDENTIAL UNIT COMPRISED AREA OF MORE THAN 1500 SQ. FT WHICH DEBAR S IT COMPLETELY FROM THE BENEFIT OF 80IB(10) 4. IN HOLDING THAT THE BENEFICIAL REGISTRATION SHOU LD BE INTERPRETED LIBERALLY WHICH IS BOTH AGAINST THE LAW AND SPIRIT OF THE ACT. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SMT. A PARNA KARAN, SR. DR AND SHRI ANIL KHABYA, LD. COUNSEL FOR THE ASSESS EE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT ONE PROJ ECT IS APPROVED IN THE NAME OF HORIZONE CONSTRUCTION COMPANY, THEREFORE, T HE LAND WAS ALSO TO BE DEVELOPED BY HORIZONE CONSTRUCTION COMPANY AN D NOT BY THE ASSESSEE COMPANY WHICH IS THE PRE-REQUISITE CONDITI ON OF SECTION 80I B(10), THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR THE CLAIMED DEDUCTION. IT WAS POINTED OUT THAT THE TOTAL AREA I S 1509.80 SQ.FT. WHICH IS MORE THAN 1500 SQ.FT. OUR ATTENTION WAS ALSO INVITE D TO SECTION 80IB(14)(A) REGARDING BUILT UP AREA. 2. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE BUILT UP AREA IS 1469.3 SQ.FT. WHICH IS LESS THAN THE REQUIRED LIMIT OF 1500 SQ.FT. A VERY CURIOUS ARGUMENT WAS ADVANCED BY THE LD. COUNSEL FO R THE ASSESSEE THAT THE WORD BUILT UP AREA USED IN THE SECTION D OES NOT INCLUDE THE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNIT, THE REFORE, IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL AND I T WAS EMPHATICALLY SUGGESTED THAT IT IS APPLICABLE TO FLATS ONLY WHERE COMMON AREAS ARE SHARED BY DIFFERENT RESIDENTS. 3 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. THE MAIN DIFFERENCE BETWEEN THE CALCULATION OF THE ASSESSEE AS WELL AS OF THE ASSESSING OFFICER IS THAT WHETHER FOR MEASURING THE BUILT UP AREA, THE BALCONY/PROJECTIONS ARE TO BE INCLUDED OR NOT. IF THE UNPROTECTED BALCONY IS TAKEN AT 50%, IT COMES TO 40.5 SQ.FT RESULTING I NTO TOTAL 1469.3 SQ.FT AND IF UNPROTECTED BALCONY IS TAKEN AT 100% THEN ITS AR EA COMES TO 81.00 SQ.FT. RESULTING INTO CALCULATION OF 1509.80 SQ.FT. THIS IS THE ONLY DIFFERENCE WHICH IS TO BE DECIDED BY THIS BENCH. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE DEFINITION OF BUIL T UP AREA AS PROVIDED UNDER CLAUSE (A) OF SUB-SECTION (14) OF SECTION 80I B OF THE ACT :- (14) FOR THE PURPOSES OF THIS SECTION, 14 [(A)BUILT-UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WAL LS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENT IAL UNITS ;] 4. IF THE AFORESAID SECTION IS ANALYZED, BROADLY W E ARE OF THE VIEW THAT THE BUILT UP AREA MEANS THE TOTAL INNER MEASUREMENT O F THE RESIDENTIAL UNIT WHICH INCLUDES PROJECTIONS AND BALCONIES ALSO. AS FAR AS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SECTION IS NOT APPLICABLE FOR INDEPENDENT UNITS AND IS APPLICABLE ONLY FOR FLATS, THOUGH SEEMS TO BE TEMPT ING FOR ACADEMIC DISCUSSION, BUT THE SECTION NOWHERE MENTIONS THAT IT IS APPLICABLE ONLY TO FLATS. IT ONLY PRESCRIBES THE RESIDENTIAL UNIT AT THE FLOOR LEVEL WHICH INCLUDES THE AREA OF PROJECTIONS AND BALCONY ALSO. IF THE INTENTION OF THE LEGISLATURE WOULD HAV E BEEN DIFFERENT, NOTHING PREVENTED IT TO ADD THAT IT IS ONLY APPLICABLE TO GROUP OF FLATS OWNED BY DIFFERENT OWNERS. ANOTHER 4 INTERESTING ARGUMENT ADVANCED BY THE LD. COUNSEL FO R THE ASSESSEE IS THAT THE UNPROTECTED BALCONY DOES NOT HAVE ANY ROOF, THEREFO RE, IT CANNOT BE INCLUDED IN THE MEASUREMENT. 5. DURING HEARING, THE LD. COUNSEL FOR THE ASSESS EE ALSO CONTENDED THAT THE ASSESSING OFFICER ALSO MADE THE ISSUE OF APPROVAL O F PROJECTS IN THE NAME OF HORIZON CONSTRUCTION COMPANY FOR WHICH NO DEDUCTION WAS CLA IMED BY THE ASSESSEE ON THAT PROJECT WHEREAS THE ASSESSEE ENTERED INTO THE AGREE MENT WITH M/S PRAKASH DEVELOPERS, BHOPAL, FOR CHUNA BHATTA PROJECT. THE APPROVAL OF THE PROJECT WAS CLAIMED TO BE GIVEN TO THE ASSESSEE ON 29.7.2004 AN D NOT TO M/S PRAKASH DEVELOPERS. IF THE MEANING OF BUILT UP AREA IS ANAL YSED, IT STILL DOES NOT PRESCRIBE UNPROTECTED OR PROTECTED BALCONY AND NO SUCH DIFFER ENCE HAS BEEN MENTIONED FOR MEASUREMENT BUT CERTAINLY INCLUDES THE INNER AREA O F PROJECTION AND BALCONIES. 6. SUB-SECTION (10) OF SECTION 80IB OF THE ACT, WH ICH PRESCRIBES ABOUT DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPMENT AND BUILDING HOUSING PROJECTS AND APPROVED BY A LOCAL AUTHORITY, MENTIONING THE D EDUCTION AT 100%, IS AS UNDER :- 10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDER TAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 6A [ 2008 ] BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEA R 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 CON STRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 5 (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SH ALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH T HE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY T HE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON 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 W HICH 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 GOVE RNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPM ENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM ARE AS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AR EA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNI T IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY -FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; 6B [ AND ] (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMME RCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS.] THE FOLLOWING CLAUSES (E) AND (F) SHALL BE INSERT ED AFTER CLAUSE (D) OF SUB-SECTION (10) OF SECTION 80- IB BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4-2010 : (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUS ING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDI VIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUS ING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL , NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTE D TO ANY OF THE FOLLOWING PERSONS, NAMELY: (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILD REN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIV IDUAL IS THE KARTA, (III)ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE S POUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDI VIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. 6 6C [ EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVERNMENT). ] THE ARCHITECT OF THE ASSESSEE HAS MENTIONED/CALCULA TED BUILT UP COVERED AREA AT 1469.3 SQ.FT. OUT OF WHICH 701.6 SQ.FT. OF GROUND F LOOR AND 683 SQ.FT. OF BUILT UP COVERED AREA AT FIRST FLOOR, 44.2 SQ. FT OF COVER P ROJECTION, WHICH IS 100% WHEREAS HE HAS CALCULATED 40.5 SQ.FT. OF BALCONY AS UNPROTECTE D TAKEN AT 50%. IT IS VERY STRANGE THAT THE PROJECTION WHICH IS COVERED HAS BEEN CALCU LATED AT 100% AND THE UNPROTECTED BALCONY HAS BEEN TAKEN AT 50%. ON QUES TIONING FROM THE BENCH, WHETHER THERE ARE CERTAIN RULES OF CALCULATING THE BUILT UP AREA, NEITHER PARTY MENTIONED ANY RULE . ADMITTEDLY, THE ASSESSING OFFICER ALSO MAY NOT BE A TECHNICAL PERSON. IN VIEW OF THESE FACTS, THE ISSUE IS REMAND ED BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR FRESH ADJU DICATION IN ACCORDANCE WITH LAW AFTER CONSIDERING THE RELEVANT RULES, IF ANY. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS FREE TO SEEK REMAND REPORT FROM TH E ASSESSING OFFICER ALSO. THE LEARNED CIT(A) IS EXPECTED TO GIVE A CLEAR FINDING WHETHER THE BALCONY PROTECTED OR UNPROTECTED IS TO BE INCLUDED IN THE COVERED AREA OR NOT AND TO DECIDE THE ISSUE ACCORDINGLY. NEEDLESS TO MENTION HERE THAT THE ASS ESSEE BE GIVEN SUFFICIENT OPPORTUNITY AND FURTHER ALLOWED TO FURNISH ANY EVID ENCE INCLUDING RULES, IF ANY, TO SUBSTANTIATE ITS CLAIM. WE ARE MAKING IT CLEAR THAT WHILE COMING TO ANY CONCLUSION THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT BE INFLUENCED BY OUR OBSERVATIONS MADE IN PARA 4 ABOVE AND IS EXPECTED T O DECIDE THE ISSUE ON THE BASIS OF TRUE FACTS/RULES. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 7 ORDER PRONOUNCED IN OPEN COURT ON 4 TH MAY, 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MAY 4 , 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DBN/