VIDHI BUILDERS, KALYAN V. ITO AWD 3(2), KALYAN

ITA 1212/MUM/2009

• Counselvise Citation: 121219914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 31-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Non compliance
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMAR (A.M) ITA NO.1212/MUM/2009(A.Y. 2005-06) VIDHI BUILDERS, 3/11 NARMADA, LOKGRAM, NETIVALLI, KALAYAN (E), PAN: AAEFV 6246T (APPELLANT) VS. THE I.T.O, WARD 3(2), KALYAN. (RESPONDENT) APPELLANT BY : SHRI K.GOPAL RESPONDENT BY : SMT. ASHIMA GUPTA ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 27/11/2009 OF CIT(A)-1, THANE RELATING TO ASSESSMENT YEAR 2005 -06. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS FOLLOWS: 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-1,THANE[LD. CIT(A)] ERRED IN CONFIRMING THE ACTION OF THE AO I N REJECTING THE CLAIM OF DEDUCTION U/S. 80 IB OF THE ACT AMOUNTING TO RS. 34,57,156/-, AS PREFERRED BY THE APPELLANT WITH RESPECT TO ITS PROJ ECT VIDHI COMPLEX. 1.2 WHILE DOING SO, THE CIT(A): (I) FAILED TO APPRECIATE THAT THE APPELLANT HAD FU LFILLED ALL THE REQUISITE CONDITIONS FOR BECOMING ELIGIBLE TO CLAIM DEDUCTION U/S. 80 IB OF THE ACT. (II) FAILED TO APPRECIATE THAT THE LAW HAD UNDERGON E CHANGE WITH EFFECT FROM A.Y 2005-06; AND ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 2 (III) ERRED IN TAKING INTO ACCOUNT IRRELEVANT, IMPE RMISSIBLE AND EXTRANEOUS CONSIDERATIONS. 1.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRC UMSTANCES OF THE CASE, AND IN LAW, NO SUCH REJECTION OF THE CLAIM WAS CALL ED FOR. 1.4 ASSUMING BUT NOT ADMITTING NO DEDUCTION U/S. 80 IB(10) WAS TO BE GRANTED, IT IS SUBMITTED THAT THE DISALLOWANCE OF R S. 19,58,399/- U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961 WAS NOT CALLE D FOR. 1.5 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITT ED THAT ASSUMING- BUT NOT ADMITTING THAT DISALLOWANCE WITH RESPECT TO THE COMMERCIAL SHOPS WAS CALLED FOR, IT IS SUBMITTED THAT IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, ONLY THE PRO PORTIONATE PROFIT ATTRIBUTABLE TO THE COMMERCIAL SHOP WAS REQUIRED TO BE EXCLUDED FROM THE DEDUCTION. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE HAD UNDER TAKEN CONSTRU CTION OF BUILDING PROJECTS AT VILLAGE GOURIPADA, TALUKA KALYAN ON PLO T BEARING SURVEY NO.22 & 23 H NO.1(PT). ON THIS LAND THE ASSESSEE CONSTRUCT ED TWO PROJECTS NAMELY AMURT DHAM COMPRISING BUILDING NO. 9&10 AND VIDHI COMPLEX COMPRISING BUILDING NO.11 TO 14. IN RESPECT OF THE PROJECT AM URT DHAM FOR WHICH THE ASSESSEE DID NOT CLAIM DEDUCTION UNDER SECTION 80 I B(10) OF THE INCOME TAX ACT 1961 (THE ACT), THE WORK-IN-PROGRESS WAS RS.69 ,25,000/-. FOR THE PROJECT VIDHI COMPLEX FOR WHICH THE ASSESSEE CLAIME D DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT, THE WIP WAS DECLARED AT RS. 1,50,00,000/-. THE ASSESSEE HAD SHOWN SALES OF PROJECT VIDHI COMPLEX A T RS.2,19,25,000/-. AFTER CLAIMING VARIOUS EXPENSES THE ASSESSEE HAD AR RIVED AT NET PROFIT OF RS. 17,05,919/-. THE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WAS HOWEVER CLAIMED AT RS.34,57,156/-. THE PROVISIONS OF SEC.8 0-IB(10) OF THE ACT AS IT APPLIES FOR AY 05-06, IN SO FAR AS IT IS RELEVANT T O A DECISION IN THE PRESENT CASE IS AS FOLLOWS: ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 3 SECTION: 80-IB(10): THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B Y A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE P REVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOP MENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION ( I )IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVE D 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 APRIL, 2004, W ITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( I ) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HO USING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; ( II )THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUS ING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; 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 RECONS TRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHIC H HAS A MINIMUM AREA OF ONE ACRE: ( C ) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MU NICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCI AL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIV E PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR T WO THOUSAND SQUARE FEET, WHICHEVER IS LESS. ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 4 3. ONE OF THE CONDITION TO BE FULFILLED BY THE ASS ESSEE FOR CLAIMING DEDUCTION U/S.80-IB(10) OF THE ACT IS THAT UNDER CLAUSE (D) O F SEC.80-IB(10) OF THE ACT, THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF TH E AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHE VER IS LESS. THE OBJECTION OF THE AO WAS THAT IN THE PROJECT VIDHI COMPLEX THERE WAS COMMERCIAL AREA AND SINCE IT WAS NOT A BUILDING PROJECT IN THE SENSE CO NSISTING OF ONLY BUILDINGS FOR RESIDENTIAL PURPOSES, THE DEDUCTION UNDER SECT ION 80IB(10) WAS NOT TO BE ALLOWED. ON THIS OBJECTION IT IS SEEN FROM THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT(A) THAT AS FAR AS THE PROJE CT VIDHI COMPLEX IS CONCERNED, THERE WAS NO COMMERCIAL AREA WHATSOEVER. EIGHTEEN SHOPS ADMEASURING IN ALL 2700 SQ. FT. WAS PART OF AMURT D HAM PROJECT FOR WHICH THE ASSESSEE DID NOT CLAIM ANY DEDUCTION U/S.80-IB( 10) OF THE ACT. IT WAS THE FURTHER SUBMISSION OF THE ASSESSEE THAT EXISTEN CE OF SHOPS IN CERTAIN BUILDINGS OF THE SAME SANCTIONED LAYOUT BUT NOT FOR MING PART OF THE HOUSING PROJECT FOR WHICH DEDUCTION U/S.80-IB(10) OF THE AC T IS CLAIMED WILL NOT IN ANY MANNER VITIATE THE CLAIM FOR DEDUCTION U/S.80-I B(10) OF THE ACT. IN THIS REGARD THE ASSESSEE RELIED ON THE DECISION OF THE H ONBLE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITAT MUMBAI IN THE CASE OF SAROJ SALES ORGANIZATION VS. ITO 115 TTJ 485 (MUM). THE CASE OF SAROJ SALES ORGANIZATION (SUPRA) WAS A CASE OF A BUILDER WHERE THERE WERE TWO PROJECTS BEI NG CONSTRUCTED BY NAME NISARG AND BREEZY CORNER. FOR AY 05-06, THE ASSESSEE CLAI MED DEDUCTION U/S.80-IB(10) OF THE ACT ON THE PROFITS OF NISARG PROJECT. THE AO T REATED BOTH THE PROJECTS AS ONE PROJECT AND FOUND THAT IN THE PROJECT BREEZY CORNER THE BUILT UP AREA OF SOME OF FLATS WERE MORE THAN 1000 SQ.FT. AND HE THEREFORE HELD THAT TH E ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S.80-IB(10) OF THE ACT. THE TRIBUNAL HELD THAT THE TWO PROJECTS WERE TO BE TREATED AS DIFFERENT PROJECTS FOR APPLYING TH E TESTS LAID DOWN IN SEC.80- IB(10)(D) OF THE ACT. ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 5 4. ON THIS ASPECT THERE IS NO SPECIFIC FINDING RENDERE D BY THE CIT(A). IN THIS REGARD A COPY OF SANCTIONED PLAN WAS FILED BEFORE U S. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT AS FAR AS THE PRO JECT VIDHI COMPLEX IS CONCERNED, THERE WAS NO COMMERCIAL AREA WHATSOEVER, COULD NOT BE VERIFIED FROM THE COPY OF THE PLAN AS PRODUCED BEFORE US. S INCE THE CIT(A) HAS ALSO NOT GIVEN ANY FINDING IN THIS REGARD IT WOULD BE AP PROPRIATE TO SET ASIDE THIS ISSUE TO THE AO FOR FRESH CONSIDERATION. THE AO WI LL VERIFY THE SANCTIONED PLAN TO FIND OUT IF THE PROJECT VIDHI COMPLEX HAS A NY COMMERCIAL AREA. THE FACT THAT COMMERCIAL AREA IN THE FORM OF SHOPS EXI ST IN THE BUILDINGS AMRUT DHAM WHICH IS PART OF THE SAME SANCTIONED LAYOUT, B UT NOT FORMING PART OF THE HOUSING PROJECT VIDHI COMPLEX, FOR WHICH DEDUCT ION U/S.80-IB(10) OF THE ACT IS CLAIMED WILL NOT IN ANY MANNER VITIATE THE C LAIM FOR DEDUCTION U/S.80- IB(10) OF THE ACT. IN THIS REGARD THE DECISION OF THE HONBLE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITAT MUMBAI IN THE CASE OF SAROJ SALES ORGANIZATION VS. ITO 115 TTJ 485 (MUM) SUPPORTS THE VIEW THAT TH E EXISTENCE OF COMMERCIAL AREA FOR THE PROJECT FOR WHICH DEDUCTION U/S.80-IB(10) O F THE ACT IS CLAIMED ALONE SHOULD BE SEEN THOUGH COMMERCIAL AREA IS BUILT IN THE SAME SANCTIONED LAYOUT BUT IN A DIFFERENT PROJECT. ON VERIFICATION, IF COMMERCIAL AREA IS FOUND TO EXIST IN THE PROJECT VIDHI COMPLEXT, THE AO WILL ALSO VERIFY IF SUCH ARE A IS WITHIN THE PERMITTED LIMITS AS LAID DOWN IN SEC.80-IB(10) OF THE ACT. THE AO I S ACCORDINGLY TO DIRECTED TO VERIFY THE FACTS IN THIS REGARD AND WHILE CONSIDERI NG THE CLAIM FOR DEDUCTION U/S.80-IB(10) OF THE ACT. 5. THE NEXT ISSUE IS WITH REGARD TO THE TOTAL AREA OF THE PLOT ON WHICH THE PROJECT WAS CONSTRUCTED. ONE OF THE CONDITION FOR ALLOWING DEDUCTION U/S.80-IB(10) OF THE ACT IS THAT THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. ACCORDING TO THE AO THE PLOT AREA AFTER REDUCING THE AREA CONSUMED FOR D.P.ROAD WAS ONLY 34 61.68 SQ. METERS WHICH WAS LESS THAN ONE ACRE. ACCORDING TO THE ASS ESSEE THE PLOT AREA IS ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 6 4746.26 SQ.MTRS INCLUDING THE AREA GIVEN FOR D.P.RO AD. ON THIS ISSUE THE CIT(A) HELD AS FOLLOWS:- 5.2 GROUND OF APPEAL NO.2: THIS GROUND OF APPEAL IS RELATED TO THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S. 80 IB(1 0) AT RS. 34,57,156/- IN RESPECT OF THE PROJECT CALLED VIDHI COMPLEX. AS STATED IN THE ASSESSMENT ORDER, THE APPELLANT WAS ENGAGED IN THE CONSTRUCTION OF TWO BUILDINGS KNOWN AS AMURT DHAM AND VIDHI COMPLEX. AS PER THE APPELLANT, VIDHI COMPLEX WA S A PROJECT, WHICH WAS 80 IB(10) COMPLIANT. THE PROJECT AMURT DHAM, WAS CONSIDERED TO BE 80 IB(10) NON COMPLIANT. THE APPELLANT HAD, THEREFORE CLAIMED DEDUCTION U/S. 80 IB (10) ONLY IN RESPECT OF VIDHI COMPLEX. THE PROJECT VIDHI COMPLEX WAS UNDOUBTEDLY A HOUSING PROJECT OF THE APPELLANT, WHICH WAS BEING CONSTRUCTED ON A PART OF LAND ADMEASURING 4746.26 SQ. MTRS INCLUSIVE OF DP ROAD. AFTER EXCLUDING THE AREA OCCUPIED BY THE DP ROAD, THE NET AREA OF T HE PLOT WAS 3461.68 SQ. MTRS ONLY. THIS FACT WAS CONFIRMED BY THE PART NER OF THE FIRM AS WELL AS THE ARCHITECT, MR. R.L. MODAK. THIS CLEARL Y MEANS THAT THE PROJECT WAS BEING CONSTRUCTED ON A PLOT OF LAND WHI CH WAS LESS THAN ONE ACRE IN AREA. THE MANDATORY CONDITION FOR A PR OJECT TO BECOME ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) IS TH AT THE PROJECT SHOULD BE CONSTRUCTED ON A PLOT WHICH IS NOT LESS THAN ONE ACRE IN AREA. SECTION 80 IB(10) CLEARLY STIPULATES THAT THE HOUS ING PROJECT SHOULD BE ON THE SIZE OF A PLOT WHICH HAS A MINIMUM AREA OF O NE ACRE. THE APPELLANT HAS CLEARLY VIOLATED THE CONDITION LAID D OWN IN CLAUSE 9B) OF SUB SECTION (10) OF SECTION 80 IB. FURTHER, THE BU ILDING PROJECT WAS NOT SANCTIONED BY THE KALYAN DOMBIVILI MUNICIPAL CORPOR ATION (KDMC). IN VIEW OF THESE VIOLATIONS OF THE MANDATORY CONDITION S LAID DOWN IN SECTION 80 IB(10), THE PROJECT VIDHI COMPLEX IS N OT ELIGIBLE TO GET DEDUCTION U/S. 80 IB(10). THE DISALLOWANCE OF CLAI M OF DEDUCTION U/S. 80 IB(10) IS, THEREFORE, CONFIRMED AND THE ORDER OF THE AO IS UPHELD ON THIS ISSUE. THE GROUND OF APPEAL NO.2 IS, THEREFOR E, DISMISSED. 6. THUS FACTUALLY IT IS NOT IN DISPUTE THAT THE PR OJECT VIDHI COMPLEX WAS CONSTRUCTED ON A PART OF LAND ADMEASURING 4746.26 S Q. MTRS INCLUSIVE OF DP ROAD. AFTER EXCLUDING THE AREA OCCUPIED BY THE DP ROAD, THE NET AREA OF THE PLOT WAS 3461.68 SQ. MTRS ONLY. THE QUESTION IS WH ETHER THE AREA GIVEN FOR THE PURPOSE OF FORMING DP ROAD HAS TO BE EXCLUDED O R INCLUDED FOR THE PURPOSE OF CALCULATING THE SIZE OF THE PLOT ON WHIC H THE HOUSING PROJECT HAS ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 7 BEEN CONSTRUCTED. ON THIS ISSUE WE FIND THAT THE H ONBLE MUMBAI ITAT IN THE CASE OF UMIYA ENTERPRISES VS. ITO IN ITA NO.2 750/M/09 FOR A.Y 2004- 05 HAS CONSIDERED THIS ISSUE. IN THAT CASE THE DIS PUTE WAS WHETHER THE AREA FOR ROAD SET BACK, RECREATION OPEN SPACE AND INTERN AL ROAD SET BACK IS TO BE EXCLUDED FOR THE PURPOSE OF CALCULATING THE SIZE OF PLOT AREA ON WHICH THE HOUSING PROJECT IS CONSTRUCTED. THE TRIBUNAL HELD AS FOLLOWS: SO FAR AS THE PRECISE POINT RAISED BY THE CIT(A) I S CONCERNED, IT IS SEEN FROM PAGE 66, WHICH IS A COPY OF THE COMMUNICATION DATED 20.09.2003 SENT BY KALYAN-DOMBIVLI MAHANAGAR PALIKA THAT IT MENTIONS T HE SIZE OF THE PLOT AS 4600 SQ.METRES ONLY. THE COMMUNICATION DATED 29.6.2 000 (PAGE 63 OF THE PAPER BOOK) ALSO REFERS TO THE AREA OF THE PLOT AS 4600 SQ.METRES. THE ASSESSEE HAS ALSO FILED AT PAGE 68 OF THE PAPER BOO K AN ANNEXURE TO THE COMMUNICATION ISSUED BY THE KALYAN-DOMBIVLI MAHANAG AR PALIKA DATED 20.09.2003, REFERRED TO EARLIER. THIS ANNEXURE IS A MAP SHOWING THE DETAILS OF THE SITE PLANS, PLAN OF THE RESIDENTIAL UNITS TO BE BUILT BY THE ASSESSEE ETC. IT ALSO CONTAINS AN AREA STATEMENT WHICH SHOWS THAT TH E AREA OF THE PLOT IS 4600 SQ. METRES. IT FURTHER SHOWS THAT THERE IS A DEDUCT ION 656.75 SQ. METRES FOR ROAD SET BACK. THIS DEDUCTION IS THEREAFTER SET OFF BY AN ADDITION OF EQUIVALENT AREA ALLOWED BY MNP. THE NET AREA OF THE PLOT AFTER THE DEDUCTION OF THE AREA FOR ROAD SET BACK HAS BEEN SHOWN AT 3943.25 SQ. MET RES. THEREAFTER THERE IS A DEDUCTION OF 591.49 SQ. METRES FOR RECREATION OPEN SPACE AND 411 SQ. METRES FOR INTERNAL ROAD . THE NET PLOT AREA IS THEN SHOWN AT 2940.76 SQ. METRES. THE AREA OF 656.75 SQ. METRES, WHICH WAS EARLIER DEDUCT ED FOR ROAD SET BACK, IS ADDED AND THE TOTAL AREA PLOT IS SHOWN AT 3597.51 S Q. METRES. IT WILL BE SEEN THAT THE TOTAL PLOT AREA HAS BEEN WORKED OUT BY THE MNP AT 3597.51 SQ.METRES ONLY AFTER DEDUCTING 591.49 SQ. METRES FOR RECREATI ON OPEN SPACE. THE RECREATION OPEN SPACE IS HOWEVER PART OF THE PLOT A ND THOUGH FOR THE PURPOSE OF MUNICIPAL REGULATIONS, A PORTION OF THE PLOT HAS TO BE RESERVED AS A RECREATION AREA BUT FOR THE PURPOSE OF CLAUSE (B) O F SECTION 80IB(10), THE RECREATION AREA HAS ALSO TO BE CONSIDERED AS PART O F THE PLOT ONLY. THERE IS NO CONDITION IN THE CLAUSE THAT RECREATION AREA HAS TO BE EXCLUDED WHILE EXAMINING WHETHER THE PLOT IS OF THE SIZE OF ONE AC RE OR LESS. IF THE RECREATION AREA OF 591.49 SQ. METRES IS ADDED TO THE TOTAL PLO T AREA OF 3597.91 SQ. METRES, IT GIVES AN AREA OF 4189 SQ. METRES WHICH IS THE S IZE OF THE PLOT. THE TOTAL PLOT AREA HAS BEEN ARRIVED AT BY MNP 3597.51 ONLY FOR TH E PURPOSE OF CALCULATING THE PERMISSIBLE FSI. THE PERMISSIBLE FSI AS PER COL UMN 9 OF THE AREA STATEMENT IS ONE, WHICH MEANS THAT THE ASSESSEE CA N BUILD 3597.91 SQ.METRES IN THE SAID PLOT. HOWEVER, FOR THE PURPOSE OF CLAUSE (B) OF SECTION 80IB(10), THE PLOT AREA HAS BEEN TAKEN AT 4 189 SQ. METRES, IF NOT AT 4600 SQ. METRES, EVEN ON THIS BASIS, THE SIZE OF TH E PLOT IS MORE THAN ONE ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 8 ACRE. IN OUR OPINION, THE CIT(A) COMMITTED AN ERROR IN SIMPLY EXCLUDING 656.75 SQ.METRES FROM THE AREA OF 4600 SQ.METRES W ITHOUT APPRECIATING THAT THE EXCLUSION IS ONLY FOR THE PURPOSE OF D.P. ROAD WHICH DOES NOT REDUCE THE SIZE OF THE PLOT AS A WHOLE. WE ARE THER EFORE SATISFIED THAT THERE IS NO VIOLATION OF THE CONDITIONS PRESCRIBED BY CLAUSE(B). 7. IN VIEW OF THE DECISION OF THE TRIBUNAL REFERRED ABOVE WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) ON THIS ISSUE HAS TO B E REVERSED. WE DIRECT ACCORDINGLY. THE CIT(A) HAS ALSO MADE PASSIVE REMA RK THAT THE PROJECT HAS NOT BEEN SANCTIONED BY THE KDMC. THIS IS NOT CORRE CT AND THE REQUIRED APPROVAL HAD BEEN FILED BEFORE US AND HAD ALSO BEEN FILED BEFORE THE AO AND THE AO HAS ALSO MADE REFERENCE TO THE SAME IN HIS O RDER. WE THEREFORE, HOLD THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION UN DER SECTION 10 IB(10) OF THE ACT SUBJECT TO THE VERIFICATION OF THE EXISTENC E OF COMMERCIAL AREA IN THE PROJECT VIDHI COMPLEX. THE FACT THAT THE COMMERCIA L COMPLEX EXISTS IN THE AMURT DHAM PROJECT WOULD NOT BE RELEVANT FOR DENYI NG THE CLAIMING OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 IB(10) OF T HE ACT FOR THE PROJECT VIDHI COMPLEX. WITH THE AFORESAID OBSERVATION WE S ET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM FOR DED UCTION UNDER SECTION 80 IB(10) OF THE ACT AFTER VERIFYING THE COMMERCIAL A REA IN THE PROJECT VIDHI COMPLEX. FOR STATISTICAL PURPOSES APPEAL OF THE AS SESSEE IS TREATED AS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH DAY OF APRIL, 2011. SD/- SD/- (PRAMOD KUMAR ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 8 TH APRIL.2011 ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RF BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.1212/MUM/2009(A.Y. 2005-06) ) 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 1/4/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 5/4/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED D RAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER