M/s. Rahul Construction Co., Pune V. ITO Wd.3(1), Pune

ITA 1250/PUN/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60035 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KUMAR
• Assessee Lawyers: SUNIL PATHAK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 1250 /PN/2009 & 707/PN/2010 (ASSTT. YEARS : 2006-07 & 2007-08 ) M/S. RAHUL CONSTRUCTION CO. , ... APPELLANT RAHUL CAPITAL, 115/B PRABHAT ROAD, PUNE PAN : AAFFR2117L V. INCOME TAX OFFICER, WARD 3(1), PUNE RESPONDENT APPELLANT BY : S/SHRI SUNIL PATHAK & NIKHIL PA THAK RESPONDENT BY : SHRI NARENDRA KUMAR, CIT DATE OF HEARING :20/02/12 DATE OF PRONOUNCEMENT : 30 -3-12 ORDER PER I.C. SUDHIR, JM ITA NO. 1250/PN/2009 THE ASSESSEE HAS QUESTIONED THE FIRST APPELLATE ORDER ON FOLLOWING GROUNDS : 1] THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS.4,42,18,673/- U/S. 80IB(10) IN RESPECT OF TH E HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE AT WARJE, PUNE. 2] THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEES PROJECT CONSISTED OF 16 BUILDINGS AS PER THE SANCTIONED LAY OUT PLAN OF THE PLOT OF LAND OF ABOUT 20 ACRES AND AS ALL THESE BUI LDINGS WERE NOT CONSTRUCTED BEFORE 31.3.2008, IT DID NOT SATISFY TH E BASIC CONDITION OF SECTION 80IB(10) AND THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION U/S. 80IB(10) OF THE ACT. 3] THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT A. THE CONDITION FOR COMPLETION OF THE PROJECT WITHIN FOUR YEARS OF THE YEAR IN WHICH THE FIRST BUILDING PLAN WAS PASS ED APPLIED TO THE ASSESSEES CASE ALTHOUGH THE FIRST BUILDING PLA N WAS PASSED BEFORE THE INTRODUCTION OF THIS CONDITION IN SECTIO N 80IB(10). ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 2 B. THE PROJECT CONSISTED OF 16 BUILDINGS AND AS THE AS SESSEE HAD NOT COMPLETED THE CONSTRUCTION OF ALL THESE BUILDINGS, THE CONDITION OF COMPLETING THE HOUSING PROJECT U/S 80IB(10) WAS NOT FULFILLED. C. THE CONCEPT OF A PROJECT AS PER SECTION 80IB(10) WAS TO BE UNDERSTOOD AS PER THE SANCTIONED LAYOUT FOR THE ENT IRE LAND AND THE CONDITION IN SECTION 80IB(10) REQUIRED THE ASSE SSEE TO COMPLETE THE CONSTRUCTION OF ALL THE BUILDINGS SHO WN IN THE LAYOUT PLAN WITHIN FOUR YEARS. D. THE ASSESSEES STAND THAT 11 BUILDINGS NAMELY A1 TO A5 AND B1 TO B6 COVERING THE LAND OF MORE THAN ONE ACRE WERE COMPLETED AND HENCE, THESE BUILDINGS TOGETHER CONSTITUTED A P ROJECT AND THE DEDUCTION OUGHT TO HAVE BEEN ALLOWED IN RESPECT OF THE PROFITS FROM THESE BUILDINGS IS NOT A CORRECT STAND . 4] THE CIT(A) FAILED TO APPRECIATE THAT A. THE FIRST BUILDING PLAN OF THE ASSESSEE WAS PAS SED BEFORE 1.4.2004 AND HENCE, THE CONDITION FOR COMPLETION O F THE PROJECT WITHIN FOUR YEARS WAS NOT APPLICABLE IN THI S CASE AND THE DEDUCTION U/S 80IB(10) HAD TO BE ALLOWED TO TH E ASSESSEE AS PER THE PROVISIONS OF SECTION 80IB(10) ON THE STATUTE BOOK ON THE DATE OF PASSING OF THE FIRST PL AN. B. THE ASSESSEE HAD COMPLETED 11 BUILDINGS NAMELY, A1 TO A5 AND B1 TO B6 BY 30.7.2006 WHICH WERE CONSTRUCTED O N A PORTION OF LAND OCCUPYING MORE THAN ONE ACRE, AND THEREFORE THEY CONSTITUTED A PROJECT AND THE DEDUCTION U/S 80 IB(10) WAS ALLOWABLE IN RESPECT OF THE PROFITS FROM THESE ELEVEN BUILDINGS. C. THERE WAS NO DEFINITION OF THE TERM PROJECT IN SECTION 80IB(10) AND THE SAME COULD NOT BE EQUATED WITH THE ENTIRE SANCTIONED LAYOUT. D. THE CLUSTER OF 11 BUILDINGS NAMELY, A1 TO A5 AND B1 TO B6 SATISFIED ALL THE CONDITIONS OF SECTION 80IB(10) AN D THEREFORE, THE PROFITS FROM THESE BUILDINGS WERE ENTITLED TO D EDUCTION UNDER THAT SECTION. 5] THE CIT(A) FAILED TO APPRECIATE THAT THE INTERPR ETATION GIVEN BY HIM OF SECTION 80IB(10) IS CONTRARY TO THE PURPO SE OF THE SECTION INASMUCH AS AN ASSESSEE CANNOT DEVELOP A PORTION OF THE LAND EXCEEDING ONE ACRE AND CLAIM DEDUCTION UNDER SECTIO N 80IB(10) IN ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 3 RESPECT THEREOF BECAUSE SUCH ASSESSEE HAS TO PUT U P THE LAYOUT PLAN FOR THE WHOLE LAND AND HENCE SUCH ASSESSEE HAS TO PERFORCE CONSTRUCT ALL THE BUILDINGS SANCTIONED AS PER THE L AYOUT PLAN WITHIN FOUR YEARS TO CLAIM DEDUCTION UNDER SECTION 80IB(10 ) WHICH MIGHT NOT BE PRACTICALLY POSSIBLE DUE TO VARIOUS REASONS. 2. THE RELEVANT FACTS EMERGING FROM THE ORDERS OF T HE AUTHORITIES BELOW ARE THAT THE ASSESSEE FIRM ENGAGED IN THE BUS INESS OF PROMOTERS AND BUILDERS HAD CLAIMED DEDUCTION U/S. 80IB(10) OF RS. 4,42,18,673/-. THE SAME WAS DENIED BY THE A.O MAINLY ON THAT BAS IS THAT OUT 16 BUILDINGS IN THE PROJECT IN WHICH ONE SINGLE APPROV AL AND SANCTION WAS TAKEN, ONLY 11 BUILDINGS WERE COMPLETE WITHIN THE P RESCRIBED TIME LIMIT UPTO 31 ST MARCH 2008. THE A.O. STATED THAT THE FIRST LAY O UT PLAN IN RESPECT OF ENTIRE COMPLEX WAS SANCTIONED BY PUNE MU NICIPAL CORPORATION (PMC) VIDE ORDER NO. DPO/45/D/646 DATED 3.4. 2003 A ND THE BUILDING PLAN WAS SANCTIONED VIDE COMMENCEMENT CERTIFICATE N O. 4269 DATED 29.4.2003. THE ENTIRE PROJECT SANCTIONED BY THESE ORDERS COMPRISED OF A, B, C & D TYPE OF BUILDINGS WERE SUBJECTED TO AMENDM ENTS LATER. REFERRING EXPLANATION BELOW SEC. 80IB(10)(A) OF THE I.T. ACT, THE A.O HELD THAT AS PER THE EXPLANATION (I) WHEN THE APPROVAL I N RESPECT OF THE HOUSING PROJECT WAS OBTAINED MORE THAN ONCE, THE V ERY FIRST APPROVAL WAS THE DATE TO BE TAKEN FOR THE APPROVAL OF THE PR OJECT FOR THE PURPOSE OF SEC. 80IB(10)(A) OF THE ACT. THE A.O. STATED TH AT IN THIS CASE, THE DATE OF APPROVAL OF THE PROJECT WAS 3.4.2003, THERE FORE, SEC. 80 IB(10)(A) REQUIRED THAT THE PROJECT SHOULD HAVE BEE N COMPLETED ON OR BEFORE 31 ST MARCH 2008, WHICH WAS NOT FULFILLED BY THE ASSESSE E IN RESPECT OF THE ENTIRE PROJECT COMPRISING OF A TO D, TYPE OF BUILDINGS. 3. THE CONTENTION OF THE ASSESSEE REMAINED THAT THE HOUSING PROJECT CONSISTED 16 BUILDINGS IN A TOTAL AREA OF 20 ACRES AND 5 DIFFERENT LAY OUT ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 4 PLANS AND ACCORDINGLY DIFFERENT BUILDING PLANS WER E SANCTIONED FROM 3.4.2003 TO 13.7.2003. FIVE BUILDINGS I.E. A1 TO A 5 KNOWN AS ATUL NAGAR WERE SANCTIONED AS PER AMENDED LAY OUT PLANS DATED 27.6.2003, 3.10.2003 AND 20 TH APRIL 2004. FURTHER, 6 BUILDINGS B1 TO B 6 WERE CONSTRUCTED ON THE BASIS OF LAY OUT PLANS SANCTIONE D ON 15.9.2004 AND 8.3.2006. IT WAS STATED THAT THESE 6 BUILDINGS KNO WN AS RAHUL NISARG CO-OPERATIVE HOUSING SOCIETY LTD. WERE SEPARATED B Y A WALL FROM ATUL NAGAR AND CONSTITUTED A PROJECT BY ITSELF. IT WAS SUBMITTED THAT DIFFERENT GROUPS OF BUILDING A & B SHOULD BE TREATED DIFFEREN T PROJECTS SINCE THESE WERE CONSTRUCTED ON PLOT OF LAND WHICH WAS MORE THA N 1 ACRE SEPARATELY. THE LAY OUT PLANS WERE DIFFERENT FOR THESE 2 GROUP S OF BUILDINGS AND THESE WERE COMPLETED WELL BEFORE 31 ST MARCH 2008. THE A.O DID NOT AGREE WITH THESE EXPLANATIONS OF ASSESSEE. THE LD CIT(A) HAS ALSO UPHELD THE ACTION OF THE A.O. 4. REITERATING THE SUBMISSIONS MADE BEFORE THE AUTH ORITIES BELOW, THE LD. A.R REFERRED EXPLANATION (I) TO SEC. 80IB(10)(A ) OF THE ACT RELYING UPON WHICH, AUTHORITIES BELOW HAVE DENIED THE CLAI MED DEDUCTION. HE TRIED TO SUBMIT THAT THE VERY WORDING OF EXPLANATI ON (I) SUGGEST THAT APPROVAL IN RESPECT OF THE 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. THE LD. A.R. TRIED TO SUBMIT THAT HOUSING PROJECT AND BUILDING PLAN ARE TWO DIFFERE NT CONCEPTS AND THUS DATE OF APPROVAL OF A HOUSING PROJECT BY PMC CANNOT BE TAKEN AS THE DATE OF APPROVAL OF THE BUILDING PLAN BY THE LOCAL AUTHO RITY. HE SUBMITTED THAT AS PER EXPLANATION (I) THE DATE ON WHICH BUILDING PLAN IS APPROVED BY THE LOCAL AUTHORITY WILL BE TAKEN AS APPROVAL OF THE H OUSING PROJECT FOR COMPUTATION OF THE PERIOD OF COMPLETION. THE LD. A .R. REITERATED THE ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 5 CONTENTS OF WRITTEN SUBMISSION DATED 13.8.2009 BEFO RE THE LD CIT(A) WHICH HAS BEEN REPRODUCED IN PARA NO. 3.4 OF THE FI RST APPELLATE ORDER. FOR A READY REFERENCE, IT IS REPRODUCED HEREUNDER : 1) IN THIS CASE, THE ONLY ISSUE IS REGARDING THE D ISALLOWANCE OF CLAIM U/S 80IB(10) OF RS.4,43,37,400/-. THE ASSESS EE IS A PROMOTER AND BUILDER. IT HAS CONSTRUCTED A PROJECT ON THE LAND ADMEASURING ABOUT 20 ACRES AT S.NO. 79/B, WAR JE, PUNE. THE FIRST LAYOUT PLAN WAS SANCTIONED BY PUNE MUNICIPAL CORPORATION ON 3.4.2003 VIDE THEIR ORDER NO. DPO/45 /D/646. THE SANCTIONED LAYOUT WAS FOR 16 BUILDINGS CONSISTI NG OF 680 TENEMENTS. THE DETAILS ARE GIVEN IN PARA 6 OF THE ASST.ORDER. AS PER THE CONDITION LAID DOWN IN SECTION 80IB(10) , THE ASSESSEE HAS TO COMPLETE THE PROJECT WITHIN FOUR YE ARS OF THE YEAR IN WHICH THE FIRST PLAN IS SANCTIONED. IN THI S CASE, THEREFORE, ACCORDING TO THE A.O., THE ASSESSEE HAD TO CONSTRUCT THE ENTIRE PROJECT BY 31.3.2008. THE A.O . HOLDS THAT THE ASSESSEE HAS COMPLETED ONLY A & B TYPE OF BUILDINGS BY THIS DATE AND THE OTHER BUILDINGS IN C & D TYPE ARE STILL UNDER CONSTRUCTION AND THEREFORE, HE HELD THAT THE ASSESSEE HAD NOT COMPLETED THIS PROJECT WITHIN FOUR YEARS AN D ACCORDINGLY, HE HAS DISALLOWED THE CLAIM OF DEDUCTI ON U/S 80IB(10). 2] IN THE PAPER BOOK ON PAGE NO. 4 THE ASSESSEE HAS GIVEN THE FIRST PLAN WHICH WAS SANCTIONED ON 29/4/2003. THER EAFTER, THE PLAN WAS REVISED A FEW TIMES AND ON PAGE NO.5, THE ASSESSEE HAS GIVEN THE FINAL PLAN AS PER WHICH THE BUILDINGS OF A & B GROUP WERE COMPLETED. THIS FINAL PLAN WAS PA SSED ON 8.3.2006. THE A GROUP CONSISTED OF FIVE BUILDINGS NAMELY A1 TO A5 AND WHICH CLUSTER IS CALLED ATUL NAGAR. THE B GROUP BUILDINGS COST OF SIX BUILDINGS B 1 B 6 AND THIS CLUSTER IS CALLED RAHUL NISARG. BOTH THESE CLUSTERS ARE SEPAR ATELY REGISTERED SOCIETIES AND THEY HAVE THEIR SEPARATE A MENITIES. THE PARTICULARS REGARDING THESE CLUSTERS ARE AS UND ER - 3] CLUSTER OF A BUILDINGS ATUL NAGAR I) APPROVAL OF THE PROJECT BY LOCAL AUTHORITY BEF ORE 31/3/2007. ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 6 THE 1 ST BUILDING PLAN FOR A TYPE HAS BEEN SANCTIONED BY PU NE MUNICIPAL CORPORATION ON 29/4/2003 VIDE COMMENCEMEN T CERTIFICATE NO. 4269 (PAGE NO. 4). HOWEVER ACTUAL CONSTRUCTION OF A TYPE BUILDING WAS EXECUTED AS PER THE REVISED PLAN VIDE NO. CC4101/ 27/6/2003 COPY OF REVISED PLAN ENCLOSED ON PAGE NO 5. II) THE SIZE OF THE PLOT ON WHICH A TYPE BUILDINGS I.E. A-1 TO A-5 HAVE BEEN CONSTRUCTED IS ---- 139466 SQ.FT. III) THE COMPLETION OF THE PROJECT IS BEFORE 31 ST MARCH 2008 IN CASE WHERE THE PLAN IS SANCTIONED BEFORE 1/4/2004. THE PROJECT A TYPE BUILDING I.E. A-1 TO A-5 CONSIS TS OF 360 RESIDENTIAL UNITS AND THE CONSTRUCTION HAS BEEN CO MPLETED BETWEEN 10/1/2005 TO 31/8/2005. ENCLOSURE OF PROOFS (PAGE NOS. 6 TO 9): A) COMPLETION CERTIFICATE NO. DATE NO. OF FLATS BCO/14/5/236 10/1/2005 125 BCO/14/5/282 04/3/2005 93 BCO/14/5/282 04/3/2005 82 BCO/14/5/140 31/8/2005 60 360 IV) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP ARE A OF 1500 SQ.FT. FOR PUNE CITY. EACH UNIT IN A TYPE PROJECT IN ALL THE BUILDINGS O F A-1 TO A-5 I.E. 360 FLATS EACH FLAT IS LESS THAN 1500 SQ.FT. V) THE BUILT UP AREA OF THE FLATS IN THIS CLUSTER I S IN THE RANGE OF - --- SQ.FT. TO ----------SQ.FT. THE BROCHURE IS EN CLOSED ON PAGE -------. V) THIS CLUSTER HAS NO COMMERCIAL AREA AT ALL. 4] B- GROUP OF BUILDINGS RAHUL NISARG I) THIS CLUSTER CONSISTS OF 6 BUILDINGS B1 TO B 6 C ONSTRUCTED ON LAND ADMEASURING 138203 SQ.FT. II) THE FIRST BUILDING PLAN WAS SANCTIONED ON 29.4 .2003 VIDE COMMENCEMENT CERTIFICATE NO. 4269 PAGE NO. 16 III) HOWEVER ACTUAL CONSTRUCTION WAS EXECUTED AS P ER REVISED PLAN SANCTION ON 20/3/2004 WIDE CC NO. 2225 PAGE NO 17 ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 7 IV) THE PROJECT CONSISTS OF 396 FLATS AND IS COMPLE TED AS PER THE DETAILS HEREUNDER A) COMPLETION CERTIFICATE NO. DATE NO. OF FLATS BCO/0218/06/1576 14/7/2006 72 BCO/0218/06/1577 14/7/2006 54 BCO/0218/06/1578 14/7/2006 72 BCO/0218/06/1579 14/7/2006 72 BCO/0218/06/1580 14/7/2006 54 BCO/0218/06/1581 14/7/2006 72 ------- 396 ===== V) THE BUILT UP AREA OF THE FLATS DOES NOT EXCEED 1500 SQ.FT. THE BUILDING PLAN/BROCHURE IS ENCLOSED ON PAGE 18 TO 2 3. VI)THIS PROJECT IS ENTIRELY A RESIDENTIAL PROJECT A ND THERE IS NO COMMERCIAL AREA THEREIN. THE LD. A.R. SUBMITTED THAT THE TERM HOUSING PRO JECT IS NOT DEFINED ANYWHERE UNDER THE INCOME TAX ACT, THEREFORE, THERE IS A POSSIBILITY OF DIFFERENT VIEWS ON THE SUBJECT LEADING TO PROTRACT ED LITIGATION. THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY VIDE ITS LE TTER DATED 1 ST JANUARY 2001 HAD REQUESTED FOR CLARIFICATION UNDER THE PROVISIONS OF SEC. 10(23G) OF THE I.T. ACT 1961 FROM THE HONBLE FINAN CE MINISTER, GOVERNMENT OF INDIA. IT WAS REQUESTED IN THE SAID LETTER THAT SUITABLE CLARIFICATION BE MADE TO DEFINE THE TERM HOUSING P ROJECT TO INCLUDE VARIOUS AMENITIES AND FACILITIES, INTER ALIA, INCLU DING THAT OF A CONVENIENT SHOPPING ETC. THE SAID LETTER WAS REPLIED BY THE C BDIT VIDE ITS LETTER DATED 4 TH MAY 2001. THE LD. A.R. REFERRED THE RELEVANT EXTR ACT OF THE SAID LETTER OF CBDT I.E. WITH REGARD TO YOUR QUERY REGA RDING THE DEFINITION OF HOUSING PROJECT WHICH HAS BEEN APPROVED BY LOCAL AU THORITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPO SE OF SEC. 10(23G) AND SEC. 80IB(10). THE LD. AR. REFERRED PAGE NOS. 1 TO 71 OF THE PAPER ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 8 BOOK I.E. COPIES OF PROFITS AND LOSS ACCOUNT FOR A & B TYPE PROJECTS; PROFIT & LOSS A/C FOR C & D TYPE PROJECT; COMMENCEMENT CE RTIFICATE FOR A TYPE PROJECT, 1 ST SANCATION PLAN DT. 29/04/2003 (FOR A TYPE); REV ISED SANCTION PLAN CE NO. 4101 DT. 27/06/2003 (FOR EXCUT ION OF CONSTRUCTION FOR-A TYPE PROJECT); COMPLETION CERTIFICATE FOR A T YPE PROJECT; COMPLETION CERTIFICATE FOR B TYPE PROJECT; 1 ST SAN CTION PLAN DT 29/04/2003 (FOR B TYPE); REVISED SANCTION PLAN CE N O. 2225 DT. 20/03/2004 (FOR EXCUTION OF CONSTRUCTION FOR B TY PE PROJECT); COMPLETION CERTIFICATE FOR B TYPE PROJECT; SUBMISSI ON LETTER DATED 30/10/2008 TO INCOME TAX OFFICER WARD 3(1); SUBMISS ION LETTER DATED 18/11/2008 TO INCOME TAX OFFICER WARD 3(1); A TYPE PROJECT BROUCHURE; B TYPE PROJECT BROUCHURE; AND CIT APPEAL SUBMISSI ON DATED 13.08.2009 AND CIT APPEAL SUBMISSION DATED 18.08.2009. 5. THE LD. A.R. CONTENDED THAT IN VIEW OF ABOVE SU BMISSION AND THE PROVISIONS OF THE RELATED LAW, THE ASSESSEE IS VERY MUCH ENTITLED FOR DEDUCTION CLAIM ON THE PROFIT EARNED ON THE SALE OF THE UNITS IN BUILDINGS A1 TO A 5 IN ATUL NAGAR AND IN BUILDINGS B1 TO B 6 IN RAHUL NISARG CO- OPERATIVE HOUSING SOCIETY LTD. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) SAROJ SALES ORGANIZATION VS. ITO (2008) 115 TTJ (MUM) 485 2) DCIT VS. BRIGADE ENTERPRISES (P) LTD. (2008) 11 9 TTJ (BANG) 269 3) VANDANA PROPERTIES VS. ACIT (2010) 128 TTJ (MUM) 89 4) MUDHIT MAGANLAL GUPTA VS. ACIT (2011), 51 DTR (M UM TRIBUNAL) 217 ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 9 6. THE LD. A.R. SUBMITTED FURTHER THAT LIBERAL INTE RPRETATION IS REQUIRED TO BE GIVEN TO THE INCENTIVE PROVISION TO ACHIEVE THE OBJECT OF LEGISLATURE. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) CIT VS. SHAAN FINANCE (P) LTD., & ANOTHER (1998) , 231 ITR 308 (SB). 2) BAJAJ TEMPO LTD. VS. CIT (1992) 196 ITR 188 (SC) 7. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE HAD COMPLETED ONLY THE PART OF THE PROJECT UPTO THE PRESCRIBED TIME LI MIT I.E. 31 ST MARCH 2008 FROM THE DATE OF FIRST APPROVAL OF THE HOUSING PROJ ECT, HENCE, AS PER EXPLANATION (I), THE ASSESSEE WAS NOT ENTITLED FOR THE BENEFIT OF CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT. HE SUBMITTE D THAT BENEFIT OF DEDUCTION U/S. 80IB(10) CANNOT BE GIVEN ON THE BASI S OF CBDT LETTER DATED 4 TH MAY 2001 AS RELIED UPON BY LD. A.R. SINCE THE SAID LETTER WAS ADDRESSED TO CLARIFY PROBLEM OF AN INDIVIDUAL. 8. CONSIDERING THE ABOVE SUBMISSION, AND HAVING GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON, WE FIND THAT THE ISSUE INVOL VED IS AS TO WHETHER THE ASSESSEE HAD COMPLETED THE HOUSING PROJECT WITHIN T HE PRESCRIBED TIME LIMIT SINCE THE DATE OF FIRST APPROVAL OF THE PROJE CT BY THE PMC. 9. TO DECIDE THE ABOVE ISSUE, IT IS NECESSARY TO D ECIDE FIRSTLY AS TO WHAT WOULD BE FIRST DATE OF APPROVAL OF THE HOUSING PROJECT BY THE PMC TO COMPUTE THE TIME LIMIT PRESCRIBED FOR COMPLETION OF THE PROJECT TO TAKE BENEFIT OF DEDUCTION U/S. 80 IB (10) OF THE ACT. T HERE IS NO DISPUTE ON SOME MATERIAL FACTS THAT OUT OF 16 BUILDINGS IN THE HOUSING PROJECT OF THE ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 10 ASSESSEE ONLY 11 BUILDINGS WERE COMPLETED WITHIN TH E PRESCRIBED TIME LIMIT UPTO 31 ST MARCH 2008. THE LAY OUT PLAN IN RESPECT OF ENTIRE COMPLEX WAS SANCTIONED BY PMC VIDE ORDER NO. DPO/45/D/646 DATED 3.4.2003 AND THE BUILDING PLAN WAS SANCTIONED VIDE COMMENCE MENT CERTIFICATE NO. 4269 DT. 29.4.2003. ADMITTEDLY, THE TERM HO USING PROJECT HAS NOT BEEN DEFINED IN THE INCOME TAX ACT BUT IN THE CONTE XT OF DEDUCTION U/S. 80IB(10) AN EXPLANATION HAS BEEN PROVIDED BELOW CLA USE (A) TO SUB- SECTION (10) TO SECTION 80 IB. FOR A READY REFEREN CE, THE SAID EXPLANATION IS BEING REPRODUCED HEREUNDER : (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 TH E DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PRO JECT 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. THE VERY READING OF ABOVE EXPLANATION (I), IT MAKES CLEAR THAT FOR THE ELIGIBILITY OF THE DEDUCTION PROVIDED U/S. 80 IB ( 10) OF THE ACT, THE DATE ON WHICH BUILDING PLAN OF SUCH HOUSING PROJECT HAS BEEN FIRSTLY APPROVED BY THE LOCAL AUTHORITY WILL BE TREATED AS APPROVAL IN RESPECT OF THE HOUSING PROJECT. WHEN WE READ EXPLANATION (II) WITH EXPLAN ATION (I) IT MAKES CLEAR THAT COMPLETION OF CONSTRUCTION OF SUCH BUILDING PL AN FIRST APPROVED BY THE LOCAL AUTHORITY WILL BE TAKEN THE DATE OF COMPLETIO N OF CONSTRUCTION OF SUCH BUILDING PLAN WHEN COMPLETION CERTIFICATE HAS BEEN ISSUED BY THE LOCAL AUTHORITY. IN OTHER WORDS, IN CLAUSE (I) OF THE EX PLANATION, IT HAS BEEN ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 11 MADE CLEAR THAT WOULD BE THE HOUSING PROJECT, FIRS T APPROVAL OF WHICH, BY THE LOCAL AUTHORITY WOULD BE TAKEN AS STARTING POIN T OF THE HOUSING PROJECT AND IN CLAUSE NO. (II), IT HAS BEEN MADE CLEAR THA T WHAT WOULD BE THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT ISSUED BY LOCAL AUTHORITY TO COMPUTE THE PRESCRIBED TIME LIMIT FOR VERIFICATION OF ELIGIBILITY OF ASSESSEE FOR THE CLAIMED DEDUCTION. IN VIEW OF THE ABOVE EXPLANATION, WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. A.R . THAT APPROVAL OF THE HOUSING PROJECT AND APPROVAL OF BUILDING PLAN ARE TWO DIFFERENT CONCEPTS. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BRIGADE ENTERPRISES (P) LTD. (SUPRA) HAS HELD THAT PLAN FOR DEVELOPMENT IS ONLY A WORK ORDER AND NOT FINAL PLAN SANCTIONED BY THE LOC AL AUTHORITY. FOR ANY PROJECT, THERE COULD NOT HAVE BEEN A PLAN WITHOUT S UBMISSION OF THE DETAILED BUILDING PLANS, BY THE ARCHITECT AND WHAT REQUISITE DETAILS REQUIRED TO BE SUBMITTED FOR APPROVAL OF THE BUILDI NG PLANS BY THE LOCAL AUTHORITY. IN THE CASE OF SAROJ SALES ORGANIZATION VS. ITO (SUPRA), BEFORE MUMBAI BENCH, ALMOST SIMILAR FACTS AS BEFOR E US WERE THERE. THE COMMENCEMENT CERTIFICATE IN RESPECT OF SIX WINGS I N BLOCK N WAS SEPARATELY RECEIVED BY THE ASSESSEE AND ALL THE FL ATS IN BLOCK WERE LESS THAN 1000 SQ.FT. IT WAS HELD BY THE TRIBUNAL THA T IT IS NOT UPON TO THE REVENUE TO INCLUDE BLOCK BC AS PART OF BLOCK N JUST TO DENY RELIEF TO THE ASSESSEE U/S. 80 IB(10). THE TRIBUNAL OBSERVED THA T BLOCK BC WAS MEANT FOR HIGHER STRATA OF THE SOCIETY HAD BEEN KEP T SEPARATELY BY ASSESSEE IN ALL THE RESPECT, ASSESSEE HAD NOT CLAIM ED RELIEF U/S. 80IB IN RESPECT OF BLOCK BC . IN THE CASE OF MUDHIT MAD ANLAL GUPTA VS. ACIT (SUPRA ) BEFORE THE MUMBAI BENCH, IT HAS BEEN HELD THAT THE HOUSING PROJECT DOES NOT NECESSARILY HAVE TO BE VARIOUS GROUP OF BUILDINGS CONSTRUCTED ON THAT PARTICULAR LAND, BUT IT CAN AL SO BE A PARTICULAR BUILDING OR ANY BUILDING WHICH IS PART OF A LARGE PROJECT. IT HAS BEEN ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 12 FURTHER HELD THAT WHATEVER PORTION OF THE HOUSING PROJECT IS OTHERWISE FOUND TO BE ELIGIBLE HAS TO BE CONSIDERED AS A HOU SING PROJECT FOR THE PURPOSE OF DEDUCTION U/S. 80 IB (10) OF THE ACT. S IMILAR VIEW HAS BEEN EXPRESSED BY MUMBAI BENCH OF THE TRIBUNAL IN THE CA SE OF VANDANA PROPERTIES VS. ACIT (SUPRA). 10. IN VIEW OF ABOVE DISCUSSION, WE COME TO THE CON CLUSION THAT FOR VERIFICATION OF ELIGIBILITY OF BENEFIT CLAIMED U/S. 80 IB (10) OF THE ACT BY THE ASSESSEE ON BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL NISARG CO-OPERATIVE HOUSING SOCIETY LTD. , THE ASSESSING AUTHORITY HAS TO VERIFY AS TO WHEN THE BUILDING PL ANS FOR THESE BUILDINGS WERE FIRSTLY APPROVED BY THE LOCAL AUTHORITY AND T AKING THE SAID DATE OF APPROVAL A STARTING POINT, HE HAS TO VERIFY AS T O WHETHER THESE BUILDINGS WERE COMPLETED WITHIN THE PRESCRIBED TIME LIMIT I.E . 31 ST MARCH 2008 ON THE BASIS OF THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT ISSUED BY THE PMC. WHEN WE EXAMINE THE FACTS OF TH E PRESENT CASE UNDER THE ABOVE BACKGROUND, WE FIND THAT THE AUTHORITIES BELOW HAVE NOT DISPUTED THE FACT FURNISHED IN THIS REGARD BY THE ASSESSEE THAT UNDER THE PROJECT ATUL NAGAR CONSISTING OF BUILDINGS A1 TO A5, THE FIRST BUILDING PLAN FOR A TYPE WAS APPROVED BY THE PMC ON 29.4.200 3 VIDE COMMENCEMENT CERTIFICATE NO. 4269 (PAGE NO. 4 OF T HE PAPER BOOK). HOWEVER, ACTUAL CONSTRUCTION OF A TYPE BUILDING WAS EXECUTED AS PER THE REVISED PLAN VIDE NO. C.C. 4101/27/6/2003 (PAGE NO. 5 OF THE PAPER BOOK). THE SIZE OF THE PLOT ON WHICH THE A TYPE BU ILDING I.E. A1 TO A6 HAVE BEEN CONSTRUCTED IS 1,39,466 SQ.FT. THE PROJ ECT A TYPE BUILDING I.E. A1 TO A5 CONSISTS OF 360 RESIDENTIAL UNITS AND THE CONSTRUCTION HAS BEEN COMPLETED BETWEEN 10.1.2005 TO 31.8.2005 (PAGE NOS. 6 TO 9 OF PAPER BOOK). THE AUTHORITIES BELOW HAVE ALSO NOT DISPUTE D THIS MATERIAL FACT ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 13 THAT RESIDENTIAL UNITS HAS A MAXIMUM BUILT UP AREA OF 1500 SQ.FT. LIKEWISE, THESE MATERIAL FACTS THAT B GROUP BUILDIN GS IN RAHUL NISARG CO- OPERATIVE HOUSING SOCIETY LTD., HAVE BEEN CONSTRUC TED ON LAND AREA OF 138203 SQ.FT., HAS NOT BEEN DENIED BY THE AUTHORITI ES BELOW. THEY HAVE ALSO NOT DENIED THESE MATERIAL FACTS THAT THE FIRST BUILDING PLAN WAS SANCTIONED ON 29.4.2003 VIDE COMMENCEMENT CERTIFICA TE NO. 4269 ISSUED BY THE PMC (PAGE NO. 16 OF THE PAPER BOOK). THE OT HER MATERIAL FACTS LIKE ACTUAL CONSTRUCTION WAS EXECUTED AS PER THE RE VISED PLAN SANCTION ON 20 TH MARCH 2004 VIDE CC NO. 2225 (PAGE NO. 17), THE PR OJECT CONSISTS OF 396 FLATS AND CONSTRUCTION OF THESE FLATS HAVE BEEN COMPLETED ON 14.7.2006 AS PER THE COMPLETION CERTIFICATE ISSUE D BY THE PMC (PAGE NOS. 13 TO 18 OF PAPER BOOK) ARE NOT IN DISPUTE. T HE AUTHORITIES BELOW HAVE ALSO NOT DENIED THAT BUILT UP AREA OF EACH OF THESE FLATS DOES NOT EXCEED 1500 SQ.FT. IT IS ALSO NOT IN DISPUTE THAT B OTH THE PROJECTS ARE ENTIRELY A RESIDENTIAL PROJECT AND THERE IS NO COM MERCIAL AREA THEREIN. UNDER THE ABOVE CIRCUMSTANCES, WE ARE OF THE VIEW T HAT THE ASSESSEE IS VERY MUCH ENTITLED TO THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT ON THE BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDING S B1 TO B6 IN RAHUL NISARG CO-OPERATIVE HOUSING SOCIETY LTD. THE ISSU E IS THEREFORE DECIDED IN FAVOUR OF THE ASSESSEE. WE THUS WHILE SETTING A SIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE, DIRECT THE A.O TO A LLOW THE CLAIMED DEDUCTION U/S. 80 IB(10) IN QUESTION. THE RELATED GROUNDS ARE ACCORDINGLY ALLOWED. 11. IN RESULT, APPEAL IS ALLOWED. ITA NO. 707/PN/2010 ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 14 12. THE FIRST APPELLATE ORDER HAS BEEN QUESTIONED B Y THE ASSESSEE ON THE FOLLOWING GROUNDS : 1] THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS.18,43,29,768/- U/S. 80IB(10) IN RE SPECT OF THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE AT WARJE, PUNE. 2] THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEES PROJECT CONSISTED OF 16 BUILDINGS AS PER THE SANCTIONED LAY OUT PLAN ON THE PLOT OF LAND OF ABOUT 20 ACRES AND AS ALL THESE BUILDINGS WERE NOT CONSTRUCTED BEFORE 31.3.2008, IT DID NOT S ATISFY THE BASIC CONDITION IN SECTION 80IB(10) AND THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO THE DEDUCTION U/S. 80I B(10). 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE 11 BUILDINGS NUMBERED A1 TO A5 AND B1 AND B6 CONSTITUT ED ONE SINGLE PROJECT AND SINCE THE ASSESSEE HAD COMPLETED ALL THESE BUILDINGS BY 31 ST MARCH, 2008 AND ALL OTHER CONDITIONS OF SECTION 80IB(10 WERE SATISFIED, THE PROFITS IN RESP ECT OF THE SAID 11 BUILDINGS WERE ENTITLED TO DEDUCTION U/S. 8 0IB(10). 4] THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT A. THE CONDITION FOR COMPLETION OF THE PROJECT WITHIN FOUR YEARS OF THE YEAR IN WHICH THE FIRST BUILDING PLAN WAS PASS ED APPLIED TO THE ASSESSEES CASE ALTHOUGH THE FIRST BUILDING PLA N WAS PASSED BEFORE THE INTRODUCTION OF THIS CONDITION IN SECTIO N 80IB(10). B. THE PROJECT CONSISTED OF 16 BUILDINGS AND AS TH E ASSESSEE HAD NOT COMPLETED THE CONSTRUCTION OF ALL THESE BUILDI NGS, THE CONDITION U/S 80IB(10) WAS NOT FULFILLED. C. THE CONCEPT OF A PROJECT AS PER SECTION 80IB(1 0) WAS TO BE UNDERSTOOD AS PER THE SANCTIONED LAYOUT FOR THE ENT IRE LAND AND THE CONDITION IN SECTION 80IB(10) REQUIRED THE ASSE SSEE TO COMPLETE THE ENTIRE CONSTRUCTION WITHIN FOUR YEAR S. ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 15 D. THE ASSESSEES STAND THAT 11 BUILDINGS NAMELY A1 TO A5 AND B1 TO B6 COVERING THE LAND OF MORE THAN ONE ACRE WE RE COMPLETED AND HENCE, THESE BUILDINGS TOGETHER CONST ITUTED A PROJECT AND THE DEDUCTION OUGHT TO HAVE BEEN ALLOWE D IN RESPECT OF THE PROFITS FROM THESE BUILDINGS IS NOT A CORRECT STAND. 5] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A. THE FIRST BUILDING PLAN OF THE ASSESSEE WAS PAS SED BEFORE 1.4.2004 AND HENCE, THE CONDITION FOR COMPLETION O F THE PROJECT WITHIN FOUR YEARS WAS NOT APPLICABLE IN THI S CASE AND THE DEDUCTION U/S 80IB(10) HAD TO BE ALLOWED TO TH E ASSESSEE AS PER THE PROVISION OF SECTION 80IB(10) A PPLICABLE ON THE DATE OF PASSING OF THE FIRST PLAN. B. THE ASSESSEE HAD COMPLETED 11 BUILDINGS NAMELY A 1 TO A5 AND B1 TO B6 BY 30.7.2006 AND THEREFORE, AS THEY WERE CONSTRUCTED ON A PORTION OF LAND OCCUPYING MORE TH AN ONE ACRE, THEY CONSTITUTED A PROJECT AND THE DEDUCTION U/S 80IB(10) WAS ALLOWABLE IN RESPECT OF THE PROFITS FR OM THESE BUILDINGS. C. THERE WAS NO DEFINITION OF THE TERM PROJECT IN SECTION 80IB(10) AND THE SAME COULD NOT BE EQUATED WITH THE ENTIRE SANCTIONED LAYOUT. D. THE CLUSTER OF 11 BUILDINGS NAMELY, A1 TO A5 AND B1 TO B6 SATISFIED ALL THE CONDITIONS OF SECTION 80IB(10) AN D THEREFORE, THE PROFITS FROM THESE BUILDINGS WERE ENTITLED TO D EDUCTION UNDER THAT SECTION. E. EVEN, THE DEPT. IN A.Y. 2005-06 HAD ACCEPTED THA T THE SAID 11 BUILDINGS CONSTITUTED ONE PROJECT FOR THE PURPOSE O F SECTION 80IB(10) AND THEREFORE, THERE WAS NO REASON TO DENY THE DEDUCTION ON THE GROUND THAT THE ASSESSEE HAD NOT C OMPLETED ALL THE 16 BUILDINGS AS PER THE SANCTIONED PLAN. 13. SAME FACTS ARE THERE DURING THE YEAR AS THE ASS ESSEE HAS CLAIMED DEDUCTION U/S. 80IB(10) ON THE BUILDINGS A1 TO A 5 IN ATUL NAGAR AND ON BUILDINGS B1 TO B6 IN RAHUL NISARG CO-OPERATIVE HOU SING SOCIETY LTD. AND THE SAME HAS BEEN DENIED BY THE AUTHORITIES BELOW ON THE BASIS THAT BUILDINGS EXCEPT A GROUP AND B GROUP WERE NOT COMPLETED BY THE ITA . NO.1250//PN/2009 & 707/PN/2010 RAHUL CONSTRUCTION CO. A.Y. 2006-07 & 2007-08 PAGE OF 16 16 PRESCRIBED DATE 31 ST MARCH 2008 AND THUS AN IDENTICAL ISSUES HAS BEEN RAISED ON SIMILAR FACTS IN THE APPEAL FOR THE A.Y. 2006-07. 14. FOLLOWING THE DECISION TAKEN ON AN IDENTICAL ISSUE UNDER SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE IN THE APPEAL F OR THE A.Y. 2006-07 HEREINABOVE, WE HOLD THAT THE ASSESSEE IS VERY MUCH ENTITLED TO THE CLAIMED DEDUCTION U/S. 80IB (10) OF THE ACT DURING THE YEAR. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION. THE RELATED GR OUNDS AND THUS ALLOWED. 15. CONSEQUENTLY, APPEAL IS ALLOWED. 16. IN SUMMARY, BOTH THE APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH MARCH 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH MARCH, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT IIV, PUNE 4. THE CIT(A)-II, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE -TRUE COPY- BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE