Assistant Commissioner of Income-tax, V. Sonalty Realty, Pune

ITA 1837/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7237 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REENA JHA TRIPATHI
• Keywords: Question of law; Reasonable cause; Valuation report
• Section: 80IB; 11

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , ! ' # , % & BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1837/PUN/2014 ! ( ( / ASSESSMENT YEAR : 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4 , PUNE, ROOM NO.111, 1 ST FLOOR, PMT COMMERCIAL COMPLEX, SWARGATE, PUNE 411 037. . / APPELLANT V/S SONATA REALTY, 102, KUMAR VASTU, RANGE HILLS, BHOSALE NAGAR, PUNE 411 020. PAN :ABDFS 5072 N. . / RESPONDENT / APPELLANT BY : SMT. REENA JHA TRIPATHI / RESPONDENT BY : SHRI SUHAS BORA ) / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) II, PUNE DT.28.05.2014 FOR THE ASSESSMENT YEAR 2010-11. / DATE OF HEARING : 29.12.2016 / DATE OF PRONOUNCEMENT: 13.01.2017 2 ITA NO.1837/PUN/2014 AY.NO.2010-11 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF BUILDING AND CONSTRUCTION. ASSESSEE ELECTRONI CALLY FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 14.10.2010 DECLARING TOTAL INCOME OF RS.36,33,810/-. THE CASE WAS SELE CTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 1 43(3) VIDE ORDER DT.28.03.2013 AND THE TOTAL INCOME WAS DETER MINED AT RS.11,77,93,387/-. AGGRIEVED BY THE ORDER OF AO, ASSESSE E CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DT.28.0 5.2014 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE (IN APPEAL NO.(PN/CIT(A)-II/DCIT CIR-4/110/2013-14/30). AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS :- 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING DEDUCT ION U/S. 80IB(10) OF THE ACT IN RESPECT OF PROJECT 'PARKLAND ' EVEN THOUGH THE PROVISIONS OF SEC. 80IB(10)(A)(III) AND SEC. 80IB(10)(C) OF THE ACT ARE NOT SATISFIED IN THE CAS E OF THE SAID PROJECT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATIN G THE FACT THAT THE HOUSE PROJECT HAD NOT BEEN COMPLETED BY 31/03/2012, THUS VIOLATING THE CONDITIONS PROVIDED IN CLAUSE (A) TO SECTION 80IB(10) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT APPRECIATIN G THE IMPORT OF SECTION 80IB(10) OF THE ACT WHICH SPEAKS ABOUT SANCTION TO THE 'HOUSING PROJECT' AND NOT TO THE IN DIVIDUAL BUILDING IN THE PROJECT. 3 ITA NO.1837/PUN/2014 AY.NO.2010-11 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING PRORAT A CLAIM OF DEDUCTION U/S. 80IB( 10) OF THE ACT IN RESPECT O F ELIGIBLE BLOCKS 1 BUILDINGS AND UNITS 1 FLATS IN THE PROJECT WITHOUT APPRECIATING THE FACT THAT JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, 333 ITR 289 HELD DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROV ED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALL OWING DEDUCTION TO A PART OF THE PROJECT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT TH E TERRACE AREA CANNOT FORM PART OF BUILT UP AREA AS DEFINED I N THE SEC 80IB(14)(A) OF THE ACT. ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C IT(A) ERRED IN ALLOWING PRORATA DEDUCTION U/S. 80IB(10) I N RESPECT OF ELIGIBLE FLATS INSPITE OF THE FACT THAT BUILT UP AREA OF FIVE ROW HOUSES OF THE PROJECT EXCEEDED THE PRES CRIBED AREA OF 1,500 SQ.FT., VIOLATING CLAUSE (C) TO SECTI ON 80IB(10) OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING PRORAT A DEDUCTION U/S. 80IB(10) IN RESPECT OF ELIGIBLE FLAT S INSPITE OF THE FACT THAT BUILT UP AREA OF FIVE ROW HOUSES O F THE PROJECT EXCEEDED THE PRESCRIBED AREA OF 1,500 SQ.FT., VIOLATING CLAUSE (C) TO SECTION 80IB(10) OF THE ACT. 7. THE APPELLANT CRAVES TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 3. BEFORE US, AT THE OUTSET, LD. D.R. SUBMITTED THAT THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS BUT THE SOLE C ONTROVERSY WHICH REQUIRES ADJUDICATION IS WITH RESPECT TO THE DEDUC TION U/S 80IB(10) OF THE I.T. ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS.11,41,59,577/- U /S 80IB(10) OF THE ACT IN RESPECT OF PROFIT AND GAINS FROM HOU SING AND RESIDENTIAL PROJECT NAMED PARK LAND. AO ON PERUSIN G THE DETAILS NOTICED THAT THE PROJECT OF THE ASSESSEE COMMEN CED ON 18.11.2006 AND AS PER PLAN, THERE WAS A BUILDING C WHICH WAS NOT CONSTRUCTED TILL DATE. HE ALSO NOTICED THAT ASSESSEE GOT PART 4 ITA NO.1837/PUN/2014 AY.NO.2010-11 COMPLETION CERTIFICATE ON 28.03.2012 FOR BUILDING A, B, D, E, & F AND DID NOT INCLUDE FOR C WING. AO ALSO NOTICED THAT AS PER THE VALUATION REPORT OF THE GOVERNMENT AUTHORIZED VALUER AND ON TH E SPOT VERIFICATION, THE BUILDING C WING WAS NOT COMPLETED TILL 04.03.2013 AND NO STRUCTURE WAS FOUND ON THE PLOT AREA WHICH WAS SIMILAR TO C WING. HE THEREFORE CONCLUDED THAT SINCE C WING OF THE BUILDING DID NOT EXIST AND THEREFORE THE PROJEC T PARK LAND WAS INCOMPLETE AS ON 31.03.2012. AO ALSO NOTICED TH AT FIVE ROW HOUSES (F1 TO F5) HAD AREA IN EXCESS OF 1500 SQ.F T. AO THEREFORE CONCLUDED THAT THERE WERE VIOLATION OF CONDITIO NS OF SEC.80IB(10) NAMELY THAT THE PROJECT WAS NOT COMPLETED WITHIN 5 YEARS FROM THE DATE OF COMMENCEMENT AND SECONDLY 5 UN ITS OF THE HOUSING PROJECT WERE MEASURING MORE THAN 1500 SQ.F T. AND THEREFORE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S80IB(1 0). THE SUBMISSION OF THE ASSESSEE THAT THE CONSTRUCTION OF THE PROJECT WAS AS PER THE SANCTIONED PLANS AND REVISED SA NCTIONED PLANS AND AS PER THE PLANS THE BUILDING C WAS COVERED ONLY TILL PLINTH STAGE DUE TO FSI ISSUES WAS NOT FOUND ACCEPTABLE TO AO. ITS SUBMISSION WITH RESPECT TO AREAS EXCEEDING 1500 SQ.F T THAT FOR CONSIDERING THE BUILT-UP AREA, THE TERRACE AREA NEED S TO EXCLUDED WAS ALSO NOT FOUND ACCEPTABLE TO THE AO. AO T HEREFORE DENIED THE CLAIM OF DEDUCTION U/S 80IB(10). AGGRIEVED BY T HE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A), W HO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 3.6 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND PERUSED MATERIAL ON RECORD. THE ONLY ISSUE RAISED BY THE APPELLANT RELATES TO THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 11,41,59,57 3/-. THE 5 ITA NO.1837/PUN/2014 AY.NO.2010-11 ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS DISALLOWED THE SAID CLAIM OF THE APPELLANT FIRSTLY ON THE GROU ND THAT AS PER THE VALUATION REPORT OF THE GOVT. AUTHORIZED VALUER THE BUILDING C WAS NOT YET COMPLETED AND HENCE THE PROJECT PARK L AND WAS HELD TO BE INCOMPLETE AND SECONDLY, FIVE UNITS OF THE SA ID HOUSING PROJECT WERE FOUND TO BE ADMEASURING MORE THAN 1500 SQ.FT. THE FACT OF THE CASE IS THAT THE APPELLANT FIRM UNDERTO OK A HOUSING PROJECT PARK LAND AT BALEWADI, PUNE. THE PROJECT WAS ORIGINALLY SANCTIONED ON 4TH AUG. 2006 AND FURTHER THE PLAN WA S REVISED ON SUBSEQUENT DATES I.E. 18-11-2006, 3-2-2007, 13-2-20 08, AND 21- 7-2011. THE PROJECT COMPRISED OF 6 BUILDINGS VIZ. W ING A, B, C, D E & F. THE DUE DATE FOR THE COMPLETION OF THE PROJE CT IS 31-3-2012 AS THE SAID PROJECT COMMENCED IN F.Y. 2006-07 AS PE R THE PROVISIONS OF SEC 80IB(10)(A). THE APPELLANT RECEIV ED PART COMPLETION CERTIFICATE ISSUED ON 28-3-2012 WITH RES PECT TO BUILDING A, B, D & E COMPRISING OF 32 UNITS AND BU ILDING F OF 5 UNITS. THE CONSTRUCTION OF BUILDING C COULD NOT COM MENCE AND, THEREFORE, THE SAME COULD NOT BE COMPLETED WITHIN T HE SPECIFIC DATES. THE TOTAL PLOT AREA AS PER THE SEC 80IB(10)( B) IS MORE THAN 1 ACRE BEING 78077.77 SQ. METERS OR 1.93 ACRES. TH ERE IS NO COMMERCIAL SHOPPING AREA IN THE PROJECT AS PER THE PROVISION OF SEC 80IB(10)(D). THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS ALSO REFERRED THE MATTER TO THE GOVT. A PPROVED VALUER WHO AFTER EXAMINING AND VERIFYING THE PROJECT HAS A LSO FOUND THE PROJECT TO BE IN ORDER WITH RESPECT TO THE SIZE OF THE PLOT, COMMERCIAL AREA, FLATS IN BUILDINGS A, B, D & E TO BE LESS THAN 1500 SQ.FT. THE VALUER HOWEVER, NOTED THAT THE ROW HOUSES F1 & F5 IN BUILDING C OF THE PROJECT HAD NOT BEEN COMPLE TED, HOWEVER, APART FROM THE ABOVE NO OTHER IRREGULARITY WAS FOUN D BY HIM. THE CONSTRUCTION OF THE BUILDING C IS STATED TO HAVE NOT STARTED TILL DATE AS THE FSI REQUIRED FOR ITS CONSTRUCTION IS NO T AVAILABLE WITH THE APPELLANT FIRM TILL 31-3-2012 AND EVEN UP TILL DATE AS THE AFORESAID FSI IS TO BE GIVEN IN LIEU OF AMENITY S PACE AND 9 METER DP ROAD WHICH IS TO BE SANCTIONED BY THE PMC AND TH US THE SAID FSI WILL BE SANCTIONED FOR THE PROJECT BY THE LOCAL AUTHORITY ON HANDING OVER OF AMENITY SPACE AND THE 9 METER DP RO AD TO THEM BY THE APPELLANT FIRM. THE DELAY IN HANDING OVER O F THE AMENITY SPACE AND THE DP ROAD IS NOT COMPLETED BECAUSE THE PMC HAS SHIFTED THE 9 METER DP ROAD IN THE DEVELOPMENT PLA N OF BANER AND BALEWADI THROUGH EP 32. THE APPELLANT HAS FILED THE COPY OF THE NOTIFICATION DATED 18-9-2008 ISSUED BY THE GOVT . OF MAHARASHTRA, URBAN DEVELOPMENT DEPT IN THIS REGARD. THUS ON THE FINAL SANCTION OF DEVELOPMENT PLAN BY THE GOVT. OF MAHARASHTRA THE PROCESS OF HANDING OVER OF THE AREA S OF AMENITY SPACE AND DP ROAD WILL BE COMPLETED. HOWEVER, AS TH E DEVELOPMENT PLAN IS PENDING FOR SANCTION BEFORE THE STATE GOVT. AND THE APPELLANT FIRM FOR THE SAID REASONS COULD NOT START AND COMPLETE THE BUILDING C OF THE PROJECT. HOWEVER, THE CONSTRUCTION, SANCTION AND APPROVAL BY THE ORIGINAL AND SUBSEQUEN T REVISED PLANS HAS BEEN FULLY COMPLETED BY THE APPELLANT FIR M AND THE REQUIRED OCCUPANCY/COMPLETION CERTIFICATE ALSO OBTA INED PRIOR TO THE SPECIFIED DATE I.E. 31-3-2012. THUS IT CAN BE NOTICED THAT THE CONSTRUCTION OF BUILDING C COULD NOT BE COMPLETE D BECAUSE OF THE FACT THAT THE REQUIRED FSI FOR CONSTRUCTION HAS N OT YET BEEN SANCTIONED AND ALLOWED BY THE PMC AND NO PENDING CO MPLIANCE REMAINS ON THE PART OF THE APPELLANT. IN SUCH A SIT UATION AND CIRCUMSTANCES WHEREIN THE COMPLIANCE OF THE PROVISI ON HAS 6 ITA NO.1837/PUN/2014 AY.NO.2010-11 BECOME IMPOSSIBLE ON THE PART OF THE APPELLANT AND THEREFORE, THE CLAIM OF DEDUCTION PRIMA FACIE CANNOT BE DENIED. T HE APPELLANT IN THIS REGARD HAS PLACED RELIANCE ON THE DECISION OF THE PUNE ITAT IN THE CASE OF RAMSUKH PROPERTIES VS DCIT(CITED SUP RA) WHEREIN IT WAS HELD AS UNDER: ASSESSEE IS A FIRM ENGAGED IN BUSINESS OF BUILDER AND PROMOTER. THE ISSUE BEFORE US IS REGARDING ALLOWABI LITY OF DEDUCTION U/S.80IB(10) OF THE ACT ON PARTIALLY COMP LETE PROJECT. THE ASSESSING OFFICER HAS DENIED THE DEDUC TION ON THE GROUND THAT PROJECT WAS NOT COMPLETED WITHIN TH E STIPULATED TIME. THERE IS NO DISPUTE WITH REGARD TO OTHER CONDITIONS LAID U/S.80IB(10) OF THE ACT, I.E., COMM ENCEMENT 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 WA S REJECTED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A). THE REQUEST FOR GRANTING WHOLE DEDUCTION IN RE SPECT OF WHOLE PROJECT HAS RIGHTLY BEEN REJECTED BECAUSE DED UCTION U/S.80IB (10) COULD NOT BE GRANTED TO ASSESSEE ON INCOMPLETE CONSTRUCTION AT RELEVANT POINT OF TIME. REGARDING PROPORTIONATE DEDUCTION IN RESPECT OF 173 OF 205 FL ATS OF PROJECT COMPLETED AS RECOGNIZED BY LOCAL AUTHORITY, I.E., PMC IN ITS COMPLETION CERTIFICATE NO.BCO/03/01333 D ATED 31.03.2008, THE LD. AUTHORISED REPRESENTATIVE HEAVI LY RELIED ON DECISION OF BENGAL AMBUJA HOUSING DEVELOP MENT LTD. (SUPRA), BRIGADE ENTERPRISES P. LTD. (SUPRA), AIR DEVELOPER (SUPRA), SHETH DEVELOPERS (SUPRA) AND ALS O G.V.CORPORATION (SUPRA), WHEREIN DEDUCTION U/S.80IB (10) WAS DENIED AS SIZE OF SOME OF THE RESIDENTIAL UNITS EXCEEDED PRESCRIBED LIMIT AS LAID DOWN U/S.80IB(10) OF THE ACT. ABOVE MENTIONED DECISIONS ARE APPLICABLE IN TH EIR OWN SPHERE, I.E. ON POINT OF EXCESS AREA OF SOME OF THE FLATS WHICH HOLD GOOD IN ITS OWN SPHERE. HOWEVER, IN CASE BEFORE US, DEDUCTION U/S.80IB(10) OF THE ACT HAS BEEN REJE CTED ON THE GROUND THAT CONDITION OF COMPLETION OF PROJECT BEFORE THE DUE DATE I.E., 31.03.2008 AS LAID DOWN U/S.80IB(10) (C) OF THE ACT, HAS NOT BEEN COMPLIED BY ASSESSEE WHICH IS BASIC CONDITION FOR ALLOWABILITY OF DEDUCTION U/S.80IB(10 ) OF THE ACT. WE FIND THAT IN CASE OF JOHAR HASSAN ZOJWALLA (SUPRA), WHEREIN CONDITION OF COMPLETION AS LAID DOWN IN SEC TION 80IB(10)(A) COULD NOT BE COMPLIED WITH BECAUSE OF A STAY BEING GRANTED BY MRTP COURT. THUS FAULT OF NON COMP LETION OF CONSTRUCTION WAS NOT ATTRIBUTABLE TO ASSESSEE. I N CASE SUCH A CONTINGENCY EMERGES WHICH MAKES THE COMPLIAN CE WITH PROVISION IMPOSSIBLE, THEN BENEFIT BESTOWED ON AN ASSESSEE CANNOT BE COMPLETELY DENIED. SUCH LIBERAL INTERPRETATION SHOULD BE USED IN FAVOUR OF ASSESSEE WHEN HE IS INCAPACITATED IN COMPLETING PROJECT IN TIME F OR THE REASONS BEYOND HIS CONTROL. IN CASE BEFORE US, AS S TATED ON BEHALF OF ASSESSEE, THAT ASSESSEE SUBMITTED CERTAIN MODIFICATIONS/RECTIFICATIONS FOR TOP FLOORS OF BUIL DINGS. THE SAID MODIFICATION/RECTIFICATION COULD NOT BE COMPLE TED AS LOCAL AUTHORITY COULD NOT APPROVE THE MODIFICATION AS THEIR FILES HAVE BEEN TAKEN OVER BY CONCERN INTELLIGENCE 7 ITA NO.1837/PUN/2014 AY.NO.2010-11 DEPARTMENT FOR INVESTIGATION OF VIOLATION OF URBAN LAND CEILING ACT APPLICABLE TO LAND IN QUESTION AT RELEV ANT POINT OF TIME. THIS FACT HAS NOT BEEN DISPUTED ON BEHALF OF REVENUE. THUS, ASSESSEE WAS PREVENTED BY SUFFICIENT REASONABLE CAUSE WHICH COMPELLED THE IMPOSSIBILITY ON PART OF THE ASSESSEE TO HAVE COMPLETION CERTIFICATE IN TIME. IT IS SETTLED LEGAL POSITION THAT THE LAW ALWAYS GI VE REMEDY AND THE LAW DOES WRONG TO NO ONE. WE AGREE TO PROPO SITION PUT FORWARD BY LD. DEPARTMENTAL REPRESENTATIVE THAT PLAIN READING OF SECTION 80IB(10) OF THE ACT SUGGESTS ABO UT ONLY COMPLETION OF CONSTRUCTION AND NO ADJECTIVE SHOULD BE USED ALONG WITH THE WORD COMPLETION. THIS STRICT INTERPR ETATION SHOULD BE GIVEN IN NORMAL CIRCUMSTANCES. HOWEVER, I N CASE BEFORE US, ASSESSEE WAS PREVENTED BY REASONABLE CAU SE TO COMPLETE CONSTRUCTION IN TIME DUE TO INTERVENTION O F CID ACTION ON ACCOUNT OF VIOLATION OF PROVISIONS OF URB AN LAND CEILING ACT APPLICABLE TO LAND IN QUESTION. ASSESSE E WAS INCAPACITATED TO COMPLETE THE SAME IN TIME DUE TO R EASONS BEYOND HIS CONTROL. ASSESSEE SHOULD NOT SUFFER FOR SAME. THE REVISION OF PLAN IS VESTED RIGHT OF ASSESSEE WH ICH CANNOT BE TAKEN AWAY BY STRICT PROVISIONS OF STATUT E. THE TAXING STATUTE GRANTING INCENTIVES FOR PROMOTION OF GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY AND T HAT PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY. AT THE SAME TIME, RESTRICTIO N THEREON TOO HAS TO BE CONSTRUED STRICTLY SO AS TO ADVANCE T HE OBJECT OF PROVISION AND NOT TO FRUSTRATE THE SAME. THE PRO VISIONS OF TAXING STATUTE SHOULD BE CONSTRUED HARMONIOUSLY WITH THE OBJECT OF STATUE TO EFFECTUATE THE LEGISLATIVE INTENTION. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT ASSESSEE IS ENTITLED FOR BENEFIT U/S.80IB (10) OF T HE ACT IN RESPECT OF 173 FLATS COMPLETED BEFORE PRESCRIBED LI MIT. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 3.6.1 SIMILARLY IN A PUNE BENCH ITAT DECISION IN THE CASE OF ITO VS SATYANARAYAN RAMSWAROOP AGARWAL (2014) 16 3 TTJ (PUNE) 17, THE HONBLE PUNE ITAT HELD AS UNDER: . 8.2 IN VIEW OF ABOVE, IT IS CLEAR THAT ASSESSEE REC EIVED APPROVAL FOR C BUILDING FROM PMC VIDE CERTIFICATE D ATED 3 RD FEB., 2005 BUT WORK ON C BUILDING COULD NOT START S INCE ADDITIONAL FSI IN LIEU OF ROAD WIDENING WAS NOT REC EIVED FROM PMC. THE ASSESSEE COULD NOT PLAN THE WORK FOR C BUILDING SINCE ENGINEERS AND ARCHITECTS COULD NOT D ESIGN THE STRUCTURE OF BUILDING IN THE ABSENCE OF FSI. TH E DETAILS OF FOLLOW-UP DONE BY ASSESSEE WITH PMC HAVE BEEN DU LY APPRECIATED BY CIT(A). THE LEGISLATIVE INTENT READ THAT THE CLEAR PROVISIONS OF THE REQUISITE SECTION, DO NOT P ERMIT ANY PROPORTIONATE DEDUCTION UNDER S. 80-IB(10) OF THE A CT. HOWEVER, IN VIEW OF THE DECISION IN RAMSUKH PROPERT IES (SUPRA) AS DISCUSSED ABOVE, THE CIT(A) RIGHTLY ALLO WED THE PROPORTIONATE DEDUCTION IN RESPECT OF PROJECT COMPL ETED DURING THE IMPUGNED ASSESSMENT YEAR. THE PROVISIONS OF TAXING STATUTE SHOULD BE CONSTRUED HARMONIOUSLY WIT H THE OBJECT OF STATUTE TO EFFECTUATE THE LEGISLATIVE INT ENTION. UNDER THE CIRCUMSTANCES, PROPORTIONATE DEDUCTION UN DER S. 80-IB(10) OF THE ACT IS JUSTIFIED. ACCORDINGLY, THE ORDER OF 8 ITA NO.1837/PUN/2014 AY.NO.2010-11 CIT(A) ON THIS ISSUE NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME IN THE PRESENT CASE THE CONSTRUCTION OF THE PROJECT HAS THE SANCTIONED PLAN DATED 4-8-2006 AND FURTHER REVISED COMMENCEMENT DATED 18-11-2006, 3-2-2007, 13-2-2 008, 21-7- 2011 HAS BEEN TOTALLY COMPLETED BEFORE THE SPECIFIC DATE I.E. 31- 3-2012. THE CONSTRUCTION OF THE C WING HAS NOT ST ARTED TILL DATE AS THE REQUIRED FSI FOR CONSTRUCTION OF THE BUILDIN G C IS NOT AVAILABLE WITH THE APPELLANT FIRM AND WHICH WILL BE GIVEN IN LIEU OF AMENITY SPACE AND 9.0 METER DP ROAD TO BE SANCTI ONED BY THE LOCAL AUTHORITY. HOWEVER, THE PMC HAS SHIFTED 9 MTR . DP ROAD IN DEVELOPMENT PLAN OF BANER & BALEWADI AND ONLY ON FI NAL SANCTION OF DEVELOPMENT PLAN BY THE GOVT. OF MAHARA SHTRA THE PROCESS OF HANDING OVER OF THE AREAS OF AMENITY SPA CE AND DP ROAD WILL BE COMPLETED AND THE SAID DEVELOPMENT PLA N IS PENDING FOR SANCTION BEFORE STATE GOVT. HOWEVER, APPELLANT HAS COMPLETED THE CONSTRUCTION OF THE APPROVED, SANCTIO NED AND REVISED PLANS BY THE PMC. THUS THE CONSTRUCTION OF BUILDING C CANNOT BE COMPLETED BECAUSE THE FSI REQUIRED FOR TH E SAID CONSTRUCTION IS NOT ALLOWED BY PMC. THE AFORESAID I SSUE IS NOT WITHIN THE PURVIEW OF THE APPELLANT AND IN SUCH A C IRCUMSTANCE WHICH MAKES THE COMPLIANCE WITH THE PROVISIONS IMPO SSIBLE, THEN THE BENEFIT BESTOWED ON AN ASSESSEE CANNOT BE COMP LETELY DENIED AND, THEREFORE, ON THE FIRST ISSUE THE APPEL LANT BECOMES LIABLE FOR CLAIM OF DEDUCTION U/S 80IB(10) ON A PRO PORTIONATE BASIS. THE APPELLANT FOR THIS PROPOSITION HAS RELIE D ON A HOST OF JUDICIAL DECISIONS WHICH ARE BEING DISCUSSED IN SUC CEEDING PARAS. 3.7 THE SECOND ISSUE ON WHICH THE ASSESSING OFFICER FOUND THE APPELLANT TO HAVE VIOLATED THE PROVISION S AND CONDITIONS IS WITH RESPECT TO AREA OF THE 5 ROW HOU SES IN BUILDING F OF THE PROJECT WHERE THE SAME WAS FOUND TO BE EXCEEDING 1500 SQ FT. AS PER SEC 80IB(10)(C). THE ASSESSING OFFICER REFERRED THE MATTER TO THE GOVT. APPROVED VALUER WHO IN ITS REPORT DATED 4- 3-2013 SUBMITTED THAT THE BUILT-UP AREA OF THE FIVE ROW HOUSES IN BUILDING / WING F WAS MORE THAN 1500 SQ FT. THE APP ELLANT, HOWEVER, HAS POINTED OUT TO THE DEFINITION OF THE B UILT UP AREA GIVEN IN SEC 80IB(14)(A) WHEREBY BUILT UP AREA MEAN S THE INNER MEASUREMENT OF THE RESIDENTIAL UNITS AT THE FLOOR L EVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASED BY THE T HICKNESS OF THE WALLS, BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THE APPELLANTS CONTENTION THAT THE GOVT. APPROVED VALUER HAS TAKEN THE OUTER MEASUREMENT O F THE ROW HOUSE AND CALCULATED THE AREA OF THE ROW HOUSES WHI CH IS CONTRARY TO THE DEFINITION CONTAINED IN SEC 80IB(14 )(A) IS FOUND TO BE CORRECT AS ON PERUSAL OF THE REPORT OF THE VALU ER IT IS CLEARLY SEEN IN THE REPORT THAT THE VALUER HAS MENTIONED TH E OUTER MEASUREMENT OF THE ROW HOUSES IN THE VALUATION REP ORT SUBMITTED BY HIM. THE VALUATION REPORT SUBMITTED BY THE VALUE R AND AS ALSO CONTENDED BY THE APPELLANT INDICATES THAT THE DETAI LED WORKING OF THE CALCULATION HAS NOT BEEN SHOWN BY HIM WHICH CER TAINLY RAISES DOUBTS WITH RESPECT TO THE WORKING OF THE CORRECT A REA OF THE EACH ROW HOUSE. THE AREA AS CALCULATED BY THE GOVT. AUTH ORIZED VALUER AND THAT BY THE ARCHITECT OF THE APPELLANT IS AS UN DER: 9 ITA NO.1837/PUN/2014 AY.NO.2010-11 SR. NO. ROW HOUSE AREA AS PER ASSESSEE (SQ. FT.) AREA ACTUALLY MEASURED (SQ. FT.) 1 F1 1451 1919 2 F2 1495 1603 3 F3 1360 1534 4 F4 1421 1618 5 F5 1423 1632 IT IS FOUND THAT THERE IS ONE OR TWO TERRACE AREA E XCLUSIVELY FOR EACH ROW HOUSE. THE DETAILS ARE AS BELOW: SR. NO. ROW HOUSE TERRACE-1(SQ. FT.) TERRACE-2(SQ. FT.) TOTAL 1 F1 216.33 222.11 438.44 2 F2 90.18 - 90.18 3 F3 120.24 - 120.24 4 F4 128.12 - 128.12 5 F5 128.12 - 128.12 THE AUTHORIZED VALUER HAS ADDED THE AREA OF THE CAR PORCH, TERRACE AREA ABOVE PORCH, FORMED OPEN TO SKY TERRAC ES AREA ABOVE LIVING ROOM AND BEDROOM IN THE MEASUREMENT OF ROW H OUSE WHEREAS THE APPELLANTS ARCHITECT HAS EXCLUDED THE AFORESAID AREAS IN ITS CALCULATION FOR THE BUILT UP AREA OF T HE ROW HOUSES F1 TO F5. THUS, IF THE TERRACE AREA WHICH IS OPEN TO S KY IS EXCLUDED FROM CALCULATION OF AREA THE BUILT UP AREA, THE TOT AL AREA OF THE UNITS DO NOT EXCEED THE 1500 SQ FT LIMIT AS PER SEC 80IB(10)(C) IN RESPECT TO THREE UNITS. IT HAS BEEN THE CONTENTION OF THE APPELLANT THAT THE VALUER HAS WRONGLY INCLUDED THE AREA OF TH E TERRACES WHICH ARE OPEN TO SKY AND WHICH ARE TOP TERRACES WH ICH CANNOT FORM PART OF THE BUILT UP AREA AND WITHOUT THE SLA B FOR TOP TERRACE THE BUILDING CANNOT BE COVERED AND HENCE THE SAID A REA OUGHT NOT BE CONSIDERED IN THE DEFINITION OF BUILT UP AREA. T HE DEFINITION OF THE BUILT UP AREA U/S 80IB(14)(A) INCLUDES PROJECTI ON AND BALCONIES, BUT DOES NOT MENTION TERRACE AREA OPENIN G TO SKY WHICH THE APPELLANT HAS ALSO MENTIONED IN THE BUILD ING PLAN. THE TERM BALCONY AND PROJECTION ARE NOT DEFINED UND ER THE ACT. THE APPELLANTS CONTENTION THAT IF THE LEGISLATURE WANT ED TO INCLUDE TERRACE IN THE BUILT UP AREA, THE SAME WOULD HAVE B EEN SPECIFICALLY PROVIDED AND SINCE THE TERRACE HAS BEE N OMITTED WHILE BALCONY CONSIDERED THERE IS NO REASON FOR INC LUDING THE TERRACE IN BUILT UP AREA CERTAINLY HAS SOME FORCE. THE APEX COURT IN THE CASE OF CONTROLLER OF ESTATE DUTY VS V R KA NKASABAI, 89 ITR 251 HAS HELD THAT THE WORDS FOUND IN THE STATU TE MUST BE GIVEN THEIR NATURAL MEANING. 3.7.1 THE APPELLANT HAS DRAWN ATTENTION TOWARDS THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF COMMON WEALTH DEVELOPERS CD FOUNTAIN HEAD VS ACIT W HEREIN IT WAS HELD THE I SSUES BEFORE THE BENCH ARE - WHETHER THE AREA OF TH E REAR COURTYARD ENCLOSED BY WALLS OF A RESIDENTIAL U NIT IS TO BE TAKEN INTO ACCOUNT TO COMPUTE BUILT UP AREA FOR THE PURPOSE OF SEC 80IB(10) BENEFITS; WHETHER IN CASE T HERE IS NO CONSTRUCTION ACTIVITY ON THE AREA OF THE COURTYA RD WHICH IS OPEN TO THE SKY, IT CAN STILL BE INCLUDED TO COM PUTE THE 10 ITA NO.1837/PUN/2014 AY.NO.2010-11 BUILT-UP AREA U/S 80IB AND WHETHER THE TRIBUNAL CAN INQUIRE INTO AND GET MEASURED THE COURTYARD WHICH IS NOT INCLUDED IN THE BUILT-UP AREA AND WHICH IS NOT THE LIS BETWEEN THE PARTIES. AND THE VERDICT FAVOURS THE AS SESSEE. THUS, UNLESS AND UNTIL IT IS SHOWN THAT SOME CONSTR UCTION IS PUT UP THE AREA OF THE COURTYARD WHICH IS OPEN T O THE SKY CANNOT BE INCLUDED TO COMPUTE THE BUILT-UP AREA. TH E DEFINITION OF THE WORDS 'BUILT-UP AREA' WAS INTRODU CED BY THE FINANCE ACT OF 2004 W.E.F. 1.4.2005, WHICH IS N OT OTHERWISE APPLICABLE TO THE FACTS OF THE PRESENT CA SE, ALSO CLEARLY PROVIDES THAT THE BUILT-UP AREA WOULD MEAN THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE F LOOR LEVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASE D BY THE THICKNESS OF THE WALL BUT DOES NOT INCLUDE THE COMM ON AREA SHARED WITH OTHER RESIDENTIAL UNIT. IN SUCH CIRCUMS TANCES, THE BUILT-UP AREA IS TO BE WORKED OUT FROM THE WALL OF THE RESIDENTIAL UNIT. THE QUESTION OF EXTENDING IT TO M EAN THAT THE AREA WITHIN THE COMPOUND AROUND AN OPEN LAND IS ERRONEOUS. THE DIVISION BENCH OF THE MADRAS HIGH CO URT IN THE JUDGMENT REPORTED IN - 2012-TIOL-951-HC-MAD-IT IN THE CASE OF THE CIT, CHANNAI V/S M/S MAHALAKSHMI HOUSING HAS HELD THAT THE OPEN TERRACE AREA CANNOT FORM PART OF THE BUILT UP AREA; IN THE RESULT, THE ASSES SEE WOULD BE ENTITLED TO DEDUCTION U/S 80-IB(10) AND THAT THE ASSESSEE WOULD BE ENTITLED TO PROPORTIONATE RELIEF AS REGARDS THE UNITS HAVING BUILT UP AREA NOT MORE THAN 1500 SQUARE FEET. CONSIDERING THE RATIO LAID DOWN IN THE AFORESAID JUDGMENTS, WE FIND THAT THE AREA OF COURT YARD CANNOT BE INCLUDED TO CALCULATE THE BUILT-UP AREA I N TERMS OF SECTION 80- IB(10). TRIBUNAL WAS NOT JUSTIFIED TO C OME TO THE CONCLUSION THAT THE SAID AREA OF THE COURTYARD IS T O BE INCLUDED TO CALCULATE THE BUILT-UP AREA AND THEREBY HOLDING THAT THE RESIDENTIAL UNIT WAS MORE THAN 1500 SQUARE FEET WHICH WOULD DISENTITLE THE APPELLANT TO CLAIM SUCH DEDUCTION. THE CONTENTION OF THE COUNSEL APPEARING FOR 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 A ND 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 QUEST ION 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. 80IBALLOWABILITYASSESSEE ENTERED I NTO AN AGREEMENT M AND OTHERS, FOR JOINT DEVELOPMENT OF PROPERTY, CLAIMED DEDUCTION U/S 80-IBREJECTION OF CLAIM BY AO ON GROUND THAT ASSESSEE IS NOT AN OWNER OF PROPERTY, THUS, NOT ENTITLED TO CLAIM DEDUCTION U/S . 80- 11 ITA NO.1837/PUN/2014 AY.NO.2010-11 IB(10) AND BUILT UP AREA OF FLATS EXCEEDED CONDITIO NS PRESCRIBED U/S. 80-IB(10)(C)CIT(A) ALLOWED ASSESSE ES CLAIM OF DEDUCTIONTRIBUNAL HELD THAT OPEN TERRACE AREA INCLUDIBLE IN BUILT UP AREA HELD, OPEN TERRACE AREA CANNOT FORM PART OF BUILT UP AREA AND ASSESSEE WOUL D BE ENTITLED TO DEDUCTION U/S. 80-IB(10)FOR PURPOSE OF SECTION 80-IB(10) DEDUCTION , IT WAS NOT REQUIRED THAT ASSESSEE SHOULD BE OWNER OF PROPERTYAPPEAL FILED B Y REVENUE IS DISMISSED. IN PARA 7 OF ORDER IT WAS HELD THAT , AS FAR AS THE ISSUE IN RESPECT OF INCLUSION OF OPEN TERRACE AREA WITH THE BUILT UP AREA IS CONCERNED, THIS COURT HAD ALREADY HELD THE SAID ISSUE AGAINST THE REVENUE IN THE DECISION REND ERED IN T.C. NOS. 581, 1186 OF 2008 AND 136 OF 2009 CEEBROS HOTELS PVT LTD V. DEPUTY COMMISSIONER OF INCOME TAX DATED 19.10.2012 AND ACCORDINGLY, THE ORDER THE TRIBUNAL IS SET ASIDE. THE ASSESSEES APPEAL VIZ., T.C.(A).NO. 318 OF 2012 STANDS ALLOWED HOLDING THAT THE OPEN TERRACE AREA CANNOT FORM PART OF THE BUILT UP AREA, IN THE RESULT, THE ASSESSEE WOULD BE ENTITLED TO DEDUC TION U/S 80-IB(10) OF THE ACT. COMMENT ON GOVERNMENT VALUATION REPORT REGARDING AR EA OF RESIDENTIAL UNIT 3.7.3 THE CONTENTION OF THE APPELLANT THAT BALCONIES AND PROJECTIONS CAN BE INCLUDED IN THE DEFINITION O F BUILT-UP AREA ALSO FIND SUPPORT IN THE DECISION OF THE ITAT AHMEDABAD IN THE CASE OF SAFAL ASSOCIATES VS ITO ITA NO.520/A HD/2011 AND ACIT VS YUG CORPORATION ITA NO.2703/AHD/2009. IN THE CASE OF AMALTAS ASSOCIATES VS ITO (2011) 142 TTJ 849 (AHD)., THE ITAT WITH RESPECT TO THE INCLUSION OF T ERRACE IN THE BUILT-UP AREA - THE HEAD NOTE READS AS FOLLOWS: AS PER THE TERMS OF THE DEVELOPMENT AGREEMENT BETW EEN THE PARTIES, PLANNING, SANCTION OF PLAN, CONSTRUCTI ON WORK, DEVELOPMENT OF PROPERTY, LABOUR ENGAGEMENT ACTIVITI ES ARE TO BE CARRIED OUT BY THE ASSESSEE THERE WAS NO BAR ON THE ASSESSEE TO CONSTRUCT MORE FLATS OR UNITS THAN THAT ORIGINALLY STIPULATED IN THE AGR EEMENT ONCE THE PLAN WAS APPROVED BY THE MUNICIPAL AUTHORI TIES ON THE BASIS OF THE PAPERS SUBMITTED BY THE REAL OW NER, IT COULD BE DEEMED AS APPROVAL IN FAVOUR OF THE ASSESS EE, MORE SO, AS THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL THE WHOLE OF THE PROPERTYHENCE, THE OBJECTION OF T HE AUTHORITIES BELOW THAT THE ASSESSEE CONSTRUCTED 110 UNITS AS AGAINST 94 UNITS MENTIONED IN THE AGREEMENT IS N OT SUSTAINABLE IN LAWAS 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 P ROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH O THER RESIDENTIAL UNITSOPEN TERRACE IS OPEN TO SKY AND W OULD NOT BE PART OF THE INNER MEASUREMENT OF THE RESIDEN TIAL UNIT 12 ITA NO.1837/PUN/2014 AY.NO.2010-11 AT ANY FLOOR LEVELTHUS, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE ASSESSEES CLAIM BY TAKI NG THE OPEN TERRACE AS BALCONY/VERANDAHEXCLUDING SUCH OPE N 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 MATTE R IT IS NOTICED THAT OUT OF THE FIVE ROW HOUSES EVEN IF THE OUTER MEASUREMENT AREA AS TAKEN BY THE GOVT. APPROVED VA LUER IS TAKEN INTO ACCOUNT IT IS NOTICED THAT THE BUILT-UP AREA OF THREE OF THE ROW HOUSES VIZ. F1, F3 & F4 CLEARLY FALLS BELOW 1500 SQ. FT. AND THE OTHER TWO I.E. F2 AND F5 ARE MARGINALLY ABO VE THE LIMIT AS PROVIDED IN THE DEFINITION OF BUILT-UP AREA WITHOUT TAKING INTO ACCOUNT THE DIFFERENCE BETWEEN THE INNER MEASUREME NT AND THE OUTER MEASUREMENT. 3.8 FURTHER, IN GROUND OF APPEAL NO. 6 RAISED WITHOUT PREJUDICE TO GROUNDS NO. 1 TO 5 IT HAS BEEN CONTEND ED THAT THE CLAIM OF DEDUCTION U/S 80IB(10) SHALL BE TENABLE ON PRO RATA BASIS IN RESPECT OF BALANCE OF THE PROJECT IN RESPECT OF THOSE UNITS AND BUILDINGS WHICH SATISFIES THE CONDITIONS STIPULATED U/S 80IB(10) AND RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECIS IONS: 1. DCIT VS BRIGADE 119 TTJ 269 (BANG) 2. ITO VS AIR DEVELOPERS 122 ITD 125 (NAG) 3. SHETH DEVELOPERS 33 SOT 277 (MUM) 4. G.V. CORPORATION VS ITO 38 SOT 174 5. RAHUL CONSTRUCTION CO. VS ITO ITA NO. 1250/PN/2009 & ITA NO. 707/PN/2010 6. RUNWAL MULTIHOUSING PVT. LTD., ITA NO. 1015, 1016 A ND 1017/PN/2011 7. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS DCIT ITA NO. I595/KOL/2005 KOLKATTA TRIBUNAL. 8. VISHWAS PROMOTERS (P) LTD. VS ACIT & ORS (2013) 50 (I) TICL 274 (MAD) 9. DCIT VS EKTA HOUSING (P) LTD. (2011) 41 (II) ITCL 4 04 (MUM) 3.8.1 IN THE CASE OF BRIGADE ENTERPRISES (P) LTD. (SUPRA) , THE FACTS WERE THAT THE ASSESSEE FORMED A SINGLE PR OJECT BY NAME BRIGADE MILLENNIUM COMPRISING A TOTAL AREA OF 22 ACRES AND 19 GUNTAS IN SURVEY NOS.44, 45 AND 51/1 OF BANGALORE S OUTH TALUKA. THIS MACRO PROJECT COMPRISED CERTAIN HOUSIN G BLOCKS, COMMUNITY HALL ETC. AS ITS MICRO COMPONENTS. IT COM PRISED, AMONG OTHER THINGS, 5 RESIDENTIAL BLOCKS BY NAME MAYFLOWE R, CASSIA, MAGNOLIA, JACARANDA AND LABURNUM. APPROVAL HAD BEEN OBTAINED FROM BDA ON 24-5-2002. THE ASSESSEE TOOK T WO BLOCKS SEPARATELY, VIZ., MAYFLOWER AND CASSIA, AND CLAIMED THE BENEFIT OF DEDUCTION U/S.80IB OF THE ACT IN RESPECT OF THE SAID TWO BLOCKS, CLAIMING THEM TO BE SEPARATE PROJECTS, AS ONLY THE SAID TWO BLOCKS COULD FULFILL THE REQUIREMENTS PRESCRIBED U/S.80IB OF THE ACT. THE AO, HOWEVER, DENIED THE CLAIM OF DEDUCTION U/S.80IB TREATING BRIGADE MILLENNIUM AS ONLY ONE PROJECT. THE TRIBUNA L, AFTER CONSIDERING THE FACTS, OBSERVED THAT THE USE OF THE WORDS 13 ITA NO.1837/PUN/2014 AY.NO.2010-11 RESIDENTIAL UNITS MEANS THAT DEDUCTION SHOULD BE COMPUTED UNIT-WISE. THEREFORE, IF A PARTICULAR UNIT SATISFIE S THE CONDITIONS OF SEC.80IB, THE ASSESSEE IS ENTITLED FOR DEDUCTION. T HEREFORE, 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 TH E BUILT UP AREA OF THE RESIDENTIAL UNITS BY APPLYING THE DEVELOPMEN T CONTROL REGULATION, 2000 AND TO ALLOW PROPORTIONATE DEDUCTI ON U/S 80IB(10) IF HE FINDS THAT THE BUILT UP AREA OF SOM E 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 R ESPECT OF THE FLATS WHICH HAVE BUILT-UP AREA LESS THAN 1000 SQ. F T., HAS TO BE WORKED OUT ON PRO RATA BASIS AO ACCORDINGLY DIREC TED TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW THE DEDUCTION O N PRO RATA BASIS IN RESPECT OF FLATS IN A PROJECT. 3.8.4 IN THE CASE OF G.V. CORPORATION VS. ITO (SUPR A), THE ASSESSEE, AT THE REQUEST OF PURCHASERS, JOINED SOME OF ITS FLAT/RESIDENTIAL UNITS, AS A RESULT OF WHICH BUILT UP AREA OF THOSE FLATS EXCEEDED 1,000 SQ. FT. DEDUCTION WAS DENIED U /S.80IB(10) ON THE GROUND THAT THE AFORESAID ACT OF THE ASSESSE E RESULTED IN VIOLATION OF THE PROVISIONS OF SEC.80IB(10). THE TR IBUNAL, FOLLOWING THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE C ASE OF BRAHMA ASSOCIATES VS. JT. CIT (2009) 119 ITD 255, HELD THA T DEDUCTION COULD NOT BE TOTALLY DENIED AND IT WOULD BE ELIGIBL E FOR PROPORTIONATE DEDUCTION 3.8.5 I N THE CASE OF RAHUL CONSTRUCTION CO. (CITED SUPRA) IS RELEVANT AND WHICH HAS HELD AS UNDER: 9. THERE IS NO DISPUTE ON FROM MATERIAL FACTS THAT OUT OF 16 BUILDINGS IN THE HOUSING PROJECT OF THE ASSES SEE ONLY 11 BUILDINGS WERE COMPLETED WITHIN THE PRESCRIBED T IME- LIMIT UP TO 31-3-2008. THE LAY OUT PLAN IN RESPECT O F ENTIRE COMPLEX WAS SANCTIONED BY PMC VIDE ORDER DATED 3-4- 2003 AND THE BUILDING PLAN WAS SANCTIONED VIDE COMMENCEMENT CERTIFICATE DATED 29-4-2003. ADMITTEDL Y, THE TERM 'HOUSING PROJECT' HAS NOT BEEN DEFINED IN THE ACT BUT IN THE CONTEXT OF DEDUCTION UNDER SECTION 80-IB (10) AN EXPLANATION HAS BEEN PROVIDED BELOW CLAUSE (A) TO S UB- SECTION (10 ) TO SECTION 80-1B. THE VERY READING OF ABOVE EXPLANATION (I), MAKES IT CLEAR THAT FOR THE ELIGIB ILITY OF THE DEDUCTION PROVIDED UNDER SECTION 80-IB(10), THE DAT E ON WHICH BUILDING PLAN OF A HOUSING PROJECT HAS BEEN F IRSTLY APPROVED BY THE LOCAL AUTHORITY WILL BE TREATED AS APPROVAL IN RESPECT OF THE HOUSING PROJECT. WHEN EXPLANATION (II) IS READ WITH EXPLANATION (I), IT MAKES CLEAR THAT THE DATE OF COMPLETION OF CONSTRUCTION OF SUCH HOUSING PROJECT WOULD BE TAKEN WHEN COMPLETION CERTIFICATE HAS BEEN ISSUED B Y THE LOCAL AUTHORITY. IN OTHER WORDS, IN CLAUSE (I) OF T HE EXPLANATION, IT HAS BEEN MADE CLEAR THAT DATE OF FI RST APPROVAL OF HOUSING PROJECT BY THE LOCAL AUTHORITY WOULD BE 14 ITA NO.1837/PUN/2014 AY.NO.2010-11 TAKEN AS STARTING POINT OF THE HOUSING PROJECT AND IN CLAUSE NO. (II), IT HAS BEEN MADE CLEAR THAT THE DATE OF C OMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT ISSU ED BY LOCAL AUTHORITY WILL BE CONSIDERED TO COMPUTE THE PRESCRI BED TIME-LIMIT FOR VERIFICATION OF ELIGIBILITY OF ASSESS EE FOR THE CLAIMED DEDUCTION. IN VIEW OF THE ABOVE EXPLANATION , APPROVAL OF THE HOUSING PROJECT AND APPROVAL OF BUI LDING PLAN ARE TWO DIFFERENT CONCEPTS . THUS PART A OF THE PROJECT COMPRISING OF BUILDING A 1 AND A2 IS A SEPARATE PROJECT AND WHICH SATISFIES ALL THE C ONDITIONS 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 PRE CEDENTS OF DIFFERENT HIGH COURTS AND CO-ORDINATE BENCHES, THE PUNE TRIBUNAL HELD THAT 21.3 IN VIEW OF THE ABOVE DECISIONS, WE ARE OF TH E CONSIDERED OPINION THAT WHATEVER PORTION COMPLETED BY THE ASSESSEE WHICH SATISFIES THE CONDITIONS PRESCRI BED U/S.80IB(10) IS ELIGIBLE FOR DEDUCTION. THE VARIOUS DECISIONS RELIED ON BY THE REVENUE ARE DISTINGUISHABLE AND NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE ACC ORDINGLY 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 T HIS 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 AR EA OF THIS HOUSING PROJECT WAS 346599 SQ. FT. THIS PROJECT CONTAINED 1 50 RESIDENTIAL UNITS WITH A BUILT UP AREA OF INDIVIDUAL UNIT OF LE SS THAN 1500 SQ.FT. AGGREGATING TO 169500 SQ.FT. THE REMAINING B UILT UP AREA OF 187593 SQ. FT. WAS CONSUMED BY OTHER RESIDENTIAL UN ITS WHEREIN THE SIZE OF INDIVIDUAL UNIT EXCEEDED 1500 SQ. FT. O F BUILT UP AREA. UNDER THESE CIRCUMSTANCES, THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80IB(10) WITH REFERENCE TO THE PROFIT ATTRIBUTA BLE TO THE BUILT UP AREA WHICH WAS OCCUPIED BY RESIDENTIAL UNITS HAV ING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQ.FT. THE A .O. REJECTED THE CLAIM OF THE ASSESSEE U/S.80IB(10), INTER ALIA, OBS ERVING THAT AS PER THE TERMS OF SEC.80IB(10), ALL THE UNITS COMPRI SED IN THE HOUSING PROJECT SHOULD HAVE HAD INDIVIDUAL FLAT SIZ E OF LESS THAN 1500 SQ.FT. IN THE BACKDROP OF THESE FACTS, THE TRI BUNAL OBSERVED THAT THE PROVISIONS LAID DOWN IN SEC.80IB(10) DO NO T SPEAK REGARDING SUCH DENIAL OF DEDUCTION IN CASE OF PROFI T FROM A HOUSING COMPLEX CONTAINING BOTH THE SMALLER AND LAR GE RESIDENTIAL UNITS AND SINCE THE ASSESSEE HAD CLAIMED ONLY DEDUC TION ON ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLING A LL THE CONDITIONS AS LAID DOWN U/S.80IB(10), THE DENIAL OF CLAIM BY T HE A.O. WAS NOT JUSTIFIED. 15 ITA NO.1837/PUN/2014 AY.NO.2010-11 3.8.8 IN VISHWAS PROMOTERS (P) LTD VS ACIT & ORS (2013) 50(I) TICL - 274 (MAD) IT WAS HELD THAT THE ASSESSE E WAS ENTITLED TO CLAIM DEDUCTION IN RESPECT OF ALL THE BLOCKS FOR MING PART OF THE PROJECT CALLED AGRINI AND VAJRA, BUT TO THE EXTENT OF EACH OF THE BLOCKS SATISFYING THE CONDITIONS U/S 80IB(10) OF T HE ACT AND THE ASSESSEE WOULD BE ENTITLED TO THE RELIEF ON A PROPO RTIONATE BASIS. SIMILAR VIEW WAS ALSO TAKEN BY THE MADRAS HIGH COUR T IN THE CASE OF CIT VS ARUN EXCELLO FOUNDATION (P) LTD (2013) 212 TAXMAN 342 (MAD) WHEREIN IT WAS HELD THAT IN A GIV EN CASE WHEN THE HOUSING PROJECT @ 100% RESIDENTIAL UNITS SATIS FIES OTHER CLAUSES (A) AND (B) AND THE BUILT UP AREA GIVEN UND ER CLAUSE (C) OF SEC 80IB(10) OF THE ACT, THERE WOULD BE NO DIFFICU LTY FOR THE REVENUE TO GRANT THE DEDUCTION. THE QUESTION BECOME S A LITTLE COMPLICATED WHEN 100% RESIDENTIAL HOUSING PROJECT H AS BUILT UP AREA OF MIXED NATURE WHILE FEW OF THE UNITS MAY SAT ISFY THE CRITERIA OF THE BUILT UP AREA OF LESS THAN 1500 SQ. FT, THERE MAY BE UNITS WHICH HAVE BUILT UP AREA CROSSING THE LIMIT AS SPECIFIED IN CLAUSE (A) OF SEC 80IB(10) OF THE ACT. IN SUCH EVEN T ON A READING OF THE PROVISION, IT IS HELD THAT THE ASSESSEE WOULD N OT BE ENTITLED TO HAVE THE BENEFIT OF 100% ABSOLUTE DEDUCTION U/S 80 IB(10) OF THE ACT IN RESPECT OF THE ENTIRE PROJECT, BUT WOULD BE ENTITLED TO PRO RATA DEDUCTION ON THE UNITS SATISFYING THE CONDITIO NS... 3.8.9 IN DCIT VS EKTA HOUSING (P) LTD (2011) 41 (II) ITCL 404 (MUM) IT WAS HELD THAT IN CASES CERTAIN RESIDE NTIAL HOUSE HAS BUILT UP AREA IN EXCESS OF 1500 SQ.FT, THE ASS ESSEE WOULD NOT LOSE THE TOTAL EXEMPTION U/S 80IB(10) IN ITS ENTIRE TY BUT WILL LOSE THE PROPORTIONATE EXEMPTION U/S 80IB(10). DEDUCTI ON U/S 80IB(10) ON PRO RATE BASIS WAS THEREFORE ALLOWABLE. THUS IN VIEW OF THE ABOVE FACTS, THE RATIO OF THE J UDICIAL DECISIONS AND THE APPELLANT HAVING SATISFIED THE OTHER CONDIT ION AS STIPULATED U/S 80IB(10) SUCH AS REGARDING THE AREA OF THE PLOT HAVING NO COMMERCIAL AREA THE APPELLANT GETS ENTITL ED TO THE DEDUCTION U/S 80IB(10) ON PRO RATA BASIS WITH RESPE CT 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 OR DER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND RELIED ON THE VARIOUS DECISIONS CITED IN THE ORDER OF LD. CIT(A). HE THUS SUPPORTED THE ORDER O F LD. CIT(A). 16 ITA NO.1837/PUN/2014 AY.NO.2010-11 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ALLOWING DEDUCTION U/S 80IB(10) OF THE ACT. THE DEDUCT ION U/S 80IB(10) WAS DENIED BY AO MAINLY FOR TWO REASONS. 1 ) THAT THE PROJECT WAS INCOMPLETE AND 2) THE AREA OF 5 ROW HO USES THAT WERE CONSTRUCTED WAS MORE THAN 1500 SQ.FT. WITH RESPE CT TO NON-COMPLETION OF PROJECT, NAMELY BUILDING C AND THERE FORE DENYING THE DEDUCTION, WE FIND THAT LD.CIT(A) HAS GIVEN A FIND ING THAT BUILDING C COULD NOT BE COMPLETED BECAUSE THE REQ UIRED FSI FOR CONSTRUCTION WAS NOT SANCTIONED / ALLOWED BY PMC AND THAT NO PENDING COMPLIANCE REMAINED ON THE PART OF THE ASSESSEE. HE HAS FURTHER NOTED THAT WHEN THE COMPLIAN CE OF PROVISION HAD BECOME IMPOSSIBLE ON THE PART OF THE ASSESS EE THE CLAIM OF DEDUCTION COULD NOT BE DENIED AND FOR WHICH HE PLA CED RELIANCE ON THE DECISION OF PUNE TRIBUNAL IN THE CASE OF M/S.RAMSUKH PROPERTIES VS. DCIT ORDER DT. 25.07.2012. H E HAD ALSO RELIED ON DECISION OF PUNE TRIBUNAL IN THE CASE OF I TO VS. SATYANARAYAN RAMSWAROOP AGARWAL REPORTED IN (2014) 163 TTJ 0017 (PUNE) AND OTHER DECISIONS. HE HAS FURTHER GIVE N A FINDING THAT THE CONSTRUCTION OF THE PARK LAND WHICH WA S 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 ASSESSE E WAS ALLOWABLE ON A PROPORTIONATE BASIS. WITH RESPECT TO THE VIOLATION OF PROVISIONS OF THE ACT ON ACCOUNT OF THE AREA O F 5 ROW HOUSES BEING IN EXCESS OF 1500 SQ.FT., HE HAS GIVEN A FINDING THAT GOVERNMENT APPROVED VALUER HAD TAKEN THE OUTER 17 ITA NO.1837/PUN/2014 AY.NO.2010-11 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 AUTHORIZ ED VALUER HAD ADDED THE AREA OF CAR PORCH, TERRACE ABO VE 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 TERRAC E, LD. CIT(A) HAD RELIED ON THE DECISIONS OF HONBLE HIGH COURT IN THE CASE OF M/S. COMMONWEALTH DEVELOPERS CD FOUNTAIN HEAD VS . CIT FOUNDATION VS. ACIT., REPORTED IN 2014(4) TMI 222 (BO M) AND THE DECISION IN THE CASE OF CIT VS. MAHALAKSHMI HOUSING (2012) TIOL 951 HC (MAD) AND OTHER TRIBUNAL DECISIONS. BEFORE US REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A) NOR HAS PLACED ANY CON TRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACT S, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 13 TH JANUARY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER % / ACCOUNTANT MEMBER PUNE; ! DATED : 13 TH JANUARY, 2017. YAMINI 18 ITA NO.1837/PUN/2014 AY.NO.2010-11 ) * +',- .-' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. COMMISSIONER OF INCOME TAX-II (A), PUNE. COMMISSIONER OF INCOME TAX-II, PUNE.. #$% &&'(, * '(, / DR, ITAT, B PUNE; %+, - / GUARD FILE )! / BY ORDER, // //// // TRUE COPY // T // // TRUE // //COPY // // TRUE COPY // ////// . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.