ITO, Pune V. Paranjape Schemes & Associates, Shri Krishna Kunj, Pune

ITA 2404/PUN/2012

• Counselvise Citation: 240424514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Valuation report
• Section: 80IB; 131; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2404/PN/2012 (ASSESSMENT YEAR 2004-05) ITO, WARD-3(1), PUNE .. APPELLANT VS. PARANJAPE SCHEMES & ASSOCIATES, SHRI KRISHNA KUNJ, 49/2, ERANDWANA, 112/2, ANAND COLONY, PUNE 411004 .. RESPONDENT PAN NO.AAAAP1557C ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI P.S. NAIK DATE OF HEARING : 09-10-2014 DATE OF PRONOUNCEMENT : 02-12-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 31-07-2012 OF THE CIT(A)-II, PUNE RELAT ING TO ASSESSMENT YEAR 2004-05. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN AOP AND IS ENGAGED IN THE BUSINESS OF DEVELOPERS AND BU ILDERS. IT FILED ITS RETURN OF INCOME ON 30-10-2004 DECLARING NIL IN COME AFTER CLAIMING DEDUCTION OF RS.2,24,44,975/- U/S.80IB(10) OF THE INCOME TAX ACT. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF DEDUCTION 2 U/S.80IB(10) OF THE INCOME TAX ACT. FROM THE VARIO US DETAILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT THE MAX IMUM BUILT UP AREA OF SOME OF THE FLATS EXCEEDED THE PERMISSIBLE LIMIT OF 1500 SQ.FT. HE NOTED THAT ROW HOUSE NOS.3 & 4 WERE INTE R CONNECTED WITH EACH OTHER AND THEREFORE THE SAME HAS TO BE CO NSIDERED AS ONE RESIDENTIAL UNIT AND THE AGGREGATE AREA OF THE SAME WAS MORE THAN 1500 SQ.FT. HE FURTHER NOTED THAT THE ASSESSEE HAS NOT CONSTRUCTED ANY FLAT BUT INSTEAD HAS CONSTRUCTED 30 ROW HOUSES IN THE PROJECT (ROLLING HILLS). ON PHYSICAL VERIFICATION OF THESE ROW HOUSES, IT WAS NOTED THAT THE ASSESSEE HAS CONSTRUCTED A BIG B UNGALOW FOR THE OWNER OF THE LAND, THE AREA OF WHICH IS MORE THAN 1 500 SQ.FT. IN ADDITION, THERE ARE 5 INSTANCES WHERE THE AREA OF R ESIDENTIAL UNIT IS MORE THAN 1500 SQ.FT, THE DETAILS OF WHICH ARE AS U NDER : UNIT NO. NAME OF PURCHASER BUILT UP AREA (SQ.FT.) TOTAL AREA (SQ.FT.) 1 .1 VISPUTE PANKAJ SUDHAKAR 729 1458 1.2 VISPUTE PANKAJ SUDHAKAR 729 10 PADMANABHAN PREETH 1358 2208 11.1 ADVANI TIRATH JHAMATMAL 850 21.1 OZA SNEHAL BHAVESH 908 1557 21.2 OZA SNEHAL BHAVESH 649 22.1 PATIL RANJIT BABURAO 983 1808 22.2 PATILRANJIT BABURAO 825 30.1 APTE NEERAJ DILIP 850 1488 30.2 APTE REKHA DILIP 638 2.1 THE AO REFERRED TO THE STATEMENT OF ONE SHRI CH ITRAVANSHI RAJAT WHO HAS PURCHASED RESIDENTIAL UNIT NO.4. SIM ILARLY, SHRI SHARAD VARMA HAS PURCHASED RESIDENTIAL UNIT NO.3 WH OSE STATEMENTS WERE RECORDED U/S.131 OF THE I.T. ACT. ON THE BASIS OF THE ABOVE FINDING, THE AO ISSUED A SHOW CAUSE NOTIC E TO THE 3 ASSESSEE, THE DETAILS OF WHICH ARE AS UNDER : 'IN ADDITION TO THE DETAILS OF ROWHOUSE NUMBERS MENTIO NED IN THIS OFFICE SHOW CAUSE DID. 29.11.2006, THERE ARE SOME MORE INSTANCES WHERE TWO ROW HOUSE HAVE BEEN JOINED TO CONST RUCT A BIGGER RESIDENTIAL UNIT HAVING AREA MORE THAN 1500 SQ . FT. ONE SUCH EXAMPLE IS ROW HOUSE NO. 3 AND ROW HOUSE NO. 4. A STATEMENT OF SHRI. CHITRAVANSHI RAJAT WAS RECORDED U /S. 131 OF I. T.ACT 1961 ON 7.12.2006. A COPY OF THE STATEMENT IS E NCLOSED WITH THIS LETTER. IN ANSWER TO QUESTION NO. 2,3,4 AND 5 OF THE STATEMENT, SHRI. CHITRAVANSHI RAJAT HAS INFORMED THAT HE HAS PURC HASED ROW HOUSE NO. 4 IN ROLLING HILLS I.E. THE SCHEME CONSTRUCTE D BY YOU. THE TOTAL AREA OF ROW HOUSE NO. 4 PURCHASED BY SHRI. CHITRAVANSHI RAJAT, AS PER AGREEMENT IS 1485 SQ.FT. IN ADDITION TO ROW HOUSE NO. 4, THE BROTHER OF SHRI. CHITRAVANSHI RAJAT WHICH IS N AMED SHRI. SHARAD VARMA HAD ALSO PURCHASED ROW HOUSE NO. 3 IN YO UR SCHEME 'ROLLING HILLS'. SHRI. CHITRAVANSHI RAJAT HAS IN FORMED THAT ROW HOUSE NO. 3 AND 4 ARE CONNECTED FROM INSIDE WHICH MEANS THAT IT IS A SINGLE RESIDENTIAL UNIT. HE HAS FURTHER IN FORMED THAT THESE ROW HOUSES HAVE BEEN CONNECTED BY THE BUILDER DU RING THE CONSTRUCTION ITSELF AND THE ROW HOUSES WERE CONNECTED A T THE TIME OF POSSESSION ITSELF. THIS ALSO CONFIRMS THAT YOU HAVE CONSTRUCTED MANY RESIDENTIAL UNITS WHICH DO NOT FULFI LL THE REQUIREMENT SPECIFIED U/S. 80IB(10) (C). PLEASE GIVE Y OUR EXPLANATION ON THE ABOVE.' 2.2 IN RESPONSE TO THE ABOVE, IT WAS REPLIED BY THE ASSESSEE THAT THE 2 RESIDENTIAL UNITS WERE PURCHASED BY SEPARATE AGREEMENTS BY THE PURCHASERS AND THESE UNITS WERE JOINED BY THE P URCHASERS SUBSEQUENTLY. IT WAS SUBMITTED THAT THE PROPERTY T AX ASSESSMENT BY PMC FOR THESE ARE SEPARATE. FURTHER, THERE ARE SEPARATE ELECTRICAL METERS AND SEPARATE GAS CONNECTIONS. TH E ASSESSEE ALSO FILED AN AFFIDAVIT OF SHRI CHITRAVANSHI RAJAT ACCOR DING TO WHICH HE WAS IN A CONFUSED MIND AT THE TIME OF RECORDING STA TEMENT U/S.131 AND HAS GIVEN THE ANSWERS AS PER HIS IMPRESSIONS AN D BELIEFS WITHOUT CHECKING THE DOCUMENTS. IT WAS STATED THAT JOINING OF THE UNITS WAS ACTUALLY DONE BY SHRI SHARAD VARMA, BROTH ER OF SHRI CHITRAVANSHI RAJAT 3 YEARS BACK AND THEREFORE SHRI CHITRAVANSHI 4 RAJAT GAVE THE ANSWERS IN THE STATEMENT IN A CASUAL MANNER. THE ASSESSEE ALSO SUBMITTED LETTERS FROM 2 OTHER UNIT H OLDERS SHRI DILIP APTE, UNIT NOS. 30.1 + 30.2 AND SHRI RANJEET BABURA O PATIL UNIT NOS. 22.1 + 22.2 WHEREIN THEY HAVE STATED THAT THEY HAVE JOINED THE UNITS AFTER TAKING POSSESSION FOR THEIR COMFORT AND CONVENIENCE. 3. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. SO FAR AS THE CONTENTION OF THE ASSESSEE REGARDING THE SEPARATE PURCHASE AGREEMENTS, SEPARAT E GAS CONNECTIONS, SEPARATE ELECTRICAL METERS ETC., ARE C ONCERNED, HE NOTED THAT ALL THESE THINGS ARE RELATED TO THE OWNE RSHIP AND USE OF UNITS AFTER TAKING POSSESSION AND THEREFORE ARE NOT RELEVANT. WHAT IS RELEVANT FOR SECTION 80IB(10) IS TO EXAMINE WHET HER THE ASSESSEE HAS CONSTRUCTED ALL THE RESIDENTIAL UNITS HAVING B UILT UP AREA OF LESS THAN 1500 SQ.FT. FROM THE VARIOUS DETAILS FUR NISHED BY THE ASSESSEE, HE OBSERVED THAT SOME OF THE UNITS CONSTR UCTED BY THE ASSESSEE HAVE THE BUILT UP AREA OF MORE THAN 1500 S Q.FT., THE DETAILS OF WHICH ARE AS UNDER : UNIT NO. PURCHASER BUILT UP AREA SQ.FT. TOTAL AREA SQ.FT. 10 PADMANABHAN PREETH 1358 2208 11.1 ADVANI TIRATH JHAMATMAL 850 21.1 OZA SNEHAL BHAVESH 908 1557 21.2 OZA SNEHAL BHAVESH 649 3. VARMA SHARAD 1470 2940 4. CHITRAVANSHI RAJAT 1470 3.1 RELYING ON VARIOUS DECISIONS THE AO NOTED THAT THE ASSESSEE HAS BUILT RESIDENTIAL UNITS HAVING BUILT UP AREA OF MORE THAN 1500 5 SQ.FT. WHICH IS MAXIMUM LIMIT PRESCRIBED U/S.80IB(1 0)(C) OF THE I.T. ACT AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE I.T. ACT. HE ACCORDI NGLY REJECTED THE CLAIM OF DEDUCTION U/S.80IB(10) MADE BY THE ASS ESSEE. 4. BEFORE THE CIT(A) THE ASSESSEE MADE ELABORATE SU BMISSIONS. IT WAS SUBMITTED THAT THE TWO UNITS 10 AND 11.1. OW NED BY MR. PADMANABHAN PREETH AND ADVANI TIRATH JHAMATMAL ARE UNRELATED CUSTOMERS AND THE AFORESAID TWO UNITS ARE NOT CONNE CTED AND ARE SEPARATE UNITS AND THAT EVEN THE COMBINED BUILT UP AREA WAS LESS THAN 1500 SQ.FT AS PER THE PMC DEFINITION. REGARDIN G UNIT NO. 21.1 AND 21.2 OWNED BY OZA SNEHAL BHAVESH IT WAS SUBMITT ED THAT THE BUILT UP AREA AS PER THE DEFINITION GIVEN AS PER PM C REGULATIONS IS ONLY 1086.95 SQ.FT. REGARDING UNITS NO. 3 & 4 OWNED BY SHARAD VARMA AND CHITRAVANSHI RAJAT IT WAS STATED THAT THE TWO UNITS WERE PURCHASED UNDER SEPARATE AGREEMENTS, THOUGH THE TWO WERE REAL BROTHERS. IT WAS FURTHER CONTENDED THAT THE TWO RO W HOUSES WERE SEPARATE UNITS HAVING SEPARATE PROPERTY TAX BILLS A ND SEPARATE ELECTRICITY METERS AND ALSO HAVING TWO SEPARATE EN TRANCES AND ONE COMMON WALL SEPARATING THE TWO UNITS. IT WAS SUBMI TTED THAT THE UNIT HOLDERS AFTER TAKING POSSESSION OF THE UNITS H AVE PUT A SMALL DOOR IN THE COMMON WALL FOR CONVENIENCE OF THEIR OL D PARENTS. HOWEVER, THE IDENTITY OF TWO INDEPENDENT RESIDENTIA L UNITS WERE MAINTAINED AS BOTH THE UNITS HAD BEEN CONCEPTUALIZE D, PLANNED AND EXECUTED AS TWO SEPARATE RESIDENTIAL UNITS AND TH EY HAD TWO 6 INDEPENDENT KITCHEN CUM DINING ROOM AND SEPARATE GA S CONNECTIONS. IT WAS SUBMITTED THAT THERE IS A SUBST ANTIAL COMPLIANCE OF THE PROVISIONS OF SEC. 80IB(10) OF TH E IT. ACT, 1961 AND THEREFORE THE DEDUCTION SHOULD BE ALLOWED. 4.1 IN A WITHOUT PREJUDICE SUBMISSION IT WAS STATED THAT THE PROVISIONS IN A TAXING STATUE GRANTING INCENTIVES F OR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALL Y AND IN VIEW OF THE RATIO OF THE DECISION OF THE APEX COURT IN T HE CASE OF BAJAJ TEMPO LTD VS CIT (1992) 196 ITR 188 (SC), THE DEDUC TION U/S 80IB(10) WAS ALLOWABLE. THE ASSESSEE HAS ALSO SUBMI TTED IN WITHOUT PREJUDICE TO THE ABOVE SUBMISSION THAT PRO- RATA DEDUCTION BE ALLOWED ON THE ELIGIBLE AND QUALIFYING RESIDENTI AL UNITS. 4.2 REGARDING THE BUILT UP AREA OF ROW HOUSE NO. 18 , THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND SUBMI TTED THAT THE AREA OF THE RESIDENTIAL UNIT CALCULATED BY THE VALU ER APPOINTED BY THE ASSESSEE AOP WAS AT 1377.55 SQ.FT AS AGAINST 18 55.95 WORKED OUT BY MR. KHANDAGALE, THE VALUER APPOINTED BY THE ASSESSING OFFICER. 4.3 IT WAS ARGUED THAT THE DEFINITION OF THE BUILT UP AREA WAS NOT AVAILABLE DURING A.Y. 2004-05 AND, THEREFORE, I N ABSENCE OF ANY GUIDELINE UNDER THE IT. ACT, THE ASSESSEE HAD A DOPTED THE DEFINITION AVAILABLE AS PER THE LOCAL AUTHORITY I.E . PMC AND AFTER THE INTRODUCTION OF THE DEFINITION OF THE BUILT UP AREA W.E.F. 1-4- 7 2005, THE SAME COULD NOT BE APPLIED RETROSPECTIVELY AS THE ASSESSEE CANNOT BACK TRACK OR REWIND THE PLANNING. IT WAS AC CORDINGLY CONTENDED THAT THE DEFINITION OF THE BUILT UP AREA AVAILABLE AT THE TIME OF PLANNING HAS TO BE CONSIDERED FOR 80IB(10) PURPOSE. IT WAS THUS CONTENDED THAT AFTER APPLYING THE DEFINITION O F THE BUILT UP AREA AS PER THE PMC GUIDELINES AND THE AREA OF THE UNITS RECALCULATED, THE SAME WORKED OUT BELOW 1500 SQ.FT. IT WAS SUBMITTED THAT THE DEFINITION OF THE BUILT UP AREA IN SEC. 80IB(10) INSERTED BY THE FIN.(NO. 2) ACT, 2004 W.E.F 1-4-200 5 IS NOT RETROSPECTIVE AND, THEREFORE, THE DEFINITION OF THE 'BUILT UP AREA' AS PER THE DEVELOPMENT CONTROL RULES OF PMC WILL PREVA IL. IT WAS ARGUED THAT THE COMPLETION CERTIFICATE OF ALL THE U NITS AND SPECIALLY THOSE DISPUTED BY THE ASSESSING OFFICER VIZ. UNIT N O. 1.1 AND 1.2, 11.1, 11.2, UNIT NO. 18, UNIT NO. 21.1 AND 21.2, 22 .1 AND 22.2, UNIT NO.30.1 AND 30.2 HAD BEEN ISSUED ON 27-3-2003 WHICH IS PRIOR TO THE INTRODUCTION AND PASSING OF THE FINANCE (NO. 2) ACT, 2004. IT WAS ARGUED THAT IT IS THE SETTLED PRINCIPLE IN LAW THAT STATUTE CANNOT IMPOSE CONDITION RETROSPECTIVELY WHICH IS IMPOSSIBL E TO COMPLY. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING JUDIC IAL DECISIONS IN SUPPORT OF ITS CLAIM: I) ITO VS AIR DEVELOPERS (2009) 123 TTJ (NAG) 959 II) ARUN EXCELLO FOUNDATIONS (P) LTD VS ACIT (2007 ) 108 TTJ (CHENNAI) 71 III) ACIT VS SHETH DEVELOPERS (P) LTD (2009) 33 SOT 277 (MUM) IV) BRAMHA ASSOCIATES VS JT CIT (2009) 122 TTJ 433 (PUNE)(SB) 8 4.4 BASED ON THE ARGUMENTS OF THE ASSESSEE THE LD.C IT(A) CALLED FOR A REMAND REPORT FROM THE AO. THE ASSESSI NG OFFICER DIRECTED THE GOVT. APPROVED VALUER TO VISIT, INSPEC T AND MEASURE THE 'BUILT UP AREA OF THE VARIOUS RESIDENTIAL TENE MENTS. THE GOVT. APPROVED VALUER SHRI. HARSHAD RUPAREL, IN HIS REPOR T DATED 22-8- 2011 HAS GIVEN THE MEASUREMENT AS PER THE 'BUILT UP AREA' AS DEFINED U/S 80IB(14)(A) AS INSERTED BY THE FINANCE ACT (NO. 2) 2004, W.E.F. 1-4-2005 AND 'BUILT UP AREA' AS PER TH E DEVELOPMENT CONTROL RULES FRAMED BY THE PMC. THE DETAILS OF THE SAME ESPECIALLY WITH RESPECT TO THE RESIDENTIAL UNITS WH ERE TOTAL BUILT UP AREA WAS DISPUTED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS, ARE AS UNDER : SL.NO. UNIT NO./NAME BUILT UP AREA INCLUDING BALCONIES PROJECTED TERRACE TOTAL AREA SQ.FT. AS PER PMC TOTAL AREA 1 3 SHARAD VARMA 1412.02 75.24 1487.26 1041.09 2 4 CHITRAVANSHI 1412.02 75.24 1487.26 1041.09 3 10 PADMANABHAN 1265.41 133.47 1398.88 980.49 4 14 ADVANI 1412.02 75.24 1487.26 1041.09 5 18 HARISH WARRIER 1363.04 0.00 1360.04 1081.02 6 21 SNEHAL OZA 1407.93 134.87 1542.80 1086.51 7 22 RANJIT PATIL 1762.82 139.28 1902.10 1348.62 8 30 APTE 1412.02 75.24 1487.26 1041.09 4.5 THE GOVT. APPROVED VALUER NOTED IN THE REPORT D ATED 22.08.2011, THAT NUMBERS LIKE 11.1/11.2, 18.1. & 18 .2 OR 21.1 OR 9 21.2 DO NOT EXIST AND THE SAME HAD BEEN REFERRED TO AS NUMBERS OF EACH FLOOR. THE AFORESAID UNITS WERE INDEPENDENT AN D ARE NOT COMBINED WITH ANY OTHER UNIT. REGARDING THE UNIT NO S. 3 & 4, IT WAS STATED THAT THEY ARE INDEPENDENT RESIDENTIAL UN ITS WITH INDEPENDENT KITCHENS. HOWEVER, A CONNECTING DOOR B ETWEEN THE TWO LIVING ROOMS EXIST. A PHOTOGRAPH OF THE SAID DO OR WAS ALSO ANNEXED TO THE REPORT. THE ASSESSING OFFICER IN ITS REPORT DT. 18-4- 2012 STATED WITH RESPECT TO UNITS 3 & 4 THAT THE AF ORESAID UNITS WERE INDEPENDENT RESIDENTIAL UNITS WITH INDEPENDENT KITCHENS, HOWEVER, A CONNECTING DOOR LIES BETWEEN THE TWO LIV ING ROOMS OF THE TWO UNITS. THE ASSESSING OFFICER REITERATED THA T THE INTER CONNECTION OF THE UNITS WAS DONE BY THE BUILDER AND THE FILING OF THE AFFIDAVIT WAS AN AFTERTHOUGHT. 4.6 REGARDING THE UNITS NO. 30.1 & 30.2, 22.1 & 22.2 AN D 21.1 & 21.2, THE ASSESSING OFFICER NOTED THAT THE VALUER HAS SUBMITTED THAT SEPARATE NUMBERS OF THE UNITS DOES NOT EXIST A ND THEY REFERRED TO THE NUMBERS OF EACH FLOOR OF AN INDEPENDENT UNIT WHICH IS NOT COMBINED WITH ANY OTHER UNIT. THE ASSESSING OFFICER THUS OBSERVED THAT UNITS 1, 10, 11, 18, 22 AND 30 ARE A TWO STORIED BUILDING AND HAD A SINGLE NUMBER IN PLAN AS WELL AS AT SITE. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE REPORT OF THE VALUER HAS GIVEN REST TO THE CONTROVERSY OF JOINING OF THE VAR IOUS UNITS AS THE SANCTIONED PLAN WAS SHOWING THEM TO BE ONE UNIT ONL Y. THE ASSESSING OFFICER NOTED THAT THE BUILT UP AREA OF U NITS NO. 21 AND 10 22 AS PER THE REPORT WAS 1542.80 SQ.FT. AND 1902.10 SQ.FT, RESPECTIVELY WHICH CLEARLY EXCEEDED THE LIMIT OF TH E BUILT UP AREA AS PER AMENDED SEC. 80IB(10) OF THE ACT. THE ASSESS ING OFFICER ALSO HELD THAT THE AMENDMENT BROUGHT ABOUT IN SEC. 80IB(10) W.E.F. 1-4-2005 BY INSERTING THE DEFINITION OF 'BUI LT UP AREA IS CLARIFICATORY IN NATURE AND, THEREFORE, THE DISALLO WANCE OF THE CLAIM OF SEC. 801B(10) DEDUCTION WAS CORRECT AND THE ASSE SSEE'S CLAIM WAS NOT ACCEPTABLE. 4.7 THE ASSESSEE IN ITS REJOINDER TO THE REPORT OF THE ASSESSING OFFICER SUBMITTED THAT THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF BRAMHA ASSOCIATES (2011) 333 ITR 289 (BOM) HAS H ELD THAT THE CLAUSE (A) INSERTED IN SEC. 80IB(10)(14) W.E.F . 1-4-2005 IS PROSPECTIVE IN NATURE AND, THEREFORE, CANNOT BE APPLIED FOR PERIOD PRIOR TO 1-4-2005 AND HENCE THE DEFINITION O F BUILT UP AREA AS PER THE DC RULES FRAMED BY PMC WILL PREVAIL. IT WAS STATED THAT SIMILAR VIEW HAS BEEN HELD IN A HOST OF TRIBUNAL DE CISIONS INCLUDING THE DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD VS ACIT, ITA NO. 219/PN/2009 FOR A.Y. 2005- 06 AND D S KULKARNI & ASSOCIATES VS ITO, ITA NO. 17 /PN/2009 FOR A.Y. 2005-06 AND OF THE MUMBAI ITAT IN THE CASE OF HIRANANDANI AKRUTI JV VS DCIT (2010) 9 SOT 498 (MUM ), WHICH HAVE HELD THAT SEC. 80IB(10) AS IT EXISTED IN THE S TATUTE IN THE YEAR IN WHICH THE PROJECT COMMENCED SHOULD APPLY. IT WAS REITERATED THAT THE DEFINITION OF THE BUILT UP AREA AS PER DC RULES OF PMC 11 WILL APPLY AND, THEREFORE, THE BUILT UP AREA OF ALL THE TENEMENTS WAS LESS THAN 1500 SQ.FT. REGARDING THE RESIDENTIAL UN ITS 3 & 4 OWNED BY MR. SHARAD VARMA AND MR. CHITRAVANSHI RAJAT, IT WAS ARGUED THAT THE GOVT APPROVED VALUER HAS AFFIRMED THAT THE TWO UNITS ARE INDEPENDENT RESIDENTIAL UNITS HAVING INDEPENDENT KI TCHENS. IT WAS REITERATED THAT THE TWO UNITS WERE TWO SEPARATE ROW HOUSES AND THE PROPERTY TAX BILLS AND ELECTRICITY METERS WERE SEPA RATE AND HAD TWO SEPARATE ENTRANCES AND A COMMON WALL SEPARATING THE TWO UNITS. IT WAS EMPHASIZED THAT THE UNIT HOLDERS AFTER TAKING P OSSESSION OF THE UNITS HAD PUT A SMALL DOOR FOR THE CONVENIENCE OF T HEIR OLD PARENTS HOWEVER, THE IDENTITY OF UNITS AS TWO INDEPENDENT R ESIDENTIAL UNITS HAD BEEN MAINTAINED. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(1 0) MADE BY THE ASSESSEE BY OBSERVING AS UNDER : 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED MATERIAL AVAILABLE ON RECORD. THE APPELL ANT HAS RAISED TWO GROUNDS OF APPEAL AND IN GROUNDS NO. 1, (1. 2 AND 1.3), THE APPELLANT HAS CONTESTED THE DISALLOWANCE OF THE CL AIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 2,24,44,975/- . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED TH AT APPELLANT HAD SHOWN NET PROFIT OF RS. 2,24,44,975/- A ND THE ENTIRE INCOME HAD BEEN CLAIMED EXEMPT U/S 80IB(10) OF THE I T ACT 1961. THE APPELLANT HAD CONSTRUCTED 30 RESIDENTIAL UNITS/RO W HOUSES IN THE SCHEME 'ROLLING HILLS'. THE ASSESSING OFFICER FOUND O N VERIFICATION THAT THE APPELLANT HAD CONSTRUCTED A BU NGALOW FOR THE OWNER OF THE LAND WHICH EXCEEDED THE BUILT UP AREA OF MORE THAN 1500 SQ.FT AND IN ADDITION THERE WERE FIVE OTHER INST ANCES WHERE THE RESIDENTIAL AREA WAS MORE THAN 1500 SQ.FT., WHICH WAS SUBSEQUENTLY REDUCED TO 2 RESIDENTIAL UNITS 10/11.1 AND 21.2/21.3. 12 UNIT NO. NAME OF PURCHASER BUILT UP AREA (SQ.FT) TOTAL AREA (SQ.FT) 1.1 VISPUTE PANKAJ SUDHAKAR 729 1458 1.2 VISPUTE PANKAJ SUDHAKAR 729 10 PADMANABHAN PREETH 1358 2208 11.1 ADVANI TIRATH JHAMATMAL 850 21.1 OZA SNEHAL BHAVESH 908 1557 21.2 OZA SNEHAL BHAVESH 649 22.1 PATH RAN JIT BABURAO 983 1808 22.2 PATILRANJIT BABURAO 825 30.1 APTE NEERAJ DILIP 850 1488 30.2 APTE REKHA DILIP 638 THE ASSESSING OFFICER ALSO RECORDED THE STATEMENT OF SHRI . CHITRAVANSHI RAJAT WHO HAD PURCHASED THE RESIDENTIAL U NIT NO.4 U/S 131 ON 7-12-2006. IN THE STATEMENT SHRI. RAJAT HA D INFORMED THAT THE ROW HOUSE NO. 4 WAS PURCHASED BY HIM AND THE AREA OF THE SAID UNITS AS PER THE AGREEMENT WAS 1485 SQ.FT. IT W AS ALSO STATED THAT HIS BROTHER SHRI. SHARAD VERMA HAD PURCHA SED ROW HOUSE NO. 3 IN THE SCHEME AND THAT THE AFORESAID TWO R OW HOUSES I.E. 3 & 4 WERE CONNECTED FROM INSIDE. THE ASSESSING OF FICER THUS HELD THE TWO RESIDENTIAL UNITS AS A SINGLE ONE AND THAT THE TWO ROW HOUSES WERE STATED TO HAVE BEEN CONNECTED BY THE BUILD ER. THE ASSESSING OFFICER ALSO VISITED THE SAID HOUSING PROJECT ALO NG WITH THE GOVT. APPROVED VALUER SHRI. NETAJI KHANDAGALE W HO ALSO SUBMITTED THE REPORT ON 7-12-2006. THE ASSESSING OFFICER FOUND THAT THE VALUER HAD TAKEN MEASUREMENTS OF BUNGALOW NO . 18 OF THE PROJECT, THE TOTAL BUILT UP AREA OF WHICH WAS OF 1855.92 SQ.FT. BEING MORE THAN THE STIPULATED 1500 SQ.FT. AS PER SEC. 80IB(10). THUS THE ASSESSING OFFICER ON THE BASIS OF THE ABOVE FINDI NGS CAME TO THE CONCLUSION THAT THE CONDITIONS FOR CLAIM OF DE DUCTION U/S 80IB(10) WERE NOT FULFILLED AND, THEREFORE, THE ENT IRE CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS.2,24,44,875/- WAS DISALLOWED. 3.3 THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS CONTENDED THAT THE DISALLOWANCE MADE BY THE ASSESSING O FFICER WAS BASED ON THE FOLLOWING FINDINGS: 1. THE TWO RESIDENTIAL UNITS HAD BEEN COMBINED AND TH E COMBINED BUILT UP AREA EXCEEDED 1500 SQ.FT. IN RESPECT OF THE FOLLOWING UNITS. UNIT NO. PURCHASER BUILT UP AREA SQ.FT. TOTAL AREA SQ.FT. 10 PADMANABHAN PREETH 1358 2208 11.1 ADVANI TIRATH JHAMATMAL 850 21.1 OZA SNEHAL BHAVESH 905 1557 21.2 OZA SNEHAL BHAVESH 649 13 2. THE UNIT NO. 3 & 4 HAD BEEN JOINED WHOSE TOTAL AR EA EXCEEDED 1500 SQ.FT. 3. THE BUILT UP AREA OF UNIT NO. 18 AS PER THE DEFIN ITION OF 'BUILT UP AREA IN SEC. 80IB(14)(A) WAS 1786.74 SQ.FT., WHICH A LSO INCLUDED THE STAIRCASE AND BALCONY AREA. THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS CO NTENDED THAT THE TWO UNITS 10 AND 11.1. OWNED BY MR. PADMANA BHAN PREETH AND ADVANI TIRATH JHAMATMAL ARE UNRELATED CU STOMERS AND THE AFORESAID TWO UNITS ARE NOT CONNECTED AND ARE SEPA RATE IDENTIFIED UNITS AND THAT EVEN THE COMBINED BUILT UP AREA WAS LESS THAN 1500 SQ.FT AS PER THE PMC DEFINITION. THE APPELL ANT REGARDING UNIT NO. 21.1 AND 21.2 OWNED BY OZA SNEHAL BHAVESH A DMITTED THAT THE BUILT UP AREA AS PER THE DEFINITION GIVEN O F PMC REGULATIONS IS ONLY 1086.95 SQ.FT. THE APPELLANT REGAR DING UNITS NO. 3 & 4 OWNED BY SHARAD VERMA AND CHITRAVANSHI RAJ AT HAS STATED THAT THE TWO UNITS WERE PURCHASED UNDER SEPARATE AGREEMENTS, THOUGH THE TWO WERE REAL BROTHERS AND HAS FURTHER CONTENDED THAT THE TWO ROW HOUSES WERE SEPARATE HAVING SEPARATE PROPERTY TAX BILLS AND ELECTRICITY METERS AND ALSO HAVING TWO SEPARATE ENTRANCES AND ONE COMMON WALL SEPARATING THE TWO UNITS. THE APPELLANT FURTHER STATES THAT THE UNIT HOLD ERS AFTER TAKING POSSESSION OF THE UNITS HAVE PUT A SMALL DOOR IN T HE COMMON WALL FOR CONVENIENCE OF THEIR OLD PARENTS, AL THOUGH THE IDENTITY OF TWO INDEPENDENT RESIDENTIAL UNITS WERE MA INTAINED AS BOTH THE UNITS HAD BEEN CONCEPTUALIZED, PLANNED AND EXECUTED AS TWO SEPARATE RESIDENTIAL UNITS AND THEY HAD TWO INDE PENDENT KITCHEN CUM DINING ROOM AND SEPARATE GAS CONNECTIONS. THE APPELLANT HAS THUS FURTHER SUBMITTED THAT THERE IS A SU BSTANTIAL COMPLIANCE OF THE PROVISIONS OF SEC. 80IB(10) OF THE I T. ACT, 1961 AND IN A WITHOUT PREJUDICE SUBMISSION, STATED THAT THE PROVISIONS IN A TAXING STATUE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY AND IN VIEW OF THE RATIO OF THE DECISION OF THE APEX COURT IN THE CASE O F BAJAJ TEMPO LTD VS CIT (1992) 196 ITR 188 (SC), THE DEDUCTION U/ S 80IB(10) WAS ALLOWABLE. THE APPELLANT HAS ALSO SUBMITTED IN WITH OUT PREJUDICE TO THE ABOVE SUBMISSION THAT PRO-RATA DEDUCT ION BE ALLOWED ON THE ELIGIBLE AND QUALIFYING RESIDENTIAL U NITS. THE APPELLANT REGARDING THE BUILT UP AREA OF ROW HOUSE N O. 18 HAS REITERATED THE SUBMISSION MADE BEFORE THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS HAD SUBMITTED THAT THE AREA CALCULATED BY THE VALUER APPOINTED BY THE APPELLANT AOP OF THE RESIDENTIAL UNIT WAS AT 1377.55 SQ.FT AS AGAINST 1855.95 WORKED OUT BY MR. KHANDAGALE, THE VALUER APPOINTED BY THE ASSESSING OFFICER. THE APPELLANT DURING THE ASSESSMENT PROCEEDING S HAD SUBMITTED THAT THE DEFINITION OF THE BUILT UP AREA W AS NOT AVAILABLE DURING A.Y. 2004-05 AND, THEREFORE, IN THE ABSENCE O F ANY GUIDELINE FROM THE IT. ACT, THE ASSESSEE HAD ADOPTED TH E DEFINITION AVAILABLE AS PER THE LOCAL AUTHORITY I.E. PMC AND AF TER THE INTRODUCTION OF THE DEFINITION OF THE BUILT UP AREA W.E.F. 1-4-2005, THE SAME COULD NOT BE APPLIED RETROSPECTIVELY AS THE A PPELLANT CANNOT BACK TRACK OR REWIND THE PLANNING. THE APPEL LANT THUS CONTENDED THAT THE DEFINITION OF THE BUILT P AREA A VAILABLE AT THE TIME OF PLANNING HAS TO BE CONSIDERED FOR 80IB(10) PU RPOSE. THE APPELLANT THUS CONTENDED THAT AFTER APPLYING THE DEF INITION OF THE 14 BUILT UP AREA AS PER THE PMC GUIDELINES AND THE AREA OF THE UNITS RECALCULATED THE SAME WORKED OUT BELOW 1500 SQ.FT. TH E APPELLANT HAS THUS SUBMITTED THAT THE DEFINITION OF THE BUILT UP AREA IN SEC. 80IB(10) INSERTED BY THE FIN.(NO. 2) ACT , 2004 W.E. F 1-4-2005 IS NOT RETROSPECTIVE AND, THEREFORE, THE DEFINITION OF THE 'BUILT UP AREA' AS PER THE DEVELOPMENT CONTROL RULES OF PMC WIL L PREVAIL. MOREOVER, IT HAS BEEN STATED THAT THE COMPLETION CER TIFICATE OF ALL THE UNITS AND SPECIALLY THOSE DISPUTED BY THE ASSESSING OFF ICER VIZ. UNIT NO. 1.1 AND 1.2, 11.1, 11.2, UNIT NO. 18, UNIT NO. 21.1 AND 21.2, 22.1 AND 22.2, UNIT NO.30.1 AND 30.2 HAD BEEN ISSUED ON 27-3- 2003 WHICH IS PRIOR TO THE INTRODUCTION AND PASSING O F THE FINANCE (NO. 2) ACT, 2004 AND IT IS SETTLED PRINCIPLE IN LAW THAT STATUTE CANNOT IMPOSE CONDITION RETROSPECTIVELY WHICH IS IMPOSSI BLE TO COMPLY. THE APPELLANT HAS PLACED RELIANCE ON THE FOL LOWING JUDICIAL DECISIONS IN SUPPORT OF THEIR CLAIM: I) ITO VS AIR DEVELOPERS (2009) 123 TTJ (NAG) 959 II) ARUN EXCELLO FOUNDATIONS (P) LTD VS ACIT (2007)108 TTJ (CHENNAI) 71 III) ACIT VS SHETH DEVELOPERS (P) LTD (2009) 33 S OT 277 (MUM) IV) BRAMHA ASSOCIATES VS JT CIT (2009) 122 TTJ 433 (PUNE)(SB) 3.4 THE APPELLANT HAS ALSO COMMENTED ON THE REMAND REPORT OF THE ASSESSING OFFICER DATED 18-4-2012 WHEREIN THE ASSESSI NG OFFICER HAD DIRECTED THE GOVT. APPROVED VALUER TO V ISIT, INSPECT AND MEASURE THE 'BUILT UP AREA' OF THE VARIOUS RESIDENTIAL TENEMENTS. THE GOVT. APPROVED VALUER SHRI. HARSHAD RUPAREL, IN ITS REPORT DATED 22-8-2011 HAS ALSO GIVEN THE MEASUREMENT AS PER THE 'BUILT UP AREA AS DEFINED U/S 80IB(14)(A) AS INSERTED BY THE FINANCE ACT (NO. 2) 2004, W.E.F. 1-4-2005 AND 'BUILT UP AREA' A S PER THE DEVELOPMENT CONTROL RULES FRAMED BY THE PMC. THE DET AILS OF THE SAME ESPECIALLY WITH RESPECT TO THE RESIDENTIAL UNITS WH ERE TOTAL BUILT UP AREA WAS DISPUTED BY THE A.O. DURING THE ASSE SSMENT PROCEEDINGS, ARE REPRODUCED BELOW: S.NO UNIT NO. /NAME BUILT UP AREA INCLUDING BALCONIES PROJECTED TERRACE TOTAL AREA SQ.FT. AS PER PMC TOTAL AREA 1 3 SHARAD VARMA 14 12.02 75.24 1487.26 1041.09 2 4 CHITRAVANSHI RAJAT 14 12.02 75.24 1487.26 1041.09 3 10 PADMANABHAN PREETH 1265.41 133.47 1398.88 980.49 4 11 ADVANI 14 12.02 75.24 1487.26 1041.09 15 5 18 HARISH WARNER 1363.04 0.00 1363.04 1081.02 6 21 SNEHAL OZA 1407.93 134.87 1542.80 1086.51 7 22 RANJEET PATIL 1762.82 139.28 1902.10 1348.62 8 30 APTE 1412.02 75.24 1487.26 1041.09 THE GOVT. APPROVED VALUER HAS ALSO NOTED IN THE REPOR T DATED 22.08.2011, THAT NUMBERS LIKE 11.1/11.2, 18.1. & 18. 2 OR 21.1 OR 21.2 DOES NOT EXIST AND THE SAME HAD BEEN REFERRED TO AS NUMBERS OF EACH FLOOR. THE AFORESAID UNITS WERE INDEPENDENT A ND ARE NOT COMBINED WITH ANY OTHER UNIT. REGARDING THE UNIT NO S. 3 & 4, IT HAS BEEN STATED THAT THEY ARE INDEPENDENT RESIDENTIAL UNI TS WITH INDEPENDENT KITCHENS, HOWEVER, A CONNECTING DOOR BE TWEEN THE TWO LIVING ROOMS EXIST. A PHOTOGRAPH OF THE SAID DOOR HAS ALSO BEEN ANNEXED TO THE REPORT. THE ASSESSING OFFICER IN IT S REPORT DT. 18-4-2012 HAS STATED WITH RESPECT TO UNITS 3 & 4 THAT THE AFORESAID UNITS WERE INDEPENDENT RESIDENTIAL UNITS WITH INDEPEN DENT KITCHENS, HOWEVER, A CONNECTING DOOR LIES BETWEEN THE TWO LIVING ROOMS OF THE TWO UNITS. THE ASSESSING OFFICER HAS REITERAT ED THAT THE INTER CONNECTION OF THE UNITS WAS DONE BY THE BU ILDER AND THE FILING OF THE AFFIDAVIT WAS AN AFTERTHOUGHT. 3.5 REGARDING THE UNITS NO. 30.1 & 30.2, 22.1 & 22.2 AND 21.1 & 21.2, THE ASSESSING OFFICER HAS NOTED THAT THE VALUER HA S SUBMITTED THAT SEPARATE NUMBERS OF THE UNITS DOES NOT EXIST AND TH EY REFERRED TO THE NUMBERS OF EACH FLOOR OF AN INDEPEND ENT UNIT WHICH IS NOT COMBINED WITH ANY OTHER UNIT. THE ASSESSING OFFICER HAS THUS OBSERVED THAT UNITS 1, 10, 11, 18, 22 AND 30 A RE A TWO STORIED BUILDING AND HAD A SINGLE NUMBER IN PLAN AS WE LL AS AT SITE. THE ASSESSING OFFICER HAS THEN FURTHER OBSERVED THAT THE REPORT OF THE VALUER HAS GIVEN REST TO THE CONTROVERSY OF JOININ G OF THE VARIOUS UNITS AS THE SANCTIONED PLAN WAS SHOWING THEM TO BE ONE UNIT ONLY. THE ASSESSING OFFICER HAS FURTHER NOTED THAT THE BUILT UP AREA OF UNITS NO. 21 AND 22 AS PER THE REPORT WAS 1542 .80 SQ.FT. AND 1902.10 SQ.FT, RESPECTIVELY WHICH CLEARLY EXCEEDE D THE LIMIT OF THE BUILT UP AREA AS PER AMENDED SEC. 80IB(10) OF TH E ACT. THE ASSESSING OFFICER ALSO HAS HELD THAT THE AMENDMENT BROUGH T ABOUT IN SEC. 80IB(10) W.E.F. 1-4-2005 BY INSERTING THE DE FINITION OF 'BUILT UP AREA 1 IS CLARIFICATORY IN NATURE AND, THEREFORE, THE DISA LLOWANCE OF THE CLAIM OF SEC. 80IB(10) DEDUCTION WAS CORRECT AND THE APPELLANT'S CLAIM WAS NOT ACCEPTABLE. 3.6 THE APPELLANT IN ITS REJOINDER TO THE REPORT OF THE ASSESSING OFFICER HAS SUBMITTED THAT THE BOMBAY HIGH COURT IN T HE CASE OF BRAMHA ASSOCIATES (2011) 333 ITR 289 (BOM) HAS HELD THA T THE CLAUSE (A) INSERTED IN SEC. 80IB(10)(14) W.E.F. 1-4-2 005 IS PROSPECTIVE IN NATURE AND, THEREFORE, CANNOT BE APPL IED FOR PERIOD PRIOR TO 1-4-2005 AND HENCE THE DEFINITION OF BUILT UP AREA AS PER THE DC RULES FRAMED BY PMC WILL PREVAIL. THE APPELLA NT HAS ALSO STATED THAT SIMILAR VIEW HAS ALSO BEEN HELD IN A HOST OF TRIBUNAL DECISIONS INCLUDING ITO VS AIR DEVELOPERS, ARUN EXCELL O 16 FOUNDATION (P) LTD VS ACIT, ACIT VS SHETH DEVELOPERS (P) LTD, BRAMHA ASSOCIATES QUOTED SUPRA. THE APPELLANT HAS ALSO DR AWN ATTENTION TOWARDS THE DECISION OF THE PUNE ITAT IN TH E CASE OF OPEL SHELTERS PVT. LTD VS ACIT, ITA NO. 219/PN/2009 F OR A.Y. 2005-06 AND D S KULKARNI & ASSOCIATES VS ITO, ITA NO. 17/PN/2009 FOR A.Y. 2005-06 AND OF THE MUMBAI ITAT IN THE CASE OF HIRANANDANI AKRUTI JV VS DCIT (2010) 9 SOT 498 (M UM), WHICH HAVE HELD THAT SEC. 80IB(10) AS IT EXISTED IN THE STAT UTE IN THE YEAR IN WHICH THE PROJECT COMMENCED SHOULD APPLY. THUS THE APPELLANT HAS REITERATED THAT THE DEFINITION OF THE BUILT UP A REA AS PER DC RULES OF PMC WILL APPLY AND, THEREFORE, THE BUILT UP AREA OF ALL THE TENEMENTS WAS LESS THAN 1500 SQ.FT. THE APPELLANT REGARD ING THE RESIDENTIAL UNITS 3 & 4 OWNED BY MR. SHARAD VARMA AND MR. CHITRAVANSHI RAJAT, HAS STATED THE GOVT APPROVED VALUE R HAS AFFIRMED THAT THE TWO UNITS ARE INDEPENDENT RESIDENTI AL UNITS HAVING INDEPENDENT KITCHENS. IT HAS AGAIN BEEN STATED THAT THE TWO UNITS WERE TWO SEPARATE ROW HOUSES AND THE PROPERTY TAX BILLS AND ELECTRICITY METERS WERE SEPARATE AND HAD TWO SEPARATE ENTRANCES AND A COMMON WALL SEPARATING THE TWO UNITS. IT HAS BE EN EMPHASIZED THAT THE UNIT HOLDERS AFTER TAKING POSSESSION OF THE UNITS HAD PUT A SMALL DOOR FOR THE CONVENIENCE OF THE IR OLD PARENTS HOWEVER, THE IDENTITY OF UNITS AS TWO INDEPENDENT RESI DENTIAL UNITS HAD BEEN MAINTAINED. 3.7 THE APPELLANT AOP HAS UNDERTAKEN THE CONSTRUCTION OF 30 RESIDENTIAL UNITS IN THE SCHEME 'ROLLING HILLS' WHICH COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE PROJECT VIDE COM MENCEMENT CERTIFICATE DATED 30-03-2001 ISSUED BY THE PMC. THE SI ZE OF THE PLOT OF LAND OF THE HOUSING PROJECT WAS HAVING AREA OF 16200 SQ. MTRS I.E. AROUND 4 ACRES. THE AFORESAID PROJECT WAS COM PLETED AS PER THE CERTIFICATES OF OCCUPANCY OF THE UNITS AS THE CERTIFICATES ISSUED BY PMC DATED 27-3-2003. THE ASSESSING OFFICER DURI NG THE ASSESSMENT PROCEEDINGS HAS NOT DISPUTED THE ABOVE FACTS, WH ICH WERE RELEVANT FOR THE CLAIM OF DEDUCTION U/S 80IB (1 0). THE ASSESSING OFFICER HAD INITIALLY RAISED OBJECTION WITH RE SPECT TO UNITS 1.1 & 1.2, 10 & 11.1, 21.1& 21.2, 22.1 & 22.2 AND 30.1 AND 30.2, STATING THAT THEY WERE HAVING AREAS MORE THAN 1 500 SQ.FT. AND THE OWNERS OF SOME OF THE UNITS WERE SAME. THE ASSE SSING OFFICER ALSO RECORDED THE STATEMENT U/S 131 OF MR. CHI TRAVANSHI RAJAT ON 7-12-2006 WHO HAD PURCHASED UNIT NO. 4 AND WHOSE BROTHER MR. SHARAD VARMA HAD PURCHASED RESIDENTIAL U NIT NO. 3. THE ASSESSING OFFICER SOUGHT THE EXPLANATION OF THE APP ELLANT THAT THE TWO UNITS 3 & 4 HAVE JOINED TO CONSTRUCT A BIGGER RESIDENTIAL UNIT HAVING AREA OF MORE THAN 1500 SQ.FT. IT WAS ALSO EMPHASIZED BY THE ASSESSING OFFICER THAT MR. CHITRAVANSHI HAD STATED THAT THE TWO ROW HOUSES/UNITS HAD BEEN CONNECTED BY THE BUILDER S DURING THE CONSTRUCTION STAGE. THEREAFTER, THE ASSESSING OFFICER VISITED THE HOUSING PROJECT ALONG WITH THE GOVT. APPROVED VA LUER MR. NETAJI KHANDAGALE AND IN THE REPORT DATED 7-12-2006 , IT WAS SUBMITTED THAT ON MEASURING BUNGALOW NO. 18, THE TOTA L BUILT UP AREA WAS OF 1855.92 SQ.FT. THE ASSESSING OFFICER, THEREF ORE, SENT THE SHOW-CAUSE SEEKING THE EXPLANATION OF THE APPELLAN T WITH RESPECT TO THE DISCREPANCIES NOTED REGARDING NON-FULFI LLMENT OF THE REQUIREMENT/CONDITIONS SPECIFIED U/S 80IB (10). 17 3.8 THE APPELLANT IN THE EXPLANATION FURNISHED BEFORE TH E ASSESSING OFFICER EXPLAINED THAT THE 'BUILT UP' AREA ME NTIONED IN THE AGREEMENT SHOULD NOT FORM THE BASIS OF CALCULATING THE BUILT UP AREA. THE APPELLANT UNDERTOOK THE EXERCISE OF M EASURING THE RESIDENTIAL UNITS WITH THE ASSISTANCE OF MR. NITIN LELE, A GOVT. APPROVED SURVEYOR AND A CHARTERED ENGINEER AND SUBMIT TED THE CALCULATION OF THE BUILT UP AREA FOR THE COMBINED U NITS WHICH INDICATED EVEN THE COMBINED BUILT UP AREAS BELOW 15 00 SQ.FT OF ALL THE UNITS VIZ. 1.1 & 1.2, 11.1 & 11.2, 21.1 & 21.2, 22.1 & 22.2 AND 30.1 & 30.2. THE APPELLANT ALSO SUBMITTED THE DETAILE D DRAWINGS AND MEASUREMENTS AND THE CALCULATION FOR VERIFICATION BY THE ASSESSING OFFICER. THE APPELLANT REGARDING UNITS NO. 3 & 4 SUBMITTED THAT THE TWO ROW HOUSES WERE SEPARATE HAVING SEPARATE ELECTRIC METERS AND PROPERTY TAX BILLS AND SEPARATE EN TRANCE AND INDEPENDENT KITCHEN-CUM-DINING ROOMS AND SEPARATE GAS CONNECTIONS. THE OWNER OF ONE OF THE UNITS MR. SHARAD VARMA ALSO CLARIFIED THAT THE SMALL DOOR IN COMMON WALL WAS MADE BY HIM BY ENGAGING A CONTRACTOR AND PAYMENT MADE IN CASH AND T HE OTHER OWNER OF THE UNIT MR. CHITRAVANSHI RAJAT SUBMITTED AN AFFIDAVIT SUBSEQUENTLY IN WHICH HE SUBMITTED, THAT THE ANSWERS AND INFORMATION GIVEN DURING THE COURSE OF STATEMENT WAS I N A CASUAL MANNER AND WAS NOT CORRECT WHICH INCLUDED SPECIFIC IN FORMATION REGARDING AREA IN THE AGREEMENT, TOTAL PAYMENTS MADE TO THE BUILDER ETC. THE APPELLANT REGARDING UNIT NO. 18 SUB MITTED THAT THE BUILT UP AREA OF THE ABOVE UNIT WAS AT 1377.55 SQ.FT AS AGAINST 1855.95 SQ.FT. THE APPELLANT ALSO EXPLAINED BEFORE TH E ASSESSING OFFICER THAT THE OWNER OF THE RESIDENTIAL UNIT NO. 3 0.1 AND 30.2 AND 22.1 AND 22.2 HAD JOINED THE UNITS AFTER TAKING POSSESSI ON FOR THEIR COMFORT AND CONVENIENCE AND THE LETTERS OF THE OWNER S. CONFIRMING THE ABOVE FACT WAS SUBMITTED BEFORE THE ASSESSING OFFICE R. THE APPELLANT ALSO SUBMITTED THAT THE KEY ISSUE WAS WITH RE SPECT TO THE DEFINITION OF 'BUILT UP AREA WHICH WAS NOT DEFINED IN THE IT. ACT 1961. IT WAS ALSO STATED BY THE APPELLANT BEFORE THE A SSESSING OFFICER THAT THE BUILT UP AREA CALCULATED BY THE BU ILDER FOR THE PURPOSE OF SALES WAS GENERALLY AND LOOSELY CALCULATED AT CARPET AREA PLUS A LOADING FACTOR WHICH VARIES BETWEEN 25% T O 33% TO ACCOMMODATE OTHER AREA ALLOWANCES AND, THEREFORE, TH E 'BUILT UP AREA 1 MENTIONED IN THE AGREEMENT SHOULD NOT FORM THE BASIS FOR BUILT UP AREA FOR THE PURPOSES OF SEC. 80IB(10). 3.9 THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE EXPLANATION FURNISHED BY THE APPELLANT AND ON THE BA SIS OF THE FOLLOWING REASONS DISALLOWED THE CLAIM OF SEC. 80IB ( 10) DEDUCTION, THOUGH THE EXPLANATION FURNISHED WITH RESP ECT TO OTHER UNITS INCLUDING 30.1 & 30.2 AND 22.1 & 22.2 AND 1.1 & 1.2 APPEARS TO HAVE BEEN ACCEPTED BY THE A.O. AS THE SAME WERE N OT CONSIDERED TO BE A REASON FOR THE DISALLOWANCE OF DEDU CTION. 1. THE FOLLOWING TWO RESIDENTIAL UNITS HAVE BEEN COMB INED AND THE TOTAL AREA EXCEEDED 1500 SQ.FT. 18 UNIT NO PURCHASER BUILT UP AREA TOTAL AREA SQ.FT 10 PADMANABHAN PREETH 1358 2208 11.1 ADVANI TIRATH JHAMATMAL 850 21.1 OZA SNEHAL BHAVESH 905 1557 21.2 OZA SNEHAL BHAVESH 649 2. 3 VARMA SHARAD 1470 2940 4 CHITRAVANSHI RAJAT 1470 BOTH UNITS JOINED TOGETHER TO CONSTRUCT A BIGGER RESID ENTIAL UNIT. 3. THE BUILT UP AREA OF UNIT NO. 18 AS PER THE DEFIN ITION OF BUILT UP AREA IN SEC. 80IB (14)(A) WAS 1786.74 SQ.FT. THE ASSESSING OFFICER ARRIVED AT THE ABOVE CONCLUSION FO R MAKING THE DISALLOWANCE AFTER CONSIDERING THE EXPLANATION AN D EVIDENCES FURNISHED DURING THE ASSESSMENT PROCEEDINGS. IN FACT, THE ASSESSING OFFICER HAD EARLIER HELD NEARLY TEN UNITS WHIC H HAD EXCEEDED THE PERMISSIBLE LIMITS OF THE BUILT UP AREA O F MORE THAN 1500 SQ.FT. AND WHICH HAD BEEN HELD TO HAVE BEEN JOI NED BY THE BUILDER FOR THE RESPECTIVE CUSTOMER. HOWEVER, THE ASSES SING OFFICER ACCEPTED THE EXPLANATION AND THE EVIDENCES W ITH RESPECT TO UNITS NO. 1.1 & 1.2, 22.1 & 22.2, 30.1 AND 30.2. THE ASSESSING OFFICER WAS GUIDED BY THE DEFINITION OF THE 'BUILT U P AREA' IN SEC. 80IB (10) INSERTED BY THE FINANCE (NO.2) ACT, 2004 W .E.F. 1-4-2005 WHICH WAS HELD BY HIM, TO BE CLARIFICATORY AMENDMENT , WITH A PURPOSE TO CLEAR THE DOUBT ABOUT CALCULATION OF BUIL T UP AREA. THE ASSESSING OFFICER ALSO HELD THE AMENDMENT TO BE DECLARAT ORY IN NATURE AND HAVING APPLICATION FOR THE EARLIER YEARS. IN VIEW OF THE ABOVE FACT, THE ASSESSING OFFICER WHILE CALCULATING THE AREA INCLUDED THE PROJECTIONS AND BALCONIES IN THE CALCULA TION OF BUILT UP AREA. THE SUBMISSION MADE BY THE APPELLANT AND THE RELIANCE PLACED ON THE JUDICIAL DECISIONS WITH RESPECT TO 'BUI LT UP AREA' WAS NOT AT ALL CONSIDERED BY THE ASSESSING OFFICER DURING TH E ASSESSMENT PROCEEDINGS. 3.10 THE APPELLANT'S SUBMISSION DURING THE APPELLATE PROCEEDINGS WITH REGARD TO THE REASON FOR THE DISALLOW ANCE OF DEDUCTION U/S 80IB(10) AND THE RELIANCE PLACED ON NU MBER OF JUDICIAL DECISIONS, THE MATTER WAS REMANDED TO THE ASSES SING OFFICER FOR MAKING NECESSARY ENQUIRIES INCLUDING FROM THE UNIT HOLDERS. THE ASSESSING OFFICER DURING THE REMAND PROCEED INGS ISSUED LETTER TO THE DEPARTMENTAL APPROVED VALUER SHR I. HARSHAD RUPAREL FOR VERIFICATION AND MEASUREMENT OF THE BUIL T UP AREA OF THE RESIDENTIAL UNITS. IN THE REPORT SUBMITTED BY THE ASSESSING OFFICER AFTER TAKING INTO ACCOUNT THE FINDINGS OF TH E DEPARTMENTAL APPROVED VALUER, SHRI. RUPAREL, IT HAS BEEN CATEGORI CALLY STATED BY THE ASSESSING OFFICER THAT THE UNITS NO. 3 & 4 WERE INDE PENDENT 19 RESIDENTIAL UNITS WITH INDEPENDENT KITCHENS, HOWEVER, IT HAS BEEN MENTIONED THERE IS A CONNECTING DOOR IN BETWEEN CONN ECTING LIVING ROOM OF BOTH THE UNITS. THE ASSESSING OFFICER HAS ALSO ENCLOSED THE VALUER'S REPORT WHICH SPECIFIES THE AREA BOTH AS PER THE AMENDED DEFINITION OF SEC. 80IB(10), AS WELL AS A S PER THE DC RULES OF PMC RESPECT OF THE RESIDENTIAL UNITS. THE ASSESS ING OFFICER, HAS HOWEVER, ON THE DEFINITION OF THE 'BUIL T UP AREA' AS PER THE AMENDED LAW HELD THE RESIDENTIAL UNITS TO HAVE E XCEEDED THE PERMISSIBLE LIMIT OF 1500 SQ.FT AS THE AMENDMENT HAS BEE N HELD BY HIM TO BE CLARIFICATORY IN NATURE. 3.11 THE BUILT UP AREA STATEMENT OF THE RESIDENTIAL UNITS A S PER THE VALUER'S REPORT DATED 22-8-2011 IS AS FOLLOWS: S.NO UNIT NO. BUILT UP AREA AS PER AMENDED LAW TOTAL AREA SQ.FT BUILT UP AREA AS PER PMC / DC RULES NAME 1 3 SHARAD VARMA 1487.26 1041.09 2 4 CHITRAVANSHI RAJAT 1487.26 1041.09 3 10 PADMANABHAN PREETH 1398.88 980.49 4 11 ADVANI TIRATH 1487.26 1041.09 5 18 HARISH WARRIER 1363.04 1081.02 6 21 SNEHAL OZA 1542. 80 1086.51 7 22 RANJEET PATIL 1902.10 1348.62 8 30 APTE 1487.26 1041.09 THE VALUER HAS CATEGORICALLY MENTIONED THAT NOS. LIKE 10.1 & 10.2 OR 22.1 OR 22.2 DOES NOT EXIST AND THEY REFER TO THE NUMBERS FOR EACH FLOOR OF AN INDEPENDENT UNIT WHICH IS NOT COMBI NED WITH ANY OTHER UNIT. IT HAS THUS BEEN OBSERVED THAT UNITS NO. 1, 10, 11, 18, 21, 22 & 30 WERE A TWO STORIED BUILDING AND HAD A SIN GLE NUMBER IN THE PLAN. THE VALUER IN RESPECT OF UNITS NO. 30.1 & 30.2 AND 22.1 & 22.2. HAD CONFIRMED REGARDING JOINING OF THE UNIT S AFTER TAKING POSSESSION OF THEIR OWN. THE APPELLANT HAD EXPLAINED IN THE SUBMISSION BEFORE THE A.O. THAT UNITS NO. 10 AND 11.1 W ERE RELATING TO TWO CUSTOMERS WHO WERE NOT RELATED AND TH AT THE TWO UNITS WERE NOT CONNECTED AND WERE SEPARATE UNITS. THE VALUER IN ITS REPORT IN THE REMAND PROCEEDINGS HAS ALSO AFFIRMED THE CONTENTION OF THE APPELLANT. THE A.O. HAS NOT BROUG HT ANY MATERIAL CONTRARY TO THE FACTS RAISED BY THE APPELLANT. FURTHE R, THE RESIDENTIAL UNITS 21.1 & 21.2 OWNED BY OZA SNEHAL BHA VESH HAS BEEN ADMITTED TO BE ONE UNIT AND ALSO AFFIRMED BY TH E VALUER IN ITS REPORT, HOWEVER, THE AREA AS PER THE DC RULES WAS ONLY 1086.51 SQ. FT. HOWEVER, AS PER THE AMENDED PROVISIONS THE AREA OF THE UNITS WAS TAKEN BY THE A.O. TO BE 1557 SQ. FT. WHICH W AS MORE THAN 20 THE PRESENT AREA OF 1500 SQ. FT. THE VALUER IN ITS REP ORT SUBMITTED DURING THE REMAND PROCEEDINGS, -HOWEVER, GAVE THE AR EA AS PER THE AMENDED PROVISIONS TO BE 1542.80 SQ.FT. AND AS PER THE DC RULES TO BE 1086.51 SQ.FT., WHICH WAS LESS THAN THE AREA STIPULATED U/S 80IB(10) OF THE IT. ACT. THE A.O. HAD ALSO OBJECT ED TO THE AREA OF RESIDENTIAL UNIT NO. 18 BEING 1786.74 AFTER INCLU DING THE STAIRCASE AND BALCONY AREA AS PER THE AMENDED LAW. HOW EVER, AS PER THE DC RULES THE TOTAL AREA WORKED OUT BY THE VA LUER IS LESS THAN 1500 SQ. FT. I.E. WITHIN THE PERMISSIBLE LIMITS AS PER SECTION 80IB(10). HOWEVER, THE A.O. DURING THE REMAND PROCE EDINGS IN ITS REPORT DATED 18.04.2012 HAS AGAIN DISPUTED THE AREA O F THE UNITS NO. 21 & 22 BEING 1542.80 SQ. FT. AND 1902.10 SQ.FT., RESPECTIVELY BASED ON THE REPORT DATED 22.08.2011 OF THE VALUER S HRI RUPAREL. THE VALUER IN ITS REPORT HAD GIVEN THE MEASUREMENT OF THE RESIDENTIAL UNITS BOTH AS PER THE DC RULES OF PMC, PUNE AND AS PER THE AMENDED LAW AS DEFINED IN SECTION 80IB(10)(14)(A) INSERTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 1.4.2005. TH E BUILT-UP AREA OF THE TWO UNITS AS PER THE DC RULES HAS BEEN OF UNIT NO. 21 IS AT 1086.51 SQ.FT. AND UNIT NO. 22 AT 1348.62 SQ.FT. THUS THE BASIC OBJECTION OF THE ASSESSING OFFICER RELATES TO THE AREA OF THE RESIDENTIAL UNITS BEING MORE THAN 1500 SQ.FT. AS PER AM ENDED LAW. THIS CONDITION IS PRESCRIBED IN CLAUSE (C) OF SEC. 80IB (10). THERE IS NO DISPUTE TO THE FACT THAT THIS CONDITION EXISTS IN TH E STATUTE AND IS REQUIRED TO BE ADHERED TO FOR AVAILING THE BENEFIT OF SEC. 80IB(10) CLAUSE (C) SAYS AS UNDER: 'THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUA TED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY -FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AN D THOUSAND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE'. THEREFORE, THE SECTION REQUIRES THE HOUSING PROJECT TO HAVE A RESIDENTIAL UNIT OF NOT MORE THAN 1500 SQ.FT TO BE EL IGIBLE FOR THE DEDUCTION. THE REGISTERED VALUER APPOINTED BY THE ASSE SSING OFFICER DURING THE REMAND PROCEEDINGS HAS GIVEN THE FINDINGS REGARDING THE AREA OF THE RESPECTIVE UNITS WHICH HAD BEEN DISPUTED BY THE ASSESSING OFFICER TO HAVE EXCEEDED THE P RESCRIBED LIMITS OF 1500 SQ.FT. HOWEVER, ON PERUSAL OF THE TABLE OF THE AREA STATEMENT AS SUBMITTED BY THE VALUER, SHRI. RUPAREL, I T IS NOTICED THAT THE TOTAL AREA AS PER THE AMENDED PROVISIONS OF S EC. 80IB(14)(A), WITH RESPECT TO THE DEFINITION OF THE ' BUILT UP AREA' IN MOST CASES THE BUILT UP AREA EXCEEDS THE LIMIT OF 1500 SQ.FT. HOWEVER, DEFINITION OF AREA AS PER THE DC RULES OF PM C THE BUILT UP AREA IN ALL THE CASES IS MUCH BELOW THE PERMISSIBLE L IMIT OF 1500 SQ.FT. THE APPELLANT HAS CONTENDED THAT THE AMEN DED DEFINITION OF BUILT UP AREA W.E.F. 1-4-2005 IS NOT R ETROSPECTIVE. IT HAS ALSO BEEN CLAIMED BY THE APPELLANT THAT THE AMEND ED DEFINITION CANNOT BE GIVEN EFFECT TO THE PROJECT AS IT WAS APPROVED ON 30.03.2001 WHEN NO SUCH DEFINITION WAS AVAILABLE IN THE SECTION AND THE PROJECT EVEN COMPLETED BEFORE THE IN TRODUCTION OF THE DEFINITION AS PER SEC. 80IB(10)(A) OF 'BUILT UP AREA'. THE APPELLANT HAS CLAIMED THAT THE ABOVE PROPOSITION HAS B EEN ACCEPTED IN VARIOUS JUDGMENTS INCLUDING BOMBAY HIGH C OURT IN THE CASE OF CIT VS BRAMHA ASSOCIATES (2011) 333 ITR 289 (BOM) THAT CLAUSE (A) INSERTED IN SEC. 80IB(14) W.E.F. 1-4- 2005 IS 21 PROSPECTIVE IN NATURE AND, THEREFORE, CANNOT BE APPL IED FOR A PERIOD PRIOR TO 1-4-2005 AND HENCE, THE DEFINITION OF 'BUILT UP AREA' AS PER DC RULES FRAMED BY PMC WILL PREVAIL. THE FINDING GIVEN BY THE BOMBAY HIGH COURT IN THIS REGARD IS AS UN DER: 27. LASTLY, THE ARGUMENT OF THE REVENUE THAT S. 80-IB (10) AS AMENDED BY INSERTING CL. (D) W.E.F. 1ST APRIL, 2005 SH OULD BE APPLIED RETROSPECTIVELY IS ALSO WITHOUT ANY MERIT, BEC AUSE, FIRSTLY, CL. (D) IS SPECIFICALLY INSERTED W.E.F. 1ST APRIL, 200 5 AND, THEREFORE, THAT CLAUSE CANNOT BE APPLIED FOR THE PERIOD PRIOR T O 1ST APRIL, 2005. SECONDLY, CL. (D) SEEKS TO DENY S. 80-IB(10) DED UCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE LIMIT PRESC RIBED UNDER CL. (D), EVEN THOUGH SUCH COMMERCIAL USER IS APP ROVED BY THE LOCAL AUTHORITY. THEREFORE, THE RESTRICTION IMPO SED UNDER THE ACT FOR THE FIRST TIME W.E.F. 1ST APRIL, 2005 CANNOT BE APPLIED RETROSPECTIVELY. THIRDLY, IT IS NOT OPEN TO THE REVEN UE TO CONTEND ON THE ONE HAND THAT S. 80-IB (10) AS IT STOOD PRIOR TO 1ST APRIL, 2005 DID NOT PERMIT COMMERCIAL USER IN HOUSING PROJEC TS AND ON THE OTHER HAND CONTEND THAT THE RESTRICTION ON COMME RCIAL USER INTRODUCED W.E.F. 1ST APRIL, 2005 SHOULD BE APPLIED RETROSPECTIVELY. THE ARGUMENT OF THE REVENUE IS MUTUA LLY CONTRADICTORY AND HENCE LIABLE TO BE REJECTED. THUS, IN OUR OPINION, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT CL. (D) IN SERTED TO S. 80- IB(10) W.E.F. 1ST APRIL, 2005 IS PROSPECTIVE AND NOT R ETROSPECTIVE AND HENCE CANNOT BE APPLIED TO THE PERIOD PRIOR TO 1ST APRIL, 2005. THE APPELLANT HAS ALSO PLACED RELIANCE ON VARIOUS TRI BUNAL DECISIONS WHERE SIMILAR VIEW HAS BEEN TAKEN. THE APPELL ANT HAS ALSO SUBMITTED THAT EVEN FOR SUBSEQUENT ASSESSMENT YEARS I.E . A.Y. 2005-06 ONWARDS, THE TRIBUNAL HAVE HELD THAT SEC. 80 IB(10) AS IT EXISTED IN THE STATUE IN THE YEAR IN WHICH THE PROJEC T COMMENCED SHOULD APPLY. THE APPELLANT HAS RELIED ON THE PUNE IT AT DECISIONS IN THE CASE OF OPEL SHELTERS LTD AND D S KULKARNI & A SSOCIATES (CITED SUPRA) AND HIRANANDANI AKRUTI J V VS DCIT (201 0) 7 SOT 498 (MUM). 3.12 IT IS A FACT THAT DEFINITION OF BUILT UP AREA H AS BEEN INTRODUCED BY THE FINANCE ACT (NO.2), 2004 W.E.F. 1 -4-2005, THE JUDGMENT OF THE PUNE ITAT THOUGH ON THE ISSUE OF CLA USE (D) OF SEC. 80IB(10) CAN HAVE APPLICATION ON THE ISSUE UNDER CONSIDERATION. AS PER THE RATIO OF THESE JUDGMENTS, IT WAS CLAIMED, BEFORE THE DEFINITION OF BUILT-UP AREA WAS INTRODUCE D IN SEC. 80IB(14) THE MEANING TO THE BUILT UP AREA OR THE RE SIDENTIAL UNIT HAS TO BE GIVEN AS IS COMMERCIALLY UNDERSTOOD. ON THIS INTERPRETATION, IT CAN BE SEEN THAT THE CLAIM OF THE APPELLANT THAT THE AREA OF THE RESIDENTIAL UNITS IS LESS THAN 1500 SQ. FT. APPEARS TO BE CORRECT IF THE IMPLICATION OF THE DEFINITION IS N OT APPLIED AS THE PROJECT WAS APPROVED ON 30.03.2001 WHEN THIS DEFINITI ON WAS NOT IN THE STATUTE AND, THEREFORE, THE APPELLANT CANNOT BE ASKED TO FULFILL A SUBSTANTIVE CONDITION INTRODUCED SUBSEQUENT T O THE APPROVAL OF THE PROJECT WHEN A VESTED RIGHT GOT CREA TED SUBJECT TO THE FULFILLMENT OF THE CONDITIONS THEN PREVAILING. T HE DECISIONS OF THE PUNE ITAT IN THE CASE OF OPEL SHELTERS PVT. LTD A ND DS KULKARNI & ASSOCIATES HAVE ALSO BEEN FOLLOWED BY THE TR IBUNAL IN SEVERAL OTHER CASES ON SIMILAR ISSUES. THE PUNE ITAT HAS HE LD THAT 22 THE ASSESSEE HAD STARTED THE PROJECT IN F.Y. 2000-01 AND THE AMENDMENT RESTRICTING THE COMMERCIAL AREA WAS INTRODU CED FROM 01.04.2005. THE ITAT, IN THIS CONTEXT HELD THAT THE AMENDMENT RESTRICTING THE COMMERCIAL AREA WOULD NOT BE APPLICA BLE FOR THE PROJECT STARTED PRIOR TO 31.03.2005. ACCORDING TO IT AT, AS PER HARMONIOUS INTERPRETATION OF SECTION 80IB(10), THE ASSE SSEE WOULD NOT BE ABLE TO COMPLY WITH A CONDITION INTROD UCED AT A LATER DATE AND, THEREFORE, THE CONTENTION OF THE A.O. THA T THE AMENDED DEFINITION WAS APPLICABLE IS NOT CORRECT. THE RELEVAN T PARAS OF THE ITAT ORDER ARE AS UNDER: '19. WE, THUS, FIND THAT THE ISSUES RAISED IN THE PRESENT APPEALS ARE FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECI SION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANAND ANI AKRUTI J. V V/S. DCIT (SUPRA). RESPECTFULLY FOLLOWING THE SAID D ECISION IN THE CASE OF HIRANANDANI AKRUTI J. V. (SUPRA), WE DECIDE THE ISSUES IN FAVOUR OF THE ASSESSEES THAT A HOUSING PROJECT WILL ALSO CONSIST OF COMMERCIAL AREA TO A PERMISSIBLE LIMIT, AS SETTLED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAMHA ASSOCIATES (SUPRA) (NOW UPHELD BY THE HON'BLE BOMBAY HIGH COURT) AS APP LICABLE UPTO A.Y. 2004-05. AND SECONDLY, THE LAW AS IT EXISTE D IN THE ASSESSMENT YEAR WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL OF TH E PROJECT AND PERMISSION FOR THE SAME WAS ACCORDED TO AND WHEN THE ASSESSEE COMMENCED THE PROJECT IS TO BE APPLIED. IN THE PRESENT CASE, UNDISPUTEDLY THE ASSESSEES HAD STARTED THE PRO JECT IN THE YEAR 2001 WHEN SUB-CLAUSE (D) TO SECTION 80IB(1 0) WAS NOT IN EXISTENCE, HENCE IT CANNOT BE APPLIED ON SUCH PROJ ECTS AS HELD BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF H IRNANDANI AKRUTI J. V. (SUPRA). IN THIS REGARD, WE ALSO FIND STR ENGTH FROM THIS PLEA OF THE LD. A.R. WHICH WAS ALSO RAISED BEFORE IN T HE CASE OF HIRANANDANI AKRUTI J.V. THAT IF THE ASSESSEE HAD FOLLOW ED WIP (WORK-IN-PROGRESS) METHOD, THE INCOME FROM THE PROJEC T WOULD HAVE BEEN TAXABLE IN THE EARLIER YEARS AS THE PROJECT WAS COMPLETED EARLIER TO THE AMENDMENT AND IN THAT CASE, AS PER THE OLD PROVISION THE ASSESSEE WOULD HAVE BEEN ELIGIBLE FOR THE DEDUCTION. BUT, JUST BECAUSE THE ASSESSEE HAS FOLLOWED TH E PROJECT COMPLETION METHOD, IN THESE CASES, THE DEDUCTION IS BE ING DENIED BECAUSE IT FALLS IN A. Y. 2005-06. IN OUR VIEW THE NE WLY INSERTED CLAUSE (D) TO SECTION 80IB(10) WILL NOT APPLY ON THE PROJECTS APPROVED UPTO 31.3.05 SINCE IN THOSE PROJECTS ASSESSEES AR E REQUIRED TO CONSTRUCT WHAT HAS BEEN APPROVED. THE ONL Y FISSILE COMPLIANCE IS REQUIRED TO BE MET AS PER THE HARMONIOU S INTERPRETATION OF SECTION 80IB(10) AS AMENDED IS TO C OMPLETE SUCH PROJECTS (APPROVED BEFORE 1.4.2004) ON OR BEFORE 31. 3.2008. IN THE CASES BEFORE US THE PROJECTS HAVE BEEN COMPLETED WE LL BEFORE THIS DATE. PUTTING OF SUCH CONDITION OF TIME LIMIT IS WELL UNDERSTOOD. SINCE THE LEGISLATURE INTENDED THE COMPLE TION OF PROJECTS WITHIN A TIME FRAME TO AVOID INCONVENIENCE TO THE BENEFICIARIES I.E. THE BUYERS. IN THIS REGARD THE LEGI SLATURE HAS CATEGORIZED THE TIME LIMIT FOR THE PROJECTS APPROVE D ON DIFFERENT PERIOD BEFORE 31.3.2007 BUT REQUIREMENT REMAINED TH E SAME THAT PROJECTS WOULD BE APPROVED BY THE LOCAL AUTHORITY. C OMPLIANCE OF THE REQUIREMENT PROVIDED IN CLAUSE (D) TO THE SECTIO N IS POSSIBLE ONLY IN THOSE PROJECTS WHICH HAVE BEEN STARTED ON OR AFTER 1.4.2005 AS BY THOSE ASSESSEES WERE ALL AWARE ABOUT THE PROVISIONS LAID DOWN IN CLAUSE (D). 23 20. BY APPLYING THE PRINCIPLE OF HARMONIOUS CONSTRUCT ION TO INTERPRET THE PROVISIONS UNDER SUB-SECTION (10) TO SEC TION 80IB AS AMENDED W.E.F. 1.4.2005 WE COME TO THE CONCLUSION TH AT THE LEGISLATURE ALWAYS INTENDED THAT THE PROJECT MUST BE A PPROVED BY THE LOCAL AUTHORITY, THUS IN THOSE APPROVED PROJECTS W HERE CONSTRUCTION HAS BEEN STARTED MUCH EARLIER THAN 1.4.20 05, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLAN AS IT HAS BEE N APPROVED. AS PUTTING SUCH ASSESSEES TO COMPLETE THE PLAN M EETING OUT CONDITION UNDER CLAUSE (D) OF THE SUBSECTION WOULD LEAD INTO ABSURDITY AND IMPOSSIBILITY FOR THE ASSESSEE AND IN CONTRA DICTION TO THE PROVISIONS U/S. 80 IB(10) AS PREVAILED AT THE TI ME OF APPROVAL AND COMMENCEMENT OF THE CONSTRUCTION OF THE PROJECT WELL BEFORE 1.4.2005. BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V (SUPRA) HAS DISCUSSED ALL THESE RE LEVANT ASPECTS RAISED BY THE DEPARTMENT. IN THE CASE OF HIRANA NDANI AKRUTI J. V V/S. DCIT, IT HAS BEEN HELD THAT THE LAW AS EXISTED WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL AND PERMISSION FOR CARRY ING OUT THE DEVELOPMENT WAS ACCORDED AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. IN THE PRESEN T CASES, AS PER PAGE NOS. 17 AND 20 OF THE PAPER BOOK IN THE CA SE OF OPEL SHELTER THE PROJECT WAS COMMENCED ON 23.2.2001 AND E VEN COMPLETED ON 14.5.2004, SIMILARLY AS PER THE CONTENTS OF PAGE NO.2 OF THE ASSESSMENT ORDER AND PAGE NO. 41 OF THE PAP ER BOOK IN THE CASE OF D.S. KULKARNI AND ASSOCIATES, THE PROJECT W AS COMMENCED ON 12.4.2001 AND COMPLETED IN THE MONTH O F NOVEMBER 2003. THUS, THE ASSESSEES WERE SUPPOSED TO COMPLET E THE PROJECTS AS PER THE LAW AS EXISTED IN THE A. Y. 200 1-02 IN THE CASE OF OPEL SHELTERS AND IN THE A.Y. 2002-03 IN THE CASE OF D.S. KULKARNI & ASSOCIATES. WE THUS FOLLOWING THE DECISION IN THE CASE OF HIRANANDANI AKRUTI JV VS DCIT (SUPRA) HOLD THAT A MENDED PROVISIONS U/S 80IB(10) W.E.F. 01.04.2005 ARE NOT APPL ICABLE IN THE PRESENT CASE, HENCE ASSESSEES ARE ELIGIBLE FOR THE CLA IMED DEDUCTION U/S 80IB(10) OF THE ACT. WE ACCORDINGLY D IRECT THE A.O. TO ALLOW THE CLAIMED DEDUCTION TO THE ASSESSEE.' IN THE CASE OF THE APPELLANT IT IS SEEN THAT THE PROJ ECT 'ROLLING HILLS SCHEME' WAS STARTED BY THE COMMENCEMENT CERTIFICATE I SSUED ON 30.03.2001 IS AN UNDISPUTED FACT AND, THEREFORE, IT C AN BE SEEN THAT THE PROJECT HAS PRIOR TO 31.03.2005. IN RESPECT OF TH E CASE OF THE APPELLANT, THE ISSUE IS REGARDING THE APPLICATION OF T HE DEFINITION OF THE BUILT-UP AREA INTRODUCED W.E.F. 01.04.2005 WHIL E BEFORE THE PUNE ITAT IN THE CASE CITED (SUPRA) OF OPEL SHELTERS, THE ISSUE WAS APPLICATION OF THE AMENDMENT RESTRICTING COMMERCIAL AREA TO 2000 SQ. FT. OR 5% OF THE BUILT-UP AREA WHICHEVER IS LOWER. THIS AMENDMENT RESTRICTING THE COMMERCIAL AREA WAS ALSO INT RODUCED W.E.F. 01.04.2005 BY THE SAME FINANCE ACT WHICH INTR ODUCED THE DEFINITION OF THE BUILT-UP AREA. IN VIEW OF THE ABO VE, IN MY CONSIDERED OPINION, THE RATIO OF THE DECISION LAID DO WN IN THE ABOVE THREE CITED DECISIONS OF PUNE ITAT ARE CLEARLY APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. THE PROJECT ROLLING HILLS SCHEME HAVE COMMENCED CONSTRUCTION MUCH BEFORE THE AMENDMENT AND, THEREFORE, IT IS NOT POSSIBLE FOR THE A PPELLANT TO COMPLY WITH THE DEFINITION OF BUILT-UP AREA INTRODU CED AT A MUCH LATER DATE I.E. 01.04.2005. THUS, IN VIEW OF THE DEC ISION OF THE JURISDICTIONAL ITAT, WHICH HAS HELD THAT THE AMENDME NT 24 RESTRICTING THE COMMERCIAL AREA IS NOT APPLICABLE TO THE PROJECT STARTED PRIOR TO 31.03.2005, SIMILARLY, IN THE CASE OF THE APPELLANT THE ISSUE IS OF BUILT-UP AREA AND AS THE AFORESAID PROJE CT HAS STARTED PRIOR TO THE AMENDMENT, THE DEFINITION OF BU ILT-UP AREA AS ENVISAGED IN THE AMENDED PROVISIONS OF SUB CLAUSE (D) TO SEC. 80IB (10) W.E.F. 01.04.2005 IS NOT APPLICABLE FOR THE PRO JECT WAS NOT IN EXISTENCE. 3.13 IN VIEW OF THE ABOVE FACT AND THE RATIO OF THE ABOV E DECISIONS INCLUDING THAT OF THE JURISDICTIONAL HIGH CO URT AND ALSO THE FINDING OF THE VALUER WITH RESPECT TO THE RESIDEN TIAL UNITS BEING INDEPENDENT, THE DEFINITION OF BUILT UP AREA AS PER DC RULES OF PMC WILL APPLY AND THUS ALL THE TENEMENTS OF THE PROJ ECT ARE HELD TO BE HAVING AREA OF LESS THAN 1500 SQ.FT. INCLUDING THE RESIDENTIAL UNITS 10, 11, 18, 21 AND 22 WHOSE AREA HAD BEEN DISPUT ED BY THE A.O. 3.14 AS REGARDS UNITS NO. 3 & 4 OWNED BY MR. SHARAD VARMA A ND MR. CHITRAVANSHI RAJAT, THE GOVT. APPROVED VALUER HA S AFFIRMED THAT THESE TWO UNITS ARE SEPARATE AND INDEPENDENT RESID ENTIAL UNITS AND SOLD TO TWO INDEPENDENT BUYERS I.E. UNIT NO. 3 TO MR. SHARAD VARMA AND UNIT NO. 4 TO MR. CHITRAVANSHI RAJA T BY WAY OF SEPARATE SALE DEEDS. IT HAS ALSO BEEN DEMONSTRATED THAT T HE PMC HAS NOT ONLY ISSUED TWO OCCUPATION CERTIFICATES FOR THE TWO UNITS BUT ISSUED SEPARATE PROPERTY TAX BILLS. EVEN THE ELECTR ICITY METERS HAVE BEEN CLAIMED TO BE SEPARATE AND ALSO THE TWO UNI TS HAVE TWO SEPARATE ENTRANCES. IT HAS ALSO BEEN CONTENDED THAT TH E ABOVE TWO UNITS HAVE TWO INDEPENDENT KITCHEN-CUM-DINING ROOMS A ND SEPARATE GAS CONNECTIONS, A FACT WHICH ALSO HAS BEEN AFF IRMED BY THE VALUER SHRI. RUPAREL IN THE VALUATION REPORT SUB MITTED BEFORE THE ASSESSING OFFICER. THE APPELLANT HAS ALSO CLAIMED THA T THE UNIT HOLDERS AFTER TAKING POSSESSION OF THE UNITS HAVE PUT A SM ALL DOOR IN THE COMMON WALL FOR THE CONVENIENCE OF THEIR OLD PARENTS, HOWEVER, THE IDENTITY AS TWO INDEPENDENT RESIDENTIAL UNITS HAS BEEN MAINTAINED. THIS FACT HAS ALSO BEEN CONFIRMED BY THE VALUER IN ITS REPORT, WHO HAS ALSO SUBMITTED THE PHOTOGRAPH OF THE DOOR CONNECTING THE TWO UNITS BUT HAS CATEGORICALLY MENTIO NED THAT THE TWO UNITS ARE INDEPENDENT UNITS. THE ASSESSING OFFICER O N THE OTHER HAND HAS RELIED ON THE STATEMENT RECORDED OF MR . CHITRAVANSHI RAJAT DURING THE ASSESSMENT PROCEEDINGS WHO HAD STATED THAT THE BUILDER HIMSELF HAD CONSTRUCTED THE DO OR THOUGH THIS FACT WAS LATER DENIED BY SHRI. RAJAT BY WAY OF A N AFFIDAVIT. THE OTHER PERSON SHRI. SHARAD VARMA HAD SUBSEQUENTLY CONFI RMED TO THE FACT OF HAVING BUILT THE DOOR AFTER TAKING POSSESSI ON OF THE RESIDENTIAL UNIT. THE ASSESSING OFFICER HAS CLAIMED THE AFFIDAVIT TO BE AN AFTERTHOUGHT AND HAS NOT TAKEN INTO CONSIDERATI ON ITS CONTENT AS WELL AS THE LETTER FILED BY MR. SHARAD VAR MA IN THIS REGARD. THE APPELLANT IN ANY CASE HAS NOT DENIED THE PUTTING UP OF THE DOOR FOR THE CONVENIENCE OF THEIR OLD PARENTS. T HE ASSESSING OFFICER HAS, HOWEVER, NOT LOOKED INTO AND CONSIDERED THE OTHER ASPECT OF THE UNIT WHICH INDICATED THEIR INDEPENDENT EXISTENCE SUCH AS THE SALE DEED, ELECTRICITY METER/BILLS, MUNICIP AL TAX RECORDS, PLANS, SOCIETY CHARGES ETC BEFORE ARRIVING AT THE CORRECT CONCLUSION. THE APPELLANT'S CONTENTION THAT THE TWO U NITS HAD BEEN CONCEPTUALIZED, PLANNED AND EXECUTED AS TWO SEPARATE INDEPENDENT RESIDENTIAL UNITS AB INITIO HAVING TWO I NDEPENDENT 25 KITCHEN CUM DINING ROOM AND SEPARATE GAS CONNECTION H AS ALSO BEEN AFFIRMED BY THE VALUER APPOINTED BY THE ASSESSING OFFICER. THUS IN VIEW OF THE ABOVE FACT, THE EXISTENCE OF TWO INDEPENDENT UNITS CANNOT BE DOUBTED AND THE RELIANCE PLACED BY T HE ASSESSING OFFICER ON THE STATEMENT OF ONE OF THE UNIT HOLDERS SHRI. CHITRAVANSHI RAJAT DEPICTS ONLY HALF THE TRUTH AS THE OTHER UNIT HOLDER WAS NEVER EXAMINED BY THE ASSESSING OFFICER, A ND THE ASSESSING OFFICER HAS ALSO NOT TAKEN INTO CONSIDERATI ON OTHER RELEVANT MATERIAL BROUGHT ON RECORD. THOUGH THE TWO UNIT HOLDERS ARE RELATED TO EACH OTHER BEING BROTHERS, THE RESTRIC TION FOR NOT SELLING RESIDENTIAL UNITS OF THE SAME PROJECT TO DIFFER ENT FAMILY MEMBERS OF THE SAME FAMILY WAS NOT IN STATUTE AT THE R ELEVANT POINT OF TIME AND THIS RESTRICTION WAS INTRODUCED IN S EC. 80IB (10) BY WAY OF CLAUSES (E) AND (F) W.E.F. 1-4-2010, WHICH RESTRICTS THE DEVELOPER / BUILDER TO ALLOT MORE THAN ONE RESIDENTI AL UNIT TO THE SAME PERSON OR TO TWO INDIVIDUALS OF THE SAME FAMILY AN D, THEREFORE, THE LAW AS WAS APPLICABLE IN THE ASSESSMENT Y EAR HAS NO PROVISION PLACING ANY SUCH RESTRICTION OF SELLING UNITS TO MEMBERS OF THE SAME FAMILY. THE FACT BROUGHT ON RECORD CLEAR LY INDICATE THAT THE APPELLANT HAS SOLD THE FLATS SEPARATELY TO TW O PERSONS AND, THEREFORE, THE LEGAL INDEPENDENCE OF THE TWO RESIDEN TIAL UNITS IN THE EYES OF LAW CANNOT BE DENIED TO BE EXISTING. IT I S ALSO EVIDENT FROM THE MATERIAL ON RECORD THAT THE APPELLANT WAS N OT SELLING DIFFERENT FLATS IN THE PROJECT AS COMBINED UNITS AND I N NO OTHER RESIDENTIAL UNITS THE INSTANCE OF A DOOR BETWEEN TWO U NITS HAS BEEN FOUND BY THE ASSESSING OFFICER. THUS IT CAN BE HELD THAT THE ACTION OF PUTTING A DOOR WAS AS PER THE WISH OF THE T WO OWNERS FOR THE CONVENIENCE OF THEIR OLD PARENTS. 3.15 IN THE CASE OF THISTLE PROPERTIES (P) LTD VS ACIT, 138 TTJ 538 (MUM), THE DEDUCTION U/S 80IB (10) WAS DENIED AS I T WAS FOUND THAT IN A HOUSING PROJECT ALL THE 104 UNITS WER E JOINED AND SOLD TO TWO MEMBERS OF THE SAME FAMILY AND, THEREFORE, IT WAS VISIBLE THAT THE APPELLANT HAD DEVELOPED THE PROJECT IN A MANNER TO DEFEAT THE PURPOSE OF THE RESTRICTION PLACED IN CL AUSE (C) OF 80IB(10) OF THE IT. ACT. IN THE PRESENT CASE BEFORE ME, NO SUCH FACT EXISTS. THE THIRD MEMBER JUDGMENT IN THE CASE OF SANGHVI AND DOSHI ENTERPRISES VS ITO, (2011) TTJ (CHENNAI)(TM) IN A SIMILAR FACT HAS HELD THAT WHERE FLATS ARE SOLD VIDE SE PARATE AGREEMENTS AND IF THE FLATS ARE JOINED AFTER SALE, THE BUILDER CANNOT BE PENALIZED FOR THE SAME. THIS PROPOSITION HAS BEEN ACCEPTED FOR THE PERIOD FALLING BEFORE 1-4-2010 WHE N CLAUSES (E) AND (F) WERE INTRODUCED IN SEC. 80IB(10) W.E.F. 1-4 -2010. IN THE CASE OF G.V. CORPORATION VS. ITO (2010) 43 DTR 329 (M UM), THE ISSUE OF THE MERGER OF TWO UNITS HAS BEEN CONSIDERED AN D THE TRIBUNAL HAS HELD AS UNDER : IT IS COMMON KNOWLEDGE THAT MEMBERS OF THE SAME FAMILY WHO PURCHASE SEPARATE RESIDENTIAL UNITS ADJACENT OR CONTIGU OUS TO EACH OTHER OFTEN JOIN THEM BY BREAKING DOWN A WALL OR BY OPENING A DOOR-WAY OR IN MANY OTHER WAYS SO THAT THE ENTIRE FA MILY LIVES TOGETHER AND GETS MORE SPACE TO LIVE. IN MANY CASES, A REQUEST IS MADE BY THE PURCHASERS TO THE BUILDER OR DEVELOPER OF THE HOUSING PROJECT TO JOIN THE FLATS/RESIDENTIAL UNITS AND THE RE QUEST IS CARRIED OUT BY THE BUILDER. IN SUCH CASES, IT IS NOT POSSIBLE T O HOLD THAT THE BUILDER BUILT THE RESIDENTIAL FLAT OF MORE THAN 1,00 0 SQ. FT. OF BUILT- 26 UP AREA. THERE IS NO EVIDENCE ON RECORD TO SUGGEST TH AT THE ASSESSEE ITSELF ADVERTISED THAT THE FLATS WERE OF MORE THA N 1,000 SQ. FT. AND THAT MERELY TO GET THE BENEFIT OF S. 80 -IB HE DREW THE PLANS IN SUCH A MANNER THAT EACH RESIDENTIAL UNIT WAS SH OWN AS NOT MORE THAN 1,000 SQ. FT. OF BUILT-UP AREA. IT IS N OT ALSO THE CASE OF THE CIT THAT EACH FLAT IN THE HOUSING PROJECTS UNDERT AKEN BY THE ASSESSEE COULD NOT HAVE BEEN USED AS AN INDEPENDENT OR S ELF- CONTAINED RESIDENTIAL UNIT NOT EXCEEDING 1,000 SQ. FT . OF BUILT-UP AREA AND THAT THERE WOULD BE A COMPLETE, HABITABLE RESIDENTIAL UNIT ONLY IF TWO OR MORE FLATS ARE JOINED WITH EAC H OTHER, WHICH WOULD ULTIMATELY EXCEED 1,000 SQ. FT. OF BUILT-UP AR EA. IN SUCH A SITUATION, MERELY BECAUSE 9 OUT OF 140 PURCHASERS DESIRE D TO JOIN THE FLATS PURCHASED BY THEM INTO ONE SINGLE UNIT, WH ICH EXCEEDED 1,000 SQ. FT. OF BUILT-UP AREA, CANNOT DISENTITLE THE ASSESSEE TO THE DEDUCTION. IF EACH RESIDENTIAL UNIT DOES NOT EXCEED T HE BUILT-UP AREA OF 1,000 SQ. FT., THE FACT THAT THEY WERE JOINE D TOGETHER BY THE PURCHASERS FOR BETTER LIVING OR FOR MORE SPACE OR FOR ANY OTHER REASON DOES NOT DISENTITLE THE ASSESSEE TO THE CLAIM FOR D EDUCTION UNDER S. 80-IB. 3.15.1 IN MUDHIT MADANPAL GUPA VS ACIT, ITAT (2011 ) 51 DTR 217, THE MUMBAI ITAT HELD THAT WHERE THE FAC TS CLEARLY SHOW THAT THE / BUILDERS/DEVELOPER HAD NO INTENTION TO CO NSTRUCT AND SALE RESIDENTIAL UNITS IN EXCESS OF THE LIMIT PRESCRIBED, THE DEDUCTION CANNOT BE DENIED ONLY BECAUSE TWO OF THE O WNERS COMBINED THEIR UNITS AS PER THEIR REQUIREMENTS. THEREF ORE, AFTER CONSIDERING THE DIFFERENT DECISIONS AVAILABLE ON THIS I SSUE, THE PRINCIPLE THAT IS EMERGING IS THAT THE BENEFIT CAN BE DENIED IF IT COULD BE FOUND ON AVAILABLE FACTS THAT THE BUILDER/D EVELOPER HAD THE INTENTION TO SALE RESIDENTIAL UNITS TO DIFFERENT P ERSONS IN A MANNER SO THAT IT CAN BE COMBINED AND THE PURPOSE OF CLAUSE (C) OF SECTION 80IB(10) GETS DEFEATED. THUS AFTER CAREFULLY C ONSIDERING THE FACT, WHICH CLEARLY SHOWS THAT THE RESIDENTIAL UNI TS WERE SOLD TO TWO DIFFERENT INDIVIDUALS, THE INDIVIDUAL OWNERSHI P IS LEGALLY ENFORCEABLE, THE INDIVIDUALITY OF THE OWNERSHIP EX ISTS BEFORE DIFFERENT AUTHORITIES, ORGANIZATION LIKE PMC FOR COR PORATION TAX, MSEB FOR ELECTRIC METERS, HOUSING SOCIETY FOR MEMBERSHI P, IT WILL BE DIFFICULT TO HOLD THAT THE APPELLANT HAS CONSTRUC TED UNITS 3 & 4 AS ONE RESIDENTIAL UNIT. THE CONSTRUCTION OF A SMALL D OOR CONNECTING THE UNITS HAS BEEN DRIVEN BY THE REQUIREME NT OF THE INDIVIDUAL BUYERS FOR THE CONVENIENCE OF THE OLD PAR ENTS, HAVING NO COMPLICITY OF BUILDER. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE FINDING TO THAT EXTENT I S DIFFICULT TO BE UPHELD AND THE EARLIER FINDING THAT THE COMBINED MEASUREMENT IS ALSO LESS THAN 1500 SQ.FT WITHOUT APPLICATION OF THE DEFINITION OF BUILT UP AREA ALSO GOES IN FAVOUR OF THE APPELLANT. 3.16 IN VIEW OF THE ABOVE FACTS AND THE LAW AS HAS BEE N PROPOUNDED BY DIFFERENT TRIBUNALS AND HIGH COURT, TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT SUSTAINAB LE IN THE FACTS OF THE CASE AND, THEREFORE, THE SAME IS DIREC TED TO BE DELETED AND GROUND OF APPEAL NO I [1.1 TO 1.3] RAISE D BY THE APPELLANT ARE LIABLE TO BE ALLOWED. 27 6. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN ALLOWING DEDUCTION OF RS.2,24,44,980/- U /S.80IB(10) OF INCOME TAX ACT, 1961. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN ALLOWING THE ABOVE DEDUCTION EVEN THOUGH SOME OF THE FLATS EXCEEDED THE BUILT UP AREA OF 1500 SQ.FT. VIOLATING THE SPECIFIC PROVISIONS U/S.80IB(10)(C) OF INCOME TAX ACT, 1961. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN ALLOWING THE ABOVE DEDUCTION RELYING UPON THE AFFIDAVIT FILED LATER ON RATHER THAN THE STATEMENT OF THE FLAT OWNER BEFORE THE ASSESSING OFFICER THAT THE FLATS WERE CONJOINED BY THE BUILDER BEFORE SALE. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN ALLOWING THE ABOVE DEDUCTION EVEN THOUGH SU CH JOINING OF THE FLATS WAS NOT APPROVED IN THE ORIGINAL OR REVISED PLAN PASSED BY THE PUNE MUNICIPAL CORPORATION (PMC). 5) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN HOLDING THAT PROVISION OF SECTION 80IB(14)(A ) ARE PROSPECTIVE AND NOT CLARIFICATORY AND, THEREFORE, DE FINITION OF BUILT UP AREA AS PER PMC RULES WOULD APPLY PRIOR TO 01.04.2 005. 6) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN IGNORING THAT BU ILT UP AREA OF ONE OF THE CONJOINT FLAT EXCEEDED 1500 SQ.F.T EVEN A S PER THE DEFINITION OF PMC RULES. 7) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. WE FIND THE AO IN THE INSTANT CASE DISALLOWED THE CLAI M OF DEDUCTION U/S.80IB(10) ON THE GROUND THAT SOME OF THE UNITS H AD BUILT UP 28 AREA EXCEEDING MORE THAN 1500 SQ.FT. AND THEREFORE THE ASSESSEE DOES NOT FULFIL ONE OF THE CONDITIONS LAID DOWN IN PROVISIONS OF SECTION 80IB(10) OF THE I.T. ACT. WE FIND THE LD.C IT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE B UILT UP AREA OF NONE OF THE FLATS EXCEED 1500 SQ.FT. FROM THE VARI OUS DETAILS FILED BY THE ASSESSEE IN THE PAPER BOOK, WE FIND THE ASSE SSEE AOP IN THE INSTANT CASE HAS COMMENCED THE HOUSING PROJECT NAME LY ROLLING HILLS AT BANER ROAD, PUNE ON 30-03-2001 AS PER COP Y OF THE COMMENCEMENT CERTIFICATE PLACED AT PAGE 8 OF THE PA PER BOOK. SIMILARLY, THE PROJECT WAS COMPLETED ON 27-03-2003 AS PER THE PART COMPLETION CERTIFICATE PLACED AT PAGE 10 OF THE PAP ER BOOK. SINCE THE ASSESSMENT YEAR INVOLVED IN THE INSTANT CASE IS A.Y. 2004-05, THEREFORE, THE QUESTION OF APPLYING THE DEFINITION OF BUILT UP AREA WHICH WAS INTRODUCED W.E.F. 01-04-2005 DOES NOT ARI SE IN THIS CASE IN VIEW OF THE DECISION OF THE PUNE BENCH OF THE TR IBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD., (SUPRA). ACCORDIN G TO THE SAID DECISION, THE BUILT UP AREA IS TO BE MEASURED AS PER THE PUNE MUNICIPAL CORPORATION RULES. THEREFORE, THE QUESTI ON OF INCLUDING THE TERRACE, BALCONY ETC., IN THE BUILT UP AREA DOES NOT ARISE. SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BEN CH OF THE TRIBUNAL IN VARIOUS OTHER DECISIONS. ONCE THE SAME IS EXCLUDED FROM THE BUILT UP AREA, THE TOTAL AREA OF EACH OF THE UNIT WILL BE LESS THAN 1500 SQ.FT. AS PER REPORT OF THE DEPARTME NTAL VALUER. THEREFORE, THE LD.CIT(A) IN OUR OPINION IS JUSTIFIE D IN ALLOWING THE CLAIM OF THE ASSESSEE ON THIS ISSUE. 29 7.1 AS REGARDS THE INCLUSION OF STAIRCASE AREA IN T HE BUILT UP AREA, WE FIND ALTHOUGH THE DEPARTMENTAL VALUER HAS EXCLUDED THE SAME FROM THE BUILT UP AREA, THE AO HAS CONSIDERE D THE SAME IN THE BUILT UP AREA. THE ACTION OF THE AO IN OUR OPINION IS NOT CORRECT SINCE IN A ROW HOUSE THERE WILL BE A STAIR CASE FROM THE GROUND FLOOR TO THE FIRST FLOOR AND THE SAME CANNOT INCREASE THE BUILT UP AREA OF THE ROW HOUSE. THIS IN OUR OPIN ION IS WITHIN THE BOUNDARY OF THE PLINTH AREA AND THEREFORE THE SAME HAS TO BE EXCLUDED WHICH THE DEPARTMENTAL VALUER HIMSELF HAS CORRECTLY DONE. FURTHER, THE DEPARTMENTAL VALUER HAS CONSIDER ED THE BUILT UP AREA AS PER THE PUNE MUNICIPAL CORPORATIONS RU LES AND REGULATIONS AND THEREFORE THE LD.CIT(A) HAS CORRECT LY APPRECIATED THE FACTS AND HAS CORRECTLY EXCLUDED THE SAME FROM THE TOTAL BUILT UP AREA. 7.2 SO FAR AS THE ROW HOUSE NO.18 BELONGING TO SHRI HARISH WARRIER IS CONCERNED, WE FIND THE AREA OF THE SAID UNIT WAS MEASURED BY THE EARLIER DEPARTMENTAL VALUER ONE SHR I KHANDANGALE, A REPORT OF WHICH IS PLACED AT PAGES 7 4 TO 77 OF THE PAPER BOOK. HE HAD COMPUTED THE AREA AT 1855 SQ.FT . WHILE DOING SO, HE INCLUDED THEREIN THE TERRACE AREA AND THE PA RKING AREA. HOWEVER, ACCORDING TO THE SUCCEEDING DEPARTMENTAL V ALUER SHRI HARSHAD RUPAREL, THE AREA OF THIS ROW HOUSE AS PER PUNE MUNICIPAL CORPORATION RULES IS ONLY 1081 SQ.FT. AFTER EXCLUDI NG THE BALCONY ETC. IF THE BALCONY ETC. ARE INCLUDED, THEN ALSO T HE TOTAL AREA COMES 30 TO 1363.04 SQ.FT., I.E., INCLUDING THE BALCONY. TH US, BY BOTH THE METHODS IT IS LESS THAN 1500 SQ.FT. SINCE THE LD.C IT(A) HAS CORRECTLY APPRECIATED THE FACTS, THEREFORE, WE FIND NO INFIRMITY IN THE SAME. 7.3 SO FAR AS THE OBSERVATION OF THE AO THAT CERTAI N ROW HOUSES WERE COMBINED AND THE TOTAL BUILT UP AREA EXCEEDS 1500 SQ.FT. AFTER COMBINING, WE FIND THE DEPARTMENTAL VALUER HA S EVALUATED THIS ISSUE IN HIS REPORT, A COPY OF WHICH IS PLACED AT PAGES 80 TO 83 OF THE PAPER BOOK. SO FAR AS ROW HOUSE NOS. 3 & 4 BELONGING TO SHRI SHARAD VARMA AND SHRI CHITRAVANSHI RAJAT ARE C ONCERNED, WE FIND FROM THE DETAILS FURNISHED IN THE PAPER BOOK T HAT BOTH THE UNITS HAVE SEPARATE OCCUPATION CERTIFICATE, SEPARATE CORP ORATION TAX ASSESSMENT, SEPARATE ELECTRICITY METERS ETC. THE A FFIDAVIT OF THE OWNER SHRI CHITRAVANSHI RAJAT TO THE EFFECT THAT HE HAS COMBINED THE ROW HOUSES LATER ON FOR THE CONVENIENCE OF HIS PARENTS IS ALSO ON RECORD. THE KITCHEN AND ENTRANCE DOORS ARE ALSO SEPARATE. THE REPORT OF THE VALUER APPOINTED BY THE AO SHOWS THAT NONE OF THE UNITS AS PER PUNE MUNICIPAL CORPORATION RULES EXCEE D 1500 SQ.FT. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING VARIOUS JUDICIAL DECISIONS. THE LD. DEPARTMENTAL REPRESENTATIVE COU LD NOT POINT OUT ANY ADVERSE MATERIAL SO AS TO TAKE A CONTRARY V IEW THAN THE VIEW TAKEN BY THE LD.CIT(A) WHO HAS FOLLOWED VARIOU S DECISIONS WHILE ALLOWING THE CLAIM OF THE ASSESSEE. IN THIS VIEW OF THE 31 MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) WHILE ALLOWING THE CLAIM OF DEDUCTION MAD E BY THE ASSESSEE U/S.80IB(10), WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAI SED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 02-12-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 02 ND DECEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II PUNE 4. THE CIT-II, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE