Appeal Details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 4922 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 3 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-06-2011
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
10-06-2011
Assessment Year
2006-2007
Appeal Filed On
03-03-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A BEFORE SHRI PRADEEP PARIKH, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS.259 & 260/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 SANGHVI AND DOSHI ENTERPRISE NO.560, 3H CENTURY PLAZA ANNASALAI, TEYNAMPET, CHENNAI 18. PAN AAYFS 0257 P VS. THE INCOME-TAX OFFICER BUSINESS WARD XV(3) CHENNAI. (APPELLANT) (RESPONDENT) I.T.A. NOS.261 & 262/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 SRI MAHALAKSHMI HOUSING 3H CENTURY PLAZA NO.560, ANNASALAI TEYNAMPET, CHENNAI 18. PAN AAZFS 0513 M VS. THE INCOME-TAX OFFICER BUSINESS WARD XV(3) CHENNAI. (APPELLANT) (RESPONDENT) I.T.A. NOS.263/MDS/2010 ASSESSMENT YEAR : 2006-07 SRI MAHALAKSHMI BUILDERS 3H CENTURY PLAZA NO.560, ANNASALAI TEYNAMPET, CHENNAI 18. PAN AAYFS 6887 P VS. THE INCOME-TAX OFFICER BUSINESS WARD XV(3) CHENNAI. (APPELLANT) (RESPONDENT) ASSESSEES BY : SHRI T.BANUSEKAR RESPONDENT BY : SHRI K.R.MEENA,CIT-DR O R D E R PER PRADEEP PARIKH, V.P. IN ALL THESE ARE FIVE APPEALS BY THREE DIFFERENT ASSESSEES. ALL THE APPEALS ARE AGAINST FIVE DIFFERE NT ORDERS OF THE LD. CIT (A), ALL DATED 29.1.2010. IN THE CASE O F FIRST TWO 2 ITA 259 TO 263 /10 ASSESSEES THEY ARE FOR ASSESSMENT YEARS 2005-06 AND 2006- 07. IN THE CASE OF THIRD ASSESSEE, IT IS FOR ASSESS MENT YEAR 2006-07. SINCE COMMON ISSUES ARE INVOLVED IN ALL TH E FIVE APPEALS, THEY ARE BEING DISPOSED OF TOGETHER BY THI S COMBINED ORDER FOR THE SAKE OF CONVENIENCE. THE APP EALS OF M/S. SANGHVI AND DOSHI ENTERPRISE ARE TAKEN UP FIRS T FOR CONSIDERATION. 2. THE MAIN GROUND IN THESE TWO APPEALS IS AGAINST THE DECISION OF THE AUTHORITIES BELOW THAT THE ASSESSEE IS NOT A BUILDER AND DEVELOPER BUT MERELY A BUILDING CONTRAC TOR AND HENCE, IS NOT ELIGIBLE FOR DEDUCTION UNDER SEC.80IB (10) OF THE INCOME-TAX ACT, 1961 (THE ACT). THE REMAINING GROUN DS ARE AGAINST THE DECISION THAT EVEN OTHERWISE, THE ASSES SEE IS NOT ELIGIBLE FOR THE SAID DEDUCTION AS IT HAS NOT FULFI LLED ALL THE CONDITIONS REQUIRED TO CLAIM SUCH DEDUCTION. 3. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. IN ASSESSMENT YEAR 2005-06, THE ASSES SEE COMPUTED A PROFIT OF RS.2,02,65,109/- FOLLOWING THE PERCENTAGE COMPLETION METHOD AND THE ENTIRE AMOUNT WAS CLAIMED AS DEDUCTION UNDER SEC.80IB(10) OF THE ACT. IN ASSESSMENT YEAR 2006-07, THE ASSESSEE COMPUTED A PR OFIT OF RS.2,96,02,224/- ON THE SAME BASIS AS IN THE EARLIE R YEAR AND CLAIMED DEDUCTION OF RS.2,93,00,835/- UNDER SEC.80IB(10) OF THE ACT. IN BOTH THE YEARS, THE PRO FIT WAS DERIVED FROM A HOUSING PROJECT NAMED AS VIMALACHAL AT NO.1088, PH ROAD, VEPERY, CHENNAI. THE SAID PROJECT WAS CONSTRUCTED ON A LAND OWNED BY HOTEL MULLAI PVT. LT D. (HMPL). 3 ITA 259 TO 263 /10 4. THE ASSESSING OFFICER CONSIDERED THE AGREEMENT D ATED 28.4.2003 ENTERED INTO BETWEEN HMPL AND THE ASSESSE E. HE OBSERVED THAT HMPL AS THE OWNER OF THE LAND DECIDED TO DEVELOP THE PROJECT FOR WHICH THE ASSESSEE WAS NOMI NATED AS ITS BUILDER FOR CONSTRUCTION. THE OTHER OBSERVATION S OF THE ASSESSING OFFICER CAN BE SUMMARISED AS FOLLOWS: A) THE PERMISSIVE POSSESSION OF THE LAND GIVEN TO T HE ASSESSEE DID NOT AMOUNT TO DELIVERY OF POSSESSION A S A PART PERFORMANCE OF THE CONTRACT UNDER SEC.53A OF THE TR ANSFER OF PROPERTY ACT (TP ACT) OR UNDER SEC.2 (47) OF THE IN COME-TAX ACT. B) ALL THE NECESSARY PERMISSIONS REQUIRED TO BE OB TAINED FROM CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY (CM DA), CORPORATION OF CHENNAI (CORPORATION FOR SHORT), AIR PORT AUTHORITY OF INDIA (AAI) ETC. WERE OBTAINED BY HMPL AND NOT THE ASSESSEE. C) THERE WAS NO OUTRIGHT PURCHASE OF LAND ON PAYME NT BY THE ASSESSEE FROM HMPL. D) THE ORDER OF THE DCTO DESCRIBED THE ASSESSEES NATURE OF BUSINESS AS WORKS CONTRACT. E) THE ASSESSEE HAD SUB-CONTRACTED THE CIVIL WORK OF THE PROJECT TO GK SHETTY BUILDERS PVT. LTD. (GKSB) AND THAT THE ASSESSEES STATUS IS SIMILAR TO THAT OF GKSB AND IT CANNOT BE BETTER. THE ASSESSING OFFICER WAS OF THE VIEW THAT DEVELOPM ENT INCLUDES MANY ASPECTS AND CONSTRUCTION IS ONLY ONE OF IT. BASED ON THE ABOVE FACTS AND THE PROVISIONS OF SEC. 80IB (10), THE ASSESSING OFFICER CONCLUDED THAT THE ASSE SSEE HAS ASSISTED THE OWNER, I.E. HMPL IN CONSTRUCTION ONLY AND ALL OTHER DEVELOPMENTAL ASPECTS HAVE BEEN DONE BY HMPL. 4 ITA 259 TO 263 /10 ACCORDINGLY, IT WAS HELD THAT THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION UNDER SEC.80IB OF THE ACT. 5. BESIDES THE ABOVE, THE ASSESSING OFFICER NOTICED THAT CERTAIN OTHER CONDITIONS IN ORDER TO CLAIM THE DEDU CTION WERE VIOLATED. THEY ARE AS FOLLOWS: A) THE BUILT-UP AREA OF CERTAIN FLATS EXCEEDED THE STATUTORY LIMIT OF 1500 SQ.FT. B) IN SOME CASES, TWO FLATS WERE COMBINED TO MAKE A SINGLE DWELLING UNIT WITH A SINGLE ENTRANCE AND HENCE, THE BUILT-UP AREA OF THE COMBINED FLATS WORKED OUT TO BE MORE TH AN 1500 SQ.FT. C) IN ONE CASE, THE PURCHASER OF THE FLAT HAD AN EX CLUSIVE RIGHT OVER THE TERRACE AND IF THE BUILT-UP AREA OF THE TERRACE WAS INCLUDED IN THE BUILT-UP AREA OF THE FLAT, THE MEASUREMENT WOULD EXCEED 1500 SQ.FT. D) ACCORDING TO THE ASSESSING OFFICER, THE PROJECT HAD TO BE COMPLETED ON OR BEFORE 31.3.2008. SINCE THE ASSESSE E DID NOT FURNISH THE COMPLETION CERTIFICATE, THE ASSESSE E WAS NOT ELIGIBLE FOR DEDUCTION. THE ABOVE DETAILS WERE ON THE BASIS OF THE REPORT O F THE VALUATION OFFICER OF THE DEPARTMENT. IN RESPECT OF ALL THE ABOVE OBJECTIONS, THE ASSESSEE SUBMITTED ITS EXPLAN ATION IN DETAIL. HOWEVER, THEY DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER AND HENCE, THE DEDUCTION WAS DENIED. THE TO TAL INCOME FOR ASSESSMENT YEAR 2005-06 WAS COMPUTED AT RS.2,02,65,109/-. FOR THE SAME REASONS, THE IMPUGN ED DEDUCTION WAS DENIED IN ASSESSMENT YEAR 2006-07 ALS O AND THE TOTAL INCOME WAS COMPUTED AT RS.2,96,02,224/-. 5 ITA 259 TO 263 /10 6. THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN TOTO IN BOTH THE YEARS FOR THE SAME REAS ONS AS MENTIONED BY THE ASSESSING OFFICER. 7. THE LD. COUNSEL FOR THE ASSESSEE, FIRST SUBMITTE D HIS ARGUMENTS ON THE QUESTION WHETHER THE ASSESSEE IS A DEVELOPER-BUILDER OR NOT. HE TOOK US THROUGH THE AG REEMENT BETWEEN THE ASSESSEE AND HMPL DATED 28.4.2003. IT W AS POINTED OUT THAT THE ASSESSEE HAS BEEN DESCRIBED AS A BUILDER IN THE SAID AGREEMENT AND MOREOVER, IT IS A LSO THE FINDING OF THE CIT (A) IN PARAGRAPH 8.6 OF HIS ORDE R THAT THE ASSESSEE IS A BUILDER WHICH FINDING IS CONTRADICTOR Y TO THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE IS A CONTRACTOR. NEXT, HIS SUBMISSION WAS THAT SEC.80IB (10) NOWHERE REQUIRES THE ASSESSEE TO BE THE OWNER OF TH E LAND. ELABORATING ON THIS SUBMISSION, THE LD. COUNSEL REF ERRED TO THE EXTRACTS FROM THE MEMORANDUM EXPLAINING THE FIN ANCE BILL, 2009 THROUGH WHICH AN EXPLANATION WAS ADDED T O SEC.80IB (10) WITH RETROSPECTIVE EFFECT FROM 1.4.20 01. THE EMPHASIS WAS THAT THE OBJECTIVE OF THE TAX CONCESSI ON IS TO PROVIDE TAX BENEFIT TO THE PERSON UNDERTAKING THE I NVESTMENT RISK I.E. THE ACTUAL DEVELOPER. IN THIS CONNECTION, OUR ATTENTION WAS DRAWN TO CLAUSES 7, 8 & 9 OF THE AGRE EMENT DATED 28.4.2003 TO SHOW THAT IT WAS THE ASSESSEE WH O HAS TO FIX THE RATE PER SQ.FT. FOR THE CONSTRUCTED AREA, T HAT ASSESSEE WAS ENTITLED TO RECEIVE THE ENTIRE SALES CONSIDERAT ION ON ITS OWN BEHALF AND THAT HMPL HAD NO CLAIM ON SUCH AMOUN TS. IT WAS ALSO POINTED OUT THAT THE RATE FOR SALE OF PROP ORTIONATE UNDIVIDED SHARE OF LAND WAS FIXED AT RS.600/- PER S Q.FT. AS PER CLAUSE 4 OF THE AGREEMENT. IT WAS EMPHATICALLY STATED THAT HMPL WAS ENTITLED TO THIS AMOUNT ONLY WHICH CO NSTITUTED THE RATE FOR SALE OF LAND AND DESCRIBING IT ON PER SQ.FT. BASIS 6 ITA 259 TO 263 /10 WAS ONLY A MODE OF DETERMINING THE AMOUNT PAYABLE T O HMPL. IT DID NOT IN ANY WAY INDICATE THAT HMPL HAD ANY SHARE IN THE SALE CONSIDERATION OF THE BUILT-UP ARE AS. THEREFORE, THE ARGUMENT WAS THAT IT WAS THE ASSESSE E WHO HAD UNDERTAKEN ALL THE INVESTMENT RISKS AND IF ANY PURCHASER FAILED TO MAKE THE PAYMENT, IT WAS THE ASSESSEES L OSS ONLY. IT WAS CONTENDED THAT EVEN IF SOME FLATS ARE NOT SO LD, IT WAS THE ASSESSEES RISK AND SINCE IT HAD TAKEN THE RISK OF DEVELOPMENT, THE ASSESSEE WAS A DEVELOPER AND BUILD ER. 8. THE LD. COUNSEL TOOK UP THE NEXT OBJECTION OF TH E REVENUE AUTHORITIES. IT WAS OBSERVED BY THE AUTHORI TIES THAT TWO FLATS THOUGH SOLD SEPARATELY TO TWO DIFFERENT P ERSONS, THEY WERE COMBINED TOGETHER TO MAKE ONE DWELLING UN IT. TOGETHER, IT MEASURED MORE THAN 1500 SQ.FT. AND HEN CE, ONE OF THE CONDITIONS TO CLAIM DEDUCTION WAS VIOLATED. THE CONTENTION OF THE LD. COUNSEL WAS THAT THE ASSESSEE HAD SOLD TWO FLATS SEPARATELY UNDER TWO SEPARATE AGREEMENTS. IT WAS THE ALLOTTEES OF THE TWO FLATS THAT COMBINED THE FL ATS TOGETHER OVER WHICH THE ASSESSEE HAD NO CONTROL. IN SUPPORT OF THIS CONTENTION, THE LD. COUNSEL DREW OUR ATTENTION TO T HE CONFIRMATION LETTER GIVEN BY THE TWO PURCHASERS OF THE FLATS STATING THAT THEY HAD COMBINED THE TWO FLATS AFTER TAKING POSSESSION FOR THEIR OWN CONVENIENCE. THUS, ACCORDI NG TO THE LD. COUNSEL THE ASSESSEE HAD NOT VIOLATED THIS COND ITION. 9. THE NEXT OBJECTION OF THE REVENUE WAS THAT THE PURCHASER OF THE FLAT ON THE TOP FLOOR HAD AN EXCLU SIVE RIGHT OVER THE TERRACE AND HENCE IT SHOULD FORM PART OF T HE BUILT-UP AREA. THIS OBJECTION WAS COUNTERED BY THE LD. COUNS EL BY STATING THAT THOUGH THE TOP FLOOR OCCUPANT HAD PAID FOR THE EXCLUSIVE RIGHT OF THE TERRACE, THE OCCUPANT DID NO T HAVE SUCH 7 ITA 259 TO 263 /10 A RIGHT. ONLY THING WAS THAT THE ACCESS TO THE TERR ACE WAS THROUGH THE FLAT ONLY AND THERE WAS NO INDEPENDENT ACCESS. ALTERNATIVELY, IT WAS CONTENDED THAT IF AFTER ADDIN G TERRACE TO THE BUILT-UP AREA, THE TOTAL AREA EXCEEDED 1500 SQ. FT., THEN PRO RATA DEDUCTION SHOULD BE GIVEN. FOR THIS ALTERN ATIVE CONTENTION RELIANCE WAS PLACED ON THE DECISION OF T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIA TES VS. JCIT (30 SOT 155) AND ON SEVERAL OTHER DECISIONS OF THE TRIBUNAL. THESE DECISIONS, IT WAS CONTENDED, WERE B ASED ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN I.T. APPEAL NO.4 53 OF 2006 DATED 5.1.2007. 10. THE NEXT OBJECTION OF THE REVENUE IS WITH REGAR D TO CERTAIN FLATS MEASURING MORE THAN 1500 SQ.FT. IN TH IS CONNECTION, THE LD. COUNSEL DREW OUR ATTENTION TO T HE CERTIFICATE GIVEN BY THE REGISTERED VALUER AS PER W HICH THE CONCERNED FLATS MEASURED LESS THAN 1500 SQ.FT. HOW EVER, HE HAD NO OBJECTION IF THE MATTER WAS REMITTED FOR VER IFICATION AND IT WAS STATED THAT LET BOTH THE VALUERS TAKE ME ASUREMENT TOGETHER FOR WHICH THE ASSESSEE WILL EXTEND ITS CO- OPERATION. 11. THE LAST OBJECTION OF THE REVENUE WAS THAT THE PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED TIME OF FOU R YEARS AND HENCE, DEDUCTION WAS NOT AVAILABLE. IT WAS POIN TED OUT THAT THOUGH THE ASSESSEE HAD APPLIED TO OBTAIN COMP LETION CERTIFICATE FROM CMDA IN TIME, FOR CERTAIN REASONS IT WAS REJECTED. THE ASSESSEE THEN APPROACHED THE HIGH COU RT AND THE COURT DIRECTED CMDA TO ISSUE THE CERTIFICATE. U LTIMATELY CMDA DID ISSUE THE COMPLETION CERTIFICATE, ALBEIT L ATE BY ABOUT THREE MONTHS. NONETHELESS, IT WAS SUBMITTED T HAT THE CORPORATION OF CHENNAI HAS ISSUED A CERTIFICATE DAT ED 8 ITA 259 TO 263 /10 28.12.2007 STATING THAT THE BUILDING WAS INSPECTED ON 23.11.2007 AND IT IS FOUND THAT IT SATISFIES THE AP PROVED BUILDING PERMIT CONDITIONS. THE FACT THAT CORPORATI ON IS THE LOCAL AUTHORITY TO APPROVE THE CONSTRUCTION IS SUPP ORTED BY THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL I N THE CASE OF JAIN HOUSING & CONSTRUCTIONS LTD. IN ITA NO.1369/MDS/2009 DATED 5.2.2010. THE CERTIFICATE OF THE CORPORATION IS SOUGHT TO BE FILED AS ADDITIONAL EVI DENCE. THUS, FINALLY THE LD. COUNSEL WOUND UP HIS ARGUMENT S BY STATING THAT THE ASSESSEE WAS A DEVELOPER-BUILDER, THAT NO CONDITIONS PRESCRIBED UNDER SEC.80IB (10) WERE VIOL ATED AND HENCE, WAS ELIGIBLE FOR THE IMPUGNED DEDUCTION. 12. THE LD. D.R. FIRST DREW OUR ATTENTION TO THE PR OVISIONS IN SEC.80IB (10) TO POINT OUT THAT AN UNDERTAKING CLAI MING DEDUCTION UNDER THIS PROVISION SHOULD BE BOTH, A DE VELOPER AS WELL AS A BUILDER. IF THE UNDERTAKING IS ONLY ON E OF THEM, IT WILL NOT BE ENTITLED TO THE DEDUCTION. HE THEN REFE RRED TO THE ORDER OF THE CIT (A) IN WHICH WAS EXTRACTED CERTAIN PORTIONS OF THE ASSESSMENT ORDER WHICH STATED THAT IT WAS HM PL WHO DECIDED TO DEVELOP THE PROJECT, NOMINATED THE ASSES SEE AS ITS BUILDER FOR CONSTRUCTION AND THAT THE LAND HAND ED OVER TO THE ASSESSEE WAS NOT TOWARDS PART PERFORMANCE OF TH E CONTRACT UNDER SEC.53A OF THE TRANSFER OF PROPERTY ACT OR UNDER SEC.2 (47) OF THE ACT. THE LD. D.R. DREW OUR ATTENTION TO THE REMAND REPORT OBTAINED BY THE CIT (A). AS PE R THE SAID REPORT, THE FINDING WAS THAT THE PAYMENT TO BE MADE BY THE ASSESSEE TO HMPL WAS ON SQ. FOOT BASIS WHICH MA DE IT OBVIOUS THAT THE PAYMENT WAS NOT A CONSIDERATION FO R LAND ALONE. THE AGREEMENT ALSO NOWHERE STATED THAT HMPL WOULD JOINTLY DEVELOP THE PROPERTY ALONG WITH THE ASSESSE E. ACCORDING TO HIM, THE DECISION OF THE CHENNAI BENCH OF THE 9 ITA 259 TO 263 /10 TRIBUNAL IN THE CASE OF SASHWAT CONSTRUCTIONS PVT. LTD. IN ITA NO.1828/MDS/2007 DATED 27.2.2009 WAS SQUARELY APPLI CABLE AND THE SAME SHOULD BE FOLLOWED. THE LD. D.R. NEXT REFERRED TO THE AGREEMENT DATED 28.4.2003 ENTERED INTO BETWE EN HMPL AND THE ASSESSEE. FROM THE AGREEMENT IT WAS PO INTED OUT THAT THE CONSTRUCTION WAS TO BE CARRIED OUT AS PER THE SPECIFICATIONS GIVEN BY HMPL AND THAT THE ASSESSEE AS THE BUILDER COULD NOT DEVIATE FROM IT. THE QUALITY OF C ONSTRUCTION WAS TO BE AS PER THE STANDARDS SET BY HMPLS ARCHIT ECTS. HE ALSO REFERRED TO THE OTHER AGREEMENTS VIZ., ONE BET WEEN HMPL AND THE PURCHASER OF FLAT FOR SALE OF UNDIVIDE D SHARE IN THE LAND. THE NEXT WAS THE CONSTRUCTION AGREEMENT B ETWEEN THE ASSESSEE AND THE PURCHASER OF THE FLAT AND THE THIRD WAS ALSO A CONSTRUCTION AGREEMENT BETWEEN THE ASSESSEE AND THE PURCHASER OF FLAT FOR SALE OF COMMON AREAS. THE THR UST OF HIS ARGUMENTS BY REFERRING TO THESE AGREEMENTS WAS THAT HMPL HAD APPLIED AND OBTAINED ALL THE NECESSARY PERMISSI ONS FROM CMDA AND THE CORPORATION, THAT THE DEED OF SALE IN RESPECT OF FLATS WAS TO BE REGISTERED IN FAVOUR OF THE PURC HASER ONLY AFTER THE ENTIRE CONSIDERATION WAS PAID UP AND HENC E, THERE WAS NO RISK ON THE PART OF THE BUILDER. IT WAS ALSO POINTED OUT THAT THE ALLOTTEES OF THE FLATS HAD REQUESTED HMPL TO ARRANGE FOR THE BUILDER. THE BUILDER WAS TO RECEIVE MONIES IN ADVANCE FROM THE ALLOTTEES AND HENCE, ON THAT COUNT ALSO TH E BUILDER HAS NO INVESTMENT RISK. THE CONSTRUCTION AGREEMENT SPECIFICALLY MENTIONED THAT THE BUILDER WAS NOT TO INCUR ANY LIABILITY IF THE LATTER WAS UNABLE TO DELIVER POSSE SSION WITHIN THE STIPULATED PERIOD. ON THE OTHER HAND, IF THERE WAS A DELAY IN PAYMENT BY THE ALLOTTEES, THE BUILDER WAS ENTITL ED TO INTEREST. IT WAS EMPHATICALLY REPEATED THAT ALL THE PROCEDURES TO OBTAIN ALL THE NECESSARY PERMISSIONS WERE OBTAIN ED BY HMPL AND HENCE, UNQUESTIONABLY HMPL WAS THE DEVELOP ER. 10 ITA 259 TO 263 /10 THE LD. D.R. RELIED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF K. RAHEJA DEVELOPMENT CORPORATION VS. S TATE OF KARNATAKA REPORTED IN 2005 AIR (SC) 2350 AND ALSO I N 141 STC 298. WITH REGARD TO THE VIOLATION OF OTHER COND ITIONS, THE LD. D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORIT IES. HE OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF THE COMPLETION CERTIFICATE OBTAINED FROM THE COR PORATION OF CHENNAI. IT WAS CONTENDED THAT SINCE THE MAIN PERMI SSION WAS FROM CMDA, THE COMPLETION CERTIFICATE ALSO SHOU LD HAVE BEEN OBTAINED FROM THE SAID AUTHORITY WITHIN THE ST IPULATED PERIOD. HE ALSO OBJECTED TO THE ALTERNATE CONTENTIO N OF THE ASSESSEE WITH REGARD TO PRO RATA DEDUCTION IN CASES WHERE THE FLATS MEASURED MORE THAN 1500 SQ.FT. 13. IN HIS COUNTER REPLY, THE LD. COUNSEL MADE SEVE RAL SUBMISSIONS. AGAINST THE REVENUES CONTENTION THAT ASSESSEE WAS NOT THE OWNER OF THE LAND, IT WAS CONTENDED THA T THERE WAS NO SUCH CONDITION IN SEC.80IB (10) TO CLAIM THE DEDUCTION. WITH REGARD TO THE CONTENTION THAT THE P AYMENT TO HMPL WAS ON SQ. FOOT BASIS, IT WAS SUBMITTED THAT I T WAS ONLY THE MANNER TO DETERMINE THE CONSIDERATION FOR SALE OF UNDIVIDED SHARE OF LAND. WITH REGARD TO THE CONTENT ION THAT BUILDING PERMISSION WAS IN THE NAME OF HMPL, IT WAS SUBMITTED THAT UNDER THE LOCAL LAWS IT WAS ONLY THE LEGAL OWNER WHO COULD MAKE APPLICATION AND HENCE THE PROC EDURES WERE UNDERTAKEN BY HMPL. WITH REGARD TO THE COMPLET ION CERTIFICATE OBTAINED FROM CORPORATION, IT WAS CONTE NDED THAT CMDA APPROVES ONLY THE STRUCTURE BUT THE CONSTRUCTI ON IS APPROVED BY THE CORPORATION AND HENCE COMPLETION CERTIFICATE GIVEN BY IT IS TO BE TREATED AS DUE COM PLIANCE UNDER SEC.80IB (10). WITH REGARD TO THE ARGUMENT AB OUT THE INVOLVEMENT OF HMPLS ARCHITECT, THE LD. COUNSEL DR EW OUR 11 ITA 259 TO 263 /10 ATTENTION TO CLAUSE (1) IN THE CONSTRUCTION AGREEME NT DATED 14.11.2003 WHICH STATED THAT THE AREAS COMPUTED BY THE ARCHITECT OF THE ASSESSEE WAS TO BE FINAL AND BINDI NG ON ALL THE PARTIES. AS REGARDS THE DECISION IN THE CASE OF SASHWAT CONSTRUCTION (SUPRA), IT WAS SUBMITTED THAT THE ORD ER RELIED UPON BY THE LD. D.R. WAS DATED 27.2.2009 AND WAS IN RESPECT OF ASSESSMENT YEAR 2004-05. THE LD. COUNSEL FURNISH ED A COPY OF THE ORDER OF THE TRIBUNAL DATED 25.2.2009 I N THE CASE OF THE SAME ASSESSEE FOR ASSESSMENT YEAR 2005-06 IN WHICH THE CLAIM OF THE ASSESSEE WAS UPHELD BY THE TRIBUNA L. THEREFORE, THE CONTENTION WAS THAT THE ORDER FOR AS SESSMENT YEAR 2004-05 WAS ITSELF ERRONEOUS IN SO FAR AS THAT IT DID NOT FOLLOW THE ORDER FOR ASSESSMENT YEAR 2005-06 AND HE NCE THE SAME CANNOT BE RELIED UPON. AGAIN, IT WAS SUBMITTED THAT IN THE CASE OF SASHWAT CONSTRUCTION (SUPRA), IN ITS OR DER FOR ASSESSMENT YEAR 2004-05 THE TRIBUNAL HAD FOLLOWED T HE JUDGMENT OF THE SUPREME COURT IN THE CASE OF FAQIR CHAND GULATI V. UPPAL AGENCIES PVT. LTD. (C.A.NO.3302 OF 2005). IT WAS CONTENDED THAT THIS JUDGMENT OF THE SUPREME COU RT WAS UNDER CONSUMER PROTECTION ACT TO ANSWER THE QUESTIO N WHETHER A LAND OWNER WHO ENTERS INTO AN AGREEMENT W ITH A BUILDER IS A CONSUMER ENTITLED TO MAINTAIN A COMPLA INT AGAINST THE BUILDER AS A SERVICE PROVIDER UNDER THE CONSUMER PROTECTION ACT. THEREFORE, FOR THAT REASON ALSO, TH E DECISION GIVEN IN THE CASE OF SASHWAT CONSTRUCTION FOR ASSES SMENT YEAR 2004-05 CANNOT BE RELIED UPON. NEXT, IT WAS CO NTENDED THAT HMPL HAS NOT OBJECTED TO THE CLAIM OF THE ASSE SSEE OF IT BEING A DEVELOPER AND HAS ALSO NOT CLAIMED ANY DEDU CTION UNDER SEC.80IB OF THE ACT. THEREFORE, WHEN THE PART IES ARE NOT DISPUTING EACH OTHERS STATUS, THE INTENTIONS O F THE PARTIES SHOULD BE CARRIED OUT. AS REGARDS THE CONTE NTION THAT HMPL INCURRED ALL THE CHARGES FOR VARIOUS APPROVALS , IT WAS 12 ITA 259 TO 263 /10 CONTENDED THAT THE ASSESSEE REIMBURSED ALL THE CHAR GES AND THE SAME HAVE BEEN ALLOWED AS DEDUCTION BY THE DEPARTMENT. WITH REGARD TO INVESTMENT RISKS IT WAS CONTENDED THAT IRRESPECTIVE OF THE AMOUNT COLLECTED BY THE ASSESSEE, IT HAD TO MAKE OVER ` 600/- PER SQ. FOOT TO HMPL. IF PRICES OF BUILDING MATERIALS WERE TO GO UP, THE ASSESSEE HAD TO BEAR THE SAME. IF THE ASSESSEE BORROWED MONI ES FOR CONSTRUCTION, IT WAS ITS LIABILITY TO REPAY THE SAM E. THEREFORE, FULL RISK WAS INVOLVED ON THE PART OF THE ASSESSEE. THE CONTENTION OF THE LD. D.R. THAT THE ASSESSEE HAD NO LIABILITY FOR DELAYED POSSESSION WAS NEGATIVED BY THE LD. COU NSEL BY STATING THAT IT WAS ONLY A FORCE MAJEURE CLAUSE OF THE AGREEMENT. COLLECTION OF MONEY FROM THE ALLOTTEES I N ADVANCE WAS THE PREROGATIVE OF THE ASSESSEE AND ONC E THE ASSESSEE PROCEEDED TO CONSTRUCT THE BUILDING, THE R ISK WAS TOTALLY HIS. REFERRING TO THE JUDGMENT IN THE CASE OF K. RAHEJA (SUPRA), IT WAS SUBMITTED THAT UNDER THE SALES-TAX ACT EXTENDED MEANING WAS GIVEN TO THE TERM WORKS CONTR ACT AND AS PER THE SAID DEFINITION THE ASSESSEE WAS A W ORKS CONTRACTOR BUT ONLY FOR THE PURPOSE OF SALES-TAX. W ITH REGARD TO OTHER OBJECTIONS, THE LD. COUNSEL REITERATED HIS EARLIER CONTENTIONS. THUS, THE LD. COUNSEL CONCLUDED HIS AR GUMENTS BY MAKING A FERVENT PLEA THAT THE ASSESSEE SHOULD B E HELD TO BE A DEVELOPER AND BUILDER AND HENCE ENTITLED TO DE DUCTION UNDER SEC.80IB (10) OF THE ACT. 14. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND THE MATERIAL ON RECORD. IT IS AN INTERESTING SITUATION. THE ASSESSEE CLAIMS TO BE THE DEVELOPER OF LAND BUT THE REVENUE IS NOT AGREEABLE TO IT. HMPL DOES NOT CLAIM TO BE T HE DEVELOPER BUT THE REVENUE WANTS TO THRUST THAT STAT US ON IT. ADMITTEDLY, NEITHER OF THE PARTY SAYS THAT THERE WA S A THIRD 13 ITA 259 TO 263 /10 ENTITY WHO DEVELOPED THE PROPERTY. IN FACT, ONE OF THE ARGUMENTS OF THE LD. D.R., AS MENTIONED IN PARAGRAP H 12 ABOVE, WAS THAT THE PROPERTY IS NOT DEVELOPED JOINT LY BY HMPL AND THE ASSESSEE. FORTUNATELY, ONE UNDISPUTED FACT REMAINS THAT THE PROPERTY HAS BEEN DEVELOPED. NO ON E DOUBTS THIS FACTUAL ASPECT. THE ONLY QUESTION TO BE ANSWERED IS AS TO WHO DEVELOPED IT. CERTAINLY IT IS NOT ANY PROVIDENTIAL HAND. IT IS EITHER HMPL OR THE ASSESSEE. 15. BEFORE WE GO INTO THE FACTS OF THE CASE, IT WOU LD BE APPROPRIATE TO UNDERSTAND CERTAIN EXPRESSIONS WHICH MAY BE RELEVANT TO APPRECIATE THE PURPORT OF SEC.80IB(10). (A) BUILDER : A BUILDER IS ONE WHO BUILDS, OR WHOSE OCCUPATION IS THAT OF BUILDING; SPECIFICALLY, ONE WHO CONTROLS OR DIRECTS THE WORK OF BUILDING CONSTRUCTION IN ANY CAPACITY. A PERSON WHOSE BUSINESS IS TO CONSTRUCT BUILDINGS, VESSELS, BRIDGES, CANALS, OR RAILROADS, BY CONTRACT. (B) BUILDER, ARTISAN, ARCHITECT: IN THE PRACTICE OF CIVIL ARCHITECTURE THE BUILDER COMES BETWEEN THE ARCHITEC T WHO DESIGNS THE WORK AND THE ARTISANS WHO EXECUTE IT. (C) BUILDER AND CONTRACTOR: THE WORD BUILDER HAS BEEN USED BY LAWYERS, JUDGES, AND COURTS AS SYNONYMOUS WITH CONTRACTOR WHEN USED IN CONNECTION WITH BUILDING CONTRACTS. (D) CONTRACTOR: PERSON WHO MAKES A CONTRACT, ESPECI ALLY A BUILDER WHO WORKS BY CONTRACT. (E) DEVELOPMENT OF LAND: THE EXPRESSION DEVELOPMEN T MEANS THE REALISATION OF THE POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR MINING. THE ABOVE MEANINGS/EXPLANATIONS OF THE VARIOUS EXPR ESSIONS ARE AS PER LAW LEXICON BY P.RAMANATHA AIYAR (2 ND EDITION 2009). FROM THE ABOVE IT CAN BE SEEN THAT THE MEANI NGS OF DIFFERENT EXPRESSIONS AT TIMES OVERLAPS EACH OTHER AND IN 14 ITA 259 TO 263 /10 PARTICULAR, THE DISTINCTION BETWEEN A BUILDER, D EVELOPER AND CONTRACTOR IS QUITE BLURRED. AS A MATTER OF F ACT, DIFFERENT PERSONS OFTEN USE THE EXPRESSIONS INTERCH ANGEABLY AND ACCORDING TO THEIR OWN PERCEPTIONS. AS A RESULT , THE AGREEMENTS ENTERED INTO BY THE PERSONS INVOLVED IN THESE ACTIVITIES ARE ALSO QUITE OFTEN BLURRED AND LACKING CLARITY LEADING TO AVOIDABLE LITIGATION. BE THAT AS IT MAY, LET US TRY TO ASCERTAIN THE STATUS OF THE ASSESSEE FROM AMIDST TH E DIFFERENT HUES THAT THE EXPRESSIONS DESCRIBED ABOVE RADIATE. 16. ONE OF THE MAJOR OBJECTIONS OF THE REVENUE IS T HAT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND AS THE PR EAMBLE OF THE AGREEMENT DATED 28.4.2003 GOES, IT WAS HMPL WHO DECIDED TO DEVELOP THE PROJECT. IN OUR VIEW, NOTHIN G TURNS ON IT. IT IS VERY OBVIOUS THAT THE FIRST STEP, I.E. TO DEVELOP A PIECE OF LAND ALWAYS RESTS WITH THE OWNER OF THE LAND AND NO OTHER PERSON IS EXPECTED TO BE IN PICTURE AT THE TIME OF MAKING THIS DECISION. THE QUESTION IS NOT WHO DECIDED TO DEVELO P THE LAND BUT THE QUESTION IS WHO ACTUALLY DEVELOPED THE LAND . 17. HAVING DECIDED TO DEVELOP THE LAND, HMPL APPROA CHED THE ASSESSEE. THEY JOINTLY EVOLVED THE SCHEME FOR DEVELOPMENT. THIS IS EVIDENT FROM CLAUSE 1 OF THE A GREEMENT. IN OTHER WORDS, THE OWNER AND THE BUILDER JOINTLY E VOLVED THE SCHEME. AT THIS JUNCTURE, WE MAY HASTEN TO ADD THAT THEY JOINTLY ONLY EVOLVED THE SCHEME. THEY DID NOT JOINT LY DEVELOP THE SCHEME. HAVING JOINTLY DECIDED UPON THE SCHEME, THE NEXT STEP WAS TO OBTAIN THE NECESSARY PERMISSIONS. OBVIOUSLY, SINCE THE LAND IS OWNED BY HMPL, PERMISS IONS HAVE TO BE IN ITS NAME ONLY. OBTAINING PERMISSIONS IN ONES NAME DOES NOT IPSO FACTO MAKE THAT PERSON A DEVELOP ER. 15 ITA 259 TO 263 /10 AGAIN, THIS TOO DOES NOT ANSWER THE QUESTION AS TO WHO DEVELOPED THE LAND OR WHO CARRIED OUT THE DEVELOPME NT. 18. HAVING EVOLVED THE SCHEME AND HAVING OBTAINED T HE NECESSARY PERMISSIONS, THE BUILDER, I.E. THE ASSESS EE ACTUALLY ENTERED THE SCENE TO EXECUTE THE SCHEME AND THE PLA NS. FIRSTLY, THE ASSESSEE WAS HANDED OVER THE POSSESSIO N OF THE LAND. UNLESS THE POSSESSION IS ACTUALLY HANDED OVER TO THE ASSESSEE, THE LATTER CANNOT PROCEED FURTHER. THEREF ORE, CLAUSE 5 OF THE AGREEMENT STATES ABOUT HANDING OVER THE POSSESSION OF THE LAND. IT IS TO BE NOTED THAT THE LAND IS NOT SOLD TO THE ASSESSEE AND THIS IS MADE CLEAR IN CLAU SE 5 ITSELF THAT THE POSSESSION IS NOT GIVEN AS A PART PERFORMA NCE OF A CONTRACT AS CONTEMPLATED U/S.53A OF THE T.P. ACT. H OWEVER, THIS HAS BEEN ONE OF THE ATTACKING POINTS OF THE RE VENUE THAT SINCE THE LAND DOES NOT BELONG TO THE ASSESSEE, THE LATTER CANNOT DEVELOP IT. THE ARGUMENT IS TOO FAR-FETCHED TO BE ACCEPTED. IF A LAND OWNER WANTS TO EXPLOIT UNUSED L AND TO HIS ADVANTAGE, HE MAY HAND IT OVER TO A BUILDER TO DEVE LOP THE SAME WITHOUT PARTING WITH THE OWNERSHIP. THERE MAY BE SEVERAL REASONS NOT TO PART WITH THE OWNERSHIP DESP ITE THE FACT THAT HE WILL BE PARTING WITH A SUBSTANTIAL POR TION OF THE LAND FOR DEVELOPMENT PURPOSE. THE OWNER MAY WANT TO RETAIN THE OWNERSHIP OF THE REMAINING LAND AND DIVISION OF THE LAND INTO TWO PORTIONS MAY NOT BE FEASIBLE. IN THAT CASE , THE OWNER WILL HAVE TO RETAIN THE OWNERSHIP OF THE ENTI RE LAND. THE LEGISLATURE MUST HAVE KEPT SUCH SITUATIONS IN M IND WHILE PROVIDING FOR THE DEDUCTION. AND AGAIN, WHEN EXPLAN ATION WAS ADDED TO SEC.80IB(10) BY FINANCE BILL,2009, THE MEMORANDUM EXPLAINING THE PROVISIONS EMPHASIZED ABO UT THE INVESTMENT RISK WHICH MAY BE TAKEN EITHER BY TH E OWNER OR THE BUILDER OR JOINTLY BY BOTH. IN THE INSTANT C ASE, WHO HAS 16 ITA 259 TO 263 /10 ACTUALLY TAKEN THE RISK, WE SHALL SEE LATER. FOR TH E PRESENT, SUFFICE IT TO SAY THAT OWNERSHIP OF THE LAND WILL N OT BE THE CRITERION TO DECIDE THE STATUS OF A DEVELOPER AS SU CH. 19. THE BUILDER THEN ACTUALLY STARTS THE DEVELOPMEN T WORK. AS PER THE AGREEMENT, THE BUILDER HAS THE EXCLUSIVE RIGHT TO SELL THE FLATS TO THE PERSONS OF HIS CHOICE. HE HAS THE EXCLUSIVE RIGHT TO DETERMINE THE SALE PRICE OF THE FLATS. HE HAS THE EXCLUSIVE RIGHT TO COLLECT THE ENTIRE SALES CONSIDERATION OF THE FLATS. OUT OF THE TOTAL SALES CONSIDERATION RECEIVED BY HIM, HE HAS TO MAKE OVER ONLY THE COST OF UNDIVIDED SHARE OF LAND TO THE OWNER WHICH IS FIXED AT ` 600 PER SQ.FT. OF THE SUPER BUILT-UP AREA. AT THIS JUNC TURE, WE MAY DEAL WITH ONE OF THE ARGUMENTS OF THE REVENUE THAT SINCE THE PRICE TO BE PAID TO THE OWNER IS BASED ON BUILT-UP AREA, IT AUTOMATICALLY PROVES THAT THE OWNER IS THE DEVELOPE R. WE ARE NOT INCLINED TO BUY THIS ARGUMENT. APPARENTLY IT MA Y SEEM TO BE SO. BUT THEN, ONE HAS TO INTERPRET THE DOCUMENT AS MAY HAVE BEEN INTENDED BY THE PARTIES. THE OWNER IS ENT ITLED TO RECEIVE ONLY THE COST OF LAND. IT HAS NO INTEREST I N WHAT COST THE BUILDER INCURS FOR CONSTRUCTION AND ALSO HAS NO INTEREST IN WHAT SALE PRICE PER FLAT THE BUILDER RECEIVES. FURT HER, ONLY THAT PART OF THE LAND IS TO BE TRANSFERRED WHICH IS UTILISED FOR CONSTRUCTION. THEREFORE, THE BEST WAY TO DESCRIBE T HE OWNERS CONSIDERATION OF LAND IS TO DETERMINE IT ON THE BAS IS OF SUPER BUILT-UP AREA. CONSIDERING THE DISCUSSION IN THIS P ARAGRAPH, ONE IS LEAD TO FRAME AN OPINION THAT THE ASSESSEE I S NOT ONLY A BUILDER BUT IS ALSO A DEVELOPER. HOWEVER, THIS IS NOT THE END OF THE STORY AND AFTER ALL, IT IS SAID THAT OPINION MAY BE STRONGER THAN IMPRESSION, BUT NOT AS STRONG AS A BE LIEF. THERE ARE OTHER DIMENSIONS ALSO TO THE ASPECT OF BUILDER AND DEVELOPER WHICH WE SHALL EXAMINE NOW. 17 ITA 259 TO 263 /10 20. WE TAKE UP THE MOST IMPORTANT DIMENSION WHICH RELATES TO THE INVESTMENT RISK INVOLVED. IN PARAGRA PH 15 ABOVE WE HAVE GIVEN THE MEANING OF THE EXPRESSION DEVELOPMENT WHICH MEANS THE REALISATION OF THE POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR MINING. IN THE PRESENT CASE, UNDOUBTEDLY, HMPL AS THE OWNER OF THE LAND HAS VENTURED TO REALISE THE POTENTIALITIES OF THE LAND. IT HAS INDEED REALISED THE POTENTIALITIES, NOT BY DEVE LOPING THE LAND BUT BY HANDING OVER THE LAND FOR DEVELOPMENT T O THE BUILDER. THIS IS EVIDENT FROM THE FACT THAT HMPL IS TO RECEIVE ONLY THE COST OF THE UNDIVIDED SHARE OF LAND. IT IS NOT THAT HMPL HAD PURCHASED THE LAND WITH A VIEW TO PUT UP T HE PRESENT PROJECT. IT HAD PURCHASED THE LAND WAY BAC K IN 1970 AND IT WAS ONLY IN 2003 THAT IT DECIDED TO EXPLOIT ITS POTENTIALITIES. FURTHER, HMPL WILL UNDOUBTEDLY RECE IVE THE COST OF LAND IRRESPECTIVE OF THE FACT WHETHER THE B UILDER IS ABLE TO SELL THE FLATS OR NOT. THUS, HMPL IS MERELY ENCASHING PART OF THE INVESTMENT MADE MORE THAN THREE DECADES AGO. ON THE OTHER HAND, THE BUILDER ON ITS PART WOULD BE INVESTING IN MATERIAL AND LABOUR NOW AND THE RECOUPMENT OF TH IS INVESTMENT IS UNCERTAIN. WHETHER ALL THE FLATS ARE BOOKED OR NOT, THE BUILDER WILL HAVE TO CONSTRUCT THE ENTIRE BUILDING. THIS IS SO BECAUSE IF A PERSON HAS BOOKED A FLAT ON 4 TH FLOOR AND THE FLAT ON 3 RD FLOOR IS NOT BOOKED, HE WILL HAVE TO HAND OVER THE POSSESSION OF THE 4 TH FLOOR FLAT FOR WHICH NECESSARILY HE WILL HAVE TO CONSTRUCT THE 3 RD FLOOR. THUS, HE WOULD BE INVESTING IN THE 3 RD FLOOR WITHOUT ANY CERTAINTY OF IT BEING SOLD. IN OTHER WORDS, THE BUILDER WILL HAVE TO PUMP IN THE FUNDS TO BUILD THE ENTIRE PROJECT THE REALISATION F ROM WHICH IS QUITE UNCERTAIN. AS AGAINST THIS, WHAT IS THE RISK OF HMPL. AT WORST, THE BUILDER MAY DEFER THE PAYMENT FOR A WHIL E. BUT ONCE THE CONSTRUCTION OF THE PROJECT IS OVER, HMPL WOULD 18 ITA 259 TO 263 /10 CERTAINLY DEMAND ITS POUND OF FLESH. THUS, THE RISK OF HMPL IS MANY TIMES LESSER THAN THAT OF THE BUILDER. THE OPI NION WHICH WE HAD FORMED IN PARAGRAPH 19 ABOVE THAT THE BUILDE R IS ALSO THE DEVELOPER GETS STRENGTHENED WITH THESE FACTS. W E MAY STILL GO FURTHER. 21. THERE IS A CONSTRUCTION AGREEMENT BETWEEN THE ASSESSEE AS THE BUILDER AND THE PURCHASER OF EACH F LAT. THE OVERALL IMPLICATION OF SUCH AN AGREEMENT WILL BE EX AMINED LATER. AT THE MOMENT WE DEAL ONLY WITH CERTAIN IMPO RTANT CLAUSES OF THE AGREEMENT. FIRSTLY, THE PREAMBLE TO THE AGREEMENT GIVES COMPLETE RIGHTS TO THE BUILDER TO E NTER INTO BUILDERS AGREEMENT FOR ALLOTMENT AND CONSTRUCTION OF BUILT- UP AREA DIRECTLY WITH THE PARTIES. THE PRICE FOR EA CH FLAT IS FIXED BY THE BUILDER AND THE PURCHASER AND HMPL IS NOWHERE IN PICTURE. THE BUILDER HAS TO PURCHASE ALL THE REQ UIRED MATERIALS AND SUPPLY LABOUR. ONE OF THE IMPORTANT R IGHTS GIVEN TO THE BUILDER IS THAT AS PER CLAUSE 30 OF TH E CONSTRUCTION AGREEMENT, BUILDER HAS THE RIGHT TO RA ISE ADDITIONAL STOREYS AND MAKE ADDITIONS IN THE PROPOS ED BLOCKS TO BE CONSTRUCTED. HMPL IS IN NO WAY INTERESTED IN THIS RIGHT OF THE BUILDER. AS PER CLAUSE 25 OF THE AGREEMENT, THE BUILDER WILL ALWAYS HAVE THE OPTION AND RIGHT TO MAINTAIN A LL COMMON SERVICES LIKE SECURITY ARRANGEMENT, MAINTENANCE OF LIFTS, COMMON PASSAGE AND LOBBIES ETC. AS PER CLAUSE 52 OF THE AGREEMENT THE BUILDER HAS THE RIGHT TO CHANGE THE U SAGE OF CERTAIN AREAS ON THE GROUND FLOOR FROM GENERATOR RO OM, AIR CONDITIONING PLANT ROOM, GARBAGE ROOM ETC. ON THE O NE HAND TO GYMNASIUM, HEALTH CLUB, COMMUNITY ROOM ETC. ON T HE OTHER HAND. IN ALL SUCH MATTERS, HMPL HAS NO ROLE T O PLAY. AS PER CLAUSE 27 OF THE AGREEMENT, THE BUILDER HAS THE RIGHT TO COLLECT MAINTENANCE EXPENSES IN ADVANCE FROM THE PU RCHASER 19 ITA 259 TO 263 /10 OF THE FLAT. ALL THESE FACTS GO TO SHOW THAT IT IS THE BUILDER WHO IS RESPONSIBLE TO DEVELOP THE PROPERTY, MAINTAI N IT AND SATISFY THE PURCHASERS. WE REITERATE, HMPL IS NOWHE RE IN THE PICTURE. THIS FURTHER STRENGTHENS OUR VIEW THAT THE ASSESSEE IS A BUILDER AS WELL AS A DEVELOPER. LET US NOW HAV E A HOLISTIC VIEW OF THE ENTIRE ARRANGEMENT. 22. AS PER SEC.80IB(10), THE DEDUCTION IS AVAILABLE TO AN UNDERTAKING WHICH IS ENGAGED IN THE DEVELOPING AND BUILDING HOUSING PROJECTS. IN OTHER WORDS, THE UNDERTAKING S HOULD BE BOTH, A BUILDER AS WELL AS A DEVELOPER. IN PARAGRAP H 15 WE HAVE GIVEN THE MEANINGS OF CERTAIN EXPRESSIONS AS P ER LAW LEXICON. AS PER THE MEANINGS GIVEN, A BUILDER IS ON E WHO BUILDS OR WHOSE OCCUPATION IS THAT OF BUILDING. IN THE INSTANT CASE, BY THE REVENUES OWN ADMISSION, THE ASSESSEE IS A BUILDER. THE MEANING GOES FURTHER TO STATE THAT A B UILDER IS SPECIFICALLY ONE WHO CONTROLS OR DIRECTS THE WORK O F BUILDING IN ANY CAPACITY. IN THE PRESENT CASE, THE FACTS GO TO SHOW THAT THE ASSESSEE HAS BEEN ENGAGED AS A BUILDER AND IT I S THE ASSESSEE WHO WILL CONTROL AND DIRECT THE WORK OF BU ILDING CONSTRUCTION. NEXT, AS PER LAW LEXICON, A CONTRACTO R IS A PERSON WHO MAKES A CONTRACT, ESPECIALLY A BUILDER W HO WORKS BY CONTRACT. NOW HERE THE REAL DISTINCTION NEEDS TO BE DRAWN BETWEEN THE EXPRESSIONS DEVELOPER AND BUILDER AND BUILDER AND CONTRACTOR. IF A PERSON IS A CONTRACT OR ONLY, THEN, HIS JOB WOULD BE MERELY TO CONSTRUCT THE BUIL DING AS PER THE DESIGNS PROVIDED BY THE OWNER AND HAND OVER THE CONSTRUCTED BUILDING TO THE OWNER. HIS JOB WILL NOT INCLUDE DESIGNING THE PROJECT, SELLING THE FLATS IN THE PRO JECT, ENTERING INTO AGREEMENTS WITH THE PURCHASERS OF THE FLAT OF THE TYPE THEY ARE ENTERED INTO IN THIS CASE. HE WILL NOT BE RUNNING AFTER THE BUYERS TO SELL THE FLATS OR REALISE THE M ONEY FOR THE 20 ITA 259 TO 263 /10 SOLD FLATS. HE WOULD NOT BE MAINTAINING THE PROPERT Y AFTER THE PROJECT IS COMPLETED. HE WOULD NOT BE HAVING ANY RI GHT TO EXTEND THE HEIGHT OF THE BUILDING. HE WOULD NOT BE HAVING ANY RIGHT TO CONVERT ANY AREA FOR A DIFFERENT USAGE . ALL THESE RIGHTS HAVE BEEN DISCUSSED IN PARAGRAPH 21 ABOVE. T HUS, THE ASSESSEE IS NOT A CONTRACTOR SIMPLICITER, HE IS NOT A BUILDER SIMPLICITER, HE IS NOT A DEVELOPER SIMPLICITER. HE IS ALL ROLLED INTO ONE I.E. HE IS A DEVELOPER, A BUILDER AND ALSO A CONTRACTOR. IT IS BECAUSE OF THIS PRACTICAL SITUATI ON WHICH IS QUITE COMMON, LAW LEXICON SAYS THAT THE WORD BUILD ER HAS BEEN USED BY LAWYERS, JUDGES AND COURTS AS SYNONYMO US WITH CONTRACTOR WHEN USED IN CONNECTION WITH BUIL DING CONTRACTS. IN THE BEGINNING OF PARAGRAPH 21 WE HA VE REFERRED TO THE CONSTRUCTION AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE PURCHASER OF THE FLAT AND IT IS M ENTIONED THAT THE IMPLICATION OF THIS AGREEMENT, WE SHALL SE E LATER. THE TIME TO SEE THIS IMPLICATION HAS NOW COME. IT H AS BEEN IN THE ARGUMENT OF THE REVENUE THAT SINCE THE ASSESSEE HAS ENTERED INTO A CONSTRUCTION AGREEMENT WITH THE PURC HASER OF THE FLAT, IT MAKES THE ASSESSEE A CONTRACTOR AND NO T A DEVELOPER. AT THE OUTSET, IT NEEDS TO BE REMINDED T HAT AS PER THE AGREEMENT BETWEEN HMPL AND ASSESSEE, THE FORMER HAD NOMINATED THE LATTER AS A BUILDER AND AS PER CLAUSE 1 OF THE AGREEMENT THE PROJECT WAS JOINTLY EVOLVED BY HMPL A ND THE ASSESSEE. IN OTHER WORDS, THEY JOINTLY DECIDED UPON THE PROJECT BUT THE JOB OF ACTUALLY DEVELOPING THE LAND , BUILDING AND CONSTRUCTING THE PROJECT WAS THE EXCLUSIVE DOMA IN OF THE ASSESSEE. THUS, IT IS NOT THAT THE PURCHASERS OF TH E FLATS HAVE ENGAGED THE SERVICES OF THE ASSESSEE AS A CONTRACTO R. THE QUESTION MAY ARISE, THEN WHY SUCH AN AGREEMENT. WEL L, IT IS MERELY TO DEFINE THE RIGHTS AND LIABILITIES OF THE ASSESSEE VIS- A-VIS THE PURCHASERS OF THE FLATS. WE MAY EXAMINE S OME OF 21 ITA 259 TO 263 /10 THE IMPORTANT RIGHTS AND RESPONSIBILITIES. THE AGRE EMENT DECIDES THE SALE PRICE OF THE FLAT, IT DECIDES THE TERMS OF PAYMENT, IT DECIDES UPON THE TIME SCHEDULE FOR DELI VERING THE FLAT, IT DECIDES UPON THE CONSEQUENCES FOR DEFAULT ON EITHER SIDE, IT PREVENTS THE PURCHASER TO MAKE ANY STRUCTU RAL CHANGES IN THE FLAT, IT DEFINES THE DEFECTS WHICH T HE ASSESSEE WILL HAVE TO REMOVE AND THOSE WHICH HE IS NOT LIABL E TO REMOVE AND SO ON. IT ALSO GIVES THE ASSESSEE THE OP TION AND RIGHT TO MAINTAIN ALL COMMON SERVICES IN THE PROJEC T AND TO COLLECT MAINTENANCE CHARGES. THE POINT IS THAT IF T HE ASSESSEE IS NOT THE DEVELOPER, WHY SHOULD HE TAKE UPON HIMSE LF THE RESPONSIBILITIES OF PROVIDING SECURITY ARRANGEMENT, MAINTENANCE OF COMMON SERVICES, PROVIDING WITH A CA PTIVE SOURCE OF WATER AND SO ON. IN SHORT, THE CONSTRUCTI ON AGREEMENT IN THE PRESENT CASE IS NOT ONE BY WHICH T HE ASSESSEE IS ENGAGED AS A CONTRACTOR BY THE PURCHASE RS OF THE FLATS BUT HAVING BEEN APPOINTED AS A BUILDER AND A JOINT DEVELOPER, THE AGREEMENT HAS BEEN ENTERED INTO ONLY TO DEFINE THE RIGHTS AND LIABILITIES VIS-A-VIS OF THE PURCHASERS OF THE FLATS. IT IS BECAUSE OF THIS COMPLEX ARRANGEMEN T COUPLED WITH THE TERMS LOOSELY USED IN THE AGREEMENTS, THAT MADE US SAY IN PARAGRAPH 15 THAT THE DISTINCTION BETWEEN A BUILDER, DEVELOPER AND CONTRACTOR IS QUITE BLURRED. IT I S IN ORDER TO REMOVE THIS HAZINESS WE HAVE GONE IN DETAIL INTO VA RIOUS AGREEMENTS TO FIND OUT THE EXACT STATUS OF THE ASSE SSEE. OUR CONCLUSION IS THAT THE ASSESSEE IS A DEVELOPER, A B UILDER AND A CONTRACTOR, ALL ROLLED INTO ONE. ON THE OTHER HAN D, HMPL IS ONLY A DEVELOPER AND NOT A BUILDER. EVEN THOUGH, TH E ASSESSEE AND HMPL ARE JOINT DEVELOPERS, IN OUR VIEW , THE ROLL OF THE ASSESSEE AS A DEVELOPER IS GREATER THAN THE ROLL OF HMPL AS DEVELOPER. TO REITERATE BRIEFLY, HMPL IS A DEVELOPER BECAUSE IT HAS JOINTLY EVOLVED THE ENTIRE SCHEME AL ONG WITH 22 ITA 259 TO 263 /10 THE BUILDER AND HAS ATTEMPTED TO REALISE THE POTENT IALITIES OF THE LAND OWNED BY IT. HOWEVER, THIS REALISATION OF THE POTENTIALITIES IS MERELY BY WAY OF ENCASHING A PAST INVESTMENT MADE THREE DECADES AGO. THERE IS NO RISK INVOLVED SO FAR AS HMPL IS CONCERNED, IN THE PRESEN T PROJECT. ON THE OTHER HAND, THE ASSESSEE IS A DEVELOPER BECA USE IT HAS JOINTLY EVOLVED THE PROJECT ALONG WITH HMPL AND WILL REALISE THE POTENTIALITIES OF THE LAND BY RISKING H IS FINANCES TODAY. WHEREAS HMPL IS SURE TO REALISE ITS MONEY, FOR ASSESSEE, THE REALISATION REMAINS UNCERTAIN, OR AT BEST ONE MAY SAY, IT IS NOT AS CERTAIN AS IN THE CASE OF HMP L. IN THE FINAL ANALYSIS, WE CONCLUDE THAT THE ASSESSEE IS A BUILDER AND A DEVELOPER ENTITLED TO DEDUCTION UNDER SEC.80IB(10 ) SUBJECT TO FULFILMENT OF OTHER CONDITIONS MENTIONED IN THE SECTION. 23. WE NOW TAKE UP CERTAIN OTHER OBJECTIONS RAISED BY THE ASSESSING OFFICER ON ACCOUNT OF WHICH ALSO THE DEDU CTION IS DENIED. ONE OF THE OBJECTIONS IS THAT IN SOME CASES , TWO FLATS HAVE BEEN COMBINED TO MAKE A SINGLE DWELLING UNIT A S A RESULT OF WHICH THE TOTAL BUILT-UP AREA OF THE COMB INED FLAT EXCEEDS 1500 SQ.FT. IN THIS CONNECTION, THE ASSESSE E HAS PLACED ON RECORD THE CONFIRMATION GIVEN BY THE PURC HASERS OF THE FLATS STATING THAT THEY HAD COMBINED THE TWO FL ATS AFTER TAKING POSSESSION FOR THEIR OWN CONVENIENCE. IN OUR OPINION, ONCE THE FLATS WHICH ARE SOLD SEPARATELY UNDER TWO SEPARATE AGREEMENTS, THE BUILDER HAS NO CONTROL UNLESS THE J OINING OF THE FLATS ENTAILS STRUCTURAL CHANGES. NOTHING IS BR OUGHT ON RECORD TO EVIDENCE SUCH STRUCTURAL CHANGES. THEREFO RE, IT IS QUITE CLEAR THAT THE TWO FLAT OWNERS HAVE THEMSELVE S COMBINED THE FLATS WHEREBY THE AREA HAS EXCEEDED 15 00 SQ.FT. THE PROJECT AS A WHOLE AND THE ASSESSEE CANN OT BE FAULTED FOR THE SAME. MOREOVER, CLAUSES (E) & (F) O F SEC. 23 ITA 259 TO 263 /10 80IB(10) ARE EFFECTIVE FROM 1.4.2010 AND THEY ARE N OT RETROSPECTIVE IN OPERATION. THEREFORE, THEY DO NOT APPLY TO THE PRESENT CASE WHICH PERTAINS TO THE YEARS PRIOR TO 1.4.2010. ACCORDINGLY, WE DO NOT SEE ANY FORCE IN T HIS OBJECTION AND THE DEDUCTION CANNOT BE DENIED ON THI S GROUND. 24. NEXT OBJECTION OF THE ASSESSING OFFICER IS THAT THE PROJECT HAD TO BE COMPLETED ON OR BEFORE 31.3.2008 AND SINCE THE ASSESSEE DID NOT FURNISH THE COMPLETION C ERTIFICATE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION. THE OBJ ECTION IS TO THE EFFECT THAT THE COMPLETION CERTIFICATE FROM CMD A IS DATED 13.6.2008, I.E. THREE MONTHS AFTER THE DUE DATE FOR COMPLETING THE PROJECT. IN THIS CONNECTION, IT HAS TO BE NOTED THAT THE COMPLETION CERTIFICATE IS TO BE ISSUED BY THE LOCAL AUTHORITY. THE QUESTION IS, WHETHER CMDA CAN BE CON SIDERED TO BE A LOCAL AUTHORITY OR NOT. THIS ISSUE HAD COME UP BEFORE THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF JA IN HOUSING & CONSTRUCTIONS LTD. IN ITA NO.1369/MDS/2009 DATED 5.2.2010. IN THAT CASE, ASSESSEE WAS DENIED DEDUCTI ON IN THE ABSENCE OF COMPLETION CERTIFICATE BY THE CMDA BUT COMPLETION CERTIFICATE ISSUED BY THE CORPORATION OF CHENNAI WAS PLACED ON RECORD. THE TRIBUNAL IN PARAGRAPH 3.5 OF ITS ORDER STATED THAT THE PROJECT LAYOUT PLAN MAY BE RE QUIRED TO BE APPROVED BY THE CMDA BUT AS FAR AS THE CONSTRUCT ION OF THE BUILDING IS CONCERNED, THE LOCAL AUTHORITY, I.E . THE CORPORATION OF CHENNAI IS THE APPROPRIATE AUTHORITY TO REGULATE THE CONSTRUCTION AS PER THE BUILDING BYE-L AWS AND SANCTION PLANS. WHEN IT IS NOT DISPUTED THAT THE CO RPORATION IS THE LOCAL AUTHORITY, CERTIFICATE ISSUED BY IT CA NNOT BE DISREGARDED. THE ASSESSEE HAS PLACED ON RECORD THE COMPLETION CERTIFICATE ISSUED BY THE CORPORATION BY WAY OF ADDITIONAL EVIDENCE. SINCE THE ALLOWABILITY OF THE ENTIRE 24 ITA 259 TO 263 /10 DEDUCTION DEPENDS ON ALL THE CONDITIONS BEING FULFI LLED, WE ADMIT THIS ADDITIONAL EVIDENCE. THE CERTIFICATE CLE ARLY MENTIONS THAT THE BUILDING WAS INSPECTED ON 23.11.2 007 AND THAT IT IS FOUND TO BE SATISFIED THE BUILDING PERMI T CONDITIONS. WE MAY ALSO MENTION THAT THE ROLE OF CMDA IS QUITE DISTINCT FROM THAT OF THE CORPORATION. CMDA LOOKS AT THE PLA NS FROM THE PERSPECTIVE OF THE DEVELOPMENT AND URBANISATION OF THE CITY AS A WHOLE. ON THE OTHER HAND, THE ROLE OF TH E CORPORATION WHILE ISSUING COMPLETION CERTIFICATE IS TO SEE THAT THE UNIT IS HABITABLE IN ALL RESPECTS LIKE CIVIC AM ENITIES AND SO ON. EVEN FOR THE SAKE OF ARGUMENT IF THE CMDA CERTI FICATE IS TO BE CONSIDERED, THEN IN THAT CASE, THE ASSESSEE D ID APPLY FOR THE COMPLETION CERTIFICATE TO CMDA ON 13.3.2006 . IT IS A DIFFERENT MATTER THAT CMDA RAISED CERTAIN OBJECTION S AND THE MATTER WENT UPTO THE HONBLE HIGH COURT ALSO. HOWEV ER, THE FACT REMAINS THAT THE PROJECT WAS COMPLETED MUCH BE FORE THE DUE DATE, MAY BE WITH CERTAIN DEFECTS. ALSO, IT HA S TO BE NOTED THAT THE CMDA CERTIFICATE IS DATED 13.6.2008, I.E. ONLY TWO MONTHS AND THIRTEEN DAYS BEYOND THE DUE DATE. I T IS INCONCEIVABLE THAT THE TYPE OF DEFECTS WHICH WERE P OINTED OUT BY THE CMDA COULD HAVE BEEN RECTIFIED IN SUCH A SHO RT PERIOD. BE THAT AS IT MAY, THE HONBLE HIGH COURT A LSO RATIFIED THE DEVIATIONS AND DIRECTED THE CMDA TO CONSIDER TH E EXPLANATION OF THE ASSESSEE. ALL THESE FACTS GO TO POINT THAT THE PROJECT WAS INDEED COMPLETED BEFORE THE 31.3.20 08. THUS, THIS GROUND ALSO HAS NO FORCE TO DENY THE ASS ESSEE THE IMPUGNED DEDUCTION. 25. THE NEXT OBJECTION OF THE ASSESSING OFFICER IS THAT CERTAIN FLATS IN THE PROJECT MEASURE MORE THAN 1500 SQ.FT. ACCORDING TO THE LD. COUNSEL, AS PER THE MEASUREMEN T TAKEN BY THE REGISTERED VALUER APPOINTED BY THE ASSESSEE, THE SAID 25 ITA 259 TO 263 /10 FLATS MEASURED LESS THAN 1500 SQ.FT. HOWEVER, HE HA D NO OBJECTION IF THE MATTER WAS REMITTED FOR VERIFICATI ON. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF T HE ASSESSING OFFICER WITH THE DIRECTION THAT THE FLATS WHICH ARE ALLEGEDLY MORE THAN 1500 SQ.FT. IN AREA BE MEASURED AGAIN AND THE DEPARTMENTAL VALUER AS WELL AS THE ASSESSEES VALUE R, BOTH SHOULD REMAIN PRESENT. THE ASSESSEE IS DIRECTED TO EXTEND ITS FULLEST CO-OPERATION. IF ON MEASURING THE FLATS, TH EY ARE FOUND TO BE OF MORE THAN 1500 SQ.FT., THE ASSESSING OFFIC ER IS THEN DIRECTED TO ALLOW DEDUCTION ONLY IN RESPECT OF THE PROFITS ARISING FROM THE SALE OF THOSE FLATS WHICH MEASURE LESS THAN 1500 SQ.FT. IN OTHER WORDS, FLATS MEASURING MORE TH AN 1500 SQ.FT. SHOULD BE LEFT OUT. AT THE SAME TIME, WE MAK E IT CLEAR THAT THE DEDUCTION SHOULD BE ALLOWED ONLY IF THE BU ILT-UP AREA OF FLATS MEASURING MORE THAN 1500 SQ.FT. DO NOT EXC EED 10% OF THE TOTAL BUILT-UP AREA. 26. THE LAST OBJECTION OF THE REVENUE IS THAT THE P URCHASER OF THE FLAT ON THE TOP FLOOR HAD AN EXCLUSIVE RIGHT OVER THE TERRACE AND HENCE IT SHOULD FORM PART OF THE BUILT- UP AREA. IF THE TOTAL BUILT-UP AREA INCLUDING THE TERRACE IS CO NSIDERED, THE SAID FLAT WOULD MEASURE MORE THAN 1500 SQ.FT. THE EXPRESSION BUILT-UP AREA HAS BEEN DEFINED IN CLAU SE (A) OF SEC.80IB(14). IT IS MEANT TO BE THE INNER MEASUREME NTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THIC KNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHA RED WITH OTHER RESIDENTIAL UNITS. IT IS NOT DISPUTED THAT TH E TERRACE WHICH IS THE SUBJECT MATTER OF DISPUTE IS ADJOINING TO THE DWELLING UNIT. IN OTHER WORDS, IT HAS TO BE CONSIDE RED AS A PROJECTION OF THE DWELLING UNIT ITSELF. IT IS ALSO NOT DISPUTED THAT IT IS ONLY THE OWNER OF THE TOP FLOOR WHO HAS ACCESS TO 26 ITA 259 TO 263 /10 THE SAID TERRACE AND NO OTHER OCCUPANT OF THE BUILD ING HAS ACCESS TO IT. THOUGH THE LD. COUNSEL VEHEMENTLY ARG UED THAT IT HAS TO BE CONSIDERED AS A PART OF COMMON AREA, W E CANNOT ACCEPT THE SAID ARGUMENT. ACCORDINGLY, THE AREA OF THE TERRACE WILL HAVE TO BE INCLUDED IN THE BUILT-UP AR EA. IN PARAGRAPH 25 WE HAVE RESTORED THE MATTER RELATING T O CERTAIN FLATS ALLEGEDLY HAVING AREA EXCEEDING 1500 SQ.FT. FOR VERIFICATION. ALONG WITH THOSE FLATS, THE FLATS WIT H EXCLUSIVE TERRACE RIGHTS ALSO BE MEASURED AGAIN TO FIND OUT W HETHER THE BUILT-UP AREA EXCEEDS 1500 SQ.FT. OR NOT. IF ANY OR ALL OF THEM ARE FOUND TO BE IN EXCESS OF 1500 SQ.FT., THEN THE SAME DIRECTION AS MENTIONED IN PARAGRAPH 25 WILL APPLY. IT IS CLARIFIED THAT THE BUILT-UP AREA OF THE FLATS WITHO UT TERRACE RIGHTS AND THE FLATS WITH TERRACE RIGHTS, BOTH PUT TOGETHER SHOULD NOT EXCEED 10% OF THE TOTAL BUILT-UP AREA. T O MAKE IT ABUNDANTLY CLEAR IT IS REITERATED THAT SEPARATE LIM ITS OF 10% SHOULD NOT BE WORKED OUT FOR THE TWO CATEGORIES OF THE FLATS BUT BOTH PUT TOGETHER SHOULD NOT EXCEED 10% OF THE TOTAL BUILT-UP AREA. ALSO, DEDUCTION SHOULD BE COMPUTED O NLY IN RESPECT OF FLATS WHICH DO NOT EXCEED 1500 SQ.FT. IN OTHER WORDS, FLATS WHICH EXCEED 1500 SQ.FT. SHOULD BE TOT ALLY IGNORED FOR THE PURPOSE OF DEDUCTION. IF THE BUILT- UP AREA OF THE FLATS EXCEEDING 1500 SQ.FT.(FLATS WITH AND WITH OUT TERRACE RIGHTS PUT TOGETHER) IS MORE THAN 10% OF THE TOTAL BUILT-UP AREA OF THE PROJECT, THEN THE ASSESSEE WILL LOSE DE DUCTION ON THE ENTIRE PROJECT. 27. BEFORE FINALLY CONCLUDING, IT MAY NOT BE OUT OF PLACE TO EXPLAIN THE GENESIS OF OUR DIRECTION GIVEN IN PARAG RAPHS 25 & 26 ABOVE. IN GIVING THE SAID DIRECTION, WE HAVE REL IED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF BRAHMA ASSOCIATES V. JCIT REPORTED IN 122 TTJ 433. IN THAT 27 ITA 259 TO 263 /10 CASE, THE ASSESSEE DEVELOPED A HOUSING PROJECT, WHI CH NOT ONLY COMPRISED OF RESIDENTIAL HOUSING UNITS BUT ALS O COMMERCIAL ESTABLISHMENTS. CLAUSE (D) OF SEC.80IB(1 0) WHICH PERMITS CERTAIN PERCENTAGE OF COMMERCIAL ESTABLISH MENTS IN THE HOUSING PROJECT WAS NOT ON THE STATUTE BOOK FOR THE YEAR WITH WHICH THE SPECIAL BENCH WAS CONCERNED. THEREFO RE, THE QUESTION BEFORE THE SPECIAL BENCH WAS WHETHER DEDUC TION UNDER SEC.80IB(10) IS ADMISSIBLE IN CASE OF A HOUSI NG PROJECT COMPRISING RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. AFTER A DETAILED DISCUSSION, AT PAR AGRAPH 75, THE SPECIAL BENCH OBSERVED THAT A PLAIN READING OF SEC.80IB(10) MAKES IT CLEAR THAT THIS SECTION IS AI MED AT PROMOTING CONSTRUCTION OF HOUSING PROJECTS SO AS TO ADDRESS THE PROBLEM OF SHORTAGE OF DWELLING UNITS. AT PARAG RAPH 76, THE BENCH OBSERVED THAT THE TAX INCENTIVE BY WAY OF DEDUCTION UNDER SEC.80IB(10) IS PREDOMINANTLY FOR T HE PURPOSE OF AUGMENTING AFFORDABLE DWELLING UNITS, AN D IT MUST BE INTERPRETED IN THAT LIGHT. THE BENCH ALSO CONSID ERED NUMEROUS JUDICIAL PRONOUNCEMENTS AND ULTIMATELY CAM E TO THE CONCLUSION THAT IF THE COMMERCIAL BUILT-UP AREA IS NOT MORE THAN 10% OF THE TOTAL BUILT-UP AREA, THE ASSES SEE SHOULD NOT LOSE THE ENTIRE BENEFIT OF SEC.80IB(10). THE BENCH ALSO CONSIDERED THE CLAIM OF THE ASSESSEE FOR PRO R ATA DEDUCTION. HOWEVER, THE BENCH RULED OUT THE CLAIM O N THE GROUND THAT THE DEDUCTION IS AVAILABLE ONLY IN RESP ECT OF THE PROFIT OF THE HOUSING PROJECT. ONE OF THE SEVERAL A UTHORITIES REFERRED TO BY THE BENCH, AND WHICH ACCORDING TO US IS MOST RELEVANT FOR THE PRESENT CASE IS THE CASE OF KAMMIN S BALLROOMS COMPANY LTD. V. ZENITH INVESTMENTS (TORQU AY) LTD., (1971) AC 850. IN THIS CASE, LORD DIPLOCK APP ROVED OF WHAT HE CALLED A PURPOSIVE APPROACH TO STATUTORY INTERPRETATION. A BRIEF DISCUSSION ON THIS IS FOUN D IN 28 ITA 259 TO 263 /10 PARAGRAPH 98 OF THE SPECIAL BENCH ORDER. ACCORDING TO LORD DIPLOCK, THE PURPOSIVE APPROACH WOULD ENJOIN A JUDG E TO IMPUTE TO PARLIAMENT AN INTENTION NOT TO IMPOSE A P ROHIBITION INCONSISTENT WITH THE OBJECTS WHICH THE STATUTE WAS DESIGNED TO ACHIEVE, THOUGH THE DRAFTSMAN HAS OMITTED TO INC ORPORATE IN EXPRESS WORDS ANY REFERENCE TO THAT INTENTION. T HE ESSENCE OF THE PURPOSIVE APPROACH, ACCORDING TO LOR D DIPLOCK, IS FOR THE JUDGE TO ANSWER A SERIES OF QUE STIONS; WHAT IS THE SUBJECT-MATTER OF THE ACT (OR PART OF THE ACT) BEING INTERPRETED? WHAT OBJECT IN RELATION TO THAT SUBJECT- MATTER PARLIAMENT INTENDED TO ACHIEVE BY THE ACT? A ND LASTLY, WHAT PART IN THE ACHIEVEMENT OF THAT OBJECT THE SEC TION UNDER CONSTRUCTION WAS INTENDED TO PLAY? THE PARTICULAR SECTION WILL THEN BE INTERPRETED ACCORDING TO THE OBJECT WH ICH THE COURT DEEMS THE LEGISLATION IS INTENDED TO SERVE. T HIS OPERATES EVEN IF PARLIAMENT HAS FAILED TO INCORPORA TE THE INTENTION WHICH THE JUDGE BELIEVES THAT THE SECTION POSSESSES. LORD DIPLOCK RE-EMPHASISED THE IMPORTANC E OF MAKING A PURPOSIVE APPROACH IN REG. VS. NAT. INS. C OMMR.: EX PARTE HUDSON (1972) AC 944 AT P.1005 : (1972) 2 WLR 210, 251 (HL) THUS : METICULOUS LINGUISTIC ANALYSIS OF WORDS AND PHRASES USED IN DIFFERENT CONTEXTS IN PARTICULAR SECTIONS OF THE ACT SHOULD BE SUBORDINATE TO THIS PURPOSIVE APPROACH. IT SHOULD NOT DISTRACT YOUR LORDSHIPS FROM IT. 28. TAKING INSPIRATION FROM THE ABOVE, AND ADDRESSI NG TO OURSELVES THE QUESTIONS SUGGESTED BY LORD DIPLOCK, WHAT ANSWERS DO WE GET. THE PROVISION WHICH WE ARE INTER PRETING PERTAINS TO HOUSING PROJECTS. THE OBJECT OF THE PRO VISION AS MENTIONED EARLIER AND AS DISCUSSED AT LENGTH IN THE SPECIAL 29 ITA 259 TO 263 /10 BENCH ORDER, IS TO AUGMENT AFFORDABLE DWELLING UNIT S. CAN IT BE SAID THAT BY HAVING ONLY VERY INSIGNIFICANT NUMB ER OF FLATS EXCEEDING 1500 SQ.FT., HAS THE ASSESSEE FAILED TO A UGMENT AFFORDABLE DWELLING UNITS. THE REPLY TO THIS QUESTI ON HAS TO BE IN THE NEGATIVE. HOWEVER, AS OBSERVED IN PARAGRAPH 94 OF THE SPECIAL BENCH ORDER, WE HAVE TO DRAW UP SOME LAKSHM AN REKHA NONETHELESS SO AS TO ENSURE THAT THE BASIC CH ARACTER OF THE PROJECT CONTINUES TO REMAIN IN HARMONY WITH THE OBJECT OF THE TAX INCENTIVE I.E. AUGMENTING AFFORDABLE DWE LLING UNITS. FURTHER, IT NEEDS TO BE EMPHATICALLY STATED THAT PR O RATA DEDUCTION HAS TO BE RULED OUT BECAUSE IF THAT IS PE RMITTED, SOME ASSESSEE MAY CONSTRUCT SUBSTANTIAL NUMBER OF F LATS EXCEEDING 1500 SQ.FT. AND MAY CLAIM DEDUCTION WITHO UT SERVING THE PURPOSE OF THE LEGISLATION. LIKEWISE, T HE FLATS WHICH EXCEED 1500 SQ.FT. ALSO HAVE TO BE LEFT OUT O F THE PURVIEW OF THE DEDUCTION. ON THE OTHER HAND, IN THE PRESENT CASE IF THE AFORESAID LAKSHMAN REKHA IS DRAWN, AND IF THE ASSESSEE IS WITHIN THAT LIMIT, GIVING DEDUCTION TO HIM WILL SERVE THE PURPOSE OF THE LEGISLATION. THEREFORE, WE HAVE DRAWN THE LIMIT OF 10% AND HAVE ALSO HELD THAT IF I T EXCEEDS THE LIMIT OF 10%, THEN THE ASSESSEE WILL LOSE ENTIR E DEDUCTION. THIS EXPLAINS OUR DIRECTIONS GIVEN IN PA RAGRAPHS 25 AND 26. 29. BESIDES THE INSPIRATION AND GUIDANCE WE HAVE FR OM THE DECISION IN THE CASE OF BRAHMA ASSOCIATES(SUPRA), W E ALSO HAVE THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS BENGAL AMBUJA HOUSING DEVELOPMENT LTD IN I.T.A.NO.458 OF 2006 DATED 5.1.2007 AND WHICH IS PL ACED ON RECORD BEFORE US. IN THIS CASE, THE HIGH COURT WAS CONSIDERING THE DECISION OF THE KOLKATA BENCH OF TH E TRIBUNAL IN THE SAME CASE IN I.T.A.NOS. 1595 AND 1735/KOL/20 05 30 ITA 259 TO 263 /10 DATED 24.3.2006. IN THIS CASE, THE ASSESSEE HAD CO NSTRUCTED SMALLER AS WELL AS LARGER RESIDENTIAL UNITS. THE A SSESSEE HAD CLAIMED DEDUCTION ONLY ON ACCOUNT OF SMALLER RESIDE NTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS CONT AINED IN SECTION 80IB(10). THE TRIBUNAL ALLOWED THE CLAIM O F THE AASSESSEE. THE HIGH COURT, DEALING WITH THE SAME C ASE, DISMISSED THE APPEAL FILED BY THE DEPARTMENT HOLDIN G THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS MAT TER. THE QUESTION IS WHETHER THIS DECISION OF THE HIGH COURT IS BINDING OR NOT WHEN IT HAS COME TO THE CONCLUSION THAT NO S UBSTANTIAL QUESTION OF LAW ARISES. THE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD VS DCIT (283 ITR 402) HAS HELD THAT IN A CASE WHERE THE HIGH COURT COMES TO THE CONCLUSION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES ON A PARTICULAR ISSUE, IT COULD NOT BE STATED THAT WHEN THE APPEAL IS DISMISS ED BY THE HIGH COURT, THE SUBJECT MATTER OF THE CONTROVERSY B ETWEEN THE PARTIES HAS NOT BEEN DEALT WITH BY THE HIGH COU RT. IT IS FURTHER STATED THAT THE EFFECT OF DISMISSAL IS THAT THE ORDER OF THE TRIBUNAL ON THE ISSUE WHICH WAS AGITATED BEFORE THE HIGH COURT STANDS MERGED IN THE ORDER OF THE HIGH COURT, AND FOR ALL INTENTS AND PURPOSES, IT IS THE DECISION OF THE HIGH COURT WHICH IS OPERATING AND WHICH IS CAPABLE OF BEING GI VEN EFFECT TO. IT IS NOT OPEN TO ANY PERSON TO CONTEND THAT T HERE IS NO DECISION OF THE HIGH COURT AND THE SUBORDINATE FORU M IS ENTITLED TO TAKE A CONTRARY VIEW THAN THE ONE ADOPT ED IN THE EARLIER PROCEEDINGS WHICH HAVE BEEN AFFIRMED BY THE HIGH COURT BY A PROCESS OF DISMISSAL OF THE APPEAL SIMP LICITER. 30. THE ABOVE ISSUE AND THE JUDGMENT OF THE GUJARAT HIGH COURT WERE CONSIDERED BY THE SPECIAL BENCH OF THE T RIBUNAL IN THE CASE OF MEDICARE INVESTMENTS LTD. VS JCIT (1 14 ITD 34). THE SPECIAL BENCH HELD THAT SUCH A DECISION W HERE THE 31 ITA 259 TO 263 /10 HIGH COURT HAS DISMISSED THE APPEAL ON THE GROUND T HAT NO SUBSTANTIAL QUESTION OF LAW ARISES, IS BINDING ON T HE SUBORDINATE FORUMS. THUS, IT IS CLEAR THAT IN ABSE NCE OF ANY DECISION OF THE JURISDICTIONAL HIGH COURT TO THE CO NTRARY, NOT ONLY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) BUT ALSO THE DECISION OF THE CAL CUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA (SUPRA) ARE BIND ING PRECEDENTS ON THE ISSUE THAT EVEN IF THE ASSESSEE H AS CONSTRUCTED RESIDENTIAL HOUSES OF LARGER AREA, DEDU CTION UNDER SEC. 80IB(10) WILL STILL BE AVAILABLE BUT WIL L BE RESTRICTED TO THE PROFITS ARISING FROM THE SALE OF SMALLER RESIDENTIAL UNITS. ACCORDINGLY, THE ASSESSING OFFI CER IS DIRECTED TO FOLLOW OUR DIRECTIONS IN PARAGRAPHS 25 AND 26 ABOVE. 31. IN THE RESULT, THE TWO APPEALS IN THE CASE OF M /S. SANGHVI & DOSHI ENTERPRISES (ITA NOS.259 & 260/MDS/ 10) ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. SRI MAHALAKSHMI HOUSING (I.T.A.NOS.261 & 262/MDS/20 10) 32. IN THE CASE OF THIS ASSESSEE, THE TWO APPEALS R ELATE TO ASSESSMENT YEARS 2005-06 AND 2006-07. IN BOTH THE ASSESSMENT YEARS, THE MAIN ISSUE IS WHETHER THE ASS ESSEE IS A BUILDER AND DEVELOPER OR NOT AND HENCE, ENTITLED TO DEDUCTION UNDER SEC. 80IB(10) OR NOT. IT IS ADMITT ED BY BOTH THE PARTIES THAT THE FACTS ARE SIMILAR TO THOSE IN THE CASE OF M/S SANGHVI AND DOSHI ENTERPRISE DEALT WITH ABOVE. THEREFORE, FOLLOWING OUR ABOVE ORDER, IT IS HELD TH AT THE ASSESSEE IS A BUILDER AND DEVELOPER AND HENCE, ENTI TLED TO DEDUCTION UNDER SEC. 80IB(10). ANOTHER COMMON ISS UE IN BOTH THE YEARS IS WHETHER THE AREA OF PRIVATE TERRA CE HAS TO 32 ITA 259 TO 263 /10 BE INCLUDED IN THE BUILT-UP AREA OR NOT. IN THIS R EGARD, AS IN THE ABOVE CASE, THE FLATS WITH EXCLUSIVE TERRACE RI GHTS BE MEASURED AGAIN AFTER INCLUDING THE PRIVATE TERRACE AND THEN FOLLOW THE DIRECTIONS GIVEN IN PARAGRAPHS 25 AND 26 ABOVE. 33. IN ASSESSMENT YEAR 2006-07, THERE IS ONE MORE I SSUE WHICH PERTAINS TO THE AREA OF COMMERCIAL PART CONST RUCTED BY THE ASSESSEE. ON PERUSAL OF THE ORDER OF THE CIT(A ), IT APPEARS THAT THE ASSESSEE IS NOT AGREEING WITH THE MANNER IN WHICH THE DEPARTMENT HAS COMPUTED THE AREA. THEREF ORE, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF MEASURING THE COMMERCIAL ARE A AND THEN DECIDE ABOUT THE DEDUCTION IN ACCORDANCE WITH LAW. 34. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. SRI MAHALAKSHMI BUILDERS (I.T.A.NO.263/MDS/2010) 35. THIS APPEAL PERTAINS TO ASSESSMENT YEAR 2006-07 . IN THIS APPEAL ALSO, THE MAIN ISSUE IS WHETHER THE ASS ESSEE IS A BUILDER AND DEVELOPER OR NOT. ADMITTEDLY, THE FACT S ARE IDENTICAL TO THE FACTS IN THE CASE OF SANGHVI AND D OSHI ENTERPRISE AND ACCORDINGLY, FOLLOWING OUR ORDER ABO VE, IT IS HELD THAT THE ASSESEE IS A BUILDER AND DEVELOPER EN TITLED TO DEDUCTION UNDER SEC. 80IB(10). 36. THE ONLY OTHER DISPUTE RELATES TO THE INCLUSION OF PRIVATE TERRACE IN THE BUILT-UP AREA. IT IS DIRECT ED THAT THE FLATS WITH EXCLUSIVE TERRACE RIGHTS BE MEASURED AGA IN AND THEN OUR DIRECTIONS IN PARAGRAPHS 25 AND 26 BE FOLL OWED. 33 ITA 259 TO 263 /10 37. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 38. SUMMARIZING THE RESULT OF THIS ORDER, ALL THE F IVE APPEALS IN RESPECT OF THE THREE ASSESSEES ARE PARTL Y ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON SEPARATE ORDER SD/- (GEORGE MATHAN) JUDICIAL MEMBER (PRADEEP PARIKH) VICE-PRESIDENT CHENNAI, DATED THE 17 TH SEPT., 2010 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR 34 ITA 259 TO 263 /10 PER GEORGE MATHAN, JUDICIAL MEMBER : 39. I HAVE PERUSED THE ORDER OF MY LEARNED BROTHER, HON'BLE VICE PRESIDENT AND I AM UNABLE TO CONVINCE MYSELF TO AGR EE WITH ALL THE FINDINGS AS ARRIVED AT BY HIM. CONSEQUENTLY, I HEREBY PASS MY ORDER ON THE ISSUES IN THE APPEAL WHEREIN THE ISSUES OF SPECIFIC DIFFERENC E IS ALSO BROUGHT OUT . 40. THE FACTS AS RECORDED BY MY LEARNED BROTHER, HO N'BLE VICE PRESIDENT ARE ACCEPTED AS CORRECT AND ADOPTED. 41. INDISPUTABLY THE ISSUES IN THE APPEAL REVOLVE A ROUND 5 ISSUES BEING, (I) WHETHER THE ASSESSEE IS A CONTRACTOR OR A BU ILDER OR A DEVELOPER? (II) WHETHER THE COMPLETION CERTIFICATE WHICH HAS BEEN OBTAINED AFTER THE DUE DATE BUT FOR WHICH THE APPLICATION HAS BEEN GIVEN BEFORE THE DUE DATE SHOULD BE CONSIDERED A S DUE COMPLIANCE? (III) WHETHER THE UNDERTAKING, DEVELOPING AND BUIL DING THE HOUSING PROJECT SHOULD BE THE OWNER OF THE SIZE OF THE PLOT OF LAND HAVING AREA OF ONE ACRE? (IV) WHETHER THE PRIVATE TERRACE IS TO BE CONSIDER ED AS PART OF THE BUILT UP AREA OF THE FLAT FOR COMPUTING THE BUIL T UP AREA OF 1500 S.FT. AS PER SECTION 80-IB(14) OF THE INCOM E-TAX ACT, 1961? (V) WHETHER THE BUILT UP AREA IF IT EXCEEDS 1500 S .FT. THE ASSESSEE WOULD BE ENTITLED TO THE DEDUCTION U/S. 80-IB (10) OF THE INCOME- TAX ACT, 1961 ON PRO RATA BASIS? 35 ITA 259 TO 263 /10 A PERUSAL OF THE SECTION 80-IB(10)(B) OF THE INCOME TAX ACT, 1961 PROVIDES THAT THE PROJECT IS TO BE ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. ONE SHOULD REMEMBER HERE THAT TH E WORDINGS ARE THAT THE PROJECT IS ON THE SIZE OF THE PLOT OF LAND. T HE WORDINGS ARE NOT THAT THE UNDERTAKING DEVELOPING AND BUILDING THE HOUSING PRO JECT SHOULD BE OWNER OF A PLOT OF LAND HAVING A SIZE OF MINIMUM AREA OF ONE ACRE. THUS AS LONG AS THE LAND ON WHICH THE PROJECT IS COMPLETED IS HAVIN G A MINIMUM AREA OF ONE ACRE THE UNDERTAKING DEVELOPING AND BUILDING SUCH H OUSING PROJECTS ON SUCH LANDS WOULD BE ENTITLED TO THE DEDUCTION U/S. 80IB( 10) SUBJECT TO THE OTHER CONDITIONS BEING FULFILLED. IN THE PRESENT CASE TH E LAND IS OWNED BY ONE PERSON AND THE ASSESSEE HAS UNDERTAKEN THE DEVELOPM ENT AND BUILDING OF THE HOUSING PROJECT ON THE SAID LAND. INDISPUTABLY , THE PROJECT IS ON A LAND EXCEEDING ONE ACRE. EVEN ASSUMING THAT THE UNDIVID ED INTEREST IN THE LAND HAS BEEN SOLD BY THE LAND OWNERS TO THE VARIOUS PUR CHASERS OF THE FLATS, STILL THE PLOT OF LAND ON WHICH THE HOUSING PROJECT IS BE ING DEVELOPED AND BUILT BY THE ASSESSEE REMAINS MORE THAN ONE ACRE AND THUS CO MPLIES WITH THE REQUIREMENTS OF SECTION 80-IB(10)(B) OF THE ACT. T HUS THERE IS NO VIOLATION IN RESPECT OF THE PROVISIONS OF SECTION 80-IB(10)(B ) OF THE ACT. THEREFORE, THE ISSUE NO. (III) IS TO BE HELD IN FAVOUR OF THE ASSESSEE. 42. A PERUSAL OF THE TERMS OF THE CONTRACT SHOWS TH AT THE ASSESSEE HEREIN IS BASICALLY DOING THE BUSINESS OF DEVELOPING LAND AND BUILDING FLATS WHICH ARE NOTHING BUT HOUSING PROJEC TS. FOR THE PURPOSE OF AVOIDING SERVICE TAX THE ASSESSEE, IT IS TRUE, HAS ENTERED INTO AGREEMENTS WITH THE INDIVIDUAL PURCHASERS OF THE FLATS UNDERTA KING TO DO THE CONSTRUCTION OF THEIR FLATS ON BEHALF OF THEM. THESE ARE BUT JU ST JUGGLERY OF WORDINGS IN 36 ITA 259 TO 263 /10 THE CONTRACT. THE ACTUAL FACT REMAINS THAT THE ASS ESSEE IS DOING THE BUSINESS OF DEVELOPING AND BUILDING HOUSING PROJECT S. JUST BECAUSE THE PLAN SANCTION, PLAN APPROVAL ETC. HAVE BEEN TAKEN IN THE NAME OF THE LAND OWNER IT WOULD NOT DENY THE ASSESSEE THE BENEFIT OF BEING TREATED AS AN UNDERTAKING DEVELOPING AND BUILDING THE HOUSING PRO JECTS INSOFAR AS IT IS THE ASSESSEE, THROUGH THE POWER OF ATTORNEY SPECIFICALL Y TAKEN FROM THE LAND OWNER, THAT THE PLANS HAVE BEEN DRAWN, APPROVAL OBT AINED, SANCTION TAKEN AND THE BUILDING CONSTRUCTED. THUS IT WOULD HAVE T O BE HELD AS AN UNDERTAKING WHICH HAS DONE THE BUSINESS OF DEVELOPI NG AND BUILDING HOUSING PROJECTS ON THE SAID LAND MEASURING MINIMUM OF ONE ACRE. THEREFORE THE ISSUE THAT THE ASSESSEE IS LIABLE TO BE HELD AS AN UNDERTAKING WHICH HAS DONE THE BUSINESS OF DEVELOPING AND BUILD ING HOUSING PROJECTS WOULD HAVE TO BE HELD IN FAVOUR OF THE ASSESSEE. C ONSEQUENTLY, ISSUE NO. (I) IS DECIDED IN FAVOUR OF THE ASSESSEE. 43. COMING TO THE ISSUE AS TO WHETHER THE PRIVATE T ERRACE IS TO BE INCLUDED IN THE COMPUTATION OF BUILT UP AREA, IT IS NOTICED THAT THE TERM BUILT UP AREA HAS BEEN DEFINED IN SEC. 80-IB(14)(A) TO I NCLUDE THE PROJECTIONS AND THE BALCONIES. THUS THE PRIVATE TERRACE IS NOT HING BUT THE PROJECTION OF THE FLAT. IT CAN ALSO BE TERMED AS AN OPEN BALCONY . THE LEARNED AUTHORISED REPRESENTATIVE HAS SPECIFICALLY AGREED THAT THE ACC ESS TO THE PRIVATE TERRACE IS ONLY THROUGH THE SPECIFIED FLAT. A PERUSAL OF T HE AGREEMENT IN RESPECT OF THE FLATS WHICH HAVE THE PRIVATE TERRACE CLEARLY SH OWS THAT THE PRIVATE TERRACE IS FOR THE EXCLUSIVE USE OF THE PURCHASER. ONCE THE PRIVATE TERRACE IS FOR THE EXCLUSIVE USE OF THE PURCHASER OF THE FLAT THEN, OBVIOUSLY, THE SAID PRIVATE TERRACE DOES NOT FALL WITHIN THE COMMON ARE AS SHARED WITH THE OTHER RESIDENTIAL UNITS AND CONSEQUENTLY WOULD HAVE TO BE INCLUDED IN THE 37 ITA 259 TO 263 /10 MEASUREMENT FOR ARRIVING AT THE BUILT UP AREA. THE TERRACE TALKED ABOUT HERE IS NOT THE ROOF TOP TERRACE. IT IS THE TERRAC E, THE ACCESS TO WHICH IS THROUGH THE FLAT OF THE PURCHASER AND WHICH IS AT T HE FLOOR LEVEL AND IS THE TERRACE OF THE IMMEDIATELY LOWER FLAT. THE REGULAR TERRACE IS CONSIDERED AS PART OF THE COMMON AREA. THE TERRACE THAT IS SOLD AND THAT IS ATTACHED TO THE FLAT AND WHICH IS HAVING EXCLUSIVE ACCESS IS SE PARATE FROM THE REGULAR TERRACE. SECTION 80IA(14)(A) USES THE WORDS INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL. THEREFORE IF THE TERRACE IS PART OF THE INNER MEASUREMENT AT THE FLOOR LEVEL, THEN IT IS TO BE INCLUDED IN THE COMPUTATION OF BUILT UP AREA. THE ASSESSEE HAS A LSO NOT PLACED BEFORE US THE FLOOR PLAN OF THE FLAT HAVING THE PRIVATE TERRA CE TO SHOW THAT THE PRIVATE TERRACE IS IN FACT NOT PART OF THE PROJECTION TO TH E FLAT OR THAT IT IS NOT AT THE FLOOR LEVEL AND THAT THERE IS ANY METHOD BY WHICH S UCH PRIVATE TERRACE CAN BE ACCESSED, WITHOUT HINDRANCE, BY THE OTHER FLAT O WNERS IN ANY WAY OTHER THAN THROUGH THE FLAT WITH WHICH THE PRIVATE TERRAC E IS ATTACHED AND SOLD. CONSEQUENTLY, THE ISSUE NO. (IV) AS TO WHETHER THE PRIVATE TERRACE IS TO BE CONSIDERED AS PART OF THE BUILT UP AREA OF THE FLAT FOR COMPUTING THE BUILT UP AREA OF 1500 S.FT. IS HELD AGAINST THE ASSESSEE HOL DING THAT THE PRIVATE TERRACE IS TO BE CONSIDERED AS PART OF THE BUILT UP AREA OF THE FLAT FOR COMPUTING THE BUILT UP AREA OF 1500 S.FT. 44. IN RESPECT OF THE ISSUE OF THE COMPLETION CERTI FICATE IT IS NOTICED THAT THE ASSESSEE HAS COMPLETED THE BUILDING AND HAS MAD E THE APPLICATION FOR THE COMPLETION CERTIFICATE ON 13-3-2006. THOUGH IN ITIALLY THE CMDA HAD NOT GRANTED THE COMPLETION CERTIFICATE, SUBSEQUENTLY AF TER THE DIRECTION FROM THE HONBLE MADRAS HIGH COURT THE CMDA HAS GIVEN THE CO MPLETION CERTIFICATE ON 13-6-208 AND THE COMPLIANCE CERTIFICATE HAS ALSO BE EN ISSUED BY THE 38 ITA 259 TO 263 /10 CORPORATION OF CHENNAI IN DECEMBER, 2007. HERE ONE SHOULD REMEMBER THAT WHEN SANCTION IS GIVEN NORMALLY THE SANCTION WOULD CONTAIN A DATE. IN THE PRESENT CASE THE CERTIFICATE ISSUED IS A COMPLETION CERTIFICATE THAT IS A CERTIFICATE ACCEPTING THE CLAIM OF THE ASSESSEE THA T THE PROJECT HAS BEEN COMPLETED, I.E. THE CERTIFICATE IS ISSUED ON AN APP LICATION GIVEN BY THE ASSESSEE. THE ASSESSEE CAN GIVE AN APPLICATION FOR COMPLETION CERTIFICATE ONLY WHEN THE COMPLETION OF THE PROJECT IS DONE. T HUS THE GRANT OF A COMPLETION CERTIFICATE AFTER VERIFICATION BY THE CO MPETENT AUTHORITY EVEN ON A SUBSEQUENT DATE WOULD REVERT BACK TO THE DATE ON WH ICH THE APPLICATION IS MADE. THUS THE COMPLETION CERTIFICATE HAVING BEEN ISSUED BY THE CMDA ON 13.6.2008 WOULD IN FACT BE A CERTIFICATE ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE PROJECT HAS BEEN COMPLETED AS MADE IN ITS APPLICATION ON 13.3.2006. THUS I AM OF THE VIEW THAT THE GRANT OF THIS COMPLETION CERTIFICATE REVERTS BACK TO THE DATE OF THE APPLICA TION FOR CERTIFICATE AS THE COMPLETION CERTIFICATE HAS BEEN APPLIED FOR BEFORE THE DUE DATE AND THE COMPLETION CERTIFICATE HAVING BEEN ISSUED BY THE CO MPETENT AUTHORITY WITHOUT ANY QUALIFICATIONS, THE PROJECT SHOULD BE D EEMED TO HAVE BEEN COMPLETED AS MENTIONED IN THE APPLICATION, I.E. BEF ORE THE DUE DATE AND CONSEQUENTLY THE ASSESSEE SHOULD BE HELD TO HAVE CO MPLIED WITH THE PROVISIONS OF SECTION 80-IB(10)(A)(II) OF THE ACT. THEREFORE, IN REGARD TO THE ISSUE AS TO WHETHER THE COMPLETION CERTIFICATE WHIC H HAS BEEN OBTAINED AFTER THE DUE DATE BUT FOR WHICH THE APPLICATION HAS BEEN GIVEN BEFORE THE DUE DATE SHOULD BE CONSIDERED AS DUE COMPLIANCE, I AM I N AGREEMENT WITH MY LEARNED BROTHER. ACCORDINGLY, THE ISSUE NO. (II) AS TO WHETHER THE COMPLETION CERTIFICATE WHICH HAS BEEN OBTAINED AFTER THE DUE D ATE BUT FOR WHICH THE 39 ITA 259 TO 263 /10 APPLICATION HAD BEEN GIVEN BEFORE THE DUE DATE SHOU LD BE CONSIDERED AS DUE COMPLIANCE IS HELD IN FAVOUR OF THE ASSESSEE. 45. HERE I MAY SPECIFICALLY MENTION THAT IN REGARD TO ISSUE NO. (I) AS TO WHETHER THE ASSESSEE IS A CONTRACTOR, BUILDER OR DE VELOPER, I AGREE WITH THE FINDING AS GIVEN BY MY LEARNED BROTHER. 46. IN REGARD TO THE ISSUE AS TO WHETHER THE UNDERT AKING, DEVELOPING AND BUILDING THE HOUSING PROJECT SHOULD BE THE OWNER OF THE SIZE OF A PLOT OF LAND HAVING THE MINIMUM AREA OF ONE ACRE, EVEN THOUGH MY LEARNED BROTHER HAS NOT SPECIFICALLY GIVEN ANY FINDING ON THE SAME BUT HE HAS TOUCHED UPON THE ISSUE WHEN DECIDING THE ISSUE NO.(I) AS TO WHETHER THE ASSESSEE IS A CONTRACTOR, BUILDER OR DEVELOPER. 47. IN REGARD TO THE ISSUE AS TO WHETHER THE PRIVAT E TERRACE IS TO BE CONSIDERED AS PART OF THE BUILT UP AREA OF THE FLAT FOR COMPUTING THE BUILT UP AREA OF 1500 S.FT, I AM IN AGREEMENT WITH MY LEARNE D BROTHER. 48. THERE IS AN ISSUE IN REGARD TO TWO OF THE FLATS BEING FLAT NOS. 501 AND 502 HAVING BEEN COMBINED BY THE PURCHASER AFTER THE PURCHASE, FOR WHICH CERTIFICATES HAVE ALSO BEEN ISSUED BY THE PUR CHASERS THEMSELVES WHICH CLEARLY SHOW THAT THE FLATS HAVE BEEN COMBINED BY T HE PURCHASERS THEMSELVES. THE COMBINATION OF THE FLATS HAVE NOT BEEN DONE BY THE ASSESSEE AND THE ASSESSEE HAS SOLD ONLY TWO FLATS S EPARATELY AND THE COMBINING OF THE FLATS BY THE PURCHASERS AFTER THE PURCHASE CANNOT BE HELD TO THE DETRIMENT OF THE ASSESSEE. ON THIS GROUND A LSO I AM IN AGREEMENT WITH THE FINDING OF MY LEARNED BROTHER. 40 ITA 259 TO 263 /10 49. MY LEARNED BROTHER HAS ALSO DIRECTED THAT IN RE GARD TO THE FLATS WHICH ARE HAVING THE PRIVATE TERRACE AS ALSO THE OBJECTIO N OF THE ASSESSING OFFICER THAT CERTAIN FLATS IN THE PROJECT MEASURE MORE THAN 1500 S.FT., THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE SAID FLATS WHICH ARE ALLEGED TO BE MORE THAN 1500 S .FT. AREA BE MEASURED AGAIN AND THE DEPARTMENTAL VALUER AS WELL AS THE AS SESSEES VALUER BOTH SHOULD REMAIN PRESENT AND THE ASSESSEE IS TO EXTEND ITS FULLEST CO-OPERATION. TO THIS EXTENT OF RE-MEASURING THE FLATS BY RESTORA TION OF THE ISSUE BEFORE THE ASSESSING OFFICER I AM IN FULL AGREEMENT WITH M Y LEARNED BROTHER. 50. IN REGARD TO THE ISSUE AS TO WHETHER THE BUILT UP AREA IF IT EXCEEDS 1500 S.FT. IN RESPECT OF ANY FLATS, THE ASSESSEE WO ULD BE ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB(10) ON PRO RATA BASIS, MY LEARNED BROTHER HAS RELIED UPON THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES V. JCIT REPORTED IN 1 22 TTJ 433 AS ALSO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO. 458 OF 2 006 DATED 5-1-2007 WHEREIN THE HON'BLE HIGH COURT HAD CONSIDERED THE D ECISION OF THE CALCUTTA BENCH OF THIS TRIBUNAL IN THE SAME CASE IN ITA NOS. 1595/KOL/2005 AND 1735/KOL/2005 DATED 24-3-2006 AS ALSO THE DECISION OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NIRMA IND USTRIES LTD. V. DCIT REPORTED IN 283 ITR 402. IN EFFECT, MY LEARNED BRO THER HAS HELD THAT IF THE VIOLATIONS IN RESPECT OF THE BUILT UP AREA OF 1500 S.FT. PER FLAT EXCEEDS THE LIMIT OF 10% OF THE TOTAL BUILT UP AREA OF THE PROJ ECT, THEN THE ASSESSEE WOULD LOSE THE DEDUCTION ON THE ENTIRE PROJECT. I T IS THESE PORTIONS OF THE ORDER WHICH I AM UNABLE TO SUBSCRIBE TO. 41 ITA 259 TO 263 /10 51. A PERUSAL OF THE PAPER BOOK AS FILED BY THE ASS ESSEE SHOWS FLAT NO. 1501 TO HAVE 1308 S.FT. BUT AS PER THE SALE AGREEME NT AND THE LETTER OF THE PURCHASER THE AREA IS 1230 S.FT. SIMILARLY, FLAT N O. 502 HAS BEEN SHOWN TO HAVE AN AREA OF 1285 S.FT. AS PER PAGE 19 OF THE PA PER BOOK OF THE ASSESSEE. BUT AS PER THE LETTER OF THE PURCHASER AND THE SALE AGREEMENT THE AREA IS 1157 S.FT. SIMILARLY, FLAT NO. 402 IS MENTIONED AS 1495 S.FT. BUT THE ASSESSEE HAS CLAIMED THE SAME TO BE 1397 S.FT. IN THE LETTER TO THE ASSESSING OFFICER WHICH FINDS MENTIONED IN PAGE 6 OF THE ORDER OF THE CIT(A). SIMILARLY, FLAT NO. 501 IN BLOCK-I SHOWS 1495 S.FT. IN THE LETTER AT PAGE 19 OF THE PAPER BOOK AND THE CLAIM OF THE ASSESSEE IS 1397 S.FT. BE FORE THE ASSESSING OFFICER. SIMILARLY, FLAT NO.1105 IN BLOCK-II HAS B EEN MENTIONED TO BE 1333 S.FT. IN THE LETTER AT PAGE 19 OF THE PAPER BOOK AN D THIS FLAT IS SAID TO INCLUDE OPEN TERRACE WHEREAS THE SALE AGREEMENT SHOWS THE A REA OF THE FLAT TO BE 1210 S.FT. AND OPEN TERRACE OF 700 S.FT. THUS WHAT IS EVIDENT IS THAT AS PER THE AGREEMENT THE ASSESSEE IS SHOWING A SPECIFIED A REA AS MENTIONED IN THE AGREEMENT BUT AS PER THE ACTUALS THE AREA IS FAR HI GHER. THIS FAR HIGHER AREA HAS BEEN SHOWN BY THE ASSESSEE ITSELF AS PER THE ME ASUREMENTS MADE BY THE ASSESSEES REGISTERED VALUER. THEREFORE IT DOE S NOT LIE IN THE MOUTH OF THE ASSESSEE TO SAY THAT THE HIGHER MEASUREMENT HAS BEEN ARRIVED AT BY THE REVENUE. IT IS TO BE KEPT IN MIND THAT AS PER SECT ION 80-IB(14)(A) OF THE ACT THE BUILT UP AREA IS SPECIFIED AND DEFINED. IT I S NOT THE ORDINARY PLINTH AREA CALCULATION NOR IS IT THE BUILT UP AREA AS DEFINED FOR LOCAL AUTHORITY PURPOSES. THE DEFINITION OF BUILT UP AREA FOR IN COME-TAX PURPOSES IS DIFFERENT FROM THE DEFINITION UNDER THE LOCAL LAWS AND THE METHOD OF CALCULATION IS ALSO DIFFERENT. FOR EXAMPLE, UNDER THE PLINTH AREA CALCULATION, THE BALCONY, WASHING AREA, ETC. ARE TAKEN AT THE ACTUAL AREA AND IN 42 ITA 259 TO 263 /10 RESPECT OF THE PARABOLIC BALCONY ONLY 1/3, WHEREAS FOR INCOME-TAX PURPOSES THE SAME WOULD BE TREATED AS PROJECTIONS AND BALCON IES AND ITS AREA IN FULL TAKEN. THE ASSESSING OFFICER HAS ALSO SPECIFICALLY MADE A STATEMENT THAT THE PLANS SUBMITTED BY THE ASSESSEE FURTHER POINTS OUT THAT THE FLATS ARE VERTICALLY PLACED ABOVE ONE ANOTHER ON SUCCESSIVE F LOORS ARE OF EQUAL DIMENSION WHICH LEAD TO THE CONCLUSION THAT THE FLA TS CLAIMED TO BE OF 1397 S.FT. OF FLAT AREA ARE, IN FACT, ABOVE 1500 SQ.FT. OF BUILT UP AREA AND BASED ON THE SAME THERE ARE MANY FLATS WHICH ARE HAVING A BU ILT UP AREA EXCEEDING 1500 S.FT. IN THE CIRCUMSTANCES, THE ASSESSING OFF ICER CHALLENGED THE BUILT UP AREA CALCULATION OF ALL THE FLATS IN THE PROJECT . 52. HERE IT WOULD ALSO BE WORTHWHILE TO MENTION THA T PAGE NO. 19 OF THE PAPER BOOK WHICH IS THE AREA CALCULATION OF VARIOUS FLATS AS DONE BY THE REGISTERED VALUER OF THE ASSESSEE SHOWS THAT THE RE GISTERED VALUER HAS ADOPTED PLINTH AREA METHOD. AS MENTIONED IN THE EARLIER PORTION, THE PLINTH AREA CALCULATION WOULD NOT BE THE SAME AS TH E BUILT UP AREA CALCULATION PROVIDED UNDER THE INCOME-TAX ACT. IN ANY CASE, THIS ISSUE OF MEASUREMENT OF THE FLATS IN DISPUTE HAS BEEN RESTOR ED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO MEASUREMENT BY THE DEPARTMENTAL VALUER AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO CO-OP ERATE IN THE PROCEEDINGS. 53. ONE OF THE BASIC PRINCIPLES OF JUDICIAL DISCI PLINE IS THAT A DIVISION BENCH CANNOT DISREGARD THE DECISION OF ANOTHER DIVI SION BENCH OF EQUAL STRENGTH. IF AT ALL SUCH A SITUATION IS TO ARISE, WHAT IS REQUIRED UNDER JUDICIAL DISCIPLINE IS TO REFER THE ISSUE TO A SPECIAL BENCH OR A LARGER BENCH. SIMILARLY, A DIVISION BENCH IS BOUND BY THE DECISIO N OF THE LARGER BENCH. A 43 ITA 259 TO 263 /10 DECISION BY A DIVISION BENCH CONTRARY TO THE DECISI ON OF A LARGER BENCH CANNOT HAVE A BINDING FORCE. THIS VIEW OF MINE IS SUPPORTED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CA SE OF ASSISTANT COMMISSIONER OF INCOME-TAX V. MSS INDIA (P) LTD. 1 23 TTJ (PUNE) 657. 54. IN THE CASE OF BRAHMA ASSOCIATES REPORTED IN 11 9 ITD 255 IN PARAS 113 AND 114 THE HON'BLE SPECIAL BENCH HAS HELD AS F OLLOWS: 113. THE NEXT QUESTION IS WHETHER OR NOT THE DEDUCTION UNDER SECTION 80-IB(10) IS TO BE GRANTED IN RESPECT OF ONLY OF SUCH PROFITS AS ARE ATTRIBUTABLE TO THE RESIDENTIAL UNITS. 114. THERE IS NOT MUCH OF A DISPUTE ON THIS ASPECT ALSO. LEARNED REPRESENTATIVES AGREE THAT THERE ARE NO ENABLING PROVISIONS SO FAR AS ALLOCATION OF PROFITS INTO PROFITS RELATABLE TO RESIDENTIAL UNITS AND COMMERCIAL UNITS ARE CONCERNED. WE HAVE NOTED THAT SECTION 80-IB(10) CATEGORICALLY REFERS TO THE PROFITS DERIVED IN THE PREVIOUS YEAR, RELEVANT TO ANY ASSESSMENT YEAR, FROM SUCH HOUSING PROJECT. WHAT IS DEDUCTIBLE IS PROFIT OF THE HOUSING PROJECT, AND NOT THE PROFIT ATTRIBUTABLE TO THE RESIDENTIAL UNITS. ONCE, THEREFORE, WE HOLD THAT THE PROJECT IN QUESTION IS A HOUSING PROJECT, ENTIRE PROFITS OF THE HOUSING PROJECT ARE DEDUCTIBLE UNDER SECTION 80-IB(10). THE QUESTION OF PROPORTIONATE DEDUCTION IS, THEREFORE, NOT AT ALL RELEVANT IN THIS CONTEXT. 44 ITA 259 TO 263 /10 IN THE SAID DECISION, THE HON'BLE SPECIAL BENCH HAS NOT GIVEN A FINDING THAT PRO RATA DEDUCTION IN RESPECT OF THE FLATS WHICH ARE HAVING AN AREA OF 1500 S.FT. SPECIFIED IN SECTION 80-IB(10)(C) CAN BE GIVE N. IN FACT, AN IN-DEPTH READING OF THE SAID DECISION SHOWS TO THE CONTRARY. 55. THE PROVISIONS OF SECTION 80-IB(10) DO NOT RECO GNIZE A PRO RATA DEDUCTION. IT IS NOT AS IF THE LEGISLATURE DID NOT RECOGNIZE PRO RATA DEDUCTION. WHEN THE LEGISLATURE DESIRED TO GIVE SUC H PRO RATA DEDUCTION, IT SPECIFICALLY PROVIDED FOR IT. FOR E.G. SECTIONS 5 4, 54(2), 54B(2), 80HHC ETC. FURTHER A PERUSAL OF THE SECTION 80-IB(10) SHOWS TH AT THE WORD USED AT THE END OF SUB-CLAUSE (C) IS AND AND NOT OR NOR IS IT JUST A COMA. THE TERM AND MEANS THAT ALL THE CONDITIONS IN SEC. 80-IB(1 0) MUST BE COMPLIED WITH INDIVIDUALLY AND CUMULATIVELY. VIOLATION OF ANY ON E OF THE SUB-CLAUSES OF SECTION 80-IB(10) AS ARE AVAILABLE FOR THE RELEVANT ASSESSMENT YEARS LEADS TO THE LOSS OF THE ELIGIBILITY OF DEDUCTION U/S. 80-IB (10) IN TOTO. THE WORDINGS OF SEC. 80-IB(10) OF THE INCOME TAX ACT, 1961 ARE IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S. IT IS NOT UNDERTAKING DEVELOPING AND BUILDING HOUSES OR FLAT S. IT IS THE PROJECT AS A WHOLE THAT HAS TO BE CONSIDERED. THIS VIEW DRAWS S UPPORT FROM THE DECISION OF THE HON'BLE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES, CITED SUPRA. THE FLOOR OF ONE FLAT IS THE ROOF OF ANOTHER. THE OUTER WALLS OF TWO FLATS WOULD BE COMMON. 56. THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT REPORTED IN 196 ITR 188 HAS CATEGORICALLY HELD THAT A PROVISION IN A TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AN D DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY; AND SINCE A PROVISION FOR P ROMOTING ECONOMIC GROWTH 45 ITA 259 TO 263 /10 HAS TO BE INTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO FRUSTRATE IT. 57. THE HON'BLE SUPREME COURT IN THE CASE OF FEDERA TION OF ANDHRA PRADESH CHAMBERS OF COMMERCE AND INDUSTRY AND OTHER S V. STATE OF ANDHRA PRADESH AND OTHERS REPORTED IN 247 ITR 36 RI TERATED THE BASIC PRINCIPLE THAT IT IS TRITE LAW THAT A TAXING STATU TE HAS TO BE STRICTLY CONSTRUED AND NOTHING CAN BE READ INTO IT. .IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM F OR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN LOOK FAIRLY AT THE LANGUAGE USED. THE HON'BLE SUPREME COURT FURTHER WENT ON T O HOLD THAT THE COURTS IN INTERPRETING A TAXING STATUTE WILL NOT BE JUSTIF IED IN ADDING WORDS THERETO SO AS TO MAKE OUT SOME PRESUMED OBJECT OF THE LEGIS LATURE.. IF THE LEGISLATURE HAS FAILED TO CLARIFY ITS MEANING BY TH E USE OF APPROPRIATE LANGUAGE, THE BENEFIT THEREOF MUST GO TO THE TAXPAY ER. IT IS SETTLED LAW THAT IN CASE OF DOUBT, THAT INTERPRETATION OF A TAXING S TATUTE WHICH IS BENEFICIAL TO THE TAXPAYER MUST BE ADOPTED. 58. A READING OF SECTION 80-IB(10) SHOWS THAT THE S AID PROVISION IS UNAMBIGUOUS. THE LEGISLATURE CLEARLY DID NOT WANT TO GRANT EXEMPTION TO A HOUSING PROJECT WHEREIN THE BUILT UP AREA OF A RE SIDENTIAL UNIT EXCEEDED THE AREA SPECIFIED IN SECTION 80-IB(10)(C). THE WO RDINGS OF SEC. 80-IB(10) ARE NOT THE DEDUCTION ..100% OF THE PROFITS DERIVE D IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECTS IN RESPECT OF RESIDENTIAL UNITS HAVING A MAXIMUM BUILT UP AREA OF 1500 S.FT. THE WORDINGS USED ARE THE AMOUNT OF DEDUCTIONSHALL BE HUNDRE D PER CENT OF THE 46 ITA 259 TO 263 /10 PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO AN Y ASSESSMENT YEAR FROM SUCH HOUSING PROJECTS IF,- (EMPHASIS SUPPLIED BY ME) (A) *********************** (B) *********************** (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AR EA OF . THE WORD IF DENOTES THE INTENTION IN ITS CLARITY OF THE LEGIS LATURE. 59. COMING TO THE ISSUE OF THE GRANTING OF THE DEDU CTION ONLY IF THE BUILT UP AREA OF THE FLATS MEASURING MORE THAN 1500 S.FT. DOES NOT EXCEED 10% OF THE TOTAL BUILT UP AREA, RELIANCE HAS BEEN PLACED O N THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F BRAHMA ASSOCIATES, REFERRED TO SUPRA. I HAVE ALREADY MENTIONED EARLIE R THAT AN IN-DEPTH READING OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES SHOWS THAT THE HON'BLE SPECIAL BENCH HAS NOT GIVEN ANY AP PROVAL IN REGARD TO THE PRO RATA DEDUCTION IN SUCH SITUATION. FURTHER WHY 10%? T HE DECISION OF THE CALCUTTA BENCH OF THIS TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. REFERRED TO SUPRA WHICH HAS APPROV ED PRO RATA DEDUCTION AND THE APPEAL BY THE REVENUE FROM WHICH HAS BEEN D ISMISSED BY THE HON'BLE CALCUTTA HIGH COURT HOLDING THAT NO SUBSTAN TIAL QUESTION OF LAW ARISES, SHOWS THAT IN THAT CASE THE ASSESSEE THEREI N HAD PUT UP 261 RESIDENTIAL UNITS IN THE HOUSING PROJECT AND OUT OF WHICH ONLY 150 UNITS WERE HAVING THE INDIVIDUAL BUILT UP AREA OF LESS THAN 15 00 S.FT., I.E. ONLY 57% OF THE HOUSING PROJECT THEREIN COMPLIED WITH THE CONDI TIONS IN SECTION 80- 47 ITA 259 TO 263 /10 IB(10) AND 43% FAILED. THE SAID DECISION ITSELF WO ULD BE CONTRARY TO THE DECISION OF THE HON'BLE SPECIAL BENCH IN THE CASE O F BRAHMA ASSOCIATES, WHEREIN THE HON'BLE SPECIAL BENCH HAS SAID CATEGORI CALLY THAT IT IS THE HOUSING PROJECT WHICH IS TO BE CONSIDERED AND NOT T HE INDIVIDUAL UNITS. IN ANY CASE, THE HON'BLE CALCUTTA HIGH COURT HAVING DI SMISSED THE APPEAL FILED BY THE REVENUE AGAINST THE SAID DECISION OF THE CAL CUTTA BENCH OF THE TRIBUNAL BY HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW AROSE SHOULD NOT BE THE LAKSHMAN REKHA BE DRAWN AT 47% AND NOT 10 %. WOULD THIS NOT LEAD TO DOING VIOLENCE TO THE PROVISIONS OF SECTION 80-IB(10) TO THE EXTENT OF FRUSTRATING THE SAID PROVISION? WHEN THE WORDINGS OF THE PROVISIONS OF SEC. 80-IB(10) ARE CLEAR AND AMBIGUOUS AND THE HON'BLE S UPREME COURT HAS ALSO LAID DOWN THE PRINCIPLES IN REGARD TO THE INTERPRET ATION OF THE TAXING STATUTE, AS ALREADY REFERRED TO SUPRA IN THE CASE OF FEDERAT ION OF ANDHRA PRADESH CHAMBERS OF COMMERCE AND INDUSTRY AND OTHERS (247 I TR 36) (S.C.) AS ALSO IN THE CASE OF BAJAJ TEMPO LTD. (196 ITR 188) (S.C.) AN APPELLATE AUTHORITY SHOULD NOT, CANNOT, MUST NOT AND SHALL NO T TINKER WITH THE PROVISIONS OF THE ACT IN SUCH A MANNER AS TO CAUSE VIOLATIONS TO THE PROVISIONS OF THE STATUTE. HAD THE ASSESSEE CONSTR UCTED TWO DIFFERENT BLOCKS AND HAD MAINTAINED SEPARATE BOOKS OF ACCOUNTS AND O NE OF THE BLOCKS DID NOT COMPLY WITH THE PROVISIONS OF SEC. 80-IB(10) AN D ONE DID, THEN THE DEDUCTION IN RESPECT OF THE BLOCK WHICH COMPLIED WI TH THE PROVISIONS OF SECTION 80-IB(10) COULD BE GRANTED AS HAS BEEN HELD BY THE MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF SAROJ SALES ORGANIZ ATION REPORTED IN 115 TTJ (MUM) 485. HOWEVER, THIS IS NOT THE CASE HERE. 60. WHEN THE ASSESSEE MADE ITS PLAN FOR CONSTRUCTIO N OF THE HOUSING PROJECTS, THE ASSESSEE VERY WELL KNEW THAT THE HOUS ING PROJECT INCLUDED FLATS 48 ITA 259 TO 263 /10 WHICH WERE HAVING AREAS EXCEEDING 1500 S.FT. THIS IS EVIDENT FROM THE CLAUSE 51 OF THE SALE AGREEMENTS ENTERED INTO BY TH E ASSESSEE WITH THE PURCHASERS OF THE FLATS WHEREIN THE ASSESSEE HAS RE COGNIZED THAT THE BUILDINGS WOULD HAVE PENT HOUSES HAVING AREAS IN EX CESS OF 2000 S.FT. THUS KNOWING FULLY WELL THAT THE HOUSING PROJECT OF THE ASSESSEE DID CONTAIN FLATS EXCEEDING THE PRESCRIBED MAXIMUM BUILT UP AREA PROV IDED U/S. 80-IB(10), THE ASSESSEE STILL DECIDED TO TAKE ITS CHANCE IN CL AIMING THE DEDUCTION U/S 80-IB(10). THE ASSESSEE ALSO VERY WELL KNEW THIS P OSITION WHEN IT HAD ITS FLATS MEASURED BY ITS REGISTERED VALUER AND OBTAINE D THE CERTIFICATE ON 5-12- 2009 THAT SOME OF ITS FLATS DID EXCEED THE 1500 S.F T. LIMIT. INTERESTINGLY, THE REGISTERED VALUER OF THE ASSESSEE INSTEAD OF TAKING THE BUILT UP AREA AS SPECIFIED IN THE PROVISIONS OF SECTION 80-IB(14) DE CIDED TO TALK OF ONLY THE PLINTH AREA AND THAT TOO BY SPECIFICALLY EXCLUDIN G THE EXCLUSIVE OPEN TERRACE. 61. IN SUCH A SITUATION CAN IT BE SAID THAT THE DEC ISION OF THE CALCUTTA BENCH OF THIS TRIBUNAL AS ALSO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT REJECTING THE REVENUES APPEAL HOLDING THAT N O SUBSTANTIAL QUESTION OF LAW WOULD HAVE A BINDING PRECEDENCE? THE HON'BLE G UJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. V. DEPUTY COMMISS IONER OF INCOME-TAX REPORTED IN 283 ITR 402 HAS HELD YES. 62. HOWEVER, THE CO-ORDINATE BENCH OF THIS TRIBUNAL AT CHENNAI ITSELF HAS IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME-TAX VS. VISWAS PROMOTERS (P) LTD. IN ITA NO. 1912/MDS/2007 DATED 13-10-2008 ANSWERED THE IDENTICAL QUESTION IN RESPECT OF THE ISSUE AS TO WHETHER THE DEDUCTION U/S. 80-IB(10) WAS AVAILABLE EVEN IF SOME OF THE FLATS IN THE HOUS ING PROJECT EXCEEDED THE 49 ITA 259 TO 263 /10 MAXIMUM SPECIFIED AREA IN SEC. 80-IB(10)(C). THE C O-ORDINATE BENCH HAS HELD THAT THE RESTRICTION IS APPLICABLE ON THE ENTI RE PROJECT. IF SOME OF THE RESIDENTIAL UNITS OF THE PROJECT COMPRISED AREA EXC EEDING THE PRESCRIBED LIMIT, THE BENEFIT AS PER THE LANGUAGE OF THE SECTI ON CANNOT BE EXTENDED TO THE PROJECT. IN INTERPRETING THE PROVISIONS, THE C O-ORDINATE BENCH HAD PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF PADMASUNDARA RAO (DECD.) AND OTHERS V. STATE OF TAM IL NADU AND OTHERS REPORTED IN 255 ITR 147 (SC) AS ALSO THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD. V. C IT REPORTED IN 278 ITR 546 (SC). THIS ORDER OF THE CO-ORDINATE BENCH OF THE T RIBUNAL WAS THE SUBJECT MATTER OF A MISCELLANEOUS PETITION IN MP NO. 379/MD S/2009, WHEREIN THE SAME COUNSEL, AS IN THE PRESENT CASE, HAD REPRESENT ED. IT WAS CLAIMED THAT AN ERROR HAD CREPT IN THE ORDER INASMUCH AS THE TRI BUNAL HAD NOT CONSIDERED THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THE MISCELLANEOUS PETITION HAD BEEN DISMISSED VIDE ORDER DT. 30-01-2009. AGAINST THIS ORDER, THE ASSESSEE HAD FILED A WRIT PETITION BEFORE THE HON'BLE HIGH COURT OF MADRAS REPORTED IN 323 ITR 114 WHEREIN THE HON'BLE JURISDICTIONAL HIGH COU RT HAD CATEGORICALLY HELD THAT A DECISION OF THE HIGH COURT OF A DIFFERENT JU RISDICTION IS NOT BINDING ON THE TRIBUNAL WHICH IS NOT UNDER ITS JURISDICTION AN D THE RECTIFICATION SOUGHT FOR ON THAT BASIS UNDER SECTION 254(2) WAS NOT VALI D. IN THE SAID DECISION THE HON'BLE JURISDICTIONAL HIGH COURT HAD ALSO LAID DOWN THE PRINCIPLES OF JUDICIAL DISCIPLINE WHEREIN IT HAD ALSO BEEN HELD T HAT WHERE THERE ARE CONFLICTING DECISIONS OF COURTS OF CO-ORDINATE JURI SDICTION, THE LATER DECISION IS TO BE PREFERRED IF REACHED AFTER FULL CONSIDERATION OF THE EARLIER DECISIONS. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE SAID D ECISION HAD ALSO 50 ITA 259 TO 263 /10 CONSIDERED THE ISSUE OF DEDUCTION U/S. 80-IB(10) TH OUGH NO SPECIFIC FINDING HAD BEEN GIVEN IN REGARD TO THE FINDING OF THE TRIB UNAL IN THE APPEAL. 63. IN THE CIRCUMSTANCES, WITH UTMOST OBEDIENCE T O THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VI SWAS PROMOTERS (P) LTD. REPORTED IN 323 ITR 114 , AS IT IS NOTICED THAT THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ASSISTANT COM MISSIONER OF INCOME-TAX V. M/S. VISWAS PROMOTERS P. LTD. IN ITA NO. 1912/MD S/20067 DATED 13-10- 2008 IS SUBSEQUENT TO THE DECISION OF THE CALCUTTA BENCH OF THIS TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENTS LTD. WHICH IS PASSED ON 24-03-2006 AND AS IT IS NOTICED THAT THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF VISWAS PROMOTERS (P) LTD. HAS CONSIDERE D ALL THE ISSUES AND HAS ARRIVED AT ITS DECISION AFTER FULL CONSIDERATION OF THE PRINCIPLES AS CONSIDERED IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LT D. AS ALSO ON ACCOUNT OF THE FACT THAT THE DECISION OF THE CALCUTTA BENCH OF THIS TRIBUNAL DOES NOT REFLECT THE CORRECT POSITION OF LAW, RELYING UPON T HE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HITECH ARA I REPORTED IN 321 ITR 477 (MAD) I FOLLOW THE DECISION OF THE CO-ORDINATE BENC H OF THIS TRIBUNAL IN THE CASE OF M/S. VISWAS PROMOTORS P. LTD. IN ITA NO. 19 12/MDS/2007 DATED 13- 10-2008 AS ALSO THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF VISVAS PROMOTERS (P) LTD. REPORTED IN 323 ITR 114 ( MAD), AND HOLD THAT IF THERE IS ANY VIOLATION IN RESPECT OF ANY OF THE CON DITIONS SPECIFIED IN SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF ANY OF THE RESIDENTIAL UNITS IN THE HOUSING PROJECT ON WHICH THE CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) HAS BEEN MADE, THE ASSESSEE SHALL BE DISE NTITLED TO THE DEDUCTION U/S. 80-IB(10) IN RESPECT OF THE TOTAL PROJECT. IN THE CIRCUMSTANCES, THE ISSUE NO. (V) BEING WHETHER THE BUILT UP AREA IF IT EXCEEDS 1500 S.FT. THE 51 ITA 259 TO 263 /10 ASSESSEE WOULD BE ENTITLED TO THE DEDUCTION U/S. 80 -IB(10) OF THE ACT ON PRO RATA BASIS, IS HELD AGAINST THE ASSESSEE. IN THE CIRCU MSTANCES I AM OF THE VIEW THAT THE INCOME-TAX ACT, 1961 DOES NOT RECOGNI ZE A LAKSHMAN REKHA BEING DRAWN BY AN APPELLATE AUTHORITY. FURTHER I A M OF THE VIEW THAT EVEN IF ONE OF THE FLATS IN THE HOUSING PROJECT VIOLATES AN Y OF THE CONDITIONS AS SPECIFIED IN SECTION 80-IB(10) OF THE INCOME-TAX AC T, 1961, AS IS APPLICABLE FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEES SHA LL NOT BE ENTITLED TO ANY DEDUCTION UNDER SECTION 80-IB(10) IN RESPECT OF SUC H HOUSING PROJECTS IN WHICH THERE HAS BEEN SUCH VIOLATION. 64. IN RESULT, ALL THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- (GEORGE MATHAN) JUDICIAL MEMBER CHENNAI, DATED THE 15 TH SEPTEMBER, 2010. H. 52 ITA 259 TO 263 /10 THE INCOME TAX APPELLATE TRIBUNAL BENCH A, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT THIRD MEMBER I.T.A.NOS.259 & 260(MAD)/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 SANGHVI AND DOSHI ENTERPRISE, THE INCOME-TAX OFFICER, NO.560, 3H CENTURY PLAZA, VS. BUSINESS WARD XV(3), ANNA SALAI, TEYNAMPET, CHENNAI. CHENNAI 600 018. (RESPSONDENT) PAN AAYFS 0257 P. (APPELLANT) I.T.A.NOS.261 & 262(MAD)/2010 53 ITA 259 TO 263 /10 ASSESSMENT YEARS : 2005-06 & 2006-07 SRI MAHALAKSHMI HOUSING, THE INCOME-TAX OFFICER, NO.560, 3H CENTURY PLAZA, VS. BUSINESS WARD XV(3), ANNA SALAI, TEYNAMPET, CHENNAI. CHENNAI 600 018. (RESPSONDENT) PAN AAZFS 0513M. (APPELLANT) AND I.T.A.NO.263(MAD)2010 ASSESSMENT YEAR : 2006-07 SRI MAHALAKSHMI BUILDERS, THE INCOME-T AX OFFICER, NO.560, 3H CENTURY PLAZA, VS. BUSINESS WARD XV(3), 54 ITA 259 TO 263 /10 ANNA SALAI, TEYNAMPET, CHENNAI. CHENNAI 600 018. (RESPSONDENT) PAN AAYFS 6887 P. (APPELLANT) ASSESSEES BY : SHRI T. BANUSEKAR, F.C.A. DEPARTMENT BY : SHRI SHAJI P. JACOB, I.R.S. O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS IS A BUNCH OF FIVE APPEALS . THE APPEALS ARE FILED BY ASSESSEES, WHO ARE THREE IN NUMBERS. THE RELEVANT ASSESSMENT YEARS ARE 2005-06 AND 2006-07. 2. ALL THE THREE ASSESSEES ARE FIRMS ENGAG ED IN CONSTRUCTION BUSINESS. THE ASSESSEE FIRMS, IN ADDI TION TO THEIR TRADITIONAL CONTRACT BUSINESS, ALSO VENTURED INTO DEVELOPMENT OF BUILDING PROJECTS. THE ASSESSEES HA VING ENGAGED IN THE CONSTRUCTION OF SUCH PROJECTS OF RES IDENTIAL 55 ITA 259 TO 263 /10 BUILDINGS, CLAIMED DEDUCTION PROVIDED UNDER SECTION 80IB(10) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE S HAVE ACCOUNTED INCOME FROM THE PROJECTS FOR THE IMPUGNED ASSESSMENT YEARS COMPUTING ON THE BASIS OF PROJECT COMPLETION METHOD. 3. BUT THE CLAIM OF DEDUCTION MADE BY THE ASSESSEES UNDER SECTION 80IB(10) HAS BEEN DENIED BY THE ASSESSING AUTHORITY AND LATER CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). THE CLAIM HAS BEEN DENIED ON VARIOUS GROUNDS, SUCH AS: (I) THAT THE ASSESSEES ARE NOT BUILDERS AND DEVELOPERS BUT ONLY BUILDING CONTRACTORS AND THEREFORE NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10); (II) THAT THE ASSESSEES CANNOT BE CONSIDERED AS BUILDERS AS LAWFUL POSSESSION OF THE LAND WAS NOT HANDED OVER TO THEM AND THE ASSESSEES WERE GIVEN ONLY PERMISSION TO CONSTRUCT THE RESIDENTIAL BUILDINGS; 56 ITA 259 TO 263 /10 (III) THAT THE STATUTORY PERMITS FROM DIFFERENT AGENCIES LIKE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY (CMDA), CHENNAI CORPORATION, AIRPORT AUTHORITY OF INDIA (AAI) WERE OBTAINED BY THE LAND OWNERS AND NOT OBTAINED IN THE NAMES OF THE ASSESSEES THEMSELVES; (IV) THAT THE CONSTRUCTION WORK HAS BEEN SUB- CONTRACTED TO OTHERS; (V) THAT THE BUILT UP AREA OF CERTAIN FLATS EXCEEDED THE STATUTORY LIMIT OF 1500 SFT. PROVIDED IN SECTION 80IB(10); (VI) THAT IN CERTAIN CASES TWO FLATS WERE COMBINED TO MAKE A SINGLE DWELLING UNIT WITH A SINGLE ENTRANCE AND IN SUCH CASES AGAIN THE COMBINED AREA EXCEEDED THE STATUTORY LIMIT OF 1500 SFT. (VII) THAT IN CERTAIN CASES THE PURCHASERS OF THE FLATS HAVE EXCLUSIVE RIGHTS OVER THE TERRACE AREA AND IN SUCH CASES THE EXTENT OF 57 ITA 259 TO 263 /10 THE BUILT UP AREA WILL BE MORE THAN 1500 SFT. IF THE TERRACE IS ALSO TREATED AS PART OF THE BUILT UP AREA; AND (VIII THAT THE ASSESSEES HAVE NOT FURNISHED COMPLETION CERTIFICATES TO PROVE COMPLETION OF THE PROJECTS BEFORE THE SPECIFIED DATES. 4. IN THE LIGHT OF THE ABOVE REASO NS STATED BY THE ASSESSING AUTHORITY TO DENY THE CLAIM OF DEDUCTION MADE BY THE ASSESSEES, WHICH HAS BEEN CONFIRMED IN FIRST AP PEALS, THE ASSESSEES HAVE RAISED SIX ISSUES IN THE SECOND APPEALS FILED BEFORE THE TRIBUNAL. THESE SIX ISSUES REFLECT ED IN VARIOUS GROUNDS RAISED IN THESE APPEALS MAY BE SHOR T LISTED AS BELOW:- (I) WHETHER THE ASSESSEES ARE BUILDERS/DEVELOPERS AND THEREFORE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10)? (II) WHERE THE PURCHASERS OF FLATS HAVE COMBINED TWO FLATS TOGETHER THEREBY EXCEEDING THE LIMIT OF THE BUILT UP AREA OF 1500 SFT. CAN BE CONSIDERED AS COMPLIANCE 58 ITA 259 TO 263 /10 OF THE STIPULATION PROVIDED IN SECTION 80IB(10) THAT THE BUILT UP AREA SHOULD NOT EXCEED 1500 SFT. AND HENCE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10)? (III) WHETHER THE ASSESSEES HAVE FURNISHED PROJECT COMPLETION CERTIFICATES ON OR BEFORE 31 ST MARCH, 2008 AND WHETHER ENTITLED FOR DEDUCTION OR NOT? (IV) WHERE IN CERTAIN CASES THE BUILT UP AREA OF A SINGLE FLAT IS MORE THAN 1500 SFT., WHETHER THE ASSESSEES ARE ELIGIBLE FOR DEDUCTION OR NOT? (V) WHETHER THE PRIVATE TERRACE SHOULD ALSO BE INCLUDED IN THE BUILT UP AREA OF THE FLATS FOR THE PURPOSE OF WORKING OUT THE STATUTORY EXTENT OF THE BUILT UP AREA? (VI) WHETHER DEDUCTION SHOULD BE ALLOWED EVEN THOUGH SOME OF THE FLATS OF THE PROJECTS EXCEEDED THE BUILT UP AREA OF 1500 SFT.? 59 ITA 259 TO 263 /10 5. THESE ISSUES WERE CONSIDERED BY THE R EGULAR BENCH OF THE TRIBUNAL IN THE HEARING CONCLUDED ON 9 TH JULY, 2010. THE BENCH WAS CONSTITUTED OF THE LEARNED VIC E- PRESIDENT AND THE LEARNED JUDICIAL MEMBER. THE LEA RNED VICE-PRESIDENT AUTHORED THE ORDER ON 9 TH SEPTEMBER, 2010. THE LEARNED JUDICIAL MEMBER PASSED A SEPARATE ORDER ON 15 TH SEPTEMBER, 2010, BECAUSE OF DIFFERENCE OF OPINION WITH THE LEARNED VICE-PRESIDENT ON CERTAIN ISSUES. 6. THE DISSENT WAS NOT ON ALL THE POINTS O F DECISION ARRIVED AT BY THE LEARNED VICE-PRESIDENT. ON THE F IRST ISSUE AS TO WHETHER THE ASSESSEES ARE BUILDERS/DEVELOPERS ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10), THE BENCH AGREED THAT THE ASSESSEES ARE BUILDERS AND DEVELOPE RS AS CONSTRUED IN SECTION 80IB(10) AND THEREFORE ENTITLE D FOR DEDUCTION UNDER THAT SECTION. THE ISSUE WHETHER T WO FLATS IN A PROJECT WHEN COMBINED TOGETHER COULD BE ELIGIB LE FOR DEDUCTION, EVEN IF THE COMBINED EXTENT OF THE BUILT UP AREA EXCEEDED 1500 SFT. WAS ALSO DECIDED BY THE BENCH UNANIMOUSLY BY HOLDING THAT DEDUCTION SHOULD NOT BE DENIED ON THE GROUND THAT TWO FLATS WERE COMBINED BY THE PURCHASERS OF THE FLATS. THE BENCH HELD THAT THIS IS BECAUSE 60 ITA 259 TO 263 /10 THE FLATS WERE PURCHASED BY THE BUYERS AS SINGLE UN ITS NOT EXCEEDING A BUILT UP AREA OF 1500 SFT. EACH. THE F LATS WERE COMBINED ONLY AFTER THE PURCHASE OF THOSE FLATS AND AFTER TAKING POSSESSION OF THEM. IN SUCH CASES THE FLATS CONCERNED ARE TO BE TREATED AS CONSTRUCTED AND SOLD AS INDEPENDENT FLATS WITH BUILT UP AREA NOT EXCEEDING 1500 SFT., EACH. REGARDING THE QUESTION OF PROJECT COMPLETION CERTIFICATES, THE BENCH AGAIN UNANIMOUSLY HELD THAT EVEN THOUGH THE CERTIFICATES ARE DATED BEYOND 31 ST MARCH, 2008, INSPECTIONS OF THE PROPERTIES WERE CARRIED OUT BY T HE CONCERNED AGENCIES WELL BEFORE 31 ST MARCH, 2008 AND THE CERTIFICATES WERE ISSUED ON THE BASIS OF SUCH INSPE CTIONS AND THEREFORE THE CERTIFICATES RELATE BACK TO THE D ATES ON WHICH THE APPLICATIONS FOR THE CERTIFICATES WERE MA DE BY THE ASSESSEES. 7. THE NEXT QUESTION AS TO WHEN THE BU ILT UP AREA OF CERTAIN FLATS MEASURED MORE THAN 1500 SFT., WHETHER THEY ARE ENTITLED FOR DEDUCTION HAS BEEN RESTORED BY THE BENCH TO THE FILES OF THE ASSESSING OFFICER WITH A DIRECTION TO MEASURE THE FLATS IN THE PRESENCE OF THE DEPARTMENTAL VALUA TION OFFICER AS WELL AS THE REGISTERED VALUERS APPOINTED BY THE 61 ITA 259 TO 263 /10 ASSESSEES, IF ANY. THERE WAS NO DISSENT ON THIS IS SUE AS WELL. 8. ALL THE ABOVE FOUR ISSUES HAV E BEEN DECIDED BY THE BENCH IN FAVOUR OF THE ASSESSEES WITHOUT ANY DISSENT. 9. THE FIFTH ISSUE AS TO WHETHE R THE PRIVATE TERRACE AREA SHOULD ALSO BE INCLUDED IN THE BUILT U P AREA OF THE FLAT FOR THE PURPOSE OF DETERMINING THE LIMIT O F 1500 SFT. HAS BEEN UNANIMOUSLY DECIDED BY THE BENCH AGAINST T HE ASSESSEE BY HOLDING THAT THE AREA OF PRIVATE TERRAC E SHOULD BE INCLUDED IN THE BUILT UP AREA OF THE FLAT. 10. AS FAR AS THE SIXTH ISSUE AS TO WHETHER DEDUCTION SHOULD BE ALLOWED EVEN THOUGH SOME UNITS EXCEEDED THE BUILT UP AREA OF 1500 SFT., THE BENCH COULD NOT ARRIVE AT AN UNANIMOUS DECISION. THE LEARNED VICE- PRESIDENT AND THE LEARNED JUDICIAL MEMBER HAVE COME TO DIFFERENT VIEWS ON THE ISSUE. THE HONBLE VICE PRE SIDENT HELD THAT DEDUCTION SHOULD BE ALLOWED IN THE CASE O F FLATS HAVING BUILT UP AREA NOT EXCEEDING 1500 SFT., EVEN THOUGH SOME OF THE FLATS ARE EXCEEDING 1500 SFT. HE HELD THAT DEDUCTION SHOULD BE DENIED IN THE CASE OF FLATS HAV ING BUILT 62 ITA 259 TO 263 /10 UP AREA IN EXCESS OF 1500 SFT. THE LEARNED VICE-P RESIDENT ALSO HELD THAT THE ASSESSEES ARE TO BE ALLOWED DEDU CTION UNDER SECTION 80IB(10) IN RESPECT OF FLATS SATISFYI NG ALL CONDITIONS, ONLY IF THE TOTAL BUILT UP AREA OF ALL THE FLATS MEASURING MORE THAN 1500 SFT. DOES NOT EXCEED 10% O F THE TOTAL BUILT UP AREA OF THE PROJECT. 11. THE LEARNED JUDICIAL MEMBER ON THE OT HER HAND HELD THAT EVEN IF ONE OF THE FLATS IN THE PROJECT V IOLATES ANY SPECIFIED CONDITION, THE ASSESSEES ARE NOT ENTITLED FOR THE DEDUCTION. THE LEARNED JUDICIAL MEMBER HELD THAT DEDUCTION UNDER SECTION 80IB(10) CANNOT BE ALLOWED ON A PRO RATA BASIS. THE LEARNED JUDICIAL MEMBER ALSO EXPRESSED HIS DISSENTING VIEW ON THE TEN PERCENT CA P SUGGESTED BY THE LEARNED VICE-PRESIDENT. 12. TO SUM UP, THE LEARNED VICE-PRESI DENT AND THE LEARNED JUDICIAL MEMBER AGREED ON FIVE ISSUES RAISE D BEFORE THEIR BENCH AND UNANIMOUSLY ADJUDICATED FOUR ISSUES IN FAVOUR OF THE ASSESSEES AND ONE ISSUE AGAINST TH E ASSESSEES. THE DIFFERENCE OF OPINION HAS IN FACT C ROPPED UP ONLY IN RESPECT OF A SINGLE ISSUE AS TO WHETHER DEDUCTION 63 ITA 259 TO 263 /10 SHOULD BE ALLOWED TO THE ASSESSEES EVEN IF SOME OF THE UNITS EXCEEDED THE BUILT UP AREA OF 1500 SFT. 13. THE POINT OF DIFFERENCE WAS REFERRED TO THE HONBLE PRESIDENT, INCOME-TAX APPELLATE TRIBUNAL TH ROUGH THE QUESTION FRAMED BY THE BENCH UNDER SECTION 255( 4) OF THE INCOME-TAX ACT, 1961, WHICH READS AS: IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS THE ASSESSEE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME-TAX ACT, 1961 IF THERE IS VIOLATION EVEN IN RESPECT OF A SINGLE RESIDENTIAL UNIT IN THE PROJECT? 14 THE HONBLE PRESIDENT OF THE INCOME-TAX APPELLATE TRIBUNAL NOMINATED ME AS THE THIRD MEMBER THROUGH H IS HONOURS PROCEEDINGS DATED 22 ND FEBRUARY, 2011 AND IT IS HOW THIS MATTER HAS BEEN PLACED BEFORE ME. 15. THE ISSUE OF GRANTING DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF FLATS HAVING BUILT UP AREA E XCEEDING 64 ITA 259 TO 263 /10 1500 SFT., HAS BEEN CONSIDERED BY THE HONBLE VICE- PRESIDENT IN PARAGRAPH 25 OF HIS ORDER. THE SAID P ARAGRAPH IS REPRODUCED BELOW: 25. THE NEXT OBJECTION OF THE ASSESSING OFFICER IS THAT CERTAIN FLATS IN THE PROJECT MEASURE MORE THAN1500 SFT. ACCORDING TO THE LD. COUNSEL, AS PER THE MEASUREMENT TAKEN BY THE REGISTERED VALUER APPOINTED BY THE ASSESSEE, THE SAID FLATS MEASURED LESS THAN 1500 SFT. HOWEVER, HE HAD NO OBJECTION IF THE MATTER WAS REMITTED FOR VERIFICATION. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT THE FLATS WHICH ARE ALLEGEDLY MORE THAN 1500 SFT. IN AREA BE MEASURED AGAIN AND THE DEPARTMENTAL VALUER AS WELL AS THE ASSESSEES VALUER, BOTH SHOULD REMAIN PRESENT. THE ASSESSEE IS DIRECTED TO EXTEND ITS FULLEST CO-OPERATION. IF ON MEASURING THE FLATS, THEY ARE FOUND TO BE MORE THAN 1500 SFT., 65 ITA 259 TO 263 /10 THE ASSESSING OFFICER IS THEN DIRECTED TO ALLOW DEDUCTION ONLY IN RESPECT OF THE PROFITS ARISING FROM THE SALE OF THOSE FLATS WHICH MEASURE LESS THAN 1500 SFT. IN OTHER WORDS, FLATS MEASURING MORE THAN 1500 SFT. SHOULD BE LEFT OUT. AT THE SAME TIME, WE MAKE IT CLEAR THAT THE DEDUCTION SHOULD BE ALLOWED ONLY IF THE BUILT UP AREA OF FLATS MEASURING MORE THAN 1500 SFT. DO NOT EXCEED 10% OF THE TOTAL BUILT UP AREA. 16. IN THE ABOVE SAID PARAGRAPH TWO ISS UES HAVE BEEN ADJUDICATED BY THE LEARNED VICE-PRESIDENT. TH E FIRST POINT IS THE QUESTION OF ASCERTAINING WHETHER CERTA IN FLATS ARE EXCEEDING THE PRESCRIBED BUILT UP AREA OF 1500 SFT. OR NOT. THE PHYSICAL ASPECT OF EXCEEDING THE BUILT UP AREA OF 1500 SFT. HAS BEEN REMITTED BACK TO THE ASSESSING OFFICE R FOR FRESH VERIFICATION. THE SECOND ISSUE, WHICH IS RELE VANT FOR THE PRESENT, IS THE QUESTION WHETHER IN A CASE WHER E FLATS ARE EXCEEDING A BUILT UP AREA OF 1500 SFT. WHETHER THE DEDUCTION CAN BE GIVEN OR NOT. THE LEARNED VICE-PR ESIDENT 66 ITA 259 TO 263 /10 HAS STATED THAT DEDUCTION SHOULD BE GIVEN WHERE THE BUILT UP AREA IS NOT MORE THAN 1500 SFT. 17. IN THE LAST PART OF THE SAID PARA GRAPH THE LEARNED VICE-PRESIDENT HAS ALSO MADE IT CLEAR THAT THE DEDUCTION SHOULD BE ALLOWED ONLY IF THE BUILT UP AR EA OF FLATS MEASURING MORE THAN 1500 SFT. DOES NOT EXCEED 10% O F THE TOTAL BUILT UP AREA. 18. IN SHORT THE FINDINGS OF THE LE ARNED VICE- PRESIDENT ARE AS FOLLOWS: (I) FLATS HAVING A BUILT UP AREA OF NOT MORE THAN 1500 SFT. ARE ENTITLED FOR THE DEDUCTION UNDER SECTION 80IB(10); (II) FLATS HAVING BUILT UP AREA EXCEEDING 1500 SFT. ARE NOT ENTITLED FOR THE ABOVE DEDUCTION. (III) THE DEDUCTION IS SUBJECT TO THE CONDITION THAT THE AREA OF FLATS HAVING BUILT UP AREA OF MORE THAN 1500 SFT. PUT TOGETHER DOES NOT EXCEED 10% OF THE TOTAL BUILT UP AREA OF THE PROJECT. 67 ITA 259 TO 263 /10 19. THE LEARNED VICE-PRESIDENT HAS EXPLAI NED THE GROUNDS OF HIS DECISION IN PARAGRAPHS 27, 28, 29 AN D 30 OF HIS ORDER. IN PARAGRAPH 27 THE LEARNED VICE-PRESID ENT HAS RELIED ON THE DECISION OF THE SPECIAL BENCH OF THE PUNE TRIBUNAL IN THE CASE BRAHMA ASSOCIATES V. JCIT, REP ORTED IN 122 TTJ 433, TO SUPPORT HIS VIEW THAT PROPORTIONATE DEDUCTION IS PERMISSIBLE AS SECTION 80IB(10) IS A B ENEFICIAL SECTION AND THE OVERALL LIMIT OF 10% OF THE BUILT U P AREA IS A FAIR RESTRICTION. IN PARAGRAPH 29 THE LEARNED VICE -PRESIDENT HAS RELIED ON THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO.458 OF 2006 DATED 5-1-20 07. IN THAT CASE THE HIGH COURT HAS CONFIRMED THE FINDING OF THE KOLKATA BENCH OF THE TRIBUNAL THAT DEDUCTION UNDER SECTION 80IB(10) IS PERMISSIBLE ON A PRO RATA BASIS. IN FA CT THE CALCUTTA HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE KOLKATA BENCH OF T HE TRIBUNAL STATING THAT NO QUESTION OF LAW AROSE OUT OF THE ORDER PASSED BY THE APPELLATE TRIBUNAL. THE LEARNED VICE- PRESIDENT HAS RELIED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. VS. DCIT, 283 ITR402, WHEREIN IT HAS BEEN HELD THAT IN A CASE WHERE 68 ITA 259 TO 263 /10 THE HIGH COURT COMES TO THE CONCLUSION THAT NO SUBS TANTIAL QUESTION OF LAW ARISES ON A PARTICULAR ISSUE, IT CO ULD NOT BE STATED THAT WHEN THE APPEAL IS DISMISSED BY THE HIG H COURT, THE SUBJECT MATTER OF THE CONTROVERSY BETWEEN THE P ARTIES HAS NOT BEEN DEALT WITH BY THE HIGH COURT. IT IS F URTHER STATED THAT THE EFFECT OF DISMISSAL IS THAT THE ORD ER OF THE TRIBUNAL ON THE ISSUE WHICH WAS AGITATED BEFORE THE HIGH COURT STANDS MERGED IN THE ORDER OF THE HIGH COURT AND FOR ALL INTENTS AND PURPOSES IT IS THE DECISION OF THE HIGH COURT WHICH IS OPERATING AND WHICH IS CAPABLE OF BEING GI VEN EFFECT TO. RELYING ON THE ABOVE JUDGMENT OF THE HO NBLE GUJARAT HIGH COURT, THE LEARNED VICE-PRESIDENT HELD THAT THE DECISION OF THE HONBLE HIGH COURT IS SQUARELY APPL ICABLE TO THE ISSUE CONSIDERED BY THE BENCH. HE ALSO RELIED ON A SPECIAL BENCH DECISION OF THE DELHI TRIBUNAL IN THE CASE OF MEDICARE INVESTMENTS LTD. VS. JCIT, 114 ITD 34, WHE RE THE BENCH HAS ADOPTED THE VIEW EXPRESSED IN THE JUDGME NT DELIVERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. VS. DCIT, 283 ITR 402. IN TH E LIGHT OF THE ABOVE JUDICIAL PRONOUNCEMENTS, THE LEARNED VICE - PRESIDENT CAME TO THE CONCLUSION THAT IN THE ABSENC E OF ANY DECISION OF THE JURISDICTIONAL HIGH COURT TO THE CO NTRARY, NOT 69 ITA 259 TO 263 /10 ONLY THE DECISION OF THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF BRAHMA ASSOCIATES BUT ALSO THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HO USING DEVELOPMENT LTD. ARE BINDING PRECEDENTS AND THEREFO RE IT IS TO BE HELD THAT EVEN IF THE ASSESSEE HAS CONSTRUCTE D RESIDENTIAL HOUSES OF LARGER AREA, DEDUCTION UNDER SECTION 80IB(10) WILL STILL BE AVAILABLE BUT WILL BE RESTRI CTED TO THE PROFITS ARISING FROM THE SALE OF SMALLER RESIDENTIA L UNITS. 20. THE LEARNED JUDICIAL MEMBERS DIS SENTING VIEW DISCUSSED THE STATUTORY PROVISIONS OF THE DEDUCTION AVAILABLE UNDER SECTION 80IB(10) IN PARAGRAPH 55 OF THE ORDER ASUNDER:- 55.THE PROVISIONS OF SECTION 80IB(10) DO NOT RECOGNIZE A PRO RATA DEDUCTION. IT IS NOT AS IF THE LEGISLATURE DID NOT RECOGNIZE PRO RATA DEDUCTION. WHEN THE LEGISLATURE DESIRED TO GIVE SUCH PRO RATA DEDUCTION, IT SPECIFICALLY PROVIDED FOR IT. FOR E.G. SECTIONS 54, 54(2), 54B(2), 80HHC ETC. FURTHER A PERUSAL OF THE SECTION 80IB(10) SHOWS THAT THE 70 ITA 259 TO 263 /10 WORD USED AT THE END OF SUB-CLAUSE(C) IS AND AND NOT OR NOR IS IT JUST A COMA. THE TERM AND MEANS THAT ALL THE CONDITIONS IN SEC. 80IB(10) MUST BE COMPLIED WITH INDIVIDUALLY AND CUMULATIVELY. VIOLATION OF ANY ONE OF THE SUB-CLAUSES OF SECTION 80IB(10) AS ARE AVAILABLE FOR THE RELEVANT ASSESSMENT YEARS LEADS TO THE LOSS OF THE ELIGIBILITY OF DEDUCTION U/S 80IB(10) IN TOTO. THE WORDINGS OF SEC. 80IB(10) ARE IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS. IT IS NOT UNDERTAKING DEVELOPING AND BUILDING HOUSES OR FLATS. IT IS THE PROJECT AS A WHOLE THAT HAS TO BE CONSIDERED. THIS VIEW DRAWS SUPPORT FROM THE DECISION OF THE HONBLE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES, CITED SUPRA. THE FLOOR OF ONE FLAT IS THE ROOF OF ANOTHER. 71 ITA 259 TO 263 /10 THE OUTER WALLS OF TWO FLATS WOULD BE COMMON. 21. THE LEARNED JUDICIAL MEMBER HAS FURT HER ELUCIDATED THE STATUTORY PROVISION OF DEDUCTION AS UNDER IN PARA 58 OF HIS ORDER:- 58. A READING OF SECTION 80IB(10) SHOWS THAT THE SAID PROVISION IS UNAMBIGUOUS. THE LEGISLATURE CLEARLY DID NOT WANT TO GRANT EXEMPTION TO A HOUSING PROJECT WHEREIN THE BUILT UP AREA OF A RESIDENTIAL UNIT EXCEEDED THE AREA SPECIFIED IN SECTION 80IB(10)(C). THE WORDINGS OF SEC. 80IB(10) ARE NOT THE DEDUCTION.100% OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECTS IN RESPECT OF RESIDENTIAL UNITS HAVING A MAXIMUM BUILT UP AREA OF 1500 SFT. THE WORDINGS USED ARE THE AMOUNT OF DEDUCTIONSHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS 72 ITA 259 TO 263 /10 YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECTS IF,- (EMPHASIS SUPPLIED BY ME) (A) ************************* (B) ************************* (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREAOF THE WORD IF DENOTES THE INTENTION IN ITS CLARITY OF THE LEGISLATURE. 22. THE LEARNED JUDICIAL MEMBER THERE AFTER EXAMINED THE GENERALLY ACCEPTED RULES OF BINDING PRECEDENCE ARISING OUT OF THE DECISIONS OF HIGHER C OURTS, SPECIAL BENCHES AND COORDINATE BENCHES. RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF ACIT VS. MSS INDIA(P) LTD., 123 TTJ (PUNE) 657, THE LEARNED JUDICIAL MEMBER HELD THAT IN THE ABSENCE OF ANY OTHER DIRECT DECISION ON THE ISSUE, THE EARLIER DEC ISION OF THE COORDINATE BENCH IS BINDING ON THE SUBSEQUENT BENCH . HE HELD THAT THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES, 119 ITD 255, RELIED UPON BY THE 73 ITA 259 TO 263 /10 LEARNED VICE-PRESIDENT, IN FACT SUPPORTS THE PROPOS ITION THAT DEDUCTION SHOULD NOT BE GIVEN ON A PRO RATA BASIS. HE OBSERVED THAT THE SAID DECISION IN FACT SUPPORTS TH E ARGUMENTS OF THE REVENUE ON THE ISSUE. THE LEARNED JUDICIAL MEMBER THEREAFTER OBSERVED THAT A COORDINA TE BENCH OF THE CHENNAI TRIBUNAL ITSELF HAS DECIDED TH E VERY SAME ISSUE IN THE CASE OF ACIT VS. VISWAS PROMOTERS (P) LTD. IN ITA NO.1912(MDS)/2007 DATED13-10-2008 AND H ELD THAT THE RESTRICTION IMPOSED BY THE STATUTE IS APPL ICABLE ON THE ENTIRE PROJECT AND THEREFORE IF SOME OF THE RES IDENTIAL UNITS OF THE PROJECT ARE EXCEEDING THE PRESCRIBED L IMIT OF BUILT UP AREA, THE BENEFIT OF DEDUCTION UNDER SECTION 80I B(10) CANNOT BE GRANTED TO THE ENTIRE PROJECT. HE FURTHE R OBSERVED THAT THE ABOVE DECISION OF THE COORDINATE BENCH OF THE CHENNAI TRIBUNAL WAS THE SUBJECT MATTER OF A MISCEL LANEOUS PETITION IN M.P. NO.379(MDS)/2009, WHEREIN IT WAS C LAIMED THAT AN ERROR HAD CREPT IN THE ORDER INASMUCH AS TH ETRIBUNAL HAD NOT CONSIDERED THE DECISION OF THE CALCUTTA BEN CH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENTS LTD. THE MISCELLANEOUS PETITION HAS B EEN DISMISSED VIDE ORDER DATED 30-1-2009. HE FURTHER OBSERVED THAT AGAINST THE ABOVE ORDER OF THE TRIBUN AL, THE 74 ITA 259 TO 263 /10 ASSESSEE HAD FILED A WRIT PETITION BEFORE THE HONB LE MADRAS HIGH COURT REPORTED IN 323ITR 114, WHEREIN T HE HONBLE JURISDICTIONAL HIGH COURT HAS CATEGORICALLY HELD THAT THE DECISION OF THE HIGH COURT OF A DIFFERENT JURIS DICTION IS NOT BINDING ON THE TRIBUNAL, WHICH IS NOT UNDER ITS JURISDICTION AND THE RECTIFICATION SOUGHT FOR ON TH AT BASIS UNDER SECTION 254(2) WAS NOT VALID. IN THE SAID DE CISION THE HONBLE JURISDICTIONAL HIGH COURT HAD ALSO LAID DOW N THE PRINCIPLES OF JUDICIAL DISCIPLINE WHEREIN IT HAD AL SO BEEN HELD THAT WHERE THERE ARE CONFLICTING DECISIONS OF COURT S OF COORDINATE JURISDICTION, THE LATER DECISION IS TO B E PREFERRED IF REACHED AFTER FULL CONSIDERATION OF THE EARLIER DEC ISIONS. 23. IN THE LIGHT OF THE ABOVE OBSERVATIONS THE LEARNED JUDICIAL MEMBER, RELYING ON THE JUDGMENT OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTORS ( P) LTD., 323 ITR 114, HELD THAT THE DECISION OF THE CO ORDINATE BENCH OF THE CHENNAI TRIBUNAL IN THE CASE OF ACIT V S. VISWAS PROMOTORS P. LTD. IN ITA NO.1912(MDS)/2007 D ATED 13-10-2008 IS SUBSEQUENT TO THE DECISION OF THE CAL CUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., WHICH WAS PASSED ON 24-3- 75 ITA 259 TO 263 /10 2006 AND THEREFORE AS THE CO-ORDINATE BENCH OF THE CHENNAI TRIBUNAL IN THE CASE OF VISWAS PROMOTORS (P) LTD. H AS CONSIDERED ALL THE EARLIER DECISIONS AND HAS ARRIVE D AT ITS FINDING AFTER FULL CONSIDERATION OF THE PRINCIPLES AS CONSIDERED IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., THE SAID DECISION APPLIES TO THE PRESENT CASE. AGAIN, RELYING ON THE JUDGMENT OF THE HONBL E MADRAS HIGH COURT IN THE CASE OF HITECH ARAI, REPORTED IN 321 ITR 477, THE LEARNED JUDICIAL MEMBER FOLLOWED THE DECIS ION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF VI SWAS PROMOTORS P. LTD. AND HELD THAT IF THERE IS ANY VIO LATION IN RESPECT OF ANY OF THE CONDITIONS SPECIFIED IN SECTI ON 80IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF ANY OF THE RESIDENTIAL UNITS IN THE HOUSING PROJECT ON WHI CH THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) HAS BEEN MADE, THE ASSESSEE SHALL NOT BE ENTITLED TO THE DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF THE TOTAL PROJECT. HE HELD THAT THE ENTIRE PROJECT SHOULD BE DENIED THE BENEFIT OF DEDUCTION AVAILABLE UNDER SECTION 80IB(10) OF THE ACT. 24. I HEARD BOTH SIDES AT LENGTH AND CONSIDERED TH E ISSUE IN DETAIL. 76 ITA 259 TO 263 /10 25. THE LEARNED VICE-PRESIDENT AND THE LEARNED JUDICIAL MEMBER HAVE EXTENSIVELY DISCUSSED THE GROU NDS OF THEIR DECISIONS BEFORE ARRIVING AT THEIR RESPECTIVE CONCLUSIONS. BOTH OF THEM HAVE DISCUSSED IN DETAIL THE DECISIONS GOVERNING THE QUESTION OF JUDICIAL PRECED ENCE IN THE LIGHT OF A NUMBER OF JUDICIAL PRONOUNCEMENTS. 26. AS THE THIRD MEMBER IN THESE APPEALS, I AM NOT HERE TO MAKE ANY CRITICAL APPRAISAL OF THEIR THOUGH T PROCESS AND ITS REFLECTIONS. THAT IS NOT MY DOMAIN AS I AM NOT COMPETENT TO DO SO. THAT IS THE DOMAIN OF CONSTITUT IONAL COURTS. THE DUTY CAST ON ME IS TO EXAMINE THE FACT S OF THE CASE IN THE LIGHT OF THE STATUTORY PROVISIONS AND T HE RELEVANT JUDICIAL PRONOUNCEMENTS AND TO AGREE WITH ONE OF TH E VIEWS. THEREFORE I AM CONFINING MYSELF TO THE SKELETON TAS K OF ZEROING DOWN THE VIEW TO WHICH I MAY AGREE. 27. THE OBSERVATIONS OF THE HONBLE VICE-PRESIDEN T ARE AS FOLLOWS:- (I)AS HELD BY THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF BRAHMA ASSOCIATES VS. JCIT, 122 TTJ 433 (PUNE) (SB), SECTION 80IB(10) IS AIMED AT PROMOTING 77 ITA 259 TO 263 /10 CONSTRUCTION OF HOUSING PROJECTS SO AS TO ADDRESS THE PROBLEM OF SHORTAGE OF DWELLING UNITS AND IT MUST BE INTERPRETED IN THAT LIGHT AND DEDUCTION UNDER SECTION 80IB(10) SHOULD BE GIVEN TO THOSE FLATS WHOSE BUILT UP AREA DOES NOT EXCEED 1500 SFT. AND THAT DEDUCTION SHOULD BE DENIED ONLY TO THOSE FLATS WHOSE BUILT UP AREA EXCEEDS THE PRESCRIBED LIMIT OF 1500 SFT. 28. ON THE OTHER HAND THE LEARNED JUDICIAL MEMBER HAS HELD THAT THE SPECIAL BENCH IN THE CASE OF BRAH MA ASSOCIATES VS. JCIT, 122 TTJ 433(PUNE)(SB) HAS NOT GIVEN A FINDING THAT PRO RATA DEDUCTION IN RESPECT OF THE FLATS WHICH ARE HAVING AREA OF NOT EXCEEDING 1500 SFT. SPECIFIE D IN SECTION 80IB(10) CAN BE GIVEN. SUCH A PROPOSITION IS CONTRARY TO THE FINDINGS OF THE SAID SPECIAL BENCH OF THE TRIBUNAL. THE PROVISIONS OF SECTION 80IB(10) DO NO T RECOGNIZE A PRO RATA DEDUCTION. VIOLATION OF ANY OF THE CONDITIONS IN SECTION 80IB(10) WOULD RESULT IN LOSS OF ELIGIBILITY OF DEDUCTION UNDER SECTION 80IB(10) AS A WHOLE. AFTER THE DECISION OF THE CALCUTTA HIGH COURT IN TH E CASE OF 78 ITA 259 TO 263 /10 CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN I TA NO.458(MDS)/2006 , THE COORDINATE BENCH OF THIS TRI BUNAL IN ACIT VS. VISWAS PROMOTORS PVT. LTD.IN 126 ITD 263 H AS HELD THAT IF SOME OF THE FLATS IN THE HOUSING PROJE CT EXCEEDED THE MAXIMUM SPECIFIED AREA PROVIDED IN SECTION 80IB (10) THE BENEFIT CANNOT BE EXTENDED TO THE PROJECT AND F OLLOWING THE DECISION OF THE COORDINATE BENCH IT IS NECESSAR Y TO HOLD THAT EVEN IF A SINGLE FLAT EXCEEDED 1500 SFT. IN IT S BUILT UP AREA, DEDUCTION WILL NOT BE AVAILABLE TO THE ENTIRE PROJECT. 29. THE CHENNAI BENCH-B OF THE TRIBUNAL IN THE CASE OF ACIT VS. VISWAS PROMOTORS(P) LTD., 126 ITD 263 HAS HELD THAT APPROVAL IS ACCORDED TO THE ENTIRE PR OJECT AND BLOCKS OF RESIDENTIAL UNITS ARE PARTS OF A PROJECT AND NOT PROJECT BY ITSELF AND HENCE A BLOCK OF RESIDENTIAL UNITS CANNOT BE CONSTRUED TO BE A SEPARATE PROJECT AND TH EREFORE THE ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION UNDE R SECTION 80IB(10). IN THAT CASE THE ASSESSEE HAD COMPLETED FOUR HOUSING PROJECTS OUT OF WHICH IN TWO PROJECTS THE A SSESSEE CONSTRUCTED FLATS EXCEEDING 1500 SFT. AND ALSO FLAT S OF LESS THAN 1500 SFT. IN AREA AND CLAIMED DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF FLATS WHICH HAVE AREA MEASUR ING LESS 79 ITA 259 TO 263 /10 THAN 1500 SFT. THE ABOVE ORDER WAS PASSED BY THE C HENNAI BENCH ON 13 TH OCTOBER, 2008. 30. THE CALCUTTA C-BENCH OF THE TRIBUNAL HAS CONSIDERED THE VERY SAME ISSUE IN THE CASE OF BENGA L AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT IN THEIR O RDER DATED 24 TH MARCH, 2006 PASSED IN ITA NO.1595(KOL)2005 AND ITA NO.1735(KOL)/2005. 31. THE ABOVE ORDER OF THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. WAS TAKEN IN APPEAL BEFORE THE HON BLE CALCUTTA HIGH COURT BY THE REVENUE. THE APPEAL FIL ED BY THE REVENUE UNDER SECTION 260A IN IA NO.458/2006 HA S BEEN DISMISSED BY THE HONBLE HIGH COURT THROUGH JUDGMENT OF THEIR LORDSHIPS DATED 5-1-2007. THE COP IES OF THE JUDGMENT WERE MADE AVAILABLE ON 28-3-2007. THE COURT DISMISSED THE APPEAL FILED BY THE REVENUE ON THE GR OUND THAT NO SUBSTANTIAL QUESTION OF LAW WAS INVOLVED IN THE MATTER. 32. LIKEWISE THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. VISWAS PROMOTO RS WAS ALSO TAKEN BEFORE THE HONBLE MADRAS HIGH COURT IN WRIT 80 ITA 259 TO 263 /10 PETITION, IN ANOTHER CONTEXT. THE ASSESSEE IN THAT CASE AFTER THE APPEAL FILED BY THE REVENUE WAS ALLOWED BY THE TRIBUNAL, HAD FILED A MISCELLANEOUS PETITION IN M.P . NO.379(MDS)/2008, WHICH WAS DISMISSED BY THE TRIBUN AL THROUGH ITS ORDER DATED 13-1-2009. THE WRIT PETITI ON WAS FILED AGAINST THE SAID ORDER OF THE TRIBUNAL, DISMI SSING THE MISCELLANEOUS PETITION. THE MADRAS HIGH COURT WHIL E DISMISSING THE WRIT PETITION HAD OBSERVED THAT THE TRIBUNAL HAS EXPLICITLY TAKEN NOTE OF THE SUBSTANCE OF THE I SSUE DECIDED BY THE CALCUTTA TRIBUNAL IN BENGAL AMBUJA H OUSING DEVELOPMENT LTD. AND THEREFORE ON THE ALLEGATION TH AT IT WAS NOT CONSIDERED, NO MISTAKE COULD BE NOTICED IN THE ORDER OF THE TRIBUNAL. IN THE COURSE OF DISPOSAL OF THE SAI D WRIT PETITION, THE HONBLE HIGH COURT ALSO DISCUSSED CER TAIN PROPOSITIONS RELATING TO THE BINDING NATURE OF DECI SIONS OF HIGH COURTS. WHILE LAYING DOWN THOSE PROPOSITIONS, THE HIGH COURT ALSO HELD THAT WHERE THERE ARE CONFLICTI NG DECISIONS OF COURT OF COORDINATE JURISDICTION, THE LATER DECISION IS TO BE PREFERRED BEING REACHED AFTER FUL L CONSIDERATION OF THE EARLIER DECISIONS. THE COURT ALSO OBSERVED THAT THE DECISION OF ONE HIGH COURT IS NEI THER 81 ITA 259 TO 263 /10 BINDING PRECEDENT FOR ANOTHER HIGH COURT NOR FOR CO URTS OR TRIBUNALS OUTSIDE ITS OWN TERRITORIAL JURISDICTION. 33. IT IS ON THE BASIS OF THE ABOVE OBSERVATIONS MADE BY THE HONBLE MADRAS HIGH COURT IN THE WRIT P ETITION FILED BY VISWAS PROMOTORS (P) LTD. THAT THE LEARNED JUDICIAL MEMBER HAS DECIDED TO RELY ON THE DECISION OF THE C HENNAI COORDINATE BENCH DELIVERED IN THE CASE OF ACIT VS. VISWAS PROMOTORS(P) LTD., 126 ITD 263. 34. ON THE OTHER HAND IT IS ON THE BASIS OF THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. THAT THE LEA RNED VICE-PRESIDENT HAS HELD IN FAVOUR OF THE ASSESSEE T HAT PRO RATA DEDUCTION IS AVAILABLE UNDER SECTION 80IB(10). 35. INCIDENTALLY THE PRESENT THIRD MEMBER WAS A PARTY TO THE ORDER OF THE TRIBUNAL, B-BENCH, CHENNA I IN THE CASE OF CIT VS. VISWAS PROMOTORS (P) LTD.,126 ITD 2 63. IN THAT CASE THE COMMISSIONER OF INCOME-TAX(APPEALS) H AD ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE BASI S OF THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL IN T HE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT. THE SAID ORDER OF THE COMMISSIONER(APPEALS) WAS REVERSE D BY 82 ITA 259 TO 263 /10 THE TRIBUNAL AND HELD THAT PRO RATA DEDUCTION IS NO T AVAILABLE UNDER SECTION 80IB(10). BUT AS A MATTER OF FACT IT IS TO BE BROUGHT ON RECORD THAT THE TRIBUNAL WHILE DISPOSING OF THAT APPEAL IN THE CASE OF VISWAS PROMOTORS (P) LTD. HAS NOT DISCUSSED ANYTHING ABOUT EITHER THE ORDER OF THE CA LCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO.1735(KOL)/2005 D ATED 24-3-2006 OR THE DECISION OF THE HONBLE CALCUTTA H IGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO.458 OF 2006 DATED 5-1-20 07. EVEN THOUGH THE TRIBUNAL HAS CONSIDERED THE MATTER IN DETAIL IN THE LIGHT OF THE PRINCIPLES OF STATUTORY INTERPRETATION DISCUSSED BY THE HONBLE SUPREME COURT IN THE CASE OF PADMASUNDARA RAO(DECD.) & OTHERS VS. STATE OF TAMIL NADU & OTHERS, 255 ITR 147, THE TRIBUNAL HAS NOT CONSIDERED OR DISCUSSED THE DECISION OF THE CALCUTT A TRIBUNAL OR THE HONBLE CALCUTTA HIGH COURT WHICH A RE DIRECTLY ON THE POINT. IT WAS ONLY WHILE DISPOSING OF THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE THAT T HE TRIBUNAL HAS MADE A MENTION ABOUT THE DECISION OF T HE CALCUTTA TRIBUNAL TO MAKE IT CLEAR THAT THE SAID DE CISION WAS ALSO CONSIDERED BY THE TRIBUNAL WHILE PASSING THE E ARLIER 83 ITA 259 TO 263 /10 ORDER. IT MAY BE BECAUSE OF THIS SUBSEQUENT OBSERV ATION THAT THE HONBLE MADRAS HIGH COURT HAS OBSERVED IN ITS ORDER DISMISSING THE WRIT PETITION FILED BY THE ASS ESSEE THAT THE TRIBUNAL HAS EXPLICITLY TAKEN NOTE OF THE SUBST ANCE OF THE ISSUE DECIDED BY THE CALCUTTA TRIBUNAL IN BENGAL AM BUJA HOUSING DEVELOPMENT LTD. 36. BUT AS A MATTER OF FACT IT IS TO BE SEEN FROM THE ORDER OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE C ASE OF VISWAS PROMOTORS(P) LTD. THAT THE TRIBUNAL HAS NOT EFFECTIVELY CONSIDERED THE ORDER OF THE CALCUTTA TR IBUNAL AND THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT. T HEREFORE THE ARGUMENT THAT ALL THE EARLIER DECISIONS ON THE SUBJECT WERE CONSIDERED BY THE CHENNAI BENCH OF THE TRIBUNA L IN THE CASE OF VISWAS PROMOTORS(P) LTD. IS NOT A CORRE CT STATEMENT OF FACT. 37. IT IS ALSO NOT CORRECT TO ARGUE THAT THE SAID ORDER OF THE TRIBUNAL CHENNAI BENCH IN THE CASE OF VISWAS PROMOTORS(P) LTD. HAS BEEN CONFIRMED BY THE HONBLE MADRAS HIGH COURT. THE HONBLE MADRAS HIGH COURT I N ITS WRIT ORDER HAS DEALT WITH ONLY THE WRIT APPLICATION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL DISMISSI NG THE 84 ITA 259 TO 263 /10 MISCELLANEOUS PETITION FILED BY THE ASSESSEE. THE HONBLE COURT HAS SPECIFICALLY MENTIONED THAT THE WRIT PETI TION WAS MISCONCEIVED AND THEREFORE LIABLE TO BE DISMISSED. THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN THE SA ID CASE WAS THAT WRIT PETITION AGAINST ORDER UNDER SECTION 254(2) CANNOT BE REJECTED ON THE GROUND OF AVAILABILITY OF ALTERNATE REMEDY. THE HONBLE MADRAS HIGH COURT HAS NOT CONSIDERED ANYTHING CONCERNING THE MERIT OF THE ISS UE THAT WHETHER IN THE CIRCUMSTANCES STATED ABOVE THE ASSES SEE COULD CLAIM DEDUCTION UNDER SECTION 80IB(10) OR NOT . THE HONBLE COURT CLARIFIED THAT IT WAS STILL OPEN FOR THE ASSESSEE TO APPEAL AGAINST THE FINDING OF THE TRIBU NAL ON MERITS OF THE ISSUE IN APPEAL BEFORE THE HONBLE HI GH COURT PERMITTED UNDER SECTION 260A. THEREFORE IT IS PREM ATURE TO HOLD THAT THE ORDER OF THE TRIBUNAL, CHENNAI BENC H IN THE CASE OF ACIT VS. VISWAS PROMOTORS(P) LTD., 126 ITD2 63 HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COUR T. 38. THEREFORE I FIND THAT THE PREMISES RELIED ON B Y THE LEARNED JUDICIAL MEMBER IN THE LIGHT OF THE ORD ER OF THE COORDINATE BENCH AND THE JUDGMENT OF THE JURISDICTI ONAL HIGH COURT ARE NOT IN THE CORRECT PERSPECTIVE. 85 ITA 259 TO 263 /10 39. AS ALREADY STATED, THE TRIBUNAL HAS NOT CONSIDERED EITHER THE ORDER OF THE CALCUTTA TRIBUNA L OR THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., EVEN THOUGH THE SAID ORDER AND THE JUDGMENT WERE DELIVERED PRIOR TO THE ORDER OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE C ASE OF VISWAS PROMOTORS (P) LTD. THEREFORE IT IS TO BE SE EN THAT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. D ATED 5-1-2007 RENDERED IN ITA NO.3458/2006 HAS NOT BEEN CONSIDERED BY THE CHENNAI BENCH WHILE PASSING ITS O RDER IN THE CASE OF ACIT VS.VISWAS PROMOTORS (P) LTD. ON 13 -10- 2008 (126 ITD 263). 40. NOW THE QUESTION IS, IN THE ABOVE CIRCUMSTANCE S WHERE THERE IS NO DIRECT DECISION OF THE JURISDICTI ONAL HIGH COURT ON THE SUBJECT AND WHERE THERE IS ALREADY AN EXISTING DECISION OF THE CALCUTTA HIGH COURT ON THE SUBJECT, WHICH DECISION IS TO BE FOLLOWED TO DECIDE THE ISSUE AT H AND, WHETHER THE DECISION OF THE CHENNAI CO-ORDINATE BEN CH OR THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT? 86 ITA 259 TO 263 /10 41. NOW, WHEN COMING TO THE FINDING THAT THE ISSUE HAS BEEN ADJUDICATED BY THE HONBLE CALCUTTA HIGH C OURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD., IT IS ALSO NECESSARY TO EXAMINE THE FACT OF DISMISSAL OF AN APPEAL BY THE HIGH COURT HOLDING THAT NO SUBSTANTIA L QUESTION OF LAW ARISES. THE DELHI BENCH OF THE TRI BUNAL IN THE CASE OF MEDICARE INVESTMENTS LTD. VS. JCIT, 114 ITD 34(DELHI)(SB) HAS CONSIDERED THIS QUESTION IN AN EL ABORATE MANNER IN ITS ORDER. RELYING ON THE JUDGMENT OF T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA IND USTRIES LTD. VS. DCIT, 283 ITR 402, THE HONBLE SPECIAL BEN CH HELD AS FOLLOWS:- THE EFFECT OF DISMISSAL OF APPEAL BY THE HIGH COURT HOLDING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IS THAT THE ORDER OF THE TRIBUNAL ON THE ISSUE WHICH WAS AGITATED BY THE APPELLANT BEFORE THE HIGH COURT STANDS MERGED IN THE ORDER OF THE HIGH COURT AND FOR ALL INTENTS AND PURPOSES, IT IS THE DECISION OF THE HIGH COURT WHICH IS OPERATIVE AND WHICH IS CAPABLE OF BEING GIVEN EFFECT TO. 87 ITA 259 TO 263 /10 42 THE HONBLE SPECIAL BENCH HELD THAT WHER E THE JURISDICTIONAL HIGH COURT HAS DISMISSED THE APPEAL AGAINST THE ORDER OF THE TRIBUNAL HOLDING THAT NO SUBSTANTI AL QUESTION OF LAW ARISES, THE SAID DECISION OF THE HIGH COURT IS A DECISION ON MERITS CONFIRMING THE FINDINGS ARRIVED AT BY THE TRIBUNAL AND IT IS NOT POSSIBLE TO ARGUE THAT THE H IGH COURT HAS NOT CONSIDERED THE MERITS OF THE ISSUE DECIDED BY THE TRIBUNAL. WHERE THE HIGH COURT DISMISSES THE APPEA L STATING THAT NO QUESTION OF LAW ARISES FROM THE ORD ER PASSED BY THE TRIBUNAL IT MEANS THAT THE HONBLE HIGH COUR T HAS CONSIDERED THE MERITS OF THE ISSUE DISCUSSED AND DE CIDED BY THE TRIBUNAL IN THE LIGHT OF THE RELEVANT LAW AN D THE HIGH COURT IS IN AGREEMENT WITH THE VIEWS OF THE TRIBUNA L AND IT IS NOT REQUIRED TO REPEAT ALL THOSE ISSUES AGAIN. WHA T THE HIGH COURT IS STATING IN SHORT IS THAT THE APPEAL IS DIS MISSED AS NO QUESTION OF LAW ARISES. ON THIS WE CANNOT PRESUME THAT A HIGH COURT HAS NOT CONSIDERED THE MERITS OF THE ISS UE DECIDED BY THE TRIBUNAL. AN APPEAL ALWAYS RAISES QUESTION ARISING OUT OF THE MERITS OF AN ISSUE. WHETHER THE HONBLE HIGH COURT DISCUSSES A CASE IN VERY MANY WORDS OR DISMISSES THE APPEAL SHORTLY STATING THAT NO QUESTI ON OF LAW ARISES, THE JUDICIAL RESULT IS THE SAME THAT THE HI GH COURT HAS 88 ITA 259 TO 263 /10 UPHELD THE REASONINGS AND FINDINGS GIVEN BY THE TRI BUNAL IN ITS ORDER. 43. THEREFORE, IN THE LIGHT OF THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIESLTD. VS.DCIT, 283 ITR 402 AND THE ORDER O F THE HONBLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F MEDICARE INVESTMENTS LTD. VS. JCIT, 114 ITD 34, I F IND THAT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT REN DERED IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEV. LTD. IN ITA NO.458 OF 2006 DATED 5-1-2007 IS A JUDGMENT DIRECTL Y ON THE ISSUE UPHOLDING THE VIEW OF THE CALCUTTA C-BENCH OF THE TRIBUNAL THAT A PRO RATA DEDUCTION IS PERMISSIBLE U NDER SECTION 80IB(10). AS I HAVE STATED ABOVE, THE JUDG MENT OF THE HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF VISWAS PROMOTERS PVT. LTD. V. ITAT & ANOTHER, 323 I TR 114 IS NOT ON THE ISSUE AGITATED IN THIS CASE. THE SAI D JUDGMENT CONCERNED ONLY WITH THE QUESTION THAT WHETHER THERE IS A MISTAKE IN THE ORDER OF THE TRIBUNAL OR NOT. THE RI GHT OF THE ASSESSEE TO FILE AN APPEAL UNDER SECTION 260A BEFOR E THE HONBLE MADRAS HIGH COURT STILL SURVIVES AND TILL D ATE THE HONBLE MADRAS HIGH COURT HAS NOT DECIDED THE ISSUE ON ITS 89 ITA 259 TO 263 /10 MERITS. THEREFORE, THE ONLY JUDGMENT OF A HIGH COU RT AVAILABLE ON THE SUBJECT, IS THE JUDGMENT OF THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HO USING DEVELOPMENT LTD. 44. AGAIN, I MAY REPEAT THAT THE QUESTION IS WHETH ER I SHOULD FOLLOW THE ORDER OF THE COORDINATE BENCH O F THE TRIBUNAL IN THE CASE OF ACIT VS. VISWAS PROMOTORS(P ) LTD., 126 ITD 263 OR THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEV. LTD. 45. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. GODAVARIDEVI SARAF, 113 ITR 589 HAS HE LD THAT INCOME-TAX APPELLATE TRIBUNAL ACTING ANYWHERE IN TH E COUNTRY HAS TO RESPECT THE LAW LAID DOWN BY THE HIG H COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THAT QUESTION. THE HONBLE BOMBAY HIGH COURT AGAIN THE CASE OF CIT VS. THANA ELECTRICITY SUPPLY LTD., 206 ITR 727, HAS HEL D THAT THE DECISION OF ANOTHER HIGH COURT DOES HAVE PERSUA SIVE VALUE ON SUBORDINATE COURTS AND TRIBUNALS OUTSIDE I TS JURISDICTION. 90 ITA 259 TO 263 /10 46. FURTHER THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192, HAS HELD THAT IF IN A CASE OF TAXING PROVISION TWO INTERPRET ATIONS ARE POSSIBLE, THE INTERPRETATION WHICH FAVOURS THE ASSE SSEE MUST BE ADOPTED. THE SAME VIEW IS REFLECTED AGAIN IN THE DECISION OF THE HONBLE SUPREMEW COURT IN THE CASE OF CIT VS. KULU VALLEY TRANSPORT CO., 77 ITR 518. 47. THEREFORE, IT IS TO BE STATED THAT THE DECISIO N OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. ALONE IS AVA ILABLE DIRECTLY ON THE SUBJECT MATTER AS THE JUDGMENT OF A CONSTITUTIONAL COURT. TWO DECISIONS, INCLUDING THE DECISION IN THE CASE OF VISWAS PROMOTERS (P) LTD., HAVE BEEN RENDERED BY CO-ORDINATE BENCHES OF THE TRIBUNAL, CH ENNAI AGAINST THE ASSESSEE. BUT IT IS TO BE SEEN THAT A CO-ORDINATE BENCH OF THE VERY SAME TRIBUNAL (CHENNAI BENCH-A) H AS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE IN THE CASE OF ARUN EXCELLO FOUNDATIONS(P) LTD. VS. ACIT, 108 TTJ 71 IN SPITE OF THE FACT THAT CONTRARY DECISIONS OF CO-ORDINATE BEN CHES WERE AVAILABLE. I DO NOT WISH TO MAKE IT A POINT OF CON TROVERSY NOW. 91 ITA 259 TO 263 /10 48. I AM ONLY CONCERNED OF THE BINDING EFFECT OF T HE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, I AM OF THE CON SIDERED OPINION THAT I SHOULD BE LEAD BY THE JUDGMENT OF TH E HONBLE CALCUTTA HIGH COURT, WHICH IS A CONSTITUTIONAL AND A COURT OF LAW. AS THERE IS NO DIRECT DECISION OF THE JURISDI CTIONAL HIGH COURT STILL AVAILABLE ON THE SUBJECT,I FIND IT MY D UTY TO FOLLOW THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT. I DO NOT THINK IT AS A GOOD JUDICIAL BEHAVIOR TO DWELL UPON THE TECHNICALITIES OF JURISDICTION AND IGNORE THE JUDGM ENT OF A COMPETENT CONSTITUTIONAL COURT. SO LONG AS THERE I S NO DECISION BY MY JURISDICTIONAL HIGH COURT, I AM IMME DIATELY BOUND BY THE JUDGMENT OF ANY OTHER HIGH COURT AVAIL ABLE TO ME, DIRECTLY ON THE SUBJECT. THEREFORE, I HOLD THA T THE CONTROVERSY PLACED BEFORE ME AS A THIRD MEMBER IS COVERED BY THE JUDGMENT OF THE HONBLE CALCUTTA HIG H COURT RENDERED IN THE CASE OF CIT VS. BENGAL AMBUJA HOUSI NG DEVELOPMENT LTD. IN ITA NO.458 OF 2006 DATED 5-1-20 07. IN THE LIGHT OF THE FINDINGS ARRIVED AT ABOVE, I AGREE WITH THE VIEW TAKEN BY THE HONBLE VICE PRESIDENT, WHERE HE HAS HELD THAT THE ASSESSEES ARE ENTITLED FOR DEDUCTION UNDER 92 ITA 259 TO 263 /10 SECTION 80IB(10) IN RESPECT OF FLATS HAVING BUILT U P AREA NOT EXCEEDING 1500 SFT. AND NOT ENTITLED FOR DEDUCTION IN RESPECT OF THOSE FLATS HAVING THEIR BUILT UP AREA EXCEEDING 1500 SFT. 49. THE LEARNED JUDICIAL MEMBER HAS ALSO EXPRESSED HIS DISSENTING VIEW ON THE 10% CAP (LAKSH MAN REKHA) PROPOSED BY THE LEARNED VICE PRESIDENT. THE LEARNED VICE-PRESIDENT HAS RELIED ON THE ORDER OF T HE HONBLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F BRAHMA ASSOCIATES V. JCIT, 122 TTJ 433 (PUNE)(SB) T O ARRIVE AT A LAKSHMAN REKHA OF 10%. IN THE APPEAL FILED AGAINST THE ORDER OF THE SPECIAL BENCH, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES VS. JCIT IN ITA NO.1194 OF 2010 DATED 22-2-2011 HAS HEL D THAT IT WAS NOT OPEN TO THE TRIBUNAL TO FIX SUCH A LIMIT . THEREFORE THE BASIS OF THE FINDING OF THE LEARNED VICE PRESID ENT ON THAT ISSUE DOES NOT HOLD GOOD ANY MORE. THEREFORE ON TH E ISSUE OF LAKSHMAN REKHA, I AGREE WITH THE LEARNED JUDICIA L MEMBER THAT THERE IS NO NEED OF ANY SUCH STIPULATIO N. 50. IN FACT THE QUESTION REFERRED TO THE THIRD MEM BER DOES NOT CONTAIN ANYTHING ABOUT THE 10% LAKSHMAN RE KHA. BUT I THOUGHT TO REFER THAT ISSUE TO AVOID 93 ITA 259 TO 263 /10 CONFUSION/CONTROVERSY THAT MAY SURFACE BEFORE THE R EGULAR DIVISION BENCH WHILE DISPOSING THE IMPUGNED APPEALS IN ACCORDANCE WITH THE MAJORITY VIEW. 51. NOW THESE FILES WILL BE PLACED BEFORE THE REGU LAR BENCH FOR PASSING ORDERS, TO FINALLY DISPOSE THE AP PEALS. SD/- (DR.O.K.NARAYANAN) VICE-PRESIDENT THIRD MEMBER CHENNAI, DATED THE 19 TH MAY, 2011. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE 94 ITA 259 TO 263 /10 IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NOS. 259 & 260/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 M/S SANGHVI AND DOSHI ENTERPRISE, NO.560, 3H CENTURY PLAZA, ANNA SALAI, TEYNAMPET, CHENNAI 600 018. PAN : AAYFS0257P (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD XV(3), CHENNAI 600 034. (RESPONDENT) I.T.A. NOS. 261 & 262/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 M/S SRI MAHALAKSHMI HOUSING, NO.560, 3H CENTURY PLAZA, ANNA SALAI, TEYNAMPET, CHENNAI 600 018. V. THE INCOME TAX OFFICER, BUSINESS WARD XV(3), CHENNAI 600 034. 95 ITA 259 TO 263 /10 PAN : AAZFS0513M (APPELLANT) (RESPONDENT) I.T.A. NO. 263/MDS/2010 ASSESSMENT YEAR : 2006-07 M/S SRI MAHALAKSHMI BUILDERS, NO.560, 3H CENTURY PLAZA, ANNA SALAI, TEYNAMPET, CHENNAI 600 018. PAN : AAYFS6887P (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD XV(3), CHENNAI 600 034. (RESPONDENT) APPELLANTS BY : SHRI T. BANUSEKAR RESPONDENT BY : SHRI R. SR INIVAS ORDER GIVING EFFECT PER BENCH : IN ALL THESE APPEALS THERE AROSE DIFFERENCE OF OPI NION BETWEEN MEMBERS OF THE DIVISION BENCH, HEARING THE APPEALS. THEREFORE, THE MATTER WAS REFERRED TO THI RD 96 ITA 259 TO 263 /10 MEMBER. HON'BLE VICE PRESIDENT ACTING AS THIRD MEM BER HAS GIVEN HIS OPINION ON THE MATTER REFERRED TO HIM . 2. GROUNDS RAISED BY THE ASSESSEES IN THESE APPEALS WERE AS FOLLOWS:- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS WITHOUT JURISDICTION, CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND AT ANY RATE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUS TICE AND FAIR PLAY. 2. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLA NT IS ELIGIBLE FOR DEDUCTION U/S 80-IB(10). 3. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLA NT HAS SATISFIED ALL THE CONDITIONS IN SECTION 80-IB(1 0) 4. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLA NT WAS A BUILDER AND DEVELOPER AND NOT MERELY A BUILDI NG CONTRACTOR. 5. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONCLUDING THAT THE APPELLAN T HAD BUILT FLATS EXCEEDING THE PERMISSIBLE LIMIT OF 1500 SQ. FT AND HAD THEREFORE VIOLATED THE PROVISIO NS OF SECTION 80IB (10)(C). 6. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE MEASUREMENT OF FLATS HAD BEEN MADE INCORRECTLY BY THE ASSESSING OFFICER. 7. WITHOUT PREJUDICE TO THE ABOVE, FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT WAS AT LEAST ELIGIBLE FOR PROPORTIONATE DEDUCTION IN RESPECT OF THOSE UNITS WHERE THE PERMISSIBLE LIMIT OF 1500 SQ FT HAD BEEN EXCEEDED. 97 ITA 259 TO 263 /10 8. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE APPELLA NT HAD COMPLETED THE PROJECT WITHIN THE TIME REQUIRED U/S 80IB(10) AND THAT THE DELAY IN OBTAINING COMPLETION CERTIFICATE WAS MORE DUE TO PROCEDURAL DELAYS IN THE OFFICE OF THE LOCAL AUTHORITY THAN AN Y LAPSE ON THE PART OF THE APPELLANT. 9. FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE ADDUCE BEFORE OR DURING THE HEARING OF THIS APPEAL WITH THE LEAVE OF THE HON'BLE TRIBUNAL, IT I S PRAYED THAT A. DEDUCTION U/S 80IB(10) BE ALLOWED AS CLAIMED BY THE APPELLANT B. SUCH OTHER ORDERS MAY BE PASSED AS THE HON'BLE TRIBUNAL MAY DEEM FIT. 2. HON'BLE VICE PRESIDENT, SITTING AS THIRD MEMBER, HAD SUCCINCTLY, FORMULATED THE QUESTIONS RAISED THROUGH THESE GROUNDS ON PAGE 5 OF HIS ORDER, AS UNDER:- (I) WHETHER THE ASSESSEES ARE BUILDERS/DEVELOPERS AND THEREFORE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10)? (II) WHERE THE PURCHASERS OF FLATS HAVE COMBINED TWO FLATS TOGETHER THEREBY EXCEEDING THE LIMIT OF THE BUILT-UP AREA OF 1500 SQ. FT. CAN BE CONSIDERED AS COMPLIANCE OF THE STIPULATION PROVIDED IN SECTION 80IB(10) THAT THE BUILT-UP AREA SHOULD NOT EXCEED 1500 SQ. FT. AND HENCE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10)? (III) WHETHER THE ASSESSEES HAVE FURNISHED PROJECT COMPLETION CERTIFICATES ON OR BEFORE 31 ST MARCH, 2008 AND WHETHER ENTITLED FOR DEDUCTION OR NOT? (IV) WHETHER IN CERTAIN CASES THE BUILT-UP AREA OF A SINGLE FLAT IS MORE THAN 1500 SQ. FT., 98 ITA 259 TO 263 /10 WHETHER THE ASSESSEES ARE ELIGIBLE FOR DEDUCTION OR NOT? (V) WHETHER THE PRIVATE TERRACE SHOULD ALSO BE INCLUDED IN THE BUILT-UP AREA OF THE FLATS FOR THE PURPOSE OF WORKING OUT THE STATUTORY EXTENT OF THE BUILT-UP AREA? (VI) WHETHER DEDUCTION SHOULD BE ALLOWED EVEN THOUGH SOME OF THE FLATS OF THE PROJECTS EXCEEDED THE BUILT-UP AREA OF 1500 SQ. FT.? 3. BASED ON THE DECISION OF HON'BLE VICE PRESIDENT SITTING AS THIRD MEMBER ON THE MATTERS WHERE THERE WERE DIFFERENCE OF OPINION, AND ON OTHER POINTS BASED ON THE UNANIMOUS VIEW OF THE DIVISION BENCH, WE HOLD THAT - (I) ASSESSEES WERE BUILDERS/DEVELOPERS AND THEREFORE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). (II) EVEN WHERE THE PURCHASERS OF THE FLATS COMBINED TWO FLATS TOGETHER THEREBY EXCEEDING THE LIMIT OF THE BUILT-UP AREA OF 1500 SQ. FT., IT COULD STILL BE CONSIDERED AS PROPER COMPLIANCE OF THE STIPULATION PROVIDED IN SECTION 80IB(10) THAT THE BUILT- UP AREA SHOULD NOT EXCEED 1500 SQ. FT. AND THEREFORE, ASSESSEES ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). (III) EVEN THOUGH ASSESSEES HAD FURNISHED PROJECT COMPLETION CERTIFICATES WHICH ARE DATED BEFORE 31 ST MARCH, 2008, THESE CERTIFICATES RELATED BACK TO DATE ON WHICH THE APPLICATIONS FOR SUCH CERTIFICATES WERE MADE BY THE ASSESSEES AND THEREFORE, 99 ITA 259 TO 263 /10 ASSESSEES ARE ENTITLED FOR DEDUCTION UNDER SECTION 80IB(10). (IV) IN SO FAR AS THE ISSUE WHETHER BUILT-UP AREA OF CERTAIN FLATS MEASURING MORE THAN 1500 SQ. FT. IS CONCERNED, IT IS RESTORED TO THE FILES OF THE ASSESSING OFFICER WITH A DIRECTION TO MEASURE A FLAT IN THE PRESENCE OF DVO AS WELL AS REGISTERED VALUATION OFFICER APPOINTED BY THE ASSESSEE. (V) PRIVATE TERRACE AREA SHOULD BE INCLUDED IN THE BUILT-UP AREA OF THE FLATS FOR THE PURPOSE OF WORKING OUT STATUTORY EXTENT OF THE BUILT-UP AREA; AND (VI) BASED ON MAJORITY VIEW, DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEES UNDER SECTION 80IB(10) IN RESPECT OF FLAT HAVING BUILT-UP AREA NOT EXCEEDING 1500 SQ. FT. ARE NOT ENTITLED FOR DEDUCTION IN RESPECT OF THESE FLATS HAVING BUILT-UP AREA EXCEEDING 1500 SQ. FT. 4. THERE WAS ONE MORE ISSUE ON WHICH THERE WAS A DIFFERENCE OF OPINION BETWEEN THE MEMBERS OF THE DI VISION BENCH, WHICH THOUGH NOT SPECIFICALLY REFERRED TO TH E HON'BLE VICE PRESIDENT SITTING AS THIRD MEMBER, WAS ANSWERE D BY HIM. THIS WAS REGARDING 10% CAP (LAKSHMAN REKHA) F OR FLATS HAVING BUILT-UP AREA EXCEEDING 1500 SQ. FT. HON'BLE VICE PRESIDENT HAS AGREED WITH THE VIEW OF LD. JUDI CIAL MEMBER THAT THERE WAS NO NEED FOR ANY SUCH STIPULAT ION OF 100 ITA 259 TO 263 /10 LIMIT. THEREFORE, BASED ON THE MAJORITY VIEW, WE H OLD THAT THERE NEED NOT BE ANY CAP OF 10% FOR FLATS HAVING B UILT-UP AREA EXCEEDING 1500 SQ. FT., WITH REGARD TO A CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 5. IN THE RESULT, APPEALS OF ASSESSEES ARE TREATED AS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 17 TH JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH JUNE, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/D.R./GUARD FILE
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