The ACIT, Vapi Circle, Vapi V. M/s. Nagjua Developers, SILVASSA

ITA 2666/AHD/2011

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2263 (ITAT-SURAT)
• Duration Of Justice: 6 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND KUMAR SINGH
• Keywords: Retrospective amendment; Question of law
• Section: 10; 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.2666/AHD/2011/SRT & . / ITA NO.227/AHD/2013/SRT [ [ / ASSESSMENT YEARS: 2007-08 & 2009-10 ASST. COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. VS. M/S. NAGJUA DEVELOPERS, 3, RAJ APARTMENTS, NAROLI ROAD, SILVASSA. (D. & N.H) [PAN: AAFFN 1449R] ( / APPELLANT) ( /RESPONDENT) / ASSESSEE BY : SHRI HARDIK VORA, ADVOCATE /REVENUE BY : SHRI ARVIND KUMAR SINGH, SR. DR /DATE OF HEARING : 22-06-2018 / DATE OF PRONOUNCEMENT : 03-08-2018 / ORDER PERC.M.GARG, JUDICIAL MEMBER : THESE TWO APPEALSHAVE BEEN FILED BY THE REVENUE CHALLENGING THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT(A) FOR SHORT) DATED 29.07.2011 & 26.10.2012 FOR THE ASSESSMENT YEARS (A.YS) 2007-08& 2009-10 RESPECTIVELY. 2 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS 2. THE SOLE GROUND RAISED BY THE REVENUEIN ITA NO.2666/AHD/2011/SRT FOR AY 2007-08 READS AS FOLLOWS: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT ASSESSE-FIRM WILL BE ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF RS. 2,65,52,967/-. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 3. THE GROUNDS RAISED BY THE REVENUEIN ITA NO.227/AHD/2013/SRT FOR AY 2009-10 READ AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DISALLOWANCE OF DEDUCTION U/S.80IB AMOUNTING TO RS.3,08,46,290/- MADE BY THE AO. 2. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 4. AT THE VERY OUTSET WE PLACED ON RECORD THAT THE PARTIES HAVE AGREED TO THAT THE FACTS AND CIRCUMSTANCES OF BOTH THE APPEALS ARE SIMILAR AND IDENTICAL AND ONLY SOLE ISSUE HAS BEEN CHALLENGED BY THE REVENUE I.E., THE RELIEF GRANTED BY THE LD. CIT(A) HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THUS, FOR THE SAKE OF CONVENIENCE AND BREVITY, WE ARE TAKING UP APPEAL FOR AY 2009-10 AS LEAD CASE. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT ASSESSE-FIRM WILL BE ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF 3 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS RS. 2,65,52,967/-. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER (AO) BE RESTORED. THE LD. DR, SUPPORTING THE FINDINGS OF THE AO,SUBMITTED THAT FROM THE FINDINGS OF THE SURVEY PARTY, IT IS CLEAR THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT, AS IT FAILS TO FULFILL THE CERTAIN BASIC CONDITIONS THAT IT HAS OWNED THE LAND AND THE UNITS CONSTRUCTED BY IT ARE WITHIN THE LIMIT PRESCRIBED AS PER THE PROVISIONS OF S. 80IB(10) OF THE ACT. 6. FURTHER, THE LD. DR SUBMITTED THAT THE APPELLANT IS NOT THE OWNER OF THE LAND AND HAS ONLY BUILD HOUSING PROJECT ON THE LAND WITHOUT HAVING OWNERSHIP THEREON HENCE, HE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS SOLD FLATS MEASURING 2000 TO 2200 SQ. FT. THEREFORE, IN VIEW OF UPPER LIMIT IMPOSED BY THE ACT I.E., 1500 SQ. FT. PER UNIT THE ASSESSEE HAS VIOLATED THE LIMITATIONS IMPOSED BY THE ACT FOR MAKING CLAIM U/S. 80IB(10) OF THE ACT HENCE, IT IS NOT ELIGIBLE FOR SAID DEDUCTION. THE LD. DR SUBMITTED THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITHOUT ANY BASIS THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO. 7. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT AS PER DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES REPORTED IN 19 TAXMANN.COM 316 (BOM.), S. 80-IB(10) OF THE ACT DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A 4 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS PLOT HAVING AREA OF ONE ACRE IS AVAILABLE, IRRESPECTIVE OF FACT THAT OTHER HOUSING PROJECTS EXIST ON SAID LAND. HE FURTHER SUBMITTED THAT RATIO OF THIS DECISION HAS BEEN FOLLOWED BY HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VISWAS PROMOTER PVT. LTD., VS. ACIT REPORTED IN 29 TAXMANN.COM 19 (MAD) AND IT WAS HELD THAT EACH RESIDENTIAL BLOCK IN A HOUSING PROJECT IS A HOUSING PROJECT IN ITSELF FOR PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THE LD. AR ALSO PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT DATED 20.06.2016 IN THE CASE OF PCIT VS. PUSHKAR CONSTRUCTION CO. IN TAX APPEAL NO.221 OF 2016 AND OTHER RELATED APPEALS AND SUBMITTED THAT IN PARA 7 OF THIS ORDER THEIR LORDSHIP ALSO REFERRED TO THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. VANDANA PROPERTIES (SUPRA) AND AGREEING TO THE OBSERVATIONS OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. VOORA PROPERTY DEVELOP PVT. LTD. 373 ITR 317 (MAD) , THAT WHEN THE PROJECT FULFILLED THE CRITERIA FOR BEING APPROVED AS A HOUSING PROJECT, THE DEDUCTION U/S. 80IB(1) COULD NOT BE DENIED ON THE GROUND THAT THE ASSESSEE HAD OBTAINED A SEPARATE PLAN PERMITS FOR THE SIX BLOCKS. 8. THE LD. AR FURTHER DRAWING OUR ATTENTION TOWARDS REGISTERED DEVELOPMENT AGREEMENT DATED 26.09.2005 AVAILABLE AT PGS. 138-151 OF THE ASSESSEES PAPER BOOK AND THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF RADHE DEVELOPERS 5 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS REPORTED IN 341 ITR 403 (GUJ.) SUBMITTED THAT EVEN IF THE ASSESSEE IS NOT OWNER OF THE LAND AND HAS TAKEN THE LAND FROM THE OWNER FOR THE PURPOSE OF BUILDING AND DEVELOPING HOUSING PROJECT THEN ALSO THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION U/S. 80IB(10) OF THE ACT ON ROW HOUSES MEASURING FROM 2000 SQ. FT. TO 2200 SQ. FT. AND HAS ONLY CLAIMED SAID DEDUCTION ON THE UNITS BELOW 1500 SQ. FT. THEREFORE, CONTENTION OF THE LD. AO AS WELL AS LD. DR ARE NOT CORRECT AND THE SAME ARE MISDIRECTED AND BASED ON THE IRRELEVANT AND MISDIRECTED FACTS THEREFORE, THE SAME MAY KINDLY BE DISMISSED. 9. THE LD. AR ALSO SUBMITTED THAT UNDISPUTEDLY THE ASSESSEE MAINTAINED SEPARATE ACCOUNTS FOR ROW HOUSES AND FLATS AND HAS SUBMITTED DETAILS/LIST OF FLAT SOLD BEFORE THE AUTHORITIES BELOW WHICH IS ALSO AVAILABLE AT PGS. 38 & 39 OF THE ASSESSEES PAPER BOOK. THE LD. AR VEHEMENTLY POINTED OUT THAT FROM THE FINANCIAL ACCOUNTS/P&L ACCOUNT FOR AY 2007- 08PLACED AT ASSESSEES PAPER BOOK PG. 39-40, IT IS CLEAR THAT THE ASSESSEE HAS SHOWN PROFITS ON THE FLATS AT RS. 2,68,88,713/- WHEREAS INCOME FROM ROW HOUSES HAS BEEN SHOWN AS RS. 14,59,009/- AND THE SAME HAS BEEN SHOWN IN THE COMPUTATION OF INCOME SEPARATELY THUS, THERE IS NO CONFUSION OR AMBIGUITY IN THE CLAIM OF THE ASSESSEE. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS HELD PORTION OF DECISION OF HON'BLE 6 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA) AT PG. 9 OF THE OF THE ASSESSEES PAPER BOOK AND SUBMITTED THAT THE PLAIN READING OF THE SAIDS. 80IB(10) OF THE ACT DOES NOT REMOTELY SUGGESTS THAT THE FLAT OF LAND HAVING MINIMUM AREA OF 1 ACRE MUST BE VACANT AND THE SAID SECTION ALLOW DEDUCTION TO A HOUSING PROJECT, SUBJECT TO FULFILLING OF ALL OTHER CONDITIONS, CONSTRUCTED ON A FLAT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSING PROJECT ARE EXISTING ON THE SAID PLOT OF LAND OR NOT. 10. THE LD. AR LASTLY SUBMITTED THAT THE RELEVANT OPERATIVE PART OF THE FIRST APPELLATE ORDER SHOWS THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AFTER CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND TAKING IN VIEW THE RELEVANT PROVISION OF THE ACT AS WELL AS RATIO OF THE DECISIONS ON THE ISSUE THEREFORE, FIRST APPELLATE ORDER MAY KINDLY BE UPHELD BY DISMISSING APPEAL OF THE REVENUE. 11. PLACING REJOINDER TO THE ABOVE, THE LD. DR SUBMITTED THAT FROM PARA 3.3 OF THE ASSESSMENT ORDER, THE FINDINGS OF THE AO CLEARLY REVEALS THAT THE AO CONSIDERED ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER APPLICATION OF MIND AND PROPER APPRECIATION THEREOF HE RIGHTLY CONCLUDED THAT THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. DR ALSO SUBMITTED THAT THE ASSESSEE SHOULD HAVE TAKEN SEPARATE SANCTION FOR FLAT AND ROW HOUSES AND COMBINED SANCTION SHOWS 7 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS THAT THESE ARE INSEPARABLE PROJECTS WHEREIN THE ASSESSEE HAS SOLD NUMBER OF UNITS WHICH ARE MORE THAN 2000 SQ. FT. AND THUS, THE ASSESSEE WAS RIGHTLY HELD AS NON-ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. THE LD. DR ALSO SUBMITTED THAT IN VIEW OF FINDING OF HON'BLE HIGH COURT OF MADRAS IN PARA 14 OF THE DECISION IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. (SUPRA), IT IS ALSO CLEAR THAT WHEN THE ASSESSEE IS NOT SATISFYING WITH THE CONDITIONS PRESCRIBED U/S. 80IB(10) OF THE ACT THEN, THE ASSESSEE WOULD NOT BE ENTITLED FOR SUCH CLAIM. THE LD. DR SUBMITTED THAT THE IMPUGNED FIRST APPELLATE ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO. 12. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS, WE FIND IT APPROPRIATE, NECESSARY AND PROFITABLE TO REPRODUCE THE RELEVANT PARAS OF FIRST APPELLATE ORDER WHEREIN THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE, WHICH READS AS FOLLOWS: 5.4 DECISION: I HAVE PERUSED THE FACTS OF THE CASE. THE AR OF THE APPELLANT EXPLAINED THAT THOUGH THE APPELLANT HAD PURCHASED THE LAND AT SURVEY NO. 882/1/2/2, AMLI, SILVASSA, VIDE AGREEMENT DATED 18/1/2005 DUE TO COURT MATTER FINAL SALE DEED WAS EXECUTED ON 31/3/2008. HENCE IN RESPECT OF FLATS SOLD, WHILE EXECUTING SALE DEEDS, TILL THE SAID LAND WAS TRANSFERRED IN THE APPELLANT'S NAME, THE SELLERS OF THE LAND WERE MADE AS A CONFIRMING PARTY. AR STRONGLY ARGUED THAT APPELLANT HAS SOLD THE FLATS AS A BUILDERS & DEVELOPERS AND NOT AS A CONTRACTORS. FURTHER AR ARGUED THAT THE HOUSING PROJECT OF THE APPELLANT, CONSISTING OF FLATS & ROW HOUSES, WAS DULY APPROVED BY APPROPRIATE AUTHORITIES AND APPELLANT HAS COMPLIED WITH ALL THE REQUISITE CONDITIONS OF SECTION 80IB( 10 ) OF THE ACT. FURTHER AR OF THE APPELLANT BROUGHT TO MY NOTICE THAT AS THE BUILT UP AREAS O F THE ROW HOUSES ARE MORE THAN 1500 SQ. FT. IT HAS N OT CLAIMED DEDUCTION U/S. 8OIB(10 ) IN RESPECT OF PROFIT FROM THE SALE OF ROW HOUSE. FURTHER AR OF THE APPELLANT EXPLAINED THAT IN RESPECT OF 8 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS SALE OF FLATS AND IN RESPECT OF SALE OF ROW HOUSES APPELLANT HAS PREPARED TWO SEPARATE PROFIT & LOSS A/C. IN SUPPORT OF IT'S CLAIM FOR DEDUCTION U/S. 80 IB( 10 ) IN RESPECT OF PROFIT FROM THE SALE OF THE FLATS AR OF THE APPELLANT STRONGLY RELIED UPON THE DECISIONS OF AHMEDABAD TRIBUNAL IN THE CASE OF RADHE DEVELOPERS AND OF CALCUTTA TRIBUNAL IN THE CASE OF BENGAL AMBUJA AND POINTED OUT THAT HON. CALCUTTA HIGH COURT HAS DISMISSED DEPARTMENT'S APPEAL. AR OF THE STRONGLY CONTENDED THAT, IN THE GIVEN FACTS ASSESSING OFFICER IS NOT JUSTIFIED IN PLACING RELIANCE ON THE OBSERVATIONS OF THE SURVEY PARTY ESPECIALLY WHEN HE HAS DEPUTED INSPECTOR FOR THE VERIFICATION OF AREAS OF THE FLATS AND THE ARCHITECTHAS GIVEN CERTIFICATE ABOUT THE AREAS OF THE FLATS. I HAVE ALSO PERUSED THE ASSESSMENT ORDER. THE MAIN ISSUES ON THE BASIS OF WHICH THE AO DENIED THE BENEFIT U/S. 8O-IB(10 ) ARE I) THE AO TREATED ENTIRE HOUSING PROJECT TO BE A SINGLE UNIT, II) OUT OF THE HOUSING PROJECTS THE ROW HOUSES EXCEEDS 1500 SQ. FT BUILT-UP AREA AND III) NO OWNERSHIP OF LANDAND THEREFORE, DOES NOT FULFILL THE CONDITIONS ENVISAGED IN SEC.80-IB(10). LET US EXAMINE THE REQUIREMENT OF THE PROVISIONS U/S. 80-IB( 10 ) OF THE ACT. SECTION 8OIB(IO) AS SUBSTITUTED BY FINANCE (NO.2) ACT, 2004, W.E.F. 1-4-2005 READS AS UNDER: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT, OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY ; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; 9 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH ASCHEME FRAMED, BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE ; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT, OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS. FURTHER, THE RETROSPECTIVE AMENDMENT VIDE FINANCE ACT (NO.2),2009 IT WAS STATED THAT THE OBJECTIVES OF THIS TAX CONCESSION WAS TO PROVIDE TAX BENEFIT TO THE PERSON UNDERTAKING THE INVESTMENT RISK I.E. ACTUAL DEVELOPER. LET US EXAMINE WHETHER THE APPELLANT HAD FULFILLED THE CONDITIONS IN THIS CASE; THE APPELLANT SUBMITTED THAT WITHIN THE MEANING OF THE PROVISIONS OF SECTION 80IB(10), THE APPELLANT IS ENTITLED FOR DEDUCTION OF THE ENTIRE PROFIT DERIVED FROM THE SALE OF THE FLATS IN THE SAID PARK CITY HOUSING PROJECT AS: I) THE HOUSING PROJECT IS APPROVED IN THE YEAR 2005-06 I.E. BEFORE 31 ST MARCH, 2007. II) CONSTRUCTION WORK OF THE SAID HOUSING PROJECT WAS STARTED AFTER THE 1 ST DAY OF OCTOBER, 1998. III) THE SIZE OF THE LAND IS NOT LESS THAN 1 ACRE. IV) THE BUILT UP AREA OF ANY OF THE RESIDENTIAL FLATS IS LESS THAN 1500 SQ. FTS. V) THERE IS NO CONSTRUCTION OF SHOPS/COMMERCIAL ESTABLISHMENT. IN MY VIEW, THE APPELLANT HAS FULFILLED ALL THE CONDITIONS AS STIPULATED IN THE SAID PROVISIONS. FURTHER, THE APPELLANT HAS CONTESTED THAT IT HAD NOT CLAIMED THE TAX BENEFITS FOR THE PROFITS DERIVED FROM THE ROW HOUSES FOR WHICH THE APPELLANT HAD MAINTAINED SEPARATE ACCOUNT. THE APPELLANT'S CASE IS ALSO SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMENTS. THE JURISDICTIONAL HON'BLE ITAT, AHMEDABAD IN 10 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS THE CASE OF RADHE DEVELOPERS V/S. I.T.O. AHMEDABAD 'A' BENCH OF AHMEDABAD TRIBUNAL (ITA NO. 2482/AHD./2006) & INCOME-TAX OFFICER, WARD-2(5), AHMEDABAD VS. SHAKTI CORPORATION. AHMEDABAD ITAT APPEAL NO. 1503 OF 2008 APTLY SUPPORT THE CASE OF THE APPELLANT. THUS IN MY OPINION, FOR CLAIMING DEDUCT U/S. 80IB(10) THE OWNERSHIP OF THE LAND IS NOT A CONDITION AND SUBJECT TO FULFILLMENT OF CONDITIONS OF SECTION 80IB(10) OF THE ACT, DEDUCTION IS AVAILABLE, TO ANY UNDERTAKING, WHICH DERIVES PROFIT FROM DEVELOPING AND BUILDING OF HOUSING PROJECTS. FURTHER, FROM THE PERUSAL OF ASSESSMENT ORDER I FIND THAT ASSESSING OFFICER HAS NOWHERE OBSERVED THAT THE AREA OF THE FLATS SOLD BY THE APPELLANT IS MORE THAN THE AREA PRESCRIBED EXCEPT ON THE ROW HOUSES FOR WHICH THE APPELLANT HAD PAID TAX. IN SUPPORT OF IT'S CLAIM, THE APPELLANT HAS SUBMITTED CERTIFICATE OF AN ARCHITECT CERTIFYING THAT THE BUILT UP AREA OF NONE OF THE FLATS IS MORE THAN 1500 SQ. FTS. ON THE OTHER HAND, THOUGH ASSESSING OFFICER HAS DEPUTED INSPECTOR FOR THE VERIFICATION OF THE AREAS OF FLATS IN THE SAID HOUSING PROJECT, HE HAS JUST RELIED ON THE OBSERVATIONS OF THE SURVEY PARTY. IGNORING THE FACT THAT THE APPELLANT HAS NOT CLAIMED DEDUCTION U/S. 80IB(10) IN RESPECT OF PROFIT FROM THE SALE OF ROW HOUSES ASSESSING OFFICER IS NOT JUSTIFIED IN DENYING THE CLAIMED DEDUCTION U/S. 80IB(10) IN RESPECT OF PROFIT FROM THE SALE OF THE FLATS. HAVING REGARDS TO THE LEGAL PROVISIONS I AM OF THE OPINION THAT IN RESPECT OF THE PROFIT FROM THE SALE OF THE FLATS THE APPELLANT HAS NOT VIOLATED ANY OF THE CONDITIONS OF SECTION 80IB(10) AND AS THE APPELLANT HAS NOT CLAIMED DEDUCTION U/S. 80IB(10) IN RESPECT OF THE PROFIT FROM THE SALE OF THE ROW HOUSES, APPELLANT IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT INRESPECT OF PROFIT FROM THE SALE OF FLATS. THE APPELLANT ALSO FURTHER BUTTRESS ITS CASE BY CITING TWO MORE JUDGEMENTS OF HON'BLE ITAT - ESSEM CAPITAL MARKET LTD VS. ITO (2011) TIOL 196 (MUM.) AND ITO VS. M.S.VISHNU DEVELOPERS, (AHM. ITAT). IN VIEW OF THE FACTUAL AND LEGAL POSITION NARRATED ABOVE, THE AO IS DIRECTED TO ALLOW BENEFITS U/S.80IB(10) OF THE ACT CLAIMED BY THE APPELLANT. THE APPELLANT SUCCEEDS ON THIS GROUND OF APPEAL. 13. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS AND FINDINGS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS CONCLUSION ARRIVED BY THE LD. CIT(A) IN THE IMPUGNED FIRST APPELLATE ORDER FIRST OF ALL, WE MAY POINT OUT THAT THE MAIN POINTS ON WHICH THE AO DENIED DEDUCTION U/S. 80IB(10) OF THE ACT HAS BEEN SUMMARIZED BY THE LD. CIT(A) AS FOLLOWS: 5-2 AO'S OBSERVATIONS : I HAVE PERUSED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER. THE LEARNED ASSESSING OFFICER HAS DENIED CLAIMED 11 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS DEDUCTION U/S. 80IB (10) IN RESPECT OF THE PROFIT DERIVED FROM THE SALE OF FLATS BY OBSERVING THAT THE AREA OF ROW HOUSES IS MUCH BIGGER THAN THE DESCRIBED AREA ELIGIBLE FOR DEDUCTION U/S. 80IB (10) OF THE I.T. ACT. FURTHER HE OBSERVED THAT THE BUILT UP AREA OF ROW HOUSES EXCEEDS 1,500 'SQ. FT. THE LEARNED ASSESSING OFFICER HAS AT THE PAGE NO. 7 OF THE IMPUGNED ORDER CITED OBSERVATIONS OF THE SURVEY PARTY THAT DURING THE COURSE OF SURVEY PROCEEDINGS IT WAS NOTICED THAT FOR PRESENT PROJECT BEING DEVELOPED BY THE ASSESSEE IN THE NAME AND STYLE OF 'PARK CITY', THE FLATS CONSTRUCTED IN THIS PROJECT ARE HAVING MORE THAN THE PRESCRIBED LIMIT AREA AS PER SECTION 80IB (10). AT PAGE NO. 5 & 6 OF THE ORDER, HE OBSERVED THAT IN THE AGREEMENTS MADE FOR THE SALE FLATS TERMINOLOGY USED, LIKE SUPER BUILT UP AREA, CARPET AREA, BUILT UP AREA, IN RELATION TO THE AREA OF THE FLATS SOLD IS VERY VAGUE AND CONFUSING AND CONCLUDED THAT APPELLANT USED VAGUE TERMINOLOGY IS USED TO AVOID VERIFICATION IN RELATION TO A VITAL PARAMETER, I.E. AREA OF THE FLAT IN RELATION TO THE CLAIM OF DEDUCTION U/S. 80IB (10). IN VIEW OF THE ABOVE, THE AO CONCLUDED THAT THE APPELLANT IS NOT ENTITLED FOR THE BENEFIT U/S. 80IB(10) OF THE ACT. 14. IN VIEW OF CONTENTIONS OF THE AO AND FINDINGS AND OBSERVATIONS RECORDED BY THE LD. CIT(A) IN THE IMPUGNED FIRST APPELLATE ORDER, WE OBSERVE THAT UNDISPUTEDLY THE APPELLANT THOUGH HAD PURCHASED THE LAND SURVEY NO.882/1/2/2, AMLI, SILVASAA VIDE AGREEMENT DATED 18.01.2005 AND DUE TO CIVIL DISPUTE PENDING BEFORE THE COURT FINAL SALE DEED IN FAVOUR OF APPELLANT WAS EXECUTED ON 31.03.2008. THEREFORE, ALL THE NECESSARY PERMISSIONS FOR DEVELOPMENT OF HOUSING PROJECT, BUILDING AND DEVELOPING OF HOUSING PROJECT ON THE SAID LAND WAS OBTAINED IN THE NAME OF LAND OWNER UNDER AGREEMENT DATED 18.01.2005. THE CRUX OF THESE FACTS IS THAT THE ASSESSEE BUILD AND DEVELOP HOUSING PROJECT UNDER AGREEMENT DATED 18.01.2005 AND BECAME OWNER OF THE SAID LAND ON 31.03.2008 WHEN THE SALE DEED EXECUTED IN FAVOUR OF THE ASSESSEE. AT THIS JUNCTURE, THE RATIO OF THE ORDER OF THE A BENCH OF ITAT, AHMEDABAD IN THE CASE OF RADHE DEVELOPERS VS. ITO (ITA NO.2482/AHD/2006) IT WAS HELD THAT TO CLAIM 12 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS DEDUCTION U/S. 80IB(10) OF THE ACT THERE IS NO CONDITION PRECEDENT THAT THE ASSESSEE MUST BE THE OWNER OF THE LAND ON WHICH HOUSING PROJECT IS TO BE CONSTRUCTED AND HENCE, CONTENTION OF THE AO IN THIS REGARD IS NOT SUSTAINABLE AND LD. CIT(A) WAS RIGHT IN DISMISS THE SAME. 15. SO FAR AS SECOND ALLEGATION AND BASIS TAKEN BY THE AO FOR DISALLOWING DEDUCTION U/S. 80IB(10) OF THE ACT I.E., ENTIRE HOUSING PROJECT IS TO BE TREATED AS SINGLE UNIT IS CONCERNED, WE ARE OF THE VIEW THAT NEITHER THE AO NOR LD. DR DURING THE ARGUMENTS BEFORE US, COULD NOT CONTROVERT THE FACT THAT THE ASSESSEE MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR FLATS AND ROW HOUSES AND HE HAS NOT CLAIMED ANY DEDUCTION ON THE ROW HOUSES WHICH ARE MEASURING FROM 2000 SQ. FT. TO 2200 SQ. FT. AND CLAIM OF S. 80IB(10) OF THE ACT HAS BEEN MADE ONLY ON THE INCOME FROM SALE OF FLATS WHICH ARE MEASURING LESS THAN 1500 SQ. FT. ON THIS ISSUE THE RATIO OF THE DECISION OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. (SUPRA), AS HAS BEEN VEHEMENTLY RELIED BY THE LD. AR, PROVIDES SUPPORT TO THE CLAIM OF THE ASSESSEE WHEREIN IT HAS BEEN HELD THAT THE MERE FACT ONE OF THE BLOCKS HAVE UNITS EXCEEDING BUILT-UP AREA OF 1500 SQ. FT. PER SE, WOULD NOT RESULT IN NULLIFYING THE EACH OF THE BLOCKS, THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTION IN RESPECT OF RESIDENTIAL UNITS SATISFYING THE REQUIREMENT U/S. 80IB(10) OF THE ACT. THEIR LORDSHIP IN PARA 15, ANSWERING THE SUBSTANTIAL QUESTION OF LAW AGAINST THE 13 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS REVENUE AND IN FAVOUR OF THE ASSESSEE FURTHER HELD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION IN RESPECT OF ALL THE BLOCKS FORMING PART OF THE PROJECTS, BUT TO THE EXTENT OF EACH OF THE BLOCKS SATISFYING CONDITIONS U/S. 80IB(10) OF THE ACT AND THE ASSESSEE WOULD BE ENTITLED TO THE RELIEF ON THE PROPORTIONATE BASIS. 16. IN THE PRESENT CASE, UNDISPUTEDLY THE ASSESSEE HAS MAINTAINED SEPARATE ACCOUNTS FOR FLATS AND ROW HOUSES AND NO CLAIM HAS BEEN MADE ON THE ROW HOUSES MEASURING AREA OF MORE THAN 1500 SQ.FT. AND THE CLAIM U/S. 80IB(10) OF THE ACT HAS BEEN MADE ONLY ON THE FLATS WHICH ARE MEASURING LESS THAN 1500 SQ.FT. THIS FACT IS CLEARLY DISCERNABLE WITH THE COMPUTATION OF INCOME FILING ALONG WITH RETURN OF INCOME (ASSESSEE PAPER BOOK PG.1 & 2) WHEREIN NET PROFIT AS PER P&L A/C. ON FLAT SALE AMOUNTING TO RS.2,68,88,714/- HAS BEEN SHOWN AND AMOUNT OF RS. 2,65,52,967/- HAS BEEN CLAIMED AS DEDUCTION U/S. 80IB(10) OF THE ACT. THUS, IN VIEW OF RATIO OF DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF VISHWAS PROMOTERS (SUPRA) CLAIM OF THE ASSESSEE, ON THE FLATS WHICH FULFILL THE CONDITIONS LAID DOWN PROVISION OF U/S. 80IB(10) OF THE ACT IS ALLOWABLE AND THE LD. CIT(A) WAS RIGHT IN ALLOWING THE SAME. 17. SO FAR AS LAST CONTENTION OF THE AO THAT THE ENTIRE HOUSING PROJECT HAS TO BE TREATED AS SINGLE UNIT IS CONCERNED, IN THE CASE OF VISHWAS PROMOTERS (SUPRA) HON'BLE HIGH COURT OF MADRAS ALSO MADE IT CLEAR THAT 14 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS EACH RESIDENTIAL BLOCK IN A HOUSING PROJECT IS A HOUSING PROJECT IN ITSELF FOR PURPOSE OF CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. THEREFORE, THIS CONTENTION OF THE AO IS ALSO NOT CORRECT AND SUSTAINABLE AND THE FIRST APPELLATE AUTHORITY WAS RIGHT IN DISMISSING THE SAME. THE CONCLUSION ARRIVED BY THE LD. CIT(A) ALSO GETS STRONG SUPPORT FROM THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF PUSHKAR CONSTRUCTION CO. (SUPRA), WHEREIN THEIR LORDSHIP IN PARA 7 HELD THAT WHEN THE PROJECT FULFILLED THE CRITERIA FOR BEING APPROVED AS A HOUSING PROJECT, THE DEDUCTION U/S. 80IB(10) OF THE ACT COULD NOT BE DENIED. AS PER DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF VANDANA PROPERTIES (SUPRA), WHICH WAS ALSO REFERRED BY HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VISHWAS PROMOTERS LTD. (SUPRA), IT WAS HELD THAT THE S. 80IB DEDUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE ACRE IS AVAILABLE, IRRESPECTIVE OF FACT THAT OTHER HOUSING PROJECTS EXIST ON SAID LAND. IN THE PRESENT CASE, IT IS NOT AN ALLEGATION OF THE AO THAT THE HOUSING PROJECT HAS BEEN BUILD OR DEVELOP ON A LAND HAVING AREA OF LESS THAN ONE ACRE, BUT HE DENIED THE DEDUCTION ON THE ALLEGATION THAT ENTIRE HOUSING PROJECT TO BE TREATED AS SINGLE UNIT WHICH IS NOT CORRECT AND JUSTIFIED IN VIEW OF THE CONCLUSION ARRIVED BY US IN THE EARLIER PART OF THIS ORDER. 15 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS 18. ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A LOGICAL CONCLUSION THAT THE AO DISALLOWED THE CLAIM BY TAKING A HYPER TECHNICAL APPROACH AND ON HIS OWN WHIMS AND SURMISES WHICH IS CLEARLY BY THE SCHEME AND MANDATE OF PROVISION OF U/S. 80IB(10) OF THE ACT AND RATIO OF THE DECISION OF HON'BLE HIGH COURT OF BOMBAY, HIGH COURT OF MADRAS AND HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT AS RESPECTFULLY NOTED ABOVE. WE, THEREFORE, ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE FINDINGS ARRIVED BY THE LD. CIT(A) IN DISMISSING THE ALLEGATIONS AND CONTENTIONS OF THE AO AND IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE ACT TO THE ASSESSEE ON THE AMOUNT ACCRUED TO HIM ON SALE OF FLATS MEASURING LESS THAN 1500 SQ.FT. PER UNIT. CONSEQUENTLY, WE HOLD THAT THE AO DISALLOWED THE CLAIM WITHOUT ANY JUSTIFIED AND CORRECT REASONS WHICH WAS RIGHTLY ALLOWED BY THE LD. CIT(A) AND THUS, WE UPHOLD THE FINDINGS RECORDED BY HIM IN THE FIRST APPELLATE ORDER. ACCORDINGLY, SOLE GROUND OF REVENUE BEING DEVOID OF MERITS IS DISMISSED. ITA NO.227/AHD/2013/SRT FOR AY 2009-10 : 19. SINCE, ADMITTEDLY FACTS AND CIRCUMSTANCES OF THE CASE OF AY 2009- 10 ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF AY 2007-08 THEREFORE, OUR CONCLUSION DRAWN IN THE EARLIER PART OF THIS ORDER FOR AY 2007-08 WOULD APPLY MUTATIS MUTANDIS TO THE APPEAL OF REVENUE FOR AY 16 ITA NOS.2666/AHD/2011/SRT & 227/AHD/2013/SRT (A.YS: 2007-08& 2009-10) M/S. NAGJUA DEVELOPERS 2009-10 HAVING IDENTICAL SOLE ISSUE OF ALLOWABLILITY DEDUCTION U/S. 80IB(10) OF THE ACT. CONSEQUENTLY, GROUNDS OF REVENUE IN THIS APPEAL ARE ALSO DISMISSED BY FOLLOWING OUR CONCLUSION DRAWN FOR AY 2007-08. 20. IN THE RESULT,BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF03 RD AUGUST, 2018. / SURAT ; DATED :03 RD AUGUST, 2018 EDN / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. ( ) / THE CIT(A), VALSAD; 4. PRL. CIT, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR , / ITAT, SURAT SD/ - SD/ - ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) / JUDICIAL MEMBER