Appeal Details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 1958 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
6 year(s) 10 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-02-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
16-10-2012
Assessment Year
2001-2002
Appeal Filed On
04-04-2006
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.336/PN/2006 (ASSTT. YEAR : 2001-02) M/S.SUKUMAR ESTATES LTD., 2 ND FLOOR, KUMAR CAPITAL, 2413, EAST STREET, PUNE 411001. .. APPELLANT VS. ACIT, CIRCLE-6, PUNE. .. RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK DEPARTMENT BY : SMT.VINITA MENON DATE OF HEARING : 13.12.2012 DATE OF PRONOUNCEMENT : 08.02.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LEARNED CIT(A) ERRED IN HOLDING THAT: 1. THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/ S 80IB(10) IN RESPECT OF PROFITS DERIVED FROM ITS KUMAR PURAM PRO JECT ON GROUNDS THAT :- I) IT WAS PART OF A PROJECT LOCATED ON REVENUE SURVEY NO.707, MUNJERI GULTEKDI IN RESPECT OF WHICH D.P. P LAN WAS SANCTIONED AND COMMENCEMENT CERTIFICATE WAS ISSUED PRIOR TO 01.10.1998. II) THE ASSESSEE HAD UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF THE KUMAR PURAM HOUSING PROJECT BEF ORE THE 1 ST DAY OF OCTOBER 1998. III) THE ASSESSEE HAD UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF A SCHEME OF COMMERCIAL PROPERTY NAM ED 2 BUSINESS COURT ON PLOT NO. 411/2 AT SURVEY NO.707 , MUNJERI GULTEKDI. THE APPELLANT PLEADS THAT THE KUMAR PURAM PROJECT I S AN INDEPENDENT PROJECT WHICH SATISFIES THE CONDITIONS AND THE PROFITS OF WHICH ARE ELIGIBLE FOR DEDUCTION U/S 80I B(10). 2. THE COMPUTATION OF THE PROFIT ELIGIBLE FOR D EDUCTION U/S 80IB(10) FOR KUMAR PURAM PROJECT AMOUNTING TO RS. 1 7,60,408 AS PER THE CERTIFICATE OF THE AUDITORS IN FORM 10CC B, FILED ALONGWITH THE RETURN OF INCOME WAS NOT CORRECT AND THAT THE FOLLOWING EXPENSES OUGHT TO BE PRORATED IN THE RATI O OF 24.4% (REPRESENTING SALES OF KUMAR PURAM PROJECT TO THE T OTAL TURNOVER FOR THE YEAR) AND REDUCED FROM THE SAID PR OFITS TO ARRIVE AT THE FIGURE OF PROFIT ELIGIBLE FOR 80IB(10 ) DEDUCTION. I) BANK GUARANTEE & LOAN PROCESSING CHARGES RS. 62500. II) ADVERTISEMENT EXPENSES RS. 576280. III) LEGAL AND PROFESSIONAL CHARGES RS. 985500. IV) INTEREST EXPENSES RS. 9666089. THE APPELLANT PLEADS THAT THE AMOUNT CERTIFIED BY T HE AUDITORS IS THE CORRECT PROFIT ELIGIBLE FOR DEDUCTION U/S 80 IB(10). 3. OUT OF INTEREST EXPENSES OF RS.96,66,089, AMOU NT OF RS.2838432 WAS ALLOCABLE TO KUMAR PURAM PROJECT FOR THE PURPOSE OF COMPUTING PROFIT ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE APPELLANT PLEADS THAT THE KUMAR PURA M PROJECT IS A CASH SURPLUS PROJECT ON WHICH NO INTEREST WAS ALLOCABLE. 4. WITHOUT PREJUDICE TO THE ABOVE GROUND APPELLAN T PLEADS THAT INTEREST EXPENSE ALLOCABLE TO KUMAR PURAM PROJ ECT IS THE AMOUNT THAT WORKS OUT ON A DAILY PRODUCT BASIS OF T HE INTEREST EXPENSES ALLOWABLE U/S 36(L)(III) (WORKED OUT AT RS .139394 OUT OF TOTAL INTEREST OF RS.9666089) AND NOT THE AMOUNT OF RS.2832432 AS HELD BY THE CIT(A). 5. OUT OF INTEREST EXPENSES RS.9666089 CLAIMED AS ALLOWABLE U/S 36(L)(III), THE FOLLOWING AMOUNTS WORKED OUT BY THE AO, AS PER TABLE NO. 9 OF HIS REMAND REPORT NEEDED TO BE D ISALLOWED IN COMPUTATION OF INCOME I) RS. 1718724 ON GROUNDS THAT THESE NEEDED TO BE ALLOCATED AND CAPITALIZED ON IMMOVABLE PROPERTIES S HOWN BY THE ASSESSEE AS INVESTMENTS/ADVANCES FOR PROPERT IES. II) RS. 567724 ON GROUNDS THAT THESE NEEDED TO BE A LLOCATED AND CAPITALIZED TO KUMAR CITY CLUB HOUSE. THE APPELLANT PLEADS THAT INTEREST ALLOCATION WORKE D OUT BY THE AO IN TABLE NO.9 IS NOT CORRECT AND THAT INTEREST E XPENSES OF RS.9666089 ARE ALLOWABLE IN FULL U/S 36(L)(III) OF THE IT ACT. 3 6. LEGAL & PROFESSIONAL CHARGES RS. 303630 RELATI NG TO PASHAN PROPERTY OUT OF TOTAL LEGAL & PROFESSIONAL C HARGES OF RS.985500 CLAIMED AS ALLOWABLE NEEDED TO BE CAPITAL ISED AS THE SUBJECT PROPERTY HAD YET TO BE ACQUIRED IN THE RELEVANT PREVIOUS YEAR. THE APPELLANT PLEADS THAT THE EXPENS ES ARE REVENUE IN NATURE AND ALLOWABLE U/S 37(1) OF THE I. T. ACT. 2. AT THE OUTSET OF HEARING, LD. AUTHORISED REPRESE NTATIVE SUBMITTED THAT HE IS NOT PRESSING GROUNDS NO.2 TO 6 . SO THEY ARE DISMISSED AS NOT PRESSED. 3. THE ONLY ISSUE REMAINS WITH REGARD TO DEDUCTION U/S.80IB(10) IN RESPECT OF PROFIT DERIVED FROM ITS KUMAR PURAM P ROJECT. THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB(10) IN RESP ECT OF KUMAR PURAM PROJECT. THE ASSESSING OFFICER IN THE ASSES SMENT ORDER HAS ALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, LATER ON, IN THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE CLAIM MADE BY THE ASSESSEE WAS DISALLOWED AND THE CIT(A) ENHANCED THE INCOME OF THE ASSESSEE ON VARIOUS ACCOUNT INCLUDING CLAIM OF DEDU CTION U/S.80IB(10) OF THE ACT. THE CIT(A) HELD THAT ASSE SSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROFIT OF KUMAR PURAM PROJECT. THE CIT(A) HAS DEALT THIS ISS UE FROM PARA 3.17 TO 7(IV) ON PAGES 30 TO 43 OF HIS ORDER, WHICH READS AS UNDER: 3.17 THE ASSESSING OFFICER SUBMITTED A LETTER NO.PN/ACIT/CIR.6/2005-06 DT.9.11.2005 ON THIS SUBJECT AND THE OPERATIVE PORTION OF THIS LETTER IS REPRODUCED AS UNDER: 'THE CASE OF ASSESSEE WAS FINALIZED IN SCRUTINY FOR A.Y. 2001-02 AND 2002-03 AND IS IN APPEAL BEFORE THE CIT(A). THE CAS E OF A.Y. 2003- 04 IS ALSO IN SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE FOLLOWING FACTS HAVE COME TO OUR N OTICE WHICH ARE RELEVANT FOR THE PROCEEDING BEFORE THE CIT(A). 1. THE FOREMOST CONDITION IS THAT THE UNDERTAKING H AS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HO USING PROJECT ON OR AFTER 1.10.1998. IN THIS REGARD, THE ENQUIRIES WERE DONE FROM PMC AN D IT IS FOUND THAT THE COMMENCEMENT OF THE HOUSING PROJECT IN THE NAME OF KUMAR PURAM WAS STARTED MUCH BEFORE 1998. THE NECESSARY DOCUMENTARY EVIDENCE IN THIS REGARD IS REPRODUCED B ELOW. (A) THE COMMENCEMENT CERTIFICATE WAS ISSUED ON 24.4.199 8, WHICH IS ENCLOSED FOR PERUSAL. 4 LTR. DT. 24.4.98 COMMENCEMENT CERTIFICATE ISSUED BY ASST.ENGR. CONSTRN PMC PUNE. THIS COMMENCEMENT CERTIFICATE IS ISSUED IN THE NAME OF V.R.SUPEKAR AND VIMAL KUMAR JAIN AND OTHERS IN RESPECT OF FINAL PLOT NO.411 TP III GULTEKDI. IN THIS LETTER IT IS MENTIONED THAT THE OWNER OF TH E PLOT MR. SUPNEKAR HAD GIVEN A LETTER TO PMC DT.10.3.95 TO START CONSTRUCTION ON A PLOT BEARING NO.411/TP HI GULTEKDI. THE PERMISSION OF WH ICH IS GRANTED VIDE LETTER 3928 DT.24.4.98, THE CONDITIONS OF WHICH ARE LAID DOWN IN THIS LETTER. (B) THE COMMENCEMENT CERTIFICATE WAS APPROVED ALONG WITH THE BUILDING PLAN ON 24.4.1998. THE TOTAL AREA OF THIS BUILDING PLAN ON WHICH KUMAR PURAM IS SITUATED IS 10,323 SQ.MTS. ON WHICH ALL THE BUILDINGS OF THIS PROJECT HAVE COME UP. THE COPY OF THIS BUILDING PLAN IS ALSO ENCLOSED FOR KIND PERUSAL. (C) NOT ONLY THE COMMENCEMENT CERTIFICATE WAS ISSUE D IN APRIL, 1998 BUT THE CONSTRUCTION UPTO THE GROUND FLOOR LEVEL WAS ALSO C OMPLETED IN SEPTEMBER, 1998. THIS IS EVIDENT FROM THE LETTER WRITTEN BY M/S.PUNDALIK & PUNDALIK, ARCHITECTS ON BEHALF OF KUMAR BUILDERS. (D) THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS O F COMMENCEMENTS AND BUILDING PLANS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS SEEN THAT THE ASSESSE E HAD FURNISHED THE COPY OF THE REVISED COMMENCEMENT CERTIFICATE AN D REVISED BUILDING PLAN DURING THE COURSE OF ASSESSMENT PROCE EDINGS. IT MAY BE MENTIONED THAT THE COMMENCEMENT CERTIFICATE AND BUI LDING PLAN SUBMITTED DURING THE ASSESSMENT PROCEEDINGS WAS NOT THE ORIGINAL COMMENCEMENT CERTIFICATE AND BUILDING PLAN. THE COMMENCEMENT CERTIFICATE WHICH GIVES THE PERMIS SION TO START CONSTRUCTION OF THE BUILDING IS CALLED NAVIN IN MARATHI. IN THIS CASE, THIS WAS, ISSUED IN APRIL,1998. AFTERWAR DS, WHENEVER THE ASSESSEE NEEDS TO REVISE THE BUILDING PLAN, HE HAS TO SUBMIT A REVISED PLAN FOR WHICH THE BUILDING PERMISSION AUTH ORITIES ISSUE REVISED COMMENCEMENT CERTIFICATE ALONGWITH REVISED PLAN. THE ASSESSEE DID NOT FURNISH THE CORRECT FACTS DURING T HE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS APPARENT FROM THESE DOCUMENTS. THE ABOVE INFORMATION ALONGWITH DOCUMENTS (COMMENCE MENT CERTIFICATE, LAYOUT PLAN AND ASSESSEES LETTER FOR CONSTRUCTION, ARE SUBMITTED BY CITY ENGINEER, CONSTRUCTION 1, PMC, IN RESPONSE TO THIS OFFICE LETTER DT.17.10.2005 CALLED FOR DURING THE COURSE OF PENDING ASSESSMENT FOR A.Y. 2003-04. THESE PAPERS SHOW THAT COMMENCEMENT FOR SUCH PROJECT AT S .NO.707 PLOT NO.411 TP III, MUKUND NAGAR (GULTEKDI) HAD ALR EADY BEEN STARTED RIGHT FROM THE YEAR 1995 AND ONLY REVISED L AYOUTS WERE 5 GOT APPROVED FROM YEAR TO YEAR. THE ASSESSEE HAD NO T FURNISHED SUCH INFORMATION AND ORIGINAL PAPERS DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2002-03. THE ORIGINAL PROJECT HAD ALREADY STARTED BEFORE THE DUE DATE I.E. 1.10.1998 WHICH IS ONE OF THE CONDITIONS FOR BENEFI T OF 80IB(10) THAT THE CONSTRUCTION COMMENCE AFTER THIS DATE. THE SE PAPERS SHOW THAT SUCH CONDITION HAS NOT BEEN FULFILLED AND HENCE CLAIM FOR BENEFIT U/S. 80IB IS WRONG. THE DOCUMENTS MENTIONED ABOVE HAVE ALSO BEEN VERIFIED AND EXPLAIN ED BY THE BUILDING INSPECTOR OF PMC. THIS IS TO BRING TO YOUR KIND NOTICE AS APPEAL IS PENDING FOR A.Y.2001-02 AND 2002-03. 2. IT MAY BE POINTED OUT THAT IN PARA 3 & 4 OF THE REMAND REPORT WE HAD RAISED TWO ISSUES REGARDING CAPITALIZ ATION OF INTEREST ON IMMOVABLE PROPERTIES AND KUMAR CITY PRO JECT. WE HAD WORKED OUT AN AMOUNT OF RS.17,18,724/- AND RS.5,67,724/-RESPECTIVELY WHICH WAS TO BE CAPITALIZ ED. HOWEVER, DURING THE COURSE OF PROCEEDINGS BEFORE TH E HON'BLE CIT(A) THE ASSESSEE HAS WORKED OUT AN AMOUNT OF RS.29,64,928/~ IN RESPECT OF OTHER PROPERTIES (RS.4 5,75,517/- ON DAILY PRODUCT BASIS) AND HAS NOT ALLOCATED ANY I NTEREST ON KUMAR CITY CLUB. IT IS REQUESTED THAT WHILE DISPOSI NG OF THE APPEAL THIS ISSUE MAY ALSO BE CONSIDERED. ON THE BASIS OF THIS REPORT OF THE ASSESSING OFFICE R, ENHANCEMENT NOTICE U/S 251(2) WAS ISSUED TO THE APP ELLANT VIDE THIS OFFICE LETTER NO.PN/CIT(A)II/246(05-06)/2 005-06/359 DATED 16.11.2005. THE OPERATIVE PORTION OF THIS ENH ANCEMENT NOTICE IS REPRODUCED AS UNDER: 'DURING THE COURSE OF REMAND PROCEEDINGS, A REPORT HAS BEEN RECEIVED FROM THE ASSESSING OFFICER IN RESPECT OF BOTH THE ASSESSMENT YEARS UNDER APPEAL. A COPY OF T HE REPORT IS ENCLOSED WITH THIS LETTER FOR READY REFER ENCE. A PERUSAL OF THE REPORT OF THE ASSESSING OFFICER SH OWS THAT THE COMMENCEMENT CERTIFICATE IN RESPECT OF PLO T BEARING NO.411/TP III GULTEKDI WAS APPROVED ALONG W ITH THE BUILDING PLAN ON 24.4.1998. IT IS FURTHER CLEAR THAT CONSTRUCTION UP TO THE GROUND FLOOR LEVEL WAS ALSO COMPLETED IN SEPTEMBER, 1998. IN VIEW OF THIS, IT I S CLEAR THAT THE HOUSING PROJECT IN RESPECT OF WHICH DEDUCT ION U/S 80IB(10) HAS BEEN CLAIMED HAS STARTED MUCH BEFO RE 1.10.1998. IN VIEW OF THIS, PLEASE EXPLAIN WHY THE CLAIM OF DEDUCTION U/S 80IB IN YOUR CASE FOR BOTH THE YEA RS UNDER APPEAL NOT BE DISALLOWED IN TOTAL. THIS NOTIC E IS BEING ISSUED U/S 251(2) OF THE INCOME TAX ACT, 1961 .' IN RESPONSE TO THIS, THE APPELLANT HAS SUBMITTED A WRITTEN REPLY VIDE HIS LETTER DATED 6.12.2005 AND THE NOTE SUBMITTED ALONG WITH THIS WRITTEN REPLY IS REPRODUCED AS UNDE R: 6 '1A) COMMENCEMENT CERTIFICATE DT.24,4,98 ISSUED BY THE ASST.ENGINEER, PMC, PUNE. THIS IS THE INITIAL PERMI SSION GRANTED BY THE PMC. THIS WAS NOT ACTED UPON UPTO 18.4.1999 AS THE KUMAR PURAM LAND AT SURVEY NO.411, TP3 GULTEKDI WAS NOT ACCESSIBLE. DEVELOPMENT AND CONSTRUCTION WORK ON KUMAR PURAM PR OJECT COMMENCED ON 18.4.99 AS IS EVIDENT FROM STATUTORY N OTICE FOR COMMENCEMENT OF WORK FURNISHED BY THE ASSESSEE'S AR CHITECT SHRI D.M. BUTALA. SECTION 80IB(10)(A) USES THE WORDS 'COMMENCES DEVEL OPMENT AND CONSTRUCTION OF THE HOUSING PROJECT'. IN THE CO NTEXT OF THE ASSESSEE'S FACTS THE RELEVANT DATE IS 18.4.99. THE PERMISSION FOR COMMENCEMENT DT.24.4.98 ISSUED BY THE PMC HIGHL IGHTED BY THE AO IS MERELY IN THE NATURE OF SANCTION. THIS APPROVAL AS PER THE INITIAL SENTENCE OF SECTION 80IB REQUIRES T O BE OBTAINED BEFORE 1.4.2001. THE ASSESSEE THEREFORE SATISFIED T HE REQUIREMENT OF THE SECTION. THE OBSERVATIONS AND CO NCLUSIONS OF THE AO ARE NOT CORRECT IN THE LIGHT OF FACTS AND THE LAW. 1B) THE SUBJECT PLAN AS MENTIONED EARLIER IS THE IN ITIAL PLAN THAT WAS FURNISHED TO THE PMC AND DOES NOT CONTRAVE NE THE PROVISIONS OF SECTION 80IB(10). THE PLANS FURNISHED BY THE ASSESSEE TO THE AO DURING ASST. PROCEEDINGS IS THE REVISED PLAN DATED 16.2.00 AS PER WHICH CONSTRUCTION OF THE BUIL DINGS HAS ACTUALLY TAKEN PLACE. THIS ALSO DOES NOT CONTRAVENE THE PROVISIONS OF SECTION 80IB. 1C) THE AO'S CONTENTION THAT CONSTRUCTION UPTO GROU ND FLOOR LEVEL WAS COMPLETED UPTO SETP.98 BASED ON LETTER BY M/S.PUNDALIK PUNDALIK ARCHITECTS IS NOT CORRECT A S THEY WERE NOT ARCHITECTS FOR KUMAR PURAM PROJECT BUT FOR BUSI NESS COURT. WE ARE ENCLOSING COPY OF CONFIRMATION FROM M/S.PUNDALIK & PUNDALIK. IT IS ALSO EVIDENT FROM TH E DOCUMENTS ON RECORD FURNISHED IN COURSE OF ASSESSME NT PROCEEDINGS THAT M/S BUTALA AND NIVSARKAR WERE THE ARCHITECTS FOR THE KUMAR PURAM PROJECT WHICH IS ELI GIBLE FOR DEDUCTION U/S 80IB. D) AS EXPLAINED EARLIER THE PMC'S COMMENCEMENT CERT IFICATE 3928 DT.24.4.93 IS THE INITIAL PLAN SUBMITTED TO TH E PMC. THE PROJECT HAS BEEN EXECUTED AS PER REVISED PLANS DT.2 0.10.00 WHICH HAVE BEEN APPROVED BY PMC. AS EXPLAINED HEREI NABOVE, THERE IS NO CONTRAVENTION OF THE CONDITIONS OF SECT ION 80IB(10). THE AO'S ALLEGATIONS REGARDING NON-SUBMISSION OF CO RRECT FACTS IS NOT VALID INASMUCH AS THE PLANS FURNISHED ARE IN RESPECT OF THE BUILDINGS ACTUALLY CONSTRUCTED IN THE PROJECT W HICH ARE DULY APPROVED BY THE PMC AND ALSO CERTIFIED AS SUCH IN THE COMPLETION CERTIFICATE. 7 THE AO'S ATTEMPT TO GIVE CREDIBILITY TO HIS ASSERTI ONS BY REFERRING TO VERIFICATION OF INSPECTOR OF PMC IS NO T VALID. NO DOCUMENTS IN SUPPORT OF THE VERIFICATION HAS BEEN S UBMITTED. THE ASSESSEE HAS SUBMITTED VALID DOCUMENTS, SANCTIO NED PLANS & COMPLETION CERTIFICATES ISSUED BY THE STATU TORY AUTHORITIES IN RESPECT OF THE ACTUAL CONSTRUCTION C ARRIED OUT ON THE PROJECT. 2) AS SOUGHT BY THE AO IN THE COURSE OF PROCEEDINGS BEFORE YOUR HONOUR WE HAVE FURNISHED FUND FLOW STATEMENT W ORKING OUT INTEREST ALLOCATION ON PROJECTS/ACTIVITIES OF T HE ASSESSEE: I) IN THE RATIO OF LOAN FUNDS FOR EACH PROJECT/ACTIVIT Y TOT TOTAL LOAN FUNDS UTILISED IN BUSINESS. II) CONSIDERING PROJECT/ACTIVITY WISE OUTLAY ON DAILY PRODUCT BASIS. IN THE ASSESSEE'S SUBMISSION KUMAR CITY CLUB WAS GR OUPED UNDER OTHER PROJECTS AND NOT IN KUMAR CITY PROJECT. THE AO THEN ARGUED THAT KUMAR CITY CLUB FORMED PART OF KUM AR CITY PROJECT. INTEREST ALLOCATION WAS ACCORDINGLY WOR KED OUT CLUBBING KUMAR CITY CLUB IN THE KUMAR CIT PROJECT. THE INTEREST ALLOCATION OF KUMAR CITY CLUB IS CONSI DERED AS A SEPARATE INDEPENDENT ACTIVITY IS AS FOLLOWS: 1) RS.608219 ON RATIO BASIS 2) RS.701066 ON DAILY PRODUCT BASIS. WE SUBMIT THAT THE EXERCISE OF ALLOCATION OF INTERE ST IS FOR THE LIMITED PURPOSE OF REFUTING THE AO'S ALLEGATIONS OF JUGGLERY OF FIGURES TO CLAIM EXCESSIVE 80IB DEDUCTION IN KUMAR PURAM PROJECT. THE STATEMENTS FURNISHED AS SOUGHT BY THE AO AMPLY PROVED THAT THE KUMAR PURAM PROJECT IS A CASH SURPL US PROJECT ON WHICH INTEREST EXPENSES INCURRED IN NIL. INTEREST EXPENSES OF RS.9666080/- ARE ALLOWABLE U/S 36(1)(III) OF THE INCOME TAX ACT, 1961 AS BORROWED FUNDS HAVE BEEN UTILISED FOR THE PURPOSE OF BUSINESS. AS PER THE SE CTION IT IS NOT RELEVANT WHETHER FUNDS HAVE BEEN UTILISED FOR CAPIT AL OR REVENUE PURPOSES.' ON THIS NOTE OF THE APPELLANT, THE LEARNED ASSESSIN G OFFICER HAS SUBMITTED A FURTHER REPORT WHICH IS CONTAINED I N HIS LETTER NO.PN/ACIT/CIR.6/2005-06 DATED 12,12.2005 AND WHICH WAS FORWARDED BY ADDL.CIT VIDE LETTER NO.PN.ADDL.CIT.RG .6/2005- 06 DT. 15.12.2005. THE OPERATIVE PORTION OF THIS RE PORT IS REPRODUCED AS UNDER: 'DURING THE COURSE OF APPELLATE PROCEEDINGS, A DOCU MENT WAS SUBMITTED WHICH WAS OBTAINED FROM MUNICIPAL CORPORA TION, WHICH SHOWS THAT THE CONSTRUCTION WAS COMPLETED UPT O GROUND 8 FLOOR BY SEPTEMBER 1998. ON THE BASIS OF THE COMMEN CEMENT CERTIFICATE, DP PLAN, STATEMENT OF THE EMPLOYEE OF THE PMC IT WAS CONFIRMED THAT THIS DOCUMENT PERTAINED TO KUMAR PURAM PROJECT, WHICH IS LOCATED ON 411 S.NO.707. 2. HOWEVER, THE AUTHORISED REPRESENTATIVE OF THE AS SESSEE COMPANY IN LETTER DT.6.12.2005, HAS PLEADED THAT TH E LETTER WHICH SHOWS THE CONSTRUCTIONS OF THE PROJECT PERTAI NS TO BUSINESS COURT AND NOT TO KUMAR PURAM IN RESPECT OF WHICH DEDUCTION U/S. 80-IB HAS BEEN CLAIMED. IT WAS CLAIM ED THAT THE LETTER IS WRITTEN BY PUNDALIK AND PUNDALIK ARCH ITECTS, WHO WERE ARCHITECTS OF BUSINESS COURT AND NOT OF KUMAR PURAM. BY THIS THE ASSESSEE WANTS TO TAKE PLEA THAT THE CO NSTRUCTION IN BUSINESS COURT HAD STARTED BEFORE OCTOBER 1998 A ND NOT IN KUMAR PURAM. 3. THE CLAIM OF THE ASSESSEE IS HOWEVER, NOT SUPPOR TED BY THE RETURNS OF INCOME FILED BY THE ASSESSEE FOR (HE A.Y .1999-2000 AND 2000-01 (ENCLOSED). THE ASSESSMENT RECORDS DON' T SHOW ANY WORK IN PROGRESS IN RESPECT OF BUSINESS COURT T ILL 31-3-2000. THE BALANCE-SHEET AS ON 31-3-99 AND 31-3-2000, (SCH EDULE VII) OF THE AUDIT REPORTS SHOW WIP IN RESPECT OF KU MAR CITY AND KUMAR PURAM ONLY UNDER CURRENT ASSETS. XEROX CO PY OF THE SAME IS ENCLOSED HEREWITH. IT WAS ONLY IN F.Y. 2000-01 (A.Y. 2001-02), WIP IN BUSINESS COURT IS SHOWN. 4. IN VIEW OF THE ABOVE NARRATED FACTS, IT IS CLEAR THAT THE PROJECT OF KUMAR PURAM ON PLOT NO,411 S.NO.707 HAS ALREADY BEEN STARTED WELL BEFORE 1.10.98 IN VIEW OF THE FOL LOWING REASONS : 1. THE PROJECT IS APPROVED BEFORE 1.10.98. 2. COMMENCEMENT CERTIFICATE IS ISSUED BEFORE 1. 10.98. 3. LETTER OF THE ASSESSEE SHOWS THAT THE WORK WAS A LSO STARTED BEFORE 1.10.98, WHICH IS CORROBORATED BY TH E OTHER DOCUMENTS. 4. SCHEDULE VII OF AUDIT REPORT ENCLOSED WITH THE R ETURN FOR A.Y.2000-01 & 2001-02 SHOW THE WIP IN RESPECT OF BUSINESS COURT AS NIL. THUS, THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.8 0-IB IS NOT CORRECT IN RESPECT OF KUMAR PURAM PROJECT.' THE COPY OF THE ASSESSING OFFICER'S REPORT DATED 12 .12.2005 WAS GIVEN TO APPELLANT ON 16-12-2005 FOR SUBMITTING HIS COMMENTS THEREON. ON 27.12.2005 THE LEARNED AR ATTE NDED AND REQUESTED FOR ADJOURNMENT AND TIME WAS GRANTED UP TO 2/1/2006. ON 2.1.2006 THE AR ATTENDED AND AGAIN SOU GHT TIME UP TO 9.1.2006 FOR FURNISHING HIS COMMENTS. ON 9.1.2006 THE LEARNED AR ATTENDED AND SUBMITTED A LETTER DT.9 .1.2006, A 9 COPY OF WHICH WAS ALSO GIVEN TO THE ASSESSING OFFIC ER DURING THE COURSE OF HEARING. THE OPERATIVE PORTION OF THI S LETTER IS REPRODUCED AS UNDER: 'WITH REFERENCE TO THE ABOVE, WE HAD FURNISHED SUBMISSION DT.6.12.2005 CLARIFYING ISSUES RAISED BY THE AO WITH REGARD TO CLAIM FOR 80IB DEDUCTION FOR KUMA R PURAM PROJECT. THE AO FURTHER FURNISHED A REPORT DT.12.12.2005 WHE REIN THE AO HAS DOUBTED THE ASSESSEE'S EXPLANATIONS BY ALLEGING THAT THE ASSESSMENT RECORDS DO NOT SHOW WO RK IN PROGRESS IN RESPECT OF BUSINESS COURT TILL 31.3.200 0. WE ARE FURNISHING LETTER DT.29.12.05 FROM M/S PUNDA LIK & PUNDALIK ARCHITECTS (FOR BUSINESS COURT PROJECT) TOGETHER WITH FOLLOWING SUPPORTINGS. I) M/S PUNDALIK & PUNDALIK'S APPLICATION FOR RENEWAL OF PLANS DT.26.7.98. II) PMC'S QUERY DT.17.8.98 III) M/S PUNDALIK & PUNDALIK'S REPLY DT. 18.9.98(WHICH IS THE BASIS OF THE ASSESSING OFFICER'S CONTENTIONS ) FROM THESE DOCUMENTS IT IS AMPLY CLEAR THAT THE SUB JECT PROJECT UNDER CONSIDERATION IS BUSINESS COURT AND N OT KUMAR PURAM. THE AO IN HIS REPORT HAS ALSO ARGUED THAT THERE ARE NO EXPENSES DEBITED IN THE ASSESSEE'S ACCOUNTS W.R.T. BUSINESS COURT TILL 31.3.2000 THEREBY INDICATING TH AT IT WAS KUMAR PURAM PROJECT WHICH WAS THE SUBJECT OF CONSIDERATION IN THE ABOVE DOCUMENTS AND THAT IT HA S COMMENCED BEFORE 1.10.98. BUSINESS COURT WAS A PROJ ECT OF SHRI VINAYAK SUPNEKAR THE LAND OWNER WHO SPENT F OR THE SAME. THE ASSESSES SPENT ON BUSINESS COURT DEVELOPMENT AND CONSTRUCTION AFTER DEMOLISHING THE EARLIER INCOMPLETE STRUCTURE. EXPENDITURE ON BUSINE SS COURT WAS INCURRED IN Y.E.31.3.2001 AS EVIDENT FROM THE ASSESSEE'S ACCOUNTS. THE KUMAR PURAM PROJECT WAS ON LAND BEHIND BUSINESS COURT WHICH DID NOT HAVE ANY ACCESS AS THE ADJACENT LANDS WERE OCCUPIED BY THE LAND OWNER SHRI SUPNEKAR AND BY M/S D.S. KULKARNI DEVELOPERS FOR THEIR CHANDRADEEP PROJECT. THE ACCESS TO THE KUMAR PURAM PROJECT WAS MADE AVAILABLE BY A NEW D.P. ROAD SANCTIONED BY THE PMC WHICH CUT THROUGH CHANDRADEEP PROJECT LAND. THE S INCURRED EXPENDITURE IN YEAR EN DING 31.3.99 ON DEVELOPMENT OF THE PMC ROAD. 10 DEVELOPMENT AND CONSTRUCTION WORK OF KUMAR PURAM PROJECT TOOK PLACE AS PER REVISED PLANS DT.11.10.99 FOR WHICH REVISED COMMENCEMENT CERTIFICATE NO.1245 DT.10.3.2000 WAS ISSUED BY THE PMC. THIS IS ALSO EV IDENT FROM THE EXPENSES DEBITED IN THE ASSESSEE'S ACCOUNT S WHICH APPEAR IN Y.E.31.3.00. THE BOOKINGS FROM CUSTOMERS ALSO BEGAN IN Y.E.31.3.2000. IT IS ALSO WORTH NOTING THAT THE AO HAS REFERRED TO COMPLETION OF RCC FRAMEWORK UPTO PLINTH LEVEL BASED ON M/S PUN DALIK & PUNDALIK'S LETTER DL.18.9.98. THE SUBJECT LETTER RE FERS TO RCC FRAME WORK COMPLETED UPTO 3RD FLOOR. THIS IS TOTALL Y CONTRADICTORY TO THE FACTUAL POSITION AS THE ASSESS EE HAS NOT ENTERED INTO KUMAR PURAM LAND AT THE SAID TIME AND RCC FRAMEWORK UPTO 3RD FLOOR OF THE SAID PROJECT TOOK S HAPE ONLY AFTER MARCH 2000.' ON 17.1.2006, THE LEARNED AUTHORIZED REPR ESENTATIVE SUBMITTED A LETTER DATED 17.1.2006 THE CONTENT S OF WHICH ARE REPRODUCED AS UNDER: '1. WE ARE ENCLOSING COPY OF PLAN PREFERRED BY M/S BUTALA & NIVSARKAR ARCHITECTS DTD 16.6.98 APPROVED BY THE DE PUTY CITY ENGINEER ON 10.7.98. WE ARE ALSO ENCLOSING AN AERIAL PHOTOGRAPH OF THE ENTIRE AREA. 2. THE ASSESSEE REITERATES THAT BUSINESS COURT AND KUMAR PURAM ARE TWO SEPARATE INDEPENDENT PROJECTS NOT INTERLINKED WITH EACH OTHER. 3. DEVELOPMENT RIGHTS IN SURVEY NO. 707 FINAL PLOT NO. 411/1 PLOT NO.6 ADMEASURING 10323 SQ.MTRS. WAS ACQUIRED BY AGREEMENT DTD 11.7.94 FROM SHRI VINAYAK SUPNEKAR FOR CONSIDERATION OF RS.48839500/-. THIS P LOT WAS USED FOR KUMAR PURAM PROJECT. 4. DEVELOPMENT RIGHTS IN S. NO. 707 FP NO. 411/1 P LOT NO.5 ADMEASURING 2774 SQ.MTRS. WAS ACQUIRED BY AGREEMENT DT 11.7.94 FOR CONSIDERATION OF RS. 12429500/-. THI S WAS USED FOR BUSINESS COURT PROJECT. 5. PLOT NO. 5 AND PLOT NO 6 ARE NOT ADJOINING OR A DJACENT PLOTS. PLOT NO.5 IS ADJOINING THE MAIN MUKUNDNAGAR ROAD BETWEEN SATARA ROAD & JAWAHARLAL NEHRU MARG. 6. PLOT NO.6 (K.P.) IS ON THE NORTH EASTERN SIDE O F S.NO. 707. THE SUBJECT PLOTS DO NOT HAVE A COMMON BORDER AND A S SUCH NO COMMON ACCESS. 7. ACCESS TO PLOT NO.6 WAS TAKEN FROM THE MUKUNDNA GAR ROAD BY MEANS OF D.P. ROAD FROM THE EASTERN SIDE OF PLOT NO.5 WHICH BIFURCATED THE ADJOINING PLOT IN WHICH D SK DEVELOPERS HELD DEVELOPMENT RIGHTS AND PROVIDED ACC ESS TO THE CENTER OF PLOT NO.6 BY ALIGNING WITH PLOT NO .1. 8. PLOT NOS 3 AND THE AREA TO THE NORTH OF PLOT NO .5 (BC PLOT) ARE OWNED BY SHRI VINAYAK SUPNEKAR AND/OR DSK DEVELOPERS.' 11 4. FROM THE SUBMISSIONS AND COUNTER SUBMISSIONS, IT WOULD BE SEEN THAT THIS OFFICE IS CALLED UPON TO DECIPHER AND DECIDE TWO BASIC ISSUES GERMANE TO ALLOWABILITY OF DEDUCTI ON U/S 80IB IN THE PRESENT CASE. THE FIRST ISSUE RELATES TO THE DETERMINATION OF DATE ON WHICH THE DEVELOPMENT AND CONSTRUCTION I N RESPECT OF KUMAR PURAM PROJECT STARTED. THE SECOND ISSUE RE LATES TO CORRECTNESS OR OTHERWISE OF ALLOCATION OF EXPENDITU RE BECAUSE IT IS SUBMITTED BY THE LEARNED ASSESSING OFFICER THAT THESE EXPENSES HAVE NOT BEEN PROPERLY ALLOCATED BY THE AP PELLANT TO THE PRIORITY PROJECTS AND THEREBY CLAIM OF DEDUCTIO N U/S 80IB HAS BEEN INFLATED. 4.1 THE SUBMISSION OF THE APPELLANT THAT THE PROJEC T WAS STARTED ON OR AFTER 1ST OCT.98 AND, THEREFORE, DEDU CTION U/S 80IB HAS BEEN CORRECTLY CLAIMED IS AS UNDER:- AS REGARDS THE LETTER OF M/S PUNDALIK AND PUNDALIK, IT IS SUBMISSION OF THE APPELLANT THAT THIS LETTER IS IN RESPECT OF BUSINESS COURT. IT IS FURTHER SUBMITTED THAT THE PL AN ON WHICH THE LEARNED ASSESSING OFFICER RELIED WAS INITIAL PL AN AND NOT THE PLAN WHICH WAS ACTED UPON. THE DEVELOPMENT AND CONSTRUCTION OF PROJECT ON KUMAR PURAM STARTED ONLY ON 18.4.99 WHICH IS EVIDENT FROM THE STATUTORY NOTICE OF COMMENCEMENT OF WORK FURNISHED BY ARCHITECT D.M. BU TALA. IT IS SUBMITTED BY THE LEARNED AR THAT THE LETTER F ROM PUNDAIIK AND PUNDALIK DATED 18.9.98 WHICH REFERS TO CONSTRUC TION UPTO 3RD FLOOR IS A PLOT WHERE BUSINESS COURT HAS COME U P. IT IS SUBMITTED THAT THIS CONSTRUCTION WAS UNDERTAKEN BY SHRI SUPNEKAR THE LAND OWNER FOR WHOM PUNDALIK & PUNDALI K WERE ARCHITECTS. THE EXPENDITURE ON THAT CONSTRUCTION, I T IS SUBMITTED, IS CONTAINED IN SUPNEKAR ACCOUNT. IN THI S REGARD, THE APPELLANT HAS FILED EXTRACTS FROM ACCOUNT OF V. S. SUPNEKAR FROM WHOM THE DEVELOPMENT RIGHTS WERE PURCHASED IN RESPECT OF SURVEY NO.707, PLOT NO.411 FOR ACCOUNTING YEAR 1 997-98 WHERE SCHEDULE 'B' WHICH IS IN RESPECT OF LAND AND BUILDING SHOWS THE VALUE OF BUILDING UNDER CONSTRUCTION AT M UKUND NAGAR AT RS.23 LAKHS. IT IS SUBMITTED THAT THIS BUI LDING CONSTRUCTED AT THAT PORTION OF PLOT AT S.NO,411 ON WHICH BUSINESS COURT IS LOCATED WAS DEMOLISHED AND CONSTR UCTION ON THAT PLOT WAS STARTED AFRESH IN F.Y.2000-01 IN RESP ECT OF PROJECT KNOWN AS BUSINESS COURT. 4.2 AS REGARDS THE FIRST ISSUE RELATING TO COMMENCE MENT OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON OR AFTER THE FIRST DAY OF OCTOBER, 1998, THE SUBMISSION OF T HE ASSESSING OFFICER IS AS UNDER:- IT IS THE CASE OF THE DEPARTMENT THAT DEVELOPMENT A ND CONSTRUCTION OF THE HOUSING PROJECT KNOWN AS KUMAR PURAM STARTED BEFORE 1.10.1998. FOR THIS CONCLUSION THE L EARNED 12 ADDL.CIT, RANGE 6, DR.NAVALJIL KAPOOR HAS PLACED RE LIANCE ON FOLLOWING DOCUMENTS. I) DPO NO.2048/3/748 DATED 13.7.98. THIS LAYOUT PLA N IS SUBJECT TO CERTAIN CONDITIONS AND ONE OF THESE COND ITION IS THAT 'ALL CONDITIONS MENTIONED IN SANCTIONED LAY OUT DPO/595/III/535 DATED 29.5.95 ARE BINDING ON SANCTION/PAH.' CONDITION NO.4 OF THESE CONDITIONS SAYS THAT 'OPEN SPACE PROVIDED IN THIS LAY OUT (2485.49) SHOULD BE OPEN F OR ALL RESIDENCE OF PLOT NO.1, 2, 4 AND FINAL PLOT NO.411/ 2'. DURING THE COURSE OF HEARING, IT IS SUBMITTED BY DR.NAVALJ IT KAPOOR THAT PLOT NO.4 IN THIS CONDITIONS REFERS TO PRESENT PLOT NO.6 WHICH IS NAMED AS KUMAR PURAM BY THE APPELLANT. IT IS SUBMITTED THAT AT THAT STAGE PLOT NO.411 HAD ONLY 4 SUB DIVISIONS PLOT NO.,1, PLOT NO.2, PLOT NO.3, PLOT NO .4 AND WHAT WAS THEN KNOWN AS PLOT NO.4 IS LATER KNOWN AS PLOT NO.6 AND ON THIS PLOT NO.6 WHICH WAS EARLIER PLOT NO.4, KUMA R PURAM PROJECT IS LOCATED. II) FROM THE DPO NO.2048 /ML/748 DT.13.7.98 IT IS C LEAR THAT PLOT NO.411 HAS BEEN SUB DIVIDED INTO 6 PLOTS AND THIS DEVELOPMENT PLAN CONTAINS PLOT AREA ALONG WITH AREA KEY PLAN FOR BUILDING IN RESPECT OF PLOT NO.1, 2, 3, 4 5 AND 6 OF PLOT NO.411. THIS DEVELOPMENT PLAN IS SIGNED BY BUTALA A ND NIVSARKAR AND APPROVED BY PUNE MUNICIPAL CORPORATIO N VIDE THEIR LETTER DATED 13.7 1998. III) DR. NAVALJIT KAPOOR ALSO PLACED RELIANCE ON COMMENCEMENT CERTIFICATE DATED 24.4.98 WHICH IS ADD RESSED TO VIMAL KUMAR JAIN & ANOTHER AND IS IN RESPECT OF PLO T NO.411. FROM THIS CERTIFICATE, IT IS SUBMITTED BY THE LEARN ED ADDL.CIT RG.6, IT IS CLEAR THAT COMMENCEMENT CERTIFICATE ALS O CONTAINED PORTION OF LAND IN RESPECT OF WHICH PLAN WAS APPROV ED VIDE1 DPO NO.2048/HI/748 DT.13.7.93. IV) THE LEARNED ADDL.CIT HAS ALSO PRODUCED TRUE COP Y OF BUILDING PLAN IN RESPECT OF PLOT NO,4 LATER ON NAME D AS PLOT NO.6 ON WHICH KUMAR PURAM IS LOCATED. THIS PLAN IS DATED 24,4.98 AND COMMENCEMENT CERTIFICATE WHICH IS NUMBE RED 3928 WHICH IS THE SAME NUMBER GIVEN TO CERTIFICATE IN RESPECT OF SUB PLOT CONTAINED IN PLOT NO.411. IT IS SUBMITTED BY DR. KAPOOR THAT FROM TRUE COPY O F BUILDING PLAN IN RESPECT OF PLOT NO.4, WHICH IS NOW PLOT NO. 6 ON WHICH KUMAR PURAM IS LOCATED WHICH IS OBTAINED BY THE DEP ARTMENT ON 18.10.2005, IT IS CLEAR THAT BUILDING PLAN IN RE SPECT OF KUMAR PURAM WAS APPROVED ON 24.4.98. IT IS SUBMITTE D BY ADDL.CIT THAT BUILDING PLAN UNDERGO SEVERAL CHANGES BEFORE THE CONSTRUCTION OF THE PROJECT COMES TO AN END. IT IS SUBMITTED THAT WHENEVER THERE IS A CHANGE IN PLAN, THE 13 COMMENCEMENT CERTIFICATE HAS GOT TO BE TAKEN. IT IS SUBMITTED THAT THOUGH COMMENCEMENT CERTIFICATE IN RESPECT OF KUMAR PURAM PROJECT WHICH IS LOCATED ON SUB PLOT 4 OF PLO T NO.411 WAS ISSUED ON 24.4.98, IT WAS CLAIMED BY THE APPELL ANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS THAT COMMENCEMENT CERTIFICATE IN RESPEC T OF THIS PROJECT WAS ISSUED ON 10.3.2000 BY THE PMC. IT IS S UBMITTED BY THE LEARNED ADDL.CIT THAT THIS IS FACTUALLY WRON G BECAUSE WHAT IS CLAIMED TO BE A COMMENCEMENT CERTIFICATE IS A REVISED COMMENCEMENT CERTIFICATE BECAUSE OF CHANGE IN PLAN. VIDE PARA 6 OF WRITTEN SUBMISSION FILED ON 9 .1.2006, IT IS STATED BY THE APPELLANT THAT DEVELOPMENT AND CONST RUCTION WORK OF KUMAR PURAM PROJECT TOOK PLACE AS PER REVIS ED PLAN DT.11.10.99 FOR WHICH REVISED COMMENCEMENT CERTIFIC ATE WAS ISSUED BY THE PMC ON 10.3.2000 VIDE CERTIFICATE NO. 1245. IT IS SUBMISSION OF ADDL.CIT THAT VIDE LETTER DT.18.9.98, PARTNER OF M/S. PUNDALIK & PUNDALIK HAS CLEARLY MENTIONED REGA RDING CONSTRUCTION OF THIS PROJECT. THE RELEVANT PORTION OF THIS LETTER WHICH IS ADDRESSED TO ASST. ENGINEER IS REPRODUCED AS UNDER: 'AS YOU ARE AWARE, THE RCC FRAME WORK UPTO 3RD FLOO R STANDS COMPLETED LONG BACK EVEN BEFORE THIS ROAD U/ S 205 COULD HAVE BEEN PROPOSED' THE ADDL.CIT HAS ALSO DRAWN MY ATTENTION TO SCHEDUL E VII IN CASE OF APPELLANT SHOWING CURRENT ASSETS IN CASE OF THE APPELLANT AS ON 31.3.99 AND 31.3.2000. IT IS SUBMIS SION OF THE ADDL.CIT THAT FROM SCHEDULE VII OF CURRENT ASSETS F OR THE PERIOD 31.3.99 AND 31.3.2000, IT WOULD BE SEEN THAT WIP ONLY IN RESPECT OF KUMAR PURAM HAS BEEN SHOWN AND THIS C LEARLY SHOWS THAT THE SUBMISSION OF THE APPELLANT THAT THE CONSTRUCTION REFERRED IN LETTER BY M/S PUNDALIK & P UNDALIK DT.18.9.98 WAS IN RESPECT OF BUSINESS COURT IS FACT UALLY INCORRECT. IT IS SUBMITTED BY THE ADDL.CIT THAT SCH EDULE VII RELATING TO CURRENT ASSETS SHOWS WIP AGAINST BUSINE SS COURT AS ON 31.3.2001 AT RS.36,36,093/- AND, THEREFORE, I T IS CLEAR THAT TILL FINANCIAL YEAR ENDING 31.3.2000 THERE WAS NO EXPENDITURE IN RESPECT OF THIS PROJECT. IT IS SUBMISSION OF THE ADDL.CIT THAT COMMENCEMENT CERTIFICATE NO.5623 DT.20.1.2002 MENTIONS FINAL PLOT NO.411 AND PLOT NO.6 AND COMMENCEMENT CERTIFICATE DT. 13.7,98 ALSO REFER S TO FINAL PLOT NO.6 ON WHICH KUMAR PURAM IS LOCATED. IN VIEW OF THIS, IT IS SUBMISSION OF THE ADDL.CIT THAT COMMENCEMENT CER TIFICATES ON WHICH THE LEARNED AR RELIES FOR ITS CONCLUSION T HAT CONSTRUCTION STARTED SUBSEQUENT TO COMMENCEMENT CER TIFICATE IS BEREFT OF MERIT BECAUSE COMMENCEMENT CERTIFICATE S ARE ISSUED NUMBER OF TIMES DEPENDING ON CHANGE IN BUILD ING PLAN. IT IS SUBMITTED BY DR. KAPOOR THAT BUILDING UNDER C ONSTRUCTION AT MUKUND NAGAR, VALUE OF WHICH IS SHOWN AT RS.23 L AKHS FOR 14 ACCOUNTING YEAR 97-98, DOES NOT PROVE THAT THIS CON STRUCTION DOES NOT PERTAIN TO CONSTRUCTION ON PLOT NO.4 WHICH IS LATER KNOWN AS PLOT NO.6 ON WHICH PROJECT KUMAR PURAM IS LOCATED. IT IS FURTHER SUBMITTED THAT BALANCE SHEET OF V.S, SUPNEKAR SHOWS ADVANCE AGAINST SALE OF LAND AT RS.1.10 CRORE S. IT IS FURTHER SUBMITTED THAT THE APPELLANT HAD PURCHASED DEVELOPMENT RIGHTS FROM SUPNEKAR IN 1994. IN VIEW O F THIS, WHATEVER DEVELOPMENT HAS TAKEN PLACE IN RESPECT OF SUBJECT PROPERTY, IT HAS TO BE ON BEHALF OF THE APPELLANT. IT IS SUBMITTED BY ADDL.CIT THAT THE VALUE OF NEW C ONSTRUCTION ON SCHEDULE B FOR ACCOUNTING YEAR 97-98 IN CASE OF V.S. SUPNEKAR SUBMITTED BY THE APPELLANT ON 9.1.2006 HAS BEEN SHOWN AT RS.7,18,765.50. IT IS SUBMITTED BY THE ADD L.CIT THAT NO DETAILS ARE MENTIONED IN RESPECT OF THIS CONSTRU CTION. 5(I) BEFORE THE FIRST ISSUE RELATING TO COMMENCEMEN T OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON OR AFTER THE FIRST DAY OF OCTOBER 1998 IS DISCUSSED, IT WOUL D BE IN FITNESS OF THINGS TO EXAMINE THE SCOPE OF DEDUCTION U/S 80IB(10). THE FIRST ISSUE THAT REQUIRES ANSWER IN. THE PRESENT CASE IS WHETHER DEDUCTION U/S 80IB IS ONLY AVAILABL E IN CASE OF A PROJECT WHICH IS ENTIRELY NEW OR IT IS ALSO AVAIL ABLE IN CASE OF A PROJECT WHICH IS IN EXISTENCE BUT WHICH IS DISMAN TLED MIDWAY AND NEW PROJECT IS BROUGHT UP ON THE SAME PR OJECT. 5(II) THE SECOND LEGAL QUESTION WHICH REQUIRES CONS IDERATION IN PRESENT APPEAL IS WHETHER PROJECT LOCATED ON A REVE NUE SURVEY NUMBER BEARING THE SAME NUMBER IN RESPECT OF WHICH DP PLAN HAS BEEN SANCTIONED AND COMMENCEMENT CERTIFICATE HA S BEEN ISSUED CONSTITUTES ONE PROJECT AND WHETHER THIS PRO JECT IS CAPABLE OF BEING BROKEN INTO SEVERAL PROJECTS FOR C LAIM OF DEDUCTION U/S 80-IB. 6. FOR DECIDING BOTH THE ISSUES CONTAINED IN 5(I) A ND 5(II), IT WOULD BE IN FITNESS OF THINGS TO HAVE A LOOK AT PRO VISIONS OF LAW AS CONTAINED U/S 80IB(10) AS IT THEN STOOD. THE SAM E IS REPRODUCED AS UNDER: '(10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKI NG DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, S HALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUS ING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP A REA OF ONE THOUSAND SQUARE FEET WERE SUCH RESIDENTIAL UNIT 15 IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE.' FROM THE PERUSAL OF SECTION 80IB(10), AS IT THEN ST OOD, IT IS ABSOLUTELY CLEAR THAT LEGISLATIVE INTENDMENT ACTUAT ING ENACTMENT OF SECTION 80IB(10) IS PROMOTION OF NEW P ROJECTS AND, THEREFORE, I AM OF THE CONSIDERED VIEW THAT TH E BENEFIT OF 80IB(10), AS IT THEN STOOD, WAS NOT AVAILABLE IN CA SE OF PROJECT WHICH IS DISMANTLED MIDWAY AND NEW PROJECT IS BROUG HT UP ON THE SAME PROJECT. AS REGARDS THE ISSUE RAISED IN 5(II) HEREINBEFORE, AFTER TAKING INTO ACCOUNT THE PROVISIONS OF LAW, I AM OF THE CON SIDERED VIEW THAT PROJECT LOCATED ON REVENUE SURVEY NUMBER IN RE SPECT OF WHICH DP PLAN HAS BEEN SANCTIONED AND COMMENCEMENT CERTIFICATE HAS BEEN ISSUED CONSTITUTES ONE PROJECT AND THIS PROJECT IS NOT CAPABLE OF BEING BROKEN INTO SEVERAL PROJECTS IN RESPECT OF SOME OF WHICH CLAIM U/S 80IB IS MADE AND IN RESPECT OF SOME OF WHICH NO SUCH CLAIM IS MADE BECA USE SUCH PROJECT/PROJECTS DID NOT FULFILL THE CONDITIONS CON TAINED U/S 80IB(10). IT MAY ALSO BE MENTIONED THAT SINCE ENTIRE PROJECT ON SURVEY NO.707 IS ONE PROJECT AND BUSINESS COURT WHICH IS A COMMERCIAL BUILDING STANDS ON THIS SURVEY NUMBER, T HE LIMIT OF 5% IS EXCEEDED AND, THEREFORE, EVEN OTHERWISE TH E APPELLANT SHALL NOT BE ENTITLED FOR DEDUCTION U/S 80IB. 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE SUBMISSION OF THE ASSESSING OFFICER & ADDL. CIT AND PERUSED MATERIAL ON RECORD. MY REASONED CONCLUS IONS IN RESPECT OF CLAIM OF 80IB, AS REGARDS ITS DATE OF DE VELOPMENT AND COMMENCEMENT, MADE BY THE APPELLANT ARE AS UNDE R: 7(I) IT IS AN UNDISPUTED FACT THAT THERE WAS CONSTR UCTION IN PURSUANCE OF COMMENCEMENT CERTIFICATE ISSUED ON 24. 4.98 AND SUCH CONSTRUCTION WAS UPTO THIRD FLOOR AS IS CLEAR FROM THE LETTER OF PUNDALIK & PUNDALIK DT.18.9.98. THIS CONS TRUCTION WAS IN PURSUANCE OF APPROVED DEVELOPMENT PLAN IN RE SPECT OF ENTIRE AREA PART OF WHICH LOCATES KUMAR PURAM, INCO ME FROM WHICH IS SUBJECT MATTER OF AVAILABILITY OF DEDUCTIO N U/S 80IB(10). THE LEARNED AR HIMSELF HAS ACCEPTED THE V ALUE OF SUCH CONSTRUCTION ON THAT PORTION OF PLOT NO. 411 W HICH LATER ON CAME TO BE KNOWN AS BUSINESS COURT AT RS.23 LAKH S AS MENTIONED IN SCHEDULE B OF BALANCE SHEET OF V.S. SU PNEKAR FOR ACCOUNTING YEAR 97-98 PERTAINING TO LAND AND BUILDI NG. THOUGH IT MUST BE STATED TO PUT THE RECORD STRAIGHT THAT NO EVIDENCE IN SUPPORT OF SUCH CONTENTION THAT THIS CO NSTRUCTION WAS ONLY ON THAT PORTION OF LAND ON WHICH BUSINESS COURT STANDS TODAY HAS BEEN BROUGHT ON RECORD. BE THAT AS IT MAY, IT 16 IS UNDISPUTED FACT THAT IN RESPECT OF PLOTS ACQUIRE D VIDE THE TWO AGREEMENTS DATED 11.7.94 IN RESPECT OF S.NO.707 FINAL, PLOT NO.411, PLOT NO.6 AND PLOT NO.5 RESPECTIVELY CONSTI TUTED ONE UNIT FOR THE PURPOSE OF PROJECT. THIS CONCLUSION IS BASED ON THE FACT THAT IN RESPECT OF S.NO.707 PLOT NO.411, COMME NCEMENT CERTIFICATE WAS ISSUED TO SHRI VIMAL KUMAR JAIN AND ANOTHER ON 24.4.98 BY PMC. AT THAT POINT OF TIME THE ENTIRE PROJECT WAS ONE PROJECT AS IS CLEAR FROM THE FACT THAT COMMENCE MENT CERTIFICATE IN RESPECT OF PLOT NO.411 DOES NOT MENT ION ANY SUB PLOT AS IS THE CASE IN COMMENCEMENT CERTIFICATE ISS UED LATER. IT IS ALSO SEEN THAT DPO NO.2048/III/748 DATED 13.7.98 CONTAINS THE BUILDING PLAN IN RESPECT OF PLOTS NO. 1 TO 6. T HIS DPO IS SUBJECT TO FOLLOWING CONDITIONS. 1. THE PMC WILL NOT BE HELD RESPONSIBLE FOR PLOT BO UNDARY AREA, ACCESS OR ANY OTHER LEGAL MATTER IF ARISES IN FUTURE 2. PSI IN LIEU OF AREA UNDER H.C.M.T.R. ROAD SHOUL D BE SANCTIONED AFTER HANDING OVER H.C.M.T.R. ROAD TO PM C FREE OF COST. 3. ALL CONDITIONS MENTIONED IN SANCTIONED LAY OUT DPO/595/III/535 DATED 29.5.95 ARE BINDING ON SANCTION/PAH. 4. OPEN SPACE PROVIDED IN THIS LAY OUT (2485.49) S HOULD BE OPEN FOR ALL RESIDENCE OF PLOT NO.1,2,4 AND FINAL P LOT NO.411/2. 5. CHOICE PLAN SHOULD BE PRODUCED BEFORE ASKING AN Y DEVELOPMENT ON SITE. IT WOULD BE SEEN THAT WHAT WAS PLOT NO.4 IN EARLIER DP PLAN HAS BECOME PLOT NO.6 AND ON THIS VERY PLOT THE PROJ ECT WHICH WAS LATER NAMED AS KUMAR PURAM IS LOCATED. AT THIS STAGE SUFFICE IT TO CONCLUDE THAT THE PROJECTS IN RESPECT OF ALL THE SIX PLOTS CONSTITUTED SINGLE PROJECT AND, THEREFORE, IT IS HELD THAT SINCE IT IS ADMITTED FACT THAT CONSTRUCTION IN RESP ECT OF THIS PLOT HAD ALREADY BEEN STARTED BY SUPNEKAR AND THE C OST OF PROJECT IN RESPECT OF SUCH CONSTRUCTION IS ADMITTED LY RS.23 LAKHS AS ON 31.3.98 AS CONTAINED IN BALANCE SHEET O F SHRI SUPNEKAR, THE CONSTRUCTION IN RESPECT OF PROJECTS A T PLOT NO.411 HAD STARTED IN F.Y.97-98. SINCE IT IS ADMITT ED POSITION THAT THE STRUCTURE STANDING ON PLOT NO.411 WAS DISM ANTLED, IT IS HELD THAT IN RESPECT OF PROJECTS ON PLOT NO.411, NO DEDUCTION U/S 80IB IS AVAILABLE. IT IS ALSO HELD THAT SINCE IN RESPECT OF THIS SURVE Y NUMBER DP PLAN HAS BEEN SANCTIONED AND COMMENCEMENT CERTIFICA TE HAS BEEN ISSUED THIS PROJECT COULD NOT BE BROKEN INTO S EVERAL PROJECTS SOME OF WHICH, AS PER CLAIM OF APPELLANT, ARE ENTITLED FOR DEDUCTION U/S 80IB WHEREAS OTHER PROJECTS LIKE BUSINESS COURT ARE NOT ENTITLED FOR THIS DEDUCTION. 7(II) AS IS ABSOLUTELY CLEAR FROM THE DPO NO.2048 /III/748 DATED 13.7.98 BUILDING PLAN IN RESPECT OF THE SUB P LOTS IN 17 RESPECT OF SURVEY NO.707, PLOT NO.411 WAS APPROVE D BY PUNE MUNICIPAL AUTHORITY VIDE THIS DPO. IN VIEW OF TH IS, BY BRINGING ABOUT COMMERCIAL PROPERTY IN NATURE OF B USINESS COURT, THE APPELLANT HAS VIOLATED CONDITIONS STIPUL ATED U/S 80IB(10) FOR GRANT OF DEDUCTION U/S 80IB(10) AS IT THEN STOOD BEFORE BEING SUBSTITUTED BY THE FINANCE(II) ACT, 20 04 W.E.F. 14.2005. THUS THE APPELLANT IS NOT ENTITLED FOR ANY DEDUCTION U/S 80IB(10) BECAUSE THE AREA ON WHICH KUMAR PURAM PROJECT IS LOCATED FORMS INTEGRAL PART OF THE PROJECT ON WH ICH CONSTRUCTION HAD ALREADY BEEN STARTED BY SUPNEKAR A S IS CLEAR FROM THE DEVELOPMENT PLAN DATED 13.7.98 AND LETTER OF PUNDALIK AND PUNDALIK DATED 18.9.98. 7(III) THE LEARNED ADDL.CIT, DURING THE COURSE OF A PPELLATE PROCEEDINGS, DREW MY ATTENTION TO THE FACTUM OF INC URRING OF EXPENDITURE BY THE APPELLANT IN RESPECT OF PREVIOUS YEAR ENDING 31.3.99 ON KUMAR PURAM PROJECT WHEREAS NO EXPENDITURE IN RESPECT OF BUSINESS COURT IS SHOWN U PTO FINANCIAL YEAR ENDING 31.3.1999. IN THIS REGARD IT WAS SUBMITTED BEFORE ME THAT THE APPELLANT HAS INCURRED EXPENDITURE OF RS.18,173/- ON IRON SHEET, RS.757 ON SECURITY CHARGES, RS.1960 ON LABOUR CHARGES AND RS.138500 ON LABOUR CONTRACTORS. THIS ACCORDING TO THE LEARNED ADDL.CIT SHOWS THAT THE CLAIM OF THE APPELLANT THAT THE CONSTRUCTION IN RESPECT OF KUMAR PURAM PROJECT STARTED IN CONSEQUENCE OF REVIS ED COMMENCEMENT CERTIFICATE ISSUED ON 0.3.2000 IS FACT UALLY INCORRECT. IT IS SUBMITTED THAT IT IS ABSOLUTELY CL EAR THAT THESE EXPENSES HAVE BEEN INCURRED IN RELATION TO CONSTRUC TION AS PER DEVELOPMENT PLAN APPROVED VIDE DPO NO.2048 DATED 13 .7.98 AND BUILDING PLAN NO.3928 DATED 24.4.98. THIS DPO N O.2048 IS A REVISED DPO BECAUSE THE FIRST DPO WAS ISSUED I N THIS CASE VIDE LETTER NO.DPO/595/III/535 DATED 29.5.95. THUS FROM THE ACCOUNTS OF THE APPELLANT ITSELF IT IS CLEAR THAT A PPELLANT'S SUBMISSION IN RESPECT OF PROJECT KNOWN AS KUMAR PUR AM CONSTRUCTION STARTED IN CONSEQUENCE OF DPO NO.2048 AND BUILDING PLAN NO.3928 DT.24.4.98 FACTUALLY INCORREC T. THUS DRAWING ADVERSE INFERENCE, IT IS HELD THAT DEVELOPM ENT AND CONSTRUCTION OF KUMAR PURAM PROJECT WAS STARTED BEF ORE 1.10.98. 7(IV) A PERUSAL OF SECTION 80IB(10) AS IT THEN ST OOD SHOWS THAT FOR DEDUCTION U/S 80IB(10) THERE ARE THREE CONDITIO NS TO BE FULFILLED. THE FIRST CONDITION IS THAT SUCH UNDER TAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE LOUSING PROJECT ON OR AFTER THE FIRST DAY OF OC TOBER 98. THE WORDS USED BY LEGISLATIVE ARE DEVELOPMENT AND CONST RUCTION AND NOT MERELY CONSTRUCTION. THIS CLEARLY SHOWS T HE LEGISLATIVE INTENDMENT THAT EVEN IF THE DEVELOPMENT OF A PROJECT HAS STARTED BEFORE 1.10.98, THOUGH NO ACTUAL CONSTR UCTION HAS STARTED BEFORE THAT DATE, SUCH PROJECT WOULD BE OUT SIDE THE AMBIT OF DEDUCTION U/S 80IB(10) AS CONTEMPLATED BY THE LEGISLATIVE INTENDMENT CONTAINED U/S 80IB(10). THER E MAY BE CASES WHERE DEVELOPMENT OF THE PROJECT STARTS BEFOR E 18 CONSTRUCTION STARTS. IN CASE OF APPELLANT IN RESPEC T OF AREA OF LAND WHICH IS SUBJECT OF COMMENCEMENT CERTIFICATE I SSUED ON 24.4.98 WHICH REFERS TO EARLIER DEVELOPMENT OF 1995 , IT IS HELD THAT DEVELOPMENT OF PROJECT HAS STARTED WITH THE SA NCTION AND ISSUE OF DEVELOPMENT PLAN OF 1995 AND, THEREFORE, T HE APPELLANT IS ALSO NOT ENTITLED TO DEDUCTION U/S 80I B(10) BECAUSE DEVELOPMENT IN RESPECT OF SUCH PROJECT COMM ENCED MUCH BEFORE. IN VIEW OF THE FOREGOING DISCUSSION, IT IS HELD THA T PROJECT WHICH IS KNOWN AS KUMAR PURAM PROJECT IS NOT ENTITL ED FOR DEDUCTION U/S 80IB AS DEVELOPMENT AND CONSTRUCTION ON PLOT NO. 411 STARTED MUCH BEFORE 1.10.98 AND, THEREFORE, THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S 80IB IN RESPECT OF PROJECT ON PLOT NO. 411 WHICH INCLUDES KUMAR PURAM PROJECT. THIS IS THE MAIN FINDING IN RESPECT OF CLAIM OF 80I B(10). 4. IN THIS BACKGROUND, LD. AUTHORISED REPRESENTATIV E SUBMITTED THAT THE NAME OF THE PROJECT IN QUESTION IS KUMAR P URAM AND AREA OF THE PLOT IS 10,323 SQ.MT. SHRI V.S.SUPNEKAR WAS OWNER OF PLOT NO. 411 SITUATED AT MUKUND NAGAR, PUNE. INITIALLY, THIS PLOT NO. 411 WAS SUB-DIVIDED INTO 4 PLOTS NAMELY - PLOT NO.1, PL OT NO.2, PLOT NO.3 AND PLOT NO.4, AS DETAILED AT PAGE 294 OF THE PAPER BOOK FILED ON BEHALF OF ASSESSEE. OUT OF THIS LAND, THE ASSESSEE PURCHASED TWO PLOTS NAMELY PLOT NO.2 AND PLOT NO.4 FROM SHRI V.S. SUPNEKAR VIDE AGREEMENT DATED 11.07.1994, AS DETAILED AT PAGES NO .140 TO 151 & 168 TO181OF THE PAPER BOOK. INITIALLY THERE WERE T OTAL 4 SUB-PLOTS IN THE PLOT NO. 411 AND THE ASSESSEE HAD PURCHASED TWO PLOTS. THEREAFTER, THE PLOT NO. 411 WAS FURTHER SUB-DIVIDE D AND TWO MORE PLOTS WERE CARVED OUT. HENCE, ULTIMATELY THERE WERE TOTAL 6 SUB- PLOTS AND THE TWO PLOTS PURCHASED BY THE ASSESSEE W ERE PLOT NO. 5 AND 6. ACCORDINGLY, PLOT NO. 2 IN OLD PLAN BECAME PLOT NO. 5 IN NEW PLAN AND PLOT NO. 4 IN OLD PLAN BECAME PLOT NO. 6 I N NEW PLAN, AS PER DETAILED PLAN PLACED AT PAGE NO.295, CLAIMED TO BE FILED BEFORE THE CIT(A). 5. AS STATED ABOVE, THE ASSESSEE CLAIMED TO HAVE PU RCHASED TWO PLOTS FROM SHRI V.S. SUPNEKAR. IN RESPECT OF PLOT N O. 5 (EARLIER PLOT NO. 2), CONSTRUCTION WAS ALREADY COMMENCED BY SHRI SUPNEKAR AND A COMMERCIAL BUILDING NAMED BUSINESS COURT WAS PLAN NED ON THE 19 SAID PLOT. THE ASSESSEE PURCHASED THE LAND ALONGWIT H THE CONSTRUCTED AREA. IN RESPECT OF PLOT NO. 6 (EARLIER PLOT NO. 4), THE ASSESSEE HAS OBTAINED THE COMMENCEMENT CERTIFICATE DATED 24.04.1998. THE COPY OF THE COMMENCEMENT CERTIFICAT E IS ENCLOSED AT PAGES 185 TO 188 OF THE PAPER BOOK. THE CIT(A) HELD THAT ONE OF THE ESSENTIAL CONDITIONS FOR CLAIM OF DEDUCTION U/S . 80IB(10) IS THAT THE ASSESSEE SHOULD START THE DEVELOPMENT AND CONST RUCTION OF THE HOUSING PROJECT AFTER 01.10.1998. THE CIT(A) HAS HE LD THAT THE ASSESSEE HAD STARTED THE DEVELOPMENT OF THE HOUSING PROJECT PRIOR TO 01.10.1998 AND HENCE, THE ASSESSEE IS NOT ELIGIB LE TO CLAIM THE DEDUCTION IN RESPECT OF THE PROJECT KUMAR PURAM. TH E VARIOUS OBJECTIONS OF THE CIT(A) AND THE CONTENTIONS OF THE ASSESSEE ARE SUMMARIZED AS UNDER: SR. NO. OBJECTIONS OF THE LEARNED CIT(A) IN RESPECT OF CLAIM OF DEDUCTION U/S.80IB(10) STAND OF THE ASSESSEE 1 PLOT NO. 411 IS ONE SINGLE PLOT AND THE VARIOUS PROJECTS CONSTRUCTED ON THE SUB-PLOTS CONSTITUTE ONE PROJECT, [REFER PARA 7(I), PAGE 40-41 OF HIS ORDER] A. THE ASSESSEE SUBMITS THAT THE SUBPLOTS 1 TO 6 OF FINAL PLOT NO. 411 ARE 6 DIFFERENT PLOTS. IN FACT, PLOTS MARKED YELLOW - ARE SOLD BY SHRI SUPNEKAR TO DSK DEVELOPERS. B. THE LAYOUT IS COMMON FOR ALL THE SUB-PLOTS. BUT IT DOES NOT MEAN THAT ALL THE PLOTS CONSTITUTE ONE PROJECT. C. THE ASSESSEE SUBMITS THAT THE SIX SUB-PLOTS ARE INDEPENDENT PLOTS AND THE PROJECTS CONSTRUCTED THEREON CONSTITUTE SEPARATE PROJECTS. D. FOR THIS PROPOSITION, THE ASSESSEE PLACES RELIANCE ON THE FOLLOWING DECISIONS- I. VANDANA PROPERTIES [BOMBAY HIGH COURT] (REFERENCE PAGE 6 TO 21, RELEVANT PARA 20 TO 29) 20 II. ADITYA DEVELOPERS [PUNE TRIBUNAL] (REFERENCE PAGE 38 TO 61, RELEVANT PARA 6 TO 8) III. RAHUL CONSTRUCTION [PUNE TRIBUNAL] (REFERENCE PAGE 22 TO 37, RELEVANT PARA 9 TO 10) 2 THE BUILDING BUSINESS COURT CONSTRUCTED ON PLOT NO. 5 IS A COMMERCIAL BUILDING AND HENCE, THE ASSESSEE HAD CONSTRUCTED COMMERCIAL AREA IN EXCESS OF 2000 SQ. FT OR 5% OF THE BUILT UP AREA WHICHEVER IS LESS, [REFER PARA 7(II), PAGE 41 - 42 OF HIS ORDER] A. AS CLARIFIED IN RESPECT OF POINT NO. 1, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PROJECT BUSINESS COURT IS CONSTRUCTED ON PLOT NO. 5 WHICH IS AN INDEPENDENT PLOT. IN FACT, FROM THE LAYOUT PLAN, IT IS CLEAR THAT PLOT NO. 5 AND 6 ARE NOT ADJACENT PLOTS ALSO AND THEY ARE SEPARATE. B. THUS, IT WAS SUBMITTED THAT BUSINESS COURT IS NOT PART OF THE PROJECT KUMAR PURAM AND HENCE, THE CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS CONSTRUCTED COMMERCIAL AREA IN THE PROJECT KUMAR PURAM. 3 THE ASSESSEE HAD INCURRED EXPENDITURE ON FOLLOWING ITEMS IN F.Y. 1998 - 99 WHICH INDICATES THAT THE ASSESSEE HAD STARTED CONSTRUCTION OF THE PROJECT BEFORE 01.10.1998 A. IRON SHEETS RS.18,173/- B. SECURITY CHARGES RS.757/- C. LABOUR CHARGES RS.1,960/- D. LABOUR CONTRACTORS RS.1,38,500/- A. THE ASSESSEE SUBMIT TED THAT THERE IS NO DISPUTE THAT THE BUILDING PLAN IN RESPECT OF PLOT NO. 6 WAS OBTAINED ON 24.04.1998 B. HOWEVER, THE ASSESSEE DID NOT START ANY CONSTRUCTION ON THE SAID PLOT IN F.Y. 1998-99. C. THE CONSTRUCTION WAS STARTED ON 18.04.1999 AND THIS FACT HAS BEEN INTIMATED BY THE ASSESSEE TO THE PUNE MUNICIPAL CORPORATION ON 05.05.1999 (PAGE 300). IT WAS ALSO SUBMITTED THAT AS PER RULE 7.2 OF THE D.C. RULES OF PMC, THE ASSESSEE HAS TO INTIMATE THE CORPORATION ABOUT THE START OF THE PROJECT. HENCE, THE INTIMATION OF START OF DEVELOPMENT OF THE PROJECT WAS GIVEN BY THE ASSESSEE IN 21 APRIL, 1999 WHICH CLEARLY INDICATES THAT THE CONSTRUCTION WAS NOT COMMENCED BEFORE 01.10.1998. D. EVEN THOUGH, THE BUILDING PLAN WAS APPROVED PRIOR TO 01.10.1998, WHAT IS MATERIAL IS START OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AFTER 01.10.1998 AND THE ASSESSEE SUBMITTED THAT THE CONSTRUCTION HAD COMMENCED ONLY AFTER APRIL 1999. E. THE EXPENDITURE INCURRED BY THE ASSESSEE AS POINTED OUT BY THE CIT(A) IS ON PETTY ITEMS LIKE PURCHASE OF IRON SHEETS, SECURITY CHARGES, LABOUR PAYMENTS WHICH ARE INCURRED FOR PUTTING UP THE FENCING OR SECURITY CABINS, ETC. ETC. AND THEY ARE NOT INCURRED FOR DEVELOPMENT AND CONSTRUCTION OF THE PROJECT. F. IF ACTUAL DEVELOPMENT HAD STARTED AS CONTENDED BY THE CIT(A), SUCH PETTY EXPENDITURE WOULD NOT HAVE BEEN INCURRED BY THE ASSESSEE. AS AGAINST THIS, THE ASSESSEE HAS INCURRED EXPENDITURE ABOUT RS. 90 LACS IN F.Y. 1999-2000 (PAGE 126) WHICH CLEARLY INDICATES THAT THE ASSESSEE HAD STARTED THE DEVELOPMENT OF THE HOUSING PROJECT AFTER APRIL 1999. G. THE ASSESSEE ALSO CLARIFIED THAT THE BOOKING OF THE FLATS WAS STARTED IN F.Y. 1999- 2000. H. FOR THIS PURPOSE, THE ASSESSEE PLACES RELIANCE OF ITAT, PUNE DECISION IN THE 22 CASE OF NIRMITI CONSTRUCTION [95 TTJ 1117]. 4 THE CONTENTION OF THE ASSESSEE THAT THE EXPENDITURE OF RS. 23 LACS WAS INCURRED ON THE PROJECT BUSINESS COURT IS FACTUALLY INCORRECT. THE LEARNED CIT(A) HAS FURTHER STATED THAT AS PER BOOKS OF ACCOUNTS, NO WIP WAS SHOWN IN RESPECT OF PROJECT BUSINESS COURT UPTO 31.03.2000 AND THEREFORE, THE CONTENTION THAT RS.23 LACS WAS INCURRED ON BUSINESS COURT IS NOT CORRECT. A. THE ASSESSEE SUBMITS THAT THE PROJECT BUSINESS COURT WAS STARTED BY SHRI SUPNEKAR. IN FACT, IN THE AGREEMENT FOR PURCHASE OF THE LAND, IT IS CLEARLY MENTIONED THAT THE BUILDING IS PARTLY CONSTRUCTED. B. THE AMOUNT OF RS.23 LACS INCURRED ON CONSTRUCTION IS SHOWN BY SHRI SUPNEKAR IN HIS BALANCE SHEET. HENCE, IT IS TO BE APPRECIATED THAT THE EXPENDITURE WAS INCURRED BY SHRI SUPNEKAR AND THEREFORE, THE ASSESSEE DID NOT RECORD THE SAME IN ITS BOOKS. FURTHER, THE ASSESSEE DEMOLISHED THE CONSTRUCTION CARRIED OUT SHRI SUPNEKAR AND NEW CONSTRUCTION WAS STARTED AFTER 01.04.2000 AND THEREFORE, NO WIP WAS SHOWN IN THE BOOKS FOR BUSINESS COURT UPTO 31.03.2000. 6. FOR THE BUSINESS COURT, THE ARCHITECT WAS M/S. P UNDLIK & PUNDLIK WHILE FOR KUMAR PURAM, THE ARCHITECT WAS M/ S. BUTALA NIVSARKAR, AS EVIDENT FROM ENTRIES ON PAGE 300. IN THIS BACKGROUND, IT WAS SUBMITTED THAT THE LETTER OF THE ARCHITECT, M/S.PUNDLIK & PUNDLIK DATED 18.03.1998, REFERRED BY THE ASSESSING OFFICER IN HIS REPORT AS MENTIONED AT PAG E 34 OF THE CIT(A), DOES NOT PERTAIN TO KUMAR PURAM PROJECT BUT IT PERTAINS TO THE BUSINESS COURT. IN THIS BACKGROUND, IT WAS NOT JUSTIFIED ON THE PART OF THE CIT(A) TO HOLD THAT THE PROJECT HAS COMMENCED PRIOR TO 01.10.1998 BY RELYING ON THE CERTIFICATE FROM M/ S. PUNDLIK & PUNDLIK. IT WAS FURTHER POINTED OUT FROM PAGE NO.3 7 WHEREIN THE CIT(A) HAS OBSERVED THAT THE COMMENCEMENT CERTIFICA TE WAS ISSUED ON 10.03.2000 AND ACCORDING TO THE ADDL. CIT, IT IS REVISED CERTIFICATE. THE STAND OF THE ASSESSEE HAS BEEN THA T THIS IS A REVISED COMMENCEMENT CERTIFICATE AND THE PROJECT KUMAR PURA M HAS A 23 SEPARATE IDENTITY. ATTENTION WAS DRAWN TO PAGE NO. 40 WHEREIN THE CIT(A) HAS OBSERVED THAT AS THE PLAN SANCTIONED IS ONE, THE PROJECT ON THE ENTIRE LAND CONSISTING OF VARIOUS PLOTS IS ONE. IN THIS BACKGROUND, THE STAND OF THE ASSESSEE IS THAT IT IS FACTUALLY A ND LEGALLY NOT CORRECT. FIRST OF ALL THE ENTIRE LAND IS ALREADY DIVIDED INTO VARIOUS PLOTS WHICH WERE PURCHASED BY VARIOUS PARTIES AND S ECONDLY, IN VIEW OF THE CASE LAWS, IT IS GROSSLY INCORRECT TO CONSID ER ALL THE CONSTRUCTION ON THE TOTAL LAND AS ONE PROJECT. THE ASSESSEE PLA CED RELIANCE ON THE FOLLOWING CASE LAWS - I) ITAT, PUNE BENCH, IN THE CASE OF M/S. RAHUL CONSTRUCTION CO. V. ITO IN ITA NOS. 1250/PN/09 & 707/PN/10. II) ITAT, PUNE BENCH IN THE CASE OF ADITYA DEVELOPERS [ITA NO. 791 & 792/PN/08] III) BOMBAY H.C. VANDANA PROPERTIES. IV) MUDHIT MADANLAL GUPTA V. ACIT 51 DTR 217 (MUM)(TRIB) V) BRIGADE ENTERPRISES (P) LTD. 119 TTJ 269 (BANG.) 7. IN VIEW OF THE ABOVE, ASSESSEE SUBMITTED THAT TH E DEDUCTION U/S 80IB(10) MAY BE ALLOWED. ON THE OTHER HAND, LD . DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT PLOT NO.411 AT MUKUND NAGAR, PUNE, WAS SINGLE PLOT AND VARIOUS PROJECTS CONSTRUCTED ON THE SUB-PLOTS CONSTITUTED ONE PROJECT. THE BUILDING BUSINESS CO URT CONSTRUCTED ON SUB-PLOT NO.5 IS A COMMERCIAL BUILDING AND HENCE, A SSESSEE HAD CONSTRUCTED COMMERCIAL AREA IN EXCESS OF 2000 SQ.FT . OR 5% OF THE BUILT UP AREA WHICHEVER IS LESS. THE ASSESSEE HAS INCURR ED EXP ON IRON AND STEEL, SECURITY CHARGES, LABOUR CHARGES AND LABOUR CONTRACTOR CHARGES AS INDICATED ABOVE. THUS, STARTED CONSTRUCTED OF T HE PROJECT BEFORE 01.10.1998, ACCORDINGLY ASSESSEE IS NOT ELIGIBLE FO R CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF PROJECT OF PL OT NO.411 AT MUKUND NAGAR, PUNE. 24 8. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AD MAT ERIAL ON RECORD, WE FIND THAT ISSUE BEFORE US IS WITH REGARD TO DEDU CTION U/S.80IB(10) IN RESPECT OF THE PROFITS DERIVED FROM ITS KUMAR PURAM PROJECT SITUATED ON PORTION OF PLOT NO.411 AT MUKUND NAGAR, PUNE. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS ALLOWED DEDUCTION U/S.8 0IB(10) IN RESPECT OF SAID KUMAR PURAM PROJECT. HOWEVER, LATER ON IN APPELLATE PROCEEDINGS, THE CIT(A) DISALLOWED THE CLAIM AND EN HANCED THE INCOME OF THE ASSESSEE ON VARIOUS ACCOUNTS INCLUDING FOR D ISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB(10) WHICH IS SUBJECT MATTER B EFORE US. THE REASONS FOR ENHANCING THE INCOME INCLUDING ON ACCOU NT OF DISALLOWANCE OF THE CLAIM U/S.80IB(10) WITH RESPECT TO KUMAR PURAM PROJECT. THE CIT(A) HAS GIVEN REASONING IN PARA 3 WHICH HAS BEEN SUPPORTED BY THE LD. DEPARTMENTAL REPRESENTATIVE BE FORE US. THE LD. AUTHORISED REPRESENTATIVE RAISED VARIOUS CONTENTION S BEFORE US IN WHICH FACTUAL AND LEGAL CONTENTIONS WERE RAISED WHI CH ARE SUBMERRISED IN PRECEDING PARA. THE STAND OF THE REVENUE HAS BEE N THAT PLOT NO.411 IS ONE SINGLE PLOT AND ITS VARIOUS SUB-PLOTS CONSTI TUTED ONE PROJECT. IN THIS REGARD, STAND OF THE ASSESSEE HAS BEEN THAT SU B-PLOTS 1 TO 6 OF THE FINAL PLOT NO.411 ARE DIFFERENT AD INDEPENDENT PLOT S. THE LAYOUT IS COMMON FOR ALL THE SUB-PLOTS WHICH DOES NOT MEAN TH AT ALL PLOTS CONSTITUTE ONE PROJECT. THE ASSESSEE SUBMITS THAT THESE SUB-PLOTS ARE INDEPENDENT PLOTS AND EACH PROJECT THEREON CONSTITU TED SEPARATE PROJECTS. HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES IN IT APPEAL NO.4361 OF 2010, VIDE PARA 20 TO 29 HAS OBSERVED AS UNDER: 20. THE QUESTION, THEN, TO BE CONSIDERED IS, WHETH ER CONSTRUCTION OF 'E' BUILDING IS AN INDEPENDENT HOUS ING PROJECT OR EXTENSION OF THE HOUSING PROJECT ALREADY EXISTING O N THE PLOT IN QUESTION. IT IS THE CONTENTION OF THE REVENUE THAT SINCE THE APPROVAL FOR CONSTRUCTION OF 'E' BUILDING WAS GRANT ED BY THE LOCAL AUTHORITY SUBJECT TO THE CONDITIONS SET OUT IN THE FIRST APPROVAL GRANTED ON 12 TH MAY 1993 FOR CONSTRUCTION OF A AND B BUILDING, CONSTRUCTION OF 'E' BUILDING MUST BE CONSIDERED TO BE THE EXTENSION OF THE EARLIER HOUSING PROJECT FOR WHICH APPROVAL WAS GRANTED PRIOR TO 1 ST OCTOBER 1998 AND, THEREFORE, THE BENEFIT OF SECTION 80IB(10) CANNOT BE GRANTED. THERE IS NO MER IT IN THE ABOVE ARGUMENT, BECAUSE, WHEN THE PLANS FOR A, B, C AND D BUILDINGS WERE APPROVED DURING THE PERIOD FROM 1993 TO 1996, CONSTRUCTION OF 'E' BUILDING WAS NOT EVEN CONTEMPLA TED ON THE 25 PLOT IN QUESTION. IT IS ONLY IN THE YEAR 2001 WHEN THE STATUS OF THE LAND WAS CONVERTED FROM SURPLUS VACANT LAND INTO WI THIN THE CEILING LIMIT LAND BY THE STATE GOVERNMENT, AN ADDI TIONAL BUILDING COULD BE CONSTRUCTED ON THE PLOT IN QUESTION AND AC CORDINGLY BUILDING PLAN FOR CONSTRUCTION OF 'E' BUILDING WAS SUBMITTED AND THE SAME WAS APPROVED BY THE LOCAL AUTHORITY ON 11 TH OCTOBER 2002. 21. THE FACT THAT THE LOCAL AUTHORITY, NAMELY THE M UNICIPAL CORPORATION APPROVED THE BUILDING PLAN FOR 'E' BUIL DING ON THE CONDITION THAT ALL THE OBJECTIONS RAISED IN THE INT IMATION OF DISAPPROVAL DATED 12 TH MAY 1993 RELATING TO THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAND SHALL BE APPLICABL E AND SHOULD BE COMPLIED WITH, CANNOT BE A GROUND TO HOLD THAT 'E' BUILDING IS EXTENSION OF THE EARLIER HOUSING PROJECT BECAUSE TH E EARLIER HOUSING PROJECT WAS COMPLETED PRIOR TO 1 ST OCTOBER 1998 AND THE HOUSING PROJECT FOR CONSTRUCTION OF 'E' BUILDING WA S APPROVED FOR THE FIRST TIME ON 11 TH OCTOBER 2002. NOWHERE IN THE INTIMATION FOR DISAPPROVAL GRANTED FOR CONSTRUCTION OF 'E' BUILDIN G ON 11 TH OCTOBER 2002, IT IS STATED THAT BUILDING 'E' CONSTI TUTES EXTENSION OF THE EARLIER HOUSING PROJECT WHICH IS ALREADY COM PLETED. THE FACT THAT THE OBJECTIONS RAISED WHILE APPROVING THE EARL IER HOUSING PROJECT ON THE SAME PLOT OF LAND WERE MADE APPLICAB LE TO THE HOUSING PROJECT IN QUESTION, IT CANNOT BE INFERRED THAT THE HOUSING PROJECT IN QUESTION CONSTITUTES EXTENSION O F THE EARLIER HOUSING PROJECT. THEREFORE, IN THE FACTS OF THE PRE SENT CASE, WHERE, NEITHER THE ASSESSEE HAD SOUGHT APPROVAL OF THE BUILDING PLAN FOR CONSTRUCTION OF 'E' BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJECT, NOR THE MUNICIPAL CORPORATION HAS GRANTED APPROVAL FOR THE HOUSING PROJECT CONSISTING OF 'E' BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJECT, IT IS NOT OPEN TO THE INCOME-TAX AUTHORITIES TO CONTEND THAT APPROVAL TO THE HOUSING PROJECT GRANTED BY THE MUNICIPAL CORPORATION ON 11 TH OCTOBER 2002 CONSTITUTES EXTENSION OF THE HOUSING PROJECT W HICH WAS APPROVED IN THE YEAR 1993. 22. RELIANCE PLACED BY THE REVENUE ON THE EXPLANATI ON TO SECTION 80IB(10)(A) WHICH WAS INTRODUCED WITH EFFEC T FROM 1 ST APRIL 2005 IS ALSO MISPLACED. WHAT THE SAID EXPLANA TION CONTEMPLATES IS THAT WHERE THE APPROVAL IN RESPECT OF A HOUSING PROJECT IS GRANTED MORE THAN ONCE, THEN, THAT HOUSI NG PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE O N WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED BY THE LOCAL AUTHORITY. FOR EXAMPLE, IN RESPECT OF A HOUSI NG PROJECT, THE ASSESSEE MAY SEEK AMENDMENT OF THE BUILDING PLAN AT SEVERAL STAGES OF THE CONSTRUCTION AND THE SAME MAY BE APPR OVED. IN SUCH A CASE, THE EXPLANATION PROVIDES THAT FOR THE PURPOSES OF SECTION 80IB(10) THE HOUSING PROJECT SHALL BE DEEME D TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE FIRST APPROV AL WAS GRANTED BY THE LOCAL AUTHORITY. THUS, THE EXPLANATI ON TO SECTION 80IB(10)(A) REFERS TO THE APPROVAL GRANTED TO THE S AME HOUSING PROJECT MORE THAN ONCE AND THE SAID EXPLANATION WOU LD NOT APPLY WHERE THE APPROVAL IS GRANTED TO DIFFERENT HOUSING PROJECTS. IN THE 26 PRESENT CASE, AS NOTED EARLIER, CONSTRUCTION OF 'E' BUILDING CONSTITUTES AN INDEPENDENT HOUSING PROJECT AND, THE REFORE, THE DATE ON WHICH THE EARLIER HOUSING PROJECT HAD COMME NCED CONSTRUCTION COULD NOT BE APPLIED TO THE HOUSING PR OJECT CONSISTING OF 'E' BUILDING MERELY BECAUSE THE CONDI TIONS SET OUT WHILE GRANTING APPROVAL TO THE EARLIER HOUSING PROJ ECT HAVE ALSO BEEN MADE APPLICABLE TO THE HOUSING PROJECT IN QUES TION. 23. THE NEXT ARGUMENT OF THE REVENUE IS THAT TO AVA IL THE DEDUCTION UNDER SECTION 80IB(10), THE HOUSING PROJE CT MUST BE ON THE SIZE OF A VACANT PLOT OF LAND WHICH HAS MINI MUM AREA OF ONE ACRE. IN THE PRESENT CASE, THERE ARE FIVE BUILD INGS (A, B, C, D AND E) ON A PLOT AD-MEASURING 2.36 ACRES, HENCE, TH E PROPORTIONATE AREA FOR EACH BUILDING WOULD BE LESS THAN ONE ACRE AND, THEREFORE, THE BENEFIT OF SECTION 80IB(10) COU LD NOT BE GRANTED IN RESPECT OF THE HOUSING PROJECT CONSISTIN G 'E' BUILDING. 24. AS RIGHTLY CONTENDED BY THE COUNSEL FOR THE ASS ESSEE AND THE INTERVENORS, SECTION 80IB(10)(B) SPECIFIES THE SIZE OF THE PLOT OF LAND BUT NOT THE SIZE OF THE HOUSING PROJECT. THE S IZE OF THE PLOT OF LAND, AS PER SECTION 80IB(10) MUST HAVE MINIMUM ARE A OF ONE ACRE. THE SECTION DOES NOT LAY DOWN THAT THE PLOT H AVING MINIMUM AREA OF ONE ACRE MUST BE A VACANT PLOT. 25. THE QUESTION, THEREFORE, TO BE CONSIDERED IS, W HETHER THE REVENUE IS JUSTIFIED IN READING THE EXPRESSION 'PLO T OF LAND' IN SECTION 80IB(10)(B) AS VACANT PLOT OF LAND' ? 26. THE OBJECT OF SECTION 80IB(10) IN GRANTING DEDU CTION EQUAL TO ONE HUNDRED PER CENT OF THE PROFITS OF AN UNDERT AKING ARISING FROM DEVELOPING AND CONSTRUCTING A HOUSING PROJECT IS WITH A VIEW TO BOOST THE STOCK OF HOUSES FOR LOWER AND MIDDLE I NCOME GROUPS SUBJECT TO FULFILLING THE SPECIFIED CONDITIONS. THE FACT THAT THE MAXIMUM SIZE OF THE RESIDENTIAL UNIT IN A HOUSING P ROJECT SITUATED WITHIN THE CITY OF MUMBAI AND DELHI IS RES TRICTED TO 1000 SQUARE FEET CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE IS TO MAKE AVAILABLE LARGE NUMBER OF MEDIUM SIZE RESIDENT IAL UNITS FOR THE BENEFIT OF THE COMMON MAN. HOWEVER, IN THE ABSE NCE OF DEFINING THE EXPRESSION 'HOUSING PROJECT' AND IN TH E ABSENCE OF SPECIFYING THE SIZE OR THE NUMBER OF HOUSING PROJEC TS REQUIRED TO BE CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM ARE A OF ONE ACRE, EVEN ONE HOUSING PROJECT CONTAINING MULTIPLE RESIDENTIAL UNITS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONS TRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE WOULD BE ELIGIBLE FOR SECTION 80IB(10) DEDUCTION. IF THE CONSTRUCTION OF SECTION 80IB(10) PUT FORTH BY THE REVENUE IS ACCEPTED, IT W OULD MEAN THAT IF ON A VACANT PLOT OF LAND, ONE HOUSING PROJE CT FULFILLING ALL CONDITIONS IS UNDERTAKEN, THEN DEDUCTION WOULD BE A VAILABLE TO THAT HOUSING PROJECT AND IF THEREAFTER SEVERAL OTHE R HOUSING PROJECTS ARE UNDERTAKEN ON THE VERY SAME PLOT OF LA ND, THE DEDUCTION WOULD NOT BE AVAILABLE TO THOSE HOUSING P ROJECTS AS THE PLOT CEASES TO BE A VACANT PLOT AFTER THE CONSTRUCT ION OF THE FIRST 27 HOUSING PROJECT. SUCH A CONSTRUCTION IF ACCEPTED WO ULD DEFEAT THE OBJECT WITH WHICH SECTION 80IB(10) WAS ENACTED. 27. MOREOVER, PLAIN READING OF SECTION 80IB(10) DOE S NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIM UM AREA OF ONE ACRE MUST BE VACANT. THE SAID SECTION ALLOWS DE DUCTION TO A HOUSING PROJECT (SUBJECT TO FULFILLING ALL OTHER CO NDITIONS) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSIN G PROJECTS ARE EXISTING ON THE SAID PLOT OF LAND OR NOT. IN THESE CIRCUMSTANCES, CONSTRUING THE PROVISIONS OF SECTION 80IB(10) BY AD DING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED AND SUCH A CONSTR UCTION WHICH DEFEATS THE OBJECT WITH WHICH THE SECTION WAS ENACT ED MUST BE REJECTED. 28. APART FROM THE ABOVE, THE CENTRAL BOARD OF DIRE CT TAXES (CBDT) BY ITS LETTER DATED 4 TH MAY 2001 ADDRESSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY HAS STATED THUS : ''THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETT ER NO,MCHI:RSA:M:388/19799/3 DATED 1 ST JANUARY 2001 AND TO STATE THAT THE ADDITIONAL HOUSING PROJECT ON EXI STING HOUSING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTION 10(23G) AND 80IB (10) PROVIDED IT IS TAKEN UP BY A SEPARATE UNDERTAKING, HAVING SEPARATE BOOKS OF ACCOUNTS, SO AS TO ENSURE THAT CORRECT PROFITS CAN BE ASCERTAINED FOR THE PURPOSE OF SECTION 80IB AND ALS O TO IDENTIFY RECEIPTS AND REPAYMENTS OF LONG TERM FINAN CES UNDER THE PROVISIONS OF SECTION 10(23G), SEPARATELY FINAN CING ARRANGEMENTS AND ALSO, IF IT SEPARATELY FULFILLS AL L OTHER STATUTORY CONDITIONS LISTED IN SECTIONS 10(23G) AND 80(B(10). WITH REGARD TO YOUR QUERY REGARDING THE DEFINITION OF HOUSING PROJECT, IT IS CLARIFIED THAT ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPOSE OF SECTION 10(2 3G) AND 80IB (10)' 29. FROM THE AFORESAID LETTER OF CBDT, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB(10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT O F LAND HAVING MINIMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSI NG PROJECT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM ARE A OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FO R SECTION 80IB(10) DEDUCTION. EVEN OTHERWISE, THE ARGUMENT OF THE REVENUE DOES NOT STAND TO REASON BECAUSE, IN THE CITY OF MU MBAI WHERE THERE IS ACUTE SPACE CRUNCH, IT IS DIFFICULT TO FIN D A VACANT PLOT HAVING MINIMUM AREA OF ONE ACRE AND EVEN IF FEW SUC H PLOTS ARE EXISTING IT CANNOT BE SAID THAT SECTION 80IB (10) D EDUCTION WAS INTENDED TO GIVE BENEFIT ONLY TO THE UNDERTAKINGS W HO CONSTRUCT HOUSING PROJECTS ON THOSE FEW PLOTS. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THE RE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG AS THOSE HOU SING PROJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FU LFILL THE 28 CONDITIONS SET OUT UNDER SECTION 80IB (10), THE DED UCTION THEREUNDER CANNOT BE DENIED TO ALL THOSE HOUSING PR OJECTS. SECTION 80IB(10) WHILE SPECIFYING THE SIZE OF THE P LOT OF LAND, DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJE CTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOST AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS BECOMES ENTITLED TO SECTION 80IB(10) DEDUCTION ON C ONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVING AREA OF ONE A CRE, IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL IN REJE CTING THE CONTENTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FAULTED. 9. IN CASE BEFORE US, WHETHER SUB-PLOT NO.6 IS A PA RT OF PLOT NO.411 AT MUKUND NAGAR, PUNE, THOUGH THE BUILDING PLAN IN RESPECT OF SAID PLOT AS A WHOLE WAS OBTAINED ON 24.04.1998. HOWEV ER, ASSESSEE DID NOT START ANY CONSTRUCTION ON THE SAID PLOT IN THE YEAR RELEVANT TO THE F.Y. 1998-99. CONSTRUCTION WAS STARTED ONLY ON 18 .04.1999 AS INDICATED BY THE ASSESSEE TO THE PUNE MUNICIPAL COR PORATION ON 05.05.1999 EVIDENT FROM THE PAGE 300. AS PER THE R ULE 7.2 OF DC RULES OF PMC, ASSESSEE HAS TO INTIMATE THE CORPORAT ION ABOUT STARTING OF THE PROJECT. HENCE, THE INTIMATION OF STARTING O F DEVELOPMENT OF PROJECT WAS GIVEN BY ASSESSEE IN APRIL, 1998 WHICH MAKES IT CLEAR THAT CONSTRUCTION WAS NOT COMMENCED BEFORE 1.10.1998 EVE N THOUGH PLAN WAS APPROVED PRIOR TO 01.10.1998. THE ESSENCE OF S TARTING OF DEVELOPMENT AND CONSTRUCTION IS THAT SAME STARTED O N 18.04.1999. THE CONSTRUCTION STARTED ON 18.04.1999 AND SAME WAS INTIMATED BY THE ASSESSEE TO CONCERNED MUNICIPAL CORPORATION ON 05.05.1999. 10. WE ALSO FIND THAT THE ITAT PUNE BENCH IN THE CA SE OF DCIT VS. M/S.ADITYA DEVELOPERS ITA.NO.791 & 792/PN/2008, HAS HELD AS UNDER: 6. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, M ATERIAL AVAILABLE ON THE RECORD AND THE DECISIONS RELIED UP ON BY THE PARTIES. THE FACTS IN DETAILS SUBMITTED BY THE ASS ESSEE BEFORE THE A.O VIDE LETTER DATED 16.10.2006 HAVE ALSO BEEN GONE THROUGH. FOR A READY REFERENCE, PARA NOS. 1 TO 8 O F THE LETTER 29 DATED 16.10.2006 SUBMITTED BY THE ASSESSEE BEFORE THE A.O ARE BEING REPRODUCED HEREUNDER : 1. M/S ADITYA DEVELOPERS PURCHASED A PLOT OF LAND BEARING SURVEY NO. 1/A(PART) OF KONDHWA KHURD, PUNE FROM RANADE AND THEIR RELATIVES. THEREAFTER M/S. A DITYA DEVELOPERS GOT THE CLEARANCE FROM URBAN AND LAND CE ILING DEPARTMENT VIDE ORDER DATED 17-8-1988. THEN WE GOT LAYOUT PLANS SANCTIONED FROM THE PMC VIDE ORDER DA TED 25-5-1990. AS PER THE TERMS OF THE ULC WE HAVE TO SHOW 25 S1.MTR COREHOUSE PLOTS AND BUILDING IN LAYOUT PL AN AND GET IT SANCTIONED FROM PMC. IF WE DONT IMPLEMENT THEIR ORDER AD SHOW THE VACANT LAND IN THE PLAN, THE ULC DEPARTMENT MIGHT HAVE INITIATED ACQUISITION PROCED URE. THE TOTAL LAND AREA WAS 28905 SQ.MTR. IT WAS NOT P OSSIBLE FOR US TO START CONSTRUCTION AND DEVELOPMENT OF EN TIRE LAND. SO WE STARTED DEVELOPMENT AND CONSTRUCTION OF FRONT AREA OF LAND. IN THE YEAR 1994, WE HAVE REQU ESTED GOVT. OF MAHARASHTRA TO ACCEPT THE CONSIDERATION I N LIEU OF CERTAIN CONDITIONS STIPULATED IN THEIR ORDER FOR D ELETING CONSTRUCTION OF COREHOUSE PLOTS & SMALL AREA FLATS . AFTER A LONG HEARINGS THEY ACCEPTED OUR REQUEST AND ON PAYM ENT MADE, ISSUED US ORDER ON 14-12-1994 BECAUSE OF WHIC H WE WERE ENTITLED TO CANCEL THE CERTAIN BUILDING AN D 112 COREHOUSESOF 25 SQ.M. PROPOSED FOR WEAKER SECTION. WE GOT OUR LAND REVERTED BACK FROM ULC DEPT. ON PAYMEN T OF CONSIDERATION TO GOVT. BY ORDER ON 14-12-1994. 2. WE HAVE COMPLETED THE DEVELOPMENT AND CONSTRUCTI ON OF THE BUILDINGS A,B,C,D,E,F,G,H & J ON PORTION OF LAND BEARING S.NO.1(PART), KONDHWA KHURD. 3. THEREAFTER THE PROVISION OF THE SECTION 80IB(10) CAME INTO FORCE. THE VACANT LAND AREA OF 8966 S1.MTR WAS AVAILABLE FOR THE NEW PROJECT WITH US. SO WE PLANN ED A NEW PROJECT AS PER THE NORMS OF PROVISIONS OF 80IB (10) ON VACANT LAND OF 8966 SQ.MTR AT S.NO.1(PART), KONDHWA , THE BUILDING PLANS WERE PREPARED IN SUCH A WAY THAT AR EA OF EACH UNIT WILL BE LESS THAN 1500 SQ.FT. WE GOT TH E BUILDING PLANS SANCTIONED ON 9-3-2001 AND 29-3-2001 AND WORK OF THE PROJECT STARTED ONLY AFTER THE BUILDING PLANS SANCTION IN MARCH 2001. IT IS VERY IMPORTANT TO NOTE THAT THE LAND OF 8966 SQ.MTR WAS VACANT AND ACCORDING TO RULES OF PMC (LOCAL AUTHORITY), ALL THE SANCTIONS PRIOR TO 9-3-2 001 & 29- 3-2001 GET CANCELLED AND LAPSED ON VACANT LAND OF 8 966 SQ.MTR. AT S.NO.1(PART)KONDHWA. 4. WE HAVE CONSTRUCTED THE BUILDINGS K,M,N,I,O & P ON VACANT LAND AT SURVEY NO. 1(A) (PART) KONDHWA KHURD , PUNE WHICH IS CARVED OUT SEPARATELY ON SITE. TDR U SED IS LESS THAN 40% OF AREA OF LAND OF 8966 SQ.MTR. WE G OT SANCTIONED NEW BUILDING PLANS AS PER NORMS OF 80IB( 10) 30 PROVISIONS IN MARCH 2001 & CONSTRUCTED ALL FLATS F OLLOWING ALL THESE NORMS. SINCE OUR NEW HOUSING PROJECT IS AS PER THE PLANS SANCTIONED IN MARCH 2001, IT IS NO WAY CONCERNED WITH EARLIER LAPSED SANCTIONS. WE HAVE N EVER STARTED ANY DEVELOPMENT OR CONSTRUCTION PRIOR TO MARCH 2001 ON THE REAR AREA OF LAND OF 8966 SQ.MTR ON WHI CH BUILDINGS K,M,N,I,O,P HAVE BEEN CONSTRUCTED. IN SU PPORT OF THIS WE ARE ENCLOSING HEREWITH PHOTOCOPY OF LETTER OF PMC DT. 5-10-2006. ENGLISH TRANSLATION OF THE SAME IS AS UNDER : PUNE MUNICIPAL CORPORATION CONSTRUCTION CONTROL DEPT. OUTWARD NO. BCO/5102 DATE: 5-10-2006 TO, M/S ADITYA DEVELOOERS, RESIDING AT SADASHIV PETH NO. 619,PUNE 30 SUB: REGARDING CONSTRUCTION ON S.NO. 1(PART),KONDHWA, PUNE REF: YOUR LETTER DT. 3-10-2006 ON THE ABOVE MENTIONED SUBJECT AND UNDER THE LETTER REFERRED ABOVE, IT IS BEING INFORMED THAT PERMISSIO N FOR CONSTRUCTION OF K BUILDING AT S.NO. 1(PART) KONDHWA KHURD, PUNE WAS GIVEN VIDE NO. 4975 DT. 9-3-01 AND CERTIFICATE OF PLINTH CHECKING WAS GIVEN UNDER NO. BCO/03/74 DT. 27-9-2001. ALSO PERMISSION FOR BUILDING MNIOP WAS GIVEN VIDE LETTE R NO. 4981 DT. 29-3-2001 AS PER THE AVAILABLE RECOR D THERE IS NO MENTION OF ANY BUILDING CONSTRUCTION O F WHATSOEVER NATURE WAS FOUND ON THE LAND OF ABOVE BUILDINGS BEFORE SANCTIONING PERMISSION FOR ABOVE CONSTRUCTION. SD/- SD ASST. ENGINEER BUILDING INSPECTOR PUNE MUNICIPAL CORPORATIO N _________________________________________________ 5. CERTIFICATES OF OUR ARCHITECT DATED 14-10-2006 CONFIRMING THIS FACT IS ALSO ENCLOSED FOR YOUR CONSIDERATION. 6. THE TDR WAS PURCHASED FROM THE OPEN MARKET AND UTILIZED AS WELL AS DEBITED TO PROFIT & LOSS ACCOUNT IN BOOKS OF ACCOUNT WAS NOT MORE THAN 40% OF 8966 SQ.MTR. WE HAVE UTILIZED TDR BY PURCHASING IT FROM OUTSIDE LAND OWNERS FROM THE OPEN MARKET AND THEN PREVAILING MARKET PRICE. 7. WE HAVE BROUGHT ALL THESE FACTS TO NOTICE OF ASSESSING OFFICER DURING THE SCRUTINY OF OUR ACCOUN TS 31 FOR A.Y. 2001-2002. IT IS CLEARLY EVIDENT IN THE ASSESSMENT ORDER OF A.Y. 2001-2002 THAT THE TWO PROJECTS ARE SEPARATE AND P/L ACCOUNT AS WELL AS WORKS IN PROGRESS ARE SEPARATELY SHOWN IN ASSESSMENT ORDER ALSO. 8. WE HAVE CONSTRUCTED ALL THE RESIDENTIAL UNITS EACH HAVING AREA OF LESS THAN 1500 SQ.FT. IN THE BUILDINGS K, M,N,I,O,P IN OUR NEW HOUSING PROJECT. IT IS NO WAY CONCERNED WITH THE RESIDENTIAL & COMMERCIAL UNIT OF EARLIER CONSTRUCTED BUILDING ON SEPARATE PORTION OF LAND AND SAME HAS BEEN REFLECTE D IN SEPARATE BOOKS OF ACCOUNTS AND WE HAVE ALREADY PAID TAXES ON IT. THE SUBMISSION OF THE LD. D.R. REMAINED THAT THE DE CISION OF PUNE BENCH IN THE CASE OF NIRMITI CONSTRUCTION VS. DCIT (SUPRA) FOLLOWED BY THE LD CIT(A), HAVING DIFFERENT FACTS IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. HAVING GON E THROUGH THAT DECISION, WE DO NOT AGREE WITH THE ABOVE CONTE NTION OF THE LD. D.R. THE DECISION FULLY COVERS THE CASE OF THE ASSESSEE ON THE ISSUE. IT APPEARS THAT THE WHOLE CONFUSION ON T HE ISSUE IN THE MIND OF THE A.O WAS DUE TO HIS UNDERSTANDING O F LAY OUT PLAN AND BUILDING PLAN ONE AND THE SAME THING, HENC E HE HAS COMMITTED ERROR IN TREATING THE DATE OF APPROVAL OF THE] LAY OUT PLAN BY THE MUNICIPAL CORPORATION AS THE DATE OF AP PROVAL OF THE BUILDING PLAN TO COMPUTE THE PERIOD OF COMPLETI ON OF THE BUILDING PLAN TO VERIFY THE ELIGIBILITY OF THE CLAI MED DEDUCTION U/S. 80IB (10) OF THE ACT. PUNE BENCH OF THE TRIB UNAL HAS OCCASION TO DISCUSS THE DISTINCTION BETWEEN THE LAY OUT PLAN AND BUILDING PLAN IN THE CASE OF NIRMITI CONSTRUCTI ON (SUPRA). IN THAT CASE BEFORE THE TRIBUNAL, THE LAY OUTS WERE FURNISHED TO THE MUNICIPAL CORPORATION FOR SANCTION ON 6 TH JUNE 1998 AND CONSTRUCTION WORK WAS COMMENCED AFTER BUILDING PERM ISSION WAS SANCTIONED BY THE MUNICIPAL CORPORATION ON 23 RD JULY 1999. DEPARTMENT TOOK THE STAND THAT THE DEVELOPME NT COMMENCED WITH THE DEVELOPMENT AGREEMENT AND ACQUIR ING IRRECOVERABLE POWER OF ATTORNEY AND MORE SO THAT LA Y OUTS WERE FURNISHED TO THE MUNICIPAL CORPORATION FOR PRELIMIN ARY SANCTION ON 6 TH JUNE 1998, THE ASSESSEES SUBMITTED THAT THE PRELIMINARY SANCTION WAS REQUIRED TO BE GIVEN WHICH CONSTITUTED NO OBJECTION FROM MUNICIPAL CORPORA TION FOR ALLOWING ASSESSEE TO HAVE THE CONSTRUCTION ON THE S AID PROPERTY. IT WAS CONTENDED THAT ON THE BASIS OF PRELIMINARY SANCTION, THE ASSESSEE MADE AN APPLICATION FOR CONV ERTING THE SAID LAND INTO NON- AGRICULTURAL LAND. THIS APPLI CATION WAS MADE ON 25 TH NOVEMBER 1998 AND THE REVENUE AUTHORITIES CONVERTED THE SAID AGRICULTURAL LAND INTO NON-AGRIC ULTURAL LAND ON 13 TH JUNE 1999. IT WAS ALSO CONTENDED BY THE ASSESSEE THAT THE BUILDING PLAN WAS SUBMITTED TO THE MUNICIPAL C ORPORATION AND THE SAID CORPORATION SANCTIONED THE BUILDING PL AN ON 23 RD JULY 1999. IN OTHER WORDS, THE MUNICIPAL CORPORATIO N GAVE THE PERMISSION OF CONSTRUCTION ON 23 RD JULY 1999. AFTER DISCUSSING 32 THE CASES OF THE PARTIES, THE TRIBUNAL HAS ACCEPTED THE ABOVE CONTENTIONS OF THE ASSESSEE THAT THE HOUSING PROJEC T HAS BEEN APPROVED BY THE LOCAL AUTHORITY ON 23 RD JULY 1999 I.E. AFTER 1 ST OCTOBER1998, HENCE THE ASSESSEE WAS ELIGIBLE FOR TH E CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT SINCE IT WAS FULFILLING ALL OTHER REQUIREMENTS OF THE PROVISIONS. 6.1. LIKEWISE, IN THE CASE OF VANDANA PROPERTIES VS. ACIT (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . IN THAT CASE, THE ASSESSEE HAD PLAN FOR 4 INDEPENDENT BUILDINGS A,B, C & D BUT, SO FAR AS E IS CONCERNED ONLY PLANNED WHEN THE STATUS OF THE SURPLUS LAND WAS CONVERTED AS WITHIN CEILING LIMIT AND TH E ASSESSEE COULD GET ADDITIONAL FSI FOR LAUNCHING WING E . WING E WAS PLANNED AND CONSTRUCTION WAS COMMENCED AFTER 1 ST OCTOBER 1998 AND BUILING/WING E WAS AN INDEPENDENT HOUSI NG PROJECT AS CONTEMPLATED U/S. 80 IB (10). THE TRIBU NAL HELD THAT THE CONCEPT OF HOUSING PROJECT DOES NOT MEAN T HAT SHOULD BE THE GROUP OF THE BUILDINGS AND ONLY THEN SAME IS CALLED A HOUSING PROJECT . IT WAS FURTHER HELD THAT BUILDING/WING E CANNOT BE PASSED WITH EARLIER BUILDINGS I.E. A, B,C & D WHICH WORK WAS COMMENCED IN THE YEAR 1993 WHEREAS PLAN F OR WING E WAS APPROVED FOR ONLY ONCE IN THE YEAR 2002. IT WAS HELD FURTHER THAT THE CONCLUSION DRAWN BY THE AUTHORITIE S BELOW THAT THE COMMENCEMENT OF WING E IS A CONTINUATIO N OF THE EXISTING PROJECT IS ERRONEOUS. 6.2. IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO (SUPRA) , THE MUMBAI BENCH HAS AGAIN EXPRESSED THE SAME VIEW AND HELD THAT THE COMMENCEMENT CERTIFICATES IN RESPECT OF THESE WINGS IN BLOCK N WERE SEPARATELY RECEIVED BY THE ASSESSEE AND ALL THE FLATS IN BLOCK N WERE OF LESS THAN 1 000 SQ.FT., HENCE IT IS NOT OPEN TO THE REVENUE TO INCLUDE BLOC K B, C AS PART OF BLOCK N JUST TO DENY RELIEF U/S. 80IB(10 ) OF THE ACT. THE BANGALORE BENCH OF THE TRIBUNAL HAS ALSO GOT O CCASION TO DISCUSS DISTINCTION BETWEEN THE SANCTION OF LAY OU T PLAN AND APPROVAL OF BUILDING PLANS BY THE LOCAL AUTHORITY F OR CONSIDERATION OF THE ELIGIBILITY OF U/S. 80 IB (10) DEDUCTION IN THE CASE OF DCIT VS. BRIGADE ENTERPRISES (P) LTD. ( SUPRA). IN THAT CASE BEFORE THE BANGALORE BENCH, THE ASSESSEE UNDERTOOK A DEVELOPMENT PROJECT IN AN AREA OF 22 ACRES 19 GUN TAS CONSISTING OF 5 RESIDENTIAL BLOCK RAW HOUSES, OAK TREE PLACE, A CLUB, AND COMMUNITY CENTRE, A SCHOOL, A PARK AND CL AIMED DEDUCTION U/S. 80 IB (10) IN RESPECT OF 2 RESIDENT IAL UNITS WHICH IF DEDUCTED SEPARATELY WERE ELIGIBLE FOR THE RELIEF. THE A.O TREATED THE ENTIRE PROJECT AS A SINGLE UNIT AND DENIED RELIEF U/S. 80 IB (10) IN ENTIRETY. THE TRIBUNAL JUSTIFIED THE ACTION OF THE LD CIT(A) IN ALLOWING RELIEF U/S. 80 IB(10) TRE ATING THE SAID 2 UNITS AS INDEPENDENT UNITS. THE TRIBUNAL OBSERVE D THAT THE GROUP HOUSING APPROVAL WAS APPROVAL OF A MASTER PL AN AS A CONCEPT AND IF A PARTICULAR UNIT SATISFIES THE COND ITION OF SECTION 80 IB (10), THE ASSESSEE IS ENTITLED FOR DE DUCTION. THE 33 TRIBUNAL HELD THAT PLAN FOR DEVELOPMENT WAS ONLY A WORK ORDER AND NOT FINAL PLANS SANCTIONED BY LOCAL AUTHORITY. FOR ANY PROJECT, THERE COULD NOT HAVE BEEN A PLAN WITHOUT SUBMISSION OF THE DETAILED BUILDING PLANS BY THE ARCHITECT A ND ON THE REQUISITE DETAILS REQUIRED TO BE SUBMITTED FOR APP ROVAL OF THE BUILDING PLANS BY THE LOCAL AUTHORITIES. IN OTHER WORDS, THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE TH AT THE DEVELOPMENT PLAN IS ONLY CONCEPTUAL AND THE DETAILE D CONSTRUCTION PLANS ARE NOT SUBMITTED NOR APPROVED WITHOUT WHICH NO CONSTRUCTION CAN EVEN COMMENCE, AND THIS I S DONE ONLY SUBSEQUENTLY WHERE THE ASSESSEE SUBMITS THE CONSTRUCTION PLANS WHICH ARE APPROVED BY THE AUTHO RITY. THIS IS DONE FOR EACH PROJECT. THE PUNE BENCH IN THE CA SES OF APOORVA PROPERTIES AND ESTATE PVT. LTD. VS. DCIT, I TA NO. 113/PN/2007, A.Y. 2003-04, ORDER DATED 21ST AUGUST 2009 AND MUMBAI BENCH IN THE CASE OF MUDHIT MADANLAL GUP TA VS/ ACIT (SUPRA), 51 DTR (MUM ) TRIB 217 HAVE EXPRESSED THE SIMILAR VIEW. 7. THERE IS NO REASON TO DISPUTE ON FACTS IN THE PR ESENT CASE THAT INITIALLY THE PROPOSED BUILDINGS ( EXCEPT WING S I, M, N, O, P AND K IN THE PRESENT FORM) LAY OUT PLAN WAS APPRO VED BY THE PMC ON 25.5.1990 ( PAGE 94 OF THE PAPER BOOK). THE PROPOSED BUILDING LAY OUT PLAN WAS REVISED ON 31.3.2001 (PAG E NO. 5 OF THE PAPER BOOK). THE TOTAL AREA OF LAND WAS 28905 S Q. MTRS. THE ASSESSEE HAD FIRSTLY COMPLETED DEVELOPMENT AND CONSTRUCTION OF BUILDINGS A,B, C,D,E,F,G,H & J IN T HE AREA OF 17,392 SQ. MTRS OF PROJECT KKN, LEAVING THE LAND A REA OF 8966 SQ.MTRS VACANT. IN THAT VACANT LAND, THE ASSESSEE STARTED THE CONSTRUCTION OF BUILDINGS IN WINGS K, M, N, I, O, P, K1 AND K2 IN THE PROJECT KKT. IN THIS PROJECT, 188 RESIDEN TIAL UNITS WERE THERE EACH HAVING BUILT UP AREA UPTO 1500 SQ. FT. THE BUILDING PLANS OF THE PROJECT KKT WERE APPROVED ON 9.3.2001 (WINGS K1 AND K2) AND 29.3.2001(WINGS I, M,N,O, P) WHICH WERE COMPLETED ON 10.10.2002 AND 10.2.2003 RESPECTI VELY. COPY OF BUILDING PLAN APPROVED ON 9.3.2001 HAS BEE N MADE AVAILABLE AT PAGE NO. 104 OF THE PAPER BOOK, WHEREA S THE BUILDING PLAN APPROVED ON 29.3.2001 HAS BEEN MADE A VAILABLE AT PAGE NO. 103 OF THE PAPER BOOK. THERE IS NO DI SPUTE ON THE DATES OF COMPLETION OF THE BUILDINGS IN THE HOUSING PROJECT. THE CBDT IN ITS LETTER DATED 4TH MAY 2001 (PAGE NO . 110 OF THE PAPER BOOK) HAS ALSO MADE IT CLEAR THAT THE DEF INITION OF HOUSING PROJECT IS ANY PROJECT WHICH HAS BEEN APP ROVED BY THE LOCAL AUTHORITY AS A HOUSING PROJECT SHOULD B E CONSIDERED ADEQUATE FOR PURPOSE OF SEC. 10(23 G) AND 80 IB (10 ). WE ALSO FIND FROM THE EXPLANATION (I) TO S. 801B(10) THAT THE HOUSING PROJECT AND BUILDING PLAN OF SUCH HOUSING PROJECT ARE TWO DIFFERENT CONCEPT. FOR A READY REFERENCE EXPLANATI ON (I) TO THE SECTION IS BEING REPRODUCED HEREUNDER: EXPLANATION- FOR THE PURPOSES OF THIS CLAUSE, - 34 (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; FROM THE VERY READING OF THE EXPLANATION (I) MAKES IT CLEAR THAT THE DATE ON WHICH BUILDING PLAN OF SUCH HOUSING PRO JECT IS APPROVED SHALL BE DEEMED THE DATE OF APPROVAL OF TH E HOUSING PROJECT. WE THUS FIND THAT THE ASSESSEE IS VERY MUC H ELIGIBLE FOR THE CLAIMED DEDUCTION U/S. 80 IB (10) ON THE PR OJECT KKT IN VIEW OF THE ABOVE CITED DECISIONS INCLUDING DECI SION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIRMITI CONSTR UCTION VS. DCIT (SUPRA), FOLLOWING WHICH, IN OUR VIEW, THE LD CIT(A) HAS RIGHTLY ALLOWED THE CLAIMED DEDUCTION. THE SAME I S UPHELD. THE ISSUE RAISED ARE THUS DECIDED IN FAVOUR OF THE ASSESSEE. 8. SO FAR AS DECISION OF CHENNAI BENCH OF THE TRIBU NAL IN THE CASE OF ACIT VS. VISWAS PROMOTRS (P) LTD. (SUPR A) RELIED UPON BY THE LD. D.R. IS CONCERNED, WE FIND THAT THE FACTS THEREIN ARE DISTINGUISHABLE AS IN THAT CASE, ASSES SEE HAD COMPLETED 4 HOUSING PROJECTS, OUT OF THOSE 4 PROJE CTS, IN 2 PROJECTS ASSESSEE HAD CONSTRUCTED FLATS EXCEEDING 1 500 SQ.FT. AND ALSO FLATS OF LESS THAN 1500 SQ.FT. IN AREA, T HE ASSESSEE CLAIMED DEDUCTION U/S. 80 IB (10) IN RESPECT OF FLA TS HAVING AREA LESS THAN 1500 SQ.FT., A.O. DENIED SAID DEDUCT ION ON THE GROUND THAT HOUSING PROJECT COMPRISED OF RESIDENTIA L UNITS EXCEEDING 1500 SQ. FT., THUS ALL CONDITIONS STIPULA TED IN STATUTE WERE NOT SATISFIED. THE TRIBUNAL HAS JUST IFIED THE ACTION OF THE A.O. THIS DECISION IS THUS NOT RELEV ANT IN THE FACTS OF THE PRESENT CASE WHEREIN THE PROJECT KKT IS FULFILLING ALL THE REQUIREMENTS OF SEC. 80 IB(10) OF THE ACT A ND APPROVAL TO THE BUILDING PLANS OF THE PROJECT WERE GIVEN SEP ARATELY BY THE MUNICIPAL CORPORATION FROM THE EARLIER PROJECT KKN. THE GROUNDS ARE THUS REJECTED. 11. WE ALSO FIND THAT ITAT, PUNE BENCH, IN THE CASE OF M/S.RAHUL CONSTRUCTION CO. VS. ITO IN ITA.NO.1250/PN/2009, HA S HELD AS UNDER: 9. TO DECIDE THE ABOVE ISSUE, IT IS NECESSARY TO DECIDE FIRSTLY AS TO WHAT WOULD BE FIRST DATE OF APPROVAL OF THE H OUSING PROJECT BY THE PMC TO COMPUTE THE TIME LIMIT PRESCR IBED FOR COMPLETION OF THE PROJECT TO TAKE BENEFIT OF DEDUC TION U/S. 80 IB (10) OF THE ACT. THERE IS NO DISPUTE ON SOME M ATERIAL FACTS THAT OUT OF 16 BUILDINGS IN THE HOUSING PROJECT OF THE ASSESSEE ONLY 11 BUILDINGS WERE COMPLETED WITHIN THE PRESCRI BED TIME LIMIT UPTO 31 ST MARCH 2008. THE LAY OUT PLAN IN RESPECT OF 35 ENTIRE COMPLEX WAS SANCTIONED BY PMC VIDE ORDER NO . DPO/45/D/646 DATED 3.4.2003 AND THE BUILDING PLAN W AS SANCTIONED VIDE COMMENCEMENT CERTIFICATE NO. 4269 DT. 29.4.2003. ADMITTEDLY, THE TERM HOUSING PROJECT HAS NOT BEEN DEFINED IN THE INCOME TAX ACT BUT IN THE CONTE XT OF DEDUCTION U/S. 80IB(10) AN EXPLANATION HAS BEEN PRO VIDED BELOW CLAUSE (A) TO SUB-SECTION (10) TO SECTION 80 IB. FOR A READY REFERENCE, THE SAID EXPLANATION IS BEING REPR ODUCED HEREUNDER: (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON 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. THE VERY READING OF ABOVE EXPLANATION (I), IT MAKES CLEAR THAT FOR THE ELIGIBILITY OF THE DEDUCTION PROVIDED U/S. 80 IB (10) OF THE ACT, THE DATE ON WHICH BUILDING PLAN OF SUCH HO USING PROJECT HAS BEEN FIRSTLY APPROVED BY THE LOCAL AUTH ORITY WILL BE TREATED AS APPROVAL IN RESPECT OF THE HOUSING PROJE CT. WHEN WE READ EXPLANATION (II) WITH EXPLANATION (I) IT MA KES CLEAR THAT COMPLETION OF CONSTRUCTION OF SUCH BUILDING PL AN FIRST APPROVED BY THE LOCAL AUTHORITY WILL BE TAKEN THE D ATE OF COMPLETION OF CONSTRUCTION OF SUCH BUILDING PLAN WH EN COMPLETION CERTIFICATE HAS BEEN ISSUED BY THE LOCA L AUTHORITY. IN OTHER WORDS, IN CLAUSE (I) OF THE EXPLANATION, I T HAS BEEN MADE CLEAR THAT WOULD BE THE HOUSING PROJECT, FIRS T APPROVAL OF WHICH, BY THE LOCAL AUTHORITY WOULD BE TAKEN AS STARTING POINT OF THE HOUSING PROJECT AND IN CLAUSE NO. (II ), IT HAS BEEN MADE CLEAR THAT WHAT WOULD BE THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT ISSUED BY LOCAL AUT HORITY TO COMPUTE THE PRESCRIBED TIME LIMIT FOR VERIFICATION OF ELIGIBILITY OF ASSESSEE FOR THE CLAIMED DEDUCTION. IN VIEW OF THE ABOVE EXPLANATION, WE FIND SUBSTANCE IN THE CONTENTION O F THE LD. A.R. THAT APPROVAL OF THE HOUSING PROJECT AND APPR OVAL OF BUILDING PLAN ARE TWO DIFFERENT CONCEPTS. THE BANG ALORE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BRIGADE EN TERPRISES (P) LTD. (SUPRA) HAS HELD THAT PLAN FOR DEVELOPMENT IS ONLY A WORK ORDER AND NOT FINAL PLAN SANCTIONED BY THE LOCAL AU THORITY. FOR ANY PROJECT, THERE COULD NOT HAVE BEEN A PLAN WITHO UT SUBMISSION OF THE DETAILED BUILDING PLANS, BY THE ARCHITECT AND WHAT REQUISITE DETAILS REQUIRED TO BE SUBMITTED FOR APPROVAL OF THE BUILDING PLANS BY THE LOCAL AUTHORI TY. IN THE CASE OF SAROJ SALES ORGANIZATION VS. ITO (SUPRA), B EFORE 36 MUMBAI BENCH, ALMOST SIMILAR FACTS AS BEFORE US WE RE THERE. THE COMMENCEMENT CERTIFICATE IN RESPECT OF SIX WIN GS IN BLOCK N WAS SEPARATELY RECEIVED BY THE ASSESSEE AND ALL THE FLATS IN BLOCK WERE LESS THAN 1000 SQ.FT. IT WA S HELD BY THE TRIBUNAL THAT IT IS NOT UPON TO THE REVENUE TO INC LUDE BLOCK BC AS PART OF BLOCK N JUST TO DENY RELIEF TO T HE ASSESSEE U/S. 80 IB(10). THE TRIBUNAL OBSERVED THAT BLOCK BC W AS MEANT FOR HIGHER STRATA OF THE SOCIETY HAD BEEN KEPT SEPA RATELY BY ASSESSEE IN ALL THE RESPECT, ASSESSEE HAD NOT CLAIM ED RELIEF U/S. 80IB IN RESPECT OF BLOCK BC . IN THE CASE OF MUDHIT MADANLAL GUPTA VS. ACIT (SUPRA ) BEFORE THE MUMBAI BENCH, IT HAS BEEN HELD THAT THE HOUSING PROJECT DOES NOT NECESSARILY HAVE TO BE VARIOUS GROUP OF BUILDINGS CONSTRUCTED ON THAT PARTICULAR LAND, BUT IT CAN ALSO BE A PARTICULAR BU ILDING OR ANY BUILDING WHICH IS PART OF A LARGE PROJECT. IT HAS BEEN FURTHER HELD THAT WHATEVER PORTION OF THE HOUSING PROJECT IS OTHERWISE FOUND TO BE ELIGIBLE HAS TO BE CONSIDERED AS A HOU SING PROJECT FOR THE PURPOSE OF DEDUCTION U/S. 80 IB (10) OF THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED BY MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF VANDANA PROPERTIES VS. ACIT (SUPRA). 10. IN VIEW OF ABOVE DISCUSSION, WE COME TO THE CON CLUSION THAT FOR VERIFICATION OF ELIGIBILITY OF BENEFIT CLA IMED U/S. 80 IB (10) OF THE ACT BY THE ASSESSEE ON BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL NISARG CO- OPERATIVE HOUSING SOCIETY LTD., THE ASSESSING AUTHORITY HAS TO VERIFY AS TO WHEN THE BUILDING PLANS FOR THESE BUILDINGS WERE FIRSTLY APPROVED BY THE LOCAL AUTHORITY AND TAKING THE SAI D DATE OF APPROVAL A STARTING POINT, HE HAS TO VERIFY AS T O WHETHER THESE BUILDINGS WERE COMPLETED WITHIN THE PRESCRIBE D TIME LIMIT I.E. 31 ST MARCH 2008 ON THE BASIS OF THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS SUED BY THE PMC. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE UNDER THE ABOVE BACKGROUND, WE FIND THAT THE AUTHORITIES BELOW HAVE NOT DISPUTED THE FACT FURNISHED IN THIS REGARD BY THE ASSESSEE THAT UNDER THE PROJECT ATUL NAGAR CONSISTING OF B UILDINGS A1 TO A5, THE FIRST BUILDING PLAN FOR A TYPE WAS APPRO VED BY THE PMC ON 29.4.2003 VIDE COMMENCEMENT CERTIFICATE NO. 4269 (PAGE NO. 4 OF THE PAPER BOOK). HOWEVER, ACTUAL CON STRUCTION OF A TYPE BUILDING WAS EXECUTED AS PER THE REVISED PLA N VIDE NO. C.C. 4101/27/6/2003 (PAGE NO. 5 OF THE PAPER BOOK). THE SIZE OF THE PLOT ON WHICH THE A TYPE BUILDING I.E. A1 TO A6 HAVE BEEN CONSTRUCTED IS 1,39,466 SQ.FT. THE PROJECT A TYPE BUILDING I.E. A1 TO A5 CONSISTS OF 360 RESIDENTIAL UNITS AND THE CONSTRUCTION HAS BEEN COMPLETED BETWEEN 10.1.2005 T O 31.8.2005 (PAGE NOS. 6 TO 9 OF PAPER BOOK). THE AU THORITIES BELOW HAVE ALSO NOT DISPUTED THIS MATERIAL FACT THA T RESIDENTIAL UNITS HAS A MAXIMUM BUILT UP AREA OF 1500 SQ.FT. L IKEWISE, THESE MATERIAL FACTS THAT B GROUP BUILDINGS IN RAH UL NISARG CO-OPERATIVE HOUSING SOCIETY LTD., HAVE BEEN CONST RUCTED ON LAND AREA OF 138203 SQ.FT., HAS NOT BEEN DENIED BY THE AUTHORITIES BELOW. THEY HAVE ALSO NOT DENIED THESE MATERIAL 37 FACTS THAT THE FIRST BUILDING PLAN WAS SANCTIONED ON 29.4.2003 VIDE COMMENCEMENT CERTIFICATE NO. 4269 ISSUED BY TH E PMC (PAGE NO. 16 OF THE PAPER BOOK). THE OTHER MATERI AL FACTS LIKE ACTUAL CONSTRUCTION WAS EXECUTED AS PER THE REVISED PLAN SANCTION ON 20 TH MARCH 2004 VIDE CC NO. 2225 (PAGE NO. 17), THE PROJECT CONSISTS OF 396 FLATS AND CONSTRUCTION OF THESE FLATS HAVE BEEN COMPLETED ON 14.7.2006 AS PER THE COMPLE TION CERTIFICATE ISSUED BY THE PMC (PAGE NOS. 13 TO 18 OF PAPER BOOK) ARE NOT IN DISPUTE. THE AUTHORITIES BELOW HA VE ALSO NOT DENIED THAT BUILT UP AREA OF EACH OF THESE FLATS DO ES NOT EXCEED 1500 SQ.FT. IT IS ALSO NOT IN DISPUTE THAT BOTH THE PROJECTS ARE ENTIRELY A RESIDENTIAL PROJECT AND THERE IS NO COM MERCIAL AREA THEREIN. UNDER THE ABOVE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE IS VERY MUCH ENTITLED TO THE CLAI MED DEDUCTION U/S. 80 IB (10) OF THE ACT ON THE BUILDIN GS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL N ISARG CO- OPERATIVE HOUSING SOCIETY LTD. THE ISSUE IS THERE FORE DECIDED IN FAVOUR OF THE ASSESSEE. WE THUS WHILE SETTING A SIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE, DIREC T THE A.O TO ALLOW THE CLAIMED DEDUCTION U/S. 80 IB(10) IN QUEST ION. THE RELATED GROUNDS ARE ACCORDINGLY ALLOWED. 12. THE OTHER OBJECTION OF THE REVENUE IS THAT THAT BUILDING BUSINESS COURT CONSTRUCTED ON PLOT NO.5 IS A COMM ERCIAL BUILDING, HENCE, THE ASSESSEE HAS CONSTRUCTED COMMERCIAL AREA IN EXCESS OF 2000 SQ.FT. OR 5% OF THE BUILT UP AREA WHICHEVER IS LESS, AS DISCUSSED IN PRECEDING PARAS OF THIS ORDER. IN THI S REGARD, STAND OF THE ASSESSEE HAS BEEN THAT THE PROJECT BUSINESS CO URT IS CONSTRUCTED ON PLOT NO.5 WHICH IS AN INDEPENDENT PL OT. IT WAS SPECIFICALLY POINTED OUT FROM THE LAYOUT PLAN THAT PLOTS NOS.5 AND 6 ARE NOT EVEN ADJOINING PLOTS. THEY ARE SEPARATE AS SHOWN IN THE CITE PLAN SUBMITTED ON BEHALF OF THE ASSESSEE. IN THIS BACKGROUND, IT WAS SUBMITTED BUSINESS COURT IS NOT PART OF PROJ ECT KUMAR PURAM AND HENCE, CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT ASSESSEE HAS CONSTRUCTED COMMERCIAL PROJECT KUMAR PURAM. THE AS SESSEE HAS FILED THE FACTUAL SITUATION WITH REGARD TO THE LAYO UT OF PROJECT KUMAR PURAM WHEREIN KUMAR PURAM PROJECT IS ON PLOT NO.6 W HILE BUSINESS COURT IS ON PLOT NO.5 ON PLOT NO.411 AND THEY ARE NOT ADJOINING PLOTS. IN THIS SITUATION, IT IS NOT JUST IFIED ON THE PART OF THE CIT(A) TO MIX TWO ISSUES OF TWO PLOTS WHICH ARE DISTANTLY LOCATED. THE THIRD OBJECTION OF THE REVENUE HAS BEEN THAT EX PENDITURE HAS 38 BEEN INCURRED ON ITEMS OF IRON AND STEEL, SECURITIE S CHARGES, LABOUR CHARGES, LABOUR CONTRACTOR CHARGES IN F.Y. 1998-99 WHICH INDICATED THAT ASSESSEE HAS STARTED CONSTRUCTION OF THE PROJE CT BEFORE 01.10.1999. IN THIS REGARD, WE FIND THAT BUILDING PLAN IN RESPECT OF PLOT NO.6 WAS OBTAINED ON 24.04.1998. THERE IS NOTH ING ON RECORD TO SUGGEST THAT ASSESSEE STARTED CONSTRUCTION ON TH E SAID PLOT. THE EXPENDITURE INCURRED BY THE ASSESSEE AS POINTED OUT BY THE CIT(A) IS SMALL ITEMS LIKE PURCHASE OF IRON AND STEEL, SECURI TY CHARGES, LABOUR CHARGES AND LABOUR CONTRACTOR CHARGES WHICH WERE IN CURRED FOR UPKEEP, FENCING CHARGES, SECURITY EXPENSES ETC., AN D IT CANNOT BE SAID TO BE INCURRED FOR THE DEVELOPMENT AND CONSTRU CTION OF THE PROJECT. FOR ACTUAL DEVELOPMENT, EXPENDITURE INCUR RED ON A BIG WAY AS HAS BEEN DONE IN F.Y. 1999-2000. EVEN THE BOOKI NG OF THE FLATS STARTED IN F.Y. 1999-2000. THE FACT HAS BEEN INTIM ATED BY THE ASSESSEE TO THE PUNE MUNICIPAL CORPORATION ON 05.05 .1999 WHEREIN IT WAS SUBMITTED THAT AS PER RULE 7.2 OF DC RULES O F PMC, ASSESSEE HAS TO INTIMATE THE CORPORATION ABOUT THE STARTING OF THE PROJECT. HENCE, THE ESTIMATION OF STARTING OF THE DEVELOPMEN T OF THE PROJECT WAS GIVEN BY THE ASSESSEE IN APRIL, 1999 WHICH SHOW S THAT CONSTRUCTION HAS NOT COMMENCED BEFORE 01.10.1999. EVEN THOUGH PLAN WAS APPROVED PRIOR TO 01.10.1999, THE DEVELOPM ENT AND CONSTRUCTION OF HOUSING PROJECT STARTED AFTER 01.10 .1999 AND CONSTRUCTION IN FACT HAS COMMENCED ONLY AFTER APRIL , 1999. IT HAS BEEN THE CONSISTENT STAND OF THE ASSESSEE THAT BUIL DING BUSINESS COURT STARTED BY SHRI SUPNEKAR EVEN IN THE AGREEME NT FOR PURCHASE OF LAND, IT WAS MENTIONED THAT BUILDING IS PARTLY C ONSTRUCTED. THE AMOUNT OF RS.23,00,000/- INCURRED ON CONSTRUCTION W AS SHOWN BY SHRI SUPNEKAR IN HIS BALANCE SHEET. THUS, THE SAID EXPENDITURE WAS INCURRED BY SHRI SUPNEKAR. THEREFORE, THE ASSE SSEE DID NOT RECORD THE SAME IN ITS BOOKS OF ACCOUNT. THE ASSES SEE HAS DEMOLISHED THE CONSTRUCTION AND NEW CONSTRUCTION WA S STARTED SUBSEQUENTLY AS INDICATED ABOVE. THEREFORE, NO WIP WAS SHOWN IN THE BOOKS FOR BUSINESS COURT UPTO 31.03.2000. FOR THE BUSINESS COURT, THE ARCHITECT WAS M/S.PUNDALIK & PUNDALIK WH ILE FOR KUMAR PURAM PROJECT THE ARCHITECT WAS M/S.BUTALA AND NIVS ARKAR AS 39 EVIDENT FROM THE DETAILS ON PAGE 300 OF THE PAPER B OOK. THUS, THE LETTER OF ARCHITECT M/S.BUTALA AND NIVSARKAR DATED 18.03.1999 REFERRED TO BY THE ASSESSING OFFICER IN THE REMAND REPORT AS MENTIONED AT PAGE 34 OF THE ORDER OF THE CIT(A) DOE S NOT PERTAIN TO KUMAR PURAM PROJECT BUT IT PERTAINS TO BUSINESS CO URT. IN VIEW OF ABOVE, THE CIT(A) WAS NOT JUSTIFIED IN OBSERVING TH AT PROJECT HAS COMMENCED PRIOR TO 01.10.1998 BY RELYING ON THE CER TIFICATE FROM M/S.PUNDALIK & PUNDALIK WHO IS THE ARCHITECT OF BU SINESS COURT. AT PAGE 37, THE CIT(A) HAS OBSERVED THAT COMMENCEME NT CERTIFICATE WAS ISSUED ON 10.03.2000 AND ACCORDING TO HIM, IT W AS REVISED CERTIFICATE. IT IS REVISED COMMENCEMENT CERTIFICAT E AND PROJECT KUMAR PURAM IS DIFFERENT IDENTITY. FACTUALLY, ENTI RE LAND ON PLOT NO.411 AS STATED ABOVE WAS ALREADY DIVIDED INTO VAR IOUS PLOTS WHICH WAS PURCHASED BY VARIOUS PARTIES SO IT WAS NOT JUST IFIED ON PART OF THE REVENUE TO HOLD THAT ALL CONSTRUCTION ON THE TO TAL LAND WAS ONE PROJECT. THIS VIEW IS SUPPORTED BY THE DECISIONS I N THE CASES OF M/S.RAHUL CONSTRUCTIONS (SUPRA), M/S.ADITYA DEVELOP ERS (SUPRA) AND VANDANA PROPERTIES (SUPRA) AND MUDIT MADANLAL G UPTA VS. ACIT 51 DTR 217 (BOM) AND BRIGADE ENTERPRISES (P) L TD. 119 TTJ 269 (BANG.). IN VIEW OF ABOVE, WE HOLD THAT ASSESS EE IS ENTITLED FOR DEDUCTION U/S.80IB(10) WITH REGARD TO KUMAR PURAM P ROJECT CONSTRUCTED ON PLOT NO.6 OF ORIGINAL PLOT NO.411. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 8 TH DAY OF FEBRUARY, 2013. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 8 TH FEBRUARY, 2013 40 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CIRCLE-6, PUNE. 3. THE CIT(A)-II, PUNE. 4. THE CIT-III, PUNE. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.
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