ASST CIT CIR 2, THANE V. ASHISH CONSTRUCTION CO., THANE

ITA 4288/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0560 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Question of law
• Section: 133A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.4288/MUM/2014 ASSESSMENT YEAR: 2006 - 2007 ASST. CIT CIRCLE-2, THANE / VS. ASHISH CONSTRUCTION CO., S-1, NARMADA APARTMENTS, CABIN ROAD, BHAYANDER ROAD (E), THANE 401 105 ( / REVENUE) ( !' /ASSESSEE) P.A. NO. AAJFA4249G / REVENUE BY SHRI V VIDHYADHAR !' / ASSESSEE BY SHRI SANJAY SHARMA # $ % '& / DATE OF HEARING : 07/02/2018 % '& / DATE OF PRONOUNCEMENT 07/02/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 26 TH MARCH 2014 OF THE LEARNED FIRST APPELLATE AUTHORITY, MUMBAI, WITH RESPECT TO DISALLOWANCE MAD E U/S. ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 2 80IB(10) OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT) TREATING THE PROJECT I AND II AS SEPARATE PROJECT, IGNORING THE APPROVAL FOR COMMENCEMENT AND COMPLETION AS ONE PRO JECT ON A COMMON PLOT OF LAND. 2. AT THE OUTSET, DURING HEARING, SHRI SANJAY SHARM A, LEARNED COUNSEL FOR THE ASSESSEE CLAIMED THAT THE I MPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION FROM HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. VANDANA PROPERTIES (353 ITR 36). THIS FACTUAL MATR IX WAS CLAIMED TO BE CORRECT BY LEARNED DR SHRI V VIDYADH AR. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIE F ARE THAT THE ASSESSEE FIRM UNDERTOOK A CONSTRUCTION OF HOUSI NG PROJECT. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IB( 10) ON THE INCOME ARISING FROM HOUSING PROJECT II AND NO D EDUCTION WAS CLAIMED ON PROJECT I, CONSISTING OF BUILDING 03 VIZ. TOPAZ BUILDING. ON VERIFICATION OF THE PLAN, IT WAS FOUN D THAT THERE WAS A ROAD FOR THE SAID PLOT WITH BUILDING NOS. 1, 2, 3 AND 5 (PROJECT II) ON ONE SIDE AND BUILDING NOS. 10, 11 A ND 12 (PROJECT I) ON THE OTHER SIDE OF THE ROAD. THE LEA RNED ASSESSING OFFICER WAS OF THE VIEW THAT THE PLAN WAS APPROVED FOR COMMENCEMENT AS ONE PROJECT AND THERE WAS NO AR EA WISE DEMARCATION SEPARATING PROJECT I & II. BY FUR THER OBSERVING THAT BUILDING NOS. WERE NOT DIVIDED IN PH ASES AS BUILDING NOS. 6, 7 & 8 FORM PROJECT I WHILE BUILDIN G NOS. 1, 2, 3, 5, 13 & 14 FORM PROJECT II. THUS, THE DEDUCTION WAS DISALLOWED. THE CLAIM OF THE ASSESSEE IS THAT THE STIPULATED CONDITIONS U/S. 80IB(10) WERE FULFILLED BY THE ASSE SSEE. ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 3 3.1 ON APPEAL BEFORE THE LEARNED CIT(A) WHEREIN REL IANCE WAS PLACED UPON VARIOUS DECISIONS AND FINALLY IT WA S DECIDED IN FAVOUR OF THE ASSESSEE. THE REVENUE IS AGGRIEVE D AND IS IN APPEAL BEFORE THIS TRIBUNAL. 4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION FROM HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDA NA PROPERTIES (SUPRA). THE RELEVANT PORTION FROM THE ORDER IS REPRODUCED HEREUNDER: THESE TWO APPEALS ARE ADMITTED ON THE FOLLOWING C OMMON SUBSTANTIAL QUESTION OF LAW AND TAKEN UP FOR HEARIN G BY CONSENT OF BOTH THE PARTIES. 'WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTI FIED IN HOLDING THAT THE ASSES SEE-FIRM WAS ELIGIBLE FOR CL AIMING DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WHEREI N THE ASSESSEE FAILED TO FULFIL THE PRIMARY CONDITIONS LA ID DOWN UNDER SECTION 80-IB(10) OF THE ACT SUCH AS COMMENCE MENT OF CONSTRUCTION, AREA OF PLOT AND SIZE OF THE FLATS CONSTRUCTED BY THE ASSES SEE ?' 2. THE ASSESSMENT YEARS INVOLVED HEREIN ARE THE ASSESSMENT YEARS 2004-05 AND 2005-06. 3. SINCE SEVERAL APPEALS ARE FILED IN THIS COURT RA ISING SIMILAR QUESTIONS, WE HAVE HEARD COUNSEL FOR VARIOU S PARTIES AS INTERVENORS. 4. THE RESPONDENT-ASSESSEE IS A REGISTERED PARTNERS HIP FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS. 5. FOR THE SAKE OF CONVENIENCE, WE SET OUT THE FACT S IN INCOME TAX APPEAL NO. 3633 OF 2009. THE RELEVANT FA CTS IN ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 4 THAT APPEAL ARE THAT ON A PLOT OF LAND, ADMEASURING 2.36 ACRES SITUATED AT KANDIVALI (WEST), MUMBAI, THE ASS ESSEE HAD CONSTRUCTED BUILDINGS A, B, C AND D OVER A PERI OD OF YEARS. INTIMATION OF DISAPPROVAL IN RESPECT OF THOS E BUILDINGS WERE GRANTED DURING THE YEAR 1993 TO 1996 . BY FOLLOWING THE WORK-IN-PROGRESS METHOD OF ACCOUNTING , THE ASSESSEE OFFERED TO TAX THE INCOME EARNED BY CONSTR UCTING THE BUILDINGS A, B, C AND D FROM TIME TO TIME. DEDU CTION UNDER SECTION 80-IB(10) OF THE ACT ON THE INCOME EA RNED FROM THE BUILDINGS A, B, C AND D BUILDINGS WAS NOT CLAIMED AS THE APPROVAL FOR CONSTRUCTION OF THOSE BUILDINGS WERE GRANTED PRIOR TO OCTOBER 1, 1998. PURSUANT TO AN OR DER PASSED BY THE STATE GOVERNMENT IN THE YEAR 2001 PERMITTING CONVERSION OF THE STATUS OF THE LAND, TH E ASSESSEE BECAME ENTITLED TO CONSTRUCT AN ADDITIONAL BUILDING 'E' ON THE AFORESAID PLOT OF LAND. ACCORDI NGLY, BUILDING PLAN FOR CONSTRUCTION OF BUILDING 'E' WITH SEVERAL RESIDENTIAL UNITS ON THE SAID PLOT OF LAND WAS SUBM ITTED BY THE ASSESSEE. 6. BY AN INTIMATION OF DISAPPROVAL DATED OCTOBER 11 , 2002, THE BUILDING PLAN FOR THE 'E' BUILDING CONSISTING O F VARIOUS RESIDENTIAL UNITS WAS APPROVED BY THE MUNICIPAL CORPORATION SUBJECT TO VARIOUS CONDITIONS SET OUT THEREIN. THEREAFTER, COMMENCEMENT CERTIFICATE F OR CONSTRUCTION OF THE 'E' BUILDING WAS ISSUED ON MARC H 10, 2003. 7. IN THE RETURNS OF INCOME FILED FOR THE ASSESSMEN T YEARS 2004-05 AND 2005-06, THE ASSESSEE ESTIMATED ITS PRO FITS FROM THE 'E' BUILDING BY FOLLOWING THE WORK-IN-PROG RESS METHOD OF ACCOUNTING AND CLAIMED DEDUCTION UNDER SE CTION 80-IB(10) AT RS. 71,42,590 AND RS. 71,73,660 RESPECTIVELY. 8. ON OCTOBER 11, 2005, SURVEY ACTION UNDER SECTION 133A OF THE INCOME- TAX ACT, 1961 ('THE ACT' FOR SHORT) ON THE BUSINESS PREMISES OF THE ASSESSEE AS ALSO AT THE PR OJECT SITE WAS CONDUCTED TO ASCERTAIN THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. DURIN G THE COURSE OF SURVEY AND THEREAFTER STATEMENT OF THE SI TE SUPERVISOR AND ARCHITECT WERE RECORDED. 9. IN THE ASSESSMENT ORDER PASSED FOR THE ASSESSMEN T YEAR 2004-05, ON DECEMBER 28, 2005, THE ASSESSING OFFICE R DISALLOWED THE CLAIM FOR DEDUCTION UNDER SECTION 80 -IB(10) FOR THE FOLLOWING REASONS : ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 5 (A) THE APPROVAL FOR THE 'E' BUILDING WAS GRANTED O N OCTOBER 11, 2002, AS AN EXTENSION OF THE APPROVALS GRANTED FOR THE A, B, C AND D BUILD INGS COMMENCING FROM JUNE 9, 1993, AND, THEREFORE, THE 'E' BUILDING BEIN G CONTINUATION OF THE A, B, C AND D BUILDINGS, THE PR OJECT MUST BE HELD TO HAVE COMMENCED PRIOR TO OCTOBER 1, 1998, AND, HENCE, NOT ELIGIBLE FOR SECTION 80-IB(10) DEDU CTION. (B) THE A, B, C, D AND E BUILDINGS ARE CONSTRUCTED ON A PLOT ADMEASU RING 2.36 ACRES AND IF 2.36 ACRES OF LAND I S PROPORTIONATELY DIVIDED BETWEEN FIVE BUILDINGS, THE LAND PERTAINING TO THE 'E' BUILDING WOULD BE LESS THAN O NE ACRE AND, HENCE, DEDUCTION UNDER SECTION 80-IB(10) CANNO T BE ALLOWED. (C) DURING THE SURVEY, IT WAS NOTICED THAT FLAT NOS . 138 AND 153 ON THE GROUND FLOOR OF THE 'E' BUILDING WERE FO UND TO BE MERGED INTO ONE FLAT AND SINCE THE AREA OF THE M ERGED FLAT EXCEEDS 1000 SQUARE FEET, THE DEDUCTION UNDER SECTION 80-IB(10) CANNOT BE GRANTED. FOR THE IDENTICAL REASONS, THE DEDUCTION UNDER SECT ION 80- IB(10) WAS DISALLOWED FOR THE ASSESSMENT YEAR 2005- 06. 10. THE APPEALS FILED BY THE ASSESSEE AGAINST THE DISALLOWANCE OF THE CLAIM UNDER SECTION 80-IB(10) W ERE DISMISSED BY THE COMMISSIONER OF INCOME- TAX (APPEA LS). 11. ON FURTHER APPEALS FILED BY THE ASSESSEE, THE T RIBUNAL BY ITS ORDERS DATED APRIL 29, 2009, AND MAY 27, 200 9, HELD THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION UNDE R SECTION 80-IB(10). CHALLENGING THE AFORESAID ORDER, THE PRE SENT APPEALS ARE FILED BY THE REVENUE. 12. MR. SURESH KUMAR, LEARNED COUNSEL FOR THE REVEN UE, ARGUED BEFORE US THAT THE AMOUNT OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IS AVAILABLE TO AN UND ERTAKING WHERE THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT HAS COMMENCED ON OR AFTER OCTOBER 1, 1998, AND IS COMPLETED WITHIN THE TIME STIPULATED THEREIN. IN TH E PRESENT CASE, APPROVAL FOR CONSTRUCTION OF THE 'E' BUILDING WAS GRANTED ON OCTOBER 11, 2002, AS AND BY WAY OF EXTENSION OF THE APPROVAL GRANTED TO THE EARLIER HO USING PROJECT CONSISTING OF THE A, B, C AND D BUILDINGS. SINCE APPROVAL TO THE HOUSING PROJECT CONSISTING OF THE A , B, C, D AND E BUILDINGS WAS FIRST GRANTED IN THE YEAR 1993, IT MUST BE HELD IN VIEW OF THE EXPLANATION TO SECTION 80-IB (10)(A) OF THE ACT THAT THE HOUSING PROJECT HAS COMMENCED ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 6 DEVELOPMENT AND CONSTRUCTION WHEN THE FIRST APPROVA L WAS GRANTED IN THE YEAR 1993 AND TO SUCH A HOUSING PROJ ECT WHICH HAS COMMENCED PRIOR TO OCTOBER 1, 1998, THE DEDUCTION UNDER SECTION 80-IB(10) COULD NOT BE GRAN TED. 13. COUNSEL FOR THE REVENUE FURTHER SUBMITTED THAT FOR CLAIMING DEDUCTION UNDER SECTION 80-IB(10), THE HOU SING PROJECT MUST BE ON THE SIZE OF A VACANT PLOT OF LAN D WHICH HAS A MINIMUM AREA OF ONE ACRE. THE SUBMISSION IS T HAT, UNLESS THE HOUSING PROJECT HAS COMMENCED DEVELOPMENT/CONSTRUCTION ON OR AFTER OCTOBER 1, 199 8, ON A VACANT PLOT OF LAND OF THE SIZE HAVING A MINIMUM AREA OF ONE ACRE, THE BENEFIT OF DEDUCTION UNDER SECTION 80 -IB(10) WOULD NOT BE AVAILABLE. IN THE PRESENT CASE, THE AS SESSEE HAS CONSTRUED THE 'E' BUILDING ON THE SIZE OF A PLO T OF LAND ADMEASURING 2.36 ACRES ON WHICH FOUR BUILDINGS, VIZ . A, B, C AND D WERE ALREADY CONSTRUCTED AND EVEN IF THE LA ND IS PROPORTIONATELY DIVIDED BETWEEN THE FIVE BUILDINGS, VIZ., A, B, C, D AND E, THE AREA OF THE LAND PERTAINING TO T HE 'E' BUILDING WOULD BE LESS THAN ONE ACRE WHICH WOULD BE IN CONTRAVENTION OF THE CONDITIONS SET OUT IN SECTION 80-IB(10) AND, THEREFORE, THE TRIBUNAL COULD NOT HAVE EXTENDE D THE BENEFIT OF SECTION 80-IB(10) TO THE ASSESSEE. 14. LASTLY, COUNSEL FOR THE REVENUE SUBMITTED THAT IN THE PRESENT CASE, THE ASSESSEE HAS MERGED TWO FLATS ON THE GROUND FLOOR OF THE 'E' BUILDING INTO ONE FLAT AS A RESULT WHEREOF THE SIZE OF THE RESIDENTIAL UNIT IN THE HOU SING PROJECT EXCEEDED 1000 SQUARE FEET WHICH IS IN CONTRAVENTION OF SECTION 80-IB(10)(C) OF THE ACT AN D, HENCE, THE BENEFIT OF THAT SECTION COULD NOT BE GRA NTED TO THE ASSESSEE. ACCORDINGLY, IT IS SUBMITTED THAT THE APPEALS FILED BY THE REVENUE BE ALLOWED BY ANSWERING THE QU ESTION RAISED IN THE APPEAL IN FAVOUR OF THE REVENUE AND A GAINST THE ASSESSEE. COUNSEL FOR THE ASSESSEE AS ALSO THE COUNSEL FOR THE INTERVENORS HAVE MADE ELABORATE ARGUMENTS SUPPORTING THE ORDER PASSED BY THE TRIBUNAL AND THE SAME ARE CONSIDERED IN THE SUBSEQUENT PARAS OF THIS JUDG MENT. 15. BEFORE CONSIDERING THE RIVAL SUBMISSIONS, WE MA Y REPRODUCE SECTION 80-IB(10), AS IT STOOD PRIOR TO I TS SUBSTITUTION BY THE FINANCE (NO. 2) ACT, 2004, WITH EFFECT FROM APRIL 1, 2005, HEREINBELOW : '(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, SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN ANY PRE VIOUS ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 7 YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUS ING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOP MENT AND CONSTRUCTION OF THE HOUSING PROJEC T ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINI MUM AREA OF ONE ACRE ; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WI THIN TWENTY FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE.' 16. SECTION 80-IB(10) SUBSTITUTED WITH EFFECT FROM APRIL 1, 2005, TO THE EXTENT RELEVANT HEREIN, READS THUS : '(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31ST DAY OF MARCH, 2007, BY A L OCAL AUTHORITY SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEA R FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOP MENT AND CONSTRUCTION OF THE HOUSING PROJEC T ON OR AFTER THE 1ST DAY OF OCTOBER, 1998, AND COMPLETES S UCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 20 04, ON OR BEFORE THE 31ST DAY OF MARCH, 2008 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY TH E LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 8 (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PR OJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LO CAL 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 P ROJECT IS ISSUED BY THE LOCAL AUTHORITY ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINI MUM AREA OF ONE ACRE ; . . .' 17. THE FIRST QUESTION TO BE CONSIDERED HEREIN IS, WHETHER, IN THE FACTS OF THE PRESENT CASE, CONSTRUCTION OF T HE 'E' BUILDING CONSTITUTES BUILDING A 'HOUSING PROJECT' U NDER SECTION 80-IB(10) OF THE ACT. 18. THE EXPRESSION 'HOUSING PROJECT' IS NEITHER DEF INED UNDER SECTION 2 OF THE ACT NOR UNDER SECTION 80-IB( 10) OF THE ACT. EVEN UNDER THE MUMBAI MUNICIPAL CORPORATIO N ACT, 1988, AS ALSO UNDER THE DEVELOPMENT CONTROL REGULAT IONS FOR GREATER MUMBAI, 1991, THE EXPRESSION 'HOUSING PROJECT' IS NOT DEFINED. THEREFORE, THE EXPRESSION 'HOUSING PROJECT' IN SECTION 80-IB(10) WOULD HAVE TO BE CONS TRUED AS COMMONLY UNDERSTOOD. 19. AS RIGHTLY CONTENDED BY MR. INAMDAR, LEARNED SE NIOR ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE AND MR . MISTRI, LEARNED SENIOR ADVOCATE AND MR.JOSHI, LEARN ED ADVOCATE APPEARING ON BEHALF OF THE INTERVENORS, TH E EXPRESSION 'HOUSING PROJECT' IN COMMON PARLANCE WOU LD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDINGS CONSISTING OF SEVERAL RESIDENTIAL UNITS. IN FACT, T HE EXPLANATION IN SECTION 80-IB(10) SUPPORTS THE CONTE NTION OF THE ASSESSEE THAT THE APPROVAL GRANTED TO A BUILDIN G PLAN CONSTITUTES APPROVAL GRANTED TO A HOUSING PROJECT. THEREFORE, IT IS CLEAR THAT CONSTRUCTION OF EVEN ON E BUILDING WITH SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCE EDING 1000 SQUARE FEET ('E' BUILDING IN THE PRESENT CASE) WOULD CONSTITUTE A 'HOUSING PROJECT' UNDER SECTION 80-IB( 10) OF THE ACT. ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 9 20. THE QUESTION, THEN, TO BE CONSIDERED IS, WHETHE R CONSTRUCTION OF THE 'E' BUILDING IS AN INDEPENDENT HOUSING PROJECT OR EXTENSION OF THE HOUSING PROJECT ALREADY EXISTING ON THE PLOT IN QUESTION. IT IS THE CONTENTION OF TH E REVENUE THAT SINCE THE APPROVAL FOR CONSTRUCTION OF THE 'E' BUILDING WAS GRANTED BY THE LOCAL AUTHORITY SUBJECT TO THE C ONDITIONS SET OUT IN THE FIRST APPROVAL GRANTED ON MAY 12, 19 93, FOR CONSTRUCTION OF THE A AND B BUILDINGS, CONSTRUCTION OF THE 'E' BUILDING MUST BE CONSIDERED TO BE THE EXTENSION OF THE EARLIER HOUSING PROJECT FOR WHICH APPROVAL WAS GRAN TED PRIOR TO OCTOBER 1, 1998, AND, THEREFORE, THE BENEF IT OF SECTION 80-IB(10) CANNOT BE GRANTED. THERE IS NO ME RIT IN THE ABOVE ARGUMENT, BECAUSE, WHEN THE PLANS FOR THE A, B, C AND D BUILDINGS WERE APPROVED DURING THE PERIOD F ROM 1993 TO 1996, CONSTRUCTION OF THE 'E' BUILDING WAS NOT EVEN CONTEMPLATED ON THE PLOT IN QUESTION. IT IS ON LY IN THE YEAR 2001 WHEN THE STATUS OF THE LAND WAS CONVERTED FROM SURPLUS VACANT LAND INTO WITHIN THE CEILING LIMIT L AND BY THE STATE GOVERNMENT, AN ADDITIONAL BUILDING COULD BE CONSTRUCTED ON THE PLOT IN QUESTION AND ACCORDINGLY THE BUILDING PLAN FOR CONSTRUCTION OF THE 'E' BUILDING WAS SUBMITTED AND THE SAME WAS APPROVED BY THE LOCAL AUTHORITY ON OCTOBER 11, 2002. 21. THE FACT THAT THE LOCAL AUTHORITY, NAMELY, THE MUNICIPAL CORPORATION APPROVED THE BUILDING PLAN FOR THE 'E' BUILDING ON THE CONDITION THAT ALL THE OBJECTIONS RAISED IN THE INTIMATION OF DISAPPROVAL DATED MAY 12, 1993, RELAT ING TO THE EARLIER HOUSING PROJECT ON THE SAME PLOT OF LAN D SHALL BE APPLICABLE AND SHOULD BE COMPLIED WITH, CANNOT B E A GROUND TO HOLD THAT THE 'E' BUILDING IS THE EXTENSI ON OF THE EARLIER HOUSING PROJECT BECAUSE THE EARLIER HOUSING PROJECT WAS COMPLETED PRIOR TO OCTOBER 1, 1998, AND THE HOU SING PROJECT FOR CONSTRUCTION OF THE 'E' BUILDING WAS AP PROVED FOR THE FIRST TIME ON OCTOBER 11, 2002. NOWHERE IN THE INTIMATION FOR DISAPPROVAL GRANTED FOR CONSTRUCTION OF THE 'E' BUILDING ON OCTOBER 11, 2002, IT IS STATED THAT THE BUILDING 'E' CONSTITUTES EXTENSION OF THE EARLIER H OUSING PROJECT WHICH IS ALREADY COMPLETED. THE FACT THAT T HE OBJECTIONS RAISED WHILE APPROVING THE EARLIER HOUSI NG PROJECT ON THE SAME PLOT OF LAND WERE MADE APPLICAB LE TO THE HOUSING PROJECT IN QUESTION, IT CANNOT BE INFER RED THAT THE HOUSING PROJECT IN QUESTION CONSTITUTES EXTENSI ON OF THE EARLIER HOUSING PROJECT. THEREFORE, IN THE FACTS OF THE PRESENT CASE, WHERE, NEITHER THE ASSESSEE HAD SOUGH T APPROVAL OF THE BUILDING PLAN FOR CONSTRUCTION OF T HE 'E' BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJEC T, NOR THE MUNICIPAL CORPORATION HAS GRANTED APPROVAL FOR THE HOUSING ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 10 PROJECT CONSISTING OF THE 'E' BUILDING AS EXTENSION OF THE EARLIER HOUSING PROJECT, IT IS NOT OPEN TO THE INCO ME-TAX AUTHORITIES TO CONTEND THAT APPROVAL TO THE HOUSING PROJECT GRANTED BY THE MUNICIPAL CORPORATION ON OCTOBER 11, 2002, CONSTITUTES EXTENSION OF THE HOUSING PROJECT WHICH WAS APPROVED IN THE YEAR 1993. 22. RELIANCE PLACED BY THE REVENUE ON THE EXPLANATI ON TO SECTION 80-IB(10)(A) WHICH WAS INTRODUCED WITH EFFE CT FROM APRIL 1, 2005, IS ALSO MISPLACED. WHAT THE SAID EXP LANATION CONTEMPLATES IS THAT WHERE THE APPROVAL IN RESPECT OF A HOUSING PROJECT IS GRANTED MORE THAN ONCE, THEN, TH AT HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROV ED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. FOR EXAMP LE, IN RESPECT OF A HOUSING PROJECT, THE ASSESSEE MAY SEEK AMENDMENT OF THE BUILDING PLAN AT SEVERAL STAGES OF THE CONSTRUCTION AND THE SAME MAY BE APPROVED. IN SUCH A CASE, THE EXPLANATION PROVIDES THAT FOR THE PURPOSE S OF SECTION 80-IB(10) THE HOUSING PROJECT SHALL BE DEEM ED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE FIRST APPROVAL WAS GRANTED BY THE LOCAL AUTHORITY. THUS, THE EXPLANATION TO SECTION 80-IB(10)(A) REFERS TO THE A PPROVAL GRANTED TO THE SAME HOUSING PROJECT MORE THAN ONCE AND THE SAID EXPLANATION WOULD NOT APPLY WHERE THE APPR OVAL IS GRANTED TO DIFFERENT HOUSING PROJECTS. IN THE PRESE NT CASE, AS NOTED EARLIER, CONSTRUCTION OF THE 'E' BUILDING CONSTITUTES AN INDEPENDENT HOUSING PROJECT AND, THEREFORE, THE DATE ON WHICH THE EARLIER HOUSING PROJECT HAD COMMENCED CONSTRUCTION COULD NOT BE APPLIED TO THE HOUSING PR OJECT CONSISTING OF THE 'E' BUILDING MERELY BECAUSE THE CONDITIONS SET OUT WHILE GRANTING APPROVAL TO THE E ARLIER HOUSING PROJECT HAVE ALSO BEEN MADE APPLICABLE TO T HE HOUSING PROJECT IN QUESTION. 23. THE NEXT ARGUMENT OF THE REVENUE IS THAT TO AVA IL OF THE DEDUCTION UNDER SECTION 80-IB(10), THE HOUSING PROJECT MUST BE ON THE SIZE OF A VACANT PLOT OF LAND WHICH HAS MINIMUM AREA OF ONE ACRE. IN THE PRESENT CASE, THER E ARE FIVE BUILDINGS (A, B, C, D AND E) ON A PLOT ADMEASU RING 2.36 ACRES, HENCE, THE PROPORTIONATE AREA FOR EACH BUILDING WOULD BE LESS THAN ONE ACRE AND, THEREFORE, THE BEN EFIT OF SECTION 80-IB(10) COULD NOT BE GRANTED IN RESPECT O F THE HOUSING PROJECT CONSISTING THE 'E' BUILDING. 24. AS RIGHTLY CONTENDED BY THE COUNSEL FOR THE ASS ESSEE AND THE INTERVENORS, SECTION 80-IB(10)(B) SPECIFIES THE SIZE OF THE PLOT OF LAND BUT NOT THE SIZE OF THE HOUSING PROJECT. THE SIZE OF THE PLOT OF LAND, AS PER SECTION 80-IB( 10), MUST ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 11 HAVE MINIMUM AREA OF ONE ACRE. THE SECTION DOES NOT LAY DOWN THAT THE PLOT HAVING 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 'PLOT OF LAND' IN SECTION 80-IB(10)(B) AS 'VACANT PLOT OF LA ND' ? 26. THE OBJECT OF SECTION 80-IB(10) IN GRANTING DED UCTION EQUAL TO ONE HUNDRED PER CENT. OF THE PROFITS OF AN UNDERTAKING ARISING FROM DEVELOPING AND CONSTRUCTIN G A HOUSING PROJECT IS WITH A VIEW TO BOOST THE STOCK O F HOUSES FOR LOWER AND MIDDLE INCOME GROUPS SUBJECT TO FULFI LLING THE SPECIFIED CONDITIONS. THE FACT THAT THE MAXIMUM SIZ E OF THE RESIDENTIAL UNIT IN A HOUSING PROJECT SITUATED WITH IN THE CITY OF MUMBAI AND DELHI IS RESTRICTED TO 1000 SQUARE FE ET CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE IS TO MAKE AVAILABLE A LARGE NUMBER OF MEDIUM SIZE RESIDE NTIAL UNITS FOR THE BENEFIT OF THE COMMON MAN. HOWEVER, I N THE ABSENCE OF DEFINING THE EXPRESSION 'HOUSING PROJECT ' AND IN THE ABSENCE OF SPECIFYING THE SIZE OR THE NUMBER OF HOUSING PROJECTS REQUIRED TO BE CONSTRUCTED ON A PL OT OF LAND HAVING MINIMUM AREA OF ONE ACRE, EVEN ONE HOUS ING PROJECT CONTAINING MULTIPLE RESIDENTIAL UNITS OF A SIZE NOT EXCEEDING 1000 SQUARE FEET CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE WOULD BE ELIGIBLE F OR SECTION 80-IB(10) DEDUCTION. IF THE CONSTRUCTION OF SECTION 80-IB(10) PUT FORTH BY THE REVENUE IS ACCEPTED, IT WOULD MEAN THAT IF ON A VACANT PLOT OF LAND, ONE HOUSING PROJECT FULFILLING ALL CONDITIONS IS UNDERTAKEN, THEN DEDUC TION WOULD BE AVAILABLE TO THAT HOUSING PROJECT AND IF THEREAF TER SEVERAL OTHER HOUSING PROJECTS ARE UNDERTAKEN ON TH E VERY SAME PLOT OF LAND, THE DEDUCTION WOULD NOT BE AVAIL ABLE TO THOSE HOUSING PROJECTS AS THE PLOT CEASES TO BE A V ACANT PLOT AFTER THE CONSTRUCTION OF THE FIRST HOUSING PR OJECT. SUCH A CONSTRUCTION IF ACCEPTED WOULD DEFEAT THE OBJECT WITH WHICH SECTION 80-IB(10) WAS ENACTED. 27. MOREOVER, PLAIN READING OF SECTION 80-IB(10) DO ES NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE MUST BE VACANT. THE SAID SECTION ALLOWS DEDUCTION TO A HOUSING PROJECT (SUBJ ECT TO FULFILLING ALL OTHER CONDITIONS) CONSTRUCTED ON A P LOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIA L AS TO WHETHER ANY OTHER HOUSING PROJECTS ARE EXISTING ON THE SAID PLOT OF LAND OR NOT. IN THESE CIRCUMSTANCES, CONSTR UING THE PROVISIONS OF SECTION 80-IB(10) BY ADDING WORDS TO THE STATUTE IS WHOLLY UNWARRANTED AND SUCH A CONSTRUCTI ON ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 12 WHICH DEFEATS THE OBJECT WITH WHICH THE SECTION WAS ENACTED MUST BE REJECTED. 28. APART FROM THE ABOVE, THE CENTRAL BOARD OF DIRE CT TAXES (CBDT) BY ITS LETTER DATED MAY 4, 2001, ADDRE SSED TO THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY HAS STA TED THUS : 'THE UNDERSIGNED IS DIRECTED TO REFER TO YOUR LETTE R NO. MCHI : RSA : M : 388/19799/3, DATED JANUARY 1, 2001 , AND TO STATE THAT THE ADDITIONAL HOUSING PROJECT ON EXISTING HOUSING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURE FACILITY UNDER SECTIONS 10(23G) AND 80-IB(10) PRO VIDED IT I S TAKEN UP BY A SEPARATE UNDERTAKING, HAVING SEPARATE BOOKS OF ACCOUNT, SO AS TO ENSURE THAT CORRECT PROFITS CAN B E ASCERTAINED FOR THE PURPOSE OF SECTION 80-IB AND AL SO TO IDENTIFY RECEIPTS AND REPAY MENTS OF LONG-TERM FINA NCES UNDER THE PROVISIONS OF SECTION 10(23G), SEPARATELY FINANCING ARRANGEMENTS AND ALSO, IF IT SEPARATELY F ULFILS ALL OTHER STATUTORY CONDITIONS LISTED IN SECTIONS 10(23 G) 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 H OUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR THE PURPO SE OF SECTIONS 10(23G) AND 80-IB (10).' 29. FROM THE AFORESAID LETTER OF THE CENTRAL BOARD OF DIRECT TAXES, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80-IB(10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSI NG PROJECT MUST BE ON A VACANT PLOT OF LAND HAVING MIN IMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSING PROJE CT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALI FY FOR SECTION 80-IB(10) DEDUCTION. EVEN OTHERWISE, THE AR GUMENT OF THE REVENUE DOES NOT STAND TO REASON BECAUSE, IN THE CITY OF MUMBAI WHERE THERE IS ACUTE SPACE CRUNCH, I T IS DIFFICULT TO FIND A VACANT PLOT HAVING MINIMUM AREA OF ONE ACRE AND EVEN IF FEW SUCH PLOTS ARE EXISTING IT CAN NOT BE SAID THAT SECTION 80-IB(10) DEDUCTION WAS INTENDED TO GIVE BENEFIT ONLY TO THE UNDERTAKINGS WHO CONSTRUCT HOUS ING PROJECTS ON THOSE FEW PLOTS. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PROJECTS ARE APPROVED BY THE LOCAL AUTHORIT Y AND FULFIL THE CONDITIONS SET OUT UNDER SECTION 80-IB(1 0), THE DEDUCTION THEREUNDER CANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80-IB(10) WHILE SPECIFYING THE SI ZE OF THE PLOT OF LAND, DOES NOT SPECIFY THE SIZE OR THE NUMB ER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 13 PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RESULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOS T AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING THE O THER CONDITIONS BECOMES ENTITLED TO SECTION 80-IB(10) DE DUCTION ON CONSTRUCTION OF A HOUSING PROJECT ON A PLOT HAVI NG AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT THAT THERE EX IST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES, TH E DECISION OF THE TRIBUNAL IN REJECTING THE CONTENTIO N OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FA ULTED. 30. THE LAST ARGUMENT OF THE REVENUE IN DECLINING T O GRANT DEDUCTION UNDER SECTION 80-IB(10) IS THAT TWO FLATS ON THE GROUND FLOOR OF THE BUILDING 'E' WERE MERGED INTO O NE FLAT, AS A RESULT WHEREOF THE MAXIMUM SIZE OF THE RESIDEN TIAL UNIT EXCEEDED 1000 SQUARE FEET WHICH IS IN VIOLATIO N OF THE CONDITION SET OUT IN SECTION 80-IB(10) AND, THEREFO RE, THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION. THE TRIB UNAL ON APPRECIATION OF THE FACTS AND THE EVIDENCE ON RECOR D ARRIVED AT THE CONCLUSION THAT THERE WAS NO MERGER OF FLATS AND IN FACT BOTH THE FLATS IN QUESTION WERE NEITHER SOLD NOR ANY APPLICATION WAS MADE BEFORE THE LOCAL AUTHORITY SEEKING MERGER OF TWO FLATS ON THE GROUND FLOOR OF THE 'E' BUILDING. THUS, NO FAULT CAN BE FOUND WITH THE DECI SION OF THE TRIBUNAL IN REJECTING THE ARGUMENT OF THE REVEN UE RELATING TO THE MERGER OF THE FLATS. 31. IN THE RESULT, THE COMMON QUESTION OF LAW FRAME D IN THESE TWO APPEALS ARE ANSWERED IN FAVOUR OF THE ASS ESSEE AND AGAINST THE REVENUE. WE FIND THAT AN ELABORATE DISCUSSION HAS BEEN MADE BY THE HON'BLE JURISDICTIONAL HIGH COURT WITH RESPECT TO D EDUCTION U/S. 80IB(10) OF THE ASSESSEE. THE ASSESSEE HAS DU LY FULFILLED THE CONDITIONS LAID DOWN IN SECTION 80IB( 10). THE LEARNED FIRST APPELLATE AUTHORITY HAS ALREADY CONSI DERED THE DECISION IN INCOME TAX OFFICER VS. KASTURI CONSTRUC TIONS (2012) 24 TAXMAN.COM 331 (MUM), RAHUL CONSTRUCTION COMPANY (2012) 21 TAXMAN.COM 435 (PUNE) AND THE TOT AL PERMISSIBLE BUILT UP AREA, AS PER THE APPROVED PLAN , WAS 12034.29 SQ. MTS. EVEN THE COMMENCEMENT CERTIFICAT E WAS OBTAINED VIDE LETTER DATED 19 TH JUNE 1998 FOR SEVEN ITA NO.4288/MUM/2014 ASHISH CONSTRUCTION CO. 14 BUILDINGS FROM 1 TO 7, CONSISTING OF 11970.19 SQ. M TS. BUILT UP AREA. AS A RESULT OF SECOND NOTIFICATION THE AS SESSEE GOT ANOTHER APPROVAL DATED 15.01.2002 CONSISTING OF BUI LDING NOS. 1 TO 6, 10-14 WITH GROUND FLOOR PLUS FOUR UPPE R FLOORS. THIS FLOOR PATTERN WAS NOT APPLICABLE TO BUILDING N O.10 WHICH WAS ALREADY EXISTING. THUS, RESPECTFULLY FOL LOWING THE RATIO LAID DOWN IN VARIOUS DECISIONS, MENTIONED HER EINABOVE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LEARNED CIT(A). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 7 TH FEBRUARY, 2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; + DATED : 07 /02/2018 SA %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 # 3' , ( ,- ) / THE CIT, MUMBAI. 4. 2 2 # 3' / CIT(A)- , MUMBAI 5. 56 0' , 2 ,-& , , # $ / DR, ITAT, MUMBAI 6. 7 8$ / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI