Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 9574 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 year(s) 3 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-04-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
30-05-2016
Assessment Year
2006-2007
Appeal Filed On
07-01-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.46/PUN/2010 [ [ / ASSESSMENT YEAR : 2006-07 SPAN SM DEVELOPERS, A1, LAXMI PARK SOCIETY, NEAR COLONY NURSING HOME, NAVI PETH, PUNE 411030 . / APPELLANT PAN: AAWFS7072G VS. THE INCOME TAX OFFICER, WARD 3(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI KISHORE PHADKE / RESPONDENT BY : S/SHRI DHEERAJ KUMAR JAIN AND ANIL KUMAR CHAWARE / DATE OF HEARING : 09.03.2017 / DATE OF PRONOUNCEMENT: 21.04.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-II, PUNE, DATED 23.10.2009 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS WRONG IN FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.2,59,07,714/- BEING THE DEDUCTION CLAIMED BY THE ASSESSEE FIRM UNDER SECTION 80-IB(10). ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 2 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST NON-ALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT AT RS.2,59,07,714/-. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD CONSTRUCTED A PROJECT KNOWN AS VANARAJI SITUATED AT SURVEY NO.123/A/1/1, KOTHRUD, RAMBAUG COLONY, PUNE. THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF SAID PROJECT FOR ASSESSMENT YEARS 2004-05 TO 2006-07. THE ASSESSING OFFICER NOTED THAT THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE WHILE PASSING THE ASSESSMENT ORDERS RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE AREA OF LAND IN THE PROJECT ON WHICH MANISHA TOWERS WAS CONSTRUCTED WAS ALSO 33,000 SQ.FT. WHICH WAS ALSO LESS THAN ONE ACRE, THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE INSTANT ASSESSMENT YEAR. ACCORDINGLY, AN ADDITION OF RS.2,59,07,714/- WAS MADE IN THE HANDS OF ASSESSEE. 5. THE CIT(A) NOTED THAT HIS PREDECESSOR IN THE APPELLATE ORDER FOR ASSESSMENT YEAR 2004-05 HAD TAKEN NOTE OF THE FACT TOTAL AREA OF DEVELOPMENT OF PROJECT WAS 96,168 SQ.FT. WHICH CONSISTED OF 6,375 SQ.FT. OF COMMERCIAL AREA AND 89,793 SQ.FT. OF RESIDENTIAL AREA AND THE COMMERCIAL AREA WAS 6.62% OF THE TOTAL AREA OF THE PROJECT. THE CIT(A) IN VIEW OF PMC RULES AND ALSO AMENDMENT BROUGHT INTO THE STATUTE W.E.F. 01.04.2005 BY WHICH CLAUSE (D) WAS INTRODUCED PROVIDING RESTRICTION OF 2000 SQ.FT. OR 5% OF THE AGGREGATE BUILT UP AREA, WHICHEVER WAS LESS, FOR COMMERCIAL AREA, UPHELD THE ORDER OF ASSESSING OFFICER IN DENYING THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT FOR ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 3 ASSESSMENT YEAR 2004-05. THE TRIBUNAL IN ITA NO.1439/PN/2007, RELATING TO ASSESSMENT YEAR 2004-05, VIDE ORDER DATED 30.04.2009 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, IN TURN, RELYING ON SPECIAL BENCH DECISION OF TRIBUNAL IN THE CASE OF BRAMHA ASSOCIATES & OTHERS DELIVERED ON 06.04.2009, REPORTED IN (2009) 122 TTJ (PUNE)(SB) 433. THE TRIBUNAL HELD THAT INTRODUCTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005 WAS NOT RETROSPECTIVE IN NATURE AND WHERE THE COMMERCIAL AREA WAS LESS THAN 10% LIMIT MENTIONED BY THE SPECIAL BENCH DECISION FOR THE PROJECTS PRIOR TO ASSESSMENT YEAR 2005-06, ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE CIT(A) VIDE PARA 3.4 OBSERVED THAT IT WAS AMPLY CLEAR FROM THE ASSESSMENT ORDERS AND APPELLATE ORDERS FOR ASSESSMENT YEARS 2004-05 AND 2005-06 AS WELL AS WRITTEN SUBMISSIONS FILED BY THE ASSESSEE THAT THE PROJECT VANARAJI CONSTITUTED OF THREE BUILDINGS F, G AND H, OUT OF WHICH BUILDING F COMPRISED TOTALLY OF SHOPS WHEREAS BUILDINGS G AND H WERE ENVISAGED AS RESIDENTIAL BUILDINGS. THE CIT(A) FURTHER OBSERVED THAT THIS FACTUAL POSITION HAD BEEN BROUGHT ON RECORD AND ALSO ADMITTED BY THE ASSESSEE IN VARIOUS WRITTEN SUBMISSIONS FILED IN EARLIER YEARS AND DURING THE YEAR ALSO. THE CIT(A) FURTHER OBSERVED THAT WHERE THE ASSESSEE VIDE ITS SUBMISSIONS DATED 23.09.2007 AND DURING THE COURSE OF HEARING, ADMITTED THE FACT THAT BUILDING H COMPRISED IN THE VANARAJI PROJECT WAS NOT STARTED AT ALL, VIDE ORDER SHEET NOTING DATED 18.09.2009, THE ASSESSEE WAS SPECIFICALLY ASKED AS TO HOW THE PROJECT COULD BE SAID TO BE COMPLETED IN ORDER TO QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10)(A) OF THE ACT. 6. THE NEXT POINT NOTED BY THE CIT(A) VIDE PARA 3.5 WAS THAT THE ASSESSING OFFICER HAD NOTED THAT ANOTHER PROJECT BY NAME MANISHA TOWERS WAS CONSTRUCTED ON 33,000 SQ.FT. OF LAND, WHICH WAS LESS THAN ONE ACRE. THE ASSESSEE BEFORE THE CIT(A) INITIALLY HAD CLAIMED THAT THERE WAS NO CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF MANISHA TOWERS. ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 4 HOWEVER, ITS STAND WAS CHANGED ON A LATER DATE, THEREFORE, THE CIT(A) VIDE ORDER SHEET ENTRY DATED 23.09.2009 ASKED THE ASSESSEE AS TO HOW MANISHA TOWERS CONSTRUCTED ON 33,000 SQ.FT. OF LAND WOULD INDEPENDENTLY SATISFY THE CONDITIONS GIVEN UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSEE IN REPLY, FURNISHED THE COPY OF AGREEMENT OF PURCHASE OF FSI IN RESPECT OF BUILDING E I.E. MANISHA TOWERS AND IT WAS CLAIMED THAT FSI WAS OF 33,000 SQ.FT. AND NOT THE LAND AREA AND IT WAS ALSO PART OF PROJECT VANARAJI. FURTHER, IT WAS CLARIFIED BY THE ASSESSEE THAT THE SAID BUILDING E WAS SITUATED ON THE PLOT OF ENTIRE PROJECT WHICH EXCEEDED ONE ACRE LIMIT. THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD BEEN MAKING CONTRARY STATEMENTS FROM YEAR TO YEAR AND BEFORE VARIOUS ASSESSING OFFICERS AND APPELLATE AUTHORITIES. THE CIT(A) FURTHER NOTED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAD GIVEN A FINDING THAT THE NEW PROJECT MANISHA TOWERS WAS CONSTRUCTED ON A PLOT ADMEASURING 33,000 SQ.FT. AND THE PLOT AREA WAS LESS THAN ONE ACRE. HOWEVER, IN THE APPELLATE PROCEEDINGS, THE ASSESSEE FILED AN EXPLANATION THAT 33,000 SQ.FT. WAS ACTUALLY THE FSI AND WAS NOT THE PLOT AREA AND FOR THE PURPOSE OF SECTION 80IB(10) OF THE ACT, IT WAS EXPLAINED THAT PLOT AREA SHOULD BE TAKEN AS ENTIRE PROJECT INCLUDING VANARAJI ALSO I.E. BUILDINGS F, G, H AND E. IN THIS REGARD, IT WAS EXPLAINED BY THE ASSESSEE THAT THE FIRST ACQUISITION WAS 95,898 SQ.FT. AND IN 2003 ANOTHER 33,000 SQ.FT. WAS ACQUIRED, THEREFORE, THE APPELLANT CHANGES ITS STAND ONCE AGAIN EQUATING THIS AREA OF 33,000 SQ.FT. FOR MANISHA TOWERS WITH THE LAND AREA INSTEAD OF FSI. TAKING NOTE OF THE PROVISIONS OF VARIOUS CONDITIONS IN SECTION 80IB(10) OF THE ACT, THE CIT(A) OBSERVED THAT THE PROJECT VANARAJI CONSTITUTED OF BUILDINGS F, G AND H AND THE BUILDING MANISHA TOWERS I.E. BUILDING E, FOR WHICH ADDITIONAL FSI WAS PURCHASED IN 2003, WAS NOT ENVISAGED AS PART OF PROJECT VANARAJI. THE CIT(A) WAS OF THE VIEW THAT IF MANISHA TOWERS IS TREATED AS SEPARATE PROJECT AND WHERE THE SAID PROJECT WAS BUILT ON AN AREA OF LESS THAN ONE ACRE, THEN THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 5 ACT WAS NOT ADMISSIBLE TO THE ASSESSEE ON THE SALE FROM THIS BUILDING. HE FURTHER OBSERVED THAT IN ORDER TO MEET THE LACUNAE OF SMALLER AREA, THE ASSESSEE IS CLAIMING THAT MANISHA TOWERS WAS PART OF ORIGINAL PROJECT VANARAJI COMPRISING OF BUILDINGS F, G AND H. HOWEVER, THE PLEA OF ASSESSEE WAS REJECTED. THE CIT(A) WAS OF THE VIEW THAT THE PROPOSITION OF DECISION OF PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 VIDE ORDER DATED 30.04.2009 WAS VALID ONLY TO THE PERIOD PRIOR TO AMENDMENT IN CLAUSE (D) TO SECTION 80IB(10) OF THE ACT. THE CIT(A) HELD THAT SINCE ONLY 6.62% OF BUILT UP AREA UTILIZED FOR COMMERCIAL PURPOSE OUT OF TOTAL AREA OF BUILDING F, THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE UNDER SECTION 80IB(10) OF THE ACT. HOWEVER, THE YEAR UNDER APPEAL WAS ASSESSMENT YEAR 2006-07 BY WHICH AN AMENDMENT BY WAY OF INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT WAS ALREADY BROUGHT ON RECORD AND HENCE, THE DECISION OF TRIBUNAL DID NOT PERTAIN TO POST AMENDMENT PERIOD I.E. ASSESSMENT YEAR 2005- 06, WHICH IS SUBJECT MATTER OF PRESENT APPEAL BEFORE THE CIT(A). IN VIEW OF SPECIAL BENCH DECISION IN BRAHMA ASSOCIATES (SUPRA), THE CIT(A) HELD THAT AFTER INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005, THE LAW HAS CHANGED AND FOR ASSESSMENT YEAR 2005-06 ONWARDS THE RESTRICTION AS MENTIONED IN CLAUSE (D) WOULD APPLY IN RESPECT OF COMMERCIAL AREA. THE CIT(A) FURTHER HELD THAT EVEN IF THE PROJECT COMMENCED PRIOR TO ASSESSMENT YEAR, THE LIMITATION OF RESTRICTION IN COMMERCIAL AREA WAS STILL APPLICABLE TO ASSESSMENT YEAR 2005-06. IN VIEW OF ABOVE, THE CLAIM OF ASSESSEE UNDER SECTION 80IB(10) OF THE ACT WAS REJECTED BECAUSE OF INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. ASSESSMENT YEAR 2005-06. THE CONTENTION OF THE ASSESSEE THAT THE COMMERCIAL BUILDING F WAS A SEPARATE PROJECT ALTOGETHER AND SHOULD NOT BE CONSIDERED WAS ALSO REJECTED BY THE CIT(A) FOR THE PROPOSITION THAT EVEN THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 HAD CONSIDERED THIS COMMERCIAL BUILDING ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 6 AS PART OF PROJECT VANARAJI AND APPLYING THE LIMIT OF 6.62% OF COMMERCIAL AREA BEING INCLUDED IN THE PROJECT, ALLOWED THE CLAIM OF DEDUCTION. 7. THE SECOND ASPECT OF THE ISSUE ON WHICH THE CIT(A) HELD THE ASSESSEE NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS THE NON- COMPLETION OF PROJECT. SINCE THE BUILDINGS F, G AND H COMPRISED OF VANARAJI, OUT OF WHICH BUILDING H HAD NOT EVEN COMMENCED CONSTRUCTION. THE CIT(A) HELD THAT THE PROJECT OF ASSESSEE DID NOT QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10)(A) OF THE ACT. THE CIT(A) THEREAFTER, DEALT WITH ALL THE DIFFERENT RELIANCES PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND HELD THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS NOT ALLOWABLE TO THE ASSESSEE. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) FOR DENYING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2004-05 WHICH WAS EARLIER DENIED TO THE ASSESSEE BECAUSE OF COMMERCIAL AREA CONSTRUCTED BY THE ASSESSEE. IT WAS EXPLAINED BY HIM THAT FIRST OF ALL, THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE AFORESAID COMMERCIAL AREA AND FURTHER, THE TRIBUNAL HAD ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE SAID PROJECT DESPITE COMMERCIAL AREA OCCUPIED BY THE COMMERCIAL ESTABLISHMENTS. HE FURTHER POINTED OUT THAT ADDITIONAL BUILDING I.E. E WAS CONSTRUCTED FOR WHICH THE LAND WAS NOT MORE THAN ONE ACRE. THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THAT BASIS. THE CIT(A), ON THE OTHER HAND, DENIED THE DEDUCTION UNDER SECTION 80IB(10) OF ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 7 THE ACT ON THREE COUNTS I.E. IN RESPECT OF MANISHA TOWERS, THE AREA WAS LESS THAN ONE ACRE. FURTHER, THE DEDUCTION WAS NOT ALLOWABLE TO THE ASSESSEE ON ACCOUNT OF DEFINITION OF COMMERCIAL AREA INSERTED BY WAY OF INTRODUCTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005 AND THE THIRD BASIS FOR DENIAL OF DEDUCTION TO THE ASSESSEE WAS BUILDING NO.H, NOT BEING DEVELOPED AT ALL. IN RESPECT OF BUILDING E I.E. MANISHA TOWERS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IT WAS SLUM LAND AND FOR WHICH THE ASSESSEE PURCHASED FSI AND BUILT THE TOWER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ON 29.05.2002, ANOTHER PERSON HAD GOT THE PLANS SANCTIONED. HOWEVER, THE ASSESSEE ON 16.09.2003 AGREED TO CONSTRUCT THE SAID BUILDING ON THE SLUM LAND, AGAINST WHICH THE BUILDING PLANS WERE SANCTIONED ON 15.07.2004. OUR ATTENTION WAS DRAWN TO THE SITE PLAN AT PAGE 66 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE WHOLE AREA WAS SLUM AND BUILDING E WAS DEVELOPED ON THE SAID LAND. OUR ATTENTION WAS FURTHER DRAWN TO THE AGREEMENT TO PURCHASE THE FSI AND CONSTRUCT THE BUILDING E, WHICH WAS PLACED AT PAGES 33 TO 35 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE AMOUNT WAS PAID TO THE CONSENTING PARTY, WHO WAS THE ORIGINAL PERSON WHO GOT THE BUILDING PLANS SANCTIONED, SUM OF RS.1 CRORE WAS PAID FOR CONSTRUCTION OF THE SAID BUILDING. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE NOTIFICATION FOR SERIAL NO.123 PLACED AT PAGES 133 AND 134 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ASSESSEE HAD PURCHASED FSI PLINTH AREA WITHIN THE APPROVED SLUM AREA. THE FIRST PROPOSITION RAISED BY THE ASSESSEE WAS THAT WHETHER THE SAID BUILDING E WAS PART OF EXISTING PROJECT, UNDER WHICH IT WAS SUPPOSED TO CONSTRUCT F, G AND H AND ALTERNATE PLEA WAS THAT IT WAS SEPARATE PROJECT AND WHERE BUILDING PLANS WERE PASSED AS ON 15.07.2004 AND AS PER COMMENCEMENT CERTIFICATE PLACED AT PAGES 53 AND 54 OF THE PAPER BOOK AND WHICH IS AFTER 01.04.2004, UNDER WHICH THE SECTION WAS AMENDED FOR SRA ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 8 PROJECTS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AFTER IT ENTERED INTO AN AGREEMENT IN 2003, THE EARLIER SANCTIONED PLANS IN 2002 WERE NOT APPLICABLE. HE STRESSED THAT SLUM PROJECT WAS ENVISAGED AFTER THE VACATION OF PERSON OCCUPYING THAT AREA OR REHABILITATION. SINCE THE EARLIER PERSON COULD NOT REHABILITATE, THE AGREEMENT WAS ENTERED INTO WITH THE ASSESSE E AND THE AMENDMENT IN ASSESSMENT YEAR 2005-06 WAS APPLICABLE IRRESPECTIVE OF THE DATE ON WHICH SRA WAS SANCTIONED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AS PER CBDT CIRCULAR, THE CONDITION WAS RELAXED AND IN ANY CASE OF PATE HAD NOT COMMENCED. IN THIS REGARD, HE PLACED RELIANCE ON VARIOUS DECISIONS AND IT WAS POINTED OUT THAT IN ANY CASE, THE TOTAL LAYOUT COMMON FOR ALL BUILDINGS WAS MORE THAN ONE ACRE AND TOTAL AREA OF LAND ON WHICH THE PROJECT ENVISAGED WAS ABOUT 8-10 ACRES. HE FURTHER STRESSED THAT ALL THE UNITS IN BUILDING E WERE COMPLETED BY 31.03.2008. HE ALSO STRESSED THAT THE FSI OF BUILDING H WAS PURCHASED, BUILDING H WAS NOT YET COMPLETED. 10. ANOTHER POINT RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THE APPROVAL UNDER MSRT ACT I.E. REHABILITATION OF SLUMS AND THE RELEVANT CBDT CIRCULAR ON THIS ISSUE AND THE APPROVAL OF BUILDING PLANS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THERE WAS COMMERCIAL PROSPECTIVE TO ACQUIRE THE RIGHTS TO CONSTRUCT BUILDING E, SINCE BUILDING H COULD NOT BE CONSTRUCTED AS THE SLUMS WERE NOT CLEARED. HE STRESSED THAT WHERE THE EARLIER BUILDING PLANS WERE NOT ACTED UPON AND THE ASSESSEE THEREAFTER PURCHASED THE FSI FOR THE LAND AND THE SAME WERE REVISED AND SANCTIONED ON 15.07.2004, THEN THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER THE AMENDED PROVISIONS OF THE ACT. RELIANCE PLACED IN THIS REGARD WAS ON THE DECISION OF THE PUNE BENCH OF TRIBUNAL IN ITO VS. A.V. BHAT DEVELOPERS (2013) 37 TAXMANN.COM 312 (PUNE TRIB.). THE ASSESSEE FURTHER ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 9 PLACED RELIANCE ON THE CBDT CIRCULAR DATED 05.01.2011, WHEREIN CBDT TALKS OF NOTIFIED PROJECTS FOR SLUM DEVELOPMENT I.E. PROJECTS APPROVED ON OR AFTER 01.04.2004. HE STRESSED THAT BUILDING PLANS IN CASE OF MANISHA TOWERS WERE PASSED AFTER 01.04.2004. WITHOUT PREJUDICE, HE POINTED OUT THAT EVEN IF THE PLANS WERE APPROVED EARLIER, WHERE PROJECT WAS DEVELOPED OF SLUM AREA, THEN THE CBDT COULD NOT PUT TIME LIMIT. RELIANCE WAS PLACED ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN ITO VS. ASHA KASHIPRASAD RINGSHIA (2013) 56 SOT 340 (MUMBAI), WHEREIN PLANS WERE SANCTIONED ON 04.08.2003 BUT COMMENCEMENT STARTED AFTER 01.04.2004 AND IT WAS HELD THAT THE ASSESSEE WAS ENTITLED TO THE DEDUCTION ON ACCOUNT OF SLUM DEVELOPMENT. SIMILAR PROPOSITION WAS LAID BY THE MUMBAI BENCH OF TRIBUNAL IN RAMESH GUNSHI DEDHIA VS. ITO (2014) 45 TAXMANN.COM 155 (MUMBAI TRIB). 11. THE NEXT PROPOSITION ADDRESSED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT SINCE SLUM WAS NOT CLEAR, BUILDING H COULD NOT COME UP. THE CIT(A) HAD DENIED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THIS COUNT. HOWEVER, THE ASSESSEE WAS ENTITLED TO THE DEDUCTION ON PROPORTIONATE BASIS AS HELD BY DIFFERENT DECISIONS OF TRIBUNAL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO STRESSED THAT MANISHA TOWERS WAS PART OF COMMON LAYOUT WHICH WAS BUILT ON PLOT AREA WHICH WAS MORE THAN 25 ACRES AND WHILE CONSIDERING THE CASE OF ASSESSEE FOR ENTITLEMENT UNDER SECTION 80IB(10) OF THE ACT, ENTIRE LAYOUT WAS TO BE TESTED AND NOT PLOT AREA UNDER MANISHA TOWERS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES (2013) 353 ITR 36 (BOM). HE ALSO REFERRED TO THE DECLARATION OF SLUM LAND AS NOTIFIED WHICH IS PLACED AT PAGE 133 OF THE PAPER BOOK AND THE COPY OF THE SLUM ACT. ANOTHER PROPOSITION RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS WITH ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 10 REGARD TO AMENDMENT TO SECTION 80IB(10)(D) OF THE ACT. HE POINTED OUT THAT WHERE THE BUILDING PLANS WERE APPROVED PRIOR TO 01.04.2005, THE SAID AMENDMENT WOULD NOT APPLY AS HELD BY THE HONBLE SUPREME COURT IN CIT VS. SARKAR BUILDERS (2015) 277 CTR 301 (SC). 12. ANOTHER PROPOSITION RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT BUILDING E WAS A RESIDENTIAL BUILDING AND THE CIT(A) SAYS IF BUILDING E IS PART OF PROJECT WITH G AND H BUILDINGS, THEN THE COMMERCIAL AREA WAS MORE AND HENCE, THE DEDUCTION WAS DENIED TO THE ASSESSEE, BUT IN CASE THE BUILT UP AREA IS ADDED THEN, THE PERCENTAGE OF COMMERCIAL AREA TO THE TOTAL AREA WOULD BE 4% AND IT WOULD BE LESS THAN 5% AND THE ASSESSEE WOULD BE ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE ON SEVERAL COUNTS. THE FIRST REASON FOR DENIAL OF DEDUCTION WAS THAT THE PROJECT WAS NOT COMPLETED AS BUILDING H WAS NOT CONSTRUCTED. THE SECOND REASON FOR DENIAL OF DEDUCTION WAS THE COMMERCIAL AREA CONSTRUCTED BY THE ASSESSEE WHICH FAR EXCEEDED THE LIMITS PRESCRIBED IN THE ACT. IN RESPECT OF BUILDING E, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT SINCE THE SAID PROJECT WAS ON A PLOT AREA LESS THAN ONE ACRE, IT WAS DENIED TO THE ASSESSEE. HOWEVER, NEW PLEA IS BEING RAISED THAT THE SAID PROJECT HAS BEEN CARRIED ON AS PER NOTIFICATION, THEN IN ORDER TO VERIFY THE CLAIM OF ASSESSEE, THE MATTER SHOULD BE SET-ASIDE TO THE FILE OF ASSESSING OFFICER. HE FURTHER PLACED RELIANCE ON THE ORDER OF CIT(A). ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 11 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IN RELATION TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE SECTION PROVIDES CERTAIN CONDITIONS, ON FULFILLMENT OF WHICH, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION AGAINST THE PROFITS ARISING FROM THE DEVELOPMENT, CONSTRUCTION AND SALE OF HOUSING PROJECT. THE AMENDED PROVISIONS OF SECTION 80IB(10) OF THE ACT IS THAT THE HOUSING PROJECT SHOULD BE CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE. THEREAFTER, CONDITIONS ARE LAID DOWN TO COMPLETE THE PROJECT WITHIN SPECIFIED TIME LIMIT AND ALSO THE LIMITS ARE PROVIDED IN RESPECT OF CONSTRUCTED AREA OF EACH OF THE TENEMENTS OR UNITS TO BE CONSTRUCTED IN THE AFORESAID HOUSING PROJECT. FURTHER, BY AN AMENDMENT W.E.F. 01.04.2005 CLAUSE (D) TO SECTION 80IB(10) OF THE ACT HAS BEEN INSERTED, UNDER WHICH THERE IS A RESTRICTION IN RESPECT OF COMMERCIAL AREA TO BE BUILT WITHIN HOUSING PROJECT. THE PROVISIONS OF SECTION 80IB(10) OF THE ACT HAVE BEEN SUBJECTED TO VARIOUS JUDICIAL REVIEWS AND VARIOUS PROPOSITIONS HAVE BEEN LAID DOWN BY DIFFERENT COURTS AND EVEN THE HONBLE SUPREME COURT ON THIS ASPECT. 15. THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES (2013) 353 ITR 36 (BOM), WHILE DECIDING THE ISSUE OF AVAILABILITY OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, WHERE A NEW HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE BUT WITH EXISTING HOUSING PROJECTS IN THE CITY OF MUMBAI, HELD 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 AUTHORITY AND FULFILL THE CONDITIONS SET OUT UNDER SECTION 80IB(10) OF THE ACT, THE DEDUCTION THEREUNDER CANNOT BE DENIED TO THOSE HOUSING PROJECTS. IT WAS FURTHER HELD THAT SECTION 80IB(10) OF THE ACT WHILE SPECIFYING THE SIZE OF PLOT OF LAND DOES NOT SPECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 12 MINIMUM AREA OF ONE ACRE. THE HONBLE BOMBAY HIGH COURT HELD THAT AS A RESULT SIGNIFICANCE OF SIZE OF PLOT OF LAND IS LOST AND THEREFORE THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS, BECOMES ELIGIBLE TO SECTION 80IB(10) OF THE ACT DEDUCTION ON CONSTRUCTION OF HOUSING PROJECT ON A PLOT HAVING MINIMUM AREA OF ONE ACRE IRRESPECTIVE OF THE FACT THAT THERE EXISTED OTHER HOUSING PROJECTS OR NOT . 16. THE HONBLE SUPREME COURT IN CIT VS. SARKAR BUILDERS (2015) 277 CTR 301 (SC) WAS ABREAST OF THE ISSUE OF RESTRICTION IMPOSED BY CLAUSE (D) TO SECTION 80IB(10) OF THE ACT IN RESPECT OF COMMERCIAL SPACE IN A HOUSING PROJECT. THE HONBLE SUPREME COURT OBSERVED THAT SECTION 80IB(10) OF THE ACT STIPULATES CERTAIN CONDITIONS WHICH ARE TO BE SATISFIED IN ORDER TO AVAIL THE BENEFIT OF SAID PROVISIONS. FURTHER, IT WAS HELD THAT THE BENEFIT WAS AVAILABLE TO THOSE UNDERTAKINGS WHICH ARE DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL AUTHORITY. THE SECTION WAS APPLICABLE IN RESPECT OF HOUSING PROJECTS BUT AT THE SAME TIME, CERTAIN COMMERCIAL ESTABLISHMENTS AND SHOPS WERE HELD TO BE NEEDED EVEN IN THE HOUSING PROJECT. THE EXTENT OF COMMERCIAL AREA WHICH COULD BE CONSTRUCTED EARLIER WAS AS PER LOCAL LAWS, UNDER WHICH THE LOCAL AUTHORITY GAVE THE SANCTIONS TO THE HOUSING PROJECTS. THE HONBLE SUPREME COURT THUS, FURTHER HELD THAT HOWEVER VIDE CLAUSE (D) WHICH WAS INSERTED AND MADE EFFECTIVE FROM 01.04.2005, IT WAS STIPULATED THAT THE BUILT UP AREA OF THE SHOPS AND COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJECTS WOULD NOT EXCEED 5% OF AGGREGATE BUILT UP AREA OF HOUSING PROJECT OR 2000 SQ.FT., WHICHEVER WAS LESS. THE HONBLE SUPREME COURT OBSERVED THAT ONE OF THE REQUIREMENT CONTAINED IN SUB-SECTION 10 THAT IN ORDER TO ENTITLED TO THE DEDUCTION UNDER SECTION, THE HOUSING PROJECT IS TO BE APPROVED BY LOCAL AUTHORITY, WHICH IN TURN, INCLUDE LOCAL AUTHORITIES GOVERNING THE CONSTRUCTION OF BUILDINGS, COMMERCIAL AS WELL AS RESIDENTIAL, IN EVERY STATE. THE HONBLE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 13 SUPREME COURT FURTHER OBSERVED THAT SUCH LOCAL AUTHORITIES WHILE SANCTIONING THE HOUSING PROJECTS ALSO PERMITTED THE USE OF CERTAIN AREA IN THE HOUSING PROJECT IN SPECIFIED MANNER FOR SHOPPING AND COMMERCIAL PURPOSES AS WELL. IT WAS NOTED BY THE APEX COURT THAT THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM) HELD THAT SINCE THE EXPRESSION HOUSING PROJECT WAS NOT DEFINED UNDER THE ACT, THE INTENTION OF PARLIAMENT WAS THAT WHATEVER WAS APPROVED BY LOCAL AUTHORITY UNDER THE RULES AS A HOUSING PROJECT WOULD BE TREATED AS HOUSING PROJECT UNDER SECTION 80IB(10) OF THE ACT, SINCE THE SUB-SECTION (10) ITSELF MANDATES THAT HOUSING PROJECT IS TO BE APPROVED BY LOCAL AUTHORITY WHICH WAS A NECESSARY CONDITION FOR CLAIMING DEDUCTION UNDER THE SAID PROVISION. THE HONBLE SUPREME COURT FURTHER HELD WHEN THE LOCAL AUTHORITY HAS APPROVED A HOUSING PROJECT, WHETHER RESIDENTIAL OR RESIDENTIAL CUM COMMERCIAL, THE ASSESSEE IS ENTITLED TO THE DEDUCTION ON THE ENTIRE PROFITS INCLUDING THE COMMERCIAL ESTABLISHMENTS PORTION. THE ASSESSEE WOULD BE ENTITLED TO CLAIM 100% DEDUCTION EVEN ON THE AREA COVERED BY SHOPS AND COMMERCIAL ESTABLISHMENTS. THE NEXT PROPOSITION ADDRESSED BY THE HONBLE SUPREME COURT WAS THAT AFTER INSERTION OF CLAUSE (D) TO SUB-SECTION (10) BY THE AMENDMENT WHICH WAS EFFECTIVE FROM 01.04.2005, WHERE EVEN IF THE LOCAL AUTHORITY HAD SANCTIONED A LARGER AREA FOR SHOPS AND COMMERCIAL ESTABLISHMENTS, THE BENEFIT OF SECTION 80IB(10) OF THE ACT WOULD NOT BE ADMISSIBLE TO THE ASSESSEES / DEVELOPERS, IN CASE THE AREA USED FOR SHOPS AND COMMERCIAL ESTABLISHMENTS EXCEEDED 5% OF AGGREGATE BUILT UP AREA OF HOUSING OR 2000 SQ.FT., WHICHEVER WAS LESS. THE HONBLE SUPREME COURT FURTHER HELD THAT THE AMENDMENT WAS PROSPECTIVE IN NATURE AND WOULD OPERATE FROM 01.04.2005. FOR THIS PROPOSITION, THE HONBLE SUPREME COURT FURTHER OBSERVED THAT PRIOR TO 01.04.2005, THE DEVELOPERS / ASSESSEES WHO GOT THEIR PROJECTS SANCTIONED FROM THE LOCAL AUTHORITIES AS HOUSING PROJECTS EVEN WITH COMMERCIAL USER, THOUGH LIMITED TO THE EXTENT PERMITTED UNDER THE DC RULES, WERE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 14 CONVINCED THAT THEY WOULD BE GETTING THE BENEFIT OF 100% DEDUCTION OF THEIR INCOME FROM SUCH PROJECTS UNDER SECTION 80IB(10) OF THE ACT AND THEY STARTED THE PROJECTS ON SUCH BASIS. ONCE THEY ARRANGE THEIR AFFAIRS IN THIS MANNER, THE REVENUE CANNOT DENY THE BENEFIT OF THIS SECTION APPLYING THE PRINCIPLE OF RETROACTIVITY EVEN WHEN THE PROVISION HAS NO RETROSPECTIVITY. WITH THE AFORESAID PLANNING AS PER THE LAW PREVAILING PRIOR TO 01.04.2005, THESE ASSESSEES ACTED AND ACQUIRED VESTED RIGHT THEREBY WHICH COULD NOT BE TAKEN AWAY. IT IS LUDICROUS ON THE PART OF REVENUE AUTHORITIES TO EXPECT THE ASSESSEE TO DO SOMETHING WHICH IS ALMOST IMPOSSIBLE. 17. THE HONBLE SUPREME COURT FURTHER REFERRED TO VARIOUS AMENDMENTS CARRIED OUT TO SUB-SECTION (10) TO SECTION 80IB(10) OF THE ACT FROM TIME TO TIME AND NOTED THE CHANGES BROUGHT IN TO SECTION 80IB(10) OF THE ACT AND ALSO NOTED THAT SIGNIFICANT AMENDMENT WAS CARRIED OUT BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01.04.2005, SEVERAL NEW CONDITIONS WERE INCORPORATED FOR THE FIRST TIME INCLUDING THE CONDITIONS MENTIONED IN CLAUSE (D) WHICH WAS NOT ON THE STATUTE BOOK EARLIER WHEN THE PROJECTS WERE SANCTIONED. THE HONBLE SUPREME COURT FURTHER NOTED THAT ANOTHER IMPORTANT AMENDMENT BY THIS ACT TO SUB-SECTION (14) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005 AND CLAUSE (A) WAS INSERTED IN SECTION 80IB(14) OF THE ACT DEFINING THE WORDS BUILT-UP AREA TO MEAN THE INNER MEASUREMENTS OF RESIDENTIAL UNITS AT THE FLOOR LEVEL. INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THICKNESS OF WALLS, BUT DID NOT INCLUDE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNITS. THE HONBLE SUPREME COURT FURTHER OBSERVED THAT IN ORDER TO AVAIL THE BENEFIT IN ASSESSMENT YEARS AFTER 01.04.2005 HOLDING THAT THE BALCONIES SHOULD BE REMOVED THOUGH THESE WERE PERMITTED EARLIER WOULD LEAD TO ABSURD RESULTS AS ONE CANNOT EXPECT AN ASSESSEE TO COMPLY WITH A CONDITION WHICH WAS NOT PART OF STATUTE WHEN HOUSING PROJECT WAS APPROVED. THE HONBLE SUPREME COURT THUS, HELD THAT THE ONLY WAY TO RESOLVE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 15 THE ISSUE WOULD BE TO HOLD THAT CLAUSE (D) IS TO BE TREATED AS INEXTRICABLY LINKED WITH THE APPROVAL AND CONSTRUCTION OF HOUSING PROJECT AND THE ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE SAID CONDITIONS WHEN IT WAS NOT IN CONTEMPLATION EITHER BY THE ASSESSEE OR EVEN THE LEGISLATURE, WHEN THE HOUSING PROJECT WAS APPROVED BY LOCAL AUTHORITY, HENCE THE SAID AMENDMENT COULD NOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE, THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. 18. THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (SUPRA) WHILE DECIDING THE ISSUE OF EXTENT OF COMMERCIAL AREA WITHIN A PROJECT WHICH WAS ENVISAGED AS A HOUSING PROJECT OR WAS APPROVED AS HOUSING PROJECT OR RESIDENTIAL PLUS COMMERCIAL PROJECT IN THE PRESCRIBED AREA OF COMMERCIAL PROJECT ALLOWABLE IN ALL SUCH PROJECTS WHERE PERMISSION TO CONSTRUCT WAS GIVEN PRIOR TO 01.04.2005 HELD AS UNDER:- 27. FORM THE FACT THAT THE DEDUCTION UNDER SECTION 80-IB(10) PRIOR TO APRIL 1, 2005 WAS ALLOWABLE ON THE PROFITS DERIVED FROM HOUSING PROJECTS CONSTRUCTED DURING THE SPECIFIED PERIOD, ON A SPECIFIED SIZE OF THE PLOT WITH RESIDENTIAL UNITS OF THE SPECIFIED SIZE, IT CANNOT BE INFERRED THAT THE DEDUCTION UNDER SECTION 80- IB(10) WAS ALLOWABLE TO HOUSING PROJECTS HAVING RESIDENTIAL UNITS ONLY, BECAUSE, RESTRICTION ON THE SIZE OF THE RESIDENTIAL UNIT IS WITH A VIEW TO MAKE AVAILABLE A LARGE NUMBER OF AFFORDABLE HOUSES TO THE COMMON MAN AND NOT WITH A VIEW TO DENY COMMERCIAL USER IN RESIDENTIAL BUILDINGS. IN OTHER WORDS, THE RESTRICTION UNDER SECTION 80-IB(10) REGARDING THE SIZE OF THE RESIDENTIAL UNIT WOULD IN NO WAY CURTAIL THE POWERS OF THE LOCAL AUTHORITY TO APPROVE A PROJECT WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DEVELOPMENT CONTROL RULES/REGULATIONS. THEREFORE, THE ARGUMENT OF THE REVENUE THAT THE RESTRICTION ON THE SIZE OF THE RESIDENTIAL UNIT IN SECTION 80-IB(10) AS IT STOOD PRIOR TO APRIL 1, 2005 IS SUGGESTIVE OF THE FACT THAT THE DEDUCTION IS RESTRICTED TO HOUSING PROJECTS APPROVED FOR RESIDENTIAL UNITS ONLY CANNOT BE ACCEPTED. 28. 29.. 30. THE QUESTION THEN TO BE CONSIDERED IS, WHETHER THE SPECIAL BENCH OF THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROJECTS HAVING COMMERCIAL AREA UP TO 10 PER CENT. OF THE BUILT-UP AREA OF THE PLOT ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB(10) ON THE ENTIRE PROJECT UP TO APRIL 1, 2005. ONCE THE BASIC ARGUMENT OF THE REVENUE THAT HOUSING PROJECTS WITH COMMERCIAL USER ARE NOT ENTITLED TO SECTION 80-IB(10) DEDUCTION IS REJECTED, THEN IN THE ABSENCE OF ANY RESTRICTION IMPOSED UNDER THE ACT, IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT THE PROJECTS APPROVED BY THE LOCAL AUTHORITIES HAVING RESIDENTIAL BUILDINGS WITH COMMERCIAL USER UP TO 10 PER CENT. OF THE PLOT AREA WOULD ALONE BE ENTITLED TO ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 16 DEDUCTION UNDER SECTION 80-IB(10). AS NOTED EARLIER, THE RESTRICTION REGARDING COMMERCIAL USER HAS BEEN IMPOSED FOR THE FIRST TIME BY INTRODUCING CLAUSE (D) TO SECTION 80-IB(10) WITH EFFECT FROM APRIL 1, 2005. THEREFORE, IT WAS NOT OPEN TO THE TRIBUNAL TO HOLD THAT PRIOR TO APRIL 1, 2005, PROJECTS HAVING COMMERCIAL USER UP TO 10 PER CENT. OF THE PLOT AREA ALONE WOULD BE ELIGIBLE FOR SECTION 80-IB(10) DEDUCTION. 19. THE HONBLE SUPREME COURT IN CIT VS. M/S. VEENA DEVELOPERS IN SLP(C) NO.24329/2011 ALONG WITH BUNCH OF APPEALS INCLUDING THE APPEAL AGAINST ORDER OF HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (SUPRA), DELIBERATED UPON THE AFORESAID ISSUE OF GRANT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT I.E. PROVISIONS WHICH STOOD PRIOR TO 01.04.2005. THE ISSUE BEFORE THE HONBLE APEX COURT WAS WHETHER WITHIN HOUSING PROJECT, IF SOME COMMERCIAL ACTIVITY WAS ALSO UNDERTAKEN, WHETHER SUCH PROJECTS WERE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE HONBLE APEX COURT HELD THAT WHERE SECTION 80IB(10) OF THE ACT VERY CATEGORICALLY MENTIONED SUCH PROJECT WHICH IS UNDERTAKEN AS HOUSING PROJECT IS APPROVED BY LOCAL AUTHORITY AND ONCE THE PROJECT IS APPROVED BY LOCAL AUTHORITY, IT IS TO BE TREATED AS HOUSING PROJECT. THE HONBLE SUPREME COURT FURTHER CLARIFIED THAT HOUSING PROJECT SHOULD BE AS PER DEVELOPMENT CONTROL REGULATIONS. THE HONBLE SUPREME COURT ALSO NOTED ANOTHER ASPECT OF THE ISSUE THAT WHERE THE PROJECT WAS CLEARED AS RESIDENTIAL PLUS COMMERCIAL PROJECT, THE HONBLE APEX COURT HELD THAT THE COMMERCIAL USER WHICH IS PERMITTED ALONG WITH THE RESIDENTIAL UNITS AND THAT TOO AS PER DCR AND THE SAME IS SAID TO BE PROJECT AS PREDOMINANTLY HOUSING / RESIDENTIAL PROJECT AND IS ENTITLED TO THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. FURTHER, UPHELD THE ORDER OF HONBLE HIGH COURT THAT FOR THE PROJECTS UP TO 31.03.2005, THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WOULD BE ALLOWABLE WHERE THE PROJECTS ARE APPROVED BY LOCAL AUTHORITY HAVING RESIDENTIAL BUILDINGS WITH COMMERCIAL USER AND NOT RESTRICTED TO 10% OF TOTAL BUILT UP AREA OF THE PLOT. IT ALSO APPROVED THE ORDER OF HONBLE HIGH COURT THAT DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS TO BE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 17 ALLOWED TO THE PROJECT AS A WHOLE AND THERE WAS NO JUSTIFICATION IN RESTRICTING THE SAID DEDUCTION ONLY TO PART OF PROJECT. FURTHER, IT WAS HELD THAT CLAUSE (D) INSERTED W.E.F. 01.04.2005 WAS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE, COULD NOT BE APPLIED FOR PROJECTS PRIOR TO 01.04.2005. 20. THE HONBLE MADRAS HIGH COURT IN CIT VS. VOORA PROPERTY DEVELOPERS P. LTD. (2015) 373 ITR 317 (MAD) WHILE DECIDING THE ISSUE OF CONDITIONS PRECEDENT FOR ALLOWING THE DEDUCTION IN RESPECT OF HOUSING PROJECT HELD THAT THE SAID DEDUCTION COULD NOT BE DENIED WHERE THE ASSESSEE UNDERTAKES A COMPOSITE HOUSING PROJECT CONSISTING OF SIX BLOCKS IN AN AREA EXCEEDING ONE ACRE. THE HOUSING PROJECTS WERE APPROVED UNDER DEVELOPMENT CONTROL RULES BY WAY OF SEPARATE PLAN PERMITS OBTAINED FOR SIX PROJECTS COULD NOT BE THE GROUND FOR DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE HONBLE HIGH COURT HELD THAT WHEN THE PROJECT FULFILLS THE CRITERIA BY HAVING APPROVED AS A HOUSING PROJECT, THE DEDUCTION COULD NOT BE DENIED UNDER SECTION 80IB(10) OF THE ACT MERELY BECAUSE THE ASSESSEE HAD OBTAINED A SEPARATE PLAN PERMIT FOR SIX BLOCKS. IF THE CONDITIONS SPECIFIED IN SECTION 80IB(10) OF THE ACT ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT. IN THE FACTS OF THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE HAD CONSTRUCTED SIX BLOCKS IN A LAND MEASURING ONE ACRE 6.5 CENTS AND THE HONBLE HIGH COURT HELD THAT THE SAME ADMITTEDLY, EXCEEDED THE REQUIRED AREA SPECIFIED IN CLAUSE (A) TO SUB-SECTION (10) OF SECTION 80IB OF THE ACT VIS--VIS ONE ACRE, THEREFORE, THE ASSESSEE WAS HELD TO BE ENTITLED TO THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES (2013) 353 ITR 36 (BOM) BY THE HONBLE MADRAS HIGH COURT. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN VISWAS PROMOTERS P. LTD. VS. ACIT , TC NOS.1014 OF 2009, 857 OF 2010 AND 190 TO 192 OF 2012 AND OTHERS VIDE JUDGMENT DATED ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 18 02.11.2012, WHEREIN SEVERAL BLOCKS WERE PUT UP IN A LARGER AREA WHICH ADMITTEDLY EXCEEDED THE REQUIRED AREA SPECIFIED IN CLAUSE (A) TO SECTION 80IB(10) OF THE ACT I.E. ONE ACRE AND IT WAS HELD THAT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 21. FURTHER, PUNE BENCH OF TRIBUNAL IN RUNWAL MULTIHOUSING PVT. LTD. VS. ACIT IN ITA NOS.1015, 1016 AND 1017/PN/2011, RELATING TO ASSESSMENT YEARS 2003-04 TO 2005-06, ORDER DATED 21.11.2012 CONSIDERED THE FACTS OF CASE WHEREIN THE ASSESSEE HAD RECEIVED PERMISSION TO CONSTRUCT A HOUSING PROJECT COMPRISING OF VARIOUS BUILDINGS, HOWEVER, DURING THE COURSE OF SURVEY ON THE SAID ASSESSEE, IT WAS OBSERVED THAT THE COMPLETION CERTIFICATE IN RESPECT OF PROJECT WAS NOT GRANTED BY LOCAL AUTHORITY TILL 31.03.2008 AND ALSO THAT THE ASSESSEE HAD FAILED TO CONSTRUCT BUILDINGS D AND F WHICH WERE PART OF LAYOUT ORIGINALLY SANCTIONED BY THE LOCAL AUTHORITY. IN SUCH CIRCUMSTANCES, THE ISSUE WAS WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE TRIBUNAL HELD THAT WHERE THE ASSESSEE HAS COMPLETED THE PROJECT AND HAD ALSO APPLIED FOR THE COMPLETION CERTIFICATE WITHIN STIPULATED PERIOD, MERELY BECAUSE THE COMPLETION CERTIFICATE WAS NOT RECEIVED BY THE ASSESSEE DOES NOT DISENTITLE THE ASSESSEE TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IN RESPECT OF SECOND GROUND FOR DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT THAT OUT OF TOTAL SPACE TO BE CONSTRUCTED AS PER SANCTIONED PLAN HAVING NOT BEEN CONSTRUCTED, CAN IT BE SAID THAT THE PROJECT WAS NOT COMPLETED, THE TRIBUNAL HELD THAT WHATEVER PORTION WAS COMPLETED BY THE ASSESSEE WHICH SATISFIES THE CONDITIONS LAID DOWN IN SECTION 80IB(10) OF THE ACT, THE ASSESSEE WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 19 22. WE FURTHER FIND THAT SIMILAR PROPOSITION IN RESPECT OF ALLOWABILITY OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, WHERE THOUGH THE BUILDING HAS BEEN COMPLETED AND THE COMPLETION CERTIFICATE HAS BEEN APPLIED FOR BY THE DEVELOPER / ASSESSEE THEREIN AND THE PERSONS HAVE ALREADY OCCUPIED THE UNITS AND MERELY BECAUSE THE COMPLETION CERTIFICATE HAS NOT BEEN RECEIVED BY THE DEVELOPER, DOES NOT DISENTITLE THE ASSESSEE FROM CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, HAS BEEN LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HINDUSTAN SAMUH AWAS LTD., REPORTED IN 377 ITR 150 (BOM). THE HONBLE HIGH COURT WAS ABREAST OF THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10)(A) OF THE ACT, WHEREIN THOUGH THE APPLICATION SEEKING COMPLETION CERTIFICATE WAS SUBMITTED TO THE MUNICIPAL CORPORATION PRIOR TO STIPULATED DATE, BUT THE SAME WAS NOT ISSUED. THE CASE OF THE ASSESSEE WAS THAT THE DELAY IN OBTAINING COMPLETION CERTIFICATE WAS NOT ATTRIBUTABLE TO IT AND THE SAID DELAY WAS BEYOND ITS CONTROL. THE HONBLE BOMBAY HIGH COURT HELD THAT COMPLETION OF HOUSING PROJECT IS PHYSICAL ACT, IT CAN BE DEMONSTRATED ON THE SPOT AND ALSO THROUGH A CERTIFICATE ISSUED BY AN ARCHITECT WHO IS APPOINTED FOR SUPERVISING THE CONSTRUCTION WORK, HE IS A PROFESSIONAL, WHO WOULD DECLARE THAT THE PROJECT IS COMPLETE. THE HONBLE JURISDICTIONAL HIGH COURT FURTHER HELD THAT WHERE AN APPLICATION FOR COMPLETION CERTIFICATE SUBMITTED TO THE AUTHORITIES IS ACCOMPANIED BY A COMPLETION CERTIFICATE ISSUED BY THE CONCERNED ARCHITECT. NO DOUBT, THE MUNICIPAL AUTHORITIES WOULD CAUSE INSPECTION OF THE SITE AND THEREAFTER, ISSUE COMPLETION CERTIFICATE; BUT IF THE PROJECT IS COMPLETED BY STIPULATED DATE AND AN APPLICATION IS MOVED QUITE IN TIME, FOR SEEKING COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES AND IF THEY DELAY THE ISSUANCE OF COMPLETION CERTIFICATE, THEN IT CANNOT BE SAID THAT SUCH A CERTIFICATE WOULD ALONE DECIDE THE DATE OF COMPLETION OF PROJECT. WHERE THE DEVELOPER HAS TAKEN ALL STEPS FOR ISSUANCE OF COMPLETION CERTIFICATE AND WHERE THE PROJECT WAS ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 20 COMPLETED WITHIN STIPULATED DATE, THE HONBLE HIGH COURT ALLOWED THE CLAIM OF ASSESSEE. 23. ANOTHER ASPECT OF THE ISSUE IS PROPORTIONATE CLAIM OF DEDUCTION IN RESPECT OF SUCH BUILDINGS OUT OF TOTAL NUMBER OF BUILDINGS WHICH WERE COMPLETED IN THE HOUSING PROJECT AND SOME OF BUILDINGS HAVE NOT BEEN COMPLETED, WAS ALSO CONSIDERED BY THE PUNE BENCH OF TRIBUNAL IN FOLLOWING CASES AND CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ALLOWED ON PRORATA BASIS:- I) SATYANARAYAN RAMSWARUP AGARWAL VS. ITO IN ITA NO.807/PN/2014, RELATING TO ASSESSMENT YEAR 2010-11, ORDER DATED 21.03.2016; II) ITO VS. M/S. PARAS DEVELOPERS IN ITA NO.583/PN/2013 AND CO NO.16/PN/2014, RELATING TO ASSESSMENT YEAR 2007-08, ORDER DATED 31.03.2015. III) M/S. SURANA MUTHA DEVELOPERS VS. ITO IN ITA NO.360/PN/2013, RELATING TO ASSESSMENT YEAR 2009-10, ORDER DATED 10.04.2015; IV) PADMAVATI DEVELOPERS VS. DCIT & ORS IN ITA NOS.1692 TO 1694/PN/2012 & ITA NO.2463/PN/2012, RELATING TO ASSESSMENT YEARS 2006-07, 2007-08 AND 2009-10, CONSOLIDATED ORDER DATED 29.05.2015. 24. BEFORE ADDRESSING THE FACTS OF PRESENT CASE, WE WOULD ALSO LIKE TO REFER TO THE PROVISIONS OF SECTION 80IB(10) OF THE ACT IN RESPECT OF DEVELOPMENT OF SLUM REHABILITATION PROJECT. 25. THE PROVISO UNDER CLAUSES (A) AND (B) TO SECTION 80IB(10) OF THE ACT PROVIDES THAT NOTHING CONTAINED IN CLAUSES (A) AND (B) SHALL APPLY TO A HOUSING PROJECT, WHICH WAS CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR THE STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDING IN AN AREA DECLARED TO BE SLUM AREA UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF. THE SAID PROVISO HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01.04.2005. THE MANDATE OF THE PROVISO IS THAT WHERE A HOUSING PROJECT IS CARRIED OUT FOR RE-CONSTRUCTION OR RE-DEVELOPMENT OF AREA DECLARED AS ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 21 SLUM AREA UNDER THE LAW, THEN THERE IS NO LIMITATION ON THE SIZE OF PLOT TO BE MINIMUM AREA OF ONE ACRE AND PLUS THERE IS NO CONDITION FOR COMPLETING THE SAID HOUSING PROJECT WITHIN THE STIPULATED TIME FRAMED AS PROVIDED UNDER CLAUSE (A) TO SECTION 80IB(10) OF THE ACT. HOWEVER, THE PROVISO INSERTED BY THE FINANCE ACT, 2004 TO CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT CLEARLY ENLISTS A REQUIREMENT OF NOTIFICATION OF THE SCHEME TO BE FRAMED BY EITHER CENTRAL GOVERNMENT OR STATE GOVERNMENT. THE SCHEME PERSE HAS TO BE FRAMED BY THE CENTRAL GOVERNMENT OR THE STATE GOVERNMENT FOR RE-CONSTRUCTION OR RE- DEVELOPMENT OF AREAS DECLARED TO BE SLUM AREA, UNDER THE LAW. HOWEVER, THERE IS NO REQUIREMENT TO INDIVIDUALLY DECLARE A PROJECT TO BE SLUM. THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL, 2004 HAS PROPOSED TO RELAX THE CONDITION OF MINIMUM PLOT SIZE OF ONE ACRE IN CASE A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL OR STATE GOVERNMENTS FOR RE-CONSTRUCTION OR RE-DEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS. WHERE THE PROJECTS ARE CARRIED OUT IN ACCORDANCE WITH THE SCHEME FOR REDEVELOPMENT OF SLUM AREA AS FRAMED BY THE CENTRAL GOVERNMENT OR THE STATE GOVERNMENT, WHICH IN TURN, IS NOTIFIED BY THE BOARD, THEN THE ASSESSEE IS ENTITLED TO THE CLAIM OF BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROFITS FROM THE DEVELOPMENT AND CONSTRUCTION OF SUCH PROJECTS AND THE PROVISIONS OF CLAUSES (A) AND (B) ARE NOT ATTRACTED IN SUCH CASES. 26. THE MUMBAI BENCH OF TRIBUNAL IN RAMESH GUNSHI DEDHIA VS. ITO (2014) 45 TAXMANN.COM 155 (MUMBAI TRIB) HELD THAT THE PROJECTS APPROVED UNDER THE SLUM REHABILITATION SCHEME WERE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND WERE ENTITLED TO THE BENEFIT OF PROVISO TO CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT. THE MUMBAI BENCH OF TRIBUNAL WHILE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 22 EXPLAINING PROVISO TO CLAUSES (A) AND (B) TO SECTION 80IB(10) OF THE ACT HELD AS UNDER:- 7.2 THE DEDUCTION U/S 80IB(10) IS AVAILABLE TO THE HOUSING PROJECT WHICH FULFILS THE CONDITIONS STIPULATED THERE UNDER. ONE OF THE CONDITIONS IS THAT THE PROJECT IS ON THE SIZE OF PLOT OF LAND WHICH HAS A MINIMUM AREA OF 1 ACRE UNDER CLAUSE (B) OF SECTION 80IB(10). AN EXCLUSION HAS BEEN CARVED OUT UNDER THE PROVISO TO CLAUSE (A) & (B) OF THE SECTION 80IB(10) WHEREBY THE CONDITION STIPULATED UNDER CLAUSE (A) & (B) SHALL NOT APPLY TO THE HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF AREA DECLARED AS SLUM AREA UNDER THE LAW. THE PROJECTS OF THE ASSESSEE ARE UNDER THE SLUM REHABILITATION SCHEME FRAMED BY THE STATE GOVERNMENT OF MAHARASHTRA WHICH HAS BEEN NOTIFIED BY THE BOARD VIDE NOTIFICATION DATED 05TH JANUARY 2011. THUS IT IS CLEAR THAT THE REQUIREMENT UNDER THE PROVISO TO SECTION 80IB(10) (A) & (B) FOR EXCLUSION OF THE CONDITIONS PRESCRIBED UNDER THE SAID CLAUSES IS THAT THE HOUSING PROJECT IS CARRIED OUT IN ACCORDANCE WITH THE SCHEME FOR RECONSTRUCTION OR REDEVELOPMENT OF SLUM AREA. SUCH SCHEME EITHER FRAMED BY STATE GOVERNMENT OR CENTRAL GOVERNMENT AND NOTIFIED BY THE BOARD IN THIS BEHALF. THE PLAIN READING OF THE PROVISO INSERTED BY THE FINANCE ACT, 2004 TO CLAUSE (A) & (B) OF SUB-SECTION (10) OF SECTION 80IB CLEARLY MANIFEST THE REQUIREMENT OF NOTIFICATION OF THE SCHEME SO FRAMED EITHER BY THE CENTRAL GOVERNMENT OR BY THE STATE GOVERNMENT. THEREFORE, THERE IS NO REQUIREMENT OF NOTIFICATION OF AN INDIVIDUAL PROJECT UNDER THE SCHEME. IT IS RELEVANT TO SEE THE INTENT OF THE LEGISLATURE WHILE AMENDING THE PROVISIONS OF SECTION 80IB(10), TO RELAX THE CONDITION FOR SUCH PROJECT UNDER THE SLUM REHABILITATION SCHEME. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL 2004 STATES THAT; WITH A VIEW TO INCREASE THE REDEVELOPMENT OF SLUM DWELLERS IT HAS PROPOSED TO RELAX THE CONDITION OF MINIMUM PLOT SIZE OF 1 ACRE IN CASE OF HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDING AND NOTIFIED BY THE BOARD IN THIS BEHALF. THUS THE INTENT OF LEGISLATION IS TO EXEMPT THE CONDITION OF MINIMUM OF 1 ACRE PLOT SIZE IN THE CASE WHERE THE HOUSING PROJECT IS CARRIED OUT IN ACCORDANCE WITH THE SLUM RECONSTRUCTION SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR STATE GOVERNMENT AND SUCH SCHEME IS NOTIFIED BY THE BOARD. THEREFORE, TO AVAIL THE BENEFIT OF THE PROVISO TO CLAUSE (A) & (B) OF THE SECTION 80IB(10) THE FOLLOWING REQUIREMENTS ARE TO BE SATISFIED VIZ. (I) THE HOUSING PROJECT IS CARRIED OUT IN ACCORDANCE WITH THE SCHEME OF RECONSTRUCTION OR REDEVELOPMENT OF SLUM AREA (II) SUCH SCHEME IS FRAMED BY THE CENTRAL GOVERNMENT OR STATE GOVERNMENT (III) SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF. 27. IT WAS FURTHER HELD AS UNDER:- 7.3 . THE PROVISO IN QUESTION HAS BEEN INSERTED TO RELAX THE CONDITION PROVIDED UNDER CLAUSE (A) & (B) OF SECTION 80IB(10) AND NOT FOR ADDING ANY NEW CONDITION WHICH IS OTHERWISE NOT REQUIRED FOR HOUSING PROJECTS FOR AVAILING THE BENEFIT OF DEDUCTION U/S 80IB(10). EVEN OTHERWISE THE CONDITION AS STIPULATED IN CLAUSE (A) OF SECTION 80IB(10) IS WITH RESPECT TO SANCTION OF THE PROJECT IS ONLY FOR THE TIME PERIOD OF COMPLETION OF THE PROJECT AND THERE IS NOT SUCH CONDITION THAT IF A PROJECT IS APPROVED PRIOR TO 01.04.2004 IS NOT ENTITLED FOR THE BENEFIT U/S 80IB(10). THE PROVISO IN QUESTION STIPULATES THE REQUIREMENT OF NOTIFICATION OF SCHEME OF RECONSTRUCTION OR REDEVELOPMENT OF SLUM AREA AND DOES NOT DISCRIMINATE THE PROJECT CARRIED OUT IN ACCORDANCE WITH SUCH SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR BY THE STATE GOVERNMENT. ONCE THE SCHEME IS NOTIFIED ALL PROJECTS CARRIED OUT IN ACCORDANCE WITH SUCH SCHEME ARE ENTITLED FOR THE BENEFIT OF THE PROVISO WHEREBY THE CONDITIONS PRESCRIBED UNDER CLAUSE (A) & (B) ARE RELAXED. THUS THE SECOND PART OF THE NOTIFICATION DATED 5TH JANUARY 2011 IS INCONSISTENT/CONTRARY TO THE PROVISO OF CLAUSE (A) & (B) OF SECTION 80IB(10) AS ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 23 WELL AS TO THE INTENT OF THE LEGISLATURE INSERTING THE SAID PROVISO. THE BOARD CANNOT INSERT A NEW CONDITION IN THE PROVISIONS OF A STATUTE WHICH IS REPUGNANT TO THE PROVISIONS ITSELF AS WELL AS AGAINST THE VERY OBJECT AND SCHEME OF THE SAID PROVISION OF THE STATUTE. AS WE HAVE DISCUSSED ABOVE THE PROVISO TO CLAUSE (A) & (B) OF SECTION 80IB(10) MANDATES THE NOTIFICATION OF SCHEME AND NOT THE PROJECT UNDER THE SCHEME. THEREFORE, PUTTING ANY EXTRA CONDITION FOR DISCRIMINATING THE PROJECT UNDER THE SCHEME IS OUTSIDE THE SCOPE OF NOTIFICATION UNDER CLAUSE (A) & (B) OF SECTION 80IB(10). ACCORDINGLY WE HOLD THAT THE ASSESSEE IS ENTITLED FOR BENEFIT OF THE PROVISO TO CLAUSE (A) & (B) OF SECTION 80IB(10) AND, THEREFORE, IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) IF THE OTHER CONDITIONS AS PRESCRIBED UNDER CLAUSE (C) TO (E) ARE SATISFIED. 28. THE PUNE BENCH OF TRIBUNAL IN ITO VS. A.V. BHAT DEVELOPERS (2013) 37 TAXMANN.COM 312 (PUNE TRIB.) HAVE LAID DOWN THE PROPOSITION THAT WHERE EARLIER APPROVAL TO CONSTRUCT AND DEVELOP THE HOUSING PROJECT WAS OBTAINED BY THE PREVIOUS OWNER OF PART OF THE SAID PLOT OF LAND, WHICH COULD NOT MATERIALIZE AND THEREAFTER, AMALGAMATED LAND WAS SOLD TO THE ASSESSEE THEREIN, WHO AFTER ITS CONSTITUTION GOT THE LAYOUT APPROVAL ON A LATER DATE, THEN THE SAME WAS TO BE CONSTITUTED AS THE FIRST APPROVAL FOR THE ASSESSEE. THE TRIBUNAL HELD AS UNDER:- 12. WE ARE ONLY TRYING TO EMPHASIS THE AFORESAID FOR THE REASON THAT EXPLANATION (I) TO CLAUSE OF SECTION80IB(10) OF THE ACT HAS BEEN WRONGLY APPLIED BY THE AUTHORITIES BELOW. THE SAID EXPLANATION IS TO BE APPLIED WITH REFERENCE TO THE PROJECT OF THE ASSESSEE AND NOT TO A PROJECT OWNED BY PREVIOUS OWNERS AND THAT TOO ON A DIFFERENT PLOT SIZE. INFACT, FACTUALLY SPEAKING THE ASSESSEE BROUGHT TO THE NOTICE OF THE LOWER AUTHORITIES THAT THE BUILDING PLAN APPROVAL DATED 2.11.2003 REFERRED BY THE ASSESSING OFFICER IS FOR A PROJECT DISTINCT THAN THE PROJECT OF THE ASSESSEE, WHOSE BUILDING PLAN APPROVAL WAS FIRST MADE ON 19.1.2005. IT CANNOT BE DENIED THAT THE APPROVAL ON 2.11.2003 WAS BY THE PREVIOUS OWNERS IN AS MUCH AS THE ASSESSEE WAS INCORPORATED ON 20.7.2004 ONLY. ASSESSEE ACQUIRED DEVELOPMENT RIGHTS OF THE PLOT OF 7826.89SQ. MTRS. OF LAND ONLY ON 1-10-2004. ORIGINALLY THERE WERE THREE DIFFERENT PLOTS AND IT WAS IN RESPECT OF ONE OF THESE PLOTS ADMEASURING 1983SQ. MTRS. THAT THE PREVIOUS OWNER OBTAINED A BUILDING PLAN APPROVAL DATED 01-11-2003, WHICH HAS BEEN REFERRED TO IN THE ASSESSMENT ORDER. IT HAS BEEN BROUGHT OUT BY THE CIT(APPEALS) THAT NO DEVELOPMENT WORK WAS CARRIED OUT ON ANY OF THE THREE PLOTS SANCTIONED IN 2003. BEFORE ACQUISITION BY THE ASSESSEE, THE THREE PLOTS WERE AMALGAMATED AND ASSESSEE ACQUIRED THE AMALGAMATED PLOT AND MADE NEW LAYOUT AND BUILDING PLANS WHICH WERE LATER APPROVED BY PMC IN 2005. THEREFORE, THE BUILDING PLAN APPROVAL DATED 19-01-2005 IS THE FIRST BUILDING PLAN APPROVAL IN RESPECT OF THE ASEESSEES PROJECT. MOREOVER, AT PAGE 92 OF PAPER BOOK, ASSESSEE HAS MADE A STATEMENT SHOWING THE DIFFERENCE IN THE LAYOUT AND BUILDING PLAN SUBMITTED BY THE PREVIOUS OWNER WITH RESPECT TO 2003 APPROVAL AND THE IMPUGNED PROJECT OF THE ASSESSEE. THE AFORESAID DIFFERENCE WAS VERY MUCH BEFORE THE LOWER AUTHORITIES AND READS AS UNDER:- PARTICULARS PLAN 2003 PLAN 2005 PLOT AREA ON WHICH SANCTIONED OBTAINED NO. OF BUILDINGS 1997.73 SQ. MTRS. 2 7286.89 SQ. MTRS. 4 ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 24 NO. OF FLOORS IN EACH BUILDINGS NO. OF FLATS COMPLAINT WITH THE PROVISION OF 80IB(10) WITH RESPECT TO PLOT AREA 4 28 NO 7 112 YES 29. THE MUMBAI BENCH OF TRIBUNAL IN ITO VS. ASHA KASHIPRASAD RINGSHIA (2013) 56 SOT 340 (MUMBAI) HELD THAT RIGOURS OF CONDITIONS ENUMERATED IN CLAUSES (A) AND (B) OF SECTION 80IB OF THE ACT HAD BEEN RELAXED BY THE LEGISLATURE TO ACHIEVE CERTAIN SOCIO-ECONOMIC OBJECTS. THEREFORE, THE PROVISO TO SECTION 80IB(10) OF THE ACT SHOULD BE GIVEN A LIBERAL INTERPRETATION SO AS NOT TO DEFEAT A GENUINE CLAIM FOR DEDUCTION BY A DEVELOPER WHO UNDERTAKES TO DEVELOP A HOUSING PROJECT IN A SLUM AREA UNDER THE SCHEME APPROVED BY CENTRAL OR STATE GOVERNMENTS. THE TRIBUNAL FURTHER HELD THAT IN THE PROVISO, TIME LIMIT PROVIDED IN CLAUSE (A) OF SECTION 80IB(10) OF THE ACT HAD NOT BEEN SPECIFICALLY MADE APPLICABLE, THEREFORE, SUCH TIME LIMIT COULD NOT BE IMPOSED BY WAY OF SUBORDINATE LEGISLATION AND THE CIRCULAR ISSUED BY THE CBDT IN THIS REGARD WAS HELD TO BE NOT APPLICABLE. THE TRIBUNAL FURTHER OBSERVED THAT IN THE FACTS OF THE CASE BEFORE THEM, THE APPROVAL WHICH WAS GIVEN ON 04.08.2003 WAS LOADED WITH LOT OF TERMS AND CONDITIONS TO BE FULFILLED BEFORE COMMENCEMENT AND ONLY AFTER SUCH TERMS AND CONDITIONS WERE FULFILLED, THE ASSESSEE WAS GIVEN COMMENCEMENT CERTIFICATE TO START THE PROJECT AND IN SUCH CASE, IT COULD NOT BE HELD THAT THE ASSESSEES PROJECT WAS NOT LIABLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, ONCE ALL OTHER CONDITIONS WERE FULFILLED. THE COMMENCEMENT CERTIFICATE WAS ISSUED AFTER 1 ST APRIL, 2004 I.E. 17.10.2004 COULD BE TAKEN AS DATE OF APPROVAL AS IT WAS FROM THIS DATE, THE APPROVAL GIVEN BY SRA BECAME OPERATIVE. THE OBJECTION OF THE REVENUE THAT THE DATE OF APPROVAL OF SRA SCHEME WAS 03.07.2003, WAS HELD TO BE NOT CORRECT BECAUSE THE SAID DATE WAS WHEN THE ASSESSEE HAD APPLIED BEFORE THE SRA FOR ITS APPROVAL OF THE PROJECT. THE SCHEME IN WHICH THE APPROVAL HAD BEEN GRANTED WAS DCR ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 25 NO.33(10) WHICH HAD BEEN NOTIFIED BY CBDT AND HENCE, THE GROUND OF APPEAL RAISED BY THE REVENUE WAS DISMISSED. 30. NOW, COMING TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS CARRYING ON THE BUSINESS OF BUILDER AND DEVELOPER. THE ASSESSEE UNDERTOOK THE DEVELOPMENT OF RESIDENTIAL PREMISES CONSISTING OF RESIDENTIAL UNITS AND SOME COMMERCIAL ESTABLISHMENTS, UNDER WHICH IT CONSTRUCTED BUILDINGS F, G AND H OF THE PROJECT VANARAJI. THE BUILDING F WAS APPROVED FIRST AND BUILDINGS G AND H WERE APPROVED LATER. THE BUILDINGS G AND H CONSISTED OF RESIDENTIAL ACCOMMODATION AND BUILDING F CONSISTED OF 17 SHOPS. THE ASSESSEE HAD ALREADY SOLD THE SHOPS IN ASSESSMENT YEAR 2003-04 AS THESE WERE COMPLETED BEFORE THE RESIDENTIAL SCHEME WAS COMPLETED AND PAID ALL THE TAXES ON PROFITS FROM THE SALE OF SHOPS. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE PROFITS EARNED FROM RESIDENTIAL UNITS DURING THE YEAR SINCE SIMILAR DEDUCTION WAS DISALLOWED IN ASSESSMENT YEAR 2004-05. THE ASSESSING OFFICER MADE THE ADDITION OF RS.2,59,07,714/- AND DID NOT ALLOW THE BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. FURTHER, THE REASONS FOR DISALLOWANCE OF THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WERE MANIFOLD. THE FIRST REASON WAS THAT THE ASSESSEE HAD CONSTRUCTED 17 SHOPS AND THE COMMERCIAL AREA DEVELOPED BY THE ASSESSEE WAS 6.62% OF THE TOTAL AREA OF PROJECT. THE SECOND OBJECTION WAS THAT THE COMPLETION CERTIFICATE ISSUED BY THE PMC WAS COMBINED IN RESPECT OF BUILDINGS G AND F, WHEREIN BUILDING F WAS COMMERCIAL AREA, HENCE IT WAS PART OF THE SAME PROJECT. AS PER THE ASSESSING OFFICER, SINCE THE COMMERCIAL AREA WAS IN EXCESS, THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE SAID DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ANOTHER ASPECT NOTED BY THE ASSESSING OFFICER WAS THAT ANOTHER BUILDING BY NAME MANISHA TOWERS WAS CONSTRUCTED ON A PLOT MEASURING 33,000 SQ.FT. AND HENCE, BEING LESS THAN ONE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 26 ACRE, WAS NOT ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ONE MORE OBJECTION RAISED BY THE ASSESSING OFFICER WAS THAT THE LOCAL BODY I.E. PMC HAD APPROVED THE PROJECT AS RESIDENTIAL CUM COMMERCIAL PROJECT AND HENCE NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. BEFORE THE CIT(A), THE CLAIM OF ASSESSEE WAS THAT THE TRIBUNAL HAD ALLOWED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN ASSESSMENT YEARS 2004-05 AND 2005-06 IN RESPECT OF PROJECT VANARAJI, WHICH CONSISTED OF THREE BUILDINGS I.E. F, G AND H, OUT OF WHICH BUILDING F COMPRISED TOTALLY OF SHOPS, WHEREAS BUILDINGS G AND H WERE RESIDENTIAL BUILDINGS. THE TRIBUNAL HAD CONSIDERED THE ASPECT OF COMMERCIAL AREA COMPRISING OF 6.62% OF THE TOTAL PROJECT AREA. THE CIT(A) AFTER NOTING THE SAME, QUESTIONED AS TO HOW THE PROJECT COULD BE TREATED AS COMPLETE TO QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, WHEREIN BUILDING H COMPRISED IN VANARAJI WAS NOT STARTED AT ALL. THE CIT(A) ALSO ASKED THE ASSESSEE TO EXPLAIN HOW MANISHA TOWERS WHICH WAS CONSTRUCTED ON 33,000 SQ.FT. OF LAND BEING LESS THAN ONE ACRE WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IT MAY BE POINTED OUT THAT THE SAID CLAIM OF DEDUCTION WAS MADE BEFORE THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS. THE ASSESSEE VIDE LETTER DATED 18.09.2009 EXPLAINED BEFORE THE CIT(A) THAT THE FSI OF SAID PLOT WAS PURCHASED BY THE ASSESSEE AND NOT ITS LAND AREA AND IT WAS PART OF THE PROJECT VANARAJI, WHICH WAS SITUATED ON PLOT OF AREA EXCEEDING ONE ACRE. THE CIT(A) STATED THAT INITIAL CLAIM OF ASSESSEE WAS THAT MANISHA TOWERS WAS A SEPARATE PROJECT FOR WHICH SEPARATE FSI WAS RECEIVED AND SEPARATE COMMENCEMENT CERTIFICATE WAS OBTAINED AND PROFITS ON SALE OF FLATS FROM THE BUILDING WERE ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. HOWEVER, SINCE IT DID NOT FULFILL THE CONDITION OF AREA OF ONE ACRE, IT CLAIMED THAT IT WAS PART OF PROJECT MANISHA TOWERS AND HENCE, ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE CIT(A) WAS OF THE VIEW THAT THIS CLAIM WAS LIABLE TO BE REJECTED, IN VIEW OF CLEAR-CUT FINDINGS ON ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 27 RECORD THAT SINCE ASSESSMENT YEAR 2004-05, PROJECT VANARAJI COMPRISED OF BUILDINGS F, G AND H AND THE COMMERCIAL AREA OF 6.62% WAS INCLUDED IN THIS PROJECT. 31. THE FIRST OBJECTION OF CIT(A) TO ALLOW THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF VANARAJI PROJECT WAS THAT THE BUILDING F COMPRISED OF COMMERCIAL ESTABLISHMENTS, WHICH WAS 6.62% OF TOTAL BUILT UP AREA. THE CIT(A) OBSERVED THAT THOUGH THE TRIBUNAL HAD ALLOWED THE CLAIM IN ASSESSMENT YEARS 2004-05 AND 2005-06, BUT SINCE THERE WAS AN AMENDMENT AND CLAUSE (D) WAS INSERTED TO SECTION 80IB(10) OF THE ACT IMPOSING A RESTRICTION OF COMMERCIAL AREA OF 5% OF BUILT UP AREA OR 2000 SQ.FT., WHICHEVER WAS LOWER W.E.F. 01.04.2015, HENCE FOR THE YEAR UNDER CONSIDERATION, IT HAD NOT FULFILLED THE CONDITIONS LAID DOWN IN CLAUSE (D) AND HENCE, NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF VANARAJI. WE FIND NO MERIT IN THE ORDER OF CIT(A). AN AMENDMENT HAS BEEN BROUGHT IN BY WAY OF INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005, HOWEVER, THE CONDITIONS IMPOSED IN THE SAID CLAUSE (D) VIS--VIS RESTRICTION ON COMMERCIAL AREA BEING 5% OF THE TOTAL BUILT UP AREA OR 2000 SQ.FT., WHICHEVER WAS LOWER, WAS APPLICABLE TO ALL SUCH PROJECTS WHICH WERE SANCTIONED ON OR AFTER 01.04.2005. THE SAID CONDITION WAS NOT TO BE APPLIED TO PROJECTS WHICH WERE SANCTIONED BEFORE THAT DATE. THE PROJECT VANARAJI WAS SANCTIONED EARLIER TO THE DATE OF AMENDMENT AND THE ASSESSEE HAD ALREADY RECEIVED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN ASSESSMENT YEARS 2004-05 AND 2005-06 IN RESPECT OF VERY SAME PROJECT VANARAJI. 32. THE HONBLE SUPREME COURT IN CIT VS. SARKAR BUILDERS (SUPRA) HAVE LAID DOWN THAT THE AMENDMENT BROUGHT IN W.E.F. 01.04.2005 THAT THE CONDITION OF CURTAILMENT OF COMMERCIAL AREA IS TO BE APPLIED PROSPECTIVELY. SINCE THE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 28 PROVISIONS IN THE SAID CLAUSE (D) WERE INEXTRICABLY LINKED WITH APPROVAL AND CONSTRUCTION OF HOUSING PROJECT AND THE ASSESSEE COULD NOT BE CALLED UPON TO COMPLY WITH THE SAID CONDITION, WHEN IT WAS NOT CONTEMPLATES EITHER BY THE ASSESSEE OR BY THE LEGISLATURE WHEN THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. APPLYING THE SAID RATIO LAID DOWN BY THE HONBLE SUPREME COURT, WE HOLD THAT THE AMENDMENT IS NOT TO BE APPLIED TO THE PROJECT VANARAJI BEING CONSTRUCTED AND DEVELOPED BY THE ASSESSEE WHICH WAS SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND WHICH WAS COMPLETED ON A DAY LATER THAN WHEN THE AMENDMENT WAS BROUGHT ON RECORD. 33. THE SECOND ASPECT OF DENIAL OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT BY THE CIT(A) WAS NON-COMPLETION OF PROJECT WHICH WAS ALSO A CONDITION BROUGHT INTO STATUTE W.E.F. 01.04.2005. THE CIT(A) NOTED THAT THE BUILDINGS F, G AND H COMPRISED OF VANARAJI OUT OF WHICH BUILDING H HAD NOT BEEN CONSTRUCTED AT ALL. THEREFORE, THE PROJECT OF ASSESSEE WHICH WAS APPROVED AS A SINGLE PROJECT BY ITS COMMENCEMENT CERTIFICATE DATED 30.03.2001, HAD TO BE COMPLETED BY THE STIPULATED TIME LIMIT OF 31.03.2008, THEN SINCE BUILDING H WAS NOT COMPLETED, HOW THE ASSESSEE WAS ELIGIBLE TO CLAIM THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE EXPLANATION OF THE ASSESSEE WAS THAT THE WORK OF BUILDING H COULD NOT GET STARTED DUE TO NON CLEARANCE OF SLUM, WHICH WAS NOT APPRECIATED BY THE CIT(A) AND IT WAS HELD THAT THE CONDITION OF COMPLETION OF THE PROJECT IS TO BE APPLIED ON THE WHOLE PROJECT AND IN VIEW OF FAILURE TO COMPLY WITH THE CONDITIONS GIVEN IN SECTION 80IB(10)(A)(I) OF THE ACT, THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION. RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE CIT(A) ON THE RATIO LAID DOWN BY CHENNAI BENCH OF TRIBUNAL IN THE CASE OF ARUN EXCELLO FOUNDATION PVT. LTD. (2007) 108 TTJ 71 (CHENNAI TRIB) WAS REJECTED, SINCE IT RELATED TO ASSESSMENT YEARS 2003-04 ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 29 AND 2004-05, WHICH WAS PRIOR TO AMENDMENT AND HENCE, WHERE THERE WAS NO COMPLETION CLAUSE. THE ASSESSEE WAS HELD NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 34. WE FIND NO MERIT IN THE ORDER OF CIT(A) IN DENYING THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF VANARAJI PROJECT ON THE PROPOSITION THAT WHERE BUILDING H WAS NOT COMPLETED, THEN IN VIEW OF AMENDMENT, THE DECISIONS OF TRIBUNAL ARE NOT APPLICABLE AND THE ASSESSEE IS NOT ENTITLED TO EVEN PRORATA CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. ADMITTEDLY, THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF BUILDING G IN VANARAJI PROJECT WHICH WAS ALLOWED TO THE ASSESSEE IN EARLIER YEARS. THE BUILDING F COMPRISED OF COMMERCIAL ESTABLISHMENTS AND NO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS CLAIMED IN RESPECT OF THE SAID PROJECT. THE BUILDING H COULD NOT BE STARTED DUE TO NON-SETTLEMENT OF SLUM. FIRST OF ALL, MERELY BECAUSE THE ASSESSEE HAD NOT RECEIVED THE COMPLETION CERTIFICATE DOES NOT DISENTITLE THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IN CASES, WHERE THE ASSESSEE HAD COMPLETED CONSTRUCTION OF PROJECT BY THE STIPULATED DATE AND HAD FILED AN APPLICATION FOR ISSUE OF COMPLETION CERTIFICATE AND ALSO FULFILLED THE OTHER CONDITIONS OF COMPLETION OF PROJECT. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HINDUSTAN SAMUH AWAS LTD. (SUPRA). WHERE THE ASSESSEE HAD MOVED AN APPLICATION SEEKING COMPLETION CERTIFICATE BEFORE THE STIPULATED DATE AND EVEN IF THE SAME WAS NOT ISSUED TO THE ASSESSEE, THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT COULD NOT BE DENIED. 35. FURTHER, COMING TO THE SECOND ISSUE OF PRORATA DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT, WE FIND THE ISSUE IS SQUARELY COVERED BY VARIOUS DECISIONS OF PUNE BENCH OF TRIBUNAL AND BY THE HONBLE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 30 MADRAS HIGH COURT IN ARUN EXCELLO FOUNDATIONS (P) LTD. VS. (SUPRA). THE PROPORTIONATE DEDUCTION IS ALLOWABLE TO THE ASSESSEE IRRESPECTIVE OF THE PROJECT BEING COMPLETED OR NOT AND ALSO IRRESPECTIVE OF THE FACT THAT THERE IS AN AMENDMENT TO THE EFFECT THAT COMPLETION CERTIFICATE IS TO BE OBTAINED. 36. THE HONBLE BOMBAY HIGH COURT IN CIT VS. HINDUSTAN SAMUH AWAS LTD. (SUPRA) IN THIS REGARD HAS ALREADY EXPLAINED THE CONDITIONS, UNDER WHICH WHERE THE ASSESSEE HAS ALREADY APPLIED FOR THE COMPLETION CERTIFICATE AND WHERE THE DELAY IN OBTAINING THE SAID COMPLETION CERTIFICATE IS NOT ATTRIBUTABLE TO THE ASSESSEE, DEDUCTION UNDER SECTION 80IB(10) OF THE ACT COULD NOT BE DENIED TO THE ASSESSEE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF COMPLETED FLATS. 37. ALL THE ABOVE SAID PROPOSITIONS WHICH WE HAVE CONSIDERED ARE IN RESPECT OF VANARAJI PROJECT. HOWEVER, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS UNDERTAKEN ANOTHER PROJECT UNDER THE NAME AND STYLE MANISHA TOWERS. THE FIRST CLAIM OF THE ASSESSEE WAS THAT IT WAS A SEPARATE PROJECT WITH SEPARATE FSI AND SEPARATE COMMENCEMENT CERTIFICATE AND HENCE, SEPARATE PROJECT TO WHICH ALSO THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT THE SAID PROJECT WAS PART OF BIGGER PROJECT, WHICH WAS UNDERTAKEN BY THE ASSESSEE ON THE SAID SURVEY LAND AND HENCE, WHERE THE TOTAL AREA OF THE PROJECT WAS MORE THAN ONE ACRE, THEN THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. BEFORE US, THE ASSESSEE HAS ALSO RAISED THE ISSUE THAT WHERE THE PROJECT WAS ON ACCOUNT OF REHABILITATION OF SLUM, THEN THE CONDITION OF AREA BEING ONE ACRE WAS NOT REQUIRED TO BE FULFILLED IN ORDER TO AVAIL DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. FURTHER, THERE WAS NO CONDITION OF COMPLETING THE PROJECT WITHIN STIPULATED TIME FRAME, WHERE IT WAS A SLUM REHABILITATION PROJECT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 31 IN THIS REGARD HAS POINTED OUT THAT THE ENTIRE SURVEY NO.123/A/1/1 CONSISTED OF SLUM ENCROACHMENT AND AS SUCH WAS DECLARED SLUM AS PER MAHARASHTRA STATE GOVERNMENT GR NO.204/2003-05/L.W.P/116. THE COPY OF THE SAID GR IN MARATHI IS PLACED AT PAGES 67 AND 68 OF THE PAPER BOOK-III AND ITS ENGLISH TRANSLATION IS ENCLOSED AT PAGES 133 AND 134 OF PAPER BOOK-IV. THE ASSESSEE STATES THAT IT HAD DEVELOPED THE HOUSING PROJECT AT THE SAID SURVEY AT KOTHRUD, PUNE AND WHEN THE LAYOUT WAS SANCTIONED, VARIOUS PLOT NUMBERS WERE GIVEN TO THE THEN DEVELOPER ON WHICH BUILDINGS WERE TO BE CONSTRUCTED. THE ASSESSEE RECEIVED FSI FOR THE PROPOSAL TO CONSTRUCT BUILDINGS IN THE SAID SURVEY NUMBER ON DIFFERENT DATES. BUT ON 08.09.1999, FSI OF 7482 SQ.MTRS. WAS PURCHASED FOR THE PROPOSED G AND H BUILDINGS, ON 16.09.2003, FSI OF 3065 SQ.MTRS. WAS PURCHASED FOR THE PROPOSED E BUILDING AND ON 24.03.2004, FSI OF 1240 SQ.MTRS. WAS PURCHASED FOR THE PROPOSED F BUILDING. AS PER CLAUSE 4 OF THE FSI SALE AGREEMENT DATED 08.09.1999, THE SELLER OF FSI M/S. SNEH PROPERTY DEVELOPMENT PVT. LTD. (IN SHORT SNEH) WHO WAS LIABLE TO CONSTRUCT REHABILITATION TENEMENTS FOR THE SLUM DEVELOPMENT AND THE ASSESSEE WAS TO ASSIST IN SHIFTING THE SAID SLUMS. THE ASSESSEE STATES THAT IT WANTED TO WORK ON G AND H BUILDINGS. HOWEVER, THE SLUM ON LAND RELATING TO PROPOSED BUILDING H COULD NOT BE AFFECTED BY THE SELLERS OF FSI. HOWEVER, PART OF SLUM RELATING TO G AND H WERE CLEAR AND SAME WERE TAKEN INTO ACCOUNT FOR CONSTRUCTION UNDER THE PROJECT VANARAJI. HOWEVER, SNEH DID NOT CLEAR THE SLUM ON LAND RELATING TO BUILDING H IN ITS ENTIRETY AND THE PROCESS OF REHABILITATION OF SLUM DEVELOPMENT GOT DELAYED. THE REMAINING SLUM ON THE LAND RELATED TO BUILDING G WAS CONNECTED TO THE SLUM ON LAND RELATED TO BUILDING E. DUE TO THIS, THE WORK OF DEVELOPMENT OF BALANCE BUILDING G STOPPED AND TO OVERCOME THIS, THE ASSESSEE ACQUIRED FSI RELATED TO BUILDING E. WHILE ACQUIRING THE FSI, THE ASSESSEE DECIDED TO ENSURE THAT THE CONSTRUCTION OF SLUM DWELLERS TENEMENTS ALSO GETS COMPLETED AND HENCE, THE CONSIDERATION OF RS.1 CRORE WAS ADJUSTED AGAINST THE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 32 CONSTRUCTION COST OF BUILDING FOR REHABILITATION OF SLUM DWELLERS. THIS WAS AS PER CLAUSE NO.2 AT PAGE 8 OF THE AGREEMENT DATED 16.09.2003 WHICH IS ENCLOSED AT PAGE 35 OF PAPER BOOK-II. THE ASSESSEE CLAIMS THAT BECAUSE OF ITS BUILDINGS THE REHABILITATION OF SLUM DWELLERS IN LAND RELATING TO BUILDING G AND BUILDING E WERE CLEAR, EXCEPT THE SLUM ON LAND RELATING TO BUILDING H. THE BALANCE PART OF BUILDING G WAS CONSTRUCTED AND THE ENTIRE CONSTRUCTED AREA OF BUILDING G WAS SOLD. THE ASSESSEE ALSO UNDERTOOK CONSTRUCTION OF BUILDING E UNDER THE NAME AND STYLE MANISHA TOWERS. THE ASSESSEE CLAIMED THAT BUILDING E WAS PART OF PROJECT VANARAJI. HOWEVER, THE ASSESSING OFFICER HELD SINCE THERE WAS SEPARATE BUILDING COMMENCEMENT CERTIFICATES, SAME WAS SEPARATE PROJECT AND THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS REJECTED. 38. THE FIRST CONTENTION OF THE ASSESSEE BEFORE US IN THIS REGARD IS THAT THE AREA OF BUILDINGS E, F AND G RELATED LAND ARE ROAD FACING AND ADJACENT TO EACH OTHER. FURTHER, SLUM ON F AND G LANDS WERE CONNECTED ON SLUM ON E LAND AS AGAINST SLUM OF H LAND, WHICH WAS IN BACK SIDE. THE LANDS OF F, G AND E BUILDINGS WERE ROAD FACING ADJACENT TO EACH OTHER AND HAD COMMON SLUM AND HENCE, THE PROJECT OF RE-DEVELOPMENT OF THESE PLOTS OF LAND SHOULD BE CONSIDERED AS ONE HOUSING PROJECT. ANOTHER POINT RAISED BY THE ASSESSEE WAS THAT THE SLUM DWELLERS WERE COMMON FOR G AND E LAND AND IF THE SAME WERE NOT CLEAR, THE CONSTRUCTION AND DEVELOPMENT OF G LAND COULD NOT HAVE BEEN COMPLETED AND AS SUCH THE ASSESSEE DECIDED TO ACQUIRE FSI ON E LAND WITH THE RESPONSIBILITY OF SLUM REHABILITATION. THE ASSESSEE STATES THAT IT HAD TAKEN UP THE FINANCIAL RESPONSIBILITY OF BEARING SLUM REHABILITATION COST UP TO RS.1 CRORE AND UNDER THIS COMMERCIAL EXPEDIENCY ACQUIRED FSI RELATED TO E BUILDING. IN RESPECT OF THE ISSUE OF SEPARATE COMMENCEMENT CERTIFICATES, IT WAS POINTED OUT BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS THAT THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS REJECTED IN RESPECT OF BUILDING E AS THERE WAS SEPARATE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 33 COMMENCEMENT CERTIFICATE AND HENCE, IT WAS NOT PART OF VANARAJI PROJECT. THE ASSESSEE IN THIS REGARD HAS EXPLAINED THAT THE DEVELOPER OF ENTIRE SURVEY LAND HAD SOLD FSI FOR BUILDING E TO ONE MR. KISHOR PATE, PARTNER OF AMIT BUILDERS. MR. KISHOR PATE FILED THE COMMENCEMENT CERTIFICATE FOR BUILDING E ON 29.05.2012. HOWEVER, THE ASSESSEE AFTER ACQUISITION OF THE SAID FSI ON 16.09.2003 FROM THE ORIGINAL DEVELOPER, REVISED THE BUILDING PLANS WHICH WERE PASSED ON 15.07.2004. THE ASSESSEES CASE IS THAT AS PER PMC RULES, ONCE THE SAID PLAN IS PASSED, THE REVISIONS THEREOF MAKE REFERENCE TO THE ORIGINAL PASSING. MERELY BECAUSE SEPARATE COMMENCEMENT CERTIFICATE WAS GIVEN DUE TO THE RULES OF PMC, HOWEVER, ENTREPRENEURIAL RISK OF DEVELOPMENT OF THE SAID SLUM IS TO BE CONSIDERED FOR ELIGIBILITY OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IN THE SAID SECTION, THERE IS NO CONDITION THAT THERE SHOULD EXIST ONLY ONE COMMON COMMENCEMENT CERTIFICATE FOR ALL THE BUILDINGS PROPOSED TO BE DEVELOPED AND CONSTRUCTED. 39. THE SECOND ASPECT OF HOLDING THE BUILDING E TO BE SEPARATE WAS THAT IT WAS ON A PLOT OF LAND WHICH WAS LESS THAN ONE ACRE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT BUILDING E WAS PART OF SLUM REHABILITATION PROJECT, WHEREIN THE DEVELOPERS DID NOT ACQUIRE LAND PERSE, BUT ACQUIRED THE FSI RELATING TO COMMON LAND AT SURVEY NO.123/A/1/1, WHICH WAS SLUM LAND AND WAS CLEARED BY PMC FOR REHABILITATION UNDER COMMON SANCTIONED LAYOUT. MERELY BECAUSE COMMENCEMENT CERTIFICATE FOR VARIOUS BUILDINGS WERE SANCTIONED FROM TIME TO TIME MAKE REFERENCE TO THE SAME SURVEY NUMBER I.E. LAND OF ABOUT 9 ACRES I.E. ABOUT 31,316 SQ.MTRS., THE OBJECTION OF NON- COMPLIANCE OF CONDITIONS OF ONE ACRE OF PROJECT LAND WAS NOT CORRECT. 40. ANOTHER POINT RAISED BY THE ASSESSEE WAS THAT WHERE MORE THAN ONE HOUSING PROJECT EXISTED ON THE SAME PIECE OF LAND, WHICH ADMITTEDLY, WAS MORE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 34 THAN ONE ACRE, THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES (2013) 353 ITR 36 (BOM). 41. ANOTHER PLEA RAISED BY THE ASSESSEE BEFORE US WAS THAT WHERE THE HOUSING PROJECT CONSTRUCTED AND DEVELOPED BY THE ASSESSEE WAS APPROVED UNDER MAHARASHTRA SLUM AREAS (IMPROVEMENT, CLEARANCE AND REDEVELOPMENT) ACT, 1971 I.E. ON ACCOUNT OF REHABILITATION OF NOTIFIED SLUMS, THE CONDITIONS PRESCRIBED UNDER CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT WERE NOT TO BE APPLIED TO THE FACTS OF THE CASE. AS PER THE PROVISO TO SUB-SECTION (B), WHERE THE ASSESSEE HAS SHOWN PROFITS FROM SLUM REHABILITATION PROJECT, WHICH WAS CARRIED OUT IN ACCORDANCE WITH SCHEME FRAMED BY THE CENTRAL / STATE GOVERNMENTS, THEN THE RESTRICTIVE CONDITIONS IN CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT WERE NOT TO BE APPLIED. THE ASSESSEE EXPLAINED THE ABOVE REFERRED ACT, UNDER WHICH APPROVED HOUSING PROJECT HAD BEEN NOTIFIED BY CBDT BY CIRCULAR NO.01/2011, DATED 05.01.2011, COPY OF WHICH IS ENCLOSED AS ANNEXURE 7 TO THE COMPILATION. THE ASSESSEE THUS, VEHEMENTLY STATED THAT THE CONDITION OF MINIMUM AREA OF ONE ACRE WAS NOT REQUIRED TO BE TESTED BY THE AUTHORITY AND DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ALLOWABLE TO THE ASSESSEE. 42. ANOTHER POINT RAISED BY THE ASSESSEE WITH REGARD TO THE SLUM REHABILITATION PROJECT WAS THE DATE OF APPROVAL OF BUILDING PLANS, WHETHER IT WAS PRIOR TO 01.04.2004 OR AFTER 01.04.2004. THE ASSESSEE STRESSED THAT THOUGH THE FIRST BUILDING PLAN OF E BUILDING WAS SANCTIONED ON 29.05.2002, THE SAME COULD NOT BE STARTED AND NO CONSTRUCTION / DEVELOPMENT WAS UNDERTAKEN IN PURSUANT TO THE SAID SANCTION. FURTHER, EARLIER SANCTION WAS FILED BY MR. KISHOR PATE, WHEREAS THE PRESENT SANCTION IS ONE FILED BY THE ASSESSEE. THE ASSESSEE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 35 RECEIVED THE SANCTION FOR E BUILDING ON 15.07.2004 AND SINCE ENTREPRENEURIAL RISK WAS ASSUMED BY THE ASSESSEE FROM 01.04.2004 ONWARDS I.E. WHEN THE SLUM WAS REHABILITATED, HENCE ASSESSEES CASE WAS COVERED WITHIN THE SCOPE OF EXCEPTIONS CARVED OUT BY THE PROVISO TO SUB-SECTIONS (A) AND (B) OF SECTION 80IB(10) OF THE ACT, HENCE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STATED THAT CONDITION OF ONE ACRE OF LAND WAS NOT REQUIRED TO BE TESTED IN SUCH SRA PROJECTS. 43. WE PROCEED TO DECIDE THE LAST PLEA OF THE ASSESSEE FIRST I.E. WHETHER CASE OF ASSESSEE IS COVERED WITHIN SCOPE OF EXCEPTION PROVIDED BY WAY OF PROVISO UNDER CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT. WE HAVE ALREADY REFERRED TO THE PROVISIONS OF SAID ACT IN THE PARAS HEREINABOVE, WHEREIN WE HAVE NOTED THAT THE SAID PROVISO WAS INSERTED BY THE FINANCE ACT, 2004 AND WAS TO COME INTO EFFECT FROM 01.04.2004. AS PER PROVISO INTRODUCED UNDER CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT, WHERE THE PROJECT DEVELOPED BY THE ASSESSEE WAS SLUM REHABILITATION PROJECT, THEN THE CONDITIONS LAID DOWN IN CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT ARE TO BE DISPENSED WITH I.E. SUCH REHABILITATION PROJECT COULD BE ON A PLOT OF AREA LESS THAN ONE ACRE AND ALSO THERE WAS NO LIMITATION IN COMPLETION OF PROJECT WITHIN STIPULATED PERIOD PROVIDED UNDER CLAUSE (A) OF SECTION 80IB(10) OF THE ACT. THE FIRST ASPECT OF THE ISSUE IS THE NOTIFICATION OF PROJECT PERSE. THE ASSESSEE HAS PLACED ON RECORD THAT THE HOUSING PROJECT WAS APPROVED UNDER THE MAHARASHTRA SLUM AREAS (IMPROVEMENT, CLEARANCE AND REDEVELOPMENT) ACT, 1971. THE DESIGNATED AUTHORITY MR. P.D. KARANDIKAR HAD NOTIFIED THE SLUM AT SURVEY NO.123/A/1/1. FURTHER, CBDT HAD VIDE NOTIFICATION NO.01/2011, DATED 05.01.2011 APPROVED THE REHABILITATION OF SLUM. ONCE THE PROJECT HAS BEEN APPROVED BY THE SCHEME FRAMED BY THE CENTRAL OR STATE GOVERNMENTS FOR RE-CONSTRUCTION AND RE- DEVELOPMENT OF AN EXISTING SLUM AND WHERE THE SCHEME IS NOTIFIED BY THE BOARD ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 36 IN THIS REGARD, THEN SUCH A SCHEME WHICH IS TERMED AS SLUM REHABILITATION PROJECT IS NOT TO BE GOVERNED BY THE CONDITIONS LAID DOWN IN CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT. IN THE FACTS OF THE PRESENT CASE, THE PROJECT UNDERTAKEN BY THE ASSESSEE IS DULY APPROVED AND NOTIFIED BY THE COMPETENT AUTHORITIES. HOWEVER, THE NEXT OBJECTION FOR DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS THE DATE OF SANCTION OF THE SAID PROJECT. THE FIRST BUILDING PLAN OF E BUILDING WAS SANCTIONED ON 29.05.2002. THIS SANCTION WAS FILED BY ONE MR. KISHOR PATE, WHO DID NOT DEVELOP THE SAID PROJECT. THE ASSESSEE THEREAFTER, PURCHASED THE FSI AND ALSO TOOK THE RISK OF CLEARANCE AND REHABILITATION OF SLUM AND THE BUILDING PLANS WERE REVISED WHICH WERE SANCTIONED ON 15.07.2004. THE BUILDING PLANS WHICH WERE SANCTIONED ON 15.07.2004 WERE SEPARATE AND DISTINCT FROM EARLIER SANCTIONS AND COULD NOT BE SAID TO BE IN LINE WITH THE EARLIER SANCTION ON 29.05.2002. HENCE, WHERE THE ASSESSEE HAD ACQUIRED THE FSI ON 16.09.2003 I.E. AFTER THE EARLIER SANCTION OF BUILDING PLANS ON 29.05.2002 AND HAD REVISED THE BUILDING PLANS AND APPLIED FOR ITS SANCTION WHICH WAS GIVEN ON 15.07.2004. WE HOLD THAT THE SAID PROJECT WAS APPROVED AFTER 01.04.2004. IN VIEW THEREOF, EXCEPTIONS PROVIDED IN THE PROVISO TO CLAUSES (A) AND (B) OF SECTION 80IB(10) OF THE ACT WERE APPLICABLE. 44. THE PROJECT APPROVED IN THE CASE OF ASSESSEE BEING SRA PROJECT WAS NOT BOUNDED BY THE CONDITIONS OF AREA OF THE LAND OR CONSTRUCTION WITHIN STIPULATED PERIOD. HOWEVER, WE FIND MERIT IN THE CLAIM OF ASSESSEE THAT WHERE IT HAD UNDERTAKEN A BIGGER PROJECT ON ACCOUNT OF REHABILITATION OF SLUM AND WHERE TOTAL AREA OF THE PROJECT WAS ABOUT 9 ACRES AND THE ASSESSEE HAD VISIONED ITS DEVELOPMENT AND REHABILITATION OF SLUM AND IN THIS REGARD ACQUIRED THE FSI FOR THE CONSTRUCTION OF BUILDINGS FROM TIME TO TIME, THEN ENTIRETY OF THE FACTS HAS TO BE SEEN I.E. THE LOCATION OF PROPERTY WAS ADJACENT TO EACH AND THE DIFFERENT BUILDINGS WHICH WERE DEVELOPED BY THE ASSESSEE WERE PART OF SAME SURVEY ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 37 NUMBER. THE ASSESSEE FIRST ACQUIRED FSI ON 08.09.1999 FOR THE PROPOSED BUILDINGS G AND H, THEREAFTER, ON 16.09.2003 FOR BUILDING E AND FINALLY ON 24.03.2004 FOR BUILDING F. THE ASSESSEE CONSTRUCTED THE COMMERCIAL ESTABLISHMENTS IN BUILDING F AND RESIDENTIAL UNITS IN BUILDING H COULD NOT BE STARTED AS THE SLUMS WERE NOT CLEARED AND REHABILITATED. THE BUILDING G ALSO COULD NOT BE COMPLETED BECAUSE OF NON-REHABILITATION OF THE SLUMS. THE AREA FOR BUILDINGS G AND E WERE ADJACENT TO EACH OTHER AND WERE OCCUPIED BY THE SAME DWELLERS AND THEREAFTER, WHILE ACQUIRING THE FSI OF E BUILDING VIDE AGREEMENT DATED 16.09.2003, THE ASSESSEE ENTERED INTO REVISED TERMS WITH THE SELLER OF FSI I.E. SNEH AND UNDERTOOK FINANCIAL RESPONSIBILITY TO BEAR SLUM REHABILITATION COST UP TO RS.1 CRORE; WHEREIN THE ASSESSEE TOOK THE RESPONSIBILITY OF CONSTRUCTION OF SLUM RE-SETTLEMENT UNITS. IN THE INITIAL AGREEMENT FOR PURCHASE OF FSI ON 08.09.1999, THERE IS NO SUCH CLAUSE. HOWEVER, IN THE AGREEMENT DATED 16.09.2003 FOR PURCHASE OF FSI FOR BUILDING E, THE ASSESSEE AGREED TO CONSTRUCT AND BEAR THE EXPENSES TOWARDS CONSTRUCTION OF BUILDING MEANT FOR REHABILITATION OF SLUM DWELLERS. THE EARLIER UNDERSTANDING BETWEEN THE PARTIES WAS THAT THE VENDOR / ASSIGNOR WAS TO CLEAR THE PLACE FOR THE REHABILITATION OF SLUM DWELLERS. SINCE THE VENDOR DID NOT COMPLETE HIS PART OF AGREEMENT, THERE WAS DELAY IN CONSTRUCTION OF BUILDING G. THE ASSESSEE BY WAY OF SECOND AGREEMENT OF PURCHASE FOR FSI UNDERTOOK THE CLEARANCE OF LAND FOR THE PURPOSE OF COMPLETION OF BUILDING G AND FOR THE CONSTRUCTION OF BUILDING E. IN THE ABOVE SAID SCENARIO, IT CANNOT BE SAID THAT THE PROJECT WHICH WAS RE- DEVELOPED BY THE ASSESSEE WAS A SEPARATE PROJECT, THOUGH THE ASSESSEE CONSTRUCTED DIFFERENT BUILDINGS FOR WHICH MAY BE THE COMMENCEMENT CERTIFICATES WERE TAKEN ON DIFFERENT DATES; BUT BECAUSE OF THE FACT THAT THE ASSESSEE HAD PURCHASED THE FSI FOR THE UNITS ON DIFFERENT DATES AND FURTHER, WHERE THE ASSESSEE HAD TAKEN ENTREPRENEURIAL RISK TO CONSTRUCT THE REHABILITATION TENEMENTS FOR THE SLUM DWELLERS BY WAY OF REVISED CLAUSES OF AGREEMENT WITH ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 38 THE SELLER OF FSI. WHILE CONSTRUCTING BUILDING E WHICH WAS AFTER IT HAD PURCHASED THE FSI FOR BUILDING G AND H, WHEREIN H BUILDING COULD NOT BE STARTED BY THE ASSESSEE AT ALL SINCE THE SLUMS WERE NOT CLEARED AND THERE WERE HANDICAPS IN THE CONSTRUCTION OF BUILDING G FOR NON-SHIFTING OF PROJECT, WE HOLD THAT THE PROJECT ENVISAGED BY THE ASSESSEE WAS COMPLETE PROJECT ON THE WHOLE AREA AND EVEN IF AREA OF THE LAND ON WHICH ALL THE PROJECTS WERE ENVISAGED WAS ONE ACRE, THEN ALSO THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VANDANA PROPERTIES (SUPRA). HOWEVER, IN THE FACTS OF THE PRESENT CASE, THE TOTAL AREA ON WHICH THE REDEVELOPMENT PROJECT WAS COMPLETED BY THE ASSESSEE WAS ABOUT 9 ACRES AND THE ASSESSEE HAVING FULFILLED ALL THE CONDITIONS IS ALSO ENTITLED TO THE CLAIM OF DEDUCTION UNDER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT ON ACCOUNT OF IT BEING A HOUSING PROJECT. 45. ONE MORE OBJECTION WHICH HAS BEEN RAISED BY THE ASSESSING OFFICER IS THAT THE PROJECT WHICH HAS BEEN SANCTIONED WAS NOT A HOUSING PROJECT, BUT A RESIDENTIAL CUM COMMERCIAL PROJECT. WE FIND NO MERIT IN THE STAND OF ASSESSING OFFICER, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (2011) 197 TAXMAN 459 (BOM), WHEREIN IT HAS BEEN HELD THAT WHERE THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY PRIOR TO 01.04.2005 WITHOUT OR WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DC RULES WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IRRESPECTIVE OF THE FACT THAT THE PROJECT APPROVED WAS AS HOUSING PROJECT OR RESIDENTIAL CUM COMMERCIAL. THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT IF CONDITIONS SET OUT IN SECTION 80IB(10) OF THE ACT ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON ENTIRE PROJECT APPROVED BY LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF PROJECT. FURTHER, THE DEDUCTION ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 39 CLAIMED UNDER SECTION 80IB(10) OF THE ACT HAS BEEN DENIED TO THE ASSESSEE BECAUSE OF INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005 AND HENCE, THE SAID CONDITIONS ARE TO BE APPLIED FOR ASSESSMENT YEAR 2006-07. THE CLAUSE (D) INSERTED IN SECTION 80IB(10) OF THE ACT W.E.F. 01.04.2005, SEEKS TO DENY DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO PROJECTS HAVING COMMERCIAL USER BEYOND LIMIT PRESCRIBED UNDER SAID CLAUSE. THE HONBLE SUPREME COURT IN THE CASE OF SARKAR BUILDERS (SUPRA) HAVE HELD THAT THE SAID AMENDMENT BY WAY OF INSERTION OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT IS PROSPECTIVE AND WOULD APPLY ONLY TO PROJECTS WHICH ARE SANCTIONED ON 01.04.2005 AND THEREAFTER, THE PROVISIONS OF SAID CLAUSE (D) I.E. RESTRICTING THE COMMERCIAL USAGE IS NOT APPLICABLE TO THE PROJECTS WHICH WERE APPROVED PRIOR TO 01.04.2005. ADMITTEDLY, THE PROJECT OF THE ASSESSEE HAS BEEN APPROVED PRIOR TO 01.04.2005 AND HENCE, THE PROVISIONS OF CLAUSE (D) TO SECTION 80IB(10) OF THE ACT ARE NOT APPLICABLE. 46. ANOTHER ASPECT TO BE NOTED IS THAT THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ALL UNITS WERE COMPLETED BY 31.03.2008, WHERE THE FIRST COMMENCEMENT CERTIFICATE WAS ISSUED IN 2001, THE ASSESSEE HAS COMPLIED WITH THE STATUTORY PROVISIONS OF CLAUSE (A) OF SECTION 80IB(10) OF THE ACT. IN THIS REGARD, THE ASSESSING OFFICER HAD OBJECTED THAT SINCE THE ASSESSEE HAD RECEIVED DIFFERENT COMMENCEMENT CERTIFICATES EACH WERE DIFFERENT AND DISTINCT HOUSING PROJECT. WE FIND NO MERIT IN THE SAID STAND OF ASSESSING OFFICER. EVEN IF CONSIDER EACH OF THE BUILDINGS AS SEPARATE HOUSING PROJECT, THEY WERE BUILT ON THE SAME SURVEY NUMBER, THOUGH THE COMMENCEMENT STARTED BY DIFFERENT DATED CERTIFICATES. HOWEVER, WHERE THE PROJECT WHICH WAS VISIONED BY THE ASSESSEE WAS ONE I.E. REHABILITATION OF SLUM ON A PARTICULAR SURVEY NUMBER, THEN ALL THE SAID BUILDINGS WERE ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IN THIS REGARD, WE PLACE ITA NO.46/PUN/2010 SPAN SM DEVELOPERS 40 RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN CIT VS. VOORA PROPERTY DEVELOPERS P. LTD. (SUPRA). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN ENTIRETY. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 47. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF APRIL, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST APRIL, 2017 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. () / THE CIT(A)-II, PUNE; 4. / THE CIT-II, PUNE; 5. , , / DR A, ITAT, PUNE; 6. [ / GUARD FILE. / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE
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