ACIT,Circle-1, Margao V. M/s Commonwealth Developers, Margao

ITA 49/PAN/2013

• Counselvise Citation: 4924114 RSA 2013
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 13-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NISHANT K
• Keywords: Difference of opinion
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 49/PNJ/2013 : (ASST. YEAR : 2006 - 07) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1, MARGAO (APPELLANT) VS. M/S. COMMONWEALTH DEVELOPERS, LAXMI BUILDING, BELOW CINE LATA, P.O. BOX NO. 7, MARGAO, GOA 403 601 (RESPONDENT) PAN : AAAFC8220E APPELLANT BY : SHRI NISHANT K., DR RESPONDENT BY : SHRI TATA KRISHNA DATE OF HEARING : 22/08/2013 DATE OF PRONOUNCEMENT : 13 /09/2013 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF CIT(A) DT. 8.2.2013. THE ONLY ISSUE INVOLVED RELATES TO THE DELETION OF THE DISALLOWANCE MADE BY THE AO IN RESPECT OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS.1,71,78,300/ - . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SUBMITTED HIS RETURN OF INCOME DECLARING TOTAL INCOM E OF RS.53,620/ - ON 30.10.2006. THE ASSESSEE U/S 143(3) WAS COMPLETED ON 21.11.2008 ON THE RETURNED INCOME OF RS.53,620/ - . SUBSEQUENTLY, CIT INVOKED HIS JURISDICTION U/S 263 AND SET ASIDE THE ORDER PASSED U/S 143(3) VIDE HIS ORDER DT. 30.3.2011 WITH THE D IRECTION TO THE AO TO EXAMINE THE RELEVANT FACTS IN CONNECTION WITH THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S 80IB(10). IN CONSEQUENCE THEREOF, THE AO PROCEEDED FOR 2 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) EXAMINING THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S 80IB(10) AMOUNTING TO RS.1,71,24,680 / - . THE AO GOING THROUGH THE PROVISIONS OF SEC. 80IB(10) AS IT EXISTED DURING THE IMPUGNED ASSESSMENT YEAR NOTED THAT THE ASSESSEE WAS GRANTED PERMISSION ON 7.7.2003 BY MARGAO MUNICIPAL CORPORATION FOR CONSTRUCTION OF R OW V ILLAS WITH BUILT - UP AREA OF 1500 SQ. FT. COMPRISING OF GROUND FLOOR AND FIRST FLOOR AND COMPOUND WALL IN THE PROPERTY BEARING CHALTA NO. 34, 35 OF P.T SHEET NO. 77 SITUATED AT FATORDA, MARGAO ADMEASURING 5330 SQ.M. (MORE THAN ONE ACRE) AND OCCUPANCY CERTIFICATE IN RESPECT OF SAME WAS GIV EN ON 6.11.2005 BY THE MUNICIPALITY. THE AO NOTED THAT THE ASSESSEE DID NOT FULFIL ONE OF THE CONDITIONS SPECIFIED U/S 80IB(10) OF THE INCOME TAX ACT AND THEREFORE HE OBSERVED UNDER PARA 5.4 AS UNDER : 5.4 IN THIS CONTEXT, THE BUILT UP AREA MEANS MEASUR EMENT OF RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING PROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF WALL BUT NOT INCLUDING COMMON AREAS SHARED LIKE STAIRCASE, LIFT ETC. WITH OTHER RESIDENTIAL UNITS. IN OTHER WORDS, FLATS/APARTMENTS CONSTRUCT ED ON THE LAND ONLY WILL HAVE COMMON AREAS SHARING WITH OTHER RESIDENTIAL UNITS AT THE PARTICULAR FLOOR LEVEL. IN THE INSTANT CASE SINCE CONSTRUCTION OF VILLAS/BUNGALOWS/ROW HOUSES ARE INDEPENDENT AND DO NOT SHARE COMMON AREAS AND HENCE THE ASSESSEE DID N OT FULFIL ONE OF THE CONDITION SPECIFIED UNDER SECTION 80IB(10) OF THE I.T. ACT. ACCORDINGLY, HE INVITED OBJECTION OF THE ASSESSEE. THE ASSESSEE IN REPLY CONTENDED THAT THE ASSESSEE COMPLIED WITH ALL THE CONDITIONS. THE SECTION NOWHERE STATED THAT THE DEDUCTION SHOULD BE GIVEN ONLY ON RESIDENTIAL UNITS SITUATED IN APARTMENTS AND IT WILL BE APPLICABLE ONLY TO FLATS AND NOT TO ROW HOUSES OR INDIVIDUAL HOUSES. ACCORDING TO THE ASSESSE E, THE DEFINITION MERELY PROVIDES FOR EXCLUSION OF THE COMMON AREA FOR THE PURPOSE OF SPECIFIED LIMIT AND IT IS NOT A PRE - CONDITION THAT THE RESIDENTIAL UNITS MUST HAVE COMMON AREAS. THE AO EXAMINED THE EXPLANATION OF THE ASSESSEE AND ACCORDINGLY, ON THIS BASIS , THE AO DISALLOWED THE CLAIM OF ASSESSEE U/S 80IB(10) . THE ASSESSEE WENT IN APPEAL BEFORE CIT(A). CIT(A) ULTIMATELY DELETED THE DISALLOWANCE BY OBSERVING AS UNDER : 3 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) 6.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AND T HE PROVISIONS CONTAINED IN SECTION 80IB(10) OF THE I.T. ACT. THERE IS NO DIFFERENCE OF OPINION ABOUT THE FACT THAT THE ASSESSEE FULFILS ALL THE CONDITIONS STIPULATED FOR CLAIM OF DEDUCTION U/S 80IB(10). IN A.OS OPINION, THE LEGISLATIVE INTENT IS TO GIVE DEDUCTION TO THOSE BUILDERS WHO CONSTRUCT FLATS OR APARTMENTS AND NOT THE ONES WHO CONSTRUCT ROW HOUSES AND BUNGALOWS. THE A.O. HAS ALSO DISCUSSED THE ISSUE OF COMMON AREAS WHILE WORKING OUT THE AREA OF 1500 SQ. FEET. THE STATUE ASKS FOR EXCLUSION OF COMMON AREA WHILE WORKING OUT THE MAXIMUM AREA OF A DWELLING UNIT, AND THEREFORE, IN MY OPINION ABSENCE OF COMMON AREA CANNOT DISQUALIFY AN ASSESSEE FROM CLAIM OF DEDUCTION U/S 80IB(10). REGARDING LEGISLATIVE INTENT, NORMALLY THE LANGUAGE EMPLOYED IN A S TATUTE SHOULD BE THE DETERMINATIVE FACTOR AND NOTHING EXTRA SHOULD BE READ INTO IT. THE PLAIN LANGUAGE OF A STATUTE MUST OVER - RIDE ANY SUPPOSED INTENDMENT OF THE LEGISLATIVE AND SHOULD NOT BE AMENDED OR STRETCHED. THE ASSESSEE HAS QUOTED A NUMBER OF JUDGE MENTS ON POSITION OF LAW THAT ONE CANNOT BE TAXED UNLESS THE WORDS OF TAXING STATUTE UNAMBIGUOUSLY IMPOSE THE TAX ON HIM AND THAT NO RESORT TO ALLEGED INTENTION CAN BE HAD WHEN THE WORDS OF THE STATUTE ARE PLAIN. THE INTENTION OF THE LEGISLATIVE HAS BEEN ENSURED BY LIMITING THE SIZE OF RESIDENTIAL UNIT TO 1500 SQ. FEET. THERE ARE NO OTHER CONDITIONS PRESCRIBED BY THE LEGISLATIVE AS REGARD THE TYPE OF THE RESIDENTIAL UNITS TO BE CONSTRUCTED. 6.2 THEREFORE, IN VIEW OF THE FACTS OF THE CASE AND LEGAL POSITION, I AM OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF DEDUCTION MADE BY THE APPELLANT U/S 80IB(10) OF THE I.T. ACT. 6.3 ACCORDINGLY, I DIRECT THE A.O. TO DELETE THE ADDITION MADE ON THIS GROUND, AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.1 THE APPEAL WAS FIXED FOR HEARING FROM TIME TO TIME. THE LD. DR VEHEMENTLY CONTENDED BEFORE US THAT THE BUILT - UP AREA OF EACH BUNGAL OW EXCEEDS 1500 SQ. FT. THE ASSESSEE HAS WRONGLY COMPUTED THE COMMON AREA FOR THE PURPOSE OF THE EXCLUSION AND SINCE THIS CONDITION IS NOT SATISFIED , THEREFORE, CIT(A) HAS ACTED AGAINST LA W IN PRESUMING THAT THE BUILT - UP AREA OF EACH BUNGALOW IS 1500 SQ. FT. OR LESS. 4 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) 2.2 THE LD. AR, ON THE OTHER HAND, SUBMITTED BEFORE US THAT THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS AS HAS BEEN STIPULATED U/S 80IB(10). WHETHER THE BUILT - UP AREA OF THE RESIDENTIAL UNIT EXCEEDS 1500 SQ. FT. OR NOT WAS NEVER DISPUT ED BY THE DEPARTMENT AT ANY POINT OF TIME. IN FACT, THE AO NOTED AT PG. 3, PARA 5.3 IN HIS ORDER THAT THE ASSESSEE WAS GRANTED PERMISSION ON 7.7.2003 BY MARGAO MUNICIPAL CORPORATION FOR CONSTRUCTION OF ROW VILLAS WITH BUILT - UP AREA OF 1500 SQ. FT. HE ALS O SUBMITTED THAT THE BUILT - UP AREA IS DEFINED U/S 80IB(14)(I). THE EXPRESSION COMMON AREA FINDS MENTION ONLY IN THE DEFINITION GIVEN IN SEC. 80IB(14)(I), NOT IN SEC. 80IB. THEREFORE, PRESENCE OF COMMON AREA IS NOT A CONDITION IN ORDER TO QUALIFY FOR DE DUCTION U/S 80IB(10). THE ASSESSEE ALSO FILED THE LAYOUT PLAN AS WELL AS THE CALCULATION OF EACH UNIT AS CERTIFIED BY THE ARCHITECT, M/S. TEAM - 2 ARCHITECT S & CONSULTING ENGINEER , 302, EMBASSY CHAMBER S, 5, VIT T AL MALLYA ROAD, BANGALORE - 1 GIVING CALCULATION OF EACH UNIT IN THE FOLLOWING MANNER : CD COUNTRYSIDE (RAINBOW) COMMON AREA SL. NO. UNIT ACTUAL AREA CO - EFFICIENT (0.008 BALCONY CAR PORCH TOTAL AREA IN SQ. FT. X ACTUAL AREA 1 A1 109.97 0.88 6.7 16.56 134.11 1443.56 2 A2 109.97 0.88 6.7 16.56 134.11 1443.56 3 A3 109.97 0.88 6.7 16.56 134.11 1443.56 4 A4 109.97 0.88 6.7 16.56 134.11 1443.56 5 A5 109.97 0.88 6.7 16.56 134.11 1443.56 6 A6 109.97 0.88 6.7 16.56 134.11 1443.56 7 B7 112.37 0.90 6.07 18.8 138.14 1486.93 772.19 6.18 46.27 118.16 942.80 10148.27 BLOCK - B 8 C8 115.06 0.92 7.48 15.87 139.33 1499.75 9 A9 109.97 0.88 6.7 16.56 134.11 1443.56 10 A10 109.97 0.88 6.7 16.56 134.11 1443.56 11 A11 109.97 0.88 6.7 16.56 134.11 1443.56 12 A12 109.97 0.88 6.7 16.56 134.11 1443.56 13 A13 109.97 0.88 6.7 16.56 134.11 1443.56 14 A14 109.97 0.88 6.7 16.56 134.11 1443.56 774.88 6.20 47.68 115.23 643.99 10161.10 5 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) BLOCK - C 15 A15 109.97 0.88 6.7 16.56 134.11 1443.56 16 A16 109.97 0.88 6.7 16.56 134.11 1443.56 17 A17 109.97 0.88 6.7 16.56 134.11 1443.56 18 A18 109.97 0.88 6.7 16.56 134.11 1443.56 19 A19 109.97 0.88 6.7 16.56 134.11 1443.56 20 A20 109.97 0.88 6.7 17.28 134.83 1451.31 659.82 5.28 40.20 100.08 805.38 8669.09 BLOCK - D 21 A21 109.97 0.88 6.7 16.56 134.11 1443.56 22 A22 109.97 0.88 6.7 16.56 134.11 1443.56 23 A23 109.97 0.88 6.7 16.56 134.11 1443.56 24 A24 109.97 0.88 6.7 16.56 134.11 1443.56 25 A25 109.97 0.88 6.7 16.56 134.11 1443.56 26 D26 116.5 0.93 3.75 16.39 137.57 1480.83 666.35 5.33 37.25 99.19 808.12 8698.61 BLOCK - E 27 D27 114.15 0.91 7.49 16.39 138.94 1495.55 28 D28 114.15 0.91 7.49 16.39 138.94 1495.55 29 D29 114.15 0.91 7.49 16.39 138.94 1495.55 30 D30 114.15 0.91 7.49 16.39 138.94 1495.55 31 D31 114.15 0.91 7.49 16.39 138.94 1495.55 32 D32 114.15 0.91 7.49 16.39 138.94 1495.55 684.9 5.48 44.94 98.34 833.64 8973.30 3558.14 28.47 216.34 531.00 4333.93 46650.38 COMMON AREA AREA IN SMT SECURITY 4.34 SOCIETY 23 27.34 COMMON AREA CO - EFFIENT COMMON AREA 27.34 ACTUAL AREA 3558.14 0.008 SITE AREA 5330 AREA OCCUPUIED BY BUILDING 2123.2 ROAD AREA 711.87 OPEN SPACE 2494.93 A COPY OF THE AGREEMENT WHICH HAS BEEN ENTERED INTO BY THE ASSESSEE WITH THE INTENDING BUYER WAS ALSO FILED BEFORE US AND IT WAS POINTED OUT THAT THE BUILT - UP 6 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) AREA MENTIONED IN THE AGREEMENT IN RESPECT OF EACH VILLA IS 134.83 SQ.M. OR THE AREA AS HAS BEEN COMPUTED BY THE ARCHITECT. 2.3 IN THE REJOINDER, THE LD. DR VEHEMENTLY CONTENDED THAT THE ONLY DISPUTE IN THIS CASE RELATES TO THE COMPUTATION OF THE BUILT - UP AREA AND THEREFORE IT WAS STRESSED THAT THE BENCH MAY HAVE A SP OT INSPECTION. 2.4 AFTER HEARING THE RIVAL SUBMISSIONS, THE BENCH PASSED AN ORDER DT. 1.8.2013 FOR MAKING SPOT INSPECTION OF THE BUNGALOW SO THAT THE EXACT MEASUREMENT OF THE INDIVIDUAL BUNGALOW CAN BE COMPUTED BY EXERCISING ITS POWER U/S 255(6) OF THE ACT. THE ORDER DT. 1.8.2013 PASSED BY THIS BENCH READS AS UNDER : IN THIS APPEAL THE ONLY GROUND ON WHICH THE AO HAS DENIED THE DEDUCTION U/S 80 - IB(10) TO THE ASSESSEE RELATES TO COMPUTATION OF BUILT - UP AREA OF EACH BUNGALOW BEING CONSTRUCTED BY THE ASSESSEE. ACCORDING TO THE AO, THE ASSESSEE HAS CLAIMED CERTAIN PORTION WHICH IS PART OF THE INDEPENDENT FACILITIES TO EACH BUNGALOW TO BE PART OF THE COMMON AREA. THE CASE WAS ARGUED AT LENGTH ON 27.6.2013. THE COUNSEL FOR THE ASSESSEE WAS ASKED TO SUB MIT CALCULATION ALONGWITH PHOTOGRAPHS, LAYOUT ETC. TO PROVE HIS CASE. FROM THE DETAILS FILED, CALCULATION OF AREA OF EACH BUNGALOW IS NOT POSSIBLE SO AS TO ASCERTAIN WHETHER INDEPENDENT FACILITIES HAVE BEEN PROVIDED OR THE FACILITIES ARE COMMON TO ALL THE BUNGALOWS. TO ASCERTAIN THE CORRECT POSITION, IT HAS BEEN DECIDED BY EXERCISING THE POWER U/S 255(6) OF THE ACT TO HAVE A SPOT INSPECTION ON 6.8.2013 AT 2.00 P.M. IN THE PRESENCE OF THE LD. DR AS WELL AS THE ASSESSEE AND TO HAVE THE EXACT MEASUREMENT OF INDEPENDENT BUNGALOW SO THAT THE ISSUE CAN BE DECIDED. CASE ADJOURNED FOR 22.8.2013. THE CASE WAS ADJOURNED FOR 22.8.2013. THE BENCH AS WELL AS THE REPRESENTATIVE OF THE ASSESSEE AND THE REPRESENTATIVE OF THE REVENUE WENT AT THE SITE ON 6.8.2013 AND ME ASUREMENT WAS CARRIED OUT IN RESPECT OF TWO BUNGALOWS AS SAMPLE SO AS TO ASCERTAIN THE SUPER BUILT - UP AREA IN RESPECT OF THE FLAT CONSTRUCTED BY THE ASSESSEE. THE BENCH NOTED THAT AT THE BACK OF EACH BUNGALOW THERE IS A COURTYARD ATTACHED TO THE RESPECTIV E BUNGALOW. THE SIZE OF THE COURTYARD AS WAS 7 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) MEASURED IN RESPECT OF TWO BUNGALOWS WAS 1.5 MTR. IN LENGTH AND 6.35 MTR. AND 6.70 MTR. IN WIDTH AND THE TOTAL AREA WAS 9.525 SQ. MTR. AND 10.05 SQ.MTR. THIS AREA WAS DULY ATTACHED WITH EACH OF THE BUNGALOW TH ROUGH THE WALLS SO THAT IT CAN BE USED ONLY BY THE OCCUPIER OF THE BUNGALOW. THE WALL OF THIS COURTYARD WAS EXCLUDING THE 6 MTR. WIDE ROAD. THE BENCH ALSO NOTED THAT IN FRONT OF EACH BUNGALOW THERE WAS A SMALL OPEN GARDEN HAVING LENGTH OF 2.5 MTR. AND WI DTH OF 3 MTR. BUT THIS PORTION IS NOT SURROUNDED BY WALL AND WAS LYING OPEN WITH GRASS AND PLANTS THEREON . IT WAS OBSERVED THAT THE ARCHITECT FROM WHOM THE ASSESSEE HAS OBTAINED CERTIFICATE DT. 5.7.2013 AS PRODUCED HEREINABOVE DID NOT INCLUDE THESE AREAS WHILE CALCULATING THE SUPER BUILT - UP AREA IN RESPECT OF EACH BUNGALOW. AN OPPORTUNITY WAS GIVEN TO BOTH THE PARTIES AND THE CASE WAS FIXED FOR HEARING ON 22.8.2013. ON THIS DATE, THE COUNSEL OF THE ASSESSEE SUBMITTED THE SUBMISSION DT. 20.8.2013 AS GIVEN BELOW ALONGWITH THE CALCULATION OF THE SUPER BUILT - UP AREA IN RESPECT OF EACH BUNGALOW. 1 AS DIRECTED BY THE HON'BLE TRIBUNAL DURING THE HEARING ON 01.08.2013, WE ARE ENCLOSING HEREWITH A STATEMENT GIVING BREAK - UP OF BUILT UP AREA DULY CERTIFIED BY TEAM 2 ARCHITECTS AND CONSULTING ENGINEERS. THIS SHOWS THAT THE BUILT - UP AREA OF NONE OF THE RESIDENTIAL UNITS EXCEED 1500 SQUARE FEET. 2 IT IS SUBMITTED THAT WHETHER THE BUILT - UP AREA OF RESIDENTIAL UNIT EXCEEDS 1500 SQUARE FEET OR NOT WAS NEVER DISPUTED BY THE DEPARTMENT AT ANY POINT OF TIME. IN FACT, THE LEARNED ASSESSING OFFICER NOTED AT PAGE 3, PARA 5.3 OF HIS ORDER THAT THE 'ASSESSES WAS GRANTED PERMISSION ON 07.07.2003 BY MARGAO MUNICIPAL CORPORATION FOR CONSTRUCTION OF 'ROW VILLAS' WITH BUILT UP AREA OF 1500 SQ. FEET.......' 3 THE FINDING OF FACT WAS NOTED AFTER DUE INSPECTION BY THE LEARNED ASSESSING OFFICER WHEN HE INSPECTED THE SITE DURING THE ASSESSMENT PROCEEDINGS. 4 THE ISSUE OF DISPUTE BEFORE THE LOWER AUTHORITIES WAS THAT THE PROJECT INVOLVED CONSTRUCTION OF ROW HOUSES WHICH DID NOT QUALIFY FOR DEDUCTION U/S 80 - IB(10) AS THEY ARE INDEPENDENT AND DO NOT SHARE C OMMON AREAS. THE DEPARTMENT CONTENDED THAT SHARING OF COMMON 8 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) AREAS IS ONE OF THE ESSENTIAL CONDITIONS TO QUALIFY FOR DEDUCTION U/S 80 - IB(10). 5 IN ANY CASE, THE PROJECT INVOLVES COMMON SHARING AREA WHICH IS EVIDENT FROM THE SANCTION PLAN AND THE CERTIFICA TE OF THE ARCHITECT DATED 05.07.2013 FILED BEFORE THE HON'BLE ITAT ON 26.07.2013 6 THE RESPONDENT IS ELIGIBLE FOR DEDUCTION U/S 80 - IB(10) DUE TO FOLLOWING REASONS: (A) BUILT - UP AREA IS DEFINED IN SECTION 80 - IB(14)(I). THE EXPRESSION 'COMMON AREA' FINDS MENTION ONLY IN THE DEFINITION GIVEN IN SECTION 80 - IB(14)(I) AND NOT IN SECTION 80 - IB(10). THEREFORE, PRESENCE OF COMMON AREA IS NOT A CONDITION IN ORDER TO QUALIFY FOR DEDUCTION U/S 80 - IB( 10). THE RESPONDENT RELIES ON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CIT V. RAGHAVENDRA CONSTRUCTIONS [2012] 22 TAXMANN.COM 260 (KAR.) [PLEASE SEE PAGES 57 TO 61 OF THE CASE LAW COMPILATION] (B) ANY PROJECT APPROVED AS HOUSING PROJECT BY LOCA L AUTHORITY SHOULD BE CONSIDERED AS ADEQUATE FOR THE PURPOSE OF SECTION 80 - IB(10). THE RESPONDENT RELIES ON THE FOLLOWING: ITO V. MAHAVEER CALYX [2012] 26 TAXMANN.COM 181 (BANG.) [PAGES 11 TO 18 OF CASE LAW COMPILATION] HARSHAD P. DOSHI V. ACIT [20101 37 SOT 9 (MUM.)(URO) [PAGES 19 TO 22 OF CASE LAW COMPILATION] CIT V. BRAHMA ASSOCIATES [2011] 197 TAXMAN 459 (BOM.) [PAGES 23 TO 32 OF CASE LAW COMPILATION] CBDT'S CLARIFICATION NO. F NO. 205/3/2001/IT A - II DATED 04.05.2001 (C) RESIDENTIAL UNIT HAS NOT BEEN DEFINED U/S 80 - IB(10). ANY UNIT APPROVED AS RESIDENTIAL UNIT BY LOCAL AUTHORITY SHOULD BE CONSIDERED AS ADEQUATE FOR THE PURPOSE OF SECTION 80 - IB(10). THE RESPONDENT RELIES ON THE DECISION OF THE HON'BLE BOMBAI HIGH COURT IN EMGEEN HOLDI NGS (P.) LTD. V. DCIT [2011] 12 TAXMANN.COM 468 (MUM.) [PAGES 33 TO 38 OF CASE LAW COMPILATION] (D) THE DEFINITION OF HOUSING PROJECT AS DEFINED FOR THE PURPOSE OF SECTION 80HHBA APPLIES EVEN FOR SECTION 80 - IB(10) IN THE ABSENCE OF DEFINITION IN SECTION 8 0 - IB. THE RESPONDENT RELIES ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN 9 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) COMMISSIONER OF INCOME - TAX VS. ARUN EXCELLO FOUNDATIONS (P) LTD [2013] 29 TAXMANN.COM 149 (MADRAS) (E) ROW HOUSES ARE ELIGIBLE FOR DEDUCTION U/S 80 - IB(10). IN MANAN CORPN.'S CASE (QUOTED SUPRA), THE PROJECT INVOLVED ROW HOUSES. (F) THE EXPRESSION USED IN SECTION 80 - IB(10) IS RESIDENTIAL UNIT AND NOT RESIDENTIAL APARTMENT. THE HOUSING PROJECT CONTEMPLATED IN SECTION 80 - IB(10) NEED NOT BE A RESIDENTIAL COMPLEX. IF THE INTENTION WERE TO TREAT HOUSING PROJECT AS RESIDENTIAL COMPLEX, THEN THE STATUTE WOULD HAVE USED THE EXPRESSION 'RESIDENTIAL COMPLEX'. COMPARISON CAN BE MADE BETWEEN LANGUAGE USED IN SECTION 80 - IB(10) AND SECTION 65 (91A) OF CHAPTER V OF THE FINANCE ACT, 1994 (G) THE P LAN HAD BEEN SANCTIONED ON 07.07.2003. THE DEFINITION OF BUILT - UP AREA WAS INSERTED BY FINANCE (NO. 2) ACT, 2004 W.E.F 01.04.2005. THE AMENDMENT DOES NOT APPLY TO HOUSING PROJECTS APPROVED BY LOCAL AUTHORITY BEFORE 01.04.2005. THE RESPONDENT RELIES ON THE FOLLOWING DECISIONS: CIT V. ANRIYA PROJECT MANAGEMENT SERVICES (P.) LTD [2012] 21 TAXMANN.COM 140 (KAR.) [PAGES 39 TO 42 OF CASE LAW COMPILATION] MANAN CORPN. V. ACIT [2013] 29 TAXMANN.COM 15 (GUJ.) [PAGES 43 TO 56 OF CASE LAW COMPILATION] (H) ASSESSING OFFICER CANNOT SIT ON THE WISDOM OF LEGISLATURE S. A. BUILDERS V. CIT (APPEALS) [2007] 158 TAXMAN 74 (SC) [PAGES 89 TO 93 OF CASE LAW COMPILATION] KISHORE B. SETALVAD V. CWT [2003] 128 TAXMAN 560 (GUJ.) [PAGES 72 TO 78 OF CASE LAW COMPILATION] (I) NO NEW CONDITION CAN BE READ INTO A SECTION. PRESENCE OF COMMON AREA IS NOT A CONDITION. THE IMPORT OF SECTION 80 - IB(14)(I) IS THAT IF THERE IS A COMMON AREA THEN SUCH COMMON AREA SHOULD BE EXCLUDED WHILE COMPUTING THE BUILT - UP AREA. CIT V. VIRMANI INDUSTRIES (P.) LTD. [1995] 83 TAXMAN 343 (SC) [PAGES 94 TO 100 OF THE CASE LAW COMPILATION] CIT V. BRAHMA ASSOCIATES [2011] 197 TAXMAN 459 (BOM.) [PAGES 23 TO 32 OF CASE LAW COMPILATION] 10 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) (J) A PROVISION IN THE STATUTE SHOULD BE INTERPRETED BASED ON WORD S USED IN THE STATUTE ORISSA STATE WAREHOUSING CORPN. V. CIT [1999] 103 TAXMAN 623 (SC) [PAGES 62 TO 71 OF THE CASE LAW COMPILATION] KESHAVJI RAVJI & CO. V. CIT [1990] 49 TAXMAN 57 (SC) [PAGES 79 TO 88 OF THE CASE LAW COMPILATION] (K) SECTION 80 - IB(10) I S A BENEFICIAL PROVISION FOR PROMOTING ECONOMIC GROWTH. HENCE, IT SHOULD BE INTERPRETED LIBERALLY. BALAJI TEMPO LTD. V. CIT [1992] 62 TAXMAN 480 (SC) [PAGES 101 TO 106 OF THE CASE LAW COMPILATION] P. R. PRABHAKAR V. CIT [2006] 154 TAXMAN 503 (SC) [PAGES 107 TO 111 OF THE CASE LAW COMPILATION] IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) BE SUSTAINED AND THE APPEAL OF THE DEPARTMENT BE DISMISSED. CD COUNTRYSIDE (RAINBOW) D - 26 DESRIPTION BUILT UP AREA A GROUND FLOOR LIVING 12.43 DINING 17.85 KITCHEN 10.89 TOILET 4.81 BED ROOM 12.94 TOTAL A 58.92 B FIRST FLOOR BED ROOM( BACKSIDE) 12.94 TOILET 4.68 BED ROOM(FRONTSIDE) 12.43 TOILET 5 . 23 FAMILY 12.58 C OPEN TERRACE BACKSIDE 4.86 FRONTSIDE 4.86 TOTAL B+C 57.58 GRAND TOTAL 116.50 11 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) CD COUNTRYSIDE(RAINBOW) D - 27, D28, D29, D30, D31 & D32 DESRIPTION BUILT UP AREA A GROUND FLOOR LIVING 11.55 DINING 17.17 KITCHEN 10.89 TOILET 4.59 BED ROOM 12.41 TOTAL A 56.61 B FIRST FLOOR BED ROOM( BACKSIDE) 12.08 TOILET 5.13 BED ROOM (FRONTSIDE) 12.58 TOILET 4.59 FAMILY 1139 1.94 C OPEN TERRACE BACKSIDE 5.03 FRONTSIDE 4.80 TOTAL B+C 57.54 GRAND TOTAL 114.15 2.4.1 THE ASSESSEE ALSO FILED AGAIN THE CALCULATION OF THE BUILT - UP AREA (NOT SUPER BUILT - U P AREA) IN RESPECT OF UNIT NOS. CD COUNTRYSIDE (RAINBOW) D - 26 AND D - 27, D - 28, D - 29, D - 30 , D - 31 & D - 32 WHICH WAS ENTIRELY DIFFERENT FROM THE CALCULATION AS HAS BEEN EARLIER FILED AND CERTIFIED BY THE SAME ARCHITECT. IN THIS CALCULATION ALSO, THE ASSESSEE DID NOT INCLUDE THE BALCONY, CAR POR CH, BACK COURTYARD AS WELL AS FRONT OPEN COURTYARD HAVING PLANTS ETC. 2.4.2 THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT THE TOTAL LENGTH OF ONE ROW HOUSE WHICH WAS MEASURED INCLUDING THE UNBUILT LAND IS 15 MTR. AND WIDTH IS 6.7 MTR. WHICH CONTAINS BAL CONY MEASURING 2.25 MTR. X 1.35 MTR. AS WELL AS COURTYARD MEASURING 1.5 MTR. X 6.35 MTR. BUT IT DOES NOT INCLUDE FRONT GARDEN MEASURING 2.5 MTR. X 3 MTR. IT WAS ALSO STATED THAT THE ROAD IN FRONT OF THE HOUSE 12 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) IS 4.5 MTR. WIDE AND THE MAIN ROAD WHICH IS BE HIND THE ROW HOUSE IS 6 MTR. WIDE. IN RESPECT OF THE SUBMISSION OF THE ASSESSEE, OUR ATTENTION WAS DRAWN TOWARDS THE GROUND OF APPEAL AND IT WAS POINTED OUT THAT THE REVENUE HAS DULY CHALLENGED THE ORDER OF CIT(A) ALLOWING DEDUCTION TO THE ASSESSEE U/S 80 IB(10) AND IT INCLUDES THE CONTENTION THAT EACH UNIT EXCEEDS 1500 SQ. FT. IT WAS VEHEMENTLY CONTENDED THAT THE AREA OF BACK COURTYARD, AS IT IS INDEPENDENTLY ATTACHED TO EACH OF THE BUNGALOW, AND THE AREA OF THE FRONT GARDEN HAS TO BE ADDED IN THE BUILT - U P AREA AND CANNOT BE REGARDED TO BE COMMON AREA PROVIDED TO ALL THE BUNGALOWS. 2.4.3 AFTER HEARING THE RIVAL SUBMISSIONS AND AFTER MAKING THE INSPECTION AT SITE BY EXERCISING THE POWERS UNDER SEC. 255(6), WE ARE OF THE VIEW THAT THE ONLY QUESTION INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB(10) FOR A SUM OF RS.1,71,78,300/ - . WE HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT( A). WE DO NOT AGREE WITH THE LD. AR THAT THE ISSUE REGARDING THE BUILT - UP AREA OF RESIDENTIAL UNIT IS NOT UNDER DISPUTE AND CANNOT BE DISPUTED BY THE REVENUE. WE NOTED FROM THE ASSESSMENT ORDER THAT THE AO DISPUTED THE BUILT - UP AREA AND IN THIS REGARD, I N PARA 5.4 HE HAS OBSERVED AS UNDER : 5.4 IN THIS CONTEXT, THE BUILT UP AREA MEANS MEASUREMENT OF RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING PROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF WALL BUT NOT INCLUDING COMMON AREAS SHARED LIKE STA IRCASE, LIFT ETC. WITH OTHER RESIDENTIAL UNITS. IN OTHER WORDS, FLATS/APARTMENTS CONSTRUCTED ON THE LAND ONLY WILL HAVE COMMON AREAS SHARING WITH OTHER RESIDENTIAL UNITS AT THE PARTICULAR FLOOR LEVEL. IN THE INSTANT CASE SINCE CONSTRUCTION OF VILLAS/BUNG ALOWS/ROW HOUSES ARE INDEPENDENT AND DO NOT SHARE COMMON AREAS AND HENCE THE ASSESSEE DID NOT FULFIL ONE OF THE CONDITION SPECIFIED UNDER SECTION 80IB(10) OF THE I.T. ACT. BEFORE US, THE GROUND OF APPEAL TAKEN BY THE REVENUE RELATES TO THE ELIGIBILITY OF THE CLAIM OF THE ASSESSEE U/S 80IB(10). SEC. 80IB(10) LAYS DOWN VARIOUS CONDITIONS FOR THE PURPOSE OF CLAIM OF DEDUCTION IN CASE OF AN UNDERTAKING 13 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) DEVELOPING OR BUILDING HOUSING PROJECT APPROVED BEFORE 31.3.2008 BY A LOCAL AUTHORITY. THE SECTION LAYS DO WN THE CONDITION IN RESPECT OF COMPLETION OF THE CONSTRUCTION WITHIN THE SPECIFIED TIME FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THE SIZE OF THE PLOT IN RESPECT OF THE PROJECT HAS TO BE MINIMUM 1 ACRE BUT THIS CONDITION MAY NOT APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR STATE GOVERNMENT FOR RE - CONSTRUCTION OR RE - DEVELOPMENT OF EXISTING BUILDING DECLARED TO BE SLUM AREAS. THIS SECTION AL SO SPECIFIES THAT THE RESIDENTIAL UNIT MAY HAVE A MAXIMUM BUILT - UP AREA OF 1000 SQ. FT. IF SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ. FT. AT ANY OTHER PLACE. THIS SECTION FURTHER STATES THAT THE BUILT - UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED 3% OF THE AGGREGATE BUILT - UP AREA OF THE HOUSING PROJECT OR 5000 SQ. FT., WHICHEVER IS HIGHER. CERTAIN OTHER CONDITIONS ARE ALSO APPLICABLE WHICH WERE INSERTED SUBSEQUENTLY. NONE OF THE CONDITIONS, EXCEPT THE MAXIMUM BUILT - UP AREA HAS BEEN DISPUTED, IN OUR OPINION, BY THE AO. THE PROJECT OF THE ASSESSEE IS NOT IN DELHI OR MUMBAI OR WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF DELHI OR MUMBAI. THEREFORE, THE MAXIMUM BUILT - UP AREA OF THE RESIDENTIAL UNIT WHICH HAS TO BE CONSTRUCTED BY THE ASSESSEE SHOULD NOT EXCEED 1500 SQ. FT. I.E. 139.49 SQ. MTR. THE BUILT - UP AREA HAS BEEN DEFINED IN THIS REGARD U/S 80IB( 14)(A) WHICH STIPULATE S AS UNDER : (A) BUILT - UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BAL CONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. FROM THE AFORESAID DEFINITION, IT IS APPARENT THAT THE BUILT - UP AREA HAS TO TAKE INTO ACCOUNT THE INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL 14 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) INCLUDING THE PROJECTIONS AND THE BALCONIES. THIS HAS ALS O TO BE INCREASED BY THE THICKNESS OF THE WALL BUT IT WILL NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. IT IS A FACT THAT THE ASSESSEE HAS CONSTRUCTED BUNGALOWS. THIS SECTION EX CLUDES THE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNI TS. THE BUNGALOW, AS WE NOTED, DOES NOT HAVE ANY COMMON AREA EXCEPT THE ROAD IN FRONT OF IT AND AT THE BACK OF IT. THE ARCHITECT HAS DULY MEASURED THE SUPER BUILT - UP AREA IN RESPECT OF EACH UNIT (BUNGALOW) AS UNDER : CD COUNTRYSIDE (RAINBOW) COMMON AREA SL. NO. UNIT ACTUAL AREA CO - EFFICIENT (0.008 BALCONY CAR PORCH TOTAL AREA IN SQ. FT. X ACTUAL AREA 1 A1 109.97 0.88 6.7 16.56 134.11 1443.56 2 A2 109.97 0.88 6.7 16.56 134.11 1443.56 3 A3 109.97 0.88 6.7 16.56 134.11 1443.56 4 A4 109.97 0.88 6.7 16.56 134.11 1443.56 5 A5 109.97 0.88 6.7 16.56 134.11 1443.56 6 A6 109.97 0.88 6.7 16.56 134.11 1443.56 7 B7 112.37 0.90 6.07 18.8 138.14 1486.93 772.19 6.18 46.27 118.16 942.80 10148.27 BLOCK - B 8 C8 115.06 0.92 7.48 15.87 139.33 1499.75 9 A9 109.97 0.88 6.7 16.56 134.11 1443.56 10 A10 109.97 0.88 6.7 16.56 134.11 1443.56 11 A11 109.97 0.88 6.7 16.56 134.11 1443.56 12 A12 109.97 0.88 6.7 16.56 134.11 1443.56 13 A13 109.97 0.88 6.7 16.56 134.11 1443.56 14 A14 109.97 0.88 6.7 16.56 134.11 1443.56 774.88 6.20 47.68 115.23 643.99 10161.10 BLOCK - C 15 A15 109.97 0.88 6.7 16.56 134.11 1443.56 16 A16 109.97 0.88 6.7 16.56 134.11 1443.56 17 A17 109.97 0.88 6.7 16.56 134.11 1443.56 18 A18 109.97 0.88 6.7 16.56 134.11 1443.56 19 A19 109.97 0.88 6.7 16.56 134.11 1443.56 20 A20 109.97 0.88 6.7 17.28 134.83 1451.31 659.82 5.28 40.20 100.08 805.38 8669.09 BLOCK - D 21 A21 109.97 0.88 6.7 16.56 134.11 1443.56 22 A22 109.97 0.88 6.7 16.56 134.11 1443.56 23 A23 109.97 0.88 6.7 16.56 134.11 1443.56 24 A24 109.97 0.88 6.7 16.56 134.11 1443.56 15 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) 25 A25 109.97 0.88 6.7 16.56 134.11 1443.56 26 D26 116.5 0.93 3.75 16.39 137.57 1480.83 666.35 5.33 37.25 99.19 808.12 8698.61 BLOCK - E 27 D27 114.15 0.91 7.49 16.39 138.94 1495.55 28 D28 114.15 0.91 7.49 16.39 138.94 1495.55 29 D29 114.15 0.91 7.49 16.39 138.94 1495.55 30 D30 114.15 0.91 7.49 16.39 138.94 1495.55 31 D31 114.15 0.91 7.49 16.39 138.94 1495.55 32 D32 114.15 0.91 7.49 16.39 138.94 1495.55 684.9 5.48 44.94 98.34 833.64 8973.30 3558.14 28.47 216.34 531.00 4333.93 46650.38 COMMON AREA AREA IN SMT SECURITY 4.34 SOCIETY 23 27.34 COMMON AREA CO - EFFIENT COMMON AREA 27.34 ACTUAL AREA 3558.14 0.008 SITE AREA 5330 AREA OCCUPUIED BY BUILDING 2123.2 ROAD AREA 711.87 OPEN SPACE 2494.93 FROM THE CALCULATION OF THE ARCHITECT, WE NOTED THAT THE ARCHITECT HAS NOT INCLUDED IN HIS CALCULATION THE BACK COURTYARD. WHEN WE INSPECTED THE BUNGALOWS IN THE PRESENCE OF THE ASSESSEES REPRESENTATIVE AS WELL AS THAT OF THE DEPARTMENT, WE NOTED THAT IT IS ANNEXED TO THE BUNGALOW SURROUNDED BY THE WALLS. THUS, THE COURTYARD IS A PART AND PARCEL OF THE BUNGALOW. IT CANNOT BE USED BY THE OCCUPIER OF OTHER BUNGALOWS SO THAT IT MAY BE REGARDED TO BE A COMMON AREA. THE AREA OF EACH COURTYARD AS WAS NOTED B Y US IS 1.5 MTR. X 6.7 MTR. = 10.05 MTR. BUT IN CASE OF OTHER BUNGALOW, WE NOTED THE MEASUREMENT WAS 1.5 MTR. X 6.35 MTR. WHICH COMES TO 9.53 MTR. IF THE AREA OF THE BACK COURTYARD, EVEN IF IT IS TAKEN TO BE 9.53 SQ. MTR. IS ADDED, THE BUILT - UP AREA IN RE SPECT OF EACH BUNGALOW WILL EXCEED 139.4 SQ. MTR. I.E. MORE THAN 1500 SQ. FT. IN VIEW OF 16 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) THIS FACT, WE ARE OF THE VIEW THAT SINCE THE BUILT - UP AREA OF EACH ROW VILLA CONSTRUCTED BY THE ASSESSEE IS MORE THAN 1500 SQ. FT., THE ASSESSEE FAILED TO COMPLY WITH THE CONDITION AS LAID DOWN U/S 80IB(10)(C) AND THEREFORE, THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION U/S 80IB(10). WE HAVE ALSO GONE THROUGH THE CASE LAWS AS HAS BEEN RELIED BY THE ASSESSEE IN THE WRITTEN SUBMISSION BUT THESE CASE LAWS DO NOT RELATE TO THE ISSUE IN DISPUTE. IN THE CASE OF THE ASSESSEE THE ONLY DISPUTE, IN OUR OPINION, RELATES TO MEASUREMENT OF THE BUILT - UP AREA. THE PROVISIONS OF SEC. 80IB IS VERY CLEAR THAT IF THERE IS ANY COMMON AREA, THAT HAS TO BE EXCLUDED. IF THERE IS NO COMM ON AREA, IT CANNOT BE EXCLUDED WHILE COMPUTING THE SUPER BUILT - UP AREA OF 1500 SQ. FT. WE HAVE GONE THROUGH ALL THE CASE LAWS BUT NONE OF THE CASE LAW, IN OUR OPINION, IS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. WE, ACCORDINGLY, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ORDER OF THE AO DISALLOWING THE DEDUCTION U/S 80IB(10) TO THE ASSESSEE AMOUNTING TO RS.1,71,78,300/ - . 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /09/2013. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 13 /09/ 2013 *SSL* 17 ITA NO. 49/PNJ/2013 (ASST. YEAR : 2006 - 07) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA