DCIT, New Delhi V. M/s. Omaxe Buildhome (P) Ltd., New Delhi

ITA 5373/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97847 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L MEENA
• Keywords: Question of law; Competent authority
• Section: 143(3); 234B; 260A; 80IB; 63; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI LAXMI PRASAD SAHU ITA NO. 4034/DEL/2013 ASSESSMENT YEAR : 2008-09 DEPUTY CIT, VS. M/S. OMAXE LTD., CENTRAL CIRCLE-4, 7-LSC, OMAXE HOUSE, NEW DELHI. KALKAJI, NEW DELHI. (PAN: AAACO0171H) (APPELLANT) (RESPONDENT) ITA NO. 3887/DEL/2013 ASSESSMENT YEAR: 2008-09 M/S. OMAXE LTD., VS. DEPUTY CIT, 7-LSC, OMAXE HOUSE, CENTRAL CIRCLE-4, KALKAJI, NEW DELHI. NEW DELHI. (PAN: AAACO0171H) (APPELLANT) (RESPONDENT) ITA NOS. 5373, 4031 &4032 ASSESSMENT YEARS: 2007-08, 2008-09 & 2009-10 DEPUTY CIT, VS. M/S. OMAXE BUILDHOME (P ) LTD., CENTRAL CIRCLE-4, 10-LSC, OMAXE HOUSE, NEW DELHI. KALKAJI, NEW DELHI. (PAN: AAACO8533D) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI ASHWANI KUMAR, CA DEPARTMENT BY: SHRI R.L. MEENA, CIT(DR) DATE OF HEARING : 17 .08.2015 DATE OF PRONOUNCEMENT: 12 :11.2015 ORDER 2 PER I.C. SUDHIR: JUDICIAL MEMBER ASSESSMENT YEAR: 2008-09 : IN THE CASE OF OMAXE LTD., THE PARTIES ARE IN CROSS APPEALS AGAINST THE COMMON FIRST APPELLATE OR DER. THE GROUNDS ARE REVOLVING ON THE ISSUE OF VALIDITY OF CLAIMED DEDUC TION UNDER SEC. 80IB (10) OF THE INCOME-TAX ACT, 1961. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES, ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AV AILABLE ON THE RECORD IN VIEW OF THE DECISIONS RELIED UPON. 3. THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND CONSTRUCTION OF LARGE SCALE RESIDEN TIAL/ HOUSING PROJECTS. FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, 2008 -09, THE APPELLANT FILED E-RETURN ON 29 TH SEPTEMBER, 2008 DECLARING INCOME OF RS. 265,77,67, 830. IN THE RETURN OF INCOME, THE APPELLANT CLAIMED DEDUCTION OF RS.189,70,14,901 UND ER SECTION 80IB(10) OF THE INCOME- TAX ACT, 1961 (THE ACT) IN RESPECT OF INCOME DERI VED FROM VARIOUS ELIGIBLE HOUSING PROJECTS. 4. IN THE ASSESSMENT COMPLETED VIDE ORDER DATED 31 ST DECEMBER, 2010 UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER ASSESSED T HE INCOME OF THE ASSESSEE AT RS.454,03,62,210 AGAINST INCOME OF RS. 265,77,67,83 0 DECLARED BY IT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DENIED THE AFORESAID D EDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT TO THE EXTENT OF RS.188,25,94,3 79. 3 5. IN THE FIRST APPEAL, THE LEARNED CIT(A) ALLOWED PARTIAL RELIEF IN RESPECT OF CLAIM U/S 80IB(10) ALLOWING THE DEDUCTION ONLY ON BUILT UP RE SIDENTIAL UNITS CONSISTED IN THE HOUSING PROJECTS. THE LEARNED CIT(A) UPHELD THE ORD ER OF THE ASSESSING OFFICER IN RESPECT OF CLAIM OF DEDUCTION ON UNBUILT HOUSING SI TES I.E. DEVELOPED PLOTS CONSISTED IN THE HOUSING PROJECTS. BOTH THE PARTIES ARE IN APPEAL BE FORE US AGAINST THE ORDER OF LEARNED CIT(A) FOR THEIR RESPECTIVE GRIEVANCES AS PER GROUN DS OF APPEAL. 6. THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: GROUNDS ITA NO. 4034: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING DEDUCTION U/S. 10IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF PROFITS FROM HOUSING PROJECTS WHICH A RE GROUP HOUSING SCHEMES OF MULTISTORIED FLATS IN THE PROJECTS NAMELY OMAXE HEIGHTS, FARIDABAD, OMAXE HEIGHTS, BADADURGARH, OMAXE HEIGHTS, SONEPAT, OMAXE PARKWOOD, BADDI AND OMAXE REVIERA, PANT NAGAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE GROUP HOUSING PROJECTS OF HOUSING PROJECTS NAMELY OMAXE HEIGHTS, FARIDABAD, OMAXE HEIGHTS, BAHADURGARH, OMAXE HEIGHTS, SONEPAT, OMAXE PARKWOOD, BADDI AND OMAXE REVIERA, PANT NAGAR ARE SEPARATELY SATISFYING THE CONDITIONS OF SEC. 80IB(1 0) OF THE INCOME-TAX ACT, 1961 DESPITE OBSERVING THAT THE 4 CONSOLIDATED APPROVAL OF THE LOCAL AUTHORITY IS FOR THE ENTIRE PROJECT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE COMMERCIAL AREA IS NOT PART OF GROUP HOUSING PROJEC TS OF HOUSING PROJECTS NAMELY OMAXE HEIGHTS FARIDABAD, OMAXE HEIGHTS, BAHADURGARH, OMAXE HEIGHTS, SONEPAT, OMAXE PARKWOOD, BADDI AND OMAXE REVIERA, PANT NAGAR. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE COMMERCIAL AREA OF HOUSING PROJECTS NAMELY OMAXE HEIGHTS, FARIDABAD, OMAXE HEIGHTS, BAHADURGARH, OMAXE HEIGHTS, SONEPAT, OMAXE PARKWOOD, BADDI AND OMAXE REVIERA, PANAT NAGAR WHICH, THOUGH, EXCEEDED THE LIMIT PRESCRIBED IN CLAUSE (D) OF SEC. 80IB(10) OF THE INCOME-TAX ACT, 1961 WAS A SEPARATE UNIT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE TRANSFER OF COMMERCIAL AREA OF HOUSING PROJECTS NAMELY OMAXE HEIGHTS, FARIDABAD, OMAXE HEIGHTS, BAHADURGARH, OMAXE HEIGHTS, SONEPAT, OMAXE PARKWOOD, BADDI AND OMAXE REVIERA, PANAT NAGAR TO THE GROUP COMPANIES WAS NOT A MERE BOOK ENTRY. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING 5 DEDUCTION U/S. 10IB(10) OF THE INCOME-TAX ACT, 1961 ON PROFITS FROM THE SALE OF VILLAS INCLUDED IN THE PROJECTS NAMELY OMAXE CITY, SONEPAT, OMAXE CITY, LUCKNOW, OMAXE CITY, JAIPUR AND OMAXE CITY, PALWAL. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE PLOTS AND VILLAS INCLUDED IN THE PROJECTS NAMELY OMAXE CITY, SONEPAT OMAXE CITY, LUCKNOW, OMAXE CITY, JAIPUR AND OMAXE CITY, PALWAL ARE SEPARATE PROJECTS. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE COMMERCIAL AREA IN THE PROJECTS NAMELY OMAXE CITY, SONEPAT, OMAXE CITY, LUCKNOW, OMAXE CITY, JAIPUR AND OMAXE CITY, PALWAL, WHICH, THOUGH, EXCEEDED THE LIMIT PRESCRIBED IN CLAUSE (D) OF SECTION 80IB (10) OF THE INCOME-TAX ACT, 1961, WAS A SEPARATE UNIT. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE TRANSFER OF COMMERCIAL AREA IN THE PROJECTS NAMELY OMAXE CITY, SONEPAT OMAXE CITY, LUCKNOW, OMAXE CITY, JAIPUR AND OMAXE CITY, PALWAL, TO THE GROUP COMPANIES WAS NOT A MERE BOOK ENTRY. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE PROJECT OMAXE HEIGHTS, SONEPAT AND PLOTS AND VILLAS 6 INCLUDED IN OMAXE CITY, SONEPAT AS DISTRICT HOUSING PROJECTS, WHEN THE ASSESSEE HIMSELF HAS CONSIDERED THE PROJECTS OMAXE CITY, SONEPAT WHICH CONTAINS PLOTS AND VILLAS AND OMAXE HEIGHTS, SONEPAT AS ONE PROJEC T AND IN ALLOWING DEDUCTION UNDER SEC. 80IB(10) OF TH E INCOME-TAX ACT, 1961 TO THE ASSESSEE IN EXCESS OF T HE DEDUCTION CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. 11. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 7. THE ASSESSEE ON THE OTHER HAND HAS IMPUGNED THE FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(APPEALS) (I) ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSES SING OFFICER IN DISALLOWING THE DEDUCTION UNDER SEC. 80I B(10) OF THE INCOME-TAX ACT, 1961 (THE ACT) CLAIMED BY TH E APPELLANT IN RESPECT OF FOLLOWING ELIGIBLE HOUSING PROJECTS. NAME OF THE PROJECT DEDUCTION CLAIMED AND DISALLOWE D UNDER SEC. 80IB(10) IN RS. OMAXE CITY, ROHTAK 1,91,34,660 OMAXE PARKSWOOD II, CHAKKAN BADDI 2,26,45,075 7 OMAXE CITY MAYAKHERI, INDORE 6,86,87,350 OMAXE CITY-II, MANGALIYA, INDORE 19,17,82,533 PDA OMAXE CITY PATIALA 48,82,09,699 BY HOLDING THAT DEDUCTION U/S. 80IB(10) OF THE ACT IN RESPECT OF PROFITS DERIVED FROM THE HOUSING PROJECTS CONSISTIN G OF UNBUILT HOUSING SITES CANNOT BE ALLOWED. (II) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U NDER SEC. 80IB(10) ON PART OF THE HOUSING PROJECT COMPRI SING OF UNBUILT HOUSING SITES OUT OF DEDUCTION CLAIMED B Y THE APPELLANT ON THE ELIGIBLE HOUSING PROJECTS, CLAIM O F DEDUCTION ON UNBUILT HOUSING SITES BEARING AS UNDER : NAME OF THE PROJECT CONFIRMED DISALLOWANCE OF DEDUCTION CLAIMED UNDER SEC. 80IB(10) IN RS. OMAXE CITY, LUCKNOW 13,54,30,598 OMAXE CITY, JAIPUR 8,39,27,677 OMAXE CITY, PALWAL 46,86,6233 BY HOLDING THAT DEDUCTION U/S. 80IB(10) OF THE ACT IN RESPECT OF PROFITS DERIVED FROM THAT PART OF HOUSING PROJECTS WHICH CONSISTS OF UNBUILT HOUSING SITES CANNOT BE ALLOWED. 8 (III) MISINTERPRETED THE PROVISIONS OF SEC. 80IB(10) BY H OLDNG THAT THE CONDITIONS (A) AND (C) OF THE AFORESAID SE CTION REGARDING COMMENCEMENT OF CONSTRUCTION OF THE HOUSI NG PROJECT AND MAXIMUM BUILT UP AREA OF A RESIDENTIAL UNITS RESPECTIVELY CANNOT BE FULFILLED, IF HOUSING SITES ARE SOLD WITHOUT ANY CONSTRUCTION THEREON. (IV) MISINTERPRETED THE PROVISIONS OF SECTION 80IB(10) O F THE ACT BY HOLDING THAT ACTIVITY OF DEVELOPING HOUSING SITES ALONG WITH CONSTRUCTION OF ALL INFRASTRUCTURAL FACI LITIES AND AMENITIES IS NOT DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT RATHER, CONSTRUCTION OF RESIDENTIA L UNITS IS MUST FOR CONSTITUTING A HOUSING PROJECT. 2. THAT THE LEARNED CIT(APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING CHARGING INTEREST UNDER SEC. 234B OF THE ACT ONT THE REVISED INCOME OF THE APPELLANT. 8. THE ASSESSEE IS THE DEVELOPER OF LARGE SCALE HOU SING PROJECTS. SOME OF THE PROJECTS UNDERTAKEN BY THE ASSESSEE ARE GROUP HOUSING PROJEC TS CONSISTING OF RESIDENTIAL MULTI STORIED BUILDINGS AND CONVENIENT SHOPPING/ COMMERCI AL COMPLEXES. SOME OF THE HOUSING PROJECTS UNDERTAKEN BY THE ASSESSEE ARE LAR GE SCALE TOWNSHIPS CONSISTING OF GROUP HOUSING AND INDEPENDENT RESIDENTIAL UNITS SOME OF W HICH ARE BUILT UP I.E. VILLAS, FLOORS ETC. AND SOME ARE UNBUILT I.E. PLOTS. THESE TOWNSHIPS AL SO CONSIST OF SEPARATE AREA EARMARKED FOR COMMERCIAL USE. COMMERCIAL AREA FROM GROUP HOUS ING PROJECTS AND TOWNSHIP HOUSING PROJECTS WAS TRANSFERRED TO OTHER ENTITIES (GROUP C OMPANIES/ INDEPENDENT ENTITIES) WITHOUT ANY CONSTRUCTION THEREON. 9 9. OUT OF THESE LARGE GROUP HOUSING PROJECTS/ TOWNS HIPS, THE ASSESSEE CLAIMED DEDUCTION OF RS. 189,70,14,901 ONLY ON ELIGIBLE HOU SING PROJECTS I.E. BUILT UP RESIDENTIAL UNITS HAVING BUILT UP AREA WITHIN THE PRESCRIBED LI MIT AND UNBUILT RESIDENTIAL UNITS. DETAILED PROJECT WISE CHART HAS BEEN SUBMITTED DURI NG COURSE OF HEARING. NO DEDUCTION WAS CLAIMED ON COMMERCIAL AREA OF ANY PROJECT AND R ESIDENTIAL UNITS HAVING BUILT UP AREA MORE THAN THE PRESCRIBED LIMIT. THIS FACT IS UNDISP UTED. 10. DEPARTMENTAL APPEAL : THE PRIMARY ISSUE RAISED IN THE PRESENT CASE RELATES TO THE AFORESAID PROJECTS UNDERTAKEN BY THE ASSESSEE SATISFYING SOME OF THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) OF THE ACT. THE MAJOR LEGAL ISSUES ON WHICH DEDUCTION HAS BEEN DENIED TO THE AS SESSEE MAY BE SUMMARIZED AS FOLLOWS. (I) AS PER SUB-CLAUSE (C) OF SECTION 80IB(10) OF THE AC T, THE MAXIMUM BUILT UP AREA OF RESIDENTIAL UNIT HAS TO BE 1000/1500 SQ FT AS PER LOCATION OF THE PROJECT, HOWEVER THE CONSOLIDATED PROJECTS CONSIST OF RESIDENTIAL UNITS HAVING AREA MORE THAN PRESCRIBED LIMIT. (II) AS PER SUB CLAUSE (D) TO THE SECTION 80IB(10) BUILT UP COMMERCIAL AREA IN THE HOUSING PROJECT SHOULD NOT EXCEED THE PRESCRIBE D LIMIT, WHEREAS THE CONSOLIDATED PROJECTS CONSISTED OF COMMERCIAL AREA MORE THAN THE PRESCRIBED LIMIT. IT WAS ALLEGED THAT TRANSFER OF C OMMERCIAL AREA BY THE ASSESSEE WAS MERELY A BOOK ENTRY TO CIRCUMVENT THE PROVISIONS OF SECTION 80IB(10). (III) AS PER THE ASSESSING OFFICER, FULFILLMENT OF VARIOU S CONDITIONS FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE AC T HAVE TO BE EXAMINED VIS--VIS THE ENTIRE HOUSING PROJECT AS ORIGINALLY APPROVED BY THE LOCAL AUTHORITY AND THE SAME CANNOT BE SEEN/ EXAMINED VIS --VIS THAT PART OF THE 10 INDEPENDENT/ SEPARATE HOUSING PROJECT, WITHIN THE L ARGE PROJECT AS APPROVED BY THE LOCAL AUTHORITY, IN RESPECT OF WHICH DEDUCTI ON HAS BEEN CLAIMED BY THE ASSESSEE. (IV) THE ASSESSING OFFICER HELD THAT THE ENTIRE PROJECT WAS APPROVED AS ONE PROJECT AND THEREFORE, IT IS NOT PERMISSIBLE TO BIF URCATE THE PROJECT AND CLAIM DEDUCTION IN RESPECT OF PART OF THE PROJECT. IN THE FIRST APPEAL, THE LEARNED CIT(A) ALLOWED DED UCTION IN RESPECT OF ELIGIBLE HOUSING PROJECTS HAVING BUILT UP RESIDENTIAL UNITS WITHIN THE PRESCRIBED LIMIT ON THE BASIS OF VARIOUS JUDICIAL PRECEDENTS THAT DEDUCTION CAN BE ALLOWED IN RESPECT OF ELIGIBLE PORTION OF THE HOUSING PROJECT ON A STANDA LONE BASIS, EVEN IF THE PROJECT AS A WHOLE CONSISTS OF RESIDENTIAL UNITS AND COMMERCIAL AREA HAVING BUILT UP AREA MORE THAN THE PRESCRIBED LIMIT. DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE ORDER OF LEARNED CIT(A) TO THE EXTENT OF RELIEF ALLOWED TO T HE ASSESSEE. 11. IN SUPPORT OF THE GROUNDS, THE LEARNED CIT(DR) HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT TRANSFER OF COMMERCIAL AREA BY THE ASSESSEE WAS MERELY A BOOK ENTRY WITH THE SOLE OBJECT TO CIRCUMV ENT THE PROVISIONS OF SEC. 80IB(10) OF THE INCOME-TAX ACT, 1961. HE PLACED RELIANCE ON THE DECISION OF CHENNAI BENCH OF THE ITAT IN THE CASE OF ACIT VS. CHITRA CONSTRCUTION PV T. LTD. ITA NO. 343/MDS/07 & ORS. (A.YS. 2003-04 AND 2004-05) ORDER DATED 28.3.2 008 HOLDING THAT DEDUCTION UNDER SEC. 80IB(10), PROVIDED TO A PROJECT AND IF THERE IS VIOLATION OF CONDITION IN ANY OF THE RESIDENTIAL UNITS NO DEDUCTION UNDER SEC. 80IB(10) CAN BE ALLOWED TO THE ASSESSEE . SIMILAR VIEW HAS BEEN EXPRESSED BY THE ITAT, CHENNA I BENCH IN THE CASE OF ACIT VS. VISWAS PROMOTERS PVT. LTD. IN ITA NO. 1912/MDS/2007 (A.Y. 2004-05) ORDER DATED 13.10.2008. THE LEARNED CIT(DR) ALSO CITED THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF PADMASUNDARA REASSESSMENT ORDER & ORS. VS. STATE OF TAMILNADU 255 ITR 147 (S.C) HOLDING THAT THE COURT CANNOT READ ANYTHI NG INTO A STATUTORY PROVISIONS WHICH IS PLAIN AND UNAMBIGUOUS. HE SUBMITTED THAT A PROJECT CANNOT BE APPROVED IN PIECEMEAL. 11 APPROVAL IS ACCORDED TO THE ENTIRE PROJECT. BLOCKS OF RESIDENTIAL UNITS ARE PART S OF A PROJECT AND NOT PROJECT BY ITSELF. AS SUCH A BLOCK OF RESIDENTIAL UNIT CANNOT BE CONSTRUED TO BE A SEPARATE PROJECT. 12. THE LEARNED AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND THE DECISIONS CITED THERE. HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, VARIOUS TOWNSHIP PROJECTS WERE UNDERTAKEN ON LARGE PLOTS WITH SIZE VARYING FROM 10 ACRES TO 329 ACRES. HAVING REGARD TO THE FA CT THAT THE SIZE OF THE PLOTS WERE VERY LARGE, MERELY AS A MATTER OF ADMINISTRATIVE CONVENI ENCE, THE ASSESSEE FILED CONSOLIDATED APPLICATION WITH THE LOCAL AUTHORITY FOR APPROVAL O F THE TOWNSHIP PROJECT. ACCORDINGLY, THE CONSOLIDATED APPLICATION WAS CONSIDERED AND APPROVE D BY THE LOCAL AUTHORITY WHILE GRANTING CONSOLIDATED LICENSE. IT IS, HOWEVER, OF U TMOST IMPORTANCE TO NOTE THAT THE ASSESSEE UNDERTOOK CONSTRUCTION OF INDEPENDENT AND SEPARATE ELIGIBLE HOUSING PROJECTS, WHICH FORMED PART OF THE CONSOLIDATED LICENSE GRANT ED BY THE LOCAL AUTHORITY. SUCH ELIGIBLE HOUSING PROJECTS, FORMING PART OF THE CONS OLIDATED LICENSE, ARE SEPARATE AND INDEPENDENT, INASMUCH AS: (A) AREA OF SUCH ELIGIBLE HOUSING PROJECTS IS CLEARLY IDENTIFIABLE IN THE LAYOUT PLANS APPROVED BY THE LOCAL AUTHORITY. SUCH ELIGIBLE PROJECTS HAVE CLEARLY DEMARCATED THE AREA/ LAYOUT IN THE APPROVED PLANS AND ONE CAN EASILY SEPARATE THE ELIGIBLE PART THEREIN; (B) SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED AND PROFIT S OF THE ELIGIBLE HOUSING PROJECT ARE IDENTIFIABLE AND CAN EASILY BE DEDUCED FROM SUCH BOOKS OF ACCOUNT AS BEING MAINTAINED BY THE APPELLANT; (C) ELIGIBLE HOUSING PROJECT SATISFIES ALL THE CONDITIO NS PRESCRIBED IN SECTION 80IB(10) OF THE ACT; (D) SEPARATE OCCUPATION CERTIFICATES ARE RECEIVED FOR T HE ELIGIBLE PROJECT. 12 12.1. THE LEARNED AR FURTHER SUBMITTED THAT THE CLA IMED DEDUCTION ONLY IN RESPECT OF PROFITS DERIVED FROM THE ELIGIBLE HOUSING PROJECTS AND NO PART OF THE PROFITS OF THE INELIGIBLE PORTION HAS BEEN INCLUDED THEREIN. UNDER SECTION 80IB(10) OF THE ACT, DEDUCTION, AS STATED ABOVE, IS ALLOWED IN RESPECT O F THE PROFITS DERIVED FROM A HOUSING PROJECT WHICH IS APPROVED BY THE LOCAL AUTHORITY. T HE SAID SECTION, AS PER HIS SUBMISSION, NOWHERE MANDATES THAT ONE HAS TO SIMPLY GO BY THE L ICENSE GRANTED BY THE LOCAL AUTHORITY AND EXAMINE THE SATISFACTION OF CONDITIONS WITH REF ERENCE TO THE ENTIRE PROJECT AS APPROVED. IT MAY BE APPRECIATED THAT WHERE THE DEV ELOPER PROPOSES TO DEVELOP A TOWNSHIP ON A LARGE PLOT OF LAND, CONSOLIDATED APPL ICATION IS FILED WITH THE LOCAL AUTHORITY FOR APPROVAL OF THE HOUSING PROJECT, MERELY AS A MA TTER OF ADMINISTRATIVE CONVENIENCE. IT IS ALSO OPEN TO THE ASSESSEE TO APPLY FOR APPROVAL OF THE HOUSING PROJECT ON PART OF THE PLOT OF LAND, RATHER THAN FILING CONSOLIDATED APPLICATIO N FOR THE ENTIRE PLOT AVAILABLE WITH THE ASSESSEE. ONCE APPROVAL IS GRANTED BY THE LOCAL AUT HORITY, THE ENTIRE PROJECT IS APPROVED. MERELY BECAUSE CONSOLIDATED APPLICATION IS FILED BY THE ASSESSEE FOR APPROVAL OF THE HOUSING PROJECT, THAT DOES NOT, IN HIS SUBMISSION, MEAN THAT ONE HAS TO ONLY LOOK AT THE COMPLETE/ CONSOLIDATED PROJECT AS SUCH. WHAT IS MA TERIAL AND IMPORTANT IS TO EXAMINE WHETHER THE CONSOLIDATED LICENSE CONSISTS OF ANY IN DEPENDENT AND SEPARATE ELIGIBLE HOUSING PROJECT, WHICH INDEPENDENTLY AND SEPARATELY SATISFIES THE VARIOUS CONDITIONS FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE AC T OR NOT. IF ANY PART OF THE CONSOLIDATED PROJECT CONSISTS OF ELIGIBLE INDEPENDE NT/ SEPARATE HOUSING PROJECT, WHICH SATISFIES ALL THE CONDITIONS OF THAT SECTION, THERE IS, NO REASON TO DENY DEDUCTION IN RESPECT OF THE PROFITS DERIVED FROM SUCH ELIGIBLE HOUSING P ROJECT. FURTHER, THE COMMERCIAL AREA, ALSO, DID NOT FORM PART OF THE ELIGIBLE HOUSING PRO JECT. IT IS, IMPORTANT TO NOTE THAT DEDUCTION WAS NOT AT ALL CLAIMED BY THE ASSESSEE IN RESPECT OF PROFITS FROM THE COMMERCIAL AREA. DESPITE THE AFORESAID, IN ORDER TO PUT THE MA TTER BEYOND ANY DOUBT AND TO STRENGTHEN THE CLAIM, THE ASSESSEE DECIDED TO TRANSFER THE COM MERCIAL AREA AT BOOK VALUE TO OTHER GROUP COMPANIES. THE LEARNED AR CONTENDED THAT THE FINDINGS/ ALLEGATIONS OF THE ASSESSING OFFICER REGARDING TRANSFER OF COMMERCIAL AREA ARE TOTALLY MISCONCEIVED AND FACTUALLY INCORRECT. THE ASSESSEE ACTUALLY TRANSFE RRED THE COMMERCIAL AREA TO OTHER COMPANIES IS SUPPORTED BY THE FOLLOWING DOCUMENTS: 13 (I) MOU ENTERED INTO BETWEEN THE ASSESSEE AND TRANSFERE E COMPANY(IES) FOR TRANSFER OF COMMERCIAL AREA; (II) INTIMATION FILED BEFORE THE DTCP/ OTHER REGULATORY AUTHORITIES INTIMATING TRANSFER OF COMMERCIAL AREA. IT MAY BE PERTINENT TO MENTION HERE IN CASES WHERE COMMERCIAL AREA WAS TRANSFERRED IN THE FINANCIAL YEAR 2008-09, INTIMATI ON WAS GIVEN TO THE REGULATORY AUTHORITIES IN MARCH, 2009, MUCH PRIOR TO THE DATE OF SURVEY BY THE TAX DEPARTMENT IN DECEMBER, 2009. (III)AGREEMENTS WERE ENTERED INTO BY TRANSFEREE COM PANY(IES) WITH VARIOUS BUYERS FOR TRANSFER OF THE COMMERCIAL AREA [SAMPLE COPIES SUBM ITTED FOR EACH OF THE PROJECTS]; (IV) POST-TRANSFER, ENTIRE EXPENDITURE ON CONSTRUCTION O F COMMERCIAL AREA WAS BORNE BY THE TRANSFEREE COMPANY(IES) AND NOT THE ASSESSEE; (V) PROFITS/ LOSSES RELATING TO THE COMMERCIAL AREA WAS ACCOUNTED FOR BY THE TRANSFEREE COMPANY(IES) AND NOT THE ASSESSEE; (VI) COMPLETION CERTIFICATES IN RESPECT OF THE COMMERCIA L AREA FORMING PART OF SOME OF THE PROJECTS WERE ISSUED BY THE LOCAL AUTHORITY IN THE NAME OF THE TRANSFEREE COMPANY(IES). (VII) IN THE REVISED MAP/ LAYOUT PLANS OF SOME OF THE PRO JECTS APPROVED BY THE LOCAL AUTHORITY, COMMERCIAL AREA IS CLEARLY DEMARCA TED IN THE NAME OF THE TRANSFEREE COMPANY(IES). : 12.2 THE AFORESAID DOCUMENTARY EVIDENCES, THE LEARN ED AR SUBMITTED, CLEARLY ESTABLISH BEYOND ANY REASONABLE DOUBT THAT THE COMM ERCIAL AREA WAS TRANSFERRED BY THE ASSESSEE TO OTHER COMPANY(IES) NOT MERELY BY WAY OF BOOK ENTRY, AS ALLEGED BY THE ASSESSING OFFICER. IT IS EMPHATICALLY REITERATED T HAT THE DECISION TO TRANSFER THE COMMERCIAL PORTION WAS TAKEN BY THE ASSESSEE FOR BUSINESS CONS IDERATIONS AND TO STRENGTHEN ITS CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE APPELLANT FAILS TO APPRECIATE AS TO HOW THE CONTENTS OF THE AFORESAID ANNEXURE HAVE BEE N UNDERSTOOD/ READ BY THE ASSESSING 14 OFFICER AS AN ATTEMPT BY THE ASSESSEE TO CIRCUMVENT PROVISIONS OF SECTION 80IB(1) OF THE ACT. 12.3 THE LEARNED AR FURTHER REITERATED THAT THE ASS ESSING OFFICER FAILED TO APPRECIATE THAT COMMERCIAL AREA, IN ANY CASE, WAS NOT AT ALL C LAIMED BY THE ASSESSEE TO BE PART OF THE ELIGIBLE HOUSING PROJECT IN RESPECT OF WHICH DEDUCT ION WAS CLAIMED. THE ASSESSING OFFICER HAD PROCEEDED ON THE GROUND THAT THE ENTIRE HOUSING PROJECT HAS TO BE SEEN WITH REFERENCE TO THE CONSOLIDATED APPROVAL GRANTED BY THE LOCAL A UTHORITY AND, THEREFORE, THE COMMERCIAL AREA SHALL CONTINUE TO FORM PART OF THE HOUSING PRO JECT, DESPITE THE FACT THAT THE SAME WAS TRANSFERRED TO OTHER COMPANY(IES). SUCH CONTENTION OF THE ASSESSING OFFICER, AS ELABORATELY DISCUSSED SUPRA, IS NOT LEGALLY SUSTAINABLE. AS DI SCUSSED SUPRA, THE MERE FACT THAT A CONSOLIDATED LICENSE HAD BEEN APPROVED FOR THE LARG E HOUSING PROJECT DOES NOT, IT WAS SUBMITTED, BAR TRANSFER OF ANY PART THEREOF, TO BE INDEPENDENTLY DEVELOPED BY A THIRD PARTY, AND CANNOT BE THE GROUND FOR DENYING DEDUCTI ON IN RESPECT OF PROFITS OF THE ELIGIBLE HOUSING PROJECT. 12.4 IN VIEW OF THE AFORESAID, IT WAS SUBMITTED BY THE LEARNED AR THAT THE ASSESSING OFFICER TOTALLY MISCONSTRUED THE PROVISIONS OF SECT ION 80IB(10) OF THE ACT TO HOLD THAT IF THE CONSOLIDATED PROJECT DOES NOT SATISFY ALL THE C ONDITIONS PRESCRIBED IN THE SAID SECTION, THEN NO DEDUCTION IS ADMISSIBLE EVEN IN RESPECT OF PROFITS DERIVED FROM ELIGIBLE HOUSING PROJECTS FORMING PART OF THE CONSOLIDATED PROJECT. 12.5 THE LEARNED AR PLACED RELIANCE ON THE FOLLOWIN G DECISIONS TO SUPPORT HIS CONTENTIONS THAT VARIOUS COURTS AND VARIOUS BENCHES OF THE TRIBUNAL HAVE CONSISTENTLY HELD THAT PRO-RATA DEDUCTION CAN BE GRANTED WITH RE FERENCE TO PROFITS OF AREA/ RESIDENTIAL UNIT(S) WHICH QUALIFIES FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT: 1. IN CASE OF VISHWAS PROMOTERS PRIVATE LIMITED, TH E ASSESSEE HAD PREFERRED APPEAL BEFORE THE CHENNAI HIGH COURT AGAINST THE OR DER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2004-05 TO 2008-09 DENYING PRO-RA TA DEDUCTION CLAIMED UNDER 15 SECTION 80IB(10) OF THE ACT (TRIBUNAL ORDER WAS REL IED UPON BY THE ASSESSING OFFICER WHILE DENYING DEDUCTION). THE FOLLOWING QUESTIONS WERE REFERRED FOR CONSIDERA TION BEFORE THE HONBLE COURT ( I ) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE APPELLATE TRIBUNAL IS RIGHT IN DENYING UNDER SECTION 80IB(10) IN RESPECT OF PROJECT AGRINI AND VAJRA FOR FLATS LESS THAN 1500 SQ.FT. ON PROPORTIONATE BASIS? ( II ) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE APPELLATE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT IN A CONSOLIDATED R ESIDENTIAL UNITS HAVING MORE THAN 1500 SQ.FT. AND LESS THAN 1500 SQ.FT., PROPORT IONATE DEDUCTION UNDER SECTION 80IB(1)(C) CANNOT BE ALLOWED FOR FLATS LESS THAN 1500 SQ.FT.? REVERSING THE DECISION OF THE TRIBUNAL AND ANSWERIN G THE AFORESAID QUESTIONS IN FAVOUR OF THE ASSESSEE, THEIR LORDSHIPS OBSERVED AS UNDER: .ON THE FACTS ADMITTED BY THE REVENUE, IN THE PRO JECTS 'AGRINI' AND 'VAJRA', THERE ARE NUMBER OF FLATS WHICH ARE BELOW 1500 SQ.FT., AND THE RELEVANT BUILT-UP AREA REQUIREMENT IS SPECIFIED UND ER SECTION 80IB(10)(C) OF THE INCOME TAX ACT. THUS, THE BUILT-UP AREA IN SOME OF THE FLATS IN BOT H THESE PROJECTS ARE IN EXCESS OF 1500 SQ.FT., I.E., 32 FLATS IN AGRINI AND ONLY ONE FLAT IN VAJRA AND THAT THE ASSESSEE HAD NOT CLA IMED ANY DEDUCTION ON THIS. WE HOLD THAT THE TRIBUNAL IS NOT CORRECT IN ITS VIEW, THAT BY REASON OF THESE UNITS BEING IN EXCESS OF 1500 SQ.FT., THE ENT IRE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TWO PROJECTS WOULD STAND REJECTED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT. THUS, GOING BY THE DEFINITION OF 'HOUSING PROJECT' UNDER EXPLANATION TO SECTION 80HHBA OF THE ACT AS REFERRE D TO ABOVE AS THE CONSTRUCTION OF 'ANY BUILDING' AND THE WORDINGS IN SECTION 80IB(10) OF THE ACT, THE QUESTION OF REJECTION IN ENTIRETY OF THE P ROJECT ON ACCOUNT OF ANY ONE OF THE BLOCKS NOT COMPLYING WITH THE CONDITIONS, DO ES NOT ARISE. EVEN IN THE CASE OF EACH ONE OF THE BLOCKS, WHEREVER THERE ARE FLATS WHICH SATISFIED THE CONDITIONS PARTICULARLY OF THE NATURE STATED UNDER SECTION 80IB(10)(C) OF THE ACT, WE HAVE ALREADY UPHELD THE CASE OF THE ASSESSE E IN T.C.NOS.1348 AND 1349 OF 2007 DATED 10.10.2012 FOR GRANT OF RELIEF U NDER SECTION 80IB(10) OF THE ACT ON A PROPORTIONATE BASIS, BY FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT REPORTED IN [2011] 333 ITR 289 (CIT VS. BRAHMA ASSOCIATES). THUS APPLYING THE DECISION OF THIS COURT IN T.C.NOS .1348 AND 1349 OF 2007 DATED 10.10.2012, WE HOLD THAT THE ASSESSEE IS ENTI TLED TO SUCCEED BOTH ON THE PRINCIPLE OF PROPORTIONALITY AS WELL AS BY REASON O F THE CONSTRUCTION ON THE MEANING OF THE EXPRESSION 'HOUSING PROJECT' AS REFE RRING TO CONSTRUCTION OF ANY BUILDING AND THE WORDINGS IN SECTION 80IB(10) O F THE ACT. IN THE CIRCUMSTANCES, WE HOLD THAT THE MERE FACT THAT ONE OF THE BLOCKS HAVE UNITS EXCEEDING BUILT-UP AREA OF 1500 SQ.FT, PER SE, WOUL D NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECTS. CON SEQUENTLY, IN RESPECT OF EACH OF THE BLOCKS, THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTION IN RESPECT OF RESIDENTIAL UNITS SATISFYING THE REQUIR EMENT UNDER SECTION 16 80IB(10)(C) OF THE ACT. IN SO HOLDING, WE ALSO AGR EE WITH THE DECISION OF THE BOMBAY HIGH COURT REPORTED IN [2012] 206 TAXMAN 584 (CIT V. VANDANA PROPERTIES), WHICH WAS DECIDED BY THE BOMBAY HIGH C OURT ON SIMILAR LINES AS IN THE ASSESSEE'S CASE BEFORE US. IT WILL, THUS, KINDLY BE OBSERVED FROM THE ABOVE DI SCUSSION, THAT HONBLE CHENNAI HIGH COURT HAS EVEN ALLOWED DEDUCTION RESIDENTIAL U NIT WISE, WITHIN A SINGLE BLOCK. 2. IN CASE OF ARUN EXCELLO FOUNDATION, THE FOLLOWIN G QUESTION WAS REFERRED FOR CONSIDERATION OF THE HONBLE MADRAS HIGH COURT: 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE TRIBUNAL WAS RIGHT IN HOLDING THAT DEDUCTION UNDER SECTION 80IB(10) IS AL LOWABLE ON A PRORATA BASIS, WHERE BOTH COMMERCIAL AND RESIDENTIAL HOUSES HAVE B EEN BUILT, WHEN THERE IS NO SUCH PROVISION UNDER THE STATUTE TO GRANT THE SAME? ' (EMPHASIS SUPPLIED) ON BEHALF OF THE REVENUE, IT WAS CONTENDED THAT THE RE IS NO PROVISION FOR PRO-RATA DEDUCTION, AS UNDER: 10. AS REGARDS THE CLAIM OF PROPORTIONATE RELIEF, LEARNED STANDING COUNSEL POINTED OUT THAT IF THE LAW CONTEMPLATED PROPORTION ATE RELIEF TO BE GRANTED ON A PARTIAL COMPLIANCE, THE SECTION ITSELF WOULD HAVE P ROVIDED FOR SUCH A SITUATION. HOWEVER, IN THE ABSENCE OF ANY SUCH CONTEMPLATION S TATED SO IN CLEAR TERMS UNDER SECTION 80IB OF ACT, IT IS NOT OPEN TO THE TR IBUNAL TO DILUTE THE SAID SECTION TO GRANT PRO-RATA RELIEF. ANSWERING THE AFORESAID QUESTION IN THE AFFIRMATIVE , THEIR LORDSHIPS OF THE MADRAS HIGH COURT OBSERVED AS UNDER: 37. LEAVING THAT ASPECT ASIDE, ON A READING OF THE THREE CLAUSES, IT IS CLEAR THAT IN A GIVEN CASE, WHEN THE HOUSING PROJECT, A 100% R ESIDENTIAL UNIT, SATISFIES OTHER CLAUSES (A) AND (B) AND THE BUILT-UP AREA AS GIVEN UNDER CLAUSE (C) OF SECTION 80-IB(10) OF THE ACT, THERE COULD BE NO DIF FICULTY FOR THE REVENUE TO GRANT THE DEDUCTION. THE QUESTION BECOMES A LITTLE COMPLICATED WHEN 100% RESIDENTIAL HOUSING PROJECT HAS BUILT-UP AREA OF MI XED NATURE. WHILE FEW OF THE UNITS MAY SATISFY THE CRITERIA OF THE BUILT-UP AREA OF LESS THAN 1500 SQ.FT., THERE MAY BE UNITS WHICH HAVE BUILT-UP AREA CROSSING THE LIMIT AS SPECIFIED IN CLAUSE (C) OF SECTION 80-IB(10) OF THE ACT. IN SUCH AN EVE NT, ON A READING OF THE PROVISION, WE HOLD THAT THE ASSESSEE WOULD NOT BE E NTITLED TO HAVE THE BENEFIT OF 100% ABSOLUTE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN RESPECT OF THE ENTIRE PROJECT, BUT WOULD BE ENTITLED TO PRO-RA TA DEDUCTION ON THE UNITS SATISFYING THE CONDITION UNDER CLAUSE (C). GIVEN TH E OBJECT OF THE PROVISIONS UNDER SECTION 80-IB(10) OF THE ACT, WHEN THE DEDUCT ION TO BE GRANTED IS ON THE PROFITS AND GAINS OF UNDERTAKING DEVELOPING AND CON STRUCTING APPROVED 17 HOUSING PROJECTS, IN THE ABSENCE OF RESTRICTIVE COV ENANT UNDER SUB- SECTION (10) OF SECTION 80-IB, WE DO NOT FIND ANY JUSTIFIAB LE GROUND TO HOLD THAT ON THE MERE FACT OF SOME OF THE UNITS HAVING THE BUILT-UP AREA EXCEEDING THE CONDITION SPECIFIED UNDER CLAUSE (C), THE CLAIM FOR DEDUCTION WOULD STAND REJECTED ON THE ENTIRE PROJECT. AS POINTED OUT IN T HE DECISION OF THE BOMBAY HIGH COURT REPORTED IN [2011] 333 ITR 289 CIT V. BR AHMA ASSOCIATES, WITH ZONES CLASSIFICATION PERMITTING COMMERCIAL EST ABLISHMENT IN RESIDENTIAL FLATS TOO, ONCE THE LOCAL AUTHORITIES APPROVED THE PROJECT WITH OR WITHOUT THE COMMERCIAL USE AS PERMITTED UNDER THE RULES, THE PR OJECT APPROVED IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). THE FACT THAT THE HOUSING PROJECT HAS RESIDENTIAL FLATS AND COMMERCIAL USER, BY ITSELF, C ANNOT, IN ANY WAY, STAND IN THE WAY OF GRANTING DEDUCTION. THE RESTRICTION UNDE R SECTION 80IB(10)(C) CANNOT BE CONSTRUED AS A NEGATIVE CONDITION TO DENY THE BENEFIT TO AN ASSESSEE, WHEN THE APPROVED PROJECT HAS RESIDENTIAL UNITS OF MORE THAN 1500 SQ. FT. THE IDEA OF PRESCRIBING SUCH RESTRICTION IS TO ENCOURAG E CONSTRUCTION OF AFFORDABLE HOUSES TO COMMON MAN AND THE RESTRICTION IS NOT BY WAY OF NEGATIVE CONDITION TO REJECT A CLAIM WHERE THE HOUSING PROJECTS HAVE U NITS WITH THE BUILT-UP AREA EXCEEDING THE PRESCRIBED LIMIT AS WELL AS WITHIN TH E LIMITS. SO TOO, IN A CASE WHERE THE PROJECT CONTAINS COMMERCIAL AS WELL AS RE SIDENTIAL AREA. (EMPHASIS SUPPLIED) 12.6 THOUGH THE AFORESAID DECISION RELATES TO PRE- AMENDMENT PERIOD, I.E. BEFORE INSERTION OF CLAUSE (D) W.E.F. 01.04.20 05, IT IS HOWEVER PERTINENT TO NOTE THAT THE HONBLE HIGH COURT AFTER CONSIDERING THE AMENDE D LAW HELD THAT RELIEF SHOULD BE GRANTED TO THE EXTENT OF COMPLIANCE. ON ALLOWABILIT Y OF PRO-RATA DEDUCTION, THE COURT FURTHER OBSERVED AS UNDER: 41. IT IS SEEN FROM THE ORDER OF THE TRIBUNAL THAT THE ASSESSEE MADE AN ALTERNATIVE SUBMISSION THAT TO THE EXTENT OF COMPLIANCE OF THE BUILT-UP AREA UNDER RESIDENTIAL UNIT, PRO-RATA RELIEF BE GIVEN TO THE ASSESSEE. AS FAR AS THIS RELIEF IS CONCERNED, IN SIMILAR CIRCUMSTANCES, IN THE DECISION REPORTED IN 238 ITR 38 H.P.T.D.C. V. UNION OF INDIA, THE HIMACHAL PRADESH HIGH COURT CON SIDERED THE POSSIBILITY OF GRANTING THE PROPORTIONATE RELIEF ON PRO-RATA BA SIS TO THE EXTENT OF COMPLIANCE OF THE PROVISIONS. IT IS NO DOUBT TRUE THAT THE SEC TION DOES NOT PROVIDE ANY SUCH WORKING. YET, THIS BEING A DEDUCTION PROVISION AND THERE BEING NO SUCH INDICATION THAT THE CONDITIONS HAVE TO BE CUMULATIVELY SATISFI ED IN THE CONTEXT OF THE MEANING OF A 'HOUSING PROJECT' TO INCLUDE RESIDENTIAL-CUM-C OMMERCIAL COMPLEX, WE FEEL, IN FAIRNESS TO THE CLAIM OF THE ASSESSEE, THE PROPORTI ONATE RELIEF HAS TO BE READ INTO THE PROVISIONS, SO THAT DEDUCTION PROVISIONS ARE SUSTAI NED. 3. IN CASE OF VANDANA PROPERTIES IN ITA NOS. 3633/2009 AND 4361/2010, THE HONBLE BOMBAY HIGH COURT OBSERVED AS UNDER: 18 ..MOREOVER PLAIN READING OF SECTION 80IB(10) DOES NOT EVEN REMOTELY SUGGEST THAT THE PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE MUST BE VACANT. THE SAID SECTION ALLOWS DEDUCTION TO A HOUS ING PROJECT (SUBJECT TO FULFILLING ALL OTHER CONDITIONS ) CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE AND IT IS IMMATERIAL AS TO WHETHER ANY OTHER HOUSING PROJECTS ARE EXISTING ON THE SAID PLOT OF L AND OR NOT.. 12.7 IN THE AFORESAID CASE, THE PROJECT OF THE ASSE SSEE CONSISTED OF BUILDINGS A, B, C, D AND E, OUT OF WHICH ONLY BUILDING E WAS ELIGIBLE FO R DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DENIED DED UCTION ON THE GROUND THAT THE SIZE OF THE PLOT IN RELATION TO BUILDING E DID NOT EXCEED T HE PRESCRIBED AREA OF 1 ACRE AND THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCT ION. THE BOMBAY HIGH COURT, APPROVING THE ORDER OF THE TRIBUNAL HELD THAT THE P LOT OF LAND MAY HAVE OTHER HOUSING PROJECTS, WHICH MAY NOT BE ELIGIBLE FOR DEDUCTION U NDER SECTION 80IB(10) OF THE ACT; NEVERTHELESS, THE DEDUCTION WILL BE ADMISSIBLE ON T HAT PART OF THE HOUSING PROJECT WHICH IS ELIGIBLE FOR DEDUCTION UNDER THAT SECTION. IT WILL , THUS, KINDLY BE APPRECIATED THAT THE AFORESAID DECISION, IN FACT, GOES A STEP FURTHER AN D HELD THAT CLAIM OF DEDUCTION CANNOT BE DENIED ON PORTION OF THE HOUSING PROJECT, EVEN THOU GH THE ELIGIBLE PORTION WAS CONSTRUCTION ON PLOT OF LAND LESS THAN THE PRESCRIB ED AREA. 12.8 IN CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT L TD., KOLKATA BENCH OF THE TRIBUNAL SIMILARLY HELD AS UNDER: IT IS APPARENT FROM THE PERUSAL OF S. 80-IB(10) TH AT THIS SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE FOR BUSINE SSMEN TO UNDERTAKE CONSTRUCTION OF RESIDENTIAL ACCOMMODATION FOR SMALL ER RESIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE P ROFIT DERIVED FROM THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER R ESIDENTIAL UNITS. THOUGH THE AO HAS DENIED THE CLAIM OF THE ASSESSEE OBSERVING T HAT LARGER UNITS WERE ALSO CONSTRUCTED BY THE ASSESSEE, AT THE SAME TIME, IT I S ALSO A FACT ON RECORD THAT THE ASSESSEE HAD CLAIMED DEDUCTION ONLY ON ACCOUNT OF SMALLER RESIDENTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS C ONTAINED IN S. 80-IB(10) AND THE SAME HAS NOT BEEN DISPUTED BY THE AO ALSO. WE H AVE ALSO NOTED DOWN THE FACT THAT EVEN THE PROVISION AS LAID DOWN IN S. 80- IB(10) DOES NOT SPEAK REGARDING SUCH DENIAL OF DEDUCTION IN CASE OF PROFI T FROM A HOUSING COMPLEX CONTAINING BOTH THE SMALLER AND LARGE RESIDENTIAL U NITS AND SINCE THE ASSESSEE HAS ONLY CLAIMED DEDUCTION ON ACCOUNT OF SMALLER QU ALIFYING UNITS BY FULFILLING 19 ALL THE CONDITIONS AS LAID DOWN UNDER S. 80-IB(10), THE DENIAL OF CLAIM BY THE ASSESSEE IS ON ACCOUNT OF RATHER RESTRICTED AND NAR ROW INTERPRETATION OF PROVISIONS OF CL. C OF S. 80-IB(10) WHILE COMING TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF THE HONBLE SUPREME COURT IN CASE OF BAJAJ TEMPO LTD. VS. CIT (SUPRA), WHEREIN IT WAS HELD THA T PROVISIONS SHOULD BE INTERPRETED LIBERALLY AND SINCE IN THE PRESENT CASE ALSO, THE ASSESSEE BY CLAIMING PRO RATA INCOME ON QUALIFYING UNITS HAS CO MPLIED WITH ALL THE PROVISIONS AS CONTAINED IN THE SAID SECTION, IN OUR CONSIDERED OPINION, SUCH CLAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LE ARNED CIT(A) BY REVERSING THE ORDER OF AO.' THE AFORESAID DECISION OF THE TRIBUNAL HAS BEEN UPH ELD BY THE HONBLE, CALCUTTA HIGH COURT IN IT APPEAL NO. 453 OF 2006 WHEREIN THE HON BLE HIGH COURT VIDE ORDER DATED 5TH JAN., 2007 HELD AS UNDER: THE APPEAL IS NOW TAKEN UP FOR HEARING AND AFTER H EARING THE LEARNED COUNSEL FOR THE PARTIES AND PERUSING THE ORDER PASSED BY TH E TRIBUNAL, WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS MAT TER. HENCE WE DISMISS THE APPEAL. 12.9 THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT: 119 ITD 255/ 30 SOT 155 (PUNE), WHILE CONSIDERING THE P ROVISIONS PRIOR TO 1.04.2005, HELD THAT: (I) ONCE A HOUSING PROJECT CONSISTING OF RESIDENTIAL AN D COMMERCIAL ESTABLISHMENTS IS APPROVED BY THE LOCAL AUTHORITY, THEN THE SAME IS E LIGIBLE FOR DEDUCTION; (II) THERE WAS NO SPECIFIC LIMIT/ RESTRICTION AS TO THE COMMERCIAL AREA FORMING PART OF THE HOUSING PROJECT. IN CASE RESIDENTIAL AREA WAS 9 0% OR MORE OF THE BUILT UP AREA, THEN, THE ENTIRE PROJECT WAS ELIGIBLE FOR DEDUCTION ; (III) HOWEVER, IN CASE COMMERCIAL AREA IS 10% OR MORE OF THE BUILT UP AREA, BUT RESIDENTIAL SEGMENT ON A STANDALONE BASIS SATISFIES THE CONDITIONS OF SECTION 80- IB(10) OF THE ACT, THEN, DEDUCTION WOULD BE ADMISSI BLE IN RESPECT OF RESIDENTIAL SEGMENT OF THE PROJECT. 20 12.10 IN FURTHER APPEAL PREFERRED BY THE REVENUE AG AINST THE AFORESAID DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL, THE BOMBAY HIGH COUR T HAS PARTLY AFFIRMED THE DECISION IN CIT V. BRAHMA ASSOCIATES: 333 ITR 289 (BOM.). THE HONBLE COURT HELD THAT RESTRICTION INSERTED WITH EFFECT FROM 1.4.2005 AS T O PERMISSIBLE LIMIT OF COMMERCIAL USE IN PROJECT IS NOT RETROSPECTIVE AND HENCE ONCE HOUSING PROJECT IS APPROVED BY LOCAL AUTHORITY HAVING RESIDENTIAL AND COMMERCIAL UNITS, THEN PRIOR TO 1.4.2005 ENTIRE PROFITS WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 80-IB(10) OF TH E ACT. HOWEVER, IN THE ABSENCE OF CLAIM MADE BY THE ASSESSEE IN THAT BEHALF, NO FURTH ER RELIEF COULD BE ALLOWED BY THE COURT. THE ORDER OF THE TRIBUNALS, IN THE AFORESAID CIRCUM STANCES WAS APPROVED. IT WILL, THUS, KINDLY BE APPRECIATED THAT THE HONBLE HIGH COURT D ID NOT AGREE WITH THE TRIBUNAL IN IMPOSING 10% LIMIT TO THE COMMERCIAL AREA. THE LEGA L POSITION THAT EMERGES FROM THE AFORESAID DECISIONS IS THAT: (A) PRIOR TO ASSESSMENT YEAR 2005-06, ENTIRE PROFITS FR OM THE APPROVED HOUSING PROJECT WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) O F THE ACT, IRRESPECTIVE OF THE COMMERCIAL AREA; (B) FROM ASSESSMENT YEAR 2005-06, PROFITS OF COMMERCIAL AREA CAN ONLY BE INCLUDED IN THE ELIGIBLE PROFITS IF THE COMMERCIAL AREA DOES NOT EXCEED THE LIMIT PRESCRIBED IN CLAUSE (D) OF SECTION 80IB(10) OF THE ACT. IF, HOWEVER, THE COMMERCIAL AREA EXCEEDS THE PRESCR IBED BUILT UP AREA, BUT RESIDENTIAL SEGMENT ON A STANDALONE BASIS SATISFIES THE CONDITIONS OF SECTION 80IB(10) OF THE ACT, THEN DEDUCTION WOULD BE ADMISS IBLE ONLY IN RESPECT OF PROFITS DERIVED FROM SUCH STANDALONE RESIDENTIAL SEGMENT OF THE PROJECT. 21 12.11 FOLLOWING THE AFORESAID, THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF SANGHVI & DOSHI ENTERPRISE V. ITO: 131 ITD 151 (CHENNAI) (T M) HELD THAT THE ASSESSEE WAS ENTITLED TO PRO-RATA DEDUCTION UNDER SECTION 80IB(1 0) OF THE ACT IN RESPECT OF FLATS HAVING BUILT UP AREA NOT EXCEEDING 1500 SQ FT AND NOT ENTI TLED TO DEDUCTION IN RESPECT OF THOSE FLATS HAVING BUILT UP AREA EXCEEDING 1500 SQ.FT. ON FURTHER APPEAL BY REVENUE TO THE HONBLE HIGH COURT, DECISION OF THE TRIBUNAL HAS BE EN AFFIRMED. 12.12 IN CASE OF ANSAL HOUSING AND CONSTRUCTIONS LT D. ITA NO. 1922 AND 1923/ DEL/2005, HONBLE DELHI ITAT HELD THAT EVEN IF SOME FLATS EXCEEDED 1000 SQ. FT. OF BUILT- UP AREA THAT DID NOT DISENTITLE THE ASSESSEE TO THE DEDUCTION; A PROPORTIONATE DEDUCTION ON FLATS WHICH EXCEED THE STATUTORY LIMIT OF 1000 SQ. FT. ALONE CAN BE DISALLOWED, AS HELD BY CALCUTTA, DELHI AND BANGALORE BENCHES OF THE TRIBUN AL IN CERTAIN CASES. THIS VIEW OF ITAT WAS AFFIRMED BY HONBLE DELHI HIGH COURT IN IT A NOS. 480 AND 485/201015. IT HELD AS UNDER: FOR THE ABOVE REASONS, WE ARE OF THE VIEW THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN ITA NOS.485/2010 & 480/2010. THE ORDERS OF THE TRIBUNAL ARE ACCORDINGLY UPHELD AND THE APPEALS FIL ED BY THE REVENUE ARE DISMISSED. 12.13 PRO-RATA DEDUCTION HAS SIMILARLY BEEN HELD ALLOWABLE IN THE FOLLOWING DECISIONS: - BRIGADE ENTERPRISES (P) LTD.: [2009] 28-SOT-7 (BANG .) - ITO V. AIR DEVELOPERS: [2010] 122 ITD 125 (NAG) - G.V. CORPORATION V. ITO: [2010] 38 SOT 174 (MUM.) - ACIT V. SHETH DEVELOPERS (P.) LTD.: [2009] 33-SOT-2 77 (MUM) 22 - PRAKRUTI CONSTRUCTIONS (P) LTD V. ITO: ITA NO. 2264 & 2265/ MUM/ 2011 - DELHI IRON AND STEEL PVT. LTD IN ITA NO. 2497/ DEL/ 2007 12.14 THE LEARNED AR THUS POINTED OUT THAT THE HON BLE HIGH COURTS AND VARIOUS BENCHES OF THE TRIBUNAL HAVE CONSISTENTLY H ELD THAT PROPORTIONATE DEDUCTION CAN BE ALLOWED IN RESPECT OF PROFITS OF RESIDENTIAL UNI TS FORMING PART OF THE HOUSING PROJECT, WHICH SATISFIES CONDITIONS PRESCRIBED IN SECTION 80 IB(10) OF THE ACT. 12.15 THE LEARNED AR SUBMITTED FURTHER THAT ONCE P RO-RATA DEDUCTION HAS BEEN HELD TO BE ADMISSIBLE IN RESPECT OF ELIGIBLE AREA O F THE PROJECT, THE LOCATION OF THE ELIGIBLE RESIDENTIAL UNITS, WITHIN THE LARGER HOUSING PROJEC T, IS IRRELEVANT. BEING SO, IRRESPECTIVE OF THE FACT THAT SOME OF THE ELIGIBLE UNITS ARE LOCATE D IN THE SAME TOWER OR BUILDING OR VICINITY OR ARE LOCATED AT DISTANT LOCATION, BUT IS PART OF THE LARGER APPROVED HOUSING PROJECT, PRO-RATA DEDUCTION IS ADMISSIBLE IN RESPEC T OF PROFITS OF THE ELIGIBLE RESIDENTIAL UNIT(S). 12.16 WHEN WE CONSIDERED THE ABOVE SUBMISSION IN V IEW OF THE ABOVE CITED DECISIONS OF THE HON'BLE HIGH COURTS AN THE DIFFERE NT BENCHES OF THE ITAT, WE COME TO THE CONCLUSION THAT PRO-RATA DEDUCTION ON THE RESID ENTIAL UNITS FULFILLING THE CONDITIONS LAID DOWN UNDER SEC. 80IB(10) OF THE INCOME-TAX ACT, 196 1 OR STAND ABOVE BASIS. NOW, WE HAVE TO RECEIVE THE FIRST APPELLATE ORDER ON THE IS SUE IN VIEW OF THE LEGAL POSITION APPROVED IN THE ABOVE CITED DECISIONS. PARA NOS. 5 TO 5.3 OF THE FIRST APPELLATE ORDER ARE 23 RELEVANT WHICH DEAL WITH THE ISSUES RAISED IN THE G ROUNDS OF THE APPEAL BEFORE US. FOR READY REFERENCE, THESE PARAGRAPHS ARE BEING REPRODU CED HEREUNDER: 5. FINDINGS: I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN SUBMISSION, ARGUMENT OF LD. AR AND VARIOUS JUDICIAL PRONOUNCEMENTS ON TH E ISSUE. THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDE RATION HAS CLAIMED DEDUCTION U/S . 80IB (10) OF 1. T. ACT ON PERCENTAGE COMPLETION MET HOD. I WOULD SEGREGATE THE CLAIM OF DEDUCTION U/S. 80IB (L0) OF 1. T. ACT IN TWO CATEGORY. FIRST CATEG ORY IS OF VARIOUS GROUP HOUSING PROJECTS WHICH ARE MULTI-STOR EYED RESIDENTIAL TOWERS WITH COMMERCIAL SPACE IN THE PROJECTS AND ANOTHER IS DEV ELOPMENT OF CITY WHERE LAND IS DEVELOPED & PLOTTED & SOLD TO CUSTOMERS EITHER AS PLOT OR AFTER CONSTRUCT ING THE VILLAS ON SUCH PLOT. THERE ARE ALSO COMMERCIAL SPACE AVAILABL E IN SUCH CITY. UNDER THE CATEGORY OF CLAIM DEDUCTION U/S 80IB (10) MULTI-STOREYED RESIDENTIAL TOWER DURING THE YEAR, THE APPELLANT HAS FOLLOWING PROJECTS :- 1. OMAXE HEIGHTS, FARIDABAD 2. OMAXE HEIGHTS, BAHADURGARH 3. OMAXE HEIGHTS, SONEPAT 4. OMAXE PARKWOCD. BADDI 5.OMAXE REVIERA, PANT NAGAI IN ALL THE ABOVE PROJECTS, THERE ARE VARIOUS RESIDE NTIAL TOWERS. OUT OF THE ABOVE FIVE PROJECTS, PROJECTS AT SR. NO. 2,3,4 I.E. BAHAD URGARH, SONEPAT & BADDI ALL THE RESIDENTIAL TOWERS HAVE RESIDENTIAL UNITS SATISFYIN G THE CRITERIA OF CONSTRUCTED MAXIMUM BUILT UP AREA OF 1000 SQ. FT. OR 1500 SQ. FT, AS PER THE REQUIREMENT OF CLAUSE (C ). FOR THE PROJECTS AT SR. NO. (1) & (5), SOME OF THE RESIDENTIAL TOWERS HAVE FLATS/RESI DENTIAL UNITS HAVING BUILT UP AREA MORE THAN THE PRESCRIBED LIMIT AS PER CLAUSE (C) OF SECTION 80IB (10) I.E. 1000 SQ. FT. WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN 25 KMS FROM THE LIMIT OF MUNICIPAL LIMITS OF THESE TWO CITIES OR 1500 SQ. FT . AT ANY OTHER PLACE. IN ALL SUCH CASES THERE IS CONSOLIDATED APPROVAL FOR THE ENTIRE PROJE CTS FROM LOCAL AUTHORITY. THE ASSESSING OFFICER HAS DENIED THE DEDUCTION ON ONE OF THE GROU ND THAT SINCE SOME OF RESIDENTIAL TOWERS HAVE RESIDENTIAL UNITS MORE THAN CONSTRUCTED AREA OF 1000 SQ. FT. OR 1500 SQ. FT. AS THE CASE MAY BE, THEREFORE CONDITIONS CONTAINED IN CLAUSE (C) IS VIOLATED AS THERE IS CONSOLIDATED APPROVAL FROM LOCAL AUTHORITY. THEREFO RE, THE ASSESSING OFFICER HAS TREATED 24 ENTIRE PROJECT AS ONE HOUSING PROJECT & HAS HELD THAT THE CONDITION CONTAINED IN CLAUSE (C) IS NOT FULFILLED. SECOND GROUND FOR DENIAL OF DEDUCTION U/S 80IB (10) FOR ALL THESE PROJECT IS COMMERCIAL AREA EXCEEDED THE LIMIT PRESCRIBED UNDER CLAUSE (D) OF SECTION 80IB (10). LD. AR HAS ARGUED THAT THE APPELLANT HAS CLAIMED DE DUCTION ONLY FROM THE PROFIT OF 'ELIGIBLE HOUSING PROJECTS' WITHIN THE CONSOLIDATED PROJECT. LD. AR ARGUED THAT THE TOWERS HAVING RESIDENTIAL UNIT WITH CONSTRUCTED AREA LESS THAN OR EQUAL TO 1000 SQ. FT. OR 1500 SQ. FT. AS THE CASE MAY BE ITSELF CONSTITUTES A HOUSING PRO JECT WITHIN THE CONSOLIDATED APPROVAL OF LOCAL AUTHORITY. HE ARGUED THAT THESE TOWERS WHI CH ARE SEPARATE HOUSING PROJECTS ARE IN DEMARCATED AREA, AND HAVING ALL AMENITIES SUCH A S SEPARATE GREEN AREA, SEPARATE ROAD ETC. AND STAND ON THERE OWN. THESE TOWERS HAVE DIFF ERENT SECTION PLAN FOR ITS RESIDENTIAL UNITS, SEPARATE COMPLETION CERTIFICATE. THEREFORE, THESE TOWERS ARE SATISFYING ALL THE CRITERIA OF SECTION 80LB CL 0) S EPARATELY. THE FULFILMENT OF CRITERIA OF CLAUSE (B) & (C) ARE AS UNDER :- S.NO. NAME OF THE DETAILS OF ELIGIBLE TOWERS DETAILS OF ELIGIBLE TOW ERS. COMMERCIAL PROJECTS. AS PER APPELLANT'S CLAIM AREA TOTAL LAND NO. OF TOTAL LAND NO. OF SQ. MTRS. AREA (IN TOWERS AREA TOWERS ACRES.) 1. OMAXE 16.5 22 11.79 14 623.37 HEIGHTS, FARIDABAD (TOTAL AREA 28.443 ACRES) 2. OMAXE HEIGHTS 10.19 14 - - 236.166 BAHADURGARH - (TOTAL AREA I 10.25 ACRES) 3 OMAXE HEIGHTS 22.64 13 459.64 , - - ~. . , SONIPAT, I I HARYANA (TOTAL I AREA 22.75 ACRES) 4. OMAXE 12.28 36 - 752.6 PARKWOODS, I' VILLAGE BIILANWALI, BADDI, (TOTAL ' 12.47 AREA ACRES) 25 5. OMAXE 40.167 71 2.S53 4 4.78 REVIERA, PANTNAGAR (TOTAL AREA 47.8 ACRES) LD. AR ARGUED THAT THESE RESIDENTIAL ELIGIBLE PROJE CT STAND ON THEIR OWN & SELF SUFFICIENT & NOT DEPENDENT ON OTHER PARTS OF THE PROJECTS. HE EM PHASIZED THAT TOTAL PROJECT AREA ARE TOO LARGE TO FORM SINGLE HOUSING PROJECT. I AGREE WITH THE AR GUMENT OF LD. AR THAT ELIGIBLE HOUSING PROJECTS ARE SEPARATE HOUSING PROJECTS SATISFYING THE CONDIT IONS OF SECTION 8OIB(LO) FOR EACH HOUSING PROJECT. FOR EACH ELIGIBLE HOUSING PROJECT LAND ARE A IS MUCH MORE THAN 1 ACRES AS PER THE CHART ABOVE EACH RESIDENTIAL UNITS HAVE SEPARATE SECTION PLAN APPROVAL & COMPLETION CERTIFICATE. THESE ELIGIBLE HOUSING PROJECTS ARE HAVING SEPARATE ROAD, SEPARATE GREEN AREA & OTHER AMENITIES. ALL THE RESIDENTIAL PROJECTS ARE SPREAD OVER VAST AREA OF L AND. THEREFORE, I HOLD THAT THESE RESIDENTIAL TOWERS OF EACH PROJECT ARE SEPARATE HOUSING PROJECTS. LD. AR ARGUED THAT JUDICIAL PRONOUNCEMENTS ARE M FA VOUR OF EVEN ALLOWING DEDUCTION ON PRORATA BASIS IN SAME TOWER IF SOME OF THE FLATS DO NOT CONFORM TO THE REQUIREM ENT OF CLAUSE (C) OF SECTION SOIB (10). HE RELIED UPON VARIOUS DE CISIONS OF HON'ABLE ITAT CITED SUPRA. APART FROM HONABLE ITAT DECISION, LD. AR HAS ARGUED THAT ALL THE DECISION OF HIGH COURTS ARE IN FAVOUR OF ASSESSEE ON THE ISSUE OF ALLOWING PROPORTIONATE DEDUCTION ULS 80LB (L0). HE ALSO ARGUED THAT ASSESSING OFFICER'S RELIANCE ON HONABLE IT AT, CHENNAI IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. HAS BEEN REVERSED BY MA DRAS HIGH COURT. LD. AR ARGUED THAT CLAIM OF DEDUCTION U/S 80M (L0) AS ALL DESIGNATED TOWERS ARE SEPARATE, HAV ING SEPARATE INFRASTRUCTURE & DOES NOT HAVE ANY RESIDENTIAL UNIT WHICH HAVE CONST RUCTED AREA IN VIOLATION OF CLAUSE (C) OF SECTION 80M (L0). SECOND ISSUE RAISED FOR ALL THE PROJECTS BY THE ASS ESSING OFFICER IS VIOLATION OF CLAUSE (D) OF SECTION 80M (L0). THERE HAS BEEN AMENDMENT IN CL AUSE (D) W.E.F. 01-04-2010. PRIOR TO AMENDMENT THE PERMISSIBLE COMMERCIAL AREA IN THE HO USING PROJECT WAS FIVE PERCENT OF THE AGREEGATE BUILT UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQ. FT. WHICH EVEN IS LESS. W.E.F. 01-04-2010, THE PERMISSIBLE COMMERCIAL AREA IS THREE PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR FIVE THOUSA ND SQ. FT. WHICHEVER IS HIGHER. ON FACTUAL ASPECT LD. AR HAS ARGUED THAT TOTAL COMMERC IAL AREA IN ENTIRE PROJECT IS NOT CONFORMING TO THE CONDITION PRIOR TO 01-04-2010, BU T CONFORMS TO THE CONDITION IN CLAUSE (D) AFTER 01-04-2010. FURTHER, HE ARGUED, THAT AMEN DMENT W.E.F. 01-04-2010 IS CURATIVE & CLARIFICATORY. I DO NOT AGREE WITH THE VIEW OF LD. AR THAT THE AMENDMENT IN CLAUSE (D) IS CLARIFICATORY & APPLY RETROSPECTIVELY. THE AMENDMENT HAS BEEN MADE PROSPECTIVELY W.E.F 01-04-2010 & NOT RETROSPECTIVELY. IF THE PURPOSE OF AMENDMENT WA S CLARIFICATORY THEN IT SHOULD HAVE BEEN MADE RETROSPECTIVELY AS IT IS SUBS TANTIVE PROVISION. ACCORDINGLY I DO NOT AGREE WITH ARGUMENTS OF LD. AR ON THIS ISSUE. 26 SECOND ARGUMENTS OF LD. AR IS THAT THE DEVELOPMENT RIGHT OF COMMERCIAL AREA HAS BEEN TRANSFERRED TO OTHER COMPANIES. THE TRANSF ER IS NOT A MERE BOOK ENTRY BUT THROUGH MEMORANDUM OF UNDERSTANDING & IS DULY INTIMATED TO LOCAL AUTHORITY WHICH HAS NOT ONLY BEEN RECOGNIZED BUT ISSUED COMPLETION CERT IFICATE IN THE NAME OF THE TRANSFEREE LD. AR ARGUED THAT AS COMMERCIAL AREA WAS TRANSFERR ED, THERE IT PROVES THAT THE SAID COMMERCIAL AREA WAS A SEPARATE UNIT & HENCE CLAUSE (D) OF SECTION 80M (10) WILL NOT COME AS OBSTACLE IN PROVIDING DEDUCTION. 5.1.2 I HAVE CONSIDERED ENTIRE ARGUMENTS OF LD. AR AND CA REFULLY CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE. ALL FIVE PROJECTS AR E DEVELOPED ON LARGE AREA OF LAND. THOUGH THERE IS CONSOLIDATED APPROVAL OF LOCAL AUTH ORITY FOR THE ENTIRE PROJECT, THESE HOUSING PROJECTS ARE SEPARATELY IDENTIFIABLE IN CON SOLIDATED MAP HAVING SEPARATE GREEN AREA, ROAD & OTHER AMENITIES TO STAND ON ITS OWN. THERE IS NO DE PENDENCE OF THESE HOUSING PROJECTS ON OTHER PARTS OF THE CONSOLIDATED PROJECTS. SECTION MAP OF EACH RESIDENTIAL UNIT IN THESE TOWERS ARE APPROVED SEPAR ATELY BY THE LOCAL AUTHORITY. IN FACT, THE LOCAL AUTHORITY HAS ACCEPTED TRANSFER OF COMMERCIAL AREA SHOWS THAT CONSOLIDATED APPROVAL CONSISTS OF DIFFERENT PROJECTS, ONE BEING ELIGIBLE HOUSING PROJECT. THESE ELIGIBLE HOUSING PROJECTS FULFIL ALL THE CONDITIONS CONTAINE D IN SECTION 80M (10) SEPARATELY. THEREFORE, I AGREE WITH THE ARGUMENTS OF LD. AR THA T THESE ELIGIBLE HOUSING PROJECT IS SEPARATELY SATISFYING THE CONDITION OF SECTION 80M (10). THE APPELLANT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR THESE HO USING PROJECTS & CLAIMED DEDUCTION ON THE PROFITS OF THESE HOUSING PROJECT. THE ASSESSING OFFICER HAS RELIED UPON THE DECISION OF HON' ABLE ITA T CHENNAI, IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. & CHITRA CONSTRUCTION PVT. LTD. CITED SUPRA WHERE IT HAS BEEN HELD THAT IF THERE IS VIOLATION OF ANY RESIDENTIAL UNIT HAVIN G CONSTRUCTED AREA MORE THAN 1000 SQ. FT. OR 1500 SQ. AS APPLICABLE, THE CONDITIONS CONTAINED IN SECTION 80IB ARE NET FULFILLED. LD. AR ARGUED THAT HON'ABLE CHENNAI HIGH COURT IN CASE OF VISHWAS PROMOTERS PVT. LTD. CITED SUPRA HAS REVERSED THE DECISION OF HON' ABLE ITAT, CHENNAI. THE RELEVANT PORTION OF JUDGEMENT IS REPRODUCED AS UNDER :- 11. IT IS AN ADMITTED FACT THAT EACH ONE OF BLOCKS HAD SEPARATE SANCTION FROM THE COMPETENT AUTHORITY. EVEN THOUGH THE LARGER AREA CO MPRISED IN THE NAME AND STYLE OF 'AGRINI' AND VAJRA' IS STATED TO BE THE MASTER PLAN OF THE PROJECT, IT IS NOT DENIED BY THE REVENUE THAT EACH BLOCK IN EACH OF THE PROJECTS HAS ITS OWN SPECIFICATION; HENCE HAD GONE FOR PLANNING APPROVAL BY THE COMPETENT PLANNING AUT HORITY. IN THE BACKGROUND OF THIS, THE QUESTION THAT ARISES/OR CONSIDERATION IS AS TO WHET HER THE ASSESSEE WOULD LOSE ITS CLAIM: FOR DEDUCTION IN RESPECT OF THOSE BLOCKS WHICH SATI SFIED THE CONDITIONS UNDER SECTION 80LE (LA) OF THE ACT BY REASON OF SOME OF THE STOCKS NOT SATISFYING THE CONDITION UNDER SECTION 80LE (LA) OF THE ACT. 27 14. ON THE FACTS ADMITTED BY THE REVENUE IN THE PR OJECTS 'AGRINI'' AND 'VAJRA' THERE ARE NUMBER OF FLATS WHICH ARE BELOW 1500 SQ. F]. AND THE RELEVANT BUILT-UP AREA REQUIREMENT IS SPECIFIED UNDER SECTION 80LE (LO)(C) OF THE INCOME TAX ACT THUS, THE BUILT-UP AREA IN SOME OF THE FLATS ILL BOIN THESE PROJECTS ARE IN EXCESS OF 1500 SQ. FT., I.E., 32 FLATS IN AGRINI AND ONLY ONE FLAT IN VAJRA AND THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION ON THIS. WE HOLD THAT THE TRIBUNAL IS NOT CORRECT IN ITS VIE'W, THAT BY REASON OF THESE U!1ITS BEING IN EXCESS OF 1500 SQ. FT., THE ENTIRE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TWO PROJECTS WOULD STAND REJECTED UNDER SECTI ON 80LE (LA) OF THE INCOME TAX ACT. THUS, GOING BY THE DEFINITION OF 'HOUSING PROJECT' UNDER EXPLANATION TO SECTION 80HHBA OF THE ACT AS REFERRED TO ABOVE AS THE CONSTRUCTION OF 'ANY BUILDING' AND THE WORDINGS IN SECTION 80LB (LA) OF THE ACT. THE QUESTION OF RE JECTION IN ENTIRETY OF THE PROJECT ON ACCOUNT OF ANYONE OF THE BLOCKS NOT COMPLYING WITH THE CONDITION:' DOES NOT ARISE. EVEN IN THE CASE .J.L EACH ONE OF THE BLOCKS, WHEREVER THERE ARE FLATS WHICH SATISFIED THE CONDITIONS PARTICULARLY OF THE NATURE STATED UNDER SECTION 80LB (LO)(C) OF THE ACT, WE HAVE ALREADY UPHELD THE CASE OF THE ASSESSEE IN TC. NOS. 1348 AND 1349 OF2007 DATED 10-10-20L2FOR GRANT OF RELIEF UNDER SECTION 80LE (L A) OF THE ACT ON A PROPORTIONATE BASIS, BY FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN CLT V. BRAHMA ASSOCIATES [20LL} 333 LTR 117 _289/97 TAXMAN 459/9 TAXMANN.COM 289. THUS APPLYING THE DECISION OF THIS COURT IN TC NOS. 1348 AND 1349 OF2007 DATED 10-10-2012, WE HOLD THAT THE ASSESSEE IS ENTITLED 10 SUCCEED BOTH ON THE PRINCIPLE OF PROPORTIONALITY AS WELL AS BY REASON OF THE CONSTRUCTION ON THE MEANING OF THE EX PRESSION 'HOUSING PROJECT' AS REFERRING TO CONSTRUCTION OF ANY BUILDING AND THE W ORDINGS IN SECTION 80IB (10) OF THE ACT. IN THE CIRCUMSTANCES, WE HOLD THAT THE MERE FA CT THAT ONE OF THE BLOCKS HAVE UNITS EXCEEDING BUILT-UP AREA OF 1 500 SQ. FT. PER SE, WOULD NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECTS. CONSEQUENTLY, IN RESPECT OF EACH OF THE BLOCKS, THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTI ON IN RESPECT OF RESIDENTIAL UNITS SATISFYING THE REQUIREMENT UNDER SECTION 80IB (J O)(C) OF THE ACT. IN SO HOLDING, WE ALSO AGREE WITH THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. VANDANA PROPERTIES F20J2} 206 TAXMAN 584/ 19 TAXMANN. CAM 316, WHICH WAS DECIDED BY THE BOMBAY HIGH COURT ON SIMILAR LINES AS IN THE ASSESSEE'S CASE BEFORE U S. A PERUSAL OF ABOVE JUDGMENT, IT CLEARLY REVEALS THA T HON'ABLE HIGH COURT HAS TAKEN AND INTERPRETED THE DEFINITION OF HOUSING PROJECT U/S 8 0HHA TO ARRIVED AT THE CONCEPT OF COMPOSITE HOUSING PROJECT WHICH HAS ELIGIBLE & INELIGIBLE UNITS IN THE PROJECT FOR THE PURPOSE OF SECTION 80IB (10) FOR ELIGIBLE UNITS ON PROPORTION BASIS. THE ASSESSING OFFICER HAS RELIED ON THE JUDGEMENT O F HONABLE MUMBAI HIGH COURT IN THE CASE BRAHMA ASSOCIATES (CITIED SUPRA). LD. AR ARGUE D THAT THE SAID JUDGMENT WAS DELIVERED IN THE CONTEXT OF COMMERCIAL AREA & ARGUED THAT THE SAID JUDGMENT HAS BEEN CONSIDERED BY HON'ABLE MADARAS HIGH COURT IN THE CA SE OF VISHWAS PROMOTERS PVT. LTD. 28 AND AFTER ANALYZING THE JUDGEMENT OF MUMBAI HIGH CO URT, MADRAS HIGH COURT HAS DELIVERED THE JUDGEMENT. LD. AR FURTHER 'ARGUED THAT ON PROPORTIONAL DEDUCTI ON OF ELIGIBLE HOUSING PROJECTS U/S 80IB (10) THE' KOLKATA HIGH COURT HAS CONCURRED THE VIEW BY NOT INTERFERING THE JUDGMENT OF KOLKATA TRIBUNAL ON THIS ISSUE IN THE C ASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO. 453 OF 2006. LD. AR FURTHER HAS RELIED ON NUMEROUS DECISIONS OF HONABLE IT AT IN ASSESSEES FAVOUR HOLDING THAT PRORATA DEDUCTION IS AVAILABLE WITH RE SPECT TO RESIDENTIAL UNIT WHICH SATISFIES THE REQUIREMENT OF MAXIMUM CONSTRUCTED AREA WHERE T HE OTHER RESIDENTIAL UNITS VIOLATES THE MAXIMUM BUILT UP AREA THAT THE APPELLANT'S CASE IS ON MUCH BETTER FOOTINGS WHERE THESE ELIGIBLE RESIDENTIAL HOUSES ARE IDENTIFIABLE CLUSTER OF TOWERS, HAVING SEPARATE IDENTIFIED LAND & VARIOUS FACILITIES. THESE RESIDENTIAL TOWERS DO NOT CONTAIN EVEN A SINGLE RESIDENTIAL UNIT WHICH VIOLATES THE MAXIMUM CONSTRUCTED AREA NOR M. FURTHER, LD. AR HAS ARGUED THE FINDINGS OF SURVEYS NARRATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN NO WAY NEGATES THE CLAIM OF DEDUCTION U/S 80IB (10). THESE CORRESPONDENCES ARE TAX PLANNING TO STRENGTHEN THE DEDUCTION U/S 80IB, WHICH EACH ASSESSEE IS ENTITLED TO DO. THERE IS NO MANIPULATION OF FACTS TO FULFI L THE CONDITION SECTION 80IB (10). AS I HAVE HELD THAT THESE HOUSING PROJECT IS SEPARATE ENTITIES, THE COMMERCIAL AREA IS NOT PART OF SUCH ELIGIBLE HOUSING PROJECT VIOLATION OF CONDITION CON TAINED IN CLAUSE (D) WILL NOT COME IN THE WAY OF ALLOWING DEDUCTION U/S 80IB (10). CONSIDERING ALL THE FACTS & CIRCUMSTANCES OF THE CASE & JUDICIAL PRONOUNCEMENTS, I HEREBY ALLOW THE DEDUCTION U/S. 80IB (10) TO THE EXTENT OF PROFITS FROM SUCH ELIGIBLE HOUSING PROJECTS WHICH ARE GROUP HOUSING SCHEME OF MULTISTORIED FLATS. 5.1.3 ANOTHER ISSUE OF DISALLOWANCE OF DEDUCTION U/S 80IB (10) IN RESPECT OF FOLLOWING PLOTTED COLONY TERMED AS CITY :- 1 OMAXE CITY, SONEPAT 2 OM AXE CITY, ROHTAK 3 OMAXE CITY. LUCKNOW 4. OMAXE CIIY. JAIPUR 5. OMAXE CIRY, PALWAL 6. OMAXE PARKWOOD-IL. CHAKKAN BADDI 7. OMAXE CITY-II MANGALIYA. INDORE 8. OMAXE CITY. MAYAKHERI, INDORE 9. PDA OMAXE CITY, PATIALA THE ASSESSING OFFICER HAS DENIED DEDUCTION U/S. 80 IB (10) ON TWO GROUNDS. ONE THE APPROVAL OF THE PROJECT IS FOR PLOTTED COLONY & NOT FOR HOUSING PROJECT &: SECONDLY COMMERCIAL AREA IN THE SAID PROJECT EXCEEDS THE LIMIT PRESCRIBED IN CL AUSE (D) OF SECTION 80B 29 (10). 5.2 ALL THE NINE PROJECTS NUMERATED ABOVE HAS BEEN APPROVED AS PLOTTED HOUSING COLONY. IT WAS ASCERTAINED DURING THE APPELLATE PRO CEEDING THAT THE APPELLANT HAS IN SOME COLONY ONLY SOLD THE RESIDENTIAL PLOT & IN SOME COLONY IT SOLD RESIDENTIAL PLOT AS WELL AS VILLAS AFTER THE CONSTRUCTION ON THE PLOT. IN ALL THE PROJECTS, THERE ARE COMMERCIAL AREA. THE ASSESSING OFFICER HAS DENIED D EDUCTION ULS 80IB (10) ON THE GROUND THAT THE SAID DEDUCTION IS NOT AVAILABLE TO SUCH APPROVED PLOTTED COLONY. FURTHER, THE ASSESSING OFFICER HAS HELD THAT COMMER CIAL AREA IN THESE COLONY FAR EXCEEDS THE PRESCRIBED MAXIMUM AREA AS PER THE CLAU SE (D) OF SECTION 80IB (10). THE ASSESSING OFFICER HAS DENIED DEDUCTION ULS 80IB (10 ) EVEN ON RESIDENTIAL UNITS CALLED VILLAS WHICH HAS CONSTRUCTED AREA LESS THAN 1000 SQ . FT. AND 1500 SQ. FT. AS THE CASE MAY BE ON PRORATA BASIS. 5.2.1 DURING APPELLATE PROCEEDINGS, LD. AR HAS SEGRATED T HE PROJECTS WHERE ONLY PLOT WERE SOLD & WHERE THE APPELLANT HAS SOLD BOTH PLOT & VILLAS. 5. 2.2 IN FOLLOWING PROJECTS, THE APPELLANT HAS SOLD ONLY RESIDENTIAL PLOTS WITHOUT CONSTRUCTION OF RESIDENTIAL UNITS. 1. OMAXE CITY, ROHTAK 2. OMAXE PARKWOOD II, CHAKKAN BADDI. 3. OMAXE CITY-II, MANGALIYA, INDORE 4. OMAXE CITY, MAYAKHERI, INDORE 5. PDA OMAXE CITY, PATIALA 5.2.3 IN FOLLOWING PROJECTS, THE APPELLANT HAS SOLD RES IDENTIAL PLOTS AS WELL AS VILLAS. 1. OMAXE CITY, SONEPAT 2. OMAXE CITY, LUCKNOW 3. OMAX CITY, JAIPUR 4. OMAXE CITY, PALWAL 5.2.4 FIRSTLY I WOULD CONSIDER 5 PROJECTS MENTION ED IN PARA 5.2.3, WHERE THE APPELLANT HAS SOLD ONLY RESIDENTIAL PLOTS. THE LD. AR HAS RELIED UPON THE DECISION OF SREEVASTA REAL ESTATE LTD. 9 ITR TRIB 808 (IT A T, CHENNAI) & ARGUED THAT HOUSING PROJECT IS NOT DEFINED UNDER THE SECTION 0IB, THERE FORE EVEN RESIDENTIAL PLOT WILL BE INCLUDED IN HOUSING PROJECT. I HAVE PERUSED THE DECISION OF SREEVASTSA REAL ESTATE LTD. CITED SUPRA. IN THAT CASE THE ISSUE WAS WHETHER THERE WAS APPROVAL OF LO CAL AUTHORITY. FACTS OF THE CASE IS AS UNDER :- 30 NOW IF WE SEE SUB-SECTION (LO) OF SECTION 80-IB, IT SPECIFIES APPROVAL BY A LOCAL AUTHORITY AND WHO OR WHAT IS SUCH LOCAL AUTHORITY I S NOT DEFINED ANYWHERE. WE CANNOT SAY THAT A VILLAGE ADMINISTRATIVE OFFICER OR A DEPU TY DIRECTOR OF TOWN PLANNING IS NOT A LOCAL AUTHORITY. HENCE THE QUESTION NOW BOILS DOWN TO WHETHER THE APPROVAL OBTAINED BY THE ASSESSEE }VAS FOR A HOUSING PROJECT . THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT THE ASSESSEE HAD PRODUCED A CERTIFICA TE DATED FEBRUARY 2, 2005 FROM THE VILLAGE ADMINISTRATIVE OFFICER, BUT HE REJECTED IT ON A REASONING THAT THE VILLAGE ADMINISTRATIVE OOFFICER WAS NOT AN AUTHORITY FOR IS SUING A CERTIFICATE OF APPROVAL. IN ANY CASE PARAGRAPHS REPRODUCED ABOVE, FROM THE LETT ER OF THE DEPUTY DIRECTOR, TOWN PLANNING WOULD SHOW THAT SUCH APPROVAL WAS FOR CONS TRUCTION IN THE PLOTS. IT IS ALSO SPECIFIED THAT THE APPLICANT SHOULD GET SANCTION FO R BUILDING FROM LOCAL PANCHAYAT. PURSUANT TO THIS, THE INDIVIDUAL OWNERS TO WHOM PLO TS WERE GIVEN HAD OBTAINED SANCTION FOR CONSTRUCTING THE UNITS, AND CONSTR UCT IONS CARRIED OUT BY THE ASSESSEE. THE APPROVED LAYOUT PLACED AT PAPER BOOK PAGE J 3, SHOWS THE BIFURCATION OF/HE SITE TO VARIOUS PLOTS, AREAS EARMARKED FOR SHOPS AND HOU SES. ALL THESE WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE PROJECT HAD THE AP PROVAL OF A LOCAL AUTHORITY. AND EACH INDIVIDUAL HOUSE ,VERE ONLY PART OF A WHOLE. FROM THE ABOVE IT IS CLEAR THAT PLOTS WERE ALLOTT ED TO THE INDIVIDUALS & CONSTRUCTION WAS CARRIED OUT BY SRIVASTSA REAL ESTATE PVT. LTD., THE ASSESSEE IN QUESTION. HONABLE ITA T ALLOWED DEDUCTION AS PRO-RATA BASIS FOR ELIGI BLE RESIDENTIAL UNITS. THE FACTS OF THE PRESENT CASE IS ENTIRELY DIFFERENT. SINCE THE A PPELLANT IN INSTANT CASE HAS SOLD RESIDENTIAL PLOTS WITHOUT ANY CONSTRUCTION ON IT. T HERE IS NO QUESTION OF HOUSING PROJECTS. IF PLOT CAN BE SAID TO BE A RCSIDENTIA UN IT. THEN HOW THE CONDITIONS CONTAINED IN SECTION 80IB (10) WILL BE FULFILLED. CONDITION C ONTAINED IN CLAUSE (A) I.E. TALKS ABOUT COMMENCEMENT OF CONSTRUCTION OF HOUSING PROJECT. SI MILARLY CLAUSE (C) SPECIFICALLY REFERS TO CEILING OF MAXIMUM BUILT UP AREA OF A RES IDENTIAL UNIT. IF THERE IS NO CONSTRUCTION, ONLY PLOT IS ALLOTTED. HOW CONDITIONS RELATING TO CONSTRUCTION OF SECTION 80IB ARE FULFILLED. CONSIDERING THESE FACTS AND CIRCUMSTANCES, I AM OF THE STRONG VI EW THAT DEDUCTION ULS 80IB IN RESPECT OF SALE OF PLOTS CANNOT BE ALLOWED. ACCORDINGL Y, THE ASSESSING OFFICER'S ACTION FOR NON-ALLOWANCE THE DEDUCTION U/S 80IB IN RESPECT OF THESE 5 PROJECTS ARE HEREBY CONFIRMED . 5.2.6 NOW I WOULD CONSIDER THE ALLOW ABILITY OF DEDUCTION ULS SOIB (10) IN RESPECT OF OTHER PROJECTS AS NUMERATED IN PARA 5.2.4, THESE ARE THE PROJECTS WHERE, THE APPELLANT HAS SOLD SOME PLOTS WITHOUT CONSTRUCTION & SOME PLOTS AFTER CO NSTRUCTION. THE APPELLANT CLAIMS THAT WHERE EVER CONSTRUCTED RESIDENTIAL UNITS ARE SOLD, CONS TRUCTION AREA IS LESS THAN 31 THE PRESCRIBED LIMIT AS PER CONDITION C OF SECTION 80IB (10) . THE LD. AR HAS ARGUED THAT THE APPELLANT HAS TAKEN APPROVAL FOR EACH RESIDENTIAL UNITS FOR IT S SECTIONED CONSTRUCTION PLAN AND COMPLETION CERTIFICATE FOR EACH VILLAS ARE SEPARATELY ISSUED I N FAVOUR OF THE APPELLANT. THEREFORE, LD. AR ARGUED THAT ASSESSING OFFICER'S CL AIM THAT THE APPROVAL IS FOR PLOTTED COLONY & THERE IS NO APPROVAL OF CONSTRUCTION OF RES IDENTIAL UNITS IS NOT PROPER. THE TOTAL CONSTRUCTED AREA, NO. OF VILLAS & LAND AREA OF DIFFERENT PROJECT IS AS UNDER :- S.NO. PROJECTS NAME AND TOTAL AREA OF THE PROJECT. COMPONENTS NO. OF TOWERS/PLOTS/VILLAS/AREA OF COMMERCIAL AREA OF LAND IN ACRES RELATABLE TO THE COMPONENT 1 2 3 4 5 1. OMAXE CITY SONEPAT, (TOTAL AREA 329.78 ACRES, INCLUDING GH OF 22.75 ACRES SEPARATELY DISCUSSED AT POINT NO.3) PLOTS VILAS 1811 445 275.98 19.48 2. OMAXE CITY LUCKNOW UTTARPRADESH- (TOTAL AREA 149.57 ACRES) PLOTS VILLAS COMMERCIAL 1111 127.54 5.57 3 OMAXE CITY PALWAL (TOTAL AREA 102.46 ACRES) PLOTS VILLAS AND G+2 COMMERCIAL 836 133 92.03 6.41 4.02 4 OMAXE CITY JAIPUR (TOTAL AREA 342.66 ACRES) PLOTS VILLAS GH COMMERCIAL 1952 487 LD. AR ARGUED THAT THOUGH THERE IS A CONSOLIDATED APPROVAL FOR COLONY. THE AREA _ FOR PLOTS AND VILLAS ARE SPECIFICALLY MARKED & SATISFIES THE CONDITIONS OF SECTION 80IB. THESE PLOTS & VILLAS CONSTITUTE TOGETHER A HO USING PROJECT WHICH STAND ON THEIR OWN. THIS HOUSING PROJECT IS DEMARCATED FROM COMMER CIAL AREA. I AGREE WITH THE VIEW OF LD. AR THAT THESE PLOTS & VILLAS ARE SEPARATE PR OJECTS. THE APPELLANT HAS CLAIMED THE DEDUCTION U/S 80LE FOR THE ENTIRE INCOME ON PLO TS AND CONSTRUCTED VILLAS. AS PER MY FINDINGS IN PARA 5.2.5, INCOME ON THE SAL E OF PLOT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB CL 0) OF LT. AN. THEREFORE ENTIRE PROFIT O N THESE PROJECTS CANNOT BE ALLOWED AS DEDUCTION U/S 80IB (10). THE LD. AR HAS ALTERNATIVELY ARGUED THAT DEDUCTION FOR CONSTRUCTED VILLAS MAY BE ALLOWED 32 ON PRORATA BASIS FOR CONSTRUCTED VILLAS. LD. AR HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENT. I HAVE CONSIDERED THE PLEA OF LD. A~ & HAS GIVEN THE FINDINGS AFTER ANALYZING JUDICIAL PRONOUNCEMENTS THAT ON PRO-RATA BASIS, DEDUCTION IS ALLOWABLE FOR ELIGIBLE HOUSING PROJECTS IN EARLIER PARTS OF THIS ORDER. THE FACTS ARE SIMILAR I.E. CONSTRUCTED VILLAS CONSTITUTES ELIGIBLE HOUSING PROJECTS & PRO- RATA DEDUCTION IS ALLOWABLE. LD. AR SPECIALLY ARGUED THAT PRO-RATA DEDUCTION WAS ALLOWE D U/S 80IB (L0) IN THE CASE OF SREEVASTSA REAL ESTATE LTD. 9 ITR TRIB. 808 (ITA T, CHENNAI) IN CASE OF ELIGIBLE VILLAS CONSTRUCTED ON PLOTS. SECOND ISSUE RAISED BY THE ASSESSING OFFICER IS VIO LATION OF CLAUSE (D) OF SECTION 80IB (L0). THERE HAS BEEN AMENDMENT IN CLAUSE (D) W .E.F. 01-04-2010. PRIOR TO AMENDMENT. THE PERMISSIBLE COMMERCIAL AREA IN THE H OUSING PROJECT WAS FIVE PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQ. FT, WHICH EVEN IS LESS. W.E.F. 01- 04-2010, THE PERMISSIBLE COMMERCIA L AREA IS THREE PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR F IVE THOUSAND SQ. FT. WHICHEVER IS HIGHER. ON FACTUAL ASPECT LD. AR HAS ARGUED THAT TOTAL COMM ERCIAL AREA IN ENTIRE PROJECT IS NOT CONFORMING TO THE CONDITION PRIOR TO 01-C4-201O, BU T CONFORMS TO THE CONDITION IN CLAUSE (D) AFTER 01-04- 2010. HOWEVER, HE H . -S ARGUED, THAT AMENDMENT W.E.F. 01-04-2010 IS CURATIVE & CLARIFICATORY. I DO NOT AGREE WITH THE V IEW OF LD. AR THAT THE AMENDMENT IN CLAUSE (D) IS C1ARIFICATORY & APPLY RETROSPECTIVELY , THE AMENDMENT HAS BEEN MADE PROSPECTIVELY W.E.F . 01-04-2010 & NOT RETROSPECTIV ELY. IF THE PURPOSE OF AMENDMENT WAS CLARIFICATORY THEN IT SHOULD HAVE BEEN RETROSPECTIV ELY AS IT IS SUBSTANTIVE PROVISION. ACCORDINGLY I DO NOT AGREE WITH ARGUMENTS OF LD. AR ON THIS ISSUE. SECOND ARGUMENTS OF LD. AR IS THAT THE DEVELOPMENT RIGHT OF CORNMERCIAL AREA HAS BEEN TRANSFERRED TO OTHER COMPANIES. THE TRANSFER IS NOT U WERE BOOK ENTRY BUT THROUGH MEMORANDUM OF ASSOCIATION & IS DULY INTIMATED TO LO CAL AUTHORITY WHICH HAS RECOGNIZED THE SAME. LD. AR ARGUED THAT AS COMMERCIAL AREA WAS TRANSFERRED, THERE IT PROVES THAT THE SAID COMMERCIAL AREA WAS A SEPARATE UNIT & HENCE CL AUSE (D) OF SECTION 80IB (10) WILL NOT COME AS OBSTACLE IN PROVIDING DEDUCTION. 5: 2.7 AFTER CONSIDERING THE ENTIRE FACTS & CIRCUMSTAN CES OF THE CASE, I DIRECT THE ASSESSING OFFICER TO ALLOW PROFIT ON THE VILLAS WHO SE CONSTRUCTED AREA IS LESS THAN THE PRESCRIBED LIMIT AS PER CONDITION (C) OF SECTION 80 IB UO) FOR ALL THE FOUR PROJECTS. THE LD. AR HAS- ALREADY SUBMITTED PROFIT OF HOUSING PRO JECT CONSIDERING VILLAS ONLY BEFORE THE ASSESSING OFFICER & DURING APPELLATE AUTHORITY IN W RITTEN SUBMISSION WHICH WAS FORWARDED TO THE ASSESSING OFFICER. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 33 5.3 AS A RESULT, ALL THE GROUNDS OF APPEALS FOR AL LOWING DEDUCTION ULS.80IB ARE PARTLY ALLOWED. 12.17 THE ASSESSING OFFICER DENIED DEDUCTION OF RS. 1,88,25,94,379 CLAIMED BY THE ASSESSEE IN RESPECT OF FOLLOWING HOUSING PROJECTS U NDER SEC. 80IB(10) OF THE INCOME-TAX ACT, 1961 (THE ACT). NAME OF THE PROJECT AMOUNT (RS.) OMAXE HEIGHTS, SONEPAT 3,54,67,703 OMAXE CITY, SONEPAT OMAXE HEIGHTS, FARIDABAD 7,85,67,605 OMAXE CITY, LUCKNOW 16,55,75,848 OMAXE CITY, JAIPUR 13,50,33,053 OMAXE CITY, ROHTAK 1,91,34,660 OMAXE HEIGHTS, BAHADURGARH 16,59,89,596 OMAXE CITY, PALWAL 84,48,158 OMAXE PARKWOOD-I, BADDI 5,08,14,862 OMAXE PARKWOOD-II, CHAKKAN BADDI 2,26,45,075 OMAXE CITY, PATIALA 48,82,09,699 OMAXE REVIERA, PANT NAGAR, UTTRANCHAL 45,22,38,237 OMAXE CITY, MAYAKHERI, INDORE 19,17,82,533 OMAXE CITY, MAYAKHERI, INDORE 6,86,87,350 TOTAL 1,88,25,94,379 34 12.18. THE ASSESSING OFFICER HAS DISCUSSED THE ELIG IBILITY OF THE CLAIMED DEDUCTION ON PROJECTWISE AND HAS DENIED THE CLAIM TO THE ABOVE E XTENT MAINLY ON THE BASIS THAT OUT OF SEVERAL CONDITIONS LAID DOWN UNDER SEC. 80IB(10) OF THE ACT, THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN UNDER CLAUSE (C) AND (D) O F SECTION 80IB(10) OF THE ACT. THE CONDITIONS LAID DOWN IN CLAUSE (C) OF THE SECTION I S THAT THE RESIDENTIAL UNIT SHOULD HAVE MAXIMUM BUILT UP AREA OF 1500 SQ. FEETS AS THE PROJ ECT IS NOT LOCATED WITHIN 25 KILOMETERS FROM THE MUNICIPAL LIMIT OF DELHI AND 1000 SQ. FT. WHERE PROJECT FALLS IN THE SAID 25 KILOMETERS. AS PER THE ASSESSING OFFICER, THIS COND ITION WAS NOT SATISFIED AS THE PRESCRIBED AREA WAS EXCEEDING IN SOME OF THE FLATS OF THE PROJECTS. THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT THE CLAIMED DEDUCTION IS NOT ALLOWABLE ON PLOTS. AS PER CLAUSE (D) OF THE SECTION, THERE WAS NO CONSTRUCTION ON TH E COMMERCIAL PLOT AND THE COMMERCIAL AREA BELONGED TO OTHER SUBSIDIARY COMPANY WHICH WAS TRANSFERRED IN FINANCIAL YEAR 2009- 12.19 THE LEARNED CIT(APPEALS) HAS DISCUSSED ABOVE HAS BASICALLY ALLOWED THE CLAIMED DEDUCTION ON ONLY THOSE RESIDENTIAL UNITS, BUILT UP AREA OF EACH OF WHICH WAS FOUND AS PER THE PRESCRIBED AREA IN CLAUSE (C) TO SECTION 80IB(1 0) OF THE ACT. WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN THIS REGARD AS IT I S WELL SUPPORTED BY THE DECISIONS OF HON'BLE HIGH COURTS AND DIFFERENT BENCHES OF THE IT AT FOLLOWED BY THE LEARNED CIT(APPEALS). THE SAME IS UPHELD. THE GROUND NOS. 1 TO 10 OF THE APPEAL PREFERRED BY THE REVENUE REVOLVING ON THE ISSUE OF ALLOWABILITY OF THE CLAIMED DEDUCTION BY THE ASSESSEE UNDER SEC. 80IB (10) OF THE ACT ON THE PRO FIT ARISING OUT OF THE SALE OF THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITIES A RE ACCORDINGLY REJECTED. 12.20 IN RESULT, THE APPEAL IS DISMISSED. 35 13. ASSESSEES APPEAL: THE LEARNED CIT(A) UPHELD THE ORDER OF THE ASSESS ING OFFICER TO THE EXTENT OF DEDUCTION CLAIMED BY THE APPELLANT ON UNBUILT HOUSING SITES I.E. THE PLOTS CONSISTED IN THE HOUSING PROJECTS MAINLY ON THE GRO UND THAT IF THERE IS NO CONSTRUCTION ON RESIDENTIAL PLOTS SOLD AS SUCH, THE CONDITIONS SPEC IFIED IN CLAUSE (A) AND (C) W.R.T. COMMENCEMENT OF CONSTRUCTION AND CEILING OF BUILT U P AREA CANNOT BE SATISFIED. THE ASSESSEE FILED THE APPEAL AGAINST THE ORDER OF CIT( A) TO THE EXTENT, AS PER GROUNDS OF APPEAL. 13.1 THE SUBMISSIONS OF THE LEARNED AR IN SUPPORT O F THE ABOVE GROUNDS (REPRODUCED IN PARA NO. 7) OF THE APPEAL PREFERRED BY THE ASSES SEE ARE AS UNDER: (I) DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS ALLO WED TO AN ASSESSEE IN RESPECT OF PROFIT DERIVED FROM A HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY. IN THE PRESENT CASE, ALL THE PROJECTS UN DERTAKEN BY THE APPELLANT, INVOLVING INTER ALIA, DEVELOPMENT OF PLOTS, CONSTRU CTION OF BUILT UP UNITS WERE APPROVED AS INTEGRATED AND COMPOSITE HOUSING P ROJECTS. IT CAN BE APPRECIATED THAT THERE IS NO DEFINITION O F HOUSING PROJECT UNDER SECTION 80IB BUT HOUSING PROJECT IS DEFINED IN SECT ION 80HHBA, WHICH FINDS ITS PLACE IN THE SAME CHAPTER I.E. CHAPTER VI A- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES. RELEVANT EXTRACT IS AS UNDER: 80HHBA. DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM HOUS ING PROJECTS IN CERTAIN CASES .: EXPLANATION: (A) 'HOUSING PROJECT' MEANS A PROJECT FOR 36 ( I ) THE CONSTRUCTION OF ANY BUILDING, ROAD, BRIDGE O R OTHER STRUCTURE IN ANY PART OF INDIA; ( II ) THE EXECUTION OF SUCH OTHER WORK (OF WHATEVER NA TURE) AS MAY BE PRESCRIBED; THE ASSESSEE DID UNDERTAKE CONSTRUCTION OF ROADS, OTHER STRUCTURES LIKE STP, WATER TANKS, BRIDGES ETC. IN ITS HOUSING PROJECTS. IT ALSO UNDERTOOK CONSTRUCTION OF RESIDENTIAL HOUSES/FLATS IN THE HOU SING PROJECTS, ALBEIT, IN SOME CASES, PROFITS FROM THE SAME WERE BOOKED IN SU CCEEDING YEARS. PERHAPS THE LAW MAKERS, IN ALL THEIR WISDOM, DID NO T SEE THE NEED OF DEFINING THE HOUSING PROJECT AGAIN IN SECTION 80IB AS REFERENCE COULD VERY WELL BE DRAWN FROM SECTION 80HHBA, AS BOTH THE SECTIONS FALL IN THE SA ME CHAPTER AND ARE INCENTIVE PROVISIONS FOR DEVELOPMENT OF HOUSING PROJECTS. IN FACT THIS VIEW HAS BEEN APPROVED BY HONBLE MADRAS HIGH COURT IN CASE OF CIT VS ARUN EXCELLO FOUNDATIONS PVT LTD (259 CTR 36 2) (MADRAS) IN ITA NO. 1348 AND 1349 OF 2007 . RELEVANT EXTRACTS ARE AS UNDER: ..THERE IS NO DEFINITION OF 'HOUSING PROJECT' UNDER SECTIO N 80IB(10) OF THE ACT. THIS, HOWEVER, DOES NOT POSE ANY DIFFICULT Y. FOR READING SECTION 80HHBA AND SECTION 80IA, IT IS CLEAR THAT SECTION 80IB IS CONCERNED ABOUT HOUSING PROJECT NAMELY, CONSTRUCTION OF ANY BUILDING OTHER THAN WHA T IS CONTEMPLATED AS AN INFRASTRUCTURE FACILITY UNDER SECTION 80IA. THUS WH EN UNDER THE VERY SAME CHAPTER DEALING WITH DEDUCTION, THE EXPRESSION 'HOU SING PROJECT' HAS ALREADY BEEN DEFINED IN A RELATED PROVISION, WE DO NOT FIND , THE ABSENCE OF THE SAME UNDER SECTION 80IB SHOULD POSE A PROBLEM IN UNDERSTANDING THE MEANING OF THE SAID EXPRESSION. IN THE ABSENCE OF DEFINITION OF THE EXP RESSION 'HOUSING PROJECT' ANYWHERE ELSE IN THE ACT AND THE SAID EXPRESSION BE ING DEFINED IN A RELATED DEDUCTION PROVISION UNDER THE SAME CHAPTER VIA, WE FEEL , IT WOULD BE MORE APPROPRIATE TO GO BY THE DEFINITION OF THE EXPRESSI ON 'HOUSING PROJECT', AS 37 AVAILABLE UNDER SECTION 80HHBA FOR THE PURPOSE OF U NDERSTANDING THE SAID EXPRESSION OF 'HOUSING PROJECT' UNDER SECTION 80-IB OF THE ACT. 31. AS SEEN ALREADY, 'HOUSING PROJECT' DEFINED UNDE R SECTION 80HHBA REFERS NOT ONLY BUILDING, BUT ALSO ROAD, BRIDGE OR OTHER STRUC TURE IN ANY PART OF INDIA.. AS DEFINED IN THE EXPLANATION, WE HOLD THAT THE HOUSING PROJECT CONTEMPLATED UNDER SECTION 80-I B(10) REFERS CONSTRUCTION OF 'ANY BUILDING' AND WIDEST POSSIBLE MEANING HAS T O BE GIVEN TO THE WORD 'BUILDING' AND CANNOT BE RESTRICTED TO AND AS REFER ABLE TO A HOUSING PROJECT COVERING RESIDENTIAL UNITS ONLY. (II) IT IS WORTHWHILE TO MENTION HERE THAT A REPRESENTAT ION HAD BEEN MADE BY THE MAHARASHTRA CHAMBER OF HOUSING INDUSTRY TO THE HON' BLE FINANCE MINISTER BY ITS MEMORANDUM DT. 1ST JAN., 2001 IN WHICH, INTER ALIA AMONGST OTHER MATTERS, IT WAS ALSO REQUESTED THAT A 'SUITABLE CLARIFICATION BE MA DE TO DEFINE THE TERM 'HOUSING PROJECT'. CONSEQUENTLY, CBDT, DEPARTMENT OF REVENUE, ADDRESSE D A REPLY UNDER F. NO. 205/3/ 2001/IT A-II DT. 4TH MAY, 2001, GIVING THE F OLLOWING CLARIFICATION: WITH REGARD TO YOUR QUERY REGARDING THE DEFINITION OF HOUSING PROJECT, IT IS CLARIFIED THAT ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR T HE PURPOSE OF SECTIONS 10(23G) AND 80-IB(10). HONBLE MUMBAI ITAT IN CASE OF LAUKIK DEVELOPERS VS DCIT 105 ITD 657 HAS ALSO PLACED RELIANCE ON THE AFORESAID DEFINITIO N AND OBSERVED AS UNDER: THE CLARIFICATION OF CBDT VIDE LETTER DT. 04.05.01 TO MAHARASTRA CHAMBER OF HOUSING INDUSTRY CLEARLY STATES THAT ANY PROJECT, W HICH IS APPROVED BY LOCAL AUTHORITY AS A 'HOUSING PROJECT', SHOULD BE CONSIDE RED ADEQUATE FOR THE PURPOSE 38 OF SECTION-10(23G) AND 80IB(10) OF THE ACT. THIS CL ARIFICATION BY THE CBDT IS OF NO HELP TO THE CASE OF THE ASSESSEE FOR THE REASON THAT THE BUILDING PROJECT OF THE ASSESSEE WAS NOT APPROVED BY THE LOCAL AUTHORITY NA MELY KDMC AS A 'HOUSING PROJECT' AND WAS IN FACT APPROVED AS A 'RESIDENTIAL AS WELL AS COMMERCIAL PROJECT' BY THEM. THOUGH THE AFORESAID CASE WAS DECIDED AGAINST THE A SSESSE AS HIS PROJECT WAS APPROVED NOT AS A HOUSING PROJECT BUT AS A RESIDEN TIAL AND COMMERCIAL PROJECT, BUT HONBLE ITAT HAS REACHED ON THIS CONCLUSION BY PLACING RELIANCE ON THE CLARIFICATION GIVEN BY CBDT. THE LEARNED AR SUBMITTED THAT THE AFORESAID DECISIO NS SUPPORT THE CASE OF THE APPELLANT INASMUCH THE PROJECT UNDER CONSIDERATION WAS, AS DISCUSSED SUPRA, UNDISPUTEDLY APPROVED AS RESIDENTIAL PROJECT BY THE LOCAL AUTHORITY. THUS, APPLYING THE RATIO LAID DOWN IN THE CASES DISCUSSED ABOVE, O NCE THE PROJECT WAS APPROVED AS HOUSING PROJECT BY THE LOCAL AUTHORITY, THE ASSESSE E WAS ELIGIBLE FOR DEDUCTION IN RESPECT OF PROFIT DERIVED FROM SUCH PROJECT UNDER S ECTION 80IB(10) OF THE ACT. FURTHER, THE EXPRESSION HOUSING PROJECT, IN THE A BSENCE OF ANY SPECIFIC DEFINITION IN SECTION 80IB(10) OUGHT TO BE GIVE A WIDER/ PURPO SIVE MEANING/ INTERPRETATION, SIMILAR TO THE ONE GIVEN IN EXPLANATION TO SECTION 80HHBA OF THE ACT. (III) CONSTRUCTION/ DEVELOPMENT OF HOUSING SITES, CONSTIT UTES DEVELOPMENT OF THE HOUSING PROJECT, WHICH IS THE HEART AND SOUL OF ALL OWANCE OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. FURTHER, IN THE ABSENC E OF ANY SPECIFIC BAR IN SECTION 80IB(10) OF THE ACT FROM CLAIMING DEDUCTION IN RESP ECT OF PROFIT DERIVED FROM DEVELOPMENT AND SALE OF HOUSING SITES/PLOTS, THERE WAS NO JUSTIFIABLE REASON FOR THE LOWER AUTHORITIES TO REJECT THE CLAIM OF THE APPELL ANT, DESPITE THE FACT THAT THE PROJECT HAD, UNDISPUTEDLY BEEN APPROVED AS RESIDENT IAL/ HOUSING PROJECT. 39 (IV) THE EXPRESSION HOUSING PROJECT IN SECTION 80IB(10 ) OF THE ACT DOES NOT SIMPLY MEAN CONSTRUCTING BUILT UP RESIDENTIAL/ DWELLING UN ITS. ON THE OTHER HAND, DEVELOPING AND CONSTRUCTING A HOUSING PROJECT INVOL VES VARIOUS ACTIVITIES FOR PROVIDING HOUSING FACILITY, WHICH PRIMARILY INVOLVE S CREATION OF INFRASTRUCTURE FOR HOUSING, AS HAS, UNDISPUTEDLY, BEEN DONE BY THE ASS ESSEE. (V) LD. CIT(A) HAS TOTALLY MISCONSTRUED THE EXPRESSION DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT IN SECTION 80IB(10 ) OF THE ACT IN AN EXTREMELY NARROW SENSE TO DEVELOPMENT AND CONSTRUCTION OF RE SIDENTIAL UNIT WHICH, IS NEITHER LEGALLY UNSUSTAINABLE NOR DOES THE SAME ACC ORD WITH THE LEGISLATIVE INTENT. HE FAILED TO APPRECIATE THAT CLAUSE (A) OF SECTION 80IB(10) PROVIDES FOR COMMENCEMENT OF CONSTRUCTION OF THE HOUSING PROJEC T AND NOT OF THE RESIDENTIAL UNIT. HE FURTHER FAILED TO APPRECIATE THAT THAT CL AUSE (C) OF SECTION 80IB(10) OF THE ACT ONLY PROVIDES THAT THE MAXIMUM BUILT UP AREA OF THE RESIDENTIAL UNIT SHOULD NOT EXCEED THE SPECIFIED LIMIT THE SAID CLAUSE NOWH ERE MANDATES CONSTRUCTION OF RESIDENTIAL UNITS AS PART OF THE ELIGIBLE HOUSING P ROJECT, AS A CONDITION PRECEDENT TO CLAIM DEDUCTION; ON THE CONTRARY, THE AFORESAID CON DITION ONLY PROVIDES MAXIMUM BUILT-UP AREA OF 1,000/ 1,500 SQ. FT.; THERE IS, HO WEVER, NO CONDITION/ STIPULATION REGARDING THE MINIMUM BUILT UP AREA. (VI) IT WAS ADMITTED BY THE LEARNED AR THAT BOTH DEVELOP MENT AND CONSTRUCTION OF THE HOUSING PROJECT ARE PRECONDITIONS FOR CLAIMING DEDU CTION UNDER SECTION 80IB(10). HOWEVER LD. CIT(A) HAS INTERPRETED THIS PROVISION I N A VERY NARROW MANNER. WHAT IS SPECIFIED IS DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AND NOT RESIDENTIAL UNITS. CONSTRUCTION OF THE HOUSING PROJECT INCLUDES CONST RUCTION OF ROADS, BOUNDARY WALLS, OVERHEAD TANKS, STP, ETC. TH E APPELLANT UNDERTOOK DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AS UNDER: CONSTRUCTION OF SECTOR ROAD, SERVICE ROAD AND INTER NAL CIRCULATION ROAD PROVISION OF SEWERAGE SYSTEM, DRAINAGE, STP ELECTRIFICATION OF THE RESIDENTIAL TOWNSHIP AND PRO VISION OF STREET LIGHTS. 40 PROVISION OF WATER SUPPLY SYSTEM PROVISION OF PARKS AND PLANTATION OF TREES PROVISION OF BASIC AMENITIES LIKE COMMUNITY CENTRE, SCHOOLS, DISPENSARY, CRCHES, PLAYGROUND ETC. PROVISION FOR UNITS RESERVED FOR ECONOMICALLY WEAKE R SECTION PROVIDING DEVELOPED AND DEMARCATED HOUSING SITES IN THE RESIDENTIAL TOWNSHIP AS PER THE APPROVED LAY OUT PLAN. (VII) THE LEARNED AR SUBMITTED THAT VARIOUS ACTIVITIES AR E INVOLVED IN THE DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT, OF WHICH CON STRUCTION OF RESIDENTIAL UNITS IS A VERY SMALL PART AS COMPARED TO OTHER ACTIVITIES, WHICH MAY BE DONE BY THE INDIVIDUAL BUYER HIMSELF. IT WOULD, IN THIS REGARD, BE PERTINENT TO BRIEFLY D ESCRIBE THE PROCEDURE FOR DEVELOPING A HOUSING PROJECT, AS UNDER: - TOWN AND COUNTRY PLANNING DEPARTMENT DECLARES CONTR OLLED AREAS AND PREPARES THE DEVELOPMENT PLAN FOR THAT AREA BY IDENTIFYING D IFFERENT ZONES SUCH AS RESIDENTIAL, COMMERCIAL AND INSTITUTIONAL, ETC; - COLONIZER ACQUIRES LAND FROM THE OWNERS; - COLONIZER APPLIES FOR LICENSES AND APPROVAL OF LAYO UT PLAN; - DTCP GRANTS LICENSE, SUBJECT TO CERTAIN CONDITIONS AND APPROVES LAYOUT PLAN AS PER NORMS PRESCRIBED IN DEVELOPMENT RULES AND REGULATIO NS; - ONCE THE PROJECT IS APPROVED, DEVELOPMENT AND CONST RUCTION WORK IS UNDERTAKEN BY THE COLONIZER AS UNDER. - LAND CLEANING AND LEVELING; - DEMARCATION OF DIFFERENT CONSTITUENTS OF THE PROJEC T SUCH AS ROADS, PARKS, RESIDENTIAL, COMMERCIAL, COMMUNITY, EWS, STP, ETC.; - PROVISION OF SPACE FOR EDUCATIONAL, MEDICAL, RECREA TIONAL AND COMMUNITY SITES; - LAYING OF WATER SUPPLY LINES, DRAINAGE PIPELINES, E LECTRICAL WIRING, ETC. - CONSTRUCTION AND METALLING OF ROADS, PAVING OF FOOT PATHS; - CONSTRUCTION OF WATER TANK, STP, ELECTRIC SUB-STATI ONS; 41 - DEVELOPMENT OF PARKS AND GREEN AREA, TURFING AND PL ANTATION OF TREES; - INSTALLATION OF STREET LIGHTS; - DEMARCATION, IDENTIFICATION AND NUMBERING OF INDIVI DUAL HOUSING SITES; ONCE THE AFORESAID ACTIVITIES ARE CARRIED OUT, THE RAW LAND GETS CONVERTED INTO A DEVELOPED HOUSING PROJECT WITH THE NECESSARY INFRAS TRUCTURAL FACILITIES, CONTENDED THE LEARNED AR. IT IS THEREAFTER, UP TO THE DEVELOPER TO EITHER UND ERTAKE TO CONSTRUCT THE RESIDENTIAL UNITS ALSO THEREON OR SELL THE DEVELOPED HOUSING SI TES/ PLOTS AS IT IS FOR CONSTRUCTION BY THE BUYER, ACCORDING TO HIS INDIVIDUAL REQUIREME NT/ NEEDS AND THE FINANCIAL CAPACITY. THE CRITICAL PART OF THE DEVELOPMENT/ CON STRUCTION OF A RESIDENTIAL COLONY, HOWEVER, ARE CREATION OF THE BASIC INFRASTR UCTURE FACILITIES, SO AS TO MAKE ANY PLOT OF LAND FIT FOR HOUSING A RESIDENTIAL COLO NY. (VIII) THE INTENTION OF THE LEGISLATURE WAS TO GIVE FILLIP TO THE HOUSING DEVELOPMENT. REFERENCE, IN THIS REGARD, MAY ALSO BE MADE TO NATIONAL URBAN HOUSING AND HABITAT POLICY-2005 ISSUED BY THE MINISTRY OF HOUSI NG AND URBAN POVERTY ALLEVIATION, GOVERNMENT OF INDIA . DEDUCTION UNDER SECTION 80IB(10) HAS BEEN PROVIDED IN ORDER TO PROMOTE THE HOUSING POLICY OF THE GOVERNMENT, WHICH NOT ONLY AIMS AT CONSTRUCTION OF THE DWELLING UNITS BUT PROVIDING WELL PLANNED HOUSING SCHEMES WITH ADEQUATE INFRASTRUCTURE FACILI TIES AS UNDER: (I) CREATION OF ADEQUATE HOUSING STOCK BOTH ON REN TAL AND OWNERSHIP BASIS. (II) FACILITATING ACCELERATED SUPPLY OF SERVICED LA ND AND HOUSING WITH PARTICULAR FOCUS TO EWS AND LIG CATEGORIES AND TAKI NG INTO ACCOUNT THE NEED FOR DEVELOPMENT OF SUPPORTING INFRASTRUCTURE A ND BASIC SERVICES TO ALL CATEGORIES. (III) FACILITATE UPGRADATION OF INFRASTRUCTURE OF TOWNS AND CITIES AND TO MAKE THESE COMPARABLE TO THE NEEDS OF THE TIMES. (IV) ENSURING THAT ALL DWELLING UNITS HAVE EASY AC CESSIBILITY TO BASIC SANITATION FACILITIES AND DRINKING WATER. 42 DEVELOPMENT OF THE HOUSING PROJECT CONSISTING OF RE SIDENTIAL PLOTS, AS DONE BY THE APPELLANT, IT IS RESPECTFULLY SUBMITTED, ALSO ACHIE VES THE AFORESAID OBJECTIVE INASMUCH AS THE SAME RESULTS IN DEVELOPMENT OF HOUS ING SITES LEADING TO DEVELOPMENT OF STATES AND TOWNS. (IX) LOWER AUTHORITIES FAILED TO APPRECIATE THAT PROVISI ON IN A TAXING STATUTE GRANTING INCENTIVE FOR PROMOTING GROWTH AND DEVELOPMENT SHOU LD BE CONSTRUED LIBERALLY AND ANY RESTRICTION ON IT TOO HAS TO BE SO CONSTRUE D SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO FRUSTRATE IT [REFER BAJ AJ TEMPO LIMITED V. CIT 196 ITR 188 (SC), P.R. PRABHAKAR V. CIT: 284 ITR 548 (SC)]. 13.2 WITHOUT PREJUDICE TO THE AFORESAID SUBMISSIONS , THE LEARNED AR SUBMITTED THAT ONE OF THE ASSESSEES SUBSIDIARY COMPANIES, M/S NAV RATAN TECHBUILD (P) LTD HAD ALSO CLAIMED DEDUCTION IN RESPECT OF ITS PROJECT U/S 80I B(10) CONSISTING OF MAINLY HOUSING SITES. DEDUCTION IN THAT CASE WAS ALSO DISALLOWED B Y THE ASSESSING OFFICER. APPEAL WAS PREFERRED BY THE ASSESSEE AGAINST THE ORDER. THE LEARNED CIT(A), VIDE ORDER DATED 01.08.2012, DISMISSED THE APPEAL FILED BY THE APPEL LANT AND HELD THAT DEDUCTION WAS NOT ADMISSIBLE QUA PROFITS DERIVED FROM SALE OF DEVELOP ED PLOTS. THE LEARNED CIT(A), DESPITE OBSERVING THAT THE DIRECTOR OF TOWN AND COUNTRY PLA NNING (IN SHORT DTCP) HAD ACCORDED APPROVAL FOR DEVELOPMENT OF RESIDENTIAL C OLONY, HELD THAT DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ADMISSIBLE ONLY FOR PROFIT DERIVED FROM DEVELOPMENT OF THOSE RESIDENTIAL COLONIES WHERE HOUSES ARE ALSO BU ILT BY THE DEVELOPER. 13.3 ON FURTHER APPEAL, THE TRIBUNAL VIDE ORDER DAT ED 30.07.2013 AFFIRMED THE ORDER PASSED BY THE LEARNED CIT(A). IT IS OF UTMOST IMPOR TANCE TO NOTE THAT THE TRIBUNAL, IN PARA 8 AGREED THAT THE APPROVAL HAD BEEN GRANTED FOR DEV ELOPMENT OF HOUSING PROJECT. STILL, 43 HOWEVER, THE TRIBUNAL HELD THAT DEDUCTION WAS NOT A DMISSIBLE IN RESPECT OF PROFIT ON SALE OF DEVELOPED PLOTS AS CONSTRUCTION OF RESIDENTIAL U NITS THEREON IS MUST FOR CLAIM OF DEDUCTION. 13.4 AGAINST THE AFORESAID ORDER OF THE TRIBUNAL, T HE ASSESSEE HAD FILED APPEAL UNDER SECTION 260A OF THE ACT BEFORE THE HONBLE HIGH COU RT OF MADHYA PRADESH. THE HONBLE HIGH COURT, HOWEVER, VIDE ORDER DATED 27.01.2014 DI SMISSED THE APPEAL PREFERRED BY THE ASSESSEE IN LIMINE, WITHOUT EVEN ADMITTING AND CONS IDERING/ ADJUDICATING THE SUBSTANTIAL QUESTIONS OF LAW RAISED BY THE ASSESSEE AND ARISING IN THE APPEAL. THE HONBLE HIGH COURT HELD THAT THE GRANT OF PERMISSION WITH RESPECT TO T HE AFORESAID PROJECT WHICH WOULD HAVE MADE THE ASSESSEE ELIGIBLE FOR EXEMPTION, REQUIRES NOT ONLY DEVELOPMENT OF THE RESIDENTIAL PLOTS, BUT ALSO CONSTRUCTION OF THE PLO TS, WHICH WAS ADMITTEDLY NOT DONE. ACCORDINGLY, IN THE OPINION OF THE HONBLE HIGH COU RT CONSTRUCTION OF RESIDENTIAL PLOTS OR CONSTRUCTION OF SOME PLOTS IN LATER YEARS WOULD NOT QUALIFY THE ASSESSEE FOR EXEMPTION. THE HONBLE COURT FURTHER OBSERVED THAT THE LEGAL I SSUES WERE CLEARLY UNDERSTOOD BY THE TRIBUNAL AND IT IS NOT A CASE WHERE ANY INTERPRETAT ION OF LAW WAS REQUIRED BY THE HIGH COURT. ACCORDINGLY, THE HONBLE HIGH COURT PROCEEDE D TO DISMISS THE APPEAL FILED BY THE APPELLANT HOLDING THAT NO SUBSTANTIAL QUESTION OF L AW WAS INVOLVED. 13.5 THE LEARNED AR FAIRLY INFERRED THAT REVIEW PET ITION FILED BY THE APPELLANT WAS ALSO DISMISSED BY THE HONBLE HIGH COURT VIDE ORDER DATED 14.03.2014. 14. THE LEARNED CIT(DR) ON THE OTHER HAND PLACED RE LIANCE ON THE ORDERS OF THE AUTHORITIES BELOW ON THE ABOVE ISSUES. 44 15. CONSIDERING THE ABOVE SUBMISSION, WE FULLY CONC UR WITH THE ORDERS OF THE AUTHORITIES BELOW THAT DEDUCTION UNDER SEC. 80I B(10) OF THE ACT IN RESPECT OF PROFITS DERIVED FROM THE HOUSING PROJECT CONSISTING OF UNBUILT HOUSING SITES CANNOT BE ALLOWED. WE ALSO DO NOT FI ND REASON TO AGREE WITH THE CONTENTION OF THE LEARNED AR THAT ACTIVITY OF M ERE DEVELOPING HOUSING SITE ALONG WITH CONSTRUCTION OF ALL INFRA-STRUCTURA L FACILITY AND AMENITIES WITH UNBUILT RESIDENTIAL UNIT IS DEVELOPMENT AND CONSTRU CTION OF HOUSING PROJECT AND PROFIT ASSIGNING OUT OF ITS SALE IS ELIGIBLE FO R THE DEDUCTION UNDER SEC. 18IB(10) OF THE ACT. THE RELEVANT PROVISION OF SEC. 80IB(10) CONDITIONS (A) AND (C) THERETO ARE BEING REPRODUCED HEREUNDER: SECTION 80IB(10) : 10. THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH, 2008 BY A LOCAL AUTHORITY SHALL BE HUNDRE D PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO AN Y ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE IST DAY OF OCTOBER, 1998 AND COMPLETES SU CH CONSTRUCTION, - X X X X X X X X 45 X X X X X X X X (B) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 15.1 IN THIS REGARD, WE ALSO FIND SUPPORT FROM THE ABOVE CITED DECISION OF THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE O F NAVRATTAN TECHBUILD (P) LTD. (SUPRA). IN RESULT, GROUND NO.1 OF THE APP EAL PREFERRED BY THE ASSESSEE IS REJECTED AND GROUND NO.2 QUESTIONING TH E CHARGING OF INTEREST UNDER SEC. 234B ON THE REVISED INCOME OF THE ASSESS EE IS CONSEQUENTIAL IN NATURE, HENCE, DOES NOT NEED INDEPENDENT ADJUDICATI ON. 16. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMI SSED. 17. THE REVENUE IN THE CASE OF OMAXE BUILDHOME (P) LTD. IN ITS APPEAL BEARING ITA NO. 4031/DEL/2013 FOR THE ASSESSMENT YEAR 2008-09 H AS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING 46 DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS.24,92,55,574 IN RESPECT OF PROFITS DERIVED FROM GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMAXE GRAND WOODS, SEC. 93B, NOIDA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMAXE GRAND WOODS, SEC. 93B, NOIDA CONSTITUTES A SEPARATE HOUSING PROJECT DESPITE A SINGLE APPROVAL BY THE COMPETENT AUTHORITY IN RESPECT OF GROUP HOUSING SCHEMES GH-01, GH-02 & GH-03. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS.16,82,15,090 IN RESPECT OF PROFITS DERIVED FROM 24 TOWERS IN PROJECT OMAXE PALMS, GREENS, SEC. MU, GR. NOIDA WHERE EACH RESIDENTIAL UNIT IS HAVING CONSTRUCTED AREA LESS THAN 1500 SQ. FT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE 24 TOWERS IN PROJECT OMAXE PALMS GREENS, SEC. MU, GR. NOIDA WHERE EACH RESIDENTIAL UNIT IS HAVING CONSTRUCTED AREA LESS THAN 1500 SQ. FT. ARE SEPARAT E HOUSING PROJECT DESPITE A SINGLE APPROVAL BY THE COMPETENT AUTHORITY FOR THE ENTIRE PROJECT. 47 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE COMMERCIAL AREA OF 4004.24 SQ. METER IN PROJECT OMAXE PALMS GREENS, SEC. MU, GR. NOIDA WHCH IS MORE THAN THE LIMIT PRESCRIBED UNDER SEC. 80IB(10) OF THE INCOME-TAX ACT, 1961 AND ITS TRANSFER TO OTHER GROUP COMPANIES IS NOT MATERIAL FOR EXAMINING THE ALLOWABILITY OF DEDUCTION U/S. 80IB(10) OF THE INCO ME- TAX ACT, 1961. THE ORDER OF THE LEARNED CIT(APPEALS) IS ER RONEOUS AND IS NOT TENABLE ON FACT S AND IN LAW. 18. THE FACTS OF THE CASE ARE THAT THE ASSESSING OF FICER HAD DENIED THE DEDUCTION OF RS.47,74,70,664 CLAIMED BY THE ASSESSEE IN RESPECT OF THE FOLLOWING HOUSING PROJECT UNDER SEC. 80IB(10) OF THE ACT: NAME OF THE PROJECT AMOUNT (RS.) OMAXE GRANDWOODS, SECTOR 93B, NOIDA. 24,92,55,574 OMAXE PALM GREENS SECTOR MU, GREATER NOIDA 16,82,15 ,090 TOTAL 41 ,74,70,664 18.1 THE ASSESSING OFFICER DENIED DEDUCTION IN RESP ECT OF THE GROUP HOUSING PROJECT OMAXE GRANDWOODS, SECTOR-93B, NOIDA, HOLDING THAT THE CONDITION HAS SPECIFIED IN CLAUSE (C) OF THE SECTION 80IB(10) IS NOT SATISFIED . HE DID NOT AGREE WITH THE ASSESSEE THAT 48 PLOT NO. GH-03 FORMS AND INDEPENDENT, DISTINCT AND SEPARATE PROJECT WHICH SATISFIED ALL THE CONDITIONS LAID DOWN IN SECTION 80IB(10) OF THE ACT ON STANDALONE BASIS. THE ASSESSING OFFICER WAS OF THE VIEW THAT PROPORTIONAT E DEDUCTION CANNOT BE ALLOWED UNDER SEC. 80IB(10) OF THE ACT. THE LEARNED CIT(APPEALS) HAS ALLOWED THE CLAIMED DEDUCTION ON PROPORTIONATE BASIS ON THE RESIDENTIAL UNITS NOT EXCEEDING THE PRESCRIBED AREA. THE REVENUE HAS QUESTIONED THIS ACTION OF THE LEARNED C IT(APPEALS) IN GROUND NOS. 1 AND 2 BEFORE THE ITAT. 18.2 THE ASSESSING OFFICER ALSO DENIED THE DEDUCTIO N CLAIMED BY THE ASSESSEE UNDER SEC. 80IB(10) OF THE ACT IN RESPECT OF GROUP HOUSIN G PROJECT OMAXE PALM GREENS, SECTOR-MU, GREATER NOIDA HOLDING THAT THE CONDITION S SPECIFIED IN CLAUSES (C) AND (D) OF SECTION 80IB(10) ARE NOT SATISFIED. THE CONTENTION OF THE ASSESSEE WAS THAT WHILE DENYING THE CLAIMED DEDUCTION, THE ASSESSING OFFICER ERRED IN NOT CONSIDERING THE AMENDED LAW FOR THE PURPOSE OF APPLYING THE LIMIT AS SPECIFIED IN CONDITIONS (D) OF SEC. 80IB(10); THE PLOT AREA APPROVED FOR COMMERCIAL WHILE APPLYING TH E LIMIT AS SPECIFIED IN CLAUSE (D) OF SEC. 80IB(10) INSTEAD OF ACTUAL BUILT UP AREA OF SH OPS AND OTHER COMMERCIAL ESTABLISHMENTS; AND THE FACT THAT BLOCKS/POCKETS CO NSISTING OF RESIDENTIAL UNIT HAVING A BUILT-UP AREA WITHIN THE LIMIT PRESCRIBED UNDER SEC . 80IB(10) FORMS AN INDEPENDENT, DISTINCT AND SEPARATE PROJECT WHICH SATISFIES ALL T HE CONDITIONS LAID DOWN IN SEC. 80IB(10) OF THE ACT ON STANDALONE BASIS. THE ASSESSING OFFIC ER ALSO HELD THAT PROPORTIONATE DEDUCTION CANNOT BE ALLOWED UNDER SEC. 80IB(10) OF THE ACT. THE LEARNED CIT(APPEALS) HAS ALLOWED THE CLAIMED DEDUCTION ON THOSE RESIDENT IAL UNITS COMPLYING THE CONDITIONS LAID DOWN UNDER SEC. 80IB(10) OF THE ACT ON STANDAL ONE AND PROPORTIONATE BASIS, WHICH 49 HAS BEEN QUESTIONED BY THE REVENUE BEFORE THE ITAT VIDE GROUND NOS. 3 TO 5 OF THE APPEAL. 19. THE PARTIES HAVE ADOPTED SIMILAR ARGUMENTS ON T HE ISSUES RAISED IN THE GROUNDS OF THE APPEAL AS THEY HAVE ADVANCED ON IDENTICAL ISSUE S HEREINABOVE IN THE APPEAL OF THE DEPARTMENT IN THE CASE OF OMAXE LTD. FOR THE ASSESS MENT YEAR 2008-09. 20. WE FIRSTLY TAKE UP GROUND NOS. 1 AND 2 OF THE A PPEAL PREFERRED BY THE REVENUE TOGETHER WHICH IS REGARDING ALLOWABILITY OF DEDUCTI ON UNDER SEC. 80IB(10) OF THE ACT IN RESPECT OF PROFIT DERIVED FROM GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMEXE GRAND WOODS, SECTOR 93B, NOIDA AND AS TO WHET HER THE GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMEXE GRANDWOOD, SECTOR -93, NOIDA CONSTITUTES A SEPARATE HOUSING PROJECT DESPITE A SINGLE APPROVAL BY THE CO MPETENT AUTHORITY IN RESPECT OF GROUP HOUSING SCHEME GH-01, GH-02 AND GH-03. 20.1 WE HAVE ALREADY DISCUSSED THE RELATED FACTS IN THE PRECEDING PARAGRAPHS AND THE RESPECTIVE SUBMISSIONS OF THE PARTIES WITH CITED DE CISIONS. IN NUT SHELL, THE ASSESSEE DEVELOPED HOUSING PROJECT OMEXE GREENWOOD IN SECT OR 93B CONSISTING OF 33 TOWERS (T-1 TO T-33) UNDER THREE GROUP HOUSING SCHEMES GH- 01, GH-02 AND GH-03. TOWER T-1 TO T-12 (12 TOWERS) IN ORIGINAL PLAN WHICH WAS REVI SED TO 11 (T-1 TO T-11) ARE NAMED AS GH-03 HAVING EACH FLAT (HOUSING UNITS) LESS THAN 10 00 SQ. FTS. OTHER TOWERS T-13 TO T-33 (21) WHICH WAS REVISED TO 14 TOWERS T-12 TO T-25 AR E UNDER GROUP HOUSING SCHEMES 01 AND 02 NAMELY GH-01 AND GH-02, HAVING BIGGER FLATS. THE ASSESSEE COMPANY HAD 50 MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR GH-01, GH -02 AND GH-03 CLAIMED DEDUCTION UNDER SEC. 80IB IN RESPECT OF PROFITS DERIVED FROM GH-03. THESE ARE UNDISPUTED FACTS BY THE ASSESSING OFFICER. 20.2 THE OBJECTION OF THE ASSESSING OFFICER AGAINST THE CLAIMED DEDUCTION OF THE ASSESSEE RELATING TO PROFIT DERIVED FROM GROUP HOUS ING SCHEME GH-03 REMAINED THAT ENTIRE PROJECT, NAMELY, OMEXE GREENWOOD CONSISTING OF 33 TOWERS IS A SINGLE HOUSING PROJECT AND IN TOWERS-13 TO T-33, BUILT UP AREA OF EACH RESIDENTIAL UNIT IS MORE THAN 100- SQ. FTS., THEREFORE, CONDITION (C) OF SECTION 80IB( 10) IS NOT FULFILLED. THIS OBJECTION OF THE ASSESSING OFFICER WAS BASED ON HIS LOGIC THAT SINGL E APPROVAL BY THE COMPETENT AUTHORITY HAS BEEN GIVEN. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD REMAINED THAT THE APPROVAL RECOGNIZES SEPARATE GROUP HOUSING SCHEMES, NAMELY, GH-01, GH-01 AND GH-03 AND IN SUPPORT, MASTER PLAN, ALLOTMENT OF NOIDA DATED 03.1 0.2006 WERE FURNISHED. THE LEARNED CIT(APPEALS) MEETING OUT THE OBJECTIONS RAISED BY T HE ASSESSING OFFICER AND THOSE EXPLAINED BY THE ASSESSEE HAS COME TO THE FOLLOWING FINDINGS: 4.8 FINDINGS : I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN S UBMISSION AND ARGUMENTS OF LD. AR. THE ASSESSING OFFICER'S MAIN BASIS OF DISALLOWING D EDUCTION U/S 80IB (10) IS THE NON FULFILMENT OF CONDITION (C) OF SECTION 8 01B (L0) WHICH IS BASICALLY THAT EACH RESIDENTIAL UNIT SHOULD HAVE BUILT AREA OF LES S THAN 1000 SQ. FT. IN THE HOUSING PROJECT AS THE PROJECT IS WITHIN 25 KMS FROM DELHI. THE APPELLANT HAS DEVELOPED HOUSING PROJECT 'OMAXE GREEN WOOD' IN SEC 93B CONSISTING OF33 TOWERS (T-L TO T-33) UNDER THRE E GROUP HOUSING SCHEME GH- OL, OH-02 & GH-03. TOWER T-L TO T-12 (12 TOWERS) IN ORIGINAL PLAN WHICH WAS REVISED TO 11 (T-L TO T -11) ARE NAMED AS G H -03 H AVING EACH FLAT (HOUSING UNITS) 51 LESS THAN 1000 SQ. FT. OTHER TOWERS T-L3 TO T-33(21 ) WHICH WAS REVISED TO 14 TOWERS T-12 TO T-25 ARE UNDER GROUP HOUSING SCHEME 01 & 02 NAMELY GH-O 1 & GH-02, HAVING BIGGER FLATS. THE APPELLANT COMPANY HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR GH-OL, GH-02 & OH-03 CLAIMED DEDUCTION ULS. 80IB IN RESPECT OF PROFIT DERIVED FROM GH-03. THESE FACTS A RE NOT DISPUTED BY THE ASSESSING OFFICER. THE BASIC ISSUED RAISED BY THE ASSESSING OFFICER IS THAT ENTIRE PROJECTS NAMELY 'OMAXE GREENWOOD' CONSISTING OF 33 TOWERS IS A SINGLE HOUSING PROJECTS & IN TOWERS 13 TO 33 BUILT UP AREA OF EACH RESIDENT IAL UNIT IS MORE THAN 1000 SQ. FT. THEREFORE, CONDITION( C) OF SECTION 80IB IS NOT FUL FILLED. HE HAS SUPPORTED HIS LOGIC ON THE BASIS OF SINGLE APPROVAL BY THE COMPET ENT AUTHORITY. I HAVE PERUSED THE ALLOTMENT OF NOIDA DATED 03-10-2 006 IN FAVOUR OF THE APPELLANT COMPANY WHICH IS PART OF THE PAPER BOOK. SUBJECT OF THIS LETTER IS ' ALLOTMENT OF GROUP HOUSING PLOT NO. OH-OI, 02, 03 S ECTOR 93B UNDER GROUP HOUSING SCHEME GH 2006(4)'. THIS LETTER IS BASICALLY APPROVAL OF THE LOCAL AUTH ORITY. THAT BEING THE CASE, THIS APPROVAL RECOGNIZES SEPARATE GROUP HOUSING SCH EMES NAMELY GH-OI, GH-02 & OH-03. LD. AR HAS DRAWN MY ATTENTION TO THE MASTE R PLAN WHICH REVEALS THAT THERE IS SEPARATE IDENTIFIABLE PLOT FOR GROUP HOUSI NG GH-OI, GH-02 & OH-03 SEPARATED BY ROAD. EACH GROUP HOUSING SCHEME HAS IT S OWN GREEN FIELD & OTHER SEPARATE AMENITIES. SECTION PLAN FOR 2 BED ROOM & B IGGER FLATS FOR DIFFERENT GROUP HOUSING SCHEMES ARE DIFFERENT & APPROVED SEPARATELY . LD. AR HAS PROVIDED LIST OF AMENITIES FOR EACH HOUSING SCHEME AS MENTIONED IN E ARLIER PARAGRAPH. SUBSEQUENTLY, DURING APPELLATE PROCEEDING THE LD. A R HAS SUBMITTED FRESH EVIDENCE IN FORM OF LETTER FROM NOIDA TOWERS OF GH- 03 WAS CONSTRUCTED ON SEPARATE PIECE OF LAND. THIS IS EVIDENT FROM MASTER PLAN ITSELF THAT OH-O 1, GH- 02 & GH-03 ARE ON SEPARATE PIECES OF LAND. 52 ON THE BASIS OF ABOVE FACTS, WHETHER GH-03 CAN BE S AID AS SEPARATE HOUSING PROJECT AS ENVISAGED IN SECTION 80IB (L0), AND CONDITIONS CONTAINED IN SECTION 80IB HAVE TO SATISFIED SEPARATELY FOR THIS PROJECT. IT MAY BE MENTIONED HERE THAT THE LOCAL AUTHORITY A T THE TIME OF ALLOTMENT OF LAND HAS ALREADY ENVISAGED THREE TYPES OF HOUSIN G SCHEMES, GH-01, GH-02 & GH-03 ON VAST AREA OF LAND ADMEASURING 119020.12 SQ UARE METERS (29.41 ACRES) OUT OF WHICH LAND MEASURING 8.4 ACRES IS RELATABLE TO GH-03. THEREFORE, LOCAL AUTHORITY HAS GIVEN A CONSOLIDATED ALLOTMENT ORDER 3 SEPARATE HOUSING SCHEMES NAMELY GH-OL, GH-02 & GH- 03 HAVING DIFFERENT FEATU RES. LD. AR ARGUED THAT ACCORDINGLY ALL THREE GROUP HOUSING SCHEME IS SEPAR ATE ENTITIES HAVING BEEN APPROVED IN COMMON APPROVAL. COMMON APPROVAL IN NO WAY DILUTES THE INDEPENDENT HOUSING SCHEMES AS DEMARCATED IN APPROV ED PLAN & INDEPENDENT FACILITIES. NOW I WILL CONSIDER VARIOUS JUDICIAL PRONOUNCEMENT RELIED UPON THE LD. AR & THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS RELIED UPON THE DECISION OF HEN' ABLE ITA T CHENNAI, IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. & CHITRA CONSTRUCTION PVT. LTD. CITED SUPRA WHERE IT HAS BEEN HELD THAT IF THE RE IS VIOLATION OF ANY RESIDENTIAL UNIT HAVING CONSTRUCTED AREA MORE THAN 1000 SQ. FT. OR 1500 SQ. AS APPLICABLE, THE CONDITIONS CONTAINED IN SECTION 80IB ARE NOT FULFIL LED. LD. AR ARGUED THAT HON'BLE CHENNAI HIGH COURT IN CASE OF VISHWAS PROMOTERS PVT . LTD. CITED SUPRA HAS REVERSED THE DECISION OF HON'BLE ITAT, CHENNAI. THE RELEVANT PORTION OF JUDGEMENT IS REPRODUCED AS UNDER :- 11. IT IS AN ADMITTED FACT THAT EACH ONE OF BLOCKS HAD SEPARATE SANCTION FROM THE COMPETENT AUTHORITY. EVEN THOUGH THE LARGE R AREA COMPRISED IN THE NAME AND STYLE OF 'AGRINI'' AND VAJRA' IS STATED TO BE T HE MASTER PLAN OF THE PROJECT, IT IS NOT DENIED BY THE REVENUE THAT EACH BLOCK IN EACH O F THE PROJECTS HAS ITS OWN SPECIFICATION; HENCE HAD GONE FOR PLANNING APPROVAL BY THE COMPETENT PLANNING AUTHORITY. IN THE BACKGROUND OF THIS, THE QUESTION THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE ASSESSEE WOULD LOSE ITS CLAIM FOR DE DUCTION IN RESPECT OF THOSE 53 BLOCKS WHICH SATISFIED THE CONDITIONS UNDER SECTION BOIB (] 0) OF THE ACT BY REASON OF SOME OF THE STOCKS NOT SATISFYING THE CON DITION UNDER SECTION BOIB (10) OF THE ACT. 14. ON THE FACTS ADMITTED BY THE REVENUE IN THE PRO JECTS 'AGRINI' AND 'VAJRA' THERE ARE NUMBER OF FLATS WHICH ARE BELOW 1 500 SQ. FT. AND THE RELEVANT BUILT-UP AREA REQUIREMENT IS SPECIFIED UNDER SECTIO N BOIB (IO)(C) OF THE INCOME TAX ACT. THUS, THE BUILT-UP AREA IN SOME OF THE FLA TS IN BOTH THESE PROJECTS ARE IN EXCESS OF 1500 SQ. FT., I. E., 32 FLATS IN AGRINI A ND ONLY ONE FLAT IN VAJRA AND THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION ON THIS. WE HOLD THAT THE TRIBUNAL IS NOT CORRECT IN ITS VIEW, THAT BY REASON OF THESE UN ITS BEING IN EXCESS OF 1500 SQ. FT., THE ENTIRE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TWO PROJECTS WOULD STAND REJECTED UNDER SECTION 80LB (10) OF THE INCOME TAX ACT. THUS, GOING BY THE DEFINITION OF 'HOUSING PROJECT' UNDER EXPLANATION T O SECTION 80HHBA OF THE ACT AS REFERRED TO ABOVE AS THE CONSTRUCTION OF 'ANY BU ILDING' AND THE WORDINGS IN SECTION 80LB (10) OF THE ACT, THE QUESTION OF REJEC TION IN ENTIRETY OF THE PROJECT ON ACCOUNT OF ANYONE OF THE BLOCKS NOT COMPLYING WITH THE CONDITIONS, DOES NOT ARISE. EVEN IN THE CASE OF EACH ONE OF THE BLOCKS, WHEREVE R THERE ARE FLATS WHICH SATISFIED THE CONDITIONS PARTICULARLY OF THE NATURE STATED UN DER SECTION 80LB (LO)(C) OF THE ACT, WE HAVE ALREADY UPHELD THE CASE OF THE ASSESSE E IN TIC, NOS. 1348 AND 1349 OF2007 DATED 10-10-2012 FOR GRANT OF RELIEF UNDER S ECTION 80LB (10) OF THE ACT ON A PROPORTIONATE BASIS, BY FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. BRAHMA ASSOCIATES [20LL} 333 1TR 2891197 TAXMAN 459/9 TAXMANN.COM 289. THUS APPLYING THE DECISION OF THIS COURT IN 'LC. NO S. 1348 AND 1349 OF2007 DATED 10-10-2012, WE HOLD THAT THE ASSESSEE IS ENTITLED T O SUCCEED BOTH ON THE PRINCIPLE OF PROPORTIONALITY AS WELL AS BY REASON OF THE CONS TRUCTION ON THE MEANING OF THE EXPRESSION 'HOUSING PROJECT' AS REFERRING TO CONSTR UCTION OF ANY BUILDING AND THE WORDINGS IN SECTION 80LB (10) OF THE ACT. IN THE CI RCUMSTANCES, WE HOLD THAT THE MERE FACT THAT ONE OF THE BLOCKS HAVE UNITS EXCEEDI NG BUILT-UP AREA OF 1500 SQ. FT. PER SE, WOULD NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECTS. CONSEQUENTLY, IN RESPECT OF EACH OF THE B LOCKS, THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTION IN RESPECT OF RESIDEN TIAL UNITS SATISFYING THE 54 REQUIREMENT UNDER SECTION 80LB (LO)(C) OF THE ACT. IN SO HOLDING, WE ALSO AGREE WITH THE DECISION OF THE BOMBAY HIGH COURT IN CIT V . VANDANA PROPERTIES [2012} 206 TAXMAN 584/ 19 TAXMANN. CORN 316, WHICH WAS DEC IDED BY THE BOMBAY HIGH COURT ON SIMILAR LINES AS IN THE ASSESSEE'S CASE BE FORE US. A PERUSAL OF ABOVE JUDGMENT, IT CLEARLY REVEALS THA T HON'BLE HIGH COURT HAS TAKEN AND INTERPRETED THE DEFINITION OF HOUSING PROJECT U/S 80HHA TO ARRIVED AT THE CONCEPT OF COMPOSITE HOUSING PROJECT WHICH H AS ELIGIBLE & INELIGIBLE UNITS IN THE PROJECT FOR THE PURPOSE OF SECTION 80IB (10) FOR ELIGIBLE UNITS ON PROPORTION BASIS. THE ASSESSING OFFICER HAS RELIED ON THE JUDGEMENT O F HON'BLE MUMBAI HIGH COURT IN THE CASE BRAHMA ASSOCIATES (CITIED SU PRA). LD. AR ARGUED THAT THE SAID JUDGMENT WAS DELIVERED IN THE CONTEXT OF COMME RCIAL AREA & ARGUED THAT THE SAID JUDGMENT HAS BEEN CONSIDERED BY HON'BLE MADARA S HIGH COURT IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. AND AFTER ANALYZING THE JUDGEMENT OF MUMBAI HIGH COURT, MADRAS HIGH COURT HAS DELIVERED THE JUDGEMEN T. LD. AR FURTHER ARGUED THAT ON PROPORTIONAL DEDUCTIO N OF ELIGIBLE HOUSING PROJECTS U/S 80LB (10) THE KOLKATA HIGH COURT HAS C ONCURRED THE VIEW BY NOT INTERFERING THE JUDGMENT OF KOLKATA TRIBUNAL ON THI S ISSUE IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO. 453 OF20 06. LD. AR FURTHER HAS RELIED ON NUMEROUS DECISIONS OF HEN' ABLE IT A T IN ASSESSEE'S FAVOUR HOLDING THAT PRORATA DEDUCTION IS AVAILABLE WITH RESPECT TO RESIDENTIAL UNIT WHICH SATISFIES THE REQUIREMENT OF MAXIMUM CONSTRUCTED AREA WHERE THE OTHER RESIDENTIAL UNITS VIOLATES THE MAXI MUM BUILT UP AREA THAT THE APPELLANT'S CASE IS ON MUCH BETTER FOOTINGS WHERE T HESE ELIGIBLE RESIDENTIAL HOUSES ARE IDENTIFIABLE CLUSTER OF TOWERS, HAVING SEPARATE IDENTIFIED LAND & VARIOUS FACILITIES. THESE RESIDENTIAL TOWERS DO NOT CONTAIN EVEN A SINGLE RESIDENTIAL UNIT WHICH VIOLATES THE MAXIMUM CONSTRUCTED AREA NORM. FURTHER, LD. AR HAS ARGUED THE FINDINGS OF SURVEYS NARRATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN NO WAY NEGATES THE CLAIM OF DEDUCTION U/S 80IB (10). THESE CORRESPONDENCES ARE TAX PLANNI NG TO STRENGTHEN THE 55 DEDUCTION U/S 80IB, WHICH EACH ASSESSEE IS ENTITLED TO DO. THERE IS NO MANIPULATION OF FACTS TO FULFILL THE CONDITION SECT ION 80IB (L0). CONSIDERING THE ENTIRE FACTS OF THE CASE & JUDICIA L PRONOUNCEMENT, I AM OF THE OPINION THAT PROFIT DERIVED FROM GROUP HOUSING SCHEME GH-03 IS ELIGIBLE FOR DEDUCTION U/S 80IB(L0) OF LT. ACT AS IT IS A SEPARA TE HOUSING PROJECT SATISFYING THE CONDITION OF SECTION 80IB (L0). ACCORDINGLY I D IRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. THIS GROUND OF APPEAL IS HEREB Y ALLOWED . 20.3 ON PERUSAL OF ORDERS OF THE AUTHORITIES BELOW , WE FIND THAT BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS BEEN ABLE TO MEET OUT THE OBJECTIONS RAISED BY THE ASSESSING OFFICER AGAINST THE CLAIMED DEDUCTION UND ER SEC. 80IB(10) OF THE ACT ON THE PROFITS DERIVED FROM GROUP HOUSING SCHEME GH-03 AND IN COMING TO THE CONCLUSION THAT GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMEX E GRANDWOOD, SECTOR 93B, NOIDA CONSTITUTES A SEPARATE HOUSING PROJECT DESPITE A SI NGLE APPROVAL BY THE COMPETENT AUTHORITY IN RESPECT OF GROUP HOUSING SCHEME GH-01, GH-02 AND GH-03. THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT AS PER MASTER PLAN AND APPROVAL OF THE LOCAL AUTHORITY THAT THOUGH THE ENTIRE PROJECTS OMEXE GREENWOOD CONSIS TING OF 33 TOWERS WAS A SINGLE HOUSING PROJECTS BUT APPROVAL WAS RECOGNIZING SEPAR ATE GROUP HOUSING SCHEMES, NAMELY, GH-01, GH-02 AND GH-03 AND AS PER MASTER PLAN, THER E WAS SEPARATE IDENTIFIABLE PLOTS FOR GROUP HOUSING GH-01, GH-02 AND GH-03 SEPARATED BY ROADS. EACH GROUP HOUSING SCHEME WAS HAVING ITS OWN GREEN FIELD AND OTHER SEP ARATE AMENITIES. SANCTIONED PLAN FOR TWO BED ROOMS AND BIGGER FLATS FOR DIFFERENT HOUSIN G SCHEMES WERE DIFFERENT AND APPROVED SEPARATELY. THE ASSESSEE HAS BEEN ABLE TO SUBMIT A LETTER FROM NOIDA THAT TOWERS OF GH-03 WAS CONSTRUCTED ON SEPARATE PIECE OF LAND WHICH WAS ALSO SUPPORTED BY THE MASTER PLAN ITSELF THAT GH-01, GH-02 AND GH-03 WERE OWN SEPARATE PIECES OF LAND. WE 56 THUS CONCUR WITH THE FINDING OF THE LEARNED CIT(APP EALS) THAT COMMON APPROVAL DOES NOT DILUTE THE INDEPENDENT HOUSING SCHEME AND DEMAR CATED IN APPROVED PLAN AND INDEPENDENT FACILITIES. UNDER THESE CIRCUMSTANCES A ND KEEPING IN VIEW THE DECISION FOLLOWED BY THE LEARNED CIT(APPEALS), WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIMED DEDUCT ION ON PRORATE BASIS AVAILABLE WITH RESPECT TO RESIDENTIAL UNIT WHICH SATISFIED THE REQ UIREMENT OF MAXIMUM CONSTRUCTED AREA. IT HAS NOT BEEN DISPUTED IN THE PRESENT CASE THAT T HESE ELIGIBLE RESIDENTIAL HOUSES WERE IDENTIFIABLE CLUSTER OF TOWERS, HAVING SEPARATE IDE NTIFIED LAND AND VARIOUS FACILITIES. WE THUS DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE AUTHORITY. IN THIS REGARD, THE SAME IS UPHELD. GROUND NOS. 1 AND 2 ARE ACCORDINGLY REJECTED. 21. GROUND NOS. 3 TO 5 : IT IS REGARDING ELIGIBILITY OF DEDUCTION UNDER SE C. 80IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF PROFITS DERI VED FROM 24 TOWERS IN PROJECT OMAXE PALM GREEN, SECTOR- MU, GREATER NOIDA. THE LEARNED CIT(APPEALS) HAS GIVEN RELIEF ACCEPTING THE ALTERNATIVE SUBMISSION OF THE ASSESSE E THAT PROPORTIONATE DEDUCTION UNDER SEC. 80IB(10) SHOULD BE GIVEN IN RESPECT OF THE RES IDENTIAL UNIT HAVING BUILT UP AREA OF LESS THAN 1500 SQ. FTS. THE REVENUE IS THUS IN APPEAL QU ESTIONING THE ACCEPTANCE OF THE CLAIMED DEDUCTION OF RS.16,82,15,090 UNDER SEC. 80I B(10) OF THE ACT. 22. THE LEARNED CIT(DR) HAS PLACED RELIANCE ON THE ASSESSMENT ORDER. HE CONTENDED THAT THE 24 TH TOWER IN PROJECT OMAXE PALM GREENS, SEC. MU, GREAT ER NOIDA HAVING RESIDENTIAL UNIT WITH CONSTRUCTED AREA LESS THAN 15 00 SQ. FTS. ARE NOT SEPARATE HOUSING 57 PROJECT AS A SINGLE APPROVAL BY THE COMPETENT AUTHO RITY HAS BEEN GIVEN FOR THE ENTIRE PROJECT. HE CONTENDED THAT THE LEARNED CIT(APPEALS) WAS ALSO NOT JUSTIFIED IN HOLDING THAT THE COMMERCIAL AREA OF 4004.24 SQ. MTR. IN THE SAID PROJECT MORE THAN THE LIMIT PRESCRIBED UNDER SEC. 80IB(10) OF THE ACT AND ITS T RANSFER TO OTHER GROUP COMPANIES IS NOT MATERIAL FOR EXAMINING THE ALLOWABILITY OF DEDUCTIO N UNDER SEC. 80IB(10) OF THE ACT. 23. THE LEARNED AR ON THE OTHER HAND HAS REITERATED SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW. HE HAS ADOPTED SIMILAR ARGUMENT TO SUPPORT HIS CONTENTION ADVANCED HEREINABOVE AGAINST GROUND NOS. 1 AND 2 THAT PROPORTIONATE DEDUCTION UNDER SEC. 80IB(10) SHOULD BE GIVEN IN RE SPECT OF THE RESIDENTIAL UNITS HAVING BUILT UP AREA OF LESS THAN 1500 SQ. FTS. 23.1 CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THE ASSESSING OFFICER HAD DENIED THE CLAIMED DEDUCTION UNDER SEC. 80IB(10) OF THE AC T TO THE EXTENT OF RS.16,82,15,090 IN THE PROJECT OMAXE PALM GREEN, SECTOR MU, GREATER NOIDA ON THE BASIS THAT CLAIM OF THE ASSESSEE THAT IT HAD CARRIED OUT TWO PROJECTS O N THE PLOT OF LAND AND CANNOT BE ACCEPTED AS THE LEASE DEED DATED 26.3.2007 BETWEEN THE ASSES SEE AND GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY AND THE APPROVED LAY OUT PLAN SHOWS THAT THE AUTHORITY HAS APPROVED ONLY ONE PROJECT. THE ASSESSING OFFICER AL LEGED THAT THE ASSESSEE HAS ARTIFICIALLY DIVIDED THE ENTIRE PROJECT INTO TWO PROJECTS (I) ONE CONSISTING OF FLATS ELIGIBLE FOR DEDUCTION UNDER SEC. 80IB(10) AND THE OTHER CONSIST ING OF BIGGER FLATS HAVING MORE THAN PERMISSIBLE BUILT UP AREA AND NOT ELIGIBLE FOR DEDU CTION UNDER SEC. 80IB(10) AND HAS STATED THAT IT HAS CLAIMED DEDUCTION ONLY IN RESPEC T OF THE FLATS SHOWING BUILT UP AREA OF 58 LESS THAN THE MAXIMUM PERMISSIBLE LIMIT. THE ASSESS ING OFFICER OBSERVED THAT THE LEASE DEED DATED 26.3.2007 BETWEEN GREATER NOIDA INDUSTRI AL DEVELOPMENT AUTHORITY AND THE ASSESSEE IN RESPECT OF THE SAID PLOT IS WITH REFERE NCE TO PROJECT AND NOT PROJECTS. THE ASSESSING OFFICER NOTED FURTHER THAT THE COMMERCIAL AREA INCLUDED IN THE PROJECT IS 404.24 SQ. MTR. WHICH IS MUCH MORE THAN THE PRESCRIBED LIM IT. THE ASSESSEE TRIED TO MEET OUT ALL THE OBJECTIONS. REGARDING APPROVAL OF THE PROJECT O R PROJECTS, THE LEARNED AR ADOPTED SIMILAR ARGUMENTS AS ADVANCED BY HIM IN RELATION TO THE ISSUES RAISED IN GROUND NOS. 1 AND 2 HEREINABOVE. REGARDING THE EXCEEDING COMMERC IAL AREA, IT WAS CONTENDED THAT THE COMMERCIAL AREA WAS A PART OF OTHER PROJECTS WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON THE BASIS THAT THE ENTIRE PROJECTS IS ON LY ONE PROJECT AND THAT THE ASSESSEE IS NOT ENTITLED TO DIVIDE THE PROJECT INTO TWO PARTS AS PE R ITS SWEET WILL. HE HELD THAT THE APPROVED COMMERCIAL AREA IS ON INTEGRAL PART OF THE ENTIRE P ROJECT. MEETING OUT OBJECTIONS RAISED BY THE ASSESSING OFFICER AND EXPLANATION THERETO PROVI DED BY THE ASSESSEE, THE LEARNED CIT(APPEALS) HAS COME TO THE FOLLOWING CONCLUSION V IDE PARA NO. 5.4 OF HIS ORDER: 5.4 FINDINGS : I HAVE CONSIDERED ENTIRE FACTS & CIRCUMSTANCES OF THE CASE. THE ASSESSING OFFICER HAS RAISED TWO OBJECTION FOR SATI SFACTION OF CONDITIONS CONTAINED IN SECTION'8OIB (L0) OF LT. ACT. THE FIRST OBJECTIO N IS NON FULFILMENT OF 46 CLAUSE(C) OF SECTION 80IB (L0) OF I.T. ACT, 1961 TH AT SOME OF THE RESIDENTIAL UNITS DO NOT CONFIRM TO THE REQUIREMENTS OF BUILT UP AREA I.E. 1500 SQ. FT. LD. AR ARGUED THAT THE FACTS ARE SIMILAR TO NOIDA PROJECT I.E. GR AND WOODS, SECTOR 93B, NOIDA. IN THIS PROJECT ALSO FOR NO. OF ELIGIBLE TOWERS ARE 24 WHERE EACH RESIDENTIAL UNIT IS HAVING CONSTRUCTED AREA LESS THAN 1500 SQ. FT. AS P ER THE REQUIREMENT OF CLAUSE (C) OF SECTION 80IB (L0), WHERE AS INELIGIBLE NO. OF TO WERS ARE 11 SPREAD OVER ON 24.174 ACRES & THESE TOWERS ARE SEPARATELY LOCATED AND SEPARATED FROM OTHER TOWERS. HENCE THESE TOWERS TOGETHER IS A SEPARATE H OUSING PROJECTS SPREAD OVER 25.83 ACRES OF LAND & SATISFYING ALL THE CONDITIONS OF SECTION 80IB (L0) 59 SEPARATELY. THOUGH THERE IS A COMMON APPROVAL OF EN TIRE 50 ACRES OF LAND CONSISTING OF ELIGIBLE HOUSING PROJECT ALONG WITH C OMMERCIAL AREA ON 24.174 ACRES OF LAND. BOTH ELIGIBLE & NON ELIGIBLE PROJECTS ARE SEPARATE BY ROAD & HAVE SEPARATE COMMON FACILITIES. LD. AR HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS ON SIMILAR LINES AS IN OMAXE GREEN L AND, SECTOR 93B, NOIDA. I HAVE CONSIDERED ENTIRE FACTS & CIRCUMSTANCES OF THE CASE. PRESENT ELIGIBLE PROJECTS IS SIMILAR TO OMAXE GREEN LAND PROJECT. THEREFORE, I TREAT THE ELIGIBLE PROJECTS AS A SEPARATE HOUSING PROJECT ON SIMILAR LINES OF NOID A PROJECT. SECOND OBJECTION OF THE ASSESSING OFFICER THAT THE COMMERCIAL AREA OF ENTIRE HOUSING SCHEME IS MORE THAN PERMISSIBLE LIMI T AS PER CLAUSE( D) OF SECTION 80IB (L0). LD. AR HAS FIRSTLY ARGUED THAT THE ELIGI BLE PROJECTS IS A SEPARATE HOUSING PROJECTS, THEREFORE, ELIGIBLE FOR DEDUCTION U/S 80I B (L0). ALTERNATIVELY, LD. AR HAS TRIED TO ARGUE THAT THE COMMERCIAL AREA ARE WITHIN THE LIMIT OF AMENDED PERMISSIBLE AREA AS PER CLAUSE (D) OF SECTION 80IB (L0) INTRODUCED BY FINANCE ACT, 2010. LD. AR HAS MADE ARGUED THAT AMENDMENT IN CLAU SE (D) OF SECTION 80IB (L0) IS ONLY CLARIFICATORY AS IT WOULD APPLY TO PROJECT STARTED BEFORE 31-03-2008. I DO NOT AGREE WITH THE LD. AR THAT THE AMENDMENT IN CLA USE (D) IS CLARIFICATORY & THEREFORE WOULD APPLY RETROSPECTIVELY. THIRD ARGUME NT OF LD. AR IS THAT THE COMMERCIAL AREA IS NOT DEVELOPED & RIGHT TO DEVELOP THE SAME IS TRANSFERRED TO OTHER COMPANIES & THE SAID TRANSFER IS DULY INTIMAT ED TO THE LOCAL AUTHORITY. THE TRANSFER IS NOT A WERE BOOK ENTRY AS CLAIMED BY THE ASSESSING OFFICER. IN MY VIEW THIS FACT IS NOT MATERIAL FOR EXAMINING THE ALLOWAB ILITY OF DEDUCTION U/S 80IB (10). HOWEVER AS I HAVE HELD EARLIER THAT THESE ELIGIBLE TOWERS ARE SEPARATE HOUSING PROJECTS, THEREFORE DEDUCTION U/S 80IB (10) IS AVAI LABLE. IN VIEW OF THE ABOVE, I ALLOW DEDUCTION U/S 80IB (L 0) IN RESPECT OF PROFIT OF THE ELIGIBLE HOUSING PROJECTS U/S 80IB (L0). I, ACC ORDINGLY ALLOW THE DEDUCTION U/S 80IB (L0) ON THE PROJECT. AS A RESULT, THIS GRO UND OF APPEAL IS ALLOWED. 23.2 ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BE LOW, WE FIND THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY ACCEPTED THE ELIGIBLE PROJ ECTS AS A SEPARATE HOUSING PROJECT ON 60 SIMILAR LINES OF NOIDA PROJECT ADJUDICATED UPON IN GROUND NOS. 1 AND 2, WHICH WE HAVE DISCUSSED IN DETAIL HEREINABOVE WHILE DEALING WITH THE GROUND NOS. 1 AND 2 WHICH IS ALSO SUPPORTED BY THE DECISIONS OF THE HON'BLE HIGH COUR TS AND DIFFERENT BENCHES OF THE ITAT FOLLOWED THEREIN. THE FINDING OF THE LEARNED CIT(AP PEALS) IN THIS REGARD IS THUS UPHELD. 23.3 SO FAR THE SECOND OBJECTION OF THE ASSESSING O FFICER THAT THE COMMERCIAL AREA OF ENTIRE HOUSING SCHEME IS MORE THAN PERMISSIBLE LIMI T AS PER CLAUSE (D) OF SECTION 80IB(10) IS CONCERNED, THE LEARNED CIT(APPEALS) DID NOT AGREE WITH THE ASSESSEE THAT THE COMMERCIAL AREA ARE WITHIN THE LIMIT OF AMENDED PER MISSIBLE AREA AS PER CLAUSE D OF SECTION 80IB(10) INTRODUCED BY FINANCE ACT, 2010 AS CLARIFICATORY IN NATURE AS IT WOULD APPLY TO THE PROJECT STARTED BEFORE 31.3.2008. WE C ONCUR WITH THIS FINDING OF THE LEARNED CIT(APPEALS) THAT AMENDMENT IN THE SAID CLAUSE (D) IS NOT CLARIFICATORY AND, THEREFORE, IT WOULD NOT APPLY RETROSPECTIVELY. THE LEARNED CIT(AP PEALS) HAS, HOWEVER, HELD THAT THE ELIGIBLE TOWERS ARE SEPARATE HOUSING PROJECTS AND, THEREFORE, DEDUCTION UNDER SEC. 80IB (10) IS AVAILABLE. THE FURTHER CONTENTION OF THE AS SESSEE THAT THE COMMERCIAL AREA IS NOT DEVELOPED AND RIGHT TO DEVELOP THE SAME IS TRANSFER RED TO OTHER COMPANY AND THE SAID TRANSFER IS DULY INTIMATED TO THE LOCAL AUTHORITY A ND THAT A TRANSFER IS NOT A MERE BOOK ENTRY AS CLAIMED BY THE ASSESSING OFFICER WAS KEPT OPEN B Y HIM IN VIEW OF HIS ABOVE FINDINGS AND TREATING THE SAME AS NOT RELEVANT. WE ARE AGRE EABLE TO THIS FINDING OF THE LEARNED CIT(APPEALS) ESPECIALLY WHEN THE ASSESSEE WAS FOUND ELIGIBLE TO CLAIM DEDUCTION UNDER SEC. 80IB(10) OF THE ACT ON THE PROJECTS HAVING RES IDENTIAL UNITS CONSTRUCTED WITHIN THE PRESCRIBED LIMIT OF 1500 SQ. FTS. THE SAME IS UPHEL D. THE GROUND NOS. 3 TO 5 ARE ACCORDINGLY REJECTED. 61 24. IN RESULT, THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED. 25. IN THE APPEALS FOR THE REMAINING ASSESSMENT YEA RS 2007-08 AND 2009- 10 PREFERRED BY THE REVENUE, SIMILAR ISSUES AS RAIS ED IN THE GROUNDS IN THE APPEAL FOR THE ASSESSMENT YEAR 2008-09 HAVE BEEN RA ISED. IN THE ASSESSMENT YEAR 2007-08, IT IS REGARDING ALLOWABILITY OF DEDUC TION UNDER SEC. 80IB(10) CLAIMED ON THE PROFIT ARISING FROM THE PROJECT GH-0 3 HOLDING THE SAME AS SEPARATE HOUSING PROJECT (GROUND NOS. 1 AND 2) AND SECONDLY HOLDING THAT 24- TOWERS IN PROJECT OMAXE PALM GREENS PLOT NO. GH-02 SECTOR MU, GREATER NOIDA HAVING EACH RESIDENTIAL UNIT CONSTRUC TED AREA LESS THAN 1500 SQ. FTS. ARE SEPARATE HOUSING PROJECTS (GROUND NOS. 3 & 4). FOR A READY REFERENCE, THE GROUNDS OF THE APPEAL FOR THE ASSESS MENT YEAR 2007-08 ARE BEING REPRODUCED HEREUNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE PROJECT GH-03 CONSTITUTE A SEPARATE HOUSING PROJECT . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS.29,14,11,809 IN RESPECT OF INCOME ARISING FROM PROJECT GH-03. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE 24 62 TOWERS IN PROJECT OMAXE PALMS GREENS, PLOT NO. GH- 02, SEC.-MU, GR. NOIDA WHERE EACH RESIDENTIAL UNIT IS HAVING CONSTRUCTED AREA LESS THAN 1500 SQ. FT. ARE SEPARATE HOUSING PROJECT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS.41,18,93,907 IN RESPECT OF INCOME ARISING FROM 24 TOWERS IN PROJECT OMAXE PALMS GREENS, PLOT NO. GH-02, SEC. MU, GR. NOIDA WHERE EACH RESIDENTIAL UNIT IS HAVING CONSTRUCTED AREA LE SS THAN 1500 SQ. FT. 26. IN THE APPEAL FOR THE ASSESSMENT YEAR 2009-10, THE REVENUE HAS RAISED ONLY ONE ISSUE I.E. ALLOWABILITY OF DEDUCTION UNDER SEC. 80IB(10) IN RESPECT OF PROFITS DERIVED FROM GROUP HOUSING SCHEME GH-0 3 IN HOUSING PROJECT OMAXE GRANDWOODS, SECTOR 93B, NOIDA HOLDING THAT IT CONSTITUTES A SEPARATE HOUSING PROJECT DESPITE A SINGLE APPROVAL BY THE COMPETENT AUTHORITY IN RESPECT OF GROUP HOUSING SCHEME GH-0 1, GH-02 AND GH-03 (GROUND NOS. 1 AND 2 ). FOR A READY REFERENCE, THES E GROUNDS ARE BEING REPRODUCED HEREUNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ALLOWING 63 DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT AMOUNTING TO RS.15,13,82,537 IN RESPECT OF PROFITS DERIVED FROM GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMAXE GRAND WOODS, SEC. 93B, NOIDA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE GROUP HOUSING SCHEME GH-03 IN HOUSING PROJECT, OMAXE GRAND WOODS, SEC. 93B, NOIDA CONSTITUTES A SEPARATE HOUSING PROJECT DESPITE A SINGLE APPROVAL BY THE COMPETENT AUTHORITY IN RESPECT OF GROUP HOUSING SCHEMES GH-01, GH-02 AND GH-03. 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 27. WE HAVE ALREADY DECIDED THE IDENTICAL ISSUES R AISED IN THE GROUNDS OF THE ABOVE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 HEREINABOVE UNDER SIMILAR SET OF FACTS IN T HE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2008-09. FOLLOWING THE SAME , THESE ISSUES ARE DECIDED AGAINST THE REVENUE BY UPHOLDING THE FIRST APPELLATE ORDER IN THIS REGARD. THE GROUNDS NOS. 1 TO 4 IN THE APPEAL FOR T HE ASSESSMENT YEAR 2007- 08 AND GROUND NO. 1 AND 2 IN THE APPEAL FOR THE ASS ESSMENT YEAR 2009-10 PREFERRED BY THE REVENUE ARE ACCORDINGLY REJECTED. 64 28. IN RESULT, THE APPEALS FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 PREFERRED BY THE REVENUE ARE DISMISSED. 29. IN SUMMARY, APPEALS PREFERRED BY BOTH THE PARTI ES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 .11.2015 SD/- SD/- ( LAXMI PRASHADSAHU ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 /11/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 65 DATE DRAFT DICTATED ON COMPUTER 12.11.2015 DRAFT PLACED BEFORE AUTHOR 12.11.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 12.11.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 19.11.2015 KEPT FOR PRONOUNCEMENT ON 12.11.2015 FILE SENT TO THE BENCH CLERK 20.11.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.