ACIT CIR 3, MUMBAI V. JOHAR HASAN ZOJWALLA, MUMBAI

ITA 5774/MUM/2012

• Counselvise Citation: 577419914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 31-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 17-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOURYA PRATAP
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Section: 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG , JM ./ I.T.A. NO. 5774/MUM/2012 ( ! ! ! ! / / / / ASSESSMENT YEAR:2007-08) DCIT,CIRCLE-3, 2 ND FLOOR, RANI MANSION, MURBAD RAOD, KALYAN(W)-421301, DIST.-THANE / VS. SHRI JOHAR HASAN ZOJWALLA, PROP- M/S SAB REALTY, 1 ST FLOOR, RANI MANSION, MURBAD RAOD, KALYAN(W) '# $ ./ PAN : AAAPZ5650K ( ' / // / REVENUE ) .. ( % & / ASSESSEE ) ' ' ( / REVENUE BY : SHRI MOURYA PRATAP %& ' ( / ASSESSEE BY SHRI SUBODH L. RATNAPARKHI ' &$ / // / DATE OF HEARING : 31/12/2013 )*! ' &$ / DATE OF PRONOUNCEMENT : 10/01/2014 +, / O R D E R PER P.M. JAGTAP, A.M . - ... /&, $ +' : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-1, THANE, DATED 26.06.2012, WHEREBY HE D IRECTED THE AO TO ALLOW PARTLY THE CLAIM OF THE ASSESSEE FOR DEDUCTIO N U/S 80IB(10) ON PROPORTIONATE BASIS. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER IN THE NAM E AND STYLE OF HIS PROPRIETARY CONCERN M/S SAB REALITY. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION ON 31.10.2007, TOTAL I NCOME OF RS.85,14,210/- WAS DECLARED BY THE ASSESSEE AFTER C LAIMING THE DEDUCTION OF RS.3,22,32,223 U/S 80IB(10) OF THE ACT . THE SAID RETURN 2 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA WAS ORIGINALLY ACCEPTED BY THE AO U/S 143(1) THEREB Y ALLOWING CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10). SUBSEQUEN TLY IT WAS NOTICED BY THE AO THAT A SIMILAR CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10) IN RESPECT OF SAME PROJECT WAS EXAMINED IN THE ASSESSMENT FOR A.Y. 2005-06 AND THE SAME WAS HELD TO BE NOT AL LOWABLE FOR THE FOLLOWING REASONS. I. IT HAS BEEN ESTABLISHED DURING THE ASSESSMENT PROCE EDINGS FOR THE A.Y. 2006-07 THAT THE PROJECT OF THE ASSESSEE FOR WHICH DEDUCTION U/S 80IB(10) HAS BEEN CLAIMED WAS NOT COMPLETED BEFORE 31.03.2008. SINCE, ASSESSEES PROJECT HAD COMMENCED BEFORE THE FIRST DAY OF APRIL, 2004 NON-COMPLETION OF THE SAME RENDERED ASSESSEES PROJECT INELIGIBLE FOR CLAIM OF DEDUCTION AS PER SUB CLAUSE (A) OF U/S 80IB (10). II. IT HAS BEEN ESTABLISHED IN ASSESSEES CASE THAT HE HAD CONSTRUCTED HIS PROJECT ON AN AREA OF 3914 SQ. MTS. WHICH IS LESS T HAN ONE ACRE AND WHICH THEREFORE, VIOLATES THE CONDITION OF SUB-CLAU SE (B) OF SEC. 80IB(10). III. THE PROJECT OF THE ASSESSEE CONTAINED TWO BUNGLOWS WHICH HAD BUILT UP AREA OF 2569.81 SQ. FT. EACH. BEING SO, THE PROJEC T OF THE ASSESSEE BECOMES INELIGIBLE FOR DEDUCTION IN VIEW OF CLAUSE (C) OF SEC. 80IB(10). 3. ON THE BASIS OF FINDING GIVEN IN THE ASSESSMENT COMPLETED FOR A.Y. 2006-07 DISALLOWING THE ASSESSEES CLAIM U/S 8 0IB(10) IN RESPECT OF SAME PROJECT, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2007-08 WAS REOPENED BY THE AO BY ISSUING NOTI CE U/S 148 ON 16.08.2011. IN REPLY TO THE SAID NOTICE, IT WAS SU BMITTED ON BEHALF OF THE ASSESSEE INTER-ALIA THAT THE DISALLOWANCE MADE ON ACCOUNT OF ITS CLAIM FOR DEDUCTION U/S 80IB(10) FOR A.Y. 2005-06 H AS ALREADY BEEN DELETED BY THE TRIBUNAL. THE AO HOWEVER NOTED THAT THE SAID DECISION OF THE TRIBUNAL WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL AGAINST THE SAME WAS FILED BEFORE THE HONBLE BOMBA Y HIGH COURT. HE THEREFORE DISALLOWED THE ASSESSEES CLAIM FOR DEDUC TION U/S 80IB(10) FOR THE YEAR UNDER CONSIDERATION IN THE ASSESSMENT COMPLETED U/S 143 R.W.S. 147 VIDE AN ORDER DATED 13.11.2011. 4. AGAINST THE ORDER PASSED BY THE AO U/S 143 R.W.S 147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y.2006-07, THE LD. CIT(A) DIRECTED THE AO TO ALLO W THE CLAIM OF THE 3 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA ASSESSEE FOR DEDUCTION U/S 80IB(10) PROPORTIONATELY AFTER RECORDING THE FOLLOWING OBSERVATIONS IN PARAGRAPH 3.4. (I) MINIMUM AREA OF 1 ACRE OF PLOT. VARIOUS DOCUMENTARY EVIDENCES PRODUCED BY THE APPEL LANT SUCH AS DEVELOPMENT AGREEMENT,7/12 EXTRACT OF THE PLOT OF L AND, ORDER UNDER ULC & BUILDING PLAN AS SANCTIONED BY THE LOCAL AUTH ORITY REVEAL THAT THE AREA OF PLOT IS 5100 SQ. MTRS. OUT OF WHICH 118 6 SQ. MTRS. OF THE LAND HAD BEEN DEDUCTED FOR D.P. ROAD, LEAVING NET A REA OF 3914 SQ. MTRS. AFTER CONSIDERING THE FACTS OF THE CASE AND LEGAL POSITION IN THIS REGARD, THE HONBLE ITAT, MUMBAI VIDE ITS ORDER DAT ED 12.01.2011 (SUPRA) IN THE APPELLANTS OWN CASE FOR A.Y.2005-06 HAS DECIDED THIS ISSUE IN THE FAVOUR OF THE ASSESSEE HOLDING THAT TH E AREA SURRENDERED FOR D.P. ROAD COULD NOT BE EXCLUDED FOR DETERMINING THE SIZE OF PLOT AS CONTEMPLATED U/S. 80IB910)(B). SINCE THE FACTS ARE IDENTICAL IN THIS YEAR ALSO, RESPECTFULLY FOLLOWING THE ORDER OF HON BLE ITAT, MUMBAI (SUPRA), I ALSO HOLD THAT HE AREA UTILIZED FOR D.P. ROAD CANNOT BE EXCLUDED FOR DETERMINING THE MINIMUM AREA REQUIRED FOR PROJECT BEING ELIGIBLE FOR DEDUCTION U/S 80IB(10). SINCE THE ARE A OF PLOT IS 51OO SQ. MTRS. WHICH IS MORE THAN THE MINIMUM AREA OF 1 ACRE , THE REQUISITE CONDITION IN THIS REGARD IS SATISFIED BY THE APPELL ANT. (II) MINIMUM BUILD UP AREA OF RESIDENTIAL UNITS TO BE 1500 SQ. FT. AS IS EVIDENT FROM THE FACTS ON RECORD THAT THE A.O . HAS COMPUTE DTHE AREA OF EACH OF TWO BUNGALOWS AT 2509.81 SQ.FT. AFT ER INCLUDING THE AREA OF FOYER OPEN AREA OF 78.15 SQ. FT. AND EXCLUS IVE OPEN AREA OF 1040.66 SQ. FT. MY PREDECESSOR VIDE HIS ORDER NO. T HN/CIT(A)-1 ADDL.CIT/R-3?KYN/164/07-08 DATED 14.06.2008 FOR A.Y .2005-06 HAS HELD THAT THE FOYER AREA AND OPEN AREA COULD NOT BE CONSIDERED FOR DECIDING BUILT UP AREA OF THE RESIDENTIAL UNIT AND HENCE THE CALCULATION DONE BY THE AO WAS INCURRED. HE FURTHER HELD THAT THE BUILT UP AREA OF EACH UNIT HAD TO BE TAKEN AT 1451 SQ. FT. ONLY. SI NCE THIS DECISION OF MY PREDECESSOR WAS NOT CHALLENGED IN SECOND APPEAL, TH E IMPUGNED ISSUE GET SETTLED. KEEPING IN VIEW THE DEFINITION OF BU ILT UP AREA AS GIVEN IN SECTION 80IB(14)(A) AND THE FINDINGS OF MY PREDECES SOR, I AM ALSO INCLINED TO HOLD THAT THE AREA OF EACH UNIT UNDER C ONSIDERATION HAS TO BE TAKEN AT 1451 SQ. FT. ONLY AND HENCE THE APPELLANT HAS NOT VIOLATED THE NECESSARY CONDITION IN THIS REGARD. (III) PROJECT TO BE COMPLETED BEFORE 31.03.2008 UNDISPUTEDLY BUILDING NO. 1 & 2 WERE DULY COMPLETED BEFORE THE SPECIFIED DATE AND THE APPELLANT HAD CLAIMED DEDUCT ION U/S 80IB(10) THEREON ONLY. THE BUILDING NO. 3 COMPRISING OF TWO ROW HOUSES WAS NEITHER CONSTRUCTED NOR SOLD AND HENCE NO REVENUE W AS EARNED THEREON TO CLAIM DEDUCTION U/S 80IB(10). THE HONBLE ITAT CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VID E ITS ORDER IN ITA NO. 5404/MUM/2008 DATED 12.01.2011 FOR A.Y. 2005-06 HAS DECIDED THE ISSUE IN FAVOUR OF APPELLANT BY HOLDING THAT THE AP PELLANT WAS INCAPACITATED (STAY GRANTED BY MRTP COURT) IN COMPL ETING THE PROJECT WITHIN STIPULATED PERIOD, PROPORTIONATE DEDUCTION U /S 80IB(10) SHOULD BE ALLOWED IN THE RATIO OF AREA COMPLETED TO SANCTI ONED AREA. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN THIS YEAR TOO, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITAT (SUPRA), I DIRECT THE A.O. TO ALLOW THE DEDUCTION U/S 80IB(10) PROPORTIONATELY ON THE B UILDINGS COMPLETED BEFORE 31.03.2008 WITHOUT DISTURBING THE TOTAL AREA OF PLOT WHICH IS 5100 SQ. FT. 4 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA AGGRIEVED BY THE ORDER OF THE LD. CIT(A), REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. REPRESENTA TIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN THIS A PPEAL OF THE REVENUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DA TED 12 TH JANUARY 2011 PASSED IN ITA NO. 5404/MUM/2008 FOR A.Y. 2005- 06. COPY OF THE SAID ORDER IS PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL VIDE PARAGRAPH NO. 6 AND 7 OF ITS ORDER WHICH READ AS UN DER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD OF THE CASE. THE MAIN ISSUE IS REGARDING FULFILLMENT O F CONDITIONS LAID DOWN U/S.80IB(10) FOR CLAIMING DEDUCTION IN RESPECT OF P ROFITS AND GAINS DERIVED BY AN UNDERTAKING CARRYING ON BUSINESS OF DEVELOPING A ND BUILDING HOUSING PROJECT APPROVED BEFORE 31.03.2007. THE FIRST REASO N FOR DENIAL OF DEDUCTION WAS ON THE GROUND THAT THE PLOT AREA ON WHICH CONST RUCTION HAS BEEN MADE IS LESS THAN 1 ACRE. IN THIS REGARD, IT IS NOT DISPUTE D THAT 1186 SQ. MS. OF LAND WAS SURRENDERED FOR DP ROAD LEAVING BEHIND 3914 SQ. MTS . NET AREA FOR THE PROJECT. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT IN THE CASE OF MIS. UMIYA ENTERPRISES VS. ITO IN ITA NO.2750/MUM/2009 D ATED 08.02.2010 WHEREIN IT HAS BEEN HELD AS UNDER. THIS ANNEXURE IS A MAP SHOWING THE DETAILS OF THE SITE PLANS, PLAN OF THE RESIDENTIAL UNITS TO BE BUILT BY THE ASSESSEE ETC. IT ALSOCONTAINS AN AREA STATEMENT WHICH SHOWS THAT THE AREA OF THE PLOT IS 4600 SQ. METRES. IT FURTHER SHOWS THAT THERE IS A DEDUCTION 656.75 SQ. METRES F OR ROAD SET BACK. THIS DEDUCTION IS THEREAFTER SET OFF BY AN ADDITION OF E QUIVALENT AREA ALLOWED BY MNP. THE NET AREA OF THE PLOT AFTER THE DEDUCTION O F THE AREA FOR ROAD SET BACK HAS BEEN SHOWN AT 3943.25 SQ.. METRES. THEREAF TER THERE IS A DEDUCTION OF 591.409 SQ. METRES FOR RECREATION OPEN SPACE AND 411 SQ. METRES FOR INTERNAL ROAD. THE NET PLOT AREA IS THEN SHOWN AT 2 940.76 SQ. METRES. THE AREA OF 656.75 SQ. METRES, WHICH WAS EARLIER DEDUCT ED FOR ROAD SET BACK, IS ADDED AND THE TOTAL AREA PLOT IS SHOWN AT 3597.51 S Q. METRES. IT WILL BE SEEN THAT THE TOTAL PLOT AREA HAS BEEN WORKED OUT BY THE MNP AT 3597.51 SQ. METRES ONLY AFTER DEDUCTING 591.49 SQ. METRES FOR R ECREATION OPEN SPACE. THE RECREATION OPEN SPACE IS HOWEVER PART OF THE PLOT AND THOUGH FOR THE PURPOSE OF MUNICIPAL REGULATIONS,A PORTION OF T HE PLOT HAS TO BE RESERVED AS A RECREATION AREA BUT FOR THE PURPOSE OF CLAUSE (B) OF SECTION 801B(10), THE RECREATION AREA HAS ALSO TO BE CONSIDERED AS PA RT OF THE PLOT ONLY. THERE IS NO CONDITION IN THE CLAUSE THAT RECREATION AREA HAS TO BE EXCLUDED WHILE EXAMINING WHETHER THE PLOT IS OF THE SIZE OF ONE AC RE OR LESS. IF THE RECREATION AREA OF 591.49 SQ. METRES IS ADDED TO THE TOTAL PLO T AREA OF 3597.91 SQ. METRES, IT GIVES AN AREA OF 4189 SQ. METRES WHICH I S THE SIZE OF THE PLOT. THE TOTAL PLOT AREA HAS BEEN ARRIVED AT BY MNP 3597.51 ONLY FOR THE PURPOSE OF CALCULATING THE PERMISSIBLE FSI. THE PERMISSIBLE FS I AS PER COLUMN 9 OF THE AREA STATEMENT IS ONE, WHICH MEANS THAT THE ASSESS EE CAN BUILD 3597.91 SQ. METRES IN THE SAID PLOT. HOWEVER FOR THE PURPOSE OF CLAUSE (B) OF SECTION 801B(10), THE PLOT AREA HAS BEEN TAKEN AT 4189 SQ. METRES, IF NOT AT 4600 SQ. 5 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA METRES, EVEN ON THIS BASIS, THE SIZE OF THE PLOT IS MORE THAN . ONE ACRE.. IN - OUR OPINION THE CIT(A) COMMENTED AN ERROR IN SIMPLY EXCLUDING 656.75 SQ. METRES FROM THE AREA OF 4600 SQ. METRES WITHOUT APP RECIATING THAT THE EXCLUSION IS ONLY FOR THE PURPOSE OF D.P. RAOD WHIC H DOES NOT REDUCE THE SIZE OF THE PLOT AS A WHOLE. IN THE PRESENT CASE, WE FIND THAT AT PAGE 56 OF TH E PAPER BOOK THERE IS A STATEMENT OF AREA, AS PER WHICH AREA OF PLOT IS 510 0 SQ. MTS., OUT OF WHICH 1186 SQ. MTS. OF LAND HAD BEEN DEDUCTED FOR DP ROAD, LEAVING BEHIND 3914 SQ. MTS. AS PER THE DECISION OF TRIBUNAL IN THE CASE OF M/S. UMIYA ENTERPRJSES NOTED ABOVE, THIS ARE SURRENDERED FOR DP ROAD COULD NOT B E EXCLUDED FOR DETERMINING THE SIZE OF THE PLOT AS CONTEMPLATED U/ S.801B(10)(B) THEREFORE, THIS OBJECTION DOES NOT SURVIVE. THE SECOND REASON FOR DENIAL OF DEDUCTION WAS ON TH E GROUND THAT SIZE OF INDIVIDUAL UNITS OF BUILDING NO.3, WAS MORE THAN 1500 SQ. FTS. THIS OBJECTION HAS NOT BEEN SUSTAINED BY LD. CIT(APPEALS) AND DEPARTMENT HAS NOT CHALLENGED THESE FINDINGS. THEREFORE, THIS OBJECTIO N DOES NOT SURVIVE. THE THIRD REASON FOR DENIAL OF DEDUCTION WAS ON T HE GROUND THAT PROJECT WAS NOT COMPLETED BEFORE 31-3-2008 AS PER THE REQUI REMENTS OF SEC.80IB(10)(A)(I). FROM THE FACTS NOTED EARLIER AN D ALSO AS ADMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A), THERE IS NO DISPUTE THAT BUILDING NO. 3 COULD NOT -, BE COMPLETED BEFORE 31-3-2008 ON ACCOUNT OF LITIGAT ION GOING ON WITH RESPECT TO THE SAME. THE ASSESSEES CLAIM IS THAT PROPORTIO NATE DEDUCTION SHOULD BE ALLOWED IN VIEW OF VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE, WHEREAS THE DEPARTMEN~ 5 CONTENTION IS THAT SINCE THE VERY BASIC CONDITION H AS NOT BEEN FULFILLED, THEREFORE, THE DEDUCTION CANNOT BE ALLO WED. WE WILL FIRST CONSIDER THE FACTS OF VARIOUS DECISIONS RELIED UPON BY THE I D. COUNSEL. 6.1 IN THE CASE OF BENGAL AMBUJA HOUSING. DEVELOPMENT LTD.(SUPRA), THE FACTS WERE THAT THE HOUSING PROJECT CONSISTED OF 26 1 RESIDENTIAL UNITS AND THE INDIVIDUAL FLAT SIZE VARIED BETWEEN 800 SQ.FT. TO 3 000 SQ.FT. AND THE TOTAL BUILT UP AREA OF THIS HOUSING PROJECT WAS 346599 SQ. FT. THIS PROJECT CONTAINED ISO RESIDENTIAL UNITS WITH A BUILT UP AREA OF INDIVIDUA L UNIT OF LESS THAN 1500 SQ. FT. AGGREGATING TO 169500 SQ. FT. THE REMAINING BUILT U P AREA OF 187593 SQ.. FT. WAS CONSUMED BY OTHER RESIDENTIAL UNITS WHEREIN THE SIZE OF INDIVIDUAL UNIT EXCEEDED 1500 SQ. FT. OF AREA. UNDER THESE CIRCUMST ANCES, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(10) WITH REFERENCE TO TH E PROFIT ATTRIBUTABLE TO THE BUILT UP AREA WHICH WAS OCCUPIED BY RESIDENTIAL UNI TS HAVING INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQ. FT. THE AO REJECTED THE CLAIM OF THE ASSESSEE U /S. 80IB(10), INTER ALIA, OBSERVING THAT AS PER THE TER MS OF SEC. 801B(10), ALL THE UNITS COMPRISED IN -THE HOUSING PROJECT SHOULD HAVE HAD INDIVIDUAL FLAT SIZE OF LESS THAN 1500 SQ.FT. IN THE BACKDROP OF THESE FACT S, THE TRIBUNAL OBSERVED THAT THE PROVISIONS LAID DOWN IN SEC. 801B(10) DO NOT SP EAK REGARDING SUCH DENIAL OF DEDUCTION IN CASE OF PROFIT FROM A HOUSING COMPL EX CONTAINING BOTH THE SMALLER AND LARGE RESIDENTIAL UNITS AND SINCE THE A SSESSEE HAD CLAIMED ONLY DEDUCTION - ON ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLIN G ALL THE CONDITIONS AS LAID DOWN U/S.8015FL0) THE CONDITIONS AS LAID DOWN U/S 80IB(10), THE DENIAL OF CLAIM BY THE AO WAS NOT JUSTIFIED. 6.2 IN THE CASE OF BRIGADE ENTERPRISES (P) LTD. (SUPRA ), THE FACTS WERE THAT THE ASSESSEE FORMED A SINGLE PROJECT BY NAME BRIGA DE MILLENNIUM COMPRISING A TOTAL AREA OF 22 ACRES AND 19 GUNTAS IN SURVEY NO S.44, 45 AND 51/1 OF BANGALORE SOUTH TALUK. THIS, MACRO PROJECT COMPRISE D CERTAIN HOUSING BLOCKS, COMMUNITY HALL ETC. AS ITS MICRO COMPONENTS. IT CO MPRISED, AMONG OTHER THINGS, 5 RESIDENTIAL BLOCKS BY NAME MAYFLOWER, CAS SIA, MANGNOLIA, 6 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA JACARANDA AND LABURNUM. APPROVAL HAD BEEN OBTAINED FROM BDA ON 25.05.2002. THE ASSESSEE TOOK TWO BLOCKS SEPARATEL Y, VIZ., MAYFLOWER AND CASSIA, AND CLAIMED THE BENEFIT OF DEDUCTION U/S 80 IB(10) OF THE ACT IN RESPECT OF THE SAID TWO BLOCKS CLAIMING THEM TO BE SEPARAT E PROJECTS, AS ONLY THE SAID TWO BLOCKS COULD FULFILL THE REQUIREMENTS PRESCRIBE D U/S.80IB OF THE ACT. THE AQ, HOWEVER, DENIED THE CLAIM OF DEDUCTION U/S.80IB TREATING 1 BRIGADE MILLENNIUM AS ONLY ONE PROJECT THE TRIBUNAL, AFTER CONSIDERING THE FACTS, OBSERVED THAT THE USE OF THE WORDS RESIDENTIAL UNI TS MEANS THAT DEDUCTION SHOULD BE COMPUTED UNIT WISE. THEREFORE IF A PARTICULAR UNIT SATISFIES THE CONDITIONS OF SEC.8OIB, THE ASSESSEE IS ENTITLED FO R DEDUCTION. THEREFORE, THE TRIBUNAL UPHELD THE ORDER OF ID. CRR(A) IN ALLOWINA DEDUCTION U/S 80IB (10) IN RESPECT OF TWO BLOCKS AS CLAIMED BY THE ASSESSEE . 6.3 IN THE CASE OF ITO VS AIR DEVELOPERS (SUPRA) ALSO, INTER ALIA, THE DISPUTE WAS THAT SINCE THE BUILT UP AREA,OF SOME OF THE RESIDENTIAL UNITS WAS MORE THAN 1500 SQ. FT., DEDUCTION U/S.80IB(10) WAS NOT ALLOWED. THE TRIBUNAL, FOLLOWING THE DECISION IN BENGAL AMBUJA HOUSING DEV ELOPMENT LTD, (SUPRA) ALSO, HELD THAT PROPORTIONATE DEDUCTION IS TO BE AL LOWED. 6.4 IN THE CASE OF SHETH DEVELOPERS (SUPRA) ALSO, SIM ILAR VIEW WAS TAKEN AND IT WAS-HELD THAT EVEN WHERE SOME OF THE UNITS I N A HOUSING COMPLEX EXCEED THE AREA LIMIT, RELIEF HAS TO BE GIVEN ON A PRO RATA BASIS. 6.5 IN THE CASE OF G.V.CORPORATION VS. ITO (SUPRA), TH E ASSESSEE, AT THE REQUEST OF PURCHASERS, JOINED SOME OF ITS FLAT/RESI DENTIAL UNITS, AS A RESULT OF WHICH BUILT UP AREA OF THOSE FLATS EXCEEDED 1,000 SQ. FT. DEDUCTION WAS DENIED U/S. 80IB(10) ON THE GROUND THAT THE AFORESAID ACT OF THE ASSESSEE RESULTED IN VIOLATION OF THE PROVISIONS OF SEC.80IB(10)(C ). TH E TRIBUNAL, FOLLOWING THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES VS. JT. CIT (2009) 119 LTD 255, HELD THAT DEDUCTION COULD N OT BE TOTALLY DENIED AND IT WOULD BE ELIGIBLE FOR PROPORTIONATE DEDUCTION. 7. IN ALL THE ABOVE DECISIONS, DEDUCTION U/S.80IB WAS DENIED AS SOME OF THE RESIDENTIAL UNITS EXCEEDED THE LIMIT OF 1500 SQ. FT . AS LAID DOWN U/S 80IB(10) (C). HOWEVER, IN THE PRESENT CASE, THE DEDUCTION HA S BEEN DENIED, INTER ALIA, ON THE GROUND THAT THE PROJECT COULD NOT BE COMPLETED BEFORE 31-3-2008. IT IS NOT DISPUTED THAT THIS CONDITION HAS NOT BEEN -FULFILLE D NOW, IN THE LIGHT OF THE AFORESAID DECISIONS, WE HAVE TO CONSIDER WHAT WOULD BE THE CONSEQUENCES OF THE PROJECT BEING NOT COMPLETED BY 31-3-2008 THIS IS THE BASIC CONDITION FOR ALLOWABILITY OF DEDUCTION U/S.80IB WE FIND CONSIDER ABLE FORCE IN THE SUBMISSION OF ID. DR. HOWEVER SINCE THIS CONDITION COULD NOT BE COMPLIED WITH BECAUSE OF STAY BEING GRANTED BY MRTP COURT FA ULT CANNOT BE FOUND WITH THE ASSESSEE IF SUCH A CONTINGENCY EMERGES, WHICH M AKES THE COMPLIANCE WITH THE PROVISIONS IMPOSSIBLE THEN THE BENEFIT BESTOWED ON AN ASSESSEE CAN NOT BE COMPLETELY DENIED. WE MAY CLARIFY THAT IT IS ONLY I N SUCH EXCEPTIONAL CIRCUMSTANCES THAT THE DEDUCTION CANNOT COMPLETELY BE DENIED BUT THIS CANNOT BE EXTENDED TO SUCH SITUATIONS WHERE THE PROJECT IS NOT COMPLETED ON ACCOUNT OF REASONS WITHIN THE CONTROL OF ASSESSEE. IN THE C ASE OF BRIGADE ENTERPRISES (P) LTD. (SUPRA), THE TRIBUNAL OBSERVED THAT THE US E OF WORDS RESIDENTIAL UNITS MEANS THAT DEDUCTION SHOULD BE COMPUTED UNIT WISE THEREFORE, IF A PARTICULAR UNIT FULFILS THE CONDITIONS OF SEC. 801B , THE ASSESSEE IS ENTITLED FOR DEDUCTION SUBJECT TO FULFILLMENT OF OTHER STATUTORY REQUIREMENT. IN THE PRESENT CASE WE FIND THAT THERE IS NO DISPUTE THAT BUILDING S A & B HAVE COMPLIED WITH THE CONDITIONS CONTEMPLATED U/S.80IB BUT THE PROJEC T AS SUCH COULD NOT BE TREATED AS COMPLETED WITHIN THE STIPULATED PERIOD. THEREFORE, IN VIEW OF THE 7 ITA NO.5774/MUM/2012 SHRI JOHAR HASAN ZOJWALLA PRINCIPLES LAID DOWN IN THE AFORESAID DECISIONS, WE ARE OF THE OPINION THAT ON ACCOUNT OF ASSESSEE BEING INCAPICITATED IN COMPLETI NG THE PROJECT WITHIN THE STIPULATED PERIOD, PROPORTIONATE DEDUCTION U/S.80IB SHOULD BE ALLOWED IN THE RATIO OF AREA COMPLETED TO SANCTIONED AREA. WE MAY CLARIFY THAT FOR THE PURPOSE OF SANCTIONED AREA, THE SIZE OF PLOT IS TO BE TAKEN AT 5100 SQ. FT. IN THE RESULT, THIS GROUND IS PARTLY ALLOWED. 6. IT IS ALSO OBSERVED THAT THE ORDER OF THE TRIBUN AL, DATED 12 TH JANUARY 2011(SUPRA) FOR A.Y. 2005-06 HAS BEEN FOLLO WED BY THE TRIBUNAL TO GIVE RELIEF TO THE ASSESSEE ON SIMILAR ISSUE IN A.Y. 2006-07 VIDE ITS ORDER DATED 31/01/2013 PASSED IN ITA NO.58 1/MUM/2012. RESPECTFULLY FOLLOWING THESE ORDERS OF THE COORDINA TE BENCHES OF THIS TRIBUNAL ON A SIMILAR ISSUE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DIRECTING THE AO TO ALLOW THE DEDUCTION CLAI MED BY THE ASSESSEE U/S 80IB(10) IN RESPECT OF SAME PROJECT ON PROPORTI ONATE BASIS AND DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 10 /01/2 014. +, ' )*! $ 1+2 10/01/2014 * ' / SD/- SD/- ( SANJAY GARG ) (P.M. JAGTA P ) +' / JUDICIAL MEMBER $ +' / ACCOUNTANT MEMBER MUMBAI ; 1+ DATED 10/01/2014 F{X~{T? P.S./ .. +, ' 3&45 65!& +, ' 3&45 65!& +, ' 3&45 65!& +, ' 3&45 65!&/ COPY OF THE ORDER FORWARDED TO : 1. #7 / THE APPELLANT 2. 38#7 / THE RESPONDENT. 3. 9 ( ) / THE CIT (A) - , MUMBAI 4. 9 /CIT MUMBAI 5. 5 / GUARD FILE. +, +, +, +, / BY ORDER, 85& 3& //TRUE COPY// ? ?? ? / // /@ @ @ @ ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI,