ACIT CIR 3, THANE V. ANJANA S. CHAVAN, MUMBAI

ITA 6757/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62395 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA NAIR
• Assessee Lawyers: CHETAN A KARIA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) AND SHRI RAJENDR A SINGH (A.M) ITA NO. 6757/MUM/10(A.Y. 2007-08) THE ACIT, CIR.3, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN (W), DIST. THANE. (APPELLANT) VS. SMT. ANJANA S. CHAVAN, SHOP NO.5, VARSH PARK, WAYALE NAGAR, KHADAKPADA, KALYAN (W) PAN: ACIPC APPELLANT BY : SMT. USHA NAIR RESPONDENT BY : SHRI CHETAN A. KARIA DATE OF HEARING : 15/05/2012 DATE OF PRONOUNCEMENT : 15/05/2012 ORDER PER N.V.VASUDEVAN, J.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDE R DATED 30/06/2010 OF CIT(A)-1,THANE RELATING TO ASSESSMENT YEAR 2007 -08. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS: 1. THE CIT(A) HAS ERRED IN LAW AND FACT IN ALLOWI NG THE CLAIM OF DEDUCTION U/S. 80IB(10) MISINTERPRETING THE CONTENT OF THE CBDTS CIRCULAR NO.5/2005 BY CONSIDERING GARDEN AREA WHILE TAKING INTO ACCOUNT THE TOTAL ARE OF PLOT OF LAND. 2. THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING TH E REVISED INDEX II ISSUED ON 11/06/2009 BY SUB-REGISTRAR, KALYAN WHERE IN IT HAS BEEN EXPLICITLY MENTIONED THAT THE LAND AREA FOR CONSTRU CTION AND DEVELOPMENT IS ADMEASURING 3765.50 SQ. MTR. ONLY. 2. THE ASSESSEE IS AN INDIVIDUAL. SHE IS A BUILDE R AND DEVELOPER. FOR ASSESSMENT YEAR 2007-08 SHE FILED THE RETURN OF INC OME DECLARING TOTAL INCOME OF RS. 6,81,632/-. THE ASSESSEE CLAIMED DED UCTION UNDER SECTION 80 ITA NO. 6757/MUM/10(A.Y. 2007-08) 2 IB(10) OF THE INCOME TAX ACT, 1961(THE ACT) OF RS.2 ,27,63,994/-. THE CLAIM FOR DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WA S DENIED BY THE AO ON THE GROUND THAT THE PLOT AREA ON WHICH THE ASSESSEE CAR RIED OUT CONSTRUCTION WAS LESS THAN ONE ACRE. AS PER THE PROVISIONS OF S ECTION 80 IB(10) OF THE ACT THE PLOT AREA ON WHICH THE CONSTRUCTION IS CARRIED OUT SHOULD BE NOT LESS THAN ONE ACRE. THE AO IN CALCULATING THE AREA IN WHICH THE PROJECT WAS CONSTRUCTED EXCLUDED 649.50 SQ. MTRS. OF PLOT AREA WHICH WAS EARMARKED FOR GARDEN AND 483.75 SQ.MTS. OF LAND WHICH WAS SUR RENDERED FOR D.P. ROAD. IT IS NOT IN DISPUTE BEFORE US THAT FOR IDENTICAL R EASONS IN A.Y 2006-07 THE CLAIM FOR DEDUCTION UNDER SECTION 80 IB (10) FROM T HE SAME PROJECT WAS DENIED BY THE AO. IN THAT YEAR THE CIT(A) CONSIDER ED THE REMAND REPORT OF THE AO ON THE ISSUE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AFTER GIVING FOLLOWING REASONS: (A) BOTH ORIGINAL DEVELOPMENT AGREEMENT AND THE R EVISED ONE SPOKE ABOUT THE PLOT AREA AT 491.374 SQ MTR. (B) THE VARI ATION IN PLOT AREA WAS THERE IN INDEX-II, THE ORIGINAL ONE MENTIONED 3 765.50 SQ MTR AS PLOT AREA AND THE AMENDED ONE REVEALED THE NET PLOT AREA AT 3765.50 SQ MTR AFTER 483.75 SQ MTR WAS SURRENDERED FOR DP R OAD AND 649.50 SQ MTR OF PLOT AREA WAS EARMARKED FOR RESERVE GARDE N. (C) ACCORDING TO THE CERTIFICATE ISSUED BY THE ASSISTANT DIRECTOR TO WN PLANNING, KDMC THE GARDEN AREA OF 649.50 SQ MTR IS PART OF THE PR OJECT AND THE OWNERSHIP OF THE GARDEN VESTS WITH THE DEVELOPER. ( D) THE PHOTOGRAPH PRODUCED BY THE APPELLANT AS PART OF SUBMISSION SHO WED THAT, THE GARDEN AREA WAS ENCLOSED WITHIN THE CAMPUS OF THE P ROJECT AND THE GARDEN WAS MAINTAINED BY THE SOCIETY OF VEDANT P ROJECT. (E) WHILE ADDITIONAL FSI IN LIEU OF DP ROAD WAS GRANTED BY KD MC, THERE WAS NO SUCH FSI SANCTIONED IN LIEU OF PLOT RESERVED FOR GA RDEN. FOLLOWING THE AFORESAID ORDER THE CIT(A) DIRECTED T HE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO. 6757/MUM/10(A.Y. 2007-08) 3 3. AT THE TIME OF HEARING OF THE APPEAL IT WAS BROU GHT TO OUR NOTICE THAT THE ORDER OF THE CIT(A) FOR A.Y 2006-07 WAS SUBJECT MATTER OF APPEAL BY THE REVENUE IN ITA NO.1080/MUM/2010 AND THIS TRIBUNAL H ELD AS FOLLOWS: 6. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE A.O. WHILE WORKING OUT THE NET AREA OF PLOT AT 3680.53 SQ. MTR. HAS EXCLUDED 1 5% ROAD SET BACK AREA AT 483.75 SQ. MTR. AND HAS FURTHER DEDUCTED 15% RECREA TION GROUND AT 649.50 SQ. MTR. AS UNDER:- 1. AREA OF PLOT (AS PER 7/12) 10330 AREA AS PER ULC ORDER 1913.74 4813.78 2A 15% ROAD SET BACK AREA 483.75 B. C. ANY RESERVATION - TOTAL (A + C) 483.75 3 BALANCE AREA FOR PLOT 4330.03 4. DEDUCTION FOR INTERNAL ROAD - 5 NET AREA FOR PLOT (3-4) 649.50 FOR INTERNAL ROAD - 6 ADDITIONAL FOR FLOOR SPACE INDEX 483.75 7 TOTAL AREA 5 +6 4164.28 THUS ACCORDING TO THE A.O., THE REMAINING AREA LEFT FOR THE PROJECT IS 3680.53 SQ. MTRS. WHICH IS LESS THAN ONE ACRE AND HENCE THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION U/S 80IB (10) OF THE ACT. PER CONTRA, THE CLAIM OF THE ASSESSEE IS THAT THE AREA OF GARDEN IS NOT TO BE EXCLUDED AS TH E ASSESSEE GOT COMPENSATORY EQUIVALENT FSI GIVEN BY KDMC FOR SURRE NDERING THE AREA FOR CONSTRUCTING ROAD ADMEASURING 483.75 SQ. MTR. AND H ENCE THE TOTAL AREA AVAILABLE FOR CONSTRUCTION WAS 4164.28 SQ. MTR. WHI CH IS MORE THAN ONE ACRE. 7. IN MR. JOHAR HASSAN ZOJWALLA (SUPRA), THE APPELL ATE ORDER OF WHICH WAS RELIED ON BY THE A.O., IT HAS BEEN HELD BY THE TRIB UNAL VIDE PARA 6 OF ITS ORDER AS UNDER:- '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD OF THE CASE. THE MAIN ISSUE IS REGARDING FULFILMENT OF CONDITIONS LAID DOWN U/S.80IB(10) FOR CLAIMING DEDUCTION IN RESPECT OF PROFITS AND GAINS DERIVED BY AN UNDERTAKING CARRYING ON BUSINESS OF D EVELOPING AND BUILDING HOUSING PROJECT APPROVED BEFORE 31-3-2007. THE FIRST REASON FOR DENIAL OF DEDUCTION WAS ON THE GROUND THAT THE PLOT AREA ON WHICH CONSTRUCTION HAS BEEN MADE IS LESS THAN 1 ACRE. IN THIS REGARD, IT IS NOT ITA NO. 6757/MUM/10(A.Y. 2007-08) 4 DISPUTED THAT 1186 SQ. MS. OF LAND WAS SURRENDERED FOR DP ROAD LEAVING BEHIND 3914 SQ. MTS. NET AREA FOR THE PROJE CT. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF ITAT IN THE CAS E OF M/S. UMIYA ENTERPRISES VS. ITO IN ITA NO.2750/MUM/09 DATED 08- 2-2010 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 AS SESSEE ETC. IT ALSO CONTAINS AN AREA STATEMENT WHICH SHOWS THAT TH E AREA OF THE PLOT IS 4600 SQ. METRES. IT FURTHER SHOWS THAT THER E IS A DEDUCTION 656.75 SQ. METRES FOR ROAD SET BACK. THIS DEDUCTION IS THEREAFTER SET OFF BY AN ADDITION OF EQUIVALENT AREA ALLOWED B Y MNP. THE NET AREA OF THE PLOT AFTER THE DEDUCTION OF THE ARE A FOR ROAD SET BACK HAS BEEN SHOWN AT 3943.25 SQ. METRES. THEREAFT ER THERE IS A DEDUCTION OF 591.409 SQ. METRES FOR RECREATION OP EN SPACE AND 411 SQ. METRES FOR INTERNAL ROAD. THE NET PLOT AREA IS THEN SHOWN AT 2940.76 SQ. METRES. THE AREA OF 656.75 SQ. METRE S, WHICH WAS EARLIER DEDUCTED FOR ROAD SET BACK, IS ADDED AND TH E TOTAL AREA PLOT IS SHOWN AT 3597.51 SQ. METRES. IT WILL BE SEE N 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 PA RT OF THE PLOT AND THOUGH FOR THE PURPOSE OF MUNICIPAL REGULA TIONS, A PORTION OF THE PLOT HAS TO BE RESERVED AS A RECREAT ION AREA BUT FOR THE PURPOSE OF CLAUSE (B) OF SECTION 80IB(10), THE RECREATION AREA HAS ALSO TO BE CONSIDERED AS PART 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 ACRE OR LESS. IF THE RECREATION AREA OF 591.49 SQ. METRES I S ADDED TO THE TOTAL PLOT AREA OF 3597.91 SQ. METRES, IT GIVES AN AREA OF 4189 SQ. METRES WHICH IS THE SIZE OF THE PLOT. THE TOTAL PLO T AREA HAS BEEN ARRIVED AT BY MNP 3597.51 ONLY FOR THE PURPOSE OF C ALCULATING THE PERMISSIBLE FSI. THE PERMISSIBLE FSI AS PER COLUMN 9 OF THE AREA STATEMENT IS ONE, WHICH MEANS THAT THE ASSESSEE CAN BUILD 3597.91 SQ. METRES IN THE SAID PLOT. HOWEVER, FOR T HE PURPOSE OF CLAUSE (B) OF SECTION 80IB(10), THE PLOT AREA HAS B EEN TAKEN AT 4189 SQ. METRES, IF NOT AT 4600 SQ. METRES, EVEN ON THIS BASIS, THE SIZE OF THE PLOT IS MORE THAN ONE ACRE. IN OUR OPINION, THE CIT(A) COMMITTED AN ERROR IN SIMPLY EXCLUDING 656.7 5 SQ. METRES FROM THE AREA OF 4600 SQ. METRES WITHOUT APPRECIATI NG THAT THE EXCLUSION IS ONLY FOR THE PURPOSE OF D.P. ROAD WHIC H DOES NOT REDUCE THE SIZE OF THE PLOT AS A WHOLE. WE ARE THER EFORE SATISFIED THAT THERE IS NO VIOLATION OF THE CONDITIONS PRESCR IBED BY CLAUSE (B).' ITA NO. 6757/MUM/10(A.Y. 2007-08) 5 IN THE PRESENT CASE, WE FIND THAT AT PAGE 56 OF THE 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 D P ROAD, LEAVING BEHIND 3914 SQ. MTS. AS PER THE DECISION OF TRIBUNA L IN THE CASE OF M/S. UMIYA ENTERPRISES NOTED ABOVE, THIS AREA SURRENDERE D FOR DP ROAD COULD NOT BE EXCLUDED FOR DETERMINING THE SIZE OF T HE PLOT AS CONTEMPLATED U/S.80IB(10)(B). THEREFORE, THIS OBJEC TION DOES NOT SURVIVE. 8. IN M/S NAVNIRMAN DEVELOPERS (SUPRA), THE TRIBUNA L WHILE DISTINGUISHING THE DECISION IN THE CASE OF OM ENGIN EERING AND BUILDERS 104 TTJ 604 (109 ITD 235) RELIED ON BY THE A.O. THE MEASUREMENTS AS PER LAYOUT PLAN WERE AS FOLLOWS (PARA 9.1.OF THE OR DER) :- 'AREA STATEMENT TOTAL AREA OF AMALGAMATED PLOT = 4264.10 SQ.M (ABCDEF) AREA UNDER COLONY ROAD = 163.50 SQ.M AREA UNDER RCAD WIDENING = 994.20 SQ.M NET AREA OF PLOT = 3106.40 2 SQ.M FSI USED FROM ROAD WIDENING AREA = 480.60 SQ.M TOTAL FSI = 3587.00 SQ.M'. ACCORDING TO THE A.O., THE AREA OF PLOT IN QUESTION AVAILABLE FOR DEVELOPMENT WAS ONLY 3160.40 SQ. MTRS. IT HAS BEEN HELD BY THE TRIBUNAL VIDE PARA 13 OF THE ORDER AS UNDER:- '13. A DECISION OF M/S OM ENGINEERING AND BUILDERS 104 TTJ 604 (109 ITD 235) HAS BEEN CITED FROM THE SIDE OF T HE REVENUE BUT THE DISTINCTION IS QUITE GLARING AND VISIBLE TH AT IN THE SAID APPEAL THE ASSESSEE BUILDER HAD UNDISPUTEDLY DEVELO PED THE HOUSING PROJECT ON A PLOT OF LAND ADMEASURING ONLY 3,800 SQ. MTRS. EVEN IT WAS NOT THE CASE THAT THE AREA OF 3,8 00 SQ. MTRS. WAS AVAILABLE AFTER CARVING OUT THE OPEN SPACE FOR ROAD. RATHER FACTS HAVE REVEALED THAT THE SAID ASSESSEE WANTED T O TAKE THE ADVANTAGE OF AN OPEN SPACE NOT OWNED BY THAT APPELL ANT. IT WAS THE SPACE BELONGED TO AN ANOTHER OWNER WHICH WAS NO T EVEN TRANSFERRED IN THE NAME OF THE SAID ASSESSEE. THE P LAIN TRUTH OR THE FACT OF THE MATTER IS THAT THE SAID DECISION WA S NOT APPLICABLE ON THE FACTS OF THE PRESENT APPEAL. THUS CONSIDERIN G THE DEVELOPMENT AGREEMENT, DEVELOPMENT PLANS SUBMITTED TO THE PRESCRIBED AUTHORITY AND THE CONTIGUITY OF THE PLOT S IN QUESTION; WE ARE OF THE CONSCIENTIOUS VIEW THAT THE TOTAL ARE OF THE AMALGAMATED PLOTS WAS THE ARE OF THE SITE ADMEASURI NG 4264.10 SQ. MTRS. OFFERED FOR THE PURPOSE OF CONSTRUCTION O F A HOUSING PROJECT OUT OF WHICH THE ROAD ETC. WERE CARVED OUT THEREFORE OVER ITA NO. 6757/MUM/10(A.Y. 2007-08) 6 WHICH THE BENEFIT OF FSI WAS GRANTED AND THAT TOO W AS USED FOR THE PURPOSE OF CONSTRUCTION OF RESIDENTIAL UNITS TH US THE OVERALL CIRCUMSTANCES WARRANT TO HOLD THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEDUCTION U/S 80IB(10). THE GROUNDS RA ISED ARE THEREFORE ALLOWED.' 9. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BRO UGHT ON RECORD BY THE REVENUE, WE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL HOLD THAT THE ROAD SET BACK AREA OF 483.75 SQ. MTRS . COULD NOT BE EXCLUDED FOR DETERMINING THE SIZE OF THE PLOT AS TH E ASSESSEE GOT COMPENSATORY EQUIVALENT FSI OF 483.75 SQ.MTRS. THUS , THE TOTAL AREA AVAILABLE FOR CONSTRUCTION IN THE ABOVE PROJECT COM ES TO 4164.28 SQ. MTRS. WHICH IS MORE THAN ONE ACRE AS CONTEMPLATED B Y SECTION 80IB(10)(B) OF THE ACT AND ACCORDINGLY WE ARE INCLI NED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) IN DELETING THE DISALLOW ANCE MADE BY THE A.O. THE GROUND TAKEN BY THE REVENUE IS, THEREFORE, REJE CTED. SINCE THE FACTS AND CIRCUMSTANCES IN THE PRESENT YE AR ARE IDENTICAL AND THE AO IN THE PRESENT ASSESSMENT YEAR HAS FOLLOWED HIS FINDING IN A.Y 2006-07 WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) WHI CH IS IN CONFORMITY WITH THE ORDER OF THE TRIBUNAL FOR A.Y 2006-07 HAS TO BE UPH ELD. WE, THEREFORE, UPHOLD THE ORDER OF CIT(A) AND DISMISS THIS APPEAL BY THE REVENUE. 4. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH DAY OF MAY 2012 SD/- SD/- (RAJENDRA SINGH ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 15 TH MAY 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RH BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.