HAWARE ENGINEERS & BUILDERS P. LTD, NAVI MUMBAI V. ACIT CEN CIR 29, MUMBAI

ITA 7144/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C P PATNAIK
• Assessee Lawyers: S K MUTSADDI
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H BENCH BEFORE SHRI I.P.BSNSAL (JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.7125/MUM/2011 ASSESSMENT YEAR: 2005-06 ACIT, CENT. CIRCLE-29, ROOM NO.411, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20 M/S. HAWARE ENGINEERS & BUILDERS PVT LTD., 413-416, VARDHAMAN MARKET, SECTOR-17, VASHI, NAVI MUMBAI-400 075 PA NO.AAACH 2577 C (APPELLANT) VS. (RESPONDENT) ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 M/S. HAWARE ENGINEERS & BUILDERS PVT LTD., 413-416, VARDHAMAN MARKET, SECTOR-17, VASHI, NAVI MUMBAI-400 075 PA NO.AAACH 2577 C ACIT, CENT. CIRCLE-29, ROOM NO.411, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20 (APPELLANT) VS. (RESPONDENT) ASSESSEE BY : SHRI S.K.MUTSADDI REVENUE BY: SHRI K.C.P PATNAIK. DATE OF HEARING: 1.11.2012 DATE OF PRONOUNCEMENT: 1. 11.2012 ORDER PER I.P.BANSAL, JM: THESE ARE CROSS APPEALS DIRECTED AGAINST ORDER PASS ED BY LD CIT(A) DATED 11.8.2011 FOR ASSESSMENT YEAR 2005-06. 2. GROUND RAISED BY DEPARTMENT READS AS UNDER: UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT(A) ERRED IN MODIFYING THE PENALTY LEVIED U/S.271(1)(C) HOLDING THAT NO PENALTY WAS LEVIABLE IN RESPECT OF DEDUCTION AMOUNT DISALLOWED U/S.80IB(10) RELATING TO PANCHAVATI & VRINDAVAN PRO JECTS. ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 2 3. GROUND RAISED BY ASSESSEE READS AS UNDER: ON THE FATS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD CIT(A) HAS ERRED IN UPHOLDING THE AOS VIEW IN RESPECT OF THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT ARISING OUT OF THE CLA IM MADE U/S.80IB(10) FOR THE PROJECTS SHANTI NIKETAN, BALAJI TOWER AND SILIC ON TOWERS. THE LEVY OF PENALTY UPHELD U/S.271(1)(C) OF THE I.T.ACT SHOULD BE CANCELLED. 4. THE ASSESSEE IS INVOLVED IN THE BUSINESS OF CONS TRUCTION OF BUILDING PROJECTS. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE CARRI ED OUT FOLLOWING SIX PROJECTS AND CLAIMED DEDUCTION U/S.80IB(10) OF THE ACT: ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 3 5. THE DEDUCTION U/S.80IB(10) HAS BEEN DISALLOWED BY THE AO AND ON SUCH DISALLOWANCE, CONCEALMENT PENALTY AMOUNTING TO RS.2 ,77,11,908/- HAS BEEN IMPOSED VIDE ORDER DATED 12.3.2010. LD CIT(A) HAS DELETED THE PENALTY WITH RESPECT TO TWO PROJECTS I.E. PROJECTS STATED AT SL. NOS.5 & 6 (PAN CHAVAI AND VRINDABAN). THE PENALTY ON THESE PROJECTS HAS BEEN DELETED BY LD CIT(A) ON THE GROUND THAT IN EARLIER YEARS, DEDUCTION U/S.80IB(10) WAS ALLOWED BY THE DEPARTMEN T IN RESPECT OF THESE PROJECTS. HENCE, THE DISALLOWANCE IS BASED ON DISPUTABLE LEGA L ISSUE OF WHICH, PENALTY CANNOT BE LEVIED. THE DEPARTMENT IN ITS APPEAL IS AGGRIEVED WITH THE DELETION OF PENALTY WITH RESPECT TO AFOREMENTIONED TWO PROJECTS. THE ASSESS EE IN ITS APPEAL IS DISPUTING LEVY OF PENALTY IN RESPECT OF REMAINING FOUR PROJECTS. HEN CE, CROSS APPEALS HAVE BEEN FILED BY BOTH THE PARTIES. 6. AT THE OUTSET, IT WAS BROUGHT TO OUR NOTICE THAT THE TRIBUNAL IN QUANTUM PROCEEDINGS VIDE ITS ORDER DATED 4.5.2012 IN I.T.A. NO.393/MUM/2009 VIDE PARA 34 HAS HELD THAT DEDUCTION U/S.80IB(10) IS AVAILABLE TO TH E ASSESSEE IN RESPECT OF THE PROJECTS EXCEPT PROJECT SHANTI NIKETAN, WHICH IS MENTIONED AT SL. NO.1 IN THE AFOREMENTIONED TABLE. COPY OF THE ORDER OF THE TRIBUNAL HAS BEEN FILED BY THE ASSESSEE IN ITS PAPER BOOK AT PAGES 1 TO 27 AND VIDE PARA 34, THE OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: 34. ACCORDINGLY, THE GROUNDS OF ASSESSEE WITH REFE RENCE TO CLAIMS OF DEDUCTION U/S.80IB(10) ON VARIOUS PROJECTS AS DISCU SSED ABOVE ARE ALLOWED, EXCEPT THE GROUND NO.1(ON SANTI NIKETAN) W HICH WAS WITHDRAWN. 7. THEREFORE, IT IS THE CASE OF LD A.R. OF THE ASSE SSEE THAT PENALTY CANNOT BE LEVIED IN RESPECT OF PROJECTS MENTIONED AT SL. NOS. 2 TO 6 AS IN THE QUANTUM APPEAL, DEDUCTION U/S. 80IB(10) HAS BEEN ALLOWED AND DISALLOWANCE DOE S NOT EXIST. 8. IN RESPECT OF PROJECT MENTIONED AT SL. NO.1, I.E . SANTI NIKETAN PROJECT, IT IS THE CASE OF LD A.R. THAT IN ASSESSMENT YEAR 2004-05, TH E TRIBUNAL HAS HELD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10). REFERENCE IN T HIS REGARD WAS MADE TO THE ORDER OF THE TRIBUNAL DATED 30.3.2011 IN I.T.A. NO.6431/M/20 07, COPY OF WHICH HAS BEEN FILED AT PAGES 52 TO 68 OF PB. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: SHANTINIKETAN PROJECT 3. BRIEFLY STATED, THE MATERIAL FACTS ARE LIKE THIS . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS CLAIMED A DEDUCTION UNDER SECTION 80 I B (10), AMOUNTING TO RS ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 4 12,44,455 IN RESPECT OF SHANTINIKETAN PROJECT. THE ASSESSING OFFICER HAD, HOWEVER, TWO OBJECTIONS TO THIS CLAIM OF DEDUCTION FIRST, THAT AREA OF PLOT OF LAND IS 4,000.02 SQUARE METERS, WHICH IS LESS TH AN ONE ACRE (ONE ACRE IS EQUAL TO 4,046.82 SQUARE METERS); AND SECOND, THA T BUILT UP AREA OF SHOPS AND COMMERCIAL UNITS IS 4,302.88 SQUARE FEET, WHICH IS MORE THAN 2,000 SQUARE FEET. AS REGARDS THE SECOND POINT, I.E. REGA RDING BUILT UP AREA OF COMMERCIAL UNITS BEING MORE THAN 2,000 SQUARE FEET, THE ASSESSING OFFICER NOTED THE SAME, BUT DID NOT DEAL WITH THE SAME IN M UCH DETAIL. THE ASSESSING OFFICER NOTED THAT THIS RESIDENTIAL PROJE CT WAS DEVELOPED BY THE ASSESSEE ON 4,000.02 SQUARE METER LAND ALLOTTED BY CITY & INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LIMITED (CID CO, IN SHORT), AS PLOT NUMBER 8 A, ON 6 TH FEBRUARY, 2001. IT WAS ALSO NOTED THAT CONSTRUCTIO N WAS COMPLETED ON 28 TH MAY 2002, AND THAT THE OCCUPATION CERTIFICATE OF T HE PROJECT WAS ALSO ISSUED ON 11 TH JULY 2002. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE SIZE OF PLOT WAS ADMITTEDLY LESS TH AN ONE ACRE ( I.E. 4,046.82 SQUARE METERS), THE ASSESSEE WAS NOT ENTITLED TO DE DUCTION UNDER SECTION 80 IB (10). WHILE THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS SUBSEQUENTLY ALLOTTED AN ADJACENT PLOT, ADMEASURIN G 48.13 SQUARE METERS, BY CIDCO AS PLOT NUMBER 8B, HE ALSO HELD THAT THIS SUBSEQUENT ALLOTMENT DID NOT MAKE GOOD THIS DEFICIENCY IN ELIGIBILITY FO R ENTITLEMENT TO DEDUCTION UNDER SECTION 80 IB(10) BECAUSE ADDITIONAL LAND WAS ALLOTTED TO THE ASSESSEE FOR PURPOSE OF PLAYING GROUND/ GREEN AREA ONLY, AND, AS PER TERMS SPECIFIED BY CIDCO, NO DEVELOPMENT OR CONSTRUCTION WAS PERMITTED THEREIN AND ADDITIONAL LAND, AS SUCH, COULD NEVER HAVE BEE N UTILIZED FOR DEVELOPMENT OF HOUSING PROJECT. THE ASSESSING OFF ICER ALSO NOTED THAT, BY WAY OF THIS, EVEN THOUGH THE AGREEMENT DATED 1.4. 2003 ( WHEREBY CIDCO ALLOTTED THE PLOT NO. 8 B, ADMEASURING 48.13 SQUAR E METERS, TO THE ASSESSEE) MODIFIES THE ORIGINAL ASSESSMENT RETROSPE CTIVELY, THE FACT REMAINS THAT THE ORIGINAL PLOT OF 4000.27 SQUARE METERS ON LY WAS UTILIZED FOR HOUSING PROJECT, AND THERE WAS NO DEVELOPMENT ON AD DITIONAL PLOT FOR THE SIMPLE REASON THAT THE ADDITIONAL PLOT WAS NOT AVAI LABLE TO THE ASSESSEE AT ALL AND EVEN OTHERWISE, ADDITIONAL PLOT IS ACTUAL LY A SEPARATE PLOT (PLOT 8 B) DISTINCT FROM THE ORIGINAL PLOT (PLOT 8A). IT W AS THUS CONCLUDED THAT, THE ASSESSEES CONTENTION THAT AREA OF ADDITIONAL P LOT SHOULD ALSO BE INCLUDED FOR CONSIDERING AREA OF HOUSING PROJECT IS , THEREFORE, UNACCEPTABLE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEES PLEA TO THE EFF ECT THAT SUBSEQUENT ALLOTMENT OF AN ADJACENT PLOT, ADMEASURING 48.13 SQ UARE METERS, BY CIDCO, AS PLOT NUMBER 8B, MADE GOOD THIS DEFICIENCY IN ELI GIBILITY FOR ENTITLEMENT TO DEDUCTION UNDER SECTION 80 IB(10), WAS REJECTED BY THE CIT(A) ON THE GROUND THAT IT IS CERTAINLY NOT THE INTENTION OF L EGISLATURE THAT HOUSING PROJECTS, WHICH HAVE ALREADY BEEN COMPLETED ON A SM ALLER PLOT, WILL ALSO BE ELIGIBLE FOR DEDUCTION [UNDER SECTION 80 IB(10)] IF SUBSEQUENTLY IT BUYS ADDITIONAL ADJACENT LAND TO MAKE THE TOTAL AREA MOR E THAN ONE ACRE. THE CIT(A) ALSO NOTED THAT PLOT NUMBER 8B ALLOTTED BY CIDCO WAS NOT TO BE USED FOR ANY CONSTRUCTION BUT WAS TO BE DEVELOPED A S GREEN BELT TO BE USED AS CHILDRENS PLAYGROUND WHICH WILL ALSO HAVE ACCES S TO PUBLIC AT LARGE, AND OBSERVED THAT IT WAS THUS MANIFESTLY CLEAR THAT TH E APPELLANT HAS TRIED TO GET ITS IRREGULAR CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) REGULARIZED THROUGH THE ALLOTMENT OF ADDITIONAL PLOT NUMBER 8B . THE CIT(A), ACCORDINGLY, CONCLUDED THAT ADDITIONAL LAND CANNOT BE REGARDED AS PART OF THE ORIGINAL PROJECT AS IT HAS NEITHER BEEN ALLOTTE D EXCLUSIVELY FOR THE PROJECT NOR HAS BEEN USED FOR HOUSING PROJECT AND THE SIZE OF ORIGINAL PLOT BEING MARGINALLY LESS THAN ONCE ACRE, THE ASSESSEE WAS NO T ENTITLED FOR DEDUCTION UNDER SECTION 80 IB (10). THE DISALLOWANCE WAS THU S CONFIRMED BY THE ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 5 CIT(A) AS WELL. THE ASSESSEE IS NOT SATISFIED BY T HE STAND SO TAKEN BY THE CIT(A), AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THOUGH THERE IS NO DISPUTE AB OUT THE FACT THAT SIZE OF THE ORIGINAL PLOT ON WHICH HOUSING PROJECT WAS DEVELOPED WAS LESS THAN ONE ACRE, THE ASSESSEE WAS SUBSEQUENTLY ALLOTT ED AN ADJACENT PLOT WHICH MADE GOOD THIS DEFICIENCY SO FAR AS REQUIREME NT ABOUT MINIMUM SIZE OF PLOT WAS CONCERNED. THE CLAIM FOR DEDUCTION UNDE R SECTION 80 IB (10) HAS, HOWEVER, BEEN REJECTED BY THE ASSESSING OFFICE R ON THE GROUND THAT NO DEVELOPMENT OR CONSTRUCTION WAS PERMITTED THEREON, AND, THEREFORE, THIS ADDITIONAL LAND COULD NEVER HAVE BEEN UTILIZED FOR DEVELOPMENT OF HOUSING PROJECT, AS ALSO ON THE GROUND THAT ADDITIONAL PL OT IS ACTUALLY A SEPARATE PLOT (PLOT 8 B) DISTINCT FROM THE ORIGINAL PLOT (PL OT 8A). THE FIRST LIMB OF THESE OBJECTIONS, REGARDING UTILIZATION OF ADDITION AL LAND FOR CONSTRUCTION, HOWEVER PROCEEDS ON THE FALLACY THAT ONLY SUCH PLOT AREA CAN BE INCLUDED IN THE SIZE OF THE PLOT ON WHICH CONSTRUCTION IS PERMI SSIBLE. IT IS IMPORTANT TO BEAR IN MIND THAT IT IS AREA OF THE PLOT, AND NOT B UILT UP AREA, WHICH IS RELEVANT FOR THE PURPOSE OF DECIDING ELIGIBILITY OF THE PROJECT. SECTION 80 IB(10) (B) PROVIDES THAT THE HOUSING PROJECT, IN OR DER TO BE ELIGIBLE FOR DEDUCTION, MUST, INTER ALIA, SATISFY THE CONDITION THAT (B) THE PROJECT IS ON THE SIZE OF A PLOT WHICH WAS A MINIMUM AREA OF ONE ACRE. IT IS CLEARLY AREA OF THE PLOT AND NOT BUILT UP AREA WHICH IS IMPORTAN T TO DETERMINE ELIGIBILITY IN TERMS OF SECTION 80 IB (10)(B). IN OUR CONSIDERE D VIEW, THE SIZE OF THE PLOT INCLUDES ENTIRE AREA OF THE PROJECT WHICH IS D EVELOPED BY THE BUILDER FOR THE RESIDENTS OF THE PROJECT, INCLUDING ALL COMMON AREAS AND PUBLIC AMENITIES FOR THE RESIDENTS OF THE PROJECT, AND CAN NOT BE CONFINED TO ONLY SUCH AREA ON WHICH CONSTRUCTION IS PERMISSIBLE. WHE THER CONSTRUCTION IS PERMISSIBLE ON THE ADDITIONAL LAND OR NOT IS WHOLLY IRRELEVANT AS LONG IT IS NOT IN DISPUTE THAT THE SAID ADDITIONAL LAND WAS ACTUAL LY ALLOTTED, WITH OR WITHOUT CONDITIONS, FOR THE PURPOSES OF THE PROJECT. WE HAV E ALSO NOTED THAT, VIDE ALLOTMENT DATED 6 TH APRIL 2004 (PAGES 27- 30 OF PAPERBOOK, @ PAGE 28), THE LAND USE PERMITTED, FOR THE ADDITIONAL LAND SO ALLO TTED, WAS ONLY FOR THE PURPOSE OF DEVELOPMENT OF GREEN BELT OR CHILDREN PL AYGROUND FOR THE MEMBERS OF THE SOCIETY (EMPHASIS SUPPLIED BY US ), BUT THEN DEVELOPMENT OF GREEN BELT OR CHILDREN PLAYGROUND FOR THE MEMBE RS OF THE SOCIETY CANNOT BUT BE AN INTEGRAL PART OF THE HOUSING PROJECT ITSE LF. UNDOUBTEDLY, THE LEASE DEED IN FAVOUR OF THE SOCIETY (PAGES 31 TO 36,@PAGE 34) PROVIDES THAT THE LICENSEE SHALL DEVELOP GREEN BELT OR CHILDRENS PL AYGROUND FOR THE MEMBERS OF THE SOCIETY ON THE SAME (PLOT), WHICH WILL HAVE FREE ACCESS TO PUBLIC AT LARGE WITHOUT DISCRIMINATION ON THE GROUND OF RELIG ION, CASTE, CREED ETC., BUT THE EXPRESSION PUBLIC AT LARGE IN THIS SENTENCE I S TO BE READ IN CONJUNCTION WITH THE WORDS IMMEDIATELY FOLLOWING THESE WORDS, I .E. WITHOUT DISCRIMINATION ON THE GROUND OF RELIGION, CASTE, CR EED ETC.. IT IS NOT A CASE THAT THE ASSESSEE HAS BEEN PERMITTED TO DEVELOP A P UBLIC PARK IN THE ADDITIONAL LAND SO ALLOTTED, AND THE BENEFIT TO THE RESIDENTS IN THIS PROJECT IS ONLY INCIDENTAL; IN FACT, IT IS THE OTHER WAY ROUND . THE DEVELOPMENT IN THIS LAND, AS A PARK OR CHILDRENS PLAYGROUND OR AS GREE N BELT, IS FOR THE PURPOSES OF THE RESIDENTS OF THE PROJECT AS HAS BEEN SPECI FICALLY APPROVED BY CIDCO, AND THE BENEFIT TO OTHERS, IF AT ALL, IS ONL Y INCIDENTAL. THE ADDITIONAL LAND IS AS MUCH A PART OF THE HOUSING PROJECT AS M UCH THE ORIGINAL PLOT IS, AS EVIDENT FROM THE FACT THAT SUPPLEMENTARY AGREEME NT, TO LEASE OUT ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 6 ADDITIONAL LAND, IS NOT EVEN A STANDALONE AGREEMENT BUT IT ONLY SEEKS TO MODIFY THE ORIGINAL LEASE BY INCLUDING PLOT NUMBER 8 B IN THE AREA ALLOTTED FOR HOUSING PROJECT. THE MERE FACT THAT CERTAIN CO NDITIONS HAVE BEEN PUT FOR USE OF ADDITIONAL LAND DOES NOT TAKE AWAY THE FACT THAT ADDITIONAL LAND IS AN INTEGRAL PART OF THE HOUSING PROJECT WHICH, CONSEQU ENT TO THE ADDITIONAL LAND HAVING BEEN ALLOTTED, NOW STANDS ON PLOT NO. 8A AND 8B, AS AGAINST PLOT NO. 8A ORIGINALLY, COLLECTIVELY SHOWN, IN LOCATION PLAN ATTACHED TO THE MODIFIED AGREEMENT, AS AREA ALLOTTED TO ASSESSEE FOR THE HOU SING PROJECT. IT IS ALSO IMPORTANT TO BEAR IN MIND THAT THE CENTRAL BOARD OF DIRECT TAXES ITSELF, VIDE CIRCULAR NO. 5/ 2005 DATED 15 TH JULY 2005 HAS OBSERVED THAT THIS SECTION [ I.E. 80 IB (10)] DOES NOT SPECIFICALLY PROVIDE AREA LIMIT FOR THE GARDEN, THE DEVELOPMENT PLAN ROADS, INTERNAL MEANS OF ACCESS, E TC. IN THE HOUSING PROJECT. THEREFORE, THE SAME SHOULD CONFORM TO THE PROJECT PLAN APPROVED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH THE REGUL ATIONS IN FORCE. THIS ALSO MAKES IT CLEAR THAT EVEN AREAS OF GARDENS, DEVELOP MENT PLAN ROADS ETC. ARE TO BE TREATED AS PART OF THE HOUSING PROJECT AS LON G AS THE SAME ARE APPROVED BY LOCAL AUTHORITY IN ACCORDANCE WITH THE REGULATIONS IN FORCE. IT IS, THEREFORE, NOT CORRECT TO PROCEED ON THE BASIS THAT AREAS NOT USED FOR CONSTRUCTION, SUCH AS GARDEN AND ROADS ETC., WILL N OT BE INCLUDED IN THE AREA OF THE PROJECT. THE LOCAL AUTHORITY IN THE PRESENT CASE IS CIDCO ITSELF AS THE HOUSING PROJECT HAS BEEN APPROVED BY CIDCO (PAGE 14 OF THE PAPER-BOOK) AND COMMENCEMENT AND COMPLETION CERTIFICATES HAVE B EEN ISSUED BY CIDCO (PAGES 15-17 AND 37-38 OF THE PAPER-BOOK), AND IT IS IN ACCORDANCE WITH THE SPECIFIC PERMISSION OF CIDCO THAT THE ADDITIONA L LAND HAS BEEN DEVELOPED, FOR THE USE OF MEMBERS OF THE SOCIETY, A S GREEN BELT AND CHILDRENS PLAYGROUND. THE USE OF ADDITIONAL LAND, THEREFORE, HAS TO BE TREATED AS A PART OF THE APPROVED PROJECT. THE OTHE R OBJECTION OF THE ASSESSING OFFICER WAS THAT PLOT NO. 8 B IS A DISTIN CT PLOT AND, THEREFORE, IT CANNOT BE INCLUDED IN THE HOUSING PROJECT. WE SEE N O SUBSTANCE IN THIS PLEA EITHER. AS EVIDENT FROM LOCATION PLAN ATTACHED TO THE MODIFIED LEASE AGREEMENT, PLOT 8A AND 8B ARE ADJACENT TO EACH OTHE R AND ARE COLLECTIVELY SHOWN AS BELONGING TO THIS PROJECT. IT IS NOT EVEN NECESSARY THAT AREA OF EACH PLOT, ON STANDALONE BASIS, MUST AT LEAST BE ON E ACRE. ONCE IT IS NOT IN DISPUTE THAT THESE TWO PLOTS ARE ADJACENT PLOTS WHI CH CAN BE VIEWED AS A COHESIVE UNIT, AS ARE THE ADMITTED FACTS OF THIS CA SE, DEDUCTION UNDER SECTION 80 IB (10) CANNOT BE DECLINED ONLY ON THE G ROUND THAT THE PLOT ON WHICH HOUSING PROJECT IS BUILT ORIGINALLY CONSISTS OF MORE THAN ONE UNITS. IN ANY EVENT, EVEN THE LEASE AGREEMENT EXECUTED BY CID CO IS ONLY ONE, AND BY WAY OF ALLOTMENT OF ADDITIONAL LAND, ONLY THE OLD A GREEMENT IS MODIFIED WITH RETROSPECTIVE EFFECT. WHEN LEASE AGREEMENT I S ONE, PLOT 8 A AND 8 B ARE ADJACENT PLOTS AND A COHESIVE UNIT ON WHICH PRO JECT IS NOW SITUATED, DECLINING DEDUCTION UNDER SECTION 80 IB(10) ON THE GROUND THAT PLOT 8B IS A DISTINCT PLOT IS NEITHER FACTUALLY CORRECT NOR SUST AINABLE IN LAW. THE GROUND ON WHICH THE ASSESSING OFFICER DECLINED DEDUCTION U NDER SECTION 80 IB(10) ARE THUS DEVOID OF LEGALLY SUSTAINABLE MERITS. 6. AS REGARDS LEARNED CIT(A)S OBSERVATIONS TO THE EFFECT THAT IT IS MANIFESTLY CLEAR THAT THE APPELLANT HAS TRIED TO GE T ITS IRREGULAR CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) REGULARIZED THROU GH THE ALLOTMENT OF ADDITIONAL PLOT NUMBER 8B, AND THAT IT IS NOT INTE NTION OF LEGISLATURE THAT THAT HOUSING PROJECTS, WHICH HAVE ALREADY BEEN COM PLETED ON A SMALLER PLOT, WILL ALSO BE ELIGIBLE FOR DEDUCTION [UNDER SE CTION 80 IB(10)] IF SUBSEQUENTLY IT BUYS ADDITIONAL ADJACENT LAND TO MA KE THE TOTAL AREA MORE THAN ONE ACRE, WE ARE UNABLE TO SEE ANY MERITS IN THESE OBSERVATIONS ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 7 EITHER. IN CASE AN ASSESSEE FINDS THAT HE IS NOT EL IGIBLE FOR DEDUCTION UNDER SECTION 80 IB(10) BECAUSE SIZE OF THE PLOT, ON WHIC H PROJECT IS BUILT, IS LESS THAN MINIMUM NECESSARY SIZE, AND HE MAKES GOOD THAT DEFICIENCY, AND ENSURES THAT ALL THE NECESSARY PRECONDITIONS ARE SA TISFIED AND APPROVALS OBTAINED, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UN DER SECTION 8 IB(10). THE FACT THAT HE SATISFIED THE CONDITIONS LATER DOES NO T ADVERSELY AFFECT ITS CLAIM FOR DEDUCTION. WHAT IS MATERIAL IS THAT AT THE POIN T OF TIME WHEN MATTER COMES UP FOR EXAMINATION OF THE CLAIM, THE NECESSAR Y PRECONDITIONS FOR BEING ELIGIBLE TO THE CLAIM ARE SATISFIED, AND THAT IS THE CASE BEFORE US. THE DEDUCTION UNDER SECTION 80 IB(10) IS, THEREFORE, AD MISSIBLE ON THE FACTS OF THIS CASE. WE MAKE IT CLEAR THAT WE HAVE ARRIVED A T THESE CONCLUSIONS ON THE PECULIAR FACTS OF THIS CASE, AND CONSIDERING SM ALLNESS OF THE SIZE OF ADDITIONAL PLOT OF LAND WHICH IS JUST 48.13 METERS, AND THIS DECISION SHOULD, THEREFORE, NOT BE CONSTRUED AS OF GENERAL APPLICATI ONS IN ALL SUCH CASES WHERE ADDITIONAL PLOT OF LAND HAS BEEN ADDED SUBSEQ UENTLY IN THE PROJECT. AS REGARDS THE COMMERCIAL BUILT UP AREA BEING IN EX CESS OF 2,000 SQUARE FEET, WE HAVE NOTED THAT THE ISSUE IS NOW SQUARELY COVERED BY HONBLE BOMBAY HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES ( 51 DTR 298 ) WHEREIN THEIR LORDSHIPS HAVE HELD THAT THE RESTRICTION ON THE AREA OF COMMERCIAL USE OF BUILT UP AREA COMES INTO PLAY ONLY WITH EFFECT FROM 2005. THE ASSESSMENT YEAR BEFORE US IS 2004-05 AND, THEREFORE, USE OF COMMERCIAL ARE IN EXCESS OF 2,000 SQUARE FEET DOES NOT VITIATE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80 IB (10). IN V IEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIRETY OF THE CASE, WE HOLD T HAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB(10) IN R ESPECT OF SHANTINIKETAN PROJECT. WE DIRECT THE ASSESSING OFFICER TO GRANT T HE SAID DEDUCTION. 7. GRIEVANCE OF THE ASSESSEE, AGAINST CIT(A)S UPH OLDING THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80 IB(10) I N RESPECT OF SHANTINIKETAN PROJECT, IS THUS UPHELD. 9. REFERRING TO THE AFOREMENTIONED ORDER OF THE TRI BUNAL, IT WAS SUBMITTED BY LD A.R. THAT ASSESSEE HAS BEEN HELD TO BE ELIGIBLE FOR DEDUCTION U/S.80IB(10) IN RESPECT OF THAT PROJECT AND ASSESSE E HAD NOT PRESSED THIS ISSUE BEFORE THE TRIBUNAL. IT IS THEREFORE, THE CL AIM OF THE ASSESSEE IN RESPECT OF THE IMPUGNED ASSESSMENT YEAR HAS NOT BEE N ACCEPTED BY THE TRIBUNAL. HE SUBMITTED THAT AS THE DEDUCTION HAS B EEN HELD TO BE ELIGIBLE IN RESPECT OF THIS RESPECT IN EARLIER YEAR, ASSESSEE H AS A VERY GOOD PRIMA FACIE CASE AND THUS, IT IS A DISPUTED ISSUE ON WHICH CON CEALMENT PENALTY CANNOT BE LEVIED. 10. ON THE OTHER HAND, LD D.R. RELIED UPON ORDER OF ASSESSING OFFICER AND LD CIT(A) IN RESPECT OF WHICH PENALTY HAS BEEN UPHE LD BY HIM AND FOR THE PURPOSE OF DEPARTMENTAL APPEAL, IT WAS SUBMITTED BY LD D.R. THAT PENALTY HAS BEEN WRONGLY DELETED BY LD CIT(A) IN RESPECT OF TWO PROJECTS MENTIONED IN THE DEPARTMENTAL GROUNDS OF APPEAL. ITA NO.7125/MUM/2011 ITA NO.7144/MUM/2011 ASSESSMENT YEAR: 2005-06 8 11. WE HAVE HEARD BOTH THE PARTIES AND RIVAL CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. 12. SO FAR AS IT RELATES TO PENALTY LEVIABLE IN RES PECT OF PROJECTS OTHER THAN SANTI NIKETAN AS QUANTUM ITSELF HAS BEEN DELETED, WE SEE NO JUSTIFICATION IN LEVY OF PENALTY IN RESPECT OF THOSE PROJECTS. 13. NOW COMING TO DEDUCTION U/S.80IB(10) IN RESPECT OF SANTI NIKETAN PROJECT, ONCE THE TRIBUNAL HAS ACCEPTED SUCH CLAIM OF THE ASSESSE E, THE RELEVANT OBSERVATIONS OF THE TRIBUNAL HAVE ALREADY BEEN REPRODUCED, THEREFORE, I T WAS A DEBATABLE ISSUE. HENCE, PENALTY CANNOT BE HELD TO BE JUSTIFIED IN RESPECT O F THAT PROJECT. THEREFORE, WE SEE NO JUSTIFICATION OF LEVY OF CONCEALMENT OF PENALTY IN RESPECT OF DEDUCTION U/S.80IB(10) CLAIMED BY THE ASSESSEE. THE PENALTY IS DELETED IN ITS ENTIRETY. 14. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS DI SMISSED AND APPEAL FILED BY ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 1 ST NOVEMBER, 2012 SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (I.P.BANSAL) JUDICIAL MEMBER MUMBAI, DATED 1 ST NOVEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),40, MUMBAI 4. COMMISSIONER OF INCOME TAX, C-II , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH H MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI