M/s. Shroff Developers, Pune V. ITO Wd. 3(1), Pune

ITA 754/PUN/2010

• Counselvise Citation: 75424514 RSA 2010
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: V L JAIN
• Section: 260A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 754 /PN/20 10 ASSESSMENT YEAR : 2007 - 08 M/S. SHROFF DEVELOPERS, SHROFF HOU SE, S. NO. 74+75/2/1, P.K. SHROFF MARG, NEAR SHROFF SUYASH, BANER, PUNE VS. INCOME TAX OFFICER, WARD - 3(1), PUNE (APPELLANT) (RESPONDENT) PAN NO. AAXFS6555R APPELLANT BY: SHRI V.L. JAIN RESPONDENT BY: SHRI S.K. SINGH ORDER P ER R.S. PAD VEKAR , JM : - IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) - II, PUNE DATED 22 - 04 - 2010 FOR THE A.Y. 2007 - 08. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF THE CLAIM U/S. 80IB(10) OF RS.11,618,359/ - '. 2. THE ASSESSEE HAS ALSO FILED AN APPLICATION SEEKING LEAVE OF THE TRIBUNAL TO RAISE THE FOLLOWING ADDITIONAL GROUND: WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRE D IN NOT ALLOWING A PRO - RATA CLAIM WITH REFERENCE TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT. 3. ON THE ADMISSION OF THE ADDITIONAL GROUND , WE HAVE HEARD THE PARTIES. IN OUR OPINION THE ADDITIONAL GROUND RAISED BY THE ASSESSEE RAISES PURELY LEGAL ISSUE WHICH CAN BE ADJUDICATED ON THE BASIS OF THE FACT S AVAILABLE ON RECORD. WE, THEREFORE, FOLLOWING THE DECISION OF THE 2 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, 229 ITR 283 ADMIT THE ADDITIONAL GROUND. 4. THE FAC TS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. THE ASSESSEE HAS UNDERTAKEN A HOUSING PROJECT FROM WHICH THE ASSESSEE DECLARED THE NET PROFIT OF RS. 1,16,18,359/ - AND THE ENTIRE PROFIT WAS CLAIMED AS DEDUCTION U/S. 80IB(10) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER RAISED CERTAIN QUERIES ON THE DEDUCTION CLAIMED BY THE ASSESSEE. THE ASSESSEE STATED THAT THE BUILDING PLANS OF THE SAID HOUSING PROJECTS WERE SANCTIONED O N 14 - 06 - 2004 AND 27 - 04 - 2005. THE ASSESSEES HOUSING PROJECT WAS CONSISTING OF 42 RESIDENTIAL UNITS, BEING 18 ROW HOUSE AND 24 FLATS. AS STATED BY THE ASSESSEE THE UNITS/FLATS WERE COMPLYING WITH THE MAXIMUM PERMISSIBLE LIMIT OF THE BUILT UP AREA I.E. 150 0 SQ. FT. AS OBSERVED BY THE ASSESSING OFFICER , THE T OTAL AREA OF THE PLOT ON WHICH THE HOUSING PROJECT WAS UNDERTAKEN , AS PER THE LAYOUT PLAN WAS TO THE EXTENT OF 4100 SQ. MTRS. AND NET GROSS PLOT AREA 4100 SQ. MTRS. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE OPEN SPACE AREA WAS TO THE EXTENT OF 10% I.E. 410.02 SQ. MTRS., AMENITY SPACE AREA WAS 15% I.E. 615.08 SQ. MTRS. AND INTERNAL ROAD AREA WAS 213.78 SQ. MTRS. AND AFTER DEDUCTING ALL RESERVED AREA THE NET ARE A OF THE PLOT AS PER THE ASSESSING OFFIC ER WAS TO THE EXTENT OF 2861.12 SQ. MTRS. THE AMENITY SPACE TO THE EXTENT OF 615.08 SQ. MTRS. WAS PROVIDED IN THE PLAN. 5. AS OBSERVED BY THE ASSESSING OFFICER , THE ASSESSEE HAS VIOLATED THE CONDITION OF SEC. 80IB(10 ) (D) AS THE COMMERCIAL AREA WAS MORE THAN 2000 SQ. FT. T HE SAID OBSERVATION WAS IN RESPECT OF AMENIT Y SPACE MENTIONED IN THE SANCTIONED PLAN. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFICER AND HE CONTENDED BEFORE THE ASSESSING OFFICER THAT AS PER THE ORDERS OF THE COLLECTOR DATE D 05 - 08 - 2006 AND 07 - 06 - 2008 THE TOTAL PLOT AREA IS TO THE EXTENT OF 8200 SQ. MTRS. HE ALSO CONTENDED THAT THE 3 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE AMENIT Y SPACE IN THE TOTAL PLOT OF 8200 SQ. MTRS. WAS SEPARATELY DEMARCATED WITHIN THE BALANCE AREA OF 6970 SQ. MTRS. ON WHICH THE HOUSING PROJEC T HAS BEEN EXECUTED. THE ASSESSEE ALSO CONTENDED THAT THE AMENITIES SPACE HAS NOT BEEN SOLD AT ALL BY THE ASSESSEE. THE ASSESSEE ALSO PRODUCED THE LETTER OF THE ASSISTANT DIRECTOR OF TOWN PLANNING, PUNE DATED 09 - 06 - 2006 IN WHICH THE ASSESSEES PLAN HAS B EEN SANCTIONED WHEREIN THE AREA IS SHOWN AS 8200 SQ. MTRS. OF THE PLOT ARE A AND THE AMENITY SPACE IS MARKED AS 1230 SQ. MTRS. 6. THE ASSESSEE ALSO TOOK STAND THAT AS THE BUILDING PLAN ON THE AMENITY SPACE HAS BEEN SEPARATELY SANCTIONED AS AN INDEPENDENT UNIT , HENCE OTHERWISE ALSO IT IS TO BE TREATED AS INDEPENDENT PROJECT. THE ASSESSEE ALSO TOOK STAND THAT HOUSING PROJECT DOES NOT MEAN THAT THE RE SHOULD BE THE GROUP OF BUILDING S AND EVEN SINGLE BUILDING MAY CONSTITUTE A HOUSING PROJECT . THE ASSESSING O FFICER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE . IN HIS OPINION AMENITIES SPACE IS NOTHING BUT IT IS A COMMERCIAL AREA AND IT IS THE PART OF THE ASSESSEES HOUSING PROJECT AND THE SAID AREA IS EXCEEDED 2000 SQ. FT. WHICH IS MAXIMUM LIMIT PUT BY THE AMENDMENT TO SEC. 80IB(10) , HENCE T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) . T HE REASONS GIVEN BY THE ASSESSING OFFICER F OR DENYING THE DEDUCTION TO THE ASSESSEE ARE AS UNDER: 3.2. THE ASSESSEE'S CONTENTION THAT AMENITY SPACE IS AS SEPARATELY CARVED OUT AREA FROM THE TOTAL PLOT AREA OF 8200 SQ. MTRS LEAVING THE BALANCE AREA OF 6970 SQ. MTRS ON WHICH THE HOUSING PROJECT HAS BEEN EXECUTED IS NOT ACCEPTABLE. IT IS TRUE THAT IT IS A MANDATORY CONDITION FOR THE ASSESSEE TO RESERVE 1 5% OF AREA AS AMENITY SPACE. HOWEVER ASSESSEE IS NOT COMPELLED TO CONSTRUCT BUILDINGS OF COMMERCIAL NATURE IN THE AMENITY SPACE BY ANY ORDER OF ANY AUTHORITY. THE ASSESSEE BY ITS OWN FREE WILL HAS VENTURED INTO THE ACTIVITY OF CONSTRUCTING BUILDINGS SUCH A S BAKERY, CONSUMER STORE, BOOKS STALL, MARKET, HOSPITAL, LIBRARY, EXHIBITION HALL DISPENSARY YOGA CENTRE TRAINING INSTITUTE ETC., WHICH ARE PATENTLY OF COMMERCIAL NATURE. THE ASSESSEE BY VENTURING INTO TAKING SUCH DECISION HAS 4 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE RISKED ITS CLAIM FOR DEDUCTIO N U/S 80IB (10). THE ASSESSEE COULD HAVE VERY WELL KEPT THE SPACE OPEN AND VACANT AS REQUIRED BY THE OFFICE OF COLLECTOR IN ORDER TO FULFILL THE CONDITIONS PRESCRIBED IN THE PROVISION OF SEC.80IB(10) AND PROTECT ITS CLAIM U/S 80IB(10). THUS ASSESSEE'S PLEA THAT IT HAS CONSTRUCTED COMMERCIAL BUILDINGS OUT OF COMPULSION IS INCORRECT AND COULD NOT COME TO ITS RESCUE. 3.3. THE ASSESSEE'S CLAIM THAT IT HAS SEPARATE SANCTION FOR CONSTRUCTING BUILDINGS IN AMENITY SPACE IS ALSO NOT CORRECT. THE SAID SANCTION DATE D 7.6.2008 IS A REVISED SANCTION ISSUED BY COLLECTOR; PUNE WHICH REFERS TO EARLIER SANCTIONS DATED 27.4.2006 AND 5.8.2006, WHICH ARE SANCTION IN RESPECT OF THE BUILDING PROJECT UNDER CONSIDERATION. THEREFORE THE SANCTION FOR BUILDING COMMERCIAL BUILDINGS IS NOTHING BUT A REVISED SANCTION AND NOT AN INDEPENDENT SANCTION CLAIMED BY THE ASSESSEE. IN VIEW OF SANCTION GIVEN BY THE COLLECTOR, PANE THE COMMERCIAL BUILDINGS ALSO BECAME INTEGRAL PART OF THE ENTIRE PROJECT. THE BUILT UP AREA OF COMMERCIAL BUILDINGS IS 517.41 SQ. MTRS. 3.4. TO CONCLUDE, IT IS NOTED THAT THE AMENITY SPACE HAS NOT CONTINUED IN THE FORM OF AMENITY ONLY BUT HAS BEEN TRANSFORMED INTO A COMMERCIAL AREA BY VIRTUE OF REVISED PLAN MADE. IT IS THUS CLEAR THAT THIS COMMERCIAL HAS BEEN AREA HAS BEEN DEVELOPED ON THIS AMENITY SPACE BY VIRTUE OF A REVISED PLAN IN CONTINUATION OF THE FIRST BUILDING PLAN GIVEN. THEREFORE THE COMMERCIAL AREA WHICH HAS COME UP ON THIS AMENITY SPACE IS VERY MUCH A PART OF THE HOUSING PROJECT FOR WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB(10). 3.5. IN VIEW OF THE SAID FACT AND GIVING DUE CONSIDERATION TO THE SUBMISSION PUT FORTH BY THE ASSESSEE DEDUCTION U/S 80IB IS HEREBY DISALLOWED FOR THE FOLLOWING REASONS: (A) THE HOUSING PROJECT INCLUDES COMMERCIAL ESTABLI SHMENTS, THE BUILT UP AREA OF WHICH EXCEEDS 200 SQ. FT. THERE BY VIOLATING THE PROVISIONS STIPULATED IN 80IB(10)(D) OF THE INCOME TAX ACT 1961. (B) THE DECISION OF THE HON'BLE SPL. BENCH ITAT PUNE RELIED UPON BY THE ASSESSEE IS ALSO GIVEN DUE CONSIDERATI ON. HOWEVER, WITH DUE RESPECT OF THE DECISION OF THE HON'BLE SPL. BENCH IT MAY BE MENTIONED THAT THE DEPARTMENT HAS PREFERRED APPEAL BEFORE THE HIGH COURT U/S. 260A OF THE ACT. 5 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE 7. IN SUM AND SUBSTANCE IN THE OPINION OF THE ASSESSING OFFICER THE AMENITIE S SPACE IS NOTHING BUT IT IS A COMMERCIAL SPACE AND IT IS MORE THAN 2000 SQ. FT. HENCE T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) . T HERE IS NO OTHER REASON GIVEN BY THE ASSESSING OFFICER FOR DENYING DEDUCTION TO THE ASSESSEE . T HE ASSESSEE C HALLENGED THE ACTION OF THE ASSESSING OFFICER DENYING THE DEDUCTION BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS. THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER . T HE RELEVANT DISCUSSION AND FINDING OF THE LD. CIT(A) ARE AS UNDER: 3.4. I HAVE CO NSIDERED THE SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT THE APPELLANT HAS MADE THE SAME SUBMISSION AS MADE BEFORE THE ASSESSING OFFICER INCLUDING THE CITING OF VARIOUS TRIBUNAL DECISIONS IN THE CASE OF VANDANA PROPERTIES, SAROJ S ALES CORPORATION, SUBHASH BAFNA, ETC. ONE CBDT LETTER DATED 4.5.2001 WAS CITED, IN WHICH IT WAS STATED THAT AN ADDITIONAL HOUSING PROJECT ON EXISTING HOUSING PROJECT CAN ALSO QUALITY U/S. 80IB(10). MOREOVER, A RECENT DECISION OF PUNE TRIBUNAL IN THE CASE OF APOORVA PROPERTIES AND ESTATES IN ITA NO. 1550/PN/2008 DATED 21.8.2009 FOR A.Y. 2005 - 06 WAS ALSO CITED. THE APPELLANT HAS ALSO PLACED RELIANCE ON CERTAIN PARAS OF PUNE SPECIAL BENCH DECISION IN THE CASE OF BRAHMA ASSOCIATES AND OTHERS, 22 DTR 1. IT I S NOTICED THAT THIS DECISION OF BRAHMA ASSOCIATES WAS IN A DIFFERENT CONTEXT THAN THAT OF THE APPELLANT. FIRSTLY, IT RELATED TO A.Y.2003 - 04 AND THE QUESTION WHETHER DURING THE PERIOD PRIOR TO AMENDMENT W.E.F. A.Y. 05 - 06, WHEN CLAUSE (D) WAS INSERTED IN THE SECTION 80IB(10), THESE PROVISIONS WOULD APPLY. IT WAS HELD BY THE SPECIAL BENCH OF THE TRIBUNAL THAT IN THE YEARS PRIOR TO THE AMENDMENT, UPTO 10% OF COMMERCIAL AREA COULD BE ALLOWED IN A HOUSING PROJECT, AND STILL IT WAS ELIGIBLE U/S.80IB(10). HERE IT I S NOT SUCH A CASE, SINCE THE ASSESSMENT YEAR INVOLVED IS 2007 - 08, THAT IS MUCH AFTER THE INSERTION OF CLAUSE (D) IN SECTION 80IB(10) WHICH WAS W.E.F. A.Y.2005 - 06. SECONDLY, HERE THE ISSUE INVOLVED IS THAT WHETHER THE COMMERCIAL AREA APPROVED IN THE 15% AME NITIES SPACE WAS TO BE CONSIDERED FOR THE PURPOSE OF ATTRACTABILITY OF CLAUSE (D) OF SECTION 80IB(10). THE APPELLANT'S CONTENTION IS THAT THE PUNE ITAT IN THE CASE OF APOORVA PROPERTIES AND ESTATES PVT. LTD. IN THE ORDERS FOR 6 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE A.Y.2003 - 04 TO A.Y.2005 - 06 DAT ED 28.9.2009, HAS HELD THAT THE AMENITIES SPACE WAS INDEPENDENT OF THE COMMERCIAL AREA. HOWEVER, A PERUSAL OF THIS ORDER IN ITA NO.113/PN/07 FOR A.Y.2003 - 04 SHOWS THAT THIS ISSUE WAS NOT BEFORE THE TRIBUNAL, AND IN FACT THE ITAT HAS NOT CONSIDERED THIS POI NT AT ALL; THAT IS, WHETHER THE COMMERCIAL AREA CONSTRUCTED IN THE AMENITIES SPACE WAS TO BE CONSIDERED UNDER CLAUSE (D) OF SECTION 80IB(10). IN THAT CASE A PERUSAL OF THE ORDER SHOWS THAT ONLY SWIMMING POOL AND CLUB HOUSE WERE MENTIONED AS AMENITIES. THEREFORE, THIS CASE OF APOORVA PROPERTIES AND ESTATES PVT. LTD. WAS CLEARLY DISTINGUISHABLE ON FACTS, AS THE ISSUE INVOLVED IN THIS APPEAL HAS NOT BEEN DISCUSSED THERE AT ALL. 3.5. SO FAR AS THE OTHER DECISIONS CITED BY THE APPELLANT ARE CONCERNED, THOSE ARE ALSO RELATED TO DIFFERENT FACTS AND NOT RELATED TO ISSUE AT HAND. THE CBDT LETTER DATED 4.5.2001 ALSO RELATED TO A MATTER WHETHER AN ADDITIONAL HOUSING PROJECT WAS CONCEIVABLE ON EXISTING HOUSING PROJECT, AND IT WAS CLARIFIED THAT IT WAS POSSIBLE PRO VIDED IT WAS TAKEN UP BY A SEPARATE UNDERTAKING, AND HAVING SEPARATE BOOKS OF ACCOUNTS SO THAT CORRECT PROFIT CAN BE ASCERTAINED. HERE FOR ONE, THE COMMERCIAL CONSTRUCTION ENVISAGED IN THE AMENITIES SPACE WAS NOT A SEPARATE HOUSING PROJECT, AND FURTHER IT HAS NOT BEEN UNDERTAKEN BY A SEPARATE UNDERTAKING HAVING SEPARATE BOOKS OF ACCOUNTS ETC. THEREFORE, THIS CLARIFICATION IS ALSO OF NO HELP TO APPELLANT. 3.6. IN ACCORDANCE WITH THE ABOVE DISCUSSION IT IS HELD THAT SINCE 1230 SQ. FT. OF AMENITIES SPACE W AS CONVERTED INTO A COMMERCIAL AREA BY CHOICE BY THE APPELLANT, THE RESTRICTION OF CLAUSE (D) OF 80IB(10) WOULD NECESSARILY APPLY TO THIS PARTICULAR AREA. ACCORDINGLY, SINCE THE COMMERCIAL AREA ENVISAGED IN THE PROJECT HAS THUS EXCEEDED LIMIT PROVIDED U/S . 80IB(10)(D) OF THE ACT, THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S. 80IB(10) OF THE I.T. ACT, 1961. GROUND NO. 1 IS, THEREFORE, DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED T HE RECORD. THE MAIN PLANK OF THE ARGUMENT OF THE LD. COUNSEL IS THAT 7 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE THE AMENITIES SPACE CANNOT BE EQUATED WITH COMMERCIAL SPACE AND EVEN IF ASSUMING IT IS A COMMERCIAL SPACE BUT STILL AS THE ASSESSEES PROJECT IS SANCTIONED PRIOR TO 01 - 04 - 2005 , T HE LIMIT ATION PUT ON THE MAXIMUM COMMERCIAL AREA IN ANY HOUSING PROJECT IS NOT APPLICABLE TO THE ASSESSEES PROJECT A S THE ORIGINAL LAY OUT AND BUILDINGS PLAN WERE FIRST SANCTIONED ON 14 - 06 - 2004. HE SUBMITS THAT AMENITIES BUILDING WHICH IS SAID TO BE COMMERCIAL I S AN INDEPENDENT BUILDING AND IS BUILT UP O N SPECIFIC MARKED AREA OF 1230 SQ. MTRS . WHICH IS AN INDEPENDENT PLOT C ARVED OUT OF THE TOTAL AREA OF 8200 SQ. MTRS. HE SUBMITS THAT INITIALLY THE PROJECT WAS ON THE PLOT OF LAND OF 4300 SQ. MTRS. BUT SUBSEQUENTL Y ADJOINING PLOT WAS ACQUIRED AND HENCE , THE SEPARATE DEMARCATION WAS MADE. HE RELIED ON THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MANAN CORPORATION VS. CIT 78 DTR 205 (GUJ ) AND CIT VS. BRAHMA ASSOCIATES 333 ITR 289 (BOM). HE SUBMI TS THAT ASSUMING WITHOUT GOING INTO CONTROVERSY WHETHER IT IS A SINGLE PROJECT OR INDEPENDENT PROJECT OTHERWISE ALSO THE ASSESSEES PROJECT SANCTIONED PRIOR TO 01 - 04 - 2005 , THE ASSESSEE IS NOT HIT BY THE DEFINITION OF THE BUILT UP ARE WHICH IS APPLICABLE TO THE PROJECT WHICH HAVE BEEN APPROVED AFTER 01 - 04 - 2005. ALTERNATIVELY WE PLEADED THAT THE PRORATA DEDUCTION MAY BE ALLOWED BY EXCLUDING THE ARE A COVERED UNDER THE AMENITIES SPACE. FOR THAT PROPOSITION HE RELIED ON THE FOLLOWING DECISION: A) M/S. G K ASSOCIA TES VS. ITO (ITA NO. 1137/PN/2010) (PARA 7) B) M/S. ADITYA DEVELOPERS VS. DCIT (PUNE) (ITA NO. 791/PN/2008) (PARA 6 & 7) C) MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION CO. VS. DCIT (PUNE) (ITA NO. 822/PN/2011) (PARA 22 & 24 ) D) M/S. RAHUL CONSTRUCTION CO. VS . ITO (PUNE) (ITA NO. 1250 /PN/2009) (PARA 8 TO 10) E) RUNWAL MULTIHOUSING (P) LTD. VS. ACIT (PUNE) (ITA NO. 1015/PN/2011) (PARA 21.3) F) DEVI CONSTRUCTION CO. VS. ACIT (PUNE) (ITA NO. 1390/PN/2010) (PARA 8) 8 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE G) JAYANT M LUNAVAT VS. ACIT (PUNE) (ITA NO. 22 9/PN/2010) (PARA 5.2,5.4 & 5.5) 9. PER CONTRA THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEES ORIGINAL LAY OUT AND BUILDING PLAN WAS SANCTIONED FOR FIRST TIME ON 14 - 06 - 2004 I.E. BEFORE 31 - 03 - 2005 (PAGE 12 OF THE PAPER BOOK). IT APPEARS THAT SUBSEQUENTLY THE ASSESSEE ACQUIRED SOME ADDITIONAL LAND AND THE ORIGINAL PLAN WAS REVISED AND IN THE SANCTIONED LAY OUT 15% SPACE OF THE TOTAL ARE A IS RESERVE FOR AMENITIES BUILDING. THE LD. COUNSEL POINTED OUT THAT TILL TODAY NO T A SINGLE UNIT IN THE AMENITIES SPACE IS SOLD OUT . THE FURTHER ARGUMENT OF THE LD. COUNSEL IS THAT HOUSING PROJECT IS VERY BROUGHT TERM AND AMENITIES BUILDING ITSELF IS THE INDEPENDENT BUILDING. 10. LET US DEAL WITH THE ARGUMENT OF THE ASSESSEE GOING W ITH THE CASE OF THE ASSESSING OFFICER THAT THE AMENITY BUILDING IS NOTHING BUT IT IS COMMERCIAL BUILDING ONLY AND PART OF THE ASSESSEES HOUSING PROJECT. IN THIS CASE THE ASSESSEES ORIGINAL LAYOUT AND THE BUILDING PLAN WERE SANCTIONED ON 14 - 06 - 2004 EVEN IF THE N.A. ORDER OF THE PLOT IS DATED 16 - 09 - 2003 ( COPY OF THE PLAN PLACED AT PAGE NOS. 13 AND 14 OF THE COMPILATION ). AS PER THE LAYOUT PLAN SANCTIONED ON 14 - 06 - 2004 , THE TOTAL AREA OF THE PLOT IS SHOWN AT 4100 SQ. MTRS. AND AREA UNDER THE AMENITY SPACE 15% I.E. 615 SQ. MTRS. IT APPEARS THAT SUBSEQUENTLY THE ASSESSEE SOUGHT THE REVIS ION I N THE SANCTIONED LAYOUT AND PLAN BUT THE AREA OF THE PLOT WAS 4100 SQ. MTRS. T ILL 01 - 04 - 2005 THE ASSESSEE HAS NOT DONE ANYTHING ON THE PLOT. IT APPEARS THAT THE ASSESS EE ACQUIRED THE ADJOINING LAND AND FILED THE FURTHER REVISED PLAN AND LAYOUT FOR THE APPROVAL TO THE LOCAL AUTHORITY AND THE APPROVAL WAS GIVEN TO THE SAID PLAN ON 05 - 08 - 2006. IN THE SAID LAYOUT THE TOTAL AREA OF THE PLOT IS SHOWN AT 8400 SQ. FT. ( COPY OF THE PLAN AND LAYOUT IS AT PAGE NOS. 28 AND 30 OF COMPILATION) . FROM THIS FACTUAL ASPECT , IT CAN SAFELY BE CONCLUDED 9 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE THAT IN FACT THE PLAN SANCTIONED ON 05 - 08 - 2006 IS ALMOST A NEW PLAN AND IT WAS NOT MERELY THE REVIS ION OF THE EXISTING PLAN , EVEN THOUGH I N THE APPLICATION TO THE LOCAL AUTHORITY THE ASSESSEE HAS STATED REVISION OF THE PLAN AND LAYOUT. IN CONSEQUENCE OF ACQUISITION OF THE ADDITIONAL LAND , THE AREA OF THE AMENITIES SPACE WAS ALSO INCREASED SO IT CANNOT BE SAID THAT THE PLAN SANCTIONED ON 05 - 08 - 2006 IS ONLY THE REVISED PLAN. WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE LD. COUNSEL THAT AS THE PROJECT WAS SANCTIONED ON 16 - 06 - 2004 , HENCE THE DEFINITION OF THE BUILT UP ARE A INTRODUCED IN SEC. 80IB(10) BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 01 - 04 - 2005 IS NOT APPLICABLE. AFTER ANXIOUSLY PERUSING THE DOCUMENTS ON RECORD , INCLUDING THE LAYOUT PLAN AND OTHER PERMISSIONS , IN OUR OPINION THE EFFECTIVE SANCTIONED TO THE ASSESSEES HOUSING PROJECT IS ON 05 - 08 - 2006 AND HENCE, THE ASSESSEE WAS VERY MUCH AW ARE REGARDING THE CHANGE IN LAW AND HE COULD HAVE ALSO ACCORDINGLY MADE THE CHANGES IN THE PLAN AND LAYOUT. WE FIND NO MERIT ON THE FIRST ARGUMENT OF THE ASSESSEE IN RESPECT OF THE APPLICABILITY OF THE DEFINITION OF THE BUILT UP ARE A INTRODUCED IN SEC. 80 IB(10) W.E.F. 01 - 04 - 2005. WE HOLD THAT AMENDMENT INTRODUCED TO SEC. 80IB(10), PUTTING, CEILING ON COMMERCIAL AREA IS APPLICABLE TO THE ASSESSEES PROJECT. 1 1 . NOW WE ADDRESS THE NEXT LIMB OF THE ARGUMENT OF THE LD. COUNSEL I.E. AMENITIES SPACE ITSELF IS A SEPARATE PROJECT . W E FIND FORCE IN THE SAID CONTENTION OF THE ASSESSEE . A S PER THE INFORMATION ON RECORD , W E FIND THAT THE ASSESSEE WAS REQUIRED TO RESERVE 15% AREA OF HIS PLOT FOR AMENITIES SPACE EVEN THOUGH THE LD. COUNSEL HAS TAKEN LOT OF EFFORTS T O CONVINCE THAT AMENITY BUILDING IS DIFFERENT THAN COMMERCIAL BUILDING BUT WE PREFER NOT TO GO INTO THE SAID CONTROVERSY. WE ARE EXAMINED THIS ISSUE ON THE DIFFERENT CONTENTION OF THE ASSESSEE THAT AMENITIES SPACE FOR AMENITY BUILDING IS A PROJECT ITSELF . O N THE PERUSAL OF THE LAYOUT AND PLAN , IT IS UNDISPUTED FACT ON RECORD THAT FROM THE FIRST APPROVED LAYOUT, 10 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE T HE ASSESSEE HAS SHOWN 15% AREA RESERVE IN PLOT OF LAND AS AMENITIES SPACE. THE ARGUMENT OF THE LD. COUNSEL IS THAT THE LOCAL AUTHORITY IN TERMS OF DC RULES AND MAHARASHTRA REGIONAL TOWN PLANNING ACT, 1966 (IN SHORT MRTP ACT) MANDATES THAT IF THE PLOT AREA IS MORE THAN 1 ACRE IN THE RESIDENTIAL ZONE THEN AMENITIES SPACE TO THE EXTENT OF 15% OF THE PLOT AREA SHALL HAVE TO BE PROVIDE D IN THE LAYOUT . THE LD. COUNSEL ALSO REFERRED TO SEC. 22 OF THE MRTP ACT, 1966 TO IMPRESS HIS ARGUMENT ON THE POINT THAT THE RESERVATION OF THE AMENIT Y SPACE IS GOVERNED BY THE RELEVANT STATUTE AND IS NOT THE MATTER OF CHOICE OF THE DEVELOPER. THE ASSESSEE HAS ALSO FI LED THE COPY OF THE SANCTIONED PLAN OF THE AMENITY BUILDING ON THE RESERVE SPACE OF 1230 SQ. MTRS. WHICH IS PLACE AT PAGE NO. 40 OF THE COMPILATION. WE FURTHER FIND THAT FOR THE CONSTRUCTION OF THE BUILDING OF THE AMENITY SPACE SEPARATE PERMISSION HAS BEE N GRANTED BY THE DISTRICT COLLECTOR BEING COMPETENT LOCAL AUTHORITY VIDE ORDER DATED 07 - 06 - 2008 . I F THE BUILDING ON THE AMENITY SPACE HAS BEEN GRANTED SPECIFIC PERMISSION SEPARATELY , I N OUR OPINION IT PARTAKE THE CHARACTER OF INDEPENDENT PROJECT AND CANNO T BE TAGGED WITH THE ASSESSEES OTHER PROJECT S . THE LD. COUNSEL ALSO SUBMITTED THAT NOT A SINGLE UNIT IN THE SAID BUILDING HAS BEEN SOL D TILL TODAY EVEN THOUGH GIVEN ON LEASE AND NO PROFIT FROM THE AMENITY BUILDING SPACE IS INCLUDED IN THE ELIGIBLE PROFIT ON WHICH THE DEDUCTION U/S. 80IB(10) HAS BEEN CLAIMED. THE LD. COUNSEL HAS RELIED ON THE PLETHORA OF THE DECISION S ON THIS LIMB OF ARGUMENT BUT IN OUR OPINION THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTY 3 53 ITR 36 (BOM) IS APPLICABLE TO THE FACTS OF THIS CASE. WE, ACCORDINGLY, HOLD THAT THE AMENITY BUILDING IS AN INDEPENDENT PROJECT ITSELF AND IT CANNOT BE TAGGED WITH OTHER PROJECT S OF THE ASSESSEE. WE, FURTHER HOLD THAT THE ASSESSEE HAS NOT VIOLATED ANY OF THE CONDITIONS OF SEC. 80IB(10) TO GAIN ELIGIBILITY FOR CLAIMING THE DEDUCTION AND HENCE BOTH THE AUTHORITIES BELOW ERRED BY DENYING THE DEDUCTION TO THE ASSESSEE. WE, ACCORDINGLY, ALLOW THE ASSESSEES CLAIM OF 11 ITA NO. 754/PN/2010, M/S. SHROFF DEVELOPERS, PUNE DEDUCTION ON THE ABOVE REASON AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S. 80IB(10). WE ALSO MAKE IT CLEAR THAT AS THE AMENITY BUILDING IS TREATED AS AN INDEPENDENT PROJECT , THE ASSESSEE IS NOT ENTITLED TO INCLUDE THE PROFIT EARNED FROM THE SALE OF ANY OF THE UNIT IN THE SAID BU ILDING FOR CLAIMING THE DEDUCTION U/S. 80IB(10). 1 2 . IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 16 - 12 - 2013 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 16 TH DECEMBER, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, PUNE 4 THE CIT - II, PUNE 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME T AX APPELLATE TRIBUNAL PUNE