Mauli Hills Cottages, Pune V. ITO, Pune

ITA 765/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9745 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: S N INAMDAR
• Section: 80IB; 263; 63

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 765/PN/2010 AND ITA NO.146/PN/2011 (ASSESSMENT YEARS 2005-06 & 2007-08) M/S. MAULI HILLS COTTAGES, 798 BHANDARKAR INSTITUTE ROAD, PUNE 411 004 .. APPELLANT PAN NO. AAGFM 9040A VS. INCOME TAX OFFICER WARD-3(1), PUNE .. RESPONDENT ASSESSEE BY : SRI S.N. INAMDAR DEPARTMENT BY : SRI S.K. SINGH DATE OF HEARING : 17-07-2012 DATE OF PRONOUNCEMENT : 14-09-2012 ORDER PER R.S. PADVEKAR, JM: THESE TWO APPEALS OF THE ASSESSEE ARE ARISING OUT O F THE DIFFERENT ORDERS, ONE BY THE LEARNED CIT, PUNE-II, PUNE U/S.2 63 OF THE ACT AND ANOTHER BY THE LEARNED CIT(A)-II, PUNE FOR THE ASSE SSMENT YEARS 2005-06 AND 2007-08 RESPECTIVELY. 2. SO FAR AS THE ASST. YEAR 2005-06 IS CONCERNED TH E LEARNED CIT-II, PUNE BY EXERCISING HIS REVISIONAL POWER U/S. 263 VIDE HI S ORDER DATED 30-03-2010 DIRECTED THE ASSESSING OFFICER TO WITHDRAW THE DEDU CTION ALLOWED U/S.80IB(10) OF THE ACT WHICH WAS GRANTED TO THE A SSESSEE COMPLETING THE ASSESSMENT IN ORDER PASSED U/S.143(3) OF THE ACT. 3. WE FIRST TAKE THE ASSESSEES APPEAL BEING ITA NO . 146/PN/2011 FOR THE ASST. YEAR 2007-08 IN WHICH WHILE COMPLETING THE AS SESSMENT U/S.143(3) OF THE ACT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.8 0IB(10) HAS BEEN DENIED. 4. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER : THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CON STRUCTION AND DEVELOPMENT OF THE RESIDENTIAL UNITS/COTTAGES. SO FAR AS THE ASSESSMENT YEAR 2007-08 IS CONCERNED THE ASSESSEE FILED THE RE TURN OF INCOME CLAIMING 2 DEDUCTION OF RS.55,09,559/- U/S.80IB(10) OF THE ACT ON THE ENTIRE PROFITS FROM SAID ACTIVITY. AS OBSERVED BY THE ASSESSING O FFICER THE CLAIM FOR DEDUCTION IN RESPECT OF THE PROFIT BY THE ASSESSEE WAS ON THE ON-GOING PROJECT OF DEVELOPMENT AND CONSTRUCTION OF UNITS/CO TTAGES ON THE LAND ADMEASURING ABOUT 2,23,037 SQ.MTRS. AT VILLAGE AGLA MBE, TALUKA HAVELI, DISTRICT PUNE. THE PROJECT FOR DEVELOPMENT AND CON STRUCTION OF THE UNITS AND THE COTTAGES IS PART OF THE PROJECT UNDERTAKEN BY T HE ASSESSEE ON THE TOTAL AREA OF THE LAND OF 4,13,500 SQ.MTRS. IN THE SAID V ILLAGE. THE SAID PROJECT HAS BEEN SANCTIONED BY THE COLLECTOR OF PUNE VIDE H IS ORDER DATED 31-08- 2000 AND 17-05-2001. AFTER EXAMINING THE DETAILS F ILED BY THE ASSESSEE THE ASSESSING OFFICER WAS OF THE OPINION THAT THE PROJE CT IN RESPECT OF WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB(10) CANNOT BE CALLED A HOUSING PROJECT. THE ASSESSING OFFICERS SAID OPINION WAS BASED ON THE FACT THAT THE COLLECTOR OF PUNE WHO WAS THE SANCTIONING AUTHORITY , HAS SANCTIONED SAID PROJECT AS TOURIST RESORT. AFTER EXAMINING THE SAMP LE COPY OF THE AGREEMENT SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER HA S OBSERVED THAT THE ASSESSEE IS BASICALLY SELLING THE LAND ALONG WITH B ARE CONSTRUCTION IN THE FORM OF COTTAGES. THE ASSESSING OFFICER HAS NOTED THAT AS PER THE SANCTIONED PLAN, THE LAND ON WHICH THE SAID PROJECT HAS COME U P OR SAID PROJECT IS UNDERTAKEN IS NOTIFIED AS TOURISM DEVELOPMENT ZONE AND FOR THE PURPOSE OF THE TOURISM DEVELOPMENT THE ASSESSESS PROJECT IS SANCTIONED. 5. THE ASSESSING OFFICER THUS CAME TO THE CONCLUSIO N THAT AS PER THE SANCTION ACCORDED BY THE COLLECTOR, PUNE USAGE OF T HE PLOTS OF LAND AND COTTAGES ARE NOT OF PERMANENT RESIDENCE BUT AS A PL ACE TO BE UTILIZED FOR THE HOLIDAY PURPOSE OR LEIZURE. THE ASSESSING OFFICER HAS MADE REFERENCE TO THE DEVELOPMENT CONTROL REGULATIONS (DCR) FOR THE PUNE REGION, MORE PARTICULARLY IN THE CONTEXT OF TOURISM DEVELOPMENT ZONE APPEARING IN PARA 6.2 (I) AND HELD THAT AS PER THE DCR THE TOURISM DE VELOPMENT ZONE (TDZ) IS TO BE USED FOR THE TOURISM PURPOSE & NOT FOR THE RE SIDENTIAL PURPOSE. THE ASSESSING OFFICER ALSO MADE REFERENCE TO THE CBDT CIRCULAR NO.5/2008 IN WHICH IT IS MENTIONED THAT THE TAX INCENTIVE WAS PR OVIDED TO INCREASE THE STOCK OF HOUSES FOR LOWER AND MIDDLE INCOME GROUPS. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT USE OF ANY COTTAGE/UNIT FO R HOLIDAY PURPOSE OR REST HOUSES IS NOT IN ACCORDANCE WITH THE INTENT OF THE LEGISLATURE AND SAME DOES NOT ADHERE TO THE BASIC CRITERIA PROVIDED FOR ELIGI BILITY TO CLAIM THE DEDUCTION U/S.80IB(10) OF THE ACT. HE FINALLY CONCLUDED THAT THE PROJECT OF THE ASSESSEE CANNOT BE TREATED AS HOUSING PROJECT WIT HIN THE MEANING OF SECTION 80IB(10) OF THE ACT AND ASSESSEE IS NOT ENT ITLED FOR ANY DEDUCTION. 3 6. THE ASSESSEE CHALLENGED THE FINDING OF THE LEARN ED ASSESSING OFFICER BEFORE THE CIT(A). THE LEARNED CIT(A) CONFIRMED TH E VIEW TAKEN BY THE ASSESSING OFFICER ON THE ELIGIBILITY OF A DEDUCTION U/S.80IB(10) AND DISMISSED THE RELEVANT GROUNDS TAKEN BY THE ASSESSEE ON THE M ERITS. THE OPERATIVE PART OF THE FINDING OF THE LEARNED CIT(A) IS AS UND ER : 3.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND MATERIAL AVAILABLE ON RECORD. FIRST OF ALL IT IS AMPLY CLEA R FROM THE SANCTION ORDER DATED 17-05-2001 THAT THE LAND AND BUILDING WAS TO BE USED ONLY AS TOURIST RESORT. MOREOVER THE A.O. REPRODUCED ON PAGES 6 AN D 7 OF THE ORDER (PARA 3.2 ABOVE) THE ALLOWABLE USE AS PER PARA 18(O) OF A GREEMENT FOR PURCHASE, WHICH SPECIFIES THAT THE UNIT FALLS IN THE TDZ, AND THEREFORE, THE UTILISATION WAS TO BE ONLY AS PER TDZ RULES. THE RELEVANT PORT ION OF THE TDZ RULES OUT OF THE DC RULES PARA 6.1(I) HAS ALSO BEEN GIVEN ABO VE. A PLAIN READING OF THE SAME WOULD CLEARLY RULE OUT ANY RESIDENTIAL OR DWELLING UNITS IN SUCH PROJECTS. THE BUILDING USER PERMITTED WAS FOR HOTE LS, COTTAGES FOR TOURISTS, CANTEENS/RESTAURANTS, TEA STALLS, PAN AND CIGARETTE BOOTHS, BATHS AND TOILETS FOR CAMPING SITES, TENTS/CARAVAN, PUBLIC UTILITIES AND SERVICES LIKE INFORMATION CENTRE, TOURIST RECEPTION CENTRE, TELEPHONE BOOTHS, WATER SPORTS FACILITIES, SWIMMING POOLS, BOAT HOUSE, BADMINTON HALLS ETC. N OWHERE DOES IT GIVES THE IMPRESSION THAT A REGULAR RESIDENTIAL DWELLING UNIT WAS ALSO ENVISAGED UNDER THESE RULES. 3.6 THE DICTIONARY MEANING OF A RESORT IS GIVEN BELOW : IN ACCORDANCE WITH THE OXFORD DICTIONARY, A RESORT MEANS A PLACE FREQUENTED FOR HOLIDAYS OR RECREATION OR F OR A PARTICULAR PURPOSE ON THE OTHER HAND THE CAMBRIDGE LEARNERS DICTIONARY GIVES THE MEANING AS A PLACE WHERE MANY PEOPLE GO FOR A HOLIDAY. IT IS THEREFORE PRETTY OBVIOUS THAT THE APPELLANTS PROJECT OF A TOURIST RESORT DEVELOPED IN A TOURISM DEVELOPMENT ZONE CANNOT BE C OVERED WITHIN THE AMBIT OF A HOUSING PROJECT WHICH NECESSARILY ENVI SAGES DWELLING UNITS TO BE UTILISED FOR REGULAR RESIDENTIAL PURPOSES. THE MEA NING OF RESORT WAS THE BASIS ON WHICH THE CLARIFICATORY LETTER DATED 25-09-2002 WAS ISSUED BY THE COLLECTOR, WHICH ONLY PERMITTED THE INDIVIDUAL OR I NSTITUTIONAL OWNERSHIP OF THESE PLOTS FOR DEVELOPMENT PURPOSE. IT WAS ALSO S PECIFIED IN THIS LETTER THAT IT WAS IN ADDITION TO THE USER OF THE COMPLEX MAINL Y FOR TOURISTS RESIDENTIAL CENTRES, THAT IT WOULD ALSO BE USED FOR REST HOUSES FOR PERSONS AND INSTITUTIONS, FOR PEOPLE DESIROUS OF LIVING IN THE COMPANY OF NATURE. IT CANNOT THEREFORE BE INTERPRETED AS MEANING THAT THIS LETTE R ALLOWED THE USE BY 4 PERSONS DESIROUS TO RESIDE IN THE COMPANY OF NATURE , AND ALSO AS A REST HOUSE, AS HAS BEEN CLAIMED IN THE APPELLANTS SUBMI SSION BEFORE THE A.O. AS WELL AS DURING THE APPELLATE PROCEEDINGS. IT ONLY SPECIFIED THE LOCATION OF THE REST HOUSE, I.E. NATURAL SURROUNDINGS. THIS DOES NO T IMPLY THAT THE PARTICULAR RESORT TURNS INTO A HOUSING PROJECT COMPRISING OF D WELLING UNITS FOR MIDDLE CLASS PEOPLE, FOR WHICH THE PROVISIONS OF SECTION 8 0IB(10) WAS INCORPORATED IN THE STATUTE. 3.7 THE A.O. HAS VERY CORRECTLY POINTED OUT THAT UN DER THE HEAD INTENTION OF LEGISLATURE THAT THE CBDT CIRCULARS AND FINANCE MINISTERS SPEECH FOR INTRODUCING THE PROVISIONS FOR DEDUCTION U/S.80IB(1 0) OF THE I.T. ACT, WAS TO INCREASE THE SUPPLY OF AFFORDABLE HOUSES FOR LOWER AND MIDDLE INCOME GROUPS, AND IT WAS TO ADDRESS THE PROBLEM OF HABITATION AND NOT FOR THE PURPOSE OF HOLIDAYING. HERE THE APPELLANT HAS ADMITTED THAT I T WAS A TOURIST RESORT AND IT WAS UNDER THE TDZ; ONLY CONTENTION IS THAT ADDITION AL USER WAS ALSO ALLOWABLE FOR PERSONS DESIROUS OF LIVING IN THE COMPANY OF NA TURE. BUT THIS ALLOWABILITY IS IN THE CONTEXT OF ITS USER AS A REST HOUSE FOR T HE EMPLOYEES, AND REST HOUSE FOR PEOPLE WHO WANTED TO SPEND HOLIDAYS IN COMPANY OF NATURE. THE LOCATION OF THE RESORT WHICH WAS AWAY FROM THE CITY, NEAR TH E BACK WATERS OF KHADAKWASLA DAM ALSO GIVES CREDENCE TO THIS CONCLUS ION. IT IS NOW A NORMAL FEATURE IN RESPECT OF VARIOUS CORPORATE BODIES BOTH IN THE PUBLIC AND PRIVATE SECTORS, BANKS, LARGE INSTITUTIONS, LOCAL BODIES ET C. TO HAVE A GUEST HOUSE FOR USE OF ITS EMPLOYEES FOR LEISURE, OR HOLIDAY FOR A SHORT PERIOD. SUCH GUEST HOUSES MAY BE LOCATED NEAR THE CITY OF PUNE IN SCEN IC LOCATIONS LIKE MAHABALESHWAR/PANCHGANI, KHANDALA, LONAVALA, LAVASA , NEAR MULSHI DAM, KHADAKWASLA DAM, ETC. HOWEVER, THIS DOES NOT IMPLY THAT THESE GUEST HOUSES LOCATED AT SUCH PLACES CAN BE CATEGORIZED AS RESIDENTIAL DWELLING UNITS FOR THE PURPOSES OF GIVING EXEMPTION U/S.80IB(10) O F THE ACT. 3.8 THE INTENT OF LEGISLATURE UNDER THE PROVISIONS OF SECTION 80IB(10) HAS BEEN AMPLY EXPLAINED IN THE DECISION OF THE SPECIAL BENCH OF ITAT PUNE IN THE CASE OF BRAMHA ASSOCIATES & OTHERS (2009) 122 T TJ (PUNE) SB) 433, VIDE ORDER DATED 06-04-2009. THE ITAT AFTER GOING THROU GH THE BUDGET SPEECHES OF SUCCESSIVE FINANCE MISTERS, SINCE THE YEAR 1997 ONWARDS, WHICH VARIOUS INCENTIVES FOR HOUSING DEVELOPMENT WERE INTRODUCED, WHICH INCLUDED INCENTIVES GIVEN VIDE SECTION 80IB(10) ALSO, ACCEPT ED THE PROPOSITION THAT THE WORDS OF THE FINANCE MINISTER IN THE VARIOUS BUDGET SPEECHES SHOW THAT THE REFERENCE TO A HOUSING PROJECT WAS FOR THE PURPOS E OF REFERENCE TO DWELLING UNITS. SOME OF THE OBSERVATIONS OF THE ITAT IN TH E ORDER IS REPRODUCED BELOW : WE ARE IN CONSIDERED AGREEMENT WITH THE LEARNED SP ECIAL COUNSEL THAT ENTIRE THRUST OF THE TAX CONCESSION U/S.8IB(10) IS AIMED AT PROVIDING MORE DWELLING UNITS . IN EVERY BUDGET SPEECH, THE SUCCESSIVE FINANCE 5 MINISTERS HAVE MADE EVERY ENDEAVOUR TO ADDRESS PROB LEM OF ACUTE SHORTAGE OF DWELLING UNITS PRIMARILY FOR LESS PRI VILEGED SECTIONS OF THE SOCIETY. AS LEARNED SPECIAL COUNSEL RIGHTS POINTS OUT THAT THIS PROBLEM IS TACKLED ON ONE HAND BY EXPENDITURE ON VARIOUS HO USING SCHEMES AND ON THE OTHER HAND BY PROVIDING TAX INCENTIVES O N THE REVENUE SIDE. AS A MATTER OF FACT, THE FACT THAT SIZE OF RESIDENT IAL UNIT IS RESTRICTED TO 1,000 SQ.FTS. IN AREAS WITHIN 25 KMS FROM MUNICIPAL LIMITS IN DELHI AND MUMBAI, AND TO 1,500 SQ. FTS IN OTHER AREAS, ALSO S HOWS THIS UNMISTAKABLE THRUST IN THE TAX INCENTIVE. THE TAX INVENTIVE BY WAY OF DEDUCTION U/S.80IB(10) IS CLEARLY LINKED TO PROVISI ON FOR AFFORDABLE DWELLING UNITS. AS REGARDS ASSESSEES CONTENTION THAT THE PROVISION IS AIMED AT PROMOTING HOUSE BUILDING ACTIVITY, IN OUR CONSIDERED OPINION, PROMOTION OF HOUSE BUILDING ACTIVITY CANNOT BE VIEW ED IN ISOLATION OR AS MAIN OBJECTIVE OF THIS PROVISION. UNDOUBTEDLY, WHE N CONSTRUCTION OF DWELLING UNITS TAKES PLACE, HOUSING BUILDING ACTIVI TY IS PROMOTED AND ECONOMIC BENEFITS FROM THE SAME ARE REALIZED. NO F ISCAL INCENTIVE IS A UNDIMENSIONAL MEASURE FOR ACHIEVING AN OBJECTIVE; I T HAS SEVERAL DIMENSIONS AND, MORE OFTEN THAN NOT, IT RESULTS IN OR IS INTENDED TO RESULT IN MORE THAN ONE BENEFIT IN ONE OR MORE AREA S. HOWEVER, THAT CANNOT MEAN THAT PROMOTING HOUSE BUILDING ACTIVITY IS MAIN OBJECTIVE OF SECTION 80IB(10), OR ELSE THERE WAS NO NEED OF P LACING ANY RESTRICTION ON THE SIZE OF THE DWELLING UNIT. IT C ANNOT BE ANYBODYS CASE THAT ECONOMIC BENEFITS FROM CONSTRUCTIONS OF S MALLER DWELLING UNITS WILL BE MORE THAN THE ECONOMIC BENEFITS FROM CONSTRUCTION OR LARGER DWELLING UNITS. A PLAIN READING OF SECTION 80IB(10), IN ENTIRELY, MAKES IT CLEAR THAT THIS SECTION IS AIMED AT PROMOT ING CONSTRUCTION OF HOUSING PROJECTS SO AS TO ADDRESS THE PROBLEM OF SH ORTAGE OF DWELLING UNITS. NO DOUBT THE WORD HOUSE IS AMENABLE TO VARIOUS ME ANINGS IN THE DICTIONARIES, BUT WHEN WE EXAMINE ITS MEANING I N THE CONTEXT IN WHICH IT IS USED IN SECTION 80IB (10), IT REFERS TO DWELLING UNITS. THE PREDOMINANT OBJECTIVE OF THIS INCENTIVE OF THIS INC ENTIVE PROVISION, THEREFORE, IS TO ENCOURAGE BETTER AVAILABILITY OF T HE DWELLING UNITS FOR LOW AND MIDDLE CLASS SEGMENTS OF THE SOCIETY. AS FOR THE EMPHASIS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON D ICTIONARY MEANINGS OF THE WORD HOUSE AND THEIR CONTENTION THAT SINCE THE SEVERAL DICTIONARY MEANINGS OF THE EXPRESSION HOUSE GO WE LL BEYOND DWELLING UNITS, CONNOTATIONS OF THE EXPRESSION HOUSE CANNO T REMAIN CONFINED TO THE DWELLING UNIT, WE MAY POINT OUT THAT AS HELD BY THE HONBLE SUPREME COURT IN THE VENKATESHWARA HATCHERIES (SUPR A), WHERE DICTIONARY GIVES MORE THAN ONE MEANING OF A WORD, T HAT WORD HAS TO BE CONSTRUED IN THE CONTEXT OF THE PROVISIONS OF TH E ACT AND REGARD MUST ALSO BE HAD TO THE LEGISLATIVE HISTORY OF THE PROVISIONS OF THE ACT AND THE SCHEME OF THE ACT. VIEWED IN THIS PERSPEC TIVE, AND BEARING IN 6 MIND UNAMBIGUOUS THRUST OF THE LEGISLATIVE HISTORY AND BACKGROUND OF THE PROVISIONS OF SECTION 80IB(10), MOST APPROPRIAT E MEANING OF THE EXPRESSION HOUSE IN THE PRESENT CONTEXT, IN OUR H UMBLE UNDERSTANDING, IS A DWELLING UNIT. . . . . . . WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE TAX INCENTIVE BY WAY OF DEDUCTION U/S.80IB(10) IS PREDOMINANTLY FOR THE PURPOSE OF AUGMENTING AFFORDABLE DWELLING UNITS, AND IT MUST B E INTERPRETED IN THAT LIGHT. WE ARE UNABLE TO SEE ANY LEGALLY SUSTA INABLE MERITS IN LEARNED COUNSELS PLEA THAT THE PURPOSE OF SECTION 80IB(10) IS TO ENCOURAGE HOUSING BUILDING ACTIVITY PER SE AND IT I S IMMATERIAL WHETHER SUCH AN ACTIVITY IS TO CONSTRUCT DWELLING UNITS OR COMMERCIAL UNITS. THE INTERPRETATION CANVASSED BY THE LD. COUNSEL FOR THE ASSESSEE IS CLEARLY CONTRARY TO THE SCHEME OF THE ACT AND LEGISLATIVE H ISTORY OF THE PROVISIONS OF SECTION 80IB(10). 3.9 THE ABOVE DISCUSSION INCLUDING THAT MADE BY THE A.O. IN THE ASSESSMENT ORDER REVEALS THAT THE APPELLANTS PROJE CT OF COTTAGES COMPRISED IN A TOURIST RESORT, DEVELOPED IN A TDZ CAN NEVER B E TREATED AS HAVING SPECIFIED THE PARAMETERS LAID DOWN BY THE LEGISLATU RE FOR THE PURPOSES OF GRANTING INCENTIVES U/S.80IB(10) OF THE ACT, WHICH HAS BEEN VERY SUCCINCTLY NARRATED BY THE ITAT PUNE SPECIAL BENCH. IN VIEW O F THIS DISCUSSION IT IS HELD THAT THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U /S.80IB(10) OF THE I.T. ACT. GROUND NOS. 1 TO 5 OF APPEAL ARE, THEREFORE, DISMIS SED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LEARNED COUNSEL VEHEMENTLY ARGUED THAT THE PARLIAMENT HAS USED THE EXPRESSION HOUSING PROJECT IN SEC.80IB(1 0) OF THE ACT WHICH HAS TO BE INTERPRETTED IN THE BROADER TERMS WHEN NO OTH ER INTENTION IS SEEN RESTRICTING MEANING OF SAID EXPRESSION. HE SUBMITS THAT THE NOMENCLATURE OF THE PROJECT BY THE SANCTIONING AUTHORITY CANNOT BE THE ONLY THE SOLE CRITERIA FOR DECIDING WHETHER A PARTICULAR PROJECT IS HOUSIN G PROJECT OR NOT. HE ALSO PRODUCED THE PHOTOGRAPHS OF THE COTTAGES/UNITS BUIL T BY THE ASSESSEE IN THE SAID PROJECTS. HE SUBMITS THAT NOW THERE IS A CONC EPT OF SECOND HOUSE AND THAT IS NOT PROHIBITED U/S.80IB(10) OF THE ACT. HE SUBMITS THAT NONE OF THE RESIDENTIAL UNITS SOLD ARE EXPLOITED FOR ANY COMMER CIAL OR RESORT PURPOSE OTHER THAN PURE RESIDENCE AS INFACT ALMOST ALL THE BUYERS OF THE COTTAGES/UNITS ARE STAYING THERE. HE SUBMITS THAT THE RESIDENTIAL UNITS ARE SOLD ALONG WITH A PARTICULAR PLOT OF LAND AND THE S AID PROJECT IS DEVELOPED AS A RESIDENCE IN THE NATURAL ENVIRONMENT. HE SUBMI TS THAT MANY OF THE 7 BUYERS OF THE RESIDENTIAL COTTAGES/UNITS ARE OCCUPY ING THOSE UNITS FOR SUBSTANTIAL PERIOD OF THE YEAR FOR THEIR RESIDENCE. NOWHERE IT IS PROVIDED IN THE SAID SECTION THAT HOUSING UNIT SHOULD BE THE PE RMANENT RESIDENCE OF THE BUYER/PERSON EVEN IT CAN BE OCCASIONALLY USED. ONC E THERE IS A UNITY BETWEEN THE TWO RESIDENTIAL HOUSES OF A PERSON THEN SAME HAS TO BE TREATED AS A RESIDENTIAL UNIT OF THE ASSESSEE. HE ARGUES T HAT THE INTERPRETATION GIVEN BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) TO EXPRESSION HOUSING PROJECT IS TOTALLY MISPLACED. HE REFERRED TO PAGE 29 OF THE PAPER BOOK WHERE THE PLAN OF THE PROJECT IS PLACED AS WELL AS PAGE 87 OF THE PAPER BOOK WHERE THE COPY OF THE COLLECTORS PERMISSION TO THE SAID PROJECT DATED 17-05- 2001 IS PLACED. HE SUBMITS THAT THERE IS NO DISPUT E THAT THE PROJECT IS SANCTIONED AS A TOURISM RESORT AS THE SAID AREA O F THE LAND IS NOTIFIED AS A GREEN ZONE. HE SUBMITS THAT THE PLOTS ARE NOT SO LD BUT THE RESIDENTIAL UNITS ALONG WITH THE PLOTS ARE SOLD. THE WORD HOU SING MEANS THE UNITS OR HOUSES WHICH ARE USED FOR PURELY RESIDENTIAL PURPOS E OF THE HUMANBEING. HE SUBMITS THAT IN THE CASE OF BRAHMA ASSOCIATES 333 I TR 289 (BOM.) THE REFERENCE OF THE HOUSING PROJECT IS IN THE CONTEX T OF THE COMMERCIAL UNITS IN SAID PROJECT AND IN THAT CONTEXT PRIOR TO THE AM ENDMENT TO SECTION 80IB(10) OF THE ACT HOW TO DECIDE A PARTICULAR PROJ ECT IS A HOUSING PROJECT OR NOT, IN A CASE A HOUSING PROJECT COMPRISE OF COMMER CIAL UNITS, HAS BEEN EXPLAINED BY THE HONBLE HIGH COURT. HE PLEADED TH AT THE PROJECT UNDERTAKEN BY THE ASSESSEE IS WITHIN THE FOUR CORNE RS OF THE HOUSING PROJECT WHICH IS CONTEMPLATED U/S.80IB(10) OF THE ACT. 8. PER CONTRA THE LEARNED CIT VEHEMENTLY ARGUED THA T THE LEGISLATIVE INTENT IN GIVING THE BENEFIT OF DEDUCTION U/S.80IB( 10) IS TO AUGMENT MORE AND MORE CONSTRUCTION OF THE HOUSES TO COPE UP WITH THE INCREASING DEMAND OF HOUSING AND AT THE SAME TIME THE RESTRICTION IS PLACED ON THE AREA WHEREBY IT SHOULD BE WITHIN REACHABLE LIMITS OF THE MIDDLE CLASS & LOWER INCOME GROUP IN THE SOCIETY. HE SUBMITS THAT THE CO LLECTOR OF PUNE HAS SANCTIONED THE SAID PROJECT AS A TOURISM RESORT A ND NOT AS A HOUSING PROJECT AND HENCE, AS HELD BY THE HONBLE HIGH COUR T OF BOMBAY IN THE BRAHMA ASSOCIATES (SUPRA), IF THE PROJECT IS NOT SA NCTIONED AS A HOUSING PROJECT, THEN THE SAME CANNOT BE TREATED AS A HOUSI NG PROJECT FOR THE PURPOSE OF GIVING THE DEDUCTION U/S.80IB(10). HE PL EADED FOR CONFIRMING THE ORDER OF THE LEARNED CIT(A). 9. IN THIS CASE AS PER THE DOCUMENTS ON RECORD. WE FIND THAT THE ASSESSEES PROJECT IS SANCTIONED AS A TOURISM DEVE LOPMENT CENTRE (TDC). WE FURTHER FIND THAT IN RESPECT OF THE AREA OF THE LAND AS WELL AS THE AREA OF 8 THE UNITS THERE IS NO RESERVATION OF THE AUTHORITIE S BELOW THAT THE SAME ARE IN CONFORMITY WITH THE PROVISIONS OF SECTION 80IB(1 0). THE ONLY OBJECTION OF THE AUTHORITIES BELOW IS THAT THE PROJECT OF THE AS SESSEE IS SANCTIONED AS TOURISM DEVELOPMENT CENTRE. THE LEARNED CIT(A) HAS RELIED ON THE DECISION OF THE ITAT SPECIAL BENCH, PUNE IN THE CASE OF BRAH MA ASSOCIATES AND OTHERS 122 TTJ 443 (PUNE) (SB) WHICH HAS BEEN SUBSEQUENTL Y AFFIRMED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BRAHMA ASSOCIATES 333 ITR 289. IN THE SAID CASE THE CONTROVERSY AROSE FO R ALLOWING THE DEDUCTION U/S.80IB(10) AS IN SAID PROJECT THERE WERE COMMERC IAL UNITS/CONVENIENCE SHOPPING. IN THE VIEW OF THE REVENUE AUTHORITIES, THE SAID PROJECT UNDERTAKEN BY THE APPELLANT COULD NOT BE TREATED AS THE HOUSING PROJECT. IN OUR HUMBLE OPINION, THE INTERPRETATION GIVEN IN SA ID CASE FOR TREATING A PARTICULAR PROJECT WHETHER IT IS A HOUSING PROJECT OR NOT IS TO BE SEEN IN THE CONTEXT OF CONTROVERSY OR ISSUE BEFORE THE HONBLE HIGH COURT. ADMITTEDLY ON THE FACTS OF THAT CASE A RESERVATION OF THE REVE NUE AUTHORITIES WAS THERE BECAUSE IN THEIR VIEW THE HOUSING PROJECT SHOULD BE EXCLUSIVELY FOR THE PURPOSE OF RESIDENCE AND IT SHOULD NOT BE FOR ANY C OMMERCIAL EXPLOITATION AND EVEN IF SOME AREA COMPRISE OF THE COMMERCIAL UN ITS THEN THAT WILL NOT BE WITHIN THE EXPRESSION HOUSING PROJECT. IN THAT CON TEXT WHILE APPROVING THE ORDER OF THE SPECIAL BENCH, PUNE IN THE CASE OF BRA HMA ASSOCIATES (SUPRA) THEIR LORDSHIPS OBSERVED THAT ONCE THE LOCAL AUTHOR ITY HAD APPROVED THE SAID PROJECT AS A HOUSING PROJECT THEN THERE IS NO REA SON TO TAKE A DIFFERENT VIEW, EVEN IF PART OF PROJECT COMPRISED OF CONVENIE NCE SHOPPING. IN FACT SUBSEQUENT AMENDMENT INTRODUCED W.E.F. A.Y. 2005-06 SUGGEST THAT IT SHOULD BE PREDOMINANTLY FOR RESIDENTIAL PURPOSE AND NOT FOR COMMERCIAL PURPOSE. 10. IN THE CASE BEFORE US IT IS NOT DENIED BY THE R EVENUE THAT THE LAND ON WHICH THE PROJECT IS UNDERTAKEN IS NOTIFIED AS A GR EEN ZONE FOR PROTECTING THE NATURES, FLORA AND FAUNA. IT IS ALSO NOT DENI ED BY THE REVENUE AUTHORITIES THAT THE PROJECT IN WHICH THE UNITS/COT TAGES ARE CONSTRUCTED BY THE ASSESSEE ARE USED ONLY FOR THE RESIDENTIAL PURP OSE OF THE BUYERS OR THEIR FAMILIES, IN OTHER WORDS FOR HUMAN HABITATION. WE D O NOT AGREE WITH THE INTERPRETATION GIVEN BY THE ASSESSING OFFICER THAT THE UNIT OR COTTAGE/HOUSE SHOULD BE FOR THE PERMANENT RESIDENCE THEN ONLY I T CAN BE TREATED AS A HOUSING PROJECT. IN FACT AS PER THE STATEMENT MADE AT BAR BY THE LD. SENIOR COUNSEL, MANY OF THE BUYERS ARE PERMANENTLY RESIDIN G THEIR AND NOT A SINGLE COTTAGE OR HOUSE IS EXPLOITED FOR ANY COMMERCIAL PU RPOSE. IN OUR OPINION, FOR DETERMINING WHETHER THE PROJECT UNDERTAKEN BY T HE ASSESSEE IS COVERED WITHIN THE EXPRESSION HOUSING PROJECT, IT IS TO BE SEEN THAT IN FACT THE HOUSES 9 OR COTTAGES DEVELOPED & CONSTRUCTED AND SOLD BY THE ASSESSEE ARE ONLY USED AND EXPLOITED FOR THE PURE RESIDENCE AND NOT FOR AN Y COMMERCIAL PURPOSES. IN SUM AND SUBSTANCE, WHERE THE END USE OF THE COTT AGE IS PREDOMINANTLY FOR THE PERSONAL RESIDENCE OR NOT IS TO BE SEEN. AD MITTEDLY, NOWHERE IT IS THE CASE OF AUTHORITIES BELOW THAT OTHER THAN SELF RESI DENTIAL USE, ANY COTTAGE OR HOUSE IS EXPLOITED FOR ANY COMMERCIAL PURPOSES. WE , THEREFORE, HOLD THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE IN VILLAGE A GLAMBE, TALUKA HAVELI, DISTRICT PUNE IS A HOUSING PROJECT WITHIN THE MEANI NG OF SECTION 80IB(10) OF THE ACT AND HENCE, THE ASSESSEE IS ENTITLED FOR THE DEDUCTION IN THE SAID PROVISION. WE ACCORDINGLY ALLOW THE GROUNDS TAKEN BY THE ASSESSEE IN ASST. YEAR 2007-08 AND DIRECT THE ASSESSING OFFICER TO AL LOW THE DEDUCTION. 11. NOW WE TAKE UP THE ASSESSEES APPEAL FOR ASST. YEAR 2005-06 VIDE ITA NO. 765/PN/2010 THE ASSESSEE HAS TAKEN THE FOLLOWIN G GROUNDS IN THE APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME-TAX ERRED IN EXERCISING JURISDICTION U/S.263 ON ERRONEOUS GROUNDS WHEN THE A.O. AFTER PERUSAL OF LAW AND EVIDENCE HAD TAKEN A REASONABLE VIEW AS TO ENTI TLEMENT OF DEDUCTION U/S.80IB(10) OF THE INCOME-TAX ACT,1961. 2. THE LEARNED COMMISSIONER OF INCOME-TAX GROSSLY E RRED BOTH ON FACTS AND IN LAW, IN HOLDING THAT MERELY BECAUSE THE HOUS ING PROJECT UNDERTAKEN BY THE APPELLANT WAS SANCTIONED AS TOURIST CENTRE (RES ORT) BY THE COLLECTOR. HE OUGHT TO HAVE HELD THAT BY SANCTIONING IT AS TOURIS T CENTRE IT DOES NOT CEASE TO BE A HOUSING PROJECT. 3. HE OUGHT TO HAVE HELD ON FACTS THAT THE EXPRESSI ON HOUSING PROJECT IS NOT DEFINED IN THE ACT AND HENCE ORDINARY POPULAR M EANING HAS TO BE ADOPTED WHICH SHOWS THAT A HOUSE MEANS A BUILDING FOR HUMAN HABITATION, HOUSING MEANS HOUSES CONSIDERED COLLECTIVELY AND A PROJECT MEANS AN ENTERPRISE CAREFULLY PLANNED TO ACHIEVE A PARTICULAR AIM. 4. THE LEARNED COMMISSIONER OF INCOME-TAX IN INTROD UCING NEW CONDITION NOT SPECIFIED BY THE SECTION IN INTERPRETING THE EX PRESSION HOUSING PROJECT NOT SPECIFIED BY THE SECTION AND WRONGLY IGNORED TH E VITAL FACTS THAT IT WAS RECOGNIZED BY HOUSING DEVELOPMENT FINANCE CORPORATI ON LTD. FOR GRANTING LOANS FOR HOUSING. 5. THE LEARNED COMMISSIONER OF INCOME-TAX ERRED IN TAKING ACTION U/S.263 ON REASONS ASSIGNED FOR REVISING THE ASSESS MENT ORDER PASSED BY A.O. U/S.143(3) PARTICULARLY WHEN THE A.O. AND OTHE R AUTHORITIES TOOK A REASONABLE AND POSSIBLE VIEW IN LAW, EVEN ASSUMING THAT ANY OTHER VIEW IS ALSO POSSIBLE. 6. HON. COMMISSIONER OF INCOME-TAX HAS ERRED IN NOT APPRECIATING THE FACT THAT NO PIECE OF LAND AS SUCH HAS BEEN SOLD BY THE APPELLANT ASSESSEE AND THE COTTAGES DULY CONSTRUCTED WITH BUILT UP ARE A OF LESS THAN 1,500 SQ.FT. ALONG WITH LAND APPURTENANT ARE SOLD WITH PERMISSIB LE FSI AT 3.75% IN RESPECT OF THE ASSESSEES PROJECT AND ALL THE CONDI TIONS U/S.80IB(10) HAVING BEEN SATISFIED, THE ORDER APPEALED AGAINST BE REJEC TED. 10 12. WE HAVE HEARD THE PARTIES. THIS APPEAL IS ARISI NG OUT OF THE ORDER PASSED BY THE LD. CIT-II, PUNE U/S.263 OF THE ACT. IN HIS ORDER THE LEARNED CIT HAS SET-ASIDE THE ASSESSMENT ORDER PASSED U/S.1 43(3) DATED 31-12- 2007 IN WHICH LD. CIT DIRECTED THE ASSESSING OFFICE R TO WITHDRAW DEDUCTION U/S.80IB(10) ALLOWED TO THE ASSESSEE. WHILE DECIDI NG THE ASSESSEES APPEAL FOR THE ASST. YEAR 2007-08 WE HAVE HELD THAT, FOR T HE REASONS GIVEN IN THAT YEAR, THE ASSESSEE IS ENTITLED FOR THE DEDUCTION U/ S.80IB(10). THE REASONS GIVEN FOR WITHDRAWING THE DEDUCTION IN THE ORDER PA SSED U/S.263 ARE IDENTICAL. WE, THEREFORE, FOLLOWING OUR REASONS ON MERIT FOR ASST. YEAR 2007- 08 HOLD THAT THE ORDER PASSED BY THE ASSESSING OFFI CER CANNOT BE TREATED AS ERRONEOUS IN THE ASST. YEAR 2005-06. THE LAW IS WE LL SETTLED IN RESPECT OF THE POWER AND JURISDICTION OF THE CIT TO INVOKE PRO VISIONS OF SECTION 263 OF THE ACT. IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. 243 ITR 83 (SC) THAT TWO CONDITIONS MUST BE FULFILLED, I.E.(1) THE ORDER SHOULD BE ERRONEOUS AND (2) ALSO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS THE ORDER PASSED IN THE ASST. 2005-06 CANNOT BE TREATED AS ER RONEOUS ON MERIT THE JURISDICTION EXERCISED BY THE CIT-II PUNE U/S.263 C ANNOT BE SAID AS WITHIN FOUR CORNERS OF LAW. WE ACCORDINGLY QUASH AND CAN CEL THE ORDER PASSED BY THE CIT-II, PUNE U/S.263. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF SEPTEMBER 2012. SD/- SD/- (G.S. PANNU) (R.S. PADV EKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: THE 14 TH SEPTEMBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT-PUNE-II, PUNE 4. CIT(A)-II, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE