DCIT,Cir.-1(1), Pune V. M/S ADITYA DEVELOPERS, Pune

ITA 791/PUN/2008

• Counselvise Citation: 79124514 RSA 2008
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 03-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL PATHAK
• Assessee Lawyers: HARESHWAR SHARMA; S K AMBASTHA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 791 & 792/PN/2008 (ASSTT. YEARS : 2003-04 & 2004-05) THE DY. COMMISSIONER OF INCOME-TAX ... APPELLANT CENTRAL CIR-1(1), PUNE V. M/S. ADITYA DEVELOPERS RESPONDENT 619, SADASHIV PETH, PUNE 411 030. PAN : AACFA0856C APPELLANT BY : SHRI SUNIL PATHAK & SHRI SUHAS P. BORA RESPONDENT BY : SHRI HARESHWAR SHARMA & SHRI S.K. AMBASTHA DATE OF HEARING: 18/01/12 DATE OF PRONOUNCEMENT : /01/12 ORDER PER I.C. SUDHIR, JUDICIAL M EMBER IN THESE APPEALS, THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING COMMON GROUNDS : 1. THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF (OF RS. 6,90,51,536/- IN A.Y. 2003-04 AND RS. 2,31,65,627/- IN A.Y. 2004- 05) ON ACCOUNT OF DEDUCTION U/S. 80IB(10) OF THE I. T. ACT 1961. ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 2 2. THE LD CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB(10) OF THE I.T. ACT, EVEN WHEN T HE PROJECT HAS COMMERCIAL SPACE MEASURING 30,000 SQ.FT. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE STAND OF THE ASSESSING OFFICER THAT THE EXTRA PROFIT EARNED ON A CCOUNT OF WAIVER OF APPLICABILITY OF URBAN LAND CEILING ACT IS NOT A PROFIT DERIVED OUT OF THE HOUSING PROJECT. 4. THE ORDER OF THE LD CIT(A) BE VACATED AND THAT OF THE A.O BE RESTORED. THUS WE FIND THAT THE ISSUE INVOLVED IN THE GROUN DS IS AS TO WHETHER THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSE E IS ENTITLED TO THE CLAIMED DEDUCTION U/S. 80 IB(10) OF THE ACT DURING THE A.YS. UNDER CONSIDERATION ? 2. THE RELEVANT FACTS ARE THAT DURING THE A.YS. UND ER CONSIDERATION, THE ASSESSEE IN THE BUSINESS OF BUILDER AND DEVELOPER H AD CLAIMED DEDUCTION U/S. 80IB(10) OF RS. 6,90,51,536/- IN A.Y. 2003-04 AND RS. 2,31,65,627/- IN THE A.Y. 2004-05. THE A.O. DENIE D THE SAME MAINLY ON THE GROUND THAT THE PROJECT UNDERTAKEN WAS NOTHING BUT AN EXTENSION OF OLD PROJECT. THE CONTENTION OF THE ASSESSEE, ON TH E OTHER HAND, REMAINED THAT THE ASSESSEE HAD DEVELOPED AND CONSTRUCTED AN INDEPENDENT HOUSING PROJECT NAMELY KRISHNA KEVAL TOWNSHIP (KKT) AT PUN E AND HAD DERIVED PROFIT FROM THE SAID HOUSING PROJECT. IT WAS CONTE NDED THAT THE ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENTS OF SEC. 80IB (10). IT WAS SUBMITTED THAT THE HOUSING PROJECT WAS DEVELOPED ON A PLOT OF LAND EXCEEDING 1 ACRE, WORK OF CONSTRUCTION AND DEVELOPM ENT OF THE HOUSING PROJECT HAD STARTED ON OR AFTER 1.10.1998, THE HOU SING PROJECT COMPRISED OF RESIDENTIAL UNITS ONLY, SIZE OF EACH OF THE RES IDENTIAL UNITS WAS LESS ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 3 THAN 1500 SQ. FT. AND THAT HOUSING PROJECT WAS COMP LETED WITHIN THE PRESCRIBED TIME LIMIT. IT WAS FURTHER SUBMITTED T HAT SEPARATE BOOKS OF ACCOUNTS FOR THE HOUSING PROJECT KKT WERE MAINTAINE D AND AUDITED. THE LD CIT(A) AFTER VERIFYING RELEVANT FACTS, HAS ALLOW ED THE CLAIMED DEDUCTION AGAINST WHICH REVENUE IS IN APPEAL UNDER CONSIDERATION. 3. IN SUPPORT OF THE GROUNDS INVOLVING THE ISSUE, F RAMED HEREINABOVE, THE LD. D.R. HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE PROJECT ON WHICH DEDUCTION U/S. 80 IB (10) HAS BEEN CLAIMED BY THE ASSESSEE IS NOTHING BUT CONTINUATION OF THE OLD PROJECT. THUS THERE IS FACTUAL INACCURACY IN THE FINDINGS OF THE LD CIT(A) IN ITS FIRST APPELLATE ORDER. HE DREW OUR ATTENTION TO PAGE NO. 94 OF THE PAPER BOOK I.E. PROPOSED BUILDING LAY OUT PLAN DATED 25 TH MAY 1990 APPROVED BY THE PUNE MUNICIPAL CORPORATION. THE LD. D.R. ALSO REFE RED PAGE NO. 110 OF THE PAPER BOOK I.E. COPY OF THE LETTER DATED 4 TH MAY 2001 BY THE CENTRAL BOARD OF DIRECT TAXES TO M/S. MAHARASHTRA CHAMBER O F HOUSING INDUSTRY MAKING CLARIFICATION UNDER THE PROVISIONS OF SECTIO N 10(23 G) OF THE INCOME TAX ACT 1961. THE LD. D.R. SUBMITTED FURT HER THAT THE DECISION IN THE CASE OF NIRMITI CONSTRUCTION VS. DCIT,ITA NO .1389/PN/ 2003, ORDER DATED 11TH AUGUST, 2004, A.Y. 2000-01 FOLLOWED BY THE LD CIT(A) IS HAVING DIFFERENT FACTS AND THUS IS NOT HELPFUL TO T HE ASSESSEE. HE PLACED RELIANCE ON THE DECISION OF CHENNAI BENCH OF THE TR IBUNAL IN THE CASE OF ACIT VS. VISWAS PROMOTERS (P.) LTD. (2010) 12 ITD 2 63 (CHENNAI). 4. THE LD. A.R. ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE.HE SUBMITTED THAT THE PROPOSED BUILDINGS LAY OUT WAS INITIALLY APPROVED BY THE PUNE MUNICIPAL CORPORATIO N (PMC) ON 25.5.1990, COPY MADE AVAILABLE AT PAGE 94 OF THE PAPER BOOK. T HIS LAY OUT PLAN WAS ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 4 AGAIN REVISED ON 31.3.2001 (PAGE 5 OF THE PAPER BO OK) BY PUNE MUNICIPAL CORPORATION ON 31 ST MARCH 2001. HE SUBMITTED THAT THE KKT HAVING LAND AREA OF 8966 SQ. MTRS. HAS BEEN MARKED IN RED IN THE BUILDING LAY OUT. HE SUBMITTED THAT THE LAID DOWN PLAN WAS APPROVED BY THE PUNE MUNICIPAL CORPORATION IN THE YEAR 1990. HE REFERRED PAGE NO. 83 & 84 OF THE PAPER BOOK I.E. LAY OUT OF BUILDINGS IN KRISHNA KEVAL NIKETAN (KKN) HAVING LAND AREA OF 23089 SQ. MTRS., KKT HAVING LAND AREA OF 12366 SQ.MTRS. HE THEREAFTER REFERRED PAGE NO. 93 OF THE PAPER BOOK I.E. DETAILS ABOUT KKT HOUSING PROJECT. HE POINTED OUT THAT KKN PROJECT CONSTITUTED BUILDINGS A TO J WHEREAS THE PROJECT UN DER CONSIDERATION I.E. KKT CONSISTED WINGS I,M,N,O,P AND K1 AND K2. THE L D A.R. REFERRED TO PAGE NO. 103 (WINGS I, M,N,O, P) & 104 (WINGS K1 AN D K2) I.E. THE COPIES OF APPROVED BUILDING PLANS DATED 29.3.2001 AND 09.3.2001 IN RESPECT OF KKT HOUSING PROJECT. IN THESE BUILDING PLANS, DETAILS ABOUT KKT HOUSING PROJECT HAS BEEN GIVEN. THE LD. A.R. S UBMITTED FURTHER THAT IN THESE BUILDING PLANS OF THE KKT HOUSING PROJECT WINGS WERE COMPLETED ON 10.10.2002 AND WINGS I, M, N,O, P WERE COMPLETED ON 10.2.2003 (PAGE NO.93 OF THE PAPER BOOK). HE SUBMITTED THAT TOTAL NUMBER OF UNITS IN THE PROJECT WAS 188. THE AREA OF PLOT OF LAND I N KKT WAS 8966 SQ. MTRS. THE PROJECT IS FULLY RESIDENTIAL AND THERE IS NO UNIT HAVING BUILT UP AREA MORE THAN 1500 SQ.FT. ABOUT THE LETTER DT. 4.5 ,.2001 WRITTEN BY CBDT TO M/S. MAHARASHTRA CHAMBER OF HOUSING INDUSTR Y, MADE AVAILABLE AT PAGE NO. 110 OF THE PAPER BOOK, THE LD. AR. SUB MITTED THAT IT IS CLARIFICATION BY THE CBDT ON THE QUERY RAISED BY MA HARASHTRA CHAMBER OF HOUSING INDUSTRY VIDE ITS LETTER DATED 1 ST JANUARY 2001, A COPY WHEREOF HAS ALSO BEEN FURNISHED BY THE ASSESSEE. THE LD. A .R. SUBMITTED THAT THE CLARIFICATION MADE BY THE CBDT REGARDING ADDITIONAL HOUSING PROJECT ON EXISTING HOUSING PROJECT SITE MAKES THE POSITION I N FAVOUR OF THE ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 5 ASSESSEE. IN THAT LETTER ALSO THE CBDT HAS MADE IT CLEAR THAT THE DEFINITION OF HOUSING PROJECT IS ANY PROJECT WHI CH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS HOUSING PROJECT SHOULD BE C ONSIDERED ADEQUATE FOR THE PURPOSE OF SECTION 10(23 G) AND 80 IB (10) OF THE I.T. ACT. IT HAS BEEN MADE CLEAR IN THAT LETTER THAT THE ADDITIONAL HOUSING PROJECT ON EXISTING PROJECT SITE CAN QUALIFY AS INFRASTRUCTURA L FACILITY U/S. 10 (23G) AND 80 IB(10) PROVIDED IT IS TAKEN UP BY A SEPARA TE UNDERTAKING HAVING SEPARATE BOOKS OF ACCOUNTS SO AS TO ENSURE THAT COR RECT PROFIT CAN BE ASCERTAINED FOR THE PURPOSE OF SECTION 80IB (10) A ND ALSO TO IDENTIFY RECEIPTS AND PAYMENTS FOR LONG TERM FINANCES UNDER THE PROVISIONS OF SECTION 10 (23G), SEPARATE FINANCING ARRANGEMENTS, IF AT ALL SEPARATELY FULFILLS ALL OTHER STATUTORY CONDITIONS LISTED IN S ECS. 10 (23/G) AND 80 IB (10). THE LD. A.R. MADE IT CLEAR THAT FOR THE POR TION OF LAND IN QUESTION, NO BUILDING PLAN WAS PASSED EARLIER. THE KKT IS A SEPARATE SOCIETY. HE ALSO REFERRED EXPLANATION (I) TO SEC. 80 IB (10) OF THE ACT TO SUPPORT HIS ARGUMENTS THAT HOUSING PROJECT AND BUILDING PLAN AR E TWO DIFFERENT THINGS. HE SUBMITTED THAT LAY OUT IS A MASTER PLAN AS A CONCEPT. FOR THE BACKGROUND OF THE PROJECT, THE LD. A.R. REFERRED PA GE NO. 1 OF THE PAPER BOOK I.E. SUBMISSION DATED 16.10.2006 OF THE ASSESS EE IN RESPONSE TO THE LETTER DATED 3.10.2006 BY THE LD. DCIT. THE LD. A. R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. DCIT VS. BRIGADE ENTERPRISES (P) LTD. 14 DTR 371 (BANG.) 2. SAROJ SALES ORGANISATION VS. ITO, 3 DTR 494 (B OM.) 3. VANDANA PROPERTIES VS. ACIT, 27 DTR 282 (MUM.) 4. MUDHIT MADHANLAL GUPTA VS. ACIT, 51 DTR 217 (BO M.) 5. APOORVA PROPERTIES AND ESTATES PVT.LTD. VS. DCI T, ITA NO. 113/PN/2007 (A.Y. 2003-04) ORDER DATED 21.8 .09. ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 6 5. THE LD. D.R. SUBMITTED IN REJOINDER THAT IF THE ARGUMENT OF THE LD. A.R. IS ACCEPTED THEN THE WHOLE PURPOSE OF THE PROV ISIONS OF 80IB(10) OF THE ACT WOULD BE DEFEATED TO ENSURE COMPLETION OF THE PROJECT IN TIME, THE DATE OF COMPLETION OF THE PROJECT HAS BEEN GIVE N IMPORTANCE UNDER THE PROVISIONS OF SEC. 80IB (10). HE POINTED OUT T HAT IN THE PRESENT CASE, THERE ARE SAME ASSESSEE, SAME ADDITION IN THE SAME PROJECT. IGNORING THESE MATERIAL FACTS, THE LD CIT(A) ERRED IN ALLOWI NG THE CLAIMED DEDUCTION. 6. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAIL ABLE ON THE RECORD AND THE DECISIONS RELIED UPON BY THE PARTIES. THE FACTS IN DETAILS SUBMITTED BY THE ASSESSEE BEFORE THE A.O VIDE LETTER DATED 16.10 .2006 HAVE ALSO BEEN GONE THROUGH. FOR A READY REFERENCE, PARA NOS. 1 T O 8 OF THE LETTER DATED 16.10.2006 SUBMITTED BY THE ASSESSEE BEFORE THE A. O ARE BEING REPRODUCED HEREUNDER : 1. M/S ADITYA DEVELOPERS PURCHASED A PLOT OF LAND BEARING SURVEY NO. 1/A(PART) OF KONDHWA KHURD, PUNE FROM RA NADE AND THEIR RELATIVES. THEREAFTER M/S. ADITYA DEVELOPERS GOT THE CLEARANCE FROM URBAN AND LAND CEILING DEPARTMENT VIDE ORDER D ATED 17-8- 1988. THEN WE GOT LAYOUT PLANS SANCTIONED FROM THE PMC VIDE ORDER DATED 25-5-1990. AS PER THE TERMS OF THE ULC WE HAVE TO SHOW 25 S1.MTR COREHOUSE PLOTS AND BUILDING IN LAYO UT PLAN AND GET IT SANCTIONED FROM PMC. IF WE DONT IMPLEMENT THE IR ORDER AD SHOW THE VACANT LAND IN THE PLAN, THE ULC DEPARTMENT MIG HT HAVE INITIATED ACQUISITION PROCEDURE. THE TOTAL LAND A REA WAS 28905 SQ.MTR. IT WAS NOT POSSIBLE FOR US TO START CONSTR UCTION AND DEVELOPMENT OF ENTIRE LAND. SO WE STARTED DEVELOP MENT AND CONSTRUCTION OF FRONT AREA OF LAND. IN THE YEAR 19 94, WE HAVE REQUESTED GOVT. OF MAHARASHTRA TO ACCEPT THE CONSI DERATION IN LIEU ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 7 OF CERTAIN CONDITIONS STIPULATED IN THEIR ORDER FO R DELETING CONSTRUCTION OF COREHOUSE PLOTS & SMALL AREA FLATS . AFTER A LONG HEARINGS THEY ACCEPTED OUR REQUEST AND ON PAYMENT M ADE, ISSUED US ORDER ON 14-12-1994 BECAUSE OF WHICH WE WERE ENT ITLED TO CANCEL THE CERTAIN BUILDING AND 112 COREHOUSESOF 2 5 SQ.M. PROPOSED FOR WEAKER SECTION. WE GOT OUR LAND REVER TED BACK FROM ULC DEPT. ON PAYMENT OF CONSIDERATION TO GOVT. BY O RDER ON 14-12- 1994. 2. WE HAVE COMPLETED THE DEVELOPMENT AND CONSTRUCTI ON OF THE BUILDINGS A,B,C,D,E,F,G,H & J ON PORTION OF LAND BE ARING S.NO.1(PART), KONDHWA KHURD. 3. THEREAFTER THE PROVISION OF THE SECTION 80IB(10) CAME INTO FORCE. THE VACANT LAND AREA OF 8966 S1.MTR WAS AVAI LABLE FOR THE NEW PROJECT WITH US. SO WE PLANNED A NEW PROJECT AS PER THE NORMS OF PROVISIONS OF 80IB(10) ON VACANT LAND OF 8 966 SQ.MTR AT S.NO.1(PART), KONDHWA, THE BUILDING PLANS WERE PREP ARED IN SUCH A WAY THAT AREA OF EACH UNIT WILL BE LESS THAN 1500 SQ.FT. WE GOT THE BUILDING PLANS SANCTIONED ON 9-3-2001 AND 29-3-2001 AND WORK OF THE PROJECT STARTED ONLY AFTER THE BUILDING PLANS SANCTION IN MARCH 2001. IT IS VERY IMPORTANT TO NOTE THAT THE LAND OF 8966 SQ.MTR WAS VACANT AND ACCORDING TO RULES OF PMC (LOCAL AUT HORITY), ALL THE SANCTIONS PRIOR TO 9-3-2001 & 29-3-2001 GET CANCELL ED AND LAPSED ON VACANT LAND OF 8966 SQ.MTR. AT S.NO.1(PART)KONDH WA. 4. WE HAVE CONSTRUCTED THE BUILDINGS K,M,N,I,O & P ON VACANT LAND AT SURVEY NO. 1(A) (PART) KONDHWA KHURD, PUNE WHICH IS CARVED OUT SEPARATELY ON SITE. TDR USED IS LESS TH AN 40% OF AREA OF LAND OF 8966 SQ.MTR. WE GOT SANCTIONED NEW BUILDIN G PLANS AS PER NORMS OF 80IB(10) PROVISIONS IN MARCH 2001 & CONSTR UCTED ALL FLATS FOLLOWING ALL THESE NORMS. SINCE OUR NEW HOUSING P ROJECT IS AS PER THE PLANS SANCTIONED IN MARCH 2001, IT IS NO WAY CO NCERNED WITH EARLIER LAPSED SANCTIONS. WE HAVE NEVER STARTED A NY DEVELOPMENT OR CONSTRUCTION PRIOR TO MARCH 2001 ON THE REAR AR EA OF LAND OF 8966 SQ.MTR ON WHICH BUILDINGS K,M,N,I,O,P HAVE BEE N CONSTRUCTED. ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 8 IN SUPPORT OF THIS WE ARE ENCLOSING HEREWITH PHOTOC OPY OF LETTER OF PMC DT. 5-10-2006. ENGLISH TRANSLATION OF THE SAME IS AS UNDER : PUNE MUNICIPAL CORPORATION CONSTRUCTION CONTROL DEPT. OUTWARD NO. BCO/5102 DATE: 5-10-2006 TO, M/S ADITYA DEVELOOERS, RESIDING AT SADASHIV PETH NO. 619,PUNE 30 SUB: REGARDING CONSTRUCTION ON S.NO. 1(PART),KONDH WA, PUNE REF: YOUR LETTER DT. 3-10-2006 ON THE ABOVE MENTIONED SUBJECT AND UNDER THE LETTER REFERRED ABOVE, IT IS BEING INFORMED THAT PERMISSION FOR CON STRUCTION OF K BUILDING AT S.NO. 1(PART) KONDHWA KHURD, PUNE W AS GIVEN VIDE NO. 4975 DT. 9-3-01 AND CERTIFICATE OF PLINTH CHECKING WAS GIVEN UNDER NO. BCO/03/74 DT. 27-9-2001. ALSO PERMISSION FOR BUILDING MNIOP WAS GIVEN VIDE LETTE R NO. 4981 DT. 29-3-2001 AS PER THE AVAILABLE RECORD THERE I S NO MENTION OF ANY BUILDING CONSTRUCTION OF WHATSOEVER NATURE WAS FOUND ON THE LAND OF ABOVE BUILDINGS BEFORE SAN CTIONING PERMISSION FOR ABOVE CONSTRUCTION. SD/- SD ASST. ENGINEER BUILDING INSPECTOR PUNE MUNICIPAL CORPORATIO N _________________________________________________ ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 9 5. CERTIFICATES OF OUR ARCHITECT DATED 14-10-2006 CONFIRMING THIS FACT IS ALSO ENCLOSED FOR YOUR CONS IDERATION. 6. THE TDR WAS PURCHASED FROM THE OPEN MARKET AND UTILIZED AS WELL AS DEBITED TO PROFIT & LOSS ACCOUN T IN BOOKS OF ACCOUNT WAS NOT MORE THAN 40% OF 8966 SQ.MTR. WE H AVE UTILIZED TDR BY PURCHASING IT FROM OUTSIDE LAND OWN ERS FROM THE OPEN MARKET AND THEN PREVAILING MARKET PRICE. 7. WE HAVE BROUGHT ALL THESE FACTS TO NOTICE OF AS SESSING OFFICER DURING THE SCRUTINY OF OUR ACCOUNTS FOR A.Y . 2001-2002. IT IS CLEARLY EVIDENT IN THE ASSESSMENT ORDER OF A. Y. 2001- 2002 THAT THE TWO PROJECTS ARE SEPARATE AND P/L AC COUNT AS WELL AS WORKS IN PROGRESS ARE SEPARATELY SHOWN IN A SSESSMENT ORDER ALSO. 8. WE HAVE CONSTRUCTED ALL THE RESIDENTIAL UNITS E ACH HAVING AREA OF LESS THAN 1500 SQ.FT. IN THE BUILDIN GS K, M,N,I,O,P IN OUR NEW HOUSING PROJECT. IT IS NO WAY CONCERNED WITH THE RESIDENTIAL & COMMERCIAL UNIT OF EARLIER C ONSTRUCTED BUILDING ON SEPARATE PORTION OF LAND AND SAME HAS B EEN REFLECTED IN SEPARATE BOOKS OF ACCOUNTS AND WE HAV E ALREADY PAID TAXES ON IT. THE SUBMISSION OF THE LD. D.R. REMAINED THAT THE DE CISION OF PUNE BENCH IN THE CASE OF NIRMITI CONSTRUCTION VS. DCIT (SUPR A) FOLLOWED BY THE LD CIT(A), HAVING DIFFERENT FACTS IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. HAVING GONE THROUGH THAT DECISION, WE DO NOT AGREE WITH THE ABOVE CONTENTION OF THE LD. D.R. THE DECISION FULL Y COVERS THE CASE OF THE ASSESSEE ON THE ISSUE. IT APPEARS THAT THE WHOLE CO NFUSION ON THE ISSUE IN THE MIND OF THE A.O WAS DUE TO HIS UNDERSTANDIN G OF LAY OUT PLAN AND BUILDING PLAN ONE AND THE SAME THING, HENCE HE HAS COMMITTED ERROR IN TREATING THE DATE OF APPROVAL OF THE] LAY OUT PLAN BY THE MUNICIPAL CORPORATION AS THE DATE OF APPROVAL OF THE BUILDING PLAN TO COMPUTE THE PERIOD OF COMPLETION OF THE BUILDING PLAN TO VERIFY THE ELIGIBILITY OF THE CLAIMED DEDUCTION U/S. 80IB (10) OF THE ACT. PUNE BENCH OF THE TRIBUNAL ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 10 HAS OCCASION TO DISCUSS THE DISTINCTION BETWEEN THE LAY OUT PLAN AND BUILDING PLAN IN THE CASE OF NIRMITI CONSTRUCTION ( SUPRA). IN THAT CASE BEFORE THE TRIBUNAL, THE LAY OUTS WERE FURNISHED TO THE MUNICIPAL CORPORATION FOR SANCTION ON 6 TH JUNE 1998 AND CONSTRUCTION WORK WAS COMMENCED AFTER BUILDING PERMISSION WAS SANCTIONED BY THE MUNICIPAL CORPORATION ON 23 RD JULY 1999. DEPARTMENT TOOK THE STAND THAT THE DEVELOPMENT COMMENCED WITH THE DEVELOPMENT AGREEMEN T AND ACQUIRING IRRECOVERABLE POWER OF ATTORNEY AND MORE SO THAT LA Y OUTS WERE FURNISHED TO THE MUNICIPAL CORPORATION FOR PRELIMINARY SANCTI ON ON 6 TH JUNE 1998, THE ASSESSEES SUBMITTED THAT THE PRELIMINARY SANCTI ON WAS REQUIRED TO BE GIVEN WHICH CONSTITUTED NO OBJECTION FROM MUNIC IPAL CORPORATION FOR ALLOWING ASSESSEE TO HAVE THE CONSTRUCTION ON THE S AID PROPERTY. IT WAS CONTENDED THAT ON THE BASIS OF PRELIMINARY SANCTIO N, THE ASSESSEE MADE AN APPLICATION FOR CONVERTING THE SAID LAND INTO NO N- AGRICULTURAL LAND. THIS APPLICATION WAS MADE ON 25 TH NOVEMBER 1998 AND THE REVENUE AUTHORITIES CONVERTED THE SAID AGRICULTURAL LAND IN TO NON-AGRICULTURAL LAND ON 13 TH JUNE 1999. IT WAS ALSO CONTENDED BY THE ASSESSEE THAT THE BUILDING PLAN WAS SUBMITTED TO THE MUNICIPAL CORPO RATION AND THE SAID CORPORATION SANCTIONED THE BUILDING PLAN ON 23 RD JULY 1999. IN OTHER WORDS, THE MUNICIPAL CORPORATION GAVE THE PERMISSIO N OF CONSTRUCTION ON 23 RD JULY 1999. AFTER DISCUSSING THE CASES OF THE PART IES, THE TRIBUNAL HAS ACCEPTED THE ABOVE CONTENTIONS OF THE ASSESSEE THAT THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY ON 23 RD JULY 1999 I.E. AFTER 1 ST OCTOBER1998, HENCE THE ASSESSEE WAS ELIGIBLE FOR TH E CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT SINCE IT WAS FULFILLING ALL OTHER REQUIREMENTS OF THE PROVISIONS. ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 11 6.1. LIKEWISE, IN THE CASE OF VANDANA PROPERTIES VS. ACIT (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . IN THAT CASE, THE ASSESSEE HAD PLAN FOR 4 INDEPENDENT BUILDINGS A,B, C & D BUT, SO FAR AS E IS CONCERNED ONLY PLANNED WHEN THE STATUS OF THE SURPLUS LAND WAS CONVERTED AS WITHIN CEILING LIMIT AND THE ASSESSEE COULD GET ADDITIONAL FSI FO R LAUNCHING WING E . WING E WAS PLANNED AND CONSTRUCTION WAS COMMENCED AFTER 1 ST OCTOBER 1998 AND BUILING/WING E WAS AN INDEPENDENT HOUSI NG PROJECT AS CONTEMPLATED U/S. 80 IB (10). THE TRIBUNAL HELD TH AT THE CONCEPT OF HOUSING PROJECT DOES NOT MEAN THAT SHOULD BE THE GR OUP OF THE BUILDINGS AND ONLY THEN SAME IS CALLED A HOUSING PROJECT . IT WAS FURTHER HELD THAT BUILDING/WING E CANNOT BE PASSED WITH EARLIE R BUILDINGS I.E. A, B,C & D WHICH WORK WAS COMMENCED IN THE YEAR 1993 WHEREA S PLAN FOR WING E WAS APPROVED FOR ONLY ONCE IN THE YEAR 2002. IT WAS HELD FURTHER THAT THE CONCLUSION DRAWN BY THE AUTHORITIES BELOW THAT THE COMMENCEMENT OF WING E IS A CONTINUATION OF THE EXISTING PROJE CT IS ERRONEOUS. 6.2. IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO (SUPRA) , THE MUMBAI BENCH HAS AGAIN EXPRESSED THE SAME VIEW AND HELD THAT THE COMMENCEMENT CERTIFICATES IN RESPECT OF THESE WINGS IN BLOCK N WERE SEPARATELY RECEIVED BY THE ASSESSEE AND ALL THE FLA TS IN BLOCK N WERE OF LESS THAN 1000 SQ.FT., HENCE IT IS NOT OPEN TO THE REVENUE TO INCLUDE BLOCK B, C AS PART OF BLOCK N JUST TO DENY RELIEF U/S . 80IB(10) OF THE ACT. THE BANGALORE BENCH OF THE TRIBUNAL HAS ALSO GOT O CCASION TO DISCUSS DISTINCTION BETWEEN THE SANCTION OF LAY OUT PLAN A ND APPROVAL OF BUILDING PLANS BY THE LOCAL AUTHORITY FOR CONSIDERATION OF T HE ELIGIBILITY OF U/S. 80 IB (10) DEDUCTION IN THE CASE OF DCIT VS. BRIGADE ENTE RPRISES (P) LTD. (SUPRA). IN THAT CASE BEFORE THE BANGALORE BENCH, THE ASSESSEE UNDERTOOK A DEVELOPMENT PROJECT IN AN AREA OF 22 AC RES 19 GUNTAS CONSISTING OF 5 RESIDENTIAL BLOCK RAW HOUSES, OAK TREE PLACE, A CLUB, AND COMMUNITY CENTRE, A SCHOOL, A PARK AND CLAIMED DEDU CTION U/S. 80 IB ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 12 (10) IN RESPECT OF 2 RESIDENTIAL UNITS WHICH IF D EDUCTED SEPARATELY WERE ELIGIBLE FOR THE RELIEF. THE A.O TREATED THE ENTIR E PROJECT AS A SINGLE UNIT AND DENIED RELIEF U/S. 80 IB (10) IN ENTIRETY. THE TRIBUNAL JUSTIFIED THE ACTION OF THE LD CIT(A) IN ALLOWING RELIEF U/S. 80 IB(10) TREATING THE SAID 2 UNITS AS INDEPENDENT UNITS. THE TRIBUNAL OBSERVED THAT THE GROUP HOUSING APPROVAL WAS APPROVAL OF A MASTER PLAN AS A CONCE PT AND IF A PARTICULAR UNIT SATISFIES THE CONDITION OF SECTION 80 IB (10), THE ASSESSEE IS ENTITLED FOR DEDUCTION. THE TRIBUNAL HELD THAT PLAN FOR DEV ELOPMENT WAS ONLY A WORK ORDER AND NOT FINAL PLANS SANCTIONED BY LOCAL AUTHORITY. FOR ANY PROJECT, THERE COULD NOT HAVE BEEN A PLAN WITHOUT SUBMISSION OF THE DETAILED BUILDING PLANS BY THE ARCHITECT AND ON T HE REQUISITE DETAILS REQUIRED TO BE SUBMITTED FOR APPROVAL OF THE BUILD ING PLANS BY THE LOCAL AUTHORITIES. IN OTHER WORDS, THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE DEVELOPMENT PLAN IS ONLY CONCEPTU AL AND THE DETAILED CONSTRUCTION PLANS ARE NOT SUBMITTED NOR APPROVED WITHOUT WHICH NO CONSTRUCTION CAN EVEN COMMENCE, AND THIS IS DONE ON LY SUBSEQUENTLY WHERE THE ASSESSEE SUBMITS THE CONSTRUCTION PLANS WHICH ARE APPROVED BY THE AUTHORITY. THIS IS DONE FOR EACH PROJECT. THE PUNE BENCH IN THE CASES OF APOORVA PROPERTIES AND ESTATE PVT. LTD. VS . DCIT, ITA NO. 113/PN/2007, A.Y. 2003-04, ORDER DATED 21ST AUGUST 2009 AND MUMBAI BENCH IN THE CASE OF MUDHIT MADANLAL GUPTA VS/ ACIT (SUPRA), 51 DTR (MUM ) TRIB 217 HAVE EXPRESSED THE SIMILAR VIEW. 7. THERE IS NO REASON TO DISPUTE ON FACTS IN THE PR ESENT CASE THAT INITIALLY THE PROPOSED BUILDINGS ( EXCEPT WINGS I, M, N, O, P AND K IN THE PRESENT FORM) LAY OUT PLAN WAS APPROVED BY THE PMC ON 25.5.1990 ( PAGE 94 OF THE PAPER BOOK). THE PROPOSED BUILDING LAY OU T PLAN WAS REVISED ON 31.3.2001 (PAGE NO. 5 OF THE PAPER BOOK). THE TOTAL AREA OF LAND WAS 28905 SQ. MTRS. THE ASSESSEE HAD FIRSTLY COMPLETED DEVELOPMENT AND CONSTRUCTION OF BUILDINGS A,B, C,D,E,F,G,H & J IN T HE AREA OF 17,392 SQ. MTRS OF PROJECT KKN, LEAVING THE LAND AREA OF 8966 SQ.MTRS VACANT. IN THAT VACANT LAND, THE ASSESSEE STARTED THE CONSTRUC TION OF BUILDINGS IN WINGS K, M, N, I, O, P, K1 AND K2 IN THE PROJECT KKT. IN THIS PROJECT, 188 RESIDENTIAL UNITS WERE THERE EACH HAVING BUILT UP AREA UPTO 1500 SQ.FT. THE BUILDING PLANS OF THE PROJECT KKT WE RE APPROVED ON 9.3.2001 (WINGS K1 AND K2) AND 29.3.2001(WINGS I, M,N,O, P) WHICH WERE COMPLETED ON 10.10.2002 AND 10.2.2003 RESPECTI VELY. COPY OF ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 13 BUILDING PLAN APPROVED ON 9.3.2001 HAS BEEN MADE A VAILABLE AT PAGE NO. 104 OF THE PAPER BOOK, WHEREAS THE BUILDING PLAN AP PROVED ON 29.3.2001 HAS BEEN MADE AVAILABLE AT PAGE NO. 103 OF THE PAPE R BOOK. THERE IS NO DISPUTE ON THE DATES OF COMPLETION OF THE BUILDINGS IN THE HOUSING PROJECT. THE CBDT IN ITS LETTER DATED 4TH MAY 2001 (PAGE NO . 110 OF THE PAPER BOOK) HAS ALSO MADE IT CLEAR THAT THE DEFINITION OF HOUSING PROJECT IS ANY PROJECT WHICH HAS BEEN APPROVED BY THE LOCAL AUTHOR ITY AS A HOUSING PROJECT SHOULD BE CONSIDERED ADEQUATE FOR PURPOSE OF SEC. 10(23 G) AND 80 IB (10). WE ALSO FIND FROM THE EXPLANATION (I) T O S. 801B(10) THAT THE HOUSING PROJECT AND BUILDING PLAN OF SUCH HOUSING PROJECT ARE TWO DIFFERENT CONCEPT. FOR A READY REFERENCE EXPLANATI ON (I) TO THE SECTION IS BEING REPRODUCED HEREUNDER : EXPLANATION- FOR THE PURPOSES OF THIS CLAUSE, - (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUS ING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SH ALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH T HE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED BY THE LOCAL AUTHORITY; FROM THE VERY READING OF THE EXPLANATION (I) MAKES IT CLEAR THAT THE DATE ON WHICH BUILDING PLAN OF SUCH HOUSING PROJECT IS A PPROVED SHALL BE DEEMED THE DATE OF APPROVAL OF THE HOUSING PROJECT. WE THUS FIND THAT THE ASSESSEE IS VERY MUCH ELIGIBLE FOR THE CLAIMED DEDU CTION U/S. 80 IB (10) ON THE PROJECT KKT IN VIEW OF THE ABOVE CITED DE CISIONS INCLUDING DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIRMITI CONSTRUCTION VS. DCIT (SUPRA), FOLLOWING WHICH, IN OUR VIEW, THE LD CIT(A) HAS RIGHTLY ALLOWED THE CLAIMED DEDUCTION. THE SAME IS UPHELD. THE ISSUE RAISED ARE THUS DECIDED IN FAVOUR OF THE ASSESSEE. 8. SO FAR AS DECISION OF CHENNAI BENCH OF THE TRIBU NAL IN THE CASE OF ACIT VS. VISWAS PROMOTRS (P) LTD. (SUPRA) RELIED UP ON BY THE LD. D.R. IS CONCERNED, WE FIND THAT THE FACTS THEREIN ARE DISTI NGUISHABLE AS IN THAT CASE, ASSESSEE HAD COMPLETED 4 HOUSING PROJECTS, O UT OF THOSE 4 PROJECTS, IN 2 PROJECTS ASSESSEE HAD CONSTRUCTED FL ATS EXCEEDING 1500 SQ.FT. AND ALSO FLATS OF LESS THAN 1500 SQ.FT. IN AREA, THE ASSESSEE CLAIMED ITA . NOS. 791 & 792/PN/2008 M /S.ADITYA DEVELOPERS. A.Y. 2003-04 & 2004- 05 PAGE OF 14 14 DEDUCTION U/S. 80 IB (10) IN RESPECT OF FLATS HAVI NG AREA LESS THAN 1500 SQ.FT., A.O. DENIED SAID DEDUCTION ON THE GROUND TH AT HOUSING PROJECT COMPRISED OF RESIDENTIAL UNITS EXCEEDING 1500 SQ. F T., THUS ALL CONDITIONS STIPULATED IN STATUTE WERE NOT SATISFIED. THE T RIBUNAL HAS JUSTIFIED THE ACTION OF THE A.O. THIS DECISION IS THUS NOT RELEV ANT IN THE FACTS OF THE PRESENT CASE WHEREIN THE PROJECT KKT IS FULFILLING ALL THE REQUIREMENTS OF SEC. 80 IB(10) OF THE ACT AND APPROVAL TO THE BUILD ING PLANS OF THE PROJECT WERE GIVEN SEPARATELY BY THE MUNICIPAL CORPORATION FROM THE EARLIER PROJECT KKN. THE GROUNDS ARE THUS REJECTED. 9. IN RESULT, APPEALS ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH J ANUARY 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH JANUARY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT, CENTRAL, PUNE 4. THE CIT(A)- I,PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE