ITO, Ward 3(4), Pune V. Shri Shrikant Balbhim Mokate, Pune

ITA 829/PUN/2013

• Counselvise Citation: 82924514 RSA 2013
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: K SRINIVASAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.829/PN/2013 (A.Y: 2009-10) ITO, WARD 3(4), PUNE APPELLANT VS. SHRI SHRIKANT BALBHIM MOKATE S.NO.31, RAGHUBAI NIWAS, PUNE 411029 PAN: AAXPM1356L RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI K. SRINIVASAN DATE OF HEARING: 24.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEAL)-II, [IN SHORT CIT(A)] PUNE, DATED 31.12.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT THE DEDUCTION UNDER SECTION 80IB(10 ) IS ADMISSIBLE IN THE CASE OF 'HOUSING PROJECT' EVEN WH ERE AREA OF THE PLOT IS LESS THAN ONE ACRE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT TO CLAIM DEDUCT ION U/S.80IB(10), THE PHYSICAL SIZE OF THE LAND ON WHIC H THE PROJECT IS BUILT SHOULD BE ATLEAST ONE ACRE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN ACCEPTING ASSESSEE'S PLEA THAT THE AREA TRANSFER RED TO PMC FOR PUBLIC AMENITY SHOULD BE CONSIDERED AS A PA RT OF THE PROJECT. 2 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THE PURPOSE OF THE C IRCULAR NO.5 DATED 15.07.2005 ISSUED BY THE CBDT WHICH IS EXPLANATORY IN NATURE AND WHICH GIVES SPECIFIC GUID ELINES AS REGARDS THE SIZE OF THE PLOT ON WHICH THE HOUSIN G PROJECT IS REQUIRED TO BE CONSTRUCTED ? 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN NOT APPRECIATING THAT THE AREA OF THE PLOT OF 40 0 SQ. MTRS. HAS BEEN EARMARKED FOR DP ROAD, WHICH CLEARLY INDICATES THAT THE SAID PLOT OF LAND WAS NOT IN THE POSSESSION OF THE ASSESSEE AND THEREFORE, EXCLUDING THE SAID PLOT, THE SIZE OF THE LAND AVAILABLE FOR CONST RUCTION AREA WAS 3900 SQ. MTRS. WHICH WAS LESS THAN ONE ACR E ? 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN CIVIL CONSTRUCTION WORK UNDERTAKING BUILDING OF HOUSING PROJECTS. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE, WAS ASSESSED BY T HE ASSESSING OFFICER AT 45,17,070/- AFTER DISALLOWING THE CLAIM OF DEDUCTI ON U/S.80IB(10) OF THE ACT OF 39,68,411/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS UNDERTAKEN A HOUSIN G PROJECT AT WARJE, PUNE ON A PLOT ADMEASURING 4300 SQ. MTRS. WH ICH THE ASSESSING OFFICER BASED ON THE BUILDING LAYOUT SANC TIONED BY PUNE MUNICIPAL CORPORATION (PMC) HELD TO BE LESS TH AN ONE ACRE AND DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) OF 39,68,411/-. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HAS ALLO WED THE CLAIM OF ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US O N BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) FAIL ED TO APPRECIATE THAT TO CLAIM DEDUCTION U/S.80IB(10), THE PHYSICAL SIZE OF THE PLOT ON WHICH THE PROJECT IS BUILT SHOULD BE AT LEAST ON E ACRE. THE CIT(A) ERRED IN ACCEPTING ASSESSEE'S PLEA THAT THE AREA TRANSFERRED TO PMC FOR PUBLIC AMENITY SHOULD BE CONSIDERED AS A PART OF THE PROJECT. ACCORDINGLY, THE ORDER OF CIT(A) BE SET A SIDE AND THAT OF 3 ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE DEDUCT ION U/S.80IB(10) ON THE GROUND THAT THE SIZE OF THE PLO T ON WHICH BUILDING OF HOUSING PROJECT WAS UNDERTAKEN WAS LESS THAN ONE ACRE. ACCORDINGLY, THE ORDER OF CIT(A) BE UPHELD, WHO HAS GRANTED RELIEF TO THE ASSESSEE. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A BUILDER AND HAS UNDERTAKEN THE HOUSING PROJECT AS DISCUSSED ABOVE. THE ASSESS ING OFFICER REJECTED THE CLAIM OF DEDUCTION U/S.80(IB(10) ON AC COUNT OF SIZE OF THE PLOT ON WHICH THE BUILDING WAS CONSTRUCTED A S SAME WAS FOUND LESS THAN ONE ACRE. THE ASSESSING OFFICER HE LD THAT THE AREA OF PLOT ON WHICH PROPOSED CONSTRUCTION WAS LES S THAN ONE ACRE, THEREBY NOT FULFILLING THE CONDITIONS OF SECT ION 80IB(10). THE STAND OF THE ASSESSEE HAS BEEN THAT THE ORIGINAL SI ZE OF THE PLOT HAS BEEN 4300 SQ. MTRS. THE AREA EARMARKED FOR D.P . ROAD, AMENITY SPACE, ETC. WAS COMPENSATED BY ALLOWING ADD ITIONAL FSI EQUAL TO THE AREA LEFT FOR SUCH AMENITIES AND ALL T HE CALCULATED SPECIFICATIONS WERE WORKED OUT BY TAKEN INTO CONSID ERATION THE SIZE OF THE PLOT AT 4300 SQ. MTRS. THE HOUSING PRO JECT CONSTITUTES D.P. ROAD AND OTHER FACILITIES REQUIRED AS PER D.P. RULES OF LOCAL AUTHORITY COMPLYING THE PROJECT. THE ASSESSING OFF ICER HAS TAKEN A PLOT AT 3917.23 SQ. MTRS. AGAINST 4300 SQ. MTRS. ON ACCOUNT OF CIVIL FACILITIES PROVIDED THEREIN. THE STAND OF TH E ASSESSEE HAS BEEN THAT THE ASSESSEE WAS COMPLETING THE CRITERIA OF THE PLOT AS ENVISAGED IN THE PROVISIONS OF SECTION 80IB(10) OF THE ACT. WE FIND IT UNDISPUTED THAT THE TOTAL AREA OF THE PLOT AS PER 7/12 EXTRACT GIVEN IN THE AREA STATEMENT WAS 4300 SQ. MT RS. AND WHICH HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER AS S UCH. THE ASSESSEE VIDE AGREEMENT DATED 16.01.2007 BETWEEN M/ S. RAMA ERANDE ASSOCIATES, A PARTNERSHIP FIRM AND M/S. MOKA TE BUILDERS. 4 PROP: SHRIKANT B MOKATE, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR DEVELOPMENT OF PROPERTY BEARING S.NO.119 OF VIL LAGE WARJE ADMEASURING 4300 SQ. MTRS., WHICH IS NOT IN DISPUTE . THE ASSESSEE WAS GRANTED COMMENCEMENT CERTIFICATE FROM PMC ON 28.03.2007 AND THE ASSESSEE APPLIED TO THE DISTRICT COLLECTOR, PUNE FOR NON AGRICULTURAL USE, WHO GRANTED THE PERM ISSION AS 3917.23 SQ. MTRS. FOR RESIDENTIAL USE AND 382.77 SQ . MTRS. EARMARKED FOR D.P. ROAD VIDE ORDER DATED 30.07.2007 . THE ASSESSING OFFICER TOOK THE NON AGRICULTURAL USE ARE A TO BE THE AREA OF THE PLOT AND EXCLUDED THE AREA EARMARKED FO R D.P. ROAD / ROAD WIDENING AS PER D.P. RULES OF PMC. THE DEDUCT ION OF THE AREA EARMARKED FROM GROSS AREA OF 4300 SQ. MTRS. LE D TO THE CONFUSION WITH REGARD TO THE AREA AVAILABLE FOR CON STRUCTION OF BUILDING AREA. THE ITAT, PUNE BENCH IN BUNTY BUILD ERS VS. ITO (2011) 139 TTJ (PUNE) 367, HELD THAT THE AREA OF TH E PLOT AS PER 7/12 EXTRACT WAS TO BE ASCERTAINED THE SIZE OF PLOT AREA REQUIRED U/S.80IB(10) OF THE ACT. THE DEDUCTION FOR ROAD WI DENING, OPEN SPACE AREA UNDER INTERNAL ROAD AMENITIES SPACE, TRA NSFORMER, ETC. SHOULD NOT BE IGNORED WHILE CALCULATING THE AREA OF THE PLOT. THE TRIBUNAL HELD SO UPON RELYING ON THE CBDT CIRCULAR NO.5 OF 2005, WHICH ACTUALLY CONTAINED THE EXPLANATORY NOTES ON A MENDMENTS BROUGHT BY THE FINANCE ACT (NO.2) 2004 WHICH READ A S UNDER: 'THIS SECTION DOES NOT SPECIFICALLY PROVIDE AREA LI MIT FOR THE GARDEN, THE DEVELOPMENT PLAN ROADS, INTERNAL MEANS OF ACCESS, ETC., IN THE HOUSING PROJECT. THEREFORE, THE SAME S HOULD CONFORM TO THE PROJECT PLAN APPROVED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH THE REGULATIONS IN FORCE. ALSO, THE AREA LIMIT OF THE PLOT HAS TO BE CONSTRUED WITH REFERENCE TO THE AREA OF THE S ITE ON WHICH THE HOUSING PROJECT IS CONSTRUCTED AND NOT WITH REF ERENCE TO THE DEMARCATION OF LAND DONE BY THE LAND DEVELOPMENT AU THORITY.' 5. RELYING ON THE ABOVE CIRCULAR, THE TRIBUNAL IN B UNTY BUILDERS (SUPRA), HELD AS UNDER: 'THIS CIRCULAR THUS GIVES A CLEAR INDICATION THAT T HOUGH THE SECTION DO NOT SPECIFICALLY PROVIDE FOR THE DEVELOP MENT PLAN ROADS OR GRANT OF OTHER FACILITIES ETC. IN A HOUSIN G PROJECT BUT THE SAME SHOULD CONFORM TO THE PROJECT PLAN APPROVED BY THE LOCAL 5 AUTHORITY. OUR NEXT REASONING IS ON THE BASIS OF AB OVE DISCUSSION THAT THE LIMIT OF THE PLOT HAS TO BE CONSTRUED WITH REFERENCE TO THE AREA AVAILABLE ON THE SITE ON WHICH THE HOUSING PROJECT IS TO BE CONSTRUCTED AND NOT WITH REFERENCE TO THE DEMARC ATION OF LAND. MEANING THEREBY THE HOUSING PROJECT THUS CONS TITUTES DEVELOPMENT PLAN ROADS AND GRANT OF OTHER FACILITIE S; THEREFORE THOSE AREAS SHOULD EXIST WITHIN THE PRESCRIBED LIMI TS AND TO BE CONSIDERED AS PART AND PARCEL OF THE PROJECT. EVEN IN THE PRESENT CASE THE FACTS HAVE REVEALED THAT THE PLAN WOULD NO T HAVE BEEN APPROVED IF THE ASSESSEE WOULD NOT HAVE MADE 15% AM ENITY SPACE AVAILABLE TO THE CORPORATION. THOUGH AMENITY SPACE WAS STATED TO BE SURRENDERED TO THE CORPORATION BUT SUC H SACRIFICE OF THE BUILDER WAS DULY RECOGNIZED AND COMPENSATED BY GRANTING ADDITIONAL FSI FOR THE SAID PROJECT. IF WE ACCEPT T HE PROPOSITION OF THE REVENUE DEPARTMENT THAT THE AREA WHICH WAS DIRE CTLY UNDER THE BUILDING CONSTRUCTION SHOULD ONLY BE HELD AS TH E PROJECT FOR CONSTRUCTION, THEN A BUILDER HAS TO ACQUIRE A LAND MORE THAN 1 ACRE OF LAND. THEN ONLY AFTER THE SET APART OF THE AMENITY SPACE HE COULD BE LEFT WITH THE BALANCE 1 ACRE FOR PROJEC T DEVELOPMENT. BUT SUCH A PROPOSITION WAS NOT INTENDED IN THE LEGI SLATURE. THE LANGUAGE OF THE SECTION DID NOT PRESCRIBE SUCH HYPO THECATION. THEREFORE, AN ANOTHER REASONING OF OUR REJECTION OF SUCH A PROPOSITION OF THE REVENUE DEPARTMENT IS THAT IT WO ULD BE ILLOGICAL TO EXPECT FROM A BUILDER TO HAVE EXCESS L AND AREA THAN 1 ACRE, AT LEAST 15% EXCESSIVE AREA APPLICABLE FOR PU NE CORPORATION, SO THAT AFTER SETTING APART 15% AREA T HE BALANCE SHOULD REMAIN 1 ACRE FOR THE PURPOSE OF CONSTRUCTIO N. THIS SUGGESTION OR APPROACH OF INTERPRETATION OF A STATU TE IS NOT IDEALISTIC BECAUSE WE CANNOT READ BEYOND THE SCOPE OF THE STATUTE. NORMAL RULE OF INTERPRETATION OF STATUES I S THAT THE GENERAL WORDS MUST RECEIVE A GENERAL CONSTRUCTION U NLESS THERE IS SOMETHING OTHERWISE EXPRESSLY PROVIDED IN THE ST ATUTE. GENERAL WORDS HAVE ORDINARILY A GENERAL MEANING, TH EN THE FIRST TASK IN INTERPRETATION IS TO GIVE THE WORDS THEIR P LAIN AND ORDINARY MEANING. THIS IS WHAT WE HAVE GATHERED FRO M THE BOOKS AVAILABLE ON THIS SUBJECT WITH AN ATTEMPT TO SUBSCR IBE A SIMPLE AND REALISTIC MEANING TO THE CLAUSE (B) TO SECTION 80(10) OF THE I.T.ACT. NOTHING MORE CAN BE ADDED HENCE WE HAVE TO RESTRICT THE INTERPRETATION THAT THE AREA OF 1 ACRE SHOULD BE AV AILABLE FOR THE HOUSING PROJECT INCLUSIVE OF AMENITIES REQUIRED TO BE SET APART AS PER THE NORMS OF A CORPORATION. THEREFORE, A JUSTIF IABLE CONCLUSION IS THAT WHEN THERE IS NO DOUBT, MORE SO IT IS NOT IN DISPUTE THAT A PORTION OF THE LAND, IN THE PRESENT CASE IT IS 15%, TO BE EARMARKED OR SET APART OR RESERVED OR SEGREGA TED OUT OF THE TOTAL LAND IN QUESTION, MINIMUM 1 ACRE MEANT FOR TH E PURPOSE OF PROJECT IN TERMS OF RULES / REGULATION OF A LOCAL B ODY, I.E. PUNE MUNICIPAL CORPORATION, AND WITHOUT THAT SEGREGATION THE PROJECT COULD NOT BE SANCTIONED THEN THAT PORTION BEING MAN DATORY FOR AMENITY PURPOSES HAS TO BE TAKEN AS A PART AND PARC EL OF THE LAND AVAILABLE FOR THE PROJECT. IN THE PRESENT CASE SINCE THE AREA AVAILABLE FOR THE HOUSING PROJECT WAS 4600 SQ.MTR. THAT IS MORE THAN 1 ACRE (4046 SQ.MTR.) THEREFORE THE APPELLANT IS ENTITLED FOR 6 THE CLAIM OF DEDUCTION U/S.80IB(10)(B) ON THIS PORT ION OF LAND. WE HOLD ACCORDINGLY.' 6. THE CIT(A) RELYING ON THE RATIO OF THE BUNTY BUI LDERS (SUPRA) HELD THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION B ASED ON THE AREA OF THE PLOT AS PER 7/12 EXTRACT BEING 4300 SQ. MTRS., WHICH WAS MORE THAN MINIMUM STIPULATED AREA OF ONE ACRE ( 4047 SQ. MTRS.). IN VIEW OF ABOVE, THE CIT(A) WAS JUSTIFIED IN GRANTING RELIEF TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 80I B(10), WHICH NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH APRIL, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE