Dy. CIT, Circle-9, Pune V. Shri Arun R. Gupta, Pune

ITA 857/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6733 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: VIPIN GUJRATHI
• Keywords: Additional evidence
• Section: 80IB

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 857/PN/2013 (ASSESSMENT YEAR : 2005-06) DY. COMMISSIONER OF INCOME TAX, CIRCLE-9, PUNE. .. APPELLANT VS. SHRI ARUN R. GUPTA, M/S. ARUN DEVELOPERS, OPP: PUDUMJEE PAPER MILL, THERGAON, PUNE 411033 PAN NO.AAXPG9825G .. RESPONDENT ASSESSEE BY : SHRI VIPIN GUJRATHI DEPARTMENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 05-06-2014 DATE OF PRONOUNCEMENT : 23-06-2014 ORDER PER R.S. PADVEKAR, JM : IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LEARNED CIT(A)-V, PUNE DATED 29-01-2013 FOR THE ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT T HE ROAD ACQUISITION AREA FOR PUBLIC PURPOSES BY THE MUNICIPAL AUTHORITY , IS TO BE CONSIDERED AS PART OF AREA OF THE PLOT FOR CALCULAT ION OF MINIMUM 1 ACRE OF AREA FOR CLAIMING DEDUCTION U/S. 80IB(10) O F THE INCOME TAX ACT, 1961 EVEN WHEN THE ACQUISITION IS PRIOR TO THE APPROVAL OF THE PROJECT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 80IB (10) WHEN THE A.O. HAD RIGHTLY INVOKED PROVISIONS OF SEC. 80IB(10 )(D) AS THE PROJECT CONSISTED OF COMMERCIAL AREA OF 7523 SQ.FT IN PLOT 'A' AND PLOT 'B', WHICH WAS MORE THAN 5% OF THE AGGREGATE BUILT UP AREA OF THE PROJECT OR 2000 SQ.FT, WHICHEVER IS LESS?. 2 3. FACTS WHICH ARE REVEALED FROM THE RECORD ARE AS UNDER : THE ASSESSEE IS A PROMOTER & BUILDER AND CARRYING ON THE PROPRIETARY BUSINESS UNDER THE NAME AND STYLE OF M /S. ARUN CONSTRUCTIONS. THE ASSESSEE HAS UNDERTAKEN THE CO NSTRUCTION OF THE HOUSING PROJECT ARUN PARK AT S.NO.33/3/3/1, DATTA NAGAR, KHERGAON, PUNE. AS OBSERVED BY THE ASSESSING OFFICE R, IN THE SAID PROJECT ONE SCHEME IS A COMMERCIAL PROJECT (PLOT-A) AND ANOTHER IS A RESIDENTIAL COMPLEX (PLOT-B). THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) OF THE INCOME TAX ACT IN RESPECT OF TH E RESIDENTIAL PROJECT OF PLOT-B TO THE EXTENT OF RS.1,75,35,572/- . THE ASSESSEE HAD MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR HOUSING P ROJECTS OF PLOT-A AND PLOT-B. THE ASSESSING OFFICER HAS OBSERVED THA T A REGISTERED ARCHITECT WAS APPOINTED TO VERIFY THE CLAIM OF THE ASSESSEE. AS PER THE VERIFICATION REPORT OF THE REGISTERED ARCHITECT DATED 14-12-2007 IN RESPECT OF PLOT-B, THE SIZE OF THE PLOT IS REPORTED AS UNDER : I. SIZE OF THE PLOT - 1.059 ACRE (4286.77 SQ.MTR S.) II. ROAD ACQUISITION AREA - 0.44 ACRE (1781.19 SQ .MTRS) III. NET AREA OF THE PLOT - 0.619 ACRE (2505.58 S Q. MTRS.) 3.1 THE ASSESSING OFFICER HAS ALSO NOTED THAT AS PE R THE VERIFICATION REPORT OF THE REGISTERED ARCHITECT, THE TOTAL BUILT UP AREA OF THE BUILDING PROJECT WAS TO THE EXTENT OF 43,362.34 SQ. FT. IN WHICH THERE IS A COMMERCIAL AREA TO THE EXTENT OF 1,470 SQ.FT. THE ASSESSING OFFICER ASKED THE ASSESSEE WHY THE DEDUCTION SHOULD NOT BE REJECTED AS CLAIMED U/S.80IB(10) OF THE ACT AS THE NET AREA OF THE PLOT WAS LESS THAN 1 ACRE. 4. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFI CER THAT FOR THE PURPOSE OF CONSIDERING THE AREA CONTEMPLATED U/ S.80IB(10), THE GROSS AREA OF THE PLOT SHOWN IN LAYOUT PLAN IS TO B E CONSIDERED AND 3 NOT THE NET AREA OF THE PLOT AFTER REDUCING THE ARE A OF THE ROAD SURRENDERED TO THE LOCAL BODY. THE ASSESSING OFFIC ER WAS NOT CONVINCED WITH THE SAID EXPLANATION OF THE ASSESSEE AND HE HELD THAT THE SIZE OF THE PLOT OF LAND WAS LESS THAN 1 ACRE A ND HENCE, THERE WAS VIOLATION OF ONE OF THE CONDITIONS FOR CLAIMING THE DEDUCTION U/S.80IB(10). IN RESPECT OF THE ALLEGED VIOLATION OF THE COMMERCIAL AREA, THE ASSESSING OFFICER HAS OBSERVED THAT ON PE RUSAL OF THE APPROVED PLAN IT WAS FOUND THAT PCMC APPROVED THE B UILDING PLAN IN RESPECT OF PLOT-B ON 13-08-2004 AND HAD GIVEN ONE C OMMON COMMENCEMENT CERTIFICATE FOR BOTH THE PLOTS. THE A SSESSING OFFICER, THEREFORE, OBSERVED THAT IT CAN THUS BE INFERRED TH AT PLOT-A AND PLOT-B CONSTITUTE ONE SINGLE PROJECT. 5. FROM THE DETAILS OF THE COMMERCIAL AREA GIVEN BY THE ASSESSING OFFICER, THE TOTAL COMMERCIAL AREA CONSTITUTED 7523 SQ.FT. AS UNDER : I. PLOT-A - 6053 SQ.FT. II. PLOT-B - 1470 SQ.FT. -------------- TOTAL - 7523 SQ.FT. -------------------- 5.1 THE ASSESSING OFFICER HAS NOTED THAT THE BUILT UP AREA IN THE HOUSING PROJECT OF THE ASSESSEE IS MORE THAN 2000 S Q.FT. AND HENCE, THE ASSESSEE HAS VIOLATED ONE MORE CONDITION TO SEC TION 80IB(10) FOR AVAILING THE DEDUCTION AND HE ACCORDINGLY, REJECTED THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.1,75,35,572/-. 6. MATTER WAS CARRIED BEFORE THE LD.CIT(A). IT APP EARS THAT IN THE FIRST ROUND OF APPEAL PROCEEDINGS THE LD.CIT(A) PAS SED THE EXPARTE ORDER. THEN MATTER WAS CARRIED BEFORE THE TRIBUNAL AND THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE LD.CIT(A) AN D CIT(A) DISPOSED OF THE APPEAL FILED BY THE ASSESSEE ALLOWING THE CLAIM OF THE ASSESSEE. THE REASONS GIVEN BY THE LD.CIT(A) ARE AS UNDER : 4 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS REPLY OF THE APPELLANT. BEFORE PROCEEDING TO ADJUDICATE THE GROUND IT IS IMPERATIVE TO ADJUDICATE THE ISSUE OF ADDITIONAL EV IDENCE. THE APPELLANT HAS FILED COPY OF CERTIFICATES ISSUED BY PCMC DATED 11.01.2008 AND 31.01.2011. WHILE THE CERTIFICATE D ATED 11.01.2008 AUTHENTICATES DIVISION OF LAND SITUATED AT SURVEY N O. 33/3/3/1 CTS NO. 6136 TO 6148 THERGAON INTO TWO PLOTS I.E. PLOT 'A' AND PLOT 'B' AND ALSO PROVIDED THE AREA OF THE TWO PLOTS BEING 1113. 23 SQMTRS IN RESPECT OF PLOT A AND 4286.77 SQMTRS IN RESPECT OF PLOT 'B', THE CERTIFICATE DATED 31.01.2011, CLEARLY MENTIONS THAT PROJECTS AT PLOT 'A' AND PLOT 'B' ARE INDEPENDENT PLOTS AND COMMENCEMENT CERTIFICATES FOR THE SAID PLOTS WERE JOINTLY GIVEN AS SHRI ARUN GUPT A WAS POWER OF ATTORNEY HOLDER IN RESPECT OF THE SAID PLOTS. ENG LISH TRANSLATION OF CERTIFICATE DATED 31.01.2011 IS REPRODUCED FOR THE SAKE OF CLARITY : 'TO SHR. ARUN GUPTA OPPOSITE ADITYA BIRLA HOSPITAL THERGAON, CHINCHWAD PUNE - 411019 SUBJECT: REGARDING BUILDING CONSTRUCTION ON THE PLOT A &PLOT B SURVEYNO. 33/3/1-CTS NO. 6136 TO 614 8 REFERENCE: 1. BP/THERGAON/LAYOUT/17/2001 DATED 13.11.2001 2. REVISED PERMISSION FOR CONSTRUCTION NO. BP/THERG AON/8/2002 DATED 17.10.2001 3. REVISED PERMISSION FOR CONSTRUCTION NO. BP/THERGAON/10/2004 DATED 13/08/2004 4. PART COMPLETION CERTIFICATE NO 105/2004 DATED 13/08/2008 5. REVISED PERMISSION FOR CONSTRUCTION NO. BP/THERGAON/08/2008 DATED 31.03.2008 6. PART COMPLETION CERTIFICATE NO. 38/2008 DATE D 31.03.2008 7. YOUR APPLICATION DATED 07/01/2001 WITH REFERENCE TO THE ABOVE REFERRED SUBJECTS, IT I S TO INFORM YOU THAT THE PLOT OF LANDS PLOT A & PLOT B ARE SEPA RATE AND INDEPENDENT PLOTS. WITH REFERENCE TO POINT NO 1 ABO VE THE LAYOUT OF THE LAND WITH BUILDING HAS BEEN SANCTION AS PER POINT NO 1 OF THE ABOVE MENTIONED REFERENCES AND AS REFER ENCE POINT NO 2,3 & 5 ABOVE REVISED BUILDING PLANS HAVE BEEN APPROVED. AS PER REFERENCE POINT NO 4 & 6 ABOVE COMPLETION CE RTIFICATES HAVE BEEN GRANTED. IT IS FURTHER CONFIRMED THAT FSI IN RESPECT OF BUILDING ON PLOT A HAS BEEN SANCTIONED WITH REFE RENCE TO THE AREA OF THE SAID PLOT A. SIMILARLY, FSI IN RESPECT OF BUILDING ON PLOT B HAS BEEN SANCTIONED WITH REFERENCE TO THE AR EA OF THE SAID PLOT B. THE BUILDING PERMISSION/COMMENCEMENT CERTIFICATE BE ARS THE ONE/SAME NUMBER AS MR. ARUN GUPTA IS POWER OF ATTO RNEY HOLDER FOR BOTH PLOTS. HOWEVER, IT IS HEREBY CERT IFIED THAT BOTH PROJECTS ARE SEPARATE.' 11. THE APPELLANT SUBMITS THAT THE LEARNED ASSESSIN G OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NEVER INDICATE D THAT HE IS GOING TO TREAT BOTH THE PLOTS I.E., 'A' & 'B' AS SINGLE P ROJECT AND THEREFORE, THERE WAS NO OCCASION FOR HIM TO OBTAIN AND SUBMIT THESE CERTIFICATES FROM LOCAL AUTHORITY IN SUPPORT OF THE SAME. AFTER GOING THROUGH THE 5 ASSESSMENT ORDER AS WELL AS THE REPLY OF THE ASSESS EE AND ALSO THE COMMENTS OF THE ASSESSING OFFICER IT IS SEEN THAT T HE APPELLANT WAS NEVER CONFRONTED ON THIS ISSUE. THEREFORE, IT IS HE LD THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH E SAME BEFORE THE ASSESSING OFFICER. FURTHER, IT IS ALSO SEEN THA T THE ABOVE CERTIFICATES ARE CRUCIAL TO DECIDE THE GROUND OF AP PEAL UNDER CONSIDERATION. THEREFORE, ADDITIONAL EVIDENCES FILE D BY THE APPELLANT VIDE ABOVE MENTIONED TWO CERTIFICATES DATED 11.01.2 008 & 31.01.2011 ISSUED BY PCMC ARE ADMITTED. 12. COMING TO THE ISSUE OF AREA OF PLOT 'B' IN RESP ECT OF WHICH DEDUCTION U/S. 80IB OF INCOME-TAX ACT HAS BEEN CLAI MED, IT IS SEEN THAT AREA OF THE PLOT 'B' HAS BEEN SHOWN BY THE PCM C IN CERTIFICATE DATED 11.01.2008 AT 4286.77 SQ.MTRS. AREA STATEMENT OF LAYOUT PLAN SANCTIONED BY PCMC DATED 13.10.2004 ALSO MENTIONS T HE AREA OF THE PLOT AT 4286.77 SQ.MTRS. OUT OF THE ABOVE ROAD ACQU ISITION AREA IS SHOWN AT 1781.19 SQ.MTRS . IN THE SAME PLAN 40% ADD ITIONAL FSI HAS BEEN GRANTED TO THE APPELLANT ON ACCOUNT OF ROAD WI DENING ACQUISITION. THEREFORE, IT IS CLEAR THAT INITIAL AR EA OF THE PLOT IS 4286.77 SQ.MTRS WHICH IS MORE THAN ONE ACRE. THE ASSESSING OFFICER CLAIMS THAT ROAD ACQUISITION WAS DONE MUCH EARLIER. THIS I S FACTUALLY INCORRECT AS ROAD ACQUISITION AREA WAS EARMARKED AS PER NORMA L PRACTICE BUT NEVERTHELESS IT WAS PART OF THE PLOT AND THE APPELL ANT WAS COMPENSATED BY WAY OF ADDITIONAL FSI OF 1002.23 SQ. MTRS. THEREFORE, THE CLAIM OF THE ASSESSING OFFICER THAT AREA OF PLO T 'B' WAS LESS THAN ONE ACE IS NOT SUPPORTED BY FACTS. HON'BLE PUNE ITA T IN THE CASE OF BUNTY BUILDERS VS. ITO(2010) 127 ITD 286 ON SIMILAR FACTS HELD AS UNDER : '9. THIS CIRCULAR THUS GIVES A CLEAR INDICATION THA T THOUGH THE SECTION DOES NOT SPECIFICALLY PROVIDE FOR THE DEVEL OPMENT PLAN ROADS OR GRANT OF OTHER FACILITIES ETC., IN A HOUSI NG PROJECT BUT THE SAME SHOULD CONFORM TO THE PROJECT PLAN APPROVE D BY THE LOCAL AUTHORITY. OUT NEXT REASONING IS ON THE BASIS OF ABOVE DISCUSSION THAT THE LIMIT OF THE PLOT HAS TO BE CON STRUED WITH REFERENCE TO THE AREA AVAILABLE ON THE SITE ON WHIC H THE HOUSING PROJECT IS TO BE CONSTRUCTED AND NOT WITH R EFERENCE TO THE DEMARCATION OF LAND. MEETING THEREBY THE HOUSIN G PROJECT THUS CONSTITUTES DEVELOPMENT PLAN ROADS AND GRANT O F OTHER FACILITIES ; THEREFORE THOSE AREAS SHOULD EXIST WIT HIN THE PRESCRIBED LIMITS AND TO BE CONSIDERED AS PART AND PARCEL OF THE PROJECT. EVEN IN THE PRESENT CASE THE FACTS HAV E REVEALED THAT THE PLAN WOULD NOT HAVE BEEN APPROVED IF THE A SSESSEE WOULD NOT HAVE MADE 15 PER CENT AMENITY SPACE AVAIL ABLE TO THE CORPORATION. THOUGH AMENITY SPACE WAS STATED TO BE SURRENDERED TO THE CORPORATION BUT SUCH SACRIFICE O F THE BUILDER WAS DULY RECOGNIZED AND COMPENSATED BY GRANTING ADD ITIONAL FSI FOR THE SAID PROJECT. IF WE ACCEPT THE PROPOSIT ION OF THE REVENUE DEPARTMENT THAT THE AREA WHICH WAS DIRECTLY 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 PROJECT DEVELOPMENT. BUT SUCH A PROPOSITION WAS NOT INTENDE D IN THE LEGISLATURE. THE LANGUAGE OF THE SECTION DID NOT PR ESCRIBE SUCH HYPOTHETICATION. THEREFORE AN ANOTHER REASONING FOR OUR REJECTION OF SUCH A PROPOSITION OF THE REVENUE DEPA RTMENT IS THAT IT WOULD BE ILLOGICAL TO EXPECT FROM A BUILDER TO HAVE EXCESS LAND AREA THAN 1 ACRE, AT LEAST 15 PER CENT EXCESSIVE AREA APPLICABLE FOR PUNE CORPORATION, SO THAT AFTER SETTING APART 15 PER CENT AREA THE BALANCE SHOULD REMAIN IF ACRE FOR THE PURPOSE OF CONSTRUCTION. THIS SUGGESTION OR APP ROACH OF INTERPRETATION OF A STATUTE IS NOT IDEALISTIC BECAU SE WE CANNOT READ BEYOND THE SCOPE OF THE STATUTE. NORMAL RULE O F INTERPRETATION OF STATUES IS THAT THE GENERAL WORDS MUST RECEIVE A GENERAL CONSTRUCTION UNLESS THERE IS SOME THING OTHERWISE EXPRESSLY PROVIDED IN THE STATUTE. GENERA L WORDS HAVE ORDINARILY A GENERAL MEANING THEN THE FIRST TA SK IN INTERPRETATION IS TO GIVE THE WORDS THEIR PLAIN AND ORDINARY 6 MEANING. THIS WHAT WE HAVE GATHERED FROM THE BOOKS AVAILABLE ON THIS SUBJECT WITH A ATTEMPT TO SUBSCRI BE A SIMPLE AND REALISTIC MEANING TO THE CL. (B) OF S.80-1 B( 1 0) OF IT 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 CORPORATION. THEREFORE A JUSTIFIABLE CONCLUSION IS THAT WHEN THERE IS NO DOUBT MORE SO I T IS NOT IN DISPUTE THAT A PORTION OF THE LAND, IN THE PRESENT CASE IT IS 15 PER CENT, TO BE EARMARKED OR SET-APART OR RESERVED OR SEGREGATED OUT OF THE TOTAL LAND IN QUESTION, MINIM UM 1 ACRE, MEANT FOR THE PURPOSE OF PROJECT IN TERMS OF RULES/ REGULATION OF A LOCAL BODY, I.E., PUNE MUNICIPAL CORPORATION, AND WITHOUT THAT SEGREGATION THE PROJECT COULD NOT BE SANCTIONE D THEN THAT PORTION BEING MANDATORY FOR AMENITY PURPOSES HAS TO BE TAKEN AS A PART AND PARCEL OF THE LAND AVAILABLE FOR THE PROJECT. IN THE PRESENT CASE SINCE THE AREA AVAILABLE FOR THE H OUSING PROJECT WAS 4,600 SQ MTRS. THAT IS MORE THAN 1 ACRE (4,046 SQ.MTRS) THEREFORE THE APPELLANT IS ENTITLED FOR TH E CLAIM OF DEDUCTION UNDER S.80-IB(10)(B) ON THIS PORTION OF L AND. WE HOLD ACCORDINGLY.' 13. THUS, FROM THE ABOVE ANALYSIS, IT IS CLEAR THAT THE ORIGINAL SIZE OF PLOT 'B' WAS 4286.77 SQ.MTRS. AS PER LAYOUT PLAN TOO, THE SAME AREA WAS SHOWN AND ACQUISITION OF 1781.19 SQ.MTRS O N ACCOUNT OF ROAD WIDENING WAS COMPENSATED BY SANCTION OF 40% OF FSI BEING 1002.23 SQ.MTRS WHICH WAS LOADED ON THE SAME PLOT. THEREFORE, IT CANNOT BE SAID THAT PLOT SIZE WAS LESS THAN ONE ACR E WHEN THE PROJECT COMMENCED. THE ASSESSING OFFICER HAS PERHAPS BEEN M ISTAKEN ON ACCOUNT OF EARMARKING OF ROAD WIDENING AREA IN THE SAID PLOT AND HAS TREATED AS ACQUISITION OF THE SAME. IT MUST BE APPR ECIATED THAT IN ANY DEVELOPMENT PLAN ROAD AND OTHER PUBLIC AMENITIES AR E EARMARKED WELL IN ADVANCE WHICH CANNOT BE EQUATED WITH ACQUISITION UNLESS AND UNTIL ACTUAL ACQUISITION IS MADE. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS HELD THAT THE ASSESSING OFFICER W AS NOT JUSTIFIED IN HOLDING THAT AREA OF PLOT 'B' WAS LESS THAN ONE ACR E. 14. COMING TO THE ISSUE OF TREATMENT OF PROJECT 'A' AND 'B' AS ONE AND THEREAFTER CONCLUDING THAT COMMERCIAL AREA IN T HE PROJECT EXCEEDS THE LIMIT PRESCRIBED IN SEC. 80IB(10)(D) OF INCOME-TAX ACT, IT IS SEEN THAT THERE IS NO BASIS FOR SUCH CONCLUSION AFTER ISSUE OF CLARIFICATION BY LETTER DATED 31.01.2011 AS PER WHI CH BOTH THE PROJECTS HAVE BEEN TREATED AS INDEPENDENT PROJECTS. EVEN OTH ERWISE, IT IS SEEN THAT BOTH THE PROJECTS WERE STARTED WITH COMMENCEME NT CERTIFICATE DATED 13.08.2004. HON'BLE PUNE ITAT IN THE CASE OF OPEL SHELTERS PVT LTD. AND D.S. KULKARNI & ASSOCIATES IN ITA NOS. 219 & 17/PN/2009 FOR A.Y. 2005-06 VIDE ORDER DATED 31.05.2011 HAS HELD T HAT AMENDED PROVISIONS OF SEC. 80IB(10) WILL NOT APPLY TO PROJE CTS STARTED BEFORE 01.04.2005. THIS VIEW HAS BEEN FOLLOWED BY HON'BLE PUNE ITAT IN THE CASE OF KUMAR BEHARAY RATHI IN ITA NO. 1033/PN/2009 (A.Y. 2005- 06). THIS BEING SO, THE CLAIM OF DEDUCTION U/S. 80I B(10) OF INCOME- TAX ACT CANNOT BE DENIED ON THE BASIS OF INVOKING T HE PROVISIONS OF SEC. 80IB(10)(D) OF INCOME-TAX ACT. 15. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF SEC, 80IB(10) OF INCOME-TAX ACT IN THE PRESENT CASE. ACCORDINGLY, HE IS DIRECTED TO DELETE THE ADDITION OF RS.1,75,35,572/-. THE GROUND IS ALLOWED. NOW THE REVENUE IS IN APPEAL BEFORE US. 7 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE CHARGES OF THE ASSESSING OFFICER FOR DENYING THE DE DUCTION TO THE ASSESSEE ARE THAT (I) THE AREA OF THE PLOT ON WHICH THE ASSESSEE HAS CONSTRUCTED THE HOUSING PROJECT IS LESS THAN 1 ACRE AND (2) THERE IS A COMMERCIAL AREA WHICH IS MORE THAN 2000 SQ.FT. SO FAR AS THE FIRST CHARGE IS CONCERNED, WE FIND THAT THERE ARE 2 PLOTS , I.E. PLOT-A AND PLOT-B. THE AREA OF THE PLOT-A IS 1113.23 SQ.MTRS AND THE AREA OF PLOT-B IS 4286.77 SQ.MTRS AND THIS FACT IS ALSO NOT DISPUTED BY THE ASSESSING OFFICER. THE RESERVATION OF THE ASSESSIN G OFFICER IS THAT AFTER REDUCING THE AREA OF THE ROAD, THE AREA OF TH E PLOT-B ON WHICH THE ASSESSEE HAS CONSTRUCTED THE HOUSING PROJECT AN D CLAIMED DEDUCTION IS LESS THAN 1 ACRE. AS OBSERVED BY THE LD.CIT(A), THE AREA OF THE PLOT-B HAS BEEN SHOWN BY THE PCMC IN CERTIFI CATE DATED 11-01- 2008 AS 4286.77 SQ.MTRS. THE AREA STATEMENT OF THE LAYOUT PLAN SANCTIONED BY THE LOCAL AUTHORITY, I.E. PCMC DATED 12-10-2004 ALSO MENTIONS THE AREA OF THE PLOT AT 4286.77 SQ.MTRS. IN THE LAYOUT PLAN, THE ROAD ACQUISITION AREA IS SHOWN AT 1781.19 SQ.MT RS. THE ASSESSEE HAS BEEN GRANTED 40% ADDITIONAL FSI AS ASSESSEES L AND WAS ACQUIRED FOR THE ROAD WIDENING. THE LAND ACQUIRED FOR THE R OAD WIDENING IS A PART OF THE GROSS AREA OF THE PLOT OF 4286.77 SQ. M TRS. THE OBJECTION OF THE ASSESSING OFFICER IS THAT FOR THE PURPOSE OF INTERPRETING THE AREA OF THE PLOT, AS PER CLAUSE (B) OF SECTION 80IB (10) THE NET AVAILABLE AREA IS TO BE CONSIDERED. 7.1 IDENTICAL ISSUE HAS COME FOR THE CONSIDERATION BEFORE THE ITAT, PUNE IN THE CASE OF BUNTY BUILDERS VS. ITO REPORTED IN 127 ITD 286. IN THE CASE OF BUNTY BUILDERS (SUPRA) THE ASSESSEE WAS REQUIRED TO LEAVE 15% OF THE AREA FOR THE AMENITY SPACE. THE T RIBUNAL HELD THAT LEAVING OF 15% OF AREA FOR THE AMENITY, WITHOUT WHI CH THE PROJECT 8 WOULD NOT HAVE BEEN SANCTIONED, IS A PART OF THE T OTAL AREA OF THE PROJECT. 7.2 IN THE PRESENT CASE, THERE WAS COMPULSORY ACQUI SITION OF THE LAND FOR THE ROAD WIDENING AND IT IS A PART OF THE AREA OF THE PLOT TOWARDS ACQUISITION OF 1781.19 SQ.MTRS BY THE LOCAL AUTHORITY ON ACCOUNT OF ROAD WIDENING. THE ASSESSEE WAS COMPENS ATED BY GIVING THE ADDITIONAL FSI OF 40%. IN OUR OPINION, THE PRI NCIPLES LAID DOWN IN THE CASE OF BUNTY BUILDERS (SUPRA) ARE APPLICABLE T O THE ASSESSEES CASE AND THE LD.CIT(A) HAS RIGHTLY HELD THAT THE AR EA ACQUIRED BY THE LOCAL AUTHORITY FOR ROAD WIDENING IS A PART OF THE PLOT/PROJECT, I.E. PLOT- B AND HENCE, THE TOTAL AREA IS TO BE CONSIDERED AS A GROSS AREA AND NOT THE NET AREA. 7.3 IN RESPECT OF ANOTHER OBJECTION, I.E., VIOLATIO N OF THE CONDITION OF THE COMMERCIAL AREA; IS CONCERNED, WE FIND THAT AS PER THE REPORT, BOTH THE PROJECTS WERE STARTED WITH THE COMMENCEMEN T CERTIFICATE DATED 13-08-2004. THIS ISSUE HAS BEEN SETTLED BY T HE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES REPORTED IN 333 ITR 289. THE HONBLE HIGH COURT ALSO REJECTED THE ARGUMENTS OF THE REVENUE THAT SECTION 80IB(10) AS AMENDED BY INSERTI ON OF CLAUSE(D) W.E.F. 01-04-2005 SHOULD BE APPLIED RETROSPECTIVELY . AS THE ASSESSEES HOUSING PROJECT HAS BEEN APPROVED PRIOR TO 01-04-2005, HENCE THE AMENDED DEFINITION OF THE COMMERCIAL AREA IS NOT APPLICABLE TO THE ASSESSEE, AS ADMITTEDLY, THERE WERE NO CONDI TION LIMITING THE COMMERCIAL AREA IN THE HOUSING PROJECT PRIOR TO 01- 04-2005. NOWHERE, IT IS THE CASE OF THE ASSESSING OFFICER TH AT THE ASSESSEES PROJECT HAS NOT BEEN APPROVED BY THE LOCAL AUTHORIT Y AS A HOUSING PROJECT. WE ALSO FIND THAT THE LD.CIT(A) HAS FOLLO WED THE DECISIONS OF THE ITAT, PUNE IN THE CASE OF OPEN SHELTERS PVT. LT D. AND D.S. 9 KULKARNI & ASSOCIATES VIDE ITA NOS. 219 AND 17/PN/2 009 FOR A.Y. 2005-06 ORDER DATED 31-05-2011 IN WHICH THE TRIBUNA L HAS HELD THAT AMENDED PROVISIONS OF SECTION 80IB(10) WILL NOT APP LY TO THE PROJECTS APPROVED BEFORE 01-04-2005. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) ALLOWING THE CLAIM OF THE AS SESSEE. ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE D ISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23-06-2014. SD/- SD/- (G.S. PANNU) (R.S. PAD VEKAR) ACCOUNTANT MEMBER JUDICIAL MEM BER PUNE DATED: 23 RD JUNE 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-V, PUNE 4. CIT-V, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE