THE ACIT, 1(1), v. SMT SAROJ KAPOOR,

PAGE 1 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : ABWPK4857E I.T.A.NO. 194/IND/2008 A.Y. : 2004-05. ACIT SMT.SAROJ KAPOOR 1(1) VS PROP. M/S. KRISHNA HOMES BHOPAL GREEN CITY E-8 ARERA COLONY BHOPAL. APPELLANT RESPONDENT PAN NO. : ABWPK4857E C.O.NO.51/IND/2008 (ARISING OUT OF I.T.A.NO. 194/IND/2008) A.Y.: 2004-05 SMT.SAROJ KAPOOR ACIT PROP. M/S. KRISHNA HOMES VS 1(1) GREEN CITY E-8 ARERA COLONY BHOPAL. BHOPAL APPELLANT RESPONDENT DEPARTMENT BY : SHRI K.K.SINGH CIT DR ASSESSEE BY : SHRI H. P. VERMA AND SHRI ASHISH GOYAL ADVOCATES DATE OF HEARING : 08.04.2010 PAGE 2 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL O R D E R PER BENCH THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARISE OUT OF ORDER OF THE LD. CIT(A)-I BH OPAL DATED 18.01.2008 FOR THE ASSESSMENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST WE SHALL TAKE UP THE REVENUES APPEAL WHEREI N THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT (A) IN ALLOWING DEDUCTION TO THE ASSESSEE U/S 80IB(10) ON PRO-RATA BASIS. THIS IS THE ONLY ISSUE INVOLVED THOUGH THE REVENUE HAS TAKEN FIVE G ROUNDS. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTION OF HOUSING PROJECTS AND CLAIMED DEDUCTION U/S 80IB(10) AMOUNTING TO RS. 1 52 67 762 /-. THE A.O. FOUND THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE DEVELOPED AND SOLD HOUSING PROJECTS COMPRISING OF ROW HOUSES AND FLATS IN GREEN CITY AT E- 8 ARERA COLONY BHOPAL. THE A.O. IN ORDER TO ASCER TAIN ACTUAL BUILT UP AREA OF EACH HOUSE OF THE PROJECT CONDUCTED A PHYSI CAL VERIFICATION ON THE SITE ON 8.12.2006 AND ON TAKING MEASUREMENT OF THRE E FLATS THE BUILT UP PAGE 3 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL AREA OF SUCH FLATS WAS FOUND TO BE MORE THAN 1500 S Q.FT. THE DETAILS OF SUCH FLATS ARE AS UNDER :- HOUSE NO. MEASURED & PROJECT NAME OF THE OWNER/OCCUPIER TOTAL BUILT UP AREA A-2-18 GREEN CITY SMT. KAVITA BHATT 1875.33 SQ.FT. A-4 GREEN CITY SHRI O.P. BEOHAR 1928.56 SQ.FT. A-6 GREEN CITY SMT. KRISHNA MURTHY W/O SHRI C. S. KRISHNA MURTHY 2639.14 SQ.FT. 5. THE A.O. ACCORDINGLY GAVE THE COPIES OF THE MEA SUREMENT SO TAKEN FOR THE COMMENTS OF THE ASSESSEE AND WAS ALSO REQUIRED TO EXPLAIN AS TO WHY THE DEDUCTION U/S 80IB(10) SHOULD HAVE BE EN DISALLOWED. THE ASSESSEE VIDE ITS LETTER DATED 26.12.2006 HAS SUBMI TTED THAT MEASUREMENTS WERE NOT CORRECTLY TAKEN AND ALSO SUBM ITTED THE AREAS AS PER THE REPORT OF A TECHNICAL EXPERT WAS WITHIN TH E PRESCRIBED LIMIT OF 1500 SQ.FT.THE A.O. HOWEVER REJECTED SUCH CLAIM O F THE ASSESSEE AND SUCH REPORT FOR THE REASON THAT THE MEASUREMENTS WE RE DONE BY THE DEPARTMENT IN THE PRESENCE OF ASSESSEES REPRESENTA TIVE. THEREAFTER THE A.O. REFERRED TO THE PROVISIONS OF SECTION 80IB(10) AND CLAUSE (A) OF SECTION 80IB(14) AND HELD THAT DEFINITION OF BUILT UP AREA HAD BEEN DEFINED WHICH WAS OF CLARIFICATORY NATURE AND THE REFORE AS PER THIS DEFINITION THE MEASUREMENTS TAKEN BY THE ENGINEER HIRED BY THE ASSESSEE PAGE 4 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL WAS NOT OF MUCH USE AS THERE WAS NO CONCEPT OF NET BUILT UP AREA IN SECTION 80IB. THE LD. A.O. ALSO HELD THAT PROVISION S OF SECTION 80IB(14)(A) OF THE ACT WAS OF CLARIFICATORY NATURE HENCE HAD RETROSPECTIVE APPLICATION. THE A.O. FURTHER FOUND T HAT IN CASE OF HOUSE NO. A/6 ON THE DATE OF PHYSICAL VERIFICATION NOBODY HAD POINTED OUT ANY DISCREPANCIES IN THE MEASUREMENTS TAKEN BY THE DEP ARTMENT AND FACT OF SO CALLED ADDITIONAL CONSTRUCTION BY THE OWNERS SU BSEQUENTLY WAS BROUGHT TO THE NOTICE OF THE DEPARTMENT WHICH WAS AN AFTER THOUGHT ON THE PART OF THE ASSESSEE. IT WAS ALSO HELD THAT EV EN IF 400 SQ.FT. AREA WAS EXCLUDED THEN ALSO THE REMAINING PART WAS MORE THAN THE LIMIT PRESCRIBED U/S 80-IB. ACCORDINGLY THE A.O. REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80-IB(10) OF THE ACT. AGGRIEVED BY TH IS THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A ) WHEREIN IT WAS CONTENDED THAT THE ASSESSEE HAD COMPLIED WITH ALL T HE THREE CONDITIONS AS LAID DOWN U/S 80IB(10). THE ASSESSEE ALSO GAVE THE DETAILS OF THE TYPES OF FLATS CONSTRUCTED BY THE ASSESSEE. IN THIS REGARD THE ASSESSEE SUBMITTED THAT IN FIRST PHASE THE RESIDENTIAL FLATS WERE CON STRUCTED ADMEASURING 929.46 SQ.FT. 1082.35 SQ.FT. OF WHICH NO MEASUREME NTS WERE DONE BY THE DEPARTMENT. IN THE SECOND PHASE 9 A-1 TYPE AND 13 A-II TYPE DUPLEX HOUSES WERE CONSTRUCTED AND THE MEASUREMENT OF DUPL EX HOUSES WAS FOUND LESS THAN 1500 SQ.FT. BY THE APPROVED VALUATI ON OFFICER. IT WAS ALSO PAGE 5 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL SUBMITTED THAT IN THE THIRD PHASE DUPLEX HOUSES AN D EWS FLATS WERE CONSTRUCTED AND THE AREA OF SUCH DUPLEX RESIDENTIAL WAS 1254.22 SQ.FT. AND EWS FLATS WAS 217 SQ.FT. IT WAS ALSO SUBMITTED THAT PHYSICAL MEASUREMENT OF HOUSES CONSTRUCTED IN THIRD PHASE WA S ALSO NOT DONE BY THE DEPARTMENT. THE ASSESSEE ALSO SUBMITTED THAT I N CASE OF A/6 DUPLEX HOUSES THE DEPARTMENT PRIMARILY MEASURED THE AREA THEREOF AT 3812 SQ.FT. WHICH WAS SUBSEQUENTLY CORRECTED TO 2639.14 SQ.FT. BY THE DEPARTMENT ON ITS OWN WHICH FACT INDICATED THAT TH E ASSESSEES REPRESENTATIVE HAD NOT CHECKED THE MEASUREMENT AND ITS CALCULATION. IT WAS ALSO CONTENDED THAT THE OWNER OF SUCH HOUSE HAD ALSO ACCEPTED THAT 400 SQ.FT. OF ADDITIONAL PORTION WAS CONSTRUCTED SU BSEQUENTLY BY THE OWNER. THE ASSESSEE ALSO SUBMITTED THAT THE PROVISI ONS OF CLAUSE (A) OF SUB SECTION (14) OF SECTION 80IB WERE OF PROSPECTIV E NATURE AND THE CORRECT METHOD TO CALCULATE THE BUILT UP AREA HAD T O BE IN ACCORDANCE WITH M.P. BHOOMI VIKAS RULES 1984 WHICH WAS APPLICABLE IN THE STATE OF M.P. WHERE THE SUCH HOUSING PROJECT HAD BEEN CONSTR UCTED. THE ASSESSEE ALSO REFERRED TO THE METHODOLOGY OF MEASUREMENT AS PER THESE RULES TO COMPUTE THE BUILT UP AREA WHICH WAS ALSO ADOPTED B Y THE APPROVED VALUATION OFFICER AND ON THAT BASIS IT WAS FOUND T HAT SUCH BUILT UP AREA WAS LESS THAN 1500 SQ.FT. THE ASSESSEE ALSO SUBMITT ED THAT THE MEASUREMENT WAS DONE BY THE DEPARTMENT THROUGH UNQU ALIFIED PERSONS PAGE 6 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL INSPITE OF THE FACT THAT SERVICES OF TECHNICAL PERS ONNEL TO CARRY OUT SUCH JOBS WERE ALSO AVAILABLE WITH THE DEPARTMENT AND TH IS APPROACH OF THE DEPARTMENT INDICATED THAT IT WAS A PREDETERMINED AC TION TO DISALLOW THE ELIGIBLE CLAIM OF THE ASSESSEE. THE LD. CIT(A) AFTE R CONSIDERING ALL THE DOCUMENTS AS WELL AS LEGAL POSITION NARRATED BY THE ASSESSEE HELD THAT THE ASSESSEE WAS ENTITLED FOR PRO-RATA DEDUCTION IN RES PECT OF SUCH HOUSING PROJECT AS THE THREE FLATS WERE HAVING BUILT UP ARE A OF MORE THAN 1500 SQ.FT. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE AS UNDER :- I HAVE CAREFULLY EXAMINED THE DETAILED REASONS GIV EN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND VARIO US SUBMISSIONS OF THE APPELLANT ON THIS ISSUE AND ALSO THE LEGAL POSITION BROUGHT OUT BY THE AR I FIND THAT ONLY T HREE DUPLEX RESIDENTIAL HOUSES HAVE BEEN MEASURED WHICH ACCORD ING TO THE APPELLANT IS BELOW 1 500 SQ.FT. I FIND THAT THE MEASUREMENT OF FLATS AND DUPLEXS TYPE A-III AND EWS FLATS ARE BELOW 1 500 SQ.FT. AS PER THE CERTIFICATE OF ME ASUREMENT OF ENGINEER AND DECLARATION MADE BY THE APPELLANT UNDER PRAKOSHTA SWAMITVA ADHINIUM 1976 DULY REGISTERED FILED BY THE APPELLANT. THE MEASUREMENT OF DUPLEX TYPE A -I AND A-II AFTER CONSIDERING THE DEDUCTION PERMISSIBLE U NDER BHOOMI VIKAS RULES 1984 AS PER THE CERTIFICATE OF THE PAGE 7 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL ENGINEER SUBMITTED BY THE APPELLANT IS LESS THAN 1 500 SQ.FT. I THEREFORE OF THE CONSIDERED VIEW THAT IT WILL B E FAIR ENOUGH TO TAX THE PROFIT OF 3 DUPLEXS OF TYPE AI & AII OF PHASE/PART 2 WHICH WERE MEASURED BY THE DEPARTMENT AND FOUND EXCEEDING 1 500 SQ.FT. AS PER THE PROFIT AND LOSS A CCOUNT SUBMITTED BY THE APPELLANT IT IS SEEN THAT THE TO TAL SALE CONSIDERATION OF DUPLEXES AND FLATS IS RS. 6 73 38 296/- AND SALE OF 3 DUPLEX TYPE A-I & A-II IS FOR RS. 39 18 9 20/-. THE PRO-RATA RATE OF PROFIT ON THESE THREE DUPLEXES @ 2 2.67 % COMES TO RS. 8 88 420/-. BUT HOWEVER IT IS SEEN T HAT THE A.O. HAS DISALLOWED THE ENTIRE CLAIM INSTEAD OF DI SALLOWANCE ON PRO RATA BASIS WHICH IN MY OPINION IS NOT PROPE R. THUS THE DISALLOWANCE IS RESTRICTED TO RS. 8 88 420/- ON LY AND AS SUCH THE APPELLANT GETS A RELIEF OF RS. 1 43 79 342 /- I.E. ( RS. 1 52 67 762/- MINUS RS. 8 88 420/-) AND THE APPEAL IS PARTLY ALLOWED. 6. THE LD. CIT DR CONTENDED THAT WHATEVER FLATS WERE M EASURED ON SAMPLE BASIS WERE FOUND HAVING BUILT UP AREA OF MORE THAN 1500 SQ.FT. HENCE OTHER FLATS WERE ALSO TO BE CONSIDERED OF HA VING BUILT UP AREA OF MORE THAN THIS LIMIT. IT WAS FURTHER CONTENDED THAT PROVISIONS OF SECTION PAGE 8 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL 80IB(14)(A) WERE OF CLARIFICATORY NATURE AND HENCE APPLICABLE FOR THE YEAR UNDER CONSIDERATION ALSO AND IF THAT BE THE C ASE THEN THE M.P. BHOOMI VIKAS RULES WERE NOT RELEVANT AND CONSEQUENT LY METHODOLOGY OF SUCH RULES COULD ALSO NOT BE APPLIED IN COMPUTING T HE BUILT UP AREA OF EACH FLAT. THE LD. CIT DR FURTHER CONTENDED THAT IT WAS A CASE OF ROW HOUSING AND NOT A CASE OF TOWER/MULTI-STOREYED FLAT S HENCE NO QUESTION OF COMMON PARKING AREAS OR COMMON FACILITIES WHICH COULD BE EXCLUDED IN COMPUTING BUILT UP AREA. THE LD. CIT DR FURTHER CONTENDED THAT ASSESSEES ENGINEERS SUBSEQUENT REPORT WAS NOT TO BE ACCEPTED WITHOUT CONFRONTING THE SAME TO THE A.O. OR VERIFICATION OF THE SAME BY THE TECHNICAL PERSONS HENCE IN VIEW OF THE FACT THAT NO SUCH EXERCISE WAS DONE BY THE CIT(A) THE SAME COULD NOT BE GIVEN ANY WEIGHTAGE. THE LD. CIT DR FURTHER CONTENDED THAT THE LD. CIT(A) ALSO D ID NOT VERIFY THE APPROVED MAP/REGISTRATION DOCUMENTS TO FIND OUT THE CORRECT FACTS. HENCE THE ORDER OF LD. CIT(A) WAS NOT CORRECT. THEREAFTER THE LD. CIT(A) REFERRED TO PAGE 123 & 124 TO DRAW OUR ATTENTION TO WARDS THE AMOUNT OF CONSIDERATION WHICH WAS NOT SAME HENCE THE UNITS COULD NOT BE OF SAME SIZE. THE LD. CIT DR FURTHER CONTENDED THAT THE PRO VISIONS OF SECTION 80IB(10) WERE UNAMBIGUOUS AND THERE WAS NO METHODOL OGY PRESCRIBED THEREIN TO GIVE PRO-RATA DEDUCTION AND THEREFORE WHEN SOME FLATS WERE FOUND TO HAVING BUILT UP AREA OF MORE THAN 1500 SQ. FT THEN THE ASSESSEE PAGE 9 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 5 1/IND/2008 SMT. SAROJ KAPOOR BHOPAL WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE L D. CIT DR THEREAFTER ALSO REFERRED TO THE ENGINEERS REPORT SUBMITTED BY THE ASSESSEE AND SUBMITTED THAT IT WAS NOT AS PER THE CRITERIA LAID DOWN IN THE ACT HENCE NOT CORRECT PIECE OF EVIDENCE. THE LD. CIT DR FURTH ER SUBMITTED THAT LETTER OF THE OWNER OF THE HOUSE OF A/6 WAS A CASE OF AFTE R THOUGHT ONLY HENCE NOT CONSIDERABLE. ACCORDINGLY HE PRAYED THAT THE O RDER OF THE A.O. WAS TO BE CONFIRMED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOLLOWING FOUR QUESTIONS WERE TO BE DECIDED :- (I) WHETHER PROVISIONS OF SECTION 80IB(14)(A) OF THE AC T WERE RETROSPECTIVE OR PROSPECTIVE ? (II) IF PROSPECTIVE THEN WHAT CRITERIA HAD TO BE ADOPTE D TO COMPUTE THE BUILT UP AREA ? (III) WHETHER ACTUAL AREA OF THREE FLATS WAS MORE THAN 15 00 SQ.FT. OR NOT. (IV) WHETHER THE LD. CIT(A) WAS CORRECT IN GIVING PRO RA TA DEDUCTION ? 8. AS REGARDS TO QUESTION NO. 1 HE SUBMITTED THAT T HIS ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CAS E OF AIR DEVELOPERS AS REPORTED IN 14 ITJ 206 (NAGPUR) WHEREIN THE TRIBUN AL HELD THAT THE DEFINITION OF BUILT UP AREA AS PRESCRIBED IN SECTIO N 80IB(14)(A) COULD NOT PAGE 10 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL BE SAID TO BE RETROSPECTIVE. THE LEARNED COUNSEL FO R THE ASSESSEE FURTHER CONTENDED THAT IN THE CASE OF BRAHMA ASSOCIATES SP ECIAL BENCH OF THE TRIBUNAL HAD ALSO HELD THAT THE PROVISIONS SPECIFYI NG MAXIMUM COMMERCIAL AREA LIMITS WERE ALSO OF PROSPECTIVE NAT URE. IN THIS REGARD THE LEARNED COUNSEL FURTHER REFERRED TO NOTES TO CLAUSE S AS WELL AS C.B.D.T. CIRCULAR WHEREIN IT HAD BEEN CLARIFIED THAT DEFINIT ION OF BUILT UP AREA HAD TO BE APPLIED WITH EFFECT FROM ASSESSMENT YEAR 2005 -06. IT WAS ALSO CONTENDED THAT SUCH DEFINITION WAS IN THE NATURE OF SUBSTANTIVE PROVISIONS HENCE IT COULD NOT BE CONSIDERED CLARIFICATORY AND RETROSPECTIVE. FOR THIS PROPOSITION THE LEARNED COUNSEL RELIED ON THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOVIND DAS AS REPORTED IN 103 ITR 123. THEREAFTER THE LEARNED COUNSEL SUBMITTED THAT THE A.O. HAD WORKED OUT THE BUILT UP AREA AS PER SUCH DEFINITION BY INCLUDI NG MUMTY STAIR CASE BALCONY ARCH PROJECTION AND TERRACE AND IF THAT WAS EXCLUDED THEN THE AREA WAS LESS THAN THE SPECIFIED LIMITS. THE LEARNE D COUNSEL FURTHER SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION I.E . IN ASSESSMENT YEAR 2004-05 THERE WAS NO DEFINITION OF BUILT UP AREA I N THE ACT. HENCE EITHER COMMON SENSE MEANING OR OTHER LEGISLATIONS DEALING WITH THE SAME SUBJECT WERE TO BE RESORTED TO FIND OUT THE MEANING OF BUILT UP AREA. THE LEARNED COUNSEL THEREAFTER SUBMITTED THAT THIS HOUS ING PROJECT AS PER THE ACT HAD BEEN APPROVED AS A HOUSING PROJECT BY A LOC AL AUTHORITY. HENCE PAGE 11 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL DEFINITION OF BUILT UP AREA HAD ALSO TO BE TAKEN AS GIVEN BY THE LOCAL AUTHORITIES. IN THIS REGARD HE AGAIN RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF AIR DEVELOPERS (SUPRA). THE LEARNED COUNSEL THEREAFTER REFERRED TO THE M.P. BHOOMI VIKAS ADHINIYAM READ WI TH BHOPAL MASTER PLAN TO SHOW THAT THE ITEMS ADDED BY THE ASSESSING OFFICER WERE NOT TO BE ADDED AND THUS THE CALCULATION DONE BY THE TECHN ICAL EXPERT APPOINTED BY THE ASSESSEE WAS CORRECT AND CONSEQUENTLY THE A REA OF THREE FLATS WAS ALSO LESS THAN 1500 SQ.FT. AS REGARD TO THE SPECIFI C ISSUE OF AREA OF FLAT NO. A/6 THE LEARNED COUNSEL SUBMITTED THAT AT THE TIME OF PHYSICAL VERIFICATION ONLY THE TENANT WAS AVAILABLE AND THE OWNER OF THAT FLAT SUBSEQUENTLY FILED A CONFIRMATION TO THE EFFECT THA T 400 SQ.FT. AREA HAD BEEN CONSTRUCTED BY HIM AFTER PURCHASE OF THE PROPE RTY AND THE SAME WAS TO BE ACCEPTED. THE LEARNED COUNSEL FURTHER SUBMITT ED THAT THE A.O. DID NOT CHANGE THE COST OF CONSTRUCTION OF THIS FLAT FO R THE ADDITIONAL CONSTRUCTION. HENCE THE BUILT UP AREA AS CLAIMED B Y THE ASSESSEE COULD NOT BE DISTURBED. IT WAS ALSO CONTENDED THAT THE A. O. HAD STATED THAT IT WAS STATED BY THE ASSESSEE AND HER REPRESENTATIVE IN TH E COURSE OF PHYSICAL VERIFICATION ON 8.12.06 THAT NO ADDITIONAL CONSTRUC TION WAS DONE BY THE OWNER WHICH WAS NOT A CORRECT FACT AS NEITHER ANY STATEMENT WAS RECORDED NOR ANY QUESTION WAS PUT TO THE ASSESSEE OR HER REPRESENTATIVE IN THIS REGARD. THE LEARNED COUNSEL FURTHER CONTENDED THAT THE ASSESSEE WAS PAGE 12 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL ENTITLED FOR PRO-RATA DEDUCTION WHICH WAS DULY SUP PORTED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF AIR DEVELOPERS (SUPR A) THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES AS R EPORTED IN 22 DTR 1 AND ALSO BY THE DECISION OF THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LIMIT ED WHICH HAD ALSO BEEN CONFIRMED BY THE HON'BLE CALCUTTA HIGH C OURT. THE LEARNED COUNSEL ALSO DREW OUR ATTENTION TO THE RELEVANT POR TION OF THE JUDICIAL DECISIONS RELIED BY HIM. 9. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE FACT THAT THE A.O. HAD ALSO APPOINTED A TECHNICAL E XPERT NAMELY SHRI AMOGH KUMAR GUPTA WHO VIDE ITS REPORT DATED 2.12.2 008 HAD ALSO STATED THAT FLATS CONSTRUCTED BY THE ASSESSEE WERE HAVING BUILT UP AREA OF LESS THAN 1500 SQ.FT. HOWEVER THE A.O. COMPLETELY IGNORED THIS REPORT. THE LEARNED COUNSEL ALSO SUBMITTED THAT EVEN AS PER THE A.O. ALL THE FLATS WERE NOT HAVING THE SAME BUILT UP AREA BECAUSE EVE N AS PER THE VERSION OF A.O. IN THE ASSESSMENT ORDER AT PAGE 6 WERE THAT HO USE NO. A/6 WAS QUITE BIGGER THAN THIS CATEGORY OF OTHER HOUSES IN THE PR OJECT. 10. THE LD. CIT DR IN THE REJOINDER MAINLY REITERATED THE SUBMISSIONS MADE EARLIER AND FURTHER SUBMITTED THAT THE OBJECT OF STATE GOVERNMENT RULES/ BY LAWS WERE DIFFERENT FROM THE O BJECT OF PROVISIONS OF SECTION 80IB(10) HENCE SAID RULES COULD NOT BE CONCLUSIVE. HE FURTHER PAGE 13 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL CONTENDED THAT ONCE THE MEASUREMENT TAKEN BY THE D EPARTMENT HAD BEEN SIGNED BY THE PROJECT MANAGER OF THE ASSESSEE AS EVIDENT FROM THE ASSESSMENT RECORD HENCE THERE WAS NO NECESSITY FO R THE A.O. TO CONSIDER THE REPORT OF THE TECHNICAL EXPERT SUBMITTED SUBSEQ UENTLY AS THE MATTER HAD TO BE GIVEN FINALITY. HE FURTHER CONTENDED THAT IN THE CASE OF AIR DEVELOPERS ONLY A FEW FLATS WERE FOUND TO BE OF MOR E THAN 1500 SQ.FT. HENCE WHEREAS IN THE PRESENT CASE ALL THE FLATS M EASURED ON SAMPLE BASIS WERE FOUND TO HAVE A BUILT UP AREA OF MORE THAN 150 0 SQ.FT. HENCE THIS DECISION WAS NOT OF ANY HELP TO THE ASSESSEE. 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 12. IT IS NOTED THAT THE ASSESSEE IS ENGAGED IN THE CON STRUCTION OF HOUSES. AT THE IMPUGNED HOUSES HAVE BEEN CONSTRUCTE D IN THREE PHASES HAVING DIFFERENT DIMENSIONS AND DESIGNS. THE A.O. H AS HOWEVER TAKEN THE MEASUREMENT PHYSICALLY ONLY OF ONE CATEGORY OF HOUSES AND THAT TOO HAS BEEN CARRIED OUT BY NON-TECHNICAL STAFF ALTHOU GH THE DEPARTMENT CAN UTILIZE THE SERVICES OF TECHNICAL PERSONNEL FOR THI S PURPOSE. THUS AT THE VERY OUT-SET WE ARE OF THE OPINION THAT SAMPLE ADO PTED BY THE ASSESSING OFFICER IS NOT REPRESENTATIVE OF WHOLE OF THE HOUSI NG PROJECT AND THEREFORE THE VERY BASIS AS SUCH ACTION OF A.O. IS FLAWED. IT IS FURTHER NOTED THAT EVEN THE MEASUREMENT OF THESE FLATS NAM ELY A/6 HAS BEEN PAGE 14 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL REVISED BY THE DEPARTMENT ITSELF WHICH SHOWS THA T THE MEASUREMENT OF SAMPLE FLATS HAS ALSO NOT BEEN DONE IN A SCIENTIFIC MANNER. THE OTHER FACT WHICH IS IMPORTANT IS THAT THE A.O. ALSO TOOK THE H ELP OF TECHNICAL EXPERT AND EVEN AS PER HIS REPORT AFTER TAKING INTO CONSID ERATION THE LOCAL BY- LAWS THE AREA OF CERTAIN FLATS MEASURED BY THE DEP ARTMENT IS LESS THAN 1500 SQ.FT. AND THE A.O. HAS NOT GIVEN ANY COGNIZAN CE TO THIS FACT WHICH MAKES THE APPROACH OF A.O. UNJUSTIFIED. WE FURTHER FIND THAT WHATEVER EXPLANATIONS/CLARIFICATIONS/OBJECTIONS HAVE BEEN RA ISED BY THE ASSESSEE SUBSEQUENT TO THE MEASUREMENT DONE BY THE DEPARTME NT THE SAME HAVE BEEN REJECTED IN A SUMMARILY MANNER MERELY FOR THE REASON THAT DURING THE COURSE OF PHYSICAL MEASUREMENT REPRESENTATIVE OF TH E ASSESSEE WERE PRESENT AND IT ALSO SIGNED THE MEASUREMENTS TAKEN B Y THE DEPARTMENT. IN OUR OPINION THIS APPROACH OF THE A.O. WHO IS A JU DICIAL OFFICER IS NOT JUSTIFIED BECAUSE BEFORE MAKING ADDITION OR REJECT ING A GENUINE CLAIM OF THE ASSESSEE IT IS THE BOUNDEN DUTY OF THE A.O. TO DEAL WITH THE OBJECTIONS OF THE ASSESSEE. WE ARE FURTHER UNABLE TO UNDERSTAN D WHY THE A.O. DID NOT DO THE RE-VERIFICATION EXERCISE TO FIND OUT THE COR RECT MEASUREMENT. WE ALSO FIND THAT AS PER THE LD. CIT DR THE SALE CONS IDERATION IS DIFFERENT WITH REFERENCE TO DIFFERENT FLATS AND THEREFORE T HERE MUST BE DIFFERENT SIZES. IN OUR OPINION THIS FACT RATHER SUPPORTS TH E CLAIM OF THE ASSESSEE BECAUSE THIS AGAIN GOES TO SHOW THAT SAMPLE TAKEN B Y THE DEPARTMENT IS PAGE 15 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL NOT THE REPRESENTATIVE ONE. THUS ON THE BASIS OF A BOVE FACTS ITSELF THE ACTION OF THE A.O. IS NOT CORRECT IN LAW. 13. HAVING STATED SO NOW WE SHALL DEAL WITH OTHER ASP ECTS. ON THE ASPECT OF NATURE OF PROVISIONS OF SECTION 80IB(14)( A) WE FIND THAT IT IS A SETTLED PROPOSITION OF LAW THAT WHEN A PARTICULAR T ERM IS DEFINED BY AN AMENDMENT WHICH RESULTS INTO INCREASE/LEVY OF CIVI L LIABILITY THE SAME HAS TO BE CONSIDERED AS THE SUBSTANTIVE ONE HENCE PROSPECTIVE. THE JUDICIAL DECISIONS CITED BY THE ASSESSEE ALSO SUPPO RT THIS VIEW. ACCORDINGLY WE REJECT THE CONTENTION OF THE REVENU E THAT THE PROVISIONS OF SECTION 80IB(14)(A) ARE OF RETROSPECTIVE NATURE. THIS VIEW LEADS US TO ANOTHER QUESTION I.E. IN THE ABSENCE OF ANY SPECIFI C TERM IN THE ACT HOW THAT TERM SHOULD BE INTERPRETED. IN THIS REGARD IT IS ALSO A SETTLED PRINCIPLE THAT SOME COMMON SENSE APPROACH OR DICTIONARY MEANI NG IF THE TERM IS OF GENERAL NATURE SHOULD BE FOUND OUT OR IF THE TERM I S OF TECHNICAL NATURE THEN THE DEFINITION OF SUCH TERM USED IN OTHER LAWS SHOULD BE TAKEN INTO CONSIDERATION. ACCORDINGLY WE HOLD THAT THE MEANIN G OF TERM BUILT UP AREA PRIOR TO INSERTION OF DEFINITION CLAUSE IN TH E ACT HAS TO BE FOUND OUT AS PER THE LOCAL LAW I.E. RULES AND REGULATIONS OF BHOPAL MUNICIPAL CORPORATION AS WELL AS FROM M.P. BHOOMI VIKAS RULES AND AS A CONSEQUENCE THEREOF THE BUILT UP AREA OF SUCH FLAT S IS UNDISPUTEDLY LESS THAN THE SPECIFIED LIMIT. HENCE THE ASSESSEE IN O UR OPINION IS ELIGIBLE FOR PAGE 16 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL DEDUCTION U/S 80IB(10). IN THIS VIEW OF THE MATTER THERE REMAINS NO QUESTION FOR ANY PRO-RATA DEDUCTION. HOWEVER WE CO NSIDER IT PERTINENT TO STATE THAT IT IS BENEFICIAL PROVISION AND THEREFOR E IT SHOULD BE INTERPRETED IN A LIBERAL MANNER AND IN CASE IT IS NECESSARY THE N THE ASSESSEE CAN BE GRANTED PRO RATA DEDUCTION. IN THIS REGARD WE ARE FURTHER OF THE VIEW THAT IF THE LEGISLATOR DID NOT WANT TO GIVE ANY PRO-RATA DEDUCTION IT COULD HAVE BEEN PROVIDED BY THE LEGISLATOR SPECIFICALLY THAT IF ONE HOUSE WAS FOUND TO BE HAVING BUILT UP AREA ON THE GROUND OF SPECIFI ED LIMIT THEN THE ASSESSEE WOULD NOT BE ENTITLED FOR ANY DEDUCTION U/ S 80IB(10). IN THIS VIEW OF THE MATTER WE DISMISS ALL THE GROUNDS RAIS ED BY THE REVENUE. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 15. NOW WE SHALL TAKE UP ASSESSEES CROSS OBJECTION W HEREIN THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A ) IN REJECTING ITS CLAIM FOR DEDUCTION U/S 80IB IN RESPECT OF THREE SAMPLE H OUSES PHYSICALLY MEASURED BY THE DEPARTMENT. 16. THE FACTS HAS ALREADY BEEN NARRATED AS ABOVE AND HA VE NO NECESSITY TOBE REPEATED AGAIN. HOWEVER HE DREW OUR ATTENTION TO THE FINDING OF THE LD. CIT(A) WHEREIN THE LD. CIT(A) HA D ACCEPTED THAT THE AREA OF THESE FLATS WAS ALSO LESS THAN THE SPECIFIE D LIMIT HENCE THE LD. CIT(A) SHOULD HAVE ACCEPTED THE CLAIM OF THE ASSESS EE IN TOTO. PAGE 17 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL 17. THE LD. CIT DR ON THE OTHER HAND PREFERRED TO REL Y ON THE ORDER OF THE LD. CIT(A) ON THIS ASPECT. 18. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 19. IT IS NOTED THAT THE LD. CIT(A) HAS OBSERVED IN THE FINDINGS REPRODUCED HEREINBEFORE THAT THE MEASUREMENT OF DUP LEX FLAT TYPE A/1 AND TYPE A/2 AS PER THE BHOOMI VIKAS RULES 1984 W AS LESS THAN 1500 SQ.FT. AND THE ASSESSEE HAS COMPLIED WITH ALL OTHER CONDITIONS AND INSPITE OF THAT THE LD. CIT(A) HAS GRANTED ONLY PRO-RATA DE DUCTION. WE FURTHER FIND THAT THE LD. CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDINGS ON THE LEGAL CONTENTIONS RAISED BY THE ASSESSEE WHICH RESULTS I NTO AN INFERENCE THAT THE LD. CIT(A) HAS NOT ACCEPTED THE PLEA OF ASSESSEE RE GARDING APPLICABILITY OF LOCAL RATES TO COMPUTE BUILT UP AREA. HOWEVER S INCE WE HAVE ACCEPTED THE LEGAL CONTENTIONS RAISED BY THE ASSESSEE IN THI S REGARD HENCE WE FIND NO REASON NOT TO GRANT A DEDUCTION THEREON U/S 80IB (10). ACCORDINGLY WE ACCEPT THIS GROUND OF THE CROSS OBJECTION FILED BY THE ASSESSEE AND DIRECT THE A.O. TO GRANT DEDUCTION U/S 80IB AS CLAIMED BY THE ASSESSEE. 20. IN THE RESULT THE CROSS OBJECTION STANDS ALLOWED. 21. TO SUM UP THE REVENUES APPEAL IS DISMISSED AND CR OSS OBJECTION IS ALLOWED. PAGE 18 OF 18 - I.T.A.NO. 194/IND/2008 & C.O. NO. 51/IND/2008 SMT. SAROJ KAPOOR BHOPAL THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH APRIL 2010. CPU* 8114