ITO 17(3)(5), MUMBAI v. VARDHAN BUILDERS, MUMBAI

ITA 4081/MUM/2015 | 2008-2009
Pronouncement Date: 25-10-2016

Appeal Details

RSA Number 408119914 RSA 2015
Assessee PAN AAAFV0694B
Bench Mumbai
Appeal Number ITA 4081/MUM/2015
Duration Of Justice 1 year(s) 3 month(s) 25 day(s)
Appellant ITO 17(3)(5), MUMBAI
Respondent VARDHAN BUILDERS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2016
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 25-10-2016
Assessment Year 2008-2009
Appeal Filed On 30-06-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI R.C.SHARMA AM & SHRI SANDEEP GOSAIN JM ./ ITA NO. 4081 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 0 8 - 20 0 9 ) ITO - 17 (3)(5) MUMBAI - 400020 VS. M/S VARDHAN BUILDERS 422 COMMERCE HOUSE 140 NAGINDAS MASTER ROAD FORT MUMBAI - 400021 ./ ./ PAN/GIR NO. : A AAFV 0 694 B ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI N.P.SINGH /AS SESSEE BY : SHRI AJIT SHETTY / DATE OF HEARING : 25 /0 7 /2016 / DATE OF PRONOUNCEMENT : 25 / 10 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY TH E REVENUE AGAINST THE ORDER OF CIT(A) MUMBAI DATED 7 - 4 - 2015 FOR THE ASSESSMENT YEAR 20 0 8 - 200 9 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : - . 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DIRECTING TO DELETE THE DISALLOWANCE OF RS. 13 50 4 3 150/ - U/S. 80IB OF THE INCOME TAX ACT 1961.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT CONSID ERING THE TRUE FACTS AT ALL UNEARTHED DURING SURVEY PROCEEDINGS DATED 1/12/2011 WHICH CLEARLY SUGGEST - NON COMPLIANCE OF THE REQUIRE MENT OF PROVISION OF SECTION 80IB (10) F THE ACT.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE STRUCTURAL CHANGES NOTICED IN THE BUILDING AS ON THE DATE OF SURVEY COULD NOT BE DETERMINATIVE OF THE FACTS WHICH EXISTED ON THE DATE OF SALE AND GIVING OF POSSESSION WITHOUT LOOKING INTO THE FACT THAT THERE WERE ITA NO. 4081 /1 5 2 UNSOL D STOCK OF FLATS ON THE DATE OF SURVEY AND THE STRUCTURAL POSITION OF THE SOLD AND UNSOLD FLATS WERE SAME I.E. ADJACENT FLATS WERE MERGED INTO ONE UNIT AND THE SAME FACTS IS NOT EXAMINED BY THE LD. CIT(A). HENCE OBSERVATION OF THE LD. CIT(A) THAT THERE WE RE UNSOLD STOCK OF FLATS ON THE DATE OF SURVEY AND THEIR STRUCTURAL POSITION OF THE SOLD AND UNSOLD FLATS WERE SAME I.E. ADJACENT FLATS WERE MERGED INTO ONE UNIT AND THE SAME FACTS IS NOT EXAMINED BY THE LD. CIT(A) AT ALL. HENCE OBSERVATION OF THE LD. CIT (A) THAT CHANGES WHICH TAKE PLACE SUBSEQUENT TO GIVING OF POSSESSION CANNOT DENY THE CLAIM OF DEDUCTION U/S. 80IB (10) IS NOT JUSTIFIED SINCE STRUCTURAL POSITION OF THE UNSOLD FLATS AS ON DATE OF THE SURVEY HAS NOT BEEN EXAMINED BY THE LD. CIT(A).' 4. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE TRUE FACTS UNEARTHED DURING SURVEY PROCEEDINGS AND THE DOCUMENTS IMPOUNDED WHICH CLEARLY INDICATES THAT THERE WERE ONLY THREE FLATS ONLY THREE M AIN DOOR ONLY THREE ELECTRIC METER ADVERTISEMENT WERE PLACED FOR THE FLATS MEASURES BUILT UP AREA OF 1572.95 SQ.FT. 1391.98 SQ.FT. AND 1083.64 SQ.FT. PER FLOOR.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING REPORT OF SHRI SHIRISH R. HNDIA AND KETAN VAKHARIA INDEPENDENT ARCHITECTS WHEREIN THEY HAVE SURVEYED AND REPORTED ONLY THREE FLATS PER FLOOR STATEMENT OF THE FLAT OWNERS AND REPORT OF THE INSPECTORS ON DUTY DURING SURVEY PROCEEDINGS WHO HAVE PHYSICALLY VERIFIED THE SUBJECT PREMISES - POSEIDON DATED 01/12/2011.' 6. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RES TORED.' 7. ''THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 2. AT THE OUTSET LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL DATED 28 - 10 - 2015 PASSED IN ITA NO. 4635/MUM/2013 FOR THE ASSESSMENT YEAR 2 009 - 2010 IN ASSESSEES OWN CASE WHEREIN EXACTLY SIMILAR ISSUE WAS DEALT BY THE TRIBUNAL AND HELD AS UNDER : - THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 14/03/2013 OF THE LD. FIRST APPELLATE AUTHORITY MUMBAI. THE ONLY GROUND RAISED IN THIS APP EAL PERTAINS TO ALLOWING DEDUCTION U/S 80IB(10) OF THE ACT WHEN THERE IS NO COMPLIANCE OF THE REQUIREMENT OF THE PROVISION OF THE ACT IN SOME FLATS THE BUILT UP AREA WAS MORE THAN THE STIPULATED CONDITION OF 1 000 SQ. FT. ITA NO. 4081 /1 5 3 2. DURING HEARING THE LD. DR ADVANCED HIS ARGUMENTS WHICH ARE BROADLY IDENTICAL TO THE GROUND RAISED BY CONTENDING THAT AREA OF SOME OF THE FLATS IS MORE THAN 1 000 SQ. FT. WHICH CAME TO LIGHT PURSUANT TO SURVEY CARRIED OUT BY THE DEPARTMENT. OUR ATTENTION WAS INVITED TO PARA 11.6 (P AGE - 26) OF THE IMPUGNED ORDER. 2.1. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT SURVEY WAS CARRIED OUT IN THE YEAR 2006 WHEN THE WORK WAS IN PROGRESS WHEREIN EVERYTH ING WAS FOUND IN ORDER. IT WAS PLEADED THAT SECOND SURVEY WAS CARRIED OUT ON 01/12/2011 WHEN CERTAIN DISCREPANCIES WERE POINTED OUT WITH RESPECT TO AREA OF FEW FLATS. IT WAS ASSERTED THAT THE ASSESSEE COMPLETED THE PROJECT ON 28/03/2008 FOR WHICH COMPLE TION/OCCUPANCY CERTIFICATE WAS ISSUED TO THE ASSESSEE BY THE COMPETENT AUTHORITY BY FURTHER CLAIMING THAT THE ENTIRE BUILDING WAS SOLD UP TO 2011 THEREFORE IF ANY MERGER OF FLATS WAS DONE BY THE OCCUPANTS THEMSELVES THE ASSESSEE CANNOT BE HELD LIABLE A S THE ASSESSEE WAS NOT HAVING ANY CONTROL OVER THE FLATS. RELIANCE WAS PLACED UPON THE DECISION IN HAWARE CONSTRUCTION PVT. LTD. VS ITO 64 DTR 251 (MUM. TRIB.) EMGEEN HOLDINGS PVT. LTD. VS DCIT 47 SOT 98 (MUM. TRIB.) AND IN DCIT VS MAGARPATTA TOWNSHIP D EVELOPMENT & CONSTRUCTION COMPANY ITA NO.822/PN/2011. IN REPLY THE LD. DR PLACED HEAVY RELIANCE UPON THE ADVERTISEMENT AND THE ADDITION MADE BY THE ASSESSING OFFICER. 2.2. WE ARE USEFULLY REPRODUCING HEREUNDER CERTAIN FINDINGS/CONCLUSIONS FROM THE DE CISION FROM PUNE BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS MAGARPATTA TOWNSHIP & DEVELOPMENT CONSTRUCTION COMPANY (ITA NO.822/PN/2011) ORDER DATED 18/09/2012 FOR READY REFERENCE AND ANALYSIS: WE FIND THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . VANDANA PROPERTIES [ITA.NO.3633 OF 2009 WITH ITA.NO.4361/2010] HAS OBSERVED AS UNDER: 17. THE FIRST QUESTION TO BE CONSIDERED HEREIN IS WHETHER IN THE FACTS OF THE PRESENT CASE CONSTRUCTION OF E BUILDING CONSTITUTES BUILDING A HOUSING PROJECT UN DER SECTION 80IB(10) OF THE ACT. 18. THE EXPRESSION HOUSING PROJECT IS NEITHER DEFINED UNDER SECTION 2 OF THE ACT NOR UNDER SECTION 80IB(10) OF THE ACT. EVEN UNDER THE MUMBAI MUNICIPAL CORPORATION ACT 1988 AS ALSO UNDER THE DEVELOPMENT CONTROL REGULATI ONS FOR GREATER MUMBAI 1991 THE EXPRESSION HOUSING PROJECT IS NOT DEFINED. THEREFORE THE EXPRESSION HOUSING PROJECT IN SECTION 80IB(10) WOULD HAVE TO BE CONSTRUED AS COMMONLY UNDERSTOOD. 19. AS RIGHTLY CONTENDED BY MR.INAMDAR LEARNED SENIOR ADVOCA TE APPEARING ON BEHALF OF THE ASSESSEE AND MR.MISTRI LEARNED SENIOR ADVOCATE AND MR.JOSHI LEARNED ADVOCATE APPEARING ON BEHALF OF THE INTERVENORS THE EXPRESSION HOUSING PROJECT IN COMMON PARLANCE WOULD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDING S CONSISTING OF SEVERAL RESIDENTIAL UNITS. IN FACT THE EXPLANATION IN SECTION 80IB(10) SUPPORTS THE CONTENTION OF THE ASSESSEE THAT THE ITA NO. 4081 /1 5 4 APPROVAL GRANTED TO A BUILDING PLAN CONSTITUTES APPROVAL GRANTED TO A HOUSING PROJECT. THEREFORE IT IS CLEAR THAT CONS TRUCTION OF EVEN ONE BUILDING WITH SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQUARE FEET (E BUILDING IN THE PRESENT CASE) WOULD CONSTITUTE A HOUSING PROJECT UNDER SECTION 80IB(10) OF THE ACT. 22.1. WE FIND THAT THE PUNE BENCH IN THE CA SE OF DCIT VS. ADITYA DEVELOPERS [ITA.NO.791 & 792/PN/2008] HAS OBSERVED AS UNDER: 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 ASS ESSEE 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 FOR LAUNCHING WING E WING E WAS PLANNED AND CONSTRUCTION WAS COMMENCED AFTER 1ST OCTOBER 1998 AND BUILDING/WING E WAS AN INDEPENDENT HOUSING PROJECT AS CONTEMPLATED U/S.80IB(10). THE TRIBUNAL HELD THAT THE CONCEPT OF HOUSING PROJECT DOES NOT MEAN THAT SHOULD BE THE GROUP OF BUI LDINGS AND ONLY THEN SAME IS CALLED A HOUSING PROJECT. IT WAS FURTHER HELD THAT BUILDING/WING E CANNOT BE PASSED WITH EARLIER BUILDINGS I.E. A B C & D WHICH WORK WAS COMMENCED IN THE YEAR 1993 WHEREAS 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 PROJECT IS ERRONEOUS. 22.2. WE ALSO FIND THAT THE PUNE BENCH IN THE CASE OF RAHUL CONSTRUCTION CO. VS. ITO [ITA.NO.1250/PN/09 & 707/PN/2010] HAS OBSERVED AS UNDER: 10. IN VIEW OF ABOVE DISCUSSION WE COME TO THE CONCLUSION THAT FOR VERIFICATION OF ELIGIBILITY OF BENEFIT CLAIMED U/S. 80 IB (10) OF THE ACT BY THE ASSESSEE ON BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL NISARG CO - OPERATIVE HOUSING SOCIETY LTD. THE ASSESSING AUTHORITY HAS TO VERIFY AS TO WHEN THE BUILDING PLANS FOR THESE BUILDINGS WERE FIRSTLY APPROVED BY THE LOCAL AUTHORITY AND TAKING THE SAID DATE OF APPROVAL A S TARTING POINT HE HAS TO VERIFY AS TO WHETHER THESE BUILDINGS WERE COMPLETED WITHIN THE PRESCRIBED TIME LIMIT I.E. 31ST MARCH 2008 ON THE BASIS OF THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT ISSUED BY THE PMC. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE UNDER THE ABOVE BACKGROUND WE FIND THAT THE AUTHORITIES BELOW HAVE NOT DISPUTED THE FACT FURNISHED IN THIS REGARD BY THE ASSESSEE THAT UNDER THE PROJECT ATUL NAGAR CONSISTING OF BUILDINGS A1 TO A5 THE FIRST BUILDING PLAN FOR A TYPE WA S APPROVED BY THE PMC ON 29.4.2003 VIDE COMMENCEMENT CERTIFICATE NO. 4269 (PAGE NO. 4 OF THE PAPER BOOK). HOWEVER ACTUAL CONSTRUCTION OF A TYPE BUILDING WAS EXECUTED AS PER THE REVISED PLAN VIDE NO. C.C. 4101/27/6/2003 (PAGE NO. 5 OF THE PAPER BOOK). THE SIZE OF THE PLOT ON WHICH THE A TYPE ITA NO. 4081 /1 5 5 BUILDING I.E. A1 TO A6 HAVE BEEN CONSTRUCTED IS 1 39 466 SQ.FT. THE PROJECT A TYPE BUILDING I.E. A1 TO A5 CONSISTS OF 360 RESIDENTIAL UNITS AND THE CONSTRUCTION HAS BEEN COMPLETED BETWEEN 10.1.2005 TO 31.8.2005 (PAGE N OS. 6 TO 9 OF PAPER BOOK). THE AUTHORITIES BELOW HAVE ALSO NOT DISPUTED THIS MATERIAL FACT THAT RESIDENTIAL UNITS HAS A MAXIMUM BUILT UP AREA OF 1500 SQ.FT. LIKEWISE THESE MATERIAL FACTS THAT B GROUP BUILDINGS IN RAHUL NISARG COOPERATIVE HOUSING SOCIETY LTD. HAVE BEEN CONSTRUCTED ON LAND AREA OF 138203 SQ.FT. HAS NOT BEEN DENIED BY THE AUTHORITIES BELOW. THEY HAVE ALSO NOT DENIED THESE MATERIAL FACTS THAT THE FIRST BUILDING PLAN WAS SANCTIONED ON 29.4.2003 VIDE COMMENCEMENT CERTIFICATE NO. 4269 ISSUED BY THE PMC (PAGE NO. 16 OF THE PAPER BOOK). THE OTHER MATERIAL FACTS LIKE ACTUAL CONSTRUCTION WAS EXECUTED AS PER THE REVISED PLAN SANCTION ON 20TH MARCH 2004 VIDE CC NO. 2225 (PAGE NO. 17) THE PROJECT CONSISTS OF 396 FLATS AND CONSTRUCTION OF THESE FLATS HAVE BEEN COMPLETED ON 14.7.2006 AS PER THE COMPLETION CERTIFICATE ISSUED BY THE PMC (PAGE NOS. 13 TO 18 OF PAPER BOOK) ARE NOT IN DISPUTE. THE AUTHORITIES BELOW HAVE ALSO NOT DENIED THAT BUILT UP AREA OF EACH OF THESE FLATS DOES NOT EXCEED 1500 SQ.FT. IT IS ALSO NOT IN DISPUTE THAT BOTH THE PROJECTS ARE ENTIRELY A RESIDENTIAL PROJECT AND THERE IS NO COMMERCIAL AREA THEREIN. UNDER THE ABOVE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ASSESSEE IS VERY MUCH ENTITLED TO THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT ON THE BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL NISARG COOPERATIVE HOUSING SOCIETY LTD. THE ISSUE IS THEREFORE DECIDED IN FAVOUR OF THE ASSESSEE. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE IS SUE DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION U/S. 80 IB(10) IN QUESTION. THE RELATED GROUNDS ARE ACCORDINGLY ALLOWED. 11. IN RESULT APPEAL IS ALLOWED. 22.3. WE FIND THAT ITAT MUMBAI BENCH IN THE CASE OF MUDHIT MADANLAL GUPTA VS. ACIT [51 DTR 271( MUM)(TRIB)] HAS OBSERVED AS UNDER: DEDUCTION UNDER S.80 - IB INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT CONDITIONS PRECEDENT ASSESSEE ENGAGED IN CONSTRUCTION BUSINESS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT FOR CONSTRUCTION OF RESIDENTIAL FLATS TOTAL PLOT MEASURED APPROXIMATELY 7633.82SQ.MTRS. DEDUCTION WAS DENIED BY AO ON THE GROUNDS THAT (I) ASSESSEE HAD COMPLETED ONLY A B AND C WINGS UPTO 31ST MARCH 2008 AND D WING WAS NOT COMPLETED (II) TOTAL PROJECT AREA WAS 1.88 ACRES AND SINC E ASSESSEES SHARE WAS ONLY 51 PER CENT OF THE BUILT - UP AREA THE PROJECT AREA WAS OF LESS THAN ONE ACRE AND (III) IN SOME OF THE FLATS UNITS AREA EXCEEDED 1000SQ.FT. NOT JUSTIFIED CIT(A) WAS SATISFIED THAT EACH UNIT OF THE RESIDENTIAL FLAT IN ALL THE THREE WINGS WAS LESS THAN 1000 SQ.FT. AND SOME OF THOSE FLATS WERE LATER CONVERTED BY THE BUYERS BY JOINING THE SAME WHEREVER THE ITA NO. 4081 /1 5 6 BUYERS HAD PURCHASES MORE THAN ONE UNIT AND SINCE REVENUE HAS NOT FILED ANY CROSS - OBJECTION AGAINST THIS FINDING THE SAME HAS BECOME FINAL AND BINDING ON THE REVENUE INDEPENDENT UNITS ARE RESIDENTIAL UNITS AND HAVE TO BE TREATED AS SEPARATE HOUSING PROJECTS FOR THE PURPOSE OF DEDUCTION UNDER S.80 - IB(10) AS LONG AS THEY FULFIL THE OTHER CONDITIONS PRESCRIBED UNDER THE ACT THE RE IS NO REQUIREMENT THAT SUCH UNDERTAKING OF ASSESSEE SHOULD BE THE OWNER OF SUCH LAND ASSESSEE IS A DEVELOPER OF THE WHOLE OF THE PROJECT AND THEREFORE THE SHARE COULD NOT BE ALLOCATED ONLY IN TERMS OF 51 PER CENT OF THE LAND AREA BECAUSE THE WHOLE P ROJECT IS DEVELOPED AND CONSTRUCTED BY THE ASSESSEE AND 49 PER CENT SHARE IS GOING TO THE LAND OWNERS IN RESPECT OF THE LAND COST AREA UNDER THE PROJECT WAS ABOUT 7000 SQ.MTRS. WHICH WAS MEANT FOR DEVELOPMENT AND WHICH IS MORE THAN ONE ACRE AND THEREFOR E DEDUCTION CANNOT BE DENIED ON THIS GROUND ASSESSEE WAS THEREFORE ENTITLED TO DEDUCTION UNDER S.80 - IB(10). 22.4. WE FIND THAT ITAT BANGALORE BENCH IN THE CASE OF DY.CIT VS. BRIGADE ENTERPRISES (P) LTD. [119 TTJ 269 (BANG.)] HAS OBSERVED AS UNDER: DEDUCTION UNDER S.80 - IB INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT DIFFERENT UNITS OF A GROUP PROJECT WHERE SOME OF THE RESIDENTIAL UNITS IN A BIGGER HOUSING PROJECT TREATED INDEPENDENTLY ARE ELIGIBLE FOR RELIEF UNDER S.80 - IB(10) RELIEF S HOULD BE GIVEN PRO RATA AND SHOULD NOT BE DENIED BY TREATING THE BIGGER PROJECT AS A SINGLE UNIT MORE SO WHEN ASSESSEE OBTAINED ALL SANCTIONS PERMISSIONS AND CERTIFICATES FOR SUCH ELIGIBLE UNITS SEPARATELY ASSESSEE UNDERTOOK A DEVELOPMENT PROJECT IN A N AREA OF 22 ACRES 19 GUNTAS CONSISTING OF 5 RESIDENTIAL BLOCKS ROW HOUSES OAK TREE PLACE A CLUB A COMMUNITY CENTRE A SCHOOL AND A PARK AND CLAIMED DEDUCTION UNDER S.80 - IB(10) IN RESPECT OF TWO RESIDENTIAL UNITS ONLY WHICH IF TAKEN SEPARATELY WERE EL IGIBLE FOR THE RELIEF AO TREATED THE ENTIRE PROJECT AS A SINGLE UNIT AND DENIED RELIEF UNDER S.80 - IB IN ENTIRETY CIT(A) ALLOWED RELIEF UNDER S.80 - IB(10) TREATING THE SAID TWO UNITS AS INDEPENDENT UNITS JUSTIFIED MATERIAL ON RECORD SHOWED THAT THE V ARIOUS LOCAL AUTHORITIES DULY INSPECTED THE PLOT AND SANCTIONED PLAN FOR EACH OF THE BLOCKS SEPARATELY GROUP HOUSING APPROVAL WAS APPROVAL OF A MASTER PLAN AS A CONCEPT FURTHER THE USE OF THE WORDS RESIDENTIAL UNIT IN CL.(C) OF S.80 - IB(10) MEANS T HAT DEDUCTION SHOULD BE COMPUTED UNIT - WISE THEREFORE IF A PARTICULAR UNIT SATISFIES THE CONDITION OF S.80 - IB THE ASSESSEE IS ENTITLED FOR DEDUCTION AND IT SHOULD BE DENIED IN RESPECT OF THOSE UNITS ONLY WHICH DO NOT SATISFY THE CONDITIONS AGAIN THE ACCOUNTING PRINCIPLES WOULD ALSO MANDATE RECOGNITION OF PROFITS FROM EACH UNIT SEPARATELY. 23. AS REGARDS THE TWO FLATS COMBINED IN BUILDING I IT IS SUBMITTED THAT THE FLATS ARE COMBINED BY THE CUSTOMERS. THE ASSESSEE HAS RECEIVED COMPLETION CERTIFICATE INDEPENDENTLY ITA NO. 4081 /1 5 7 FOR THE TWO UNITS AND THEREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN CALCULATING THE BUILT UP AREA BY COMBINING THE TWO UNITS. THE ASSESSEE SUBMITS THAT IF UNITS ARE COMBINED BY THE CUSTOMERS THE BUILT UP AREA SHOULD BE COMPUTED INDEP ENDENTLY AND THE ASSESSEE CANNOT BE DENIED THE DEDUCTION. FOR THIS PROPOSITION THE ASSESSEE PLACES RELIANCE ON THE FOLLOWING DECISIONS A. HAWARE CONSTRUCTIONS PVT. LTD. [64 DTR 251 (MUM)] B. EMGEEN HOLDINGS P. LTD. VS. DCIT [ITA.NO.3594 & 3595/MUM/09] C. DCIT VS. ARCADE BHOOMI ENTERPRISES [ITA.NO.366/MUM/10] 23.1. WE FIND THAT THE ITAT MUMBAI BENCH IN THE CASE OF HAWARE CONSTRUCTIONS (P) LTD. VS. ITO (2011) 64 DTR (MUM)(TRIB) 251 HAS HELD AS UNDER: DEDUCTION UNDER S. 80 - IB - INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT - BUILT UP AREA EXCEEDING 1 000 SQ. FT. - BUILT - UP AREA OF EACH FLAT AS APPROVED BY CIDCO IS LESS THAN 1 000 SQ. FT. AS PER THE APPROVED PLAN AND THE ASSESSEE HAS SOLD EACH FLAT UNDER SEPARATE AGREEMENTS AND NOT SOLD TWO FLATS BY COMBINING THEM TOGETHER AS ONE FLAT TO ONE PARTY FURTHER THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS DRAWN THE PLAN IN SUCH A MANNER THAT EACH RESIDENTIAL UNIT IS SHOWN AS SMALLER THAN 1 000 SQ. FT. MERELY TO GET THE BENEFIT OF DEDUCT ION UNDER S. 80 - IB(10) - IT IS ALSO NOT THE CASE OF THE REVENUE THAT EACH FLAT IN THE HOUSING PROJECT COULD NOT HAVE BEEN USED AS AN INDEPENDENT OR AS A SELFCONTAINED RESIDENTIAL UNIT AND THAT THERE WOULD BE A COMPLETE HABITABLE RESIDENTIAL UNIT ONLY IF TWO OR MORE FLATS ARE JOINED TOGETHER - THEREFORE MERELY BECAUSE SOME OF THE PURCHASERS HAVE PURCHASED MORE THAN ONE FLAT AND COMBINED THE SAME ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80 - IB(10) CANNOT BE DISALLOWED - FURTHER THE CONDITION THAT NOT MORE THAN ON E RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ONE PERSON NOT BEING AN INDIVIDUAL HAS BEEN INSERTED BY FINANCE (NO.2) ACT 2009 W.E.F. 1ST APRIL 2010 AND HENCE IT IS NOT APPLICABLE TO THE FACTS OF THE CASE. 23.2. WE FIND THAT THE ITAT MUMBA I BENCH IN THE CASE OF EMGEEN HOLDINGS P. LTD. VS. DCIT IN ITA.NO.3594 & 3595/MUM/09 HAS OBSERVED AS UNDER: 7. WE FIND THAT THE DEDUCTION U/S.80IB(10) HAS BEEN DECLINED BY THE ASSESSING OFFICER ON THE GROUND THAT SIZE OF THE RESIDENTIAL UNIT WAS IN EXCE SS OF 1 000 SQ.FT WHICH IN TURN PROCEEDS ON THE BASIS THAT THE FLATS SOLD TO THE FAMILY MEMBERS ADMITTEDLY BY SEPARATE AGREEMENTS SHOULD BE TREATED AS ONE UNIT. WE ARE UNABLE TO APPROVE THIS APPROACH. WE HAVE NOTED THAT THE SIZE OF EACH FLAT AS EVIDENT FROM BUILDING PLAN AS DULY APPROVED BY MUNICIPAL AUTHORITIES WAS LESS THAN 1 000 SQ.FT. WE HAVE ALSO NOTED THAT IT IS NOT EVEN REVENUE'S CASE THAT EACH OF FLAT ON STANDALONE BASIS WAS NOT A RESIDENTIAL UNIT. EVEN IF FLATS WERE CONSTRUCTED OR PLANNED IN SU CH A WAY THAT TWO FLATS COULD INDEED BE MERGED INTO ONE ITA NO. 4081 /1 5 8 LARGER UNIT AS LONG EACH FLAT WAS AN INDEPENDENT RESIDENTIAL UNIT DEDUCTION U/S.80IB(10) COULD NOT BE DECLINED IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT WHAT SECTION 80IB(10) REFERS TO IS 'RESID ENTIAL UNIT' AND IN THE ABSENCE OF ANYTHING TO THE CONTRARY IN THE INCOME TAX ACT THE EXPRESSION 'RESIDENTIAL UNITS' MUST HAVE THE SAME CONNOTATIONS AS ASSIGNED TO IT BY LOCAL AUTHORITIES GRANTING APPROVAL TO THE PROJECT. THE LOCAL AUTHORITY HAS APPROVED THE BUILDING PLAN WITH RESIDENTIAL UNITS OF LESS THAN 1 000 SQ.FT AND GRANTED COMPLETION CERTIFICATE AS SUCH. THAT LEAVES NO AMBIGUITY ABOUT THE FACTUAL POSITION. WE HAVE FURTHER NOTED THAT THE PROHIBITION AGAINST SALE OF MORE THAN ONE FLAT IN A HOUSING PROJECT TO MEMBERS OF A FAMILY HAS BEEN INSERTED SPECIFICALLY WITH EFFECT FROM 1ST APRIL 2010 AND IN OUR HUMBLE UNDERSTANDING THIS AMENDMENT IN LAW CAN ONLY BE TREATED AS PROSPECTIVE IN EFFECT. WHAT IS THEREFORE CLEAR IS THAT SO FAR AS PRE - AMENDMENT POSITION IS CONCERNED AS LONG A RESIDENTIAL UNIT HAS LESS THAN SPECIFIED AREA IS AS PER THE DULY APPROVED PLANS AND IS CAPABLE OF BEING USED FOR RESIDENTIAL PURPOSES ON STAN DALONE BASIS DEDUCTION U/S.80IB (10) CANNOT BE DECLINED IN RESPECT OF THE SAME ME RELY BECAUSE THE END USER BY BUYING MORE THAN ONE SUCH UNIT IN THE NAME OF FAMILY MEMBERS HAS MERGED THESE RESIDENTIAL UNITS INTO A LARGER RESIDENTIAL UNIT OF A SIZE WHICH IS IN EXCESS OF SPECIFIED SIZE. THAT PRECISELY IS THE CASE BEFORE US. WHILE ON THE SUBJECT IT IS USEFUL TO TAKE NOTE OF LEGISLATIVE AMENDMENT BY THE VIRTUE OF WHICH LEGISLATURE PUT CERTAIN RESTRICTIONS ON SALE OF RESIDENTIAL UNITS TO CERTAIN FAMILY MEMBERS OF A PERSON WHO HAS BEEN SOLD A RESIDENTIAL UNIT IN THE HOUSING PROJECT. SECTIO N 80IB(10) NOW PROVIDES AN ADDITIONAL ELIGIBILITY CONDITION THAT IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING P ERSON NAMELY (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL (II) THE HUF IN WHICH SUCH INDIVIDUAL IS A KARTA (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HUF IN WHICH SUCH INDIVIDUAL IS A KARTA. THE EXPLANATION MEMORANDUM EXPLAINED THE LEGISLATIVE AMENDMENT AS FOLLOWS: (314 ITR(ST) 203) 'FURTHER THE OBJECT OF THE TAX BENEFIT FOR HOUSING PROJECTS IS TO BUILD HOUSING STOCK FOR LOW AND MIDDLE INCOME HOUSEHOLDS. THIS HAS BEEN ENSURED BY LIMITING THE SIZE OF THE RESIDENTIAL UNIT. HOWEVER THIS IS BEING CIRCUMVENTED BY THE DEVELOPER BY ENTERING INTO AGREEMENT TO SELL MULTIPLE ADJACENT UNITS TO A SINGLE BUYERS. ACCORDINGLY. IT IS PROPOSED TO INSERT NEW CLAUSES IN THE SAID SUB - SEC TION TO PROVIDE THAT THE UNDERTAKING WHICH DEVELOPS AND BUILDS THE HOUSING PROJECT SHALL NOT BE ALLOWED TO ALLOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT TO THE SAME PERSON NOT BEING AN INDIVIDUAL AND WHERE THE PERSON IS AN INDIVIDUAL NO OTHE R ITA NO. 4081 /1 5 9 RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSON: - (I) SPOUSE OR MINOR CHILDREN OF SUCH INDIVIDUAL; (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA; (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. THIS AMENDMENT WILL TAKE EFFECT FROM THE 1ST APRIL 2010 AND SHALL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2010 - 2011 AND SUBSEQU ENT YEARS.' 8. IT IS THUS CLEAR THAT THE AFORESAID AMENDMENT HAS BEEN BROUGHT WITH PROSPECTIVE EFFECT I.E. FROM 1ST DAY OF APRIL 2010 AND THERE IS NO INDICATION WHATSOEVER TO SUGGEST THAT THESE RESTRICTIONS NEED TO BE APPLIED WITH RETROSPECTIVE EFFECT. T HE AMENDMENT SEEKS TO PLUG A LOOPHOLE BUT RESTRICTS THE REMEDY WITH EFFECT FROM 1ST DAY OF APRIL 2010 I.E. AY 2010 - 2011. THE LAW IS VERY CLEAR THAT UNLESS PROVIDED IN THE STATUTE THE LAW IS ALWAYS PRESUMED TO BE PROSPECTIVE IN NATURE. IT WILL THEREFORE BE CONTRARY TO THE SCHEME OF LAW TO PROCEED ON THE BASIS THAT WHEREVER ADJACENT RESIDENTIAL UNITS ARE SOLD TO FAMILY MEMBERS ALL THESE RESIDENTIAL UNITS ARE TO BE CONSIDERED AS ONE UNIT. IF LAW PERMITTED SO THERE WAS NO NEED OF THE INSERTION OF CLAUSE (F ) TO SECTION U/S 80IB(10). IT WILL BE UNREASONABLE TO PROCEED ON THE BASIS THAT LEGISLATIVE AMENDMENT WAS INFRUCTUOUS OR UNCALLED FOR - PARTICULARLY AS THE AMENDMENT IS NOT EVEN STATED TO BE 'FOR REMOVAL OF DOUBTS'. ON THE CONTRARY THIS AMENDMENT SHOWS TH AT NO SUCH ELIGIBILITY CONDITIONS COULD BE READ INTO PRE - AMENDMENT LEGAL POSITION. 9. AS REGARDS THE AO'S STAND THAT THE ASSESSEE HIMSELF HAS OFFERED THE DEDUCTION U/S.80IB(10) IN RESPECT OF THESE UNITS DURING THE COURSE OF SURVEY PROCEEDINGS IT IS ONLY ELEMENTARY THAT NEITHER STATEMENT RECORDED UJS.133A HAS AN EVIDENTIARY VALUE NOR A LEGAL CLAIM CAN BE DECLINED ONLY BECAUSE ASSESSEE AT SOME STAGE DECIDED TO GIVE UP THE SAME. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIRETY OF THE CASE ARE O F THE CONSIDERED VIEW THAT THE DEDUCTION UJS.80IB(10) OUGHT TO HAVE BEEN ALLOWED TO THE ASSESSEE ENTIRELY. TO THIS EXTENT WE MODIFY THE ORDER OF THE CIT(A) AND ALLOW FURTHER RELIEF TO THE ASSESSEE. 23.3. WE FIND THAT THE ITAT MUMBAI BENCH IN THE CASE OF ARCADE BHOOMI ENTERPRISES VS. DCIT IN ITA.NO.366/MUM/2010 HAS TAKEN SIMILAR VIEW. 24. IN VIEW OF ABOVE DISCUSSION WE HOLD THAT CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT FLATS IN BUILDING PRIME HAD BUILT UP AREA EXCEEDING 1500 SQ.FT. THE ENTIRE COSMOS P ROJECT DID NOT QUALIFY FOR DEDUCTION U/S.80IB(10) IN RESPECT OF ITS PROFITS. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAS CLAIMED DEDUCTION IN RESPECT OF BUILDING PRIME WHEREIN BUILT UP AREA OF ITS UNITS IS EXCEEDING 1500 SQ.FT. IN FACT THERE WE RE 25 BUILDINGS IN COSMOS PROJECT OUT OF WHICH EXCEPT BUILDING ITA NO. 4081 /1 5 10 PRIME ALL OTHER BUILDINGS SATISFY THE CONDITIONS OF BUILT UP AREA LIMIT OF 1500 SQ.FT. THEREFORE DEDUCTION U/S.80IB(10) SHOULD BE ALLOWED IN RESPECT OF PROFIT FROM SUCH BUILDINGS. THIS VIEW I S FORTIFIED BY THE DECISIONS IN VANDANA PROPERTIES (SUPRA) AND ADITYA DEVELOPERS (SUPRA) DISCUSSED ABOVE. AS REGARDS TWO FLATS COMBINED TOGETHER THE ALLEGATION IS THAT SOME UNITS WERE COMBINED INTO ONE SO DEDUCTION U/S.80IB(10) SHOULD NOT BE ALLOWED. IN THIS REGARD ASSESSEES STAND HAS BEEN THAT ASSESSEE CONCEIVED THE FLATS AS INDEPENDENT UNITS AND THESE WERE CONSTRUCTED AS INDEPENDENT UNITS. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HIMSELF HAS JOINED THE ADJACENT FLATS. IN THIS SITUATION AS SESSEE SHOULD NOT SUFFER FOR ITS NO FAULT IF PURCHASER JOIN THE ADJOINING FLATS. THIS VIEW IS FORTIFIED BY THE DECISION OF MUMBAI BENCH OF ITAT IN HAWARE CONSTRUCTIONS PVT. LTD. (SUPRA) EMGEEN HOLDINGS P. LTD. (SUPRA) AND ARCADE BHOOMI ENTERPRISES (SUPRA) ETC. AS DISCUSSED ABOVE. IN VIEW OF ABOVE WE HOLD THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) IN RESPECT OF ENTIRE PROFITS COMPUTED AFTER MAKING ADDITIONS/DISALLOWANCES IN RESPECT OF COSMOS PROJECT CONSISTING OF 24 BUILDINGS EXCLUDING PRIME BU ILDING. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 2.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER LEADING TO ADDITION MADE TO THE TOTAL INCOME CONCLUSIO N DRAWN IN THE IMPUGNED ORDER MATERIAL AVAILABLE ON RECORD ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND THE CONCLUSION DRAWN IN THE AFOREMENTIONED CASES INCLUDING CITED FROM BOTH SIDES IF KEPT IN JUXTAPOSITION AND ANALYZED THE FACTS IN BRIEF A RE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT. THE ASSESSEE DECLARED NIL INCOME IN ITS RETURN FILED ON 29/09/2009 WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) ACCEPTING THE RETURNED INC OME. THE ASSESSEE FOLLOWS PROJECT COMPLETION METHOD. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THEREFORE REQUISITE NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE TO WHICH THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED NECESSARY DETAILS/SUBMIS SIONS (AS IS EVIDENT FROM PAGE 1 OF THE ASSESSMENT ORDER). THE WHOLE CASE OF THE DEPARTMENT IS DEMOLISHED BY THE OBSERVATION MADE IN THE ASSESSMENT ORDER ITSELF (PARA - 3) WHEREIN THE LD. ASSESSING OFFICER HIMSELF CONCLUDED THAT THE PROJECT WAS COMPLETED IN THE PRECEDING YEAR RELEVANT TO ASSESSMENT YEAR WHEREAS THE SECOND SURVEY WAS CONDUCTED ON 01/12/2011. IT IS PERTINENT TO NOTE HERE THAT THE CONSTRUCTION STARTED ON 15/04/2002 AND COMPLETED ON 28/03/2008 THE DATE WHEN AFTER EXAMINING THE FLATS THE C OMPETENT AUTHORITY ISSUED COMPLETION CERTIFICATE TO THE ASSESSEE CERTIFYING THAT THE PROJECT WAS COMPLETED AS PER THE APPROVED PLAN. THE ASSESSEE SHOWED THE NET PROFIT OF RS.9.07 CRORES OUT OF THE TOTAL SALES. 2.4. THE OBSERVATION MADE BY THE ASSESSING OFFICER AND ALSO ARGUED BY THE LD. DR ARE THAT PURSUANT TO SECOND SURVEY MADE ON 01/12/2011 BY THE INVESTIGATION WING CERTAIN VIOLATION OF ITA NO. 4081 /1 5 11 CONDITIONS FOR ELIGIBILITY OF DEDUCTION U/S 80IB(10) OF THE ACT WERE FOUND WHEREIN CERTAIN FLATS WERE FOUND EXCEED ING THE PRESCRIBED AREA OF 1 000 SQ. FT. NOW QUESTION ARISES WHETHER THE ASSESSEE CAN BE HELD LIABLE FOR EXTENSION OF AREA IN THE ALLEGED FLATS AFTER THE SALE TO THE RESPECTIVE PURCHASERS. THE OBVIOUS REPLY IS NO BECAUSE THE PROJECT OF THE ASSESSEE WAS COMPLETED ON 28/03/2008 AFTER EXAMINING THE AREA OF EACH FLAT OF THE PROJECT BY THE COMPETENT AUTHORITY AND ONLY THEN THE COMPLETION CERTIFICATE WAS ISSUED TO THE ASSESSEE. THE CASE OF THE ASSESSEE IS FURTHER FORTIFIED BY THE FACT THAT THE ASSESSEE STARTE D CONSTRUCTION ON 15/04/2002 AND DURING SECOND SURVEY CARRIED OUT IN 2006 EVERYTHING WAS FOUND IN ORDER. IT CAN BE SAID THE BASIC STRUCTURE OF THE FLATS MUST HAVE BEEN COMPLETED OR AT LEAST THE BASE SHOULD HAVE BEEN COMPLETED ABOVE PLINTH AREA ON WHICH T HE FURTHER CONSTRUCTION WOULD HAVE BEEN MADE. THERE IS NO ALLEGATION BY THE SURVEY TEAM (DURING FIRST SURVEY IN 2006) THAT THE ASSESSEE WAS NOT CONSTRUCTING AS PER THE APPROVED PLAN. THE COMPLETION CERTIFICATE WAS ISSUED BY THE COMPETENT AUTHORITY AFTER E XAMINING WHETHER THE ASSESSEE HAS FULFILLED THE CONDITIONS STIPULATED IN THE ACT AND ALSO WHETHER CONSTRUCTION HAS BEEN COMPLETED AS PER THE SANCTIONED PLAN DATED 15/04/2002. IF AT THE LATER STAGE THE ALLOTTEES/OCCUPANTS OF THE FLATS MAKES ANY ADDITION THE ASSESSEE CANNOT BE HELD LIABLE FOR THEIR OMISSIONS/ACTS IF ANY. OUR VIEW IS FORTIFIED BY THE DECISION IN HAWARE CONSTRUCTION PVT. LTD. VS ITO (2011) 64 DTR 251 (MUM) SANGHAVI & DOSHI ENTERPRISES VS ITO (2011) 60 DTR 406 (CHENNAI)(TM)(TRIB.) ITO VS AIR DEVELOPERS (ITA NO.447/NAG/2007) ORDER DATED 21/05/2008 M/S GLOBAL REALITY VS ITO (2012) 134 ITD 407 (INDORE) WHEREIN ONE OF US (JUDICIAL MEMBER) IS SIGNATORY TO THE ORDER HOLDING THAT ONCE THE ASSESSEE SOLD THE FLATS AND THE PURCHASER MERGES THE F LATS OR EXTENDS THE AREA NO FAULT CAN BE FOUND AGAINST THE ASSESSEE. IDENTICALLY HONBLE JURISDICTIONAL HIGH COURT IN CIT VS VANDANA PROPERTIES ORDER DATED 28/03/2012 DECIDED IN FAVOUR OF THE ASSESSEE. IN THE CASE OF HAWARE CONSTRUCTION PVT. LTD. VS IT O (SUPRA) WHEREIN BUILT UP AREA EXCEEDED 1 000 SQ. FT. WHEREAS AS PER APPROVAL BY CIDCO THE AREA WAS LESS THAN 1 000 SQ. FT. (AS PER APPROVED PLAN) AND LATER ON THE OCCUPANTS OF THE FLATS REJOINED TWO OR MORE FLATS IT WAS HELD THAT ASSESSEE CANNOT BE PENALIZED CONSEQUENTLY THE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT CANNOT BE DISALLOWED. WHILE COMING TO THIS CONCLUSION THE BENCH FOLLOWED THE DECISION IN GIRDHARILAL K. LULLA (ITA NO.4207/MUM/2009) ORDER DATED 30/05/2011. EVEN OTHERWISE THE ASSESS EE IS FOLLOWING PROJECT COMPLETION METHOD AND FULFILLED THE REQUIRED CONDITIONS BEFORE HANDING OVER THE COMPLETED PROJECT TO THE PURCHASERS/OCCUPANTS. THE RATIO LAID DOWN IN EMGEEN HOLDINGS PVT. LTD. VS DCIT (2011) 47 SOT 98 (MUM.) ORDER DATED 29/07/2011 F URTHER SUPPORTS THE CASE OF THE ASSESSEE. IN VIEW OF THE UNDISPUTED FACTS AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HIS STAND IS AFFIRMED RESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. ITA NO. 4081 /1 5 12 FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. 3. LD. AR DREW OUR ATTENTION TO PARA 2.5.4 OF THE CIT(A)S ORDER WHEREIN THE CIT(A) HAS FOLLOWED THE CONCLUSION DRAWN IN THE APPELLATE ORDE R FOR 2009 - 2010 WHICH WAS AFTER CALLING REMAND REPORT FROM THE AO WHERE FACTS WERE EXACTLY SIMILAR AND ALSO THE DECISION OF HON BLE BOMBAY HIGH COURT AND MUMBAI BENCH OF THE TRIBUNAL AND HELD THAT DENIAL OF PROVISION U/S.80IB(10) CANNOT BE SUSTAINED. 4. ON THE OTHER HAND LD. DR RELIED ON THE ORDER OF AO. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDER OF LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS. FACTS IN BRIEF ARE THAT THE ASSESSEE FIRM IS ENGAGED IN TH E BUSINESS OF PROP E RTY DEVELOPMENT AND CONSTRUCTI O N AND HAVE CONSTRUCTED THE FLATS LESS THAN 1000 SQ.FT. AS PER THE PLAN DUL Y APPROVED BY THE TOWN PLANNING AUTHORITY AND HAVE OBTAINED THE COMPLETION CERTIFICATE FROM THE COMPETENT AUTH ORITY AND HANDED OVER THE POSSES SION OF THE FLATS TO THE RESPECTIVE PURCHASERS OF THE TENEMENTS. THE FIRM HAS CLAIMED DEDUCTION U/ S 80 IB ( 10 ) OF THE INCOME TAX ACT 1961 IN ACCORDANCE WITH THE LAW OF INCOME TAX ACT 1961. IN THE A Y 2008 - 09 THE YEAR IN WHICH THE PROJECT WA S COMPLETED THE DEDUC TION U/S 80IB(I0) WAS ALLOWED AS PER THE INCOME TAX ACT 196 1 U/S L43( 1) . THE CASE WAS RE OPENED U/S 147 BASED ON REASON THAT SIZE OF FLATS EXCEEDS 1000 SQ.FT AND AFTER EXAMINING ALL THE RECORDS ASSESSMENT WAS COMPLETED U/S 143(3) ALLOWING THE DEDUCT ION U/S 8 0IB (10) ON 29.12.2010 . A SURVEY ACTION WAS CONDUCTED ON 1.12.20 11 ITA NO. 4081 /1 5 13 AND THE CASE F OR AY 2008 - 09 WAS 2ND TIME REO PENED U/S 147 BASED ON REASON THAT FLATS SIZES EXCEEDED 1000 SQ.FT. 6. THE CONTENTION OF ASSESSEE BEFORE THE AO WAS THAT ALL THE CONDITIONS STIPULATED U/S.80IB(10) WAS FULFILLED THE AREA OF EACH FLAT WAS LESS THAN 1000 SQ.FT.. EVEN THE COMMERCIAL AREA DEVELOPED AS SHOPS IS ABOUT 179.96 SQ.F MTRS. WHICH IS LESS THAN THE 5% OF TOTAL CONSTRUCTED AREA OR 2000 SQ.F.T. WHICHEVER IS LOWER AS PRESCRI BED UNDER THE INCOME TAX ACT 1961. 7. FROM THE RECORD WE FOUND THAT AFTER SURVEY SIMILAR ADDITION WAS MADE BY THE AO IN THE ASSESSMENT YEAR 2009 - 10 WHICH WAS DELETED BY CIT(A) AFTER CONTROVERTING EACH OBJECTION OF THE AO AND RECORDED A FINDING TO THE EF FECT THAT APPELLANT HAD CONSTRUCTED AND DEVELOPED 78 INDIVIDUAL FLATS IN 'A' WING EACH ADMEASURING LESS THAN 1000 SQ. FT. EACH OF THE FLATS WAS A SELF CONTAINED UNIT AND WAS SOLD INDIVIDUALLY BY THE APPELLANT TO THE BUYERS OF FLATS. THE FINDINGS ARRIVED AT DURING THE 'SURVEY PROCEEDINGS DO NOT INDICATE IN ANY MANNER WHATSOEVER THAT THE APPELLANT HAD COMBINED THE FLATS BEFORE GIVING POSSESSION TO THE BUYERS. THE STRUCTURAL CHANGES NOTICED IN THE BUILDING AS ON THE DATE OF SURVEY COULD NOT BE DETERMINATIVE OF THE FACTS WHICH EXISTED ON THE DATE OF SALE AND GIVING OF POSSESSION. THE C LAIM OF DEDUCTION U/S. 80IB(10) HAS TO BE EXAMINED AT THE STAGE OF COMPLETION OF CONSTRUCTION AS ALSO ON THE DATE OF SALE AND GIVING OF POSSESSION - CHANGES WHICH TAKE PLACE SUBS EQUENT TO GIVING OF POSSESSION CANNOT DENY THE CLAIM OF DEDUCTION U/S 80IB(10). IN THE RESULT IT IS HELD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80IB(1 0 ). ITA NO. 4081 /1 5 14 8. WE FOUND THAT FINDING SO RECORDED BY CIT(A) WAS AS PER MATERIAL ON RECORD AND WHICH H AS BEEN CONFIRMED BY TRIBUNAL BY DISMISSING REVENUE APPEAL IN ITA NO.4635/MUM/2013 DATED 28/10/2015 . DURING THE YEAR UNDER CONSIDERATION THE CIT(A) HAS FOLLOWED THE ORDER OF CI T(A) FOR THE ASSESSMENT YEAR 20 0 9 - 1 0 AND ALLOWED ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10). WE FOUND THAT TRIBUNAL VIDE ITS ORDER DATED 28/10/2015 IN ASSESSEES OWN CASE HAS DEALT THREADBARE WITH THE ALLEGATION OF THE AO AS WELL AS FINDINGS RECORDED BY CIT(A) AND AFTER APPLYING THE PROPOSITION OF LAW LAID DOWN BY VARIOUS HIGH COURT S INCLUDING BOMBAY HIGH COURT AND MUMBAI TRIBUN AL AS DISCUSSED IN THE ORDER HAD REACHED TO THE CONCLUSION THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10). THE FINDINGS SO RECORDED BY CIT(A) ARE AS PER MATERIAL ON RECORD WHICH HAS BEEN FURTHER FORFEITED BY TRIBUNAL IN ITS ORDER DATED 28/10/2015. 9. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 2010 DATED 28/10/2015 WHEREIN THE FACTS AND CIRCUMST ANCES WERE EXACTLY SIMILAR WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10). 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 4081 /1 5 15 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 2 5/10 / 2 01 6 . S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 25 / 10 /201 6 . . /PKM . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDE R / ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE. //TRUE COPY//