M/s Baba Promoters & Developers,, Pune v. ITO Wd. 4(6),, Pune

ITA 629/PUN/2009 | 2004-2005
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 62924514 RSA 2009
Assessee PAN AAFFB8179C
Bench Pune
Appeal Number ITA 629/PUN/2009
Duration Of Justice 2 year(s) 9 month(s) 3 day(s)
Appellant M/s Baba Promoters & Developers,, Pune
Respondent ITO Wd. 4(6),, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-02-2012
Date Of Final Hearing 23-12-2011
Next Hearing Date 23-12-2011
Assessment Year 2004-2005
Appeal Filed On 26-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO. 629/PN/2009 (ASSTT. YEAR : 2004-2005) M/S. BABA PROMOTERS & DEVELOPERS ... APPELLANT ADDRESS M.G. ROAD PUNE - 411001 PAN : AAFFB8179C V. INCOME TAX OFFICER WARD 4(6) PUNE RESPONDENT ITA NO. 625/PN/2011 (ASSTT. YEAR : 2006-07) M/S. BABA PROMOTERS & DEVELOPERS APPELL ANT FLAT NO.5 HRISHIKESH DHAM ABOVE PARIHAR SWEETS I.T.I. ROAD AUNDH PUNE 411007 PAN : AAFFB8179C V. ASSTT. C.I.T CIRCLE -4 PUNE RE SPONDENT ITA NO. 159/PN/2010 (ASSTT. YEAR : 2005-06) M/S. BABA PROMOTERS & DEVELOPERS APPELL ANT 1 ST FLOOR ESPANYA HEIGHTS 1616 M.G. ROAD PUNE 411 001 PAN : AAFFB8179C V. INCOME TAX OFFICER WARD 4(5) PUNE RESPONDENT PMT BUILDING SWARGATE PUNE 411 037 APPELLANT BY : SHRI. SUNIL GANOO RESPONDENT BY : SHRI. SATINDERSINGH NAVRATH & MS. ANN KAPTHUAMA ORDER PER I.C. SUDHIR JM ITA NO. 629/PN/2009 ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 2 IN THIS APPEAL THE ASSESSEE HAS QUESTION VALIDIT Y OF REVISIONAL ORDER PASSED U/S. 263 OF THE ACT ON SEVERAL GROUNDS RUNNING INTO 10 PAGES WHICH ARE CONSISTING OF ARGUMENTS AS WELL. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE A PART NERSHIP FIRM WORKING AS LAND DEVELOPERS STARTED CONSTRUCTION OF RESIDENTIAL PROJECT CASTLE WORLD AT S. NO. 242/1+2/1 BANAR D.P. ROAD AUNDH PUNE. AS PER THE ORIGINAL LAY OUT PLAN APPROVED BY PUNE MUNI CIPAL CORPORATION (IN SHORT PMC) THE TOTAL AREA OF THE PLOT WAS SHOWN TO BE 3995.34 SQ. MTRS. I.E. MARGINALLY LESSER THAN THE PRESCRIBED AREA OF 1 ACRE IN THE SECTION 80 IB(10) OF THE ACT. THE SUBMISSIONS OF THE ASSES SEE REMAINED THAT IN ADDITION TO THE ABOVE STATED AREA OF LAND AN ADDIT IONAL LAND MEASURING 5 ARE WAS ALSO ACQUIRED BY THE ASSESSEE FOR THE APP ROACH ROAD TO THE SAID PROJECT VIDE A SEPARATE AGREEMENT MADE WITH THE SAM E LANDLORDS FROM WHOM THE ABOVE STATED AREA OF 3995.34 SQ. MTRS. O F LAND WAS PURCHASED. THE ASSESSEE CONTENDED THAT REQUIREMENT OF 1 ACRE OF LAND IN VIEW OF SECTION 80IB(10) WAS FULFILLED AS THE AREA OF THE APPROACH ROAD CANNOT BE EXCLUDED FROM THE AREA OF THE PROJECT FOR THE SIMPLE REASON THAT IF THAT AREA WOULD NOT HAVE BEEN ACQUIRED THE PMC WOULD NOT HAVE SANCTIONED THE PLAN AND ISSUED COMMENCEMENT CERTIFI CATE. THE A.O. VISITED THE SITE AND BEING SATISFIED WITH THE FULFI LLMENT OF THE REQUIRED AREA OF LAND AND ACCEPTING THE EXPLANATION OF THE ASSESSEE REGARDING OTHER DISCREPANCIES THE A.O HAD ALLOWED THE CLAIME D DEDUCTION U/S. 80 IB(10) OF THE ACT IN THE ASSESSMENT FRAMED U/S. 143 (3) OF THE ACT. THE LD CIT FOUND THE ASSESSMENT ORDER AS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE FOLLOWING REASON S : 1) THE AREA OF THE PROJECT IS LESS THAN 1 ACRE. ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 3 2) AS PER SALE AGREEMENT OF ROW HOUSE THE SALEABLE AREA MENTIONED IS MORE THAN 1500 SQ.FT SIMILAR POSITION IS THERE IN UNIT NOS. 2 8 & 5. 3) IN A.Y. 2005-06 THE I.T.O. IN ITS ORDER PASSED U/S. 143(3) HAS DENIED THE DEDUCTION U/S. 80 IB (10) TO THE ASS ESSEE ON THE GROUNDS THAT (NO. 1 THE AREA OF THE PLOT IS LESS T HAN 1 ACRE; (2) ROW HOUSE IN BUILDING NO. D IS HAVING BUILT UP AREA EXC EEDING 1500 SQ.FT); AND NO. 4) THERE ARE FLATS WHICH WERE MERGED TOGETHER AND M ODIFICATION IS NOT AS PER APPROVED PLANS. 3. BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THE CIT WHILE HOLDING THAT THE ASSESSMENT ORDER IN QUESTION IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE HAS DIREC TED THE A.O TO WITHDRAW THE DEDUCTION GRANTED U/S. 80 IB (10) OF RS. 47 95 506/- FROM THE ASSESSED INCOME. 4. THE LD. A.R. WHILE REITERATING THE CONTENTIONS M ADE BEFORE THE AUTHORITIES BELOW SUBMITTED THAT THE ASSESSEE HAD COMMENCED THE CONSTRUCTION OF THE PROJECT IN THE F.Y. 2003-04. T HE ORIGINAL LAY OUT PLAN WAS APPROVED BY PMC VIDE CERTIFICATE NO. DPO/6754/D /636 DT. 5.12.2002. THE COLLECTOR PUNE HAD PASSED AN ORDE R UNDER MAHARASHTRA LAND REVENUE CODE 1966 TO GRANT PERMISSION FOR CONS TRUCTION OF RESIDENTIAL BUILDING ON AN AREA ADMEASURING 3988.34 SQ.MTRS. VIDE ORDER DT. 7.3.2003. THE PMC ISSUED COMMENCEMENT CERTIFIC ATE FOR CONSTRUCTION VIDE LETTER NO. 2983 DT. 21.2.2003. IN THE LAY OUT PLAN DT. 5.12.2002 THE AREA OF THE PLOT WAS SHOWN AT 3995.34 SQ. MTRS. A S EPARATE AGREEMENT DT. 20 TH MARCH 2004 WAS ENTERED INTO WITH THE SAME LANDLORD S FOR FURTHER ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 4 ACQUISITION OF AN AREA OF 5 ARE SO AS TO HAVE THE APPROACH ROAD FOR THE PROJECT. IN SUPPORT THE LD. A.R. DREW OUR ATTENTI ON TO THE COPY OF THE SAID AGREEMENT MADE AVAILABLE AT PAGE NOS.3 TO 7 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THE LD CIT HAS ERRED IN HOLDING THAT THE PLEA OF THE ASSESSEE THAT 5 ARE OF LAND PURCHASED ON 20 TH MARCH 2004 FOR THE PURPOSE OF APPROACH ROAD AND SUBSEQUENTLY TRANSFERR ED TO THE SOCIETY MAKES PLOT AREA MORE THAN 1 ACRE AS THE APPROACH RO AD CANNOT BE SAID TO BE THE INTEGRAL PART OF THE PROJECT AS IT WAS NEVER THE PART OF THE PROJECT AS ON 21 ST FEBRUARY 2003. THE LD. A.R. SUBMITTED THAT COMMEN CEMENT OF PROJECT CANNOT BE GRANTED BY THE PMC UNLESS THE PRO JECT HAS NECESSARY APPROACH ROAD. THE PROJECT WAS APPROVED BY THE PMC WITH THIS SPECIFIC CONDITION THAT ASSESSEE WILL BE RESPONSIBLE FOR PRO VIDING THE ROAD TO THE PROJECT. THE ASSESSEE ACCORDINGLY ACQUIRED 5 ARE OF LAND FOR APPROACH ROAD TO THE SOCIETY. HE SUBMITTED THAT THERE IS NO OTHER APPROACH ROAD THAN THE ROAD IN QUESTION AVAILABLE TO THE SOCIETY. HE CITED DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HAWARE ENGINEERS AND BUILDERS (P) LTD. V/S. ACIT (2011) 11 TAXMAN .COM 286 (MUM) ITAT COPY SUPPLIED. THE LD. A.R. SUBMITTED THAT IN THAT CASE ALSO THE DEPARTMENT HAD DECLINED DEDUCTION U/S. 80 IB(10) ON THE GROUND THAT ADDITIONAL PLOT ACQUIRED SUBSEQUENTLY BY ALLOTMENT WAS A DISTINCT PLOT WHICH CANNOT BE INCLUDED IN COMPUTATION OF THE AREA OF THE PLOT. THE TRIBUNAL HELD THE APPROACH OF THE DEPARTMENT NEIT HER FACTUALLY CORRECT NOR SUSTAINABLE IN LAW AND ACCORDINGLY THE CLAIMED DEDUCTION WAS ALLOWED HOLDING THAT AREA OF THE PLOT ACQUIRED SUBSEQUENTL Y IS ALSO TO BE INCLUDED IN THE MEASUREMENT OF THE TOTAL AREA AND THUS THE T OTAL AREA WAS AS PER THE REQUIREMENT OF SECTION 80 IB(10) OF THE ACT. ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 5 5. THE LD. A.R. SUBMITTED FURTHER THAT THE PROJECT CONSISTS OF 37 RESIDENTIAL FLATS AND 11 ROW HOUSES OUT OF WHICH THE BUILT UP AREA OF THE NONE OF THE FLATS AND ROW HOUSE EXCEEDS 1500 SQ. FT.. THE BUILT UP AREA OF ROW HOUSE NO. 11C IN BUILDING D DOES NOT EXCEE D 1500 SQ.FT. AREA. THE RESIDENTIAL UNITS HAS A MAXIMUM BUILT UP AREA O F 1500 SQ.FT. THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL EST ABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 5% OF THE AG GREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. THE LD. A.R. SUBMITTED FURTHER THAT BUILT UP AREA FOR THE PURPOS E OF THE SECTION AS DEFINED IN CLAUSE (A) TO SUB-SECTION 14 OF SECTION 80IB MEANS THE INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT THE FLOOR L EVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASED BY THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESI DENTIAL UNITS. 6. THE LD. A.R. SUBMITTED FURTHER THAT IN THE SALE AGREEMENT OF ROW HOUSE THE SALEABLE AREA MENTIONED IS MORE THAN 150 0 SQ.FT. BECAUSE IT INCLUDES AREA OF OPEN LAND/GARDEN. IF THAT AREA IS EXCLUDED THEN AREA OF ROW HOUSE IS LESS THAN 1500 SQ.FT. AS PER THE PROV ISIONS OF SECTION 80IB(10) THE AREA OF OPEN LAND/GARDEN ARE NOT BEIN G INCLUDED IN THE BUILT UP AREA. THE LD. A.R. SUBMITTED THAT EVEN IN THE CASE OF A.Y. 2005-06 THE ASSESSEE HAS PREFERRED APPEAL AGAINST THE ASSES SMENT ORDER DENYING THE CLAIMED DEDUCTION U/S. 80 IB(10) ON SIMILAR BAS IS. 7. THE LD. A.R. SUBMITTED THAT THE ASSESSMENT U/S. 143(3) IN THE PRESENT CASE HAS BEEN FRAMED BY THE A.O AFTER RAISI NG QUERIES ON THE ISSUE AND AFTER VERIFICATION OF THE CLAIM OF THE ASSESSEE BY HIS PERSONAL VISITS TO THE SITE. THE LD. A.R. SUBMITTED THAT THE SURVEYOR MR. S.D. KULKARNI HAS WRONGLY INCLUDED STORE/GYM. ROOM ARE A MEANT FOR COMMON ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 6 USE OF THE RESIDENTS OF THE SOCIETY IN BUILT-UP AREA OF THE SAID ROW- HOUSE. THE STORE/GYM. HOUSE HAVING INDEPENDENT AC CESS IS COMMON AREA OF RESIDENCE OWNERS OF THE SAID SOCIETY. THE GROUND FLOOR AREA IS 518 SQ.FT. WHEREAS MR. KULKARNI HAS MENTIONED IN HI S REPORT AT ITEM NO. 9 (PAGE 4) AT 783.21 SQ.FT. HENCE THE DIFFERENCE OF 264.79 SQ.FT. WILL BE REDUCED FROM TOTAL BUILT UP I.W. 783.21 264.79 = 518.42 SQ.FT. AND FF AREA IS 890.29 SQ.FT. THUS TOTAL COMES TO 1408.7 S Q.FT. THE LD. A.R. REFERRED THE REPORT OF MR. S.D. KULKARNI REGISTER ED VALUER SUBMITTED TO ITO MADE AVAILABLE AT PAGE NO. 15 TO 24 OF THE PAP ER BOOK. 8. THE LD. A.R. SUBMITTED THAT IN VIEW OF AFORESAID SUBMISSIONS THE ASSESSMENT ORDER IN QUESTION CANNOT BE HELD AS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO INVOKE TH E PROVISIONS OF SECTION 263 OF THE ACT. THE PROVISIONS U/S 263 ARE INVOKE D WHEN AN ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THERE IS NO INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLIC ATION OF LAW INVOLVED ON THE ISSUE BY THE A.O. HE PLACED RELIANCE ON THE F OLLOWING DECISIONS : I) CIT V/S. EXPORT HOUSE 256 ITR 603 (PUN. & HAR.) II) MOFFUSIL WAREHOUSE V/S. CIT 238 ITR 867 (MAD.) III) ARVEE INTERNATIONAL V/S. ACIT 290 ITR 80 (AT)8 (MU M.) IV) DHARIWAL INDUSRIES LTD. V/S. ACIT 300 ITR 90(SB)(P UNE) V) BUNTY BUILDERS V/S. ITO (2010) 127 ITD 286 (PUNE) VI) RADHE DEVELOPERS & ORS. V/S. ITO 113 TTJ (AHD.) 300 VII) ACIT V/S. SMT. C. RAJINI (2011) 9 TAXMAN.COM 115 (CHENNAI) VIII) NIKHIL ASSOCIATES V/S. ITO (2011) 12 TAXMAN.COM 76 (AHD.) ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 7 9. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT THE A.O. WHILE ALLOWING THE CLAIMED DEDUCTION U/S. 80 IB(10) OF T HE ACT HAS ACCEPTED THE CLAIM BLINDLY WITHOUT MAKING INDEPENDENT VERIFI CATION OF THE CLAIM. HE FAILED TO APPRECIATE THAT APPROVAL BY THE PMC W AS GRANTED ON THE PLAN HAVING AREA OF LESS THAN 1 ACRE OF LAND. NO APPROV AL FOR 5 ARE LAND USED FOR ROAD WAS GRANTED BY THE PMC. THIS ROAD WAS DUE TO ARRANGEMENT WITH NEIGHBORS. THE STORY OF ACQUISITION OF 5 ARE LAND FOR ROAD PURPOSE IS NOTHING BUT AN AFTER-THOUGHT BY ASSESSEE AS THE A GREEMENT FOR ACQUISITION OF LAND IS DATED 20 TH MARCH 2004 AND NO AMOUNT OF CONSIDERATION FOR THE ACQUISITION HAS BEEN MENTIONE D IN THE AGREEMENT. IN THIS REGARD THE LD. D.R. REFERRED PAGE NO. 5 & 6 OF THE PAPER BOOK I.E. PART OF THE AGREEMENT. THE LD. D.R. SUBMITTED FUR THER THAT THE A.O IS NOT COMPETENT TO VERIFY THE AREA ON HIS OWN BEING N OT A TECHNICAL PERSON. HE HAS NOT MENTIONED ABOUT TAKING ASSISTANCE OF ANY TECHNICAL PERSON. IT IS HIS WRONG ASSUMPTION OF FACT BY THE A.O THAT TH E AREA OF LAND OF THE PROJECT WAS 1 ACRE. HE FAILED TO APPRECIATE THAT T HE APPROVAL BY THE PMC WAS GRANTED TO THE PLAN FOR LESS THAN 1 ACRE AREA. SINCE IT IS A CASE OF WRONG ASSUMPTION OF FACT BY THE A.O THE ASSESSMENT ORDER IS ERRONEOUS. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) K.A. RAMASWAMY CHETTIAR & ORS.VS. CIT 220 ITR 657 ( MAD.) II) GEE VEE ENTERPRISES VS. ACIT 99 ITR 375 (DEL.) III) F.L. SMIDH LTD. V/S. ACIT 2009-TIOL-419-ITAT-MAD IV) SHRI D.K. SINGHAL V/S. CIT 2008 ITOL 311-ITAT DELHI V) M/S. M G MOTORS V/S. ITO 2008-TIOL-136-ITAT-DELHI VI) CIT V/S. M/S. ALBORZ INDUSTRIES 2011 TIOL 61- SC-HP-IT ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 8 10. THE LD. A.R. REJOINED WITH THIS SUBMISSION THA T U/S. 131 OF THE ACT IT IS WELL WITHIN THE POWER OF A.O TO INSPECT THE A REA FOR WHICH NO TECHNICAL ASSISTANCE WAS REQUIRED. IT IS GENERALLY IN THE CASE OF ESTIMATION OF VALUATION OF A PROPERTY OR AN ASSET THE ASSISTANCE OF TECHNICAL PERSON IS REQUIRED BUT A.O IS NOT EVEN BOUND BY THE REPORT OF SUCH TECHNICAL PERSON. 11. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND HAVE G ONE THROUGH THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE DECISIO NS RELIED UPON. THE ORDER IN QUESTION IS REVISIONAL ORDER PASSED U/S. 2 63 OF THE ACT FOR WHICH THE FOREMOST REQUIREMENT IS THAT THE ASSESSMENT ORD ER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESS EE HAS QUESTIONED THE REVISIONAL ORDER ON THE BASIS THAT THE A.O BEFORE F RAMING ASSESSMENT U/S. 143(3) AND ALLOWING THE CLAIMED DEDUCTION U/S. 80IB (10) OF THE ACT HAD VERIFIED THE CORRECTNESS OF THE CLAIM WHICH ALSO IN CLUDED HIS PERSONAL VISITS TO THE SITE. AS WE HAVE DISCUSSED HEREIN-AB OVE THE LD. A.R. HAS TRIED TO MEET OUT ALL THE OBJECTIONS RAISED BY THE LD CIT ON THE BASIS OF WHICH THE LD CIT HAS TREATED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO INVOKE T HE PROVISIONS OF SEC. 263 OF THE ACT AND HAS WITHDRAW THE CLAIMED DEDUCTION U/S. 80 IB(10) ALLOWED BY THE A.O. THE LD CIT HAS ALLEGED THAT THE A.O HAS ALLOWED THE DEDUCTION WITHOUT VERIFYING THE CORRECTNESS OF THE CLAIMED DEDUCTION U/S. 80IB OF THE ACT AS IN THE LAY OUT PLAN APPROVED BY PMC THE AREA OF THE PLOT HAS BEEN SHOWN TO BE 3995.34 SQ.MTRS. ONLY W HICH IS MARGINALLY LESSER THAN THE PRESCRIBED MINIMUM LIMIT OF 1 ACRE; ONE OF THE DWELLING UNITS IS MORE THAN THE PRESCRIBED CEILING OF 1500 S Q.FT. AND MERGER OF 2 FLATS EXCEEDING THE PRESCRIBED CEILING OF 1500 SQ.F T. WE HAVE ALREADY ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 9 DISCUSSED HEREINABOVE THE EXPLANATION OF ASSESSEE T O THESE BASIS. IN BRIEF THE ASSESSEE TRIED TO EXPLAIN THAT THE PLAN WAS APPROVED BY THE PMC WITH THIS CONDITION THAT MAKING AVAILABILITY O F APPROACH ROAD TO A SOCIETY IS THE RESPONSIBILITY OF ASSESSEE AND THE A SSESSEE BY A SEPARATE AGREEMENT DT. 20 TH MARCH 2004 HAD ACQUIRED 5 ARE OF LAND FOR THE RO AD PURPOSE AND IT IS THE ONLY ROAD AVAILABLE TO THE SO CIETY FOR INGRESS AND OUTGRESS. IT WAS SUBMITTED THAT IF THE LAND OF 5 ARE IS INCLUDED IN THE LAND AREA SHOWN IN THE PLAN THE TOTAL AREA EXCEEDS 1 ACRE OF LAND. HIS FURTHER CONTENTION REMAINED THAT IN VIEW OF THE DEC ISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HAWARE ENGINEERS AND BUILDERS (P) LTD. V. ACIT (SUPRA) ( HOLDING THAT DEDUCTION U/S. 80 IB(10 ) DENIED ON THE GROUND THAT ADDITIONAL PLOT WAS A DISTINCT PLOT WA S NEITHER ACTUALLY CORRECT NOR SUSTAINABLE IN LAW) THE AREA OF 5 ARE WILL BE INCLUDED FOR COMPUTING THE TOTAL AREA OF THE LAND. THE CONTENTIO N OF THE LD. D.R. REMAINED THAT THE ACQUISITION OF THE SAID AREA OF 5 ARE FOR THE PURPOSE OF ROAD TO THE SOCIETY IS AN AFTER-THOUGHT SINCE IN T HE AGREEMENT WITH THE OWNER OF THE SAID LAND AMOUNT IN CONSIDERATION AG REED FOR THE TRANSACTION OF LAND HAS NOT BEEN MENTIONED AND THE LAND IS STATED TO BE SHARED WITH NEIGHBOURS. THE LD CIT BESIDES NOTING THIS FACT HAS ALSO NOTED THAT THERE WAS NO REGISTERED DOCUMENT FOR ACQ UISITION OF 5 ARE LAND. HAVING GONE THROUGH THE AGREEMENT OF SALE OF THE 5 ARE LAND MADE AVAILABLE AT PAGE NO. 387 OF THE PAPER BOOK W E FIND THAT AT PAGE NOS. 5 & 6 IT HAS BEEN MENTIONED THAT BESIDES 40 A REAS OF LAND SOLD TO THE ASSESSEE SOCIETY THE OWNER HAS CONTRIBUTED 5 ARE LAND FOR ROAD. IN THE SAME PARAGRAPH IT HAS BEEN FURTHER MENTIONED T HAT THE OWNER WILL BE HAVING RIGHT TO USE THE ROAD FOR EVER BY AGREEMENT DT. 10.1.1980. DUE TO THIS SENTENCE IT APPEARS THAT THE LD CIT WAS OF TH E OPINION THAT THE 5 ARE AREA OF LAND WHICH IS STATED TO BE ACQUIRED FOR THE PURPOSE OF ROAD BY THE ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 10 ASSESSEE WAS ACTUALLY TO BE SHARED WITH THE OWNERS. WE HOWEVER FIND FROM THE CONCLUDING PART OF THE AGREEMENT UNDER THE HEAD NOW THEREFORE THIS AGREEMENT WITNESSETH AND IT IS HEREB Y AND BETWEEN THE PARTIES HERETO AS UNDER :- 1) THE OWNER HAS SOLD THE RIGHT OF 5 AAR LAND AND ACCE SS THROUGH SAID ROAD TO THE PURCHASER HEREIN FOREVE R. 2) THE OWNER HAS RECEIVED CONSIDERATION AMOUNT FROM PURCHASER VIDE REGISTERED DEVELOPMENT AGREEMENT IS REGISTERED IN THE OFFICE OF SUB-REGISTRAR HAVELI NO . 4 AT SR.NO. 5166 5168 5170 5172 5174 DATED 20/06/200 2. 3) THE OWNER SHALL NOT WITHDRAW CANCEL HIS PERMISSION IN ANY CASE FOR OWNERSHIP RIGHT OF 5R LAND AND USING THE S AID ROAD. 4) THE OWNER ASSURES THAT ALL THE FLATS BUNGALOW ROW HOUSE OWNER THEIR RELATIVES AGENT SERVANT HAVE A RIGHT TO USE THE SAID ROAD. 5) THE OWNER GIVEN ASSURANCE THAT HE WILL CLEAR RECTI FY ALL THE OBJECTIONS WHICH WILL RAISED BY SOCIETY OR OTHER PE OPLE WITHOUT ANY EXPENSES. THUS IN THE CONCLUDING PARAGRAPH OF THE AGREEMENT IT HAS BEEN MADE CLEAR THAT 5 ARE OF LAND WAS ACQUIRED BY THE ASSE SSEE THROUGH THIS AGREEMENT. THE A.O. IN THE ASSESSMENT ORDER HAS M ENTIONED ABOUT HIS PERSONAL VISIT AT THE SITE AND THEREAFTER BEING SA TISFIED WITH THE EXPLANATION OF THE ASSESSEE REGARDING FULFILLMENT O F REQUIREMENTS OF ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 11 SECTION 80IB(10) HE HAS ACCEPTED THE CLAIM. IN THE CASE OF HAWARE ENGINEERS AND BUILDERS (P) LTD. THE ASSESSEE WAS E NGAGED IN CONSTRUCTION OF THE BUILDING PROJECT. DURING THE C OURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE A.O NOTICED THAT THE AS SESSEE IN THAT CASE HAD CLAIMED DEDUCTION U/S. 80IB(10) IN RESPECT OF R ESIDENTIAL PROJECT DEVELOPED BY ASSESSEE ON 4000.02 SQ. MTR LAND ALLOT TED BY CIDCO. HE DISALLOWED THE SAID DEDUCTION ON THE GROUNDS THAT SIZE OF THE PLOT WAS ADMITTEDLY LESS THAN 1 ACRE I.E. 4046.82 SQ. MTRS. WITH SUBSEQUENT ALLOTMENT OF ADJACENT PLOT MEASURING 48.13 SQ.MTR. DID NOT MAKE GOOD THE DEFICIENCY IN ELIGIBILITY FOR ENTITLEMENT TO DE DUCTION U/S. 80 IB(10) AS IT WAS ALLOTTED FOR PURPOSE OF PLAYING GROUND/GREE N AREA AND NON- DEVELOPMENT/CONSTRUCTION WAS PERMITTED THEREIN AND THAT ADDITIONAL PLOT WAS ACTUALLY A SEPARATE PLOT DISTINCT FROM ORIGINAL PLOT. ON APPEAL THE COMMISSIONER(APPEALS) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAD TRIED TO GET ITS IRREGULAR CLAIM O F DEDUCTION U/S. 80 IB(10) REGULARIZED THROUGH ALLOTMENT OF ADDITIONAL PLOT. AFTER DETAILED DISCUSSION ON THE ISSUE THE BOMBAY BENCH OF THE TR IBUNAL ON THE OBSERVATION OF THE COMMISSIONER (APPEALS) TO THE EF FECT THAT IT WAS MANIFESTLY CLEAR THAT THE ASSESSEE HAD TRIED TO GET ITS CLAIM OF DEDUCTION U/S. 80IB(10) REGULARIZED THROUGH THE ALLOTMENT OF ADDITIONAL PLOT AND THAT IT WAS NOT THE INTENTION OF THE LEGISLATURE TH AT THE HOUSING PROJECTS WHICH HAVE ALREADY BEEN COMPLETED ON A SMALLER PLOT WILL ALSO BE ELIGIBLE FOR DEDUCTION U/S. 80IB(10) IF SUBSEQUENTLY IT POSS ESSES ADDITIONAL ADJACENT LAND TO MAKE THE TOTAL AREA MORE THAN 1 AC RE. THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN THESE OBSERVATIONS. IT WAS HELD THAT IN CASE AN ASSESSEE FINDS THAT HE IS NOT ELIGIBLE FOR THE DEDU CTION U/S. 80IB(10) BECAUSE SIZE OF THE PLOT ON WHICH PROJECT IS BUILT IS LESS THAN MINIMUM NECESSARY SIZE AND HE MAKES GOOD THAT DEFICIENCY AND ENSURES THAT ALL ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 12 THE NECESSARY PRE-CONDITIONS ARE SATISFIED AND APPR OVALS OBTAINED THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10). IT WAS FURTHER HELD THAT THE FACT THAT HE SATISFIED THE CONDITIONS LATER DO ES NOT ADVERSELY AFFECT ITS CLAIM FOR DEDUCTION. WHAT IS MATERIAL IS THAT AT T HE POINT OF TIME WHEN MATTER COMES UP FOR EXAMINATION OF THE CLAIM THE N ECESSARY PRE- CONDITIONS FOR BEING ELIGIBLE TO THE CLAIM ARE SATI SFIED THEREFORE THE DEDUCTION U/S. 80IB(10) WAS ADMISSIBLE ON THE FACTS OF THE CASE. SIMILAR ARE THE FACTS IN THE PRESENT CASE BEFORE US AS THE ASSESSEE HAS ACQUIRED THE ADDITIONAL LAND OF 5 ARE SUBSEQUENTLY AFTER THE ACQUISITION OF THE MAIN PLOT OF LAND FROM THE SAME SELLER. IT IS ALSO A WELL ESTABLISHED PROPOSITION OF LAW THAT FOR TRANSFER OF A PLOT WIT HIN THE MEANING OF INCOME TAX ACT 1961 THE REQUIREMENT IS HANDING OVE R OF THE POSSESSION AND PAYMENT OF CONSIDERATION. THUS REGISTRATION O F DOCUMENT OF THE TRANSACTION IS NOT FOREMOST REQUIREMENT TO ESTABLI SH THE TRANSFER FOR THE PURPOSE OF INCOME TAX ACT 1961. 12. IN THE CASE OF RADHE DEVELOPERS & ORS. V/S. ITO (SUPRA) RELIED UPON BY THE LD. A.R THE AHMEDABAD BENCH OF THE TRI BUNAL GONE FURTHER BY HOLDING THAT CONTENTION OF THE REVENUE THAT IN O RDER TO CLAIM DEDUCTION U/S. 80IB(10) THE ASSESSEE MUST BE THE OWNER OF LA ND ON WHICH THE HOUSING PROJECT IS CONSTRUCTED IS NOT SUSTAINABLE. IT WAS HELD THAT THERE IS NO SUCH CONDITION IN THE PROVISIONS OF SECTION 80IB (10). IT WAS FURTHER HELD THAT ONCE THE ASSESSEE HAD TAKEN POSSESSION OF THE IMMOVABLE PROPERTY AND RETAINED IT IN PART PERFORMANCE OF A C ONTRACT OF A NATURE REFERRED TO SEC. 53A OF THE TRANSFER OF PROPERTY AC T 1882 IT AMOUNTS TO TRANSFER U/S. 2(47)(V) OF THE I.T. ACT 1961. LIKEW ISE THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V/S. SMT C. RAJ INI (2011) 9 TAXMAN.COM 115 CHENNAI HAS HELD THAT IN ORDER TO C LAIM DEDUCTION U/S. ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 13 80 IB(10) ASSESSEE WAS NOT REQUIRED TO BE OWNER OF LAND ON RECORD. THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF NIK HIL ASSOCIATES V/S. ITO (SUPRA) (2011) 12 TAXMAN.COM 76 (AHD.) HAS HELD THAT LEGAL OWNERSHIP OVER THE LAND HAS NEVER BEEN ANY RELEVANT CRITERIA FOR ALLOWING OR NOT ALLOWING DEDUCTION U/S. 80IB(10) WHAT IS NE CESSARY IS THAT ASSESSEE SHOULD HAVE COMPLETE CONTROL DOMINIONS OR RIGHT TO CARRY ON PROJECT AS SANCTIONED BY LOCAL AUTHORITY. DEPARTME NT IN THE PRESENT CASE BEFORE US HAS NOT DISPUTED THE CLAIM OF THE ASSESSE E THAT THERE IS A DOMINION OF THE ASSESSEE DEVELOPER OVER THE LAND IN AS MUCH AS THE POSSESSION OF LAND IS GIVEN TO THE ASSESSEE AND TH E LAND HAS BEEN MARKED AND USED AS ROAD MEANT FOR THE SOCIETY. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BUNTY BUILDERS V/S.ITO (SUP RA) HAS HELD THAT CBDT CIRCULAR IN (2005) 276 ITR (ST.) 170 GIVES A CLEAR INDICATION THAT THOUGH THE SEC. 80IB(10) DO NOT SPECIFICALLY PROVID E FOR THE DEVELOPMENT PLAN ROADS OR GRANT OF OTHER FACILITIES ETC. IN A HOUSING PROJECT BUT THE SAME SHOULD CONFORM TO THE PROJECT PLAN AND APPROVE D BY THE LOCAL AUTHORITY. IT WAS HELD FURTHER THAT HOUSING PROJE CT CONSTITUTE DEVELOPMENT PLAN ROADS AND GRANT OF OTHER FACILITI ES THEREFORE THOSE AREAS SHOULD EXIST WITHIN THE PRESCRIBED LIMITS AND TO BE CONSIDERED AS A PART AND PARCEL OF THE PROJECT. THERE IS NO DISPUTE IN THE CASE BEFORE US THAT AFTER ADDITION OF 5 ARE OF LAND PURCHASED BY T HE ASSESSEE VIDE AGREEMENT DT. 20 TH MARCH 2004 FOR THE PURPOSE OF APPROACH ROAD TO T HE AREA GIVEN IN THE LAY OUT PLAN IT FULFILLS THE 1 A CRE PRESCRIBED AREA FOR ELIGIBILITY OF CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. 13. SO FAR AS NEXT GROUND ON THE BASIS OF WHICH TH E LD CIT(A) HAS INVOKED REVISIONARY PROVISION U/S. 263 OF THE ACT ABOUT ROW HOUSE HAVING AREA MORE THAN 1500 SQ.FT. IS CONCERNED WE FIND S UBSTANCE IN THE ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 14 CONTENTION OF THE LD. A.R. IN THIS REGARD THAT AS P ER SALE AGREEMENT OF ROW HOUSE THE SALEABLE AREA WAS MENTIONED MORE THAN 15 00 SQ.FT. SINCE IT INCLUDED AREA OF OPEN LAND/GARDEN AND IF THAT IS E XCLUDED THEN AREA OF ROW HOUSE IS LESS THAN 1500 SQ.FT. EVEN AS PER THE DEFINITION OF BUILT-UP AREA PROVIDED IN SEC. 80 IB(14) IT INCLUDES THICK NESS OF WALL AND PROJECTIONS AND BALCONIES BUT DOES NOT INCLUDE COMM ON AREA SHARED WITH OTHER RESIDENTIAL UNITS. LD. CIT HAS INCLUDED THE OPEN LAND/GARDEN WHILE COMPUTING THE TOTAL AREA OF THE ROW HOUSE. IT IS N OT THE CASE OF THE LD CIT THAT THERE WAS PROJECTIONS OR BALCONIES ADDIT ION OF WHICH WAS EXCEEDING 1500 SQ.FT. AREA. ANY WAY THE ISSUE WAS DEBATABLE IN NATURE AND THUS PROVISIONS U/S. 263 COULD NOT BE INVOKED O NLY BECAUSE THE LD CIT WAS HAVING DIFFERENT VIEW ON THE ISSUE THAN THE A.O. THE LD CIT HAS ALSO MENTIONED THAT IN THE A.Y. 2005-06 THE I.T.O HAS DENIED DEDUCTION U/S. 80 IB(10) TO THE ASSESSEE ON THE BASIS THAT TH E AREA OF THE PLOT IS LESS THAN 1 ACRE ROW HOUSE IN BUILDING D IS HAVI NG BUILT UP AREA EXCEEDING 1500 SQ.FT. AND THERE ARE FLATS WHICH WER E MERGED TOGETHER AND MODIFICATIONS IS NOT AS PER APPROVED PLANS. WE HAVE ALREADY DEALT WITH THE ISSUE OF AREA OF THE PLOT HEREINABOVE. TH ERE IS NO SPECIFIC ALLEGATION THAT DURING THE YEAR ALSO ROW HOUSE IN BUILDING D WAS HAVING BUILT UP AREA EXCEEDING 1500 SQ.FT. BUT THE LD CIT HAS MADE GENERAL ALLEGATION THAT IN SOME ROW HOUSES THE AREA WAS EX CEEDING THE PRESCRIBED LIMIT OF 1500 SQ.FT. WHICH WE HAVE ALREA DY DEALT WITH HEREINABOVE. THE SUBMISSION OF LD. A.R. REGARDING BUILT UP AREA OF ROW HOUSE NO. 11C IN D BUILDING HAS BEEN DISCUSSED HERE INABOVE WHEREIN HE HAS MENTIONED THAT THE SURVEYOR HAD WRONGLY TAKEN S TORE/GYM. ROOM AREA IN BUILT AREA OF THE SAID ROW HOUSE IGNORING T HIS FACT THAT THE SAID STORE/GYM. ROOM IS COMMON AREA OF RESIDENCE/OWNERS OF THE SAID SOCIETY. IT WAS FURTHER SUBMITTED THAT GROUND FLO OR AREA OF THE SAID ROW ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 15 HUSE IS 518.5 SQ.FT. WHEREAS THE SURVEYOR HAS MENTI ONED IN HIS REPORT THE AREA AS 783.21 SQ.FT. HENCE THE DIFFERENCE OF 26 4.79 SQ.FT (STORE/GYM. ROOM AREA) WILL BE REDUCED FROM TOTAL BUILT UP AREA SHOWN AS 783.21 SQ.FT. WHICH COMES TO 518.42 SQ.FT. AND FIRST FLOO R AREA 890.29 SQ.FT. THUS TOTAL COMES TO 1408.79 SQ.FT. WE DO NOT FIND REASONS TO DISBELIEVE THIS EXPLANATION OF THE ASSESSEE AS THE SAME HAS AL SO BEEN VERIFIED BY THE A.O IN HIS PERSONAL VISIT OF THE SITE. PERSONAL VI SIT OF THE SITE BY THE A.O HAS NOT BEEN DENIED BY THE LD CIT NOR IN ABSENCE OF SUBSTANTIVE REBUTTAL OF ABOVE EXPLANATION OF THE ASSESSEE IT CAN BE AL LEGED THAT A.O HAS WRONGLY ACCEPTED LESSER AREA WITHOUT VERIFICATION . SO FAR AS MERGER OF FLATS AND THEREBY EXCEEDING THE PRESCRIBED LIMIT OF 1500 SQ.FT. TAKEN AS A BASIS FOR DENIAL OF THE DEDUCTION IN THE A.Y. 2005- 06 BY THE I.T.O IS CONCERNED THERE IS NO SUBSTANCE SINCE IT IS UNDISP UTED FACT THAT EACH FLAT WAS WITHIN THE PRESCRIBED LIMIT OF 1500 SQ.FT. AREA AND IF AFTER PURCHASING OF 2 FLATS OWNER(S) OF FLATS MERGES IT INTO A LARGER FLAT THE CLAIMED DEDUCTION TO THE ASSESSEE CANNOT BE DENIED ON THIS BASIS. IN VIEW OF THE ABOVE DISCUSSION WE FIND THAT THE GROUNDS O N WHICH THE LD CIT HAS TREATED THE ASSESSMENT ORDER AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE UNDER THE PROVISIONS OF SEC. 26 3 OF THE ACT AND HAS WITHRDRAWN THE DEDUCTION GRANTED BY THE A.O ARE NO T SUSTAINABLE ALSO BECAUSE THE ISSUES REGARDING AREA OF LAND ROW HOUS ES ETC. WERE DEBATABLE IN NATURE AND ONLY BECAUSE CIT WAS HAVING DIFFERENT VIEW THAN THE A.O REVISIONAL PROVISIONS U/S. 263 CANNOT BE I NVOKED. THE DECISIONS RELIED UPON BY THE LD. D.R. TO JUSTIFY THE ACTION O F THE LD CIT IN THE PRESENT CASE HAVING DISTINGUISHABLE FACTS ARE NOT H ELPFUL TO THE REVENUE. IN THE CASE OF F.L. SMIDTH LTD. V/S. ACIT 2009-TIO L-419-ITAT-MAD THE ACTION U/S. 263 TAKEN BY THE LD CIT WAS JUSTIFIED SINCE THE ASSESSMENT ORDER PASSED WITHOUT ANY ENQUIRY ON THE ISSUE OF EL IGIBILITY OF DEDUCTION ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 16 U/S. 80 IB ON DUTY DRAW BACK RECEIPTS. SUCH IS NOT THE CASE BEFORE US AS ADMITTEDLY THE ITO BEFORE ALLOWING DEDUCTION HAD RAISED QUERIES IN THIS REGARD AND HAD VISITED THE SITE TO VERIFY THE AREA OF THE LAND ROW HOUSES AND FLAT. SIMILARLY IN THE CASE OF SHRI D.K. SINGH AL V/S. CIT 2008-ITOL - 311-ITAT DELHI THE ITO HAS NOT CONDUCTED ANY ENQU IRY BEFORE ACCEPTING THE INCOME SURRENDERED BY THE ASSESSEE. IN THE CAS E OF M/S. M.G. MOTORS V/S. ITO 2008-TIOL 136 ITAT DELHI THE A.O. HAD WRONGLY ALLOWED THE CLAIM ON INSUFFICIENT MATERIAL. LIKEWISE IN THE CA SE OF CIT V/S. M/S. ALBORZ INDUSTRIES 2011-TIOL- 61-SC-HP- IT THE UN-REBUTT ED ALLEGATION OF NO APPLICATION OF THE MIND BY THE A.O BEFORE ALLOWING THE BENEFITS TO THE ASSESSEE WAS THERE. WHEREAS IN THE PRESENT CASE AS IT IS EVIDENT FROM THE ASSESSMENT ORDER THE A.O HAS FULLY APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. UNDER THESE CIRCUMSTANCES THE ASSES SMENT ORDER IN QUESTION CAN NOT BE HELD AS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. WE THUS SET ASIDE THE REVISIONAL ORDE R IMPUGNED AND RESTORE THE ASSESSMENT ORDER IN QUESTION HOLDING THAT THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE I NTEREST OF REVENUE AS DISCUSSED ABOVE. THE GROUNDS QUESTIONING THE VALIDI TY OF THE REVISIONAL ORDER IN QUESTION ARE THUS ALLOWED IN FAVOUR OF THE ASSESSEE. 14. IN RESULT APPEAL IS ALLOWED. ITA NO. 159/PN/2010 15. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORD ER ON THE GROUND THAT LD CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF DEDUCTION OF RS. 98 66 499/- CLAIMED U/S. 80IB(10) OF THE INCOME TAX ACT 1961 MADE ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 17 BY THE A.O WITHOUT APPRECIATING THE FACTS OF THE CA SE IN PROPER PERSPECTIVE. 16. WE HAVE ALREADY DISCUSSED THE GENERAL FACTS OF THE CASE HEREINABOVE WHILE ADJUDICATING THE ITA NO. 629/PN/2 009. DURING THE YEAR THE A.O DENIED THE CLAIMED DEDUCTION U/S. 80I B(10) OF THE ACT ON THE BASIS THAT IN THE LAY OUT PLAN SANCTIONED BY TH E PMC ON 5.12.2002 THE TOTAL AREA OF PLOT HAS BEEN SHOWN 3995.34 SQ. M TRS WHICH WAS LESSER THAN 1 ACRE. THE A.O ALSO MENTIONED THE REPORT OF THE SURVEYOR SHRI. S.D. KULKARNI CONFIRMING THAT THE AREA OF THE PLOT MENTIONED IN PMC APPROVAL WAS 43005 SQ.FT. WHICH IS LESS THAN 1 ACRE (43560 SQ.FT.). THE A.O DID NOT AGREE WITH THE EXPLANATION OF THE ASSES SEE THAT ANOTHER 5 ARE OF LAND WAS PURCHASED SUBSEQUENTLY FROM THE SAME O WNERS WHICH COULD BE INCLUDED IN THE CALCULATION OF AREA OF THE PLOT. THE FURTHER OBJECTION OF THE A.O FOR THE DENIAL OF THE CLAIM WAS THAT ONE RO W HOUSE IN BUILDING D APPEARED TO BE HAVING AREA IN EXCESS OF 1500 SQ.FT. HE SOUGHT REPORT OF APPROVED VALUER IN THIS REGARD WHO ALSO REPORTED T HAT THE BUILT UP AREA OF ROW HOUSE NO. 11C IN BUILDING D WAS 1673.50 SQ.FT . BESIDES THE ROOF TERRACE OF 442.92 SQ.FT. THE A.O. ALSO ALLEGED THA T THE ASSESSEE HAD MODIFIED/MERGED 4 FLATS WHEREAS THE APPROVED PLAN F ROM LOCAL AUTHORITY SHOULD NOT BE SUBJECTED TO SUCH MODIFICATION. 17. SIMILAR ARGUMENTS HAVE BEEN ADOPTED BY THE PART IES AS ADVANCED BY THEM HEREINABOVE DURING THE COURSE OF HEARING OF ITA NO. 629/PN/2009 ON SIMILAR ISSUES. 18. WE HAVE ALREADY DISCUSSED THE ISSUES OF THE LAN D AREA AND AREA OF THE ROW HOUSE HEREINABOVE IN ITA NO. 629/PN/2009. THOUGH WE HAVE ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 18 ALLOWED THE APPEAL ITA NO. 629/PN/2009 IN FAVOUR OF THE ASSESSEE ALSO ON THE BASIS THAT THE ISSUES RAISED THEREIN FOR E XAMINING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IB WERE DEBA TABLE HENCE ONLY BECAUSE LD CIT WAS HAVING DIFFERENT VIEW ON THOSE I SSUES THE PROVISIONS LAID DOWN U/S. 263 CANNOT BE INVOKED TO TREAT THE A SSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E STILL WE HAVE OBSERVED THAT THE AREA OF 5 ARE LAND PURCHASED BY T HE ASSESSEE SUBSEQUENTLY VIDE AN AGREEMENT AND NOT SHOWN IN THE APPROVED PLAN FOR THE PURPOSE OF PROVIDING ROAD TO THE SOCIETY CAN BE ADDED IN THE AREA OF LAND WHILE CALCULATING THE MINIMUM PRESCRIBED AREA OF 1 ACRE REQUIRED FOR CLAIMING DEDUCTION U/S. 80 IB (10) OF THE ACT. IN THIS REGARD WE HAVE REFERRED SOME DECISIONS CITED BY THE LD. A.R. FOL LOWING THE SAME WE HOLD HERE THAT THE AREA OF LAND WAS FULFILLING THE CONDITION OF THE MINIMUM PRESCRIBED AREA LIMIT OF 1 ACRE. 19. REGARDING THE EXCESS AREA IN ROW HOUSE NO. 11C IN BUILDING D THE LD. A.R. IN ADDITION TO THE ABOVE SUBMISSION MADE I N ITA NO. 629/PN/2009 DREW OUR ATTENTION TO PAGE NO. 14 OF TH E PAPER BOOK I.E. LAY OUT PLAN OF THE ROW HOUSE SHOWING THAT THE APPROVE D VALUER SHRI D.K. KULKARNI HAD WRONGLY INCLUDED THE COMMON AREA OF ST ORE/GYM ROOM WHILE COMPUTING THE TOTAL AREA OF ROW HOUSE AND IF THE A REA OF THE SAID STORE ROOM/GYM ROOM (39.60 X 52.93 SQ.FT.) IS EXCLUDED T HEN THE TOTAL AREA OF THE ROW HOUSE IS WELL WITHIN 1500 SQ.FT. THE LD. A .R. ALSO FURNISHED A PHOTOGRAPH TO SUPPORT HIS CONTENTION THAT THE GYM. ROOM HAD BASEMENT FLOOR LEVEL IN D BUILDING IS MEANT FOR COMMON USE OF THE RESIDENTS OF THE SOCIETY AND ACCESS TO IT IS PROVIDED FROM OUTSIDE N OT UNDER THE DOMAIN OF THE OWNER OF THE ROW HOUSE. ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 19 20. ON VERIFICATION OF THE PLAN OF THE ROW HOUSE MA DE AVAILABLE AT PAGE NO. 14 OF THE PAPER BOOK WE FIND THAT IF THE AREA OF STORE ROOM/GYM. AS CLAIMED BY THE APPROVED VALUER IS REALLY EXCLUDED FROM THE TOTAL AREA OF THE ROW HOUSE IT DOES NOT EXCEED 1500 SQ.FT. LIMIT . THE APPROVED VALUER THOUGH HAS MENTIONED IN HIS REPORT REFERRED IN PARA 3.2 OF THE FIRST APPELLATE ORDER THAT THE AREA OF GYM. ROOM AT BASEM ENT FLOOR LEVEL IN D BUILDING WAS NOT INCLUDED IN THE BUILT UP AREA OF 1 673.50 SQ.FT. BUT IN REALITY WE FIND THAT THE VALUER HAS NOT EXCLUDED THE AREA OF GYM. ROOM/STORE ROOM. WE THUS DO NOT FIND SUBSTANCE IN THIS GROUND ON THE BASIS OF WHICH THE A.O HAD DENIED THE CLAIMED DEDU CTION. THE FURTHER GROUND ON THE BASIS OF WHICH A.O HAS DENIED THE DED UCTION IS THE ALLEGED MERGER OF 4 FLATS DEVIATING FROM APPROVED PLANS. W E HAVE DEALT WITH THIS ISSUE HEREINABOVE IN ITA NO. 629/PN/2009 AND HELD T HAT MERGER OF FLATS AFTER PURCHASE BY THE OWNERS THEREOF TO MAKE IT INT O A LARGER FLAT FOR THEIR OWN CONVENIENCE WILL NOT BE A CAUSE FOR DENIAL OF C LAIMED DEDUCTION ESPECIALLY WHEN AN UNDISPUTED FACT THAT EACH OF THO SE FLATS DOES NOT EXCEED THE PRESCRIBED AREA LIMIT 1500 SQ.FT. UNDE R THESE CIRCUMSTANCES WE FIND THAT THE AUTHORITIES BELOW WERE NOT JUSTIFI ED IN DENYING AND UPHOLDING THE CLAIMED DEDUCTION U/S. 80IB(10) IN QU ESTION TO THE ASSESSEE ON THE ABOVE DISCUSSED UNTENABLE BASIS. W E THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW DIRECT THE A. O TO ALLOW THE CLAIMED DEDUCTION AT RS. 98 63 499/- U/S. 80IB(10) OF THE A CT. THE GROUND IS ACCORDINGLY ALLOWED. 21. IN RESULT APPEAL IS ALLOWED. ITA NO. 625/PN/2010 ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 20 22. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORD ER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER THE LD CI T(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION OF RS. 12 1 0 775/- CLAIMED BY THE ASSESSEE U/S. 80IB(10) OF THE ACT. 23. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW WE FIND THAT THE AUTHORITIES BELOW HAVE DENIED THE CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT TO THE ASSESSEE ON SIMILAR BASI S THAT THE AREA OF THE LAND IS BELOW 1 ACRE AND THE AREA OF ROW HOUSE NO. 11C IN BUILDING D IS MORE THAN 1500 SQ.FT. 24. THE PARTIES HAVE ADOPTED THE SAME ARGUMENTS AS ADVANCED BY THEM IN ABOVE APPEALS. ON AN IDENTICAL ISSUE IN A BOVE APPEALS WE HAVE DECIDED THE ISSUE REGARDING FULFILLMENT OF AREA OF LAND AS 1 ACRE AND THE AREA OF ROW HOUSE NO. 11C IN BUILDING D AND HELD THAT THE ADDITION OF FURTHER AREA OF 5 ARE LAND PURCHASED BY THE AS SESSEE SUBSEQUENTLY FOR PROVIDING ROAD TO THE SOCIETY IS FULFILLING THE 1 A CRE AREA REQUIREMENT AND THE AREA OF THE ROW HOUSE NO. 11C IN BUILDING D IS WITHIN THE PRESCRIBED MAXIMUM AREA LIMIT OF 1500 SQ.FT. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION U/S. 80 IB(10) TO THE ASSESSEE AS THE GRO UNDS ON THE BASIS OF WHICH THE AUTHORITIES BELOW HAVE DENIED THE CLAIME D DEDUCTION ARE NOT SUSTAINABLE. THE GROUNDS INVOLVING THE ISSUE ARE A CCORDINGLY DECIDED AND ALLOWED IN FAVOUR OF THE ASSESSEE. 25. IN RESULT APPEAL IS ALLOWED. 26. IN SUMMARY ALL THE APPEALS ARE ALLOWED. ITA . NOS 629/PN/2009 625/PN/2011 & 159/PN/2010 M/S. BABA PROMOTERS & DEVELOPERS. A.Y. 2004-05 TO 2006-07 PAGE OF 21 21 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29TH FEBRUARY 2012. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 29TH FEBRUARY 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT- AURANGABAD 4. THE CIT(A)- AURANGABAD 5. THE D.R. A BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE