Dy. CIT, Central Circle 1(2), Pune v. M/s. Mangal Murti Developers, Pune

ITA 888/PUN/2013 | 2006-2007
Pronouncement Date: 28-11-2014 | Result: Dismissed

Appeal Details

RSA Number 88824514 RSA 2013
Assessee PAN AAAAM5439N
Bench Pune
Appeal Number ITA 888/PUN/2013
Duration Of Justice 1 year(s) 7 month(s) 6 day(s)
Appellant Dy. CIT, Central Circle 1(2), Pune
Respondent M/s. Mangal Murti Developers, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-11-2014
Date Of Final Hearing 17-11-2014
Next Hearing Date 17-11-2014
Assessment Year 2006-2007
Appeal Filed On 22-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NOS.888 TO 890/PN/2013 (ASSESSMENT YEARS: 2006-07 TO 2008-09) THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) PUNE . APPELLANT VS. M/S. MANGAL MURTI DEVELOPERS SAI NISARG PARK OFFICE NO.9 UMED BHAVAN CANARA BANK BUILDING PIMPRI PUNE 411018 PAN: AAAAM5439N . RESPONDENT APPELLANT BY : SHRI B.C. MALAKAR RESPONDENT BY : SHRI V.L. JAIN DATE OF HEARING : 19-11-2014 DATE OF PRONOUNCEMENT : 28-11-2014 ORDER PER SUSHMA CHOWLA JM: THESE THREE APPEALS FILED BY THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-CENTRAL PUNE DATED 08.01.201 3 RELATING TO ASSESSMENT YEARS 2006-07 2007-08 AND 2008-09 PASSED UNDER SECTION 153C R.W.S. 143(3) OF THE INCOME TAX ACT. 2. SIMILAR GROUNDS OF APPEAL WERE RAISED IN ALL THE YEARS W HICH READ AS UNDER: 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE AC T IN RESPECT OF THE ASSESSEE'S PROJECT 'SAI NISARG PARK' IGNORING THE FACT THAT ROW HOUSES IN THE PROJECT EXCEEDED THE PR ESCRIBED BUILT UP AREA OF 1500 SQ. FT. AND THEREBY VIOLATED ON E OF THE CONDITIONS FOR CLAIM OF DEDUCTION U/S. 80IB(10). ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 2 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB(10) OF THE AC T IN RESPECT OF THE ASSESSEE'S PROJECT 'SAI NISARG PARK' IGNORING THE FACT THAT SOME OF THE FLATS IN THE PROJECT EXCEEDED THE PRESCRIBED BUILT UP AREA OF 1500 SQ. FT. AND THEREBY VIOLATED ONE OF THE CONDITIONS FOR CLAIM OF DEDUCTION U/S. 80IB(10). 03. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 04. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ONLY ISSUE RAISED IN ALL THE APPEALS IS AGAINST THE DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 4. ALL THE APPEALS RELATING TO SAME ASSESSEE ON SIMILAR ISS UE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN ALL THE YEARS UND ER APPEAL ARE IDENTICAL. HOWEVER WE MAKE A REFERENCE TO THE FACTS IN IT A NO.888/PN/2013 ON THE ISSUE. 5. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZUR E OPERATION UNDER SECTION 132 OF THE ACT WERE CONDUCTED AT THE RE SIDENTIAL PREMISES RELATED TO WADHWANI GROUP OF CASES ON 13.08.2008. SIMULTAN EOUSLY SURVEYS UNDER SECTION 133A OF THE ACT WERE CONDUCTED ON VARIOUS BUSINESS PREMISES OF THE SAID GROUP AS ENLISTED AT PAGE 2 OF THE ASSESSMENT ORDER. THE SAID WADHWANI GROUP OF PIMPRI WAS DEALING IN PURCHASE AND SALE OF LAND DEVELOPMENT OF LAND ETC. FURTH ER THEY WERE ALSO INVOLVED IN CONSTRUCTION OF FLATS / SHOPS AND ITS SALES THEREOF. THE ASSESSEE AOP WAS ONE OF THE CONCERNS OF THE WADHVANI G ROUP. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153C OF THE A CT AND IN RESPONSE TO THE SAME THE ASSESSEE FILED RETURN OF INCOM E DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF TH E ACT ON THE PROJECT SAI NISARG PARK. THE ASSESSING OFFICER DURING T HE COURSE OF ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 3 ASSESSMENT PROCEEDINGS ASKED SHRI HARSHAD RUPAREL ARCH ITECT TO VISIT THE PROJECT AND SUBMIT REPORT IN VIEW OF THE PROVISIONS O F SECTION 80IB(10) OF THE ACT. SHRI HARSHAD RUPAREL SUBMITTED HIS REPORT VIDE LETTER DATED 13.10.2010 GIVING THE DATES OF COMMENCEMENT OF THE PROJECT AND THE DETAILS OF THE AREA OF PLOT BUILT UP AREA OF RESIDE NTIAL UNITS COMMERCIAL UNITS AND ALSO THE DATE OF COMPLETION OF PROJEC T AS TABULATED UNDER PARA 6.2 OF THE ASSESSMENT ORDER. THE SAID REPO RT WAS CONFRONTED TO THE ASSESSEE AND WAS ASKED TO EXPLAIN AS TO WHY T HE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT SHOULD BE ALLOWED TO IT. IN REP LY THE ASSESSEE SUBMITTED A LETTER DATED 03.12.2010 WHICH WAS REPRODUCED UNDER PARA 6.3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THE PROJECT WAS COMMENCED ON 01.09.2003 AND HENCE THE CONDITION ENLIS TED IN SECTION 80IB(10)(A) OF THE ACT WAS FULFILLED. FURTHER THE AREA OF THE PLOT / LAND WAS IN EXCESS OF ONE ACRE AND HENCE THE CONDITION L AID DOWN IN SECTION 80IB(10)(B) OF THE ACT WAS ALSO FULFILLED. THE NEXT CO NDITION LAID DOWN IN SECTION 80IB(10)(C) OF THE ACT WAS THAT THE BUILT U P AREA OF EACH OF THE RESIDENTIAL UNITS SHOULD HAVE MAXIMUM AREA OF 1500 S Q.FT. AGAINST WHICH THE ASSESSING OFFICER VIDE PARAS 7 TO 7.5 CONSIDERED THE VARIOUS ASPECTS WHICH WOULD BE REFERRED TO HEREINAFTER. THE LAST CONDITION WAS THAT THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIA L SHOPS INCLUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED 5% OF THE AGGR EGATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER WAS LESS WAS ALSO FULFILLED BY THE ASSESSEE AS THE COMMERCIAL AREA OF THE PROJ ECT WAS ONLY 1841.91 SQ.FT. 6. THE ASSESSING OFFICER NOTED THAT THE ROW HOUSES NOS.R -1 TO R-8 WERE WITH TERRACE WHICH WAS FOR EXCLUSIVE USE OF THE RELAT IVE FLAT OWNERS. THE ASSESSING OFFICER WAS THUS OF THE VIEW THAT THE PROJE CT TERRACE BECOMES THE PART OF BUILT UP AREA OF RESPECTIVE FLATS AND THEREFORE THE ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 4 SAME HAD TO BE TAKEN FOR WORKING OUT THE BUILT UP AREA OF THE RESPECTIVE FLATS AND AS SUCH THE BUILT UP AREA OF ROW HOUSES NO.R -1 TO R-8 WAS 1579.94 SQ.FT. EACH AND BEING IN EXCESS OF THE LIMITS PRESCR IBED IN THE CONDITIONS AS LAID DOWN IN SECTION 80IB(10) OF THE ACT DID N OT FULFILL THE SAID CONDITIONS. HENCE THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE DEDUCTION UNDER S ECTION 80IB(10) OF THE ACT. 7. THE NEXT OBJECTION RAISED BY THE ASSESSING OFFICER WAS IN RESPECT OF THE FLATS SOLD BY THE ASSESSEE. AS PER THE REPORT OF TH E ARCHITECT FLAT NOS.203 AND 204 WERE OCCUPIED BY SHRI KASBEKAR FLAT NOS .303 AND 304 WERE OCCUPIED BY MR. AJAY DOGRA AND FLAT NOS.401 AND 40 4 WERE OCCUPIED BY MR. A.B. MORE. THE SAID FLATS WERE INTERNALLY CO NNECTED AND HAD BEEN COMBINED INTO ONE LARGE FLAT. THE ASSESSEE IN HIS REPLY SUBMITTED THAT TWO UNITS I.E. FLAT NOS.203 AND 204 WERE SO LD TO TWO DIFFERENT PERSONS AND EVEN ON COMBINATION OF THE TWO FLATS THE AREA WAS LESS THAN 1500 SQ. FT. FURTHER THE FLAT NOS.303 & 304 AN D 401 & 404 ON COMBINATION HAD AREA LESS THAN 1500 SQ. FT. AND HENCE THE SAID CONDITION WAS NOT VIOLATED. THE ASSESSING OFFICER STATES TH AT THE EVIDENCES IN THIS REGARD WERE FURNISHED. HOWEVER THE INTE NTION OF THE LEGISLATURE WAS THAT EACH AND EVERY FAMILY SHOULD HAVE T HE HOUSE SEEMS TO BE DEFEATED BY SELLING TWO FLATS TO A SINGLE INDIVIDUAL. IN VIEW OF THE SAME ALSO THE ASSESSEE WAS HELD TO BE NOT ELIGIBLE FOR DED UCTION UNDER SECTION 80IB(10) OF THE ACT. 8. THE CIT(A) NOTED THAT THE PROJECT WAS APPROVED ON 01.09.2003 I.E. PRIOR TO 01.04.2005. BY PLACING RELIANCE ON THE RATIO LAID DO WN BY THE PUNE BENCH OF THE TRIBUNAL IN D.S. KULKARNI DEVELOPERS LTD. V S. ACIT IN ITA NO.1428/PN/2008 THE CIT(A) OBSERVED THAT THE DEFINITIO N OF BUILT ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 5 UP AREA PROVIDED UNDER SECTION 80IB(10) OF THE ACT WOULD NOT APPLY TO THE ASSESSEES PROJECT. FURTHER THE BALCONY AND TERR ACE COULD NOT BE INCLUDED IN THE DEFINITION OF BUILT UP AREA FOR PROJECTS APPR OVED BEFORE 01.04.2005 AS HELD BY THE PUNE BENCH OF THE TRIBUNAL IN D.S . KULKARNI DEVELOPERS LTD. VS. ACIT (SUPRA). FURTHER RELIANCE WAS P LACED ON THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN CI T VS. ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. REPORTED IN 78 D TR 198 (KAR) IN RESPECT OF THE OTHER OBJECTION OF THE ASSESSEE AS TO T WO ADJACENT FLATS IN SAME BUILDING SOLD TO SAME PERSON. THE CIT(A) APPROVED TH E PLEA OF THE ASSESSEE THAT THE NECESSARY AMENDMENT I.E. CLAUSE (E) TO SECTION 80IB(10) OF THE ACT WAS BROUGHT INTO THE STATUTE ONLY W.E.F. 01.04.2 010 AND HAD NO APPLICATION TO THE YEAR UNDER APPEAL. FURTHER EVEN IN RESPECT OF THE SAID FLATS THE FINDING WAS THAT THE COMBINED AREA OF THE S AID ADJACENT FLATS WORKS OUT LESS THAN 1500 SQ.FT. WHEN BALCONY AND PR OJECTIONS WERE EXCLUDED FROM THE DEFINITION OF BUILT UP AREA. IN VIEW THEREO F THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. WITH REGARD TO THE ALTERNATE CLAIM O F THE PRO-RATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE ELIGIBLE PORTION OF THE VARIOUS PROJECTS IN RESPECT OF WHICH THE SAID DEDUCTION W AS CLAIMED THE CIT(A) HELD THAT THE ISSUE IS ONLY OF ACADEMIC SIGNIFICANCE SIN CE FULL DEDUCTION HAD BEEN ALLOWED UNDER SECTION 80IB(10) OF THE ACT. 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIAN CE ON THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT IN RES PECT OF THE TWO UNITS GIVEN TO ONE PERSON THE VERY PURPOSE OF SECTION 8 0IB(10) OF THE ACT WOULD BE DEFEATED. RELIANCE WAS PLACED ON THE RATIO LAID DO WN BY THE SPECIAL BENCH OF THE TRIBUNAL IN SANGVI & DOSHI ENTERPRISES VS. ITO (CHENNAI) (TM) 141 TTJ 1. ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 6 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE POINTED OUT THAT THERE WERE TWO ISSUES RAISED IN THE PRESENT APPEA L AND THE FIRST ISSUE WAS WHETHER THE TERRACE AREAS OF THE ROW HOUSES COULD BE INCLUDED TO WORK OUT THE AREA OF EACH ROW HOUSE. IT WAS POINTE D OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE PROJECT WAS APPROVED PRIOR TO 01.04.2005 AND THE PROVISIONS OF SECTION 80IB(14)(A) OF THE ACT WERE INTRODUCED W.E.F. 01.04.2005. THE LEARNED AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT UNDER THE PRE-AMENDED PROVISIONS THE BUILT UP AREA OF FLAT DOES NOT INCLUDE THE TE RRACE. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE PUNE BENCH OF T HE TRIBUNAL IN REGENCY MAHAVIR CONSTRUCTION VS. ADDL.CIT IN ITA NO.1309/P N/2009. FURTHER IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTA TIVE THAT THE BUILDING PLANS WERE FIRST APPROVED PRIOR TO 01.04.2005 A ND EVEN WHERE APPROVAL WAS TAKEN AFTER 01.04.2005 THE TERRACE WAS NOT TO BE INCLUDED AS PART OF BUILT UP AREA AS HELD BY THE PUNE BE NCH OF THE TRIBUNAL IN N.T. WADHWANI VS. DCIT IN ITA NOS.18 19 AND 20/ PN/2013. IN RESPECT OF SALE OF FLATS OUR ATTENTION WAS DRAWN TO TH E ASSESSMENT ORDER AND THE OBSERVATIONS OF ASSESSING OFFICER IN PARAS 7 .2 AND 7.3 IN THIS REGARD. FURTHER OUR ATTENTION WAS DRAWN TO PARA 7.4 OF THE ASSESSMENT ORDER AND IT WAS POINTED OUT THAT FLAT NOS.20 3 AND 204 HAVING BEEN SOLD TO TWO DIFFERENT PERSONS HAS BEEN ACCEP TED BY THE ASSESSING OFFICER AND THE DEDUCTION HAS NOT BEEN ALLOWED SIMPLY BECAU SE THE TWO FLATS WERE SOLD TO ONE SINGLE INDIVIDUAL. IT WAS POIN TED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT IN RESPECT OF FLAT NOS.303 & 304 AND 401 & 404 THE COMBINED AREA OF THE FLATS WAS LESS T HAN 1500 SQ.FT. AND HENCE WITHIN THE PARA MATERS PRESCRIBED IN THE RELEV ANT SECTION. IT WAS ALSO POINTED OUT BY THE LEARNED AUTHORIZED REPRESEN TATIVE THAT CLAUSE (E) TO SECTION 80IB(10) OF THE ACT WAS BROUGHT IN B Y FINANCE (NO.2) ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 7 ACT 2009 W.E.F. 01.04.2010 AND THE SAID ACT WAS NOT APP LICABLE TO THE EARLIER PROJECTS. RELIANCE IN THIS REGARD WAS PLACED ON TH E RATIO LAID DOWN BY THIRD MEMBER IN SANGHVI & DOSHI ENTERPRISES VS . ITO (CHENNAI) (TM) 141 TTJ 1. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SHOWN PROFITS FROM THE PROJECT NAMED SAI NISARG PARK AGAINST WHICH THE ASSES SEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE AS SESSING OFFICER HAD DENIED THE SAID DEDUCTION CLAIMED UNDER SECTION 80IB(1 0) OF THE ACT HOLDING THE ASSESSEE NOT TO HAVE FULFILLED THE CONDITIONS PRE SCRIBED UNDER THE SAID SECTION. THE CIT(A) HOWEVER HAS ALLOWED THE CLAIM OF THE ASSESSEE AGAINST WHICH THE REVENUE HAS FILED THE PRESENT APPEAL. THE PROJECT FOR THE CONSTRUCTION OF THE SAID BUILDING WAS FIRST APPROVED ON 01.09.2003 AND REVISED APPROVALS WERE RECEIVED ON 29.07.2 005 AND 15.02.2007 RESPECTIVELY. IN VIEW OF THE FIRST APPROVAL FOR T HE BUILDING PLANS BEING GIVEN ON 01.09.2003 THE PRE-AMENDED PROVISIONS OF SECTION 80IB(10) OF THE ACT ARE TO BE APPLIED WHICH ARE APPLICAB LE IN CASES WHERE THE HOUSING PROJECT HAD BEEN APPROVED ON OR BEFORE 01 .04.2005. THE TOTAL AREA OF THE PLOT OF LAND WAS 1.493 ACRES I.E. IT WAS AB OVE THE LIMIT OF ONE ACRE AND HENCE THE CONDITION LAID DOWN IN CLAUSE (B) OF SECTION 80IB(10) OF THE ACT WAS FULFILLED. FURTHER AS PER EXPLANATION UNDER CLAUSE (A) TO SECTION 80IB(10) OF THE ACT WHERE MORE THAN ONE APPR OVAL IN RESPECT OF HOUSING PROJECT HAD BEEN OBTAINED THEN SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLANS OF SUCH HOUSING PROJECT WERE FIRST APPROVED BY THE LOCAL AUTHORITY. IN VIEW THEREOF IN THE FACTS OF PRESENT CASE W HERE THE FIRST APPROVAL WAS GRANTED BY THE AUTHORITIES FOR THE DEVELOP MENT OF THE PROJECT ON 01.07.2003 THE SAID PROJECT SHALL BE DEEMED T O HAVE BEEN ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 8 APPROVED ON 01.07.2003 I.E. PRIOR TO THE AMENDMENT COMING INTO EFFECT FROM 01.04.2005. 12. THE THIRD CONDITION TO BE FULFILLED FOR AN ENTITY TO ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AS PE R CLAUSE (C) OF SECTION 80IB(10) OF THE ACT IS THAT EACH OF THE RESIDENTIAL UNITS SHOULD HAVE MAXIMUM BUILT UP AREA OF 1500 SQ.FT. THE ASSESSEE CLAIMS THAT IN THE SAID PROJECT EACH OF THE UNIT CONSTRUCTED BY IT WAS HAVING BUILT UP AREA OF LESS THAN 1500 SQ.FT. HOWEVER THE CASE OF THE AS SESSING OFFICER WAS THAT THE BUILT UP AREA DEFINED BY SECTION 80IB(14)(A) O F THE ACT WHICH PROVIDED THAT INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOO R LEVEL INCLUDED THE PROJECTIONS AND BALCONIES IS INCREASED BY THIC KNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH THE RESIDENTIAL UNITS. THE ASSESSEE HAD CONSTRUCTED ROW HOUSES I.E. UNIT NOS.R-1 TO R-8 WHICH HAD TERRACES WHICH WERE EXCLUSIVELY USED BY THE R ELATIVE FLAT OWNERS. AS PER THE ASSESSING OFFICER THE SAID PROJECTED TERRACE BECOMES PART OF THE BUILT UP AREA OF THE RESPECTIVE FLATS THOUGH THE BUILT UP ARE A OF EACH UNIT WAS 1454.96 BUT THE PROJECTED TERRACE WAS O F 127.98 SQ.FT. AND HENCE THE TOTAL BUILT UP AREA OF 1579.94 SQ. FT. WAS EXCEE DING THE LIMIT OF 1500 SQ.FT. HENCE THE ASSESSEE WAS HELD TO BE NOT ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THE SAID ROW HOUSES. 13. THE FINANCE ACT (NO.2) 2004 EFFECTIVE FROM 01.04.2005 HA S INSERTED THE DEFINITION OF BUILT UP AREA IN CLAUSE (A) TO SECTIO N 80IB(14) OF THE ACT. UNDER THE SAID CLAUSE IT IS PROVIDED THAT BUILT U P AREA WOULD INCLUDE THE INNER MEASUREMENTS OF THE RESIDENTIAL UNITS AT THE FLOOR LEVEL INCLUDING THE PROJECTIONS AND BALCONIES. THE SAID PROVISION HAS BEEN INSERTED W.E.F. 01.04.2005 UNDER WHICH PART OF THE PROVISIONS OF SECTION ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 9 80IB(10) OF THE ACT WERE ALSO AMENDED. HOWEVER THE SAID PROVISIONS ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE H OUSING PROJECT UNDER CONSIDERATION WAS APPROVED BY THE LOCAL AUTHORITIE S PRIOR TO 01.04.2005 AND CONSEQUENTLY THE PRE-AMENDED PROVISIONS ARE APPLICABLE UNDER WHICH IT HAD BEEN PROVIDED THAT THE MAXIMUM BUILT U P AREA OF SUCH RESIDENTIAL UNITS SHOULD BE MAXIMUM UP TO 1500 SQ.FT . IN VIEW OF THE PRE-AMENDED PROVISIONS THAT BEFORE THE INSERTION OF C LAUSE (A) TO SECTION 80IB(14) OF THE ACT FOR DETERMINING THE BUILT UP AREA OF THE FLAT THE AREA HAD TO BE CONSIDERED WITHOUT TAKING INTO CONSID ERATION THE AREA OF THE PROJECTIONS OR BALCONIES. CONSEQUENTLY THE AREA OF THE TERRACES ATTACHED TO THE RESPECTIVE FLATS ARE TO BE IGNORED WHILE DETERMINING WHETHER THE BUILT UP AREA OF THE CONSTRUCTED UNITS BY T HE ASSESSEE I.E. THE ROW HOUSES WAS WITHIN THE PERMISSIBLE LIMITS. AS REPORT ED BY THE ASSESSING OFFICER THE BUILT UP AREA OF EACH OF THE ROW HOUS ES WAS LESS THAN 1500 SQ.FT. I.E. ONLY 1454.96 SQ.FT. WITHOUT CONSIDERIN G THE AREA OF TERRACE THE SAID AREA BEING WITHIN THE PERMISSIBLE LIMITS ENT ITLES THE ASSESSEE TO CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 14. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN REGEN CY MAHAVIR CONSTRUCTION VS. ADDL.CIT (SUPRA) HAD LAID DOWN A SIMILAR PRO POSITION HOLDING THAT THE TERRACE AND BALCONIES WERE NOT INCLUDABLE IN THE BUILT UP AREA IN CASE OF PROJECTS WHICH HAD BEEN COMMENCED PRIOR TO 01.04.2005. FURTHER EVEN IN CASE WHERE THE AMENDMENT TO SECTION 8 0IB(14)(A) OF THE ACT IS APPLICABLE I.E. WHERE THE APPROVAL FOR CONSTRUCTION OF THE PROJECT HAD BEEN RECEIVED AFTER 01.04.2005 THE AREA OF TERRACE IS NOT TO BE CONSIDERED AS PART OF BUILT UP AREA AS THERE WAS NO ROO M UNDER SUCH TERRACE EVEN IF THE SAME WAS EXCLUSIVELY AVAILABLE FOR USE OF THE RESPE CTIVE UNIT HOLDER. THE SAID VIEW HAS BEEN LAID DOWN BY THE PU NE BENCH OF THE TRIBUNAL IN N.T. WADHWANI VS. DCIT (SUPRA) WHEREIN IT WAS HELD THAT ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 10 THE INTRODUCTION OF DEFINITION OF BUILT-UP AREA IN SECTION 80 IB(14)(A) OF THE ACT CAME INTO FORCE FROM 01.04.2005 AND THE SAME WILL HAVE RELEVANCE TO THOSE HOUSING PROJECTS WHICH WERE APPROV ED SUBSEQUENT TO 01.04.2005. THE SAID DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS IN TURN OVER RULED THE DECISION OF THE THIRD MEMBER IN SAN GHVI & DOSHI ENTERPRISES VS. ITO (SUPRA) WHEREIN IT WAS HELD THAT THE T ERRACE ADJOINING THE DWELLING UNIT IS TO BE CONSIDERED AS PART OF THE RESIDENTIAL UNIT. ACCORDINGLY WE HOLD THAT THE ASSESSEE IS ENTITLED T O THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THE ROW HOUSES SOLD BY IT. 15. ANOTHER ASPECT RELATING TO THE CLAIM OF DEDUCTION U NDER SECTION 80IB(10) OF THE ACT IS THE AREA OF THE FLATS SOLD BY THE AS SESSEE. THE ASSESSING OFFICER IN VIEW OF THE REPORT OF THE ARCHITECT HA D NOTED THAT FLAT NOS.203 AND 204 WERE OCCUPIED BY ONE PERSON I.E. SHRI KAS BEKAR. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER VIDE WRITTEN SUB MISSIONS WHICH ARE REPRODUCED UNDER PARA 6.3 OF THE ASSESSMENT ORDER IN THIS REGARD WAS THAT THE SAID TWO UNITS WERE SOLD TO TWO DIFFE RENT PERSONS I.E. FLAT NO.203 WAS SOLD TO SHRI KASBEKAR AND FLAT NO.204 WAS S OLD TO MRS.POOJA PULASARIA. THE COPIES OF THE AGREEMENTS OF SAL E WERE FILED BEFORE THE ASSESSING OFFICER. ANOTHER PLEA RAISED BY THE A SSESSEE WAS THAT EVEN ON COMBINATION OF THE TWO FLATS THE TOTAL ARE A WAS LESS THAN 1500 SQ.FT. WHICH WAS APPARENT FROM THE REPORT OF THE AUD ITOR ITSELF. FURTHER IN RESPECT OF THE OTHER TWO FLATS I.E. FLAT NOS.303 AND 304 ALLOTTED TO SHRI AJAY DOGRA THE TOTAL AREA WAS LESS THAN 1500 SQ.FT. AND EVEN FOR FLAT NOS.401 AND 404 THE COMBINED FLAT AREA WAS LESS THAN 1500 SQ.FT. AND THE SAME AS PER THE ASSESSEE EVIDENT FROM TH E REPORT OF THE ARCHITECT. THE CLAIM OF THE ASSESSEE WAS REJECTED BY T HE ASSESSING OFFICER OBSERVING THAT THE INTENTION OF THE LEGISLATURE WAS THAT EACH AND ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 11 EVERY FAMILY HAVING A FLAT EACH WAS DEFEATED WHERE TWO FLAT S WERE SOLD TO A SINGLE INDIVIDUAL. IN THE FIRST INSTANCE THE PROVISION OF H OLDING NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT BY AN INDIVIDUAL HAS BEEN BROUGHT IN BY THE INSERTION OF CLAUSE (E) TO SECT ION 80IB(10) OF THE ACT BY FINANCE ACT (NO.2) 2009 W.E.F. 01.04.2010. THE S AID PROVISION IS NOT APPLICABLE TO THE EARLIER PROJECTS APPROVE D BY THE LOCAL AUTHORITIES. EARLIER CONDITIONS TO BE FULFILLED IN RESPECT OF AR EA OF THE FLAT WERE THAT MAXIMUM BUILT UP AREA SHOULD NOT EXCEED 1500 SQ.FT. WE HOLD THAT THE CLAUSE (E) INSERTED TO SECTION 80IB(10) BY THE F INANCE ACT (NO.2) OF 2009 HAS PROSPECTIVE APPLICATION AS THE SAME IS INSERTE D W.E.F. 01.04.2010 AND THE SAID PROVISIONS ARE NOT TO BE APPLIED T O PROJECTS WHICH HAVE BEEN APPROVED PRIOR TO 01.04.2010. IN THE FAC TS OF THE PRESENT CASE WHERE THE PROJECT HAD BEEN FIRST APPROVE D ON 01.09.2003 THE AMENDED PROVISIONS OF SECTION 80IB(10)(E) OF THE ACT AR E NOT APPLICABLE. FURTHER WHERE THE COMBINED BUILT UP AREA OF TH E TWO FLATS WAS LESS THAN 1500 SQ.FT. THEN THERE IS NO MERIT IN THE DE NIAL OF DEDUCTION UNDER SECTION IN VIEW OF THE PROVISIONS OF CLAUSE (C) TO SECTION 80IB(10) OF THE ACT. IN RESPECT OF FLAT NOS.203 AND 204 THE ASSESSEE HAD SOLD THE UNITS TO TWO DIFFERENT PERSONS AND ITS COMBINED O CCUPATION BY ONE PERSON DOES NOT DISENTITLE THE ASSESSEE TO CLAIM DED UCTION UNDER SECTION 80IB(10) OF THE ACT ESPECIALLY WHERE THE COMBINED AREA OF FLATS WAS LESS THAN 1500 SQ. FT. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THIRD MEMBER IN SANGHVI & DOSHI ENTERPRISE VS. ITO (SUPRA) WHEREIN IT HAS BEEN LAID DOWN THAT THE CLAUSES (E) AND (F) TO SECTION 8 0IB(10) WERE EFFECTIVE FROM 01.04.2010 AND WERE NOT RETROSPECTIVE IN OP ERATION. FURTHER IN ANY CASE IN THE FACTS OF THE CASE BEFORE THIR D MEMBER IN SANGHVI & DOSHI ENTERPRISE VS. ITO (SUPRA) THE TWO FLAT OW NERS COMBINED THE FLATS AFTER PURCHASING THE SAME AND THE ARE A HAD EXCEEDED 1500 SQ. FT. BUT THE THIRD MEMBER HELD THAT THE ASSESSE E WAS ENTITLED TO ITA NOS.888 TO 890/PN/2013 M/S. MANGAL MURTI DEVELOPERS 12 THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN SUCH CASES ALSO. ACCORDINGLY WE ARE IN CONFORMITY OF THE ORDER OF TH E CIT(A) THAT THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTIO N 80IB(10) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN ITA NO.888/PN/2013 ARE THUS DISMISSED. 16. THE FACTS AND ISSUE IN ITA NOS.889 AND 890/PN/2013 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.888/PN/2013 AND OUR D ECISION IN ITA NO.888/PN/2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.889 AND 890/PN/2013. 17. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER 2014. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 28 TH NOVEMBER 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-CENTRAL PUNE; 4) THE CIT-CENTRAL PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. PUNE