Case Law Details
SUMMARY OF CASE LAW
The concept of housing project does not mean that there should be the group of the buildings and only then same is called as “Housing Project”
RELEVANT PARAGRAPH
10. The first issue is to be decided before us is the interpretation of the phrase “Housing Project” which is contemplated in Section 80IB (10) of the Act. There is no definition of the term `Housing Project’ given either in the Section 80IB or in the Act itself. But so far as Section 80HHBA which provides for a deduction in respect of profits and gains derived from the execution of the Housing Project which are awarded on the basis of global tender and also aided by the World Bank, deduction is allowed as prescribed in Sub-section (1) to Section 80HHBA. In the said Section, the Legislature had defined the expression “Housing Project” by way of explanation to mean that project for the construction of any building, road, bridge or other structure in any part of India. The concept of Housing Project in Section 80HHBA is much more wider, but so far as Section 80 IB(10) is concerned, as there is no definition of expression “Housing Project”, then definition given in Section 80HHBA will be internal aid to decide whether Housing Project means the project of the group of the buildings or whether it can be the project of a single building also. As per the definition of Housing Project in Section 80HHBA, Housing Project includes construction of “any building”. If the Legislature was desiring to define nature of the Housing Project for the purpose of sec. 80IB(10), then either the specific definition would have been incorporated in the Act or it would have been explained by way of Explanation to Section 80 IB.
11. In our opinion, the concept of Housing Project does not mean that there should be the group of the buildings and only then same is called aS “Housing Project In the present case, it is seen that initially, as per the documents on record i.e. copy of CC, the assessee had planned for four independent buildings, but, so far as Wing `E’ is concerned, that was only planned when the status of the surplus land was converted as `Within Ceiling Limit’ (WCL) and the assessee could get additional FSI for launching Wing `E’. Another Co-ordinate Bench of the Tribunal has considered somewhat identical situation in the case of Saroj Sales Corporation (supra) and said decision of the co-ordinate bench of the Tribunal is more relevant also to decide issue before us. As in the said case, the different units of the building were completed step by step and it was the case of the Department that all the buildings were comprise of one project only. Rejecting the contention of the Revenue, it is held as under:
“12. There is no dispute that the housing project in the case of `Nisarg’ is approved before 31st March, 2005. The substituted section extended the benefit of 100 per cent deduction of income derived from housing projects approved up to 31st March, 2007 but simultaneously imposed a restriction on the area of shopping complex that is permissible to be included in the housing project by inserting the sub-s. 80-IB(10)(d) w.e.f. 1st April, 2005. The legislature nowhere provided the definition of a housing project either in the section or anywhere in the IT Act. Is it open for the Revenue to consider all the housing activities undertaken by the assessee as one project or different projects ? The Cocise Oxford Dictionary (9th Edition) defines a `project’ as “a plan, a scheme, a planned undertaking, a usually long-term task undertaken by a student to be submitted for assessment. The commencement certificates in respect of building No.1 were received by the principal developer on 7th March, 2001 and 30th March, 2001 respectively. But the commencement certificates for various wings were approved by the municipality as per the details given below :
Wing-C on 10.9.2001
Wing-E on 11.9.2001
Wings-C,D-E, F & G on 27.3.2002
Wings-F & G on 7.5.2002
Wing-F1 on 23.9.2003
All the above wings are part of `Nisarg’ block and independent satisfies the necessary approval of a housing project. It really makes no difference whether M/s. Conwood Agencies had applied for or the assessee had applied to the municipal corporation to make any difference in deciding the assessee’s claim for deduction under s. 80-IB(10) of the Act. It must be appreciated that the main developer was M/s Conwood Agencies (P) Ltd. The sanction plan have only approved the construction of the dwelling units of less than 1,000 sq.ft. in all the wings of the said project. There is no dispute that all the flats in these wings contain the eligible units. It is not open to the Revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who are undertaken the low housing projects will get defeated. `Breezy ” project which was meant for higher strata of the society. The assessee has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the test laid down under s. 80-IB(10) of the Act. In our view, combining these two projects into one will lead to a result which manifestly will be unjust and absurd and defeat the very provisions of deduction sections. Unless there is a clear intention of the legislature the Revenue cannot be permitted to do so. After all the assessee have obtained different commencement certificates and started on different periods of time. They are separate by time, space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue, in our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion. In identical situation in the case of Bengal Ambuja Housing Development Ltd (supra), the assessee was having a housing project which consisted of 261 residential units and the individual flat size varied between 800 sq.ft. to 3,000 sq.ft. and the total built-up area of that housing project was 3,46,599 sq.ft. The said project contained 150 residential units with a built-up area of individual unit of less than 1,500 sq.ft., the assessee’s claim for deduction under s. 80-IB(10) was not entertained. The Tribunal after appreciating the clear provisions of s. 80-IB(10), which does not speak regarding such denial of deduction in case of profit from a housing complex containing both the small and large and large residential units and since the assessee has only claimed deduction on account of smaller qualifying units by fulfilling all the conditions as laid down under s.80-IB(10), the denial of claim by the assessee was held to be based on narrow and restricted interpretation of the provisions of cl. (c ) of s. 80-IB(10) of the Act. They drew support from the decision of the Hon’ble Supreme Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT(1992) 104 CTR (SC) 116 : (1992) 196 ITR 188 (SC), wherein it was held that provisions should be interpreted liberally and since the present case also, the assessee’s claim should be accepted. This order of the Tribunal was taken up in appeal before the Kolkata High Court, the Kolkata High Court dismissed the appeal arising from this order. The ratio laid down by this Tribunal order, in our view, based on the same set of facts as exist in our present case are equally applicable and the assessee’s claim for deduction of s. 80-IB(10) in respect of the eligible units of this housing project is therefore, deserves to be accepted.”
In the said case, the Tribunal has considered the decision of the another Co-ordinate Bench of Tribunal at Kolkatta in the case of Bengal Ambuja Housing Development Ltd., (supra).
12. In the present case, Building `E’ is planned and construction was commenced after 1.10.1998 and in our opinion, Building/Wing `E’ itself is a independent Housing Project as contemplated u/s. 80IB(10) of the Act and it cannot be fastened with earlier buildings i.e. `A’, `B’, `C’ and `D’ which work was commenced in the year 1993. In respect of the argument of the Ld. DR that in view of Expl. 2 , which is newly inserted w.e.f. 1/04/05, as the assessee has commenced construction of building “E” for which permission was originally granted can not be accepted for our elaborate discussion on this issue hereinabove. We therefore reject the same as plan for Building-`E’ was only approved for only once in the year2002. We, therefore, hold that the conclusion drawn by both the authorities that the commencement of Wing `E’ is a continuation of the existing project is erroneous.
13. Now the next objection is in respect of the size of the plot of the land. There is no dispute about the fact that assessee acquired the Development Rights in respect of the plot which was admittedly 2.36 acres on which assessee executed the different building projects. The case of the A.O for rejecting the claim of the assessee is that if the said land is proportionately allocated among different buildings, then area allocated to building `E’ is less than one acre. As per clause (b) to Section 80 IB(10), it is provided that the project should be on a size of plot of land which has the minimum area of one acre. As per the area statement given in the plans, we find that no specific demarcation in respect of the plot of 2.36 acres has been made. It is seen that the surplus land available with the assessee or earlier owner was given the status as `Within Ceiling Limit’ (W.C.L.) and due to change or conversion of the land status, that the assessee was able to plan the project for Building Wing- `E’. The Ld. Counsel brought to our notice, the correspondence made by the Maharashtra Chamber of Housing Industry, Mumbai with the Hon’ble Finance Minister, Government of India, New Delhi, seeking clarification of certain aspects on 10(23G) and Section 80 IB(10). The main issue was in respect of the treatment to be given to the Transfer of Development Rights (TDR) which is purchased by the Developer and used on the existing plot of land or the project. As per the letter dated 4.5.2001, it appears that the CBDT, New Delhi has replied giving the clarification that additional housing project on the existing housing project can qualify for exemption/deduction u/s. 10(23G) and 10 IB (10) provided the correct profit can be ascertained So far as the present case is concerned, we have to take into consideration the entire area of the plot on which all the building projects have been planned i.e. A,B,C,D & E though some of the buildings do not qualify for deduction u/s. 80IB (10) of the Act and admittedly, the same is also not claimed. We, therefore, do not agree with the view taken by the A.O as well as the Learned CIT(A) that the assessee has violated the another condition in respect of the size of the plot.
14. Now we go to the third objection of the A.O for not allowing the deduction to the assessee i.e. in respect of the alleged excess area which was found during the physical visit by the survey party to Wing `E’. As per the facts noted by the A.O, Flats 138 and 153 were merged together and hence, the total area of those two plots became 1466 Sq.ft., in short it was more than 1000 Sq.ft. The A.O. has relied on the statements of the site supervisor Mr. Viren Gosar as well as Mr. Prakash L. Sapre, architect of the assessee company. The A.O has reproduced the questions and answers on page No. 3 of the assessment order. Now we have to deal with the statements of both these persons first. It is pertinent to note here that no where the A.O has recorded the statements of any of the partner to clarify this issue. So far as the site supervisor is concerned, it appears that there is a direct question put by the A.O. being question No. 5 and Question No. 6 in respect of the alleged merger of two flats i.e. 138 and 153 on the Ground Floor in `E’ Wing. The site supervisor replied that the said two flats were combined for the convenience of the Jain Sadhus for religious purpose. In respect of the provision for kitchen, it is replied that there is no kitchen in the said flat i.e. Flat No. 138 and 153 but there is a provision of one kitchen in the said flat. So far as the statement of Mr. Prakash Sapre, the architect is concerned, he has replied that he was not aware of the merger of the two flats at ground floor in `E’ Wing and no amended plan was submitted to BMC for merger. In our opinion, the conclusion drawn by the A.O based on the submission of these two persons is totally erroneous for the following reasons :
i) Nothing has been mentioned by the A.O that as per the approved plans, the total area of two alleged merger of the flats is more than 1000 sq.ft. i.e 1468 sq. ft.
ii) The site supervisor had stated that for the purpose of some religious function of the Jain Sadhus, it was kept open.
Moreover, as per the explanation of the assessee, as both the flats were on the ground floor, the said flats were used for storing the material and this is the normal use of the ground floor made by the builders. It is not the case of the A.O that any agreement was found selling both flats showing the area of 1466 sq.ft. on the date of the survey u/s. 133A. In our opinion, the third reason given by the A.O for rejecting the claim is also erroneous. In the light of our above findings and discussions, we are of the opinion that Wing `E’ is a separate Housing Project within the meaning of Section 80 IB (10) of the I.T. Act and as the said Housing Project is commenced after 1.10.1998 and also completed before 31.3.2005, the assessee is eligible to get the deduction u/s. 80 IB (10).
15. We further hold that there is no violation in respect of size of the plot on which building `E’ is constructed. As we have to take into consideration the total size of the plot under development, though part of the projects do not qualify for deduction. We further hold that the conclusion of the A.O in respect of alleged violation of the area of the flats i.e. flat No. 138 and 153 is also baseless and without merit. We, therefore, hold that assessee is entitled for deduction u/s. 80 IB (10) of the Act as all fundamental conditions are fulfilled by the Assessee. We reverse the order of the CIT(A) and direct the A.O. to grant the deduction to the assessee u/s. 80 IB (10) of the Act.
Please help on below mentioned query:
Is the case of Vandana Properties v ACIT, appeal no. ITA NO. 1253/MUM/2007, which was decided on April 29, 2009 by ITAT, Mumbai Bench was further appealed in any other court?