M/S. TULSI DEVELOPERS,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 7,, PUNE

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

The three appeals filed by the assessee are emanating out of separate orders of Commissioner of Income Tax (A), Pune-5, Pune dt.31.07.2017 for the assessment years 2006-07 to 2008-09, respectively.

while arguing one appeal would be equally applicable to the other

appeals also and thus, all the three appeals can be heard together.

In view of the aforesaid submissions of both the parties, I, for the

sake of convenience, proceed to dispose of all the three appeals by

a consolidated order but however, proceed with narrating the facts

in ITA No.2490/PUN/2017 for assessment year 2006-07.

are as under :-

Assessee is a partnership firm stated to be engaged in the

business of Promoters, Builders and Developers. Assessee had

claimed deduction u/s 80IB(10) of the Act for its “Gokul Nagari”

Project at Pimple Gurav, Pune. The claim of the assessee for claim

of deduction was denied by the AO mainly for the reason that the

assessee’s housing project was not of one acre of land, which was

the minimum area required in accordance with Section 80IB(10) of

the Act. According to AO, the area was only 4000 sq. mtrs. after

the approved plan of Pimpri Chinchwad Municipal Corporation

(PCMC), whereas in accordance with the prescribed condition of

minimum area of one acre, the area of the land should have been

4046.86 sq. mtrs. AO also rejected the claim of deduction for the

reason that project was with respect to 7 buildings A, B, C, D, E, F

and G and out of which only A, B, C & D buildings were completed

by the stipulated date of 31.03.2008. Aggrieved by the order of AO,

assessee carried the matter before Ld.CIT(A), who confirmed the

order of AO. Thereafter, the matter was carried before the Tribunal.

The Tribunal vide order dt.30.07.2013 in ITA Nos.1394 to

1396/PN/2010 and ITA No.1796/PN/2012 for A.Ys. 2005-06 to

2008-09 remanded the matter back to AO to decide the issue of

deduction u/s 80IB(10) of the Act afresh in view of the directions of

the aforesaid order. Pursuant to the directions of ITAT, AO passed

order giving effect to the order of ITAT u/s 254 of the Act vide order

dt.30.03.2015 wherein he again held that assessee’s contention

that size of the plot to be of more than one acre to be not true. He

thus once again denied the claim of deduction u/s 80IB(10) of the

Act of Rs.19,65,236/-. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who vide order dt.31.07.2017

(in appeal No.PN/CIT(A)-5/Dy.CIT, Cir-7, Pune/238/2015-16)

upheld the order of AO by following her own decision in assessee’s

own case for A.Y. 2005-06 and held as under :

“4.4. I have perused the material on record and the contention of the appellant carefully. The only issue to be decided is whether the AO’s action in holding the plot size to be less than one acre relying on the Valuer’s Report was correct or not. This issue has already been adjudicated by the undersigned by upholding the action of the AO and against the Appellant, in the Appellant's own case in Appeal No PN/CIT (A)-5/Dy.CIT,Cir-7, Pune/237/2015-16 for AY 2005-06 dated 18.11.2016 has held at Para 5.4 and Para 5.5 as under:-

“5.4 I have perused the material on record and the contention of the Appellant carefully. The only issue to be decided is whether the AO’s action in holding the plot size to be less than one acre relying on the Valuer’s Report was correct or not.

The Appellant in its submissions/statement of fact has contended that, the housing project sanctioned by the local Authority is on the plot area of 1 acre and no disallowances are called for.

A perusal of the Valuer's Report clearly indicates that, the Valuer has considered at Para 1.3 the following documents which were submitted:-

1) Commencement Certificate 2) Completion Certificate 3) Layout plan for 2007 and 2012 4) Development Agreement 5) Plot purchase agreement

At column NO.3 the Valuers Report states “80IB(10)b - size of the plot - should be more than 1 Acre i.e., more than 4046.82 sqm.”

At Para 3.1 of the report the Valuer categorically states "As per purchase deed: Shri Velji B. Chothani and others entered in to

Development Agreement Vide No. 7608 dated 17/12/2002 for the area is 1300 sqm + 1300 sqm + 1400 sqm = 4000 sqm for Rs. 46,41,000/- (HUF).

At 3.2 Para of the report the valuer gives a finding of the plot area being 4000 Sqm.

A detailed .perusal of Para 3.3 which is the plot area statement, the Valuer gives finding as under at the first point:-

"Plot Area Statement

At the 2nd and 3rd point of the Para the Valuers states that, "the Assessee claimed that on the same sanctioned plan area actually measured is mentioned as 4077.21 sqm i.e. 1.0075 Acre which is more than one Acre. However on the same sanctioned plan, area under road is as 218.49 sqm deducting the same from actual area of 4077.32 sqm. Net area of plot is 3858.2 sqm i.e. 0.9535 acre, which is less than a acre." He then goes on to elaborate on the road area ;n the sanctioned plot and lessens it from the claimed plot area, to indicate the plot size which is less than one Acre.

Similarly he works out the area statement of the plot as per plan area after lessening the road area from 4000 sq.mtrs which he states is purchased to be, as under:-

“If I consider 4000 sqm as correct plot area which is purchased the area statement as per plan is

Area of plot 4000.00 sqm (-) The proposed Road 218.49 sqm (-) Road area 320.32 sqm 3461.19 sqm

Net Gross Area of plot i.e. the plot 0.8553 acre which is less than 1 Area in Acre acre.”

At Para 3.3 he makes a statement as under:-

"Hence the Area which is purchased and sanctioned in the plan and in possession is less than a acre."

I tend not to agree with the Appellant, that the AO has taken an adverse inference. The Report of the Valuer is clear on this issue. The AO has only taken the size of the plot as stated by the Valuer. The Valuer clearly states that, the plot size is below one acre as per the purchase deed and the sanctioned plan. The contention of the Appellant, that the Valuer has stated the plot area in hand is 4077.21 sq.mtr is misconstrued. The full reading of all the Paragraphs in the Valuers Report clearly show that, the Valuer mentions the claim but sticks to his findings of the plot size-being less than one acre.

5.5 The Appellant did not substantiate his claim of the plot size being more than one acre during Appellate Proceeding. Though it claimed in the written submission dated 15.11.2016 to have attached copies of the plan as Annexure No.1 Certificate from the Architect as Annexure No.2 for clarifying the plot area, the same has not been annexed. What has been annexed is copy of the order of Hon'ble ITAT dt. 30.07.2013 as Annexure No.1 (as again mentioned in the submission) part report of the Departmental Valuer as Annexure No.2, decision of the Hon'ble ITAT, Pune in the case of Bunty Builders vs. ITO 2010,127 ITAT 286 Pune as Annexure No.3. Therefore, the Appellant was unable to substantiate its claim of the plot size being more than one acre.

The other contention of the Appellant that, in the initial Assessment the AO was confused due to the conversion of Ares into acres and sq feet, now is irrelevant as the AO has based his decision on the calculations of the plot land area by an expert. The Appellant has tried to draw a picture, that its plot area was less than one Acre due to the road area being lessened by the Valuer. It has contended that, the Road Area is to be considered in the plot area for calculation of the plot size by relying of the judgment of the Hon'ble ITAT Pune in the case of Bunty Builders (Supra]. This case has no application to the facts of the Appellants case. In the said case, there was no dispute regarding the original plot size, which fell below the required area of the one acre after lessening the Road area. In the Appellant's case, the original plot size itself is less than one acre, thus violating the provisions of the Section 80IB(10) b; which falls further under one acre on the lessening of the road area. Hence, the decision will be applicable only if the plot size initially is one acre.

In view of the discussions in the preceding paragraphs, the action of the AO in holding the plot area to be less than one acre is sustained and the disallowance u/s 80IB(10) upheld. The appellant fails in these Grounds of Appeal which are dismissed.”

Following the above, the action of the AO is sustained and the disallowance u/s 80IB(10) upheld. The appellant fails in these grounds of appeal which are dismissed.”

and has raised the following grounds :

“1. On the facts and in the circumstances of the case and in law the Learned Assessing Officer erred in not accepting the fact that departmental valuation officer has pointed out that the gross plot of area of land is 4077.21 square meters and therefore it is more than 1 acre.

4.1. Similar grounds are raised in ITA Nos.2491 and

2492/PUN/2017 for A.Ys. 2007-08 and 2008-09, respectively.

together.

while deciding the issue had followed the order in assessee’s own

case for A.Y. 2005-06. Ld.A.R. submitted that against the order of

Ld.CIT(A), assessee had carried the matter before the Tribunal and

the Tribunal vide order dt.20.04.2018 in ITA No.484/PUN/2017

has held that the assessee had fulfilled the conditions of holding

the plot of having area of land more than one acre and therefore

directed the AO to allow the claim of assessee of deduction u/s

80IB(10) of the Act. He placed on record the copy of the aforesaid

order and pointed to the relevant findings of Tribunal. He therefore

submitted that since the facts of the case in the year under

consideration are similar to A.Y. 2005-06, as has also been

admitted by Ld.CIT(A), therefore, following the order of Tribunal in

assessee’s own case for A.Y. 2005-06, assessee be granted

deduction u/s 80IB(10) of the Act. Ld.D.R. on the other hand, did

not controvert the submissions made by Ld.A.R. but however

supported the order of lower authorities.

on record. The issue in the present ground is with respect to denial

of claim of deduction u/s 80IB(10) of the Act for the reason that

the area of plot on which the housing project was constructed was

held by AO to be of less than one acre of land. The claim of

assessee of deduction u/s 80IB(10) of the Act was also denied by

the AO in A.Y. 2005-06 for the same reason. Against the order of

AO, which was confirmed by Ld.CIT(A), assessee had carried the

matter before the Tribunal. The Tribunal vide order dt.20.04.2018

(in ITA No.484/PUN/2017) has decided the issue in favour of the

assessee by holding as under :

“10. Coming to the facts of present case before the Tribunal, the Tribunal in the first round had noted that in the area statement, area of plot was mentioned as 4000 sq.mtrs. in the sanctioned building plan; and on the said plan itself, in the middle, plot area by triangulation method, area was 4077.21 sq.mtrs. The case of assessee before the Tribunal was that in common parlance, one acre of plot of land was referred to as 40R, which in turn, was equal to 4000 sq.mtrs., but that does not mean that area of plot of land was 4000 sq.mtrs. In the present case, the area of plot of land on measurements as per triangulation method was 4077.21 sq.mtrs. i.e. more than one acre as stipulated in clause (b) to section 80IB(10) of the Act. The assessee when it had submitted its plan for development had in possession area which was more than one acre at 4077.21 sq.mtrs. However, as per norms of the Municipal Corporation and other authorities, the assessee in order to develop the said plot of land had to earmark land for DP road equivalent to 218.49 sq.mtrs. The said fact was also mentioned in the sanctioned plan itself. In other words, for getting the sanction for development of housing project on the plot of land, which measured to 4077.21 sq.mtrs. by actual measurements, then the said sanction would be accorded where the assessee gives up area for DP road measuring 218.49 sq.mtrs. The said was the condition for getting permission to develop the housing project at the said place. The learned Authorized Representative for the assessee before us has pointed out that against the said area left for DP road, the assessee was entitled to increased FSI. In other words, the assessee gained from leaving the land for DP road. The Courts have time and again held that the condition which needs to be fulfilled for claiming the deduction, as per clause (b) is the actual measurement of plot of land on the date of start of development. The assessee had in the present set of facts, purchased the plot of land, which measured slightly more than one acre at 4077.21 sq.mtrs. In other words, the basic condition of fulfillment of having plot area of one acre stands fulfilled by the assessee. The said area had to be set apart only as per the requirements of different rules under the Municipality Act, but the same does not lead to the conclusion that the assessee had less than one acre of plot of land area for its development. The gross total area was more than one acre and hence, the assessee was entitled to claim the deduction under section 80IB(10) of the Act

irrespective of the fact that the assessee had set apart certain portion of land for making DP road. There is no merit in the orders of authorities below in denying the claim of deduction under section 80IB(10) of the Act. Accordingly, the Assessing Officer is directed to allow the deduction under section 80IB(10) of the Act as the assessee had fulfilled the condition of holding plot of land, having area of more than one acre. The finding of CIT(A) that the original plot size itself in the hands of assessee was less than one acre was not correct, in view of actual measurements of land as per triangulation method, what had to be seen as the actual measurement of plot of land and not the plot size mentioned in local language of 40R. The DVO had also referred to same area of 4077.21 sq.mtrs. Reversing the order of CIT(A), claim of assessee of 80IB(10) deduction is allowed. The grounds of appeal raised by the assessee are thus, allowed.”

feature in the facts of the present case and that of earlier year.

Further, Ld.CIT(A) also while deciding the issue had followed her

own order for A.Y. 2005-06 meaning thereby that the facts in the

year under consideration were identical to that of A.Y. 2005-06. I

therefore following the same reasoning, as held by Pune Bench of

the Tribunal while deciding the assessee’s appeal for A.Y. 2005-06

and for similar reasons hold that the assessee has fulfilled the

conditions by holding the plot of land having area of more than one

acre. In such a situation, I hold that the assessee is eligible for

deduction u/s 80IB(10) of the Act. I therefore direct the AO to

grant deduction u/s 80IB(10) of the Act. Thus, the ground of the

assessee is allowed.

No.2490/PUN/2017 for A.Y. 2006-07 is allowed.

2492/PUN/2017 for A.Ys. 2007-08 and 2008-09 are concerned, in

view of the submissions of both the parties that the facts of the case

in the years being identical to the facts and issue of the case in ITA

No.2490/PUN/2016 for A.Y. 2006-07, I therefore for the reasons

stated herein while disposing of the appeal in ITA

No.2490/PUN/2016 for A.Y. 2006-07, and for similar reasons, hold

that the assessee is eligible for deduction u/s 80IB(10) of the Act

and thus allow the grounds of appeals of assessee in ITA Nos.2491 & 2492/PUN/2017. Thus, the grounds of the assessee are

allowed.

2492/PUN/2017 for A.Ys.2007-08 and 2008-09 are allowed.

Order pronounced on the 25th day of October, 2018.

Sd/--- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 25th October, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.