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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A), Pune-5, dated 18.11.2016 relating to assessment year 2005-06 against order passed under section 254 of the Income-tax Act, 1961 (in short ‘the Act’).
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The assessee has raised the following grounds of appeal:- 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. 2. On the facts and in the circumstances of the case and in law the Learned Assessing Officer erred in not considering the plot size on the date of submission of plan and not appreciating the fact that surrender for the road is a subsequent event and conditions for 1 acre has to be seen on the date of submission of the plan. 3. On the facts and in the circumstances of the case and in law the Learned Assessing Officer erred in not allowing the deduction of Rs.18,57,570/- u/s 80IB(10) of the Income Tax Act, 1961 although all requisite conditions for claiming the deduction are complied with.
The issue which is arising in the present appeal is against the claim of deduction under section 80IB(10) of the Act on an area of plot of land which is termed as 40R but as per the assessee, in fact, was 4071 sq.mtrs.
Briefly, in the facts of the case, the assessee was partnership firm, which was engaged in the business of promoters, builders and developers. During financial year 2002-03, the assessee received sanction for housing project which was completed in a phased manner. The assessee offered the income from said project for each completed phases starting from assessment year 2005-06 onwards. The assessee claimed that it had complied with the conditions laid down in section 80IB(10) of the Act and hence, was entitled to said deduction. The Assessing Officer in the first round of proceedings noted that the area of plot was less than one acre and the completion certificate for the last building was not obtained before 31.03.2008, hence the assessee was not entitled to the said 80IB(10) deduction.
The CIT(A) upheld the order of Assessing Officer. The Tribunal in ITA Nos.1394 to 1396/PUN/2010, relating to assessment years 2005-06 to 2008- 09, vide order dated 30.07.2013 remitted the issue back to the file of Assessing Officer for actual measurement of plot size. The Assessing Officer in the
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second round referred the matter to the DVO, who in the report states that practically area in hand was 4077.21 sq.mtrs. However, on account of proposed road, the area reserved for the proposed housing project was less than one acre. The Assessing Officer denied 80IB(10) deduction to the assessee while giving effect to the order of Tribunal under section 254 of the Act. The CIT(A) upheld the order of Assessing Officer, against which the assessee is in appeal.
The learned Authorized Representative for the assessee pointed out that plot of land purchased by the assessee was referred as 40R in 7/12 extract, which was taken to be 4000 sq.mtrs. However, the actual area of the plot was 4077.21 sq.mtrs. as per triangulation method i.e. actual measurements were more than one acre and hence, the assessee was entitled to claim the aforesaid deduction under section 80IB(10) of the Act. The learned Authorized Representative for the assessee referred to the sanctioned plan in this regard and pointed out that on the right hand side of plot, certain area was marked for DP road and if the same is excluded, then the area is less than 4000 sq.mtrs. But, while considering plot size for development, it is the actual size of plot which has to be seen which was more than one acre and hence, the assessee was entitled to 80IB(10) deduction. The learned Authorized Representative for the assessee pointed out that the issue stands covered by the order of Tribunal in Bunty Builders Vs. ITO (2010) 127 ITD 286 (Pune).
The learned Departmental Representative for the Revenue laid emphasis on the findings of CIT(A) at page 13 of the appellate order and pointed out that the area on which the building was constructed was less than one acre and hence, 80IB(10) deduction is not to be allowed to the assessee.
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On perusal of record and after hearing rival contentions, the issue which arises in the present appeal is in relation to the claim of deduction under section 80IB(10) of the Act. For claiming the aforesaid deduction, certain conditions are to be complied with which are provided in section itself. One of the prescribed condition for claiming 80IB(10) deduction is the area of plot which should be one acre or more than one acre. In case, plot area is less than one acre, no deduction under section 80IB(10) of the Act can be allowed to the assessee. The present appeal before the Tribunal is second round of proceedings. The Assessing Officer in the first round, denied the claim of deduction under section 80IB(10) of the Act on the ground of non fulfillment of condition of area of the plot. The Tribunal vide order dated 30.07.2013 (supra) noted that as per 7/12 extract, size of plot was mentioned as 4000 sq.mtrs. and even in the area statement of the approved building plan, the size of plot is mentioned as 4000 sq.mtrs. However, in the middle of the same building plan which was relied upon by authorities below, there was mention of area by way of triangulation method as 4077.1 sq.mtrs. The said contention of assessee was not considered while denying the assessee’s claim of 80IB(10) deduction. The Tribunal in such circumstances, was of the view that where both the facts were mentioned in the same plan, which was not taken note of the Revenue authorities, then the said issue needs to be re-considered to decide the same as per fact and law, hence the matter was set aside to the Assessing Officer. In the second round proceedings, the Assessing Officer referred the matter to the DVO, copy of valuation report of DVO is placed at pages 15 to 18 of Paper Book. The DVO while considering the size of plot in column No.3 observed that the same should be more than one acre i.e. more than 4046.82 sq.mtrs. Vide point No.3.1, the DVO referred to Purchase Deed and the Development Agreement, wherein it was for the area of 1300 sq.mtrs. + 1300 sq.mtrs. + 1400 sq.mtrs., equivalent to 4000 sq.mtrs. As per point 3.2, he thus, commented that
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as per sanctioned plan, the plot area was 4000 sq.mtrs. Vide point No.3.3, the claim of assessee that on the same sanctioned plan, area actually measured was 4077.21 sq.mtrs. was also noted by the DVO. He further goes on to say that under the same sanctioned plan, area under DP road was 218.49 sq.mtrs. and if the same is deducted from the total area of 4077.21 sq.mtrs., net area of the plot was 3858.72 sq.mtrs., which was less than one acre. Further, additional area of 320.32 sq.mtrs. was left for road and hence, practical area which was available was 3538.40 sq.mtrs. The DVO in this regard concluded that in case 4000 sq.mtrs. was considered as correct plot area, then net area of plot was below one acre. He was of the view that area which was purchased and sanctioned in the plan and in the possession was less than one acre. The DVO also commented on other conditions to be fulfilled and found no other faults, except that total area of the plot of land on which the housing project was constructed was less than one acre. The assessee on the other hand, has submitted that it is the gross area which has to be considered and not the net area. The area which was left for DP road and other road is part of housing project and the same had to be taken into consideration while computing total area available for development. He stressed that in the sanctioned plan itself though in the area statement, the area of plot is mentioned as 4000 sq.mtrs. i.e. equivalent to 40R, which was the term in local language. However, actual measurement of plot by triangulation method was 4077.21 sq.mtrs. This was the gross area which was available with the assessee, out of which area under DP road was earmarked and set aside of 218.49 sq.mtrs., but the said area under DP road is to be taken note as part of gross plot area while seeing the requirements of section 80IB(10) of the Act.
I find that similar issue arose before the Tribunal in Bunty Builders Vs. ITO (supra), wherein it was held that in order to allow the assessee’s claim of
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deduction under section 80IB(10)(b) of the Act, area of one acre available for development of housing project includes the area required to set apart for amenities as per norms of Corporation. In the facts of said case, demarcated portion had to be reserved as amenities space, which had to be handed over to the PMC. The Tribunal held that language used in the impugned section was that project had to be on the size of plot of land which had minimum area of one acre. It was further observed that from the series of documents and evidences as well as sanctions granted, the area of 4600 sq.mtrs. was available. All the calculations or specifications were based on the said area, therefore, the said area was the start point for calculation of amenities, as well as for granting FSI to the assessee. The Tribunal held that the Courts have pronounced the question of easement or right of possession had to be determined on the basis of boundaries over which such rights were generally exercised. The Courts had also held that boundaries as existed at the site must prevail over the dimensions. The Tribunal thus, held that for applicability of the said section, one had to simply ascertain the size of plot available for the impugned housing project and the amenities space which was parted with by the developer was subject to allotment of additional FSI and the developer was not in a dis- advantageous situation.
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
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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
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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.
In the result, appeal of assessee is allowed.
Order pronounced on this 20th day of April, 2018.
Sd/- (SUSHMA CHOWLA) न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 20th April, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; आयकर आयुक्त(अऩीऱ) / The CIT(A), Pune-5; 3. 4. The Pr.CIT, Pune-4, Pune; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune