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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI S.K. YADAV & SHRI A.K. GARODIA
Date of hearing : 05.12.2016 Date of Pronouncement : 06.01.2017 O R D E R Per Sunil Kumar Yadav, Judicial Member
These appeals are preferred by the Revenue against the order of CIT(Appeals) on the common grounds relating to claim of deduction u/s. 80IB of the Income-tax Act, 1961 ["the Act"].
During the hearing, the ld. counsel for the assessee has invited our attention that the CIT(Appeals) had decided the issue following the earlier orders of the CIT(A) for AYs 2007-08, 2008-09 and 2009-10 and in those years, the dispute with regard to built-up area was examined and claim of deduction u/s. 80IB was allowed. The ld. counsel further contended that the decision taken by the CIT(Appeals) was also further examined by the Tribunal. The Tribunal in the assessee's own case had examined the issue of built-up area while allowing claim of deduction u/s. 80IB of the Act.
Copies of the orders of the Tribunal are placed on record.
The ld. DR placed relied upon the order of the AO.
Having carefully examined the orders of the lower authorities in the light of rival submissions, we find that the AO has denied the deduction u/s. 80IB of the Act on the ground that the built-up area is more than the sanctioned area without the approval of local authorities. This aspect was examined by the CIT(Appeals) as well as the Tribunal in the earlier years. The Tribunal was of the view that the assessee is entitled for deduction u/s. 80IB of the Act. We, however, for the sake of reference, extract the relevant portion of the order of the Tribunal in in the case of ITO v. M/s. Mahaveer Calyx as under:-
“5.3· We have heard the rival submissions and perused and carefully considered the material on record, including the judicial decision cited by the learned Authorised Representative. We find that the issue of deduction u/s. 80-IB of the Act, raised by revenue, is squarely covered in favour of the assessee by the order of the co- ordinate bench of this Tribunal in the assessee' s own case in & 998/Bang/2011 dt.31.8.2612, wherein the assessee had also claimed deduction u/s. 80-IB of the Act in respect of the same project. In this order of the co-ordinate bench f the Tribunal, it has been held as under :
5.4.1 We have considered the rival submissions and perused and carefully considered the material on record. From the findings recorded by the authorities below, it is seen that the assessee obtained a sanctioned plan on 31.10.2008 for construction of a basement of 92,565 sq ft and ground, first, second and third floors amounting to 1,83,748.40 sq. ft. It is also seen that the area constructed and sold as per the sale deeds, the Assessing Officer found that the built up area after construction was 1,91,436 sq. ft. and after increasing by the common area at 18.5% the built up area comes to 2,26,851.60 sq. ft. The basic crux of the dispute between the assessee and revenue revolves around this aspect of the matter. 5.4.2 It has been contended by the assessee before the authorities below that the approved plan mentions the built up area being plinth area of the flats and does not cover the balconies of each flat, corridors, lift area room, overhead tank, sump tank, security rooms, stair case and stair case head room, which area is in addition to the area arrived at from the sanctioned plan. What the assessee has conveyed in the sale deeds is the total area constructed including the aforesaid area, which is not reflected in the sanctioned plan. That apart, the contention of the assessee has been that the approval of the local authority for the housing project is secured and that is sufficient for grant of deduction under section 80 IB of the Act. In this context, it is relevant to refer to the clarification of the CBDT in a letter vide.No.205/3/2001/ITA-II dt. 4.5.2001 addressed to the Maharashtra Chamber of Housing Industry, which has been reproduced by the learned CIT(A) at para 3.8 of her order for Assessment Year 2008-09 in which it has been stated that approval of any project as a housing project by the local authority would be adequate for the purposes of section 80 IB of the Act. Although, the learned Departmental Representative has contended that aforesaid clarifications were given in the context of the commercial areas being constructed along with the housing project, we are of the view that the scope cannot be considered to be restricted to that circumstance alone. This is due to the fact that the definition of a housing project is not given under the Act and therefore the view of the CBDT that a housing project is one which is approved by a local authority requires to be given full effect to. Therefore, it cannot be construed that what the assessee has constructed is not a housing project.
5.4.3 Coming to the crucial question as to whether the housing project constructed by the assessee is an approved housing project or not, we do not find the view of the Assessing Officer that the project should be considered as unapproved because of excess construction put up by the assessee to be on sound footing. This is because the municipal authorities are vested with the power to look into the violations, if any, of the approved/sanctioned plan. The Assessing Officer while examining the issue of granting of deduction under section 80IB of the Act has to satisfy himself with regard to the following conditions mentioned in section 80 IB(10) : (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land, which has a minimum area of one acre; (c) the residential unit has a maximum built up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within 25 kms from the municipal limits of those cities OR one thousand five hundred sq. ft. at any other places. (d) the built up area of the shops and other commercial establishments included in the housing project does not exceed 5% of the aggregate built up area of the housing project OR 2000 sq. ft. whichever is less. 5.4.4 From an application of the aforesaid conditions to the facts of the assessee’s case, it becomes clear that the assessee has fulfilled the conditions mentioned in section 80 IB of the Act. The judgment of the Hon'ble High Court of Gujarat in the case of Jolly Polymers (supra) relied upon by the learned Departmental Representative was rendered in a case where the assessee claimed deduction under section 80 IB of the Act in respect of a factory without even obtaining a factory licence. In that context, the Hon'ble Court held that the commencement of the industrial activity must be lawful and any manufacturing activity which is fundamentally unlawful and is prohibited by law and against public policy would not be covered by the provisions. It has also been held by the Hon'ble High Court that mere breach of some technical provisions OR requirement would not ipso fact disqualify an assessee from claiming deduction under section 80 IB of the Act. With due respect, we are of the view that the said judgment would therefore not be applicable to the facts of the assessee’s case as the assessee has obtained approval of the concerned local authorities for construction of a housing project. The fact that the compounding fee has not yet been paid would not mean that the housing project constructed by the assessee is unlawful and thus an violation of the provisions of section 80 IB of the Act. 5.4.5 We are of the view that the learned CIT(A) has rightly placed reliance on the decisions of the Hon'ble Apex Court in the cases of Petron Engineering Construction (P) Ltd. reported in 175 ITR 523, Pandian Chemicals Ltd. reported in 262 ITR 278, N.C. Budharaja & Co. reported in 204 ITR 412, IPCA Laboratories Ltd. reported in 266 ITR 521 to arrive at the view that the tax incentive by way of deduction. 80 IB of the Act is predominantly for the purpose of augmenting affordable dwelling and ought to be interpreted in that light. In this view of the matter, the incentive provisions must be construed in a manner which advances the object and intention of legislature. The fact that the assessee has obtained approval for the housing project cannot be lost sight of. As for the excess area constructed, as rightly held by the learned CIT(A), it is for the BBMP to look into the violations if any in the construction of the housing project. That however does not authorize the Assessing Officer to hold that the assessee has not got approval for the housing project OR that the conditions laid down in section 80 IB (10) stated violated. In view of the facts and circumstances of the case as discussed above, we are of the considered opinion that the orders of the learned CIT(A) for both Assessment Years 2007-08 and 2008-09 granting the assessee deduction under section 80 IB of the Act is in accordance with law and on a proper appreciation of the facts of the instant case of the assessee and therefore finding no need for interference therein, confirm the orders of the learned CIT(A).
In the result, the Revenue’s appeal are dismissed.” 5.4 Following the aforesaid decision of the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Years 2007-08 and 2008-09 -(supra) wherein the assessee was allowed deduction u/s. 80-1B of the Act, we are of the considered opinion that the orders of the learned C1T (Appeals) for Assessment Year 2009-10 granting the assessee deduction u/s. 80-1B of the Act is in accordance with law and on a proper appreciation of facts of the case on hand and therefore there is no requirement for interference therein. We, therefore, uphold the order of the learned CIT (Appeals) and consequently dismiss the grounds raised by revenue at S.Nos.2 to 5.”
Since the Tribunal has taken a consistent view in the earlier years, we find no justification to take a contrary view. Accordingly we confirm the orders of the CIT(Appeals).
6. In the result, the appeals of the revenue are dismissed.
Pronounced in the open court on this 6th day of January, 2017.