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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the Revenue against the order of CIT(A)- 22, Mumbai dated 20/01/2015 for the AY 2010-11 in the matter of order passed u/s.143(3) of the IT Act.
The only grievance of Revenue relates to deleting the disallowance of deduction claimed u/s.80IB(10) on sale of TDR.
Rival contentions have been heard and record perused.
Facts in brief are that the assessee is engaged in the business of development of slums. The assessee had constructed a Slum Redevelopment project at Adarsh Gharkul slums, situated at Hemant Manjrekar Marg, Sardar Nagar No.4, near Rawli Camp, Sion Koliwada, M/s. Citywood Builders Pvt. Ltd., Mumbai 400 037. The project has 6 rehab buildings for rehabilitation of 510 slum dwellers. In lieu of construction of slum rehabilitation buildings, the company was allotted TDR/ FSI which can be sold in the open market. This project was allotted to the company by Slum Development authorities by approval dt.19.10.2004. As per notification of the Board, CBDT vide its notification No. 67/210 and 5.01.2011 wherein it is held that slum development projects are eligible for deduction under sec. 80lB from AY 2005-06 onwards. Based on the above notification, the assessee had claimed amount received from the sale of TDR/FSI under sec. 80IB(10). The AO had disallowed the assessee's claim under sec. 80IB(10) on the ground that the assessee had not developed any flats not exceeding 1000 sq.ft. and not satisfied the conditions laid down in 80IB(10). Along with, the AO had disallowed expenditure incurred for construction of development of slums development projects for Rs. 2,33,31,201/-.
By the impugned order, CIT(A) allowed assessee’s claim of deduction u/s.80IB(10) after having following observation:- 3.3 I have considered the facts of the case. The appellant had received the approval from Slum Development Authority for development of slum projects for development of slums vide order dt. 19.10.2004 in which the appellant had to develop slums project at Adarsh Gharkul slums, situated at Hemant Manjrekar Marg, Sardar Nagar No.4, near Rawli Camp, Sion Koliwada, Mumbai 400 037. The appellant had developed 6 rehab buildings for rehabilitation of 510 slum dwellers. In lieu of construction of slum rehabilitation buildings, the company was allotted TDR/FSI. The appellant had sold TDR/FSI and received consideration. On this consideration, the appellant had claimed deduction under sec. 801B(10) which AO had disallowed on the ground that the appellant had not developed any flats and not satisfied with the conditions laid down in sec. 801B(10). The AO also disallowed the expenditure M/s. Citywood Builders Pvt. Ltd., incurred by the appellant for development of slum projects for Rs.2,33,31,201/-. 3.4 As per sec. 801B(10), it is stated that in proviso 1 provided that nothing contained in cl. (a) or cl. (b) shall comply to housing project carried out in accordance with the scheme framed by the Central Government or State Government for reconstruction or redevelopment of the existing building in areas which are declared to the slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf. The Board has notified vide its notification dt.5.1.20 11 that Maharashtra Slum Development Project is eligible for deduction under sec. 801B(10) if the scheme is approved on or after the 1st day of April 2004 and before 31.03.2008. In the present claim, the scheme was approved by M/s Slum Development Authority on 19.10.2004 and the appellant had developed the slum as per the notification and received TDR amount as consideration. The appellant had sold these 6 TDRs in the market and received consideration. After deducting this expenditure, the appellant had claimed deduction u/s 80IB( 10) for Rs. 1,86,51,698/- and this claim of the appellant was disallowed by the AO on the ground that it has not satisfied the conditions of 80IB( 10) and further disallowed the proportionate expenditure of Rs.2,33,31 ,20 1 j -. Similar and identical issue has come into consideration in the case of ITO Vs Sonasha Enterprises and 4912/Mum/2010 In para nos.5.2, 5.3 which is as under : “ 5.2 As regards th4e last contention of the revenue is that the assessee is not a builder and the income received by sale of TDR and not by sale of housing project is concerned, we find that there is no dispute about the fact the assessee received the TDR as a consideration against the development of the project in question. We further note that the TDR was received only for residential portion of the housing project and not for the commercial establishment. Thus when the TDR reed by the assessee was immediately sold and the sale consideration was shown as receipt from the housing project, then there is no other element in the said receipt against the sale of TDR other than the income from housing project. 5.3 It is not the case of the revenue that the assessee sold the TDR after appreciation of the value and therefore, the entire amount cannot be treated as sale consideration of the housing project. The assessee has given the details of the receipts of TDR and sale of the TDR as in the same year and immediately after receiving from the MMRDA. Therefore, there is no element of any appreciation in the value in the sale consideration. In view of the above facts and M/s. Citywood Builders Pvt. Ltd., circumstances of the case, we do not find any reason to interfere with the order of the Ld. CIT(A) for both the asstt .years. In the result, the appeals filed by the revenue are dismissed. 3.5 Further in the case of ITO Vs Suraksha Realtors in para 6 as under: "We have considered the rival submissions and perused the orders of the lower authorities and also the order of the Tribunal in ITA No. 4223/M/2010 (supra). We find that the facts for the year under consideration are identical with the facts of AY 2007-08. That being so, we find that the Tribunal in ITA No. 4223/ M/ 1 0 has confirmed the findings of the Ld. CIT(A) and dismissed the revenue's appeal in AY 2007- 08 by holding as under: "Thus we agree with the decision of the CIT(A) that (a) assessee is entitled to relief u/ s 80lB(10)(a)(b): (b) the assessee is entitled to relief u/ s 80IB(10) notwithstanding the fact that they conveyed the land to SRA prior to conveying the tenements developed by them: (c) on the facts of the case the assessee is a developer and cannot be considered as a contractor and the explanation introduced in the Finance Bill, 2009 to Section 80IB(10) shall not be applicable in the case of the assessee; and (d) the market value of the TDRs allotted to the assessee would constitute the sale consideration for development of the tenements and should be included for the purpose determination of relief under sec. 80IB(10). Therefore the assessee is entitled to deduction under sec. 80lB(10) in respect of tenements developed by them for SRA and the sale price of TDR allotted to the assessee should be considered as sale consideration received for development of the tenements and should be taken into account in computing relief under sec. 80IB(10). " As no new facts have been brought on record by the Revenue respectfully following the decision of the Tribunal in ITA No. 4223/M/ 10 (supra), we do not find any reason in tinkering with the findings of Ld. CIT(A). Accordingly, the appeal filed by the revenue is dismissed. " wherein the above two facts are identical to the facts of our case in which the appellant had developed slums as per Slum Rehabilitation Project as approved by the slum authorities. In view of the Board's notification the sale of TDR/FSI on which the appellant claims 80IB(10) is eligible for deduction under sec. 801B (10). Hence in view of the above decisions, 80IB(10) deduction is upheld and AO's disallowance is deleted. In this case, as appellant’s claim of 80IB(10) is allowed. Hence appellant is eligible for expenditure considering it has incurred for the development of M/s. Citywood Builders Pvt. Ltd., this project. Hence AO's addition of expenditure for Rs.2,33,31,201/- is deleted. Hence ground of appeal
is allowed.
6. Against the above order of CIT(A), revenue is in further appeal before us.
7. We have considered rival contentions and carefully gone through the orders of the authorities below and found that during the year under consideration, assessee has undertaken construction of Slum Rehabilitation Project at Adarsh Gharkul slums. Deduction claimed in respect of income from sale of TDR was declined u/s. 80IB(10) on the plea that assessee has not constructed flats exceeding 1000 sq.ft. The CIT(A) has recorded a categorical finding in his order that assessee has developed six rehabilitation buildings. In lieu of the construction of slum rehabilitation building, assessee was allotted TDR, FSI which had been sold and assessee received consideration for the same. CIT(A) also observed that the Board has notified vide its notification dt.5.1.2011 that Maharashtra Slum Development Project is eligible for deduction under sec. 80IB(10) if the scheme is approved on or after the 1st day of April 2004 and before 31.03.2008. In the present claim, the scheme was approved by M/s Slum Development Authority on 19.10.2004 and the assessee had developed the slum as per the notification and received TDR amount as consideration. The assessee had sold these 6 TDRs in the market and received consideration. After deducting this expenditure, the assessee had claimed deduction u/s 80IB(10) for Rs. 1,86,51,698/-. Thereafter, relying on decision of ITAT-Mumbai Bench in case of Sonasha M/s. Citywood Builders Pvt. Ltd., Enterprises and Suraksha Realtors, CIT(A) allowed assessee’s claim. We do not find any infirmity in the order of CIT(A) in so far as assessee’s project of rehabilitation was approved after 1st April 2004. The CIT(A) recorded a finding that this was approved on 19/10/2004, accordingly eligible for claim of deduction. Findings so recorded by CIT(A) has not been controverted by DR by bringing any positive material on record, we therefore uphold the findings so recorded by CIT(A) and dismiss the appeal filed by department.
8. In the result, appeal of the Revenue is dismissed.