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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI SANJAY GARG & SHRI RAJESH KUMAR
Per Sanjay Garg, Judicial Member:
The above titled appeals have been preferred by the Revenue against the orders dated 01.05.2014 & 26.05.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2004-05 & 2011-12 respectively.
Since identical grounds have been taken by the Revenue in both the appeals, hence for the sake of convenience, the grounds from are taken which are reproduced as under: "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the deduction u/s 80IB(10) of the IT Act is admissible to a 'Housing Project" on the size of two plots of land together making minimum area of one acre, when clause (b) of section 80lB(10) of the IT Act prescribes that the project should be on the size of the land which has a
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the deduction u/s 80IB(10) of the IT Act is admissible to a 'Housing Project" comprising residential and commercial units. The appellant craves to leave to add, to amend and I or to alter any of the 3. grounds of appeal, if need be.
4 The appellant, therefore, prays that on the grounds stated above, the order of the Ld. CIT(A)-40, Mumbai, may be set aside and that of the Assessing Officer restored.”
At the outset, the Ld. A.R. of the assessee inviting our attention to above grounds of appeal
has stated that the issues raised during the above grounds of appeal have already been settled/concluded in favour of the assessee by the decisions of the Tribunal in the earlier assessment years. He has invited our attention to the impugned order of the Ld. CIT(A) wherein the Ld. CIT(A) following the decision of this Tribunal dated 04.05.12 for A.Y. 2005-06 & 2006-07 and further order dated 04.04.13 for A.Y. 2007-08 and also following the order of his predecessor for A.Y. 2008-09, has decided the issues in favour of the assessee. The relevant observations of the Ld. CIT(A) for the sake of convenience are reproduced as under:
10. I have considered the facts of the case, submissions and contentions of the appellant, order of the AO as also the material available on record. It is seen that Hon'ble ITAT had, vide common order dated 4/5/2012 for A.Ys. 2005-06 and 2006-07, and order dated 4/4/2013 for A.Y. 2007-08, held that the appellant is entitled for deduction u/s.80lB(10) in respect of the above-mentioned three projects. Similarly, my learned predecessor, vide order dated 7/11/2012 for A.Y. 2008-09, had directed the AO to allow deduction u/s.80lB(10) to the appellant, in respect of the three projects mentioned above. Further, vide orders dated 7/11/2012 and 17/4/2013 for A.Ys. 2009-10 and 2010-1 1 respectively, my learned predecessor had directed the AO to allow deduction u/s.80IB(10) to the appellant, in respect of the projects ‘Panchavati’ and 'Vrindavan', following Hon'ble ITAT's order dated 4/5/2012 in appellant's own case for A.Ys. 2005-06& 2006-07. Relevant portion of order dated 7/11/2012 passed by learned predecessor in the case of the appellant for A.Y. 2008-09 is reproduced as under :- “4.4.1 I have gone through the assessment order, perused the submissions and also discussed the case with the AR of the appellant. In the grounds of appeal,
3 & 5211/M/2014 M/s. Haware Engg. & Builders Pvt. Ltd. deduction u/s.80-lB(10) with reference to the projects Shantiniketan, Balaji Towers, Silicon Towers, Kaveri, Panchavati, Vrindavan, Tulsi and Kamothe Phase I, Phase II and Phase III has been claimed. However, during appellate proceedings, the deduction relating to 'Shantineketan' has not been pressed. Regarding the projects relating to Panchavati, Silicon Towers, Vrindavan, Tulsj, Balaji Tower and Kaveri, the appellant has relied upon the order of Hon 'ble ITAT for A.Ys. 2005-06 and 2006-07 dated 4/5/2012, a copy of which has been filed. In the above said judgement, the Hon'ble ITAT has observed as under:-
"31. Therefore the assessee is eligible for deduction on these projects (Balaji and Silicon) and respectfully following the above order of coordinate bench in assessee case, we direct AO accordingly. As far as Kaveri, Panchavati & Vrindavan are concerned, the deduction was allowed by AO in assessment year 2004- 05 as conditions were satisfied but the deduction was denied on the reason that new norms as per amended provisions will apply. Since the project was approved before 1.4.2005 and as AO allowed deduction in earlier years, there is no need for disallowing the deduction in these years, as revised provisions do not apply to the projects approved earlier to 01-04-05. Therefore, assessee is eligible for deduction under section 80IB(10). The principle was laid down by (ITAT in the case of Saroj Sales Organization 3 DTR 494 while deciding an identical issue for A.Y. 2005-06, held in Para 13 of the order that “we are of the view that housing projects were approved before 31st March, 2005 and for such project which were so approved, there was no stipulation as to the shopping complex are permissible in the project. As already stated earlier that the amendments were subsequently made while extending the deduction of income from housing project approved up to 31 March, 2007, the denial of deduction, in our view, is clearly not in accordance with law”.
Similar view has been taken by ITAT, Mumbai in the case of Hiranandani Akruti JV v. DCIT (2010) 39 SOT 498 (Mum) and ACIT v. Sheth Developers 33 SOT 277 (Bom) wherein they have followed the judgement of ITAT in Saroj Sales Organization (supra). The ITAT, Ahmedabad in the case of Raj Developers v. ITO (2011) 43 SOT 184 (Ahmd) have also followed the decision of Division Benches in the case Aruna Excello Foundation Pvt. Ltd. v. ACIT (2007) 108 TTJ (Chennai) 71 and Saroj Organization
Therefore we hold that these projects (Kaveri, Panchavati & Vrindavan) are eligible for deduction and AO is directed accordingly.
With reference to the Tulsi Project, the contention was whether Tulsi Towers is a separate project or extension of Vrindavan Project. AO held that Tulsi Towers is only an extension of Vrindavan Project and accordingly he disallowed the claim as he has not allowed the claim for Vrindavan Project. The CIT(A) upheld the contention by holding as under vide Para 3.3.2.
"3.3.2 I now come to the deduction for the Tulsi Project. Looking into the facts brought on record by the Assessing Officer, the documents relied upon and the provisions of section 80IB(10), I find that the Assessing Officer has rightly held this project as only an extension of the Vrindavan project. To this end, I note the following significant features: i) The Tulsi Tower is only the 'C' wing of the Vrindavan project which has 'A' to 'W' wings laid out in a rectangular shape in two loops. ii) The commencement certificate dated 01.2.2002 is in respect of the development of the Vrindavan project. iii) The separate commencement certificate dated 22.12.2006 for the Tulsi Tower refers to only Additions and Alteration' of the C wing making it clear that this certificate is being issued only for the Addition and Alteration of the existing building on plot no. 52, Sector 9, New Panvel, Navi Mumbai which is the same plot on which the Vrindavan project has been constructed. iv) The District Valuation Officer has also in his report dated 31.1.2008 mentioned Tulsi Tower as the last building in the Vrindavan Project.
As may be seen, the above features of the Tulsi Tower project overwhelmingly support the Assessing Officer's stand that this is not a separate project but only an extension of the Vrindavan Project which is not entitled to the deduction. As against these tell-tale evidences brought on record by the Assessing Officer, the appellant has not been able to bring anything on record to substantiate its stand. The Tulsi Tower being part of the Vrindavan Project,
5 & 5211/M/2014 M/s. Haware Engg. & Builders Pvt. Ltd. the conditions stipulated in section 80IB(10) would thus have to be applied as applicable to the Vrindavan project and not the Tulsi Tower. In view of this, the submissions of the appellant that the amended provisions of section 80IB(10) are applicable for the Tulsi Tower are misplaced. The other arguments put forth by the appellant viz., filing of the necessary particulars, built-up areas of the flats being within the prescribed limits, recognition of the revenue from this project on percentage completion method are all irrelevant once it stands proved that this project is only an extension of another project which is found to be ineligible for the facts applicable to that project. In line with the foregoing, I find that the Assessing Officer has rightly denied deduction to the Tulsi Project. His action is confirmed.
In line with the foregoing, the ground of appeal is dismissed."
33. As can be seen from the above, the CIT(A) also agrees that this project is an extension of Vrindavan Project. Assessee's contentions are to be accepted as this is a separate project, as there is a separate approval and fulfilled conditions as applicable post amendment, so the project is entitled for deduction under section 80IB(10). Even if one were to accept that this is an extension of Vrindavan Project, since Vrindavan Project itself was allowed 80IB(10) deduction, there cannot be any reason for disallowance of 80IB deduction on Tulsi Towers, as part of Vrindavan Project. Looking at it either way, a claim under section 80IB-on the Tulsi project cannot be disallowed as all the conditions applicable to 80IB(10) are fulfilled. The Hon'ble Bombay High Court has dealt with the issue of new project on existing plot in its order dated 28.03.2012 in the case of CIT v. Vandana Properties of 2009 and 4361 of 2010. In that case also, the land of plot admeasuring 2.36 acres had constructed building A, B, C and D over a period during 1993- 1996. Pursuant to the decision of the State Government permitting conversion of the status of land, assessee became entitled to construct an additional building E on that plot of land. The plot known as Building No.E was constructed for which the approval of the building plan was granted on 11.10.2002 and commencement certificate was issued on 10.03.2003. Even though the land pertained to E- Building was less than one acre, the Hon'ble Bombay High Court held in Para 29 of the judgement that u/s 80-IB(10), there is no limit on the number of projects. It laid down that “on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out u/s 80-18(10), the deduction there under can
6 & 5211/M/2014 M/s. Haware Engg. & Builders Pvt. Ltd. not be denied to all those housing projects. Section 80-IB(1,0) while specifying the size of plot on land, does not specify the size or the number of housing projects that are required to be undertaken on a plot having minimum area of one acre'.
Therefore, there can not be any objection for sanction of new project on existing projects sanctioned earlier. However, for record we hold that Tulsi Project is separately approved project as a residential housing project and amended provisions of section 80IB(10) effective from 01/04/2005 are applicable and those conditions are satisfied by assessee as the project is a residential project and commercial area is less than the prescribed area and other conditions are satisfied, so we hold that Tulsi project is also eligible for deduction under section 80lB(l0).
Accordingly the grounds of assessee with reference to claims of deduction u/s80IB(10) on various projects as discussed above are allowed, except the Ground No.1 (on Shanti Niketan) which was withdrawn.”
Respectfully following the above judgement, the AO is directed to allow deduction claimed u/s. 80IB(10) regarding these 6 projects in this year also."
Accordingly, respectfully following the above orders of Hon'ble ITAT and my learned predecessor, the AO is directed to allow deduction u/s.80IB(10) to the appellant, in respect of all the three projects 'Panchavati', 'Vrindavan and 'Kaveri', in this year also. These grounds of appeal are, accordingly, allowed.
In the result, this appeal is partly allowed.”
The Ld. A.R. of the assessee has further invited our attention to the orders of the Hon’ble Bombay High Court dated 03.08.15 in of 2013 relevant to A.Y. 2007-08 and further order dated 09.01.15 in ITA No.164 of 2013 relating to A.Y. 2005-06 and order dated 04.12.14 in ITA No.1668 of 2012 wherein the Hon’ble Bombay High Court has upheld the orders of the Tribunal and the issues have been settled by the Hon’ble Jurisdictional High Court in favour of the assessee. In view of this, the issue under consideration for the assessment years under consideration is squarely covered in favour of the assessee.
7 & 5211/M/2014 M/s. Haware Engg. & Builders Pvt. Ltd. 5. The Ld. D.R. has also fairly admitted that the above grounds have already been decided by the Hon’ble Jurisdictional High Court in earlier as well as subsequent assessment years to the year under consideration in favour of the assessee.
Respectfully following the same, we do not find any merit in the appeals of the Revenue and the same are accordingly dismissed.
Order pronounced in the open court on 17.03.2016.