ORDER

G.S. Pannu, Accountant Member - The captioned two appeals relating to the same assessee involve a common issue and therefore they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. In both the appeals, substantive dispute arises from the action of the IT authorities in denying assessee's claim for deduction under s. 80-IB(10) of the IT Act, 1961 (in short "the Act") with regard to the profits derived by it from developing and building a housing project.

2. The appellant is a partnership firm which is engaged in the business of promoters, builders and developers. For the asst. yrs. 2006-07 and 2007-08, which are in appeal before us, assessee claimed deduction under s. 80-IB(10) of the Act amounting to Rs. 12,76,88,137 and Rs. 1,27,68,813 respectively in respect of the profits derived from developing and building a housing project named 'Shubhashree Woods' located at Pimple Saudagar, Pune. The said claim of deduction has been denied by the IT authorities for identical reasons in both the assessment years. In order to appreciate the relevant facts, the reasons for denial of deduction and the justification sought to be canvassed by the assessee, we may refer to the fact-situation as emerging from the orders of the authorities below and other material furnished in the form of paper book, etc. in the course of hearing before us for the asst. yr. 2006-07.

3. In the asst. yr. 2006-07, appellant filed a return of income declaring total income of Rs. 12,76,88,137 which was claimed as exempt under s. 80-IB(10) of the Act on the ground that the entire income represented profits derived from undertaking development and building of a housing project named 'Shubhashree Woods' located at Pimple Saudagar, Pune. The said project was claimed to have been started in the previous year relevant to the earlier asst. yr. 2004-05. The assessee contended before the AO that it complied with all the conditions laid down under s. 80-IB(10) of the Act and that deduction was justifiably claimed in the return of income. The AO has primarily raised an objection with regard to the non-completion of the project within the period specified in s. 80-IB(10)(a)(i) of the Act. Notably, the project commenced development and construction after 1st Oct., 1998 and it was approved by the 'local authority' i.e. Pimpri Chinchwad Municipal Corporation (in short 'PCMC') before the first day of April, 2004 and therefore in terms of s. 80-IB(10)(a)(i) of the Act construction of the project ought to have been completed on or before 31st March, 2008. In terms of Expln. (ii) to cl. (a) of s. 80-IB(10) of the Act, the completion certificate in respect of the construction of the housing project was thus required to be obtained from the 'local authority' on or before 31st March, 2008. The aforesaid requirement of s. 80-IB(10)(a) of the Act is the subject-matter of dispute before us in as much as the stand of the Revenue is that the assessee has not been able to complete the construction of the entire project by 31st March 2008. Accordingly, the claim of deduction under s. 80-IB(10) of the Act has been denied for non-adherence with the condition prescribed in s. 80-IB(10)(a) of the Act with respect to the permissible period of construction of the project. In the aforesaid background, now we may bring out the relevant facts which have a bearing on the aforesaid controversy.

4. The relevant background and the nitty-gritty of the project undertaken by the assessee has been elaborately noted by the AO and the same can be summarized as follows. The appellant firm acquired development rights in respect of a plot admeasuring 37,150 sq. mtrs. between the period 7th March, 2003 to 5th June, 2003. On 26th June, 2003, assessee approached PCMC for approval of construction and the same was granted by PCMC on 10th Sept., 2003 on a plot size of 37,150 sq. mtrs. The said approval envisaged construction of 262 units comprising of 200 flats and 62 row houses, the relevant approved plan and also the corresponding certificate issued by PCMC for commencement of construction have been placed at pp. 265-266 and 275 to 278 respectively of the paper book filed by the assessee.

5. Subsequently, appellant acquired further lands totalling 18,800 sq. mtrs. during the period 5th Aug., 2003 to 17th Oct., 2003 and thus the total plot area increased to 55,950 sq. mtrs. After such acquisition, assessee filed a revised plan on 8th Oct., 2003 with the PCMC on the total plot area of 55,950 sq. mtrs., proposing to construct 297 row houses; it transpires that PCMC granted approval for construction of 280 row houses vide approval dt. 23rd Dec, 2003, a copy of such approval and the corresponding certificate issued by PCMC permitting the commencement of construction dt. 23rd Feb., 2003 have been placed at pp. 267 to 272 and 279 to 282 respectively of the paper book. With respect to the 17 row houses, it was clarified by the assessee that PCMC withheld the approval on account of overhead electricity transmission lines crossing over a portion of land.

6. The AO further noticed in the assessment order that assessee acquired a further land area of 10,350 sq. mtrs. on 16th April, 2004 and after such acquisition, assessee amalgamated the piece of said additional land of 10,350 sq. mtrs. with the existing land area of 55,950 sq. mtrs. On the total increased plot area of 66,300 sq. mtrs., assessee filed a revised plan with PCMC, which was approved on 29th March, 2005, whereby construction of 295 row houses and 144 flats was approved. At this point, it would be appropriate to observe the assertion of the assessee made before the AO that the sanction of 295 row houses was on a plot area of 55,950 sq. mtrs. (i.e. the plot area existing prior to the acquisition of 10,350 sq. mtrs.) and, the construction of 144 flats was sanctioned on a plot area of 10,350 sq. mtrs. acquired on 16th April, 2004. The project of row houses comprising of 295 units has been styled as 'Shubhashree Woods Row Houses' (in short 'SWRH') while the project of 144 flats has been styled as S-cube (in short 'S3'). The copies of the relevant plans approved by the PCMC dt. 29th March, 2005 and also the corresponding certificate permitting commencement of construction have been placed at pp. 273-274 and 283 to 286 of the paper book respectively.

7. In order to complete the facts regarding the lands acquired by the assessee, it is also relevant to observe that on 27th Sept., 2005 assessee acquired another contiguous plot of land measuring 5,100 sq. mtrs., which was also amalgamated with the earlier land area of 66,300 sq. mtrs. and thus the total plot area increased to 71,400 sq. mtrs. Assessee filed another revised plan with the PCMC and vide its approval dt. 31st March, 2006, PCMC gave approval for construction of 282 flats in addition to the 295 row houses which were already approved in the plan dt. 29th March, 2005. Copies of such sanctioned plan as well as the relevant commencement certificates have again been furnished in the paper book at pp. 477-478 and 481-482 respectively. In fact, it transpires that assessee filed another revised plan for approval with the PCMC whereby the total number of flats to be constructed was increased to 316 as against the previously approved 282 flats and such revision was also sanctioned by PCMC on 31st March, 2008, copy of which has also been placed in the paper book at pp. 479-480 and copy of corresponding commencement certificate has been placed at pp. 485 to 488 of the paper book. The aforesaid chronology of the acquisition of lands and the plan revisions carried out from time to time have been succinctly brought out by the AO in the assessment order and even before us a detailed reference has been made to the paper book wherein the relevant material has been placed. After considering the aforesaid, in para 5 of the assessment order, AO has tabulated the details of approval of plans, area of plot, built-up area, and the number of residential units, i.e. row houses and flats approved by the PCMC. The said tabulation is reproduced as under :

8. In the above background, on being asked to justify the claim of deduction under s. 80-IB(10) of the Act, assessee submitted before the AO that it had undertaken development and construction of two projects, namely, the row houses project styled as 'SWRH' project and the other project of 316 flats styled as 'S3' project. Assessee explained that the row houses project i.e. 'SWRH' project comprising of 295 units was independent of the 'S3' project and that the deduction under s. 80-IB(10) of the Act was claimed only with regard to the profits derived from the 'SWRH' project. As per the submissions of the assessee, which have been extensively reproduced by the AO in the assessment order, assessee pointed out that 'SWRH' project was constructed on a plot area of 55,950 sq. mtrs. while 'S3' project was on the balance land area of 15,450 sq. mtrs. As per the assessee the two projects were conceived as independent projects and they were also marketed as separate projects; and the claim of deduction under s. 80-IB(10) of the Act was confined to the profits derived from the construction of 'SWRH' project. With respect to the 'SWRH' project, assessee also asserted that the construction of all 295 units was completed before the stipulated date of 31st March, 2008 and accordingly it fulfilled the requirements of s. 80-IB(10)(a)(i) of the Act.

9. At this point, we may also briefly touch upon the aspect of completion of construction of 295 units of row houses. Admittedly, in terms of s. 80-IB(10)(a)(i) of the Act, construction of the said project was required to be completed by 31st March, 2008. The AO noticed that out of the total of 295 row houses in 'SWRH' project, completion certificate was issued by PCMC only for 293 row houses on or before 31st March, 2008. However, at the time of hearing before us, the learned counsel for the assessee pointed out that completion certificate even for the balance two row houses has been received from PCMC. The learned counsel explained that the completion certificate for the balance two row houses was issued by PCMC on 28th June, 2012, though the application to obtain such completion certificate was filed within time by the assessee i.e. on 26th March, 2008 itself. A copy of the said certificate has been placed in the paper book at p. 293. That the said two row houses were sold out to the customers who had started using it and for that matter learned counsel has referred to pp. 295 to 298 of the paper book wherein are placed property tax bills issued by PCMC for the two row houses, which show that the two row houses were indeed completed before 31st March, 2008. In fact, it is pointed out with reference to the completion certificate dt. 28th June, 2012, that it has been issued by PCMC w.e.f. 26th March, 2008, thereby justifying the assertion that the construction was complete prior to 31st March, 2008, the stipulated date for completion of the project. The learned counsel also pointed out that the said completion certificate dt. 28th June, 2012 issued by PCMC was not available at the time of proceedings before the lower authorities and therefore it should be admitted as an additional evidence. Justifying the admission of such additional evidence, it is contended that it was not within the control of the assessee and that in any case it was an approval granted by a local authority i.e. PCMC whose genuineness could not be doubted; and, further that the additional evidence is merely in support of the assertion of the assessee already made before the IT authorities that construction of 'SWRH' project comprising of 295 row houses was complete before 31st March, 2008.

10. The AO has not accepted the plea of the assessee that 'SWRH' and 'S3' projects were two independent and separate projects for the purpose of s. 80-IB(10) of the Act. The AO, after noticing the chronology of events which we have dealt in the earlier paras, pointed out that 'SWRH' project comprising of 295 row houses did not come into existence by way of any specific approval of PCMC. As per the AO, in the plan approvals dt. 10th Sept., 2003 and 29th March, 2005, PCMC has approved construction of row houses as well as construction of flats. In para 12(3) at p. 20 of the assessment order, the assertion of the AO is that the two projects, i.e. 'SWRH' project for row houses and 'S3' project for flats, have a 'single umbilical cord' by way of a common building permission granted by the PCMC on 29th March, 2005.

11. The second point made by the AO to show that the two projects are a composite project is contained in para 12(6) of the assessment order wherein it is observed that the PCMC allowed the assessee to use the unutilized extra FSI of 24,645 sq. mtrs. of the row houses area to build the flats because the construction of row houses and flats was considered as a composite project.

12. During assessment proceedings, the AO also carried out a verification exercise with the PCMC and in that context he examined Shri Eknath Pandurang Ugile, Chief Engineer, PCMC. As per the AO, the said official of PCMC stated, in response to a question, that the row houses project was not a separate project and further observed that the area of land on which the flats are constructed was amalgamated with the plot area on which the row houses were constructed: and, that assessee was able to construct 316 flats after using the surplus FSI available in respect of the construction of row houses.

13. In nutshell, the AO held that assessee had undertaken only one project, which comprised of construction of row houses as well as flats, and, that the two were not separate projects, as claimed by the assessee. Accordingly, the AO concluded that assessee had undertaken a singular project consisting of construction of 611 residential units (i.e. 295 row houses and 316 flats) and since prior to the stipulated date of 31st March, 2008 the completion certificates were obtained from PCMC only for 293 units out of the total 611 residential units, assessee did not comply with the condition specified in s. 80-IB(10)(a)(i) of the Act. Consequently, the deduction claimed by the assessee under s. 80-IB(10) of the Act was denied.

14. In appeal before the CIT(A), assessee reiterated its claim to the effect that the 'SWRH' project was a separate project and if it was so considered, the same complied with all the conditions specified for claim of deduction under s. 80-IB(10) of the Act. The CIT(A) has upheld the stand of the AO to the effect that the two projects canvassed by the assessee were indeed a single project. Going further, the CIT(A) held that even if the claim of the assessee that 'SWRH' project is a separate project was to be upheld, yet assessee was not eligible for the deduction under s. 80-IB(10) of the Act on the ground that till 31st March, 2008, assessee had received completion certificate only in respect of 293 row houses out of total of 295 row houses and the completion certificate for the balance two row houses was not received till 31st March, 2008. Therefore, according to him, in the absence of completion certificate for two row houses, it could not be said that assessee had completed construction of its 'SWRH' project before 31st March, 2008 and therefore on this ground also he denied the claim of deduction under s. 80-IB(10) of the Act.

15. In the above background, the rival counsel have made their submissions before us. In so far as the appellant is concerned, the point canvassed is that both the lower authorities have erred in not appreciating that for the purposes of s. 80-IB(10) of the Act, 'SWRH' project comprising of row houses was a separate project than the 'S3' project comprising of flats. It was reiterated that assessee's claim of deduction under s. 80-IB(10) of the Act was only in respect of the 'SWRH' project and therefore it is only in the context of this project, the conditions of s. 80-IB(10) of the Act have to be examined. According to the learned counsel, AO erred in observing that on account of a common approval granted by PCMC, the two projects were one and not separate. According to him, though the construction of two projects have been sanctioned by way of common approval at a certain point of time, the same cannot be taken to mean that the two constituted a single project for the purposes of s. 80-IB(10) of the Act. The learned counsel vehemently pointed out that the requirement of s. 80-IB(10) of the Act is that the project in question should be approved by a 'local authority', and such a requirement is fulfilled in the present case. The learned counsel pointed out that the expression 'housing project' has not been defined in s. 80-IB(10) of the Act. It is submitted that even a single building or a group of buildings could also constitute a 'housing project' and therefore it was not correct on the part of the AO to say that all the buildings sanctioned by a 'local authority' under one plan would alone constitute a 'housing project' for the purposes of s. 80-IB(10) of the Act. In this connection, he has invited our attention to the judgement of the Hon'ble Bombay High Court in the case of CIT v. Vandana Properties [2013] 353 ITR 36/[2012] 286 Taxman 584/19 taxmann.com 316 , copy of which has also been placed on record. It was contended that the lower authorities have travelled beyond the provisions of s. 80-IB(10) of the Act by equating the sanctioned plan with the meaning of 'housing project' for the purposes off s. 80-IB(10) of the Act.

16. Apart from the aforesaid, learned counsel contended that factually also the two projects were not only perceived but also executed as independent and separate projects by the assessee. For this purpose, he has referred to the relevant pages of the paper book containing the plans and brochures of the two projects to show that they have been conceived and marketed separately. Reference has also been made to certain advertisements of the projects, copies of which have been placed in the paper book, to point out that the two projects were advertised altogether separately.

17. With regard to the action of the AO in relying upon the statement of the Chief Engineer, PCMC, the learned counsel pointed out that from the point of PCMC all the buildings sanctioned under one plan may constitute a single project, so however this was not the position for the purposes of examining assessee's claim for deduction under s. 80-IB(10) of the Act. It was also submitted that utilization of extra FSI of the row houses project for the purposes of construction of flats does not indicate that it was a single project. The learned counsel emphasized that the 295 row houses project can independently constitute a 'housing project' and the eligibility of assessee's claim for deduction under s. 80-IB(10) of the Act is to be considered in that light. It was submitted that no deduction, either in this year or in the subsequent years, have been claimed with regard to the 'S3' project and that on this aspect there is no dispute.

18. A reference was also made to the audit report submitted in Form No. 10CCB whereby the assessee's claim for deduction under s. 80-IB(10) of the Act was enumerated. In the said report, the total land area stated is 55,950 sq. mtrs., which is the area on which assessee undertook development of 'SWRH' project consisting of 295 row houses, thus showing that 'SWRH' project was conceived as a separate project for the purposes of s. 80-IB(10) of the Act.

19. In the course of hearing, the learned counsel has referred and relied on the following decisions : (i) Pune Bench of the Tribunal in the case of Rahul Construction Co. v. ITO [2012] 51 SOT 192 (URO)/21 taxmann.com 435 ; (ii) Mumbai Bench of the Tribunal in the case of Saroj Sales Organisation v. ITO [2008] 115 TTJ 485 ; (iii) Bangalore Bench of the Tribunal in the case of Dy. CIT v. Brigade Enterprises (P.) Ltd. [2009] 28 SOT 7 (URO) ; (iv) Mumbai Bench of the Tribunal in the case of Mudhit Madanlal Gupta v. Asstt. CIT [2011] 9 taxmann.com 235 (Mum.) and (v) Pune Bench of the1 Tribunal in the case of Runwal Multihousing (P.) Ltd. v. Asstt. CIT [IT Appeal Nos. 1015 to 1017 (PN) of 2011, dated 21-11-2012].

20. After having submitted that 'SWRH' project was a separate project consisting of 295 row houses, the learned counsel proceeded to demonstrate that construction of the said project was complete by 31st March, 2008. The completion certificate for 293 row houses was received by the assessee prior to 31st March, 2008, and a reference has been made to p. 289 of the paper book, wherein is placed a copy of such certificate. For the balance two row houses, it is explained that the completion certificate was withheld for reasons extraneous to the non-completion of construction; and, in any case, it has been subsequently issued by PCMC on 28th June, 2012 but w.e.f. 26th March, 2008, which is evident from the copy of the said certificate placed in the paper book at p. 293. The learned counsel pointed out that the construction of the two row houses was also completed before 31st March, 2008 and the two row houses were sold by the assessee and were being used by the customers. In support, reference has been made to the property tax bills issued by the PCMC. It was submitted that the assessee had applied for obtaining the completion certificate in time, i.e. on 26th March, 2008 but the certificate has been issued by PCMC belatedly and this would not mean that the assessee has not completed the project in time. In this context, reliance was placed on the decision of the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. v. ITO [IT Appeal Nos. 945 to 950 (PN) of 2010, dated 30-8-2011]. Accordingly, it is contended that assessee fulfilled the condition of completion of housing project by 31st March, 2008 and thus it was eligible for deduction under s. 80-IB(10) of the Act. On this aspect, reliance has also been placed on the decision of the Pune Bench of Tribunal in the case of Kundan Real Estate v. ITO [IT Appeal No. 126 (PN) of 2010, dated 26-6-2012] for the proposition that once the PCMC issued the completion certificate it would relate back to the date of application i.e. 26th March, 2008 in the present case and thus assessee fulfils the condition of completing the construction prior to 31st March, 2008 contained in s. 80-IB(10)(a)(i) of the Act.

21. In contrast, the learned Departmental Representative appearing for the Revenue has justified the orders of the authorities below by pointing out that the 'SWRH' and 'S3' projects could not be considered as separate projects undertaken by the assessee. According to the learned Departmental Representative, the sanction for 'SWRH' and 'S3' projects have been given by the PCMC under a single common approval and therefore the combined project of 'SWRH' and 'S3' would constitute a 'housing project' for the purposes of s. 80-IB(10) of the Act also. It was pointed out that even as per the explanation rendered by Chief Engineer, PCMC the two projects were not seen as separate projects by the PCMC. The learned Departmental Representative pointed out that merely because the two projects were advertised and marketed separately cannot be interpreted to mean that assessee undertook development of two separate projects because the fact remained that they have been sanctioned under one common approval plan and thus it was to be considered as a single project.

22. The learned Departmental Representative also justified the action of CTT(A) in holding that even if 'SWRH' project was to be considered as a separate project consisting of 295 row houses, the assessee was still not eligible for deduction under s. 80-IB(10) of the Act, because before the stipulated date of 31st March, 2008, completion certificate was issued by PCMC only for 293 row houses.

23. We have considered the rival submissions, perused the orders of the authorities below and the decisions cited at Bar. Sec. 80-IB(10) of the Act permits deduction to an assessee undertaking development and building of a 'housing project' approved by a 'local authority'; and, such deduction is allowed to the extent of 100 per cent of profits derived from the 'housing project', subject to the conditions specified therein. Shorn of other details, the only condition relevant for the present purpose is contained in cl. (a) of s. 80-IB(10) of the Act, which is with regard to time-limits for completion of construction of 'housing project'. In the present case, there is no dispute that the permissible period for completion of construction is to be governed by sub-cl. (i) of cl. (a) to s. 80-IB(10) of the Act, because the housing project has been approved by the local authority i.e. PCMC before 1st April, 2004; and, accordingly the project is required to be completed on or before 31st March, 2008. To the aforesaid extent, there is no difference between assessee and the Revenue. However, the difference arises as to which is the 'housing project' that is required to be evaluated to ascertain whether construction has been completed on or before 31st March, 2008 in terms of s. 80-IB(10)(a)(i) of the Act. As per the Revenue, the project to be considered comprises of 611 residential units (i.e. 295 row houses and 316 flats) and, if it is so considered, the assessee has not completed construction of the project before 31st March, 2008 and thus assessee becomes ineligible for the claim of deduction under s. 80TB(10) of the Act.

24. Per contra, the claim of the assessee is that the 'SWRH' project consisting of construction of 295 row houses is to be considered as a 'housing project' for the purposes of s. 80-IB(10)(a)(i) of the Act as the claim for deduction under s. 80-IB(10) of the Act is confined to the profits derived from the said 'SWRH' project and as per the assessee it is a separate and independent project which fulfils all the conditions for the purposes of s. 80-IB(10) of the Act.

25. Ostensibly, the pertinent issue which is required to be adjudicated in the present case is as to whether 'SWRH' project and 'S3' project are two independent projects or a single project for the purposes of determining assessee's eligibility for the claim of deduction under s. 80-IB(10) of the Act. We may emphasize here that the claim of the assessee for deduction under s. 80-IB(10) of the Act is confined to the profits derived in respect of the 'SWRH' project alone. Sec. 80-IB(10) of the Act allows exemption of profits derived from developing and building of a housing project, subject to the conditions prescribed therein. Notably, the expression 'housing project' has not been defined in s. 80-iB(10) of the Act, a situation that has also been noted by the Hon'ble Bombay High Court in the case of Vandana Properties (supra). In fact, the Hon'ble High Court was considering a project which was falling in the purview of the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991 and the Hon'ble Court noticed that the expression 'housing project' is not defined in the aforesaid two enactments also. Therefore, the expression 'housing project' in s. 80-IB(10) of the Act would have to be construed as "commonly understood", as per the Hon'ble Bombay High Court in the case of Vandana Properties (supra). As per the Hon'ble Bombay High Court, construction of even one building with several residential units of the prescribed size would constitute a 'housing project' for the purposes of s. 80-IB(10) of the Act. The relevant portion of the order of the Hon'ble Bombay High Court in the case of Vandana Properties (supra) is as under :

"18. The expression 'housing project' is neither defined under s. 2 of the Act nor under s. 80-IB(10) of the Act. Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in s. 80-IB(10) would have to be construed as commonly understood.

19. As rightly contended by Mr. Inamdar, learned senior advocate appearing on behalf of the assessee and Mr. Mistri, learned senior advocate and Mr. Joshi, learned advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or a group of buildings consisting of several residential units. In fact, the Explanation in s. 80-IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1,000 sq. ft. ('E' building in the present case) would constitute a 'housing project' under s. 80-IB(10) of the Act.

20. The question, then, to be considered is, whether construction of 'E' building is an independent housing project or extension of the housing project already existing on the plot in question. It is the contention of the Revenue that since the approval for construction of 'E' building was granted by the local authority subject to the conditions set out in the first approval granted on 12th May, 1993 for construction of A and B buildings, construction of 'E' building must be considered to be the extension of the earlier housing project for which approval was granted prior to 1st Oct., 1998 and, therefore, the benefit of s. 80-IB(10) cannot be granted. There is no merit in the above argument, because, when the plans for A, B, C and D buildings were approved during the period from 1993 to 1996, construction of 'E' building was not even contemplated on the plot in question. It is only in the year 2001 when the status of the land was converted from surplus vacant land into within the ceiling limit land by the State Government, an additional building could be constructed on the plot in question and accordingly building plan for construction of 'E' building was submitted and the same was approved by the local authority on 11th Oct., 2002."

26. Similarly, the Hon'ble Madras High Court in the case of Viswas Promoters Private Limited v. Income Tax [2013] 214 Taxman 524/29 taxmann.com 19 also noted that the expression 'housing project' is not defined in s. 80-IB(10) of the Act, and, by referring to the definition of 'housing project' under Explanation to s. 80HHBA of the Act observed that the expression 'housing project' under s. 80-IB(10) of the Act refers to any 'building' other than 'road', 'bridge' or other structure. According to the Hon'ble High Court each block in a larger project has to be taken as an independent building and hence a 'housing project' for the purpose of considering the claim of deduction under s. 80-IB(10) of the Act.

27. Again, the Hon'ble Madras High Court in the case of Commissioner Of Income Tax v. Arun Excello Foundations (P) Ltd. [2013] 212 Taxman 342/29 taxmann.com 149 noted the absence of definition the expression 'housing project' in s. 80-IB(10) of the Act and held that 'housing project' is to be understood as a building project and need not be restricted to a residential project; that the project may be either out and out residential or commercial project or mix up of both; and, as per the Hon'ble High Court, a housing project, purely of commercial nature, approved by a 'local authority', is also a 'housing project' entitled to deduction under s. 80-IB(10) of the Act.

28. In fact, at this point we may refer to the decision of the Mumbai Bench of the Tribunal in the case of Mudhit Madanlal Gupta (supra) wherein a similar issue has been considered. In this case, assessee had constructed a project with four wings, namely, A, B, C and D. The claim of deduction under s. 80-IB(10) of the Act was denied on the ground that assessee was not able to obtain the completion certificate in respect of wing 'D'. The Revenue canvassed that the project was a single project consisting of four wings and non-completion of wing 'D' disentitled the assessee from the claim of deduction under s. 80-IB(10) of the Act. The Tribunal, after noticing that the expression 'housing project' is not defined in s. 80-IB(10) of the Act, referred to the dictionary meaning of the expression 'housing project' and held that even segregated block of buildings can also be construed as a 'housing project' for the purposes of s. 80-IB(10) of the Act and, deduction is to be allowed if all the conditions of s. 80-IB(10) of the Act are fulfilled. It was explained that 'housing project' does not necessarily have to be various group of buildings constructed on a particular land but it can also be a particular building or buildings, which is part of a larger project. Whatever portion of the larger project which satisfied the conditions of s. 80-IB(10) of the Act was held to be considered as a 'housing project' for the purposes of s. 80-IB(10) of the Act. The following observations of the Tribunal are worthy of notice :

"Coming to the second objection raised by the Revenue i.e., that the assessee has not completed the project. This objection is raised on the basis that since the project consisted of four wings i.e., A, B, C and D and since completion certificate has not been filed for D wing and, therefore, the project cannot be said to have been completed. This would lead one to the question as to what is the meaning of a housing project. Legislature has not provided any definition of the housing project and, therefore, the definition has to be construed by making reference to the dictionary and as long as the segregated blocks are being eligible for deduction under s. 80-IB(10), then same shall be construed as eligible housing project and constructed on a particular land but it can also be a particular building or any building which is part of the large project. Whatever portion of the housing project is otherwise found to be eligible has to be considered as a housing project for the purpose of deduction under s. 80-IB(10)."

29. Similar view has been taken by the Pune Bench of the Tribunal in the case of Runwal Multihousing (P.) Ltd. (supra). In this case, assessee had obtained sanction for construction of buildings A to F and 17 row houses in a single plan from the concerned 'local authority', i.e. Pune Municipal Corporation. Later, assessee constructed buildings A, C, D, E and 17 row houses but did not construct buildings B and F. The claim of deduction under s. 80IB(10) of the Act was denied on the ground that buildings B and F were not constructed and thus the condition of completion of housing project was not satisfied by the assessee. The Tribunal held that if the portion completed by the assessee complied with the requirements of s. 80-IB(10) of the Act, the same should be considered as a 'housing project' for the purpose of deduction under s. 80-IB(10) of the Act. The relevant discussion in the order of the Tribunal is as under :

"21. So far as the second grievance of the Revenue that building Nos. B and F are not constructed and therefore the project has not been completed as per the approved plan, we find the buildings A, C, D, E and the 17 row houses are constructed on a plot area of more than 1 acre, none of the fiats/row houses is beyond 1,500 sq. ft. and the completion thereof has been over before 31st March, 2008 in view of our findings above.

21.1 We find the Pune Bench of the Tribunal in the case of Rahul Construction Co. v. ITO ITA No. 1250/Pn/2009 and ITA No. 707/Pn/2010 order dt. 30th March, 2012 has held as under :

'8. Considering the above submission, and having gone through the orders of the authorities below, material available on record and the decisions relied upon, we find that the issue involved is as to whether the assessee had completed the housing project within the prescribed time limit since the date of first approval of the project by the PMC.

9. To decide the above issue, it is necessary to decide firstly as to what would be first date of approval of the housing project by the PMC to compute the time-limit prescribed for completion of the project to take benefit of deduction under s. 80-IB(10) of the Act. There is no dispute on some material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time limit upto 31st March, 2008. The layout plan in respect of entire complex was sanctioned by PMC vide order No. DPO/45/D/646, dt. 3rd April, 2003 and the building plan was sanctioned vide commencement certificate No. 4269, dt. 29th April, 2003. Admittedly, the term 'housing project' has not been defined in the IT Act but in the context of deduction under s. 80-IB(10) an Explanation has been provided below cl. (a) to sub-s. (10) to s. 80-IB. For a ready reference, the said Explanation is being reproduced hereunder :

The very reading of above Expln. (i), it makes clear that for the eligibility of the deduction provided under s. 80-IB(10) of the Act, the date on which building plan of such housing project has been firstly approved by the local authority will be treated as approval in respect of the housing project. When we read Expln. (ii) with Expln. (i) it makes clear that completion of construction of such building plan first approved by the local authority will be taken the date of completion of construction of such building plan when completion certificate has been issued by the local authority. In other words, in cl. (i) of the Explanation, it has been made clear that would be the housing project, first approval of which, by the local authority would be taken as starting point of the housing project and in clause No. (ii), it has been made clear that what would be the completion certificate in respect of such housing project issued by local authority to compute the prescribed time limit for verification of eligibility of assessee for the claimed deduction. In view of the above explanation, we find substance in the contention of the learned Authorised Representative that approval of the housing project and approval of building plan are two different concepts. The Bangalore Bench of the Tribunal in the case of Dy. CIT v. Brigade Enterprises (P.) Ltd. (supra) has held that plan for development is only a work order and not final plan sanctioned by the local authority. For any project, there could not have been a plan without submission of the detailed building plans, by the architect and what requisite details required to be submitted for approval of the building plans by the local authority. In the case of Saroj Sales Organisation v. ITO (supra), before Mumbai Bench, almost similar facts as before us were there. The commencement certificate in respect of six wings in block 'NT was separately received by the assessee and all the flats in block were less than 1,000 sq. ft. It was held by the Tribunal that it is not upon to the Revenue to include block 'BC' as part of block 'N' just to deny relief to the assessee under s. 80-IB(10). The Tribunal observed that Block 'BC' was meant for higher strata of the society had been kept separately by assessee in all the respect, assessee had not claimed relief under s. 80-IB in respect of Block 'BC' In the case of Mudhit Madanlal Gupta v. Asstt. CIT (supra) before the Mumbai Bench, it has been held that the housing project does not necessarily have to be various group of buildings constructed on that particular land, but it can also be a particular building or any building which is part of a large project. It has been further held that whatever portion of the housing project is otherwise found to be eligible has to be considered as a housing project for the purpose of deduction under s. 80-IB(10) of the Act. Similar view has been expressed by Mumbai Bench of the Tribunal in the case of Vandana Properties v. Asstt. CIT (supra).

10. In view of above discussion, we come to the conclusion that for verification of eligibility of benefit claimed under s. 80-IB(10) of the Act by the assessee on buildings Al to A5 in 'Atul Nagar' and buildings B1 to B6 in 'Rahul Nisarg Co-operative Housing Society Ltd.', the assessing authority has to verify as to when the building plans for these buildings were firstly approved by the local authority and taking the said date of approval a starting point, he has to verify as to whether these buildings were completed within the prescribed time-limit i.e. 31st March, 2008 on the basis of the completion certificate in respect of such housing project issued by the PMC. When we examine the facts of the present case under the above background, we find that the authorities below have not disputed the fact furnished in this regard by the assessee that under the project 'Atul Nagar' consisting of buildings Al to A5, the first building plan for A type was approved by the PMC on 29th April, 2003 vide commencement certificate No. 4269 (page No. 4 of the paper book). However, actual construction of A type building was executed as per the revised plan vide No. C.C. 4101/27/6/2003 (page No. 5 of the paper book). The size of the plot on which the A type building i.e. Al to A6 have been constructed is 1,39,466 sq. ft. The project A type building i.e. Al to A5 consists of 360 residential units and the construction has been completed between 10th Jan., 2005 to 31st Aug., 2005 (page Nos. 6 to 9 of paper book). The authorities below have also not disputed this material fact that residential units has a maximum built up area of 1,500 sq. ft. Likewise, these material facts that B Group buildings in 'Rahul Nisarg Co-operative Housing Society Ltd.' have been constructed on land area of 1,38,203 sq. ft., has not been denied by the authorities below. They have also not denied these material facts that the first building plan was sanctioned on 29th April, 2003 vide commencement certificate No. 4269 issued by the PMC (page No. 16 of the paper book). The other material facts like actual construction was executed as per the revised plan sanction on 20th March, 2004 vide CC No. 2225 (page No. 17), the project consists of 396 flats and construction of these flats have been completed on 14th July, 2006 as per the completion certificate issued by the PMC (page Nos. 13 to 18 of paper book) are not in dispute. The authorities below have also not denied that built-up area of each of these flats does not exceed 1,500 sq. ft. It is also not in dispute that both the projects are entirely a residential project and there is no commercial area therein. Under the above circumstances, we are of the view that the assessee is very much entitled to the claimed deduction under s. 80-IB(10) of the Act on the buildings Al to A5 in 'Atul Nagar' and buildings B1 to B6 in 'Rahul Nisarg Co-operative Housing Society Ltd.'. The issue is therefore decided in favour of the assessee. We thus while setting aside the orders of the authorities below on the issue, direct the A.O to allow the claimed deduction under s. 80-IB(10) in question. The related grounds are accordingly allowed.'

21.2 We find that Bangalore Bench of the Tribunal in the case of Dy. CIT v. Brigade Enterprises (P.) Ltd. [2008] 119 TTJ (Bang) 269 : (2008) 14 DTR (Bang)(Trib) 371 has observed as under :

'Deduction under s. 80-IB-Income from developing and building housing project-Different units of a group project-Where some of the residential units in a bigger housing project, treated independently, are eligible for relief under s. 80-IB(10), relief should be given pro rata and should not be denied by treating the bigger project as a single unit, more so, when assessee obtained all sanctions, permissions and certificates for such eligible units separately-Assessee undertook a development project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s. 80-IB(10) in respect of two residential units only which, if taken separately, were eligible for the relief-AO treated the entire project as a single unit and denied relief under s. 80-IB(10) in entirety-CIT(A) allowed relief under s. 80-IB(10) treating the said two units as independent units-Justified-Material on record showed that the various local authorities duly inspected the plot and sanctioned plan for each of the blocks separately-Group housing approval was approval of a master plan as a concept-Further, the use of the words 'residential units' in cl. (c) of s. 80-IB(10) means that deduction should be computed unit-wise-Therefore, if a particular unit satisfies the condition of s. 80-IB, the assessee is entitled for deduction and it should be denied in respect of those units only which do not satisfy the conditions-Again, the accounting principles would also mandate recognition of profits from each unit separately.'

21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed under s. 80-IB(10) is eligible for deduction. The various decisions relied on by the Revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction under s. 80-IB(10) in respect of building Nos. A, C, D, E and the 17 row houses. The grounds raised by the assessee on this issue are accordingly allowed."

30. From the aforesaid discussion, it can be inferred that in order to understand the meaning of the expression 'housing project' for the purpose of s. 80-IB(10) of the Act, in the absence of any definition in s. 80-IB(10) of the Act or even in the Local Development Control Rules for PCMC, it has to be construed as "commonly understood". The plea of the Revenue that expression 'housing project' should be understood to mean the project as approved by the 'local authority' is not justified because evidently the Development Control Rules of the 'local authority' i.e. PCMC does not define a 'housing project'. In fact, from the discussion in the foregoing paras it is evident that even a building or a group of buildings comprised in a larger project approved by a 'local authority' can be construed as a 'housing project' for the purpose of considering a claim of deduction under s. 80-IB(10) of the Act. Considered in this background, in the instant case, the plea of the assessee that 'SWRH' project is an independent project for the purpose of considering a claim of deduction under s. 80-IB(10) of the Act cannot be shut out merely because PCMC approved it along with the 'S3' project. Therefore, while evaluating the compliance with the condition of completion of construction of the project contained in s. 80-IB(10)(a)(i) of the Act, we upheld assessee's plea that 'SWRH' project be construed as a 'housing project, especially when the claim for deduction under s. 80-IB(10) of the Act is confined to the profits of 'SWRH' project.

31. Apart from the aforesaid, factually speaking also, it emerges that 'SWRH' project has been developed and executed by the assessee independent of the 'S3' project. Firstly, by its very nature the two projects are different in as much as 'SWRH' project consists of row houses on a contiguous plot size of more than, one acre; whereas the 'S3' project consists of only multi-storeyed flats. Secondly, it is also notable that assessee marketed and advertised the two projects separately. At pp. 255 to 260 of the paper book is placed the brochure of 'SWRH' project in which there is no reference to the 'S3' project consisting of flats. Similarly, the brochure in respect of 'S3' project placed in the paper book at pp. 471 to 475 also does not contain any reference to the 'SWRH' project consisting of row houses. On p. 263 of the paper book is a copy of a newspaper advertisement released by the assessee regarding the 'SWRH' project of row houses, which does not contain any reference to 'S3' project comprising of flats. Thirdly, even in the audit report filed in Form No. 10CCB certifying the claim of deduction under s. 80-IB(10) of the Act, the deduction has been computed by considering 'SWRH' project as a separate project. In this report, size of the plot of land is stated to be 55,950 sq. mtrs., which is the plot area on which the 'SWRH' project consisting of 295 row houses is constructed. Considering all the aforesaid factors, we find ample force in the plea of the assessee that 'SWRH' project was not only perceived but also developed and executed as a separate project independent of the 'S3' project, and thus assessee was justified in considering 'SWRH' project as 'housing project' for the purposes of s. 80-IB(10) of the Act.

32. The argument of the Revenue, based on the statement of Chief Engineer, PCMC, in our view, does not help the case of the Revenue as the following discussion would show. The case set up by the Revenue is that two projects have been sanctioned by a common approval and thus the PCMC has viewed the two projects as a single composite project. It is contended by the Revenue that the expression 'housing project', though not defined in s. 80-IB(10) of the Act, should be taken to be the project per se, as approved by a 'local authority' for the purposes of s. 80-IB(10) of the Act. No doubt, for a 'housing project' to be eligible for deduction under s. 80-IB(10) of the Act, it is required to be approved by a 'local authority', so however, the phraseology of s. 80-IB(10) of the Act does not reflect a legislative intent that the project should be 'as approved' by a 'local authority'. The requirement of s. 80-IB(10) of the Act to the effect that project should be approved by a 'local authority' is fulfilled no sooner when the 'housing project' considered by an assessee is approved by a 'local authority'. Moreover, the expression 'housing project' is not defined in the Development Control Rules for PCMC i.e. the 'local authority' in the case before us and thus, the said enactment cannot be resorted to for the purpose of understanding the meaning of expression 'housing project' contained in s. 80-IB(10) of the Act. Therefore, so long as the claim of deduction is in relation to a 'housing project', which has been approved by the 'local authority', it would satisfy the requirement of s. 80-IB(10) of the Act. Pertinently, if the proposition of the Revenue is to be upheld, the same would be quite contrary to the manner in which the expression 'housing project' contained in s. 80-IB(10) of the Act has been understood by the Hon'ble Bombay High Court in the case of Vandana Properties (supra) and also by the Hon'ble Madras High Court in Viswas Promoters (P.) Ltd. (supra) and Arun Excello Foundations (P.) Ltd. (supra). It may also be pertinent to observe that the Hon'ble Bombay High Court in Vandana Properties (supra) not only noted that the expression 'housing project' is not defined under s. 80-IB(10) of the Act but also noted that the same was not defined even under the relevant local regulations before it, viz. the Mumbai Municipal Corporation Act, 1988 and the Development Control Regulations for Greater Mumbai, 1991. Thus, the Hon'ble High Court proceeded to observe that the expression 'housing project' in s. 80-IB(10) would have to be construed as commonly understood. Even in the case before us, there is no dispute that the expression 'housing project' is not defined in the Development Control Rules for PCMC and therefore, the concept of 'housing project' as sought to be understood by the AO based on the explanation of Chief Engineer, PCMC is not relevant for the purposes of s. 80-IB(10) of the Act. Thus, the argument of the Revenue to the effect that since SWRH and 'S3' projects have been approved by PCMC under a common approval, the two projects should be combined and considered as a single project for the purpose of s. under s. 80-IB(10) of the Act, in our opinion is misplaced.

33. In conclusion, we hold that 'SWRH' project is to be considered as an independent 'housing project' for evaluating assessee's claim for deduction under s. 80-IB(10) of the Act. The only aspect now to be examined is as to whether assessee has completed construction of the said project before 31st March, 2008, as required by s. 80-IB(10)(a)(i) of the Act.

34. On the above aspect, the claim of the Revenue is that prior to 31st March, 2008, assessee has obtained completion certificate only in respect of 293 out of 295 total row houses and thus, it has to be inferred that assessee has not fulfilled the condition prescribed in s. 80-IB(10)(a)(i) of the Act. As noted earlier out of 295 row houses the completion certificate in respect of 293 row houses was obtained prior to 31st March, 2008 but even with regard to the remaining two row houses the application for obtaining completion certificate was made to the 'local authority' on 26th March, 2008. The assessee claimed before the lower authorities that construction of the remaining two row houses was also complete before 31st March, 2008, a plea which has not been accepted. Before us, learned counsel for the assessee pointed out that subsequent to the impugned order of the CIT(A), on 28th June, 2012 in pursuance to the application of the assessee submitted on 26th March, 2008, the completion certificate has been issued by PCMC for the remaining two row houses also, a copy of the said certificate is placed at p. 293 of the paper book. The aforesaid certificate provides that it is being issued w.e.f. 26th March, 2008. On this basis, it has been vehemently argued that the construction was complete even at the time of submission of application to PCMC on 26th March, 2008, and the delay in issuance of completion certificate by PCMC could not be attributed to the assessee in as much as no objections were confronted to the assessee at any stage. Be that as it may, we find that the said certificate dt. 28th June, 2012 was not before the lower authorities and is an additional piece of evidence now sought to be relied by the assessee. We deem it fit arid proper to admit such evidence because the certificate is issued by a 'local authority' duly constituted in law and it is relevant to decide the issue on hand. Moreover, it does not enable the assessee to make out a new case in as much as the same has been obtained from PCMC in response to an application made of an earlier date, which is in the knowledge of the authorities below, and is merely in support of assessee's assertions made consistently before the lower authorities that the construction of the two row houses was complete in all respects before 31st March, 2008 and that it had applied for obtaining the completion certificate in time i.e. on 26th March, 2008. Thus, we find that the delay in issuing completion certificate cannot be attributed to assessee so as to deny the deduction claimed under s. 80-IB(10) of the Act on the basis that the construction was not complete before 31st March, 2008, especially when there is no objection raised by PCMC regarding non-completion of construction.

35. Factually speaking, the two row houses were complete at the time of making application to PCMC on 26th March, 2008 is also borne out of the material on record. At pp. 295 to 298 of the paper book is placed copies of the property tax bills raised by PCMC in relation to the two row houses for the financial year 2005-06. The assessee also clarified that possession of the two row houses was handed over to the actual users or customers prior to 31st March, 2008, a fact which is not disputed by the Revenue. The assessee also asserted before the lower authorities that the application dt. 26th March, 2008 made to PCMC for obtaining of completion certificate was based on a certificate of the architect confirming completion of construction of the building.

36. The Expln. (ii) to s. 80-IB(10)(a) of the Act requires that the date of completion of construction of a housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. On the basis of the aforesaid, the claim of the Revenue is that as on 31st March, 2008, the PCMC had not issued the completion certificate for the two row houses and therefore the assessee did not comply with the stipulated period of completion of construction. The moot question is as to whether in the face of the aforesaid fact-situation noted by us, can it be said that assessee's project did not comply with the condition prescribed in s. 80-IB(10)(a)(i) r/w Expln. (ii) thereof so as to hold that the construction was not complete before 31st March, 2008. In a somewhat similar situation, the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. (supra), allowed the claim of the assessee considering that (i) the certificate of the architect confirming that the construction was complete; and, (ii) the application for obtaining completion certificate was moved before the local authority before the specified date. The Tribunal noted that delay in issuing completion certificate was not attributable to the assessee or to any non-completion of construction. In our view, the decision of the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. (supra) is clearly applicable in the present case in as much as the assessee applied for obtaining completion certificate for the two row houses before 31st March, 2008 i.e. on 26th March, 2008 and the said application was based on a certificate issued by the architect. Factually also, the facts on record, supported by the property tax bills, architect's certificate, occupation by users, etc. support the position that prior to 31st March, 2008 construction of the two row houses was complete. Pertinently, the completion certificate of PCMC regarding the two row houses in question which is dt. 28th June, 2012, clearly states that it is issued w.e.f. 26th March, 2008. Therefore, even the PCMC certification supports the position that the construction was complete as on 26th March, 2008 which, in our view, is in substantive compliance with the requirements of s. 80-IB(10)(a)(i) r/w Expln. (ii) thereof.

37. Now, insofar as the balance of 293 row houses is concerned there is no dispute that the completion certificate has been issued by PCMC prior to 31st March, 2008. Therefore, considered in respect of entire 295 units comprised in 'SWRH' project, the date of completion of construction is to be understood as on or before 31st March, 2008 thereby complying with the requirement of s. 80-IB(10)(a)(i) r/w Expln. (ii) thereof.

38. In view of the aforesaid discussion, we therefor hold that assessee is eligible for deduction under s. 80-IB(10) of the Act of Rs. 12,76,88,137 with respect to the profits derived from 'SWRH' project for asst. yr. 2006-07.

39. In the result, appeal of the assessee for asst. yr. 2006-07 is allowed.

40. The facts and circumstances stand on identical footing in asst. yr. 2007-08, therefore, our decision in asst. yr. 2006-07 would apply mutatis mutandis in asst. yr. 2007-08 also.

41. Resultantly, both the captioned appeals of the assessee are allowed, as above.

SUNIL