ORDER
Ahmad Fareed, A.M.
1. This appeal by the assessee is directed against the order of the CIT(A)-n, Pune, dt. 14th Dec., 2004 for asst. yr. 2001-02. The only issue involved in this appeal is about the assessee’s claim for deduction under Section 80-IB.
2. The assessee is a partnership firm engaged in the business of development and construction of housing projects. The assessee-firm undertook a housing project at Kothrud under the name of Bhaktiyog Co-operative Housing Society (‘Bhaktiyog society’ for short). In the return for asst. yr. 2001-02 filed on 31st Oct., 2001 the total income was shown at Rs. NIL after claiming deduction under Section 80-IB(10) in respect of the entire net profit of Rs. 81,83,630. The AO disallowed this claim and his order was confirmed by the CIT(A). The assessee has challenged the order of the CIT(A) in the present appeal.
3. Shri S.K. Tyagi, the learned Authorised Representative submitted that the Bhaktiyog society had purchased a piece of land admeasuring 4757 sq. mtrs, that on a request of Maharashtra Academy of Engineering and Educational Research (MAEER), the Special Land Acquisition Officer, Pune, started proceedings in respect of the aforesaid land of the society along with the plots of land of four other housing societies; that in 1990 all the aforesaid five societies filed a writ petition in Bombay High Court against the acquisition of their land; that on 31st March, 1994 all the five societies entered into a compromise agreement with MAEER; that a compromise decree dt. 30th March, 1995 was passed by the Bombay High Court; that as per para 3, p. 2 of the relevant minutes, the State Government was to allot to the said society a buildable area of 3,800 sq. mtrs; that as per para 8, p. 5 of the relevant minutes, MAEER was to provide to all the aforesaid five societies, from out of its land, the required additional open space and place for transformer; that as per the aforesaid compromise the said society was allotted a plot of land of area of 3,800 sq. mtrs and the requisite open space of 380 sq. mtrs, aggregating to the area of 4,180 sq. mtrs, which exceeded one acre; that as per the layout of land admeasuring 0.4 hectare (one acre) or more, 10 per cent of the entire holding area is to be reserved as recreational space; that the layout plan of the five cooperative societies and MIT was passed jointly by the Pune Municipal Corporation; that in the layout plan the area of 2378 sq. mtrs was kept as open space for all the housing societies; that in a plot of one acre (4047 sq. mtrs) the permissible built up area is 3643 sq. mtrs; that from the letters of P.M.C. dt. 4th Feb., 2004 and 27th July, 2004, it is clear that the built up area permissible on a plot of one acre would be 3646 sq. mtrs as against the built up area allotted to the said society is 3800 sq. mtrs; that it clearly proves that the corresponding plot area of the said society was higher than one acre as per para 42.1 of the CBDT Circular No. 772, dt. 23rd Dec., 1998; that the aforesaid provision had been inserted in the then Section 80-IA with a view to promote investment in housing projects ; that in interpreting the incentive provisions the approach of the AO should be liberal and therefore the claim of the assessee for deduction under Section 80-IB(10) was admissible and be allowed.
4. Shri Ajay Shrivastava, the learned Departmental Representative placed reliance on the orders of the lower authorities and vehemently argued saying that the order of the CIT(A) needed to be upheld. He pointed out that in the present case the assessee was a builder; that the land belonged to the said society that the built-up area allotted to the said Society was only 3800 sq. mtrs. that so far as the assessee-builder was concerned the rate was confined to the area of 3800 sq. mtrs with the open space allotted by MAEER in its own land was not identifiable and therefore, could not be considered for being included in the area of the plot; that the condition given in Clause (b) of Sub-section (10) of Section 80-IB very clearly stated that the project was to be on the size of a plot of land which had a minimum area of one acre; that the area of the plot of land on which the assessee-builder developed/built the impugned project was only 3800 sq. mtrs which was much less than the area of one acre; that the assessee did not fulfil one of the basic conditions of Sub-section (10) of Section 80-IB and therefore, the assessee’s claim for deduction under Section 80IB was rightly rejected by the AO and by the CIT(A).
5. We have considered the rival submissions in the light of material on record. The Sub-sections (1) and (10) of Section 80-IB read as under:
80-IB (1)-Where the gross total income of an assessee includes any profits and gains derived from any business referred to in Sub-sections (3) to (11), (11A) and (11B) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section.
80-IB (10)- (a)….
(b) the project is on the size of a plot of land which has a minimum area of one acre.
6. The elementary principle of interpreting or construing a statute is to gather the mens or sententia legis of the legislature. Where the language is clear, the intention of the legislature is to be gathered from the language used. The Supreme Court in the case of Federation of Andhra Pradesh Chambers of Commerce & Industry and Ors. Etc. v. State of Andhra Pradesh and Ors. (2001) 165 CTR (SC) 672 : (2001) 247 ITR 36 (SC) observed as under:
It is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In the classic passage from Cape Brandy Syndicate’s case (1921) 1 KB 64, 71, which was noticed in the judgment under appeal, it was said [p. 92 of AIR 1997 AP (FB)]:
In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used’.
7. We find that in the present case, the condition with regard to the area of the plot of land as given in Clause (b) of Sub-section (10) of Section 80-IB, is not fulfilled. Admittedly, for the impugned housing project the assessee-builder had a plot of land admeasuring only 3,800 sq. mtrs, which was much less than one acre. The compromise arrangement which was repeatedly mentioned by the learned Authorised Representative was between the Maharashtra Academy of Engineering and Educational Research (MAEER) and the Bhaktiyog Cooperative Housing Society and not the assessee-builder. In terms of the Development Control Rules of the PMC any layout of land admeasuring 0.4 hectare (one acre) or more 10 per cent of the entire holding area is to be reserved as recreational space. It appears that in order to enable these five housing societies to fulfil this condition, the MAEER agreed, as part of the compromise arrangement, to allow part of its land to be used as open space by these housing societies. The condition with regard to reserving 10 per cent of the plot area as open space was relaxed in the case of these housing societies in respect of the plots finally allotted to them as a result of the compromise and after MAEER agreed to make part of its land available to the five societies for being used as open space.
8. Shri Tyagi, the learned Authorised Representative repeatedly emphasized saying that the area of 3800 sq. mtrs. together with the area made available by MAEER for being used as open space exceeded one acre and therefore the condition of Clause (b) of Section 80-IB(10) was satisfied. In our opinion, the above mentioned compromise arrangement fulfilled the requirement/condition of the relevant laws/rules of the PMC but such an arrangement cannot be said to satisfy the condition given in Clause (b) of Sub-section (10) of Section 80-IB.
9. The deduction under Section 80-IB has been claimed by the assessee-builder and the plot of land that the assessee-builder had for building the impugned housing project had an area of only 3800 sq. mtrs, which was much less than one acre. Further, as pointed out by the learned Departmental Representative, there is nothing on record to show that the ownership of the land which was to be used as open space was transferred by the MAEER in favour of the housing societies. Also, the condition given in Clause (b) of Sub-section (10) of Section 80-IB cannot be treated as fulfilled by applying an arithmetical exercise on a notional basis. What is very clearly required by the above provision is that the size of the plot of land on which the housing project is built should have a minimum area of one acre. There is no ambiguity in the language of the Clause (b) of Section 80-IB(10). The area of the plot of land on which the impugned housing project was built by the assessee-builder, was only 3,800 sq. mtrs, which was much less than one acre. In the circumstances, therefore, we see no infirmity in the conclusions reached by the CIT(A) and his order is accordingly upheld.
10. In the result, the appeal filed by the assessee is dismissed.