2016 (12) TMI 1888 - AT - Income Tax

Tribunal restores assessment order, allows assessee's appeal. CIT's decision overturned.

M/s. Mahavir Enterprises, Versus The Pr. Commissioner of Income Tax -28,

The Tribunal set aside the CIT's order and restored the assessment order passed by the AO, allowing the appeal of the assessee. The Tribunal found that ... Revision u/s 263 - Deduction u/s 80IB(10) - as per CIT completion of construction of the project has not been done within the stipulated period and therefore, the deduction under section. 80IB (10) of the Act has been wrongly allowed - whether in the facts of the present case, the assessee firm is justified in considering the group of Buildings No.2 & 5 in the ‘Balaji Garden’ complex as a ‘project’ for the purposes of claim of deduction under section 80 IB (10) ? - HELD THAT:- A somewhat similar issue had come-up in the case of M/s. Vandana Propertiesobserved that the expression ‘housing project’ in common parlance would mean constructing building or group of buildings consisting of several residential units. According to the Hon'ble High Court, the provisions of section 80 IB (10) envisage that construction of even one building with several residential units of the size not exceeding 1000 sq.fts would constitute a ‘housing project’ for the purposes of availment of benefits under section 80 IB(10) of the Act. In the spirit of what has been laid down supra in our considered opinion, assessee is fully justified in considering Buildings No. 2 & 5 in the complex of ‘Balaji Garden’ as a ‘housing project’ for the purposes of claiming deduction under section 80 IB (10) - Clearly on this aspect the CIT misdirected himself and, therefore, in this view of the matter the issue as to whether the other buildings have been completed within the time frame is not at all relevant to evaluate assessee’s claim for deduction under section 80IB (10) of the Act in the instant year. In so far as the said project comprising of Buildings No.2 & 5 is concerned, the same has been completed on 19/03/2010, when assessee’s architect submitted application to the local authority for issuance of Occupancy Certificate. The aforesaid is clearly born out of the completion certificate issued by the concerned local authority i.e. Kalyan & Dombivali Municipal Corporation, Kalyan dated 17/09/2013 - assessee has referred to the decision of the Court of Joint Civil Judge, Kalyan dated 25/11/2010, wherein it is decreed that the Occupancy Certificate and Completion Certificate as per provisions of Rule-38 of the Kalyan–Dombivili Municipal Corporation Development Control Regulations is deemed to have been obtained in respect of Buildings No.2 & 5 on 19/03/2010, i.e. on the date when requisite application was made by the assessee. Considered in this light, it has to be understood that the completion of construction of the instant housing project is within the period stipulated in section 80 IB (10)(a)(iii) r.w. Explanation (ii) thereof. Thus, on this aspect, we find no reason to uphold the stand of the CIT. Built-up area of some of the flats comprised in the housing project - The architect has enumerated the ‘built-up area’ of various flats comprised in the Buildings No.2 & 5. He has further certified that such built-up area is as per the sanctioned plan and also that the same is as per the definition of the expression ‘built-up area’ contained in section 80 IB (14) of the Act. Thus, as per the said certificate of the architect, it is quite clear that the area of balconies/projections, as required, has been taken into account in calculating the built-up area. It is also clear that built-up area of none of the flats is exceeding the limit of 1000 sq.fts prescribed in clause (c) of section 80IB (10) of the Act . We have perused the order of the CIT and find that he has merely proceeded on a presumption that the built-up area of some of the flats might exceed 1000 sq.fts., if the area of balcony is added. However, we find not even an iota of evidence with the CIT to suggest that the built-up area shown in the certificate of the architect is without including the area of balcony; whereas the certificate clearly mentions that the built-up area is inclusive of the requisite projections and balconies. At the time of hearing, the Ld. Representative for the assessee has also made assertion that in the earlier assessment year of 2010-11, the site inspection was carried out by the Assessing Officer and that there was no adverse finding on this aspect. There is no negation to the aforesaid plea of the assessee and, therefore, considering the material on record, we find that the CIT has proceeded on mere doubt to hold that there is a violation of the provision of clause (c) of section 80 IB(10) of the Act. AO has reproduced in the assessment order a chart which enumerates the various conditions prescribed in section 80 IB(10) of the Act and how the same are complied by the assessee firm. Clearly, it is not a case of any lack of enquiry. In fact, as our aforesaid discussion shows, the CIT has misdirected himself on both the counts namely non-consideration of Buildings No. 2 & 5 as a project for the purposes of section 80 IB(10) of the Act and regarding the built-up area of some of the units as prescribed in section 80IB(10(c) of the Act. Under these circumstances, in our view, there was no justification for the CIT to uphold that the assessment order dated 13/01/2014 is erroneous in so far as it is prejudicial to the interest of the Revenue within the meaning of section 263 of the Act, qua the claim of deduction under section 80IB(10) of the Act allowed by the Assessing Officer. We hereby set-aside the order of the CIT and restore the assessment order passed by the Assessing Officer under section 143(3) - Decided in favour of assessee. Issues Involved:1. Whether the assessment order dated 13/01/2014 was erroneous and prejudicial to the interests of the Revenue under section 263 of the Income Tax Act, 1961.2. Whether the project “Balaji Garden” consisting of Buildings No.2 & 5 qualifies for deduction under section 80IB(10) of the Act.3. Whether the built-up area of some residential units exceeded the permissible limit of 1000 sq. ft., violating section 80IB(10)(c) of the Act.Issue-wise Detailed Analysis:1. Erroneous and Prejudicial Assessment Order:The primary grievance of the assessee was against the CIT's action in holding the assessment order dated 13/01/2014 as erroneous and prejudicial to the interests of the Revenue under section 263 of the Act. The CIT argued that the assessee did not satisfy certain conditions prescribed in section 80IB(10) and that the Assessing Officer (AO) failed to make the required enquiry and verification regarding the deduction claim under section 80IB(10). The Tribunal concluded that the CIT misdirected himself on both counts and found no justification for the CIT to uphold that the assessment order was erroneous and prejudicial to the interests of the Revenue.2. Qualification of Buildings No.2 & 5 for Deduction under Section 80IB(10):The CIT contended that the entire “Balaji Garden” complex should be treated as one project and that the completion certificate for some buildings was not received before the stipulated date. The Tribunal referred to the judgment of the Hon'ble Bombay High Court in CIT vs. Vandana Properties, which held that even one building with several residential units could constitute a housing project for section 80IB(10) purposes. The Tribunal found that Buildings No.2 & 5 could be considered a separate project and that the completion certificate was deemed granted on 19/03/2010, fulfilling the conditions of section 80IB(10).3. Built-up Area of Residential Units:The CIT raised concerns that the built-up area of some units might exceed 1000 sq. ft. if the balcony area was included, violating section 80IB(10)(c). The Tribunal examined the architect's certificate, which confirmed that the built-up area, including balconies, was within the permissible limit. The Tribunal found no evidence to contradict the architect's certificate and noted that the AO had inspected the project site in the earlier assessment year without finding discrepancies. Thus, the Tribunal concluded that the CIT's presumption was unfounded.Conclusion:The Tribunal set aside the CIT's order and restored the assessment order passed by the AO, allowing the appeal of the assessee. The Tribunal found that the CIT had misdirected himself on both counts and that there was no justification for holding the assessment order as erroneous and prejudicial to the interests of the Revenue. The Tribunal concluded that the assessee satisfied all conditions for claiming deduction under section 80IB(10). The order was pronounced in the open court on 28/12/2016.