TaxTMI 
TaxTMI 
2013 (11) TMI 895
X X X X Extracts X X X X
X X X X Extracts X X X X
....lding H - 4 and simply because the completion certificate of the four flats was not received by the assessee was not a valid ground for disallowing the deduction u/s.80IB(10). 4. Without prejudice to the above grounds, the assessee submits that the eligible housing project qualifying for deduction u/s.80IB(10) should be taken of the building except building H-4 and the deduction should be allowed on the profits of such project. 5. Without prejudice to the above grounds, the assessee submits that the deduction ought to have been allowed proportionately in respect of the units for which the completion certificate was received from the local authority till 31st March, 2008. 2. The assessee is a firm engaged in the business of promoters and builders, executing schemes for residential/commercial purposes. The assessee firm filed the return of income declaring Nil income after claiming deduction of Rs.93,93,614/- u/s.80IB(10) of the Act. The Assessing Officer, however, assessed the total income at Rs.1,33,96,580/- rejecting the claim of deduction u/s.80IB(10). Brief facts of the case are that the assessee has two ongoing projects viz. Harsh Vihar and Ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icial provision is also to be constructed liberally and in favour of the assessee. The Assessing Officer did not accept the explanation furnished by the assessee during the assessment proceedings and held that the housing project was not completed before the stipulated date, i.e., 31.03.2008 and so the assessee is not eligible for claiming deduction u/s.80IB(10). Accordingly the same was disallowed. In appeal, the same was upheld by the CIT(A) and same has been opposed before us. 5. The Ld. Authorised Representative submitted that Harsh Paradise project is on a total land area of 8,164.20 sq.mtrs. The first layout plan was sanctioned by Pune Municipal Corporation on 19.03.2002. The said housing project consists of four buildings viz. H-1, H-2, H-3, H-4 and G building. The said plan for housing project was approved by the local authority on 28.05.2003 wherein construction of whole H-1, H-2, H-3 & G building, alongwith first floor of H-4 building were sanctioned. Subsequently the assessee tried to purchase development rights for construction of remaining floors of H-4 building. As the project was sanctioned before 01.04.2004, the due date of completion of the project was 31.03.200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d before 31- 03-2008. It is the submission of the learned counsel for the assessee that it has constructed Building Nos. A, C, D and E and 17 row houses and Building Nos. B & F being not feasible was not constructed and the assessee has dropped the idea of construction of the same. It is also the submission of the learned counsel for the assessee that it has applied for completion certificate on 22-01-2004 and since the PMC has a legal problem, which is subjudice, the PMC is not able to grant the completion certificate. It is also the submission of the learned counsel for the assessee that Corporation has started levying municipal taxes, the flat owners have started paying electricity bills and the project on which Building Nos. A, C, D and E and 17 row houses are constructed are on a plot of area of more than 1 acre. Therefore, the assessee is entitled to deduction u/s.80IB(10) on the 4 buildings and 17 row houses which it has completed. 19. We find the Managing Director Shri Pradeep Amrutlal Runwal in his statement recorded during the course of survey u/s.133A has replied to Question Nos. 7, 8, 9, 10 & 12 as under : "Q.7. Ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....your comment? Ans. Yes, I agree that the construction of buildings B and F have not been carried out with a perfect understanding in the mind that we wanted to give up these two wings. In case these wings would have been constructed they would have been very shabby and been place for non-hygiene in the entire project. Looking at the merits and demerits these wings were not constructed. Further, building just one floor was economically unviable". 20. So far as the first objection of the revenue that completion certificate from PMC has not been obtained by the assessee before 31-03-2008 we find the assessee through his architect vide application dated 22-01-2004 has applied to PMC for occupancy certificate. (Page 119 of the Paper Book). The submission of the learned counsel for the assessee that the PMC has not yet rejected the said application till date could not be controverted by the Revenue. The further submission of the learned counsel for the assessee that all the flat owners/row house owners have been given possession between 26-10-2002 to 15-01-2007, i.e. prior to 31-03-2008 could not be controverted by the learned DR (P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Assessing Officer supports the assertion made by the assessee that factually speaking construction of flats in building 'E' was also complete and possession handed over to the actual user/customers prior to 31-3-2008. Pertinently, on the basis of the architect's certificate confirming completion of construction of building, the assessee applied for the completion certificate to the Pune Municipal Corporation on 12-3-2008. It has been pointed out before us that the local authority i.e. Pune Municipal Corporation did not raise any objection with regard to assessee's application and the certificate for building 'E' was thereafter issued on 5-5-2008. The moot question is as to whether in such a situation can it be said that the assessee's project did not comply with the condition prescribed in sub-clause (i) of clause (a) to section 80- IB(10) of the Act whereby the construction was to be completed on or before 31-3-2008. Somewhat similar situation was considered by our co-ordinate Bench in the case of Hindustan Samutha Awas Ltd. (supra) wherein also on the strength of architect's certificate, an application for obtaining completion certificate was moved to the local authority o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are allowed" 13. The aforesaid decision of the Tribunal is clearly applicable to the facts of the present case also. In the present case, the completion certificate was applied for before 31-3-2008 i.e. on 12-3-2008. It is undisputable that the application of the assessee has been approved by the local authority without raising any amendment or objection, as has been asserted by the assessee all along and the delayed issuance of the completion certificate by the local authority on 5-5-2008, albeit after the mandated date of 31-3-2008 cannot be attributed to the assessee. In this background of the matter, we therefore, find ample force in the plea of the assessee that denial of deduction u/s 80-IB(10) on such score is uncalled for. In conclusion therefore, in the instant factual background, we hold that the assessee has complied with the condition of completing the construction of the project within the mandated date of 31-3- 2008 even with regard to building 'E', following the parity of the reasoning lid down in the case of Hindustan Samutha Awas Ltd. (supra).. 14. Sub-clause (i) of clause (a) to secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee did not complete the housing project within the statutory time frame. Under sub-clause (i) of clause (a) of section 80IB(10), the assessee since had got approval for the housing projects from the local authority before Ist April 2004 was required to complete the construction latest by 31st March 2008. Relying on explanation (ii) to clause (i), Revenue contends that since BU permission was granted after March 2008, the construction must be deemed to have been completed after such date. Explanation (ii) reads as under : (ii) the date of completion of construction of the 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. CIT (Appeals) as well as the Tribunal after detailed discussion came to the conclusion that such requirement was not mandatory in nature. In the present case, the assessee had completed the construction well before the last date, namely 31st March 2008 and had also sold several units which was completed and actually occupied, and it also applied for BU permission to the local authority. The local authority, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the AMC for issuance of occupancy certificate on 25-3-2008. Requisite fee was also paid by the assessee in this regard. AMC did not raise any objection to the said completion certificate of the Architect. The occupancy certificate dt.10-10-2008 has been issued by the AMC only on the basis of the said application dt.25-3-2008. It is also an undisputed fact that issuance of occupancy certificate is the prerogative of the local authority i.e. AMC and in this regard, the assessee has no control and it is beyond the power of the assessee to make the AMC issue the said Completion/Occupancy certificate before 31.3.2008. What was under the power and control of the assessee was only to move the AMC for completion certificate fulfilling all the requirements with the AMC for issuance of occupancy certificate, which the assessee has done in the present case. Thus, the delay in issuing the occupancy certificate cannot be attributed on the part of the assessee to deny the claimed deduction u/s 80IB(10) of the act on the basis that the project was not completed by 31- 3-2008, especially when there is no objection raised by the AMC regarding deviation in the construction of the project approved ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich do not affect the main project and are generally temporary constructions. 20. We thus while setting aside orders of the authorities below direct the A.O to allow the claimed deduction u/s. 80IB(10) of the I.T. Act 1961 in the assessment years under consideration treating the required date of completion of construction of the housing project as the date when above discussed deeming provision period of 21 days expired i.e. 20.11.20." 10. He again submitted that the ITAT in the case of Sanghvi & Doshi Enterprise vide ITA No. 259 TO 263/Mds/2010, as discussed in Runwal Multihousing Pvt. Ltd. (supra), has held as under: "24. Next objection of the Assessing Officer is that the project had to be completed on or before 31.03.2008 and since the assessee did not furnish the completion certificate, the assessee is not eligible for deduction. The objection is to the effect that the completion certificate from CMDA is dated 13.6.2008, i.e. three months after the due date for completing the project. In this connection, it has to be noted that the completion certificate is to be issued by the local authority. The question is, whether CMDA can be considered t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CMDA to consider the explanation of the assessee. All these facts go to point that the project was indeed completed before the 31.3.2008. Thus, this ground also has no force to deny the assessee the impugned deduction." 11. We find that in the case of M/s. Ramsukh Properties Vs. DCIT vide ITA No.84/PN/2011 order dated 25-07-2012 for A.Y. 2007-08 wherein it has been held as under: "6. After going through rival submissions and material on record, we find that the assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not complete within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee's housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able cause which compelled the impossibility on part of the assessee to have completion certificate in time. It is settled legal position that the law always give remedy and the law does wrong to no one. We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used alongwith the word completion. This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(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 u/s.80IB(10) in respect of building No. A,C,D, E and the 17 row houses. The grounds raised by the assessee on this issue are accordingly allowed. 22. In the result, the appeal filed by the assessee is partlyallowed. In this background, Ld. Authorised Representative submitted that the claim of the assessee should be allowed following the ratio of Runwal Multihousing Pvt. Ltd. (supra). 13. On the other hand, the Ld. Departmental Representative supported the orders of the authorities below and submitted that the housing project was not completed before the stipulated date, i.e., 31.03.2008 and as per the provisions of section 80IB(10), the housing project has to be completed within the stipulated period for assessee to qualify for claiming deduction u/s.80I(10) of the Act. Since assessee has failed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n certificate dated 06.03.2007 and 19.03.2008 as stated above. According to the Assessing Officer, the housing project was not completed within the stipulated time period i.e., 31.03.2008 and rejected the claim of the assessee which was confirmed by the CIT(A). The undisputed facts remain that assessee has completed the buildings H-1, H-2, H-3 & G on area of plot measuring 6722.12 sq.mtrs. as detailed above. So irrespective of non-construction of building H-4, assessee is entitled for its claim of deduction u/s.80IB(10) with regard to these buildings H-1, H-2, H-3 & G, because, these are on standalone basis, fulfilled the conditions with regard to claim of deduction u/s.80IB(10). 15. We find that ITAT Pune Bench in the case of Rahul Construction Co. (supra) has held that the Assessing Officer has to verify as to when the building plan of these buildings were firstly approved by the local authority and taking the said date of approval as starting point, he has to verify as to whether these buildings were completed within prescribed time limit, i.e., 31.03.2008 on the basis of completion certificate in respect of such housing project issued by the PMC. In case before us, Revenue a....