TaxTMI 
TaxTMI 
2014 (2) TMI 595
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....to completion of the assessment proceedings, a survey action u/s.133A was also carried out in case of the assessee on 28-02-2006 in order to verify the eligibility of the project to deduction u/s.80IB(10). Subsequently, after amendment to the provisions of sec. 80IB(10) w.e.f. 01-04-2005 whereby condition regarding completion of the housing project was introduced, another survey action u/s.133A was carried out in case of the assessee on 29-05-2008 to verify the adherence to this condition in respect of the project in question. In the case of the assessee, the project in respect of which deduction u/s.80IB(10) was granted, the first sanction was given by the local authority on 12-12-2001 and as per the conditions contained at the relevant point of time, the project was to be completed on or before 31-03-2008. However, during the survey, it was observed by the survey team that completion certificate in respect of the project in question was not granted by the local authority till 31-03- 2008 and also that the assessee failed to construct Buildings 'B' and 'F' which was part of the layout originally sanctioned by the local authority. Accordingly, the Assessing Officer came to the infe....
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....ction u/s.80IB(10) should not be disallowed since the assessee has not commenced nor complete the construction of building B&F in Runwal Paradise. The assessee submitted that as per the certificate given by the Architect Sri Prakash Kulkarni, construction work of building A, C, D and E and the row houses from 1 to 17 were completed in all respects and buildings were ready for occupation. The assessee also furnished a few copies of firm quotations, MSEB receipts, bills for taxes payable to PMC etc. and submitted that it has decided to drop the construction of Wing B & F as it was not viable. It was submitted that the assessee is entitled to deduction u/s.80IB(10) on profits of buildings A, C, D andE and the 17 row houses. 4. However, the AO was not convinced with the explanation given by the assessee and held that the deduction already allowed u/s.80IB(10) in the original assessment has to be denied to the assessee for the following reasons (Page 6 & 7 of the assessment order) : "(1) Provisions of section 80IB(10) are specific. They are not vague nor ambiguous. Explanation (ii) to section 80IB(10)(a) is specific in as much as it states that "the date of completion of construct....
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....ed. (4) The assessee has relied on two decisions of the Hon'ble Apex Court to claim that the beneficial provisions should be considered liberally. With all due respects to their Lordships of the Hon'ble Apex Court, it is to be submitted that the facts leading to decisions in those two cases are altogether different from the facts in the present case. In this case, the shortcomings are with reference to the fulfilment of the specific basic requirements of Section 80IB(10) as mentioned in the earlier paragraphs of this order. (5) As long as the specific basic requirements are not fulfilled, question of granting any benefits under Section 80IB(10) does not arise. (6) Looking to the facts and circumstances of the case, as stated hereinabove, it is beyond doubt that the assessee is not entitled to the benefits of deduction under Section 80IB(10)." He accordingly denied the claim of deduction u/s.80IB(10)made by the assessee amounting to Rs.3,73,07,726/-. 5. Before CIT(A) apart from challenging the re-opening of the assessment u/s.147 the assessee also challenged it on merit. It was submitted that the Assessing Officer has erred in rejecting the claim of the assessee citin....
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.... Court in the case of ACIT Vs.Rajesh Jhaveri Stock Brokers (P) Ltd. reported in 291 ITR 500 and various other decisions he upheld the reopening of the assessment under the provisions of section 147. 7. So far as the merit of the case is concerned he upheld the action of the AO in denying the benefit of decision u/s.80IB(10). While doing so he noted that the deduction is allowable in respect of the amount of profits. The assessee in the instant case has formulated a scheme for construction of 6 units out of which only 4 units were completed till the date of survey on 29-05-2008. The project for construction of 6 units was approved by the local authority and individual units are part of a project and not project by itself. Therefore, some of the residential units cannot be treated to be a separate project. The project in respect of which deduction u/s.80IB(10) was claimed by the assessee was not completed as per plan originally sanctioned by the local authority and therefore the assessee is not eligible to claim deduction u/s.80IB(10) in respect of the project named as 'Runwal Paradise'. 8. Distinguishing the various case decisions cited before him and relying on the decision o....
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....alid at all. 3. The learned CIT(A) failed to appreciate that the reopening was on a mere change of opinion and hence, the reassessment was not justified at all. 4. The learned CIT(A) erred in confirming the denial of the deduction of Rs.3,73,07,730/- in respect of the project Runwal Paradise on the ground that the assessee had not completed the said project by 31st March 2008. 5. The learned CIT(A) erred in holding that since the assessee had not completed the said project by 31st March, 2008 and also had not received the completion certificate from the local authority till that date, the assessee company was not entitled to claim the deduction/s.8IB(10). 6. The learned CIT(A) failed to appreciate that : (a) The assessee had completed the construction of the entire project and the Municipal Taxes were also levied in respect of all the units which were constructed by the assessee. (b) The assessee had also made an application for obtaining the completion certificate to the local authority much before 31-03-2008 and it was beyond the control of the assessee to get the completion certificate on or before 31-03-2008 and hence, the assessee should not have been penaliz....
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....rned counsel for the assessee the assessee had applied to the PMC for the completion certificate on 22-01-2004. In the order passed u/s.143(3) the deduction claimed u/s.80IB(10) was allowed for Building No. A, C, D & E and the row houses. At that time the issue of completion was not verified by the AO. During the course of survey, the statement of the Managing Director Sri Pradeep Runwal was recorded during which he had clarified in his statement that Building No. B & F were dropped being uneconomical. However, no revised plan was submitted. He submitted that the completion certificate applied on 22- 01-204 has not yet been rejected. Since the corporation has started levying municipal taxes and since the assessee had enclosed sample electricity bills in the name of the flat owners as an evidence of possession, therefore, notwithstanding the non-receipt of completion certificate the assessee has proved beyond doubt that Building No. A, C, D & E and the row houses have been completed in every respect. Therefore, the assessee has completed the above buildings for which the assessee is entitled to deduction u/s.80IB(10). Referring to Page Nos. 55 to 61 of the Paper Book the learned cou....
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....jected to the applications filed by the architect on behalf of the assessee, then in that case deduction u/s.80IB(10) cannot be denied. 13.1 Referring to the decision of the Bangalore Bench of the Tribunal in the case of Brigade Enterprises (P) Ltd. reported in 119 TTJ 269 (Bangalore) he submitted that the tribunal in the said decision has held that where some of the residential units in a bigger housing project treated independently are eligible for relief u/s.80IB(10), relief should be given pro-rata and should not be denied by treating the bigger project as a single unit. It has been held in the said decision that if a particular unit satisfies the condition of section 80IB(10), the assessee is entitled to deduction and it should be denied in respect of those units only which do not satisfy the condition. 13.2 Referring to the decision of the Pune Bench of the Tribunal in the case of Magarpatta Township Development and Construction Co. Vs. DCIT Vide ITA No.822/PN/2011 and CO. No.04/PN/2012 he submitted that the Tribunal in the said decision has held that whatever portion of the housing project satisfies the conditions of the section 80IB(10) should be considered as a housi....
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....he PMC being uneconomical and which will reduce the beauty of the other buildings. As regards the application of the decision of the non-jurisdictional High Court the learned counsel for the assessee referring to the decision of the Hon'ble Bombay High Court, Nagpur Bench in the case of CIT Vs. Godavaridevi saraf reported in 113 ITR 89 submitted that the Hon'ble Court in the said decision has held that the law declared by High Court in a State is binding on Tribunal in another state. Referring to the said decision he submitted that the Hon'ble Court in the said decision has held that an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. Since nothing has been brought to the notice of the Bench against the decision of the Hon'ble Gujarat High Court, therefore, the same is binding on the Tribunal. 17. So far as the decision of the Chennai Bench of the Tribunal in the case of ACIT Vs. Viswas Promoters (P) Ltd. (Supra) is concerned, the learned counsel for the assessee submitted that the facts therein ar....
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....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. Have you received the Completion Certificate from PMC for Runwal Paradise Project ? Ans. The Completion Certificate for Row Houses 7 to 18 was received. However for other buildings on Runwal Paradise Project we have not received the Completion Certificate as on today though we have applied for the same. Q.8. Whether the construction is completed in respect of all the buildings as per revised plan dated 10-01-2003, Commencement Certificate No.1372? Ans. Construction is completed before 31st March 2008 in the entire scheme Runwal Paradise to the extent that we want to build and enjoy the FSI of the project and the area used so is above 1 acre. Q.9. If the construction is completed be....
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....ners/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 (Page 55 to 63 of the Paper Book). The learned DR also could not controvert the submission of the learned counsel for the assessee that PMC has started levying municipal taxes and the Electricity Meters are in the name of the flat owners who have started paying electricity bills. 20.1 We find the Pune Bench of the Tribunal in the case of City Development Corporation Vs. ACIT - ITA No. 57 and 1287/PN/2010 order dated 27-09-2012 has held as under : "12. We have carefully considered the rival submissions. Quite clearly, the dispute is with regard to the completion certificate of building 'E' having been issued by the local authority i.e. Pune Municipal corporation, on 5-5-2008. Sub-clause (i) of clause (a) to section 80-IB(10) requires that the construction of the project in question is to be completed on or before 31-3-2008. Clause (ii) of Explanation below section 80-IB(10)(a) prescribes that the date of completion of construction of housing project shall be taken to be the date on which the completion certificate in respect of ....
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....ate was moved to the local authority on 25-2-2008 but in actuality the completion certificate was issued by the local authority on 10-10-2008. The Tribunal noticed that the delay in issuing completion certificate was not attributable to the assessee as no objections were raised by the local authority. The Tribunal after considering its earlier decisions in the case of M/s. Satish Bohra & Associates Vs. ACIT in ITA No. 713 and 714/PN/2010 for A.Y. 2004-05 and 2005-06 dated 7-1-2011; M/s. D.K. Constructions Vs. ITO ITA No. 243/PN/2010 for A.Y. 2006-07; dated 6-12-2010 and Sanghvi and Doshi Enterprises Vs. ITO and others ITA No. 259 to 263/MDS/2010 dated 19-5- 2011 for A.Y. 2005-06 and 2006-07 (TM) has concluded as follows: "From the above, once this is clear that the date that appears on the Architect's Completion certificate filed before the local authority is relevant one. In the instant case, the said date is 25- 3-2008 and the assessee filed requisite form before the local authorities intimating the completion of the project. The said certificate/intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the ....
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....s that the undertaking, developing and building a housing project "completes such construction" or before 31-3-2008. In the present case, assessee has factually asserted right from the stage of assessment proceedings, that the construction of building 'E' was complete in all respects as per sanctioned plan and all the flats were handed over to the actual users/customers prior to 31-3-2008. In the background of the aforesaid factual position which has remained uncontroverted, in our view, on a plain reading of sub-clause (i) of clause (a) to section 80-IB(10) the condition prescribed therein is fulfilled., inasmuch as the construction of building 'E' was complete before 31-3-2008. However, on the reading of clause (ii) of the Explanation below sec. 80-IB(10)(a) of the Act, it emerges that the completion of construction of a housing project is to be taken to be the date on which completion certificate is issued by the local authority, which in the present case is issued on 5-5-2008 i.e. beyond the stipulated date of 31-3-2008. The moot question is in case the condition of completion construction contained in the substantive section 80- 0IB(10)(a)(i) is factually found to be complied ....
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....led discussion of the CIT(Appeals) as well as the Tribunal on the issue. IN particular, the Tribunal noted that the construction was completed in 2006. Application for BU permission to the Municipal authorities was filed on 15-02-2006 which was rejected on 1-07-06. Several residential units were occupied since the same was done without necessary permission. The assessee had done without necessary permission. The assessee had also paid penalty and got such occupation regularised. Several tenements were sold long before the last date. In the present case, therefore, the fact that the assessee had completed the construction well before 31st March 2008 is not in doubt. It is, of course, true that formally BU permission was not granted by the Municipal Authority by such date. It is equally true that explanation to clause (a) to section 80IB(10) links the completion of the construction to the BU permission being granted by the local authority. However, not every condition of the statute can be seen as mandatory. If substantial compliance thereof is established on record, in a given case, the court may take the view that minor deviation thereof would not vitiate the very purpose for wh....
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.... prescribed form issued by the licensed architect etc. who has supervised the construction is furnished with four sets of completion plan under Rule 7.6 of the DC Rules of the PMC. Thereafter PMC is required to return one of the sets duly certified as Completion Plan to the owner along with the issue of full Occupancy Certificate after inspection of the work under Rule 7.7 of the DC Rules. Since Explation (ii) to Section 80IB(10)(a) of the I.T. Act requires Completion Certificate issued by the local authority to be taken as the date of Completion of the Construction, a general understanding in our view is that a Completion Certificate which is issued by the local authority after conducting inspections of construction by it. In case of PMC, it is only Occupancy Certificate which is issued alongwith certified completion plan after inspection of the construction by it, we have treated the date of issuance of such Occupancy Certificate alongwith Certified Completion plan as the date of Completion Certificate of the construction for the requirement of Explanation (ii) to Section 80IB(10)(a) of the I.T. Act. 2. Since infact PMC do not issue Occupancy Certificate generally in time and ....
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....tion as per the building bye-laws and sanction plans. When it is not disputed that the Corporation is the local authority, certificate issued by it cannot be disregarded. The assessee has placed on record the completion certificate issued by the Corporation by way of additional evidence. Since the allowability of the entire deduction depends on all the conditions being fulfilled deduction depends on all the conditions being fulfilled, we admit this additional evidence. The certificate clearly mentions that the building was inspected on 23.11.2007 and that it is found to be satisfied the building permit conditions. We may also mentions that the role of CMDA is quite distinct from that of the Corporation. CMDA looks at the plans from the perspective of the development and urbanisation of the city as a whole. On the other hand, the role of the Corporation while issuing completion certificate is to see that the unit is habitable in all respects like civic amenities and so on. Even for the sake of argument if the CMDA certificate is to be considered, then in that case, the assessee did apply for the completion certificate to CMDA certificate on 13.3.2006. It is a different matter that C....
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....1.3.2008 and the assessee has informed regarding such completion, the Local Authorities may take its own time for issue of certificate, which may be even after 6-7 months, but the letter so issued by the Local Authorities should clearly mention the date of completion of such project. Merely because such certificate is issued after gap of 8-9 months or even one year, will not adversely affect the assessee if it has mentioned clearly the date of completion of project prior to 31.3.2008. Once the letter for completion of project is given by the assessee to the Local Authority, it is the duty of the Local Authority to verify physically the Projects stated to be completed from its own parameters. This process may take time and, therefore, the date of issue of letter is not so crucial to determine the assessee's eligibility for claim of deduction as per Explanation (ii) of Section 80IB(10)(a) of the Income-tax Act, 1961. What is crucial is date mentioned in the letter so issued certifying completion of the Project. Thus, the date of issue of letter is not important, but the date mentioned in the letter certifying completion of project is important. We, therefore, do not find may merit in....
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....etion certificate from PMC before 31-03-2008 which was beyond the control of the assessee. This view of ours is fortified by our decision 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 both of us are parties) 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 by the CIT(A). The request for granting whole deduction in respect of whole project ....
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....tion 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 thereon too has to be construed strictly so as to advance the object of provision and no....
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....the context of deduction u/s. 80IB(10) an Explanation has been provided below clause (a) to sub-section (10) to Section 80 IB. For a ready reference, the said Explanation is being reproduced hereunder : (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. (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." The very reading of above Explanation (i), it makes clear that for the eligibility of the deduction provided u/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 Explanation (ii) with Explanation (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 bu....
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....he case of Vandana Properties Vs. ACIT (Supra). 10. In view of above discussion, we come to the conclusion that for verification of eligibility of benefit claimed u/s. 80 IB (10) of the Act by the assessee on buildings A1 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 A1 to A5, the first building plan for A type was approved by the PMC on 29.4.2003 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 v....
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....o 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. 80IB(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.80IB(10) in entirety - CIT(A) allowed relief under s. 80IB(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.80IB(10) means that deduction should be computed unit-wise - Therefore, if a particular unit satisfies the condition of s.80IB, the assessee is entitled for deduction and it should be denied in respect of tho....