2014 (2) TMI 983
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.... assessee filed various details in response to the queries raised by the Assessing Officer. From the various details furnished by the assessee the Assessing Officer noted that assessee company had undertaken a project namely "Potnis Properties" at Sy.No.29/2, Hingane(B), Karvenagar, Pune. The project envisaged construction of 6 buildings. According to the Assessing Officer, as per the provisions of section 80IB(10) of the I.T. Act 1961, construction of the housing project approved by the local authority before 01-04-2004 had to be completed before 31-03-2008. In the instant case, the project "Potnis Properties" was sanctioned by the local authority, i.e. PMC and commencement certificates were issued on different dates, i.e. 12-10-2001, 19-04-2002, 25-10-2002, 25-02-2004, 21-04-2004 and 04-08-2006. However, the latest completion certificate from PMC is 09-05-2008. Since the project has not been completed by 31-03-2008 the Assessing Officer was of the opinion that the assessee has not satisfied one of the conditions prescribed u/s.80IB(10) and therefore not eligible for claiming deduction u/s.80IB(10). 3. The Assessing Officer further observed that in the assessment order passed u/s....
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...., Pune wherein the findings of the Assessing Officer were confirmed. During appeal, the appellant has placed on record' his submissions which have already been quoted above and the orders passed by the Hon'ble ITAT in the case of the appellant in A.Y. 2004-05 and 2005- 06, to claim that the above referred decisions should be followed for allowing the deduction claimed. In respect of delay in the completion of the project beyond the statutory limit of 31.3.2008 it has been submitted that all the expenses relating to the project were incurred upto 31.3.2006 and all except three out of the 121 flats constructed were sold prior to 31.3.2006. It has also been contended that all the flats were sold, possession handed over to the customers much before the due date. List of building-wise statements of construction and sale of flats were also enclosed. Copies of electricity bills etc., certificate of architect, and affidavit of one of the directors were enclosed to claim that the aforesaid evidences show that the project was completed before 31.3.2008. On careful consideration of the facts of the case and the law in respect of inclusion of commercial area beyond 5% or 2000 sq. ft. whichever....
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....on certificate as well as provisional completion certificate for part of the projects from time to time in the form of occupation certificate. Since the completion certificate has to be for the project as a whole, the provisional part certificate issued by PMC for a different purpose, cannot be considered to serve the aforesaid purpose. It is well known that the final completion certificate/ occupation certificate is issued by the PMC after receiving an application in the prescribed form along with the certificate of completion by the project architect. The appellant has claimed that the application dated 14.10.2005 was filed with PMC on 20.10.2005. However, it is not clear whether the said application was for the complete project or not. The appellant himself also admits that the completion certificate in respect of some flats and shops in building No. A-1 and A-5 was issued by Asstt. Engineer, PMC on 9.5.2008. The fact that the part certificate was issued on 9.5.2008, clearly shows that the project was not complete before 31.3.2008. In view of the above referred facts, there is no ambiguity that the project was not completed before the due date and therefore, this condition remai....
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.... the residential units completed before 31-03-2008. 5. The appellant pleads that its claim for deduction u/s.80IB(10) is legitimate and ought to be allowed". 6. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). He submitted that the Assessing Officer disallowed the claim of deduction u/s.80IB(10) on two reasons, i.e. (i) the built up area of the commercial units was 11.77% of the total area and therefore the commercial area exceeded the limit specified in section 80IB(10) and (ii) the assessee had not received the completion certificate in respect of few flats before 31-03-2008. 6.1 So far as the first issue on which deduction u/s. 80IB(10) has been denied, i.e. the built up area of commercial units was 11.77% he submitted that the project was started vide commencement certificate dated 12-10- 2001 and thus the project has been started prior to 01-04-2005. Since the project was started prior to the amendment putting a limit on the commercial area includible in the housing project, therefore, no disallowance u/s. 80IB(10) can be made on account of commercial area exceeding the prescribed limit. For this proposition, the Ld. Counsel for the assessee ref....
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....006, hence, the project can be completed after 31/03/2008, however our project was completed well before 31/03/2008 evident from my application for completion certificate dated 20/10/2005. (copy enclosed as annexure a). However, the completion certificate was issued by the local authority, i.e. PMC on 09/05/2008. The delay is on account of non-receipt of "Road NOC' from PMC in want of "Thaale Madi" (in Marathi) from "Bhoomi Zindagi Khathe" (in Marathi) of PMC." He submitted that the electricity connections were also provided to all the units which shows that the project was completed in all respects. He submitted that on the basis of application made on 14-10-2005 the Corporation had not raised any objections. He submitted that the Corporation has started levying tax for all the flats before 31-03-2008, therefore, the deduction cannot be denied to the assessee. As regards the order for the A.Y 2004-05 and 2005-06 he submitted that the matter was restored by the Tribunal to the file of the Assessing Officer for deciding the issue in the light of the decision of Special Bench of the Tribunal in the case of Brahma Associates and others and the Assessing Officer has allowed the claim ....
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.... certificate in respect of certain flats before 31-03-2008, therefore, assessee is not entitled to benefit of deduction u/s.80IB(10). He, therefore, denied the deduction u/s.80IB(10) which has been upheld by the CIT(A). 8.1 It is the submission of the Ld. Counsel for the assessee that the project was started prior to 01-04-2005 and therefore the amendment restricting the commercial area is not applicable to the assessee. So far as the issue of non-receipt of completion certificate before 31-03-2008 it is the submission of the Ld. Counsel for the assessee that the assessee had completed the entire project and had applied to the Corporation for obtaining the completion certificate. The assessee has not incurred any expenditure after 2006, electricity connections were provided to all the units, the corporation has started levying tax for all the flats before 2008, therefore, the project was completed in all respects. 8.2 So far as the first objection of the Revenue denying deduction u/s.80IB(10) is concerned, i.e. the commercial area is around 11.77% of the total area and therefore the commercial area exceeds the limits prescribed in section 80IB(10) we find admittedly the project w....
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....Hiranandani is 2006-07. The total commercial space in the project in that case was 117800 sq.ft. According to the A.O, as the provisions of Section 80IB(10)(d) is applicable w.e.f. 1.4.2005, the limit for having commercial space in the housing project is 5% of the total built up area or 2000 sq.ft whichever is less. Accordingly, the assessee was asked to explain why deduction claimed by it u/s. 80IB(10) amounting to Rs. 51,06,05,521/- should not be disallowed. The Tribunal after discussing the arguments of the parties and the decisions cited by them including the decision of Special Bench in the case of Bramha Associates (supra), has come to the following conclusion on the issue : 26. There is truth in the plea of hardship put forth on behalf of the Assessee. Let us assume an Assessee applies and obtains approval of a local authority for building a housing project in the previous year relevant to AY 02-03. As per the law as it stood in the previous year relevant to AY 02-03 upto 04-05, there was no time limit within which the construction has to be completed or any restriction regarding commercial area that can be built in a housing project. Let us assume that the Assessee complie....
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....ch of the Tribunal in the case of Hiranandani Akruti J.V. (Supra) has held as under : "28. We have already held that on the issue on what is a housing project and whether commercial area can be constructed in a housing project and if so constructed whether the Assessee would loose exemption under the law as applicable upto A.Y. 04-05 has been settled by the Special Bench of ITAT in the case of Bramha Associates 122 TTJ 433(SB) (Pune). The AO held the law as amended by the Finance Act, 2005 w.e.f. 1-4-2005 whereby it was laid down that the built up area of the shops and commercial establishment included in the housing project should not be more than 5% of the total built up area of the project or 2000 Sq.ft. whichever is less will apply and therefore he had no occasion to apply the test as laid down by the special bench referred to above. Since we have held that the law as it existed in the A.Y. 04-05 when the Assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17.11.2003 and when the Assessee commenced development is to be applied, the Assessee to claim deduction u/s. 80-IB(10) of the Act has to pass the test ....
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.... is being denied because it falls in A.Y. 2005-06. In our view the newly inserted clause (d) to Section 80IB(10) will not apply on the projects approved upto 31.3.05 since in those projects assessees are required to construct what has been approved. The only fissible compliance is required to be met as per the harmonious interpretation of Section 80IB(10) as amended is to complete such projects (approved before 1.4.2004) on or before 31.3.2008. In the cases before us the projects have been completed well before this date. Putting of such condition of time limit is well understood. Since the legislature intended the completion of projects within a time frame to avoid inconvenience to the beneficiaries i.e. the buyers. In this regard the Legislature has categorised the time limit for the projects approved on different period before 31.3.2007 but requirement remained the same that projects would be approved by the local authority. Compliance of the requirement provided in clause (d) to the Section is possible only in those projects which have been started on or after 1.4.2005 as by then those assessees were all aware about the provisions laid down in clause (d). 20. By applying the p....
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....ase and the assessee is eligible for deduction u/s.80IB(10) of the Act. 8.5 Now coming to the second issue on which the CIT(A) denied the benefit of deduction u/s.80IB(10) is concerned, we find the Director of the assessee company in his reply to Question No.11 during the course of survey had categorically stated that the project was completed well before 31-03-2008 which is evident from the application for completion certificate dated 20-10-2005. It was clarified at that time that the completion certificate was issued by PMC on 09-05-2008 and the delay was on account of non-receipt of Road NOC from PMC. From the various details furnished by the assessee we find the assessee has not incurred any expenditure after 31-03-2006 on account of the housing project . Electricity connections were provided to all the units and the Corporation has started levying taxes before 31-03-2008. At the instance of the Tribunal the assessee also filed an affidavit stating that that the assessee has completed construction of all flats and shops in the project as per sanctioned plans before 14-10-2005. 8.6 We find the Coordinate Bench of the Tribunal in the case of Runwal Multihousing Pvt. Ltd. (Supra....
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....2008, the construction of building was complete in all respects; that electrical connection was provided to each flat owner; road was complete; water and drainage connection was available; sewerage system was operating; club house was functional; etc. The assessee also pointed out that the local authority had also initiated property tax assessments for each of the flats and the same demonstrated that all the flats in the building were complete. In fact, in para 6.9 of the assessment order, the Assessing Officer noticed that "the facts that the flats were completed and possession given will not come to the rescue of the assessee". The aforesaid finding 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 an....
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.... by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections for accepted by issue of said completion certificate till 10-10-2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80-IB(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal 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 31-3-200....
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....of deduction u/s 80-IB(10) on the strength of non-issuance of the completion certificate for building 'E' by the Pune Municipal Corporation before 31-3- 2008, having regard to the facts and circumstances of the case." 20.2 We find the Hon'ble Gujarat High court in the case of CIT Vs. Tarnetar Corporation (Supra) has held as under : "With respect to the second contention, we may record that the contention of the Revenue is that the assessee 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 t....
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....ted 30-08-2011 has held as under : "7. We have considered the above view points of the parties in disputed. We find that it is a fact that the assessee through its architect had filed application with 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 80I....
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....se objections which 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." B. Extract from the decision of the Tribunal in the case of Sanghvi & Doshi Enterprise vide ITA NO. 259 TO 263/Mds/2010 "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 to be a local authority or not. This issue had come up before the Chennai Bench of t....
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.... the project was indeed completed before the 31.3.2008. Thus, this ground also has no force to deny the assessee the impugned deduction. " C Extract from the decision of the Tribunal in the case of M/s. D.K.Construction vide ITA 243/Ind/2010 "7. We have considered the rival contentions, carefully gone through the orders of the authorities below and relevant material placed on record towards which our attention was invited during the course of hearing by the ld. Authorized Representative and the ld. Senior D.R. Provisions of Section 80IB allows claim for deduction in respect of housing project, which has been approved prior to 1.4.2004 and also completed before 31.3.2008. During the course of assessment with regard to assessee's claim of deduction u/s 80IB in respect of its D.K.Honey Homes Project, the AO has asked the assessee to furnish the certificate of completion of this project M/s. D.K.Honey Homes. The AO also directly called information from the local authorities by issuing summons u/s.133(6) and a letter was issued by the competent authority dated 11th November, 2008, confirming that no completion certificate has been issued by this office. Accordingly, the assessee's cla....
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....ny queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. In such circumstances, in our opinion, the delay in obtaining the completion certificate on 10-10-2008 is certainly not attributable to the assessee and obtaining the said certificate before 31.3.2008 is beyond the control of the assessee. Assessee's job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite Forms together with the Completion certificate given by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections nor accepted by issue of said completion certificate till 10.10.2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80IA(10) of the Act. Accordingly, the order of the CIT(A) has....
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....idential units exceeded prescribed limit as laid down u/s.80IB(10) of the Act. Above mentioned decisions are applicable in their own sphere, i.e. on point of excess area of some of the flats which hold good in its own sphere. However, in case before us, deduction u/s.80IB(10) of the Act has been rejected on the ground that condition of completion of project before the due date i.e., 31.03.2008 as laid down u/s.80IB(10)(c) of the Act, has not been complied by assessee which is basic condition for allowability of deduction u/s.80IB(10) of the Act. We find that in case of Johar Hassan Zojwalla (supra), wherein condition of completion as laid down in section 80IB(10)(a) could not be complied with because of a stay being granted by MRTP Court. Thus fault of incompletion of construction was not attributable to assessee. In case such a contingency emerges which makes the compliance with provision impossible, then benefit bestowed on an assessee cannot be completely denied. Such liberal interpretation should be used in favour of assessee when he is incapacitated in completing project in time for the reasons beyond his control. In case before us, as stated on behalf of assessee, that assess....