TaxTMI 
TaxTMI 
2013 (10) TMI 1295
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....s. 12,76,88,137/- and Rs. 1,27,68,813/- respectively in respect of the profits derived from developing and building a housing project named 'Shubhashree Woods' located at Pimple Saudagar, Pune. The said claim of deduction has been denied by the income-tax authorities for identical reasons in both the assessment years. In order to appreciate the relevant facts, the reasons for denial of deduction and the justification sought to be canvassed by the assessee, we may refer to the fact situation as emerging from the orders of the authorities below and other material furnished in the form of Paper Book, etc. in the course of hearing before us for the assessment year 2006-07. 3. In the assessment year 2006-07, appellant filed a return of income declaring total income of Rs. 12,76,88,137/- which was claimed as exempt u/s.80-IB(10) of the Act on the ground that the entire income represented profits derived from undertaking development and building of a housing project named 'Shubhashree Woods' located at Pimple Saudagar, Pune. The said project was claimed to have been started in the previous year relevant to the earlier assessment year of 2004-05. The assessee contended b....
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....cquired further lands totaling 18800 sq.mtrs. during the period 05.08.2003 to 17.10.2003 and thus the total plot area increased to 55950 sq.mtrs. After such acquisition, assessee filed a revised plan on 08.10.2003 with the PCMC on the total plot area of 55950 sq.mtrs., proposing to construct 297 row houses; it transpires that PCMC granted approval for construction of 280 row houses vide approval dated 23.12.2003, a copy of such approval and the corresponding certificate issued by PCMC permitting the commencement of construction dated 23.02.2003 have been placed at pages 267 to 272 and 279 to 282 respectively of the Paper Book. With respect to the 17 row houses, it was clarified by the assessee that PCMC withheld the approval on account of overhead electricity transmission lines crossing over a portion of land. 6. The Assessing Officer further noticed in the assessment order that assessee acquired a further land area of 10350 sq.mtrs. on 16.04.2004 and after such acquisition, assessee amalgamated the piece of said additional land of 10350 sq.mtrs with the existing land area of 55950 sq.mtrs.. On the total increased plot area of 66300 sq.mtrs., assessee filed a revised plan with P....
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....s been placed. After considering the aforesaid, in para 5 of the assessment order, Assessing Officer has tabulated the details of approval of plans, area of plot, built-up area, and the number of residential units, i.e. row houses and flats approved by the PCMC. The said tabulation is reproduced as under :- Sr.No. Date of approval of the plan Particulars Plot area Sq. Mt. Built up area Sq.Mt. No. of residential units 1 10/09/2003 Initial plan approval by PCMC for flats & row houses. 37150 20182 262 (200 flats & 62 row houses) 2 23/12/2003 PCMC approves revised plan 55950 25032.57 280 (All row houses) 3 29/03/2005 PCMC approves revised plan 66300 41473.75 439 (144 Flats & 395 row houses) 4 24/03/2006 PCMC approves revised plan 71400 52315.78 577 (282 Flats and 295 row houses) 5 31/03/2008 PCMC approves revised plan 71400 53733.70 611 (316 flats 295 row houses 8. In the above background, on being asked to justify the claim of deduction u/s. 80-IB(10) of the Act, assessee submitted before the Assessing Officer that it had undertaken development and construction of t....
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....ills issued by PCMC for the two row houses, which show that the two row houses were indeed complete before 31.03.2008. In-fact, it is pointed out with reference to the completion certificate dated 28.06.2012, that it has been issued by PCMC with effect from 26.03.2008, thereby justifying the assertion that the construction was complete prior to 31.03.2008, the stipulated date for completion of the project. The learned counsel also pointed out that the said completion certificate dated 28.06.2012 issued by PCMC was not available at the time of proceedings before the lower authorities and therefore it should be admitted as an additional evidence. Justifying the admission of such additional evidence, it is contended that it was not within the control of the assessee and that in any case it was an approval granted by a local authority i.e. PCMC whose genuineness could not be doubted; and, further that the additional evidence is merely in support of the assertion of the assessee already made before the income-tax authorities that construction of 'SWRH' project comprising of 295 row houses was complete before 31.03.2008. 10. The Assessing Officer has not accepted the plea of t....
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....tained from PCMC only for 293 units out of the total 611 residential units, assessee did not comply with the condition specified in section 80-IB(10)(a)(i) of the Act. Consequently, the deduction claimed by the assessee u/s. 80-IB(10) of the Act was denied. 14. In appeal before the CIT(A), assessee reiterated its claim to the effect that the 'SWRH' project was a separate project and if it was so considered, the same complied with all the conditions specified for claim of deduction u/s. 80-IB(10) of the Act. The CIT(A) has upheld the stand of the Assessing Officer to the effect that the two projects canvassed by the assessee were indeed a single project. Going further, the CIT(A) held that even if, the claim of the assessee that 'SWRH' project is a separate project was to be upheld, yet assessee was not eligible for the deduction u/s. 80IB(10) of the Act on the ground that till 31.03.2008, assessee had received completion certificate only in respect of 293 row houses out of total of 295 row houses and the completion certificate for the balance two row houses was not received till 31.03.2008. Therefore, according to him, in the absence of completion certificate for....
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....e Act by equating the sanctioned plan with the meaning of 'housing project' for the purposes of section 80IB(10) of the Act. 16. Apart from the aforesaid, learned counsel contended that factually also the two projects were not only perceived but also executed as independent and separate projects by the assessee. For this purpose, he has referred to the relevant pages of the Paper Book containing the Plans and Brochures of the two projects to show that they have been conceived and marketed separately. Reference has also been made to certain advertisements of the projects, copies of which have been placed in the Paper Book, to point out that the two projects were advertised altogether separately. 17. With regard to the action of the Assessing Officer in relying upon the statement of the Chief Engineer, PCMC, the learned counsel pointed out that from the point of PCMC all the buildings sanctioned under one plan may constitute a single project, so however this was not the position for the purposes of examining assessee's claim for deduction u/s. 80-IB(10) of the Act. It was also submitted that utilization of extra FSI of the row houses project for the purposes of cons....
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....py of the said certificate placed in the Paper Book at page 293. The learned counsel pointed out that the construction of the two row houses was also completed before 31.03.2008 and the two row houses were sold by the assessee and were being used by the customers. In support, reference has been made to the Property Tax bills issued by the PCMC. It was submitted that the assessee had applied for obtaining the completion certificate in time, i.e. on 26.03.2008 but the certificate has been issued by PCMC belatedly and this would not mean that the assessee has not completed the project in time. In this context, reliance was placed on the decision of the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. vs. ITO, in ITA Nos. 945 to 950/PN/2010 dated 30.08.2011. Accordingly, it is contended that assessee fulfilled the condition of completion of housing project by 31.03.2008 and thus it was eligible for deduction u/s. 80-IB(10) of the Act. On this aspect, reliance has also been placed on the decision of the Pune Bench of Tribunal in the case of M/s. Kundan Real Estate vs. ITO in ITA No.126/PN/2010 dated 26.06.2012 for the proposition that once the PCMC issued the complet....
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....of construction of 'housing project'. In the present case, there is no dispute that the permissible period for completion of construction is to be governed by sub- clause (i) of clause (a) to section 80-IB(10) of the Act, because the housing project has been approved by the local authority i.e. PCMC before 01.04.2004; and, accordingly the project is required to be completed on or before 31.03.2008. To the aforesaid extent, there is no difference between assessee and the Revenue. However, the difference arises as to which is the 'housing project' that is required to be evaluated to ascertain whether construction has been completed on or before 31.03.2008 in terms of section 80-IB(10)(a)(i) of the Act. As per the Revenue, the project to be considered comprises of 611 residential units (i.e. 295 row houses and 316 flats) and, if it is so considered, the assessee has not completed construction of the project before 31.03.2008 and thus assessee becomes ineligible for the claim of deduction u/s. 80-IB(10) of the Act. 24. Per contra, the claim of the assessee is that the 'SWRH' project consisting of construction of 295 row houses is to be considered as a 'ho....
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....ns for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80IB(10) would have to be construed as commonly understood. 19. As rightly contended by Mr. Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or a group of buildings consisting of several residential units. In fact, the Explanation in section 80IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 squre feet ('E' building in the present case) would constitute a 'housing project' under section 80IB(10) of the Act. 20. The question, then, to be considered is, whether construction of 'E' building is an independent housing project or extension of the housing project already exist....
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....urt a housing project, purely of commercial nature, approved by a 'local authority', is also a 'housing project' entitled to deduction u/s. 80-IB(10) of the Act. 28. In-fact, at this point we may refer to the decision of the Mumbai Bench of the Tribunal in the case of Mudhit Madanlal Gupta (supra) wherein a similar issue has been considered. In this case, assessee had constructed a project with four wings, namely, A, B, C and D. The claim of deduction u/s. 80-IB(10) of the Act was denied on the ground that assessee was not able to obtain the completion certificate in respect of wing 'D'. The Revenue canvassed that the project was a single project consisting of four wings and non-completion of wing 'D', disentitled the assessee from the claim of deduction u/s. 80-IB(10) of the Act. The Tribunal, after noticing that the expression 'housing project' is not defined in section 80-IB(10) of the Act referred to the dictionary meaning of the expression 'housing project' and held that even segregated block of buildings can also be construed as a 'housing project' for the purposes of section 80-IB(10) of the Act and, deduction is to ....
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....e considered as a 'housing project' for the purpose of deduction u/s. 80-IB(10) of the Act. The relevant discussion in the order of the Tribunal is as under : - "21. So far as the second grievance of the Revenue that Building Nos. B and F are not constructed and therefore the project has not been completed as per the approved plan, we find the buildings A, C, D, E and the 17 row houses are constructed on a plot area of more than 1 acre, none of the fiats/row houses is beyond 1500 sq.ft. and the completion thereof has been over before 31-03-2008 in view of our findings above. 21.1 We find the Pune Bench of the Tribunal in the case of M/s. Rahul construction Co. Vs. ITO - ITA No.l250/PN/2009 and ITA No.707/PN/2010 order dated 30-03-2012 has held as under : "8. Considering the above submission, and having gone through the orders of the authorities below, material available on record and the decisions relied upon, we find that the issue involved is as to whether the assessee had completed the housing project within the prescribed time limit since the date of first approval of the project by the PMC. 9. To decide the above issue, it is necessary to decide firstly as ....
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....f assessee for the claimed deduction. In view of the above explanation, we find substance in the contention of the Id. A.R. that approval of the housing project and approval of building plan are two different concepts. The Bangalore Bench of the Tribunal in the case of DCIT Vs. Brigade Enterprises (P) Ltd. (Supra) has held that plan for development is only a work order and not final plan sanctioned by the local authority. For any project, there could not have been a plan without submission of the detailed building plans, by the architect and what requisite details required to be submitted for approval of the building plans by the local authority. In the case of Saroj Sales Organization Vs. ITO (Supra), before Mumbai Bench, almost similar facts as before us were there. The commencement certificate in respect of six wings in Block 'N' was separately received by the assessee and all the flats in Block were less than 1000 sq.ft. It was held by the Tribunal that it is not upon to the revenue to include block "BC" as part of block 'N' just to deny relief to the assessee u/s. 80 IB(10). The Tribunal observed that Block "BC" was meant for higher strata of the Society had be....
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.... facts that B Group buildings in "Rahul Nisarg Co-operative Housing Society Ltd.," have been constructed on land area of 138203 sq.ft., has not been denied by the authorities below. They have also not denied these material facts that the first building plan was sanctioned on 29.4.2003 vide Commencement Certificate No. 4269 issued by the PMC (Page No. 16 of the Paper Book). The other material facts like actual construction was executed as per the revised plan sanction on 20th March 2004 vide CC No. 2225 (page No. 17), the project consists of 396 flats and construction of these flats have been completed on 14.7.2006 as per the Completion Certificate issued by the PMC (Page Nos. 13 to 18 of paper book) are not in dispute. The authorities below have also not denied that built up area of each of these flats does not exceed 1500 sq.ft. It is also not in dispute that both the projects are entirely a residential project and there is no commercial area therein. Under the above circumstances, we are of the view that the assessee is very much entitled to the claimed deduction u/s. 80 IB (10) of the Act on the buildings Al to A5 in "Atul Nagar" and buildings Bl to B6 in "Rahul Nisarg Co-operat....
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....y 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." 30. From the aforesaid discussion, it can be inferred that in order to understand the meaning of the expression 'housing project' for the purpose of section 80-IB(10) of the Act, in the absence of any definition section 80-IB(10) of the Act or even in the Local Development Control Rules for PCMC, it has to be construed as "commonly understood". The plea of the Revenue that expression 'housing project' should be understood to mean the project as approved by the 'local authority' is not justified because evidently the Development Control Rules of the 'local authority' i.e. PCMC does not define a 'housing project'. In-fact, from the discussion in the foregoing paragraphs it is evident that even a building or a group of buildings comprised in a larger project approved by a 'local authority' can be construed as a 'housing project' for the purpose of considering a claim of deduction u/s. 80-IB(10) of the Act. Considered in this backgroun....
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....as justified in considering 'SWRH' project as 'housing project' for the purposes of section 80-IB(10) of the Act. 32. The argument of the Revenue, based on the statement of Chief Engineer, PCMC, in our view, does not help the case of the Revenue as the following discussion would show. The case set up by the Revenue is that two projects have been sanctioned by a common approval and thus the PCMC has viewed the two projects as a single composite project. It is contended by the Revenue that the expression 'housing project', though not defined in section 80IB(10) of the Act, should be taken to be the project perse, as approved by a 'local authority' for the purposes of section 80IB(10) of the Act. No doubt, for a 'housing project' to be eligible for deduction u/s. 80IB(10) of the Act, it is required to be approved by a 'local authority', so however, the phraseology of section 80IB(10) of the Act does not reflect a legislative intent that the project should be 'as approved' by a 'local authority'. The requirement of section 80IB(10) of the Act to the effect that project should be approved by a 'local authority' i....
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.... we hold that 'SWRH' project is to be considered as an independent 'housing project' for evaluating assessee's claim for deduction u/s. 80-IB(10) of the Act. The only aspect now to be examined is as to whether assessee has completed construction of the said project before 31.03.2008, as required by section 80-IB(10)(a)(i) of the Act. 34. On the above aspect, the claim of the Revenue is that prior to 31.03.2008, assessee has obtained completion certificate only in respect of 293 out of 295 total row houses and thus, it has to be inferred that assessee has not fulfilled the condition prescribed in section 80-IB(10)(a)(i) of the Act. As noted earlier out of 295 row houses the completion certificate in respect of 293 row houses was obtained prior to 31.03.2008 but even with regard to the remaining two row houses the application for obtaining completion certificate was made to the 'local authority' on 26.03.2008. The assessee claimed before the lower authorities that construction of the remaining two row houses was also complete before 31.03.2008, a plea which has not been accepted. Before us, learned counsel for the assessee pointed out that subsequent to....
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.... also asserted before the lower authorities that the application dated 26.03.2008 made to be PCMC for obtaining of completion certificate was based on a certificate of the Architect confirming completion of construction of the building. 36. The Explanation (ii) to section 80-IB(10)(a) of the Act requires that the date of completion of construction of a housing project shall be taken to the date on which the completion certification in respect of such housing project is issued by the local authority. On the basis of the aforesaid, the claim of the Revenue is that as on 31.03.2008, the PCMC had not issued the completion certificate for the two row houses and therefore the assessee did not comply with the stipulated period of completion of construction. The moot question is as to whether in the face of the aforesaid fact situation noted by us, can it be said that assessee's project did not comply with the condition prescribed in section 80-IB(10)(a)(i) read with Explanation (ii) thereof so as to hold that the construction was not complete before 31.03.2008. In a somewhat similar situation, the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. vs. ITO in ITA N....