TaxTMI 
TaxTMI 
2015 (6) TMI 803
X X X X Extracts X X X X
X X X X Extracts X X X X
....een M/s. Sahara India Commercial Corporation Ltd., Sahara India Financial Corporation Ltd., Sahara India Corporation Ltd., and Sain Processing and Weaving Mills Pvt. Ltd., with an intention to continue and carry on the project which was being developed individually by them. Assessee-AOP took over the project, developed the housing project and claimed deduction u/s. 80IB(10) of the Income Tax Act [Act], as per the then existing provisions, commencing from AY. 2003-04. In the original assessment completed u/s. 143(3) for AYs. 2003-04, 2004-05 and 2005-06, Assessing Officers (AOs) did examine the eligibility of the assessee and allowed the claim of deduction after due verification of all agreements, documents and also field verification by the Inspector in respective assessment years. Subsequently, while completing the assessment for AY. 2006-07, the AO insisted on furnishing 'Project Completion Certificate'. Since assessee could not furnish the same, AO took the view that assessee was not eligible for deduction u/s. 80IB(10). Consequently, the assessments completed in earlier years were re-opened u/s. 147 mainly on the reason that assessee has failed to furnish the 'Proje....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s. Sahara India Commercial Corporation Ltd., (previous M/s. Sahara India Housing Ltd., Calcutta) M/s. Sahara India Financial Corporation Ltd., (Lucknow), M/s. Sahara India Corporation Ltd., (New Delhi) and M/s. Sain Processing and Weaving Mills (P) Ltd., New Delhi. During the previous year relevant to the AY. 2005-06, the assessee claimed deduction under sub-section 10 of Sec. 80IB of the IT Act for an amount of Rs. 3,45,15,612/- the profits being derived from developing & building housing project. The sub section 10 of Sec. 80 IB relevant for the AY. 2005-06 stipulated as under: The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2005, by a local authority, shall be 100% of the profits derived in any previous year relevant to any AY from such housing project, if - a) Such undertaking has commenced or commences development and construction of the housing project on or after the first day of October 1998 and completes such construction: (i) In a case where a housing project has been approved by the local authority before the 1st day of April, 2004 on or before the 31st day of March, 2008;....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from conservation use to residential use by the State Govt. of AP and the draft variation was published in the AP Gazedtte, dt. 19-03-1998. The assessee's AR, Shri Mudit Saxena stated that the project was commenced w.e.f. 10-07- 1999. During the course of scrutiny proceedings, the assessee's AR produced copies of the lay out plan along with the sanction letter of Hyderabad Urban Development Authority (HUDA) (in letter no. 14870/MP2/HUDA/98 dt. 07-07- 1999) and LB Municipality (in proc. No. G2/3221/99 dt. 25-08-1999) in respect of the entire land of 44.63 acres. The assessee's AR stated that the project consisting of various types of houses and these types are further divided into blocks. Copies of typical floor plans approved by HUDA/LB Nagar Municipality in respect of all the types/blocks relevant to the financial year 2003-04 and the details of such approvals are furnished by the assessee's Authorised Representative as mentioned below: Type Name of the Block Date of HUDA approval Date of LB Nagar Municipality approval Type-I Type-II Vrindavani Gandhar New Malhar 07-07-1999 07-07-1999 07-07-1999 & 25-06-2003 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t random in each type as it is impracticable to take the measurement of all the units sold during the relevant previous year 2003-04 under various types: The are as per the measurement of each type/block is found as under: Name of the Block Built - up area as per physical measurement taken Type-I Type-II Type-II Type-III Vrindavani Gandhar New Malhar Malhar 300 sq. ft. to 312 sq. ft. 509 sq. ft. to 527 sq. ft. 815 sq. ft. to 858 sq. ft. 768 sq. ft. to 779 sq. ft. Row Houses Bahara - A (West) Category I - 640 sq. ft. to 648 sq. ft. Alfa - 819 sq. ft. to 829 sq. ft. Beta - 940 sq. ft. to 951 sq. ft. Gama - 1460 sq. ft. to 1464 sq. ft. Future Group Houses Yaman Type-I - 1130 sq. ft. to 1135 sq. ft. Type-II - 810 sq. ft. to 815 sq. ft. New Bahar - 810 sq. ft. to 816 sq. ft. Kalyani Plotted Houses 1508 sq. ft. to 1520 sq. ft. No. of shops sold 30 shops The assessee has taken separate approval for each Type of Block. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al in AY. 2006-07, wherein Ld.CIT(A) upheld AO's stand in denying the deduction u/s. 80IB(10). 6. Ld. DR vehemently submitted that there was no change of opinion as contended by assessee and accepted by the Ld.CIT(A) as assessee has not furnished 'Project Completion Certificate' nor furnished the complete details of AOP as pointed out by the AO. It was the submission that the original project has started way back in 1996 and therefore, it did not satisfy the conditions laid down u/s. 80IB(10). Ld. DR relied on the following: (a) Hon'ble Supreme Court in the case of Rajesh Jhavery stock Brokers P. Ltd [291 ITR 500] (SC); (b) Central Provinces Manganese ore Co Ltd Vs ITO [191 ITR 662]; for reopening and (c) Co-ordinate bench decision in the case of Sainath Estates P. Ltd., vs. DCIT 08-02-2013 for the proposition that deduction was not allowable on failure to furnish completion certificate of housing project. Detailed written submissions were also placed on record in support of the contentions. 7. Ld. Counsel for the assessee however, countering the arguments of the DR submitted that land was acquired way back in 1996 on which there is no dispute. But....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and evidence with reference to the fact that project was completed by 31-03-2008. It was the contention that AO cannot insist on 'Project Completion Certificate' based on subsequent amendment and cannot deny the deduction as relevant authorities are not issuing the certificate, even though assessee has indeed completed the project within the time limits, even contemplated by the amended provisions. However, the main contention of the Ld. Counsel is that assessee cannot be asked to fulfill the condition which was not there when the project was approved and the condition was not stipulated at the time of claiming the deduction. 9. We have considered the rival contentions and perused the records and Paper Book placed on record. As far as reopening of assessments u/s. 147/148 are concerned, we agree with the Ld.CIT(A) that this is a mere change of opinion. In fact, the AO at the time of completion of assessment has indeed taken pains in examining the eligibility and also deputed his inspector and allowed the deduction after due verification. There is also no dispute that the relevant provision of Secton 80IB(10) at the time of claim in AY. 2003-04 was as under: "(10) The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was to be deemed to have started then and the same was prior to 01-10-1998. Therefore, the assessee is not eligible for deduction. This contention cannot be accepted as the project was not even approved by the local authorities. Not even by 01-10-1998, as can be seen from the approvals stated above. Therefore, the project has started after 01-10-1998 and therefore, the contention of the AO that the project started before that date is not factually correct. Moreover, claim of assessee that assessee has entered into joint venture agreement and all the parties have started the project in their individual capacity. As per record, members contributed their land as capital, whereas the project was conceived and constructed by the AOP and the claim was accordingly made in the hands of the AOP. Since these aspects were examined by the AOs at the time of original assessment, the opinion of the subsequent AO that AOP continued the project cannot be accepted. Lastly, with reference to the 'project completion' which was one of the reasons for reopening assessments and also for denying the deduction in AY. 2006-07 (which was upheld by the CIT(A)), this was on the basis of subsequent amendment t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n'ble Supreme Court dealt with the entire provision and approved the Hon'ble Bombay High Court judgment in the case of CIT Vs. M/s. Brahma Associates [333 ITR 289]. Hon'ble Supreme Court vide para 12 has held as under: "12. The issues dealt with from paras 21 to 25 by the High Court already stands approved by this Court. In para 29, the High Court has held that clause (d) has prospective operation, viz., with effect from 01-04-2005, and this legal position is not disputed by the Revenue before us. Wheat follows from the above is that prior to 01-04-2005, these developers/assessees who had got their projects sanctioned from the local authorities as 'housing projects' even with commercial user, though limited to the extent permitted under the DC Rules, were convinced that they would be getting the benefit of 100% deduction of their income from such projects under Section 80IB of the Act. Their projects were sanctioned much before 01-04-2005. As per the permissible commercial user on which the project was sanctioned, they started the projects and the date of commencing such project is also before 01-04-2005. All these assessees were made known of the provision b....