TaxTMI 
TaxTMI 
2015 (9) TMI 796
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....e Tribunal vide order dated 31-03-2011 has decided the appeal relating to A.Yrs. 2007-08, 2005- 06 & 2006-07. The assessee filed a Miscellaneous Application before the Tribunal and the Tribunal vide order dated 11-06-2013 in M. A.No.80/PN/2011 recalled the order for the limited purpose of deciding the validity of reopening u/s.147 for A.Yrs. 2005-06 and 2006-07 and the alternate contention of the assessee regarding proportionate deduction u/s.80IB(10) for A.Yrs. 2005-06 to 2007-08 respectively. 3. So far as the issue relating to reopening of assessments for A.Yrs. 2005-06 and 2006-07 are concerned, the Ld. Counsel for the assessee submitted that the AO in the order passed u/s.143(3) on 22-12-2006 for A.Yrs. 2004-05 has granted deduction u/s.80IB(10) in respect of the housing project called "Sundar Sahavas". However, the AO reopened the assessments for A.Yrs. 2005-06 and 2006-07 which is not correct and legal due to the following reasons (a) No reasons are recorded for issuing the notice u/s.148 for both these assessment years. (b) The reopening is based on change of opinion as similar claim made u/s.80IB(10) has been allowed in A.Y. 2004-05 in the assessment order made u/s....
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....ere completed u/s.143(1). There was no application of mind. Therefore, it cannot be said that the same is due to change of opinion. 6. So far as the argument of the Ld. Counsel for the assessee that the Revenue has not taken any remedial measures either by reopening the assessment u/s.147 or action u/s.263 of the I. T. Act, the Ld. Departmental Representative submitted that the assessee has to be blamed for this. He submitted that the assessee has deliberately filed the return of income before the non-jurisdictional Assessing Officer with a wrong PAN Number. Therefore, the return was not readily traceable by the jurisdictional Assessing Officer. He accordingly submitted that the reassessment proceedings initiated by the AO being in accordance with law, the same should be upheld. 7. We have considered the rival arguments made by both the sides, perused the order of the AO and CIT(A) and the paper book filed on behalf of the assessee. From the submission of the Ld. Counsel for the assessee as well as on perusal of the material on record, we find the assessments for A.Yrs. 2005-06 and 2006-07 were admittedly completed u/s.143(1). Further, non-issuance of completion certificate f....
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..../s.80IB(10) on the ground that the assessee has not fulfilled the conditions laid down in the provisions of section 80IB(10). The assessee preferred an appeal before the CIT(A) who dismissed the appeal of the assessee. On further appeal filed by the assessee the Tribunal vide order dated 31-03-2011 restored the issue of allowability of deduction u/s.80IB(10) to the file of the AO with a direction to examine the assessee's claim in the light of the decision of the Tribunal in the case of Satish Bora and Associates vide ITA Nos. 713 & 714/PN/2010 order dated 07-01-2011. The AO accordingly issued notice to the assessee asking him to explain as to why the deduction u/s.80IB(10) should not be disallowed. It was submitted by the assessee that after submission of the completion certificate by the architect, the Pune Municipal Corporation did not raise any objection within the time period of 21 days from the date of filing of the application. The assessee has completed the entire project and part completion certificate for building Nos. D1 to D6 are already issued by PMC. The completion certificate for building No. D7 is awaited. It was submitted that the alleged major problem relating to ....
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....by Local Authority. In the present case, the project has commenced in the financial year 2003-04. That means the scheme should have been completed by 31/03/2008. However, the Local Authority i.e. Pune Municipal corporation has not issued the completion certificate to the said project. It was initially communicated by the Local Authority that no completion certificate has been granted to the said project. However, subsequently they informed that only part completion certificate i.e. in respect of buildings D-l to D-6 have been issued by them. Further, the assessee has also admitted vide his letter dated 07 12/2009 the fact that completion certificate has been issued in respect of six out of seven buildings only and the same has not been issued by the local authority for the seventh building. It is very much clear from PMC's letter dated 05/11/2012 that the assessee has not received the completion certificate from the Local Authority as yet. As part completion certificate cannot be termed as completion certificate in respect of entire housing project. Although the PMC vide letter dated 05.11.2012 has stated that the City Engineer, PMC has accorded approval to vacate the notice issued....
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....0) in respect of Building No. D7. The relevant observation of the Ld. CIT(A) at para 4.6 to 5 of the order read as under "4.6. I have considered the submissions of the appellant and the contention of the Assessing Officer in rejecting the claim for deduction u/s 80IB(10). In the subsequent set aside proceedings, the Assessing Officer carried out certain enquiries from the PMC wherein he learned that the appellant had applied for completion certificate on 17.05.2006 for 07 buildings where as the PMC had issued part completion for 06 buildings on 16.12.2006. The objection raised by PMC vide letter dated 25.10.2007 was approved to be vacated by the City Engineer, PMC following the Bombay High Court decision on 30.06.2010. The PMC in the letter dated 05. 11.2012 addressed to the Assessing Officer stated in response to specific question as to whether a completion certificate had been issued in response to the application made by the assessee, that "the proceedings in respect of issue of completion certificate in respect of building no. 07 is in progress." The Assessing Officer relied upon this observation of PMC to hold that the completion certificate from the local authority as requ....
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....etion certificate for 06 buildings, i.e. Nos. D-1 to D-6 on 16.12.2006. The objection certificate of the PMC directing the appellant to stop all work vide its letter dated 12.11.2007 was received almost a year later. This letter put an immediate halt to the construction activity being undertaken at the appellant's "Sunder Sahawas" project. As already stated above this letter of PMC was issued in view of the major violation relating to the FSI as well as irregular construction carried out on lands declared as surplus vacant land. However, the Bombay High Court has subsequently intervened and quashed the revisional order of the Collector u/s.34 of the Urban Land (Ceiling & Regulation) Act, 1976 on the ground of inordinate delay and also quashed the penalty levied at the rate mentioned in the Ready Reckoner Rate for regularizing the construction on surplus vacant land. The appellant's case is that by reason of the order of the Bombay High Court referred to above, PMC has vacated the said notice dated 12.11.2007 thereby making it clear that there is no so called major violation. Therefore, it is seen that although the work stoppage order issued by PMC involved the misuse of ULC Provisi....
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....allowed to add, amend, alter or delete any ground of appeal at the time of appellate proceedings. Since option has been exercised by the appellant during the appellate proceedings to file additional ground which stands admitted and adjudicated, this ground of appeal is taken to be allowed." 15. Aggrieved with such order of the CIT(A) the assessee as well as the revenue are in appeal before us with the following grounds Grounds by Assessee : "1. On the facts and in the circumstances of the case the CIT(A) has erred in upholding the validity of reopening of the assessment u/s.147 without appreciating the fact that there has not been any new tangible material possessed by the AO justifying the reopening of the assessment. 2. On the facts and in the circumstances of the case and without prejudice to above ground, the CIT(A) has erred in not allowing the claim made u/s.80IB(10) for the entire housing project. The above grounds of appeal may kindly be allowed to be altered, modified, amended, etc in the interest of natural justice." Grounds by Revenue : "1. The order of the Ld. Commissioner of Income Tax (Appeals) is contrary to the law and facts and circumstances of....
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.... is completed and these are under occupation. He submitted that since construction of all the buildings have been completed the assessee should be allowed the deduction u/s.80IB(10) in respect of the profits of the entire project for all the 3 assessment years. 17. He further submitted that the project has been sanctioned on 22-12-2003, i.e. prior to 01-04-2005. Referring to the decision of Hon'ble Delhi High Court in the case of CIT Vs. CHD Developers Ltd. reported in 362 ITR 177 he submitted that the Hon'ble High Court in the said decision has held that amendment w.e.f. 01-04-2005 requiring certificate of completion of project within 4 years of approval is not applicable to projects approved prior to that date. Accordingly, the order of the Tribunal allowing claim of deduction u/s.80IB(10) was upheld and the appeal filed by the Revenue was dismissed. Referring to the decision of the Pune Bench of the Tribunal in the case of System Enterprises Vs. ITO vide ITA No.1123/PN/2013 order dated 28-08- 2014 he submitted that the Tribunal following the above decision of Hon'ble Delhi High Court has held that since the date of commencement of the project in that case is admittedly 16-07-....
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....e has to complete construction of the entire housing project and is duty bound to obtain and produce the completion certificate within the prescribed time for availing of the benefit. He submitted that unless the assessee obtains the completion certificate from the Pune Municipal Corporation within the stipulated time, the very basis for which the provision was inserted will be lost. He accordingly supported the order of the AO and submitted that the grounds raised by the assessee be dismissed and the grounds raised by the revenue be accepted. 21. We have considered the rival arguments made by both the sides, perused the order of the Ld. CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant the assessee carried out construction of a housing project called "Sundar Sahavas" and claimed deduction u/s.80IB(10) of the Act with respect to the profits earned from the entire project. The plan in respect of the said housing project was sanctioned by the local authority on 22-12-2003. According to the AO, in terms of provisions of section 80IB(10) of the Act the assessee was required to complete the....
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.... the assessee is not required to produce the completion certificate to avail the deduction u/s.80IB(10) in respect of a housing project which has been approved prior to 01-04-2005. 23. We find merit in the above argument of the Ld. Counsel for the assessee. Admittedly, the project has been sanctioned by the local authority on 22-12-2003 vide commencement certificate No.1071/2003 dated 22-12-2003, a copy of which is placed at page 126 of the paper book. There is also no dispute to the fact that the occupancy certificate for 6 buildings namely D1 to D6 was issued by PMC vide certificate dated 16-12-2006, a copy of which is placed at page 54 of the paper book. From the notice dated 12-11-2007 issued by PMC directing the assessee to stop the construction work, we find PMC in the said letter itself has also mentioned that all the buildings are constructed and are under occupation. The letter issued by PMC on 12-11-2007 directing the assessee to stop the construction work has been vacated by the Hon'ble Bombay High Court vide order dated 30-06-2010. The relevant observation of the Hon'ble High Court at para 3 and 4 reads as under "3. In so far as challenge to the Revisional order o....
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....under "10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case denied the benefit of deduction u/s.80IB(10) on 4 counts (a) the housing project last sanctioned was for the construction of 65 units which has not been completed in the stipulated time frame, (b) the built up area of 2 row houses 1 & 7 are more than 1500 sq.ft. each (c) the housing project was required to be completed in totality and not individual flats and (d) the condition laid down in section (a) and (b) of 80IB(10) of the Act was not fulfilled. 10.1 So far as the first 2 objections are concerned, we find the Ld. CIT(A) has decided the above issues in favour of the assessee. We find the CIT(A) has held that the size of the project comprise of 63 units only which included 56 flats and 7 row houses which could quality for the claim of deduction u/s.80IB(10) and not 65 units as held by the Assessing Officer (para 3.6 of the order). Similarly, he has held that the area of the 2 unit....
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....of the completion certificate. For the assessment year 2007-08, its claim to deduction under section 80-IB(10) of the Income-tax Act, 1961 was denied inter alia, on the ground that the assessee had violated the conditions stipulated under section 80-IB(10) inasmuch as it had not obtained the completion certificate for the project from the competent authority within four years as stipulated in Explanation (ii) thereto. The Commissioner (Appeals) upheld the assessment order. The Tribunal held that the assessee was expected to complete the project in accordance with the approved plan at a particular point of time and the assessee was not expected to do or to fulfil the conditions which were not in existence at the relevant point of time or made compulsory by amendment in the Act from the future date. Since the assessee was to complete the project on or before March 31, 2009, and a request was duly made with the competent authority on November 5, 2008, mentioning that the project had been completed and the completion certificate may be issued and if the certificate was not issued by the competent authority the assessee should not be penalised therefore unless and until some contrary fa....
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....enefit. In that view of the matter, we do not see any merit in the appeals and the said questions of law are answered in the sense that the said provision has no application to the facts of this case". 10.5 Since the date of the commencement of the project in the instant case is admittedly 16-07-2002 as held by the Assessing Officer as well as the CIT(A), therefore, respectfully following the decisions cited (Supra) it has to be held that amendment w.e.f. 01-04-2005 requiring certificate of completion of project within 4 years of approval is not applicable to the projects approved prior to that date and therefore the assessee is entitled to deduction u/s.80IB(10) of the I. T . Act. 10.6 Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the other grounds raised by the assessee since these become academic in nature 11. In the result, the appeal filed by the assessee is allowed." 25. Since in the instant case the project has been approved prior to 01-04-2005 and the assessee has admittedly completed construction of all the 7 buildings, therefore, the denial of deduction u/s.80IB(10) for non production of completion certificate for the....