TaxTMI 
TaxTMI 
2015 (10) TMI 2820
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....our of the assessee by the decision of the Tribunal dated 05/1/2015 in the case of M/s Krish Enterprises vs ACIT (ITA No.5554/Mum/2014) order dated 05/01/2015. This factual matrix was not controverted by ld. DR. 2. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the aforesaid order of the Tribunal dated 05/01/2015 for ready reference:- "Aggrieved by the impugned order dated 25/07/2011 of the ld. First Appellate Authority, Mumbai, the assessee is in appeal before this Tribunal. The assessee is aggrieved in confirming the disallowance of deduction claimed u/s 80IB(10) of the Income Tax Act, 1961 amounting to Rs. 1,42,53,667/- on the plea that the ld. Commissioner of Income tax (Appeals) did not appreciate that the condition of completion is not applicable since the project was approved on 05/03/2004, before the insertion of condition of completion inserted with effect from 01/04/2005. 2. At the time of hearing, the ld. Counsel for the assessee, Shri Vimal Punmiya, advanced his arguments which are identical to the ground raised by submitting that the project was approved on 0....
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.... 07/02/1997 Owner converted agriculture land into Non-arculture land. Vide Order bearing No.Rev/Desk-1/T9/NAP/SR-3/96 of office of Collector, Thane. 05.03.2004 CIDCO approved block plan as "residential with shopline building" Vide No.CIDCO/VVSR/BP-1087/W/2500 for Dvelopment of Sector.I,II,III, IV & V 0.2.07.2004 Owner transfer development right to Mr. Kunverji Bachhu Shah For Development of Sector No.I,II,III, IV & V 40-77 09.07.2004 Mr. Kunverji Bachhu Shah Transfer development right to M/s. Adinath Developers For Development of Sector No.I,II,III, IV & V 78-121 30.04.2007 M/s. Adinath Developers transfer Development right to appellant For Building No.1 Wing "C", Building No.2 Wing A,B,C & Building No.3 Wing A,B,C of sector No.IV (100% Residential Project) admeasuring area of 5499.17 sq.mtr. (i.e. More than 1 Acre) 122-142 15.9.2005 M/s.Adinath Developers transfer Development right to Leela Builders. For remaining building commercial area right and all 143-161 ..3.2008 Project was completed 17.03.2008 House tax levied 168-170 27.....
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....e the buyers from the eligibility to claim deduction under section 80IB(10) of the Act. The disallowance of deduction was challenged in an appeal filed before Ld. CIT(A). It was submitted that assessee had applied to CIDCO for completion certificate on 31/3/2008. However, CIDCO did not issue completion certificate. The Gram Panchayat had issued the completion certificate on 29/3/2008 certifying the fact that the project is complete and is habitable and is also ready to be occupied by the flat owners. Therefore, the condition regarding completion of project was complied with. It was also submitted that as per explanation to section 10(20) of the Act Gram Panchayat also falls under Local Authority and reference was made to the decision of Pune Bench of the Tribunal in the case of Krishna Harubhau Lohokare vs. ITO(ITA No.937/PN/2010) , wherein it has been held that for the purpose of issue of completion certificate under section 80 IB(10) Gram Panchayat is a Local Authority. 2.4 It was further submitted that requirement of completion certificate does not apply to a case where project has been approved before 31/3/2005. All these contentions of the assessee are noted ....
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....uthority cannot hold any validity. The question which is important to be decided is that whether it is a Competent Authority to issue the certificate of completion to the assessee. The evidence of such "competence" of the authority has not been provided by the assessee either before the AO or before Ld. CIT(A), therefore, the case law relied upon by the assessee will not support its case. In this manner Ld. CIT(A) has upheld the disallowance. The concluding observations of Ld. CIT(A) are as under: "5.1.. The appellant had filed copy of Application letter dated 31.3.2008, submitted to the CIDCO regarding the completion of the project and issuance of .completion certificate, before the Assessing Officer. But the aid certificate was not issued by the CIDCO. It was observed b the Assessing Officer that it was pending for more than a, year. The appellant in the meanwhile obtained completion certificate from another. Local Authority viz. Gram Panchayat, Bolinj, Virar and claimed that the project was completed arid it had fulfilled the conditions for claiming deduction u/s.801B(10) of the Income Tax Act. The Assessing Officer had also issued summons u/sj33(6) of the. Inc....
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....ed grounds of appeal. 3. After narrating the facts it was submitted by Ld. AR that the development agreement of the assessee, copy of which is filed at page 122 to 142 of the paper book was in respect of Sector No.4 for Building No.1,Wing-C, Building No.2, Wing-A,B & C and Building No.3, Wing A,B & C and this is 100% residential project admeasuring an area of 5499.17 sq.mts., which is more than one acre. Relying to the development agreement it was submitted that the total development rights in respect of total area were to the tune of 409272 sq.fts., out of which approved area was 274272 sq.fts. Out of the total developed area the assessee got 5499.12 sq.mtrs. i.e. 59193 sq.fts. in Sector -4. In this regard Ld. AR referred to clause (v) & (z-b) of pages 6 & 7 of the development agreement, copy placed at pages 128 to 129 of the paper book. It was submitted that this project was 100% residential project and rest of the area was transferred by M/s. Adinath Developers for development to Sai Leela Builders and copy of this agreement is also filed at pages 143 to 161 of the paper book. He submitted that M/s. Sai Leela Builders is different party unrelated to the assessee. He sub....
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....rity. These provisions added. Thus, there is no condition of completion and furnishing completion certificate. 3.3 For raising the contention that completion of the project was not a condition precedent in respect of project which were approved before 31/3/2005, Ld. AR relied upon the following decisions: (1) CIT vs. CHD Developers (2014) 43 Taxman.com 243(Del)- In this case approval for the project was given by Mathura Vrindavan Development Authority on 16/03/2005. The AO applied the provisions of sub-section (10) of Section 80IB being substituted by Finance (No.2) Act, 2004, w.e.f. 1/4/2005 and disallow the claim of deduction on the reasoning that the completion certificate in terms of explanation (ii) to clause (a) of section 80IB(10) had not been granted to the assessee so as to enable it to avail the benefit provided by section 80 IB. It was contended before AO that vide letter dated 5/11/2008 it had applied for completion certificate but the same was not issued which was beyond its control and power. Order passed by AO was upheld by Ld. CIT(A). The Tribunal held that in a case where approval of the project is granted by the Competent Authority before 1....
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....) (iii) NO due certificate from Gram Panchayat dated 17/03/2008. (Refer Page No. 173-175). (iv) Applied to CIDCO for granting completion certificate vide letter dated 3 1/03/2008. (Page No.176) (v) NOC from Water Department and accordingly water charges were paid to Virar Nagar Palika on 27/03/2008. (It is require after completion of project). (Refer Page No.171-172) (vi) House Tax was paid on 17/03/2008 as completed house. In Maharashtra House tax are levied accordingly to nature and condition of property. In Appellant case project is completed therefore local body charge house tax on project as completed house. (Page No. 168-170)". 3.5 For the proposition that no commercial property was involved in the project of the assessee as the project of the assessee has to be considered a separate project, Ld. AR relied upon the following decision. (i) Khyti Financial Services,ITA No.3740/Mum/2008 and reference was made to the following facts and findings recorded by ITAT: FACTS (PARA 2) The assessee is a partnership firm consisting of two partners viz M/s Khyati Financial Services P.Ltd & Shri. Paresh Mohanlal Parekh. The appella....
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....derstood. As rightly contended by Mr. Inamdar Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the interveners, the expression "housing project" in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the explanation in Section 801B(10) supports the contention of the assessee that the 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 sq.ft. ("E" building in the present case) would constitute a "housing project" under Section 801B(10) of the Act". Thus it was submitted by Ld. AR that Ld. CIT(A) has erred in not allowing the relief to the assessee and assessee should be granted with deduction under section 80 IB(10) of the Act. 4. On the other hand, Ld. DR relying upon the assessment order as well as order passed by Ld. CIT(A), which have been discussed in detail in the above part of this order submitted that Ld. CIT(A) has rightly held that assessee is not entitled to claim deduct....
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....a Developers will absolve the buyers from eligibility to claim deduction under section 80 IB(10) of the Act but AO has not spelt out that how such splitting done by M/s. Adinath Developers will disentitle the assessee to claim deduction under section 80 IB(10) of the Act. As per decision of Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties (supra) it is held that the expression "housing project" is neither defined under section 2 of the Act nor under section 80IB(10) of the Act. It is also not defined under Mumbai Municipal Corporation Act, therefore, the same has to be construed as commonly understood. In common parlance "housing project" would mean constructing the building or group of buildings consisting of several residential units. In fact the explanation in section 80 IB(10) supports the contention of the assessee that approval granted to housing project. Therefore, it is clear that construction of even one building with several residential units of size not exceeding 1000 sq.fts. "E" Building in that case would constitute a housing project under section 10 IB(10) of the Act. If facts of the present case are seen in the light of the aforementioned decision ....
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....ated 22/01/2014. The Hon'ble Delhi High Court affirmed the stand of the Tribunal to the fact that before the substitution of the Act with effect from 01/04/2005 and in terms of explanation (ii) to clause (a) of section 80IB (10), there is no requirement of completion certificate for availing deduction for the project which were approved before the date of substitution i.e. 01/04/2005. In the present appeal approval was granted by the competent authority on 05/03/2004, before the insertions of condition of completion certificate (i.e. w.e.f. 01/04/2005), therefore, the assessee is not expected to fulfill the conditions which were not on the statute book when the approval was granted by the competent authority to the assessee, consequently, following the decision of the Pune Bench of the Tribunal in Shri Krishna Haribhau Lohokare (ITA No.937/PN/2010) order dated 28/02/2013, CIT vs CHD Developers (ITA No.2902 & 4694/Del/2010) order dated 26/09/2012 and the decision from Hon'ble Delhi High Court in the case of CHD Developers, ratio laid down in CIT vs Tarnetar Corporation order dated 12/09/2012 from Hon'ble Gujarat High Court, Hon'ble Madras High Court in CIT Vs Jain Housing Constructi....
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....before 01st October 1998 and the matter is duly covered by the above decision of the Tribunal. It is also clarified here that identically the Delhi Bench of the Tribunal in the case of CIT vs CHD Developers (ITA No.2902 and 4694/Del/2010) order dated 26/09/2012 (wherein one of us i.e Judicial Member) a signatory to the order and the said decision was affirmed by the Hon'ble Delhi High Court (2014) 43 taxman.com 249 (Del.) order dated 22/01/2014 supports the case of the assessee. In that case, it was held that before the substitution made in the Act, with effect from 01/04/2005 and in terms of explanation (ii) to Clause (a) of section 80IB(10), there is no requirement of completion certificate for availing deduction for the project, which were approved before the date of the substitution i.e. 01/04/2005. In the present appeal, the approval was granted by the local authority/competent authority before insertion of the amendment, therefore, the assessee is not expected to fulfil the conditions which were not in the statute book, when the approval was granted by the competent authority to the assessee. The Pune Bench decision of the Tribunal in the case of Shri Krishna Haribhau Lohkare....