TaxTMI 
TaxTMI 
2022 (7) TMI 1290
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....es of the case and in law, the Ld. CIT(A) was justified in allowing deduction of Rs. 23,32,39,561/ - u/s. 801B(10) of the Income Tax Act, 1961, notwithstanding that the assessee had suo moto withdrawn claim of exemption under the aforesaid section by filing revised return, on the ground that its project could not be completed within the stipulated date." 3. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the deduction u/s. 801B(10) of the Income Tax Act, 1961 relying on the decision of the Hon'ble Bombay High Court in the case of CIT v/s. Hindustan Samuh Awas Ltd. (2015) 62 Taxmann.com 175 notwithstanding that the facts of the aforesaid case are clearly distinguishable from our instant case." 3. And the additional grounds of appeal raised by the revenue which are supplementing ground nos. 2 to 3 of original grounds reads as under: - "1. "Whether on the facts and circumstances of the appellant's case and in law the ld. CIT(A) was Justified in allowing deduction of Rs 23,32,39,561/- u/s 80 IB(10) of the Income Tax Act 1961, notwithstanding that the project Blue Meadows was not complete, part OC application of t....
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....res shown by the assessee, the only inference that can be drawn in such circumstances is that the assessee has made the purchases in question from the grey market at a cheaper rate without genuine bills. Therefore, the Ld. CIT(A) held that only the profit embedded in respect of the sale on the purchases in question (bogus) should be brought to tax and not the entire purchases as done by the AO. Therefore, he relied on the ratio of the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. P. Simit Sheth in ITA. No.553 of 2012 wherein a similar case the Hon'ble High Court has held that the entire purchases cannot be added, but only the profit element embedded in such questionable purchases should be added to the income of the assessee. Therefore, the Ld. CIT(A) has restricted the addition to 12.5% of the bogus purchases of Rs.30,02,434/- which comes to Rs.3,82,804/-. This decision of the Ld. CIT(A), we note on the undisputed facts as discussed is in line with the judicial precedents on subject. Therefore, we do not find any error in the order of the Ld. CIT(A). So we confirm the same and dismiss the revenue's ground of appeal. 6. Now coming to ground no. 2, 3 and addit....
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....e project was 31.03.2012. The residential project of the assessee got completed by No,2011 and architect has given a certificate in this regard. (please refer architect certificate. Based on architect certification the assessee has applied for the occupation certificate with BMC on 26.12.2011. Also Mumbai fire brigade vide letter dated 28.02.2012 has granted its NOC for occupation of the building and subsequently assessee started giving possession to the allotttees. Based on the above mentioned NOC of Mumbai Fire Brigade dated 28.02.2012, completion certificate issued by the BMC to the assessee on June, 2016. 5. Furnishing of Audit report in prescribed form. The auditor has verified the books of accounts and all the conditions and accordingly issued form 10CCB for a claim of Rs.23,32,39,561/-. Form 10CCB already filed with return of income. 7. The assessee brought to the notice of AO that it has fulfilled the aforesaid conditions for being eligible for deduction u/s 80IB(10) of the Act to the tune of Rs 23,32,39,561/-. It was brought to the notice of AO that it has developed housing project (Blue Meadows) wherein it had built three (3) Wings i.e. A, B & C. And for A Win....
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....see preferred an appeal before the Ld. CIT(A) against the action of AO, wherein it claimed the deduction u/s 80IB(10) of the Act for the project (Blue Meadow) after taking note of the decision of the Hon'ble Bombay High Court in Hindustan Samuh Awas Ltd. [(2015) 62 taxmann.com 175]. And the Ld. CIT(A) after calling for the remand report from the AO and having reproduced the same in the impugned order was pleased to allow the claim of the assessee by holding as under: - "4.1 To have a clearer understanding of the provisions of the Section, 80-IB(10) the same are re-produced hereunder: 80-IB. (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) @ ((11), (LIA) and (11B)j (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. {(10) The amount of deduction in the case of an undert....
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....usand and five hundred square feet at any other place; the built-up area of the shops and other commercial establishments included in the housing project does not exceed [three]per cent of the aggregate built-up area of the housing project or [five thousand square feet, whichever is higher};] not more than one residential unit in the housing project is allotted to any person not being an individual; and in 8 case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely: the individual or the spouse or the minor children of such individual, (if) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta.] [Explanation -For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (includi....
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....that the assessee has filed the original return declaring the returned income at Rs. 96,11,230/- after claiming 80IB deduction of Rs. 11,37,47,893/-. But the assessee has again revised the return for AY 2011-12 on 29.05.2012 withdrawing the 80IB deduction. This shows that assessee is filing the return as per his own whims and fancies. In both AYs i.e. AY 2010-11 & AY 2011-12, the assessee was aware that the project was not completed but still he claimed 80-IB deduction even though he was not eligible for the same. Later on, he revised the return for both the years by withdrawing the claim of deduction. By doing this assessee itself admitted that it is not eligible for any deduction u/s 80-IB on the above project. Now before your goodself, the assessee has once again presented the claim his claim for deduction u/s 80IB. Further it is pertinent to mention here that Supreme court relied on the decision in the case of Goetz (India) Ltd. vs. CIT 157 Taxman | and stated that before the AO the assessee could not make a claim for deduction otherwise than by way of filing a revised return. Therefore, in the circumstances of the case the assessee's contention is iii) From the above ....
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.... years 2002-03 to 2007-08. Assessee was a builder and developer company it undertook a mega housing project was approved in the year 2000. Assessee completed a part of project and obtained completion certificate for that part of project from Municipal Corporation on 1010-2008. Assessee sought exemption under section 80-IB(10). Assessing Officer denied assessee's claim on ground that completion certificate was not issued on or prior to 31-03-2008. However, it was found that architect sot of D project had given a completion certificate prior to 31-03-2008 and assessee had submitted application to Municipal Authority along with such certificate well in time on 25-032008. Thereafter, completion certificate was issued on 10-10-2008 by Municipal Authority and this delay could not be attributed to assessee. Whether, on facts, assessee was entitled to exemption under section 801B(10)? Held, yes, " 4.1.5 The appellant in his reply to the observations of the AO in the remand report has stated as under: In this regard we would like to state that in the remand report the Ld. AO has himself admitted that the project was completed by November, 2011 as per the architect's ce....
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....ction of the project by the Municipal Authority albeit without the receipt of Occupation Certificate before the completion of five years. This fact was confirmed and certified not only by the Architect but also by the Mumbai Fire Brigade Department which gave its NOC for occupation of the housing project. The only doubt which remained in the mind of the assessee and perhaps the AO regarding the eligibility for claiming deduction u/s. 801B(10), without the occupation certificate from the local Municipal Authority, was set to rest by the Hon'ble Mumbai High Court, in the case of C/T vs. Hindustan Samuh A Ltd.(2015) 62 taxmann. Com 175, which held that where the architect had issued the completion certificate and the assessee had applied to the local authority in time, the delay in issuance of completion certificate cannot be attributed to the assessee and that the assessee would be eligible for claiming deduction u/s. 80-IB(10). I find merit in the plea of the assessee that it should not be faulted and denied its due of deduction claim under section 80-IB(10), when on its part, it had complied with all requirements as per law and more so in the backdrop of the Hon'ble Bombay....
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.... be given to assessee. According to him Section 80A(5) of the Act and 80AC of the Act has to be read in conjunction and since section 80A(5) also prescribes that if assessee fail to make any claim in its ROI for deduction u/s (10/10AA/10B/10BA) then no deduction shall be allowed. Likewise, section 80AC bars an assessee from claiming deduction u/s 80IA/80-IAB/80-IB/80IC/80-ID/80IE, unless it has furnished ROI before the due date of filing the ROI, which in this case the assessee failed to do after the revised return was filed on 27.03.2012. 11. It was pointed out by the Ld. DR that only part occupancy certificate the assessee filed on 24.12.2011 before MCGM and not the full occupancy certificate as required for claiming deduction. It was also pointed out by the Ld. DR that on 5.01.2012, the MCGM had rejected the application of the assessee even for part occupancy. Therefore, in such a scenario, the assessee had to withdrew its claim u/s 80IB of the Act vide its revised return of income on 27.03.2012. Therefore, according to him in the light of the aforesaid facts, the architect certificate regarding completion of the Blue Meadow project submitted by the assessee before MCGM canno....
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....herefore, according to the Ld. CIT-DR as per the explanation given u/s 80IB(10) of the Act unless the assessee received the occupancy certificate from the local authority (MCGM) the assessee ought not be granted the deduction u/s 80IB(10) of the Act and the Ld. CIT(A) erred in granting the same and therefore, the decision of the Ld. CIT(A) needs to be reversed and that of the AO be upheld for both assessment years. 13. Per contra, the Ld. AR of the assessee submitted that Dilip Kumar Company case decided by Hon'ble Supreme Court Constitutional Bench was in respect of Customs and Excise matters. According to him, the notification referred there in is in respect of the indirect taxations arena were numerous notifications are issued by Government from time to time giving/withdrawing benefit of tax concessions/incentives on article/products which is not the case in the income tax scenario. According to him, Section 80IB(10) of the Act has been brought into the statute with an aim and purpose for giving incentives to the builders/developers to construct within the period of time (5 years) small units of house/flats for facilitating the housing for middle income group of size of less ....
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....had completed the housing project (Blue Meadow) with in 31.03.2012 and filed the architect completion certificate and applied for part occupancy initially to A & B Wings on 12.07.2011 and that of the 'C' Wing on 26.12.2011 along with lift certificate and Fire NOC. And the allottees occupied their flats (121 units). Thus, it can be seen that assessee has fulfilled its obligation of completing the housing project and being eligible for deduction u/s 80IB(1) of the Act had made a claim in the original ROI u/s 139(1) of the Act, which was revised because the local authority/MCGM for reasons best know dilly-dallied issuance of the occupancy certificate and refused it on 05.01.2012 for some minor discrepancies which were duly complied with in a month's time. And since the project was completed, and fit for physical possession, 121 flats got occupied from February 2012. However, to be on the safer side, since the occupancy certificate was technically not issued by 25 March 2012, the assessee filed revised return on 27 march 2012, withdrawing the claim of deduction. In the light of the aforesaid facts, according to Ld. AR, it can be seen that the assesssee had completed the housing project....
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....f date (30.03.2012) which was duly certified by the architect, lift certificate, fire brigade cannot be denied merely for certificate/OC from the local authority as held by the Hon'ble Jurisdictional High Court in the case of CIT vs. Hindustan Samuh Awas Ltd. (2015) 62 taxmann.com 175 Bombay wherein the Hon'ble High Court held as under: - "These Appeals by Revenue challenged the judgment and order passed by the Income Tax Appellate Tribunal, Pune, in Appeal Nos. 945 to 950/PN/2010. The facts leading to these Appeals are as under: 2. The respondent is a builder and developer company. They had undertaken a Mega Housing Project on a layout covering an area of about 25 acre at Aurangabad. The project was approved in February, 2000. The respondents completed part of the project and obtained Completion Certificate for that part of the project from Aurangabad Municipal Corporation on 10.10.2008. The respondent sought exemption under Section 80-IB(10) of the Income Tax Act in all the assessment years 2002-2008. It was their case that the profit made in these years from the sale of flats etc. from this project is exempted from Income Tax. Their claim was denied by the Asse....
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....) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet, whichever is higher; (e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:- (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in whic....
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....s an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements. 14. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See institute of Chartered Accountants of India v. Price Waterhouse 1977 (6) SCC 312). The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner (1846) 6 MOO pc1, the courts cannot aid the legislature's defective phrasing of an Act, they cannot add or mend, and by construction make up deficiencies which are left there. (See State of Gujarat v. Dilipbhai Nathjibhai Patel 1989 (3) SCC 234). It is contrary to all rules of construction to read words into an Act unless it is absolutely n....
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....s scope for holding that the interpretation had inducted an element, which goes against the spirit and purpose of the Section. He also placed reliance on a judgment of Gujarat High Court in the case of CIT v. Tarnetar Corpn. [2014] 362 ITR 174/[2012] 210 Taxman 206 (Mag.)/26 taxmann.com 180 on the point. We have perused the judgment of Gujarat High Court and found that the situation before the Gujarat High Court was similar. The High Court was examining the correctness of the findings recorded by the Income Tax Appellate Tribunal. The High Court mainly placed reliance on the crucial fact that the application seeking Completion Certificate was submitted to the Municipal Corporation prior to 31.03.2008 and therefore, they confirmed the finding of the Court that the requirement of Section was not mandatory in nature. 10. We have no difficulty to accept this contention. We also hold that the explanation is quite clear and does not introduce any uncertainty. In other words, date of completion of a project has to be the date of issuance of Completion Certificate by the Municipal authority. 11. The question we raise here is whether the explanation introduced an element o....
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....ttributed to the respondent assessee. 13. In view of this, we are inclined to hold that the project, for which exemption is sought, was completed prior to 31.03.2008 and therefore, we are inclined to record our answer in affirmative to the substantial question of law referred to above. Both the appeals are accordingly dismissed." 14. The Ld. AR drew our attention to para 9 to 11 to buttress the contention that in the facts and circumstances the assessee's claim for deduction was rightly allowed by the Ld. CIT(A). The Ld. AR also drew our attention to the Hon'ble Gujarat High Court decision in the case of CIT Vs. Tarnetar Corporation (2012) 26 taxmann.com 180 wherein the Hon'ble High Court noted the facts of the case wherein that assessee (Tarnetar Corporation) had completed the construction before the last week on 31.03.2008 and had sold several units which were completed and actually occupied; and it also applied for the occupation permission from the local authority. However, it was rejected on technical reason in the year 2006 and the same was granted only on 19.03.2009 and the AO denied deduction to that assessee on similar plea which was over-turned by the Tribunal....
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....ided the assessee's claim on this issue and therefore, has not made any error by granting the claim u/s 80IB(10) of the Act for both A.Y. 2010-11 & 2011-12 and therefore, his action need not be interfered by us. 16. We have heard both the parties and perused the record. We note that the assessee firm is engaged in the business of building and development of real estate. The assessee had filed original return of income u/s 139(1) of the Act declaring total income of Rs.29,75,430/- wherein the assessee claimed the deduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/-. During the assessment proceedings, the AO asked the assessee to file the documents to substantiate its claims u/s 80IB(10) of the Act and pursuant to it the assessee filed the requisite details to substantiate the claim. The AO noted that assessee had claimed deduction u/s 80IB (10) of the Act for having developed housing project (Blue Meadows) which according to it has fulfilled the requisite conditions prescribed therein u/s 80IB (10) of the Act as given below: - Conditions of Section 80-IB (10) Compliance by Assessee 1. The size of the plot of the land should be minimum of 1 acre The plot ....
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....reater Mumbai (hereinafter "MCGM"). For the said project (Blue Meadow), the assessee had obtained fire NOC from the Fire Department on 20.02.2012 and the licence for working/using of the lift was received as early as on 17.01.2011 and submitted its application to the MCGM along with the completion certificate in part dated 12.07.2011 and 24.12-2011 along with the certificate of structure by the architect dated 9.12.2011. However, the assessee taking note of certain developments/facts [the local authority/MCGM having not accepted the assessee's application for issuance of occupancy certificate (OC) of the Blue Meadows project by letter dated 5.1.2012], withdrew its claim u/s 80IB(10) of the Act by filing the revised return of income on 27.03.2012 and offered Rs.23,32,39,561/- for taxation. And assessee, on perusal of the assessment order discerned that the action of assessee to revise ROI was viewed by the AO as an afterthought. According to the AO, if the assessee's case was not taken up for scrutiny, the assessee could have got away with deduction claimed u/s80IB(10) of the Act and in that process there would have been escapement of income and therefore he was of the opinion that ....
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....ssessee's explanation given for filing the revised return has not been considered by the AO. It is noted that assessee had withdrawn the deduction u/s 80IB(10) of the Act because even though assessee had completed the Blue Meadows project well before the prescribed time limit which was on 31.03.2012, and had applied before the local authority/MCGM for Occupation Certificate (OC) on 26.12.2011, (refer page 1 of paper book) and had duly filed the following documents with the application for OC, i.e, part-completion certificate of A Wing and B Wing of Blue Meadows project issued by Architect Nathanal B Delvadia on 12.07.2011, and that of the C Wing on 26.12.2011 dated 24.12.2011 along with the certificate of structural engineer, completion certificate u/s 353(A), stability certificate (form D) Site Supervision completion certificate, lift certificate (page 31 of the paper book), Fire NOC (Page 8 PB), which were received by it (MCGM) on 26.12.2011, but the local authority/ MCGM did not accept the application of assessee to grant occupation certificate (OC) citing few defects vide letter dated 05.01.2012 (refer page 5 of the paper book). And since the assessee could not obtain the occup....
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....lied with the purpose for which the incentive/deduction u/s 80IB(10) of the Act was envisaged by the Parliament for the builders/assessee. Taking note of the aforesaid facts and in the light of the Hon'ble High Court's reiteration of the principle of substantial compliance in respect of such projects in the case of Hindustan Samuh Awas Ltd. (supra), the assessee's claim for deduction u/s 80IB(10) of the Act, has been rightly allowed by the Ld. CIT(A). 18. For completeness we would like to deal with one of the contention of the Ld. DR that in this case, assessee's application for OC was rejected by the MCGM vide letter dated 05.01.2012 and the Ld CIT(A) was not aware of it and since there was refusal by MCGM, therefore the assessee's case stands distinguished from case laws relied/cited by assessee. In this regard, we find that the assessee's application for OC was not accepted by the MCGM vide letter dated 05.01.2012; and while conveying that it is not accepting the assessee's application for OC, MCGM has pointed out 14 deficiencies out of which we note that two conditions were not applicable to the assessee ((i)compliance of lay out condition if any and (ii)internal road comple....
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....se of the rule or the regulation. Such a defence cannot be pleased if a clear statutory prerequisite which effectuates the object and the purposeof the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed." 20. Therefore, as per the principle of 'substantial compliance' enunciated by the Constitution Bench of the Hon'ble Supreme Court in Harichand case (supra), we note that the grant of deduction/incentives depends upon the facts and circumstances of the each case and keeping in mind the purpose and object to be achieved by the grant of deduction/exemption as meant by the Legislature/Parliament it has to be seen whether 'substantial compliance' has been made by the assessee ....