TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1271
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....ithout properly appreciating the facts of the case. 1.1 The Ld CIT(A) failed to consider that in respect of 'Parshwanath Om Residency Project' no approval from the local authority had been obtained before 31.3.2008 and the assessee has violated clause (a)(i) of Section 80(IB)(10) of the Act and was not eligible for deduction u/s 80IB(10) of the Act. 1.2 The Ld. CIT(A) failed to appreciate that by not completing the entire project 'Parshwanath Metro City' consisting of 376 units before 31.3.2012, the assessee has violated clause (a)(iii) of Section 80(IB)(10) of the Act and was not eligible for deduction u/s 80(IB)(10) of the Act. 2. The appellant craves leave to amend alter any ground or add a new ground, which may be necessary." 3. The brief facts of the case are that assessee had claimed deduction under Section 80(IB)(10) of the Act, in respect of two projects namely 'Parshwanath Om Residency Project' ('POR' Project) and 'Parshwanath Metro City' ('PMC' Project). While passing the order, the Assessing Officer observed that the assessee has claimed that the approval of the Project POR was taken on 30.03.2007, but according to the Assessing Officer such certificate is not an ....
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....d that these three blocks were absolutely independent and separate from those blocks in respect of which BU Permission was obtained by the assessee. Accordingly, it was submitted that it was not the case of the assessee that the assessee has not obtained BU Permission for few units in one block but it is the case of the assessee that BU Permission was not received for all the units of two blocks. Accordingly, it was submitted that since these units were in a separate block from those blocks in respect of which approval was granted i.e. BU Permission was obtained, the Ld. Assessing Officer is not justified in denying the entire claim of deduction under Section 80(IB)(10) of the Act. After going through the facts of the assessee's case, Ld. CIT(A) allowed the appeal of the assessee with the following observation:- "So far as disallowance of deduction of POR is concerned, it is observed that deduction under Section 80-16(10) on entire profit derived from this project was denied by AO on the ground that approval of the project was taken on 27th October, 2010 whereas provisions of the Act requires that project should be approved before 31st March, 2008. The AO has referred to letter d....
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....th March, 2007, which means that such permission is revised development permission. It is also found that at clause No. 37, GUDA has clearly stated that as permission is given on 27th October, 2010, earlier approval of 30th March, 2007 is withdrawn. This fact clearly prove that project in which Appellant has constructed the housing unit was approved on 30th March, 2007. The provisions of Section 80-IB(10) as reproduced herein above also states that when approval of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which building plan of such housing project is first approved by local authority, which in present case is 30th March, 2007. The fact that project is approved in 2007 is also substantiated by Appellant from project expenditure being material, carting, labour expenditure, advertisement and other expenditure as shown in Profit & Loss Account. The Audited Annual Accounts for AY 2010-11 and 2011-12 are already on record of AO which support the contention of Appellant that expenditure pertaining to this project was incurred in such years and AO has not doubted that this expenditure is not pertaining to thi....
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....BU permission before prescribed date. Whether each building or block is a separate housing project is not is dealt with by Hon'ble Bombay High Court in the case of CIT V/s Vandana Properties 353 ITR 36 wherein it is held as under: "The expression 'housing project' is neither defined under section 2 of the Act nor under section 80-IB(10). Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80-IB(10) would have to be construed as commonly understood. [Para 18] 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 80-IB(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 square feet would constitute a 'housing project' un....
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....sidential units. Accordingly, ground Nos. 2 and 3 of the appeal by the Revenue are dismissed being devoid of any merit." The decision referred supra are on similar facts with the facts of the Appellant's case and ratio of this decision which has in turn followed the decision of Hon'ble Bombay High Court squarely applied to the facts of the Appellant's case. During the course of Assessment Proceedings, Appellant has relied upon various decisions in its written submission dated 30th October, 2017, which inter alia, refer to decision of Hon'ble Hyderabad ITAT in the case of Vertex Homes Pvt. Limited 62 Taxmann 285. The head note of said decision is as under: Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertaking other than infrastructure development undertakings (Housing project) - Assessment years 2010-11 and 2011-12 - Assessee company was engaged in business of construction of residential apartments/housing projects - In terms of construction agreement, assessee had to construct six residential blocks - Within stipulated period of five years, assessee completed construction of three blocks - Assessee filed its return claiming deducti....
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....ire Assessment Order the Assessing Officer has not brought any contrary decision which can support his contention. During the course of appellate hearing, Appellant has also relied upon following decisions of Hon'ble Pune ITAT and ratio of these decisions are also applicable on facts of the case. (i) Hon'ble Pune Bench in case of Rahul Construction Co. reported in 21 taxmann.com 435 (ii) Hon'ble Pune IT AT in case of Anand Ashok Gandhi in IT A No. 20047 PUN/2014 dated 25.05.2016 "Claim of pro-rata deduction u/s. 80IB(10) - non-completion of the few buildings -Held that- We find the assessee in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of "Harshad Constructions". During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only fo....
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.... doubt that he had not completed housing project within the prescribed period of four years. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) granted relief to the assessee on this account as well. The same has been opposed before us on behalf of revenue. On the other hand, the learned Authorized Representative has supported the order of CIT(A) on the issue. 8.1 After going through the rival submissions and material on record, we find that the issue before us is with regard to prorata deduction u/s. 80IB(10). On the issue of prorata deduction, the ITAT Pune Bench has allowed prorata deduction u/s. 80IB(10) in the case of Ramsukh Properties Vs. DCIT, Circle 1, Pune in ITA No.84/PN/2011 vide its order dated 25.07.2012. For the convenience, the relevant portion of the order reads as under: "We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in no....
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.... project in respect of buildings 'A' and 'B' has been completed by 31.03.2009 and where non-completion of building 'C' was beyond the control of assessee, since it had not received FSI within stipulated period, we find no merit in the orders of authorities below in denying deduction under section 80IB(10) of the Act to the assessee for prorata units completed by the assessee before stipulated date. The issue in this regard is settled by various decisions of the High Courts including the decision of Hon'ble Bombay High Court in CIT Vs. Vandana Properties reported in 353 ITR 36 (Bom), wherein it has been held that the developer is entitled to prorata deduction under section 80IB(10) of the Act on the completed units. (iv) Hon'ble Pune ITAT in case of M/s Varun Developers in ITA No. 1624/PN/2011 dated 22.03.2013 In view of detailed discussion made herein above and the contention of AO that BU permission was not received by Appellant within prescribed period for all the blocks for which approval was given are already discussed by various Courts and AO has not brought any other contrary decision on record nor stated as to how decision relied upon by Appellant in Assessment P....
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....ed reply of the Assessing Officer in response notice under Section 143(6) of the Act related to POR Project. On perusal of the reply, it is seen that GUDA had provided the copy of permission for Development Certificate 27.10.2010. However, there is no mention of alleged approval letter dated 30.03.2007, which shows that the letter dated 30.03.2007 was not a Permission Certificate for development but simply a letter of acknowledgement of application filed by the assessee. With regard to the PMC Project, it was submitted that on perusal of the BU Permission letter, it is also seen that the AUDA had granted BU Permission for completed 349 Units. It is an undisputed fact that the assessee completed only 349 Units before 31.03.2012 as against original approval for 396 residential Units which was given on 30.03.2007. Therefore, the Assessing Officer was correct in holding that the entire project was not completed within prescribed time limit i.e. 3.103.2012 i.e. five years from the end of the Financial Year in which the housing project was first approved. The Ld. D.R. also placed on record certain judicial precedents in support of its contention. 7. In response, Ld. Counsel for the asse....
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....such Housing Project is first approved by the local authority, which in the present case is 30.03.2007. Accordingly, Ld. CIT(A) in the instant facts has correctly allowed the appeal of the assessee with respect to the POR Project. 8. Before going to the specific facts of the POR & PMC Projects, we shall first adjudicate on the issue deduction under Section 80(IB)(10) of the Act with respect to these two Projects. The issue for consideration before us is that when the Assessing Officer, on identical set of facts has granted deduction under Section 80(IB)(10) of the Act with respect to the aforesaid projects, can the approval be withdrawn in the subsequent years, without pointing out to any change in facts. We observe that in the case of Saurashtra Cement & Chemical Industries Ltd. 123 ITR 669 (Guj.) the Hon'ble Gujarat High Court has held that in respect of income from newly established industrial undertakings, the assessee's claim under Section 80J for the subsequent year cannot be rejected when such claim has been accepted in the earlier assessment years, but not withdrawn. Again, in the case of PCIT vs. Maps Enzymes Ltd. 111 taxmann.com 73 (Guj.), the Gujarat High Court held tha....
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....of the Act with respect to POR Project. 9. Now we shall come to the facts of the PMC Project, wherein the issue for consideration before is this that the BU Permission was obtained in respect of only 349 Units out of a total of 376 Units and therefore, can the assessee be allowed to take benefit of deduction under Section under Section 80(IB)(10) of the Act only with respect to the Units which have been completed, or whether the entire claim of deduction under Section 80(IB)(10) of the Act has to be denied to the assessee with respect to PMC Project. We observe that in the case of ITO vs. Saket Corporation 62 taxmann.com 38, the Gujarat High Court held that where assessee had completed construction of its entire Housing Project and applied for BU Permission / Completion Certificate within prescribed time limit, it would be entitled to deduction under Section 80(IB)(10) notwithstanding the fact the it could not receive permission for its entire project. In the present case, the Ld. CIT(A) has given a specific finding that the assessee had obtained BU Permission subsequently for remaining three blocks as well, however, no deduction under Section 80(IB)(10) of the Act was claimed wit....
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.... has also cited various decisions which have held that the assessee is eligible for claim of pro-rata deduction under Section 80(IB)(10) of the Act. In the case of Models Construction Pvt. Ltd. 124 taxmann.com 513 (Bombay), the High Court held that pro-rata deduction can be granted under Section 80(IB)(10) of the Act. In the case of Sreevatsa Real Estates Pvt. Ltd 42 taxmann.com 329 (Madras), the High Court held that where assessee engaged in property development claimed deduction under section 80-IB(10), Tribunal rightly concluded that assessee was entitled to pro rata deduction in respect of units which had built up area of less than 1500 sq. ft. and, thus, there could be no disallowance of entire claim if built area of some of units exceeded 1500 sq. ft. In the case of Arun Excello Foundations (P.) Ltd. 29 taxmann.com 149 (Madras), the High Court held that where housing project has both commercial and residential units, proportionate deduction, to extent of compliance of provisions under section 80-IB(10), is allowable. In the case of Harshvardhan Constructions 117 taxmann.com 818 (Mumbai - Trib.), the ITAT held that within a composite housing project, where there are eligible a....