The ITO, Ward-2(2), Vijayawada, Vijayawada V. M/s Vishnu Builders, Vijayawada

CO 13/VIZ/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9497 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA

Judgement Text

ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS.98/VIZAG/2012 & ITA NO.96/VIZAG/2013 ASSESSMENT YEAR S : 20 08 - 09 & 2009 - 10 RESPECTIVELY ITO WARD-2(2) VIJAYAWADA VS. VISHNU BUILDERS VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AACFV 8153B CO NO.13/VIZAG/2012 ASSESSMENT YEARS : 2008-09 ITO WARD-2(2) VIJAYAWADA VS. VISHNU BUILDERS VIJAYAWADA (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SMT. KOMALI KRISHNA, ADDL. CIT DATE OF HEARING : 06.03.2014 DATE OF PRONOUNCEMENT : 07.03.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THESE ARE TWO APPEALS FILED BY THE DEPARTMENT AGAI NST SEPARATE ORDERS OF CIT(A), VIJAYAWADA PERTAINING TO THE ASSESSMENT YEARS 2008-09 AND 2009- 10. THERE IS ALSO A CO BY THE ASSESSEE FOR THE ASS ESSMENT YEAR 2008-09. ASSESSEE BEING SAME AND ISSUES RAISED IN THE APPEAL BEING IDENTICAL, WE CLUB THE APPEALS AND CO TOGETHER AND DISPOSE IT OF IN TH IS COMMON ORDER. 2. THE ONLY ISSUE RAISED BY THE DEPARTMENT IN THE P RESENT APPEALS IS WITH REGARD TO THE CIT(A) ALLOWING ASSESSEES CLAIM OF D EDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. SINCE FACTS ARE IDENTICAL, WE WILL DEAL WITH THE FACTS AS INVOLVED IN ASSESSMENT YEAR 2008-09. ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA 2 3. BRIEFLY STATED, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF APARTMENTS. FOR THE AS SESSMENT YEAR 2008-09 THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME AT NIL AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. DURING THE SCRUTINY ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF AN AMOUNT OF RS.2,75,78,917/- IN CA SE OF ONE OF ITS PROJECT VIZ. MEGA ESTATES. THE ASSESSING OFFICER ON ANALYZ ING THE PROVISIONS CONTAINED U/S 80IB(10) OF THE ACT FELT THAT AN UNDE RTAKING WHICH DEVELOPS AND BUILDS HOUSING PROJECTS APPROVED BEFORE 31.3.20 07 BY A LOCAL AUTHORITY ELIGIBLE FOR DEDUCTION OF 100% OF THE PROFITS DERIV ED FROM SUCH HOUSING PROJECT, IF IT CUMULATIVELY SATISFIES ALL THE CONDI TIONS LAID DOWN UNDER THE SAID PROVISION. HE THEREFORE, CALLED UPON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT. AFTER CONSIDERIN G THE SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE HAD TAKEN APPROVAL FOR CONSTRUCTION OF THE RESIDENTIAL COMPLE X ON 10.06.2004. THEREFORE, THE PROJECT SHOULD BE COMPLETED BY 31.3. 2009 IN ORDER TO MAKE THE ASSESSEE ELIGIBLE FOR CLAIMING DEDUCTION U/S 80 IB(10) OF THE ACT. HE THEREFORE, NOTED THAT THOUGH THE ASSESSEE HAD CLAIM ED THAT PROJECT WAS COMPLETED IN THE MONTH OF SEPTEMBER, 2008 BUT ASSES SEE HAS NOT OBTAINED ANY PROJECT COMPLETION CERTIFICATE FROM THE LOCAL M UNICIPAL AUTHORITY AS PER THE PROVISIONS CONTAINED U/S 80IB(10) OF THE ACT. O N THE AFORESAID BASIS, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AND ADDED THE AMOUNT OF RS.2,75,78,917/- AS INCOME OF THE ASSESSEE AND COMPLETED THE ASSESSMENT ACCORDINGLY. 4. BEING AGGRIEVED OF THE SAID ASSESSMENT ORDER, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 5. IN COURSE OF HEARING BEFORE THE CIT(A), THE ASSES SEE CONTENDED THAT THOUGH IT HAS SUBMITTED BEFORE THE ASSESSING OFFICE R THAT THE MUNICIPAL AUTHORITIES HAVE COMMUNICATED TO THE ASSESSEE THAT THEY DO NOT HAVE THE PRACTICE OF ISSUING COMPLETION CERTIFICATE AND THOU GH THE ASSESSEE HAD PRODUCED OTHER EVIDENCES LIKE MUNICIPAL TAX ASSESSM ENT COPIES IN RESPECT OF ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA 3 THE RESIDENTIAL UNITS OF THE PROJECT BUT THE ASSESS ING OFFICER IGNORING THE SAME HAS DISALLOWED THE CLAIM OF DEDUCTION. THE ASSESSE E ALSO RELIED UPON A DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN ASSESS EES OWN CASE FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08, WHEREIN THE TR IBUNAL HAS ACCEPTED THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF THE A CT. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, ALLOWED THE ASSESS EES APPEAL WITH THE FOLLOWING OBSERVATIONS: 6. IN THE CASE OF APPELLANT FOR THIS YEAR THE A.O A LSO OBSERVED THAT THE PROJECT WAS TO BE COMPLETED IN THE MONTH OF SEPTEMB ER 2008 I.E, IN THE A.Y.2009-10. BUT WITH A REASON THAT THERE IS NO PROJECT COMPLETION C ERTIFICATE FROM THE MUNICIPAL AUTHORITY, THE A.O. DISALLOWED THE DE DUCTION U/S.80IB(10). THE APPELLANT SUBMITTED THAT THEY HAVE PRODUCED THE MUNICIPAL TAX PAYMENT RECEIPT BEFORE TH E A.O AS A PROOF THAT THE PROJECT WAS COMPLETED SINCE THERE IS NO PRACTICE AT VIJAYAWADA MUNICIPALITY TO ISSUE PROJECT COMPLETION CERTIFICATES. 7. IN SUPPORT OF ITS CLAIM, THE APPELLANT SUBMITTED BEFORE ME AN ENDORSEMENT FROM VIJAYAWADA MUNICIPAL CORPORATION DATED 3/2/201 1 WHEREIN IT WAS STATED THAT NO COMPLETION CERTIFICATES ARE ISSUED TO THE CONST RUCTION WHICH WERE CONSTRUCTED ACCORDING TO THE PLAN APPROVAL BY THE MUNICIPAL COR PORATION. COPY OF THE MUNICIPAL TAX PAID BY THE FLAT OWNERS WERE ALSO PRODUCED AS EVIDENCE. EVEN THO UGH THERE IS NO PROJECT COMPLETION CERTIFICATE, THE APPELLANT PROVE D THE COMPLETION OF PROJECT DURING THIS ASSESSMENT YEAR BY PRODUCING THE EVIDEN CE IN THE FORM OF COPIES OF MUNICIPAL TAXES PAID RECEIPTS WHICH WERE PRODUCED BE FORE THE ASSESSING OFFICER ALSO. AFTER CONSIDERING THE EVIDENCES PRODUCED BY T HE APPELLANT AND BY RESPECTFULLY FOLLOWING THE FINDINGS OF THE JURISDICTI ONAL ITAT, I AM OF THE OPINION THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S.80I B(10). ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION U/S.80IB(10). HENCE, THIS GROUND IS ALLOWED. 6. THE LD. D.R. DRAWING SUPPORT FROM THE REASONING OF THE ASSESSING OFFICER SUBMITTED BEFORE US THAT FOR CLAIMING DEDUC TION U/S 80IB(10) OF THE ACT, THE ASSESSEE MUST FULFILL ALL THE CONDITIONS L AID DOWN THEREIN. IT WAS SUBMITTED THAT FURNISHING OF COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITY IS ONE OF THE MANDATORY CONDITIONS TO BE FULFILLED FOR CLAIMING THE DEDUCTION U/S 80IB(10) OF THE ACT. SINCE THE ASSESS EE HAS NOT FULFILLED THAT CONDITION BY FURNISHING A COMPLETION CERTIFICATE FR OM THE MUNICIPAL AUTHORITY, THE ASSESSING OFFICER WAS CORRECT IN DISALLOWING TH E DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT. IN SUPPORT OF SUCH CONTENTION, THE LD. D.R. RELIED UPON ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA 4 A DECISION OF THE ITAT HYDERABAD BENCH IN CASE OF S AINATH ESTATES PVT. LTD. VS. DCIT 142 ITD 370. 7. THE LD. AR STRONGLY SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSEE HAS PRODUCED SUFFICIENT PROOF WITH REG ARD TO ITS CLAIM OF COMPLETION OF ITS PROJECT BEFORE THE DUE DATE. IT W AS SUBMITTED THAT THE ASSESSEE HAS ALSO FURNISHED A COMMUNICATION FROM TH E VIJAYAWADA MUNICIPAL CORPORATION, WHEREIN THEY HAVE STATED THAT NO COMPL ETION CERTIFICATES ARE ISSUED IN CASE OF CONSTRUCTIONS, WHICH ARE IN ACCOR DANCE WITH THE PLAN APPROVED BY THE MUNICIPAL CORPORATION. IT WAS CONT ENDED THAT WHEN THE MUNICIPAL CORPORATION DOES NOT ISSUE ANY COMPLETION CERTIFICATE, THEN THE ONLY ALTERNATIVE LEFT WITH THE ASSESSEE IS TO PROVE THE COMPLETION OF PROJECT BY FURNISHING OTHER EVIDENCES AND THE ASSESSEE IN FACT HAS FURNISHED SUCH EVIDENCES BY PRODUCING PROPERTY TAX RECEIPT FROM TH E MUNICIPALITY IN CASE OF ALL THE RESIDENTIAL UNITS OF THE PROJECT. IT WAS SU BMITTED THAT THE ASSESSEE CANNOT BE ASKED TO PERFORM AN IMPOSSIBLE ACT OF OBT AINING COMPLETION CERTIFICATE FROM LOCAL MUNICIPALITY WHEN THEY DO NO T HAVE ANY SUCH PRACTICE OF ISSUING PROJECT COMPLETION CERTIFICATE. THE LD. A. R. REFERRING TO THE DECISION OF THE ITAT VISAKHAPATNAM BENCH IN ASSESSEES OWN C ASE FOR THE PRECEDING 3 ASSESSMENT YEARS SUBMITTED THAT SINCE THE COORDINAT E BENCH OF THIS TRIBUNAL HAS ALLOWED ASSESSEES CLAIM OF DEDUCTION U/S 80IB(1 0) OF THE ACT, TAKING INTO CONSIDERATION THE FACT THAT THE MUNICIPAL AUTHORITY DOES NOT HAVE THE PRACTICE OF ISSUING PROJECT COMPLETION CERTIFICATES, THE CIT (A) HAS RIGHTLY ALLOWED DEDUCTION TO THE ASSESSEE U/S 80IB(10) OF THE ACT. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES. IT IS VE RY MUCH EVIDENT FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS FULFILLED AL L THE CONDITIONS AS LAID DOWN IN SECTION 80IB(10) OF THE ACT EXCEPT FURNISHIN G THE PROJECT COMPLETION CERTIFICATE FROM THE LOCAL MUNICIPAL AUTHORITY. ON LY DUE TO NON-FURNISHING OF THE PROJECT COMPLETION CERTIFICATE FROM MUNICIPAL A UTHORITY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(1 0) OF THE ACT. HOWEVER, IT IS VERY MUCH EVIDENT FROM THE FINDING OF THE CIT(A) , AS CONTAINED IN PARA-7 ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA 5 EXTRACTED HEREIN ABOVE, THE VIJAYAWADA MUNICIPAL CO RPORATION VIDE LETTER DATED 3.2.11 HAVE CLARIFIED THAT NO COMPLETION CERT IFICATES ARE ISSUED TO THE CONSTRUCTION WHICH WERE CONSTRUCTED ACCORDING TO TH E PLAN APPROVED BY THE MUNICIPAL CORPORATION. THAT BEING THE CASE, THE AS SESSEE CANNOT BE COMPELLED TO PERFORM AN IMPOSSIBLE ACT BY INSISTING UPON HIM TO OBTAIN A COMPLETION CERTIFICATE FROM THE MUNICIPALITY. THER EFORE, IN THE PREVAILING CIRCUMSTANCES, THE ASSESSEE HAS TO PROVE THE COMPLE TION OF THE PROJECT BY FURNISHING OTHER EVIDENCES. AS CAN BE SEEN FROM TH E FACTS ON RECORD, THE ASSESSEE HAS PRODUCED OTHER EVIDENCES IN THE FORM O F PROPERTY TAX ASSESSMENTS, ETC. TO PROVE THAT THE PROJECT WAS COM PLETED BEFORE THE DUE DATE. FURTHER, WHEN SIMILAR DISPUTE OF DISALLOWANC E OF DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT FOR THE PRECEDING ASSESSMENT YE ARS I.E 2005-06 TO 2007- 08 IN ASSESSEES OWN CASE CAME UP BEFORE THE TRIBUN AL, A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS.178, 179 & 180/VIZAG/20 11 AFTER CONSIDERING THE FACT THAT THE VIJAYAWADA MUNICIPAL CORPORATION DO N OT HAVE THE PRACTICE OF ISSUING PROJECT COMPLETION CERTIFICATE HELD THAT WH EN THE MUNICIPAL AUTHORITY HAS NO PRACTICE OF ISSUING PROJECT COMPLETION CERTI FICATE, THEN THE ASSESSEE CAN PROVE THE COMPLETION OF THE PROJECT BY ADDING O THER EVIDENCES. AS CAN BE SEEN FROM THE FACTS ON RECORD EXCEPT NON-FURNISH ING OF PROJECT COMPLETION CERTIFICATE, THE ASSESSING OFFICER HAS NOT ALLEGED NON-FULFILLMENT OF ANY OTHER CONDITIONS OF SECTION 80IB(10) OF THE ACT. THEREFOR E, IN OUR VIEW WHEN THE LOCAL MUNICIPAL AUTHORITIES DO NOT HAVE ANY PRACTIC E OF ISSUING PROJECT COMPLETION CERTIFICATE, THE ASSESSEE CAN PROVE COMP LETION BY FURNISHING OTHER EVIDENCES. SINCE IN THE PRESENT CASE, THE ASSESSEE HAS PROVED COMPLETION OF THE PROJECT BY FURNISHING PROPERTY TAX RECEIPT ISSU ED IN CASE OF ALL THE RESIDENTIAL UNITS, IN OUR VIEW, THE ASSESSEE IS ELI GIBLE TO CLAIM DEDUCTION U/S 80IB(10) OF THE ACT. SO FAR AS THE DECISION OF ITA T HYDERABAD BENCH IN CASE OF SAINATH ESTATES PVT. LTD. VS. DCIT (SUPRA) IS CO NCERNED, IN OUR CONSIDERED VIEW, THE RATIO LAID DOWN THEREIN WOULD NOT APPLY T O THE FACTS OF THE ASSESSEES CASE AS IN THAT CASE THERE IS NO SUCH CL ARIFICATION OBTAINED FROM THE MUNICIPAL AUTHORITY FOR NOT ISSUING PROJECT COMPLET ION CERTIFICATE AS HAS BEEN DONE IN THE PRESENT CASE. IN THE AFORESAID VIEW O F THE MATTER, WE DO NOT ITA NOS.98/VIZAG/2012 & 96/VIZAG/2013 AND CO 13/VIZAG/2012 VISHNU BUILDERS, VIJAYAWADA 6 FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND A LLOWING THE CLAIM OF THE ASSESSEE. WE, THEREFORE, DISMISS THE GROUNDS RAISE D BY THE DEPARTMENT. 9. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. CO NO.13/VIZAG/2012: 10. ON A PERUSAL OF THE GROUNDS RAISED IN THE CRO SS OBJECTION BY THE ASSESSEE SHOWS THAT IT IS ONLY SUPPORTING THE ORDER OF THE CIT(A). SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A), THIS CROSS OBJ ECTION HAS BECOME INFRUCTUOUS, HENCE, IS DISMISSED AS SUCH. 11. IN THE RESULT, DEPARTMENTS APPEAL IN ITA NOS.98 /VIZAG/2012 & 96/VIZAG/2013 ARE DISMISSED AND ASSESSEES CO IS ALSO DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7 TH MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH MARCH, 2014 COPY TO 1 ITO WARD-2(2), VIJAYAWADA 2 VISHNU BUILDERS, D.NO.40-27-94A, TONIA TOWERS, OP P. NIRMALA CONVENT, PATAMATA, VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM