JCD Builders & Developers, Pune V. DCIT, Pune

ITA 1094/PUN/2010

• Counselvise Citation: 109424514 RSA 2010
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: V L JAIN
• Keywords: Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1094 / P N/ 20 10 ASSESSMENT YEAR : 2007 - 08 J.C.D. BUILDERS & DEVELOPERS, 5/28, PRATIK NAGAR, YERAWADA, PUNE VS. DCIT, CIRCLE - 2, PUNE (APPELLANT) (RESPONDENT) PAN NO. AAEFJ4976A APPELLANT BY: SHRI V.L. JAIN RESPONDENT BY: MS. ANN KAPT H UAMA ORDER P ER R.S. PADVEKAR , JM : - THIS APPEAL IS FILED BY THE ASSESSEE CHALL ENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - II, PUNE DATED 09 - 07 - 2010 FOR THE A.Y. 2007 - 08. THE ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS: 1. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING A DISALLOWANCE OF THE CLAIM U/S. 80IB(10) OF RS .1,12,24,626/ - FOR WANT OF FULL COMPLETION CERTIFICATE, INSPITE OF THE FACT THAT POSSESSION WAS ALREADY GIVEN, ARCHITECTS CERTIFICATE OF COMPLETION AND APPLICATION TO LOCAL AUTHORITY WAS IN COMPLIANCE WITH THE REQUIREMENTS OF SEC. 80IB(10). 2. WITHOUT PREJU DICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISREGARDING THE BINDING PRECEDENTS AND IN NOT ALLOWING A PRO - RATA CLAIM U/S. 80IB(10) WITH REFERENCE TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT. 2. THE FACTS WHICH ARE REVEALED FR OM THE RECORD AS UNDER. THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF DEVELOPERS AND BUILDERS UNDER THE NAME AND STYLE OF J.C.D. BUILDERS AND DEVELOPERS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2007 - 08 2 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE IN WHICH THE DEDUCTION TO THE EXTENT OF RS.1,12,24,626/ - U/S. 80IB(10) OF THE INCOME - TAX ACT WAS CLAIMED. THE ASSESSEE FIRM HAS UNDERTAKEN THE HOUSING PROJECT FOR CONSTRUCTING 6 RESIDENTIAL BUILDING S AT J.C.D. PARK, PHASE - I AND PHASE - II AT YERWADA (VISHRANTWADI), PUNE. AS PER THE SANCTIONED LAYOUT AND BUILDING PLAN , TOTAL AREA OF THE LAND IS 5,700 SQ. MTS. (BEFORE REDUCING AREA COVERED BY ROADS AND OPEN SPACES) VIDE COMMENCEMENT CERTIFICATE NO. DPO 5938/V/133 DATED 30 - 10 - 2002. THE PLAN WAS REVISED BY THE ASSESSEE FROM TIME TO TIME AND LAST PLAN WAS APPROVED ON 29 - 07 - 2006. AS PER APPROVED PLAN THE ASSESSEE CONSTRUCTED 6 BUILDINGS I.E. A1, A2, B1, B2, B3, B4 AND B5. THE SAID 6 BUILDINGS CONSIST OF 106 FLATS. IN RESPECT OF THE 6 BUILDINGS , THE COMPLETI ON CERTIFICATE WAS FILED BY THE ASSESSEE ONLY IN BUILDING S A1, B1 AND B2 HAVING TOTAL FLATS OF 44 OF THE TWO DIFFERENT DATES I.E. 23 - 02 - 2005 AND 23 - 07 - 2004. THE ASSESSE DID NOT FILE THE COMPLETION CERTIFICATE IN RESPECT OF BUILDING A2, B3 AND B4. THE ASSESSEE STATED BEFORE THE A SSESSING OFFICER THAT THE ASSESSEE HAS FILED AN APPLICATION ON 22 - 12 - 2006 FOR GETTING THE COMPLETION/OCCUPA NCY CERTIFICATE BUT SAME HAS NOT BEEN ISSUED. IN THE CASE OF THE ASSESSEE THE DATE OF COMPLETION OF THE HOUSING PROJECT WAS 31 - 03 - 2008 AND THERE IS NO DISPUTE ABOUT IT. 3. THE ASSESSEE FURTHER CONTENTED BEFORE THE ASSESSING OFFICER THAT THE AFORESAID PROJECT HAS BEEN COMPLETED BY THEM IN THE YEAR 2006 AND ACCORDINGLY THEY HAVE APPLIED FOR ISSUE OF THE COMPLETION /OCCUPATION CERTIFICATE TO THE PMC ON 21 - 12 - 2006 . BUT ON THE ALLEGED VIOLATION OF THE URBAN LAND CEILING ACT , THE PUNE MUNICIPAL CORPORATION (PMC) HAS HELD UP THE FINAL COMPLETION CERTIFICATE. THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT AS PER NOTICE NO. BCO/9078 DATED 06 - 03 - 2007, THE PMC HAS CERTIFIED THAT THE BUILDING NOS. A1, A2, B3, B4 & B5 (TOTAL 5 BUILDINGS) UNDER THE PROJECT HAVE BEEN COMPLETED AS PE R THE APPROVED PLAN. THE ASSESSEE ALREADY FILED THE COMPLETION CERTIFICATE IN RESPECT OF 3 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE BUILDINGS NO. B1 AND B2 THAT WAS DATE D 21 - 0 7 - 2004. THE ASSESSEE , THEREFORE , PLEADED THAT THE Y HAVE ALREADY COMPLETED THE ENTIRE HOUSING PROJECT BEFORE THE DUE DATE PRESCRIBED U/S. 80IB(10) OF THE ACT I.E. 31 - 03 - 2008 AND THE ASSESSEE HAS ALSO FILED AN APPLICATION FOR GETTING THE COMPLETION/OC CUPANCY CERTIFICATE AND HENCE , DEDUCTION CANNOT BE DENIED . IT APPEARS THAT AS PER THE ASSESSMENT RECORD IN RESPECT OF THE SAID HOUSING PROJECT THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S. 80IB(10) AS UNDER: SL. NO. ASSESSMENT YEAR CLAIM U/S. 80IB(10) 1 20 04 - 05 RS.46,24,290/ - 2 2005 - 06 RS.47,86,516/ - 3 2006 - 07 RS.88,19,086/ - 4 2007 - 08 RS.1,12,24,626/ - TOTAL RS.2,94,54,518 4. THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S. 80IB(10) BY THE ASSESSEE ON THE REASON THAT THE ASSESSEE COULD NOT PR ODUCE THE COMPLETION CERTIFICATE FROM THE PMC TO SUPPORT THAT IT HAS COMPLETED THE PROJECT BEFORE THE DUE DATE I.E. 31 - 03 - 2008. THE ASSESSING OFFICER , THEREFORE , DENIED THE ENTIRE DEDUCTION CLAIM ED BY THE ASSESSEE U/S. 80IB(10) OF THE INCOME - TAX ACT AND M ADE ADDITION TO THE TOTAL INCOME. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). 5. IT APPEARS THAT THE PMC ISSUED S HOW - CAUSE NOTICE TO THE ASSESSEE STATING THAT THERE IS A VIOLATION OF THE ULC ACT AND HENCE , THE ASSESSEE SHOULD STOP THE CONSTRUCTI ON ACTIVITY. THE NOTICE ISSUED BY THE PMC DATED 06 - 03 - 2007 IS REPRODUCED BY THE LD. CIT(A) IS IN HIS ORDER. THE LD. CIT(A) OBSERVED THAT IT IS NOT CORRECT THAT AS STATED BY THE ASSESSEE THE NOTICE DOES NOT CONVEY THE CONSTRUCTION OF THE BUILDING WAS ILLE GAL. THE LD. CIT(A) FOLLOWED HIS APPELLATE ORDER IN ASSESSEES OWN CASE FOR THE 4 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE A.Y. 2006 - 07 AND DISMISS THE GROUNDS TAKEN BY THE ASSESSEE IN RESPECT OF THE ALTERNATE CLAIM OF THE ASSESSEE I.E. TO GIVE THE PRO - RATA DEDUCTION . T HE SAME WAS ALSO DISMISSED . NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LEARNED COUNSEL SUBMITS THAT THE LAND WAS BELONG ED TO THE TRUST WHICH WAS TAKEN FOR THE DEVELOPMENT OF THE ASSESSEE. HE SUBMITS THAT THE ALLEGED VIOLATION OF THE URBAN LAND CEILING ACT WAS CARRIED BEFORE THE HON'BLE HIGH COURT OF BOMBAY BY THE LAND OWNERS AND MATTER WAS DECIDED IN FAVOUR OF THE LAND OWNERS. HE REFERRED TO PAGE NO. 16 WHICH IS LETTER - CUM - NOTICE ISSUED BY THE PMC ( IN MARATHI) AND ENGLISH TRANSLATION IS AT PAGE NO. 17A AND SUBMITS THAT IT IS CLEAR FROM THE SAID LETTER THAT THE ASSESSEE HAS APPLIED FOR GETTING THE OCCUPANCY CERTIFICATE TO THE PUNE MUNICIPAL CORPORATION ON 22 - 12 - 2006 BUT AS THE ASSESSEE FAILED TO FILE U LC ORDER AFRESH FOR THE ROAD CONNECTING TO ITS PLOT AS PER THE ORDERS OF THE COLLECTOR HENCE, IT WAS DECIDED TO CONSIDER ASSESSEES APPLICATION ONLY AFTER OBTAINING U LC ORDER AFRESH. THE LEARNED COUNSEL SUBMITS THAT THE MATTER HAS BEEN FINALLY DECIDING I N FAVOUR OF THE LAND OWNER BY THE HON'BLE HIGH COURT OF BOMBAY IN W RIT PETITION N O. 8699 OF 2007 JUDGMENT DATED 29 - 06 - 2010. HE SUBMITS THAT FOR NO FAULT OF THE ASSESSEE OCCUPANCY/COMPLETION CERTIFICATE WAS NOT ISSUED EVEN IF THE ASSESSEE HAS APPLIED FOR T HE SAME IN TIME. 7 . PER CONTRA THE LD. DR REFERRED TO DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2006 - 07 AND SUBMIT S THAT THE TRIBUNAL HAS CATEGORICALLY GIVEN A FIN DING THAT THE VIOLATION OF THE U LC ACT CANNOT BE SAID TO BE MERE VENIAL BREACH. HE SUBMITS THAT IF THERE IS A SERIOUS VIOLATION OF LAW AND OCCUPANCY CERTIFICATE IS DENIED BY THE LOCAL AUTHORITY , THEN IT CANNOT BE CLAIMED THAT THE ASSESSEE HAS COMPLETED THE 5 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE HOUSING PROJECT IN ALL RESPECT WHICH IS CONTEMPLATED IN SEC. 80IB(10) OF THE INCOME - TAX ACT. HE SU PPORTS THE ORDERS OF THE AUTHORIT IES BELOW. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT IN THE PRECEDING YEAR I.E. A.Y. 2006 - 07 THE DEDUCTION WAS DENIED TO THE ASSESSEE . O N PERU SAL OF THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2006 - 07, WE FIND THAT THE TRIBUNAL HAS HELD THAT THE VIOLATION OF THE URBAN LAND CEILING ACT CANNOT BE SAID TO BE MERE VENIAL BREACH. IT IS SEEN THAT THE TRIBUNAL HAS OBSERVED THAT THE ISSUE OF THE ALLEGED VIO LATION UNDER THE U LC ACT IS PENDING BEFORE THE HON'BLE HIGH COURT IN THE SIMILAR MATT ER IN THE CASE OF MUSLIM JAMAT H USEIN SHAH BABA TRUST VS. STATE OF MAHARASHTRA & ORS. WRIT P ETITION N O. 8699 OF 2007. IT IS FURTHER OBSERVED THAT THE SAID WRIT PETITION H AS BEEN ALLOWED BY THE HON'BLE HIGH COURT VIDE ORDER DATED 29 - 06 - 2007 IN FAVOUR OF THE PETITIONERS THEREIN. THE LEARNED COUNSEL SUBMITS THAT THERE IS NON - APPRECIATION OF THE FACT AS THE LAND OWNER IS MUSLIM JAMAT H USEIN SHAH BABA TRUST ONLY AND THE ASSESS EE IS A DEVELOPER . T HERE WAS NO SEPARATE PROCEEDING PENDING BEFORE THE HON'BLE HIGH COURT OF BOMBAY. 9 . WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL THAT AS PER THE CORRESPONDENCE , MORE PARTICULARLY , LETTER FROM PUNE MUNICIPAL CORPORATION DATED 07 - 11 - 2008 ( PAGE NO. 17 O F THE PAPER B OOK ), IT IS SEEN THAT THE SAID TRUST HAS APPLIED THROUGH THE ASSESSEE FOR GETTING THE OCCUPANCY CERTIFICATE. IT IS SEEN THAT THE ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT DATED 20 - 08 - 2002 WITH THE SAID TRUST . IF THE ASSESSEE HAS APPLIED FOR GETTING THE OCCUPANCY CERTIFICATE FOR THE BUILDINGS A2, B3 AND B4 ON 22 - 12 - 2006 MUCH MORE BEFORE THE DUE DATE OF COMPLETION OF THE HOUSING PROJECT I.E. 31 - 03 - 2008 BUT THE PMC HAD NOT ISSUED THE OCCUPANCY CERTIFICATE. AS PER THE NOTICE ISSUED BY THE PMC DATED 06 - 03 - 2007 (COPY PLACED AT PAGE NO. 21 OF THE C OMPILATION) 6 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE THE CURRENT STATUS OF THE CONSTRUCTION IS SHOWN BY OBSERVING THAT AS PER THE APPROVED PLANS B UILDINGS NO. A1, B3, B4 AND B5 ARE FULLY COMPLETE . SAID OBSERVATION IN PMCS NOTICE SUGGEST S THAT ON 06 - 03 - 2007 THE ASSESSEE HAS COMPLETED THE HOUSING PROJECT IN RESPECT OF ALL THE BUILDINGS . I T IS SEEN THAT THE ASSESSEE APPLIED AS PER THE DEVELOPMENT CONTROLS RULES TO THE PUNE MUNICIPAL CORPORATION THROUGH THEIR ARCHITE CT FOR GETTING THE OCCUPANCY CERTIFICATE BUT THE SAME WAS WITHHELD PARTLY ON THE ISSUE OF THE ALLEGED VIOLATION OF URBAN LAND CEILING ACT AND THAT MATTER HAS BEEN PUT TO R EST BY THE HON'BLE HIGH COURT OF BOMBAY . A S PER THE PROVISIONS OF DEVELOPMENT CONTRO L RULES MORE PARTICULARLY RULE NO. 7.6 . , T HE OWNER THROUGH THE LI CENSED A RCHITECT OR E NGINEER SHALL FURNISH THE COMPLETION CERTIFICATE TO THE LOCAL AUTHORITY AND LOCAL AUTHORITY SHALL ISSUE THE OCCUPANCY CERTIFICATE UNDER RULE 7.7 AFTER CARRYING OUT THE IN SPECTION OF THE WORK /CONSTRUCTION. IT IS SEEN THAT ONLY REASON GIVEN BY THE LOCAL AUTHORITIES IS THE VIOLATION OF THE URBAN LAND CEILING ACT AND THERE IS NO OTHER REASON. 10 . SO FAR AS OBSERVATION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN A.Y. 2006 - 07 IS CONCERNED , THE ASSESSEE HAS RELIED ON THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF J T. CIT VS. AMERICA N EXPRESS BANK LTD. 7 8 DTR ( M ) 38. IN OUR OPINION , THERE IS A MISTAKE OF FACTS IN THE ORDER OF THIS TRIBUNAL IN THE A.Y. 2006 - 07 IN RESPECT OF O N THE ISSUE OF THE MATTER PENDING IN HON'BLE HIGH COURT OF BOMBAY . I N FACT THE LAND OWNER TRUST CARRIED THE MATTER BEFORE THE HIGH COURT AND NOT THE ASSESSEE. WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO JUSTIFICATION , AFTER CONSIDERING THE ENTIRETY OF THE FACTS AND DOCUMENTS PLACED BEFORE US TO DENY DEDUCTION TO THE ASSESSEE U/S. 80IB(10) OF THE ACT AS ASSESSEE HAS COMPLETED THE HOUSING PROJECT BEFORE THE 31 - 03 - 2008 WHICH WAS THE DUE DATE PRESCRIBED AS PER THE PROVISIONS OF SEC. 80IB(10). WE, THERE FORE, ALLOW GROUND NO. 1 TAKEN BY THE ASSESSEE. THE ASSESSEE HAS TAKEN THE 7 ITA NO. 1094/PN/2010, J.C.D. BUILDERS & DEVELOPERS, PUNE ALTERNATE PLEA BY WAY GROUND NO. 2 FOR ALLOWING THE PRO - RATA DEDUCTION AS THE ASSESSEE HAS SUCCEEDED ON GROUND NO. 1 . T HE GROUND NO. 2 BECOME INFRUCTUOUS. 1 1 . IN THE RESULT, TH E ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25 - 0 6 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 25 TH JUNE, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, PUNE 4 THE CIT - II, PUNE 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE