City Development Corporation, Pune V. ACIT, Pune

ITA 1100/PUN/2010

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0007 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 03-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: NIKHIL PATHAK SUHAS BORA
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIL MEMBER ANDSHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1489/PN/2009 AND 1100/PN/2010 (A.Y. 2006-07 AND 2007-08) M/S CITY DEVELOPMENT CORPORATION, .. APPELLA NT 917/19A, F.C. ROAD, CITY CHAMBERS, PUNE 411 004 VS. ADDL./ASSTT. COMMISSIONER OF INCOME-TAX .. RESPONDENT RANGE-3, PUNE AND ITA NO. 57 AND 1287/PN/2010 (A.Y. 2006-07 AND 2007- 08 ASSTT. COMMISSIONER OF INCOME-TAX, .. APPELL ANT CIR.3, PUNE VS M/S CITY DEVELOPMENT CORPORATION, .. RESPONDENT PUNE ASSESSEE BY: S/SHRI NIKHIL PATHAK/SUHAS BORA DEPARTMENT BY: SHRI S. K. SINGH DATE OF HEARING : 17.09.2012 DATE OF PRONOUNCEMENT : 22 .09.2012 ORDER PER G.S. PANNU, AM THESE CROSS-APPEALS BY THE ASSESSEE AND REVENUE AR E DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCO ME-TAX (APPEALS)II, PUNE WHICH, IN TURN, HAVE ARISEN FROM THE RESPECTIV E ORDERS OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07 AN D 2007-08. 2. SINCE COMMON ISSUES ARE INVOLVED ALL THESE APPEA LS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF A CON SOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. IN THE APPEALS OF THE ASSESSEE FOR THE ASSESSMEN T YEARS 2006-07 AND 2007-08, VIDE ITA NOS 1489/PN/09 AND 1100/PN/10 THE COMMON DISPUTE RELATES TO THE ISSUE OF DISALLOWANCE OF DEDUCTION U NDER SECTION 80-IB(10) OF THE ACT IN RESPECT OF THE HOUSING PROJECT AT KASTURKUNJ , PUNE. SINCE THE ISSUE IN BOTH APPEALS IS COMMON, WE SHALL DEAL WITH THE FACT S RELATING TO THE ASSESSMENT YEAR 2006-07 WHICH WILL ALSO GOVERN THE FACTS FOR ASSESSMENT YEAR 2007-08. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS AND HAS E XECUTED A HOUSING PROJECT NAMED AS TEN KASTURKUNJ AT PUNE IN THE YEAR 2005- 06 RELEVANT TO THE ASSESSMENT YEAR 2006-07. FOR THE ASSESSMENT YEAR 20 06-07, THE ASSESSEE FURNISHED A RETURN OF INCOME ON 31.10.2006 DECLARIN G INCOME OF RS 8,76,37,050/- AFTER CLAIMING DEDUCTION UNDER SECTIO N 80-IB(10) OF THE ACT AMOUNTING TO RS 11,96,74,144/- FOR ITS HOUSING PROJ ECT TEN KASTURKUNJ. THE KASTURKUNJ PROJECT WITH FIVE BUILDINGS, NAMELY, A , B, C, D & E IS CONSTRUCTED ON SURVEY NO 132B, HISSA NO 13/14/15, S HIVAJINAGAR, PUNE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE SAID PROJECT WAS LAUNCHED AS PER THE ORIGI NAL COMMENCEMENT CERTIFICATE DATED 13.6.2003 ISSUED BY THE PUNE MUNI CIPAL CORPORATION, I.E. THE LOCAL AUTHORITY, AND THE PROJECT COMPRISED OF FIVE BUILDINGS, A, B, C, D & E AS PER THE APPROVED PLAN. THE ASSESSEE CLAIMED DEDUCTI ON UNDER SECTION 80- IB(10) OF THE ACT IN RESPECT OF THE BUILDINGS A, B & C, WHICH WERE STATED TO HAVE BEEN COMPLETED BY 31.3.2006. ACCORDING TO THE ASSESSING OFFICER, SINCE THE PROJECT COMPRISED OF FIVE BUILDINGS AS A WHOLE FOR WHICH SINGLE SANCTION PLAN/APPROVAL WAS TAKEN, THE FACT THAT COMPLETION C ERTIFICATE WAS NOT ISSUED FOR THE BUILDING E BY 31.3.2008 WOULD RENDER THE ASSE SSEES CLAIM UNDER SECTION 80IB(10) INADMISSIBLE IN VIEW OF THE EXPRESS PROVIS IONS OF SECTION 80IB(10)(A)(I) OF THE ACT. THE ASSESSING OFFICER AL SO STATED THAT THE PUNE MUNICIPAL CORPORATION HAD INFORMED VIDE LETTER DATE D 8.12.2008 THAT THE FINAL COMPLETION CERTIFICATE WAS NOT ISSUED TO THE UNDERT AKING FOR THE PROJECT UNDER CONSIDERATION. THE ASSESSEE EXPLAINED BEFORE THE AS SESSING OFFICER THAT CONSTRUCTION OF ALL THE FIVE BUILDINGS WAS ACTUALLY COMPLETED BEFORE 31.3.2007 AND POSSESSION WAS ALSO HANDED OVER TO THE RESPECTI VE FLAT OWNERS OF BUILDINGS A, B & C IN THE FINANCIAL YEAR 2005-06 AN D BUILDING D AND E IN FINANCIAL YEAR 2006-07 AND ACCORDINGLY SALES WERE A LSO OFFERED FOR TAXATION. THE ASSESSEE, HOWEVER, ADMITTED THAT FOR BUILDING E, COMPLETION CERTIFICATE WAS RECEIVED ON 5.5.2008. IT WAS ALSO STATED BY THE ASSESSEE THAT APPLICATION FOR COMPLETION CERTIFICATE WAS MADE TO THE LOCAL AU THORITY ON 12.3.2008 FOR BUILDING E AND IN SUPPORT OF ITS CLAIM REGARDING COMPLETION OF BUILDING E BEFORE 31.3.2008, ASSESSEE SUBMITTED ARCHITECTS CE RTIFICATE BEFORE THE ASSESSING OFFICER. IT WAS ALSO STATED THAT POSSESSI ON OF ALL THE FLATS WAS HANDED OVER BY 31.3.2007 AFTER COMPLETING ALL THE R EQUISITES, LIKE ELECTRICITY CONNECTION, WATER CONNECTION, SEWAGE SYSTEM, APPROA CH ROAD, CLUB HOUSE, ETC. THE ASSESSING OFFICER, HOWEVER, REJECTED THE C ONTENTION OF THE ASSESSEE BY RELYING ON THE PROVISIONS OF SECTION 80IB(10)(A) (I) AND EMPHASIZING ON THE FACT THAT IT WAS NOT THE ARCHITECTS CERTIFICATE, B UT THE CERTIFICATE ISSUED BY THE LOCAL AUTHORITY WHICH WAS TO BE CONSIDERED FOR THE PURPOSE OF COMPLETION OF THE PROJECT IN ACCORDANCE WITH THE ACT. FURTHER, ACCORD ING TO THE ASSESSING OFFICER, IT WAS THE ENTIRE PROJECT WHICH HAD TO BE COMPLETED WITHIN THE STIPULATED TIME FOR FULFILLMENT OF CONDITIONS LAID DOWN UNDER SECTI ON 80IB(10)(A)(I) AND THE SECTION DID NOT ENVISAGE COMPLETION OF DIFFERENT BU ILDINGS OR UNITS CONSTITUTING THE PROJECT. ACCORDING TO THE ASSESSING OFFICER, TH E FACT THAT COMPLETION CERTIFICATE OF BUILDING E WAS ISSUED ON 5.5.2008 WAS A SUFFICIENT REASON FOR DISALLOWANCE OF ASSESSEES CLAIM UNDER SECTION 80IB (10)(A)(I) OF THE ACT. 5. THE ASSESSING OFFICER FURTHER STATED THAT IN FEW CASES THE ASSESSEE HAD CONSTRUCTED A LOBBY IN-FRONT OF TWO ADJACENT FLATS WHICH GAVE A COMMON ENTRANCE TO THE TWO ADJOINING FLATS AND THUS INFERR ED THAT THIS MADE THE TWO FLATS AS ONE UNIT. ACCORDING TO THE ASSESSING OFFIC ER, ON COMBINING THE BUILT-UP AREA OF TWO COMBINED FLATS, THE TOTAL AREA EXCEEDED 1500 SQ.FT LIMIT AS PROVIDED IN SECTION 80IB(10)(C) OF THE ACT. FOR TH E ABOVE TWIN REASONS, THE ASSESSING OFFICER DISALLOWED THE ASSESSEES CLAIM F OR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 6. BEING AGGRIEVED, ASSESSEE CHALLENGED BOTH THE FI NDINGS OF THE ASSESSING OFFICER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND FILED DETAILED WRITTEN SUBMISSIONS MEETING EACH AND EVERY OBJECTION OF THE ASSESSING OFFICER. 7. THE COMMISSIONER OF INCOME-TAX (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AFFIRMED THE ULTIMATE DECISION OF THE ASSESSING OFFICER TO DENY ASSESSEES CLAIM FOR DEDUCTION UNDE R SECTION 80-IB(10) OF THE ACT OF THE ACT. ON THE ISSUE OF DELAY IN ISSUANCE OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY, THE CIT(A) HELD AS UNDER, WHIL E UPHOLDING THE STAND OF THE ASSESSING OFFICER:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FAC T THAT THE KASTURKUNJ PROJECT CONSTITUTED OF FIVE BUILDINGS A, B, C, D AND E, OUT OF WHICH FOR BUILDING E, COMPLETION CERTIFIC ATE COULD BE ISSUED BY THE PMC ONLY ON 5.5.2008. SINCE THIS PROJ ECT APPROVED VIDE COMMENCEMENT CERTIFICATE DATED 13.6.2003 HAS N OT BEEN COMPLETED BY 31.3.2008, THERE IS NO COMPLIANCE WITH THE CONDITION PRESCRIBED U/S 80IB(10)(A)(I) OF THE ACT. IN THIS CONNECTION, THE CONTENTION OF THE APPELLANT REGARDI NG ACTUALLY THE PROJECT HAVE BEEN COMPLETED AND POSSESSION HAVING B EEN HANDED OVER ALONG WITH THE ARCHITECTS CERTIFICATE TO THIS EFFECT ETC. IS NOT ACCEPTABLE IN VIEW OF THE PROVISIONS OF EXPLANATION (II) BELOW SECTION 80IB(10(A), WHICH STATES AS UNDER: THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUS ING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT IS ISSUED BY THE LOCAL AUTHORITY. THEREFORE, SINCE SECTION 80IB(10(A) TALKS OF A PRO JECT BEING COMPLETED BEFORE 31.3.2008 AND NOT INDIVIDUAL BUILD ING OR UNITS COMPRISED IN THAT PROJECT BEING COMPLETED, THE CL AIM OF DEDUCTION U/S 80IB(10) CANNOT BE ALLOWED TO THE APP ELLANT AND THE DECISION OF THE AO IN THIS REGARDS IS HEREBY UP HELD. ACCORDINGLY, GROUND NO. 3 IS HEREBY DISMISSED. 8. WITH REGARD TO ASSESSING OFFICERS OBJECTION REG ARDING THE COMBINING OF TWO ADJOINING FLATS INTO ONE FLAT, FOR THE PURPOSE OF COMPUTING THE BUILT -UP, AREA THE COMMISSIONER OF INCOME-TAX (APPEALS) UPHELD THE PLEA OF THE ASSESSEE, HOLDING AS UNDER: 6.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE DISCUSSION MADE IN THE ASSESSMENT ORDER, IN WHICH A LSO THE APPELLANT HAD GIVEN THE SAME EXPLANATION. I SEE NO REASON TO REJECT THE EXPLANATION, SINCE THE COMMON LOBBY AREA GIVEN IN FRONT OF TWO ADJACENT FLATS WERE NOT SOLD TO ANYONE AND IT WAS ONLY FOR SECURITY PURPOSE THAT THEY WERE ENCLOSED A ND A SEPARATE ENTRANCE WAS GIVEN. THIS DOES NOT RESULT INTO COMBI NING THE TWO ADJACENT FLATS INTO A SINGLE UNIT. THE APPELLANT HA S RIGHTLY EXPLAINED BEFORE THE UNDERSIGNED THAT PRIOR TO THE AMENDMENT BROUGHT INTO THE STATUTE BY FINANCE ACT 2009 W.E.F. 1.10.2009, THERE WAS NO BAR ON SELLING TWO FLATS IN THE SAME B UILDING TO ONE INDIVIDUAL OR TO A RELATIVE OR SPOUSE OF AN INDIVID UAL WHO HAS ALREADY PURCHASED A FLAT IN THE PROJECT. THE AO HAS ALSO NOT STATED ANYTHING TO REBUT THE EXPLANATION GIVEN BY T HE APPELLANT THAT THE JOINING OF TWO ADJACENT FLATS WAS DONE BY THE BUYERS THEMSELVES SUBSEQUENT TO THE SALE AND HANDING OVER OF POSSESSION, AND THE APPELLANT HAD GOT NOTHING TO DO WITH IT. THE AO HAD NOT BROUGHT ANYTHING ON RECORD TO REBUT THIS EXPLANATION AND TO SHOW THAT THIS JOINING OF FLATS WAS DONE BY THE APPELLANT ITSELF PRIOR TO SELLING THESE FLATS. THEREFORE, THI S EXPLANATION OF THE APPELLANT IS ALSO ACCEPTABLE. 6.2 THOUGH THE APPELLANTS EXPLANATION GIVEN IN RES PECT OF GROUND NO. 2 IS ACCEPTABLE, STILL SINCE VIDE DISMIS SAL OF GROUND NO. 3 DEDUCTION U/S 80IB(10) IS HELD TO BE INADMISS IBLE TO THE APPELLANT, THIS GROUND HAS BECOME MERELY ACADEMIC I N NATURE. FOR STATISTICAL PURPOSES, HOWEVER, THIS GROUND WILL BE TREATED AS ALLOWED. 9. IN THIS BACKGROUND THESE ARE THE CROSS APPEALS O F THE ASSESSEE AND THE REVENUE. IN ASSESSEES APPEALS, THE GRIEVANCE IS W ITH REGARD TO SUSTENANCE OF DENIAL OF DEDUCTION U/S 80-IB(10) ON THE GROUND THAT THE HOUSING PROJECT DID NOT OBTAIN THE COMPLETION CERTIFICATE FOR E BUILD ING BEFORE 31-3-2008. THE REVENUE IN ITS CROSS APPEALS HAS CONTESTED THE FIND ING OF THE CIT(A) THAT FOR ASCERTAINING THE FULFILLMENT OF CONDITION (C) OF SE CTION 80-IB(10) THE BUILT UP AREA OF THE TWO ADJOINING FLATS HAVE TO BE COMPUTED INDEPENDENTLY. 10. IN THIS BACKGROUND, WE HAVE HEARD THE RIVAL SUB MISSIONS. SECTION 80- IB(10) SEEKS TO ALLOW DEDUCTION IN RESPECT OF PROFI TS DERIVED BY AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS. THE DEDU CTION ENVISAGED U/S 80- IB(10) IS SUBJECT TO THE CONDITIONS PRESCRIBED THER EIN, AND INTER ALIA, IN THE CAPTIONED APPEALS, TWO CONDITIONS ARE IN DISPUTE. FIRSTLY, IN TERMS OF CLAUSE (A) OF SECTION 80-IB(10) THE HOUSING PROJECT UNDERTAKEN BY AN ASSESSEE IS TO BE COMPLETED BY THE PRESCRIBED PERIOD, WHICH IN THE PR ESENT CASE IS ON OR BEFORE 31-3-2008, IN TERMS OF SUB-CLAUSE (I) OF CLAUSE (A) OF SECTION 80-IB(10) OF THE ACT. AS PER THE REVENUE, THE SAID CONDITION HAS NO T BEEN COMPLIED WITH, INASMUCH AS THE COMPLETION CERTIFICATE HAS BEEN ISS UED BY THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL CORPORATION ON 5-5-2008 WITH RE SPECT TO BUILDING E ,WHICH IS POSTERIOR THAN THE PRESCRIBED DATE OF 31-3-2008. THE SECOND CONDITION WHICH IS IN DISPUTE ALBEIT IN THE APPEALS OF THE RE VENUE, IS CONTAINED IN CLAUSE (C) OF SECTION 80-IB(10) WHICH PRESCRIBES THAT THE RESIDENTIAL UNITS IN THE HOUSING PROJECT OUGHT TO HAVE A MAXIMUM BUILT UP AR EA OF 1500 SQ.FT. IN THE CITY OF PUNE. THE REVENUE HAS CONTENDED THAT IN FE W CASES, TWO ADJOINING FLATS HAVE BEEN COMBINED INTO ONE AND CONSIDERING T HE BUILT UP AREA OF THE COMBINED FLATS, THE SAME EXCEEDED 1500 SQ.FT., THUS VIOLATING THE CONDITION OF SEC. 80-IB(10)(C) OF THE ACT. 10. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT OUT OF FIVE BUILDINGS, THE COMPLETION CERTIFICATE IN RESPE CT OF BUILDINGS A TO D WAS OBTAINED PRIOR TO 31-3-2008 AND EVEN WITH REGARD TO THE BUILDING E THE APPLICATION FOR OBTAINING COMPLETION CERTIFICATE WA S MADE TO THE LOCAL AUTHORITY ON 12-3-2008 AS EVIDENCED BY THE COPY OF THE APPLIC ATION PLACED IN THE PAPER BOOK AT PAGE 12. IT WAS POINTED OUT THAT THE ASSES SEE HAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT IN EFFECT EVEN BUILDING E WAS COMPLETE IN ALL RESPECTS, AS CAN BE FOUND FROM THE DISCUSSION MADE BY THE ASSESSING OFFICER ON PAGES 7 TO 13 OF THE ASSESSMENT ORDER. THE COMP LETION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITY ON 5-5-2008 IN PURSUA NCE TO THE APPLICATION OF THE ASSESSEE SUBMITTED ON 12-3-2008 AND IT WAS VEHEME NTLY POINTED OUT THAT THE DELAY WAS NOT ATTRIBUTABLE TO THE ASSESSEE, INASMUC H AS NO OBJECTIONS WERE RAISED BY THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL C ORPORATION AT ANY STAGE. IN THIS CONNECTION, ASSESSEE HAS PLACED RELIANCE ON TH E DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HINDUSTAN SAMUTHA AW AS LTD., AURANGABAD VS. ITO WARD 1(1) AURANGABAD IN ITA NO. 945 TO 950/PN/2 010 FOR A.Y. 2002-03 TO 2007-08 DATED 30-8-2011 TO CONTEND THAT ON THIS BAS IS, DEDUCTION U/S 80- IB(10) COULD NOT BE DENIED TO THE ASSESSEE. 11. ON THIS ASPECT, THE LEARNED DR HAS REITERATED T HE ARGUMENTS TAKEN BY THE ASSESSING OFFICER AS WELL AS CIT(A) WHICH WE HA VE ALREADY DISCUSSED IN THE EARLIER PART OF THIS ORDER AND ARE NOT BEING RE PEATED FOR THE SAKE OF BREVITY. THE LEARNED DR HAS PRIMARILY EMPHASIZED THAT FOR TH E PURPOSE OF ASCERTAINING THE COMPLETION OF CONSTRUCTION OF A HOUSING PROJECT , IT IS THE DATE ON WHICH THE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHO RITY IS RELEVANT AND IN THIS VIEW OF THE MATTER, THE COMPLETION CERTIFICATE FOR BUILDING E WAS ISSUED BY THE LOCAL AUTHORITY ON 5-5-2008 WHICH IS BEYOND THE PRE SCRIBED DATE OF 31-3-2008. THE LEARNED DR POINTED OUT THAT IN THE ABSENCE OF C OMPLETION CERTIFICATE OF BUILDING E IT COULD NOT BE SAID THAT THE ASSESSEE HAD COMPLETED CONSTRUCTION OF THE HOUSING PROJECT BEFORE THE PRESCRIBED DATE A ND THEREFORE, THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE STAND OF THE ASSESSI NG OFFICER ON THIS ASPECT . 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. QUITE CLEARLY, THE DISPUTE IS WITH REGARD TO THE COMPLETION CERTIFICAT E OF BUILDING E HAVING BEEN ISSUED BY THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL C ORPORATION, ON 5-5-2008. SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) R EQUIRES THAT THE CONSTRUCTION OF THE PROJECT IN QUESTION IS TO BE COMPLETED ON OR BEFORE 31-3-2008. CLAUSE (II) OF EXPLANATION BELOW SECTION 80-IB(10)(A) PRES CRIBES THAT THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IN THE PRESENT CASE, IT HAS B EEN ISSUED ON 5-5-2008 AND HENCE THE CASE SET UP BY THE REVENUE THAT THE COMPL ETION IS BEYOND THE MANDATED DATE OF 31-3-2008. IN THIS BACKGROUND, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE APPLIED FOR OBTAINING THE COMPLETION CERTIFICATE IN RESPECT OF BUILDING E ON 12-3-2008. FROM THE DIS CUSSION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, WHEREIN THE FACTUAL ASSERTIONS OF THE ASSESSEE HAVE BEEN REPRODUCED, IT IS QUITE EVID ENT THAT THE ASSESSEE ASSERTED THAT BEFORE 31-3-2008, THE CONSTRUCTION OF BUILDING WAS COMPLETE IN ALL RESPECTS; THAT ELECTRICAL CONNECTION WAS PROVI DED TO EACH FLAT OWNER; ROAD WAS COMPLETE; WATER AND DRAINAGE CONNECTION WAS AVA ILABLE; SEWERAGE SYSTEM WAS OPERATING; CLUB HOUSE WAS FUNCTIONAL; ET C. THE ASSESSEE ALSO POINTED OUT THAT THE LOCAL AUTHORITY HAD ALSO INITI ATED PROPERTY TAX ASSESSMENTS FOR EACH OF THE FLATS AND THE SAME DEMONSTRATED THA T ALL THE FLATS IN THE BUILDING WERE COMPLETE. IN FACT, IN PARA 6.9 OF TH E ASSESSMENT ORDER, THE ASSESSING OFFICER NOTICED THAT THE FACTS THAT THE FLATS WERE COMPLETED AND POSSESSION GIVEN WILL NOT COME TO THE RESCUE OF THE ASSESSEE . THE AFORESAID FINDING OF THE ASSESSING OFFICER SUPPORTS THE ASSER TION MADE BY THE ASSESSEE THAT FACTUALLY SPEAKING CONSTRUCTION OF FLATS IN BU ILDING E WAS ALSO COMPLETE AND POSSESSION HANDED OVER TO THE ACTUAL USER/CUSTO MERS PRIOR TO 31-3-2008. PERTINENTLY, ON THE BASIS OF THE ARCHITECTS CERTIF ICATE CONFIRMING COMPLETION OF CONSTRUCTION OF BUILDING, THE ASSESSEE APPLIED FOR THE COMPLETION CERTIFICATE TO THE PUNE MUNICIPAL CORPORATION ON 12-3-2008. IT HA S BEEN POINTED OUT BEFORE US THAT THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL COR PORATION DID NOT RAISE ANY OBJECTION WITH REGARD TO ASSESSEES APPLICATION AND THE CERTIFICATE FOR BUILDING E WAS THEREAFTER ISSUED ON 5-5-2008. THE MOOT QU ESTION IS AS TO WHETHER IN SUCH A SITUATION CAN IT BE SAID THAT THE ASSESSEES PROJECT DID NOT COMPLY WITH THE CONDITION PRESCRIBED IN SUB-CLAUSE (I) OF CLAUS E (A) TO SECTION 80-IB(10) OF THE ACT WHEREBY THE CONSTRUCTION WAS TO BE COMPLETE D ON OR BEFORE 31-3-2008. SOMEWHAT SIMILAR SITUATION WAS CONSIDERED BY OUR CO -ORDINATE BENCH IN THE CASE OF HINDUSTAN SAMUTHA AWAS LTD. (SUPRA) WHEREIN ALSO ON THE STRENGTH OF ARCHITECTS CERTIFICATE, AN APPLICATION FOR OBTAINI NG COMPLETION CERTIFICATE WAS MOVED TO THE LOCAL AUTHORITY ON 25-2-2008 BUT IN AC TUALITY THE COMPLETION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITY ON 10 -10-2008. THE TRIBUNAL NOTICED THAT THE DELAY IN ISSUING COMPLETION CERTIF ICATE WAS NOT ATTRIBUTABLE TO THE ASSESSEE AS NO OBJECTIONS WERE RAISED BY THE L OCAL AUTHORITY. THE TRIBUNAL AFTER CONSIDERING ITS EARLIER DECISIONS IN THE CASE OF M/S. SATISH BOHRA & ASSOCIATES VS. ACIT IN ITA NO. 713 AND 714/PN/20 10 FOR A.Y. 2004-05 AND 2005-06 DATED 7-1-2011; M/S. D.K. CONSTRUCTIONS VS. ITO ITA NO. 243/PN/2010 FOR A.Y. 2006-07; DATED 6-12-2010 AND SANGHVI AND DOSHI ENTERPRISES VS. ITO AND OTHERS ITA NO. 259 TO 263/M DS/2010 DATED 19-5- 2011 FOR A.Y. 2005-06 AND 2006-07 (TM) HAS CONCLUDE D AS FOLLOWS: FROM THE ABOVE, ONCE THIS IS CLEAR THAT THE DATE THAT APPEARS ON THE ARCHITECTS COMPLETION CERTIFICATE FILED BEF ORE THE LOCAL AUTHORITY IS RELEVANT ONE. IN THE INSTANT CASE, TH E SAID DATE IS 25- 3-2008 AND THE ASSESSEE FILED REQUISITE FORM BEFORE THE LOCAL AUTHORITIES INTIMATING THE COMPLETION OF THE PROJEC T. THE SAID CERTIFICATE/INTIMATION WAS ACCEPTED BY THE LOCAL AU THORITY WITHOUT ANY AMENDMENTS OR OBJECTIONS. LOCAL AUTHORITY HAS NOT RAISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUIL DING OR THE COMPLETION OF THE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY. IN SUCH CIRCUMSTANCES, IN OUR OPINION, THE DELAY IN OBTAINING THE COMPLETION CERTIFICATE ON 10-10-2008 IS CERTAINLY NOT ATTRIBUTABLE TO THE ASSESSEE AND OBTAINING THE SAID CERTIFICATE BEFORE 31-3-2008 IS BEYOND THE CONTROL OF THE ASSES SEE. ASSESSEES JOB INCLUDES THE COMPLETION OF THE BUILD ING IN ACCORDANCE WITH THE APPROVED PLANS AND INTIMATION O F THE SAME TO THE LOCAL AUTHORITY BY WAY OF FILING THE REQUISI TE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHIT ECT, THE SPECIALIST IN THE MATTER AND THE ASSESSEE HAS DONE HIS JOB SCRUPULOUSLY IN THIS CASE. HOWEVER, THE LOCAL AUTH ORITY HAS NEITHER OBJECTED TO THE SAID APPLICATION OF THE ASS ESSEE AND THE ARCHITECT BY RAISING ANY OBJECTIONS FOR ACCEPTED BY ISSUE OF SAID COMPLETION CERTIFICATE TILL 10-10-2008. THEREFORE, THE DELAY IN GRANT OF THE SAID CERTIFICATE IS CERTAINLY NOT ATTR IBUTABLE TO THE ASSESSEE. THEREFORE, IN OUR OPINION, THE ASSESSEE IS NOT DEFAULTER ON THIS ACCOUNT AND THUS, THE AO HAS ERRE D IN DENYING THE DEDUCTION U/S 80-IB(10) OF THE ACT. ACCORDINGLY , THE ORDER OF THE CIT(A) HAS TO BE REVERSED. THUS, THE GROUNDS RA ISED IN THE APPEAL ARE ALLOWED 13. THE AFORESAID DECISION OF THE TRIBUNAL IS CLEAR LY APPLICABLE TO THE FACTS OF THE PRESENT CASE ALSO. IN THE PRESENT CASE, THE COMPLETION CERTIFICATE WAS APPLIED FOR BEFORE 31-3-2008 I.E. ON 12-3-2008. IT IS UNDISPUTABLE THAT THE APPLICATION OF THE ASSESSEE HAS BEEN APPROVED BY TH E LOCAL AUTHORITY WITHOUT RAISING ANY AMENDMENT OR OBJECTION, AS HAS BEEN ASS ERTED BY THE ASSESSEE ALL ALONG AND THE DELAYED ISSUANCE OF THE COMPLETION CE RTIFICATE BY THE LOCAL AUTHORITY ON 5-5-2008, ALBEIT AFTER THE MANDATED DA TE OF 31-3-2008 CANNOT BE ATTRIBUTED TO THE ASSESSEE. IN THIS BACKGROUND OF T HE MATTER, WE THEREFORE, FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT DENIAL OF DEDUCTION U/S 80-IB(10) ON SUCH SCORE IS UNCALLED FOR. IN CONCLUSION THERE FORE, IN THE INSTANT FACTUAL BACKGROUND, WE HOLD THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITION OF COMPLETING THE CONSTRUCTION OF THE PROJECT WITHIN T HE MANDATED DATE OF 31-3- 2008 EVEN WITH REGARD TO BUILDING E, FOLLOWING TH E PARITY OF THE REASONING LID DOWN IN THE CASE OF HINDUSTAN SAMUTHA AWAS LTD. (SU PRA). . 14. SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(1 0) OF THE ACT REQUIRES THAT THE UNDERTAKING, DEVELOPING AND BUILDING A HOUSING PROJECT COMPLETES SUCH CONSTRUCTION OR BEFORE 31-3-2008. IN THE PRESENT CASE, ASSESSEE HAS FACTUALLY ASSERTED RIGHT FROM THE STAGE OF ASSESSMENT PROCEED INGS, THAT THE CONSTRUCTION OF BUILDING E WAS COMPLETE IN ALL RESPECTS AS PER SANCTIONED PLAN AND ALL THE FLATS WERE HANDED OVER TO THE ACTUAL USERS/CUSTOMER S PRIOR TO 31-3-2008. IN THE BACKGROUND OF THE AFORESAID FACTUAL POSITION WHICH HAS REMAINED UNCONTROVERTED, IN OUR VIEW, ON A PLAIN READING OF SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) THE CONDITION PRESCRIBED THEREIN IS FULFILLED., INASMUCH AS THE CONSTRUCTION OF BUILDING E WAS COMPLETE BEFORE 31 -3-2008. HOWEVER, ON THE READING OF CLAUSE (II) OF THE EXPLANATION BELOW SEC . 80-IB(10)(A) OF THE ACT, IT EMERGES THAT THE COMPLETION OF CONSTRUCTION OF A HO USING PROJECT IS TO BE TAKEN TO BE THE DATE ON WHICH COMPLETION CERTIFICAT E IS ISSUED BY THE LOCAL AUTHORITY, WHICH IN THE PRESENT CASE IS ISSUED ON 5 -5-2008 I.E. BEYOND THE STIPULATED DATE OF 31-3-2008. THE MOOT QUESTION IS IN CASE THE CONDITION OF COMPLETION CONSTRUCTION CONTAINED IN THE SUBSTANTIV E SECTION 80-0IB(10)(A)(I) IS FACTUALLY FOUND TO BE COMPLIED WITH, CAN THE CONTEN TS OF THE EXPLANATION CLAUSE (II) THEREOF, ALTER THE SITUATION? CAN AN EXPLANAT ION APPENDED TO A SECTION, ENLARGE THE SCOPE OF THE MAIN SECTION SO AS TO MAKE IT MORE ONEROUS FOR A TAX- PAYER? BE THAT AS IT MAY, WE DO NOT DWELL ON THIS ASPECT ANY FURTHER, AS THE ASSESSEE HAS BEEN FOUND TO BE ELIGIBLE FOR NECESSAR Y RELIEF BECAUSE THE CONDITION PRESCRIBED IN SECTION 80-IB(10)(A)(I) OF THE ACT HAS BEEN COMPLIED WITH IN VIEW OF THE STATED PRECEDENTS. WE THEREFORE , SET ASIDE THE ORDER OF THE CIT(A) ON THIS ASPECT AND HOLD THAT THE ASSESSEE CA NNOT BE DENIED THE CLAIM OF DEDUCTION U/S 80-IB(10) ON THE STRENGTH OF NON-I SSUANCE OF THE COMPLETION CERTIFICATE FOR BUILDING E BY THE PUNE MUNICIPAL CORPORATION BEFORE 31-3-2008, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 15. NOW WE MAY COME TO THE SECOND OBJECTION TAKEN B Y THE ASSESSING OFFICER IN ORDER TO DENY THE CLAIM OF DEDUCTION U/S 80-IB(10) WHICH IS TO THE EFFECT THAT CERTAIN ADJOINING FLATS IN THE HOUSING PROJECT WERE SOLD TO A SINGLE PERSON OR PERSON BELONGING TO ONE FAMILY AND SUCH F LATS WERE COMBINED BY THE PURCHASER. AS PER THE ASSESSING OFFICER THE BUILT UP AREA OF SUCH FLAT BE CONSIDERED AFTER COMBINING THE SAME AND IN THIS MAN NER THE BUILT UP AREA EXCEEDED 1500 SQ.FT. WHICH WAS VIOLATIVE OF CLAUSE (C) TO SECTION 80-IB(10) OF THE ACT. THE PLEA OF THE ASSESSEE ON THIS ASPECT H AS BEEN THAT THE FLATS WERE SANCTIONED AS INDEPENDENT UNITS; THEY HAVE BEEN SOL D AS SEPARATE UNITS INASMUCH AS SEPARATE SALE DEEDS HAVE BEEN ENTERED I NTO FOR SELLING DIFFERENT FLATS; THAT THE CUSTOMERS FOR THEIR OWN CONVENIENC E HAD COMBINED TWO ADJACENT FLATS INTO A SINGLE FLAT AND, THAT SUCH CO MBINING OF FLATS HAD BEEN DONE BY THE PURCHASERS AFTER THE FLATS WERE HANDED OVER POSSESSION BY THE ASSESSEE. THE ASSESSEE FURTHER POINTED OUT THAT TH E COMMON ENTRANCE GIVEN TO THE FLAT OWNERS WAS A SECURITY MEASURE AND THAT SUCH COMMON AREA WAS NOT SOLD TO ANY PARTICULAR FLAT OWNER. THE AFORESAID S UBMISSIONS HAVE BEEN SUCCINCTLY NOTED BY THE ASSESSING OFFICER ON PAGE 1 2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE P LEA OF THE ASSESSEE, WHICH HAS THEREAFTER BEEN ACCEPTED BY THE CIT(A). AS PER THE CIT(A) THERE WAS NO EVIDENCE PUTFORTH BY THE ASSESSING OFFICER T O DEMONSTRATE THAT THE TWO ADJACENT FLATS HAVE BEEN COMBINED BY THE ASSESSEE B EFORE HANDING OVER POSSESSION TO THE CUSTOMERS. AS REGARD COMMON LOBB Y IN FRONT OF THE TWO ADJACENT FLATS WHICH HAD SINGLE ENTRANCE, THE CIT(A ) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE SAID COMMON ARE A WAS NOT SOLD TO ANY PERSON AND THAT IT WAS ONLY A FACILITY PROVIDED FRO M THE SECURITY POINT OF VIEW. ACCORDINGLY, AS PER THE CIT(A), THE BUILT UP AREA O F THE FLATS HAVE TO BE SEEN INDEPENDENTLY AND NOT AFTER COMBINING THE TWO FLATS FOR THE PURPOSES OF CLAUSE (I) TO SECTION 80-IB(10) OF THE ACT. 16. THE LEARNED DR HAS CONTESTED THE AFORESAID ACTI ON OF THE CIT (A) BY REITERATING THE STAND OF THE ASSESSING OFFICER AS M ANIFESTED IN THE ASSESSMENT ORDER. AS PER THE REVENUE, THE ADJACENT FLATS WHIC H HAVE BEEN COMBINED INTO ONE HAVE A COMMON LOBBY AT THE ENTRANCE AND THEREFO RE, TWO FLATS HAVE TO BE TREATED AS A SINGLE UNIT FOR THE PURPOSE OF COMPUTI NG THE BUILT UP AREA. IT WAS POINTED OUT THAT MERELY BECAUSE THE TWO FLATS WERE SOLD BY DIFFERENT SALE DEEDS WOULD NOT ALTER THE NATURE OF THE PROPERTY INASMUCH AS IT WAS BEING USED AS A SINGLE UNIT BY THE CUSTOMERS. IN THIS MANNER, THE STAND OF THE ASSESSING OFFICER THAT THE BUILT UP AREA HAS TO BE CONSIDERED AFTER COMBINING THE TWO FLATS IS SOUGHT TO BE DEFENDED. 17. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND, POINTED OUT THAT COMBINING OF TWO FLATS WAS CARRIED OUT BY THE CUSTOMERS AND NOT BY THE ASSESSEE AND THE CIT(A) HAS ARRIVED AT A FACTUAL AP PRECIATION OF THE MATTER IN THIS REGARD. THE LEARNED REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT THERE WAS NO NEGATION TO ASSERTION OF THE CIT(A) TH AT THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THE TWO F LATS WERE COMBINED BY THE ASSESSEE-FIRM BEFORE HANDING OVER POSSESSION OF THE CUSTOMERS. ONCE FLATS ARE SOLD AND THE POSSESSION HANDED OVER , THE ASSES SEE CANNOT BE PENALIZED IF THE ACTUAL OWNERS COMBINED THE TWO ADJACENT FLAT S. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE CONDITION PRESCRIBED IN CLAUSE (C) OF SECTION 80-IB(10) IS TH E SUBJECT MATTER OF DISPUTE. AS PER CLAUSE (C) OF SECTION 80-IB(10) A RESIDENTIA L UNIT OUGHT TO HAVE MAXIMUM BUILT UP AREA OF 1500 SQ.FT. SO FAR AS IT I S RELEVANT FOR THE CITY OF PUNE. IN THE CASE BEFORE US, ADMITTEDLY, THE LOCAL AUTHOR ITY HAS SANCTIONED TWO FLATS SEPARATELY AND EVEN IN THE OCCUPATION/COMPLETION CE RTIFICATE ISSUED BY THE PUNE MUNICIPAL CORPORATION, TWO FLATS HAVE BEEN CON SIDERED AS INDEPENDENT UNITS. THE CIT(A) HAS COME TO A FINDING THAT THERE IS NO EVIDENCE TO SHOW THAT THE TWO FLATS HAVE BEEN COMBINED BY THE ASSESSEE AN D THEREAFTER SOLD TO THE CUSTOMERS AS A SINGLE UNIT. IN FACT, THE AFORESAID FINDING HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US AND ACCORDING LY, IT WOULD BE IN THE FITNESS OF THINGS TO HOLD THAT THERE IS NO MATERIAL TO SHOW THAT THE ASSESSEE HAD COMBINED TWO ADJOINING FLATS SO AS TO CONSIDER THEM AS ONE UNIT FOR THE PURPOSE OF EXAMINING THE APPLICABILITY OF CLAUSE (C ) TO SECTION 80-IB(10) OF THE ACT. IT IS ALSO EVIDENT THAT THERE IS NO FINDING, MUCH LESS AN ASSERTION BY THE REVENUE, AT ANY STAGE THAT THE TWO ADJACENT FLATS I F CONSIDERED INDEPENDENTLY HAVE A BUILT UP AREA IN EXCESS OF 1500 SQ.FT. IT I S ALSO NOT THE CASE OF THE REVENUE THAT THE INDEPENDENT FLAT CANNOT BE VIEWED AS A SINGLE UNIT. IN THE ABSENCE OF ANY ASSERTION OF THE REVENUE THAT EACH F LAT IN THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE COULD NOT HAVE BEEN USED AS AN INDEPENDENT OR SELF CONTAINED RESIDENTIAL UNIT NOT EXCEEDING 1500 SQ.FT. OF BUILT UP AREA AND THAT IT WOULD BE A COMPLETE UNIT ONLY IF TWO OR MOR E FLATS ARE COMBINED TOGETHER, THE SAME WOULD NOT LEAD TO AN INFERENCE T HAT THE ASSESSEE HAS NOT FULFILLED CONDITION PRESCRIBED IN CLAUSE (C) OF SEC TION 80-IB(10) OF THE ACT. THE ASSESSEE HAD RELIED UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS PROPOSITION WITH WHICH WE ARE IN COMPLETE AGREEMENT:- I) HAWARE CONSTRUCTIONS (P) LTD. VS. ITO (2011) 64 DTR (MUMBAI) (TRIB) 251. II) EMGEEN HOLDINGS P. LTD. VS. DCIT ITA NO. 3594 A ND 3595/MUM/2009 FOR A.Y. 2003-04 AND 2004-05 DATED29- 7-2011; III) DCIT VS. ARCADE BHOOMI ENTERPRISES ITA NO. 3 66/MUM/2010 FOR A.Y. 2006-07 DATED 12-8-2011. 19. IN THE AFORESAID PRECEDENTS, IT HAS BEEN HELD B Y THE TRIBUNAL THAT IF THERE IS NO EVIDENCE THAT THE BUILDER HAS COMBINED THE FLATS AND THE ADJOINING FLATS ARE COMBINED BY THE CUSTOMERS, THERE WAS NO R EASON TO COMPUTE THE BUILT UP AREA AS REQUIRED FOR CLAUSE (I) OF SECTION 80-IB (10) OF THE ACT AFTER COMBINING THE FLATS. IN THIS VIEW OF THE MATTER, WE ARE THEREFORE, OF THE OPINION THAT THE BUILT-UP OF THE FLATS HAVE TO BE CONSIDERE D INDEPENDENTLY, AS RIGHTLY CONCLUDED BY THE CIT(A). IF SO DONE, IN THE PRESEN T CASE, WE FIND THAT THE CONDITION PRESCRIBED IN CLAUSE (C) TO SECTION 80-IB (10) OF THE ACT IS MET. THEREFORE, ON THIS ASPECT, THE ORDER OF THE CIT(A) IS AFFIRMED. 20. IN THE RESULT, IN SO FAR AS THE APPEALS OF THE ASSESSEE ARE CONCERNED THE SAME ARE ALLOWED AND THOSE OF THE REVENUE ARE DISMI SSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPTEMBER 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 27 TH SEPTEMBER 2012 ANKAM COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. THE ACIT CIR. 3, PUNE 3. THE CIT(A)-II PUNE 4. THE CIT-II PUNE 5. THE D.R, B BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER SR.PS ITAT, PUNE BENCHES, PUNE