M/s. System Enterprises, Pune V. ITO, Ward 4(5), Pune

ITA 1123/PUN/2013

• Counselvise Citation: 112324514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: VIPIN GUJRATHI
• Keywords: Valuation report; Competent authority
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1123/PN/2013 (ASSESSMENT YEAR : 2009-10) SYSTEM ENTERPRISES 206, TAJ HOUSE, 5 M.G. ROAD, PUNE-411001 .. APPELLANT PAN NO. AAFFS5784G VS. ITO, WARD-4(5), PUNE .. RESPONDENT ASSESSEE BY : SHRI VIPIN GUJRATHI REVENUE BY : SHRI A.K. MODI DATE OF HEARING : 26-08-2014 DATE OF PRONOUNCEMENT : 28-08-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14-01-2013 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS AS BUILDER S. IT FILED ITS RETURN OF INCOME ON 28-10-2009 DECLARING TAXABLE IN COME OF RS.2,39,250/- AFTER CLAIMING DEDUCTION OF RS.5,90,1 9,941/- U/S.80IB(10) OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO JUSTIFY THE CLAIM OF DEDUCTION U/S.80IB(10). 2 2.1 FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE THE ASSESSING OFFICER NOTED THAT THE FOLLOWING COMMENCE MENT CERTIFICATES HAVE BEEN ISSUED BY THE PMC : I. NO.2030 DATED 04-01-1997 II. NO.4690 DATED 24-01-2001 III. NO.6816 DATED 16-07-2002 IV. CC/1953/05 DATED 25-08-05 V. CC/3152/06 DATED 02-12-2006 VI. CC/1742/08 DATED 28-08-2009 2.2 HE NOTED THAT THE ASSESSEE HAS RECEIVED PART CO MPLETION (OCCUPANCY) CERTIFICATE IN 3 PARTS WHICH ARE AS UND ER : I. CERTIFICATE PART-I DATED 07-12-2006 FOR 7 ROW HO USES II. CERTIFICATE PART-II DATED 20-06-2008 FOR 28 FLA TS IN BUILDING C. III. CERTIFICATE PART-III DATED 31-10-2009 FOR 28 F LATS IN BUILDING B. IN VIEW OF THE ABOVE, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THIS HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) WHEN THE CONDITIONS LAID DOWN UNDER THE ACT ARE NOT FULFILLED. 3. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE AS SESSEE THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENT ITLED FOR DEDUCTION U/S.80IB(10) BECAUSE IT DOES NOT SATISFY THE CONDIT IONS PRESCRIBED THEREIN. HE NOTED THAT THE FIRST PLAN WAS APPROVED ON 04-01-1997 FOR CONSTRUCTION OF 6 UNITS WHICH WAS REVISED ON 24 -01-2001 FOR CONSTRUCTION OF 34 UNITS, I.E., 28 FLATS AND 6 ROW HOUSES. COMMENCEMENT CERTIFICATE ISSUED ON 16-07-2002 WAS F OR CONSTRUCTION OF 63 FLATS. THIS WAS AGAIN REVISED V IDE COMMENCEMENT CERTIFICATES DATED 25-08-2005, 02-12-2 006 AND 28- 3 08-2009. HE NOTED THAT THE LAST APPROVED PROJECT B UILDING SANCTION PLAN VIDE COMMENCEMENT CERTIFICATE DATED 28-08-2009 WAS APPROVED FOR CONSTRUCTION OF 65 TENEMENTS. THUS, IT IS VERY CLEAR THAT THE HOUSING PROJECT WAS LAST SANCTIONED FOR CO NSTRUCTION OF 65 UNITS WHICH WAS NOT COMPLETED WITHIN THE STIPULATED TIME. ACCORDING TO THE AO EVEN ASSUMING THAT THE COMMENC EMENT DATE OF THE PROJECT IS 25-8-2005, THE HOUSING PROJECT SH OULD HAVE BEEN COMPLETED BY 31-3-2011 AND THE ASSESSEE HAS NOT COM PLETED THE HOUSING PROJECT WITHIN THE STIPULATED PERIOD. THE F INAL COMPLETION (OCCUPATION) CERTIFICATE FOR THE ENTIRE PROJECT HAS NOT BEEN ISSUED BY THE PMC TO THE ASSESSEE. 3.1 THE ASSESSING OFFICER REFERRED TO EXPLANATION ( I) TO SECTION 80IB(10) ACCORDING TO WHICH IN A CASE WHERE THE APP ROVAL IN RESPECT OF HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE O N WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED BY THE LOCAL AUTHORITY. CLAUSE (II) OF THE EXPLANATION PROVIDE F OR THE DATE OF COMPLETION OF CONSTRUCTION SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSI NG PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IN VIEW OF THE ABOVE , THE AO HELD THAT WHAT IS REQUIRED TO BE COMPLETED BY THE ASSESSEE IS THE HOUSING PROJECT IN TOTALITY AND NOT THE INDIVIDUAL FLATS AS CLAIMED BY THE ASSESSEE. 4 3.2 THE ASSESSING OFFICER FURTHER NOTED THAT THE AR EA OF 2 ROW HOUSES, I.E. NO.1 & 7 ARE HAVING AREA OF MORE THAN 1500 SQ.FT. EACH AS PER SANCTIONED BUILDING PLAN. THE ASSESSEE IN R ESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER SUBMITTED A V ALUATION REPORT OF THE GOVERNMENT APPROVED VALUER ACCORDING TO WHIC H THE BUILT UP AREA OF THE ROW HOUSES 1 & 7 ARE 1391 SQ.FT. HO WEVER, THE ASSESSING OFFICER REJECTED THE VALUATION REPORT ON THE BASIS OF THE VALUATION REPORT SUBMITTED BY THE GOVERNMENT REGIST ERED VALUER WHO STATED THAT THE BUILT UP AREA EXCEEDED THE LIMI T OF MAXIMUM BUILT UP AREA OF 1500 SQ.FT. THE SUBMISSION OF THE ASSESSEE TO ALLOW PROPORTIONATE DEDUCTION WAS ALSO REJECTED BY THE AS SESSING OFFICER IN VIEW OF THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. VISWAS PROMOTERS PVT. LTD. REPORTE D IN (2010) 5 ITR (TRIBUNAL) 449 (CHENNAI) AND THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASS OCIATES. IN VIEW OF THE ABOVE AND OBSERVING THAT THE ASSESSEE H AS NOT FULFILLED THE CONDITIONS LAID DOWN IN OTHER SUB-CLAUSE (1) AN D (C) OF SECTION 80IB(10) OF THE ACT, THE ASSESSING OFFICER HELD THA T THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. HE ACCORDINGLY DISALLOWED THE CLAIM MADE BY THE ASSESSEE U/S.80IB( 10). 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A). HOWEVER, THE CIT(A) ALSO WAS NOT FULLY SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. SO FAR AS THE OBSER VATION OF THE ASSESSING OFFICER THAT THE HOUSING PROJECT WAS SANC TIONED FOR 5 CONSTRUCTION OF 65 UNITS WHICH WAS NOT COMPLETED WI THIN THE STIPULATED TIME, HE HELD THAT THE SIZE OF THE PROJE CT COMPRISED OF 63 UNITS ONLY WHICH INCLUDED 56 FLATS AND 7 ROW HOUSES WHICH COULD QUALITY FOR CLAIM OF DEDUCTION U/S.80IB(10) AND NOT 65 UNITS AS HELD BY THE ASSESSING OFFICER. THE REVENUE IS NOT IN AP PEAL BEFORE US ON THIS OBSERVATION OF THE CIT(A). THEREFORE, THE FIRST OBJECTION OF THE ASSESSING OFFICER THAT THE HOUSING PROJECT WAS SANCTIONED FOR CONSTRUCTION OF 65 UNITS WAS NEGATED BY THE CIT(A). 4.1 SO FAR AS THE SECOND OBJECTION OF THE ASSESSING OFFICER THAT THE AREA OF 2 ROW HOUSES, I.E. 1 & 7 ARE HAVING ARE A OF MORE THAN 1500 SQ.FT. EACH AS PER SANCTIONED PLAN, THE LD.CIT (A) RELYING ON VARIOUS DECISIONS HELD THAT BALCONY/TERRACE/PROJECT IONS ARE TO BE EXCLUDED FROM THE BUILT UP AREA. HE ACCORDINGLY HE LD THAT THE OBSERVATION OF THE ASSESSING OFFICER THAT THE 2 UNI TS, 1 & 7 ARE MORE THAN 1500 SQ.FT. IS NOT TENABLE IN VIEW OF THE GIVE N FACTS OF THE CASE AND THE 2 UNITS FULFIL THE CONDITIONS LAID DOWN U/S .80IB(10)(14)(A) OF THE I.T. ACT. THIS OBSERVATION OF THE CIT(A) AL SO IS NOT CHALLENGED BY THE REVENUE, THEREFORE, THE SECOND OB JECTION OF THE ASSESSING OFFICER FOR DENYING THE BENEFIT OF DEDUCT ION U/S.80IB(10) WAS ALSO NEGATED BY THE CIT(A). 4.2 SO FAR AS THE THIRD OBJECTION OF THE ASSESSING OFFICER THAT THE PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED PER IOD, THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICE R BY OBSERVING AS UNDER : 6 3.11 THE THIRD GROUND ON WHICH THE ASSESSING OFFICER H AS BASED HIS REJECTION IS WITH RESPECT TO THE NON-COMPLETION OF THE PROJECT WITHIN THE STIPULATED PERIOD. THE MATERIAL BROUGHT ON RECORD INDICATE THAT THE SAID HOUSING PROJECT HAS BEEN SUBJECT ED TO SUCCESSIVE REVISION OF BUILDING PLANS AND THE FIRST BUILD ING PLAN HAVING BEEN APPROVED ON 04-01-1997, WHICH HAD LAPSE D ON 04-01- 2001 AFTER HAVING BEEN EXTENDED ON A YEAR TO YEAR B ASIS AS PER THE MAHARASHTRA TOWN RELIGIOUS PLANNING ACT, 1966 AND ON THE COMMENCEMENT CERTIFICATE DATED 24-1-2001 THE LAND W AS STILL UNDER URBAN LAND CEILING REGULATION ACT 1976, THERE FORE, NO COMMERCIALLY VIABLE CONSTRUCTION WAS POSSIBLE. HOWEVER, BY THE COMMENCEMENT CERTIFICATE DATED 16-7-2002, APPROVED THE BUILDING PLAN WHEREBY 63 UNITS WERE APPROVED BY THE LOCAL AUT HORITY, HOWEVER, THE AFORESAID APPROVED BUILDING PLAN WAS SUBSE QUENTLY REVISED ON 25-8-2005 AND 2-12-2006 ALTHOUGH THE NUMB ER OF UNITS TO BE CONSTRUCTED REMAINED THE SAME. THEREFORE, THE F IRST APPROVAL FOR THE HOUSING PROJECT AS EMANATING FROM THE MATERIA LS ON RECORD WAS GRANTED BY THE PMC ON 16-7-2002 THOUGH THE APPEL LANT HAS CLAIMED THE BUILDING PLAN APPROVED ON 25-8-2005 TO BE THE FIRST APPROVAL WHEREBY THE CONSTRUCTION OF THE PROJECT STAR TED WITHOUT BRINGING ANY MATERIAL ON RECORD SO AS TO JUSTIFY ITS CL AIM. THE APPELLANT HAS NOT BROUGHT ON RECORD ANY SUCH REASON F OR NOT CONSIDERING THE COMMENCEMENT CERTIFICATE DATED 16-7- 2002 OR THE FIRST APPROVAL GIVEN BY THE LOCAL AUTHORITY DESPITE THE FACT THAT THE NUMBER OF UNITS REMAINED THE SAME IN THE SUBSEQUENT APP ROVALS. THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS FI LED THE BUILDING PLAN APPROVED VIDE CC DATED 25-8-2005 ONLY , THOUGH THE ASSESSING OFFICER HAS MENTIONED IN PARA 9 OF THE ORDER A BOUT THE COMMENCEMENT CERTIFICATE DATED 16.07.2002 WAS FOR CO NSTRUCTION OF 63 FLATS WHICH WAS AGAIN REVISED ON SUCCESSIVE DATES. THE ASSESSING OFFICER HAS TAKEN THE COMMENCEMENT DATE OF THE PROJECT OF 25-8-2005 AS AN ASSUMPTION WITH RESPECT TO THE LAST R EVISION OF THE PLAN ON 28-8-2009 WHEREBY CONSTRUCTION OF 65 TEN EMENTS WAS APPROVED AND IT WAS IN THIS CONTEXT THAT THE STIPU LATED DATE OF COMPLETION HAS BEEN TAKEN AS AT 31-3-2011. THE ASSESSING OFFICER HAS, HOWEVER, RIGHTLY TAKEN THE DATE OF COMMENCEMENT OF THE PROJECT AS AT 16-7-2002 AS THE FIRST APPROVAL HELD TH AT FOR THE 63 UNITS I.E. THE HOUSING PROJECT WAS APPROVED BEFORE 31 ST MARCH 2004 AND THE PROJECT SHOULD HAVE BEEN COMPLETED BEFORE 31 -3-2008. 3.12 THUS, THE ISSUE INVOLVES DATE OF COMPLETION OF THE PRO JECT FOR WHICH SECTION 80IB(10)(A)(I) HAS PRESCRIBED THE TIME LIMIT UPTO 31.03.2008 WHEN THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE 01.04.2004 FURTHER, THE EXPLANATION (II) BELOW SECTION 80IB(10) (A) SPECIFICALLY STATES AS UNDER: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN U NDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEF ORE THE 31ST DAY OF MARCH, 2008, BY A LOCAL AUTHORITY SHALL BE HU NDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVEL OPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER T HE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION,- 7 EXPLANATION '(I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH T HE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVE D BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF TH E HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETIO N CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY;' THEREFORE, THE COMPLETION / OCCUPANCY CERTIFICATE I N RESPECT OF A HOUSING PROJECT HAS TO BE ISSUED BY THE LOCAL AUTHORITY ONLY AS ENVISAGED BY THE PROVISION OF SECTION 80IB(10) OF THE ACT. THERE IS NO AMBIGUITY IN THE LANGUAGE OF THE EXPLANATION WHI CH WOULD LEAD TO OTHER EXPLANATION. THEREFORE, FOR THE PURPOSES OF SECTION 80IB(10)(A) READ WITH EXPLANATION, THE OCCUPANCY / COMPLETION CERTIFICATE WOULD BE RELEVANT TO DETERMINE THE FULF ILLMENT OF THE CONDITIONS GIVEN IN THIS SECTION. IN THE PRESENT CASE, T HE APPROVAL FOR THE PROJECT WAS GRANTED FOR THE FIRST TIME FOR 63 UNITS I.E. 7 ROW HOUSES AND 56 FLAT ON 16.07.2002 VIDE COMMENCEMENT CE RTIFICATE NO. CC 6816 AND, THEREFORE, THE PROJECT OUGHT TO HA VE BEEN COMPLETED BEFORE 31.03.2008. THE APPELLANT HAS NOT B EEN ABLE TO OBTAIN THE REQUISITE CERTIFICATE WITHIN THE TIME LIM IT PRESCRIBED IN THE AFORESAID SECTION OF THE ACT I.E. BEFORE 31.03.20 08 FOR THE 28 FLATS IN BUILDING 'B', WHICH WAS ACTUALLY OBTAINED ON LY ON 31.10.2009, WHICH IS BEYOND THE STIPULATED DATE. THE APPELLANT HAS THUS FAILED TO PRODUCE OR BRING ON RECORD THE 'BHOGV ATA PATRA ANTIM' OR THE 'FINAL OCCUPANCY / COMPLETION CERTIFI CATE' FROM THE LOCAL AUTHORITY FOR THE PROJECT. 3.13 IN VIEW OF THE ABOVE FACT THE CLAIM OF DEDUCTI ON U/S.80IB(10 OF THE ACT, IN THE YEAR UNDER CONSIDERATION HAS RIGHT LY BEEN DISALLOWED BY THE ASSESSING OFFICER DEDUCTION WAS BASED O N THE ABOVE FACT THAT THE PROJECT HAS NOT BEEN COMPLETED W ITHIN THE STIPULATED TIME FRAME U/S.80IB(10)(A) AND, THEREFORE, THE GROUND OF APPEAL NO.1 RAISED BY THE APPELLANT IS LIABLE TO BE DISMISSED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWA NCE OF DEDUCTION OF RS.5,90,19,941/- CLAIMED UNDER SECTION 80IB(10) OF THE I T ACT MADE BY THE INCOME TAX OFFICER, WARD 4(5), PUNE WITHOUT APPRECIATING THE FACTS OF THE CASE IN PROPER PERSPECTI VE AND LAW PREVAILING FOR THE PROJECT UNDER CONSIDERATION. THE APPELLANT HEREBY PRAYS YOUR HONOUR THAT THE CLAIM OF DEDUCTION MAY PL EASE BE ALLOWED. 8 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE DATE OF COMMENCEMENT OF THE PROJECT IS WHEN THE ASSESSEE SUBMITS THE BUILDING PLAN FOR APPROVAL, THE LOCAL AUTHORITY APP ROVES THE PLAN AND THE ASSESSEE COMMENCES THE CONSTRUCTION AS PER THE SAID APP ROVAL. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE APPELLANT COMMENCED THE CONSTRUCTION AS PER THE BUILDING PLAN A PPROVED ON 25 TH AUGUST 2005 AND THEREFORE, THE PRESCRIBED DATE FOR C OMPLETION OF THE PROJECT WAS 31 ST MARCH 2011. THE APPELLANT OBTAINED COMPLETION OF THE LOCAL AUTHORITY ON 31 ST OCTOBER 2009 I.E. BEFORE 31 ST MARCH 2011 AND THEREFORE, THE CONDITION PRESCRIBED U NDER SECTION 80IB(10) (A) WAS COMPLIED BY THE APPELLANT. THE APPE LLANT HEREBY PRAYS THAT THE DEDUCTION CLAIMED UNDER SECTION 80IB(1 0) MAY PLEASE BE ALLOWED. 3) WITHOUT PREJUDICE TO THE ABOVE GROUND OF AP PEAL THE APPELLANT WISHES TO RAISE THE FOLLOWING GROUND OF APPEAL. A) THE LEARNED CIT(A) CONCURRED WITH THE LEARNED AO THAT THE DATE OF THE COMMENCEMENT OF THE HOUSING PROJECT WAS 1 6 TH JULY 2002 I.E. BEFORE 31 ST MARCH 2004. ASSUMING BUT NOT ADMITTING THE DATE OF THE PROJECT COMMENCEMENT IS 26 TH JULY 2002, THE PROJECT OF THE APPELLANT WAS SUBSTANTIALLY COMPLETED B EFORE 31 ST MARCH 2008. SINCE, THE APPELLANT HAS MADE SUBSTANTIAL COMPLIANCE OF THE CONDITIONS THE DEDUCTION SHOULD HAV E BEEN GRANTED. THE LEARNED CIT(A) ERRED IN NOT APPRECIATI NG THE FACT THE SUBSTANTIAL OF THE CONDITIONS WAS ALREADY DONE AND NOT EVERY CONDITION OF THE STATUTE IS MANDATORY AS HELD BY GUJAR AT HIGH COURT IN THE CASE OF CIT VS TARNETAR CORPORATION TAX APPEAL NO. 1241 OF 2001. THE APPELLANT HEREBY REQUESTS YOUR HON OUR TO KINDLY ALLOW THE DEDUCTION. B) THE APPELLANT HAD OBTAINED COMPLETION IN RESPEC T OF 7 ROW HOUSES AND 28 RESIDENTIAL FLATS BEFORE 31 ST MARCH 2008. THE APPELLANT HEREBY, IN ALTERNATE, PRAYS THAT THE DEDUC TION IN RESPECT OF UNITS COMPLETED PRIOR TO 31 ST MARCH 2008 MAY PLEASE BE GRANTED. 4) THE APPELLANT HEREBY RESERVE THE RIGHT TO AD D, AMEND, DELETE OR RAISE ANY ADDITIONAL GROUND OF APPEAL BEFORE OR DURI NG THE COURSE OF HEARING. 5.1 THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROU ND WHICH READS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF D EDUCTION OF RS.5,90,19,941/- WITHOUT APPRECIATING THE FACT AND T HE LEGAL POSITION THAT THE HOUSING PROJECT OF THE APPELLANT WA S APPROVED BEFORE IST APRIL 2005 AND THEREFORE, THE PROVISIONS AM ENDED BY THE FINANCE (NO.2) ACT 2004 ARE NOT APPLICABLE TO THE C ASE OF THE APPELLANT. ACCORDINGLY THE APPELLANT WAS NOT REQUIR ED TO OBTAIN COMPLETION CERTIFICATE BEFORE 31 ST MARCH 2008. THE PROVISION CAME ON STATUTE BOOK BY THE FINANCE ACT 204 W.E.F. 01-04- 2005 AND THE 9 SAID PROVISION IS PROSPECTIVE IN NATURE AND IT HAS NO AP PLICATION TO THE HOUSING PROJECT WHICH WAS APPROVED BY LOCAL AUTHO RITY PRIOR TO 01-04-2005. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO TH E ABOVE GROUND SUBMITTED THAT THE ADDITIONAL GROUND RAISED IS PART OF THE FIRST GROUND OF APPEAL AND IS MORE SPECIFIC AND AS SUCH STRICTLY IS NOT AN ADDITIONAL GROUND OF APPEAL. FURTHER, THIS GROU ND IS PURELY A LEGAL ONE. HE SUBMITTED THAT ALL THE FACTS AND DET AILS WERE BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) AND NO NEW FACTS ARE BEING BROUGHT ON RECORD BY THE ASSESSEE. RELYING O N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC VS. C IT REPORTED IN 229 ITR 383 HE SUBMITTED THAT SINCE THIS ADDITIO NAL GROUND IS PURELY A LEGAL ONE AND NO NEW FACTS ARE REQUIRED TO BE LOOKED INTO FOR ADJUDICATION OF THIS GROUND, THEREFORE, THE SAM E SHOULD BE ALLOWED. 7. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIV E AND CONSIDERING THE ADDITIONAL GROUND BEING A LEGAL ONE , THE SAME IS BEING ADMITTED FOR ADJUDICATION. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET R EFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHD DEVELOPERS LTD. REPORTED IN 362 ITR 177 AND SUBMITT ED THAT THE HONBLE HIGH COURT, FOLLOWING THE DECISIONS OF HON BLE GUJARAT HIGH COURT AND HONBLE KARNATAKA HIGH COURT HAS HEL D THAT AMENDMENT W.E.F. 01-04-2005 REQUIRING CERTIFICATE O F COMPLETION OF PROJECT WITHIN 4 YEARS OF APPROVAL IS NOT APPLICABL E TO PROJECTS 10 APPROVED PRIOR TO THAT DATE AND THEREFORE THE ASSES SEE IS ENTITLED TO DEDUCTION U/S.80IB(10)(A)(II) OF THE I.T. ACT. REF ERRING TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. ITTINA PROPERTIES PVT. LTD. VIDE ITA NO. 5 56/2013, 574 TO 576, 103, 106 & 104/2014 ORDER DATED 15-07-2014 (CO PY ENCLOSED) HE SUBMITTED THAT THE HONBLE KARNATAKA HIGH COURT IN THE SAID DECISION HAS HELD THAT THE PROVISIONS OF SECTION 80 IB(10)(1) CAME TO THE STATUTE BOOK BY THE FINANCE ACT, 2004 W.E.F. 01 -04-2005. IT HAS BEEN HELD THAT THE SAID PROVISION IS PROSPECTIVE IN NATURE AND IT HAS NO APPLICATION TO HOUSING PROJECTS WHICH WERE APPRO VED BY THE LOCAL AUTHORITY PRIOR TO 01-04-2005. HE ACCORDINGLY SUBM ITTED THAT THE BENEFIT U/S.80IB(10) CANNOT BE DENIED TO THE ASSESS EE ON THE GROUND THAT THE ASSESSEE DOES NOT COMPLY WITH THE TERMS OF SECTION 80IB(10). HE SUBMITTED THAT SINCE THE LD.CIT(A) HAS GIVEN A FINDING THAT APPROVAL FOR THE PROJECT WAS GRANTED O N 16-07-2002 WHICH IS PRIOR TO THE AMENDMENT BROUGHT BY THE FINA NCE ACT, 2004 W.E.F. 01-04-2005, THEREFORE, IN VIEW OF THE DECISI ONS CITED (SUPRA), THE ASSESSEE IS ENTITLED TO GET THE BENEFIT OF DEDU CTION U/S.80IB(10). 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBM ITTED THAT SINCE THE ASSESSEE HAS FAILED TO PRODUCE OR BRING ON RECO RD THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY FOR COMPLETION OF THE PROJECT BEFORE 31-03-2008, THEREFORE, THE ASSESSEE IS NOT E NTITLED TO DEDUCTION U/S.80IB(10). HE ACCORDINGLY SUBMITTED T HAT THE APPEAL FILED BY THE ASSESSEE SHOULD BE DISMISSED. 11 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE DENIED THE BE NEFIT OF DEDUCTION U/S.80IB(10) ON 4 COUNTS (A) THE HOUSING PROJECT LA ST SANCTIONED WAS FOR THE CONSTRUCTION OF 65 UNITS WHICH HAS NOT BEEN COMPLETED IN THE STIPULATED TIME FRAME, (B) THE BUILT UP AREA OF 2 R OW HOUSES 1 & 7 ARE MORE THAN 1500 SQ.FT. EACH (C) THE HOUSING PROJ ECT WAS REQUIRED TO BE COMPLETED IN TOTALITY AND NOT INDIVIDUAL FLAT S AND (D) THE CONDITION LAID DOWN IN SECTION (A) AND (B) OF 80IB( 10) OF THE ACT WAS NOT FULFILLED. 10.1 SO FAR AS THE FIRST 2 OBJECTIONS ARE CONCERNED , WE FIND THE LD.CIT(A) HAS DECIDED THE ABOVE ISSUES IN FAVOUR OF THE ASSESSEE. WE FIND THE CIT(A) HAS HELD THAT THE SIZE OF THE PR OJECT COMPRISE OF 63 UNITS ONLY WHICH INCLUDED 56 FLATS AND 7 ROW HOU SES WHICH COULD QUALITY FOR THE CLAIM OF DEDUCTION U/S.80IB(10) AND NOT 65 UNITS AS HELD BY THE ASSESSING OFFICER (PARA 3.6 OF THE ORDE R). SIMILARLY, HE HAS HELD THAT THE AREA OF THE 2 UNITS, I.E. 1 & 7 A RE LESS THAN 1500 SQ.FT. AFTER EXCLUDING TERRACE, BALCONY AND PROJECT IONS ETC., AND THEREFORE THE 2 UNITS FULFIL CONDITIONS PRESCRIBED U/S.80IB(10)(14)(A) OF THE I.T. ACT. THE ABOVE OBSERVATIONS OF THE LD. CIT(A) ARE NOT CHALLENGED BY THE REVENUE AND THEREFORE IT HAS ATTA INED FINALITY AND THEREFORE WE ARE NOT CONCERNED WITH THE ABOVE OBJEC TIONS OF THE ASSESSING OFFICER. 12 10.2 THE OTHER GROUND ON WHICH THE ASSESSING OFFICE R BASED HIS REJECTION OF DEDUCTION U/S.80IB(10) IS THAT THE ASS ESSEE HAS NOT BEEN ABLE TO OBTAIN THE REQUISITE COMPLETION CERTIFICATE /OCCUPANCY CERTIFICATE WITHIN THE TIME LIMIT PRESCRIBED IN THE PROVISIONS OF SECTION 80IB(10) FOR ALL THE FLATS/UNITS WHICH IN T HE INSTANT CASE IS 31-03-2008 AND THE ASSESSEE HAS OBTAINED THE CERTIF ICATE ONLY ON 31- 10-2009 WHICH IS BEYOND THE STIPULATED DATE. WE FI ND THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE DATE OF COMMENCEMENT OF THE PROJEC T AS 16-07- 2002. IN OTHER WORDS, THE HOUSING PROJECT WAS APP ROVED BEFORE 31- 03-2004 AND THEREFORE ACCORDING TO BOTH OF THEM THE PROJECT SHOULD HAVE BEEN COMPLETED BEFORE 31-03-2008. 10.3 WE FIND THE HONBLE DELHI HIGH COURT IN THE CA SE OF CHD DEVELOPERS LTD. (SUPRA) HAS OBSERVED AS UNDER (SHO RT NOTES) : SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961, BEF ORE SUBSTITUTION BY THE FINANCE (NO. 2) ACT, 2004 ALLOWED A HUNDRED PER CENT, DEDUCTION OF THE PROFITS IN THE CASE OF AN UNDERTAKIN G DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE MARCH 3 1, 2005, BY A LOCAL AUTHORITY. BY THE FINANCE (NO. 2) ACT, 2004 , WITH EFFECT FROM APRIL 1, 2005, THE CONDITIONS FOR GRANT OF DEDUCTION WERE THAT IN A CASE WHERE A HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY BETWEEN APRIL 1, 2004 AND MARCH 31, 2005, THE PROJE CT SHOULD BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINA NCIAL YEAR IN WHICH IT IS APPROVED BY THE LOCAL AUTHORITY. CLAUSE ( II) OF THE EXPLANATION PROVIDED THAT THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJ ECT IS ISSUED BY THE LOCAL AUTHORITY. THE ASSESSEE, A REAL ESTATE DEVE LOPER, OBTAINED APPROVAL FOR A HOUSING PROJECT ON MARCH 16, 2005, FROM THE DEVELOPMENT AUTHORITY. IT COMPLETED THE PROJECT IN 2008 AND BY LETTER DATED NOVEMBER 5, 2008 APPLIED TO THE COM PETENT AUTHORITY FOR THE ISSUE OF THE COMPLETION CERTIFICATE . FOR THE ASSESSMENT YEAR 2007-08, ITS CLAIM TO DEDUCTION UNDER SEC TION 80- IB(10) OF THE INCOME-TAX ACT, 1961 WAS DENIED INTER ALIA, ON THE GROUND THAT THE ASSESSEE HAD VIOLATED THE CONDITIONS STI PULATED UNDER SECTION 80-IB(10) INASMUCH AS IT HAD NOT OBTAINE D THE COMPLETION CERTIFICATE FOR THE PROJECT FROM THE COM PETENT AUTHORITY WITHIN FOUR YEARS AS STIPULATED IN EXPLANATION (II) TH ERETO. THE 13 COMMISSIONER (APPEALS) UPHELD THE ASSESSMENT ORDER. THE TRIBUNAL HELD THAT THE ASSESSEE WAS EXPECTED TO COMPLETE THE PROJECT IN ACCORDANCE WITH THE APPROVED PLAN AT A P ARTICULAR POINT OF TIME AND THE ASSESSEE WAS NOT EXPECTED TO DO OR TO FU LFIL THE CONDITIONS WHICH WERE NOT IN EXISTENCE AT THE RELEVAN T POINT OF TIME OR MADE COMPULSORY BY AMENDMENT IN THE ACT FROM THE FUTURE DATE. SINCE THE ASSESSEE WAS TO COMPLETE THE PROJECT ON OR BEF ORE MARCH 31, 2009, AND A REQUEST WAS DULY MADE WITH THE COMPET ENT AUTHORITY ON NOVEMBER 5, 2008, MENTIONING THAT THE PROJECT HAD BEEN COMPLETED AND THE COMPLETION CERTIFICATE MAY B E ISSUED AND IF THE CERTIFICATE WAS NOT ISSUED BY THE COMPETENT AUTHOR ITY THE ASSESSEE SHOULD NOT BE PENALISED THEREFORE UNLESS AND UNTIL SOME CONTRARY FACTS WERE BROUGHT ON RECORD EVIDENCING THA T THE ASSESSEE CONTRAVENED THE CONDITIONS CONTAINED IN THE APPROVAL GRANTED BY SUCH COMPETENT AUTHORITY. HOWEVER, SINCE THE APPROVAL WAS GRANTED TO THE ASSESSEE ON APRIL 1,2005, THE ASSESSEE WAS N OT EXPECTED TO FULFIL THE CONDITIONS WHICH WERE NOT ON THE STATUTE WHEN SUCH APPROVAL WAS GRANTED TO THE ASSESSEE. THE TRIBU NAL ACCEPTED THE ASSESSEE'S CLAIM TO DEDUCTION UNDER SECTION 80-IB(10). ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE APPROVAL FOR THE PROJECT WAS GIVEN BY THE DEVELOPMENT AUTHORITY ON MARCH 16, 200 5. CLEARLY THE APPROVAL RELATED TO THE PERIOD PRIOR TO 2005, I.E., BEFORE THE AMENDMENT, WHICH INSISTED ON ISSUANCE OF THE COMPLETION CERTIFICATE BY THE END OF THE FOUR-YEAR PERIOD, WAS BROUGHT INTO FORCE. THE APPLICATION OF SUCH STRINGENT CONDITIONS, W HICH ARE LEFT TO AN INDEPENDENT BODY SUCH AS THE LOCAL AUTHORITY WHO I S TO ISSUE THE COMPLETION CERTIFICATE, WOULD HAVE LED TO NOT ONLY HARDSHIP BUT ABSURDITY. AS A CONSEQUENCE, THE TRIBUNAL WAS NOT, THER EFORE, IN ERROR OF LAW WHILE HOLDING IN FAVOUR OF THE ASSESSEE. 10.4 WE FIND THE HONBLE KARNATAKA HIGH COURT IN TH E CASE OF M/S.ITTINA PROPERTIES PVT. LTD. (SUPRA) WHILE DECID ING AN IDENTICAL ISSUE HAS OBSERVED AS UNDER (PARA 4/PAGE 6 OF THE ORDER): 4. INSOFAR AS QUESTION NOS. 3 AND 4 ARE CONCERNED, IT RELATES TO THE ASSESSEE COMPLYING WITH THE REQUIREMENTS PROVIDED UN DER SUB- SEC.(1) OF SEC.80 IB BEFORE IT COULD CLAIM THE BENEF IT PROVIDED UNDER SEC. 80 IB. THE SAID PROVISION CAME ON THE STATUTE BOO K BY FINANCE ACT 2004, WITH EFFECT FROM 1/4/2005. THE PLAN WHICH IS SANCTIONED IN THIS CASE IS OF 16/3/2004 I.E., PRIOR TO THE SAID P ROVISION COMING INTO FORCE. THIS COURT IN MORE THAN ONE CASE HAS HELD THAT THE SAID PROVISION IS PROSPECTIVE IN NATURE AND IT HAS NO APPLIC ATION TO HOUSE PRODUCTS WHICH WAS APPROVED BY THE LOCAL AUTHORI TY PRIOR TO 1/4/2005. IN THAT VIEW OF THE MATTER, THE BENEFIT U NDER SEC. 80 IB CANNOT BE DENIED TO THE ASSESSEE ON THE GROUND THAT HE DOES NOT COMPLY WITH THE TERMS OF SEC.80 IB(10). 5. IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THEY HA VE COMPLIED WITH THE SAID STATUTORY REQUIREMENT ALSO. AS THE SAID PROVISION HAS NO APPLICATION TO THE FACTS OF THE CASE, THE QUESTION OF GOING TO THE QUESTION WHETHER THOSE STATUTORY REQUIREM ENTS HAVE 14 BEEN COMPLIED WITH OR NOT, WOULD NOT ARISE AND THE T RIBUNAL RIGHTLY EXTENDED THE SAID BENEFIT. IN THAT VIEW OF THE MATT ER, WE DO NOT SEE ANY MERIT IN THE APPEALS AND THE SAID QUESTIONS OF LAW ARE ANSWERED IN THE SENSE THAT THE SAID PROVISION HAS NO APPL ICATION TO THE FACTS OF THIS CASE. 10.5 SINCE THE DATE OF THE COMMENCEMENT OF THE PROJ ECT IN THE INSTANT CASE IS ADMITTEDLY 16-07-2002 AS HELD BY TH E ASSESSING OFFICER AS WELL AS THE CIT(A), THEREFORE, RESPECTFU LLY FOLLOWING THE DECISIONS CITED (SUPRA) IT HAS TO BE HELD THAT AMEN DMENT W.E.F. 01- 04-2005 REQUIRING CERTIFICATE OF COMPLETION OF PROJ ECT WITHIN 4 YEARS OF APPROVAL IS NOT APPLICABLE TO THE PROJECTS APPROVED PRIOR TO THAT DATE AND THEREFORE THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) OF THE I.T .ACT. 10.6 SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROU ND, WE REFRAIN OURSELVES FROM ADJUDICATING THE OTHER GROUNDS RAISE D BY THE ASSESSEE SINCE THESE BECOME ACADEMIC IN NATURE 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28-08-2014. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 28 TH AUGUST, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE