M/s.Kundan real estates, Pune V. ITO, Ward 8(2), Pune

ITA 1216/PUN/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62752 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANTO SH KUMAR
• Assessee Lawyers: CHANDRA KANT G DOSHI
• Keywords: Right to appeal
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIALMEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1216/PN/10 & 1057/PN/11 (ASSTT. YEAR: 2006- 07 & 2007-08) M/S KUNDAN REAL ESTATES, .. APPELLANT 206 CHADHA MANSION, PIMPRI, PUNE 411 018 VS. INCOME-TAX OFFICER, .. RESPONDENT WD. 8(2), PUNE APPELLANT BY: S/SHRI SUNIL GANOO & CHANDRAKANT G DO SHI RESPONDENT BY: DR SANT OSH KUMAR DATE OF HEARING : 22.05.2012 DATE OF PRONOUNCEMENT : 26.06.2012 ORDER PER G.S. PANNU, A.M .: THE CAPTIONED APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, PU NE, DATED 25.6.2010 & 13.6.2011 WHICH, IN TURN, HAVE ARISEN FRO M THE RESPECTIVE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07 AND 2007- 08 RESPECTIVELY. 2. IN BOTH THE APPEALS, THE SOLITARY ISSUE ARISING FOR D ETERMINATION IS THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-IB(10) OF TH E ACT WITH RESPECT TO PROFITS RELATING TO THE HOUSING PROJECT UNDERTAKEN B Y THE ASSESSEE. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCU MSTANCES IN BOTH THE ASSESSMENT YEARS ARE COMMON AND THEREFORE, THE APPEA LS WERE HEARD WITH REFERENCE TO THE FACTS ARISING IN RELATION TO THE ASSESSMENT YEAR 2006-07. IN THIS BACKGROUND, WE TAKE UP FOR DISCUSSION THE DISPUTE I N RELATION TO THE FACTS EMERGING FROM RECORD WITH RESPECT TO THE ASSESSMENT Y EAR 2006-07. 3. THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF PROMOTERS, DEVELOPERS AND BUILDERS. DURING THE YEAR UN DER CONSIDERATION, ASSESSEE FIRM UNDERTOOK CONSTRUCTION OF A HOUSING PROJECT AT PIMPLE SAUDAGAR, PIMPRI, TAL. HAVELI, DIST. PUNE, AND THE P ROJECT CONSISTED OF SEVERAL BUILDINGS AS DETAILED IN PARA 3 OF THE ASSESSMENT ORDER. THE ASSESSEE EFFECTED SALES OUT OF THE SAID PROJECT AT RS 1,62,53,965 /- AND COMPUTED PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT DURING THE YEAR AT RS 25,24,677/-. AFTER CLAIMING DEDUCTION OF RS 25,24,677/ - AS PER SECTION 80IB(10) OF THE ACT, THE RETURN OF INCOME WAS FILED A T AN INCOME OF RS 60,000/- REPRESENTING RENTAL INCOME UNDER THE HEAD OTHER SOURCE S. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS NOT FOUND ELIGIBLE FO R THE CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT AND ACCORD INGLY, THE DEDUCTION CLAIMED AT RS 25,24,677/- WAS DENIED AND THE TOTAL INC OME ASSESSED AT RS 25,84,680/-. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALSO UPHELD SUCH DENIAL OF DEDUCTION UNDER SECTION 80-IB(10) AND AS A RESULT, THE ASSESSEE HAS PREFERRED THE CAPTIONED APPEAL BEFORE US. 4. SECTION 80-IB(10) OF THE ACT ALLOWS AN ASSESSEE, A DED UCTION IN RESPECT OF PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO T HE ANY ASSESSMENT YEAR FROM A HOUSING PROJECT WHICH HAS BEEN APPROVED BEFORE 3 1.3.2007 SUBJECT TO THE CONDITIONS PRESCRIBED IN CLAUSES THEREOF. THE RELEVAN T PORTION OF SECTION 80-IB(10) OF THE ACT, AS APPLICABLE FOR THE ASSESSMENT YE AR UNDER CONSIDERATION, IS AS UNDER: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31 ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED 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 DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION,-- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 31 ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY; EXPLANATION FOR THE PURPOSES OF THIS CLAUSE (I) IN A CASE WHERE THE APPROVAL N RESPECT OF THE H OUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUT HORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSI NG PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORI TY; 5. THE DISPUTE BEFORE US ESSENTIALLY REVOLVES AROUND CLA USE (A) TO SECTION 80-IB(10) OF THE ACT. IN TERMS OF CLAUSE (A) DEDUCTION IS AVAILABLE IN RESPECT OF A HOUSING PROJECT WHICH COMMENCES DEVELOPMENT AND CONSTRUCT ION ON OR AFTER 1.10.1998 AND COMPLETES SUCH CONSTRUCTION WITHIN THE PERIO D PRESCRIBED IN SUB- CLAUSES (I) & (II) THEREOF. IN THE CASE BEFORE US , THE CLAIM OF THE ASSESSEE IS THAT ITS HOUSING PROJECT HAS BEEN APPROVED BY THE LOCA L AUTHORITY, I.E. PIMPRI CHINCHWAD MUNICIPAL CORPORATION, PIMPRI (IN SHORT THE PCMC) ON 31.7.2004 AND THEREFORE, THE PERIOD ALLOWED FOR COMPLETION SHA LL BE GOVERNED BY SUB- CLAUSE(II) OF CLAUSE (A) OF SECTION 80-IB(10) OF THE ACT. THUS, AS PER THE ASSESSEE, IT IS ENTITLED TO COMPLETE THE CONSTRUCTION OF THE PROJECT AS PER SUB- CLAUSE (II) OF CLAUSE (A) OF SECTION 80-IB(10) WITHIN F OUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROJECT WAS APPROVED BY PCMC, I.E. UPTO 31.3.2009. ON THE CONTRARY, THE CLAIM OF THE ASSESSING O FFICER IS TO THE EFFECT THAT HAVING REGARD TO THE PRESCRIPTION OF CLAUSE (I) OF THE EXPLANATION BELOW CLAUSE (A) OF SECTION 80IB(10) OF THE ACT REPRODUCED AB OVE, THE DATE OF APPROVAL OF THE HOUSING PROJECT FOR THE PURPOSES OF CLAU SE (A) HAS TO BE WITH REFERENCE TO THE DATE ON WHICH THE BUILDING PLAN OF SUCH A PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. ACCORDING TO THE REVE NUE, IN THE INSTANT CASE, THE APPROVAL GRANTED BY PCMC ON 31.7.2004 IS A REVISE D SANCTION, WHEREAS THE ORIGINAL SANCTION WAS DATED 23.6.2003 AND THEREFOR E, HAVING REGARD TO CLAUSE (I) OF THE EXPLANATION BELOW SECTION 80-IB(10)(A ), THE PERIOD ALLOWED FOR COMPLETION OF CONSTRUCTION IN THIS CASE HAS TO BE IN TER MS OF SUB-CLAUSE (I) OF CLAUSE (A) OF SECTION 80-IB(10) OF THE ACT, AS THE PROJECT IS FIRST APPROVED BY THE PCMC BEFORE 1.4.2004. IN TERMS OF SUB-CLAUSE (I) OF CL AUSE (A) TO SECTION 80- IB(10) OF THE ACT, THE PROJECT IS TO BE COMPLETED BEFO RE 31.3.2008 AND IN THIS CASE, THE SAME HAS NOT BEEN SO DONE. IN VIEW OF THE AFO RESAID RIVAL POSITIONS, IT IS CLEAR THAT THE CRUX OF THE CONTROVERSY IS TO ASCERTAI N THE DATE ON WHICH HOUSING PROJECT OF THE ASSESSEE IS APPROVED BY THE LOCAL AUTHORITY FOR THE PURPOSES OF DETERMINING THE REQUIRED DATE OF COMPLETI ON OF CONSTRUCTION PRESCRIBED- WHETHER THE CONSTRUCTION OF THE PROJECT IS TO BE COMPLETED (I) ON OR BEFORE 31.3.2008 IN TERMS OF SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) AS CANVASSED BY THE REVENUE, OR (II) BY 31.3.2009 ON AP PLICATION OF SUB- CLAUSE (II) OF CLAUSE (A) OF SECTION 80-IB(10) AS CANVASSED BY THE ASSESSEE. IN THIS BACKGROUND, WE MAY NOW PROCEED TO EXAMINE THE RELE VANT FACTS AND THE REASONINGS TAKEN BY THE RIVAL PARTIES FOR THEIR RESPECTIV E STANDS. 6. THE ASSESSEE FIRM ENTERED INTO A DEED OF ASSIGNMENT O F DEVELOPMENT RIGHTS ON 9.7.2004 WITH M/S GANESH CONSTRUCTIONS IN TERM S OF WHICH, ASSESSEE ACQUIRED DEVELOPMENT RIGHTS IN RESPECT OF PROPERTY OF L AND ADMEASURING 0.H 84 R OUT OF SURVEY NO 61/2+3+5+6 LYING AND SITUATE AT VI LLAGE PIMPLE SAUDAGAR, TAL. HAVELI, DIST. PUNE, A COPY OF SUCH AGREEMENT IS PL ACED IN THE PAPER BOOK AT PAGES 30 TO 48. FURTHER, ON THE SAME DAY, I.E. ON 9.7.2004, ASSESSEE ALSO ENTERED INTO A DEED OF ASSIGNMENT OF DEVELOPMENT RIGH TS WITH MR S. B PATIL, WHEREBY IT ACQUIRED THE DEVELOPMENT RIGHTS OF THE PRO PERTY OF LAND ADMEASURING 0.H 20 R OUT OF SURVEY NO. 61/4 LYING AN D SITUATE AT VILLAGE PIMPLE SAUDAGAR, PIMPRI, TAL. HAVELI, DIST. PUNE. NO TABLY, THE TWO PLOTS OF LAND THUS ACQUIRED BY THE ASSESSEE FROM M/S GANESH CONSTRU CTIONS AND MR S B PATIL AS PER THE AFORESAID ASSIGNMENT DEEDS, WERE ADJA CENT. THE ASSESSEE AMALGAMATED BOTH THE PLOTS AND ON THE COMBINED AREA O F 104 R, IT SUBMITTED BUILDING PLANS FOR APPROVAL OF PCMC, WHICH WERE APPRO VED BY PCMC ON 31.7.2004, A COPY OF WHICH HAS BEEN PLACED AT PAGE 83 O F THE PAPER BOOK. THE PRESCRIBED CERTIFICATE TO COMMENCE CONSTRUCTION WAS ISSU ED BY PCMC ON EVEN DATE I.E. 31.7.2004, A COPY OF WHICH HAS BEEN PLA CED AT PAGES 73 TO 82 OF THE PAPER BOOK. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 103 TO 105 OF THE PAPER BOOK WHEREIN IS PLACED COP IES OF THE CERTIFICATE OF COMPLETION OF CONSTRUCTION DATED 31.3.2011 ISSUED BY PCMC WHEREIN THE DATE OF COMPLETION/OCCUPANCY CERTIFICATE HAS BEEN STATED TO BE 20.3.2009. ON THE STRENGTH OF THE AFORESAID, THE CASE MADE OUT BY THE ASSESSEE IS THAT SINCE THE DATE OF APPROVAL BY THE PCMC IS 31.7.2004, ASSESSE E WAS PERMITTED TO COMPLETE THE CONSTRUCTION BY 31.3.2009 AS PER SUB-CLAUSE ( II) OF CLAUSE (A) OF SECTION 80-IB(10) OF THE ACT, AND THEREFORE, THE ASSESSIN G OFFICER WAS NOT CORRECT IN REQUIRING THE ASSESSEE TO COMPLETE THE CONSTRUCTI ON OF THE PROJECT BY 31.3.2008 BY WRONGLY INVOKING SUB-CLAUSE (I) OF CLAUSE (A ) OF SECTION 80-IB(10) OF THE ACT. 7. THE REVENUE HAS SUPPORTED ITS PLEA BY POINTING OUT THAT THE APPROVAL GRANTED BY PCMC ON 31.7.2004 WAS NOT THE FIRST APPROV AL, INASMUCH AS THE PCMC ITSELF HAS STATED THAT IT WAS A REVISED SANCTION OF THE EARLIER SANCTION NO. DP/PS SAUDAGAR/15/2003 DATED 23.6.2003, A COPY OF WHICH HAS ALSO BEEN PLACED IN THE PAPER BOOK AT PAGE 72. OUR ATTENT ION WAS ALSO BEEN DRAWN TO PAGES 63 TO 71 OF THE PAPER BOOK WHEREIN THE CORRESP ONDING CERTIFICATE TO COMMENCE CONSTRUCTION WAS ALSO ISSUED BY PCMC ON 23.6.2003. AS PER THE REVENUE HAVING REGARD TO CLAUSE (I) OF THE EXPLANATIO N BELOW CLAUSE (A) TO SECTION 80-IB(10), THE PROJECT IS DEEMED TO HAVE BEEN A PPROVED ON 23.6.2003 AND THEREFORE, IT OUGHT TO HAVE BEEN COMPLETED BEFOR E 31.3.2008 AS PER SUB- CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) OF THE ACT. AS PER THE REVENUE, THE SANCTION OF THE PCMC DATED 31.7.2004 SOUGHT TO BE RELI ED UPON BY THE ASSESSEE WAS A REVISED SANCTION WHEREAS THE ORIGINAL SANCTIO N WAS DATED 23.6.2003 AND THEREFORE, THE LATTER APPROVAL WAS THE FIRST APPROVAL WHICH HAS TO BE CONSIDERED TO ASCERTAIN THE REQUIRED DATE OF COMPLET ION OF CONSTRUCTION. 8. IN THIS CONTEXT, THE PLEA OF THE ASSESSEE IS THAT THE MERE MENTION OF THE WORD REVISED SANCTION IN THE APPROVAL GRANTED ON 31.7.2 004 IS MISLEADING AND IN SUM AND SUBSTANCE IT IS THE FIRST APPROVAL AND THE ASSESSE E HAD COMMENCED THE CONSTRUCTION OF THE PROJECT ON 31.7.2004 ON LY. THE LEARNED COUNSEL REFERRED TO THE AGREEMENT WITH M/S GANESH CON STRUCTIONS AND POINTED OUT THAT THE SAID FIRM COULD NOT DEVELOP THE SAID PROPERTIES AND, THEREFORE, THE DEVELOPMENT RIGHTS WERE ASSIGNED TO THE ASSESSEE VIDE AGREEMENT DATED 9.7.2004. IT WAS ALSO POINTED OUT THA T THE PCMC SANCTION DATED 23.6.2003 WAS OBTAINED BY M/S GANESH CONSTRUCTIONS, BUT AS THE SAID CONCERN COULD NOT DEVELOP THE PROPERTIES, ASSESSEE ACQUIRED SUCH RIGHTS. THE ASSESSEE FIRM ACQUIRED SUCH RIGHTS AND ALSO FURTHER ACQUIRED LAND OF 20 R AND AMALGAMATED THE TWO PLOTS INTO A SIZE OF 104 R AND TH EREAFTER, ON SUCH AMALGAMATED PLOT, IT SOUGHT PCMC APPROVAL FOR THE IN STANT HOUSING PROJECT AND SUCH APPROVAL IS DATED 31.7.2004. IT WAS, THEREFOR E, CONTENDED THAT THE PROJECT OF THE ASSESSEE WAS ON 104 R AS APPROVED BY THE P CMC ON 31.7.2004 AND IT WAS DIFFERENT FROM THE PROJECT SANCTIONED BY PC MC ON 23.6.2003 WHICH WAS ONLY ON 84 R. THEREFORE, THE ASSESSEE COMMENCED THE CON STRUCTION OF SUCH PROJECT ONLY AFTER 31.7.2004 AND ACCORDINGLY, IT WA S REQUIRED TO COMPLETE THE CONSTRUCTION BY 31.3.2009. ACCORDING TO THE ASSESSEE, THE MENTION OF THE REMARK BY PCMC OF REVISED SANCTION IS OF NO CONSEQUENCE A ND RELIANCE WAS PLACED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBU NAL IN THE CASE OF ACIT V. SHREE OSWAL BUILDERS LTD. VIDE ITA NO 2144/M UM/10 DATED 28.2.2011 IN THIS REGARD. 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE, HAS POINTED OUT THAT THE ASSESSEE WAS WRONG IN ASSERTING THAT AN ALTOGETHER NEW PROJECT WAS SANCTIONED B Y PCMC ON 31.7.2004. AS PER THE LEARNED DEPARTMENTAL REPRESENTA TIVE, BOTH THE SANCTIONED PLANS BEAR THE SAME NUMBER, NAMELY, BP/PSA UDAGAR/15/2003, AND THE PLAN APPROVED ON 31.7.2004 CLEARLY CONTAINS A MARK REVISION TO THE PLAN DATED 23.6.2003. THEREFORE, ACCORDING TO THE LEA RNED DEPARTMENTAL REPRESENTATIVE, PCMC HAS TREATED THE SECOND PLAN TO BE MERELY A REVISED VERSION OF THE FIRST PLAN AND THAT THE ASSESSING OFFICER HAD DULY NOTED IN THE ASSESSMENT ORDER THAT THE DEVELOPMENT CHARGES LEVIED BY P CMC IN RESPECT OF THE FIRST PLAN WAS RS 2,01,150/- WHEREAS IN RESPECT OF TH E REVISED PLAN THE CHARGES LEVIED WERE ONLY TO THE TUNE OF RS 11,819/-. T HIS SHOWS THAT THE LATTER PLAN WAS NOT A NEW PLAN BUT ONLY A REVISION OF THE EA RLIER PLAN. IT IS FURTHER POINTED OUT THAT EVEN IN THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE BUYERS OF FLATS/ROW HOUSES, THE MENTION HAS BEEN MADE OF THE SANCTION BY PCMC DATED 23.6.2003. ON THIS BASIS, IT IS CONTENDED T HAT THE HOUSING PROJECT CONTINUED TO BE THE SAME ONE WHICH WAS APPROVED BY PCM C INITIALLY ON 23.6.2003, NOTWITHSTANDING THE FACT THAT THE BUILDER WHO ULTIMATELY EXECUTED THE PLAN WAS NOT THE SAME WHO OBTAINED THE ORIGINAL A PPROVAL ON 23.6.2003. THEREFORE, ACCORDING TO THE LEARNED DEPARTMENTAL REPR ESENTATIVE, THE ASSESSING OFFICER HAS CORRECTLY GONE BY THE APPROVAL DATE OF 23.6.2003 HAVING REGARD TO CLAUSE (I) OF THE EXPLANATION BELOW CLAUSE (A ) TO SECTION 80-IB(10) OF THE ACT. 10. ON THIS ASPECT, WE HAVE CAREFULLY CONSIDERED THE RIVA L STANDS. FROM THE RELEVANT PROVISIONS OF SECTION 80-IB(10) OF THE ACT, WHI CH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, IT EMERGES THAT THE D ATE OF APPROVAL OF THE PROJECT IS RELEVANT TO ASCERTAIN THE PERMISSIBLE PERIOD OF COMPL ETION OF CONSTRUCTION OR IN OTHER WORDS, THE PRESCRIBED CONDITION OF COMPLETION O F CONSTRUCTION OF THE PROJECT IS TO BE RECKONED FROM THE DATE OF APPROVAL BY THE LOCAL AUTHORITY. IN TERMS OF SUB-CLAUSES (I) AND (II) OF CLAUSE (A) TO SECTI ON 80-IB(10) OF THE ACT, THE ASCERTAINMENT OF DATE OF COMPLETION OF CONSTRUCTION IS LIABLE TO BE DETERMINED WITH REFERENCE TO THE DATE OF APPROVAL BY THE LOCAL AUTHORITY. THE EXPLANATION BELOW CLAUSE (A) SECTION 80-IB(10) OF THE ACT PRESCRIBES THAT 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 B EEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PR OJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. CLAUSE (II) OF THE EXPLANATION F URTHER CLARIFIES THAT 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 HOU SING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. ON THE STRENGTH OF CLAUSE (I) OF THE EXPLANATION, THE REVENUE CONTENDS THAT IN THIS CASE THE FIRST APPROVAL IS D ATED 23.6.2003 AND IT IS WITH REFERENCE TO SUCH DATE, THE DATE OF COMPLETION OF CONSTRUCTION WITH REFERENCE TO SUB-CLAUSE (I) AND (II) OF CLAUSE (A) SECTIO N 80-IB(10) OF THE ACT IS TO BE ASCERTAINED. IN OUR CONSIDERED OPINION, THE POSITI ON CANVASSED BY THE REVENUE MISSES A PERTINENT POINT AS WE PROCEED TO EXPLA IN. THE CLARIFICATION IN CLAUSE (I) OF THE EXPLANATION IS TO BE APPLIED IN A CASE WHERE IN RESPECT OF THE HOUSING PROJECT THE APPROVAL HAS BEEN OBTAINED MORE TH AN ONCE. IN THE INSTANT CASE, THE MOOT POINT IS, CAN IT BE SAID THAT IN RESPECT OF THE HOUSING PROJECT IN QUESTION, HAS APPROVAL BEEN OBTAINED MORE THAN ONCE? IN ORDER TO ANSWER SUCH QUESTION, IT WOULD BE RELEVANT TO EXAMINE THE PR OJECT WHICH HAS BEEN APPROVED BY PCMC ON 31.7.2004 AND FOR THAT MATTER, WE REFER TO PAGE 77 OF THE PAPER BOOK WHEREIN IS PLACED THE CERTIFICATE OF COMM ENCEMENT OF CONSTRUCTION DATED 31.7.2004. AS PER THE SAID CERTIFICATE, THE SANCTION IS GRANTED FOR CONSTRUCTION ON SURVEY NO. 61/2+3+4+5+6 OF PIMPLE SAUDAGAR, PIMPRI CHINCHWAD MUNICIPAL CORPORATION/CITY SURVEY N O 772 AS PER MAHARASHTRA STATE REGIONAL AND CITY PLANNING CODE YEA R 1966 SECTION 44 AND PROVISIONS OF MUMBAI MUNICIPAL CORPORATION CODE 1949 SECT ION 253 AND 254. THE CORRESPONDING SANCTION ON THE BUILDING LAY-OUT PLAN OF EVEN DATE ALSO CONTAINS REFERENCE TO THE BUILDING LAY-OUT AT S.NO 61/ 2+3+4+5+6, C.T.S NO 772 & 773, PIMPLE SAUDAGAR, TAL. HAVELI, PUNE. NOW, WE MAY CONTRAST THIS WITH THE CERTIFICATE TO COMMENCE CONSTRUCTION DATED 23.6. 2003 PLACED AT PAGES 63 TO 72 OF THE PAPER BOOK. CLEARLY, IN TERMS OF THE SAID CERTIFICATE PERMISSION FOR CONSTRUCTION IS ON SURVEY NO.61/2+3+5+6 OF PIMPLE SA UDAGAR, PIMPRI CHINCHWAD MUNICIPAL CORPORATION/CITY SURVEY NO 772 AS PER MAHARASHTRA STATE REGIONAL AND CITY PLANNING CODE YEAR 1966 SECTION 44 AND PROVISIONS OF MUMBAI MUNICIPAL CORPORATION CODE 1949 SECTION 253 AND 254. THE CORRESPONDING SANCTION OF THE LAY-OUT PLAN OF EVEN DATE ALSO CONTAINS REFERENCE TO S.NO. 61/2+3+5+6, C.T.S NO 680, 681, 6 82 & 772, PIMPLE SAUDAGAR TAL. HAVELI, PUNE. THE AFORESAID CLEARLY SHO WS THAT THE HOUSING PROJECT UNDER CONSIDERATION REFLECTED BY THE SANCTION DA TED 31.7.2004 IS DIFFERENT THAN THE PROJECT CONTEMPLATED UNDER PCMC SAN CTION DATED 23.6.2003. THE LATTER SANCTION WAS IN RELATION TO A LA ND AREA OF 104 R REFLECTED BY SURVEY NO. 61/2+3+4+5+6, WHEREAS THE FORMER WAS WIT H REFERENCE TO SURVEY NO. 61/2+3+5+6 CONSTITUTING 84 R OF LAND ALONE. SECONDLY, THE FORMER SANCTION WAS AS PER THE PLAN FORMULATED BY THE EARLIER PERSON, I.E. M/S GANESH CONSTRUCTIONS WHO HAD ULTIMATELY SOLD THE DEVELOPMENT R IGHTS IN SUCH LAND OF 84 R TO THE ASSESSEE. THE FOLLOWING CLAUSES OF THE AGREE MENT DATED 9.7.2004 WITH M/S GANESH CONSTRUCTIONS SUPPORT THE POSITION CANVASSED BY THE ASSESSEE THAT THE CONSTRUCTION WAS NOT COMMENCED, RATHER THE PROJECT REFLECTED BY THE SANCTION DATED 23.6.2003 COULD NOT BE DEVELOPED BY THE ERSTWHILE HOLDER, NAMELY, M/S GANESH CONSTRUCTIONS: AND WHEREAS THE PARTY OF THE FIRST PART ASSIGNOR GOT THE BUILDING PLAN SANCTION FROM PIMPRI CHINCHWAD MUNICIPAL CORPORATION UNDER C OMMENCEMENT CERTIFICATE BEARING NO. DT. OBTAINED ULC ORDER FROM THE COM PETENT AUTHORITY, PUNE URBAN AGGLOMERATION, ON 30.3.1999 IN CASE NO ULC/DESK-II/ 1999 AND ALSO OBTAINED N.A ORDER BEARING NO. PRH/NA/SR/158/III/2003 DT 24.7.20 03; AND WHEREAS DUE TO OTHER BUSINESS ACTIVITIES, THE F IRST PART COULD NOT DEVELOP THE SAID PROPERTIES AND AS SUCH INTENDED TO ASSIGN THE DEVELOPMENT RIGHTS IN PURSUANCE OF THE TERMS AND CONDITIONS OF THE AFORESAID DEVELOPME NT AGREEMENT; AND WHEREAS THE SECOND PART ASSIGNEE APPROACHED T HE ASSIGNOR WITH A PROPOSAL OF ACQUIRING THE DEVELOPMENT RIGHTS IN RESPECT OF T HE SAID PROPERTY WHICH THE ASSIGNOR HAS ACCEPTED ON CERTAIN MUTUALLY AGREED TERMS AND C ONDITIONS; AND WHEREAS, THE PARTIES HERETO ARE DESIROUS OF REC ORDING THE AFORESAID TERMS AND CONDITIONS IN RESPECT OF THE ASSIGNMENT OF DEVELOPM ENT RIGHTS BETWEEN THEM IN THE MANNER HEREINAFTER APPEARING; THEREFORE, IT IS THE ASSESSEE WHO ACQUIRED THE RIGHTS OF DEVELOPMENT AND AFTER HAVING ACQUIRED FURTHER LAND OF 0.H 20 R OUT OF SURVE Y NO. 61/4, AMALGAMATED THE TWO PLOTS AND SOUGHT SANCTION FOR HOUSING PROJECT, WH ICH IS REFLECTED BY PCMC SANCTION DATED 31.7.2004. FACTUALLY, THERE IS NO M ATERIAL ON RECORD TO SAY THAT THE SELLER M/S GANESH CONSTRUCTIONS HAD COMMENCED THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AS S ANCTIONED BY PCMC ON 23.6.2003. IN FACT, IT IS QUITE CLEAR THAT THE LAND OF 84 R WITH M/S GANESH CONSTRUCTIONS WAS ACQUIRED BY THE ASSESSEE IN THE MONTH OF JULY, 2004 AND TILL THE DATE OF SUCH PURCHASE, THERE WAS NO CONSTRUCTION ACT IVITY STATED TO HAVE BEEN COMMENCED BY THE ERSTWHILE PERSON. AS A MATTER OF FACT, THE ASSESSEE FIRM ACQUIRED FURTHER LAND OF 20 R ON THE SAME DATE A ND REVISED THE BUILDING LAY-OUT, WHICH WERE ORIGINALLY PREPARED BY THE ERSTWH ILE HOLDER OF RIGHTS AND THE PLAN SO REVISED (INCLUSIVE OF THE ADDITIONAL LAND OF 20R) GOT SANCTIONED BY THE PCMC ON 31.7.2004 ONLY. IT IS ONLY AFTER THAT DATE, THE ASSESSEE THUS COMMENCED THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSIN G PROJECT IN QUESTION. QUITE CLEARLY, THE PROJECT IN QUESTION IS QUITE DISTINCT AND SEPARATE FROM THE PROJECT REFLECTED BY THE PCMC SANCTION DATED 23.6.2003, IN VIEW OF THE ABOVE FEATURES, WHICH WE HAVE NOTED, THE ASSESSING OF FICER, IN OUR VIEW, HAS BEEN UNDULY INFLUENCED BY THE REMARK REVISED SANCTI ON CONTAINED IN PCMC APPROVAL DATED 31.7.2004. IN FACT, THE EXPLANAT ION TO SECTION 80- IB(10)(A) OF THE ACT PRESSED INTO SERVICE BY THE REVENU E REFERS TO THE APPROVAL GRANTED TO THE SAME HOUSING PROJECT MORE THAN ONCE AND THE SAID EXPLANATION IS NOT RELEVANT IN A CASE WHERE THE APPROV AL IS GRANTED TO DIFFERENT HOUSING PROJECTS. THE AFORESAID PROPOSITION IS IN LINE WI TH THE FOLLOWING PRONOUNCEMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VANDANA PROPERTIS 19 TAXMANN.COM 316 (BOM): RELIANCE PLACED BY THE REVENUE ON THE EXPLANATION TO SECTION 80IB(10)(A) WHICH WAS INTRODUCED WITH EFFECT FROM 1 ST APRIL 2005 IS ALSO MISPLACED. WHAT THE SAID EXPLAN ATION CONTEMPLATES IS THAT WHERE THE APPROVAL IN RESPECT OF A HOUSING PROJECT IS GRANTED MORE THAN ONCE, THEN, THAT HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUS ING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. FOR EXAMPLE, IN RESPECT OF A HOUSI NG PROJECT, THE ASSESSEE MAY SEEK AMENDMENT OF THE BUILDING PLAN AT SEVERAL STAGES OF THE CONSTRUCTION AND THE SAME MAYBE APPROVED. IN SUCH A CASE, THE EXPLANATION PRO VIDES THAT FOR THE PURPOSES OF SECTION 80IB(10) THE HOUSING PROJECT SHALL BE DEEME D TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE FIRST APPROVAL WAS GRANTED BY THE LOCAL AUTHORITY. THUS, THE EXPLANATION TO SECTION 80IB(10)(A) REFERS TO THE AP PROVAL GRANTED TO THE SAME HOUSING PROJECT MORE THAN ONCE AND THE SAID EXPLANATION WOU LD NOT APPLY WHERE THE APPROVAL IS GRANTED TO DIFFERENT HOUSING PROJECTS. IN THE PR ESENT CASE, AS NOTED EARLIER, CONSTRUCTION OF E BUILDING CONSTITUTES AN INDEPEN DENT HOUSING PROJECT AND, THEREFORE, THE DATE ON WHICH THE EARLIER HOUSING PROJECT HAD C OMMENCED CONSTRUCTION COLD NOT BE APPLIED TO THE HOUSING PROJECT CONSISTING OF E BU ILDING MERELY BECAUSE THE CONDITIONS SET OUT WHILE GRANTING APPROVAL TO THE EARLIER HOUS ING PROJECT HAVE ALSO BEEN MADE APPLICABLE TO THE HOUSING PROJECT IN QUESTION. 11. QUITE CLEARLY IN THE PRESENT CASE, FACTUALLY IT IS F OUND THAT THE PROJECT IN QUESTION REFLECTED BY THE SANCTION OF PCMC DATED 31.7.2 004 IS DIFFERENT THAN THE PROJECT INTENDED UNDER PCMC APPROVAL DATED 23.6. 2003, WHICH IN ANY CASE HAS NOT FRUCTIFIED. THEREFORE, IN THIS MANNER, THE EXPLANATION TO SECTION 80-IB(10) OF THE ACT CANNOT BE INVOKED SO AS TO RECKON TH E PERIOD OF COMPLETION OF CONSTRUCTION AS CONTAINED IN CLAUSE (I) OR (II) CLAUSE (A) TO SECTION 80-IB(10) OF THE ACT. IN THIS VIEW OF THE MATTER, IN OUR VIEW, THE APPELLANT IS JUSTIFIED IN ASSERTING THAT IT COMMENCED DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON 31.7.2004 AND NOT ON 23.6.2003 AN D ACCORDINGLY, THE LAST DATE FOR COMPLETION OF CONSTRUCTION HAS TO BE CALCULATED A S PER SUB-CLAUSE (II) OF CLAUSE (A) TO SECTION 80-IB(10) OF THE ACT IN TERMS OF WHICH THE ASSESSEE IS REQUIRED TO COMPLETE THE CONSTRUCTION BY 31.3.2009. 12. BEFORE PARTING, WE MAY REFER TO THE ISSUE OF DEVE LOPMENT CHARGES LEVIED BY PCMC IN THIS CASE, ON THE BASIS OF WHICH IT IS SOUGHT TO BE CANVASSED THAT THE LATTER SANCTION DATED 31.7.2004 HAS BE EN CONSIDERED BY PCMC MERELY A REVISION OF EARLIER ONE, BECAUSE THE DE VELOPMENT CHARGES PAID ON A LATTER DATE IS ONLY RS 11,819/- AS AGAINST PAYMENT OF RS 2,01,150/- IN RESPECT OF THE FIRST PLAN. SECONDLY, IT IS ALSO CANVASSED THAT IN THE AGREEMENT ENTERED INTO BY THE APPELLANT WITH THE BUYERS, IT CONT AINS REFERENCE TO THE PCMC SANCTION OF 23.6.2003 ALSO. ON THESE ASPECTS, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME ARE GOVERNED BY THE REQUIREMENTS OF THE LOCAL LAWS AND ARE NOT RELEVANT FOR THE PRESENT PU RPOSE. IN OUR CONSIDERED OPINION, BOTH THESE ASPECTS ARE NOT DETERMINATIVE OF THE QUESTION BEFORE US. AS PER RELEVANT PROVISIONS OF SECTION 80IB(10) DEDUCTION IS ALLOWABLE IN THE CASE OF AN UNDERTAKING ENGAGED IN DEVELOPING AND BUIL DING HOUSING PROJECTS, IF SUCH UNDERTAKING MEETS WITH THE CONDITION PRESCRIBED I N THE SECTION. IN THE PRESENT CASE, ASSESSEE FIRM IS SUCH AN UNDERTAKING WHICH HAS U NDERTAKEN THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT AT PIMPLE SAUDAGAR, PIMPRI, TAL. HAVELI, DIST. PUNE. THE STATED OBJECTIONS OF THE REVENUE, IN OUR VIEW, ARE NOT GERMANE TO SUPPORT ITS STAND QUA THE DA TE OF COMPLETION OF CONSTRUCTION ENVISAGED IN CLAUSE (A) SECTION 80-IB(10) OF THE ACT. 13. APART THEREFROM, THE ASSESSING OFFICER HAS ALSO REFER RED TO STATEMENT OF A PARTNER OF THE ASSESSEE RECORDED DURING THE COURSE OF A SURVEY ACTION UNDER SECTION 133A OF THE ACT. AS PER THE ASSESSING OFFICER, T HE PARTNER WAS QUESTIONED TO THE EFFECT THAT THE ASSESSEE WAS NOT ENTITL ED TO DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT BECAUSE THE FIRST PLAN WAS APPROVED ON 23.6.2003 AND THE PROJECT HAS NOT BEEN COMPLETED BEFORE 31.3.200 8 AS PER SUB-CLAUSE (I) SECTION 80-IB(10) OF THE ACT. THE ASSESSING OFFICER POINTED OUT THAT IN THE ANSWER TO SUCH QUESTION, THE PARTNER WAS READY TO PAY TA X ON SUCH AMOUNT AND, THEREFORE, IT IS SOUGHT TO BE MADE OUT THAT THE ASSESSEE ADMITTED THAT ITS CLAIM WAS UNTENABLE. IN OUR CONSIDERED OPINION, THE AFO RESAID SITUATION CANNOT BE A GROUND TO DECIDE THE MERITS OF THE ISSUE. IN ANY CA SE, THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN THE RETURN OF INCOME FILED AND BEING AN ISSUE INVOLVING A POINT OF L AW, THE SAME IN OUR CONSIDERED OPINION IS LIABLE TO BE DECIDED IN VIEW OF THE PREVAILING LEGAL POSITION AND NOT AS UNDERSTOOD BY THE ASSESSEE AT CERTAIN POINT OF TIME ALONE. MOREOVER, EVEN THE ANSWER OF THE PARTNER WHICH HAD BE EN REFERRED BY THE ASSESSING OFFICER ALSO CONTAINS AN OBSERVATION THAT THE REA DINESS TO PAY THE TAX WAS SUBJECT TO THE RIGHT TO APPEAL. THIS ITSELF SHOW S THAT THE ASSESSEE AT NO STAGE HAD GIVEN UP ITS RIGHT TO CLAIM DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. THEREFORE, THIS ASPECT OF THE MATTER, IN OUR VIEW , IS ALSO NOT GERMANE TO DECIDE THE CONTROVERSY IN QUESTION. 14. CONSIDERING THE AFORESAID DISCUSSION, IN OUR VIEW, T HE STAND OF THE ASSESSING OFFICER AS MANIFESTED IN THE ASSESSMENT ORDER IN OR DER TO DENY ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-IB(10) OF TH E ACT IS NOT RIGHT AND IS ACCORDINGLY TURNED DOWN. IN THE RESULT, THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS SET ASIDE THE ASSESSING OFFICER IS DI RECTED TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT A S PER LAW. THUS THE ASSESSEE SUCCEEDS ON THIS GROUND OF APPEAL. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2006- 07 IS ALLOWED. 16. THE ISSUE, FACTS AND CIRCUMSTANCES OF THE CASE FOR THE ASSE SSMENT YEAR 2007-08 BEING IDENTICAL TO THOSE FOR THE ASSESSMENT YEA R 2006-07, OUR FINDINGS GIVEN ABOVE WOULD MUTATIS MUTANDIS APPLY TO THE ASSESSM ENT YEAR 2007-08 ALSO. IN THIS VIEW OF THE MATTER, THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS) IS SET ASIDE THE ASSESSING OFFICER IS DIRECTED TO AL LOW THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB(10) OF THE ACT AS PER LAW . 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2007- 08 IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF JUNE, 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 26 TH JUNE, 2012 B COPY TO:- 1) ASSESSEE 2) ITO WD 8(2), PUNE 3) THE CIT (A) V PUNE 4) THE CIT-V PUNE 5) THE D R, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER TRUE COPY SR.PS I.T.A.T., PUNE