DCIT, CHENNAI V. Arihant Foundations & Housing Ltd., CHENNAI

ITA 1280/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90636 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-05-2015
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . !' , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NOS.1280 & 1281/MDS./2015 ( # ' %' / ASSESSMENT YEARS : 2005-06 & 2007-08) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI 600 034. VS. M/S.ARIHANT FOUNDATIONS & HOUSING LTD., 271,POONAMALLEE HIGH ROAD, CHENNAI 600 010 . PAN AAACA 7402 P ( &' /APPELLANT) ( ()&' / RESPONDENT ) / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE, AGGRI EVED BY THE SEPARATE ORDER OF THE LEARNED COMMISSIONER OF INCOM E-TAX(A)-I, CHENNAI FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO. 339/13-14/A-1 &' * + / APPELLANT BY : MR.SANKARALINGAM, CIT, D.R ()&' * + /RESPONDENT BY : MR.DEVENDRA KUMAR BHANDAR, C.A * , / DATE OF HEARING : 14.07.2015 -% * , /DATE OF PRONOUNCEMENT : 22.07.2015 2 ITA NO.1280,1281/MDS./2015 & FOR THE ASSESSMENT YEAR 2007-08 ITA NO.338/13-14/ A-1 BOTH THE ORDERS PASSED UNDER SECTION 143(3) R.W.S 147 OF THE ACT ON 23.01.2015. SINCE THE ISSUES IN BOTH THE APPEALS A RE COMMON, THEY ARE CLUBBED & HEARD TOGETHER AND DISPOSED OF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED THREE IDENTICAL & ELABOR ATE GROUNDS IN BOTH THE APPEALS; HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD ERRED IN ALLOWING THE DEDUCTION U/S.80-IB OF THE ACT BY HOLDING THAT THE COMPLETION CERTIFICATE GIVEN BY THE CORPORATION OF CHENNAI WOU LD SUFFICE FOR THE PURPOSE OF COMPLIANCE OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY, ENGAGED IN THE BUSINESS OF REAL ESTATE AND CONSTRUC TIONS, FILED ITS RETURN OF INCOME ON 29.11.2005 FOR A.Y.2005-06 AND ON 31.10.2007 FOR A.Y 2007-08 ADMITTING ITS INCOME AS ` 1,89,94,760/- AND RS. 13,05,16,782/- RESPECTIVELY. THE LD. ASSESSING OFF ICER REJECTED THE CLAIM OF DEDUCTION U/S.80-IB OF THE ACT FOR THE SIMPLE REASON THAT 3 ITA NO.1280,1281/MDS./2015 THE ASSESSEE HAS NOT PRODUCED THE COMPLETION CERTIF ICATE FROM THE CMDA, WHICH IS THE STATUTORY APPROVING AUTHORITY FO R THE CONSTRUCTION OF THE BUILDING, BUT ONLY PRODUCED THE COMPLETION C ERTIFICATE FROM THE LOCAL PANCHAYAT/CORPORATION OF CHENNAI. ON APPEAL THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ITA NO.1326/MDS./2011 DATED 13.1.12 BY HOLDING THAT THE COMPLETION CERTIFICATE FROM CMDA IS NOT MANDATORY A ND THE COMPLETION CERTIFICATE ISSUED BY THE CORPORATION OF CHENNAI WOULD SUFFICE, SINCE IT CAN BE CONSIDERED AS THE LOCAL AU THORITY FOR THE PURPOSE OF SECTION.80-IB(10) OF THE ACT. 4. BEFORE US THE LD. A.R. REITERATED THE SUBMISSIO N MADE BEFORE THE LD. CIT (A) AND POINTED OUT THAT THE ISSUE IS C OVERED BY THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN TH E ASSESSEES OWN CASE IN ITA NOS.1326 & 1327/MDS./2011 FOR THE ASSES SMENT YEARS 2006-07 & 2008-09 VIDE ORDER DATED 13.01.2012 WHERE IN THE TRIBUNAL HELD THAT THE LD. CIT (A) WAS CORRECT IN REACHING A T THE CONCLUSION THAT THE LOCAL AUTHORITY WILL INCLUDE CORPORATION OF CHENNAI. LD. D.R ON THE OTHER HAND SUBMITTED THAT IT WAS MANDATORY F OR THE ASSESSEE 4 ITA NO.1280,1281/MDS./2015 TO PRODUCE COMPLETION CERTIFICATE FROM THE APPROPRI ATE AUTHORITY AND IN THE CASE OF THE ASSESSEE THE APPROPRIATE AUTHORITY IS CMDA. IT WAS THEREFORE PLEADED THAT THE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THE ORDER OF THE LD. ASSESSING OFFICER MAY BE C ONFIRMED. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. THE CRUX OF THE ISS UE IN THIS APPEAL IS THAT FOR CLAIMING THE BENEFIT OF SECTION.80-IB OF T HE ACT WHETHER THE COMPLETION CERTIFICATE ISSUED BY CMDA IS ESSENTIAL OR THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL PANCHAYAT OR CORPOR ATION OF CHENNAI WOULD SUFFICE. ON THIS ISSUE WE ARE REMINDED OF TH E RECENT DECISION RENDERED BY THIS TRIBUNAL IN ITA NO.1623 & 1775/MDS ./2012 & ITA NO.1689/MDS./2012 VIDE ORDER DATED 29.05.2015 WHERE IN IT WAS HELD THAT THE COMPLETION CERTIFICATE ISSUED BY CMDA IS E SSENTIAL BECAUSE THEY ARE THE AUTHORITY WHO GRANTS PLANNING PERMISSI ON/APPROVAL FOR THE CONSTRUCTION OF THE PROJECT AND THE MATTER WAS REMITTED BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR VERIFICAT ION. THE GIST OF THE ORDER IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 5 ITA NO.1280,1281/MDS./2015 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON E ITHER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE ALSO CAREF ULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE F OR ASSESSMENT YEARS 2006-07 AND 2008-09. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80- IB(10) ON PERCENTAGE COMPLETION METHOD. THE ASSESSI NG OFFICER DISALLOWED THE CLAIM ON THE GROUND THAT THE PLANNIN G PERMISSION WAS OBTAINED FROM CMDA, THEREFORE, THE COMPLETION CERTI FICATE HAS TO BE OBTAINED ONLY FROM CMDA AND NOT FROM CHENNAI CORPOR ATION. THIS TRIBUNAL IN ITS ORDER DATED 13.01.2012 FOUND THAT LOCAL AUTHORITY WILL INCLUDE A MUNICIPAL COMMITTEE, PANCHAYAT AND CANTON MENT BOARD. THEREFORE, THE COMPLETION CERTIFICATE ISSUED BY CHE NNAI CORPORATION IS SUFFICIENT COMPLIANCE OF THE REQUIREMENT OF THE ACT . THIS TRIBUNAL HAS ALSO MADE A REFERENCE THAT CMDA ALONE WAS NOT THE AUTHOR ITY TO ISSUE BUILDING PERMITS AND COMPLETION CERTIFICATES AND REFERRING T O OFFICIAL WEBSITE OF CHENNAI CORPORATION, THE TRIBUNAL HELD THAT BUILDIN G PERMITS WERE ALSO ISSUED BY CHENNAI CORPORATION. 18. THE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLA NNING ACT, 1971 WAS NOT BROUGHT TO THE NOTICE OF THE EARLIER BENCH OF T HIS TRIBUNAL. UNDER THE PROVISIONS OF TAMIL NADU TOWN & COUNTRY PLANNING AC T, 1971, IN RESPECT OF PLANNING, THE CMDA ALONE HAS POWER AND JURISDICT ION TO GRANT PLANNING PERMISSION. HOWEVER, BY EXERCISE OF STATUTORY POWER , THE CMDA DELEGATES ITS POWER TO LOCAL AUTHORITY INCLUDING CHENNAI CORP ORATION AND OTHER MUNICIPAL CORPORATION, PANCHAYAT, ETC. TO GRANT PLA NNING PERMISSION IN RESPECT OF BUILDING WITH GROUND + ONE FLOOR. IF THE CONSTRUCTION EXCEEDS MORE THAN GROUND + ONE FLOOR, THE APPROVAL OF CMDA IS ESSENTIAL WITHIN THE CITY OF CHENNAI. ADMITTEDLY, THE PROJECT CONSTRUCTE D WAS WITHIN THE CITY OF CHENNAI AND WHAT WAS CONSTRUCTED BY THE ASSESSEE WA S MULTISTORY BUILDING EXCEEDING THREE FLOORS. THEREFORE, THE PLA NNING PERMISSION HAS TO 6 ITA NO.1280,1281/MDS./2015 BE OBTAINED ONLY FROM THE CMDA AND NOT FROM CHENNAI CORPORATION. ONCE THE PLANNING PERMISSION IS TO BE OBTAINED ONLY FROM CMDA, THE AUTHORITY WHO GRANTS THE APPROVAL / PLANNING PERMISSION HAS T O GIVE THE COMPLETION CERTIFICATE. THEREFORE, IT WOULD NOT BE CORRECT TO SAY THAT THE COMPLETION CERTIFICATE OBTAINED FROM CHENNAI CORPORATION ALSO IS SUFFICIENT COMPLIANCE OF THE ACT. IN THIS CASE, SUBSEQUENTLY THE ASSESSEE HAS OBTAINED COMPLETION CERTIFICATE FROM THE CMDA ALSO. IN FACT, THAT CERTIFICATE WAS PRODUCED BEFORE THE CIT(APPEALS). THEREFORE, THE GE NUINENESS OF THE CERTIFICATE NEEDS TO BE VERIFIED BY THE ASSESSING O FFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF DEDUCTION UNDER SECTION 80-IB(10) IS REMITTED BACK TO THE FIL E OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE COMPLETION CERTIFICATE OBTAINED BY THE ASSES SEE FROM THE CMDA AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. FROM THE ABOVE IT IS EVIDENT THAT IT IS MANDATORY O N THE PART OF THE ASSESSEE TO OBTAIN COMPLETION CERTIFICATE IN REGARD TO THE BUILDINGS OF SPECIAL AND MULTI-STORIED BUILDINGS. THERE ARE VARI OUS NORMS PRESCRIBED FOR COMPLIANCE BY THE MONITORING COMMITT EE OF THE CMDA TO CERTIFY THAT THE BUILDING IS CONSTRUCTED AS PER THE PLANNING PERMISSION APPROVED BY THE CMDA. THEREFORE, THE APP ROPRIATE AUTHORITY FOR CERTIFYING THE COMPLETION OF PROJECT AS PER THE APPROVED 7 ITA NO.1280,1281/MDS./2015 PLAN IS CMDA. THESE FACTS WERE NOT CONSIDERED BY T HE TRIBUNAL IN ITS EARLIER ORDER. THEREFORE, FOLLOWING THE RECENT DEC ISION OF THE TRIBUNAL IN ITA NO.1623/1775/1689/MDS./2012, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD. ASSESSING OFFICER WITH RESP ECT TO BOTH THE APPEALS OF THE ASSESSEE IN ORDER TO VERIFY WHETHER THE ASSESSEE IS IN POSSESSION OF THE COMPLETION CERTIFICATE ISSUED BY CMDA FOR CLAIMING THE BENEFIT OF SECTION.80-IB(10) OF THE ACT AND THE REAFTER PASS APPROPRIATE ORDER IN THE LIGHT OF THE RECENT DECISI ON OF THE TRIBUNAL IN ITA NO.1623/1775/1689/MDS./2012 VIDE ORDER DATED 29 .05.2015. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. ORDER PRONOUNCED ON 22 ND JULY, 2015 AT CHENNAI. SD/- SD/- (V. DURGA RAO) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND JULY,2015. K S SUNDARAM . * (#,01 21%, /COPY TO: 1. PETITIONER 2. ()&' /RESPONDENT 3. 3, () /CIT(A) 4. 3, /CIT 5. 16! (#,# /DR 6. !7' 8 /GF