INCOME TAX OFFICER, UDAIPUR V. AASAN AFFORDABLE HOUSING LLP, UDAIPUR

ITA 149/JODH/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3510 (ITAT-JODHPUR)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-01-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 09-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 2; 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 Income Tax Officer Udaipur [PAN: ABIFA 8690 H] (Appellant) Vs. Aasan Affordable Housing LLP, Udaipur (Respondent) Appellant by Sh. Amit Kothari, CA. Respondent by Sh. Shailendra Sharma, CIT DR Date of Hearing 23.01.2024 Date of Pronouncement 07.03.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by revenue is arising out of the order of the National Faceless Appeal Centre (NFAC), Delhi dated 17/03/2023 [here in after NFAC ] for assessment year 2020-21 which in turn arise from the order dated 26.09.2022 passed under section 143(3) r.w.s. 144B of the Income Tax Act, by AO. 2. In this appeal, the revenue has raised following grounds: - I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 2 “1. Whether on the facts and circumstances of the case, the ld. CIT(A), NFAC Delhi was justified in allowing the appeal of the assessee by deleting the addition of disallowance of deduction of Rs. 3,83,12,436 made by the AO, u/s 80IBA of the Act, 1961.” 3. Succinctly, the fact as culled out from the records is that the assessee is running real estate business and disclosed high closing stock as compared to turnover. Whether the assessee has adopted correct accounting standards in respect of recognition of revenue and correctly declared income may be verified. The assessee had claimed deduction under section 80 IBA of the Income Tax Act. The ld. AO has disallowed the entire deduction claimed of Rs. 3,83,12,436/- as the completion certificate produced by the assessee is not from the competent authority. 3.1 The case of the assessee selected to verify the return of income on the grounds on the reasons that the assessee claimed deductions u/s 80IA / 80IAB /80IAC / 80IB/80IC/ 80IBA/ 80ID/ 80IE /10A/ 10 AA by the assessee during the current assessment year is significantly more than the deductions claimed under these sections during the preceding Assessment Year. There is a possibility that assessee has claimed wrong deduction in order to reduce its profit/taxable income. Therefore, I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 3 the genuineness of deduction claimed be verified. Further assessee has shown high liabilities in balance sheet as compared to low income / receipt declared in ITR Genuineness of liabilities declared may be verified. The assessee is running real estate business and disclosed high closing stock as compared to turnover. Whether the assessee has adopted correct accounting standards in respect of recognition of revenue and correctly declared income be verified. As the assessee had claimed deduction u/s. 80IBA of the Act the assessee was asked to produce the completion certificate as required under section 80IBA (2) (b). The assessee produced the completion certificate from Mr. Sandeep Bhawsar, Architect, citing the Rule 20 read with rule 16.2 of Model Rajasthan (Urban Area) Building Regulation 2020 issued by Ministry of Urban Development & Housing Department, Government of Rajasthan on dated 12.11.2020. Therefore, a show cause notice was issued and the reply of the assessee was also obtained. The ld. AO did not find the reply of the assessee satisfactory on the issue that Model Rajasthan (Urban Area) Building Regulations 2020 had authorized the empanelled architect to issue the completion certificate as per norms prescribed under Model Rajasthan (Urban Area) Building Regulations 2020, is not considered as acceptable in the case of the assessee, the competent authority was Nagar Vikas Paranyas, Udaipur i.e. Urban Improvement I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 4 Trust, Udaipur and the said rules have laid a clear cut procedure for getting a completion certificate from same as per provision of Rule. Thus, as per discussion mentioned above, as the assessee has not been able to provide a valid completion certificate as required under section 80-IBA (2) (b) (ii) of the Income Tax Act, 1961, hence the benefit of the deduction available under section 80-IBA cannot be allowed to the assessee for the relevant year. Thus, in the absence of completion certificate from the empowered competent authority, as required under section 80IBA of the Income Tax Act, 1961, the disallowance of deduction of claim u/s. 80IBA for Rs 3,83,12,436/- is made in the case of the assessee. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “6. Decision of CIT(A) 6.1 I have gone through the submission of the appellant and the assessment order. The appellant is engaged in the business of real estate and is eligible for 80IB deduction. However, during the year under consideration, the learned AO disallowed deduction under section 80IB claimed by the appellant because the appellant did not opt certificate of completion of project from same authority (named – Nagar Vikas Paranyas, Udaipur i.e. Urban Improvement Trust) who had issued approval to begin the project. 6.2 The Project had commenced on 06/09/2017 and it got completed on 05/09/2022. I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 5 6.3 The appellant produced a completion certificate from Mr. Sandeep Bhawsar, Architect, citing the Rule 20 read with Rule 16.2 of Model Rajasthan (Urban Area) Building Regulations 2020 issued by Ministry of Urban Development & dated 12.11.2020. 6.4 (Urban The appellant submitted that Rajasthan Govt. vide Model Rajasthan Area) Building Regulations 2020 had nominated Mr/ Sandeep Bhawsar to issue project completion certificate. 6.5 The provision of rule 20 of said regulations is reproduced hereunder: Hkou ekufp= Lohd`fr] Hkou iw.kZrk izek.k i= ,oa vf/kokl izek.k i= tkjh djus gsrq rduhdhfoKksa dk iathdj.k (Registration of Architects):- eq[; uxj fu;kstd] jktLFkku }kjk Hkou ekufp= Lohd`fr] Hkou iw.kZrk izek.k i= ,od vf/kokl izek.k i= tkjh djus vFkok bu fofu;eksa ls lEcfU/kr fdlh vU; fo"k; gsrq okLrqfon ,oa flfoy baftfu;jksa dh vgZrkvks dks fu/kkZj.k dj bu fofu;eksa ds rgr vuqKk tkjh djus ds fy, vf/kd`r fd;k tk ldsxk rFkk mlds fy, izfdz;k dk fu/kkZj.k fd;k tk ldsxkA 6.6 The above provision clearly mentions that designated engineer shall be appointed to issue completion certificate. 6.7 Further, the certificate issued by Mr. Sandeep also mentions that he is empanelled architect for issuance of completion and occupancy certificate and his registration number is CTP/Raj/Architect/2021/79. 6.8 The contention of appellant are considered. The provision of section 80IB are reproduced hereunder: 80IBA (2): For the purposes of sub-section (1), a housing project shall be a project which fulfils the following conditions, namely:- (a) the project is approved by the competent authority after the 1st day of June, 2016, but on or before the 31st day of March, 39(2022): (b) the project is completed within a period of five years from the date of approval by the competent authority: 80IBA (6) - For the purposes of this section,- (a) "carpet area" shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (b) "competent authority" means the authority empowered to approve the building plan by or under any law for the time being in force; 6.9 Upon reading of relevant provisions of the Act, it is clear that approval shall be obtained from competent authority which means authority empowered to approve building plan. However, in the underlined case, the Rajasthan Govt. has delegated such powers to empaneled Architects and pursuant to which project completion is determined and accepted by Rajasthan Govt. as well. I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 6 6.10 The requirement of completion certificate under provision of Income Tax Act are intended to ensure that time lines of finishing the project is met by the eligible person. IN the underlined case, the appellant has completed the project in such time lines and the same is not disputed by the learned AO. The dispute mainly arises only on the ground that whether Mr. Sandeep shall construed to be a competent authority or not. 6.11 Having regard to provisions of Model Rajasthan (Urban Area) Building Regulations 2020, and intent of Income Tax Act, I am of the considerate view that the certificate issued by Mr. Sandeep is conclusive in nature and also accepted by Rajasthan Govt. The same shall not be disputed under Income Tax Act. 6.12 Therefore, the addition made by learned AO is not found to be in line with intention of Income Tax Act and hence deleted. 6.13 Accordingly, the appeal of the appellant is Allowed.” 5. Feeling dissatisfied from the order of the ld. CIT(A), the revenue has preferred the present appeal on the grounds as stated herein above challenging the finding of the ld. CIT(A). In respect of the sole ground about the allowability of the deduction claimed by the assessee the ld. DR is heard who has relied upon the finding recorded in the order of the ld. assessing officer and vehemently argued that the assessee has not placed on record the completion certificate from the competent authority and therefore, the claim of the assessee rightly been denied and prayed to consider that finding of the ld. AO while deciding this appeal. 6. On the other hand, the ld. AR of the assessee supported the order of the ld. CIT(A) and reiterated the similar contentions as raised before I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 7 the ld. CIT(A) to the contentions so raised he has relied upon the submission made before the ld. CIT(A) and also support the contention so raised by making reliance on the following evidences: S. No. Particulars Page No. 1 Submission to ld. CIT(A) 1-5 2 Completion certificate by the Architect and UIT Udaipur letter 6-9 3 Payment of Charges to UIT Udaipur 10-14 4 Completion certificate by the Architect 15-57 7. We have heard the rival contentions and perused the material placed on record. The apple of discord in the matter whether the assessee is eligible to get the deduction based on the completion certificate of project which is different from the authority who has issued the approval to begin the project. In the case of the assessee the project permission was granted on 06.09.2017 by the Competent Authority Nagar Vikas Paranyas, Udaipur i.e. Urban Improvement Trust, Udaipur. Whereas the completion certificate was issued on 05.09.2022 by Mr. Sandeep Bhawsar, Architect, under rule 20 read with rule 16.2 of Model Rajasthan (Urban Area) Building Regulations 2020 issued by Ministry of Urban Development & Housing Department, Government of Rajasthan dated 12.11.2020. The ld. AO has the view in the matter that section 80IBA of the Income Tax Act clearly defines who the competent authority and he hold that the competent authority is that authority who is I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 8 empowered to approve the building plan, but in the case the assessee has obtained the completion certificate from the Architect and he is of the view that Architect is not authorised to issue the completion certificate to the assessee and thereby he has denied the claim of the assessee u/s. 80IBA for an amount of Rs. 3,83,12,436/-. The assessee has challenged the finding of the ld. AO before the ld. CIT(A), who in this case is National Faceless Appeal Center (NFAC). The NFAC vide order dated 17.03.2023 hold that : 6.9 Upon reading of relevant provisions of the Act, it is clear that approval shall be obtained from competent authority which means authority empowered to approve building plan. However, in the underlined case, the Rajasthan Govt. has delegated such powers to empaneled Architects and pursuant to which project completion is determined and accepted by Rajasthan Govt. as well. 6.10 The requirement of completion certificate under provision of Income Tax Act are intended to ensure that time lines of finishing the project is met by the eligible person. IN the underlined case, the appellant has completed the project in such time lines and the same is not disputed by the learned AO. The dispute mainly arises only on the ground that whether Mr. Sandeep shall construed to be a competent authority or not. 6.11 Having regard to provisions of Model Rajasthan (Urban Area) Building Regulations 2020, and intent of Income Tax Act, I am of the considerate view that the certificate issued by Mr. Sandeep is conclusive in nature and also accepted by Rajasthan Govt. The same shall not be disputed under Income Tax Act. 6.12 Therefore, the addition made by learned AO is not found to be in line with intention of Income Tax Act and hence deleted. The bench noted, that the ld. AO through the ld. DR did not bring anything contrary that the completion certificate issued by Shri Sandeep I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 9 Bhawasar is not full and final certificate of completion of the Project of the assessee and the same is not approved by the State Government. The object and purpose of granting the deduction is to promote the sector and to see that the promotional measure is completed in the permitted time line which in this case is not disputed. The ld. AO only disputed in this case that the completion certificate issued by Shri Sandeep Bhawsar is the person who has not issued the sanction of the project. Moreover, the ld. AO was also of the view that as per the certificate of registration granted to Mr. Sandeep, he is authorize to approve building plans for all land area up to 2500 sq. mt. Whereas in the case of the assessee the area of project is more than that ceiling the ld. AO noted that Mr. Sandeep is not competent authority and therefore, the deduction was denied. Before the ld. CIT(A) the assessee submitted a detailed submission based on that submission and considering the facts placed before the ld. CIT(A), he is of the view that the requirement of completion certificate under provision of Income Tax Act are intended to ensure that time lines of finishing the project is met by the eligible person. In the case on hand the assessee has placed on record the completion certificate of project in such time lines and the same is not disputed by the learned AO even before us. Thus, the dispute mainly arises only on the ground that whether Mr. Sandeep shall construed to I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 10 be a competent authority or not, for which we have gone through the provisions of Model Rajasthan (Urban Area) Building Regulations 2020, and intent of Income Tax Act, we are of the considered view that the certificate issued by Mr. Sandeep is conclusive in nature and also accepted by Rajasthan Government which we believe so in the absence of the contrary material placed on record and thus, we hold that the said completion certificate issued by Mr. Sandeep Bhawar can not be disputed to grant the deduction to the assessee. Thus, we do not find any infirmity in the findings so recorded by the ld. CIT(A) / NFAC and the appeal of the revenue fails on merits and the same is dismissed. 8. In the result, the appeal of the revenue is dismissed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judcial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy I.T.A. No. 149/Jodh/2023 Assessment Year: 2020-21 11 By order Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order