Deputy Commissioner of Income-tax, V. Kamdhenu Real Estate Pvt. Ltd., Pune

ITA 1512/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0421 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Assessee Lawyers: VIPIN GUJRATHI
• Keywords: Business expenditure; Cost of acquisition; Assessment record; Commercial expediency
• Section: 54B; 80IB; 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1525/PN/2014 '% % / ASSESSMENT YEAR : 2010-11 KAMDHENU REAL ESTATES PVT. LTD., 320, MUTHA COMMERCE HOUSE, SHANKERSETH ROAD, PUNE 411037 PAN : AAACK6835G . /APPELLANT V/S ACIT, CIRCLE11(1), PUNE . /RESPONDENT . / ITA NO.1512/PN/2014 '% % / ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE11(1), PUNE . /APPELLANT V/S KAMDHENU REAL ESTATES PVT. LTD., 320, MUTHA COMMERCE HOUSE, SHANKERSETH ROAD, PUNE 411037 PAN : AAACK6835G . /RESPONDENT ASSESSEE BY : SHRI VIPIN GUJRATHI REVENUE BY : SHRI ANIL KUMAR CHAWARE, CIT / ORDER PER R.K.PANDA, AM : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE AS SESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTE D AGAINST THE ORDER DATED 31-01-2014 OF THE CIT(A)-I, PUNE RELATING T O ASSESSMENT / DATE OF HEARING :30.11.2016 / DATE OF PRONOUNCEMENT: 30 .11.2016 2 ITA NO.1525 & 1512/PN/2014 YEAR 2010-11. FOR THE SAKE OF CONVENIENCE, BOTH THE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. IT FILED ITS RETURN OF INCOME ON 08-10-2010 DECLARING TOTAL INCOME OF RS.68,52,9 80/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 IB(10) AMOUNTING TO RS.1,47,49,415/- IN ITS RETURN OF INCOME IN RES PECT OF HOUSING PROJECT NAMELY, 'KAMDHENU SIDDHI' BEING DEVELOPED BY THE ASSESSEE AT KOTHRUD, PUNE. THE ASSESSEE WAS CALLED UPON TO DEMONSTRATE THAT ALL THE CONDITIONS LAID DOWN UNDER SECTIO N 80IB(10) OF THE I.T. ACT WERE COMPLIED WITH BEFORE CLAIMING THE DEDUCTION. 3. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY HAS ENTERED INTO THE FOLLOWING DEVELOPMENT AGREEMENTS FOR DEVELOPMENT OF PLOT OF L AND AT S.NO. 54/5 AND 54/6B, KOTHRUD, DISTRICT PUNE. THE DETAILS O F THE DEVELOPMENT AGREEMENTS ENTERED INTO AS SUBMITTED BY TH E ASSESSEE ARE AS FOLLOWS: SR. NAME OF THE LAND DEVELOPMENT AGREEMENT AND S . NO. AND AREA OF THE NO. OWNERS DATE OF EXECUTION LAND 1 SOU. YAMUNABAI DEVELOPMENT AGREEMENT S. NO. 54/5/1(1) AND BABAS MOKATE EXECUTED ON 21/02/05 54/5/1, PLOT O F LAND AND OTHERS REGISTERED WITH SUB REGISTRAR, ADMEAS URING ABOUT HAVELI - IV, AT SERIAL NO 3708.50 SQ MTRS, 1198/2005. 2 SMT. HIRABAI DEVELOPMENT AGREEMENT S. NO. 54/6 , PLOT OF LAND TUKARAM BORATE EXECUTED ON 10/07/03 ADMEASURING ABOUT AND OTHERS REGISTERED WITH SUB REGISTRAR, 1000 S Q MTRS. HAVELI-IV, AT SERIAL NO 5841/2003. 4. THE ASSESSEE FURNISHED A COPY OF ABOVE DEVELOPMENT AG REEMENTS BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED T HAT THE 1 ST BUILDING PLAN WAS SANCTIONED BY PUNE MUNICIPAL CORPORATION O N 03- 3 ITA NO.1525 & 1512/PN/2014 04-2006 AND THE BUILDING PLANS HAVE BEEN REVISED FROM TIME TO TIME, THE DETAILS OF WHICH ARE AS FOLLOWS: S.NO. DATE OF COMMENCEMENT / REVISION COMMENCEMENT CERTIFICATE NO. 1 3RD APRIL, 2006. CC/0019/06 2 25TH JULY, 2006. C/OO19/06 3 29TH MARCH, 2007. CC/4664/06 5. THE ASSESSEE ALSO FURNISHED A COPY OF THE COMMENCEME NT CERTIFICATES ISSUED FROM TIME TO TIME BY PUNE MUNICIPAL CORP ORATION, COPY OF THE DEVELOPMENT PLAN ISSUED BY DEPUTY CITY ENGINE ER, PUNE MUNICIPAL CORPORATION, COPY OF FIRST BUILDING PLAN APPROVED BY PUNE MUNICIPAL CORPORATION ON 03-04-2006. IT WAS CLAIMED THAT T HE TOTAL AREA OF THE PLOT OF LAND ON WHICH THE ASSESSEE WAS DEVELO PING HOUSING PROJECT IS 4700.00 SQUARE METERS AND IS MORE THAN ONE ACRE. THE PROJECT 'KAMDHENU SIDDHI' CONSISTS OF 2 WINGS NAMELY A A ND B AND THE NUMBER OF FLATS, CONTAINED IN EACH WING IS AS FOLLOWS: BUILDING/WING NO. OF FLATS WING A 31 FLATS WING B 30 FLATS 6. IT WAS CLARIFIED BY THE ASSESSEE THAT THE PROJECT DO ES NOT INCLUDE ANY SHOPS AND/OR COMMERCIAL ESTABLISHMENT AND THE BUILT U P AREA OF SIX LARGEST/BIGGEST FLATS (FLAT NO 203, 20B, 403, 40B, 603 AND 60B OF BUILDINGS) IN THE HOUSING PROJECT IS 1308 SQUARE FEET. IT WAS SUBMITTED THAT THE 1 ST BUILDING PLAN OF THE HOUSING PROJECT WAS APPROVED ON 3-04- 2006 AND THE ASSESSEE COMPANY HAS COMMENCED DEVELOPIN G AND CONSTRUCTING THE PROJECT DURING THE FINANCIAL YEAR 2006-07. 7. WITH REGARD TO THE COMPLETION OF THE PROJECT THE ASS ESSEE SUBMITTED THAT PUNE MUNICIPAL CORPORATION HAS GRANTED CO MPLETION CERTIFICATE TO THE PROJECT IN TWO PHASES. THE ASSESSEE C OMPANY HAD 4 ITA NO.1525 & 1512/PN/2014 APPLIED FOR THE FIRST COMPLETION CERTIFICATE ON 16-08-2010. TH E FIRST COMPLETION CERTIFICATE NO.OOC/0512110 DATED 11TH OCTOBER 2010 WAS GRANTED IN RESPECT OF 46 FLATS WITH REFERENCE TO ITS APPLICATION DATED 16/08/2010, THE ASSESSEE COMPANY APPLIED FOR SECO ND (FINAL) COMPLETION CERTIFICATE ON 27TH MARCH 2012. THE FINAL COMPLETIO N WAS GRANTED VIDE CERTIFICATE NO. OCC/0547/12 DATED 21 ST JULY 2012 IN RESPECT OF 15 FLATS WITH REFERENCE TO ITS APPLICATION DATED 27TH MARCH 2012. COPIES OF COMPLETION CERTIFICATES ISSUED BY PUNE MUNICIP AL CORPORATION WERE ALSO FILED BEFORE THE ASSESSING OFFICER. IT W AS SUBMITTED THAT THE ASSESSEE COMPANY HAS OBTAINED AUDIT REPORT IN FORM NO 10CCB IN RESPECT OF DEDUCTION CLAIMED UNDER SEC TION 80IB(10) OF THE INCOME TAX ACT. IT WAS ACCORDINGLY ARGUE D THAT SINCE ALL THE CONDITIONS LAID DOWN UNDER SEC. 80IB(10) ARE DULY C OMPLIED WITH, THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION CLAIMED. 8. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT TH E APPROVAL IN RESPECT OF THE SAID HOUSING PROJECT WAS GRANTED BY THE LOCAL AUTHORITY FOR THE FIRST TIME VIDE COMMENCEMENT CERTIFICATE DATED 03-0 4-2006 AND THEREFORE AS PER SUB-CLAUSE (III) OF THE CLAUSE (A) OF SECTION 80IB (10) OF THE I.T. ACT, 1961, THE SUBJECT PROJECT SHOULD HAVE BE EN COMPLETED WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY, I.E. O N OR BEFORE 31-03-2012. ADVERTING TO EXPLANATION (II) BELOW CLAUSE (A) OF TH E SECTION 80IB(10), THE ASSESSING OFFICER ALSO OBSERVED THAT T HE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING PROJECT HAS TO BE T AKEN AS THE DATE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY AND AS SUCH THE COMPLETION CERTIFICATE OUGHT TO HAVE BEE N OBTAINED ON OR BEFORE 31-03-2012. BUT ADMITTEDLY, THE FINAL COMPLETION C ERTIFICATE IN RESPECT OF THE PROJECT WAS ISSUED BY THE PUNE MUNICIP AL CORPORATION 5 ITA NO.1525 & 1512/PN/2014 ON 21-07-2012. HE THEREFORE ASKED THE ASSESSEE TO SHO W CAUSE AS TO WHY THE CLAIM MADE BY THE ASSESSEE U/S 80IB(10) SHOULD N OT BE DISALLOWED. 9. THE ASSESSEE REITERATED THAT THE FIRST COMPLETION CER TIFICATE NO. OCC/0512/10 DATED 11TH OCTOBER 2010 WAS GRANTED IN R ESPECT OF 46 FLATS WITH REFERENCE TO IT APPLICATION DATED 16-08-2010 AND THE FINAL COMPLETION CERTIFICATE WAS GRANTED VIDE CERTIFICATE NO. OCC/0 547/12 DATED 21ST JULY 2012 IN RESPECT OF 15 FLATS WITH REFERENCE TO ITS APPLICATION DATED 27TH MARCH 2012. THE ASSESSEE COMPANY APPLIED FOR THE FINAL COMPLETION OF THE PROJECT ON 27TH MARCH 2012 AN D PUNE MUNICIPAL CORPORATION GRANTED COMPLETION CERTIFICATE ON 21 ST JULY 2012 WITH REFERENCE TO THE APPLICATION DATED 27TH MARCH 2012. IT WAS FURTHER STATED THAT AS PER RULE NO 7.6 OF THE DEVELOPMEN T CONTROL RULES OF PMC, THE DEVELOPER/ BUILDER IS REQUIRED TO SUBMIT T HE APPLICATION FOR OCCUPANCY ALONG WITH THE COMPLETION CERTIFICAT E ISSUED BY THE ARCHITECT IN PRESCRIBED FORM. AFTER THE RECEIPT OF APPLICATION THE OCCUPANCY CERTIFICATE IS EITHER GRANTED OR REJECTED BY P MC AND IN CASE OF REJECTION THE OBJECTIONS/ REASONS ARE COMMUNICATED T O THE DEVELOPER/ ARCHITECT. IT WAS ALSO STATED THAT AS PER RU LE 7.7 OF D C RULE OF PMC PUNE IN CASE NO OBJECTION IS RAISED WITHIN 21 D AYS OF THE APPLICATION, THE OCCUPANCY CERTIFICATE IS DEEMED TO HAVE BE EN GRANTED. IT WAS POINTED OUT THAT SINCE PMC DID NOT RAISE ANY OB JECTION IN ASSESSEE'S CASE, THE COMPLETION CERTIFICATE IS DEEMED TO HAVE BEEN GRANTED WITHIN TIME. IN SUPPORT OF THIS CONTENTION, THE AS SESSEE COMPANY RELIED ON THE DECISION OF THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF SATISH BORA AND ASSOCIATES ITA NO. 713 & 714/PN/2010. 10. THE ASSESSEE FURTHER SUBMITTED THAT THE ARCHITECT HAS ISSUED COMPLETION CERTIFICATE ON 27TH MARCH 2012 AND THE ASSESS EE HAS FILED 6 ITA NO.1525 & 1512/PN/2014 THE REQUISITE FORM TO PUNE MUNICIPAL CORPORATION INTIMATING T HE COMPLETION OF THE PROJECT. IT WAS CLAIMED THAT THE SAID CE RTIFICATE / INTIMATION WAS ACCEPTED BY THE PMC WITHOUT ANY AMENDMENTS/OBJECTIONS AND THE PMC HAS NOT RAISED ANY QUERY ON THE QUALITY OF THE CONSTRUCTION OF THE BUILDING OR THE COMPLETIO N OF THE SAME AS PER THE PLANS APPROVED BY PMC. PMC HAS GRANTE D THE FINAL COMPLETION CERTIFICATE ON 21 ST JULY 2012 WITH REFERENCE TO THE APPLICATION DATED 27TH MARCH 2012 AND THE DELAY IN OBTAIN ING THE COMPLETION CERTIFICATE IS CERTAINLY NOT ATTRIBUTABLE TO THE ASSESSEE AND OBTAINING THE SAID CERTIFICATE BEFORE 31-03-2012 WAS BEYON D THE CONTROL OF THE ASSESSEE. IT WAS ARGUED THAT FOR CLAIMING D EDUCTION U/S 80IB(10), THE ASSESSEE IS REQUIRED TO COMPLETE THE HOUSING PROJECT IN ACCORDANCE WITH THE APPROVED PLANS AND INTIMATE THE SAM E TO THE LOCAL AUTHORITY BY WAY OF FILING REQUISITE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHITECT, WHO IS AN EXP ERT IN THE MATTER. IT WAS SUBMITTED THAT THE ASSESSEE CANNOT COM PEL THE LOCAL AUTHORITY TO ISSUE COMPLETION CERTIFICATE WITHIN PARTICULAR TI ME FRAME AND THE ISSUE OF COMPLETION OF THE PROJECT IS SQUARELY CO VERED BY THE PUNE TRIBUNAL JUDGMENT IN THE CASE OF HINDUSTAN SAMUHA AW AS LIMITED VS. ITO ITA NO. 945 TO 950/PN/2010. IT WAS FURTHE R SUBMITTED THAT IN THE FOLLOWING CASES, THE DIFFERENT BENCHES OF THE TRIB UNAL HAVE DECIDED THE ISSUE UNDER CONSIDERATION IN FAVOR OF THE ASSESSEE. 1. SANGHVI AND DOSHI ENTERPRISE VS. ITO 141 TTJ 1 (CHENNA I), 2. ITO VS. KHYATI FINANCIAL SERVICES 6 TAXMANN 56 (MUMBA I) 3. GLOBAL REALTY VS. ITO 134 ITD 407 (INDORE) 4. SATISH BORA AND ASSOCIATES VS. ACIT, ITA NO. 713 AND 714 /PN/201 0 (PUNE) 11. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH TH E ARGUMENTS ADVANCED BY THE ASSESSEE. HE NOTED THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE 7 ITA NO.1525 & 1512/PN/2014 CASE OF HINDUSTAN SAMUHA AWAS LIMITED (SUPRA) AND SATISH B ORA AND ASSOCIATES (SUPRA) AND HAS PREFERRED APPEAL BEFORE THE HO NBLE BOMBAY HIGH COURT. THEREFORE, THE ISSUE HAS NOT ATTAINED FINALITY. HE ACCORDINGLY REJECTED THE CLAIM OF DEDUCTION OF RS.1,47,49,415 /- MADE BY THE ASSESSEE U/S.80IB(10). 12. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMEN T PROCEEDINGS FURTHER NOTED THAT DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.19,56,185/-TO T HE P&L A/C UNDER THE HEAD 'COMPENSATION TO FLAT OWNERS', RESPONDING TO A QUERY RAISED BY THE ASSESSING OFFICER ABOUT NATURE OF EXPENDITUR E AND ALSO AS TO THE REASONS FOR MAKING PAYMENT OF COMPENSATION TO FLAT OWNERS, THE ASSESSEE SUBMITTED THAT THE COMPENSATION WAS PAID TO THE FLAT OWNERS DUE TO DELAYED HANDING OVER OF POSSESSION OF FLATS. IT WAS CLAIMED THAT THE FLAT HOLDERS HAVE EXPRESSED CONCERN THA T THE ASSESSEE WOULD NOT BE IN A POSITION TO GIVE POSSESSION OF FLATS BY 31 -03-2009 AS DISCUSSED IN THE FIRST MEETING DATED 04-01-2009. IT WAS A LSO CLAIMED THAT THE ASSESSEE ASSURED THAT THE POSSESSION OF THE FLAT WOULD BE GIVEN IN APPROPRIATE TIME FRAME AND ACCEPTED TO PAY COMP ENSATION AS AGREED IN THE MEETING. IT WAS SUBMITTED THAT AS THE SITU ATION IS BEYOND THE CONTROL OF THE ASSESSEE, THE COMPANY HAS AGREED TO PAY COMPENSATION IN ORDER TO SAFEGUARD THE GOODWILL OF THE COM PANY AND AS A COMMERCIAL/BUSINESS EXPEDIENCY AND TO AVOID LEGAL SUIT S IN CONSUMER FORUMS ETC. IN SUPPORT OF ITS CLAIM, THE ASSESSE E FURNISHED DETAILED LIST OF AGREED DATE OF POSSESSION AND THE ACTUAL D ATE OF POSSESSION BEFORE THE ASSESSING OFFICER. 13. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH TH E EXPLANATION GIVEN BY THE ASSESSEE FOR THE FOLLOWING REASONS : 8 ITA NO.1525 & 1512/PN/2014 A) IN THE AGREEMENT EXECUTED BEFORE THE SUB-REGISTR AR OFFICE, NOWHERE IT IS WRITTEN THAT IF ASSESSEE FAILED TO GIVE PO SSESSION TO THE FLAT OWNERS, IT WILL BE LIABLE TO PAY COMPENSATION. THEREF ORE THE LIABILITY TOWARDS COMPENSATION, WHICH IS NOT AT ALL DISCUSSED IN TH E ORIGINAL AGREEMENT, DOES NOT EVEN ARISE. B) ASSESSEE & FLAT OWNERS ENTERED INTO AN AGREEMENT ON 4TH JANUARY 2009 WHICH IS ON PLAIN PAPER AND THEREFORE, ACCORDIN G TO STAMP ACT 2004, THE AGREEMENT SHOULD HAVE BEEN EXECUTED ON AT LEAST O F RS.100/- VALUE PAPER AND THAT TOO NOTARIZED. IN THE ABSENCE OF RS.10 0/- STAMP PAPER AND NOTARIZATION, AGREEMENT DATED 04/01/2009 HAS NO VALI DITY IN THE EYES OF LAW AND THEREFORE, THE C) IF IT IS FOR DELAY OF POSSESSION OF FLAT, THEN THE N OMENCLATURE 'COMPENSATION' IS MISNOMER AS THERE IS 'BREACH OF CONTR ACT' BY THE BUILDER AND IF THERE IS BREACH OF CONTRACT, BUILDER IS LIABLE TO PAY PENALTY UNDER BOTH CONSUMER PROTECTION ACT AND MAHARASHTRA OW NERSHIP FLATS ACT WHICH CANNOT BE ALLOWED AS DEDUCTION UNDER SEC. 37 (1 ) OF THE I. T. ACT. 5.2.1 CITING ABOVE REASONS, COMPENSATION AMOUNT OF RS. 19,56,185/- CLAIMED BY THE APPELLANT WAS DISALLOWED BY THE ASSESSING OFFICER AND ADDED TO THE TOTAL INCOME DECLARED BY THE APPELLANT COMPANY. 14. BEFORE CIT(A) IT WAS SUBMITTED THAT THE DEDUCTION CLAIM ED OF RS. 1,47,49,415/- UNDER SECTION 80IB(10) OF THE I.T. ACT, 1 961 IN RESPECT OF THE SAID HOUSING PROJECT WAS DENIED ON THE G ROUND THAT THE COMPLETION CERTIFICATE FOR COMPLETION OF THE HOUSING PROJECT WAS NOT OBTAINED FROM THE LOCAL AUTHORITY ON OR BEFORE THE DUE D ATE VIZ. 31-03- 2012 AS SPECIFIED IN THE EXPLANATION (II) BELOW CLAUSE (A) OF THE SECTION 80IB(10) OF THE I.T. ACT 1961. THE ASSESSEE SUBMITTED TH AT IT HAS COMPLIED WITH ALL THE CONDITIONS AS SPECIFIED UNDER SECTION 80 IB(10) OF THE 1. T. ACT, 1961 IN ORDER TO CLAIM DEDUCTION IN RESPECT OF THE SAID HOUSING PROJECT. IT WAS REITERATED THAT THE ASSESSEE H AS COMMENCED THE CONSTRUCTION OF THE SAID PROJECT DURING THE FINANCIAL YEAR 2006-07 AND COMPLETED THE SAME IN THE MONTH OF MARCH 2012 AND COMPLETION CERTIFICATE FROM PUNE MUNICIPAL CORPORATION WAS OBTAINED IN T WO PARTS. THE FIRST COMPLETION CERTIFICATE NO.OCC/0512/10 DATED 11TH OCTOBER 2010 WAS GRANTED IN RESPECT OF 46 FLATS WITH REFERENCE TO IT APPLICATION DATED 16-08-2010. THE FINAL COMPLETION CERTIFICATE WAS GRAN TED VIDE CERTIFICATE NO. OCC/0547/12 DATED 21 ST JULY 2012 IN RESPECT OF 15 9 ITA NO.1525 & 1512/PN/2014 FLATS WITH REFERENCE TO ITS APPLICATION DATED 27TH MARCH 20 12. IT WAS STATED THAT THE' ASSESSEE HAS SUBMITTED THE COMPLETION CERTIFICATE OBTAINED FROM THE ARCHITECT M/S. MALWADKAR ARCHITECTS ALO NG WITH THE APPLICATION TO PMC FOR ISSUE OF OCCUPANCY CERTIFICATE. AS PE R RULE NO 7.6 OF THE DEVELOPMENT CONTROL RULES OF PMC, THE DEVELOPER/ BUILDER IS REQUIRED TO SUBMIT THE APPLICATION FOR OCCUPANCY CERTIFICATE ALONG WITH THE COMPLETION CERTIFICATE ISSUED BY THE ARCHITECT IN PRESC RIBED FORM. AFTER THE RECEIPT OF APPLICATION THE OCCUPANCY/COMPLETION CERTIFICATE IS EITHER GRANTED OR REJECTED BY PMC AND IN CASE OF REJEC TION THE OBJECTIONS/REASONS ARE COMMUNICATED TO THE DEVELOPER/A RCHITECT. IT WAS STATED THAT AS PER RULE 7.7 OF D.C RULE OF PMC PUNE IN CASE NO OBJECTION IS RAISED WITHIN 21 DAYS THE OCCUPANCY CERTIFICAT E IS DEEMED TO HAVE BEEN GRANTED FROM THE DATE OF APPLICATION. 15. THE ASSESSEE SUBMITTED THAT THE PMC DID NOT RAISE ANY OBJECTION AND THEREFORE THE COMPLETION CERTIFICATE IS DEEMED TO HAV E BEEN GRANTED WITHIN TIME. FOR THE ABOVE PROPOSITION, THE ASSES SEE RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SATISH BORA AND ASSOCIATES (SUPRA). IT WAS ARGUED THAT THE AR CHITECT HAS ISSUED COMPLETION CERTIFICATE ON 27TH MARCH 2012 AND THE ASSESSEE FILED THE REQUISITE FORM WITH PUNE MUNICIPAL CORPORATION INTIMAT ING THE COMPLETION OF THE SAID PROJECT. IT WAS CLAIMED THAT TH E SAID CERTIFICATE/INTIMATION WAS ACCEPTED BY THE PMC WITHOUT ANY AMENDMENTS/OBJECTIONS AND THE PMC HAS NOT RAISED ANY QUERY ON THE QUALITY OF THE CONSTRUCTION OF THE BUILDING OR THE COMPLETIO N OF THE SAME AS PER THE PLANS APPROVED BY PMC. THE PMC HAS G RANTED THE FINAL COMPLETION CERTIFICATE ON 21-07-2012 WITH REFERENCE TO THE APPLICATION DATED 27-03-2012 AND THE DELAY IN OBTAINING T HE COMPLETION CERTIFICATE BEFORE 31-03-2012 IS CERTAINLY NOT A TTRIBUTABLE TO 10 ITA NO.1525 & 1512/PN/2014 THE ASSESSEE AND IT IS BEYOND THE CONTROL OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT FOR CLAIMING DEDUCTION U/S 80IB(10), THE ASSE SSEE IS REQUIRED TO COMPLETE THE HOUSING PROJECT IN ACCORDANCE WITH THE APPROVED PLANS AND INTIMATE THE SAME TO THE LOCAL AUTHO RITY BY WAY OF FILING REQUISITE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHITECT, WHO IS THE EXPERT IN THE MATTER AND THE ASSESSEE CANNOT COMPEL THE LOCAL AUTHORITY TO ISSUE COMPLETION CERTIFICATE W ITHIN PARTICULAR TIME FRAME. IT WAS ARGUED THAT THE ISSUE OF CO MPLETION OF THE PROJECT IS SQUARELY COVERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HINDUSTAN SAMUHA AWAS LIMITED (SUPRA). IT WAS ARG UED THAT CONDITION OF OBTAINING COMPLETION CERTIFICATE OF PROJECT IS NO T MANDATORY AND WHAT IS IMPORTANT TO BE ESTABLISHED IS SUB STANTIAL COMPLIANCE. IN SUPPORT OF THIS, THE ASSESSEE REFERRED TO T HE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. TARNET AR CORPORATION REPORTED IN 26 TAXMANN.COM 180, WHEREIN IT IS HELD THAT EV ERY CONDITION (CONDITION AS TO THE COMPLETION BEFORE PRESCRIBED DATE) OF THE STATUTE CANNOT BE SEEN AS MANDATORY. IF THE SUBSTANTIA L COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COUR T MAY TAKE A VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VER Y PURPOSE FOR WHICH THE DEDUCTION HAS BEEN MADE AVAILABLE. 16. THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. SANGHVI AND DOSHI ENTERPRISE VS. ITO 141 TTJ 1 (CHENNA I), 2. ITO VS. KHYATI FINANCIAL SERVICES 6 TAXMAN 56 (MUMBAI ) 3. GLOBAL REALTY VS. ITO 134 ITD 407 (INDORE) 4. SIDDIVINAYAK SHREE VS. ACIT ITA NO. 883/PN/2010 (PUN E) 17. SO FAR AS DISALLOWANCE OF COMPENSATION PAID TO THE FLAT O WNERS IS CONCERNED, THE ASSESSEE OBJECTED TO THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER THAT THE AR HAS AGREED FOR THE ADDIT ION. IT WAS CLARIFIED BY THE COUNSEL THAT IT IS ONLY STATED DURING THE ASSESSMENT 11 ITA NO.1525 & 1512/PN/2014 PROCEEDINGS THAT THE AR AGREES TO THE ADDITION IN THE M ANNER AND TO THE EXTENT MADE IN THE EARLIER ASSESSMENT YEAR AND THE AR HAS NEVER AGREED FOR THE ADDITION. IN SUPPORT OF ITS CLAIM, THE ASSESS EE FURNISHED A COPY OF AFFIDAVIT OF THE AUTHORIZED REPRESENTATIVE MR. JITE NDAR RANDER, CA, WHO APPEARED BEFORE THE ASSESSING OFFICER AT T HE TIME OF ASSESSMENT PROCEEDINGS. ON MERITS, THE ASSESSEE REITERA TED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND REQUESTE D THAT THE CLAIM FOR COMPENSATION MAY BE ALLOWED AS CLAIMED BY THE ASS ESSEE. WITHOUT PREJUDICE TO THE GROUND OF APPEAL, THE ASSESSEE ALSO RAISED FOLLOWING ADDITIONAL GROUND OF APPEAL: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE APPELLANT IS ENTITLED TO ENHANCED THE DEDUCTION UNDER SECTION 80I B(10) OF THE I.T. ACT 1961 TO THE EXTENT OF DISALLOWANCE MADE ON ACCOUNT O F COMPENSATION PAID TO FLAT PURCHASERS RS. 19,56,185/-. THE APPELLANT PRAYS TH AT THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) MAY PLEASE BE ENHANCED TO THE EXTENT OF RS. 19,56,185/-' 18. HOWEVER, THE CIT(A) WAS NOT FULLY SATISFIED WITH THE EX PLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT IN THE PRESEN T CASE IT IS NOT IN DISPUTE THAT THE FIRST COMMENCEMENT CERTIFICATE FOR THE PR OJECT WAS RECEIVED FROM LOCAL AUTHORITY ON 03-04-2006 BY PMC COMM ENCEMENT CERTIFICATE NO. CC/0019/06. THE SECOND REVISED APPROVAL FOR THE PROJECT WAS RECEIVED FROM PMC VIDE COMMENCEMENT CERTIFICA TE NO. CC/0019/06 DATED 25-07-2006. THE THIRD AND FINAL APPROVA L FOR REVISION OF THE PLAN WAS RECEIVED BY CC NO. 4664/06 DATED 29-03- 2007. THUS, THE AFORESAID HOUSING PROJECT WAS ORIGINALLY A PPROVED VIDE PMC'S COMMENCEMENT CERTIFICATE NO. CC/0019/06 DATED 03-04-200 6. 19. HE REFERRED TO THE PROVISIONS OF SECTION 80IB(10) AND N OTED THAT FROM A PLAIN READING OF THE SECTION, IT IS CLEAR THAT IN A CAS E WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MO RE THAN ONCE, 12 ITA NO.1525 & 1512/PN/2014 SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPR OVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. AS ALREADY MENTIONED, THE ASSESSEE RECEIVED ITS FIRST APPROVAL FOR ITS HOUSING PROJECT ON 03-0 4-2006 AND ALL SUBSEQUENT APPROVALS TAKEN WERE FOR AMENDMENTS TO ITS INITIAL PLAN. THEREFORE, AS PER EXPLANATION (I) TO SEC. 80IB(10)(A), THE DEEME D DATE OF APPROVAL OF THE HOUSING PROJECT WOULD BE 03-04-2006. AS THE PROJECT IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2005, THE CONSTRUCTION OF THE PROJECT HAS TO BE COMPLETED WIT HIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY I.E. ON OR BEFORE 31-03-20 12 IN THE PRESENT CASE. FURTHER, UNDER CLAUSE (II) OF EXPLANATION TO CL AUSE (A) OF SECTION 80-IB(10), DATE OF COMPLETION OF CONSTRUCTION SHALL BE TAKEN TO BE DATE ON WHICH COMPLETION CERTIFICATE IN RESPECT OF THE H OUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. WHEN THE STATUT E USED THE WORD 'SHALL' IN CLAUSE (II) OF THE EXPLANATION, IT IS MANDATORY T O OBTAIN THE COMPLETION CERTIFICATE IN RESPECT OF THE 'ENTIRE HOUSING PROJECT' ISSUED BY THE LOCAL AUTHORITY WITHIN THE STIPULATED TIME I .E. 31-03- 2012 IN CASE OF THE ASSESSEE, FOR AVAILING DEDUCTION U/S. 801B(10). IT IS ALSO CLEAR FROM THE SECTION THAT THE DEDUCTION IS ALLOWABLE IN RESPECT OF THE AMOUNT OF PROFITS DERIVED FROM SUCH HOUSING PROJECTS I.E. PROJECTS APPROVED BY THE LOCAL AUTHORITY SUBJECT TO THE FULFILMENT OF OTHER CONDITIONS STIPULATED UNDER CLAUSES (A), (B) & (C) OF THE SECTIO N. IN THE PRESENT CASE, ADMITTEDLY THE FINAL COMPLETION CERTIFICATE IN R ESPECT OF THE SUBJECT HOUSING PROJECT WAS OBTAINED BY THE ASSES SEE ONLY ON 21.07.2012, AND THEREFORE THE SAID PROJECT OF THE ASSESSE E HAS NOT COMPLIED WITH ONE OF THE REQUIREMENTS FOR AVAILING THE DEDUC TION UNDER SEC. 80IB (10). 13 ITA NO.1525 & 1512/PN/2014 20. THE LD. CIT(A) REFERRED TO THE DECISIONS OF THE TRIBUN AL IN THE CASE OF HINDUSTAN SAMUHA AWAS (SUPRA) AND SATISH BORA & ASSOCIATES (SUPRA) AND NOTED THAT THE TRIBUNAL IN THE SAID DECISION HA S CLEARLY HELD THAT WHERE THE LOCAL AUTHORITY, ACTING ON THE APPLICAT ION OF THE BUILDER/DEVELOPER AND THE ARCHITECT FOR THE ISSUE OF OCCU PANCY CERTIFICATE, HAS NOT RAISED ANY OBJECTIONS OR QUERIES ON T HE QUALITY OF CONSTRUCTION OF THE BUILDING OR THE COMPLETION OF THE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY, THE COMPLETION CERTIFICAT E ISSUED BY THE LOCAL AUTHORITY RELATES BACK TO THE DATE OF APPLICATION . THE TRIBUNAL HAS FURTHER OBSERVED THAT IN SUCH CASES THE D ELAY IN OBTAINING THE COMPLETION/OCCUPANCY CERTIFICATE ON OR BEFORE THE SPECIFIED DATE IS CERTAINLY NOT ATTRIBUTABLE TO THE ASSESS EE' AND OBTAINING THE SAID CERTIFICATE BEFORE THE STIPULATED DATE IS BEYOND THE CONTROL OF THE ASSESSEE. HE OBSERVED THAT IN THE INSTA NT CASE, THE FINAL COMPLETION/OCCUPANCY CERTIFICATE WAS ISSUED BY THE PMC ON 21-07- 2012 APPARENTLY WITH REFERENCE TO THE APPLICATION OF THE ARCHITECT/ASSESSEE DATED 27-03-2012. IN VIEW OF THE DEC ISION OF THE ITAT, PUNE IN THE CASES REFERRED ABOVE, THOUGH HE WAS N OT ABLE TO PERSUADE HIMSELF TO CONCUR WITH THE SAID OBSERVATIONS OF T HE ITAT IN VIEW OF THE EXPRESS LANGUAGE OF CLAUSE (II) OF EXPLANATION TO SEC. 80IB(10) AS DISCUSSED EARLIER, THE CERTIFICATE SO ISSUED ON 21-07-2012 RELATES BACK TO THE DATE OF APPLICATION I.E. 27-03-2012 PRO VIDED NO OBJECTIONS/QUERIES WERE RAISED BY THE PMC DURING INTERVE NING PERIOD ON THE QUALITY OF CONSTRUCTION OF THE BUILDING OR THE COMP LETION OF THE SAME AS PER THE PLANS APPROVED BY PMC. ACCORDING TO HIM , FROM THE MATERIAL PLACED ON RECORD, IT IS NOT CLEAR WHETHER CERTIFICAT E WAS ISSUED BY THE PMC ON 21-07-2012 WITHOUT RAISING ANY QUERIES OR SEEKING CLARIFICATIONS ON THE COMPLETION OF THE PROJECT IN ACCORDANC E WITH THE PROJECT PLAN APPROVED BY THE PMC. THEREFORE, HE HELD THA T THIS IS A FIT 14 ITA NO.1525 & 1512/PN/2014 CASE FOR ISSUE OF DIRECTIONS TO THE ASSESSING OFFICER FOR NEC ESSARY VERIFICATION IN THE MATTER. HE ACCORDINGLY DIRECTED THE AS SESSING OFFICER TO VERIFY WHETHER OCCUPANCY CERTIFICATE DATED 21-07-201 2 WAS ISSUED BY THE LOCAL AUTHORITY WITHOUT RAISING ANY QUERIES OR OBJ ECTIONS ON THE QUALITY OF CONSTRUCTION OF THE BUILDING OR SEEKING CLARIFICATIO NS ON THE COMPLETION OF THE SAME AS PER THE PROJECT PLAN APPROVED BY THE PMC. ON DUE VERIFICATION AND ENQUIRIES WITH THE LOCAL AUTHORITY, WH ICH ISSUED THE COMPLETION/OCCUPANCY CERTIFICATE, IF IT IS FOUND THA T THE SAID CERTIFICATE WAS ISSUED WITHOUT RAISING ANY OBJECTIONS/ QUER IES OR SEEKING CLARIFICATIONS ON THE COMPLETION OF THE PROJECT, THE DEDUCTION UNDER SEC. 80IB( 10) SHALL BE ALLOWED IN RESPECT OF PROFITS D ERIVED BY THE ASSESSEE FROM THE PROJECT DURING THE YEAR AS THE CERTIFICATE ISSUED IN SUCH A CASE RELATES BACK TO THE DATE OF APPLICATION AS HELD BY THE ITAT, PUNE IN THE CASES REFERRED ABOVE. IN CASE IT IS FOUN D THAT CERTAIN OBJECTIONS/QUERIES WERE RAISED OR CLARIFICATIONS WERE SOUGH T AFTER APPLICATION WAS FILED BY THE ASSESSEE/ARCHITECT ON 27-03-2 012, THE DEDUCTION CLAIMED SHALL NOT BE ALLOWED TO THE ASSESSEE FOR THE REASON THAT IN SUCH A CASE, THE DELAY IN OBTAINING THE CERTIFICATE IS ATTRIBUTA BLE TO THE ASSESSEE AND IT CANNOT BE SAID THAT OBTAINING TH E CERTIFICATE ON OR BEFORE 31-03-2012 IS BEYOND THE CONTROL OF THE ASSESSEE. 21. SO FAR AS THE DISALLOWANCE OF COMPENSATION IS CONCERNE D THE LD.CIT(A) REFERRED TO THE ORDER SHEET OF THE ASSESSMENT FOLDER AND COMMENTS OF THE ASSESSING OFFICER AND NOTED THAT THE ASS ESSING OFFICER HAS SUBSEQUENTLY CLARIFIED THAT THE AR OF THE ASSE SSEE HAS ONLY AGREED TO THE MANNER IN WHICH THE SIMILAR DISALLOWANCE WAS DEALT WITH FOR THE A.Y 2009-10. IT WAS FURTHER CLARIFIED BY THE ASSESS ING OFFICER THAT AS PER THE ASSESSMENT RECORD FOR THE A.Y. 2009-10 , THE ASSESSEE HAS NOT AGREED TO THE SAID ADDITION AND THEREFORE THE R ESULT WOULD BE NON-AGREEMENT OF THE AR. IT WAS STATED THAT THE OBSER VATION WAS ONLY 15 ITA NO.1525 & 1512/PN/2014 INADVERTENT MISTAKE WHICH OCCURRED DUE TO OVER SIGHT. I N VIEW OF THIS CLARIFICATION OF THE ASSESSING OFFICER HE HELD THAT IT CANNOT B E SAID THAT THE DISALLOWANCE OF COMPENSATION WAS MADE IN THE ASSESSME NT ORDER AFTER TAKING THE CONSENT OF THE AR OF THE ASSESSEE. 22. SO FAR AS MERIT OF THE CASE IS CONCERNED, THE LD.CIT(A ) DISMISSED THE GROUND RAISED BY THE ASSESSEE. 23. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED, THE L D.CIT(A) RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATION : 5.4.3 HOWEVER, IN THE PRESENT PROCEEDINGS, WITHOUT PREJUDICE TO THE CONTENTION THAT THE COMPENSATION PAID TO THE BUYERS O F FLATS IS LEGITIMATE BUSINESS EXPENDITURE, THE APPELLANT RAISED AN ALTERNATE PLEA THAT EVEN OTHERWISE IT IS ENTITLED TO DEDUCTION UNDER SECTION 80 IB(10) OF THE I.T. ACT 1961 IN RESPECT OF ADDITION OF RS. 19,56,185/- ALSO. I N SUPPORT OF THIS PLEA, THE APPELLANT RELIED ON THE FOLLOWING LEGAL PRECEDE NTS WHEREIN IT IS REPORTED TO HAVE BEEN HELD THAT THE PLAIN CONSEQUENCE OF DISAL LOWANCE OR ADDITION THAT HAS BEEN MADE BY THE AO IS AN INCREASE IN THE BUSI NESS PROFIT OF THE BUSINESS/UNIT ELIGIBLE FOR DEDUCTION. 1) CIT VS. GEM PLUS JEWELLERY INDIA LTD 330 ITR 175 (B OMBAY) 2) S B BUILDERS & DEVELOPERS VS. ITO 136 TTJ (MUMBAI) 420 5.4.4 THE ADDITIONAL GROUND RAISED BY THE APPELLANT IS CAREFULLY EXAMINED WITH REFERENCE TO THE MATERIAL PLACED ON RECORD AND THE RELEVANT LEGAL POSITION. THE ADDITIONAL GROUND RAISED BY THE APPELLA NT IS A LEGAL GROUND ARISING FROM THE FACTS AVAILABLE ON RECORD AND THE SAM E DOES NOT REQUIRE FURTHER INVESTIGATION OF FACTS OR CALLING FOR ADDITIO NAL EVIDENCE. THEREFORE, THE SAME IS ADMITTED IN VIEW OF THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF NTPC LTD. (229 ITR 383) AND ADJUDICAT ED HEREIN AFTER. IN THE PRESENT CASE, THE PLAIN CONSEQUENCE OF THE DISALLOWANCE OF THE COMPENSATION TO BUYERS OF FIATS IN THE PROJECT AND THE ADD BACK, THAT HAD BEEN MADE BY THE ASSESSING OFFICER, WAS AN INCREASE IN T HE BUSINESS PROFITS OF THE APPELLANT. IN THIS CONTEXT, REFERENCE CAN BE MADE TO THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GEM PLUS JEWELLERY INDIA LTD 330 ITR 175, WHEREIN IN THE CON TEXT OF DEDUCTION UNDER SEC. 10A, IT WAS HELD AS UNDER: 'THE PLAIN CONSEQUENCE OF THE DISALLOWANCE AND THE ADD BACK, THAT HAD BEEN MADE BY THE ASSESSING OFFICER, WAS AN INCREASE IN T HE BUSINESS PROFITS OF THE ASSESSEE. THE CONTENTION OF THE REVENUE THAT IN COM PUTING THE DEDUCTION UNDER SECTION 10A THE ADDITION MADE ON ACCOUNT OF T HE DISALLOWANCE OF THE PROVIDENT FUND/ ESIC PAYMENTS OUGHT TO BE IGNORED C OULD NOT BE ACCEPTED. NO STATUTORY PROVISION TO THAT EFFECT HAVING BEEN M ADE, THE PLAIN CONSEQUENCE OF THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER MUST FOLLOW. ' 16 ITA NO.1525 & 1512/PN/2014 5.4.5 HOWEVER, IN THE CASE OF THE APPELLANT, AS DISCUSSE D EARLIER, THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION UNDER SE C. 80IB(10) IN RESPECT OF PROFITS DERIVED FROM AFORESAID HOUSING PROJE CT SUBJECT TO THE CONDITION THAT THE LOCAL AUTHORITY HAS NOT RAISED ANY OBJECTIONS/QUERY OR SOUGHT ANY CLARIFICATIONS IN RESPECT OF COMPLETION OF HOUSING PROJECT AFTER FILING OF THE APPLICATION FOR ISSUE OF OCCUPANCY CERT IFICATE BY THE ARCHITECT OF THE APPELLANT BEFORE THE PMC. ON DUE VERIFICATIO N, IF IT IS HELD BY THE ASSESSING OFFICER THAT THE SUBJECT PROJECT IS ELIGIBLE FO R THE DEDUCTION UNDER SEC. 80IB( 10), THE ADDITION MADE ON ACCOUNT O F DISALLOWANCE OF COMPENSATION TO THE FLAT OWNERS ALSO QUALIFIES FOR DEDU CTION UNDER SEC. 80IS( 10) AS THE ADDITIONAL INCOME FORMS PART OF THE ELIGIBLE PROFITS DERIVED FROM THE PROJECT. IN OTHER WORDS, THE ADMISSIB ILITY OF ALTERNATE PLEA RAISED BY THE APPELLANT BY WAY OF ADDITIONAL GR OUND OF APPEAL DEPENDS ON THE OUTCOME OF THE VERIFICATION BY THE ASSE SSING OFFICER AND IF THE PROJECT IS FOUND TO BE ELIGIBLE FOR DEDUCTION UN DER SEE. 80IB(10), THE DEDUCTION SHALL BE ALLOWED ON THE ENHANCED ASSESSED INC OME DERIVED FROM THE PROJECT. SUBJECT TO THESE DIRECTIONS, THE ADDITIONAL GROUND OF APPEAL RAISED BY THE APPELLANT STANDS DISPOSED OF. 24. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE : 1. THE HONOURABLE CIT(A) SET ASIDE THE ASSESSMENT ORDER AND REFER THE CASE BACK TO THE LEARNED ASSESSING OFFICER TO MAKE F RESH INQUIRIES WITH THE LOCAL AUTHORITY -PUNE MUNICIPAL CORPORATION AS T O WHETHER ANY OBJECTION WAS RAISED DURING 27TH MARCH 2012 (THE DATE OF APPLICATION FOR OCCUPANCY CERTIFICATE) AND 21 ST JULY 2012 (THE DATE ON WHICH PUNE MUNICIPAL CORPORATION ISSUED THE OCCUPANCY CERTIFICAT E) AND DECIDE THE ELIGIBILITY OF THE APPELLANT FOR CLAIMING DEDUCTION 80IB(10) OF THE I. T. ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND I N LAW THE APPEAL ORDER PASSED BY THE HONOURABLE CIT(A) -I, PUNE IS VOID AB INITIO AND IS BAD IN LAW AS THE HONOURABLE CIT(A) HAS EXCEEDED HIS AUTHO RITY BEYOND THE POWERS PRESCRIBED IN SECTION 251 (1)(A) OF THE I. T. ACT. THE HONOURABLE CIT(A) SET ASIDE THE ASSESSMENT ORDER AND REFER THE CASE B ACK TO ASSESSING OFFICER TO MAKE THE FRESH ASSESSMENT. THE FINANCE ACT 20 01 WITH EFFECT FROM 01/06/2001 HAS DELETED THE POWERS OF THE CIT (A ) TO SET ASIDE THE ASSESSMENT AND REFER BACK THE CASE TO THE ASSESSING OFFICER IN ACCORDANCE WITH THE DIRECTION GIVEN BY THE CIT (A). THE APPELL ANT HEREBY PRAYS THAT THE ORDER OF THE CIT (A) MAY PLEASE BE QUASHED AS ILLE GAL AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AN D IN LAW THE HONOURABLE CIT (A)-I, PUNE OUGHT TO HAVE ALLOWED TH E DEDUCTION OF RS. 1,47,49,415/- CLAIMED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT. THE HONOURABLE CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION MADE BY LEARNED ASSESSING OFFICER WITHOUT APPRECIATING THE F ACT THAT THE PROJECT WAS COMPLETED ON 27TH MARCH 2012 I.E. BEFORE DUE DAT E 31 ST MARCH 2012. THE APPELLANT HEREBY PRAYS THAT THE DEDUCTION MAY PL EASE BE GRANTED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AN D IN LAW THE HONOURABLE CIT(A) ERRED IN CONFIRMING THE DISALLOWAN CE MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF THE COMPENSATION PAID TO FLAT 17 ITA NO.1525 & 1512/PN/2014 OWNERS OF RS. 19,56,185/- DUE TO DELAY IN HANDING OVE R THE POSSESSION OF FLATS WITHIN STIPULATED TIME WITHOUT APPRECIATING THE FACT THAT A. THE COMPENSATION PAID IS AS PER THE AGREEMENT BETWE EN THE APPELLANT AND FLAT PURCHASERS B. THE COMPENSATION IS PAID BY ACCOUNT PAYEE CHEQUES C. THE APPELLANT HAS PRODUCED CONFIRMATION OF THE FL AT PURCHASERS IN RESPECT OF COMPENSATION PAID D. THE HONOURABLE CIT(A) AND LEARNED AO DID NOT APP RECIATE THE COMMERCIAL EXPEDIENCY INVOLVED IN THE PAYMENT O F COMPENSATION TO THE FLAT OWNERS AND DECIDED THE ISSUE O CCUPYING THE CHAIR OF BUSINESSMAN WHICH THEY ARE NOT PERMITTED TO DO. THE APPELLANT HEREBY PRAYS THAT THE DISALLOWANCE OF C OMPENSATION PAID TO FLAT OWNERS MAY PLEASE BE DELETED. 4. THE APPELLANT HEREBY RESERVES THE RIGHTS TO ADD, AM END, DELETE OR WITHDRAW OR RAISE ANY ADDITIONAL GROUND OR GROUNDS OF APPEAL. GROUNDS BY REVENUE : 1. THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION TO TH E ASSESSEE U/S.80IB WHEN THE ASSESSEE COULD NOT COMPLETE THE HOUSING PROJECT WITHIN TIME AS REQUIRED UNDER PROVISIONS OF SECTION 80IB(10)(A)(III) OF THE I.T. ACT, 1961 AS PER THE COMPLETION CERTIFICATE ISSUED BY THE PUNE M UNICIPAL CORPORATION U/S.80IB(10) EXPLANATION (II) OF THE ACT. 2. THE LD.CIT(A) ERRED IN INTERPRETING SECTION 80IB( 10) IN THE CONTEXT OF APPLICABILITY OF EXPLANATION (II) TO CLAUSE (A) I N A MANNER NEITHER CONTEMPLATED NOR PROVIDED FOR UNDER THE ACT. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 25. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET RE FERRING TO THE DECISION OF AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF SU RI SONS VS. ACIT REPORTED IN 124 TTJ 800 SUBMITTED THAT THE TRIBUN AL IN THE SAID DECISION HAS HELD THAT AFTER 01-06-2001 THE CIT(A) HAS NO POWER TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECON SIDERATION. THE CIT(A) SHOULD HAVE DECIDED THE ISSUE HIMSELF INSTEAD OF SETTING ASIDE THE ISSUE. ACCORDINGLY, THE TRIBUNAL DIRECTED THE CI T(A) TO DECIDE THE ISSUE HIMSELF. 18 ITA NO.1525 & 1512/PN/2014 26. REFERRING TO THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. RAMKISHAN REPORTED IN 29 CCH 935 HE SU BMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT UNDER THE PROVISIONS OF SECTION 251(1)(A) THE CIT(A) CAN CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. HOWEVER, HE CANNOT RESTORE T HE ISSUE TO BE DETERMINED BY THE ASSESSING OFFICER. 27. REFERRING TO THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. HOTEL QUEES ROAD PVT. LTD. REPORTED IN 42 CCH 139 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HE LD THAT UNDER THE PROVISIONS OF SECTION 251(1)(A) THE CIT(A) HAS POWE R ONLY TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT AND SPE CIFICALLY DOES NOT HAVE POWER TO SET ASIDE AS PER FINANCE ACT, 2 001. ACCORDINGLY, THE ORDER OF THE CIT(A) WAS SET ASIDE AND TH E MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE SAME DIRECTIONS. HE ACCORDINGLY SUBMITTED THAT SINCE IN THE INSTANT CASE THE CIT(A) INSTEAD OF DECIDING THE ISSUE HIMSELF HAS RESTORED THE MATT ER TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THEREFORE, T HE SAME IS NOT IN ACCORDANCE WITH LAW. HE ACCORDINGLY SUBMITTED TH AT THE MATTER MAY BE RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION T O DECIDE THE ISSUE HIMSELF. 28. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND WHILE SUPPORTING THE ORDER OF THE CIT(A) FAIRLY CONCEDED THAT T HE CIT(A) DOES NOT HAVE THE POWER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. HE ACCORDINGLY SUBMITTED THAT HE HAS NO OBJECTIO N IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A). 19 ITA NO.1525 & 1512/PN/2014 29. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SID ES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE IS A COMPANY ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. IT FILE D ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.68,52,980/- AFTER CLAIMING DEDUCTION OF RS.1,47,49,415/- U/S.80IB(10) IN RESPECT OF ITS HOUSING PROJECT KAMDHENU SIDDHI AT KOTHRUD, PUNE. WE FIND THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S.80IB(10) ON THE GRO UND THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS PRESCRIBED IN SECTION 80IB(10) BY NOT COMPLETING THE PROJECT BEFORE THE STIPULAT ED DATE. IN THE SAID ORDER THE ASSESSING OFFICER ALSO DISALLOWED THE COM PENSATION PAID TO THE FLAT OWNERS AT RS.19,56,185/- ON THE GROUND T HAT IN THE AGREEMENT DONE BEFORE THE SUB-REGISTRAR OFFICE IT IS NOWH ERE WRITTEN THAT IF THE ASSESSEE FAILS TO GIVE POSSESSION TO THE FLAT OWNERS HE W ILL BE LIABLE TO PAY COMPENSATION. FURTHER, THE AGREEMENTS WERE ON PLAIN PAPERS INSTEAD OF STAMP PAPER WORTH RS.100/- AND DULY NOTORISED. WE FIND WHEN THE ASSESSEE CHALLENGED THE ASSESSMENT ORD ER BEFORE THE CIT(A) THE LD.CIT(A) SET ASIDE THE ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH CERTAIN DIRECTIONS. 30. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT AFTER THE AMENDMENT BY THE FINANCE ACT, 2001 TO THE PR OVISIONS OF SECTION 251(1)(A) THE CIT(A) HAS NO POWER TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 31. WE FIND FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSE L FOR THE ASSESSEE. WE FIND THE AMRITSAR BENCH OF THE TRIBUNAL IN TH E CASE OF SURI SONS (SUPRA) AT PARA 8 OF THE ORDER HAS OBSERVED AS UNDER: 20 ITA NO.1525 & 1512/PN/2014 8. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THER E IS FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEES THAT T HE LEARNED CIT(A) HAS NO POWER TO SET ASIDE THE ISSUE TO THE FILE OF THE A O FOR RECONSIDERATION W.E.F. 1ST JUNE, 2001, WHICH IS DELETE D BY THE FINANCE ACT, 2001. 9. THE LEARNED CIT(A) SHOULD HAVE DECIDED THIS ISSUE HI MSELF INSTEAD OF SETTING ASIDE THE ISSUE. THIS IS A IRREGULARITY, WHICH CA N BE CURED BY US OTHERWISE IT WILL LEAD TO MISCARRIAGE OF JUSTICE. HEN CE, WE DIRECT, THE LEARNED CIT(A) TO DECIDE THIS ISSUE HIMSELF INSTEAD OF SE TTING ASIDE TO THE AO. THIS ISSUE IS ACCORDINGLY SET ASIDE TO THE FILE OF TH E CIT(A) FOR DECIDING AFRESH AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE. 32. WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF RAMKISHAN (SUPRA) FROM PARA 8 ONWARDS HAS OBSERVED AS UNDER : 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. SECTION 251(1)(A) REGULA TES THE POWERS OF THE CIT(A) WHERE THE APPEAL IS AGAINST AN ORDER OF ASSESSMENT . HIS POWER UNDER THAT PROVISION IS TO CONFIRM, REDUCE, ENHANCE O R ANNUL THE ASSESSMENT. FOR THE SAKE OF CONVENIENCE, THE SAID PROVISI ON IS REPRODUCED HEREUNDER : 251(1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SH ALL HAVE THE FOLLOWING POWERS- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. IT MAY BE MENTIONED HERE THAT THESE PROVISIONS ARE APP LICABLE FROM 1.6.2001 AS THE POWER TO SET ASIDE AS GIVEN EARLIER WAS OMITTED BY THE FINANCE ACT, 2001. IN THE LIGHT OF AFOREMENTIONED P ROVISION, IT HAS TO BE SEEN WHETHER IN THE PRESENT CASE ID. CIT(A) HAS RIGHTLY SET ASIDE THE ISSUE. FOR THAT PURPOSE, IT-WILL BE RELEVANT TO REPRODUCE P ARA 3.3 OF THE ORDER OF ID. CIT(A) AS UNDER:- '3.3. AS PER THE ABOVE COMPUTATION OF INCOME, THE AP PELLANT HAS SHOWN THAT THERE IS NO LIABILITY OF CAPITAL GAINS TAX ON TH E SALE OF AGRICULTURAL LAND. BUT THE FACT REMAINS TO BE VERIFIED IS THAT WHETHER THE LAND SOLD WAS ACTUALLY USED FOR AGRICULTURAL PURPOSES BY THE APPELLA NT OR HIS PARENT IN TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH TH E TRANSFER TOOK PLACE FOR CLAIMING DEDUCTION U/S 54B OF THE ACT. TO VERIFY THIS ASPECT, THE APPELLANT IS DIRECTED TO SUBMIT THE REQUISITE EVIDENCE IN THE FORM OF REPORT FROM THE RESPECTIVE REVENUE AUTHORITIES/PATWARI, WHO OFFICIALLY MAINTAINS THE ACTUAL LAND USE RECORD (GIRDAWARI). FOR DETERMIN ING THE COST OF ACQUISITION AS ON 1.4.1981, THE ASSESSING OFFICER MAY TAK E THE CIRCLE RATE FIXED BY THE GOVT. FOR STAMP DUTY PURPOSES FOR THAT AR EA OR THE AVERAGE OF SALE PRICE PREVAILING IN THAT AREA, WHICHEVER IS HIGH ER. ACCORDINGLY, THE INCOME UNDER THE HEAD CAPITAL GAINS MAY BE WORKED OU T. THE DEDUCTION U/S 54B OF THE ACT, IF ALL CONDITIONS ARE FULFILLED, SHALL BE ALLOWED.' 9. THE ABOVE DIRECTIONS OF ID. CIT(A), IF READ WITH THE PROVISIONS OF SECTION 251(1)(A), THEN IT WILL BE CLEAR THAT HE HAS NOT CON FIRMED, REDUCED, ENHANCE OR ANNULLED THE ASSESSMENT BUT PRACTICALLY HE H AS RESTORED THE 21 ITA NO.1525 & 1512/PN/2014 ISSUE TO BE DETERMINED BY THE ASSESSING OFFICER. THEREFOR E, SUCH RESTORATION IS NOT PERMITTED BY THE EXPRESS PROVISION OF THE STATUTE. 10. FINDING FORCE IN THE ARGUMENTS OF THE LD. D.R., WE CONSIDER IT JUST AND PROPER TO DIRECT THE ID. CIT(A) TO GET REPORT FROM THE ASSESSING OFFICER ON THE ISSUES WHICH HAVE BEEN DIRECTED TO BE VERIFIED AND THEN TO DECIDE THE APPEAL FILED BY THE ASSESSEE ACCORDING TO THE FACTS VER IFIED AND AS PER PROVISIONS OF LAW. WE DIRECT ACCORDINGLY. THE ISSUE RAI SED BY THE REVENUE IS RESTORED BACK TO THE FILE OF THE CIT(A) IN THE MAN NER AFORESAID. 33. WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF HO TEL QUEES ROAD PVT. LTD. (SUPRA) HAS OBSERVED AS UNDER : 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE CIT(A) AFTER THE SUBMISSIONS OF THE ASSESSEE AT PAGES 6-9 H AS FURTHER SUMMED UP THESE SUBMISSIONS ALONGWITH ARGUMENTS AT PAGES 10 -12 AND AFTER RE-ADDRESSING THE FACTS AT PAGES 13 TO 17 IN PARA 3.3 SUB-PARA (A-D) HAS GIVEN THE DIRECTIONS TO THE AO IN SUB-PARA (E) TO VERIFY THE FACTUAL ASSERTIONS. ON A CONSIDERATION OF THE DIRECTIONS CONTAIN ED WHICH HAVE BEEN REPRODUCED IN THE EARLIER PART OF THIS ORDER, W E FIND NO INFIRMITY IN THE DIRECTION GIVEN. HOWEVER CONSIDERING THE FACT TH AT THE CIT(A) AS PER SECTION 251(1)(A) OF THE ACT HAS THE POWERS ONLY TO CO NFIRM, REDUCE, ENHANCE OR ANULL THE ASSESSMENT AND SPECIFICALLY DOES NO T HAVE THE POWER TO SET ASIDE AS PER THE FINANCE ACT, 2001 W.E.F 01.06. 2001. ACCORDINGLY FINDING OURSELVES IN AGREEMENT WITH THE DIRECTIONS GIV EN, WE SUBSTITUTE THE SAME BY OUR SIMILAR DIRECTION TO THE AO AS THE STA TUTE BARS THE CIT(A) TO SET ASIDE THE ISSUE TO THE AO. THE IMPUGNED ORDER IS MODIFIED TO THIS EXTENT. ACCORDINGLY THE DEPARTMENTAL APPEAL IS ALLOW ED FOR STATISTICAL PURPOSES. TO THE EXTENT THAT THE CONCLUSIONS REMAINS THE SAME. 34. IN VIEW OF THE DECISIONS CITED (SUPRA) WE ARE OF THE CO NSIDERED OPINION THAT THE CIT(A) SHOULD HAVE DECIDED THE ISSUE HIMSE LF INSTEAD OF SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING O FFICER SINCE HE HAS NO POWER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER IN VIEW OF THE AMENDMENT TO PROVISIONS OF SECTION 251(1)(A) BY THE FINANCE ACT, 2001 W.E.F. 01-06-2001. WE THEREFORE ARE OF THE CONSIDERED OPINION THAT THE MATTER REQUIRES RE-VISIT TO T HE FILE OF THE CIT(A) WHO SHALL DECIDE THE ISSUE HIMSELF AFTER OBTAINING A RE MAND REPORT FROM THE ASSESSING OFFICER, IF NECESSARY. HE SHALL DEC IDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUN DS RAISED BY 22 ITA NO.1525 & 1512/PN/2014 THE ASSESSEE AS WELL AS THE REVENUE ARE ACCORDINGLY AL LOWED FOR STATISTICAL PURPOSES. 35. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSE LF, I.E. ON 30-11-2016. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; DATED : 30 TH NOVEMBER, 2016. ( )'+ , / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // ' $ / TRUE COPY // %& $ ) / SR. PRIVATE SECRETARY ), / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A ) - I , PUNE 4. 5. THE CIT - I, PUNE ' $$), ), A BENCH / DR, ITAT, A BENCH PUNE; 6. 1 / GUARD FILE.