The ITO, Ward-1(2)(1), Vadodara V. M/s. Kirti Construction, Vadodara

ITA 1579/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6007 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NOS. 1578 & 1579/AHD/2016 / A.Y. 2010-11 & 2011-12 INCOME - TAX OFFICER, WARD-1(2)(1), VADODARA-39007 VS M/S. KIRTI CONSTRUCTIN, AYODHYA TOWNSHIP, KEDAR PARK, NEAR MOTINAGAR-3, TARSALI, VADODARA-39009 PAN : AAGFK 7066 A / (APPELLANT) !' / (RESPONDENT) B Y REVENUE : SHRI PRASOON KABRA, SR DR BY ASSESSEE : NONE / DATE OF HEARING : 27/02/2018 /DATE OF PRONOUNCEMENT: 28/02/2018 / O R D E R PER BENCH : THESE TWO REVENUES APPEALS FOR ASSESSMENT YEARS 20 10-11 AND 2011- 12, ARISE AGAINST CIT(A)-4, VADODARAS SEPARATE ORD ERS; BOTH DATED 26.02.2016 PASSED IN CASES NOS.CAB/4-290/2015-16 AND CAB/4-291 /2015-16, REVERSING THE ASSESSING OFFICERS ACTION DISALLOWING ASSESSEE S 80IB(10) DEDUCTION CLAIM OF RS.1,16,53,857/- AND RS.44,63,274/- AS WELL AS A DOPTING GP RATE OF 56.7% COMING TO RS.35,53,424/- (IN LATTER CASE) IN PROCEE DINGS UNDER SECTION 143(3)) OF THE INCOME-TAX ACT, 1961; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARED ON ASSESSEES BEH EST. REGISTRY SENT RPAD NOTICE ON 05.02.2018. THE SAME STAND RECEIVED BACK UNSERVED BY THE POSTAL AUTHORITIES. WE THUS PROCEED EX-PARTE A GAINST THE ASSESSEE IN THE TWO INSTANT APPEALS. 2. WE COME TO THE FORMER COMMON ISSUE OF SECTION 80 IB(10) DEDUCTION DISALLOWANCE INVOLVING RESPECTIVE FIGURES OF RS.1,1 6,53,857/- AND ITA NOS. 1578 & 1579/AHD/2016 ITO VS. KIRTI CONSTRUCITON A.Y. 2010-11 & 2011-12 - 2 - RS.44,63,274/- IN THE TWO IMPUGNED ASSESSMENT YEARS . THE CIT(A) APPEARS TO HAVE FOLLOWED HIS PRECEDING ASSESSMENT Y EARS 2005-06 AND 2007-08 FINDING AT THE VERY ISSUE QUA THE SAME PROJ ECT IN BOTH THE IMPUGNED ASSESSMENT YEARS AS UNDER:- 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER. I AM IN FULL AGREEMENT WITH THE ID. AUTHORIZED REPRESENTATIVE TH AT THE MATTER WAS BEFORE THE JURISDICTIONAL AHMEDABAD TRIBUNAL IN THE CASE OF THE APPELLANT FOR AY 2005-06 & 2007-08 TO 2009-10. OUT OF THESE A PPEALS, THE ONE RELATING TO AY 2005-06 WAS DECIDED BY ME IN FAVOUR OF THE APPELLANT VIDE MY ORDER DATED 15.03.2013. THE RELEVANT PARA IN APP EAL NO.CAB/-296/11- 12 IS REPRODUCED AS UNDER :- '4.3. DECISION: I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AU THORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. HON'BLE HIG H COURT OF GUJARAT IN CIT-IV VS. TARNETAR CORPORATION [2012] 210 TAXMAN 2 06 (GUJ.) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY REJ ECTING REVENUE'S APPEAL IN I.T. APPEAL NO. 1241 OF 2011 VIDE ORDER DATED SEPTE MBER 12, 2012 HOLDING THAT: '3. WITH RESPECT TO THE SECOND CONTENTION, WE MAY R ECORD THAT THE CONTENTION OF THE REVENUE IS THAT THE ASSESSEE DID NOT COMPLETE THE HOUSING PROJECT WITHIN THE STATUTORY TIME FRAME. UNDER SUB- CLAUSE (I) OF CLAUSE (A) OF SECTION 80-IB(10), THE ASSESSEE SINCE HAD GOT AP PROVAL FOR THE HOUSING PROJECT FROM THE LOCAL AUTHORITY BEFORE 1 ST APRIL, 2004 WAS REQUIRED TO COMPLETE THE CONSTRUCTION LATEST BY 31 ST MARCH, 2008. RELYING ON EXPLANATION (II) TO CLAUSE (I), REVENUE CONTENDS TH AT SINCE BU PERMISSION WAS GRANTED AFTER MARCH 2008, THE CONSTRUCTION MUST BE DEEMED TO HAVE BEEN COMPLETED AFTER SUCH DATE. EXPLANATION (IT) RE ADS AS UNDER: '(II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING 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 AUTHORITY.' 4. CIT (APPEALS) AS WELL AS THE TRIBUNAL AFTER DETA ILED DISCUSSION CAME TO THE CONCLUSION THAT SUCH REQUIREMENT WAS NOT MANDAT ORY IN NATURE. IN THE PRESENT CASE, THE ASSESSEE HAD COMPLETED THE CONSTR UCTION WELL BEFORE THE LAST DATE, NAMELY, 31ST MARCH, 2008 AND HAD ALSO SO LD SEVERAL UNITS WHICH WAS COMPLETED AND ACTUALLY OCCUPIED, AND IT ALSO AP PLIED FOR BU PERMISSION TO THE LOCAL AUTHORITY. THE LOCAL AUTHORITY, HOWEVE R, FOR TECHNICAL REASONS, AT ONE STAGE REJECTED SUCH APPLICATION IN THE YEAR 200 6 AND THEREAFTER UPON ITA NOS. 1578 & 1579/AHD/2016 ITO VS. KIRTI CONSTRUCITON A.Y. 2010-11 & 2011-12 - 3 - REVISED EFFORTS FROM THE ASSESSEE GRANTED THE SAME BY ORDER DATED 19TH MARCH, 2009. 5. WE HAVE PERUSED THE DETAILED DISCUSSION OF THE C IT (APPEALS) AS WELL AS THE TRIBUNAL ON THE ISSUE. IN PARTICULAR, THE TRIBU NAL NOTED THAT THE CONSTRUCTION WAS COMPLETED IN 2006. APPLICATION FOR BU PERMISSION TO THE MUNICIPAL AUTHORITIES WAS FILED ON 15.2.2006 WHICH WAS REJECTED ON 1.7.06. SEVERAL RESIDENTIAL UNITS WERE OCCUPIED SINCE THE S AME WAS DONE WITHOUT NECESSARY PERMISSION. THE ASSESSEE HAD ALSO PAID PE NALTY AND GOT SUCH OCCUPATION REGULARIZED. SEVERAL TENEMENTS WERE SOLD LONG BEFORE THE LAST DATE. 6 IN THE PRESENT CASE, THEREFORE, THE FACT THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH, 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXP LANATION TO CLAUSE (A) TO SECTION 80-IB(10) LINKS THE COMPLETION OF THE CONST RUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HO WEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE.' HON'BLE MADRAS HIGH COURT IN C1T VS SANGHVI AND DOS HI ENTERPRISE [2013] 255 CTR 156 (MAD.) HAS ALSO DEALT WITH THE I SSUE AND OBSERVED THAT APPLICATION FILED BY THE ASSESSEE BEFORE THE STATUT ORY AUTHORITY WOULD BE SUFFICIENT COMPLIANCE TO THE PROVISIONS OF SECTION 80IB(10) AND THAT THE GRANT OF COMPLETION CERTIFICATE THE SAID AUTHORITY IS NOT IN THE HANDS OF THE ASSESSEE. IT HAS BEEN HELD BY THE HON'BLE COURT THA T: '13. AS REGARDS THE QUESTION AS TO WHETHER THE PROJ ECT HAD BEEN COMPLETED ON OR BEFORE 31.3.2008 AS PER THE CONDITIO NS CONTAINED IN SECTION 80IB(10)(A) OF THE INCOME TAX ACT, THE TRIBUNAL P OINTED OUT THAT THE OBJECTION OF THE REVENUE WAS THAT THE CHENNAI METRO POLITAN DEVELOPMENT AUTHORITY HAD ISSUED THE COMPLETION CERTIFICATE ONL Y ON 13.6.2008, I.E., THREE MONTHS FROM THE DUE DATE PRESCRIBED UNDER THE STATUTE, NAMELY, 31.3.2006. THE TRIBUNAL POINTED OUT THAT AS FAR AS THE CONSTRUCTION OF THE BUILDING IS CONCERNED, THE LOCAL AUTHORITY, THE CHE NNAI CORPORATION, IS THE APPROPRIATE AUTHORITY TO REGULATE CONSTRUCTION AS P ER THE BUILDING BYE-LAWS AND SANCTION PLANS. THE TRIBUNAL OBSERVED THAT WHE N IT IS NOT DISPUTED THAT THE CORPORATION IS THE LOCAL AUTHORITY, THE CE RTIFICATE ISSUED BY IT COULD NOT BE DISREGARDED. THE BUILDING WAS INSPECTED ON 2 3.11.2007 BY THE CORPORATION LOCAL AUTHORITIES AND WAS FOUND TO BE I N ACCORDANCE WITH THE PERMIT CONDITIONS. LOOKING FROM THE ANGLE OF THE RO LE OF THE CHENNAI ITA NOS. 1578 & 1579/AHD/2016 ITO VS. KIRTI CONSTRUCITON A.Y. 2010-11 & 2011-12 - 4 - CORPORATION AS WELL AS CHENNAI METROPOLITAN DEVELOP MENT AUTHORITY, THE TRIBUNAL POINTED OUT THAT THE CERTIFICATE ISSUED ON 13.6.2008 BY THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY CANNOT, IN ANY MANNER, NEGATE THE RELEVANCE OF THE CORPORATION'S CERTIFICA TE AND THE FACTUAL COMPLETION BEFORE 31.3.2008. THUS, THE TRIBUNAL HEL D THAT WHEN THE COMPLETION OF THE PROJECT WAS WELL BEFORE 31.3.2008 , THE LOCAL AUTHORITY HAD ALSO CERTIFIED THE SAME, THE ASSESSEE WAS ENTITLED TO SUCCEED.' ON THE ISSUE OF PROPORTIONATE DEDUCTION U/S. 80IB(1 0) ALSO HIGH COURT HAS OPINED IN FAVOUR OF THE ASSESSEE THAT THE SAME IS A LLOWABLE ON THE UNITS WHICH ARE FULFILLING THE ELIGIBILITY CONDITION. THO UGH, IN THAT CASE, THE BUILT UP ARE WAS UNDER CONSIDERATION AND IN THE PRESENT C ASE, THE ISSUE IS OF COMPLETION CERTIFICATES. HOWEVER, IN MY OPINION THE RATIO IS THE SAME AND WILL APPLY ON THE RESIDENTIAL UNITS WHICH ARE COMPL ETED BUT WHERE COMPLETION CERTIFICATES HAVE NOT BEEN ISSUED BY THE BMC. HON'BLE MADRAS HIGH COURT IN CASE OF SANGHVI AND DOSHI ENTERPRISE (SUPRA) HELD THAT: '36. THIS LEAVES US WITH THE LAST QUESTION ON PROPO RTIONALITY, WHICH WAS CONSIDERED BY US IN T.C(A)NOS.L348 AND 1349 OF 2007 DATED 18.10.2012. THOUGH THE ASSESSEE HAD COMPLIED WITH THE EXTENT OF BUILT-UP AREA AS PER CLAUSE (C) AND THE ASSESSEE IS ENTITLED TO HAVE THE BENEFIT OF DEDUCTION UNDER. SECTION 80IB OF THE INCOME TAX ACT, SINCE THE TRIBU NAL HAD REMANDED THE PORTION OF THE BUILT-UP AREA FOR VERIFICATION BEFOR E THE ASSESSING OFFICER AND A FACTUAL ENQUIRY HAS TO BE MADE THEREON AS TO WHET HER THE BUILT-UP AREA IS IN FACT 1500 SQ.FT. OR MORE THAN THAT, WE DO NOT TH INK THAT THE REVENUE COULD HAVE ANY SERIOUS OBJECTION ON THIS ASPECT. IN THE CIRCUMSTANCES, WE CONFIRM THE ORDER OF THE TRIBUNAL ON THE REMAND POR TION.' LD. AUTHORIZED REPRESENTATIVE FOR THE APPELLANT HAS ALSO RELIED UPON THE DECISION OF MADRAS HIGH COURT IN CASE OF VISWAS PRO MOTERS (P.) LTD. VS CIT [2013] 29 TAXMANN.COM 19 (MAD.) WHEREIN IT HAS BEEN HELD THAT EACH RESIDENTIAL BLOCK IN A HOUSING PROJECT IS A 'HOUSIN G PROJECT' IN ITSELF FOR PURPOSE OF CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. IT HAS BEEN HELD BY THE HIGH COURT THAT THE PROPORTIONATE DEDUCTION HAS TO BE ALLOWED TO THE ASSESSEE IN RESPECT OF THE UNITS WHICH FULFILL THE ELIGIBILITY CONDITIONS. THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S. 80IB(1 0) ON THOSE UNITS IN RESPECT OF WHICH COMPLETION CERTIFICATES HAVE BEEN ISSUED BY THE BMC. IT WILL ALSO GET DEDUCTION U/S. 80IB(10) IN RESPECT OF THOSE UNITS FOR WHICH ASSESSEE HAD APPLIED TO BMC BEFORE THE DUE DATE I.E . 31.03.2008. THE APPELLANT HAS RECEIVED COMPLETION CERTIFICATE IN RE SPECT OF 129 UNITS (ON 20.04.2005 FOR 39 UNITS, ON 23.08.2005 FOR 20 UNITS AND ON 10.02.2006 FOR 70 UNITS AND SUBMITTED DULY ACKNOWLEDGED COPY OF FO RM NO 7 I.E. COMPLETION REPORT SUBMITTED TO BMC (VADODARA MUNICI PAL CORPORATION) ITA NOS. 1578 & 1579/AHD/2016 ITO VS. KIRTI CONSTRUCITON A.Y. 2010-11 & 2011-12 - 5 - ON 9 TH MAY 2007 FOR 91 UNITS. ACCORDING TO THE JURISDICTI ONAL HIGH COURT IN CASE OF TARNETAR CORPORATION (SUPRA), THE APPLIC ATION FOR OBTAINING COMPLETION CERTIFICATE BY THE ASSESSEE BEFORE THE D UE DATE IS SUFFICIENT COMPLIANCE FOR THE GRANT OF DEDUCTION U/S 80IB(10). IN THE CASE OF THE APPELLANT, IT HAS BEEN DEMONSTRATED THAT THE APPLIC ATION FOR SUCH CERTIFICATES WAS MADE ON 09.05.2007, I.E. BEFORE THE DUE DATE OF 31.03.2008. THUS, ONLY 3 UNITS OUT OF TOTAL 223 APPROVED BY THE BMC REMAIN ED INCOMPLETE ON WHICH DEDUCTION U/S. 80IB(10) WILL NOT BE AVAILABLE . AS THE APPELLANT FIRM HAD COMPLETED CONSTRUCTION OF THE 220 UNITS MUCH BE FORE 31ST MARCH 2008, I.E. THE DATE BEFORE WHICH CONSTRUCTION WAS TO BE C OMPLETED AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE INCOME TAX AC T, 1961, THE ASSESSING OFFICER IS DIRECTED TO ALLOW FULL DEDUCTION U/S. 80 IB8(10) ON 220 UNITS OUT TOTAL 223 UNITS. THE DEDUCTION IS WORKED OUT AS UND ER: TOTAL DEDUCTION CLAIMED RS.42,76,463 X 220 = RS.42,18,932/- 223 THE ASSESSEE SHALL GET RELIEF OF RS.42,18,932/-.' AS MENTIONED BY THE LD. AUTHORIZED REPRESENTATIVE I N HIS WRITTEN SUBMISSIONS, THE APPEAL FILED BY THE REVENUE AGAINS T MY ORDER DATED 15.03.2013 HAS BEEN DECIDED BY THE TRIBUNAL ITA NO. 1686/AHD/2013 VIDE THEIR COMBINED ORDER DATED 13.11.2014 (A.Y. 2005-06 AND 2007-08-2009- 10) IN FAVOUR OF THE APPELLANT AND, THEREFORE, ABOV E ORDER ON THE ISSUE OF NON AVAILABILITY OF COMPLETION CERTIFICATES, HAS BEEN A PPROVED. FACTS OF THE PRESENT CASE ARE IDENTICAL SO FAR AS DATES OF COMPL ETION CERTIFICATES FILED BEFORE THE BMC (NOW VMC) ARE CONCERNED. IN THE ASSE SSMENT ORDER, ASSESSING OFFICER HAS NOT DISCUSSED ABOUT THE AFORE MENTIONED ORDERS IN FAVOUR OF THE APPELLANT BECAUSE THE ASSESSMENT U/S 143(3) WAS PASSED BY THE ASSESSING OFFICER ON 13.03.2013, WHEREAS, ORDER OF CIT(A) IS DATED 15.03.2013 AND THAT OF TRIBUNAL IS DATED 13.11.2014 . SINCE THE ISSUE IS COVERED BY THE ORDER OF THE TRIB UNAL IN APPELLANTS OWN CASE, THIS GROUND OF APPEAL HAS TO BE DECIDED IN FA VOUR OF THE APPELLANT. I AGREE WITH THE CONTENTION THAT THE APPELLANT FIRM H AD COMPLETED CONSTRUCTION OF THE 220 UNITS MUCH BEFORE 31ST MARC H 2008, I.E. THE DATE BEFORE WHICH CONSTRUCTION WAS TO BE COMPLETED AS PE R THE PROVISIONS OF SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THUS, DEDUCTION U/S 80IB(10) WILL BE AVAILABLE TO THE APPELLANT IN RESP ECT OF THESE 220 UNITS OUT OF TOTAL 223 UNITS. THE ASSESSING OFFICER IS DIRECT ED TO CALCULATE THE PROPORTIONATE DEDUCTION TO THE APPELLANT AS WAS DON E IN AY 2005-06. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 3. CASE FILES SUGGEST THAT THE SAID CO-ORDINATE BEN CH DECISION DATED 13.11.2014 (SUPRA) HAS ALREADY DECLINED REVENUES I DENTICAL GRIEVANCE IN ITA NOS. 1578 & 1579/AHD/2016 ITO VS. KIRTI CONSTRUCITON A.Y. 2010-11 & 2011-12 - 6 - SAID LEAD ASSESSING YEAR 2005-06. LEARNED DEPARTME NTAL REPRESENTATIVE FAILS TO PINPOINT ANY EXCEPTION THEREIN ON FACTS OR LAW. WE THEREFORE ADOPT JUDICIAL CONSISTENCY TO AFFIRM THE CIT(A)S FINDING S QUA SECTION 80IB(10) DEDUCTION ISSUE IN THE IMPUGNED ASSESSMENT YEAR(S) AS WELL. THIS FORMER COMMON ISSUE IS THUS DECIDED IN ASSESSEES FAVOUR. 4. THIS LEAVES US WITH REVENUES SECOND SUBSTANTIVE GROUND IN LATTER CASE THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING GP ADDITION OF RS.35,53,424 @ 56.7% AS MADE BY THE ASSESSING OF FICER IN ASSESSMENT ORDER DATED 28.03.2014. LEARNED DEPARTMENTAL REPRE SENTATIVE FAILS TO REBUT THE CIT(A)S CLINCHING FINDING THAT THE ASSES SING AUTHORITY HAD NOT REJECTED ASSESSEES BOOKS OF ACCOUNTS BEFORE ARRIVI NG AT THE IMPUGNED GP @ 56.7%. WE THUS SEE NO REASON TO INTERFERE WITH T HE CIT(A)S FINDING UNDER CHALLENGE DELETING THE IMPUGNED ADDITION. 5. THE REVENUES INSTANT TWO APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28 TH FEBRUARY, 2018 AT AHMEDABAD SD/- SD/- ( AMARJIT SINGH ) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED 28/02/2018 *BT % !'( )( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. ' **' , ' , / DR, ITAT, AHMEDABAD 6. / / GUARD FILE. / BY ORDER, TRUE COPY / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD