ITO 24(3)(2), MUMBAI V. NEETA ENTERPRISES, MUMBAI

ITA 1652/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0939 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 234B; 80IB; 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.1652/MUM/2013 ASSESSMENT YEAR: 2009-10 ITO-24 (3)(2), RO. NO.704, C-11, 7 TH FLOOR, B.K.C. BANDRA(EAST), MUMBAI-400051 / VS. M/S NEETA ENTERPRISES, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON (W), MUMBAI-400062 ( / REVENUE) ( !'# $ /ASSESSEE) P.A. NO. AACGN4947M / REVENUE BY SHRI A. RAMCHANDRAN-DR !'# $ / ASSESSEE BY SHRI VIMAL PUNAMIYA % & ' $ ( / DATE OF HEARING 23/07/2015 ' $ ( / DATE OF ORDER: 09/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER 14/12/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED IN THIS APPEAL PERTAINS TO ALLOWING DEDUCTION U/S 80IB OF THE ACT IGNORING THE FACT THE ASSESSEE HAS NOT OBTAINED THE COMPLETION CERTIFICATE FROM TH E LOCAL ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 2 AUTHORITY BEFORE 31/03/2008, WHICH IS MANDATORY AS PER EXPLANATION-2 TO SECTION 80IB(10) OF THE ACT. REVEN UE IS ALSO AGGRIEVED IN ALLOWING DEDUCTION U/S 80IB(10) OF THE ACT IGNORING THE FACT THAT APPROVAL OF THE LOCAL AUTHOR ITY WAS OBTAINED ON 28/11/1992 I.E. MUCH BEFORE 01/04/1998, THE DATE ON OR AFTER WHICH THE PROJECT APPROVED WERE EL IGIBLE FOR DEDUCTION 80IB(10) OF THE ACT. DURING HEARING, THE LD. COUNSEL CONTENDED THAT THE IMPUGNED ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DATED 05/1 /2015 IN THE CASE OF M/S KRISH ENTERPRISES VS ACIT (ITA NO.5554/MUM/2014) ORDER DATED 05/01/2015. THIS FACT UAL MATRIX WAS NOT CONTROVERTED BY LD. DR. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE AFORESAID O RDER OF THE TRIBUNAL DATED 05/01/2015 FOR READY REFERENCE:- AGGRIEVED BY THE IMPUGNED ORDER DATED 25/07/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, THE ASSE SSEE IS IN APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE IS AGGRIEVED IN CONFIRMING THE DISALLOWANCE OF DEDUCTI ON CLAIMED U/S 80IB(10) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.1,42,53,667/- ON THE PLEA THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT APPREC IATE THAT THE CONDITION OF COMPLETION IS NOT APPLICABLE SINCE THE PROJECT WAS APPROVED ON 05/03/2004, BEFORE THE INSERTION OF CONDITION OF COMPLETION INSERTED WITH EFFECT FROM 01/04/2005. ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 3 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SHRI VIMAL PUNMIYA, ADVANCED HIS ARGUMENT S WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITT ING THAT THE PROJECT WAS APPROVED ON 05/03/2004, THEREFORE, THERE WAS NO REQUIREMENT OF OBTAINING COMPLETION CERTIFICATE AND GRAM PANCHAYAT WAS THE COMPETENT AUTHORITY AT THE RELEVANT TIME TO ISSUE COMPLETION CERTIFICATE. IT WAS ALSO PLEADED THAT A SSESSEE APPLIED FOR COMPLETION CERTIFICATE VIDE LETTER DATE D 31/03/2008 BUT WAS NOT GRANTED SUCH CERTIFICATE WHI CH WAS BEYOND THE CONTROL OF THE ASSESSEE. PLEA WAS A LSO RAISED THAT SECTION 80IB(10) OF THE ACT IS A BENEFI CIAL PROVISION, CONSEQUENTLY, IT SHOULD BE INTERPRETED LIBERALLY. RELIANCE WAS PLACED UPON THE DELHI BENC H OF THE TRIBUNAL IN THE CASE OF CHD DEVELOPERS LTD. WHI CH WAS APPROVED BY HONBLE DELHI HIGH COURT IN (2014) 43 TAXMAN.COM 249 (DEL.). RELIANCE WAS ALSO PLACED UP ON THE DECISIONS IN ITO VS SAI KRUPA DEVELOPERS (ITA NO.3661/MUM/2011), CIT VS JAIN HOUSING & CONSTRUCTION LTD. (2013) 30 TAXMAN.COM 131 (MAD.), AND MANAN CORPORATION VS ACIT (ITA NO.1053 OF 2011 ORDE R DATED 03/09/2012) FROM HONBLE GUJARAT HIGH COURT. IT WAS ALSO EXPLAINED THAT IDENTICALLY FOR A.Y. 2009-1 0 IN THE CASE OF ASSESSEE ITSELF, THE MUMBAI BENCH OF TH E TRIBUNAL VIDE ORDER DATED 22/09/2014 (ITA NO.6728/MUM/2013) ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 4 2.1. ON THE OTHER HAND, THE LD. DR, SHRI NEIL PHILI P, THOUGH DEFENDED THE CONCLUSION DRAWN IN THE IMPUGNE D ORDER BUT DID NOT CONTROVERT THE FACTUAL FINDING TH AT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSE SSEE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE AFORESAID ORDER OF THE TR IBUNAL DATED 22/09/2014 IN THE CASE OF ASSESSEE ITSELF ON IDENTICAL FACTS/ISSUE. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER IN THE VASAI-VIRAR REGION OF THANE DIST. SHRI PURUSHOTTAM A. KAWALI THE ORIGINAL OWNER OF THE LAND WAS AWARD ED WITH COMMENCEMENT CERTIFICATE FROM CIDCO AS PER LETTER NO.CIDCO/VVSR/BP-1087/W/2500 DATED 5/3/2004 WITH RE GARD TO VARIOUS SECTORS INTER-ALIA INCLUDING SECTOR-4, WHIC H IS DEVELOPED BY THE ASSESSEE AS PER ITS AGREEMENT WITH M/S.ADINATH DEVELOPERS. SEQUENCE OF EVENTS IS STATED IN THE FACT SHEET SUB MITTED BY LD. AR OF THE ASSESSEE AS UNDER. DATE EVENT REMARK PAGE NO. BEFORE 7.2.1997 PURUSHOTTAM A. KAWALI THE ORIGINAL OWNER OF AGRICULTURE LAND. 07/02/1997 OWNER CONVERTED AGRICULTURE LAND INTO NON-ARCULTURE LAND. VIDE ORDER BEARING NO.REV/DESK-1/T- 9/NAP/SR-3/96 OF OFFICE OF COLLECTOR, THANE. 05.03.2004 CIDCO APPROVED BLOCK PLAN AS RESIDENTIAL WITH SHOPLINE BUILDING VIDE NO.CIDCO/VVSR/BP- 1087/W/2500 FOR DVELOPMENT OF SECTOR.I,II,III, IV & V 0.2.07.2004 OWNER TRANSFER DEVELOPMENT RIGHT TO MR. KUNVERJI BACHHU SHAH FOR DEVELOPMENT OF SECTOR NO.I,II,III, IV & V 40-77 09.07.2004 MR. KUNVERJI BACHHU SHAH TRANSFER DEVELOPMENT RIGHT TO M/S. ADINATH DEVELOPERS FOR DEVELOPMENT OF SECTOR NO.I,II,III, IV & V 78-121 30.04.2007 M/S. ADINATH DEVELOPERS TRANSFER DEVELOPMENT RIGHT TO APPELLANT FOR BUILDING NO.1 WING C, BUILDING NO.2 WING A,B,C & BUILDING NO.3 WING A,B,C OF SECTOR NO.IV (100% 122-142 ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 5 RESIDENTIAL PROJECT) ADMEASURING AREA OF 5499.17 SQ.MTR. (I.E. MORE THAN 1 ACRE) 15.9.2005 M/S.ADINATH DEVELOPERS TRANSFER DEVELOPMENT RIGHT TO LEELA BUILDERS. FOR REMAINING BUILDING AND ALL COMMERCIAL AREA RIGHT 143-161 ..3.2008 PROJECT WAS COMPLETED 17.03.2008 HOUSE TAX LEVIED 168-170 27.03.2008 PAID WATER CONNECTION CHARGES TO VIRAR NAGARPALIKA 171-172 28.03.2008 ARCHITECT CERTIFIED THAT PROJECT IS COMPLETED 29.03.2008 BOLINJ GRAMPANCHAYAT ISSUED COMPLETION CERTIFICATE 177 31.03.2008 FIRM APPLIED TO CIDCO FOR GRANTING OCCUPATION CERTIFICATE 176 2.1 DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 (THE ACT), WHICH HAS BEEN DISALLOWED BY THE AO. THE R EASONS GIVEN BY AO FOR DISALLOWANCE OF THE CLAIM ARE AS UNDER: I. THE ASSESSEE COULD NOT PRODUCE COMPLETION CERTI FICATE OBTAINED FROM CIDCO WITHIN A PERIOD OF FOUR YEARS I.E. BEFOR E 31/3/2008. II. VASAI VIRAR MUNICIPAL CORPORATION IN RESPONS E TO QUERY RAISED BY AO VIDE NOTICE ISSUED UNDER SECTION 133(6) HAS STATED THAT IT DID NOT ISSUE COMPLETION CERTIFICATE TO THE ASSESSEE A ND AS PER LETTER RECEIVED FROM VASAI-VIRAR MUNICIPAL CORPORATION PER MISSION OF REVISED DEVELOPMENT PLAN WAS ISSUED VIDE LETTER DAT ED 23/3/2010. THUS AO OBSERVED THAT ASSESSEE DID NOT COMPLETE THE BUILDING WITHIN THE MANDATORY TIME LINE I.E. 31/3/2008. III. ACCORDING TO DETAILS FILED BEFORE AO THE ASSE SSEE HAD BEEN INCURRING EXPENDITURE BEYOND 31/3/2008 IN THE SHAPE OF FIXING OF KITCHEN DOORS, SLIDING WINDOWS, ELECTRIC METER PURC HASE, LOFT TANK PURCHASE, PLUMBING PIPES, ELECTRIC WIRING CABLES E TC. WHICH IS INDICATIVE OF THE FACT THAT PROJECT OF THE ASSESS EE WAS NOT COMPLETE. 2.2 FURTHER THE AO REJECTED THE CONTENTION OF THE ASSESSEE THAT COMPLETION CERTIFICATE ISSUED BY GRAM PANCHAYAT BOL INJ, VIRAR SHOULD BE CONSIDERED TO BE FULFILLMENT OF THE CONDITION OF COMPLETION OF PROJECT. THE AO REJECTED SUCH CONTENTION ON THE BA SIS THAT THE CERTIFICATE ISSUED BY GRAM PANCHAYAT WILL NOT SERVE THE PURPOSE OF ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 6 THE ASSESSEE AND ONLY CIDCO COULD ISSUE SUCH CERTIF ICATE, THEREFORE, THE CERTIFICATE ISSUED BY GRAM PANCHAYAT CANNOT BE TAKEN AS FULFILLMENT OF THE CONDITION OF COMPLETION OF THE PROJECT BEFORE 31/3/2008. 2.3 THE A.O ALSO OBSERVED THAT THE PROJECT WAS APPR OVED AS SINGLE PROJECT BY LOCAL AUTHORITY WHICH WAS CAPA BLE OF BEING DIVIDED INTO VARIOUS PARCELS AND ALLOCATE TO DIFFE RENT ENTITIES FOR DEVELOPMENT BY THE DEVELOPMENT RIGHT OWNER THEN THE VERY ACTION OF THE OTHER PARTY WHICH INTER-ALIA INCLUDE M/S. ADINA TH DEVELOPERS WILL ABSOLVE THE BUYERS FROM THE ELIGIBILITY TO CLAIM D EDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE DISALLOWANCE OF D EDUCTION WAS CHALLENGED IN AN APPEAL FILED BEFORE LD. CIT(A). I T WAS SUBMITTED THAT ASSESSEE HAD APPLIED TO CIDCO FOR COMPLETION CERTIFICATE ON 31/3/2008. HOWEVER, CIDCO DID NOT ISSUE COMPLETION CERTIFICATE. THE GRAM PANCHAYAT HAD ISSUED THE COMPLETION CERTIF ICATE ON 29/3/2008 CERTIFYING THE FACT THAT THE PROJECT IS C OMPLETE AND IS HABITABLE AND IS ALSO READY TO BE OCCUPIED BY THE FLAT OWNERS. THEREFORE, THE CONDITION REGARDING COMPLETION OF P ROJECT WAS COMPLIED WITH. IT WAS ALSO SUBMITTED THAT AS PER E XPLANATION TO SECTION 10(20) OF THE ACT GRAM PANCHAYAT ALSO FALLS UNDER LOCAL AUTHORITY AND REFERENCE WAS MADE TO THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KRISHNA HARUBHAU LOHOKA RE VS. ITO(ITA NO.937/PN/2010) , WHEREIN IT HAS BEEN HELD THAT FOR THE PURPOSE OF ISSUE OF COMPLETION CERTIFICATE UNDER SECTION 80 IB (10) GRAM PANCHAYAT IS A LOCAL AUTHORITY. 2.4 IT WAS FURTHER SUBMITTED THAT REQUIREMENT OF CO MPLETION CERTIFICATE DOES NOT APPLY TO A CASE WHERE PROJECT HAS BEEN APPROVED BEFORE 31/3/2005. ALL THESE CONTENTIONS OF THE ASS ESSEE ARE NOTED IN PARA -4 OF THE ORDER OF LD. CIT(A). LD. CIT(A) HAS SUMMARIZED THE CONTENTIONS OF THE ASSESSEE AS UNDER: ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 7 I. THAT THE DEDUCTION UNDER SECTION 80 IB(10) SHO ULD NOT BE DISALLOWED SINCE THE ASSESSEE HAS COMPLETED THE PROJECT BEFORE 31.03.2008 AND HAS ALSO OBTAINED THE COMPLETION CERTIFICATE FROM THE G RAM PANCHAYAT, BOLINJ. II. THAT GRAM PANCHAYAT , BOLINJ IS A COMPETENT LOC AL AUTHORITY AUTHORIZED TO ISSUE A COMPLETION CERTIFICATE AS PER THE INCO ME TAX ACT AS WELL AS THE CONSTITUTION OF INDIA. III. THAT THE REQUIREMENT OF A COMPLETION CERTIFIC ATE IS A TECHNICAL FORMALITY FOR WHICH THE DEDUCTION SHOULD NOT BE DISALLOWED. IV) THAT THE ASSESSEE IS NOT REQUIRED TO OBTAIN THE COMPLETION CERTIFICATE BECAUSE THE PROJECT WAS APPROVED PRIOR TO 01.04.200 5 WHEN THE AMENDED PROVISION DID NOT EVEN EXIST AND THE QUESTION OF P UTTING THEM INTO EFFECT DID NOT ARISE AT THAT TIME. THE OLD PROVISIONS NEV ER REQUIRED THE COMPLETION CERTIFICATE AND HENCE, THE ASSESSEE IS NOT REQUIRE D TO OBTAIN THE SAME. HENCE, IN VIEW OF THE ABOVE, WE REQUEST YOUR HONOUR TO GRANT A SYMPATHETIC CONSIDERATION TOWARDS THE ASSESSEE AND ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) OF THE IT ACT, 19 61. 2.5 AFTER CONSIDERING THE AFOREMENTIONED SUBMISSION S OF THE ASSESSEE LD. CIT(A) HAS COME TO THE CONCLUSION THAT PRIMA FACIE THE PROJECT WAS NOT APPROVED BY LOCAL AUTHORITY I.E. CI DCO AS HOUSING PROJECT BUT AS RESIDENTIAL BUILDING IN SHOP LINE AS THERE WAS NO PROVISION FOR COMMERCIAL AREA IN HOUSING PROJECT PR IOR TO 01/04/2004. THE COMPLETION CERTIFICATE WAS NOT ISS UED BY LOCAL AUTHORITY/COMPETENT AUTHORITY I.E. CIDCO TILL THE D ATE OF THE ASSESSMENT ORDER. THE PROJECT OF THE ASSESSEE COUL D NOT BE CONSIDERED TO BE COMPLETE IN VIEW OF THE FACTS ME NTIONED BY THE AO IN THE ASSESSMENT ORDER. THE PERMISSION TO CONSTRU CT THE STRUCTURE WAS GIVEN BY THE LOCAL AUTHORITY I.E. CIDCO AND THE COMPLETION CERTIFICATE WAS ISSUED BY ANOTHER LOCAL AUTHORITY I .E. GRAM PANCHAYAT BOLINJ, VIRAR. THOUGH GRAM PANCHAYAT MAY BE A COMPETENT AUTHORITY TO ISSUE SUCH CERTIFICATE BUT I N THE INSTANT CASE THE PERMISSION TO CONSTRUCT THE BUILDING WAS NOT A CCORDED BY THE GRAM PANCHAYAT BOLINJ, VIRAR. THE APPELLANT HAD AP PLIED FOR COMPLETION CERTIFICATE FROM CIDCO AND COULD NOT OBT AIN IT FROM THE SAID COMPETENT AUTHORITY. IN THE CIRCUMSTANCES GE TTING A CERTIFICATE FROM OTHER LOCAL AUTHORITY CANNOT HOLD ANY VALIDIT Y. THE QUESTION WHICH IS IMPORTANT TO BE DECIDED IS THAT WHETHER I T IS A COMPETENT ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 8 AUTHORITY TO ISSUE THE CERTIFICATE OF COMPLETION T O THE ASSESSEE. THE EVIDENCE OF SUCH COMPETENCE OF THE AUTHORITY HA S NOT BEEN PROVIDED BY THE ASSESSEE EITHER BEFORE THE AO OR B EFORE LD. CIT(A), THEREFORE, THE CASE LAW RELIED UPON BY THE ASSESSEE WILL NOT SUPPORT ITS CASE. IN THIS MANNER LD. CIT(A) HAS UPHELD THE DISALLOWANCE. THE CONCLUDING OBSERVATIONS OF LD. CIT(A) ARE AS UN DER: 5.1.. THE APPELLANT HAD FILED COPY OF APPLICATION LETTER DATED 31.3.2008, SUBMITTED TO THE CIDCO REGARDING THE COM PLETION OF THE PROJECT AND ISSUANCE OF .COMPLETION CERTIFICATE, BEFORE THE ASSESSING OFFIC ER. BUT THE AID CERTIFICATE WAS NOT ISSUED BY THE CIDCO. IT WAS OB SERVED B THE ASSESSING OFFICER THAT IT WAS PENDING FOR MORE THAN A, YEAR. THE APPELLANT IN THE MEANWHILE OBTAINED COMPLETION CER TIFICATE FROM ANOTHER. LOCAL AUTHORITY VIZ. GRAM PANCHAYAT, BOLI NJ, VIRAR AND CLAIMED THAT THE PROJECT WAS COMPLETED ARID IT HAD FULFILLED THE CONDITIONS FOR CLAIMING DEDUCTION U/S.801B(10) OF T HE INCOME TAX ACT. THE ASSESSING OFFICER HAD ALSO ISSUED SUMMONS U/SJ33(6) OF THE. INCOME TAX ACT TO VASAI -VIRAR MUNICIPAL CORPO RATION OR EXAMINATION OF THE ISSUE; BY WHICH SHE CAME TO KN OW THAT THERE WAS A REVISED DEVELOPMENT PERMISSION ISSUED BY THE CIDCO IN RESPECT OF THE SAID PROJECT BEARING REFERENCE NO. CIDCO/VVSR/RDP/BP-10871W/6048 DATED 23.3.20W, THE C OPY OF THE SAME WAS ENCLOSED BY THE ASSESSING OFFICER FOR REFERENCE. AS PER THE ABOVE STATED LETTER, THE ASSESSING OFFICER HAD COME TO THE CONCLUSION THAT THE PROJECT WAS NOT COMPLETED TILL THE MANDATORY TIME LINE I.E. 31.3.2008 AND DENIED THE DEDUCTION U /S.8OLB(10) OF THE INCOME TAX ACT. 5.2. FROM THE FOREGOING PARAS, IT IS OBSERVED THAT THERE ARE CERTAIN IRREGULARITIES/DELAYS IN GETTING THE COMPLETION CER TIFICATE FROM CIDCO BY THE APPELLANT. IT IS VERY MUCH OBVIOUS THA T THE APPELLANT APPROACHED ANOTHER LOCAL AUTHORITY TO CUT SHORT THE REGULAR PROCEEDINGS AND OBTAINED THE COMPLETION CERTIFICATE FROM ANOTHER LOCAL AUTHORITY. THE PERMISSION TO CONSTRUCT THE ST RUCTURE WAS GIVEN BY THE LOCAL AUTHORITY I.E. CIDCO AND THE COMPLETIO N CERTIFICATE WAS ISSUED BY ANOTHER LOCAL AUTHORITY I.E. GRAM PANCHAY AT, BOLINJ, VIRAR. THE APPELLANT SUBMITTED THAT GRAM PANCHAYAT ALSO WAS A COMPETENT AUTHORITY TO ISSUE THE COMPLETION CERTIFI CATE TO CLAIM THE BENEFIT OF DEDUCTION U/S.8OLB(10) OF THE INCOME TAX ACT. HOWEVER, I AM OF THE OPINION THAT GRAM PANCHAYAT MAY BE A COMP ETENT AUTHORITY TO ISSUE SUCH A CERTIFICATE BUT IN THE IN STANT CASE, THE PERMISSION TO CONSTRUCT THE BUILDING WAS NOT ACCORD ED BY THE GRAM PANCHAYAT, BOLINJ, VIRAR. THE APPELLANT HAD APPLIED FOR COMPLETION CERTIFICATE FROM CIDCO ONLY AND COULD NOT OBTAIN FR OM THE SAID COMPETENT AUTHORITY. IN THE CIRCUMSTANCES GETTING A CERTIFICATE FROM ANOTHER LOCAL AUTHORITY CANNOT HOLD ANY VALIDITY. I T MAY BE A LOCAL AUTHORITY AS DEFINED BY THE INCOME TAX ACT BUT THE QUESTION REMAINS IN THE INSTANT CASE WHETHER IT IS A COMPETE NT AUTHORITY TO ISSUE THE CERTIFICATE OF COMPLETION TO THE APPELLA NT. THE QUESTION OF COMPETENCE HAS NOT BEEN PROVED BY THE APPELLANT E ITHER, BEFORE THE ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 9 ASSESSING OFFICER OR BEFORE THE APPELLATE AUTHORITY . HENCE THE CASE LAWS RELIED ON BY THE APPELLANT DOES NOT SUPPORT IT S CASE. IN THE CIRCUMSTANCES, THE CLAIM OF DEDUCTION U/S.801B(1O) OF INCOME. TAX ACT CANNOT B ALLOWED AND THE ADDITION MADE BY THE A SSESSING OFFICER IS SUSTAINED. THIS GROUND OF APPEAL IS DISM ISSED. AGGRIEVED, ASSESSEE HAS FILED THE AFORE MENTIONED G ROUNDS OF APPEAL. 3. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY LD . AR THAT THE DEVELOPMENT AGREEMENT OF THE ASSESSEE, COPY OF WHIC H IS FILED AT PAGE 122 TO 142 OF THE PAPER BOOK WAS IN RESPECT OF SECTOR NO.4 FOR BUILDING NO.1,WING-C, BUILDING NO.2, WING-A,B & C AND BUILDING NO.3, WING A,B & C AND THIS IS 100% RESIDENTIAL PR OJECT ADMEASURING AN AREA OF 5499.17 SQ.MTS., WHICH IS MO RE THAN ONE ACRE. RELYING TO THE DEVELOPMENT AGREEMENT IT WAS SUBMITTED THAT THE TOTAL DEVELOPMENT RIGHTS IN RESPECT OF TOTAL A REA WERE TO THE TUNE OF 409272 SQ.FTS., OUT OF WHICH APPROVED AREA WAS 274272 SQ.FTS. OUT OF THE TOTAL DEVELOPED AREA THE ASSESSEE GOT 54 99.12 SQ.MTRS. I.E. 59193 SQ.FTS. IN SECTOR -4. IN THIS REGARD LD. AR REFERRED TO CLAUSE (V) & (Z-B) OF PAGES 6 & 7 OF THE DEVELOPME NT AGREEMENT, COPY PLACED AT PAGES 128 TO 129 OF THE PAPER BOOK. IT W AS SUBMITTED THAT THIS PROJECT WAS 100% RESIDENTIAL PROJECT AND REST OF THE AREA WAS TRANSFERRED BY M/S. ADINATH DEVELOPERS FOR DEVELOPM ENT TO SAI LEELA BUILDERS AND COPY OF THIS AGREEMENT IS ALSO FILED AT PAGES 143 TO 161 OF THE PAPER BOOK. HE SUBMITTED THAT M/S. S AI LEELA BUILDERS IS DIFFERENT PARTY UNRELATED TO THE ASSESSEE. HE SUBMITTED THAT THE AREA OF DEVELOPMENT OF M/S. SAI LEELA BUILDERS WA S COMPRISING OF RESIDENTIAL AS WELL AS COMMERCIAL AREA. THUS IT WAS SUBMITTED BY LD. AR THAT IN THE AREA DEVELOPED BY THE ASSESSEE N O COMMERCIAL BUILDING WAS INVOLVED. 3.1 LD. AR FURTHER SUBMITTED THAT REVISED BUILDING PLAN FOR WHICH INFORMATION WAS RECEIVED BY THE AO VIDE LETTER DATED 23/3/2010 DID NOT BELONG TO ASSESSEE AS THE SAID PLAN WAS NOT REVISED IN RESPECT OF PROJECT DEVELOPED BY THE ASSESSEE BUT WA S IN RESPECT OF ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 10 PROJECT DEVELOPED BY OTHER DEVELOPER. THEREFORE, L D. AR PLEADED THAT THE SAID REVISED PLAN HAS NOTHING TO DO WITH T HE PROJECT OF THE ASSESSEE. 3.2 SO FAR AS IT RELATES TO CONTENTION REGARDING CO MPLETION CERTIFICATE IT WAS SUBMITTED BY LD. AR THAT PROJECT OF THE ASSESSEE WAS APPROVED BY CIDCO AS PER LETTER DTED 5/3/2004 ( THE COPY OF THE SAID LETTER WAS NOT ENCLOSED IN THE PAPER BOOK. HOWEVER, IT WAS SUBMITTED DURING THE COURSE OF HEARING AND COPY WA S ALSO GIVEN TO LD. DR) IT WAS SUBMITTED BY LD. AR THAT THE COND ITION REGARDING COMPLETION OF PROJECT IS NOT APPLICABLE ON THE PRO JECT WHICH ARE APPROVED BEFORE 31/3/2005. LD. AR HAS SUBMITTED A CHART SHOWING THE ESSENTIAL CONDITIONS BEFORE 01/04/2005 AND AFTER 01/04/2005 AND THE SAID CHART READ AS UNDER: SN HEAD BEFORE 1.4.05 AFTER 1.4.05 REMARKS 1. CUT OF DATE PROJECTS APPROVED BEFORE 31.3.2005 PROJECTS APPROVED BEFORE 31.03.2007 DEDUCTION PERIOD INCREASED 2. COMMENCEMENT AFTER 1.10.1998 AFTER 1.10.1998 SAM E 3. COMPLETION NO PROVISION I) PROJECTS APPROVED BEF ORE 1.4.2004 ON OR BEFORE 31.03.2008 II.PROJECTS APPROVED AFTER 1.4.2004 WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH APPROVAL RECEIVED THESE PROVISIONS ADDED 4. AREA MINIMUM 1 ACRE PLOT SIZE. MINIMUM 1 ACRE PLOT SIZE SAME. 5. MAXIMUM BUILT UP AREA 1000 SQ.FT. OR 1500 SQ.FT. AS APPLICABLE ACCORDING TO CITIES 1000 SQ.FT. OR 1500 SQ.FT. AS APPLICABLE ACCORDING TO CITIES SAME 6. BUILT UP AREA NO DEFINITION BUILT-UP AREA DEFIN E DETAIL DEFINITION 7. PERMITTED COMMERCIAL AREA NO PROVISION NOT EXCEEDING 5% OR 2000 SQ.FT. BUILT UP AREA NO RESTRICTION IN COMMERCIAL USE OF LAND SUBJECT TO APPROVING UNDER HOUSING CATEGORY 8. COMPLETION CERTIFICATE NO PROVISION COMPLETION CERTIFICATE TO BE OBTAINED BY LOCAL AUTHORITY. THESE PROVISIONS ADDED. THUS, THERE IS NO CONDITION OF COMPLETION AND FURNI SHING COMPLETION CERTIFICATE. ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 11 3.3 FOR RAISING THE CONTENTION THAT COMPLETION OF T HE PROJECT WAS NOT A CONDITION PRECEDENT IN RESPECT OF PROJECT WH ICH WERE APPROVED BEFORE 31/3/2005, LD. AR RELIED UPON THE FOLLOWING DECISIONS: (1) CIT VS. CHD DEVELOPERS (2014) 43 TAXMAN.COM 24 3(DEL)- IN THIS CASE APPROVAL FOR THE PROJECT WAS GIVEN BY MATHURA VRINDAVAN DEVELOPMENT AUTHORITY ON 16/03/2005. THE AO APPLIE D THE PROVISIONS OF SUB-SECTION (10) OF SECTION 80IB BEI NG SUBSTITUTED BY FINANCE (NO.2) ACT, 2004, W.E.F. 1/4/2005 AND DISAL LOW THE CLAIM OF DEDUCTION ON THE REASONING THAT THE COMPLETION CERT IFICATE IN TERMS OF EXPLANATION (II) TO CLAUSE (A) OF SECTION 80IB(10) HAD NOT BEEN GRANTED TO THE ASSESSEE SO AS TO ENABLE IT TO AVAIL THE BE NEFIT PROVIDED BY SECTION 80 IB. IT WAS CONTENDED BEFORE AO THAT VI DE LETTER DATED 5/11/2008 IT HAD APPLIED FOR COMPLETION CERTIFICAT E BUT THE SAME WAS NOT ISSUED WHICH WAS BEYOND ITS CONTROL AND PO WER. ORDER PASSED BY AO WAS UPHELD BY LD. CIT(A). THE TRIBUNA L HELD THAT IN A CASE WHERE APPROVAL OF THE PROJECT IS GRANTED BY TH E COMPETENT AUTHORITY BEFORE 1/4/2005 THE POSITION WILL BE GOV ERNED BY THE NON- AMENDED PROVISIONS AND IN NON-AMENDED PROVISIONS TH ERE WAS NO CONDITION LIKE PROJECT COMPLETION CERTIFICATE. THE ASSESSEE WAS NOT EXPECTED TO FULFILL THE CONDITION WHICH WAS NOT ON THE STATUTE WHEN SUCH APPROVAL WAS GRANTED AND TRIBUNAL DIRECTED THE AO TO ALLOW THE DEDUCTION. HONBLE DELHI HIGH COURT HAS UPHELD THE ORDER PASSED BY THE TRIBUNAL. (2) ITO VS. SAI KRUPA DEVELOPERS, DECISION DATED 14/3/2012 IN ITA NO.3661/MUM/2011, COPY PLACED ON RECORD. THE AFOR EMENTIONED PROPOSITION WAS UPHELD AS PER FOLLOWING OBSERVATION S: REGARDING THE NEXT OBJECTION OF THE AO, THAT THE P ROJECT WAS NOT COMPLETED BEFORE 31.3.2008, THE CONTENTION OF THE R EPRESENTATIVE IS THAT AS THE PROJECT OF THE APPELLANT WAS APPROVED B EFORE 31.3.2005, THERE WAS NO REQUIREMENT OF OBTAINING THE COMPLETIO N CERTIFICATE. THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS. IN T HE CIRCUMSTANCES, I ACCEPT THE PLEA OF THE REPRESENTATIVE THAT DEDUCTIO N U/S. 80 IB(10) CANNOT BE DENIED MERELY BECAUSE THE APPELLANT DID N OT OBTAIN THE ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 12 COMPLETION CERTIFICATE ON OR BEFORE 31.3.2008. IN V IEW OF ABOVE, I FIND THAT THERE IS NO JUSTIFICATION FOR DENYING DEDUCTIO N U/S. 80IB(10). 10. AGGRIEVED BY THE STAND SO TAKEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. II. HAVING HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND GOING TO THE FACTS OF THE CASE AND DETAILED REASONI NG GIVEN BY THE CIT(A), WE ARE NOT INCLINED TO DISTURB THE WELL REA SONED ORDER OF THE CIT(A), WHEREIN, HE HAS ALLOWED THE CLAIM FOR DEDUC TION U/S. 80 IB(10)) TO THE ASSESSEE FIRM. (3) CIT VS. JAIN HOUSING & CONSTRUCTION LTD. ( 201 3) 30 TAXAMAN.COM 131 (MAD) - IN THIS CASE IT WAS HELD B Y HONBLE MADRAS HIGH COURT THAT IT IS DIFFICULT TO ACCEPT TH E CASE OF REVENUE THAT THAT THE CLAIM FOR DEDUCTION HAS TO BE REJECT ED ON THE GROUND THAT ASSESSEE DID NOT FURNISH THE COMPLETION CERTIF ICATE AS THERE WAS NO SUCH REQUIREMENT UNDER SECTION 80 IB(10), AS IT STOOD DURING THE RELEVANT ASSESSMENT YEAR 2004-05. 3.4 LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAD SUBMITTED VARIOUS EVIDENCES TO SHOW THAT THE PROJECT WAS COMP LETED ON 31/3/2008 AND REFERENCE WAS MADE TO THE FOLLOWING E VIDENCES: (I) COMPLETION CERTIFICATE FROM ARCHITECT. (II) COMPLETION CERTIFICATE FROM GRAM PANCHAYAT, BO LINJ, VIRAR (LOCAL AUTHORITY) DATE 29/03/2008. (PAGE NO.177) (III) NO DUE CERTIFICATE FROM GRAM PANCHAYAT DATED 17/03/2008. (REFER PAGE NO. 173-175). (IV) APPLIED TO CIDCO FOR GRANTING COMPLETION CERTI FICATE VIDE LETTER DATED 3 1/03/2008. (PAGE NO.176) (V) NOC FROM WATER DEPARTMENT AND ACCORDINGLY WATER CHARGES WERE PAID TO VIRAR NAGAR PALIKA ON 27/03/2008. (IT IS REQUIRE AFTER COMPLETION OF PROJECT). (REFER PAGE NO.171-172) (VI) HOUSE TAX WAS PAID ON 17/03/2008 AS COMPLETED HOUSE. IN MAHARASHTRA HOUSE TAX ARE LEVIED ACCORDINGLY TO NAT URE AND CONDITION OF PROPERTY. IN APPELLANT CASE PROJECT IS COMPLETED THEREFORE LOCAL BODY CHARGE HOUSE TAX ON PROJECT AS COMPLETED HOUSE. (PAGE NO. 168-170). 3.5 FOR THE PROPOSITION THAT NO COMMERCIAL PROPERTY WAS INVOLVED IN THE PROJECT OF THE ASSESSEE AS THE PROJECT OF TH E ASSESSEE HAS TO BE ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 13 CONSIDERED A SEPARATE PROJECT, LD. AR RELIED UPON T HE FOLLOWING DECISION. (I) KHYTI FINANCIAL SERVICES,ITA NO.3740/MUM/2008 A ND REFERENCE WAS MADE TO THE FOLLOWING FACTS AND FINDINGS RECORD ED BY ITAT: FACTS (PARA 2) THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF TW O PARTNERS VIZ M/S KHYATI FINANCIAL SERVICES P.LTD & SHRI. PARESH MOHANLAL PAREKH. THE APPELLANT FIRM ENTERED INTO A DEVELOPMENT AGREEMENT ON 25.4.2003 WITH HICKSON & DADAJEE P.LTD A COMPANY DULY INCORPORATED UNDER THE COMPANIES ACT, 1956 TO DEVELOP PROPERTY SITUATED AT VILLAGE PAHADI, GOREGAON (E) OWED BY M/S HICKSON & DADAJEE P.LTD IN PURSUANCE OF SAID DEVELOPMENT AGREEMENT, THE ASSESSEE FIRM UNDERTOOK TO CONSTRUCT RESIDENTIAL BUILDING VIZ., ACMEE ARMAY TO BE RESIDENTIAL AREA CONSTRUCTED AT 60,000 SQ.FT. APPRO X. COMPRISING 200 FLATS IN 7 WINGS IN GROUND PLUS UPPE R FLOORS TO BE APPROVED. THE SAID RESIDENTIAL BUILDIN G HAS TO BE CONSTRUCTED ON A SHOPPING COMPLEX COMPRISING OF APPROX. 10,566 SQ/FT/ BUILT UP AREA WHEREIN THE LIM ITED DEVELOPMENT RIGHT TO CONSTRUCT SHOPPING COMPLEX WAS ASSIGNED TO A DIFFERENT CONCERN VIZ LAKSHADEEP INVESTMENT & FINANCE P.LTD HEREINAFTER CALLED AS LI FPL, BEING A SISTER CONCERN OF THE APPELLANT THROUGH A SEPARATE DEVELOPMENT AGREEMENT DT 25.4.2003 ENTERED BETWEEN LIFPL & M/S HICKSON & DADAJEE PUT .LTD (OWNER OF THE PROPERTY) IN OTHER WORDS THE DEVELOPM ENT RIGHT OF THE PROPERTY WAS DIVIDED BETWEEN THE ASSES SEE FOR CONSTRUCTING RESIDENTIAL FLATS AND SHOPPING COM PLEX AT GROUND FLOOR TO LIFPL. THE CONSIDERATIONS TO BE PAID BY THE APPELLANT AND LIFPL WERE FIXED AT RS.11.56 C RORE & 2 CRORE RESPECTIVELY IN LIEU OF DEVELOPMENT RIGHT S RECEIVED BY THEM. FINDING (PARA 15) HOUSING PROJECT OF THE ASSESSEE IS DIFFERENT AND DISTINCT FROM THE PROJECT FOR BUILDING COMMERCIAL AREA BY ANOTHER ENTITY. HOUSING PROJECT DOES NOT INCLUDE CONSTRUCTION OF COMMERCIAL ESTABLISHMENT CARRIED BUT BY ANOTHER ENTITY IN THAT AREA. THEREFORE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 801B(10) FOR THE HOUSING PROJECT CANNOT BE DENIED BECAUSE THE COMMERCIAL PROJECT WAS CARRIED OUT BY A SISTER CONCERN. 3.6 HE HAS ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES, 3 53 ITR 36 (BOM) AND REFERENCE WAS MADE TO THE FOLLOWING OBSERVATION S: THE EXPRESSION HOUSING PROJECTS IS NEITHER DEFIN ED UNDER SECTION 2 OF ACT NOR UNDER SECTION 801B(10) OF THE ACT. EVEN UNDER MUMBAI MUNICIPAL CORPORATION ACT, 1988 AS ALS O UNDER DEVELOPMENT CORPORATION REGULATIONS FOR GREATER MUM BAI, 1991, THE EXPRESSION HOUSING PROJECT IS NOT DEFIN ED. THEREFORE, THE EXPRESSION HOUSING PROJECT IN SECT ION 801B(10) WOULD HAVE TO BE CONSTRUED AS COMMONLY UNDERSTAND. AS RIGHTLY HAVE TO BE CONSTRUCTED AS COMMONLY UNDER STOOD. ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 14 AS RIGHTLY CONTENDED BY MR. INAMDAR SENIOR ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE AND MR. MISTRI, LEARNED SENIOR ADVOCATE AND MR. JOSHI, LEARNED ADVOCATE APP EARING ON BEHALF OF THE INTERVENERS, THE EXPRESSION HOUSING PROJECT IN COMMON PARLANCE WOULD MEAN CONSTRUCTING A BUILDING OR GROUP OF BUILDINGS CONSISTING OF SEVERAL RESIDENTIAL UNIT S. IN FACT, THE EXPLANATION IN SECTION 801B(10) SUPPORTS THE CONTEN TION OF THE ASSESSEE THAT THE APPROVAL GRANTED TO A HOUSING PRO JECT. THEREFORE, IT IS CLEAR THAT CONSTRUCTION OF EVEN ON E BUILDING WITH SEVERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQ.FT. (E BUILDING IN THE PRESENT CASE) WOULD CONSTITUTE A HOUSING PROJECT UNDER SECTION 801B(10) OF THE ACT. THUS IT WAS SUBMITTED BY LD. AR THAT LD. CIT(A) HAS ERRED IN NOT ALLOWING THE RELIEF TO THE ASSESSEE AND ASSESSE E SHOULD BE GRANTED WITH DEDUCTION UNDER SECTION 80 IB(10) O F THE ACT. 4. ON THE OTHER HAND, LD. DR RELYING UPON THE ASSES SMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT(A), WHICH HAVE BEEN DISCUSSED IN DETAIL IN THE ABOVE PART OF THIS ORDER SUBMITTED THAT LD. CIT(A) HAS RIGHTLY HELD THAT ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT AS IT DID NOT FULFILL THE REQUIRED CONDITION AS MENTIONED BY AO AND LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE FIRST AND FORE MOST CASE OF THE REVENUE IS THAT THE ASSESSEE DID NOT SUBMIT COM PLETION CERTIFICATE FROM COMPETENT AUTHORITY WHICH ACCORDIN G TO THE OPINION OF AO AND LD. CIT(A) IS CIDCO. THE ASSE SSEE HAD NOT ONLY SUBMITTED THE PROJECT COMPLETION CERTI FICATE ISSUE BY THE GRAM PANCHAYAT BUT ALSO VARIOUS EVIDENCES TO SHOW THAT THE PROJECT WAS COMPLETED BY 31/03/2008 AND THESE EVIDENCES HAVE ALSO BEEN DESCRIBED IN PARA 3.4 OF THIS ORDER. IN OUR OPINION IT WILL NOT BE RELEVANT TO GO INTO MUCH DETAIL FOR THIS ISSUE AS IT IS CLEAR FROM THE DECISIONS OF HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHD DEVELOPERS A ND HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JA IN HOUSING ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 15 CONSTRUCTION (SUPRA) THAT SUCH CONDITION OF SUBMISS ION OF COMPLETION CERTIFICATE WAS NOT APPLICABLE TO THE PR OJECTS WHICH HAVE BEEN APPROVED BY THE PUBLIC AUTHORITY BEFORE 31/3/2005. IN THE PRESENT CASE THE PROJECT WAS APP ROVED FOR COMMENCEMENT VIDE LETTER OF CIDCO DATED 05/03/2004. THUS, THE PROJECT WAS APPROVED FOR COMMENCEMENT BEF ORE 31/3/2005 AND OLD LAW WILL APPLY WHEN IT WAS NOT A CONDITION PRECEDENT TO SUBMIT COMPLETION CERTIFICA TE. IN VIEW OF THESE DECISIONS AND ALSO THE DECISIONS OF CO-ORD INATE BENCHES RELIED UPON BY LD. AR WHICH HAVE BEEN DI SCUSSED IN THE ABOVE PART OF THIS ORDER WE HOLD THAT DEDUC TION U/S. 80 IB (10) CANNOT BE DENIED TO THE ASSESSEE FOR W ANT OF COMPLETION CERTIFICATE FROM CIDCO. 5.1 THE OTHER OBJECTION BY THE AO IS REGARDING COMM ERCIAL ELEMENT WHICH ACCORDING TO THE SUBMISSIONS OF THE ASSESSEE IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AS TH ERE IS NO COMMERCIAL ELEMENT IN THE PROJECT CONSTRUCTED BY T HE ASSESSEE AND COMMERCIAL ELEMENT, IF ANY, FOR DEVELOPMENT WA S IN ANOTHER PROJECT WHICH IS NOT THE SUBJECT MATTER OF THIS APPEAL. 5.2 IT MAY ALSO BE MENTIONED HERE THAT THOUGH AO H AS GIVEN A PASSING REMARK FOR DISALLOWING THE CLAIM TH AT WHEN A PROJECT IS APPROVED AS A SINGLE PROJECT BY THE LOCA L AUTHORITY WHICH IS CAPABLE OF DIVIDING INTO VARIOUS PARCELS A ND ALLOCATED TO DIFFERENT ENTITIES FOR DEVELOPMENT BY THE DEVELOPMENT RIGHT OWNER THEN THE ACTION OF THE DE VELOPER OF SPLIT SELLING OF THE PROJECT TO THE ASSESSEE AND M/ S. SAI LEELA DEVELOPERS WILL ABSOLVE THE BUYERS FROM ELIGIBILI TY TO CLAIM DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT BUT AO HAS NOT SPELT OUT THAT HOW SUCH SPLITTING DONE BY M/S. ADI NATH DEVELOPERS WILL DISENTITLE THE ASSESSEE TO CLAIM DE DUCTION UNDER SECTION 80 IB(10) OF THE ACT. AS PER DECISIO N OF HONBLE ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 16 BOMBAY HIGH COURT IN THE CASE OF CIT VS. VANDANA PR OPERTIES (SUPRA) IT IS HELD THAT THE EXPRESSION HOUSING PR OJECT IS NEITHER DEFINED UNDER SECTION 2 OF THE ACT NOR UND ER SECTION 80IB(10) OF THE ACT. IT IS ALSO NOT DEFINED UNDER MUMBAI MUNICIPAL CORPORATION ACT, THEREFORE, THE SAME HAS TO BE CONSTRUED AS COMMONLY UNDERSTOOD. IN COMMON PARLAN CE HOUSING PROJECT WOULD MEAN CONSTRUCTING THE BUILD ING OR GROUP OF BUILDINGS CONSISTING OF SEVERAL RESIDENTIA L UNITS. IN FACT THE EXPLANATION IN SECTION 80 IB(10) SUPPORTS THE CONTENTION OF THE ASSESSEE THAT APPROVAL GRANTED TO HOUSING PROJECT. THEREFORE, IT IS CLEAR THAT CONSTRUCTION OF EVEN ONE BUILDING WITH SEVERAL RESIDENTIAL UNITS OF SIZE NO T EXCEEDING 1000 SQ.FTS. E BUILDING IN THAT CASE WOULD CONST ITUTE A HOUSING PROJECT UNDER SECTION 10 IB(10) OF THE ACT. IF FACTS OF THE PRESENT CASE ARE SEEN IN THE LIGHT OF THE AFORE MENTIONED DECISION OF HONBLE BOMBAY HIGH COURT THEN IT WILL BE CLEAR THAT PROJECT CONSTRUCTED BY THE ASSESSEE WAS A SEPARATE PROJECT DIFFERENT FROM THE PROJECT CARRIED OUT BY M /S. SAI LEELA DEVELOPERS. THEREFORE, SUCH PASSING OBSERVATIONS OF AO CANNOT BE HELD TO BE A GROUND FOR REJECTION OF ASSE SSEES CLAIM FOR DEDUCTION UNDER SECTION 80 IB (10) OF THE ACT. 5.3 FOR THE AFOREMENTIONED REASONS WE SET ASIDE TH E ORDER PASSED BY LD. CIT(A) AND HOLD THAT ASSESSEE IS ENTI TLED TO GET DEDUCTION UNDER SECTION 80 IB(10) AND ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE DEDUCTION TO THE ASSESSEE UN DER SECTION 80 IB(10). GROUND NO.1 TO 5 ARE ALLOWED IN THE MA NNER AFORESAID. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER/IMPUGNED ORDER, CONCLUSION DRAWN IN THE ORDER OF THE TRIBUNAL ( IN THE CASE OF ASSESSEE ITSELF), WE NOTE THAT THE FACTS ARE IDENTICAL BECAUSE FOR ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 17 ASSESSMENT YEAR 2009-10, THE PROJECT WAS APPROVED ON 05/03/2004 I.E. BEFORE INSERTIONS OF CONDITIONS OF COMPLETION WITH EFFECT FROM 01/04/2005. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILD ER AND DEVELOPER IN VASAI-VIRAR REGION OF THANE DISTRI CT. THE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE ON THE REASONS AS CONTAINED IN THE ASSESSMENT ORDER, BROADLY, THE ASSESSEE COUL D NOT PRODUCE COMPLETION CERTIFICATE FROM CIDCO WITH IN THE STIPULATED PERIOD. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO AFFIRMED THE STAND OF THE ASSESSING OFFICER. IT IS NOT WORT HY THAT AS PER EXPLANATION TO SECTION 10(20) OF THE AC T GRAM PANCHAYAT ALSO FALLS UNDER LOCAL AUTHORITY FOR WHICH REFERENCE CAN BE DRAWN FROM THE DECISION IN THE CASE OF KRISHAN HARUBHAU LOHOKARE VS ITO (ITA NO.937/PN/2010), WHEREIN, IT WAS HELD THAT FOR THE PURPOSES OF ISSUANCE OF COMPLETION CERTIFICATE U/S 80IB(10) OF THE ACT GRAM PANCHAYAT IS A LOCAL AUTHORITY, THEREFORE, WE FIND MERIT IN THE CONTENTI ON OF LD. COUNSEL FOR THE ASSESSEE. SUBSTITUTION WAS MAD E BY THE FINANCE (NO.2) ACT 2004 WITH EFFECT FROM 01/04/2005 AND PRIOR TO ITS SUBSTITUTION, IN SUB- SECTION (10) TO SECTION 80IB, THERE WAS NO REQUIREM ENT OF COMPLETION CERTIFICATE. THIS ISSUE HAS BEEN ELABORATELY DEALT WITH BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS CHD DEVELOPERS (WHEREIN ONE OF US I.E. JUDICIAL MEMBER) IS SIGNATO RY ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 18 TO THE ORDER, WHICH WAS AFFIRMED BY THE HONBLE DEL HI HIGH COURT IN (2014) 43 TAXMAN. COM 249 (DEL.) VIDE ORDER DATED 22/01/2014. THE HONBLE DELHI HIGH COURT AFFIRMED THE STAND OF THE TRIBUNAL TO THE FAC T THAT BEFORE THE SUBSTITUTION OF THE ACT WITH EFFECT FROM 01/04/2005 AND IN TERMS OF EXPLANATION (II) TO CLAU SE (A) OF SECTION 80IB (10), THERE IS NO REQUIREMENT O F COMPLETION CERTIFICATE FOR AVAILING DEDUCTION FOR T HE PROJECT WHICH WERE APPROVED BEFORE THE DATE OF SUBSTITUTION I.E. 01/04/2005. IN THE PRESENT APPEA L APPROVAL WAS GRANTED BY THE COMPETENT AUTHORITY ON 05/03/2004, BEFORE THE INSERTIONS OF CONDITION OF COMPLETION CERTIFICATE (I.E. W.E.F. 01/04/2005), THEREFORE, THE ASSESSEE IS NOT EXPECTED TO FULFILL THE CONDITIONS WHICH WERE NOT ON THE STATUTE BOOK WHEN THE APPROVAL WAS GRANTED BY THE COMPETENT AUTHORITY TO THE ASSESSEE, CONSEQUENTLY, FOLLOWING THE DECISI ON OF THE PUNE BENCH OF THE TRIBUNAL IN SHRI KRISHNA HARIBHAU LOHOKARE (ITA NO.937/PN/2010) ORDER DATED 28/02/2013, CIT VS CHD DEVELOPERS (ITA NO.2902 & 4694/DEL/2010) ORDER DATED 26/09/2012 AND THE DECISION FROM HONBLE DELHI HIGH COURT IN THE CASE OF CHD DEVELOPERS, RATIO LAI D DOWN IN CIT VS TARNETAR CORPORATION ORDER DATED 12/09/2012 FROM HONBLE GUJARAT HIGH COURT, HONBLE MADRAS HIGH COURT IN CIT VS JAIN HOUSING CONSTRUCTIONS HOLDING THAT THE CONDITIONS OF COMPLETION CERTIFICATE WHICH WERE NOT APPLICABLE TO ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 19 THE PROJECTS APPROVED BY THE COMPETENT AUTHORITY BEFORE 31/03/2005. EVEN FOR ASSESSMENT YEAR 2009- 10, THE MUMBAI BENCH OF THE TRIBUNAL VIDE ORDER DATED 22/09/2014 (REPRODUCED HEREINABOVE) DEALT WITH THE ISSUE IN DETAIL AND THAT TOO AFTER PLACING RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE CASE OF CHD DEVELOPERS, AND OTHER CASES RELIED UPON BY THE ASSESSEE, THEREFORE, ON TH IS ISSUE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 3. SO FAR AS, CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT IS CONCERNED, IN VIEW OF OUR DECISI ON, IT IS CONSEQUENTIAL IN NATURE. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.1. THE FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED APPEAL FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE A CT, FILED THE ARCHITECT CERTIFICATE WITH AUDIT REPORT IN FROM NO. 10CCB WITH THE RETURN OF INCOME. THE SAID ARCHITECT HAD C ERTIFIED THAT THE HOUSING PROJECT UNDER TAKEN BY THE ASSESSE E WAS APPROVED BY THE MCGM ON 31/03/2003 AND ASSESSEE HAS STARTED CONSTRUCTION OF BUILDING AS PER BMC APPROVE D PLAN/SANCTION DATED 13/01/2004. THE ASSESSING OFFIC ER DENIED THE CLAIMED DEDUCTION BY OBSERVING THAT M/S GAS PROPERTY DEVELOPERS INCURRED EXPENDITURE OF RS.1,80,46,496/- UP TO 31/03/1998 WITH WHOM THE ASS ESSEE ENTERED IN TO DEVELOPMENT AGREEMENT WITH RESPECT TO THE PROPERTY UNDER CONSIDERATION. ON THE OTHER HAND, T HE LD. AR, CONTENDED THAT NO EXPENDITURE HAD BEEN INCURRED ON THE ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 20 DEVELOPMENT OF THE HOUSING PROJECT, WHILE THERE WAS SOME MINOR EXPENSES INCURRED ON THE REPAIR AND MAINTENAN CE OF BOUNDARY WALL, BRICKS AND NOT IN THE DEVELOPMENT OF HOUSING PROJECT. THERE WAS SOME EXPENSES INCURRED ON ARCHIT ECT AND ENGINEERING FEES WORTH RS.4,16,300/- IN CONNECTION WITH THE APPROVAL OF THE BUILDING PLAN VIDE COMMENCEMENT CER TIFICATE DATED 28/11/1992. THE ASSESSEE CONTENDED THAT AS PER THE ORIGINAL BUILDING PLAN, ONLY TWO BUILDINGS WERE CON STRUCTED WHILE AS PER THE REVISED PLAN SEVEN BUILDING ARE TO BE CONSTRUCTED AND THE DETAILS OF THE APPROVAL OBTAINE D FROM THE BMC FOR THE PROJECT, DETAILED ABOVE, AS OBTAINED BY THE ASSESSEE, HENCE, WE HAVE OBSERVED THAT THE ASSESSEE HAS DULY COMPLIED WITH THE CONDITION OF THE SECTION 80IB(10) OF THE ACT, WHEREBY THE APPROVAL HAS OBTAINED PRIOR TO 31/03/20 05, IT IS ALSO OBSERVED THAT THE PROJECT HAS NOT COMMENCED BE FORE 01 ST OCTOBER 1998 AND THE MATTER IS DULY COVERED BY THE ABOVE DECISION OF THE TRIBUNAL. IT IS ALSO CLARIFIED HERE THAT IDENTICALLY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS CHD DEVELOPERS (ITA NO.2902 AND 4694/DEL/2010) O RDER DATED 26/09/2012 (WHEREIN ONE OF US I.E JUDICIAL ME MBER) A SIGNATORY TO THE ORDER AND THE SAID DECISION WAS AF FIRMED BY THE HONBLE DELHI HIGH COURT (2014) 43 TAXMAN.COM 2 49 (DEL.) ORDER DATED 22/01/2014 SUPPORTS THE CASE OF THE ASSESSEE. IN THAT CASE, IT WAS HELD THAT BEFORE TH E SUBSTITUTION MADE IN THE ACT, WITH EFFECT FROM 01/0 4/2005 AND IN TERMS OF EXPLANATION (II) TO CLAUSE (A) OF S ECTION 80IB(10), THERE IS NO REQUIREMENT OF COMPLETION CER TIFICATE FOR AVAILING DEDUCTION FOR THE PROJECT, WHICH WERE APPR OVED ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 21 BEFORE THE DATE OF THE SUBSTITUTION I.E. 01/04/2005 . IN THE PRESENT APPEAL, THE APPROVAL WAS GRANTED BY THE LOC AL AUTHORITY/COMPETENT AUTHORITY BEFORE INSERTION OF T HE AMENDMENT, THEREFORE, THE ASSESSEE IS NOT EXPECTED TO FULFIL THE CONDITIONS WHICH WERE NOT IN THE STATUTE BOOK, WHEN THE APPROVAL WAS GRANTED BY THE COMPETENT AUTHORITY TO THE ASSESSEE. THE PUNE BENCH DECISION OF THE TRIBUNAL I N THE CASE OF SHRI KRISHNA HARIBHAU LOHKARE (ITA NO.937/PN/2010) ORDER DATED 28/02/2013, HONBLE GUJ RAT HIGH COURT IN CIT VS TARNETAR CORPORATIN ORDER DATE D 12/09/2012 AND HONBLE MADRAS HIGH COURT IN CIT VS JAIN HOUSING CONSTRUCTION HOLDING THAT THE CONDITION OF COMPLETION CERTIFICATE WHICH WERE NOT APPLICABLE TO THE PROJECTS APPROVED BY COMPETENT AUTHORITY BEFORE 31/ 03/2005 SUPPORTS OUR VIEW. WE NOTE THAT SECTION 80IB (10) OF THE ACT WAS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2004, W. E.F. 01/04/2005 AND PRIOR TO ITS SUBSTITUTION SUB-SECTIO N (10), AS AMENDED BY THE FINANCE ACT, 2000, W.E.F. 01/04/2001 AND FINANCE ACT, 2003, W.R.E.F. 01/04/2002 PROVIDES 100 % OF THE PROFIT DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT APPROVED BEFORE 31/03/2005. THUS, TIME PROJECT COMPLETION TIME LIMI T IS NOT PROVIDED IN THE SECTION. THE PROJECT OF THE ASSESS EE COMMENCED IN THE FINANCIAL YEAR 2003-04 I.E. BEFORE 01/04/2005. CIRCULAR NO.772 DATED 23/12/1998 WITH RESPECT TO TAX INCENTIVE PROVISION/TAX HOLIDAY SUPP ORTS THE CASE OF THE ASSESSEE. THERE IS UNCONTROVERTED FINDI NG IN THE IMPUGNED ORDER (PARA 2.4) THAT IDENTICAL ISSUE WAS DECIDED ITA NO.1652/MUM/2013 , M/S NEETA ENTERPRISES 22 FOR A.Y. 2008-09 ON 28/03/2011 HOLDING THAT THE PRO JECT UNDER TAKEN BY THE ASSESSEE HAD NOT COMMENCED PRIOR TO 01/10/1998, WHEREIN, THE ASSESSING OFFICER WAS DIRE CTED TO ALLOW THE CLAIMED DEDUCTION. NO CONTRARY DECISION W AS BROUGHT TO OUR NOTICE CONTRADICTING THE FINDING REC ORDED IN THE IMPUGNED ORDER, THUS, WE FIND NO INFIRMITY IN T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THESE I SSUES RAISED BY THE REVENUE, CONSEQUENTLY, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 23/07/2015 . SD/- SD/- ( SANJAY ARORA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % & MUMBAI; ) DATED : 09/10/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 % 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 % 1$ / CIT(A)- , MUMBAI 5. 34 .$ ! , 0 +( ! 5 , % & / DR, ITAT, MUMBAI 6. ' 7& / GUARD FILE. / BY ORDER, /3+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI