M/s Varun Developers, Pune V. ITO wd- IV-[VI], Pune

ITA 1845/PUN/2012

• Counselvise Citation: 184524514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1845/PN/2012 (ASSESSMENT YEAR : 2009-10) M/S. VARUN DEVELOPERS, SUPREME ICON, OFFICE NO. 304/305, AUNDH BANER ROAD, NEAR SAKAL NAGAR, BANER, PUNE 411 007. PAN : AACFV8009J . APPELLANT VS. INCOME TAX OFFICER, WARD 4 (6), PUNE. . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SMT. M. S. VERMA DATE OF HEARING : 28-10-2013 DATE OF PRONOUNCEMENT : 30-10-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, PUNE DATE D 31.05.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 19.12.2011 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME-TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: - 1) THE LEARNED CIT(A) ERRED IN CONFORMIN G THE DENIAL OF THE DEDUCTIONS OF RS.7,08,34,948/- IN RESPECT OF THE PROJECT HARSH PARADISE ON THE GROUND THAT THE ASSESSEE HAD NOT COMPLETED T HE SAID PROJECT BY 31 ST MARCH, 2008. 2) THE LEARNED CIT(A) ERRED IN HOLDING THAT SINCE T HE ASSESSEE HAD NOT COMPLETED THE SAID PROJECT BY 31 ST MARCH, 2008 AND ALSO HAD NOT ITA NO. 1845/PN/2012 A.Y. 2009-10 RECEIVED THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY TILL THE DATE, THE ASSESSEE COMPANY WAS NOT ENTITLED TO CLAIM THE DEDU CTION U/S. 80IB(10). 3) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF THE ENTIRE PROJECT IN CLUDING THE FOUR FLATS OF BUILDING H - 4 AND SIMPLY BECAUSE THE COMPLETION CE RTIFICATE OF THE FOUR FLATS WAS NOT RECEIVED BY THE ASSESSEE WAS NOT A VALID GR OUND FOR DISALLOWING THE DEDUCTION U/S. 80IB(10). 4) WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSE SSEE SUBMITS THAT THE ELIGIBLE HOUSING PROJECT QUALIFYING FOR DE DUCTION U/S. 80IB(10) SHOULD BE TAKEN OF THE BUILDING EXCEPT BUILDING H - 4 AND THE DEDUCTION SHOULD BE ALLOWED ON THE PROFITS OF SUCH PROJECT. 5) WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSE SSEE SUBMITS THAT THE DEDUCTION OUGHT TO HAVE BEEN ALLOWED PROPO RTIONATELY IN RESPECT OF THE UNITS FOR WHICH THE COMPLETION CERTIFICATE WAS RECEIVED FROM THE LOCAL AUTHORITY TILL 31 ST MARCH, 2008. 3. ALTHOUGH ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE SOLITARY DISPUTE IS WITH REGARD TO ASSESSEES CLAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT AMOUNTING TO RS.7,08,34,948/-, WHICH HAS SINCE BEEN DENIED BY THE INCOME-TAX AUTHORITIES. 4. IN BRIEF, THE FACTS ARE THAT APPELLANT IS A PART NERSHIP FIRM ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS, EXECUTING CONST RUCTION SCHEMES FOR RESIDENTIAL/COMMERCIAL PURPOSES. FOR THE ASSESSMENT YEAR 2009-10, ASSESSEE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,11,392/- WHICH INTER-ALIA CONTAINED A CLAIM OF DEDUCTION OF RS.7,08,34,948/- U/S. 80-IB(10) OF THE ACT IN RESPECT OF THE PROFITS DERIVED FROM UNDERTAKING DEV ELOPMENT AND BUILDING OF A HOUSING PROJECT NAMED HARSH PARADISE. THE SAID PR OJECT CONSISTED OF FOUR BUILDINGS VIZ. H-1, H-2, H-3, H-4 AND G BUILDING. T HE BUILDING G WAS TO BE HANDED OVER TO THE PUNE MUNICIPAL CORPORATION I.E. PMC FOR ALLOTMENT TO THE WEAKER-SECTIONS OF THE SOCIETY. THE PROJECT WAS APP ROVED BY THE LOCAL AUTHORITY I.E. PMC WHEREBY CONSTRUCTION OF THE ENTI RE PROJECT CONSISTING OF H-1, H-2, H-3 AND G BUILDING AND FOUR FLATS OF H-4 BUILD ING WERE SANCTIONED. THE CONSTRUCTION OF FOUR FLATS IN H-4 BUILDING WAS TO B E CARRIED OUT BY THE ASSESSEE AFTER PURCHASE OF TRANSFERABLE DEVELOPMENT RIGHTS I .E. TDRS ON ACCOUNT OF LACK OF FSI IN THE HANDS OF THE ASSESSEE. IN TERMS OF SE CTION 80-IB(10)(A)(I) OF THE ACT, THE STIPULATED DUE DATE OF COMPLETION OF CONST RUCTION OF THE PROJECT WAS ITA NO. 1845/PN/2012 A.Y. 2009-10 31.03.2008. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEES PROJECT DID NOT COMPLY WITH THE AFORESAID CONDITION INASMUCH AS THE CERTIFICATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT I SSUED BY PMC PRIOR TO 31.03.2008 PERTAINED ONLY TO H-1, H-2, H-3 AND G BU ILDING. SO FAR AS THE BUILDING H-4 WAS CONCERNED, IT WAS NOTICED THAT THE COMPLETION CERTIFICATE WAS NOT OBTAINED FROM PMC PRIOR TO 31.03.2008. BUILDING H-4 INVOLVED CONSTRUCTION OF FOUR FLATS AND THE SAME COULD NOT BE COMPLETED A S THE REQUISITE TDR COULD NOT BE PURCHASED BY THE ASSESSEE. THE ASSESSING OFF ICER, UNDER THESE CIRCUMSTANCES, HELD THAT SINCE THE WHOLE PROJECT WA S NOT COMPLETED BEFORE THE STIPULATED DATE I.E. 31.03.2008, THE CLAIM OF THE A SSESSEE FOR DEDUCTION U/S. 80-IB(10) OF THE ACT WAS TO BE DENIED IN TOTO. 5. ON THE OTHER HAND, THE STAND OF THE ASSESSEE WAS THAT THE PROJECT COMPRISING OF H-1, H-2, H-3 AND G BUILDING FOR WHIC H THE COMPLETION CERTIFICATE WERE ISSUED BY PMC ON 19.03.2008 AND 06.03.2007 COM PLIED WITH ALL THE REQUIREMENTS OF SECTION 80-IB(10) OF THE ACT AND EV EN IN THE ABSENCE OF COMPLETION OF FOUR FLATS OF H-4 BUILDING, IT SHOULD BE ALLOWED DEDUCTION U/S. 80-IB(10) OF THE ACT IN RELATION TO THE PROFIT S RELATING TO H-1, H-2, H-3 AND G BUILDING. THE ASSESSEE FURTHER POINTED OUT THAT T HE CLAIM OF DEDUCTION WAS MADE ONLY WITH RESPECT TO THE PROFITS OF H-1, H-2, H-3 AND G BUILDING. THE ASSESSING OFFICER HAS DISALLOWED THE DEDUCTION DUE TO NON-COMPLETION OF CONSTRUCTION OF BUILDING H-4 OF THE PROJECT. THE CI T(A) HAS ALSO SUSTAINED SUCH DISALLOWANCE BY NOTICING THAT IN RELATION TO THE PR ECEDING ASSESSMENT YEAR OF 2008-09, SIMILAR DISALLOWANCE WAS MADE BY THE ASSES SING OFFICER, WHICH STOOD CONFIRMED BY THE ORDER OF THE THEN CIT(A) DAT ED 05.09.2011. 6. IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR OF 2008-09 ALSO ASSESSEE HAD CLAIMED DEDUCTION U/S. 80-IB(10) OF TH E ACT IN RELATION TO THE PROFIT DERIVED FROM THE PROJECT HARSH PARADISE AN D THE SAME WAS DENIED UNDER IDENTICAL CIRCUMSTANCES AS NOTED ABOVE. AT T HE TIME OF HEARING BEFORE ITA NO. 1845/PN/2012 A.Y. 2009-10 US, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POI NTED OUT THAT THE ORDER OF THE CIT(A) FOR THE PRECEDING ASSESSMENT YEAR OF 200 8-09 WAS A SUBJECT-MATTER OF CONSIDERATION BY THE TRIBUNAL VIDE ITA NO. 1624/ PN/2011 DATED 22.03.2013 WHEREBY THE CLAIM OF THE ASSESSEE WAS ALLOWED. A CO PY OF THE SAID ORDER HAS BEEN PLACED ON RECORD AND IT WAS THEREFORE CONTENDE D THAT THE ISSUE IN QUESTION IS COVERED BY THE AFORESAID PRECEDENT, WHI CH CONTINUES TO HOLD THE FIELD. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE HAS NOT CONTROVERTED THE FACTUAL MATRIX POINTED OUT BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE. 8. HAVING PERUSED THE MATERIAL ON RECORD, WE FIND T HAT IN THE PRECEDENT BY WAY OF THE TRIBUNAL ORDER DATED 22.03.2013 (SUPRA) IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 SIMILAR DISPUTE HA S BEEN ADJUDICATED BY THE TRIBUNAL. THE OBJECTIONS OF THE REVENUE TO DENY THE CLAIM OF DEDUCTION U/S. 80-IB(10) OF THE ACT IN THE INSTANT ASSESSMENT YEAR HAVE BEEN A SUBJECT- MATTER OF CONSIDERATION BY THE TRIBUNAL IN THE EARL IER ASSESSMENT YEAR OF 2008-09. IT WAS ALSO A COMMON POINT BETWEEN THE PAR TIES THAT THE FACTS AND CIRCUMSTANCES IN THE TWO ASSESSMENT YEARS PERTAININ G TO ASSESSEES CLAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT STAND ON SIMILA R FOOTING. IN THIS BACKGROUND, WE HAVE PERUSED THE ORDER OF THE TRIBUNAL DATED 22. 03.2013 (SUPRA) AND REPRODUCE THE FOLLOWING OPERATIVE PORTION OF THE SA ID ORDER : - 14. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT IN THE INSTANT CASE ASSESSEE H AS OBTAINED PERMISSION FOR CONSTRUCTION OF FOUR BUILDINGS H-1, H-2, H-3, H-4 A ND G BUILDING. THE SAID G BUILDING WAS TO BE GIVEN TO THE PMC TO BE ALLOTTED TO THE WEAKER SECTION OF THE SOCIETY. THE HOUSING PROJECT WAS APPROVED BY THE LO CAL AUTHORITY ON 28.05.2003 WHEREIN PLAN FOR CONSTRUCTION OF WHOLE P ROJECT INCLUDING H-1, H-2, H-3 & G BUILDING, AND FIRST FLOOR OF H-4 BUILDING W AS SANCTIONED. THE ASSESSEE WAS PLANNING TO PURCHASE FURTHER TDR FOR CONSTRUCTI ON OF REMAINING FLOORS OF H-4 BUILDING. AS THE PROJECT WAS SANCTIONED BEFORE 01.04.2004, THE DUE DATE OF COMPLETION OF THE PROJECT WAS 31.03.2008. IT IS UNDISPUTED THAT THE ASSESSEE HAS RECEIVED THE COMPLETION CERTIFICATE IN RESPECT OF H-1, H-2, H-3 & G BUILDING ON 19.03.2008 AND 06.03.2007. HOWEVER, IN RESPECT OF THE BUILDING H-4, THE ASSESSEE SUBMITTED THAT THE TDR COULD NOT BE PURCHASED AND, ITA NO. 1845/PN/2012 A.Y. 2009-10 THEREFORE, THE BUILDING H-4 COULD NOT BE COMPLETED AND HENCE THE COMPLETION CERTIFICATE WAS NOT ISSUED BY THE PMC FOR THE H-4 B UILDING HAVING FOUR FLATS. SO THE QUESTION BEFORE US IS WHETHER ASSESSEE IS EN TITLED FOR CLAIM OF DEDUCTION IN RESPECT OF THE PROFITS FROM BUILDINGS H-1, H-2, H-3 AND G-1 COMPLETED THROUGH COMPLETION CERTIFICATE DATED 06.0 3.2007 AND 19.03.2008 AS STATED ABOVE. ACCORDING TO THE ASSESSING OFFICER, THE HOUSING PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED TIME PERIOD I.E., 3 1.03.2008 AND REJECTED THE CLAIM OF THE ASSESSEE WHICH WAS CONFIRMED BY THE CI T(A). THE UNDISPUTED FACTS REMAIN THAT ASSESSEE HAS COMPLETED THE BUILDI NGS H-1, H-2, H-3 & G ON AREA OF PLOT MEASURING 6722.12 SQ.MTRS. AS DETAILED ABOVE. SO IRRESPECTIVE OF NON-CONSTRUCTION OF BUILDING H-4, ASSESSEE IS ENTIT LED FOR ITS CLAIM OF DEDUCTION U/S.80IB(10) WITH REGARD TO THESE BUILDINGS H-1, H- 2, H-3 & G, BECAUSE, THESE ARE ON STANDALONE BASIS, FULFILLED THE CONDITIONS W ITH REGARD TO CLAIM OF DEDUCTION U/S.80IB(10). 15. WE FIND THAT ITAT PUNE BENCH IN THE CASE OF RAH UL CONSTRUCTION CO. (SUPRA) HAS HELD THAT THE ASSESSIN G OFFICER HAS TO VERIFY AS TO WHEN THE BUILDING PLAN OF THESE BUILDINGS WERE F IRSTLY APPROVED BY THE LOCAL AUTHORITY AND TAKING THE SAID DATE OF APPROVAL AS S TARTING POINT, HE HAS TO VERIFY AS TO WHETHER THESE BUILDINGS WERE COMPLETED WITHIN PRESCRIBED TIME LIMIT, I.E., 31.03.2008 ON THE BASIS OF COMPLETION CERTIFICATE I N RESPECT OF SUCH HOUSING PROJECT ISSUED BY THE PMC. IN CASE BEFORE US, REVE NUE AUTHORITIES HAVE NOT DISPUTED THE FACT THAT ASSESSEE HAS COMPLETED THE C ONSTRUCTION IN RESPECT OF BUILDINGS H-1, H-2, H-3 AND G AS DISCUSSED ABOVE. THERE IS ALSO NO DISPUTE OF AREA OF THE PLOT AS LAID DOWN IN PROVISIONS OF S ECTION 80IB(10) OF THE ACT, ON WHICH PROJECT TOOK PLACE. ONLY DISPUTE IS THAT BUI LDING H-4 WAS NOT COMPLETED AT RELEVANT POINT OF TIME SO CLAIM OF ASSESSEE SHOU LD NOT BE DISALLOWED AS A WHOLE. WHATEVER PORTION COMPLETED BY ASSESSEE WHIC H SATISFY THE CONDITION PRESCRIBED U/S.80IB(10) IS ELIGIBLE FOR DEDUCTION A S HELD IN BRIGADE ENTERPRISES PVT. LTD. (SUPRA). 16. IN CASE BEFORE US, ASSESSEE HAS RECEIVED THE CO MPLETION CERTIFICATE WITH REGARDS TO BUILDINGS H-1, H-2, H-3 AND G AS STATED ABOVE. SO ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S.80I B(10) IN THE STIPULATED TIME IN RESPECT OF COMPLETED BUILDINGS OF THE PROJECT IN QUESTION. THE CONSTRUCTION ON H-4 BUILDING COULD NOT BE COMPLETED FOR THE COND ITIONS BEYOND THE CONTROL OF THE ASSESSEE FOR WHICH ASSESSEE IS NOT CLAIMING THE DEDUCTION U/S.80IB(10). IN SUCH SITUATION THE ASSESSEE SHOULD NOT BE DENIED CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF COMPLETED BUILDINGS AND CLAIM OF THE ASSESSEE SHOULD NOT BE COMPLETELY DENIED. AS MENTIONED ABOV E, THIS VIEW IS FORTIFIED BY DECISION OF BRIGADE ENTERPRISES PVT. LTD. (SUPRA). WE ALSO FIND THAT SUCH LIBERAL INTERPRETATION SHOULD BE USED IN FAVOUR OF ASSESSEE WHEN HE IS INCAPACITATED IN COMPLETING WHOLE PROJECT BECAUSE A SSESSEE COULD NOT COMPLETE H-4 BUILDING FOR THE REASONS BEYOND HIS CO NTROL AS STATED ABOVE. IT IS SETTLED LEGAL POSITION THAT LAW ALWAYS GIVES REM EDY AND LAW DOES WRONG TO NO ONE. WE ARE AWARE THAT PLAIN READING OF SECTION 80IB(10) OF THE ACT SUGGESTS ABOUT ONLY COMPLETION OF CONSTRUCTION AND NO ADJECTIVE SHOULD BE USED ALONGWITH WORD COMPLETION. THIS STRICT INTE RPRETATION SHOULD BE GIVEN IN NORMAL CIRCUMSTANCES. HOWEVER, IN THE CASE BEFORE US UNDISPUTEDLY ASSESSEE HAS COMPLETED THE CONSTRUCTION OF BUILDING S H-1, H-2, H-3 AND G AS STATED ABOVE AND ASSESSEE COULD NOT COMPLETE THE CO NSTRUCTION OF BUILDING H- 4 FOR THE REASONS DISCUSSED ABOVE THE ASSESSEE SHOU LD NOT SUFFER FOR THE SAME WITH REGARD TO THE COMPLETED PORTIONS OF THE P ROJECT. THE TAXING STATUTE GRANTING INCENTIVES FOR PROMOTION OF GROWTH AND DEV ELOPMENT BE CONSTRUED LIBERALLY AND THE PROVISIONS FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY. AT THE SAME TIME RESTRICTIO N THEREON HAS TO BE CONSTRUED STRICTLY SO AS TO ADVANCE THE OBJECT OF PROVISION A ND NOT TO FRUSTRATE THE SAME. THE PROVISIONS OF TAXING STATUTE SHOULD BE CONSTRUE D HARMONIOUSLY WITH THE OBJECT OF STATUTE TO EFFECTUATE LEGISLATIVE INTENTI ON. THIS VIEW IS FORTIFIED BY ITA NO. 1845/PN/2012 A.Y. 2009-10 DECISION OF PUNE TRIBUNAL IN THE CASE OF RAMSUKH PR OPERTIES (SUPRA), RAHUL CONSTRUCTION CO. (SUPRA), SATISH BOHRA & ASSOCIATES (SUPRA). ACCORDINGLY WE HOLD THAT ASSESSEE IS ENTITLED TO THE CLAIM OF DEDU CTION U/S.80IB(10) IN RESPECT OF ALL BUILDINGS EXCEPT BUILDING H-4. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 9. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEE N RENDERED IN THE ASSESSEES OWN CASE ON AN IDENTICAL ISSUE, WE HEREB Y HOLD THAT ASSESSEES CLAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT IN R ELATION TO THE PROFITS DERIVED FROM ITS HOUSING PROJECT HARSH PARADISE ARE ELIGI BLE FOR DEDUCTION U/S. 80-IB(10) OF THE ACT IN THE MANNER AS ADJUDICA TED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2008-09 (SUPRA). THUS, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW ASSESSEE S CLAIM FOR DEDUCTION U/S. 80-IB(10) OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH OCTOBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE