Keerthi Estates, Hyderabad V. ITO, Ward-6(3), Hyderabad, Hyderabad

ITA 1854/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5906 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Benefit of exemption
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1854/HYD/2014 ASSESSMENT YEAR 2010-2011 KEERTHI ESTATES HYDERABAD. PAN AAGFK8093F VS. THE INCOME TAX OFFICER, CIRCLE-6(3), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 1 5 .03.2016 DATE OF PRONOUNCEMENT : 24 .03.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2010- 2011. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A)-IV, HYDERABAD DATED 05.09.2 014 IN CONFIRMING THE DISALLOWANCE OF THE CLAIM OF DEDUCTI ON MADE BY THE A.O. UNDER SECTION 80IB(10) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A FIRM WHICH IS ENGAGED IN THE BUSINESS OF DEVELOPM ENT AND CONSTRUCTION OF BUILDINGS. IT FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 07.10.2010 DECL ARING INCOME OF RS.9,24,627. IN THE COMPUTATION OF TOTAL 2 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,51,12,561 UNDER SECTION 80IB(10) OF THE ACT. D URING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE ASSESSEE SUBMITTED A NOTE STATING THA T THE FIRM HAS UNDERTAKEN CONSTRUCTION OF A RESIDENTIAL C OMPLEX AT HUBLI, BANGALORE AND THAT THE ASSESSEE IS SATISF YING ALL THE CONDITIONS AS PER SECTION 80IB(10). THE A.O. EX AMINED THE DEVELOPMENT AGREEMENT DATED 23.03.2006, THE SANCTIONED PLAN APPROVED BY THE BRUHAT BANGALORE MAHANAGAR PALIKE, BANGALORE DATED 07.10.2005 AND AL SO THAT THE ASSESSEE HAS COMMENCED CONSTRUCTION ACTIVI TY ON 07.10.2005. HE OBSERVED THAT AS PER THE PROVISIONS OF SECTION 80IB(10)(A)(III), THE ASSESSEE HAS TO COMPL ETE THE PROJECT WITHIN FIVE YEARS FROM THE END OF THE FINAN CIAL YEAR IN WHICH THE PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY. HE OBSERVED THAT THE PROJECT HAS TO BE COMPLETED BY 31.03.2011. HE FURTHER OBSERVED THAT T HE ASSESSEE HAS NOT SUBMITTED THE COMPLETION CERTIFICA TE ISSUED BY THE LOCAL AUTHORITY. THEREFORE, THE ASSES SEE WAS ASKED TO FURNISH THE SAME. THE ASSESSEE VIDE LETTER DATED 22.03.2013 SUBMITTED THAT THE PROJECT WAS COMPLETED DURING THE A.Y. 2010-2011 AND THE FLATS WERE ALL HA NDED- OVER TO THE BUYERS AND THE ASSESSEE HAS ALSO RECEIV ED THE COMPLETE SALE PROCEEDS WHICH ARE DULY RECORDED IN T HE BOOKS OF ACCOUNT. THE ASSESSEE SUBMITTED THE COMPLE TION CERTIFICATE OBTAINED FROM M/S. ASLAM ARCHITECTS AND INTERIOR DESIGNERS P. LTD., BANGALORE WHEREIN IT WA S STATED THAT THE CONSTRUCTION WAS COMPLETED IN ALL ASPECTS IN THE F.Y. 2009-2010. IT ALSO SUBMITTED THE PROPERTY 3 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. ASSESSMENTS AND ALLOTMENT OF PROPERTY NUMBERS WHICH ARE ALL DATED 22.05.2009 I.E., BEFORE 31.03.2010 TH E DATE BY WHICH THE PROJECT HAS TO BE COMPLETED. IT WAS SUBMITTED THAT THESE APPLICATIONS ARE MOVED BY THE INDIVIDUAL OWNERS AND ON THE BASIS OF THEIR APPLICA TION, THE MUNICIPAL ASSESSMENTS HAVE BEEN MADE AFTER VISI TING THE SITE INSPECTION AND ENSURING THAT ALL FORMALITI ES ARE COMPLIED WITH. THE A.O. WAS HOWEVER, WAS NOT SATISF IED WITH THE ASSESSEES CONTENTION AND OBSERVED THAT TH E ASSESSEE HAS TO FURNISH THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES FOR CLAIMING DEDUCTION UND ER SECTION 80IB(10) OF THE ACT. HE THEREFORE, DISALLOW ED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) AND BROUG HT IT TO TAX. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, MR. S. RAMA RAO, SUBMITTED THAT THE PROJECT WAS IN KARNATAKA AN D IN THE LOCAL MUNICIPAL ACT, THERE IS NO PROVISION FOR ISSUANCE OF A COMPLETION CERTIFICATE. HE HAS RELIED UPON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ITTINA PROPERTIES P. LTD., (2014) 49 TAX MANN.COM 201 (KAR.) (HC) WHEREIN THE ABOVE POSITION WAS TAKE N NOTE OF AND HAS HELD AS UNDER : 6. ONE OF THE PROJECT HAS BEEN SANCTIONED SUBSEQU ENT TO THE ACT. THE POINT OF CONTROVERSY IS REGARDING THE DATE ON WHICH THE PROJECT WAS COMPLETED TO BE ELIGIBLE FOR THE BE NEFIT OF THE SAID PROVISION. THE REVENUE CONTENDS, THE COMPLETIO N CERTIFICATE ISSUED BY THE VILLAGE PANCHAYAT IS NOT VALID AND TH EREFORE THE ASSESSEE IS NOT ENTITLED TO THE SAID BENEFIT. ADMIT TEDLY THE PLAN 4 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. IS SANCTIONED BY THE BDA. THE BDA HAS NOT ISSUED AN Y COMPLETION CERTIFICATE. THE REASON BEING, IN THE BD A ACT OR THE KARNATAKA MUNICIPAL CORPORATION ACT, THERE IS NO PR OVISION FOR ISSUE OF COMPLETION CERTIFICATE. THE PROVISION IN T HE KARNATAKA MUNICIPAL CORPORATION ACT IS FOR ISSUANCE OF OCCUPA NCY CERTIFICATE. WHEN THE STATUTE DOES NOT PROVIDE FOR ISSUE OF A COMPLETION CERTIFICATE, IF THE AUTHORITIES WERE INS ISTING ON SUCH CERTIFICATE, THE ASSESSEE HAS GONE TO THE VILLAGE P ANCHAYAT WITHIN WHOSE LIMITS THE PROPERTY IS SITUATED AND HA S OBTAINED THE COMPLETION CERTIFICATE AND HAS PRODUCED THE SAM E FOR AVAILING THE BENEFIT. WHETHER THAT CERTIFICATE WOUL D SATISFY THE REQUIREMENT OF LAW NEED NOT BE GONE INTO IN THESE P ROCEEDINGS BECAUSE, WHEN THE STATUTE DOES NOT PROVIDE FOR ISSU E OF SUCH A CERTIFICATE, IF THE REVENUE INSISTS ON SUCH CERTIFI CATE, THE ASSESSEE WOULD BE LEFT WITH NO OPTION EXCEPT TO GET SUCH CERTIFICATE WITH SOME AUTHORITY WHICH WOULD BE CALL ED AS A LOCAL AUTHORITY. IN THE FACTS OF THIS CASE, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RECORDED A FINDING THAT THE BUILDING W AS COMPLETED WITHIN THE STIPULATED PERIOD AND THEREFOR E DE HORS THIS CERTIFICATE ISSUED BY THE PANCHAYAT AFTER THE BUILDING IS COMPLETED, THE ASSESSEE IS ENTITLED TO THE SAID BEN EFIT. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THES E APPEALS. ACCORDINGLY THE APPEALS ARE DISMISSED. 7. THE FINDING OF THE TRIBUNAL IS SOLELY ON THE FA CTS OF THESE CASES AND IT CANNOT BE CITED AS A PRECEDENT NOR THE JUDGMENT RENDERED, BECAUSE WE ARE ALSO CONFINING ON THE FACT S OF THESE CASES. 8. IT IS UNFORTUNATE THAT WHEN THE PARLIAMENT HAS EXTENDED THE BENEFIT OF EXEMPTION FROM PAYMENT OF INCOME TAX TO A BUILDER WHO UNDERTAKES GROUP HOUSING ACTIVITY, THE DEPARTMENT IS NOT WILLING TO EXTEND THE BENEFIT ON THE PRETEXT THAT THE PRODUCTION OF COMPLETION CERTIFICATE IS A CONDITION PRECEDENT FOR EXTENDING THE BENEFIT. NEITHER UNDER THE BDA ACT NO R UNDER THE KARNATAKA MUNICIPAL CORPORATION ACT NOR UNDER THE K ARNATAKA MUNICIPALITIES ACT, THERE IS ANY PROVISION FOR ISSU ANCE OF A COMPLETION CERTIFICATE. THERE IS A PROVISION FOR SA NCTION OF A PLAN, ISSUE OF A LICENSE, ISSUE OF A COMMENCEMENT C ERTIFICATE AND ISSUE OF AN OCCUPANCY CERTIFICATE. IN THOSE CIR CUMSTANCES, IF THE REVENUE WERE TO INSIST ON PRODUCTION OF A COMPL ETION CERTIFICATE, THEY ARE ASKING THE ASSESSEE TO DO SOM ETHING WHICH IS IMPOSSIBLE AND WHICH IS NOT PROPER IN LAW. IT IS HIGH TIME THE REVENUE, KEEPING IN MIND THE RELEVANT LAW GOVERNING THE STATE OF KARNATAKA, WOULD SUITABLY AMEND THE LAW OR ISSUE APPROPRIATE CIRCULARS ENABLING THE ASSESSEES TO COM PLY WITH THE LEGAL REQUIREMENT SO THAT THEY COULD HAVE THE BENEF IT EXTENDED TO THEM BY THE PARLIAMENT. 5 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. 3.1. THUS, ACCORDING TO HIM, WHERE THE KARNATAKA MUNICIPAL CORPORATION ACT DOES NOT PROVIDE FOR ISSU ANCE OF A COMPLETION CERTIFICATE, THE ASSESSEE COULD NOT HAVE FURNISHED THE COMPLETION CERTIFICATE AS ASSESSEE CA NNOT BE ASKED TO PERFORM AN IMPOSSIBLE ACT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED T HE MUNICIPAL PROPERTY ASSESSMENTS BY THE MUNICIPAL AUTHORITIES WHICH GOES TO PROVE THAT THE PROJECT WA S COMPLETED BY THE DATE CERTIFICATES WERE ISSUED AFTE R INSPECTION/VERIFICATION BY THE LOCAL AUTHORITY. THU S, ACCORDING TO HIM, THE DEDUCTION UNDER SECTION 80IB( 10) OUGHT TO BE ALLOWED TO THE ASSESSEE. 4. THE LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER REL IED UPON THE JUDGMENT OF THE HONBLE MADHYA PRADESH HIGH COU RT IN THE CASE OF CIT VS. M/S. GLOBAL REALTY IN ITA.NO .40 OF 2012 DATED 21.08.2015 WHEREIN AFTER TAKING NOTE OF THE DIFFERENCES IN THE MUNICIPAL ACTS OF VARIOUS STATES , THE HONBLE MADHYA PRADESH HIGH COURT HAS HELD THAT THE REQUIREMENT OF SECURING COMPLETION CERTIFICATE ISSU ED BY THE LOCAL AUTHORITY BEFORE THE CUT-OFF DATE IS NOT DIRECTORY BUT IS MANDATORY AND THAT THE COMPLETION CERTIFICAT E GRANTED BY THE LOCAL AUTHORITY MUST BEAR THE DATE O F HAVING BEEN ISSUED BEFORE THE CUT-OFF DATE. THE LD. D.R. FURTHER SUBMITTED THAT FROM THE PROPERTY ASSESSMENT FURNISHED BY THE ASSESSEE BEFORE THE A.O., IT IS NO TICED THAT SOME OF THE PROPERTIES HAVE AN AREA OF EXCEEDI NG 1500 SQ. FEET. THUS, ACCORDING TO HIM, IT ALSO ENTA ILS THE 6 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. ASSESSEE TO LOOSE THE DEDUCTION UNDER SECTION 80IB( 10) OF THE ACT. 5. THE LD. COUNSEL FOR THE ASSESSEE, IN REBUTTAL SUBMITTED THAT THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IS DISTINGUISHABLE ON FACTS WHER EAS, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IS ON THE MUNICIPAL CORPORATION ACT OF THE KARNATAKA AND THEREFORE, THE SAME IS APPLICABLE TO THE FACTS OF T HE CASE BEFORE US. AS REGARDS THE AREA EXCEEDING 1500 SQ. F EET IN ANY OF THE FLATS, THE LD. COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE A.O. HAS ALREADY CONSIDERED THE SAME WHILE EXAMINING THE ASSESSEES CLAIM UNDER SECTION 80IB(10) AND IS DEEMED TO HAVE OCCUPIED THE SAME AS NO ADVERSE FINDING HAS BEEN GIVEN IN THE ASSESSMENT OR DER. EVEN OTHERWISE, HE SUBMITTED THAT THESE ASSESSMENTS ARE MADE BY THE MUNICIPAL AUTHORITIES ON THE BASIS OF T HE CLAIMS MADE BY THE INDIVIDUAL OWNERS AND THESE AREA S MAY HAVE INCLUDED THE COMMON AREA WHICH IS NOT TO B E TAKEN INTO CONSIDERATION FOR THE PURPOSE OF BUILT-U P AREA UNDER SECTION 80IB(10) OF THE ACT. THUS, ACCORDING TO HIM, THERE IS NO VIOLATION OF ANY OF THE PROVISIONS UNDE R SECTION 80IB(10) OF THE ACT BY THE ASSESSEE. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE BASIC REASON F OR NON ALLOWING OF DEDUCTION UNDER SECTION 80IB(10) IS THA T THE ASSESSEE HAS NOT FILED THE COMPLETION CERTIFICATE I SSUED BY THE LOCAL AUTHORITY AS AN EVIDENCE THAT THE PROJECT HAS 7 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. BEEN COMPLETED WITHIN THE TIME SPECIFIED UNDER THE ACT. IN THE CASE BEFORE US, THE UNDISPUTED FACTS ARE THAT T HE PROJECT IS AT HUBLI, KARNATAKA. UNDER THE KARNATAKA MUNICIPAL CORPORATION ACT, THERE IS NO PROVISION FO R ISSUANCE OF COMPLETION CERTIFICATE TO ANY OF THE AS SESSEES. THE HONBLE KARNATAKA HIGH COURT HAS TAKEN NOTE OF THIS PROVISION IN THE CASE OF ITTINE PROPERTIES P. LTD., (CITED SUPRA), AND HAS HELD THAT THE ASSESSEE CANNOT BE CA LLED UPON TO PERFORM AN IMPOSSIBLE ACT. IN THE CASE OF G LOBAL REALITIES, THE HONBLE MADHYA PRADESH HIGH COURT WA S DEALING WITH THE PROVISIONS OF LOCAL MUNICIPAL ACTS WHEREIN THERE IS A PROVISION FOR ISSUANCE OF A PART IAL COMPLETION CERTIFICATE AND IN SUCH CIRCUMSTANCES, T HE HONBLE MADHYA PRADESH HIGH COURT HAS HELD THAT THE ASSESSEE HAS TO OBTAIN THE COMPLETION CERTIFICATE O F HAVING COMPLETED THE PROJECT BEFORE THE CUT-OFF DATE. THE HONBLE MADHYA PRADESH HIGH COURT WAS NOT CONSIDERING THE C ASE OF A LOCAL ACT WHEREIN THERE IS NO PROVISION FOR IS SUANCE OF A COMPLETION CERTIFICATE. THE FACTS IN THE CASE BEF ORE THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF ITTINA PROPERTIES P. LTD., (CITED SUPRA) ARE SIMILAR TO TH E FACTS OF THE ASSESSEE BEFORE US AND IS APPLICABLE TO THE ASS ESSEES CASE. HOWEVER, AS REGARDS THE AREAS OF SOME OF THE FLATS BEING IN EXCESS OF 1500 SQ. FEET IN VIOLATION OF TH E PROVISIONS OF SECTION 80IB(10) OF THE ACT, WE FIND THAT THOUGH THE A.O. HAS NOT DISALLOWED THE CLAIM UNDER SECTION 80IB(10) ON THIS GROUND, THIS TRIBUNAL BEIN G THE FINAL FACT FINDING AUTHORITY, IS NOT PRECLUDED FROM DIRECTING THE A.O. TO VERIFY OF THE SAME IF THE SAME HAS BEEN 8 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. BROUGHT TO OUR NOTICE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING AND MARKETING P. LTD., IN ITA.NO.525 OF 2014 DATED 11 TH MARCH, 2015 HAS HELD THAT THE TRIBUNAL BEING THE FI NAL FACT FINDING AUTHORITY, IS UNDER AN OBLIGATION TO D IRECT THE A.O. TO MAKE PROPER ENQUIRIES IF THE DISCREPANCIES AND FACTS ARE BROUGHT TO ITS NOTICE. IN VIEW OF THE SAM E, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE F ILE OF THE A.O. WITH A DIRECTION TO EXAMINE AND VERIFY WHE THER THE TOTAL PLINTH DECLARED BY THE INDIVIDUAL OWNERS INCLUDES THE COMMON AREA AND IF IT IS FOUND THAT THE BUILT-U P AREA OF ANY OF THE FLATS IS EXCEEDING 1500 SQ. FEET, THE N THE DEDUCTION UNDER SECTION 80IB(10) SHALL BE COMPUTED PROPORTIONATELY. THE ISSUE WITH REGARD TO FILING OF COMPLETION CERTIFICATE FOR THE CLAIM OF DEDUCTION U NDER SECTION 80IB(10), IS COVERED IN FAVOUR OF THE ASSES SEE BY THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF ITTINA PROPERTIES P. LTD., (CITED SUPRA) AND THE REFORE, THE A.O. SHALL NOT INSIST UPON THE SAID CERTIFICATE FOR ALLOWING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24.03.2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH MARCH, 2016 VBP/- 9 ITA.NO.1854/HYD/2014 KEERTHI ESTATES, HYDERABAD. COPY TO : 1. KEERTHI ESTATES, HYDERABAD. C/O. MR. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, CIRCLE - 6(3), HYDERABAD. 3. CIT(A) - I V, HYDERABAD. 4. CIT - I II , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE