The DCIT, Circle-2(3), Surat V. M/s. Srushti Corporation, Surat

ITA 1856/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2113 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESS MENT YEAR; RESPECTIVELY
• Assessee Lawyers: IN ITA NO AHD A Y REA
• Keywords: Set aside
• Section: 133A; 80IB; 205; 80IA

Judgement Text

PAGE 1 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER I.T.A. NOS. 2575 & 2963/AHD/2014 & 1856/AHD/2016 ASSESSMENT YEAR: 2010-11, 2011-12 AND 2012-13 THE INCOME TAX OFFICER, WARD-5(4), SURAT ASSISTANT COMMISSIONER OF INCOME TAX-2 &9 SURAT. VS. M/S. SRUSHTI CORPORATION, 9 R.S.NO.153, T.P. NO.48, F.P. NO.7, SWAPNA SRUSHTI RESIDENCY, JIYAV BUDIYA ROAD, H.NO.8, BHESTAN, SURAT [PAN: AAOFM 1919 J] APPELLANT /RESPONDENT /O R D E R PER O.P. MEENA, AM: 1. THESE THREE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-I, SURAT [IN SHORT THE CIT(A)] DATED 27.06.2014 AND 20.08.2014 FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 RESPECTIVELY, AND LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-IV, SURAT [IN SHORT THE CIT(A)] DATED 31.04.2016 FOR THE ASSESSMENT YEAR 2012-13. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ( IN ITA NO.2575/AHD/2014 FOR A.Y. 2010-11 ) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN GRANTING DEDUCTION TO THE /ASSESSEE BY SHRI RASESH SHAH, CA, AR /REVENUE BY SHRI R.P. RASTOGI, SR. D.R / DATE OF HEARING : 19.07.2019 /PRONOUNCEMENT ON : 27.08.2019 PAGE 2 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 ASSESSEE UNDER SECTION 80IB OF THE I.T ACT OF RS.85,22,980/- BY HOLDING THAT THERE IS NO DEFINITION OF THE EXPRESSION HOUSING PROJECT U/S.80IB OF THE ACT, THE EXPRESSION IS DEFINED UNDER EXPLANATION TO SECTION 80HHBA OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING THE COMPLETION OF CONSTRUCTION OF HOUSING PROJECT WITHIN 5 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS.85,22,980/- IGNORING THAT THE ASSESSEE FAILED TO FULFIL THE CONDITIONS PROVIDED UNDER SECTION 80IB OF THE I.T. ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDING OF THE LD. CIT(A) IS PERVERSE, CONTRARY TO THE RECORD AND UNTENABLE IN THE EYE OF LAW. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A), SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICERS ORDER MAY BE RESTORED. 3. GROUNDS OF APPEAL RAISED BY THE REVENUE ( IN ITA NO. 2963/AHD/2014 FOR A.Y.2011-12 ) READ AS UNDER:- 1. WHETHER THE CIT(A) WAS CORRECT IN ALLOWING FOR THE PROPORTIONATE DEDUCTION U/S.80IB(10) OF THE I.T ACT (TO THE EXTENT OF COMPLETION), EVEN THOUGH ACT DOESNT PROVIDE FOR THE SAME AND CBDTS INSTRUCTION NO.4/2009 DATED 30.06.2009 SPECIFICALLY INSTRUCTS FOR WITHDRAWAL OF THE DEDUCTION, EVEN IN EARLIER YEARS WHERE IT HAS BEEN GRANTED, IF THE PROJECT IS NOT COMPLETED WITHIN THE SPECIFIED TIME LIMIT? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. PAGE 3 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 4. GROUNDS OF APPEAL RAISED BY THE REVENUE ( IN ITA NO.1856/AHD/2016 FOR A.Y 2012-13 ) READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S.80IB(10) OF THE ACT OF RS.2,99,55,094/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE SURVEY U/S.133A WAS CONDUCTED ON 03.04.2012 AND IT WAS FOUND THAT THE PROJECT WAS UNDER CONSTRUCTION AND WAS NOT COMPLETED. THE FACT RELATING TO NON-COMPLETION OF THE PROJECT WAS DULY CONFIRMED BY ENGINEERS FROM LOCAL AUTHORITY, THE CONCERNED ARCHITECT AND CONTRACTORS WORKING ON IT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT JUDICIAL PRONOUNCEMENTS RELIED UPON BY LD.CIT(A) ARE NOT RELATABLE TO THE PRESENT CASE AS THE BUILDINGS WERE NOT COMPLETE AS ON 31.03.2012, THE RECKONING DATE, AS CONFIRMED BY THE LOCAL AUTHORITY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ALLOWING PROPORTIONATE DEDUCTION IS NOT PROPER BECAUSE SECTION 80IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80IB (10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT. I.T.A NO.2575/AHD/2014 FOR THE A.Y. 2010-11:- 5. GROUND NO. 1 TO 5 ARE RELATES TO ALLOWING DEDUCTION OF RS.85,22,980/- UNDER SECTION 80IB (10) OF THE ACT. PAGE 4 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 6. THE BRIEF FACTS, AS DISCUSSED BY AO IN THE ASSESSMENT ORDER, ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. DURING THE YEAR, IT HAS DECLARED THE PROFIT OF RS. 85,22,980-/- ON THE TURNOVER OF RS.2,37,01,000/- AND WHOLE OF THE PROFIT HAS BEEN CLAIMED AS EXEMPT U/S. 80IB( 10) OF THE ACT. THE PROJECT NAMELY 'SRUSHTI CORPORATION' HAS BEEN DEVELOPED BY ASSESSEE AT BHESTAN, SURAT ON WHICH AFORESAID DEDUCTION HAS BEEN CLAIMED. HOWEVER, A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED BY DEPARTMENTAL AUTHORITIES ON 03.04.2012 AT THE BUSINESS PREMISES OF ASSESSEE. DURING THE SURVEY, IT WAS FOUND THAT THE PROJECT IN QUESTION WAS NOT COMPLETE TILL THE DATE OF SURVEY. IT WAS FOUND THAT OUT OF 27 BUILDINGS OF THE PROJECT, ONLY 11 BUILDINGS WERE CLAIMED AS COMPLETE AS ON 03.04.2012 IN WHICH BUC FROM SMC, SURAT WAS RECEIVED AND OUT OF THESE 11 BUILDINGS, ONLY 6 BUILDINGS I.E. F-1, F-2, F-3, F-4, S & T WERE COMPLETE IN ALL MANNERS. HOWEVER, AS PER AO, FOLLOWING DISCREPANCIES/DEFICIENCIES WERE DETECTED BY SURVEY TEAM DURING THE SURVEY PROCEEDINGS IN THE REMAINING 21 BUILDINGS. SR . NO NAME OF THE PROJECT NAME OF THE BUILDING DISCREPANCIES/DEFICIENCIES AS DETECTED BY THE SURVEY TEAM M/S. SRUSHTI CORPORATION B-1(A-3) WIRING IN SOME OF THE FLATS AND OTHER MISCELLANEOUS WORK ARE PENDING LIFTS IS NOT INSTALLED AT ALL. FINISHING WORK I.E. GROUND TILES, PLASTER ARE PENDING. B-4 & B-5 (A-2 & A-3) LIFT IS NOT INSTALLED AT ALL. CONSTRUCTION WORK IS STILL IN PROGRESS. PAGE 5 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 C-1 & C-4 (B-11 & B- 16) WIRING IN SOME OF THE FLATS AND OTHER MISCELLANEOUS WORKS ARE PENDING. LIFT IS NOT INSTALLED AT ALL. SR. NO NAME OF THE PROJECT NAME OF THE BUILDING DISCREPANCIES/DEFICIENCIES AS DETECTED BY THE SURVEY TEAM M/S. SRUSHTI CORPORATION RCC WORK COMPLETED. WORK OF PLASTER IS GOING ON. APPRO. 50% WORK IS COMPLETE. B-3, B- 6, C-2, D-1, R RCC WORK COMPLETED. WORK OF PLASTER IS GOING ON. APPRO. 50% WORK IS COMPLETE C -3 ONLY PLINTH WORK IS COMPLETE. MEANS IS 15 TO 20% WORK IS COMPLETE. E- 1 RCC WORK IS COMPLETE UPTO 2 FLOOR. APPRO. 20% WORK IS COMPLETE. D-2, D- 3, D-4, E-2, E- 3, E-4, P & Q TILL DATE OF SURVEY, THE WORK OF ALL EIGHTS BUILDINGS ARE NOT STARTED. THESE ARE IN THE FORM OF OPEN PLOTS. 7. IT WAS FURTHER NOTICED BY AO THAT EVEN IN RESPECT OF ABOVE/5 BUILDINGS I.E. B-1, B-4, B-5, C-L, AND C-4 ALSO, BUC ISSUED BY SMC, SURAT WAS CANCELLED VIDE THEIR LETTER SZ/TEC/707 DATED 02.05.2012. IN VIEW OF THIS, AO PROPOSED TO DISALLOW THE DEDUCTION OF RS. 85,22,980/- U/S. 80IB(10) ON THE GROUND THAT PROJECT, AS A WHOLE, WAS NOT COMPLETE WITHIN THE PRESCRIBED TIME LIMIT. IN REPLY, ASSESSEE SUBMITTED THAT INITIALLY THE PAGE 6 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 PROJECT WAS APPROVED BY THE LOCAL AUTHORITY AS ON 30.03.2007. LATER ON THE PROJECT WAS REVISED WHICH WAS APPROVED BY LOCAL AUTHORITY ON 13.09.2008. THE PROJECT CONSISTED 27 BUILDINGS (5 FLOORS IN EACH BUILDINGS) WHICH WAS AS PER APPROVED PLAN. IN RESPECT OF LAND OF PLOT, IT WAS SUBMITTED THAT THE LAND FOR PROJECT WAS 24,340 SQUARE METERS AND AFTER CHANGE IN PLAN, FINAL PLOT AREA WAS ASCERTAINED ADMEASURING 25,069.89 SQUARE METERS. AFTER GIVING THE DETAILS OF PROJECT, IT WAS FURTHER SUBMITTED THAT THE ASSESSEE FIRM HAS COMPLETED 11 BUILDINGS FOR WHICH BUC HAS BEEN RECEIVED FROM LOCAL AUTHORITY BEFORE 31.03.2012 AND OUT OF THESE 11 BUILDINGS, COMPLETION OF 6 BUILDINGS I.E. F-L, F-2, F-3, F-4, S & T ARE NOT DISPUTED BY THE DEPARTMENT ALSO. IT IS FURTHER MENTIONED THAT THE AREA OF LAND USED AND UTILIZED IN RESPECT OF THESE 6 BUILDINGS IS MORE THAN ONE ACRE AND ALL THE CONDITIONS AS PER PROVISIONS OF SECTION 80IB(10) HAVE BEEN FULFILLED. IN RESPECT OF DISCREPANCIES/DEFICIENCIES AS NOTICED BY SURVEY TEAM IN RESPECT OF REMAINING 5 BUILDINGS, OUT OF TOTAL 11 COMPLETED BUILDINGS, IT WAS SUBMITTED THAT FIRSTLY, THE ALLEGED DISCREPANCIES/DEFICIENCIES WERE NOT BROUGHT IN THE KNOWLEDGE OF ASSESSEE DURING SURVEY AND SECONDLY, THE CANCELLATION OF BUC VIDE LETTER 'SZ/TEC/707 DATED 02.05.2012 WAS REVISED BY LOCAL AUTHORITY BY ISSUING BUC VIDE LETTER DATED 23.10.2012 GIVING EFFECT FROM 19.03.2012. IT WAS FURTHER SUBMITTED THAT THE CONSTRUCTION WAS COMPLETE IN ALL THOSE 5 BUILDINGS INCLUDING WIRING WORK, HOWEVER, SOMETIMES IT MAY HAPPEN THAT PURCHASER OF FLAT REQUIRES MINOR CHANGES FOR SHIFTING THE ELECTRIC POINT FROM ONE PLACE TO ANOTHER AND MAY BE SUCH WORK PAGE 7 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 WAS GOING ON IN THE FLATS WHICH CANNOT BE CONSIDERED INCOMPLETE WORK. SIMILARLY, THE FLOORING WORK DONE BY CONTRACTOR GETS DAMAGED WHILE CARRYING OUT SOME OTHER WORK SUCH AS WIRING, COLOR, PLASTERING ETC. AND THEREFORE THE BUILDER HAS TO CARRY OUT SUCH WORK AGAIN WHICH CANNOT BE CONSIDERED INCOMPLETE. IN RESPECT OF INSTALLATION OF LIFTS, IT WAS SUBMITTED THAT ASSESSEE HAD PURCHASED LIFTS LONG BACK WHICH WERE ALREADY INSTALLED FOR TRIAL RUN BUT DUE TO SOME PROBLEMS, THE RE-FITTING WORK WAS IN PROCESS TO RE-INSTALL THE LIFT AT THE TIME OF SURVEY PROCEEDINGS, WHICH IS EVIDENT FROM COPY OF LEDGER ACCOUNT. IN RESPECT OF QUANTIFICATION OF AMOUNT OF RS. 85,22,980/- AS PROFIT FROM 5 BUILDINGS, WHICH ARE UNDISPUTEDLY COMPLETE, ASSESSEE SUBMITTED THAT THE SAME IS COMPUTED ON THE BASIS OF CONSIDERATIONS RECEIVED OUT OF SALE OF FLATS OF THESE 6 BUILDINGS. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTIONS OF APPELLANT AND HE CONCLUDED ON THE BASIS OF STATEMENTS RECORDED DURING SURVEY PROCEEDINGS OF DIFFERENT PERSONS AND DISCREPANCIES/DEFICIENCIES NOTICED BY SURVEY TEAM DURING SURVEY THAT THE PROJECT REMAINED INCOMPLETE STRUCTURALLY AS WELL AS FUNCTIONALLY AS ON 31.03.2012. HE FURTHER CONTENDED THAT .THE CLAIM MADE BY ASSESSEE IN RESPECT OF THOSE 5 BUILDINGS FOR WHICH BUC WAS CANCELLED AND REVISED UP TO 4 TH FLOOR ONLY ESTABLISHES THE FACT THAT THE PROJECT, AS A WHOLE, WAS INCOMPLETE AS ON 31.03.2012. CONSEQUENTLY, THE DEDUCTION U/S. 80IB (10) OF THE ACT CLAIMED BY ASSESSEE ON THE PROFIT OF RS.85,22,980/- DERIVED AGAINST THE SALE OF FLATS FROM 6 BUILDINGS WAS DISALLOWED BY AO AND ASSESSMENT WAS COMPLETED. PAGE 8 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 8. BEING, AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE CIT (A) OBSERVED THAT THE AO HAS NOT GIVEN ANY FINDINGS ON THE SPECIFIC ISSUE WHETHER DEDUCTION IS ALLOWABLE ON PART OF PROJECT I.E. 6 BUILDINGS, WHICH ARE UNDISPUTEDLY COMPLETE, FOR WHICH BUC HAS BEEN RECEIVED BY APPELLANT, FLATS HAVE BEEN SOLD AND CONSIDERATION RECEIVED DURING THE YEAR AND THEREAFTER DEDUCTION HAS BEEN CLAIMED. HE HAS SIMPLY REJECTED THE PLEA OF APPELLANT THAT SINCE THE WHOLE OF THE PROJECT WAS NOT COMPLETE, DEDUCTION U/S. 80IB(10) WAS NOT ALLOWABLE ON ANY PART OF THE PROJECT. THE CIT (A) THEREFORE, OBSERVED THAT THE QUESTION ARISES WHETHER THE COMPLETION OF PART OF PROJECT I.E. 6 BUILDINGS IN THE CASE OF APPELLANT, WOULD BE TERMED AS COMPLETION OF PROJECT FOR THE PURPOSE OF SECTION 80IB (10) OF THE ACT OR NOT. THIS QUESTION HAS BEEN ANSWERED BY HONBLE MADRAS HIGH COURT IN THE CASE VISWAS PROMOTERS (P) LTD. VS. ACIT REPORTED IN 255 CTR (MAD.) 149 AS UNDER: 12. IT IS NOT DENIED BY THE REVENUE THAT THERE IS NO DEFINITION OF THE EXPRESSION HOUSING PROJECT UNDER SECTION 80IB OF THE ACT. THE SAID EXPRESSION IS DEFINED UNDER EXPLANATION TO SECTION 80HHBA OF THE INCOME TAX ACT, WHICH READS AS UNDER: SECTION 80HHBA. DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM HOUSING PROJECTS IN CERTAIN CASES. ** ** EXPLANATION: FOR THE PURPOSES OF THIS SECTION, - (A) HOUSING PROJECT MEANS A PROJECT FOR (I) THE CONSTRUCTION OF ANY BUILDING, ROAD, BRIDGE OR OTHER STRUCTURE IN ANY PART OF INDIA. PAGE 9 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 13. SECTION 80IA OF THE ACT IS A SPECIFIC PROVISION, WHICH DEALS WITH DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURAL FACILITIES SUCH AS ROADS, BRIDGES AND OTHER STRUCTURE AS REGARDS THE GRANT OF DEDUCTION IN RESPECT OF DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT. SECTION 80IB IS A SPECIFIC PROVISION IN RESPECT OF PROFITS AND: GAINS FROM UNDERTAKINGS ENGAGED IN DEVELOPING AND CONSTRUCTING HOUSING PROJECTS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. THUS, HOUSING PROJECTS CONSIDERED HEREIN UNDER SECTION 80IB REFERS TO ANY BUILDING OTHER THAN ROAD, BRIDGE OR OTHER STRUCTURE. THUS, GOING BY THE DEFINITION OF HOUSING PROJECT TO MEAN THE CONSTRUCTION OF ANY BUILDING AND THE DEDUCTION UNDER SECTION 80IB OF THE ACT IS HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR FROM SUCH HOUSING PROJECT COMPLYING WITH THE CONDITION, EACH BLOCK IN THE LARGER PROJECT BY NAME AGRINI AND VAJRA, HAS TO BE TAKEN AS ON INDEPENDENT BUILDING AND HENCE A HOUSING PROJECT, FOR THE PURPOSE OF CONSIDERING A CLAIM OF DEDUCTION. SECTION 80IB (10) BEGINS BY STATING: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31 ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, ** ** ** THUS THE UNDERTAKING QUALIFYING FOR DEDUCTION UNDER SECTION 80IB OF THE ACT IS AN 'UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS' AND THE DEDUCTION IS IN RESPECT OF 'PROFITS AND GAINS DERIVED FROM' SUCH HOUSING PROJECT, SATISFYING THE CONDITIONS STIPULATED IN THE CLAUSE THEREIN. THUS, WITHIN A PAGE 10 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 COMPOSITE HOUSING PROJECT, WHERE THERE ARE ELIGIBLE AND INELIGIBLE UNITS, THE ASSESSEE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE UNITS IN THE PROJECT AND EVEN WITHIN THE BLOCK; THE ASSESSEE IS ENTITLED TO CLAIM PROPORTIONATE RELIEF IN THE UNITS SATISFYING THE EXTENT OF THE BUILT-UP AREA.' 9. THUS, THE HON'BLE COURT HAS DEFINED THE 'HOUSING PROJECT' AS 'ANY BUILDING' FOR THE PURPOSE OF DEDUCTION U/S. 80IB (10) OF THE ACT. AS PER COURT, WITHIN A COMPOSITE HOUSING PROJECT, ELIGIBLE UNITS OR BUILDINGS ARE ENTITLED TO CLAIM PROPORTIONATE RELIEF, IF SUCH UNITS OR BUILDINGS SATISFY OTHER REQUISITE CONDITIONS OF SECTION 80IB(10). IN THE CASE OF APPELLANT, 6 BUILDINGS HAVE BEEN COMPLETED, BUC HAS BEEN RECEIVED IN RESPECT OF ALL THESE BUILDINGS, FLATS HAVE BEEN SOLD AND CONSIDERATION RECEIVED. ALL OTHER REQUISITE CONDITIONS AS PER SECTION 80IB(10) SUCH AS AREA OF PLOT NOT LESS THAN ONE ACRE, BUILT UP AREA OF EACH FLAT NOT MORE THAN 1500 SQ. FT. ETC. HAVE ALREADY BEEN FULFILLED BY APPELLANT TO WHICH AO ALSO HAS NOT DISPUTED. THESE FACTS JUSTIFY THE CLAIM OF APPELLANT OR DEDUCTION U/S. 80IB(10) ON 6 BUILDINGS FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT (A) FURTHER OBSERVED THAT THE CLAIM OF APPELLANT ALSO GETS SUPPORT FROM THE DECISION OF HON'BLE ITAT, PUNE IN THE CASE RAHUL CONSTRUCTION COMPANY VS. ITO REPORTED IN 51 SOT 192 (PUNE) WHEREIN PROJECT CONSISTED OF 16 BUILDINGS AS PER SANCTIONED LAYOUT PLAN BUT WITHIN PRESCRIBED TIME, ONLY 11 BUILDINGS WERE COMPLETE. IN THAT CASE ALSO HON'BLE ITAT ALLOWED THE DEDUCTION U/S. 80IB (10) ON 11 BUILDINGS TREATING THEM AS HOUSING PROJECTS. SIMILARLY, IN OTHER CASE NAMELY RAMSUKH PROPERTIES VS. DCIT IN ITA PAGE 11 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 NO. 84/PN/2011 FOR A.Y. 2007-08, HON'BLE ITAT, PUNE, VIDE THEIR ORDER DATED 25.07.2012, HAVE ALLOWED DEDUCTION U/S. 80IB(10) ON 173 FLATS COMPLETED BEFORE PRESCRIBED TIME, OUT OF TOTAL 205 FLATS SANCTIONED BY LOCAL AUTHORITY AS A HOUSING PROJECT. SIMILAR VIEW TAKEN BY HON'BLE ITAT IN THE CASE M/S. VARUN DEVELOPERS VS. DCIT ITA NO. 1624/PN/2011 (PUNE) ALSO. THUS, THE CLAIM OF APPELLANT GETS SUPPORT FROM THESE DECISIONS THAT IT IS ENTITLED FOR DEDUCTION U/S. 80IB (10) ON THOSE BUILDINGS WHICH HAVE BEEN COMPLETED WITHIN SPECIFIED TIME AND WHICH ARE PART OF TOTAL PROJECT. IT WAS FURTHER OBSERVED THAT THE APPELLANT HAS REFERRED THE INSTRUCTION NO. 4/2009 DATED 30.06.2009 ISSUED BY CBDT AS CLARIFICATION REGARDING DEDUCTION U/S. 80IB(10) IN RESPECT OF THE UNDERTAKING DEVELOPING BUILDING AND HOUSING PROJECT. IN VIEW OF THIS INSTRUCTION, APPELLANT HAS CLAIMED THE DEDUCTION, WHICH IS ALLOWABLE ON A YEAR-TO-YEAR BASIS ON PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. IN SUPPORT OF ITS CONTENTION, APPELLANT HAS FILED THE COPY OF AUDIT REPORT WHEREIN THE METHOD OF ACCOUNTING FOR THE YEAR UNDER CONSIDERATION HAS BEEN MENTIONED AS 'MERCANTILE SYSTEM- ON THE BASIS OF SALE OF FLATS'. ON THIS BASIS ALSO, APPELLANT IS JUSTIFIED FOR ITS CLAIM OF DEDUCTION U/S.80IB OF THE ACT. IT IS APPARENT FROM RECORDS THAT THE APPELLANT HAS DISCLOSED PROFIT YEAR WISE ON THE BASIS OF SALE OF FLATS IN THE BUILDINGS HAVE BEEN SOLD BY APPELLANT AND PROFIT OF RS.85,22,980/- ON SALE CONSIDERATION OF FLATS HAS BEEN DISCLOSED IN THE RETURN OF INCOME AND DEDUCTION PAGE 12 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 U/S.80IB(10) CLAIMED. IN SUBSEQUENT YEARS ALSO, APPELLANT HAS DISCLOSED THE PROFITS IN ITS RETURN OF INCOME ON THE BASIS OF SALE OF FLATS ONLY. THUS, THE APPELLANT GETS SUPPORT FROM THE INSTRUCTION ISSUED BY CBDT ALSO, WHICH IS BINDING, ON THE ASSESSING OFFICER TO COMPLY. IN THE LIGHT OF ABOVE DISCUSSION, THE CIT (A) HELD THAT THE DEDUCTION OF RS.85, 22,980/- CLAIMED BY APPELLANT U/S.80IB (10) OF THE ACT IS ALLOWABLE TO IT. THE AO IS, THEREFORE, DIRECTED TO ALLOW THE SAME. THE GROUNDS TAKEN BY APPELLANT ARE ALLOWED. 10. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. THE LD. D.R. SUBMITTED THAT PROVISIONS OF SECTION 80IB (10) PROVIDES THAT DEDUCTION U/S. 80IB(10) WOULD BE ALLOWABLE TO A UNDERTAKING FOR HOUSING PROJECT WHICH HAS BEEN APPROVED BEFORE 31.03.2007 BY LOCAL AUTHORITY AND THAT HOUSING PROJECT IS COMPLETED WITH ALL RESPECT WITHIN FIVE YEAR FROM THE END OF FINANCIAL YEAR IN WHICH SUCH HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. HOWEVER, IN THE CASE OF THE ASSESSEE, THE HOUSING PROJECT COMMENCED ON 30.03.2007 HENCE, ENTER HOUSING PROJECT SHOULD HAVE BEEN COMPLETED IN ALL RESPECT BY 31. 03. 2012. HOWEVER, DURING SURVEY PROCEEDING UNDER SECTION 133A CARRIED ON 03.04.2012, A STATEMENT WAS RECORDED FROM SHRI RITESHBHAI BHIKHABHAI MORADIA, PARTNER OF FIRM, IN WHICH HE HAS STATED THAT WORK OF 11 OUT 27 BUILDINGS WAS ONLY COMPLETED AND REMAINING WORK OF 16 BUILDING WAS PENDING. THEREFORE, THE LEARNED D.R. CONTENDED PAGE 13 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 THAT HOUSING PROJECT WAS NOT COMPLETE IN ALL RESPECT AND UNFIT FOR USE AS ON 03.04.2012. FURTHER BUC CERTIFICATE OBTAINED IN RESPECT OF 11 BUILDINGS ONLY. THE LEARNED D.R. ALSO DEBIT THAT DEFINITION GIVEN UNDER EXPLANATION TO SECTION 80BHHA RELATES TO PARTICULARLY TO THAT SECTION ONLY AND CANNOT BE APPLIED TO SECTION 80IB(10) OF THE ACT. THEREFORE, LD. CIT (A) WAS NOT JUSTIFIED TO GRANT DEDUCTION UNDER SECTION 80IB (10) OF THE ACT. 11. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB (10) OF THE ACT. IN RESPECT OF 6 BUILDING WHICH WERE COMPLETE IN ALL RESPECT. THE LOCAL AUTHORITY HAS ALSO GIVEN BUC IN RESPECT OF THESE BUILDINGS. THEREFORE, THERE IS NO DISPUTE REGARDING 6 BUILDING THAT WERE COMPLETE AS ON 31.03.2012. H IN STATEMENT OF FACTS, THE AO HAS ALSO MENTIONED THAT OUT OF 11 BUILDINGS FOR WHICH BUC WAS RECEIVED BEFORE 31.03.2012. THE CIT (A) ALSO STATED IN THE APPELLATE ORDER THAT BUC FROM SMC WAS RECEIVED ONLY OF 6 BUILDINGS I.E. F-1, F-2, F-3 F-4, S & T. THUS, THE FACTS THAT 6 BUILDINGS WERE COMPLETE WAS NOT DISPUTED BOTH DEPARTMENT. THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 2,37,01,000 FOR A.Y. 2010-11, RS. 3,69,97,250 FOR A.Y. 2011-12 AND RS. 7,76,50,000 FOR A.Y. 2012-13. THE DETAILS OF WHICH ARE FILED ASPER PAPER BOOK. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DEDUCTION UNDER SECTION 80IB (10) OF THE ACT IS ALLOWABLE WHERE THE BUILDINGS ARE COMPLETE WHICH FULFILLS THE ALL CRITERIA LAID DOWN U/S. PAGE 14 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 80IB (10) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. B M AND BROTHERS [TAX APPEAL NO. 796 OF 2013 DATED 01.10.2013] WHEREIN CONSIDERING THE PROVISIONS OF SECTION 80IB (10) OF THE ACT, IT WAS HELD THAT DEDUCTION UNDER SECTION 80IB (10) OF THE ACT, CAN BE ALLOWED IN RESPECT OF THOSE UNITS OF HOUSING PROJECT WHICH HAVE BEEN COMPLETED ON PRESCRIBED TIME STIPULATED. FURTHER LD. CIT (A) HAS RELIED ON THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE VISWAS PROMOTERS (P) LTD. VS. ACIT REPORTED IN 255 CTR (MAD.) 149. THEREFORE, LD. CIT (A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THERE IS NO DISPUTE THE OUT OF 27 BUILDINGS, 6 BUILDING WERE COMPLETE IN ALL RESPECT AS ON 31. 03. 2012 OF WHICH BUC CERTIFICATE WAS ALSO OBTAINED FROM SMC I.E. LOCAL AUTHORITY. THE CLAIM OF REVENUE IS THAT THE WHOLE PROJECT WAS NOT COMPLETED BEFORE 31.03.2012, HENCE, DEDUCTION UNDER SECTION 80IB (10) OF THE ACT IS NO AVAILABLE. HOWEVER, THIS IS COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. B M BROTHERS [ TAX APPEAL NO. 796 OF 2013 DATED 01.10.2013] IN WHICH THE HONBLE GUJARAT HIGH COURT OBSERVED 6. CONSIDERING THE PROVISIONS OF SECTION 80IB(10) OF THE ACT, WHEN THE HOUSING PROJECT NAMED MANINAGAR AT RAJKOT WAS APPROVED PRIOR TO 01/04/2004 AND PAGE 15 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 DIFFERENT UNITS WERE CONSTRUCTED BEFORE 31/03/2008, IT CANNOT BE SAID THAT ITAT HAS COMMITTED ANY ERROR GRANTING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WITH RESPECT TO ONLY THOSE UNITS OF HOUSING PROJECT NAMED MANINAGAR WAS ALREADY APPROVED PRIOR TO 01/04/2004 OF WHICH CONSTRUCTION HAVE BEEN COMPLETED PRIOR TO 31/03/2008. IT CANNOT BE DISPUTED THAT THE HOUSING PROJECT NAMED MANINAGAR WAS ALREADY APPROVED PRIOR TO 01/04/2004 AND CONSTRUCTION THAT HAVE BEEN PUT UP HAVE BEEN COMPLETED PRIOR TO 31/03/2008. THUS, IN THE INSTANT CASE 6 BUILDING WHICH WERE APPROVED PRIOR TO 30.03.2007 OF WHICH CONSTRUCTION WAS COMPLETED BY 31.03.2012 IN ALL RESPECT. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB (10) OF THE ACT. IN RESPECT OF 6 BUILDING ONLY. THIS ISSUE IS ALSO COVERED BY DECISION OF HON`BLE MADRAS HIGH COURT IN THE CASE VISWAS PROMOTERS (P) LTD. VS. ACIT 255 CTR (MAD.) 149. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD. ACCORDINGLY, GROUND NO. 1 TO 5 OF REVENUE APPEAL ARE DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A.Y. 2010-11 IS DISMISSED. I.T.A.NO. 2963/AHD/2014 A.Y. 2011-12: 14. THE GROUND NO. 1 TO 3 OF REVENUE APPEAL RELATES TO FOR PROPORTIONATE DEDUCTION U/S. 80IB (10) OF THE ACT. PAGE 16 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BOTH PARTIES HAVE AGREED THE FACTS ARE IDENTICAL TO THAT OF ASSESSMENT YEAR 2010-11. WE FIND THAT THE FACTS ARE IDENTICAL AS THAT OF ASSESSMENT YEAR 2010-11 IN I.T.A.NO. 2575/AHD/2014 A.Y. 2010-11 AS DISCUSSED ABOVE. THEREFORE, OUR FINDINGS AS GIVEN FOR ASSESSMENT YEAR 2010-11 IN THE CASE OF WOULD MUTATIS MUTANDIS APPLY TO THESE GROUNDS OF APPEAL ALSO. THEREFORE, FOLLOWING THE SAME, THESE GROUNDS OF APPEAL OF REVENUE ARE THEREFORE, DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A.Y. 2011-12 IS DISMISSED. I.T.A.NO. 1856/AHD/2016 A.Y. 2012-13 17. GROUND NO. 1 TO 4 OF REVENUE APPEAL RELATES TO ALLOWING DEDUCTION OF RS. 2,,99,55,094 U/S. 80IB(10) OF THE ACT. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BOTH PARTIES HAVE AGREED THE FACTS ARE IDENTICAL TO THAT OF ASSESSMENT YEAR 2010-11. WE FIND THAT THE FACTS ARE IDENTICAL AS THAT OF ASSESSMENT YEAR 2010-11 IN I.T.A.NO. 2575/AHD/2014 A.Y. 2010-11 AS DISCUSSED ABOVE. THEREFORE, OUR FINDINGS AS GIVEN FOR ASSESSMENT YEAR 2010-11 IN THE CASE OF WOULD MUTATIS MUTANDIS APPLY TO THESE GROUNDS OF APPEAL ALSO. THEREFORE, FOLLOWING THE SAME, THESE GROUNDS OF APPEAL OF REVENUE ARE THEREFORE, DISMISSED. PAGE 17 OF 17 SRUSHTI CORPORATION VS. ITO, WARD-5(4), ACIT, CENT. CIR-2 & DCIT, CIR-2(3), SURAT/A.Y. 2010-11, 2011-12 & 2012-13 19. IN THE RESULT, THE APPEAL OF THE REVENUE FROM A.Y. 2012-12 IS DISMISSED. 20. IN THE RESULT, IN SUM UP, THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2010-11, 2011-12 AND 2012-13 ARE DISMISSED. 21. THE ORDER IS PRONOUNCED BY LISTING THE CASE ON THE NOTICE BOARD UNDER RULE 34(4) OF INCOME TAX APPELLATE TRIBUNAL RULES 1963. SD/- SD/- (H.S.SIDHU) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT, DATED: 27 TH AUGUST, 2019/ COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT