Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 0395 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 year(s) 10 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
16-05-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
20-06-2013
Assessment Year
2008-2009
Appeal Filed On
24-06-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 248/AGRA/2011 & 269/AGRA/2012 ASSTT. YEAR : 2008-09 & 2009-10 A.C.I.T., CIRCLE 3(1), VS. M/S. G.L.R. REAL ESTAT E PVT. LTD., GWALIOR. D-2, SILVER ESTATE, UNIVERSITY ROAD, GWALIOR. (PAN: AACCG 4572 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI K.C. AGARWAL, ADVOCATE DATE OF HEARING : 20.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 05.07.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS ORDER SHALL DISPOSE OF BOTH THE DEPARTMENTAL APPEALS FILED AGAINST THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS ON THE IDENTICAL QUESTIONS. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. BOTH THE DEPARTMENTAL APPEALS ARE DECIDED AS UNDER : ITA NO. 248/AGRA/11 & 269/AGRA/12 2 ITA NO. 248/AGRA/2011 (A.Y. 2008-09) : 3. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), GWALIOR DATED 25.03.2011 FOR THE ASSESSMENT YEAR 20 08-09 CHALLENGING THE DELETION OF ADDITION OF RS.3,96,85,240/- MADE ON AC COUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80IB (10) OF THE IT ACT BECA USE THE ASSESSEE HAS VIOLATED THE CONDITIONS LAID DOWN BY THE LOCAL AUTHORITY IN OBTAINING COMPLETION CERTIFICATE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER IN REAL ESTATE. AS PER ITS RETURN FILED ON 13.10.2008 IT HAS DECLARED SALE/GROSS RECE IPTS FROM BUSINESS AT RS.13,19,13,138/- ALONG WITH OTHER INCOME OF RS.88, 915/-. CLOSING STOCK OF RS.9,33,09,214/- HAS ALSO BEEN SHOWN WHEREBY NET PR OFIT OF RS.3,52,50,186/- HAS BEEN DECLARED. DEDUCTION U/S 80-IB(10) HAS BEEN CLA IMED AT RS.3,96,85,237/- WHICH HAS BEEN REJECTED BY THE AO MAINLY ON THE GRO UND OF ABSENCE OF COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY AND THE FACT THAT POSSESSION OF HOUSES HAS BEEN GIVEN BEFORE OBTAINING OF COMPLETIO N CERTIFICATE WHICH IS FOUND TO BE A GROSS VIOLATION OF CONDITION NO. 7 OF APPRO VAL CERTIFICATE AND BY HOLDING THAT IN VIEW OF CONDITION NO. 8 OF THE SAID APPROVA L CERTIFICATE, SUCH APPROVAL ITA NO. 248/AGRA/11 & 269/AGRA/12 3 STANDS CANCELLED AUTOMATICALLY. AO HAS DISCUSSED IN DETAIL THE FACTS IN THE ASSESSMENT ORDER AS PER PARAS 4, 5 & 6. ASSESSEES SUBMISSIONS, AND STATEMENT OF FACTS AS GIVEN BEFORE THE LD. CIT(A), ARE REPRODUCE D AS UNDER: 'IT FILED ITS RETURN OF INCOME FOR THE RELEVANT YEA R ON 13/10/2008, DECLARING THERE IN TOTAL INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S 80-1B(10) OF THE I. T. ACT 1961, BEING A COMPANY DERIVING PROFIT FROM BUSINESS OF HOUSING PROJECT. CASE FOR THE RELEVANT YEAR WAS SELECTED UNDER CASS FOR SCRUTINY AND LEARNED ASSESSING AUTHORITY ASSESSED TOTAL/TAXABLE INCOME O F ASSESSEE AT RS.39685240/- AFTER DISALLOWING CLAIM OF DEDUCTION U/S 80-1B(10) OF THE ACT, CITING THERE IN FOLLOWING REASONS : 1. POSSESSION WAS GIVEN BEFORE THE APPLYING AND OBT AINING OF COMPLETION CERTIFICATE WHICH IS A GROSS VIOLATION OF CONDITION NO. 7 OF APPROVAL CERTIFICATE AND HENCE AS PER CONDITION 8 CERTIFICATE STANDS CAN CELLED AUTOMATICALLY. HENCE THE PROJECT IS WITHOUT ANY APPROVAL CERTIFICATE AND WITHOUT PERMISSION. WHILE U/S 80-IB(10) IT IS ESSENTIAL REQUIREMENT FOR THE DEDUC TION THAT PROJECT SHOULD BE APPROVED BY A LOCAL AUTHORITY, WHILE IN CASE OF AS SESSEE WHOLE PROJECT IS WITHOUT PERMISSION. 2. THE ASSESSEE HAS NOT TAKEN COMPLETION CERTIFICAT E FROM THE LOCAL AUTHORITY WHICH IS TO BE TAKEN AS PER THE AMENDED P ROVISION OF SECTION 80-IB(10) . 3. THE ASSESSEE HAS NOT APPLIED FOR ISSUANCE OF COM PLETION CERTIFICATE IN THE PRESCRIBED FORMAT I.E. APPENDIX-G. THEREFORE DEEMIN G PROVISION AS CLAIMED BY THE ASSESSEE IS NOT TENABLE. ITA NO. 248/AGRA/11 & 269/AGRA/12 4 IN VIEW OF ABOVE, THE ASSESSEE IS THEREFORE, NOT EL IGIBLE FOR DEDUCTION U/S. 80IB(10). THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80-IB(10) FO R AN AMOUNT OF RS. 3,96,85,237/-. THE SAME IS THEREFORE REJECTED. AGGRIEVED BY THE AFORESAID ORDER DISALLOWING DEDUCT ION CLAIMED U/S 80-IB(10) OF THE IT ACT, ASSESSEE PREFERRED APPEAL BEFORE YOU R GOOD SELF. FOR THE SAKE OF PRIVITY RELEVANT SECTION 80IB(10) I S REPRODUCED AS UNDER : DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERT AIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. 80-IB(1)- WHERE THE GROSS TOTAL INCOME OF AN ASSES SEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB- SECTIONS (3) TO (11). (11A) AND (11B) (SUCH BUSINES S BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, A DEDUCTION FORM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO S UCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIE D IN THIS SECTION. XXXX XXXX XXXX XXXX (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2008 BY A LOCAL AUTHORITY SHALL BE HU NDRED PERCENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT T O ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IT, - (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTIONS ITA NO. 248/AGRA/11 & 269/AGRA/12 5 (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH 2008. (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRI L 2004 (BUT NOT LATER THAN THE 31ST DAY OF MARCH 2005) WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 20 05, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION :- FOR THE PURPOSES OF THIS CLAUSE, - (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTH ORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LO CAL AUTHORITY; (B) THE PROJECT IS ON SIZE OF PLOT OF LAND WHICH HA S A MINIMUM AREA OF ONE ACRE PROVIDED THAT NOTHING CONTAINED IN CLAU SE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDIN GS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIM E BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BE HALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE K ILOMETERS FROM ITA NO. 248/AGRA/11 & 269/AGRA/12 6 THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSA ND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; (D). THE BUILT-UP AREA OF THE SHOPS AND OTHER COMME RCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED (THREE) PERCENT OF THE AGGREGATE BUILT-UP AREA OF T HE HOUSING PROJECT OR (FIVE THOUSAND SQUARE FEET, WHICHEVER IS HIGHER) . (E). NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOU SING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLL OWING PERSON, NAMELY;- (I). THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHIL DREN OF SUCH INDIVIDUAL, (II). THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDI VIDUAL IS THE KARTA, (III). ANY PERSON REPRESENTING SUCH INDIVIDUAL, TH E SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA.) EXPLANATION:- FOR THE REMOVAL OF THE DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL AP PLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT, AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STA TE GOVERNMENT) IN VIEW OF THE FACT AND LEGAL PROVISION GOVERNING C ASE OF ASSESSEE, IT SUBMITS AS UNDER : 1. THAT THE LEARNED AO ERRED IN DISALLOWING / REJEC TING THE CLAIM OF DEDUCTION U/S 80-IB (10) OF THE INCOME TAX ACT OF R S.3,96,85,234/- WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WHEREAS THE APPELLANT ITA NO. 248/AGRA/11 & 269/AGRA/12 7 COMPANY SUBMITTED ALL THE FACTS FOR THE DEDUCTION U /S 80-IB(10) DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE THE DEDUCTI ON U/S 80-IB(10) RS. 3,96,85,234/- MAY KINDLY BE ALLOWED. 2. THAT, WHOLE ORDER OF ASSESSMENT IS ARBITRARY, IL LEGAL, UNJUSTIFIED AND SEEMS TO HAVE BEEN FRAMED WITH THE SOLE OBJECTIVE O F MAKING A HIGH PITCHED ORDER OF ASSESSMENT WHICH DOES NOT HAVE ANY RELEVAN CE WITH FACTS OF THE CASE FOR FOLLOWING REASONS. (A) THAT THE LEARNED AO HAS ERRED IN OBSERVING THAT THE APPELLANT VIOLATED OF CONDITION NO. 7 OF PERMISSION LETTER AND AS PER CON DITION NO. 8 THE PERMISSION STANDS CANCELLED AUTOMATICALLY WHEREAS BATH THE CON DITIONS ARE SEPARATE AND CANNOT BE TREATED AS INTERLINKED TO EACH OTHER. HEN CE THE REJECTION OF DEDUCTION U/S 80-IB(10) ON THIS GROUNDS IS UNWARRANTED. DETAILS OF CONDITION NO. 7 AND 8 OF PERMISSION LETT ER DATED 09/01/2006 OR CONDITION NO. 6 AND 7 OF PERMISSION LETTER OF 30/05 /2006 ARE AS UNDER: 'KRZ DZEKAD 6%& VK;QDR DH VUQKK ESA OF.KZR DK;Z DH IW.KZR% DS LACA/K ESA IFJFK'V N% ESA FYF[KR LWPUK NSUH GKSXH LWPUK IZKFIR DS LKR FNO L DS VUNJ VK;QDR }KJK LFKY IJH{K.K DJ DK;Z IW.KZR% IZEK.K I= VFKOK VU; VKO;D FUNSZK TKJH FD;S TK;SAXSA DK;Z IW.KZR% IZEK.KI= IZKIR FD;S FCUK FUFEZR HKOU DK MI;KSX FD;K TKUK VOS/KKFUD GKSXK A 'KRZ DZEKAD 7%& IYHUFK YSOY DQLHZ LRJ RD FUEKZ.K DK;Z GKS TKUS IJ VK;QDR DK;KZY; ESA FUJH{K.K GSRQ FYF[KR LWPUK NSUH GKSXH A IFJFK'V P LWPUK U NSUS IJ LOHD`FR LOR%FUJLR EKUH TK;SXH RFKK FUEKZ.K VOS/K EKUK TKDJ VF/KFU;E DS IZKO/KKUKSA DS RGR /OLR FD;K TK;SXK A ITA NO. 248/AGRA/11 & 269/AGRA/12 8 (B) THAT THE LEARNED AO HAS ERRED IN MENTIONING THA T THE APPELLANT HAS NOT TAKEN COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY WHE REAS THE APPELLANT COMPANY APPLIED FOR COMPLETION CERTIFICATE BEFORE THE COMMI SSIONER MUNICIPAL CORPORATION, GWALIOR AND REMINDER LETTER ALSO FILED REGARDING DEEMING PROVISION OF COMPLETION CERTIFICATE. HENCE THE REJECTION OF D EDUCTION U/S 80-IB(10) ON THIS GROUND IS UNWARRANTED. (C) THAT THE LEARNED AO HAS ERRED IN MENTIONING THA T THE APPELLANT HAS NOT APPLIED FOR ISSUANCE OF COMPLETION CERTIFICATES IN PRESCRIBED FORMAT I.E. APPENDIX G. THEREFORE, DEEMING PROVISION AS CLAIMED BY THE ASSESSEE IS NOT TENABLE WHEREAS THE APPELLANT COMPANY APPLIED FOR C OMPLETION CERTIFICATE IN PRESCRIBED FORMAT. HENCE THE REJECTION OF DEDUCTION U/S 80-IB(10) ON THIS GROUND IS UNWARRANTED. (D) THAT, LEARNED AO HAS FAILED TO APPRECIATE THE F ACT THAT THE APPELLANT APPLIED FOR COMPLETION CERTIFICATE ON 24/09/2008 VIDE INWAR D LETTER NO. 10204 TO THE COMMISSIONER MUNICIPAL CORPORATION, GWALIOR AND A R EMINDER LETTER ALSO SUBMITTED ON 10/10/2008 VIDE INWARD LETTER NO. 1218 3 FOR THE SURVEY NO. 218 AND 226. THE COMPANY ALSO APPLIED FOR THE COMPLETIO N CERTIFICATE FOR THE HOUSING PROJECT SITUATED AT SURVEY NO. 224 AND 225 ON 24/09/2008 VIDE INWARD LETTER NO. 12184. THE APPELLANT COMPANY MENTIONED I N THE REMINDER LETTER THAT NO RESPONSE COULD BE EVOKED TO THE SAID APPLICATION AND NOR ANY VIOLATION OF BUILDING CONSTRUCTION WAS ALLEGED BY YOU AS ON DATE . THIS IS INACTION ON THE PART OF LOCAL BODY AUTHORITIES FOR WHICH NEITHER ASSESSE E IS RESPONSIBLE NOR CAN HE BE PENALIZED FOR THE SAME. RELEVANT EXTRACT OF THE LET TER IS AS UNDER: 'IN THIS CONNECTION WE WOULD LIKE TO INFORM YOU THA T WE HAVE COMPLETED THE CIVIL CONSTRUCTION WORK OF THE SAID P ROJECT. ITA NO. 248/AGRA/11 & 269/AGRA/12 9 THAT NO RESPONSE COULD BE EVOKED TO THE SAID APPLIC ATION AND NOR ANY VIOLATION OF BUILDING CONSTRUCTION WAS ALLEGED BY YOU AS ON DATE. THAT IN SUCH CIRCUMSTANCES AS PER THE PROVISIONS OF SECTION 301 (4B) THE MUNICIPAL CORPORATION ACT, AND THE LAW OF GENER AL APPLICATION IT SHALL BE DEEMED THAT COMPLETION CERTIFICATES HAS BE EN ISSUED BY YOU AND IN SUCH CIRCUMSTANCES THE APPLICANTS/ ALLOTTERS ARE PERMITTED TO OCCUPY THEIR FLATS. ' (E) THAT, LEARNED AO GROSSLY ERRED IN NOT APPRECIAT ING THE PROVISION OF SECTION 301 (4B) OF THE MUNICIPAL CORPORATION ACT AND THE L AW OF GENERAL APPLICATION, WHEREIN DEEMING PROVISIONS ARE INCORPORATED AND IN CASE COMPLETION CERTIFICATE IS NOT ISSUED WITHIN A TIME FRAME BY LOCAL BODY AUT HORITY AND IN SUCH CIRCUMSTANCES THE APPLICANTS / ALLOTTERS ARE PERMIT TED TO OCCUPY THEIR HOUSES. THEREFORE, THE OBSERVATION OF LEARNED AO THAT APPEL LANT HAS NOT TAKEN COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY AS PER THE AMENDED PROVISION OF SECTION 80-IB(10) IS FACTUALLY INCORRECT, AGAINST T HE LAW AND UNJUSTIFIED. (F) THAT, ALLEGATION OF LEARNED ASSESSING AUTHORITY WITH REFERENCE TO NON APPLYING FOR ISSUANCE OF COMPLETION CERTIFICATES IN PRESCRIB ED FORMAT IS ALSO UNWARRANTED AND UNCALLED FOR AS IN THE FACTS OF THE CASE WHERE ALL THE DOCUMENTARY EVIDENCE REGARDING APPLICATION FOR COMPLETION CERTIFICATE AR E ON RECORD IT MAY BE MERE TECHNICAL/VENIAL BREACH WHICH DOES NOT WARRANT SUCH HARSH ACTION OF DISALLOWING TOTAL CLAIM OF DEDUCTION U/S 80-IB(10) OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE IT IS FURTHER SUB MITTED THAT LEARNED ASSESSING AUTHORITY OUGHT TO HAVE APPRECIATED THE P RACTICAL GROUND REALITY WHERE IN AS PER THE EVIDENCE PRODUCED BEFORE HIM THE SAID HOUSING PROJECT IS COMPLETED AND PEOPLE STATED LIVING IN ITS DWELLING UNITS WHICH IS ONLY POSSIBLE ITA NO. 248/AGRA/11 & 269/AGRA/12 10 AFTER COMPLETION OF THE PROJECT, HENCE FOR ALL PRAC TICAL PURPOSES, PROJECT WAS COMPLETED, DEDUCTION AS RIGHTLY CLAIMED U/S 80-18(1 0) OF THE ACT, WAS WRONGLY DISALLOWED. 4. THAT, LEARNED ASSESSING AUTHORITY OUGHT TO HAVE APPRECIATED THE FACT THAT ANY BREACH/ VIOLATION OF CONDITIONS OF ANY OTHER AC T IN FORCE DOES NOT AFFECT AND RIGHTS / PRIVILEGE GRANTED/ ACCRUING UNDER THE INCO ME TAX ACT TO THE ASSESSEE. IN THIS REGARD IT IS FURTHER PUT TO YOUR KIND ATTENTIO N THAT THE LEARNED AO ISSUED A LETTER DATED 24/11/2010 AND MENTIONED THAT COMMISSI ONER MUNICIPAL CORPORATION, GWALIOR HAS FURNISHED THE INFORMATION IN REPLY OF NOTICE U/S 133(6), THAT THE APPELLANT HAS NOT APPLIED ANY APPL ICATION FOR THE COMPLETION CERTIFICATE OF THE HOUSING PROJECT. THE APPELLANT F ILED RELY OF THE LETTER ON 29/11/2010 AND REQUESTED BEFORE THE LEARNED AO TO I SSUE THE SUMMON U/S 131 OF THE INCOME TAX ACT TO THE COMMISSIONER OF MUNICIPAL CORPORATION, GWALIOR OF THE CROSS EXAMINATION. THE LEARNED AO DID NOT ISSUE ANY SUMMON TO THE COMMISSIONER OF MUNICIPAL CORPORATION, GWALIOR WHIC H PROVES THAT THE LEARNED AO WAS AGREED WITH THE CONTENTION OF THE APPELLANT COMPANY. IT IS FURTHER SUBMITTED IN THE MATTER THAT THE LEAR NED ASSESSING AUTHORITY BEFORE MAKING DISALLOWANCE IN TOTO, OUGHT TO HAVE TAKEN CA RE OF THE INTENTION OF THE LEGISLATURE, IN FRAMING THE BENEFICIAL PROVISIONS A S CONTAINED IN THE SECTION, WHERE IN CERTAIN BENEFITS ARE CONFERRED ON THE ASSE SSEE, UNDER TAKING CONSTRUCTION OF SPECIFIC HOUSING PROJECTS, TO ENCOU RAGE THE ENTREPRENEUR AND THEREBY BENEFIT THE MASSES FACING ACUTE HOUSING SHO RTAGE IN THE COUNTRY. YOUR KIND ATTENTION IS FURTHER DRAWN TO THE SPECIFI C CONDITION THAT WHEN A BUILDER APPLIES FOR PERMISSION FOR CONSTRUCTION / D EVELOPMENT OF HOUSING PROJECT FROM LOCAL AUTHORITY CERTAIN PART OF THE PROPERTY I S TAKEN CONTROL OF BY THE AUTHORITY BY WAY OF MORTGAGE OF THAT PART OF PROPER TY IN ITS FAVOUR, AND THE SAME IS RELEASED BY THE AUTHORITY IN FAVOUR OF BUILDER O NCE THE PROJECT IS COMPLETED AND IN THE INSTANT CASE, THE SAID RELEASE DEED IS E XECUTED ON BEHALF OF ITA NO. 248/AGRA/11 & 269/AGRA/12 11 COMMISSIONER MUNICIPAL CORPORATION, GWALIOR ON 11/0 1/2008, HENCE FOR ALL PRACTICAL PURPOSES, PROJECT IS DEEMED TO BE COMPLET ED AND BENEFITS AS ALLOWED BY STATUTE CAN NOT BE WITHDRAWN BY MISAPPRECIATION OF FACTS AVAILABLE ON RECORD. HENCE IN THE INSTANT CASE WHEN ALL THE CONDITIONS E NUMERATED IN SECTION 80- IB(10) OF THE ACT WHICH ARE AS FOLLOWS ARE FULFILLE D. (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTIONS,- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 2005, WI THIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. (B). THE PROJECT ON SIZE OF A PLOT OF LAND WHICH HA S A MINIMUM AREA OF ONE ACRE : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANC E WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDIN GS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIM E BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BE HALF; ITA NO. 248/AGRA/11 & 269/AGRA/12 12 (C). THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP A REA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MU NICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; (D). NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOU SING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND DENIAL OF BENEFIT TO THE DEVELOPER ON THE PRESUMPTI ON THAT COMPLETION CERTIFICATE WITH RESPECT TO THE PROJECT IS NOT OBTAINED BY HIM WILL LEAD TO ABSURD RESULTS AND MAY CREATE CHAOS IN THE HOUSING SEGMENT. TAX INCENTIVE PROVISION BY WAY OF DEDUCTION U/S 80- IB(10) OF THE ACT IS TO ENABLE AUGMENTING AFFORDABLE DWELLING UNITS. FOR READY REFERENCE OF THE CONDITION SPECIFIED IN S ECTION 80-IB(10) VIA A VIS ASSESSEE, FOLLOWING CHART IS PRESENTED FOR YOUR KIN D PERUSAL, WHICH SQUARELY PROVES THAT THERE IS NO VIOLATION OF CONDITION OF P ROVISIONS DONE BY ASSESSEE. S.NO . PARAMETERS CONDITION AS PER SECTION 80-IB (10) FACTS IN THE CASE OF ASSESSEE 1. DATE OF APPROVAL SHOULD BE BEFORE 31/03/2008 APP ROVAL DATE 10/01/2006 2. DATE OF COMMENCEMENT SHOULD HAVE COMMENCED AFTER 01/10/1998 COMMENCED AFTER APPROVAL 3. DATE OF COMPLETIONS SHOULD BE COMPLETED WITHIN F IVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH APPROVAL WAS GIVEN, IF THE SAME WAS GIVEN AFTER 01/04/2005 COMPLETED DURING F.Y. 2008-09 4. EVIDENCE OF COMPLETION FULL OCCUPATION CERTIFICATE ISSUED BY LOCAL AUTHORITY APPLICATION TO ISSUE COMPLETION CERTIFICATE ITA NO. 248/AGRA/11 & 269/AGRA/12 13 MOVED BEFORE APPROPRIATE AUTHORITY 5. SIZE OF PLOT 1 ACRE 13420 SQ. MET EQUIVALENT 6. SIZE OF EACH UNIT 1500 SQ. FT. IN PLACE OTHER THAN METRO WITH IN SPECIFIED LIMIT 7. SIZE OF COMMERCIAL SPACE 5% OF TOTAL BUILT UP AREA N.A. 8. WHETHER NOTIFIED BY BOARD N.A. N.A. 9. DATE OF FILING OF RETURNS RETURN OF INCOME SHOULD BE FILED ON OR BEFORE DUE DATE OF SUBMISSION AS PER SECTION 139(1) FILED WITHIN DUE DATE AND IF THERE IS ANY TECHNICAL/VENIAL BREACH OF COND ITION OBSERVED BY LEARNED ASSESSING AUTHORITY, BENEFIT AS ACCORDED BY A BENEF ICIAL LEGISLATION CANNOT BE TAKEN AWAY, AS HELD IN FOLLOWING CASES BY HON'BLE C OURTS AND TRIBUNALS. (I). DCIT VS. ANSAL PROPERTIES AND INDUSTRIES LTD.( 2009) 116 ITD 253 (DELHI) (II). STATE OF U.P. VS. L.J. JOHNSON (1983) AWC 789 SC (III). CIT VS. SHAH SADIQ & SONS (1987) 166 ITR 102 (SC) (IV). DY. CIT VS. ANSAL PROPERTIES & INDUSTRIES LTD . (2008) 22 SOT 45 (DEL.) (V). SAROJ SALES ORGANISATION VS. ITO (2008) 115 TT J (MUMBAI) 485 (VI). DCIT VS. BRIGADE ENTERPRISES (P) LTD. (2008) 119 TTJ (BANG.) 269. IN THE CASE OF UNION OF INDIA & ORS. VS. WOOD PAPER S LTD. & ANR. AIR 1991 SC 2049 THE SUPREME COURT, THE CONTEXT OF INTERPRET ING EXEMPTION PROVISIONS HELD AS UNDER: ITA NO. 248/AGRA/11 & 269/AGRA/12 14 'LITERALLY EXEMPTION IS FREEDOM FROM LIABILITY, TAX OR DUTY. FISCALLY IT MAY ASSUME VARYING SHAPES, SPECIALLY IN A GROWING E CONOMY, FOR INSTANCE TAX HOLIDAY TO NEW UNITS, CONCESSIONAL RAT E OF TAX TO GOODS OR PERSONS FOR LIMITED PERIOD OR WITH THE SPECIFIC OBJECTIVE ETC. THAT IS WHY ITS CONSTRUCTION UNLIKE CHARGING PROVISION, HAS TO BE TESTED ON DIFFERENT TOUCHSTONE. IN FACT, AN EXEMPTION PROVISI ON IS LIKE AN EXCEPTION AND ON NORMAL PRINCIPLE OF CONSTRUCTION O F INTERPRETATION OF STATUES IT IS CONSTRUCTED STRICTLY EITHER BECAUS E OF LEGISLATIVE INTENTION OR ON ECONOMIC JUSTIFICATION OF INEQUITAB LE BURDEN OR PROGRESSIVE APPROACH OF FISCAL PROVISIONS INTENDED TO AUGMENT STATE REVENUE. BUT ONCE EXCEPTION OR EXEMPTION BECOMES AP PLICABLE NO RULE OR PRINCIPLE REQUIRE TO BE CONSTRUED STRICTLY. TRULY, SPEAKING LIBERAL AND STRICT CONSTRUCTION OF AN EXEMPTION PRO VISION ARE TO BE INVOKED AT DIFFERENT STAGES OF INTERPRETING IT. WHE N THE QUESTION IS WHETHER A SUBJECT FALLS IN THE NOTIFICATION OR IN T HE EXEMPTION CLAUSE THEN IT BEING IN NATURE OF EXCEPTION IS TO BE CONST RUED STRICTLY AND AGAINST THE SUBJECT BUT ONCE AMBIGUITY OR DOUBT ABO UT APPLICABILITY IS LIFTED AND THE SUBJECT FALLS IN THE NOTIFICATION THEN FULL PLAY SHOULD BE GIVEN TO IT AND IT CALLS FOR WIDER AND LIBERAL C ONSTRUCTION.' IN CIT VS. GWALIOR RAYON SILK MANUFACTURING CO. LTD . {1992} 104 CTR {SC} 243 : AIR 1992 SC 1782, THE SUPREME COURT OBSERVED AS UNDER: 'THE CONTEXTUAL MEANING HAS TO BE ASCERTAINED AND G IVEN EFFECT TO A PROVISION FOR DEDUCTION, EXEMPTION OR RELIEVE SHOUL D BE CONSTRUED REASONABLY AND IN FAVOUR OF THE ASSESSEE.' ITA NO. 248/AGRA/11 & 269/AGRA/12 15 IN THE CASE OF BAJAJ TEMP LTD. VS. CIT {1992} 104 C TR {SC} 116 : {1992} 196 ITR 188 SC, APPROVING DECISION OF BOMBAY HIGH COURT REPORTED IN CAPSULATION SERVICES {P} LTD. VS. CIT, 1973 91 ITR 566 BOM. AND PUNJAB AND HARYANA HIGH COURT IN PHAGOO MAL SANT RAM VS. CIT 1 969 74 ITR 734 {P&H}, THE APEX COURT HELD: 'A PROVISION IN TAXING STATUE GRANTING INCENTIVES F OR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALL Y; AND SINCE A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE I NTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HAS TO BE CONS TRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO F RUSTRATE IT. THIS WOULD THUS MEAN WHERE THERE IS PARTIAL OR NOMI NAL NON-COMPLIANCE OF THE REQUIREMENTS OF LAW THERE SHOULD NOT BE A COMPLETE DISALLOWANCE OF DEDUCTIONS. THE DISALLOWANCE, IF ANY, WILL HAVE TO BE RESTRICTE D TO THE EXTENT OF NON- COMPLIANCE OF THE PROVISION. IN THIS REGARD YOUR KI ND ATTENTION IS INVITED TO THE FOLLOWING. THE CBDT CIRCULAR NO. 14 (XL-35), DATED 11/04/1955 SAYS THAT THE AO SHOULD WHILE CONSIDERING THE CASE OF AN ASSESSEE TAKE A LI BERAL VIEW IN GRANTING RELIEF OR ALLOWING CLAIM MADE BY THE ASSESSEE AND THE SAME SH OULD NOT BE REJECTED ON PROCEDURAL OR TECHNICAL GROUNDS. IN SHREE SAJJAN MI LLS LTD. VS. CIT & ANR. 1985 156 ITR 585 SC, IT WAS OBSERVED THAT THE MERE FACT THAT THE TAX STATUE OUGHT TO BE STRICTLY CONSTRUED DOES NOT PRECLUDE TH E PRINCIPLE OF REASONABLE CONSTRUCTION BEING MADE TO GIVE EFFECT TO THE INTEN TION OF THE LEGISLATURE BEING APPARENT FROM THE SCHEME ENVISAGED IN THE ACT. THUS LOOKING TO ABOVE DISCUSSION, ALL ONE CAN SAY IS THAT IN THE CASE OF NON-FILING OF AUDIT REPORT ALONGWITH RETURN OF INCOME THE BENEFICIAL PROVISION SAID TO BE NOT APPLICABLE IS CONTRARY TO THE INTENTION OF LEGISLATURE. SECTION 8 0HH, 80HHA, 80-I, 80-IA, 80J ETE. ARE ALL BENEFICIAL PROVISION. IT IS NOT CORREC T TO SAY THAT ONLY DUE TO WANT OF ITA NO. 248/AGRA/11 & 269/AGRA/12 16 AUDIT REPORT ALONGWITH THE RETURN ASSESSES FOR WHOS E BENEFIT THE RELEVANT BENEFICIAL PROVISIONS ARE ENACTED, WOULD BE AFFECTE D ADVERSELY. IT IS WELL SETTLED THAT THE CHARGING PROVISIONS HAV E TO BE STRICTLY CONSTRUCTED BUT NOT THE MACHINERY OR PROCEDURAL PROVISIONS. THUS ON CE IT IS HELD THAT THE RELEVANT PROVISION IS PROCEDURAL OR IS DIRECTORY IN NATURE, ITS SUBSTANTIAL COMPLIANCE SHOULD BE CONSIDERED TO BE SUFFICIENT FO R THE PURPOSE OF DERIVING THE BENEFIT OF DEDUCTION/ RELIEF UNDER THE RELEVANT PRO VISION. THE GUJRAT HIGH COURT IN C1T VS KAIRA DISTRICT CO-O PERATIVE MILK PRODUCERS UNION LTD. 1979 116 ITR 319 GUJ. IN THE CONTEXT OF THE THEN RULE 19M IN RELATION TO SECTION 84 THE FORERUNNER OF SECTION 80 J OBSERVED AS UNDER : 'IF ON CONSISTING RULE 19-M THE COURT FIND THAT THE MAIN OBJECT OR THE PURPOSE OF SECTION 84 NAMELY, TAX HOLIDAY ON THE BA SIS OF EMPLOYMENT OF CAPITAL IS THWARTED OR FRUSTRATED BY AN APPARENTLY PLAIN OR LITERAL READING OF THE PROVISIONS OF THE R ULE, THE COURT MUST READ THE RULE IN SUCH A MANNER AS TO AVOID MANIFEST ABSURDITY APPARENT INJUSTICE AD IRRATIONAL OR ABSURD CONCLUSI ON SO THE OBJECT AND PURPOSE OF THE MAIN ENACTMENT CAN BE EFFECTUATE D FULLY. EVEN IF IT IS ASSUMED THAT THE REQUIREMENT OF ANNEX ING THE AUDIT REPORT ALONGWITH THE RETURN OF INCOME IS MANDATORY, THE SAME IS LIKELY TO FRUSTRATED THE VERY OBJECT AND PURPOSE OF THE SCHEME UNDERLYING SECTION 80-IA AND WOULD RESULT IN ABSURD ITY FOR THE OTHER VIEW BY WHICH THE BENEFICIAL PROVISIONS OF SECTION 80-1A IS MADE FULLY OPERATIVE SHOULD BE PREFERRED. ITA NO. 248/AGRA/11 & 269/AGRA/12 17 THE GUJRAT HIGH COURT IN C1T VS. GUJRAT OIL & ALLIE D INDUSTRIES 1993 201 ITR 325 GUJ. UPHELD THE CONTENTION OF THE ASSESSEE'S COUNSEL TO THE EFFECT THAT THE MENTIONING OF THE RE QUIREMENT OF FILING THE AUDIT REPORT WITH THE RETURN DOES NOT MEAN THAT IT IS A MANDATORY PROVISION AND WHILE CONSTRUING THAT PART OF SUB-SEC TION (6A) OF SECTION 80J THE WORD SHALL COULD BE INTERPRETED AS MAY. IN VIEW OF THIS LEGAL POSITION A SUBSTANTIAL COMPLIANCE SHOULD BE CONSIDERED TO BE SUFFICIENT FOR THE PURPOSE OF GETTING THE BENEFI T OF DEDUCTION UNDER SECTION 80-IA AND, TO THAT EXTENT, THE WORD 'SHALL' AS EMPLOYED BY THE LEGISLATURE IN THE SECOND PART OF SUB-SECTION ( 8) WOULD HAVE TO BE READ AS 'MAY'. THE ABOVE VIEW IS FORTIFIED BY THE OBSERVATION MADE IN C1T VS. NATIONAL TAJ TRADER 1980 121 ITR 535 SC, THAT 'THE PRINCIPLE THAT A FISCAL STATURE SHOULD BE CONSTRUED STRICTLY IS APPL ICABLE ONLY TO TAXING PROVISIONS SUCH AS A CHARGING PROVISION OR A PROVISION IMPOSING PENALTY AND NOT TO THOSE PARTS OF THE STAT URE WHICH CONTAIN MACHINERY PROVISIONS. FURTHER, STRENGTH IS ADDED TO THE ABOVE CONCLUSION RELYING ON THE OBSERVATION OF THE SUPREM E COURT IN GOODYEAR INDIA LTD. VS. STATE OF HARYANA 1991 188 I TR 402 SC TO THE EFFECT THAT IT IS WELL SETTLED THAT REASONABLE CONSTRUCTION OF THE TAXING STATUTE SHOULD BE FOLLOWED AND LITERAL CONST RUCTION MAY BE AVOIDED IF THAT DEFEATS THE MANIFEST PURPOSE AND OB JECT OF THE STATUTE.' ITA NO. 248/AGRA/11 & 269/AGRA/12 18 5. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF BO TH THE PARTIES AND MATERIAL ON RECORD ALLOWED THE APPEAL OF THE ASSESS EE. HIS FINDINGS IN APPELLATE ORDER IN PARAS 3.2 TO 4 ARE REPRODUCED AS UNDER : 3.2 APPELLANT'S SUBMISSIONS ALONG WITH ASSESSMENT O RDER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS HAVE ALSO BEEN PERUSED. THE APPELLANT COMPANY HAS BEEN GRANTED APP ROVAL BY MUNICIPAL COMMISSIONER, NAGAR PALIKA NIGAM, GWALIOR VIDE LETTER DATED 10.01.2006 AND 30.05.2006 IN RESPECT OF PLOT NO. 20/3388 & 3440, GRAM-OHADPUR FOR CONSTRUCTION OF HOUSES AS PE R SPECIFICATIONS AND MAP APPROVED BY THE LOCAL AUTHORITY. PARA-7 & 8 OF THE SAID APPROVAL, ON THE BASIS OF WHICH AO HAS REJECTED THE CLAIM OF DEDUCTION, ARE REPRODUCED AS UNDER: 7 VK;QDR DH VUQKK ESA OF.KZR DK;Z DH IW.KZR% DS LAC A/K ESA IFJFK'V N% ESA FYF[KR LWPUK NSUH GKSXH LWPUK IZKFIR DS LKR FNOL DS VUNJ V K;QDR }KJK LFKY IJH{K.K DJ DK;Z IW.KZR% IZEK.K I= VFKOK VU; VKO;D FUNSZK TKJ H FD;S TK;SAXSA DK;Z IW.KZR% IZEK.KI= IZKIR FD;S FCUK FUFEZR HKOU DK MI;KSX FD;K TKUK VOS/KKFUD GKSXK A 8- IYHUFK YSOY DQLHZ LRJ RD FUEKZ.K DK;Z GKS TKUS IJ VK;QDR DK;KZY; ESA FUJH{K.K GSRQ FYF[KR LWPUK NSUH GKSXH A IFJFK'V P LWPUK U N SUS IJ LOHD`FR LOR%FUJLR EKUH TK;SXH RFKK FUEKZ.K VOS/K EKUK TKDJ VF/KFU;E D S IZKO/KKUKSA DS RGR /OLR FD;K TK;SXK A 3.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO HAS SOUGHT INFORMATION U/S 133(6) FROM THE COMMISSIONER-MUNICI PAL CORPORATION VIDE LETTER DATED 13.10.10 AS UNDER: 'YOU ARE REQUESTED TO PROVIDE A COPY OF COMPLETION CERTIFICATE OF 'GARDEN HOME PHASE-III' SITUATED AT SURVEY 218 & 22 6 AT GRAM- OHADPUR, GWALIOR. ITA NO. 248/AGRA/11 & 269/AGRA/12 19 YOU ARE ALSO REQUESTED TO PROVIDE A COPY OF APPROVA L CERTIFICATE IN THE ABOVE MENTIONED CASE. ANOTHER LETTER/REMINDER DATED 02.11.2010 HAS AGAIN BEEN SENT BY THE AO SEEKING THE SAME INFORMATION AS ABOVE. VIDE LETT ER DATED 10.11.2010 MUNICIPAL COMMISSIONER HAS SUBMITTED AS UNDER: HKOU LOKEH }KJK FODKL FU;E 1984 312P DS VARXZ R IW.KZRK IZEK.KI= FU/KKZFJR IZK:I ESA VKOSNU DJUS DS IPKR~ UXJ FUXE }KJK FU;EK UQLKJ IW.KZRK IZEK.KI= TKJH FD;K TKRK GS A LACAF/KR IZDJ.K ESA VKOSND DS }KJK D KSBZ VKOSNU IZLRQR U DJUS DS DKJ.K IW.KZRK IZEK.KI= TKJH UGH FD;K X;K GS A UXJ FUXE }KJK XKMZU GKSE QSL&3] XZKE &VKSGNIQJ LOS Z DZEKAD 224 ,OA 225 DS LOHD`FR IZEK.KI= DZEKAD 15@10-01-2006 ,OA EKUFP= DH QKSVKSIZFR I= DS LKFK LAYXU IZSF'KR GS A 3.4 ON PERUSAL OF RECORDS, IT IS SEEN THAT THE APP ELLANT HAS APPLIED FOR ISSUE OF COMPLETION CERTIFICATE VIDE LETTER DAT ED 24.09.2008 AND 10.10.2008 AS PER ACKNOWLEDGEMENT NO. 10205 AND 121 84 RESPECTIVELY OF THE LOCAL AUTHORITY, THOUGH ADMITTE DLY NOT IN THE PRESCRIBED FORM. THEREFORE THE MUNICIPAL AUTHORITIE S HAVE INFORMED THE AO THAT COMPLETION CERTIFICATE IS ISSUED AFTER THE APPLICANT HAS APPLIED FOR IT IN THE PRESCRIBED FORM. ON BEING CON FRONTED WITH THE INFORMATION RECEIVED FROM THE MUNICIPAL COMMISSIONE R APPELLANT HAS REQUESTED THE AO VIDE LETTER DATED 29.11.2010 R EQUESTING THE OPPORTUNITY FOR THE CROSS-EXAMINATION OF MUNICIPAL COMMISSIONER BY ISSUE OF SUMMONS U/S 131 AND DATE AND TIME OF CR OSS-EXAMINATION MAY BE INTIMATED TO IT. THE APPELLANT HAS AGAIN REI TERATED ITS EARLIER SUBMISSIONS REGARDING SATISFACTION OF CONDITIONS FO R CLAIM OF DEDUCTION ALONG WITH PRODUCTION OF BOOKS OF ACCOUNT S, BILLS AND VOUCHERS ETC. HOWEVER, AO HAS PROCEEDED TO COMPLETE THE ASSESSMENT PROCEEDINGS VIDE ORDER DATED 27.12.2010 WITHOUT GRANTING THE REQUESTED OPPORTUNITY OF CROSS-EXAMINA TION. ITA NO. 248/AGRA/11 & 269/AGRA/12 20 3.5 ON THE BASIS OF FACTS ABOVE IT IS EVIDENT THAT THE HOUSING PROJECT UNDER CONSIDERATION HAS BEEN DULY APPROVED BY THE LOCAL AUTHORITY WHICH HAS NOT BEEN CANCELLED TILL THE COM PLETION OF ASSESSMENT PROCEEDINGS AND IN FACT IS VALID TILL DA TE ALSO AS SUBMITTED BY THE APPELLANT VIDE AFFIDAVIT DATED 14.03.2011. A O HAS PROCEEDED ON MISTAKEN BELIEF OF AUTOMATIC CANCELLATION OF THE APPROVAL GRANTED BY THE AUTHORITY WHICH PERTAINS TO FAILURE TO SUPPL Y INFORMATION IN ANNEXURE CH RELATING TO PLINTH LEVEL CONSTRUCTION AS ENUMERATED IN PARA-8 OF THE APPROVAL. THOUGH PARA 7 OF THE SAID A PPROVAL MENTIONED THAT USE OF THE CONSTRUCTED BUILDING WITH OUT OBTAINING COMPLETION CERTIFICATE SHALL BE ILLEGAL BUT IT NO W HERE MENTIONS THAT THE APPROVAL GRANTED EARLIER SHALL STAND CANCELLED AUTOMATICALLY IN ITS ABSENCE. FURTHER, VIDE RELEASE DEED DATED 11.01.200 8 ISSUED BY MUNICIPAL COMMISSIONER, IT HAS BEEN SPECIFICALLY ME NTIONED AS UNDER: ;G FD MIJKSDR DKWYKSUH ,DL- XKMZU GKSEL QST&3 TKS FD TH-,Y-VKJ- FJ;Y BLVSV IZK- FY- XOKFY;J }KJK FODFLR GS] DK LFKY FUJH {K.K TKDJ DEIUH }KJK DKWYKSUH ESA OKVJ YKBU] M~~ZSUST] LHOJ YKBU] FO/KQR O;OLFKK E; LV~ZHV YKBV RFKK JKSM DK FUEKZ.K DJK;K TK PQDK GS FTLDH IQF'V QKBY IZDJ.K DZEKAD 406@2006 X 3@3 DS }KJK DH XBZ GS A MIJKSDR LEIW.KZ DK;Z DEIUH DS }KJK EKSDS IJ DJK FN ;K X;K GS FTL CKOR~ EKSDK NS[KDJ LURQF'V GKS PQDH GS A VR% MIJKSDR 12 H KOU FTUDS DZEKAD 9] 10] 11] 17] 18] 24] 25 ,OA 29 LS YXK;R 33 RD GSA LAYXU UD KS ESA VAFDR GSA DKS TKS UXJ FUXE DS FGR ESA FNUKAD 27-05-2006 JFTLV~ZSKU DZEKA D 467 DS }KJK CU/KD GSAA MIJKSDR LHKH HKOUKSA DKS BL FY[KRE CU/KD&&EQFDR&&I= }KJK CU/KD EQDR FD;S TKRS GSAA VC MIJKSDR HKOUKSA DKS DEIUH VIUS FU;EKUQ LKJ MI;KSX DJSA ;K VIUS LNL;KSA DKS VYKWV DJKDS MUDKS IZNKU DJSAA VC UXJ FU XE] XOKFY;J DK DKSBZ HKH YSUK&NSUK CKDH UGHA GS VKSJ U GH HKFO'; ESA GKSXK R FKK MDR 12 HKOU CU/KD EQDR FD;S TKRS GSAAA ITA NO. 248/AGRA/11 & 269/AGRA/12 21 3.6 FURTHER AS PER PROVISIONS OF SECTION 301(4) OF THE MUNICIPAL CORPORATION ACT, 1956 PERTAINING TO COMPLETION CERT IFICATE AND PERMISSION TO OCCUPY, IT IS MENTIONED AS UNDER: 301. COMPLETION CERTIFICATE AND PERMISSION TO OCCUP Y / USE 4. NO PERSON SHALL OCCUPY OR PERMIT TO BE OCCUPIED ANY SUCH BUILDING OR USE OR PERMIT TO BE USED ANY PART AFFEC TED BY THE RE- ERECTION OF SUCH BUILDING - A. (B) UNLESS THE COMMISSIONER HAS FAILED FOR FIFTEEN DAYS AFTER THE RECEIPT OF NOTICE OF COMPLETION TO INTIMATE HIS RE FUSAL TO GRANT THE SAID PERMISSION. ' AS PER RECORDS THE APPELLANT HAS APPLIED WITHIN TIM E ON COMPLETION OF ITS PROJECT BEFORE THE MUNICIPAL AUTHORITIES, TH OUGH NOT IN THE PRESCRIBED FORM. EVEN AFTER SENDING THE REMINDER, N O RESPONSE HAS BEEN MADE BY THE MUNICIPAL AUTHORITIES. THUS THE DE EMING PROVISIONS REGARDING COMPLETION CERTIFICATE, AS MEN TIONED ABOVE, ARE FOUND APPLICABLE IN CASE OF THE APPELLANT. FURTHER AO HAS NOT SUMMONED ANY MUNICIPAL AUTHORITY IN SPITE OF THE RE QUEST MADE BY THE APPELLANT FOR CROSS-EXAMINATION IN RESPONSE TO INFORMATION GIVEN TO THE AO. THUS THE INFORMATION SUPPLIED BY THE MUN ICIPAL COMMISSIONER COULD NOT HAVE BEEN USED AGAINST THE A PPELLANT AND IN THE ABSENCE OF AFFORDING A REASONABLE OPPORTUNITY O F BEING HEARD BY SUMMONING THE SAID AUTHORITY ON THE BASIS OF WHICH CLAIM OF DEDUCTION HAS BEEN REJECTED BY THE AO, THE ASSESSME NT ORDER GETS VITIATED. THIS HAS BEEN SO HELD BY HON'BLE JURISDIC TIONAL M.P. HIGH COURT IN CASE OF PRAKASH CHAND NAHTA VS. CIT (2008) 301 ITR 134 (MP). IT IS ALSO A WELL SETTLED LEGAL POSITION THAT THE PURPOSE OF GRANTING INCENTIVE BY WAY OF DEDUCTION U/S 80-IB(10 ) IS TO PROMOTE GROWTH OF HOUSING PROJECTS, HENCE THE SECTION IS TO BE CONSTRUED LIBERALLY. THE MAIN CONDITION IS THAT THE APPROVAL TO THE HOUSING PROJECTS SHOULD HAVE BEEN GRANTED AND THE CONSTRUCT ION COMPLETED WITHIN THE TIME PRESCRIBED. REST OF THE CONDITIONS ARE ABOUT THE BUILT~ UP AREA OF EACH RESIDENTIAL UNIT AS ALSO THE TOTAL AREA OF THE PROJECT. AN ENTREPRENEUR UNDERTAKING THE DEVELOPMEN T AND ITA NO. 248/AGRA/11 & 269/AGRA/12 22 CONSTRUCTION OF A HOUSING PROJECT QUALIFIES FOR DED UCTION SUBJECT TO COMPLETION OF PROJECT WITHIN THE SPECIFIED PERIOD. THE SAME HAS BEEN DONE BY THE APPELLANT DURING THE YEAR UNDER CONSIDE RATION AS IS EVIDENT FROM THE LETTER OF OCCUPATIONS SUBMITTED BE FORE THE AO ALSO. IN FACT AO HAS ALSO NOT DOUBTED THE SAID OCCUPATION CERTIFICATES BY BRINGING ANY ADVERSE MATERIAL ON RECORD BUT HAS HEL D N0T:\COMPLETION OF THE PROJECT SOLELY ON THE GROUND OF ABSENCE OF C OMPLETION CERTIFICATE ISSUED BY THE MUNICIPAL AUTHORITY. IT H AS BEEN HELD BY HON'BLE ITAT MUMBAI IN CASE OF SAROJ SALES ORGANIZA TION VS. ITO (2008) 115 TTJ (MUMBAI) 485 THAT SINCE THE HOUSING PROJECT HAS DULY BEEN APPROVED BY THE LOCAL AUTHORITIES AND THE CONSTRUCTION HAS BEEN COMPLETED BEFORE SPECIFIED PERIOD AND THE OCCU PATION CERTIFICATE AND RELEASE DEED HAVE ALSO BEEN ISSUED IN THE YEAR, THE CONDITION RELATING TO THE COMPLETION OF THE CONSTRU CTION AS PRESCRIBED IN SECTION 80-IB(10) SHOULD ALSO BE TAKEN TO BE SAT ISFIED. 3.7. IN VIEW OF THE FACTS ABOVE, AO IS NOT FOUND J USTIFIED IN REJECTING THE CLAIM OF DEDUCTION U/S 80-IB(10) CLAI MED AS PER ITS RETURN IN ABSENCE OF VIOLATION OF PRESCRIBED CONDIT IONS. IN ANY CASE ANY BREACH/VIOLATION OF CONDITION OF ANY OTHER ACT IN FORCE DOES NOT ADVERSELY AFFECT THE RIGHTS/PRIVILEGE GRANTED/ACCRU ING UNDER THE INCOME TAX ACT TO AN ASSESSEE. ACCORDINGLY, THE APP ELLANT IS FOUND ENTITLED FOR CLAIM OF DEDUCTION U/S 80-IB AND ADDIT ION OF RS.3,96,85,237/- MADE TO THE RETURN INCOME IS, HERE BY, DELETED. 4. IN THE RESULT, THE APPEAL IS ALLOWED. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT NO COMPLETION CERTIFICATE OF CONSTRUCTION OF HOUSING P ROJECT WAS OBTAINED WITHIN THE TIME PRESCRIBED. MUNICIPAL CORPORATION REFUSED TO G IVE THE COMPLETION CERTIFICATE BECAUSE IT WAS NOT APPLIED IN PRESCRIBED FORM. THE DEEMING PROVISIONS ARE NOT PART OF INCOME-TAX. MUNICIPAL CORPORATION DENIED IF THE ASSESSEE APPLIED FOR ITA NO. 248/AGRA/11 & 269/AGRA/12 23 COMPLETION CERTIFICATE. MUNICIPAL CORPORATION HAS N OT ISSUED ANY DIRECTION OF OCCUPANCY OR COMPLETION CERTIFICATE WHILE ISSUING T HE MORTGAGE RELEASE DEED. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND REFERRED TO PB-25 AND 28 IN THE PAPER BOOK, WHICH IS APPROVAL GRANTED BY MUNICIPAL AUTHORITIES FOR DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT NAMELY GARDEN H OME PHASE-III. HE HAS SUBMITTED THAT THE ASSESSEE FILED APPLICATIONS ON D ATED 24.09.2008 FOR OBTAINING COMPLETION CERTIFICATE (PB-65, 66). THE ASSESSEE AL SO ISSUED A REMINDER ON 10.10.2008 FOR OBTAINING COMPLETION CERTIFICATES (P B 67 & 68). HE HAS SUBMITTED THAT THE MUNICIPAL CORPORATION, HOWEVER, DID NOT GR ANT ANY COMPLETION CERTIFICATE. THEREFORE, ACCORDING TO SECTION 301 OF THE M.P. MUNICIPAL CORPORATION, ADHINIYAM, THE ASSESSEE IS DEEMED TO H AVE OBTAINED COMPLETION CERTIFICATE. THE OFFICER OF MUNICIPAL AUTHORITY WIT HIN TIME ALLOWED U/S. 301 OF THE ABOVE ACT DID NOT VISIT TO MAKE INSPECTION OF T HE COMPLETION OF THE WORK. PB- 34 IS MORTGAGE RELEASE DEED DATED 11.01.2008 THROUG H WHICH THE PROPERTY IN QUESTION WAS RELEASED FROM MORTGAGE BY THE MUNICIPA L CORPORATION AND THE ASSESSEE WAS ALLOWED TO USE THE BUILDING OR TO ALLO T THE BUILDING TO THE RESPECTIVE PURCHASERS. IT WOULD, THEREFORE, PROVE THAT THE BUI LDING USE PERMISSION WAS GRANTED TO THE ASSESSEE BY THE MUNICIPAL CORPORATIO N. PB-79 TO 81 ARE THE DETAILS ITA NO. 248/AGRA/11 & 269/AGRA/12 24 OF THE FASTS SOLD IN THE ABOVE HOUSING PROJECTS IN THE YEAR 2007 AND 2008, THEREFORE, COMPLETION OF THE CONSTRUCTION OF THE HO USING PROJECT IN THE YEAR 2008 HAVE NOT BEEN DOUBTED OR DISPUTED BY THE AUTHORITIE S BELOW. THE ASSESSEE MADE REQUEST TO THE AO TO SUMMON THE MUNICIPAL COMMISSIO NER FOR CROSS EXAMINATION BUT THE AO DID NOT SUMMON THEM. THEREFORE, WHATEVER INFORMATION WAS SUPPLIED BY THE COMMISSIONER OF MUNICIPAL CORPORATION, CANNO T BE USED AGAINST THE ASSESSEE. HE HAS SUBMITTED THAT THE ASSESSEE HAS CO MPLIED WITH THE PROVISIONS OF LAW, THEREFORE, THE LD. CIT(A) CORRECTLY DELETED TH E ADDITION. HE HAS RELIED UPON THE DECISION OF GUJRAT HIGH COURT IN THE CASE OF CI T VS. TARNETAR CORPORATION REPORTED IN 210 TAXMAN 206 (GUJ.)(MAG.), COPY OF WH ICH IS FILED AT PAGE 127 OF THE PAPER BOOK. HE HAS ALSO RELIED UPON THE DECISIO N OF MADRAS HIGH COURT IN THE CASE OF CIT VS. SANGHVI AND DOSHI ENTERPRISES, 214 TAXMAN 463, COPY OF WHICH IS FILED AT PAGE 129 OF THE PAPER BOOK. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE FACTS NOTED BY THE LD. CIT(A) IN HIS FINDINGS HAVE NOT BEEN DISPUTED BEFORE US. THE ASSESSEE COMPANY HAS BEEN GRANTED APPROVAL BY M UNICIPAL CORPORATION, GWALIOR ON DATED 10.01.2006 AND 30.05.2006 FOR CONS TRUCTION OF HOUSING PROJECT IN QUESTION AND APPROVED THE MAP. THE ASSESSEE HAS APPLIED FOR ISSUE OF COMPLETION CERTIFICATE OF THE HOUSING PROJECT IN QU ESTION ON 24.09.2008, COPIES OF ITA NO. 248/AGRA/11 & 269/AGRA/12 25 WHICH ARE FILED AT PAGE 65 AND 66 OF THE PAPER BOOK , IN WHICH THE ASSESSEE SPECIFICALLY INFORMED THE COMMISSIONER, MUNICIPAL C ORPORATION, GWALIOR THAT THE CONSTRUCTION WORK OF THE HOUSING PROJECT IN QUESTIO N HAS BEEN COMPLETED AND THE ASSESSEE REQUESTED FOR ISSUE OF COMPLETION CERTIFIC ATE OF THE PROJECT IN QUESTION. THE MUNICIPAL CORPORATION, HOWEVER, DID NOT TAKE AN Y STEP IN THE MATTER AS PER MUNICIPAL LAW. THE ASSESSEE, THEREFORE, FILED FURTH ER LETTER DATED 10.10.2008 BEFORE THE COMMISSIONER OF MUNICIPAL CORPORATION, G WALIOR REITERATING THE SAME FACT OF COMPLETION OF CIVIL CONSTRUCTION WORK OF TH E PROJECT IN QUESTION (PB-67 & 68) AND ALSO IT WAS INFORMED THAT AS PER SECTION 30 1 OF THE MUNICIPAL CORPORATION ACT, IT SHALL BE DEEMED THAT COMPLETION CERTIFICATE HAS BEEN ISSUED IN VIEW OF THE ABOVE CIRCUMSTANCES AND THE ASSESSEE/ALLOTTEES ARE PERMITTED TO OCCUPY THEIR FLATS. THE MUNICIPAL CORPORATION, HOWEVER, DID NOT TAKE AN Y ACTION IN THIS REGARD. THE LD. CIT(A) HAS TAKEN COGNIZANCE OF SECTION 301 OF T HE M.P. MUNICIPAL CORPORATION ACT IN HIS FINDINGS WHICH PROVIDES THAT FOR OBTAINING COMPLETION CERTIFICATE, THE PERSON WHO HAS CONSTRUCTED ANY BUI LDING SHALL WITHIN ONE MONTH OF THE COMPLETION OF THE WORK, DELIVER TO THE COMMI SSIONER A NOTICE IN WRITING OF SUCH COMPLETION AND SHALL GIVE TO THE COMMISSIONER ALL NECESSARY FACILITIES FOR INSPECTION OF SUCH WORK. THE COMMISSIONER WITHIN SE VEN DAYS OF THE RECEIPT OF THE SAID NOTICE SHALL DEPUTE AN OFFICER TO COMMENCE AN INSPECTION OF SUCH WORK. WITHIN SEVEN DAYS FROM THE DATE OF COMMENCEMENT OF SUCH INSPECTION, THE ITA NO. 248/AGRA/11 & 269/AGRA/12 26 COMMISSIONER SHALL GIVE PERMISSION FOR OCCUPANCY OF BUILDING IN QUESTION OR REFUSE TO GIVE PERMISSION IF CONSTRUCTION IS MADE I N CONTRAVENTION OF THE PROVISIONS OF THE ACT. ACCORDING TO SUB-SECTION (4) OF SECTION 301, NO PERSON SHALL OCCUPY OR PERMIT TO BE OCCUPY ANY SUCH BUILDI NG OR USE OR PERMIT TO BE USED ANY PART AFFECTED BY THE RE-ERECTION OF SUCH BUILDI NG UNLESS THE COMMISSIONER HAS FAILED FOR FIFTEEN DAYS AFTER THE RECEIPT OF NOTICE OF COMPLETION TO INTIMATE HIS REFUSAL TO GRANT THE SAID PERMISSION. THE RECORD WO ULD REVEAL THAT THE ASSESSEE HAS GIVEN NOTICE IN WRITING TO THE COMMISSIONER OF COMP LETION OF CONSTRUCTION WORK OF THE HOUSING PROJECT IN QUESTION ON 24.09.2008 AN D 10.10.2008. HOWEVER, THE CORPORATION DID NOT TAKE ANY ACTION IN THE MATTER A ND NO OFFICER WAS DEPUTED TO MAKE INSPECTION OF THE CONSTRUCTION OF HOUSING PROJ ECT COMPLETED BY THE ASSESSEE. THE AO ON THE OTHER HAND CALLED FOR INFORMATION U/S . 133(6) FROM THE COMMISSIONER, MUNICIPAL CORPORATION WHO HAS INTIMAT ED THE AO THAT COMPLETION CERTIFICATE IS NOT GRANTED BECAUSE THE NOTICE WAS N OT GIVEN AS PER PRESCRIBED PROFORMA. THE ASSESSEE, THEREFORE, REQUESTED THE AO TO ALLOW CROSS EXAMINATION OF MUNICIPAL CORPORATION BY ISSUING SUMMONS U/S. 13 1 OF THE IT ACT, BUT THE AO INSTEAD OF SUMMONING THE COMMISSIONER, MUNICIPAL CO RPORATION U/S. 131, PROCEEDED TO COMPLETE THE ASSESSMENT IN THE MATTER. THEREFORE, WHATEVER INFORMATION WAS PROVIDED BY THE COMMISSIONER, MUNIC IPAL CORPORATION WAS RIGHTLY HELD NOT TO BE READ IN EVIDENCE AGAINST THE ASSESSEE. FURTHER, THE ITA NO. 248/AGRA/11 & 269/AGRA/12 27 REQUIREMENT OF SECTION 301 OF MUNICIPAL CORPORATION ACT FOR OBTAINING COMPLETION CERTIFICATE HAS BEEN THAT THE PERSON WHO HAS CONSTRUCTED THE BUILDING SHALL HAVE TO GIVE NOTICE IN WRITING OF THE COMPLET ION OF CONSTRUCTION, WHICH THE ASSESSEE IN THIS CASE HAS ALREADY GIVEN TO THE MUNI CIPAL CORPORATION TWICE ON DIFFERENT OCCASIONS. THEREFORE, ACCORDING TO SECTIO N 301 (4)(B), THE ASSESSEE IS DEEMED TO HAVE OBTAINED THE COMPLETION CERTIFICATE IN THE MATTER AND THE ASSESSEE IS PERMITTED TO USE AND OCCUPY THE BUILDING SO CONS TRUCTED IN RESPECT OF HOUSING PROJECT IN QUESTION. FURTHER, THE MUNICIPAL CORPORA TION HAS EXECUTED MORTGAGE RELEASE DEED WITH THE ASSESSEE ON 11.01.2008, WHICH IS DULY SIGNED BY THE COMMISSIONER, MUNICIPAL CORPORATION, COPIES OF WHIC H ARE FILED IN THE PAPER BOOK AT PAGE 34 ONWARDS IN WHICH IT IS CLEARLY STAT ED THAT THE ASSESSEE HAS COMPLETED THE CONSTRUCTION OF GARDEN HOMES, PHASE-I II AND THAT PROPERTY IS RELEASED FROM THE MORTGAGE BY THE CORPORATION AND T HE ASSESSEE COMPANY COULD USE BUILDING IN QUESTION AS PER RULES AND ALSO COUL D HAVE ALLOTTED TO ITS MEMBERS AND NOTHING IS LEFT DUE TO THE MUNICIPAL CORPORATIO N. AFORESAID DOCUMENTS CLEARLY PROVE THAT THE ASSESSEE HAS COMPLETED THE C ONSTRUCTION OF THE HOUSING PROJECT IN THE YEAR 2008. IN FACT, THE AO HAS NOT D OUBTED THE SAID OCCUPANCY CERTIFICATE BY BRINGING ADVERSE MATERIAL ON RECORD, BUT HAS HELD NON-COMPLETION OF THE PROJECT SOLELY ON THE GROUND OF ABSENCE OF COMP LETION CERTIFICATE ISSUED BY THE MUNICIPAL AUTHORITIES. SUCH AN APPROACH OF THE AO I S WHOLLY UNJUSTIFIED. THE ITA NO. 248/AGRA/11 & 269/AGRA/12 28 ASSESSEE IN THE PAPER BOOK ALSO FILED DETAILS OF TH E SALE DEEDS EXECUTED BY THE ASSESSEE COMPANY WITH THE BUYER AND HANDING OVER TH E POSSESSION OF THE FLATS IN QUESTION IN THE YEAR 2008 SUPPORTED BY SALE DEEDS. THEREFORE, THE FACTS AND CIRCUMSTANCES AND THE EVIDENCES, AVAILABLE ON RECOR D CLEARLY SUPPORT THE CASE OF ASSESSEE THAT COMPLETION OF CONSTRUCTION WAS MADE I N THE YEAR 2008. THE ASSESSEE THUS MADE SUBSTANTIAL COMPLIANCE TO THE PROVISIONS OF LAW. THE PROCEDURAL PROVISIONS HAVE TO BE CONSTRUED LIBERALLY. FURTHER, THE COMPLETION WORK SHALL HAVE TO BE COMPLETED WITHIN FIVE YEARS AS PER SECTION 80 IB(10)(A)(III) OF THE IT ACT BECAUSE THE APPROVAL OF HOUSING PROJECT WAS GIVEN O N 10.01.2006 AND 13.05.2006. THE EVIDENCES AND MATERIAL ON RECORD AS DISCUSSED ABOVE CLEARLY SUGGEST THAT BUILDING CONSTRUCTION WAS COMPLETED PR IOR TO THE PRESCRIBED DATE AND BUILDING WAS USED PRIOR TO PRESCRIBED DATE AND BUIL DING USE PERMISSION WAS GRANTED BY THE MUNICIPAL CORPORATION WHILE EXECUTIN G THE MORTGAGE RELEASE DEED. MAIN REQUIREMENT OF SECTION 80IB(10) OF THE IT ACT HAD BEEN THAT SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON APPROVAL BY THE LOCAL AUTHORITY ON OR AFTER 01.04.2005 AND COMPLETES SUCH CONSTRUCTION WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOC AL AUTHORITY. THE DISCUSSION WOULD SHOW THAT THE ASSESSEE COMPLIED WITH THE PROV ISIONS OF LAW BECAUSE IN THIS CASE, THE APPROVAL BY THE LOCAL AUTHORITY WAS GRANT ED AFTER 01.04.2005 AND ITA NO. 248/AGRA/11 & 269/AGRA/12 29 ASSESSEE COMPLETED CONSTRUCTION IN THE YEAR 2008. T HE CLAIM OF ASSESSEE WAS, HOWEVER, REJECTED BECAUSE THE ACTUAL COMPLETION CER TIFICATE HAS NOT BEEN OBTAINED. THE ASSESSEE HAS EXPLAINED THE REASONS, W HICH ARE MAINLY ATTRIBUTABLE TO MUNICIPAL CORPORATION, GWALIOR FOR NOT ISSUING T HE COMPLETION CERTIFICATE ON TIME TO THE ASSESSEE. THE ASSESSEE AS PER DEEMING P ROVISION IS DEEMED TO HAVE OBTAINED THE COMPLETION CERTIFICATE. THEREFORE, COM PLETION OF CONSTRUCTION OF HOUSING PROJECT BEFORE TIME IS NECESSARY INGREDIENT AND AS SUCH THE OBTAINING OF COMPLETION CERTIFICATE AS PER EXPLANATION (II) TO S EC. 80IB (10) WOULD NOT BE MANDATORY IN NATURE. EXPLANATION WOULD EXPLAIN THE MAIN SECTION, BUT IT WOULD NOT FRUSTRATE THE VERY PURPOSE OF INCENTIVE GRANTED TO THE ASSESSEE IN RESPECT OF DEDUCTION OF PART OF INCOME UNDER THE ACT. HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. VS. CIT, 196 ITR 188 HELD AS UNDE R : A PROVISION IN A TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUE D LIBERALLY; AND SINCE A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HA S TO BE CONSTRUED SO AS TO ADVANCE THE OBJECT OF THE PROVISION AND NOT T O FRUSTRATE IT. 8.1 THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. TARNETAR CORPORAT ION (SUPRA), WHO HAVE CONFIRMED THE ORDER OF ITAT, AHMEDABAD BENCH DATED 24.05.2011. THE ORDER OF ITAT, AHMEDABAD BENCH IN THE CASE OF ITO VS. M/S. T ARNETAR CORPORATION IN ITA NO. 248/AGRA/11 & 269/AGRA/12 30 ITA NO. 2447/2010 DATED 24.05.2011 HAS BEEN AUTHORE D BY ONE OF US (JUDICIAL MEMBER) AND IN PARAS 10 TO 11, IT WAS HELD AS UNDER : 10. ON CONSIDERATION OF THE FACTS NOTED IN THE IMPU GNED ORDER AND THE ANNEXURES ATTACHED WITH THE IMPUGNED ORDER, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. EARL IER ITAT BENCHES HAVE DECIDED SIMILAR ISSUE IN THE CASE OF M/S. RADH E DEVELOPERS & OTHERS IN ITA NO.2482/AHD/2006 ORDER DATED 29-07-2007 AND SHAKTI CORPORATION (SUPRA) HAVE LAID DOWN SEVERAL T ESTS FOR SATISFYING THE REQUIREMENTS OF SECTION 80IB (10) OF THE IT ACT. FURTHER, ITAT AHMEDABAD BENCH IN THE CASE OF M/S. AMALTAS ASSOCIATES VS ITO IN ITA NO.2401/AHD/2010 FOR ASSES SMENT YEAR 2004-05 VIDE ORDER DATED 21-01-2011 CONSIDERING I TS EARLIER DECISION IN THE CASES OF M/S. RADHE DEVELOPERS & OT HERS AND SHAKTI CORPORATION (SUPRA) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE FINDINGS OF THE TRIBUNAL IN THIS CASE FROM PARA 6 T O PARA 12 ARE REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. SECTION 80IB (10) READS AS UN DER: 80-IB. DEDUCTION IN RESPECT OF PROFITS AND GAINS F ROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS.--(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB-SECTIONS 3(3) TO (11), (11A) AND (11B) (SUC H BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGI BLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJ ECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMP UTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. XXXX XXXX XXXX XXXX ITA NO. 248/AGRA/11 & 269/AGRA/12 31 (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31ST DAY OF MARCH, 2008 BY A LO CAL AUTHORITY SHALL BE HUNDRED PER CENT. OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESS MENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 20 08 ; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROV ED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUS ING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY ; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WH ICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSI NG PROJECT IS ISSUED BY THE LOCAL AUTHORITY ; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE : ITA NO. 248/AGRA/11 & 269/AGRA/12 32 PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CL AUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIM E BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE B OARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNI T IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WI THIN TWENTY-FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE ; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT. OF THE AGGREGATE BUILT-UP ARE A OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS. XXXXXX EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 7. THE DEFINITION OF BUILT-UP AREA IS PROVIDED IN SECTION 80IB(14) (A) OF THE ACT, WHICH MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR L EVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREAS ED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COM MON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. BEFORE PROCE EDING FURTHER, IT WOULD BE RELEVANT TO MENTION THE FACTS CONSIDERED IN THE CASE OF RADHE DEVELOPERS AND SHAKTI CORPORATION (SUPRA) DECIDED BY THE ITAT, AHMEDABAD BENCHES. IN THE CAS E OF ITA NO. 248/AGRA/11 & 269/AGRA/12 33 RADHE DEVELOPERS (SUPRA), THE ASSESSEE CLAIMED DEDU CTION UNDER SECTION 80IB(10). HOWEVER, THE AO DISALLOWED THE CLAIM ON THE GROUND THAT (I) THE ASSESSEE WAS NOT T HE OWNER OF THE LAND, AND (II) EACH APPROVAL WAS ALSO NOT IN TH E NAME OF THE ASSESSEE AND IT HAD ACTED MERELY AS AN AGENT/CO NTRACTOR FOR CONSTRUCTION OF RESIDENTIAL HOUSE. THE CLAIM W AS DENIED TO THE ASSESSEE. THE TRIBUNAL CONSIDERED THE AVERMEN TS AND MATERIAL ON RECORD AND HELD AS UNDER: 27. A BARE READING OF THESE PROVISIONS OF S. 80-IB (10), AS THEY STOOD IN THE YEARS UNDER CONSIDERATION, THE REQUIREMENTS FOR CLAIMING DEDUCTION FOR HOUSING PROJECTS ARE THAT (I) THERE MUST BE AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT; (II) SUCH HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) THE DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT HAS COMMENCED ON OR AFTER 1ST OCT., 1998; (IV) THE HOUSING PROJECT IS ON A SIZE OF A PLOT OF LAND WHIC H HAS MINIMUM AREA OF ONE ACRE; AND (V) THE RESIDENTIAL U NIT DEVELOPED AND BUILT HAS A BUILT UP AREA OF 1,000 SQ . FT. IF IT IS SITUATED IN DELHI AND MUMBAI OR WITHIN 25 KMS OF MUNICIPAL LIMIT OF THESE CITIES AND 1,500 SQ. FT. A T ANY OTHER PLACE. THERE IS NO OTHER CONDITION, WHICH IS TO BE COMPLIED BY AN ASSESSEE FOR CLAIMING THE DEDUCTION ON PROFITS OF THE HOUSING PROJECT. 28. THE CONTENTION OF THE REVENUE AUTHORITIES THAT TO CLAIM DEDUCTION UNDER S. 80-IB(L0), THERE IS A COND ITION PRECEDENT THAT THE ASSESSEE MUST BE OWNER OF THE LA ND ON WHICH HOUSING PROJECT IS CONSTRUCTED HAS NO FORC E. WE DO NOT FIND ANY SUCH CONDITION AS APPEARING IN T HE PROVISIONS OF THE SECTION EXTRACTED ABOVE. A PLAIN READING OF SUB-S. (10) OF S. 80-IB REVEALS AND MAKE S IT EVIDENT THAT THERE MUST BE AN UNDERTAKING DEVELOPIN G AND BUILDING A HOUSING PROJECT AS APPROVED BY A LOC AL AUTHORITY. IT DOES NOT HAVE ANY FURTHER CONDITION T HAT SUCH DEVELOPMENT AND BUILDING OF THE HOUSING PROJEC T SHOULD ALSO BE ON A LAND OWNED BY AN ASSESSEE UNDERTAKING. IT MIGHT BE TRUE THAT THE LAND BELONGS TO ITA NO. 248/AGRA/11 & 269/AGRA/12 34 THE PERSON WHO HAS ENTERED INTO AN AGREEMENT WITH T HE ASSESSEE TO DEVELOP AND BUILD HOUSING PROJECT BUT O N A PERUSAL OF THE AGREEMENT AS NARRATED ABOVE, IT IS EVIDENT THAT THE DEVELOPMENT AND BUILDING WORK HAS BEEN CARRIED OUT BY THE ASSESSEE IN PURSUANCE OF A TRIPARTITE AGREEMENT AND IT IS NOT BY THE LAND-OWNE RS. THEREFORE, THE MERE FACT THAT THE LANDOWNER AND THE UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT , ARE TWO DIFFERENT ENTITIES WOULD NOT MAKE ANY DIFFERENCE. THE DEDUCTION WOULD BE ELIGIBLE TO THE PERSON WHO IS DEVELOPING AND BUILDING HOUSING PROJE CT AND NOT TO THE MERE OWNER THEREOF. A PERSON WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON IS NO DOUBT A CONTRACTOR. HAVING ENTERED INT O AGREEMENTS WITH LANDOWNERS FOR DEVELOPMENT AND BUILDING THE HOUSING PROJECT, ASSESSEE WAS OBVIOUSL Y A CONTRACTOR BUT IT DOES NOT DEROGATE THE ASSESSEE FO R BEING A DEVELOPER, AS WELL. THE TERM CONTRACTOR IS NOT ESSENTIALLY CONTRADICTORY TO THE TERM DEVELOPER. AS STATED ABOVE, IT IS THE UNDERTAKING THAT DEVELOPS O R BUILDS THE HOUSING PROJECT THAT IS ENTITLED TO DEDU CTION IRRESPECTIVE OF THE FACT WHETHER THAT IT IS THE OWN ER OR NOT OR WHETHER IT IS THE CONTRACTOR THEREOF. THE REQUIREMENT FOR CLAIMING DEDUCTION IS THAT SUCH AN UNDERTAKING MUST DEVELOP AND BUILD HOUSING PROJECT, BE IT ON THEIR OWN LAND OR ON THE LAND OF OTHERS AND F OR WHICH A TRIPARTITE AGREEMENT HAS BEEN ENTERED INTO FOR DEVELOPMENT AND BUILDING HOUSING PROJECT; OR BE THE ASSESSEE A CONTRACTOR FOR DEVELOPING AND BUILDING HOUSING PROJECT OR AN OWNER OF THE LAND. THE WORD DEVELOPMENT MEANS THE REALIZATION OF POTENTIALITIES OF LAND OR TERRITORY BY BUILDING OR MINING. ACCORDINGLY, IT CAN BE SAFELY SAID THAT A PERSON WH O UNDERTAKES TO DEVELOP REAL ESTATE BY DEVELOPING AND CONSTRUCTING A HOUSING PROJECT IS AN ELIGIBLE UNDERTAKING; DEVELOPING AND BUILDING OF HOUSING PROJECTS WITHIN THE MEANING OF S. 80-IB(10) OF THE ACT. ITA NO. 248/AGRA/11 & 269/AGRA/12 35 IN THE PRESENT CASE IN HAND, THE LANDOWNER HAS NOT MADE ANY CONSCIOUS ATTEMPT TO DEVELOP THE PROPERTY EXCEPT ENSURING THEIR RIGHTS AS LANDOWNER SO THAT T HE SALE VALUE OF THE LAND COULD BE REALIZED TO THEM AS PER THE TERMS OF AGREEMENT TO SALE AND THE DEVELOPMENT AGREEMENT . THE LANDOWNERS, NO DOUBT, HAVE NOT THROWN THEMSELVES INTO DEVELOPMENT OF PROPERTY. IT IS ONLY THE ASSESSEE WHO IS DEVELOPING THE PROPERTY. THROWING ITSELF INTO THE BUSINESS OF DEVELOPMENT AND BUILDING OF HOUSING PROJECTS BY TAK ING ALL RISKS ASSOCIATED WITH THE BUSINESS BY ENGAGING ARCHITECTS, STRUCTURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSION S, APPROVING PLANS, HIRING MACHINERY AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTORS, ETC. NO D OUBT, THE PERMISSION HAS BEEN OBTAINED IN THE NAME OF THE REGISTERED LANDOWNERS, BUT THE SAME HAVE BEEN OBTAINED BY THE ASSESSEE FIRM THROUGH ITS PARTNERS WHO ARE HOLDING POWER OF ATTORNEY OF THE RESPECTIVE LANDOWNERS. IT IS A FACT THAT THE ASSESSEE IS A DEVELOPER AND NOT A CONTRACTOR AS HELD BY THE L OWER AUTHORITIES. THE DEVELOPER IS NOT WORKING ON REMUNERATION FOR THE LANDOWNERS, BUT DEVELOPER IS WORKING FOR HIMSELF IN ORDER TO EXPLOIT THE POTENTI AL OF ITS BUSINESS IN HIS OWN INTEREST AND, THEREFORE, OP TED FOR ALL BUSINESS RISKS ASSOCIATED WITH THE BUSINESS OF DEVELOPMENT OF REAL ESTATE INCLUDING DEVELOPING AND BUILDING OF HOUSING PROJECTS. AS PER THE PROVISIONS OF S. 2(1)(G) OF REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE ACT (27 OF 1996), THE TERM CONTRACTOR M EANS A PERSON WHO UNDERTAKES TO PRODUCE A GIVEN RESULT F OR ANY ESTABLISHMENT, OTHER THAN A MERE SUPPLY OF GOOD S OR ARTICLES OF MANUFACTURE, BY THE EMPLOYMENT OF BUILD ING WORKERS OR WHO SUPPLIES BUILDING WORKERS FOR ANY WO RK OF THE ESTABLISHMENT; AND INCLUDES A SUB-CONTRACTOR . IN THOSE CIRCUMSTANCES, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S. 80-IB(10) AS IT HAD DEVELOPED AN D ITA NO. 248/AGRA/11 & 269/AGRA/12 36 BUILT THE HOUSING PROJECT; IT HAD STARTED CONSTRUCT ION AFTER 1 DAY OF APRIL 1998; THE PROJECT IS ON THE SI ZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE A ND THE MAXIMUM BUILT-UP AREA OF THE RESIDENTIAL UNITS IS NOT MORE THAN 1,500 SQ. FT. IT MAY ALSO BE BORN IN MIND THAT DEDUCTION IS NOT EXCLUSIVELY TO AN ASSESSEE BUT TO AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT, BE IT DEVELOPED BY A CONTRACTOR OR BY AN OWNER. THE ASSESSEE, IN THE INSTANT CASE, CAN ALSO BE SAID TO BE THE OWNER OF THE LAND AS IT HAD MADE PART PAYMENT T O THE LANDOWNERS DURING THE FINANCIAL YEARS 2000-01 A ND 2001-02 FOR AN AMOUNT OF RS. 56 LACS, AND TAKEN THE POSSESSION OF THE LAND FOR DEVELOPMENT AND BUILDING THE HOUSING PROJECT AND SATISFY THAT CONDITION AS WELL OF BEING THE OWNER OF THE LAND IN VIEW OF PROVISIONS O F S. 2(47)(V). WHEN THE ASSESSEE HAS TAKEN ON THE POSSES SION OF IMMOVABLE PROPERTY OR RETAINED IT IN PART PERFORMANCE OF A CONTRACT OF A NATURE REFERRED TO I N S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 IT AMOUNT S TO TRANSFER UNDER S. 2(47)(V). IN THE INSTANT CASE THERE WAS, DEFINITELY, A DOMINI ON OF THE DEVELOPER OVER THE LAND TO THE EXCLUSION OF OTH ERS INASMUCH AS POSSESSION OF THE LAND IS GIVEN TO THE DEVELOPER BY THE LAND OWNERS TO CARRY OUT THE CONSTRUCTION ACTIVITY OF THE HOUSING PROJECT. THE ASSESSEE DEVELOPER HAS COMPLIED WITH ALL THE CONDIT IONS AS PROVIDED UNDER S. 80-IB(10) OF THE ACT, SO AS TO CLAIM DEDUCTION. THE ASSESSEE HAS ALSO PASSED ON THE PART CONSIDERATION FOR ACQUIRING THE LAND THROUGH AN AGREEMENT TO SALE AND IN VIEW OF THE PROVISIONS O F S. 2(47) R/W S. 53A OF THE TRANSFER OF PROPERTY ACT, 1 882, THE ASSESSEE HAS COMPLETELY PERFORMED HIS PART OF T HE CONTRACT AND DEVELOPED THE HOUSING PROJECT AND TRANSFERRED THE FLATS/TENEMENTS TO THE BUYERS IN VI EW OF AGREEMENT TO SALE AS WELL AS DEVELOPMENT ITA NO. 248/AGRA/11 & 269/AGRA/12 37 AGREEMENT. IT SHOWS THAT THE ASSESSEE WAS IN FULL POSSESSION OF THE LAND FOR THE DEVELOPMENT OF HOUSI NG PROJECT AND HAS CARRIED OUT ALL THE ACTIVITIES OF A COMPLETE HOUSING PROJECT BY TAKING ALL RISKS ASSOCI ATED WITH THIS BUSINESS. THE ASSESSEE IS ENGAGED IN COMP LETE INFRASTRUCTURE INCLUDING ENGAGING ARCHITECTS, STRUC TURAL CONSULTANTS, DESIGNING AND PLANNING OF THE HOUSING SCHEMES, PAYMENT OF DEVELOPMENT CHARGES, OBTAINING NECESSARY PERMISSIONS, ON BEHALF OF THE LANDOWNERS, GOT THE PLANS APPROVED, HIRING OF MACHINERY AND EQUIPMENTS, HIRING ENGINEERS, APPOINTING CONTRACTOR S, ETC. AS DISCUSSED ABOVE AND IN VIEW OF THE CASE LAW OF T HE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA), WHEREIN IT HAS BEEN CATEGORICALLY OBSERVED AS REGARDS TO OWNERSHIP THAT ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING THE RIGHT TO USE AND OCCUPY TH E PROPERTY AND/OR TO ENJOY ITS USUFRUCT IN HIS OWN RI GHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TITLE MIGHT NOT HAVE BEEN SALE AND DEVELOPMENT AGREEMENT , THE ASSESSEE HAS ACQUIRED DOMINION OVER THE LAND TO THE EXCLUSION OF OTHERS A ND HE HAS COMPLETED THE PROJECT ON TERMS AND CONDITION S LAID DOWN UNDER S. 80-IB(10) OF THE ACT, TO CLAIM DEDUCTION ON THE PROFIT DERIVED FROM CONSTRUCTION A ND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. THERE I S NO EXPLICIT CONDITION ENUMERATED IN S. 80-IB(10) OF TH E ACT AS REGARDS TO REQUIREMENT OF OWNERSHIP FOR THE CLAI M OF DEDUCTION. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LEGAL PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. (SUPRA), WE HOLD THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION ON THE PROFITS DERIVED FROM CONSTRUCTI ON AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT. ITA NO. 248/AGRA/11 & 269/AGRA/12 38 8. IN THE CASE OF SHAKTI CORPORATION (SUPRA), THE A SSESSEE CLAIMED THE DEDUCTION UNDER SECTION 80IB(10). THE A O DISALLOWED THE ASSESSEES CLAIM ON THE GROUND THAT IT WAS NOT THE OWNER OF THE PROPERTY; THAT THE PERMISSION WAS NOT GRANTED IN THE ASSESSEES NAME AND THE APPROVAL FRO M THE MUNICIPAL CORPORATION WAS IN THE NAME OF THE ORIGIN AL LAND OWNER AND NOT IN THE NAME OF THE ASSESSEE. THE TRI BUNAL CONSIDERED THE AVERMENT AND THE MATERIAL ON RECORD AND ALLOWED THE CLAIM OF THE ASSESSEE AND IT WAS HELD A S UNDER: IN THE INSTANT CASE, THERE WAS NO AGREEMENT TO SHA RE THE CONSTRUCTED AREA. THIS AGREEMENT RELATES ONLY T O PURCHASE PART OF THE LAND FROM THE LANDOWNER BY THE ASSESSEE FOR A PREDETERMINED CONSIDERATION. ALL THE RESPONSIBILITIES FOR CARRYING OUT THE CONSTRUCTION, PERMISSION, NA, NOC, LEGAL PROCEEDINGS AND THE RESU LTS OF THE DEVELOPMENT LIES WITH THE ASSESSEE. THE FIRS T PARTY IS ONLY TO CO-OPERATE THE ASSESSEE IN CARRYING OUT THE DEVELOPMENT AND ALSO TO EXECUTE THE DOCUMENTS WHENEVER IT IS REQUIRED BY THE DEVELOPER. THE ASSES SEE HAS ALSO HANDED OVER THE PHYSICAL POSSESSION TO THE BUILDER FOR CARRYING OUT THE DEVELOPMENT OF THE PRO JECT. THE LANDOWNER DOES NOT HAVE ANY RIGHT, INTEREST, TI TLE IN THE DEVELOPMENT SO CARRIED OUT EXCEPT TO THE EXTENT HE HAS TO RECEIVE THE CONSIDERATION FROM THE ASSESSEE. THE ASSESSEE IS ENTITLED TO PUBLICIZE THE PROJECT, PRIN T BROCHURES, ETC., AND CAN SELL THE PROJECT AT ITS OW N RIGHT. ALL THE EXPENSES HAVE TO BE INCURRED BY THE ASSESSE E FOR CARRYING OUT THE CONSTRUCTION, ETC. THE LANDOWNER H AS TO DO NOTHING EXCEPT TO THE EXTENT HE HAS TO RECEIV E CONSIDERATION FROM THE ASSESSEE. HIS MOTIVE IS NOT TO DEVELOP, CONSTRUCT OR CARRY ON THE BUSINESS AS A BU ILDER OR DEVELOPER. PRACTICALLY NO RIGHT IN THE LAND REMA INS WITH THE OWNER. FOR WHOLE PRACTICAL PURPOSE THE ASSESSEE ACQUIRED DOMINANT RIGHT OVER THE LAND AND HE CAN DEAL WITH THE LAND IN THE MANNER IN WHICH HE MA Y LIKE. THUS, THE TERMS AND CONDITIONS ENTERED INTO, IN OUR OPINION, GIVE ALL DOMINANT CONTROL AND RIGHTS OVER THE LAND TO THE ASSESSEE. THE ASSESSEE, IN OUR OPINION, WILL ITA NO. 248/AGRA/11 & 269/AGRA/12 39 BE CONSTRUCTING THE BUILDING AT ITS OWN COST AND WI LL REMAIN THE OWNER OF THE BUILDING AT ITS OWN WITHOUT ANY INTERFERENCE FROM THE LANDOWNER. THE LANDOWNER DOES NOT HAVE ANY RIGHT TO SHARE THE BUILDINGS. THE AGREEMENT DOES NOT ENVISAGE THAT THE ASSESSEE WILL BE WORKING AS A CONTRACTOR OR AGENT ON BEHALF OF THE LANDOWNER. THE AGREEMENT CANNOT BE REGARDED TO BE THE JOINT VENTURE OR COLLABORATION AGREEMENT. IT IS , IN OUR OPINION, THE AGREEMENT FOR THE SALE OF THE LAND FOR A DETERMINED CONSIDERATION UNDER WHICH THE ASSESSEE I S ENTITLED TO DEVELOP THE PROJECT ON THE SAID LAND AT ITS OWN COST IN THE MANNER IN WHICH HE MAY DECIDE. THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS IN THE CASE OF RADHE DEVELOPER S & ORS. (SUPRA) AND, ACCORDINGLY, WE ARE OF THE VIEW T HAT THE ASSESSEE HAS ACQUIRED THE DOMINANT OVER THE LAN D AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISKS INVOLVED THER EIN. WE MAY MENTION HERE THAT, IN OUR OPINION, THE DECIS ION IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA) WILL NOT APPLY IN A CASE WHERE THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR A FIXED REMUNERATION MERELY AS A CONTRACTOR TO CONSTRUCT OR DEVELOP THE HOUSING PROJ ECT ON BEHALF OF THE LANDOWNER. THE AGREEMENT ENTERED I NTO IN THAT CASE WILL NOT ENTITLE THE DEVELOPER TO HAVE THE DOMINANT CONTROL OVER THE PROJECT AND ALL THE RISKS INVOLVED THEREIN WILL VEST WITH THE LANDOWNER ONLY. THE INTEREST OF THE DEVELOPER WILL BE RESTRICTED ONLY F OR THE FIXED REMUNERATION FOR WHICH HE WOULD BE RENDERING THE SERVICES. THE DECISION IN THE CASE OF RADHE DEVELOP ERS & ORS. (SUPRA) HAS NOT DEALT WITH SUCH SITUATION. T HE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RADHE DEVELOPERS & ORS. (SUPRA) CANNOT BE APPLIED UNIVERSALLY WITHOUT LOOKING INTO THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE DEVELOPER ALONG WITH THE LANDOWNER. IN THE CASE OF THE ASSESSEE, SINCE IT H AD FILED COPY OF THE DEVELOPMENT AGREEMENT AND CRUX OF THE AGREEMENT WAS THAT THE ASSESSEE HAD PURCHASED THE ITA NO. 248/AGRA/11 & 269/AGRA/12 40 LAND AND HAD DEVELOPED THE HOUSING PROJECT AT ITS O WN, THE ASSESSEE WOULD BE ENTITLED TO THE DEDUCTION UND ER SECTION 80IB(10). 9. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE TERMS OF THE AGREEMENT FOR HOUSING PROJECT (PB 62). ACCORDING TO WHICH, THE RESPONSIBILITY OF THE ASSES SEE HAVE BEEN ANALYZED IN SUCH MANNER THAT THE PLANNING, SAN CTION OF PLAN, WORK OF CONSTRUCTION, DEVELOPMENT OF THE PROP ERTY, LABOUR ENGAGEMENT SHALL HAVE TO BE DONE BY THE ASSE SSEE IN RESPECT OF THE DEVELOPMENT OF THE PROPERTY IN QUEST ION. IT IS FURTHER PROVIDED THAT THE ASSESSEE SHALL PROVIDE PARTIES/MEMBERS TO WHOM SALE IS TO BE MADE BY ENROL LING THE MEMBERS. THE ASSESSEE SHALL ACCEPT ALL THE PAYMENT S FROM THE MEMBERS/BUYERS. THE LEARNED COUNSEL FOR THE ASSESS EE FILED DETAILS OF THE SALE PROCEEDS RECEIVED FROM THE PART IES OF 110 UNITS IN THE ASSESSMENT YEAR 2005-2006 AND 2006-200 7. IT WOULD SUPPORT THE CASE OF THE ASSESSEE THAT THE ASS ESSEE RECEIVED ENTIRE SALE CONSIDERATION FROM THE MEMBERS /BUYERS AFTER COMPLETION OF THE DEVELOPMENT AND BUILDING HO USING PROJECT. AGREEMENT FURTHER PROVIDES THAT THE ASSES SEE SHALL PROVIDE PAYMENT FOR CONSTRUCTION, ENGAGE ARCHITECT, ENGINEERS/SITE SUPERVISORS AND SHALL ALSO OBTAIN AL L PERMISSION FROM THE AUDA. THE ASSESSEE SHALL MAKE ALL FINANCI AL ARRANGEMENTS FOR THE PURPOSE OF IMPLEMENTING HOUSIN G PROJECT AND SHALL EXECUTE ALL DEEDS IN THIS BEHALF. THE AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE SHALL RECOMMEND THE NAMES OF THE MEMBERS FOR ALLOTMENT AND LAND SHA LL REMAIN OPEN FOR CONSTRUCTION FOR THE ASSESSEE AND THE ASSE SSEE SHALL HAVE ALL RIGHTS FOR USING OF ALL THE TERRACE AND OP EN SPACE IN ANY MANNER. THE AGREEMENT FURTHER PROVIDES THAT AF TER IMPLEMENTATION AND COMPLETION OF THE PROJECT, WHATE VER PROFIT/SURPLUS OR LOSS/DEFICIT TO THE ASSESSEE OUT OF THE PROJECT WILL REST WITH THE ASSESSEE AND THE ASSESSEE SHALL BE RESPONSIBLE AND LIABLE FOR ALL THE LOSSES SUFFERED FOR THE COMPLETION OF THE PROJECT AND THE ASSESSEE SHALL CO MPENSATE IN THIS BEHALF. THE AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE SHALL INCUR ALL EXPENSES FOR COMMON FACILI TY LIKE, LIGHTS, WATER, SEWERAGE, LIFT, BORE-WELL ETC. THE LEARNED ITA NO. 248/AGRA/11 & 269/AGRA/12 41 COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE AGR EEMENT TO SELL DATED 12-8-2003 THROUGH WHICH THE ASSESSEE PUR CHASED THE PROPERTY IN QUESTION THROUGH AGREEMENT TO SELL FOR CONSIDERATION OF RS.3 LAKHS AND ALSO FILED COPY OF THE LEDGER ACCOUNT AND BANKING STATEMENT OF THE ASSESSEE AS WE LL AS OF THE SOCIETY TO SHOW THAT THE AMOUNT OF SALE CONSIDE RATION OF RS.3 LAKHS IS TRANSFERRED IN A SUM OF RS.2.50 LAKHS AND RS.50,000/- FROM THE ASSESSEE AND WAS RECEIVED BY T HE SOCIETY IN THEIR ACCOUNT. IT WOULD THEREFORE PROVE THAT TH E ASSESSEE MADE THE PAYMENT OF SALE CONSIDERATION OF THE PROPE RTY IN QUESTION THROUGH BANKING CHANNEL. THE DETAILS OF T HE AMOUNT RECEIVED AS A SALE PROCEEDS FROM THE MEMBERS/PROPOS ED BUYER IS ALSO FILED TO SUPPORT THE CONTENTION OF THE ASSE SSEE THAT THE ASSESSEE RECEIVED ENTIRE SALE PROCEEDS IN ITS BOOKS OF ACCOUNTS WITH ALL RIGHTS TO USE PROFIT AND LOSS. PB-130 IS THE REPLY FILED BEFORE THE LEARNED CIT(A) TO EXPLAIN THE ABOVE POSI TION THAT THE ASSESSEE PAID SALE CONSIDERATION TO THE SOCIETY . THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO T HE QUERIES RAISED BY THE CIT(A) IN THIS REGARD WHICH IS PROPER LY EXPLAINED BY THE ASSESSEE. THE ABOVE FACTS WOULD P ROVE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL WITH THE SOCIETY FOR CONSIDERATION. ALL THE RESPONSIBILITIES FOR CA RRYING OUT THE CONSTRUCTION, PERMISSION AND DEVELOPMENT OF THE PRO JECT LIE WITH THE ASSESSEE. THE REAL OWNER OF THE LAND WAS ONLY TO CO- OPERATE WITH THE ASSESSEE IN CARRYING OUT THE DEVEL OPMENT AND ALSO TO EXECUTE NECESSARY DOCUMENTS WHENEVER REQUIR ED BY THE ASSESSEE AS A DEVELOPER. THE REAL OWNER HAS AL SO HANDED OVER THE PHYSICAL POSSESSION TO THE SOCIETY AS A BU ILDER FOR CARRYING OUT THE DEVELOPMENT OF THE PROJECT. THE LAND OWNER DID NOT LEFT WITH ANY RIGHT, INTEREST OR TITLE IN D EVELOPMENT WHICH WAS CARRIED OUT BY THE ASSESSEE. THE ASSESSE E WAS ENTITLED TO ENROLL THE MEMBERS FOR SELLING THE UNIT S WITHIN ITS OWN RIGHTS. ALL THE EXPENSES HAVE TO BE INCURRED B Y THE ASSESSEE FOR CARRYING OUT THE CONSTRUCTION ETC. T HE MOTIVE OF THE REAL OWNER WAS NOT TO DEVELOP, CONSTRUCT OR CAR RYING OUT ANY BUSINESS AS A BUILDER OR DEVELOPER AND PRACTICA LLY NO RIGHT IN THE HANDS OF THE REAL OWNER IN THIS BEHALF . WITH ALL INTENTS AND PURPOSES, THE ASSESSEE HAS ACQUIRED DOM INANT RIGHT OVER THE LAND AND THE ASSESSEE COULD DEAL WIT H THE LAND ITA NO. 248/AGRA/11 & 269/AGRA/12 42 IN THE MANNER IN WHICH THE ASSESSEE MIGHT HAVE LIKE D. THE TERMS AND CONDITIONS ENTERED INTO BETWEEN THE ASSES SEE AND THE SOCIETY AS PER THE DEVELOPMENT AGREEMENT AND AG REEMENT TO SELL PROVIDED ALL DOMINANT CONTROL AND RIGHTS OV ER THE LAND TO THE ASSESSEE AND THE ASSESSEE WOULD BE DEVELOPIN G AND CONSTRUCTING THE HOUSING PROJECT AT ITS OWN COST AN D WOULD REMAIN OWNER OF THE BUILDING WITHOUT ANY INTERFEREN CE FROM THE LAND OWNER. THE AGREEMENT IN QUESTION DID NOT PROVIDE THAT THE ASSESSEE WOULD BE WORKING AS A CONTRACTOR OR AGENT ON BEHALF OF THE LAND OWNER. THE AGREEMENT IN QUES TION WOULD NOT BE REGARDED TO BE THE JOINT-VENTURE OR CO LLABORATION AGREEMENT. IT WAS THE AGREEMENT FOR SALE OF THE LA ND FOR DETERMINED CONSIDERATION UNDER WHICH THE ASSESSEE W AS ENTITLED TO DEVELOP THE HOUSING PROJECT ON THE SAID LAND IN ITS OWN COST AND IN THE MANNER IN WHICH THE ASSESSEE MI GHT HAVE DECIDED. THE AUTHORITIES BELOW REJECTED THE CLAIM OF THE ASSESSEE, BECAUSE, ORIGINALLY, THE ASSESSEE WAS AUT HORIZED TO CONSTRUCT 94 RESIDENTIAL UNITS, BUT AS AGAINST THE AGREEMENT, LATER ON, THE ASSESSEE CONSTRUCTED 110 UNITS. HOWE VER, WE FIND THAT THERE IS BAR TO CONSTRUCT MORE FLATS OR U NITS BY THE ASSESSEE IN THE GIVEN FACTS OF THE CASE. IT IS A M ATTER BETWEEN THE LAND OWNER AND THE ASSESSEE. ONCE SANCTION PLA N IS APPROVED BY THE MUNICIPAL AUTHORITIES ON THE PAPERS SUBMITTED BY THE REAL OWNER, IT COULD BE DEEMED APP ROVAL OF CONSTRUCTION OF HOUSING FLATS IN FAVOUR OF THE ASSE SSEE, MORE SO, WHEN THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL WHOLE OF THE PROPERTY. SO THE OBJECTION OF THE AUTHORITI ES BELOW THAT THE ASSESSEE CONSTRUCTED MORE FACTS IS NOT SUSTAINA BLE IN LAW. THE ABOVE FACTS, IF CONSIDERED IN LIGHT OF DECISION OF THE ITAT, AHMEDABAD BENCHES, IN THE CASE OF RADHE DEVELOPERS AND THE SHAKTI CORPORATION, WE ARE OF THE VIEW THAT THE ISS UE IS NOW COVERED BY THE ABOVE DECISION OF THE TRIBUNAL IN FA VOUR OF THE ASSESSEE, BECAUSE, THE ASSESSEE HAS ACQUIRED DOMINI ON RIGHT OVER THE LAND AND HAS DEVELOPED THE HOUSING PROJECT BY INCURRING ALL THE EXPENSES AND TAKING ALL THE RISK INVOLVED THEREIN. THE CRUX OF THE MATTER WOULD BE THAT THE ASSESSEE HAS PURCHASED THE LAND AND HAS DEVELOPED THE HOUSING PR OJECT AT ITS OWN COST, THEREFORE, WE ARE OF THE VIEW THAT TH E ASSESSEE ITA NO. 248/AGRA/11 & 269/AGRA/12 43 WILL BE ENTITLED FOR DEDUCTION UNDER SECTION 80IB(1 0) OF THE ACT. 10. THE ASSESSEE FILED DETAILS OF BUILT UP AREA OF ALL 110 UNITS OF THE RESIDENTIAL FLATS AT PAGE NO.52 AND 53 OF THE PB TO SHOW THAT THE BUILT UP AREA WAS LESS THAN 1500 SQ. FEET. HOWEVER, THE DVO REPORTED IN HIS REPORT (PB-46) THA T CONSIDERING THE OPEN TERRACE IN FRONT OF PENT-HOUSE ROOM AT 6TH FLOOR WHICH IS ANALOGOUS TO BALCONY/VERANDAH, T HEN BUILT- UP AREA IN THIS MANNER WILL MEASURE MORE THAN 2500 SQ. FEET TO 2600 SQ. FEET APPROXIMATELY. IT IS THEREFORE A CASE SET UP AGAINST THE ASSESSEE THAT THE OPEN TERRACE IS ANALO GOUS TO BALCONY/VERANDAH AND IF IT IS INCLUDED IN THE DEFIN ITION OF BUILT-UP AREA, THEN IT WOULD EXCEED THE PRESCRIBED LIMIT. THE DEFINITION OF BUILT-UP AREA MEANS INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING THE P ROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF THE WALL S BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESI DENTIAL UNITS. THE LEARNED COUNSEL FOR THE ASSESSEE PROVI DED FROM DIFFERENT DICTIONARIES THE DEFINITION OF BALCONY WHICH READS AS UNDER: 1. (ARCH.) A PLATFORM PROJECTING FROM THE WALL OF A BUILDING, USUALLY RESTING ON BRACKETS OR CONSOLES, AND ENCLOSED BY A PARAPET; AS A BALCONY IN FRONT OF A WINDOW. ALSO, A PROJECTING GALLERY IN PLACES OF AMUSEMENTS; AS, THE BALCONY IN A THEATER. [1913 WEBESTER] 2. 1): AN UPPER FLOOR PROJECTING FROM THE REAR OVER THE MAIN FLOOR IN AN AUDITORIUM 2): A PLATFORM PROJECTING FROM THE WALL OF A BUILDI NG AND SURROUNDED BY A BALUSTRADE OR RAILING OR PARAPE T. SOURCE : WORD NET (R) 2.0 3. 1(ARCH.) A PLATFORM PROJECTING FROM THE WALL OF A BUILDING, USUALLY RESTING ON BRACKETS OR CONSOLES, AND ITA NO. 248/AGRA/11 & 269/AGRA/12 44 ENCLOSED BY A PARAPET; AS A BALCONY IN FRONT OF A WINDOW. ALSO, A PROJECTING GALLERY IN PLACES OF AMUSEMENTS; AS, THE BALCONY IN A THEATER. SOURCES: WEBSTERS REVISED UNABRIDGED DICTIONARY (1913). 11. WHEN THE ABOVE MEANING OF BALCONY IS TAKEN IN TO CONSIDERATION WITH THE DEFINITION OF BUILT-UP AREA AS PROVIDED IN THE ACT, IT IS CLEAR THAT FINDING OF TH E AUTHORITIES BELOW ARE NOT SUSTAINABLE IN LAW. IT IS AN ADMITTE D FACT THAT THE OPEN TERRACE IN FRONT OF PENT-HOUSE WAS CONSIDE RED AS BALCONY/VERANDAH. THE OPEN TERRACE IS NOT COVERED AND IS OPEN TO SKY AND WOULD NOT BE PART OF THE INNER MEAS UREMENT OF THE RESIDENTIAL FLOOR AT ANY FLOOR LEVEL. THE DEFI NITION OF BUILT-UP AREA IS INCLUSIVE OF BALCONY WHICH IS NO T OPEN TERRACE. THE DVO HAS CONSIDERED THE OPEN TERRACE A S ANALOGOUS TO BALCONY/VERANDAH WITHOUT ANY BASIS. T HEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTI NG THE CLAIM OF THE ASSESSEE BY TAKING THE OPEN TERRACE AS BALCONY/VERANDAH. THEREFORE, THE ASSESSEE HAS COMP LIED WITH ALL THE REQUIREMENTS OF SECTION 80IB (10) OF THE AC T IN THIS REGARD. MOREOVER, THE ITAT, NAGPUR BENCH IN THE CA SE OF AIR DEVELOPERS (SUPRA) HAS HELD AS UNDER: IN VIEW OF THE DECISION OF THE KOLKATA BENCH OF TH E TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. V. DY. CIT (IT APPEAL NO. 1595 (KO L) OF 2005, DATED 24-3-2006], WHICH WAS SQUARELY APPLICABLE TO THE INSTANT CASE, IT WAS TO BE HELD T HAT IF THE ASSESSEE HAD DEVELOPED A HOUSING PROJECT WHEREI N THE MAJORITY OF THE RESIDENTIAL UNITS HAD A BUILT-U P AREA OF LESS THAN 1500 SQ. FT., I.E., THE LIMIT PRESCRIB ED BY SECTION 80-IB(10) AND ONLY A FEW RESIDENTIAL TRAITS WERE EXCEEDING THE BUILT-UP AREA OF 1500 SQ. FT., THERE WOULD BE NO JUSTIFICATION TO DISALLOW THE ENTIRE DEDUCTIO N UNDER SECTION 80-IB(10). IT WOULD BE /AIR AND REASONABLE TO ALLOW THE DEDUCTION ON A PROPORTIONAT E BASIS, I.E. ON THE PROFIT DERIVED FROM THE CONSTRUC TION OF ITA NO. 248/AGRA/11 & 269/AGRA/12 45 THE RESIDENTIAL UNIT WHICH HAD A BUILT-UP AREA OF L ESS THAN 12500 SQ. FT., I.E. THE LIMIT PRESCRIBED UNDER SECTION 80IB(10). IN VIEW OF THE ABOVE, THE AO WAS TO BE DIRECTED THAT IF IT WAS FOUND THAT THE BUILT-UP ARE A OF SOME OF THE RESIDENTIAL UNITS WAS EXCEEDING 1500 SQ . FT., HE WOULD ALLOW THE PROPORTIONATE DEDUCTION UNDER SECTION 80-IB(10). ACCORDINGLY, THE APPEAL OF THE REVENUE WAS TO BE DISMISSED AND CROSS-OBJECTION OF THE ASSESSEE WAS DEEMED TO BE PARTLY ALLOWED. THEREFORE, IN THE LIGHT OF THE DECISION OF THE ITAT , NAGPUR BENCH, THE AUTHORITIES BELOW SHOULD NOT HAVE REJECT ED THE CLAIM OF THE ASSESSEE AT LEAST ON ALTERNATE CONTENT ION THAT THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDER SECT ION 80IB(10) ON PRO-RATA BASIS. NO OTHER POINT WAS CON SIDERED AGAINST THE ASSESSEE FOR REFUSING RELIEF UNDER SECT ION 80IB(10) BY THE AUTHORITIES BELOW. SINCE WE HAVE HELD ABOVE THAT THE OPEN TERRACE IS NOT PART OF BALCONY/VARANDH THEREFO RE ACCORDING TO THE SUBMISSIONS OF THE ASSESSEE, THE B UILT UP AREA OF THE ASSESSEE WAS WITHIN THE PRESCRIBED LIMIT. T HEREFORE, THERE IS NO NEED TO GIVE FURTHER FINDING WITH REGAR D TO ALTERNATE CLAIM OF THE ASSESSEE. CONSIDERING THE FA CTS OF THE CASE, IN THE LIGHT OF THE ABOVE DECISIONS, WE ARE O F THE VIEW THAT THE ASSESSEE FULFILLED THE CONDITIONS AND REQU IREMENT OF THE SECTION 80IB(10) OF THE ACT, THEREFORE, THE CLA IM OF THE ASSESSEE FOR DEDUCTION SHOULD NOT HAVE BEEN DENIED BY THE AUTHORITIES BELOW. WE ACCORDINGLY, SET ASIDE THE O RDERS OF THE AUTHORITIES BELOW AND DIRECT THE AO TO GRANT DEDUCT ION TO THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT AS CLAIM ED BY THE ASSESSEE. 12. IN RESULT, THE ASSESSEES APPEAL IS ALLOWED. 11. THE SUBSTANTIAL OBJECTIONS OF THE AO HAVE BEEN CONSIDERED IN THE ABOVE CASE WITH REGARD TO THE OWNERSHIP OF THE ASSESSEE BUILDER AND THE APPROVAL IN THE NAME OF THE SOCIETY. WE FI ND THAT THE LEARNED CIT(A) ON DETAILED CONSIDERATION OF THE EVI DENCES AND MATERIAL ON RECORD RIGHTLY HELD THAT THE ASSESSEE I NCURRED EXPENSES TOWARDS COST OF THE LAND AND ACQUIRED DOMINANT CONT ROL OVER THE ITA NO. 248/AGRA/11 & 269/AGRA/12 46 LAND AND DEVELOPED THE PROJECT AT ITS OWN RISK. THE REFORE, THE ASSESSEE HAS SATISFIED THE CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT IN THE MATTER. WITH REGARD TO THE AREA IN WHICH THE HOUSING PROJECT HAS BEEN DEVELOPED, THE AO HAS NOT DISPUTED THIS CONDITION AND THE DVO IN HIS REPORT ALSO CONFIRMED THE AREA O F THE PLOT UNDER CONSIDERATION AT 10725 SQ. MTRS. MERELY BECAUSE DIF FERENT AGREEMENTS WERE ENTERED INTO WITH INDIVIDUAL PLOT O WNERS IS NO GROUND TO REJECT THE CLAIM OF THE ASSESSEE. ULTIMAT ELY, THE ENTIRE AREA OF THE HOUSING PROJECT SHALL HAVE TO BE CONSIDERED. SINCE, THE PROJECT IS ON THE SIZE OF THE PLOT OF LAND WHICH HAS MINIMU M AREA OF 1 ACRE, THEREFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN HOLD ING THAT THE ASSESSEE COMPLIED WITH THE CONDITIONS OF SECTION 80 IB (10) OF THE IT ACT. FURTHER, IT WAS FOUND THAT THE RESIDENTIAL UNI TS HAVE NOT EXCEEDED THE MAXIMUM BUILD UP AREA OF 1500 SQ. FT. THE DVO INTIMATED THAT FSI OF EACH FLAT CONSTRUCTED IS LESS THAN PERMISSIBLE LIMIT. IT WAS THE APPREHENSION OF THE DVO THAT THE BUYERS OF THE FLATS CAN ADD TO THE BUILT UP AREA IN THE TERRACE PORTION ETC. THIS WAS MERELY ASSUMPTION OF THE DVO THAT FURTHER CONSTRUCT ION CAN BE RAISED IN THE PROPERTY. EVEN THEN SUCH FUTURE EVENT S CANNOT DENY THE DEDUCTION IN FAVOUR OF THE ASSESSEE BECAUSE AT THE TIME OF CLAIM MADE BY THE ASSESSEE THE MAXIMUM BUILT UP AREA DID NOT EXCEED MAXIMUM PRESCRIBED LIMIT. FURTHER, THE OBJECTION OF THE AO WAS THAT THE BU PERMISSION WAS GIVEN ON 19-03-2009 INSTEAD O F OBTAINING THE SAME ON 31-03-2008, THE ASSESSEE EXPLAINED THROUGH MATERIAL ON RECORD THAT BUILDING CONSTRUCTION WAS COMPLETED BEF ORE 31-03-2008 AND THE ASSESSEE APPLIED FOR BU PERMISSION WITHIN T HE TIME BUT DUE TO PROBLEM WITH THE LOCAL AUTHORITIES THE BU PERMIS SION COULD NOT BE OBTAINED IN TIME. THE LETTERS OF AMC FILED AS ANNEX URES TO THE IMPUGNED ORDER AND REFERRED TO BEFORE THE LEARNED C IT(A) CLEARLY SUGGEST THAT BUILDING CONSTRUCTION WAS COMPLETED PR IOR TO THE PRESCRIBED DATE AND THE BUILDING WAS UNDER USE PRIO R TO THE PRESCRIBED DATE AND WITHOUT BU PERMISSION SINCE IT WAS USED, THEREFORE, THE ASSESSEE PAID THE PENALTY. THE MAIN REQUIREMENT OF SECTION 80 IB (10) OF THE IT ACT HAD BEEN THAT SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON OR AFTER 01-10-1998 AND COMPLETES SUCH C ONSTRUCTION, IN CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY L OCAL AUTHORITIES BEFORE 01-04-2004, ON OR BEFORE 31-03-2008. THIS PR OVISION WOULD SHOW THAT THE ASSESSEE COMPLIED WITH THE PROVISIONS OF THE LAW ITA NO. 248/AGRA/11 & 269/AGRA/12 47 BECAUSE IN THIS CASE APPROVAL BY THE LOCAL AUTHORIT IES WAS GRANTED BEFORE 01-04-2004 AND THE ASSESSEE COMPLETED CONSTR UCTION BEFORE 31-03-2008 AND THE SAME IS EVIDENT FROM THE LETTERS OF AMC ATTACHED WITH THE IMPUGNED ORDER. THE CLAIM OF THE ASSESSEE WAS HOWEVER, REJECTED BY CONSIDERING THE EXPLANATION IN WHICH IT WAS PROVIDED THAT DATE OF COMPLETION OF THE CONSTRUCTIO N OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH COMP LETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITIES. THE ASSESSEE HO WEVER, EXPLAINED THE REASONS WHICH WERE MAINLY ATTRIBUTABLE TO AMC F OR NOT ISSUING THE CERTIFICATE ON TIME. THE ASSESSEE LATER ON OBTA INED THE BU PERMISSION AND PRODUCED THE SAME BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A), THEREFORE, ON PROPER APPRECIATION O F THE FACTS RIGHTLY NOTED THAT CONSTRUCTION OF BUILDING WAS COM PLETED IN THIS CASE AND WAS PUT TO USE ALSO PRIOR TO 31-03-2008. T HE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJAR AT OIL AND ALLIED INDIA (SUPRA) WAS RIGHTLY RELIED UPON IN SUP PORT OF THE FINDINGS OF THE LEARNED CIT(A). THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. 62 TAXMAN 480 CONSIDERING THE PROVISIONS OF SECTION 80 IA OF THE IT ACT HELD THAT PROVISION IN THE TAXATION STATUTE GRANTING INCENTIVES FOR PROMOTING GROWTH AN D DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY. SINCE PROVISION INTE NDED FOR PROMOTING AND ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, RESTRICTION OF IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVES OF THE PROVISIONS AND NOT TO FRUSTRATE I T. SINCE IN THE CASE OF THE ASSESSEE BUILDING PERMISSION FOR HOUSIN G PROJECT WAS GRANTED WITHIN THE PRESCRIBE DATE AND BUILDING CONS TRUCTION ALSO COMPLETED BEFORE THE PRESCRIBED DATE AND THE BU PER MISSION WAS MERELY ISSUED LATER ON IS ON GROUND TO REJECT THE C LAIM OF THE ASSESSEE. THE LEARNED CIT(A), THEREFORE, ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE. WE MAY ALSO NOTE THAT THE ASSESSEE SP ECIFICALLY PLEADED BEFORE THE LEARNED CIT(A) THAT IT HAS BEEN GRANTED DEDUCTION U/S 80 IB (10) OF THE IT ACT IN THE PRECEDING ASSESSMENT Y EAR 2005-06, THEREFORE, ON PARITY OF THE FACTS THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED. NOTHING IS BROUGHT TO OUR NOTICE IF ANY F URTHER APPEAL IS PREFERRED OR FILED IN THE PRECEDING ASSESSMENT YEAR 2005-06. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES NOTED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED CIT(A) IN ITA NO. 248/AGRA/11 & 269/AGRA/12 48 ALLOWING THE CLAIM OF THE ASSESSEE. IN THE RESULT, THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS DISMISSED. 8.2 THE AFORESAID DECISION OF ITAT, AHMEDABAD BENCH HAS BEEN CONFIRMED BY THE HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS . TARNETAR CORPORATION, 210 TAXMAN 206 (GUJ.)(MAG.), COPY OF WHICH IS FILED AT PAGE 127 OF THE PAPER BOOK, IN WHICH THE HONBLE HIGH COURT HELD 5. WE HAVE PERUSED THE DETAILED DISCUSSION OF THE CIT(APPEALS) AS WELL AS THE TRIBUNAL ON THE ISSUE. IN PARTICULAR, THE TRIBUNAL NOTED THAT THE CONSTRUCTION WAS COMPLETED IN 2006. APPLICATION FOR BU PERMISSION TO THE MUNICIPAL AUTH ORITIES WAS FILED ON 15.2.2006 WHICH WAS REJECTED ON 1.7.06. SE VERAL RESIDENTIAL UNITS WERE OCCUPIED SINCE THE SAME WAS DONE WITHOUT NECESSARY PERMISSION. THE ASSESSEE HAD ALSO PAID PENALTY AND GOT SUCH OCCUPATION REGULARIZED. SEVERAL TENEMENTS WERE SOLD LONG BEFORE THE LAST DATE. 6. IN THE PRESENT CASE, THEREFORE, THE FACT THAT T HE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31 ST MARCH, 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMALLY BU PERM ISSION WAS NOT GRANTED BY THE MUNICPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) TO SECTION 80IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER, NOT EVERY CONDITIO N OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT M AY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE. 7. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. TH E ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEARS BEFOR E THE FINAL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSI ON WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT CO MPLETED, BUT THE ITA NO. 248/AGRA/11 & 269/AGRA/12 49 SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MA TTER, GRANTING BENEFIT OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL. 8. IN THE RESULT, THE TAX APPEAL IS DISMISSED. 8.3 HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS . SANGHVI AND DOSHI ENTERPRISES (SUPRA) HELD IN PARA 32 AS UNDER : 32. THIS TAKES US TO THE SECOND QUESTION AS REGARD S THE COMPLETION CERTIFICATE. AS ALREADY POINTED OUT IN T HE PRECEDING PARAGRAPHS, THE ASSESSEE HAD EVIDENTLY COMPLETED THE CONSTRUCTION AS EARLY AS 05.03.2006, A FACT WHICH IS NOT DISPUTE D BY THE REVENUE. IT IS ALSO AN ADMITTED FACT THAT THE APPRO VAL WAS GRANTED FOR CONSTRUCTION, BOTH BY THE CHENNAI METRO POLITAN DEVELOPMENT AUTHORITY AND THE LOCAL AUTHORITY, NAME LY, CHENNAI CORPORATION. THE LETTER OF THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY ACCORDING SANCTION TO THE PRO JECT AS EARLY AS 23.9.2003 CLEARLY POINTS OUT THAT THE SANC TION WAS ALSO SUBJECT TO THE APPROVAL BY THE CORPORATION. THUS, W ITH THE PLANNING DETAILS BEING SUBJECTED TO THE APPROVAL BY THE CORPORATION AS THE COMPETENT LOCAL AUTHORITY AND IT HAVING CERTIFIED AS TO THE COMPLETION AS EARLY AS 28.12.20 07, WE ARE SATISFIED THAT THE COMPLETION BEING ON OR BEFORE 31 .3.2008, THE RELIANCE PLACED ON EXPLANATION (2) TO REJECT THE AS SESSEE'S CASE COULD NOT BE SUSTAINED. IN ANY EVENT, GIVEN THE FAC T THAT THE APPROVAL, WHICH IS AN ADMINISTRATIVE PROCESS, IS PU RELY AT THE HANDS OF THE STATUTORY AUTHORITY CONCERNED, OVER WH ICH, THE ASSESSEE COULD NOT HAVE ANY CONTROL, THE EXPLANATIO N CANNOT, IN ANY MANNER, HAVE A NEGATIVE EFFECT ON A FACTUAL ASP ECT OF THE MATTER, NAMELY, COMPLETION OF THE CONSTRUCTION. THU S, IN A CASE LIKE THIS, WHERE, THE LOCAL AUTHORITY, BEING THE CO RPORATION, HAD ALREADY CERTIFIED ABOUT THE COMPLETION OF THE PROJE CT AS PER THE APPROVED PLAN, THE FACT THAT ONE OF THE AUTHORITIES , NAMELY, CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY HAD ISSU ED A LETTER ONLY ON 13.6.2008, PER SE, CANNOT NEGATIVE THE ASSE SSEE'S CLAIM FOR DEDUCTION. ITA NO. 248/AGRA/11 & 269/AGRA/12 50 8.4 CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT O F ABOVE DECISIONS, IT IS PROVED BY THE ASSESSEE THAT THE BUILDING CONSTRUCTI ON OF THE HOUSING PROJECT WAS COMPLETED BEFORE THE PRESCRIBED DATE AND BUILDING U SE PERMISSION WAS GRANTED ON EXECUTING THE MORTGAGE RELEASE DEED. THEREFORE, THE RE IS SUFFICIENT COMPLIANCE MADE BY THE ASSESSEE TO MAKE CLAIM U/S. 80IB(10) OF THE IT ACT. WE MAY ALSO NOTE THAT THE ASSESSEE ALSO SUBMITTED BEFORE US THA T IN ASSESSMENT YEAR 2007-08, THE AO ACCEPTED THE CLAIM OF ASSESSEE U/S. 80IB(10) IN RESPECT OF THE SAME PROJECT IN THE ASSESSMENT ORDER U/S. 143(3) ON DATE D 30.11.2009. THEREFORE, SIMILAR CLAIM OF THE ASSESSEE SHOULD NOT HAVE BEEN DENIED IN THE ASSESSMENT YEAR UNDER APPEAL. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES IN THE LIGHT OF FINDINGS OF LD. CIT(A) AND MATERIAL ON RECORD, WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF AS SESSEE. IN THE RESULT, THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS DISMISSED. ITA NO. 269/AGRA/2012 (A.Y. 2009-10): 9. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), GWALIOR DATED 02.03.2012 FOR THE ASSESSMENT YEAR 20 09-10 SIMILARLY CHALLENGING THE DELETION OF ADDITION OF RS.3,24,22,942/- MADE O N ACCOUNT OF DISALLOWANCE U/S. 80IB (10) OF THE IT ACT. ITA NO. 248/AGRA/11 & 269/AGRA/12 51 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF BUILDING AND DEVELOPING HOUSING PROJECTS. DURING THE YEAR UNDER CONSIDERATION, IT HAS DECLARED GROSS RECEIPTS OF RS .4,26,71,037/- (WHICH INCLUDES OTHER INCOME OF RS.15,77,227/-) FROM HOUSING PROJEC TS. NET PROFIT OF RS.3,31,38,481/- HAS BEEN EARNED AND DECLARED AFTER CLAIMING DEDUCTION U/S. 80IB FOR RS.3,24,22,942/- IN RESPECT OF TWO HOUSING PROJ ECTS CARRIED OUT DURING THE YEAR, RETURNED INCOME OF RS.3,90,820/- HAS BEEN DEC LARED. THE RETURN WAS SUPPORTED BY AUDIT REPORT. PART OF THE GROUND RELAT ES TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S. 80IB(10) IN RESPECT OF HOUSING PROJE CT CARRIED OUT FOR GARDEN HOME, PHASE-III. THE ASSESSEE HAS DECLARED GROSS PR OFIT OF RS.1,08,90,959/-, FROM WHICH THE DEDUCTION U/S. 80IB HAS BEEN CLAIMED AT R S.81,82,754/-. THE AO HAS REJECTED ASSESSEES CLAIM FOLLOWING HIS EARLIER YEA RS ASSESSMENT ORDER U/S. 143(3) ON 27.12.2010 WHEREBY SIMILAR DEDUCTION HAS BEEN DI SALLOWED FOR WANT OF COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITY . ACCORDING TO THE AO, THERE BEING NO CHANGE IN THE FACTS FROM THE LAST YEAR, TH EREFORE, DEDUCTION WAS NOT ALLOWED. THE LD. CIT(A) FOLLOWING HIS APPELLATE ORD ER FOR THE ASSESSMENT YEAR 2008-09 DATED 25.03.2011, ALLOWED THE CLAIM OF DEDU CTION U/S. 80IB(10) BY FOLLOWING THE SAME REASONS. BOTH THE PARTIES SUBMIT TED THAT THE ISSUE IS SAME AS IS ARGUED BY THEM IN PRECEDING ASSESSMENT YEAR 2008-09 IN DEPARTMENTAL APPEAL IN ITA NO. 248/AGRA/2011. FOLLOWING THE REASONS FOR DE CISION IN ASSESSMENT YEAR ITA NO. 248/AGRA/11 & 269/AGRA/12 52 2008-09 IN ITA NO. 248/AGRA/2011, WE DISMISS THE DE PARTMENTAL APPEAL ON THIS ISSUE BEING THE ISSUE IS IDENTICAL AND BASED ON THE SAME FACTS. DEPARTMENTAL APPEAL TO THAT EXTENT IS ACCORDINGLY DISMISSED. 11. PART OF THE GROUND RELATES TO SIMILAR DISALLOWA NCE OF CLAIM OF DEDUCTION U/S. 80IB(10) IN RESPECT OF GULMOHAR CITY HOUSING PROJEC T FOR WHICH THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.2,42,40,188/-. THE AO MENTI ONED THAT IN THE BROCHURE IT WAS PUBLISHED IN RESPECT OF GULMOHAR CITY THAT AREA IN RESPECT OF CERTAIN FLATS/DUPLEX EXCEED THE MINIMUM PRESCRIBED LIMIT FO R ELIGIBILITY OF DEDUCTION. THE EXPLANATION WAS CALLED FOR IN WHICH THE ASSESSE E EXPLAINED THAT THE BROCHURE IS JUST FOR ATTRACTING THE CUSTOMERS TO PURCHASE TH E FLATS, BUT THERE IS NO VIOLATION OF ANY PROVISION OF LAW AND THE PRESCRIBED LIMIT OF THE FLATS IN QUESTION HAVE NOT EXCEEDED THE MINIMUM LIMIT PRESCRIBED UNDER THE ACT . THE REPLY OF ASSESSEE IN RESPECT OF FLATS AREA-WISE IS SPECIFICALLY NOTED IN THE APPELLATE ORDER AT PAGE 7 TO 10 OF THE APPELLATE ORDER. THE ASSESSEE IN THE REPL Y SPECIFICALLY SUBMITTED THAT NO FLAT/DUPLEX HAVE EXCEEDED THE PRESCRIBED AREA WHICH IS SUPPORTED BY THE CERTIFICATE OF THE ARCHITECT ENGINEER. THE AO CONSI DERED THE REPLY OF THE ASSESSEE. HOWEVER, THE AO FOUND THAT THE ASSESSEE HAS SHOWN I NCOME ON COMPLETION BASIS OF THE PART PROJECT. THE ENTIRE PROJECT HAS NOT BEE N COMPLETED DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE AO IT IS ONE OF THE PREREQUISITE CONDITION ITA NO. 248/AGRA/11 & 269/AGRA/12 53 THAT THE PROJECT MUST BE COMPLETED DURING THE YEAR IN WHICH DEDUCTION U/S. 80IB(10) IS CLAIMED. SINCE HOUSING PROJECT HAS NOT BEEN COMPLETED IN ENTIRETY, THE CLAIM OF ASSESSEE WAS DISALLOWED FOR THIS PROJE CT. 11.1. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS SHOWN INCOME ON COMPLETION BASIS OF THE PART PROJECT. THE ENTIRE PROJECT HAS NOT BEEN COMPLETED DURING THE YEAR UNDER CONSIDERATION. THE AO DID NOT RAISE ANY QUERY WITH REGARD TO COMPLETION OF PART PROJECT. IT WAS S UBMITTED THAT THE ASSESSEE HAS SATISFIED ALL THE CONDITIONS OF SECTION 80IB AND HA S NOT EXCEEDED THE BUILT UP AREA IN VIOLATION OF THE ACT. IT WAS FURTHER SUBMITTED T HAT THERE IS NO PROVISION UNDER THE ACT THAT THE DEDUCTION U/S. 80IB(10) CAN BE CLA IMED ONLY WHEN THE CONSTRUCTION OF THE ENTIRE HOUSING PROJECT IS COMPL ETED. IN THIS REGARD, BOARD ALSO ISSUED A CLARIFICATION BY ISSUING INSTRUCTION NO. 0 4/2009 DATED 30.06.2009 DETAILS. THEREFORE, IT IS REQUESTED THAT THE ASSESSEE HAS FU LFILLED ALL THE CONDITIONS OF SECTION 80IB(10) OF THE IT ACT. THE LD. CIT(A) CONS IDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF ABOVE BOARDS CIRCULAR ALLO WED THE CLAIM OF ASSESSEE. HIS FINDINGS IN APPELLATE ORDER IN PARA 4.2 TO 5 ARE RE PRODUCED AS UNDER : 4.2 APPELLANT'S SUBMISSIONS ALONGWITH THE ASSESSME NT ORDER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS, IN 3 VOLS., HAVE ALSO BEEN PERUSED. IT IS SEEN THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. HAS ASKED THE APPELLANT TO GIVE D ETAILS OF CLAIM OF ITA NO. 248/AGRA/11 & 269/AGRA/12 54 DEDUCTION U/S 80IB(L0) MADE BY THE APPELLANT AS PER ITS RETURN. VIDE ORDER SHEET ENTRY DTD. 09.11.20 11, THE APPELLANT H AS BEEN SPECIFICALLY ASKED TO SHOW CAUSE AS TO WHY THE SAID DEDUCTION IN RESPECT OF GARDEN HOME, PHASE-III PROJECT BE NOT DI SALLOWED. THERE IS NO QUERY REGARDING DEDUCTION CLAIM IN RESPECT OF GULMOHAR CITY PROJECT. VIDE ORDER SHEET ENTRY DTD. 05.12.2011, TH E APPELLANT HAS BEEN ASKED TO GIVE DETAILS OF AMOUNT DEDUCTED FROM DEPOSITS ON CANCELLATION MADE AND ACCOUNTING TREATMENT THEREOF ALONGWITH QUERY REGARDING BASIS OF VALUATION OF FLATS AND STOCK. TH E APPELLANT HAS ALSO BEEN ASKED TO PRODUCE ITS BOOKS OF ACCOUNTS ON NEXT DATE FIXED FOR HEARING, I.E. 22.12.2011. ON THE FIXED DATE, TH E APPELLANT HAS PRODUCED BOOKS (IF ACCOUNTS WHICH HAVE BEEN EXAMINE D ON TEST CHECK BASIS BY THE A.O. ON THE SAID DATE, THE APPEL LANT HAS BEEN ASKED TO EXPLAIN THE REASONS AS TO WHY THE CLAIM OF DEDUCTION U/S 80IB BE NOT DISALLOWED, AS THE SUPER BUILT UP AREA/ COVERED AREA OF FLATS EXCEEDS THE MINIMUM PRESCRIBED LIMIT IN VIEW OF BROCHURE SUBMITTED BY THE APPELLANT FOR THE SAID PROJECT OF GULMOHAR CITY. THE APPELLANT HAS GIVEN DETAILED REPLY ON 29.12.201 1 WHICH IN FACT HAS BEEN REPRODUCED BY THE A.O. IN HIS ASSESSMENT O RDER ALSO. ON 29.12.2011 CASE HAS BEEN DISCUSSED WITH REGARD TO E LIGIBILITY CONDITION OF DEDUCTION U/S 80IB AS PER THE QUERY RA ISED IN RESPECT OF BUILT-UP AREA VIS-A-VIS COVERED AREA ETC. THEREAFTE R, ASSESSMENT ORDER HAS BEEN PASSED ON 30.12.11. REPLY OF THE APPELLANT EXPLAINING THE FULFILLMENT OF CONDITIONS PRESCRIBED U/S 80M IN RES PECT OF SIZE OF PLOT, FLATS, BUILT-UP AREA, SUPER BUILT-UP AREA HAS BEEN CONSIDERED BY THE A.O. AND FOUND ACCEPTABLE, SINCE AS PER THE ASS ESSMENT ORDER NO ADVERSE INFERENCE HAS BEEN DRAWN ON THIS BASIS. THE ONLY GROUND FOR DISALLOWANCE TAKEN BY THE A.O. AND WHICH IS NOT FOU ND TO HAVE BEEN CONFRONTED TO THE APPELLANT DURING THE ENTIRE COURS E OF ASSESSMENT PROCEEDINGS IS REGARDING THE COMPLETION OF THE PROJ ECT. AS PER THE A.O., SINCE THE ENTIRE PROJECT HAS NOT BEEN COMPLET ED DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT IS NOT ENTITLED TO ITS CLAIM OF DEDUCTION U/S 80IB FOR GULMOHAR CITY PROJECT. IN TH IS REGARD, IT WOULD BE RELEVANT TO BRING ON RECORD RELEVANT PROVI SIONS OF SEC. 80IB OF THE LT. ACT WHICH ARE REPRODUCED AS UNDER : - 'DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CER TAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. ITA NO. 248/AGRA/11 & 269/AGRA/12 55 80-IB. (L) WHERE THE GROSS TOTAL INCOME OF AN ASSES SEE INCLUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRE D TO IN SUB- SECTIONS (3) TO (11). (11A) AND (11B) SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCEN TAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THI S SECTION. (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 3IS1 DAY OF MARCH, (2008) BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVAN T TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DE VELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTIONS, - I. IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 3 RD DAY OF MARCH 2008. II. IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL 2004 [BUT NOT LATER THAN THE 31ST DAY OF MARCH 2005] WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. ' 4.3. FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT TH ERE IS NO REFERENCE W.R.T. ELIGIBILITY FOR ENTIRE COMPLETION OF THE PRO JECT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSTT. YEAR UNDER CON SIDERATION. IN THIS REGARD CBDT HAS ALSO ISSUED INSTRUCTION NO 4/2009 D TD. 30.6.09 AS UNDER ;- '1. UNDER SUB-SECTION (10) OF SECTION 80-IB AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS IS ALLOWED A DEDUCTION OF 100% OF ITS PROFITS DERIVED FROM SUCH PROJECTS IF I T COMMENCED THE PROJECT ON OR AFTER 1.10.1998 AND COMPLETES THE CON STRUCTION WITHIN ITA NO. 248/AGRA/11 & 269/AGRA/12 56 FOUR YEARS FROM THE FINANCIAL YEAR IN WHICH THE HOU SING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. 2. CLARIFICATIONS HAVE BEEN SOUGHT BY VARIOUS CCS I T ON THE ISSUE WHETHER THE DEDUCTION U/S 80-IB(10) WOULD BE AVAILA BLE ON A YEAR TO YEAR BASIS WHERE AN ASSESSEE IS SHOWING PROFIT ON P ARTIAL COMPLETION OR IF IT WOULD BE AVAILABLE ONLY IN THE YEAR OF COM PLETION OF THE PROJECT U/S 80-IB(10). 3. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT IS CLARIFIED AS UNDER:- (A) THE DEDUCTION CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. (B) IN CASE IT IS LATER FOUND THAT THE CONDITION OF COMPLETING THE PROJECT WITHIN THE SPECIFIED TIME LIMIT OF 4 YEARS AS STATED IN SECTION 80-IB(L0) HAS NOT BEEN SATISFIED, THE DEDUCTION GRA NTED TO THE ASSESSEE IN THE EARLIER YEARS SHOULD BE WITHDRAWN.' 4.4. IN VIEW OF ABOVE FACTS AND AFTER PERUSAL OF S UBMISSIONS, THE APPELLANT IS FOUND ENTITLED FOR CLAIM OF DEDUCTION U/S 80IB( 10) MADE IN RESPECT OF GULMOHAR CITY HOUSING PROJECT. THIS G ROUND OF APPEAL IS, HEREBY, ALLOWED. 4.5. ACCORDINGLY, ADDITION OF RS.3,24,22,942/- MAD E FOR DISALLOWANCE OF TOTAL CLAIM OF DEDUCTION U/S 80IB(1 0) IS, HEREBY, DELETED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 12. THE LD. DR MERELY RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE BOARDS CIRCULAR NO. 4/20 09, COPY OF WHICH IS FILED AT PAGE 51 OF THE PAPER BOOK AND ALSO RELIED UPON THE ORDER OF ITAT, HYDERABAD ITA NO. 248/AGRA/11 & 269/AGRA/12 57 BENCH IN THE CASE OF DCIT VS. S.M.R. BUILDERS PVT. LTD., 54 SOT 105, IN WHICH IT WAS HELD WHETHER IN TERMS OF CIRCULAR NO. 4 OF 2009 DEDUCTIO N UNDER SECTION 80IB(10) CAN BE CLAIMED ON YEAR-TO-YEAR BAS IS WHERE ASSESSEE WAS SHOWING PROFIT FROM PARTIAL COMPLETION OF PROJECT IN EACH YEAR HELD, YES. 12.1 HE HAS ALSO SUBMITTED THAT IN ASSESSMENT YEAR 2007- 08, THE AO ALLOWED SIMILAR CLAIM FOR GARDEN HOME HOUSING PROJECT IN TH E ORDER U/S. 143(3) DATED 30.11.2009, COPY OF WHICH IS FILED AT PAGE 75 OF TH E PAPER BOOK FOR THE ASSESSMENT YEAR 2008-09. 13. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, IN T HE LIGHT OF BOARDS CIRCULAR, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL O F THE REVENUE. BOARD HAS CLARIFIED THE POSITION OF MAKING SUCH CLAIM ON THE PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. THE AO HAS NOT RAISED ANY QUERY ON THIS ISSUE BEFORE REFUSING TO ACCEPT THE CLAIM OF ASSESSEE. THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE BOARDS CIRCULAR, WHICH IS BINDING ON THE REVEN UE AUTHORITIES AND THE DECISION OF HYDERABAD BENCH OF ITAT IN THE CASE OF S.M.R. BUILDERS PVT. LTD. (SUPRA). THE LD. COUNSEL FOR THE ASSESSEE ALSO RIGH TLY CONTENDED THAT IN THE ASSESSMENT YEAR 2007-08, THE AO HAS ACCEPTED SIMILA R CLAIM OF ASSESSEE ON PARTIAL COMPLETION OF THE PROJECT. CONSIDERING THE ABOVE DISCUSSION, WE DO NOT ITA NO. 248/AGRA/11 & 269/AGRA/12 58 FIND ANY MERIT IN THE DEPARTMENTAL APPEAL ON THIS I SSUE. SAME IS ACCORDINGLY DISMISSED. IN THE RESULT, THE DEPARTMENTAL APPEAL I S DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY
