AI Insights
The case involves appeals by the Deputy Commissioner of Income Tax, Circle-2(2), Ahmedabad against Parshwanath Corporation concerning the deductions claimed under Section 80IB(10) of the Income-tax Act for two housing projects. The primary contention by the Revenue was that the projects did not meet the statutory requirements for approval and completion within the prescribed timelines. The CIT(A) had earlier ruled in favor of the assessee, which was contested by the Revenue in the Tribunal. The Tribunal's decision favored the assessee, affirming the CIT(A)'s findings and allowing the deductions.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 125686 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 9 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-10-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
19-07-2023
Assessment Year
2013-2014
Appeal Filed On
02-01-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . No s. 2 7 & 28 / A h d / 20 2 0 ( As s e s s me nt Y ea rs : 20 13 - 1 4 & 20 1 4 - 1 5) D e p ut y C o m m i ss io n er o f I nc o m e Ta x , C ir cl e - 2( 2) , A h m e d a ba d V s .Par s h w a n a th C o r po r a t io n, 50, H a r si dh C ha mb e r s , As hr a m R oa d , A h m ed a b a d- 38 0 0 14 [ P A N N o . AA B F P9 0 58 J ] (Appellant) .. (Respondent) Appellant by : Shri Biren Shah & Shri Dhrunal Bhatt, A.Rs. Respondent by: Shri Samir Tekriwal, CIT DR & Shri Atul Pandey, Sr. DR D at e of H ea r i ng 20.07.2023 D at e of P r o no u n ce me nt 18.10.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: Both appeals have been filed by the Revenue against the orders passed by the Ld. Commissioner of Income Tax (Appeals)-10 (in short “Ld. CIT(A)”), Ahmedabad vide orders dated 23.10.2019 passed for the Assessment Years 2013-14 & 2014-15. Since common facts and issues for consideration are involved for all the years under consideration, all the appeals are being disposed of together. We shall first take up the Department’s appeal for A.Y. 2013-14 (ITA No. 27/Ahd/2020). 2. The Department has raised the following grounds of appeal:- ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 2 - “1. The Ld. CIT(A) has erred in law as well as on facts of the case in allowing the deduction u/s.80IB(1) of the Income-tax Act of Rs. 9,91,54,852/- without properly appreciating the facts of the case. 1.1 The Ld CIT(A) failed to consider that in respect of ‘Parshwanath Om Residency Project’ no approval from the local authority had been obtained before 31.3.2008 and the assessee has violated clause (a)(i) of Section 80(IB)(10) of the Act and was not eligible for deduction u/s 80IB(10) of the Act. 1.2 The Ld. CIT(A) failed to appreciate that by not completing the entire project ‘Parshwanath Metro City’ consisting of 376 units before 31.3.2012, the assessee has violated clause (a)(iii) of Section 80(IB)(10) of the Act and was not eligible for deduction u/s 80(IB)(10) of the Act. 2. The appellant craves leave to amend alter any ground or add a new ground, which may be necessary.” 3. The brief facts of the case are that assessee had claimed deduction under Section 80(IB)(10) of the Act, in respect of two projects namely ‘Parshwanath Om Residency Project’ (‘POR’ Project) and ‘Parshwanath Metro City’ (‘PMC’ Project). While passing the order, the Assessing Officer observed that the assessee has claimed that the approval of the Project POR was taken on 30.03.2007, but according to the Assessing Officer such certificate is not an approval issued by the GUDA and the final approval was to be granted after fulfillment of certain conditions as per letter issued by GUDA dated 30.03.2007. As per the Assessing Officer, the actual approval from GUDA was taken on 27.10.2010 and accordingly, the Project POR was not approved before 31.03.2008. As per the Assessing Officer, as on 31.03.2007, GUDA has merely accepted the application of approval filed by the assessee and in light of the above facts, the Assessing Officer held that the assessee is not entitled for deduction under Section 80(IB)(10) of the Act for the “POR” Project. Further, the Assessing Officer observed that so far as the deduction with respect of PMC Project is concerned, the Assessing Officer observed that ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 3 - the said project was approved for 376 units, whereas the completion certificate stated that BU permission was only given for 349 units. The Assessing Officer observed that since the entire project was not approved within five years from the end of the Financial Year in which project was approved, assessee is not entitled for deduction under Section 80(IB)(10) of the Act. On this basis the Assessing Officer disallowed the entire deduction under Section 80(IB)(10) of the Act in respect of PMC Project. 4. In appeal before Ld. CIT(A), the assessee submitted that approval for the Project POR was obtained on 30.03.2007. It was submitted that the permission issued by the GUDA on 27.10.2010 is revised development permission and in such approval by GUDA, it was clearly stated that in- principal permission was already granted on 30.03.2007. Further, the assessee submitted that in assessment proceedings, assessee has already submitted letter issued by GUDA on 12.06.2017 stating that approval of the project was effective from 30.03.2007. Accordingly, the assessee’s submissions before Ld. CIT(A) was that once the POR Project was approved by 31.03.2008, it is entitled for deduction under Section 80(IB)(10) of the Act. With respect to the Project PMC, the assessee submitted that it had obtained BU permission for 349 units till 31.03.2012 and has accordingly, had only taken deduction under Section 80(IB)(10) with respect to those units (349 Units) for which approval had been obtained till 31.03.2012. The assessee submitted that it could not obtain BU permission for three blocks (B-1, P-1, and Z-1), which comprised of 21 units. It was submitted that these three blocks were absolutely independent and separate from those blocks in respect of which BU Permission was obtained by the assessee. Accordingly, it was submitted that it was not the case of the assessee that the assessee has not obtained BU Permission for few ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 4 - units in one block but it is the case of the assessee that BU Permission was not received for all the units of two blocks. Accordingly, it was submitted that since these units were in a separate block from those blocks in respect of which approval was granted i.e. BU Permission was obtained, the Ld. Assessing Officer is not justified in denying the entire claim of deduction under Section 80(IB)(10) of the Act. After going through the facts of the assessee’s case, Ld. CIT(A) allowed the appeal of the assessee with the following observation:- “So far as disallowance of deduction of POR is concerned, it is observed that deduction under Section 80-16(10) on entire profit derived from this project was denied by AO on the ground that approval of the project was taken on 27th October, 2010 whereas provisions of the Act requires that project should be approved before 31st March, 2008. The AO has referred to letter dated 19th January, 2016 filed by Gandhinagar Urban Development Authority (GUDA) in response to notice under Section 133(6) of the Act wherein approval dated 27th October, 2010 for 234 units on above land at Survey No. 1367 of TPS 10 of Village Adalaj was provided. It is observed that Appellant has submitted approval dated 30th March, 2007 given by GUDA on very same land but same was not accepted by AO on the ground that GUDA has merely accepted the application and stated that permission will be granted on final submission of layout plan and building plan as per circular of Revenue Department dated 16th February, 2004. On perusal of these documents it is found that Appellant has made an application for obtaining the approval on 28th March, 2007 which is very much before the cut-off date prescribed under the Act. Even in approval dated 30 th March, 2007, it was clearly mentioned that permission is granted for application filed for development. It is relevant to reproduce the English translation of such permission as under: ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 5 - In this letter it is stated that copy of permission and copy of approved layout plan, key plan and building plan shall be given on production of order of permission for non-agricultural use obtained in respect of such land. In this letter it is not mentioned that approval is not given to Appellant or even it is not mentioned that permission will be granted when Appellant submits approved layout plan, key plan and building plan. This fact proves that approval for the project was received on 30 th March, 2007. It is further observed that during the course of Assessment Proceedings Appellant vide letter dated 30 th October, 2017 provided a letter dated 12 th June, 2017 from ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 6 - GUDA authority wherein it is stated that approval of the project is taken by Appellant on 30th March, 2007. For the sake of clarity, said letter as submitted before AO, is reproduced below: In this letter the GUDA being the prescribed authority has not stated that approval of the project is in granted in 2010, as observed by AO. This letter was already on record of AO and AO has not brought any other evidence to prove that such approval was not taken on 31 st March, 2007, as claimed by Appellant. Here it is relevant to reproduce approval dated 27 th October, 2010 as issued by GUDA: ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 7 - On perusal of this letter, it is clear that GUDA has already given in principle approval on 30th March, 2007, which means that such permission is revised development permission. It is also found that at clause No. 37, GUDA has clearly stated that as permission is given on 27th October, 2010, earlier approval of 30th March, 2007 is withdrawn. This fact clearly prove that project in which Appellant has constructed the housing unit was approved on ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 8 - 30th March, 2007. The provisions of Section 80-IB(10) as reproduced herein above also states that when approval of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which building plan of such housing project is first approved by local authority, which in present case is 30th March, 2007. The fact that project is approved in 2007 is also substantiated by Appellant from project expenditure being material, carting, labour expenditure, advertisement and other expenditure as shown in Profit & Loss Account. The Audited Annual Accounts for AY 2010-11 and 2011-12 are already on record of AO which support the contention of Appellant that expenditure pertaining to this project was incurred in such years and AO has not doubted that this expenditure is not pertaining to this project. In addition to above it is found that AO has not disputed any other conditions specified in Section 80-IB(10). Considering these facts, it is found that Appellant has clearly demonstrated that it has satisfied all the conditions prescribed under Section 80-IB(10) and project is approved on 30th March, 2007. Considering these facts, contention of AO that Appellant is not entitled to deduction under Section 80-IB(10) for POR project cannot be accepted. Thus, AO is directed to allow deduction under Section 80-IB(10) on above project as claimed by Appellant in its return of income. So far as disallowance of deduction under Section 80-IB(10) for PMC project is concerned, deduction under Section 80-IB(10) on profit derived from this project was denied on the ground that though Appellant has taken approval for 376 units, BU permission received shows completion of 349 units (348 +1). The AO has found that as per provisions of section 80-IB(10), Appellant was required to complete construction of all the units for which approval was granted by AUDA. As entire issue is factual in nature, it is relevant to reproduce approval and completion certificate herein below: ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 9 - ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 10 - ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 11 - On perusal of both these documents it is found that various blocks comprising different units were required to be constructed by Appellant. It is correct that approval was for 376 units but BU permission submitted by Appellant reflects completion of 348 units, which means that BU permission is not received for 28 units. It is found that Appellant was unable to obtain BU permission for Block B-1 being 12 units, P-1 and Z-1 for 16 units. This is not the case that Appellant has partially constructed and obtained BU permission for such blocks. The Appellant has constructed and obtained BU permission for all the units of particular block, except three blocks being B-1, P1 and Z-1 , as stated herein above. It is an undisputed fact that BU permission dated 20th March, 2012 certifying completion of all the blocks as mentioned in approval except three blocks comply with basic condition laid down under Section 80-IB(10) relating to plot of land and area of each unit. Even Appellant has obtained BU permission for remaining three blocks subsequently on which 80-IB(10) deduction was not claimed. In this background, Appellant has claimed deduction under Section 80-IB(10) for blocks for which it has received BU permission before prescribed date. Whether each building or block is a separate housing project is not is dealt with by Hon'ble Bombay High Court in the case of CIT V/s Vandana Properties 353 ITR 36 wherein it is held as under: “The expression 'housing project' is neither defined under section 2 of the Act nor under section 80-IB(10). Even under the Mumbai Municipal Corporation Act, 1988 as also under the Development Control Regulations for Greater Mumbai, 1991, the expression 'housing project' is not defined. Therefore, the expression 'housing project' in section 80-IB(10) would have to be construed as commonly understood. [Para 18] The expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in section 80-IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 square feet would constitute a 'housing project' under section 80-IB(10). [Para 19]” Even in above case, building - A to D were already constructed on very same land and building - E was constructed on a later date and still the Hon'ble Court has considered building - E as a housing project and allowed deduction under Section 80-IB(10) of the Act. The Appellant has relied upon decision of Hon'ble Pune ITAT in the case of M/s Sai Siddhi Atul in ITA No. 2420/PN/2016 dated 15.11. 201 Swherein it is held as under: ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 12 - “6. In so far as first issue is concerned a perusal of assessment order shows that the assessee has developed housing project with three Wings A, B and C. The housing project was approved on 30-03-2007. As per the provisions of section 80IB(10)(a)(iii) the project should have been completed on or before 31-03-2012. During scrutiny assessment proceedings the assessee furnished part completion certificate issued by the local authority on 31-03-2012 in respect of Wings A and B and commercial units. The assessee could not produce completion certificate in respect of Wing C. The Assessing Officer disallowed assessee’s entire claim of deduction u/s. 80IB(10) of the Act. However, the Commissioner of Income Tax (Appeals) following various judicial rulings of the Hon’ble High Courts and the Tribunal allowed pro-rata deduction in respect of completed unit to the assessee. 7. The allowability of proportionate deduction u/s. 80IB(10) in respect of completed units is no more res integra. The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Brahma Associates reported as 333 ITR 289, Commissioner of Income Tax Vs. Vandana Properties (supra), the Hon’ble Madras High Court in the case of Commissioner of Income Tax Vs. Arun Excello Foundations (P) Ltd. reported as 259 CTR 362 have approved allowing of proportionate deduction u/s. 80IB(10) in respect of completed eligible units. The Tribunal in catena of orders have been consistently allowing proportionate deduction u/s. 80IB(10) in respect of units which are complete in every respect in consonance with the conditions set out u/s. 80IB(10) of the Act. The ld. DR has not brought to our knowledge any contrary decision of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) in allowing pro-rata deduction to the assessee in respect of completed residential units. Accordingly, ground Nos. 2 and 3 of the appeal by the Revenue are dismissed being devoid of any merit.” The decision referred supra are on similar facts with the facts of the Appellant’s case and ratio of this decision which has in turn followed the decision of Hon’ble Bombay High Court squarely applied to the facts of the Appellant’s case. During the course of Assessment Proceedings, Appellant has relied upon various decisions in its written submission dated 30 th October, 2017, which inter alia, refer to decision of Hon’ble Hyderabad ITAT in the case of Vertex Homes Pvt. Limited 62 Taxmann 285. The head note of said decision is as under: ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 13 - Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertaking other than infrastructure development undertakings (Housing project) - Assessment years 2010-11 and 2011-12 - Assessee company was engaged in business of construction of residential apartments/housing projects - In terms of construction agreement, assessee had to construct six residential blocks - Within stipulated period of five years, assessee completed construction of three blocks - Assessee filed its return claiming deduction under section 80-IB (10) in respect of completed blocks - Revenue authorities rejected assessee's claim on ground that entire housing project had not been completed within stipulated period - Whether even a single building consisting of a number of residential units can be considered to be a housing project by itself, hence, will be eligible for deduction under section 80-IB(10), if it otherwise fulfils conditions of section 80-IB(10) - Held, yes - Whether, therefore, even though assessee had not completed construction of all blocks of housing project, that would not deprive assessee from availing deduction under section 80-IB (10) in respect of each of completed block on stand-alone basis - Held, yes [Para 8] [In favour of assessee] In the above referred case, Hon'ble ITAT in its order has observed that housing project of Assessee consisted of six blocks being Block - A to F which was approved by local authority on 30th March, 2007. As per provisions of section 80-IB(10)(a)(iii), the project has to be completed within five years from end of the financial year in which housing project was approved. The Hon'ble Court found that within prescribed period, Assessee completed only three blocks and other three blocks being C, D and E were not completed. On these facts, Hon'ble Court has allowed deduction under Section 80-IB(10) on three blocks for which BU Permission was received within prescribed period. The Hon'ble ITAT has held that a single building consists of number of housing units can be considered as a housing project by itself and these three blocks are eligible for deduction as provisions of Section 80-IB(10) are beneficial in nature and too technical nature would defeat the purpose for which provisions have been brought into the Statute. The facts of this case are identical with the facts of Appellant's case and even in Appellant's case, three blocks were not completed and hence BU Permission was not received for such blocks. The Appellant in its submission before AO has also relied upon decision of Ramsukh Properties V/s DCIT 25 taxmann.com 558 and such decision is also relied upon by Appellant in present submission. However, AO has not contravened the facts of these decisions with the facts of Appellant's case nor brought on record how ratio of these decisions cannot be made applicable to present case. Even in entire Assessment Order the Assessing Officer has not brought any contrary decision which can support his contention. ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 14 - During the course of appellate hearing, Appellant has also relied upon following decisions of Hon'ble Pune ITAT and ratio of these decisions are also applicable on facts of the case. (i) Hon'ble Pune Bench in case of Rahul Construction Co. reported in 21 taxmann.com 435 (ii) Hon'ble Pune IT AT in case of Anand Ashok Gandhi in IT A No. 20047 PUN/2014 dated 25.05.2016 “Claim of pro-rata deduction u/s.80IB(10) - non-completion of the few buildings -Held that- We find the assessee in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of "Harshad Constructions". During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed in appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed. No infirmity in the order of the CIT(A) granting pro-rata deduction to the assessee in respect of Buildings B and C which were completed. We find the Pune Bench of the Tribunal in the case of M/s. Kumar Company [2016 (2) TMI 231 - ITAT PUNE] while deciding identical issue had allowed the claim of pro-rata deduction wherein held AO cannot reject the claim of deduction u/s. 80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO to allow pro-rata deduction claimed u/s.80IB(10) - Decided in favour of assessee.” In above case, though approval was for three buildings being A to C, but Assessee has submitted the completion certificate only for building - B and C and even building - A was never constructed and still Hon'ble ITAT has allowed deduction to Appellant. ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 15 - (iii) Hon'ble Pune ITAT in case of SatyanarayanRamswarup Agarwal in ITA No. 807/PN/2014 dated 21.03.2016 “16. The third aspect of the issue is non-completion of housing project before stipulated date. This issue was also considered by the Tribunal vide paras 8 to 8.2 and the assessee was held to be entitled to pro-rata deduction under section 801 B(10) of the Act. The relevant findings of the Tribunal, read asunder: “8. The next issue is with regard to non-completion of housing project. The Assessing Officer stated that the assessee has commenced the construction of third building in the year 2010- 11 and it clearly shows that the assessee has not completed the housing project within prescribed four years from the date of first approval of housing project. The Assessing Officer observed that if at all the assessee wanted he could have completed the total housing project except the so called 189 sq. mtrs. of land under road widening. The action of assessee proves that he had partially completed the construction of building and carried out on the same till 2010-11 by which, it is proved beyond doubt that he had not completed housing project within the prescribed period of four years. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) granted relief to the assessee on this account as well. The same has been opposed before us on behalf of revenue. On the other hand, the learned Authorized Representative has supported the order of CIT(A) on the issue. 8.1 After going through the rival submissions and material on record, we find that the issue before us is with regard to prorata deduction u/s.80IB(10). On the issue of prorata deduction, the ITAT Pune Bench has allowed prorata deduction u/s.80IB(10) in the case of Ramsukh Properties Vs. DCIT, Circle 1, Pune in ITA No.84/PN/2011 vide its order dated 25.07.2012. For the convenience, the relevant portion of the order reads as under: “We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used along with the word completion. This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 16 - reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too/ has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing statute should be construed harmoniously with the object of statute to effectuate the legislative intention. In view of above facts and circumstances, we hold that assessee is entitled for benefit u/s 80IB(10) of the Act in respect of 173 flats completed before prescribed limit. The Assessing Officer is directed accordingly." 8.2 In view of above, it is clear that assessee received approval for C building from PMC vide certificate dated 03.02.2005 but work on C building could not start since additional FSI in lieu of road widening was not received from PMC. The assessee could not plan the work for C building since engineers and architects could not design the structure of building in the absence of FSI. The details of follow up done by assessee with PMC have been duly appreciated by CIT(A). The legislative intent read that the clear provisions of the requisite section, do not permit any proportionate deduction u/s. 80IB(10) of Act. However, in view of the decision in Ramsukh Properties (supra) as discussed above, the CIT(A) rightly allowed the proportionate deduction in respect of project completed during the impugned assessment year. The provisions of taxing statute should be construed harmoniously with the object of statute to effectuate the legislative intention. Under the circumstances, proportionate deduction u/s.80IB(10) of the Act is justified. Accordingly, the order of CIT(A) on this issue needs no interference from our side. We uphold the same.” 17. In view of categorical finding of the Tribunal that where the project in respect of buildings ‘A’ and ‘B’ has been completed by 31.03.2009 and where non-completion of building ‘C' was beyond the control of assessee, since it had not received FSI within stipulated period, we find no merit in the orders of authorities below in denying deduction under section 80IB(10) of the Act to the assessee for prorata ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 17 - units completed by the assessee before stipulated date. The issue in this regard is settled by various decisions of the High Courts including the decision of Hon’ble Bombay High Court in CIT Vs. Vandana Properties reported in 353 ITR 36 (Bom), wherein it has been held that the developer is entitled to prorata deduction under section 80IB(10) of the Act on the completed units. (iv) Hon'ble Pune ITAT in case of M/s Varun Developers in ITA No. 1624/PN/2011 dated 22.03.2013 In view of detailed discussion made herein above and the contention of AO that BU permission was not received by Appellant within prescribed period for all the blocks for which approval was given are already discussed by various Courts and AO has not brought any other contrary decision on record nor stated as to how decision relied upon by Appellant in Assessment Proceedings are not applicable to its facts, following the ratio laid down by various Courts, it is held that Appellant has rightly claimed deduction under Section 80-18(10) on project PMC in return of income. The AO is directed to delete the addition made in Assessment Order. In nutshell, Appellant is entitled for deduction under Section 80-18(10) for Rs. 20,85,60,286/-. The ground no. 1 & 2 have overlapping as far as issues are concerned. The first issue raised is to allow the deduction us. 8018(10) stands disposed off in favour of appellant. Hence, this issue raised in ground no. 1 & 2 is allowed. The AO is directed to issue revised demand notice after allowing deduction u/s 80IB (10). 5. The Second issue in ground no. 1 & 2 is relating to the claim of the appellant that their submission has not been considered while passing the impugned assessment order. The facts in assessment order have been perused wherein the explanation of appellant has been fully considered. There may be error of judgment in the eyes of higher appellate authority but the decision taken by the AO was correct as per his understanding of the facts. Therefore, one cannot conclude that the version submitted by the appellant has not been considered. Such contention is found without any basis. Therefore, the second issue raised in ground no. 1 & 2 is hereby dismissed. 5. In the results, the appeal is partly allowed.” ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 18 - 5. The Department is in appeal before us against the aforesaid order passed by Ld. CIT(A) granting relief to the assessee. 6. Before us, the argument of the Ld. D.R. were that so far as the POR Project is concerned, it was submitted that the letter dated 30.03.2007 issued by GUDA is not an approval letter but only an acknowledgement that the assessee has made application for approval of Project POR. It was submitted that the approval of the assessee was subject to furnishing of necessary documents like approved layout plan, key plan, building plan, etc. Therefore, it is clear that this letter cannot be treated as permission for development of Project POR. Further, it was submitted that GUDA had granted permission for development vide Certificate dated 27.10.2010 and it can be seen that the said Certificate had issued in prescribed format as per Rule 10 which is quite different from the letter issued on 30.03.2007. Further, the Ld. D.R. submitted that GUDA had furnished reply of the Assessing Officer in response notice under Section 143(6) of the Act related to POR Project. On perusal of the reply, it is seen that GUDA had provided the copy of permission for Development Certificate 27.10.2010. However, there is no mention of alleged approval letter dated 30.03.2007, which shows that the letter dated 30.03.2007 was not a Permission Certificate for development but simply a letter of acknowledgement of application filed by the assessee. With regard to the PMC Project, it was submitted that on perusal of the BU Permission letter, it is also seen that the AUDA had granted BU Permission for completed 349 Units. It is an undisputed fact that the assessee completed only 349 Units before 31.03.2012 as against original approval for 396 residential Units which was given on 30.03.2007. Therefore, the Assessing Officer was correct in holding that the entire project was not completed within prescribed time limit i.e. ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 19 - 3.103.2012 i.e. five years from the end of the Financial Year in which the housing project was first approved. The Ld. D.R. also placed on record certain judicial precedents in support of its contention. 7. In response, Ld. Counsel for the assessee submitted that firstly the Department has allowed deduction under Section 80(IB)(10) in assessee’s own case for A.Y. 2012-13 on identical set of facts. It was submitted that though the PCIT had initiated 263 proceedings against the aforesaid order passed by Ld. AO for A.Y. 2012-13 however, the ITAT vide order dated 25.10.2019 in ITA No. 900/Ahd/2017 quashed the order under Section 263 passed by the Ld. PCIT. It was submitted that the issue of disallowance under Section 80(IB)(10) is covered by the judgment of Hon’ble Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. 123 ITR 669 (Guj.), which has laid down the proposition that if relief is granted in the earlier year then the same cannot be denied in the subsequent years, without their being any change in facts. Further, it was submitted that Ld. CIT(A) has correctly observed that from the facts placed on record it is evident that vide letter dated 30.03.2007, Gandhinagar Urban Development Authority (GUDA) had granted permission in respect of assessee’s application filed for development. It was submitted that Ld. CIT(A) has correctly observed that in the approval letter it is not mentioned that the approval has not been given to the assessee and further it has not been mentioned that permission will be granted to the assessee, when it submits approved layout plan, key plan and building plan. Further, the Ld. CIT has also correctly observed that from the perusal of letter dated 27.10.2010, the GUDA has specifically mentioned that in-principle approval in respect of POR Project has been granted vide letter dated 30.03.2007. Further, the Ld. CIT(A) has also correctly observed that vide ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 20 - letter dated 12.06.2017 from GUDA Authority which was submitted by the assessee during the course of assessment proceedings vide letter dated 30.10.2017, GUDA Authority has specifically stated that the approval of the Project was taken by the assessee on 30.03.2007. Accordingly, all documents furnished by the GUDA consistently pointed out to the fact that the approval by the assessee was obtained on 30.03.2007. Further, the Ld. CIT(A) has also correctly observed that the provisions of Section 80(IB)(10) of the Act clearly provides that when approval of the Housing Project is approved more than once, such Housing Project shall be deemed to be have approved on the date on which the building plan of such Housing Project is first approved by the local authority, which in the present case is 30.03.2007. Accordingly, Ld. CIT(A) in the instant facts has correctly allowed the appeal of the assessee with respect to the POR Project. 8. Before going to the specific facts of the POR & PMC Projects, we shall first adjudicate on the issue deduction under Section 80(IB)(10) of the Act with respect to these two Projects. The issue for consideration before us is that when the Assessing Officer, on identical set of facts has granted deduction under Section 80(IB)(10) of the Act with respect to the aforesaid projects, can the approval be withdrawn in the subsequent years, without pointing out to any change in facts. We observe that in the case of Saurashtra Cement & Chemical Industries Ltd. 123 ITR 669 (Guj.) the Hon’ble Gujarat High Court has held that in respect of income from newly established industrial undertakings, the assessee’s claim under Section 80J for the subsequent year cannot be rejected when such claim has been accepted in the earlier assessment years, but not withdrawn. Again, in the case of PCIT vs. Maps Enzymes Ltd. 111 taxmann.com 73 (Guj.), the Gujarat High Court held that where ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 21 - Assessing Officer rejected the assessee’s claim for deduction under Section 80JJA on the ground that the business of assessee was commenced in A.Y. 2000-01 and thus, prescribed period of five years had expired, in view of the fact that assessee was allowed deduction under Section 80JJA in A.Y. 2004- 05, and thus, A.Y. 2008-09 was a fifth and final year, impugned order was to be set-aside and assessee’s claim was to be allowed. In the case of Simple Food Products Pvt. Ltd. 84 taxmann.com 239, the Bombay High Court held that where deduction under section 80-IB of the Act was granted for an initial assessment year, same could not be rejected for subsequent assessment years unless relief for initial year was withdrawn. Accordingly, in view of the above judicial precedents, in our considered view, when the deduction under Section 80(IB)(10) of the Act was allowed to the assessee in the initial assessment year i.e. A.Y. 2012-13, then unless the said deduction is withdrawn, deduction under Section 80(IB)(10) of the Act cannot be withdrawn on identical set of facts. Secondly, on the facts placed on record before us, and letter issued by GUDA, it is seen that the GUDA has in all the letters issued on various dates, maintained its position that in-principal approval in respect of POR Project was granted to the assessee on 30.30.2007. While allowing deduction under Section 80(IB)(10) of the Act, in respect of POR residency, Ld. CIT(A) has taken note of this fact while allowing the assessee’s appeal. During the course of arguments before us, the Ld. D.R. has not brought forth any substantive evidence to dispute or disprove the factual findings made by the Ld. CIT(A) on this issue, which are to the effect that the approval with respect to POR Project was granted to the assessee on 30.03.2007. Further, Ld. CIT(A) has also observed that in view of the provisions of Section 80(IB)(10) of the Act, when the approval 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 ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 22 - building plan of such Housing Project is first approved by local authorities, which in the present case is 30.03.2007. Accordingly, in view of the above facts, we are of the considered view that the Ld. CIT(A) has not erred in facts and in law in holding that the assessee was eligible for deduction under Section 80(IB)(10) of the Act with respect to POR Project. 9. Now we shall come to the facts of the PMC Project, wherein the issue for consideration before is this that the BU Permission was obtained in respect of only 349 Units out of a total of 376 Units and therefore, can the assessee be allowed to take benefit of deduction under Section under Section 80(IB)(10) of the Act only with respect to the Units which have been completed, or whether the entire claim of deduction under Section 80(IB)(10) of the Act has to be denied to the assessee with respect to PMC Project. We observe that in the case of ITO vs. Saket Corporation 62 taxmann.com 38 , the Gujarat High Court held that where assessee had completed construction of its entire Housing Project and applied for BU Permission / Completion Certificate within prescribed time limit, it would be entitled to deduction under Section 80(IB)(10) notwithstanding the fact the it could not receive permission for its entire project. In the present case, the Ld. CIT(A) has given a specific finding that the assessee had obtained BU Permission subsequently for remaining three blocks as well, however, no deduction under Section 80(IB)(10) of the Act was claimed with respect to the aforesaid three blocks. Further, with respect to the claim of proportionate deduction only with respect those Units for which BU permission had been received, the Pune ITAT in the case of M/s. Sai Siddhi Atul in ITA No. 2420/PN/2016 vide order dated 15.11.2018 has made the following important observations:- ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 23 - “6. In so far as first issue is concerned a perusal of assessment order shows that the assessee has developed housing project with three Wings A, B and C. The housing project was approved on 30-03-2007. As per the provisions of section 80IB(10)(a)(iii) the project should have been completed on or before 31-03-2012. During scrutiny assessment proceedings the assessee furnished part completion certificate issued by the local authority on 31-03-2012 in respect of Wings A and B and commercial units. The assessee could not produce completion certificate in respect of Wing C. The Assessing Officer disallowed assessee’s entire claim of deduction u/s. 80IB(10) of the Act. However, the Commissioner of Income Tax (Appeals) following various judicial rulings of the Hon’ble High Courts and the Tribunal allowed pro-rata deduction in respect of completed unit to the assessee. 7. The allowability of proportionate deduction u/s. 80IB(10) in respect of completed units is no more res integra. The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Brahma Associates reported as 333 ITR 289, Commissioner of Income Tax Vs. Vandana Properties (supra), the Hon’ble Madras High Court in the case of Commissioner of Income Tax Vs. Arun Excello Foundations (P) Ltd. reported as 259 CTR 362 have approved allowing of proportionate deduction u/s. 80IB(10) in respect of completed eligible units. The Tribunal in catena of orders have been consistently allowing proportionate deduction u/s. 80IB(10) in respect of units which are complete in every respect in consonance with the conditions set out u/s. 80IB(10) of the Act. The ld. DR has not brought to our knowledge any contrary decision of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals) in allowing pro-rata deduction to the assessee in respect of completed residential units. Accordingly, ground Nos. 2 and 3 of the appeal by the Revenue are dismissed being devoid of any merit.” 10. Further, the Ld. CIT(A) has also cited various decisions which have held that the assessee is eligible for claim of pro-rata deduction under Section 80(IB)(10) of the Act. In the case of Models Construction Pvt. Ltd. 124 taxmann.com 513 (Bombay), the High Court held that pro-rata deduction can be granted under Section 80(IB)(10) of the Act. In the case of Sreevatsa Real Estates Pvt. Ltd 42 taxmann.com 329 (Madras), the High Court held that where assessee engaged in property development claimed deduction under section 80-IB(10), Tribunal rightly concluded that assessee was entitled to pro rata deduction in respect of units which had built up area of less than 1500 sq. ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 24 - ft. and, thus, there could be no disallowance of entire claim if built area of some of units exceeded 1500 sq. ft. In the case of Arun Excello Foundations (P.) Ltd. 29 taxmann.com 149 (Madras), the High Court held that where housing project has both commercial and residential units, proportionate deduction, to extent of compliance of provisions under section 80-IB(10), is allowable. In the case of Harshvardhan Constructions 117 taxmann.com 818 (Mumbai - Trib.), the ITAT held that within a composite housing project, where there are eligible and ineligible units, assessee can claim proportionate deduction in respect of eligible units. In the case of Paras Builders 58 taxmann.com 286 (Pune - Trib.), the ITAT held that where assessee had violated provisions of section 80-IB(10)(C) in respect of two units of housing project, denial of deduction under section 80-IB would be limited only to said two units and for balance units assessee would be entitled to deduction. 11. In view of the facts of the instant case and judicial precedents on the subject cited above, we are of the considered view that the assessee is eligible to claim deduction under Section 80-IB(10) of the Act with respect to those blocks, where BU Permission was obtained since the same were separate and distinguishable from those blocks for which BU Permission was not obtained. Accordingly, in our considered view the fact that assessee could not obtain BU Permission with respect to 27 Units comprising of three blocks, out of total of 276 Units, and had obtained BU Permission with respect to 349 Units, the assessee cannot be denied claim of deduction under Section 80-IB(10) with respect to the entire PMC Project. The assessee, in our considered view is eligible for claim of deduction under Section 80-IB(10) of the Act with respect to those Units for which BU Permission has been obtained. ITA Nos. 27&28/Ahd/2020 DCIT vs. Parshwanath Corporation Asst. Years –2013-14 & 2014-15 - 25 - 12. In the result, in light of the above, the appeal of the Department is dismissed for A.Y. 2013-14. 13. We observe that the facts of A.Y. 2014-15 are identical to facts of A.Y. 2013-14, and accordingly, the appeal of the Department is also dismissed for A.Y. 2014-15. 14. In the combined result, the appeal of the Department is dismissed for both the years under consideration. This Order pronounced in Open Court on 18/10/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 18/10/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 13.10.2023 2. Date on which the typed draft is placed before the Dictating Member 16.10.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 16.10.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .10.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 18 .10.2023 7. Date on which the file goes to the Bench Clerk 18 .10.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................
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