M/s. Trident Properties, CHENNAI V. ITO, Coimbatore

ITA 3138/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7620 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Competent authority

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3138/MDS/2016 * +* / ASSESSMENT YEAR : 2012-13 M/S TRIDENT PROPERTIES, C/O SHRI S. SRIDHAR, SHRI A.S. SRIRAMAN, ADVOCATES, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AAEFT 8389 H V. THE INCOME TAX OFFICER, NON-CORPORATE WARD 1(1), COIMBATORE. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT ' 1 3& / DATE OF HEARING : 30.01.2017 45+ 1 3& / DATE OF PRONOUNCEMENT : 09.03.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, COIMBAT ORE, DATED 30.09.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.3138/MDS/16 2. THE ONLY DISPUTE IS WITH REGARD TO DEDUCTION CLA IMED BY THE ASSESSEE UNDER SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 8 0-IB(10) OF THE ACT IN RESPECT OF HOUSING PROJECT. THE ASSESSING O FFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE THE COMPLETION CERTIFICA TE AFTER CONSTRUCTION. ACCORDING TO THE LD. COUNSEL, THE AS SESSEE GOT APPROVAL FOR CONSTRUCTION OF THREE BLOCKS IN THE SU BJECT LAND. THE ASSESSEE COMPLETED TWO BLOCKS, NAMELY, A & C. DUE TO NON- AVAILABILITY OF SERVICE ROAD, THE ASSESSEE COULD NO T COMPLETE B- BLOCK. ACCORDING TO THE LD. COUNSEL, THERE WAS ENC ROACHMENT ON THE MAIN ROAD. THE CORPORATION AND THE HIGHWAYS AU THORITIES COULD NOT EVICT THE ENCROACHERS. THE ENCROACHERS WERE RE MOVED AND EVICTED ONLY IN AUGUST, 2013. THEREFORE, THE ASSES SEE COULD NOT COMPLETE THE PROJECT IN RESPECT OF B-BLOCK. THE CO NSTRUCTION OF THE PROJECT WAS STALLED FOR YEARS TOGETHER. WHEN THE A SSESSEE APPROACHED THE CORPORATION FOR COMPLETION CERTIFICA TE, ACCORDING TO THE LD. COUNSEL, THE CORPORATION AUTHORITIES INFORM ED THE ASSESSEE 3 I.T.A. NO.3138/MDS/16 THAT THEY HAVE DECIDED NOT TO GIVE COMPLETION CERTI FICATE AS A MATTER OF POLICY. 4. REFERRING TO THE COPY OF THE RESOLUTION SAID TO BE PASSED BY THE COIMBATORE MUNICIPALITY ON 13.06.2011, THE LD.C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CORPORATION CANCELLED I TS EARLIER PROCEDURE OF GRANTING COMPLETION CERTIFICATE. SINC E THE CORPORATION CANCELLED ITS PROCEDURE OF GRANTING COMPLETION CERT IFICATE, THE ASSESSEE CANNOT BE BLAMED FOR NOT PRODUCING THE COM PLETION CERTIFICATE. PLACING RELIANCE ON THE JUDGMENT OF A PEX COURT IN CIT V. VEENA DEVELOPERS (2015) 277 CTR 297, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE COULD NOT EXPECTED TO PERFORM AN IMPOSSIBLE CONDITION. THEREFORE, ACCORDING TO THE LD. COUNSEL , THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORD ER OF THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE OBTAINE D APPROVAL FOR THREE BLOCKS, NAMELY, A, B & C. ADMITTEDLY, THE AS SESSEE CONSTRUCTED ONLY A & C BLOCKS. B-BLOCK WAS NOT CON STRUCTED BY THE ASSESSEE. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THAT IT WAS IMPOSSIBLE TO CONSTRUCT THE B-BLOCK SINCE THE S ERVICE ROAD WAS 4 I.T.A. NO.3138/MDS/16 NOT PROVIDED BY THE CORPORATION AND HIGHWAYS AUTHOR ITIES DUE TO ENCROACHMENT. REFERRING TO CBDT CIRCULAR, THE LD. D.R. SUBMITTED THAT FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SE CTION 80-IB(10) OF THE ACT, THE ASSESSEE HAS TO COMPLETE THE HOUSIN G PROJECT WITHIN FOUR YEARS FROM THE FINANCIAL YEAR IN WHICH HOUSING PROJECT WAS APPROVED BY LOCAL AUTHORITY. IN THIS CASE, THE ASS ESSEE OBTAINED PLANNING PERMISSION FOR CONSTRUCTION OF THREE BLOCK S. HOWEVER, THE ASSESSEE COULD NOT COMPLETE B-BLOCK. SINCE THE ASS ESSEE COULD NOT COMPLETE ONE BLOCK WITHIN THE DUE DATE, ACCORDI NG TO THE LD. D.R., THE ASSESSEE CANNOT CLAIM ANY DEDUCTION UNDER SECTION 80- IB(10) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE HOUSING PROJECT WAS APPROVED BY THE COMPETENT AUTHO RITY FOR CONSTRUCTION OF THREE BLOCKS, NAMELY, A, B & C. IT IS NOT IN DISPUTE THAT THE ASSESSEE COMPLETED A & C BLOCKS. DUE TO O BSTRUCTION ON THE SERVICE ROAD BY ENCROACHERS, THE ASSESSEE COULD NOT COMPLETE B-BLOCK. IT IS ALSO NOT IN DISPUTE THAT ENCROACHER S WERE EVICTED IN AUGUST, 2013 BY THE CORPORATION AND HIGHWAYS AUTHOR ITIES. NO DOUBT, FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 80- 5 I.T.A. NO.3138/MDS/16 IB(10) OF THE ACT, THE ASSESSEE HAS TO COMPLETE THE PROJECT AS PER THE APPROVED PLAN. 6. NOW THE QUESTION ARISES FOR CONSIDERATION IS WHE N THE ASSESSEE COULD NOT COMPLETE THE PROJECT DUE TO ENCR OACHMENT IN THE SERVICE ROAD AND THE CORPORATION AND HIGHWAYS A UTHORITIES COULD NOT EVICT THEM WITHIN APPROPRIATE TIME, CAN T HE BENEFITS PROVIDED UNDER SECTION 80-IB(10) OF THE ACT BE DENI ED? IN SOMEWHAT SIMILAR MATTER, WHILE GRANTING DEDUCTION U NDER SECTION 80-IB(10) OF THE ACT, THE MADRAS HIGH COURT FOUND T HAT WHEN THE ASSESSEE EXCEEDED THE PLINTH AREA IN RESPECT OF SOM E OF THE RESIDENTIAL UNITS, THE ASSESSEE IS ELIGIBLE FOR PRO PORTIONATE DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT IN RESPECT OF TH E RESIDENTIAL UNITS WHICH ARE LESS THAN 1500 SQ.FT. THIS CONCEPT EMPLO YED BY THE MADRAS HIGH COURT IN RESPECT OF RESIDENTIAL UNITS, WHICH EXCEED 1500 SQ.FT., CAN ALSO BE EXTENDED TO THE ASSESSEE W HEN THE ASSESSEE COULD NOT COMPLETE B-BLOCK FOR THE ADMITTE D REASON THAT ENCROACHERS COULD NOT BE EVICTED BY CORPORATION OF COIMBATORE AND HIGHWAYS AUTHORITIES. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT REJECTION OF THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE COULD NOT COMPLETE B-BLOCK, AS PER AP PROVED PLAN, 6 I.T.A. NO.3138/MDS/16 COULD NOT BE A REASON FOR REFUSING THE DEDUCTION UN DER SECTION 80- IB(10) OF THE ACT. THE ASSESSEE IS ENTITLED FOR DE DUCTION ON PROPORTIONATE BASIS IN RESPECT OF BLOCKS A & C. 6. NOW COMING TO PRODUCTION OF COMPLETION CERTIFICA TE, AS A MATTER OF POLICY, THE COIMBATORE CORPORATION HAS DE CIDED NOT TO GRANT COMPLETION CERTIFICATE. THE TRANSLATED PORTI ON OF THE RESOLUTION SAID TO BE PASSED BY CORPORATION OF COIM BATORE READS AS FOLLOWS:- SUBJECT NO.19 TO REGULATE BUILDINGS CONSTRUCTED WITHOUT APPROVA L, IMPLEMENT RULES TO RESTRICT THE CONSTRUCTION OF BUI LDING WITH DEVIATIONS, AFTER COMPLETION OF CONSTRUCTION OF BUI LDING, TO PROVIDE THE CONSTRUCTION COMPLETION CERTIFICATE AND TO IMPLEMENT THE USAGE OF NEWLY CONSTRUCTED BUILDING, THE COMMISSIONER OF CORPORATION ISSUED ORDER FOR THE CORPORATION NO.4207/2011/MH5 ON 10.05.2011. THE CORPORATION ISSUES THE BUILDING APPROVAL ON THE BASI S ON THE BUILDING COMPLETION REPORT RECEIVED EITHER OWNER OR THE ENGINEERING WHO CONSTRUCTED THE BUILDING, ASSURING T HAT THE BUILDING WAS DULY CONSTRUCTED ACCORDING TO THE REGU LATIONS GIVEN BY THE CORPORATION. IN RECEIPT OF BUILDING AP PROVAL FROM THE CORPORATION ONLY OWNER IS LIABLE TO LEVY P ROPERTY TAX, WATER, DRAINAGE AND ELECTRICITY. IN IMPLEMENTATION THERE ARE SOME PRACTICAL PROBLE MS, HENCE IN NORMAL CORPORATION COUNCIL MEETING HELD ON 13.06.2011, ALL MEMBERS OF THE COUNCIL WHOLE HEARTEDLY REQUESTED TO CANCEL THE ABOVE RESOLUTION. DECISION ON THIS SUBJECT IS HANDEDOVER TO THE CORPORATION COUNCIL. CORPORATION NO.4207/2011/MH5 7 I.T.A. NO.3138/MDS/16 CORPORATION COUNCIL RESOLUTION NO.19 DATED 13.06.2011 COMMISSIONERS IMPLEMENTATION ORDERS FOR THE CORPORATION NO.4207/2011/MH5 DATED 13.06.2011 HAS BEEN TEMPORARILY STOPPED. (SIGNATURE) R. VENKATACHALAM MAYOR COIMBATORE CORPORATION 7. IN VIEW OF THE ABOVE, THE ASSESSEE CANNOT BE BLA MED FOR NON-PRODUCTION OF COMPLETION CERTIFICATE FROM CORPO RATION OF COIMBATORE. FROM THE MATERIAL AVAILABLE ON RECORD, IT APPEARS THAT THE ASSESSEE HAS CONSTRUCTED A MULTISTORIED BUILDIN G. THEREFORE, THE ASSESSING OFFICER HAS TO EXAMINE AND FIND OUT W HO IS THE COMPETENT AUTHORITY FOR GRANTING PLANNING PERMISSIO N AND BUILDING APPROVAL UNDER TAMIL NADU TOWN AND COUNTRY PLANNING ACT, 1971. IF THE ASSESSING OFFICER FINDS THAT THE PLANNING PE RMISSION HAS TO BE OBTAINED FROM CORPORATION OF COIMBATORE, AS PER THE PROVISIONS OF TAMIL NADU TOWN AND COUNTRY PLANNING ACT AND RULES MADE THEREUNDER AND COIMBATORE MUNICIPALITY ACT, THE ASS ESSING OFFICER CANNOT FIND FAULT WITH THE ASSESSEE FOR NON-PRODUCT ION OF COMPLETION CERTIFICATE, SINCE THE CORPORATION OF COIMBATORE HA S SUSPENDED THE ISSUE OF COMPLETION CERTIFICATE AS PER THE RESOLUTI ON REPRODUCED HEREINABOVE. IF THE ASSESSING OFFICER COMES TO A C ONCLUSION AFTER 8 I.T.A. NO.3138/MDS/16 EXAMINING THE PROVISIONS OF TAMIL NADU TOWN AND COU NTRY PLANNING ACT AND RULES MADE THEREUNDER AND COIMBATORE MUNICI PALITY ACT THAT THE COMPETENT AUTHORITY FOR GRANTING APPROVAL IS OTHER THAN THE CORPORATION OF COIMBATORE, THEN AN OPPORTUNITY SHAL L BE GIVEN TO THE ASSESSEE TO PRODUCE THE COMPLETION CERTIFICATE FROM SUCH AUTHORITY WHO IS COMPETENT TO GRANT BUILDING APPROVAL AS PER THE STATUTORY PROVISIONS. 8. WITH THE ABOVE OBSERVATION, THE ORDERS OF THE AU THORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTE D BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SH ALL RE-EXAMINE THE MATTER AFRESH AS INDICATED ABOVE AND THEREAFTER DECIDE THE ISSUE, IN ACCORDANCE WITH LAW, AFTER GIVING A REASO NABLE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 9 TH MARCH, 2017. 9 I.T.A. NO.3138/MDS/16 KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-2, COIMBATORE 4. PRINCIPAL CIT-1, COIMBATORE 5. 8; /3 /DR 6. * < /GF.