ACIT, Kota V. VASTUVEDIK COLONIZERS & DEVLOPERS PVT. LTD., Kota

ITA 320/JPR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5572 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH AGARWAL CA DHK
• Keywords: Bonafide belief; Retrospective amendment; Additional evidence; Non-deduction of tax; Reasonable cause; Competent authority
• Section: 80IB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 664/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE INCOME TAX OFFICER, WARD 1(1), KOTA. CUKE VS. M/S. VASTUVEDIC COLONIZERS & DEVELOPERS PVT. LTD., 1, AERODRUM CIRCLE, CHOURAHA, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCV 9754 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 320/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA. CUKE VS. M/S. VASTUVEDIC COLONIZERS & DEVELOPERS PVT. LTD., 1, AERODRUM CIRCLE, CHOURAHA, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCV 9754 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.12.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15/02/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE ORDER OF LD. CIT (APPEALS), KOTA DATED 27.05.2015 AND 19.01.2015 PER TAINING TO ASSESSMENT YEARS 2012-13 AND 2010-11 RESPECTIVELY. SINCE COMMON ISSU ES ARE INVOLVED IN BOTH THESE APPEALS, THEREFORE, THE SAME ARE TAKEN UP TOGETHER FOR HEARING AND ARE BEING DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER, FOR TH E SAKE OF CONVENIENCE. FIRST, WE 2 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. TAKE UP REVENUES APPEAL IN ITA NO. 320/JP/2015 PER TAINING TO A.Y. 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN :- (I) DELETING THE ADDITION OF RS. 2,46,34,603/- MADE BY AO BY DISALLOWING DEDUCTION U/S 80IB OF THE INCOME TAX AC T, 1961. THE LD. CIT (A) HAS NOT APPRECIATED THE SPECIFIC AND EX PRESS PROVISIONS OF EXPLANATION (II) TO CLAUSE (A) AS WELL AS CLAUSE (F) OF SECTION 80IB(10). (II) DELETING THE ADDITION OF RS. 2,50,000/- MADE BY AO BY DISALLOWING EXPENSES U/S 40(A)(IA) OF THE ACT. THE LD. CIT (A) HAS NOT APPRECIATED THE FACT THAT THE ASSESSEE HAD FAILED T O FURNISH CERTIFICATE IN PRESCRIBED FROM THE PAYEE AS STIPULA TED IN SECTION 201 OF THE ACT AS WELL AS THE FACT THAT THE ASSESSEE FA ILED TO DEDUCT ANY TAX AT SOURCE U/S 194J. (III) DELETING THE ADDITION OF R. 33,908/- MADE BY AO BY DISALLOWING INTEREST EXPENSES U/S 40(A)(IA) OF THE INCOME TAX A CT, 1961. THE LD. CIT (A) HAS NOT APPRECIATED THE FACT THAT THERE IS NOT QUESTION OF PAYMENT OF TDS WHEN THE ASSESSEE FAILED TO DEDUCT A NY TAX AT SOURCE. (IV) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T UNDER SECTION 143(43) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 26.03.2013. THE AO WHILE FRAMING THE ASSESSM ENT, DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF RS. 2,46,34,603 /- AND ALSO DISALLOWED THE DESIGNING WORK FEE OF RS. 2,50,000/-, COMMISSION EX PENSES OF RS. 6,74,779/- AND INTEREST PAID TO TATA MOTOR FINANCE OF RS. 33,908/- . HENCE THE AO COMPUTED THE INCOME AT RS. 2,71,25,817/- AS AGAINST THE INCOME D ECLARED IN THE RETURN OF RS. 3 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. 2,61,67,130/-. THE ASSESSEE AGGRIEVED BY THE ORDER , PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS ALLO WED THE APPEAL THEREBY THE LD. CIT (A) ALLOWED THE DEDUCTION UNDER SECTION 80IB(10 ) AND ALSO DELETED THE OTHER DISALLOWANCE OF EXPENSES. AGGRIEVED BY THIS, THE R EVENUE IS IN PRESENT APPEAL. 3. GROUND NO. (I) IS AGAINST DELETING THE ADDITION OF R. 2,46,34,603/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB(10). 3.1. THE LD. D/R VEHEMENTLY ARGUED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. HE SUBMITTED THAT THE AO HAD DISALLOWED THE DEDUCTION ON THE BASIS THAT THE ASSESEE DID NOT GET COMPLETIO N CERTIFICATE FOR THE PROJECT FROM THE LOCAL AUTHORITY AND ALSO THE ASSESSEE HAD TAKEN BOOKING AND SOLD 31 FLATS OF THIS PROJECT TO THE PERSONS WHO BELONG TO THE SAME FAMIL Y. THEREFORE, THE AO WAS JUSTIFIED IN DISALLOWING THE DEDUCTION. HE SUBMITT ED THAT THE ASSESSEE COMPANY VIOLATED THE CONDITIONS AS LAID DOWN IN SECTION 80I B(10) OF THE ACT. 3.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSION. THE LD. COUNSEL SUBMITTED THAT THE ALLEGATION AGAINST THE ASSESSEE ARE THAT IT HAD NOT OBTAINED F INAL COMPLETION CERTIFICATE FROM THE UIT KOTA AND HAD VIOLATED THE PROVISIONS OF SEC TION 80IB(10)(F) OF THE ACT. IN RESPECT OF THE OBJECTION WITH REGARD TO THE COMPLET ION CERTIFICATE, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD STARTED CONSTRUCTIO N ON THE HOUSING PROJECT FROM JUNE, 2006 AND THE PROJECT WITH 13 BLOCKS WAS COMPL ETED WITHIN THE STIPULATED TIME PERIOD. IN THE RETURN OF INCOME FILED, DEDUCTION U /S 80IB(10) WAS CLAIMED ON THE FLATS SOLD DURING THE YEAR, IN ALL 13 BLOCKS OF MAH ALAXMI ENCLAVE PROJECT, THOUGH CERTAIN SALES WERE ALSO MADE IN OTHER PROJECTS ON W HICH NO DEDUCTION U/ 80IB(10) 4 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. WAS MADE. REGARDING THE ISSUE OF COMPLETION CERTIF ICATE BY UIT KOTA, AN APPLICATION FOR THE COMPLETION CERTIFICATE WAS MADE AND THE UIT KOTA GAVE A COMPLETION CERTIFICATE WITH REGARD TO 11 BLOCKS ONLY, THEREBY TWO BLOCKS, NAMELY, A5 AND A6 WERE NOT APPROVED, AND THE AUTHORITY HAD INTER ALIA LAID DOWN SPECIFIC CONDITIONS THAT (1) INSTALLATION OF SOLAR POWER AND (2) APPROVAL OF MAP FOR THE CONSTRUCTION OF COMMUNITY HALL, WHICH WAS THE CONDITION TO ISSUE CO MPLETION CERTIFICATE FOR THE ABOVE MENTIONED TWO BLOCKS. AFTER COMPLYING WITH T HE ABOVE TWO CONDITIONS, THE ASSESSEE MADE A FRESH APPLICATION TO UIT KOTA DATED 21.06.2011 FOR ISSUE OF COMPLETION CERTIFICATE, FOLLOWED BY TWO REMINDERS D ATED 18.07.2011 AND 14.11.2011. BUT NONE OF THE ABOVE WAS RESPONDED BY THE CONCERNE D AUTHORITY. THE LD. COUNSEL SUBMITTED THAT THE UIT KOTA FOLLOWS THE RULES AND R EGULATIONS OF JDA JAIPUR. AS PER PROVISIONS OF SUB-SECTION (III) OF SECTION 16 OF JD A RULES, IT IS MANDATORY THAT AFTER GIVING INTIMATION OF CONSTRUCTION WORK BEING COMPLE TED BY THE BUILDER, COMPLETION CERTIFICATE IS TO BE ISSUED WITHIN 30 DAYS FROM THE RECEIPT OF SUCH INTIMATION, AND IN CASE IT IS NOT PROVIDED BY THE COMPETENT AUTHORITY, THE APPLICANT IS TO ISSUE 15 DAYS NOTICE TO THE COMPETENT AUTHORITY AND IF COMPLETION CERTIFICATE IS NOT ISSUED BY THE COMPETENT AUTHORITY, IT SHALL BE DEEMED AS IF COMPL ETION CERTIFICATE HAS BEEN ISSUED. ON THE BASIS OF THE SPECIFIC PROVISION OF DEEMED CE RTIFICATE OF COMPLETION PROVIDED IN THE JDA RULES, IT IS SUBMITTED THAT THE ASSESSEE HA S COMPLIED WITH THE CONDITION OF SECTION 80IB(10) AND THUS, RIGHTLY CLAIMED THE DEDU CTION. THE LD. COUNSEL SUBMITTED THAT THE HOUSING PROJECT OF THE ASSESSEE WAS APPROV ED BY UIT KOTA ON 31.05.2006 AND AS PER PROVISIONS OF SECTION 80IB(10) THE PROJE CT WAS TO BE COMPLETED WITHIN 5 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE HOUSING PROJECT IS APPROVED BY 5 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. THE LOCAL AUTHORITY. THE DATE OF APPROVAL OF PROJE CT IS ADMITTED BY THE AO IN THE BODY OF ASSESSMENT ORDER. THUS THE REQUIRED DATE OF COMPLETION OF HOUSING PROJECT IS 31.03.2012 AS PER PROVISIONS OF SECTION 80IB(10) (A)(III) INSERTED BY FINANCE ACT, 2010 AND NOT 31.03.2010 AS HELD BY THE AO. THE LD. COUNSEL SUBMITTED THAT THE ASSESEE HAS DECLARED THE PROFIT OF THE HOUSING PROJ ECT BASED ON THE SALE DEEDS EXECUTED DURING THE YEAR UNDER APPEAL. THE PROFIT ON SALE OF FLATS DECLARED IN THE YEAR IN WHICH THE SAME WERE TRANSFERRED BY WAY OF S ALE WITHIN THE MEANING OF SECTION 2(47) OF THE ACT AND THUS, FOR THE ASSESSME NT PERTAINING TO THE YEAR ENDED ON 31.03.2010, HE WAS NOT REQUIRED TO SUBMIT COMPLE TION CERTIFICATE WHEN HOUSING PROJECT WAS TO BE COMPLETED BY 31.03.2012 AND COMPL ETION CERTIFICATE BY LOCAL AUTHORITY WAS TO BE ISSUED DURING THAT PERIOD. THI S VIEW IS SUPPORTED BY THE CBDT INSTRUCTION NO. 4 OF 2009 DATED 30.06.2009 WHICH WA S SUBMITTED BEFORE THE AO BUT THE SAME WAS NOT APPLIED IN ITS RIGHT PERSPECTIVE H OLDING THAT THE COMPLETION CERTIFICATE NOT FILED EVEN IN ASSESSMENT PROCEEDING S. IT IS SUBMITTED THAT THE AO IS TO SATISFY WHETHER PROJECT WAS COMPLETED IN TIME OR NOT, WHICH OF COURSE IS NOT DISPUTED BY THE AO AND IS ALSO EVIDENT FROM THE FAC T THAT THE ASSESSEE HAS MADE REPEATED REQUESTS TO UIT KOTA THAT THE CERTIFICATE OF COMPLETION OF BLOCK A5 AND A6 BE ISSUED TO THE APPLICANT AS THE CONSTRUCTION OF B LOCKS HAS BEEN COMPLETED BY THE APPLICANT. THE LD. COUNSEL SUBMITTED THAT IT IS A WELL SETTLED LAW THAT NON-SUBMISSION OF COMPLETION CERTIFICATE IS A TECHNICAL FAULT AND SHOULD NOT BE THE SOLE BASIS TO DISALLOW DEDUCTION/S 80IB(10). A BENEFICIAL PROVIS ION HAS TO BE CONSTRUED LIBERALLY, AS THE SAME ARE FOR GRANTING INCENTIVES FOR PROMOTI NG GROWTH AND DEVELOPMENT, THUS THE RESTRICTIONS TOO HAS TO BE CONSTRUED SO AS TO A DVANCE THE OBJECTIVE OF THE 6 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. PROVISIONS AND NOT TO FRUSTRATE THE SAME. THE LD. COUNSEL HAS RELIED UPON THE DECISION RENDERED IN THE CASE OF KURA HOMES P. LTD. VS. ITO, 139 ITD 445. FURTHER RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF CIT VS. TARNETAR CORPORATION, 362 ITR 174 ( GUJ.) IN SUPPORT OF THE CONDITION THAT IF SUBSTANTIAL COMPLIANCE OF THE CONDITIONS AS REQUIRED U/S 80IB(10) IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT M AY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOS E FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE. THE LD. COUNSEL SUBMITTED THAT IN T HE PRESENT CASE ADMITTEDLY THE PROJECT WAS DULY COMPLETED WITHIN THE PRESCRIBED TI ME. MERELY BECAUSE THE COMPLETION CERTIFICATE WAS NOT FURNISHED BY THE CON CERNED LOCAL AUTHORITY DESPITE APPLICATION WOULD NOT DIS-ENTITLE THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IB(10). THE LD. COUNSEL PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF GERA DEVELOPMENTS PVT. LTD. VS. JCIT PU NE IN ITA NO. 598/PN/2013. RELIANCE IS ALSO PLACED ON THE DECISION OF COORDINA TE BENCH IN THE CASE OF D.K. CONSTRUCTION VS. ACIT, 17 TTJ 1 (INDORE) IN SUPPORT OF THE CONTENTION THAT THE DATE OF COMPLETION CERTIFICATE IS NOT CRUCIAL BUT DATE O F COMPLETION IS RELEVANT. THEREFORE, HE SUPPORTED THE ORDER OF LD. CIT (A). 3.3. IN RESPECT OF THE OTHER OBJECTION, THE LD. COU NSEL REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. IT IS SUBMITTED THAT AS REGARDS THE APPLICABILITY OF THE PROVISIONS OF SECTION 80IB(10)(F) OF THE ACT, THE S AME ARE APPLICABLE ONLY WITH EFFECT FROM 01.04.2010 AND THE PERIOD INVOLVED IN THE ASSE SSMENT AND APPEAL IS 01.04.2009 TO 31.03.2010. AS SUCH THE CLAIM MADE B Y THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PROVISIONS OF SECTION 80IB(1 0)(F) OF THE IT ACT. IT IS 7 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. CONTENDED THAT EVEN IF IT IS PRESUMED THAT THE AO I S JUSTIFIED ONLY FOR 4 FLATS OF THE TOTAL FLATS OF 516 SOLD FALL UNDER CLAUSE (F), AND THESE WERE ALL BOOKED PRIOR TO INSERTION OF CLAUSE (F) WITH EFFECT FROM 01.04.2010 . THEREFORE, IT WAS CONTENDED THAT THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE DISAL LOWANCE. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSSESSING OFFICER HAD DE NIED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE ON THE GROUNDS THAT THE ASSESSEE DID NOT OBTAIN THE REQUISITE COMPLETION CERTIFICATE FROM TH E UIT KOTA AND ALSO VIOLATED THE PROVISIONS OF SECTION 80 IB(10) OF THE ACT. HOWEVE R, LD. CIT(A) WHILE ALLOWING THE DEDUCTION OBSERVED THAT THE ASSESSEE HAS 13 BLOCKS IN THIS PROJECT. THE ASSESSEE HAD APPLIED AND RECEIVED COMPLETION CERTIFICATE FOR 11 BLOCKS, HOWEVER, UIT DID NOT ISSUE COMPLETION CERTIFICATE FOR REMAINING TWO BLOC KS NAMELY A-5 AND A-6. THE ASSESSEE ISSUED VARIOUS REMINDERS ON 21.06.2011, 18 -7-2011 AND 14-11-2011. IT WAS FURTHER OBSERVED THAT OUT OF 516 UNITS, THE ASS ESSEE SOLD 15 UNITS IN F.Y 2008- 09 AND 233 UNITS IN THE CURRENT YEAR. THESE UNITS ARE SITUATED IN DIFFERENT BLOCKS AND DIFFERENT FLOORS. COPY OF REGISTERED SALE DEED WAS PLACED ON RECORD. THEREFORE, HE INFERRED THAT THE PROJECT WAS COMPLETED WHEN THE POSSESSION OF THE FLATS WAS HANDED OVER TO THE CONCERNED BUYERS. LD. CIT (A) HA S GIVEN A FINDING THAT THE ASSESSEE HAD FURNISHED SUFFICIENT EVIDENCE TO DEMON STRATE THAT THE PROJECT WAS COMPLETED BEFORE DUE DATE. IN RESPECT OF VIOLATION OF CONDITION LAID IN SECTION 80IB(10)(F), LD. CIT(A) OBSERVED THAT THE SAID PROV ISION WAS INTRODUCED IN THE STATUTE BY FINANCE ACT (NO.2) 2009 W.E.F 01-04-2010 , THEREFORE WOULD NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. 8 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. 3.4. UNDER THESE FACTS, WE NEED TO EXAMINE WHETHER LD. CIT(A) IS JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80 IB (10) OF T HE ACT. FOR AVAILING THE BENEFIT OF DEDUCTION U/S 80IB(10), THE ASSESSEE HAS TO DEMONST RATE THAT ALL THE CONDITIONS EMBODIED INTO THAT SECTION ARE FULFILLED. FOR THE SAKE OF CLARITY, SECTION 80IB(10) IS REPRODUCED AS UNDER:- 80IB(10): THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH, BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CE NT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR F ROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOP MENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST 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 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 31 ST 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 31 ST 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 APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOU SING 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 HOUS ING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PR OJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE O F WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; 9 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSI NG PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS I SSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE 9B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONS TRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETERS FROM THE MU NICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED 3 P ER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 5 THOUSAND SQUARE FEET, WHICHEVER IS HIGHER; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING P ROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING P ROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UNI T IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS, NAMELY :- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE 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 DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UN DERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AW ARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 10 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. 3.5. NOW WE NEED TO APPLY THE ABOVE CONDITIONS ON T HE FACTS OF THE PRESENT CASE. THERE IS NO DISPUTE WITH REGARD TO APPROVAL, DEVELO PMENT AND BUILDING HOUSING PROJECT. AS PER THE AO, THE ASSESSEE WAS REQUIRED TO FURNISH COMPLETION CERTIFICATE OF PROJECT FOR CLAIMING THE DEDUCTION. THE LD. CIT (A) HAS GIVEN FINDING THAT THE ASSESSEE HAS FURNISHED COMPLETION CERTIFICATE IN RE SPECT OF 11 BLOCKS OUT OF 13 BLOCKS I.E. EXCEPT BLOCK A-5 & A-6. THIS FACT IS NOT CONTROVERTED BY THE REVENUE. IN RESPECT OF REMAINING TWO BLOCKS, THE ASSESSEE HAD A PPLIED TO THE CONCERNED AUTHORITY AND SENT VARIOUS REMINDERS. IT IS OBSERVE D BY THE LD.CIT (A) THAT AS PER THE REGULATIONS GOVERNING THE ISSUANCE OF COMPLETION CE RTIFICATE, IN CASE THE ASSESSEE MAKES AN APPLICATION AND THE COMPLETION CERTIFICATE IS NOT ISSUED WITHIN 30 DAYS FROM THE RECEIPT OF SUCH APPLICATION, THE ASSESSEE WOULD GIVE A NOTICE TO THE COMPETENT AUTHORITY. AFTER EXPIRY OF 15 DAYS, IT WOULD BE DEEMED THAT COMPLETION CERTIFICATE HAS BEEN ISSUED. THIS FACT IS ALSO NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE , IN OUR CONSIDERED VIEW THE AO WAS NOT JUSTIFIED IN DECLINING THE DEDUCTION ON THI S GROUND. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF LD. CIT (A). 3.6. ANOTHER OBJECTION OF THE AO WAS THAT THE ASSES SEE HAS VIOLATED THE PROVISIONS OF SECTION 80IB(10(F). IT IS POINTED OUT BY THE LD . COUNSEL FOR THE ASSESSEE THAT THIS PROVISION CAME INTO EFFECT FROM W.E.F. 01.04.2010 W HEREAS THE FLATS WERE SOLD IN BETWEEN 01.04.2009 AND 31.03.2010. THEREFORE, THE PROVISIONS WERE NOT APPLICABLE. THE LD. CIT (A) HAS ALSO RECORDED THIS FACT IN HIS ORDER. THE FACT THAT THE PROVISIONS OF SECTION 80IB(10(F) WAS INTRODUCED IN THE STATUTE BOOK WITH EFFECT FROM 01.04.2010. THEREFORE, THE TRANSACTIONS RELATED TO PRIOR PERIOD DO NOT COME WITHIN 11 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. THE AMBIT OF NEWLY INTRODUCED PROVISION. THEREFORE , WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF LD. CIT (A) AND THE SAM E IS AFFIRMED. THIS GROUND OF THE REVENUE IS REJECTED. 4. GROUND NOS. (II) & (III) RELATE TO DELETION OF A DDITIONS OF RS. 2,50,000/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES AND RS. 33,908/ - ON ACCOUNT INTEREST EXPENSES UNDER SECTION 40(A)(IA) OF THE ACT. 4.1. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATE D THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUBMITTED THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 2,50,000/- TO MAHAK MEHTA BY DEDUCTING TDS @ 1% OF THE PAYMENT UNDER A BONAFIDE BELIEF THAT THE TDS @ 1% IS ONLY DEDUCTIBL E AS PER SEC. 194C, AND AN INTEREST PAYMENT OF RS. 33,908/- MADE TO M/S. TATA MOTOR FINANCE, WITHOUT DEDUCTING TAX. THE LD. COUNSEL SUBMITTED THAT THE LD. CIT (A) DELE TED THE DISALLOWANCE SO MADE BY THE AO, BY RELYING ON THE DECISION OF THE HONBLE A LLAHABAD HIGH COURT, IN THE CASE OF VECTOR SHIPPING SERVICES LTD., 357 ITR 642 WHERE IN IT WAS HELD THAT THE PROVISIONS OF SEC. 40(A)(IA) ARE APPLICABLE TO EXPENSES REMAIN ING PAYABLE AND NOT AMOUNT THAT ARE DULY PAID ON THE BALANCE SHEET DATE. THUS, NO D ISALLOWANCE CAN BE MADE ON THE EXPENSES WHICH DO NOT REMAIN PAYABLE ON THE LAST DA TE OF THE FINANCIAL YEAR. THE LD. CIT (A) HAS FURTHER CONTENDED THAT IN THE ABOVE CAS E SINCE THE SLP FILED BY THE DEPARTMENT WAS DISMISSED BY THE HONBLE SUPREME COU RT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE RATIO ES TABLISHED IN THE CASE OF VECTOR SHIPPING HAS BEEN RECENTLY FOLLOWED BY THE HONBLE ITAT JAIPUR BENCH IN THE CASE 12 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. OFGIRDHARI LAL BARGOTI, ITA NO. 757/JP/2012 AND TH E DECISION OF THE ITAT JAIPUR BENCH (SUPRA) HAS BEEN FOLLOWED AGAIN IN THE CASE O F M/S. CHOUDHARY YATRA COMPANY (P) LTD. VS. ACIT IN ITA NO. 177/JP/2016 DA TED 05.09.2016. BASED ON ABOVE, IT IS SUBMITTED THAT THE RATIO OF THE ABOVE CASES FULLY APPLY TO THE PRESENT CASE AND THE CONSULTANCY CHARGES PAID TO MAHAK MEHT A AND INTEREST PAID TO TATA MOTOR FINANCE, SINCE THE SAME WERE DULY PAID BEFORE THE END OF THE RELEVANT FINANCIAL YEAR. HENCE PROVISIONS OF SECTION 40(A)(I A) ARE NOT APPLICABLE TO THE ABOVE AMOUNTS, AND THUS DISALLOWANCES MADE THEREUNDER DES ERVES TO BE DELETED, AND ARE RIGHTLY HELD SO, BY THE LD. CIT (A), AND THUS PRAYS THAT THE SAME MAY KINDLY BE ACCEPTED. THE LD. COUNSEL FURTHER SUBMITTED THAT IN THE CASE OF MAHAK MEHTA, IT IS NOT A CASE OF NON-DEDUCTION OF TAX, AS TAX HAS BEEN DEDUCTED FROM THE PAYMENT MADE, BUT AT A LOWER RATE THAN APPLICABLE. THUS, THE PROVISIONS OF SECTION.40(A)(IA) ARE NOT ATTRACTED, AND THE DISALLOWANCE MADE BY THE LD. AO HAS BEEN RIGHTLY DELETED BY THE LD. CIT (A). THIS CONTENTION OF THE ASSESSEE GETS SUPPORT FROM THE FOLLOWING CASES : DCIT VS. S.K. TEKRIWAL ( 46 TAXMANN.COM 444 (KOL. ) ACIT VS. M/S. M.C. SHARMA & ASSOCIATES (ITA NO. 1 028/JP/2011). THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS FIL ED THE COPIES OF ITR AND COMPUTATION OF INCOME SHOWING THE CONSULTANCY CHARG ES RECEIVED FROM THE ASSESSEE AND THE TAX PAID ON IT. THUS IN THIS CASE, LOW DEDU CTION OF TAX BY THE ASSESSEE HAS NOT LEAD TO ANY LOSS TO THE REVENUE, IN SO FAR AS T HE PAYEE HAS PAID FULL TAX ON THE SAID RECEIPT. 13 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. IN CASE OF M/S. TATA MOTOR FINANCE, THE LD. COUNSEL SUBMITTED THAT IT IS A CONCERN WORKING ON NATIONAL LEVEL AND NOT A CASE OF SMALL A SSESSEE INDULGING IN TAX EVASION. IT IS UNDOUBTEDLY ASSESSED TO INCOME TAX. THEREFOR E, THE INTEREST PAID BY THE ASSESSEE IS AUTOMATICALLY SUBJECT TO TAX. THE MAIN PURPOSE FOR BRINGING THE PROVISION ON THE STATUTE BOOK WAS TO PLUG THE LOOP HOLE IN TH E TAX EVASION IN CASES WHERE INTEREST INCOME WAS NOT DISCLOSED TO THE DEPARTMENT . BUT THIS IS NOT SO IN THE CASE OF ASSESSEE. THE LD. COUNSEL SUBMITTED THAT THE INTENTION BEHIND THE INSERTION OF PROVISION OF SECTION 40(A)(IA) WAS TO BROUGHT THOSE PERSONS IN T HE TAX NET IN WHOSE CASE NO TDS IS DEDUCTED THOUGH THEY ARE ENJOYING THE TAXABLE IN COME THUS WHERE THE PAYEE HAS ALREADY PAID THE DUE TAXES ON THE PAYMENTS ON WHICH NO TDS IS DEDUCTED BY PAYER, THERE REMAINED NO REASON TO MAKE DISALLOWANCE IN TH E HANDS OF THE PAYER. THE HONBLE APEX COURT IN THE CASE OF CIT (CENTRAL-I) D ELHI VS.VATIKA TOWNSHIP PVT. LTD. REPORTED IN 367 ITR 466 HAS HELD THAT THE BENEFICI AL AMENDMENT WHICH EFFECT THE PUBLIC GENERALLY AND WHERE TO CONFER SUCH BENEFIT A PPEARS TO HAVE BEEN THE LEGISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE T HAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVE N RETROSPECTIVE EFFECT. RECENTLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. REPORTED IN 234 TAXMAN 825 HAS HELD THAT THE S ECOND PROVISION TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE AND IT HAS RE TROSPECTIVE EFFECT FROM 01.04.2005. FURTHER, THE HONBLE AGRA BENCH OF ITAT IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ADDL. CIT REPORTED IN 149ITD 363 HELD AS UNDER :- 14 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. SECOND PROVISO ASSESSMENT YEAR 2006-07 WHETHER INSERTION OF SECOND PROVISO TO SECTION40(A)(IA) WITH EFFECT FROM 01.04.2013 IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETRO SPECTIVE EFFECT FROM 01.04.2005, BEING DATE FROM WHICH SUB-CLAUSE (IA) O F SECTION 40(A) WAS INSERTED BY FINANCE (NO. 2) ACT, 2004 HELD, YES. THUS, THE PROVISO INSERTED IN SECTION 40(A)(IA) W.E .F. 01.04.2012 IS CURATIVE AND REMEDIAL IN NATURE AS IT GOES WITH THE SPIRITOFTHE GOVERNMENT THAT NO DOUBLE TAX SHOULD BE CHARGED ON SAME INCOME AND HENCE THE SAME IS APPLICABLE RETROSPECTIVELY W.E.F. ASSTT. YEAR 2005-06 WHEN THE SUB SECTION (IA) WAS INSERTED IN SECTION 40(A) OF THE INCOME TAX ACT, 1961. SUCH VI EW HAS BEEN UPHELD BY THE HONBLE SUPREME COURT ALSO. THEREFORE, THE SAID PRO VISO MAY KINDLY BE TAKEN TO BE APPLICABLE FOR THE YEAR UNDER CONSIDERATION ALSO AN D THE DISALLOWANCE SO MADE MAY KINDLY BE DELETED, AS ONE CAN SAFELY PRESUME THAT T HE CONDITION STIPULATED IN THE SECTION NAMELY (I) HAS FURNISHED HIS RETURN OF INCO ME UNDER SECTION139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED B Y HIM IN SUCH RETURN OF INCOME, STAND FULFILLED IN BOTH THE CASES. IN VIEW OF THIS THE ASSESSEE IS NOT AT DEFAULT AND THEREFORE PROVISIONS OF SECTION 40(A)(IA) ARE NOT A PPLICABLE. IN VIEW OF THE ABOVE, THE LD. COUNSEL SUBMITTED THA T THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE PAYMENT OF INTEREST U/ S 40(A)(IA). THE ADDITION MADE HAS BEEN RIGHTLY DELETED BY THE LD. CIT (A), AND PRAYS THAT THE SAME MAY KINDLY BE UPHELD. 4.2. ON THE CONTRARY, THE LD. D/R OPPOSED THE SUBMI SSIONS. 15 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. 4.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. WE FIND THAT THE LD. CIT (A) HAS DELETED THE ADDITION BY TAKING INTO CONSIDERATI ON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES LTD., 357 ITR 642 (ALL.). IT IS ALSO OBSERVED THAT THE RATIO OF JUDGMENT OF T HE HONBLE ALLAHABAD HIGH COURT (SUPRA) HAS ALSO BEEN FOLLOWED BY THE COORDINATE BE NCH OF THE TRIBUNAL IN THE CASES OF GIRDHARI LAL BARGOTI (ITA NO. 757/JP/2012) AND M /S. CHOUDHARY YATRA COMPANY (P) LTD. VS. ACIT (ITA NO. 177/JP/2016) THEREBY ALL OWING THE CLAIM OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO REASON TO INTERFERE INTO THE ORDER OF LD. CIT (A), THE SAME I S AFFIRMED. THE GROUNDS OF THE REVENUE ARE REJECTED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 6. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 664/JP/2015 FOR ASSESSMENT YEAR 2012-13. THE GROUNDS RAISED IN THI S APPEAL ARE AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN (I) DELETING THE ADDITION OF RS. 1,51,67,115/- MADE BY AO BY DISALLOWING DEDUCTION U/S 80IB OF THE INCOME TAX AC T, 1961. THE LD. CIT (A) HAS NOT APPRECIATED THE SPECIFIC AN D EXPRESS PROVISIONS OF EXPLANATION (II) TO CLAUSE (A) OF SEC TION 80IB(10) AS WELL AS CLAUSE (F) OF SECTION 80IB(10) OF THE ACT; (II) ADMITTING REPORT U/S 10CCB AS ADDITIONAL EVIDENCE W ITHOUT REASONABLE CAUSE BY IGNORING THE FACT THAT REPORT W AS NEVER PRODUCED WITH RETURN OF INCOME OR DURING ASSESSMENT PROCEEDINGS BEFORE AO. (III) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. 16 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD. 7. WE HAVE ALREADY DECIDED THE SIMILAR GROUND FOR T HE ASSESSMENT YEAR 2010-11 ABOVE IN THE ASSESSEES OWN CASE, BY REJECTING THE GROUND OF THE REVENUE. THEREFORE, BY FOLLOWING THE DECISION ARRIVED AT IN ITA NO. 320/JP/2015 A.Y. 2010-11, WE REJECT THE GROUND RAISED BY THE REVENUE IN THIS APPEAL ALSO. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/02/2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 15/02/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ITO WARD 1(1), KOTA. 2. THE RESPONDENT- M/S. VASTUVEDIC COLONIZERS & DEV ELOPERS P. LTD., KOTA. 3. THE CIT, 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 664 & 320/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 17 ITA 664 & 320/JP/2015 VASTUVEDIC COLONIZERS & DEVELOPERS P. LTD.