THE ITO-WARD-3, Akola V. M/S SAMRUDDHI DEVELOPERS, Akola

ITA 321/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2170 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P G MUDLIAR
• Keywords: Revision of order; Competent authority
• Section: 143(3); 80IB; 6; 263

Judgement Text

1 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 242/NAG/2014 ASSESSMENT YEAR : 2009 - 10. M/S SAMRUDDHI DEVELOPERS, THE COMMISSIONER OF INCOME - TAX - I, AKOLA. VS. NAGPUR. PAN ABFFS7939E. APPELLANT RESPONDENT I.T.A. NO. 321/NAG/2014 ASSESSMENT YEAR : 2010 - 11. THE INCOME - TAX OFFICER, M/S SAMRUDDHI DEVELOPERS, WARD - 3, AK OLA. VS. AKOLA. APPELLANT. RESPONDENT. A SSESSEE BY : SHRI K.P. DEWANI. . DEPARTMENT BY : SHRI S.P.G. MUDLIAR. DATE OF HEARING : 31 - 05 - 2016 DATE OF PRONOUNCEMENT : 17 TH JUNE, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. OUT OF THES E TWO APPEALS, ONE APPEAL FOR ASSESSMENT YEAR 2009 - 10 IS FILED BY THE ASSESSEE AGAINST AN ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX - I, NAGPUR DATED 27 - 03 - 2014 U/S 263 OF I.T. ACT. THE OTHER APPEAL FOR ASSESSMENT YEAR 2010 - 11 HAS BEEN FILED BY THE REVENU E DEPARTMENT EMANATING FROM AN ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 28 - 03 - 2014 . IN BOTH THESE APPEALS THE FUNDAMENTAL QUESTION IS THAT WHETHER IN A SITUATION WHEN A COMPLETION CERTIFICATE HAS BEEN ISSUED BY THE PRESCRIBED AUTHORITY BELATEDLY THEN WHETHER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION U/S 80IB(10) OF I.T. ACT. SINCE 2 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 THIS ISSUE IS COMMON IN BOTH THESE APPEALS HENCE CLUBBED TOGETHER AND HEREIN BELOW DECIDED BY THIS COMMON ORDER. 2. A. ITA NO. 242/NAG/2014 - ASSTT. YER : 2009 - 10. THE APPE LLANT HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER PASSED UNDER SECTION 263 OF I.T. ACT, 1961 IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE LEARNED CIT ERRED IN HOLDING THAT ORDER PASSED U/S 143(3) OF INCOME TAX ACT, 1961 IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. 3. THE LEARNED CIT ERRED IN HOLDING THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF INCOME TAX ACT, 1961 AS ALLOWED IN REGULAR ASSESSMENT FRAMED AND THEREBY WITHDRAWING THE DEDUCTION ALLOWED U/S 80IB(10) OF INCOME TAX ACT, 1961. 4. THE ADDITION MADE BY LEARNED CIT BY WITHDRAWING DEDUCTION U/S 80IB(10) OF INCOME TAX ACT, 1961 IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 5. THE LEARNED CIT ERRED IN HOLDING THAT HOUSING PROJECT OF ASSESSEE IS NOT COMPLETE INSPITE OF LEGAL EVIDENCE CERTIFYING COMPLETION OF HOUSING PROJECT ON RECORD. 3. THE LEARNED CIT - I, NAGPUR VIDE AN ORDER DATED 27 - 03 - 2014 HAS RECORDED A FINDING THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(10) AMOUNTING TO RS.40,45,111/ - AND THE AO HAD COMPLETED THE ASSESSMEN T ACCEPTING THE CLAIM OF DEDUCTION ALTHOUGH IT WAS STATED BEFORE THE AO THAT THE COMPLETION CERTIFICATE OF THE PROJECT FROM THE LOCAL AUTHORITY WAS YET TO BE OBTAINED. ONE MORE OBSERVATION HAS BEEN MADE BY LEARNED CIT THAT WHILE COMPLETING THE ASSESSMENT F OR ASSESSMENT YEAR 2010 - 11 THE AO HAD FOUND THAT THE ASSESSEE HAD NOT FURNISHED THE COMPLETION CERTIFICATE WHICH WAS REQUIRED TO BE OBTAINED FROM THE LOCAL AUTHORITY ON OR BEFORE 31 ST MARCH, 2012. THE OBSERVATION OF THE LEARNED CIT WAS THAT FOR ASSESSMENT YEAR 2009 - 10 THE ASSESSEE WAS NOT ELIGIBLE FOR THE DEDUCTION U/S 80IB(10), HOWEVER, IT WAS ALLOWED BY THE AO, HENCE THE ORDER PASSED U/S 143(3) DATED 13 - 12 - 2011 WAS AN ERRONEOUS ORDER. BY INVOKING THE JURISDICTION PRESCRIBED U/S 263 OF I.T. ACT LEARNED CIT HAS HELD AS UNDER: 3 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR. UNDER SECTION 80IB (10) OF THE ACT, THE PROFITS DERIVED BY AN UNDERTAKING, DEVELOPING AND BUILDING HOUSING PROJECTS ARE ELIGIBLE FOR 100% EXEMPTION SUBJECT TO FULFILME NT OF CERTAIN CONDITIONS SPECIFIED IN THE SECTION. ONE OF THE CONDITIONS LAID DOWN IN SUB CLAUSE (III) OF CLAUSE (A) OF SEC.80IB (10) IS THAT WHERE A HOUSING PROJECT HAS BEEN APPROVED BY A LOCAL AUTHORITY ON OR AFTER 1/4/2005, THE PROJECT SHOULD BE COMPLET ED WITHIN 5 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. IN THE PRESENT CASE, THE LOCAL AUTHORITY APPROVED THE PROJECT ON 7/8/2006. ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO COMPLETE THE PROJECT BY 31/3/2012. FURTHER, IN EXPLANATION (II0 TO SECTION 80IB(10), IT HAS BEEN PROVIDED THAT THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IN THIS CASE, THE MUNICIPAL CORPORATION HAS ISSUED THE COMPLETION CERTIFICATE ON 20/4/2013. IN VIEW OF THE PROVISIONS CONTAINED IN EXPLANATION (II) DISCUSSED ABOVE, THE DATE OF COMPLETION OF THE PROJECT HAS TO BE TAKEN AS 20 /4/2013. THEREFORE, IT CANNOT BE SAID THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE IN RESPECT OF WHICH DEDUCTION U/S. 80IB(10) HAS BEEN CLAIMED WAS COMPLETED IN TIME. IN THE CASE OF SAINATH ESTATES PVT. LTD. VS, DCIT 142 ITD 370 (HYD.), IT HAS BEEN HELD THA T FURNISHING OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY CERTIFYING COMPLETION OF PROJECT WAS MANDATORY TO CLAIM DEDUCTION U/S. 80IB(10). THE APPLICATION MADE FOR OCCUPANCY CERTIFICATE AND A CERTIFICATE OF THE LICENSED ARCHITECT, THE MUNICIPAL ASSESSMENT OF INDIVIDUAL FLAT OWNERS OR SALE OF FLATS CANNOT BE A SUBSTITUTE FOR COMPLETION CERTIFICATE TO BE ISSUED BY THE LOCAL AUTHORITY. THEREFORE, PRIMA FACIE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE I.T. ACT WHILE COMPLETING T HE ASSESSMENT. FURTHER, WHILE COMPLETING THE ASSESSMENT FOR THE A.Y.2010 - 11 ON 31/3/203, IT HAS ALREADY BEEN HELD BY THE AO THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10) SINCE IT DID NOT OBTAIN THE COMPLETION CERTIFICATE WITHIN THE TIME I.E. ON OR BEFORE 31/3/2012. SECTION 263 EMPOWERS THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS TO REACH THE CONCLUSION WHETHER ANY ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN EXPLANATION (B) TO SECTION 263 , IT HAS BEEN PROVIDED THAT RECORD SHALL INCLUDE AND SHALL BE 4 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER . ALTHOUGH, THE COMPLETION CERTIFICATE DUE TO BE OB TAINED ON OR BEFORE 31/3/2012 COULD NOT HAVE BEEN FURNISHED BY THE ASSESSEE WHEN THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS COMPLETED ON 13/12/2011, BUT THE EXPLANATION (B) TO SEC. 263 OF THE I.T. ACT EMPOWERS THE COMMISSIONER TO LOOK I NTO ANY RECORD WHICH WAS AVAILABLE TO HIM AT THE TIME OF EXAMINATION ALTHOUGH THE SAID RECORD MIGHT RELATE TO THE PERIOD AFTER THE DATE OF ASSESSMENT. THEREFORE, THE ASSESSEE IS HELD TO BE NOT ENTITLED TO DEDUCTION U/S 80IB(10) OF THE I.T. ACT. THE AO IS D IRECTED TO GIVE EFFECT TO THIS ORDER BY WITHDRAWING THE DEDUCTION ALREADY ALLOWED U/S 80IB(10). THE ISSUES RELATING TO ALLOWABILITY OF DEDUCTION U/S 80IB(10) IN RESPECT OF DIVIDEND INCOME AND RENTAL INCOME ARE NOT DISCUSSED HERE AS THESE ISSUES ARE OF ACAD EMIC INTEREST ONLY AFTER IT IS HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB(10) FOR WANT OF COMPLETION CERTIFICAGTE WITHIN PRESCRIBED TIME. 4. ON THIS SHORT ISSUE THE ARGUMENT OF LEARNED A.R. MR. K.P. DEWANI IS THAT THE AO HAS EXAMINED THE RELEVANT RECORD OF THE ASSESSEE BECAUSE THE ASSESSMENT WAS MADE U/S 143(3) OF I.T. ACT AND THEREUPON HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF I.T. ACT. LEARNED A.R. HAS DRAWN OUR ATTENTION ON AN OBSE RVATION OF THE AO ON PAGE 1 OF THE IMPUGNED ASSESSMENT ORDER WHEREIN IT WAS OBSERVED BY THE AO AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITTED COMPUTATION OF INCOME, COPY OF AUDIT REPOR T IN FORM NO. 3CD & FORM NO. 10CCB, COPY O F PARTNERSHIP DEED CONFIRMATION OF FRESH UNSECURED LOAN, PARTNERS CAPITAL A/C, COMMENCEMENT CERTIFICATE OF HOUSING PROJECT, SANCTIONED MAP, DETAILS OF SALE OF FLATS, JUSTIFICATION FOR REASONABLENESS OF PAYMENT U/S 40A(2), LEDGER OF INTEREST, LEDGER OF BRO KERAGE AND JUSTIFICATION AS TO HOW THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF I.T. ACT. ALL THE DETAILS FILED BY ASSESSEE ARE KEPT ON RECORD. BOOKS OF ACCOUNTS ALONGWITH BILLS/VOUCHERS OF EXPENSES WERE PRODUCED FOR VERIFICATION. 4.1 THE NEXT A RGUMENT OF LEARNED A . R . IS THAT THE CONSTRUCTION WORK WAS COMPLETED BEFORE 31 ST MARCH, 2012. THE ASSESSEE HAD APPLIED FOR ISSUE OF THE 5 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 COMPLETION CERTIFICATE BEFORE AKOLA MUNICIPAL CORPORATION. A CERTIFICATE WAS ISSUED ON 20 TH OF APRIL, 2013 (REFER PAGES 17 & 18 OF PAPER BOOK) WHEREIN IT WAS SPECIFICALLY CERTIFIED THAT THE BUILDING CONSTRUCTION HAD BEEN COMPLETED ON 31 ST MARCH, 2012. LEARNED A.R. HAS FURTHER EXPLAINED THAT IN WING B1 UPPER THREE FLOORS WERE ON THE LAST STAGE OF CONSTRUCTION FOR WHICH T HE PERMISSION WAS GRANTED FOR USE OF PARTIAL CONSTRUCTED PORTION, HOWEVER, THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION IN RESPECT OF THAT FLOOR, HENCE NO ADVERSE INFERENCE COULD BE DRAWN. HE HAS FURTHER PLEADED THAT THE SAID UPPER FLOOR WAS CONSTRUCTED BECA USE ADDITIONAL FSI WAS GRANTED. LEARNED A.R. HAS ALSO PLACED ON RECORD THE FLOOR - WISE DETAIL OF SALE AND THE AMC PROPERTY TAX IMPOSED TO DEMONSTRATE THAT THE CONSTRUCTION WAS COMPLETED AND THE POSSESSION WAS HANDED OVER TO THE RESPECTIVE BUYERS. LEARNED A. R. HAS ALSO PLACED RELIANCE ON A CERTIFICATE ISSUED BY AN ARCHITECT AFTER VISITING THE RAMI HERITAGE COMPLEX. 5. ON THE QUESTION OF POSSIBLE VIEW TAKEN BY THE AO, LEARNED A.R. HAS PLACED RELIANCE ON THE DECISION OF CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) AND CIT VS. GARBIAL INDIA LTD. 203 ITR 108 (BOM.). ON THE ISSUE OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : I) CIT VS. HINDUSTAN SAMUH AWAS LTD. 377 ITR 150 (BOM.). II) ITAT ORDER IN ITA NO. 6023/MUM/2012 IN THE CASE OF M/S DHARTI ENTERPRISES DATED 18/05/2015. III) SIDDHIVINAYAK KOHINOOR VENTURE VS. ADCIT 97 DTR 68 (PUNE ITAT) DATED 31 - 10 - 2013. IV) ITO VS. SAKET CORPORATION 234 TXMAN 435 (GUJ) (HC). 6. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. S.P.G. MUDLIAR APPEARED AND ARGUED THAT ON THE BASIS OF THE INFORMATION COLLECTED BY THE AO FOR ASSESSMENT YEAR 2010 - 11 THE LEARNED CIT HAD INVOKED THE JURISDICTION U/S 263 OF 6 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 I.T. ACT. WHILE PASSING THE ORDER FOR ASSESSMENT YEAR 2010 - 11 THE AO HAD FOUND THAT NO COMPLETION CERTIFICATE WAS OBTAINED BY THE ASSESSEE. LEARNED D.R. HAS ALSO INFORMED THAT IN ASSESSMENT YEAR 2010 - 11 THE AO HAD MADE ENQUIRY FROM AKOLA MUNICIPAL CORPORATION A ND IT WAS INFORMED THAT THE A SSESSEE HAD NOT COMPLETED THE HOUSING PROJECT TILL 18 TH MARCH, 2013. SINCE THE ASSESSEE HAD DEFAULTED IN NOT COMPLETING THE PROJECT WITHIN THE TIME PRESCRIBED, HENCE LEARNED CIT WAS JUSTIFIED IN DIRECTING THE AO TO WITHDRAW THE CLAIM OF DEDUCTION U/S 80IB( 10). 7. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE EVIDENCES FILED AND THE CASE LAWS CITED. THE PROCEEDINGS U/S 263 WERE INVOKED BY LEARNED COMMISSIONER UNDISPUTEDLY ON THE BASIS OF THE OBSERVATION MADE BY THE AO WHILE PASSING THE ORDER FOR ASSESSMENT YEAR 2010 - 11 DATED 31 ST MARCH, 2013. AT THE OUTSET IT IS WORTH TO MENTION THAT THE SAID ORDER FOR ASSESSMENT YEAR 2010 - 11 WAS CHALLENGED BEFORE THE LEARNED CIT(APPEALS) WHO HAS CONSIDERED THE DISPUTE OF ISSUANCE OF COMPLETION CERTIFICATE BY AMC AND VIDE AN ORDER DATED 28 - 03 - 2014 DECIDED IN FAVOUR OF THE ASSESSEE. IT IS ALSO WORTH TO MENTION THAT THE ORDER PASSED U/S 263 IS DATED 27 - 03 - 2014 WHICH MEANS THAT ON IDENTICAL SET OF FACTS AND CIRCUMSTANCES TWO DIFFERENT OPINIONS BY TWO COMMISSIONERS OF REVENUE DEPARTMENT HAVE BEEN TAKEN, THEREFORE, UNDISPUTEDLY THE VIEW TAKEN BY THE AO WHILE PASSING THE ORDER FOR ASSESSMENT YEAR 2009 - 10 SHOULD BE HELD AS POSSIBLE VIEW IN RESPECT OF THE QUESTION IN HAND. AS FAR AS THE EVIDENCES WHICH WERE APPRECIATED BY T HE REVENUE AUTHORITIES WERE THE CERTIFICATE DATED 20 TH OF APRIL, 2013, HOWEVER, IN THE SAID CERTIFICATE IT WAS SPECIFICALLY MENT IONED THAT THE BUILDING CONSTRUCTION WAS COMPLETED ON 31 ST MARCH, 2012. THE SAID CERTIFICATE WAS PLACED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2010 - 11. THE EVIDENCES PLACED IN THE COMPILATION HAVE ALSO DEMONSTRATED THAT A LETT ER ON 26 TH OF MARCH, 2012 WAS WRITTEN BY THE ASSESSEE TO AKOLA 7 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 MUNICIPAL CORPORATION TO ISSUE A COMPLETION CERTIFICATE. THE ARCHITECT OF THE ASSESSEE HAS ISSUED A COMPLETION CERTIFICATE AND LATER ON THE AKOLA MUNICIPAL CORPORATION HAS ALSO ISSUED A CERTIFI CATE ALTHOUGH DATED 20 TH APRIL, 2013 CERTIFYING THAT THE BUILDING CONSTRUCTION HAD BEEN COMPLETED ON 31 ST MARCH, 2012. 8. IN THE LIGHT OF THE ABOVE FACTUAL POSITION WE HAVE PERUSED THE ORDER OF HONBLE BOMBAY HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. HINDUSTAN SAMUH AWAS LTD. 337 ITR 150 (BOM.) WHEREIN THE FINAL VERDICT WAS AS UNDER : SUB - SECTION (10) MENTIONS THAT A HOUSING PROJECT SHOULD BE COMPLETE BEFORE 31.03.2008 SO AS TO GET THE EXEMPTION. COMPLETION OF HOUSING PROJECT IS A PHYSICAL ACT. IT CA N BE DEMONSTRATED ON THE SPOT AND ALSO THROUGH A CERTIFICATE ISSUED BY AN ARCHITECT WHO IS APPOINTED FOR SUPERVISING THE CONSTRUCT ION WORK. HE IS A PROFESSIONAL WHO WOULD DECLARE THAT THE PROJECT IS COMPLETE. UNFORTUNATELY, SUB - SECTION (10) AND THE EXPLA NATION DO NOT GIVE ANY IMPORTANCE TO THE ISSUANCE OF SUCH COMPLETION CERTIFICATE BY THE CONCERNED ARCHITECT. IT GIVES IMPORTANCE ONLY TO THE CERTIFICATE OF MUNICIPAL AUTHORITY. IT IS COMMON KNOWLEDGE THAT AN APPLICATION FOR COMPLETION CERTIFICATE SUBMITTED TO THE MUNICIPAL AUTHORITIES IS ACCOMPANIED BY A COMPLETION CERTIFICATE ISSUED BY THE CONCERNED ARCHITECT. NO DOUBT, THE MUNICIPAL AUTHORITIES THEN CAUSE INSPECTION OF THE SITE AND VERIFY THE CLAIM. THEREAFTER, THEY ISSUE COMPLETION CERTIFICATE. BUT, IF A PROJECT IS REALLY COMPLETE BEFORE 31.03.2008 AND AN APPLICATION IS MOVED QUITE IN TIME, FOR SEEKING COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES, AND IF THEY DO NOT TAKE STEPS URGENTLY AND DELAY THE ISSUANCE OF COMPLETION CERTIFICATE FROM THEIR S IDE, CAN IT BE SAID THAT SUCH CERTIFICATE WOULD ALONE DECIDE THE DATE OF COMPLETION OF THE PROJECT? THE ANSWER IS IN NEGATIVE. IN THE FACTS OF THIS CASE, ADMITTEDLY, THE ARCHITECT OF THE PROJECT HAD GIVEN A CERTIFICATE PRIOR TO 31.03.2008. THE RESPONDENT SUBMITTED APPLICATION TO THE MUNICIPAL AUTHORITY ALONG WITH SUCH CERTIFICATE WELL IN TIME ON 25.03.2008 IT SEEMS THAT THE MUNICIPAL AUTHORITIES DIRECTED THE RESPONDENT TO DEPOSIT CERTAIN AMOUNT FOR ISSUANCE OF COMPLETION CERTIFICATE ON 27.03.2008 AND THE AMOUNT WAS ACCORDINGLY DEPOSITED ON 31.03.2008. THEREAFTER, THE CERTIFICATE WAS ISSUED IN OCTOBER, 2008. THIS DELAY CANNOT BE ATTRIBUTED TO THE RESPONDENT ASSESSEE. 8 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 9. FROM THE SIDE OF THE APPELLANT FEW MORE DECISIONS OF THE RESPECTED COORDINATE BENCHES HAVE ALSO BEEN CITED. RESPECTFULLY FOLLOWING ALL THESE DECISIONS WE HEREBY HOLD THAT IN A SITUATION WHEN THE ADMITTED FACTUAL POSITION WAS THAT THE APPELLANT HAD OBTAINED A CERTIFICATE FROM THE LOCAL AUTHORITY WHEREIN IT WAS CERTIFIED T HAT THE CONDITION PR ESCRIBED U/S 80IB(10)(A)(III) HAS BEEN FULFILLED, THEREFORE, THERE WAS NO IRREGULARITY IN THE IMPUGNED ASSESSMENT ORDER PASSED BY THE AO. THE ORDER IN QUESTION PASSED U/S 263 BY LEARNED COMMISSIONER IS NOT IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBL E JURISDICTIONAL HIGH COURT, HENCE HEREBY QUASHED. GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. B. ITA NO. 321/NAG/2014 ASSTT. YEAR : 2010 - 11. REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ALL OWING THE CLAIM OF THE ASSESSEE U/S 80IB OF THE ACT BY NOT TAKING COGNIZANCE OF LETTER DT. 21.03.2013 ISSUED BY THE AKOLA MUNICIPAL CORPORATION, AKOLA, WHEREIN IT IS CLEARLY STATED THAT THE WORK OF THE HOUSING PROJECT HAS NOT BEEN COMPLETED EVEN ON 18.03.2 013 WHEREAS IT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31.03.2012, THEREFORE, DEDUCTION U/S 80IB IS NOT ALLOWABLE TO THE ASSESSEE; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN HOLDING THAT THE INTEREST RECEIVED FROM M/S MALANI COMBINES AT RS.1,25,640/ - AND RENT RECEIVED AT RS.7,91,033/ - WERE ELIGIBLE FOR DEDUCTION U/S 80IB(10). 11. APROPOS TO GROUND NO. 1 , THE OBJECTION OF THE AO WHILE PASSING THE ORDER FOR ASSESSMENT YEAR 2010 - 11 WAS THAT THE COMPLETION CERTIFICATE WAS BELATEDLY OBTAIN ED WHICH WAS NOT IN ACCORDANCE TO 80IB(10)(A)(III) OF I.T. ACT. THE AO HAS ALSO MENTIONED THAT AS PER EXPLANATION (II) TO SECTION 80IB(10) THE DATE OF COMPLETION OF THE CONSTRUCTION SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IS ISSUE D BY THE LOCAL AUTHORITY. THE AO HAS, THEREFORE, DRAWN A CONCLUSION THAT IN A SITUATION WHEN THE COMMENCEMENT CERTIFICATE WAS 9 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 DATED 7 TH AUGUST, 2006, THEREFORE, THE HOUSING PROJECT SHOULD HAVE BEEN COMPLETED WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED. ACCORDING TO THE AO THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31 ST MARCH, 2012. THE AO HAS, THEREFORE, ALLEGED THAT IN A SITUATION WHEN THE COMPLETION CERTIFICATE WAS UNDISPUTEDLY DATED 20 TH OF A PRIL, 2013, THEREFORE, THE COMPLETION OF THE PROJECT WAS NOT WITHIN THE TIME PRESCRIBED, HENCE THE ASSESSEE WAS HELD AS NOT ENTITLED FOR THE DEDUCTION U/S 80IB(10). 11.1 WHEN THIS MATTER WAS CARRIED BEFORE THE FIST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS EXAMINED FEW PRECEDENTS IN THE LIGHT OF THE EVIDENCES AND THEREUPON HELD AS UNDER : 11.2 THE AO, IN THE ASSESSMENT ORDER HAS RECORDED A FINDING THAT THE COMPETENT AUTHORITY I.E. AKOLA MUNICIPAL CORPORATION ISSUED COMPLETION CERTIFICATE ON 20.04.2013, HENCE, HELD THAT CONDITION OF ISSUE OF COMPLETION CERTIFICATE WITHIN THE MEANING OF SEC. 80IB(10) HAS NOT BEEN COMPLIED WITH BY THE APPELLANT. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ALSO FOUND THAT THE APPELLANT SUBMITTED TWO COMPLETION CERTIFICATES ISSUED DATED 26.03.2012 BY SHRI ANIS SHAH, OF M/S AAKAR CONSULTANCY, CONSULTING STRUCTURAL ENGINEERS, AKOLA AND M/S RAVI KHAWALA & ASSOCIATES, ARCHITECT, AKOLA RESPECTIVELY. THE AO , THUS, CONSTRUED THAT THE TWO CERTIFICATES ARE CONTRARY IN N ATURE AS THEY DO NOT CORROBORATE THE LETTER OF THE COMMISSIONER, AKOLA MUNICIPAL CORPORATION DATED 21.03.2013 WHEREIN IT IS STATED THAT THE JUNIOR ENGINEER NOF THE AKOLA MUNICIPAL CORPORATION, HAD INSPECTED THE PROJECT SITE ON 18.03.2013 AND FOUND THAT THE CONSTRUCTION WORK WAS STILL GOING ON IN RESPECT OF B WING OF THE PROJECT, HENCE THE COMPLETION CERTIFICATE WS NOT ISSUED. 11.3 IN THIS REGARD, THE AR OF THE APPELLANT CONTENDED THAT AS PER THE PROVISIONS OF THE LAW, AS STIPULATED UNDER SEC. 80IB(10), A HOUSING PROJECT, SHOULD BE COMPLETED WITHIN 5 YEARS, FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CONSTRUCTION PLAN IS APPROVED BY THE LOCAL AUTHORITY. IN THE CASE OF APPELLANT, THE APPELLANT DEVELOPER GOT THE 10 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 SANCTION FOR COMMENCEMENT OF CONSTRUCTION OF PROJECT ON 07.08.2006 AND ACCORDING TO THE LAW, THE CONSTRUCTION WAS REQUIRED TO BE COMPLETED BY 31.03.2012 AND ACCORDINGLY, THE APPELLANT COMPLETED THE PROJECT BY THAT DATE. THE ASSESSEE HAD PAID THE TAXES ON THE COMPLETED BLOCKS A (COMPRISING OF WINGS A - 1 TO A - 3) & B - 2, B - 3 AND C, ACCORDINGLY AND THE RECEIP T S ISSUED FOR THE SAME IN THE NAME OF THE BUYERS, WHICH SHOWS THAT CON STRUCTION WAS COMPLETED BY THE DUE DATES I.E. 31.03.2012. AS REGARDS TO THE ISSUE OF CERTIFICATE ISSUED BY SHRI RAVI KHAWALE, ARCHITECT, WHICH IS DATED 26.03.2012, THE CONTENTION OF THE APPELLANT IS THAT FOR THE PURPOSE OF OBTAINING BUILDING COMPLETION CER TIFICATE, A COMPLETION CERTIFICATE FROM A GOVT. APPROVED VALUER ARCHITECT IS PRE - REQUISITE AND IT IS BUT FOR THIS REASON THAT THE APPELLANT OBTAINED A COMPLETION CERTIFICATE FROM SHRI KHAWALE, BEING A TECHNICAL PERSON AS GOVERNMENT APPROVED VALUER BASED ON WHICH, THE COMPLETION CERTIFICATE WAS ISSUED BY DY. COMMISSIONER, AKOLA MUNICIPAL CORPORATION ON 28.03.2013, AFTER SPOT INSPECTION. THE APPELLANT IN THIS REGARD HAS RELIED ON THE JUDGMENT IN THE CASE OF NORTH CITY DEVELOP E RS VS. ITO, KOLKATA (IN THIS CASE KOLKATA BENCH OF INCOME TAX APPELLATE TRIBUNAL HELD THAT WHEN A PROJECT IS COMPLETED WITHIN TIME AND CERTIFIED BY AN ARCHITECT, THE ACTUAL DATE OF COMPLETION CERTIFICATE ISSUED BY A LOCAL AUTHORITY IS NOT RELEVANT TO CLAIM DEDUCTION U/S 80IB OF THE INC OME TAX ACT, 1961. 11.4 THE HOUSING PROJECT CONSTRUCTED BY THE APPELLANT IS LOCATED IN THE JURISDICTION OF AKOLA MUNICIPAL CORPORATION AND THUS ACCORDING TO THE APPELLANT AMC IS THE LOCAL AUTHORITY FROM WHOM THE APPELLANT IS REQUIRED TO OBTAIN THE APPROV AL FOR MAKING OF THE HOUSING PROJECT. IN THE INSTANT CASE, THE REQUIRED APPROVAL FROM THE AMC WAS OBTAINED ON 07.08.2006. IT IS FURTHER OBSERVED THAT THE ADDITIONAL CONSTRUCTION FOUND IN PROCESS CONSTRUCTION IN RESPECT OF B BUILDING WAS UNDERTAKEN PURSUA NT TO THE ADDITIONAL SANCTION GRANTED BY CIVIC AUTHORITY ON 19.10.2011 AND WAS NOT A PART OF THE PROJECT IN RESPECT OF WHICH DEDUCTION U/S 80IB(10) OF THE ACT HAS BEEN CLAIMED BY THE APPELLANT. 12. AS REGARDS TO THE VIEW TAKEN BY THE LD. AO THAT TWO COMPLETION CERTIFICFATES ISSUED BY THE ARCHITECT AND THE AMC ARE CONTRADICTORY, IT IS SEEN THAT THIS VIEW IS NOT FACTUALLY CORRECT. THE SUBMISSION OF COMPLETION CERTIFICATE FROM A REGISTERED ARCHITECT IS A PRE - REQUISITE FOR ISSUE OF FINAL COMPLETION CERTIF ICATE BY THE COMPETENT AUTHORITY. ACCORDINGLY, ON SUBMISSION OF CERTIFICATE FROM THE REGISTERED ARCHITECT, THE AKOLA MUNICIPAL CORPORATION HAS ISSUED A COMPLETION CERTIFICATE WHICH IS 11 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 OBVIOUS FROM THE FACT THAT THE DATE OF ARCHITECTS CERTIFICATE PRECEDES THE DATE OF COMPLETION CERTIFICATE ISSUED BY THE AKOLA MUNICIPAL CORPORATION. THEREFORE, THERE IS NO CONTRADICTION IN BOTH THE CERTIFICATES WHICH ARE FOUND IN ORDER. THE HOUSING PROJECT THEREFORE HAS BEEN COMPLETED WITHIN THE STIPULATED TIME I.E. BY 31 ST MARCH, 2012. IN THIS REGARD, IT HAS ALREADY BEEN HELD THAT THE AKOLA MUNICIPAL CORPORATION IS THE LOCAL AUTHORITY FOR GRANT OF APPROVAL FOR CONSTRUCTION OF THE HOUSING PROJECT; THEREFORE, THE COMPLETION CERTIFICATE OBTAINED FROM THE SAID AUTHORITY, WITHIN THE STIPULATED TIME IS IN ORDER. 13.0 IN VIEW OF ABOVE, I HOLD THAT THE AO WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE INCOME FROM HOUSING PROJECT FOR THE REASON THAT THE HOUSING PROJECT IS NOT HAVING COMPLETION CERT IFICATE FROM THE LOCAL AUTHORITY BY THE STIPULATED DATE FOR THE PURPOSE OF SECTION 80IB(10) OF I.T. ACT, 1961. ACCORDINGLY THE GROUNDS RELATING TO THE ISSUE OF COMPLETION CERTIFICATE OF THE AMC BY THE APPELLANT IS ALLOWED. 12. AFTER HEARING THE SUBMISSIO NS OF BOTH THE SIDES AND IN THE LIGHT OF THE DISCUSSION MADE HEREIN ABOVE WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10, WE HEREBY AFFIRM THE VIEW TAKEN BY LEARNED CIT(APPEALS). THE LEGALITY OF A CERTIFICATE ISSUED BELATEDLY BUT FOR MING THE DATE OF COMPLETION WITHIN THE PRESCRIBED TIME HAS ALREADY BEEN CONSIDERED BY THE HONBLE COURTS AND THEREUPON HELD THAT IF THE CONSTRUCTION IN FACT HAS BEEN COMPLETED WITHIN THE STIPULATED TIME AND THE ASSESSEE HAD MOVED AN APPLICATION BEFORE THE LOCAL AUTHORITY WITHIN THE TIME THEN THE ASSESSEE SHOULD NOT BE HELD RESPONSIBLE FOR A CERTIFICATE ISSUED BY A LOCAL AUTHORITY, IF AT ALL, BELATEDLY. WE, THEREFORE, CONCLUDE THAT CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE VIEW T A KEN BY LEARNED CIT(APPEALS) DESERVES TO BE UPHELD FOLLOWING THE PRECEDENTS CITED. GROUND NO. 1 OF THE REVENUE IS, THEREFORE, DISMISSED. 13. APROPOS TO GROUND NO.2, THE PROVISIONS OF SECTION 80IB(10) PRESCRIBES THAT THE DEDUCTION IS ALLOWABLE IN RESPECT OF PROFITS DERIVED FROM SUCH HOUSING 12 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 PROJECT. THE LANGUAGE OF THIS SECTION HAS USED A TERM DERIVED FROM WHICH HAS BEEN DEALT WITH IN NUMBER OF CASES BY THE HONBLE APEX COURT AND HELD THAT THE EXPRESSION DERIVED FROM HAS A RESTRICTED SCOPE OF APPLI CATION. THE HONBLE COURTS HAVE ALSO COMPARED THE EXPRESSION DERIVED FROM WITH THE EXPRESSION ATTRIBUTABLE TO AND HELD THAT THE EXPRESSION ATTRIBUTABLE TO IS OF WIDER IMPORT THAN THE EXPRESSION DERIVED FROM. FOR REFERENCE, A DECISION OF CAMBEY E LECTRIC SUPPLY INDUSTRIAL CO. LTD. 113 ITR 84 (SC), PANDIAN CHEMICALS LTD. 262 ITR 278 (SC), STERLING FOODS 237 ITR 579 ARE WORTH MENTIONING. THE VERDICT OF THE HONBLE APEX COURT HAS THUS BECOME THE LAW OF THE LAND. 13.1 WITH THIS LEGAL BACKGROUND WE HAVE EXAMINED THE BASIC FACTS AS NARRATED BY THE AO IN THE ASSESSMENT ORDER WHERE IN RESPECT OF RENTAL INCOME OF RS.7,91,033/ - HE HAS MENTIONED THAT FEW FLATS OF THE HOUSING PROJECT HAVE BEEN LET OUT AND THE ASSESSEE HAD EARNED RENTAL INCOME. BUT THE BUSINESS OF THE ASSESSEE IS NOT EARNING OF RENTAL INCOME BY ACQUIRING SEVERAL BUILDINGS AND LETTING THEM ON HIRE BUT THE BUSINESS OF THE ASSESSEE IS DEVELOPING A HOUSING PROJECT. THE FIRST APPELLATE AUTHORITY HAS NOT APPRECIATED THIS DISTINCTION AND SIMPLY HELD TH AT THE FLATS IN QUESTION WERE THE ASSETS SHOWN IN STOCK IN TRADE, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80IB(10) OF I.T. ACT. EVEN THE CASE LAWS ARE NOT ON THE ISSUE OF ELIGIBILITY OF RENTAL INCOME FOR DEDUCTION U/S 80IB(10). A S A RESULT, WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY LEARNED CIT(APPEALS) AND THE SAME IS HEREBY REVERSED. THIS PART OF THE GROUND OF THE REVENUE IS, THEREFORE, ALLOWED. 14. THE NEXT OBJECTION OF THE REVENUE DEPARTMENT AS PER GROUND NO. 2 IS IN RESPE CT OF INTEREST RECEIVED FROM M/S MALANI COMBINES OF RS.1,25,640/ - . THE FACTS OF THE CASE AS NARRATED BY THE AO WERE THAT THE ASSESSEE HAD RECEIVED INTEREST ON FIXED DEPOSITS FROM BANKS. THE EXPLANATION OF THE ASSESSEE WAS THAT THE FIXED DEPOSITS WERE MADE WITH THE BANK TO BE USED IN EMERGENCY, HENCE INTEREST INCOME IS PART OF THE PROJECT, THEREFORE, QUALIFIES FOR THE DEDUCTION. AS 13 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 AGAINST THAT, THE AO HAS HELD THAT THE INTEREST EARNED FROM BANK FDR COULD NOT BE LINKED WITH THE HOUSING PROJECT. THE PROFITS E ARNED FROM THE PROJECT MIGHT HAVE BEEN INVESTED IN BANK FDRS. BY PLACING RELIANCE ON A DECISION OF INDIAN ADDITIVES LTD. VS. DCIT 67 DTR 389 THE AO HAS HELD THAT THE INTEREST INCOME WAS NOT DERIVED FROM THE PROJECT, HENCE NOT ELIGIBLE FOR DEDUCTION. 15. WH EN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY IT WAS FURTHER EXPLAINED THAT OUT OF THE TOTAL INTEREST INCOME OF RS.1,93,127/ - THE ASSESSEE HAD RECEIVED INTEREST OF RS.66 , 058/ - ON FIXED DEPOSITS WITH AKOLA URBAN COOPERATIVE BANK AND RECEIVE D INTEREST OF RS.1,25,640/ - FROM M/S MALANI COMBINES. IT HAS ALSO BEEN EXPLAINED THAT THE ASSESSEE HAD PAID INTEREST TO BANK OF RS.36,91,526/ - . ON THOSE FACTS THE VIEW TAKEN BY LEARNED CIT(APPEALS) WAS THAT THE INTEREST PAID WAS MORE THAN INTEREST RECEIVE D AND THERE WAS NO POSITIVE INTEREST, THEREFORE, INTEREST INCOME SHOULD NOT BE EXCLUDED FROM THE CLAIM OF DEDUCTION U/S 80IB(10) OF I.T. ACT. 16. IN OUR CONSIDERED OPINION WHEN THE ADMITTED FACTUAL POSITION WAS THAT THE ASSESSEE HAD INCLUDED THE TOTAL INT EREST INCOME OF RS.1,93,127/ - IN THE CLAIM OF DEDUCTION U/S 80IB(10) AS IS EVIDENT FROM PARA 5 OF THE ASSESSMENT ORDER AND THE ASSESSEE HAS NOT ESTABLISHED ANY NEXUS THAT THE INTEREST INCOME HAS A DIRECT NEXUS WITH THE HOUSING PROJECT, WE ARE NOT INCLINED TO AFFIRM THE VIEW OF LEARNED CIT(APPEALS). THIS IS NOT THE CASE OF THE ASSESSEE THAT THE INTEREST WAS RECEIVED FROM THE PARTIES/CLIENTS TO WHOM THE FLATS HAVE BEEN SOLD AND ON ACCOUNT OF DELAYED PAYMENTS THE INTEREST FROM THOSE PARTIES/CLIENTS HAVE BEEN CHARGED BY THE ASSESSEE. IN THE ABSENCE OF SUCH NEXUS THE CLAIM OF DEDUCTION OF ASSESSEE IS MISPLACED. BY PLACING RELIANCE ON THE DECISIONS CITED SUPR A , WE HEREBY AFFIRM THE VIEW TAKEN BY THE AO AND THIS PART OF THE GROUND OF THE REVENUE IS HEREBY ALLOWED . 1 7 . AS A RESULT, GROUND NO. 2 OF THE REVENUE DEPARTMENT IS ALLOWED. 14 ITA NOS. 242/NG/2014 AND ITA MO. 321/NAG/2014 1 8 . THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. 1 9 . TO CONCLUDE, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 IS ALLOWED AND THE APPEAL OF THE REVENUE DEPARTMENT FOR ASSESSME NT YEAR 2010 - 11 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JUNE, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 17 TH J UNE, 2016. COPY FORWARDED TO : 1. M/S SAMRUDDHI DEVELOPERS, OPP. RTO OFFICE, MURTILIZER ROAD, AKOLA - 444001. 2. I.T.O., WARD - 3, AKOLA. 3. COMMISSIONER OF INCOME - TAX - I,NAGPUR. 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.