DCIT, Chandigarh V. Sh. Sham Sunder Sharma, Chandigarh

ITA 330/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51598 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER ITA NO. 330/CHD/2011 ASSESSMENT YEAR: 2007-08 THE DCIT, VS SHRI SHAM SUNDER SHARMA, CIRCLE-1(1), CHANDIGARH CHANDIGARH PAN NO. AIIPS8699B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 21.11.2011 DATE OF PRONOUNCEMENT : ORDER PER H.L.KARW A, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), CHANDIGARH DATED 1.11.2010 RELATING TO ASS ESSMENT YEAR 2007-08. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT, 1961 AS THE ASSESSE E HAS FAILED TO MEET THE REQUIREMENTS OF SECTION 80IB (10) OF THE I.T.ACT. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SSESSEE CLAIMED DEDUCTION U/S 80IB(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT'), TO THE EXTENT OF RS. 49,51,216/- IN RESPECT OF ITS PRO PRIETARY CONCERN M/S SWASTIK CONSTRUCTIONS. M/S SWASTIK CONSTRUCTIONS H AS UNDERTAKEN A CONSTRUCTION PROJECT AT PANCHKULA AND THE PROFIT FR OM THAT PROJECT WAS CLAIMED AS DEDUCTION U/S 80IB(10) OF THE ACT. IN O RDER TO EXAMINE THE GENUINENESS OF THE CLAIM OF DEDUCTION U/S 80IB(1) O F THE I.T. ACT, THE STATEMENT OF THE GENERAL MANAGER SHRI V.P SINGH WAS RECORDED. FROM THE STATEMENT OF SHRI V.P.SINGH, THE ASSESSING OFFICER OPINED THAT THE PROJECT ON WHICH THE DEDUCTION U/S 80IB(10) HAS BEEN CLAIME D WAS ALREADY IN PROGRESS I.E. MUCH BEFORE OCTOBER, 1998 AND THE NEC ESSARY APPROVAL FOR DEVELOPING IT AS A RESIDENTIAL COLONY HAS BEEN TAKE N MUCH BEFORE OCTOBER, 1998. ACCORDING TO ASSESSING OFFICER, THIS FACT WA S ALSO APPARENT FROM THE DETAILS FURNISHED BY THE ASSESSEE REGARDING THE PAYMENT OF EXTERNAL DEVELOPMENT CHARGES PAID IN RESPECT OF THE SAID PRO JECT ON 2.99 ACRES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF COMPLETION OF THE PROJECT BY FURNISHING COMPLETION CERTIFICATE FROM GOVERNMENT AUTHORITIES. HOWEVER, NO COMPLETION CERTIFICATE F ROM THE GOVERNMENT AUTHORITIES WAS FURNISHED. THE ASSESSEE FURNISHED THE COMPLETION CERTIFICATE / DOCUMENTS FROM SHRI MANMOHAN KHANNA, ARCHITECT, WHICH READS AS UNDER:- TO WHOM IT MAY CONCERN THIS IS TO CERTIFY THAT I HAVE SUPERVISED THE CONSTRUCTION OF COMPOSITE WORKS IN RESPECT OF GROUP HOUSING COLONY IN SWASTIKA VIHAR, MANSA DEVI COMPLEX, SECTO R 5, PANCHKULA IN AN AREA OF 2.99 ACRES AT PANCHKULA APP ROVED VIDE MEMO NO. 5DP(III)-99/4560 DATED 12.4.1999. 1 16 FLATS OF DIFFERENT CATEGORY HAVING AREA 1500 FT OR LESS H AVE BEEN 3 COMPLETED TO MY SATISFACTION. THE TERMS AND A COND ITION OF THE APPROVAL OF SERVICE PLAN AND ESTIMATE APPROVED BY DIRECTOR, TOWN & COUNTRY PLANNING, HARYANA, CHANDIG ARH, HAVE COMPLETELY BEEN FOLLOWED WHILE CONSTRUCTION CO MPLETING HOUSING COLONY. FOR KHANN MANMOHAN ASSOCIATES SD/- (MANMOHAN KHANNA) ARCHITECT 4. ACCORDING TO ASSESSING OFFICER, AS PER EXPLANATI ON (II) TO SECTION 80IB(10(A) OF THE ACT, THE COMPLETION CERTIFICATE W AS REQUIRED TO BE ISSUED BY LOCAL AUTHORITY AND ALSO THE PERUSAL OF T HE REPLY REVEALED THAT THE PROJECT WAS GRANTED APPROVAL ON 15 TH FEBRUARY, 1996, WHICH WAS MUCH BEFORE THE DATE I.E. OCTOBER, 1998 AS PROVIDED IN THE I.T. ACT. FURTHER, PROJECT WAS NOT COMPLETED BY 31 ST MARCH, 2008 AS THE ASSESSEE HAS FAILED TO FURNISH THE COMPLETION CERTIFICATE OF THE LOCAL AUTHORITY. THEREFORE, THE ASSESSING OFFICER HELD THAT ON BOTH THESE GROUNDS THE ASSESSEE HAS FAILED TO MEET THE REQUIREMENT OF SEC TION 80IB(10) OF THE ACT. THUS, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUC TION U/S 80IB(10) OF THE ACT. THEREFORE, THE INCOME OF RS. 49,51,216/- WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE, OBSERVING AS UNDER:- 12. AFTER TAKING INTO CONSIDERATION THE REPLY OF ASSES SING OFFICER AND DISTRICT TOWN & COUNTRY PLANNING, HARYANA, CHANDIGARH, IT HAS BEEN OBSERVED THAT IN T HE ABSENCE OF ANY SPECIFIC PROVISION REGARDING ISSUANC E OF COMPLETION CERTIFICATE IN PUNJAB NEW CAPITAL PERIPH ERY CONTROL ACT, 1952, THE OCCUPATION CERTIFICATE ISSUE D BY 4 THE DTP IS CONSIDERED AS COMPLETION CERTIFICATE ISS UED BY THE GOVERNMENT AUTHORITIES FOR CLAIMING EXEMPTIO N U/S 80IB. 13. IN VIEW OF THE ABOVE, IT HAS BEEN FOUND THAT AP PELLANT DULY FULFILLED THE MANDATORY CONDITIONS REQUIRED FO R AVAILING EXEMPTION U/S 80IB. AS SUCH, THE CLAIM FO R EXEMPTION AMOUNTING TO RS. 49,51,216/- IS HELD TO B E IN ORDER, ALLOWING ASSESSEES APPEAL ON ALL THESE GROU NDS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE THE AS SESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT TO THE EXTENT OF RS. 49,51,216/- IN RESPECT OF HIS PROPRIETARY CONCERN, M/S SWASTIK CON STRUCTIONS. M/S SWASTIK CONSTRUCTIONS HAS UNDERTAKEN A CONSTRUCTION PROJECT AT PANCHKULA AND THE PROFIT FROM THAT PROJECT WAS CLAIMED AS DED UCTION U/S 80IB(1) OF THE I.T. ACT. IN THIS CASE, THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE ON TWO COUNTS. FIRSTLY, ON THE GROUN D THAT THE PROJECT WAS GRANTED APPROVAL ON 15.2.1996 I.E. MUCH BEFORE THE DATE I.E. OCTOBER, 1998 AS PROVIDED IN SECTION 80IB(1) OF THE I.T. ACT . SECONDLY, THE PROJECT WAS NOT COMPLETED BY MARCH 31, 2008 AS THE ASSESSEE FAILED TO FURNISH THE COMPLETION CERTIFICATE FROM THE LOCAL A UTHORITY. AS REGARDS, THE REJECTION OF ASSESSEES CLAIM ON FIRST GROUND B Y THE ASSESSING OFFICER, THE CIT(A) HAS NOT GIVEN ANY FINDINGS, THEREFORE, T HE ORDER OF CIT(A) IS BAD IN LAW AND DESERVES TO BE SET ASIDE. IN FACT TH E ASSESSEE HAS RAISED A SPECIFIC GROUND I.E. GROUND NO.3 BEFORE THE CIT(A) AND THE CIT(A) HAS NOT CONSIDERED AND DECIDED THIS GROUND OF APPEAL. THE CIT(A) WAS REQUIRED TO GIVE HIS FINDINGS ON THIS ISSUE ALSO AN D THEREFORE, WE HOLD THE IMPUGNED ORDER AS BAD IN LAW. CONSEQUENTLY, WE REM AND THE MATTER TO 5 CIT(A) WITH A DIRECTION TO DECIDE AND GIVE HIS FIN DINGS WITH REGARD TO ISSUE RAISED BY THE ASSESSEE VIDE GROUND NO.3 OF TH E APPEAL. 7. THE SECOND GROUND FOR REJECTING THE CLAIM U/S 80 IB (10) OF THE ACT IS THAT PROJECT WAS NOT COMPLETED BY 31.3.2008 AS T HE ASSESSEE HAS FAILED TO FURNISH THE COMPLETION CERTIFICATE FROM THE LOCA L AUTHORITY. IT IS APPARENT FROM THE RECORD THAT BEFORE THE CIT(A), TH E ASSESSEE FURNISHED A LETTER DATED 18.5.2010 ISSUED BY DISTRICT TOWN PLA NNER, HARYANA, CHANDIGARH. THE ASSESSEE ALSO FILED ANOTHER LETTER DATED 9.8.2010 ISSUED BY DISTRICT TOWN PLANNER, HARYANA CHANDIGARH CLARI FYING THE LETTER DATED 18.5.2010 ISSUED BY DISTRICT TOWN AND PLANNER, HARY ANA, CHANDIGARH. THE CIT(A) TREATED THESE LETTERS AS COMPLETION CER TIFICATE ISSUED BY GOVERNMENT AUTHORITIES FOR CLAIMING EXEMPTION U/S 8 0IB OF THE ACT. THESE LETTERS ARE AVAILABLE AT PAGES 15 TO 17 OF TH E ASSESSEES PAPER BOOK. SHIR AKHILESH GUPTA, LD. DR POINTED OUT THAT LETTER DATED 9.8.2010 ISSUED BY DISTRICT, TOWN PLANNER, HARYANA, CHANDIGARH CAN NOT BE CONSIDERED AS COMPLETION CERTIFICATE. IN THIS LETTER, IT IS STA TED THAT REGARDING PROVISIONS OF RAIN WATER HARVESTING SYSTEM WHICH IS FUNCTIONAL AT SITE, THERE IS NO REQUIREMENT FOR OBTAINING THE COMPLETIO N CERTIFICATE. SHRI AKHILESH GUPTA, LD. DR ALSO SUBMITTED THAT LETTER D ATED 18.5.2010 ISSUED BY DISTRICT TOWN PLANNER, CHANDIGARH ALSO CANNOT BE CONSIDERED AS COMPLETION CERTIFICATE. ACCORDING TO HIM, VIDE THI S LETTER THE DISTRICT TOWN PLANNER HAS GRANTED PERMISSION FOR OCCUPATION OF THE BUILDING AFTER CHARGING CERTAIN AMOUNT SUBJECT TO THE FOLLOWING CO NDITIONS:- 1. THE BUILDING SHALL BE USED FOR THE PURPOSES FOR WHICH THE OCCUPATION CERTIFICATE IS BEING GRANTED. 6 2. THAT YOU SHALL ABIDE BY THE PROVISIONS OF APARTM ENT OWNERSHIP ACT, 1983 AND RULES FRAMED THEREUNDER. ALL THE FLATS FOR WHICH OCCUPATION CERTIFICATE IS B EING GRANTED SHALL HAVE TO BE COMPULSORILY REGISTERED AN D A DEED OF APARTMENT WILL HAVE TO BE FILED BY YOU WITH IN THE TIME SCHEDULE AS PRESCRIBED UNDER THE APARTMENT OWNERSHIP ACT 1983. FAILURE TO DO SO SHALL INVITE LEGAL PROCEEDINGS UNDER THE STATUTE. 3. THAT YOU SHALL BE FULLY RESPONSIBLE TO SUPPLY OF WATER AS PER NORMS TILL SUCH TIME THE COLONY IS HANDED OV ER AFTER FINAL COMPLETION. 4. YOU SHALL ALSO MAINTAIN THE INTERNAL SERVICES TO THE SATISFACTION OF THE DIRECTOR TILL THE COLONY IS HAN DED OVER AFTER GRANTING FINAL COMPLETION. 5. THAT YOU SHALL BE SOLELY RESPONSIBLE FOR DISPOSA L OF SEWERAGE AND STORM WATER OF YOUR COLONY TILL SUCH T IME THESE SERVICES ARE MADE AVAILABLE BY HUDA / STATE GOVERNMENT AS PER THEIR SCHEME. 6. THAT IN CASE SOME ADDITIONAL STRUCTURES ARE REQU IRED TO BE CONSTRUCTED AS DECIDED BY HUDA AT LATER STAGE, T HE SAME WILL BE BINDING UPON YOU. 7. THAT YOU SHALL PROVIDE THE RAIN WATER HARVESTING SYSTEM AT THE EARLIEST. 8. THE STILT SHALL BE USED AS PER PROVISIONS OF APP ROVED ZONING PLAN AND BUILDING PLANS. 9. THAT THE OUTER FAADE OF THE BUILDING SHALL NOT BE USED FOR HE PURPOSES OF ADVERTISEMENT AND PLACEMENT OF HOARDING. 10. THAT YOU SHALL NEITHER ERECT NOR ALLOW THE EREC TION OF ANY COMMUNICATION AND TRANSMISSION TOWER ON TOP OF THE BUILDING BLOCKS. 7 8. THE ASSESSEE WAS REQUIRED TO FULFILL THE ABOVE C ONDITIONS. SHRI AKHILESH GUPTA, LD. DR SUBMITTED THAT BY NO STRETCH OF IMAGINATION THE ABOVE LETTERS CAN BE CONSIDERED AS COMPLETION CERTI FICATE BY LOCAL AUTHORITY AS PER LAW. 9. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE, WE SET ASIDE THE ORDER OF CIT(A) IN TOTO AND REMAND THE MATTER TO THE CIT(A) WITH A DIRECTION TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW CONSIDERING THE CONTENTIONS RAISED BY THE LD. D R. THE CIT(A) SHALL GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. AT THE SAME TIME, WE ALSO DRIECT THE LD. CIT(A) TO DISPOS E OF THE ASSESSEES APPEAL PREFERABLY WITHIN THREE MONTHS FROM THE DATE OF RECEIPT OF ORDER. 10. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23RD DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 23 RD NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR