PESHWA CONSTRUCTION, MUMBAI V. CIT 15, MUMBAI

ITA 3631/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1599 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPKANT PRASAD
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law; Competent authority; Assessment record
• Section: 143(3); 142(1); 80IB; 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 3631 /MUM / 201 4 ( / ASSESSMENT YEAR : 20 0 9 - 10 ) M/S PESHWA CONSTRUCTION, 595, NARENDRA VILLA, DR.AMBEDKAR ROAD, MATUNGA (CR), MUMBAI - 400019 / VS. COMMISSIONER OF INCOME TAX, 15, R.NO. 124, 1 ST FLOOR, MATRU MANDIR , TARDEO ROAD, MUMBAI - 400007 ( / APPELLANT ) ( / RESPONDENT ) ./ PAN : AAIFP6690H ( / APPELLANT ) .. ( / RESPONDENT ) / A SSESSEE BY : SHRI VIPUL JOSH I / R E VENUE BY : SHRI DEEPKANT PRASAD / DATE OF HEARING : 17 . 10 . 2016 / DATE OF PRONOUNCEMENT : 15. 1 2 . 2016 / O R D E R PER RAJESH KUMAR , AM : THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER OF COMMISSIONER OF INCOME TAX - 15, DATED 21.3.2014 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 2. BRIEF F ACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN OF INCOME ON 31.07.2009 DECLARING A TOTAL INCOME AT NIL BY CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT OF RS.4,12,68,224/ - WHICH WAS ITA NO.3631/MUM/2014 2 PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, T HE CASE WAS SELECTED FOR SCR UTINY AND THE STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOP MENT. THE PROJECT HILLSCAPE LOCATED AT SURVEY NO.62/2 A ND 62/4, KHANDHWA KHURD, BEHIND SHEETAL PETROL PUMP, PUNE, WAS COMPLETED DURING THE YEAR HAVING THREE WINGS COMPRIS ING 4 FLATS PER ON FLOOR PER WING TOTALING TO 84 FLATS WITH AREA OF THE PLOT 1.25 ACRES. THE PROJECT WAS APPROVED ON 20.4.2001 AND TH E AREA OF PER FLAT WAS LESS THAN 1000 SQ.FT. THE COMMENCEMENT CERTIFICATE WAS ISSUED BY THE COMPETENT AUTHORITY ON 5.7.2006 AND THE PROJECT WAS COMPLETED ON 31.3.2008. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 27.12.2011 ASSESSING THE TOTAL IN COME OF THE ASSESSEE AT RS.15 LAKHS BY RESTRICTING THE DEDUCTION U/S 80IB(10) OF THE ACT OF RS.3,97,68,224/ - AS AGAINST THE ACTUAL CLAIM OF RS.4,12,68,224/ - . THEREAFTER THE ASSESSMENT AS COMPLETED BY THE AO WAS SET ASIDE BY THE COMMISSIONER WITH A DIR ECTION TO PASS ASSESSMENT ORDER AFRESH AFTER EXAMINING THE DOCUMENTS AND CONDUCTING I NQUIRY BY EXERCISING THE REVISIONARY JURISDICTION U/S 263 OF THE ACT VIDE ORDER DATED 21.3.2014 AFTER ISSUING SHOW CAUSE NOTICE DATED 8.1.2013 . THE VARIOUS REASONS CITE D IN THE SHOW CAUSE NOTICE ARE AS UNDER: ITA NO.3631/MUM/2014 3 1. 2. I HAVE CA LLED FOR AND EXAMINED THE ASSESSMENT R ECORDS OF THE ASSESSEE. THE ORDER SHEET WITH ONLY 3 ENTRIES ON ONE PAGE HAS ALSO BEEN LOOKED INTO. THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 80IB(10) IS AS UNDER : 3. ONE OF T HE REQUIREMENTS OR SEC 80IB(10 ) IS AS UNDER : (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) I N A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST 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 1ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; FURTHERMORE, EXPLANATION (II) TO SECTION 80IB ( A) IS AS UNDER : (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF T HE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) 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; 4. AS SEC 801B(10) IS A PROVISION FOR DEDUCTION/EXEMPTION, IT HAS TO BE CONSTRUED STRICTLY. IT IS THE DUTY OF THE ASSESSEE TO MAKE A CLAIM FOR EXEMPTION AND PLACE RELEVANT MATERIALS BEFORE THE AO IN SUPPORT THERE OF AND TO PROVE THAT HIS CASE FALLS WITHIN THE EXEMPTION (87 ITR 556) (CAL). 5. IT IS SEEN THAT IN THIS CASE, THE LOCAL AUTHORITY HAS ISSUED A COMMENCEMENT CERTIFICATE FOR THE PROJECT IN PUNE AT NECO HILLSCAPE SURVEY NO.62/2 AND 62/4, KONDHWA KHURD, BEHIND SHEETAL PETROL PUMP, MUMBAI - 400048 ON 24.12.2000 AND 5.7.2006. THUS IT IS CASE ITA NO.3631/MUM/2014 4 COVERED BY EXPLANATION (II) OF THE SECTION 8 0IB QUOTED ABOVE. THIS ASPECT HAS NOT BEEN EXAMINED AT ALL BY THE AO DURING THE ASSESSMENT PROCEEDINGS FOR THIS AY AND NEEDLESS TO SAY THAT LEGAL IMPLICATION IS AGAINST THE ASSESSEES CASE. IT MAY ALSO BE MENTIONED HERE THAT NOT ONLY THIS ASPECT REMAINED TO BE EXAMINED BY AO. IT WAS NOT EVEN DISCLOSED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS FOR EARLIER ASSESSMENT YEARS. THUS, THE ASSESSEE HAD NOT DISCLOSED A MATERIAL FACT REQUIRED FOR CLAIM OF EXEMPTION U/S 80IB(10) OF THE IT ACT, 1961 FOR AY S 7.8. AND 08 - 09. THE FAILURE OF T HE AO TO EXAMINE A CRUCIAL REQUIREMENT MAKES THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO REVENUE AS THE CLAIM OF DEDUCTION U/S 80IB (10) AMOUNTING TO RS.3,97,68,224/ - HAS BEEN ERRONEOUSLY ALLOWED. 6 . IN THE INSTANT CASE IT IS FURTHER SEEN THAT THE CO MPLETION CERTIFICATE FOR THE PROJECT HAS ALSO NOT BEEN ISSUED BY THE LOCAL AUTHORITY. ONLY A CERTIFICATE BY WAY OF BHOGVATA PATRA DATED 31.3.2008 HAS BEEN ISSUED BY STATING THAT ONLY 72 FLATS A R E COMPLETE AND READY TO USE FOR RESIDENCE. IT MAY BE POINTED OUT HERE THAT AS PER THE BUILDING PLAN AVAILABLE ON RECORD, TOTAL NUMBER OF 84 FLATS CONSTITUTE THE PROJECT AND THUS THE PROJECT WAS NOT COMPLETED AS ON 31.3.2008. THUS, THE ASSESSEE FAILED TO FU LFILL THE CONDITION OF ELIGIBILITY LAID DOWN U/S 80IB(1)(I) OF THE ACT AS WELL. THIS ALSO MAKES THE ASSESSMENT ORDER ERRONEOUS AND AS SUCH NO ENQUIRY WHATSOEVER HAS BEEN CONDUCTED EVEN ON THIS ISSUE. 7 . IT IS FURTHER SEEN THAT THE ASSESSEE DID NOT FURNI SH FORM NO . 10CCB IN THE PRESCRIBED PROFORMA, DULY CERTIFIED AND SIGNED BY THE CA. THIS IS ONE OF THE BASIC CONDITIONS FOR CLAIMING DEDUCTION U/S 80IB (10). IN FACT, THE ONLY DOCUMENT IN THIS REGARD AVAILABLE IN THE ASSESSMENT RECORD IS AN UNSIGNED PHOTO COPY OF A LETTER ISSUED BY THE CA. 7.1 IT IS FURTHER TO BE POINTED OUT THAT IN THE TEXT OF HIS REPORT IN FORM 10CCB AT COL.26, THE AUDITOR HAS MENTIONED NIL WITH REGARD TO DETAILS OF DEDUCTION ADMISSIBLE UNDER CHAPTER VIA. THUS, THE AO HAS FAILED TO EVEN EXAMINE THE AUDIT REPORT ANNEXED WITH THE RETURN OF INCOME. 8. AS DISCUSSE D ABOVE , IT IS ABUNDANTLY CLEAR THAT THE ASSESSMENT ORDER PASSED BY THE AO FOR THE AY - 09 - 10 IS ERRONEOUS IN SO FAR AS THAT THE ORDER IS PASSED MECHANICALLY WITHOUT ANY EXAMI NATION OF THE IMPORTANT REQUIREMENTS FOR ALLOWABILITY TO DEDUCTION UNDER ITA NO.3631/MUM/2014 5 SECTION 80IB(10) AND THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED SUBSTANTIALLY. THUS, AFTER CALLING FOR AND EXAMINING THE RECORD OF ASSESSMENT PROCEEDINGS OF T HE ASSESSEE, I CONSIDER THAT THE ASSESSMENT ORDER PASSED BY THE ITO WARD 15(1)( 4), MUMBAI IS ERRONEOUS IN SO FAR AS IT IS PREJUDI CI AL TO THE INTEREST OF REVENUE IN THE ASSESSMENT YEAR 2009 - 10. YOU ARE HEREBY GIVEN AN OPPORTUNITY OF BEING HEARD TO STATE AS TO WHY ORDER U/S 263 (1) MAY NOT BE PASSED IN THE CIRCUMSTANCES OF THE CASE. YOU MAY, THEREFORE, APPEAR EITHER THROUGH AUTHORIZED REPRESENT AT IVE OR OTHERWISE AT MY OFFICE ON 15.1.2013 AT 3.00 PM AND STA T E YOUR CASE SD/ - ( PRADEEP SHARMA) COMMISSIONER OF INCOME TAX - 15, MURNBAI. 3. IN REPLY TO THE ABOVE NOTICE, THE ASSESSEE SUBMITTED THAT THE PLAN WAS APPROVED BY THE PUNE MUNICIPAL CORPORATION ON 29.11.2001 FOR A CONSTRUCTION OF THREE BUILDINGS WITH GROUND FLOOR PLUS FOUR FLOORS HAS GRANTED TO M/S BADSHAH ENTERPRISES F OR 50 FLATS. HOWEVER, DUE TO SOME REASONS, THE PROJECT WAS ABANDONED BY THE SAID FIRM AND THE ASSESSEE - FIRM AFTER COMING INTO BEING RE - SUBMITTED FRESH PLAN ON 15.4.2006 THAT 50 FLATS COMPRISING OF THREE BUILDINGS AND COMMENCEMENT CERTIFICATE WAS GI VEN TO THE ASSESSEE BY PUNE MUNICIPAL CORPORATION ON 5.7.2006. THEREAFTER THE ASSESSEE F URTHER REVISED THE PLAN TO CONSTRUCT 84 FLATS, 42 CAR PARKING WHICH WAS APPROVED VIDE LETTER NO.DPO/SEC 6/0231/07/203 WHICH WAS ALSO FIELD BEFORE THE COMMISSIONER OF INCOME TAX . A FTER COMPLETION OF CONSTRUCTION OF ALL 84 FLATS, THE ASSESSEE OBTAINED ALL NOCS FROM VARIOUS GOVERNMENT AUTHORITIES AND FILED ALL THESE DOCUMENTS ITA NO.3631/MUM/2014 6 INCLUDING INDEMNITY BOND ON 17.3.2008 BEFORE THE MUNICIPAL CORPORATION FOR ISSUE OF COMPL ETION CERTIFICATE . THEREAFTER, PUNE MUNICIPAL CORPORATION ISSUED BHOGVATA PATRA ON 31.3.2008 VIDE NO . BCO/14/1/230. HOWEVER, BHOGVATA PATRA WAS ISSUED ONLY IN RESPECT OF 72 FLATS I.E. GROUND PLUS 6 FLOORS. IN OTHER WORDS, THIS WAS A PART COMPLETION CERTIFICATE ISSUED BY THE PUNE MUNICIPAL CORPORATION FOR THE REASON THAT ROAD ON THE PROJECT LAND WAS NOT YET WIDENED BY THE P UNE M UNICIPAL C ORPORATION . ON THE BASIS OF THIS COMPLETION CERTIFICATE, THE COMMISSIONER OBSERVED THAT THE AO HA D NOT EXAMIN E THE ISSUE OF COMPLETION OF THE PROJECT AND THUS, CAME TO THE CONCLUSION THAT FAILURE OF THE AO TO CONDUCT INQUIRIES GOES TO THE ROOT OF ELIGIBILITY CONDITION FOR DEDUCTION U/S 80IB(10) OF THE ACT. 4 . THE COMMISSIONER NOTED THAT FINAL COMPLETION CE RTIFICATE FROM PUNE MUNICIPAL CORPORATION HAS NOT BEEN ISSUE D SO FAR TO THE ASSESSEE WHICH WAS ADMITTED BY THE LD.AR OF THE ASSESSEE BECAUSE OF THE REASON THAT THE ROAD PROPOSED ON THE PROJECT LAND WAS NOT WIDENED AS PUNE MUNICIPAL CORPORATION HAD NOT TA KE N THE POSSESSION OF THE LAND FOR THE SAID PURPOSE . THE ASSESSEE SUBMITTED BEFORE THE COMMISSIONER THAT FLATS AT 7TH FLOOR WERE OCCUPIED BY THE RESIDENTS SINCE 2008. THE LD. AR ARGUED THAT SINCE THE DELAY IN ISSU ING THE OF FINAL COMPLETION CERTIFICATE QUA 7 TH FLOOR BY PUNE MUNICIPAL CORPORATION WAS ATTRIBUTED TO THE REASONS NOT IN THE CONTROL OF THE ASSESSEE AS THE MUNICIPAL CORPORATION DID NOT UNDERTAKE THE ROAD WIDENING. THE COMMISSIONER FURTHER NOTED THAT T HE ASSESSEE HIMSELF ITA NO.3631/MUM/2014 7 ADMI TTED VIDE SUBMIS SION DATED 30.1.2011 THAT THE COMPLETION CERTIFICATE WAS NOT ISSUED FOR THE PROJECT AND ONLY BHOGVATA PATRA WAS ISSUED BY PUNE MUNICIPAL CORPORATION ON 31.3.2008 ONLY FOR 72 FLATS . ACCORDING TO THE CIT ,T HE AO HA D SIMPLY NOTED THAT CERTAIN DETAILS WE RE FILED INCLUDING THE COP IES OF COMMENCEMENT CERTIFICATE , COMPLETION CERTIFICATE AND SALE AGREEMENT BUT THERE WAS NO PROOF EITHER IN THE ORDER SHEET OR IN THE ASSESSMENT RECORD THAT THE AO HA D EXAMINED ALL THESE DOCUMENTS . AS PER CIT THERE WAS NON - A PPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. THEREAFTER, THE LD.CIT AFTER RELYING ON VARIOUS DECISIONS AS RECORDED IN PARA 12 TO 27 OF THE APPEAL ORDER CAME TO THE CONCLUSION THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE AND THEREFORE THE SAME WAS REQUIRED TO BE SET ASIDE AND ACCORDINGLY SET ASIDE WITH A DIRECTION TO PASS FRESH ASSESSMENT ORDER. 5 . THE LD.AR VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE HAD RIGHTLY CLAIMED DEDUCTION U/S 80 IB OF THE ACT QUA THE PROFIT EARNED BY THE ASSESSEE FROM HOUSING PROJECT AS THE ASSESSE E HA D FULFILLED ALL THE CONDITIONS AS ENVISAGED U/S 80IB(10) OF THE ACT. THE LD.AR SUBMITTED THAT THE ASSESSEE MOVED A REVISED PLAN FOR 84 FLATS IN THREE BUILDING S WITH SEVEN FLOORS WHICH WAS APPROVED BY THE PUNE MUNICIPAL CORPORATION AND COMPLETION WAS GRANTED VIDE LETTER NO.DPO/SEC 6/0231/07/203 DATED 31.3.2008. HOWEVER, THE PUNE MUNICIPAL CORPORATION GRANTED COMPLETION PARTIALLY THEREBY WITHH O LD ING THE COM PLETION CERTIFICATION ( BHOGVATA ITA NO.3631/MUM/2014 8 PATRA ) IN RESPECT OF 12 FLATS ON THE 7 TH FLOOR FOR THE REASONS THAT THE PROPOSED ROAD WIDENING ON THE PROJECT LAND WHICH WAS YET TO BE DONE BY PUNE MUNICIPAL CORPORATION. THE LD. AR SUBMITTED THAT THE DELAY FOR ISSUING COMPLETION CERTIFICATE WAS PURELY ATTRIBUTABLE TO THE ABOVE SAID REASONS WHICH WAS NOT ISSUED TILL THE DATE OF EXERCISING REVISIONARY POWERS AND ALSO TILL THE DA T E OF PASSING THE ORDER UNDER SECTION 263 OF THE ACT . IT WAS SUBMITTED THAT THE DELAY WAS ON THE PART OF THE PUNE MUNICIPAL CORPORATION IN TAKING POSSESSION OF THE LAND OF T HE ASSESSEE FOR DEVELOPMENT AND WIDENING OF THE ROAD . THE LD. AR FURTHER SUBMITTED THAT IN ORDER TO CLAIM DEDUCTION AS PER THE PROVISIONS OF SECTION 80IB(10) THE ISSUE OF C OMPLETION CERTIFICATE WAS NOT NECESSARY BUT EVEN IF THE ASSESSEE HAD COMPLETED THE CONSTRUCTION AND APPLIED FOR THE COMPLETION CERTIFICATE BEFORE 31.3.2008 AFTER OBTAINING NECESSARY APPROVAL FROM THE DEPARTMENT CONCERNED IT WOULD BE SUFFICE . THE LD. AR DREW OUR ATTENTION TO VARIOUS NO OBJECTION CERTIFICATES WHICH WERE PLACED AT PAGES 46 TO 67 OF THE PAPER BOOK QUA 84 FLATS. THE LD. AR VEHEMENTLY SUBMITTED THAT REVISIONARY POWERS WERE EXERCISED BY THE COMMISSIONER WITHOUT APPRECIATING THE FACTS ON RECO RDS IN CORRECT PERSPECTIVE . IT WAS ARGUED BY THE LD.AR THAT THE POINT S ON WHICH THE LD. COMMISSIONERS EXERCISED THE REVISIONARY JURISDICTION U/S 263 W ERE WRONG AS THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HA D EXAMINED THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IB(10) OF THE ACT COMPREHENSIVELY AND THEREAFTER FRAMED ITA NO.3631/MUM/2014 9 THE ASSESSMENT ALLOW ING DEDUCTION U/S 80IB(10) OF THE ACT . THE LD. AR ALSO POINTED OUT THAT SIMILAR DEDUCTION WAS ALLOWED FOR THE ASSESSMENT YEAR 2007 - 08 WHICH WAS INITIAL YEA R OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT BY DRAWING OUR ATTENTION TO ASSESSMENT ORDER PLACED AT PAGES 98 TO 100 OF THE PAPER BOOK BUT THE SAID ASSESSMENT WAS ALSO REOPENED U/S 147 R.W.S148 OF THE ACT WHICH WAS PENDING . IT WAS ALSO ARGUED BEFOR E US THAT THE COMMISSIONER FAILED TO UNDERSTAND THE MEANING OF BHOGVATA PATRA , A MARATHI TERM IN MUMBAI USED FOR COMPLETION CERTIFICATE AND THUS WRONGLY OBSERVED THAT THE COMPLETION CERTIFICATE WAS NOT ISSUED BY LOCAL AUTHORITY ONLY BHOGVATA PATRA DAT ED 31.3.2008 WAS ISSUED . THE CIT WRONGLY OBSERVED THAT ONLY 72 FLATS WAS READY FOR OCCUPATION OUT OF 84 FLATS AND THEREFORE THE PROJECT WAS NOT COMPLETED ON 31.3.2008 W HEREAS AS A MATTER OF FACT THE ASSESSEE APPLIED FOR COMPLETION CERTIFICATE FOR THE ENTIRE PROJECT AFTER OBTAINING NECESSARY NOCS FROM THE CONCERNED DEPARTMENT PLACED AT PAGES 46 TO 67 OF THE PAPER BOOK WHICH CORROBORATED THE AVERMENTS OF THE ASSESSEE THAT THE CONSTRUCTION WAS COMPLETED BEFORE 31.3.2008. THE OBSERVATIONS OF THE COMM ISSIONER THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT THE CLAIM OF DEDUCTION U /S 80IB(10) AMOUNTING TO RS. RS.3,97,68,224/ - WAS WRONGLY ALLOWED TO THE ASSESSEE WAS ALTOGETHER MISCONCEIVED AND BA S ED UPON INCORRECT APPR ECIATION OF FACTS O N RECORDS. ITA NO.3631/MUM/2014 10 6 . IN PARA 7 OF THE NOTICE , THE COMMISSIONER OBSERVED THAT ASSESSEE DID NOT FURNISH FORM NO. 10CCB IN THE PRESCRIBED PROFORMA, DULY CERTIFIED AND SIGNED BY THE CA WHICH WAS O NE OF THE BASIC CONDITION S FOR CLAIMING DEDUCTION U/S 80IB(10). THE COMMISSIONER OF INCOME TAX HA D ALSO OBSERVED AND NOTED T HAT COLUMN NO.26 IN FORM 10CCB WAS MENTIONED AS NIL WITH REGARD TO DETAILS OF DEDUCTION ADMISSIBLE UNDER CHAPTER VIA. THE LD COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE COLUMN WAS MARKED AS NIL BECAUSE IT WAS MEANT FOR DEDUCTION U/S 80IB(A)(4)(2) OF THE ACT WHEREAS THE CLAIM OF THE ASSESSEE WAS DULY MENTIONED IN COLUMN 27 WHICH REFLECTED THE AMOUNT OF DEDUCTION CLAIMED U/S 80IB(10) . THE LD. COUNSEL FIN ALLY SUBMITTED THAT THE ASSESSMENT ORDER WAS FRAMED IN ACCORDANCE WITH ACT AFTER DULY EXAMINING THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IB(10) AND THUS THE INVOCATION OF REVISIONARY JURISDICTION BY THE COM MISSIONER U/S 263 OF THE ACT WAS TOTA LLY WRONG AND CONTRARY TO THE PROVISIONS OF INCOME TAX ACT AND SO WAS THE ORDER OF THE COMMISSIONER SET TING ASIDE THE ASSESSMENT ORDER AND DIRECT ING THE AO TO MAKE FRESH ASSESSMENT . IN DEFENCE, THE LD. AR RELIED ON THE FOLLOWING DECISIONS: A) CIT V/S HINDUSTAN SAMUH AWAS LTD (2015) 377 ITR 150 (BOM); B) CIT V/S TARNETAR CORPORATION (2014) 362 ITR 174 (GUJ); C) ITO V/S SAKET CORPORATION (2015) 62 TAXMANN.COM 38 (GUJ) D) SIDDHIVINAYAK KOHINOOR VENTURE V/S ACIT (2015) 67 SOT 284 (PUNE - TRIB) URO ITA NO.3631/MUM/2014 11 7 . ON THE OTHER HAND, THE LD. DR STRONGLY OPPOSED THE ARGUMENTS OF THE LD.AR AND SUBMITTED THAT THE ASSESSMENT WAS RIGHTLY SET ASIDE BY THE COMMISSIONER BY EXERCISING THE REVISIONARY JURISDICTION U /S 263 OF THE ACT AS THE ORDER OF THE ASSESSING OFFICER PASSE D UNDER SECTION 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN VIEW OF THE FACT THAT THE CLAIM OF THE ASSESSEE U/S 80IB(10) WAS NOT EXAMINED BY THE AO AND DEDUCTION WAS WRONGLY ALLOWED. THE LD. DR ARGUED THAT THE ASSESSEE HAS BEEN GRANTED BHOGVATA PATRA ON 31.3.2008 ONLY IN RESPECT OF 72 FLATS WHEREAS THE PROJECT WAS SANCTION ED FOR 84 FLATS AND TILL THE DATE OF THE PASSING OR D ER U/S 263 BY THE COMMISSIONER EVEN NO COMPLETION CERTIFICATE WAS ISSUED FOR REMAINING FLATS WHICH PROVE D THAT THE PROJECT WAS NOT COMPLETED ON 31.3.2008 AND THE AO HA D FAILED TO MAKE ANY INQUIRY DURING T HE ASSE SS MENT PROCEEDINGS AND DID NOT EXAMINE ALL ASPECT S OF THE MATTER . THE LD. DR PRAYED THAT THE ORDER OF THE COMMISSIONER PASSED UNDER SECTION 263 DESE RVES TO BE UPHELD. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS RELIED UPON BY BOTH THE PARTIES. WE FIND THAT THE ASSESSEE HA D CONSTRUCTED A HOUSING PROJECT OF 84 FLATS COMPRISING IN THREE BUILDINGS HAVING G ROUND PLUS 7 FLOORS. THE COMMENCEMENT CERTIFICATE WAS ISSUED BY P UNE M UNICIPAL C ORPROATION FOR 84 FLATS AND CONSTRUCTION WAS UNDERTAKEN AND COMPLETED ACCORDINGLY. A FTER COMPLETION OF C ONSTRUCTION, ITA NO.3631/MUM/2014 12 THE ASSESSEE OBTAINED VARIOUS NO OBJECTION CERTIFICATES FROM VARIOUS DEPARTMENTS LIKE FIRE DEPARTMENT DATED 21.1.2008, WATER SUPPLY DEPARTMENT DATED 31.1.2008, AUTHORITY FOR TREE GROWTH DATED 12.3.2008, ACCOMPANIED LETTER DATED 13.3.2008 , HEALTH CARE DATED 24.3.2008, LETTER FOR LIFT PERMISSION DATED 26.3.2006 AND FINAL CERTIFICATE FROM FIRE DEPARTMENT DATED 29.3.2008 . ALL THESE NOCS WERE OBTAINED PRIOR TO 31.3.2008 AND SUBMITTED TO P UNE M UNICIPAL C ORPORATION FOR ISSUING FINAL CO MPLETION CERTIFICATE QUA 84 FLATS. THEREAFTER P UNE M UNICIPAL C ORPORATION ISSUED BHOGVATAPATRA DATED 31. 3 .2008 WHICH WAS A COMPLETION CERTIFICATE IN RESPECT OF 72 FLATS ONLY UP TO 6 TH FLOORS . ACCORDING TO THE CIT ONLY PART COMPLETION OF THE PROJECT WAS G RANTED THEREBY WITHHOLDING THE COMPLETION QUA 12 FLATS ON THE 7 TH FLOOR OF ALL THE THREE BUILDINGS ON THE GROUND THAT ROAD WIDENING ON THE SIDE OF THE PROJECT WAS YET TO TAKE PLACE WHICH WAS TO BE DONE BY THE MUNICIPALITY . WE FIND MERIT IN THE SUBMISSIONS OF THE LD.AR THAT THE DELAY IN ISSUE OF COMPLETION CERTIFICATE QUA DEVELOPMENT OF FLATS WAS ON THE PART OF THE P UNE M UNICIPAL CORPORATION WHO FAILED TO TAKE POSSESSION OF THE LAND FOR WIDENING THE ROAD AND CONSEQUENTLY WITHH ELD THE NOC FOR 12 FLATS ON THE 7 TH FLOOR. A PERUSAL OF THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT REVEALS VARIOUS REASONS AND GROUNDS ON THE BASIS OF WHICH THE COMMISSIONER EXERCISED JURISDICTION U/S 263 FOR SETTING ASIDE THE ORDER OF ASSESSMENT PASSED B Y THE AO. ACCORDING TO THE COMMISSIONER THE ITA NO.3631/MUM/2014 13 ASSESSEE HA D NOT PLACED /FURNISHED THE NECESSARY MATERIAL FOR VERIFICATION BEFORE THE AO QUA THE CLAIM DEDUCTION U/S 80IB(10) FOR ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 AND THE AO ACCORDINGLY FAILED TO EXAMINE THE CRUCIAL PRECONDITION S FOR ALLO W ANCE OF DEDUCTION U/S 80IB(10) OF THE ACT RESULTING INTO ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE CLAIM U/S 80IB(10) OF THE ACT AMOUNTING TO RS.3,97,68,224/ - WAS WRONGLY ALLOWED W ITHOUT EXAMINING THE NECESSARY DOCUMENTS AND SATISFYING THE VARIOUS PRECONDITIONS . THE CIT ALSO NOTED THAT THE P UNE M UNICIPAL C ORPORATION ISSUED BHOGVATAPATRA ONLY IN RESPECT OF 72 FLATS WHEREAS THE PROJECT WAS ENVISAGED FOR 84 FLATS AND THEREFORE A SSESSEE FAILED TO FULFILL THE NECESSARY CONDITIONS FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT AND RESULTANT ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS NO INQUIRY WAS CONDUCTED BY THE AO . ANOTHER REASON GIVEN BY THE COMMISSIONER FOR DIRECTING THE AO TO REFRAME THE ASSESSMENT WAS THAT THE ASSESSEE DID NOT FURNISH FORM 10CCB DULY CERTIFIED AND SIGNED BY THE CHARTERED ACCOUNTANT WHICH WAS THE BASIC CONDITIONS U/S 80IB (10) OF THE ACT THEREBY CONTRAD IC TING HIS OWN FINDING S STATED IN PARA 7.1 OF THE SHOW CAUSE NOTICE THAT IN THE AUDIT REPORT IN FORM NO. 10CCB AT COL.26, THE AUDITOR HAD MENTIONED NIL AS REGARD THE DETAILS OF DEDUCTION ADMISSIBLE UNDER CHAPTER VIA. ACCORDING TO THE COMMISSIONER T HE AO HA D EVEN FAILED TO EXAMINE THE AUDIT REPORT ANNEXED WITH THE RETURN OF INCOME . WE FIND ITA NO.3631/MUM/2014 14 THAT THE FINDINGS AS RECORDED BY THE COMMISSIONER WERE CONTRADICTORY AND CONFLICTING AND THERE WAS NO OF APPLICATION OF MIND TO THE FACTS ON RECORDS AND HE PRO CEEDED TO SET ASIDE THE ASSESSMENT FOR THE REASONS WHICH WERE CONFLICTING AND BASED UPON WRONG APPRECIATION OF FACTS ON RECORD. ON ONE HAND THE COMMISSIONER HAS OBSERVED THAT AUDIT REPORT IN FORM 10CCB WAS NOT FILED WHEREAS CONTRADICTING HIS OWN OBSERVA TION HE FURTHER NOTED THAT AO FAILED TO EXAMINE THE AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME. ACCORDING TO THE AR OF THE ASSESSEE THE COLUMN NO.26 OF THE AUDIT REPORT OF FORM NO.10CCB THE COLUMN WAS MARKED AS NIL AS THE ASSESSEE HA D NOT CLAIMED ANY DEDUCTION U/S 80IB(3,4,5 AND 7) WHEREAS COLUMN NO.29 AND 30 WERE DULY FILLED IN AND RS.4,12,60,224/ - WAS MENTIONED AS CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT WHICH APPEARS TO BE CORRECT . WE ALSO FIND THAT THE RE WAS A CERTIFICATE APPENDED BY TH E AUDITOR AT THE END OF THE SAID FORM IN RESPECT OF THE CLAIM UNDER SECTION 80IB(10) OF THE ACT . IN VIEW OF THE FACTS AND CIRCUMSTANCES , HEREINABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT FRAMED BY THE AO WAS CORRECT AND WAS W RONGLY SET A SIDE BY THE COMMISSIONER BY EXERCISING REVISIONARY JURISDICTION/POWERS U/S 263 OF THE ACT . BESIDES THE CASE OF THE ASSESSEE IS ALSO SUPPORTED AND SQUARELY COVERED BY THE DECISION IN THE CASE OF HINDUSTAN SAMUH AWAS LTD(SUPRA) IN WHICH THE HONBLE BO MBAY HIGH COURT HAS HELD THAT EVEN IF THE PROJECT IS PART COMPLETED AND WAS GRANTED COMPLETION CERTIFICATE FOR THE WORK ITA NO.3631/MUM/2014 15 COMPLETED , THE ASSESSEE IS ENTITLE D FOR CLAIMING BENEFIT U/S 80IB(10) OF THE ACT. THE RELEVANT PORTION OF THE JUDGMENT OF THE JURI SDICTIONAL HIGH COURT IN THE CASE OF HINDUSTAN SAMUH AWAS LTD (SUPRA) IS REPRODUCED BELOW: 10. WE HAVE NO DIFFICULTY TO ACCEPT THIS CONTENTION. WE ALSO HOLD THAT THE EXPLANATION IS QUITE CLEAR AND DOES NOT INTRODUCE ANY UNCERTAINTY. IN OTHER WORDS, DATE OF COMPLETION OF A PROJECT HAS TO BE THE DATE OF ISSUANCE OF COMPLETION CERTIFICATE BY THE MUNICIPAL AUTHORITY. 11. THE QUESTION WE RAISE HERE IS WHETHER THE EXPLANATION INTRODUCED AN ELEMENT OF HARSHNESS TO SUCH AN EXTENT THAT IT RENDERED THE MAIN PROVIS ION NUGATORY? IN OUR VIEW, THE EXPLANATION IS INTRODUCED RECENTLY TO PUT AN END TO A CONTROVERSY, WHICH MIGHT ARISE BEFORE THE ASSESSING OFFICER ABOUT THE DATE OF COMPLETION. THE INTENTION OF THE LEGISLATURE IN PROVIDING EXPLANATION TO FIX THE DATE OF COMP LETION OF A PROJECT IS QUITE HELPFUL WHEN THIS PROVISION IS UTILIZED IN PRACTICE. IN OUR VIEW THE EXPLANATION HAS INTRODUCED AN UNNECESSARILY STRICTNESS IN THE PROVISION WHICH IS IN THE NATURE OF EXEMPTION AND NOT IN THE NATURE OF CHARGING. 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 CAN BE DEMONSTRATED ON THE SPOT AND ALSO THROUGH A CERTIFICATE ISSUED BY AN ARCHITECT WHO IS APPOINTED FO R SUPERVISING THE CONSTRUCTION WORK. HE IS A PROFESSIONAL WHO WOULD DECLARE THAT THE PROJECT IS COMPLETE. UNFORTUNATELY, SUB - SECTION (10) AND THE EXPLANATION DO NOT GIVE ANY IMPORTANCE TO THE ISSUANCE OF SUCH COMPLETION CERTIFICATE BY THE CONCERNED ARCHITE CT. 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 ARCHITEC T. 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 COMP LETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES, AND IF THEY DO NOT TAKE STEPS URGENTLY AND DELAY THE ISSUANCE OF COMPLETION CERTIFICATE FROM THEIR SIDE, CAN IT BE SAID THAT SUCH CERTIFICATE WOULD ALONE DECIDE THE DATE OF COMPLETION OF THE PROJECT? THE A NSWER IS IN NEGATIVE. ITA NO.3631/MUM/2014 16 12. 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 25.03.200 8. 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, 200 8. THIS DELAY CANNOT BE ATTRIBUTED TO THE RESPONDENT ASSESSEE. 13. IN VIEW OF THIS, WE ARE INCLINED TO HOLD THAT THE PROJECT, FOR WHICH EXEMPTION IS SOUGHT, WAS COMPLETED PRIOR TO 31.03.2008 AND THEREFORE, WE ARE INCLINED TO RECORD OUR ANSWER IN AFFIRMATIV E TO THE SUBSTANTIAL QUESTION OF LAW REFERRED TO ABOVE. BOTH THE APPEALS ARE ACCORDINGLY DISMISSED. IN THE CASE OF THE ASSESSEE ALSO THE CONSTRUCTION OF FLATS WAS COMPLETED BEFORE 31.3.2008 AND THE ASSESSEE APPLIED FOR ISSUE OF COMPLETION CERTIFICATE AF TER OBTAINING NECESSARY NOCS FROM VARIOUS GOVT AUTHORITIES AND THEREFORE THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN IN THE ABOVE DECISION. ACCORDINGLY WE ARE INCLINED S ET ASIDE THE ORDER OF CIT AND UPHOLD HE ASSESSMENT FRAMED BY THE AO. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH DEC , 2016 15TH DEC , 2016 S D SD ( AMIT SHUKLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15/ 1 2 /2016 . . ./ SRL , SR. PS ITA NO.3631/MUM/2014 17 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI