ACIT CENTRAL CIRCLE 1(10, PUNE V. M/S P3 PROPERTIES, PUNE

ITA 41/PUN/2020

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had allowed the respondent-assessee, M/s P3 Properties, a deduction under section 80IB(10) for a housing project. The Revenue contended that the project did not commence on the correct date and was not completed within the stipulated time frame. The Tribunal examined the dates of approval and completion of the housing project and found that the project was completed later than the deadline required by section 80IB(10), thus not fulfilling the conditions for the deduction.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137447 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2020
• Other Referred Cases: CIT vs. Voora Property Developers (P.) Ltd. 373 ITR 317 (Madras), CIT vs. Vandana Properties 353 ITR 36 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.41/PUN/2020 िनधाᭅरण वषᭅ / Assessment Year : 2010-11 ACIT, Central Circle-1(10), Pune. Vs. M/s P3 Properties, 504, Senapati Bapat Road, Corporate Plaza Next to Chatursingh Temple, Pune- 411004. PAN : AAIFP1712G Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)-11, Pune [‘the CIT(A)’] dated 31.10.2019 for the assessment year 2010-11. 2. The Revenue raised the following grounds of appeal :- “1. Whether the Ld CIT(A) was correct in holding that the sanction of layout plan i.e. 01/07/2003 cannot be taken as commencement date for the housing project. 2. Whether the Ld CIT(A) was correct in holding that the housing project are held to have commencement only after amended approval by the local authority on 12/09/2005, when there are 7 such commencement certificates between 2003-2010. Revenue by : Shri Prashant Gadekar Assessee by : Shri Suhas Bora & Shri Sanket Bora Date of hearing : 25.01.2023 Date of pronouncement : 08.02.2023 ITA No.41/PUN/2020 2 3. Whether the Ld CIT(A) erred in not appreciating the fact that Shri Rajiv Bhale already spent a sizable amount in preparation of plot and work commenced as per the layout plan dated 01/07/2003. 4. Whether the Ld CIT(A) was correct in allowing proportionate deduction u/s 80IB(10) of the Act for the houses whose area exceeded 1500 sq. ft. in respect of flat no H 701 & 704 as section does not speak about proportionate disallowance. 5. Whether the Ld CIT(A) was correct in allowing deduction u/s 80IB(10) of the Act where the area in building of Ruby project, Flat No. E-304(Typical odd floor), and flat No-E-even floor built up area of it are in excess of 1500 sq. ft. and the area of Row House No- B-3 & Emerald Building worked out at 1534.10 sq. ft. (including balcony area, projected terrace and additional floor projections to terrace). Similarly, all the Row Houses in this project have built up area of more than 1500 sq. ft.” 3. Briefly, the facts of the case are as under :- The respondent-assessee is a firm engaged in the business of Builders and Developers. The Return of Income for the assessment year 2010-11 was filed on 27.09.2010 disclosing Rs.Nil income after claiming deduction under the provisions of section 80IB(10) of the Income Tax Act, 1961 (‘the Act’) of Rs.59,19,60,200/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Central Circle-1(2), Pune (‘the Assessing Officer’) vide order dated 26.03.2013 passed u/s 143(3) at a total income of Rs.59,19,60,200/- after disallowing the claim for deduction of Rs.59,19,60,200/- u/s 80IB(10) of the Act. The factual matrix of the case is as under : During the course of assessment proceedings, the Assessing Officer found that during the previous year relevant to the ITA No.41/PUN/2020 3 assessment year under consideration, the respondent-assessee had completed two housing projects, namely, Ruby and Emerald Park and shown the sale proceeds of the said housing projects at Rs.1,64,25,71,071/- after claiming expenditure shown as profit of Rs.59,13,57,328/-. The same was claimed as deduction under the provisions of section 80IB(10) of the Act. The Factual background of the project is as under : One Mr. Rajeev Bhale of M/s Pratham Developers undertook the housing development project in Survey No.210/2 + 5, 211/2, Wakad, Pune on the area of land admeasuring more than 36 acres. He accordingly, applied for sanction of building plan which was approved by the Pimpri Chinchwad Municipal Corporation (‘PCMC’) by BP/Lay-out/Wakad/22/03 dated 01.07.2003. The said Mr. Rajeev Bhale had incurred some expenditure upto financial year 2005-06. The same was disclosed in the application made before the Hon’ble Settlement Commission of Income Tax Department. Out of the two plots, one plot was sold by Shri Rajeev Bhale and in respect of other plot, he entered into a joint venture agreement dated 31.10.2004. By virtue of this joint venture agreement, the respondent-assessee came into existence and proceeded with development of the housing project and submitted a revised plan for approval to the PCMC. The Assessing Officer was of the opinion ITA No.41/PUN/2020 4 that the original housing plan approval i.e. 01.07.2003 should be reckoned/taken into consideration if so than the said housing project is required to be completed on or before 31.03.2008. However, the date of completion of the housing project is 23.03.2010, which is beyond the prescribed time lime for completion of the housing project under the provisions of section 80IB(10) of the Act. 4. The respondent-assessee submitted revised plan after formation of the joint venture to develop this housing project and the revised plan was approved by the PCMC by Layout Plan No.BP/Lay-out/Wakad/22/03 dated 12.09.2005. 5. Thus, he was of the opinion that the original approval and commencement certificate was obtained on 01.07.2003 and, therefore, the project should have been completed on or before 31.03.2008 in order to avail deduction under the provisions of section 80IB(10) of the Act. Further, the Assessing Officer also observed that area of residential unit project “Ruby” exceeded 1500 sq.ft. and this fact was also got verified by the Government Registered Valuer appointed by the Department. Accordingly, he concluded that the assessee is not entitled for deduction u/s 80IB(10) of the Act. 6. Being aggrieved by the above assessment order, an appeal was filed before the ld. CIT(A) contending inter-alia that the approval ITA No.41/PUN/2020 5 relied upon by the Assessing Officer dated 01.07.2003 is only layout approval and not a building plan approval. The project plan for construction of the housing project “Ruby” and “Emerald” was approved by the PCMC only on 12.09.2005. As regards, the allotment of more than one flat residential unit in the housing project to an individual, it is submitted that the allotment was done prior to the provisions of clause (f) came into existence. However, the ld. CIT(A) placing reliance on the decision of the Hon’ble Madras High Court in the case of CIT vs. Voora Property Developers (P.) Ltd. 373 ITR 317 (Madras) and the decision of the Hon’ble Bombay High Court I the case of in the case of CIT vs. Vandana Properties 353 ITR 36 (Bombay) as well as considering the fact that the respondent-assessee had paid building permission fees on 12.09.2005 held that the Assessing Officer had erred in taking the commencement date for the housing project as 01.07.2003 instead of 12.09.2005 accordingly, directed the Assessing Officer to allow the deduction u/s 80IB(10) of the Act. As regards to the violation of the conditions for availing the benefit of deduction u/s 80IB(10) i.e. each residential unit exceeding 1500 st.ft. i.e. the size of residential unit is more than 1500 sq.ft., the ld. CIT(A) held that the terrace area shall not be included in the calculation of the built-up area of the flat of each ITA No.41/PUN/2020 6 residential unit on exclusion of terrace area each unit of block of residential unit is less than 1500 sq.ft. and regarding violation of clause (f), the ld. CIT(A) had upheld the disallowance in respect of the units which are allotted to more than one unit to a single individual or in the name of his family members. 7. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us in the present appeal. 8. The ld. CIT-DR submits that the ld. CIT(A) ought not to have considered the permission for building plan for construction of the housing projects, “Ruby” and “Emerald” were obtained only on 12.09.2005 ignoring the fact that the original approval was granted to the assessee on 01.07.2003. Taking us through the copies of the approval filed before us, he submits that that in every subsequent approval, a reference was made to the original sanction plan of building permission dated 01.07.2003 which clearly establishes that the commencement certificate and the original plan was obtained on 01.07.2003, which means the project is required to be completed on or before 31.03.2008, which is a sine qua non condition for availing deduction u/s 80IB(10) of the Act. He further submitted that even the completion certificate dated 23.03.2010 also contains the building permission approval dated 01.07.2003. ITA No.41/PUN/2020 7 9. On the other hand, ld. AR submits that the building plan approved by the PCMC on 01.07.2003 is only a layout plan along with building plan for the housing project submitted by Pratham Developers, the photocopies of which are furnished before us. He further submitted that the layout plan of entire plots were further sub-divided on 12.09.2005 and the building plan for housing project “Ruby” and “Emerald” was first submitted by the respondent- assessee on 12.09.2005 and the development charges were paid only on 12.09.2005. He also filed copies of building plan certified by the Architect. 10. We heard the rival submissions and perused the material on record. In the present case, the dispute is with regard to the date of approval of original building plan. The claim of deduction is inextricably linked with the date of approval of the housing project. The Explanation inserted to clause (iii) of sub-section (10) of section 80IB, clarifies that where the approval in respect of housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which building plan of housing project is first approved by the local authority. Therefore, the crucial fact that requires to be determined by us is, what is the date of first approval of building plan of the PCMC. Even in the building plan dated 12.09.2005, which is submitted ITA No.41/PUN/2020 8 before us, it is clearly mentioned that the previous sanction of housing project was approved on 01.07.2003, the photocopy of the image of the said layout plan is reproduced below :- 11. Thus, it is clear from the above that the housing plan was originally sanctioned on 01.07.2003 and, therefore, the housing project is required to be completed on or before 31.03.2008, whereas, in the present case the housing project could be completed only on 23.03.2010. Thus, the respondent-assessee had not satisfied the conditions precedent for availing the benefit of deduction u/s 80IB(10) of the Act. It is settled principle of law that exemption is available only on complying with certain conditions precedent under the respective Statute, those conditions have to be strictly ITA No.41/PUN/2020 9 complied with as held by the Hon’ble Supreme Court in the case of CIT vs. Dilip Kumar (2018) 9 SCC 1 (FB)(SC). The principle that in the event of ambiguity in a provision in a fiscal statute, a construction favourable to concerned, shall not be applicable to construction of an exemption notification. In the background of the above settled legal principle, we examined the facts of the present case and on perusal of the assessment order as well as impugned order, we are unable to discern that the ld. CIT(A) had satisfied himself that the respondent-assessee had fulfilled the necessary conditions precedent for availing the deduction u/s 80IB(10) of the Act. We are perplexed by the approach adopted by the ld. CIT(A) in granting relief to the respondent-assessee without examining in detailed, the permissions granted by the PCMC and also without any discussions on the factual aspect of this issue, simply jumped to the conclusion that the permission was granted by the PCMC on 01.07.2003 is only layout plan. Therefore, we are of the considered opinion that the order of the ld. CIT(A) suffers from voice of perversity and it is bereft of factual discussion on facts of the case and also failed to construe the provisions of relevant section in accordance with settled legal principles discussed above. 12. It is also settled position of law that the onus of satisfying the conditions precedent for availing the benefit of deduction u/s 80IB ITA No.41/PUN/2020 10 always lie upon an assessee, who is claiming the benefit of deduction. In the present case, as stated by us supra, the assessee had failed to prove that the permissions for construction of the housing project were obtained on 12.09.2005 for the first time except harping on that the permissions for obtain for the first time only on 12.09.2005. As observed by us in the foregoing paragraphs, even the permissions obtained on 12.09.2005 contained a reference to the original permission obtained on 01.07.2003, which clearly establishes that the approvals for building permission were obtained for first time only on 01.07.2003. The reliance placed by the ld. CIT(A) on the decision of Hon’ble Bombay High Court in the case of CIT vs. Vandana Properties, 353 ITR 36 (Bombay) and the decision of the Hon’ble Madras High Court in the case of CIT vs. Voora Properties (P) Ltd., 373 ITR 317 (Madras) is misplaced, inasmuch as, the ratio laid down in those cases has no application to the facts of the present case. 13. In view of the above findings, we are of the considered opinion that the assessee is not eligible for deduction of profits derived from execution of housing projects “Ruby” and “Emerald” u/s 80IB(10) of the Act. 14. We consider unnecessary to delve into the issue of violation of other conditions for availing the benefit of deduction u/s 80IB(10) ITA No.41/PUN/2020 11 of the Act. Since, we held in foregoing paragraphs that the respondent-assessee is not eligible for benefit of deduction u/s 80IB(10) for failure of assessee to satisfy the condition precedent. Therefore, the order of the ld. CIT(A) is reversed and restore the assessment order. 15. In the result, the appeal filed by the Revenue stands allowed. Order pronounced on this 08 th day of February, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 08 th February, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-11, Pune. 4. The Pr. CIT (Central), Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.