ACIT, UDAIPUR V. M/s. Silver Spring Construction P. Ltd., UDAIPUR

ITA 460/JODH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7844 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U C JAIN
• Keywords: Proportionate interest
• Section: 143(3); 80IB

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H ARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A. NO. 460 /JODH/201 4 (A.Y. 20 10 - 11 ) A.C.I.T., VS M/S. SILVER SPRING CONSTRUCTION P. LTD. CIRCLE - 2 , SHANTI NIKETAN, BEDLA ROAD, FATEHPURA, UDAIPUR. UDAIPUR. PAN NO. AAKCS2772C (APPELLANT) (RESPONDENT) ASSESSEE BY : - SHRI U.C. JAIN AND SHRI RAJENDRA JAIN . DEPARTMENT BY : - SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 01 / 10 /2 01 4 DATE OF PRONOUNCEMENT : 08 / 10 /2014 O R D E R P E R HARI OM MARATHA, J.M. : THIS APPEAL OF THE REVENUE, FOR A.Y. 2010 - 11, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), DATED 04.06.2014. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE THAT THE ASS ESSEE - COMPANY CARRIED ON THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL COMPLEXES. FOR A.Y. 2010 - 11, THE COMPANY FILED ITS RETURN OF INCOME 2 ON 29.09.2010 DECLARING TOTAL INCOME OF RS. 67,15,810/ - . AS AGAINST WHICH THE INCOME WAS ASSESSED U/S 143(3) OF THE IN COME TAX ACT, 1961, THE ACT FOR SHORT, AT RS. 1,64,57,830/ - . THE A.O. HAS MADE THE FOLLOWING ADDITIONS : - TOTAL INCOME AS PER COMPUTATION OF INCOME RS. 67,15,810/ - ADD: I) DISALLOWANCE OF CLAIM U/S 80IB(10) AS DISCUSSED ABOVE. RS. 95,04,512/ - II) DISALLOWANCE OUT OF INTEREST EXPENSES AS DISCUSSED ABOVE. RS. 1,37,503/ - III) LUMP SUM DISALLOWANCE FOR WANT OF VOUCHERS AS DISCUSSED RS. 1,00,000/ - RS. 97,42,015/ - RS. 1,64,57,825/ - TOTAL INCOME RS. 1,64,57,830/ - 2.1 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL AND LD. CIT(A) HAS PARTLY ALLOWED RELIED, AGAINST WHICH THE REVENUE HAS CAME IN THIS APPEAL. THE ASSESSEE HAS NOT FILED ANY SECOND APPEAL AGAINST THE SUSTAINED ADDITIONS. THE REVENUE HAS R AISED THE FOLLOWING GROUNDS IN ITS APPEAL : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN : 1. DELETING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE I.T. ACT AMOUNTING TO RS. 95,04,512/ - WITHOUT APPRECIATING TH E FACTS THAT THE ASSESSEE DID NOT ALLOT/SALE THE HOUSING OR RESIDENTIAL UNITS AS SPECIFIED IN SECTION 80IB(10) OF THE I.T. ACT. 3 1. 1. I GNORING THE FACTS THAT NO COMPLETION CERTIFICATE OR BUILDING USE CERTIFICATE OR OCCUPATION CERTIFICATE WAS ISSUED BY T HE LOCAL AUTHORITY TILL DATE OF ASSESSMENT ORDER. 2. DELETING THE DISALLOWANCE OF INTEREST OF RS. 1,37,503/ - MADE BY THE A.O. U/S 36(1)(III) OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT INTERNET FREE LOAN TO ITS DIRECTORS AND OTHERS WAS ADVANCED WITH OUT ANY BUSINESS EXPEDIENCY WHEREAS ASSESSEE IS PAYING INTEREST ON BORROWED FUNDS. 3. RESTRICTING THE LUMP - SUM DISALLOWANCE OF LABOUR EXPENSES FROM RS. 1,00,000/ - TO RS. 40,000/ - WITHOUT APPRECIATING THE FACTS THAT CASH PAYMENTS ARE MADE TO LABOURERS ON SEL F PREPARED VOUCHERS/WITHOUT VOUCHERS WHICH DOES NOT CONTAIN THE NAME OF PAYEE, ADDRES S AND SIGNATURE ETC. 2.2 WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY CIRCUMSPECTED THE ENTIRE RECORD. 2.3 GROUND NO. (1) AND (1.1) OF THIS APPEAL IS REGARDING ALLOWANCE OF RS. 95,04, 512/ - AS DEDUCTION U/S 80IB(10) OF THE ACT. THE FACTS APROPOS THIS ISSUE ARE THAT IN THE STATEMENT OF INCOME OF THE ASSESSEE - COMPANY HAS CLAIMED 100% DEDUCTION OF RS. 95,04,512/ - AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT, WHICH IS AVAILABLE ON A RESIDENTIAL PROJECT 4 CONSTRUCTED BY ANY ASSESSEE IN THE CASE THE CONDITIONS LAID IN THE SECTION ARE FULFILLED. THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL PROJECT NAMED AS SILVER SPRING APARTMENTS. IN THE C.A. AUDIT REPORT THE DATE OF COMPLETION OF THE PROJECT AS GIVEN IN FORM NO. 10 CCB DATED 29/09/2010, (COL. 23 B) IS MENTIONED AS 31.03.2010. AS PER THE A.O. COMPLETION CERTIFICATE IS NOT ENCLOSED. THE ASSESSEE OBTAINED FIRST APPROVAL OF THE PLAN FROM THE URBAN IMPROVEMENT TRUST (U .I.T.), UDAIPUR ON 24.06.2006. AS PER SECTION 80IB(10), THE PROJECT SO APPROVED MUST BE COMPLETED WITHIN 5 YEARS FROM THE END OF THE F.Y. IN WHICH APPROVAL WAS FIRST SOUGHT (SIC GRANTED). FURTHER, THE A.O. ALSO NOTICED THAT IN VIOLATION OF ANOTHER CONDITIO N IT HAS ALLOTTED MORE THAN ONE FLAT TO SHRI VINOD KUAMR BHATI. THE A.O. ALSO FOUND THE CONSTRUCTION WAS NOT AS PER THE APPROVED PLAN. THEREFORE, AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSEE, THE A.O. H A S DISALLOWED THIS CLAIM AND HAS ADDED A SU M OF RS. 95,04,512/ - TO ASSESSEES INCOME OF THE YEAR. IN APPEAL, THE LD. CIT(A) GOT CONVINCED AND HAS FOUND THE ASSESSEE - COMPANY ELIGIBLE FOR THIS DEDUCTION. 2.4 THE LD. D.R. HAS PERSUASIVELY SUBMITTED THE SAME REASONS WHICH HAVE BEEN GIVEN BY THE A.O. AND HAS PLEADED THAT THIS AMOUNT OF RS. 95,04,512/ - NEEDS TO BE ADDED. 5 2.5 ON THE OTHER HAND LD. A.R. HAS REPEATED AND SUPPORTED THE ORDER OF LD. CIT(A). 2.6 AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES, WE ARE CONVINCED THAT THE ASSESSEE - COM PANY IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. WE WOULD LIKE TO EXTRACT THE FOLLOWING RELEVANT PORTION OF LD. CIT(A)S ORDER, FROM WHICH EVERY POINT WILL BE CLARIFIED : - I H AVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDING S OF THE AO KEEPING INTO CONSIDERATION THE VARIOUS CASE LAWS OF THE HIGHER APPELLATE AUTHORITIES AND THE HONBLE COURTS I INCLINE TO AGREE WITH THE CONTENTION OF THE APPELLANT THAT THE LD. AO IS NOT JUSTIFIED IN MAKING THE ADDITION/DISALLOWANCE OF CLAIM U/ S 80IB(10) OF THE ACT OF RS. 95,04,512/ - ON THE FOLLOWING COUNTS: I) THE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF REAL ESTATE AND CONSTRUCTION. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DERIVED PROFITS ON SALE OF UNITS OF A RESIDENTIAL PROJECT DEVELOPED AND CONSTRUCTED BY IT, NAMELY; 'SILVER SPRING APARTMENT' AT UDAIPUR AND CLAIMED DEDUCTION OF RS.95,04,512/ - U/S 80IB(10) ON THE SAID PROJECT. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT AMOUNTING TO RS.95,04,512/ - WHICH HAS BE EN DISALLOWED BY THE LD. AO FOR THE REASONS AS MENTIONED ABOVE. 6 II) THE FIRST APPROVAL OF THE SAID HOUSING PLAN ON WHICH CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT HAS BEEN MADE WAS OBTAINED FROM LOCAL AUTHORITY I.E. URBAN IMPROVEMENT TRUST (UIT) ON 24.06.2 006 AND AS SUCH, IN ORDER TO AVAIL CLAIM OF DEDUCTION U/S 80IB, THE PRESCRIBED PERIOD OF FIVE YEARS FOR COMPLETION OF THE CONSTRUCTION ENDED ON 31.03.2012. III) THE ENTIRE ISSUE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT WAS EXAMINED DURING THE ASSESSMENT P ROCEEDINGS U/S 143(3) OF THE ACT FOR THE EARLIER ASSESSMENT YEAR 2009 - 10 ALSO AND AFTER DULY VERIFYING ALL THE FACTS AND MATERIALS, THE ID. AO HAD ALLOWED THE DEDUCTION CLAIMED U/S 80 - IB(10) OF THE ACT AND IT IS THE SAME SANCTION PLAN IN THE YEAR UNDER CON SIDERATION ON WHICH THE DEDUCTION U/S 80 - IB(10) OF THE ACT WAS ALLOWED BY THE LD. AO. THOUGH THE PRINCIPLE OF RES - JUDICATA IS NOT APPLICABLE TO THE INCOME - TAX PROCEEDINGS, YET FOR THE SAKE OF CONSISTENCY, THE SAME NEEDS TO BE FOLLOWED. IV) SINCE THE EXPLANAT ION TO CLAUSE (A) TO SECTION 80 - IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY I.E. IN THIS CASE UIT, THE APPELLANT - ASSESSEE DULY INFORMED AND REQUESTED UIT TO ISSUE THE COMPLETION CERTIFICATE FOR THE SAID PROJECT VIDE LETTER DATED 31.03.2010. THE LOCAL AUTHORITY HAD DULY ACKNOWLEDGED THE RECEIPT OF SUCH A REQUEST MADE, A COPY WHEREOF WAS DULY FURNISHED TO THE ID. AO AT THE TIME OF ASSESSMENT PROCEEDINGS. 7 V) HOWEVER, UIT, UDAIPUR HAS NOT YET ISSUED T HE COMPLETION CERTIFICATE NOR COMMUNICATED ANY REASON FOR NOT ISSUING THE SAME. IT IS SUBMITTED BY THE LD. AR THAT WHATEVER WAS WITHIN THE CONTROL AND POWER OF THE ASSESSEE I.E. TO SUBMIT A REQUEST TO ISSUE CERTIFICATE OF COMPLETION TO UIT, UDAIPUR, THE AS SESSEE HAS ALREADY DONE BY INFORMING AND REQUESTING TO THE UIT. THE ASSESSEE COULD NOT BE HELD RESPONSIBLE FOR NON - ISSUANCE OF THE COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY. IT IS A TRITE THAT IMPOSSIBLE CANNOT BE REQUIRED TO BE PERFORMED BY A PERSON, ESPECIALLY WHEN THING IS BEYOND HIS CONTROL. THE ASSESSEE COULD NOT BE PUNISHED FOR SUCH ACT, WHICH IS BEYOND HIS CONTROL. THE WORD ISSUED HAS BEEN USED IN THE ACT FOR THE COMPLETION CERTIFICATE AND NOT THE WORD OBTAINED BY THE ASSESSEE. AS THE LEGISLA TURE HAD ALREADY ANTICIPATED SUCH HARDSHIPS TO THE ASSESSEE AND THAT IS WHY THE WORD ISSUED BY THE LOCAL AUTHORITY HAS BEEN USED. THERE IS NO REFUSAL FOR ISSUANCE OF THE COMPLETION CERTIFICATE AND AS SUCH, THE COMPLETION CERTIFICATE IS DEEMED TO HAVE BEE N ISSUED. FACTUALLY, THERE IS NO GENERAL PRACTICE TO ISSUE COMPLETION CERTIFICATE BY THE CONCERNED AUTHORITY IN RESPECT OF THE BUILDINGS APPROVED BY IT AND THE IT ACT HAS ALSO NOT PRESCRIBED ANY FORMAT OF COMPLETION CERTIFICATE FOR 80 - IB(10) OF THE ACT. V I) IT IS REITERATED THAT THE LOCAL AUTHORITY IS RESPONSIBLE FOR ISSUING COMPLETION CERTIFICATE SO THE ASSESSEE CANNOT BE DENIED RELIEF U/S 80IB ON THIS GROUND AS HELD IN ACIT, CIRCLE 27(1), NEW DELHI VS. SURENDRA DEVELOPERS, NEW DELHI IN ITA NOS.2743 TO 2745/DEL/2010 VIDE ORDER DATED 01.08.2012. 8 VII) IT WAS ALSO SUBMITTED BEFORE THE ID. AO THAT THE ASSESSEE HAS APPLIED TO THE LOCAL AUTHORITY TO ISSUE NECESSARY COMPLETION CERTIFICATE BUT FOR ANY INACTION ON THE PART OF LOCAL AUTHORITY, THE BENEFIT SHOU LD NOT BE DENIED TO THE ASSESSEE. VIII) THE ID. AO WITHOUT APPRECIATING THIS FACTUAL ASPECT OF COMPLETION CERTIFICATE, HAS GONE INTO ANOTHER ASPECT AS TO THE ISSUE OF OCCUPANCY CERTIFICATE OR UTILITY CERTIFICATE BY THE LOCAL AUTHORITY AS MENTIONED ON PA GE NO. 10 OF HIS IMPUGNED ASSESSMENT ORDER. IN THIS CONNECTION, IT IS RATHER MORE SIGNIFICANT TO SUBMIT THAT THE ACT SUBSCRIBES ONLY COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT TO BE ISSUED BY THE LOCAL AUTHORITY AND NOT THE OCCUPANCY CERTIFI CATE OR UTILITY CERTIFICATE AS MENTIONED BY THE ID. AO. IX) EVEN IN THE APPROVAL LETTER AND ALSO IN REPLY OF UIT U/S 133(6), AS REPRODUCED BY THE ID. AO IN THE ASSESSMENT ORDER, THERE IS NO MENTION OF COMPLETION CERTIFICATE, BOTH SPEAK ABOUT OCCUPANCY A ND UTILITY CERTIFICATES ONLY. THERE WAS NO STIPULATION OF OBTAINING COMPLETION CERTIFICATE IN THE APPROVAL LETTER AND ALSO, IN REPLY THE UIT HAS MENTIONED ABOUT OCCUPANCY CERTIFICATE ONLY. IT IS ALSO SUBMITTED THAT THE COMPLETION CERTIFICATE RELATES TO CON STRUCTION ACTIVITIES WHEREAS OCCUPANCY OR , UTILITY CERTIFICATE HAS CONNECTION WITH AMENITIES. X) IT CANNOT BE DISPUTED THAT THE ASSESSEE HAS NOT REQUESTED FOR ISSUE OF COMPLETION CERTIFICATE OF THE HOUSING PROJECT. IT IS ALSO STATED THAT IN THE SHOW - CA USE NOTICE ISSUED TO THE ASSESSEE, THE ID. AO HAS MENTIONED THAT NO COMPLETION CERTIFICATE HAS BEEN OBTAINED. BUT, 9 IN THE ASSESSMENT ORDER THERE IS MENTION OF OCCUPANCY AND UTILITY CERTIFICATE. IF HE WAS INCLINED TO DRAW ANY ADVERSE INFERENCE FROM NON OBT AINING OF OCCUPANCY AND UTILITY CERTIFICATE, IT WAS HIS DUTY TO INFORM THE ASSESSEE AND GIVE HIM PROPER OPPORTUNITY TO CROSS CHECK WITH UIT. HOWEVER, AS ALREADY SUBMITTED, EVEN UIT DID NOT DENY ABOUT ASSESSEES APPLICATION FOR ISSUE OF COMPLETION CERTIFIC ATE, A COPY OF WHICH WAS ALREADY FURNISHED TO THE ID. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS REITERATED THAT THE PROVISIONS OF SECTION 80 - IB(10) OF THE ACT HAVE NOT PRESCRIBED THAT THE CLAIM OF DEDUCTION CAN BE GIVEN ONLY ON THE BASIS OF 'OC CUPANCY CERTIFICATE' BUT SUBSCRIBES ONLY ON 'COMPLETION CERTIFICATE'. XI) IT IS SUBMITTED THAT THE APPELLANT - ASSESSEE HAD OBTAINED A COMPLETION CERTIFICATE TO THIS EFFECT FROM THE APPROVED VALUER OF THE DEPARTMENT AND CHARTERED ENGINEER, A COPY WHEREOF WAS ALSO SUBMITTED TO THE ID. AO. THE SAID COMPLETION CERTIFICATE GOES TO VOUCH THAT (I) THE PROJECT HAS BEEN COMPLETED ON 31.03.2010 ON PHYSICAL INSPECTION OF THE SUBJECT PROJECT ON 28.03.2010, IT WAS FOUND THAT THE BUILDING CONSTRUCTION WAS COMPLETE (II I) PHOTO OF THE. BUILDING ANNEXED WITH THE CERTIFICATE ALSO SUGGESTS THE COMPLETION OF THE SAID PROJECT (IV) SUCH CERTIFICATE HAS BEEN ISSUED AFTER VERIFICATION OF DOCUMENTS. XII) IT IS STATED THAT THIS COMPLETION CERTIFICATE AS CERTIFIED BY NONE OTHER T HAN APPROVED REGISTERED VALUER OF THE DEPARTMENT CANNOT BE BRUSHED ASIDE. THIS ASSERTION MAKES IT ABUNDANTLY CLEAR THAT THE CONSTRUCTION OF THE SUBJECT PROJECT WAS COMPLETE IN ALL 10 RESPECTS WELL BEFORE THE DUE DATE OF 31.03.2012. XIII) IT IS A MATTER OF RECORD THAT ALL 108 RESIDENTIAL UNITS IN THE SAID PROJECT WERE SOLD BEFORE 31 ST MARCH, 2010, COMPLETE DETAILS WHEREOF INCLUDING NAME OF CUSTOMERS, DATE OF SALE DEED, SALE CONSIDERATION, ETC. WERE ALREADY FURNISHED TO THE ID. AO. BEFORE THE SAID DATE, THE P OSSESSION OF UNITS WAS ALSO HANDED OVER TO THE RESPECTIVE PURCHASERS. SUCH OCCUPANTS ALSO APPLIED FOR ELECTRICITY CONNECTIONS IN THEIR NAMES. ALL SUCH FACTS REMAINED UN - CONTROVERTED EVEN AFTER SPOT VERIFICATION. IT IS FURTHER STATED THAT THE TURNOVER OF EA CH YEAR OF THE PROJECT DISCLOSED IN THE RETURN OF INCOME WOULD ALSO SUPPORT THE FACT THAT THE PROJECT HAS BEEN COMPLETED WITHIN THE STIPULATED TIME. XIV) IT IS, THEREFORE, PROVED BEYOND DOUBT THAT THE ACTUAL COMPLETION OF THE PROJECT TOOK PLACE WITHIN TH E PRESCRIBED TIME DURING THE YEAR ENDED 31ST MARCH, 2010. XV) THE FOLLOWING RELEVANT JUDICIAL PRONOUNCEMENTS ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE A) THE LOCAL AUTHORITY IS RESPONSIBLE FOR ISSUING COMPLETION CERTIFICATE SO TH E ASSESSEE CANNOT BE DENIED RELIEF U/S 80IB ON THIS GROUND AS HELD IN ACIT, CIRCLE 27(1), NEW DELHI VS. SURENDRA DEVELOPERS. NEW DELHI IN ITA NOS.2743 TO 2745/DEL/2010 VIDE ORDER DATED 01.08.2012 WHERE THE HONBLE ITAT, DELHI HAS CONFIRMED THE FOLLOWING FI NDING OF THE LD. CIT(A) 11 THE ID. CIT (A), ON APPEAL BY THE ASSESSEE FOR ALL THE THREE YEARS, PASSED A COMPOSITE ORDER DATED 29.03.2010 AND GRANTED RELIEF TO THE ASSESSEE OBSERVING, INTER ALIA, AS FOLLOWS: - 'THE A.O. HAD NOT DISPUTED THE FACT THAT THE AP PELLANT HAS NOT APPLIED FOR COMPLETION CERTIFICATE ON 26.11.2007. HERE, THE ASSESSEE COULD NOT BE HELD RESPONSIBLE FOR NON ISSUANCE OF THE COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY. IMPOSSIBLE CANNOT BE REQUIRED TO BE PERFORMED BY A PERSON ESPECIALLY W HEN THING IS BEYOND HIS CONTROL. THE ASSESSEE COULD NOT BE PUNISHED FOR SUCH ACT WHICH IS BEYOND HIS CONTROL. THE DOCUMENTS MENTIONED IN PARA 5.7.1 ABOVE ESTABLISH THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF THE PROJECT BEFORE 31.03.2008. THE ASSES SEE HAD ALSO APPLIED FOR THE COMPLETION CERTIFICATE, BUT IT COULD NOT GET THE COMPLETION CERTIFICATE WITHIN THE STATUTORY TIME PRESCRIBED IN THE SECTION OF 301 OF MADHYA PRADESH NAGAR PALIKA ADHINIYAM. THE WORD 'ISSUED 1 HAS BEEN USED IN THE IT ACT FOR THE COMPLETION CERTIFICATE AND NOT THE WORD 'OBTAINED' BY THE ASSESSEE. AS THE LEGISLATURE HAD ALREADY ANTICIPATED SUCH HARDSHIPS OF THE ASSESSEE AND THAT IS WHY THE WORK ISSUED BY 3 ITA NOS.2743 TO 2745/DEL/2010 ITA NOS.3056 TO 3058/DEL/2010 THE CORPORATION H AS BEEN USED. IN THIS CASE THERE IS NO REFUSAL FOR ISSUANCE OF THE COMPLETION CERTIFICATE BY THE COMMISSIONER OF MUNICIPAL CORPORATION TILL 31.03.2008, THEREFORE, IT IS HEREBY HELD THAT THE PROJECT OF THE ASSESSEE IS DEEMED TO BE COMPLETED AND COMPLETION C ERTIFICATE IS DEEMED TO HAVE BEEN ISSUED BY 31.03.2008, KEEPING IN VIEW (I) THE SUBMISSION OF THE AR, (II) ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON THE 12 RECORDS BY THE A.O. AND (III) PROVISIONS OF SECTION 301(4) OF THE MADHYA PRADESH NAGAR PALIKA NIGAM A DHINIYAM. HOWEVER LATER ON, THE CORPORATION ISSUED THE COMPLETION CERTIFICATE ON 02.06.2009. HERE, THERE IS NO DISPUTE REGARDING THE APPELLANT COMPLYING WITH THE ELIGIBILITY CONDITIONS REQUIRED FOR CLAIMING DEDUCTION U/S 80IB (10) AND ONLY CONTENTION OF TH E A.O. FOR REJECTING THE CLAIM OF APPELLANT IS THAT THERE IS NO COMPLETION CERTIFICATE ISSUED BY THE CORPORATION. TAKING INTO ACCOUNT THE FACT THAT THE A.O. HAS NOT DISPUTED THE ELIGIBILITY OF THE APPELLANT FOR CLAIMING THE DEDUCTION AND FURTHER IN VIEW OF THE FACT THAT THERE IS DEEMING COMPLETION CERTIFICATE ISSUED BY THE CORPORATION AS DISCUSSED ABOVE, IT IS HEREBY HELD THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S 80IB ( 10 ).' B) IN THE CASE OF CIT VS. TARNETAR CORPORATION (TAX APPEAL NO. 1241 OF 2011), T HE HONBLE GUJARAT HIGH COURT, VIDE ITS JUDGMENT DATED 12.09.2012, OBSERVED THAT: 6. IN THE PRESENT CASE, THEREFORE, THE FACT THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31ST MARCH, 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMA LLY BU PERMISSION WAS NOT GRANTED BY THE MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) TO SECTION 80 - IB(10) LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BE ING MADE AVAILABLE. 13 7. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TWO YEARS BEFORE THE FINAL DATE AND HAD APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT COMPLETED, BUT THE SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF THE MATTER, GRANTING BENEFIT OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL.' XVI) FURTHER, THE CIRCULAR NO. 5 OF 2010 DATED 3RD JUNE, 2010 [(2010) 232 CTR (ST)289] ISSUED BY THE CBDT EXER CISING THE POWER U/S 119 OF THE ACT EXPLAINS RATIONALISING THE PROVISIONS OF DEDUCTION U/S 80IB( 10) IS RELEVANT IN THE CASE OF THE APPELLANT. THE PRINCIPAL OBJECT BEHIND THIS PROVISION IS TO PROVIDE FOR 100% DEDUCTION OF THE PROFITS DERIVED BY AN UNDERTAK ING FROM DEVELOPING AND BUILDING HOUSING PROJECTS. IN ORDER TO BE ELIGIBLE FOR THE SAID BENEFIT, THE ASSESSEE SHOULD SATISFY THE FOLLOWING CONDITIONS : - '(A) - AND (E) THE PROJECT HAS TO BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN W HICH THE PROJECT IS APPROVED BY THE LOCAL AUTHORITY.' IN THE CASE OF THE APPELLANT IT IS PROVED BEYOND DOUBT THAT THE ACTUAL COMPLETION OF THE PROJECT TOOK PLACE WITHIN THE PRESCRIBED TIME DURING THE YEAR ENDED 31ST MARCH, 2010. IN VIEW OF THE ABOVE DISC USSIONS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS MENTIONED ABOVE RELIED ON BY THE APPELLANT, I AM OF THE VIEW THAT THE ISSUANCE OF COMPLIANCE CERTIFICATE BY THE LOCAL AUTHORITY IS A PROCEDURAL FORMALITY OTHERWISE IT HAS GIVEN ITS APPROVAL AT EVERY STAGE OF THE PROJECT. THE APPROVED VALUER AND THE CHARTERED ENGINEER HAVE GIVEN THE COMPLETION CERTIFICATES FOR THE PROJECT WHICH HAS BEEN SOLD OUT COMPLETELY AND THE 14 LD. AO HAS NOT APPRECIATED THESE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERING T HE TOTALITY OF THE FACTS AND CIRCUMSTANCES AS DISCUSSED IN THE FOREGOING PARAGRAPHS AND IN CONFORMITY WITH THE FINDINGS/RULINGS OF THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE APPELLANT, KEEPING IN VIEW THE RELEVANT STATUTORY PROVISIONS AND THE FACT THAT T HE ENTIRE ISSUE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT WAS EXAMINED DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT FOR THE EARLIER ASSESSMENT YEAR 2009 - 10 ALSO AND AFTER DULY VERIFYING ALL THE FACTS AND MATERIALS, THE LD. AO HAD ALLOWED THE DEDUCTION CLAIMED U/S 80 - IB(10) OF THE ACT ON THE SAME SANCTION PLAN , IN MY VIEW THE APPELLANT IS ENTITLED TO CLAIM DEDUCTION U/S 80 - IB(10) OF THE ACT. THE OTHER OBJECTIONS RAISED BY THE LD. AO ARE ALSO NOT SUSTAINABLE IN VIEW OF THE ABOVE DISCUSSIONS. THEREFORE, FOR THE SAKE OF CONSISTENCY, WHICH NEEDS TO BE FOLLOWED AND I ORDER ACCORDINGLY. HENCE, THE ADDITION/DISALLOWANCE OF CLAIM U/S 80IB(10) OF THE ACT OF RS. 95,04,512/ - IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. THUS, WE FIND NO FORCE IN THE REASONS GIVEN BY THE A.O. AND SUBMISSIONS OF LD. D.R., AS ALL THE PRE - REQUISITE CONDITIONS OF SECTION 80IB(10) OF THE ACT SAND FULFILLED AND THE ASSESSEE - COMPANY IS ELIGIBLE FOR THIS DEDUCTION. THE COMPLETION CERTIFICATE GETS MERGED IN THE OCCUPANCY CERTIF ICATE OR UTILITY CERTIFICATE BY THE UIT. THE ASSESSEE - COMPANY APPLIED FOR GETTING THE COMPLETION CERTIFICATE WHICH WAS NOT DENIED AND UNDER IDENTICAL FACTS IN THE A.Y. 2009 - 10, ADMITTEDLY, THE 15 A.O. HAS ALLOWED THIS DEDUCTION IN RESPECT OF THE SAME PROJECT. OTHERWISE THE COMPLETION OF THE PROJECT ON 31.03.2010 HAS NOT BEEN IN QUESTION. THUS, THE PROJECT WAS COMPLETED WITHIN 4 YEARS ONLY. THERE IS NO PROOF THAT THE CONTINUATION OF THE PROJECT IS NOT AS PER THE APPROVED PLAN. THEREFORE, WE ARE IN AGREEMENT WIT H THE FINDING OF LD. CIT(A) AND DISMISS GROUND NOS. (1) AND (1.1). 3. THE FACTS APROPOS GROUND NO. (2) ARE THAT SINCE THE ASSESSEE - COMPANY HAS ADVANCED INTEREST - FREE LOANS TO SOME PERSONS, THE A.O. HAS DISALLOWED PROPORTIONATE INTEREST OUT OF INTEREST - PAI D, AT RS. 1,37,503/ - U/S 36(1)(III) OF THE ACT. THIS ADDITION HAS BEEN DELETED BECAUSE NO SUCH INTEREST OF RS. 2,86,582/ - HAS BEEN PAID BY THE ASSESSEE TO THE BANK AND HAS NOT BEEN DEBITED TO THE P&L ACCOUNT BY THE ASSESSEE - COMPANY. 3.1 AFTER HEARING BOT H THE SIDES WE HAVE FOUND THE DECISION TAKEN BY LD. CIT(A) AS CORRECT. WHEN THE ASSESSEE - COMPANY HAS NOT DEBITED A SUM OF RS. 2,86,582/ - AS INTEREST PAID IN ITS P & L ACCOUNT AND THIS AMOUNT REPRESENTED FINANCIAL CHARGES (ONLY BANK CHARGES) WHICH FACT IS E VIDENT FROM THE COPY OF THE LEDGER ACCOUNT OF THE BANK COMMISSION AND LOAN PROCESSING CHARGES. OTHERWISE ALSO THE ASSESSEE - COMPANY HAD 16 ENOUGH CAPITAL AT THE YEAR END TO THE TUNE OF RS. 4,01,75,613/ - . ACCORDINGLY, WE DISMISS GROUND NO. (2) OF REVENUES APPE AL. 4. GROUND NO. (3) IS REGARDING ADDITION OF RS. 1 LAKH WHICH HAS BEEN REDUCED TO RS. 40,000/ - BY LD. CIT(A). THIS DISALLOWANCE IS OUT OF LABOUR EXPENSES PAID WHICH WERE NOT FULLY VOUCHED OR VOUCHED BY SELF MADE VOUCHERS. THE A.O. HAS MADE LUMP - SUM DIS ALLOWANCE OF RS. 1 LAKH AS AGAINST WHICH THE LD. CIT(A) HAS REDUCED IT TO RS. 40,000/ - . BOTH THE PARTIES HAVE REITERATED THEIR EARLIER STAND. WE DONT FIND ANY REASONS FOR INTERFERING IN SUCH A LUMP - SUM ADDITION SUSTAINED BY LD. CIT(A) AND THEREFORE, DISMI SS GROUND NO. (3) OF THIS APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON OCTOBER , 2014. (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : OCTOBER , 2014 VL / - 17 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR