Narayana Builders, V. ITO,

ITA 474/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86101 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Assessee Lawyers: SHAM R CHAKRAVARTHI
• Section: 234B; 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER STAY PETN. NO.77/BANG/2013 (IN ITA NO.474/BANG/2013) (ASSESSMENT YEAR: 2009 - 10) AND ITA NO. 474 / BANG/20 1 3 ( ASSESSMENT YEAR: 2009 - 10 ) M/S.NARAYAN BUILDERS, NO.101/104, 1 ST FLOOR, SESHADRIPURAM, BANGALORE - 5600 20 PAN: AAFFN 3285 R VS. APPELLANT INCOME - TAX OFFICER, WARD 6(3), BANGALORE. RESPONDENT A PPELLANT BY: SHRI SHAM R.CHAKRAVARTHI, CA. RESPONDENT BY: SHRI P.DHIVAHAR, JCIT (DR). DATE OF HEARING : 1 8 /0 3 /2015. DATE OF PRONOUNCEMENT: 3 1 /0 3 /2015. O R D E R PER SMT.P.MADHAVI DEVI, JM: ITA NO.474/BANG/2013: IN THIS APPEAL , THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) - III, BANGALORE, DATED 20/02/2013 IN CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80 - IB(10 ) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] ON THE GROUND THAT (I) THE ASSESSEE HAS FAILED TO FILE THE AUDI T REPORT ALONG WITH THE RETURN OF INCOME AND THAT (II) THE ASSESSEE HAS FAILED TO PRODUCE THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES. ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 2 OF 7 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 DECLARING GROSS TOTAL INCOME OF RS.2,79,23,865/ - AND CLAIMED THE ENTIRE INCOME AS DEDUCTION U/S 80IB( 10 ) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS NOT FILED THE AUDIT REPORT AS REQUIRED U/S 80 - IB(10) AND FURTHER THAT IT HAS FAILED TO FILE/OBTAIN THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY AS REQUIRED UNDER SEC. 80 - IB(10). HE, THEREFORE, DENIED THE ENTIRE CLAIM OF DEDUCTION U/S 80 - IB(10) OF THE ACT. 3. AG GRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND ALSO FILED THE COPY OF THE AUDIT REPORT. THE CIT(A), HOWEVER, DECLINED TO ADMIT THE AUDIT REPORT STATING THAT THE SAME OUGHT TO HAVE BEEN FILED BEFORE THE AO S INCE THE AUDIT REPORT WAS VERY M UCH AVAILABLE EVEN BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS . FURTHER, THE ASSESSEE COULD NOT FILE THE COMPLETION CERTIFICATE EVEN BEFORE THE CIT(A). THEREFORE, ON BOTH THE COUNTS, THE CIT(A) UPHELD THE ORDER OF THE AO AND CONFIRMED THE DISALLO WANCE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE AUDIT REPORT WAS FILED BEFORE THE CIT(A) AND THAT THE CIT(A) OUGHT TO H AVE CONSIDERED THE SAME INSTEAD OF REJECTING THE ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 3 OF 7 EVIDENCE FILED BY THE ASSESSEE. IN SUPPORT OF HIS CONTENTION THAT THE AUDIT REPORT CAN BE FILED EVEN AT THE APPELLATE STAGE, HE PLACED RELIANCE UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA S E OF CIT & ANOTHER VS. ACE MULTITAXES SYSTEMS PVT. LTD. REPORTED IN 317 ITR 207. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING GONE THROUGH THE MATERIAL ON RECORD AS WELL AS THE DECISION O F THE JURISDICTIONAL HIGH COURT, WE FIND THAT THE HON BLE HIGH COURT HAS CONSIDERED THE JUDGMENT OF THE HON BLE PUNJAB & HARYANA HIGH COURT AND HON BLE KOLKATTA HIGH COURT TO COME TO THE CONCLUSION THAT THE AUDIT REPORT FILED AT THE APPELLATE STAGE MAY BE CONSIDERED AS SUB - SEC.(7) OF SEC.80 - IA OF THE ACT DOES NOT CAST ANY OBLIGATION ON THE ASSESSEE THAT THE RETURN MUST BE ACCOMPANIED BY THE AUDIT REPORT. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, WE ALLOW THE GROUND OF APPEAL NOS.3 TO 5. 6. THE NEXT OBJECTION OF THE REVENUE IS THAT THE ASSESSEE HAS NOT FILED COMPLETION CERTIFICATE ALONG WITH ITS RETURN OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO VARIOUS DOCUMENTS FILED BEFORE US TO DEMONSTRATE THAT THE ASSESSEE HAD COMPLETED THE CONS TRUCTION WITHIN THE STIPULATED TIME AND HAD MADE AN APPLICATION DATED 20/1/2008 FOR THE COMPLETION /OCCUPANCY CERTIFICATE. HE HAS DRAWN OUR ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 4 OF 7 ATTENTION TO PAGE 4 OF THE PAPER BOOK WHICH IS THE CERTIFICATE D ATED 20/1/2008 ISSUED BY THE REGISTERED ARCHITECT OF THE ASSESSEE STATING THAT THE BUILDING HAS BEEN COMPLETED ON 20/1/2008 AND THEREFORE OCCUPANCY CERTIFICATE FOR THE PREMISES MAY BE ISSUED. AT PAGE 5 OF THE PAPER BOOK IS THE NOTICE - CUM SPECIAL NOTICE U/ S 147 & SEC.112 - B OF KMC ACT, 1976 DATED 27/3/2008 WHEREIN IT IS STATED THAT THE BUILDING CONSTRUCTED BY THE ASSESSEE IS ASSESSED TO TAX W.E.F. 1/10/1987 AND ALSO IT IS STATED THAT THE NEWLY CONSTRUCTED BUILDING HAS BEEN PUT TO USE FOR RESIDENTIAL PURPOSES W.E.F. 1/10/2007 AND THAT THE ASSESSMENT IS SUBJECT TO ISSUE OF FINAL OCCUPANCY CERTIFICATE AND SUBJECT TO FURTHER ACTION THAT MAY BE INITIATED FOR DEVIATION, IF ANY, IN THE CONSTRUCTION OF THE BUILDING. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T IT IS THE PROVISIONAL CERTIFICATE GIVEN BY THE LOCAL AUTHORITY AND SINCE THERE WAS NO DEVIATION, THE ASSESSMENT HAS NOT BEEN CHANGED. HE SUBMITTED THAT THERE IS NO PROVISION IN ANY OF THE LOCAL ACT FOR ISSUANCE OF THE OCCUPANCY OR COMPLETION CERTIFICATE , AS HELD BY THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF ITTINA PROPERTIES WHICH HAS BEEN FOLLOWED BY THE B OF THE TRIBUNAL IN ITA NO.1169/BANG/2012 DATED 27/02/2015 TO WHICH ONE OF US I.E. THE ACCOUNTANT MEMBER IS THE SIGNATORY. A COPY OF THE SAID ORDER IS FILED BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 5 OF 7 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE HON BLE HIGH COURT, IN THE CASE OF IT TINA PROPERTIES HAS HELD THAT WHERE THE CONSTRUCTION OF BUILDING WITHIN THE STIPULATED PERIOD IS PROVED, THEN SUBMISSION OF COMPLETION CERTIFICATE IS NOT MANDATORY. THE HON BLE COURT HAS ALSO FURTHER CONSIDERED THE REQUIREMENT OF FILING OF THE OCCUPANCY C ERTIFICATE AND AT PARA.15 HAS HELD AS UNDER: 15. FROM AN OVERALL ANALYSIS OF THE DECISIONS AND THE MATERIAL ON RECORD, IT IS SEEN THAT IF ASSESSEE HAS COMMITTED CERTAIN VIOLATIONS IN THE CONSTRUCTION, THEN THOSE VIOLATIONS COULD BE COMPOUNDED UNDER T HE AKRAMA - SAKRAMA SCHEME FLOATED BY THE KARNATAKA GOVERNMENT. THE OBJECT OF THIS CERTIFICATE IS TO ASCERTAIN WHETHER THE TIME LIMIT PROVIDED IN THE PROVISION FOR CONSTRUCTION OF THE BUILDING HAD BEEN ADHERED TO OR NOT BY THE ASSESSEE. THE ASSESSEE HAD HANDED OVER THE POSSESSION, OCCUPANTS ARE RESIDING IN THE BUILDING AND THEY HAD WATER, ELECTRICITY CONNECTION ETC., MEANING THEREBY THE PROJECT WAS COMPLETED WITHIN THE STIPULATED PERIOD. THE ASSESSING OFFICER HAS NOT DISPUTED THIS FACT NOR DID AN INSPECT ION. HE ASSUMED THAT SUBMISSION OF COMPLETION CERTIFICATE IS A CONDITION PRECEDENT. IF THERE ARE BUILDING VIOLATIONS, THEN IT IS FOR THE MUNICIPAL AUTHORITIES TO PENALIZE THE ASSESSEE OR CHARGE COMPOUNDING FEES. THIS ASPECT HAS BEEN CONSIDERED BY THE IT AT IN THE ORDER EXTRACTED SUPRA. THEREFORE, FOLLOWING THE ORDER OF THE COORDINATE BENCH, AS WELL AS OF THE GUJARAT AND KARNATAKA HIGH COURTS, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT DEDUCTION U/S 80IB OF THE ACT. THE ASSESSING OFFICER SHALL VERIFY THE COMPUTATION MADE BY THE ASSESSEE AND THEN DETERMINE THE QUANTUM OF DEDUCTION. AS THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US ARE ALSO SIMILAR AND THE ASSESSEE HAS PROVED BY DOCUMENT S FILED BEFORE THE AUTHORITIES B ELOW AS WELL AS BEFORE US THAT CONSTRUCTION OF THE BUILDING WAS COMPLETED, THE ASSESSEE HAS ALSO APPLIED FOR OCCUPANCY/COMPLETION CERTIFICATE BUT WAS NOT ISSUED BY THE RELEVANT AUTHORITY, WE DO NOT FIND THAT THERE IS ANY CASE FOR ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 6 OF 7 DENIAL OF DEDUCTION U/S 80 - IB(10) OF THE ACT ON THIS GROUND. HOWEVER, THE DOCUMENTS FILED BY THE ASSESSEE HAVE NOT BEEN VERIFIED BY THE AO. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO SOLELY FOR VERIFICATION OF THE DOCUMENTS FILED BY THE ASSESSE E AND IF IT IS FOUND THAT THE DOCUMENTS ARE GENUINE, THEN NO DISALLOWANCE SHALL BE MADE. THE GROUND NOS.6 AND 7 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.8 IS AGAINST CHARGING OF INTEREST U/S 234B AND 234C WHICH IS CONSEQUENT IAL IN NATURE AND THE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE, IF ANY. 9. IN THE RESULT, THE ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. SP NO.77/BANG/2013: SINCE THE APPEAL ITSELF HAS BEEN DISPOS ED OF BY THE ORDER EVEN DATE , THE STAY PETITION HAS B ECOME INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. PRO N OUNCED IN THE OPEN COURT ON 31 ST MARCH , 201 5 . S D/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMB ER EKSRINIVASULU ITA NO .474 & SP 77/BANG/2013 M/S.NARAYAN BUILDERS . PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE