M/s. Makwana Bros & Co. (HWP), Pune V. ACIT, Range-4, Pune

ITA 656/PUN/2010

• Counselvise Citation: 65624514 RSA 2010
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNITA BILLA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Reasonable cause
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.602 & 656/PN/2010 (A.YS: 2006-07 & 2005-06) M/S MAKWANA BROS AND COMPANY (HWP) S.NO.42, JAMSMRUTI, WANAWADI, OPP. DYANAND GARDEN, PUNE 411040 PAN: AABFM9368G APPELLANT VS. ADDL. CIT, RANGE-4, PUNE RESPONDENT ITA NO.348/PN/2011 (A.Y: 2004-05) M/S MAKWANA BROS AND COMPANY (HWP) S.NO.42, JAMSMRUTI, WANAWADI, OPP. DYANAND GARDEN, PUNE 411040 PAN: AABFM9368G APPELLANT VS. ACIT, CIRCLE-4, PUNE RESPONDENT ITA NOS.1036 & 1037/PN/2012 (A.YS: 2003-04 & 2007-08) M/S MAKWANA BROS AND COMPANY (HWP) S.NO.42, JAMSMRUTI, WANAWADI, OPP. DYANAND GARDEN, PUNE 411040 PAN: AABFM9368G APPELLANT VS. ACIT, CIRCLE-4, PUNE RESPONDENT 2 ITA NO.721/PN/2010 (A.Y: 2005-06) ACIT, CIRCLE-4, PUNE APPELLANT VS. M/S MAKWANA BROS AND COMPANY (HWP) S.NO.42, JAMSMRUTI, WANAWADI, OPP. DYANAND GARDEN, PUNE 411040 PAN: AABFM9368G RESPONDENT ASSESSEE BY : SHRI SUNIL PA THAK & SHRI NIKHIL PATHAK DEPARTMENT BY : MS SUNITA B ILLA DATE OF HEARING : 10.06.2014 DATE OF ORDER : 30.06.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE ON ALMOST SIMILAR ISSUES, SO THEY ARE BEING DISPOSED OFF BY T HIS COMMON ORDER. 2. IN ITA NO.602/PN/2010 FOR A.Y. 2006-07, THE ASSE SSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS. 1] THE LEARNED CIT(A) ERRED IN REJECTING THE CLAIM OF DEDUCTION OF RS.1,45,90,939/- U/S 80IB(10) IN RESPE CT OF THE PROFITS ARISING FROM CONSTRUCTION OF BUILDINGS 'A TO F' WHICH CONSTITUTED SEPARATE INDEPENDENT PROJECT ENTI TLED TO THE DEDUCTION U/S 80IB(10). 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PRO JECT OF THE ASSESSEE CONSTITUTED OF BUILDINGS 'A TO J' AND SINCE THE ASSESSEE HAD NOT COMPLETED ALL THE BUILDINGS TILL 3 1 ST MARCH, 2008, THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE DEDUCTION U/S 80IB(10). 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PRO JECT OF THE ASSESSEE CONSTITUTED OF BUILDINGS 'A TO J' AND THEREFORE, THE CLAIM OF THE ASSESSEE OF PROPORTIONATE DEDUCTIO N IN RESPECT OF THE BUILDINGS 'A TO F' WAS NOT PERMISSIB LE AND 3 HENCE, THE LEARNED A.O. WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE TH AT - A. THE BUILDINGS 'A TO F' CONSTITUTED A SEPARATE PROJECT AND ALL THE CONDITIONS OF SECTION 80IB(10) WERE DULY COMPLIED WITH IN RESPECT OF THIS PROJECT AND HENCE, THERE WAS NO REASON TO DENY THE DEDUCTION IN RESPECT OF THE PROFITS ARISING FROM THE SALE OF UNITS IN THE SAID BUILDINGS. B. THE ASSESSEE HAD DECIDED NOT TO CONSTRUCT BUILDINGS 'G' & I AND THEREFORE, THERE WAS NO QUESTION OF TREATING THE SAID BUILDINGS AS PART OF THE PROJECT OF THE ASSESSEE. C. THE BUILDINGS J & H WERE RETAINED BY THE PARTNERS AND WERE NOT SOLD AND HENCE, THERE WAS NO REASON TO CONSIDER THE SAME AS PART OF THE PROJECT ELIGIBLE FOR DEDUCTION U/S 80IB(10). D. THERE WAS CLEAR CUT DEMARCATION BETWEEN THE BUILDINGS A TO F AND BUILDINGS J & H AND HENCE, THERE WAS NO REASON TO TREAT BUILDINGS J & H AS PART OF THE PROJECT CONSISTING OF BUILDINGS A TO F. 5. THE APPELLANT CRAVES LEAVE TO ADDITION, ALTER, A MEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ASSESSEE IS A FIRM ENGAGED IN THE DEVELOPMEN T AND CONSTRUCTION OF RESIDENTIAL PROJECTS. THE ASSESSIN G OFFICER HAS DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) AMOU NTING TO 1,45,90,939/-. IN A.Y. 2006-07, THE ASSESSING OFFI CER NOTICED THAT IN RESPECT OF THE PROJECT 'SHIVANAND GARDEN', AS PER T HE REVISED LAYOUT AND BUILDING PLAN COMMENCEMENT CERTIFICATE NO.2170 DATED 02.07.2004, THERE WERE 8 BUILDINGS / BLOCKS IN THE PROJECT I.E. A, B, C, D, E, F, G & H, WHICH WERE ALL COMPLETED BY 31.0 3.2006. HOWEVER, IN RESPECT OF ANOTHER PROJECT NAMELY 'DAYA NAND GARDEN', HE NOTICED THAT IT WAS APPROVED BY THE PMC, VIDE CO MMENCEMENT CERTIFICATE NO.1237 DATED 6.10.1999, WHICH WAS REPE ATEDLY REVISED. SUBSEQUENTLY AND AS PER THE LAST REVISED BUILDING P LAN 4 COMMENCEMENT CERTIFICATE NO. 2147 DATED 17.03.2004, THERE WERE 10 BUILDINGS IN THE PROJECT A, B, C, D, E, F, G, H, I & J. OUT OF THESE, 'G' BLOCK HAD 40 TENEMENTS INCLUDING 10 SHOPS ON THE GR OUND FLOOR AND THESE 10 SHOPS HAD BUILT-UP AREA OF 2490 SQ. FT. ' H' AND 'J 1 BUILDINGS WERE BUNGALOWS WITH BUILT-UP AREAS OF 2690 SQ. FT. AND 3767 SQ. FT. RESPECTIVELY. I BUILDING WAS A CLUB-HOUSE WHICH WAS SHELVED IN THE LAST REVISED PLAN. THE ASSESSING OFFICER STATED TH AT THIS PROJECT WAS TO BE COMPLETED BY 31.03.2008, AS PER THE PROVISION S OF SECTION 80IB(10)(A)(I) OF THE I.T. ACT. THE ASSESSING OFFI CER OBSERVED THAT THE COMPLETION CERTIFICATE FOR THE 'G' BUILDING WAS NOT AVAILABLE, WHILE THE ASSESSEE COULD PRODUCE THE COMPLETION CERTIFICA TES FOR 'J' BUILDING AND 'H' BUILDING, WHICH WERE BOTH BUNGALOW S. IN RESPECT OF THE OTHER BUILDINGS, THE COMPLETION CERTIFICATES WE RE ALREADY FURNISHED DURING THE ASSESSMENT PROCEEDINGS FOR A.Y . 2005-06. THE ASSESSING OFFICER REJECTED THE CLAIM OF ASSESSEE BE CAUSE (I) THE ASSESSEE HAS NOT COMPLETED THE PROJECT AND THE COMPLETION CERTIFICATE HAS NOT BEEN ISSUED BY THE P MC IN RESPECT OF G BUILDING, (II) THE BUILT UP AREA OF COMMERCIAL UNIT SHOP EXCEEDED THE LIMIT OF 2000 SQ. FT. ON ACCOUNT OF AREA SHOWN IN T HE PLAN ALONG WITH G BUILDING CONTAINING SUCH SHOPS AND (III) TWO RESIDENTIAL UNITS OF THE PROJECT VIZ. H & J BUILDINGS (BUNGALOWS WITH BUILT UP AREA OF 2690 SQ. FT. AND 3 767 SQ. FT.) RESPECTIVELY, EXCEEDED THE LIMIT OF 1500 SQ. F T. AS LAID DOWN IN THE PROVISIONS OF SECTION 80IB(10). IN VIEW OF ABOVE, THE ASSESSEE WAS NOT ENTITLED FOR CLAIMING DEDUCTION U/S.80IB(10) IN RESPECT OF THE PROJECT OF DAYANAND GARDEN. 4. IN APPEAL, THE CIT(A) HELD THAT SINCE HOUSING PR OJECT APPROVED ON 17.03.2004, WAS NOT COMPLETED WITHIN STIPULATED TIME LIMIT BY 31.03.2008 U/S.80IB(10) AND HENCE THE ASSESSEE FAIL ED TO QUALIFY FOR DEDUCTION U/S.80IB(10) OF THE ACT. FURTHER, THE AS SESSEE ALSO FAILED UNDER THE PARAMETERS PRESCRIBED UNDER THE PROVISION S OF SECTION 5 80IB(10C) AND (10D) OF THE ACT AS DISCUSSED ABOVE. THE CIT(A) ALSO REJECTED THE REQUEST OF PROPORTIONATE DEDUCTION. 5. IN APPEAL BEFORE US, THE ASSESSEE CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION O F 1,45,90,939/- U/S.80IB(10) IN RESPECT OF PROFITS ARISING FROM CON STRUCTION OF BUILDINGS A TO F, WHICH CONSTITUTED SEPARATE IN DEPENDENT PROJECT ENTITLED TO DEDUCTION U/S.80IB(10) OF THE ACT. 5.1 THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT TH E PROJECT OF THE ASSESSEE CONSTITUTED OF BUILDINGS 'A TO J' AND SINC E THE ASSESSEE HAD NOT COMPLETED ALL THE BUILDINGS TILL 31.03.2008, TH E ASSESSEE WAS NOT ENTITLED TO CLAIM THE DEDUCTION U/S 80IB(10). 5.2 THE CIT(A) ERRED IN HOLDING THAT THE PROJECT OF THE ASSESSEE CONSTITUTED OF BUILDINGS 'A TO J' AND THEREFORE, TH E CLAIM OF THE ASSESSEE OF PROPORTIONATE DEDUCTION IN RESPECT OF T HE BUILDINGS 'A TO F' WAS NOT PERMISSIBLE. THE CIT(A) FAILED TO APPRE CIATE THAT THE BUILDINGS 'A TO F' CONSTITUTED A SEPARATE PROJECT A ND ALL THE CONDITIONS OF SECTION 80IB(10) WERE DULY COMPLIED W ITH IN RESPECT OF THIS PROJECT AND HENCE, THERE WAS NO REASON TO DENY THE DEDUCTION IN RESPECT OF THE PROFITS ARISING FROM THE SALE OF UNI TS IN THE SAID BUILDINGS. 5.3 THE ASSESSEE HAD DECIDED NOT TO CONSTRUCT BUILD INGS 'G' & F AND THEREFORE, THERE WAS NO QUESTION OF TREATING TH E SAID BUILDINGS AS PART OF THE PROJECT OF THE ASSESSEE. 5.4 THE BUILDINGS J & H WERE RETAINED BY THE PART NERS AND WERE NOT SOLD AND HENCE, THERE WAS NO REASON TO CONSIDER THE SAME AS PART OF THE PROJECT ELIGIBLE FOR DEDUCTION U/S 80IB (10). 5.5 MOREOVER, THERE WAS CLEAR CUT DEMARCATION BETWE EN THE BUILDINGS A TO F AND BUILDINGS J & H FALLS. TH E ASSESSEE DREW OUR ATTENTION TO THE SITE PLAN, ACCORDING TO WHICH, THE RE IS A ROAD 6 BETWEEN BUILDINGS A TO F AND J & H. IN SUCH A SITUATION, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TREATING PR OJECT J & H AS PART OF PROJECT CONSISTING A TO F. 5.6 IN THIS REGARD, THE LEARNED AUTHORIZED REPRESEN TATIVE HAS RELIED ON THE DECISION OF RUNWAL MULTIHOUSING PVT. LTD. VS ACIT IN ITA NO.1015 1017/PN/2011. THE LEARNED AUTHORIZED REP RESENTATIVE HAS ALSO SUBMITTED THAT THE SAME DECISION HAS BEEN FOLLOWED IN THE CASE OF VARUN DEVELOPERS VS. DCIT IN ITA NO.1624/PN /2011. 5.7 THE LEARNED AUTHORIZED REPRESENTATIVE HAS ALSO RELIED ON THE DECISION IN THE CASE OF ACIT VS M/S. DHARESHWAR PRO MOTERS & BUILDERS IN ITA NO.820 & 831/PN/2011. THE LEARNED AUTHORIZED REPRESENTATIVE HAS ALSO RELIED ON THE DECISION OF H ONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CO NSTRUCTION LTD. (2013) 82 DTR (MAD) 135, WHEREIN, IT HAS BEEN HELD THAT PRIOR TO THE AMENDMENT, THERE WAS NO SUCH REQUIREMENT AS REGARDS FURNISHING OF COMPLETION CERTIFICATION AND THE DEDUCTION PROVISIO N POINTED OUT TO THE GRANT OF 100% DEDUCTION ON THE PROFITS DERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPME NT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TILL 2005, THERE WAS NO CLAUSE DEALING WITH C OMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO THE PROVISION AS A CONDITION, WHICH WAS NOT SPECIFICALLY PROVIDED FOR THEREIN. 5.8 IN THIS BACKGROUND, THE LEARNED AUTHORIZED REPR ESENTATIVE HAS SUBMITTED THAT THE ASSESSEE SHOULD BE GRANTED DEDUC TION OF 1,45,90,939/- U/S. 80IB(10) IN RESPECT OF PROFITS A RISING FROM CONSTRUCTION OF BUILDINGS A TO F ON STANDALONE BA SIS WHICH CONSTITUTED SEPARATE INDEPENDENT PROJECT ENTITLED F OR DEDUCTION IN QUESTION. 5.9 ON OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE HAS SUBMITTED THAT THE ASSESSEE WAS NOT ENTITLED FOR CL AIMING DEDUCTION BECAUSE THE ASSESSEE HAS CONSTRUCTED THE PROJECT WI TH BUILDINGS A TO 7 H AND THE ASSESSEE HAS NOT COMPLETED THE PROJECT A ND COMPLETION CERTIFICATE HAS NOT BEEN ISSUED BY THE PMC IN RESPE CT OF J BUILDING. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITT ED THAT COMMERCIAL UNIT SHOPS EXCEEDED THE LIMIT OF 2000 SQ . FT. ON ACCOUNT OF AREA SHOWN IN THE PLAN ALTHOUGH G BUILDING CON TAINING SUCH SHOPS (WITH BUILT UP AREA OF 231.27 SQ. MTRS.) HAS NOT BEEN ACTUALLY BUILT. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALS O HAS SUBMITTED THAT THE TWO RESIDENTIAL UNITS OF THE PROJECT NAMEL Y H AND J BUILDING (BUNGALOWS WITH BUILT UP AREA OF 2690 SQ. FT. AND 3 767 SQ. FT.) RESPECTIVELY EXCEEDED THE LIMIT OF 1500 SQ. FT. AC CORDINGLY, THE ORDER OF CIT(A) BE UPHELD. 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT IN RESPECT OF PROJECT DAYANAND GARDEN, WHICH WAS APPROVED BY THE PMC VIDE COMMENCEMENT CERTIFICA TE NO.1237, DATED 06.10.1999 WAS REPEATEDLY REVISED AND THE LAS T REVISED BUILDING PLAN COMMENCEMENT CERTIFICATE NO. 2147 DAT ED 17.03.2004. ACCORDING TO WHICH, THERE WERE 10 BUIL DINGS CONCEIVED IN THE PROJECT A, B, C, D, E, F, G, H, I & J. IT I S NOT IN DISPUTE THAT BUILDINGS A TO F AND G, H, I & J HAVE BEEN SEPA RATED BY ROAD AS EVIDENT FROM SANCTIONED SITE PLAN PLACED ON PAGE 16 OF PAPER BOOK FILED ON BEHALF OF ASSESSEE. IT IS ALSO NOT IN DIS PUTE THAT THE ASSESSEE HAS CONSTRUCTED BUILDINGS A TO F PRIOR TO 31.03.2 008. IT IS AGAIN NOT IN DISPUTE THAT THE ASSESSEE HAS NOT CONSTRUCTE D BUILDINGS G & I WHILE J & H WERE RETAINED BY THE PARTNERS, SO, TH ERE WAS NO QUESTION OF CLAIMING DEDUCTION IN RESPECT OF THOSE BUILDINGS. EVEN THOUGH, THE AREA OF SUCH BUILDINGS / BUNGALOWS EXCE EDED THE PRESCRIBED LIMIT OF 1500 SQ. FT., WE FIND THAT ITAT , PUNE BENCH IN THE CASE OF RUNWAL MULTIHOUSING PVT. LTD. HAD OCCASION TO DEAL A SIMILAR SITUATION AND OBSERVED AS UNDER: 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE 8 INSTANT CASE THE ASSESSEE OBTAINED THE PERMISSION F OR CONSTRUCTION OF BUILDINGS A, B, C, D, E, F AND 17 R OW HOUSES ON 12-12-2001. THE ASSESSEE CONSTRUCTED BUILDING NOS. A,C, D AND E AND THE 17 ROW HOUSES AND DROPPED THE IDEA OF CONSTRUCTION OF BUILDING NOS. B AND F BEING UNECONO MICAL AND HAD NOT SUBMITTED ANY REVISED PLAN TO PMC. ALTHOUG H THE ASSESSEE APPLIED FOR COMPLETION CERTIFICATE ON 22-0 1-2004, THE SAME WAS NOT RECEIVED BY THE ASSESSEE BEFORE 31-03- 2008. IT IS THE CASE OF THE REVENUE THAT DEDUCTION U/S.80IB(10) CANNOT BE AVAILED OF BY THE ASSESSEE SINCE IT HAS NOT CONSTRU CTED ALL THE SIX BUILDINGS AND 17 ROW HOUSES FOR WHICH PERMISSIO N WAS GRANTED AND COMPLETION CERTIFICATE WAS NOT OBTAINED BEFORE 31- 03-2008. IT IS THE SUBMISSION OF THE LEARNED COUNS EL FOR THE ASSESSEE THAT IT HAS CONSTRUCTED BUILDING NOS. A, C , D AND E AND 17 ROW HOUSES AND BUILDING NOS. B & F BEING NOT FEASIBLE WAS NOT CONSTRUCTED AND THE ASSESSEE HAS DROPPED TH E IDEA OF CONSTRUCTION OF THE SAME. IT IS ALSO THE SUBMISSIO N OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT HAS APPLIE D FOR COMPLETION CERTIFICATE ON 22-01-2004 AND SINCE THE PMC HAS A LEGAL PROBLEM, WHICH IS SUBJUDICE, THE PMC IS NOT A BLE TO GRANT THE COMPLETION CERTIFICATE. IT IS ALSO THE SUBMISS ION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT CORPORATION H AS STARTED LEVYING MUNICIPAL TAXES, THE FLAT OWNERS HAVE START ED PAYING ELECTRICITY BILLS AND THE PROJECT ON WHICH BUILDING NOS. A, C, D AND E AND 17 ROW HOUSES ARE CONSTRUCTED ARE ON A PL OT OF AREA OF MORE THAN 1 ACRE. THEREFORE, THE ASSESSEE IS ENT ITLED TO DEDUCTION U/S.80IB(10) ON THE 4 BUILDINGS AND 17 RO W HOUSES WHICH IT HAS COMPLETED. 19. WE FIND THE MANAGING DIRECTOR SHRI PRADEEP AMRU TLAL RUNWAL IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S.133A HAS REPLIED TO QUESTION NOS. 7, 8, 9, 10 & 12 AS UNDER : Q.7. HAVE YOU RECEIVED THE COMPLETION CERTIFICATE FROM PMC FOR RUNWAL PARADISE PROJECT ? ANS. THE COMPLETION CERTIFICATE FOR ROW HOUSES 7 TO 18 WAS RECEIVED. HOWEVER FOR OTHER BUILDINGS ON RUNWA L PARADISE PROJECT WE HAVE NOT RECEIVED THE COMPLETIO N CERTIFICATE AS ON TODAY THOUGH WE HAVE APPLIED FOR THE SAME. Q.8. WHETHER THE CONSTRUCTION IS COMPLETED IN RESPE CT OF ALL THE BUILDINGS AS PER REVISED PLAN DATED 10-01-2003, COMMENCEMENT CERTIFICATE NO.1372? ANS. CONSTRUCTION IS COMPLETED BEFORE 31 ST MARCH 2008 IN THE ENTIRE SCHEME RUNWAL PARADISE TO THE EXTENT THA T WE 9 WANT TO BUILD AND ENJOY THE FSI OF THE PROJECT AND THE AREA USED SO IS ABOVE 1 ACRE. Q.9. IF THE CONSTRUCTION IS COMPLETED BEFORE 31 ST MARCH 2008, WHY YOU HAVE NOT RECEIVED COMPLETION CERTIFIC ATE FROM PMC FOR ALL BUILDINGS IN RUNWAL PARADISE PROJE CT AS ON TODAY? ANS. THE COMPLETION CERTIFICATE ARE DEEMED RECEIVED SINCE WE HAVE APPLIED FOR THE SAME, BUT SINCE THE MATTER IS SUBJUDICE THE PMC IS NOT ABLE TO GRANT THE COMPLETI ON CERTIFICATE. THE VERY LOCAL AUTHORITY WHICH IS RES PONSIBLE FOR GRANTING THE COMPLETION CERTIFICATE HAS A LEGAL PRO BLEM WHICH IS SUBJUDICE. Q.10. AS STATED ANSWERING THE QUESTION NO.9, PLEASE STATE WHEN YOU HAVE APPLIED FOR COMPLETION CERTIFIC ATE IN RESPECT OF RUNWAL PARADISE PROJECT AND ALSO SUBMIT THE RELEVANT APPLICATIONS? ANS. WE HAVE APPLIED FOR COMPLETION CERTIFICATE FOR THE ENTIRE PROJECT. WE ARE SUBMITTING HEREWITH THE APP LICATION FOR COMPLETION CERTIFICATE DATED 22-01-2004VIDE COMMENCEMENT CERTIFICATE NO.1372 DATED 10-01-2002 A S PER ANNEXURE C. THE COPIES OF ANY FURTHER APPLIC ATION, IF ANY, WE WILL SUBMIT THE SAME ON 2 ND JUNE 2008. Q.12. AS PER REVISED BUILDING LAYOUT SANCTIONED ON 10- 01-2003, YOU GOT APPROVAL FOR CONSTRUCTION OF BUILD INGS A TO F AND ROW HOUSES 1 TO 18 IN RUNWAL PARADISE PROJECT . HOWEVER AS SEEN FROM THE LIST OF FLAT HOLDERS SUBMI TTED BY YOU AS ANNEXURE D AND ALSO THE INSPECTION CARRIED OUT AT THE SITE OF RUNWAL PARADISE LOCATED AT S.NO.981, AT PAUD ROAD, KOTHRUD, PUNE, THE CONSTRUCTION OF BUILDINGS B AND F IS YET TO BE COMPLETED. PLEASE GIVE YOUR COMMENT? ANS. YES, I AGREE THAT THE CONSTRUCTION OF BUILDING S B AND F HAVE NOT BEEN CARRIED OUT WITH A PERFECT UNDERSTAND ING IN THE MIND THAT WE WANTED TO GIVE UP THESE TWO WINGS. IN CASE THESE WINGS WOULD HAVE BEEN CONSTRUCTED THEY W OULD HAVE BEEN VERY SHABBY AND BEEN PLACE FOR NON-HYGIEN E IN THE ENTIRE PROJECT. LOOKING AT THE MERITS AND DEME RITS THESE WINGS WERE NOT CONSTRUCTED. FURTHER, BUILDING JUST ONE FLOOR WAS ECONOMICALLY UNVIABLE. 20. SO FAR AS THE FIRST OBJECTION OF THE REVENUE TH AT COMPLETION CERTIFICATE FROM PMC HAS NOT BEEN OBTAINED BY THE A SSESSEE BEFORE 31-03-2008 WE FIND THE ASSESSEE THROUGH HIS ARCHITECT VIDE APPLICATION DATED 22-01-2004 HAS APPLIED TO PM C FOR OCCUPANCY CERTIFICATE. (PAGE 119 OF THE PAPER BOOK) . THE 10 SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PMC HAS NOT YET REJECTED THE SAID APPLICATION TILL DATE COULD NOT BE CONTROVERTED BY THE REVENUE. THE FURTHER SUBMIS SION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT ALL THE FLAT OWNERS/ROW HOUSE OWNERS HAVE BEEN GIVEN POSSESSION BETWEEN 26- 10-2002 TO 15-01-2007, I.E.PRIOR TO 31-03-2008 COULD NOT BE CONTROVERTED BY THE LEARNED DR (PAGE 55 TO 63 OF TH E PAPER BOOK). THE LEARNED DR ALSO COULD NOT CONTROVERT TH E SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT PMC HAS STARTED LEVYING MUNICIPAL TAXES AND THE ELECTRI CITY METERS ARE IN THE NAME OF THE FLAT OWNERS WHO HAVE STARTED PAYING ELECTRICITY BILLS. 20.1 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF CITY DEVELOPMENT CORPORATION VS. ACIT ITA NO. 57 AND 1287/PN/2010 ORDER DATED 27-09-2012 HAS HELD AS UND ER : 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. QUITE CLEARLY, THE DISPUTE IS WITH REGARD TO THE CO MPLETION CERTIFICATE OF BUILDING 'E' HAVING BEEN ISSUED BY T HE LOCAL AUTHORITY I.E. PUNE MUNICIPAL CORPORATION, ON 5-5-2 008. SUB- CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) REQUI RES THAT THE CONSTRUCTION OF THE PROJECT IN QUESTION IS TO BE CO MPLETED ON OR BEFORE 31-3-2008. CLAUSE (II) OF EXPLANATION BEL OW SECTION 80-IB(10)(A) PRESCRIBES THAT THE DATE OF CO MPLETION OF CONSTRUCTION OF HOUSING PROJECT SHALL BE TAKEN TO B E THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF S UCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. I N THE PRESENT CASE, IT HAS BEEN ISSUED ON 5-5-2008 AND HE NCE THE CASE SET UP BY THE REVENUE THAT THE COMPLETION IS B EYOND THE MANDATED DATE OF 31-3-2008. IN THIS BACKGROUND, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE APP LIED FOR OBTAINING THE COMPLETION CERTIFICATE IN RESPECT OF BUILDING 'E' ON 12-3-2008. FROM THE DISCUSSION MADE BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER, WHEREIN THE FACTUA L ASSERTIONS OF THE ASSESSEE HAVE BEEN REPRODUCED, IT IS QUITE EVIDENT THAT THE ASSESSEE ASSERTED THAT BEFORE 31-3 -2008, THE CONSTRUCTION OF BUILDING WAS COMPLETE IN ALL RE SPECTS; THAT ELECTRICAL CONNECTION WAS PROVIDED TO EACH FLA T OWNER; ROAD WAS COMPLETE; WATER AND DRAINAGE CONNECTION WA S AVAILABLE; SEWERAGE SYSTEM WAS OPERATING; CLUB HOUS E WAS FUNCTIONAL; ETC. THE ASSESSEE ALSO POINTED OUT THAT THE LOCAL AUTHORITY HAD ALSO INITIATED PROPERTY TAX ASSESSMEN TS FOR EACH OF THE FLATS AND THE SAME DEMONSTRATED THAT AL L THE FLATS IN THE BUILDING WERE COMPLETE. IN FACT, IN PA RA 6.9 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTICED THAT 'THE FACTS THAT THE FLATS WERE COMPLETED AND POSSES SION GIVEN WILL NOT COME TO THE RESCUE OF THE ASSESSEE'. THE AFORESAID FINDING OF THE ASSESSING OFFICER SUPPORTS THE 11 ASSERTION MADE BY THE ASSESSEE THAT FACTUALLY SPEAK ING CONSTRUCTION OF FLATS IN BUILDING 'E' WAS ALSO COMP LETE AND POSSESSION HANDED OVER TO THE ACTUAL USER/CUSTOMERS PRIOR TO 31-3-2008. PERTINENTLY, ON THE BASIS OF THE ARCH ITECT'S CERTIFICATE CONFIRMING COMPLETION OF CONSTRUCTION O F BUILDING, THE ASSESSEE APPLIED FOR THE COMPLETION CERTIFICATE TO THE PUNE MUNICIPAL CORPORATION ON 12-3-2008. IT HAS BEE N POINTED OUT BEFORE US THAT THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL CORPORATION DID NOT RAISE ANY OBJECTION W ITH REGARD TO ASSESSEE'S APPLICATION AND THE CERTIFICAT E FOR BUILDING 'E' WAS THEREAFTER ISSUED ON 5-5-2008. THE MOOT QUESTION IS AS TO WHETHER IN SUCH A SITUATION CAN I T BE SAID THAT THE ASSESSEE'S PROJECT DID NOT COMPLY WITH THE CONDITION PRESCRIBED IN SUB-CLAUSE (I) OF CLAUSE (A ) TO SECTION 80-IB(10) OF THE ACT WHEREBY THE CONSTRUCTION WAS T O BE COMPLETED ON OR BEFORE 31-3-2008. SOMEWHAT SIMILAR SITUATION WAS CONSIDERED BY OUR CO-ORDINATE BENCH I N THE CASE OF HINDUSTAN SAMUTHA AWAS LTD. (SUPRA) WHEREIN ALSO ON THE STRENGTH OF ARCHITECT'S CERTIFICATE, AN APPL ICATION FOR OBTAINING COMPLETION CERTIFICATE WAS MOVED TO THE L OCAL AUTHORITY ON 25-2-2008 BUT IN ACTUALITY THE COMPLET ION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITY ON 10 -10-2008. THE TRIBUNAL NOTICED THAT THE DELAY IN ISSUING COMP LETION CERTIFICATE WAS NOT ATTRIBUTABLE TO THE ASSESSEE AS NO OBJECTIONS WERE RAISED BY THE LOCAL AUTHORITY. THE TRIBUNAL AFTER CONSIDERING ITS EARLIER DECISIONS IN THE CASE OF M/S. SATISH BOHRA & ASSOCIATES VS. ACIT IN ITA NO. 713 A ND 714/PN/2010 FOR A.Y. 2004-05 AND 2005-06 DATED 7-1- 2011; M/S. D.K. CONSTRUCTIONS VS. ITO ITA NO. 243/PN/2010 FOR A.Y. 2006-07; DATED 6-12-2010 AND SANGHVI AND DOSHI ENTERPRISES VS. ITO AND OTHERS IT A NO. 259 TO 263/MDS/2010 DATED 19-5- 2011 FOR A.Y. 2005- 06 AND 2006-07 (TM) HAS CONCLUDED AS FOLLOWS: 'FROM TH E ABOVE, ONCE THIS IS CLEAR THAT THE DATE THAT APPEAR S ON THE ARCHITECT'S COMPLETION CERTIFICATE FILED BEFORE THE LOCAL AUTHORITY IS RELEVANT ONE. IN THE INSTANT CASE, THE SAID DATE IS 25- 3-2008 AND THE ASSESSEE FILED REQUISITE FORM BEFORE THE LOCAL AUTHORITIES INTIMATING THE COMPLETION OF THE PROJECT. THE SAID CERTIFICATE/INTIMATION WAS ACCEPTED BY THE LOCAL AUTHORITY WITHOUT ANY AMENDMENTS OR OBJECTIONS. LOC AL AUTHORITY HAS NOT RAISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUILDING OR THE COMPLETION OF T HE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY. IN SUCH CIRCUMSTANCES, IN OUR OPINION, THE DELAY IN OBTAINI NG THE COMPLETION CERTIFICATE ON 10-10-2008 IS CERTAINLY N OT ATTRIBUTABLE TO THE ASSESSEE AND OBTAINING THE SAID CERTIFICATE BEFORE 31-3-2008 IS BEYOND THE CONTROL OF THE ASSESSEE. ASSESSEE'S JOB INCLUDES THE COMPLETION OF THE BUILDING IN ACCORDANCE WITH THE APPROVED PLANS AND INTIMATION OF THE SAME TO THE LOCAL AUTHORITY BY WA Y OF FILING 12 THE REQUISITE FORMS TOGETHER WITH THE COMPLETION CE RTIFICATE GIVEN BY THE ARCHITECT, THE SPECIALIST IN THE MATTE R AND THE ASSESSEE HAS DONE HIS JOB SCRUPULOUSLY IN THIS CASE . HOWEVER, THE LOCAL AUTHORITY HAS NEITHER OBJECTED T O THE SAID APPLICATION OF THE ASSESSEE AND THE ARCHITECT BY RAISING ANY OBJECTIONS FOR ACCEPTED BY ISSUE OF SAI D COMPLETION CERTIFICATE TILL 10-10-2008. THEREFORE, THE DELAY IN GRANT OF THE SAID CERTIFICATE IS CERTAINLY NOT A TTRIBUTABLE TO THE ASSESSEE. THEREFORE, IN OUR OPINION, THE ASSESS EE IS NOT DEFAULTER ON THIS ACCOUNT AND THUS, THE AO HAS ERRE D IN DENYING THE DEDUCTION U/S 80-IB(10) OF THE ACT. ACC ORDINGLY, THE ORDER OF THE CIT(A) HAS TO BE REVERSED. THUS, T HE GROUNDS RAISED IN THE APPEAL ARE ALLOWED' 13. THE AFORESAID DECISION OF THE TRIBUNAL IS CLEAR LY APPLICABLE TO THE FACTS OF THE PRESENT CASE ALSO. I N THE PRESENT CASE, THE COMPLETION CERTIFICATE WAS APPLIE D FOR BEFORE 31-3-2008 I.E. ON 12-3-2008. IT IS UNDISPUTA BLE THAT THE APPLICATION OF THE ASSESSEE HAS BEEN APPROVED B Y THE LOCAL AUTHORITY WITHOUT RAISING ANY AMENDMENT OR OB JECTION, AS HAS BEEN ASSERTED BY THE ASSESSEE ALL ALONG AND THE DELAYED ISSUANCE OF THE COMPLETION CERTIFICATE BY T HE LOCAL AUTHORITY ON 5-5-2008, ALBEIT AFTER THE MANDATED DA TE OF 31- 3-2008 CANNOT BE ATTRIBUTED TO THE ASSESSEE. IN THI S BACKGROUND OF THE MATTER, WE THEREFORE, FIND AMPLE FORCE IN THE PLEA OF THE ASSESSEE THAT DENIAL OF DEDUCTION U /S 80- IB(10) ON SUCH SCORE IS UNCALLED FOR. IN CONCLUSION THEREFORE, IN THE INSTANT FACTUAL BACKGROUND, WE HOLD THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITION OF COMPLET ING THE CONSTRUCTION OF THE PROJECT WITHIN THE MANDATED DAT E OF 31- 3- 2008 EVEN WITH REGARD TO BUILDING 'E', FOLLOWING THE PARITY OF THE REASONING LID DOWN IN THE CASE OF HINDUSTAN SAMUTHA AWAS LTD. (SUPRA). . 14. SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(1 0) OF THE ACT REQUIRES THAT THE UNDERTAKING, DEVELOPING AND BUILD ING A HOUSING PROJECT 'COMPLETES SUCH CONSTRUCTION' OR BE FORE 31- 3-2008. IN THE PRESENT CASE, ASSESSEE HAS FACTUALLY ASSERTED RIGHT FROM THE STAGE OF ASSESSMENT PROCEED INGS, THAT THE CONSTRUCTION OF BUILDING 'E' WAS COMPLETE IN ALL RESPECTS AS PER SANCTIONED PLAN AND ALL THE FLATS W ERE HANDED OVER TO THE ACTUAL USERS/CUSTOMERS PRIOR TO 31-3- 2008. IN THE BACKGROUND OF THE AFORESAID FACTUAL PO SITION WHICH HAS REMAINED UNCONTROVERTED, IN OUR VIEW, ON A PLAIN READING OF SUB-CLAUSE (I) OF CLAUSE (A) TO SECTION 80-IB(10) THE CONDITION PRESCRIBED THEREIN IS FULFILLED., INASMUC H AS THE CONSTRUCTION OF BUILDING 'E' WAS COMPLETE BEFORE 31 -3-2008. HOWEVER, ON THE READING OF CLAUSE (II) OF THE EXPLA NATION BELOW SEC. 80-IB(10)(A) OF THE ACT, IT EMERGES THAT THE COMPLETION OF CONSTRUCTION OF A HOUSING PROJECT IS TO BE TAKEN 13 TO BE THE DATE ON WHICH COMPLETION CERTIFICATE IS I SSUED BY THE LOCAL AUTHORITY, WHICH IN THE PRESENT CASE IS I SSUED ON 5- 5-2008 I.E. BEYOND THE STIPULATED DATE OF 31-3-2008 . THE MOOT QUESTION IS IN CASE THE CONDITION OF COMPLETIO N CONSTRUCTION CONTAINED IN THE SUBSTANTIVE SECTION 8 0- 0IB(10)(A)(I) IS FACTUALLY FOUND TO BE COMPLIED WIT H, CAN THE CONTENTS OF THE EXPLANATION CLAUSE (II) THEREOF, AL TER THE SITUATION? CAN AN EXPLANATION APPENDED TO A SECTION , ENLARGE THE SCOPE OF THE MAIN SECTION SO AS TO MAKE IT MORE ONEROUS FOR A TAX- PAYER? BE THAT AS IT MAY, WE DO NOT DWELL ON THIS ASPECT ANY FURTHER, AS THE ASSESSEE HAS BEE N FOUND TO BE ELIGIBLE FOR NECESSARY RELIEF BECAUSE THE CON DITION PRESCRIBED IN SECTION 80-IB(10)(A)(I) OF THE ACT HA S BEEN COMPLIED WITH IN VIEW OF THE STATED PRECEDENTS. WE THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THI S ASPECT AND HOLD THAT THE ASSESSEE CANNOT BE DENIED THE CLA IM OF DEDUCTION U/S 80-IB(10) ON THE STRENGTH OF NON-ISSU ANCE OF THE COMPLETION CERTIFICATE FOR BUILDING 'E' BY THE PUNE MUNICIPAL CORPORATION BEFORE 31-3-2008, HAVING REGA RD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 20.2 WE FIND THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. TARNETAR CORPORATION (SUPRA) HAS HELD AS UNDER : WITH RESPECT TO THE SECOND CONTENTION, WE MAY RECO RD THAT THE CONTENTION OF THE REVENUE IS THAT THE ASSE SSEE DID NOT COMPLETE THE HOUSING PROJECT WITHIN THE STATUTO RY TIME FRAME. UNDER SUB-CLAUSE (I) OF CLAUSE (A) OF SECTI ON 80IB(10), THE ASSESSEE SINCE HAD GOT APPROVAL FOR THE HOUSING PROJECTS FROM THE LOCAL AUTHORITY BEFORE IST APRIL 2004 WAS REQUIRED TO COMPLETE THE CONSTRUCTION LATEST BY 31 ST MARCH 2008. RELYING ON EXPLANATION (II) TO CLAUSE (I), R EVENUE CONTENDS THAT SINCE BU PERMISSION WAS GRANTED AFTER MARCH 2008, THE CONSTRUCTION MUST BE DEEMED TO HAVE BEEN COMPLETED AFTER SUCH DATE. EXPLANATION (II) READS AS UNDER : (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WH ICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSI NG PROJECT IS ISSUED BY THE LOCAL AUTHORITY. CIT (APPEALS) AS WELL AS THE TRIBUNAL AFTER DETAILE D DISCUSSION CAME TO THE CONCLUSION THAT SUCH REQUIRE MENT WAS NOT MANDATORY IN NATURE. IN THE PRESENT CASE, THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE THE LAST DATE, NAMELY 31 ST MARCH 2008 AND HAD ALSO SOLD SEVERAL UNITS WHICH WAS COMPLETED AND ACTUALLY OCCU PIED, AND IT ALSO APPLIED FOR BU PERMISSION TO THE LOCAL AUTHORITY. THE LOCAL AUTHORITY, HOWEVER, FOR TECHNICAL REASONS , AT ONE STAGE REJECTED SUCH APPLICATION IN THE YEAR 2006 AN D 14 THEREAFTER UPON REVISED EFFORTS FROM THE ASSESSEE G RANTED THE SAME BY ORDER DATED 19 TH MARCH 2009. WE HAVE PERUSED THE DETAILED DISCUSSION OF THE CIT(APPEALS) AS WELL AS THE TRIBUNAL ON THE ISSUE. IN PARTICULAR, THE TRIBUNAL NOTED THAT THE CONSTRUCTIO N WAS COMPLETED IN 2006. APPLICATION FOR BU PERMISSION T O THE MUNICIPAL AUTHORITIES WAS FILED ON 15-02-2006 WHICH WAS REJECTED ON 1-07-06. SEVERAL RESIDENTIAL UNITS WER E OCCUPIED SINCE THE SAME WAS DONE WITHOUT NECESSARY PERMISSION. THE ASSESSEE HAD DONE WITHOUT NECESSAR Y PERMISSION. THE ASSESSEE HAD ALSO PAID PENALTY AND GOT SUCH OCCUPATION REGULARISED. SEVERAL TENEMENTS WER E SOLD LONG BEFORE THE LAST DATE. IN THE PRESENT CASE, THEREFORE, THE FACT THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION WELL BEFORE 31 ST MARCH 2008 IS NOT IN DOUBT. IT IS, OF COURSE, TRUE THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE MUNIC IPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRUE THAT EX PLANATION TO CLAUSE (A) TO SECTION 80IB(10) LINKS THE COMPLET ION OF THE CONSTRUCTION TO THE BU PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER, NOT EVERY CONDITION OF THE STA TUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL COMPLIANCE TH EREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT M AY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VIT IATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILABLE. IN THE PRESENT CASE, THE FACTS ARE PECULIAR. THE ASSESSEE HAD NOT ONLY COMPLETED THE CONSTRUCTION TW O 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. IN THE RESULT, THE TAX APPEAL IS DISMISSED. 20.3. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HINDUSTAN SAMUHA AWAS LTD. VS. ITO VIDE ITA NOS 945 TO 950/PN/2010 ORDER DATED 30-08-2011 HAS HELD AS UNDE R : 7. WE HAVE CONSIDERED ..... A. EXTRACT FROM THE DECISION OF THE TRIBUNAL IN THE C ASE OF M/S. SATISH BORA & ASSOCIATES VIDE ITA NOS. 713 & 714/P N/2010 19. . 15 B. EXTRACT FROM THE DECISION OF THE TRIBUNAL IN TH E CASE OF SANGHVI & DOSHI ENTERPRISE VIDE ITA NO. 259 TO 263/MDS/2010 24. NEXT OBJECTION ........ C EXTRACT FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. D.K.CONSTRUCTION VIDE ITA 243/IND/2010 7. WE HAVE CONSIDERED ........ 20.4. IN VIEW OF THE ABOVE DECISIONS WE ARE OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE HAS DONE WHATEVER P OSSIBLE ON HIS PART, I.E. DULY APPLIED TO PMC FOR ISSUE OF COM PLETION CERTIFICATE, HANDED OVER POSSESSION OF THE FLATS/RO W HOUSES TO THE RESPECTIVE BUYERS, PMC HAS STARTED LEVYING MUNI CIPAL TAXES AND ELECTRICITY BILLS PAID BY RESPECTIVE OWNERS, TH EREFORE, DEDUCTION U/S.80IB(10) UNDER THE FACTS AND CIRCUMST ANCES OF THE CASE CANNOT BE DENIED TO THE ASSESSEE FOR NON-R ECEIPT OF COMPLETION CERTIFICATE FROM PMC BEFORE 31-03-2008 W HICH WAS BEYOND THE CONTROL OF THE ASSESSEE. THIS VIEW OF O URS IS FORTIFIED BY OUR DECISION IN THE CASE OF M/S. RAMSUKH PROPERT IES VS. DCIT VIDE ITA NO.84/PN/2011 ORDER DATED 25-07-2012 FOR A.Y. 2007-08 (WHEREIN BOTH OF US ARE PARTIES) WHEREIN IT HAS BEEN HELD AS UNDER: 6. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT THE ASSESSEE IS A FIRM ENGAGED IN BUSINESS OF BUILDER AND PROMOTER. THE ISSUE BEFORE US IS REGARDING ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT ON PARTIALLY COMPLETE PROJECT. THE ASSESSING OFFIC ER HAS DENIED THE DEDUCTION ON THE GROUND THAT PROJECT WAS NOT COMPLETE WITHIN THE STIPULATED TIME. THERE IS NO D ISPUTE WITH REGARD TO OTHER CONDITIONS LAID U/S.80IB(10) O F THE ACT, I.E., COMMENCEMENT OF PROJECT, AREA OF LAND OF PROJ ECT, ETC. ASSESSEES HOUSING PROJECT WAS APPROVED VIDE COMMENCEMENT CERTIFICATE NO.3837/04 DATED 13.01.200 5 OUT OF WHICH COMPLETION CERTIFICATE WAS OBTAINED AN D FURNISHED BEFORE THE ASSESSING OFFICER FOR 173 OUT OF 205 FLATS. SAME WAS REJECTED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). THE REQUEST FOR GRANTING WHOLE DEDUCTION IN RESPECT OF WHOLE PROJECT HAS RIGHTLY B EEN REJECTED BECAUSE DEDUCTION U/S.80IB(10) COULD NOT B E GRANTED TO ASSESSEE ON INCOMPLETE CONSTRUCTION AT R ELEVANT POINT OF TIME. REGARDING PROPORTIONATE DEDUCTION I N RESPECT OF 173 OF 205 FLATS OF PROJECT COMPLETED AS RECOGNI ZED BY LOCAL AUTHORITY, I.E., PMC IN ITS COMPLETION CERTIF ICATE NO.BCO/03/01333 DATED 31.03.2008, THE LD. AUTHORISE D 16 REPRESENTATIVE HEAVILY RELIED ON DECISION OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA), BRIGADE ENTERPRIS ES P. LTD. (SUPRA), AIR DEVELOPER (SUPRA), SHETH DEVELOPE RS (SUPRA) AND ALSO G.V.CORPORATION (SUPRA), WHEREIN DEDUCTION U/S.80IB(10) WAS DENIED AS SIZE OF SOME O F THE RESIDENTIAL UNITS EXCEEDED PRESCRIBED LIMIT AS LAID DOWN U/S.80IB(10) OF THE ACT. ABOVE MENTIONED DECISIONS ARE APPLICABLE IN THEIR OWN SPHERE, I.E. ON POINT OF EX CESS AREA OF SOME OF THE FLATS WHICH HOLD GOOD IN ITS OWN SPH ERE. HOWEVER, IN CASE BEFORE US, DEDUCTION U/S.80IB(10) OF THE ACT HAS BEEN REJECTED ON THE GROUND THAT CONDITION OF COMPLETION OF PROJECT BEFORE THE DUE DATE I.E., 31. 03.2008 AS LAID DOWN U/S.80IB(10)(C) OF THE ACT, HAS NOT BEEN COMPLIED BY ASSESSEE WHICH IS BASIC CONDITION FOR ALLOWABILI TY OF DEDUCTION U/S.80IB(10) OF THE ACT. WE FIND THAT IN CASE OF JOHAR HASSAN ZOJWALLA (SUPRA), WHEREIN CONDITION OF COMPLETION AS LAID DOWN IN SECTION 80IB(10)(A) COUL D NOT BE COMPLIED WITH BECAUSE OF A STAY BEING GRANTED BY MR TP COURT. THUS FAULT OF INCOMPLETION OF CONSTRUCTION W AS NOT ATTRIBUTABLE TO ASSESSEE. IN CASE SUCH A CONTINGE NCY EMERGES WHICH MAKES THE COMPLIANCE WITH PROVISION IMPOSSIBLE, THEN BENEFIT BESTOWED ON AN ASSESSEE CA NNOT BE COMPLETELY DENIED. SUCH LIBERAL INTERPRETATION SHOULD BE USED IN FAVOUR OF ASSESSEE WHEN HE IS INCAPACITATED IN COMPLETING PROJECT IN TIME FOR THE REASONS BEYOND H IS CONTROL. IN CASE BEFORE US, AS STATED ON BEHALF OF ASSESSEE, THAT ASSESSEE SUBMITTED CERTAIN MODIFICATIONS/RECTI FICATIONS FOR TOP FLOORS OF BUILDING. THE SAID MODIFICATION/ RECTIFICATION COULD NOT BE COMPLETED AS LOCAL AUTHORITY COULD NOT APPROVE THE MODIFICATION AS THEIR FILES HAVE BEEN TAKEN OVE R BY CONCERN INTELLIGENCE DEPARTMENT FOR INVESTIGATION O F VIOLATION OF URBAN LAND CEILING ACT APPLICABLE TO LAND IN QUE STION AT RELEVANT POINT OF TIME. THIS FACT HAS NOT BEEN DIS PUTED ON BEHALF OF REVENUE. THUS, ASSESSEE WAS PREVENTED BY SUFFICIENT REASONABLE CAUSE WHICH COMPELLED THE IMPOSSIBILITY ON PART OF THE ASSESSEE TO HAVE COMPL ETION CERTIFICATE IN TIME. IT IS SETTLED LEGAL POSITION THAT THE LAW ALWAYS GIVE REMEDY AND THE LAW DOES WRONG TO NO ONE . WE AGREE TO PROPOSITION PUT FORWARD BY LD. DEPARTMENTA L REPRESENTATIVE THAT PLAIN READING OF SECTION 80IB(1 0) OF THE ACT SUGGESTS ABOUT ONLY COMPLETION OF CONSTRUCTION AND NO ADJECTIVE SHOULD BE USED ALONGWITH THE WORD COMPLET ION. THIS STRICT INTERPRETATION SHOULD BE GIVEN IN NORMA L CIRCUMSTANCES. HOWEVER, IN CASE BEFORE US, ASSESSE E WAS PREVENTED BY REASONABLE CAUSE TO COMPLETE CONSTRUCT ION IN TIME DUE TO INTERVENTION OF CID ACTION ON ACCOUNT O F VIOLATION OF PROVISIONS OF URBAN LAND CEILING ACT APPLICABLE TO LAND IN QUESTION. ASSESSEE WAS INCAPACITATED TO COMPLETE TH E SAME IN TIME DUE TO REASONS BEYOND HIS CONTROL. ASSESSE E SHOULD NOT SUFFER FOR SAME. THE REVISION OF PLAN IS VESTED RIGHT OF 17 ASSESSEE WHICH CANNOT BE TAKEN AWAY BY STRICT PROVI SIONS OF STATUTE. THE TAXING STATUTE GRANTING INCENTIVES FOR PROMOTION OF GROWTH AND DEVELOPMENT SHOULD BE CONST RUED LIBERALLY AND THAT PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY. AT THE SAME TIME, RESTRICTION THEREON TOO HAS TO BE CONSTRUED STRICTLY SO AS TO A DVANCE THE OBJECT OF PROVISION AND NOT TO FRUSTRATE THE SAME. THE PROVISIONS OF TAXING STATUTE SHOULD BE CONSTRUED HARMONIOUSLY WITH THE OBJECT OF STATUE TO EFFECTUAT E THE LEGISLATIVE INTENTION. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT ASSESSEE IS ENTITLED FO R BENEFIT U/S.80IB(10) OF THE ACT IN RESPECT OF 173 FLATS COM PLETED BEFORE PRESCRIBED LIMIT. THE ASSESSING OFFICER IS D IRECTED ACCORDINGLY. 7. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISPO SED OFF AS INDICATED ABOVE. IN THE LIGHT OF THE ABOVE DISCUSSION THE ORDER OF T HE CIT(A) DENYING BENEFIT OF DEDUCTION U/S.80IB(10) FOR NON-R ECEIPT OF COMPLETION CERTIFICATE IS SET-ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. 21. SO FAR AS THE SECOND GRIEVANCE OF THE REVENUE T HAT BUILDING NOS. B AND F ARE NOT CONSTRUCTED AND THERE FORE THE PROJECT HAS NOT BEEN COMPLETED AS PER THE APPROVED PLAN, WE FIND THE BUILDINGS A, C, D, E AND THE 17 ROW HOUSES ARE CONSTRUCTED ON A PLOT AREA OF MORE THAN 1 ACRE, NON E OF THE FLATS/ROW HOUSES IS BEYOND 1500 SQ.FT. AND THE COMP LETION THEREOF HAS BEEN OVER BEFORE 31-03-2008 IN VIEW OF OUR FINDINGS ABOVE. 21.1 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. RAHUL CONSTRUCTION CO. VS. ITO - ITA NO.1250/P N/2009 AND ITA NO.707/PN/2010 ORDER DATED 30-03-2012 HAS H ELD AS UNDER : 8. CONSIDERING THE ABOVE SUBMISSION, AND HAVING GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERI AL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON, WE FIND THAT THE ISSUE INVOLVED IS AS TO WHETHER THE ASSESS EE HAD COMPLETED THE HOUSING PROJECT WITHIN THE PRESCRIBED TIME LIMIT SINCE THE DATE OF FIRST APPROVAL OF THE PROJE CT BY THE PMC. 9. TO DECIDE THE ABOVE ISSUE, IT IS NECESSARY TO D ECIDE FIRSTLY AS TO WHAT WOULD BE FIRST DATE OF APPROVAL OF THE HOUSING PROJECT BY THE PMC TO COMPUTE THE TIME LIMI T PRESCRIBED FOR COMPLETION OF THE PROJECT TO TAKE B ENEFIT OF DEDUCTION U/S. 80 IB (10) OF THE ACT. THERE IS NO DISPUTE 18 ON SOME MATERIAL FACTS THAT OUT OF 16 BUILDINGS IN THE HOUSING PROJECT OF THE ASSESSEE ONLY 11 BUILDINGS W ERE COMPLETED WITHIN THE PRESCRIBED TIME LIMIT UPTO 31 ST MARCH 2008. THE LAY OUT PLAN IN RESPECT OF ENTIRE COMPLEX WAS SANCTIONED BY PMC VIDE ORDER NO. DPO/45/D/646 DATED 3.4.2003 AND THE BUILDING PLAN WAS SANCTIONE D VIDE COMMENCEMENT CERTIFICATE NO. 4269 DT. 29.4.2003. ADMITTEDLY, THE TERM HOUSING PROJECT HAS NOT BEEN DEFINED IN THE INCOME TAX ACT BUT IN THE CONTEXT OF DEDUCTION U/S. 80IB(10) AN EXPLANATION HAS BEEN PROVIDED BELOW CLAUSE (A) TO SUB-SECTION (10) TO SE CTION 80 IB. FOR A READY REFERENCE, THE SAID EXPLANATION IS BEING REPRODUCED HEREUNDER : (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE 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 WH ICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSI NG PROJECT IS ISSUED BY THE LOCAL AUTHORITY. THE VERY READING OF ABOVE EXPLANATION (I), IT MAKES CLEAR THAT FOR THE ELIGIBILITY OF THE DEDUCTION PROVIDED U/S. 80 IB (10) OF THE ACT, THE DATE ON WHICH BUILDING PLAN OF SUCH HOUSING PROJECT HAS BEEN FIRSTLY APPROVED BY THE LO CAL AUTHORITY WILL BE TREATED AS APPROVAL IN RESPECT OF THE HOUSING PROJECT. WHEN WE READ EXPLANATION (II) WIT H EXPLANATION (I) IT MAKES CLEAR THAT COMPLETION OF CONSTRUCTION OF SUCH BUILDING PLAN FIRST APPROVED B Y THE LOCAL AUTHORITY WILL BE TAKEN THE DATE OF COMPLETIO N OF CONSTRUCTION OF SUCH BUILDING PLAN WHEN COMPLETION CERTIFICATE HAS BEEN ISSUED BY THE LOCAL AUTHORITY . IN OTHER WORDS, IN CLAUSE (I) OF THE EXPLANATION, IT H AS BEEN MADE CLEAR THAT WOULD BE THE HOUSING PROJECT, FIRS T APPROVAL OF WHICH, BY THE LOCAL AUTHORITY WOULD BE TAKEN AS STARTING POINT OF THE HOUSING PROJECT AND IN CLA USE NO. (II), IT HAS BEEN MADE CLEAR THAT WHAT WOULD BE THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT ISSUED BY LOCAL AUTHORITY TO COMPUTE THE PRESCRIBED TIME LIMIT FOR VERIFICATION OF ELIGIBILITY OF ASSESSEE FOR THE CLAIMED DEDUCTION. IN VIEW OF THE ABOVE EXPLANATI ON, WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. A.R. THAT APPROVAL OF THE HOUSING PROJECT AND APPROVAL OF BU ILDING PLAN ARE TWO DIFFERENT CONCEPTS. THE BANGALORE BEN CH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BRIGADE ENTER PRISES 19 (P) LTD. (SUPRA) HAS HELD THAT PLAN FOR DEVELOPMENT IS ONLY A WORK ORDER AND NOT FINAL PLAN SANCTIONED BY THE L OCAL AUTHORITY. FOR ANY PROJECT, THERE COULD NOT HAVE B EEN A PLAN WITHOUT SUBMISSION OF THE DETAILED BUILDING P LANS, BY THE ARCHITECT AND WHAT REQUISITE DETAILS REQUIRE D TO BE SUBMITTED FOR APPROVAL OF THE BUILDING PLANS BY THE LOCAL AUTHORITY. IN THE CASE OF SAROJ SALES ORGANIZATION VS. ITO (SUPRA), BEFORE MUMBAI BENCH, ALMOST SIMILAR FACTS AS BEFORE US WERE THERE. THE COMMENCEMENT CERTIFICATE IN RESPECT OF SIX WINGS IN BLOCK N WAS SEPARATELY RECEIVED BY THE ASSESSEE AND ALL THE FLATS IN BLOCK WERE L ESS THAN 1000 SQ.FT. IT WAS HELD BY THE TRIBUNAL THAT IT IS NOT UPON TO THE REVENUE TO INCLUDE BLOCK BC AS PART OF BLOCK N JUST TO DENY RELIEF TO THE ASSESSEE U/S. 80 IB( 10). THE TRIBUNAL OBSERVED THAT BLOCK BC WAS MEANT FOR HIG HER STRATA OF THE SOCIETY HAD BEEN KEPT SEPARATELY BY ASSESSEE IN ALL THE RESPECT, ASSESSEE HAD NOT CLAIMED RELIE F U/S. 80IB IN RESPECT OF BLOCK BC . IN THE CASE OF MU DHIT MADANLAL GUPTA VS. ACIT (SUPRA ) BEFORE THE MUMBAI BENCH, IT HAS BEEN HELD THAT THE HOUSING PROJECT D OES NOT NECESSARILY HAVE TO BE VARIOUS GROUP OF BUILDINGS CONSTRUCTED ON THAT PARTICULAR LAND, BUT IT CAN AL SO BE A PARTICULAR BUILDING OR ANY BUILDING WHICH IS PART OF A LARGE PROJECT. IT HAS BEEN FURTHER HELD THAT WHATEVER PORTION OF THE HOUSING PROJECT IS OTHERWISE FOUND TO BE ELIGIB LE HAS TO BE CONSIDERED AS A HOUSING PROJECT FOR THE PURPO SE OF DEDUCTION U/S. 80 IB (10) OF THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED BY MUMBAI BENCH OF THE TRIBUNAL IN T HE CASE OF VANDANA PROPERTIES VS. ACIT (SUPRA). 10. IN VIEW OF ABOVE DISCUSSION, WE COME TO THE CONCLUSION THAT FOR VERIFICATION OF ELIGIBILITY O F BENEFIT CLAIMED U/S. 80 IB (10) OF THE ACT BY THE ASSESSEE ON BUILDINGS A1 TO A5 IN ATUL NAGAR AND BUILDINGS B1 TO B6 IN RAHUL NISARG CO-OPERATIVE HOUSING SOCIETY LTD. , THE ASSESSING AUTHORITY HAS TO VERIFY AS TO WHEN THE B UILDING PLANS FOR THESE BUILDINGS WERE FIRSTLY APPROVED BY THE LOCAL AUTHORITY AND TAKING THE SAID DATE OF APPROVAL A STARTING POINT, HE HAS TO VERIFY AS TO WHETHER THESE BUILDI NGS WERE COMPLETED WITHIN THE PRESCRIBED TIME LIMIT I.E. 31 ST MARCH 2008 ON THE BASIS OF THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT ISSUED BY THE PMC. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE UNDER THE ABO VE BACKGROUND, WE FIND THAT THE AUTHORITIES BELOW HAV E NOT DISPUTED THE FACT FURNISHED IN THIS REGARD BY THE ASSESSEE THAT UNDER THE PROJECT ATUL NAGAR CONSISTING OF B UILDINGS A1 TO A5, THE FIRST BUILDING PLAN FOR A TYPE WAS AP PROVED BY THE PMC ON 29.4.2003 VIDE COMMENCEMENT CERTIFIC ATE NO. 4269 (PAGE NO. 4 OF THE PAPER BOOK). HOWEVER, A CTUAL CONSTRUCTION OF A TYPE BUILDING WAS EXECUTED AS PER THE 20 REVISED PLAN VIDE NO. C.C. 4101/27/6/2003 (PAGE NO. 5 OF THE PAPER BOOK). THE SIZE OF THE PLOT ON WHICH THE A TYPE BUILDING I.E. A1 TO A6 HAVE BEEN CONSTRUCTED I S 1,39,466 SQ.FT. THE PROJECT A TYPE BUILDING I.E. A 1 TO A5 CONSISTS OF 360 RESIDENTIAL UNITS AND THE CONSTRUCT ION HAS BEEN COMPLETED BETWEEN 10.1.2005 TO 31.8.2005 (PAGE NOS. 6 TO 9 OF PAPER BOOK). THE AUTHORITIES BELOW HAVE ALSO NOT DISPUTED THIS MATERIAL FACT THAT RESIDENTI AL UNITS HAS A MAXIMUM BUILT UP AREA OF 1500 SQ.FT. LIKEWIS E, THESE MATERIAL FACTS THAT B GROUP BUILDINGS IN RAH UL NISARG CO-OPERATIVE HOUSING SOCIETY LTD., HAVE BEE N CONSTRUCTED ON LAND AREA OF 138203 SQ.FT., HAS NOT BEEN DENIED BY THE AUTHORITIES BELOW. THEY HAVE ALSO NOT DENIED THESE MATERIAL FACTS THAT THE FIRST BUILDING PLAN WAS SANCTIONED ON 29.4.2003 VIDE COMMENCEMENT CERTIFICA TE NO. 4269 ISSUED BY THE PMC (PAGE NO. 16 OF THE PAPE R BOOK). THE OTHER MATERIAL FACTS LIKE ACTUAL CONST RUCTION WAS EXECUTED AS PER THE REVISED PLAN SANCTION ON 20 TH MARCH 2004 VIDE CC NO. 2225 (PAGE NO. 17), THE PRO JECT CONSISTS OF 396 FLATS AND CONSTRUCTION OF THESE FL ATS HAVE BEEN COMPLETED ON 14.7.2006 AS PER THE COMPLETION CERTIFICATE ISSUED BY THE PMC (PAGE NOS. 13 TO 18 OF PAPER BOOK) ARE NOT IN DISPUTE. THE AUTHORITIES BELOW HA VE ALSO NOT DENIED THAT BUILT UP AREA OF EACH OF THESE FLAT S DOES NOT EXCEED 1500 SQ.FT. IT IS ALSO NOT IN DISPUTE TH AT BOTH THE PROJECTS ARE ENTIRELY A RESIDENTIAL PROJECT AND THERE IS NO COMMERCIAL AREA THEREIN. UNDER THE ABOVE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE IS VERY MUCH ENTITLED TO THE CLAIMED DEDUCTION U/S. 80 IB ( 10) OF THE ACT ON THE BUILDINGS A1 TO A5 IN ATUL NAGAR A ND BUILDINGS B1 TO B6 IN RAHUL NISARG CO-OPERATIVE H OUSING SOCIETY LTD. THE ISSUE IS THEREFORE DECIDED IN FA VOUR OF THE ASSESSEE. WE THUS WHILE SETTING ASIDE THE ORDE RS OF THE AUTHORITIES BELOW ON THE ISSUE, DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION U/S. 80 IB(10) IN QUESTION. THE RELATED GROUNDS ARE ACCORDINGLY ALLOWED. 21.2 WE FIND THAT BANGALORE BENCH OF THE ITAT IN TH E CASE OF DY.CIT VS. BRIGADE ENTERPRISES (P) LTD. [119 TTJ 26 9 (BANG.)] HAS OBSERVED AS UNDER : DEDUCTION UNDER S.80IB INCOME FROM DEVELOPING AND BUILDING HOUSING PROJECT DIFFERENT UNITS OF A GRO UP PROJECT WHERE SOME OF THE RESIDENTIAL UNITS IN A BIGGER HOU SING PROJECT, TREATED INDEPENDENTLY, ARE ELIGIBLE FOR RE LIEF UNDER S.80IB(10), RELIEF SHOULD BE GIVEN PRO RATA AND SHO ULD NOT BE DENIED BY TREATING THE BIGGER PROJECT AS A SINGLE U NIT, MORE SO, WHEN ASSESSEE OBTAINED ALL SANCTIONS, PERMISSIO NS AND CERTIFICATES FOR SUCH ELIGIBLE UNITS SEPARATELY A SSESSEE UNDERTOOK A DEVELOPMENT PROJECT IN AN AREA OF 22 AC RES 19 21 GUNTAS CONSISTING OF 5 RESIDENTIAL BLOCKS, ROW HOUS ES, OAK TREE PLACE, A CLUB, A COMMUNITY CENTRE, A SCHOOL AN D A PARK AND CLAIMED DEDUCTION UNDER S. 80IB(10) IN RESPECT OF TWO RESIDENTIAL UNITS ONLY WHICH IF TAKEN SEPARATELY, W ERE ELIGIBLE FOR THE RELIEF AO TREATED THE ENTIRE PRO JECT AS A SINGLE UNIT AND DENIED RELIEF UNDER S.80IB(10) IN E NTIRETY CIT(A) ALLOWED RELIEF UNDER S. 80IB(10) TREATING TH E SAID TWO UNITS AS INDEPENDENT UNITS JUSTIFIED MATERIAL O N RECORD SHOWED THAT THE VARIOUS LOCAL AUTHORITIES DULY INSP ECTED THE PLOT AND SANCTIONED PLAN FOR EACH OF THE BLOCKS SEP ARATELY GROUP HOUSING APPROVAL WAS APPROVAL OF A MASTER PLA N AS A CONCEPT FURTHER, THE USE OF THE WORDS RESIDENT IAL UNITS IN CL.(C) OF S.80IB(10) MEANS THAT DEDUCTION SHOULD BE COMPUTED UNIT-WISE THEREFORE, IF A PARTICULAR UNI T SATISFIES THE CONDITION OF S.80IB, THE ASSESSEE IS ENTITLED F OR DEDUCTION AND IT SHOULD BE DENIED IN RESPECT OF THO SE UNITS ONLY WHICH DO NOT SATISFY THE CONDITIONS AGAIN, T HE ACCOUNTING PRINCIPLES WOULD ALSO MANDATE RECOGNITIO N OF PROFITS FROM EACH UNIT SEPARATELY. 21.3 IN VIEW OF THE ABOVE DECISIONS, WE ARE OF THE CONSIDERED OPINION THAT WHATEVER PORTION COMPLETED BY THE ASSE SSEE WHICH SATISFIES THE CONDITIONS PRESCRIBED U/S.80IB(10) IS ELIGIBLE FOR DEDUCTION. THE VARIOUS DECISIONS RELIED ON BY THE R EVENUE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE ACCORDINGLY HOLD THAT THE ASSESSEE IS ELI GIBLE FOR DEDUCTION U/S.80IB(10) IN RESPECT OF BUILDING NO. A ,C,D, E AND THE 17 ROW HOUSES. THE GROUNDS RAISED BY THE ASSES SEE ON THIS ISSUE ARE ACCORDINGLY ALLOWED. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY- ALLOWED. 7. THUS, WE FIND THAT IN RUNWAL MULTIHOUSING PVT. L TD. (SUPRA), THE PROJECT OF ASSESSEE HAS STARTED IN 2001 FOR CON STRUCTION OF BUILDINGS A TO F AND 17 ROW HOUSES BUT DID NOT CO NSTRUCT BUILDINGS B & F AS THE SAME WAS NOT FEASIBLE. EVEN THE ASSES SEE DID NOT REVISE THE BUILDING PLAN WHEN HE HAD ABANDONED B & F BUILD INGS. EVEN THE COMPLETION CERTIFICATE WAS NOT ISSUED FOR CERTA IN REASONS AS DISCUSSED IN RUNWAL MULTIHOUSING PVT. LTD. (SUPRA). THE ASSESSEE WAS HELD ENTITLED FOR CLAIM U/S.80IB(10) IN THE CAS E OF RUNWAL (SUPRA) IN RESPECT OF A, B, C, D AND 17 ROW HOUSES . THE DECISION IN RUNWAL (SUPRA) DREW STRENGTH FROM THE DECISION OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. TARNETAR CORPORAT ION VIDE TAX 22 APPEAL NO.1241/2011 ORDER DATED 12.09.2011, WHEREIN THE ASSESSEE HAS COMPLETED THE CONSTRUCTION WELL BEFORE 31.03.20 08, HOWEVER, THE BU PERMISSION WAS NOT GRANTED BY CONCERNED MUNICIPA L AUTHORITY BY SUCH DATE. THE EXPLANATION TO CLAUSE (A) TO SECTIO N 80IB(10) LINKS THE COMPLETION OF CONSTRUCTION TO BU PERMISSION GRANTED BY LOCAL AUTHORITY. THE SUBSTANTIAL COMPLIANCE OF CONSTRUCT ION WAS PROVED BEFORE THE COURT EVEN THOUGH THE PERMISSION WAS NOT GRANTED, THE ASSESSEE WAS GRANTED CLAIM OF DEDUCTION U/S.80IB(10 ). IN THE CASE BEFORE US, THE ASSESSEE HAS COMPLETED THE BUILDINGS A TO F BEFORE PRESCRIBED DATE I.E. 31.03.2008, SO, IS ENTITLED DE DUCTION FOR DEDUCTION IN RESPECT OF THE SAME STANDALONE BASIS. WE FIND THAT A SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE BENCH IN THE CASE OF RAHUL CONSTRUCTION CO. VS. ITO IN ITA NO.1250/PN/20 09 AND ITA NO.707/PN/2010 VIDE ORDER DATED 30.03.2012. FURTHE R, A SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF M/S. VARUN DEVEL OPERS VS. DCIT IN ITA NO.1624/PN/2011. ONCE WE HAVE HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80IB(10) OF THE ACT WITH REGARD TO BUILDINGS A TO F WHICH WERE COMPLETED BEFORE PRES CRIBED LIMIT OF TIME AND COMPLIED ALL CONDITIONS LAID DOWN UNDER TH E PROVISIONS OF SECTION 80IB(10) OF THE ACT. THE ASSESSEES CLAIM FOR DEDUCTION WILL NOT BE EFFECTED EVEN IF THE ASSESSEE HAS NOT CONSTR UCTED BUILDINGS G & I BECAUSE THE ASSESSEE CLAIM U/S.80IB(10) OF THE ACT IS JUSTIFIED IN RESPECT OF BUILDINGS A TO F ON STANDALONE BASIS. NOW, COMING TO SIZE OF ISSUE OF BUILDINGS J & H. AS STATED ABOVE, THESE BUILDINGS J & H WERE RETAINED BY PARTNERS OF THE ASSESSEE AND NO QUESTION OF CLAIM U/S.80IB(10) OF THE ACT ARISES. THE CLAIM OF THE A SSESSEE IN RESPECT OF BUILDING CANNOT BE DENIED IN RESPECT OF BUILDING S A TO F IRRESPECTIVE OF THE FACT THAT AREA OF BUILDINGS / B UNGALOWS J & H EXCEEDED 1500 SQ. FT. IN RESPECT TO WHICH, NO CLAIM HAS BEEN MADE AS DISCUSSED ABOVE. MOREOVER, BUILDINGS A TO F ARE CLEARLY SEPARATED FROM G & I AND J & H BY ROAD AS STATED ABOVE. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT THE ASSESSEE IS ENTITLED F OR DEDUCTION OF 1,45,90,939/- U/S. 80IB(10) OF THE ACT IN RESPECT O F PROFITS ARISING 23 FROM CONSTRUCTION OF BUILDINGS A TO F FOR A.Y. 20 06-07 WHICH CONSTITUTED SEPARATE INDEPENDENT PROJECT AS DISCUS SED ABOVE. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 7. SIMILAR ISSUES AROSE IN ASSESSEES APPEAL FOR A. YS. 2003-04, 2004-05, 2005-06 AND 2007-08. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE HOLD THAT THE ASSESSEE IS EN TITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT IN RESPECT OF PR OFITS ARISING FROM CONSTRUCTION OF BUILDINGS A TO F WHICH CONSTITUTE D SEPARATE INDEPENDENT PROJECT ENTITLED FOR CLAIMING THE DEDUC TION IN ALL THESE YEARS. THE ASSESSING OFFICER IS DIRECTED ACCORDING LY. 8. IN A.Y. 2005-06, THE ASSESSEE HAS RAISED SEPARAT E GROUND WHICH READS AS UNDER: THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS.8,92,604/- BY HOLDING THAT THE INDIRECT COSTS IN CURRED BY THE ASSESSEE SHOULD BE ALLOCATED BETWEEN THE PROJECT SH IVANAND GARDEN AND DAYANAND GARDEN IN THE RATIO OF 40:60 ON THE BASIS OF THE TURNOVER OF THE SAID TWO PROJECTS AS A GAINST THE CLAIM OF THE APPELLANT THAT THE RATIO SHOULD 70:30. 8.1 AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZE D REPRESENTATIVE DID NOT PRESS THIS GROUND, SO THE SAME IS DISMISSED AS NOT PRESSED. 9. IN ITA NO.721/PN/2010 FOR A.Y. 2005-06, THE REVE NUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED, IN HOLDING THAT THE LOWER PROFIT MARGINS OF 'SHIVANAND GARDEN' PROJECT CANNOT BE EQUATED WITH THE HIGHER P ROFIT MARGINS OF 'DAYANAND GARDEN' PROJECT PARTICULARLY W HEN NO SEPARATE BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED BY THE ASSESSEE IN RESPECT OF THESE TWO PROJECTS. 24 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT 'SHIVANAND GARD EN' PROJECT WAS STARTED IN THE F.Y. 1993-94, WHEN THE COST OF M ATERIALS AND LABOUR WAS MUCH LOWER THAN IN 2000-01 WHEN CONSTRUCTION OF DAYANAND GARDEN PROJECT WAS STARTED . AS BOTH THE PROJECTS ARE SIMILAR IN NATURE (WHOLLY RES IDENTIAL), HAVING BEEN LOCATED IN THE SAME AREA(MERELY 100 M F ROM EACH OTHER), THERE IS NO JUSTIFICATION FOR INCURRIN G LOWER PROFIT MARGINS IN THE 'SHIVANAND GARDEN' PROJECT. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN IGNORING THE VERY FACT THAT NO JUSTIFICATION HAS BE EN GIVEN BY THE ASSESSEE REGARDING THE HIGH COST OF CONSTRUCTIO N (RS. 783 PER SQ. FT) FOR THE SHIVANAND GARDEN PROJECT AS AGA INST RS. 482/- PER SQ. FT. ONLY FOR THE DAYANAND GARDEN PROJ ECT) 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT (APPE ALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RES TORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 9.1 THE ONLY ISSUE PERTAINS TO REVENUES APPEAL IN A.Y. 2005-06, THE ASSESSING OFFICER HAS COMPARED THE FIGURES OF P ROFITABILITY FROM THE PROJECT SHIVANAND GARDEN WHICH WAS A PROJECT ON WHICH DEDUCTION U/S.80IB(10) WAS NOT AVAILABLE VIS--VIS THE PROFITABILITY OF DAYANAND GARDEN WHICH WAS ELIGIBLE FOR DEDUCTION U/S.80IB(10). THE SHIVANAND GARDEN WAS SANCTIONED ON 12.09.1994 O N A PLOT ADMEASURING 10645 SQ. MTRS. AND ADDITIONAL FSI WAS BROUGHT INTO THE PROJECT BY PURCHASE OF TDR OF 391 SQ. MTRS. DUR ING F.Y. 2003- 04. THE TOTAL BUILT UP AREA WAS 154075 SQ.FT. AND THE CONSTRUCTION COST PER SQ. FT. WAS WORKED OUT 783/- PER SQ. FT. BY THE ASSESSING OFFICER. ON THE OTHER HAND, DAYANAND GARDEN PROJEC T WAS ON A PLOT ADMEASURING 7311.57 SQ. MTRS. WHERE LAYOUT WAS SANC TIONED ON 25.09.1996 AND THE BUILDING PLAN WAS APPROVED ON 06 .10.1999. IN THIS PROJECT THE COST OF CONSTRUCTION PER SQ. FT. F OR THE BUILT UP AREA OF 107460 SQ. FT. HAS BEEN COMPUTED AT 482/- PER SQ. FT. 9.2 DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER ASKED THE ASSESSEE THE REASONS FOR DIFFERENCE IN THE COST OF CONSTRUCTION OF 25 THE TWO PROJECTS. IT WAS CONTENDED ON BEHALF OF AS SESSING OFFICER THAT THE ASSESSEE DID NOT GIVE THE DETAILS OF COST OF CONSTRUCTION OF SHIVANAND GARDEN PROJECT. IT WAS FURTHER STATED TH AT THE GROSS PROJECT RATIO OF SHIVANAND GARDEN PROJECT WAS ONLY 32.47% WHEREAS FOR DAYANAND GARDEN PROJECT WAS 49.27% FOR THE ENTI RE DURATION OF THE PROJECT. IT WAS STATED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAS NOT SUBMITTED ANY JUSTIFICATION FOR HIGHER CONS TRUCTION COST FOR SHIVANAND PROJECT; WHEREAS THE SHIVANAND GARDEN PRO JECT STARTED IN F.Y. 1993-94 WHEN THE MATERIAL AND LABOUR COST WAS LOWER THAN IN 2000-01 WHEN THE DAYANAND GARDEN PROJECT CONSTRUCTI ON STARTED. ACCORDING TO THE ASSESSING OFFICER, BOTH THE PROJEC TS WERE LOCATED IN THE VILLAGE WANAWARIE, PUNE AND FOR ABOUT FIVE FINA NCIAL YEARS, THEY WERE SIMULTANEOUSLY CONSTRUCTED AND SOLD. THE ASSES SING OFFICER STATED THAT THE INDIRECT EXPENSES OF 29,75,349/- HAVE BEEN ALLOCATED TO THE TWO PROJECTS IN THE RATIO OF 70:30 ( 20,82,744/- FOR SHIVANAND GARDEN PROJECT AND 8,92,605/- FOR DAYANAND GARDEN PROJECT). ON THE OTHER HAND, THE DIRECT COST OF 1,27,67,661/- WAS ALLOCATED IN THE RATIO OF 40:60 BETWEEN SHIVANAND G ARDEN AND DAYANAND GARDEN PROJECTS WHICH WAS CORRESPONDING TO THE SALES TURNOVER WHICH WERE 1,99,48,913/- FOR SHIVANAND GARDEN PROJECT AND 2,72,34,497/- FOR DAYANAND GARDEN PROJECT (WHICH GI VES A RATIO OF 42:58). THE ASSESSING OFFICER HAS THUS, P OINTED OUT THAT DUE TO THIS SKEWED ALLOCATION OF INDIRECT EXPENSES, PRO FITABILITY OF SHIVANAND GARDEN PROJECT HAS BEEN SUPPRESSED YEAR AFTER YEAR. THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF A CCOUNTS FOR THE PROJECTS AND THEY ARE NOT RELIABLE IN VIEW OF THE F ACTS STATED ABOVE. THE ASSESSING OFFICER THUS APPLIED PROVISIONS OF SE CTION 145(3) OF THE ACT AND APPLIED THE AVERAGE GROSS PROFIT RATE OF 49 .27% FROM DAYANAND GARDEN PROJECT TO THE SALES OF SHIVANAND G ARDEN PROJECT OF WHOM THE GROSS PROFIT RATE FOR THE CURRENT YEAR WAS 21.85% ONLY. FURTHER, THE INDIRECT EXPENSES WERE ALSO ALLOCATED IN THE RATIO 40:60 INSTEAD OF 70:30 BETWEEN SHIVANAND GARDEN PROJECT A ND DAYANAND GARDEN PROJECT AND ACCORDINGLY THE PROFIT FROM S HIVANAND GARDEN 26 PROJECT WAS COMPUTED AT 86,38,709/- [ 98,28,829/- (-) 11,90,120/- FOR ALLOCATION OF INDIRECT EXPENSES]. THE ASSESSING OFFICER ALSO REALLOCATED THE INDIRECT EXPENSES IN D AYANAND GARDEN PROJECT AT 60% BEING 17,85,209/- IN PLACE OF 8,92,604/- AS SHOWN BY THE ASSESSEE THEREBY RECOMPUTING THE PROFI T FROM THE DAYANAND GARDEN PROJECT AT 1,66,88,690/- IN PLACE OF 1,75,81,295/- SHOWN BY THE ASSESSEE, ON WHICH DEDUC TION U/S.80IB(10) WAS ALLOWED. 9.3 IN APPEAL, THE CIT(A) HELD ON THIS ISSUE THAT T HE ASSESSING OFFICER HAS POINTED OUT TO ONLY ONE MAIN ISSUE THAT THE COST OF CONSTRUCTION FOR THE ENTIRE DURATION OF THE PROJECT IN CASE OF SHIVANAND GARDEN PROJECT WAS MUCH HIGHER THAN THAT OF DAYANAND GARDEN PROJECT. ON THE OTHER HAND, IT WAS OBSERVED BY THE CIT(A) THAT THE SHIVANAND GARDEN PROJECT WAS IN OPERATION SINCE F.Y. 1993- 94 UPTO F.Y.2005-06 WHEREAS THE DAYANAND GARDEN PRO JECT STARTED FROM F.Y.2000-01 AND WAS RUNNING TILL F.Y.2005-06. ANOTHER DEFECT POINTED OUT BY THE ASSESSING OFFICER WAS THAT THE A LLOCATION OF INDIRECT EXPENSES WAS NOT IN THE SAME RATIO AS DIRE CT EXPENSES, WHICH ROUGHLY AMOUNTED TO THE RATIO OF THE RESPECTI VE TURNOVER. ON THIS BASIS, THE ASSESSING OFFICER HAS STATED THAT T HE BOOK RESULTS ARE NOT RELIABLE AND PROVISIONS OF SECTION 145(3) WERE INVOKED. AFTER INVOKING THE SAME, THE AVERAGE GROSS PROFIT RATE FR OM DAYANAND GARDEN PROJECT FOR THE ENTIRE DURATION OF THE PROJE CT WORKED OUT TO 49.27% WAS APPLIED TO THE SALES OF SHIVANAND GARDEN PROJECT AND THEN THE INDIRECT COST WAS RE-ALLOCATED. THIS WAS A SIMPLE ARITHMETIC CALCULATION MADE BY THE ASSESSING OFFICER. THE ASS ESSEE HAS EXPLAINED A NUMBER OF ISSUES FOR COMPARISON OF THE COST OF THE TWO PROJECTS IN THE SUBMISSION DATED 18.2.2010 AND CONT ENDED THAT THE DAYANAND GARDEN PROJECT WAS ON A LAND WHICH WAS SUB JECTED TO ULC ACT LIMITATION AND THERE WERE CERTAIN PRECONDITIONS FOR ITS DEVELOPMENT I.E. LOW COST CONSTRUCTION, SMALLER SIZ E OF THE TENEMENTS ETC. THE ASSESSEE HAS ENCLOSED COMPARISON OF THE SP ECIFICATION OF 27 WORKS AND AMENITIES BETWEEN THE SHIVANAND GARDEN PR OJECT AND DAYANAND GARDEN PROJECT EXPLAINING THAT THE SPECIFI CATIONS WERE MUCH LOWER AND THE MATERIAL USED WERE CHEAPER IN TH E CASE OF DAYANAND GARDEN PROJECT; IN RESPECT OF PLASTER, FLO ORING, DOORS, WINDOWS, BATHROOM FITTINGS, PLUMBING ETC. IT WAS A LSO EXPLAINED THAT THE COST OF LAND WAS ALSO LOWER IN THE CASE OF DAYA NAND GARDEN PROJECT SINCE IT HAD ULC RESTRICTIONS. SINCE AVERA GE GROSS PROFIT RATE OF ENTIRE DURATION HAS BEEN COMPUTED AND APPLIED, T HE COMPONENT OF COST OF LAND ESSENTIALLY COMES INTO THE COMPUTATION . IT WAS FURTHER EXPLAINED THAT THE CLUB HOUSE AND GARDEN WAS ALSO M UCH SMALLER AND SIMPLE IN DAYANAND GARDEN PROJECT WHEREAS SHIVA NAND GARDEN PROJECT HAD A LANDSCAPED GARDEN, A CLUB HOUSE WITH GYMNASIUM AND SWIMMING POOL. THE SHIVANAND GARDEN PROJECT CONSIST ED OF THREE ROW HOUSES ALSO, WHILE THE DAYANAND GARDEN PROJECT, WAS ONLY FOR RESIDENTIAL FLATS. IT WAS ALSO POINTED OUT BY THE ASSESSEE THAT WHILE THE YEAR HAS BEEN COMPARED, THE ASSESSING OFFICER H AS NOT TAKEN COGNIZANCE OF THE FACT THAT IN THE PAST, IN SHIVANA ND GARDEN PROJECT ALSO GROSS PROFIT RATE OF 68.55% IN F.Y. 1997-98 AN D 54.94% IN F.Y.2000-01 WAS SHOWN, AND IN F.Y.2002-03 BOTH THE PROJECTS HAD DISCLOSED SIMILAR GROSS PROFIT RATES OF 18.41 AND 1 8.95% RESPECTIVELY. IT WAS ALSO STATED THAT EVEN THE AVERAGE GROSS PROF IT RATE COMPUTATION OF DAYANAND GARDEN PROJECT AT 49.28% WAS INCORRECT SINCE THE CLOSING WIP IN THE CURRENT YEAR WAS WRONGLY TAKEN B Y THE ASSESSING OFFICER. THEREFORE, THE GROSS PROFIT RATE FOR THE C URRENT YEAR I.E. A.Y.2005-06 WAS WRONGLY TAKEN AT 67.83% BY THE ASSE SSING OFFICER WHEREAS THE CORRECT GROSS PROFIT RATE SHOULD BE 50. 78% AND ACCORDINGLY THE AVERAGE GROSS PROFIT RATE OF DAYANA ND GARDEN PROJECT UPTO A.Y.2006-07 WORKED OUT TO 44.18% INSTEAD OF 49 .28% TAKEN BY THE ASSESSING OFFICER. 9.4 THE ASSESSEE HAS EXPLAINED THE VARIATION OF THE GROSS PROFIT RATE OF THE TWO PROJECTS FROM YEAR TO YEAR. THE ASSESSIN G OFFICER HAS ADOPTED THE GROSS PROFIT RATE OF DAYANAND GARDEN PR OJECT AND 28 APPLIED IT TO SHIVANAND GARDEN PROJECT ON THE PRESU MPTION THAT THE ASSESSEE WAS DELIBERATELY SHOWING HIGHER PROFIT IN DAYANAND GARDEN PROJECT SINCE IT WAS SUBJECTED TO DEDUCTION U/S.80I B(10). HOWEVER, IT HAS BEEN POINTED OUT BY THE ASSESSEE THAT IN MANY O F THE EARLIER YEARS EVEN IN SHIVANAND GARDEN PROJECT MUCH HIGHER PROFIT RATE WAS SHOWN AND IN A.Y.2003-04 THE GROSS PROFIT RATE OF B OTH THE PROJECTS WAS SAME. FURTHER, IT WAS OBSERVED BY THE CIT(A) TH AT IN THE IMMEDIATELY PRECEDING YEAR I.E.A.Y.2004-05 ALSO IN SHIVANAND GARDEN PROJECT THE GROSS PROFIT RATE WAS 31.57% AS AGAINST THE GROSS PROFIT RATE OF 33.41% IN DAYANAND GARDEN PROJECT I. E. THERE IS HARDLY MUCH DIFFERENCE TO INDICATE ANY SORT OF DELIBERATE SHOWING OF HIGHER PROFIT IN DAYANAND GARDEN PROJECT. IT WAS ONLY IN THIS ASSESSMENT YEAR THAT THE GROSS PROFIT RATE APPEARS TO BE MUCH DIFFERENT, BUT IT HAS BEEN EXPLAINED BY VARIOUS FACTORS BY THE ASSESS EE. EVEN IN RESPECT OF THE DIFFERENCE IN THE AVERAGE GROSS PROF IT RATE, OF WHICH THE CORRECT FIGURE OF DAYANAND GARDEN PROJECT WAS 44.18 %, AS AGAINST THAT OF SHJVANAND GARDEN PROJECT BEING 32.47%, THE DIFFERENCE IN THE COST OF LAND AND VARIOUS SPECIFICATIONS AND AMENITI ES, LOWER COST OF CONSTRUCTION ETC. HAS BEEN EXPLAINED IN THE ASSESSE E'S SUBMISSION. MOREOVER, THE ACCOUNTS ARE AUDITED AND THE PRESCRIB ED AUDIT REPORTS HAVE ALSO BEEN FURNISHED. HOWEVER, THERE WAS SUBST ANCE IN THE ASSESSING OFFICER'S CONTENTION THAT THE ALLOCATION OF THE INDIRECT COST, IF DONE ON A PROPORTIONATE BASIS, SHOULD BE IN THE SAME RATIO AS THE DIRECT COST, WHICH IS IN PROPORTION TO TURNOVER I.E . IT SHOULD BE ALLOCATED IN THE RATIO 40:60 FOR THIS YEAR IN PROPO RTION TO THE TURNOVER OF SHIVANAND GARDEN PROJECT AND DAYANAND GARDEN PRO JECT. THIS WOULD RESULT IN A LOWER ALLOCATION IN THE SHIVANAND GARDEN PROJECT SINCE THE ORIGINAL ALLOCATION WAS IN THE RATIO 70:3 0. THE INDIRECT EXPENSES WHICH HAVE BEEN ALLOCATED AT 20,82,744/- IN THE SHIVANAND GARDEN PROJECT IS NOW REDUCED TO 11,90,140/-. THIS REALLOCATION, WHICH RESULTS IN A REDUCTION IN EXPENDITURE TO THE TUNE OF 8,92,604/- IN THE SHIVANAND GARDEN PROJECT, HAS RES ULTED IN ENHANCEMENT OF THE PROFIT BY THIS AMOUNT. ACCORDINGLY, THE 29 ADDITION OF 8,92,604/- IN RESPECT OF THE PROFITS OF THE SHIVANA ND GARDEN PROJECT IS HEREBY SUSTAINED AND THE REMAININ G WAS DELETED. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFEREN CE FROM OUR SIDE, BECAUSE BOTH PROJECTS CANNOT BE EQUATED AS DISCUSSE D ABOVE. WE UPHOLD THE SAME. 10. IN THE RESULT, THE APPEALS FILED BY ASSESSEE FO R A.Y. 2005-06 IS PARTLY ALLOWED WHILE THE OTHER APPEALS OF ASSESSEE ARE ALLOWED AS INDICATED ABOVE AND THE APPEAL FILED BY THE REVENUE FOR A.Y. 2005-06 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF JUNE, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JUNE, 2014 GCVSR COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE