Hiraman Nivrutti Bhujbal, Pune V. ITO 9(1), Pune

ITA 667/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79897 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: V L JAIN
• Keywords: Competent authority
• Section: 10

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 NO.667/PN/2013 (A.Y: 2009-10) HIRAMAN NIVRUTTI BHUJBAL FLAT NO.7, LALITRAJ PARK TANAJI NAGAR, CHINCHWAD, PUNE 411033 PAN: AAUPB5023C APPELLANT VS. ITO, WARD 9(1), PUNE RESPONDENT APPELLANT BY : SHRI V.L. J AIN RESPONDENT BY : SHRI P.L . PATHADE DATE OF HEARING: 08.05.2014 DATE OF ORDER : 27.05.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-V, [IN SHORT CIT(A)] PUNE, DATED 06.02.2013 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS. 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB(10) AMOUNTING TO RS.25,48,221/- - - (A) GRAM PANCHAYAT IS NOT A LOCAL AUTHORITY COMP ETENT TO ISSUE APPROVALS AND COMPLETION FOR THE HOUSING P ROJECT AND - (B) THE ROAD AREA WAS NOT PART OF THE PROJECT AN D HENCE THE AREA OF THE LAND WAS LESS THAN ONE ACRE. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL OR ADDITION TO THE SAME, IF DEEME D NECESSARY. 2 2. THE ASSESSEE MR.HIRAMAN N. BHUJBAL PROPRIETOR OF M/S.SHREYAS BUILDERS HAS CLAIMED DEDUCTION OF 25,48,221/- U/S.80IB(10) OF I.T. ACT. THE ASSESSING OFFICER HA S DENIED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT FOR THE REASON THAT THE GRAMPANCHAYAT IS NOT LOCAL AUTHORITY COMPETENT TO I SSUE APPROVAL AND COMPLETION CERTIFICATE FOR HOUSING PRO JECT AND ROAD AREA WAS NOT PART OF PROJECT AND HENCE, THE AREA OF LAND WAS LESS THAN ONE ACRE. WE FIND FIRST ISSUE IS THAT WHETHER THE GRAMPANCHAYAT IS A LOCAL AUTHORITY COMPETENT TO ISS UE APPROVAL AND COMPLETION CERTIFICATE FOR HOUSING PROJECT HAS BEEN DECIDED BY ITAT, PUNE BENCH IN ITA NO.937/PN/2010 IN A.Y. 2 006-07 IN THE CASE OF SHRI KRISHNA HARIBHAU LOHOKARE VS. ITO, WHEREIN, THE TRIBUNAL HELD AS UNDER: 14. THE NEXT OBJECTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEE COULD NOT PRODUCE THE COMPLETI ON CERTIFICATE FROM THE LOCAL AUTHORITY I.E., COLLECTO R, PUNE, THE COMPETENT AUTHORITY WHO HAS SANCTIONED THE REVISED LAY OUT AND BUILDING PLAN OF THE PROJECT. ACCORDING TO THE ASSESSING OFFICER, KESHAVNAGAR GRAMPANCHAYAT MUNDHWA WAS NOT LOCAL AUTHORITY COMPETENT TO ISSUE COMPLETION CERTI FICATE. IT IS UNDISPUTED THAT THE ASSESSEE HAS OBTAINED COMPLE TION CERTIFICATE IN RESPECT OF 80 FLATS INCLUDED IN BUIL DINGS A, B, C, D & E AND 48 FLATS INCLUDED IN BUILDINGS F, G & H FROM GRAMPANCHAYAT KESHAVNAGAR, MUNDHWA, AS MENTIONED ABOVE VIDE ORDER DATED 28.02.2008. THE ASSESSING O FFICER DID NOT APPRECIATE THE FACT THAT THERE WAS NO PROCE DURE FOR ISSUING COMPLETION CERTIFICATE BY COLLECTOR, PUNE, IN RESPECT OF ANY BUILDING PLAN APPROVED BY HIM. THE ASSESSEE AFTER THE COMPLETION OF THE CONSTRUCTION MADE ENQUIRY UND ER RIGHT TO INFORMATION ACT AS TO THE NUMBER OF APPROV ALS GRANTED BY THE COLLECTOR WITHIN THE LIMITS OF VILLA GE MUNDHWA, KESHAVNAGAR. THE OFFICE OF THE COLLECTOR VIDE LETTER DATED 14.01.2010 COMMUNICATED THAT NO COMPLE TION CERTIFICATE WAS GRANTED TO ANY PROJECT APPROVED BEF ORE 31.12.2007, AS MENTIONED ABOVE. SIMILARLY, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE BROUG HT TO THE NOTICE OF THE CIT(A) THAT CLARIFICATION WAS ISSUED BY THE TOWN PLANNING AUTHORITY THAT IN RESPECT OF AREA FAL LING OUTSIDE THE JURISDICTION OF PMC, THE PROCEDURE IS T O OBTAIN COMPLETION CERTIFICATE FROM THE REGISTERED ARCHITEC T AND IT WAS ALSO POINTED OUT THAT GRAMPANCHAYAT WAGHOLI WAS THE LOCAL AUTHORITY FOR THIS PURPOSE. IN THIS REGARD, THE STAND OF 3 THE ASSESSEE HAS BEEN THAT THERE WAS NO PROCEDURE T O ISSUE COMPLETION CERTIFICATE BY TOWN PLANNING DEPARTMENT IN RESPECT OF CONSTRUCTION BEYOND THE PMC LIMITS. SEC TION 80IB(10) DOES NOT DEFINE A LOCAL AUTHORITY AND IT D OES NOT REQUIRE THAT COMPLETION CERTIFICATE SHOULD BE GRANT ED BY THE SAME AUTHORITY WHICH HAS APPROVED THE BUILDING PLAN OR ISSUED THE COMMENCEMENT CERTIFICATE. MOREOVER, IT W AS NOT POSSIBLE IN THIS CASE BECAUSE LAND IN QUESTION WAS EXCLUDED FROM PMC LIMIT AT RELEVANT POINT OF TIME AS STATED ABOVE. SO THERE IS NO QUESTION OF ISSUING COMPLETION CERTIFIC ATE FROM PMC AT RELEVANT POINT OF TIME AFTER EXCLUSION OF SA ME FROM PMC LIMITS AS STATED ABOVE. IN SUCH CIRCUMSTANCES THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT GRAMPANCHAYAT KESHAVNAGAR IS NOT A LOCAL AUTHORITY. THE EXPRESSION LOCAL AUTHORITY HAS NEITHER BEEN DEFINED U/S.2 NOR U/S.80IB(10) OF THE ACT. HOWEVER, THE EXPRESSI ON LOCAL AUTHORITY IS DEFINED IN EXPLANATION 2 TO SECTION 10 (20) OF THE ACT AS UNDER: EXPLANATION - FOR THE PURPOSES OF THIS CLAUSE, EXPRESSION 'LOCAL AUTHORITY' MEANS (I) PANCHAYAT AS REFERRED TO IN CLAUSE (D) OF ARTI CLE 243 OF THE CONSTITUTION OR (II) MUNICIPALITY AS REFERRED TO IN CLAUSE (E) OF THE ARTICLE 243P OF THE CONSTITUTION OR (III) MUNICIPAL COMMITTEE OR DISTRICT BOARD, LEGAL LY ENTITLED TO OR ENTRUSTED BY THE GOVERNMENT WITH THE CONTROL AND MANAGEMENT OF MUNICIPAL OR LOCAL FUND (IV) CANTONMENT BOARD AS DEFINED IN SECTION 3 OF TH E CANTONMENT BOARD ACT 1924 15. IN VIEW OF ABOVE WE HOLD THAT ASSESSEE SHOULD N OT SUFFER FOR ANY ADMINISTRATIVE CHANGE WITH REGARD TO APPLICABILITY OF BUILDING BYE LAWS IN PARTICULAR AR EA. THE PROBLEM AROSE WITH REGARD TO COMPLETION CERTIFICATE BY PMC BY VIRTUE OF THE FACT THAT AREA OF THE LAND IN QUES TION WAS EXCLUDED FROM PMC LIMITS AT RELEVANT POINT OF TIME AS DISCUSSED ABOVE. IN SUCH PECULIAR CONDITIONS, THE BENEFIT BESTOWED ON ASSESSEE SHOULD NOT BE DENIED FOR NO FA ULT OF THE ASSESSEE. SUCH LIBERAL INTERPRETATION SHOULD B E USED IN FAVOUR OF ASSESSEE WHEN HE IS INCAPACITATED IN COMP LYING CERTAIN PROVISIONS FOR THE REASONS BEYOND HIS CONTR OL. IN CASE BEFORE US, PROBLEM AROSE DUE TO THE CHANGE OF JURISDICTION WITH REGARD TO CONFUSION OF APPLICABIL ITY OF BUILDING BYE LAWS BECAUSE OF CHANGE OF JURISDICTION BY VIRTUE OF EXCLUSION OF LAND IN QUESTION FROM PMC LIMITS. THE 4 ASSESSEE SHOULD NOT SUFFER FOR THE SAME. UNDER SUC H CIRCUMSTANCES, LIBERAL INTERPRETATION SHOULD BE USE D IN FAVOUR OF THE ASSESSEE. IT IS SETTLED LEGAL POSITI ON THAT LAW ALWAYS GIVES REMEDY AND LAW DOES WRONG TO NO ONE. WE ARE AWARE THAT PROVISIONS OF SECTION 80IB(10) SUGGEST A BOUT ONLY COMPLETION OF CONSTRUCTION AND NO ADJECTIVE SHOULD BE USED ALONGWITH WORD COMPLETION. THIS STRICT INTERPRET ATION SHOULD BE GIVEN IN NORMAL CIRCUMSTANCES BUT FACTS B EFORE US ARE PECULIAR BECAUSE OF CHANGE OF JURISDICTION OF L AND FOR THE PURPOSE OF APPLICABILITY OF BUILDING BYE LAWS. ASS ESSEE WAS INCAPACITATED TO OBTAIN COMPLETION CERTIFICATE FROM PMC BECAUSE OF EXCLUSION OF LAND IN QUESTION FROM PMC L IMITS WHICH IS BEYOND THE CONTROL OF THE ASSESSEE. ASSES SEE SHOULD NOT SUFFER FOR THE SAME. MOREOVER, CONCERNE D GRAM PANCHAYAT WHO ISSUE COMPLETION CERTIFICATE WITHIN STIPULATED TIME IS ENTITLED FOR ISSUING COMPLETION CERTIFICATE AS STATED ABOVE AFTER EXCLUSION OF THE LAND IN QUES TION FROM PMC LIMITS. THE TAXING STATUTE GRANTING INCENTIVES FOR PROMOTION OF GROWTH AND DEVELOPMENT SHOULD BE CONST RUED LIBERALLY AND THAT PROVISIONS FOR PROMOTING ECONOMI C GROWTH HAS TO BE INTERPRETED LIBERALLY. AT THE SAME TIME, RESTRICTION THEREON HAS TO BE CONSTRUED STRICTLY SO AS TO ADVAN CE THE OBJECT OF PROVISION AND NOT TO FRUSTRATE THE SAME. THE PROVISIONS OF TAXING STATUTE SHOULD BE CONSTRUED HARMONIOUSLY WITH THE OBJECT OF THE STATUTE TO EFFE CTUATE LEGISLATIVE INTENTION. THIS VIEW IS FORTIFIED BY DECISION OF PUNE TRIBUNAL IN THE CASE OF RAMSUKH PROPERTIES (SU PRA), RAHUL CONSTRUCTION CO. (SUPRA) AND OTHERS. 16. IN VIEW OF ABOVE, WE HOLD THAT GRAM PANCHAYAT K ESHAV NAGAR, MUNDHWA, PUNE, IS LOCAL AUTHORITY FOR THE PU RPOSE OF ISSUING COMPLETION CERTIFICATE FOR CLAIMING DEDUCTI ON U/S.80IB(10) IN RESPECT OF PROFIT FROM SALE OF ELIG IBLE FLATS IN PROJECT IN QUESTION. ASSESSEE FULFILLED ALL CONDIT IONS LAID DOWN FOR CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT AS DETAILED ABOVE. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 3. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASO NING, WE ARE NOT INCLINED TO CONCUR WITH THE FINDING OF CIT(A). WE HOLD THAT THE CONCERNED GRAM PANCHAYAT IS A COMPETENT LOCAL A UTHORITY FOR THE PURPOSE OF ISSUING APPROVAL AND COMPLETION CERT IFICATES FOR CLAIMING DEDUCTION U/S.80IB(10) IN RESPECT OF THE P ROFIT FROM SALE OF ELIGIBLE FLATS IN PROJECT IN QUESTION. THE ASSE SSING OFFICER IS DIRECTED ACCORDINGLY. 5 4. THE NEXT ISSUE IS WITH REGARD TO WHETHER ROAD AR EA IS PART OF PROJECT. THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF ITAT, PUNE B BENCH IN BUNTY BUILDERS VS. ITO (201 1) 139 TTJ (PUNE) 367, WHEREIN VIDE PARA 9, THE TRIBUNAL HELD AS UNDER: 9. THIS CIRCULAR THUS GIVES-A CLEAR INDICATION THA T THOUGH THE SECTION DOES NOT SPECIFICALLY PROVIDE FOR THE D EVELOPMENT PLAN ROADS OR GRANT OF OTHER FACILITIES ETC., IN A HOUSING PROJECT BUT THE SAME SHOULD CONFORM TO THE PROJECT PLAN APPROVED BY THE LOCAL AUTHORITY. OUR NEXT REASONING IS ON THE BAPIS OF ABOVE DISCUSSION THAT THE LIMIT OF THE PLOT HAS TO BE CONSTRUED WITH REFERENCE TO THE AREA AVAILABL E ON THE SITE ON WHICH THE HOUSING PROJECT IS TO BE CONSTRUC TED AND NOT WITH REFERENCE TO THE DEMARCATION OF LAND. MEAN ING THEREBY THE HOUSING PROJECT THUS CONSTITUTES DEVELO PMENT PLAN ROADS AND GRANT OF OTHER FACILITIES; THEREFORE THOSE AREAS SHOULD EXIST WITHIN THE PRESCRIBED LIMITS AND TO BE CONSIDERED AS PART AND PARCEL OF THE PROJECT. EVEN IN THE PRESENT CASE THE FACTS HAVE REVEALED THAT THE PLAN WOULD NOT HAVE BEEN APPROVED IF THE ASSESSEE WOULD NOT HAVE M ADE 15 PER CENT AMENITY SPACE AVAILABLE TO THE CORPORATION . THOUGH AMENITY SPACE WAS STATED TO BE SURRENDERED TO THE CORPORATION BUT SUCH SACRIFICE OF THE BUILDER WAS D ULY RECOGNISED AND COMPENSATED BY GRANTING ADDITIONAL F SI FOR THE SAID PROJECT. IF WE ACCEPT THE PROPOSITION OF T HE REVENUE DEPARTMENT THAT THE AREA WHICH WAS DIRECTLY UNDER T HE BUILDING CONSTRUCTION SHOULD ONLY BE HELD AS THE PR OJECT FOR CONSTRUCTION THEN A BUILDER HAS TO ACQUIRE A LAND M ORE THAN 1 ACRE OF LAND. THEN ONLY AFTER THE SET-APART OF TH E AMENITY SPACE HE COULD BE LEFT WITH THE BALANCE 1 ACRE FOR PROJECT DEVELOPMENT. BUT SUCH A PROPOSITION WAS NOT INTENDE D IN THE LEGISLATURE. THE LANGUAGE OF THE SECTION DID NO T PRESCRIBE SUCH HYPOTHETICATION. THEREFORE AN ANOTHER REASONIN G OF OUR REJECTION OF SUCH A PROPOSITION OR THE REVENUE DEPA RTMENT IS THAT IT WOULD BE ILLOGICAL TO EXPECT FROM A BUIL DER TO HAVE EXCESS LAND AREA THAN 1 ACRE, AT LEAST 15 PER CENT EXCESSIVE AREA APPLICABLE FOR PUNE CORPORATION, SO THAT AFTER SETTING APART 15 PER CENT AREA THE BALANCE SHOULD REMAIN 1 ACRE FOR THE PURPOSE OF CONSTRUCTION. THIS SUGGESTION OR APP ROACH OF INTERPRETATION OF A STATUTE IS NOT IDEALISTIC BECAU SE WE CANNOT READ BEYOND THE SCOPE OF THE STATUTE. NORMAL RULE OF INTERPRETATION OF STATUES IS THAT THE GENERAL WORDS MUST RECEIVE A GENERAL CONSTRUCTION UNLESS THERE IS SOME THING OTHERWISE EXPRESSLY PROVIDED IN THE STATUTE. GENERA L WORDS HAVE ORDINARILY A GENERAL MEANING THEN THE FIRST TA SK IN INTERPRETATION IS TO GIVE THE WORDS THEIR PLAIN AND ORDINARY 6 MEANING. THIS I S WHAT WE HAVE GATHERED FROM THE BOOKS AVAILABLE ON THIS SUBJECT WITH AN ATTEMPT TO SUBSCR IBE A SIMPLE AND REALISTIC MEANING TO THE CL. (B) OF S. 8 0-IB(10) OF IT ACT. NOTHING MORE CAN BE ADDED HENCE WE HAVE TO RESTRICT THE INTERPRETATION THAT THE AREA OF 1 ACRE SHOULD B E AVAILABLE FOR THE HOUSING PROJECT INCLUSIVE OF AMENITIES REQU IRED TO BE SET APART AS PER THE NORMS OF A CORPORATION. THEREF ORE A JUSTIFIABLE CONCLUSION IS THAT WHEN THERE IS NO DOU BT MORE SO IT IS NOT IN DISPUTE THAT A PORTION OF THE LAND, IN THE PRESENT CASE IT IS 15 PER CENT, TO BE EARMARKED OR SET-APART OR RESERVED OR SEGREGATED OUT OF THE TOTAL LAND IN QUESTION, MINIMUM 1 ACRE, MEANT FOR THE PURPOSE OF PROJECT IN TERMS OF RULES/REGULATION OF A LOCAL BODY, I.E., PUNE MUN ICIPAL CORPORATION, AND WITHOUT THAT SEGREGATION THE PROJE CT COULD NOT BE SANCTIONED THEN THAT PORTION BEING MANDATORY FOR AMENITY PURPOSES HAS TO BE TAKEN AS A PART AND PARC EL OF THE LAND AVAILABLE FOR THE PROJECT. IN THE PRESENT CASE SINCE THE AREA AVAILABLE FOR THE HOUSING PROJECT WAS 4,60 0 SQ. MTRS. THAT IS MORE THAN 1 ACRE (4,046 SQ. MTRS.) TH EREFORE THE APPELLANT IS ENTITLED FOR THE CLAIM OF DEDUCTIO N UNDER S. 80-IB(10; (B) ON THIS PORTION OF LAND. WE HOLD ACCO RDINGLY. 4.1 IN VIEW OF ABOVE, WE HOLD THAT THE AREA OF AMEN ITY SPACE COMPULSORILY REQUIRED TO BE HANDED OVER TO MUNICIPA L CORPORATION CONSTITUTES AN INTEGRAL PART OF HOUSING PROJECT AND HENCE, IS REQUIRED TO BE CONSIDERED WHILE CALCULATI NG THE ONE ACRE AREA OF PLOT OF LAND OF HOUSING PROJECT FOR THE PUR POSE OF DEDUCTION U/S.80IB(10). SO, THE ASSESSEE IS ELIGIB LE FOR CLAIMING DEDUCTION ON THIS ACCOUNT AS WELL. THE ASSESSING O FFICER IS DIRECTED ACCORDINGLY. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED ON ABOVE ACCOUNTS. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF MAY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MAY, 2014 GCVSR 7 COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-V, PUNE 4) THE CIT-V, 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