I.T.O. WD 1(3), THANE V. ASTAVINAYAKA DEVELOPERS, THANE

ITA 7266/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3599 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMANATH S UKKALI
• Assessee Lawyers: SUBODH RATNAPARKHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 7266/MUM/2011 (ASSESSMENT YEAR 2007 - 2008) ITO, WARD 1(1) THANE VS. M/S. ASHTAVINAYAKA DEVELOPERS G - 1, VIHANG VIHAR, NR. OPEN HO USE, PANCHPAKHADI, THANE (W) 400 602. ( APPELLANT ) .. ( RESPONDENT ) PAN NO. AAHFA6606R ASSESSEE BY : SHRI SUBODH RATNAPARKHI DEPARTMENT BY : SHRI SOMANATH S. UKKALI DATE OF HEARING : 14.01.2016 DATE OF PRONOUNCEMENT : 02 .03.2016 O R D E R PER B.R. BASKARAN, AM : - THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30 - 06 - 2011 PASSED BY LD CIT(A) - II, THANE FOR ASSESSMENT YEAR 2007 - 08, WHEREIN HE HAD ALLOWED THE DEDUCTION U/S 80IB(10) CLAIMED BY THE ASSESSEE BY HOLDING THAT THE PROJECT WAS COMPLETED BY 31.3.2008 AND FURTHER HOLDING THAT THE ASSESSEE IS ENTITLED TO PROPORTIONATE DEDUCTION, WHEN THE AREA OF SOME OF THE RESIDENTIAL UNITS EXCEEDS THE LIMIT PRESCRIBED IN THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE HOUSING PROJECT OF THE ASSESSEE WAS AP P ROVED BY THE LOCAL AUTHORITY ON 31.3.2001. SINCE THE PROJECT WAS COMMENCED PRIOR TO 31.3.2004, THE SAME IS REQUIRED TO BE COMPLETED BEFORE 31.3.2008 AS PER SECTION 80IB(10)(A)(I) OF THE ACT. THE ASSESSEE DEVELOP ED SIX BUILDINGS AND CLUB HOUSE. THERE IS NO DISPUTE THAT THE COMPLETION CERTIFICATE WAS OBTAINED PRIO R TO 31.3.2008 FOR BUILDINGS NUMBERED AS 1, 2 & 3. HOWEVER, ACCORDING TO THE AO, THE ASSESSEE DID NOT OBTAIN COMPLETION CERTIFICATE IN RESPECT OF BUILDI NGS NUMBERED AS 6,7,8 & CLUB HOUSE. IN THIS REGARD, THE AO MADE ENQUIRIES WITH THE CONCERNED LOCAL AUTHORITY, WHO INTIMATED TO THE AO THAT THE ASSESSEE HAD APPLIED FOR 2 M/S. ASHTAVINAYAKA DEVELOPERS ITA NO. 7266/MUM/2011 OCCUPATION CERTIFICATE ON 15/02/2008, BUT THE SAME WAS NOT GRANTED TO THE ASSESSEE DUE TO NON - FURNISHING OF ULC CLEARANCE CERTIFICATE. IT WAS FURTHER STATED BY THE LOCAL AUTHORITY THAT THE ASSESSEE HAS FURNISHED ULC CLEARANCE CERTIFICATE FOR BUILDING NO.4 & 5, BUT THE SAME IS AWAITED FOR BUILDING NO.6. IN VIEW OF THE ABOVE, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITIONS PRESCRIBED IN THE EXPLANATION TO SEC. 80IB(10 ) (A)(I) OF THE ACT BY NOT OBTAINING COMPLETION CERTIFICATE PRIOR TO 31.3.2008. 3. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, DEPUTE D THE GOVERNMENT APPROVED ARCHITECT TO INSPECT THE FLATS CONSTRUCTED BY THE ASSESSEE. THE ARCHITECT REPORTED THAT FOUR FLATS IN BUILDING NO.6 HAVE BEEN JOINED AND CONVERTED INTO A BUNGALOW WITH AN AREA OF 4000 S Q.FT. HE FURTHER REPORTED THAT FLAT NOS. 30 3 & 304 IN BUILDING NO.3 AND FLAT NOS. 601 & 602 AND 703 & 704 IN BUILDING NO.4 HAVE ALSO BEEN JOINED TOGETHER. EVEN THOUGH THE ASSESSEE CONTENDED THAT THE BUYERS OF THE FLATS HAVE THEMSELVES COMBINED THE FLATS BY REMOVING THE PARTITION WALLS WITHOUT THE KNOWLEDGE OF THE ASSESSEE, YET THE AO HELD THAT THE ASSESSEE HAS VIOLATED THE CONDITIONS PRESCRIBED IN CLAUSE (C) OF SEC. 80IB(10). 4. IN VIEW OF THE ABOVE, THE AO REJECTED THE CLAIM FOR DEDUCTION OF 4.51 CRORES MADE BY THE ASSESSEE U/S 80IB(10) OF TH E ACT. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) HELD THAT THE LOCAL AUTHORITY HAS PRIMA FACIE ACCEPTED THE FACT THAT THE ASSESSEE HAS COMPLETED THE PROJECT PRIOR TO 31.3.2008, BUT THE ISSUING OF COMPLETION CERTIFICATE WAS WITHHELD UNDER SOME TECHNICAL REASONS. ACCORDINGLY HE HELD THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED IN SEC. 80IB(10)(A)(I) READ WITH EXPLANATION THERETO. WITH REGARD TO THE SECOND ALLEGATION OF CONSTRUCTION OF FLATS EXCEEDING THE PRESCRIBED AREA, THE LD CIT(A) HE LD THAT THE ASSESSEE SHALL BE ENTITLED FOR DEDUCTION ON PROPORTIONATE BASIS ON ELIGIBLE UNITS. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 5. THE LD D.R PLACED STRONG RELIANCE ON THE ASSESSMENT ORDER. ON THE CONTRARY, THE LD A.R SUBMITT ED THAT THE FACT OF COMPLETION OF CONSTRUCTION 3 M/S. ASHTAVINAYAKA DEVELOPERS ITA NO. 7266/MUM/2011 WAS ASCERTAINED BY THE ASSESSING OFFICER HIMSELF FROM THE LOCAL AUTHORITY. FURTHER THE LOCAL AUTHORITY HAS AMPLY CLARIFIED THAT THE COMPLETION CERTIFICATE WAS NOT ISSUED FOR TECHNICAL REASONS, I.E., DUE TO NO N - SUBMISSION OF ULC CLEARANCE CERTIFICATE. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED IN SEC. 80IB(10)(A)(I) BY COMPLETING THE CONSTRUCTION PRIOR TO 31.3.2008. HE FURTHER SUBMITTED THAT THE EXPLANATION TO SECTION 80IB(10)(A) PRESCRIBING THE CONDITION FOR OBTAINING COMPLETION CERTIFICATE WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 1.4.2005 AND THE SAME SHALL NOT HAVE RETROSPECTIVE APPLICATION AS HELD IN THE FOLLOWIN G CASES: - (A) CIT VS. SARKAR BUILDERS (375 ITR 392)(SC) (B) CIT VS. CHD DEVELOPERS LTD (362 ITR 177)(DELHI) (C) CIT VS. JAIN HOUSING & CONSTRUCTION LTD (256 CTR 408)(MAD) ACCORDINGLY HE SUBMITTED THAT THE NON - PRODUCTION OF COMPLETION CERTIFICATE WI LL NOT DISENTITLE THE ASSESSEE FROM CLAIMING DEDUCTION U/S 80IB(10), SINCE THE APPROVAL WAS GRANTED TO IT PRIOR TO THE INTRODUCTION OF EXPLANATION. 6. HAVING HEARD RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE DECISION RENDE RED BY LD CIT(A) ON THIS ISSUE. THE FACT THAT THE ASSESSEE HAS APPLIED FOR COMPLETION CERTIFICATE IN THE MONTH OF FEBRUARY, 2008 IS UNDISPUTED. THE LETTERS WRITTEN BY THE LOCAL AUTHORITY TO THE ASSESSING OFFICER SHOWS THAT THEY HAVE WITHHELD THE COMPLETI ON CERTIFICATE ONLY FOR WANT OF ULC CLEARANCE CERTIFICATE, THAT TOO FOR ONE BUILDING ONLY. FURTHER THE HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF CIT VS. CHD DEVELOPERS LTD (SUPRA) THAT THE EXPLANATION TO SEC. 80IB(10 ) (A) INSERTED WITH EFFECT FROM 1 .4.2005 BY FINANCE (NO.2) ACT, 2004 PROVIDING FOR SUBMISSION OF COMPLETION CERTIFICATE SHALL NOT BE APPLICABLE TO PROJECTS APPROVED PRIOR TO 1.4.2005. THUS, ON FACTS, IT IS SEEN THAT THE ASSESSEE HAS COMPLETED THE CONSTRUCTION PRIOR TO 31.3.2008 AND ON L EGAL POINT ALSO, THE EXPLANATION TO SEC. 80IB(10 ) (A) CANNOT BE APPLIED TO THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE. 4 M/S. ASHTAVINAYAKA DEVELOPERS ITA NO. 7266/MUM/2011 7. WITH REGARD TO THE DECISION OF LD CIT(A) IN DIRECTING THE AO TO ALLOW THE DEDUCTION ON PROPORTIONATE BASIS, WE NOTICE THAT THE LD CIT(A) HAS FOLLOWED VARIOUS DECISIONS RENDERED IN THIS RESPECT. BEFORE US ALSO, THE LD A.R PLACED HOSTS OF DECISION, SOME OF WHICH ARE GIVEN BELOW: - (A) BENGAL AMBUJA HOUSING DEVELOPMENT LTD VS. DCIT (ITA NO.1595/KOL/2005 & 1735/KOL/2005 DATED 24.3.2006) (B) BENGAL AMBUJA HOUSING DEVELOPMENT LTD (ITA NO.458 OF 2006 DATED 05 - 01 - 2007) OF HONBLE CALCUTTA HIGH COURT. (C) ACIT VS. SHETH DEVELOPERS (P) LTD (33 SOT 277)(MUM) (D) G.V. CORPORATION VS. ITO (38 SOT 174)(MUM) (E) PODDAR & ASHISH DEVELOPERS VS. ITO (152 ITD 117)(MUM) (F) CIT VS. SREEEVATSA REAL ESTATES P LTD (222 TAXMAN 105)(MAD) (G) CIT VS. ARUN EXCELLO FOUNDATIONS P LTD (259 CTR 362)(MAD). IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD CIT(A) ON THIS ISSUE ALSO. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 02 . 0 3.2016. SD/ - SD/ - (AMARJIT SINGH) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 02 / 0 3 /20 16 SR. P.S SSL COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. R EGISTRAR) ITAT, MUMBAI