M/s. Dhareshwar Promoters & Builders, Pune V. ACIT, Cir.-4, Pune

ITA 832/PUN/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88879 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL PATHAK
• Section: 143(3); 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO . 821 /PN/20 1 1 ASSESSMENT YEAR : 200 6 - 07 ASST. COMMISSIONER OF INCOME TAX, CI RCLE 4, PUNE VS. M/S. DHARESHWAR PROMOTERS & BUILDERS, YASH RESIDENCY, S. NO. 128/2C, SUS ROAD, NEAR ABHINAV MAHAVIDAYALAYA, PASHAN, PUNE - 4311021 (APPELLANT) (RESPONDENT) PAN NO. AADFD3276A ITA NO. 832 /PN/201 1 ASSESSMENT YEAR : 200 6 - 07 M/S. DHARESHWAR PROMOTERS & BUILDERS, YASH RESIDENCY, S. NO. 128/2C, SUS ROAD, NEAR ABHINAV MAHAVIDAYALAYA, PASHAN, PUNE - 4311021 VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE (APPELLANT) (RESPONDENT) PAN NO. AADFD3276A PAN NO. AADFD3276A REVEN UE BY: SHRI RAJESH DAMOR ASSESSEE BY: SHRI SUNIL PATHAK & NIKHIL PATHAK DATE OF HEARING : 16 - 12 - 2014 DATE OF PRONOUNCEMENT : 30 - 01 - 2015 ORDER PER R.S . PADVEKAR , JM : - TH ESE TWO CROSS APPEALS, ONE BY THE REVENUE AND ANOTHER BY THE ASSESSEE, ARE ARISING OUT OF ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME - TAX ACT AND ASSESSMENT YEAR INVOLVED IS 2006 - 07. 2. WE FIRST TAKE THE ASSESSEES APPEAL WHICH IS A LEAD APPEAL BEING ITA NO. 8 32 /PN/2011 . THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: 2 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E HON'BLE CIT (APPEALS) HAS ERRED IN CONFIRMING ORDER OF THE ITO OF DENYING DEDUCTION U/S 80(IB)10, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 . THE FACTS WHICH ARE REVEALED FORM THE RECORD AS UNDER. THE ASSESS EE IS A B UILDER AND D EVELOPER. THE ASSESSEE HAS UNDERTAKEN A HOUSING PROJECT NAMELY YASH RESIDENCY AT PASHAN IN PUNE AND THIS PROJECT IS GOING ON SINCE 2001. THE SAID PROJECT CONSIST S OF 4 BUILDINGS /WINGS A, B, C AND D. THE ASSESSING OFFICER HAS OBSER VED THAT BUILDING A IS COMMERCIAL CUM RESIDENTIAL BUILDING. AS OBSERVED BY THE ASSESSING OFFICER THE BUILDING PLAN IS REVISED FROM TIME TO TIME. THE ASSESSEE HAS DECLARED PROFIT ON THE SAID PROJECT OF RS.13,08,678/ - AND THE ENTIRE PROFIT IS CLAIMED AS A DEDUCTION U/S. 80IB(10) OF THE ACT. AS OBSERVED BY THE ASSESSING OFFICER THE ORIGINAL PLAN WAS APPROVED ON 23 - 07 - 2001 AND THE ORIGINAL LAYOUT PLAN WAS SANCTIONED BY THE PMC ON 17 - 10 - 2000. THE BUILDING PLANS WERE REVISED FROM TIME TO TIME I.E. AS ON 17 - 0 4 - 2001, 23 - 08 - 2001, 06 - 03 - 2003 AND 24 - 12 - 2004. THE ASSESSING OFFICER HAS RESERVATION IN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IB(10) OF THE ACT ON THE FOLLOWING THREE REASONS: I. THE BUILT UP ARE A OF THE SHOPS AND COMMERCIAL ESTABLISHMENTS WA S MORE THAN 5% OF THE AGGREGATE BUILT UP AREA, II. THE HOUSING PROJECT IS ON THE SIZE OF PLOT OF LAND WHICH IS LESS THAN 1 ACRE AND, III. THE ASSESSEE HAS NOT COMPLETED THE HOUSING PROJECT WITHIN THE PERMISSIBLE TIME LIMIT I.E. AS PER THE ASSESSING OFFICER IT SHOU LD HAVE BEEN COMPLETED BEFORE 31 - 03 - 200 8 . 3.1 THE ASSESSING OFFICER, THEREFORE, DECLINED TO GIVE THE BENEFIT OF DEDUCTION TO THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THIS HOUSING PROJECT IS RUNNING HOUSING PROJECT AND THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IB(10) FOR THE FIRST TIME IN THE A.Y. 2001 - 02. THE 3 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E SUMMARY OF THE PROFIT DECLARED AND DEDUCTION CLAIMED BY THE ASSESSEE IS AS UNDER : ASST. YEAR NET PROFIT DEDUCTION CLAIMED U/S. 80IB(10) TOTAL INCOME 2001 - 02 665978 665978 NIL 2002 - 03 1595015 15 95015 NIL 2003 - 04 2597838 2597838 NIL 2004 - 05 1623477 1623477 NIL 2005 - 06 6638984 6638984 NIL 2006 - 07 1308678 1308678 NIL 4. THE ASSESSEE FILED THE DETAIL ED REPLY BEFORE THE ASSESSING OFFICER WHICH IS REPRODUCED IN THE ASSESSMENT ORDER. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER BEFORE LD. CIT(A). LD. CIT(A) AGREED ON THE CONTENTION OF THE ASSESSEE THAT SO FAR AS SIZE OF THE PLOT OF LAND IS CONCERNED THE SAME IS MORE THAN 1 ACRE BUT OTHER TWO CONTENTIONS WERE REJECTED AND LD. CIT(A) DECLINED TO GIVEN THE BENEFIT OF SEC. 80IB(10) OF THE ACT. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL SUBMITS THAT YASH RESIDENCY IS A RUNNING HOUSING PROJECT AND THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 80IB(10) WAS ALREADY BEFORE THE HON'BLE TRIBUNAL IN THE PRECEDING YEARS I.E. A. YRS. 2002 - 03 TO 2005 - 06. HE SUBMITS THAT SO FAR AS THE TWO OBJECTIONS ARE CONCERNED I.E. THE EXCESS COMMERCIAL AREA MORE THAN 2,000 SQ. FT. AND SIZE OF PLOT OF LAND HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE PRECEDING YEARS MORE PARTICULARLY FOR THE A. YRS. 2003 - 04 AND 2004 - 05 AND THE SAID ORDER WAS FOLLOWED SUBSEQUENTLY IN THE A. Y. 2002 - 03 . THE LD. COUNSEL REFERRED TO THE COMPILATION IN WHICH THE COPIES OF ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A. YRS. 2002 - 03 TO 2005 - 06 ARE PLACED. HE SUBMITS THAT ACCORDINGLY THE TWO OBJECTIONS OF THE ASSESSING OFFICER ARE SETTLED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. IN RESPECT OF THE THIRD 4 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E OBJECTION THAT THE PROJECT IS NOT COMPLETED WITHIN THE TIME LIMIT PERMISSIBLE U/S. 80IB(10) OF THE ACT , H E ARGUES THAT ADMITTEDLY, THE HOUSING PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 01 - 04 - 2004 AND HENCE, THE TIME LIMIT FOR COMPLETION OF THE HOUSING PROJECT WAS 31 - 03 - 2008. HE SUBMITS THAT OUT OF THE FOUR BUILDINGS I.E. BUILDING A, B, C AND D, BUILDING A COMPRISES OF THE COMMERCIAL AREA. HE SUBMITS THAT THE ASSESSEE COMPLETED THE ENTIRE PROJECT B EFORE THE 31 - 03 - 2008 AND IT IS EVIDENCE D FROM THE OCCUPANCY CERTIFICATE ISSUED BY THE PMC DATED 01 - 04 - 2007 (PAGE NOS. 2 AND 4 OF THE COMPILATION) WHERE COPIES OF THE OCCUPATION CERTIFICATE S ARE PLACED. 5.1 HE SUBMITS THAT SO FAR AS BUILDING A IS CONCERN ED EVEN THOUGH THE SAME WAS COMPLETED BUT AS THERE WAS NO CUSTOMER TO BUY HENCE, THE ASSESSEE WAS COMPELLED TO CONVERT THE COMMERCIAL AREA INTO THE RESIDENTIAL AREA AFTER 31 - 03 - 2008 AND TO THAT EXTENT THE COMPLETION CERTIFICATE COULD NOT BE OBTAINED. HE S UBMITS THAT SO FAR AS BUILDING A IS CONCERNED OUT OF 457.704 SQ. MTRS. BUILT UP AREA THE ASSESSEE CONVERTED 285.184 SQ. MTRS. IN TO THE RESIDENTIAL AREA. THE ASSESSEE ALSO FILED THE CHART SHOWING THE AREA WISE STATEMENT OF THE BUILDINGS AND DETAILS OF TH E COMPLETION CERTIFICATE. HE SUBMITS THAT THE LAST COMPLETION CERTIFICATE IS DATED 29 - 03 - 2008 WHICH IS IN RESPECT OF BUILDING D . HE SUBMITS THAT AS THE ASSESSEE PROJECT IS APPROVED PRIOR TO 01 - 04 - 2004 , AS PER THE LAW APPLICABLE A T THE TIME OF SANCTIONE D OF PLAN, THERE WAS NO REQUIREMENT U/S. 80IB(10) FOR PRODUCING THE COMPLETION CERTIFICATE FROM THE L OCAL A UTHORITY AND THE DATE ON WHICH LOCAL A UTHORITY ISSUES CERTIFICATE IS TO BE TAKEN AS DATE OF COMPLETION OF THE PROJECT. HE SUBMITS THAT THE SAID PROV ISION IS BROUGHT ON STATUTE BOOK W.E.F. 01 - 04 - 2005 AND THE SAID AMENDMENT HAS BEEN CONSIDERED BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. CHD DEVELOPERS LTD. 362 ITR 177 (DELHI) AND IT IS HELD THAT IF THE PROJECT WAS APPROVED PRIOR TO 01 - 04 - 2 005 THEN THERE IS NO REQUIREMENT FOR PRODUCING THE C OMPLETION CERTIFICATE FROM THE L OCAL 5 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E A UTHORITY. HE SUBMITS THAT THE ASSESSEE HAS COMPLETED THE ENTIRE PROJECT BEFORE THE TIME LIMIT BUT SUBSEQUENTLY AFTER COMPLETION , HE CONVERTED PART OF THE COMMERCIAL AREA INTO RESIDEN TIAL AREA DUE TO COMPELLING CIRCUMSTANCES AS THERE WAS NO BUYER TO THE COMMERCIAL AREA. IN THIS SITUATION IT CANNOT BE SAID THE ASSESSEE HAS NOT COMPLETED THE PROJECT. WE HAVE HEARD THE LD. DR. 6. SO FAR AS YASH RESIDENCY HOUSING PROJ ECT OF THE ASSESSEE IS STARTED SOMEWHERE IN THE 2001 , A S RIGHTLY ARGUED BY THE LD. COUNSEL THE OBJECTIONS OF THE ASSESSING OFFICER , IN RESPECT OF THE SIZE OF PLOT AND BUILT UP COMMERCIAL AREA WHICH IS ADMITTEDLY MORE THAN 2,000 SQ. FT. , HAD COME FOR THE CO NSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CASE IN THE PRECEDING YEARS. WE MAY REFER HERE THE DECISION OF THE TRIBUNAL FOR THE A.Y. 2002 - 03 IN ITA NOS. 820 & 831/PN/2011 DATED 23 - 05 - 2013. EVEN THOUGH THE A.Y. 2002 - 03 CAME FOR ADJUDICATION AFT ER THE SUBSEQUENT YEARS BUT THE TRIBUNAL HAS REFERRED TO THE DECISION FOR THE A. YRS. 2003 - 04 AND 2004 - 05. WE, THEREFORE, REFER TO THE FINDING S ON TWO ISSUES AND OPERATIVE PART OF THE TWO ISSUES I.E. (I) THE SIZE OF THE PLOT OF LAND AND (II) COMMERCIAL AR EA ARE AS UNDER: 8. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SO FAR AS THE OBJECTION OF THE ASSESSING OFFICER RELATING TO CLAUSES (B) AND (D) OF SECTION 80IB(10) OF THE ACT IS CONCERNED, THE SAME WERE SUBJECT MATTER OF CONSIDERATION BY TH E TRIBUNAL IN THE ASSESSEES OWN CASE VIDE ITA NO. 111 & 1353/PN/2007 DATED 21.10.2011 FOR ASSESSMENT YEARS 2003 - 04 & 2004 - 05, WHEREIN THE STAND OF THE ASSESSEE HAS BEEN UPHELD. 9. CLAUSE (B) OF SECTION 80IB(10) PRESCRIBES THAT THE HOUSING PROJECT IS TO BE ON A SIZE OF THE PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. AS PER THE ASSESSING OFFICER, AREA OF THE PLOT OF LAND WAS LESS THAN ONE ACRE AND IN SUPPORT, THE ASSESSING OFFICER REFERRED TO HIS EARLIER STAND IN ASSESSEES OWN CASE FOR THE ASSESSME NT YEARS 2003 - 04 & 2004 - 05. FOR THE ASSESSMENT YEARS 2003 - 04 & 2004 - 05, THE TRIBUNAL VIDE ITS ORDER DATED 21.10.2011 6 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E (SUPRA) ADJUDICATED THE AFORESAID OBJECTION OF THE ASSESSING OFFICER IN THE FOLLOWING MANNER : - 11. SO FAR AS THE DISPUTE REGARDING ARE A OF THE LAND MEANT FOR THE PROJECT IS CONCERNED, AS DISCUSSED ABOVE, THE A.O REMAINED OF THE VIEW THAT IT IS LESS THAN 1 ACRE OF LAND. IN THIS REGARD, HE NOTED THAT THE AREA OF THE PLOT DEMARCATED IN THE REVISED PLAN SANCTIONED ON 17.4.2001 WAS 4044.770 SQ. MTS. AND AFTER EXCLUDING AREA OF 536.89 SQ.MTS. RESERVED FOR D.P. ROAD, THE NET AREA OF LAND AVAILABLE FOR CONSTRUCTION WAS 3507.88 SQ. MTS. THE A.O., THEREFORE, HELD THAT THE TOTAL AREA OF LAND AVAILABLE FOR CONSTRUCTION EVEN IF CONSIDERED AS 40 44.77 SQ. MTS. EQUIVALENT TO 43537.90 SQ.FT. WAS LESS THAN 1 ACRE BECAUSE 1 ACRE IS EQUIVALENT TO 43561.31 SQ.FTS. THE SUBMISSION OF THE LD. A.R. IN THIS REGARD REMAINED THAT LAND USED BY THE ASSESSEE FOR THE PROJECT IS EXACTLY 1 ACRE. IN SUPPORT, HE RE FERRED COPIES OF AGREEMENT FOR PURCHASE OF LAND DATED 4.9.2000 AND 7/12 EXTRACT MADE AVAILABLE AT PAGE NOS. 1 TO 14 OF THE PAPER BOOK. HAVING GONE THROUGH THAT, WE FIND THAT THE AREA OF LAND MEANT FOR THE PROJECT HAS BEEN SHOWN AS 1 ACRE OF LAND. HE HAS ALSO REFERRED COPIES OF VARIOUS PLANS MADE AVAILABLE AT PAGE NOS. 15 TO 18 OF THE PAPER BOOK. HAVING GONE THROUGH THESE PLANS, WE FIND THAT IN THE REVISED PLAN MADE AVAILABLE AT PAGE NO. 17, THE SANCTIONING AUTHORITY HAS MENTIONED THE AREA AS 4044.77 SQ. MTS. WHILE IN THE INITIAL PLANS SANCTIONED, THE AREA IS MENTIONED AS 4046.865 SQ. MTS (PAGE NOS. 16 & 17 OF THE PAPER BOOK), WHICH IS IN CONFORMITY WITH THE AREA SHOWN IN THE AGREEMENT FOR PURCHASE OF LAND AND 7/12 EXTRACT. 1 ACRE IS = 43,460 SQ. FT. WHIC H COMES TO 4046 SQ. MTS. WE THUS HOLD THAT THE LAND DEVELOPED IS 1 ACRE. WE ALSO FIND SUBSTANCE WHICH IS SUPPORTED BY THE CBDT CIRCULAR NO.5 DATED 15.7.2005 (PAGE NO. 54) STATING THAT THE AREA OCCUPIED BY THE D.P ROAD SHOULD NOT BE EXCLUDED WHILE CALCULA TING THE AREA OF THE PLOT. SECONDLY, AREA OF THE PLOT SHOULD NOT BE TAKEN UP WITH REFERENCE TO THE DEMARCATION OF THE LAND DONE BY THE AUTHORITY BUT IT SHOULD BE TAKEN WITH REFERENCE TO THE AREA OF THE SITE ON WHICH THE HOUSING PROJECT IS CONSTRUCTED. AS ALREADY MENTIONED, THAT THE SALE DEED AND 7/12 EXTRACTS CLEARLY INDICATES THE AREA AT 1 ACRE. IN THIS REGARD, WE ALSO FIND SUPPORT FROM THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BUNTY BUILDERS VS. ITO (SUPRA) HOLDING 7 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E THAT THE HOUSING PROJECT CONSISTS DEVELOPMENT PLAN ROADS AND GRANT OF OTHER FACILITIES, THEREFORE, THOSE AREA SHOULD EXIST WITHIN THE PRESCRIBED LIMIT AND TO BE CONSIDERED AS PART AND PARCEL OF THE PROJECT. WE THUS DO NOT FIND SUBSTANCE IN THE OBJECTION OF THE AUTHORITIES BELOW AND DENIAL OF THE CLAIMED DEDUCTION BY THEM ON THE BASIS THAT THE LAND AREA OF THE PROJECT WAS LESS THAN 1 ACRE. 10. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEEN RENDERED UNDER IDENTICAL FACTS AND CIRCUMSTANCES IN ASSESSEES OWN CASE, WE HEREBY AFFIRM THE DECISION OF THE CIT(A) HOLDING THAT THE ASSESSEES PROJECT IS ON THE PLOT OF LAND WHICH IS OF ONE ACRE AND THEREFORE IT COMPLIES WITH THE PROVISIONS OF SECTION 80IB(10)(B) OF THE ACT. 11. FURTHER, WITH REGARD TO THE OBJECTION OF THE AS SESSING OFFICER THAT THE BUILT - UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT EXCEEDS THE LIMITS PRESCRIBED IN SECTION 80IB(10)(D) OF THE ACT IS CONCERNED, THE TRIBUNAL IN ITS ORDER DATED 21.10.2011 (SUPRA) HAS HELD AS UNDER : - 7. REGARDING THE COMMERCIAL AREA CONSTRUCTED AS FOUND BY THE A.O, THE SUBMISSION OF THE ASSESSEE BEFORE THE A.O REMAINED THAT CONSTRUCTION OF RESIDENTIAL AS WELL AS COMMERCIAL PREMISES WAS DONE AS PER THE PLAN REVISED BY THE PMC AND NO CONSTRUC TION HAS BEEN DONE MORE THAN THE SANCTIONED PLAN. IT WAS SUBMITTED THAT THE DIFFERENCE IN THE AREA BETWEEN WHAT HAD BEEN ACTUALLY REFLECTED AS PER THE AGREEMENT/SALE DEEDS WITH CUSTOMERS AND THAT DEDUCTION BY THE A.O ON PHYSICAL INSPECTION RESULTED INTO INCLUSION OF BASEMENT AREA, TOP TERRACE AREA ETC., IN THE TOTAL AREA. THE A.O HAS CONSIDERED THE ACCESS OF BASEMENT AREA AND TOP TERRACE AREA TO THE RESTAURANT AS THE TOTAL AREA FOR COMMERCIAL CONSTRUCTION. AS PER THE RULE OF THE PMC, THE SAID RESTAURAN T WAS TO HAVE ACCESS TO BASEMENT AS WELL AS TOP TERRACE. THE A.O WAS WRONG IN DRAWING INFERENCE THAT THE SAID AREAS WERE TO BE USED BY THE RESTAURANT. FURTHER, THE CONSTRUCTION IN FRONT OF THE RESTAURANT REFERRED BY THE A.O WAS TEMPORARY AND COULD BE DE MOLISHED BY THE PMC AT ANY TIME AND THE DEVELOPER DID NOT PROCESS ANY LEGAL RIGHT TO SALE THE SAME. IT WAS ALSO POINTED OUT THAT THE A.O THROUGH OVERSIGHT HAS INCLUDED THE AREA OF 363 SQ.FT. OF THE SMALL HALL AREA TWICE TO 8 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E ARRIVE AT THE TOTAL AREA OF THE COMMERCIAL UNITS. IT WAS SUBMITTED THAT IF THESE SUBMISSIONS ARE CONSIDERED, THE ACTUAL AREA OF THE LAND OF THE COMMERCIAL UNIT WOULD BE 4072 SQ.FT. ONLY. 8. REGARDING THE OBSERVATION OF THE A.O BASED ON THE AMENDMENT TO SECTION 80IB(10) BY THE FINAN CE ACT 2004, IT WAS CONTENDED THAT THIS AMENDMENT WAS APPLICABLE W.E.F. 1.4.2005 AND THUS NOT APPLICABLE DURING THE A.YS. UNDER CONSIDERATION. THE LD CIT(A) HAS UPHELD THE ACTION OF THE A.O IN DENIAL OF THE CLAIMED DEDUCTION U/S. 80IB(10). 9. CONSIDERIN G THE ABOVE SUBMISSIONS, WE FIND THAT UNDISPUTEDLY, THE PROVISIONS OF 80 IB(10) CAME INTO OPERATION W.E.F. 1.4.2005 WERE NOT APPLICABLE DURING THE A.YS. I.E. 2003 - 04 AND 2004 - 05 UNDER CONSIDERATION. IT HAS BEEN NOW HELD BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES, 122 TTJ (S.B) PUNE, 433, APPROVED BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN ITS DECISION DATED 22.2.2011 (SUPRA) HOLDING THAT CLAUSE (D) INSERTED TO SECTION 80IB(10) W.E.F. 1.4.2005 IS PROSPECTIVE AND NOT RETROS PECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1.4.2005. IN THIS DECISION, IT HAS BEEN ALSO HELD THAT UPTO 31 ST MARCH 2005 (SUBJECT TO FULFILLING OTHER CONDITIONS), DEDUCTION U/S. 80 IB (10) IS ALLOWABLE TO HOUSING PROJECT APPROVED BY THE LOC AL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER D.C. RULES/REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORITY. IN THE CASE OF BRAHMA ASSOCIATES, WHEREIN THE A.Y. INVOLVED WAS BEFORE THE PROVISIONS OF CLAUSE (D) TO SECTION 80 IB (10) COMING TO EFFECT TO 1.4.2005 I.E. A.Y. 2005 - 06. BEFORE INSERTION OF CLAUSE (D) TO THIS SECTION W.E.F. 1.4.2005, THERE WAS NO RESTRICTION OF CONSTRUCTION OF COMMERCIAL AREA IN THE PROJECT. THE TRIBUNAL HELD THAT UPTO 31 ST MARCH 200 5, DEDUCTION U/S. 80 IB(10) WOULD BE ALLOWABLE TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT UP AREA OF THE PLOT. THE HONBLE JURISDICTIONAL HIGH COURT IN THIS REGARD WAS PLEAS ED TO HOLD THAT IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOME TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31 ST MARCH 2005, DEDUCTION U/S. 80 IB (10) WOULD BE ALLOWABLE TO THE 9 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E PROJECTS APPROVED BY THE LOCAL AUTHORITY IN RESIDENTIAL BUI LDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT UP AREA OF THE PLOT. ON QUERY RAISED BY THE BENCH, LD. A.R. SUBMITTED THAT THE COMMERCIAL AREA CONSTRUCTED IN THE PROJECT IS AROUND 12% OF THE BUILT UP AREA. WE THUS RESPECTFULLY FOLLOWING THE DEC ISION OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (SUPRA) HOLD THAT THE A.O WAS NOT JUSTIFIED IN DENYING THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT TO THE ASSESSEE ON THE BASIS THAT THE COMMERCIAL AREA CON STRUCTED BY THE ASSESSEE WAS MORE THAN 5% OF THE TOTAL BUILT UP AREA OR 2000 SQ.FT, WHICHEVER IS LESS, AS PER CLAUSE (D) TO SECTION 80IB(10) OF THE ACT. 12. THE AFORESAID DISCUSSION SHOWS THAT AS PER THE TRIBUNAL, THE ASSESSING OFFICER COULD NOT HAVE A PPLIED THE NEWLY AMENDED CLAUSE (D) OF SECTION 10IB(10) OF THE ACT TO THE INSTANT CLAIM OF THE ASSESSEE, BECAUSE THE PROJECT OF THE ASSESSEE WAS APPROVED BY THE LOCAL AUTHORITY PRIOR TO 31.03.2005 WHEREAS THE AMENDED SECTION 10IB(10)(D) WAS BROUGHT ON THE STATUTE WITH EFFECT FROM 01.04.2005. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT THE PROJECT OF THE ASSESSEE WAS APPROVED BY THE PUNE MUNICIPAL CORPORATION (I.E. THE LOCAL AUTHORITY) ON 17.10.2000 AND THE CONSTRUCTION WAS COMMENCED ON THE SAME DAT E I.E. WELL BEFORE THE OPERATION OF THE AMENDED SECTION 80IB(10)(D) OF THE ACT. FOLLOWING THE PRECEDENT WHICH IS IN LINE WITH THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM.), THE OBJ ECTION OF THE ASSESSING OFFICER IS NOT TENABLE AND THE CIT(A) MADE NO MISTAKE IN NEGATING THE SAME. IN SO FAR AS THE APPEAL OF THE REVENUE IS CONCERNED THE SAME IS DISPOSED - OFF IN THE AFORESAID MANNER AND IS ACCORDINGLY DISMISSED. 13. NOW, WE MAY TAKE UP THE OBJECTION OF THE ASSESSING OFFICER WITH REGARD TO THE PROVISIONS OF SECTION 80IB(10)(A)(I) OF THE ACT. AS PER THE ASSESSING OFFICER SINCE THE PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 01.04.2004, IT SHOULD HAVE BEEN COMPLETED BY 31.03.2008 IN TERM S OF THE CONDITION PRESCRIBED IN SECTION 80IB(10)(A)(I) OF THE ACT. THE ASSESSING OFFICER FURTHER NOTED THAT SINCE THE REQUISITE OCCUPANCY/ COMPLETION CERTIFICATE WAS NOT ISSUED BY THE LOCAL AUTHORITY BEFORE 31.03.2008, IT COULD NOT BE SAID THAT THE PROJEC T OF THE ASSESSEE WAS COMPLETED WITHIN THE SPECIFIED PERIOD. IN THIS CONNECTION, THE LEARNED COUNSEL FOR THE ASSESSEE 10 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E POINTED OUT THAT THE LOWER AUTHORITIES WERE WRONG IN REJECTING THE CLAIM OF THE ASSESSEE ON THE AFORESAID GROUND FOR THE REASON THAT THE P OSITION OF LAW INVOKED BY THE LOWER AUTHORITIES WAS INTRODUCED ONLY BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01.04.2005 AND PRIOR TO IT, THERE WAS NO REQUIREMENT OF COMPLETION OF PROJECT WITHIN A SPECIFIED PERIOD. THE CASE OF THE ASSESSEE IS FOR AS SESSMENT YEAR 2002 - 03 WHICH IS PRIOR TO THE AMENDMENT MADE TO SECTION 80IB(10) OF THE ACT. IN THE PRE - AMENDED PROVISIONS OF SECTION 80IB(10) THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSEE OF FURNISHING A COMPLETION CERTIFICATE AS A CONDITION PRECEDENT FOR AVAILING OF DEDUCTION AND THAT SUCH A CONDITION WAS INTRODUCED ONLY BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01.04.2005. FURTHERMORE, THE LEARNED COUNSEL HAS SUBMITTED THAT THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. JAIN HOUSING & CONSTRUCTIONS LTD. (2013) 30 TAXMAN 131 (MADRAS) HAS CONSIDERED AN IDENTICAL SITUATION, WHEREIN THE STAND OF THE ASSESSEE WAS UPHELD. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND POINTED OUT THAT THE AMENDED PROVISIONS HAVE PRESCRIBED A COMPLETION PERIOD FOR A PROJECT WHICH WAS APPROVED PRIOR TO 01.04.2004 AND THEREFORE THE SAME WOULD APPLY IN ORDER TO TEST THE PRESENT CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUB MISSIONS. UNDISPUTABLY, THE OBJECTION WITH REGARD TO THE COMPLETION OF PROJECT IS ON THE BASIS OF THE PROVISIONS OF SECTION 80IB(10)(A) OF THE ACT AS INSERTED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01.04.2005. IT IS ALSO EVIDENT THAT SO FAR AS TH E AFORESAID AMENDMENT IS CONCERNED THE LEGISLATURE HAS NOT PROVIDED THAT THE SAME IS RETROSPECTIVE IN ITS APPLICATION. PRIOR TO THE INSERTION OF THE AMENDED SECTION 80IB(10)(A) OF THE ACT WITH EFFECT FROM 01.04.2005 THERE WAS NO REQUIREMENT AS REGARDS THE COMPLETION OF CONSTRUCTION OF A PROJECT. IN FACT, THE PRE - AMENDED PROVISIONS OF SECTION 80IB(10) VIS - - VIS THE AMENDED PROVISIONS OF SECTION 80IB(10)(A) WITH EFFECT FROM 01.04.2005, HAVE BEEN CONSIDERED BY THE HONBLE MADRAS HIGH COURT IN THE CASE CIT VS. JAIN HOUSING & CONSTRUCTION LTD. (SUPRA) AND THE FOLLOWING DISCUSSION IS WORTHY OF NOTICE : - 11 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E 9. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80IB(10) OF THE ACT, PRIOR TO THE AMENDMENT, THERE WAS NO SUCH REQUIREMENT AS REGARDS FURNISHING OF COMPLETION CERTIFICATE AND THE DEDUCTION PROVISION POINTED OUT TO THE GRANT OF 100% DEDUCTION ON THE PROFITS DERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TIL L 2005, THERE WAS NO CLAUSE DEALING WITH COMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO THE PROVISION AS A CONDITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN. 10. AS FAR AS THE PRESENT CASE IS CONCERNED, IT RELATES TO THE ASSESSMENT YEAR 2004 - 05. THE SUBSTITUTION OF EXPLANATION TO CLAUSE (A) TO SUB - SECTION (10) OF SECTION 80IB OF THE INCOME TAX ACT WAS BROUGHT IN UNDER FINANCE NO. (2) ACT OF 2004, EFFECTIVE FROM 01.04.2005. THUS, IN THE ABSENCE OF ANY SUCH REQUIREMENT READ INTO THE SECTION, WE FIND IT DIFFICULT TO ACCEPT THE CASE OF THE REVENUE THAT THE CLAIM FOR DEDUCTION HAS TO BE REJECTED ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED THE COMPLETION CERTIFICATE. 16. FOLLOWING THE AFORESAID JUDGMENT OF THE HONBLE MADRAS HIGH COURT WHICH FUL LY COVERS THE CONTROVERSY BEFORE US, WE DO NOT FIND ANY JUSTIFICATION TO ACCEPT THE CLAIM OF THE REVENUE THAT THE ASSESSEES CLAIM FOR DEDUCTION IS TO BE REJECTED ON THE GROUND THAT THE ASSESSEE HAD NOT COMPLETED THE CONSTRUCTION AND OBTAINED THE COMPLETIO N CERTIFICATE FROM THE LOCAL AUTHORITIES PRIOR TO 31.03.2008. AT THIS POINT, WE MAY ALSO NOTICE THAT IN THE ASSESSMENT YEARS 2003 - 04 & 2004 - 05 ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WITH RESPECT THE SAME PROJECT WAS ALSO DENIED BY THE ASSESSING OFFICER BUT THERE WAS NO OBJECTION RAISED WITH REGARD TO THE REQUIREMENT OF COMPLETION OF PROJECT, AS IS SOUGHT TO BE MADE OUT IN THE PRESENT YEAR. THUS, BY IMPLICATION IT FOLLOWS THAT FOR ASSESSMENT YEARS 2003 - 04 & 2004 - 05 THE DEPARTMENT AC CEPTED THE POSITION THAT THE CLAIM OF DEDUCTION COULD NOT BE REJECTED IN THE ABSENCE OF THE COMPLETION CERTIFICATE BASED ON THE AMENDMENT MADE TO SECTION 80IB(10) OF THE ACT WITH EFFECT FROM 01.04.2005. BE THAT AS IT MAY, WE CONCLUDE BY HOLDING THAT FOLLOW ING THE PARITY OF REASONING LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CONSTRUCTIONS LTD. (SUPRA), IN THE PRESENT CASE, THE AFORESAID OBJECTION OF THE ASSESSING OFFICER IS UNTENABLE. 12 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E 17. IN THE RESULT, WE SET ASIDE TH E ORDER OF THE CIT(A) ON THE AFORESAID ASPECT AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE, AS CLAIMED. 7. IT IS CLEAR FROM THE ABOVE ORDER THAT THE TWO OBJECTIONS OF THE ASSESSING OF FICER HAVE BEEN OVERRULED BY THE TRIBUNAL AND ALLOWED THE DEDUCTION TO THE ASSESSEE IN THE PRECEDING YEARS. WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN THE A. YRS. 2002 - 3 TO 2004 - 05 HOLD THAT THE ASSESSEE HAS NOT VIOLA TED THE CONDITION OF SEC. 80IB(10)(B) AND (D) OF THE ACT. 8. THE NEXT OBJECTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS NOT COMPLETED THE HOUSING PROJECT BEFORE TIME LIMIT PRESCRIBED I.E. 31 - 03 - 2008. THERE IS NO DISPUTE ABOUT THE FACT THAT AS THE ORIGINAL PLAN OF THE ASSESSEE WAS SANCTIONED PRIOR TO 01 - 04 - 2004 HENCE, THE ASSESSEE WAS REQUIRED TO COMPLETE THE PROJECT BEFORE 31 - 03 - 2008. THERE IS AN AMENDMENT TO SEC. 80IB(10) W.E.F. 01 - 04 - 2005 AND DATE OF COMPLETION OF THE CONSTRUCTION OF THE HO USING PROJECT IS LINKED WITH THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF THE HOUSING PROJECT IS ISSUED BY THE COMPETENT LOCAL AUTHORITY. IN THE CASE OF CHD DEVELOPERS LTD. (SUPRA) , THE HON'BLE HIGH COURT OF DELHI HAS CONSIDERED THE SAID AME NDMENT AND HELD THAT IF THE PROJECTS ARE APPROVED PRIOR TO 01 - 04 - 2005 , THEN THERE IS NO REQUIREMENT FOR PRODUCING THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY. THE ASSESSEE FILED THE COPY OF COMPLETION CERTIFICATE FROM THE PMC DATED 29 - 03 - 2008. T HE ORIGINAL CERTIFICATE IS IN MARATHI (PAGE NO. 4 OF THE COMPILATION) AND TRANSLATION IN ENGLISH. AS PER THE SAID CERTIFICATE D WING IS ALSO COMPLETED. SO FAR AS A, B, AND C WING ARE CONCERNED THE ASSESSEE OBTAINED THE COMPLETION CERTIFICATE ON 01 - 01 - 2 007 BUT AT THAT TIME SO FAR AS BUILDING A IS CONCERNED THERE WAS NO RESIDENTIAL AREA BUT ONLY COMMERCIAL AREA . S UBSEQUENTLY , AS THERE WAS NO BUYER TO THE COMMERCIAL UNIT IN A BUILDING/WINGS, THE ASSESSEE WAS FORCED TO CONVERT THE PART OF THE 13 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E COMMERCIA L AREA INTO THE RESIDENTIAL AREA IN A WING. IN OUR OPINION AS PER THE SANCTIONED PLAN THE ASSESSEE HAS COMPLETED THE PROJECT BEFORE 31 - 03 - 2008 EVEN PRESUMING THAT PART OF THE COMMERCIAL AREA AND BUILDING A WAS CONVERTED INTO RESIDENTIAL AREA AND COULD NOT BE COMPLETED BUT OTHERWISE ALSO THE ASSESSEE IS ENTITLED FOR DEDUCTION IN RESPECT OF BUILDINGS B, C AND D COMPLETED BEFORE 31 - 03 - 2008. AS PER THE STATEMENT MADE BY THE LD. COUNSEL , SO FAR AS A.Y. 2006 - 07 IS CONCERNED THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION IN RESPECT OF BUILDING A . WE, THEREFORE, ALLOW THE PLEA OF THE ASSESSEE AND REVERSE THE OBJECTIONS OF THE ASSESSING OFFICER. ACCORDINGLY, GROUNDS TAKEN BY THE ASSESSEE ARE ALLOWED AND ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION TO TH E ASSESSEE. 9. NOW, WE TAKE UP THE REVENUES APPEAL BEING ITA NO. 8 21 /PN/2011. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCE S OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE INSTEAD OF CONFIRMING THE ASSESSMENT MADE BY THE ASSESSING OFFICER. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN HOL DING THAT THE DEDUCTION US 80 IB(10) IS ADMISSIBLE IN THE CASE OF A 'HOUSING PROJECT' WHERE AREA OF THE PLOT OF CONSTRUCTION IS LESS THAN 1 ACRE. 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT TO CLAIM DEDUCTI ON U/S 80 IB(10), THE PHYSICAL SIZE OF THE LAND ON WHICH THE PROJECT IS BUILT SHOULD BE AT LEAST ONE ACRE. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED AND THAT OF THE ASSES SING OFFICER BE RESTORED. 14 ITA NO S. 821 & 832/PN/2011, M/S. DHARESHWAR PROMOTERS & BUILDERS, PUN E 10. WE HAVE HEARD THE PARTIES. IN GROUND NO. 2, THE REVENUE HAS TAKEN THE PLEA THAT THE LD. CIT(A) HAS NOT CONFIRMED THE ASSESSMENT MADE BY THE ASSESSING OFFICER. IN OUR OPINION THE SAID GROUND IS ERRONEOUS AS LD. CIT(A) DISMIS SED THE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE DISALLOWANCE U/S. 80IB(10) OF THE ACT. GROUND NOS. 3 AND 4 ARE IN RESPECT OF THE SIZE OF PLOT OF LAND. WE HAVE ALREADY DEALT WITH THIS ISSUE WHILE DECIDING THE ASSESSEES APPEAL. MOREOVER, THE TRIBU NAL HAS ALREADY ADJUDICATED THIS ISSUE IN THE PRECEDING YEARS I.E. A. YRS. 2002 - 03 TO 2004 - 05 AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. THE SAID DECISIONS ARE ALREADY REFERRED AND RELIED WHILE DECIDING THE ASSESSEES APPEAL FOR A.Y. 2006 - 07 . ACCORD INGLY, GROUND NOS. 3 AND 4 ARE DISMISSED. GROUNDS NOS. 1, 5 AND 6 ARE GENERAL IN NATURE. 11. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 - 0 1 - 201 5 SD/ - SD / - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 30 TH JANUARY, 2015 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I I , PUNE 4 THE CIT - I I , PUNE 5 6 THE DR, ITAT, A BE NCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , PUNE