R.V.Nirmaan Pvt Ltd, Hyderabad V. DCIT, Hyderabad

ITA 850/HYD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69808 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMALAL TRIPATHI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Competent authority
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A.NO.850/HYD/2010 ASSESSMENT YEAR 2006-2007 RV NIRMAAN PRIVATE LTD. HYDERABAD. VS. DCIT, CIRCLE 3 (1) HYDERABAD. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.V. RAGHURAM (AR) FOR RESPONDENT : SHRI AMALAL TRIPATHI DATE OF HEARING : 27.08.2013 DATE OF PRONOUNCEMENT : 25.09.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 31.03.2010 F OR THE ASSESSMENT YEAR 2006-2007. 2. THE FACTS LEADING TO THE APPEAL ARE AS UNDER: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPERS. FOR THE ASSESSMENT YEAR 2006-2007, THE A SSESSEE HAD FILED ITS RETURN OF INCOME ON 29.11.2006 DECLAR ING TOTAL INCOME OF RS.41,79,245/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 AND SUBS EQUENTLY SELECTED FOR SCRUTINY. STATUTORY NOTICES WERE ISSUED. THE ASSESSMENT WAS COMPLETED ON TOTAL INCOME OF RS.4,59 ,24,085/-. THE ASSESSING OFFICER DISALLOWED DEDUCTION UNDER SE CTION 80IB OF THE ACT AMOUNTING TO RS.54,65,550/- AMONG OTHER DIS ALLOWANCES. 2 3. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER RE JECTED THE GRANT OF DEDUCTION UNDER SECTION 80IB(10) AS THE ASSESSEE SHOULD HAVE ENCLOSED A COMPLETION CERTIFICATE FROM THE COMPETEN T AUTHORITY WHILE PUTTING-UP HIS CLAIM. THE ASSESSING OFFICER O PINED THAT SUCH CERTIFICATE SHOULD HAVE BEEN OBTAINED WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR OF ORIGINAL APPROVAL I .E., BEFORE 31.3.2007. FROM THE LETTER ISSUED BY HUDA DATED 26. 05.2004 THAT THE PROPOSALS DATED 17.7.2003 HAD BEEN REJECTED UNDER SECTION 14 OF AP UA (D) ACT, 1975. THE ASSESSEE SUB MITTED REVISED PLAN ON 31.05.2004 AND IT WAS ON 26.06.2004 THAT APPROVAL FOR THE FIRST TIME WAS GIVEN FOR THE PROJEC T. THE ASSESSING OFFICER HELD THAT THE PROVISIONS OF SECTI ON 80IB(10) SPEAK OF APPROVAL AND NOT OF PROPOSAL. EVEN IF A PROPOSAL WAS SUBMITTED EARLIER, THE SAME WAS REJECTED AND IT WAS FOR THE FIRST TIME ON 26.06.2004 THAT THE FIRST APPROVAL WAS GIVE N BY THE COMPETENT AUTHORITY. THE ASSESSING OFFICER HELD THAT THE COMPLETION CERTIFICATE COULD HAVE BEEN OBTAINED ON OR BEFORE 31.03.2009 AND SINCE THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-2007 ON 29.11.2006 ITSELF, IT IS CLEAR THAT SUCH COMPLETION CERTIFICATE COULD NOT HAVE BEE N FILED ALONG WITH THE RETURN OF INCOME. IT WAS ALSO NOT POSSIBLE FOR THE ASSESSEE TO FURNISH SUCH CERTIFICATE EVEN DURING TH E ASSESSMENT PROCEEDINGS WHICH WERE COMPLETED ON 22.12.2008 AS T HE ASSESSEE HAD TIME TILL 31.03.2009 TO OBTAIN THE COM PLETION CERTIFICATE. 4. THE LEARNED A.R. CONTENDED BEFORE THE LEARNED CI T(A) THAT NO INTIMATION OF DENIAL WAS RECEIVED FROM THE LOCAL AUTHORITY WITHIN 15 DAYS OF SUBMISSION OF NOTICES OF COMPLETIO N, WITHIN WHICH AN OCCUPANCY CERTIFICATE WAS REQUIRED TO BE I SSUED BY THE LOCAL AUTHORITY. THE LEARNED COUNSEL FURTHER CONTEND ED THAT SINCE THE ISSUE OF OCCUPANCY CERTIFICATE WAS GETTING DELAYE D, THE 3 LICENSED BUILDER / DEVELOPER I.E., THE ASSESSEE, HA D ITSELF APPROACHED THE LOCAL AUTHORITY VIDE LETTER DATED 19. 3.2009, INFORMING THAT THE CONSTRUCTION HAD BEEN COMPLETED AND POSSESSION TO ALL FLAT OWNERS HAD BEEN GIVEN AND TH AT PROPERTY TAX ASSESSMENTS HAD ALSO BEEN COMPLETED IN MAY CASES AND THEREFORE, A COMPLETION CERTIFICATE BE GIVEN. FURTH ER, THE LEARNED COUNSEL CONTENDED THAT AFTER CONSIDERING THE COMPLE TION CERTIFICATE ISSUED BY THE STRUCTURAL ENGINEER AND THE REGISTERED ARCHITECT AND THE REPRESENTATION OF THE LICENSE BUI LDER, THE ZONAL COMMISSIONER, GHMC, WEST ZONE, ISSUED A COMPLETION/OCCUPANCY CERTIFICATE ON 30.11.2009, INTE R ALIA CONFIRMING THAT THE CONSTRUCTION HAD BEEN COMPLETED ON 15.09.2008 IN ALL RESPECTS AND THAT THE BUILDING WA S FIT FOR OCCUPATION. THEREFORE, THE LEARNED COUNSEL PRAYED TH AT THE COMPLETION CERTIFICATE ISSUED BY THE REGISTERED STRU CTURAL ENGINEER AND ARCHITECT CERTIFYING THAT THE CONSTRUCT ION HAD BEEN COMPLETED IN ALL RESPECTS BY 15.09.2008, WHICH HAS B EEN CONFIRMED BY THE OCCUPANCY CERTIFICATE ALSO, BE CONSI DERED. 5. THE LEARNED CIT(A) HELD THAT E VEN-THOUGH THE CERTIFICATES FROM THE MUNICIPAL APPROVED STRUCTURAL CONSULTANT A ND THE LICENSED ARCHITECTS DT.15.9.2008 MENTION THAT THE P ROJECT HAD BEEN COMPLETED ( 15.09.2008, AND FURTHER EVEN T HAT THE ZONAL COMMISSIONER, GHMC HIMSELF IN HIS LETTER DT. 23.3.2009, MENTIONS THAT THE APARTMENTS FLATS WERE COMPLETED AND RELATED PROPERTY TAX ASSESSMENT HAD A LSO BEEN DONE AND FURTHER THAT THE COMPLETION CERTIFICA TE COULD BE ISSUED ONLY AFTER BPS REGULARIZATION SCHEME WRIT PETITION IS DISPOSED OF THE HON'BLE HIGH COURT OF A P, IT REMAINS A FACT THAT THE APPELLANT IS NOT IN POSSESS ION OF ANY 'COMPLETION / OCCUPANCY CERTIFICATE' FROM THE MUNIC IPAL AUTHORITIES CERTIFYING COMPLETION OF THE PROJECT BEFORE 31.3.2009. THE LEARNED COMMISSIONER FURTHER HELD TH AT THE 4 EXPLANATION (II) TO THE PROVISIONS OF SEC. 80IB(10) (A) READ AS UNDER : 'THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. ' AND FROM THE ABOVE, IT IS CLEAR THAT FOR ALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10), A 'COMPLETION CER TIFICATE' IS TO BE MANDATORILY OBTAINED FROM THE LOCAL AUTHOR ITY AND THAT THE DATE OF ISSUANCE OF SUCH COMPLETION CERTIF ICATE IS TO BE TAKEN AS THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT. EVEN PARA NOS. 25.1 AND 25.2 OF TH E DEPARTMENTAL CIRCULAR NO. 5 OF 2005, DT. 15.7.2005, EMPHASIZE THIS ISSUE AS UNDER : . . . ..FOR THIS PURPOSE THE DATE OF APPROVAL SHAL L BE THE DATE ON WHICH THE BUILDING PLAN IS FIRST APPROVED BY THE LOCAL AUTHORITY A ND THE DATE OF COMPLETION OF THE HOUSING PROJECT, SHALL BE THE DAT E ON WHICH THE COMPLETION CERTIFICATE IS ISSUED BY SUCH AUTHORITY.' 6. THE LEARNED CIT(A) CONCLUDED THAT IN THE INSTA NT APPEAL HOWEVER, SUCH CERTIFICATE WAS FIRSTLY NOT FILED DUR ING THE COURSE OF ASST. PROCEEDINGS. EVEN THE COMPLETION CE RTIFICATE SOUGHT TO BE ADMITTED DURING THE' APPELLATE PROCEED INGS IS DT.30.11.2009. ACCORDINGLY, IN VIEW OF THE ABOVE PR OVISIONS OF THE ACT, THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT HAS TO BE TAKEN TO BE 30.11.2009 ONLY, AS T HE 'COMPLETION CERTIFICATE' WAS ISSUED ON THE SAID DAT E ONLY. AS REGARDS THE ASST. NOTICES ISSUED BY THE MUNICIPAL A UTHORITIES IN RESPECT OF SOME OF THE FLATS, THE CIT(A) HELD TH AT IT IS CLEAR THAT THE SAME CANNOT BE EQUATED WITH THE 'COMPLETIO N CERTIFICATE' CONTEMPLATED UNDER THE ACT AND FURTHER HELD THAT 5 EVEN THE NOTICE ISSUED BY THE APPELLANT OR THE CERT IFICATES ISSUED BY THE MUNICIPAL APPROVED STRUCTURAL ENGINEE R OR THE LICENSED ARCHITECTS CANNOT BE A SUBSTITUTE FOR 'COM PLETION CERTIFICATE' CONTEMPLATED UNDER THE ACT. HENCE, THE CIT(A) CONCLUDED THAT IN THE ABSENCE OF ANY COMPLETION CER TIFICATE SHOWING COMPLETION OF THE PROJECT BEFORE 31.03.2009 , THE APPELLANT IS NOT ENTITLED FOR THE CLAIM OF DEDUCTIO N U/S. 80IB (10). THE LEARNED CIT(A) ACCORDINGLY UPHELD THE DEN IAL OF CLAIM OF RS.54,65,550/-. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US A ND RELIED ON THE DECISION OF THE MADRAS HIGH COURT IN THE CASE O F CIT VS. JAIN HOUSING & CONSTRUCTION LTD. IN TAX CASE (APPEAL) NO. 759 OF 2010 DATED NOVEMBER 2, 2012. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO RE LIED ON THE DECISION OF THE ITAT PUNE BENCH B BENCH VIDE ITA.NO.295/PN/2012 DATED 17.05.2013 AND THE DECISIO N OF ITAT G BENCH, NEW DELHI VIDE ITA.NO.2743 TO 2745/DEL/2010 DATED 01.08.2012. 9. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT THE HYDERABAD URBAN DEVELOPMENT AUTHORITY HAS GIVEN SANCT ION ONLY ON 26.06.2004. THE DECISION IN THE CASE OF JAIN HOUSING AND CONSTRUCTION IS SQUARELY AGAINST THE ASSESSEE. THE R ELEVANT PORTION OF THE DECISION HONBLE MADRAS HIGH COURT IN THE CASE OF JAIN HOUSING & CONSTRUCTIONS LTD., (SUPRA) ARE EXTR ACTED BELOW : 9. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 801B(10)(1) 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 6 DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1ST OCTOBER, 1998. THUS, TILL 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 801B 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. 10. THE CASE OF JAIN HOUSING & CONSTRUCTIONS LTD. ( SUPRA) IS RELATED TO ASSESSMENT YEAR 2004-2005 AND THEREFORE, IT WAS HELD THAT A S FAR AS THE PRESENT CASE IS CONCERNED, IT RELATES TO THE ASSESSMENT YEAR 2004-05. THE SUBSTITUTION OF EXPLAN ATION TO CLAUSE (A) TO SUB-SECTION (10) OF SECTION 801B OF T HE INCOME TAX ACT WAS BROUGHT IN UNDER FINANCE NO.(2) ACT OF 2004, EFFECTIVE FROM 01.04.2005. 11. THE FACTS IN THE PRESENT CASE BEFORE US IS THAT THE APPROVAL BY THE HYDERABAD URBAN DEVELOPMENT AUTHORITY HAS BEEN OBTAINED ON 26.06.2004 ONLY FOR WHICH THE RELEVANT A SSESSMENT YEAR IS 2005-2006 AND HENCE THE DECISION IN THE CASE OF JAIN HOUSING & CONSTRUCTIONS LTD. (SUPRA) GOES AGAINST T HE ASSESSEE. THEREFORE, WE CONFIRM THE ORDER OF CIT(A) AND DISMI SS THE ASSESSEES APPEAL. 12. RESPECTFULLY FOLLOWING THE RATIO OF THE HONBLE M ADRAS HIGH COURT DECISION IN THE CASE OF JAIN HOUSING & CONSTR UCTIONS LTD. WE DISMISS THE APPEAL OF THE ASSESSEE AND DISALLOW CLAIM OF 7 DEDUCTION OF AN AMOUNT OF RS.54,65,550/- UNDER SECT ION 80IB (10) OF THE INCOME TAX ACT, 1961, TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.09 .2013 SD/- SD/- (CHANDRA POOJARI) (SMT. ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 25 TH SEPTEMBER, 2013. VBP/- COPY TO 1. RV NIRMAAN PRIVATE LTD. 8-2-268/1/16/B/1, SRINIK ETAN COLONY, ROAD NO.3, BANAJRA HILLS, HYDERABAD. 2. DCIT, CIRCLE 3(1), I.T. TOWERS, MASAB TANK, HYDE RABAD. 3. COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDERAB AD. 1. COMMISSIONER OF INCOME TAX-III, HYDERABAD 5. DR A BENCH