Income-tax Officer, V. Shri Neelkanth Ramesh Nagpal, Aurangabad

ITA 950/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1155 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 950 /PN/20 14 / ASSESSMENT YEAR : 20 1 0 - 11 THE INCOME TAX OFFICER , THE INCOME TAX OFFICER , WARD - 2(1), AURANGABAD . / APPELLANT VS. SHRI NEELKANTH RAMESH NAGPAL, KANCHENJUNGA, RTO ROAD, SHILP NAGAR, AURANGABAD . / RES PONDENT PAN: A COPN7760Q / APPELLANT BY : SHRI SUHAS KULKARNI / RESPONDENT BY : S HRI NIKHIL PATHAK / DATE OF HEARING : 28 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 05 . 0 8 .201 6 / ORDER / PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST ORDER OF C I T (A) , AURANGABAD , DATED 25 . 0 2 .20 14 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) . ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 2 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HON'BLE CIT(A) , AURANGABAD, ERRED IN ALLOWING THE DEDUCTION U/S. 801B(10) AMOUNTING TO RS.1,61,74,462/ - . 2. ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE, WHETHER THE HON'BLE CIT(A), AURANGABAD, IS CORRECT IN INTERPRETING THE PROVISIONS OF SECTION 80IB(10) OF THE ACT VIZ. IN NOT CONSIDERING THE DATE OF COMPLETION OF PROJECT SHALL BE TAKEN TO BE THE DATE OF COMPLETION/OCCUPANCY CERTIF ICATE ISSUED BY THE LOCAL AUTHORITY AS MENTIONED IN THE EXPLANATION (II) OF SECTION 80IB(10) OF THE ACT . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE HON BLE CIT(A) IS RIGHT IN LAW IN ALLOWING DEDUCTION U /S 80IB(10) IN RESPECT OF CO NSTRUCTION OF A HOUSING PROJECT WHICH HAS NOT OBTAINED COMPLETION CERTIFICATE FROM LOCAL AUTHORITY CERTIFYING THE COMPLETION OF HOUSING PROJECT AS ON 31/3/2010, AS HELD BY THE HON BLE ITAT HYDERABAD BENCH 'A' IN THE CASE OF SAINATH ESTATES (P) LTD. VS. D Y. CIT HYDERABAD (2013) 32 TAXMANN.COM 7 (HYDERABAD - TRIB) . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE HON'BLE CIT(A), AURANGABAD, IS CORRECT IN APPLYING THE DECISION OF CIT VS. TARNETAR CORPORATION (HIGH COURT OF GUJRAT) (2012) 26 T AXMANN.COM.180 (GUJ.) FOR ALLOWING DEDUCTION U/S 80IB(10) TO THE ASSESSEE, SINCE THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FROM THE FACTS OF THE SAID CASE . 5 . WHETHER A HOUSING PROJECT CAN BE CONSIDERED TO BE ELIGIBLE FOR DEDUCTION U/S 80IB(10) WHICH HAS NOT SATISFIED THE CONDITION OF COMPLETION/OCCUPANCY CERTIFICATE AS ON SPECIFIED DATE AS PER THE PROVISIONS OF SECTION 80IB(10 ) (II) OF CERTIFICATE AS ON SPECIFIED DATE AS PER THE PROVISIONS OF SECTION 80IB(10 ) (II) OF THE I.T. ACT, 1961 . 6 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE CIT(A), A URANGABAD, MAY BE VACATED AND THAT OF THE A.O. BE RESTORED. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AT RS.1,61,74,462/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS PROPRIETOR OF M/S. R.N. REALITIES, WHICH WAS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF P ROJECT MEADOWS UPTOWN SITUATED AT SHAHNOORWADI, AURANGABAD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 3 ASSESSEE WAS ASKED TO FURNISH EVIDENCE IN RESPECT OF ELIGIBILITY OF THE PROJECT FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE A SSESSING OFFICER NOTED THAT THE FIRST PERMISSION TO CONSTRUCT WAS GRANTED ON 19.10.2006 AND AS SUCH THE PROJECT WAS REQUIRED TO BE COMPLETED ON OR BEFORE 31.03.2012. HOWEVER, THE ASSESSEE HAD NOT FURNISHED ANY OCCUPANCY CERTIFICATE BEFORE THE ASSESSING OF FICER AND HENCE, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT SHOULD NOT BE DISALLOWED . IN RESPONSE, THE ASSESSEE FURNISHED COMPLETION CERTIFICATE ISSUED BY THE ARCHITECT ALONG WITH LIST OF PERS ONS TO WHOM A AND B TYPES OF FLATS WERE SOLD ALONG WITH COPY OF APPLICATION TO THE MUNICIPAL CORPORATION, COPIES OF MSEB BILLS, MUNICIPAL TAXATION PAVATIES AND POSSESSION RECEIPTS. THE CASE OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE CONSTRU CTION OF SAID HOUSING PROJECT WAS COMPLETED MUCH BEFORE THE SPECIFIED DATE I.E. 31.03.2012 AND THE SAID UNITS WERE ALSO OCCUPIED FOR RESIDENCE BY THE PURCHASERS MUCH BEFORE 31.03.2012 AND HENCE, THE ASSESSEE HAD FULFILLED THE CONDITIONS OF COMPLETION OF CO NSTRUCTION OF HOUSING PROJECT MUCH BEFORE THE SPECIFIED DATE. THE ASSESSING OFFICER SOUGHT INFORMATION FROM THE COMMISSIONER , MUNICIPAL CORPORATION, AURANGABAD UNDER SECTION 133(6) OF THE ACT, WHO ADMITTED THAT THE ASSESSEE HAD APPLIED FOR OCCUPANCY CERTI FICATE , BUT THE OCCUPANCY CERTIFICATE WAS NOT SANCTIONED AND ISSUED TO THE ASSESSEE. IT WAS ALSO CERTIFIED IN THE SAID LETTER THAT THE PROJECT WAS COMPLETED BEFORE 31.03.2012 BUT THE OCCUPANCY CERTIFICATE WAS NOT SANCTIONED OR ISSUED. THE PLEA OF THE ASS ESSEE THAT THERE WAS NO REQUIREMENT TO RECEIVE THE OCCUPANCY CERTIFICATE IN ORDER TO AVAIL THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS REJECTED BY THE ASSESSING OFFICER AND THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE A SSESSEE. ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 4 5. THE CIT(A) ON THE OTHER HAND, OBSERVED THAT IT WAS AN UNDISPUTED FACT THAT THE ASSESSEE HAD COMPLETED THE HOUSING PROJECT MUCH BEFORE DUE DATE OF COMPLETION OF THE PROJECT PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT. HOWEVER, THE DEDUCTION C LAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE BY THE ASSESSING OFFICER AS THE ASSESSEE COULD NOT OBTAIN COMPLETION / OCCUPANCY CERTIFICATE OF THE PROJECT FROM LOCAL AUTHORITY BEFORE THE DUE DATE PRESCRIBED UNDER SECTION 80IB(10)(A) OF THE ACT OR EVEN UP TO THE DATE OF ASSESSMENT ORDER. BEFORE THE CIT(A), THE ASSESSEE POINTED OUT THAT THE COMPLETION CERTIFICATE IN RESPONSE TO THE APPLICATION FILED ON 18.04.2009 WAS GRANTED BY THE LOCAL AUTHORITY ON 16.01.2014. IN VIEW THEREOF, THE CIT (A) RELIED ON VARIOUS DECISIONS AND HELD THE ASSESSEE TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AS THE OCCUPANCY / COMPLETION CERTIFICATE WAS NOT ISSUED WITHIN PRESCRIBED DATE ON SOME TECHNICAL GROUNDS, WHICH WERE REMOVED BY MAKING COM PENSATORY PAYMENT OF RS. 8,51,000/ - AND RS.5,89,300/ - TO THE MUNICIPAL CORPORATION, WHO IN TURN, HAD APPROVED THE SAME PROJECT WHICH HAS BEEN COMPLETED MUCH BEFORE THE DUE DATE AS PROVIDED UNDER THE ACT. THE ASSESSEE WAS HELD TO BE ELIGIBLE FOR THE CLAIM O F DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. SHRI SUHAS KULKARNI APPEARED FOR THE REVENUE AND SHRI NIKHIL PATHAK APPEARED FOR THE ASSESSEE AND PUT FORWARD THEIR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT APPEAL IS REGARDING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10)(A) OF THE ACT . THE ASSESSEE HAD RECEIVED THE COMMENCEMENT ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 5 CERTIFICATE TO CONSTRUCT THE BUILDING ON 19.10.2006 AND UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE WAS TO COMPLETE THE SAID BUILDING BY 31.03.2012. HOWEVER, THE ASSESSEE FILED AN APPLICATION FOR OBTAINING COMPLETION CERTIFICATE WITH LOCAL AUTHORITY ON 18.04.2009 MENTIONING THAT THE BUILDIN G HAD BEEN COMPLETED BEFORE DUE DATE OF COMPLETION AS PROVIDED UNDER THE ACT. THE ASSESSEE IN ORDER TO JUSTIFY ITS CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IN TURN, RELIED ON COMPLETION CERTIFICATE ISSUED BY THE ARCHITECT AND ALSO FURNISHED C OMPLETE DETAILS OF PERSONS WHO HAD OCCUPIED THE COMPLETED UNITS ALONG WITH COPIES OF POSSESSION RECEIPTS, MSEB BILLS, MUNICIPAL TAXATION PAVATIES, ETC. THE ASSESSEE ALSO FILED A COPY OF APPLICATION MOVED BEFORE THE MUNICIPAL CORPORATION FOR OBTAINING THE OCCUPANCY / COMPLETION CERTIFICATE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER SOUGHT INFORMATION FROM THE COMMISSIONER, MUNICIPAL CORPORATION, AURANGABAD UNDER SECTION 133(6) OF THE ACT, WHO ACKNOWLEDGED THAT THE ASSESSEE HAD APPL IED FOR OCCUPANCY CERTIFICATE BUT THE SAME WAS NOT SANCTIONED / ISSUED TO THE ASSESSEE. THE COMMISSION ER , MUNICIPAL CORPORATION HOWEVER, ADMITTED THAT THE PROJECT WAS COMPLETED BEFORE 31.03.2012 BUT DUE TO SOME DEFECTS, THE OCCUPANCY CERTIFICATE WAS NOT S ANCTIONED AND WAS NOT ISSUED. ADMITTEDLY, THE ASSESSEE HAS RECEIVED THE COMPLETION CERTIFICATE ON 06.01.2014 AFTER PAYING COMPENSATORY PAYMENTS TO THE MUNICIPAL CORPORATION FOR TECHNICAL DEFAULTS. TH E ISSUE WHICH ARISES BEFORE US IS WHETHER IN SUCH CIRCU MSTANCES WHERE THE ASSESSEE HAD FULFILLED THE CONDITIONS LAID DOWN UNDER SECTION 80IB(10)(A) OF THE ACT I.E. COMPLETION OF BUILDING BEFORE DUE DATE PRESCRIBED UNDER THE ACT AND MERELY BECAUSE, THE ASSESSEE HAD NOT RECEIVED THE OCCUPANCY / COMPLETION CERTIF ICATE, CAN THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT BE DENIED TO THE ASSESSEE. ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 6 9. WE FIND THAT PUNE BENCH OF TRIBUNAL IN VARIOUS CASES HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE HOLDING THAT WHERE THE ASSESSEE HAS COMPLETED THE CO NSTRUCTION OF THE PROJECT AND WHICH HAS BEEN OCCUPIED BY THE ALLOTTEES OF FLATS / ROW HOUSES AND THE ASSESSEE HAS ALSO APPLIED FOR OCCUPANCY / COMPLETION CERTIFICATE, MERELY BECAUSE THE ASSESSEE HAD NOT RECEIVED THE COMPLETION CERTIFICATE BEFORE DUE DATE D OES NOT DISENTITLE THE ASSESSEE TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 10. WE FURTHER FIND THAT SAID ISSUE HAS BEEN DECIDED BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. HINDUSTAN SAMUH AWAS LTD. (2015) 377 ITR 150 (BOM) HAS ALSO HELD AS UNDER: - 11. THE QUESTION WE RAISE HERE IS WHETHER THE EXPLANATION INTRODUCED AN ELEMENT OF HARSHNESS TO SUCH AN EXTENT THAT IT RENDERED THE MAIN PROVISION NUGATORY ? IN OUR VIEW, THE EXPLANATION IS INTRODUCED RECENTLY TO PUT AN END TO A CONTROVERSY, WH ICH MIGHT ARISE BEFORE THE ASSESSING OFFICER ABOUT THE DATE OF COMPLETION. THE INTENTION OF THE LEGISLATURE IN PROVIDING EXPLANATION TO FIX THE DATE OF COMPLETION OF A PROJECT IS QUITE HELPFUL WHEN THIS PROVISION IS UTILISED IN PRACTICE. IN OUR VIEW, THE E XPLANATION QUITE HELPFUL WHEN THIS PROVISION IS UTILISED IN PRACTICE. IN OUR VIEW, THE E XPLANATION HAS INTRODUCED AN UNNECESSARILY STRICTNESS IN THE PROVISION WHICH IS IN THE NATURE OF EXEMPTION AND NOT IN THE NATURE OF CHARGING. SUB - SECTION (10) MENTIONS THAT A HOUSING PROJECT SHOULD BE COMPLETED BEFORE MARCH 31, 2008, SO AS TO GET THE EXEMP TION. COMPLETION OF HOUSING PROJECT IS A PHYSICAL ACT. IT CAN BE DEMONSTRATED ON THE SPOT AND ALSO THROUGH A CERTIFICATE ISSUED BY AN ARCHITECT WHO IS APPOINTED FOR SUPERVISING THE CONSTRUCTION WORK. HE IS A PROFESSIONAL WHO WOULD DECLARE THAT THE PROJECT IS COMPLETE. UNFORTUNATELY, SUB - SECTION (10) AND THE EXPLANATION DO NOT GIVE ANY IMPORTANCE TO THE ISSUANCE OF SUCH COMPLETION CERTIFICATE BY THE CONCERNED ARCHITECT. IT GIVES IMPORTANCE ONLY TO THE CERTIFICATE OF MUNICIPAL AUTHORITY. IT IS COMMON KNOWLEDG E THAT AN APPLICATION FOR COMPLETION CERTIFICATE SUBMITTED TO THE MUNICIPAL AUTHORITIES IS ACCOMPANIED BY A COMPLETION CERTIFICATE ISSUED BY THE CONCERNED ARCHITECT. NO DOUBT, THE MUNICIPAL AUTHORITIES THEN CAUSE INSPECTION OF THE SITE AND VERIFY THE CLAIM . THEREAFTER, THEY ISSUE COMPLETION CERTIFICATE. BUT IF A PROJECT IS REALLY COMPLETE BEFORE MARCH 31, 2008, AND AN APPLICATION IS MOVED QUITE IN TIME, FOR SEEKING COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES, AND IF THEY DO NOT TAKE STEPS URGENTLY AND DELAY THE ISSUANCE OF COMPLETION CERTIFICATE FROM THEIR SIDE, CAN IT BE SAID THAT SUCH CERTIFICATE WOULD ALONE DECIDE THE DATE OF COMPLETION OF THE PROJECT ? THE ANSWER IS IN THE NEGATIVE. 11. FOLLOWING THE SA ME PARITY OF REASONING, WHERE THE ASSESS EE HAD COMPLETED ALL THE FORMALITIES OF COMPETING THE PROJECT AND WHERE THE SAID PROJECT HAS BEEN OCCUPIED BY THE ALLOTTEES AND THE ASSESSEE HAD ALSO APPLIED FOR COMPLETION ITA NO . 95 0 /PN/20 14 SHRI NEELKANTH RAMESH NAGPAL 7 CERTIFICATE, THEN THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT CANNOT BE DENIED TO THE ASSESSEE MERELY BECAUSE THE ASSESSEE HAD NOT RECEIVED OCCUPANCY / COMPLETION CERTIFICATE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 12 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 5 TH DAY OF AUGUST , 201 6 . SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 5 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / THE A PPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) , AURANGABAD ; 4. / THE C I T , AURANGABAD ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE