M/s.Keerthi Estates Pvt Ltd., Hyderabad V. DCIT, Circle-2(1), Hyderabad

MA 108/HYD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0834 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Assessee Lawyers: V SIVA KUMAR
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER MA NO. 108/HYD/2013 ARISING OUT OF ITA NO. 478/HYD/2011 ASSESSMENT YEAR 2007-08 M/S. KEERTHI ESTATES PVT. LTD., HYDERABAD PAN: AAACK8642F VS. DY. CIT CIRCLE-2(1) HYDERABAD ASSESSEE RESPONDENT APPELLANT BY: SRI V. SIVA KUMAR RESPONDENT BY: SRI RAJEEV BENJWAL DATE OF HEARING: 0 2 .0 8 .201 3 DATE OF PRONOUNCEMENT: 30.08.2013 O R D E R PER CHANDRA POOJARI, AM: THIS MISCELLANEOUS APPLICATION (MA) BY THE ASSESSE E IS SEEKING RECTIFICATION IN THE ORDER OF THE TRIBUNAL DATED 21 ST SEPTEMBER, 2012 IN ITA NO. 478/HYD/2011. 2. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS IN TH E BUSINESS OF CONSTRUCTION OF RESIDENTIAL APARTMENTS AND SALE OF FLATS. THE ASSESSEE UNDERTOOK A HOUSING PROJECT UND ER THE NAME 'KEERTHI RIVIERA' AT BANGALORE ON AN AREA OF MORE T HAN ONE ACRE. IT FOLLOWS PROJECT COMPLETION METHOD FOR OFFERING I NCOME FROM CONSTRUCTION ACTIVITY. THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY ON 6.03.2004 AND DUE DATE FOR COMPLETION OF THE PROJECT WAS BY 31.3.2008. THE ASSESSEE COMPLETED TH E PROJECT BEFORE 31-03-2007. IT FILED RETURN OF INCOME FOR TH E A.Y. 2007-08 CLAIMING DEDUCTION U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF THE PROFITS DERIVED FROM TH E SAID PROJECT. MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 2 3. THE AR SUBMITTED THAT IN RESPONSE TO QUERY FROM THE ASSESSING OFFICER ABOUT COMPLETION OF THE PROJECT, THE ASSESSEE FILED PROPERTY ASSESSMENTS ISSUED BY THE MUNICIPAL AUTHORITIES IN RESPECT OF THE 141 FLATS COMPRISED IN THE PROJEC T, AS ALSO APPROVAL FOR ELECTRICITY CONNECTIONS AND WATER CONN ECTIONS ETC., TO SHOW THAT THE PROJECT WAS COMPLETED BY 02-02-200 7. HOWEVER, COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES WAS NOT FURNISHED. THE ASSESSING OFFICER PROPOSED T O DENY DEDUCTION U/S. 80IB(10) FOR WANT OF COMPLETION CERT IFICATE. 4. THE AR SUBMITTED THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS THE ASSESSEE FILED APPLICATION UNDER SE C. 144A OF THE IT ACT BEFORE THE ADDL. CIT. AFTER CAUSING ENQU IRIES INCLUDING FIELD ENQUIRIES AT BANGALORE, THE ADDL. C IT WAS SATISFIED, ON THE BASIS OF THE EVIDENCE PRODUCED, T HAT THE ASSESSEE COMPLETED THE PROJECT WITHIN TIME, I.E., B EFORE 31-03- 2008. HE, HOWEVER, DIRECTED DENIAL OF DEDUCTION ON THE COUNT THAT THE ASSESSEE HAS NOT OBTAINED COMPLETION CERTI FICATE FROM THE CONCERNED AUTHORITY, WHICH HE OPINED WAS MANDAT ORY. ACCORDINGLY THE ASSESSING OFFICER DENIED DEDUCTION CLAIMED U/S. 80IB{10) OF THE ACT. 5. THE AR SUBMITTED THAT IN THE FIRST APPEAL, THE CIT( A), EVEN AFTER FINDING AS A MATTER OF FACT THAT THE PROJECT WAS COMPLETED IN TIME, CONFIRMED THE DENIAL OF DEDUCTION U/S. 80I B(10) FOR THE ONLY REASON OF NON-FURNISHING OF COMPLETION CERTIFI CATE. 6. THE AR SUBMITTED THAT IN FURTHER APPEAL BEFORE THE HON'BLE APPELLATE TRIBUNAL, THE ASSESSEE CONTENDED THAT IN THE LIGHT OF THE PROVISIONS OF SEC. 80IB(10) AS IT EXIS TED ON THE DATE OF APPROVAL I.E., 06-03-2004, IT WAS SUFFICIENT TO SHOW THAT THE PROJECT WAS COMPLETED BY 31-03- 2008 AND THE FURNIS HING OF COMPLETION CERTIFICATE WAS NOT MANDATORY. THE ASSES SEE RELIED MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 3 ON THE DECISION OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI JV V. DCIT 39 SOT 49 8 (MUM). IN THAT CASE THE ASSESSEE SUBMITTED A PROPOSAL FOR SLUM REHABILITATION AND PERMISSION FOR CARRYING OUT DEVE LOPMENT WAS ACCORDED ON 17-11-2003 AND THE PROJECT WAS COMPLETE D IN THE A.Y. 2006-07. ASSESSEE, FOLLOWING PROJECT COMPLETIO N METHOD OF ACCOUNTING, CLAIMED DEDUCTION UNDER SECTION 80IB(10 ) FROM GROSS TOTAL INCOME ACCRUED FROM PROJECT. THE ASSESS ING OFFICER DENIED THE DEDUCTION BECAUSE AS PER PROVISIONS OF S ECTION 80- 1B(10)(D) AS APPLICABLE WITH EFFECT FROM 1-4-2005, LIMIT FOR HAVING COMMERCIAL SPACE IN HOUSING PROJECTS WAS 5 P ER CENT OF TOTAL BUILT-UP AREA OR 2,000 SQ. FT., WHICHEVER WAS LESS AND IN THE CASE OF THE ASSESSEE, TOTAL BUILT-UP AREA OF CO MMERCIAL SPACE IN HOUSING PROJECT EXCEEDED 2,000 SQ. FT. THE HON'B LE ITAT HELD THAT IN VIEW OF DECISION IN SAROJ SALES ORGANISATIO N V. ITO 115 TTJ 485 (MUM), LAW AS IT EXISTED IN ASSESSMENT YEAR 2004-05, WHEN ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHAB ILITATION AND PERMISSION FOR CARRYING OUT DEVELOPMENT WAS ACC ORDED, WAS TO BE APPLIED. A COPY OF THE ORDER OF THE HON'BLE T RIBUNAL IN THE CASE OF HIRANANDANI AKRUTI(SUPRA) WAS SUBMITTED BEF ORE THE HON'BLE ITAT. 7. THE AR SUBMITTED THAT THE 'A' BENCH OF THE TRIBUNAL , HYDERABAD BENCHES PASSED ORDERS ON 21-09-2012 IN TH E ASSESSEE'S APPEAL IN ITA NO. 478/H/2011. THE TRIBUN AL NOTICED THAT THE GRIEVANCE OF THE ASSESSEE IN THE APPEAL IS WITH REGARD TO DENIAL TO DEDUCTION U/S. 80IB(10) OF THE ACT FOR WA NT OF COMPLETION CERTIFICATE. THE TRIBUNAL ALLOWED ASSESS EE'S APPEAL APPLYING THE RATIO OF THE DECISION IN THE CASE OF H IRANANDANI AKRUTI (SUPRA) VIZ., THAT THE LAW AS IT EXISTED WHE N THE ASSESSEE OBTAINED APPROVAL FOR ITS PROJECT IS TO BE APPLIED AND ACCORDINGLY IT WAS NOT MANDATORY FOR THE ASSESSEE TO FURNISH CO MPLETION MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 4 CERTIFICATE. PARAGRAPH 15 OF THE ORDER OF THE HON'B LE APPELLATE TRIBUNAL IS REPRODUCED HEREUNDER: '15. IN VIEW OF THE FOREGOING DISCUSSION, WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IB(10) OF THE ACT IN THE LIGHT OF THE ORDER OF THE TRIBUNAL I N HIRANANDANI AKRUTI JV VS DCIT (39 SOT 498)' 8. THE AR SUBMITTED THAT THE TRIBUNAL MADE CERTAIN OBSERVATIONS IN THE ORDER WHICH ARE NOT GERMANE TO THE FACTS OF THE ASSESSEE'S CASE AND CONSTITUTE MISTAKES APPAREN T FROM THE RECORD. FIRSTLY, IN PARA 11 OF ITS ORDER, THE TRIBU NAL OUTLINED THE CONDITIONS FOR ELIGIBILITY FOR DEDUCTION U/S. 80IB( 10) WHICH ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. SECOND LY, THE HON'BLE TRIBUNAL STATED IN PARAGRAPH 12 OF ITS ORDE R: 'IN THE PRESENT CASE, THE ASSESSEE'S PROJECT IS APPROVED BY THE LOCAL AUTHORITY ON 1-4-2004 AND THERE IS NO DISPUTE REGARDING THIS.' 9. THE AR SUBMITTED THAT THE ASSESSEE OBTAINED INITIAL SANCTION FOR ITS HOUSING PROJECT ON 06-03-2004, EVE N AS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER. THUS THE OBSERVATION MENTIONED ABOVE IS A MISTAKE A PPARENT FROM THE RECORD. THE TRIBUNAL ALSO OBSERVED IN PARA GRAPH 13 AS UNDER: 'IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD.' 10. AGAIN IN PARAGRAPH 14, THE TRIBUNAL OBSERVED AS UN DER: 'THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD.' 11. THE AR SUBMITTED THAT THE ABOVE QUOTED OBSERVATION OF THE TRIBUNAL CONSTITUTE MISTAKE APPARENT FROM THE R ECORD BECAUSE THE ASSESSEE FOLLOWS PROJECT COMPLETION MET HOD. BASING MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 5 ON THE SAID OBSERVATIONS WHICH CLEARLY CONSTITUTE M ISTAKES APPARENT FROM THE RECORD, THE TRIBUNAL MADE FURTHER OBSERVATIONS IN PARAGRAPHS 12, 13 AND 14 OF ITS ORD ER ABOUT ALLOWABILITY OF DEDUCTION U/S. 80IB(10) OF THE ACT EVEN IN CASES WHERE THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETI ON METHOD AND WHERE THE AMENDED PROVISIONS ARE APPLICABLE TO POST 2005 APPROVALS. 12. THE AR SUBMITTED THAT THE TRIBUNAL MAY KINDLY RECAL L ITS ORDER DATED 21-09-2012 PASSED IN I.T.A NO. 478/H/20 12 AND RECTIFY THE MISTAKES THAT HAVE CREPT INTO THE SAID ORDER BY WAY FACTUALLY INCORRECT OBSERVATIONS. 13. THE LEARNED DR SUBMITTED THAT THROUGH THE PRESENT M A, THE ASSESSEE IS SEEKING RECTIFICATION OF THE FOLLOW ING MISTAKES APPARENT FROM RECORD IN THE ORDER DATED 21-09-2012. THE FIRST MISTAKE SOUGHT TO BE RECTIFIED IS THAT THE CONDITIO NS OUTLINED BY THE TRIBUNAL AT PARA 11 OF THE ORDER ARE NOT APPLIC ABLE TO THE ASSESSEE. IT IS SUBMITTED THAT THE CONDITIONS ARE A PPLICABLE TO ALL ASSESSES WHO ARE SEEKING DEDUCTION U/S 80IB(10) AND HENCE THERE IS NO ERROR IN THE ORDER. THE SECOND MISTAKE SOUGHT TO BE RECTIFIED IS TO REPLACE THE DATE OF INITIAL SANCTIO N OF THE HOUSING PROJECT FROM '01-04-2004' TO '06-03-2004' AND THE D EPARTMENT HAS NO OBJECTION FOR RECTIFICATION OF THIS MISTAKE. THE THIRD MISTAKE SOUGHT TO BE RECTIFIED IS THAT TRIBUNAL OBS ERVED AT PARA 13 AND PARA 14 OF THE ORDER THAT THE ASSESSEE IS FO LLOWING PERCENTAGE COMPLETION METHOD WHEREAS THE ASSESSEE I S FOLLOWING PROJECT COMPLETION METHOD. THE DEPARTMENT HAS NO OB JECTION FOR RECTIFICATION OF THIS MISTAKE. 14. THE DR FURTHER SUBMITTED THAT AFTER RECTIFICATION O F THE MISTAKES, THE DECISION OF THE TRIBUNAL IN ITA NO. 4 78/H/2011 NEEDS TO BE REVERSED BECAUSE FURNISHING OF COMPLETI ON MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 6 CERTIFICATE IS MANDATORY AFTER INTRODUCTION OF EXPL ANATION-II TO SECTION 80IB(10) W.E.F. FROM 01-04-2005. RELIANCE I N THIS REGARD IS PLACED ON THE DECISION OF THE TRIBUNAL DATED 08- 02-2013 IN THE CASE OF SAINATH ESTATES PVT. LTD FOR A.YS. 2003 -04 TO 2006- 07. IN THE SAID CASE, THIS TRIBUNAL HELD THAT 'THE USE OF THE WORD 'SHALL' IN EXPLANATION-IL MAKES THE FURNISHING OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY MANDATORY TO PROVE THAT THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT IS COMPLETE IN ALL RESPECTS. IT IS THE CONTENTION O F THE LEARNED AR THAT THE EXPLANATION - II SHOULD NOT BE INTERPRETED STRICTLY BUT A LIBERAL INTERPRETATION H AS TO BE GIVEN TO ACHIEVE THE OBJECT OF THE PROVISION. IT HAS FURTHER BEEN CONTENDED THAT IF OTHER EVIDENCES PRODUCED INDICATE COMPLETION OF THE PROJECT THEN DEDUCTION CANNOT BE DISALLOWED ONLY BECAUSE OF NON- FURNISHING OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY. SUCH CONTENTION OF THE LEARNED AR CANNOT BE ACCEPTED IN VIEW OF THE CLEAR LANGUAGE EMPLOYED IN THE STATUTORY PROVISION. AS HAS ALREADY BEEN STATED HEREIN BEFORE THE AFORESAID AMENDED PROVISION WAS INTRODUCED TO THE STATUTE BY THE FINANCE ACT, 2004 WITH EFFECT FROM 01/04/2005. EARLIER TO IT, THE PROVISION AS CONTAINED U/ S 80IB(10) DID NOT REQUIRE FURNISHING OF A COMPLETION CERTIFIC ATE ISSUED BY THE LOCAL AUTHORITY. THEREFORE, THE INTEN TION OF THE LEGISLATURE IN BRINGING SUCH A PROVISION REQUIRING PRODUCTION OF COMPLETION CERTIFICATE ISSU ED BY THE LOCAL AUTHORITY CANNOT BE OVERLOOKED OR BRUSHED ASIDE FOR CONFERRING A BENEFIT UPON THE ASSESSEE ONLY FOR THE SAKE OF LIBERAL INTERPRETATIO N. THE REQUIREMENT OF COMPLETION CERTIFICATE ASSUMES IMPORTANCE FOR REMOVING THE POSSIBILITY OF DEVIATIO N FROM THE SANCTIONED PLAN AND TO SEE TO IT THAT THE PROJECT HAS BEEN CONSTRUCTED IN ACCORDANCE WITH THE SANCTIONED APPROVAL. IT IS SETTLED PRINCIPLE OF LAW THAT WHEN THE LANGUAGE OF A PROVISION IS CLEAR AND UNAMBIGUOUS THEN THERE IS LITTLE SCOPE TO INTERPRET IT IN A DIFFERENT MANNER'. 15. IN LIGHT OF THE ABOVE, THE DR PRAYED THAT THE TRIBU NAL MAY KINDLY RECTIFY THE MISTAKES SOUGHT TO BE RECTIFIED BY THE ASSESSEE MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 7 AND DISALLOW THE DEDUCTION U/S. 80IB(10) BECAUSE TH E MANDATORY REQUIREMENT IS NOT MET BY THE ASSESSEE. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE TRIBUNAL WHILE PASSING THE ORDER ON 21.9.2012 IN THIS CASE CONSIDERED THAT THE PROJECT WAS GOT AP PROVED BY THE LOCAL AUTHORITY ON 1.4.2004 AND DUE DATE FOR COMPLE TION OF THE PROJECT WAS 31.3.2008 AS RECORDED IN THE ORDER OF T HE CIT(A). ACTUALLY, AS SEEN FROM THE ASSESSMENT ORDER AS WELL AS FROM THE COPY OF PLAN SUBMITTED BY THE ASSESSEE, THE PLAN WA S GOT APPROVED ON 6.3.2004. THERE WAS ALSO ONE MORE PLAN FOR ANOTHER PROJECT WHICH WAS APPROVED ON 19.3.2004. S INCE THIS IS A CRUCIAL DATE, THE PRE-AMENDED SECTION 80IB(10) AS STOOD AT THE TIME OF GETTING APPROVAL FROM LOCAL AUTHORITY IS AP PLICABLE. HOWEVER, THE TRIBUNAL DECIDED THE ISSUE IN DISPUTE ON THE PREMISES THAT THE PLAN WAS GOT APPROVED BY LOCAL AU THORITY ON 1.4.2004. ACCORDINGLY, THERE IS AN INADVERTENT MIST AKE CREPT IN THE ORDER OF THE TRIBUNAL AS THE TRIBUNAL ADJUDICAT ED THE ISSUE ON THE BASIS THAT THE APPROVAL WAS OBTAINED BY THE ASSESSEE ON 1.4.2004 WHICH IS INCORRECT. FURTHER THE TRIBUNAL COMMITTED AN ERROR BY CONSIDERING THAT THE ASSESSEE IS FOLLOWING 'PERCENTAGE COMPLETION METHOD' THOUGH THE ASSESSEE IS FOLLOWING 'PROJECT COMPLETION METHOD'. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE ORDER OF THE TRIBUNAL DATED 21.09.2012 IS TO BE RECTIFIED AS BELOW. THE TRIBUNAL RECORDED ITS FINDINGS IN PARA 11 AS FOLLOWS AND THERE WOULD BE NO CHANGE. PARA 11: WE HAVE HEARD THE RIVAL SUBMISSIONS. AS PER PROVISIONS OF SECTION 80IB(10) INCOME-TAX ACT, 1961 AN UNDERTAKING WHICH DEVELOPS AND BUILDS HOUSING PROJE CTS APPROVED BEFORE 31.3.2007 BY A LOCAL AUTHORITY IS E LIGIBLE FOR DEDUCTION U/S. 80IB(10) SUBJECT TO THE FOLLOWI NG CONDITIONS: 'I) IN A CASE WHERE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED ON OR BEFORE 3 1- MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 8 03-2008. IN A CASE WHERE THE APPROVAL FROM LOCAL AUTHORITY IS OBTAINED ON OR AFTER 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED WITHIN 4 YEARS FRO M THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. II) THE HOUSING PROJECT IS CONSTRUCTED ON A PLOT O F LAND WHICH HAS A MINIMUM AREA OF 1 ACRE. III) THE RESIDENTIAL UNITS CONSTRUCTED IN THE HOUSING PROJECT HAVE A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. WHERE SUCH UNITS ARE SITUATED IN PLACE S OTHER THAN DELHI OR MUMBAI. IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS DOES NOT EXCEED 5% OF THE AGGREGATE BUILT- UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FT., WHICHE VER IS LESS.' 17. THE PARA 12 IN THE ORIGINAL ORDER IS DELETED AND RE PLACED BY THIS PARA AND IS TO BE READ AS FOLLOWS : PARA 12: AS THE ASSESSEE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1.4.2004 AS EVIDENCED BY THE COPY OF THE APPROVED PLAN FROM LOCAL AUTHORITY FURNISHED BY THE ASSESSEE WHICH IS KEPT ON RECORD I.E., ON 6.3.2004 VIDE ORDER OF THE DEPUTY COMMISSIONER (EAST ZONE), BANGALORE MAHANAGAR PALIKE, LP NO. 2 DC(E) 829/2003-04 DATED 12.03.2004 VALID UP TO 11.03.2006 AND ANOTHER PLAN APPROVED ON 19.3.2004 VIDE LP NO. 2 DC(E) 830/03-04 DATED 26.3.2004 VALID UP TO 25.03.2006. BEING SO, THE PROVISIONS AS STOOD DURING THE A.Y. 2004-05 IS APPLICABLE WHICH READS AS FOLLOWS: '80IB(10): THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO AN Y MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 9 ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE.' 18. PARA 13. NO CHANGE IN THIS PARA 13 EXCEPT THE WORD S 'PERCENTAGE COMPLETION METHOD' SUBSTITUTED BY THE W ORDS 'PROJECT COMPLETION METHOD'. 19. ORIGINAL PARA 14 IN THE ORDER DATED 21.09.2012 IS D ELETED AND SUBSTITUTED BY THIS PARA AND IT IS TO BE READ A S FOLLOWS: PARA 14 : 'AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80-IB(10) (1) OF THE ACT, PRIOR TO THE AMENDMENT, T HERE 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 D ERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TILL 2005, !HERE WAS NO CLAUSE DEALING WITH COMPLETION, IN WHI CH EVENT, ONE CANNOT READ INTO THE PROVISION AS A COND ITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN.' AS FAR AS THE PRESENT CASE IS CONCERNED, THOUGH THE ASSESSEE'S CASE IS RELATED TO A.Y. 2007-08, THE PRO JECT WAS GOT APPROVED BY THE CONCERNED LOCAL AUTHORITY BEFOR E 1.4.2004. THE PROVISIONS OF SECTION 80IB AS STOOD PRIOR TO THE AMENDMENT ARE APPLICABLE TO THE ASSESSEE'S CASE . AS MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 10 THE SUBSTITUTION OF EXPLANATION TO CLAUSE (A) TO SU BSECTION (10) OF SECTION 80IB OF THE INCOME-TAX ACT, 1961 WA S BROUGHT IN UNDER FINANCE (NO. 2) ACT OF 2004, EFFEC TIVE FROM 1.4.2005. THUS, IN THE ABSENCE OF ANY SUCH REQUIREMENT READ INTO THE SECTION, WE FIND IT DIFFI CULT TO ACCEPT THE OBSERVATION OF THE CIT(A) THAT THE CLAIM FOR DEDUCTION HAS TO REJECTED ON THE GROUND THAT THE AS SESSEE HAD NOT FURNISHED THE COMPLETION CERTIFICATE. BEIN G SO, IN THE ABSENCE OF ANY REQUIREMENT U/S. 80IB(10)(A) OF THE ACT AND GOING BY THE PROVISIONS AS APPLICABLE TO THE RE LEVANT ASSESSMENT YEAR, IT IS DIFFICULT TO ACCEPT THE CONT ENTION OF THE DEPARTMENT THAT THE CLAIM OF DEDUCTION HAS TO B E ALLOWED TO THE ASSESSEE ONLY ON PRODUCTION OF COMPL ETION CERTIFICATE. 20. PARA 15 NO CHANGE. 21. PARA 16 NO CHANGE 22. AFTER RECTIFICATION OF THE ORDER OF THE TRIBUNAL DA TED 21.9.2012, THE FINDINGS OF THE TRIBUNAL ORDER IN PA RAS 11 TO 16 ARE TO BE READ AS FOLLOWS: PARA 11: WE HAVE HEARD THE RIVAL SUBMISSIONS. AS PER PROVISIONS OF SECTION 80IB(10) INCOME-TAX ACT, 1961 AN UNDERTAKING WHICH DEVELOPS AND BUILDS HOUSING PROJECTS APPROVED BEFORE 31.3.2007 BY A LOCAL AUTHORITY IS ELIGIBLE FOR DEDUCTION U/S. 80I B(10) SUBJECT TO THE FOLLOWING CONDITIONS: 'I) IN A CASE WHERE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED ON OR BEFORE 31-03-2008. IN A CASE WHERE THE APPROVAL FROM LOCAL AUTHORITY IS OBTAINED ON OR AFTER 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED WITHIN 4 YEARS FRO M THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 11 II) THE HOUSING PROJECT IS CONSTRUCTED ON A PLOT O F LAND WHICH HAS A MINIMUM AREA OF 1 ACRE. III) THE RESIDENTIAL UNITS CONSTRUCTED IN THE HOUSING PROJECT HAVE A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. WHERE SUCH UNITS ARE SITUATED IN PLACE S OTHER THAN DELHI OR MUMBAI. IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS DOES NOT EXCEED 5% OF THE AGGREGATE BUILT- UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FT., WHICHEVER IS LESS.' 12. AS THE ASSESSEE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1.4.2004 AS EVIDENCED BY THE COPY OF THE APPROVED PLAN FROM LOCAL AUTHORITY FURNISHED BY THE ASSESSEE WHICH IS KEPT ON RECORD I.E., ON 6.3.2004 VIDE ORDER OF THE DEPUTY COMMISSIONER (EAST ZONE), BANGALORE MAHANAGAR PALIKE, LP NO. 2 DC(E) 829/2003-04 DATED 12.03.2004 VALID UP TO 11.03.2006 AND ANOTHER PLAN APPROVED ON 19.3.2004 VIDE LP NO. 2 DC(E) 830/03- 04 DATED 26.3.2004 VALID UP TO 25.03.2006. BEING SO, THE PROVISIONS AS STOOD DURING THE A.Y. 2004-05 IS APPLICABLE WHICH READS AS FOLLOWS: '80IB(10): THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO AN Y ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998; THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; AND MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 12 THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNI T IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LI MITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE.' 13. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT T HE ASSESSEE HAS BEEN FOLLOWING PROJECT COMPLETION METHOD AND ALSO THE ASSESSEE FURNISHED THE EVIDENCE IN THE FORM OF PROPERTY ASSESSMENT DOCUMENT, WATER CONNECTION DOCUMENTS, POLLUTION CONTROL PERMISSION ETC. ON AN EXAMINATION OF THE NOTICES ISSUED BY THE BANGALORE MAHANAGAR PALIKE (MUNICIPAL CORPORATION) IN RESPECT OF 141 FLAT OWNE RS IN THE ASSESSEE'S HOUSING PROJECT, IT IS SEEN THAT IN THE NOTICES DATED 17.1.2007 IN RESPONSE TO THE FLAT OWNERS APPLICATIONS DATED 1.12.2006 REQUESTING FOR ASSESSMENT AND ALLOTMENT OF MUNICIPAL NUMBERS, THE MUNICIPAL CORPORATION HAD ISSUED NOTICES FOR PAYMENT OF THE REQUIRED TAXES FOR THE INITIAL ASSESSMENT. THE RELEVANT NOTICE READS AS UNDER: 'WITH REFERENCE TO THE ABOVE SRI (APPLICANT / FL AT OWNER) HEREBY INFORMED THAT THE ZONAL COMMISSIONER (EAST), BANGALORE MAHANAGARA PALIKE, BANGALORE, HAS APPROVED THE ALLOTMENT OF MUNICIPAL NUMBERS AND ASSESSMENT IN RESPECT OF NEWLY CONSTRUCTED, RESIDENTIAL APARTMENT AT PROPERTY NO. 184 AS DETAILED BELOW ...' THE PROOF OF PAYMENT OF TAXES IN CERTAIN CASES HAS ALSO BEEN PRODUCED. FROM THE ABOVE, IT WOULD APPEAR THAT THE APPLICANTS, BEING FLAT OWNERS, HAD INDIVIDUALLY FILED APPLICATION BEFORE THE MUNICIPAL CORPORATION FOR ALLOTMENT OF MUNICIPAL NUMBERS AND MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 13 ASSESSMENT. THE NOTICE, AS ABOVE, CLEARLY INDICATES THAT THE MUNICIPAL NUMBERS WERE BEING ALLOTTED IN RESPECT OF NEWLY CONSTRUCTED RESIDENTIAL APARTMENTS . 14. AS IS EVIDENT FROM THE SECTION 80-IB(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 DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TILL 2005, !HERE WAS NO CLAUSE DEALING WITH COMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO TH E PROVISION AS A CONDITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN. AS FAR AS THE PRESENT CASE IS CONCERNED, THOUGH THE ASSESSEE'S CASE IS RELATED TO A.Y. 2007-08, THE PROJECT WAS GOT APPROVED BY THE CONCERNED LOCAL AUTHORITY BEFORE 1.4.2004. THE PROVISIONS OF SECTI ON 80IB AS STOOD PRIOR TO THE AMENDMENT ARE APPLICABLE TO THE ASSESSEE'S CASE. AS THE SUBSTITUTION OF EXPLANATION TO CLAUSE (A) TO SUBSECTION (10) OF SECTION 80IB OF THE INCOME-TAX ACT, 1961 WAS BROUGHT IN UNDER FINANCE (NO. 2) ACT OF 2004, EFFECTIVE FROM 1.4.2005. THUS, IN THE ABSENCE OF A NY SUCH REQUIREMENT READ INTO THE SECTION, WE FIND IT DIFFICULT TO ACCEPT THE OBSERVATION OF THE CIT(A) T HAT THE CLAIM FOR DEDUCTION HAS TO REJECTED ON THE GROU ND THAT THE ASSESSEE HAD NOT FURNISHED THE COMPLETION CERTIFICATE. BEING SO, IN THE ABSENCE OF ANY MA. NO. 108/HYD/2013 M/S. KEERTHI ESTATES PVT. LTD. ====================== 14 REQUIREMENT U/S. 80IB(10)(A) OF THE ACT AND GOING B Y THE PROVISIONS AS APPLICABLE TO THE RELEVANT ASSESSMENT YEAR, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE DEPARTMENT THAT THE CLAIM OF DEDUCTION HAS TO BE ALLOWED TO THE ASSESSEE ONLY ON PRODUCTION OF COMPLETION CERTIFICATE. 15. IN VIEW OF THE FOREGOING DISCUSSION, WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IB(10) OF THE ACT IN THE LIGHT OF THE ORDER OF THE TRIBUNAL I N HIRANANDANI AKRUTI JV VS. DCIT (39 SOT 498). 16. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 15. IN THE RESULT, MA FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013 SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 30 TH AUGUST, 2013 TPRAO COPY FORWARDED TO: 1. M/S. KEERTHI ESTATES PVT. LTD., 8 - 2 - 120/86/1, KEERTHI PRIDE, ROAD NO. 2, BANJARA HILLS, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), IT TOWERS, AC GUARDS, HYDERABAD. 3. THE CIT(A), VIJAYAWADA. 4. THE CIT - II, HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD