THE ACIT, 2(1), BHOPAL V. M/S. D.K. CONSTRUCTION, BHOPAL

ITA 436/IND/2015

AI Insights

The case involves three appeals by the revenue against the orders of the CIT(A) which allowed deductions under section 80-IB(10) for three housing projects developed by M/s D.K. Construction. The primary issues were whether the assessee was a contractor or a developer and whether the completion certificates submitted met the statutory requirements. The Tribunal examined the nature of the agreements between the assessee and the buyers, the role of the assessee in the projects, and the validity of the completion certificates issued by the local authority. The Tribunal concluded that the assessee was a developer and the completion certificates were valid, thus upholding the CIT(A)'s decisions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36925 (ITAT-INDORE)
• Duration Of Justice: 9 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2015
• Other Referred Cases: Sky Builders & Developers [2011] 14 taxmann.com 78 (Indore), Nitin Agarwal Vs. ACIT, Paras Housing (P) Ltd. Vs. ACIT, Agarwal Builders Vs. DCIT, CIT Vs. Radhe Developers, DCIT Vs. AG8 Ventures Ltd., AG8 Ventures Ltd. Vs. ACIT, Bhopal, Swadesh Developers and Builders Vs. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASSESSEERESPONDENT DID NOT HAVE ANY OBJECTION; SHRIRAM KUMAR YADAV; TAKING SUPPORT FROM SKY
• Assessee Lawyers: S.S. DESHPANDE
• Keywords: Capital asset; Additional evidence; Retrospective amendment; Question of law
• Section: 143(3); 142(1); 119; 64; 153A; 22; 13; 80IB; 20

Judgement Text

"Page 1 of 40 आयकरअपीलीयअिधकरण,इंदौरɊायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRIB.M. BIYANI, ACCOUNTANT MEMBER ITA Nos.59/Ind/2015, 159/Ind/2015 & 436/Ind/2015 Assessment Years: 2009-10 to 2011-12 ACIT 2(1), Bhopal बनाम/ Vs. M/s D.K. Construction, E-2/21, Pandit Dindayal Complex, Arera Colony, Bhopal (Revenue) (Assessee/Appellant) PAN: AAAFD7121P Assessee by Shri S.S. Deshpande, AR Revenue by ShriRam Kumar Yadav, CIT-DR Date of Hearing 25.09.2024 Date of Pronouncement 17.10.2024 आदेश/O R D E R Per B.M. Biyani, A.M.: These three appeals are filed by revenue against three separate appeal- orders dated 14.10.2014, 27.01.2015 and 22.04.2015 passed by learned Commissioner of Income-Tax (Appeals)-I, Bhopal [“CIT(A)”] which in turn arises out of respective assessment-orders dated 29.12.2011, 18.03.2013 and 31.03.2014passed by learned ACIT-1(2) / ITO-1(1), Bhopal[“AO”] u/s 143(3)of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2009-10, 2010-11 and 2011-12 respectively. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 2 of 40 2. Learned Representatives of both sides have made vehement oral arguments as well as filed their written-synopsis. We have considered their submissions, the orders passed by lower-authorities and the documents held in case record to which our attention has been drawn. 3. The background facts leading to these appeals are such that the assessee is a firm engaged in real estate business. The assessee filed returns of AY 2009-10, 2010-11 and 2011-12 after claiming deduction u/s 80-IB(10) relating to income from developing and building housing projects. The returns were selected for scrutiny-assessment and the AO issued notices u/s 143(2)/ 142(1) to assessee. Finally, the AO completed assessments u/s 143(3) wherein the deduction u/s 80-IB(10) was disallowed qua three projects undertaken by assessee, namely “D.K. Honey Homes”, “D.K. Devasthali” and “D.K. Cottage” for certain reasons as narrated in assessment-order. Aggrieved, the assessee filed first-appeals to CIT(A) and succeeded. Now, the revenue has come in these appeals before us assailing the orders of first-appeal passed by CIT(A). 4. Originally, the revenue/appellant filed Grounds of Appeal in Form No. 36 but subsequently revised grounds dated 03.09.2024 have been filed. During hearing, Ld. AR for assessee/respondent did not have any objection against filing of revised grounds. Therefore, the appeals have been heard on revised grounds and the same are being adjudicated in subsequent discussions. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 3 of 40 5. Learned Representatives of both sides agreed that the grounds for all three appeals are identical and grounds of first assessment year i.e. AY 2009-10 can be taken for adjudication. The same judication will apply to all three years. The grounds of AY 2009-10 are as under: “(1) Whether on the facts and the circumstances of the case, the Ld. CIT(A) was justified in allowing deduction u/s 80IB(10), thereby deleting the addition made by the AO for the project D.K. Honey Homes? (2) Whether on the facts and the circumstances of the case, the Ld. CIT(A) was justified in allowing deduction u/s 801B(10), thereby deleting the addition made by the AO for the project D.K. Honey Homes, ignoring that: (a) The assessee is merely a contractor and, accordingly, it is not eligible for deduction u/s 801B(10) of the Income Tax Act, 1961? (b) Among other aspects in this regard, the assessee was not selling any constructed property to its customers, since only the registry/transfer of the plot by it was made in the name of the purchaser whereas separate agreement for construction of the bungalow/house was made against payment of installments for construction from plinth level tothe finished residential unit and the such entire amount received from the customers was credited as mere construction receipts and assessee has admitted that no registry/transfer of house by the assessee was made and, thus, the assessee is merely a contractor and not a builder or developer of the project also including because it is not the owner of the land (which was transferred earlier) and, accordingly, it is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 1961? (c) The decision of the jurisdictional Hon'ble ITAT, Indore in the case of Sky Builders & Developers [2011] 14 taxmann.com 78 (Indore), which applies in favour of revenue? (d) The completion certificate issued by the concerned authority and submitted by the assessee does not meet the tests specified u/s 80IB(10) of the Income Tax Act, 1961, including that: (i) This project was approved by local authority on 26.04.2003 and the same was to be completed on or before 31.03.2008 while the completion certificate had been issued by the Municipal corporation on 15.12.2008 and 24.12.2010, which clearly establishes that the project could not be treated as 'completed' for the purpose of Explanation (ii) to Section 80IB(10) of the Act and since the said Explanation of the Act is unambiguous and in very clear words says that the date of completion shall be only the date on which completion certificate is issued by the local authority and moreover when the Act is crystal clear on any issue, there is no need to derive any other conclusion; and (ii) moreover, even in subsequent AY, when the AO asked the assessee to explain the same, the assessee failed to establish that the project was completed on or before the due date? ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 4 of 40 (e) Without prejudice to the above, the matter has been decided by the jurisdictional MP High Court in assessee's own case (ITA Nos. 65/2012 and 161/2012) in favor of Revenue? (3) Whether on the facts and the circumstances of the case the Ld. CIT(A) was justified in allowing deduction u/s 80IB(10), thereby deleting the addition made by the AO for the project D.K. Devasthali? (4) Whether on the facts and the circumstances of the case the Ld. CIT(A) was justified in allowing deduction u/s 80IB(10), thereby deleting the addition made by the AO for the project D.K. Devasthali, ignoring that: (a) The assessee is merely a contractor and, accordingly, it is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 1961? (b) Among other aspects in this regard, the assessee was not selling any constructed property to its customers, since only the registry/transfer of the plot by it was made in the name of the purchaser whereas separate agreement for construction of the bungalow/house was made against payment of installments for construction from plinth level to the finished residential unit and the such entire amount received from the customers was credited as mere construction receipts and assessee has admitted that no registry/transfer of house by assessee was made and, thus, the assessee is merely a contractor and not a builder or developer of the project also including because it is not the owner of the land (which was transferred earlier) and,accordingly, it is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 1961? (c) The decision of the jurisdictional Hon'ble ITAT, Indore in the case of Sky Builders & Developers (2011) 14 taxmann.com 78 (Indore), which applies in favour of revenue? (d) The completion certificate issued by the concerned authority and submitted by the assessee does not meet the tests specified u/s 80IB(10) of the Income Tax Act, 1961, including that: (i) This project was approved by local authority on 29.04.2004 and the same was to be completed on or before 31.03.2009 but the completion certificate dated 31.03.2009 submitted by the assessee does not bear any seal of the local authority; (ii) it is also not clear whether it was issued on 31.03.2009 or after that date; (iii) that there is no mention about the project \"D.K. Devasthali\" in this certificate and, thus, it could not be ascertained as to whether the completion certificate had been issued for this project and, consequently, it cannot be considered as 'completion certificate' envisaged in the provisions contained u/s 80IB(10) of the Act; (iv) that this completion certificate clearly says that from the permission certificate dated 29.04.2004 the construction of houses is complete only on the plots bearing no. 14 to 119, and thus this so-called 'completion certificate' itself says/reveals that the housing project was not completed on or before due date since merely completing a specific number of houses does not mean the housing project is complete; and therefore, it is clear that this project was not complete on or before the due date? (e) Without prejudice to the above, the matter has been decided by the jurisdictional MP High Court in assessee'sown case (ITA Nos. 65/2012 and 161/2012) in favor of Revenue? ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 5 of 40 (5) Whether on the facts and the circumstances of the case the Ld. CIT(A) was justified in allowing deduction u/s 80IB(10), thereby deleting the addition made by the AO for the project D.K. Cottage? (6) Whether on the facts and the circumstances of the case the Ld. CIT(A) was justified in allowing deduction u/s 80IB(10), thereby deleting the addition made by the AO for the project D.K. Cottage, ignoring that: (a) The assessee is merely a contractor and, accordingly, it is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 19612 (b) Among other aspects in this regard, the assessee was not selling any constructed property to its customers, since only the registry/transfer of the plot by it was made in the name of the purchaser whereas separate agreement for construction of the bungalow/house was made against payment of installments for construction from plinth level to the finished residential unit and the such entire amount received from the customers was credited as mere construction receipts and assessee has admitted that no registry/transfer of house by assessee was made and, thus, the assessee is merely a contractor and not a builder or developer of the project also including because it is not the owner of the land (which was transferred earlier) and, accordingly, it is not eligible for deduction u/s 80IB(10) of the Income Tax Act, 1961? (c) The decision of the jurisdictional Hon'ble ITAT, Indore in the case of Sky Builders & Developers [2011] 14 taxmann.com 78 (Indore), which applies in favour of revenue? (d) The completion certificate could not be submitted by the assessee and the assessee contended that the completion certificate was not due at the time of assessment proceedings and further that the assessee has itself written in its submission that the project is still under construction and, therefore, the profit if any derived from sale of any plot or residential unit shall not be eligible for deduction u/s 80IB(10)? (e) Without prejudice to the above, the matter has been decided by the jurisdictional MP High Court in assessee's own case (ITA Nos. 65/2012 and 161/2012) in favor of Revenue?” Ground No. 1 & 2: 6. These grounds relate to the project “D.K. Honey Homes”. Referring to the grounds raised, the Ld. DR for revenue/appellant submitted that there are precisely two issues to be determined: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 6 of 40 (i) Whether the assessee was eligible for deduction u/s 80-IB(10) considering the assessee’s status as a mere ‘contractor’ and not ‘builder/developer’ of projects? (ii) Whether the completion-certificate submitted by assessee meets the statutory requirement under the provisions of section 80-IB(10)? First issue of ‘contractor’ Vs. ‘builder/developer’: 7. Ld. DR submitted that the AO, in his findings, has noted that the assessee sold plots to buyers through registered sale-deeds and entered into separate agreements for construction of houses and that no registry/ transfer was made for houses/bungalows. Therefore, the assessee was a mere ‘contractor’ and not a ‘builder/developer’. He submitted that as per provisions of section 80-IB(10), the entirety of project including development of infrastructure must be undertaken by assessee. According to Ld. DR, ‘entire project’ would mean development as a cohesive unit which includes the construction of houses with development of essential amenities. In the case of assessee, the buyers have first acquired ownership of plots from assessee and only then entered into a separate agreement for construction with assessee, which indicates that the assessee functioned as a ‘contractor’ rather than ‘builder/developer’. Ld. DR submitted that this situation disentitles assessee from claiming deduction as held by ITAT, Indore in Sky Builders & Developers (2011) 14 taxmann.com 78 (Indore) order dated ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 7 of 40 17.08.2011 and Nitin Agarwal Vs. ACIT, ITA No. 156/Ind/2013 order dated 14.09.2015. Ld. DR referred following paras of these decisions: Sky Builders: “4. If sub-clause (2) to Explanation is analysed with the facts of the present appeal, it clearly provides that the date of issue of completion certificate, by the local authority, shall be the date of completion of the project. However, as admitted by the Ld. Counsel for assessee and also in view of the letter dated 15.12.2008, issued to the ld. Assessing Officer, no certificate was issued to the assessee, therefore, it can be clearly inferred that the assessee is not eligible for deduction u/s 80IB(10) of the Act. So far as the reliance of the Ld. Counsel for assessee in the case of M/s. D.K. Construction vs. ITO (ITA No.243/Ind/2010, order dated 6.12.2010) passed by the Indore Bench, is concerned, firstly, we find that in this case, the completion-certificate was issued to the assessee clearly mentioning the date of the project but in the present appeal, even till date, no such certificate was issued and secondly, the assessee sold the plots to the respective customers by registering a sale- deed and thereafter the assessee constructed the building on agreed price, therefore, the assessee acted as building contractor and not as a developer, consequently, this decision may not help the assessee. Sometimes, the process of issuance of certificate may take time, therefore, for claiming eligibility of deduction as per Explanation (2) of sec. 80IB(10)(a) of the Act, the crucial aspect is the date mentioned in the letter certifying completion of project. For claiming deduction u/s 80IB(10), on the profits derived from a housing project, the assessee has to fulfil all the four conditions laid down in the clauses (a), (b), (c) and (d) of sub-sec. (10). In the case of the assessee, the housing project was approved by the local authority on 24.11.2003 (i.e. before 1.4.2004), consequently, the assessee was to complete the construction on or before 31.3.2008. In sub-clause (ii) to Explanation, the word used is \"shall\" and not \"may\" before completion certificate is issued by the local authority, therefore, it can be said that the assessee has not fulfilled the required conditions laid down in clause (a)(i) of sec. 80IB(10).Even otherwise, it is well settled principle in law that the court cannot read anything into a statutory provision where the language is clean and unambiguous because a statute is an addict of legislature. The language employed in statute is the determinative factor of legislative intent.Our view is fortified by the decision from Hon'ble Apex Court in the case of Prakash Nath Khanna vs. CIT (266 ITR 1) (SC). 5. Substitution was further made by the Finance (No.2) Act 2009 with retrospective effect from 1.4.2009 and insertion by the Finance Act 2010 w.e.f. 1.4.2010 as per which the assessee is supposed to complete the project within the specified time form the end of the FY in which the housing project is approved by the local authority and the date of completion of construction shall be taken to be the date on which completion certificate is issued by the local authority in respect of such housing project. However, in the case of the ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 8 of 40 assessee, even till today, no completion certificate was issued to the assessee, therefore, we find no infirmity in the stand of the ld. CIT(A). It is affirmed.” Nitin Agarwal: “8. We have heard both the sides. We have also considered the case laws relied upon by the parties. During the relevant period the assessee claimed that it has constructed 2 projects, one on two acres land at village Dham Kheda at Khasra No.34/170/1/1 purchased by himself. It is claimed that project was approved by Gram Panchayat on 20.2.2002 and completed on 31.3.2004. It is claimed that completion certificate is not required as project was prior to amendment in the Act. The other project was on 4 acres of land owned by SarvDharmGrihNirmanSahakari Samiti Maryadit Society Khasra No.34/170/2/1 and 34/170/2/4 which got approval to construct Duplex bungalows on the land belonging to Society and the assessee has done so as contractor. The assessee claimed that the land was under Gram Panchayat, therefore, there was no requirement of sanction from Municipal Corporation, Bhopal. Both the lands were situated in the revenue area of Dhamkheda Tehsil Huzur Bhopal. The projects were approved by the Town & Country Planning Department. The completion certificate was necessary for claiming deduction. The facts of the case show that the assessee has sold out plots to the customers and gave possession to them. Thereafter, the assessee has constructed individual building for these plot owners. The plan approval placed in the paper book at pages 65 to 92 clearly shows that the individual plot units were approved by Sarpanch Gram Panchayat. The approval was forindividual plot unit. The certificate regarding completion produced and placed at page 64 of paper book itself shows that the completion was also for individual units of bungalows as the certificate mentions the number of such units. The fact that the assessee has not credited sale proceeds towards the sale of built up area in its books of account has also not been controverted by the learned counsel for the assessee. Further regarding completion certificate, Hon'ble jurisdictional High Court in the case of CIT vs. M/s Global Reality ITA No. 40/2012 held that completion certificate from local authority for project is necessary on or before the date prescribed in section 80IB(10) of the Income Tax Act, 1961. 9. The Hon'ble ITAT in the case of Sky Builders & Developers reported in 14 taxmann.78 held that where the assessee sold plots to respective customers by registering sale deed and thereafter constructed the building at an agreed price, it has to be concluded that the assessee merely worked as a contractor and not as a developer and the ITAT held that the assessee was not eligible for deduction u/s 80IB(10) of the Income Tax Act. Keeping these facts in view, we find no fault in the order of the learned CIT(A). We sustain the same”. 8. Ld. DR has submitted Para 1.04 & 1.05 of his written-synopsis and argued orally also to contend that the following case-laws relied by Ld. AR in “Case Laws Compilation” are clearly distinguishable and cannot help assessee as under: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 9 of 40 Paras Housing (P) Ltd. Vs. ACIT (2013) 22 ITJ 273 (Trib. Indore) These decisions are prior to Nitin Agarwal (supra). Agarwal Builders Vs. DCIT (2015) 26 ITJ 709 (Trib. Indore) CIT Vs. Radhe Developers (2012) 341 ITR 403 (Guj HC) DCIT Vs. AG8 Ventures Ltd. (2019) 34 ITJ 209 (Trib. Indore) / AG8 Ventures Ltd. Vs. ACIT, Bhopal IT(SS)A No.83, 84, 86, 87, 90, 91, 109, 110 & ITA, No. 922 & 923/Ind/2019 order dated 16.02.2021 The ITAT has merely followed the issue of contractor vs. developer as decided in original proceeding. Further, the ITAT has not taken into account the order passed in Nitin Agarwal (supra). Swadesh Developers and Builders Vs. ACIT, ITA No. 304 to 309/Ind/2017 order dated 10.08.2021 (ITAT, Indore) There was no bifurcation of cost towards land and cost of construction in the allotment-letter issued by assessee to buyers whereas in present appeals, there was a clear-cut bifurcation in the construction receipts and the consideration received on sale of plots. 9. Lastly, Ld. DR submitted that the CIT(A) has erroneously relied upon previous orders of CIT(A) for AYs 2006-07 and 2008-09 passed in assessee’s ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 10 of 40 case for holding that the assessee is a ‘developer’, failing to appreciate the subsequent judicial developments and AO’s well-reasoned findings. 10. Per contra, Ld. AR for assessee submitted that there are two facts which have been wrongly considered/assumed by revenue. Firstly, the AO has wrongly mentioned that there were two separate agreements; the correct fact is such that there was one initial Agreement between assessee and buyers for purchase of entire bungalow/house. Subsequently, a registered Sale-deed was executed between assessee and buyer for partly constructed house. This registration of partly constructed house was done in the names of buyers only to facilitate bank finance. Secondly, there is no bifurcation of construction-receipts and the consideration received towards sale of plots. The initial Agreement clearly mentions one ‘single consideration’ for entire bungalow/house and the assessee received proceeds of such ‘single consideration’ from time to time from buyers as per Agreement. The amount of consideration mentioned in registered Sale-deed of plot was just a figure as per guideline-valuation of Stamps Authority for plot with partly finished construction only to facilitate registration of sale-deed. 11. To show the exact facts of transactions done by assessee, Ld. AR drew us to one sample Agreement filed in Paper-Book at Page No. 98-104 for sale of Bungalow No. 60. He carried us through various clauses and covenants of the Agreement wherein it has been clearly mentioned that the assessee purchased land for development of project; applied to authorities for development of township project; obtained statutory permission from ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 11 of 40 authorities; various amenities and facilities are provided by assessee in township; the assessee issued advertisements for booking of houses/bungalows and in response to such advertisements the buyers approached assessee to book houses/bungalows; there is a ‘single consideration’ for entire bungalow sold to the buyer; there is a complete specification of the house/bungalow to be provided by assessee in ‘Schedule’ to the Agreement, etc. Having shown these important elements of Agreement, Ld. AR invited our particular attention to following clauses of Agreement: “3/ That if the first party agrees to execute the sale-deed of property in favour of the second party at any time but the possession shall only be delivered upon the receipt of entire sale consideration as set forth herein above. 5/ That the possession of the agreed property shall be handed over to the Second Party by the first party only upon receipt of full consideration and other dues as mentioned in this deed. This will be the special condition. The Second Party shall have no right to demand the possession of the agreed property from the first party without complying this condition.” 12. Then, Ld. AR drew us to the registered Sale-deed of same Bungalow No. 60 filed at Page No. 105-112 of Paper-Book. He carried us through various clauses and covenants of Sale-deed wherein there is a clear reference of aforesaid initial Agreement as well as there are complete details of the township project undertaken by assessee; the details of statutory permissions obtained; the specification of bungalow sold by assessee to the buyer, etc. Ld. AR invited our particular attention to the following clause of Sale-Deed: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 12 of 40 “2/……. The constructive possession of the said property is delivered to the purchaser, however the physical possession will be delivered upon the completion and finishing of said property, by the seller to the purchaser.” 13. Thus, by referring to the aforesaid documents, namely (i) initial Agreement for sale of bungalow and (ii) registered Sale-deed of partly finished bungalow, Ld. AR submitted following facts: (i) Initially, the assessee has purchased lands over which the project was to be developed. (ii) The assessee conceived the entire scheme of housing project, prepared the map of project, applied to authorities and obtained statutory permission from authorities in its own name for the project. (iii) The assessee has not made two Agreements with buyers as is being claimed by revenue. There was one initial Agreement between assessee and buyers for purchase of entire bungalow/house. Subsequently, a registered Sale-deed was executed between assessee and buyer for partly constructed house. The registered Sale-deeds of partly constructed houses were made in the names of buyers only to facilitate bank finance which is a business necessity because the buyers are willing to buy properties only if bank finance is available. (iv) There is no bifurcation of construction-receipts and the consideration received towards sale of plots as is being claimed by revenue. The initial Agreement clearly mentions one ‘single consideration’ for entire bungalow/house and the assessee received proceeds of such ‘single ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 13 of 40 consideration’ from time to time from buyers. The amount of consideration mentioned in registered Sale-deed of plot was just a figure as per guideline-valuation of Stamps Authority for plot with partly finished construction only to facilitate registration. (v) The physical possession of entire bungalows was given to buyers after completion of full construction of bungalows and after receiving full consideration towards bungalows as per Agreement. (vi) The assessee has developed the entire project with all amenities and facilities like road, drainage, lights, etc. (vii) The assessee made initial investments for developing the project. 14. Ld. AR then placed a heavy reliance on following decisions as filed in “Case Laws Compilation” submitted by him: Paras Housing (P) Ltd. Vs. ACIT (2013) 22 ITJ 273 (Trib. Indore): “6. ….. The only objection of the Assessing Officer was that total construction of the plot was much higher than the amount mentioned in the registered sale deed. The Assessing Officer also observed that the registered sale deed mentions that the plots have been sold at structure level. Thus, the difference of agreed sale price and the sale-deed price is the contract receipts. Accordingly, he held that the assessee is a contractor and not a developer. We have carefully gone through the agreement executed by the assessee with the buyers wherein structure was sold just to enable the buyers to take loan against it. However, possession was to remain with the assessee who alleged to carry out the complete construction of the building thereon as per the approved plan. The relevant clause 17 of the agreement reads as under: \"But in that case for all practical purposes the actual and physical possession of the said apartment shall continue to remain with the builders only and the builders shall have a lien over the said apartment until the entire balance payment is made to the builders either by the ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 14 of 40 purchaser or by his/her financer. Therefore, it is clearly understood and agreed by the purchaser that such sale-deed will be executed by the builders only to facilitate the purchaser to get the housing loan or as the case may be, but the same shall certainly not affect the terms of sale entered into between the parties under this agreement.\" Such agreements were entered into so that the purchasers could obtain loan from the banks. 7. As per the prevailing practice in the market normally all the prospective buyers purchase flat/bungalow, are interested to avail housing loan facility from different financial institutions/banks. The financial institutions/banks insist for the execution of the sale deed before completion of the units to safeguard their interest. These agreements have been executed by the assessee before execution of sale deed and in the agreement for sale, the total cost of flat is mentioned and nowhere the bifurcation of amount of plot and amount of finished work has been mentioned. We also found that builders are asking the buyers to pay the total amount of flat at different stages based on the progress of the project. It is evident from the agreements submitted before the Assessing Officer that entire cost of flat and other charges were demanded from the buyers within a period of two months which further indicate that the flats were already completed and the possession was handed over to the buyers immediately after receiving the entire amount. The contention of the Assessing Officer that the assessee is acting as a contractor is merely on the basis of execution of sale deed at a lower price than the agreed price. There is no merit in Assessing Officer's contention in so far as the buyers having incurred any expenditure on construction of said flats during the year under consideration and the assessee is a developer and builder since inception, which has not only been accepted by the Department but also by the Tribunal in its order dated 19/12/2006. 8. In view of the above, the orders passed by lower authorities are de void of any merits. Accordingly, the Assessing Officer is directed to allow the claim of deduction u/s 80IB(10) of the Act. Agarwal Builders Vs. DCIT (2015) 26 ITJ 709 (Trib. Indore): “8. Similarly in respect of semi-finished, finished units where the revenue has treated the assessee as a contractor rather than a developer, we hold that even after registry, the purchasers were not given possession of the house till it is completed. As regards the reliance of the revenue in the case of Sky Builders (supra), we find that in that case only the plots were sold to the purchasers and not the constructed area. Various documents submitted before us including sanction from the Municipal Corporation and the completion certificate and other documents establish that the registries of the structure were made only to facilitate the housing loan to the purchasers. The initial agreement clearly provided that after receiving the sale consideration, the registration for structure/semi-finished/finished flats/bungalows may be done whenever the purchaser desires. Even after execution of the registration ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 15 of 40 of sale-deed of structure/semi-finished/finished flats/bungalows, the possession shall remain with the seller till full payment is made. All these facts suggest that the assessee was a developer and it has never worked as a contractor on behalf of the purchasers. We also get support from the decision of the ITAT in the case of Paras Housing (supra) and Vardhman Builders & Developers (supra). Our this view is also supported by the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Radhe Developers (supra) wherein the Hon'ble High Court has held as under:- \"The assessee had, in part performance of the agreement to sell the land in question, was given possession thereof and had also carried out the construction work for development of the housing project. Combined reading of s. 2(47)(v) and s. 53A of the Transfer of Property Act would lead to a situation where the land would be for the purpose of IT Act deemed to have been transferred to the assessee. In that view of the mater, for the purpose of income derived from such property, the assessee would be the owner of the land for the purpose of the said Act. It is equally true that such title would pass only upon execution of a duly registered sale deed. However, for the limited purpose of these proceedings, one is not concerned with the question of passing of the title of the property but only examining whether for the purpose of benefit under s. 80IB(10), the assessee could be considered as the owner of the land in question. For the limited purpose of deduction u/s 80IB(10), the assessee had satisfied the condition of ownership also, even if it was necessary. The Tribunal committed no error in holding that the assesses were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessee and in some case, the development permissions may also have been obtained in the name of the original land owners. It is not even the case of the Revenue that other conditions of s. 80IB were not fulfilled.\" The decisions in the cases of Radhe Developers and Paras Housing Pvt. Ltd. (supra) were of a later date than the decision of ITAT in the case of Sky Developers (supra).” AG8 Ventures Ltd. Vs. ACIT, Bhopal IT(SS)A No.83, 84, 86, 87, 90, 91, 109, 110 & ITA, No. 922 & 923/Ind/2019 order dated 16.02.2021 (ITAT, Indore): “32. We have considered the rival submissions and gone through the orders of the lower authorities and the facts and evidences on record. Revenue has challenged the finding of Ld.CIT(A) allowing the claim of assessee of deduction u/s. 80IB(10) of the Act at Rs. 1,60,73,981; Rs. 3,56,08,183; and Rs. 2,68,13,834 raising Ground No. 3 of A.Y. 2008-09, Ground No. 3 of A.Y. 2009-10 and Ground No. 10 of A.Y. 2011-12 respectively. At the first instance, we observe that learned Assessing office has not referred to any incriminating material found during the course of search u/s.132 of the Act to establish disallowance of deduction u/s. 80IB(10). Further, we find that the claim of deduction u/s. 80IB(10) was already a subject matter of ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 16 of 40 regular assessments in preceding years.In the A.Y. 2004-05 to 2007-08 the deduction was impugned before this Tribunal and the same was decided in favor of assessee and copy of order is placed at PB 438-447. Further, in A.Y. 2007-08, the issue of deduction was disallowed again in proceedings u/s. 147. The matter again travelled before this Tribunal and in ITA No. 472 & 473/Ind/2015, vide order dated 08.01.2019 deduction u/s.80IB(10) of the Act was allowed. The order has been placed in the assessee's paper book at PB 125-145. Further in A.Y. 2008-09, which is impugned before us, the assessment was completed u/s. 143(3) and the claim of deduction u/s. 80IB(10) was allowed by the Ld. AO (The Assessment order is placed at PB 45-46). Also, in A.Y. 2009-10, the claim was allowed in the assessment u/s. 143(3) by the Ld. AO. The Assessment order is placed at PB 69-70. In A.Y. 2010-11, the issue of developer and contractor travelled to ITAT. The claim was allowed by the ITAT, Indore Bench, Indore and the order is placed at PB 125-145. Thus, the issue as regards the deduction u/s. 80IB(10), so far as the assessee is concerned, has already been settled in various proceedings. The department in the proceedings u/s. 153A is trying to re-agitate this issue, which is not permissible. The relevant finding of this Tribunal in ITA 472 & 473/IND/2015, order dated 08.01.2019 squarely applicable on the instant issue is reproduced below: \"5. We have heard rival submissions, perused the materials available on record and gone through the orders of the authorities below. Objection of the A.O. is that the assessee is not undertaking development and construction of housing projects. The assessee is not owner of the land of which project is claimed to have been undertaken. The similar issue was before the Hon'ble Gujarat High Court in the case of CIT Vs. Radhe Developers 341 ITR 403, wherein the Hon'ble High Court was of the view that the ownership of the land is not sine-qua- non for claiming deduction u/s 80IB(10) of the Act. Therefore, in our considered view, this objection of the A.O. is contrary to the judicial pronouncements cannot be sustained. Further, the A.O's objection that the assessee is merely acting as a contractor to the customer to whom land is independently sold and thereafter construction is being done as per agreement. This issue was examined by the Tribunal in original proceedings, wherein it has been decided in favour of the assessee. There is no change into facts and circumstances. Hence, this objection is also not sustained” Swadesh Developers and Builders Vs. ACIT, ITA No. 304 to 309/Ind/2017 order dated 10.08.2021 (ITAT, Indore): “25. …. It was also contended that for the sake of convenience the buyers and in order to facilitate them to take housing loan the assessee agreed to sale the plots without giving the possession and after the construction of house used to hand over the possession. This submission by the Ld. counsel for the assessee has sufficient weightage as this condition is already provided in clause 13 of the agreement entered into between assesse and buyers placed at page 102 of paper book. We also observe that in the allotment cum acceptance letter consideration is towards the complete bunglow and there is no bifurcation of ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 17 of 40 the cost towards land and cost of construction. Thus there remains no dispute to the fact that after the completion of construction possession of the residential house is given to the buyers/colonizers. 26. However, the Coordinate Bench Ahmedabad in the case of Green Associates (supra) dealing with the similar issue and identical set of acts and placing reliance on the decision of Tribunal in the case of Narayan Reality Ltd. ITANo.2293/Ahd/2012 and others dated 02.05.2014 held that the assessee is a developer eligible for deduction u/s 80IB(10) of the Act observing as follows: “We have heard the rival submission and perused the material on record. We find that in the present case the assesse was denied deduction u/s 80IB(10) by Ld. CIT(A) for the reason that assessee had not sold residential houses in the house project but had sold developed residential plots with construction up to the plinth only and thus the assessee could not be considered as developer of housing project but was a contractor and therefore assessee was not eligible for deduction u/s 80IB(10) of the Act. we find that on similar facts, in the case of Narayan Reality Ltd. (supra) the issue was decided in favor of the assessee by holding as under: \"8. We have heard the rival submissions and perused the material on record. On perusing the order of CIT(A), it is seen that CIT(A) has held that the issue relating to disallowance of deduction u/s 80IB(10) of the Act on the ground that Assessee is not the owner of the land and the approval of the project not being in the name of the Assessee is covered in favour of Assessee by the decision of his predecessor in assessees own case for AY 2008-09. We further find that CIT(A) had disallowed the claim of the Assessee on the ground that Assessee had entered into two agreements namely \"sale-deed\"for the sale of land and \"construction agreement\" for the construction the unit and therefore according to him, the Assessee was a contractor and therefore not eligible for deduction u/s 80IB(10). We also find that on identical facts, the co-ordinate Bench of the tribunal in the case of Satsang Developers (ITA No 1011, 2498 and 1221 of 2012 order dated 12.11.2013 has allowed the deduction to assessee by holding as under:- \"4.2. In addition to above two objections, the Ld.CIT(A) has raised one more objection that the assessee has sold the land to the Unit holders separately and has done the construction of units under separate agreement/contract and, therefore, the assessee is not eligible for deduction u/s.80-IB(10) of the Act because as per ld.CIT(A), profit earned by the assessee in respect of sale of land is not eligible for deduction u/s.80-IB(10) of the Act and similarly, the profit earned by the assessee for construction activities is not eligible for deduction u/s.80-IB(10) because the assessee is doing the construction as a contractor for a work and not as a builder or developer and, therefore, the assessee is not eligible for ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 18 of 40 deduction u/s.80-IB(10) of the Act. Against these objections of ld.CIT(A), the assessee is in appeal before us. 5.2 Regarding the 3rd objection that the assessee has sold land to the unit holders separately and has done the construction units under a project agreement/contract, it was submitted that it is a joint activity although the agreement and land sale-deed are executed separately, but for this reason alone, it cannot be said that the assessee is not a builder or a developer. He placed reliance on the following Tribunal decisions:- Sl. Decision in the case of. ... Reported in.... No(s) 1. DCIT vs. SMR Builders (P.)Ltd. (2012)24 Taxman.com 194 (Hyd.) 2. Sky Builders & Developers vs. (2011)14 Taxman.com 78 ITO (Indore) 3. M/s.Vardhman Builders ITA No.559/Ind/2010 dated and Developers vs. ITO 09/05/20 12 4. Raghava Estates Vs. Dy.CIT ITA Nos.248 & 49/Vizag/2009 dated 04/08/2011. 5.2. He submitted that in the case of Vardhman Builders & Developers (supra) also, the assessee had entered into a separate agreement for sale of land and separate agreement for construction of housing on such land and under these facts, it was held by the Tribunal in that case that merely because of two separate agreements, the claim of the assessee for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied. 5.3. He further submitted that in the case of DCIT vs. SMR Builders (P) Ltd. (supra) also, the facts were that the assessee had sold flats in a semi-finished stage. In that case, the AO had noted that as per the sale- deed, the assessee-company has sold undivided share of land with super-structure of semi-finished built-up area for a certain consideration. The AO held that thesemi-finished structure has never been considered as a residential unit. It was also noted by the AO in that case that on the same date when the sale deed was executed, a construction agreement was also entered into with the transferee for further construction of the same flats by the builder company itself. He submitted that the facts in the present case are similar. He also pointed out that in that case, it was held by the Tribunal that the stand of the Revenue with regard to the semifinished condition of the flats is devoid of any merit in as much as what is sought to be constructed and sold by the assessee is a residential units and what is sought to be purchased by the buyer is the ownership of the specified unit and registration of flat in semi-finished condition is only to facilitate the convenience of the parties and agreement for development and completion of balance work in relation to the flats is only an incidental formality and this cannot be viewed as fatal to the claim of the assessee for deduction u/s.80-IB(10) of the Act. It was also held by ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 19 of 40 the Tribunal that the entire work from the stage of the commencement to the stage of making the residential unit habitable have been carried out by the assessee only and, therefore, assessee is eligible for deduction u/s.80-IB(10) of the Act. 9.2. Now we take up the third and last objection of Ld.CIT(A) that the assesse had sold the land separately and undertook the construction work as per a separate agreement and, therefore the assessee is not a builder or a developer but a land dealer and contractor. In this regard, in our considered opinion, the issue involved is squarely covered in favour of assessee by the decision of ITAT Indore Bench rendered in the case of M/s.Vardhman Builders and Developers vs. ITO(supra). It is noted by the Tribunal in that case that the assessee had entered into an agreement for a sale of land and a separate agreement for construction of the house on the land and, therefore, the facts are similar. Under these facts, it was held by the Tribunal in that case that the claim of the assessee for deduction u/s.80-IB (10) of the Act cannot be declined if other conditions are being satisfied.Similarly, in the case of DCIT vs. SMR Builders (P.) Ltd. (supra) also, the assessee sold the land along with semi-finished structure to the buyers and as per separate agreement, agreed for construction for completion of balance work. Hence, the facts of this case are also similar because in that case also, the land was sold separately along with partial and unfinished construction of flats and, thereafter, construction agreement was entered into to carry out the balance construction work and under these facts, it was held by the Tribunal in that case that such agreement for construction to complete the balance work is only an incidental facilitation to protect interest of the parties and therefore, the assessee is eligible for deduction u/s.80-IB(10) of the Act. Similarly, in the case of Raghava Estates vs. Dy.CIT (supra) on which reliance was placed by the Id.AR of the assessee, the facts are similar. In that case also, the assessee had sold the plots separately and thereafter, constructed the houses and under these facts, the Revenue held that the assessee has to be considered as a mere contractor and, therefore, the assessee is not eligible for deduction u/s.80-IB (10) of the Act. This goes to show that the facts in that case were identical. In that case, it was noted by the Tribunal that the assessee had chosen to register the plot in the name of the buyer on payment of specified amount in order to achieve cost saving and to ensure reliability and thereafter, the assessee had proceeded to construct the house as per building plan obtained in the name of the plot-owners on payment of subsequent installments. It is also noted that the assessee had also developed various public amenities within the project. Thereafter, it was held by the Tribunal that on a totality of a fact, the Tribunal is of the view that the assessee has undertaken developing and building housing projects as per the scheme provided in section 80-IB (10) of the Act. 9.3. Since the facts in the present case are similar to the facts in above noted three Tribunal decisions, we do not find any defect in the construction in the present case and hence respectfully following these decisions, we decide the issue in favour of the assessee. There is no ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 20 of 40 other objection of the ld. CIT(A) regarding allowability of deduction to the assessee u/s. 80IB(10) of the Act. Hence, we direct the A.O to grant the deduction to the assessee u/s. 80IB(10) of the Act. 9. Before us, the Revenue could did not place any contrary decision on record nor could distinguish the facts of the case which was relied ITA Nos. 1028 & 1781/Ahd/2012 ITO vs. M/s. Parashar Developers AY : 2008-09 & 2009-10 by the Assessee. In view of the aforesaid facts, we respectfully following the aforesaid decision of the co-ordinate Bench of the Tribunal, in the case of Satsang Developers (supra) hold that Assessee is eligible for deduction u/s 80IB(10). Thus this ground of Assessee is allowed. 10. This the appeal of Assessee is allowed.\" 15. Ld. AR distinguished Sky Builders (supra) relied by revenue. He submitted that a careful reading of Para 5 of the order of ITAT shows that the ITAT has rejected assessee’s claim of deduction for want of completion- certificate. The sale of plots to buyers in Para 4 was mentioned only for the sake of comparison with another case. Further, the decision in Sky Builders was given before decision of Hon’ble Gujrat High Court in Radhe Developers 341 ITR 403. The decision of Radhe Developers has been followed by various benches of ITAT in subsequent cases including ITAT, Indore in Agarwal Builders (supra) and AG8 Ventures Ltd. (supra) relied by assessee. Ld. AR referred Para No. 8 of Agarwal Builders (supra) to demonstrate that there were exactly same facts and same controversy as in present assessee and that the ITAT allowed claim of deduction by following decisions of ITAT, Indore in Paras Housing and Vardhman Builders & Developers as well as the decision of Hon'ble Gujarat High Court in Radhe Developers. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 21 of 40 16. Ld. AR also distinguished Nitin Agarwal (supra) by pointing out certain distinguishable facts discernible from the very same Para 8 and 9 of the order relied by Ld. DR (re-produced above). These are such that (i) in one project, the completion-certificate was not filed at all; (ii) in other project, the land was belonging to a society which got approval to construct duplex bungalows and the assessee had acted as a contractor. Further, the approval from Gram Panchayat was for individual plot units and not for a project. Ld. AR also referred Para No. 7 of the order wherein the ITAT has also taken cognizance of the AO’s findings that (i) no investment had been made by assessee to start the project; (ii) the project was not approved by Municipal Corporation; (iii) no building permission was given, (iv) the completion-certificate was not obtained. Ld. AR submitted that none of these adverse features is existing in assessee’s case, therefore Nitin Agarwal’s decision is not applicable at all. 17. Ld. AR lastly submitted that the CIT(A) has reversed AO’s order and allowed assessee’s claim for other important reasons that (i) for earlier AYs 2006-07 and 2008-09, the CIT(A) allowed assessee’s claim of developer and the order of CIT(A) was not challenged by revenue before tribunal, and (ii) for earlier AYs 2005-06 and 2007-08, the AO has himself accepted assessee as a developer and not treated as contractor. The CIT(A) has also observed that the initial investments were made by the assessee and before execution of sale-deed, the assessee executed an Agreement for sale of each house wherein it was clearly mentioned that the possession of house shall be given ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 22 of 40 only after completion of full construction [Page 6 of CIT(A)’s order]. Therefore, the CIT(A) is very much correct in accepting assessee as developer and giving deduction. Ld. AR pointed an additional fact for information purpose that subsequently the Hon’ble High Court of Madhya Pradesh has reversed the decision of CIT(A)/ITAT for AY 2006-07 but that reversal is for the reason of completion-certificate and not for the issue of ‘contractor’ Vs. ‘developer/builder’. 18. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The controversy in present case is very narrow and specific. The assessee has claimed deduction u/s 80-IB(10) treating itself as engaged in the activity of developing and building housing project which the AO has rejected by concluding that the assessee is a mere work-contractor and not a developer/builder. The CIT(A) has, however, reversed AO’s order and accepted claim of assessee. The relevant facts of the case are such that the assessee purchased a land and conceived township project. The assessee then obtained necessary permissions from govt. authorities for development of township which were granted. Thereafter, the assessee advertised to sale residential houses/bungalows in the township and the buyers made bookings. The assessee entered into Agreements with buyers for sale of bungalows as per terms and conditions set out in Agreements. Subsequently, there were registered sale-deed executed between assessee and buyers for partly finished bungalows upto plinth level. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 23 of 40 According to assessee, the execution of sale-deeds was to facilitate bank financing only. The assessee, however, received payments from buyers as per initial Agreements and delivered possession of bungalows to the buyers after complete construction of bungalows. Thus, the initial Agreements were not obliterated in any manner due to execution of sale-deeds of partly finished houses. Further, there is no bifurcation of construction-receipts and the consideration received towards sale of plots. The initial Agreement clearly mentions one ‘single consideration’ for entire bungalow/house and the assessee received proceeds of such ‘single consideration’ from time to time from buyers. It is also a point that the physical possession of entire bungalows was given to buyers after completion of full bungalows and after receiving full consideration as per Agreement. That apart, the assessee has developed the entire project with all amenities and facilities like road, drainage, lights, etc. The assessee made initial investments for developing the project. These clinching facts shown by Ld. AR with reference to the documents held in Paper-Book could not be rebutted by revenue. Therefore, in these set of facts, the decisions relied by Ld. AR as cited in foregoing part of this order are clearly applicable according to which the assessee is a developer/builder of project and not mere work-contractor. Ld. DR for revenue has relied upon Sky Builders (supra) but in Agarwal Builders (supra) relied by Ld. AR, the ITAT Indore has already rejected Sky Builders following the subsequent decisions of ITAT, Indore in Paras Housing (supra) and Hon’ble Gujrat High Court in Radhe Developers. Further, the ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 24 of 40 Ld. DR has also placed a very strong reliance upon Nitin Agarwal (supra) but the Ld. AR has shown several distinguishing features which make the decision of Nitin Agarwal (supra) non-applicable to assessee’s case. We have already noted those distinguishing feature in earlier para and do not wish to repeat the same for brevity. We also find that in Nitin Agarwal’s case, the ITAT Ruled in favour of revenue by taking support from Sky Builders but Sky Builders itself has already been rejected by ITAT, Indore due to subsequent judicial developments, more particularly the decision of Hon’ble Gujrat High Court in Radhe Developers. 19. We also agree to Ld. AR’s submission that the CIT(A) has allowed assessee’s claim for two more valid reasons that (i) for earlier AYs 2006-07 and 2008-09, the CIT(A) has allowed assessee’s claim of developer and the order of CIT(A) was not challenged by revenue before tribunal, and (ii) for earlier AYs 2005-06 and 2007-08, the AO has himself accepted assessee as a developer and not treated as contractor. It is a settled law that consistency has to be followed by tax authorities unless there is some change in legal or factual scenario justifying departure. In present case, the Ld. DR is not able to show any such change. 20. In view of above discussions, we are inclined to hold that in present case, the assessee was engaged in the activity of developing and building housing project named as “D.K. Honey Homes” in the light of decided judicial rulings. Therefore, the assessee was entitled to deduction u/s 80- IB(10) and the CIT(A) has rightly reversed AO’s order and granted deduction ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 25 of 40 to assessee. Being so, we uphold the order of CIT(A) and consequently the issue raised by revenue is dismissed being devoid of any merit. Second issue of ‘completion-certificate’: 21. The project “D.K. Honey Homes” was approved by local authority on 26.04.2003 and the same was required to be completed by 31.03.2008. As per Explanation (ii) to section 80-IB(10), the ‘date of completion of construction’ of 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’. In present case, the assessee claims that although the project was completed on 21.03.2008 and the assessee had applied to local authority for issuance of completion-certificate but the completion-certificate was issued by local authority on 15.12.2008 (subsequently a rectified certificate was issued by local authority on 24.12.2010). The assessee claims that the completion of project was before 31.03.2008, therefore it is eligible for deduction. On the other hand, the revenue has taken a view that in terms of Explanation (ii) to section 80-IB(10), the date of completion of project shall be taken as 15.12.2008/24.12.2010 i.e. the date on which completion-certificate was issued by local authority. Therefore, the assessee was not entitled to deduction. 22. For this issue, the assessee has filed an application alongwith declaration in Form No. 8 u/s 158A(1) for all three AYs 2009-10 to 2011-12. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 26 of 40 The application filed by assessee for the first AY 2009-10 is scanned and re- produced below for an immediate reference: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 27 of 40 Further, the Form No. 8 filed by assessee for AY 2009-10 is also scanned and re-produced below for reference: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 28 of 40 23. Ld. AR for assessee submitted that this very issue has already arisen in assessee’s case for AY 2005-06 and 2008-09 which stands decided by Hon’ble M.P. High Court vide order dated 21.08.2015 in Appeal No. 65/2012 & 161/2012 against assessee. The assessee thereafter filed S.L.P. (C) Nos. 35004-35005 of 2015 before Hon’ble Supreme Court against the decision of Hon’ble High Court whereupon the Hon’ble Supreme Court, vide order dated 08.07.2019, has stayed operation of the order of High Court. Under this circumstance, identical issue is pending before Hon’ble Supreme Court. Ld. AR further submitted that the assessee wants to take benefit of section 158A and undertakes to abide by the outcome of the decision of Hon’ble Supreme Court in SLP filed by the assessee for A.Ys.2005-06 & 2008-09 on the identical question of law and shall not raise such question of law for the AYs 2009-10 to 2011-12 under consideration in any appeal before the Hon’ble High Court or before the Hon’ble Supreme Court. Accordingly, Ld. AR has pleaded that the tribunal may pass an appropriate order by considering declaration of the assessee filed u/s 158A(1). 24. Therefore, in terms of requirement of section 158A(2), the Bench called a report from AO qua the claim of assessee. In response, the AO filed a consolidated report dated 03.09.2024 for AY 2009-10 to 2011-12, the same is scanned and re-produced below: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 29 of 40 ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 30 of 40 ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 31 of 40 25. Thus, in Para 2.4 and 2.5 of report, the AO has submitted that there were various projects run by assessee and the reasonings for disallowance of deduction were different in different projects. Therefore, the ITAT has to look into varying factual aspects of each project. Therefore, the AO has submitted that the declaration filed by assessee is not acceptable. 26. On a careful consideration, we find that though the assessee was running multiple projects named as “D.K. Honey Homes”, “D.K. Devasthali” and “D.K. Cottage” but the declaration has been filed qua the project “D.K. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 32 of 40 Honey Homes” only and not for other projects. Further, the issue in project “D.K. Honey Homes” is confined to the point as to whether the completion- certification dated 15.12.2008/24.12.2010 issued by local authority certifying that the said project was completed in March, 2008 i.e. before 31.03.2008 would entitle the assessee for deduction u/s 80-IB(10) or not? There is no other controversy so far as the project “D.K. Honey Homes” is concerned. Therefore, the issue involved is identical to the issue pending before Hon’ble Supreme Court. Hence, the declaration filed by assessee in terms of section 158A(1) qua the project “D.K. Honey Homes” is admissible. At this stage, we also take note that for AY 2014-15 also, the assessee filed similar declaration u/s 158A(1) in ITA No. 23/Ind/2022 before ITAT, Indore and the ITAT has already made following adjudication vide order dated 09.09.2024: “4.2 Having regard to the fact as recorded above as well as judgment of Hon’ble Bombay High Court (supra), we are satisfied that the issue involved in the present appeal of the assesse before us as raised in ground no.1 is identical to the question of law raised by the assesse in the ground (b) & (c) (reproduced in forgoing part of this order) before the Hon’ble Supreme Court in SLP for A.Ys.2005-06 & 2008-09 against the order of the Hon’ble jurisdictional High Court. Accordingly, the appeal of the assesse is disposed off in terms of the declaration filed by the assessee in form no.8 as per section 158A r.w Rule 15A of the Income Tax Rules 1962. The AO is directed to apply decision of Hon’ble Supreme Court on this issue and amend if need arises the assessment order in conformity with the judgment of Hon’ble Supreme Court. The assessee shall not be entitled to raise such question of law in appeal before any appellate authority or before Hon’ble High Court or Supreme court as shall be abide by its declaration made u/s 153A(1) in form No.8. Accordingly ground no.1 of the assesse’s appeal is disposed off in the above terms.” 27. Therefore, we too dispose of this issue for AY 2009-10 to 2011-12 qua the project “D.K. Honey Homes” in terms of the declaration filed by the ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 33 of 40 assessee in Form No.8 as per section 158A r.w Rule 15A of the Income Tax Rules 1962. The AO is directed to apply decision of Hon’ble Supreme Court on this issue and amend, if need arises, the assessment-order in conformity with the final judgment of Hon’ble Supreme Court. The assessee shall not be entitled to raise such question of law in appeal before any appellate authority or before Hon’ble High Court or Supreme court and shall abide by its declaration made u/s 158A(1) in Form No.8. This issue is disposed of in these terms. For statistical purpose, the issue raised by revenue may be treated as allowed. Ground No. 3 & 4: 28. These grounds relate to the project “D.K. Devasthali”. There are twin issues involved in these grounds similar to the issues dealt by us in Ground No. 1 & 2 relating to project “D.K. Honey Homes”. First issue of ‘contractor’ Vs. ‘builder/developer’: 29. The controversy and underlying facts are same as in the project “D.K. Honey Homes”. Therefore, our adjudication in earlier part of this order shall apply mutatis mutandis. Consequently, this issue raised by revenue is dismissed. Second issue of ‘completion-certificate’: 30. The project “D.K. Honey Homes” was approved by local authority on 29.04.2004 and the same was required to be completed by 31.03.2009. Ld. ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 34 of 40 DR for revenue submitted that the assessee filed completion-certificate dated 31.03.2009 but the AO has found following infirmities in the certificate submitted by assessee which the CIT(A) has failed to address adequately: (i) The name of project “D.K. Devasthali” is not mentioned in certificate. (ii) The certificate does not mention date of completion of project. (iii) The certificate mentions about completion of construction only for plot numbers 14 to 119 which means the plot numbers 1 to 13 remained unconstructed. The assessee has also filed additional evidence before the bench in the shape of letter dated 19.09.2024 from local authority certifying that no construction was done over plot numbers 1 to 13. The claim of assessee that plot nos. 1 to 13 are commercial and to avoid litigation regarding the permissible area of commercial plots, assessee has not made construction over those plots, does not suffice as the construction on all plots is a statutory requirement for claiming deduction. (iv) The certificate lacks the seal of local authority casting doubt on its authenticity. The CIT(A) has failed to make any enquiry from local authority. 31. Ld. AR for assessee referred the impugned certificate filed at Page 38 of an earlier Paper-Book filed by assessee’s previous A/R and submitted that ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 35 of 40 (i) the certificate is issued by Bhawan Anugya Sakha, Nagar Nigam, Bhopal, (ii) it is on letter-head of Nagar Nigam, (iii) It bears S.No. 476/Bh.A.Sa./09 dated 31.03.2009, and (iv) it contains a reference of Permission No. 178 dated 29.04.2004 granted by Nagar Nigam to the assessee for construction, and (v) it is signed by three authorities of Nagar Nigam with their designations. Therefore, there should not be any doubt regarding its authenticity merely for the allegation that it does not bear any seal of Nagar Nigam. Further, the CIT(A) has rightly observed that if the AO had any doubt, he could have conducted enquiry from Nagar Nigam but the same was not done by AO. So far as non-mention of date of completion in certificate is concerned, Ld. AR submitted that the certificate is itself dated 31/03/2009 and certifies that the construction had been completed; this automatically means that the construction was completed prior to deadline date of 31.03.2009. In so far as non-mention of project name in the certificate is concerned, Ld. AR submitted that the certificate contains the reference of Permission No. 178 dated 29.04.2004 granted by Nagar Nigam to assessee as well as details of Plot No. 14 to 119; these details pertained to the project “D.K. Devasthali”. Further, the assessee has also filed latest letter No. 19.09.2024 from Nagar Nigam, Bhopal obtained under Right to Information Act, 2005 wherein the CPIO of Nagar Nigam has narrated the name of project as “D.K. Devasthali” with reference to Permission No. 178 dated 29.04.2004 and also stated that no permission has been given for construction over plot No. 1 to 13. Ld. AR submitted that the plot No. 1 to ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 36 of 40 13 were for commercial purpose and the assessee thought it prudent to avoid commercial construction which may invite litigation of permissible limit for commercial portion. Therefore, the assessee did not get the maps sanctioned from Nagar Nigam on plot nos. 1 to 13 from the very beginning. With these submissions, Ld. AR urged that the assessee has filed a valid completion-certificate issued by local authority and also completed the construction of all residential units of plot nos. 14 to 119. Therefore, the AO has unjustifiably taken adverse view against assessee. 32. We have considered rival contentions of both sides and perused the documents to which our attention has been drawn. After a careful consideration, we find that the assessee has filed a completion-certificate to the AO but the AO has inferred certain infirmities and raised doubt on authenticity. Ld. AR has successfully shown that the certificate is issued by Bhawan Anugya Sakha, Nagar Nigam Bhopal on their letter-head, it bears S.No. 476/Bh.A.Sa./09 dated 31.03.2009, it contains a reference of Permission No. 178 dated 29.04.2004 granted by Nagar Nigam to assessee for construction and it is signed by three authorities of Nagar Nigam with their designations. It is true that the certificate lacks seal of Nagar Nigam but other details contained in the certificate are sufficient enough. Still if the AO had any doubt, the AO had all authority to make enquiry from Nagar Nigam to rebut the certificate filed by assessee but the AO has not done any such effort, instead resorted to disallow deduction to assessee. Be that as it may, we find that the latest letter dated 19.09.2024 filed by assessee as ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 37 of 40 received from CPIO of Nagar Nigam also contains reference of Original Permission No. 178 dated 29.04.2004 as mentioned in the impugned completion-certificate filed by assessee. Further, the impugned completion- certificate stated that construction was completed on plot nos. 14 to 119 and the latest letter dated 19.09.2024 also states that no permission for construction had been given on plots 1 to 13. Thus, the details contained in completion-certificate are corroborated by latest letter dated 19.09.2024 received by assessee from CPIO of Nagar Nigam, Bhopal. Therefore, there should not be any scope for doubting genuineness of the completion- certificate filed by assessee. So far as the infirmities regarding non-mention of ‘date of completion’ and ‘project name’ in completion-certificate are concerned, Ld. AR has successfully dislodged those infirmities also. Lastly, the submission made by assessee that there was no construction over plot nos. 1 to 13 because they were reserved for commercial purpose and the assessee did not want to invite any litigation, is meritorious. We find that the incentive u/s 80-IB(10) is given for residential houses. Therefore, when the assessee has not taken even permission for construction of commercial portion from Municipal Corporation and restricted its activity solely for construction of residential houses only, there should not be any problem in giving deduction to assessee. Being so, we are inclined to conclude that the issue of completion-certificate raised by revenue qua the project “D.K. Devasthali” is meritless and dismissed therefore. Ground No. 5 & 6: ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 38 of 40 33. These grounds relate to the project “D.K. Cottage”. There are twin issues involved in these grounds similar to the issues dealt by us in Ground No. 1 & 2 relating to project “D.K. Honey Homes”. First issue of ‘contractor’ Vs. ‘builder/developer’: 34. The controversy and underlying facts are same as in the project “D.K. Honey Homes”. Therefore, our adjudication in earlier part of this order shall apply mutatis mutandis. Consequently, this issue raised by revenue is dismissed. Second issue of ‘completion-certificate’: 35. Ld. DR for revenue has made a limited contention that the certificate for project “D.K. Cottage” was not submitted before AO but filed to CIT(A) during first-appellate proceeding only. The CIT(A) has allowed deduction without following procedure of Rule 46A which is a grave error as per CIT, Trichur Vs. E.D. Benny (2015) 62 taxmann.com 302 (Kerala). Therefore, CIT(A)’s order must be overturned. 36. Per contra, Ld. AR for assessee firstly submitted that there is no ground raised by revenue qua this issue, hence the submission made by Ld. DR in absence of ground is liable to rejected. Without prejudice, Ld. AR relied upon following order passed by CIT(A) qua this issue: “Regarding completion certificate of the Project D.K. Cottage, it was under construction when the assessment-proceedings were going on and, therefore, completion-certificate was not furnished. The Ld. AR furnished the completion- ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 39 of 40 certificate in the course of appellate proceedings which has been kept on record. The certificate is issued by the Municipal Corporation, Bhopal dated 31.03.2012 and, therefore, claim for deduction u/s 80IB(10) for this project is accepted. However, the AO can exercise the option of invoking Instruction No. 4 of 2009 dated 30.06.2009 of CBDT if it is detected that completion-certificate of the project furnished at the appellate stage is not correct.” 37. After a careful consideration, we find sufficient merit in the submission of Ld. AR. At first, we find that there is no ground raised by revenue qua this issue. Therefore, this issue for which submission alone has been made by Ld. DR without any ground of appeal, is liable to rejected. Further, we also find much strength in the adjudication made by CIT(A) which is self-speaking and does not require any repetition from us. The CIT(A) has clearly mentioned that the project was going on during assessment-proceeding and therefore completion-certificate could be filed only during first appellate proceeding. Being so, we do not find any merit in the issue raised by revenue and the same is therefore dismissed. 38. Resultantly, these appeals of revenue are partly allowed for statistical purposes. Order pronounced in open court on 17.10.2024 Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 17.10.2024 Dev/Sr. PS ACIT-2(1), Bhopal Vs. M/s D.K. Construction ITA No.59, 159 & 436/Ind/2015 – AY 2009-10 to 2011-12 Page 40 of 40 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore "