TMI Blog2012 (12) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 - SHRI SHAILENDRA KUMAR YADAV AND SHRI R.K. PANDA, JJ. Appellant by: Dr. P. Daniel Department by: Shri Naurath ORDER PER SHRI SHAILENDRA KUMAR YADAV, JM This appeal by the assessee is directed against order of the CIT(A)-II Pune dated 19-11-2010 for A.Y. 2007-08 on the following grounds: 1. The Hon ble CIT(A) erred in confirming the AO s order not allowing the appellant s claim for deduction of Rs. 7,87,49,450/- u/s 80-IB(10) on grounds that all 205 flats planned in the project were not completed within the time stipulated under the section. The appellant pleads that its claim is legitimate and that the AO be directed to allow the claim. 2. The Hon ble CIT(A) erred in confirming the AO s order denying proportionate deduction u/s 80-IB(10) in respect of 173 flats which were completed within the stipulated time and certified as such by the local authority. 2. The assessee is a firm engaged in the business of builders and promoters. The issue before us is regarding deduction u/s 80-IB(10) of the Act amounting to Rs. 7,87,49,450/-. The Assessing Officer denied the deduction u/s 80-IB(10) of the Act on the ground that the project was not com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or part completion or substantial completion. Hence phrase completion is a relative, and not absolute term. Accordingly even part completion must be construed to completion as the local authority being recognized as authority for approval and completion of housing project u/s 80-IB(10), completion certificate issued by local authority should not be doubted. 3.2. The Ld. AR submitted that the Tribunal in the case of Bengal Ambuja Housing Development Ltd. In ITA No. 1595/Kol/2005 for A.Y. 2002-03 dated 24-3-2006 has held as under: :We, therefore, keeping in view the above facts and circumstances and in the light of above discussion, are of the opinion that the ld. CIT(A) while allowing the claim of the assessee on account of deduction of profit u/s 80-IB(10) on 150 units has passed a well reasoned and speaking order which does not need any interference at our end. We therefore, uphold the same and reject the ground raised by the Revenue. This decision of Calcutta Bench has been approved by Hon ble Calcutta High Court. 3.3. The learned AR for the assessee drew our attention to the decision of Bombay Bench J of the Tribunal in the case of Mr. Johar Hassan Zojwalla in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied the claim of deduction u/s.80IB treating Brigade Millennium as only one project. The Tribunal, after considering the facts, observed that the use of the words "residential units" means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the conditions of sec.80IB, the assessee is entitled for deduction. Therefore, the Tribunal upheld the order of Id. CIT(A) in allowing deduction u/s.80IB(10) in respect of two blocks as claimed by the assessee. 6.3 In the case of ITO vs. AIR Developers (supra) also, inter alia, the dispute was that since the built up area of some of the residential units was more than 1500 sq. ft., deduction u/s.80IB(10) was not allowed. The Tribunal, following the decision in Bengal Ambuja Housing Development Ltd. (supra) also, held that proportionate deduction is to be allowed. 6.4 In the case of Sheth Developers (supra) also, similar view was taken and it was held that even where some of the units in a housing complex exceed the area limit, relief has to be given on a pro rata basis. 6.5 In the case of' G.V. Corporation vs. ITO (supra), the assessee, at the request of purchasers, joined some of its flat/residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate deduction u/s.80IB should be allowed in the ratio of area completed to sanctioned area. We may clarify that for the purpose of sanctioned area, the size of plot is to be taken at 5100 sq.ft. In the result, this ground is partly allowed. 8. In the result, the appeal is partly allowed. 3.4. The learned AR submitted that in the case of Bajaj Tempo Ltd. Vs. CIT (1992) 196 ITR 188 (SC), the Hon ble Supreme Court held that a provision in a taxing statute granting incentives for promotion of growth and development should be construed liberally, and that since provision for promoting economic growth has to be interpreted liberally, while restriction on it too has to be construed strictly so as to advance the object of provision and not to frustrate the same. In the case of CIT Vs. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) 196 ITR 149 the Apex Court held that the provisions of taxing statute should be construed harmoniously with the object of the statute to effectuate the legislative intention. In the case of CIT Vs. Strawboard Mfg. Co. Ltd. (177 ITR 431) (SC) Hon ble Supreme Court had emphasized the above principles. In this background, an alternate ground of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is very specific and no two meanings can be assigned to the same. Even, plain and ordinary reading of the word "completion" suggests that if a particular project is not complete then in no way and in no sense, anybody can say that the project is completed. Deduction u/s 80IB(10) has to be given on completion of the project by the specified date. As the appellant has not completed the project by the due date specified as per the Statute, hence no deduction is available to the appellant. 5. If the Legislature can use and clearly specify about the 'approval' which is relevant for the purpose of Explanation (i) to section 801B(10) of the Act then the Legislature had all the powers to legislate and specify about completion or 'part' completion of project by specified dates in view of which the assesses can avail off the benefit of deduction u/s 80IB(10) of the Act. By choosing not to do the same means that this was never the intention of the Legislature. The Legislature, having realized the lacunae about the date of completion of the project, an amendment had been brought to section 80IB(10)(a) whereby the outer limit for completion of the project was specified. In the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve mentioned decisions are applicable in their own sphere, i.e. on point of excess area of some of the flats which hold good in its own sphere. However, in case before us, deduction u/s.80IB(10) of the Act has been rejected on the ground that condition of completion of project before the due date i.e., 31.03.2008 as laid down u/s.80IB(10)(c) of the Act, has not been complied by assessee which is basic condition for allowability of deduction u/s.80IB(10) of the Act. We find that in case of Johar Hassan Zojwalla (supra), wherein condition of completion as laid down in section 80IB(10)(a) could not be complied with because of a stay being granted by MRTP Court. Thus fault of incompletion of construction was not attributable to assessee. In case such a contingency emerges which makes the compliance with provision impossible, then benefit bestowed on an assessee cannot be completely denied. Such liberal interpretation should be used in favour of assessee when he is incapacitated in completing project in time for the reasons beyond his control. In case before us, as stated on behalf of assessee, that assessee submitted certain modifications/rectifications for top floors of building. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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