TMI Blog2015 (1) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... d 05/03/2004. Thus, the project was approved for commencement before 31/3/2005 and old law will apply when it was not a condition precedent to submit completion certificate. Thus we hold that deduction u/s. 80 IB (10) cannot be denied to the assessee for want of completion certificate from CIDCO. - Decided in favour of assessee - ITA No.5554/Mum/2014 - - - Dated:- 5-1-2015 - Shri Joginder Singh, Judicial Member And Shri Sanjay Arora, Accountant Member Assessee by : Shri Vimal Punmiya Revenue by : Shri Neil Philip-DR O R D E R PER JOGINDER SINGH (JM) : Aggrieved by the impugned order dated 25/07/2011 of the ld. First Appellate Authority, Mumbai, the assessee is in appeal before this Tribunal. The assessee is aggrieved in confirming the disallowance of deduction claimed u/s 80IB(10) of the Income Tax Act, 1961 amounting to ₹ 1,42,53,667/- on the plea that the ld. Commissioner of Income tax (Appeals) did not appreciate that the condition of completion is not applicable since the project was approved on 05/03/2004, before the insertion of condition of completion inserted with effect from 01/04/2005. 2. At the time of hearing, the ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder. Date Event Remark Page No. Before 7.2.1997 Purushottam A. Kawali the original owner of agriculture land. 07/02/1997 Owner converted agriculture land into Non-arculture land. Vide Order bearing No.Rev/Desk-1/T- 9/NAP/SR-3/96 of office of Collector, Thane. 05.03.2004 CIDCO approved block plan as residential with shopline building Vide No.CIDCO/VVSR/BP- 1087/W/2500 for Dvelopment of Sector.I,II,III, IV V 02.07.2004 Owner transfer development right to Mr. Kunverji Bachhu Shah For Development of Sector No.I,II,III, IV V 40-77 09.07.2004 Mr. Kunverji Bachhu Shah Transfer development right to M/s. Adinath Developers For Development of Sector No.I,II,III, IV V 78-121 30.04.2007 M/s. Adinath Developers transfer Development right to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate issued by Gram Panchayat Bolinj, Virar should be considered to be fulfillment of the condition of completion of project. The AO rejected such contention on the basis that the certificate issued by Gram Panchayat will not serve the purpose of the assessee and only CIDCO could issue such certificate, therefore, the certificate issued by Gram Panchayat cannot be taken as fulfillment of the condition of completion of the project before 31/3/2008. 2.3 The A.O also observed that the project was approved as single project by Local Authority which was capable of being divided into various parcels and allocate to different entities for development by the development right owner then the very action of the other party which inter-alia include M/s.Adinath Developers will absolve the buyers from the eligibility to claim deduction under section 80IB(10) of the Act. The disallowance of deduction was challenged in an appeal filed before Ld. CIT(A). It was submitted that assessee had applied to CIDCO for completion certificate on 31/3/2008. However, CIDCO did not issue completion certificate. The Gram Panchayat had issued the completion certificate on 29/3/2008 certifying the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till the date of the assessment order. The project of the assessee could not be considered to be complete in view of the facts mentioned by the AO in the assessment order. The permission to construct the structure was given by the Local Authority i.e. CIDCO and the completion certificate was issued by another Local Authority i.e. Gram Panchayat Bolinj, Virar. Though Gram Panchayat may be a Competent Authority to issue such certificate but in the instant case the permission to construct the building was not accorded by the Gram Panchayat Bolinj, Virar. The appellant had applied for completion certificate from CIDCO and could not obtain it from the said Competent Authority. In the circumstances getting a certificate from other Local Authority cannot hold any validity. The question which is important to be decided is that whether it is a Competent Authority to issue the certificate of completion to the assessee. The evidence of such competence of the authority has not been provided by the assessee either before the AO or before Ld. CIT(A), therefore, the case law relied upon by the assessee will not support its case. In this manner Ld. CIT(A) has upheld the disallowance. The conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate from another Local Authority cannot hold any validity. It may be a Local Authority as defined by the Income Tax Act but the question remains in the instant case whether it is a competent authority to issue the certificate of completion to the appellant. The question of competence has not been proved by the appellant either, before the Assessing Officer or before the appellate authority. Hence the case laws relied on by the appellant does not support its case. In the circumstances, the claim of deduction u/s.801B(1O) of Income. Tax Act cannot b allowed and the addition made by the Assessing Officer is sustained. This ground of appeal is dismissed. Aggrieved, assessee has filed the afore mentioned grounds of appeal. 3. After narrating the facts it was submitted by Ld. AR that the development agreement of the assessee, copy of which is filed at page 122 to 142 of the paper book was in respect of Sector No.4 for Building No.1,Wing-C, Building No.2, Wing-A,B C and Building No.3, Wing A,B C and this is 100% residential project admeasuring an area of 5499.17 sq.mts., which is more than one acre. Relying to the development agreement it was submitted that the total devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Same 3. Completion No Provision i) Projects approved before 1.4.2004 on or before 31.03.2008 ii. Projects approved after 1.4.2004 within 4 years from the end of the financial year in which approval received These provisions added 4. Area Minimum 1 acre Plot size. Minimum 1 acre Plot size Same. 5. Maximum built up area 1000 sq.ft. or 1500 sq.ft. as applicable according to cities 1000 sq.ft. or 1500 sq.ft. as applicable according to cities Same 6. Built up area No definition Built-up area define Detail definition 7. Permitted Commercial Area No Provision Not exceeding 5% or 2000 sq.ft. built up area No restriction in commercial use of land subject to approving under housing category 8. Completion Certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate on or before 31.3.2008. In view of above, I find that there is no justification for denying deduction u/s. 80IB(10). 10. Aggrieved by the stand so taken by the CIT(A), the revenue is in appeal before us. ii. Having heard the learned Departmental Representative and going to the facts of the case and detailed reasoning given by the CIT(A), we are not inclined to disturb the well reasoned order of the CIT(A), wherein, he has allowed the claim for deduction u/s. 80 IB(10)) to the assessee firm. (3) CIT vs. Jain Housing Construction Ltd. ( 2013) 30 Taxaman.com 131 (Mad) - In this case it was held by Hon ble Madras High Court that it is difficult to accept the case of Revenue that that the claim for deduction has to be rejected on the ground that assessee did not furnish the completion certificate as there was no such requirement under section 80 IB(10), as it stood during the relevant assessment year 2004-05. 3.4 Ld. AR further submitted that the assessee had submitted various evidences to show that the project was completed on 31/3/2008 and reference was made to the following evidences: (i) Completion Certificate from Architect. (ii) Completion Certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial flats and shopping complex at ground floor to LIFPL. The considerations to be paid by the appellant and LIFPL were fixed at ₹ 11.56 crore 2 crore respectively in lieu of development rights received by them. Housing project of the assessee is different and distinct from the project for building commercial area by another entity. Housing project does not include construction of commercial establishment carried but by another entity in that area. Therefore claim of the assessee for deduction u/s 801B(10) for the housing project cannot be denied because the commercial project was carried out by a sister concern. 3.6 He has also relied upon the decision of Hon ble Bombay High Court in the case of CIT vs. Vandana Properties, 353 ITR 36 (Bom) and reference was made to the following observations: The expression housing projects is neither defined under Section 2 of Act nor under section 801B(10) of the Act. Even under Mumbai Municipal Corporation Act, 1988 as also under Development corporation Regulations for Greater Mumbai, 1991, the expression housing project is not defined. Therefore, the expression housing project in Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved for commencement vide letter of CIDCO dated 05/03/2004. Thus, the project was approved for commencement before 31/3/2005 and old law will apply when it was not a condition precedent to submit completion certificate. In view of these decisions and also the decisions of Co-ordinate Benches relied upon by Ld. AR which have been discussed in the above part of this order we hold that deduction u/s. 80 IB (10) cannot be denied to the assessee for want of completion certificate from CIDCO. 5.1 The other objection by the AO is regarding commercial element which according to the submissions of the assessee is not applicable to the case of the assessee as there is no commercial element in the project constructed by the assessee and commercial element, if any, for development was in another project which is not the subject matter of this appeal. 5.2 It may also be mentioned here that though AO has given a passing remark for disallowing the claim that when a project is approved as a single project by the Local Authority which is capable of dividing into various parcels and allocated to different entities for development by the development right owner then the action of the devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80IB(10) of the Act was denied to the assessee on the reasons as contained in the assessment order, broadly, the assessee could not produce completion certificate from CIDCO within the stipulated period. On appeal, the ld. Commissioner of Income tax (Appeals) also affirmed the stand of the Assessing Officer. It is not worthy that as per explanation to section 10(20) of the Act Gram Panchayat also falls under local authority for which reference can be drawn from the decision in the case of Krishan Harubhau Lohokare vs ITO (ITA No.937/PN/2010), wherein, it was held that for the purposes of issuance of completion certificate u/s 80IB(10) of the Act Gram Panchayat is a local Authority, therefore, we find merit in the contention of ld. counsel for the assessee. Substitution was made by the Finance (No.2) Act 2004 with effect from 01/04/2005 and prior to its substitution, in sub-section (10) to section 80IB, there was no requirement of completion certificate. This issue has been elaborately dealt with by the Delhi Bench of the Tribunal in the case of CIT vs CHD Developers (wherein one of us i.e. Judicial Member) is signatory to the order, which was affirmed by the Hon ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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