TMI Blog2019 (5) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... , ground raised by the assessee is allowed. - 1141, 1142 And 1143/H/2017, 217 And 218/H/17 - - - Dated:- 15-5-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri A. Srinivas For the Revenue : Shri Y.V.S.T. Sai ORDER PER S. RIFAUR RAHMAN, AM: All these appeals are filed by the assessee as well as revenue for AYs 2009-10 to 2010-11 and assessee for the AY 2011-12. As identical issues are involved in all these appeals, they were clubbed and heard together and therefore, a common order is passed for the sake of convenience. 2. On perusal of record, we find that appeals in ITA Nos. 1139 1140/Hyd/2017 were filed by the assessee with a delay of 128 days before the Tribunal. In this connection, assessee has filed a condonation petition along with an affidavit wherein it was stated that its AR, who was entrusted to file the appeals before the ITAT, was having a severe medical problem which resulted in a major surgery to him, due to which, the appeals filed belatedly. It was therefore submitted that the delay may be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee has not produced any new information in this regard and, therefore, applied the conclusions derived in the assessment proceedings of assessment years 2002-03 to 2008-09 and disallowed the claim for the current year also. 6.1 In A.Y.2010-11 the assessee admitted NIL income in the return filed on 14.10.2010. After computing a gross total income of ₹ 10,17,30,666/- the entire amount was claimed as a deduction u/s.80IB(10). The Assessing Officer noted that there was no record of the projects being completed by 31:03.2008. The relevance of this date is not apparent from the assessment order. However, the Assessing Officer also noticed that the amount of ₹ 10,17,30,666/- also includes profits from contract work undertaken for Janapriya Township Pvt. Ltd. for projects on which deduction u/s.80lB was being claimed by them. Since the details of profits earned from the contract work were not furnished and in any case a contractor is not eligible for the benefits of Section 801B, the Assessing- Officer disallowed the entire claim and assessed a total income of ₹ 10,17,30,666/-. 7 When the assessee preferred appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a/c (ii)₹ 21,21,56,223/- being contract receipts credited to the Profit Loss a/c vide Schedule 9. It is seen, therefore, that the Ld. A.R. would now contend that the non-80IB turnover of ₹ 37,06,62,466/- has resulted in an income of ₹ 51,49,826/-. In the scrutiny proceedings this aspect has not received the attention of the Assessing Officer because of details not produced as noticed in the assessment order. It is seen from the sales breakup furnished with the written submissions that the aggregate sales of the 4 projects claimed eligible u/s. 80IB is ₹ 49,31,98,581/- resulted in a profit of ₹ 9,65,80,840/-, or 19.58% of the sales turnover. The profits of Somsetty Halli project and income offered from contract receipts will have to be evaluated for adequacy and reasonableness in this light of the matter. The Assessing Officer is directed to do so after affording reasonable opportunity to the assessee. This direction is in terms of Explanation appended to Section 251 of the I. T. Act 1961. 9. Before us, the ld. AR of the Assessee submitted that the issue in dispute is squarely covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80IB(10)(a) can be said to be directory. Considering the prodigious benefit offered in terms of Section 80IB to the assessee(hundred per cent of the profits derived in any previous year relevant to any assessment year); and the purpose underlying the same - which is inter alia burden on the public exchequer due to waiver of commensurate revenue - the stipulation for obtaining completion certificate from the Local Authority before the cut off date, must be construed as mandatory. The fact that compliance of that condition is dependent on the manner in which the proposal is processed by the Local Authority, the provision cannot be construed as a directory requirement. It is a substantive provision mandating issuance or grant of completion certificate by the Local Authority before the cut off date or specified time, as a precondition to get the benefit of tax deduction. Else, it will then be open to the assessee to rely on other circumstances or evidence to plead that the housing project is complete - requiring enquiry into those matters by the Tax Authorities - sans a completion certificate issued by the Local Authority in that behalf. A priori, the argument of substantial com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Local Authority. In some States, the Municipal Law may provide for issuing partial or full completion certificate. The requirement of completion certificate issued by the Local Authority, as envisaged in Section 80IB(10)(a) of the Income Tax Act, which is a Central enactment dealing with the special subject of taxation, however, is, of only one certificate - which is full/completion certificate issued by the Local Authority before the cut off date. That is to lend credence to the factum of completion of the entire housing project in all respects as per the approval granted by the Local Authority. It can be safely assumed that the legislature was conscious of this position, for which, express provision has been made as to the meaning of the date of completion of the housing project linked to the date on which completion certificate is issued by the Local Authority , as predicated in Explanation(ii) thereunder. 26. We accordingly hold that issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, does not fulfil the condition specified in clause (a) of Section 801 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB(10) in terms of size of the project, size of the flats and area meant for shops and commercial establishments. This is not a case where no opportunity was granted to the assessee at lower levels. When the assessee failed to discharge the onus on him before the lower authorities, he cannot seek relief from Hon'ble ITAT. 8. It is humbly submitted that exemption provisions have to be constructed literally and there is no room for lateral or liberal interpretation. Also, the benefit of liberal interpretation, if any shall flow to Revenue. Reliance in this regard is placed on the decision of the Constitutional Bench of Hon'ble Supreme Court in the case of Dilip Kumar and Company Others (Decision dated 30/07/2018 in CA No: 3327 of 2007), wherein it was held that the benefit of any doubt or ambiguity shall be in favour of Revenue. At paragraph 52 of the said decision, the Hon'ble Apex Court held as follows: To sum up, we answer the reference holding as under (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes with the parame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed, the AO rejected the ITA No.2004/PN/2014 claim of deduction of ₹ 3,05,70,196/- made by the assessee u/s.80IB(10). In appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed. 10. We do not find any infirmity in the order of the CIT(A) granting pro-rata deduction to the assessee in respect of Buildings B and C which were completed. We find the Pune Bench of the Tribunal in the case of M/s. Kumar Company while deciding identical issue had allowed the claim of pro-rata deduction by observing as under : 12. We have considered the rival arguments made by both the sides, perused the orders of the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2004/PN/2014 [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression housing project as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft, per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court reported in [2012] 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee's case before us. 15. In the light of the above reasoning, we have no hesitation in allowing the cases cases filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the said deduction is allowable to the assessee only in respect of units construction of which has been completed upto 31st March, 2008. Accordingly, we direct the ITA No.2004/PN/2014 Assessing Officer to verify the claim of the assessee in this regard in assessment years 2006-07 and 2007-08 and if the assessee has fulfilled the aforesaid conditions under section 80-IB(10) of the Act, pro-rata deduction under the said section could be allowed to the assessee in relation to the buildings / flats completed in Sector No.7. Consequently, the ground of appeal raised by the assessee is partly allowed. 15. In view of the above discussion, we hold that the assessee is entitled to pro-rata deduction in respect of the buildings/units of the housing project 'Kumar Padmalaya' which have complied with the conditions laid down in section 80IB(10) of the Act. In other words, the AO cannot reject the claim of deduction u/s.80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO to allow pro-rata deduction claimed u/s.80IB(10) in respect of project 'Kumar Padmalaya'. The grounds rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of CIT(A) is silent on the issue. 3. Any other ground that may be urged at the time of hearing. 14. As regards ground Nos. 1 2 regarding claim of deduction u/s 80IB, following the conclusions drawn in assessee s appeals for AYs 2009-10 2010-11 vide para 11 to 11.2 (supra), we dismiss the grounds raised by the revenue. 15. In the result, appeals of the assessee are allowed and the appeals of the revenue are dismissed. ITA No. 1143/Hyd/2017 for AY 2011-12 16. The CIT(A) dismissed the appeal on the ground that there was a delay of 55 days in filing the appeal before him and there was no explanation given for the delay in filing the appeal. 17. Considered the rival submissions and perused the material on record. In the interest of justice, we remit this appeal back to the file of the CIT(A) with a direction to give one more opportunity to assessee to submit reasons for delay and admit the appeal as per law. He may dispose of the appeal on merits also, after providing reasonable opportunity of being heard to the assessee in the matter. 18. In the result, this appeal is t ..... 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