TMI Blog2015 (10) TMI 2820X X X X Extracts X X X X X X X X Extracts X X X X ..... /10/1998, wherein, the Assessing Officer was directed to allow the claimed deduction. No contrary decision was brought to our notice contradicting the finding recorded in the impugned order, thus, we find no infirmity in the order of the Commissioner of Income Tax (Appeals) on these issues raised by the Revenue, consequently, the appeal of the Revenue is dismissed. - ITA NO.1652/Mum/2013 - - - Dated:- 9-10-2015 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER For the Appellant : Shri A. Ramchandran-DR For the Respondent : Shri Vimal Punamiya ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order 14/12/2012 of the ld. First Appellate Authority, Mumbai. The first ground raised in this appeal pertains to allowing deduction u/s 80IB of the Act ignoring the fact the assessee has not obtained the completion certificate from the local authority before 31/03/2008, which is mandatory as per explanation-2 to section 80IB(10) of the Act. Revenue is also aggrieved in allowing deduction u/s 80IB(10) of the Act ignoring the fact that approval of the local authority was obtained on 28/11/1992 i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 in the case of assessee itself, the Mumbai Bench of the Tribunal vide order dated 22/09/2014 (ITA No.6728/Mum/2013) allowed the appeal of the assessee. 2.1. On the other hand, the ld. DR, Shri Neil Philip, though defended the conclusion drawn in the impugned order but did not controvert the factual finding that the impugned issue is covered in favour of the assessee by the decision cited by the ld. counsel for the assessee. 2.2. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 22/09/2014 in the case of assessee itself on identical facts/issue. 2. The assessee is a firm engaged in the business of builder and developer in the Vasai-Virar region of Thane Dist. Shri Purushottam A. Kawali the original owner of the land was awarded with commencement certificate from CIDCO as per letter No.CIDCO/VVSR/BP-1087/W/2500 dated 5/3/2004 with regard to various sectors inter-alia including sector-4, which is developed by the assessee as per its agreement with M/s.Adinath Developers. Sequence of events is stated in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n certificate 176 2.1 During the year under consideration the assessee claimed deduction under section 80IB(10) of the Income Tax Act, 1961 (the Act), which has been disallowed by the AO. The reasons given by AO for disallowance of the claim are as under: i. The assessee could not produce completion certificate obtained from CIDCO within a period of four years i.e. before 31/3/2008. ii. Vasai Virar Municipal Corporation in response to query raised by AO vide notice issued under section 133(6) has stated that it did not issue completion certificate to the assessee and as per letter received from Vasai-Virar Municipal Corporation permission of revised development plan was issued vide letter dated 23/3/2010. Thus AO observed that assessee did not complete the building within the mandatory time line i.e. 31/3/2008. iii. According to details filed before AO the assessee had been incurring expenditure beyond 31/3/2008 in the shape of fixing of kitchen doors, sliding windows, electric meter purchase, loft tank purchase, plumbing pipes, electric wiring cables etc. which is indicative of the fact that project of the assessee was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. That Gram Panchayat , Bolinj is a competent local authority authorized to issue a completion certificate as per the Income Tax Act as well as the Constitution of India. iii. That the requirement of a completion certificate is a technical formality for which the deduction should not be disallowed. iv. That the assessee is not required to obtain the completion certificate because the project was approved prior to 01.04.2005 when the amended provision did not even exist and the question of putting them into effect did not arise at that time. The old provisions never required the completion certificate and hence, the assessee is not required to obtain the same. Hence, in view of the above, we request your honour to grant a sympathetic consideration towards the assessee and allow the claim of deduction under section 80 IB(10) of the IT Act, 1961. 2.5 After considering the aforementioned submissions of the assessee Ld. CIT(A) has come to the conclusion that prima facie the project was not approved by Local Authority i.e. CIDCO as housing project but as residential building in shop line as there was no provision for commercial area in housing project prior to 01/04/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Assessing Officer had come to the conclusion that the project was not completed till the mandatory time line i.e. 31.3.2008 and denied the deduction u/s.8OlB(10) of the Income Tax Act. 5.2. From the foregoing paras, it is observed that there are certain irregularities/delays in getting the completion certificate from CIDCO by the appellant. It is very much obvious that the appellant approached another Local Authority to cut short the regular proceedings and obtained the completion certificate from another Local Authority. 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. The appellant submitted that Gram Panchayat also was a competent authority to issue the completion certificate to claim the benefit of deduction u/s.8OlB(10) of the Income Tax Act. However, I am of the opinion that Gram Panchayat may be a competent authority to issue such a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the said plan was not revised in respect of project developed by the assessee but was in respect of project developed by other developer. Therefore, Ld. AR pleaded that the said revised plan has nothing to do with the project of the assessee. 3.2 So far as it relates to contention regarding completion certificate it was submitted by Ld. AR that project of the assessee was approved by CIDCO as per letter dted 5/3/2004 ( The copy of the said letter was not enclosed in the paper book. However, it was submitted during the course of hearing and copy was also given to Ld. DR) It was submitted by Ld. AR that the condition regarding completion of project is not applicable on the project which are approved before 31/3/2005. Ld. AR has submitted a chart showing the essential conditions before 01/04/2005 and after 01/04/2005 and the said chart read as under: SN Head Before 1.4.05 After 1.4.05 Remarks 1. Cut of Date Projects approved before 31.3.2005 Projects approved befre 31.03.2007 Deduction period increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate but the same was not issued which was beyond its control and power. Order passed by AO was upheld by Ld. CIT(A). The Tribunal held that in a case where approval of the project is granted by the Competent Authority before 1/4/2005 the position will be governed by the nonamended provisions and in non-amended provisions there was no condition like project completion certificate. The assessee was not expected to fulfill the condition which was not on the statute when such approval was granted and Tribunal directed the AO to allow the deduction. Hon ble Delhi High Court has upheld the order passed by the Tribunal. (2) ITO vs. Sai Krupa Developers, decision dated 14/3/2012 in ITA No.3661/Mum/2011, copy placed on record. The aforementioned proposition was upheld as per following observations: Regarding the next objection of the AO, that the project was not completed before 31.3.2008, the contention of the representative is that as the project of the appellant was approved before 31.3.2005, there was no requirement of obtaining the completion certificate. The assessee has fulfilled all the conditions. In the circumstances, I accept the plea of the representative that deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FACTS (PARA 2) The assessee is a partnership firm consisting of two partners viz M/s Khyati Financial Services P.Ltd Shri. Paresh Mohanlal Parekh. The appellant firm entered into a development agreement on 25.4.2003 with Hickson Dadajee P.Ltd a company duly incorporated under the Companies Act, 1956 to develop property situated at Village Pahadi, Goregaon (E) owed by M/s Hickson Dadajee P.Ltd In pursuance of said development agreement, the assessee firm undertook to construct residential building viz., Acmee Armay to be residential area constructed at 60,000 sq.ft. approx. comprising 200 flats in 7 wings in ground plus upper floors to be approved. The said residential building has to be constructed on a shopping complex comprising of approx. 10,566 sq/ft/ built up area wherein the limited development right to construct shopping complex was assigned to a different concern viz Lakshadeep Investment Finance P.Ltd hereinafter called as LIFPL, being a sister concern of the appellant through a separate development agreement dt 25.4.2003 entered between LIFPL M/s Hickson Dadajee Put .Ltd (owner of the property) In other words the development right of the property was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A), which have been discussed in detail in the above part of this order submitted that Ld. CIT(A) has rightly held that assessee is not entitled to claim deduction under section 80 IB(10) of the Act as it did not fulfill the required condition as mentioned by AO and Ld. CIT(A). 5. We have heard both the parties and their contentions have carefully been considered. The first and foremost case of the Revenue is that the assessee did not submit completion certificate from Competent Authority which according to the opinion of AO and Ld. CIT(A) is CIDCO. The assessee had not only submitted the project completion certificate issue by the Gram Panchayat but also various evidences to show that the project was completed by 31/03/2008 and these evidences have also been described in para 3.4 of this order. In our opinion it will not be relevant to go into much detail for this issue as it is clear from the decisions of Hon ble Delhi High Court in the case of CIT vs. CHD Developers and Hon ble Madras High Court in the case of CIT vs. Jain Housing Construction (supra) that such condition of submission of completion certificate was not applicable to the projects which have been approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld constitute a housing project under section 10 IB(10) of the Act. If facts of the present case are seen in the light of the aforementioned decision of Hon ble Bombay High Court then it will be clear that project constructed by the assessee was a separate project different from the project carried out by M/s. Sai Leela Developers. Therefore, such passing observations of AO cannot be held to be a ground for rejection of assessee s claim for deduction under section 80 IB (10) of the Act. 5.3 For the aforementioned reasons we set aside the order passed by Ld. CIT(A) and hold that assessee is entitled to get deduction under section 80 IB(10) and accordingly the AO is directed to allow the deduction to the assessee under section 80 IB(10). Ground No.1 to 5 are allowed in the manner aforesaid. 2.3. If the observation made in the assessment order/impugned order, conclusion drawn in the order of the Tribunal ( in the case of assessee itself), we note that the facts are identical because for Assessment Year 2009-10, the project was approved on 05/03/2004 i.e. before insertions of conditions of completion with effect from 01/04/2005. The assessee is a firm engaged in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tarnetar Corporation order dated 12/09/2012 from Hon ble Gujarat High Court, Hon ble Madras High Court in CIT Vs Jain Housing Constructions holding that the conditions of completion certificate which were not applicable to the projects approved by the competent authority before 31/03/2005. Even for Assessment Year 200910, the Mumbai Bench of the Tribunal vide order dated 22/09/2014 (reproduced hereinabove) dealt with the issue in detail and that too after placing reliance upon various judicial pronouncements including the case of CHD Developers, and other cases relied upon by the assessee, therefore, on this issue, the appeal of the assessee is allowed. 3. So far as, charging of interest u/s 234B and 234C of the Act is concerned, in view of our decision, it is consequential in nature. Resultantly, the appeal of the assessee is allowed. 2.1. The facts of the case are that the assessee has filed appeal for claiming deduction u/s 80IB(10) of the Act, filed the architect certificate with audit report in from no. 10CCB with the return of income. The said architect had certified that the housing project under taken by the assessee was approved by the MCGM on 31/03/2003 and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted by the competent authority to the assessee. The Pune Bench decision of the Tribunal in the case of Shri Krishna Haribhau Lohkare (ITA No.937/Pn/2010) order dated 28/02/2013, Hon ble Gujrat High Court in CIT vs Tarnetar Corporatin order dated 12/09/2012 and Hon ble Madras High Court in CIT vs Jain Housing Construction holding that the condition of completion certificate which were not applicable to the projects approved by competent authority before 31/03/2005 supports our view. We note that section 80IB (10) of the Act was substituted by the Finance (No.2) Act, 2004, w.e.f. 01/04/2005 and prior to its substitution sub-section (10), as amended by the Finance Act, 2000, w.e.f. 01/04/2001 and Finance Act, 2003, w.r.e.f. 01/04/2002 provides 100% of the profit derived in any previous year relevant to any assessment year from such housing project approved before 31/03/2005. Thus, time project completion time limit is not provided in the section. The project of the assessee commenced in the financial year 2003-04 i.e. before 01/04/2005. Circular no.772 dated 23/12/1998 with respect to tax incentive provision/tax holiday supports the case of the assessee. There is uncontroverted find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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