TMI Blog2013 (11) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... completion certificate was not issued by the PMC for the H-4 building having four flats. Assessee has received the completion certificate with regards to buildings H-1, H-2, H-3 and G as stated above. So assessee is entitled for claim of deduction u/s.80IB(10) in the stipulated time in respect of completed buildings of the project in question. The construction on H-4 building could not be completed for the conditions beyond the control of the assessee for which assessee is not claiming the deduction u/s.80IB(10). In such situation the assessee should not be denied claim of deduction u/s.80IB(10) in respect of completed buildings and claim of the assessee should not be completely denied - Following decision of Dy.CIT Vs. Brigade Enterprises (P) Ltd. [2008 (8) TMI 453 - ITAT BANGALORE-A] - Decided in favour of assessee. - ITA No.1624/PN/2011 - - - Dated:- 22-3-2013 - Shailendra Kumar Yadav and R K Panda, JJ. For the Appellant : Shri Nikhil Pathak For the Respondent : Shri Achal Sharma ORDER:- Per: Shailendra Kumar Yadav: This appeal has been filed by the assessee against the order of the CIT(A) on the following grounds: 1. The learned CIT(A) erred in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, which was duly registered on 20.07.2004. On this very plot of land having area of 8164.20 sq.mtrs., the project Harsh Paradise has been developed. The first layout plan was sanctioned by Pune Municipal Corporation on 19.03.2002. The said housing project consists of four buildings viz. H-1, H-2, H-3, H-4 and G building, which is to be given to the PMC to be allotted to the weaker section of the society. The plan of housing project was approved by the local authority on 28.05.2003 wherein construction of Buildings H-1, H-2, H-3 G and first floor of H-4 building was sanctioned. The assessee further tried to purchase transferable development rights (TDR) for construction of remaining floors of H-4 building. As the project was sanctioned before 01.04.2004, the due date of completion of the project was 31.03.2008. The stand of the assessee has been that it had received the completion certificate of H-1, H-2, H-3 G building on 19.03.2008 and 06.03.2007. However, with respect to the building H-4, the assessee submitted that the TDR could not be purchased and, therefore, the building H-4 could not be completed and hence the completion certificate was not issued by the PMC for the H-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted within the stipulated time period for claiming deduction u/s.80IB(10) of the Act. He submitted that the assessee has completed the project and entitled for deduction u/s.80IB(10) in respect of H-1, H-2, H-3 G buildings. The total area of the same is 6,722 sq.mtrs. which is within the parameters laid down in provisions of section 80IB(10) of the Act, same was completed before the stipulated time, i.e., 31.03.2008. Accordingly, it was eligible for deduction with regard to completed portion of the project, i.e., H-1, H-2, H-3 G buildings. For this proposition the Ld. Authorised Representative relied on the following decisions ITAT, Pune Bench, in the case of Runwal Multihousing Pvt. Ltd. in ITA.Nos.1015, 1016 and 1017/PN/2011 wherein the Tribunal has decided the issue in favour of the assessee by observing as under: 18. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the assessee obtained the permission for construction of buildings A, B, C, D, E, F and 17 row houses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so is above 1 acre. Q.9. If the construction is completed before 31st March 2008, why you have not received Completion Certificate from PMC for all buildings in Runwal Paradise Project as on today? Ans. The Completion Certificate are deemed received since we have applied for the same, but since the matter is subjudice the PMC is not able to grant the Completion Certificate. The very local authority which is responsible for granting the Completion Certificate has a legal problem which is subjudice. Q.10. As stated answering the Question No.9, please state when you have applied for Completion Certificate in respect of Runwal Paradise Project and also submit the relevant applications? Ans. We have applied for Completion Certificate for the entire project. We are submitting herewith the application for Completion Certificate dated 22-01-2004vide Commencement Certificate No.1372 dated 10-01-2002 as per Annexure C . The copies of any further application, if any, we will submit the same on 2nd June 2008. Q.12. As per revised building layout sanctioned on 10-01-2003, you got approval for construction of buildings A to F and row houses 1 to 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (ii) of Explanation below section 80-IB(10)(a) prescribes that 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 the present case, it has been issued on 5-5-2008 and hence the case set up by the Revenue that the completion is beyond the mandated date of 31-3-2008. In this background, we find that there is no dispute that the assessee applied for obtaining the completion certificate in respect of building 'E' on 12-3-2008. From the discussion made by the Assessing Officer in the assessment order, wherein the factual assertions of the assessee have been reproduced, it is quite evident that the assessee asserted that before 31-3-2008, the construction of building was complete in all respects; that electrical connection was provided to each flat owner; road was complete; water and drainage connection was available; sewerage system was operating; club house was functional; etc. The assessee also pointed out that the local authority had also initiated property tax assessments for each of the flats and the same demonstrated that all the flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities intimating the completion of the project. The said certificate/intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. In such circumstances, in our opinion, the delay in obtaining the completion certificate on 10-10-2008 is certainly not attributable to the assessee and obtaining the said certificate before 31-3-2008 is beyond the control of the assessee. Assessee's job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite forms together with the completion certificate given by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections for accepted by issue of said completion certificate till 10-10-2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5-5-2008 i.e. beyond the stipulated date of 31-3-2008. The moot question is in case the condition of completion construction contained in the substantive section 80-0IB(10)(a)(i) is factually found to be complied with, can the contents of the Explanation clause (ii) thereof, alter the situation? Can an Explanation appended to a section, enlarge the scope of the main section so as to make it more onerous for a tax- payer? Be that as it may, we do not dwell on this aspect any further, as the assessee has been found to be eligible for necessary relief because the condition prescribed in section 80-IB(10)(a)(i) of the Act has been complied with in view of the stated precedents. We therefore, set aside the order of the CIT(A) on this aspect and hold that the assessee cannot be denied the claim of deduction u/s 80- IB(10) on the strength of non-issuance of the completion certificate for building 'E' by the Pune Municipal Corporation before 31-3-2008, having regard to the facts and circumstances of the case. 7. He also drew attention of Bench that the Hon ble Gujarat High court in the case of CIT Vs. Tarnetar Corporation Pvt. Ltd., Tax Appeal No.1241/2011 dated 12.09.2011 as discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B(10) links the completion of the construction to the BU permission being granted by the local authority. However, not every condition of the statute can be seen as mandatory. If substantial compliance thereof is established on record, in a given case, the court may take the view that minor deviation thereof would not vitiate the very purpose for which deduction was being made available. In the present case, the facts are peculiar. The assessee had not only completed the construction two years before the final date and had applied for BU permission. Such BU permission was not rejected on the ground that construction was not completed, but the some other technical ground. In that view of the matter, granting benefit of deduction cannot be held to be illegal. In the result, the Tax Appeal is dismissed . 8. The Ld. Authorised Representative also submitted that the ITAT, Pune Bench, in the case of Hindustan Samuha Awas Ltd. Vs. ITO vide ITA Nos. 945 to 950/PN/2010 order dated 30-08-2011, which has also been discussed in Runwal Multihousing Pvt. Ltd. (supra), has held as under : 7. We have considered the above view points of the parties in disputed. We find that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a Completion Certificate which is issued by the local authority after conducting inspections of construction by it. In case of PMC, it is only Occupancy Certificate which is issued alongwith certified completion plan after inspection of the construction by it, we have treated the date of issuance of such Occupancy Certificate alongwith Certified Completion plan as the date of Completion Certificate of the construction for the requirement of Explanation (ii) to Section 80IB(10)(a) of the I.T. Act. 2. Since infact PMC do not issue Occupancy Certificate generally in time and with this understanding the Legislature have also introduced a deeming provision of 21 days to put constraint upon PMC, we after detailed deliberation in preceding paragraphs have come to a conclusion that in case of small objections of PMC raised after expiry of deeming period of 21 days under Rule 7.7 of DC Rules under PMC, the date when the applicant acquired deeming sanction will be treated as the date of Completion (occupancy) Certificate to meet out the requirement of Explanation (ii) to Section 80IB (10)(a) of the Act. We have already discussed hereinabove what would be the small objections. In br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2007 and that it is found to be satisfied the building permit conditions. We may also mentions that the role of CMDA is quite distinct from that of the Corporation. CMDA looks at the plans from the perspective of the development and urbanisation of the city as a whole. On the other hand, the role of the Corporation while issuing completion certificate is to see that the unit is habitable in all respects like civic amenities and so on. Even for the sake of argument if the CMDA certificate is to be considered, then in that case, the assessee did apply for the completion certificate to CMDA certificate on 13.3.2006. It is a different matter that CMDA raised certain objections and the matter went upto the Hon ble High Court also. However, the fact remains that the project was completed much before the due date, may be with certain defects. Also, it has to be noted that the CMDA certificate is dated 13.6.2008, i.e. only two months and thirteen days beyond the due date. It is inconceivable that the type of defects which were pointed out by the CMDA could have been rectified in such a short period. Be that as it may, the Hon ble High Court also ratified the deviations and directed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 said modification/rectification could not be completed as local authority could not approve the modification as their files have been taken over by concern intelligence department for investigation of violation of urban land ceiling Act applicable to land in question at relevant point of time. This fact has not been disputed on behalf of revenue. Thus, assessee was prevented by sufficient reasonable cause w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment project in an area of 22 acres 19 guntas consisting of 5 residential blocks, row houses, oak tree place, a club, a community centre, a school and a park and claimed deduction under s. 80IB(10) in respect of two residential units only which if taken separately, were eligible for the relief - AO treated the entire project as a single unit and denied relief under s.80IB(10) in entirety - CIT(A) allowed relief under s. 80IB(10) treating the said two units as independent units - Justified - Material on record showed that the various local authorities duly inspected the plot and sanctioned plan for each of the blocks separately - Group housing approval was approval of a master plan as a concept - Further, the use of the words residential units in cl.(c) of s.80IB(10) means that deduction should be computed unit-wise - Therefore, if a particular unit satisfies the condition of s.80IB, the assessee is entitled for deduction and it should be denied in respect of those units only which do not satisfy the conditions - Again, the accounting principles would also mandate recognition of profits from each unit separately . 21.3 In view of the above decisions, we are of the considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four buildings H-1, H-2, H-3, H-4 and G building. The said G building was to be given to the PMC to be allotted to the weaker section of the society. The housing project was approved by the local authority on 28.05.2003 wherein plan for construction of whole project including H-1, H-2, H-3 G building, and first floor of H-4 building was sanctioned. The assessee was planning to purchase further TDR for construction of remaining floors of H-4 building. As the project was sanctioned before 01.04.2004, the due date of completion of the project was 31.03.2008. It is undisputed that the assessee has received the completion certificate in respect of H-1, H-2, H-3 G building on 19.03.2008 and 06.03.2007. However, in respect of the building H-4, the assessee submitted that the TDR could not be purchased and, therefore, the building H-4 could not be completed and hence the completion certificate was not issued by the PMC for the H-4 building having four flats. So the question before us is whether assessee is entitled for claim of deduction in respect of the profits from buildings H-1, H-2, H-3 and G-1 completed through completion certificate dated 06.03.2007 and 19.03.2008 as stated abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Brigade Enterprises Pvt. Ltd. (supra). We also find that such liberal interpretation should be used in favour of assessee when he is incapacitated in completing whole project because assessee could not complete H-4 building for the reasons beyond his control as stated above. It is settled legal position that law always gives remedy and law does wrong to no one. We are aware that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used alongwith word completion . This strict interpretation should be given in normal circumstances. However, in the case before us undisputedly assessee has completed the construction of buildings H-1, H-2, H-3 and G as stated above and assessee could not complete the construction of building H-4 for the reasons discussed above the assessee should not suffer for the same with regard to the completed portions of the project. The taxing statute granting incentives for promotion of growth and development be construed liberally and the provisions for promoting economic growth has to be interpreted liberally. At the same time restriction thereon has to be construed strictly so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
