TMI Blog2014 (2) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... since the assessee has done whatever possible on his part, i.e. duly applied to PMC for issue of completion certificate, handed over possession of the flats/row houses to the respective buyers, PMC has started levying municipal taxes and electricity bills paid by respective owners – thus, the deduction u/s.80IB(10) cannot be denied to the assessee for non-receipt of completion certificate from PMC before 31-03-2008 which was beyond the control of the assessee – thus, the order of the CIT(A) denying benefit of deduction u/s.80IB(10) for non-receipt of completion certificate is set-aside and the grounds raised by the assessee on this issue are allowed. The decision in M/s. Rahul construction Co. Vs. ITO [2012 (6) TMI 319 - ITAT PUNE] followed - The approval of the housing project and approval of building plan are two different concepts – the housing project does not necessarily have to be various group of buildings constructed on that particular land, but it can also be a particular building or any building which is part of a large project - whatever portion of the housing project is otherwise found to be eligible has to be considered as a housing project for the purpose of deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time, the project was to be completed on or before 31-03-2008. However, during the survey, it was observed by the survey team that completion certificate in respect of the project in question was not granted by the local authority till 31-03- 2008 and also that the assessee failed to construct Buildings B and F which was part of the layout originally sanctioned by the local authority. Accordingly, the Assessing Officer came to the inference that the project did not meet the necessary criteria prescribed in Sec.80IB(10) so as to be eligible for deduction u/s.80IB(10) and therefore, the deduction already granted ought to be withdrawn. He accordingly issued notice u/s.148 after recording the following reasons : 1. The assessee company is a builder and developer. The company has undertaken various projects, viz., Runwal Paradise, Runwal Luxor/Trinity, Runwal Eden, Runwal Sinclair Runwal Maestro/Florentine, and has claimed deduction u/s.80IB(10) during the year. A survey u/s.133A was conducted on 28- 02-2006 to verify the allowability of Sec.80IB(10) of the Act. During survey, it was noticed that except Runwal Paradise, the area of these projects were less than 1 acre (as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot convinced with the explanation given by the assessee and held that the deduction already allowed u/s.80IB(10) in the original assessment has to be denied to the assessee for the following reasons (Page 6 7 of the assessment order) : (1) Provisions of section 80IB(10) are specific. They are not vague nor ambiguous. Explanation (ii) to section 80IB(10)(a) is specific in as much as it states that the date of completion of construction of the 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 . This explanation does not leave any room for the Assessing Officer to accept any other evidence. In support of the date of completion of construction, other than the completion certificate issued by the local authority, viz. The Pune Municipal Corporation in our case. I am therefore unable to proceed in favour of the assessee on the strength of the completion certificates issued by the assessee s architect. (2) It was only in the course of the second survey dated 29-05-2008 that the Department came to know that out of the six buildings viz, A, B, C, D, E and F, the assessee had not comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyond doubt that the assessee is not entitled to the benefits of deduction under Section 80IB(10). He accordingly denied the claim of deduction u/s.80IB(10)made by the assessee amounting to Rs.3,73,07,726/-. 5. Before CIT(A) apart from challenging the re-opening of the assessment u/s.147 the assessee also challenged it on merit. It was submitted that the Assessing Officer has erred in rejecting the claim of the assessee citing that the completion certificate was not obtained before 31-03-2008. It was argued that during the course of assessment proceedings, it was submitted before the Assessing Officer that the assessee had completed the above referred project before 31st March, 2008 and that the assessee had, in fact, even given the possession of all the flats and the Corporation had also started levying the taxes which the Assessing Officer has not disputed. It was argued that the assessee had made an application for issue of completion certificate to the PMC before 31st March 2008and this fact was brought to the notice of the AO. It was strongly contended that the project was complete in all respects before 31-03-2008. Describing the process of obtaining of the completion ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units cannot be treated to be a separate project. The project in respect of which deduction u/s.80IB(10) was claimed by the assessee was not completed as per plan originally sanctioned by the local authority and therefore the assessee is not eligible to claim deduction u/s.80IB(10) in respect of the project named as Runwal Paradise . 8. Distinguishing the various case decisions cited before him and relying on the decision of the Chennai Bench of the Tribunal in the case of ACIT Vs. Viswas promoters Pvt. Ltd. reported in 126 ITD 263 he held that the assessee is not eligible to claim deduction u/s.80IB(10) in respect of the project named Runwal Paradise . 9. So far as the contention of the assessee that incentive provision should be incorporated in a liberal way so as to advance the objects for which the beneficial legislation is introduced in the statute, he noted that the above contention of the assessee cannot be accepted. According to him when the admissibility of deduction u/s.80IB(10) is circumscribed by certain conditions provided therein, which inter-alia include conditions that profit must be derived from approved housing project, issue of completion certificate within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire project and the Municipal Taxes were also levied in respect of all the units which were constructed by the assessee. (b) The assessee had also made an application for obtaining the completion certificate to the local authority much before 31-03-2008 and it was beyond the control of the assessee to get the completion certificate on or before 31-03-2008 and hence, the assessee should not have been penalized for non receipt of the completion certificate before 31-03-2009. (c) The assessee had cancelled the plan for construction of the buildings B F and they were not part of the project and this fact was clarified to the AO in the assessment completed u/s.143(3) and hence, the CIT(A) erred in holding that the assessee had not completed the construction of the entire project since the buildings B F were not constructed by the assessee. 7. The learned CIT(A) erred in not appreciating that the condition of completion of the project by 31st March, 2008 in respect of the project which was started prior to 31st March, 2004 was introduced w.e.f., A.Y. 2005-06 and therefore, the same was not applicable to A.Y. 2003-04 and hence, the deduction should not have been denied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wners as an evidence of possession, therefore, notwithstanding the non-receipt of completion certificate the assessee has proved beyond doubt that Building No. A, C, D E and the row houses have been completed in every respect. Therefore, the assessee has completed the above buildings for which the assessee is entitled to deduction u/s.80IB(10). Referring to Page Nos. 55 to 61 of the Paper Book the learned counsel for the assessee drew the attention of the Bench to the date-wise possession of the flats to the respective flat owners which was given to the AO vide letter dated 06-11-2009 as per Paper Book Page No.45. Referring to Page No. 65 of the Paper Book the learned counsel for the assessee drew the attention of the Bench to the total plot area of the project which is 3.30 acres. He submitted that after excluding the area of building B F which has not been constructed, the total area comes to 2.41 acres. He submitted that since the total area of the project on which deduction has been claimed u/s.80IB(10) is more than 1 acre and since the assessee has completed the buildings A, C, D and E and 17 row houses, therefore, the assessee is entitled to deduction u/s.80IB(10). 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich do not satisfy the condition. 13.2 Referring to the decision of the Pune Bench of the Tribunal in the case of Magarpatta Township Development and Construction Co. Vs. DCIT Vide ITA No.822/PN/2011 and CO. No.04/PN/2012 he submitted that the Tribunal in the said decision has held that whatever portion of the housing project satisfies the conditions of the section 80IB(10) should be considered as a housing project for the purpose of section 80IB(10). He also relied on the following decisions : (a) Dy. CIT Vs. Aditya Developers - ITA No. 791 792/PN/2008 order dated 30-01-2012. (b) CIT Vs. Vandana Properties - Tax Appeal No.3633 of 2009 with Tax Appeal No.4361 of 2010 (Bombay High Court) order dated 28-03-2012 (c) Kunden Real Estate Vs. ITO - ITA No.1216/PN/2010 ITA No.1057/PN/2011 order dated 26-06-2012. (d) Hindustan Samuha Awas Ltd. Vs. ITO ITA No.945 to ITA No. 950/PN/2010 order dated 30-08-2011. (e) Dy. CIT Vs. M/s. Ekta Housing Pvt. Ltd. ITA No.3649/M/09 order dated 20-05- 2011. (f) Saroj Sales Organisation Vs. ITO reported in 115 TTJ 485 (g) Dy. CIT Vs. Brigade Enterprises (P) Ltd. reported in 119 TTJ 269 (Bangalore) (h) Mudhit Madanlal Gupta Vs. ACI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court on that question. Since nothing has been brought to the notice of the Bench against the decision of the Hon ble Gujarat High Court, therefore, the same is binding on the Tribunal. 17. So far as the decision of the Chennai Bench of the Tribunal in the case of ACIT Vs. Viswas Promoters (P) Ltd. (Supra) is concerned, the learned counsel for the assessee submitted that the facts therein are distinguishable as in that case, the assessee had completed 4 housing project. Out of those 4 projects, in 2 projects assessee had constructed flats exceeding 1500 sq.ft. and also flats of less than 1500 sq.ft. in area. The assessee claimed deduction u/s.80IB(10) in respect of flats having area less than 1500 sq.ft. The AO denied said deduction on the ground that housing project comprised of residential units exceeding 1500 sq.ft., thus all conditions stipulated in statute were not satisfied. The Tribunal justified the action of the AO. He submitted that the ratio of the above decision is not applicable to the facts of the present case which are on different footing. He accordingly submitted that the assessee is entitled to deduction u/s.80IB(10) on the 4 buildings and the 17 row houses. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Q.8. Whether the construction is completed in respect of all the buildings as per revised plan dated 10-01-2003, Commencement Certificate No.1372? Ans. Construction is completed before 31st March 2008 in the entire scheme Runwal Paradise to the extent that we want to build and enjoy the FSI of the project and the area used 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 Commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration, on 5-5-2008. Sub-clause (i) of clause (a) to section 80-IB(10) requires that the construction of the project in question is to be completed on or before 31-3-2008. Clause (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 func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion certificate filed before the local authority is relevant one. In the instant case, the said date is 25- 3-2008 and the assessee filed requisite form before the local authorities 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 objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of a housing project is to be taken to be the date on which completion certificate is issued by the local authority, which in the present case is issued on 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. 20.2 We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (a) to section 80IB(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 . 20.3. We find the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. Vs. ITO vide ITA Nos 945 to 950/PN/2010 order dated 30-08-2011 has held as under : 7. We have considered the above view points of the parties in disputed. We find that it is a fact that the assessee through its architect had filed application with the AMC for issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 precedign 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 brief those objections which do not affect the main project and are generally temporary constructions. 20. We thus while setting aside orders of the authorities below direct the A.O to allow the claimed deduction u/s. 80IB(10) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 CMDA to consider the explanation of the assessee. All these facts go to point that the project was indeed completed before the 31.3.2008. Thus, this ground also has no force to deny the assessee the impugned deduction. C Extract from the decision of the Tribunal in the case of M/s. D.K.Construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction as per Explanation (ii) of Section 80IB(10)(a) of the Income-tax Act, 1961. What is crucial is date mentioned in the letter so issued certifying completion of the Project. Thus, the date of issue of letter is not important, but the date mentioned in the letter certifying completion of project is important. We, therefore, do not find may merit in the observation of the lower authorities to the effect that the date of completion shall be taken the date on which certificate is physically issued by the Local Authorities. 9. From the above, one this is clear that the date that appear on the Architect s Completion certificate filed before the local authority is a relevant one. In the instant case, the said date is 25-3-2008 and the assessee filed requisite form before the local authorities 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 certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee s housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT(A). The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s.80IB(10) could not be granted to assessee on incomplete construction at relevant point of time. Regarding proportionate deduction in respect of 173 of 205 flats of project completed as recognized by local authority, i.e., PMC in its completion certificate No.BCO/03/01333 dated 31.03.2008, the Ld. Authorised Representative heavily relied on decision of Bengal Ambuja Housing Development Ltd. (supra), Brigade Enterprises P. Ltd. (supra), AIR Developer (supra), Sheth Developers (supra) and also G.V.Corporation (supra), wherein deduction u/s.80IB(10) was denied as size of some of the residential units exceeded prescribed limit as laid down u/s.80IB(10) of the Act. Above mentioned decisions are applicable in their own sphere, i.e. on point of excess area of some of the flats which hold good in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing statute should be construed harmoniously with the object of statue to effectuate the legislative intention. In view of above facts and circumstances, we hold that assessee is entitled for benefit u/s.80IB(10) of the Act in respect of 173 flats completed before prescribed limit. The Assessing Officer is directed accordingly. 7. As a result, the appeal of the assessee is disposed off as indicated above. In the light of the above discussion the order of the CIT(A) denying benefit of deduction u/s.80IB(10) for non-receipt of completion certificate is set-aside and the grounds raised by the assessee on this issue are allowed. 21. So far as the second grievance of the Revenue that Building Nos. B and F are not constructed and therefore the project has not been completed as per the approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project has been firstly approved by the local authority will be treated as approval in respect of the housing project. When we read Explanation (ii) with Explanation (i) it makes clear that completion of construction of such building plan first approved by the local authority will be taken the date of completion of construction of such building plan when completion certificate has been issued by the local authority. In other words, in clause (i) of the Explanation, it has been made clear that would be the housing project, first approval of which, by the local authority would be taken as starting point of the Housing Project and in clause No. (ii), it has been made clear that what would be the Completion Certificate in respect of such housing project issued by local authority to compute the prescribed time limit for verification of eligibility of assessee for the claimed deduction. In view of the above explanation, we find substance in the contention of the ld. A.R. that approval of the housing project and approval of building plan are two different concepts. The Bangalore Bench of the Tribunal in the case of DCIT Vs. Brigade Enterprises (P) Ltd. (Supra) has held that plan for dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished in this regard by the assessee that under the project Atul Nagar consisting of buildings A1 to A5, the first building plan for A type was approved by the PMC on 29.4.2003 vide Commencement Certificate No. 4269 (page No. 4 of the paper book). However, actual construction of A type building was executed as per the revised plan vide No. C.C. 4101/27/6/2003 (PAGE No. 5 of the paper book). The size of the plot on which the A type building i.e. A1 to A6 have been constructed is 1,39,466 sq.ft. The project A type building i.e. A1 to A5 consists of 360 residential units and the construction has been completed between 10.1.2005 to 31.8.2005 (page Nos. 6 to 9 of paper book). The authorities below have also not disputed this material fact that residential units has a maximum built up area of 1500 sq.ft. Likewise, these material facts that B Group buildings in Rahul Nisarg Co-operative Housing Society Ltd., have been constructed on land area of 138203 sq.ft., has not been denied by the authorities below. They have also not denied these material facts that the first building plan was sanctioned on 29.4.2003 vide Commencement Certificate No. 4269 issued by the PMC (Page No. 16 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction. The various decisions relied on by the revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction u/s.80IB(10) in respect of building No. A,C,D, E and the 17 row houses. The grounds raised by the assessee on this issue are accordingly allowed. 22. In the result, the appeal filed by the assessee is partly-allowed. ITA No. 1016/PN/2011 and ITA No.1017/PN/2011 (A.Y. 2004-05 2005-06): 23. After hearing both t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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