TMI Blog2015 (6) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... tructed by the AOP and the claim was accordingly made in the hands of the AOP. Since these aspects were examined by the AOs at the time of original assessment, the opinion of the subsequent AO that AOP continued the project cannot be accepted. Lastly, with reference to the ‘project completion’ which was one of the reasons for reopening assessments and also for denying the deduction in AY. 2006-07 (which was upheld by the CIT(A)), this was on the basis of subsequent amendment to Sub-Section 10 of Section 80IB(10) w.e.f. 01-04-2005. Furnishing of 'Project Completion Certificate' was not even stipulated in AYs. 2003-04 and 2004-05, therefore, that cannot be the basis for reopening the assessments. Therefore, AO's stand on this regard cannot be accepted. Assessee has completed its project by 31-03-2008 and has requested the local authorities for approving the final project. If the local authorities did not issue the 'Project Completion Certificate' as requested by assessee, it is not possible to furnish the said certificate to the Revenue authorities. All the evidences on record do indicate that assessee has completed the project, therefore, just because assessee could not furnish t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 80IB(10). Recording the reasons accordingly, the AO issued notices u/s. 147 and completed the assessments disallowing the claim basically on 3 reasons: (a) That the housing project was started much before 01-10- 1998 by acquiring the land in the year 1996; (b) That AOP has not commenced the project rather continued the ongoing project of the individual members; and (c) That the project has not been completed within the specified limits i.e., on or before 31-03-2008. By elaborately discussing these issues, the AO in the impugned assessment years, disallowed the claim in the re-assessment proceedings in AY. 2003-04, 2004-05 2005-06 and u/s. 143(3) in AY. 2006-07. 3. Before the Ld.CIT(A) it was contended that assessee has complied with all the conditions of Section 80IB(10). These were verified by the AO at the time of original assessment, including field verification by the I.T.I. Subsequent reopening of assessment is nothing but change of opinion by the officer and there is no valid reason to reopen the assessment u/s. 147. It has raised various contentions and relied on various case law in support of the contentions, questioning the validity of reopening of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within 4 years from the end of the FY in which the housing project is approved by the local authority; Explanation for the purpose of this clause (i) In a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) 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. b) The project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Govt. or State Govt. for reconstruction or redevelopment of existing building in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf; c) The residential unit has a maximum built up area of 1,000 sq. ft., where such residential unit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-06-2003 25-08-1999 25-08-1999 07-01-2004 Type-III Malhar Bahar A (West) Bahar B (West) 07-07-1999 07-07-1999 15-02-2002 07-07-1999 15-02-2002 25-08-1999 25-08-1999 25-08-1999 Future Houses New Bahar A B Yaman 07-07-1999 25-06-2003 07-07-1999 25-06-2003 07-01-2004 07-01-2004 Plotted House Kalyani 07-07-1999 25-06-2003 07-01-2004 To find out whether the assessee had followed the eligibility criteria for claiming deduction under sec. 80IB (10) of IT Act and whether the project was built within the frame-work of this Section, the Inspector of this office was directed to visit the project site and verify the construction activity going on in the site. The Inspector physically inspected the project with the help of one Civil Engineer, Shri Bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Type-I Type-II Type-II Type-III Vrindavani Gandhar New Malhar Malhar 300 sq. ft. to 312 sq. ft. 509 sq. ft. to 527 sq. ft. 815 sq. ft. to 858 sq. ft. 768 sq. ft. to 779 sq. ft. Row Houses Bahara A (West) Category I 640 sq. ft. to 648 sq. ft. Alfa 819 sq. ft. to 829 sq. ft. Beta 940 sq. ft. to 951 sq. ft. Gama 1460 sq. ft. to 1464 sq. ft. Future Group Houses Yaman Type-I 1130 sq. ft. to 1135 sq. ft. Type-II 810 sq. ft. to 815 sq. ft. New Bahar 810 sq. ft. to 816 sq. ft. Kalyani Plotted Houses 1508 sq. ft. to 1520 sq. ft. No. of shops sold 30 shops The assessee has taken separate approval for each Type of Block. During the year, the assessee sold 30 commercial shops, which is verified from the sale deeds furnished. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ld. DR vehemently submitted that there was no change of opinion as contended by assessee and accepted by the Ld.CIT(A) as assessee has not furnished 'Project Completion Certificate' nor furnished the complete details of AOP as pointed out by the AO. It was the submission that the original project has started way back in 1996 and therefore, it did not satisfy the conditions laid down u/s. 80IB(10). Ld. DR relied on the following: (a) Hon'ble Supreme Court in the case of Rajesh Jhavery stock Brokers P. Ltd [291 ITR 500] (SC); (b) Central Provinces Manganese ore Co Ltd Vs ITO [191 ITR 662]; for reopening and (c) Co-ordinate bench decision in the case of Sainath Estates P. Ltd., vs. DCIT 08-02-2013 for the proposition that deduction was not allowable on failure to furnish completion certificate of housing project. Detailed written submissions were also placed on record in support of the contentions. 7. Ld. Counsel for the assessee however, countering the arguments of the DR submitted that land was acquired way back in 1996 on which there is no dispute. But, the AOP was constituted by the members contributing the land as their capital and referred to various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO cannot insist on 'Project Completion Certificate' based on subsequent amendment and cannot deny the deduction as relevant authorities are not issuing the certificate, even though assessee has indeed completed the project within the time limits, even contemplated by the amended provisions. However, the main contention of the Ld. Counsel is that assessee cannot be asked to fulfill the condition which was not there when the project was approved and the condition was not stipulated at the time of claiming the deduction. 9. We have considered the rival contentions and perused the records and Paper Book placed on record. As far as reopening of assessments u/s. 147/148 are concerned, we agree with the Ld.CIT(A) that this is a mere change of opinion. In fact, the AO at the time of completion of assessment has indeed taken pains in examining the eligibility and also deputed his inspector and allowed the deduction after due verification. There is also no dispute that the relevant provision of Secton 80IB(10) at the time of claim in AY. 2003-04 was as under: (10) The amount of profits in case of an undertaking developing and building housing projects approved before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not eligible for deduction. This contention cannot be accepted as the project was not even approved by the local authorities. Not even by 01-10-1998, as can be seen from the approvals stated above. Therefore, the project has started after 01-10-1998 and therefore, the contention of the AO that the project started before that date is not factually correct. Moreover, claim of assessee that assessee has entered into joint venture agreement and all the parties have started the project in their individual capacity. As per record, members contributed their land as capital, whereas the project was conceived and constructed by the AOP and the claim was accordingly made in the hands of the AOP. Since these aspects were examined by the AOs at the time of original assessment, the opinion of the subsequent AO that AOP continued the project cannot be accepted. Lastly, with reference to the project completion which was one of the reasons for reopening assessments and also for denying the deduction in AY. 2006-07 (which was upheld by the CIT(A)), this was on the basis of subsequent amendment to Sub-Section 10 of Section 80IB(10) w.e.f. 01-04-2005. Furnishing of 'Project Completion Certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in the case of CIT Vs. M/s. Brahma Associates [333 ITR 289]. Hon'ble Supreme Court vide para 12 has held as under: 12. The issues dealt with from paras 21 to 25 by the High Court already stands approved by this Court. In para 29, the High Court has held that clause (d) has prospective operation, viz., with effect from 01-04-2005, and this legal position is not disputed by the Revenue before us. Wheat follows from the above is that prior to 01-04-2005, these developers/assessees who had got their projects sanctioned from the local authorities as 'housing projects' even with commercial user, though limited to the extent permitted under the DC Rules, were convinced that they would be getting the benefit of 100% deduction of their income from such projects under Section 80IB of the Act. Their projects were sanctioned much before 01-04-2005. As per the permissible commercial user on which the project was sanctioned, they started the projects and the date of commencing such project is also before 01-04-2005. All these assessees were made known of the provision by which these projects are to be completed as those dates have been specified from time to time by su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicate that assessee has completed the project, therefore, just because assessee could not furnish the 'Project Completion Certificate', the deduction cannot be denied on that basis. the eligible deduction cannot be denied to the assessee. 15. In view of the above, we uphold the orders of the CIT(A) setting aside the reassessment proceedings in AYs. 2003-04, 2004-05 and 2005-06. Revenue appeals have no merit and accordingly they are dismissed. 16. As far as AY. 2006-07 is concerned, for the detailed discussion made above, assessee is eligible for deduction u/s. 80IB(10) and therefore, AO is directed to allow the same. Since the assessment is completed u/s. 143(3), issue of reopening does not arise. Therefore, on merits, assessee's contentions are accepted and AO is directed to allow the deduction. 17. The cross appeals are in support of CIT(A)'s order. Since we have dismissed all the appeals of Revenue, all the Cross appeals have become academic in nature and considered as infructuous. Penalty orders in ITA No. 1499/Hyd/2012, C.O.No. 160/Hyd/2012 (AY.2003-04) 1501/Hyd/2012, C.O.No. 162/Hyd/2012 (AY.2004-05) : 18. The AO levied penalty u/s 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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