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Vertex Homes Pvt. Ltd. Versus Dy. Commissioner of Incometax, Circle – 3 (3) , Hyderabad

2015 (9) TMI 549 - ITAT HYDERABAD

Eligibility to claim deduction u/s 80IB(10) - Held that:- Provisions of section 80IB(10) being beneficial in nature, too technical a approach, would defeat the purpose for which provision has been brought into the statute. Moreover, as far as ld. CIT(A)’s observation that the housing project should have been completed by 31/03/2011, we do not find the same to be acceptable. As assessee’s housing project has been approved after 1st April, 2005, the stipulated period within which assessee has to c .....

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tage completion method and project of the assessee has started in FY 2007-08. As it appears, assessee in the years under consideration i.e. AYs 2010-11 and 2011-12 has recognized revenue on percentage completion method and has also claimed deduction u/s 80IB(10) on that basis. Therefore, it is very much necessary and essential to verify whether deduction claimed in these two AYs is for the entire project (all six blocks) or only blocks A, B & F. Neither the AO has examined this aspect nor the as .....

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AP AND SHRI SAKTIJIT DEY, JJ. For The Assessee Shri V. Raghavendra Rao For The Revenue Shri Prabhat Kumar Gupta ORDER PER SAKTIJIT DEY, J.M.: These appeals by assessee are directed against separate orders, both, dated 07/11/2014 of ld. Commissioner of Income-tax (A) -IV, Hyderabad for AYs 2010-11 and 2011-12. 2. The solitary issue arising for consideration in both the appeals is related to denial of assessee s claim of deduction u/s 80IB(10) of the Act. 3. As facts are common in both the appeals .....

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pa situated at Survey Nos. Part 76/B and 77/B, Hydernagar Village, Nizampet Road, Hyderabad. During the assessment proceeding, AO while examining assessee s claim of deduction u/s 80IB(10), found from the information available on record that though assessee claimed to have acquired land in Survey No. Part 76/B and 77/B, Hydernagar Village, Nizampet Road, Hyderabad, from some persons, but, lands were never acquired by assessee company, but, they were taken for execution of works contract on lease .....

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s. He observed that assessee has shown relatively high profit percentage of 8.81 in respect of Sadguru Krupa compared to other projects. On the basis of the aforesaid reasoning, AO disallowed assessee s claim of deduction u/s 80IB(10). Being aggrieved of disallowance of claim of deduction u/s 80IB(10), assessee challenged the same in appeal preferred before ld. CIT(A). 5. Assessee contesting the ground on which AO disallowed assessee s claim of deduction u/s 80IB(10) advanced detailed argument. .....

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roceeding when assessee was asked to furnish the completion certificate for the Sadguru Krupa project, assessee filed a partial completion certificate dated 31/12/2011 issued by GHMC wherein it was mentioned that out of six blocks in the project i.e. Block A to F, assessee has completed three blocks i.e. A, B & F with all amenities which are fit for occupation. From completion certificate issued by GHMC, ld. CIT(A) found that though the approval for the project was for construction of six re .....

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specified period, hence, no benefit can be allowed on partial completion of the project. In this context, she referred to the CBDT Instruction No. 4/09 dated 30/06/09. She also placed reliance upon a decision of the ITAT, Hyderabad Bench in case of Sainath Estates Pvt. Ltd., in ITA No. 299-300/Hyd/12, dated 08/02/13 wherein it was held that furnishing of completion certificate in terms of section 80IB(10) is mandatory. Thus, ld. CIT(A) concluded that as assessee has not completed the entire hou .....

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eduction u/s 80IB(10) were found to be valid by ld. CIT(A). However, ld. CIT(A) found out a new reason in disallowing assessee s claim of deduction u/s 80IB(10) by holding that as assessee has failed to furnish completion certificate for the entire project and only submitted a partial completion certificate it is not eligible for deduction u/s 80IB(10). Ld. AR submitted, approval granted by competent authority is for residential apartments and not any particular project. Ld. AR submitted, assess .....

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in which housing project is approved. He submitted, ld. CIT(A) has therefore completely erred while observing that assessee should have completed the project by 31/03/2011. Ld. AR submitted, assessee having completed three blocks with all amenities which covers an area of more than one acre and as the built up area of each residential unit is not exceeding 1500 sq.ft., it is eligible for claiming deduction u/s 80IB(10). He submitted, only because some other blocks in the housing project have not .....

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l authority consists of six blocks, whereas, assessee has submitted completion certificate in respect of three blocks. Therefore, since construction of the entire housing project i.e. six blocks have not been completed, assessee is not eligible to avail deduction u/s 80IB(10). Ld. DR referring to the provision contained u/s 80IB(10) submitted, assessee has to complete entire housing project within the stipulated time of five years. As assessee has not completed the entire housing project and has .....

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project was approved for claiming deduction u/s 80IB(10). In the present case, there is no dispute to the fact that within the stipulated period of five years, assessee has completed only three blocks i.e. Block A, B & F whereas the other three blocks C, D & E have not been completed. Assessee also admits this factual position. It is also a fact on record that in respect of block A, B & F, assessee has submitted a completion certificate from the municipal authorities certifying that .....

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nt that assessee shall be eligible for 100% deduction of the profits derived in respect of a housing project subject to fulfillment of the conditions mentioned therein. In the present case, there is no dispute that block A, B & F comprises of area of more than 1 acre. There is also no dispute to the fact that none of the residential unit in the aforesaid three blocks is having a built up area in excess of 1500 sq.ft. It is also a fact on record that in respect of the aforesaid three blocks, .....

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ch of the completed block on stand alone basis. The Hon ble Bombay High Court in case of CIT Vs. Vandana Properties (supra) while referring to the term housing project has observed that it has not been defined either u/s 2 of the Act or u/s 80IB(10), hence, it has to be understood as per common parlance. The Hon ble Court observed that housing project in common parlance would mean constructing a building or group of buildings consisting of several residential units. Therefore, deduction u/s 80IB .....

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y the assessee and all the flats in Block were less than 1000 sq.ft. It was held by the Tribunal that it is not upon to the revenue to include block 'BC' as part of block 'N' just to deny relief to the assessee u/s. 80 IB(10). The Tribunal observed that Block "BC" was meant for higher strata of the Society had been kept separately by assessee in all the respect, assessee had not claimed relief u/s. 80IB in respect of Block "BC". In the case of Mudhit Madanlal .....

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by Mumbai Bench of the Tribunal in the case of Vandana Properties(supra). 8.1 Thus, the principle which emerges from the aforesaid judicial precedents is, even a single building consisting of a number of residential units can be considered to be a housing project by itself, hence, will be eligible for deduction u/s 80IB(10), if it otherwise fulfills the conditions of section 80IB(10). Applying the aforesaid principles to the facts of the present case, it is very much evident that blocks A, B &a .....

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in nature, too technical a approach, would defeat the purpose for which provision has been brought into the statute. Moreover, as far as ld. CIT(A) s observation that the housing project should have been completed by 31/03/2011, we do not find the same to be acceptable. As assessee s housing project has been approved after 1st April, 2005, the stipulated period within which assessee has to complete the project is five years. Assessee having completed blocks A, B & F within five years from th .....

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