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2015 (9) TMI 549 - ITAT HYDERABAD

2015 (9) TMI 549 - ITAT HYDERABAD - [2015] 43 ITR (Trib) 340 (ITAT [Hyd]) - 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 .....

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has been recognizing revenue from Sadguru Krupa project by following percentage 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) .....

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oses. - ITA Nos. 01 and 02/Hyd/2015 - Dated:- 26-8-2015 - SHRI P.M. JAGTAP 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 d .....

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₹ 38,74,435 in respect of its housing project named Vertex Sadguru Krupa 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 ass .....

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essee has not claimed 80IB(10) deduction in respect of other housing projects. 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 disall .....

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ing deduction u/s 80IB(10). As observed by ld. CIT(A), in course of appeal proceeding 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) f .....

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ng project and requires that assessee completes such construction within the 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. .....

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before us, none of the reasons on which AO disallowed assessee s claim of deduction 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 res .....

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pril, 2005, it has to be completed within five years from the end of the FY 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). .....

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the other hand, submitted, housing project of assessee approved by the local 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 .....

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t has to be completed within five years from the end of FY in which housing 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 submit .....

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d period. On a reference to provision as contained u/s 80IB(10), it is evident 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. .....

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l not deprive assessee from availing deduction u/s 80IB(10) in respect of each 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 buil .....

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icate in respect of six wings in Block 'N' was separately received by 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 .....

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ose of deduction u/s, 80 IB (10) of the Act. Similar view has been expressed 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 t .....

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for deduction u/s 80IB(10). 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 complete the project is five ye .....

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