TMI Blog2015 (9) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the denial of deduction u/s.80IB(10) for non production of completion certificate for the 7th building is not justified in view of the decision of M/s. Satish Bora & Associates Versus Assistant Commissioner of Income Tax (2011 (1) TMI 1215 - ITAT PUNE ). In view of the above decision, the assessee is not required at all to submit the completion certificate since the project has admittedly been approved prior to 01-04-2005. Therefore, the claim of deduction u/s.80IB(10) in respect of all the 7 buildings in our opinion has to be allowed to the assessee. We hold and direct accordingly. In view of our above findings, the grounds raised by the revenue challenging the pro-rata deduction granted by the CIT(A) become infructuous and are dismissed. - Decided in favour of assessee. - ITA Nos.908 to 910/PN/2010, ITA Nos.1873 to 1875/PN/2013, ITA Nos.1941 to 1943/PN/2013 - - - Dated:- 28-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Appellant: Shri S.N. Doshi For The Department Shri Rajesh Damor ORDER PER R.K. PANDA, AM ITA Nos. 908 to 910/PN/2010 filed by the assessee relating to Assessment Years 2007-08, 2006-07 2005-06 respectively are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.147 or 263 has been initiated. Relying on various decision the Ld. Counsel for the assessee submitted that the reopening is bad in law and therefore cannot be upheld. He also relied on the following decisions 1. Telco Dadajee Dhackjee Limited Vs. DCIT ITA No.4613/Mum/2005 order dated 12-05-2010 2. HV Transmissions Ltd. Vs. ITO ITA No.2230/Mum/2010 order dated 07-10-2011. 5. The Ld. Departmental Representative on the other hand submitted that after completion of the assessment for A.Y. 2004-05 certain facts came to the notice of the AO which led him to initiate reassessment proceedings u/s.147/148. He submitted that during the course of assessment proceedings for A.Y.2007-08 the AO made enquiries with the local authority, i.e. Pune Municipal Corporation vide her letter dated 19-06-2008. In response to the said enquiry, the Deputy City Engineer Pune Municipal Corporation vide his letter dated 21-06-2008 submitted various details along with copies of 2 documents, viz., part completion certificate dated 16-12-2006 and a notice issued by the Pune Municipal Corporation dated 12-11-2007 according to which the Pune Municipal Corporation has issued only part completion certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the argument of the Ld. Counsel for the assessee that no reasons are recorded for issue of notice u/s.148 for both these assessment years, we find from the perusal of the order sheet entries that the reasons recorded by the AO are sufficient for reopening of the assessment. The argument of the Ld. Counsel for the assessee that the reopening is based on change of opinion is without any merit since the assessments for A.Yrs. 2005-06 2006-07 were completed u/s.143(1) and therefore there was no application of mind by the AO. Therefore, it cannot be said that the reopening of the assessments is based on change of opinion especially when new tangible material has come in the possession of the Assessing Officer. In this view of the matter, we are of the considered opinion that the reopening of the assessments by the AO is valid. The grounds raised by the assessee on this issue for A.yrs. 2005-06 2006-07 are accordingly dismissed. 9. So far as the second issue is concerned, i.e. non consideration of the alternate ground relating to pro-rata deduction for A.Yrs. 2005-06 to 2007-08, we have held in the succeeding paragraphs that the assessee is eligible for deduction u/s.80IB(10) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation given by the assessee for the following reasons 5.1 The Hon ble Mumbai High Court has quashed the order owing to the inordinate delay in initiation of the proceedings and not on merits. 5.2 It is clear that the PMC raised its objection and much beyond the stipulated period of 21 days from the receipt of the application for the completion certificate and thus fulfils the condition laid down in rule 7.7 of the Development Control (DC) Rules of the PMC, as far the time limit is concerned. However the objection raised by the PMC vide letter dated 25.10.2007 was a major objection whereby the notice for stopping the construction was given. 5.3 It is a fact that it was the land owner who filed a writ petition. The assessee is a party as an intervener. However the assessee's argument that is no dispute of the title of the housing project, since the assessee has only taken development rights, is not fully acceptable. It is to be appreciated that the assessee, as a promoter and builder, has an onerous responsibility to not only have the FSI conveyed to the flat owners but also the conveyance of the land to the proposed society in which the flat owners are members. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of augmenting affordable dwelling units; not withstanding Legislature's unambiguous objective of introducing tax benefits under Sec. 80IB(10) for augmenting availability of dwelling units for low and middle class. If this is the intention of the Legislature, the housing project in respect of which 80IB(10) claim is to be made, should be free from all tribulations i.e, the project should be free from all techno-legal aspects. Therefore, even if for some technical problems, as in the case of the assessee, the project do not get completion certificate, the intent of Legislature gets defeated. The provision of section 80IB(10) is a beneficial provision to the assessee. However, the conditions stipulated for getting the deduction needs to be fulfilled strictly. In the present case, though the assessee fulfills the other requisite conditions, the condition regarding the completion of the project within the stipulated period, may be due to some technical reasons, has not been fulfilled by the assessee and therefore the assessee's claim for deduction u/s.. 80IB(10) fails. 5.6 It is pertinent to mention that the Department has preferred appeal to the High Court u/s 260A, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility of razing down unauthorized construction thereon. The Assessing Officer also noted that the department had not accepted the decision of the ITAT, Pune in the case of Satish Bora and Associates and had filed a reference before the High Court in that case. 4.7 The appellant s submission is that the Assessing Officer has travelled beyond the confines prescribed by the ITAT in examining the facts to see if Satish Boar case is applicable. This submission is not found to be correct. In the Satish Bora decision the ITAT held in the concluding para 19.2 that in case of small objections raised by PMC after expiry of deeming period of 21 days under rule 7.7 of DC Rules, the date of receiving deeming sanction, i.e. date of occupancy certificate would meet the requirements of Explanation (ii) of Sec.80IB(10)(a). The relevant para reads as under Since Intact 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding D-7 as per their letter dated 05.11.2012 addressed to the Assessing Officer. Hence, it cannot be considered that the requirement of Sec 80IB(10)(a)(i) r/w explanation (ii) has been met In view of this, it is seen that the directions laid down by the ITAT, Pune are found to have been appropriately followed and applied by the Assessing Officer, keeping in view the ratio of Satish Bora case. Accordingly, it is held that the Assessing Officer has correctly appreciated the caveats laid down in Satish Bora case after examining the factual aspects of the appellant's case. 4.10. The alternative contention of the appellant is that deduction u/s 80IB10) may be allowed in respect of the six buildings which are admittedly completed before 31.03.2008. Reliance has been placed on the following decisions of ITAT, Pune at Bombay High Court a) M/s. Vandana Properties ITA No. 3633 of 2009 Bombay High Court dated 28/03/2012. b) Runwal Multi Housing Pvt. Ltd. ITA No. 1015 to 1017/PN/2011 decided on 21/11/2012 Pune Bench. c) M/s. Rahul Const ITA No. 1250/PN/2009 707/PN /2010 for AY. 2006-07 2007-08 dated 30/03/2012 d) Magarpatta Township Development Construction Co. dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an was approved by Local Authority for 7 buildings thus the assessee violated the provision of sub section (ii) of clause (a) to section 80IB(10) of the Act, 1961. 4. For these and such above other grounds as may be urged at the time of the hearing, the order of the learned CIT(Appeals) may be vacated and that of the Assessing Officer be restored. 5. The appellant craves, leave to add, amend, alter or delete any of the above ground of appeal during the course of the appellant proceedings before the ITA T. 16. The Ld. Counsel for the assessee submitted that there is no dispute that in respect of 6 buildings Pune Municipal Corporation had granted the occupancy certificate on 16-12-2006. So far as the profit in respect of the 7th building is concerned, i.e. Building No. D7 the Tribunal in the earlier order while deciding the appeal has in principle held that the profit in respect of the entire housing project including the 7th building is eligible for deduction u/s.80IB(10). The Hon ble Tribunal, however, required the AO to verify the correctness of the additional evidences filed before the Tribunal. The decision of the Tribunal was misconstrued by the AO who again confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the AO and CIT(A) on the basis of the notice issued by the Pune Municipal Corporation dated 12-11-2007 does not exist because the said notice has been vacated by the order of Hon ble Bombay High Court on a Writ Petition filed by the land owners as well as Civil Application filed by the asssessee. He submitted that the Pune Municipal Corporation by its letter dated 09-09-2010 vacated the notice dated 12-11-2007 suggesting very clearly that even the socalled discrepancy never existed on the said date. He submitted that in the instant case the licensed architect filed the application dated 17-05-2006 along with the completion certificate for providing occupancy certificate for all the 7 buildings. The PMC granted occupancy certificate on 16-12-2006 for 6 buildings and nothing objectionable was heard in respect of the 7th building. He submitted that as per Rule 7 of Development Control Rules if nothing is received within 21 days from the date of filing the application and no major violation is found in the construction completed, it has to be held that there is deemed completion/occupancy certificate. For the above proposition, he relied on the decision of the Pune Bench of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) the date of completion of the housing project shall be the date on which the completion certificate in respect of such housing project is issued by the local authority. According to the AO, the provisions of section 8IB(10) is a beneficial provision to the assessee and therefore the conditions stipulated for getting the deduction need to be fulfilled strictly. In the instant case, though the assessee fulfils the other requisite conditions, the condition regarding the completion of the project within the stipulated period has not been fulfilled by the assessee and therefore no deduction u/s.80IB(10) can be given to the assessee. As regards the reliance on the decision of the Tribunal in the case of M/s. Satish Bora and Associates (Supra) is concerned, the AO held that since the department is in appeal before the Hon ble High Court, therefore, the same cannot be followed. 22. We find in appeal the Ld. CIT(A) allowed the claim of prorata deduction in respect of the 6 buildings which were admittedly completed before 31-03-2008. While doing so, he relied on various decisions of the Tribunal and the decision of the Hon ble High Court in the case of M/s. Vandana Properties (Supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visional authority could not have issued directions of levying penalty at the rate mentioned in the ready reckoner for regularizing the construction on the surplus vacant land. 4. Since in the instant case revisional proceedings were initiated after a period of about five years, for the view that the Division Bench of this Court has taken in the judgment (Supra), the above petition is required to be allowed and is accordingly allowed in terms of prayer clause (b). Rule is accordingly made absolute in the above terms. Therefore, now the question that arises is as to whether where the project is approved prior to 01-04-2005 and the assessee has completed the housing project consisting of 7 buildings and has obtained the occupancy certificate for 6 buildings and the local authority has not issued the completion certificate for the 7th building, then in that case, deduction u/s.80IB(10) be allowed or not. In other words, whether production of completion certificate is required in such a case where the project has been approved prior to 01-04-2005. 24. We find an identical issue had come up before the Tribunal in the case of System Enterprises vide ITA No.1123/PN/2013 order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n certificate/Occupancy certificate within the time limit prescribed in the provisions of section 80IB(10) for all the flats/units which in the instant case is 31-03-2008 and the assessee has obtained the certificate only on 31-10-2009 which is beyond the stipulated date. We find the Assessing Officer as well as the CIT(A) has given a categorical finding that the date of commencement of the project as 16-07-2002. In other words, the housing project was approved before 31-03-2004 and therefore according to both of them the project should have been completed before 31-03-2008. 10.3 We find the Hon ble Delhi High Court in the case of CHD Developers Ltd. (Supra) has observed as under (Short Notes) Section 80-IB(10) of the Income-tax Act, 1961, before substitution by the Finance (No. 2) Act, 2004 allowed a hundred per cent, deduction of the profits in the case of an undertaking developing and building housing projects approved before March 31, 2005, by a local authority. By the Finance (No. 2) Act, 2004, with effect from April 1, 2005, the conditions for grant of deduction were that in a case where a housing project is approved by the local authority between April 1, 2004 and Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 2005. Clearly the approval related to the period prior to 2005, i.e., before the amendment, which insisted on issuance of the completion certificate by the end of the fouryear period, was brought into force. The application of such stringent conditions, which are left to an independent body such as the local authority who is to issue the completion certificate, would have led to not only hardship but absurdity. As a consequence, the Tribunal was not, therefore, in error of law while holding in favour of the assessee. 10.4 We find the Hon ble Karnataka High Court in the case of M/s. Ittina Properties Pvt. Ltd. (Supra) while deciding an identical issue has observed as under (Para 4/page 6 of the order): 4. Insofar as question Nos. 3 and 4 are concerned, it relates to the assessee complying with the requirements provided under Sub-sec.(1) of Sec.80 IB before it could claim the benefit provided under Sec. 80 IB. The said provision came on the statute book by Finance Act 2004, with effect from 1/4/2005. The plan which is sanctioned in this case is of 16/3/2004 i.e., prior to the said provision coming into force. This court in more than one case has held that the said provision is ..... 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