TMI Blog2015 (1) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80IB(10) of the Act. Accordingly, we direct the Assessing Officer to allow the said deduction to the assessee. We find merit in the claim of the assessee that it had commenced construction only after obtaining approval from the local authority, hence, the assessee is eligible to the claim of deduction under section 80IB(10) of the Act. Further, merely because in the audit report relating to assessment year 2006-07, the year of project was mentioned as first year, does not change the factum that the assessee had already claimed the deduction under section 80IB(10) of the Act.The assessee had in Form No.10CCB filed for assessment year 2005- 06 has also mentioned that the year of start of project was first year.In view thereof, there is no merit in denial of deduction under section 80IB(10) of the Act. - Decided in favour of assessee Disallowance under section 40(a)(ia) - Held that:- We find merit in the plea of the assessee that where a person is eligible to the claim of deduction under section 80IB(10) of the Act, then such deduction is allowable on the profits of the business which have been computed in the hands of the assessee. In the facts of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee against the order of CIT(A)-I, Thane, dated 28.11.2008 relating to assessment year 2005-06 against order passed under section 143(3) of the Income Tax Act, 1961. The Revenue has filed the Cross Objections against the appeal filed by the assessee relating to assessment year 2005-06. Further, the Revenue has also filed an appeal against the order of CIT(A)-I, Thane, dated 15.10.2009, relating to assessment year 2006-07 against order passed under section 143(3) of the Income Tax Act, 1961. 2. All the three appeals relating to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The assessee in ITA No.214/PN/2009 has raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in upholding the disallowances made by Assessing Officer, of lawful claim of exemption of income u/s 80IB(10) ₹ 39,32,000/- by assessee. 2. On facts and circumstances of case and in law, the learned CIT(A) confirmed disallowances made by AO u/s 80IB(10) without verifying the evidence and facts submitted by assessee at the time of hearing be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and law. 6. The claim of deduction u/s 80IB(10), is not available to the assessee for the following reasons a) In the present case, the original plan was sanctioned on 28.10.1995 whereas the provisions of sec. 80IB(10) came into existence w.e.f. 01.10.1998 and applicable for the projects in which the plans are approved after 01.10.1998. Thus, in the instant case the provisions of sec. 80IB(10) are not applicable. Therefore, the Hon. ITAT is requested to consider this fact while deciding the issue on the appeal filed by the assessee. b) In the present case, the revised plan was claimed to be passed somewhere in the year 2003 (no proof has been submitted from the competent authority). As per the explanation to the provisions of sec 80IB(10) in the cases 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. Therefore, as the original plan was sanctioned on 28.10.1995, the deduction u/s 80IB(10) is not available to this project. The Hon. ITAT is requested to consider this f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed even before approval by the appropriate authority. The assessee had failed to enclose the copy of approval by the local authority along with return of income. In the Form No.10CCB filed relating to assessment year 2006-07, in column 7, the Auditor mentioned the deduction under section 80IA of the Act being claimed. However, the eligible undertaking was entitled only to the deduction under section 80IB(10) of the Act in the case of housing projects. Further, the spot enquiries confirmed that there were 23 shops in J and K buildings. However, in the Audit Report, there was no mention of any commercial shops in the project. The assessee was asked to explain whether it fulfills the conditions laid down in section 80IB(10) of the Act. The assessee did not submit any reply. In order to verify the claim of assessee under section 80IB(10) of the Act, survey under section 133A of the Act was undertaken on 30.08.2007. During the course of survey, the physical measurements of flats and shops were taken by the survey team. The details of area of flats and shops of both the complexes were tabulated in Annexure-2 attached to the assessment order. It was found that Apeksha Complex had comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IB(10) of the Act, in view of the provisions of section 80IB(13) of the Act. Further, the CIT(A) observed that the assessee along with the return of income filed for assessment year 2006-07 had annexed the Audit Report in Form No.10CCB, which reflected in item No.9 that the initial assessment year from when deduction was claimed was 31.03.2006 i.e. assessment year 2006-07. The CIT(A) thus, observed that the same clearly shows that the assessee was intending to claim deduction under section 80IB(10) of the Act from assessment year 2006-07. Further, in the Form No.10CCB, the assessee had claimed deduction under section 80IA(a) and 80IB(10) of the Act, meaning thereby that the assessee had not filed the Form No.10CCB along with the return of income for assessment year 2005-06. Another point noted by the CIT(A) was that in the acknowledgement for filing the return of income for assessment year 2005-06, the assessee had typed Certificate and Report in item No.6 of list of documents attached with the return. However, Form No.10CCB had been added later on in ink. 9. The CIT(A) further held that the local authority for passing the building project in Village Akurli, cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80IB(10) has not been filed during the course of assessment proceedings and also during the course of appellate proceedings. The claim of filing sanction order of 'local authority' has been found to be false as the appellant has enclosed a letter of 'NA permission' in the name of sanction order' for building project. iv. In Form No 10CCB filed with return of income for AY 2006-07, the initial year for claim of deduction u/s 80IB(10) has been shown as AY 2006-07. In view of the above facts and in view of the explicit violation of various provisions of Section 80IB(10), I am not in a position to interfere with the order of the AO on this issue. The disallowance of the claim of deduction u/s 80IB(10) is upheld. The grounds of appeal No 1 2 are, therefore, dismissed.' 12. The assessee is in appeal against the order of CIT(A) in not allowing deduction under section 80IB(10) of the Act. 13. Further, the ground of appeal No.1 raised in the Cross Objection by the Revenue is in support of the order of CIT(A). 14. The Revenue in assessment year 2006-07 has agitated against the grant of deduction under section 80IB(10) of the Act b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 80IB(10) even in absence of sanction for approval of the project by the competent authority. 5. The appellant prays the order of the CIT(A)-I, Thane, may be vacated and that of the Assessing Officer be restored. 6. The appellant craves leave to add, amend or alter any ground/ grounds, which may be necessary. 16. We proceed to decide the appeal filed by the assessee in assessment year 2005-06 and the appeal filed by the Revenue in assessment year 2006-07 against the claim of deduction under section 80IB(10) of the Act after hearing both the Authorized Representatives. 17. The learned Authorized Representative for the assessee pointed out that the deduction under section 80IB(10) of the Act was denied to the assessee in assessment year 2005-06 on several issues and the first issue was non-submission of Audit Report in Form No.10CCB along with return of income. Our attention was drawn to the copy of acknowledgement of filing the return of income at pages 6 and 7 of the Paper Book, in which documents attached with the return of income at serial No.6, it was mentioned certificate and report (Form No.10CCB). The learned Authorized Representative for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her pointed out that another aspect for rejection of the claim under section 80IB(10) of the Act was that the project comprised of commercial area exceeding 2000 sq. ft. It was pointed out by the learned Authorized Representative for the assessee that as per the commencement certificate, the construction started on 02.05.2003 and the condition of the commercial area being less than 2000 sq. ft., does not apply to the earlier projects. Reliance in this regard, in Opel Shelters Pvt. Ltd. Vs. ACIT in ITA No.219/PN/2009 another, relating to assessment year 2005-06, vide order dated 31.05.2011, Manan Corporation Vs. ACIT, in Tax Appeal No.1053 of 2011, vide order dated 03.09.2012 (Guj), and CIT Another Vs. G.R. Developers (2013) 353 ITR 1 (Kar). 19. Another objection raised by the Assessing Officer was that in Form No.10CCB filed for assessment year 2006-07, the date of commencement of the project was mentioned as 22.11.2002, whereas the date of approval of the plan was stated to be 16.04.2003. In reply, the learned Authorized Representative for the assessee pointed out that the assessee had incurred some nominal expenses like leveling of land, creation of compound wall, etc. amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue, had denied the deduction under section 80IB(10) of the Act, which was confirmed by the CIT(A) relating to assessment year 2005-06, against which the assessee is in appeal. Similar claim of deduction under section 80IB(10) of the Act in assessment year 2006-07 was denied by the Assessing Officer. However, the same was allowed by the CIT(A), against which, the Revenue is in appeal. 23. The first objection raised by the Assessing Officer in denying the claim under section 80IB(10) of the Act in assessment year 2005-06 was that the assessee had not filed the Form No.10CCB along with return of income. For claiming the deduction under section 80IB(10) of the Act, the requirement is to furnish the Audit Report in Form No.10CCB along with return of income. In case, where the said Audit Report is not furnished along with return of income, then the deduction under section 80IB(10) of the Act from the profits and gains of undertaking are not admissible, in view of provisions of section 80IA(7) r.w.s. 80IB(11) of the Act. The plea of the assessee however, before us is that, it had duly submitted the Form No.10CCB at the time of filing the return of income for assessment year 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly, the local authority was the Grampanchayat, though, a plea was raised by the assessee before the authorities below that the local authority, who sanctions the building project was the Collector, Alibag. The assessee had furnished the approval letter of Collector, Alibag, during the course of assessment proceedings. However, the Commencement Certificate issued by the Grampanchayat was not furnished by the assessee as the same reportedly, was washed away in floods both from the office of the assessee and from the office of the Collector. However, the assessee had furnished the Completion Certificate issued by Grampanchayat, which is placed at page 63 of the Paper Book along with its English translation at page 64. The letter dated 22.05.2009 reads as under:- To, Respected Sarpanch Saheb, Grampanchayat Aakurli, Tal. Panvel, Dist. Raigad. Respected Sir, At village Aakurli, at Gat No. 98, Hissa No. 1 2, the application for approval for the construction of building is submitted to the Office of Collector, Raigad Alibag. The said plan is approved by The Collector, Raigad Alibag as on dated 02/05/2003 and has given the permission to construct the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Grampanchayat had lost the certificate in the floods. However, copy of the Grampanchayat certificate was obtained from the owner of the plot of land and the said photo copy of certificate is placed at page 4 of the Paper Book along with its English translation at page 5 of the Paper Book. Vide meeting held on 05.02.2003, the Grampanchayat at Akurli had given permission to the assessee for the construction of complex, residential and commercial purposes. In view of the said certificate being a State record, the same is admitted as additional evidence, where the Grampanchayat had given the permission for construction of the building at the site on 05.02.2003 and the copy of the Certificate being filed by the assessee as an additional evidence, we find no merit in the orders of authorities below in denying the claim of deduction under section 80IB(10) of the Act for the reason that the assessee had failed to furnish the Commencement Certificate of the construction of the project. In any case, the assessee had furnished the Completion Certificate and had also furnished a communication, under which it was stated by the Sarpanch, Grampanchayat, Akurli that the building plans were ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue in this regard and the same is dismissed. 28. Another issue on which the deduction under section 80IB(10) of the Act was refused to the assessee was that the project of the assessee comprised of commercial area of about 4000 sq. ft. The case of the assessee before us was that the Commencement Certificate for construction of the said project was issued on 02.05.2003 and the condition of the requisite of commercial usage does not apply to the earlier projects, which were sanctioned by the authorities. The present provisions of section 80IB(10) of the Act were substituted by the Finance (No.2) Act of 2004 w.e.f. 01.04.2005, under which as per clause (d) to section 80IB(10) of the Act, limit of commercial usage in a housing project is provided. However, the pre-amended provisions of section 80IB(10) of the Act which were amended by the Finance Act, 2000 w.e.f. 01.04.2001 and Finance Act, 2003 with retrospective effect from 01.04.2002 read as under:- (10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2001 when sub-clause (d) to Section 80IB(10) was not in existence, hence it cannot be applied on such projects as held by the Mumbai Bench of the Tribunal in the case of Hirnandani Akruti J.V. (Supra). In this regard, we also find strength from this plea of the Ld. A.R. which was also raised before in the case of Hiranandani Akruti J.V. that if the assessee had followed WIP (Work-in-progress) method, the income from the project would have been taxable in the earlier years as the project was completed earlier to the amendment and in that case, as per the old provision the assessee would have been eligible for the deduction. But, just because the assessee has followed the Project Completion method, in these cases, the deduction is being denied because it falls in A.Y. 2005-06. In our view the newly inserted clause (d) to Section 80IB(10) will not apply on the projects approved upto 31.3.05 since in those projects assessees are required to construct what has been approved. The only fissible compliance is required to be met as per the harmonious interpretation of Section 80IB(10) as amended is to complete such projects (approved before 1.4.2004) on or before 31.3.2008. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Opel Shelters and in the A.Y. 2002-03 in the case of D.S. Kulkarni and Associates. We thus following the decision in the case of Hiranandani Akruti JV V/s. DCIT (Supra) hold that amended provisions under Section 80 IB(10) w.e.f. 1.4.2005 are not applicable in the present case, hence assessees are eligible for the claimed deduction u/s. 80 IB (10) of the Act. We accordingly direct the A.O to allow the claimed deduction to the assessees. 31. The Hon ble High Court of Gujarat in Manan Corporation Vs. ACIT, in Tax Appeal No.1053 of 2011, vide order dated 30.09.2012 had held that the amendment brought in to section 80IB(10) of the Act by the Finance Act, 2004 w.e.f. 01.04.2005 was a substantive amendment and not a clarificatory amendment and the amendment of this nature could not have retrospective effect. 32. In view of the above said proposition laid down, we hold that the pre-amended provisions of section 80IB(10) of the Act are to be applied to the project undertaken by the assessee, where the approval for the commencement of construction was given before 01.04.2005. As per the additional evidence furnished by the assessee which has been admitted by us, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case under which, as per clause (a) of section 80IB(10), it was provided that the deduction under section 80IB(10) of the Act would be available to such undertaking which had commenced or commences, developed and construction of the housing project on or after 01.10.1998. The assessee has placed on record the Commencement Certificate under which, permission was given to construct the building for residential and commercial purpose by the Grampanchayat at Akurli vide its meeting held on 05.02.2003. Since the permission for construction has been given after 01.04.1998, the provisions of section 80IB(10) of the Act (pre-amended) are clearly attracted and since the assessee has fulfilled the conditions laid down in clause (a) of section 80IB(10) (pre-amended), and had commenced the construction of housing project after first day of October, 1998, the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. Accordingly, we find no merit in the submissions made by the learned Departmental Representative for the Revenue in this regard and the same is dismissed. The Assessing Officer is directed to allow deduction under section 80IB(10) of the Act to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 are against the disallowance under section 40(a)(ia) of the Act. 39. The assessee has also filed an additional ground vis- -vis disallowance under section 40(a)(ia) of the Act and pointed out that where the profits of the undertaking have increased on account of the disallowance made by the Assessing Officer, the said profits being eligible for deduction under section 80IB(10) of the Act, then any increase in the profits should also be made eligible for the deduction under section 80IB(10) of the Act. The learned Authorized Representative for the assessee clearly pointed out that the ends of justice would be met in case the additional ground of appeal is allowed in the hands of the assessee as against the grounds of appeal raised. 40. We find merit in the plea of the assessee that where a person is eligible to the claim of deduction under section 80IB(10) of the Act, then such deduction is allowable on the profits of the business which have been computed in the hands of the assessee. In the facts of the present case, the Assessing Officer while computing the profits of the business, had made certain additions on account of disallowance under section 40(a)(ia) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
