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2016 (2) TMI 566 - ITAT PUNE

2016 (2) TMI 566 - ITAT PUNE - TMI - Disallowance of deduction claimed u/s. 80IB(10) for non-completion of project before the due date - incomplete housing project - Held that:- As decided in Income Tax Officer Vs. M/s. Paras Construction [2015 (8) TMI 266 - ITAT PUNE ] non obtaining of completion certificate in respect of project approved prior to 01-04-2005 will not render the assessee ineligible for claiming deduction u/s. 80IB(10) in the impugned assessment year.

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s 2003-04 to 2006-07 have been filed by the assessee against the orders of Commissioner of Income Tax (Appeals)-I, Pune for the respective assessment years. All the impugned orders are dated 17-02-2011. Since, the issues involved in all the appeals are identical, these appeals are taken up together for adjudication. 2. In the grounds of appeal, the assessee has raised various grounds. The ld. AR of the assessee has filed applications to withdraw ground Nos. 1 to 4 and 12 in ITA No. 857/PN/2012 f .....

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f deduction claimed u/s. 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 3. The facts of the case as emanating from the record are: The assessee is a partnership firm engaged in the business as promoter and developer of real estate. The assessee developed housing project under the name Laxmi Vihar at Hadapsar, Pune comprising of 108 residential units. The commencement certificate in respect of the above said project was issued to the assessee by Pune Municipal Corpora .....

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/- 2006-07 Rs.1,28,99,010/- Initially, the returns of the assessee were accepted by the Department u/s. 143(3) of the Act for all the impugned assessment years. Thereafter, a survey action u/s. 133A on 06-06-2008 was carried out at the business premises of the assessee and the assessments were reopened on the ground that the claim u/s. 80IB(10) was not in order. In the reassessment proceedings the claim of the assessee u/s. 80IB(10) was withdrawn for the reason, that the assessee had not complet .....

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ect Laxmi Vihar was issued by the PMC on 01-02-2002. A copy of the commencement certificate is placed at pages 41 and 42 of the paper book. Since, the project was approved prior to 01-04-2005. There was no requirement for obtaining commencement certificate. The amended provisions of the Act requiring assessees to obtain completion certificate in respect of projects to claim deduction u/s. 80IB(10) is effective only from the date of amendment i.e. 01-04-2005. The ld. AR contended that even otherw .....

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uld show that the same was issued in response to the application dated 16-05-2005 made by the assessee. The ld. AR further referred to the information sought under the Right to Information Act, wherein it has been mentioned that the application for occupation certificate was made on 16-05-2005 and no objection was found in the said matter. The ld. AR contended that in the first instance the assessee was not required to obtain completion certificate from the PMC to claim deduction u/s. 80IB(10) a .....

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s. Paras Construction, ITA Nos. 584 to 588/PN/2013 for the assessment years 2003-04 to 2007-08 decided on 31-07-2015. 5. On the other hand Shri Dheeraj Kumar Jain representing the Department vehemently supported the findings of the Commissioner of Income Tax (Appeals) in rejecting the claim of assessee u/s. 80IB(10) of the Act. The ld. DR submitted that there is no dispute about the date of commencement of the project. Since, the project started before 1st April, 2004 the project should have bee .....

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now Bench of the Tribunal in the case of Fortuna Foundation Engineer & Consultants (P.) Ltd. Vs. Assistant Commissioner of Income Tax reported as 155 TTJ 501 (Lucknow). The ld. DR submitted that the Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income Tax Vs. Global Reality (supra) has held that the stipulation for obtaining completion certificate from the local authority before cutoff date is mandatory. Where the completion certificate of housing project was issued af .....

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ts of the case of the assessee are distinguishable from the facts in the case of Commissioner of Income Tax Vs. Global Reality (supra). Therefore, the decision rendered in the said case is not applicable in the facts and circumstances of the case in hand. The ld. AR further submitted that the Hon'ble Delhi High Court and the Hon'ble Madras High Court has given decision on this issue in favour of the assessee. It is a well settled law that where two views are possible, the view in favour .....

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issue raised by the assessee is denial of deduction u/s. 80IB(10) for non-completion of project before the due date. Undisputedly, the commencement certificate was issued to the assessee in respect of project Laxmi Vihar on 01-02-2002. As per the contention of the assessee the project was completed in all respects on 16-05-2005 and accordingly an application was made to the PMC for issuance of completion certificate. However, the PMC issued completion certificate in response to the said applicat .....

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ed that an application was made on 16-05-2005 for occupation certificate of the building, no objection is found to the said matter. The relevant extract of the translated copy of the letter from the PMC placed on record at page 38 of the paper book by the assessee is reproduced herein- below: Addl. City Engineer's Office, Pune Municipal Corporation, Outward No. Zone 4/4124, Dated: 31/1/11. To, Shri. Arun Nimhan Flat No. 101, Shree Laxmi Villa, S.No. 1170/32 Revenue Colony, Shivajinagar, Pune .....

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g inward No. 29 dated 16/5/2005. No Objection has been found to the said matter. After having paid ₹ 2/- per page of the records available with the PMC, in the PMC Treasury and having made actual expenses towards Xerox copies of the papers, you shall be given the available papers with this office as per application under reference. This fact is being in-formed to you in connection the application under reference. Sd/-xxx Public Information Officers and Dy. Engineer. Construction Developmen .....

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t there was any deficiency or objection pointed out by the PMC for not granting the completion certificate. Thus, the delay in issuance of completion certificate by the PMC cannot be attributed to the assessee in the facts and circumstances of the present case. 9. Apart from merits of the case on facts, we further observe that the assessee had commenced the project prior to 01-04-2004. The provisions of section 80IB(10) have been amended w.e.f. 01-04-2005 by the Finance Act (No. 2) of 2004, wher .....

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(supra), wherein the Tribunal in similar circumstances after placing reliance on the decision rendered in the case of Runwal Developers Vs. ACIT in ITA No. 1339/PN/2010 decided on 30-12-2014 has held as under: 6. We find that the issue raised in the present appeal is similar to the dispute decided by the Co-ordinate Bench in the case of Runwal Developers Vs. ACIT (supra). In the said case the project had commenced w.e.f. 12-12-2003 and accordingly it was required to be completed on or before 31 .....

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uthority before 31-03-2008 was for reasons beyond the control of the assessee. Once, the assessee has obtained no objection certificate from the concerned Departments, the obtaining of completion certificate is merely a formality. The delay in issuance of completion certificate by the competent authority cannot be attributed to the assessee. The Tribunal further relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. CHD Developers Ltd. (supra) and held that since the proje .....

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80-IB(10) of the Act, the construction of the housing project was to be completed on or before 31.03.2008. Subclause (i) of clause (a) to section 80-IB(10) of the Act prescribes that where a housing project is approved on or before 01.04.2004 then the development and construction of such housing project shall be completed on or before 31.03.2008. Explanation (ii) below clause (a) of section 80- IB(10) of the Act provides that the date of completion of construction of the housing project shall b .....

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sessee that the relevant completion certificate has not been issued by the local authority i.e. PMC on or before 31.03.2008. However, the case setup by the assessee is that the project of the assessee was approved and it commenced on 12.12.2003, which pertains to a period prior to 01.04.2005 i.e. the date on which the amendment which insisted on production of completion certificate was brought into force. In order to appreciate the aforesaid plea of the assessee, we may refer to the provisions o .....

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n of the housing project on or after tile 1st day of October, 1998; (b) the project is on the size of a plot of land which has minimum area of one acre; and (c) the residential unit has a minimum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. 9. Subsequently, Finance (No.2) Act of 2004, .....

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enced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction - (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 but not later than the 31st day of March, 2005, within four years from .....

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ll 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 .....

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from the municipal limits of these cities and one thousand and five hundred square feet at any other place; (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed three per cent. of the aggregate built-up area of the housing project of five thousand square feet, whichever is higher. 10. In the instant assessment year i.e. 2006-07, the Assessing Officer has sought to disallow the deduction claimed by the assessee on the ground that t .....

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ted period i.e. on or before 31.03.2009. Notably, in the case before the Hon ble Delhi High Court, the time-limit for completion of construction of the housing project was governed by sub-clause (ii) of clause (a) to section 80-IB(10) of the Act. The Hon ble Delhi High Court noted that since the project of the assessee was approved prior to 2005 i.e. before the amendment which insisted on issuance of completion certificate by the end of four years was brought into force, the claim of deduction c .....

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letion certificate for grant of deduction u/s. 80IB(10) was introduced by Finance No. (2) Act, 2004 w.e.f. 01-04-2005 and prior to it there was no such requirement. The claim of assessee cannot be rejected for assessment year 2004-05 on the ground that the assessee had not furnished the completion certificate. 8. xxxxxxxxxx 9. xxxxxxxxxx 10. In view of the facts of the case and the decisions discussed above we hold that non obtaining of completion certificate in respect of project approved prior .....

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