TMI Blog2014 (8) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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. Since the date of the commencement of the project in the instant case is admittedly 16-07-2002 as held by the Assessing Officer as well as the CIT(A), therefore, it has to be held that amendment w.e.f. 01- 04-2005 requiring certificate of completion of project within 4 years of approval is not applicable to the projects approved prior to that date and therefore the assessee is entitled to deduction u/s.80IB(10) of the I.T .Act. - Decided in favour of assessee - ITA No. 1123/PN/2013 - - - Dated:- 28-8-2014 - Shri R.S. Padvekar, Judicial Member and Shri R.K. Panda, Accountant Member Appellant by : Shri Vipin Gujrathi Respondent by : Shri A.K. Modi ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 14-01-2013 of the CIT(A)-II, Pune relating to Assessment Year 2009-10. 2. Facts of the case, in brief, are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upation) certificate for the entire project has not been issued by the PMC to the assessee. 3.1 The Assessing Officer referred to Explanation (i) to section 80IB(10) according to which in a case where the approval in respect of 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. Clause (ii) of the explanation provide for the date of completion of construction shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. In view of the above, the AO held that what is required to be completed by the assessee is the housing project in totality and not the individual flats as claimed by the assessee. 3.2 The Assessing Officer further noted that the area of 2 row houses, i.e. No.1 7 are having area of more than 1500 sq.ft. each as per sanctioned building plan. The assessee in response to the query raised by the Assessing Officer submitted a valuation report of the Government Approved Valuer according to which the built up area of the row houses 1 7 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second objection of the Assessing Officer for denying the benefit of deduction u/s.80IB(10) was also negated by the CIT(A). 4.2 So far as the third objection of the Assessing Officer that the project was not completed within the stipulated period, the Ld.CIT(A) upheld the action of the Assessing Officer by observing as under : 3.11 The third ground on which the Assessing Officer has based his rejection is with respect to the non-completion of the project within the stipulated period. The material brought on record indicate that the said housing project has been subjected to successive revision of building plans and the first building plan having been approved on 04-01-1997, which had lapsed on 04-01- 2001 after having been extended on a year to year basis as per the Maharashtra Town Religious Planning Act, 1966 and on the commencement certificate dated 24-1-2001 the land was still under Urban Land Ceiling Regulation Act 1976, therefore, no commercially viable construction was possible. However, by the commencement certificate dated 16-7-2002, approved the building plan whereby 63 units were approved by the local authority, however, the aforesaid approved building plan was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction,- Explanation (i) in a case 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; (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; Therefore, the completion / occupancy certificate in respect of a housing project has to be issued by the local authority only as envisaged by the provision of section 80IB(10) of the Act. There is no ambiguity in the language of the explanation which would lead to other explanation. Therefore, for the purposes of section 80IB(10)(a) read with explanation, the occupancy / completion certificate would be relevant to determine the fulfillment of the conditions given in this section. In the present case, the approval for the project was granted for the first time for 63 units i.e. 7 row houses and 56 flat on 16.07.2002 vide commencement certificate No. CC 6816 and, therefore, the project ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of appeal the appellant wishes to raise the following ground of appeal. a) The learned CIT(A) concurred with the learned AO that the date of the commencement of the housing project was 16th July 2002 i.e. before 31st March 2004. Assuming but not admitting the date of the project commencement is 26th July 2002, the project of the appellant was substantially completed before 31st March 2008. Since, the appellant has made substantial compliance of the conditions the deduction should have been granted. The learned CIT(A) erred in not appreciating the fact the substantial of the conditions was already done and not every condition of the statute is mandatory as held by Gujarat High Court in the case of CIT Vs Tarnetar Corporation Tax Appeal No. 1241 of 2001. The appellant hereby requests your honour to kindly allow the deduction. b) The appellant had obtained completion in respect of 7 row houses and 28 residential flats before 31st March 2008. The appellant hereby, in alternate, prays that the deduction in respect of units completed prior to 31st March 2008 may please be granted. 4) The appellant hereby reserve the right to add, amend, delete or raise any additional ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. M/s. Ittina Properties Pvt. Ltd. vide ITA No. 556/2013, 574 to 576, 103, 106 104/2014 order dated 15-07-2014 (copy enclosed) he submitted that the Hon ble Karnataka High Court in the said decision has held that the provisions of section 80IB(10)(1) came to the statute book by the Finance Act, 2004 w.e.f. 01-04-2005. It has been held that the said provision is prospective in nature and it has no application to housing projects which were approved by the local authority prior to 01-04-2005. He accordingly submitted that the benefit u/s.80IB(10) cannot be denied to the assessee on the ground that the assessee does not comply with the terms of section 80IB(10). He submitted that since the Ld.CIT(A) has given a finding that approval for the project was granted on 16-07-2002 which is prior to the amendment brought by the Finance Act, 2004 w.e.f. 01-04-2005, therefore, in view of the decisions cited (Supra), the assessee is entitled to get the benefit of deduction u/s.80IB(10). 9. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that since the assessee has failed to produce or bring on record the completion certificate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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 March 31, 2005, the project should be completed within four years from the end of the financial year in which it is approved by the local authority. Clause (ii) of the Explanation provided that 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. The assessee, a real estate de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 Subsec.( 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 prospective in nature and it has no application to house products which was approved by the local authority prior to 1/4/2005. In that view of the matter, the benefit under Sec. 80 IB cannot be denied to the assessee on the ground that he does not comply with the terms of Sec.80 IB(10). 5. It is submitted on behalf of the assessee that they have complied with the said statutory requirement also. As the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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