TMI Blog2012 (9) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the Commissioner of Income-tax (Appeals) II, Pune which, in turn, have arisen from the respective orders of the Assessing Officer passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ), pertaining to the assessment year 2006-07 and 2007-08. 2. Since common issues are involved all these appeals, they were heard together and are being disposed of by way of a consolidated order for the sake of convenience. 3. In the appeals of the assessee for the assessment years 2006-07 and 2007-08, vide ITA Nos 1489/PN/09 and 1100/PN/10 the common dispute relates to the issue of disallowance of deduction under section 80-IB(10) of the Act in respect of the housing project at Kasturkunj, Pune. Since the issue in both appeals is common, we shall deal with the facts relating to the assessment year 2006-07 which will also govern the facts for assessment year 2007-08. 4. The facts, in brief, are that the assessee is a partnership firm engaged in the business of promoters and builders and has executed a housing project named as Ten Kasturkunj at Pune in the year 2005-06 relevant to the assessment year 2006-07. For the assessment year 2006-07, the assessee furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse, etc. The Assessing Officer, however, rejected the contention of the assessee by relying on the provisions of section 80IB(10)(a)(i) and emphasizing on the fact that it was not the architect s certificate, but the certificate issued by the local authority which was to be considered for the purpose of completion of the project in accordance with the Act. Further, according to the Assessing Officer, it was the entire project which had to be completed within the stipulated time for fulfillment of conditions laid down under section 80IB(10)(a)(i) and the section did not envisage completion of different buildings or units constituting the project. According to the Assessing Officer, the fact that completion certificate of building E was issued on 5.5.2008 was a sufficient reason for disallowance of assessee s claim under section 80IB(10)(a)(i) of the Act. 5. The Assessing Officer further stated that in few cases the assessee had constructed a lobby in-front of two adjacent flats which gave a common entrance to the two adjoining flats and thus inferred that this made the two flats as one unit. According to the Assessing Officer, on combining the built-up area of two combined fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax (Appeals) upheld the plea of the assessee, holding as under: 6.1 I have considered the submissions of the appellant and the discussion made in the assessment order, in which also the appellant had given the same explanation. I see no reason to reject the explanation, since the common lobby area given in front of two adjacent flats were not sold to anyone and it was only for security purpose that they were enclosed and a separate entrance was given. This does not result into combining the two adjacent flats into a single unit. The appellant has rightly explained before the undersigned that prior to the amendment brought into the statute by Finance Act 2009 w.e.f. 1.10.2009, there was no bar on selling two flats in the same building to one individual or to a relative or spouse of an individual who has already purchased a flat in the project. The AO has also not stated anything to rebut the explanation given by the appellant that the joining of two adjacent flats was done by the buyers themselves subsequent to the sale and handing over of possession, and the appellant had got nothing to do with it. The AO had not brought anything on record to rebut thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., thus violating the condition of sec. 80-IB(10)(c) of the Act. 10. Before us, the learned counsel for the assessee pointed out that out of five buildings, the completion certificate in respect of buildings A to D was obtained prior to 31-3-2008 and even with regard to the building E the application for obtaining completion certificate was made to the local authority on 12-3-2008 as evidenced by the copy of the application placed in the Paper Book at page 12. It was pointed out that the assessee has explained before the Assessing Officer that in effect even building E was complete in all respects, as can be found from the discussion made by the Assessing Officer on pages 7 to 13 of the assessment order. The completion certificate was issued by the local authority on 5-5-2008 in pursuance to the application of the assessee submitted on 12-3-2008 and it was vehemently pointed out that the delay was not attributable to the assessee, inasmuch as no objections were raised by the local authority i.e. Pune Municipal corporation at any stage. In this connection, assessee has placed reliance on the decision of Pune Bench of the Tribunal in the case of Hindustan Samutha Awas Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical connection was provided to each flat owner; road was complete; water and drainage connection was available; sewerage system was operating; club house was functional; etc. The assessee also pointed out that the local authority had also initiated property tax assessments for each of the flats and the same demonstrated that all the flats in the building were complete. In fact, in para 6.9 of the assessment order, the Assessing Officer noticed that the facts that the flats were completed and possession given will not come to the rescue of the assessee . The aforesaid finding of the Assessing Officer supports the assertion made by the assessee that factually speaking construction of flats in building E was also complete and possession handed over to the actual user/customers prior to 31-3-2008. Pertinently, on the basis of the architect s certificate confirming completion of construction of building, the assessee applied for the completion certificate to the Pune Municipal Corporation on 12-3-2008. It has been pointed out before us that the local authority i.e. Pune Municipal Corporation did not raise any objection with regard to assessee s application and the certificate for bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections for accepted by issue of said completion certificate till 10-10-2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80-IB(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal are allowed 13. The aforesaid decision of the Tribunal is clearly applicable to the facts of the present case also. In the present case, the completion certificate was applied for before 31-3-2008 i.e. on 12-3-2008. It is undisputable that the application of the assessee has been approved by the local authority without raising any amendment or objection, as has been asserted by the assessee all along and the delayed issuance of the completion certificate by the local authority on 5-5-2008, albeit after the mandated date of 31-3-2008 cannot be attributed to the assessee. In this background of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion certificate for building E by the Pune Municipal Corporation before 31-3-2008, having regard to the facts and circumstances of the case. 15. Now we may come to the second objection taken by the Assessing Officer in order to deny the claim of deduction u/s 80-IB(10) which is to the effect that certain adjoining flats in the housing project were sold to a single person or person belonging to one family and such flats were combined by the purchaser. As per the Assessing Officer the built up area of such flat be considered after combining the same and in this manner the built up area exceeded 1500 sq.ft. which was violative of clause (c) to section 80-IB(10) of the Act. The plea of the assessee on this aspect has been that the flats were sanctioned as independent units; they have been sold as separate units inasmuch as separate sale deeds have been entered into for selling different flats; that the customers for their own convenience had combined two adjacent flats into a single flat and, that such combining of flats had been done by the purchasers after the flats were handed over possession by the assessee. The assessee further pointed out that the common entrance given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully considered the rival submissions. The condition prescribed in clause (c) of section 80-IB(10) is the subject matter of dispute. As per clause (c) of section 80-IB(10) a residential unit ought to have maximum built up area of 1500 sq.ft. so far as it is relevant for the city of Pune. In the case before us, admittedly, the local authority has sanctioned two flats separately and even in the occupation/completion certificate issued by the Pune Municipal Corporation, two flats have been considered as independent units. The CIT(A) has come to a finding that there is no evidence to show that the two flats have been combined by the assessee and thereafter sold to the customers as a single unit. In fact, the aforesaid finding has not been controverted by the Revenue before us and accordingly, it would be in the fitness of things to hold that there is no material to show that the assessee had combined two adjoining flats so as to consider them as one unit for the purpose of examining the applicability of clause (c) to section 80-IB(10) of the Act. It is also evident that there is no finding, much less an assertion by the Revenue, at any stage that the two adjacent flats if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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