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TMI Blog2012 (9) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 furnished a return of income on 31.10.2006 declaring income of Rs. 8,76,37,050/- after claiming deduction under section 80-IB(10) of the Act amounting to Rs. 11,96,74,144/- for its housing project Ten Kasturkunj. The Kasturkunj project with five buildings, namely, 'A', 'B', 'C', 'D' & 'E' is constructed on survey No 132B, Hissa No 13/14/15, Shivajinagar, Pune. During the course of assessment proceedings, the Assessing Officer noticed that the said project was launched as per the original commencement certificate dated 13.6.2003 issued by the Pune Municipal Corporation, i.e. the local authority, and the project comprised of five buildings, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. 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 flats, the total area exceeded 1500 sq.ft limit as provided in section 80IB(10)(c) of the Act. For the above twin reasons, the Assessing Officer disallowed the assessee's claim for deduction under section 80IB(10) of the Act. 6. Being aggrieved, assessee challenged both the findings of the Assessing Officer in appeal before the Commissioner of Income-tax (Appeals) and filed detailed written submissions meeting each and every objection of the Assessing Officer. 7. The Commissioner of Income-tax (Appeals), after considering the submissions of the assessee, affirmed the ultimate decision of the Assessing Officer to deny assessee's claim for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute 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 this explanation and to show that this joining of flats was done by the appellant itself prior to selling these flats. Therefore, this explanation of the appellant is also acceptable. 6.2 Though the appellant's explanation given in respect of ground no. 2 is acceptable, still since vide dismissal of ground no. 3 deduction u/s 80IB(10) is held to be inadmissible to the appellant, this ground has become merely academic in nature. For statistical purposes, however, this ground will be treated as allowed." 9. In this background these are the cross appeals of the assessee and the Revenue. In assessee's appeals, the grievance is with regard to sustenance of denial o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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., Aurangabad Vs. ITO Ward 1(1) Aurangabad in ITA No. 945 to 950/PN/2010 for A.Y. 2002-03 to 2007-08 dated 30-8-2011 to contend that on this basis, deduction u/s 80- IB(10) could not be denied to the assessee. 11. On this aspect, the learned DR has reiterated the arguments taken by the Assessing Officer as well as CIT(A) which we have already discussed in the earlier part of this order and are not being repeated for the sake of brevity. The learned DR has primarily emphasized that for the purpose of ascertaining the completion of construction of a housing project, it is the date on which the completion certificate is issued by the local authority is relevant and in this v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 building 'E' was thereafter issued on 5-5-2008. The moot question is as to whether in such a situation can it be said that the assessee's project did not comply with the condition prescribed in sub-clause (i) of clause (a) to section 80-IB(10) of the Act whereby the construction was to be completed on or before 31-3-2008. Somewhat similar situation was considered by our co-ordinate Bench in the case of Hindustan Samutha Awas Ltd. (supra) wherein also on the strength of architect's certificate, an application for obtaining completion certificate was moved to the local authority on 25-2-2008 but in actuality the completion certificate was issued by the local authority on 10-10-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 matter, we therefore, find ample force in the plea of the assessee that denial of deduction u/s 80-IB(10) on such score is uncalled for. In conclusion therefore, in the instant factual background, we hold that the assessee has complied with the condition of completing the construction of the project within the mandated date of 31-3- 2008 even with regard to building 'E', following the parity of the reasoning lid down in the case of Hindustan Samutha Awas Ltd. (supra). . 14. Sub-clause (i) of clause (a) to section 80-IB(10) of the Act requires that the undertaking, developing and building a housing project "completes such construction" or before 31-3-2008. In the present case, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lea 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 to the flat owners was a security measure and that such common area was not sold to any particular flat owner. The aforesaid submissions have been succinctly noted by the Assessing Officer on page 12 of the assessment order. The Assessing Officer however, did not accept the plea of the assessee, which has thereafter been accepted by the CIT(A). As per the CIT(A) there was no evidence putforth by the Assessing Officer to demonstrate that the two adjacent flats have been combined by the assessee before handing over possession to the customers. As regard common lobby in front of the two adjacent flats which had single entrance, the CIT(A) has accepted the contention of the assessee that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 considered independently have a built up area in excess of 1500 sq.ft. It is also not the case of the Revenue that the independent flat cannot be viewed as a single unit. In the absence of any assertion of the Revenue that each flat in the housing project undertaken by the assessee could not have been used as an independent or self contained residential unit not exceeding 1500 sq.ft. of built up area and that it would be a complete unit only if two or more flats are combined together, the same would not lead to an inference that the assessee has not fulfilled condition prescribed in clause (c) of section 80-IB(10) of the Act. The assessee had relied upon the following decisions in support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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