TMI Blog2015 (2) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the grounds taken by the assessee and direct the AO to allow the deduction. - Decided in favour of assessee - ITA No. 44/PN/2013 - - - Dated:- 6-2-2015 - Shri G.S. Pannu, Accountant Member And Shri R.S. Padvekar, Judicial Member Appellant by : Shri Nilesh Khandelwal Respondent by : Shri Rajesh Damor ORDER PER S. PADVEKAR, JM : In this appeal the assessee has challenged the impugned order of the Ld.CIT(A)-II, Pune dated 04-09-2012 for the Assessment Year 2009-10. 2. The facts which are revealed from the record as under. The assessee is a firm engaged in the activity as developer and builder under the name and style M/s Aum Housing. During the year under consideration the assessee claimed deduction u/s.80IB(10) of ₹ 86,90,893/-. During the assessment proceedings the AO noted that the Architect of the assessee firm had made an application for occupancy certificate to the Pune Municipal Corporation on 08-12-2008 but the same was not issued. Therefore, in order to ascertain the reasons the AO issued a letter to the PMC. In response to which the PMC vide letter dated 28-11-2011 informed the AO that the correspondence regarding handing over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a project. Moreover, the total built up area (FSI) to be approved the issues relating to the amenity space, open space, road etc has to be earmarked at the initial stages of starting/ commencement of the project itself. In the present case the appellant has not brought on record any such material which could indicate the FSI granted by the PMC for the project especially after its revision of the plan in 2006 with respect to the row houses. In fact this issue was still pending as is evident from the reply of the PMG to the Assessing Officer during the assessment proceedings. Thus in view of the given set of facts as brought-on record, the issue of the final 'occupancy certificate' assumes importance. The appellant has not brought on record the permissible FSI for the project as per the byelaws and also the area statement worked out in the sanctioned plan. These technical details are also subject to inspection by the PMC or the local authority. 3.8 In the present case the approval for the project was granted on 22.12.2004 and, therefore, the project ought to have been completed before 31.3.2009. Further, explanation (ii) below Sec. 80IB(10)(a) specifically states as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a housing project. 3.10 In view of the facts as narrated above, it would be appropriate and significant to discuss the manner in which the certificate of occupancy or the completion certificate is issued by a local authority, as prescribed under explanation to Sec 80IB(10)(a) of the Act. This is because it is not a simple matter of mechanically constructing various residential buildings and handing over the possession to the buyer of these units. The prescribed local authority has to ensure that the builder/developer has complied with the statutory rules and regulations with regard to the project e.g. the provisions of the urban land ceiling (ULC) Act, prescribed regulations which requires 'No objection certificate' or the 'NOC' from the Drainage Department, Chief Fire Officer, Development Plan (DP) Dept., Chief Engineer (Elec), Water Works Dept., Garbage disposal, Garden Dept, encroachment clearance etc. All these authorities carry out process of verification of compliances with respect to the conditions laid down by them and it is only after their satisfaction that the 'NOC' is issued. The local authority thus has to ensure that all such rules and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the licensed architect. It was in this context that the decision in the case of Satish Bora (supra) was rendered by the ITAT, Pune. The facts and the material brought on record is contrary to the facts of the above case. 3.12 In view of the above fact the disallowance of 80IB(10) deduction made by the Assessing Officer is upheld and the ground of appeal No.1 raised by the appellant is liable to be dismissed . Now the assessee is in appeal before us. 4. The Ld. Authorised Representative argues that the project La Vella Casa comprise of 117 flats in three wings A,B C and 8 row houses in D Wing as per CC 4759/06 dated 30-3-2007. The PMC issued the completion certificate for the 1st stage for 93 flats i.e. 31 flats in Wing A, 31 flats in Wing B, 31 flats in Wing C vide certificate dt. 29-12-2007. The 2nd completion/occupancy certificate was issued by the PMC for 24 flats i.e. 8 flats in Wing A, 8 flats in Wing B and 8 flats in Wing C vide certificate dt. 19-1-2009. Thus the completion / occupancy certificate of the entire 117 flats in the three wings viz. A, B C, were obtained by the assessee. However, the occupancy certificate for the eight (8) row houses in 'D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said reference is mentioned in the orders of the authorities below. There are mainly two objections for not granting the deduction to the assessee, i.e. (i) the assessee could not produce the completion certificate from the local authorities and (ii) the application filed by the architect of the assessee was not in the proper format and hence the Ld.CIT(A) raised the doubt about the completion certificate issued by the architect. As per the facts on record, it is not in dispute that the assessee s housing project was sanctioned vide C.C.issued by the PMC date 22-12-2004. The first plank of the argument of the Ld. Authorised Representative is that so far as amendment brought on the statute book by the Finance Act 2004 which was operative from 01-04-2005 is having no retrospective effect, more particularly the housing projects which are sanctioned prior to 01-04-2005. For that proposition, he relied on the decision of the Hon ble High Court of Gujarat in the case of Manan Corporation Vs. ACIT (Supra) and CIT Vs. CHD Developers (Supra) and also the decision of the ITAT, Pune Bench in the case of System Enterprises Vs. ITO-4(5), Pune in ITA No.1123/PN/2012 order dated 28-08- 2014. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 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 developer, obtained approval for a housing project on March 16, 2005, from the Development Authority. It completed the project in 2008 and by letter dated November 5, 2008 applied to the competent authority for the issue of the completion certificate. For the assessment year 2007-08, its claim to deduction under section 80-IB(10) of the Income-tax Act, 1961 was denied inter alia, on the ground that the assessee had violated the conditions stipulated under section 80-IB(10) inasmuch as it had not obtained the completion certificate for the project from the competent authority within four years as stipulated in Explanation (ii) thereto. The Commissioner (Appeals) upheld the assessment order. The Tribunal held that the assessee was expected to complete the project in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 provision has no application to the facts of the case, the question of going to the question whether those statutory requirements have been complied with or not, would not arise and the Tribunal rightly extended the said benefit. In that view of the matter, we do not see any merit in the appeals and the said questions of law are answered in the sense that the said provision has no application to the facts of this case . 10.5 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, respectfully following the decisions cited (Supra) 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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