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2016 (7) TMI 182 - ITAT MUMBAI

2016 (7) TMI 182 - ITAT MUMBAI - TMI - Deduction u/s. 80IB(10) - AO had held that occupancy certificates (OC) was received by the assessee after the due date i.e. 31.3.2008 in case of KP and therefore, the assessee was not entitled to claim deduction u/s. 80IB(10) - FAA held that amended provisions were not applicable to KP - Held that:- Amended provisions were applicable to the projects that were approved before 1. 4. 2005. Thus we hold that assessee was not entitled to claim deduction u/s. 80I .....

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Member & Rajendra, Accountant Member For the Revenue : Shri Love Kumar-DR For the Assessee : Ms. Uma Mahadeokar ORDER Per Rajendra, AM Challenging the order dt. 13. 02. 2013 of CIT(A)-I, Mumbai, the Assessing Officer(A. O. )and the assessee have filed the present appeal/Cross Objection (C. O. ). During the course of hearing before us, the AR of the assessee stated that assessee was not interested in pressing the grounds raised in the CO, considering the smallness of tax effect. Therefore, C .....

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ion u/s. 80IB(10) of the Act. During the assessment proceedings, the AO found that the assessee had claimed deduction u/s. 80IB amounting to ₹ 3. 48 crores for Kavyadhara Project(KP), ₹ 11, 729/-for Puranik City Project(PCP), ₹ 20, 673/- for Prathpusha (PP) and ₹ 26, 745/- for Swapnadhara Project(SDP). The AO called for various details in that regard and recorded the statement of the architect on 2. 12. 2011 to ascertain the facts regarding sanction of development permiss .....

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ings as per the final plan were received as under : Building No. No. of Buildings No. of Floors Date of occupation certificate A-1 1 Part ground +14 10. 12. 2008 A-2 1 Part ground +14 31, 05. 2005 B-1 1 Stilt +7 15. 11. 2006 B-2 1 Stilt + 14 15. 11. 2006 B-3 1 Stilt +14 15. 11. 2006 B-4 1 Stilt +7 31. 3. 2008 C-1 1 Stilt +7 15. 11. 2006 C-2 1 Stilt +7 31. 03. 2008 C-3 1 Stilt +7 10. 12. 2008 C-4 1 Stilt +7 10. 12. 2008 Club House 1 Ground +1 10. 12. 2008 He held that the sanction for development .....

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hat the conditions laid down in Section 80IB(10) were not fulfilled. Vide his order sheet entries dt. 8. 11. 2011, 30. 11. 2011 and 8. 11. 2011, the AO asked the assessee to explain as to why deduction claimed by it u/s. 80IB(10)of the Act should not be disallowed in respect of KP. In its submission dt. 22. 12. 2011 the assessee submitted that there was delay in OC of a few weeks, that the project was completed on time as per the requirements of the section, that the delay had been from the side .....

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ore 31. 3. 2008 nor had it completed the housing project before the specified time limit, that there was no delay on part of the TMC, that the assessee itself had applied for the OC after the due datei. e. 31. 3. 2008. Finally, he held that assessee was not entitled for deduc -tion in respect of KP amounting to ₹ 3. 48 crores. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, elaborate submissions were made by the .....

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2003, that the date of completion for all buildings of this project was 31. 03. 2008, that there was no dispute regarding completion of the other buildings of the project namely A-2, B-1, B-2, B-3, B-4, C- 1 and C-2 within the specified time of 31. 3. 2008, that the dispute was regarding the building numbers A-1, C-3, C-4 and Club-house as well as building A-2, that the OC. s were received after 31. 3. 2008 (for building A-2 on 31. 5. 2008 and for remaining buildings on 10. 12. 2008). The FAA re .....

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er 1. 4. 2005. He further, held that pre-amended provisions of section 80IB(10) had not fixed any time limit for completion of housing projects, that the requirement of completing the projects within a period of 4 years came into effect from 1. 4. 2005. He referred to the cases of Brahma Associates (333ITR289), Sai Krupa Developers, Mumbai(ITA/3661/Mum/2011, dt. 4. 3. 2012)and held that KP would be govern -ed by un-amended provisions of section 80IB, that the said housing project was approved on .....

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failed to comply with all the condition of the amended provisions. The Authorised Representative (AR) supported the order of the FAA and relied upon the cases referred by the FAA. 6. We have heard the rival submissions and perused the material before us. We find that the basic issue to be decide in the case under consideration is as to whether the amended provisions would be applicable for the projects that were approved before 1. 4. 2005. The AO had held that OC was received by the assessee af .....

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rse of assessment proceedings, the completion certificate was not produced before 31. 03. 2008. Further, a letter was issued by the municipal corporation dated 18. 12. 2008, pursuant to the enquiry made in that behalf stating that completion certificate had not been issued to the assessee till that date and that the application of the assessee was still being processed. On these facts the Assessing Officer proceeded to complete the assessment proceedings and disallowed the deduction claimed by t .....

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approved before March 31, 2005, by the local authority. The only condition in clause (a), at the relevant time, was that the development and construction of the housing project had commenced or commences on or after October 1, 1998. This stipulation has been modified by amendment to clause (a). According to the amended clause (a), the housing project approved before March 31, 2007 by a local authority would receive the benefit of deduction provided the development and construction of the housing .....

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on of construction of the housing project shall be reckoned on the basis of the date on which the completion certificate in respect of such housing project is issued by the local authority. Clause (a) as amended, stricto sensu, cannot be considered as a new condition and that too incapable of compliance inasmuch as clause (a) deals with the time frame within which the housing project was expected to be completed, to get the benefit of the prescribed deduction. The amended section 80-IB(10)(a) ex .....

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her case, the time frame for completion of the project has been prescribed as four years. In that, the project approved before April 1, 2004 has been given time to complete before March 31, 2008 and in the latter category within four years from the end of the financial year in which the housing project was approved by the local authority. The municipal laws of different States in respect of procedure for issuance of completion certificate are not uniform. To wit, in some States, the dispensation .....

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tificate-which is full completion certificate issued by the local authority before the cut-off date. That is to lend credence to the factum of completion of the entire housing project in all respects according to the approval granted by the local authority. The Legislature was conscious of this position, for which, express provision has been made as to the meaning of the date of completion of the housing project linked to the date on which completion certificate is issued by the local authority .....

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e relevant rules in that behalf. ……. . it was not a case of imposing a new condition, much less, with retrospective effect unlike introduction of new condition in the shape of clause (d), which obviously could be applied only prospectively. Clause (a) stands on a completely different pedestal. It cannot be treated as a new condition linked to the approval and construction or having retrospective effect as such. For, it gives at least four years time to both classes of housing proje .....

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project in an indefinite period. The right arising from section 80-IB , is coupled with the obligation or duty to complete the project in the specified time frame. If the developer does not complete the housing project within the specified time, will not receive that benefit. There is no compulsion on him to complete the project in four years. Even the approvals to the construction of housing project granted by the local authority specify the date within which the construction must be completed, .....

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rms of clause (d) and that of clause (a). The condition in clause (a), neither operates retrospectively nor can be said to be absurd, unjust or expecting the assessee to comply with something which is impossible to achieve. (ii) That considering the prodigious benefit offered in terms of section 80-IB to the assessee (hundred per cent. of the profits derived in any previous year relevant to any assessment year) and the purpose underlying it - which is, inter alia, a burden on the public excheque .....

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r specified time, as a pre-condition to get the benefit of tax deduction. Else, it will then be open to the assessee to rely on other circumstances or evidence to plead that the housing project is complete-requiring enquiry into those matters by the tax authorities- sans a completion certificate issued by the local authority in that behalf. A priori, the argument of substantial compliance is sufficient, would lead to uncertainty about the date of completion of the project which is the hallmark f .....

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n pronounced in the section but also doing violence to the legislative intent. For, Explanation (ii) will then have to be read as date of completion of construction of the housing project shall be taken to be the date as certified by the local authority in that behalf , irrespective of the date of issuance of such certificate by the local authority. Indeed, in a given case if the assessee is able to substantiate that the completion certificate was in fact issued by the local authority before the .....

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nd of investing wide discretion in that authority, which, eventually, may only end up in getting embroiled in litigation. If the assessee has failed to comply with the condition of obtaining completion certificate from the local authority before the cut-off date, he must take the consequence thereof of denial of the benefit of tax deduction offered to him on that count. (iii) That issuance of completion certificate, after the cut-off date by the local authority but, mentioning the date of comple .....

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ut-off date. (iv) That the provision in the form of section 80-IB(10)(a) , applies uniformly to all assessees whether following the work-in-progress accounting method or otherwise. The benefit of deduction under this provision can be availed of by the assessee following the work-in-progress accounting method, provided he has complied with the stipulation of having produced the completion certificate issued by the local authority before the cut-off date, as may be applicable in his case. In other .....

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