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2016 (8) TMI 647 - ITAT MUMBAI

2016 (8) TMI 647 - ITAT MUMBAI - TMI - Eligibility of deduction u/s. 80 IB (10) - date of approval - Competence of issuing authority to issue commencement certificate - Held that:- The housing project in question was approved on 21/09/04 when the plan was approved by the Thane Municipal Corporation. The correspondence between the assessee and the Thane Municipal Corporation prior to the approval of the building is not relevant to decide the date of approval as per the explanation to section 80 I .....

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80 IB (10) a certificate has to be signed by a particular officer only. The purpose to introduce the section was to encourage the construction of affordable houses for common man. The AO has tried to raise super/hyper technical objections to deny the deduction to the assessee. The stand taken by him is against the spirit and intent of the provision. We also agree that the issue is not arising out of the order of the FAA. However, we have decided the issue on merits. As stated earlier, effective .....

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/2858/Mum/2012, CO/146/Mum/2012 & CO /90/Mum/2013 - Dated:- 12-8-2016 - Shri Rajendra, Accountant Member And C. N. Prasad, Judicial Member Revenue by : Shri Manjunatha Swamy -CIT-DR Assessee by : Dr. Sunil Pathak & Shri Subodh Ratnaparakhi ORDER Per Rajendra, AM Challenging the orders of CIT(A)Thane-I, the Assessing Officer(AO) and the assessee have filed appeal/cross objection for the above mentioned years. Assessee-firm is engaged in the business of builders and developers. Details of date .....

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ed additional evidences as per the provisions of Rule 29 of the ITAT, Rules, 1963, that those documents were not available at the passing of assessment/appellate orders, that same directly dealt with the issues on hand, that in the appeal filed by the AO for the AY. 2007-08 some new issues were raised, that the AO had revised the grounds of appeal for the AY. 2005-06, that paper included correspondence with the local authorities of the year 2012 and the assessment and appellate orders for the su .....

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Rule 29 of the ITAT, Rules. As the issues involved in the appeals and the CO. s are common, so, for the sake of convenience we are adjudicating all the appeals by single common order. ITA/2857/Mum/2012-AY. 2005-06: 3. First ground of appeal (GOA1-7 and 11-17), deal with allowability of deduction claimed by assessee u/s. 80IB of the Act. While deciding the appeal filed by the AO, the Tribunal had, vide its order dated, 27. 10. 2010, (ITA / 5146/ Mum/2008)directed the First Appellate Authority (FA .....

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of the Act. The AO made an addition of ₹ 2. 45 crores to the income of the assessee by holding that it was not entitled to deduction u/s. 80 IB(10), that certain residential units of the housing project exceeded the maximum permissible built-up area of thousand square feet, that the project undertaken by the assessee was not a housing project. During the course of assessment proceedings, another issue decided against the assessee was that of location of the project. It was held that the p .....

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hat it had to be completed by 31st/03/2008 as per the provisions of section 80 IB (10) (a)(i) of the Act, that CC was issued on 21/09/2004, that the project was to be completed by 31/03/2009, that it had completed the project by June 2008, that the provisions of section 80 IB (10) (a) (ii) were applicable to the facts of the case, that the Tribunal had decided the issue in its favour, while deciding the appeal for the AY. 2006-07 (ITA/5170/Mum/2009, dated 29/04/2011). After considering the submi .....

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appeal filed by the assessee. 6. During the course of hearing before us The DR supported the order of AO. The AR stated that issue stands decided in favour of the assessee by the Tribunal order delivered for the AY. 2005-06, at paragraphs no. 16 and 17 of the order, that the case of the assessee was covered by the provisions of section 80IB(10)(a)(ii)and not by 80IB(10)(a)(i)of the Act, that the commencement certificate was issued on 21. 09. 2004, that it was the date of first approval by the m .....

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ce between the assessee and the Thane Municipal Corporation prior to the approval of the building is not relevant to decide the date of approval as per the explanation to section 80 IB (10). 17. In view of the above discussion, we decide this issue against the revenue and in favour of the assessee. The order of the CIT (A) is confirmed, qua this issue. Respectfully, following the above decision, first part of the first effective ground is decided against the AO. 8. Second part of the effective g .....

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nt order or appellate order, that it was not arising also out of the order of the Tribunal, that the Tribunal had dismissed attempt of the department to introduce fresh issue of issue of CC by EE, while deciding the appeal for the AY. 2005-06. He referred to the para. 1. 8 and 1. 9 of the Tribunal order for AY. 2006-07. He further contended that all the sanctions were issued in the name of Municipal Commissioner(MC), that different authorities under him would sign the sanctions as per the powers .....

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are given by the Commissioner of the Corporation, that there is delegation of powers by him to his officers, that delegated powers were used by his junior officers. In our opinion, what is material is the approval of the municipal authorities and not the person signing the permission letter/CC. We do not find any precondition in the Act or the Income Tax Rules, 1962 that prescribes that for availing deduction u/s. 80 IB (10) a certificate has to be signed by a particular officer only. The purpos .....

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appeal (GOA 8-10)is about expenditure of ₹ 21. 86 lakhs incurred prior to receipt of commencement certificate. In that regard the FAA, in the second round of hearing, observed that the assessee had entered into an agreement for development on 27/10/2004, that the document was duly registered, that the price consideration of ₹ 1. 68 crores was required to be paid by the assessee for acquiring the development rights besides transfer of 11 flats free of cost. He referred to the cases o .....

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CC and OC being issued in the name of the original holder would not disentitle the assessee to claim the deduction u/s. 80 IB(10), that the section did not postulate any condition for allowing the deduction, that while passing the order u/s. 143 (3) of the Act for the AY. 2008-09 the AO had not raised the issue of ownership of land in subsequent years. The FAA allowed the appeal filed by the assessee. 12. Before us, the DR stated that expenditure was incurred before the project started, that sa .....

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he appeals for the AY. s. 2008-09 and 2009-10. He referred to the matter of Nirmiti Construction(4 SOT 383). 13. We find that the Tribunal has decided the issue in favour of the assessee and in the subsequent AY. s. the AO himself has not disallowed the deduction in that regard. In our opinion, expenditure incurred by an assessee for developing the housing project was an integral part of the project and hence allowable. Second effective ground of appeal is decided against the AO. ITA/8605/Mum/20 .....

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have decided the identical ground of appeal, we decide Grounds no. 18-20 against the AO. 16. Third effective ground of appeal(GOA 21)pertains to pro-rata deduction in respect of eligible units of the housing project. It is found that while deciding the appeals for the AY. s. 2005-06(Paragraph 1. 3 at pg. 5) and 2006-07(Paragraph 26 at pg. 17)the Tribunal has held that proportionate deduction should be allowed to the assessee for the housing project, except for the 12 flats. Following the orders .....

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ence, same stand dismissed as not pressed. 19. Second ground deals with size of the flat. While completing the assessment the AO held that certain flats have been merged with adjoining flats to create six flats having built up area exceeding 1000 Sq. feet. In the appellate proceedings the FAA held that the assessee was eligible to claim deduction on proportionate basis, that proportionate deduction on residential units having more than 1000 sq. ft constructed area needed to be denied. 20. Before .....

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