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2013 (6) TMI 796 - ITAT PUNE

2013 (6) TMI 796 - ITAT PUNE - TMI - ITA No. 1218/PN/2010 - Dated:- 25-6-2013 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER Appellant by : Mr. Sunil Pathak & Mr. Suhas Bora Respondent by: Ms. Ann Kapthuama ORDER PER G. S. PANNU, AM This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-II, Pune ( in short 'the CIT(A)') dated 16-6-2010, which in-turn, has arisen from an order passed by the Assessing Officer o .....

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d in the business of builders and developers. For the assessment year under consideration, assessee had claimed deduction u/s 80IB(10) of the Act of ₹ 1,46,24,573/- in respect of a housing project viz. 'Oakwoods' at Viman Nagar, Pune. In the course of assessment proceedings, the Assessing Officer held that assessee was not eligible for the claim of deduction u/s 80IB(10) of Act and accordingly the deduction claimed at ₹ 1,46,24,573 was denied. The CIT(A) has upheld the claim .....

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ct and the Explanation thereof, which read as under :- "(10) The amount of deduction in the case of an undertaking developing and building house projects approved before the 31st day of March 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) Such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and .....

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e approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) 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." 5. In terms of Clause (a), deduction is available in re .....

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(ii) of clause (a) of section 80IB(10) of the Act. Accordingly, as per the assessee it is entitled to complete the construction of the project within four years from the end of the financial year in which the housing project is approved by the local authority i.e. upto 31-3-2009. The assessee furnished the necessary completion certificates issued by PMC, as detailed by the Assessing Officer in para 2.1 of the assessment order, as per which the final completion certificate was issued by the PMC o .....

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ned by sub-clause (i) of clause (a) of section 80IB(10) of the Act, and accordingly the construction of the project was to be completed by 31.3.2008. Since the final completion certificate in respect of assessee's housing project has been issued by the PMC on 20.12.2008, and thus as per the Assessing Officer, project of the assessee does not comply with the requirements of clause (a) of section 80IB(10) of the Act. Explanation (i) to clause (a) of section 80IB(10) prescribes that in a case w .....

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. 80IB(10) of the Act, which has been reproduced above, the date of approval of the housing project for the purposes of Clause (a) has to be reckoned as 02.11.2003 i.e when the project was first approved by the local authority. According to Assessing Officer in the instant case, the approval granted by PMC on 19.01.2005 is a Revised sanction, whereas the original sanction was dated 02.11.2003 and therefore the period allowed for completion of construction in this case has to be in terms of sub-c .....

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24,573 was rejected by the Assessing Officer. 6. From the aforesaid, it is clear that the crux of the controversy is to determine the date on which the housing project of the assessee has been "approved by the local authority" as contained in Clause (a) to section 80IB(10) of the Act so as to decide whether the date of completion of construction is to be governed by sub-clause (i) or by sub-clause (ii) of clause (a) to section 80IB(10) of the Act. Notably, the CIT(A) has upheld the sta .....

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obtained the development rights of the plot of 7826.89 sq. mtrs. of land on 01.10.2004. It has also been clarified that originally there were three different plots and it was in respect of one of these plots admeasuring 1983 sq. mtrs. that building plan approval was obtained vide commencement certificate dated 01.11.2003, which has been referred to in the assessment order. However, it has been clarified by the PMC that no development was carried out on any of the three difference plots sanction .....

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the commencement certificate No. DPO 2822 dated 20.07.2004 all previous approvals were canceled. However, since the original three plots were part of the amalgamated piece of land, the building plan sanctioned on 19.1.2005 was termed and approved as a 'revised plan'. Accordingly, it is contended that the 'Oakwoods' project of the appellant firm can be treated to have commenced w.e.f January 2005 only, and therefore, time was a available upto 31.3.2009 for the completion of the pr .....

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g Plan approval in respect of the appellant, and the date 19.01.2005 the date of commencement of the appellant's project. Since it is not disputed that the project was completed by 20.12.2008, and the final completion certificate was also obtained on this date, it is held that the appellant's project was completed within stipulated time 80IB(10)(a)(ii) of the I.T.Act, 1961. The deduction 80IB(10) is therefore, held to be allowable. Grounds of appeal Nos. 2 & 3 are, therefore, allowed .....

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that the commencement certificate dated 02.11.2003 was on a plot of 1983 sq. mts., which was obtained by the previous owners. The previous owners amalgamated the adjoining plot subsequently and such amalgamated revised layout was sanctioned by the PMC vide commencement certificate dated 02.07.2004 to create a plot of 7826.89 sq. mtrs. The assessee firm was incorporated on 20.07.2004 and in terms of a development agreement dated 01.10.2004, it acquired the development rights of this plot of 7826 .....

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e the building plan approval dated 19.01.2005 issued the PMC mentions it as a revised approval, it cannot be treated as the first building plan approval for the project undertaken by the assessee. In this connection the learned counsel has referred to the detailed submission made before the CIT (Appeals) which have been reproduced in the impugned order and in particular reference has been made to a letter dated 31.12.2009 issued by PMC which clarified that prior to assessee acquiring the plot of .....

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4 and the assessee obtained approval for development of said plot in January 2005. In particular, the learned counsel has referred to the copy of communication of PMC dated 31-12-2009, placed at pages 163-165 of the Paper Book to submit that as per the PMC on account of approval of layout plan after amalgamation of plots on 20-07-2004 all previous approval were cancelled. Even with regard to the presence of the expression Revised plan on the certificate issued by PMC on 19.1.2005, the learned co .....

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ut that the letter from PMC dated 31.12.2009 could not be obtained at the time of assessment due paucity of time and therefore it was produced before the CIT (Appeals) as additional evidence in terms of rule 46A of the Income Tax Rules 1962 and has been rightly admitted by the CIT (Appeals) to adjudicate the controversy. 10. We have carefully considered the rival submissions. Factually speaking, it would be pertinent to observe that the assessee firm was incorporated on 20-07-2004 in terms of pa .....

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s undertaken development and building of a housing project on the aforesaid piece of land, a fact situation which is not in dispute. The assessee obtained a commencement certificate dated 12.1.2005 which was a layout plan approval from the PMC for development of the said plot of land of 7826.89 sq. mtrs., a copy of which has been placed in the Paper Book at pages 90-91. The approval of the corresponding Building Plans by the PMC is dated 19-01-2005, which is placed at pages 93-94 of the Paper Bo .....

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ion of date of completion of construction is to be reckoned with reference to the date of approval by the local authority. The Explanation (i) below Clause (a) to sec. 80IB(10) of the Act prescribes that in a case where the approval in respect of a housing project is obtained more than once such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. Notably, Explanation (i) is to be applied in .....

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e placed by the Revenue on the Explanation to Section 80IB(10)(a) which was introduced with effect from 1st April 2005 is also misplaced. What the said Explanation contemplates is that where the approval in respect of a housing project is granted more than once, then, that housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. For example, in respect of a housing project, the assessee may seek .....

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ranted to different housing projects. In the present case, as noted earlier, construction of 'E; building constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of 'E' building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question". [underlined f .....

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eferred by the Assessing Officer is for a project distinct than the project of the assessee, whose Building Plan approval was first made on 19.1.2005. It cannot be denied that the approval on 2.11.2003 was by the previous owners in as much as the assessee was incorporated on 20.7.2004 only. Assessee acquired development rights of the plot of 7826.89sq. mtrs. of land only on 1-10-2004. Originally there were three different plots and it was in respect of one of these plots admeasuring 1983sq. mtrs .....

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9-01-2005 is the first Building plan approval in respect of the aseessee's project. Moreover, at page 92 of Paper Book, assessee has made a statement showing the difference in the layout and building plan submitted by the previous owner with respect to 2003 approval and the impugned project of the assessee. The aforesaid difference was very much before the lower authorities and reads as under:- Particulars Plan 2003 Plan 2005 Plot area on which sanctioned obtained 1997.73 sq. mtrs. 7286.89 s .....

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