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2016 (11) TMI 365

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..... haspati Tripathi For The Respondent by : Shri Shriram Bajaj ORDER Per Sanjay Arora, A. M.: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-II, Thane ( CIT(A) for short) dated 01.8.2014, partly allowing the Assessee s appeal contesting its assessment u/s.143(3) r/w s. 147 of the Income Tax Act, 1961 ( the Act hereinafter) for the assessment year (A.Y.) 2008-09 vide order dated 28.3.2013. 2. The only issue arising per the instant appeal is the maintainability in law of the deduction u/s. 80-IB(10) of the Act claimed by the assessee a builder and developer, qua its housing project Krishna Complex , Badlapur, Thane. The same stands denied by the Revenue on the ground that the said project is not completed by 31.3.2008, the last date by which the said project, approved on 22.5.2001 (i.e., prior to 01.4.2004) ought to have been completed u/s. 80-IB(10)(a)(i) r/w Explanation (ii) thereto. The assessee s case, on the other hand, rests on the fact that seven of the eight buildings comprising the project, i.e., except Building A-4, stand completed by 31.3.2008, as signified by completion certificates. The .....

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..... to be the date on which the completion certificate in respect of such housing project is issued by the local authority ; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided .. (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project of two thousand square feet, whichever is less. [ emphasis, ours ] 3.2 We firstly observe that the assessee s contention that the housing project could be under the circumstances restricted to seven buildings, or that each building be considered as a separate housing project for the purposes of section 80-IB(10), so that a proportionate deduction there-under is exigible, is misplaced and does not follow a reading of the decisions cited and relied upon. Rather, the .....

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..... hich is binding on us. There is no discussion of the import or the context of the extracted findings in Brahma Associates (supra), rendered in the context of the qualifying condition of section 80-IB(10)(d), forming the basis of the decision by the Hon ble Court, in the said order by the tribunal, which upholds the decision by the first appellate authority allowing deduction to a part of the project , reproducing his findings at para 5 of its order (which is followed by para 6, reproduced above), as under: 5. The only issue arising in this appeal is The relevant findings of the CIT(A) are as under: 4.1 The ld. AR has vehemently relied upon the decision of Hon ble High Court in the case of CIT vs. Vandana Properties (2012) 19 taxmann.com 316 (Bom), wherein it has been held that where housing project is consisted of several buildings/ then even one building with several residential units would constitute a Housing Project u/s. 80IB(10) of the Act. Similarly, in the case of Vishwas Promoters (P) Ltd. vs. ACIT (2013) 29 Taxmann.com 19 (Mad), which has been also relied upon by the appellant, it has been held that each block could be considered as a separate housin .....

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..... eciate the ratio of the decision. In Vandana Properties (supra), the Hon ble High Court was considering the eligibility of a building which came up much later on the site of an existing housing project, completed much earlier. The issue was as to how the land size, which is required per section 80-IB(10)(b) to be at a minimum of one acre for an eligible housing project, is to be reckoned; the Revenue denying the claim on the ground that the land already considered for the earlier, completed (before 01/10/1998) project could not be once again taken into account. Even considering proportionate land, its size fell below one acre. This did not find favour both with the Tribunal and the Hon ble High Court which clarified that land for the purpose of a housing project u/s. 80-IB(10) does not necessarily imply a (wholly) vacant land. The additional building E that came up much later was approved independently on 11/10/2002, only after the status of the land was converted from surplus vacant land to within ceiling land by the State Government. And was therefore to be considered as a separate project, independent of the earlier project, with which it had no relation. As long as th .....

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..... o that the qualifying condition of section 80-IB(10)(a) is either met or not . The question of it being satisfied in part; the project comprising eight buildings, all of which are admittedly not complete by 31.03.2008, does not arise. The course thus available for us is to refer the matter to a larger bench of the tribunal. We, however, on a careful and anxious consideration of the matter, including the decision in Brahma Associates (supra), binding on us, for the reasons stated hereinafter, are inclined to agree with the assessee s claim in preference to that of the Revenue. Our conclusion being in agreement with that by the tribunal (supra), we do not consider it necessary to refer the matter to a larger bench, also explaining the apparent conflict of the said order with the judgment in Brahma Associates (supra). 3.4 The dispute in the present case is with reference to the date of completion of the construction of the housing project, which stands provided in the provision itself as being the date on which the completion certificate is issued in respect of such housing project by the local authority ( Explanation (ii) to sec. 80-IB(10)(a)). The first issue therefore would .....

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..... ioned plans. One set of plans, certified by the Commissioner as the completed plans, shall be returned to the owner along with the occupancy certificate. Where the occupancy certificate is refused or rejected, the reasons for refusal or rejection shall be given in intimation of the rejection or refusal. (8) Part occupancy certificate :- When requested by the holder of the development permission, the Commissioner may issue a part occupancy certificate for a building or part thereof, before completion of the entire work as per the development permission, provided sufficient precautionary measures are taken by the holder to ensure public safety and health. The occupancy certificate shall be subject to the owner's indemnifying the Commissioner in the form in Appendix XXIII. [ emphasis, ours ] Clearly, the completion certificate , which the Act prescribes as signifying completion, represents a stage anterior to the issue of an occupancy certificate. Further, though the Act postulates a completion certificate in respect of a housing project, the same, under the relevant law, is only issued qua each separate building comprising the project . This also explains as to how and .....

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..... absurdity, a contradiction, to suggest otherwise. We accordingly answer the question posed in the affirmative. 3.5 We may next consider the question if the deduction u/s. 80-IB(10) could be allowed to the assessee s relevant housing project, admittedly comprising eight buildings, on the profit derived on that part of the project that is complete, ignoring that which is yet to be completed (by the prescribed date). Where the said two parts are, to any extent, related, there is no question of the project being regarded as complete to any extent. The reason is that a project , to be considered as such, must necessarily have all the qualitative attributes and ingredients thereof, i.e., of the project as approved, which only would qualify it as representing the housing project, as approved, which is, by definition, a housing project u/s. 80-IB(10), as explained in Brahma Associates (supra). For example, the project may have a school, dispensary, a park, a convenient shopping facility, a community or health/sports centre, etc., i.e., amenities, or common utilities, which is/are not complete. Surely, pending the completion of the same, or such like parts of the project, forming an i .....

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..... the one, single project. It is even otherwise well settled that only a cumulative satisfaction of all the conditions of eligibility entitles the subject undertaking to qualify as one and, further, that there is no equity about tax and the provisions of the taxing statutes are to be strictly construed, as once again clarified by the Hon'ble jurisdictional High Court recently in Humayun Suleman Merchant vs. CCIT [2016] 73 taxmann.com 2 (Bom). This is more so in case of an exemption provision as explained time and again by the Apex Court, as in Novopan India Ltd. vs. CCE [1994] 73 ELT 769 (SC). In Brahma Associates (supra), the ratio of which is binding on us, the provision under reference was section 80-IB(10)(d), inserted w.e.f. 1.04.2005, providing commercial user, by way of convenient shopping or other commercial establishment to a specified extent. The tribunal allowing deduction on the residential part of the project, the Hon ble Court held that the provision is qua deduction on the profits of the entire housing project, which is one, indivisible project. The term housing project being not specifically defined in section 80-IB(10), the same was to be taken as appr .....

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..... nceiving the project at a particular size, should not act as a detriment in providing relief. The land area would also, as explained in Vandana Properties (supra), have to be taken with reference to the project as approved. We are, when we say so, also conscious that it may well be that the remaining, incomplete part of the project is not brought to completion even subsequently. This consideration would not disturb our conclusion in any manner. The reason is simple, i.e., that the project completed by the specified date is a complete project in itself, liable to be regarded as a separate project, albeit smaller in size. The functional independence would also ensure that the completed project meets the approval standards under the D C Regulations with reference to which a project is approved by the local authority. In sum 4. The assessee stands allowed relief by the ld. CIT(A) following the decision by the first appellate authority in the assessee s case for A.Y. 2009-10, which stands since upheld by the tribunal (supra), which found the decisions in the case of Vandana Properties (supra) and Brahma Associates (supra) as squarely covering the issue at hand. There is .....

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..... may be so in a given case, or where each of the buildings form part of a composite project, a completion certifying that all it s functional or qualitative attributes are in place, cannot but be regarded as representing the whole project, albeit smaller in size and, therefore, complete to that extent. This is as the issue of a completion certificate, which the law stipulates as signifying completion, a qualifying condition for eligibility, cannot but, and does indeed, similarly, signify completion, of a building/s comprising the project. Completion, it may be appreciated, is not a functional attribute, or a concomitant, of a project . The condition of completion by a specified date as an eligibility criterion is, on the other hand, extrinsic to the project . In a given case, it may well be outside the control of the Developer, rendering the provision uncompliable. In contradistinction, s. 80-IB(10)(d), as explained in Sarkar Builders (supra), is inextricably linked with the approval and construction of a housing project. The same cannot be said of clause (a) thereof, which must therefore be regarded as the stipulation. What thus obtains for s. 80-IB(10)(d) may not hold good .....

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..... ted should be, without doubt, functionally independent of that not complete, having all the ingredients of the project as approved . The reason is that only a completed project can be said to contain all the ingredients of the project, quantitative or qualitative. As such, only a project which contains all the features of the whole project can be said to be a project , or is liable to be considered as one such, i.e., in substance, being deficient - with reference to the entire project, only in size. So reading the provision of section 80-IB(10)(a) along with Explanation (ii) thereto would ensure the object of the provision while at the same time preventing the mischief sought to be curbed by confining the deduction to a project that is completed within a reasonable time, set at four years from the end of the year of its commencement, with the existing projects being also allowed, similarly, another period of four years, eschewing any charge of inequity. A housing project which is complete in all its functional aspects, meeting all the infrastructural facilities that on completion would accrue to the residents thereof, can only be regarded as representing the project as approved, .....

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