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2016 (11) TMI 365 - ITAT MUMBAI

2016 (11) TMI 365 - ITAT MUMBAI - TMI - Eligibility of claim u/s 080IB - date of completion of the construction of the housing project - Held that:- no functional relationship or dependence between the buildings completed and that not completed (by the specified date – 31.3.2008), which are thus independent of each other. This is as the Revenue’s only objection is that one of the eight buildings comprising the assessee’s otherwise eligible housing project u/s. 80-IB(10), i.e., ‘Krishna Complex’, .....

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. No.6754/Mum/2014 - Dated:- 22-9-2016 - SHRI SANJAY ARORA, AM AND SHRI PAWAN SINGH, JM For The Appellant by : Shri Vachaspati 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) fo .....

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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 assessee be accordingly allowed proportionate deduction, i.e., other than on the profit relatable to building A-4. The ld. CIT(A) has allowed the assessee s claim following the decision by the first appellate a .....

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akings other than infrastructure development undertakings. 80-IB. (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11), (11A) and (11B) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to .....

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using project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) ………. (iii) ………. Explanation.-For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been .....

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housand 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 first .....

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approved by the local authority is to be considered as the housing project for the purposes of section 80-IB(10) and, two, that a project there-under is a single project, on the entire of which, where eligible, deduction u/s. 80-IB(10) is to be allowed. We extract the relevant part of the said decision, which is clear and unambiguous, as under: (refer para 31/pgs. 302-303, also catch notes at pgs. 290-291) Section 80-IB(10) allows deduction to the entire project approved by the local authority a .....

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elied upon before us: 6. We find that the issue raised in the present appeal is squarely covered by the jurisdictional High court in the case of Vandana Properties (supra) and M/s. Brahma Associates (supra), which in turn has been affirmed by the Hon'ble Apex Court in a bunch of appeals with lead in Civil Appeal No.4476/2015 judgment dated 29.04.2015. Accordingly, we hold that the assessee is entitled to (its) claim of deduction u/s. 80IB(10) of the Act in respect of seven buildings complete .....

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the Hon'ble Court in Brahma Associates (supra) clarifying the scope and meaning of the term housing project u/s. 80-IB(10) as well as the scope of the provision itself, is therefore apparently inconsistent therewith, i.e., the latter decision, which 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 Ho .....

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na 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 housing project when larger project cons .....

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f the appellant are identical the decisions of Hon'ble Bombay High Court in the case of Vandana Properties (supra) and Hon ble Madras High Court in the case of Vishwas Promoters (P) Ltd. (supra) clearly support the case of appellant. Moreover, the decision of Hon'ble Bombay high Court being jurisdictional one, is binding on me. Therefore, I am of the considered view that the 7 buildings completed within the stipulated time comprising of more than 1 acre built up are constitute a separate .....

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is directed to verify this fact from the record an disallow the deduction u/s. 80IB(1) only in respect of the Building No.A-4 which has not been completed within the stipulated time. [emphasis, ours] There is, it may be emphasized, no concept of a partial satisfaction of the qualifying condition/s, i.e., for eligibility, of a project (which is the subject matter of eligibility), so that it is either eligible or not, i.e., in terms of the qualifying conditions, resulting in its profits being eit .....

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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 n .....

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with which it had no relation. As long as therefore the land size as per the project as approved was not less than one acre, deduction could not be denied. It was in this context that a separate building was considered as an independent project. The decision nowhere contradicts the earlier decision by the Hon ble Court in Brahma Associates (supra). The decision in Vishwas Promoters (P.) Ltd. (supra) stood again rendered in a different context, i.e., of section 80-IB(10)(c), wherein restriction .....

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d by the local authority and, further, a single project. This aspect of the matter stands also discussed at length by the tribunal in Asst. CIT vs. Ekta Sankalp Developers [2015] 152 ITD 805 (Mum), which was again in the context of section 80-IB(10)(c). While holding, following Brahma Associates (supra), a housing project to be a single project qua which deduction, therefore, cannot be allowed in part, the tribunal was of the view that the condition contained in section 80-IB(10)(c), however, ap .....

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s. 80-IB(10), and forms,as afore-stated, the basis of its decision. To, therefore, say that the decision in Vandana Properties (supra) and Brahma Associates (supra) squarely cover the issue at large, as does the tribunal vide its order dated 8/6/2015 supra and, therefore, is covered by the said order by the tribunal itself, cannot be accepted. Why, a project is either complete, or not so, by a particular date, so that the qualifying condition of section 80-IB(10)(a) is either met or not. The que .....

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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 housin .....

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not extend to all the buildings of the project? We consider it as so. Our reason for so stating is that each of the buildings, stated to be seven (being A1, A2, A3, B1, B2, C1 and C2), stand granted a completion certificate in terms of Regulation 6(6) of the Development Control Regulations for Greater Mumbai, 1991 issued under Maharashtra Regional and Town Planning Act, 1966 (MRTP Act), which, along with Regulations 6(7) and 6(8), reads as under: 6) Completion certificate:- The owner, through h .....

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er satisfying himself that there is no deviation from the approved plans, issue a certificate of acceptance of the completion of the work in the form in Appendix XXI. (7) Occupancy certificate:- On receipt of the acceptance of completion certificate in the form in Appendix XXI, the owner, through his licensed surveyor/engineer/structural engineer/supervisor of his architect shall submit to the Commissioner a development completion certificate in the form in Appendix XVIII with three copies of th .....

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d 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 .....

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tion 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 why completion certificates were issued at different times (from 22/7/2005 to 27/3/2008, and finally to the eighth building on 25/11/2009) for different buildings in the present case (refer para 3 of the assessment order). Even assuming that a completion certificate is finally issued, i.e., on the completion of the .....

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atisfaction, on the same parameters, as it does for granting completion and, following it, occupancy certificate for the entire project. The same thus has the same validity in the eyes of law, i.e., the law under which it is granted. To clarify further, a building forming part of the project, to which such certificate/s stands granted, cannot be under the relevant regulations regarded as any less complete than were it, instead of a part of a housing project, to comprise the whole project itself. .....

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ued by the local authority. Rather, as it appears, such certificates are issued only buildingwise. Further, the Act recognizing the completion certificate qua a project, i.e., as signifying it s completion, cannot therefore possibly not recognize the completion of a building comprising a project, i.e., by deduction. Why, would not the relevant housing project be regarded as complete, i.e., under the MRTP Act and, consequently, under the Act, upon the issue of a completion certificate to the only .....

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ere 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 proj .....

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o residential buildings, it is unexceptional as to why the project cannot be regarded as complete to that extent, i.e., in terms of and following the completion parameters as prescribed by the Act itself. The independence of-course should be both with reference to construction as well as functional. The two buildings being independent of each other, could be constructed independent of each other, as signified by the issue of a separate completion certificate qua each building, as in the present .....

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adopted a purposive interpretation of the provision. This is as it would be manifestly unjust where a part of the project, complete in itself, is not regarded as qualifying as eligible despite complying with the conditions of completion in its respect. We employ the words complete in itself as where it is not so, the project suffers from a deficiency qua a qualitative attribute that would get removed on the completion of that part of the project. The statute mandates the completion of the entire .....

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w as well as the clear mandate of the decision in Brahma Associates (supra), so that the deduction u/s. 80-IB(10) is to extend to a project as a whole, which is 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&# .....

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ment 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 approved by the local authority, i.e., for the purpose of section 80-IB(10). Further, being a substantive provision, section 80-IB(10)(d) would have no re .....

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a. The said decision stands since upheld in Sarkar Builders (supra). The word project in Brahma Associates (supra) is being thus read by us as including that part of the approved project which has all the attributes of the entire project. This is toward and by way of a harmonious construction and reconciliation between the intent and object of the provision on one hand, and its language on the other. Without doubt, completion of the project forms one of the qualifying conditions for an eligible .....

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ntrinsic to the project. It may well be that despite all the efforts by the Developer, a part could not be completed within the statutorily defined time period. Again, there could exist conditions or otherwise develop circumstances in the environment impeding the progress of the project, causing its delay. The statutory mandate qua completion, as a qualifying condition, would, therefore, meaningfully applied, in our view, extend to that part of the project, which has all the ingredients of the p .....

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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 r .....

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cisions, or even of the law laid down per the said decisions, which alone is binding. The same, holding a project as approved as being the housing project u/s. 80- IB(10) and, therefore, as one, single project, so that there is no question of a deduction on a part of the project, which forms the basis of the decision in these judgments, the said order by the tribunal, rather than following the Hon ble High Court, is, with respect, in apparent conflict therewith and de hors the same. The decision .....

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thus only be at the peril of not following - at least prima facie, the binding decision in Brahma Associates (supra), clarifying the scope of the deduction u/s. 80-IB(10) and binding on us. On the ld. AR being so confronted by the Bench during hearing, reading the relevant part of Brahma Associates (supra), extracted above (refer para 3.2), he would, seeking time, place on record the Regulations under the MRTP Act (which stand reproduced in this order), further pleading that the completion param .....

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be considered as complete on the issue of a completion certificate for the last building. Though we are therefore not required to consider a case where the D & C Regulations provide for completion certificate qua a project, i.e., in the facts of the present case, even extending the argument, as it 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 re .....

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ligibility 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 in the .....

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n to be read in the factual backdrop and the context in which it is rendered. This is as the words take their colour from the context in which they are used (CIT vs. Venkateswar Hatcheries (P.) Ltd. [1999] 237 ITR 174 (SC)). Again, as explained in Goodyear India Ltd. vs. State of Haryana and Another [1991] 188 ITR 402 (SC), a precedent is an authority only for what it actually decides and not what may remotely or even logically follow from it (also: CIT v. Sun Engineering Works (P.) Ltd. (1992) .....

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that part of the project which does not meet the said stipulation. Rather, could, one may ask, a uniform completion date be prescribed for all housing projects, which may vary in several respects, besides get beset with construction issues wholly outside the province of the Builder, i.e., get embroiled in factors that are extrinsic to the project. The intent of the Legislature in providing a completion date, as we understand, is to restrict the benefit to where the project is not set on an inde .....

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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 pr .....

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nts thereof, can only be regarded as representing the project as approved, bearing its ingredients, so that it would qualify as an eligible project even where a part of the residential complex is not complete by the specified date. This is as it is again trite law that though being required to be strictly construed, in-as-much as an exemption is an exception to the general rule, once the subject falls within the purview of the provision, so that the same is applicable, it is to be construed libe .....

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riction on it too has to be construed so as to advance the objective of the section and not to frustrate it. True, there is no equity about tax, and the two make strange bed fellows. However, as explained in R. B. Jodhamal Kuthiala vs. CIT [1971] 82 ITR 570 (SC) that though equitable considerations are irrelevant in interpreting tax laws, the same are to be interpreted reasonably and in consonance with justice. This in fact stands oftrepeated by the apex court, as in CIT vs. Gotla [1985] 156 ITR .....

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