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2017 (2) TMI 66 - ITAT PUNE

2017 (2) TMI 66 - ITAT PUNE - TMI - Disallowance of claim of deduction u/s. 80IB(10) - assessee has not completed the entire project before stipulated date i.e. 31st March, 2008, and the assessee has not produced completion certificate from the competent local authority - Held that:- As decided in assessee's own case for earlier AY assessee should not suffer for any administrative change with regard to applicability of building bye laws in particular area. The problem arose with regard to comple .....

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gard to confusion of applicability of building bye laws because of change of jurisdiction by virtue of exclusion of land in question from PMC limits. The assessee should not suffer for the same. Under such circumstances, liberal interpretation should be used in favour of the assessee. It is settled legal position that law always gives remedy and law does wrong to no one. We are aware that provisions of section 80IB(10) suggest about only completion of construction and no adjective should be used .....

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015 - Dated:- 25-1-2017 - Shri Anil Chaturvedi, Am And Shri Vikas Awasthy, JM Assessee by : Shri Krishna Gujrathi Revenue by : Shri Hitendra Ninawe ORDER Per Vikas Awasthy, JM These three appeals have been filed by the Revenue against the orders of Commissioner of Income Tax (Appeals)-II, Pune. ITA No. 56/PUN/2015 is directed against the order of Commissioner of Income Tax (Appeals) dated 28-10-2014 for the assessment year 2008-09. In ITA Nos. 57 & 58/PUN/2015 the Revenue has assailed the or .....

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ed to as the Act ) in respect of its housing project Mahaganesh Nagari situated at Kesavnagar, Mundhwa, Pune. The deduction claimed by the assessee u/s. 80IB(10) in the impugned assessment years is as under : Assessment Year Deduction claimed u/s. 80IB(10) 2008-09 ₹ 68,13,878/- 2010-11 ₹ 85,83,327/- 2011-12 ₹ 1,47,39,268/- The Assessing Officer disallowed the claim of deduction u/s. 80IB(10) on the ground that : i. the assessee has not completed the entire project before stipul .....

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of the assessee for assessment years 2008-09, 2010-11 and 2011-12. The Revenue is in appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals). 3. The grounds of appeal raised by the Revenue in assessment year 2008-09 are as under : 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing the assessee s claim u/s. 80IB(10) without appreciating the fact that the assessee has not fulfilled conditions laid down in para (i .....

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i appearing on behalf of the assessee submitted at the outset that the Assessing Officer had made disallowance for similar reasons in the assessment year 2006-07. The ld. AR pointed that this fact has been recorded by the Assessing Officer in para 5.2 of the assessment order dated 28-02-2014 for assessment year 2008-09 and para 4.2 of the assessment order dated 22-03-2013 for assessment year 2010-11. Similar observations have been made by the Assessing Officer in para 5.2 of the assessment order .....

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ear 2009-10 decided on 09-09-2014 by placing reliance on its earlier order for assessment year 2006-07 rejected the appeal of the Department. The ld. AR placed on record a copy of the order of Tribunal in ITA No. 937/PN/2010 (supra) and ITA No. 1733/PN/2013 (supra). 5. On the other hand Shri Hitendra Ninawe representing the Department fairly admitted that the issue relating to allowability of deduction u/s. 80IB(10) of the Act in respect of housing project Mahaganesh Nagari situated at Kesavnaga .....

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ssioner of Income Tax (Appeals) in allowing assessee s claim of deduction u/s. 80IB(10) of the Act on the premise that the conditions laid down u/s. 80IB(10)(a)(i) are not complied with. The assessee has developed housing project Mahaganesh Nagari situated at Kesavnagar, Mundhwa, Pune. The said housing project was developed by the assessee in two phases. The initial building plan was sanctioned by the Pune Municipal Corporation (PMC) on 31-03-2011. The first phase of the project approved was wit .....

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is not complete by 31-03-2008. The documents on record show that the first phase of the project consisting of buildings A, B, C, D and E was approved on 31-01-2001. As per the provisions of section 80IB(10)(1)(a) project should have been complete on or before 31-03-2008. Whereas, the approval of second phase of the project consisting of Buildings F, G and H + 10 row houses + amenities space was obtained on 25-01-2007. Therefore, as per the provisions of section 80IB(10)(a) the second phase of th .....

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n 31.03.2008. The Assessing Officer observed that on visit to the project site during assessment proceedings in December, 2008, the construction of buildings B-1 to B-10 and amenity building and shop was not started which proved that the project is not complete. In this regard, we find that the Assessing Officer has not been able to appreciate the fact that building plan approved by the PMC on 31.03.2001 consisting of five buildings as stated above and subsequent building plan approved by the co .....

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t is subject matter before us. These buildings A, B, C, D & E were already existing at the strength of approval dated 31.03.2001. This is the reason that second approval with regard to F, G & H, 10 row houses and amenity space was obtained on 25.01.2007. It does not make any difference if it acknowledged/refer existence of earlier five buildings constructed. This second approval acknowledges the existence of first five buildings. Hon'ble Bombay High Court in the case of CIT vs. Vanda .....

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d. As rightly contended by Mr. Inamdar, learned Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the intervenors, the expression 'housing project' in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in Section 80IB(10) supports the contention of the assessee that the approval granted to a building plan .....

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07 by the Collector, Pune, was independent and was not the extension of the building plan approved on 31.03.2001 by PMC with regards to five earlier buildings. We find that ITAT Pune Bench in the case of Rahul Construction Co. Vs. ITO in ITA.No.1250/PN/2009 and 707/PN/2010 held observed that there is a difference between the layout plan and building plan. It was held that approval of housing project and approval of building plan are two different concepts. Thus it was held that whatever portion .....

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nt to issue completion certificate. It is undisputed that the assessee has obtained completion certificate in respect of 80 flats included in buildings A, B, C, D & E and 48 flats included in buildings F, G & H from Grampanchayat Keshavnagar, Mundhwa, as mentioned above vide order dated 28.02.2008. The Assessing Officer did not appreciate the fact that there was no procedure for issuing completion certificate by Collector, Pune, in respect of any building plan approved by him. The assess .....

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ued by the Town Planning authority that in respect of area falling outside the jurisdiction of PMC, the procedure is to obtain completion certificate from the registered Architect and it was also pointed out that Grampanchayat Wagholi was the local authority for this purpose. In this regard, the stand of the assessee has been that there was no procedure to issue completion certificate by Town Planning Department in respect of construction beyond the PMC limits. Section 80IB(10) does not define a .....

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Assessing Officer was not justified in holding that Grampanchayat Keshavnagar is not a local authority. The expression local authority has neither been defined u/s.2 nor u/s.80IB(10) of the act. However, the expression local authority is defined in Explanation 2 to section 10(20) of the Act as under: Explanation - For the purposes of this clause, expression "local authority" means (i) Panchayat as referred to in clause (d) of Article 243 of the Constitution or (ii) Municipality as ref .....

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tion certificate by PMC by virtue of the fact that area of the land in question was excluded from PMC limits at relevant point of time as discussed above. In such peculiar conditions, the benefit bestowed on assessee should not be denied for no fault of the assessee. Such liberal interpretation should be used in favour of assessee when he is incapacitated in complying certain provisions for the reasons beyond his control. In case before us, problem arose due to the change of jurisdiction with re .....

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alongwith word completion . This strict interpretation should be given in normal circumstances but facts before us are peculiar because of change of jurisdiction of land for the purpose of applicability of building bye laws. Assessee was incapacitated to obtain completion certificate from PMC because of exclusion of land in question from PMC limits which is beyond the control of the assessee. Assessee should not suffer for the same. Moreover, concerned Gram Panchayat who issue completion certif .....

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