TMI Blog2018 (5) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and hence has to be deemed to have been issued. It is another fact that the assessee itself made a fresh application again for issuance of completion certificate on 28.05.2013, in reply to which, the Municipal Corporation vide letter dated 13.06.2013 pointed out certain defects, which, in our opinion are not substantial and essential for considering the blocks to be incomplete. They are only peripheral works, which may be part of the housing project but are not essential. Therefore, the assessee is entitled to the deduction u/s 80IB(10) even for the Blocks of F, K and L. Denying the claim of deduction u/s 80IB is that the area in some of the flats exceeded 1500 sft. As held by the Hon'ble Madras High Court in the case of Viswas Promoters (2012 (11) TMI 1117 - MADRAS HIGH COURT), the assessee is entitled to deduction in respect of the flats which do not exceed the area of 1500 sft on pro-rata basis. The AO is accordingly directed to allow the deduction. As regards the claim of interest income, as a deduction u/s 80IB(10) of the Act, the learned Counsel for the assessee has placed reliance upon the decision in the case of CIT vs. Indo Aquatics Ltd reported in (2014 (10) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiose instead of advancing the purpose of legislation in the light of this accepted principle enunciated the Apex Court. The learned CIT(A) ought to have allowed deduction in respect of completed blocks for which the claim was made for which necessary certificate was obtained from the municipality duly supported by other evidences. 4. The learned CIT(A) ought to have appreciated the spirit of the above circular which has the effect of diluting the provisions of section 801B(10) to remove the hardship caused by strict implementation of the provisions instead of making incorrect interpretation of the circular. 5. The learned CIT(A) ought to have limited the deduction to the portions of the housing project completed by the appellant instead of making a literal interpretation of the provision and disallowing the deduction. 6. The learned CIT(A) ought to have allowed deduction of Rs.l,71,170/-received from deposits of margin money in the banks . 3. In addition to the above, vide letter dated 16.03.2015, the assessee has raised the following additional grounds of appeal: The order of the CIT (A)-VI, Hyderabad in giving a finding at Paragraph 4.15 of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained for F, K L blocks and the application for issuance of completion certificate before the GHMC is yet to be filed. As regards the status of the project in March, 2013, the DVO reported that; i) 4 buildings are completed in respect of which occupancy certificate was obtained; ii) 3 buildings are stated to be completed but no efforts have been made to obtain the completion certificate from the local authority; and iii) the balance buildings are in skeleton shape or are yet to be started. Further, it was reported that, and out of the 241 flats completed, 20 flats are of the size exceeding 1500 sft each. Therefore, the AO issued a show-cause notice to the assessee to substantiate its claim of deduction u/s 80IB(10) of the Act. 6. In reply thereto, the assessee relied upon the CBDT instruction No.04/2009 dated 30.06.2009 and also filed a list of case laws in support of its contention that the deduction u/s 80IB(10) is allowable on year to year basis on partial completion of the housing project. The AO however, held that the entire project has been approved as a single project and therefore, the assessee should have completed the whole of the project on or before 31.03.2013 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars as stated in section 80IB(10) has not been satisfied, the deduction granted to the assessee in the earlier A.Ys should be withdrawn. Therefore, according to the learned Counsel for the assessee, since the assessee has completed the construction of 4 buildings containing various residential units, each block also can be considered as a separate housing project and the assessee is eligible to claim the deduction u/s 80IB(10) of the Act on the profits from buildings which are completed. For this proposition, he placed reliance upon the following decisions: i) ITO vs. Saket Corporation (2015) 62 Taxmann.com 38 (Guj.) ii) M/s. Viswas Promoters Pvt Ltd vs. Asstt. CIT reported in 373 ITR 317 (Mad.) iii) Siddhivinayak Kohinoor Venture vs. Addl. CIT (2014) 159 TTJ 0390 (Pune) iv) CIT vs. Vandana Properties (2013) 353 ITR 36 (Bom.) v) CIT vs. Voora Property Developers P Ltd (2015) 373 ITR 317 (Mad) vi) Pushkar Construction Co. Vs. ITO (2015) 43 ITR (Trib.) 293 (ITAT Ahd.) 8. On the issue of the completion of blocks F, K L, he has drawn our attention to the assessee s application to the Director General of Fire Emergency Services and to the GHMC s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction is to be disallowed and not the entire claim of deduction. Thus, according to him, the assessee is eligible for deduction u/s 80IB(10) of the Act for all the blocks completed by it. 11. As regards the interest income which has been claimed as a deduction u/s 80IB(10) of the Act, the learned Counsel for the assessee submitted that these deposits were kept as margin money with the Banks for completion of the project and therefore, they are inextricably linked to the project and interest therefrom is also linked to the project and therefore, the assessee is eligible for deduction u/s 80IB(10) of the Act on such interest income as well. In support of this contention, he placed reliance upon the decisions of the Hon'ble Telangana A.P. High Court in the case of Indo Aquatics (2014) 369 ITR 589 (T AP), and in the case of CIT vs. Godavari Drugs Ltd (2015) 371 ITR 379 (T A.P). 12. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the housing project has been approved as a single project and therefore, the assessee is required to complete the entire project on or before 31.03.2013 and has to obtain the completion certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s evident from the Municipal proceedings No.G/1272/BP/581/ 2007 dated 4.2.2008 (at page 2 of the paper book filed by the assessee) but the assessee has been able to complete only seven buildings out of the whole project. The CBDT instruction No.04/09 dated 30.06.2009 had clarified that the assessee can claim the deduction u/s 80IB(10) on a year to year basis when it is following percentage completion method and such a deduction so granted in each of the years can be withdrawn if the condition of the completing the project within the stipulated period is not fulfilled. 17. In the case before us, the assessee has claimed the deduction u/s 80IB(10) on percentage completion method. The project was supposed to be completed by 30.03.2013. Though the claim in the A.Y 2007-08 is made for the first time, the assessment proceedings were initiated only after issuance of notice u/s 143(2) on 26.08.2011 and the assessment order was passed on 30.03.2013, by which date, the information regarding the stage of the project was available with the AO. Therefore, the AO did not allow the deductions. Therefore, the action of the AO cannot be said to be against the instruction No.04/09 (cited supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; ( iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area; (iv) should have been completed within the stipulated period; and (v) the project shall be taken to be completed on the date on which the completion certificate is issued by the local authority. 24. As far as the 4 blocks are concerned, all the above, except condition No.(iv) are fulfilled and as far as 3 blocks are concerned, both the conditions (iv) and (v) are not fulfilled. In respect of some of the flats, there is a violation of condition No.(iii) as well. Therefore, it is to be examined, if the deduction is not to be allowed in toto even if one of the above condition is not fulfilled. 25. The Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties reported in (2013) 355 ITR 36 (Bom.) has considered similar situation wherein the assessee therein had obtained approval to construct four buildings on a plot of land admeasuring 2.36 acres and intimation of the approval in respect of those buildings was granted during the years 1993-96 and following the percentage completion method, the assessee therein had offered to tax, the income earned from construction of buildings A, B, C D from time to time and deduction u/s 80IB(10) of the Act was also claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six separate projects in one single piece of land measuring 1.065 acres and therefore, the assessee did not fulfil the essential conditions of the minimum area of one acre for a single project as laid down u/s 80IB(10). The Hon'ble High Court held that if the conditions specified u/s 80IB are satisfied, then the deduction is allowable on the entire project and since the assessee constructed six blocks in a land measuring 1 acre and 6.5 cents, the assessee was entitled to deduction. 27. The Coordinate Bench of this Tribunal in the case of M/s. Sriram Constructions vs. Dy.CIT in ITA No.1300/Hyd/2011 vide orders dated29.04.2016 has also considered similar situation and has held that the assessee will not automatically loose the deduction u/s 80IB(10) for the entire project but is eligible for pro-rata deduction as allowed by the CIT (A) in the said case. 28. The Coordinate Bench of this Tribunal at Ahmedabad in the case of Pushkar Construction Co vs. ITO reported in (2015) 43 ITR (Trib.) 293 (ITAT Ahm.) has followed the decision of the Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties (Supra) and also the Hon'ble Madras High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an undertaking developing and building housing projects and the deduction is in respect of profits and gains derived from such housing project, satisfying the conditions stipulated in the clause therein. Thus, within a composite housing project, where there are eligible and ineligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief in the units satisfying the extent of the built-up area. 14. On the facts admitted by the Revenue, in the projects Agrini and Vajra , there are number of flats which are below 1500 sq.ft., and the relevant built-up area requirement is specified under Section 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the entire claim of the assessee in respect of these two projects would stand rejected under Section 80IB(10) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication for the same. It is seen that according to the Architects certificate, the assessee has completed the construction in all aspects and that the assessee has submitted the application for issuance of occupancy certificate as on 30.3.2013 by paying the requisite fees. The learned Counsel for the assessee has relied upon the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Hindustan Samuh Awas Ltd reported in (2015) 377 ITR 150 (Bom.) wherein under similar circumstances, it was held that where the assessee has applied for the issuance of completion certificate by paying the fees within the specified time, the delay by the Municipal Corporation in issuance of certificate cannot be attributed to the assessee and the assessee is entitled to the deduction u/s 80IB(10). In the said case, the assessee was supposed to get the certificate before 31st March, 2008 whereas the assessee has submitted application on 26.03.2008 and also deposited the fee for such certificate on 31.3.2008 and the certificate was issued in October, 2008. Based on these facts, the Hon'ble High Court held that the delay in obtaining the certificate cannot be attributed to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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