TMI Blog2015 (8) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue. Deduction u/s 80IB(10) - Approval of housing project - HELD THAT:- The assessee got the project sanctioned. The assessee got approved housing project on 17.6.2004 in its own name as colonizer. The project was completed in F.Y. 2007-08, as per the sanctioned plan from Municipal Corporation, Bhopal. None of the residential units was sanctioned for more than 1500 sq.ft. The assessee completed the project in the stipulated period of four years as per the approved plans. The assessee has developed and completed the infra-structure, approach road, water line sewerage line and electrification work as per the norms laid down by 28.1.2008. The possession letter was also issued to the customers on the completion of the residential units in all respect. These possession letters were signed by all the customers. The purchasers got permanent electricity connection from M.P. Electricity Board as customer. The permanent electricity connections are given only on the completion of the houses/flats. The persons who have purchased these units have paid property taxes to the Municipal Corporation, Bhopal. All these evidences show that the assessee has constructed and developed the project a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years 2002-03 to 2007-08. 5. In ITA Nos. 238, 239 and 240/Ind/2012 there is a common ground i.e. ground no. 1 in which the assessee has challenged the confirmation of action of the Assessing Officer in issuing notices u/s 153C of the Act for the reason that it has been issued without adopting proper basis and satisfactory reasons and the copy of satisfactory note, if any, was not provided to the assessee. 6. We have heard both the sides. The assessee s claim that no incriminating documents were found during the course of search and the proceedings u/s 153C of the Act are not factually correct. There are certain documents seized during the search which reflect certain receipts which are not reflecting in the books of accounts. Since there were incriminating documents which were seized during the search operation, the learned CIT(A) was justified in sustaining the issue of notice issued u/s 153C of the Act as legal and valid. 7. Ground no. 2 in ITA Nos. 238 for the assessment years 2005-06 and ground no. 3 in ITA No. 240/Ind/2012 for the assessment year 2007-08 relate to sustaining the addition on account of receipts of bank OCR (owners contribution receipt) of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactory reasons and the copy of satisfaction note if any was not provided to the assessee at the time of assessment proceedings nor at the time of appellate proceedings. (ii) That on the facts and in the circumstances of the case, the learned CIT(Appeals) erred in sustaining the addition of ₹ 15,74,406/- being disallowance of deduction claimed u/s 80IB(10) without considering the explanation offered by the assessee and without appreciating the facts properly and particularly holding that the appellant does not fulfill the following conditions : (i) The project is not build and developed by the appellant (ii) Project completion certificate is not obtained from the local authority as provided in the condition (a) of section 80IB(10) (iii) Shops and commercial establishment in the projects exceeds the are allowed to be built as provided in condition (d) of section 80IB(10) It is submitted that all the aforesaid requirements has been complied by the appellant properly and necessary explanation in this manner has already been submitted before the A.O. as well as before the learned CIT(A). (iv) That under the circumstances, charging of interest u/s 234A of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishments. herefore, by necessary implication, the said provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be applied to those projects which were sanctioned and commenced prior to 01.04.2005 and completed by the stipulated date, though such stipulated date is after 01.04.2005. 21. These aspects are dealt with by various High Courts elaborately and convincingly in their judgments. It is not necessary to go into the detailed reasoning given by these High Courts. However, we would like to extract the following discussion from the judgment dated 25.07.2014 of the Bombay High Court in ITA Nos. 201 and 308 of 2012 where this very aspect is answered in the following manner : 36.There is yet another reason for coming to the aforesaid conclusion. Take a scenario where an assessee following the project completion method of accounting, has completed the housing project approved by the local authority complying with all the conditions as set out in section 80IB(10) as it stood prior to Ist April, 2005. If we were to accept the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits derived therefrom. We may hasten to add that if a particular condition is not inseparably linked to the date of approval of the housing project, different considerations would arise. However, we are not called upon to decide any such condition and hence we are not laying down any general proposition of law save and except that clause (d)of section 80IB(10) being a condition linked to the date of the approval of the housing project, would not apply to any housing project that was approved prior to 31st March, 2005 irrespective of the fact that the profits of the said housing project are brought to tax after the said provision was brought into force. 22. At this juncture, we would like to quote the following passage from Commissioner of Income Tax, U.P. vs. M/s Shah Sadiq and Sons (1987) 3 Hon'ble Supreme Court 516 : 14. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years. The right of carrying forward and set off accrued to the assessee under the Act of 1922. A right which had accrued and had become vested continued to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalized for the same unless and until some contrary facts are brought on record evidencing that the assessee contravened the conditions contained in the approval granted by such Competent Authority. As per sub-section (10) of section 80IB(10), the benefit will be hundred percent subject to fulfillment of certain conditions. However, this condition was substituted by the Finance (No. 2) Act of 2009 with effect from 01.04.2009 which has been further explained by sub-clause (ii) to the Explanation regarding completion certificate. However, since the approval was granted to the assessee on 01.04.2005, therefore, the assessee is not expected to fulfill the conditions which were not on the statute when such approval was granted to the assessee. Therefore, the appeal of the assessee deserves to be allowed. In the case of CIT vs. Tarnetar Corporation (2012) 26 Taxman.com 180(Guj.) it was held that In the present case, therefore, the fact that the appellant had completed the construction well before 31st March, 2008 is not in doubt. It is, of course, true that formally BU permission was not granted by the Municipal Authority by such date. It is equally true that explanation to cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisite forms together with the completion certificate given by the Architect, the specialist in the matter and the appellant has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the appellant and the Architect by raising any objection nor accepted by issue of said completion certificate till 10.10.2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the appellant. Therefore, in our opinion, the appellant is not defaulter on this account and thus the A.O. has erred in denying the deduction u/s 80IB(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal are allowed. Hon'ble ITAT, Delhi Bcnch in the case of M/s Girija Colonisers in ITA Nos. 2417 to 2422/Del/2011 has held as under :- In the light of the facts narrated in A.O. s remand report and facts available on record, the ld. CIT(A) has taken a view that the appellant has completed the construction much prior to 31.03.2008 and had fulfilled all requirements/formalities of the completion certificate as notified by the corporation at the time of filing applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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