9911796707
TMI Blog2015 (10) TMI 2820X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal dated 05/1/2015 in the case of M/s Krish Enterprises vs ACIT (ITA No.5554/Mum/2014) order dated 05/01/2015. This factual matrix was not controverted by ld. DR. 2. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the aforesaid order of the Tribunal dated 05/01/2015 for ready reference:- "Aggrieved by the impugned order dated 25/07/2011 of the ld. First Appellate Authority, Mumbai, the assessee is in appeal before this Tribunal. The assessee is aggrieved in confirming the disallowance of deduction claimed u/s 80IB(10) of the Income Tax Act, 1961 amounting to Rs. 1,42,53,667/- on the plea that the ld. Commissioner of Income tax (Appeals) did not appreciate that the condition of completion is not applicable since the project was approved on 05/03/2004, before the insertion of condition of completion inserted with effect from 01/04/2005. 2. At the time of hearing, the ld. Counsel for the assessee, Shri Vimal Punmiya, advanced his arguments which are identical to the ground raised by submitting that the project was approved on 05/03/2004, therefore, there was no requirement of obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide Order bearing No.Rev/Desk-1/T9/NAP/SR-3/96 of office of Collector, Thane. 05.03.2004 CIDCO approved block plan as "residential with shopline building" Vide No.CIDCO/VVSR/BP-1087/W/2500 for Dvelopment of Sector.I,II,III, IV & V 0.2.07.2004 Owner transfer development right to Mr. Kunverji Bachhu Shah For Development of Sector No.I,II,III, IV & V 40-77 09.07.2004 Mr. Kunverji Bachhu Shah Transfer development right to M/s. Adinath Developers For Development of Sector No.I,II,III, IV & V 78-121 30.04.2007 M/s. Adinath Developers transfer Development right to appellant For Building No.1 Wing "C", Building No.2 Wing A,B,C & Building No.3 Wing A,B,C of sector No.IV (100% Residential Project) admeasuring area of 5499.17 sq.mtr. (i.e. More than 1 Acre) 122-142 15.9.2005 M/s.Adinath Developers transfer Development right to Leela Builders. For remaining building commercial area right and all 143-161 ..3.2008 Project was completed 17.03.2008 House tax levied 168-170 27.03.2008 Paid water connection charges to Virar Nagarpalika 171-172 28.03.2008 Architect certified that project is completed 29.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion certificate on 31/3/2008. However, CIDCO did not issue completion certificate. The Gram Panchayat had issued the completion certificate on 29/3/2008 certifying the fact that the project is complete and is habitable and is also ready to be occupied by the flat owners. Therefore, the condition regarding completion of project was complied with. It was also submitted that as per explanation to section 10(20) of the Act Gram Panchayat also falls under Local Authority and reference was made to the decision of Pune Bench of the Tribunal in the case of Krishna Harubhau Lohokare vs. ITO(ITA No.937/PN/2010) , wherein it has been held that for the purpose of issue of completion certificate under section 80 IB(10) Gram Panchayat is a Local Authority. 2.4 It was further submitted that requirement of completion certificate does not apply to a case where project has been approved before 31/3/2005. All these contentions of the assessee are noted in para -4 of the order of Ld. CIT(A). Ld. CIT(A) has summarized the contentions of the assessee as under: "i. That the deduction under section 80 IB(10) should not be disallowed since the assessee has completed the project before 31.03.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO or before Ld. CIT(A), therefore, the case law relied upon by the assessee will not support its case. In this manner Ld. CIT(A) has upheld the disallowance. The concluding observations of Ld. CIT(A) are as under: "5.1.. The appellant had filed copy of Application letter dated 31.3.2008, submitted to the CIDCO regarding the completion of the project and issuance of .completion certificate, before the Assessing Officer. But the aid certificate was not issued by the CIDCO. It was observed b the Assessing Officer that it was pending for more than a, year. The appellant in the meanwhile obtained completion certificate from another. Local Authority viz. Gram Panchayat, Bolinj, Virar and claimed that the project was completed arid it had fulfilled the conditions for claiming deduction u/s.801B(10) of the Income Tax Act. The Assessing Officer had also issued summons u/sj33(6) of the. Income Tax Act to Vasai -Virar Municipal Corporation or examination of the issue; by which she came to know that there was a revised development permission issued by the CIDCO in respect of the said project bearing Reference No. CIDCO/VVSR/RDP/BP-10871W/6048 dated 23.3.20W, the copy of the same was enc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 100% residential project admeasuring an area of 5499.17 sq.mts., which is more than one acre. Relying to the development agreement it was submitted that the total development rights in respect of total area were to the tune of 409272 sq.fts., out of which approved area was 274272 sq.fts. Out of the total developed area the assessee got 5499.12 sq.mtrs. i.e. 59193 sq.fts. in Sector -4. In this regard Ld. AR referred to clause (v) & (z-b) of pages 6 & 7 of the development agreement, copy placed at pages 128 to 129 of the paper book. It was submitted that this project was 100% residential project and rest of the area was transferred by M/s. Adinath Developers for development to Sai Leela Builders and copy of this agreement is also filed at pages 143 to 161 of the paper book. He submitted that M/s. Sai Leela Builders is different party unrelated to the assessee. He submitted that the area of development of M/s. Sai Leela Builders was comprising of residential as well as commercial area. Thus it was submitted by Ld. AR that in the area developed by the assessee no commercial building was involved. 3.1 Ld. AR further submitted that revised building plan for which information was rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hura Vrindavan Development Authority on 16/03/2005. The AO applied the provisions of sub-section (10) of Section 80IB being substituted by Finance (No.2) Act, 2004, w.e.f. 1/4/2005 and disallow the claim of deduction on the reasoning that the completion certificate in terms of explanation (ii) to clause (a) of section 80IB(10) had not been granted to the assessee so as to enable it to avail the benefit provided by section 80 IB. It was contended before AO that vide letter dated 5/11/2008 it had applied for completion certificate but the same was not issued which was beyond its control and power. Order passed by AO was upheld by Ld. CIT(A). The Tribunal held that in a case where approval of the project is granted by the Competent Authority before 1/4/2005 the position will be governed by the nonamended provisions and in non-amended provisions there was no condition like project completion certificate. The assessee was not expected to fulfill the condition which was not on the statute when such approval was granted and Tribunal directed the AO to allow the deduction. Hon'ble Delhi High Court has upheld the order passed by the Tribunal. (2) ITO vs. Sai Krupa Developers, decision dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition of property. In Appellant case project is completed therefore local body charge house tax on project as completed house. (Page No. 168-170)". 3.5 For the proposition that no commercial property was involved in the project of the assessee as the project of the assessee has to be considered a separate project, Ld. AR relied upon the following decision. (i) Khyti Financial Services,ITA No.3740/Mum/2008 and reference was made to the following facts and findings recorded by ITAT: FACTS (PARA 2) The assessee is a partnership firm consisting of two partners viz M/s Khyati Financial Services P.Ltd & Shri. Paresh Mohanlal Parekh. The appellant firm entered into a development agreement on 25.4.2003 with Hickson & Dadajee P.Ltd a company duly incorporated under the Companies Act, 1956 to develop property situated at Village Pahadi, Goregaon (E) owed by M/s Hickson & Dadajee P.Ltd In pursuance of said development agreement, the assessee firm undertook to construct residential building viz., "Acmee Armay" to be residential area constructed at 60,000 sq.ft. approx. comprising 200 flats in 7 wings in ground plus upper floors to be approved. The said residential building has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l residential units of the size not exceeding 1000 sq.ft. ("E" building in the present case) would constitute a "housing project" under Section 801B(10) of the Act". Thus it was submitted by Ld. AR that Ld. CIT(A) has erred in not allowing the relief to the assessee and assessee should be granted with deduction under section 80 IB(10) of the Act. 4. On the other hand, Ld. DR relying upon the assessment order as well as order passed by Ld. CIT(A), which have been discussed in detail in the above part of this order submitted that Ld. CIT(A) has rightly held that assessee is not entitled to claim deduction under section 80 IB(10) of the Act as it did not fulfill the required condition as mentioned by AO and Ld. CIT(A). 5. We have heard both the parties and their contentions have carefully been considered. The first and foremost case of the Revenue is that the assessee did not submit completion certificate from Competent Authority which according to the opinion of AO and Ld. CIT(A) is CIDCO. The assessee had not only submitted the project completion certificate issue by the Gram Panchayat but also various evidences to show that the project was completed by 31/03/2008 and these ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmonly understood. In common parlance "housing project" would mean constructing the building or group of buildings consisting of several residential units. In fact the explanation in section 80 IB(10) supports the contention of the assessee that approval granted to housing project. Therefore, it is clear that construction of even one building with several residential units of size not exceeding 1000 sq.fts. "E" Building in that case would constitute a housing project under section 10 IB(10) of the Act. If facts of the present case are seen in the light of the aforementioned decision of Hon'ble Bombay High Court then it will be clear that project constructed by the assessee was a separate project different from the project carried out by M/s. Sai Leela Developers. Therefore, such passing observations of AO cannot be held to be a ground for rejection of assessee's claim for deduction under section 80 IB (10) of the Act. 5.3 For the aforementioned reasons we set aside the order passed by Ld. CIT(A) and hold that assessee is entitled to get deduction under section 80 IB(10) and accordingly the AO is directed to allow the deduction to the assessee under section 80 IB(10). Ground No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which were not on the statute book when the approval was granted by the competent authority to the assessee, consequently, following the decision of the Pune Bench of the Tribunal in Shri Krishna Haribhau Lohokare (ITA No.937/PN/2010) order dated 28/02/2013, CIT vs CHD Developers (ITA No.2902 & 4694/Del/2010) order dated 26/09/2012 and the decision from Hon'ble Delhi High Court in the case of CHD Developers, ratio laid down in CIT vs Tarnetar Corporation order dated 12/09/2012 from Hon'ble Gujarat High Court, Hon'ble Madras High Court in CIT Vs Jain Housing Constructions holding that the conditions of completion certificate which were not applicable to the projects approved by the competent authority before 31/03/2005. Even for Assessment Year 200910, the Mumbai Bench of the Tribunal vide order dated 22/09/2014 (reproduced hereinabove) dealt with the issue in detail and that too after placing reliance upon various judicial pronouncements including the case of CHD Developers, and other cases relied upon by the assessee, therefore, on this issue, the appeal of the assessee is allowed. 3. So far as, charging of interest u/s 234B and 234C of the Act is concerned, in view of our dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80IB(10), there is no requirement of completion certificate for availing deduction for the project, which were approved before the date of the substitution i.e. 01/04/2005. In the present appeal, the approval was granted by the local authority/competent authority before insertion of the amendment, therefore, the assessee is not expected to fulfil the conditions which were not in the statute book, when the approval was granted by the competent authority to the assessee. The Pune Bench decision of the Tribunal in the case of Shri Krishna Haribhau Lohkare (ITA No.937/Pn/2010) order dated 28/02/2013, Hon'ble Gujrat High Court in CIT vs Tarnetar Corporatin order dated 12/09/2012 and Hon'ble Madras High Court in CIT vs Jain Housing Construction holding that the condition of completion certificate which were not applicable to the projects approved by competent authority before 31/03/2005 supports our view. We note that section 80IB (10) of the Act was substituted by the Finance (No.2) Act, 2004, w.e.f. 01/04/2005 and prior to its substitution sub-section (10), as amended by the Finance Act, 2000, w.e.f. 01/04/2001 and Finance Act, 2003, w.r.e.f. 01/04/2002 provides 100% of the profit de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
