9911796707
TMI Blog2018 (10) TMI 1945X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in law by relying on the judgment of the Hon'ble Gujarat High Court in the case of Tarnetar Corporation (2012) 26 taxmann.com 180 since the facts mentioned in the case of M/s Tarnetar Corporation is not identical with the present case i.e. M/s Rekha Construction Company. However the decision of the Hon'ble Gujarat High Court was not accepted by the department and the same has been challenged before the Apex Court vide civil appeal No.8121 of 2013 and status of the same is still pending. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in law as well as facts and circumstances of the case by allowing deduction u/s 80IB (10) of the I.T.Act by amounting to Rs. 50,58,54,491/- by ignoring the explanation (ii) of the provisions of the section 80IB(10)(a) of the I.T.Act, which stated that 'the date of completion of construction of housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority.' However in this case, the Local Authority i.e. Surat Muncipal Corporation has issued BUC for the towers 2,5 and 7 of the project on 28.09.2012, which is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of such housing project is issued by the local authority.' However in this case, the Local Authority i.e. Surat Muncipal Corporation has issued BUC for the towers 2, 5 and 7 of the project on 28.09.2012, which is beyond stipulated time i.e. 31.03.2012. Hence the order passed by the Ld.CIT(A) is perverse in view of the above explanation (ii) of the provisions of section 80IB(10)(a) of the I.T. Act. He further contended that the Ld. CIT(A) has erred in allowing deduction u/s 80IB (10) of the I.T. Act by ignoring the facts that the auditor of the assessee has reported in his audit report that "Tower- 2,5 and 7 of the said project were completed after 31.03.2012" as mentioned at Form 10CCB of the audit report. The ld. CIT-DR prayed that keeping in view about facts and circumstances the ld. CIT(A) ought to have upheld the order of the AO and the first appellate authority was not correct and justified in granted relief to the assessee therefore, the impugned order may kindly be set aside by restoring that of the AO. 5. The ld. CIT-DR also submitted that as per provision of s. 80- IB(10)(iii) of the Act the assessee is entitled for deduction if such undertaking has commenced or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project of Tower 2, 5 & 7 was 17.03.2012 and applications seeking completion certificate for these three towers were submitted by the assessee on 20.03.2012 before the competent authority and the building completion certificates for these three towers were issued to the assessee on 28.09.2012. 7. The ld. AR submitted that as per judgment of Hon'ble Supreme Court in the case of S. Sundaram Pillai vs. V.R. Pattabiraman reported in 1985 AIR 582 (SC) for proper understanding of provisions of Act or any statue the letters and scripts should be understood in a right prospective without putting therein any word or meaning by the judicial authority, who is considering the interpretation of such provision, otherwise there would be a havoc and possibilities of misinterpretation and misunderstanding of the provisions of the Act. 8. The ld. AR vehemently submitted that the ld. CIT(A) while granted relief to the assessee has followed and relied on the binding judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Tarenetar Corporation (supra), wherein it was held that where assessee had completed housing project will before final date but local authority, for technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereafter, the assessee submitted application seeking for Building Completion Certificate on 23.03.2012 for all three towers and these facts have not been controverted by the AO during assessment proceedings and by the ld. CIT-DR during arguments before the bench therefore, in view of these undisputed facts, it has to be presumed that the assessee completed construction and also applied for building completion certificates for all three towers. The ld. AR vehemently pointed out that if, the competent authority is issuing building completion certificate on 28.09.2012 after prescribed time limit then, the assessee cannot be denied deduction u/s. 80IB(10) of the Act despite the fact that it could not receive permission within prescribed time limit as the issuance of certificate is beyond control of the assessee. 11. The ld. AR again took us through relevant operative part of the first appellate order i.e., para 8 and submitted that the ld. CIT(A) after considering the entire facts and circumstances of the case in right prospective and by following the ratio of the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Tarnetar Corporation (supra) rightly allowed reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.3.2007 i.e. on or before 31.03.2012. The main reason, according to the A.O. for denying the benefit of section 80IB(10) of the Act was the fact that BUC for building no. 2, 5, 7 was issued after 31.03.2012; and therefore he held that the firm had violated the provisions of the section S01B(10} of the I.T. Act. When the assessee first applied for BUC, there were certain deficiencies noted by th(~SMC were with regards to unauthorized construction in C.O.P and non compliance with certain other mandatory rules of the GD & CR namely rule 7.2 of GDCR. The A.O has highlighted the fact that, the BUC was issued by the SMC belatedly on 28/09/2012 only after a fresh submission Dt.25/09/2012. 2) The following facts related to construction and occupancy of the building is undisputed: a. Construction of all towers including towers no.2,5& 7 was completed before 31/03/2012. Even the BUC had been given much earlier for towers. 1,3,4 & 8. Many flats were soia and occupied before 31/03/2012 including in the towers 2,5 & 7 for which proof like copies cf scje deeds, electricity bills ,Munciapal Tax payments etc. were filed during the co^-se of assessment proceedings. b) The BU permission for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s contention carries weight as judging by preponderance of probability as 4 Towers were already given BUC; the Bore wells were already in design and the SMC has not alleged that Bore well were not there at all. There is no objection that parking places were not provided for, not complete or not paved. Marking from main gates must already be there for BUC for 4 towers. In my considered view; it would be very far- fetched to hold that the building is not complete, in view of these objections alone. d. The last objection was very technical. SMC was not satisfied with the missing signature of supervisor on Form 8. I have gone through copy of form 8 submitted which is dated 17th March 2012. It is signed by owner and structural engineer Sh Jalil A Sheikh. It certifies that building has been constructed according to sanctioned plan, and structural design and under supervision. It is true that Supervising engineer has not signed it, but I have noted that the stipulated form which is numbered and is sold by SMC for Rs. 10; itself provides for signature of the Structural Designer and in printed form itself at a single place option of signature of either Owner or Supervisor has been give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as the Tribunal on the issue. In particular, the Tribunal noted that the construction was completed in 2006. Application for BU permission to the Municipal authorities was filed on 15.2.2006 which was rejected on 1.7.06. Several residential units were occupied since the same was done without necessary permission. The assessee had also paid penalty and got such occupation regularized. Several tenements were sold long before the last date. 6. In the present case, therefore, the fact that the assessee 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 clause (a) to s. 80-IB(1) links the competition on the construction t the BU permission being granted by the local authority. However, not every condition of the statute can be seen as mandatory. If substantial compliance thereof is established on record, in a given case, the court may take the view that minor deviation thereof would not vitiate the very purpose for which deduction was being made available 7. In tee present case, the facts are peculiar. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project is required to be made within five years from the end of financial year (FY) 2006-07 i.e., on or before 31.03.2012. As we have noted above, as per audit report u/s. 80-IB(10) of the Act in Form-10CCB, the construction of towers 2, 5 & 7 was completed on 17.03.2012 and thereafter, the assessee applied for building completion certification on 23.03.2012 informing the competent authority that the construction of three towers has been completed and therefore, building completion certificate may kindly be issued and this exercise was done before the required due date of 31.03.2012 as per mandate s. 80-IB(10) of the Act. 17. From the copy of the letter of Competent Authority/Asst. Engineer, Surat Municipal Corp. dated 11.04.2012 (copy at assessee's paper book page 29) shows that the Competent Authority rejected the permission to live for the following reasons. 1. Necessary clarification required regarding construction in C.O.P. 2. It is necessary to put direction instruction board for entrance way and exit way, visitor parking, car parking, scooter parking etc. 3. It is necessary to make provision for percolated borewell. 4. Signature of the site Supervisor is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncompliance of building and this deficiency does not establish in any manner that the building was not completed on the date of application i.e., 23.03.2012 and thus, we safely presume that some addition construction was made in contravention or beyond the scope of construction permission, which was required to be removed and it cannot be interpretated as an allegation of incomplete construction. The Gujarat Development and Construction Rules (GDCR) provides certain other requirement to be fulfilled before issuance of building completion certification such as certificates of competent technical expert/authority regarding the structural stability, completion of building under stipulated supervision, existence of certain facilities such as lift, provision of proper marked parking, lift and fire safety, and certain other provisions for environmental protection in the form of tree planation and rain water harvesting and as we have noted above, the assessee along with application seeking building completion certificate filed certificates/letters showing above mandatory compliances. 21. Deficiency No.2 is pertaining to lack of marking of entrance & exit way, visitors parking, car parki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority of SMC on the basis of completion certificates of March, 2012 on the basis of supporting evidences filed by the assessee establishing and showing completion of building viz. completion certificate of Govt. approved Charted Engineer, stability certification of Structure Engineer, license to use the lift certificate & existence of required fire fighting equipments and possession letter issued to the allottees and the construction of project including tower no. 2, 5 & 7 was completed on 17.03.2012 and application seeking building completion certificate before the competent authority in the prescribed form along with supporting documents and certificates was filed before the competent authority/Asst. Engineer of SMC on 23.03.2012 i.e., before the required date i.e., 31.03.2012, which supports the factum that the project qualifies the conditions for eligibility of deduction u/s. 80-IB(10) of the Act. 25. At this juncture, we find it necessary and appropriate to consider the ratio of the decision of Hon'ble High Court of Gujarat in the case of Tarentar Corporation (supra), wherein speaking for Hon'ble Jurisdictional High Court their lordship held thus: "5. We have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch deduction was being made available. 27. In the present case, the facts are glaring which clearly shows that the assessee completed construction of project including towers No.2, 5 & 7 on 17.03.2012 and application seeking construction certificate was submitted to the competent authority/Asst. Engineer, SMC on 23.03.2012 i.e., before the last date 31.03.2012 as per requirement of s. 80-IB(10) of the Act and thus, we safely presume that the assessee had not only completed the construction within prescribed time limit but had also applied for BU permission before the stipulated last date for completion of project i.e., 31.03.2012. Merely because, the competent authority pointed out some deficiencies in the project, which were curable and linked with the GDCR compliance, and not showing any deficiency or incompleteness in the project, it would be unjustified to hold that the project was not completed on the date of submitting application seeking building construction certificate before the competent authority. 28. The Hon'ble Jurisdictional High Court of Gujarat in the case of ITO vs. Saket Corporation (supra), held that where the assessee had completed construction of its entire ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
