TMI Blog2018 (10) TMI 1945X X X X Extracts X X X X X X X X Extracts X X X X ..... ctifiable and curable, it cannot be denied that the building was completed on 17.03.2012 and application for issuance of completion certificate was submitted on 23.03.2012. Unauthorized/additional construction and was not regarding noncompliance 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority was right in concluding and holding that the BUC has been granted by the competent 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. Thus we reach to a logical conclusion that the ld. CIT(A) was right in allowing claim of the assessee for deduction u/s. 80IB(10) - Decided in favour of assessee. - ITA No.3659/A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T.Act. 4. On the facts and circumstances of the case and in law, 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. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 6. It is, therefore, prayed that the order of the CIT (A) may be set aside and that of Assessing Officer may be restored to the above extent. 3. We have heard the arguments of both sides and carefully perused the relevant material placed on the record of the Tribunal. The ld. CIT Departmental Representative (CIT-DR) submitted that 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 Income Tax Act, 1961 (in short 'the Act') by amounting to ₹ 50,58,54,491/-, in spite of the fact that the assessee did not meet one of the most critical condition i.e. completion of the project within five years as per section 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a housing project has been approved by the local authority on or after 01.04.2005, within five years from the end of the financial year in which the housing project is approved by the local authorities. The ld. CIT-DR submitted that from para 5 of assessment order, it is clear that the project of the assessee was completed after 31.03.2012 as Building Use Certificate (hereafter referred as BUS) for building no. 2, 5, 7 was issued after 31.03.2012 on 28.09.2012. Thus, the assessee firm has violated the provisions of the s. 80-IB(10)(a)(iii) of the Act. The ld. CIT-DR submitted that the conclusion drawn by the ld. AO in para 6 of assessment order, the assessee s project namely Vrajbhumi Complex fails to qualify for deduction u/s. 80-IB(10) of the Act, therefore the AO was right in disallowing claim of deduction to the assessee. The ld. CIT-DR submitted that the first appellate authority has erred in granted relief to the assessee by following and relying on the ratio of the decision of Hon'ble High Court of Gujarat in the case of Tarentar Corporation (supra) as the same has not been accepted by the Department and SLP has been filed before Hon'ble Supreme Court against sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, the Revenue authorities cannot ignore or discard the ratio of the binding decision of Hon ble Jurisdictional High Court of Gujarat therefore, the conclusion drawn by the ld. CIT-DR by following decision of Hon ble Jurisdictional High Court in the case of CIT vs. Tarenetar Corporation (supra) is quite correct, justified and sustainable therefore, the same may kindly be upheld by dismissing appeal of the Revenue. 9. The ld. AR submitted that as per ratio of the another decision of Hon ble Jurisdictional High Court of Gujarat in the case of ITO vs. Saket Corporation reported in 62 taxmann.com 38 (Guj.), wherein it was held that where the assessee had completed construction of its entire housing project and applied for building use permission/completion certificate within prescribed time-limit, it would be entitled to deduction u/s. 80-IB(10) of the Act notwithstanding fact that it could not receive permission for its entire project. The ld. AR contended that as per ratio of decision of Hon'ble High Court of Bombay in the case of CIT vs. Hindustan Samuh Awas Ltd. reported in 377 ITR 150 (Bom.), wherein it was held that where the assessee-builder undertook a housing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue. 12. Placing rejoinder to the above, the ld. CIT-DR again submitted that when the SLP of Department is pending against the order of Hon'ble High Court of Gujarat in the case of CIT vs. Tarnetar Corporation (supra) then, it cannot be presumed that the issue has attained finality and the AO is not duty bound to follow the judgment and hence, the ld. CIT(A) was not correct in granting relief to the assessee by following order of Hon'ble High Court. 13. In view of above noted contentions at the very outset, we observe that from the conclusion recorded by the AO in the assessment order, we observe that the ld. AO denied deduction u/s. 80-IB(10) of the Act with following conclusions and findings: a. The construction of the eligible project was NOT complete on 31.03.2012 as is evidenced by the inspection report of the local authority SMC dtd. 11.04.2012. b. The BUC has been issued in the case of Towers 2, 5 7 on 28.09.2012. The date of completion therefore needs to be taken as 28.09.2012 in accordance with s. 80-IB(10)(a)(iii)(expln.ii) of the I.T. Act. c. The alleged occupation of the flats by the flat purchasers, as sought to be shown by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the A.O in support of it's case that the building was complete before that date such as 1) Completion certificate of Government approved chartered engineers 2) Stability certificate of Structure engineers 3) License to use lift certificate 4) Possession letters, 5) Certain Electricity Consumption --^statement reflecting the electricity connection 6) Fire Fighting Certificate 7) certain SMC municipal tax bills. c) The AO's objection is based on the rejection letter Dt.il/04/2012 and deficiencies noted by the SMC; which have been discussed in para 5.1 and it's sub paras in the assessment order. 3) The deficiencies pointed out in the SMC letter, the A.O's observations and assessee's contentions and material evidences have been carefully considered by me and the following pertinent observations are made: a. The first objection was not regarding non completion of building but was actually related to unauthorized/additional construction. In my considered view once it is regularized even after stipulated period on the application filed before the due date (which is undisputed fact);.. It only proves that additional construction was made before the stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted form itself. Penalizing the builder for it, is injustice. e) BUC has been in fact granted on application dated 23/03/12. The relevant part of the BUC Dt.28/09/2012 is reproduced below. Reference:-Application for occupancy certificate 9B.U.C) On Development Scheme:- TP Scheme No. 19 (Parvat-Magob]) R.S No. Block No. O.P No. F.P No. C.S. No. T.P.S No. 19 114 2 5 -- Case No.:CTDO/OUT/02042012/2 Development Type: High Rise Building Type:-Apartment without podium With reference to your application for Building Use Certificate, Dated: 23/03/2012, the permission for occupancy is hereby granted for the following units on the floor mentioned against each unit and for the use specified against each unit. As per approved plan dated: 23/03/2012 and subject to the completion certificate Submitted by Architect Bharatkumar Maganbhai Patel and structural stability certificate from Jalil A Sheikh on following conditions. . A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, the facts are peculiar. The assessee had not only completed the construction two years before the final date and had applied for BU permission. Such BU permission was not rejected on the ground that construction was not completed, but the some other technical ground, in mat view of the matter, granting benefit of deduction cannot be held to be illegal. In view of the above, I hold that the minor deviations as discussed in para 'c' above are not of the nature that should vitiate the very purpose for which the deduction was made available. I have considered the case law cited by the AO which are mainly on strict and literal meaning of the words used. I find that the requirement of the section is completion of building within time and not strictly 'permission for use' and interpretation is required. I have also noted the judgment of Hon'ble Supreme Court in the case of Ipca Laboratories Ltd. 266 ITR 521 in the case of Bajaj Tempo Ltd. 62 taxman 480 which is relied upon, by the appellant. Considering all these, I hold a view that the judgment of the Jurisdictional High Court gives better guidance particularly as it is on the specific section itself. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Signature of the site Supervisor is required in the presented form No.8 of living application. 18. From above reasons, it is clearly discernable that the competent authority did not reject the application of the assessee seeking completion certificate but pointed out some deficiencies, which were required to be eliminated or cured before the authority grants permission to live in the building constructed by the assessee. Therefore, adverse view taken by the AO on the basis of said letter is not correct and justified as the deficiencies pointed by the competent authority were with regard to unauthorized construction of COP; putting instruction board for entrance and exit way, car parking, visitors parking, scooter parking etc; for making provision for percolated borewell and signature of site supervisor in Form- 8 of living application/permission to live application and no deficiency has been pointed out in tower 2, 5 7 and therefore, even in existence of above noted deficiencies, which are rectifiable and curable, it cannot be denied that the building was completed on 17.03.2012 and application for issuance of completion certificate was submitted on 23.03.2012. 19. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marking of entrance exit way, visitors parking, car parking and scooter parking etc. which are required to be completed by way of putting some marking boards and the same is not substantially related to the deficiency in the construction of building but the same are related with the lack of indication/marking boards/displays. It is not a case of the AO that the assessee did not provide entrance exit way and parking places for residents visitors therefore, in absence of certain indication or marking boards, it cannot be hold that the building was not completed on the date of application seeking certificate of construction as on 23.03.2012. 22. So far as third objection regarding provision for percolated borewell is concerned, this is also relating to rain water harvesting system as the SMC Inspector reported that the water flow to borewell was not ok, which shows that the construction was percolated borewell, as required by the GDCR was made but the flow of water was not up to required mark and this deficiency does not establish that the building was not completed but only shows that the water flow in the percolated borewell was not proper functioning and the same was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional High Court their lordship held thus: 5. We have perused the detailed discussion of the CIT (Appeals) as well 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 onM.5.2.2006 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 section 80-IB(l0) links the completion of the construction to 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 wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), held that where the assessee had completed construction of its entire housing project and applied for building use permission/completion certificate within prescribed time-limit, it would be entitled to deduction u/s. 80-IB(10) of the Act notwithstanding fact that it could not receive permission for its entire project. In the present case also the assessee completed the construction of project including tower 2, 5 7 on 17.03.2012 and also applied for living permission and completion certificate within prescribed time limit on 23.03.2012 then, it has to be held that the assessee is entitled for deduction u/s. 80-IB(10) of the Act despite the fact that the assessee could not receive building completion certificate for the project on or before last date of 31.03.2012 from the competent authority. In our humble understanding the purpose of above decision of Hon ble Jurisdictional High Court of Gujarat is that the delay on the part of competent authority in issuing building completion certificate cannot be attributed to the assessee for denying deduction u/s. 80-IB(10) of the Act and if such delay is attributed to the assessee then, it would defeat the purpose of legislature in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
