TMI Blog2016 (11) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer since he has no power to set aside the matter to the file of the Assessing Officer in view of the amendment to provisions of section 251(1)(a) by the Finance Act, 2001 w.e.f. 01-06-2001. We therefore are of the considered opinion that the matter requires re-visit to the file of the CIT(A) who shall decide the issue himself after obtaining a remand report from the Assessing Officer, if necessary. He shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee as well as the revenue are accordingly allowed for statistical purposes. - ITA No. 1525/PN/2014 And ITA No. 1512/PN/2014 - - - Dated:- 30-11-2016 - Shri R.K. Panda, AM And Shri Vikas Awasthy, JM For the Assessee : Shri Vipin Gujrathi. For the Revenue : Shri Anil Kumar Chaware, CIT. ORDER PER R.K. PANDA, AM : These are cross appeals. The first one is filed by the assessee and the second one filed by the Revenue and are directed against the order dated 31-01-2014 of the CIT(A)-I, Pune relating to Assessment Year 2010-11. For the sake of convenience, both the appeals were heard togeth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29th March, 2007. CC/4664/06 5. The assessee also furnished a copy of the Commencement Certificates issued from time to time by Pune Municipal Corporation, copy of the Development Plan issued by Deputy City Engineer, Pune Municipal Corporation, copy of first Building Plan Approved by Pune Municipal Corporation on 03-04-2006. It was claimed that the total area of the plot of land on which the assessee was developing Housing Project is 4700.00 Square Meters and is more than one acre. The Project 'Kamdhenu Siddhi' consists of 2 Wings namely A and B and the number of flats, contained in each wing is as follows: Building/Wing No. of Flats Wing A 31 Flats Wing B 30 Flats 6. It was clarified by the assessee that the project does not include any shops and/or commercial establishment and the built up area of six largest/biggest flats (Flat No 203, 20B, 403, 40B, 603 and 60B of Buildings) in the housing project is 1308 square feet. It was submitted that the 1st Building plan of the housing project was approved on 3-04- 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be disallowed. 9. The assessee reiterated that the first Completion Certificate No. OCC/0512/10 dated 11th October 2010 was granted in respect of 46 flats with reference to it application dated 16-08-2010 and the Final Completion Certificate was granted vide certificate No. OCC/0547/12 dated 21st July 2012 in respect of 15 flats with reference to its application dated 27th March 2012. The assessee company applied for the final completion of the project on 27th March 2012 and Pune Municipal Corporation granted completion certificate on 21St July 2012 with reference to the application dated 27th March 2012. It was further stated that as per Rule No 7.6 of the Development Control Rules of PMC, the developer/ builder is required to submit the application for occupancy along with the completion certificate issued by the architect in prescribed form. After the receipt of application the occupancy certificate is either granted or rejected by PMC and in case of rejection the objections/ reasons are communicated to the developer/ architect. It was also stated that as per Rule 7.7 of D C Rule of PMC Pune in case no objection is raised within 21 days of the application, the occupancy cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the Tribunal in the case of Hindustan Samuha Awas Limited (Supra) and Satish Bora and Associates (Supra) and has preferred appeal before the Hon ble Bombay High Court. Therefore, the issue has not attained finality. He accordingly rejected the claim of deduction of Rs.1,47,49,415/- made by the assessee u/s.80IB(10). 12. The Assessing Officer during the course of assessment proceedings further noted that during the year under consideration, the assessee has debited an amount of Rs.19,56,185/-to the P L a/c under the head 'compensation to flat owners', Responding to a query raised by the Assessing Officer about nature of expenditure and also as to the reasons for making payment of compensation to flat owners, the assessee submitted that the compensation was paid to the flat owners due to delayed handing over of possession of flats. It was claimed that the flat holders have expressed concern that the assessee would not be in a position to give possession of flats by 31-03-2009 as discussed in the first meeting dated 04-01-2009. It was also claimed that the assessee assured that the possession of the flat would be given in appropriate time frame and accepted to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 in order to claim deduction in respect of the said housing project. It was reiterated that the assessee has commenced the construction of the said project during the Financial Year 2006-07 and completed the same in the month of March 2012 and completion certificate from Pune Municipal Corporation was obtained in two parts. The First Completion Certificate No.OCC/0512/10 dated 11th October 2010 was granted in respect of 46 flats with reference to it application dated 16-08-2010. The Final Completion Certificate was granted vide certificate No. OCC/0547/12 dated 21st July 2012 in respect of 15 flats with reference to its application dated 27th March 2012. It was stated that the' assessee has submitted the Completion Certificate obtained from the Architect M/s. Malwadkar Architects along with the application to PMC for issue of Occupancy Certificate. As per Rule No 7.6 of the Development Control Rules of PMC, the developer/builder is required to submit the application for occupancy certificate along with the Completion Certificate issued by the architect in prescribed form. After the receipt of application the occupancy/completion Certificate is either granted or rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be seen as mandatory. If the substantial compliance thereof is established on record, in a given case, the court may take a view that minor deviation thereof would not vitiate the very purpose for which the deduction has been made available. 16. The assessee also relied on the following decisions : 1. Sanghvi and Doshi Enterprise vs. ITO 141 TTJ 1 (Chennai), 2. ITO vs. Khyati Financial Services 6 Taxman 56 (Mumbai) 3. Global Realty vs. ITO 134 ITD 407 (Indore) 4. Siddivinayak Shree Vs. ACIT ITA No. 883/PN/2010 (Pune) 17. So far as disallowance of compensation paid to the flat owners is concerned, the assessee objected to the observations made in the assessment order that the AR has agreed for the addition. It was clarified by the Counsel that it is only stated during the assessment proceedings that the AR agrees to the addition in the manner and to the extent made in the earlier assessment year and the AR has never agreed for the addition. In support of its claim, the assessee furnished a copy of affidavit of the authorized representative Mr. Jitendar Rander, CA, who appeared before the Assessing Officer at the time of assessment proceedings. On merits, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of completion of construction shall be taken to be date on which completion certificate in respect of the housing project is issued by the local authority. When the statute used the word 'shall' in clause (ii) of the Explanation, it is mandatory to obtain the completion certificate in respect of the 'entire housing project' issued by the Local Authority within the stipulated time i.e. 31-03- 2012 in case of the assessee, for availing deduction u/s. 801B(10). It is also clear from the section that the deduction is allowable in respect of the amount of profits derived from such housing projects i.e. projects approved by the local authority subject to the fulfilment of other conditions stipulated under clauses (a), (b) (c) of the section. In the present case, admittedly the final completion certificate in respect of the subject housing project was obtained by the assessee only on 21.07.2012, and therefore the said project of the assessee has not complied with one of the requirements for availing the deduction under sec. 80IB (10). 20. The Ld. CIT(A) referred to the decisions of the Tribunal in the case of Hindustan Samuha Awas (supra) and Satish Bora Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said certificate was issued without raising any objections/ queries or seeking clarifications on the completion of the project, the deduction under sec. 80IB( 10) shall be allowed in respect of profits derived by the assessee from the project during the year as the certificate issued in such a case relates back to the date of application as held by the ITAT, Pune in the cases referred above. In case it is found that certain objections/queries were raised or clarifications were sought after application was filed by the assessee/architect on 27-03-2012, the deduction claimed shall not be allowed to the assessee for the reason that in such a case, the delay in obtaining the certificate is attributable to the assessee and it cannot be said that obtaining the certificate on or before 31-03-2012 is beyond the control of the assessee. 21. So far as the disallowance of compensation is concerned the Ld.CIT(A) referred to the order sheet of the assessment folder and comments of the Assessing Officer and noted that the Assessing Officer has subsequently clarified that the AR of the assessee has only agreed to the manner in which the similar disallowance was dealt with for the A.Y 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Gem Plus Jewellery India Ltd 330 ITR 175, wherein in the context of deduction under sec. 10A, it was held as under: The plain consequence of the disallowance and the add back, that had been made by the Assessing Officer, was an increase in the business profits of the assessee. The contention of the revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ ESIC payments ought to be ignored could not be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the Assessing Officer must follow. 5.4.5 However, in the case of the appellant, as discussed earlier, the Assessing Officer is directed to allow deduction under sec. 80IB(10) in respect of profits derived from aforesaid housing project subject to the condition that the local authority has not raised any objections/query or sought any clarifications in respect of completion of housing project after filing of the application for issue of occupancy certificate by the architect of the appellant before the PMC. On due verification, if it is held by the Assessing Officer that the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction made by learned assessing officer without appreciating the fact that the project was completed on 27th March 2012 i.e. before due date 31st March 2012. The appellant hereby prays that the deduction may please be granted. 3. On the facts and in the circumstances of the cases and in law the honourable CIT(A) erred in confirming the disallowance made by the learned assessing officer in respect of the compensation paid to flat owners of Rs. 19,56,185/- due to delay in handing over the possession of flats within stipulated time without appreciating the fact that a. The compensation paid is as per the agreement between the appellant and flat purchasers b. The compensation is paid by account payee cheques c. The appellant has produced confirmation of the flat purchasers in respect of compensation paid d. The honourable CIT(A) and learned AO did not appreciate the commercial expediency involved in the payment of compensation to the flat owners and decided the issue occupying the chair of businessman which they are not permitted to do. The appellant hereby prays that the disallowance of Compensation paid to flat owners may please be deleted. 4. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is not in accordance with law. He accordingly submitted that the matter may be restored to the file of the CIT(A) with a direction to decide the issue himself. 28. The Ld. Departmental Representative on the other hand while supporting the order of the CIT(A) fairly conceded that the CIT(A) does not have the power to set aside the matter to the file of the Assessing Officer. He accordingly submitted that he has no objection if the matter is restored to the file of the CIT(A). 29. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is a company engaged in the business of promoters and builders. It filed its return of income declaring total income of Rs.68,52,980/- after claiming deduction of Rs.1,47,49,415/- u/s.80IB(10) in respect of its housing project Kamdhenu Siddhi at Kothrud, Pune. We find the Assessing Officer denied the claim of deduction u/s.80IB(10) on the ground that the assessee has not fulfilled the conditions prescribed in section 80IB(10) by not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. It may be mentioned here that these provisions are applicable from 1.6.2001 as the power to set aside as given earlier was omitted by the Finance Act, 2001. In the light of aforementioned provision, it has to be seen whether in the present case Id. CIT(A) has rightly set aside the issue. For that purpose, it-will be relevant to reproduce para 3.3 of the order of Id. CIT(A) as under:- 3.3. As per the above computation of income, the appellant has shown that there is no liability of capital gains tax on the sale of agricultural land. But the fact remains to be verified is that whether the land sold was actually used for agricultural purposes by the appellant or his parent in two years immediately preceding the date on which the transfer took place for claiming deduction u/s 54B of the Act. To verify this aspect, the appellant is directed to submit the requisite evidence in the form of report from the respective revenue authorities/patwari, who officially maintains the actual land use record (Girdawari). For determining the cost of acquisition as on 1.4.1981, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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