TMI Blog2022 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... fficult to accept the contention of the assessee that the construction was completed on 7.3.2012 so as to qualify as the date of completion certificate. The sequitur is that the construction was completed after 24.9.2012 but before 30.3.2013, when the construction got fully completed beyond the virtual completion. Date of approval of the housing project by the local authority - The housing project was approved on 30.03.2007 and a period of five years from the end of the financial year in which the housing project was approved by the local authority, came to an end on 31-03-2012. Since the actual completion of the project took place between 24-09-2012 (when the assessee intimated the factum of virtual completion of the project to the District Collector) and 30.3.2013 (when the completion certificate was issued by the competent authority), the condition of completing the construction within a period of five years from the end of the financial year in which the housing project was approved, got vitiated, making the assessee ineligible for deduction u/s.80IB(10) of the Act. We, therefore, overturn the impugned order and restore the order of the AO. Levy of tax u/s.115JC - as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project within the time stipulated as per the provisions of section 80IB(10). 3. Succinctly, the facts of the case are that the assessee is a Builder and Developer, who filed his return declaring total income of Rs.28,71,109/- , after claiming deduction u/s.80IB(10) amounting to Rs.45,84,87,519/-. The tax was however paid on the adjusted total income of Rs.8,53,51,346/- u/s.115JC of the Act. Deduction u/s.80IB(10) was claimed in respect of housing project, namely, Teerth Towers , which consisted of 7 Buildings and Commercial shops. The assessee had been following Project Completion Method for recognising the income, as a result of which all the expenses incurred on the project till the immediately preceding financial year were shown as work-in-progress. During this year, the assessee showed sale of entire units of Buildings A to F for a sum of Rs.90,92,08,550/-. The Assessing Officer (AO) noticed that the assessee contravened the provisions of section 80IB(10) inasmuch as the project was not completed within 5 years from the end of the financial year in which the housing project was approved by the local authority. He observed that the housing project was approved by the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the local authority. Explanation. -For the purposes of this clause,- ( i ) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; ( ii ) the date of completion of construction of the 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; 5. A bare perusal of the above provision indicates that deduction u/s.80IB(10) is allowed if the development and construction of the housing project commences on or after 01-10-1998 and the construction is completed within a period of five years from the end of the financial year in which the housing project is approved by the local authority. Thus, it can be seen that, there are three timelines relevant for claiming the deduction insofar as the dispute under consideration is concerned, viz., i) the date of start of construction; ii) the date of completion of the housing project and iii) the date of approval of the housing project by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of construction. If, however, the authority, on verification, finds some work incomplete, then such date of intimation by the assessee will disqualify to be the date of completion of construction. In such a panorama, the assessee will have to make good the deficiencies and again intimate the completion. The crux is that when the authority, on final intimation from the assessee in writing about the completion of construction, finds the construction as having been actually completed, the date of issuance of the completion certificate shall be construed as the date on which the assessee finally intimated the factum of completion of construction. 7. Adverting to the facts of the instant case, we find that the date of completion certificate issued by the competent authority, a copy placed at page 133A of the paper book, is 30-03-2013. The assessee lodged a claim before the Tribunal that though the completion certificate was issued on this date, but the project was actually completed on 07-03-2012, when it intimated about the completion of construction to the District Collector, Pune vide its letter, a copy placed at page 215 of the paper book. It is also claimed that anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction got fully completed beyond the virtual completion. (II) Date of approval of the housing project by the local authority 9. Now we espouse the next timeline, being, the date of approval of housing project by the local authority. The AO has set up a case that the approval was given by the competent authority on 30-03- 2007 pursuant to the assessee s application dated 24-12-2006 and hence, 30-03-2007 should be taken as the date of approval for commencement. On the other hand, the assessee contended and the ld. CIT(A) accepted the contention that the approval was conditional upon the demarcation and since the demarcation certificate was issued by the O/o. DILR on 22-08-2007, the same was the date of approval. 10. Sub-clause (iii) of section 80IB(10)(a) provides that the construction should be completed within five years from the end of the financial year in which the housing project is approved by the local authority. The stipulated period of five years has connection only with the granting of approval by the local authority and not when the construction is actually commenced. The requirement is that the construction should be commenced after the stipulated dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or finding out the date of approval by the competent authority. Office of the District Collector, Pune granted permission on 30-03-2007 to the assessee s application dated 21-12-2006, whose copy is available at page 125A of the paper book. Opening part of this order states that: P.A. Vijay Tukaram Raundal. . . . . . . . . and others has requested for getting Non-Agricultural permission and approval for building plan for residential use on Survey No ..owned by him vide his application dated 21-12-2006 . This order further records in para 2: As the residential construction drawings for the above location submitted by the applicant, this area being outside the limits of Municipal Corporation, were sent for examination to the Assistant Director, Urban Planning, Pune and the Assistant Director, Town Planning, Pune has examined and conveyed vide their outward no. Drawing/NABP/M Sus/Tal Mulshi/S.No.28/2 and others/SSP/1056 dt. 30-03-2007 that on examination of planned residential use space drawings of the referred place, they generally seem to appropriate as per the existing guidelines . This shows that the assessee applied for getting both the N.A. permission and approval for bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion on 30-03-2007. Certification by the Land record department as to the fulfillment of condition no. 3 was confined to the drawings. A copy of such certificate dated 22.8.2007 is available at page 137-A of the paper book. Condition no. 3, as reproduced above, is in the context of marking the drawing on the ground before taking up actual development work. This is a procedural requirement invariably in all the approvals of housing project by the local authority. This requirement is enshrined in approvals for ensuring that the actual development of the housing project coincides with the accorded approval. This condition is not something peculiar to the assessee, so as to put his case at a different pedestal from others, so as to assume the date of permission granted by DILR on 22-08-2007 as a starting point in contrast to the date when the approval was first granted by the District Collector, Pune on 30.3.2007. Further, one needs to draw a line of distinction between an approval and a certificate. The requirement of the section is the grant of approval and not the issuance of certificate. Approval in this case was granted to the housing project by the District Collector, Pune, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of an exemption notification. It went on to hold that in such a case it is for the assessee to show that he comes within the purview of exemption. After considering the issue in detail, the Bench held that exemption notification should be interpreted strictly and: the burden of proving the applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification . It further held that: `When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed extended to the subject/assessee and it must be interpreted in favour of the Revenue . Going with the ratio decidendi of this Constitution Bench judgment, it is manifested that the assessee has to strictly satisfy the conditions as given in the section for availing the deduction and in case of any doubt or ambiguity, the benefit of interpretation has to be given in favour of the Revenue. 17. Extantly, we are concerned with a situation in which there is no ambiguity in the relevant language of section 80IB(10) and even on the plain interpretation of the provision, it is clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the date of change of the character of agricultural land to non-agricultural land pursuant to the permission granted by the Collector for non-agricultural use. Au contraire , we are considering the language of section 80IB(10), which requires interpretation of the financial year `in which the housing project is approved by the local authority . The texts as well as contexts of both the cases are altogether different and are streets away from each other. Ergo, the reliance of the ld. AR on this judgment is of no consequence in the present case. 19. The ld. AR also relied on a decision of the Bombay Bench of the Tribunal in Shree Krishna Sai Development Corporation Vs. ITO (2011) 130 ITD 31 (Mumbai) . In that case, the assessment years orders under consideration were 2005-06 and 2006-07 and the assessee claimed deduction u/s.80IB(10) in earlier years which was accepted in the assessments completed u/s.143(3). The CIT, assuming jurisdiction u/s.263, opined that deduction u/s.80IB(10) should not have been allowed by the AO without proper verification of the certificate issued by the CIDCO indicating the date of commencement as 07-04-1998. The Tribunal considered the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t section 115JC of the Act is a special provision for payment of tax by certain persons other than a company. Sub-section (1) of section 115JC provides as under: `Notwithstanding anything contained in this Act, where the regular income-tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent. 25. This section starts with a non obstante clause and provides that where the regular income-tax payable for a previous year is less than the alternate minimum tax payable for for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income-tax on such total income @18.5%. This section clearly refers to total income of the previous year which has to be substituted as per the mandate of this provision, in case the income under regular provisions for such previous year, is less than that pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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