Income Tax Appellate Tribunal - Mumbai
Aakash Construction, Thane vs Ito Wd 4(1), Thane on 23 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM
ITA No. 2887/Mum/2016
(A.Y:2011-12)
ITA No. 2889/Mum/2016
(A.Y:2012-13)
M/s Aakash Construction Income Tax Appeal Ward
Apartment, Building No.1, 4(1), Thane
Shriprastha Complex,
Vs.
Nallasopara (W ), Tha ne-
401207
P AN No. AALFA6549B
Appellant .. Respondent
ITA No. 2888/Mum/2016
(A.Y:2012-13)
Shri Ramachandra Nair Income Tax Appeal Ward
Flat No.2, Laxmi Vulas Co - 4(3), Thane
operative Society, Virat Vs.
Nagar, Virar(W )
P AN No. ACNPN9183E
Appellant .. Respondent
Assessee by .. Shri Bhupendra Shah, AR
Revenue by .. Shri T.A. Khan, DR
Date of hearing .. 17-08-2017
Date of pronouncement .. 23-08-2017
ORDER
PER MAHAVIR SINGH, JM:
These three appeals by different assessees are arising out of the order of CIT(A)-3, Mumbai, in appeal Nos. 51, 47 & 127-THN/14-15 dated 18-01-2016. The Assessments were framed by ITO ward-4(1), Thane for the A.Y. 2011-12 & 2012-13 vide orders dated 03-03-2014, 03-12-2014 & 10-03-2015 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act').
2. The only common issue in all these three appeals of assessees is against the order of CIT(A) confirming the action of the AO in disallowing the claim of deduction under section 80IB(10) of the Act. The facts and 2 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) circumstances and issue is exactly identical in all the three appeals except the quantum, hence, we will take the facts from ITA No. 2888 /Mum/2016 and also reproduced the ground, which reads as under: -
"1. In the facts and circumstances of the case and in law, the assessing officer erred in disallowing deduction of Rs 24,88,438 under section 80IB(1) on the basis of erroneous insufficient and incorrect reasoning which are contrary to the facts and evidence on record by wrongly holding that the project was not completed before 31.03.2008,
2. In the facts and circumstances of the case and in law, the Commissioner of Income Tax(A) erred in confirming the above disallowance by overlooking several case laws submitted.
3. In the facts and circumstances of the case and in law, the Assessing Officer erred in charging interest 234 A,B, C."
3. Briefly stated facts are that the assessee is a builder and developer and claimed deduction under section 80IB(10) of the Act. The assessee has furnished the details in support of his claim of deduction/s 80IB(10) of the Act i.e. furnished from No.10CCB, copy of commencement certificate, completion certification from the architect etc. The AO noted that the assessee was approved by the local authority as per commencement certificate dated 19-12-2003 and the assessee was required to complete these project by the specified date i.e. 31-03-2007, apart from fulfilling the other conditions as specified under section 80IB(10) of the Act. According to AO, since the assessee failed to produce occupancy certificate of the local authorities i.e. Vasai Municipal Corporation within the prescribed time limit as per the Act. Accordingly, he disallowed the claim of deduction under section 80IB(10) of the Act. Aggrieved, assessee 3 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) preferred the appeal before CIT(A), who relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Global Reality in ITA No. 40, 36 and 35/2012 dated 21-08-2015, and decided the issue against assessee by observing in Para 5.0 (Vi) as under: -
"(vi) In view of the above discussion and respectfully following the recent decision of the F-1on'ble M.P. High Court, (a) the appellant is not entitled for deduction u/s.80IB(10) of the Act, even if the Jurisdictional ITAT in appellant's own case has decided in favour of the appellant as the Hon'ble High Court of MP in the case of CIT vs. M/s. Global Reality in ITA Nos. 40/2012, 36/2012 & 35/2012 order dated 21.08.2015 has decided in favour of the Revenue on similar issue and facts of the case (b) In the appellant case, the commencement certificate was dated 17.07.2003 and as stated by the AR of the appellant that all conditions were compiled except could not obtain completion certificate from Local Authority before 31.03.2008 Inspite of the architect certificate that the project was completed before October 2006 issued by MIs. W. N. Associates dated 12.10.2006. Due to some technical reasons, the appellant was unable to obtain the Occupancy certificate from the Local Authority. (c) The appellant has not obtained the completion certificate or occupancy certificate from local authority before or on 31.03.2008 and even till date the appellant has not obtained the completion certificate or occupancy certificate. (d) As discussed in the above para (v), the appellant has not fulfilled the basic conditions to obtain the Occupancy certificate or completion certificate from Competent 4 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) Authority. (e) In addition to the above, it is a precedent that the decision of the Superior Court over rules the decision of the lower court on similar issue and facts. Therefore, the decision in the case of National Textiles reported in 216 CTR 153 has held that the Lowe Court always bound by higher Court and cannot deviate from superior Court."
Aggrieved, assessee came in second appeal before Tribunal.
4. At the outset, the learned Counsel for the assessee sated that the commencement certificate of the project was dated 17-07-2003 and assessee fulfilled all the conditions because he could not have obtained the completion certificate from local authority on or before 31-03-2008 but obtained architect certificate that the project was completed before October 2006 as issued by the architect M/s W N Associates dated 12- 10-2006.
5. We find that the architect Shri W N Associates vide their letter dated 03-10-2007 has filed completion certificate for issuance of completion certificate to the associate planner East Siddiqui Limited. Vasai district Thane. The relevant letter reads as under: -
"Sub: File No BP-3145(West) I hereby certify that the carrying out of development for proposed Residential with shopline building No1, 5(Type C1A, C1, A9) 6,7 in Section VII on Plot Nos. 1 to 8, 14 to 205, 214 to 218, 228 to 232, 240, 241, open space garden road in S. No. 56 to 58, 91P, 92 to 95, 98, 100, 102, 103, 104, 136, 137, 148 to 157, 165 to 171, 173, and S. No 90, S. No 178 located at village Nilemore, Tal. Vasai, Dist. Thane, has been completed according to the permission granted vide 5 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) CIDCO approved plan No CIDCO/ VVSR/ CC/BP-
3145/W/886 dated 17-07-2003 & CIDCO/VSR/AM/BP-3145/W/4187 dated 20-02-227 and plans approved. I hereby declare that the structural work of the aforesaid proposal has been executed in accordance with the structural design, drawing and details prepared by a qualified structural Engineer and under his supervision to ensure due and proper safety and stability of work carried under the aforesaid proposal. I hereby further certify that no approval or permission granted to the aforesaid proposal has been constructed to impose upon your corporation any liability or responsibility in law for any damage or loss arising from any act or omission in executing the intended work for which I hold myself liable or responsible wholly and exclusively. No provision of the development Control Regulations and conditions prescribed in the commencement certificates have been transgressed during the carrying out of development. The development so carried out is fit for which it has been carried out."
6. In these facts, the learned Counsel for the assessee argued that the Tribunal in assessee's own case for AY 2007-08 following the jurisdictional high court decision in the case of CIT vs. Hindustan Samuh Awas Ltd.(2015) 377 ITR 150 (Bom) has allowed the claim of the assessee by observing in Para 2.4 as under: -
"2.4. In the aforesaid case, the Hon'ble jurisdictional High Court concluded that upto 31st March, 2005, deduction under s. 80-IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent 6 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) permitted under the DC Rules/Regulations framed by the respective local authority irrespective of the fact that the project is approved as 'housing project' or 'residential plus commercial'; Tribunal was not justified in holding that upto 31st March, 2005, deduction under s. 80-IB(10) would be allowable to the projects approved by the local authority having residential building with commercial user upto 10 per cent of the total built-up area of the plot; cl. (d) inserted in s. 80-IB(10) w.e.f. 1st April, 2005 is prospective and not retrospective. The project of the present assessee commenced on 17/07/2003. The assessee applied for completion certificate on 06/07/2005 as is evident from claim of the assessee mentioned in para-2.3 of the impugned order. As per the Revenue, the completion certificate was not issued to the assessee. There is no allegation by the Revenue that the project was not completed, as claimed by the assessee, but merely says that occupancy certificate was not issued to the assessee. Before us, the Ld. Counsel for the assessee invited our attention to the occupation certificate dated 22/12/2009 (page-84 to 86 of the paper book), wherein, there is mention of the grant of occupancy certificate. In such a situation, one fact is oozing out that the project was completed within the stipulated period, applied within time by the assessee and if there is a delay in issuing the same by the competent authority, the assessee cannot be penalyzed. Even in the assessment order/impugned order, there is no mention that the project was not completed. The assessee cannot be expected to fulfil the conditions which are beyond his control.7
ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) The assessee applied for completion certificate on 03/10/2007, addressed to the Executive Engineer (CIDCO) (VVSR) for the concerned project, it can be inferred that the assessee completed the project within time, against the sanction plan, therefore, following the ratio laid down in the cases decided by Hon'ble jurisdictional High Court/Hon'ble Apex Court and the ratio laid down in the case of CHD Developers by Delhi Bench of the Tribunal in ITA no.4694/Del/10 for A.Y. 2007-08, which was later on affirmed by Hon'ble' Delhi High Court (ITA No.298 of 2013) order dated 22/01/2014, we direct the Assessing Officer to grant the claimed deduction to the assessee."
7. We have also gone through the Judgment of Hon'ble Bombay High Court in the case of Hindustan Samuh Awas Ltd. (supra) wherein it is held as under: -
"11. The question we raise here is whether the explanation introduced an element of harshness to such an extent that it rendered the main provision nugatory? In our view, the explanation is introduced recently to put an end to a controversy, which might arise before the Assessing Officer about the date of completion. The intention of the legislature in providing explanation to fix the date of completion of a project is quite helpful when this provision is utilized in practice. In our view the explanation has introduced an unnecessarily strictness in the provision which is in the nature of exemption and not in the nature of charging. Sub-section (10) mentions that a housing project should be complete before 31.03.2008 so as to get the exemption.8
ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) Completion of housing project is a physical act. It can be demonstrated on the spot and also through a certificate issued by an architect who is appointed for supervising the construction work. He is a professional who would declare that the project is complete. Unfortunately, Sub-section (10) and the explanation do not give any importance to the issuance of such Completion Certificate by the concerned architect. It gives importance only to the certificate of Municipal authority. It is common knowledge that an application for Completion Certificate submitted to the Municipal Authorities is accompanied by a Completion Certificate issued by the concerned architect. No doubt, the Municipal authorities then cause inspection of the site and verify the claim. Thereafter, they issue Completion Certificate. But, if a project is really complete before 31.03.2008 and an application is moved quite in time, for seeking Completion Certificate from the Municipal authorities, and if they do not take steps urgently and delay the issuance of Completion Certificate from their side, can it be said that such certificate would alone decide the date of completion of the project? The answer is in negative.
12. In the facts of this case, admittedly, the Architect of the project had given a certificate prior to 31.03.2008. The respondent submitted application to the Municipal authority along with such certificate well in time on 25.03.2008. It seems that the Municipal authorities directed the respondent to deposit certain amount for issuance of Completion Certificate on 27.03.2008 and the amount was accordingly deposited on 31.03.2008. Thereafter, 9 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) the certificate was issued in October, 2008. This delay cannot be attributed to the respondent assessee."
8. In view of the above proposition of law settled by Hon'ble Bombay High Court that once architect has given certificate for completion and such certificate is submitted before the Municipal Authority along with application, and deposited the amount for issuance of OC, the delay cannot be attributed to the assessee and it shall be considered as fulfillment of all the conditions as prescribed u/s 80IB(10) of the Act. In the present case before us, we find that the commencement certificate of the project was dated 17-07-2003 and assessee fulfilled all the conditions because he could not have obtained the completion certificate from local authority on or before 31-03-2008 but obtained architect certificate that the project was completed before October 2006 as issued by the architect M/s W N Associates dated 12-10-2006 and submitted before the Vasai Municipal Authority. Even otherwise, the issue is covered by the Tribunal decision in assessee's own case in the immediate preceding year. Respectfully following Tribunal decision, facts of the case and the precedent cited of Hon'ble Bombay High Court, we reverse the order of CIT(A) disallowing the claim of the assessee. The appeals of the assessee's are allowed.
9. In the result, the appeals of assessee's are allowed.
Order pronounced in the open court on 23-08-2017.
Sd/-
(MAHAVIR SINGH) JUDICIAL MEMBER Mumbai, Dated: 23-08-2017 Sudip Sarkar /Sr.PS 10 ITA No. 2887, 2888, 2889/ Mum/2016 M / s Aa k a s h C o n s t r u c t i o n & Shri Ramachandra Nair (A.Ys:11-12 & 12-13) Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI