Income Tax Appellate Tribunal - Delhi
M/S Sahara India Sahkari Awas Samiti ... vs Dcit, New Delhi on 7 January, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH, 'FRIDAY': NEW DELHI
(Through Video Conferencing)
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND
MS. SUCHITRA KAMBLE, JUDICIAL MEMBER
MA No.155/DEL/2021
(Arising out of ITA No.2482/DEL/2011)
[Assessment Year: 2006-07]
Sahara India Sahkari Awas DCIT,
Samiti Ltd., Central Circle-6,
Sahara Bhawan, Room No.334, ARA Centre,
1, Kapoorthala Complex, Jhandewalan Extn.
Aliganj, Lucknow New Delhi
PAN-AAGFS9137D
Assessee Revenue
Assessee by Sh. Ajay Vohra, Sr. Adv.
Revenue by Sh. Gaurav Pundir, Sr. DR
Date of Hearing 08.10.2021
Date of Pronouncement 07.01.2021
ORDER
PER R.K. PANDA, AM,
The assessee, through this Miscellaneous Application, has requested the Tribunal to rectify certain mistakes that have crept in the order of the Tribunal.
2. The ld. Counsel for the assessee drew the attention of the Bench to the contents of the Miscellaneous Application which reads as under:-
2 MA No.155/Del/2021"Re: Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961('the Act') for rectification of mistakes apparent from the record in Order dated 19.07.2021 passed in ITA No(s). 2481 and 2482/Del/2011 for AY 2005-06 and 2006-07).
In connection with the captioned matter, it is respectfully submitted as under:
The impugned order dated 19.07.2021 was passed by the Hon'ble Tribunal, disposing off the appeals filed by the Department for assessment years 2005- 06 and 2006-07 (ITA Nos. 2481 and 2482/Del/2011) along with Cross Objections of the applicant (CO.
Nos.221 and 222/Del/2011) involving common issues. Copy of the order is annexed hereto and marked as Annexure 1.
The present application under section 254(2) of the Act is being filed for rectification of certain mistake(s) apparent from record in the order dated 19.07.2021, which calls for being rectified for the reasons elaborated hereinafter.
Facts:
The applicant is a cooperative society engaged in the business of development and construction of residential projects since the year 2000. A development agreement dated 21.09.1999 was entered into between the applicant and M/s Sahara India Commercial Corporation Ltd ["SICCL"] wherein the applicant appointed SICCL to construct Sahara States, Lucknow and Sahara Grace, Lucknow projects.
The project map was approved on 26.03.2003 by the Lucknow Development Authority and the said project was completed by SICCL on 14.03.2008 for which the completion certificate was furnished (as additional evidence before the Hon'ble Tribunal) 3 MA No.155/Del/2021 [[refer Page 5 of additional evidence compilation] The applicant started selling residential units from assessment year 2003-04 onwards and deduction under section 80IB(10) of the Act was claimed by the applicant. The deduction claimed under section 80IB(10) of the Act for preceding assessment years 2003-04 and 2004- 05 was accepted by the department and the same is not in dispute.
During the years under consideration, the deduction claimed under section 80IB(10) of the Act was denied by the assessing officer [Pg 4-5 of the assessment order for AY 2005-06] on the grounds that:
(i) since as per section 80IB(10)(d) inserted vide Finance (No.2) Act, 2004, with effect from 01.04.2005, the built-up area of the shops and commercial establishment could not exceed 5% of the aggregate built-up area or 2000 sq.ft whichever is less, the project developed by the assessee, which comprised of 30,300 sq.ft of shops and commercial establishment, exceeded the limit;
(ii) since as per the amendment in section 80IB(10) vide Finance (No.2) Act, 2004, with effect from 01.04.2005, the assessee was to obtain completion certificate prior to 31bt March 2008. the assessee failed to produce such certificate: and
(iii) the assessee could not be regarded as a developer since the assessee was not actively involved in the development and construction works due to non-employment of capital and labour therefore.
The aforesaid order passed by the assessing officer was overturned by the CIT(A) vide order dated 25.02.2011 wherein the deduction claimed under section 80IB(10) of the Act was allowed, inter alia, on the ground that conditions mentioned in (i) and (ii) above were not in existence on the date when the 4 MA No.155/Del/2021 approval was granted by the Development authority and therefore, the said conditions could not be made applicable to the projects which were approved prior to 01.04.2005.
On further appeal filed by the Revenue, the applicant / assessee filed, out of abundant caution, application for admission of additional evidence in terms of Rule 29 of the Income tax (Appellate Tribunal) Rules, 1963 ('the Rules') by way of:
a. Letter from M/s Sahara India Commercial Corporation Ltd to the applicant dated 14/03/2008 [Pg 5 of additional evidence compilation] b. Letter from the applicant to M/s Sahara India Commercial Corporation Ltd dated 18/03/2008 [Pg 6 of additional evidence compilation] c. Architect certificate dated 15/09/2.009 along with the official translation [Pg 7 and 8 of additional evidence compilation].
Vide the appellate order dated 19.07.2021, the Hon'ble Tribunal, upheld the order of the CIT(A) with respect to grounds / objections (i) and (iii) taken by the assessing officer (set out above) to deny the claim of deduction under section 80IB(10) of the Act. While dismissing Revenue's objection no. (i), the Hon'ble Tribunal held that the condition introduced vide Finance (No.2) Act, 2004 w.e.f. 01.04.2005, with respect to extent of commercial area, being prospective in nature and not applicable to projects approved prior to 01.04.2005, relying upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Sarkar Builders: 375 ITR 392 and CIT vs. Vatika Township Pvt. Ltd. reported in 367 ITR 466, could not be applied to the projects being executed by the applicant, which were approved by the Development Authority on 2.6th March, 2003 (refer para 24.1 of the impugned order).
In so far as objection no. (ii) was concerned, the 5 MA No.155/Del/2021 applicant, at the outset, submitted that the restrictive condition enacted vide Finance (No.2) Act, 2004, w.e.f. 01.04.2005 providing that the last date for completion of housing projects approved before 01.04.2004 shall be 31.03.2008, was not applicable qua projects approved prior to 01.04.2005, as held in the following decisions:
- CIT vs CHD Developers Ltd: 362 ITR 177 (Del)
- PCIT vs Sahara States Gorakhpur: 418 ITR 168 (Allahabad)
- Sahara States, Hyderabad AOP vs DCIT: ITA No 1886/Hyd/2011 Attention of the Hon'ble Bench was drawn to the decision of the Supreme Court in the case of PCIT vs. Majestic Developers: 431 ITR 49 which affirmed the decision of Karnataka High Court in case of PCIT vs. Majestic Developers 426 ITR 175 holding that certificate of registered certified architect was sufficient for proving the completion of the project within the specified time, in the following terms:
"5 Thus, completion certificate which is referred to in Section 310 of KMC Act is completion certificate which is required to be issued by Architect, engineer or supervisor, as the case may be, factum of completion of building or project to the Commissioner. It is only after such completion certificate being furnished and inspection conducted by the Commissioner, occupancy certificate would be issued by Commissioner of BBMP.
Hence, contention of Revenue that completion certificate is required to be issued by local Authority as prescribed under Second Explanation to sub-clause (3) of sub- section (10) of Section 80-IB of the Act cannot be accepted. However, if the contention of the revenue that the completion certificate referred to under sub-clause (3) of Sub-Section (10) of Section of 80-IB of the Act is to be accepted, then, in that event, Authorities under the Act cannot insist for a completion certificate to be issued by the Municipal Corporation, when, in fact the said certificate contemplated under the KMC Act and the Building Bye-laws is to be issued by registered architect/engineer/supervisor" (emphasis supplied) 6 MA No.155/Del/2021 Copy of the Apex Court decision was separately e- mailed to the Hon'ble Tribunal under cover of mail dated 09.03.2021. Copy of the email is enclosed as Annexure 2.
It was accordingly submitted that objection (ii) raised by the Revenue to deny the claim of deduction under section 80IB(10) of the Act was not merited, considering that -
- the amended provision for issuance of completion certificate for availing benefit of section 80IB(10) of the Act was not applicable for projects approved before 01.04.2005, in view of the judicial precedents cited, including the binding decision of the jurisdictional High Court; and
- even otherwise, assuming for sake of argument that the said condition was applicable, the same stood satisfied as evident from the letter dated 14.03.2008 issued by developer to the applicant evidencing completion of project along with certificate dated 15.09.2009 issued by the architect (submitted as additional evidence), as held by the Apex Court in the case of Majestic Developers (supra).
Ignoring the settled legal position set out hereinabove, the Hon'ble Tribunal ought to have affirmed the decision of the CIT(A) qua objection no.(ii) as well; instead, the Hon'ble Tribunal without dealing with the legal submissions, restored the issue to the file of the assessing officer for deciding the same as per law. The relevant paragraph 25 of the appellate order is reproduced hereunder for ready reference:
"25. Since these documents were never produced before the lower authorities and were filed before the tribunal for the first time in the shape of additional evidences, therefore. we admit the additional evidences filed in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 7 MA No.155/Del/2021 1963 and deem it proper to restore the issue relating to completion of the project prior to 31st March, 2008 to the file of the AO for adjudication of this issue i.e., completion of the project prior to 31st March, 2008. The AO shall examine the documents and any other details that he may require and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. "
In view of the aforesaid, remanding the matter to the file of the assessing officer for de novo adjudication, contrary to the well settled legal position in light of the decision of the Hon'ble Supreme Court in the case of Majestic Developers (supra) and the binding decision of the jurisdictional High Court in the case of CHD Developers Ltd (supra) constitutes mistake apparent from the record requiring rectification under section 254(2) of the Act, as per law laid down by the apex Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd.: 305 ITR 227 (SC).
Furthermore, the Hon'ble Tribunal erred in not appreciating that in view of the law declared by the jurisdictional High Court, the Revenue's objection could not be sustained in law, de hors the additional evidences filed; it was, therefore, not necessary to remand the issue to the assessing officer for consideration of the additional evidences, which were, in any case, furnished before the Hon'ble Tribunal out of abundant caution to buttress the case of the applicant.
In view of the above, the conclusion reached by the Hon'ble Tribunal in para 25 of the impugned order, holding that since the additional evidences filed were not on record before the lower authorities, the issue should be remanded back to the assessing officer, runs contrary to the law declared by the jurisdictional High Court and the decisions of the co- ordinate Benches of Tribunal holding that the condition of obtaining completion certificate on or before 8 MA No.155/Del/2021 31.03.2008 was not applicable to projects approved before 01.04.2005.
The same, therefore, constitutes mistake apparent from record which needs to be rectified under section 254(2) of the Act by modifying the said para 25 of the appellate order to uphold the order of the CIT(A) and reject the denial of deduction of deduction under section 80IB(10) of the Act on the said ground; alternatively, recalling the impugned order dated 19.07.2021 to the limited extent of dealing with the aforesaid objection (ii), namely, issuance of completion certificate, afresh.
The applicant trusts that the request shall be acceded to.
An opportunity of being heard is being prayed for."
3. Referring to the contents of the Miscellaneous Application, the ld. Counsel for the assessee submitted that the same is self explanatory; therefore, appropriate order may be passed.
4. The Ld. DR, on the other hand, strongly objected to the Miscellaneous Application filed by the assessee. He submitted that the Tribunal after considering the various submissions made by the assessee and the additional evidences filed before the Tribunal has admitted the additional evidences and restored the same to the file of the Assessing Officer for verification with certain direction. He submitted that the assessee through this Miscellaneous Application is 9 MA No.155/Del/2021 trying to persuade the Tribunal to modify the order which amounts to review of its own order by the Tribunal, which is not permissible in law. He accordingly submitted that the Miscellaneous Application filed by the assessee should be dismissed.
5. We have heard the rival arguments made by both the sides and perused the record. We find, the assessee in the instant case has filed certain additional evidence before the Tribunal which was admitted and the issue was restored to the file of the Assessing Officer for fresh adjudication by recording the following reasons:-
"24.2 So far as the second objection of the Revenue is concerned, i.e., completion of the project on or before 31.03.2008 is concerned, it is the submission of the ld. Counsel that the project was completed before 31st March, 2008 in view of the following additional evidences:-
(i) Letter from M/s Sahara India Commercial Corporation ltd to the assessee dated 14/03/2008 [Pg 5 of additional evidence compilation]
(ii) Letter from the assessee to M/s Sahara India Commercial Corporation ltd dated 18/03/2008 [Pg 6 of additional evidence compilation] (iii)Architect certificate dated 15/09/2009 along with the official translation [Pg 7 and 8 of additional evidence compilation],
25. Since these documents were never produced before the lower authorities and were filed before the 10 MA No.155/Del/2021 tribunal for the first time in the shape of additional evidences, therefore, we admit the additional evidences filed in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963 and deem it proper to restore the issue relating to completion of the project prior to 31st March, 2008 to the file of the AO for adjudication of this issue i.e., completion of the project prior to 31st March, 2008. The AO shall examine the documents and any other details that he may require and decide the issue as per fact and law after giving due opportunity of being heard to the assessee."
6. From the above, it is clear that in view of the additional evidences filed by the assessee which were never produced before the lower authorities and were filed for the first time before the Tribunal, therefore, the additional evidences were admitted and the issue was restored to the file of the Assessing Officer to examine the documents and allow the deduction as per law after verification of the completion of the project prior to 31st March, 2008. It is clearly and categorically stated that the Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Therefore, in our opinion, the apprehension of the ld. Counsel for the assessee that the Assessing Officer may not decide the issue as per law is without any merit. The Assessing Officer is bound to follow the settled principle of law on this issue. We, therefore, do not find 11 MA No.155/Del/2021 any infirmity in the order of the Tribunal so as to rectify the same as per provisions of section 254(2) of the Act. The Miscellaneous Application filed by the assessee is accordingly dismissed.
7. In the result, the Miscellaneous Application filed by the assessee is dismissed.
Oder pronounced in the open court on 07th December, 2021.
Sd/- Sd/-
[SUCHITRA KAMBLE] [R.K.PANDA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Delhi; Dated: 07th December, 2021.
f{x~{tÜ? fÜA P.S
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi