Income Tax Appellate Tribunal - Pune
Kasturi Tushar Shelters (Aop), Pune vs Assessee on 10 June, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri Shailendra Kumar Yadav Judicial Member
and Shri R.K. Panda Accountant Member
ITA No. 1465/M/2009
(Assessment Year 2006-07)
Kasturi Tushar Shelters (AOP),
Satsang, Office No.4,
Sadhu Waswani Chowk,
Pune-411001
PAN No.AAAAK 3731H .. Appellant
Vs.
ACIT, Range-5, Pune .. Respondent
ITA No. 667/PN/2012
(Assessment Year 2005-06)
Kasturi Tushar Shelters (AOP),
Satsang, Office No.4,
Sadhu Waswani Chowk,
Pune-411001
PAN No.AAAAK 3731H .. Appellant
Vs.
ACIT, Circle-5, Pune .. Respondent
ITA No. 431/PN/2011
(Assessment Year 2007-08)
Kasturi Tushar Shelters (AOP),
Satsang, Office No.4,
Sadhu Waswani Chowk,
Pune-411001
PAN No.AAAAK 3731H .. Appellant
Vs.
ITO, Ward-2(2), Pune .. Respondent
Assessee by : Shri V.L. Jain
Revenue by : Shri S.K. Singh
Date of Hearing : 10-06-2013
Date of Pronouncement : 31-07-2013
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ORDER
PER R.K. PANDA, AM :
The above 3 appeals filed by the assessee are directed against the separate orders of the CIT(A) relating to A.Ys. 2006-07, 2005-06 & 2007-08 respectively. Since identical issues are involved in all these appeals, therefore, for the sake of convenience all these appeals were heard together and are being disposed of by this common order ITA No.1465/M/2009 (A.Y. 2006-07) :
2. Facts of the case, in brief, are that the assessee AOP was engaged in the development and sale of residential project at Pune in respect of which the assessee had claimed deduction of Rs.4,73,50,870/- u/s 80IB(10) of the Income Tax Act. During the course of assessment proceedings the Assessing Officer observed that the project was commenced on 27-8-2002 i.e. before 1-4-2004 and therefore, as per provisions of section 80IB(10)(a)(i) this projects was required to be completed before 31-3-2008. He also observed that as per Explanation 2 below section 80IB(10)(a), the date of completion of construction of the housing project is to be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. In order to verify whether the construction of the project was complete as on 31-3-2008 as per necessary completion certificate of the local authority, a survey u/s 133A was conducted by the Assessing Officer on 2-6-2008 wherein it was found that the project in respect of which deduction u/s 80IB(10) has been claimed, had not been completed as on 31-3-2008 as the local authority had not given the necessary 3 completion certificate. At the time of survey, as well as during assessment proceedings, it was stated by the assessee that the local authority had not issued the completion certificate due to mandate from state government to stay issue of completion certificate. However, on being required by the Assessing Officer to substantiate its claim, the assessee expressed its inability to furnish any evidence in this regard. However, it was contended by the assessee that the construction of the project was complete before time and possession of the residential units had been handed over to the respective owners before the year 2007 and therefore, it was requested that the claim u/s 80IB(10) should not be withdrawn.
2.1 However, the Assessing Officer did not accept the contention of the assessee. He observed from the evidences placed on record that in respect of the buildings/villas not covered by the completion certificate, that the delay in obtaining the necessary completion certificate from the local authority seemed to be attributable to the assessee itself since the assessee had moved applications for various NOCs in the fag end of the month of March, 2008. Since the condition envisaged u/s 80IB(10)(a) in terms of Explanation 2 below the said clause was not fulfilled in the case of the project in question, the Assessing Officer disallowed assessee's claim of deduction u/s 80IB(10) amounting to Rs.4,73,50,870/-.
2.2 The Assessing Officer proceeded further to observe that the saleable area as per agreements was exceeding the limit of 1500 sq.ft. 4 prescribed u/s 80IB(10)(c) for the built up area of such units. On sample basis, he found that the saleable area of villa no. 5 as per sale agreement consisted of the following components:
(i) Built up area 1482 sq.ft.
(ii) Adjacent terrace 165 sq.ft.
(iii) Top terrace 740 sq.ft.
(iv) Garden area 1700 sq.ft.
2.3 The Assessing Officer observed that while showing built up
area of 1482 sq.ft. of villa no. 5, the assessee had not included the adjacent terrace area of 165 sq.ft. and entrance porch area of 28 sq.ft. In the eye of the Assessing Officer, both adjacent terrace area and entrance porch area was includible in the built up area as per definition of 'built up area' given in the Act. With regard to the objection of the assessee regarding inclusion of the adjacent terrace area and entrance porch area in the total built up area, the Assessing Officer observed that the adjacent terrace area is the area adjacent to two rooms on the first floor and even has its entrance from one of the rooms and was therefore, clearly includible as balcony / projection. Similarly, the entrance porch area was the cemented area leading to the entrance door of the villa and is arrived upon after climbing couple of stairs. Therefore, according to the Assessing Officer, there was no justification for excluding this area from the built up area. Since, with the inclusion of adjacent terrace area and entrance porch area, the total built up area of villa no. 5 i.e. 1675 sq.ft., exceeded the prescribed limit of 1500 sq.ft. and thus violated the condition prescribed u/s.80IB(10), the AO held the project to be ineligible for deduction u/s.80IB(10).
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3. Before the CIT(A) it was submitted that by moving all the applications before 31.3.2008 for obtaining the completion certificates, the assessee has made his part of compliance for obtaining the completion certificate. Therefore, the issue of obtaining the completion certificate from the local authority is no more than a venial breach of the condition provided for in-section 80IB(10) and the assessee cannot be penalized for the same. The assessee contended that if the project is otherwise complete, the mere non-issue of completion certificate should not be a stumbling block. It was submitted that as per Development Control Rules applicable in Pune Municipal Corporation area, the local authority does not issue any completion certificate. Under these circumstances, the compliance of section 80IB(10) is rendered impossible. It was submitted that the completion certificate from the supervising architect should be considered as sufficient evidence proving the completion of the project compliance. It was submitted that the units have already been occupied by the purchasers as is evident from the fact that the possession has been given to them before 31-3-2008. This factually confirms the position that the units are completed before 31-3- 2008 thereby substantively complying with the condition of section 80IB(10) in so far as completion is concerned.
3.1 With regard to the dispute in respect to the built up area, it was submitted that the Assessing Officer has not negated or rebutted any of the assessee's contention save for an unsubstantiated statement that the terrace area is includible in balcony or projection. It was contended that the housing project in question was commenced on 27-8-2002 when the 6 statute was silent on the definition of built up area and .therefore, one shall have to go by what is commonly understood as built up area and not by what is the amended position of law. It was further contended that a terrace can neither be a projection nor balcony as understood in common parlance or otherwise. According to the assessee, a balcony is a covered area and projection is a protrusion with support only at one end. It was submitted that terrace is neither a covered area nor it is a protrusion and therefore, the inclusion of terrace area or porch area in the built up area is neither justified in fact nor in law. It was accordingly submitted that the Assessing Officer has erred in disallowing the claim of deduction u/s 80IB(10) on the ground that built up area of certain units in the projects exceeded the prescribed limit of 1500 sq.ft. 3.2 Without prejudice to the above, it was contended that a pro rata claim u/s.80IB(10) with reference to the eligible residential portion, being the area of units below 1500 sq.ft. of built up area, of the housing project should be allowed.
4. However, the Ld. CIT(A) was also not satisfied with the explanation given by the assessee and upheld the action of the AO in disallowing the claim of deduction u/s.80IB(10) by holding as under :
"3.11. The submission has been considered. The appellant has argued that if the project is otherwise complete, the mere issue of completion certificate should not be a stumbling block. The question arises as to who will decide that if the project is otherwise complete or not. The mere fact of moving applications for obtaining various NOCs before the expiry date or giving possession of units to some of the purchasers, cannot conclusively prove that the project has been completed before 31-3-2008. Without knowing the fate of the applications moved by the 7 assessee, nothing can be said in this regard. In fact, while prescribing condition for completion of project within the prescribed period, the legislature was well aware of the potential question as to who will decide whether the project is complete or not, A certificate issued by the supervising architect / engineer of the assessee could amount only to self certification which cannot have sufficient strength as evidence for completion of the project. It is only in order to rule out any controversy in this regard that the legislature laid down that the date of completion of the housing project is to be taken to be the date on which the completion certificate in respect of such project is issued by the local authority. In my considered view, reliance on any fact/evidence other than the completion certificate issued by the local authority can be placed only in utter disregard of the statutory mandate and therefore, the same is not permissible. In this view of the matter, no one can be allowed to dilute the importance of obtaining completion certificate from local authority as an evidence regarding date of completion of project simply by stating that the issue of obtaining completion certificate from the local authority is not more than a venial breach of condition provided for in section 80IB(10). There is no denying of the fact that the assessee has failed to obtain the mandatory completion certificate from the local authority to the effect that the project was completed before 31-3-2008 and therefore, the condition prescribed u/s 80IB(10) remains unfulfilled. Under these circumstances, the action of the Assessing Officer in rejecting assessee's claim of deduction u/s 80IB(10) is upheld.
3.12. With regard to the dispute whether built up area shall include terrace area or not I am inclined to subscribe to the view of the Assessing Officer that the terrace area is includible in the built up area. Firstly, in my view, the terrace area falls under the category of 'projection' and, as per the clarificatory amendment, has to be considered part of the built up area. Secondly, assuming though not admitting that a projection is not to be considered as part of the built up area as per pre-amendment position of law, one shall have to go, as also advocated by the appellant, by what is commonly understood as built up area. As per common understanding also, the built up area of a flat consists of the covered area as well as the terrace area. Therefore, the contention of the appellant that the built up area should be considered without including the terrace area, having no substance, does not merit acceptance and is rejected".
4.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds of appeal : 8
"1. The learned CIT (A) has erred on facts and in law in confirming a disallowance of the claim u/s 80IB (10) of Rs.4,73,50,870/- on the grounds that - (a) completion certificate was not obtained for the/ entire project and that (b) the built up area of some residential unit was in excess of 1500 sq. ft. when the area of adjacent terrace and entrance porch was included.
2. Without prejudice to the above, the learned CIT (A) has erred on facts and in law in not allowing a pro-rata claim u/s 80IB(10) with reference to the eligible portion of the housing project by observing that the provisions in law do not support a pro-rata claim."
5. The Ld. Counsel for the assessee while arguing on the issue of completion certificate submitted that the application for occupancy is filed on 03-03-2008. There is no deficiency pointed out by the local authority. As such after 21 days, the occupancy certificate is deemed to be granted as per Rule 7.7 of the DC Rules. Even Fire NOC which finds significant mention in the DC Rules (7.7.2) has been obtained much before 31st March, 2008. Such an NOC not received by the assessee in the case of Satish Bora and Associates (ITA no.713/PN/2010) was considered minor deviation to be ignored by the Hon Pune Tribunal. The fact of completion of project has not been doubted or challenged by either the AO or the CIT(A). The Survey party which visited the project site on 02-06-2008 had only one objection that of non availability of completion certificate. The Survey party had no issue with the completion of the project or its occupation thereof by the flat purchasers. There is no dispute about the possession prior to 31-03-2008. The MSEB bills of individual flat purchasers are also in place indicating the possession thereof. It is the Explanation to Section 80IB(10)(a) which speaks of the completion certificate. This is a machinery provision that cannot override the main section. What is relevant is completion and not 9 the completion certificate. The assessee placed reliance on the following decisions:
1. CIT Vs.Tarnetar Corp.(Guj.) ITA no. 1241 of 2011
2. City Development Corp. Vs ACIT (Pune) ITA no. 1489/PN/2009
3. Global Reality Vs ITO (Indore) reported in 134 ITD 407
4. Runwal Multi Housing Pvt. Ltd. V ACIT (Pune) ITA No.l015/PN/2011
5. CIT V Sanghvi & Doshi Enterprises reported in 81 DTR (Mad.) 75
6. Manan Corporation Vs. ACIT Tax Appeal No.1053/2011 Gujarat High Court
7. DCIT Vs. Magarpatta Township Development & Construction Co. (Pune) ITA No.822/PN/2011 and CO No.04/PN/2012 order dt. 18-09-2012
8. D.S. Kulkarni Developers Ltd. Vs. ACIT vide ITA No.1428/ & 1429/PN/2008 order dt. 08-08-2012 5.1 He also relied on the decision of the Hon'ble Madras High Court in the case of CIT Vs. Jain Housing and Construction Ltd. reported in 82 DTR (mad.) 135 according to which prior to amendment of section80IB(10) w.e.f. 01-04-2005 there was no obligation on the part of the assessee to file completion certificate.
6. So far as the issue relating to built up area he submitted that various Benches of the Tribunal have held that amendments made w.e.f. 01-04-2005 do not apply to projects approved prior to 31-03-2005. Such clause (1) of section 80IB(4) which defines built up area does not apply to the case of the assessee. For this proposition he relied on the decision of the Mumbai Bench of the Tribunal in the case of Saroj Sales organizations Vs. ITO Mumbai reported in1 15 TTJ 485 and the decision 10 of Hon'ble Bombay High Court in the case of Brahma Associates reported in 333 ITR 289. Referring to the decision of the Pune Bench of the Tribunal in the case of ITO Vs. Prime Properties vide ITA Nos.887 to 889/PN/2010 order dated 26-04-2012 for A.Ys. 2003-04 to 2005-06 and the decision in the case of Brahma Builders Vs. DCIT Vide ITA No.1647 and 649/PN/2009 order dated 15-05-2012 for A.Y. 2004-05 and 2005-06 he submitted that it has been held that in respect of projects approved prior to 01-04-2005 Balcony/Terrace cannot be included in the built up area of the units. He accordingly submitted that the built up area of the units in the case of the assessee being less than 1500 sq.ft. therefore, the assessee is entitled to the benefit of deduction u/s.80IB(10).
7. The Ld. Departmental Representative on the other hand heavily relied on the order of the Assessing Officer and the CIT(A). Referring to the decision of Hyderabad Bench of the Tribunal in the case of M/s.Sainath Estates Pvt. Ltd Hyderabad Vs. DCIT Vide ITA No.299 to 300/Hyd/2012 order dated 08-02-2013 for A.Ys 2005-06 and 2006-07 he submitted that under identical circumstances the Tribunal had denied the claim of deduction u/s.80IB(10) although an application was made for occupancy certificate by the licensed architect. The Tribunal in the said decision has distinguished the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Tarnetar Corporation reported in 210 Taxmann.com
206. He submitted that the law is very clear on this issue. The local authority has to verify the violations, if any, before issuing the completion certificate. There is clear disregard to the provisions by the 11 assessee in the instant case. Further, the assessee has applied for completion certificate prior to obtaining completion of sewerage and water connection, therefore, the assessee in the instant case is not entitled to deduction u/s.80IB(10). He also relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Brahma Associates vide ITA No.1194/2010.
8. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee AOP is engaged in the business of development and sale of a residential project called "LA SALLETE". Further, there is also no dispute to the fact that the date of the commencement of the project is 27-08-2002 and thus has been approved by the local authority before 01-04-2004. We find the Assessing Officer disallowed the claim of deduction u/s.80IB(10) amounting to Rs.4,73,58,870/- on the ground that
(a) the completion certificate was not obtained for the entire project before 31-03-2008 and (b) the built up area of some of the residential units was in excess of 1500 sq.ft. after including the adjacent terrace and entrance porch. We find from Page No.24 of the Paper Book that the assessee through his architect has applied to the PMC for occupancy certificate on 03-03-2008 which has been duly acknowledged by the PMC. Even the Assessing Officer vide his letter dated 18-02-2013 addressed to the CIT, ITAT, Pune, a copy of which has been filed before the Bench, also mentions the copy of the completion certification application of the assessee is dated 03-03-2008. The Assessing Officer's 12 letter also contain the work order of drainage which is dated 28-03-2008. The assessee had applied for such certificate on 16-03-2008 vide receipt No.878, a copy of which is placed at Paper Book Page No.25. Similarly the Chief Fire Officer of PMC has issued the NOC on 17-04-2007 a copy of which is annexed to the letter sent by the Assessing Officer to the CIT, ITAT and a copy of which is filed before the Bench. It is thus clear that the assessee has applied to the PMC for issue of completion certificate on 03-03-2008 which is before 31-03-2008. We further find from Para 4.3 of the assessment order that the assessee in its submission dated 17-10-2008 has submitted as under :
"It is true that the project was commenced prior to 01-04-2004 and therefore is required to be completed by 31-03-2008 as contemplated u/s.80IB(10). It is also true that the section envisages the completion certificate to be evidenced by the completion certificate issued by the Local Authorities. In so far as this project is concerned, the fact that the project has been completed on the site is not disputed. However, as it has been rightly observed in the course of survey u/s.133A, the Local Authority has not issued the completion certificate. In this connection, we have already provided information on the reasons for non-availability of completion certificate as the Local Authority was under a mandate from the State Government to stay the issue of completion certificate.
As such, though we have completed the project and have done everything that needs to be done at our end, we cannot be faulted for the Local Authorities in-action which too is legally constrained".
8.1 We further find during the course of survey the assessee in his reply to Question No. 9 had replied as under which has been reproduced by the Assessing Officer in the body of the assessment order in Para 4.1 and which reads as under :
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"Yes I have already completed the project before time and the possession of the residential units has been handed over to the respective owner before February, 2007. However, the Local Authority (PMC) has not issued the completion certificate as I am told, they are under Instruction from the State Government, not to issue the Completion Certificate because of some pending ULC matter. I can submit the possession receipts alongwith their respective electricity bill paid by them, for the last two years as evidence that the project is completed before time. Hence, it is requested that the claim u/s.80IB(10) should not be withdrawn".
8.2 From the above and on the basis of the various documents filed by the assessee in the Paper Book we find the assessee has handed over the residential units to the respective owners before February, 2007. This fact is also not disputed by the Revenue authorities. We find the Hon'ble Gujarat High Court in the case of CIT Vs. Tarnetar Corporation vide Tax Appeal No.1241/2011 order dated 12-09-2012 has observed as under :
"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 (1) to section 80IB(10) 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 would not vitiate the very purpose for which deduction was being made available".
8.3 We find the Pune Bench of the Tribunal in the case of Runwal Multi Housing Pvt. Ltd. Vs. ACIT vide ITA Nos.1015 to 1017/PN/2011 order dated 21-11-2012 for A.Ys. 2003-04 to 2005-06 has observed as under :
"18. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the assessee obtained the permission 14 for construction of buildings A, B, C, D, E, F and 17 row houses on 12-12- 2001. The assessee constructed building Nos. A,C, D and E and the 17 row houses and dropped the idea of construction of Building Nos. B and F being uneconomical and had not submitted any revised plan to PMC. Although the assessee applied for completion certificate on 22-01-2004, the same was not received by the assessee before 31-03-2008. It is the case of the revenue that deduction u/s.80IB(10) cannot be availed of by the assessee since it has not constructed all the six buildings and 17 row houses for which permission was granted and completion certificate was not obtained before 31-03-2008. It is the submission of the learned counsel for the assessee that it has constructed Building Nos. A, C, D and E and 17 row houses and Building Nos. B & F being not feasible was not constructed and the assessee has dropped the idea of construction of the same. It is also the submission of the learned counsel for the assessee that it has applied for completion certificate on 22-01-2004 and since the PMC has a legal problem, which is subjudice, the PMC is not able to grant the completion certificate. It is also the submission of the learned counsel for the assessee that Corporation has started levying municipal taxes, the flat owners have started paying electricity bills and the project on which Building Nos. A, C, D and E and 17 row houses are constructed are on a plot of area of more than 1 acre. Therefore, the assessee is entitled to deduction u/s.80IB(10) on the 4 buildings and 17 row houses which it has completed.
19. We find the Managing Director Shri Pradeep Amrutlal Runwal in his statement recorded during the course of survey u/s.133A has replied to Question Nos. 7, 8, 9, 10 & 12 as under :
"Q.7. Have you received the Completion Certificate from PMC for Runwal Paradise Project ?
Ans. The Completion Certificate for Row Houses 7 to 18 was received. However for other buildings on Runwal Paradise Project we have not received the Completion Certificate as on today though we have applied for the same.
Q.8. Whether the construction is completed in respect of all the buildings as per revised plan dated 10-01-2003, Commencement Certificate No.1372?
Ans. Construction is completed before 31st March 2008 in the entire scheme Runwal Paradise to the extent that we want to build and enjoy the FSI of the project and the area used so is above 1 acre.
Q.9. If the construction is completed before 31st March 2008, why you have not received Completion Certificate from PMC for all buildings in Runwal Paradise Project as on today?
Ans. The Completion Certificate are deemed received since we have applied for the same, but since the matter is subjudice the PMC is not able to grant the Completion Certificate. The very local authority which is responsible for granting the Completion Certificate has a legal problem which is subjudice.
Q.10. As stated answering the Question No.9, please state when you have applied for Completion Certificate in respect of Runwal Paradise Project and also submit the relevant applications?15
Ans. We have applied for Completion Certificate for the entire project. We are submitting herewith the application for Completion Certificate dated 22- 01-2004vide Commencement Certificate No.1372 dated 10-01-2002 as per Annexure "C". The copies of any further application, if any, we will submit the same on 2nd June 2008.
Q.12. As per revised building layout sanctioned on 10-01-2003, you got approval for construction of buildings A to F and row houses 1 to 18 in Runwal paradise Project. However as seen from the list of Flat Holders submitted by you as Annexure "D" and also the inspection carried out at the site of Runwal Paradise located at S.No.981, at Paud Road, Kothrud, Pune, the construction of buildings B and F is yet to be completed. Please give your comment?
Ans. Yes, I agree that the construction of buildings B and F have not been carried out with a perfect understanding in the mind that we wanted to give up these two wings. In case these wings would have been constructed they would have been very shabby and been place for non-hygiene in the entire project. Looking at the merits and demerits these wings were not constructed. Further, building just one floor was economically unviable".
20. So far as the first objection of the revenue that completion certificate from PMC has not been obtained by the assessee before 31-03-2008 we find the assessee through his architect vide application dated 22-01-2004 has applied to PMC for occupancy certificate. (Page 119 of the Paper Book). The submission of the learned counsel for the assessee that the PMC has not yet rejected the said application till date could not be controverted by the Revenue. The further submission of the learned counsel for the assessee that all the flat owners/row house owners have been given possession between 26- 10-2002 to 15-01-2007, i.e.prior to 31-03-2008 could not be controverted by the learned DR (Page 55 to 63 of the Paper Book). The learned DR also could not controvert the submission of the learned counsel for the assessee that PMC has started levying municipal taxes and the Electricity Meters are in the name of the flat owners who have started paying electricity bills. 20.1 We find the Pune Bench of the Tribunal in the case of City Development Corporation Vs. ACIT - ITA No. 57 and 1287/PN/2010 order dated 27-09-2012 has held as under :
"12. We have carefully considered the rival submissions. Quite clearly, the dispute is with regard to the completion certificate of building 'E' having been issued by the local authority i.e. Pune Municipal corporation, on 5-5-2008. Sub-clause (i) of clause (a) to section 80-IB(10) requires that the construction of the project in question is to be completed on or before 31-3-2008. Clause
(ii) of Explanation below section 80-IB(10)(a) prescribes that the date of completion of construction of 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. In the present case, it has been issued on 5-5-2008 and hence the case set up by the Revenue that the completion is beyond the mandated date of 31-3-2008. In this background, we find that there is no dispute that the assessee applied for obtaining the completion certificate in respect of building 'E' on 12-3-2008. From the discussion made by the Assessing Officer in the assessment order, wherein the factual assertions of the assessee have been reproduced, it is quite evident that the assessee asserted that before 31-3-2008, the construction of building was complete in all respects; that electrical connection was provided to each flat owner; road was complete; water and drainage connection was available; sewerage system was operating; club house was functional; etc. The assessee also 16 pointed out that the local authority had also initiated property tax assessments for each of the flats and the same demonstrated that all the flats in the building were complete. In fact, in para 6.9 of the assessment order, the Assessing Officer noticed that "the facts that the flats were completed and possession given will not come to the rescue of the assessee". The aforesaid finding of the Assessing Officer supports the assertion made by the assessee that factually speaking construction of flats in building 'E' was also complete and possession handed over to the actual user/customers prior to 31-3-2008.
Pertinently, on the basis of the architect's certificate confirming completion of construction of building, the assessee applied for the completion certificate to the Pune Municipal Corporation on 12-3-2008. It has been pointed out before us that the local authority i.e. Pune Municipal Corporation did not raise any objection with regard to assessee's application and the certificate for building 'E' was thereafter issued on 5-5-2008. The moot question is as to whether in such a situation can it be said that the assessee's project did not comply with the condition prescribed in sub-clause (i) of clause (a) to section 80-IB(10) of the Act whereby the construction was to be completed on or before 31-3-2008. Somewhat similar situation was considered by our co- ordinate Bench in the case of Hindustan Samutha Awas Ltd. (supra) wherein also on the strength of architect's certificate, an application for obtaining completion certificate was moved to the local authority on 25-2-2008 but in actuality the completion certificate was issued by the local authority on 10- 10-2008. The Tribunal noticed that the delay in issuing completion certificate was not attributable to the assessee as no objections were raised by the local authority. The Tribunal after considering its earlier decisions in the case of M/s. Satish Bohra & Associates Vs. ACIT in ITA No. 713 and 714/PN/2010 for A.Y. 2004-05 and 2005-06 dated 7-1-2011; M/s. D.K. Constructions Vs. ITO ITA No. 243/PN/2010 for A.Y. 2006-07; dated 6-12-2010 and Sanghvi and Doshi Enterprises Vs. ITO and others ITA No. 259 to 263/MDS/2010 dated 19-5- 2011 for A.Y. 2005-06 and 2006-07 (TM) has concluded as follows: "From the above, once this is clear that the date that appears on the Architect's Completion certificate filed before the local authority is relevant one. In the instant case, the said date is 25- 3-2008 and the assessee filed requisite form before the local authorities intimating the completion of the project. The said certificate/intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. In such circumstances, in our opinion, the delay in obtaining the completion certificate on 10-10-2008 is certainly not attributable to the assessee and obtaining the said certificate before 31-3-2008 is beyond the control of the assessee. Assessee's job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite forms together with the completion certificate given by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections for accepted by issue of said completion certificate till 10-10-2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80-IB(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal are allowed"
13. The aforesaid decision of the Tribunal is clearly applicable to the facts of the present case also. In the present case, the completion certificate was applied for before 31-3-2008 i.e. on 12-3-2008. It is undisputable that the application of the assessee has been approved by the local authority without raising any amendment or objection, as has been asserted by the assessee all along and the delayed issuance of the completion certificate by the local authority on 5-5-2008, albeit after the mandated date of 31-3-2008 cannot be 17 attributed to the assessee. In this background of the matter, we therefore, find ample force in the plea of the assessee that denial of deduction u/s 80-IB(10) on such score is uncalled for. In conclusion therefore, in the instant factual background, we hold that the assessee has complied with the condition of completing the construction of the project within the mandated date of 31-3- 2008 even with regard to building 'E', following the parity of the reasoning lid down in the case of Hindustan Samutha Awas Ltd. (supra). .
14. Sub-clause (i) of clause (a) to section 80-IB(10) of the Act requires that the undertaking, developing and building a housing project "completes such construction" or before 31-3-2008. In the present case, assessee has factually asserted right from the stage of assessment proceedings, that the construction of building 'E' was complete in all respects as per sanctioned plan and all the flats were handed over to the actual users/customers prior to 31-3-2008. In the background of the aforesaid factual position which has remained uncontroverted, in our view, on a plain reading of sub-clause (i) of clause (a) to section 80-IB(10) the condition prescribed therein is fulfilled., inasmuch as the construction of building 'E' was complete before 31-3-2008. However, on the reading of clause (ii) of the Explanation below sec. 80-IB(10)(a) of the Act, it emerges that the completion of construction of a housing project is to be taken to be the date on which completion certificate is issued by the local authority, which in the present case is issued on 5-5-2008 i.e. beyond the stipulated date of 31-3-2008. The moot question is in case the condition of completion construction contained in the substantive section 80-0IB(10)(a)(i) is factually found to be complied with, can the contents of the Explanation clause (ii) thereof, alter the situation? Can an Explanation appended to a section, enlarge the scope of the main section so as to make it more onerous for a tax- payer? Be that as it may, we do not dwell on this aspect any further, as the assessee has been found to be eligible for necessary relief because the condition prescribed in section 80-IB(10)(a)(i) of the Act has been complied with in view of the stated precedents. We therefore, set aside the order of the CIT(A) on this aspect and hold that the assessee cannot be denied the claim of deduction u/s 80-IB(10) on the strength of non-issuance of the completion certificate for building 'E' by the Pune Municipal Corporation before 31-3- 2008, having regard to the facts and circumstances of the case."
20.2 We find the Hon'ble Gujarat High court in the case of CIT Vs. Tarnetar Corporation (Supra) has held as under :
"With respect to the second contention, we may record that the contention of the Revenue is that the assessee did not complete the housing project within the statutory time frame. Under sub-clause (i) of clause (a) of section 80IB(10), the assessee since had got approval for the housing projects from the local authority before Ist April 2004 was required to complete the construction latest by 31st March 2008. Relying on explanation
(ii) to clause (i), Revenue contends that since BU permission was granted after March 2008, the construction must be deemed to have been completed after such date. Explanation (ii) reads as under :
(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.
CIT (Appeals) as well as the Tribunal after detailed discussion came to the conclusion that such requirement was not mandatory in nature. In the present case, the assessee had completed the construction well before the last 18 date, namely 31st March 2008 and had also sold several units which was completed and actually occupied, and it also applied for BU permission to the local authority. The local authority, however, for technical reasons, at one stage rejected such application in the year 2006 and thereafter upon revised efforts from the assessee granted the same by order dated 19th March 2009.
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 on 15-02-2006 which was rejected on 1-07-
06. Several residential units were occupied since the same was done without necessary permission. The assessee had done without necessary permission. The assessee had also paid penalty and got such occupation regularised. Several tenements were sold long before the last date.
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 80IB(10) 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 would not vitiate the very purpose for which deduction was being made available.
In the present 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 that view of the matter, granting benefit of deduction cannot be held to be illegal.
In the result, the Tax Appeal is dismissed".
20.3. We find the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. Vs. ITO vide ITA Nos 945 to 950/PN/2010 order dated 30-08-2011 has held as under :
"7. We have considered the above view points of the parties in disputed. We find that it is a fact that the assessee through its architect had filed application with the AMC for issuance of occupancy certificate on 25-3-2008. Requisite fee was also paid by the assessee in this regard. AMC did not raise any objection to the said completion certificate of the Architect. The occupancy certificate dt.10-10-2008 has been issued by the AMC only on the basis of the said application dt.25-3-2008. It is also an undisputed fact that issuance of occupancy certificate is the prerogative of the local authority i.e. AMC and in this regard, the assessee has no control and it is beyond the power of the assessee to make the AMC issue the said Completion/Occupancy certificate before 31.3.2008. What was under the power and control of the assessee was only to move the AMC for completion certificate fulfilling all the requirements with the AMC for issuance of occupancy certificate, which 19 the assessee has done in the present case. Thus, the delay in issuing the occupancy certificate cannot be attributed on the part of the assessee to deny the claimed deduction u/s 80IB(10) of the act on the basis that the project was not completed by 31-3-2008, especially when there is no objection raised by the AMC regarding deviation in the construction of the project approved by the AMC.
8. We have gone through the orders cited by the assessee's representative and find relevant paragraphs are required to be extracted for completion of the order. They are as follows.
A. Extract from the decision of the Tribunal in the case of M/s. Satish Bora & Associates vide ITA Nos. 713 & 714/pn/2010 "19. .......
1. In the case of PMC, the completion certificate in prescribed form issued by the licensed architect etc. who has supervised the construction is furnished with four sets of completion plan under Rule 7.6 of the DC Rules of the PMC. Thereafter PMC is required to return one of the sets duly certified as Completion Plan to the owner along with the issue of full Occupancy Certificate after inspection of the work under Rule 7.7 of the DC Rules. Since Explation (ii) to Section 80IB(10)(a) of the I.T. Act requires Completion Certificate issued by the local authority to be taken as the date of Completion of the Construction, a general understanding in our view is that a Completion Certificate which is issued by the local authority after conducting inspections of construction by it. In case of PMC, it is only Occupancy Certificate which is issued alongwith certified completion plan after inspection of the construction by it, we have treated the date of issuance of such Occupancy Certificate alongwith Certified Completion plan as the date of Completion Certificate of the construction for the requirement of Explanation (ii) to Section 80IB(10)(a) of the I.T. Act.
2. Since infact PMC do not issue Occupancy Certificate generally in time and with this understanding the Legislature have also introduced a deeming provision of 21 days to put constraint upon PMC, we after detailed deliberation in precedign paragraphs have come to a conclusion that in case of small objections of PMC raised after expiry of deeming period of 21 days under Rule 7.7 of DC Rules under PMC, the date when the applicant acquired deeming sanction will be treated as the date of Completion (occupancy) Certificate to meet out the requirement of Explanation (ii) to Section 80IB (10)(a) of the Act. We have already discussed hereinabove what would be the small objections. In brief those objections which do not affect the main project and are generally temporary constructions.
20. We thus while setting aside orders of the authorities below direct the A.O to allow the claimed deduction u/s. 80IB(10) of the I.T. Act 1961 in the assessment years under consideration treating the required date of completion of construction of the housing project as the date when above discussed deeming provision period of 21 days expired i.e. 20.11.20."20
B. Extract from the decision of the Tribunal in the case of Sanghvi & Doshi Enterprise vide ITA NO. 259 TO 263/Mds/2010 "24. Next objection of the Assessing Officer is that the project had to be completed on or before 31.03.2008 and since the assessee did not furnish the completion certificate, the assessee is not eligible for deduction. The objection is to the effect that the completion certificate from CMDA is dated 13.6.2008, i.e. three months after the due date for completing the project. In this connection, it has to be noted that the completion certificate is to be issued by the local authority. The question is, whether CMDA can be considered to be a local authority or not. This issue had come up before the Chennai Bench of the Tribunal in the case of Jain Housing & Constructions Ltd. in ITA No.1369/Mds/2009 dated 5.2.2010. In that case, assessee was denied deduction in the absence of completion certificate by the CMDA but completion certificate issued by the Corporation of Chennai was placed on record. The Tribunal in paragraph 3.5 of its order stated that the project layout plan may be required to be approved by the CMDA but as far as the construction of the building is concerned, the local authority, i.e. the Corporation of Chennai is the appropriate authority to regulate the construction as per the building bye-laws and sanction plans. When it is not disputed that the Corporation is the local authority, certificate issued by it cannot be disregarded. The assessee has placed on record the completion certificate issued by the Corporation by way of additional evidence. Since the allowability of the entire deduction depends on all the conditions being fulfilled deduction depends on all the conditions being fulfilled, we admit this additional evidence. The certificate clearly mentions that the building was inspected on 23.11.2007 and that it is found to be satisfied the building permit conditions. We may also mentions that the role of CMDA is quite distinct from that of the Corporation. CMDA looks at the plans from the perspective of the development and urbanisation of the city as a whole. On the other hand, the role of the Corporation while issuing completion certificate is to see that the unit is habitable in all respects like civic amenities and so on. Even for the sake of argument if the CMDA certificate is to be considered, then in that case, the assessee did apply for the completion certificate to CMDA certificate on 13.3.2006. It is a different matter that CMDA raised certain objections and the matter went upto the Hon'ble High Court also. However, the fact remains that the project was completed much before the due date, may be with certain defects. Also, it has to be noted that the CMDA certificate is dated 13.6.2008, i.e. only two months and thirteen days beyond the due date. It is inconceivable that the type of defects which were pointed out by the CMDA could have been rectified in such a short period. Be that as it may, the Hon'ble High Court also ratified the deviations and directed the CMDA to consider the explanation of the assessee. All these facts go to point that the project was indeed completed before the 31.3.2008. Thus, this ground also has no force to deny the assessee the impugned deduction. "
C Extract from the decision of the Tribunal in the case of M/s.
D.K.Construction vide ITA 243/Ind/2010 21 "7. We have considered the rival contentions, carefully gone through the orders of the authorities below and relevant material placed on record towards which our attention was invited during the course of hearing by the ld. Authorized Representative and the ld. Senior D.R. Provisions of Section 80IB allows claim for deduction in respect of housing project, which has been approved prior to 1.4.2004 and also completed before 31.3.2008. During the course of assessment with regard to assessee's claim of deduction u/s 80IB in respect of its D.K.Honey Homes Project, the AO has asked the assessee to furnish the certificate of completion of this project M/s. D.K.Honey Homes. The AO also directly called information from the local authorities by issuing summons u/s.133(6) and a letter was issued by the competent authority dated 11th November, 2008, confirming that no completion certificate has been issued by this office. Accordingly, the assessee's claim for deduction u/s 80-IB was declined. Section 80IB clearly defines the date of completion as "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 Authorities", it means Local Authorities is competent to certify the date of completion of Housing Project. The date of issue of such letter by the Local authorities is not so crucial but it should have clearly mentioned the date of completion of project. When the Project is completed on 31.3.2008 and the assessee has informed regarding such completion, the Local Authorities may take its own time for issue of certificate, which may be even after 6-7 months, but the letter so issued by the Local Authorities should clearly mention the date of completion of such project. Merely because such certificate is issued after gap of 8- 9 months or even one year, will not adversely affect the assessee if it has mentioned clearly the date of completion of project prior to 31.3.2008. Once the letter for completion of project is given by the assessee to the Local Authority, it is the duty of the Local Authority to verify physically the Projects stated to be completed from its own parameters. This process may take time and, therefore, the date of issue of letter is not so crucial to determine the assessee's eligibility for claim of deduction as per Explanation (ii) of Section 80IB(10)(a) of the Income-tax Act, 1961. What is crucial is date mentioned in the letter so issued certifying completion of the Project. Thus, the date of issue of letter is not important, but the date mentioned in the letter certifying completion of project is important. We, therefore, do not find may merit in the observation of the lower authorities to the effect that the date of completion shall be taken the date on which certificate is physically issued by the Local Authorities."
9. From the above, one this is clear that the date that appear on the Architect's Completion certificate filed before the local authority is a relevant one. In the instant case, the said date is 25-3-2008 and the assessee filed requisite form before the local authorities intimating the completion of the project. The said certificate/ intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. In such circumstances, in our opinion, the delay in obtaining the completion 22 certificate on 10-10-2008 is certainly not attributable to the assessee and obtaining the said certificate before 31.3.2008 is beyond the control of the assessee. Assessee's job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite Forms together with the Completion certificate given by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections nor accepted by issue of said completion certificate till 10.10.2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80IA(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal are allowed. 20.4. In view of the above decisions we are of the considered opinion that since the assessee has done whatever possible on his part, i.e. duly applied to PMC for issue of completion certificate, handed over possession of the flats/row houses to the respective buyers, PMC has started levying municipal taxes and electricity bills paid by respective owners, therefore, deduction u/s.80IB(10) under the facts and circumstances of the case cannot be denied to the assessee for non-receipt of completion certificate from PMC before 31- 03-2008 which was beyond the control of the assessee. This view of ours is fortified by our decision in the case of M/s. Ramsukh Properties Vs. DCIT vide ITA No.84/PN/2011 order dated 25-07-2012 for A.Y. 2007-08 (wherein both of us are parties) wherein it has been held as under:
"6. After going through rival submissions and material on record, we find that the assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not complete within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act, i.e., commencement of project, area of land of project, etc. Assessee's housing project was approved vide commencement certificate No.3837/04 dated 13.01.2005 out of which completion certificate was obtained and furnished before the Assessing Officer for 173 out of 205 flats. Same was rejected by the Assessing Officer and confirmed by the CIT(A). The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s.80IB(10) could not be granted to assessee on incomplete construction at relevant point of time. Regarding proportionate deduction in respect of 173 of 205 flats of project completed as recognized by local authority, i.e., PMC in its completion certificate No.BCO/03/01333 dated 31.03.2008, the Ld. Authorised Representative heavily relied on decision of Bengal Ambuja Housing Development Ltd. (supra), Brigade Enterprises P. Ltd. (supra), AIR Developer (supra), Sheth Developers (supra) and also G.V.Corporation (supra), wherein deduction u/s.80IB(10) was denied as size of some of the residential units exceeded prescribed limit as laid down u/s.80IB(10) of the Act. Above mentioned decisions are applicable in their own sphere, i.e. on point of excess area of some of the flats which hold good in its own sphere. However, in case before us, deduction u/s.80IB(10) of the Act has been rejected on the ground that condition of completion of project before the due date i.e., 31.03.2008 as laid down u/s.80IB(10)(c) of the Act, has not been complied by assessee which is basic condition for allowability of deduction u/s.80IB(10) of the Act. We find that in case of Johar Hassan Zojwalla (supra), wherein condition of completion as laid down in section 80IB(10)(a) could not be complied with because of a stay being granted by MRTP Court. Thus fault of incompletion 23 of construction was not attributable to assessee. In case such a contingency emerges which makes the compliance with provision impossible, then benefit bestowed on an assessee cannot be completely denied. Such liberal interpretation should be used in favour of assessee when he is incapacitated in completing project in time for the reasons beyond his control. In case before us, as stated on behalf of assessee, that assessee submitted certain modifications/rectifications for top floors of building. The said modification/rectification could not be completed as local authority could not approve the modification as their files have been taken over by concern intelligence department for investigation of violation of urban land ceiling Act applicable to land in question at relevant point of time. This fact has not been disputed on behalf of revenue. Thus, assessee was prevented by sufficient reasonable cause which compelled the impossibility on part of the assessee to have completion certificate in time. It is settled legal position that the law always give remedy and the law does wrong to no one. We agree to proposition put forward by Ld. Departmental Representative that plain reading of section 80IB(10) of the Act suggests about only completion of construction and no adjective should be used alongwith the word completion.
This strict interpretation should be given in normal circumstances. However, in case before us, assessee was prevented by reasonable cause to complete construction in time due to intervention of CID action on account of violation of provisions of Urban Land Ceiling Act applicable to land in question. Assessee was incapacitated to complete the same in time due to reasons beyond his control. Assessee should not suffer for same. The revision of plan is vested right of assessee which cannot be taken away by strict provisions of statute. The taxing statute granting incentives for promotion of growth and development should be construed liberally and that provision for promoting economic growth has to be interpreted liberally. At the same time, restriction thereon too has to be construed strictly so as to advance the object of provision and not to frustrate the same. The provisions of taxing statute should be construed harmoniously with the object of statue to effectuate the legislative intention. In view of above facts and circumstances, we hold that assessee is entitled for benefit u/s.80IB(10) of the Act in respect of 173 flats completed before prescribed limit. The Assessing Officer is directed accordingly.
7. As a result, the appeal of the assessee is disposed off as indicated above."
In the light of the above discussion the order of the CIT(A) denying benefit of deduction u/s.80IB(10) for non-receipt of completion certificate is set-aside and the grounds raised by the assessee on this issue are allowed." 8.4 We find the Pune Bench of the Tribunal in the case of M/s. City Development Corporation Vs. ACIT vide ITA No.1489/PN/2009 and ITA No.1100/PN/2010 order dated 22-09-2012 for A.Y. 2006-07 and 2007-08 has observed as under :
"12. We have carefully considered the rival submissions. Quite clearly, the dispute is with regard to the completion certificate of building 'E' having been issued by the local authority i.e. Pune Municipal corporation, on 5-5- 2008. Sub-clause (i) of clause (a) to section 80-IB(10) requires that the construction of the project in question is to be completed on or before 31-3- 2008. Clause (ii) of Explanation below section 80-IB(10)(a) prescribes that 24 the date of completion of construction of 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. In the present case, it has been issued on 5-5-2008 and hence the case set up by the Revenue that the completion is beyond the mandated date of 31-3-2008. In this background, we find that there is no dispute that the assessee applied for obtaining the completion certificate in respect of building 'E' on 12-3-2008. From the discussion made by the Assessing Officer in the assessment order, wherein the factual assertions of the assessee have been reproduced, it is quite evident that the assessee asserted that before 31-3-2008, the construction of building was complete in all respects; that electrical connection was provided to each flat owner; road was complete; water and drainage connection was available; sewerage system was operating; club house was functional; etc. The assessee also pointed out that the local authority had also initiated property tax assessments for each of the flats and the same demonstrated that all the flats in the building were complete. In fact, in para 6.9 of the assessment order, the Assessing Officer noticed that "the facts that the flats were completed and possession given will not come to the rescue of the assessee". The aforesaid finding of the Assessing Officer supports the assertion made by the assessee that factually speaking construction of flats in building 'E' was also complete and possession handed over to the actual user/customers prior to 31-3-2008. Pertinently, on the basis of the architect's certificate confirming completion of construction of building, the assessee applied for the completion certificate to the Pune Municipal Corporation on 12-3-2008. It has been pointed out before us that the local authority i.e. Pune Municipal Corporation did not raise any objection with regard to assessee's application and the certificate for building 'E' was thereafter issued on 5-5-2008. The moot question is as to whether in such a situation can it be said that the assessee's project did not comply with the condition prescribed in sub-clause (i) of clause (a) to section 80-IB(10) of the Act whereby the construction was to be completed on or before 31-3-2008. Somewhat similar situation was considered by our co- ordinate Bench in the case of Hindustan Samutha Awas Ltd. (supra) wherein also on the strength of architect's certificate, an application for obtaining completion certificate was moved to the local authority on 25-2-2008 but in actuality the completion certificate was issued by the local authority on 10- 10-2008. The Tribunal noticed that the delay in issuing completion certificate was not attributable to the assessee as no objections were raised by the local authority. The Tribunal after considering its earlier decisions in the case of M/s. Satish Bohra & Associates Vs. ACIT in ITA No. 713 and 714/PN/2010 for A.Y. 2004-05 and 2005-06 dated 7-1-2011; M/s. D.K. Constructions Vs. ITO ITA No. 243/PN/2010 for A.Y. 2006-07; dated 6-12- 2010 and Sanghvi and Doshi Enterprises Vs. ITO and others ITA No. 259 to 263/MDS/2010 dated 19-5-2011 for A.Y. 2005-06 and 2006-07 (TM) has concluded as follows:
"From the above, once this is clear that the date that appears on the Architect's Completion certificate filed before the local authority is relevant one. In the instant case, the said date is 25-3-2008 and the assessee filed requisite form before the local authorities intimating the completion of the project. The said certificate/intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. In such circumstances, in our opinion, the delay in obtaining the completion certificate on 10-10-2008 is certainly not attributable to the assessee and 25 obtaining the said certificate before 31-3-2008 is beyond the control of the assessee. Assessee's job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite forms together with the completion certificate given by the Architect, the specialist in the matter and the assessee has done his job scrupulously in this case. However, the local authority has neither objected to the said application of the assessee and the Architect by raising any objections for accepted by issue of said completion certificate till 10-10-2008. Therefore, the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore, in our opinion, the assessee is not defaulter on this account and thus, the AO has erred in denying the deduction u/s 80-IB(10) of the Act. Accordingly, the order of the CIT(A) has to be reversed. Thus, the grounds raised in the appeal are allowed"
13. The aforesaid decision of the Tribunal is clearly applicable to the facts of the present case also. In the present case, the completion certificate was applied for before 31-3-2008 i.e. on 12-3-2008. It is undisputable that the application of the assessee has been approved by the local authority without raising any amendment or objection, as has been asserted by the assessee all along and the delayed issuance of the completion certificate by the local authority on 5-5-2008, albeit after the mandated date of 31-3-2008 cannot be attributed to the assessee. In this background of the matter, we therefore, find ample force in the plea of the assessee that denial of deduction u/s 80-IB(10) on such score is uncalled for. In conclusion therefore, in the instant factual background, we hold that the assessee has complied with the condition of completing the construction of the project within the mandated date of 31-3- 2008 even with regard to building 'E', following the parity of the reasoning lid down in the case of Hindustan Samutha Awas Ltd. (supra). .
14. Sub-clause (i) of clause (a) to section 80-IB(10) of the Act requires that the undertaking, developing and building a housing project "completes such construction" or before 31-3-2008. In the present case, assessee has factually asserted right from the stage of assessment proceedings, that the construction of building 'E' was complete in all respects as per sanctioned plan and all the flats were handed over to the actual users/customers prior to 31-3-2008. In the background of the aforesaid factual position which has remained uncontroverted, in our view, on a plain reading of sub-clause (i) of clause (a) to section 80-IB(10) the condition prescribed therein is fulfilled., inasmuch as the construction of building 'E' was complete before 31-3-2008. However, on the reading of clause (ii) of the Explanation below sec. 80- IB(10)(a) of the Act, it emerges that the completion of construction of a housing project is to be taken to be the date on which completion certificate is issued by the local authority, which in the present case is issued on 5-5- 2008 i.e. beyond the stipulated date of 31-3-2008. The moot question is in case the condition of completion construction contained in the substantive section 80-0IB(10)(a)(i) is factually found to be complied with, can the contents of the Explanation clause (ii) thereof, alter the situation? Can an Explanation appended to a section, enlarge the scope of the main section so as to make it more onerous for a tax-payer? Be that as it may, we do not dwell on this aspect any further, as the assessee has been found to be eligible for necessary relief because the condition prescribed in section 80- IB(10)(a)(i) of the Act has been complied with in view of the stated precedents. We therefore, set aside the order of the CIT(A) on this aspect and hold that the assessee cannot be denied the claim of deduction u/s 80-IB(10) on the strength of non-issuance of the completion certificate for building 'E' 26 by the Pune Municipal Corporation before 31-3-2008, having regard to the facts and circumstances of the case."
8.5 Since in the instant case the assessee undisputedly has applied to the PMC for occupancy certificate on 03-03-2008 and since the PMC has not rejected the application, therefore, in view of the decisions cited above the assessee cannot be faulted for non-receipt of the occupancy certificate. The decision relied on by the Ld. Departmental Representative is not applicable to the facts of the present case and is distinguishable on facts. Considering the totality of the facts of the case we hold that the assessee has satisfied the first objection raised, i.e. non- receipt of the completion certificate before the due date. We accordingly hold this issue in favour of the assessee.
9. Now coming to the second objection raised by the Revenue, i.e. the built up area of some of the residential units was in excess of 1500 sq.ft when the area of adjacent terrace and entrance porch are included we find the date of commencement of the project in the instant case is 27-08-2002. In other words the project has been approved by the local authority before 01-04-2004. It is the case of the Revenue that once the balcony and terrace area are included the built up area of some of the units exceed 1500 sq.ft. and therefore the assessee is not entitled to deduction u/s.80IB(10). It is the case of the assessee that since the project was approved prior to 01-04-2004, therefore, the definition of built up area as per section 80IB(14) (a) which is inserted w.e.f. 01-04- 2004 does not apply to projects approved prior to that date and therefore the assessee is entitled to deduction u/s.80IB(10). We find similar issue had come up before the Tribunal in the case of ITO Vs. M/s. Prime 27 properties vide ITA No.838/PN/2010 order date 26-04-2012 for A.Y. 2005-06. In this case also the deduction u/s.80IB(10) was denied since after including the balcony/terrace the total built up area of some of the flats exceeded 1500 sq.ft. The Ld. CIT(A) upheld the order of the Assessing Officer. On further appeal by the assessee the Tribunal vide Para 11 of the order allowed the claim of the assessee by holding as under :
"11. We have considered the rival arguments made by both the sides. There is no dispute to the fact that the project was approved prior to 1.4.2004. Therefore, the definition of built up area as per Sec. 80 IB (14)(a) which is inserted w.e.f. 1.4.2004 does not apply to projects approved prior to that date. We find the Pune Bench of the Tribunal in the case of D.S. Kulkarni & Associates (Supra) at para 20 of the order has observed as under:
"20. By applying the principle of harmonious construction to interpret the provisions under Sub-section (10) to Section 80IB as amended w.e.f. 1.4.2005 we come to the conclusion that the Legislature always intended that the project must be approved by the local authority, thus in those approved projects where construction has been started much earlier than 1.4.2005, the assessees are required to complete the plan as it has been approved. As putting such assessees to complete the plan meeting out condition under clause (d) of the sub-section would lead into absurdity and impossibility for the assessee and in contradiction to the provisions u/s. 80 IB(10) as prevailed at the time of approval and commencement of the construction of the project well before 1.4.2005. Bombay Bench of the Tribunal in the case of Hiranandani Akruti J.V (supra) has discussed all these relevant aspects raised by the Department. In the case of Hiranandani Akruti J.V V/s. DCIT, it has been held that the law as existed when the assessee submitted its proposal and permission for carrying out the development was accorded and when the assessee commenced development is to be applied. In the present cases, as per page nos. 17 and 20 of the paper book in the case of Opel Shelter the project was commenced on 23.2.2001 and even completed on 14.5.2004, similarly as per the contents of page No.2 of the assessment order and page no. 41 of the paper book in the case of D.S. Kulkarni and Associates, the project was commenced on 12.4.2001 and completed in the month of November 2003. Thus, the assessees were supposed to complete the projects as per the law as existed in the A.Y. 2001-02 in the case of Opel Shelters and in the A.Y. 2002-03 in the case of D.S. Kulkarni and Associates. We thus following the decision in the case of Hiranandani Akruti JV V/s. DCIT (Supra) hold that amended provisions under Section 80 IB(10) w.e.f. 1.4.2005 are not applicable in the present case, hence assessees are eligible for the claimed deduction u/s. 80 IB (10) of the Act. We accordingly direct the A.O to allow the claimed deduction to the assessees."28
12. We find similar view has been taken by the Mumbai Bench of the Tribunal in the case of Haware Constructions (P) Ltd. (Supra). Since the projects has been approved prior to 1.4.2004 and since after excluding the balcony/terrace, the total built up area of none of the flats exceeds 1500 sq. ft., therefore, respectfully following the decisions cited (Supra) we hold that the benefit of deduction u/s. 80 IB (10) cannot be denied to the assessee. In this view of the matter, we set aside the orders of the CIT(A) and direct the A.O to allow the benefit of deduction u/s. 80 IB (10) claimed by the assessee."
9.1 Respectfully following the decision of the Coordinate Bench of the Tribunal we hold that the benefit of deduction u/s.80IB(10) cannot be denied to the assessee on this ground. Therefore, the assessee also succeeds on this issue. Thus, in the light of the above discussion, the assessee is entitled to deduction u/s.80IB(10). We hold and direct accordingly. The first ground raised by the assessee is accordingly allowed. Since the assessee succeeds on the first ground, the second ground, which is an alternate ground becomes academic in nature and therefore, the same is not being adjudicated.
ITA No.667/PN/2012 (A.Y. 2005-06) : ITA No.431/PN/2011 (A.Y. 2007-08) :
10. After hearing both the sides we find the grounds raised by the assessee in the above 2 appeals are identical to grounds in ITA No.1465/M/2009. The deduction u/s.80IB(10) was denied on account of non-receipt of completion certificate and the area of some of the flats were in excess of 1500 sq.ft. after including the balcony/terrace area. Since facts in the above 2 appeals are identical to the facts in ITA No.1465/M/2009, therefore, following the reasonings given therein the grounds raised in the above 2 appeals are allowed.
29
11. In the result, all the 3 appeals filed by the assessee are allowed.
Pronounced in the Open Court on this the 31st day of July 2013 Sd/- Sd/-
(SHAILENDRA KUMAR YADAV) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune Dated: 31st July 2013
Satish
Copy of the order forwarded to :
1. Assessee
2. Department
3. CIT(A)-II & III, Pune
4 CIT-II & III, Pune
5. The D.R, "B" Pune Bench
6. Guard File
By order
// True Copy //
Senior Private Secretary
ITAT, Pune Benches, Pune