Income Tax Appellate Tribunal - Pune
Ujjwal Construction, Pune vs Assessee on 31 October, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER
AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No.607/PN/2011
(Assessment Year: 2006-07)
M/s. Ujjwal Construction
Rajyog Apartments,
S.No.70, Vadgaon Budruk,
Pune - 411051
PAN: AABFU3163B .... Appellant
Vs.
The Income Tax Officer,
Ward 1(3), Pune. .... Respondent
Appellant by : Shri Srinivasan
Respondent by : Shri P.S. Naik
Date of hearing : 28-10-2014
Date of pronouncement : 31-10-2014
ORDER
PER SUSHMA CHOWLA, JM:
This appeal filed by the assessee is against the order of CIT(A)-I, Pune dated 22.10.2010 relating to assessment year 2006-07 against order passed under section 143(3) of the Income-tax Act.
2. The assessee has raised the following grounds of appeal:
1. The Hon. CIT erred in holding assessee is not entitled to claim relief under section 80 IB(10)even though assessee satisfies all the requirement for grant of relief.
2. It may be held CIT(A) and A.O.'s orders are bad in law as they have failed to interpret provisions of sec.80 IB(10) correctly in accordance with law and decided cases.
3. Orders passed by A.O. and CIT (A) may be set aside and they be directed to accept the return of income claiming relief under sec 80IB(10).2 ITA No.607/PN/2011
M/s. Ujjwal Construction
4. The appellant pleads for directions allowing his appeal and craves leave to add to, alter, amend, modify or withdraw any or all grounds of appeal.
3. The issue raised in the present appeal is in relation to the claim of deduction under section 80IB(10) of the Act.
4. The brief facts of the case are that, the assessee firm had undertaken a project for construction of residential premises viz. Ujjwal Gardens at Vadgaon Sheri, Pune Ahmednagar Road, Pune. The assessee had claimed deduction under section 80IB(10) of the Act on the profits arising from the said project. During the course of assessment proceedings, the Assessing Officer requisitioned the assessee to submit the Completion Certificate of the project. In reply, the assessee furnished copy of the sanctioned plan and the architect certificate regarding completion of wings A, B, C and D of building 'Ujjwal Garden'. The assessee was show caused by the Assessing Officer to explain as to why the deduction claimed under section 80IB(10) of the Act should not be disallowed as Completion Certificate from Pune Municipal Corporation was not received till 31.03.2008. In reply, the assessee explained that the project of the assessee fulfills all the conditions laid down in section 80IB(10) of the Act although no Completion Certificate had been received. However, the building had been occupied and was being used by the said occupiers, which established that the project of the assessee was completed within the stipulated time. The assessee further made a reference to the Certificate of Architect, which in turn proved that the project was completed. With regard to the Completion Certificate, it was pointed out by the assessee that though the application had been submitted, 3 ITA No.607/PN/2011 M/s. Ujjwal Construction but the Pune Municipal Corporation had not issued the Completion Certificate, against which the application had been made to the appropriate court. The Assessing Officer after considering the explanation filed by the assessee, noted that the assessee's project was approved on 13.11.2001 and 12.03.2003 by the Pune Municipal Corporation and the same should have been completed within four years under the provisions of section 80IB(10) of the Act. As per the Assessing Officer, the assessee should have been furnished the project Completion Certificate from the authority, who had approved the project and in the absence of any certificate from the Pune Municipal Corporation, the Assessing Officer observed that the assessee had failed to complete the project within the stipulated time limit laid down in section 80IB(10) of the Act i.e. before 31.03.2008 and consequently, the deduction claimed at Rs.7,79,060/- was denied to the assessee.
5. The CIT(A) upheld the order of the Assessing Officer observing as under:
"3.3.4. On careful consideration of the facts as well as the documents placed on record, it is observed that the appellant has been claiming that the project is complete and the Assessing Officer is of the view that the same was not complete before the due date i.e 31.3.2008. There is no dispute that submission of completion certificate issued from the local authority is a statutory requirement for the grant of the deduction. The claim of the appellant that the same should be allowed by treating the project as complete on the basis of other documents and other facts, may be in the name of liberal interpretation of the beneficial provision, but the same has also to be established without prejudice to the requirement of the law. It is observed from the documents submitted that the appellant is incorrect in claiming the project to be complete. Only because certain departments of the municipal authorities have certified that the relevant aspect of the project has been completed and also may be the flat owners have started living in the premise, but from that it cannot be said that the project is complete unless it could be shown that the project was really complete as required in law and the issuance of certificate from the local authority, though a mandatory requirement could not be obtained or issued for reasons not attributable to the appellant and for all other aspects otherwise the project is really 4 ITA No.607/PN/2011 M/s. Ujjwal Construction complete. In the present case, it is observed that the litigation relates to a case wherein the appellant is a plaintiff and Pune Municipal Authority is the defendant, it is also seen from the petition filed by the appellant himself that the project was stopped from being constructed w.e.f. different dates which are relevant for A.Y. 2006-07 and thereafter, the relevant portion is quoted below for ready reference :
"2....
3.....
4.....
5.....
6....."
From the perusal of the above it is clear that the project was stopped from time to time during the previous year under consideration and therefore, the claim of the appellant that the project is complete is not factually correct. In view of the above, the finding given by the Assessing Officer is upheld and the ground appeal is dismissed."
6. The assessee is in appeal against the order of CIT(A). The learned Authorized Representative for the assessee referred to the facts of the case and pointed out that the project was first sanctioned by the Pune Municipal Corporation in January, 2001 and subsequently in March, 2003 and July, 2004. The assessee had for the first time, claimed deduction under section 80IB(10) of the Act in assessment year 2004-05 and subsequently, in assessment years 2005-06, 2006- 07 and 2007-08. The claim of the assessee was accepted by the Assessing Officer for assessment years 2004-05 and 2005-06 and the assessment order was passed under section 143(3) of the Act relating to assessment year 2005-06. However, the claim of the assessee under section 80IB(10) of the Act was for the first time rejected during the assessment year 2006-07 on the ground that the Completion Certificate from Pune Municipal Corporation had not been received within the prescribed time limit. The plea raised by the assessee was that since the Assessing Officer had accepted that the assessee had complied with all the conditions laid down under section 80IB(10) of 5 ITA No.607/PN/2011 M/s. Ujjwal Construction the Act in assessment year 2005-06 and in the absence of Completion Certificate, there was no merit for denial of the same in the year under appeal. The learned Authorized Representative for the assessee further pointed out that there was no denial of the fact that the project had been completed as the building was fully occupied and corporation tax notice had been issued to the owners. Further, all the ancillary certificates from various departments had been received and even the Completion Certificate from the Architect was received. The learned Authorized Representative for the assessee explained the reasons as to why the Completion Certificate from the Pune Municipal Corporation was still pending. Reference was made to the civil suit filed in the case and our attention was drawn to the copies of the suit filed by the assessee and the order pronounced by the Civil Judge, under which, it has been clarified that the building under consideration was not part of the dispute between the parties. Another aspect was pointed out by the learned Authorized Representative for the assessee that the Pune Municipal Corporation was issuing Completion Certificate to individual flat owners and no Certificate had been issued to the assessee.
7. The learned Departmental Representative for the Revenue pointed out that in the absence of any Completion Certificate and also because the assessee had failed to file any application for the Completion Certificate, the assessee was not entitled to the claim of deduction under section 80IB(10) of the Act. In respect of letters received from the ancillary department, the learned Departmental Representative for the Revenue pointed out that the same were only 6 ITA No.607/PN/2011 M/s. Ujjwal Construction recommendations and reliance was placed on the orders of the authorities below.
8. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to the claim of deduction under section 80-IB(10) of the Act. The assessee had undertaken the project for construction of residential premises at Vadgaon Sheri, Pune Ahmednagar Road, Pune under the name and style of Ujjwal Gardens. The building plans for the said project were first sanctioned by the Pune Municipal Corporation in January, 2001 and subsequently in March, 2003 and July, 2004. The assessee had claimed the deduction under section 80-IB(10) of the Act for the first time for A.Y. 2004-05 and thereof A.Ys. 2005-06 and 2007-08. The assessments relating to A.Ys. 2004-05 and 2005-06 were completed by passing order under section 143(3) of the Act and the claim of the assessee was accepted. The claim of the assessee was accepted vis-à- vis the deduction claimed under section 80-IB(10) of the Act. However, during the assessment proceedings, taken up for the year under appeal i.e. A.Y. 2006-07, the Assessing Officer requisitioned the assessee to furnish the completion certificate from the Pune Municipal Corporation. The said completion certificate as per the Assessing Officer should have been received by 31.03.208. The contention of the assessee in reply was that the project had been completed and the building had been occupied and was being used by the occupies which established the claim of the assessee as to completion of the project within the stipulated period. Though the completion certificate was not received from the Pune Municipal Corporation. However, the Architect's certificate along with the ancillary certificates received from 7 ITA No.607/PN/2011 M/s. Ujjwal Construction the various Department to establish the completion of the project were filed before the Assessing Officer and the CIT(A). But the Assessing Officer in the absence of any certificate from the Pune Municipal Corporation observed that the assessee failed to complete the project within the stipulated time prescribed in section 80-IB(10) of the Act i.e. before 31.03.2008 and the deduction claimed u/s 80-IB(10) of the Act at Rs.7,79,060/- was denied to the assessee, which was upheld by the CIT(A).
9. The explanation of the assessee in this regard was that the project had been completed within time limit i.e. 31.03.2008 as was evident from the fact that all the ancillary certificates from the various Departments had been received, copies of which are available at pages 20 to 24 of the Paper Book. The completion certificate was also received from Architect which is placed at page 19 of the Paper Book. In addition, the corporation tax notice had been issued to the owners which are placed at pages 37 to 41 of the Paper Book. All the above said evidences established that the construction of the building is completed and is fully occupied. In respect of the completion certificate to be issued by the Pune Municipal Corporation, the learned Authorized Representative by the assessee admitted that no such certificate has been issued till date. It was explained by the assessee in October, 2005, the Additional Commissioner, Pune Municipal Corporation issued an order asking not only the assessee firm but also all its partners, sister concerns and others to stop work at all their sites falling within the jurisdiction of Pune Municipal Corporation. The said order was issued on the basis of a complaint filed by one Shri Vasant Mahadev Deshpande, who was the land owner of another site. 8 ITA No.607/PN/2011
M/s. Ujjwal Construction Against the said, the assessee filed a Suit with the Court of Civil Judge, Senior Division, Pune on 21.06.2006 against the Pune Municipal Corporation and the relief claimed in the said Suit was that if the work had to be stopped on the complaint of Shri Vasant Mahadev Deshpande then it should be related to the site of Shri Vasant Mahadev Deshpande only and work at all the other sites should not be stopped. The Civil Judge, Senior Division, Pune vide order dated 01.07.2006 lifted the restrain order passed by the Pune Municipal Corporation in respect of the other properties, which did not relate to the complainant, Shri Vasant Mahadev Deshpande. The copy of the Civil Suit filed by the assessee is placed at pages 28 to 36 of the Paper Book and the hand-written order of the Civil Judge is available at page 32 of the Paper Book. The plea of the assessee is that consequent to the said order of the Civil Judge, Senior Division, Pune the construction of all the sites except the site connected with Shri Vasant Mahadev Deshpande were started and was later completed. However, the Pune Municipal Corporation did not issue the completion certificate in respect of the properties constructed by the assessee. In the above said circumstances, the application for obtaining completion certificate prepared by the assessee was not accepted by the Pune Municipal Corporation and consequent thereto the completion certificate has not been issued to the assessee till date.
10. The issue arising in the present appeal is that where the assessee had completed construction of the building, which had been occupied by the owners within the stipulated time provided under section 80-IB(10) of the Act, merely because the assessee had not 9 ITA No.607/PN/2011 M/s. Ujjwal Construction received the completion certificate, the said claim under section 80- IB(10) of the Act can be denied to the assessee.
11. The Hon'ble Delhi High Court in the case of CIT vs. CHD Developers Ltd., (2014) 362 ITR 177 (Delhi) noted the provisions of section 80-IB(10) of the Act and the pre-amended provisions which were amended by Finance Act, 2000 w.e.f. 01.04.2001 and also the substitution by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 and held that in the pre-amended provisions when the plan was sanctioned/approved, there was no condition of production of completion certificate. The Hon'ble High Court held that the it was a settled proposition of law that the law existing at the particular time would be applicable, unless and until it was specifically made retrospective by the legislature. The Hon'ble High Court thus held that "the substitution so made, is therefore, applicable prospectively and not retrospectively". In the facts of the case before the Hon'ble High Court in the case of CIT vs. CHD Developers Ltd. (supra), the approval was granted to the assessee on 16.03.2005 and the assessee was expected to complete the project on or before 31.03.2009. The issue arising before the Hon'ble High Court was whether the project was completed by the assessee within time. The High Court noted that assessee had vide letter dated 05.11.2008 informed the authorities that the construction have been completed and further request was made for grant of completion certificate. However, no completion certificate was issued to the assessee and it was held by the Hon'ble High Court non- obtaining of completion certificate was not requirement to the projects which were approved prior to 01.04.205 when the amendment by the Finance Act, 2004 was made effective.
10ITA No.607/PN/2011
M/s. Ujjwal Construction
12. In the present case, the project has been approved by the local authority before 01.04.2005 within the meaning of clause (a) of section 80-IB(10) of the Act and therefore the ratio of the judgement of the Hon'ble High Court in the case of CIT vs. CHD Developers Ltd. (supra) squarely applies. However, it would be required to establish by the assessee that the construction of the project as sanctioned was completed before the stipulated date. On this aspect, assessee has been consistently pointing out before the Assessing Officer, CIT(A), as well as before the Tribunal that the construction was completed before the stipulated date. The flats have been sold and are occupied by the respective customers. It has also been pointed out that in some of the cases the local authority has issued individual completion certificates to the respective flat owners. Other document viz. property tax assessment of some individual flat owners, electricity bills showing occupation of the flats, etc. have been referred to in the course of hearing. We find that the said material was placed before the lower authorities and the same has not been repudiated at all. The denial of deduction has been solely on non-obtaining of completion certificate, which in the present case is not a requirement to be insisted upon in view of the judgement of the Hon'ble Delhi High Court in the case of CIT vs. CHD Developers Ltd. (supra).
13. In the aforesaid, we hereby affirm the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee under section 80-IB(10) of the Act. Thus, the grounds of appeal raised by the assessee are allowed.
11ITA No.607/PN/2011
M/s. Ujjwal Construction
14. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on this 31st day of October, 2014.
Sd/- Sd/-
(G.S. PANNU) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated: 31 st October, 2014.
GCVSR/Sujeet
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A)-I, Pune;
4) The CIT-I, Pune;
5) The DR "B" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Assistant Registrar
I.T.A.T., Pune