Income Tax Appellate Tribunal - Pune
M/S. Shree Mukund & Shreyas ... vs Income-Tax Officer,, on 26 September, 2018
आयकर अपील
य अ धकरण "ए" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE
ी डी. क णाकरा राव,लेखा सद य, एवं ी वकास अव थी, या"यक सद य के सम#
BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.1672/PUN/2014
"नधा&रण वष& / Assessment Year : 2009-10
M/s. Shree Mukund & Shreyas
Developers.
5, Shriram Apartments,
1126/A, Near Hotel Ambassador,
Model Colony, Shivaji Nagar,
Pune-411 016.
PAN : AABAS0344K
.......अपीलाथ / Appellant
बनाम / V/s.
The Income Tax Officer,
Ward-3(1), Pune.
......
यथ / Respondent
Assessee by : Shri Prateek Jha &
Shri Prayag Jha
Revenue by : Shri S.K. Jadhav
सन
ु वाई क तार ख / Date of Hearing : 17.09.2018
घोषणा क तार ख / Date of Pronouncement : 26.09.2018
आदे श / ORDER
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by Assessee against the order of CIT(Appeals)-II, Pune, dated 30.04.2014 for the Assessment year 2009-
10.
2. The grounds raised by the Assessee read as under: 2 ITA No. 1672/PUN/2014
A.Y.2009-10 " On facts and in law,
1. The learned CIT(A) erred in confirming the disallowance of claim of deduction u/s.80IB(10) amounting to Rs.2,57,22,927/- on the ground that the assessee had not received the completion certificate of the entire project by 31.03.2008.
2. The learned CIT(A) erred in holding that the assessee was not entitled to claim deduction u/s. 80IB(10) since it had failed to fulfill the condition of completion of the project within the stipulated time period.
3. The learned CIT(A) failed to appreciate that the assessee had completed the said housing project within the specified time limit and hence, there was no reason to disallow the claim of deduction u/s 80IB(10).
4. The learned CIT(A) erred in not appreciating that the assessee had made an application for obtaining the completion certificate before 31.03.2008 which clearly indicated that the assessee had completed the entire project and hence, simply because the Pune Municipal Corporation had issued the completion certificate on 01.08.2008 does' not mean that the assessee had not completed the project before 31.03.2008.
5. The learned CIT(A) failed to appreciate that since the housing project was started prior to 01.04.2005, the assessee was not required to satisfy the condition of completion of the project within the specified time limit and therefore, there was no reason to deny the deduction claimed by the assessee.
6. The assessee submits that the deduction u/s.80IB(10) has been wrongly disallowed by the A.O. on the ground that the commercial area in the said housing project exceeded 2000 sq. ft. without appreciating that the project of the assessee was started prior to 01.04.2005 and hence, there was no restriction on the commercial area included in the project.
7. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal."
3. Briefly stated relevant facts include that the assessee is engaged in the business of developing housing project like earlier years. Assessee filed return of income on 23.10.2009 declaring total income at Nil. At the end of the assessment, the Assessing Officer quantified the assessed income at Rs.2,57,22,930/-(rounded off). In the assessment, the Assessing Officer made addition of Rs.2,57,22,927/- as per discussion given in Para 3 of the assessment order. This addition arises from the claim of deduction u/s.80IB (10) of the Income Tax Act, 1961 (hereinafter 3 ITA No. 1672/PUN/2014 A.Y.2009-10 referred to as 'the Act'). As per the Assessing Officer, assessee failed to furnish the 'Completion Certificate' from Pune Municipal Corporation (PMC), Pune to evidence the completion of the project by 31st March, 2008. The 'Completion Certificate' dated 01.08.2008 filed by the assessee is consequent to the application dated 16.07.2008 for issuance of 'Completion Certificate' by the said Authority. In fact, the Assessing Officer got the said certificate/information from Authority of PMC (Deputy Engineer, PMC) vide letter No. ZN/1/J/1694 dated 15.11.2011. Assessee alleged that the Assessing Officer did not grant proper opportunity to cross examine the said Deputy Engineer, PMC on the ground of paucity of time. The request of the assessee to cross examine the Deputy Engineer, PMC was not considered by the Assessing Officer as there was no deposition of any statement on oath from him.
4. Aggrieved with the order of Assessing Officer, assessee filed appeal before the CIT(A). During First Appellate Proceedings, Assessee raised the said issue i.e. 'granting reasonable opportunity to cross examine the Deputy Engineer, PMC' along with another issue relating to 'extent of commercial area of the project'. As per the assessee, the commercial area of 2564.20 Sq.ft should have been exceeded as there is no restriction provided by the statute for the year under consideration. Assessee placed reliance on the 'Completion Certificate' dated 01.08.2008 and decision of Tribunal in the case of Satish Bora Vs. ACIT, ITA No.713 & 714/PN/2010 for A.Y.2004-05 and A.Y.2005-06 decided on 07.01.2011. The CIT(A) examined the said issue and also examined the additional evidences furnished by Assessee before him. The issue of request for cross examining the Deputy Engineer, PMC was forwarded and called for remand report (Para 3.1.2). The CIT(A) considered the written submission 4 ITA No. 1672/PUN/2014 A.Y.2009-10 made by the assessee (Para 3.2) and discussed the issue relating to allowability of claim of deduction u/s. 80IB (10) of the Act ( Para 3.3) and dismissed the appeal of the assessee. The CIT(A) recorded that the housing project of the assessee, in question, was approved by Local Authority before 01.04.2004 and the relevant due date for completion of the same is on 31.03.2008. That being the law, the date of completion certificate is 01.08.2008 in consequent to the application dated 16.07.2008 is not in favour of the assessee. The CIT(A) dismissed the additional grounds in view of non-submission of any details. The contents of Para 3.4.3 onwards are relevant for the adjudication of this issue. Operation para of the decision is in Para 3.5 to 3.8 and for the sake of completeness the same are extracted as under:
"3.5 Thus, the issue involves the date of completion of the project for which section 80IB(10)(a) has prescribed the time limit upto 31.03.2008 when the housing project has been approved on the date on which the building plan of such housing project is first approved by the local authority.
"(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;
(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority:"
It is thus provided that in a case where the approval in respect of the housing project is obtained more than once, the housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. Therefore, the completion/occupancy certificate in respect of a housing project has to be issued by the local authority only as envisaged by the provision of section 80IB(10) of the IT Act, 1961. 3.6. Development of every region is regulated the concerned local authority in accordance with DC rules/regulations framed by that local authority. The DC rules/regulations are framed by the local authority depending upon the needs of that region and hence differ from region to region. The expression 'housing project' is neither defined under the IT Act nor it is defined under the DC rules/regulations framed by the local authority and, therefore, which project would qualify to be called as a housing project has to be gathered from the rules/regulations framed by the local authority 5 ITA No. 1672/PUN/2014 A.Y.2009-10 and the development of project at Pune are approved as per the Development control rules for Pune Municipal Corporation, Pune 1982 'DC Rules Pune' for short. Thus the legislature and the Courts in its wisdom have recognized the importance of a 'local authority' and recognizes the certificate issued with respect to the approval as well as completion/occupancy of a housing project. Once it is hold that the local authority could approve a project to be a housing project and grant completion/occupancy certificate as permitted under the DC rules, then the said project would be eligible for section 80IB(10) deduction irrespective of the fact that some infirmity, if noticed subsequently cannot completely overlook the grant of the certificate issued by the local authority. In the present case the issue is that of the time limit by which the project should had been completed in order to qualify for deduction u/s.80IB(10) of the IT Act, 1961, the appellant had not fulfilled the condition regarding obtaining the occupancy certificate from the local authority but has failed to obtain the same within the time limit prescribed in the aforesaid section of the Act for claiming deduction i.e. before 31.03.2008.
3.7. Since the application itself has been made by the appellant beyond the stipulated time, therefore, the contention raised is not at all applicable vis-à-vis the deduction claimed u/s. 80IB(10) of the IT Act. In the case of the appellant as the application for occupancy certificate for Building "B", as per material on record has been made on 16.07.2008 to the PMC and the occupancy certificate has been issued subsequently i.e. only on 01.08.2008 which is much beyond the date stipulated as per section 80IB(10) of the IT Act, thereby the appellant has not fulfilled the conditions as per section 80IB(10)(a) r.w. explanation.
3.8. In view of the above facts the claim of deduction u/s.80IB(10) of the IT Act, 1961 for the assessment year under consideration has rightly been disallowed by the AO as the project has not been completed within the time frame stipulated u/s.80IB(10)(a) of the IT Act. Accordingly, grounds No. 1 to 4 raised by the appellant are dismissed."
5. Aggrieved with the order of CIT(A), the assessee is in appeal before us by raising grounds as extracted above.
6. Before us, Ld. Counsel for the assessee raised seven grounds out of which ground Nos.1 to 5 relates to the 'Completion Certificate' linked arguments. The ground No. 6 relates to the extent of commercial area as applicable to the assessee's project. It also relates to the applicability of the relevant condition on extent of 2000 sq. ft. of commercial area of the said project under consideration. It is claim of the assessee that such restriction does not apply to the assessee's project which was approved 6 ITA No. 1672/PUN/2014 A.Y.2009-10 prior to 01.04.2005. Ld. Counsel for the assessee narrated the facts of the issues and submitted that the Assessing Officer erred in not considering the 'First Application dated 11.03.2008' (page 5 of the paper book) made to PMC for requesting grant of 'Occupancy Certificate'. Assessee claims the Completion Certificate dated 01.08.2008 was given in response to the second application dated 16.07.2008. In fact, assessee made application first on 11.03.2008 and the project was completed prior to this date. Further, the Assessing Officer has not granted any opportunity to cross examine the Deputy Engineer of PMC who issued completion certificate dated 01.08.2008 (page 46 of the paper book). Further, Ld. Counsel narrated following events giving important dates:
Sr. Date Description
No.
1 30/04/2002 Commencement Certificate granted
2. 14/08/2003 Commencement Certificate granted after revision of plan
3. 29/10/2004 Commencement Certificate granted after revision of plan
4. 15/03/2005 Commencement Certificate granted after revision of plan
5. 07/07/2005 Part occupancy Certificate granted for Tower A. Deduction claimed u/s.80IB(10) of Rs.1,00,82,771/- in A.Y 2006-07.
Deduction allowed.
6. 11/03/2008 Application made to PMC for Occupancy Certificate after completion of Tower B along with copies of -
a) Drainage NOC
b) Water Meter NOC
c) Encroachment NOC
d) License to operate lift
e) Tax NOC
f) Fire NOC
g) Garden NOC
7. 31/03/2008 Last date for completing construction to claim deduction u/s.80IB(10).
8. 17/07/2008 Second Application made to PMC for grant of Occupancy Certificate along all 7 ITA No. 1672/PUN/2014 A.Y.2009-10 the attachments.
9. 01/08/2008 PMC grants Occupancy Certificate. 6.1 Further, Ld. Counsel brought our attention to the grounds of the appeal before CIT(A) and submitted CIT(A)'s failure to adjudicate the issue raised in ground No. 6 of the present appeal. He further submitted that CIT(A) failed to appreciate the fact that the amendment brought in by the Finance (No.2) Act, 2004, does not apply as the projects approved prior to the said date. The project was first approved in this case originally in April, 2002. In the instant case, the project was undisputedly approved by the PMC prior to the amendment to section 80IB(10) of the Act. Further, in this regard, Ld. Counsel relied on the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Brahma Associates, 197 Taxman 459 ( Bombay) in 2011. Ignoring all these important aspects i.e. developments of the projects, arguments advanced by the Ld. Counsel and judgment of Hon'ble Jurisdictional High Court, the CIT(A) confirmed the disallowance which is unsustainable in the eye of law. Ld. Counsel prayed for remitting the issue back to the file of Assessing Officer for removing discrepancies occurred in the assessment proceedings and adjudicating the issue afresh.
7. On the other hand, Ld. DR for the Revenue heavily relied on the orders of Assessing Officer and CIT(A). To start with, Ld. DR submitted that 'Completion Certificate No.1' is not bona-fide one. Bringing our attention to Page 5 of the Paper book, Ld. DR submitted that the Completion Certificate No. 1 has not been acknowledged by the Municipal Authority and the same is evident from the fact that seal and stamp of the PMC is missing. The contents available on application for Occupancy 8 ITA No. 1672/PUN/2014 A.Y.2009-10 Certificate No. 2, are placed at page 46 of the paper book. Explaining the manner of such application, Ld. DR submitted that there is a procedure of entry for submitting such application in Taluka Register of the concerned Department and no such acknowledgement was evident on application for 'Completion Certificate No.1' filed by the assessee. Further, bringing our attention to the signature of Architecture, Structural Engineer, Engineer etc, Ld. DR submitted that signature of Architecture do not tally. License/Registration number of the signatory is also exclusively absent on page 5 i.e. Copy of application submitted on 11.03.2008 for grant of Occupancy Certificate. Further, Ld. DR argued to make out his case that application for Occupancy Certificate No.1 is never submitted to the PMC. He further submitted that Deputy Engineer, PMC relying on his records commented that Occupancy Certificate No. 2 is the final Occupancy Certificate which is relevant for deciding the allowability of claim of deduction u/s.80IB(10) of the Act. Referring to assessee's request for cross examining the Deputy Engineer, Ld. DR submitted that Deputy Engineer has not given any statement against the assessee and accordingly, there is no need to cross examine the Deputy Engineer by the assessee. Thus, Ld. DR submitted that AO/CIT(A) has rightly adjudicated the issue without granting opportunity to cross examine. 7.1 On the issue of applicability of the Judgement of Hon'ble Jurisdictional High Court in the case of CIT Vs. Brahma Associates (supra.), Ld. DR heavily placed reliance on the orders of AO/CIT(A). On the assessee's request for remitting the issue back to the file of AO, Ld. DR submitted that it is clear case of non completion of housing project before due date and therefore, denial of deduction u/s.80IB(10) by the Assessing Officer/ CIT(A) is justified.
9ITA No. 1672/PUN/2014
A.Y.2009-10
8. We have heard both the sides and perused the record. The issues raised before us relates to (i) Completion Certificate & providing opportunity to cross examine the Deputy Engineer, PMC and (ii) Extent of commercial area of the housing project. We shall deal with these issues in the following paragraphs:
Completion Certificate & providing opportunity to cross examine the Deputy Engineer, PMC :
9. Completion Certificate (CC):
Undisputed facts relating to this issue of CC are that the project was approved prior to 01.04.2004 (Clause-1 (i) of Section 80IB(10)(a) of the Act) and due date of completion of the housing project is 31st March, 2008. The assessee claims making of an application for completion certificate first (Page 5 of the Paper book) on 11.03.2008 for completion of Tower-B with all necessary Annexures. Relying on the same, assessee considered the same as compliance to meet the provisions of Income Tax Provisions. Further, the assessee submitted that the second Application dated 17.07.2008 along with all the Attachments was filed as there was no response from the PMC. It is not known to us as to why the assessee filed the said second Application to the PMC for want of Completion Certificate on 17.07.2008 when he has already filed first application on 11.03.2008. The 'onus' is upon the assessee to explain the reasons for making second application. As such no compliance receipts was filed by the Ld. Counsel before the Assessing Officer or before us to substantiate its case.10
ITA No. 1672/PUN/2014
A.Y.2009-10
10. We have examined both the applications i.e. First Application dated 11.03.2008 and Second application dated 17.07.2008 and found, the First application suffers from various discrepancies, questioning the credibility of the First Application for issuance of CC by the PMC. Signatories of the applications are different and manner of taking acknowledgement from PMC Authority are also different. These discrepancies and differences have left many questions regarding bona fide of the First Application (Page 5 of the Paper book). When there are such unanswered questions with respect to the Application Form logically, Income Tax Authority should have examined the attachments to the said applications and see if these documents are authentic and complete in all respect qua the due date of completion of the housing project. Assessing Officer did not verify the same. Assessing Officer should have made enquiries with the Drainage Department, Water Meter, Encroachment Department, License to operate lift, Tax, Fire and Garden etc to ascertain the completion of the project. No attempt was made in this regard by the Assessing Officer. Therefore, in our view, there is need for scrutiny of these facts by the Assessing Officer. Hence, these aspects are found needed for remanding to the file of Assessing Officer. Assessing Officer shall grant reasonable opportunity of being heard to the assessee as per the set principles of natural justice.
11. Providing opportunity to cross examine the Deputy Engineer PMC :
Coming to the next issue i.e. request of assessee to cross examine the Deputy Engineer, PMC, we find, it is a settled legal proposition if there is any incriminating statement given by witness to the Department against the assessee then principles of natural justice demand that an opportunity should necessarily be given to the affected party i.e. assessee 11 ITA No. 1672/PUN/2014 A.Y.2009-10 in this regard. As such, in a case where no such statement is given and merely a Completion Certificate was issued by the Deputy Engineer in normal course of his duties as Govt. Servant, in our view, it does not call for any cross examination to the said Deputy Engineer, PMC who issued such completion certificate. This cross examination will come into picture when the Assessing Officer invoked the provisions of section 131 of the Act and recorded statement and the same is against the assessee. In any case, Assessing Officer is duty bound to supply copies of the documents objected before him under various sections of the Act and they are put to use against the assessee in the assessment. As such, the assessee has the other remedies before the said Officer/ Engineer under Right to Information Act & various rules. Therefore, we are of the opinion that the Engineer merely executed his duties and there is no need for cross examining him. We order accordingly.
12. Thus, while deciding this issue based on information available with us, we are of the considered opinion, as requested by the Ld. Counsel for the assessee, this issue needs to be remanded to the file of Assessing Officer for fresh adjudication of all the aspects of the completion certificate. Assessing Officer shall grant reasonable opportunity of being heard to the assessee.
13. Accordingly, relevant grounds/arguments raised by assessee are partly allowed for statistical purposes.
Extent of Commercial Area
14. Provisions of Clause (d) of Section 80IB (10) is relevant for the issue of built up area of the shops and other commercial establishments 12 ITA No. 1672/PUN/2014 A.Y.2009-10 included in the housing project. These provisions are brought into statute by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005. The statute provides for restriction of 2000 sq. ft. As per the assessee, this restriction is applicable to the housing project approved on or after 01.04.2005 and the same is not applicable in the case where the project stands approved before the said date. Assessee placed reliance on the judgment of Hon'ble Jurisdictional High Court in the case of CIT Vs. Brahma Associates (supra.).
15. On hearing both the parties on this issue, we find, this issue was not adjudicated by the Lower Authorities in proper perspective by giving speaking order as requested by the Ld. Counsel. Accordingly, we are of the considered opinion that this issue should be remanded to the file of Assessing Officer for fresh adjudication after considering the judgment of Hon'ble Jurisdictional High Court in the case of CIT Vs. Brahma Associates (supra.) and after giving reasonable opportunity of being heard to the assessee. Accordingly, this part of ground raised by the assessee is partly allowed for statistical purposes.
16. In the result, appeal of the assessee is partly allowed for statistical purpose.
Order pronounced on 26th day of September, 2018.
Sd/- Sd/- ( वकास अव थी /VIKAS AWASTHY) (डी. क णाकरा राव/D. KARUNAKARA RAO) या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER पण
ु े / Pune; !दनांक / Dated : 26th September, 2018.
SB 13 ITA No. 1672/PUN/2014 A.Y.2009-10 आदे श क* +"त-ल प अ.े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-II, Pune.
4. The CIT-II, Pune.
5. %वभागीय त न(ध, आयकर अपील य अ(धकरण, "ए" ब,च, पण ु े / DR, ITAT, "A" Bench, Pune.
6. गाड/ फ़ाइल / Guard File.
// True Copy // आदे शानस ु ार / BY ORDER, नजी स(चव /Private Secretary आयकर अपील य अ(धकरण, पण ु े / ITAT, Pune.