Income Tax Appellate Tribunal - Pune
Anand Ashok Gandhi,, Pune vs Department Of Income Tax on 27 May, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
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BEFORE SHRI R.K. PANDA, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.2004/PN/2014
"नधा%रण वष% / Assessment Year : 2010-11
DCIT, Circle-3, Pune .......... अपीलाथ /
Appellant
बनाम v/s
Anand Ashok Gandhi, .......... यथ /
304, Narayann Peth, Respondent
Pune - 411030
PAN No.ABJPG1729J
नधा रती क ओर से / Assessee by : Shri Kishor Phadke
यथ क ओर से / Department by : Shri S.K. Jadhav
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing :24.05.2016 Date of Pronouncement: 27.05.2016
आदे श / ORDER
PER R.K. PANDA, AM :
This appeal filed by the Revenue is directed against the order dated 28-07-2014 of the CIT(A)-II, Pune relating to Assessment Year 2010-11.
2. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of Promoters and Builders in the name and style of "Harshad Constructions". He filed his return of income for the impugned assessment year on 14-10-2010 declaring total income of Rs.23,78,003/-. During the Course of assessment proceedings the AO noted that the assessee has claimed deduction u/s.80IB(10) 2 ITA No.2004/PN/2014 amounting to Rs.3,05,70,196/- in respect of hiss housing project at Ashok Nagar situated at Survey No.73/Hissa No.313 to 318, Saiyyad Nagar, Handewadi Road, Hadapsar, Pune. The AO noted that the commencement certificate for this project was received by the assessee vide CC/9495/G/95 dated 14-02-2007. After this revised commencement certificates were received as follows :
CC/4416/06 dated 17-03-2007 CC/3970/09 dated 29-03-2010 CC/2483/12 dated 21-11-2012 CC/2483/2012 dated 27-11-2012
3. The AO noted from the original plan passed that there are 3 buildings, viz., A, B and C. However, the assessee submitted completion certificates only for buildings B and C. He, therefore, asked the assessee to explain as to why deduction claimed u/s.80IB(10) should not be disallowed on account of this fact. The AO also issued a Commission u/s.131(1)(d) to Shri Nitin Lele (Government Registered Valuer) to inspect the site and submit a report on the lines of provisions specified u/s.80IB(10). Shri Nitin Lele submitted in his report that there is no separate plan or any Sub-Division of plot by the assessee to claim deduction only for Buildings B and C which are complete. The AO referred to a decision of the CIT(A) in the case of Suvarna Mutha Developer where pro-rata deduction has been disallowed. He also referred to the provisions of section 80IB(10). The AO further noted that the date of first approval of the project is 14-02- 2007 and as such the final completion certificate has to be obtained by 31-03-2012. However, the assessee obtained completion certificate of only Buildings B and C. Thus, the total project is incomplete. Also Plot for Buildings B and C is not separated physically on ground nor technically it is separated by a Sub-Division plan. The AO, therefore, confronted the assessee about the above fact and asked him to explain 3 ITA No.2004/PN/2014 as to how he is eligible for deduction u/s.80IB(10). The submission of the assessee that Buildings B and C may be regarded as a stand-alone project and deduction be granted on the same was rejected by the AO.
According to him, there is no separate plan for Buildings B and C. Section 80IB(10) talks about "project" and not a cluster of buildings which satisfy the conditions of section 80IB(10). The project was the one which was sanctioned by the Municipal Authority which included Building A. Rejecting the various explanations given by the assessee the AO disallowed the claim of deduction of Rs.3,05,70,196/-
u/s.80IB(10) of the I.T. Act.
4. Before CIT(A) it was submitted that the AO rejected the claim of deduction u/s.80IB(10) on account of Non-Construction and Non-
completion of Building A. The assessee furnished an event chart of the various dates on which the agreement with Mrs. Najmunissa Kazi, the landlord, was entered into for the purchase of 232.29 sq.mtrs of land.
It was submitted that the landlord, i.e. the Sayyed family had undertaken the responsibility of extending possession of Building A land. However, Mrs. Kazi who was the occupant of the land, did not vacate the said area till 2012 for which the assessee could not start construction of Building A on the said land. The assessee had a genuine difficulty in constructing Building A. Because of various problems attached with the land on which the Building A was to be constructed it was submitted that it was not practically possible for the assessee to construct Building A. It was argued that in case of genuine difficulties the provisions of section 80IB(10) are required to be considered with respect to the areas which should be completed and a prudent businessman will never prefer to delay construction of a sanctioned housing project unless there is some compelling reason.
4 ITA No.2004/PN/2014Relying on various decisions it was submitted that proportionate deduction should be granted to the assessee in respect of Buildings which were completed, i.e. Buildings B and C.
5. Based on the arguments advanced by the assessee and relying on various decisions the Ld.CIT(A) allowed the pro-rata deduction u/s.80IB(10) to the assessee by observing as under :
"4.2 I have considered the submission made by the appellant and perused material on record. The only issue contested relates to the disallowance of the claim of deduction u/s 80IB(10) on account of non-completion of the housing project. The material and facts on record indicate that the housing project undertaken by the appellant was first approved by the local authority on 14.02.2007 vide commencement certificate no. CC/9495/G/95 which contained buildings A, B & C. The said plan has been revised subsequently on 17.03.2007, 29.03.2010 and 27.11.2012. The appellant completed the buildings B & C comprising of 28 flats and 42 flats respectively for which the occupancy/completion certificates have also been obtained on 30.03.2010. The Govt. Approved Valuer has also examined the said buildings and found the conditions u/s. 80IB(10) to have been fulfilled with respect to them i.e. buildings B & C. The only point of dispute and reason for the disallowance of the claim of deduction by the Assessing Officer relates to the non-completion of building 'A' which was sanctioned along with the other two buildings by the local authority. However, the material brought on record indicates that part of building 'A' that was to be constructed was encroaching the land in possession of Mrs. Najmunissa Kazi. The facts indicate that the appellant had entered into an agreement with the Sayyed family on 31.08.2005 and acquired approximately 9588 sq. mtrs. of land from them and the Sayyed family had undertaken the responsibility of settlement with Mrs. Kazi to whom they had earlier sold the land admeasuring 232.50 sq. mtrs . on 05.08.2003 and the said land was to contain part of building 'A' that was to be constructed by the appellant. The appellant started the construction of the project on the plan that the entire land is to be available for the for the project, however, Mrs. Kazi sold the land to the appellant in the year 2010 and the possession extended in 2012. The very fact that Mrs. Kazi paid the municipal taxes of the property on the land owned and occupied by her has been paid till 2012 and the old construction on the said land existing till 2012. The commencement certificate issued by the PMC stipulated and, restricted the appellant as per condition 11 that an old existing construction on the land shall, be demolished before commencing the work. Thus' the appellant who had already undertaken the project and started its construction was prohibi.ted to carry out construction of building 'A' as the part of land area of 232 sq. mtrs. owned by Mrs, Kazi was sold only on 01.11.2010 and possession handed over at a much later date in 2012. Moreover, the appellant would have required a fresh, commencement certificate to start construction of building 'A', as the time of one year had already lapsed before the date of original sanction given in February 2007, i.e. 14.02.2007 and subsequent revisions and the layout sanctioned required to commence work within one year. Thus the material on record do point to the fact that the appellant had genuine difficulty in constructing building 'A' on the said land. In such 5 ITA No.2004/PN/2014 circumstances, Courts and Tribunals have taken a view of allowing deduction by considering the completed areas of buildings, which satisfied the condition specified u/s. 80IB(10).
4.3 So far as the contention of the Assessing Officer that only the B & C buildings to have been completed and occupancy certificates obtained leaving the A building incomplete and not completed having led to non- completion of the housing project, it is seen that the plot area of the buildings 'B' &'C' is 5967 sq.mtrs which is more than one acre and the aforesaid two buildings have complied with all the conditions as stipulated in section 80IB(10) as is evident from the observation as reported by the Govt. Approved Valuer Shri Nitin Lele.
4.3.1. Hence, the claim of the appellant that the buildings, B and C having been duly completed on or before 31.03.2012 and also satisfies the condition of section 80IB(10) are eligible for deduction u/s. 80IB(10) of the Act on a proportionate basis if the entire project is taken as one finds support from several judicial precedents also relied upon by the appellant.
4.4. In the case at Brigade Enterprises (P) Ltd. (supra), the facts were that the assessee formed a single project by name 'Brigade, Millennium"
comprising a total area of 22 acres and 19 guntas in Survey. Nos. 44, 45 and, 51/1 of Bangalore South Taluka. This macro project comprised certain housing blocks, community hall etc. as its micro components. It comprised, among other things, 5 residential blocks by name Mayflower, Cassia, Magnolia, Jacaranda and Laburnum. Approval had been obtained from BDA on 24-5-2002. The assessee took two blocks separately, viz., Mayflower and Cassia, and claimed the benefit of deduction u/s. 80IB of the Act in respect of the said two blocks, claiming them to be separate projects, as only the said two blocks could fulfill the requirements prescribed u/s.80IB of the Act. The AO, however, denied the claim of deduction u/s.80IB treating Brigade Millennium as only one project. The Tribunal, after considering the facts, observed that the use of the words "residential' units" means that deduction should be computed unit-wise. Therefore, if a particular unit satisfies the conditions of sec.80IB, the assessee is entitled for deduction. Therefore, the Tribunal upheld the order of Ld. CIT(A) in allowing deduction u/s.80IB(10) In respect of two blocks as claimed by the assessee.
4.4.1 In ITO Vs AIR Developers (supra) The tribunal held that "Assessing Officer is directed to determine the built up area of the residential units by applying the development control Regulation, 2000 and to allow proportionate deduction u/s.80IB(10) if he finds that the built up area of some of the residential units exceed 1500 sq.ft."
4.4.2 In Sheth Developers (supra) the Mumbai ITAT held "as regards the A project assessee is eligible for relied on pro-rata basis in respect of the flats which did not have a built up area exceeding 1000 sq.ft. - quantum of deduction in respect of the flats which have built up area less than 1000 sq.ft., has to be worked out on pro-rata basis - AO accordingly directed to verify the claim of the assessee and allow the deduction on pro-rata basis in respect of flats in A project."
4.4.3 In the case of G.V. Corporation Vs. ITO (supra), the assessee, at the request of purchasers, joined some of its flat/residential units, as a result of which built up area of those flats exceeded 1,000 sq.ft. Deduction was 6 ITA No.2004/PN/2014 denied u/s.80IB(10) on the ground that the aforesaid act of the assessee resulted in violation of the provisions of sec.80IB(10). The Tribunal, following the Special Bench decision of the Tribunal in the case of Brahma Associates Vs. Jt. CIT (2009) 119 ITD 255, held that deduction could not be totally denied and it would be eligible for proportionate deduction."
4.4.4 In this regard the decision of the Pune ITAT in the case of Rahul Construction Co. Vs. ITO, ITA No.1250/PN/2009 and ITA No.707/PN/2010 dated 30-03-2012 held as under :
"9, There is no dispute on, from material facts that out of 16 buildings in the housing project of the assessee only 11 buildings were completed within the prescribed time-limit up to 31-3-2008. The layout plan in respect of entire complex was sanctioned by PMC vide order dated 3-4-2003 and the building plan was sanctioned vide, commencement certificate dated 29- 4-2003. Admittedly, the term 'housing project' has not been defined in the Act but in the context of deduction under section 80IB(10) an Explanation has been provided below clause (a) to sub-section (10 ) to section 80IB. The very reading of above Explanation (i), makes it clear that for the eligibility of the deduction provided under section 80-IB(10), the date on which building plan of a housing project has been firstly approved by the local authority will be treated as approval in respect of the housing project. When Explanation (ii) is read with Explanation
(i), it makes clear that the date of completion of construction of such housing project would be taken when completion certificate has been issued by the local authority. In other words, in clause (i) of the Explanation, it has been made clear that date of first approval of housing project by the local authority would be taken as starting point of the housing project and in clause No. (ii), it has been made clear that the date of completion certificate in respect of such housing project issued by local authority will, be considered to compute the prescribed time-limit for verification of eligibility of assessee for the Claimed deduction. In view of the above Explanation, approval of the housing project and approval of building plan are two different concepts."
Thus, the part of the project comprising of buildings B & C is a separate project and which satisfied all the conditions stipulated u/s.80IB(10) and hence the appellant is very much entitled to claim the deduction u/s.80IB(10) of the Act, on buildings 'B' and 'C' in view of the above set of reasoning by the Tribunal.
4.4.5 In the case of M/s. Runwal Multihousing Pvt. Ltd. Vs. ACIT (Supra) after considering various judicial precedents of different High courts and Coordinate benches, the Pune Tribunal held that "21.3 In view of the above decisions, we are of the considered opinion that whatever portion completed by the assessee which satisfies the conditions prescribed u/s. 80IB(10) is eligible for deduction. The various decisions relied on by the revenue are distinguishable and not applicable to the facts of the present case. We accordingly hold that the assessee is eligible for deduction u/s. 80IB(10) in respect of building No. A,C,D, E and the 17 row houses.
7 ITA No.2004/PN/2014The grounds raised by the assessee on this issue are accordingly allowed."
4.4.6 In the case of Bengal Ambuja Housing Development Ltd. (Supra), the facts were that the housing project consisted of 261 residential units and the individual flat size varied between 800 sq.ft. to 3000 sq.ft. and the total built up area of this housing project was 346599 sq.ft. This project contained 150 residential units with a built up area of individual unit of less than 1500 sq.ft. aggregating to 169500 sq.ft. The remaining built up area of 187593 sq.ft. was consumed by other residential units wherein the size of individual unit exceeded 1500 sq.ft. of built up area. Under these circumstances, the assessee had claimed deduction u/s.80IB(10) with reference to the profit attributable to the built up area which was occupied by residential units having individual flat size of less than 1500 sq.ft. The AO rejected the claim of the assessee u/s.80IB(10), inter alia, observing that as per the terms of sec.80IB(10), all the units comprised in the housing project should have had individual flat size of less than 1500 sq.ft. In the backdrop of these facts, the Tribunal observed that the provisions laid down in sec.80IB(10) do not speak regarding such denial of deduction in case of profit from a housing complex both the smaller and large residential units and since the assessee had claimed only deduction on account of smaller qualifying units fulfilling all the conditions as laid down u/s.80IB(10), the denial of claim by the AO was not justified.
4.4.7 In Vishwas Promoters (P) Ltd. Vs. ACIT & Ors (2013) 50(I) TICL - 274 (Mad) it was held that the assessee was entitled to claim deduction in respect of all the block forming part of the project called Agrini and Gajra, but to the extent of each of the blocks satisfying the conditions u/s.80IB(10) of the Act and the assessee would be entitled to the relief on a proportionate basis. Similar view was also taken by the Madras High Court in the case of CIT Vs. Arun Excello Foundation (P) Ltd. (2013) 212 taxman 342 (Mad) wherein it was held that in a given case when the housing project @10% residential units satisfied other clauses (a) and (b) and the built up area given under clause (c) of sec.80IB(10) of the Act, there would be no difficulty for the revenue to grant the deduction. The question becomes a little complicated when 100% residential housing project has built up area of mixed nature while few of the units may satisfy the criteria of the built up area of less than 1500 sq.ft., there may be units which have built up area crossing the limit as specified in clause (a) of Sec.80IB(10) of the Act. In such event on a reading of the provision, it is held that the assessee would not be entitled to have the benefit of 100% absolute deduction u/s.80IB(10) of the Act in respect of the entire project, but would be entitled to pro rata deduction on the units satisfying the conditions . . . . . . . . . ."
4.4.8 In DCIT Vs. Ekta housing (P) Ltd. (2011) 44 (II) ITCL 404 (mum) it was held that in cases certain residential house has built up area in excess of 1500 sq.ft, the assessee could not lose the total exemption u/s.80IB(10) in its entirety but will lose the proportionate exemption u/s.80IB(10). Deduction u/s.80IB(10) on pro rata basis was therefore allowable.
4.4.9 Thus in view of the above facts, the ratio of the judicial decisions and the appellant having satisfied the other condition as stipulated u/s. 80IB(10) such as regarding the area of the plot having no commercial area the appellant gets entitled to the deduction u/s.80IB(10) on pro rata basis 8 ITA No.2004/PN/2014 with respect to the blocks and units satisfying the conditions u/s.80IB(10) of the Act."
6. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds :
"1. The learned Commissioner of Income-tax (Appeals) erred in allowing the assessee's claim of deduction u/s 80IB(10) of Rs.3,05,70,196/- with respect o the Housing project.
2. The learned Commissioner of Income-tax (Appeals) erred in not appreciating the import of Section 80IB(10) which speaks 'about sanction to the 'housing project' and not to the individual buildings in the project.
3. The learned Commissioner of lncome-tax Appeals) erred in not appreciating the fact that the original plan passed by local authority constructed of three buildings A,B& C and plan was not revised and only B&C were shown as completed within the prescribed due date.
4. The learned Commissioner of Income-tax (Appeals) erred in allowing pro-rata claim of deduction u/s. 80IB(10) in 'respect of eligible flats in the project inspite of violation of clause (c) without appreciating the fact that jurisdictional High Court in the case of CIT vs. Brahma Associates, 333 ITR 289 held that deduction is allowable on the entire project approved by the Local Authority and there is no question of allowing deduction to a part of the project.
5. The appellant craves leave to add, alter or amend any or all the grounds of appeal."
7. The Ld. Departmental Representative referring to the assessment order submitted that the AO has given justifiable reasons for rejecting the claim of deduction u/s.80IB(10). He submitted that there is no concept of proportionate deduction under the provisions of section 80IB(10). It speaks of the entire project. Since the assessee in the instant case has not completed Building A, therefore, the project is incomplete. Therefore, the CIT(A) was not justified in allowing proportionate deduction u/s.80IB(10) to the assessee.
8. The Ld. Counsel for the assessee on the other hand while relying on the order of Ld.CIT(A) referred to the following decisions and submitted that the various Benches of the Tribunal as well as different 9 ITA No.2004/PN/2014 High Courts are taking the consistent view that assessee is entitled to proportionate deduction u/s.80IB(10):
1. CIT Vs. Arun Excello Foundations (P. Ltd. reported in 259 CTR 362 (Madras High Court)
2. CIT Vs. Sanghvi and Doshi Enterprise reported in 255 CTR 156 (Madras High Court)
3. Viswas Promoters Pvt. Ltd. Vs. ACIT reported in 255 CTR 149 (Madras High Court)
4. ACIT Vs. Subhash F. Bafna vide ITA Nos. 316 to 319 and batch of connected appeals and batch of other appeals order dated 26-06-2014 (Pune' B' Bench)
5. M/s Kumar Company Vs. Addl.CIT vide ITA No.1652/PN/2012 order dated 06-01-2016 (ITAT Pune)
6. CIT Vs. Elegant Estates vide Tax Appeal No.1172/2015 (Madras High Court)
9. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of "Harshad Constructions". During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed, the AO rejected the 10 ITA No.2004/PN/2014 claim of deduction of Rs.3,05,70,196/- made by the assessee u/s.80IB(10). In appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed.
10. We do not find any infirmity in the order of the CIT(A) granting pro-rata deduction to the assessee in respect of Buildings B and C which were completed. We find the Pune Bench of the Tribunal in the case of M/s. Kumar Company while deciding identical issue had allowed the claim of pro-rata deduction by observing as under :
"12. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the impugned grounds raised by the assessee is regarding allowability of pro-rata deduction u/s.80IB(10) in respect of the housing project 'Kumar Padmalaya' where admittedly some of the units have not been completed before 31-03-2008. According to the revenue, for claiming deduction u/s.80IB(10) the assessee has to fulfil all the conditions laid down in section 80IB(10) and there is no concept of pro-rata deduction. According to the assessee it is entitled to pro-rata deduction u/s.80IB(10) in respect of the units which fulfill the conditions laid down in section 80IB(10).
13. We find the Hon'ble Madras High Court in the case of Viswas Promoters Pvt. Ltd. (Supra) while allowing proportionate deduction u/s.80IB(10) has observed as under :
"14. On the facts admitted by the Revenue, in the projects "Agrini"
and "Vajra", there are number of flats which are below 1500 sq.ft., and the relevant built-up area requirement is specified underSection 80IB(10)(c) of the Income Tax Act. Thus, the built-up area in some of the flats in both these projects are in excess of 1500 sq.ft., i.e., 32 flats in Agrini and only one flat in Vajra and that the assessee had not claimed any deduction on this. We hold that the Tribunal is not correct in its view, that by reason of these Units being in excess of 1500 sq.ft., the entire claim of the assessee in respect of these two projects would stand rejected under Section 80IB(10) of the Income Tax Act. Thus, going by the definition of "housing project" under Explanation to Section 80HHBA of the Act as referred to above as the construction of "any building" and the wordings in Section 80IB(10) of the Act, the question of rejection in entirety of the project on account of any one of the blocks not complying with the conditions, does not arise. Even in the case of each one of the blocks, wherever there are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the assessee in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court reported in 11 ITA No.2004/PN/2014 [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq.ft, per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(c) of the Act. In so holding, we also agree with the decision of the Bombay High Court reported in [2012] 206 TAXMAN 584 (CIT v. Vandana Properties), which was decided by the Bombay High Court on similar lines as in the assessee's case before us.
15. In the light of the above reasoning, we have no hesitation in allowing the cases cases filed by the assessee in respect of assessment years 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09, thereby answering the substantial questions of law in favour of the assessee, that the assessee is entitled to the claim of deduction in respect of all the blocks forming part of the projects called Agrini and Vajra, but to the extent of each of the blocks satisfying the conditions under Section 80IB(10) of the Act, the assessee would be entitled to the relief on a proportionate basis."
14. We find following the above decision the Pune Bench of the Tribunal in the case of Padmavati Developers (Supra) has decided the issue of pro-rata deduction in favour of the assessee by holding that assessee is entitled to pro-rata deduction in respect of the residential units which have complied with the conditions and were eligible for the deduction u/s.80IB(10). The relevant observation of the Tribunal at Paras 36 to 38 of the order read as under :
"36. Now, coming to the second housing project in Sector No.7. Admittedly, the assessee in assessment year 2006-07 has completed only 2 buildings i.e. Q-1, Q-2 and some flats in assessment year 2007-
08. The building comprised in P-1 to P-6 and the row houses have not been constructed by the assessee till the date of survey and upto 31.03.2008.
37. The Hon'ble Madras High Court in Viswas Promoters Pvt. Ltd. vs. ACIT, (2013) 255 CTR 149 (Mad.) have laid down that within a composite housing project, where there are eligible and inelligible units, the assessee can claim deduction in respect of eligible units in the project and even within the block, the assessee is entitled to claim proportionate relief against the units satisfying the extent of built-up area.
38. Similar proposition has been laid down by the Bangalore Bench of the Tribunal in DCIT vs. Brigade Enterprises (P.) Ltd., (2008) 119 TTJ 269 (Bang) and the Pune Bench of the Tribunal in Runwal Multihousing Pvt. Ltd. vs. ACIT in ITA Nos.1015, 1016 and 1017/PN/2011 relating to assessment years 2003- 04 to 2005-06, order dated 21.11.2012. Following the same parity of reasoning, we hold that the assessee is entitled to pro-rata deduction in respect of residential units in the housing project No.7, which have complied with the conditions and were eligible for the deduction under section 80- IB(10) of the Act. However, the said deduction is allowable to the assessee only in respect of units construction of which has been completed upto 31st March, 2008. Accordingly, we direct the 12 ITA No.2004/PN/2014 Assessing Officer to verify the claim of the assessee in this regard in assessment years 2006-07 and 2007-08 and if the assessee has fulfilled the aforesaid conditions under section 80-IB(10) of the Act, pro-rata deduction under the said section could be allowed to the assessee in relation to the buildings / flats completed in Sector No.7. Consequently, the ground of appeal raised by the assessee is partly allowed."
15. In view of the above discussion, we hold that the assessee is entitled to pro-rata deduction in respect of the buildings/units of the housing project 'Kumar Padmalaya' which have complied with the conditions laid down in section 80IB(10) of the Act. In other words, the AO cannot reject the claim of deduction u/s.80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO to allow pro-rata deduction claimed u/s.80IB(10) in respect of project 'Kumar Padmalaya'. The grounds raised by the assessee are accordingly allowed.
11. We find the Hon'ble Bombay High Court in the case of Elegant Estates (Supra) following the decision of CIT Vs. Arun Excello Fondations Pvt. Ltd., reported in 212 taxmann 342 has allowed pro-
rata deduction.
12. We find the Coordinate Bench of the Tribunal in the case of Subash S. Bafna (Supra) after considering the decision of Hon'ble Bombay High Court in the case of Brahma Associates has allowed the claim of pro-rata deduction by observing as under :
"7. We have considered 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 during the course of survey carried out u/s.133A on the business premises of the assessee on 13-05-2008 it was found that the project had not been completed as required under the provisions of section 80IB(10) as it stood prior to 31-03-2008. There is also no dispute to the fact that the assessee in his statement recorded u/s.131 on 13-05-2008, in response to Question No.6 had admitted that out of the total revised approval for 180000 sq.ft. received in 2003 he had obtained the completion certificate from PMC for 152000 sq.ft. only The area of one Acre and the size of units being less than 1500 sq.ft. is not in dispute. The only dispute before us is regarding the allowability of proportionate deduction u/s.80IB(10) when the entire project is not completed before the stipulated date. We find the Ld.CIT(A) allowed the claim of proportionate deduction u/s.80IB(10) for A.Yrs. 2004-05 to 2007-08 by relying on various decisions. However, for the A.Y. 2008-09 the Ld.CIT(A) denied the claim of benefit of deduction u/s.80IB(10) by relying on the decision of the Hyderabad Bench of the Tribunal in the case of Sainath Estate Pvt. Ltd.(Supra), the decision of the 13 ITA No.2004/PN/2014 Mumbai Bench of the Tribunal in the case of Everest Home Construction India Pvt. Ltd. (Supra) and the decision of the Mumbai High Court in the case of Brahma Associates (Supra).
7.1 We find the Pune Bench of the Tribunal in the case of Siddhivinayak Shree (Supra) after considering the decision in the case of Sainath Estate Pvt. Ltd.(Supra), the decision of the Mumbai Bench of the Tribunal in the case of Everest Home Construction India Pvt. Ltd. (Supra) has allowed the claim of proportionate deduction u/s.80IB(10) of the I.T. Act, 1961. The relevant observation of the Tribunal from Para 13 onwards read as under :
"13. 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 the AO in the instant case denied the claim of deduction u/s.80IB(10) on the ground that
(a) the assessee has not obtained the completion certificate on or before 31-03-2008 (b) that the project includes shops and other commercial areas in excess of the prescribed limit and (c) that the assessee has claimed deduction u/s.80IB(10) since A.Y. 2001-02 and the assessee is showing the entire project as a single project. We find the Ld.CIT(A), on the basis of the additional evidences filed before him and the remand report obtained from the AO, held that the projects (A) and (B) undertaken by the assessee are two different projects. The relevant observations of the Ld.CIT(A) are already reproduced at para 4.1 of the impugned order. The revenue is not in appeal before us on this issue. Therefore, this issue on which the AO has denied the deduction is not relevant.
14. However, the Ld.CIT(A) upheld the action of the AO in denying the claim of deduction on the other reasons stated by the AO, i.e. (a) the completion certificate has not been obtained on or before 31-03-2008 (b) that the assessee did not explain anything about Project B and (c) that the project includes shops and commercial area in excess of the prescribed limit.
14.1 From the details furnished by the assessee in the Paper Book we find the details of completion certificate No and date and the reference to the date of application are as under :
Project A -Plot No 3 Completion Date Completion With Building No of flats SHOPS Certificate No reference to date BCO/03/262 28/06/2000 27/03/2000 F 48 0 640 30/03/2010 04/04/2006 D-1 24 7 640 30/03/2010 04/04/2006 D-2 24 8 640 30/03/2010 04/04/2006 E-2 24 9 640 30/03/2010 04/04/2006 E-3 24 7 640 30/03/2010 04/04/2006 E-4 24 8 TOTAL 168 39 14 ITA No.2004/PN/2014 Project B -Plot No 4 Completion Date Completion With Building No of SHOPS Certificate No reference to date flats BCO/03/146 05/10/2005 05/10/2005 G 101 0 (Gold) BCO/03/146 05/10/2005 05/10/2005 H 68 0 (Crown) TOTAL 169 0 The completion certificate in respect of building I+K in respect of 80 flats is not granted so far by PMC although the assessee has duly applied for the same on 04-04-2006 as per application for occupancy certificate received by PMC on 04-04-2006, a copy of which is placed at Paper Book Page No.12.
14.2 It is the submission of the Ld. Counsel for the assessee that the project A and building I & K of Project B are complete before May 2006 since the assessee has applied for completion on 04-04- 2006. Similarly the assessee has applied on 05-10-2005 for Project B (G & H building) which was received by the assessee. The permission was not rejected but was withheld for technical reasons, i.e. non allotment of built up area in terms of section 20 of the Urban Land and Ceiling (Regulation) Act, 1976 and non- payment of compounding fees of Rs.2,41,805/-. The assessee had enclosed the completion certificate, no objection certificates/clearance such as drainage, water, fire NOC, Lift NOC, Health NOC, Road NOC and structural stability certificate etc for the entire project A and building I & K of Project B (Page No.12 of Paper Book). Completion certificate for Building G and H of Project B are already availed and there is no dispute. Further, the PMC issued completion certificate on 31-03-2010 with reference to application dated 04-04-2006 in respect of building D1, building D2, building E2, building E3 and building E4. Therefore, the completion certificate in respect of Building D1, D2, E2, E3 & E4 of building A relates back to the application dated 04-04-2006.
14.3 We find merit in the above submission of the Ld. Counsel for the assessee. It has not been disputed by the Revenue that the assessee has not applied to the Municipal Corporation for issue of completion certificate on 04-04-2006 for Project A and building I & K of Project B. It is also not in dispute that the completion certificate issued by the PMC dated 31-03-2010 for Buildings of Project A is not with reference to application dated 04-04-2006. Therefore, in our opinion, the completion certificate issued on 31- 03-2010 with reference to the application dated 04-04-2006 for Project A relates back to the date of application, i.e. 04-04-2006.
14.4 The second issue on which the Ld.CIT(A) completed the denial of deduction u/s.80IB(10) is that nothing was explained about Project B. As already mentioned earlier completion certificate for Building G & H of Project B has already been granted on 05-10-2005 which is not disputed by the Revenue since a copy of the same was filed before the AO & CIT(A) as certified in the 15 ITA No.2004/PN/2014 Paper Book and not disputed by the Revenue. So far as the building I + K of Project B is concerned we find although the assessee has applied for the same on 04-04-2006, however, the same is pending before PMC for technical reasons.
14.5 We find the Pune Bench of ITAT in the case of Hindustan Samuha Awas Ltd. has observed as under :
"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 25-03-2008 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 31-03-2008 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".
14.6 Further, in the instant case as has been pointed out before the AO and CIT(A) as well as before us that the assessee is all along claiming that the project was complete in the year 2006, the purchasers have been given possession of the flats, they have undertaken for the maintenance charges and have started paying electricity charges etc. Further, the PMC has not issued any rejection letter within 21 days from the date of submission of the completion certificate which was submitted on 04-04-2006. The Revenue has not disputed the above facts.
14.7 We find the Hon'ble Gujarat High Court in the case of CIT Vs. Tarnetar Corporation (Supra) has held as under :
"5. 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 15.2.2006 which was rejected on 1.7.06. Several residential units were occupied since the same was done without necessary permission. The assessee had also paid penalty and got such occupation regularized. Several tenements were sold long before the last date.
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 (a) to section 80-IB(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 16 ITA No.2004/PN/2014 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.
7. 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
8. In the result, the Tax Appeal is dismissed."
14.8 From the details furnished by the Ld. Counsel for the assessee we find the assessee has allotted the built up area of 944.10 sq.mtrs against 942 sq. mtrs as per condition of sanction before 27-02-2008. Therefore, we find merit in the submission of the Ld. Counsel for the assessee that the assessee has complied with the condition of allotment on 27-02-2008 which is before 31- 03-2008. We find merit in the submission of the Ld. Counsel for the assessee that since the ULC Act was repealed in the year 2009, therefore, PMC/ULC department and Secretariat to Mantralaya are not responding, therefore, the assessee cannot be held responsible.
14.9 We find the Pune Bench of the Tribunal in the case of M/s. Ramsukh Properties Vs. DCIT vide ITA No.84/PN/2011 has 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 of construction was not attributable to assessee. In case such a 17 ITA No.2004/PN/2014 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."
14.10 We find the Pune Bench of the Tribunal in the case of Runwal Multihousing Pvt. Ltd. (Supra) 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 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 18 ITA No.2004/PN/2014 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? 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 19 ITA No.2004/PN/2014 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 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 20 ITA No.2004/PN/2014 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 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, 21 ITA No.2004/PN/2014 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 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 22 ITA No.2004/PN/2014 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 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 23 ITA No.2004/PN/2014 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."
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 24 ITA No.2004/PN/2014 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 "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 25 ITA No.2004/PN/2014 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 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 26 ITA No.2004/PN/2014 being granted by MRTP Court. Thus fault of incompletion 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."
14.11 In view of the above decisions the first issue on which the Ld.CIT(A) denied the deduction u/s.80IB(10) i.e., the project is not complete before 31-03-2008 is not correct since the assessee in the instant case has applied for the completion of the project vide letter dt. 04-04-2006 and the PMC has issued certificate on 31-03-2010 with reference to the application dt. 04-04-2006, therefore, the completion certificate by PMC relates back to the date of application, i.e. 04-04-2006 and, therefore, in our considered opinion the assessee has completed the project before 31-03-2008. So far as the second issue is concerned the assessee has duly applied for issue of completion of buildings I+K of Project B on 04- 04-2006 and has handed over the flats to the customers, that they have undertaken for maintenance charges and have started paying 27 ITA No.2004/PN/2014 electricity charges. The assessee has done everything possible on its part for issuance of completion certificate. Therefore, the assessee cannot be held responsible for non-issuance of completion certificate by PMC since the delay is not attributable to the assessee.
15. The third issue on which the Ld.CIT(A) upheld the disallowance u/s.80IB(10) is that the assessee had constructed shops admeasuring about 9472 sq.ft. out of the aggregate built up area of 1,16,433 sq.ft. and therefore the commercial area is 8.37% of the aggregate built up area and therefore is in excess of the prescribed limit u/s.80IB(10). We find, there is no dispute to the fact that the project, in the instant case, is approved on 11-01-1999 vide commencement certificate No.2117 for Plot No.3. Similarly, the PMC approved the first building plan in respect of Plot No.4 vide commencement certificate No.4410 dated 06-03-2000. Thus, the housing project has been approved before 31-03-2005. It has been held by the Hon'ble Bombay High Court in the case of CIT Vs. Brahma Associates reported in 333 ITR 289 that the housing project approved before 31-03-2005 can include commercial area. It is the case of the Revenue that the ratio of Brahma Associates will not be applicable for A.Y. 2005-06 and subsequent years since in the case of Brahma Associates the assessment year involved was2003-04 and the position would be different w.e.f. A.Y. 2005-
06. 15.1 We find the Hon'ble Gujarat High Court in the case of Manan Corporation after considering the decision of Hon'ble Bombay High Court in the case of Brahma Associates has held as under:
"As mentioned hereinabove criterias to hold this amendment retrospective are absent there is no as explicit and specific wording expressing retrospectivity and even if it is assumed for the sake of arguments that the same is to be read by implication the same does not appear to be reasonable but, in fact emerges to be harsh and unreasonable when y comes to implementation.
31. Again, as held in case of CIT vs. J.H. Gotia(supra) by the Apex Court such strict construction of the statute if leads to absurd interpretation the same may not subserve the intent and object of legislation.
32. Again, as held in the case of Mysore Minerals Ltd. vs. Commission of Income-Tax reported in 239 ITR 775, Apex Court with two possibilities of interpretation of a taxing statute, one which is favourable to the assessee should be always preferred.
33. As also laid down in the case of Bajaj Tempo Ltd. vs. Commissioner of Income-Tax reported in 196 ITR 188 (SC), taxing statute granting incentives for promoting economic growth and development should be liberally construed to facilitate and advance the objectives of the provision.
34. Above discussion cumulatively when examined with the objectives and intent it sought to achieve in bringing about the said provision of Section 80IB(10), this amended taxing statute requires to be interpreted in favour of the assessee rather than insisting upon strict compliance leading to absurdity.28 ITA No.2004/PN/2014
35. It can be also held that this being a substantive amendment and not a clarificatory amendment, the amendment of this nature cannot have retrospective effect."
15.2 Similar view has been taken by the Mumbai Bench of the Tribunal in the case of Hiranandani Akruti JV Vs. DCIT reported in 39 SOT 498 where it has been held that law as it existed in the A.Y. 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced the development is to be applied and accordingly it was held that the assessee was entitled to deduction u/s.80IB(10) for A.Y. 2006- 07 15.3 The Pune Bench of the Tribunal in the case of Opel Shelters Vs. ACIT vide ITA No.219/PN/2009 and D.S. Kulkarni and Associates vide ITA Nio.17/PN/2009 following the decision of the Mumbai Bench of the Tribunal in the case Hiranandani Akruti JV (Supra) has held that in those approved projects where construction has been started much earlier than 01-04-2005, the assessees are required to complete the plan as it has been approved.
15.4 In view of the decision of Hon'ble Gujarat High Court in the case of Manan Corporation(Supra) it has to be held that the law as existed in the year when the assessee submitted its proposal and the permission is granted by the local authority and the assessee commences development is to be applied in determining its eligibility of the deduction claimed u/s.80IB(10). The assessee in the instant case cannot be denied the benefit of deduction for construction of commercial area which is more than 2000 sq.ft. or 5% of the built up area of the housing project whichever is less. It has been held by various judicial decisions including the decision of Hon'ble Gujarat High Court in the case of Manan Corporation (Supra) that such amendment to provisions of section 80IB(10) is prospective in nature and not retrospective. We, therefore, hold that the assessee cannot be denied the benefit of deduction u/s.80IB(10) on this issue also.
15.5 So far as the 2 decisions relied on by the Ld. Departmental Representative we find both these decisions are distinguishable and not applicable to the facts of the present case. So far as the decision of the Tribunal in the case of Sainath Estates Pvt. Ltd. (Supra) relied on by the Ld. Departmental Representative is concerned we find the same is not applicable to the facts of the present case. The assessee could not explain the reason for non issuance of completion certificate by the local authority in the case of Sainath Estates Pvt. Ltd. (Supra). However, in the instant case the completion certificate has been issued on 30-03-2010 with respect to the occupancy certificate issued by the architect on 04- 04-2006. Further, the delay in issue of completion certificate was not for completing the project but on technical grounds, i.e. non payment of the compounding fees of Rs.2,41,865/- for unauthorized constructions which the assessee has denied all along and non allotment of certain built up area to the economically weaker section of the society which the assessee has complied before 31-03-2008. So far as the decision in the case of Everest Home Construction (India) Pvt. Ltd. (Supra) to the 29 ITA No.2004/PN/2014 proposition that the amendment brought in by the Finance Act, 2004 is applicable to A.Y. 2005-06 and onwards, even if the project is approved before 31-03-2005 we find the same is not applicable in view of the decision of Hon'ble Gujarat High Court in the case of Manan Corporation (Supra) which has already been reproduced. Further, the decision of a High Court would prevail upon the decision of the Tribunal which is a lower forum than the High Court.
15.6 Therefore, in view of the above discussions we hold that the assessee in the instant case is entitled to the benefit of deduction u/s.80IB(10) on its housing projects. Accordingly, the first ground of the assessee is allowed. Since the assessee succeeds on the first ground the alternate contention for proportionate deduction become academic in nature and therefore is not required to be adjudicated."
7.2 Similarly, the Pune Bench of the Tribunal in the case of M/s. Raviraj Kothari Punjabi Associates (Supra) after considering the decision of Hon'ble Mumbai High Court in the case of Brahma Associates (Supra) and the decision of the Mumbai Bench of the ITAT in the case of Everest Home Construction (India) Pvt. Ltd. (Supra) has allowed the claim of proportionate deduction by observing as under :
"6. So, however, at the time of hearing the Ld.CIT DR appearing for the Revenue contended that the Tribunal held that the restrictions on permissible commercial area as per section 80IB(10)(d) of the Act was inserted by the Finance (No.2) Act 2004 w.e.f.01-04-2005 and that such amendment was prospective in nature and would not apply to the project in question. The Ld. CIT DR submitted that in this context the Mumbai Bench of the Tribunal in the case of ITO Vs. Everest Home Construction (India) (P) Ltd. vide ITA No.7021/Mum/2008 order dated 12-09-2012 has taken a contrary view to hold that the commercial area limit introduced by the Finance (No.2) Act 2004 w.e.f.01-04-2005 by insertion of Clause (d) section 80IB(10) shall be applicable to evaluate the deductions claimed by the assessee from the A.Y. 2005-06 onwards.
7. We have carefully considered the argument set up by the Ld. Departmental Representative and find that there is no reason to depart from the position decided by the Tribunal in the assessee's own case for the Assessment Years 2003-04 to 2006-07 vide its order dated 23- 11-2012 (Supra). The Tribunal had concluded that the amendment made by the Finance (No.2) Act 2004 w.e.f. 01-04-2005 by insertion of Clause (d) of section 80IB(10) would not operate retrospectively and that it would be prospective in nature. According to the Tribunal, the assessee had commenced its project in question prior to 01-04-2005 in terms of the approval granted by a local authority and the said project also stands completed on 20-03-2004 and thus the amendment made by the Finance (No.2) Act 2004 cannot be invoked to dis-entitle assessee's claim of deduction u/s.80IB(10) for the Assessment Years 2005-06 and 2006-07 as well. The aforesaid conclusion of the Tribunal was also based on certain precedents which are as under :
1. Open Shelters Pvt. Ltd. Vs. ACIT (ITA No.219/PN/2010 for A.Y. 2005-06 order dated 31-05-2010
2. G.K. builders in ITA No.1077 and 1078/PN/2010 for A.Y. 2005- 06 and 2006-07 order dated 30-07-2012
3. Hiranandani Akruti JV Vs. Dy. CIT reported in 39 SOT 498 (Mumbai) 30 ITA No.2004/PN/2014 The Tribunal also considered the judgments of the Hon'ble Bombay High Court in the case of Brahma Associates (2011) 333 ITR 289 (Bom.) to hold that amendments in question are to be seen as prospective in nature.
8. Apart from the aforesaid we may also notice the judgment of the Hon'ble Gujarat High Court in the case of Manan Corporation Vs. ACIT dated 03-09-2012 wherein the bone of contention was the applicability of the requirements contained in Clause (d) of section 80IB(10) of the Act. The Revenue had canvassed that the provision of section 80IB(10)(d) of the Act was applicable from 01-04-2005 and was to be considered for A.Y. 2006-07 as well, regardless of the date of approval of the project in question. The Hon'ble Gujarat High Court, by referring to the judgment of the Hon'ble Bombay High Court in the case of Brahma Associates (Supra) and also the judgment of the Hon'ble Karnataka High Court in the case of CIT Vs. M/s. Anriya Project Management vide ITA No.138 of 2010 dated 29-02-2012 held that such an amendment would not apply to a project which is approved prior to 01-04-2005 and that in this light the prospective nature of the amendment, as held by the Hon'ble Bombay High Court, is to be viewed.
9. Pertinently in the case before Hon'ble Gujarat High Court the claim of the assessee was denied by the Tribunal relying on the judgement of the Hon'ble Bombay High Court in the case of Brahma Associates (Supra) holding that the restriction set out in Clause(d) of section 80IB(10) inserted by Finance (No.2) Act 2004 w.e.f.01-04-2005 was to be applied in A.Y. 2006-07, regardless of the date of approval of the project in question. The aforesaid position canvassed by the Tribunal in the case of Manan Corporation (Supra) was negated by the Hon'ble Gujarat High Court on the basis of the judgment of the Hon'ble Bombay High Court in the case of Brahma Associates (Supra). Therefore, in this manner, the reliance now sought to be placed by the Ld. CIT DR in the case of Everest Home Construction (India) Pvt. Ltd. (Supra) therefore is not of any help to the Revenue. Thus, following the parity of reasoning laid down in the order of the Tribunal dated 23-11- 2012 (Supra), in assessee's own case, and which is in consonance with the judgment of the Hon'ble Gujarat High Court in the of Manan Corporation (Supra), which has referred to and relied upon the judgment of the Hon'ble Bombay High Court in the case of Brahma Associates (Supra), we therefore find it expedient to uphold the assessee's claim for deduction u/s.80IB(10) in relation to the "Citadel" project. In this manner, the claim of the assessee is allowed.
Respectfully following the above decisions, we hold that the assessee is entitled to proportionate deduction u/s.80IB(10) of the I.T. Act. We, therefore, uphold the order of the CIT(A) for A.Yrs. 2004-05 to 2007-08 and set-aside the order of the CIT(A) for A.Y. 2008-09."
7.3 In view of the decisions cited above, we are of the considered opinion that the assessee is eligible for pro-rata claim of deduction u/s.80IB(10) with respect to the eligible units of the housing project. We, therefore, uphold the order of Ld.CIT(A) for A.Yrs. 2003-04 to 2007-08. The order of Ld.CIT(A) for A.Y. 2008-09 is set-aside and the AO is directed to allow proportionate deduction for the eligible units."
13. In view of the consistent decision of the Coordinate Benches of the Tribunal allowing claim of pro-rata deduction u/s.80IB(10) we do not find any infirmity in the order of the CIT(A) allowing the claim of 31 ITA No.2004/PN/2014 pro-rata deduction. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed.
14. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 27-05-2016.
Sd/- Sd/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER iq.ks Pune; #दनांक Dated : 27th May, 2016. lrh'k
आदे श क( )"त+ल प अ,े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-II, Pune
4. CIT-II, Pune 'वभागीय त न*ध, आयकर अपील य अ*धकरण, "बी" iq.ks /
5. DR, ITAT, "B" Pune;
6. गाड फाईल / Guard file.
आदे शानस ु ार/ BY ORDER,स या स या'पत त //True Copy// व र/ठ नजी स*चव / Sr. Private Secretary आयकर अपील य अ*धकरण, iq.ks / ITAT, Pune