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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
Before: SMT P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
PER S. RIFAUR RAHMAN, A.M.:
Both these appeals filed by the revenue are directed against the orders of CIT(A), Vijayawada, both dated 28/03/2014 for AYs 2006-07 and 2007-08. Since identical issue is involved in both these appeals, the same were clubbed and heard together and therefore a common order is passed for the sake of convenience.
The facts as taken from AY 2006-07 are, the assessee is a real estate developer, during this year, the assessee has started its project of construction of residential house after plotting the land purchased in earlier years. The sale from plots and residential houses has started in this AY and the assessee has shown receipts from the same. The assessee had claimed its entire income of Rs. 55,94,827/- as exempt u/s 80IB(10) of the Income-tax Act, 1961 (in short ‘the Act’). The AO observed that as per the provisions of section 80IB,
2 ITA Nos. 1255 & 1256/Hyd/14 M/s Lakshmi Mega Township, Hyd. deduction will be allowed only when the housing project is completed. Since, the housing project has not been completed, the AO denied the claim of the assessee u/s 80IB. When the assessee carried the matter in appeal before the CIT(A), the CIT(A) restored the file to the AO with a direction to allow assessee’s claim.
2.1 The AO, accordingly, asked the assessee to produce the completion certificate from the municipal authorities in support of the proof that the apartments have been completed as per the plan approved. The AO held that inspite of sufficient time given to the assessee, it failed to produce to the completion certificate as on the date of assessment order. Hence, AO disallowed the assessee’s claim of deduction u/s 80IB(10).
Aggrieved, assessee preferred an appeal before the CIT(A).
Before the CIT(A), the assessee filed written submissions, which were extracted by the CIT(A) in his order at pages 3 to 5 wherein the assessee, inter-alia, stated that the project was completed much prior to 31/03/2011, which is the prescribed date in its case. In fact after completion of the project, the assessee vide its letter dated 24/01/2011 had made a request to the authority concerned for issue of completion certificate. As is evident from such letter, it was specifically mentioned therein that all the works, with regard to the project in question were completed as per the sanctioned plan and a copy of certificate from the structural engineer, in that regard was also filed. It was further requested to make necessary inspection and issue the completion certificate at the earliest. Copies of said correspondence was filed before the CIT(A). It was submitted that all these facts lead to an undisputable inference that the project was completed in all respects as per the sanctioned plan, as on 24/01/20011. However, the authorities failed to issue the certificate before 31/03/2011, instead, the said certificate was issued vide letter dt. 14/05/2012.
3 ITA Nos. 1255 & 1256/Hyd/14 M/s Lakshmi Mega Township, Hyd. 5. The CIT(A) after considering the submissions of the assessee as well as referring to the provisions of section 80IB(10) directed the AO to allow the claim of the assessee by giving the following categorical findings: 1. As per the provisions of the Act, the project should be completed within five years from the end of the financial year in which the housing project is approved. Accordingly, the deadline for the completion of the project would be 31/03/2011. 2. On a perusal of record it is found that the assessee has completed the project within the time limit as is evidenced by the fact that 197 houses were already sold and delivered to the respective customers before the deadline date i.e. 31/03/2011. 3. There was a delay in issuance of completion certificate by the local authorities, for which, the assessee cannot be denied the claim of deduction u/s 80IB(10) of the Act keeping in view the fulfilment of all other conditions stipulated in the said section. 4. The completion of the project by the assessee before the deadline i.e. 31/03/2011 is evidenced by the fact that the AO has allowed the claim of the assessee u/s 80IB(10) for the AYs 2011-12 and 2012-13.
Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal:
“1. The order of the CIT(A) is erroneous in law as well as on the facts of the case.
Ld.CIT (A) has erred in not appreciating the fact that during the Search and Seizure Operation, it was proved that the housing project is not completed and also completion Certificate is not produced by the assessee at the time of assessment proceedings.
The Ld. CIT(A) should have appreciated that the Provisions of Sec. 80AC of IT Act 1961 are applicable in this case.
4 ITA Nos. 1255 & 1256/Hyd/14 M/s Lakshmi Mega Township, Hyd. 4. The Ld. CIT(A) erred on facts and in law in granting relief though it is mandatory u/s. 80AC of IT Act to file ROI within the time allowed u/s. 139(1) for the purpose of claiming deduction u/s. 80IB(10) of the IT Act, as held by Hon'ble Mumbai High Court in the case of M/s. Kansai Nerolac Paints Ltd., Vs DCIT, Circle-7(1), Mumbai & Anr.
Any other ground or grounds may be urged at the time of hearing.”
6.1 The revenue also filed the following additional ground of appeal relying on the decision in the case of NTPC Ltd. Vs. CIT, 229 ITR 383. “1. The Learned CIT (A) should have appreciated that the Provisions of Sec. 80AC of Income tax Act, 1961 are applicable in this case of granting relief, it is mandatory u/s. 80AC of Income tax Act, 1961 to file Return of Income within the time allowed u/s. 139(1) of the Income tax Act, 1961 for the purpose of claiming deduction u/s. 80IB(10) of the Income tax Act, 1961.
The additional ground of appeal may be considered as per decision in the case of NTPC Ltd Vs. CIT (229-ITR-383), wherein it was answered that the Hon’ble ITAT has jurisdiction to examine a question of law arising in assessment proceedings not raised earlier, when all the facts from which the question arises available on record.”
Since the additional ground raised by the revenue does not arise out of the orders of AO/CIT(A), the same is not admitted for adjudication.
Considered the rival submissions and perusal the material on record. The AO denied the assesee’s claim of exemption u/s 80IB(10) on the ground that the assessee failed to produce the completion certificate from the municipal authorities in support of the proof that the apartments have been completed as per the plan approved at the time of assessment proceedings. On the other hand, the assessee claimed that it has applied to the municipal authorities for completion certificate, however, there was delay in issuance of such certificate by the authorities, which cannot be attributed to the assessee and as such cannot be made the basis for denial of benefit of deduction u/s
5 ITA Nos. 1255 & 1256/Hyd/14 M/s Lakshmi Mega Township, Hyd. 80IB, especially, when there are no objections raised regarding deviation in the construction of the project approved by the said authority. The CIT(A) directed the AO to allow the claim of the assessee by holding that the assessee cannot be denied the claim of deduction u/s 80IB(10) keeping in view the fulfilment of all other conditions stipulated in the said section and also the AO has allowed the claim of the assessee u/s 80IB(10) for the AYs 2011-12 and 2012- 13. After considering the totality of the facts and circumstances of the case, we are of the view that we do not find any infirmity in the order of the CIT(A) in directing the AO to allow the claim of the assessee as the AO has already allowed similar claim in AY 2011-12 and 2012-13, further, the authorities have issued the relevant certificate on 14/05/2012 and, accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue.
8.1 With regard to ground Nos. 3 & 4, the application of section 80AC was raised before us is not the issue emanating from the order of AO or CIT(A). This was raised before us for the first time. Department also filed additional ground on the same subject, which was duly rejected as not emanating from the order of AO. Therefore, these grounds also dismissed.
As the facts and grounds are identical in AY 2007-08 to that of AY 2006-07, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue in this AY also.
In the result, both the appeals under consideration are dismissed. Pronounced in the open Court on 27th April, 2018.
Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 27th April, 2018
6 ITA Nos. 1255 & 1256/Hyd/14 M/s Lakshmi Mega Township, Hyd. kv
Copy to:-
1) ACIT, Circle – 8(1), Hyderabad. 2) M/s Lakshmi Mega Township, 21, 3rd Floor, RT Market, Patel Market, Charkaman, Hyderabad. 3) CIT(A), Vijayawada. 4) CIT – II, Hyd. 5) The Departmental Representative, I.T.A.T., Hyderabad. 6) Guard File