DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 3,, AURANGABAD vs. M/S. KASLIWAL NEST,, AURANGABAD

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.27/PUN/2019 िनधा�रण वष� / Assessment Year: 2012-13 DCIT, Circle-3, Vs. M/s. Kasliwal Nest, Aurangabad. 215/216, 1st Floor, Building No.3, Apna Bazar, Jalna Road, Aurangabad- 431005. PAN : AAJFK5915H Appellant Respondent C.O. No.09/PUN/2022 (Arising out of ITA No.27/PUN/2019) िनधा�रण वष� / Assessment Year: 2012-13 M/s. Kasliwal Nest, Vs. DCIT, Circle-3, 215/216, 1st Floor, Building Aurangabad. No.3, Apna Bazar, Jalna Road, Aurangabad- 431005. PAN : AAJFK5915H Appellant Respondent Revenue by : Shri Keyur Patel Assessee by : Shri S. N. Puranik Date of hearing : 17.11.2022 Date of pronouncement : 16.12.2022 आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)- 2, Aurangabad [‘the CIT(A)’] dated 17.10.2018 for the assessment year 2012-13.

2 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 The Cross Objection filed by the assessee against the appeal of the Revenue. 2. First, we shall take up the appeal of the Revenue in ITA No.27/PUN/2019 for adjudication. ITA No.27/PUN/2019 – By Revenue : 3. The Revenue raised the following grounds of appeal :- “1. The Ld. Commissioner of Income-tax (A)-II erred in passing the order both on the facts of the case and in law. 2. The Ld. Commissioner of Income-tax (A)-II erred in deleting the addition of Rs. 12,35,02,325/- made by AO U/s 80IB(10) treating the date of completion of construction of housing project taken on 31/03/2012. 3. The Ld. Commissioner of Income-tax (A)-II erred in deleting the addition of Rs. 12,35,02,325/- made by AO U/s 80IB(10) ignoring the fact that the occupancy certificate dated 31/03/2012 was not available with the assessee firm as on 31/03/2012 and it was obtained by the assessee firm by filing an application under the RTI Act, 2005, it clearly shows that the occupancy certificate was not in possession in the hands of the assessee as on 31/03/2012 as Aurangabad Municipal Corporation sent a letter dated 28/09/2012 to the assessee firm intimating them to obtain No Objection Certificate from Fire Department. 4. The Ld. Commissioner of Income-tax (A)-II erred in deleting the addition of Rs. 12,35,02,325/- made by AO U/s 80IB(10) ignoring the fact that the Fire Department issued No Objection Certificate as on 16/08/2016, thereafter the Aurangabad Municipal Corporation had restored and validated the occupancy certificate dated 31/03/2012. Considering the fact, it is abundantly clear that the Housing project of the assessee firm was treated as incomplete as on 31/03/2012 in view of provisions of section 80IB(10) of the Income-tax Act, 1961 as this condition is mandatory. 5. The order of the CIT(A)-II be vacated and order of the AO be restored. 6. The appellant craves leave to add, amend or alter any other ground the time of hearing.”

3 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 4. Briefly, the facts of the case are as under : The respondent-assessee is a partnership firm engaged in the business of construction of housing project, developer and builder. The Return of Income for the assessment year 2012-13 was filed on 30.09.2012 declaring Rs.Nil income after claiming exemption u/s 80IB(10) of the Income Tax Act, 1961 (‘the Act’) of Rs.12,35,02,325/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-3(2), Aurangabad (‘the Assessing Officer’) vide order dated 27.03.2015 passed u/s 143(3) denying claim for exemption under the provisions of section 80IB(10) of the Act. The factual background of the case is as under : During the previous year relevant to the assessment year under consideration, the respondent-assessee had constructed a residential housing project at Beed-by-pass Road, Aurangabad. The said housing project was commenced during the financial year 2006-07 as per the approval dated 30.03.2007 granted by Aurangabad Municipal Corporation. The respondent-assessee stated that the said housing project was completed during the previous year relevant to the assessment year under consideration and claimed profits derived from the housing project as deduction u/s 80IB(10)

4 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 of the Act. During the course of assessment proceedings under consideration, the Assessing Officer had called upon the respondent-assessee to prove the satisfaction of the conditions laid down under the provisions of section 80IB(10) with supporting evidence. The respondent-assessee vide letter dated 08.01.2015 had submitted evidence in the form of commencement certificate, completion certificate No.365/17/2011-12 dated 31.03.2012. However, the Assessing Officer based on the letter dated 28.09.2012 issued by Aurangabad Municipal Corporation had come to the conclusion that the completion certificate issued by Aurangabad Municipal Corporation on 31.03.2012 was not valid, as the same was cancelled by the said Aurangabad Municipal Corporation for want of fire clearance certificate from Fire Department vide letter dated 28.09.2012 and, therefore, concluded that the housing project was not completed on or before 31.03.2012, accordingly, came to be conclusion that the respondent-assessee is not entitled for deduction under the provisions of section 80IB(10) of the Act. Therefore, the Assessing Officer had completed the assessment at a total income of Rs.12,35,02,325/- by disallowing the claim for deduction of profits u/s 80IB(10) of the Act.

5 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 5. Being aggrieved by the assessment order, an appeal was filed before the ld. CIT(A) contending that the construction work of the housing project was completed before 31.03.2012 and the Architect of the said project had certified the completion of the housing project, and the application for completion certificate was submitted along with necessary charges before 31.03.2012. The fact that the occupancy certificate issued on 31.03.2012 came to be cancelled on 28.09.2012 subsequently for want of the No Objection Certificate from Fire Department have no bearing in allowing the deduction u/s 80IB(10) of the Act. It was further brought to the notice of the ld. CIT(A) that Aurangabad Municipal Corporation vide letter dated 28.08.2017 had revoked its cancellation order dated 28.09.2012 cancelling the occupancy certificate issued on 31.03.2012 and also restored the validity of the occupancy certificate dated 31.03.2012. Considering the additional evidence of letter dated 28.08.2017 issued by Aurangabad Municipal Corporation, the ld. CIT(A) after calling for remand report from Assessing Officer held that the respondent-assessee had applied for issuance of occupancy certificate well within the prescribed time limit along with the requisite charges and certificate dated 25.03.2012 issued by Architect that the housing project was completed, the ld. CIT(A)

6 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 after making a reference to the decisions of the ITAT had concluded that the respondent-assessee is entitled for deduction u/s 80IB(10) and, accordingly, directed the Assessing Officer to allow deduction of Rs.12,35,02,325/- u/s 80IB(10) of the Act. 6. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us. 7. The ld. CIT-DR submits that as on 31.03.2012 there was no valid completion certificate issued by Aurangabad Municipal Corporation and also no valid completion certificate was produced by the respondent-assessee and, therefore, the respondent-assessee is not entitled for deduction u/s 80IB(10) placing reliance on the decision of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. Global Reality [2015] 62 taxmann.com 204 (MadhyaPradesh) and the decision of Co-ordinate Bench of this Tribunal in the case of ACIT vs. Vijay Tukaram Raundal in ITA No.178/PUN/2019 for A.Y. 2013-14 decided on 30.08.2022. Taking us through the application made by the respondent-assessee for issuance of completion certificate which is placed at page no.16 of the Paper Book, ld. CIT-DR submits that the Architect had not certified the date of completion of the project which is left blank. He further submits that in the remand report on which ld. CIT(A)

7 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 placed heavy reliance for granting relief to the respondent-assessee that the Assessing Officer had not commented anything on the merits of the claim. Thus, he submitted that the remand report cannot form the basis for allowing the relief to the respondent- assessee. 8. On the other hand, ld. AR for the respondent-assessee submits that the housing project was completed well before 31.03.2012 and the buyers of flats have occupied their flats and the respondent- assessee made an application for issuance of completion certificate before Aurangabad Municipal Corporation well within time limit and the respondent-assessee cannot be made to suffer on account of delay caused by the Aurangabad Municipal Corporation in issuing the completion certificate placing reliance on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs. M/s. Dharti Enterprises in Income Tax Appeal No.1096 of 2016 order dated 16.01.2019. He also placed reliance on the decision of ITAT, ‘D’ Bench, Mumbai in the case of ACIT vs. M/s. Dharti Enterprises in ITA No.6023/Mum/2012 for A.Y. 2006-07 decided on 18.05.2015. He also placed reliance on the decision of Hon’ble Jurisdiction High Court in the case of CIT vs. Hindustan Samuh Awas Ltd. 377 ITR 150 (Bombay) and the decision of the Hon’ble

8 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 Karnataka High Court in the case of PCIT vs. Majestic Developers 426 ITR 175 (Karnataka). He further submits that the ratio of the decision of the Co-ordinate Bench of the Tribunal (supra) and decision of the Hon’ble Madhya Pradesh High Court (supra) have no application to the facts of the present case, inasmuch as, it is not disputed in the present case that the respondent-assessee had complied with all the conditions precedent for availing the benefit of deduction u/s 80IB(10) of the Act. Taking us through the provisions of section 254 to 256 of Maharashtra Municipal Corporation Act submits that the failure of the municipal authorities to issue certificate within the period of 21 days from the date of receipt of notice of completion of project shall be deemed that the municipal authorities has issued the completion certificate. In the present case, it is only on 28.09.2012 Municipal Authorities had cancelled the original certificate of completion of project issued by Aurangabad Municipal Corporation. Thus, it is contended that as on 31.03.2012, there was nothing on record to say that the completion certificate is not issued to the respondent-assessee and, therefore, it is submitted that the order of the ld. CIT(A) is based on proper appreciation of material and legal position and does not require any interference.

9 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 9. We heard the rival submissions and perused the material on record. The issue that arises for consideration before us whether or not on the facts and circumstances of the case and in law, the ld. CIT(A) is justified in granting deduction u/s 80IB(10) of the Act. During the course of previous year relevant to the assessment year under consideration, it was claimed that it had completed the housing project at Beed-by-pass Road, Aurangabad and obtained the completion certificate issued by Aurangabad Municipal Corporation on 31.03.2012 pursuant to his application made by the respondent-assessee on 17.03.2012. It is also an admitted fact that subsequent to issuance of completion certificate on 31.03.2012, Aurangabad Municipal Corporation had cancelled the completion certificate on 28.09.2012 for want of No Objection Certificate from Fire Department, Government of Maharashtra. The Assessing Officer taking cognizance of these facts had denied the claim for exemption of profits u/s 80IB(10) by holding that the housing project was not completed well within the stipulated period of time i.e. on or before 31.03.2012. It is not in dispute that the respondent- assessee fulfilled all other conditions prescribed under the provisions of section 80IB(10) to avail the benefit of deduction under the said provisions of the Act. On appeal before the ld.

10 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 CIT(A), the ld. CIT(A) taking the cognizance of additional evidence filed before him in the form of letter issued by Aurangabad Municipal Corporation on 28.08.2017, wherein, the original occupancy certificate dated 31.03.2012 was restored and validated, allowed the benefit of deduction u/s 80IB(10) of the Act. This very finding of the ld. CIT(A) is under challenge before us. Therefore, the issue that arises for determination by us is can be it said that there is a valid completion certificate issued by the competent authority certifying the completion of housing project as on 31.03.2012. Admittedly, as on 31.03.2012, the material on record clearly indicates that the completion certificate issued on 31.03.2012 by Aurangabad Municipal Corporation is still valid. It is only vide letter dated 28.09.2012, Aurangabad Municipal Corporation had cancelled the occupancy certificate issued on 31.03.2012. Even otherwise, in view of the provisions of section 263 of Maharashtra Municipal Corporation Act, if the municipal authorities had not acted upon the application made for completion certificate within 21 days of the receipt of notice of completion of the housing project, it shall be presumed that the municipal authorities had granted the completion certificate. No doubt, the cancellation always relates back to date of original issuance of

11 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 completion certificate. Similarly, the letter dated 28.08.2017 revoking the cancellation of occupancy certificate, restoring and validating occupancy certificate issued on 31.03.2012 also relates to original date of completion certificate i.e. 31.03.2012. The term “validation” is defined to mean as “the act or process of making something officially or legally acceptable or approved”. 10. Therefore, in the light of the above discussion, it cannot be said that the respondent-assessee is not in possession of valid completion certificate as on 31.03.2012. It is not for the Income Tax Department to go behind the certificates issued by the Municipal Authorities. 11. Further, we notice that the application for want of completion certificate was made well within the time period i.e. 31.03.2012. Even assuming for argument sake that the completion certificate issued by Aurangabad Municipal Corporation on 31.03.2012 is not valid, for whatsoever reasons by virtue of cancellation letter issued by Aurangabad Municipal Corporation on 28.09.2012 than what follows logically from that is there was no communication either granting or denying the completion certificate within the period of 21 days from the date of notice of completion of the housing project i.e. 17.03.2012 i.e. on or before 07.04.2012. In such a factual

12 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 situation, the ratio of the decision of the Hon’ble Jurisdictional High Court in the case of Dharti Enterprises (supra) and in the case of Hindustan Samuh Awas Ltd. (supra) and the decision of the Hon’ble Karnataka High Court in the case of Majestic Developers (supra) is squarely applicable to the facts of the present case. The ratio of the decision of the Co-ordinate Bench of the Tribunal in the case of Vijay Tukaram Raundal (supra) has no application to the facts of the present case since all the conditions necessary for availing the deduction u/s 80IB(10) have not been satisfied in that case. Similarly, the decision of the Hon’ble Madhya Pradesh High Court in the case of Global Reality (supra) is contrary to the decision of the Jurisdictional High Court in the case of Hindustan Samuh Awas Ltd. (supra) and the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Tarnetar Corporation 362 ITR 174 (Gujarat) and the decision of the Hon’ble Karnataka High Court in the case of Majestic Developers (supra). The decision of Jurisdictional High Court (supra) is binding upon us, we prefer to follow the decision of the Jurisdictional High Court in the case of Dharti Enterprises (supra). Thus, we do not find any fallacy in the reasoning given by ld. CIT(A) in the impugned order holding that the respondent-assessee is entitled for deduction u/s 80IB(10 of the

13 ITA No.27/PUN/2019 C.O. No.09/PUN/2022 Act. Accordingly, the grounds of appeal raised by the Revenue stand dismissed. 12. In the result, the appeal filed by the Revenue stands dismissed. C.O. No.09/PUN/2022 – By Assessee : 13. The Cross Objection filed by the assessee stands dismissed as not pressed during the course of hearing. 14. To sum up, the appeal filed by the Revenue as well as Cross Objection filed by the assessee stands dismissed. Order pronounced on this 16th day of December, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 16th December, 2022. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-2, Aurangabad. 4. The Pr. CIT-2, Aurangabad. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.