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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
Per S.S.Godara, JM:
This Revenue’s appeal with assessee’s Cross Objection CO No.01/PUN/2022 for the A.Y. 2014-15, arise against the CIT(A)-8, Pune’s order dated 17.10.2017 passed in case no.PN/CIT(A)-8/ACIT Cir-12/293/2017-18/284, in proceedings under section 143(3) of the Income Tax Act, 1961.
Heard both the parties. Case files perused.
C.O.No.01/PUN/2022 Yash Associates, Pune
The Revenue’s sole substantive grievance pleaded in its appeal CIT(A)’s action deleting section 80IB(10) disallowance made by the Assessing Officer to the tune of Rs.2,43,29,955/- in his assessment order dated 30.12.2016, as under: “5. In Ground No.1 the appellant has contended that it be allowed deduction u/s. 80IB(10) as it has fulfilled the conditions stipulated under the relevant provisions. In its written submissions dated 12.08.2017, the appellant submitted that it was M/s Ravi Promoters that had got sanctioned the First layout vide no DPO/10440/G/49 from PMC on 17.03.2004 and they commenced the project, with the construction of Row-houses on that part of the plot. Later, they decided to part away with the balance plot of land. On 03.02.2006, they entered into an agreement with the appellant, for the land admeasuring 18.527 sq.mtr along with FSI of 17,440 sq.mtr. The transaction was towards the sale of the plot and not the project. The Row Houses were constructed by Ravi Promoters, sold and the completion certificate of the row houses was taken by Ravi Promoters. The appellant was not involved in the development of the project of Row Houses. The Housing Project namely Ravi Park was independent of the Housing Project of Row houses developed by Ravi Promoters. The appellant further stated that, in any of the revised plans, the plans of the row houses which were developed, have not been altered and also the records and finances for the project were made by an independent unit. The appellant also submitted before the AO that, the aforesaid view was supported by the decisions of the various High Courts and ITAT as well as CBDT vide its letter dated 04.05.2001, addressed to the Maharashtra Chamber of Housing Industry according to which, a new housing project on existing housing project can qualify as a new housing project for the purpose of Sec 80IB (10). The Assessee finally claimed that, since the construction of Buildings A to G constituted an independent housing project, therefore the commencement certificate in respect of the earlier project for construction of Row houses undertaken by M/s Ravi Promoters, could not be applied to construction of projects undertaken by the Assessee. The Assessee relied on a similar case of CIT vs Vandana Properties Bombay C.O.No.01/PUN/2022 Yash Associates, Pune High Court for the above.
The AO, however, found the submissions of the Appellant not acceptable. The AO stated that the revised Commencement Certificates were for Part B of the project which belonged to the assessee. The AO observed that the initial sanctioned Plan contained Part B of the project as well and thus such subsequent commencement separately for Row Houses and for Buildings A to G was only a revision of the original plan and not a separate project. The two projects of Row Houses and Building A to G had not been separated by a compound wall and open space as required under the applicable laws and as pointed out by the Valuer in his Report. Mere fact, that the ownership is different and separate books of accounts are maintained, does not make it a different project in itself. The AO further held, that the ownership was changed by way of illegal mutual agreement without proper subdivision of land and was merely an attempt to defraud the revenue, by buying extra time for completion of project. The claim of the Assessee that, there is sale of plot of land and not the sale of project, was also not accepted. The valuer had pointed out that proper subdivision is required for sale of partial plot of land which is not done in this case. The AO highlighted the observations of the Valuer, wherein he had stated that definition of Plot as per Maharashtra Regional and Town Planning Act, 1966, Chapter-1-2, 2-1 is portion of land held in one ownership and numbered and shown as one plot in town planning scheme. In the Assessee's case the plot is 30,400 sq.mtr and it is not divided into two fragments- one to M/s Ravi Promoters and another to M/s Yash Associates, which shows that the plot is one only, for which M/s Ravi Promoter had got the Commencement Certificate in the year 2004 and subsequent sanctions were only revisions on the basis of first approval. The AO distinguished the facts of the case of Vandana Properties, reported in 353 ITR 36 as relied upon by the Assessee. He also considered the decision of Hon’ble ITAT, Pune regarding the appeal filed by the Assessee for similar issues raised for A Y 2010-11, challenging the decision of the CIT(A), deciding the case in favour of the Assessee. The AO observed as below:
“4.17 I have given careful consideration to the decision of the Hon'ble ITAT in this case and also gone through the decision of Hon tile Mumbai High Court in the case Vandana Properties (353 ITR 36) in that case, the Bombay High Court C.O.No.01/PUN/2022 Yash Associates, Pune in relation to explanation to section 8oIB(10)(a) held as under 4.18. A careful analysis of the Bombay High Court decision cited above would show that in the case decided by the High court the assessee had already constructed buildings A,B,C and D during the period 1993 to 1996 i.e. prior to 1.10.1998 when section 8oIB(10) was not on the statute. In the year 2001, the land was converted from surplus vacant land into land within ceiling limit by the state govt., thereby giving the appellant extra FSI. Accordingly, approval for construction of additional building E, which was not even contemplated and conceived at the time of original plan, was submitted and the same was approved by the local authority on 11.10.2002. It is in view of these peculiar facts, that the High court held that building E could not be considered as an extension of earlier housing project nor had the municipal corporation granted approval to building E as extension of the existing/earlier housing project, but could be said to be a separate housing project. Consequently, it was held that explanation (i) to section 80IB (10) does not apply. As discussed earlier, the facts in the present case are totally different from the facts and circumstances existing in the case of Vandana properties, It is clear from the preceding paragraphs that the appellant only sought revision and modifications to the building plan comprising row houses and flats, which was first approved on 17/03/2004. This is a case where amendment to the building plan was sought and approved at several stages of development and construction of the project. In such a situation, explanation to section 8oIB(10) is clearly attracted and for the purposes of section 8oIB(10) , the project ‘Ravi Park’ shall be deemed to have been approved on the date on which first approval of ‘building plan' was granted by the local authority viz. on 17/03/2004. Since the appellant has failed to complete the construction of the entire housing project on or before 31.03.2008 as per the existing provisions of law, the impugned project does not qualify for deduction u/s 8oIB(10). Thus the decision of Bombay High Court in the case of Vandana Properties does not advance the case of the appellant.
C.O.No.01/PUN/2022 Yash Associates, Pune 4.19 In view of the reasons cited above, it is held that Buildings A to G do not constitute separate and independent project and therefore the period of four years for completion of the entire project has to be reckoned from the first Commencement Certificate dated 17.03.2004 and the project including Buildings A to G has-to be completed before 31.03.2008 for availing deduction u/s 8oIB(10)”
7. I have carefully perused the material on record and submission made by the Appellant carefully. I find that in Appellant’s own case in A.Y 2010-11, vide ITA no, 940/PN/2014, dated 22.01.2015, the Hon'ble ITAT Pune, Bench 'B', has allowed the Assessee's appeal in respect of deduction claimed u/s. 80IB, holding in para 13 of the said order as under:
"In our considered opinion, the stand of the Revenue is quite inappropriate. Firstly it is quite evident that the Assessee firm was incorporated only on 31.01.2006 and it could not be said that the Assessee firm obtained first sanction of its project on 17.03.2004, a date anterior to its incorporation. Secondly, it is also emerging from the agreement dated 03.02.2006 entered by the Assessee with Tupe Family and Ravi Promoters that Assessee not only acquired the land along with the development rights thereto but also the use of the permissible FSI and the balance of the unused FSI by the erstwhile seller i.e. Ravi Promoters. Factually speaking, there is no denial of the fact that the housing project constructed by the Assessee consisting of buildings AtoG comprises of only flats and is quite Different from the project which was conceived by the erstwhile owner i.e. M/s Ravi Promoters. Further it is also quite clear that the Assessee has undertaken development and construction of the housing project on a piece of land which is distinct from the land on which the erstwhile M/s Ravi Promoters completed construction of 40 row houses, though the entire piece of land admeasuring 22639 sq.mtrs, was one plot. The objection of the Revenue that 18527 sq.mtrs. of plot obtained by the Assessee was not formally sub-divided out of the total plot of land 22639 sq.mtrs is of no consequence. The Assessing Officer had relied upon the definition of the plot as per the MRTP Act, 1966 to say that the entire piece of land has to be seen as one plot and therefore according to the Assessing C.O.No.01/PUN/2022 Yash Associates, Pune Officer, the project undertaken by the Assessee on 18527 sq.mtrs of land cannot constitute an independent project. In our considered opinion, the aforesaid projection of the Assessing Officer is not founded on any of the conditions prescribed in clauses (a) to (f) of Section 80IB (10) of the Act. In-fact, one of the points made by the Assessing Officer is to the effect that in the absence of a legal sub-division of plot, the project of the Assessee is to be viewed as a project within a project. This argument of the Revenue is quite fallacious if one is to take guidance from the party of reasoning laid down by the Flon'ble Bombay High Court in the case of Vandana Properties (supra). In the case before the Hon'ble High Court, Assessee had' claimed deduction u/s 80IB (10) of the Act for a Building 'E' which was constructed after the advent of Section 80IB (10) of the Act. Prior to that, buildings A to D were constructed before the advent of section 80IB (10) of the Act. The Hon'ble High Court not only approved assessee's stand that building 'E' could be construed as a housing project independently but while examining the compliance with clause (b) to section 80IB (10) of the Act relating to size of plot of land on which the project stood, it took into consideration even the area of land which was occupied by buildings A to D. Therefore, we do not find weight in the plea of the Revenue based on the definition of plot of MRTP Act, 1966. Even if it is to be accepted that it is a common plot as per MRTP Act, yet the Assessee is not disentitled from claiming construction undertaken by it of buildings A to G as an independent project eligible for Section 80IB(10) of the Act. Therefore, we conclude by holding that the approval of the project of the Assessee for the purposes of clause (a) to section 80-IB (10) of the Act has to be reckoned with as 02.08.2006 i.e. date on which the impugned project of the Assessee was first approved by the PMC. As a consequence, the stipulated date for completion of construction has to be governed by sub- clause (Hi) of clause (a) to section 80IB (10) of the Act. Having regard to the same, Assessee has rightly canvassed that it has compiled with the requirement of clause (a) to section80-IB(10) of the Act. We hold so”
8. Besides the above, the Appellant has also relied upon the decision of Ld. CIT (A)-5, for the A.Ys. 2011-12, 2012-13 & 2013- C.O.No.01/PUN/2022 Yash Associates, Pune 14 in Appeal 78/2015-16, 923/2014-15 & 424/2015-16 of F.No.PN/CIT(A)-5/ITO Wd.i2(3),Pune, respectively, wherein the Ld. CIT (A)-5 has allowed the appeals of the appellant on the identical issue by following the order of Hon’ble Jurisdictional ITAT Pune in A.Y. 2010-11. Respectfully following the decision of the Hon'ble Jurisdictional Tribunal, in Appellant’s own case, on the same set of facts, for AY 2010-11, the AO is directed to allow deduction u/s. 80IB (10) of the Act. Ground No. 1 raised by the Appellant is accordingly allowed.” 3. A perusal of the case records indicates that not only the assessee has succeeded on the very issue of section 80IB(10) deduction in 2010-11 involving its appeal in dated 22.01.2015 but also the Revenue’s Tax Appeal no.581/2016 filed in hon’ble jurisdictional high court against the same stands dismissed on 03.12.2018. Learned DR could hardly dispute the clinching fact that the assessee residential project(s) have remained the same all along whose Phase-1 and 2 stood declared completed as on 10.03.2010 and 30.03.2012; respectively by the Pune Municipal Corporation. Faced with the situation, we find no merit in the Revenue’s instant sole substantive grievance. The CIT(A)’s order under challenge to this effect stands upheld. This Revenue’s appeal no.159/PUN/2018 stands rejected.
Next comes the assessee’s C.O.No.01/PUN/2022 raising its sole substantive grievance that section 115JC of the Act is not applicable in its case as the corresponding residential project(s) had been approved and completed well before the Finance Act, 2011 C.O.No.01/PUN/2022 Yash Associates, Pune inserting the foregoing provision made applicable w.e.f 01.04.2012. Learned Counsel also sought to buttress the point that such a course of action of making section 115JC applicable in case of residential projects having got approved / completed much earlier would render sec 80IC(10) deduction as well as sec 115JC(1) as otiose. It was further highlighted that this eligible assessee had only developed a single residential project which stood completed and therefore, building / development business had come to an end. Meaning thereby that it would not be able to raise any tax credit claim u/s.115JC(1) in the succeeding assessment years. Mr.Thakkar also quoted this tribunal’s co-ordinate bench’s order in M/s.Vikram Developers and Promoters Vs. DCIT & 2796 /PUN/2016 dated 14.11.2019 rejecting applicability of section 115JC “AMT” qua the projects which had already sanctioned and completed before 01/04/2012.
We find no merit in the assessee’s instant arguments. We make it clear that the legislature has inserted Chapter XII-BA in the Act; including sec 115JC, by the Finance Act, 2011 w.e.f 01.04.2012 applicable in case of “persons other than a company”. Section 115JC (1) starts with a non-obstante clause “Notwithstanding anything contained in this Act” in the nature of an overriding provision on all other provisions of the Act” which is in light of Central Bank of C.O.No.01/PUN/2022 Yash Associates, Pune India Vs. State of Kerala [2009] 45 CC 94 (SC). It is further noted that section 115JC(2)(i) stipulates adjustment(s) in an assessee’s total income; “as increased by deductions claimed, if any, under any section (other than section 80B) included in Chapter-VIA under the heading {C}-Deduction in respect of certain incomes”. There is hardly any dispute that the assessee’s impugned section80IB(10) deduction indeed comes under this specific clause wherein the legislature has not stipulated any exception regarding the eligible residential projects which had been approved or completed earlier or later; as the case may be. The same rather indicates very clearly that it is not the approval or completion of the residential project but the deduction claim only which has to be added u/s.115JC(2)(i) of the Act.
6. Faced with the situation, we adopt stricter interpretation in light of the foregoing non-obstante provision and reject the assessee’s contentions as per of hon’ble apex court’s recent decision in CIT Vs. Calcutta Knitwears, Ludhiana [2014] 6 SCC 444 (SC), CCE Vs. Dilip Kumar [2018] 9 SCC 1 (SC) (FB) and PCIT Vs. Wipro Ltd. [2022] 140 taxmann.com 223 (SC).
Learned counsel at this stage once again reiterated his vehement contentions in light of section 115JC read with sec 115JD(1) of the Act(supra). He could hardly rebut the fact that C.O.No.01/PUN/2022 Yash Associates, Pune section 115JC(1) carries an overriding effect on section 115JD being in the nature of non-obstante provision. He next sought constitution of a Special Bench u/s 255(3) of the Act once we are taking a divergent view going against M/s.Vikram Developers and Promoter Ltd., (supra). And that making sec 115JC applicable on already approved / completed housing projects eligible for sec 80IB(10) deductions would end up frustrating the deduction provision itself. All these assessee’s argument fail to evoke our concurrence. So far as it’s reliance on learned co-ordinate bench in concerned, we hold that the same hardly forms a binding precedent as per CIT Vs. B R Constructions [1993] 202 ITR 333 (AP)(FB) holding that any decision not based on correct appreciation of facts and law does not bind a co-ordinate bench. The assessee’s last argument in that sec 115 JC; if made applicable on its project entitled for sec 80IB(10) deduction which had been approved & completed much earlier, hardly carried any weight in light of M/s.Sankara Polymers (P) Ltd. Vs. ITO [2013] 31 taxmann.com 1656 (Kar) rejecting the concerned assessee’s contention challenging sec 115JB “MAT” applicability on its income eligible for sec 80IB deduction. The very principle applies in section 115JC as well since the difference vis-a-vis sec 115JB is regarding the class of an assessee i.e. “PERSONS OTHER THAN A COMPANY and “Companies” only. The assessee fails in all of its argument, grounds raised in CO No.01/PUN/2022. Ordered Accordingly.
C.O.No.01/PUN/2022 Yash Associates, Pune
To sum up, this Revenue’s appeal in Cross Objection No.01/PUN/2022 are dismissed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 5th August, 2022.