SHRI PUSHPENDRAKUMAR K. SHARMA,AKOLA vs. I.T.O. WARD -3, AKOLA

JL} I.T.A. Nu.c2/NAG/20TJ ASossment yeat:2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P, K: BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH; JUDICIAL MEMBER LIANo92NNAGZOZ Assessment_Year:2008-09 Shri Pushpendra Kumar K. Sharma Prop. Of Kawach Builders Developers, Tapadia Nagar, Akola: PAN:AETPS 4753 H (Appellant; Vs, Income Tax Officer , Ward-3, Akofa. (Respondent) Appellant by Shri C. ]. Thakar; Advocate Shri S C ThakarAdvocate Shri Geetesh Kumar; D.R, 22/11/2017 24112/2017 Respondent by Date of hearng_ FPPE Date of pronouncement 3 QRDER PER PK BANSAL_VE This appeal has been filed by the assessee agalnst the order of the CIT(A)-1, Nagpur dated 21/11/2016 relating to assessment year 2008-09, The only issue involved in this appeal taken by the assessee relates to the denial of claim f deduction to the assessee U/s 80IB(10) of the IT. Act; 2 The facts of the case, in brief; are that the assessee has claimed deduction ujs 801B(10) of the IT, Act amounting to Rs,1,07,65,311/- The Assessing Officer disallowed the same to the following reasons: Commencement certificate i5 in the name Of Shri Sunilkumar Kailashchandra Bajoria and does not having any seal on it; The AO held that as assessee has purchased land from Shri Sunilkumar K. Bajoria & Others in FY, 2001-02 & FY, 2003-04, the assessee should have obtained fresh commencement certiricate for housing project in his name K,T44. Yu,2/NAG/2017 Assessment year:2008-09 Therefore this certificate cannot be treated 25 bonafide commencement certificate; (W) In the case of assessee the housing project shall be completed &n pr before the 31st day of March, 2008. In this regard the completion certificate submitted by the assessee dated 22.02.2008 which does not bear ay seal or other mark of Akola Municipal Corporation or signature of Commissioner of Municipal Corporation but it signed by Dy. Engineer PWD; Akola. Municipal Corporation , Akola vide letter dated 28.12.2010 stated that this Office has not issue such completion certificate Only the Commissioner of Municipal Corporation, Akola i5 the competent authority t0 issue completion certificate The assessee waS thus failed to submit bonafide completion certificate issued by Competent Authority Of Municipal Corporation, Akola. (i1) Sanctioned Map of projects submitted by the shows assessee that total buiit up area of shops-commercial unit i5 X4 438.75 SQM. 1.e ground floor ) 146.25 SQM, 1st floor 28 146.25 SQM, floor 146,25 SQM total 438.75 SQM. As per section BOIB(IO) of I T Act, 1961 the build-up area of the shops and other commercial establishment included in the housing project should not exceed five per cent of the aggregate buitt up area of the housing project or two thousand square feet Whichever i5 less In assessee 5 case housing project Is much more than the build up area as mentioned in section us 801B(10). 3 Against the said order , the assessee went in appeal before the CIT(A) During the appellate proceedings the assessee got the following papers from Akola Mahanagar Palika on 08/08/2011: Commencement certificate in the name of Kawach Builders and Developers through Shri . Pushpendrakumar Keshrilal Sharma in respect f above project (Ti Revised sanctioned plan (case no. 14/39/07-08) (it) Occupancy certificate (Imaratit rahanya sathi praman patra) The assessee submitted the following papers as an additional evidence before the CIT(A): 142 1.T.A. No.92/NAGZZQT? {ssessment year:2008-09 (6) Order-sheet of Akola Mahanagar Palika in case No. 14/39/07-08 in the case of Kawach Builders and Developers through Pushpendrakumar Keshrilal Sharma: (ii) Copy of application dated 06/12/2007 to the Municipal Commissioner , Akola by the assessee (iii) Copy of letter reminder by assessee to Town Planning Nazul Dept; Akola Mahanagar Palika dtd, 20/05/2008. (iv) Letter Qf Akola Mahanagar Palika dtd, 10/09/2008 in reply to above letter dated 20/05/2008. (v) Letter by assessee to Akola Mahanagar Palika dtd. 20/12/2010 (vi) Letter of Akola Mahanagar Paiika dtd; 28/07/2011 in reply to assessee's letters dated 20/05/2008 & 20/12/2010, (vii) Commencement certificate in the name of Kawach Builders and developers through Shri Pushpendrakumar Keshrilalji Sharma dtd, 02/08/2007 In respect of above project in case no. 14/39/07-08, (vli) Building occupancy certificate In favour of "Kawach builders ad developers' through Shri Pushpendrakumar Keshrilal Sharma, Shastri Nagar, Akola in respect of building completion on 27/03/2008. (ix) Revised sanctioned plan in respect of above project in case No.14/39/07-08 dated 02/08/2007. The CIT(A) asked for the remand report from the Assessing Officer: The Assessing Officer took the view that the additional evidence was not in existence at the time of assessment proceedings ad were created with a view to mislead the department The CIT(A) on this basis dismissed the appeal of the assessee. When the Matter went before the Tribunal in LTA.No.311/NAG/2O13, the Tribunal vide order dated 05/09/2014 set aside the order of the CIT(A) and restored the same to the file of the Assessing Officer in respect of the claim made by the assessee u/s 801B. Accordingly, in the fresh assessment proceedings the Assessing Offlcer rejected the claim of the assessee with regard to deduction ujs 80IB. the assessee again went before the CIT(A) who confirmed the order of the Assessing Officer: 0 1.1.4 Y92/1//20}17 AsshssInchl yeai:2ona-Ug 4 We have heard the rival submissions, carefully considered the same along with the orders of the tax authorities below: We nated that in this case the assessee has got approved the low income housing project on 29/03/2001 by the Akola Municipal Corporation and accardingly claimed the deduction from assessment vear 2002-03 to assessment year 2008-09 u/s 80IB(10) of the Act. During the assessment vear 2004-05 when the scrutiny of conducted; the assessee was allowed deduction u/s 8OIB(1O) vide assessment order passed u/s 14303) on 10/07/2006. The only question before U5 is whether the conditions stipulated uJs 80IB(10) are applicable prior to its amendment made with effect from 01/04/2005. It is not denied that the project Of the assessee was approved prior to 01/04/2005. As on that date the provision of section ufs 80IB(1O) read as under: "(10} The amount of profits in case of an undertaking developing ad building housing projects approved before the 31st day of March, 200S by & local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year form such housing project If, (a) Such undertaking has commence Or commences development and construction of the housing project Qn Or after the _st day of October, 1998: (b) The Project is on the size of a plot of Iand -which has a minimum area Of one acre; and (c) The residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities Of Delhi Or Mumbai Or within twenly five kilometers from the municipal limits of these cities and One thousand and five hundred square feet at any other place: Subsequently we noted that the provision of u/s 80IB(1O) has been amended by the Finance Act; 2004 with effect from 01/04/2005 ad sub clause (d) has been inserted by which condition regarding the restriction on the built up area and other establishment was incorporated: Similarly , condition regarding the completion of the construction was incorporated u/s 164 _ 3 Sm I.T.A. No.92/NAG/20H17 Assessinent Year: 2008-09 condition mentioned In clause (d). This conditionjrestriction Was not on the statute book earlier when ali these projects were sanctioned Another impartant amendment was made by this Act to sub-section (14) of Section BOIB with effect from 1.4.2005 and for the First time under clause (a) thereof the words 'built-up area were defined ((para 17} Clause (a) was inserted in Section 80IB(14) defining the words "built-up area tp mean the inner measurements of the residential unit at the floor Ievel, including the projections and balconies; a5 increased by the thickness of the walls; but did not include the common areas shared with other residential units (para 18) Now Clause (d) was to be treated a5 inextricably linked with the approval and construction Of the housing project but an assessee cannot be called upon to comply with the said condition when it was not in contemplation either Of the assessee or even the Legislature, when the housing project was accorded approval by the local authorities: (para 19) Bombay High Court in ITA Nos. 201 ad 308 of 201Z, had held that when the Assessee claims a deductian under section 80 IB(10), the (Assessee i5 required to comply with such a condition only iF jt Is &n the statute-book on the date of the approval of the housing project ad it has nothing to do with the vear in which the profits are brought to tax by the Assessee Clause (d) of section 80-18(10} is inextricably linked to the date of the approval of the housing project a the subsequent development-construction Of the same; and has nothing to do with the profits derived therefrom: If & particular condition is not Inseparably linked to the date of approval of the housing project; different considerations would arise: Clause (d) of section 80-18(10), being a condition linked to the date of the approval of the housing project; would not apply to any housing project that Was approved prior to 3lst March; 2005 irrespective of the fact that the profits of the said housing project are brought to tax after the said provision was brought into farce-(para 21) (55 186 I.TA.No.9Z/NAG/2017 Assessment year;2008-09 BOIB( 10)(a)()(Ui) (_) . The section has also subsequently been amended by Finance Act; 2009 and Finance Act, 2010, We noted when the project of the assessee was approved 35 per the provisions of u/s 801B(10); as it exists on that date, under sub clause (&) the only condition was that such underta) king has commenced or commences development or construction of housing project 0n or after 01/10/98. There was no condition regarding the completion of such canstruction: The condition regarding the completion of the construction has been inserted ufs 80IB(1O) bY Finance Act; 2004 with effect from 01/04/2005, Even there was no condition regarding the restriction on the built Up area of the shops and commercial establishment included in the housing project The Assessing Officer has denied the deduction to the assessee u/s 8OIB in the impugned assessment year on the basis of the amended provision of section 8O(IB) which were inserted from 01/04/2005, In Our view , the assessee i5 required to comply with the conditions as stipulated UJs 8O(IB) a5 on the date when its project was approved and he commenced the construction not the conditions which have been brought into the statute subsequently. Our aforesaid view is duly supported by the decision of Hon'ble Supreme Court in the case of CIT vS, Sarkar Buiiders [2015] 375 ITR 392 (SC) in which Hon'bie Supreme Court has held as under: "Only changes that were brought about were that with effect from 1.4.2002: (6) the housing project had to be approved before 31.03.2005; and (_) there was no time limit prescribed far completion of the said project Though these changes were brought about by the Finance Act; 2003, the Legislature thought it fit that these changes be deemed to have been brought into effect from 1.4.2002, AlI the remaining provisions of Section 8018(10) remained unchanged. (para 16}) LiA Thereafter, significant amendment was carried out by Finance (No.2) Act; 2004 with effect from 1.4.2005 The Legislature made substantial changes in sub-section (10} Several new conditions were incorporated for the first time; including the 47 1. A.No.9z/NAG/2017 Assessment year;2u08-0} Thus judgments of the High Courts, which are impugned in these appeals, take correct view that the assesees were entitled to the benefit of Section 8018(10). (para 23) Clause (d} of Setjan 80-76 i5 to be treated a5 inextricably linked with the approval and canstruction of the housing project but &n assessee cannot be called upon to camply with the said condition when It was not in contemplation either Of the assessee r even the Legislature; when the housing project was accorded approval by the local authorities Clause (d) 0f section 80-18/10), being a condition linked to the date of the approval of the housing project; would not apply to ay housing project that was] approved prior to 3Ist March; 2005 irrespective of the fact that the profits of the said housing project are brought to tax after the said provision was brought Into force: 4.1 Similar view has been taken by the undersigned in the case of Raj Reality vs. DCIT [2015] 53 Taxmann com 439 (Indore-Trib:) in which this Tribunal under para 9 has held as under: "From the perusal of the provision Of section 80-IB(10) &s was in existence; when the assessee's project was approved i.e n 24/4/2003, the condition as stipulated under Explanation (I) to section 80-IB about the completion of the project and issue of the certificate by the local authority was not there There was only three conditions which have to be complied with by the Project; the first condition was that project should have been approved before 31-3-2005, ad the undertaking should have commenced the development of construction Of housing project on Or after 1-10-1998 The size of the project should have 3 minimum area Of 1 acre and in case the residential units has a minimum built up area of 1000 sq.ft , if it is situated within the cities Of Delhi or Mumbai or within 25 kms, from Municipal limit of these cities and 1500 sg.ft: If it Is situated in any other place: The condition that completion of the project before 31-3-2008, Or within 4 years Or within 5 years has been brought into section 80-IB Only by the Finance Act;, 2004, not prior to that This i5 settled position af law that the law existing at the particular point of time will be applicable unless ad until it is specifically made retrospective by the legislator. Therefore, the assessee is expected to complete the project as per the approved plan at a particular point of time and the assessee is 0 1..Nu,4JZ/NAD/2017 Assessncnt year:2008-09 1y2 not expected to do or fulfili the conditions which are not in existence at the relevant point of time or made compulsory after making Such amendment In the Act from the future date; When the project approved, the competent authority has given specified date that project should have completed byY that date The section 80-18610), which was in existence In relevant year relevant year there nowhere required the assessee to complete the project within a particular period Therefore; the restriction; which has been imposed subsequently by amending the provisions of the law will not apply to the assessee that the project should have been completed within four years from the end of the financial year in which housing i5 approved by the Iocal authorities [Para 9] 4.2 In viewv of this fact; we are of the view that the Assessing Officer cannat reject the claim of the assessee made u/s 80IB( 10) on the basis of the non compliance of the condition regarding the completion of the project as well as non complying with the condition stipulated u/s 80IB(10)(d) of the Act as those conditions were not in existence when the assessee's project was approved I.e. on 29/03/2001. In view of decision of Hon'ble we set aside the order of CIT(A) ad allow the deduction Supreme Court to the assessee u/s 80IB of the Act, 5_ In the result; the appeal of the assessee stands allowed. (Order was pronounced in the open court on 24/11/2017 . Sd] _ (PAWAN SINGH) Judicial Member Dated:24/11/2017 #Singh P K; BANSAL ) Vice President Copy of the order forwarded_to 1 The Appellant 2 The Respondent. 3_ Concerned CIT 4 The CIT(A)