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Income Tax Appellate Tribunal, BENCH “I”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI PAWAN SINGH
confirmed. Thus, further aggrieved by the order of Ld. CIT(A), the assessee has filed the present appeal before us raising the following grounds of appeal:
1. On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeal) - 25. MUMBAI (‘hereinafter referred to as the CIT(A)') has erred in upholding the disallowance of the claim of deduction u/s. 80IB(10) in respect of the profit derived from the activity of construction of housing projects to the tune of Rs. 52,91,537/- as claimed by the appellant for the alleged non fulfilment of condition laid down in clause (iii) of Section 80IB(10) of the Act. The appellant therefore being aggrieved by the order passed by the CIT(A) in utter disregards of the documentary evidences filed and explanations, submissions made before him and also not following the judicial 2 & 1373/Mum/2017- Mavani & Sons
pronouncement of the Apex Court in the case of CAI Vs Sarkar Builders (375 ITR 392) on the similar ratio, and on the facts and circumstances of the case prays that the disallowance of claim of deduction u/s. 80IB(10) of Rs. 52,91,537/- being unjustified, unwarranted and bad-in-law be deleted. 3. We have heard the ld. AR of the assessee and ld. DR for the Revenue and perused the material available on record. The ld. AR of the assessee argued that the assessee undertaken a development of housing project namely “Maruti Mahadev Nagar” near Nandivli Telephone Exchange, Dombivli (East). The assessee has approval of sanction plan on 09.01.2003. The sanction plan consisting of four Wings. Wing No. 1 to 3 consist of A to G Block. Wing No. 4 consist of Wing H, I, J & K. The assessee claimed deduction under section 80IB for Wing No. F & G under building No.3 for Rs. 52,91,537/-. The Assessing Officer disallowed the deduction holding that the approval from the local authority was availed before 01.04.2005 and the construction should have been completed within five years from the end of Financial Year in which the project was approved by local authority. It was submitted that the approval of project was sanctioned by Kalyan-Dombivli Municipal Corporation (KDMC) on 09.01.2003 and project commenced in October 2003. The Ld. AR further submits that the assessee fulfilled all the condition stipulated under section 80IB(10) at the prevailing time at the commencement of the project. At the relevant time, there was no condition for completing the project within five years from the date of approval/commencement. The amendment made under section 80IB(10) w.e.f. 01.04.2005 cannot be made applicable to the housing project which 3 & 1373/Mum/2017- Mavani & Sons has obtained approval before 31.03.2005. The Ld. AR submits that the amendment made in section 80IB(10) w.e.f. 01.04.2005 is not applicable on assessee and the assessee has a valid and legitimate claim of deduction under section 80IB(10). In support of his submission, the Ld. AR of the assessee relied upon the decision of Hon'ble Supreme Court in case of CIT v/s. Aakash Nidhi Builders & Developers [2016] 76 taxmann.com 86 (SC) and in case of Hon'ble Bombay High Court in CIT Vs. Vandana Properties [2013] 353 ITR 36 (Bom.).
On the other hand, the Ld. DR for the Revenue supported the order of authorities below. The Ld. DR for the Revenue further submits that by claiming such relief, the purpose of amendment brought under section 80IB(10) would defeat the purpose of amendment. The Ld. DR further submits that while making amendment under section 80IB(10)(a)(iii), the legislature has given the grace period of five years from the end of Financial year in which housing project was approved by the local authority. Admittedly, the assessee has not completed the project within the prescribed period allowed in amended provision of section 80IB(10)(a)(iii).
We have considered the rival submission of the parties and have gone through the orders of authorities below. The Assessing Officer while framing the assessment order disallowed the deduction under section 80IB(10) on three grounds. Firstly, the project was not completed within five years from the end of Financial Year in which the housing project has been approved.
ITA No. 1374 & 1373/Mum/2017- Mavani & Sons The project was completed in Financial Year 2008-09 whereas it should have been completed in Financial Year 2007-08. Secondly, ground of disallowance was as per section 80IB(10), the starting year is to be the Financial Year in which approval was granted by local authority for development of project and not the year in which the project is commenced. Thirdly, the certificate of completion of project dated 14.03.2007 was a partial completion certificate and not final completion certificate as per the condition stipulated under section 80IB(10)(a)(iii). Before the Ld. CIT(A), the assessee urged that project was approved by local authority vide approval dated 09.01.2003 and that project was partly completed in Financial Year 2007-08 and in the year 2008-09. Thus, the assessee claimed deduction from Assessment Year 2005-06 to 2008-09. The first phase of completion certificate was issued vide Occupation Certificate dated 14.03.2007 and second completion certificate dated 26.03.2009. During the first appellate stage, the assessee urged that the provisions of the section 80IB(10), as stood on the date of commencement of project has to be seen. The ld. CIT(A) took his view that the deduction is claimed for Financial Year 2006-07 relevant to Assessment Year 2007-08, hence, the provision of the Act as stood on 01.04.2006 will be applicable and not as on 31.03.2003 as urged by assessee and confirmed the action of Assessing Officer. The Hon’ble Madras High Court in CIT vs. Jain Housing Construction Company [2013] 30 taxman.com 131 (Madras) while considering the similar issues held that furnishing of & 1373/Mum/2017- Mavani & Sons completion certificate to be produced as a condition of grant of deduction under section 80IB(10) was introduced under Finance Act 2004, w.e.f. 01.04.2005 and prior to that there was no such requirement, in absence of any requirement under section 80IB(10)(a) of the Income Tax Act and going by the proviso, as stood during the relevant year 2004-05, it is difficult to accept the contention of revenue that claim for deduction rested on the production of completion certificate. Further, the Hon’ble Delhi High Court in CIT vs. CHD Developers Ltd. 362 ITR 177 (Del.) held that when approval related to the project was granted prior to 2005 i.e. before amendment and the assessee was not require to produce the completion certificate to avail deduction under section 80IB. The Co-ordinate Bench of Hyderabad Tribunal in case of ITO vs. Kura Homes (P.) Ltd. [2004] 47 taxmann.com 161 held that furnishing of completion certificate in respect of a housing project was brought into statute only with effect from 1-4-2005, hence, would apply prospectively. The Hon’ble Apex Court in CIT vs. Aakash Nidhi Builders & Developers (supra) held that the assessee entitled for proportionate profit in respect of different Wings of the project. Thus, considering the decision of Hon’ble Delhi High Court in CHD Developers (spra), Hon’ble Madras High Court in Jain Housing & Construction Ltd. (supra) and the decision of co-ordinate Bench of Hyderabad Tribunal that the condition precedent for grant of deduction for seeking completion within the time prescribed has to be treated prospectively. Hence, in our view, the & 1373/Mum/2017- Mavani & Sons assessee is not require to produce the completion certificate as the project was approved before the amendment in section 80IB(10). In view of the discussion, the ground of appeal raised by assessee is allowed.
In the result, appeal of the assessee is allowed.
In (Assessment Year- 2008-09)
The assessee has raised identical ground of appeal as raised in the appeal for Assessment Year 2007-08. As we have already allowed the appeal for Assessment Year 2007-08, considering the principle of consistency, the appeal for this Assessment Year is also allowed with similar observation.