FLORIDA TOWERS PVT. LTD.,KOLKATA vs. ITO, WD-1(3), KOLKATA, KOLKATA

O R D E R

Per Dr. Arjun Lal Saini, AM:

Floride Towers Pvt. Ltd. Assessment Year: 2009-10 3.That the appellant craves leave to add, alter, and delete all or any grounds of appeal at the time of hearing.

3. The brief facts qua the issue are that the assessee filed its return of income of Rs.Nil. The assessee’s case was processed u/s.143(1) of the Act. The case then was selected for scrutiny u/s.143(2) of the Act. During the relevant previous year, the assessee was engaged in the business of developing and selling of a housing project. The Assessing Officer observed that on examination of the audited accounts, it was seen that assessee earned a profit of Rs. 26,10,118/-. ln the return of income the assessee claimed that the entire profit is exempted u/s. 80-lB of the l.T Act, 1961. ln support of such claim, the assessee furnished Form no.10CCB duly signed by the a Chartered Accountant under Rule 18BBB of the I.T Rules, 1962. In course of examination of Form No.10CCB, it was seen that the building project was sanctioned by the local authority on 03.10.2002 but assessee did not produce the sanctioned letter before AO. In spite of the fact that it is specifically mentioned in the Form 10CCB, no copy of first approval of the building plan had been attached to that Form 10CCB by the auditor. The Assessing Officer observed that based on Form no.10CCB and audited accounts, it was concluded that the project was still under construction activity during the F.Y 2008-09. Section 80-IB(10) of the I.T Act, 1961 clearly states that any housing project taken up after September 30, 1998 but before 1st April 2004 should be completed on or before 31st March 2008. In the instant case, the project was not completed prior to 1st April 2008 rather the construction activity was going during F.Y 2008-09. The AO also highlighted other irregularities in respect of the said claim of the assessee. Therefore, the Assessing Officer rejected the assessee’s claim u/s. 80-IB of the Act. Page | 2 Floride Towers Pvt. Ltd. Assessment Year: 2009-10

4. Aggrieved by the order passed by the Assessing Officer, the assessee filed an appeal before the ld. CIT(A), who has confirmed the order passed by the Assessing Officer. The ld. CIT(A) observed that there was no evidence of any such completion Certificate being issued by the Howrah Municipal Corporation or even receipt of letter / requisition made by the Appellant for issue of completion Certificate by the Howrah Municipal Corporation. Further the A.O. confirmed that as per enquiry, it was informed that as per provision of Howrah Municipal Corporation relevant rule 1991, Completion Certificate is issued only if the developer requested for it in writing and it was confirmed from enquiry that they had not received any such request from the assessee. Therefore, Assessing Officer had also mentioned in his Remand Report dated 16.12.2013 that as per prescribed condition u/s 80- IB(10)(c) the residential unit should have make built up area of 1500 Sq.Ft, and the assessee has not fulfilled these conditions. This way, the ld. CIT(A) confirmed the order passed by the Assessing Officer.

5. Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us. The ld. Counsel for the assessee has submitted before us that in the light of the recent judgment of the Hon`ble Supreme Court in the case of CIT Vs. Sarkar Builders in [2015] 57 taxmann.com 313 (SC), the assessee is entitled to claim the deduction under section 80-IB(10) of the Act. The requirement of the said sub section is that in order to claim deduction a housing project should be approved before the 31st day of March 2008. The ld Counsel further stated that the assessee`s building project was sanctioned by the local authority on 03.10.2002 therefore the assessee is entitled to claim deduction U/s 80-IB of the Act and the recent judgment of the Hon`ble Supreme Court in the case of CIT Vs. Sarkar Page | 3 Floride Towers Pvt. Ltd. Assessment Year: 2009-10 Builders in [2015] 57 taxmann.com 313 (SC) (supra) is squarely applicable to the facts of the assessee`s case under consideration, wherein it was held as under: “20. Having regard to the above, let us take note of the special features which appear in these cases: a) In the present case, the approval of the housing project, its scope, definition and conditions, all are decided and dependent by the provisions of the relevant DC Rules. In contrast, the judgment in Reliance Jute Industries Ltd. (supra) was concerned with income tax only. b) The position of law and the rights accrued prior to enactment of Finance Act, 2004 have to be taken into account, particularly when the position becomes irreversible. c) The provisions of section 80IB(10) mention not only a particular date before which such a housing project is to be approved by the local authority, even a date by which the housing project is to be completed, is fixed. These dates have a specific purpose which gives time to the developers to arrange their affairs in such a manner that the housing project is starred and finished within those stipulated dates. This planning, in the context of facts in these appeals, had to be much before 01.04.2005. d) The basic objective behind Section 80IB(10) is to encourage developers to undertake housing projects for weaker section of the society, inasmuch as to qualify for deduction under this provision, it is an essential condition that the residential unit be constructed on a maximum built up area of 1000 sq.feet where such residential unit is situated within the cities of Delhi and Mumbai or within 25 kms from the municipal limits of these cities and 1500 sq.ft. at any other Place. e) It is the cardinal principle of interpretation that a construction resulting in unreasonably harsh and absurd results must be avoided. f) A Clause (d) makes it clear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built up area of shops and establishments to 5% of the aggregate built up area or 2000 sq.ft., whichever is less. However, the Legislature itself felt that this much commercial space would not meet the requirements of the residents. Therefore, in the year 2010, the Parliament has further amended this provision by providing that it should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft., whichever is higher. This is a significant modification making complete departure from the earlier yardstick. On the one hand, the permissible built up area of the shops and other commercial shops is increased from 2000 sq.ft. to 5000 sq.ft. On the other hand, though the aggregate built up area for such shops and establishment is reduced from 5% to 3%, what is significant is that it permits the builders to have 5000 sq.ft. or 3% of the aggregate built up area, whichever is higher. In contrast, the provision earlier was 5% or 2000 sq.ft., 'whichever is less'. g) From this provision, therefor, it is clear that the housing project contemplated under sub-section (10) of Section 80IB includes commercial Page | 4 Floride Towers Pvt. Ltd. Assessment Year: 2009-10 establishments or shops also. Now, by way of an amendment in the form of Clause (d), an attempt is made to restrict the size of the said shops and/or commercial establishments. Therefore, by necessary implication, the said provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore; it cannot be applied to those projects which were sanctioned and commenced prior to 01.04.2005 and completed by the stipulated date, though such stipulated date is after 01.04.2005.” Therefore, ld Counsel stated that said judgment of Hon`ble Supreme Court is applicable to the assessee`s case under consideration, and therefore the assessee is entitled to claim deduction U/s 80-IB of the Act.