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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER आदेश आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the Revenue against the order of CIT(A)-5, Pune, dated 15-02-2016 for the Assessment Year 2011-12.
Revenue raised the following grounds and the same read as under:
“1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is correct in allowing the deduction u/s.80IB(10) of the I.T. Act, 1961. 2. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored.”
From the above grounds, it is evident that the only issue raised in this appeal relates to allowability of deduction u/s.80IB(10) of the Act.
Relevant facts of the case are that the assessee is an AOP and engaged
in the business of Builder and Developers. Assessee filed the return of income
on 29-09-2011 declaring total income of Rs.3,22,31,984/-. Assessee claimed
the deduction of Rs.3,75,97,564/- in respect of units sold during the year in
building A1 to A6 which were part of project ‘A’. However, the assessee claims
to have completed the construction of the said building before due date i.e.
31.03.2008. But, the initial plan sanctioned comprised of two projects i.e.
project ‘A’ and ‘B’ and since project ‘B’ had not started. Therefore, the
deduction claimed under section 80IB(10) of the Act was denied to the
assessee in A.Yrs. 2009-10 and 2010-11 by the AO. CIT(A) confirmed the
same. Aggrieved with the order of CIT(A), assessee filed appeals before the
Tribunal for A.Yrs. 2009-10 and 2010-11. The Tribunal vide ITA
No.1260/PN/2013, order dated 31-12-2015 and ITA No. 883/PUN/2014, order
dated 07-04-2016 allowed proportionate claim of deduction under section
80IB(10) of the Act to the assessee in respect of completed units in project ‘A’.
At the outset, before us, Ld. Counsel for the assessee submitted that this
is the third year the assessee claimed the deduction u/s.80IB(10) of the Act.
He further brought our attention to the order of CIT(A) and submitted that the
issue of allowability of deduction u/s.80IB(10) of the Act in respect of the
profits on the same project was decided by the Tribunal allowing proportionate
deduction in respect of the project A. Ld. Counsel for the assessee filed the
copies of the said orders of the Tribunal and asked for deciding on the lines of
existing orders of the Tribunal.
Ld. DR for the Revenue dutifully relied on the order of the AO. However,
he fairly mentioned that the Tribunal in the assessee’s own case in the earlier
assessment years 2009-10 and 2010-11 decided the issue.
We heard both the sides and the order of Tribunal for the A.Y. 2010-11
and find it relevant to extract the finding of the Tribunal on the same issue.
The same is reproduced as under :
“10. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to the claim of deduction under section 80IB(10) of the Act. We proceed to consider the factual aspects of the case in order to adjudicate the issue raised by the assessee i.e. the claim of deduction under section 80IB(10) of the Act in respect of project A sanctioned prior to project B, which was sanctioned on later date i.e. after the receipt of order of ULC by release of plot for constructing the project B. The factual aspects of the case were that the company Sharan Estates Pvt. Ltd. had purchased undivided shares of various owners of land at survey No.186, Yerwada, Pune admeasuring 15900 sq. mtrs. vide Agreement of Sale dated 22.09.1994, 27.10.1994, 18.08.1995 and 09.01.1996. The said land was subject to the provisions of Urban Land Ceiling & Regulation Act, 1976. The said concern sought approval from PMC for development and construction of the residential buildings on the said land to be developed as projects A and B. The said division was based on the statutory provision under the ULCA, 1976 and the commencement of the work. The project A was envisaged and sanctioned as per order under ULCA, dated 22.11.1998, under which an area of 12094 sq. mtrs. was exempted. The balance for the above area sanctioned on 14.07.2001. The first building plan was sanctioned on 03.06.1997, under which one of the conditions was to obtain NOC for Nalla / gutter. The copy of the said sanctioned plan is placed at page 38 of the Paper Book. Thereafter, the payment for the said Nalla / gutter was made on 26.04.1999 and the copy of the same is placed at page 41 of the Paper Book. The PMC again issued a commencement certificate No.2141 dated 09.06.1999 after the objection was met by the assessee. The copy of the said commencement certificate issued by the PMC is placed at page 40 of the Paper Book. The assessee claims that the second commencement certificate was also issued with the condition meaning Nalla / gutter for rain water was to be removed after the payment of charges and the actual commencement certificate was issued on 17.04.2004, copy of which is placed at page 43 of the Paper Book. The plea of the assessee before us is two-fold in this regard. Though the commencement certificate, if any, issued prior to fulfilling the condition of Nalla / gutter for rain water, and the restriction imposed by the ULCA having not been complied with, the clear area of 12094 sq. mtrs. was available with the assessee only when third commencement certificate was obtained on 14.07.2001. The company M/s. Sharan Estates Pvt. Ltd., did not commence the construction against which and the AOP was formed on 19.04.2004, which was formed as pre-condition to the plans sanctioned on 17.04.2004. The case of the assessee before us was that the contention of the Assessing Officer that the initial sanction for commencement of the project by the local authority was given on 03.06.1997 i.e. prior to 1998 was not correct, in view of the above said facts and circumstances.
We are in conformity with the findings of CIT(A) in this regard that the contention of the Assessing Officer that first date when the construction and development could have taken place would be 03.06.1997, was not correct. The construction and development of project A made only by way of commencement certificate dated 09.06.1999, though the same was subject to fulfillment of condition of payment of certain charges of Nalla / gutter. The case of the assessee before us was that though the commencement certificate was issued on 09.06.1999, but no construction was started as is evident from the fact that no expenses for construction had been debited and further, the project has been undertaken by the AOP, which came into existence only on 19.04.2004. Another plea raised by the assessee in this regard was that the actual commencement certificate was issued by the PMC on 17.04.2004, and
because of the said pre-condition being fulfilled, the AOP was formed on 19.04.2004. In order to adjudicate the said dispute of date of certificate of the project, recourse is made to the provisions of section 80IB(10) of the Act. The clause (a) to section 80IB(10) of the Act talks of various dates on which the undertaking commenced development and construction of the housing project. In case the said commencement of development and construction of the project is on or after 01.10.1998 and where the housing project had been approved by the local authority before the first day of April, 2004, then the construction of the said project is to be completed on or before 31.03.2008 as per clause (i) thereunder. As per clause (ii) thereunder, where the housing project has been approved by the local authority on after 01.04.2004, but not later on 31.03.2005, then the same has to be completed within four years from the end of the financial year in which the housing project is approved by the local authority. The explanation under section 80IB(10)(a) of the Act further provides that in cases where the approval in respect of housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. There are other conditions laid down in section i.e. in respect of project being a size of plot of land generally a minimum area of one acre and the residential units being not exceeding the built up area of 1500 sq. ft. and certain restrictions on the commercial area. Admittedly, all the other conditions prescribed under section 80IB(10) of the Act stand fulfilled i.e. the project is on an area exceeding one acre and built up area of the units completed by the assessee are less than 1500 sq.ft. The question which arises before us is first the date on which the project has been approved by the local authority, commenced development and construction of the housing project and secondly, the date on which the said project has been completed.
The second aspect of the issue raised before us is that where initially the project was envisaged to comprise of projects A and B and where the project B has not completed the development and construction, can the deduction under section 80IB(10) of the Act be allowed to the project A or the same has to be denied. The case of the Assessing Officer is that the assessee is not entitled to the deduction under section 80IB(10) of the Act since the sanction to construction projects A and B was given on 03.06.1997. However, we find no merit in the said plea of the Assessing Officer, in view of the conditions laid down in the said sanction itself i.e. it was subject to approval under ULCA, 1976. The surplus land under ULCA, 1976 was declared by the competent authority i.e. the Additional Collector, Pune Agglomeration vide order dated 22.12.1998 at 3806.75 sq. mtrs., the earlier ULCA order dated 15.12.1997 had only specified the area for road and open space. In view thereof, the assessee could have commenced the construction of the project A only after ULCA order dated 22.12.1998, till then the area for construction of project B was not regularized and hence, there is no merit in the observations of Assessing Officer in this regard that the project envisaged by the assessee was both A and B. After the declaration of the surplus land, the commencement certificate was issued by PMC on 09.06.1999 with the condition that Nalla / gutter for rain water, which was to be removed after payment of charges. In view of the totality of the above said facts and circumstances and in view of the restrictions imposed by ULCA, 1976 and also the conditions imposed by the PMC in the original sanction dated 03.06.1997, we hold that only after the clear area of 12094 sq. mtrs., was available with the assessee pursuant to the order dated 22.12.1998, declaring the surplus land, the sanction of PMC dated 09.06.1999 for project A is to be considered. It may be reiterated here that the project B is not envisaged in the sanction which was given by the PMC on 09.06.1999. The case of the assessee is that third commencement certificate was obtained on 14.07.2011. However, no construction was commenced by the company Sharan Estates Pvt. Ltd. and thereafter, another plan was sanctioned on 17.04.2004 before formation of AOP on 19.04.2004. The contention of the assessee in this regard is that the plan was sanctioned on 17.04.2004, under which the construction started and hence, it is governed by the provisions of section 80IB(10)(a)(ii) of the Act. However, we find no merit in the stand of the assessee. The Explanation under
section 80IB(10)(a) of the Act provides that in cases where the approval in respect of housing projects are obtained more than once, then such housing projects shall be deemed to have been approved on the date on which the building plan was first approved by the local authority. The building plans in the case of assessee after the declaration of surplus land by the ULCA was first approved on 09.06.1999 with certain conditions, which were later fulfilled by the assessee. Merely because another plan for commencement which was sanctioned on a later date i.e. 14.07.2001 and 19.04.2004 relates to the initial plan sanctioned on 09.06.1999 and in view of Explanation to section 80IB(10)(a) of the Act, we hold that the plans in the case of the assessee to construct project A were approved on 09.06.1999 since these were sanctioned on or after first day of October, 1998, but before first day of April, 2004, then the provisions of section 80IB(10)(a)(i) of the Act are applicable and the assessee had to complete the construction on or before 31.03.2008. The assessee in this regard drew our attention to the copy of Occupancy certificate in local language dated 31.03.2008 placed at page 72 of the Paper Book. However, English translation of the said document is not available on record and it is not clear as to whether the occupancy certificate is given for 122 flats has been completed by the assessee by 31.03.2008. Accordingly, we direct the Assessing Officer to verify the stand of the assessee vis-à-vis document placed at page 72 of the Paper Book. In case, the building in project A has been completed by 31.03.2008, then the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. In case the buildings are not completely constructed by 31.03.2008, then the assessee is entitled only to the proportionate deduction on the portion of building i.e. flats which have completed construction by 31.03.2008 as the assessee was required to complete the construction by 31.03.2008. The year under appeal before us is assessment year 2009-10 with year ending 31.03.2009. The necessary details could be verified by the Assessing Officer in this regard and in case found to be in order, in line with our directions, the Assessing Officer shall compute deduction claimed under section 80IB(10) of the Act in respect of completed buildings or proportionate deduction in respect of completed units.
The second stand of the Assessing Officer in rejecting the claim of the assessee that original plan was for the construction of projects A and B and where project B has not been completed by 31.03.2008, the assessee is not entitled to the claim of deduction under section 80IB(10) of the Act does not stand, in view of the land on which project B planned was under the ULCA, 1976. Vide order dated 22.12.1998, only the area on which project A was completed was released and the land on which project B is being constructed was released on 21.10.2005. Hence, before the order of ULCA, 1976, we find no merit in the stand of Assessing Officer in holding that the project B was already envisaged as per the sanctioned plan dated 03.06.1997. Although there is sanction of plan on 03.06.1997, but the same was with conditions i.e. obtaining declaration under the ULCA, 1976 and the said declaration having been made on 22.11.1998, we find no merit in the stand of the Assessing Officer in this regard that the plans were sanctioned on 03.06.1997. The learned Authorized Representative for the assessee placed reliance on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Ashray Premises (P.) Ltd. (2013) 34 taxmann.com 165 (Bom) for the proposition that approval of the project does not determine the start of project and it is only the commencement certificate which determines. We find support from the said ratio laid down by the Hon’ble Bombay High Court. We direct the Assessing Officer to compute the deduction under section 80IB(10) of the Act in line with our directions after affording reasonable opportunity of hearing to the assessee. Accordingly, the grounds of appeal raised by the Revenue are dismissed.”
“6. The learned Authorized Representative for the assessee before us pointed out that no deduction was claimed by it in respect of project ‘B’. In view of the issue being identical to the issue before the Tribunal in assessee’s own case in assessment year 2009-10 and following the same parity of reasoning, we direct the Assessing Officer to allow proportionate deduction
under section 80IB(10) of the Act in respect of completed units in project ‘A’. The grounds of appeal raised by the assessee are thus, allowed.
From the above, it is evident that the assessee is entitled for deduction
on proportionate basis. However, it is the decision of the Tribunal that AO
needs to verify on the aspects narrated in the order of the Tribunal.
Considering the settled nature of the issue, we are of the opinion that assessee
is entitled to proportion deduction u/s.80IB(1) of the Act in view of the
directions given by the Tribunal in the assessee’s own case for A.Y. 2010-11.
We therefore direct the AO accordingly. Thus, the grounds of appeal raised by
the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on this 28th day of February, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य
पुणे Pune; �दनांक Dated : 28th February, 2018 सतीश आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-5, Pune 4. CIT-5, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B Bench” Pune; 5. गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune