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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI MANOJ KUMAR AGGARWAL
Date of Hearing : 28/07/2016 Date of pronouncement : 10/08/2016 O R D ER PER MAHAVIR SINGH, JM : These two appeals by the Revenue are arising out of separate orders of Ld. CIT(A)-27, Mumbai in appeal nos. CIT(A)-27/16(2)(4)/342 & 343/13-14 both dt. 09/04/2014. Assessments were framed by ITO Ward 16(2)(4), Mumbai for the AY 2008-09 and 2009-10 under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide his different orders both dt. 30/01/2014.
Only common issue in these two appeals of the Revenue is against the order of Ld. CIT(A) allowing the claim of deduction under section 80IB(10) of the Act, despite the fact that construction of the project by builder has not been completed in the stipulated period as prescribed under the law.
3. Brief facts are that the assessee company in both the years claimed deduction under section 80IB(10) of the Act, but the AO disallowed the claim of the deduction on the ground that housing project was not completed on or before 31/03/2009 i. e. within four years of the end of the FY in which the housing project was approved by the local authorities. The assessee applied for occupation certificate on 20/02/2008 and in response to occupation certificate application (OC), the OC was granted by Thane Municipal Corporation vide letter dt. 09/07/2009. According to AO the assessee was not eligible for deduction under section 80IB(10) as the project was not complete. Aggrieved, the assessee preferred appeal before the Ld. CIT(A) who allowed the claim of the assessee. Aggrieved Revenue came in second appeal before the Tribunal in both the years.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts and the submissions of the assessee that the project of the assessee was completed on 10/02/2008. Application for OC was submitted on 20/02/2008, the issuance of OC by Thane Municipal Corporation was beyond the control of the assessee as onus of issuance OC lies with the local authorities and this is not within the control of the assessee. The assessee before Ld. CIT (A) filed complete tabulated details which are as under:
Date Event Commencement of construction certificate granted (1st time) 30/08/2004 10/02/2008 Work completed as per architect certificate 20/02/2008 Applied for occupation certificate before the Local Authority(TMC) 09/07/2009 Occupation certificate received in response to application dated 20/02/2008 16/07/2009 Letter of TMC stating that the occupation certificate should be treated as Building Completion Certificate.
In view of the above facts that the assessee has already completed the project on 10/02/2008 and application for OC was submitted on 20/02/2008, the Ld. CIT(A) allowed the claim of the assessee.
At the outset Ld. Counsel for the assessee filed copy of Tribunal order in assesses own case for AY 2010-11 in order dt. 24/02/2016 whereby Tribunal has allowed the claim of assessee by observing as under:
5. We have gone through the detailed findings of the ld. CIT(A). It is noted by us that he has carefully examined each and every evidences filed by the assessee before arriving at the factual conclusion that completion of the project was done within the stipulated time which is evident from the fact that the assessee applied for obtaining Occupation Certificate from the Thane Municipal Corporation on 20.2.2008. No discrepancy was pointed out by the said authority before granting the Occupation Certificate on 9.7.2009. In this regard, the ld. CIT(A) also analyzed the position of law that if nothing is pending on the part of the assessee, then, after filing application for Completion Certificate with the concerned authority, nothing remains in the control of the assessee, and therefore, on whatever date the Completion Certificate is granted by the authority, it should relate back to the date of filing of the application by the assessee for obtaining the Completion Certificate. We have gone through the facts of the case and find that everything was completed on the part of the assessee on the date of making application for obtaining the Occupation Certificate. Thereafter, granting of the certificate was not in the hands or in the control of the assessee. The delay occurred in granting of the Occupation Certificate by the concerned authority, in our view, should not be attributed on the part of the assessee in the given facts and circumstances of the case particularly when nothing has been brought before us to show that something was pending in the project or that delay occurred due to some reasons attributable to the assessee. The Thane Municipal Corporation granted the Occupation Certificate eventually on 9.7.2009. In our considered view, the date of granting of Occupation Certificate should relate back to the date of filing of application by the assessee i.e. 20.2.2008. Thus, in our considered view, the project has been completed well in time and assessee has made compliance with the mandatory conditions of the law and thus, the assessee was eligible for deduction u/s. 80IB. Our view is fortified by many judgments. We place reliance on the judgment of the Hon'ble Delhi High Court in the case of CIT v. Sandan Vikas (India) Ltd., 335 ITR 117 wherein the Hon'ble High Court has relying upon another judgement of Hon'ble Gujarat High Court in the case of CIT v. Claris Lifesciences Ltd., 326 ITR 251 (Guj.) has taken a similar view. Similar view was taken by the Hon'ble Bombay High Court in the case of CIT v. Ackruti City Ltd., 31 taxmann.com 275 (Bombay) wherein the Hon'ble Bombay High Court held as under :- “In this appeal by the Revenue for assessment year 2005-06, following questions of law have been proposed for our consideration. “(a) ……………………. (b) ……………………. (c) ……………………. (d) Whether, on the facts and in the circumstances of the case and in law, Tribunal is right in law in holding that assessee is entitled to deduction under Section 80IA(4)(iii) of the Income Tax Act on profits on industrial park at Marol Andheri when assessing officer made disallowance as per Rule 18-C of the Income Tax Rules and project of the assessee was not notified by the CBDT in the assessment year 2005-06 and assessee has not shown relevant income as business income in the original return of income filed ?” 2. .…………………………………………………………..
Insofar as question (d) is concerned, the Tribunal by the impugned order upheld the order of the Commissioner of Income Tax (A) holding that the respondent - assessee is entitled to the benefit of deduction under Section 80IA(4)(iii) of the Income Tax Act, 1961 ("Act" for short). The objection of the Revenue that the deduction under Section 80IA(4)(iii) of the Act is available to an industrial park only on CBDT notifying the industrial park under Rule 18C of the Income Tax Rules, 1962 ('the Rules' for short). This the CBDT did only on 5th June 2006. Therefore, according to the Revenue the benefit of Section 80IA of the Act in terms of sub-section (4)(iii) thereof would be available as from Assessment Year 2007-08 and not earlier. The Commissioner of Income Tax (A) as well as the Tribunal have held that the Ministry of Commerce and Industry had finally by letter dated 31st December 2004 approved the industrial park and a copy of the same was forwarded to the CBDT. In terms of Rule 18C(4) of the Rules, once the industrial park is approved by the Ministry of Commerce & Industry, the CBDT has to suo-motto issue the notification. The Tribunal, on examination of all facts concluded that all the requisite
conditions for claiming benefit under Section 80IA(4)(iii) of the Act has been complied with by the respondent - assessee during the assessment year in question. Further, there is no reason to hold the benefit under Section 80IA(4)(iii) of the Act is available only prospectively from the date of the issue of Notification by the CBDT. In these circumstances, as the decision of the Tribunal is based on finding of fact and mere delay on the part of the Central Board of Direct Taxes in issuing the notification would not warrant the respondent - assessee being denied the benefit of Section 80IA(4)(iii). This is so, particularly when the Revenue has not been able to point out any infirmity in the approval as granted by the Ministry for Commerce and Industry recognizing the respondent - assessee as industrial park. The view of the Commissioner of Income Tax (A) and the Tribunal is a reasonable view in the facts of the case and thus we see no reason to entertain question (d).” (Emphasis supplied) 6. It is further noted by us that in this case amendment made in Sec. 80IB(10) brought about by insertion of clause (d) w.e.f. 1.4.2005 will not apply to any approval granted in any year prior to A.Y 2005-06. This issue has also been decided in various judgments, including the judgment of Hon'ble Bombay High Court in the case of CIT v. Jogani Constructions Ltd., 35 taxmann.com 9 (Bombay). Similar view has been taken by the Hon'ble Karnataka High Court in the case of CIT v. G.R. Developers, 22 taxmann.com 265 and the Mumbai Bench of the ITAT in the case of Haware Constructions (P) Ltd., 64 DTR 251 (ITAT Mumbai). 7.Thus, in view of the facts of the case and the settled position of law as discussed above, we find nothing wrong in the findings of the ld. CIT(A), and therefore, these are upheld. Therefore, the grounds raised by the revenue in this appeal are dismissed. In view of this Ld. Counsel for the assessee stated that the issue is decided in favour of the assessee and against the Revenue.
In view of the above facts of the case that the project was complete within the stipulated period and even otherwise the issue is covered by Tribunal’s decision in assessee’s own case, respectfully following the same we dismissed both the appeals of the Revenue confirming the orders of the CIT(A).
In the result, both the appeals of the Revenue are dismissed.
Order pronounced in the open court on 10th August, 2016.