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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: The Present Appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)- 35, dated 11.10.2012 for A.Y. 2009-10 on the following grounds of appeal.
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises
"On the facts and in the circumstances of the case, and in law, the ld. CIT(A) erred in allowing the claim of Deduction u/s. 80IB( 10) of the Act without appreciating the fact that the first commencement certificate was issued to the asssessee on 06/09/1991 i.e. prior to 1st October 1998 as per Explanation (i) of Section 80IB(l0)." 2. "On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in observing that the construction was not commenced till 03.l 0.2005, without bringing any concrete evidence on record about actual date of commencement of project." 3. "On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in observing that the construction was completed before 31.03.2008, without giving any concrete documentary evidence or fact findings proving that the construction was completed on 31103/2008." 4. "On the facts and in the circumstances of the case, and in law, the ld. CIT(A) failed to appreciate that assessee in support of completion of project furnished Partial Completion Certificate issued by the local authorities, and thereby proved that the project was not completed before 01/04/2008. " 5. "On the facts and in the circumstances of the case, and in law, the ld. CIT(A) has not brought any evidence on record to prove that the project was not commenced till 0311 0/2005. Additionally, assessee also never put on record any documentary evidence especially Commencement Certificate evidencing that the project commenced on 0310/2005 i.e. after 0111011998 either before the A.O. or during the appellate proceedings." 6. "On the facts and in the circumstances of the case, and in law, the ld. CIT(A) ignored the Order issued by the Hon'ble Minister of State, City Development Dept., Maharashtra Government bearing Bo. TPS 1998/613/P. No. 1561NV12 08/09/1999 which sows that the project stared before 01/10/1998." 7. "The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored." 8. "The appellant craves leave to amend or alter any ground or add a new ground."
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises
The brief facts of the case are that return of income was filed on 16.07.2009 declaring total income at Rs. Nil after claiming deduction u/s 80IB(10) amounting to Rs.37,71,909/- being income derived from ongoing construction of housing project. The return was processed u/s 143(1) and the case was subsequently selected for scrutiny after serving statutory notices and considering reply, the AO passed order of assessment thereby denying deduction u/s 80IB (10) vide order dated 23.12.2011.
Aggrieved by the order of the AO, assessee filed appeal before CIT(A) and the CIT(A) after considering the case of the assessee allowed the appeal vide its order dated 11.10.12.
Aggrieved by the order of CIT(A), the revenue has filed the present appeal before us on the grounds mentioned herein above.
Ground No. 1 to 6:
Since all the grounds raised by the revenue are inter-connected and inter- related therefore, we thought it fit to dispose off the same through the present consolidated order.
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises
We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by the revenue authorities. We have noticed that the CIT(A) had decided the above grounds and the operative para of CIT(A) is reproduced herein below:
“I have considered the submission of the representative and the stand taken by the AO. The only issue involved in this appeal is the date of commencement of housing project. The AO held that the appellant obtained the original commencement certificate dated 06.19.1991 which falls 01.10.1998 and, thereafter, not entitled to deduction u/s as one of the condition laid down in section 80IB(10) is that the housing project should have been commenced on or after 01.10.1998.
From an analytical reading of the provisions of sec.80IB(10. It can be seen that an undertaking should have commenced or commences development and construction of housing project on or after 01.10.1998 and completed such construction before 31.03.2008 in case where the housing project has been approved by the local authority before 01.04.2004.
As per explanation, the date of the first approval by the local authority shall be taken to have been approved on that date which means that for the purpose of determining the completion of construction, this criteria has to be applied. There is no deeming provision for determining the commencement of development or construction. The section nowhere
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises mentioned that the date of first approval shall be taken as the commencement of the project.
The explanation (1) has to be read with clause a(i) which prescribe the time limit for completion of the project. In the case of the appellant, even though the original approval wad dated 06.09.1991 for the entire area, the appellant subsequently obtained revalidation by the order dated 03.10.2005 which establish the fact that the relevant housing project was not commenced till 03.10.2005 and even assuming that the project was approved before 01.04.2004 the appellant has to complete the construction before 31.03.2008 which in any case is fulfilled.
A plain reading of section 80IB (10) shows that so far as the approval of housing project is concerned, the section only specifies that it should have been approved before the specific date and there is no stipulation in the section that the project should have been approved after a certain date. The condition laid down in the section is that the project should be commenced on or after 01.10.1998 and there is lot of difference between the date of approval of the housing project and the date of commencement of the project and the AO mistook the date of approval of the housing project as the date of commencement which is not correct.
In the circumstances, when the issue was also decided by my predecessor in favour of appellant in A.Y.2007-08 vide Appeal order dt. 27.01.2010. I find that the A.O. wrongly applied explanation. I with reference to the commencement of project whereas if is applicable with reference to the completion of construction. In view of the above, I hold
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises that there is no justification for denying deduction u/s. 80IB (10) and the A.O. is directed to allow the same.
In the result the appeal is ALLOWED.”
6. Our attention was also drawn towards paper book which contains order of CIT(A) for A.Y. 2007-08 dated 29.03.2010 and for A.Y. 2008-09 dated 29.01.2015 at page no. 80 to 85, from the reading of the same we found that the CIT(A) had allowed the appeal filed by the assessee for the said year and directed the AO to allow the deduction u/s 80IB(10) of the Income Tax Act. Our attention has also been drawn towards order passed by ITAT in A.Y. 2007-08 which was decided on 25.03.2015 it is important to mention here that when the impugned order dated 11.10.2012 was passed by CIT(A), by that time this order of ITAT was not available. Therefore, in these circumstances we have analysed the order passed by ITAT in assessee’s own case for A.Y. 2007-08 and operative para of ITAT are reproduced below:
“Therefore the commencement of the project has to be taken into account as per the actual construction work started in respect of the project and not by taking into consideration the original sanction and amended sanction of the plan. Since the actual work of construction and development of the project has not been examined by the authorities below, therefore, in facts and circumstances of the case,
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises we set aside this issue to the record of AO for proper verification and examination of the fact and then decide the issue as per law. The issue of completion of project within the prescribed time limit is kept open.”
After considering the afore mentioned order passed by ITAT, we are in agreement with the same and therefore while maintaining the judicial consistency and respectfully following the same, and after considering that the issue in present case is also same as was raised before the Hon’ble ITAT . Therefore, while following the orders of ITAT we also set aside this issue to the record of the AO for proper verification and examination of the fact and then to decide the issue as
per law. The issue of completion of project within the prescribed time limit is kept open.
Ground No. 7&8 are general in nature and needs no separate adjudication in view of the above decision.
In the result, the Revenue’s appeal is allowed for statistical purposes.
(A.Y. 2009-10) ITO vs. M/s. Shivam Enterprises
Order pronounced in the open court on 23rd March, 2016 Sd/- Sd/- (Rajendra) (Sandeep Gosain) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated: 23.03.2016 Ps. Ashwini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File आदेशानुसार/ BY ORDER,