I.T.O. WD 1(3), THANE vs. ASTAVINAYAKA DEVELOPERS, THANE

We heard the parties and perused the record. The housing project of the assessee was approved by the local authority on 31.3.2001. Since the project was commenced prior to 31.3.2004, the same is required to be completed before 31.3.2008 as per section 80IB(10)(a)(i) of the Act. The assessee developed six buildings and club house. There is no dispute that the completion certificate was obtained prior to 31.3.2008 for buildings numbered as 1, 2 & 3. However, according to the AO, the assessee did not obtain completion certificate in respect of buildings numbered as 6,7,8 & club house. In this regard, the AO made enquiries with the concerned local authority, who intimated to the AO that the assessee had applied for 2 M/s. Ashtavinayaka Developers 15/02/2008, but the same was not granted to the assessee due to non-furnishing of ULC clearance certificate. It was further stated by the local authority that the assessee has furnished ULC clearance certificate for building no.4 & 5, but the same is awaited for building no.6. In view of the above, the AO took the view that the assessee has failed to comply with the conditions prescribed in the Explanation to sec. 80IB(10)(a)(i) of the Act by not obtaining completion certificate prior to 31.3.2008.

The AO, during the course of assessment proceedings, deputed the Government approved architect to inspect the flats constructed by the assessee. The architect reported that four flats in building no.6 have been joined and converted into a bungalow with an area of 4000 sq.ft. He further reported that flat nos. 303 & 304 in building no.3 and flat nos. 601 & 602 and 703 & 704 in building no.4 have also been joined together. Even though the assessee contended that the buyers of the flats have themselves combined the flats by removing the partition walls without the knowledge of the assessee, yet the AO held that the assessee has violated the conditions prescribed in clause (c) of sec. 80IB(10).

In view of the above, the AO rejected the claim for deduction of 4.51 crores made by the assessee u/s 80IB(10) of the Act. In the appellate proceedings, the Ld CIT(A) held that the local authority has prima facie accepted the fact that the assessee has completed the project prior to 31.3.2008, but the issuing of completion certificate was withheld under some technical reasons. Accordingly he held that the assessee has complied with the conditions prescribed in sec. 80IB(10)(a)(i) read with Explanation thereto. With regard to the second allegation of construction of flats exceeding the prescribed area, the Ld CIT(A) held that the assessee shall be entitled for deduction on proportionate basis on eligible units. Aggrieved, the revenue has filed this appeal before us.

The Ld D.R placed strong reliance on the assessment order. On the contrary, the Ld A.R submitted that the fact of completion of construction

Having heard rival submissions, we are of the view that there is no infirmity in the decision rendered by Ld CIT(A) on this issue. The fact that the assessee has applied for completion certificate in the month of February, 2008 is undisputed. The letters written by the local authority to the assessing officer shows that they have withheld the completion certificate only for want of ULC clearance certificate, that too for one building only. Further the Hon’ble Delhi High Court has held in the case of CIT Vs. CHD Developers Ltd (supra) that the Explanation to sec. 80IB(10)(a) inserted with effect from 1.4.2005 by Finance (No.2) Act, 2004 providing for submission of completion certificate shall not be applicable to projects approved prior to 1.4.2005. Thus, on facts, it is seen that the assessee has completed the construction prior to 31.3.2008 and on legal point also, the Explanation to sec. 80IB(10)(a) cannot be applied to the assessee. Accordingly, we uphold the order of Ld CIT(A) on this issue.

With regard to the decision of Ld CIT(A) in directing the AO to allow the deduction on proportionate basis, we notice that the Ld CIT(A) has followed various decisions rendered in this respect. Before us also, the Ld A.R placed hosts of decision, some of which are given below:- (a) Bengal Ambuja Housing Development Ltd Vs. DCIT (ITA No.1595/Kol/2005 & 1735/Kol/2005 dated 24.3.2006) (b) Bengal Ambuja Housing development Ltd (ITA No.458 of 2006 dated 05-01-2007) of Hon’ble Calcutta High Court. (c) ACIT Vs. Sheth Developers (P) Ltd (33 SOT 277)(Mum) (d) G.V. Corporation Vs. ITO (38 SOT 174)(Mum) (e) Poddar & Ashish Developers Vs. ITO (152 ITD 117)(Mum) (f) CIT Vs. Sreeevatsa Real Estates P Ltd (222 Taxman 105)(Mad) (g) CIT Vs. Arun Excello Foundations P Ltd (259 CTR 362)(Mad).

In the result, the appeal filed by the revenue is dismissed.