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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
2 C.O. No. 211/M/12 PER C.N. PRASAD, JM:
These are appeal by the Revenue and the Cross objection by the assessee preferred against the order of the Ld. CIT(A)-30 Mumbai dated 09.05.2011 pertaining to assessment year 2003-04. Since this appeal and the cross objection were heard together, they are disposed of by this common order for the sake of convenience and brevity.
The Revenue has raised the following grounds of appeal:
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating that the project had commenced after 1.10.1998 without appreciating the fact that the AO had brought out sufficient material on record to conclude that the project had commenced much prior to 01.10.1998 i.e. on 13.11.1996 and hence not eligible for deduction u/s. 80IB(10) of the I.T. Act.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying on the decision of the Hon’ble ITAT in the case of M/s. Sarkar Builders, ITA No. 4835/M/07 dated 23.10.209 which has not been accepted by the Department.”
Facts of the case are that the assessee firm is engaged in the business of building and construction. The original return was filed by the assessee on 1.11.2004 declaring Nil income after claiming deduction u/s. 80IB(10) of the Act . Assessment u/s. 143(3) was completed on 28.3.2006 accepting the Nil income shown by the assessee after allowing deduction claimed u/s. 80IB(10) of the Act. Later on notice u/s. 148 was issued and the reassessment was completed u/s. 143(3) r.w. Sec. 147 of the Act completed on 24.12.2007 determining the income of the assessee at Rs.
3 C.O. No. 211/M/12 29,36,955/- by withdrawing the deduction allowed u/s. 80IB(10) of the Act. The reason for the AO for withdrawing the deduction allowed u/s. 80IB(10) was that initially Municipal Corporation of Greater Mumbai issued commencement certificates in the name of Sunil Builders for the residential building on the site and for the very same site, the assessee obtained commencement certificate on 5.8.1999. According to the AO, deduction u/s. 80IB(10)(a) is allowable if such undertaking is commenced or commences development and construction of the housing project on or after 1.10.1998 and since the commencement certificate has been issued on 13.11.1996 i.e. prior to 1.10.1998, the AO was of the view that the assessee is not entitled for deduction u/s. 80IB(10) of the Act.
On appeal, the Ld. CIT(A) while upholding the validity of reopening allowed the claim of deduction u/s. 80IB(10) to the assessee holding that the commencement certificate which was issued on 13.11.1996 in the name of Sunil Builders got expired on 12.11.1997 and the assessee applied for commencement certificate of the residential project on 13.5.1999 and the commencement certificate was issued in the name of the assessee by the Municipal Corpn. Of Greater Mumbai on 5.8.1999. The Ld. CIT(A) held that the development work was started only after the commencement certificate issued in the name of the assessee on 5.8.1999 therefore he held that since the assessee has developed the project rather commenced the project after 1.10.1998, assessee is entitled for deduction u/s. 80IB(10) of the Act.
Aggrieved by this, the Revenue is in appeal before us.
4 C.O. No. 211/M/12
The Ld. Departmental Representative vehemently supported the order of the AO in denying the assessee deduction u/s. 80IB(10) of the Act.
The Ld. Counsel for the assessee strongly supported the order of the Ld. CIT(A). He invited our attention to page 53 to 55 of the Paper Book and submits that the original commencement certificate was issued in the name of Sunil Builders on 13.11.1996 and this was valid upto 12.11.1997. He submits that the assessee firm entered into Development Agreement with Sunil Builders vide agreement dated 9.4.1993 for construction of residential complex. He submits that Sunil Builders did not carry out any development work though it had applied on 15.10.1982 and obtained certificate on 13.11.1996. He submits that after entering into development agreement on 9.4.1993, assessee made application to BMC on 13.5.1999 and obtained commencement certificate dated 8.8.1999 and the entire construction of the project was commenced in pursuance of the said certificate. Therefore, it is submitted that the project was commenced after 1.10.1998 and the assessee is entitled for deduction u/s. 80IB(10) of the Act.
Heard the rival contentions, perused the materials placed before us. The AO denied deduction u/s. 80IB(10) by reopening the assessment u/s. 147 of the Act for the reason that deduction u/s. 80IB(10) is allowable when the project is commenced on or after 1.10.1998. Since the commencement certificate according to the AO was issued prior to 1.10.1998, the assessee is not entitled for deduction u/s. 80IB(10) of the Act. The Ld. CIT(A) held that the 5 C.O. No. 211/M/12 commencement certificate issued on 13.11.1996 in the name of Sunil Builders got expired on 12.11.1997 and the assessee on entering into development agreement with Sunil Builders applied for commencement certificate on 13.5.1999 and got certificate dated 5.8.1999 and the project was commenced by the assessee pursuant to the certificate dated 5.8.1999 and since the project was commenced after 1.10.1998, assessee is entitled for deduction u/s. 80IB(10) of the Act. While holding so, the Ld. CIT(A) observed as under:
“The appellant on the other hand has contended that the commencement certificate (CC) dated 13.11.1996 issued in the name of Sunil Builders got expired on 12.11.1997 since Sunil Builders did not carry any development work. The appellant made an application to BMC on 13.5.1999 and accordingly the appellant was issued commencement certificate dated 5.8.1999 in its own name i.e. Sagar Shopping Developers. The appellant has submitted that the firm carried out development work on saleable part of the project in pursuance of the CC dated 5.8.1999. As such, the AO's reliance on the issue of CC dated 13.11.1996 issued in the name of Sunil Builders is totally devoid of the facts and circumstances of the case. The A.R. of the appellant also submitted that the issue of CC does not lead to the conclusion that development activity has commenced. The AR. of the appellant also submitted that in subsequent years, the assessment has been framed u/s.143(3) and that findings have been given that the appellant has satisfied all the conditions u/s.80IB(1) of the I.T.Act.
The CC dated 13.11.1996 was issued in the name of Sunil Builders which got expired on 12.11.1997. However, the CC dated 13.11.1996 was issued in the name of Sunil Builders who did not carry out any development work. This being so, the appellant made application on 13.5.1999 and accordingly it was issued CC dated 5.8.1999 in its own name. Thus the CC was issued to 2 different entities i.e. Sunil Builders and the appellant and hence it is not correct to apply explanation (1) to section 80IB(10). The development work started only after the CC dated 5.8.1999 was issued in the name of the appellant. The facts of the case cited by 6 C.O. No. 211/M/12 the appellant of Sarkar Developers are to my mind on weaker footings compared to the case of the appellant. In the case of Sarkar Developers, both the certificates were in the name of the same assessee whereas in the case of the appellant, the CC elated 13.11.1996 is in the name of Sunil Builders and the CC dated 5.8.1999 is in the name of the appellant. However, the other facts of Sarkar Builders are quite similar to the facts of the appellant in as much as the CC was expired in both the cases and a fresh CC was obtained which is after 1.10.1998. The Hon. Tribunal in the case of Sarkar Builders had held that from the CC originally obtained, it cannot be said that the appellant has developed the project prior to 1.10.1998. This finding of the Hon. Tribunal is very much applicable to the facts and circumstances of the instant case. Hence following the ratio decided in the aforementioned case, I also hold that the appellant is entitled for deduction u/s. 80IB(10) of the I.T. Act and the objection of the AO that the appellant has obtained the CC prior to 1.10.1998 does not hold god. The AO is directed to grant deduction u/s. 80IB(10) to the appellant accordingly. The grounds of appeal are allowed.”
None of the above findings of the Ld. CIT(A) has been rebutted by the Revenue with evidences. In the circumstances, we do not see any valid reason to interfere with the findings of the Ld. CIT(A) in holding that assessee is entitled for deduction u/s. 80IB(10) of the Act.
In the result, appeal filed by the Revenue is dismissed.
C.O. No. 211/M/2012
The assessee in its Cross objection challenging the order of the Ld. CIT(A) in upholding the reopening of the assessment u/s. 148 of the Act.
7 C.O. No. 211/M/12
The Ld. Counsel for the assessee submits that the C.O. become infructuous once the order of the Ld. CIT(A) is upheld. We find from the record, the C.O filed by the assessee is time barred by 103 days. No petition for condonation of delay has been filed by the assessee. Thus, the C.O. filed by the assessee is dismissed in limine.
Order pronounced in the open court on 29th January, 2016. (RAJESH KUMAR) (C.N. PRASAD ) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 29th January, 2016 व."न.स./ Rj , Sr. PS
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार (Dy./Asstt.