ITO 24(3)(2), MUMBAI vs. NEETA ENTERPRISES, MUMBAI

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order 14/12/2012 of the ld. First Appellate Authority, Mumbai. The first ground raised in this appeal pertains to allowing deduction u/s 80IB of the Act ignoring the fact the assessee has not obtained the completion certificate from the local

2 ITA No.1652/Mum/2013, M/s Neeta Enterprises authority before 31/03/2008, which is mandatory as per explanation-2 to section 80IB(10) of the Act. Revenue is also aggrieved in allowing deduction u/s 80IB(10) of the Act ignoring the fact that approval of the local authority was obtained on 28/11/1992 i.e. much before 01/04/1998, the date on or after which the project approved were eligible for deduction 80IB(10) of the Act. During hearing, the ld. counsel contended that the impugned issue is covered in favour of the assessee by the decision of the Tribunal dated 05/1/2015 in the case of M/s Krish Enterprises vs ACIT (ITA No.5554/Mum/2014) order dated 05/01/2015. This factual matrix was not controverted by ld. DR.

“Aggrieved by the impugned order dated 25/07/2011 of the ld. First Appellate Authority, Mumbai, the assessee is in appeal before this Tribunal. The assessee is aggrieved in confirming the disallowance of deduction claimed u/s 80IB(10) of the Income Tax Act, 1961 amounting to Rs.1,42,53,667/- on the plea that the ld. Commissioner of Income tax (Appeals) did not appreciate that the condition of completion is not applicable since the project was approved on 05/03/2004, before the insertion of condition of completion inserted with effect from 01/04/2005.

3 ITA No.1652/Mum/2013, M/s Neeta Enterprises 2. At the time of hearing, the ld. Counsel for the assessee, Shri Vimal Punmiya, advanced his arguments which are identical to the ground raised by submitting that the project was approved on 05/03/2004, therefore, there was no requirement of obtaining completion certificate and Gram Panchayat was the competent authority at the relevant time to issue completion certificate. It was also pleaded that assessee applied for completion certificate vide letter dated 31/03/2008 but was not granted such certificate which was beyond the control of the assessee. Plea was also raised that section 80IB(10) of the Act is a beneficial provision, consequently, it should be interpreted liberally. Reliance was placed upon the Delhi Bench of the Tribunal in the case of CHD Developers Ltd. which was approved by Hon’ble Delhi High Court in (2014) 43 taxman.com 249 (Del.). Reliance was also placed upon the decisions in ITO vs SAI Krupa Developers (ITA NO.3661/Mum/2011), CIT vs Jain Housing & construction Ltd. (2013) 30 taxman.com 131 (Mad.), and Manan Corporation vs ACIT (ITA No.1053 of 2011 order dated 03/09/2012) from Hon’ble Gujarat High Court. It was also explained that identically for A.Y. 2009-10 in the case of assessee itself, the Mumbai Bench of the Tribunal vide order dated 22/09/2014 (ITA No.6728/Mum/2013) allowed the appeal of the assessee.

4 ITA No.1652/Mum/2013, M/s Neeta Enterprises 2.1. On the other hand, the ld. DR, Shri Neil Philip, though defended the conclusion drawn in the impugned order but did not controvert the factual finding that the impugned issue is covered in favour of the assessee by the decision cited by the ld. counsel for the assessee.

2.2. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 22/09/2014 in the case of assessee itself on identical facts/issue.

“2. The assessee is a firm engaged in the business of builder and developer in the Vasai-Virar region of Thane Dist. Shri Purushottam A. Kawali the original owner of the land was awarded with commencement certificate from CIDCO as per letter No.CIDCO/VVSR/BP-1087/W/2500 dated 5/3/2004 with regard to various sectors inter-alia including sector-4, which is developed by the assessee as per its agreement with M/s.Adinath Developers. Sequence of events is stated in the fact sheet submitted by Ld. AR of the assessee as under. Date Event Remark Page No. Before Purushottam A. Kawali the 7.2.1997 original owner of agriculture land. 07/02/1997 Owner converted agriculture Vide Order bearing No.Rev/Desk-1/T- land into Non-arculture land. 9/NAP/SR-3/96 of office of Collector, Thane. 05.03.2004 CIDCO approved block plan Vide No.CIDCO/VVSR/BP- as “residential with shopline 1087/W/2500 for Dvelopment of building” Sector.I,II,III, IV & V 0.2.07.2004 Owner transfer development For Development of Sector No.I,II,III, 40-77 right to Mr. Kunverji Bachhu IV & V Shah 09.07.2004 Mr. Kunverji Bachhu Shah For Development of Sector No.I,II,III, 78-121 Transfer development right to IV & V M/s. Adinath Developers 30.04.2007 M/s. Adinath Developers For Building No.1 Wing “C”, Building 122-142 transfer Development right to No.2 Wing A,B,C & Building No.3 appellant Wing A,B,C of sector No.IV (100%

5 ITA No.1652/Mum/2013, M/s Neeta Enterprises Residential Project) admeasuring area of 5499.17 sq.mtr. (i.e. More than 1 Acre) 15.9.2005 M/s.Adinath Developers For remaining building and all 143-161 transfer Development right to commercial area right Leela Builders. ..3.2008 Project was completed 17.03.2008 House tax levied 168-170 27.03.2008 Paid water connection 171-172 charges to Virar Nagarpalika 28.03.2008 Architect certified that project is completed 29.03.2008 Bolinj Grampanchayat issued 177 completion certificate 31.03.2008 Firm applied to CIDCO for 176 granting occupation certificate

2.1 During the year under consideration the assessee claimed deduction under section 80IB(10) of the Income Tax Act, 1961 (the Act), which has been disallowed by the AO. The reasons given by AO for disallowance of the claim are as under:

i. The assessee could not produce completion certificate obtained from CIDCO within a period of four years i.e. before 31/3/2008.

ii. Vasai – Virar Municipal Corporation in response to query raised by AO vide notice issued under section 133(6) has stated that it did not issue completion certificate to the assessee and as per letter received from Vasai-Virar Municipal Corporation permission of revised development plan was issued vide letter dated 23/3/2010. Thus AO observed that assessee did not complete the building within the mandatory time line i.e. 31/3/2008.

iii. According to details filed before AO the assessee had been incurring expenditure beyond 31/3/2008 in the shape of fixing of kitchen doors, sliding windows, electric meter purchase, loft tank purchase, plumbing pipes, electric wiring cables etc. which is indicative of the fact that project of the assessee was not complete.

2.2 Further the AO rejected the contention of the assessee that completion certificate issued by Gram Panchayat Bolinj, Virar should be considered to be fulfillment of the condition of completion of project. The AO rejected such contention on the basis that the certificate issued by Gram Panchayat will not serve the purpose of

6 ITA No.1652/Mum/2013, M/s Neeta Enterprises the assessee and only CIDCO could issue such certificate, therefore, the certificate issued by Gram Panchayat cannot be taken as fulfillment of the condition of completion of the project before 31/3/2008.

2.3 The A.O also observed that the project was approved as “single project” by Local Authority which was capable of being divided into various parcels and allocate to different entities for development by the development right owner then the very action of the other party which inter-alia include M/s. Adinath Developers will absolve the buyers from the eligibility to claim deduction under section 80IB(10) of the Act. The disallowance of deduction was challenged in an appeal filed before Ld. CIT(A). It was submitted that assessee had applied to CIDCO for completion certificate on 31/3/2008. However, CIDCO did not issue completion certificate. The Gram Panchayat had issued the completion certificate on 29/3/2008 certifying the fact that the project is complete and is habitable and is also ready to be occupied by the flat owners. Therefore, the condition regarding completion of project was complied with. It was also submitted that as per explanation to section 10(20) of the Act Gram Panchayat also falls under Local Authority and reference was made to the decision of Pune Bench of the Tribunal in the case of Krishna Harubhau Lohokare vs. ITO(ITA No.937/PN/2010) , wherein it has been held that for the purpose of issue of completion certificate under section 80 IB(10) Gram Panchayat is a Local Authority.

2.4 It was further submitted that requirement of completion certificate does not apply to a case where project has been approved before 31/3/2005. All these contentions of the assessee are noted in para -4 of the order of Ld. CIT(A). Ld. CIT(A) has summarized the contentions of the assessee as under:

7 ITA No.1652/Mum/2013, M/s Neeta Enterprises “i. That the deduction under section 80 IB(10) should not be disallowed since the assessee has completed the project before 31.03.2008 and has also obtained the completion certificate from the Gram Panchayat, Bolinj. ii. That Gram Panchayat , Bolinj is a competent local authority authorized to issue a completion certificate as per the Income Tax Act as well as the Constitution of India. iii. That the requirement of a completion certificate is a technical formality for which the deduction should not be disallowed. iv) That the assessee is not required to obtain the completion certificate because the project was approved prior to 01.04.2005 when the amended provision did not even exist and the question of putting them into effect did not arise at that time. The old provisions never required the completion certificate and hence, the assessee is not required to obtain the same. Hence, in view of the above, we request your honour to grant a sympathetic consideration towards the assessee and allow the claim of deduction under section 80 IB(10) of the IT Act, 1961.”

2.5 After considering the aforementioned submissions of the assessee Ld. CIT(A) has come to the conclusion that prima facie the project was not approved by Local Authority i.e. CIDCO as housing project but as residential building in shop line as there was no provision for commercial area in housing project prior to 01/04/2004. The completion certificate was not issued by Local Authority/Competent authority i.e. CIDCO till the date of the assessment order. The project of the assessee could not be considered to be complete in view of the facts mentioned by the AO in the assessment order. The permission to construct the structure was given by the Local Authority i.e. CIDCO and the completion certificate was issued by another Local Authority i.e. Gram Panchayat Bolinj, Virar. Though Gram Panchayat may be a Competent Authority to issue such certificate but in the instant case the permission to construct the building was not accorded by the Gram Panchayat Bolinj, Virar. The appellant had applied for completion certificate from CIDCO and could not obtain it from the said Competent Authority. In the circumstances getting a certificate from other Local Authority cannot hold any validity. The question which is important to be decided is that whether it is a Competent

8 ITA No.1652/Mum/2013, M/s Neeta Enterprises Authority to issue the certificate of completion to the assessee. The evidence of such “competence” of the authority has not been provided by the assessee either before the AO or before Ld. CIT(A), therefore, the case law relied upon by the assessee will not support its case. In this manner Ld. CIT(A) has upheld the disallowance. The concluding observations of Ld. CIT(A) are as under:

“5.1.. The appellant had filed copy of Application letter dated 31.3.2008, submitted to the CIDCO regarding the completion of the project and issuance of .completion certificate, before the Assessing Officer. But the aid certificate was not issued by the CIDCO. It was observed b the Assessing Officer that it was pending for more than a, year. The appellant in the meanwhile obtained completion certificate from another. Local Authority viz. Gram Panchayat, Bolinj, Virar and claimed that the project was completed arid it had fulfilled the conditions for claiming deduction u/s.801B(10) of the Income Tax Act. The Assessing Officer had also issued summons u/sj33(6) of the. Income Tax Act to Vasai -Virar Municipal Corporation or examination of the issue; by which she came to know that there was a revised development permission issued by the CIDCO in respect of the said project bearing Reference No. CIDCO/VVSR/RDP/BP-10871W/6048 dated 23.3.20W, the copy of the same was enclosed by the Assessing Officer for reference. As per the above stated letter, the Assessing Officer had come to the conclusion that the project was not completed till the mandatory time line i.e. 31.3.2008 and denied the deduction u/s.8OlB(10) of the Income Tax Act. 5.2. From the foregoing paras, it is observed that there are certain irregularities/delays in getting the completion certificate from CIDCO by the appellant. It is very much obvious that the appellant approached another Local Authority to cut short the regular proceedings and obtained the completion certificate from another Local Authority. The permission to construct the structure was given by the Local Authority i.e. CIDCO and the completion certificate was issued by another Local Authority i.e. Gram Panchayat, Bolinj, Virar. The appellant submitted that Gram Panchayat also was a competent authority to issue the completion certificate to claim the benefit of deduction u/s.8OlB(10) of the Income Tax Act. However, I am of the opinion that Gram Panchayat may be a competent authority to issue such a certificate but in the instant case, the permission to construct the building was not accorded by the Gram Panchayat, Bolinj, Virar. The appellant had applied for completion certificate from CIDCO only and could not obtain from the said competent authority. In the circumstances getting a certificate from another Local Authority cannot hold any validity. It may be a Local Authority as defined by the Income Tax Act but the question remains in the instant case whether it is a competent authority to issue the certificate of completion to ‘the appellant. The question of ‘competence’ has not been proved by the appellant either, before the

9 ITA No.1652/Mum/2013, M/s Neeta Enterprises Assessing Officer or before the appellate authority. Hence the case laws relied on by the appellant does not support its case. In the circumstances, the claim of deduction u/s.801B(1O) of Income. Tax Act cannot b allowed and the addition made by the Assessing Officer is sustained. This ground of appeal is dismissed.

Aggrieved, assessee has filed the afore mentioned grounds of appeal.

3.1 Ld. AR further submitted that revised building plan for which information was received by the AO vide letter dated 23/3/2010 did not belong to assessee as the said plan was not revised in respect of project developed by the assessee but was in respect of

10 ITA No.1652/Mum/2013, M/s Neeta Enterprises project developed by other developer. Therefore, Ld. AR pleaded that the said revised plan has nothing to do with the project of the assessee.

3.2 So far as it relates to contention regarding completion certificate it was submitted by Ld. AR that project of the assessee was approved by CIDCO as per letter dted 5/3/2004 ( The copy of the said letter was not enclosed in the paper book. However, it was submitted during the course of hearing and copy was also given to Ld. DR) It was submitted by Ld. AR that the condition regarding completion of project is not applicable on the project which are approved before 31/3/2005. Ld. AR has submitted a chart showing the essential conditions before 01/04/2005 and after 01/04/2005 and the said chart read as under:

SN Head Before 1.4.05 After 1.4.05 Remarks 1. Cut of Date Projects approved Projects approved before Deduction period before 31.3.2005 31.03.2007 increased 2. Commencement After 1.10.1998 After 1.10.1998 Same 3. Completion No Provision i) Projects approved before These provisions 1.4.2004 on or before added 31.03.2008 ii.Projects approved after 1.4.2004 within 4 years from the end of the financial year in which approval received 4. Area Minimum 1 acre Plot Minimum 1 acre Plot size Same. size. 5. Maximum built 1000 sq.ft. or 1500 1000 sq.ft. or 1500 sq.ft. as Same up area sq.ft. as applicable applicable according to cities according to cities 6. Built up area No definition Built-up area define Detail definition 7. Permitted No Provision Not exceeding 5% or 2000 No restriction in Commercial Area sq.ft. built up area commercial use of land subject to approving under housing category 8. Completion No Provision Completion certificate to be These provisions Certificate obtained by local authority. added. Thus, there is no condition of completion and furnishing completion certificate.

11 ITA No.1652/Mum/2013, M/s Neeta Enterprises 3.3 For raising the contention that completion of the project was not a condition precedent in respect of project which were approved before 31/3/2005, Ld. AR relied upon the following decisions:

(1) CIT vs. CHD Developers (2014) 43 Taxman.com 243(Del)- In this case approval for the project was given by Mathura Vrindavan Development Authority on 16/03/2005. The AO applied the provisions of sub-section (10) of Section 80IB being substituted by Finance (No.2) Act, 2004, w.e.f. 1/4/2005 and disallow the claim of deduction on the reasoning that the completion certificate in terms of explanation (ii) to clause (a) of section 80IB(10) had not been granted to the assessee so as to enable it to avail the benefit provided by section 80 IB. It was contended before AO that vide letter dated 5/11/2008 it had applied for completion certificate but the same was not issued which was beyond its control and power. Order passed by AO was upheld by Ld. CIT(A). The Tribunal held that in a case where approval of the project is granted by the Competent Authority before 1/4/2005 the position will be governed by the non- amended provisions and in non-amended provisions there was no condition like project completion certificate. The assessee was not expected to fulfill the condition which was not on the statute when such approval was granted and Tribunal directed the AO to allow the deduction. Hon’ble Delhi High Court has upheld the order passed by the Tribunal.

(2) ITO vs. Sai Krupa Developers, decision dated 14/3/2012 in ITA No.3661/Mum/2011, copy placed on record. The aforementioned proposition was upheld as per following observations: “Regarding the next objection of the AO, that the project was not completed before 31.3.2008, the contention of the representative is that as the project of the appellant was approved before 31.3.2005, there was no requirement of obtaining the completion certificate. The assessee has fulfilled all the conditions. In the circumstances, I accept the plea of the representative that deduction u/s. 80 IB(10) cannot be denied merely because the appellant did not obtain the

12 ITA No.1652/Mum/2013, M/s Neeta Enterprises completion certificate on or before 31.3.2008. In view of above, I find that there is no justification for denying deduction u/s. 80IB(10).” 10. Aggrieved by the stand so taken by the CIT(A), the revenue is in appeal before us. ii. Having heard the learned Departmental Representative and going to the facts of the case and detailed reasoning given by the CIT(A), we are not inclined to disturb the well reasoned order of the CIT(A), wherein, he has allowed the claim for deduction u/s. 80 IB(10)) to the assessee firm.”

(3) CIT vs. Jain Housing & Construction Ltd. ( 2013) 30 Taxaman.com 131 (Mad) - In this case it was held by Hon’ble Madras High Court that it is difficult to accept the case of Revenue that that the claim for deduction has to be rejected on the ground that assessee did not furnish the completion certificate as there was no such requirement under section 80 IB(10), as it stood during the relevant assessment year 2004-05.

3.4 Ld. AR further submitted that the assessee had submitted various evidences to show that the project was completed on 31/3/2008 and reference was made to the following evidences:

“(i) Completion Certificate from Architect.

(ii) Completion Certificate from Gram Panchayat, Bolinj, Virar (Local Authority) date 29/03/2008. (Page No.177)

(iii) NO due certificate from Gram Panchayat dated 17/03/2008. (Refer Page No. 173-175).

(iv) Applied to CIDCO for granting completion certificate vide letter dated 3 1/03/2008. (Page No.176)

(v) NOC from Water Department and accordingly water charges were paid to Virar Nagar Palika on 27/03/2008. (It is require after completion of project). (Refer Page No.171-172)

(vi) House Tax was paid on 17/03/2008 as completed house. In Maharashtra House tax are levied accordingly to nature and condition of property. In Appellant case project is completed therefore local body charge house tax on project as completed house. (Page No. 168-170)”.

3.5 For the proposition that no commercial property was involved in the project of the assessee as the project of the assessee has to be

13 ITA No.1652/Mum/2013, M/s Neeta Enterprises considered a separate project, Ld. AR relied upon the following decision. (i) Khyti Financial Services,ITA No.3740/Mum/2008 and reference was made to the following facts and findings recorded by ITAT: FACTS (PARA 2) FINDING (PARA 15) The assessee is a partnership firm consisting of two Housing project of the partners viz M/s Khyati Financial Services P.Ltd & Shri. assessee is different and Paresh Mohanlal Parekh. The appellant firm entered into distinct from the project for a development agreement on 25.4.2003 with Hickson & building commercial area Dadajee P.Ltd a company duly incorporated under the by another entity. Housing Companies Act, 1956 to develop property situated at project does not include Village Pahadi, Goregaon (E) owed by M/s Hickson & construction of commercial Dadajee P.Ltd In pursuance of said development establishment carried but agreement, the assessee firm undertook to construct by another entity in that residential building viz., “Acmee Armay” to be area. Therefore claim of residential area constructed at 60,000 sq.ft. approx. the assessee for deduction comprising 200 flats in 7 wings in ground plus upper u/s 801B(10) for the floors to be approved. The said residential building has housing project cannot be to be constructed on a shopping complex comprising of denied because the approx. 10,566 sq/ft/ built up area wherein the limited commercial project was development right to construct shopping complex was carried out by a sister assigned to a different concern viz Lakshadeep concern. Investment & Finance P.Ltd hereinafter called as LIFPL, being a sister concern of the appellant through a separate development agreement dt 25.4.2003 entered between LIFPL & M/s Hickson & Dadajee Put .Ltd (owner of the property) In other words the development right of the property was divided between the assessee for constructing residential flats and shopping complex at ground floor to LIFPL. The considerations to be paid by the appellant and LIFPL were fixed at Rs.11.56 crore & 2 crore respectively in lieu of development rights received by them.

3.6 He has also relied upon the decision of Hon’ble Bombay High Court in the case of CIT vs. Vandana Properties, 353 ITR 36 (Bom) and reference was made to the following observations:

“The expression “housing projects” is neither defined under Section 2 of Act nor under section 801B(10) of the Act. Even under Mumbai Municipal Corporation Act, 1988 as also under Development corporation Regulations for Greater Mumbai, 1991, the expression “housing project” is not defined. Therefore, the expression “housing project” in Section 801B(10) would have to be construed as commonly understand. As rightly have to be constructed as commonly understood.

14 ITA No.1652/Mum/2013, M/s Neeta Enterprises As rightly contended by Mr. Inamdar Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the interveners, the expression “housing project” in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the explanation in Section 801B(10) supports the contention of the assessee that the approval granted to a housing project. Therefore, it is clear that construction of even one building with several residential units of the size not exceeding 1000 sq.ft. (“E” building in the present case) would constitute a “housing project” under Section 801B(10) of the Act”.

Thus it was submitted by Ld. AR that Ld. CIT(A) has erred in not allowing the relief to the assessee and assessee should be granted with deduction under section 80 IB(10) of the Act.

15 ITA No.1652/Mum/2013, M/s Neeta Enterprises Construction (supra) that such condition of submission of completion certificate was not applicable to the projects which have been approved by the Public Authority before 31/3/2005. In the present case the project was approved for commencement vide letter of CIDCO dated 05/03/2004. Thus, the project was approved for commencement before 31/3/2005 and old law will apply when it was not a condition precedent to submit completion certificate. In view of these decisions and also the decisions of Co-ordinate Benches relied upon by Ld. AR which have been discussed in the above part of this order we hold that deduction u/s. 80 IB (10) cannot be denied to the assessee for want of completion certificate from CIDCO.

5.1 The other objection by the AO is regarding commercial element which according to the submissions of the assessee is not applicable to the case of the assessee as there is no commercial element in the project constructed by the assessee and commercial element, if any, for development was in another project which is not the subject matter of this appeal.

5.2 It may also be mentioned here that though AO has given a passing remark for disallowing the claim that when a project is approved as a single project by the Local Authority which is capable of dividing into various parcels and allocated to different entities for development by the development right owner then the action of the developer of split selling of the project to the assessee and M/s. Sai Leela Developers will absolve the buyers from eligibility to claim deduction under section 80 IB(10) of the Act but AO has not spelt out that how such splitting done by M/s. Adinath Developers will disentitle the assessee to claim deduction under section 80 IB(10) of the Act. As per decision of Hon’ble

16 ITA No.1652/Mum/2013, M/s Neeta Enterprises Bombay High Court in the case of CIT vs. Vandana Properties (supra) it is held that the expression “housing project” is neither defined under section 2 of the Act nor under section 80IB(10) of the Act. It is also not defined under Mumbai Municipal Corporation Act, therefore, the same has to be construed as commonly understood. In common parlance “housing project” would mean constructing the building or group of buildings consisting of several residential units. In fact the explanation in section 80 IB(10) supports the contention of the assessee that approval granted to housing project. Therefore, it is clear that construction of even one building with several residential units of size not exceeding 1000 sq.fts. “E” Building in that case would constitute a housing project under section 10 IB(10) of the Act. If facts of the present case are seen in the light of the aforementioned decision of Hon’ble Bombay High Court then it will be clear that project constructed by the assessee was a separate project different from the project carried out by M/s. Sai Leela Developers. Therefore, such passing observations of AO cannot be held to be a ground for rejection of assessee’s claim for deduction under section 80 IB (10) of the Act.

5.3 For the aforementioned reasons we set aside the order passed by Ld. CIT(A) and hold that assessee is entitled to get deduction under section 80 IB(10) and accordingly the AO is directed to allow the deduction to the assessee under section 80 IB(10). Ground No.1 to 5 are allowed in the manner aforesaid.”

2.3. If the observation made in the assessment order/impugned order, conclusion drawn in the order of the Tribunal ( in the case of assessee itself), we note that the facts are identical because for

17 ITA No.1652/Mum/2013, M/s Neeta Enterprises Assessment Year 2009-10, the project was approved on 05/03/2004 i.e. before insertions of conditions of completion with effect from 01/04/2005. The assessee is a firm engaged in the business of builder and developer in Vasai-Virar region of Thane district. The claimed deduction u/s 80IB(10) of the Act was denied to the assessee on the reasons as contained in the assessment order, broadly, the assessee could not produce completion certificate from CIDCO within the stipulated period. On appeal, the ld. Commissioner of Income tax (Appeals) also affirmed the stand of the Assessing Officer. It is not worthy that as per explanation to section 10(20) of the Act Gram Panchayat also falls under local authority for which reference can be drawn from the decision in the case of Krishan Harubhau Lohokare vs ITO (ITA No.937/PN/2010), wherein, it was held that for the purposes of issuance of completion certificate u/s 80IB(10) of the Act Gram Panchayat is a local Authority, therefore, we find merit in the contention of ld. counsel for the assessee. Substitution was made by the Finance (No.2) Act 2004 with effect from 01/04/2005 and prior to its substitution, in sub- section (10) to section 80IB, there was no requirement of completion certificate. This issue has been elaborately dealt with by the Delhi Bench of the Tribunal in the case of CIT vs CHD Developers (wherein one of us i.e. Judicial Member) is signatory

18 ITA No.1652/Mum/2013, M/s Neeta Enterprises to the order, which was affirmed by the Hon’ble Delhi High Court in (2014) 43 Taxman. Com 249 (Del.) vide order dated 22/01/2014. The Hon’ble Delhi High Court affirmed the stand of the Tribunal to the fact that before the substitution of the Act with effect from 01/04/2005 and in terms of explanation (ii) to clause (a) of section 80IB (10), there is no requirement of completion certificate for availing deduction for the project which were approved before the date of substitution i.e. 01/04/2005. In the present appeal approval was granted by the competent authority on 05/03/2004, before the insertions of condition of completion certificate (i.e. w.e.f. 01/04/2005), therefore, the assessee is not expected to fulfill the conditions which were not on the statute book when the approval was granted by the competent authority to the assessee, consequently, following the decision of the Pune Bench of the Tribunal in Shri Krishna Haribhau Lohokare (ITA No.937/PN/2010) order dated 28/02/2013, CIT vs CHD Developers (ITA No.2902 & 4694/Del/2010) order dated 26/09/2012 and the decision from Hon’ble Delhi High Court in the case of CHD Developers, ratio laid down in CIT vs Tarnetar Corporation order dated 12/09/2012 from Hon’ble Gujarat High Court, Hon’ble Madras High Court in CIT Vs Jain Housing Constructions holding that the conditions of completion certificate which were not applicable to

19 ITA No.1652/Mum/2013, M/s Neeta Enterprises the projects approved by the competent authority before 31/03/2005. Even for Assessment Year 2009- 10, the Mumbai Bench of the Tribunal vide order dated 22/09/2014 (reproduced hereinabove) dealt with the issue in detail and that too after placing reliance upon various judicial pronouncements including the case of CHD Developers, and other cases relied upon by the assessee, therefore, on this issue, the appeal of the assessee is allowed.

20 ITA No.1652/Mum/2013, M/s Neeta Enterprises development of the housing project, while there was some minor expenses incurred on the repair and maintenance of boundary wall, bricks and not in the development of housing project. There was some expenses incurred on architect and engineering fees worth Rs.4,16,300/- in connection with the approval of the building plan vide commencement certificate dated 28/11/1992. The assessee contended that as per the original building plan, only two buildings were constructed while as per the revised plan seven building are to be constructed and the details of the approval obtained from the BMC for the project, detailed above, as obtained by the assessee, hence, we have observed that the assessee has duly complied with the condition of the section 80IB(10) of the Act, whereby the approval has obtained prior to 31/03/2005, it is also observed that the project has not commenced before 01st October 1998 and the matter is duly covered by the above decision of the Tribunal. It is also clarified here that identically the Delhi Bench of the Tribunal in the case of CIT vs CHD Developers (ITA No.2902 and 4694/Del/2010) order dated 26/09/2012 (wherein one of us i.e Judicial Member) a signatory to the order and the said decision was affirmed by the Hon’ble Delhi High Court (2014) 43 taxman.com 249 (Del.) order dated 22/01/2014 supports the case of the assessee. In that case, it was held that before the substitution made in the Act, with effect from 01/04/2005 and in terms of explanation (ii) to Clause (a) of section 80IB(10), there is no requirement of completion certificate for availing deduction for the project, which were approved

21 ITA No.1652/Mum/2013, M/s Neeta Enterprises before the date of the substitution i.e. 01/04/2005. In the present appeal, the approval was granted by the local authority/competent authority before insertion of the amendment, therefore, the assessee is not expected to fulfil the conditions which were not in the statute book, when the approval was granted by the competent authority to the assessee. The Pune Bench decision of the Tribunal in the case of Shri Krishna Haribhau Lohkare (ITA No.937/Pn/2010) order dated 28/02/2013, Hon’ble Gujrat High Court in CIT vs Tarnetar Corporatin order dated 12/09/2012 and Hon’ble Madras High Court in CIT vs Jain Housing Construction holding that the condition of completion certificate which were not applicable to the projects approved by competent authority before 31/03/2005 supports our view. We note that section 80IB (10) of the Act was substituted by the Finance (No.2) Act, 2004, w.e.f. 01/04/2005 and prior to its substitution sub-section (10), as amended by the Finance Act, 2000, w.e.f. 01/04/2001 and Finance Act, 2003, w.r.e.f. 01/04/2002 provides 100% of the profit derived in any previous year relevant to any assessment year from such housing project approved before 31/03/2005. Thus, time project completion time limit is not provided in the section. The project of the assessee commenced in the financial year 2003-04 i.e. before 01/04/2005. Circular no.772 dated 23/12/1998 with respect to tax incentive provision/tax holiday supports the case of the assessee. There is uncontroverted finding in the impugned order (para 2.4) that identical issue was decided

22 ITA No.1652/Mum/2013, M/s Neeta Enterprises for A.Y. 2008-09 on 28/03/2011 holding that the project under taken by the assessee had not commenced prior to 01/10/1998, wherein, the Assessing Officer was directed to allow the claimed deduction. No contrary decision was brought to our notice contradicting the finding recorded in the impugned order, thus, we find no infirmity in the order of the Commissioner of Income Tax (Appeals) on these issues raised by the Revenue, consequently, the appeal of the Revenue is dismissed. Finally, the appeal of the Revenue is dismissed. This Order was pronounced in the open court in the presence of ld. representative of both sides, at the conclusion of hearing on 23/07/2015.

Sd/- Sd/- (Sanjay Arora) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 09/10/2015 f{x~{tÜ? P.S/.�न.स.

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, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �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 //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai