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TMI Blog2012 (10) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Because the "CIT(A)" has also erred in law and on facts in taking a view that the "appellant" was already in this business and, therefore, not entitled to claim exemption under section 80IB(10). 4. Because the exemption was claimed in relation to the project of 'Fortuna Apartment', which was a housing project undertaken by the "appellant" for the first time, independent of its other business activities and denial of appellant's claim for exemption on this ground is against the provisions of law as well as rule of consistency. 5. Because the project known as "Fortuna Apartments" had been envisaged and formulated on the land area which admeasured 48,413 sq. feet (more than 1 acre) and the same having been implemented and executed accordingly, it was eligible for exemption under section 80IB(10) and view to the contrary as has been taken by the Authorities below is wholly erroneous on facts as well as in law. 6. Because the "CIT(A)" has erred in law and on facts in denying the "appellant's" claim of exemption under section 80IB(10), inter alia, on the ground that the appellant's had merely acted as a contractor, so-much-so that; (a)&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held. 12. Because the "CIT(A)" has erred in law and on facts in denying the benefit of exemption under section 80IB(10), inter-alia, on the ground that: (a) the certificate had been obtained on23.10.2009 i.e. much after the close of the relevant accounting year, on the basis of application filed by someone acting on behalf of Karuna Shanker Dubey; and (b) such certificate had not been filed before the Assessing officer during the course of regular assessment proceedings. 13. Because the "appellant" had executed the Group Housing Project on the land partly acquired under Builder's Agreement from Shri Karuna Shanker Dubey, since deceased, and merely because the prescribed Authority had issued the completion certificate in the name of Shri Karuna Shanker Dubey, benefit of relief giving provision as contained in section 80IB(10), could not have been denied. 14. Because the order appealed against is contrary to the facts, law and principles of natural justice. 2. Though various grounds are raised assailing the order of the ld. CIT(A), but they all relate to the claim of deduction under section 80IB(10) of the Income-tax Act, 1961 (hereinafter called in short "the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under section 80IB(10) of the Act for various reasons, which are as under:- "1. The assessee Company entered into the Builder's Agreement with one, Shri Karuna Shankar Dubey on 24.4.2002 for the development of an area measuring 28600 sq ft, which is equivalent to 2657 sq mtrs, out of total land area of 48413 sq ft, which is equivalent to 4497.597 sq. mtrs for making a group housing multi storied building thereon. After the death of Shri Karuna Shankar Dubey on 3.2.2003, his heirs entered into an agreement with the assessee Company on the remaining land bearing an area of 1840.63 sq meters (19813 sq ft) on 14.10.2003. The assessee Company through the sale deed made in favour of flat owner has admitted these facts. 2. The assessee Company filed copy of sub-division plan of plot, which clearly mentions the area of 2657 sq mtrs for which building plan was got approved from LDA vide Permit No. 14202, date of sanction 24.11.2001. As per the sub-division plan of plot, submitted with LDA, the plot was shown divided into 3 parts as follows:- Plot No. and address of the same Area of the plot (in sq mtrs) 27A/1, Jopling Road, Lucknow 52.44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure development could be considered and the cost of housing be kept minimum through tax holiday, and resultant beneficiary be the flat purchaser, but it cannot be provided by sewing together three different plots, which has taken place in the case of the assessee Company. In view of the above discussions, it is evident that the assessee has not fulfilled the essential condition laid down in the section 80(IB)(10) (b) of the Income Tax Act, 1961. Accordingly, the deductions claimed by the assessee under section 80(IB)(10) of the Income Tax Act, 1961 is disallowed. Penalty under section 271(1)(c) of the Income Tax Act, 1961 is being initiated for concealment of Income and furnishing inaccurate particulars." 5. An appeal was preferred before the ld. CIT(A) and the assessee besides reiterating its contentions, has also filed completion certificate from the LDA before the ld. CIT(A) and was contended that an application for completion certificate was filed on 14.3.2008 and completion certificate was granted on 23.10.2009. The ld. CIT(A), reexamined the issue in the light of his order passed for assessment year 2007-08 and has finally denied benefit of deduction under section 80IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 10 of the Income-tax Act, 1961, the assessee is not eligible for the claim of deduction under section 80-IB(10). 3.2.5 The project is not one integrated project but two distinct projects as even the allocated share is in different proportion from that of the first phase. Had it been the same project, the terms and conditions would not have been altered. Thus, being a distinct project, the requirement of land of at least one acre is not fulfilled. 3.2.6 As the facts enlisted above would show, the assessee had merely carried out the work of construction as per the agreement with Shri Karuna Shankar Dubey and the consideration was to be paid in kind. Thus, the assessee can be said to have executed the housing project as a works contract as per the agreement as in none of the sanctioned maps the assessee is said to be the owner of the project nor the name "Fortuna Apartments" is appearing in any of the sanctioned maps. Explanation to sub-section (10) of section 80IB of the Income-tax Act, 1961 bars the applicability of the provisions of section 80IB to any works contract The explanation is reproduced as under: Explanation.-For the removal of doubts, it is hereby declared that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed deduction under section 80IB(10) of the Act on the basis of partial completion method. The ld. counsel for the assessee further invited our attention to the order of the Tribunal for both the assessment years with the contention that the project was completed before 31.3.2008, therefore, in the impugned assessment year no contrary view can be taken in this regard, as the Tribunal is required to follow the order of the co-ordinate Bench with respect to the findings of facts. Our attention was also invited to the application for completion certificate submitted to the LDA and completion certificate granted by the LDA. It was further contended that since the issue is squarely covered by the orders of the Tribunal for earlier years, the claim of deduction under section 80IB(10) of the Act be allowed to the assessee. 7. The ld. CIT (DR), Shri. Praveen Kumar along with Shri. R.K. Ram, ld. D.R. appearing for the Revenue has strongly contended that during the course of hearing of the appeal for assessment year 2005-06, completion certificate obtained from the LDA was not filed and the Tribunal has given a finding with regard to the completion of the project on assumption without bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession to most of the members were shown to be from March, 2004 upto March, 2008. According to the assessee, the project was completed on 14.3.2008, on which date application for completion certificate was filed, but as per list of possession, 38 persons out of 42 were given possession of flats between March, 2004 and August 2007. If the project was not completed, how possession can be given to the different persons. This shows that the list prepared by the assessee for allotment of plot and grant of possession is fabricated-one and cannot be relied upon for the purpose of deciding the date of completion of the project. 9. Shri. Praveen Kumar, ld. CIT (DR) further invited our attention to the Explanation below section 80IB(10) of the Act with the submission that through this Explanation, the date of completion of project has been defined and according to this Explanation the date of completion of project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. Since the certificate was issued on 23.10.2009, though in the name of a dead person, the date of completion of the project shall be taken to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 1. Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 2. P. R. Prabhakar v. CIT [2006] 284 ITR 548 3. Ramaniyam Castles (P) Ltd. v. Asstt. CIT [2011] 128 ITD 130 4. Saroj Sales Organisation v. ITO [2008] 115 TTJ 485 (Mum.) 11. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the lower authorities, judgments referred to by the parties and the material available on record, we find that the Assessing Officer has denied benefit of deduction under section 80IB(10) of the Act for various reasons. In earlier years also benefit of deduction was denied by the Assessing Officer as well as the ld. CIT(A). 12. The first objection for denial of benefit of deduction under section 80IB(10) of the Act was that the housing project was constructed on three different plots. This issue was examined by the Tribunal in earlier assessment years and it was finally concluded that the total land involved, on which housing project was raised, is more than one acre and hence the first condition entitling the assessee for claim of deduction under section 80IB(10) of the Act is fulfilled. 13. The other ground of denial for ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the local authority before 31st March 2007 and as per clause (a) to sub section 10 of section 80IB of the Act, such undertaking has to commence the development and construction of the housing project on or after 1st day of October 1998 and complete such construction on or before 31st March 2008. In the instant case, the assessee commenced the construction of housing project after the 1st day of October 1998 and completed the project before 31st March 2008. The another provision as per sub clause (i) to clause (a) of sub-section (10) of section 80IB is that the approval of the local authority has to be taken before 1st day of April 2004. In the instant case, there is no dispute that the approval was taken by the assessee from Lucknow Development Authority before 1st April 2004. Even the Assessing Officer himself admitted that first approval was taken on 24/11/2001 and thereafter another approval was taken on 03/06/2003. Both these dates are prior to the cut off date i.e. 1st day of April 2005. Therefore, the assessee fulfilled the conditions as laid down in sub clause (i) of clause (a) to sub-section (10) of section 80IB of the Act. In the instant case, one of the objections of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is also fulfilled. In the present case, no doubt the assessee got the first approval on 24/11/2001 which was superseded by the approval granted on 22/06/2003 by the local authority i.e. Lucknow Development Authority and the area of the land was aggregating 4550.07 sq. mtr., the project was started after 1st October 1998 by taking the approval before 1st April 2004 and was completed before 31/03/2008, the area of the land on which the housing project was constructed was 4550.07 sq. mtr. i.e. more than one acre. Therefore, the assessee fulfilled the conditions laid down in section 80IB(10) and as we have already pointed out that the audit report as per rule 18 BBB in Form No. 10CCB was furnished during the assessment proceedings i.e. before the completion of the assessment, as such the assessee also fulfilled the conditions laid down in section 80IB(13) of the Act. We, therefore, considering the totality of the facts as discussed herein above, are of the view that the Learned CIT(A) was fully justified in directing the Assessing Officer to allow the exemption claimed by the assessee u/s 80IB(10) of the Act. In that view of the matter, we do not see any merit in this ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e withdrawn." 7.5 Admittedly the assessment year 2007-2008 is the year in which the project is not shown to have been completed but the profits have been disclosed on partial completion method. In this view of the matter and having regard to the Circular as aforesaid as well as the findings of fact reached by the earlier Tribunal in assessee's own case for assessment year 2005-2006, we do not find any reason to deviate from the well reasoned decision already reached in assessee's own case in allowing deduction u/s 80-IB(10) of the Act. Setting aside the finding as well as the order of learned CIT(A), we allow the grounds raised in appeal by the assessee." 16. Therefore, whatever findings are given by the Tribunal in assessment years 2005-06 and 2007-08 with regard to the completion of project, it was in the absence of any documentary evidence, rather it was on assumption of certain facts by the Tribunal. But in the instant case, before the ld. CIT(A) completion certificate was filed for the first time and the ld. CIT(A) took cognizance thereof and given a specific finding in the light of Explanation below section 80IB(10)(a) of the Act that date of completion of construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The relevant clause 80IB(10) and Explanation are extracted hereunder for the sake of reference:- "[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, [but not later than the 31st day of March, 2005] within four years from the end of the financial year in which the housing project is approved by the local authority; (iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough this application, completion certificate was sought. Thereafter, completion certificate was granted to Shri Karuna Shanker Dubey, a dead person, which is appearing at page 26 of the compilation of the assessee. In this certificate, a reference was made to a permit No. 24939, dated 6.11.2008. Though this letter may be issued to a dead person, but it has its own evidentiary value with regard to the completion of the project. In this certificate, a reference was made to a permit No. 24939, dated 6.11.2008, meaning thereby the process of completion of the project was not finalized till 6.11.2008 and some permit number was issued. From a careful perusal of this completion certificate, no inference can be drawn from anywhere that the project was completed before 31.3.2008. 21. Where there is no ambiguity in the relevant provisions of the Income-tax Act, there cannot be any question of its construction liberally. In section 80IB(10) of the Act, it has been made emphatically clear that if the housing project is approved before 1st April, 2004 and is completed before 31.3.2008, the assessee would be entitled for deduction under section 80IB(10) of the Act and through its Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (10) of section 80-IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the projection or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority. 2. Clarifications have been sought by various CCITs on the issue whether the deduction u/s 80-IB(10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80-IB(10). 3. The above issue has been considered by the Board and it is clarified as under:- (a) The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year. (b) In case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years is should be withdrawn. 4. The above Instruction will override earlier clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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