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TMI Blog2012 (11) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... authority before 31.3.2008, therefore, it is clear that the assessee has not fulfilled the conditions laid down under the Act - Even till today, no evidence has been produced that the local authority issued the completion certificate to the assessee - appeals of the assessee are dismissed - ITA Nos.309 & 310/Ind/2011 - - - Dated:- 23-5-2012 - SHRI JOGINDER SINGH, AND SHRI R.C. SHARMA, JJ. Appellant by Shri Sumit Nema Respondent by Shri Arun Dewan O R D E R PER JOGINDER SINGH , judicial member Both these appeals are by the assessee against the common impugned order dated 2.8.2011 passed by the learned first appellate authority, Bhopal on the ground that learned Commissioner of Income Tax (Appeals) erred in upholding the disallowance of the exemption u/s 80IB(10) of the IT Act and levy of interest u/s 234B 234C of the Act. 2. During hearing of this appeal, we have heard Shri Sumit Nema, learned counsel for the assessee and Shri Arun Dewan, learned Senior DR. At the outset, the learned Senior DR asserted that the impugned issue is covered against the assessee by the decision of the Tribunal in the case of M/s Agrawal Builders (ITA No. 337/Ind/2010) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction u/s 80IB(10) of the Act. 2. We have heard the rival submissions of the parties and have gone through the material available on the file. The crux of arguments on behalf of the assessee is that the assessee applied for completion certificate to the Competent Authority/Municipal Corporation on 16.1.2008, which was not issued till date. It was claimed that possession of the dwelling unit/bungalows was handed over to the 62 customers for which, our attention was invited to page 42 43 of the paper book, contending that the possession was handed over on the dates mentioned against the respective names. It was also claimed that registered sale deeds were executed in favour of such customers. It was specifically claimed that when the map of such dwelling units was sanctioned in 2004, therefore, the law applicable on that date will be applicable when the plan was sanctioned/approved by the Competent Authorities. Reliance was placed upon the decisions in 39 SOT 498 (Mum), Essar Construction P. Ltd. vs. ACIT (17 ITJ 138) (Indore) and D.K. Construction vs. ITO, 17 ITJ 1 (Indore) and also the decision of the Tribunal in the case of the assessee for assessment year 2004-05 vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer was affirmed by the ld. CIT(A) which is under challenge before this Tribunal. The claimed deduction was disallowed by the ld. Assessing Officer by observing that the following requirements of sec. 80IB(10) were not fulfilled by the assessee: 1. The assessee is merely acting as a contractor to the customers to whom land has been sold. 2. No registry whatsoever is being made for the construction work done by the assessee. No new residential property is being constructed or transferred by the assessee as per books of accounts of the assessee. 3. Intention behind any deduction u/s 80IB is to promote investment in a particular section, which is less profitable. In assessee s case virtually no investment was made to start the project and return on capital or profitability is very substantial. 4. Project is not approved as a whole by the Municipal Corporation individual building permission has been given. 5. The assessee has constructed the duplexes, which exceeds the maximum limit of 1500 sqft specified in section 80IB(10) which in fact is one of the main basic condition to be fulfilled in order to claim the exemption. The assessee has failed to fulfill this main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; [and] (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less.] The following clauses (e) and (f) shall be inserted after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing of convention halls to be used for the purpose of holding conferences and seminars, being of such size and number and having such other facilities and amenities, as may be prescribed;] (b) hilly area means any area located at a height of one thousand metres or more above the sea level; (c) initial assessment year (i) in the case of an industrial undertaking or cold storage plant or ship or hotel, means the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or things, or to operate its cold storage plant or plants or the cold chain facility or the ship is first brought into use or the business of the hotel starts functioning; (ii) in the case of a company carrying on scientific and industrial research and development, means the assessment year relevant to the previous year in which the company is approved by the prescribed authority for the purposes of sub-section (8); (iii) in the case of an undertaking engaged in the business of commercial production or refining of mineral oil referred to in sub-section (9), means the assessment year relevant to the previous year in which the undertaking c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; (g) small-scale industrial undertaking means an industrial undertaking which is, as on the last day of the previous year, regarded as a small-scale industrial undertaking under section 11B26 of the Industries (Development and Regulation) Act, 1951 (65 of 1951).] In sub-clause (a) of sub-sec. 14 of sec. 80IB means the measurement of residential units which includes projections and balconies but does not include the common area shared with other residential units. The assessee has built up independent bungalows and not the flats, therefore, there is no question of common areas, consequently, the built-up area in these bungalows is beyond the prescribed limit of 1500 sq.ft. 6. As per sub-clause (ii) to Explanation to sub-sec. (10), the date of the construction of the housing project shall be taken to the date on which, the completion certificate, in respect of the housing project, is issued by the local authority. Whereas in the present appeal, as per the Revenue, till date no such certificate was issued to the assessee, therefore, from this angle also, the assessee has not fulfilled the stipulated condition. The basic idea as per sub-clause (iii) to sub-sec. 10(a) is to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surement and its calculation, therefore, the facts of assessment year 2004-05 are different. Amendment was made in sub-sec. (10) by the Finance (No.2) Act, 2004 w.e.f. 1.4.2005 and prior to its substitution, sub-sec. (10) as amended by Finance Act, 2000, was w.e.f. 1.4.2001 and Finance Act, 2003 with retrospective effect from 1.4.2002, having different conditions. In the present appeal, firstly, the assessee did not fulfill the conditions as mentioned in para 4 (supra) and secondly, the completion certificate was not issued till date, therefore, these judicial pronouncements may not help the assessee. 8. The benefit of deduction was first introduced by the Finance Act, 1998 w.e.f. 1.4.99 in the form of sub-sec. (4F) to sec. 80IA of the Act. By the Finance Act, 1999 w.e.f. 1.4.2002, the benefit of such deduction was available u/s 80IB(10). By the Finance Act, 2000 w.e.f. 1.4.2001, the words before 31st day of March, 2001 were inserted after the words housing project approved . Thus, all conditions for grant of deduction remained the same except the approved of local authority for the development has to be obtained before 31st day of March, 2001. For assessment year 2002-03, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses to the customers, therefore, the assessee acted as a builder and developer. So far as excess built up area of the residential units and completion of construction within the specified period is concerned, we find that by the Finance (No. 2) Act, 2004, substitution was made in section 80IB of the Act with effect from 1.4.2005, therefore, the substitution in the sub-section is applicable prospectively to assessment year 2005-06 and subsequent assessment years. The present appeals are for the assessment years 2006-07 and 2007-08, therefore, the amended provision is clearly applicable to the present appeals. If the language used in the section is analysed, as per sub-clause (2) to the Explanation to sub-section (10) the date of completion of construction of the housing projects shall be taken on the date when completion certificate is issued by the local authority and as per sub-clause , the maximum built up area should not exceed 1500 sq.ft. (as applicable to the present assessee). So far as the applicability of the statute is concerned, it is settled principle that the law prevailing on Ist April of the relevant assessment year will be applicable. The amendment was made in sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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