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TMI Blog2012 (12) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... First approval dated 12.9.2003 was obtained by the earlier owner for the project - Due to substantial change in the housing project assessee obtained another from local authorities on 28.9.2005 – Held that:- When the project in question was sanction after 1.4.2004, then as per clause (a) (ii) of sec 80IB(10), it is required to be completed within four years from the end of the F.Y in which it is approved by the local authorities. Since the project in question was sanctioned on 28.9.2005; therefore, the same was required to be completed on or before 31.3.2010. Accordingly, we hold that the assessee has complied with the conditions of completion within four years from the end of the financial year 2005-06. In favour of assessee Deduction u/s 80IB(10) – Correct measurement of size of plot on which project developed - Discrepancy in the records of the Government agencies with regard to the actual size of the plot of land – Held that:- If it is ultimately found that the area of plot is more than one acre, then deduction u/s 80IB cannot be denied on the basis of the area of plot shown in the 7/12 extract as less than one acre. This factual aspect is required to be verified physical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why its income should not be computed by adopting the percentage completion method. In response, the assessee vide its letter dated 16.12.2008 submitted that the assessee has been consistently following the method of accounting for profit on the project completion basis. The profits of the entire project is declared and offered in the last financial year during which the project is completed and necessary certificate obtained from the authorities concerned. It was further submitted by the assessee that as the year under consideration is not the final year of the project and therefore all the expenses on the said project has been carried forward as work in progress at the end of the year and therefore there is no income eligible to tax in this year. In support of his contention the assessee has relied upon various decisions of this Tribunal as well as decision of the Hon ble jurisdictional High Court in case of CIT vs Dempo company reported in 131 CTR 203. The Assessing Officer did not accept the contention of the assessee and expressed his view that the principle of res-judicata to income tax proceedings would not apply as law in this regard is well settled. 3.2 The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the year ending 31st of March 2006 and not a single flat was sold in building number C. 4.2 Thus the learned AR of the assessee has pointed out that only 64 % of flats in building number A and 47% of flats in building number B were sold up to 31st of March 2006. In this way, only 30.25% of the construction work was completed up to 31 3 2006. The learned AR of the assessee has submitted that the Assessing Officer has relied upon the decision of this Tribunal wherein the work was completed more than 80% and the same were sold during the year. The facts of those cases cannot be compared to the facts of the assessee where 30% of the work was completed up to the end of the year under consideration. The learned A.R. of the assessee has supported and relied upon the order of the Commissioner of Income Tax(Appeals). 5 We have considered the rival contention as well as relevant material on record. The Assessing Officer has accepted the fact that the assessee has been consistently following the project completion method. The Assessing Officer has also recorded the fact that the project was not completed before 31st 3 2008 and the sale of flats as well as construction work were less t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the assessee offered the income to tax from the entire project for the assessment year 2008-09 which has been adopted by the Assessing Officer for estimation of the income for the year under consideration, then this fact goes to prove that there is no difference in the rate of profit declared by the assessee for the assessment year 2008-09 and the rate adopted by the assessing officer for the year under consideration. Thus there is no revenue effect and the income offered by the assessee on completion of the project is revenue neutral. 6 In view of the above discussions, we do not find any error or illegality in the order of Commissioner of Income Tax(Appeals), qua this issue. 7 Ground number 3 and 4 regarding rejection of claim of deduction under section 80 IB (10): 7.1 During the assessment proceedings the assessing officer obtained details from the local authority i.e. KDMC to ascertain the date of commencement of project. From the details, the Assessing Officer noticed that the project was commenced on 12.9.2003 and as per clause (a) (i) of section 80 IB (10), the project approved by the local authority before the 1st April 2004 have to be completed before 31st of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 3379.76 sq.mtrs. Subsequently the assessee put up the plan of the project consisting of 3 wings having 8 floors comprising of ground + 7 upper floors and total built-up area of the project is 4079.50 sq.mtrs. The learned A.R. of the assessee has submitted that the project executed by the assessee is different from the project which was approved on 12.9.2003. The plans of the new project executed by the assessee were submitted on 8th Aug 2005 for approval and accordingly, the approval was granted by the local authority on 29 8 2005 after the assessee acquired the development rights of the project. Thus the learned A.R. of the assessee has submitted that the 1st plan sanctioned for the project implemented and executed by the assessee was approved on 28 9 2005 and hence, the date of approval of project should be reckoned from the date when the plans of this project were approved on 28 9 2005 and not from the date when the plans of the earlier projects were approved on to 12.9.2003. The learned A.R. of the assessee has submitted that when the project was approved on 28 9 2005, then the completion is within the time period prescribed under section 80 IB (10). 8.2 The learned A.R. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of four flows, each having total built up area of 3379.76 sq.mtrs. On our directions, the assessee has filed all three approved plans and it is evident that the plant approved on 28.9.2005 was for a project consisting of 3 wings having 8 floors each and the total built up area of the project is 4079.50 sq. mtrs. Thus, it is clear that there is a substantial change in the housing project when the assessee obtained the approval of the local authorities on 28.9.2005. 10.1 The Explanation to Sec 80IB(10)(a) reads as under: Explanation . For the purposes of this clause, (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing 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; 11 As it is clear from the language of the explanation that in case where the approval in respect of the housing project is obtained more than once, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing 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; 12.1 The Assessing Officer has recorded in the assessment order that the assessee offered the tax on completion of project for the Assessment Year 2008 09; though the completion certificate was issued by the local authorities on 11.9.2008. The project which was finally completed vide completion certificate dated 11.9.2008 was sanctioned vide sanction plan dated 28.9.2005. This fact was evident from the sanction plan dated 28.9.2005 as well as the completion certificate dated 11.9.2008. The relevant portion of the completion certificate is reproduced as under: KALYAN DOMBIVALI MUNICPAL CORPORATION, KALYAN TOWN PLANNTING DEPARTMENT No. KDMC/TDP/CC/ 281 Date: 11-9-2008 Sub (Part Construction Completion Certificate . .. On application dated 11.03.2008 from Shri Subhash Athlye, Certificate is iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. ON MERITS: 17 The issue raised by the assessee in the cross objection is regarding the size of plot. The authorities below have denied the deduction u/s 80IB(10) on the ground that the size of plot on which the project has been developed by the assessee is less than one acre; therefore, the assessee is not entitled for deduction. The assessee has submitted before the authorities below that the actual size of the plot was 4100 sq.mtrs. In support of the contention, the assessee filed the report of the surveyor as well as the agreement executed in favour of the buyers of the flats. It was submitted before the Commissioner of Income Tax(Appeals) that the assessee has already applied for rectification of land record being 7/12 extract. The Commissioner of Income Tax (Appeals) has not accepted the contention of the assessee and held that the assessee has failed to satisfy one of the prime conditions of section 80IB(10). 18 Before us, the ld AR of the assessee has submitted that the actual size of the building is 4100 sq.mts; though it was shown in the 7/12 extract as 3940 sq.mtrs. 19 The assessee has also filed an application for admission of the additional evidence viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the fact remains that the size of the plot is more than 1 acre. Further, it is not the case of any addition of the area in the existing plot of land after the project was approved and completed; but the size at the site remains the same and the only dispute is regarding the correct measurement of size of plot. 20.1 If it is ultimately found that the area of plot is more than one acre, then deduction u/s 80IB cannot be denied on the basis of the area of plot shown in the 7/12 extract as less than one acre. This factual aspect is required to be verified physically either by the competent revenue authorities or by the Assessing Officer through some agencies. The assessee is also directed to get the demarcation and correct measurement by the competent authority. 21 In view of the above facts and circumstances and in the interest of justice, we admit the additional evidence and remand the issue to the record of the Assessing Officer to verify the actual size of the plot either by physical verification or through some agencies. 22 In the result, the appeal filed by the revenue is dismissed whereas the Cross Objection filed by the assessee is allowed for statistical purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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