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TMI Blog2013 (9) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of deduction u/s 80IB(10) afresh after affording a reasonable opportunity of being heard to the assessee. It is open for the assessee to produce all the information and evidence in support of its claim of deduction u/s 80IB(10). The Assessing Officer shall consider all the information and evidences that may be produced by the assessee and decide the issue. Determination of the income from house property by applying the rate of 7% on the investment of the assessee subject to cost inflation index – Held that:- The Tribunal in its order dated 23rd October, 2009 for the previous assessment years, directed the Assessing Officer to recompute the income from house property by following the return on investment method, applying the rate of 7% on the assessee's investment in the property as enhanced by applying the cost inflation index applied for the respective years to arrive at the ALV for the relevant assessment year. The facts being identical, since the CIT(A) has followed the direction of the Income-tax Appellate Tribunal while directing the Assessing Officer to recompute the income from house property - The order of the CIT(A) on this issue is sustained. Disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings, which ensued in response to notice u/s 153A of the Act, the Assessing Officer noticed that the assessee has claimed deduction u/s 80IB(10) of the Act in respect of construction of a housing project in the name and style of "Manasa Sarover Heights - II". In a note given in the return of income, the assessee had stated that the housing project has been built on a total area of land of 4 acres and the maximum area of each flat is between 1200 to 1500 sq.ft. The Assessing Officer was of the view that the deduction u/s 80IB(10) can be availed if all the preconditions mentioned therein are fulfilled. The Assessing Officer however had observed in the assessment order that the assessee did not furnish any information called for to show that the preconditions mentioned in sec. 80IB(10) have been fulfilled. The Assessing Officer found that the assessee had neither obtained and submitted a certificate in the prescribed form( Form No. 10CCB) from its auditor nor a completion certificate from the local authority had been submitted. The Assessing Officer came to a conclusion that as the assessee is not the owner of land and has not fulfilled the preconditions laid down in section 80IB( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving conditions and not to encroach on the public property and to ensure that a design and construction in tune with the notifications issued by the competent authority from time to time. The CIT(A) came to a conclusion that special deductions as contemplated in the Income-tax Act are to be allowed after strict compliance of eligibility criteria only. Therefore, without such completion certificate issued by the competent authority the housing project cannot be said to be complete in all respects. The CIT(A) held that for claiming deduction u/s 80IB(10), the assessee has to produce the completion certificate from the local authority and the individual house tax assessments cannot substitute the substantial condition imposed as per law. The assessee having failed to submit the completion certificate, deduction u/s 80IB(10) cannot be allowed. On the aforesaid conclusion, the CIT(A) sustained the disallowance. 7. Still aggrieved, the assessee is in appeal before us. 8. The learned AR through his submissions made orally at the time of hearing as well as in the writing filed before us has more or less reiterated the stand taken before the CIT(A). The learned AR submitted before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficial provision of tax incentive and should be interpreted liberally so as to confer the benefit keeping in view the intention of the legislature and object behind the introduction of the provision. In this context, the learned AR relied upon the CBDT Circular No. 5/2005, dated 15/07/2005 explaining the amendment to section 80IB(10). In support of his contention, the learned AR relied upon the following decisions: 1. Petron Engg. Construction (P) Ltd. v. CBDT 2. Pandian Chemicals Ltd. v. CIT 3. CIT v. N.C. Budharaja Co 4. Union of India v. Wood Papers Ltd. [1991] 83 STC 251 (SC) 5. SJR Builders v. Asstt. CIT [2010] 3 ITR (Trib) 569 (Bang.) 6. ArunExcello Foundations (P) Ltd. v. Asstt. CIT 7. Brahma Associates v. Jt. CIT [2009] 30 SOT 155 (Pune)(SB). 8. Ramsukh Properties v. Dy. CIT 9. ITO v. Mahaveer Calyx 9. The learned AR drawing support from the ratio laid down in the aforesaid decisions submitted that the intention of the legislature behind the explanation requiring to submit completion certificate is that the project should be completed within the time. The learned AR submitted that as explained in CBDT C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Bengal Immunity Co. Ltd. v. State of Bihar [1955] 6 STC 446 (SC). 2. CIT v. Orissa Cement Ltd. 3. Commissioner of Agricultural Income Tax v. Plantation Corpn. of Kerala Ltd. 11. The learned Departmental Representative referring to the object behind the introduction of the Explanation to clause (a) of section 80IB(10) submitted that the date of approval of the local authority and date of completion as certified by the local authority is used to stress that the project should be in accordance with the regulations in force. The learned Departmental Representative submitted that, thus, there is a specific purpose for which approval and certification of local authority is insisted and this being intent of legislature, no other interpretation is possible. The learned Departmental Representative submitted that when there is no ambiguity in the provisions of statute it cannot be interpreted in a different manner to confer benefit on the assessee. For such proposition the learned Departmental Representative relied upon the decision of the Hon'ble Supreme Court in case of IPCA Laboratories Ltd. v. Dy. CIT. The learned Departmental Representative submitted that the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the financial year in which the housing project is approved by the local authority.] 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; (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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 80IB(10) in respect of a housing project shall be available to the assessee, provided the project is approved by the local authority after 01/04/2004 and has been completed within a period of 4 years and such completion has been certified by the local authority. The use of the word 'shall' in Explanation-II makes the furnishing of completion certificate issued by the local authority mandatory to prove that the development and construction of the Housing Project is complete in all respects. It is the contention of the learned AR that the Explanation - II should not be interpreted strictly but a liberal interpretation has to be given to achieve the object of the provision. It has further been contended that if other evidences produced indicate completion of the project then deduction cannot be disallowed only because of non-furnishing of completion certificate issued by the local authority. Such contention of the learned AR cannot be accepted in view of the clear language employed in the statutory provision. As has already been stated herein before the aforesaid amended provision was introduced to the statute by the Finance Act, 2004 with effect from 01/04/2005. Earlier to it, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny scope for interpreting it in a different manner to confer benefit upon the assessee. To a specific query from the Bench in course of hearing of appeal with regard to obtaining completion certificate from the local authority, the learned AR only submitted a copy of the application made for occupancy certificate and a certificate of the licensed architect. These documents, however, does not prove the completion of the housing project. The learned AR also could not explain the reasons for non-issuance of completion certificate by the local authority. If the furnishing of the completion certificate to prove the completion of the project is not to be insisted upon then the purpose for bringing such a provision to the statute becomes redundant. If the furnishing of completion certificate from the local authority is to be considered as not mandatory then in every case the assessee will come up with one plea or the other for not furnishing the completion certificate while claiming deduction u/s 80IB(10) of the Act. In that event, the intent and purpose of enacting such a provision will not be fulfilled. Similarly, the municipal assessment of the individual flat owners or sale of flats c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Accordingly, we sustain the order of the CIT(A). The grounds raised by the assessee are dismissed. ITA No. 300/Hyd/2011 for AY 2006-07 - assessee's appeal 15. Ground No. 1 is general in nature. Ground Nos. 2, 3 4 wherein the assessee has challenged the disallowance of deduction claimed u/s 80IB(10) of the Act are identical to ground Nos. 2 3 in assessee's appeal No. 299/Hyd/12 (supra). In view of our decision in said appeal No. 299/Hyd/12, we hold that the assessee is not entitled to claim of deduction u/s 80IB(10) of the Act. Accordingly, the order of the CIT(A) on this issue is confirmed and the ground Nos. 2, 3 4 are dismissed. 16. Ground No. 5 relates to the determination of income from house property at Rs. 2,10,39,214/- by the Assessing Officer. 17. Briefly the facts of the issue are that in course of the assessment proceedings the Assessing Officer noticed that the assessee had disclosed income under the head 'house property' of an amount of Rs. 5,95,000/- on account of property leased out to M/s Bhagyanagar Hotel Pvt. Ltd. for Rs. 12.00 lakhs per year. The Assessing Officer was of the view that the said building is palatial club in the heart of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as issued u/s 153A of the Act. In response to the notice, the assessee filed the return of income admitting the total income as per the original return filed by it after claiming deduction u/s 80IB(10) of the Act. In course of the assessment proceedings pursuant to notice u/s 153A, the Assessing Officer disallowed the claim of exemption by observing that inspite of repeated show cause notice the assessee has not furnished any details regarding the housing project, the assessee has not furnished any information regarding fulfillment of conditions stipulated in section 80IB(10), the assessee has not furnished the completion certificate/occupancy certificate to claim the deduction. It was further observed by the Assessing Officer that the assessee has not obtained the certificate in Form 10CCB from its auditor for fulfilling the conditions prescribed in the Act. The Assessing Officer was further of the opinion that the assessee being only a builder and not the owner of the housing project, it is not entitled to avail deduction u/s 80IB(10). 22. The assessee being aggrieved of the disallowance of deduction u/s 80IB(10), preferred an appeal before the CIT(A). 23. The CIT(A) after co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1 acre and residential unit has a maximum built up area of 1500 sft. As would be clear from the aforesaid conditions there was no requirement for furnishing a completion certificate from the municipal authority. In that view of the matter, the claim of deduction u/s 80IB(10) cannot be denied for not submitting the completion certificate from the local authority. Similarly, it is not a requirement under the Statute that the undertaking must be owner of the land for claiming deduction u/s 80IB(10). However, it is a fact that the Assessing Officer has rejected the claim of deduction u/s 80IB(10) by alleging that the assessee has not furnished any information or evidence with regard to the housing project and whether the conditions for claiming deduction u/s 80IB(10) have been fulfilled. The Assessing Officer had further alleged that the assessee had not submitted and not obtained auditor's certificate in Form No. 10CCB. Though, it is seen from the assessment order dated 09/05/2001 passed u/s 143(3) read with section 147 for the impugned assessment year there is a recording of fact by the Assessing Officer that the assessee had produced the auditor's certificate in Form 10CCB. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has disclosed income from house property at Rs. 6,59,811/- on account of property leased out to M/s Bhagyanagar Hotel Pvt. Ltd. for Rs. 9,00,000/- per year. The Assessing Officer found that the property consisted of 14,940 sq. yards of land situated in the heart of the city with palatial building. Considering this fact the Assessing Officer came to a conclusion that the income from house property admitted by the assessee in the return of income is very meager. The Assessing Officer therefore following the conclusion arrived at by him in the assessment order passed u/s 143(3) read with section 147 dated 24/03/2006 for the AY 2003-04 determined the income from house property at Rs. 1,46,97,893/-. The Assessee challenged the determination of the house property income filed an appeal before the CIT(A). 30. The CIT(A) following the order passed by the Income-tax Appellate Tribunal, Hyderabad Bench on identical issue for the assessment years 2003-04, 2004-05 and 2005-06, directed the Assessing Officer to determine the income under the head income from house property by applying the rate of 7% on the investment of the assessee subject to cost inflation index and also further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee purely on a hypothetical basis without pointing out any specific discrepancy in the claim of the assessee. The CIT(A) observing that the assessee has maintained proper books of account and the same were audited by an accountant and in absence of any specific defects pointed out by the Assessing Officer, no disallowance of expenditure can be made. 36. We have heard the submissions of the parties on the issue and perused the relevant material on record. It is a fact on record that the Assessing Officer has disallowed 10% of the expenditure claimed since the assessee did not produce the necessary details along with supporting evidence in respect of the expenses claimed. The CIT(A) has deleted the addition made by observing that the Assessing Officer has not pointed out any specific defect. When the assessee has not submitted the details called for by the Assessing Officer, he was left with no option but to disallow part of the expenses on ad-hoc basis. Therefore, the CIT(A) was not justified in allowing the expenditure claimed by the assessee in toto. Considering the totality of the facts and circumstances, we are of the view that a disallowance of 5% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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