9911796707
TMI Blog2015 (1) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the Learned CIT(A) erred in upholding the disallowances made by Assessing Officer, of lawful claim of exemption of income u/s 80IB(10) Rs. 39,32,000/- by assessee. 2. On facts and circumstances of case and in law, the learned CIT(A) confirmed disallowances made by AO u/s 80IB(10) without verifying the evidence and facts submitted by assessee at the time of hearing before him. 3. The learned CIT(A) has erred in law in not considering affidavit of Architect and approved plan by Collector, Alibag. 4. The learned CIT (A) erred in law by not considering at all Tribunal decisions submitted by assessee at the time of hearing. 5. The learned CIT(A) erred in law and facts by confirming disallowance made by AO of Rs. 14,50,023/- u/s 40(ia). 6. The learned CIT(A) erred in law and facts by confirming disallowance made by AO of Transport Charges including cost of material Rs. 13,16,955/- u/s 40(ia). 7. The learned CIT (A) erred in law and facts by confirming disallowance made by AO of third party expenditure Rs. 3,73,000/- treating as unaccounted expenditure. 8. The learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore, as the original plan was sanctioned on 28.10.1995, the deduction u/s 80IB(10) is not available to this project. The Hon. ITAT is requested to consider this fact while deciding the issue on the appeal filed by the assessee. c) During the course of assessment proceedings the assessee has failed to furnish the commencement certificate of the project, copy of sanction plan duly approved by competent authority which are mandatory requirements to fulfill the conditions laid down for claiming deduction u/s 80IB(10) of the I.T. Act. Therefore, the Hon. ITAT is requested to consider this fact while deciding the issue on the appeal filed by the assessee. 7. The appellant craves leave to add, amend or alter any ground/ grounds, which may be necessary. 5. The first issue raised by the assessee vide grounds of appeal No.1 to 3 is against the denial of deduction under section 80IB(10) of the Act. 6. The brief facts of the case are that, the assessee was a builder and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) of the Act, survey under section 133A of the Act was undertaken on 30.08.2007. During the course of survey, the physical measurements of flats and shops were taken by the survey team. The details of area of flats and shops of both the complexes were tabulated in Annexure-2 attached to the assessment order. It was found that Apeksha Complex had commercial area of more than 2000 sq. ft. During the course of survey proceedings, plan signed by Sarpanch in Bundle-1, at document Nos.12 and 13 was found, which reflected the commercial area. However, there was no date on this plan. The document further confirms that the shops measuring 4667 sq. ft. were commercial area, even in the map of Village Grampanchayat, though the same Grampanchayat was not the approving authority. The approving authority in the case was District Collector, Alibag. During the course of survey, statement of Shri Babubhai Patel, one of the partners was recorded on 30.08.2007, in which he confirmed the area of shops being more than 2000 sq. ft. The partner of the assessee firm further confronted with the fact that for claiming deduction under section 80IB(10) of the Act in assessment year 2005-06 and 2006-07, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledgement for filing the return of income for assessment year 2005-06, the assessee had typed "Certificate and Report" in item No.6 of list of documents attached with the return. However, Form No.10CCB had been added later on in ink. 9. The CIT(A) further held that the local authority for passing the building project in Village Akurli, could not be the Collector, Alibag and further, the assessee had not submitted the approval letter of Collector, Alibag during the course of assessment proceedings or even during the course of appellate proceedings. The assessee had only furnished the copy of letter of housing plan sanctioned by the office of Collector, Alibag, which in turn was only a letter giving NA permission and was not a sanction letter for housing project. Further, in Form No.10CCB filed along with the return of income for assessment year 2006-07, the assessee had mentioned the date of commencement of the project as 22.11.2002 and the date of approval by the local authority as 16.04.2003, which clearly shows that the project was started without any sanction of the local authority. Further, the said sanction order dated 16.04.2003 was neither furnished before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) in not allowing deduction under section 80IB(10) of the Act. 13. Further, the ground of appeal No.1 raised in the Cross Objection by the Revenue is in support of the order of CIT(A). 14. The Revenue in assessment year 2006-07 has agitated against the grant of deduction under section 80IB(10) of the Act by the CIT(A) and has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-I, Thane was justified in holding that the deduction u/s 80IB(10), as applicable prior to 1st April, 2005, is admissible in case of a 'housing project' comprising residential housing units and commercial establishments? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-I, Thane was justified in holding that the residential projects having commercial area more than 2,000 sq.ft. or 5% of the total built area is eligible for the claim of deduction for entire profits of project u/s 80IB(10)? 3. The appellant prays the order of the Ld. CIT(A)-I, Thane, may be vacated and that of the Assessing Officer be restored. The appellant craves leave to add, amend or alter any ground/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of acknowledgement of filing the return of income at pages 6 and 7 of the Paper Book, in which documents attached with the return of income at serial No.6, it was mentioned certificate and report (Form No.10CCB). The learned Authorized Representative for the assessee further pointed out that the said Audit Report in Form No.10CCB is attached at pages 26 and 27 of the Paper Book. The learned Authorized Representative for the assessee further referred to the assessment order, wherein at page 2, the Assessing Officer mentioned that the assessee had not enclosed the Form No.10CCB along with return of income for assessment year 2005-06. However, at page 5, the Assessing Officer notes that the Form No.10CCB was enclosed with the return of income. Without prejudice to its claim of having furnished Form No.10CCB along with return of income, the learned Authorized Representative for the assessee pointed out that the Audit Report can be filed at any time of proceedings i.e. even before the Tribunal as appellate proceedings were continuation of the assessment proceedings. Reliance in this regard, was placed in CIT Vs. Mayur Foundation (2005) 274 ITR 562 (Guj) and Hastimal Sancheti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.11.2002, whereas the date of approval of the plan was stated to be 16.04.2003. In reply, the learned Authorized Representative for the assessee pointed out that the assessee had incurred some nominal expenses like leveling of land, creation of compound wall, etc. amounting to Rs. 1,21,120/- and such expenditure could not be considered as incurred on development and construction of the project. It was vehemently stated by the learned Authorized Representative for the assessee that the construction of the project was commenced only after obtaining the approval from the local authority and hence, the assessee was entitled to the claim of deduction under section 80IB(10) of the Act. 20. The learned Departmental Representative for the Revenue in reply, pointed out that the CIT(A) in para 5.1.1 at page 17 of the appellate order has given a finding that the assessee while claiming the deduction in assessment year 2006-07 had mentioned that it was the first year of its claim. The second issue raised by the learned Departmental Representative for the Revenue was that the Collector had sanctioned the said plan prior to 1998 and only the projects which were approved after 1998 could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking are not admissible, in view of provisions of section 80IA(7) r.w.s. 80IB(11) of the Act. The plea of the assessee however, before us is that, it had duly submitted the Form No.10CCB at the time of filing the return of income for assessment year 2005-06. The assessee has placed on record the copy of acknowledgement of filing the return of income for assessment year 2005-06 at pages 6 and 7 of the Paper Book, wherein there is a mention of certificate and audit report and with ink, there is mention of 10CCB. The Assessing Officer while passing the assessment order at page 2 comments that the assessee has not furnished the Audit Report along with return of income, however, at page 5, the Assessing Officer accepts the fact that the assessee has furnished the Audit Report in Form No.10CCB along with return of income. The Assessing Officer had confronted the assessee with the fact pertaining to the approval from the statutory authority required as per the provisions of section 80IB(10) of the Act and also the facts stated by the assessee in his return of income and in Form No.10CCB enclosed with the return, during the course of recording the statement of the partner Shri Babubhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for approval for the construction of building is submitted to the Office of Collector, Raigad Alibag. The said plan is approved by The Collector, Raigad Alibag as on dated 02/05/2003 and has given the permission to construct the building. The said plan is also approved by Grampanchayat, Akurli & has given the permission to construct the building at the said premises. But all the related records were washed out in flood occurred as on dated 26/07/2005. As the approval from the Grampanchayat, Akurli had been taken for the construction of building, the Grampanchayat, Akurli had also issued the completion certificate as on dated 21/07/2006. As per the completion certificate the Grampanchayat has levied the property tax (Ghar Patti) to all Flat owners as per the measure area of the flats & also collects the said tax from the flat owners. So we request you to issue the letter that we (M/s Mateshwari Developers) had taken the approval of building plan from the Grampanchayat, Akurli. Recd. by, Your's truly, Signature of Surpanch Grampanchayat Aakurli M/s.Mateshwari Developers Tal Panvel Partner's Signature" 25. The perusal of the said communication clearly reflects that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject. In any case, the assessee had furnished the Completion Certificate and had also furnished a communication, under which it was stated by the Sarpanch, Grampanchayat, Akurli that the building plans were approved by the Grampanchayat, Akurli, who in turn had given the permission for construction of the building at the said site. Further, the plans were also approved by the Collector, Raigad, Alibag on 02.05.2003 and the Completion Certificate was issued on 21.07.2006. In the entirety of the above said documents and evidences furnished by the assessee, the findings of CIT(A) are reversed. The assessee having obtained the Commencement Certificate from the competent authority i.e. the Grampanchayat and in addition having received the Commencement Certificate from the Collector, Raigad, Alibag, we find no merit in the orders of the authorities below in denying the claim of deduction under section 80IB(10) of the Act on this account. 27. The learned Departmental Representative for the Revenue had raised an issue that the assessee was not entitled to the claim of deduction under section 80IB(10) of the Act for the instant year since the assessee in the Audit Report filed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any 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; (b) the project is on the size of a plot of land which has a minimum area of one acre; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place." 29. Under the said provisions, admittedly, there was no clause relating to the built up area of shops and commercial establishments. The project of the assessee before us was approved on 05.02.2003 and admittedly, the pre-amended provisions of the Act were applicable. 30. The Pune Bench of the Tribunal in Opel Shelters Pvt. Ltd. Vs. ACIT in ITA No.219/PN/2009 & another, relating to assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be met as per the harmonious interpretation of Section 80IB(10) as amended is to complete such projects (approved before 1.4.2004) on or before 31.3.2008. In the cases before us the projects have been completed well before this date. Putting of such condition of time limit is well understood. Since the legislature intended the completion of projects within a time frame to avoid inconvenience to the beneficiaries i.e. the buyers. In this regard the Legislature has categorised the time limit for the projects approved on different period before 31.3.2007 but requirement remained the same that projects would be approved by the local authority. Compliance of the requirement provided in clause (d) to the Section is possible only in those projects which have been started on or after 1.4.2005 as by then those assessees were all aware about the provisions laid down in clause (d). 20. By applying the principle of harmonious construction to interpret the provisions under Sub-section (10) to Section 80IB as amended w.e.f. 1.4.2005 we come to the conclusion that the Legislature always intended that the project must be approved by the local authority, thus in those approved projects where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e commencement of construction was given before 01.04.2005. As per the additional evidence furnished by the assessee which has been admitted by us, the Commencement Certificate was issued by the Grampanchayat on 05.02.2003 i.e. approved before 01.04.2004 and construction had to be completed on or before 31.03.2008. The assessee has filed the Completion Certificate dated 21.07.2006 at pages 66 and 67 of the Paper Book under which, it has been certified that the said project has been completed as on the date of certificate i.e. within stipulated date provided under the Act. The project having been approved by the competent authority and having been completed by the assessee in line with the approval given by the competent authority, merely because the commercial area of the said project was about 4000 sq. ft., does not dis-entitles the assessee from the claim of deduction under section 80IB(10) of the Act. Accordingly, we direct the Assessing Officer to allow the said deduction to the assessee. 33. The learned Departmental Representative for the Revenue had relied on the decision of the Mumbai Bench of the Tribunal in ITO Vs. Everest Home Construction (India) (P) Ltd. (2012) 26 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in this regard and the same is dismissed. The Assessing Officer is directed to allow deduction under section 80IB(10) of the Act to the assessee for the captioned assessment year. 35. Another issue raised in the present appeal is that in Form No.10CCB, the date of commencement of the project has been mentioned as 22.11.2002 whereas the date of approval was stated to be 16.04.2003. The case of the Assessing Officer was that the assessee had commenced the construction prior to the approval and hence, the assessee was not eligible for the claim of deduction under section 80IB(10) of the Act. Another plea raised in this regard was that in the audit report filed in Form No.10CCB relating to assessment year 2006-07, the year of construction was mentioned to be first year. We find no merit in the plea of the Revenue authorities in this regard, where nominal expenses of Rs. 1,21,120/- were incurred by the assessee prior to the development and construction of the project. We find merit in the claim of the assessee that it had commenced construction only after obtaining approval from the local authority, hence, the assessee is eligible to the claim of deduction under section 80IB(10) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile computing the profits of the business, had made certain additions on account of disallowance under section 40(a)(ia) of the Act for non-deduction of tax at source. The said addition has been added to the profits declared by the assessee and consequently, the profits of the business have increased. The said increased profits are the eligible profits of the business. Since the assessee is entitled to the claim of deduction under section 80IB(10) of the Act as held by us in the paras hereinabove on its profits from the business, such deduction under section 80IB(10) of the Act is also allowable on the enhanced profits of the business which are the profits eligible for the claim of deduction under section 80IB(10) of the Act. Accordingly, we allow the additional ground of appeal raised by the assessee in this regard. The grounds of appeal No.5 and 6 are thus, dismissed and additional grounds of appeal are allowed. 41. The issue in ground of appeal No.7 is with regard to enhancement in the hands of the assessee on account of additional income offered pursuant to the survey proceedings. The assessee had offered an expenditure of Rs. 3,73,000/- as an additional income being unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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