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TMI Blog2016 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... B(10) of the Act to the assessee on completed flats of the project. Accordingly, we direct the Assessing Officer to allow proprata claim of deduction under section 80IB(10) of the Act. - Decided in favour of assessee - ITA No.807/PN/2014 - - - Dated:- 21-3-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant by : Shri Pramod Singhte For The Respondent : Shri Dheeraj Kumar Jain ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT(A)-I, Pune, dated 29.11.2013 relating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax has erred in rejecting appellant s claim of deduction made u/s 80IB(10) of the Income Tax Act, 1961 for a sum of ₹ 91,51,079/- by disregarding appellant s contention in this regard. 2. On the facts and in the circumstances of the case and in law, the Learned CIT(Appeals) erred in not following the orders of jurisdictional Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the work of development for the first building could be started with the condition that unless and until the reservation of road area was transferred in the name of PMC on 7/12 extract, developer was not permitted to utilize the relatable FSI. The assessee claims that the plan for the work of third building got delayed since no action was taken by the PMC for completing formalities. The assessee claims that in view thereof, there was revision in plans and eventually permission was received from PMC for revised sanction for second building on 01.10.2007. Since no FSI was released to the assessee till 2009, the assessee claims to have dropped the idea of completing third building and carried out the project with only two buildings on plot of area of one acre. Both these buildings were completed before 31.03.2009 and therefore, eligible for deduction under section 80IB(10) of the Act. 5. The Assessing Officer was of the view that the assessee is not entitled to claim of deduction under section 80IB(10) of the Act since the size of plot on which housing project approved was 3952 sq.mts. As per the building plans sanctioned by PMC, the size of plot was 4134.99 sq.mtrs., out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one acre and hence, this condition was fulfilled. 7. The second issue was commercial area exceeding 3% of aggregate built up area. The CIT(A) noted that Pune Bench of Tribunal in the case of Opel Shelter Pvt. Ltd. in ITA No.219/PN/2009 held that clause (d) to section 80IB(10) of the Act amended w.e.f. 01.04.2005 was not applicable to housing projects commenced prior to amendment and hence, the admissibility of deduction under section 80IB(10) of the Act had to be considered as per law prevalent in which housing project had commenced. The CIT(A) further noted that in the present case, the assessee had received commencement certificate on 03.02.2005 and 11.03.2005 comprising of three buildings and one of the conditions was to surrender the area of 182.99 sq.mtrs. to PMC for road widening, against which the assessee was permitted to utilized the relatable FSI. The claim of the assessee that it had dropped the building C' because of non-receipt of FSI certification, was considered by the CIT(A) and also the revised sanction plan received from PMC by the assessee on 01.10.2007. Further, the claim of the assessee before the CIT(A) was that it had carried out the project only wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of proportionate deduction or full deduction would arise only if the basic conditions laid down in section 80IB(10) of the Act were complied with. Since in the case of the assessee, the commercial area in the project exceeded 2000 sq.ft., and which basic condition was not fulfilled, hence, the assessee was not entitled to claim of deduction under section 80IB(10) of the Act. The other issue that the deduction was allowable on proportionate basis in respect of building Nos.A and B, as per the CIT(A) had become academic and there was no necessity to adjudicate the same. 9. The assessee is in appeal against the order of CIT(A). 10. The learned Authorized Representative for the assessee pointed out that the assessee had constructed two buildings and building A in which there were only two commercial establishments and in building B , 7 flats and there was no sale of units in building C'. Both A and B , as per the assessee, were completed by 31.03.2009 and hence, the assessee was entitled to the claim of deduction under section 80IB(10) of the Act. It was further pointed out by the learned Authorized Representative for the assessee that the plans were appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was prospective in nature and would not have retrospective effect. The CIT(A) had allowed the claim of assessee in this regard, which was upheld by the Tribunal in assessment year 2009-10. The next objection was non-completion of housing project by way of construction of three buildings in the year 2010-11. In this regard, proprata deduction was allowed to the assessee, in turn, relying on the ratio laid down in other decisions of Tribunal. 13. We have heard the rival contentions and perused the record. The assessee was a builder and developer of a project named as Satyaraj Aangan . The building plan for the said plot of land admeasuring more than one acre was approved by the local authority on 11.03.2005. As per clause (a) to section 80IB(10) of the Act, where a housing project has been approved on or after 01.04.2004 but not later than 31.03.2005, then the construction of such project should be completed within four years from the end of financial year in which the housing project is so approved by the local authority. In view thereof, the project being approved on 11.03.2005 is to be completed by 31.03.2009. The assessee claims to have received completion certificate from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had initially received commencement certificate on 03.02.2005 and 11.03.2005 for the construction of three building A , B and C' , where building C' was not constructed and the plans for other buildings were revised by PMC on 01.10.2007, then the revised provisions of section 80IB(10) of the Act were applicable as they came into effect from 01.04.2005 and where the same has been violated, the assessee is not entitled to the claim of deduction under section 80IB(10) of the Act. We find no merit in the order of CIT(A) in this regard. First of all, this objection has been met with by the Tribunal in assessee s own case in assessment year 2009-10 and it was held as under:- 7. The next objection of Assessing Officer is that the assessee has exceeded the limits of commercial establishments beyond permissible limit. The Assessing Officer observed that as per sanctioned plan by PMC dated 03.02.2005, commercial establishment in housing project is 210.92 sq. mtrs. which is more than 3% of aggregate built up area as permitted u/s.80IB(10). The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me have to be completed on or before 31.03.2009. Since the assessee had not constructed building C' before 31.03.2009, it is one of the conditions for denial of deduction under section 80IB(10) of the Act to the assessee that the project has not been completed by 31.03.2009. If we take the stand of CIT(A) as correct that after revision of plans on 01.10.2007, the area as prescribed in the Act for commercial establishment should have been adhered to, then the date of completion of project would stand extended to 31.03.2013, whereas admittedly, the assessee has constructed building C' and sold some units in assessment year 2010-11 and has been found to be not eligible to the claim of deduction under section 80IB(10) of the Act. The assessee himself has not claimed any deduction under section 80IB(10) of the Act in respect of building C'. In the above said facts and circumstances of the case, we find no merit in the order of CIT(A) in overlooking the observations of CIT(A) in assessment year 2009-10 and now also the order of Tribunal, which had upheld the findings of CIT(A) in this regard on the issue of commercial limits in the housing project constructed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be applied to those projects which were sanctioned and commenced prior to April 1, 2005, and com pleted by the stipulated date, though such stipulated date is after April 1, 2005. 16. The third aspect of the issue is non-completion of housing project before stipulated date. This issue was also considered by the Tribunal vide paras 8 to 8.2 and the assessee was held to be entitled to prorata deduction under section 80IB(10) of the Act. The relevant findings of the Tribunal, read as under:- 8. The next issue is with regard to non-completion of housing project. The Assessing Officer stated that the assessee has commenced the construction of third building in the year 2010-11 and it clearly shows that the assessee has not completed the housing project within prescribed four years from the date of first approval of housing project. The Assessing Officer observed that if at all the assessee wanted he could have completed the total housing project except the so called 189 sq. mtrs. of land under road widening. The action of assessee proves that he had partially com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73 flats completed before prescribed limit. The Assessing Officer is directed accordingly. 8.2 In view of above, it is clear that assessee received approval for C building from PMC vide certificate dated 03.02.2005 but work on C building could not start since additional FSI in lieu of road widening was not received from PMC. The assessee could not plan the work for C building since engineers and architects could not design the structure of building in the absence of FSI. The details of follow up done by assessee with PMC have been duly appreciated by CIT(A). The legislative intent read that the clear provisions of the requisite section, do not permit any proportionate deduction u/s. 80IB(10) of Act. However, in view of the decision in Ramsukh Properties (supra) as discussed above, the CIT(A) rightly allowed the proportionate deduction in respect of project completed during the impugned assessment year. The provisions of taxing statute should be construed harmoniously with the object of statute to effectuate the legislative intention. Under the circumstances, proportionate deduction u/s.80IB(10) of the Act is justified. Accordingly, the order of CIT(A) on this issue needs no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in M/s. Gera Developments Pvt. Ltd. Vs. JCIT (supra), we find no merit in the plea of the learned Departmental Representative for the Revenue and the same is dismissed. The relevant findings of the Pune Bench of Tribunal in M/s. Gera Developments Pvt. Ltd. Vs. JCIT (supra) are as under:- 18. We have carefully considered the rival submissions. Quite clearly, the entire case of the Assessing Officer rests on Explanation (ii) to section 80IB(10)(a) of the Act which prescribes that 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. In the present case, the local authority, i.e. Pune Municipal Corporation has not issued the requisite completion certificate (to be understood as occupancy certificate in the context of the PMC) before the stipulated date. However, the assessee has countered the aforesaid objection by pointing out that in-fact it has completed the construction of the project on 04-12-2007 i.e. much before the stipulated date of completion contained in section 80IB(10)(a) of the Act, it had applied to the PMC for obtaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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