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TMI Blog2016 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Ms. Uma Mahadeokar ORDER Per Rajendra, AM Challenging the order dt. 13. 02. 2013 of CIT(A)-I, Mumbai, the Assessing Officer(A. O. )and the assessee have filed the present appeal/Cross Objection (C. O. ). During the course of hearing before us, the AR of the assessee stated that assessee was not interested in pressing the grounds raised in the CO, considering the smallness of tax effect. Therefore, C. O. filed by the assessee, stands dismissed as not pressed. 2. Assessee-company, engaged in the business of developing and building housing projects, filed its return of income 22. 09. 2009, declaring total income at ₹ 22, 06, 440/-. The assessment order u/s. 143(3) of the Act, was passed on 26. 12. 2011, determining the total income of the assessee at ₹ 3. 71 crores. 4612/Mum/2013 3. The first effective Ground of appeal raised by AO is regarding allowing assessee s claim for deduction u/s. 80IB(10) of the Act. During the assessment proceedings, the AO found that the assessee had claimed deduction u/s. 80IB amounting to ₹ 3. 48 crores for Kavyadhara Project(KP), ₹ 11, 729/-for Puranik City Project(PCP), ₹ 20, 673/- fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not completed by 31. 3. 2008, that OCs in respect of three buildings were received on 10. 12. 2008, that the OC in respect of building A-2 was received on 31. 5. 2008, that the conditions laid down in Section 80IB(10) were not fulfilled. Vide his order sheet entries dt. 8. 11. 2011, 30. 11. 2011 and 8. 11. 2011, the AO asked the assessee to explain as to why deduction claimed by it u/s. 80IB(10)of the Act should not be disallowed in respect of KP. In its submission dt. 22. 12. 2011 the assessee submitted that there was delay in OC of a few weeks, that the project was completed on time as per the requirements of the section, that the delay had been from the side of TMC which was beyond the control of the assessee. He directed the assessee to submit the letter through which OC was applied for. The assessee submitted that it was not in a position to trace the documents as it was shifting the office. The AO made enquiries with TMC who informed him that OC in respect of building No. A-1, C-3, C-4 and Club-house were issued on 31. 5. 2008. Considering the above facts, the AO held that the assessee had neither applied to the TMC for the issue of OC on or before 31. 3. 2008 nor had it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded provisions of section 80IB, that the said housing project was approved on 16. 1. 2003 i. e. prior to 1. 4. 2005, that the project was eligible in respect of the profits derived for the year under consideration. The FAA also referred to the judgment of Tarnetar Corpn (ITA 1241/M/2011 dt. 12. 9. 12 ) of Hon ble Gujarat High Court. Finally, he directed the AO to allow deduction to the assessee. 5. During the course of hearing before us, the Departmental Representative (DR) supported the order of the AO stated that the OC was obtained after 31. 3. 2008, that the assessee failed to comply with all the condition of the amended provisions. The Authorised Representative (AR) supported the order of the FAA and relied upon the cases referred by the FAA. 6. We have heard the rival submissions and perused the material before us. We find that the basic issue to be decide in the case under consideration is as to whether the amended provisions would be applicable for the projects that were approved before 1. 4. 2005. The AO had held that OC was received by the assessee after the due date i. e. 31. 3. 2008 in case of KP and therefore, the assessee was not entitled to claim deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction of the housing project shall be reckoned on the basis of the date on which the completion certificate in respect of such housing project is issued by the local authority. Clause (a) as amended, stricto sensu, cannot be considered as a new condition and that too incapable of compliance inasmuch as clause (a) deals with the time frame within which the housing project was expected to be completed, to get the benefit of the prescribed deduction. The amended section 80-IB(10)(a) extends the benefit even to housing projects approved by the local authority before March 31, 2007, instead of March 31, 2005, as was provided in the unamended provision. Therefore, the necessity was felt to make a distinction between the two classes of housing projects for specifying the time frame for completion. The one approved by the local authority before April 1, 2004 and the other class of housing project approved by the local authority on or after April 1, 2004 till March 31, 2007. In either case, the time frame for completion of the project has been prescribed as four years. In that, the project approved before April 1, 2004 has been given time to complete before March 31, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur year period obviously has prospective effect, albeit limiting the period for completion of the project, to avail of the benefit. Four years time for completion of the project, by no standards, could be said to be unreasonable, harsh, absurd or incapable of compliance. It was also not a case of withdrawal of vested right of the developer, as such. No developer can claim a vested right to complete the housing project in an indefinite period. The right arising from section 80-IB , is coupled with the obligation or duty to complete the project in the specified time frame. If the developer does not complete the housing project within the specified time, will not receive that benefit. There is no compulsion on him to complete the project in four years. Even the approvals to the construction of housing project granted by the local authority specify the date within which the construction must be completed, as per the time frame specified in the permission. If the project is not completed within the stipulated time, the developer is free to get that period renewed or extended from the local authority as per the applicable Rules and Regulations. The provision for claiming tax deduction f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g project shall be taken to be the date as certified by the local authority in that behalf , irrespective of the date of issuance of such certificate by the local authority. Indeed, in a given case if the assessee is able to substantiate that the completion certificate was in fact issued by the local authority before the cut-off date but could not be produced by him within time due to reasons beyond his control, the argument of substantial compliance with the provision can be tested. Any other interpretation would result not only in uncertainty (in finalisation of assessment proceedings due to non-issuance or delayed issuance of such certificate by the local authority and prone to manipulations at the end of the local authority), but also have to yield to the subjective satisfaction of the assessing authority and of investing wide discretion in that authority, which, eventually, may only end up in getting embroiled in litigation. If the assessee has failed to comply with the condition of obtaining completion certificate from the local authority before the cut-off date, he must take the consequence thereof of denial of the benefit of tax deduction offered to him on that count. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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