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TMI Blog2014 (9) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... lding in that case would constitute a housing project under section 10 IB(10) of the Act. Project constructed by the assessee was a separate project different from the project carried out by M/s. Sai Leela Developers. Therefore, such passing observations of AO cannot be held to be a ground for rejection of assessee’s claim for deduction under section 80 IB (10) of the Act. For the aforementioned reasons we set aside the order passed by Ld. CIT(A) and hold that assessee is entitled to get deduction under section 80 IB(10) and accordingly the AO is directed to allow the deduction to the assessee under section 80 IB(10). Ground No.1 to 5 are allowed in the manner aforesaid. - ITA NO.6728 /MUM/2013 - - - Dated:- 22-9-2014 - Shri I.P.Bansal, JM and Shri Rajendra, AM Appellant by :Shri Vimal Punmiya Respondent by : Shri Permanand J. O R D E R PER I.P.BANSAL (JM) : This is an appeal filed by the assessee. It is directed against order passed by Ld. CIT(A)-34., Mumbai dated 09.10.2013 for assessment year 2009- 10. Grounds of appeal read as under: 1. The Ld. CIT(A) erred in confirming disallowance of deduction u/s 801B(10) amount ₹ 58,65,900/. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d block plan as residential with shopline building Vide No.CIDCO/VVSR/BP-1087/W/2500 for Dvelopment of Sector.I,II,III, IV V 0.2.07.2004 Owner transfer development right to Mr. Kunverji Bachhu Shah For Development of Sector No.I,II,III, IV V 40-77 09.07.2004 Mr. Kunverji Bachhu Shah Transfer development right to M/s. Adinath Developers For Development of Sector No.I,II,III, IV V 78-121 30.04.2007 M/s. Adinath Developers transfer Development right to appellant For Building No.1 Wing C , Building No.2 Wing A,B,C Building No.3 Wing A,B,C of sector No.IV (100% Residential Project) admeasuring area of 5499.17 sq.mtr. (i.e. More than 1 Acre) 122-142 15.9.2005 M/s.Adinath Developers transfer Development right to Leela Builders. For remaining building and all commercial area right 143-161 ..3.2008 Project was completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the project was approved as single project by Local Authority which was capable of being divided into various parcels and allocate to different entities for development by the development right owner then the very action of the other party which inter-alia include M/s.Adinath Developers will absolve the buyers from the eligibility to claim deduction under section 80IB(10) of the Act. The disallowance of deduction was challenged in an appeal filed before Ld. CIT(A). It was submitted that assessee had applied to CIDCO for completion certificate on 31/3/2008. However, CIDCO did not issue completion certificate. The Gram Panchayat had issued the completion certificate on 29/3/2008 certifying the fact that the project is complete and is habitable and is also ready to be occupied by the flat owners. Therefore, the condition regarding completion of project was complied with. It was also submitted that as per explanation to section 10(20) of the Act Gram Panchayat also falls under Local Authority and reference was made to the decision of Pune Bench of the Tribunal in the case of Krishna Harubhau Lohokare vs. ITO(ITA No.937/PN/2010) , wherein it has been held that for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct the building was not accorded by the Gram Panchayat Bolinj, Virar. The appellant had applied for completion certificate from CIDCO and could not obtain it from the said Competent Authority. In the circumstances getting a certificate from other Local Authority cannot hold any validity. The question which is important to be decided is that whether it is a Competent Authority to issue the certificate of completion to the assessee. The evidence of such competence of the authority has not been provided by the assessee either before the AO or before Ld. CIT(A), therefore, the case law relied upon by the assessee will not support its case. In this manner Ld. CIT(A) has upheld the disallowance. The concluding observations of Ld. CIT(A) are as under: 5.1.. The appellant had filed copy of Application letter dated 31.3.2008, submitted to the CIDCO regarding the completion of the project and issuance of .completion certificate, before the Assessing Officer. But the aid certificate was not issued by the CIDCO. It was observed b the Assessing Officer that it was pending for more than a, year. The appellant in the meanwhile obtained completion certificate from another. Local Authority v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, the claim of deduction u/s.801B(1O) of Income. Tax Act cannot b allowed and the addition made by the Assessing Officer is sustained. This ground of appeal is dismissed. Aggrieved, assessee has filed the afore mentioned grounds of appeal. 3. After narrating the facts it was submitted by Ld. AR that the development agreement of the assessee, copy of which is filed at page 122 to 142 of the paper book was in respect of Sector No.4 for Building No.1,Wing-C, Building No.2, Wing-A,B C and Building No.3, Wing A,B C and this is 100% residential project admeasuring an area of 5499.17 sq.mts., which is more than one acre. Relying to the development agreement it was submitted that the total development rights in respect of total area were to the tune of 409272 sq.fts., out of which approved area was 274272 sq.fts. Out of the total developed area the assessee got 5499.12 sq.mtrs. i.e. 59193 sq.fts. in Sector -4. In this regard Ld. AR referred to clause (v) (z-b) of pages 6 7 of the development agreement, copy placed at pages 128 to 129 of the paper book. It was submitted that this project was 100% residential project and rest of the area was transferred by M/s. Adinath D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Same. 5. Maximum built up area 1000 sq.ft. or 1500 sq.ft. as applicable according to cities 1000 sq.ft. or 1500 sq.ft. as applicable according to cities Same 6. Built up area No definition Built-up area define Detail definition 7. Permitted Commercial Area No Provision Not exceeding 5% or 2000 sq.ft. built up area No restriction in commercial use of land subject to approving under housing category 8. Completion Certificate No Provision Completion certificate to be obtained by local authority. These provisions added. Thus, there is no condition of completion and furnishing completion certificate. 3.3 For raising the contention that completion of the project was not a condition precedent in respect of project which were approved before 31/3/2005, Ld. AR relied upon the following decisions: (1) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s. 80 IB(10)) to the assessee firm. (3) CIT vs. Jain Housing Construction Ltd. ( 2013) 30 Taxaman.com 131 (Mad) - In this case it was held by Hon ble Madras High Court that it is difficult to accept the case of Revenue that that the claim for deduction has to be rejected on the ground that assessee did not furnish the completion certificate as there was no such requirement under section 80 IB(10), as it stood during the relevant assessment year 2004-05. 3.4 Ld. AR further submitted that the assessee had submitted various evidences to show that the project was completed on 31/3/2008 and reference was made to the following evidences: (i) Completion Certificate from Architect. (ii) Completion Certificate from Gram Panchayat, Bolinj, Virar (Local Authority) date 29/03/2008. (Page No.177) (iii) NO due certificate from Gram Panchayat dated 17/03/2008. (Refer Page No. 173-175). (iv) Applied to CIDCO for granting completion certificate vide letter dated 3 1/03/2008. (Page No.176) (v) NOC from Water Department and accordingly water charges were paid to Virar Nagar Palika on 27/03/2008. (It is require after completion of project). (Refer Page No.171-172) (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be denied because the commercial project was carried out by a sister concern. and LIFPL were fixed at ₹ 11.56 crore 2 crore respectively in lieu of development rights received by them. 3.6 He has also relied upon the decision of Hon ble Bombay High Court in the case of CIT vs. Vandana Properties, 353 ITR 36 (Bom) and reference was made to the following observations: The expression housing projects is neither defined under Section 2 of Act nor under section 801B(10) of the Act. Even under Mumbai Municipal Corporation Act, 1988 as also under Development corporation Regulations for Greater Mumbai, 1991, the expression housing project is not defined. Therefore, the expression housing project in Section 801B(10) would have to be construed as commonly understand. As rightly have to be constructed as commonly understood. As rightly contended by Mr. Inamdar Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the interveners, the expression housing project in common parlance would mean constructing a building or group of buildings consisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee for want of completion certificate from CIDCO. 5.1 The other objection by the AO is regarding commercial element which according to the submissions of the assessee is not applicable to the case of the assessee as there is no commercial element in the project constructed by the assessee and commercial element, if any, for development was in another project which is not the subject matter of this appeal. 5.2 It may also be mentioned here that though AO has given a passing remark for disallowing the claim that when a project is approved as a single project by the Local Authority which is capable of dividing into various parcels and allocated to different entities for development by the development right owner then the action of the developer of split selling of the project to the assessee and M/s. Sai Leela Developers will absolve the buyers from eligibility to claim deduction under section 80 IB(10) of the Act but AO has not spelt out that how such splitting done by M/s. Adinath Developers will disentitle the assessee to claim deduction under section 80 IB(10) of the Act. As per decision of Hon ble Bombay High Court in the case of CIT vs. Vandana Properties (supra) i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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