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TMI Blog2022 (7) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... f law as stipulated in section 80IB(10) of the Act and as per the said provision it was bound to complete the building project before 31.03.2012 and it had filed the partial completion certificate in-respect of wing (A B ) on 12.07.2011 and C wing on 24.12.2011 and thus it is noted that the assessee not only filed the architect certificates of completion of the project Blue Meadow, it also had filed the certificate of structure, the lift certificate as well as NOC of the fire brigade and all these certificates were filed before MCGM by Feb, 2012. And moreover it is noticed that on 27.02.2012 itself possession of the flats were given to the allottees who had made the full and final payment which fact is evident from perusal of the letter given to the allottees of housing units for possession of the flats and that one hundred twenty one (121) flats/units got occupied at Blue Meadow Project (which were regularised later) and therefore according to us, the legislative intent/conditions stipulated for giving deduction/incentive for developers like assessee u/s 80IB(1) have been sufficiently/substantially fulfilled. Therefore the deduction u/s 80IB(10) should not be denied merely be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh court had also agree certain compliances were still not made by the assessee towards meeting the criteria for granting the OC . 2. Whether on the facts and circumstances of the appellant s case and in law the ld. CIT(A) was justified in allowing deduction of Rs 23,32,39,561/- u/s 80 1B(10) of the Income Tax Act 1961, notwithstanding that the assessee withheld crucial information regarding rejection of OC by BMC which have a clear adverse impact of the assessee s claim for the said deduction . 3. The appellant craves leave to amend or alter any ground or to submit additional new ground which may be necessary . 4. Ground No. 1 of Revenue is against the action of the Ld. CIT(A) disallowing for A.Y.2010-11 the total bogus purchases of Rs.30,02,434/-. The brief facts of the case as noted that the Ld. CIT(A) is as under: - 4.2.1 In support of his claim of purchases the assessee submitted before the AO copies of purchase bill and ledger A/c issued by the parties. The AO stated in his order at Para 4 that the bills submitted are only photocopies and they have not been accompanied by relevant supporting evidence such as lorry receipts/ delivery challans etc. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of the assessee for the claim u/s 80IB (10) of the Income Tax Act, 1961 (hereinafter the Act ) for A.Y.2010-11 wherein the assessee had claimed deduction of Rs.23,32,39,561/-. The assessee s claim has been allowed by Ld. CIT(A) against which action the revenue is before us by raising the grounds of appeal/additional grounds of appeal. Brief fact of the case is that the AO notes that the assessee firm is engaged in the business of building of development of real estate. The original return of income declaring total income of Rs.29,75,430/- was filed on 14.10.2010. Later, the case was selected for scrutiny and notice u/s 143(2) was issued on 24.08.2011 and thereafter notice u/s 142(1) was issued on 13.01.2012 directing the assessee to file basic details such as copy of the return of income, copy of audited profit loss account and balance-sheet along with the relevant papers. Pursuant to which the assessee filed the details as called for by the AO. The AO noted that assessee had claimed deduction u/s 80IB (10) of the Act for having developed housing project (Blue Meadows) which according to it has fulfilled the requisite conditions prescribed therein u/s 80IB (10) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of AO that it has developed housing project (Blue Meadows) wherein it had built three (3) Wings i.e. A, B C. And for A Wing B Wing, and that it had submitted its part- building completion certificate on 12.07.2011 and for the remaining part C Wing it filed the completion certificate on 26.12.2011 before the local authority Municipal Corporation of Greater Mumbai (hereinafter MCGM ). For the said project (Blue Meadow), the assessee had obtained fire NOC from the Fire Department on 20.02.2012 and the licence for working/using of the lift was received as early as on 17.01.2011 and submitted its application to the MCGM along with the completion certificate in part dated 12.07.2011 and 24.12-2011 along with the certificate of structure by the architect dated 9.12.2011. However, the same was not accepted by the MCGM pointing out non-submission of certain certificates V13 fire NOC/conditions not fulfilled vide order dated 05.01.2012; and meanwhile the possession of flats were given to one hundred and twenty one (121) occupants in all the three Wings (refer page no. 55 of the paper book) which fact has been acknowledged by the MCGM. And thereafter since the assessee realis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch number of assessment years as specified in this section. {(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority Shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, such undertaking has commenced or commences development and construction of the housing project on or after the Ist day of October, 1998 and completes such construction, - (i) in a case where a housing project has been approved by the local authority before the Ist day of April, on or before the 31st day of March, 2008; ii in a case where a housing project has been, or, is approved by the local a4 authority on or after the 1st daf of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; (iii) in a case where a housing project has been approved by the local authority on or after the Ist day of April, 2005, within five years from the end of the financial year in which the housing project .is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any person (including the Central or State Government).] 4.1.1 As mentioned by the AO in his order and by the Appellant in his submissions the assessee originally filed return of income 14.10.2010 declaring total income at Rs. 29,75,430/- after claiming deduction u/s. 80-IB(10) of Rs.23, 561/-, Subsequently, - the assessee filed revised return on 27.03.2012 withdrawing its claim for deduction u/s. 80IB(10) and offered total income Rs.23,62,14,994/for taxation. The AO completed scrutiny assessment based on the original return of income and made am addition of Rs.23,32,39,561/and Rs.30,62,434/made on account of disallowance of claim of deduction u/s. 80-IB(10) and bogus purchases respectively. In the course of appellate proceedings, the appellant raised additional grounds of appeal and contested the addition made in the assessment order denying deduction w/s. 80IB of the IT Act and filed additional evidence in support of his claim. Vide letter dated 19.08.2016, the AO was directed to give his remand report on the issues raised by the appellant as per the provisions of Rule 46A. 4.1.2 The AO vide his letter dated 22.05.2017 submitted his remand report, the gist of which is as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is clear that the assessee is confusing the department about his claim. In the instant case, as the completion certificate for YA 2010-11 was received by the assessee in June 2016, he does not satisfy the conditions laid down in the section for claim of deduction u/s 80-IB. Therefore, deduction u/s 80IB should not be allowed to the assessee. The appeal of the assessee on this ground deserved to be dismissed. 4.1.3 From the above discussions the following undisputed facts emerge: a. The requirements regarding plot size of land and maximum built up area and the total commercial area and other requirements as per Section 80-[B(10) have been duly complied with by the appellant. b. The housing project Blue Meadows was approved on 29.12.2006 by Municipal Authority. c. The residential project was completed by November 2011 and the architect M/s. H.M. Shaveri Sons have given a certificate in this regard. d. Based on Architect s certificate, the assessee applied to the Municipal Corporation of Greater Mumbai vide its letter 24.12.2011 for Occupation Certificate. e. The Mumbai Fire Brigade Department vide letter dated 28.02.2012 granted it s NOC (no objection ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation for issue of completion certificate on 26.12.2011. Thus, our case gets squarely covered by the decision of the Hon'ble Bombay High Court in M/s. Hindustan Awas. b. The second contention of the Ld. AO is that as per the decision of the Hon ble Apex Court in the case of Goetze India, no additional claim can be made before the AO otherwise than by way of revised return. In this regard we would like to state that we have raised an additional ground of appeal before your honour to claim deduction w/s. 80-IB(10)and not before AO. We rely on the decision of the Hon ble Bombay High Court in the case of Pruthvi Brokers Shareholder [2012] 349 ITR 336(Bom.)] wherein it was held that an assessee is entitled to raise before Appellate Authorities additional grounds in terms of additional claims not made in return filed by it. Head notes of the case is reproduced herein below: Section 251, read with section 254, of the IT Act, 1961Commissioner(Appeals)Powers of -AY-2004-05-whether an assessee is entitled to raise before appellate authorities additional grounds in terms of additional claims not made in return filed by it-Held, yes Assessee company claimed deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO that no additional claim for deduction can be made before the AO otherwise than by filing a revised return, as per the decision of the Hon ble Apex Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 157 taxmann, has not accurately been applied in the context of this case. I agree with the reliance placed by the appellant in the case of Pruthvi Brokers Shareholder [2012] 349 ITR 336(Bom.)] wherein it was held by the Hon ble Court that an assessee is entitled to raise before appellate authority additional ground in terms of additional claims not made in the Income Tax return filed by it. In view of the same, the additional ground raised before me by the appellant are hereby allowed. 9. Aggrieved by the aforesaid action of the Ld. CIT(A). The revenue is before us. 10. The Ld. CIT-DR (Departmental representative) assailing the action of the Ld. CIT(A) submitted that the assessee had filed the return of income (original on 14.10.2010) claiming deduction u/s 80IB(10) of the Act to the tune of Rs.23.32 crores in respect of its Blue Meadows project and returning income of only Rs.29.75 lakhs which was later revised; and the revised return of income (ROI) dated 27.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deciding the issue in favour of the assessee by relying on the wrong certificate of the architect whereas, the assessee had filed only part occupancy certificate before MCGM and even didn t bring to his notice the action of MCGM refusing issue of occupancy certificate in that way, assessee has misled the Ld. CIT(A). According to the Ld. CIT-DR selective disclosures were only made before the Ld. CIT(A) which has misled the Ld. CIT(A) to allow deduction. According to the Ld. DR, the judicial precedents relied by the assessee is not applicable to the facts of the case. According to him in all the judicial precedents cited by assessee, the common thread is that the applications for issuance of occupancy/completion certificate were submitted before the concerned local authorities by those assessees well within the time prescribed (in this case five years) and the local authority s did not respond to it. Therefore, the courts have taken a view that in such a scenario, those assessees cannot be faulted for the delay caused by local authority to issue completion certificate, when the project was in fact completed within the prescribed time. However, in this case in hand, it was pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f substantial compliance laid by another Constitutional Bench of Supreme Court in Harichand Gopal (2011) 1 SCC 236 and the same principle was taken not by the Hon ble Jurisdictional High Court in Hindustan Samuh Awas Ltd. (supra). Therefore according to the Ld. AR, the assessee having completed the housing project named Blue Meadow project within the 5 years had fulfilled the conditions prescribed u/s 80IB (10) of the Act and in support of it had submitted (i) the certificate of structure vide letter dated 09.12.2011 (paper book-3) and (ii) part completion of Wing A B on 12.07.2011 certified by architect and (iii) that of the C Wing vide letter dated 24.12.2011 wherein the architect submitted before the MCGM-1 (iv) completion certificate u/s 353A, (v) RCC consultant stability certificate in proforma D (vi) copy of licence of the structural engineer (vii) lift certificate (viii) Occupancy Certificate (OC) and with the aforesaid relevant documents requested MCGM for grant of part occupation certificate vide letter dated 24.12211 (refer Page-1 Paper Book). He also drew our attention to the page-8 of the paper book wherein the Fire Brigade, Mumbai has issued NOC for completion of fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee have fulfilled the purpose of enacting this provision by Parliament by completing the project with in five years and that is how 121 flats were taken possession by the allotees in February 2012. So the deduction/incentive for builders/developers/assessee for having completed middle income housing units/flats (less than 1000 sqft.) in five years was rightly granted by Ld CIT(A) and the delay of issuance of occupancy certificate from MCGM cannot be a ground for denying the deduction u/s 80 IB(10) of the Act. So according to Ld. AR the Ld. CIT(A) taking note of judicial precedents on the aforesaid facts and circumstance have rightly granted deduction which does not require any interference from our part. Further the Ld. AR brought to our notice an important fact that as the flats were meant for middle class/middle income group and as per the booking of flats, the flats were allotted to the respective owners. And the allottees of flats (in the Blue Meadow Project) having paid the full consideration took note of the fact that the project was completed and ready for habitation. So, they pressurized the assessee to give physical possession of the flats at A, B C wing of Blue M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads as under:- 80-IB (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008 by a local authority shall be hundred per cent of the profits derived in the 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 and completes such construction- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 but not later than the 31st day of March, 2005, within four years from the end of the financial year in which the housing project is approved by the local authority; (iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person (including the Central or State Government). 3. The respondent's appeal before the Commissioner of Income Tax (Appeals), was dismissed. As against this, the respondent went before Income Tax Appellate Tribunal, where the impugned order was passed. 4. The ITAT held that in view of the fact that the respondent had made application seeking Completion Certificate prior to 31.03.2008, the date on which the Completion Certificate was issued was not material. It also held that the delay in obtaining Completion Certificate was not attributable to the respondent. This delay was beyond their control. 5. The following substantial question of law arises in these appeals: Is it permissible in law to compute the date on which the completion certificate in respect of housing is issued by the local authority as provided in explanation to section 80IB(10) of the Income Tax Act? If yes, how? 6. We have heard the submissions at bar at length. We have also perused the opposite view expressed by the Commissioner (Appeals), in his judgment. In the said judgment, he opined that the explanation to Section 80-IB(10)(a)(ii) of the Act must be strictly construed. He rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be found within the four corners of the act itself. (Per Lord Loreburn, L.C. in Vickers Sons) 15. The question is not what may be supposed and has been intended but what has been said. statutes should be construed not as theorems of Euclid , Judge Learned Hand said, but words must be construed with some imagination of the purposes which lie behind them .' Para No. 13 in the case of Saurashtra Chemicals Ltd. (supra) reads as under:- 13. A beneficent statute may have to be considered liberally but where a statute does not admit of more than one interpretation, literal interpretation must be resorted to. The provision allows taking of credit but the same is circumscribed by the condition as is apparent from the use of the words subject to and is limited to an amount not exceeding 50% of the duty paid on such capital goods. The term subject to in the contest assumes some importance. In Ashok Leyland Ltd. v. State of T.N. This Court held: (SCC p. 36, para 79) 79. . . . . . 'Subject to' is an expression whereby limitation is expressed. The order is conclusive for all purposes. This Court further noticed the dictionary meaning of subject to stating: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in practice. In our view the explanation has introduced an unnecessarily strictness in the provision which is in the nature of exemption and not in the nature of charging. Sub-section (10) mentions that a housing project should be complete before 31.03.2008 so as to get the exemption. Completion of housing project is a physical act. It can be demonstrated on the spot and also through a certificate issued by an architect who is appointed for supervising the construction work. He is a professional who would declare that the project is complete. Unfortunately, Sub-section (10) and the explanation do not give any importance to the issuance of such Completion Certificate by the concerned architect. It gives importance only to the certificate of Municipal authority. It is common knowledge that an application for Completion Certificate submitted to the Municipal Authorities is accompanied by a Completion Certificate issued by the concerned architect. No doubt, the Municipal authorities then cause inspection of the site and verify the claim. Thereafter, they issue Completion Certificate. But, if a project is really complete before 31.03.2008 and an application is moved quite in time, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted in 2006. Application for BU permission to the Municipal authorities was filed on 15.2.2006 which was rejected on 1.7.06. Several residential units were occupied since the same was done without necessary permission. The assessee had also paid penalty and got such occupation regularized. Several tenements were sold long before the last date. 6 In the present case, therefore, the fact that the assessee had completed the construction well before 31st March, 2008 is not in doubt. It is, of course, true that formally BU permission was not granted by the Municipal Authority by such date. It is equally true that explanation to clause (a) to section 80-IB(10) links the completion of the construction to the BU permission being granted by the local authority. However, not every condition of the statute can be seen as mandatory. If substantial compliance thereof is established on record, in a given case, the court may take the view that minor deviation thereof would not vitiate the very purpose for which deduction was being made available. 7 In the present case, the facts are peculiar. The assessee had not only completed the construction two years before the final date and had appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other commercial establishment in the housing project should be 3% of the aggregate built up area or 5000 sq. ft. which-ever is higher The total commercial area in the project is apx 3500 sq. ft, which is also within the limit of the prescribed area. Please refer Proforma A 4. In case the housing project is approved by the local authority on or after 01.04.2005, then the project should be completed within 5 years from the end of the financial year in which the project is approved by the local authority. The project was approved on 29.12.2006 by municipal authority. (Please refer copy of ICD). Accordingly, the last date for completion of the project was 31.03.2012. The residential project of the assessee got completed by No,2011 and architect has given a certificate in this regard. (please refer architect certificate. Based on architect certification the assessee has applied for the occupation certificate with BMC on 26.12.2011. Also Mumbai fire brigade vide letter dated 28.02.2012 has granted its NOC for occupation of the building and subsequently assessee started giving possession to the allotttees. Based on the above m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/- and thus computing total income at Rs.23,92,77,430/-. Thus we find that the assessee s revised return reflecting income of Rs. 23,62,14,990/- was not acted upon by the AO (In this context it should be borne in mind that assessee by filing revised return on 27.03.2012 had withdrawn deduction claimed u/s 80IB(10) of the Act and as per its original return of income filed u/s 139(1) of the Act wherein it had shown income of only Rs.29,75,430/- by claiming deduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/-) As evident from perusal of the assessment order it can be safely inferred that AO has not accepted the revised return filed by the assessee because first of all he finds fault with the assessee filing the revised return which according to him, the assessee was forced to do because, the MCGM refused approval to grant occupancy certificate (OC) for the project; and further according to him, if the assessee s case was not selected for scrutiny, the assessee could have simply got away with the deduction and could not have bothered to withdraw its claim as done on 27.03.2012. And it is noted that even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised return filed on 27.03.2012. However, the AO by assessment order dated 25.03.2013 disallowed the claim u/s 80IB of the Act to the tune of Rs.23,32,39,561/-. Later, on when the assessee came to know about the ratio of the decision of the Jurisdictional Hon ble Bombay High Court in the case of CIT Vs. Hindustan Samuh Awas Ltd. (supra) which was passed by the Hon ble High Court on 2nd Feb, 2014 and since the assessee understood that since there was substantial compliance of the project (Blue Meadow) claimed again the deduction u/s 80IB of the Act in the appeal preferred before the Ld. CIT(A). And the Ld. CIT(A) while considering this claim took notice of the relevant facts that assessee had commencement certificate for the SRA Project at Iraniwai, Goregoan (E) on 27.04.2006 from the office of Chief Executive Officer (Slum Rehabitation Authority i.e. Local Authority) and had applied for Occupation Certificate on 26.12.2011 (well before the limitation period sets in on 31.03.2012) by filing the certificate for use of lift, NOC from fire brigade, part-completion certificate from the architect for A, B C Wing, [here it has to be borne in mind that part-completion certificate was be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three (3) were complied with by the assessee within few weeks as is evident from submission of Fire NOC on 28.02.2012 and NOC from Tree authority and DCC. So it is seen that assessee had fulfilled the short-comings pointed out by the MCGM vide letter dated 5.01.2012 before the cut off date 31.03.2012. So it cannot be said that assessee had not substantially complied the Project [Blue Meadow] before 31.03.2012 and therefore the Ld. CIT(A) action is a plausible view in the light of the ratio of the Constitutional Bench of Hon ble Supreme Court in CCS vs Harichand Gopal (2011) 1 SCC 236 (infra) which has been taken note of by the Constitutional Bench while deciding the case of Dileep Kumar case supra (cited by Ld DR) wherein the Hon ble Supreme Court has taken note of the doctrine of substantial compliance and intended use which principles were explained as under: - 39.The Constitution Bench then considered the doctrine of substantial compliance and intended use . The relevant portions of the observations in paras 31 to 34 are in the following terms 31. Of course, some of the provisions of an exemption notification may be directory in nature and some are mandatory in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mirror image type of strict compliance. Applying the principle of substantial compliance in the facts of this case it can be seen that the assessee had complied sufficiently the requirement of law as stipulated in section 80IB(10) of the Act and as per the said provision it was bound to complete the building project before 31.03.2012 and it had filed the partial completion certificate in-respect of wing (A B ) on 12.07.2011 and C wing on 24.12.2011 and thus it is noted that the assessee not only filed the architect certificates of completion of the project Blue Meadow, it also had filed the certificate of structure, the lift certificate as well as NOC of the fire brigade and all these certificates were filed before MCGM by Feb, 2012. And moreover it is noticed that on 27.02.2012 itself possession of the flats were given to the allottees who had made the full and final payment which fact is evident from perusal of the letter given to the allottees of housing units for possession of the flats and that one hundred twenty one (121) flats/units got occupied at Blue Meadow Project (which were regularised later) (refer letter of MCGM page no. 56 PB) and therefore according to us, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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