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TMI Blog2022 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ed total income of Rs.8,53,51,346/- u/s.115JC of the Act. Deduction u/s.80IB(10) was claimed in respect of housing project, namely, "Teerth Towers", which consisted of 7 Buildings and Commercial shops. The assessee had been following "Project Completion Method" for recognising the income, as a result of which all the expenses incurred on the project till the immediately preceding financial year were shown as work-in-progress. During this year, the assessee showed sale of entire units of Buildings A to F for a sum of Rs.90,92,08,550/-. The Assessing Officer (AO) noticed that the assessee contravened the provisions of section 80IB(10) inasmuch as the project was not completed within 5 years from the end of the financial year in which the housing project was approved by the local authority. He observed that the housing project was approved by the competent authority vide order dated 30-02-2007, which depicted that the assessee sought N.A. (Non-Agricultural) permission and also approval for building plan for residential use vide his application dated 21-12-2006. The housing project was completed vide the Completion certificate issued by the competent authority on 30-03-2013. Considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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; 5. A bare perusal of the above provision indicates that deduction u/s.80IB(10) is allowed if the development and construction of the housing project commences on or after 01-10-1998 and the construction is completed within a period of five years from the end of the financial year in which the housing project is approved by the local authority. Thus, it can be seen that, there are three timelines relevant for claiming the deduction insofar as the dispute under consideration is concerned, viz., i) the date of start of construction; ii) the date of completion of the housing project and iii) the date of approval of the housing project by the local authority. There is no dispute regarding the first timeline, namely, the date of start of construction, which, admittedly, commended after 1.10.1998. We will take up the other two disputed timelines for consideration in seriatim. (I) Date of completion of the housing project 6. Clause (a) of section 80IB(10) provides that the deduction shall be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the assessee in writing about the completion of construction, finds the construction as having been actually completed, the date of issuance of the completion certificate shall be construed as the date on which the assessee finally intimated the factum of completion of construction. 7. Adverting to the facts of the instant case, we find that the date of completion certificate issued by the competent authority, a copy placed at page 133A of the paper book, is 30-03-2013. The assessee lodged a claim before the Tribunal that though the completion certificate was issued on this date, but the project was actually completed on 07-03-2012, when it intimated about the completion of construction to the District Collector, Pune vide its letter, a copy placed at page 215 of the paper book. It is also claimed that another letter intimating about the completion of the project was sent to the District Collector, Pune on 24-09-2012, whose copy is available at page 217 of the paper book. The ld. AR argued that the date of completion of construction should be taken as the date when the project was actually completed, namely, 07-03- 2012. 8. We proceed to examine the letters dated 7.3.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 24-12-2006 and hence, 30-03-2007 should be taken as the date of approval for commencement. On the other hand, the assessee contended and the ld. CIT(A) accepted the contention that the approval was conditional upon the demarcation and since the demarcation certificate was issued by the O/o. DILR on 22-08-2007, the same was the date of approval. 10. Sub-clause (iii) of section 80IB(10)(a) provides that the construction should be completed within five years from the end of the financial year in which the housing project is approved by the local authority. The stipulated period of five years has connection only with the granting of approval by the local authority and not when the construction is actually commenced. The requirement is that the construction should be commenced after the stipulated date but it has to complete within a period of five years from the end of the financial year in which the housing project is approved by the local authority. Thus, it is evident that the period of five years is relevant only for considering the completion of the project from the end of the financial year in which the housing project is approved by the local authority. Even if the construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval for building plan for residential use on Survey No.....owned by him vide his application dated 21-12-2006". This order further records in para 2: "As the residential construction drawings for the above location submitted by the applicant, this area being outside the limits of Municipal Corporation, were sent for examination to the Assistant Director, Urban Planning, Pune and the Assistant Director, Town Planning, Pune has examined and conveyed vide their outward no. Drawing/NABP/M Sus/Tal Mulshi/S.No.28/2 and others/SSP/1056 dt. 30-03-2007 that on examination of planned residential use space drawings of the referred place, they generally seem to appropriate as per the existing guidelines". This shows that the assessee applied for getting both the N.A. permission and approval for building plan of the project to the District Collector, Pune. On finding that the area was outside the limits of Municipal Corporation, the District Collector, Pune sought the opinion of the Assistant Director, Urban Planning, and the latter, vide his order dated 30-03-2007, gave a green signal on finding the drawings of the planned residential site to be appropriate. On the basis of that order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n all the approvals of housing project by the local authority. This requirement is enshrined in approvals for ensuring that the actual development of the housing project coincides with the accorded approval. This condition is not something peculiar to the assessee, so as to put his case at a different pedestal from others, so as to assume the date of permission granted by DILR on 22-08-2007 as a starting point in contrast to the date when the approval was first granted by the District Collector, Pune on 30.3.2007. Further, one needs to draw a line of distinction between an approval and a certificate. The requirement of the section is the grant of approval and not the issuance of certificate. Approval in this case was granted to the housing project by the District Collector, Pune, whereas the office of the land records department simply issued a certificate as to the fulfillment of the condition no. 3. When we read sub-clause (iii) to section 80IB(10(a) in juxtaposition to the Explanation (i), the position which comes to the fore is that construction of the housing project has to be completed within a period of five years from the end of the financial year in which it is approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption notification". It further held that: `When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed extended to the subject/assessee and it must be interpreted in favour of the Revenue". Going with the ratio decidendi of this Constitution Bench judgment, it is manifested that the assessee has to strictly satisfy the conditions as given in the section for availing the deduction and in case of any doubt or ambiguity, the benefit of interpretation has to be given in favour of the Revenue. 17. Extantly, we are concerned with a situation in which there is no ambiguity in the relevant language of section 80IB(10) and even on the plain interpretation of the provision, it is clear that the period of five years for completion of construction has to be reckoned from the end of the financial year in which the building plan of the housing project is first approved by the local authority. 18. The ld. AR heavily relied on the judgment of Hon'ble Bombay High Court in Jamunabai Parmananddas Shah and others Vs. Bajirao Seetaram Kalbhor and others (1995) (1) Mh.L.J. 564. This judgment was rendered in the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are streets away from each other. Ergo, the reliance of the ld. AR on this judgment is of no consequence in the present case. 19. The ld. AR also relied on a decision of the Bombay Bench of the Tribunal in Shree Krishna Sai Development Corporation Vs. ITO (2011) 130 ITD 31 (Mumbai). In that case, the assessment years orders under consideration were 2005-06 and 2006-07 and the assessee claimed deduction u/s.80IB(10) in earlier years which was accepted in the assessments completed u/s.143(3). The CIT, assuming jurisdiction u/s.263, opined that deduction u/s.80IB(10) should not have been allowed by the AO without proper verification of the certificate issued by the CIDCO indicating the date of commencement as 07-04-1998. The Tribunal considered the fact that though the commencement certificate issued by the CIDCO indicated the date of commencement as 07-04-1998, the actual commencement took place only after obtaining permission from the District Collector on 19-05-1999. It was held that the date as per CIDCO certificate was irrelevant. It was only the date of District Collector which was held to be relevant. When we apply the ratio of this decision to the facts of the instant case, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson for such previous year and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent.' 25. This section starts with a non obstante clause and provides that where the regular income-tax "payable for a previous year" is less than the alternate minimum tax payable for "for such previous year, the adjusted total income shall be deemed to be the total income of that person "for such previous year" and he shall be liable to pay income-tax on such total income @18.5%. This section clearly refers to total income "of the previous year" which has to be substituted as per the mandate of this provision, in case the income under regular provisions for such previous year, is less than that provided under this section. The ld. AR contended that though this section is applicable to the year under consideration, but it should not be applied because the housing project was approved in an earlier year, when this section was not in vogue. We do not find any logic in the interpretation of this provision as made by the ld. AR. This section applies as one unit for a previous year, when the income under the regular provisions is less than the adjusted i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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