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TMI Blog2024 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the overall constructed area within the prescribed limit of building by laws. Nothing has been brought on record to prove that the second contention of the Ld. AR is that the built up area of units are less than 1500 sq. ft. The assessee is a developer and not a works contractor is based on the hypothetical situation and facts and not on the actual facts of the assessee's case. The assesse has not brought any material on record to show that in all the cases sale deed of plots were executed prior to the construction of house to facilitate the buyers to avail loan from the bank/financial institutions. Even otherwise this issue has already attained finality in the quantum proceedings and nothing has been brought on record to show that the case of the assessee falls in the category of developer and sale deed executed by the assesse in favour of the buyers is only for the purpose of availing loan facility by the prospective buyers. Accordingly the decision relied upon by the Ld. AR of the assessee will not help the assessee of the case because those decision are only on the point of addition made by the A.O on a debatable issue and the claim of the assessee was found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... across the fact that order under section 250 of the Act had been passed by the Ld. CIT(A), NFAC. Delhi on 20-06-2023 confirming the levy of penalty of Rs. 55,00,000/- under section 271(1)(c) of the Act. Subsequently, my regular counsel consulted a senior counsel who advised my counsel to immediately file an appeal before the Hon'ble ITAT, Indore Bench challenging the levy of penalty under section 271(1)(c) of the Act of Rs. 55,00,000/-, 5. It was for the aforesaid reason that the present appeal is being filed before the Hon'ble Bench with a delay of 10 days (till 29th August, 2023). However, I would like to submit before the Hon'ble Bench that as soon as the senior counsel advised my regular counsel to file an appeal before the Hon'ble ITAT, Indore Bench against the appellate passed under section 250 of the Act, my regular counsel asked me to pay the challan for appeal fees immediately and accordingly the present appeal is being filed without any further delay. 3. Thus the assessee has explained the cause of delay that notices issued by CIT(A) as well as the impugned order were sent to the e-mail id of counsel of the assessee who inadvertently missed these mails an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the disallowance of claim u/s 80IB(10) due to the technical formality of obtaining completion certificate was not satisfied. He has also relied upon the following decisions: (i) 82 Taxmann.com 65, Indore Tribunal (ii) Pragati Construction Co. ITA No.5786/Ind/2016 Indore Tribunal Thus the Ld. AR has submitted that the penalty levied by the A.O and confirmed by the CIT(A) is not justified and same may be deleted. 5.1 Ld. AR has further submitted that so far as the exceeding the built-up area of 112 units as breach of condition u/s 801B(10) for disallowing the claim is concerned, the DVO has made no reference to the measurement or to the house number of which the measurement were taken and were found to be exceeding the limits. The DVO has mentioned that the measurement were taken for sample units then how it can be the specific number of units found to be exceeding the area provided u/s 801B(10). It could have been done only by measuring all the houses for determining built- up area of each and every house. The measurement given in the approved plan shows that built up is below 1500. R 5.2 So far as the explanation introduced in section 80IB for excluding the benefit to the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making the claim of deduction u/s 80IB(10) on incorrect facts. 7. We have considered the rival contentions as well as relevant materials placed on record. The A.O has levied penalty u/s 271(1)(c) of the Act in respect of the addition made on account of disallowance of deduction u/s 80IB(10). In the assessment order the A.O has given the finding on three points which were considered as non-compliance of conditions prescribed u/s 80IB(10). The first point on which the A.O have given the finding is that the assessee has not developed the residential project in terms of Section 80IB but the assessee first sold the plots of land to the buyers and thereafter, the construction of houses were undertaken by the assessee on the plots of lands of the individual owners. Thus the A.O has held that the assessee was not a developer but only a contractor to construct houses on the plots of the individual owners. The second objection of the A.O was regarding breach of conditions prescribed u/s 80IB(10)(c) which prescribes the condition that the residential units has a maximum built up area of 1000 square feet where such residential unit is situated within the city of Delhi or Mumbai or within twen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the residential units after construction. But as pointed out by the A.O. the said agreement for construction and sale of residential unit was not registered and as per provisions of section 17(1A) of the Registration Act, 1908, w.e.f. 24.09.2001 if any agreement for transfer of Immovable property for consideration is not registered under the Registration Act, it shall have no effect for the purpose of section 53A of the Transfer of Property act, 1882. Thus, the said agreement cannot be given cognisance even for deemed transfer u/s 53A of the Transfer of Property act. It is also admitted fact that the appellant had not got any document registered for the sale of a residential unit. Thus, the appellant had not earned income on account of sale of residential unit as envisaged in section 801B(10) because the appellant after selling the plots of land had acted only as a contractor for the customers to construct the residential units for them. Secondly, it is also an admitted fact that the appellant had not got any document registered for the sale of a residential unit. Thus, the appellant had not earned income on account of sale of residential unit as envisaged in section 80IB(10) bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant had acted merely as a contractor after selling the plot and not as a developer. Completion certificate was also not issued to the appellant by the local authority for the entire project. Therefore, the appellant was not eligible for claiming deduction / 801B(10) on the profits derived from these projects. Further, as mentioned by the A.O, on physical inspection of the project by the District Valuation Officer, it was also found that the appellant had not constructed all the residential units having built up area of less than 1500 sq.ft. The appellant had himself admitted that only 147 residential units out of total 159 residential units of the project qualify for deduction u/s 80IB(10). Regarding these 147 residential units, the A.O. issued commission u/s 13(1)(d) to the DVO to measure the built up area of these residential units. The DVO had inspected the project in the presence of the appellant and other concerned housing project staff on 17.1.2013. The DVO vide letter dated 8.2.2013 informed that out of these total 147 houses constructed by the appellant only 35 had built up area of less than 1500 sq. ft. Thus, it is clear that the said housing project had not fulfilled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that though the Tribunal has dismissed the appeal of the assessee by following the judgment of Hon ble jurisdictional High Court on the point of obtaining completion certificate within the prescribed period however, the factual finding given by the A.O and CIT(A) in quantum appeals has attained the finality. The CIT(A) in the impugned order has confirmed the levy of penalty and the concluding finding of CIT(A) in para 6.7 is as under: 6.7 It also has to be appreciated that the appellant was well aware that he had failed to complete the entire housing project as claimed by him, before the specified date 31.03.2012. The jurisdictional High Court of Madhya Pradesh in the case of CIT vs. Global Reality, ITA No.40/2012 and others has held that Considering the prodigious benefit offered in terms of section 80IB(10) to the assesseee (hundred percent of the profits derived in any previous year relevant to any assessment year), and the purpose underlying the same-which is inter-alia burden on the public exchequer due to waiver of commensurate revenue- the stipulation for obtaining completion certificate from the local authority before the cut off date, must be construed as mandatory . If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O on other two factual grounds being most of the residential units having more than 1500 square feet and secondly the assessee has not developed the residential project but only construction the residential houses as a contractor. This factual findings have not been disturbed in the appellate proceedings and therefore, keeping aside the debatable issue of obtaining completion certificate within the stipulated period which is pending before the Hon ble Supreme Court the assessee is otherwise not eligible to claim the deduction u/s 80IB(10) on the other two objections raised by the A.O. The Ld. AR of the assessee has questioned the correctness of the DVOs report pointing out the breach of conditions with respect to the build-up area having more than 1500 sq ft. in respect of 112 units and referred to the sanction plan wherein build-up area of units is shown as 1500 sq ft. It is pertinent to note that merely mentioning build-up area of 1500 sq ft. in the sanction plan cannot be a determinative fact of actual area of the area constructed units as there may be deviations in the actual area of construction and area of construction as per plan. Even otherwise if extra area of constr ..... 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