The ACIT- 1(1), Bhopal v. M/s Essargee Construction Pvt. Ltd., Bhopal

ITA 185/IND/2013 | 2002-2003
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 18522714 RSA 2013
Assessee PAN AAACE8852F
Bench Indore
Appeal Number ITA 185/IND/2013
Duration Of Justice 2 year(s) 3 month(s) 26 day(s)
Appellant The ACIT- 1(1), Bhopal
Respondent M/s Essargee Construction Pvt. Ltd., Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Date Of Final Hearing 03-10-2016
Next Hearing Date 03-10-2016
Assessment Year 2002-2003
Appeal Filed On 04-04-2013
Judgment Text
ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH INDORE BEFORE SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA HONBLE ACCOUNTANT MEMBER ITA NOS. 185 & 186/IND/2013 A.YS.2002-03 & 2004-5 ACIT 1(1) BHOPAL ::: APPELLANT VS M/S ESSARJEE CONSTRUCTION PVT. LTD. PAN AAACE8852F ::: RESPONDENT REVENUE BY SHRI R.A. VERMA RESPONDENT BY SHRI M.K. SHARMA DATE OF HEARING 17.6 .2015 DATE OF PRONOUNCEMENT 31 .7.2015 O R D E R PER BENCH BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDERS OF LEARNED CIT(A)-I BHOPAL DATED ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 2 11.1.2013 FOR THE ASSESSMENT YEAR 2002-03 AND DATED 31.1.2013 FOR THE ASSESSMENT YEAR 2004-05. SINCE COMM ON ISSUES ARE INVOLVED THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.185/IND/2013 FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I BHOPAL DATED 11.1.2013. 3. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDU CTION U/S 80IB(10) OF THE ACT CLAIMED BY THE ASSESSEE ON TH E PROFIT DERIVED FROM THE PROJECTS ESSARJEE PURVANCHAL-2 AND ESSARJEE CAMPUS. THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIVING INCOME FROM CONSTRUCTION OF HOUSES AND COMMERCIAL PROJECT. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 WAS FILED DECLARING INCOME AT N IL. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE AC T AT ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 3 RS. 18 80 949/- AND DECLARED BOOK PROFIT U/S 115JB AT RS. 1 78 230/-. THE NOTICE U/S 148 WAS ISSUED ON 24.3.2 009. THE ASSESSEE SUBMITTED RETURN OF INCOME AND ORDER U/ S 143/147 WAS MADE AT AN INCOME OF RS. 18 80 949/- DISALLOWING THE CLAIM U/S 80IB(10) OF THE ACT. THE LE ARNED CIT(A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY HOLD ING AS UNDER :- HOWEVER IN RESPECT OF OTHER TWO PROJECTS IT IS NOTICED IN REGARD TO ESARJEE PURVANCHAL-2 THAT THE APPROVAL OF T & CP WAS OBTAINED ON 22.03.1999 AND FIRST BUILDING PERMISSION WAS ALSO OBTAINED ON 24.03.2000. SIMILARLY IN THE CASE OF ESARJEE CAMPUS THE APPROVAL OF T&CP WAS OBTAINED ON 26.11.1999 AND FIRST BUILDING PERMISSION WAS TAKEN ON 14.12.1999. THUS THESE PROJECTS WERE COMMENCED AFTER 01.10.1998. ON PERUSAL OF ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 4 THE DETAILS IT IS ALSO NOTICED THAT IN BOTH THESE PROJECTS THE APPELLANT HAD CONSTRUCTED DUPLEX RESIDENTIAL HOUSES AND AFTER COMPLETING THE CONSTRUCTION POSSESSION OF THE RESIDENTIAL UNITS WERE GIVEN. THOUGH IT IS ALSO FOUND THAT THE APPELLANT HAD THE SALE DEED REGISTERED IN RESPECT OF THE PLOTS BUT THE SAME WAS MADE SUBJECT TO THE FULFILLMENT OF ALL TERMS AND CONDITIONS OF THE AGREEMENTS OF SALE OF RESIDENTIAL UNIT ENTERED BETWEEN THE APPELLANT COMPANY AND THE CUSTOMER. IT WOULD BE RELEVANT TO REPRODUCE THE RELEVANT CLAUSE ON SAMPLE BASIS OF A SALE DEED ENTERED BETWEEN THE APPELLANT COMPANY AND SHRI PRAHLAD GHORMARE FOR SALE OF PLOT NO. H- ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 5 103 IN ESSARJEE PURVANCHAL-2 PROJECT AS UNDER :- . ( !'# $. % .) ' ( )*+ - ( . * 0 ! 12 03 4 52 67 + . 8 9 : ; < = >?@ - 2 ?@ 09.12.1999 ; @( E - 8 . 4 F = ( 67 67 : G ?@ + . H THUS IN THIS CASE IT CANNOT BE SAID THAT THE APPELLANT HAD SOLD THE PLOT AND THEREAFTER ACTED ONLY AS A CONTRACTOR BECAUSE THE APPELLANT COMPANY HAD NOT GIVEN POSSESSION OF THE PLOT AND THE CUSTOMER WAS NOT ENTITLED TO GET THE CONSTRUCTION DONE EITHER BY HIMSELF ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 6 OR BY ANOTHER AGENCY. IT WAS FURTHER NOTICED THAT THE INSTANCES OF MEASUREMENT OF BUILT UP AREA OF RESIDENTIAL UNIT MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER PERTAINED TO THE OTHER PROJECTS ADHARSHILA AND NEW FORT EXTENSION PROJECTS WHICH WERE UNDERTAKEN BY THE APPELLANT COMPANY IN SUBSEQUENT ASSESSMENT YEARS AND NO DEDUCTION WAS CLAIMED IN RESPECT OF THESE PROJECTS IN THE YEAR UNDER CONSIDERATION. THE A.O. HAD NOT POINTED OUT INSTANCE OF ANY RESIDENTIAL UNIT PERTAINING TO THE PROJECTS ESARJEE PURVANCHAL-2 OR ESSARJEE CAMPUS UNDERTAKEN DURING THE YEAR UNDER CONSIDERATION WHERE THE BUILT UP AREA OF ANY RESIDENTIAL UNIT WAS IN EXCESS OF THE SPECIFIED BUILT UP AREA OF 1500 SQ. FT IT MAY ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 7 ALSO BE PERTINENT TO NOTE THAT THE ASSESSMENT YEAR INVOLVED IS A.Y. 2002-03 AND AS PER THE PROVISIONS ON THE STATUTE FOR A.Y. 2002-03 THERE WAS NO CONDITION FOR COMPLETING THE CONSTRUCTION OF THE HOUSING PROJECT WITHIN A SPECIFIED TIME IN THE RELEVANT ASSESSMENT YEAR. IT MAY BE NOTED THAT THE CONDITION FOR COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT WAS INTRODUCED BY THE FINANCE (NO. 2) ACT 2004 W.E.F. 01-04.2005 WHICH IS APPLICABLE FROM A.Y. 2005-06 AND SUBSEQUENT ASSESSMENT YEARS. THEREFORE THE DEDUCTION U/S 80IB(10) OF THE ACT CANNOT BE DISALLOWED IN A.Y. 2002-03 ON THE GROUND THAT THE APPELLANT HAD NOT FURNISHED COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY. ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 8 THE CONTENTION OF THE LD. AR OF THE APPELLANT THAT THERE IS NO CONDITION THAT APPROVAL FOR CONSTRUCTION OF BUILDINGS OF THE WHOLE PROJECT TO BE OBTAINED AT ONE INSTANCE IS FOUND TENABLE AS IS EVIDENT FROM THE AMENDED PROVISIONS OF SECTION 80IB(10). IT IS NOTICED THAT THE TOTAL AREA OF THE PROJECT APPROVED BY THE T&CP AND MUNICIPAL CORPORATION FOR THE DEVELOPMENT OF THE HOUSING PROJECTS WAS MORE THAN ONE ACRE IN BOTH THESE PROJECTS I.E. ESSARJEE PURNANCHAL- 2 AND ESSARJEE CAMPUS COMMERCIAL AREAIN ESSARJEE PURVANCHAL-II WAS ABOUT 1.7% LESS THAN 10%. THERE WAS NO COMMERCIAL AREA IN ESSARJEE CAMPUS PROJECT. THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 9 APPELLANT WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) PERTAINING TO THE PROFITS DERIVED FROM THESE TWO PROJECTS ESSARJEE PURVANCHAL-2 AND ESSARJEE CAMPUS. ACCORIDNGLY THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S 80IB(10) ON THE PROFITS DERIVED FROM ESSARJEE PURVANCHAL-2 AND ESSARJEE CAMPUS DURING THE YEAR UNDER CONSIDERATION. THE GROUND IS THUS PARTLY ALLOWED. 4. WE HAVE HEARD BOTH THE SIDES. THE PROJECT WAS SANCTIONED PRIOR TO AMENDMENT TO SECTION U/S 80IB(10) OF THE ACT W.E.F. 1.4.2005 AND THEREFORE THE AMENDED PROVISIONS ARE NOT APPLICABLE. IN THE CASE OF CHD DEVELOPERS LTD. VS. ACIT CIRCLE 3(1) NEW DELHI H ON'BLE DELHI HIGH COURT HAS HELD AS UNDER :- ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 10 THE ASSESSEE IS EXPECTED TO COMPLETE THE PROJECT AS PER THE APPROVED PLAN AT A PARTICULAR POINT OF TIME AND THE ASSESSEE IS NOT EXPECTED TO DO OR TO FULFIL L THE CONDITIONS WHICH ARE NOT IN EXISTENCE AT THE RELEVA NT POINT OF TIME OR MADE COMPULSORY AFTER MAKING SOME AMENDMENT IN THE ACT FROM THE FUTURE DATE. SINCE TH E ASSESSEE WAS TO COMPLETE THE PROJECT ON OR BEFORE AND 31.03.2009 AND REQUEST WAS DULY MADE WITH THE COMPETENT AUTHORITY ON 05.11.2009 MENTIONING THAT THE PROJECT HAS BEEN COMPLETED AND COMPLETION CERTIFICATE MAY BE ISSUED AND IF THE SAME IS NOT ISSUED BY THE COMPETENT AUTHORITY THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE SAME UNLESS AND UNT IL SOME CONTRARY FACTS ARE BROUGHT ON RECORD EVIDENCIN G THAT THE ASSESSEE CONTRAVENED THE CONDITIONS CONTAINED IN THE APPROVAL GRANTED BY SUCH COMPETENT AUTHORITY. AS PER SUB-SECTION (10) OF SECTION 80IB( 10) ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 11 THE BENEFIT WILL BE HUNDRED PERCENT SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. HOWEVER THIS CONDITION WAS SUBSTITUTED BY THE FINANCE (NO. 2) AC T OF 2009 WITH EFFECT FROM 01.04.2009 WHICH HAS BEEN FURTHER EXPLAINED BY SUB-CLAUSE (II) TO THE EXPLANA TION REGARDING COMPLETION CERTIFICATE. HOWEVER SINCE TH E APPROVAL WAS GRANTED TO THE ASSESSEE ON 01.04.2005 THEREFORE THE ASSESSEE IS NOT EXPECTED TO FULFILL THE CONDITIONS WHICH WERE NOT ON THE STATUTE WHEN SUCH APPROVAL WAS GRANTED TO THE ASSESSEE. THEREFORE TH E APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. IN THE CASE OF CIT VS. TARNETAR CORPORATION (2012) 26 TAXMAN.COM 180(GUJ.) IT WAS HELD THAT IN THE PRESENT CASE THEREFORE THE FACT THAT THE APPELLANT HAD COMPLETED THE CONSTRUCTION WELL BEFOR E 31 ST MARCH 2008 IS NOT IN DOUBT. IT IS OF COURSE TRU E THAT FORMALLY BU PERMISSION WAS NOT GRANTED BY THE ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 12 MUNICIPAL AUTHORITY BY SUCH DATE. IT IS EQUALLY TRU E THAT EXPLANATION TO CLAUSE (A) TO SECTION 88IB(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 COMPLETION THEREO F IS ESTABLISHED ON RECORD IN A GIVEN CASE THE COUR T MAY TAKE A VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH THE DEDUCTIO N WAS BEING MADE AVAILABLE. IN THE PRESENT CASE THE FACTS ARE PECULIAR. THE ASSESSEE HAS NOT ONLY COMPLETED THE CONSTRUCTION TW O YEARS BEFORE THE FINAL DATE AND APPLIED FOR BU PERMISSION. SUCH BU PERMISSION WAS NOT REJECTED ON THE GROUND THAT CONSTRUCTION WAS NOT COMPLETED BUT ON SOME OTHER TECHNICAL GROUND. IN THAT VIEW OF ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 13 MATTER GRANTING RELIEF OF DEDUCTION CANNOT BE HELD TO BE ILLEGAL. IN ACIT VS. SURENDRA DEVELOPERS IN ITA NOS. 2743 TO 2745/DEL/2010 IT WAS HELD AS UNDER :- THE LD. CIT(A) IT IS SEEN HAS GRANTED RELIEF TO THE APPELLANT ON THE BASIS OF THE FACT THAT THOUGH THE APPELLANT HAD APPLIED FOR COMPLETION CERTIFICATE BEFORE THE LOCAL AUTHORITY IN TIME THE SAID CERTIF ICATE WAS NOT ISSUED IN TIME BY THE LOCAL AUTHORITY. SUCH ISSUANCE OF COMPLETION CERTIFICATE HAS BEEN HELD AN D IN OUR OPINION CORRECTLY SO TO BE BEYOND THE CONT ROL OF THE ASSESSEE. IN THE CASE OF HINDUSTAN SAMUDHA AWAS LTD. VS. ITO IN I TA NOS. 945 TO 950/PNP 2010 HON'BLE ITAT PUNE BENCH HELD AS UNDER :- FROM THE ABOVE ONE THING IS CLEAR THAT THE DATE TH AT APPEAR ON THE ARCHITECTS COMPLETION CERTIFICATE FI LED ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 14 BEFORE THE LOCAL AUTHORITY IS A RELEVANT ONE. IN TH E INSTANT CASE THE SAID DATE IS 25.03.2008 AND THE APPELLANT FILED REQUISITE FORM BEFORE THE LOCAL AUTHORITY INTIMATING THE COMPLETION OF THE PROJECT. THE SAID CERTIFICATE/INTIMATION WAS ACCEPTED BY THE LOC AL AUTHORITY WITHOUT ANY AMENDMENTS OR OBJECTS. LOCAL AUTHORITY HAS NOT RAISED ANY QUERIES ON THE QUALITY CONSTRUCTION OF THE BUILDING OR THE COMPLETION OF T HE SAME AS PER THE PLANS APPROVED BY SUCH AUTHORITY. IN SUCH CIRCUMSTANCES IN OUR OPINION THE DELAY IN OBTAINING THE COMPLETION CERTIFICATE ON 10.10.2008 IS CERTAINLY NOT ATTRIBUTABLE TO THE APPELLANT AND OBTAINING THE SAID CERTIFICATE BEFORE 31.03.2008 IS BEYOND THE CONTROL OF THE APPELLANT. THE APPELLANT S JOB INCLUDES THE COMPLETION OF THE BUILDING IN ACCORDANCE WITH THE APPROVAL PLANS AND INTIMATION O F THE SAME TO THE LOCAL AUTHORITY BY WAY OF FILING TH E ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 15 REQUISITE FORMS TOGETHER WITH THE COMPLETION CERTIFICATE GIVEN BY THE ARCHITECT THE SPECIALIST IN THE MATTER AND THE APPELLANT HAS DONE HIS JOB SCRUPULOUSLY IN THIS CASE. HOWEVER THE LOCAL AUTHORITY HAS NEITHER OBJECTED TO THE SAID APPLICAT ION OF THE APPELLANT AND THE ARCHITECT BY RAISING ANY OBJECTION NOR ACCEPTED BY ISSUE OF SAID COMPLETION CERTIFICATE TILL 10.10.2008. THEREFORE THE DELAY I N GRANT OF THE SAID CERTIFICATE IS CERTAINLY NOT ATTRIBUTABLE TO THE APPELLANT. THEREFORE IN OUR OPINION THE APPELLANT IS NOT DEFAULTER ON THIS ACC OUNT AND THUS THE A.O. HAS ERRED IN DENYING THE DEDUCTIO N U/S 80IB(10) OF THE ACT. ACCORDINGLY THE ORDER OF THE CIT(A) HAS TO BE REVERSED. THUS THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED. ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 16 HON'BLE ITAT DELHI BENCH IN THE CASE OF M/S GIRIJA COLONISERS IN ITA NOS. 2417 TO 2422/DEL/2011 HAS HE LD AS UNDER :- IN THE LIGHT OF THE FACTS NARRATED IN A.O.S REMAND REPORT AND FACTS AVAILABLE ON RECORD THE LD. CIT(A ) HAS TAKEN A VIEW THAT THE APPELLANT HAS COMPLETED THE CONSTRUCTION MUCH PRIOR TO 31.03.2008 AND HAD FULFILLED ALL REQUIREMENTS/FORMALITIES OF THE COMPLETION CERTIFICATE AS NOTIFIED BY THE CORPORATI ON AT THE TIME OF FILING APPLICATION FOR ISSUANCE OF COMPLETION CERTIFICATE ON 26.11.2007. THE LD. CIT(A ) HAS ALSO RECORDED A FINDING THAT SALES OF ALL RESIDENTIAL UNITS IN RESPECT OF THREE PROJECTS WERE MATERIALIZED ON OR BEFORE 31.03.2008. THE MUNICIPAL AUTHORITY HAS NOT POINTED OUT ANY DEFECT AND IRREGULARITY IN THE APPELLANTS APPLICATION DATED 26.11.2007 SUBMITTED FOR ISSUANCE OF COMPLETION ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 17 CERTIFICATE OF ALL THE SAID PROJECTS. THEREFORE IN THE LIGHT OF FACTS FOUND BY THE LD. CIT(A) AND REASONS GIVEN BY HIM AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF ITAT PUNE BENCH B IN THE CASE HINDUSTAN SAMUHA AWAS LIMITED (SUPRA) WE DO NOT FIND ANY REASON TO TAKE A VIEW OTHER THAN TH E VIEW TAKEN BY THE LD. CIT(A) IN THE PRESENT CASE. W E THEREFORE UPHOLD THE ORDER OF LD. CIT(A) AND DISMI SS ALL THESE APPEALS FILED BY THE REVENUE. VISAKHAPATNAM BENCH OF THE ITAT IN THE CASE OF M/S VISHNU BUILDERS VS. ACIT (ITA NOS. 178 179 & 180/VIZAG/2011) ORDER DATED 27 TH JULY 2011 OBSERVED THAT COMPLETION CERTIFICATE WAS NOT FILED BEFORE THE ASSES SING OFFICER AND THE PROOF OF MUNICIPAL TAX ASSESSMENT OF VARIOUS FLAT OWNERS ESTABLISHING THAT THE HOUSING PROJE CT WAS COMPLETED BEFORE SEPTEMBER 2008 WAS FILED. SINCE THERE WAS NO PRACTICE OF ISSUING THE PROJECT COMPLETI ON ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 18 CERTIFICATE THEREFORE IT WAS HELD THAT IT WAS NOT A CO NDITION PRECEDENT OF FILING THE COMPLETION CERTIFICATE FOR AL LOWING DEDUCTION U/S 80IB(10) OF THE ACT. 5. AS MENTIONED BY THE LEARNED CIT(A) THERE WAS NO VIOLATION OF LIMIT OF BUILT UP AREA REPORTED IN THE PR OJECTS ON WHICH DEDUCTION U/S 80IB(10) OF THE ACT WAS CLAIMED. FURTHER FACTS ESTABLISH THAT THE ASSESSEE HAS WORKED AS DEVELOPER AND NOT AS MERE CONTRACTOR. REVENUE FAILS TO DISLODGE THE FINDINGS OF THE LEARNED CIT(A). IN VIE W OF THESE FACTS WE SUSTAIN THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 6. ITA NO. 186/IND/2013 EMANATES FROM THE ORDER OF T HE LEARNED CIT(A)-I DATED 11.1.2013. IN THIS APPEAL THE O NLY ISSUE INVOLVED IS THAT THE LEARNED CIT(A) WAS NOT JUST IFIED IN ALLOWING THE DEDUCTION U/S 80IB(10) OF THE ACT CLAIME D BY THE ASSESSEE ON PROFITS DERIVED FROM THE PROJECTS ES SARJEE PURVANCHAL-2 AND ESSARJEE CAMPUS. ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 19 7. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ON 5 PROJE CTS NAMELY PURVANCHAL II NEW FORT EXTENSION ESSARJEE HOMES ESSARJEE YOGANTAR AND ESSARJEE ADHARHILA. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT ON THE HOUSING PROJECT NEW FORT EXTENSION AT RS. 25 20 473/- ON THE GROUND THAT THE B UILT UP AREA OF ONE OF THE HOUSES HIG-26 NEW FORT EXT. WAS MORE THAN THE PRESCRIBED LIMIT. THE ASSESSEE PREFERR ED APPEAL BEFORE THE LEARNED CIT(A) WHO DISMISSED THE SAM E. THE ASSESSEE FURTHER APPEALED TO THE ITAT AND THE ITAT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDIN G THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT ON THE PROJECT NEW FORT EXTENSION AFTER HOLDING THAT THE BUILT UP AREA TO BE CONSIDERED AS PER THE PROVISI ONS OF BHUMI VIKAS RULES AND THE AMENDED PROVISIONS WITH REGARD TO DEFINITION OF BUILT UP AREA ARE PROSPECTIVE I N ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 20 NATURE AND NOT APPLICABLE TO THE ASSESSMENT YEAR 2004-05 . SUBSEQUENTLY THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE ACT AND THE ASSESSMENT WAS COMPLETED U/S 143(3)/147 OF THE ACT ON 24.7.2008 AFT ER DISALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF TH E ACT. THE LEARNED CIT(A) GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 3.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT IS NOTICED AS SUBMITTED BY THE LD. AR OF THE APPELLANT THAT APPELLANT HAD UNDERTAKEN AND CLAIMED DEDUCTION U/S 80IB(10) IN RESPECT OF FIVE PROJECTS DURING THE YEAR UNDER CONSIDERATION I.E. PURVANCHAL-II; NEW FORT; NEW FORT EXTENSION; HOMES; AND YUGANTER. 3.5 IT MAY BE NOTED THAT THE LAW APPLICABLE WILL BE THE LAW AS ON IST APRIL OF THE ASSESSMENT YEAR ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 21 IS UNIVERSALLY ACCEPTED PROPOSITION AS HAD BEEN POINTED OUT IN A NUMBER OF CASES E.G. IN RELIANCE JUTE & INDUSTRIES LTD. VS. CIT (1979) 120 ITR 921 (SC) IT IS HELD THAT ASSESSMENT FOR ONE ASSESSMENT YEAR NOT TO BE AFFECTED BY LAW IN FORCE IN ANOTHER ASSESSMENT YEAR. IT IS CARDINAL PRINCIPLE OF LAW THAT THE LAW TO BE APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE PROVIDED EXPRESSLY OR BY NECESSARY IMPLICATION. THE HON'BLE MADRAS HIGH COURT ALSO OBSERVED IN OM SINDHOORI CAPITAL INVESTMENTS LTD. VS. JOINT CIT (2005) 274 ITR 4277 (MAD) THAT THE LAW THAT GOVERNS THE ASSESSMENT IS THE LAW THAT IS PREVAILING ON APRIL 1 OF THE ASSESSMENT YEAR IN QUESTION. IT WOULD BE RELEVANT TO REPRODUCE THE PROVISIONS OF SUB-SECTION (10) OF SECTION 80IB AS WERE ON STATUTE FOR A.Y. 2004-05 AS UNDER :- ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 22 (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31 ST DAY OF MARCH 2005 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY 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 IST DAY OF OCTOBER 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF ONE THOUSAND SQUARE ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 23 FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. IT IS NOTICED THAT ALL THE FIVE PROJECTS WERE COMMENCED AFTER 01.10.1998. ON PERUSAL OF THE DETAILS IT IS ALSO NOTICED THAT IN ALL THESE PROJECTS THE APPELLANT HAD CONSTRUCTED DUPLEX RESIDENTIAL HOUSES AND AFTER COMPLETING THE CONSTRUCTION POSSESSION OF THE RESIDENTIAL UNITS WERE GIVEN TO THE CUSTOMERS. THOUGH IT IS ALSO FOUND THAT THE APPELLANT HAD THE SALE DEED REGISTERED IN RESPECT OF THE PLOTS BUT ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 24 THE SAME WAS MADE SUBJECT TO THE FULFILLMENT OF ALL TERMS AND CONDITIONS OF THE AGREEMENTS OF SALE OF RESIDENTIAL UNIT ENTERED BETWEEN THE APPELLANT COMPANY AND THE CUSTOMER. IT WOULD BE RELEVANT TO REPRODUCE THE RELEVANT CLAUSE ON SAMPLE BASIS OF A SALE DEED ENTERED BETWEEN THE APPELLANT COMPANY AND SHRI VAJENT RAWAT S/O SHRI D.B. RAWAT FOR SALE OF PLOT NO. H-54 IN ESSARJEE YUGANTAR PROJECT ON 25.02.2004 AS UNDER :- . ( !'# $. % .) ' ( )*+ - ( . * 0 ! 12 03 4 52 67 + . 8 9 : ; < = >?@ - 2 ?@ ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 25 10.02.2004 ; @( E - 8 . 4 F = ( 67 67 : G ?@ + . H THUS IN THIS CASE IT CANNOT BE SAID THAT THE APPELLANT HAD SOLD THE PLOT AND THEREAFTER ACTED ONLY AS A CONTRACTOR BECAUSE THE APPELLANT COMPANY HAD NOT GIVEN POSSESSION OF THE PLOT AND THE CUSTOMER WAS NOT ENTITLED TO GET THE CONSTRUCTION DONE EITHER BY HIMSELF OR BY ANOTHER AGENCY. IT WAS MANDATORILY TO BE GOT CONSTRUCTED BY THE APPELLANT COMPANY M/S ESSARJEE CONSTRUCTION PVT. LTD. THUS THE APPELLANT HAD HANDED OVER THE RESIDENTIAL UNITS AFTER CONSTRUCTION TO THE CUSTOMERS AND HENCE THE APPELLANT HAD DEVELOPED AND BUILT THE ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 26 RESIDENTIAL PROJECT AS A DEVELOPER AND NOT AS A CONTRACTOR. IT WAS FURTHER NOTICED THAT THE INSTANCES OF MEASUREMENT OF BUILT UP AREA OF RESIDENTIAL UNIT MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER WERE PERTAINING TO THE PROJECTS ADHARSHILA AND NEW FORT EXTENSION PROJECTS. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAD NOT UNDERTAKEN THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ADHARSHILA WHICH WAS UNDERTAKEN BY THE APPELLANT COMPANY IN SUBSEQUENT ASSESSMENT YEARS AND NO DEDUCTION WAS CLAIMED IN RESPECT OF THIS PROJECT IN THE YEAR UNDER CONSIDERATION. THUS NO ADVERSE VIEW CAN BE TAKEN ON THE BASIS OF MEASUREMENT ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 27 OF A HOUSE OF THE PROJECT ADHARHILA ON THE CLAIM OF DEDUCTION U/S 80IB(10) IN RESPECT OF OTHER PROJECTS. THE OTHER INSTANCE WAS OF MEASUREMENT MENTIONED IN THE ASSESSMENT ORDER I.E. HOUSE NO. H-17 NEW FORT EXTENSION IN WHICH BUILT UP AREA WAS FOUND AT 1622.63 SQ.FT. AS PER DEFINITION OF BUILT UP AREA GIVEN IN CLAUSE (A) OF SECTION 80IB(14). THE APPELLANTS CLAIM IS THAT THE BUILT UP AREA OF THE HOUSE WAS TO BE TAKEN KEEPING IN VIEW THE RULES AND NORMS OF BUILT UP AREA AS PER APPROVAL FROM LOCAL AUTHORITIES AND AS PER M.P. BHOOMI VIKAS RULES 1984. IT WAS CONTENDED THAT ALL THE HOUSES CONSTRUCTED IN THESE PROJECTS WERE WELL BELOW THE CONSTRUCTED AREA OF 1500 SQ.FT. IN THIS REGARD IT MAY BE NOTED THAT THIS ISSUE ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 28 CAME UP FOR CONSIDERATION BEFORE THE HON'BLE ITAT IN THE APPELLANTS OWN CASE FOR THE SAME ASSESSMENT YEAR 2004-05 IN APPEAL RELATED TO REGULAR ASSESSMENT ORDER U/S 143(3) IN APPEAL ITA NO. 116/IND/2009 ORDER DATED 30.12.2010 WHEREIN THE HON'BLE ITAT DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT HOLDING THAT PROVISIONS OF SECTION 80IB(14)(A) ARE CLARIFICATORY IN NATURE AND HAVE RETROSPECTIVE APPLICABILITY. THE HON'BLE ITAT HELD THAT A.O. WAS NOT JUSTIFIED IN DISALLOWING DEDUCTION U/S 80IB(10) ON THIS ACCOUNT. THUS THIS ISSUE HAD ALREADY BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE HON'BLE ITAT IN APPELLANTS OWN CASE. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT INDORE BENCH IN APPELLANTS ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 29 OWN CASE FOR THE SAME ASSESSMENT YEAR 2004-05 IT IS HELD THAT AMENDED PROVISIONS OF SECTION 80IB(14)(A) ARE APPLICABLE W.E.F. 01.04.2005 AND UPTO A.Y. 2004-05 THE MEASUREMENT OF BUILT UP AREA HAS TO BE DONE AS PER PREVAILING RULES OF LOCAL AUTHORITY I.E. M.P. BHOOMI VIKAS RULES 1984 APPLICABLE IN THIS CASE. SINCE AS PER THE RULES OF M.P. BHOOMI VIKAAS RULES 1984 THE BUILT UP AREA OF THE RESIDENTIAL UNIT IN THESE PROJECTS WERE LESS THAN 1500 SQ.FT. THE APPELLANT FULFILLED THE CONDITION OF SECTION 80IB(10) AND NO ADVERSE VIEW WAS CALLED FOR ON THIS ACCOUNT. IT MAY ALSO BE PERTINENT TO NOTE THAT THE ASSESSMENT YEAR INVOLVED IS A.Y. 2004-05 AND AS PER THE PROVISIONS ON THE STATUTE FOR ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 30 A.Y. 2004-05 AS REPRODUCED ABOVE THERE WAS NO CONDITION FOR COMPLETING THE CONSTRUCTION OF THE HOUSING PROJECT WITHIN A SPECIFIED TIME IN A.Y.2004-05. IT MAY BE NOTED THAT THE CONDITION FOR COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT WAS INTRODUCED BY THE FINANCE (NO.2) ACT 2004 W.E.F. 01.04.2005 WHICH IS APPLICABLE FROM A.Y. 2005-06 AND SUBSEQUENT ASSESSMENT YEARS. THEREFORE THE DEDUCTION U/S 80IB(10) CANNOT BE DISALLOWED IN A.Y. 2004-05 ON THE GROUND THAT THE APPELLANT HAD NOT FURNISHED COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY. THE CONTENTION OF THE LD. AR OF THE APPELLANT THAT THERE IS NO CONDITION THAT APPROVAL FOR CONSTRUCTION OF BUILDINGS OF THE WHOLE PROJECT ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 31 TO BE OBTAINED AT ONE INSTANCE IS FOUND TENABLE . AS IS EVIDENT FROM THE AMENDED PROVISIONS OF SECTION 80IB(10). IT IS NOTICED THAT THE TOTAL AREA OF THE PROJECT APPROVED BY THE T&CP AND MUNICIPAL CORPORATION FOR THE DEVELOPMENT OF THE HOUSING PROJECTS WAS MORE THAN ONE ACRE IN ALL THESE FIVE PROJECTS I.E. PURVANCHAL-II NEW FORT NEW FORT EXTENSION; HOMES; AND YUGANTER. THUS ALL THE PROJECTS FULFILLED THE CONDITION LAID DOWN UNDER CLAUSE (B) OF SECTION 80IB(10). THEREFORE KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE IT IS FOUND THAT THE APPELLANT HAD FULFILLED ALL THE CONDITIONS LAID DOWN U/S 80IB(10) AS STOOD ON THE STATUTE IN THE RELEVANT ASSESSMENT YEAR 2004-05. ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 32 ACCORDINGLY THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S 80IB(10) OF THE ACT ON THE PROFITS DERIVED FROM PURVANCHAL-II NEW FORT NEW FORT EXTENSION; HOMES AND YUGANTER DURING THE YEAR UNDER CONSIDERATION. HOWEVER BEFORE PARTING WITH THE ISSUE IT MAY BE NOTED THAT THE APPELLANT HAD INCLUDED THE AMOUNT OF RS. 1 26 679/- OF OTHER INCOME INTO THE AMOUNT OF DEDUCTION U/S 80IB(10) OF RS.35 95 310/- CLAIMED. THIS AMOUNT OF RS.1 26 679/- CONSISTS OF THE FOLLOWING ITEMS : (I) RENT RECEIVED RS.38 304/- (II) INCOME TAX REFUND RS. 11 943/- (III) INTEREST ON FDR RS. 76 432/- TOTAL - RS.1 26 679/- ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 33 THE ABOVE INCOME OF RS.1 26 679/- WAS NOT PROFITS DERIVED FROM THE HOUSING PROJECTS ELIGIBLE FOR DEDUCTION U/S 80IB(10) AS THE IMMEDIATE AND EFFECTIVE SOURCE OF THESE INCOME WAS NOT DEVELOPING AND BUILDING OF HOUSING PROJECT. INTEREST ON INCOME TAX REFUND AND INTEREST ON FDR WERE INCOME FROM OTHER SOURCES. THEREFORE THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S 80IB(10) OF THE ACT ON OTHER INCOME OF RS.1 26 679/-.IT MAY BE RELEVANT TO MENTION HERE THAT THE A.O. HAD DISALLOWED THIS AMOUNT OF RS.1 26 679/- IN THE ORIGINAL ASSESSMENT U/S 143(3) ALSO AND IT APPEARS THAT THE APPELLANT HAD NOT CHALLENGED THE SAID DISALLOWANCE IN APPEALS. ACCORDINGLY THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 34 80IB(10) OF RS.34 68 631/- (RS.35 95 310 RS.1 26 679) ONLY. HENCE THIS GROUND IS PARTLY ALLOWED. 8. AFTER HEARING BOTH THE SIDES WE HOLD THAT THE AMEN DED PROVISIONS OF U/S 80IB(10) OF THE ACT SHALL NOT BE AP PLICABLE RETROSPECTIVELY. REVENUE FAILED TO DISLODGE THE FIND ING RECORDED BY LEARNED CIT(A) FOR GRANTING RELIEF TO TH E ASSESSEE. THEREFORE THE LEARNED CIT(A) WAS QUITE JUSTI FIED IN PARTLY ALLOWING THE CLAIM OF THE ASSESSEE. WE THERE FORE DISMISS THIS APPEAL OF THE REVENUE. 9. IN THE RESULT BOTH THE APPEALS OF THE REVENUE STAN D DISMISSED. PRONOUNCED IN OPEN COURT ON 31 ST JULY 2015 SD/- SD/ (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 31 ST JULY 2015 ESSARJEE CONSTRUCTION P. LTD. ITA NOS. 185 & 186/IND/2013 35 DN/-