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

ITA 272/IND/2013 | 2007-2008
Pronouncement Date: 31-07-2015 | Result: Allowed

Appeal Details

RSA Number 27222714 RSA 2013
Assessee PAN AAACE8852F
Bench Indore
Appeal Number ITA 272/IND/2013
Duration Of Justice 2 year(s) 2 month(s) 24 day(s)
Appellant M/s Essarjee Construction Pvt. Ltd., Bhopal
Respondent The ACIT 1(1), Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Date Of Final Hearing 17-06-2015
Next Hearing Date 17-06-2015
Assessment Year 2007-2008
Appeal Filed On 06-05-2013
Judgment Text
M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/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. 270 TO 272/IND/2014 A.YS.2005-06 TO 2007-08 M/S ESSARJEE CONSTRUCTION PVT. LTD. PAN AAACE8852F ::: APPELLANT VS ACIT 1(1) BHOPAL ::: RESPONDENT REVENUE BY SHRI R.A. VERMA RESPONDENT BY SHRI M.K. SHARMA DATE OF HEARING 17.6.2015 DATE OF PRONOUNCEMENT 3 1 . 7.2015 O R D E R PER BENCH THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST T HE ORDERS DATED 10.3.2014 OF THE LEARNED COMMISSIONER O F INCOME TAX(A) BILASPUR CAMP BHOPAL. SINCE COMMON M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 2 ISSUES ARE INVOLVED THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THESE APPEALS IS THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRM ING THE REJECTION OF THE CLAIM OF DEDUCTION OF RS. 58 09 741/- IN A.Y. 2005-06 RS. 57 32 531/- IN A.Y. 2006-07 AND RS.43 16 037/- IN A.Y. 2007-08 U/S 80IB(10) OF THE ACT CLAIMED BY THE ASSESSEE ON THE PROFIT DERIVED FROM TH E PROJECTS ESSARJEE HOMES AND WEST BLOCK FROM THE TOTAL RETURNED INCOME OF THE ASSESSEE. THE ASSESSEE IS A PR IVATE LIMITED COMPANY DERIVING INCOME FROM CONSTRUCTION O F HOUSES AND COMMERCIAL PROJECT. 3. SO FAR AS ASSESSMENT YEAR 2005-06 IS CONCERNED THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TAXABLE INCOME AT RS. 1 78 230/- AFTER CLAIMING DEDUCTION U/ S 80IB(10) OF THE ACT AT RS. 58 09 741/-. THE RETURN W AS M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 3 PROCESSED U/S 143(1) OF THE ACT ON 31.7.2007 AND THE RETURNED INCOME WAS ACCEPTED. THEREAFTER THE CASE WAS REOPENED FOR REASSESSMENT U/S 148 BY ISSUING NOTICE U/S 148 OF THE ACT ON 23.3.2009. IN RESPONSE THE ASSESS EE SUBMITTED THAT THE ORIGINAL RETURN MAY BE TREATED AS RE TURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. TH E ASSESSING OFFICER AFTER ISSUING NOTICES U/S 143(2) AN D 142(1) OF THE ACT AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE COMPLETED THE ASSESSMENT U/S 147 READ WITH SECTION 143(3) OF THE ACT DETERMINING TAXABLE INCOME AT RS. 59 87 971/- DISALLOWING THE ASSESSEES CLAIM WITH REG ARD TO DEDUCTION U/S 80IB(10) OF THE ACT. 4. SO FAR AS ASSESSMENT YEAR 2006-07 IS CONCERNED THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TAXABLE INCOME AT RS. 5 63 795/- AFTER CLAIMING DEDUCTION U/ S 80IB(10) OF THE ACT AT RS. 57 32 531/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) OF THE ACT M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 4 AND ASSESSMENT U/S 143(3) WAS MADE ON 23.12.2008 DETERMINING THE TAXABLE INCOME AT RS. 62 96 326/- AFTE R DISALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT AT RS.57 32 531/-. 5. SO FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TAXABLE INCOME AT RS. 21 99 020/- AFTER CLAIMING DEDUCTION U/ S 80IB(10) OF THE ACT AT RS. 43 16 017/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) OF THE ACT AND ASSESSMENT U/S 143(3) WAS FRAMED ON 30.9.2009 DETERMINING THE TAXABLE INCOME AT RS. 65 15 037/- AFTE R DISALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT AT RS.43 16 017/-. 6. AGGRIEVED BY THE ABOVE ACTION OF THE ASSESSING OFF ICER THE ASSESSEE PREFERRED APPEALS BEFORE THE LEARNED CIT(A ) BUT COULD NOT SUCCEED. NOW THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 5 4. WE HAVE HEARD BOTH THE SIDES. THE PROJECT WAS SANCTIONED PRIOR TO AMENDMENT TO SECTION 80IB(10) OF THE ACT W.E.F. 1.4.2005 AND THEREFORE THE AMENDED PROVI SIONS ARE NOT APPLICABLE. IN THE CASE OF CHD DEVELOPERS LTD. VS. ACIT CIRCLE 3(1) NEW DELHI HON'BLE DELHI HIGH CO URT HAS HELD AS UNDER :- 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 M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 6 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) 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. M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 7 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 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. M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 8 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 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 AUTHORITY6 IN TIME THE SAID CERTI FICATE WAS NOT ISSUED IN TIME BY THE LOCAL AUTHORITY. SUCH ISSUANCE OF COMPLETION CERTIFICATE HAS BEEN HELD AN D M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 9 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 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. M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 10 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 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 M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 11 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. 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 ) M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 12 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 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 & M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 13 180/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 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. IN VIEW OF THESE FACTS WE ARE CLEARLY OF THE VIEW THAT THE AMENDED PROVISIONS OF SECTION 80IB(10) OF THE AC T SHALL BE APPLICABLE ONLY TO THE PROJECTS SANCTIONED ON OR AFT ER 1.4.2005. THUS THE DEFINITION OF BUILT UP AREA AND LI MIT OF COMMERCIAL SPACE SHALL NOT BE APPLICABLE TO THE PROJECTS SANCTIONED PRIOR TO 1.4.2005. THE BUILT UP AREA AND COMMERCIAL AREA WERE AS PER APPROVED PLAN. NO VIOLATION IS REPORTED. IN VIEW OF VARIOUS DECISIONS CITED ABOVE THE M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 14 REQUIREMENT OF COMPLETION CERTIFICATE SHALL NOT BE APPLICABLE TO THESE PROJECTS. IN VIEW OF THESE PECUL IAR FACTUAL MATRIX THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER WITH REGARD TO REJECTION OF CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTH ORITIES WITH THE DIRECTION TO ALLOW THE CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT. 9. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED. 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 M/S ESSARJEE CONSTRUCTION P.LTD. ITA NOS. 270 TO 272/IND/2013 15