M/s Mahendra Builders & Developers, Bhopal v. The ACIT 1(1), Bhopal

ITA 435/IND/2010 | 2006-2007
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 43522714 RSA 2010
Assessee PAN AAGFN3093H
Bench Indore
Appeal Number ITA 435/IND/2010
Duration Of Justice 1 year(s) 29 day(s)
Appellant M/s Mahendra Builders & Developers, Bhopal
Respondent The ACIT 1(1), Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 27-07-2011
Assessment Year 2006-2007
Appeal Filed On 28-06-2010
Judgment Text
MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 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.371 372/IND/2012 435/IND/2010 373 & 374/IND/2012 & 365/IND/2013 A.YS. 2004-05 2005-06 2006-07 2007-08 2008-09 & 2009-10 MAHENDRA BUILDERS & DEVELOPERS BHOPAL PAN AAGFN 3093H ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(1) INDORE ::: RESPONDENT APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA RESPONDENT BY SHRI R AHUL RAMAN DATE OF HEARING 23 . 6. 2015 DATE OF PRONOUNCEMENT 3 0 .7.2015 O R D E R PER BENCH ITA NOS.371 TO 374/IND/2012 EMANATE FROM THE COMMON ORDER OF THE LEARNED CIT(A) RAIPUR CAMP AT MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 2 BHOPAL DATED 30.3.2012. ITA NO. 435/IND/IND/2010 EMANATES FROM THE ORDER OF THE LEARNED CIT(A) BHOPAL DATED 9.3.2010 AND ITA NO. 365/IND/2013 EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I BHOPAL DATED 28.2. 2013. IN ALL THESE APPEALS THERE ARE COMMON ISSUES AND THEREFORE THE SAME ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NOS. 371 & 372/IND/2012 GROUND NO. 3 IS AGAINST SUSTAINING VALIDITY OF NOTICE U/S 148 OF THE AC T. IN BOTH THESE APPEALS GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. IN GROUND NO. 2 THE ISSUE IS REGARDING NOT ALLOWING THE CLAIM OF DED UCTION U/S 80IB(10) OF THE ACT. THIS ISSUE IS ALSO RAISED I N GROUND NOS. 2 AND 3 IN ITA NOS. 435/IND/2010 373 374/IND/2012 AND 365/IND/2013. GROUND NO. 1 IN ITA NOS. 373 & 374/IND/2012 435/IND/2010 AND 365/IND/2013 IS GENERAL IN NATURE. HENCE IN ALL THESE SIX MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 3 APPEALS THERE IS A COMMON GROUND RELATING TO DEDUCTION U/S 80IB(10) OF THE ACT BUT SINCE IN ITA NOS. 371 AN D 372/IND/2012 THE VALIDITY OF REASSESSMENT PROCEEDINGS HAS BEEN CHALLENGED THEREFORE WE ARE DECIDING THIS I SSUE FIRST AND THEREAFTER WE SHALL TAKE THE ISSUE OF DEDUC TION U/S 80IB(10) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION DEVELOPING BUILDING AND HOUSING PROJEC TS. DURING THE RELEVANT PERIOD THE ASSESSEE HAS DEVELOPED VARIOUS PROJECTS VIZ. MAHENDRA TOWNSHIP PHASE-I MAHINDRA TOWNSHIP PHASE-II MAHENDRA CITY AND MAHENDRA GREENWOOD. IN THE ASSESSMENT YEAR 2004-05 THE ASSESSEE WAS ALLOWED DEDUCTION U/S 80IB(10) OF THE ACT WHILE MAKING THE ASSESSMENT U/S 143(3) OF THE ACT. I N THE ASSESSMENT YEAR 2005-06 THERE WAS NO SCRUTINY MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 4 ASSESSMENT AND THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. 4. THE MAIN CONTENTION OF THE LEARNED COUNSEL FOR TH E ASSESSEE REGARDING REOPENING WAS THAT IT WAS BASED ON CHANGE OF OPINION. THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE CLAIM OF THE ASSESSING OFFICER THAT THE AMENDMENT MADE BY FINANCE (NO. 2) ACT OF 2005 WAS APPLICABLE EVEN TO THE ASSESSMENT YEAR 2003-04 EVEN W HEN THE ASSESSEE HAS NOT BOOKED ANY INCOME DURING THAT PERIOD. HE SUBMITTED THAT THE ISSUE WAS A DEBATABLE ONE AND THEREFORE THE REOPENING WAS BASED ON MERE CHANGE OF OPINION AND SHOULD NOT BE SUSTAINED IN VIEW OF CIT VS . KELVINATOR OF INDIA (2010) 320 ITR 561 (SC). 5. ON THE OTHER HAND THE LEARNED DR RELIED ON THE OR DERS OF THE AUTHORITIES BELOW. MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 5 6. WHILE FRAMING THE ASSESSMENT FOR THE ASSESSMENT YEA R 2006-07 THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT FULFILLED THE REQUIRED CONDITIONS OF SECTION 80I B(10) OF THE ACT AND THE ASSESSING OFFICER RECORDED CERTAIN FAI LURE ON THE PART OF THE ASSESSEE FOR NOT FULFILLING THE CO NDITIONS AS NARRATED U/S 80IB(10) OF THE ACT WHICH ALSO INCLUDE THE BUILT UP AREA AND AMENDED PROVISIONS OF THE ACT. THE REASSESSMENT WAS NOT BASED ON CHANGE OF OPINION BUT BASED ON NEW MATERIAL CAME INTO KNOWLEDGE OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07. CONSIDERING ALL THESE ASPECTS WE HOLD THAT THE ASSESSING OFFICER WAS HAVING SUFFICIENT MATERIAL TO MAKE A BELIEF FOR REOPENING OF THE ASSESSMENT PROCEEDINGS. THEREFORE WE DISMISS THIS G ROUND OF THE ASSESSEE. 7. NOW WE WILL DECIDE THE ISSUE OF CLAIM OF DEDUCTIO N U/S 80IB(10) OF THE ACT. FROM A PERUSAL OF VARIOUS ORDERS FOR MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 6 VARIOUS ASSESSMENT YEARS WE FIND THAT THE ASSESSEE HAS BEEN DENIED THE BENEFIT OF DEDUCTION U/S 80IB(10) O F THE ACT ON THE ISSUE OF BUILT UP AREA COMMERCIAL AREA HOL DING THE ASSESSEE AS A CONTRACTOR NOT GETTING THE COMPLETI ON CERTIFICATE APPROVAL IS NOT IN THE NAME OF THE ASSESSEE AND LAND IS ALSO NOT IN THE NAME OF THE ASSESSEE. ON THESE ISSUES WE HAVE HEARD BOTH SIDES IN DETAIL. WE HAVE ALS O GONE THROUGH THE VARIOUS CASE LAWS RELIED UPON BY BOT H THE SIDES. THE DETAILS OF PROJECTS ARE AS UNDER :- NAME OF COLONY MAHENDRA TOWNSHIP PHASE I MAHENDRA TOWNSHIP PHASE II MAHENDRA CITY MAHENDRA GREENWOOD AREA AND KHASRA BAWADIYA KALAN BAWADIYA KALAN JATKHEDI HOSHANGABAD ROAD JATKHEDI HOSHANGABAD RIOAD OWNER OF LAND SARVOTTAM GRIH NIRMAN SAHKARI SAMITI SARVOTTAM GRIH NIRMAN SAHKARI SAMITI SARVOTTAM GRIH NIRMAN SAHKARI SAMITI ASSESSEE FIRM JOINT DEVELOPMENT AGREEMENT 01.07.2002 07.06.2002 06.01.2006 14.02.2007 APPROVAL 07.06.2002 07.06.2002 06.01.2006 14.02.200 7 INCOME OFFERED IN A.Y. ALL AYS UPTO AY 2008-09 ALL AYS UPTO AY 2008-09 ALL AYS ONLY IN A.Y.2009-10 MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 7 8. FOR THE ISSUE THAT THE PERMISSION IS NOT GIVEN IN THE NAME OF THE ASSESSEE AND OWNERSHIP IS ALSO NOT BELONGIN G TO THE ASSESSEE WE HOLD THAT THIS ISSUE HAS BEEN SETT LED BY VARIOUS JUDGMENTS WHEREIN EVEN IF THE LAND WAS NOT IN THE NAME OF THE ASSESSEE AND PERMISSION IS NOT IN THE NAME OF THE ASSESSEE THEN ALSO THE ASSESSEE WAS HELD TO BE ELI GIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. RELIANCE IS P LACED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RADHE DEVELOPERS; 341 ITR 402 (GUJ.) WHE REIN IT WAS HELD THE ASSESSEE HAD IN PART PERFORMANCE OF THE AGREEMENT TO SELL THE LAND IN QUESTION WAS GIVEN POSSESSION THEREOF AND HAD ALSO CARRIED OUT THE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSING PROJECT. COMBINED READING OF S. 2(47)(V) AND S. 53A OF THE TRANSFER OF PROPERTY ACT WOULD LEAD TO A SITUATION WHERE THE LAND MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 8 WOULD BE FOR THE PURPOSE OF IT ACT DEEMED TO HAVE BEEN TRANSFERRED TO THE ASSESSEE. IN THAT VIEW OF THE MATER FOR THE PURPOSE OF INCOME DERIVED FROM SUCH PROPERTY THE ASSESSEE WOULD BE THE OWNER OF THE LAND FOR THE PURPOSE OF THE SAID ACT. IT IS EQUALLY TRUE THAT SUCH TITLE WOULD PASS ONLY UPON EXECUTION OF A DULY REGISTERED SALE DEED. HOWEVER FOR THE LIMITED PURPOSE OF THESE PROCEEDINGS ONE IS NOT CONCERNED WITH THE QUESTION OF PASSING OF THE TITLE OF THE PROPERTY BUT ONLY EXAMINING WHETHER FOR THE PURPOSE OF BENEFIT UNDER S. 80IB(10) THE ASSESSEE COULD BE CONSIDERED AS THE OWNER OF THE LAND IN QUESTION. FOR THE LIMITED PURPOSE OF DEDUCTION U/S 80IB(10) THE ASSESSEE HAD SATISFIED THE CONDITION OF OWNERSHIP ALSO EVEN IF IT WAS NECESSARY. MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 9 THE TRIBUNAL COMMITTED NO ERROR IN HOLDING THAT THE ASSESSES WERE ENTITLED TO THE BENEFIT U/S 80IB(10) EVEN WHERE THE TITLE OF THE LANDS HAD NOT PASSED ON TO THE ASSESSEE AND IN SOME CASE THE DEVELOPMENT PERMISSIONS MAY ALSO HAVE BEEN OBTAINED IN THE NAME OF THE ORIGINAL LAND OWNERS. IT IS NOT EVEN THE CASE OF THE REVENUE THAT OTHER CONDITIONS OF S. 80IB WERE NOT FULFILLED. IN THE CASE OF CIT VS. SHITAL CORPORATION (2014) 369 ITR 476 (GUJ) HON'BLE GUJARAT HIGH COURT HELD AS UNDER :- SECTION 80IB(10) OF THE INCOME-TAX ACT 1961 PROVIDES FOR DEDUCTIONS TO AN UNDERTAKING ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING HOUSING PROJECTS UNDER CERTAIN CIRCUMSTANCES. IT DOES NOT PROVIDE THAT THE LAND MUST BE OWNED BY THEASS SEEKING SUCH MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 10 DEDUCTIONS. IT IS WELL SETTLED THAT WHILE INTERPRETING A STATUTE PARTICULARLY A TAXING STATUTE NOTHING CAN BE READ INTO THE PROVISIONS WHICH HAS NOT BEEN PROVIDED BY THE LEGISLATURE. THE CONDITION WHICH IS NOT MADE PART OF SECTION 80IB(10) OF THE ACT NAMELY THAT OF OWNING THE LAND WHICH THE ASSESSEE DEVESOPS CANNOT BE SUPPLIED BY ANY PURPORTED LEGISLATIVE INTENT. THERE IS NOTHING UNDER SECTION 80IB(10) OF THE ACT REQUIRING THAT OWNERSHIP OF THE LAND MUST VEST IN THE DEVELOPER TO BE ABLE TO QUALIFY FOR SUCH DEDUCTION. SECONDLY THE TERM DEVELOPER HAS BEEN UNDERSTOOD IN COMMON PARLANCE AS WELL AS IN LEGAL SENSE CARRYING A MUCH WIDER CONNOTATION. 9. WITH REGARD TO THE ISSUE OF COMMERCIAL AREA BEYOND THE LIMIT EXCEEDING AS PROVIDED UNDER THE AMENDED MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 11 PROVISIONS OF THE ACT WE HOLD THAT THIS ISSUE IS ALS O SETTLED BY VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS IN F AVOUR OF THE ASSESSEE. SIMILAR VIEW HAS BEEN HELD IN THE FOLLO WING DECISIONS :- (I) CIT VS. MAHALAKSHMI HOUSING; 41 TAXMANN.COM 146(MAD.) (II) CIT VS. NIKHIL ASSOCIATES; 224 TAXMAN 219 (GUJ) (III) C.I. BUILDERS PVT. LTD.; 20 ITJ 495 (INDORE) (IV) CIT VS. SHAJANAND ASSOCIATES; 44 TAXMAN.COM 458(GUJ) (V) CIT VS. MOON STAR DEVELOPERS; 269 CTR 259 (GUJ.) 10. THIS ISSUE IS CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SARKAR BUILDERS DATED 15.5.2015 WHEREIN HON'BLE SUPREME COURT HELD AS UNDER :- (G) FROM THIS PROVISION THEREFOR IT IS CLEAR THA T THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW BY WAY OF AN MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 12 AMENDMENT IN THE FORM OF CLAUSE (D) AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE BY NECESSARY IMPLICATION THE SAID PROVISION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. 21. THESE ASPECTS ARE DEALT WITH BY VARIOUS HIGH COURTS ELABORATELY AND CONVINCINGLY IN THEIR JUDGMENTS. IT IS NOT NECESSARY TO GO INTO THE DETAILED REASONING GIVEN BY THESE HIGH COURTS. HOWEVER WE WOULD LIKE TO EXTRACT THE FOLLOWING MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 13 DISCUSSION FROM THE JUDGMENT DATED 25.07.2014 OF THE BOMBAY HIGH COURT IN ITA NOS. 201 AND 308 OF 2012 WHERE THIS VERY ASPECT IS ANSWERED IN THE FOLLOWING MANNER : 36.THERE IS YET ANOTHER REASON FOR COMING TO THE AFORESAID CONCLUSION. TAKE A SCENARIO WHERE AN ASSESSEE FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING HAS COMPLETED THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY COMPLYING WITH ALL THE CONDITIONS AS SET OUT IN SECTION 80IB(10) AS IT STOOD PRIOR TO IST APRIL 2005. IF WE WERE TO ACCEPT THE ARGUMENT OF THE REVENUE THEN IN THAT EVENT DESPITE HAVING COMPLETED THE ENTRIE CONSTRUCTION PRIOR TO IST APRIL 2005 AND COMPLYING WITH ALL THE CONDITIONS OF SECTION 80IB(10) AS IT STOOD THEN THE ASSESSEE WOULD MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 14 BE DISENTITLED TO THE ENTIRE DEDUCTION CLAIMED IN RESPECT OF SUCH HOUSING PROJECT MERELY BECAUSE HE OFFERED HIS PROFITS TO TAX IN THE A.Y. 2005-06 AND DENIED THE SAME FROM A.Y. 2005- 06 AND THEREAFTER. IT COULD NEVER HAVE BEEN THE INTENTION OF THE LEGISLATURE THAT THE DEDUCTION UNDER SECTION 80IB(10) AVAILABLE TO A PARTICULAR ASSESSEE WOULD BE DETERMINED ON THE BASIS OF THE ACCOUNTING METHOD FOLLOWED. THIS TO OUR MIND AND AS RIGHTLY SUBMITTED BY MR. MISTRY WOULD LEAD TO STARTLING RESULTS. WE THEREFORE HAVE NO HESITATION IN HOLDING THAT SECTION 80IB(10) IS PROSPECTIVE IN NATURE AND CAN HAVE NO APPLICATION TO A HOUSING PROJECT THAT IS APPROVED BEFORE 31 ST MARCH 2005. AS THE DEDUCTION SOUGHT TO BE CLAIMED UNDER SECTION 80IB(10) IS INSEPARABLY LINKED WITH THE MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 15 DATE OF APPROVAL OF THE HOUSING PROJECT IT WOULD MAKE NO DIFFERENCE IF THE CONSTRUCTION OF THE SAID PROJECT WAS COMPLETED ON OR AFTER IST APRIL 2005 OR THAT THE PROFITS WERE OFFERED TO TAX AFTER IST APRIL 2005 I.E. IN A.Y. 2005-06 OR THEREAFTER. WE THEREFORE FIND NO SUBSTANCE IN THE ARGUMENT OF THE REVENUE THAT NOTWITHSTANDING THE FACT THAT THE HOUSING PROJECT WAS APPROVED PRIOR TO 31 ST MARCH 2005 IF THE CONSTRUCTION WAS COMPLETED ON OR AFTER IST APRIL 2005 OR IF THE PROFITS ARE BROUGHT TO TAX IN THE A.Y. 2005-06 OR THEREAFTER THE SAID HOUSING PROJECT WOULD HAVE TO COMPLY WITH THE PROVISIONS OF CLAUSE (D OF SECTION 80IB(10). TO OUR MIND WE DO NOT THINK THAT THE CONDITION/RESTRICTION LAID DOWN IN CLAUSE (D) OF SECTION 80IB(10) HAS TO BE REVISITED AND/OR MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 16 LOOKED AT AND COMPLIED WITH IN THE ASSESSMENT EYAR IN WHICH THYE PROFITS ARE OFFERED TO TAX BY THE ASSESSEE. WHENTHE ASSESSEE CLAIMS A DEDUCTION UNDER SECTION 80IB(10) THE ASSESSEE IS REQUIRED TO COMPLY WITH SUCH A CONDITION ONLY IF IT IS ON THE STATUTE BOOK ON THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND IT HAS NOTHING TO DO WITH THE YEAR IN WHICH THE PROFITS ARE BROUGHT TO TAX BY THE ASSESSEE. WE HAVE COME TO THIS CONCLUSION ONLY BECAUSE WE FIND THAT CLAUSE (D) OF SECTION 80IB(10) IS INEXTRICABLY LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND THE SUBSEQUENT DEVELOPMENT/ CONSTRUCTION OF THE SAME AND HAS NOTHING TO DO WITH THE PROFITS DERIVED THEREFROM. WE MAY HASTEN TO ADD THAT IF A PARTICULAR CONDITION SI MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 17 NOT INSEPARABLY LINKED TO THE DATE OF APPROVFAL OF THE HOUSING PROJECT DIFFERENT CONSIDERATIONS WOULD ARISE. HOWEVER WE ARE NOT CALLED UPON TO DECIDE ANY SUCH CONDITION AND HENCE WE ARE NOT LAYING DOWN ANY GENERAL PROPOSITION OF LAW SAVE AND EXCEPT THAT CLAUSE (D)OF SECTION 80IB(10) BEING A CONDITION LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT WOULD NOT APPLY TO ANY HOUSING PROJECT THAT WAS APPROVED PRIOR TO 31 ST MARCH 2005 IRRESPECTIVE OF THE FACT THAT THE PROFITS OF THE SAID HOUSING PROJECT ARE BROUGHT TO TAX AFTER THE SAID PROVISION WAS BROUGHT INTO FORCE. 22. AT THIS JUNCTURE WE WOULD LIKE TO QUOTE THE FOLLOWING PASSAGE FROM COMMISSIONER OF INCOME TAX U.P. VS. M/S SHAH SADIQ AND SONS (1987) 3 HON'BLE SUPREME COURT 516 : MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 18 14. UNDER THE INCOME TAX ACT OF 1922 THE ASSESSEE WAS ENTITLED TO CARRY FORWARD THE LOSSES OF THE SPECULATION BUSINESS AND SET OFF SUCH LOSSES AGAINST PROFITS MADE FROM THAT BUSINESS IN FUTURE YEARS. THE RIGHT OF CARRYING FORWARD AND SET OFF ACCRUED TO THE ASSESSEE UNDER THE ACT OF 1922. A RIGHT WHICH HAD ACCRUED AND HAD BECOME VESTED CONTINUED TO BE CAPABLE OF BEING ENFORCED NOTWITHSTANDING THE REPEAL OF THE STATUTE UNDER WHICH THAT RIGHT ACCRUED UNLESS THE REPEALING STATUTE TOOK AWAY SUCH RIGHT EXPRESSLY OR BY NECESSARY IMPLICATION. THIS IS THE EFFECT OF SECTION 6 OF THE GENERAL CLAUSES ACT 1897. 15.IN THIS CASE THE SAVING PROVISION IN THE REPEALING STATUTE IS NOT EXHAUSTIVE OF THE RIGHTS WHICH ARE SAVED OR WHICH SURVIVE THE REPEAL OF MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 19 THE STATUTE UNDER WHICH SUCH RIGHT HAD ACCRUED. IN OTHER WORDS WHATEVER RIGHTS ARE EXPRESSLY SAVED BY THE SAVINGS PROVISION STAND SAVES. BUT THAT DOES NOT MEAN THAT RIGHTS WHICH ARE NOT SAVED BY THE SAVINGS PROVISION ARE EXGINGUISHED OR STAND IPSO FACTO TERMINATED BY THE MERE FACT THAT A NEW STATUTE REPEALING THE OLD STATUTE IS ENACTED. RIGHTS WHICH HAVE ACCRUED ARE SAVED UNLESS THEY ARE TAKEN AWAY EXPRESSLY. THIS IS THE PRINCIPLE BEHIND SECTION 6 OF THE GENERAL CLAUSES ACT 1897. THE RIGHT TO CARRY FORWARD LOSSES WHICH HAD ACCRUED UNDER THE REPEALED INCOME TAX ACT OF 1922 IS NOT SAVED EXPRESSLY BY SECTION 297 OF THE INCOME TAX ACT 1961. BUT IT IS NOT NECESSARY TO SAVE A RIGHT EXPRESSLY IN ORDER TO KEEP IT ALIVE AFTER THE REPEAL OF THE OLD ACT OF MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 20 1922. SECTION 6(2) SAVES ACCRUED RIGHTS UNLESS THEY ARE TAKEN AWAY BY THE REPEALING STATUTE. WE DO NOT FIND ANY SUCH TAKING AWAY OF THE RIGHTS BY SECTION 297 EITHER EXPRESSLY OR BY IMPLICATION 23. THE AFORESAID DISCUSSION PERSUADES US TO CONCLUDE THAT THE JUDGMENTS OF THE HIGH COURTS WHICH ARE IMPUGNED IN THESE APPEALS TAKE CORRECT VIEW THAT THE ASSESSES WERE ENTITLED TO THE BENEFIT OF SECTION 80IB(10). AS A RESULT THESE APPEALS FAI L AND ARE HEREBY DISMISSED. 11. WITH REFERENCE TO THE CONDITION OF COMPLETION CERTIFICATE FROM THE MUNICIPAL CORPORATION BHOPAL IT WAS SUBMITTED BEFORE US THAT THE PROVISIONS OF SECTION 8 0IB(10) OF THE ACT ARE INCENTIVES FOR THE BENEFIT OF PERSONS OF LOWER AND MIDDLE INCOME GROUP. THE IT ACT DOES NOT SPECIF ICALLY MANDATES OR LAYS DOWN ANY ENFORCEABLE COMPLIANCE FROM MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 21 THE MUNICIPAL CORPORATION FOR ISSUE OF COMPLETION CERTIFICATE. IN THIS SITUATION THE PROVISIONS OF M.P . MUNICIPAL CORPORATION ACT 1956 AND M.P. BHUMI VIKAS NIYAM 1984 ARE TO BE UNDERSTOOD IN THE SITUATION IN W HICH THE TAX PAYER IS PLACED. M.P. MUNICIPAL CORPORATION A CT 1956 SECTION 301 PROVIDES FOR COMPLETION CERTIFICAT E AND PERMISSION TO OCCUPY OR USE THE PREMISES ERECTED OR RE- ERECTED. AS PER THESE PROVISIONS NO BUILDING SHALL BE OCCUPIED FOR RESIDENTIAL OR COMMERCIAL PURPOSES BEFOR E THE COMPLETION CERTIFICATE IS OBTAINED FROM THE MUNICIPAL CORPORATION AS DESIRED UNDER THIS SECTION. HOWEVER THERE IS A PROVISION THAT WHEN THE COMMISSIONER HAS FAILED FO R 15 DAYS AFTER THE RECEIPT OF THE NOTICE OF COMPLETION T O INTIMATE HIS REFUSAL TO GRANT PERMISSION THEN THE PERSON CAN OC CUPY SUCH BUILDING. IN SUCH A SITUATION M.P. MUNICIPAL CORPORATION ACT HAS TO BE READ WITH THE INCOME TAX AC T. IN THE CASE OF SURANA STEEL PRIVATE LIMITED VS. DCIT; 237 ITR MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 22 777 THE HON'BLE SUPREME COURT DEALING WITH THE COMP ANY LAW PROVISIONS FOR DEPRECIATION IN THE INCOME TAX AC T HELD THAT INCORPORATION OF AN EARLY ACT INTO A LATTER IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISION S OF THE EARLIER ACT INTO THE LATTER. WHEN AN EARLIER ACT O R CERTAIN PROVISIONS ARE INCORPORATED INTO A LATTER ACT T HE PROVISION SO INCORPORATED BECOMES PART AND PARCEL OF TH E LATTER ACT AS IF THEY HAD BEEN BODILY TRANSPOSED INTO I T. HE FURTHER SUBMITTED THAT OBTAINING THE COMPLETION CERTI FICATE FROM THE MUNICIPAL CORPORATION IS BEYOND THE CONTROL OF THE ASSESSEE. FOR THIS PROPOSITION HE RELIED ON THE DE CISION OF THE HON'BLE ITAT G-BENCH IN THE CASE OF ACIT VS. SU RENDRA DEVELOPERS. HE SUBMITTED THAT ASKING FOR COMPLETION CERTIFICATE WHEN THERE IS NO MANDATE IN THE INCOME TAX PROVISIONS TO ENFORCE SUCH COMPLIANCE FROM THE LOCAL AUTHORITY THEN IT IS IMPOSSIBILITY WHICH HAS BEEN PUT ON THE MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 23 ASSESSEE. THEREFORE THE ASSESSEE CANNOT BE MADE TO/COMPEL TO DO SOMETHING WHICH IS IMPOSSIBLE TO DO . FOR THIS PROPOSITION HE RELIED ON THE FOLLOWING DECISI ONS :- - LIC OF INDIA VS. CIT; 219 ITR 410 (SC) - COCHIN STATE POWER & LIGHT CORPORATION VS. STATE OF KERALA; AIR 1965 SC 1688 - VINOD KRISHNA KAUL VS. UNION OF INDIA; 1995 (9) SC 2 05 - MANOHAR JOSHI VS. CIT; 1996 1 SSC 169 - SHEIKH ABDUL HAMID VS. STATE OF M.P. 1998 AIR SC 94 2 - GENERAL COURT MARSHALL VS. ANILJIT SINGH DHARIWAL 1998 AIR SC 983 - RAMSUKH PROPERTIES VS. DCIT(2013) 84 DTR 383 (PUNE) HE ALSO SUBMITTED THAT THE DATE OF COMPLETION OF THE HOUSING PROJECT TO BE TAKEN THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF THE HOUSING PRO JECT ISSUED BY THE LOCAL AUTHORITY THEN IT WILL LEAD TO T HE ABSURDITY. SINCE THE ASSESSEE WAS ALLOWED TO COMPLETE T HE BUILDING BY 31 ST MARCH AND IF THE ASSESSEE APPLIES TO THE MUNICIPAL AUTHORITY ON 31 ST MARCH ITSELF THEN AS PER THE MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 24 PROVISIONS OF MUNICIPAL CORPORATION ACT AT LEAST 15 DA YS TIME IS REQUIRED FOR INSPECTION AND REPORT. IN SUCH A SITUATION THE PROVISIONS OF THE INCOME TAX ACT GIVE RISE TO ABSURDITY. FOR THIS PROPOSITION HE RELIED ON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHES E; 131 ITR 597 WHEREIN THE HON'BLE COURT HAS HELD THAT N O STATUTE SHOULD BE INTERPRETED IN SUCH A MANNER AS TO RENDER ANY PROVISION COMPLETELY MEANINGLESS OR REDUND ANT. HE FURTHER SUBMITTED THAT THE ASSESSEE SHOULD NOT SU FFER OR SHOULD NOT BE PENALIZED FOR NO FAULT. THE ASSESSEE COMPLETED THE PROJECT IN ALL RESPECTS AND APPLIED FOR COMPLETION CERTIFICATE AND IF THE COMPLETION CERTIFIC ATE IS NOT ISSUED BY THE COMPETENT AUTHORITY THEN THE ASSESS EE SHOULD NOT BE PENALIZED FOR HIS NO FAULT. HE RELIED O N THE FOLLOWING DECISIONS :- ( I) CIT VS.TARNETAR CORPORATION (2012) 26 TAXMAN.COM (II) ACIT VS. SURENDRA DEVELOPERS IN ITA NO.2743 TO 2745/DEL/2010 MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 25 (III) HINDUSTAN SAMUHA AWAAS LTD. VS. ITO; ITA NO. 945 TO 950/PN/2010 (IV) ACIT VS. GIRIJA COLONISERS; 2417 TO 2422/DEL/2 011 (V) M/S VISHNU BUILDERS VS. ACIT; ITA NOS.178 179 & 180VIZAG/2011 12. ON THIS ISSUE WE HAVE HEARD BOTH THE SIDES IN DETAIL. THESE PROJECTS WERE SANCTIONED PRIOR TO THE AMENDED PROVISIONS OF THE ACT. MUNICIPAL CORPORATION A CT 1956 PROVIDES THAT WHEN THE COMMISSIONER FAILS TO ISS UE COMPLETION CERTIFICATE WITHIN 15 DAYS AFTER THE RECEI PT OF THE NOTICE OF COMPLETION THE PERSON IS PERMITTED TO OC CUPY THE BUILDING. THE ASSESSEE HAS GIVEN NOTICE OF COMPLETIO N AND IF IT HAS NOT BEEN ISSUED BY THE MUNICIPAL CORPORATION I T IS THE IMPOSSIBILITY WHICH THE ASSESSEE CANNOT FULFILL. SIMILARLY THIS ASPECT IS BEYOND THE CONTROL OF THE AS SESSEE. THEREFORE CONSIDERING VARIOUS DECISION OF THE HON'B LE ITAT AND HIGH COURTS WE DECIDE THIS ISSUE IN FAVOUR OF TH E ASSESSEE. MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 26 13. IN THE CASE OF CHD DEVELOPERS LTD. VS. ACIT CIR CLE 3(1) NEW DELHI WHEREIN HON'BLE DELHI HIGH COURT H AS 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 ISSUED BY THE COMPETENT AUTHORITY THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE SAME UNLESS AND UNT IL MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 27 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. IN THE CASE OF CIT VS. TARNETAR CORPORATION (2012) 26 TAXMAN.COM 180(GUJ.) IT WAS HELD THAT MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 28 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. 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 MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 29 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 IN OUR OPINION CORRECTLY SO TO BE BEYOND THE CONT ROL OF THE ASSESSEE. MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 30 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. IN SUCH CIRCUMSTANCES IN OUR OPINION THE DELAY IN OBTAINING THE COMPLETION CERTIFICATE ON 10.10.2008 IS MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 31 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 ATTRIBUTABLE TO THE APPELLANT. THEREFORE IN OUR OPINION THE APPELLANT IS NOT DEFAULTER ON THIS ACC OUNT MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 32 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 BCNCH 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 MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 33 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 & 180/VIZAG/2011) ORDER DATED 27 TH JULY 2011 OBSERVED THAT COMPLETION CERTIFICATE WAS NOT FILED BEFORE THE ASSES SING MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 34 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. 14. WITH REGARD TO DEVELOPER VS. MERE WORKS CONTRACTO R WE HOLD THAT THE FINANCE (NO. 2) ACT 2009 HAS INTRODU CED EXPLANATION TO SECTION 80IB(10) WITH EFFECT FROM 1.4. 2001 WHEREIN IT HAS BEEN PROVIDED AS UNDER :- EXPLANATION FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB- SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTED THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 35 15. THE FACTS OF THE ASSESSEES CASE SHOW THAT THE ASSESSEE WAS NOT A MERE WORK CONTRACTOR BUT IT WAS A DEVELOPER OF THE PROJECT. IN NONE OF THE PROJECTS THE ASSESSEE HAS ACTED FOR FIXED PRICE FOR EXECUTING THE WORK AS IN THE CASE OF WORKS CONTRACT THE WORK IS AWARDED AT A FIXED CONSIDERATION. THUS THE ASSESSEE CANNOT BE HELD TO BE A MERE CONTRACTOR. FURTHER THE ASSESSEE HAS NOT ONLY CONSTRUCTED THE HOUSES BUT IT HAS DEVELOPED THE ROADS ELECTRICAL WORK AND ALSO WATER CONNECTION SYSTEM IN WHO LE OF THE PROJECT. WITH REGARD TO THE AGREEMENT OF CONSTRUCTION OF THE HOUSES AND REGISTRY OF LAND WE HOLD THAT THE ITAT INDORE BENCH IN THE CASE OF PARAS HOUSI NG PRIVATE LIMITED; 22 ITJ 273 INDORE TRIB. HAS HELD AS UNDER :- 7. AS PER THE PREVAILING PRACTICE IN THE MARKET NORMALLY ALL THE PROSPECTIVE BUYERS PURCHASE FLAT/BUNGALOW ARE INTERESTED TO AVAIL HOUSING MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 36 LOAN FACILITY FROM DIFFERENT FINANCIAL INSTITUTIONS/BANKS. THE FINANCIAL INSTITUTIONS/ BANKS INSIST FOR THE EXECUTION OF THE SALE DEED BEFORE COMPLETION OF THE UNITS TO SAFEGUARD THEIR INTEREST. THESE AGREEMENTS HAVE BEEN EXECUTED BY THE ASSESSEE BEFORE EXECUTION OF SALE DEED AND IN THE AGREEMENT FOR SALE THE TOTAL COST OF FLAT IS MENTIONED AND NOWHERE THE BIFURCATION OF AMOUNT OF PLOT AND AMOUNT OF FINISHED WORK HAS BEEN MENTIONED. WE ALSO FOUND THAT BUILDERS ARE ASKING THE BUYERS TO PAY THE TOTAL AMOUNT OF FLAT AT DIFFERENT STAGES BASED ON THE PROGRESS OF THE PROJECT. IT IS EVIDENT FROM THE AGREEMENTS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ENTIRE COST OF FLAT AND OTHER CHARGES WERE DEMANDED FROM THE BUYERS WITHIN A PERIOD OF TWO MONTHS WHICH FURTHER INDICATE THAT THE FLATS WERE ALREADY MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 37 COMPLETED AND THE POSSESSION WAS HANDED OVER TO THE BUYERS IMMEDIATELY AFTER RECEIVING THE ENTIRE AMOUNT. THE 6 CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS ACTING AS A CONTRACTOR IS MERELY ON THE BASIS OF EXECUTION OF SALE DEED AT A LOWER PRICE THAN THE AGREED PRICE. THERE IS NO MERIT IN ASSESSING OFFICERS CONTENTION IN SO FAR A S THE BUYERS HAVING INCURRED ANY EXPENDITURE ON CONSTRUCTION OF SAID FLATS DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE IS A DEVELOPER AND BUILDER SINCE INCEPTION WHICH HAS NOT ONLY BEEN ACCEPTED BY THE DEPARTMENT BUT ALSO BY THE TRIBUNAL IN ITS ORDER DATED 19/12/2006. SIMILAR VIEW WAS TAKEN BY ITAT IN THE CASE OF VARDHAMAN BUILDERS & DEVELOPERS 20 ITJ 277 (TRIB. INDORE) WHE RE IT WAS HELD MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 38 DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT 1961. HOUSING PROJECT AT THE CONSTITUTION OF ASSESSEE FIRM LAND WAS CONTRIBUTED BY PARTNERS ASSESSEE DEVELOPMENT OF HOUSES AND EXECUTED SALES THEREON SEPARATE REGISTRATION FOR LAND WAS DONE AND AGREEMENT FOR CONSTRUCTION OF HOUSE WAS DONE WITH BUYER A.O. HELD THAT THE ASSESSEE WASNOT OWNER OF LAND THE PROJECT WAS NOT APPROVED IN THE NAME OF ASSESSEE AND THE ASSESSEE WAS A MERE CONTRACTOR DEDUCTION WAS THEREFORE DISALLOWED HELD THERE IS NO REQUIREMENT THAT THE PROJECT SHALL BE APPROVED IN THE NAME OF ASSESSEE OR ASSESSEE SHALL BE LAND OWNER ASSESSEE IS A DEVELOPER AS ASSESSEE HAS UNDERTAKEN NOT ONLY THE DEVELOPMENT OF THE HOUSE BUT ALSO OF THE ROAD WATER AND ELECTRICITY. MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 39 16. CONSIDERING THE DECISION OF THE ITAT AND THE FACT S OF THE ASSESSEES CASE WE FIND NO MERIT IN THESE PLEADIN GS OF THE REVENUE. CONSIDERING ALL THESE FACTS WE DIRECT TO ALLOW DEDUCTION U/S 80IB(10) OF THE ACT IN ALL THE YEARS FR OM 2004-05 TO 2009-10. 17. IN THE RESULT ALL THE APPEALS ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 30 TH JULY 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 30 TH JULY 2015 DN/- MAHENDRA BUILDERS & DEVELOPERS ITA NOS. 371/IND/2012 AND OTHERS 40