M/s. ESSARJEE CONSTRUCTION PVT. LTD., Bhopal v. THE DCIT 1(1), Bhopal

ITA 525/IND/2014 | misc
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 52522714 RSA 2014
Assessee PAN AAACE8852F
Bench Indore
Appeal Number ITA 525/IND/2014
Duration Of Justice 45 year(s) 6 month(s) 30 day(s)
Appellant M/s. ESSARJEE CONSTRUCTION PVT. LTD., Bhopal
Respondent THE DCIT 1(1), Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Assessment Year misc
Appeal Filed On 01-01-1970
Judgment Text
ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA HONBLE ACCOUNTANT MEMBER ITA NOS. 525 & 526/IND/2014 A.YS.2008-09 & 2009-10 M/S ESSARJEE CONSTRUCTION PVT. LTD. PAN AAACE8852F ::: APPELLANT VS ACIT 1(1) BHOPAL ::: RESPONDENT REVENUE BY SHRI M.K. SHARM A RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 23.7.2015 DATE OF PRONOUNCEMENT 3 1 .7.2015 O R D E R PER BENCH THESE ARE THE APPEALS FILED BY THE ASSESSEEE AGAINST THE TWO ORDERS DATED 10.3.2014 OF THE LEARNED CIT(A) BILASPUR CAMP AT BHOPAL. SINCE COMMON ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 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 SUM AND SUBSTANCE OF THE GROUNDS OF APPEAL INVOLVED IN THESE APPEALS IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF T HE ASSESSEE U/S 80IB(10) OF THE ACT AMOUNTING TO RS.20 08 999/- FOR THE ASSESSMENT YEAR 2008-09 AND RS.25 40 484/- FOR THE ASSESSMENT YEAR 2009-10. 3. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008- 09 WAS FILED DECLARING INCOME AT RS. 70 90 130/- AFTER CLAIMING DEDUCTION OF RS. 20 08 999/- U/S 80IB(10) O F THE ACT. FOR THE ASSESSMENT YEAR 2009-10 THE RETURN OF IN COME WAS FILED BY THE ASSESSEE DECLARING INCOME AT RS.39 51 200/- AFTER CLAIMING DEDUCTION OF RS. 25 40 484/- U/S 80IB(10) OF THE ACT. IN BOTH THE ASSESSMENT YEARS THE ASSESSING OFFICER DENIED THE DEDUCTION U/S 80IB(10) OF THE ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 3 ACT AND ADDED THE SAME TO THE RETURNED INCOME. THIS ACTION OF THE ASSESSING OFFICER WAS CONFIRMED IN APPE AL BY THE LEARNED CIT(A). NOW THE ASSESSEE IS IN APPEAL BEFOR E US. 3. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALREADY HELD THAT THE ASSESSEE WAS A DEVELOPER AND NOT MERELY A CONTRACTOR. THE LEARNED CIT(A) IN ASSESSMENT YEARS 2002 - 03 AND 2004-05 HELD SO WHICH WE HAVE UPHELD IN OUR ORDER. THE INITIAL CONTRACT ITSELF SHOWS THAT THE ASS ESSEE HAS FUNCTIONED AS DEVELOPER. HON'BLE SUPREME COURT I N THE CASE OF CIT MUMBAI VS. SARKAR BUILDER DATED 15.5.2015 HELD THAT AMENDMENT IN STATUTE SHALL NOT BE APPLICABLE TO THE PROJECTS SANCTIONED PRIOR TO 1.4.20 05. IN THIS CASE THE PROJECT WAS SANCTIONED PRIOR TO AMENDMEN T 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) N EW DELHI HON'BLE DELHI HIGH COURT HAS HELD AS UNDER :- ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 4 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) ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 5 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 6 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 7 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 8 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 9 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. ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 10 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 11 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 ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 12 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. 4. IN VIEW OF THESE FACTS MATRIX AND DECISIONS OF HON' BLE HIGH COURTS AND SUPREME COURT WE HOLD THAT THE LEARNE D CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ACTION OF T HE ASSESSING OFFICER IN DENYING EXEMPTION U/S 80IB(10) OF THE ACT. WE THEREFORE SET ASIDE THE ORDERS OF THE LOW ER AUTHORITIES WITH THE DIRECTION TO ALLOW THE CLAIM OF T HE ASSESSEE U/S 80IB(10) OF THE ACT. 5. IN ITA NO. 526/IND/2014 GROUND NOS. 5 AND 6 RELATE TO CONFIRMING THE ADDITION OF RS.98 23 000/- U/S 50C OF THE ACT TREATING THE STAMP DUTY AS THE CONSIDERATION FOR TRANSFER OF PROPERTY. 6. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 13 OFFICER HAS MADE THE ADDITION WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE TO SHOW THAT THE LAND SOLD WAS A CAPITAL ASSET. THE ASSESSEE HAS PRODUCED ALL NECESSARY BOOKS OF ACCOUNTS AND THESE BOOKS OF ACCOUNTS READ WITH FINANCIAL STATEMENTS MAKE IT APPARENT THAT THE LAND IN QUESTION WAS ALWAYS PART OF STOCK IN TRADE. THE ASSESS ING OFFICER HAS TO DISCHARGE HIS ONUS OF SHOWING THE ASSET AS CAPITAL PRIOR TO INVOKING THE PROVISIONS OF SECTION 5 0C OF THE ACT. SECTION 50C OF THE ACT CANNOT BE INVOKED WH ERE THE LAND IN QUESTION IS NOT A CAPITAL ASSET. WHEN THE LAND IS STOCK IN TRADE PROVISIONS OF SECTION 50C OF THE ACT ARE NOT ATTRACTED. 7. AFTER HEARING BOTH THE SIDES AND IN THE INTEREST O F JUSTICE AND EQUITY WE FIND IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIF Y WHETHER THE LAND IN QUESTION WAS STOCK IN TRADE OR A CAPITAL A SSET. WITHOUT ESTABLISHING THE TRUE CHARACTER OF THE LAND HEL D BY ESSAR CONSTRUCTION PVT. LTD ITA NOS. 525 & 526/IND/2014 14 THE ASSESSEE THE PROVISIONS OF SECTION 50C OF THE A CT CANNOT BE ATTRACTED. THEREFORE WE REMAND THIS ISSUE T O THE FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT ITA NO. 525/IND/2014 IS ALLOWED WHEREAS ITA NO. 526/IND/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 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 DN/-