Paradise Construction,, vs Department Of Income Tax

Dy. Commissioner of Income Tax, Circle- 4, Pune. .... Appellant

Vs.

Paradise Construction, 21, Gulmohar Apartment, 2420, East Street Camp, Pune - 400 001. PAN : AAHEP3703C .... Respondent

Department by : Shri B. C. Malakar Assessee by : Shri Suhas Bora Date of hearing : 05-01-2015 Date of pronouncement : 12-01-2015

ORDER

PER G. S. PANNU, AM

The captioned appeal by the Revenue is directed against an order of

the Commissioner of Income Tax (Appeals)-II, Pune dated 26.09.2013 which,

in turn, has arisen from an order dated 15.12.2011 passed by the Assessing

Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the Act") pertaining to

the assessment year 2009-10.

2. In this appeal, Revenue has raised multiple Grounds of Appeal but the

solitary issue relates to a claim of deduction u/s 80-IB(10) of the Act

amounting to Rs.16,96,771/- made by the assessee, which was disallowed by

the Assessing Officer and deleted by the CIT(A).

3. In brief, the relevant facts giving rise to the impugned dispute can be

summarized as follows. The appellant is a partnership firm engaged in the

business of promoters, builders and developers. During the assessment year

under consideration, it filed an e-return of income declaring total income at 'Nil' 2 ITA No.124/PN/2014

after claiming deduction u/s 80-IB(10) of the Act amounting to Rs.16,96,771/-,

which was disallowed by the Assessing Officer on the ground that the project

of the assessee, named 'Gulmohar Paradise Home', Kharadi was not

completed within the stipulated period of time. The Assessing Officer noted

that the project, 'Gulmohar Paradise Home' initially comprised of 80 flats as

per the commencement certificate issued by the local authority, i.e. Pune

Municipal Corporation (PMC) on 28.04.2004. Subsequently, 46 more flats

were added in two buildings by the revised sanctioned plan in the year 2005.

During the assessment year under consideration, assessee showed sale

receipts to the tune of Rs.57,13,265/- from the aforesaid project, namely,

'Gulmohar Paradise Home' and claimed deduction u/s 80-IB(10) of the Act

amounting to Rs.16,96,771/- with respect to the profits of the said project.

This claim was disallowed by the Assessing Officer. Therefore, assessee

carried the matter in appeal before the CIT(A), who has since disagreed with

the view of the Assessing Officer and allowed the claim of deduction of

Rs.16,96,771/- made by the assessee u/s 80-IB(10) of the Act. Against such a

decision of the CIT(A), Revenue is in appeal before us.

4. Before us, it was a common point between the parties that an identical

controversy has been considered by the Pune Bench of the Tribunal in the

assessee's own case for assessment years 2007-08 and 2008-09 vide ITA

No.233/PN/2011 & ITA No.346/PN/2012 respectively dated 26.06.2013 and

the relevant portion of the order reads as under :-

"9. After going through the rival submissions and material on record, we find that the assessee is a partnership firm engaged in the business of promoters, builders and developers. The assessee had constructed a project under the name of Gulmohar Paradise Home, Kharadi. This project initially comprised of 80 flats as per commencement certificate issued by the PMC on 28.04.2004. Subsequently, 46 more flats were added in second building by revised sanction plan in 2005. It is undisputed that the assessee received occupation/completion certificate for 126 flats from PMC as follows:

Certificate Part-I dt. 13.02.2006 - for 80 flats in buildings A & B. 3 ITA No.124/PN/2014

Certificate Part-II dt. 06.05.2008 - for 40 flats in building D. Certificate Part-III dt. 15.12.2008 - for 40 flats in building C.

10. According to the Assessing Officer, the final completion/occupation certificate for project was not issued by PMC and as per building by-laws assessee was required to handover 15% of the area to PMC for amenities. In fact, assessee's initial project was for 126 flats for which completion certificate was received by the assessee on 15.12.2008, i.e., before due date of completion i.e., 31.03.2009. In accordance with the revised plan upto 25.05.2005, 126 flats comprised 40 flats each in Buildings 'A', 'B' and 'D' and 6 flats were raised in building 'C'. Thus, the assessee got completion certificate with regards to 126 flats before stipulated time prescribed u/s.80IB(10) i.e., 31.03.2009. Subsequent to this, in lieu of 15% of amenities area, i.e., 1200 sq.mtrs., additional FSI amounting to saleable area of 18,700 sq.ft. was sanctioned by PMC vide commencement certificate dated 10.06.2009 which was subsequent to date of 31.03.2009, which was time limit for completion of the project having 126 flats. The additional FSI was utilised by constructing 30 additional flats in building 'C'. As per clarification issued on behalf of CBDT dated 04.05.2001, the additional housing project on existing housing project site could qualify as infrastructure facility under the provisions of section 80IB(10) provided it is undertaken by separate undertaking having separate books of accounts so as to ensure that correct profit could be ascertained for purpose of section 80IB(10).

Deduction u/s. 80IB(10) is granted vis-a-vis project and correct profits are ascertainable with regards to profits from additional project. But here in case before us, it is not the case of assessee because assessee has not claimed deduction u/s. 80IB(10) with regard to additional flats raised in building 'C' at the strength of additional FSI in lieu of surrender of 15% of amenities area to PMC. Taking the spirit of clarification of CBDT letter dated 04.05.2001, it is clear that additional construction at the strength of TDR qualify for claim of deduction in its own facts and circumstances. Same reasoning apply for additional FSI received in lieu of surrender of 15% of amenities area by the assessee. So the construction at the strength of additional FSI should be taken separate for purpose of claiming deduction u/s.80IB(10). Having said so, it is clear that construction of initial 126 flats as mentioned above should not be linked with additional 30 flats completed subsequent to 31.03.2009. Had the assessee been eligible for deduction u/s.80IB(10) even subsequent to 31.03.2009, his claim would have been entitled for with regards to 30 flats as well.

But there is no claim of 30 flats with regard to deduction u/s.80IB(10). But claim or no claim of 30 flats raised at the strength of additional FSI will not disturb the entitlement of 126 flats raised on buildings 'A' (40 flats), 'B' (40 flats) , 'C' (6 flats) and 'D' (40 flats), which were completed in all respects on 15.12.2008, i.e., before 31.03.2009. The beneficial provisions of section 80IB(10) should not be diluted by narrow untenable interpretation by the Revenue authorities.

Accordingly, we hold that the assessee is entitled for claiming deduction u/s.80IB(10) in respect of 126 flats completed before 31-3-2009 as discussed above. The Assessing Officer is directed accordingly. Similar issue arose in A.Y. 2008-09. Facts being similar, so following same reasoning, the claim of deduction u/s.80IB(10) is directed to be allowed."

5. Similar issue was also considered by the Tribunal in assessment year

2006-07 vide ITA No.2133/PN/2012 dated 13.06.2014 and by following the

earlier precedent dated 26.06.2013 (supra), assessee's claim for deduction u/s 4 ITA No.124/PN/2014

80-IB(10) of the Act in relation to 'Gulmohar Paradise Home, Kharadi' project

was allowed.

6. Following the aforesaid precedents which continue to hold the field, we

hereby affirm the order of the CIT(A) and the Revenue has to fail accordingly.

7. In the result, appeal of the Revenue is dismissed.

Order pronounced in the open Court on 12 th January, 2015.

Sd/- Sd/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER

Pune, Dated: 12 th January, 2015. Sujeet

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT(A)-II, Pune; 4) The CIT-II, Pune; 5) The DR "B" Bench, I.T.A.T., Pune; 6) Guard File.

By Order //True Copy// Assistant Registrar I.T.A.T., Pune