O/TAXAP/107/2015 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 107 of 2015 INCOME TAX OFFICER....Appellant(s) Versus SAKET CORPORATION....Opponent(s) Appearance: MR KM PARIKH, ADVOCATE for Appellant(s) No. 1 MR B S SOPARKAR, ADVOCATE for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE S.H.VORA Date : 05/05/2015 ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.00. Feeling aggrieved and dissatisfied with impugned Judgement and Order passed by learned Income Tax Appellate Tribunal, Bench D , Ahmedabad (hereinafter referred to as learned tribunal for convenience in ITA No.3377/Ahd/2010 for Assessment Year 2007-2008 (hereinafter referred to as A.Y. 2007-2008 for short), revenue has preferred present Tax Appeal with following proposed substantial questions of law :- (A). Whether order of ITAT is perverse in law in holding that provision of Section 80IB is not applicable to projects Page 1 of 7 HC-NIC Page 1 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER approved in 2004 completely ignoring provisions of Section 80IB(10)(a)(i) of IT Act? (B). Whether ITAT has erred I law and on facts in relying on decision of Hon ble Delhi High Court in case of CHD Developers Ltd., (2014) 43 taxmann.com 249 (Delhi), where facts in that case was different in so far as, in that case assessee had applied for completion certificate within time, while in instant case, no completion certificate has been applied for? (C). Whether ITAT has erred in law and on facts in completely ignoring facts and law discussed by CIT(A) and thereby passed perverse order? 2.00. That assessee, engaged in business of development and construction of residential housing project, filed return of income for A.Y. 2007-2008 declaring total income at Rs.2,930/- after claiming deduction of Rs.52,82,915/- under section 80IB of Income Tax Act, 1961 (hereinafter shall be referred to as Act for short). That assessee claimed deduction under section 80IB(10) of Act with respect to housing project with respect to 43 units. 2.01. That Assessing Officer (hereinafter referred to as A.O. ) disallowed deduction claimed under section 80IB(10) of Act o ground that Building Use Page 2 of 7 HC-NIC Page 2 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER Permission (hereinafter referred to as BU Permission ) and/or Completion Certificate was granted by local authority only with respect to 20 units within period of four year from date of approval of project by local authority and not with respect to entire housing project consisting of 43 units. 2.02. That feeling aggrieved and dissatisfied with order passed by A.O. disallowing deduction claimed under section 80IB(10) of Act, assessee preferred appeal before learned CIT(A) and learned CIT(A) dismissed said appeal confirming disallowance made by A.O. with rspect to deduction claimed under section 80IB(10) of Act. 2.03. Feeling aggrieved and dissatisfied with order passed by learned CIT(A), assessee preferred further appeal before learned tribunal and by impugned Judgement and Order, relying upon decision of Delhi High Court in case of Commissioner of Income Tax-I V/s. CHD Developers Ltd., reported in (2014) 362 ITR 177 (Delhi), learned tribunal has allowed appeal preferred by assessee and has held that, as housing project was approved on 10/3/2004 by competent authority, condition for obtaining Completion Certificate within period of four years from date of approval being eligible for deduction under section 80IB(10) of Act, is not applicable. Consequently, it is held that assessee shall be entitled to deduction under section 80IB(10) of Act. Page 3 of 7 HC-NIC Page 3 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER 2.04. Feeling aggrieved and dissatisfied with impugned Judgement and Order passed by learned tribunal, revenue has preferred present Tax Appeal to consider following substantial questions of law:- (A). Whether order of ITAT is perverse in law in holding that provision of Section 80IB is not applicable to projects approved in 2004 completely ignoring provisions of Section 80IB(10)(a)(i) of IT Act? (B). Whether ITAT has erred I law and on facts in relying on decision of Hon ble Delhi High Court in case of CHD Developers Ltd., (2014) 43 taxmann.com 249 (Delhi), where facts in that case was different in so far as, in that case assessee had applied for completion certificate within time, while in instant case, no completion certificate has been applied for? (C). Whether ITAT has erred in law and on facts in completely ignoring facts and law discussed by CIT(A) and thereby passed perverse order? 2.05. We have heard Mr.KM Parikh, learned advocate appearing on behalf of revenue at length. Page 4 of 7 HC-NIC Page 4 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER 2.06. At outset, it is required to be noted that Housing Project for 43 units came to be approved by local authority and assessee claimed deduction under section 80IB(10) of Act, however, assessee has not obtained completion certificate within period of four years from date of approval by competent authority with respect to all 43 units though entire housing project consisting of 43 units was completed and assessee could obtain Completion Certificate in respect to 20 units only and could not obtain Completion Certificate in respect of remaining 23 units, though construction of same were completed and though assessee applied for Completion Certificate within period of four years from date of approval by competent authority, Completion Certificate was not issued for reasons best known to authority. Therefore, both, A.O. as well as learned CIT(A) disallowed deduction claimed under section 80IB(10) of Act. However, learned ITAT deleted disallowance made by A.O. and held that assessee shall be entitled to deduction claimed under section 80IB(10) of Act and while holding so in para 6, learned tribunal has observed and held as under :- 6. We find that in instant case, housing project was approved on 10.03.2004 by competent authority. above fact is not in dispute. On above fact, as per decision of Hon ble Delhi High Court in case of CIT Vs. CHD Developers (supra), condition for obtaining completion certificate within four years of date of approval for being eligible for deduction u/s. 80IB(10) is not applicable. Page 5 of 7 HC-NIC Page 5 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER Departmental Representative could nto point out any good reason as to why aforesaid decision of Hon ble Delhi High Court should not be followed in instant case. 2.07. In case of CIT V/s. Tarnetar Corporation, reported in (2014) 363 ITR 174 (Gujarat), Division Bench of this Court has allowed deduction under section 80IB(10) of Act by holding that if assessee has completed construction within prescribed time limit and applied for B.U. Permission, however, for some technical ground, B.U. Permission was not granted and B.U. Permission was not rejected on ground that construction was not completed, assessee shall be entitled to claim deduction under section 80IB(10) of Act. 2.08. Considering aforesaid decision of Division Bench of this Court and facts of case on hand, as assessee completed project / construction of all 43 units within 4 years from date of approval by competent authority and also applied for B.U. Permission within period of four years with respect to all 43 units, however, could obtain B.U. Permission with respect to 20 units only and for whatever reasons, with respect to remaining 23 units, B.U. Permission was not issued by authority and as observed hereinabove, construction of all 43 units was completed, assessee is entitled to deduction under section 80IB(10) of Act, no error has been committed by learned tribunal in holding that assessee shall be entitled to deduction claimed under section 80IB(10) of Act. Page 6 of 7 HC-NIC Page 6 of 7 Created On Wed May 03 15:49:16 IST 2017 O/TAXAP/107/2015 ORDER 3.00. No substantial question of law arise in present Tax Appeal, as proposed and suggested by appellant revenue. Hence, present Tax Appeal deserves to be dismissed and is accordingly dismissed. Sd/- (M.R.SHAH, J.) Sd/- (S.H.VORA, J.) Rafik Page 7 of 7 HC-NIC Page 7 of 7 Created On Wed May 03 15:49:16 IST 2017 Income-tax Officer v. Saket Corporation