Deduction u/s. 80-IB(10) not available for housing complexes constructed after 31-3-2008

IN THE ITAT LUCKNOW BENCH ‘A’

Fortuna Foundation Engineer & Consultants (P.) Ltd.

v.

Assistant Commissioner of Income-tax-IV, Lucknow

IT APPEAL NO. 283 (LKW) OF 2012

[ASSESSMENT YEAR 2006-07]

AUGUST 22, 2012

ORDER

Sunil Kumar Yadav, Judicial Member– This appeal is preferred by the assessee against the order of the ld. CIT(A) on various grounds, which are illustrated as under:-

1.  Because the “CIT(A)” has erred in law and on facts in upholding the denial of “appellant’s” claim for exemption under section 80IB(10) of the “Act” as had been claimed by it on an integrated housing project, undertaken, promoted and developed by it.

2.  Because it was even judicially improper for the “CIT(A)” to uphold denial of “appellant’s” claim for exemption under section 80IB(10) by not following the binding precedence available in the form of decision of the Hon’ble ITAT in Income Tax Appeal No ITA 67/LUC/2009, in the appellant’s own case and in relation to the same very project.

3.  Because the “CIT(A)” has also erred in law and on facts in taking a view that the “appellant” was already in this business and, therefore, not entitled to claim exemption under section 80IB(10).

4.  Because the exemption was claimed in relation to the project of ‘Fortuna Apartment’, which was a housing project undertaken by the “appellant” for the first time, independent of its other business activities and denial of appellant’s claim for exemption on this ground is against the provisions of law as well as rule of consistency.

5.  Because the project known as “Fortuna Apartments” had been envisaged and formulated on the land area which admeasured 48,413 sq. feet (more than 1 acre) and the same having been implemented and executed accordingly, it was eligible for exemption under section 80IB(10) and view to the contrary as has been taken by the Authorities below is wholly erroneous on facts as well as in law.

6.  Because the “CIT(A)” has erred in law and on facts in denying the “appellant’s” claim of exemption under section 80IB(10), inter alia, on the ground that the appellant’s had merely acted as a contractor, so-much-so that;

 (a)  none of the sanctions/approvals are in the name of the “appellant”; and

 (b)  consideration was paid in kind, (being a specified percentage of the constructed area).

 7.  Because the essence of claim under section 80IB(10) is that the same is available to an “undertaking, developing and building housing project” and in view of the undisputed fact that it was the “appellant” who had undertaken and developed the ‘housing project’ known as “Fortuna Apartment”, it was ipso-facto entitled to the said exemption and “made of payment of consideration and, sanctions/approvals etc. in other names” (as have been taken as grounds by the First Appellate Authority for upholding the rejection of appellant’s claim) are wholly irrelevant, not germane to the issue involved for decision before him.

 8.  Because the “CIT(A)” has further erred in holding that;

(a)  Lucknow Development Authority (LDA) ceased to be a local authority following amendment in section 10(20) of the Act and, therefore, approval of the housing project by it did not meet the requirement of law;

(b)  completion certificate having not been obtained, another vital requirement has not been fulfilled;

and the same are wholly fallacious and based on misreading/misinterpretation of law.

 9.  Because the amendment in the definition of ‘local authority’ was merely meant to deny blanket exemption under section 10(20) of the “Act” and LDA being the prescribed authority for granting approval under UP Urban Planning and Development Act, 1973, the appellant had duly complied with the requirement of law, by obtaining approval from the said Authority and denial of claim for exemption under section 80IB(10) on that ground is wholly erroneous.

10. Because completion certificate as envisaged under the Act has also been obtained within the prescribed limit and the appellant’s claim for exemption under section 80IB(10) has wrongly been rejected, inter alia, on this ground.

11. Because denial of the appellant’s claim for exemption under section 80IB(10) on its first housing project named as ‘Fortuna Apartment’, is based on irrelevant consideration and contrary to the rule of interpretation of relief giving enactment and the same deserve to be quashed and appellant’s claim for exemption under the said section deserves to be upheld.

12. Because the “CIT(A)” has erred in law and on facts in denying the benefit of exemption under section 80IB(10), inter-alia, on the ground that:

(a)  the certificate had been obtained on23.10.2009 i.e. much after the close of the relevant accounting year, on the basis of application filed by someone acting on behalf of Karuna Shanker Dubey; and

(b)  such certificate had not been filed before the Assessing officer during the course of regular assessment proceedings.

13. Because the “appellant” had executed the Group Housing Project on the land partly acquired under Builder’s Agreement from Shri Karuna Shanker Dubey, since deceased, and merely because the prescribed Authority had issued the completion certificate in the name of Shri Karuna Shanker Dubey, benefit of relief giving provision as contained in section 80IB(10), could not have been denied.

14. Because the order appealed against is contrary to the facts, law and principles of natural justice.

2. Though various grounds are raised assailing the order of the ld. CIT(A), but they all relate to the claim of deduction under section 80IB(10) of the Income-tax Act, 1961 (hereinafter called in short “the Act”).

3. The facts in brief borne out from the record are that the assessee is a Company by status, which got incorporated on 4.3.1986 with the main object to act as builder and developer of real estate and execute civil construction work as a contractor. During the relevant previous year, the assessee implemented its residential housing complex project known as “Fortuna Apartments” at three contiguous plots situated by the sides of each other, which on physical measurement at the site were found to be having an area of 48,413 sq. ft. (more than one acre). In relation to the said project, the assessee had claimed deduction amounting to Rs. 43,48,942.50 under section 80IB(10) of the Act as per report in prescribed Form No. 10CCB dated 4.8.2006.

4. During the course of assessment proceedings, the assessee was asked to explain as to whether the pre-requisite conditions for implementing the project of land area of more than one acre was satisfied besides other conditions for the completion of the project. In response thereto, it was stated that the project named as “Fortuna Apartment Housing Project” have been envisaged on a big chunk of land as per the understanding arrived at with Shri. Karuna Shankar Dubey, the owner thereof and as per the said understanding, the assessee itself has paid freehold charges of the landed property as had been agreed to be developed by the assessee into “Fortuna Apartment Housing Project”. The property had been duly acquired in phases after complying with the requisite formalities and on quantification of actual measurement at site, the area worked to 48,413 sq. ft. which is more than one acre. All these plots numbered as 27A/1, 27A/2 and 27A/3 in the municipal records, were contiguous and situated by the sides of each other, and housing project that had been implemented by the assessee was integrated one. With regard to the approval and completion of project, it was contended that the approval by the local body i.e. Lucknow Development Authority (LDA) was granted before 1st April, 2004 and the project was also completed before 31st March 2008. Therefore, all the requisite conditions for claiming deduction under section 80IB(10) of the Act were fulfilled by the assessee. The Assessing Officer examined the claim of the assessee but was not convinced with the explanations furnished by the assessee. He accordingly denied exemption claimed under section 80IB(10) of the Act for various reasons, which are as under:-

“1.  The assessee Company entered into the Builder’s Agreement with one, Shri Karuna Shankar Dubey on 24.4.2002 for the development of an area measuring 28600 sq ft, which is equivalent to 2657 sq mtrs, out of total land area of 48413 sq ft, which is equivalent to 4497.597 sq. mtrs for making a group housing multi storied building thereon. After the death of Shri Karuna Shankar Dubey on 3.2.2003, his heirs entered into an agreement with the assessee Company on the remaining land bearing an area of 1840.63 sq meters (19813 sq ft) on 14.10.2003. The assessee Company through the sale deed made in favour of flat owner has admitted these facts.

 2.  The assessee Company filed copy of sub-division plan of plot, which clearly mentions the area of 2657 sq mtrs for which building plan was got approved from LDA vide Permit No. 14202, date of sanction 24.11.2001. As per the sub-division plan of plot, submitted with LDA, the plot was shown divided into 3 parts as follows:-

 3.  The assessee Company on 15.4.2002 purchased the first part; the second part was taken on Builder’s Agreement on 24.4.2002 and the third part was taken for Builder’s Agreement on 14.10.2003. As per these documents, the LDA approved the sub-division of plot into three plots of different area mentioned above. On second plot no. 27A/2, measuring 2657.009 sq mtrs, the LDA approved one multi storied building on 24.11.2001 This approval itself recognized the land into three plots out of which Builder’s Agreement was made for one part, i.e. for 2657.009 sq mtrs only. Subsequently on 14.10.2003, the other part was offered for builder’s agreement for the area of 1838.991 sq mtrs. The construction on the second part (i.e. 1838,991 sq mtrs) was originally to be made by the landowners themselves for which building plan was got approved by them only vide Permit No. 16628 vide sanction date 03.06.2003. As per the submissions of the assessee Company and the perusal of documents filed, it is revealed that profits of sharing ratio of both the parts are different as detailed below:-

 4.  The other builder’s agreement for plot no 27A/3 was executed on 14.10.2003 as mentioned in the sale deed itself.

From the above facts, it is amply clear that there were three plots having nos. 27A/1, 27A/2 & 27A/3, and it was not a single plot having minimum area of one acre or more, which is a prerequisite for the applicability of deduction under section 80(IB)(10) of the Income Tax Act, 1961.

The Law requires the size of a plot for the project, the minimum size of one acre while in the instant case there were three plots and they were brought into projects on different dates for which separate sanctions were obtained from IDA. The purpose of Law is to provide incentives to emerging housing sector on one hand and provide dwellings to the general public on the other side by making optimum use of available land in developing cities. In order to plug the hole, the possibility of taking advantage by mushrooming builders, the Law was enacted under which conditions were laid down so that genuine projects of infrastructure development could be considered and the cost of housing be kept minimum through tax holiday, and resultant beneficiary be the flat purchaser, but it cannot be provided by sewing together three different plots, which has taken place in the case of the assessee Company.

In view of the above discussions, it is evident that the assessee has not fulfilled the essential condition laid down in the section 80(IB)(10) (b) of the Income Tax Act, 1961. Accordingly, the deductions claimed by the assessee under section 80(IB)(10) of the Income Tax Act, 1961 is disallowed. Penalty under section 271(1)(c) of the Income Tax Act, 1961 is being initiated for concealment of Income and furnishing inaccurate particulars.”

5. An appeal was preferred before the ld. CIT(A) and the assessee besides reiterating its contentions, has also filed completion certificate from the LDA before the ld. CIT(A) and was contended that an application for completion certificate was filed on 14.3.2008 and completion certificate was granted on 23.10.2009. The ld. CIT(A), reexamined the issue in the light of his order passed for assessment year 2007-08 and has finally denied benefit of deduction under section 80IB(10) of the Act. While denying benefit of exemption under section 80IB(10) of the Act, the ld. CIT(A) has also observed that completion certificate was granted by the local authority on 23.10.2009 and as per Explanation below section 80IB(10)(a) of the Act, the date of completion of the housing project shall be taken to be date on which completion certificate in respect of such housing project is issued by the local authority. Therefore, as per the above Explanation, the housing project was completed on 23.10.2009, which is certainly after 31.3.2008. Since the project was not completed before the specified date i.e. 31.3.2008, the assessee is not entitled for deduction under section 80IB(10) of the Act. The ld. CIT(A) has also observed that this completion certificate obtained from the local authority was not even filed in the course of appeal proceedings for assessment year 2005-06. The ld. CIT(A) accordingly did not rely upon the order of the Tribunal for assessment year 2005-06 in assessee’s own case, in which it was claimed that project was completed before 31.3.2008. The relevant observations of the ld. CIT(A) in this regard are extracted hereunder:-

“3.2.4. The Assessing Officer required the assessee to furnish the completion certificate, but it was not furnished till the date of the assessment as the project was not complete by the date of assessment. It is claimed before the ITAT in the appeal for the A.Y. 2005-06 that the project was completed by 31.03.2008. However, no completion certificate has been filed from the local authority even in the course of the appeal that the project has been completed by 31.03.2008 which is the due date of completion. The Explanation to section 80IB(10)(a) states that “For the purposes of this clause,-

 (i)  in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;

(ii)  the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;

As the necessary completion certificate has not been issued by the local authority as defined in the Explanation below sub-section (20) of section 10 of the Income-tax Act, 1961, the assessee is not eligible for the claim of deduction under section 80-IB(10).

3.2.5 The project is not one integrated project but two distinct projects as even the allocated share is in different proportion from that of the first phase. Had it been the same project, the terms and conditions would not have been altered. Thus, being a distinct project, the requirement of land of at least one acre is not fulfilled.

3.2.6 As the facts enlisted above would show, the assessee had merely carried out the work of construction as per the agreement with Shri Karuna Shankar Dubey and the consideration was to be paid in kind. Thus, the assessee can be said to have executed the housing project as a works contract as per the agreement as in none of the sanctioned maps the assessee is said to be the owner of the project nor the name “Fortuna Apartments” is appearing in any of the sanctioned maps. Explanation to sub-section (10) of section 80IB of the Income-tax Act, 1961 bars the applicability of the provisions of section 80IB to any works contract The explanation is reproduced 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 executes the housing project as a works contract awarded by any person (including the Central or State Government).

This Explanation has been inserted by the Finance (No. 2) Act, 2009, w.r.e.f. 1-4-2001. As the assessee company has executed the housing project as a works contract awarded as per the agreement with Shri Karuna Shankar Dubey and his heirs, it is not eligible for the claim of deduction under section 80IB(10).

Thus, apart from the reasons mentioned by the Assessing Officer, the facts as enunciated above show that the assessee is not entitled to the claim of deduction under section 80IB(10) of the Income-tax Act, 1961 and the deduction has rightly been denied by the Assessing Officer. Thus the grounds of appeal 1 to 4 are hereby rejected.

3.1.4 There is further additional fact that the so-called completion certificate claimed to have been issued by LDA on 23.10.2009 is actually a verification of the “Praman Patra” in respect of the Group housing constructed on Plot no. 15, Lajpat Rai Marg, Jopling Road, Lucknow made by Shri Karuna Shankar Dubey but the applicant was not alive on the date of application and the application has been illegibly signed in the name of Shri Karuna Shankar Dubey by some so-called employee whose name does not even figure therein and the application for obtaining the completion certificate was not made by the legal heirs, making the so-called certificate itself questionable. Moreover, as the legal requirements mentioned in the preceding paragraphs have not been complied and in the appeal for the A.Y. 2005-06, full facts had not been considered, therefore, following the findings in the appeal of the appellant for the A.Y. 2007-08, the denial of claim of deduction under section 80-IB(10) by the Assessing Officer is hereby upheld and grounds number 1 to 4 of the appeal are hereby rejected.”

6. Aggrieved, the assessee has preferred an appeal before the Tribunal and reiterated its contentions. The ld. counsel for the assessee has placed heavy reliance upon the orders of the Tribunal for assessment years 2005-06 and 2007-08 in the assessee’s own case, in which the Tribunal has given a categorical finding that the assessee has fulfilled all the requisite conditions for claiming deduction under section 80IB(10) of the Act and the Tribunal finally allowed deduction under section 80IB(10) of the Act on the basis of partial completion method. The ld. counsel for the assessee further invited our attention to the order of the Tribunal for both the assessment years with the contention that the project was completed before 31.3.2008, therefore, in the impugned assessment year no contrary view can be taken in this regard, as the Tribunal is required to follow the order of the co-ordinate Bench with respect to the findings of facts. Our attention was also invited to the application for completion certificate submitted to the LDA and completion certificate granted by the LDA. It was further contended that since the issue is squarely covered by the orders of the Tribunal for earlier years, the claim of deduction under section 80IB(10) of the Act be allowed to the assessee.

7. The ld. CIT (DR), Shri. Praveen Kumar along with Shri. R.K. Ram, ld. D.R. appearing for the Revenue has strongly contended that during the course of hearing of the appeal for assessment year 2005-06, completion certificate obtained from the LDA was not filed and the Tribunal has given a finding with regard to the completion of the project on assumption without basing on any documentary evidence. Even during assessment year 2007-08, though the completion certificate was available with the assessee, but it was not filed before the Tribunal and the Tribunal following its earlier order for assessment year 2005-06, again held that the project was completed before 31.3.2008. But in the impugned assessment year, the completion certificate was first time filed before the ld. CIT(A) and the ld. CIT(A) has categorically observed from the application for completion certificate and the completion certificate that the completion certificate was issued by the LDA on 23.10.2009, which is much after the specified date for completion of project for claiming the deduction under section 80IB(10) of the Act i.e. 31.3.2008. During the course of hearing, the ld. counsel for the assessee has admitted that Shri Karuna Shankar Dubey, owner of the land was expired long back and the application for completion certificate was filed in the name of a dead person without disclosing the factum of death of Shri Karuna Shankar Dubey to the LDA. Consequently, the completion certificate was also issued to a dead person by the LDA on 23.10.2009. Since the completion certificate was issued in the name of a dead person, it has no evidentiary value in the eyes of law. Therefore, it cannot be relied upon for the purpose of completion of the project.

8. The ld. D.R. further invited our attention to the receipt dated 14.3.2008 for map, with the submission that approval of design of the plot was received by the LDA on 14.3.2008 and the assessee was asked to contact the competent authority on 4.4.2008 for receiving objection under section 15(3), if any, or for the information in this regard. Shri. Praveen Kumar, ld. CIT (DR) further contended that from the application dated 14.3.2008 appearing age page 23 of the compilation, it is evident that this application was moved to seek permission for compounding of the additional/unauthorized constructions, but not for grant of completion certificate. However, one more application appearing at page 25 of the compilation appears to be an application for grant of completion certificate but this application dated 27.3.2008 was received in the office of the LDA on 28.3.2008. Shri. Praveen Kumar, ld. CIT (DR) further invited our attention to the list of persons to whom flats were allotted and as per this list, the date of possession to most of the members were shown to be from March, 2004 upto March, 2008. According to the assessee, the project was completed on 14.3.2008, on which date application for completion certificate was filed, but as per list of possession, 38 persons out of 42 were given possession of flats between March, 2004 and August 2007. If the project was not completed, how possession can be given to the different persons. This shows that the list prepared by the assessee for allotment of plot and grant of possession is fabricated-one and cannot be relied upon for the purpose of deciding the date of completion of the project.

9. Shri. Praveen Kumar, ld. CIT (DR) further invited our attention to the Explanation below section 80IB(10) of the Act with the submission that through this Explanation, the date of completion of project has been defined and according to this Explanation the date of completion of project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. Since the certificate was issued on 23.10.2009, though in the name of a dead person, the date of completion of the project shall be taken to be on 23.10.2009 which is much after the specified date for completion of the project i.e. 31.3.2008. Therefore, the project was not completed within the specified period. As such, the assessee is not entitled for any deduction under section 80IB(10) of the Act. He has placed reliance upon the Instruction No. 4 of 2009 dated 30.6.2009 issued by the Board, in which it has been stated that in case it is late found that the condition of completing the project within the specified time limit of four years as stated in section 80IB(10) of the Act has not been satisfied, deduction granted to the assessee under section 80IB(10) of the Act in earlier years should be withdrawn. Therefore, a direction should be issued by the Tribunal to withdraw the deduction already granted under section 80IB(10) of the Act in earlier years.

10. In rebuttal, the ld. counsel for the assessee has submitted that controversy raised in this appeal has already been adjudicated by the Tribunal in its earlier order and following the rule of consistency, the Tribunal is bound to follow its earlier order passed in earlier assessment years in the assessee’s own case. The ld. counsel for the assessee, Shri. P. K. Kapoor further invited our attention to the Board’s Instruction No. 4 of 2009 dated 30.6.2009 through which the Board has clarified that deduction under section 80IB(10) of the Act would be available on year-to-year basis wherein profit is shown on partial completion. Therefore, the deduction claimed under section 80IB(10) of the Act be allowed in the impugned assessment year following the earlier order of the Tribunal. The ld. counsel for the assessee further contended that completion certificate was granted by the LDA on 23.10.2009, therefore, this document can only be considered in assessment year 2010-11 not in the impugned assessment year. In support of his contention that following the rule of consistency, the Tribunal should take same view as has been taken by it in earlier assessment years, he placed reliance upon the judgments of Hon’ble Gujarat High Court in the case of Affection Investments Ltd. v. Asstt. CIT [2010] 326 ITR 255, Hon’ble Delhi High Court in the case of Thirani Chemicals Ltd. v. Dy. CIT [2009] 180 Taxman 474. Reliance was also placed upon the following judgments in support of his contention that beneficial provision should be construed liberally:-

 1.  Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188/62 Taxman 480 (SC)

 2.  P. R. Prabhakar v. CIT [2006] 284 ITR 548/154 Taxman 503 (SC)

 3.  Ramaniyam Castles (P) Ltd. v. Asstt. CIT [2011] 128 ITD 130/[2010] 8 taxmann.com 11 (Chennai)

 4.  Saroj Sales Organisation v. ITO [2008] 115 TTJ 485 (Mum.)

11. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the lower authorities, judgments referred to by the parties and the material available on record, we find that the Assessing Officer has denied benefit of deduction under section 80IB(10) of the Act for various reasons. In earlier years also benefit of deduction was denied by the Assessing Officer as well as the ld. CIT(A).

12. The first objection for denial of benefit of deduction under section 80IB(10) of the Act was that the housing project was constructed on three different plots. This issue was examined by the Tribunal in earlier assessment years and it was finally concluded that the total land involved, on which housing project was raised, is more than one acre and hence the first condition entitling the assessee for claim of deduction under section 80IB(10) of the Act is fulfilled.

13. The other ground of denial for benefit of deduction under section 80IB(10) of the Act is that the approval was obtained from the LDA, which is not a local authority. In this regard also, the Tribunal has given a specific finding that the LDA is a local authority for the purpose of granting approval and issuing completion certificate of residential housing project. During the course of hearing no dispute was raised by the ld. D.R. with regard to the findings of the Tribunal in earlier assessment years on these two aspects. Therefore, there is no controversy in this regard.

14. The main dispute was raised with regard to the date of completion of the housing project, though this issue was also raised in earlier years and the Tribunal has given a specific finding that the housing project was completed before 31.3.2008, but the ld. CIT (DR) has emphatically argued that this finding of the Tribunal in this regard is contrary to the facts available on record. During assessment year 2005-06, the impugned completion certificate as available at page 26 of the compilation of the assessee, was neither placed before the lower authorities nor before the Tribunal during the course of hearing of the appeal though the appeal was heard on 8.4.2010 and the said completion certificate was issued by the LDA to the assessee on 23.10.2009. The Tribunal has given a finding on the basis of its own assumption of facts that the project was completed before 31.3.2008 during assessment year 2005-06. In the assessment year 2007-08, the Tribunal has simply followed its earlier order for assessment year 2005-06 in the assessee’s own case. The order of the Tribunal in assessment year 2007-08 was passed on 15.12.2011 and even during the course of hearing of this appeal, the assessee had not furnished the aforesaid completion certificate before the Tribunal and the Tribunal following its order for assessment year 2005-06 in the assessee’s own case, again given a finding that the project was completed before 31.3.2008. In order to understand what has been placed before the Tribunal during the course of hearing of the appeal for assessment year 2005-06, we extract the relevant portion of the order of the Tribunal as under:-

“7.5 From the above provisions it would be clear that deduction u/s 80IB(10) is available to an eligible assessee who takes the work of developing and building housing project which is approved by the local authority before 31st March 2007 and as per clause (a) to sub section 10 of section 80IB of the Act, such undertaking has to commence the development and construction of the housing project on or after 1st day of October 1998 and complete such construction on or before 31st March 2008. In the instant case, the assessee commenced the construction of housing project after the 1st day of October 1998 and completed the project before 31st March 2008. The another provision as per sub clause (i) to clause (a) of sub-section (10) of section 80IB is that the approval of the local authority has to be taken before 1st day of April 2004. In the instant case, there is no dispute that the approval was taken by the assessee from Lucknow Development Authority before 1st April 2004. Even the Assessing Officer himself admitted that first approval was taken on 24/11/2001 and thereafter another approval was taken on 03/06/2003. Both these dates are prior to the cut off date i.e. 1st day of April 2005. Therefore, the assessee fulfilled the conditions as laid down in sub clause (i) of clause (a) to sub-section (10) of section 80IB of the Act. In the instant case, one of the objections of the Assessing Officer was that there were two different approvals for the housing project. In this regard an explanation has been inserted in the relevant section and as per Explanation (i) it is clarified that when approvals are more than one, then the first approval given by the local authority shall be deemed to be the date of approval. In the instant case, by considering the Explanation (i) inserted in section 80IB(10) it can safely be held that the assessee got the approval of the local authority before 1st day of April 2004 even if the first approval obtained i.e. the approval dated 24/11/2001 is to be considered. Therefore, we are of the opinion that the assessee got the approval of the local authority before the cut off date as mentioned in sub clause (i) to clause (a) to sub-section (10) of section 80IB of the Act. The another condition which is required to be fulfilled is provided in clause (b) of sub section 10 to section 80IB which relates to the area of land on which the project is constructed. The provisions contained therein specify the area which shall be minimum one acre. In the instant case, the assessee constructed the complete housing project known as “Fortuna Apartment Housing Project” on the total area of 4550.07 sq. mtr. The assessee was in possession of the said area and the mode of acquisition of land was as under:

7.6 The aforesaid land is no doubt more than one acre, therefore, the assessee also fulfilled the conditions laid down in clause (b) to sub-section (10) of section 80IB of the Act. The provisions contained in section 80IB(10)(b) of the Act do not impose any condition for completion of the project which can be completed in more than one phase but the size of the plot on which project is undertaken must be more than one acre and the project shall be completed before 31st March 2008. In the instant case, housing project of the assessee was on the area which was more than one acre and the project had been completed before the specified date, therefore, the condition laid down in section 80IB(10)(b) of the Act is also fulfilled. In the present case, no doubt the assessee got the first approval on 24/11/2001 which was superseded by the approval granted on 22/06/2003 by the local authority i.e. Lucknow Development Authority and the area of the land was aggregating 4550.07 sq. mtr., the project was started after 1st October 1998 by taking the approval before 1st April 2004 and was completed before 31/03/2008, the area of the land on which the housing project was constructed was 4550.07 sq. mtr. i.e. more than one acre. Therefore, the assessee fulfilled the conditions laid down in section 80IB(10) and as we have already pointed out that the audit report as per rule 18 BBB in Form No. 10CCB was furnished during the assessment proceedings i.e. before the completion of the assessment, as such the assessee also fulfilled the conditions laid down in section 80IB(13) of the Act. We, therefore, considering the totality of the facts as discussed herein above, are of the view that the Learned CIT(A) was fully justified in directing the Assessing Officer to allow the exemption claimed by the assessee u/s 80IB(10) of the Act. In that view of the matter, we do not see any merit in this ground of the departmental appeal.”

15. In assessment year 2007-08, the Tribunal has simply followed its earlier order for assessment year 2005-06 in assessee’s own case in the absence of completion certificate and has again given a finding that the project was completed before 31.3.2008. The relevant portion of the order of the tribunal is extracted hereunder:-

“7.4 The learned CIT(A) has also drawn a parallel and proceeded to hold that this was a project undertaken by the assessee as project of works contract. Such a finding reached by learned CIT(A) is without any cogent reasons and the same is divorced from the approved scheme which was undertaken by the appellant in assessment year 2004-2005 by making his own investment and income declared on partial completion method from assessment year 2004-2005 till the year under consideration. The Assessing Officer himself has allowed the claim u/s 80-IB(10) of the Act in assessment year 2004-2005 in the summary assessment. Thereafter, the Appellate Tribunal in assessment year 2005-2006 found that the appellant had satisfied all the conditions as are laid u/s 80-IB(10) of the Act for claiming deduction under that section and thereafter by a detailed reasoning contained in the said order dated 08/04/2010 and also by recording a finding that the project stands completed prior to the year ended on 31/03/2008, allowed the deduction for the assessment year 2005- 2006 as well. No change in facts or law has been reported or brought to our notice by either of the parties. The CBDT by its order No. 4 of 2009 dated 30/06/2009 reported as [2009] 224 CTR (St.) 196 has clarified that in a case where the assessee follows partial completion method, the profit so declared have to be taken eligible profit for the purpose of section 80-IB(10) of the Act. The relevant clarification as contained in para 3 of the aforesaid Circular is reproduced as under:

“3. The above issue has been considered by the Board and it is clarified as under:-

(a)  The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.

(b)  In case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years is should be withdrawn.”

7.5 Admittedly the assessment year 2007-2008 is the year in which the project is not shown to have been completed but the profits have been disclosed on partial completion method. In this view of the matter and having regard to the Circular as aforesaid as well as the findings of fact reached by the earlier Tribunal in assessee’s own case for assessment year 2005-2006, we do not find any reason to deviate from the well reasoned decision already reached in assessee’s own case in allowing deduction u/s 80-IB(10) of the Act. Setting aside the finding as well as the order of learned CIT(A), we allow the grounds raised in appeal by the assessee.”

16. Therefore, whatever findings are given by the Tribunal in assessment years 2005-06 and 2007-08 with regard to the completion of project, it was in the absence of any documentary evidence, rather it was on assumption of certain facts by the Tribunal. But in the instant case, before the ld. CIT(A) completion certificate was filed for the first time and the ld. CIT(A) took cognizance thereof and given a specific finding in the light of Explanation below section 80IB(10)(a) of the Act that date of completion of construction of housing project shall be taken to be date on which the completion certificate in respect of such housing project is issued by the local authority i.e. LDA. The ld. CIT(A) has also given a finding that the completion certificate was sought the assessee in the name of Shri Karuna Shanker Dubey, who was expired long back and the certificate was also issued in his name. Therefore, the certificate has no evidential value and cannot be relied upon for the purpose of determining the date of completion of the housing project. In the light of these facts, the issue with regard to the date of completion of the housing project requires a fresh adjudication by the Tribunal without being influenced by the earlier orders of the Tribunal, as those orders can be called to be an order per incuriam.

17. We have also examined various judgments referred to by the assessee on the point of rule of consistency and we find that in all those judgments it has been repeatedly held that the principle of res judicata are not applicable in the Income-tax proceedings and every assessment year is independent assessment year, but the rule of consistency should be followed, if a particular view is taken by the Tribunal in a particular year with respect to certain facts, the same view should be followed in succeeding years unless and until the facts are changed. In the instant case, the earlier view of the Tribunal is based on assumption of facts whereas in the instant assessment year, the relevant facts are placed before the Tribunal. Therefore, the Tribunal is not supposed to follow its orders of earlier years. If certain relevant facts are placed on record, the issue requires a proper adjudication in the light of the relevant provisions of the Act.

18. With regard to the date of completion, Explanation was provided below section 80IB(10)(a) of the Act. According to this Explanation, the date of completion of construction of the housing project shall be taken to be the date on which completion certificate in respect of such housing project is issued by the local authority. In the instant case, undisputedly completion certificate was issued by the local authority, though in the name of a dead person, on 23.10.2009. For claiming deduction under section 80IB(10) of the Act, the housing project should have been completed before 31.3.2008 as per provisions of section 80IB(10)(a)(i) of the Act. The relevant clause 80IB(10) and Explanation are extracted hereunder for the sake of reference:-

“[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,-

(a)  such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,-

(i)  in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008;

(ii)  in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, [but not later than the 31st day of March, 2005] within four years from the end of the financial year in which the housing project is approved by the local authority;

(iii)  in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.]

Explanation.-For the purposes of this clause,-

 (i)  in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;

(ii)  the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority;”

19. For claiming deduction under section 80IB(10) of the Act, the assessee is required to fulfill basic requisite conditions that the housing project should have been approved before 1st April 2004 and should have been completed before 31.3.2008. If any of the condition is not fulfilled, the assessee would not be entitled for deduction under section 80IB(10) of the Act. With respect to the approval of the housing project, there is no dispute and admittedly it was granted before 1st April, 2004 by the local authority, but with regard to the date of completion of the project, as per provisions of section 80IB(10) of the Act and its Explanation, it was to be completed before 31.3.2008, but the same was in fact completed only on 23.10.2009.

20. During the course of hearing, our attention as invited to the applications dated 14.3.2008 and 27.3.2008 appearing at pages 23 and 25 of the compilation of the assessee, with the submission that on 14.3.2008 an application was filed for seeking permission for compounding with regard to the additional construction and on this application the assessee was asked to deposit Rs. 75,000 by the LDA. There is one more letter of the LDA on the same date, available at page No. 24 of the compilation of the assessee, from which it is evident that some map approval of design was received and through this letter it was informed to the assessee that the assessee has to contact the competent authority on 4.4.2008 for receiving the objections under section 15(3), if any. Thereafter, another application dated 27.3.2008, which is available at page 25 of the compilation of the assessee, was submitted to the LDA. This application was also filed on behalf of a dead person. On perusal of this application, it appears that through this application, completion certificate was sought. Thereafter, completion certificate was granted to Shri Karuna Shanker Dubey, a dead person, which is appearing at page 26 of the compilation of the assessee. In this certificate, a reference was made to a permit No. 24939, dated 6.11.2008. Though this letter may be issued to a dead person, but it has its own evidentiary value with regard to the completion of the project. In this certificate, a reference was made to a permit No. 24939, dated 6.11.2008, meaning thereby the process of completion of the project was not finalized till 6.11.2008 and some permit number was issued. From a careful perusal of this completion certificate, no inference can be drawn from anywhere that the project was completed before 31.3.2008.

21. Where there is no ambiguity in the relevant provisions of the Income-tax Act, there cannot be any question of its construction liberally. In section 80IB(10) of the Act, it has been made emphatically clear that if the housing project is approved before 1st April, 2004 and is completed before 31.3.2008, the assessee would be entitled for deduction under section 80IB(10) of the Act and through its Explanation (i) it has been made clear that the date of completion of construction of housing project shall be taken to be date on which completion certificate in respect of such housing project is issued by the local authority. Therefore, there is no iota of doubt in the interpretation of Explanation below section 80IB(10) of the Act and according to the said Explanation, the date of completion of the project in the instant case shall be taken to be the date of issuance of completion certificate by the local authority i.e. 23.10.2009. Since the housing project was completed after 31.3.2008, the assessee has not fulfilled the second requisite condition for claiming deduction under section 80IB(10) of the Act and therefore the assessee is not entitled for deduction under section 80IB(10) of the Act.

22. We have also examined the other judgments referred to by the assessee on the point of interpretation of beneficial provisions and we are of the view that the judgments would be of no assistance to the assessee, as the provisions are quite unambiguous and there cannot be second interpretation.

23. We have also considered the request of the ld. CIT (DR) that once it is held that the assessee is not entitled for deduction under section 80IB(10) of the Act on non-fulfilment of the requisite condition, a direction may be issued for withdrawal of deduction under section 80IB(10) of the Act already granted to the assessee in earlier years. In this regard, we would like to make a reference to the instruction No. 4 of 2009 dated 30.6.2009 of the Board, through which it has been clarified by the Board that deduction under section 80IB(10) of the Act can be claimed on year-to-year basis where the assessee is showing profit from partial completion of the project in every year. It was also further clarified that in case it is late found that the condition of completing the project within the specified time limit of four years, as stated in section 80IB(10) of the Act, has not been satisfied, deduction granted to the assessee under section 80IB(10) of the Act in earlier years should be withdrawn. The contents of the aforesaid Instructions of the C.B.D.T are extracted hereunder:-

“Instruction No. 4/2009, dated 30-6-2009

Clarification regarding deduction under section 80-IB(10) in respect of undertakings developing building and housing projects

Deductions

Section 80-IB(10)

Under sub-section (10) of section 80-IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the projection or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority.

2. Clarifications have been sought by various CCITs on the issue whether the deduction u/s 80-IB(10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80-IB(10).

3. The above issue has been considered by the Board and it is clarified as under:-

(a)  The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.

(b)  In case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years is should be withdrawn.

4. The above Instruction will override earlier clarification on this issue contained in Member(R)’s D.O. letter No. 58/Misc./2008/CIT(IT&CT) dated 29.04.2008 and Member (IT)’s D.O. letter No. 279/Misc./46/08-ITJ dated 2.5.2008.

5. This may kindly be brought to the notice to the notice of the all Assessing Officers in your charge.”

[F.No.178/32/2009-Income-tax Act, 1961.I]

(2009) 224 CTR(St)196″

24. Since the Board has already issued an instruction in this regard, we do not find any justification in issuing such a direction to the Revenue. The Revenue is at liberty to take action with respect to the earlier years as provided in the law. Accordingly, the appeal of the assessee stands dismissed.

25. In the result, appeal of the assessee is dismissed.