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:-
