Takshashila Realities Pvt Ltd Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that denial of deduction u/s. 80IB(10) of the Income Tax Act alleging non-completion of some blocks unjustified as separate building planning permission were obtained by assessee from Local Authority namely AMC for each Block as a separate housing project.
Facts- The assessee developed 11 Blocks of residential housing projects under the scheme of Takshashila Colonial starting with Block Nos. C to Q. The assessee obtained separate planning permission for construction of residential building from the local authority namely Ahmedabad Municipal Corporation (AMC) and the date of commencement of the project and also completion of construction Building Usage permission obtained from AMC for the 8 Blocks (except) 3 Blocks.
AO held that as per Section 80IB(10), the housing project shout have been completed within five years from the end of the financial year in which the housing project is approved by the Local Authority. The assessee obtained housing project for Blok Nos. C to Q from the Local Authority on 01-03-2007, therefore the entire housing projects should have been completed on or before 31-03-2012. But no construction was started in Block Nos. E, F & G by the assessee. Therefore the A.O. issued a show cause notice, asking why the entire deduction claimed u/s. 80IB(10) should not be disallowed.
AO rejecting the explanation of the assessee denied the claim of deduction u/s. 80IB(10) of the Act and added the same as the total income of the assessee. CIT(A) confirmed the addition. Being aggrieved, the present appeal is filed.
Conclusion- It is an admitted fact that separate building planning permission were obtained by assessee from Local Authority namely AMC for each Block as a separate housing project. Further Building Usage permission was also obtained by the assessee from the Local Authorities namely Ahmedabad Municipal Corporation well within the period of 2 to 5 years. The Lower Authorities without appreciating the above facts denied the claim of deduction u/s. 80IB(10), solely on the ground that the assessee has not started the building project relating to Block Nos. E, F & G and thereby wrongly held that the assessee has not completed the housing projects.
Co-ordinate Bench of Hyderabad Tribunal in the case of Vertex Homes (P.) Ltd. held that the assessee, a builder, had not completed construction of all blocks of housing project, within stipulated period, would not deprive assessee from availing of deduction u/s. 80IB(10) in respect of each of completed block on stand alone basis.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These two appeal are filed by the Assessee as against separate appellate orders both dated 09.07.2019 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad arising out of the reassessment order passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2009-10.
2. The Grounds of Appeal raised by the Assessee in ITA No. 1401/Ahd/2019 in M/s. Takshashila Realities Pvt. Ltd. (The Successor of M/s. Youngstar Infrastructure) reads as follows:
1. The Ld. CIT(A) has erred in law and on facts to disallow the labour expenses of Rs. 25,68,507/-.
3. The Grounds of Appeal raised by the Assessee in ITA No. 1400/Ahd/2019 in M/s. Takshashila Realities Pvt. Ltd. (The Successor of M/s. Takshashila Gruh Nirman) reads as follows:
1. The Learned CIT(A) has erred in law and on facts to confirm the addition of Rs. 31,64,266/- on account of deduction u/s 80IB(10) of the Act.
2. The Learned CIT(A) has failed to appreciate that out of the Fifteen blocks. Twelve blocks [ C to Q except E, F and G ] were completed within five years as per completion certificate issued by the competent authority and for remaining three blocks [block E, F and G], not claimed any deductions u/s 801B(10) of the Act. Therefore, there is no reason to disallow deduction u/s 80IB(10) of the Act.
3. The Learned CIT(A) ought to consider the Provision u/s 80IB(10) being beneficial in nature, too technical approach would defeat the purpose for which provision had been brought in to the statute.
4. We find that the Grounds of Appeal raised by the assessee in the above two appeals are interchanged because of the name of the resultant company and assessment year remains the same, which is an inadvertent mistake, hence we proceed to adjudicate the appeals with correct grounds.
5. Ld. Counsel Mr. Sudhir Mehta appearing on behalf of the assessee submitted before us that the assessee is not pressing the solitary ground of labour expenses of Rs. 25,68,507/- in ITA No. 1400/Ahd/2019.
6. Recording the above statement of the Ld. Counsel, the appeal filed by the Assessee in ITA No. 1400/Ahd/2019 is dismissed.
ITA No. 1401/Ahd/2019 M/s. Takshashila Realities Pvt. Ltd. (The Successor of M/s. Takshashila Gruh Nirman) for A.Y. 2009-10.
7. The solitary issue in this appeal is confirmation of addition of Rs. 31,64,266/- on account of denying deduction u/s. 80IB(10) of the Act on the ground that the housing projects were not completed by the assessee within five years period.
7.1. The Brief facts of the case is that the assessee developed 11 Blocks of residential housing projects under the scheme of Takshashila Colonial starting with Block Nos. C to Q. The assessee obtained separate planning permission for construction of residential building from the local authority namely Ahmedabad Municipal Corporation (AMC) and the date of commencement of the project and also completion of construction Building Usage permission obtained from AMC for the 8 Blocks (except) 3 Blocks namely E, F & G are as follows:
