The Pr Commissioner Of Income Tax-3,Pune v. Cosmopolis Construction

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1833 OF 2016 The Pr Commissioner of Income TAx-3,Pune .... Appellant versus Cosmopolis Construction... Respondent ….... Mr.Tejveer Singh, Advocate for Appellant.Mr.Tejveer Singh, Advocate for Appellant. Mr.Rohan Deshpande a/w Ms.Alisha Pinto i/b. Mihir Naniwadekar, Advocate for Respondent.Mr.Rohan Deshpande a/w Ms.Alisha Pinto i/b. Mihir Naniwadekar, Advocate for Respondent. CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ.DATE: 25[th] MARCH, 2019. P.C. : 1. This Appeal is filed by the revenue to challenge the judgment passed by the Income Tax Appellate Tribunal.Following questions were presented for our consideration at thetime of argument. “(a) On the facts and in the circumstances of the caseand in law, the Hon'ble ITAT has erred inand in law, the Hon'ble ITAT has erred in 2 / 5 07-ITXA-1833-16.odt allowing the assessee's claim of deduction u/s80IB(10) of the IT Act of Rs.4,81,97,731/- for theA.Y. 2009-10, when the project “Park Island” wasinitially sanctioned by the Local Authority on03/06/1997 which is prior to 1998 whendeduction u/s 80IB(10) is allowable to projectscommenced on or after 1[st] October 1998. (b)Alternately, the Hon'ble ITAT has erred inallowed the assessee's claim of deduction u/s80IB(10) of the Act without appreciating the factthat the entire project was not completed on orbefore 31/03/2008.allowed the assessee's claim of deduction u/s80IB(10) of the Act without appreciating the factthat the entire project was not completed on orbefore 31/03/2008. (c)On the facts and in the circumstances of the caseand in law, the Hon'ble ITAT erred in allowingdeduction u/s 80IB(10) of the IT Act onproportionate basis in respect of buildingcompleted during the A.Y. 2009-10.and in law, the Hon'ble ITAT erred in allowingdeduction u/s 80IB(10) of the IT Act onproportionate basis in respect of buildingcompleted during the A.Y. 2009-10. 2. Respondent-Assessee was engaged in housingdevelopment business. For the assessment year 2009-2010assessee had claimed deduction under section 80IB(10) of theIncome Tax Act (for short ‘the Act’); in relation to the income 3 / 5 07-ITXA-1833-16.odt arising out of such business. The revenue objects to this claimmainly on the following grounds; (i)that the development permission was granted to the assessee by the local authority prior to01/10/1998.01/10/1998. (ii) that in any case the deduction could not have been claimed for project A, ignoring fact that project Bwas not completed within a statutory period.was not completed within a statutory period. 3. Having heard the learned Counsel for the parties andhaving perused documents on record, we notice that the CITAppeals and the tribunal while granting benefit of the deductionto the assessee had come to the conclusion that the first orderdated 03/06/1997 for sanctioning the building plans was aconditional one. The land was covered under the provisions ofthe Urban Land Ceiling (& Regulation) Act, 1976 and thesanction of the ULC authority was obtained only on22/11/1998. Tribunal was of the opinion that the building plan 4 / 5 07-ITXA-1833-16.odtcannot be stated to have been sanctioned prior to 1998. Secondissue was on completion of construction within time. Objectionof the revenue was that projects A and B were composite andsince construction of project B was not completed, no deductioncan be guaranteed. The tribunal however held that both theprojects were separate. Project A was completed in time. 4. We are broadly in agreement with the view of tribunal.It may be a fact that the plan for building construction wassanctioned on 03/06/1997. However, no such developmentcould be under taken without the sanction of the ULC authority.Such sanction for building development was thus conditional onthe ULC Authority granting the necessary sanction whichhappened only after 1998. 4 / 5 07-ITXA-1833-16.odtcannot be stated to have been sanctioned prior to 1998. Secondissue was on completion of construction within time. Objectionof the revenue was that projects A and B were composite andsince construction of project B was not completed, no deductioncan be guaranteed. The tribunal however held that both theprojects were separate. Project A was completed in time. 4. We are broadly in agreement with the view of tribunal.It may be a fact that the plan for building construction wassanctioned on 03/06/1997. However, no such developmentcould be under taken without the sanction of the ULC authority.Such sanction for building development was thus conditional onthe ULC Authority granting the necessary sanction whichhappened only after 1998. 5. The revenue is not correct insofar as the completion ofthe construction of the project A and B is concerned. Firstly, thetwo projects were independent and separate as held by thetribunal. Secondly, the project A itself fulfilled all the necessary 5 / 5 07-ITXA-1833-16.odt requirements of the deduction such as the building the areabeing not less than one acre and each unit not exceeding built up area of 1500 sq.ft. In fact the building constructionpermissions were also separately granted for both the projects.ULC sanction in relation to project B was obtained on19/11/2006 for which the Municipal Corporation authoritiesgranted building permission. 6. Under such circumstances, we do not find any error inview of the tribunal. No question of law arises. Income TaxAppeal is dismissed. (SARANG V. KOTWAL, J.) (AKIL KURESHI, J.)