The Pune bench of Income Tax Appellate Tribunal ( ITAT ) denied income tax deduction under section 80IB (10) of Income Tax Act 1961 to a builder because of delay in completion of housing projects without statutory approval.
Section 80IB (10) of Income Tax Act 1961 states that Any undertaking engaged in the construction and developing housing projects was made eligible to claim deduction in respect of 100% profit from such business subject to certain conditions.
This appeal was filed by the revenue against the order of Commissioner of Income Tax (Appeal).
Assessee P3 Properties, Is A Firm Engaged In The Business Of Builders And Developers The Return Of Income Was Filed On 27.09.2010 Disclosing Rs.Nil Income After Claiming Deduction Under The Provisions Of Section 80IB(10) Of The Income Tax Act, 1961.After Completion Of The Assessment Proceedings Assessing Officer disallowed the claim for deduction under section 80IB (10) Of the Income Tax Act, 1961.
“The assessing office opinion the reason for disallowing the above claim was the original housing plan approval that is 01.07.2003 should be reckoned/taken into consideration if so than the said housing project is required to be completed on or before 31.03.2008.
However, the date of completion of the housing project is 23.03.2010, which is beyond the prescribed time limit for completion of the housing project under the provisions of section 80IB (10) of the Act”
Against this said order assesee filed an appeal before the Commissioner of Income Tax Appeal CIT(A) and the appeal was allowed by the CIT(A).But the aggrieved revenue preferred an appeal before ITAT.
Prashant Gadekar counsel for the revenue ,contented that “in every subsequent approval, a reference was made to the original sanction plan of building permission dated 01.07.2003 which clearly establishes that the commencement certificate and the original plan was obtained on 01.07.2003, which means the project is required to be completed on or before 31.03.2008, which is a sine qua non condition for availing deduction under section 80IB(10) of the Income Tax Act 1961”.
Suhas Bora counsel for the assessee submits that,
The building plan approved by the PCMC on 01.07.2003 is only a layout plan along with building plan for the housing project submitted by Pratham Developers”
Moreover layout plan of entire plots was further subdivided on 12.09.2005 and the building plan for housing project “Ruby” and “Emerald” was first submitted by the respondent assessee on 12.09.2005 and the development charges were paid only on 12.09.2005.
After considering the both contention the division bench of the ITAT comprising Partha Sarathi Chaudhury, (Judicial Member) and Inturi Rama Rao Accountant Member) allowed the appeal filed by the revenue and observed that the assessee failed to prove that the permissions for construction of the housing project were obtained on 12.09.2005 for the first time except harping on that the permissions for obtain for the first time only on 12.09.2005.
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