Commissioner of Income Tax and Another vs Akshay Eminence Developers (P.) Ltd.

N. Kumar, J.—These three appeals are preferred by the Revenue challenging the order passed by the Tribunal which has granted benefit to the assessee under s. 80-IB(10) for the asst. yrs. 2005-06, 2006-07 and 2007-08. As the question of law involved in all these appeals is one and the same, they are taken up for consideration together and disposed of by this common order, as the Tribunal has also disposed of these appeals by a common order.

The assessee-company undertook a project with regard to construction of residential flats situated at survey Nos. 85 and 86, Vijinapura Village, K.R. Puram Hobli, Bangalore, consisting of 144 residential units ranging from 1,102 sq. ft. to 1,415 sq. ft. The profit earned by the assessee has been claimed as exemption under s. 80-IB of the IT Act, 1961 (hereinafter for short referred to as ''the Act''). It is not in dispute that the assessee applied for approval of the plan on 8th Oct., 2004. Approval was granted on 28th March, 2005. However, the sanction plan was issued on 4th April, 2005 making it clear it comes into effect from 4th April, 2005 and will be in force till 3rd April, 2007. Assessee contended as the approval was granted on 28th March, 2005, he is entitled to the benefit under s. 80-IB(10) of the Act from the asst. yr. 2005-06 onwards. The assessing authority sought clarification from the Bangalore-Development Authority. The Bangalore Development Authority wrote a letter informing him that the project is approved for construction w.e.f. 4th April, 2005. Acting on the said letter, the AO denied the benefit of s. 80-IB(10) of the Act to the assessee.

Aggrieved by the said order, the assessee preferred an appeal to the CIT(A). The CIT(A) held the date of approval is 28th March, 2005. The said approval was communicated to the assessee on 4th April, 2005. The assessing authority is not disputing the fact that the assessee made an application on 8th Oct., 2004. It was approved on 28th March, 2005 and communicated on 4th April, 2005. In those circumstances, when the approval is obtained on 28th March, 2005, the communication of the approval goes to the background and therefore he held the assessing authority was wrong in denying the benefit and accordingly granted the benefit.

Aggrieved by the said order, the Revenue preferred an appeal to the Tribunal. The Tribunal by a considered order referring to a judgment of the Bombay High Court where it was held, approval once accorded should relate back to the date of application, was of the view the approval dates back to 8th Oct., 2004 and therefore the assessing authority was wrong in denying the benefit. Therefore, it dismissed the appeal. Aggrieved by the said order, the Revenue is in appeal. It is not in dispute that the approval is granted on 28th March, 2005. It is communicated on 4th April, 2005. Because it was communicated to the assessee on 4th April, 2005 and in law he should have 2 years'' time to complete the construction, the said communication and the sanctioned letter made it clear the time for completing the construction starts from 4th April, 2005 and it ends on 3rd April, 2007. That is not the date of approval. The date of approval is 28th March, 2005. As per the judgment of the Bombay High Court, once approval is granted it dates back to the date of application. Even that exercise is not to be done in this case, as the date of approval is 28th March, 2005. The assessee is entitled to the benefit for the asst. yr. 2005-06 and therefore we do not see any justification to interfere with the well considered order passed by the Tribunal. There is no merit in these appeals and accordingly they are dismissed. The substantial questions of law are answered in favour of the assessee and against the Revenue.