The Commissioner of Income Tax-V vs Kundan Real Estate

These two appeals by the revenue challenge the order dated 26 June 2012 passed by the Income Tax Appellate Tribunal (the Tribunal). By the impugned order, the Tribunal disposed of the appeals pertaining to Assessment Years 2006-07 and 2007-08 on a common issue, namely, entitlement of the assessee for the claim of deduction under Section 80IB(10) of the Income Tax Act, 1961 (the Act).

Mr. Singh, learned counsel appearing for the revenue urges the following question of law, which is common in both appeals, for our consideration:--

"Whether on the facts and in the circumstances of the case and in law the Income Tax Appellate Tribunal was justified in accepting the date of approval by local authority in respect of Housing Project ''Kundan Estates'' as 31.07.2004 even though the project was first approved by the local authority on 23.06.2003 ?"

The respondent had claimed benefit of deduction under Section 80IB(10) of the Act in respect of profits relating to housing projects undertaken by it. The Assessing Officer denied the benefit under Section 80IB(10) of the Act on the ground that the project was not completed within the stipulated time. This was in view of the Explanation to Section 80IB(10)(a) of the Act. The building plans had first obtained an approval from the local authority on 23 June 2003 and thereafter a revised sanction was obtained on 31 July 2004. Thus, the project having obtained its first approval on 23 June 2003, the project was required to be completed on or before 31 March 2008.

In appeal, the Commissioner of Income Tax (Appeals) upheld the finding of the Assessing Officer. On further appeal, the Tribunal by the impugned order allowed the respondent-assessee''s appeal by inter-alia holding that the sanction obtained by the local authority on 23 June 2003 was in respect of a project different from the sanction obtained, called revised sanction, of the local authority on 31 July 2004. The Tribunal by the impugned order inter-alia records the fact that the approval on 31 July 2004 was for construction of Survey No. 61/2+3+4+5+6 of CTS Nos. 772 and 773 of Pimple Saudagar, Pimpri Chinchwad Municipal Corporation. While as regards the approval/sanction obtained on 23 June 2003 of the local authority was in respect of Survey No. 61/2+3+5+6 of CTS No. 772.

The aforesaid impugned order records that the housing project, reflected in the sanction dated 31 July 2004, was different from the housing project approved on 23 June 2003 by the local authority. The sanction dated 31 July 2004, the impugned order finds, was in relation to area 104-R reflected by Survey No. 61/2+3+4+5+6, whereas the earlier sanction on 23 June 2003 was in respect of area 84-R of land area consisting of Survey No. 61/2+3+5+6. This by itself would indicate that the sanction which has been obtained on 31 July 2004 is in respect of distinct and separate project, then the approval obtained on 23 June 2003 for the housing project. The mere use of the revised sanction by the local authority in the sanction given on 31 July 2004, would not by itself make it an amendment or a change to a earlier sanction when in fact it is a sanction for a materially different housing project.

In fact, the impugned order relies upon the decision of this Court in The Commissioner of Income Tax 25, C/11, Room No. 209, 2nd Floor, Pratyaksha Kar Bhavan, Bandra Kurla Complex, Bandra (East), Mumbai - 400051 Vs. M/s. Vandana Properties, 602B, Prem Nagar, Off. SV P Road, Borivali (West), Mumbai - 400092, in support of its conclusion that the project sanctioned on 21 July 2004 is different from the project sanctioned on 23 June 2003.

We find that the finding recorded by the impugned order is a pure finding of fact. The impugned order spells out the basis on which the sanction received on 31 July 2004 is in respect of a different project then that obtained on 23 June 2003. The revenue has not been able to show that this finding of fact recorded by the Tribunal is, in any manner, perverse and/or arbitrary.

In view of the above, the question as proposed by the revenue does not give rise to any substantial question of law.

Accordingly, both the appeals filed by the revenue are dismissed. No order as to costs.