2011 (8) TMI 1061 - AT - Income Tax

Deduction u/s 80IB(10) - delay in obtaining the completion certificate - Held that - Date that appear on the Architect s Completion certificate filed before the local authority is a relevant one. In the instant case the said date is 25-3-2008 and the assessee filed requisite form before the local authorities intimating the completion of the project. The said certificate/ intimation was accepted by the local authority without any amendments or objections. Local authority has not raised any queries on the quality construction of the building or the completion of the same as per the plans approved by such authority. Delay in obtaining the completion certificate on 10-10-2008 is certainly not attributable to the assessee and obtaining the said certificate before 31.3.2008 is beyond the control of the assessee. Assessee s job includes the completion of the building in accordance with the approved plans and intimation of the same to the local authority by way of filing the requisite Forms together with the Completion certificate given by the Architect the specialist in the matter and the assessee has done his job scrupulously in this case. However the local authority has neither objected to the said application of the assessee and the Architect by raising any objections nor accepted by issue of said completion certificate till 10.10.2008. Therefore the delay in grant of the said certificate is certainly not attributable to the assessee. Therefore in our opinion the assessee is not defaulter on this account and thus the AO has erred in denying the deduction u/s 80IA(10)- Decided in favour of assessee.

Issues Involved:
1. Denial of deduction under Section 80IB(10) of the Income Tax Act, 1961 due to non-compliance with the filing of the completion certificate in time.

Detailed Analysis:

Issue 1: Denial of Deduction under Section 80IB(10) due to Non-Compliance with Filing Completion Certificate in Time

Facts and Arguments:
The appeals were filed by the assessee against the common order of the Commissioner of Income Tax (Appeals), Aurangabad, for the assessment years 2002-03 to 2007-08. The primary issue was the denial of deduction under Section 80IB(10) of the Income Tax Act, 1961, due to the alleged non-compliance in the timely filing of the completion certificate. The assessee argued that the learned CIT(A) was not justified in holding that the date of completion of the project as per the architect's application dated 25-3-2008 could not be treated as the date of completion, and since the occupancy certificates were received on 10-10-2008, which was beyond 31-3-2008, the deduction was denied.

Assessee's Contentions:
The assessee's counsel pointed out that the issue was covered in favor of the assessee by several Tribunal decisions, including:
- Sanghvi and Doshi Enterprise v. ITO and Others
- M/s D.K. Constructions v. ITO
- M/s Satish Bora & Associates v. ACIT

The assessee had filed separate plans for each of the six sectors with AMC along with an application dated 25-3-2008 for the occupancy certificate. The AMC issued the occupancy certificate on 10-10-2008. The assessee had complied with all requirements and furnished necessary documents, but it was beyond their control to compel AMC to issue the certificate by 31-3-2008.

Department's Contentions:
The learned departmental representative justified the orders of the authorities below, stating that the occupancy certificate was issued by the AMC only on 10-10-2008. Thus, the CIT(A) rightly upheld the disallowance of the claimed deduction under Section 80IB(10) based on the project not being completed by 31-3-2008. The provisions of Section 80IB(10)(a)(ii) require the completion certificate to be issued by the local authority.

Tribunal's Analysis and Decision:
The Tribunal considered the viewpoints of both parties. It was acknowledged that the assessee had filed the application with AMC for the occupancy certificate on 25-3-2008 and paid the requisite fee. AMC did not raise any objections to the architect's completion certificate. The occupancy certificate dated 10-10-2008 was issued based on the application dated 25-3-2008. The issuance of the occupancy certificate is the prerogative of the local authority, and the assessee had no control over this process. The delay in issuing the occupancy certificate could not be attributed to the assessee, especially since there were no objections from AMC regarding the construction.

Relevant Precedents:
The Tribunal referred to several decisions to support its conclusion:
- In M/s. Satish Bora & Associates, it was held that the completion certificate issued by the local authority after inspection is treated as the date of completion. The Tribunal emphasized that the delay in issuing the occupancy certificate by the local authority should not adversely affect the assessee if the project was completed and the application was filed in time.
- In Sanghvi & Doshi Enterprise, it was noted that the completion certificate from the local authority is crucial, and even if issued after the due date, the project completion date should be considered based on the application date.
- In M/s. D.K. Construction, the Tribunal emphasized that the date mentioned in the completion certificate is crucial, not the date of issuance. The local authority's delay in issuing the certificate should not impact the assessee's eligibility for the deduction.

Conclusion:
The Tribunal concluded that the date on the architect's completion certificate (25-3-2008) filed before the local authority was relevant. The delay in obtaining the completion certificate on 10-10-2008 was not attributable to the assessee. The assessee had completed the project as per the approved plans and filed the necessary forms with the local authority. Therefore, the denial of deduction under Section 80IB(10) was not justified. The Tribunal reversed the order of the CIT(A) and allowed the appeals.

Final Order:
All five appeals of the assessee were allowed. The order was pronounced in the open court on 30th August 2011.

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