2014 (9) TMI 1084 - AT - Income Tax

Disallowance of claim of deduction u/s 80IB(10) - Held that - The project approved by PMC on 31.03.2001 consisted of Buildings A,B,C,D & E and the local authority for the purposes of issuing completion certificate for claiming deduction u/s 80IB(10) of the Act is the Gram Panchayat, Keshav Nagar, Mundhwa, Pune. In view of the above fact the claim of deduction u/s 80IB(10) of the Act for the project approved on 31.03.2001 and which comprises of Buildings A to E of 80 flats amounting to ₹ 18,68,951/- was held allowable for A.Y. 2006-07. In view of above, the CIT(A) allowed the claim of deduction u/s.80IB(10) of the Act following the decision of ITAT in A.Y.2006-07 as discussed above. Nothing contrary has been brought to our knowledge on behalf of the Revenue. Facts being similar, so following the same reasoning, we are not inclined to interfere with the finding of CIT(A), who has allowed the claim of the assessee by following the decision of assessee s own case by ITAT order for A.Y. 2006-07. - Decided against revenue

Summary

Issues:
1. Allowance of deduction u/s.80IB(10) for an incomplete project.
2. Interpretation of building plan approvals.
3. Validity of completion certificate from a local authority.

Issue 1: Allowance of deduction u/s.80IB(10) for an incomplete project:
The appellant, a real estate developer, claimed a deduction u/s 80IB(10) of the Income Tax Act for a project approved in 2001 but incomplete by 2008. The Assessing Officer disallowed the deduction based on a similar disallowance in a previous year. The CIT(A) allowed the claim, citing a Tribunal decision that considered the project as two separate entities due to administrative changes. The ITAT Pune upheld the CIT(A)'s decision, emphasizing that the completion certificate from the Gram Panchayat was valid, and the appellant met all conditions for the deduction. The ITAT's decision was based on a liberal interpretation of the law to favor the appellant due to circumstances beyond their control, such as changes in jurisdiction affecting the project's completion.

Issue 2: Interpretation of building plan approvals:
The Revenue contended that the building plan approved in 2007 was not independent but an extension of the 2001 plan. However, the ITAT Pune differentiated between the two plans, considering them as separate projects. The Tribunal's decision was consistent with a previous ruling that favored the appellant, emphasizing that the completion certificate from the Gram Panchayat was valid for claiming the deduction u/s 80IB(10). The ITAT's interpretation favored a liberal construction of the law to promote economic growth and development, ensuring that the appellant was not penalized for administrative changes beyond their control.

Issue 3: Validity of completion certificate from a local authority:
The Revenue argued that the completion certificate should have been issued by the Pune Municipal Corporation (PMC) instead of the Gram Panchayat. However, the ITAT Pune clarified that the Gram Panchayat was a valid local authority for issuing the completion certificate for the project, as per the provisions of section 80IB(10) of the Act. The Tribunal's decision highlighted the importance of interpreting taxing statutes harmoniously with the legislative intent to promote economic growth while strictly adhering to the statutory restrictions. By upholding the CIT(A)'s decision, the ITAT Pune affirmed the validity of the completion certificate issued by the Gram Panchayat for claiming the deduction u/s 80IB(10).

In conclusion, the ITAT Pune dismissed the Revenue's appeal, affirming the allowance of the deduction u/s 80IB(10) for the appellant's project based on a liberal interpretation of the law and considering the unique circumstances surrounding the administrative changes affecting the project's completion and certification process.