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2015 (11) TMI 1653 - AT - Income TaxEligibility for deduction u/s 80IB (10) - Gram panchayat Besa authority to sanction the plans of the housing project and to issue commencement certificate and completion certificate for housing project eligible for deduction - Held that - The Bombay Village Panchayat Act, 1958 which has provided that sanction of construction of building within the limits of village has to be granted by the Panchayat. So, the argument before us is that the village Panchayat is a local authority, therefore, competent to approve a housing project. On this issue, a judgment has been passed by ITAT Nagpur Bench, Nagpur in the case of ACIT Vs M/s. Chintamoni Builders 2015 (10) TMI 2631 - ITAT NAGPUR wherein a discussion of The Bombay Village Panchayat Act, 1958 was made and it was found that the sanction of the construction of a building being situated within the limits of village, the approval has to be granted by the Panchayat. Because of that reason, it was held that the Village Panchayat is a local authority. Prescribed area for the purpose of claim of deduction u/s 80IB (10) - Held that - In support of the above claim, the assessee has furnished the copy of sanctioned map, lay out plan and demonstrated that the total plot area was above the prescribed limit of One Acre. In this regard, we have noted that hate first appellate authority has given a finding of facts demarcating the respective area of the plots and there upon came to the conclusion that the total area of the plots was above the prescribed limit of One Acre. We have noted that the said finding of fact had not been controverted by the Revenue Department. In the absence of any contrary material on record, we hereby confirm the findings of the learned CIT (A). As a result, the grounds raised by the Revenue Department are hereby dismissed. - Decided in favour of assessee
Issues Involved:
1. Competency of Gram Panchayat Besa as the authority for sanctioning housing project plans and issuing commencement and completion certificates for deduction eligibility under Section 80IB (10) of the Income Tax Act, 1961. 2. Compliance with the minimum area requirement of one acre for the housing project under Section 80IB (10). 3. Validity of the completion certificate issued by the Gram Panchayat Besa. Detailed Analysis: 1. Competency of Gram Panchayat Besa: The primary issue was whether the Gram Panchayat Besa was a competent authority to sanction housing project plans and issue commencement and completion certificates for eligibility under Section 80IB (10). The Appellate Tribunal upheld the CIT (A)'s decision that the Gram Panchayat Besa was indeed a competent local authority. The Tribunal referenced Section 52 and Section 124 of The Bombay Village Panchayat Act, 1958, which authorize Gram Panchayats to grant permissions for building erection and levy taxes within their jurisdiction. The Tribunal also cited several ITAT decisions supporting the view that Gram Panchayats are local authorities for the purposes of Section 80IB (10). 2. Compliance with Minimum Area Requirement: The second issue involved the fulfillment of the condition that the housing project must be developed on a plot of land with a minimum area of one acre. The AO contended that the assessee only owned 11 plots totaling 1207 sq. mtrs., and the remaining plots were owned by different individuals, thus not meeting the one-acre requirement. However, the CIT (A) found that the entire development area, including all plots, exceeded one acre, and this finding was confirmed by the Tribunal. The Tribunal noted that the assessee had entered into a development agreement covering the entire area and that the total plot area was above the prescribed limit of one acre. 3. Validity of Completion Certificate: The third issue was the validity of the completion certificate issued by the Gram Panchayat Besa. The AO had rejected the completion certificate issued by the Gram Panchayat, arguing that it was not a competent authority. However, the CIT (A) and the Tribunal found that the completion certificate issued by the Gram Panchayat, preceded by a certificate from a registered architect, was valid and in order. The Tribunal emphasized that the Gram Panchayat was the local authority for granting such approvals and that the housing project was completed within the stipulated time frame. Conclusion: The Tribunal dismissed the appeals filed by the Revenue, confirming that the Gram Panchayat Besa was a competent local authority for sanctioning housing project plans and issuing completion certificates. The Tribunal also upheld that the housing project met the minimum area requirement of one acre and that the completion certificate issued by the Gram Panchayat was valid. Consequently, the assessee was deemed eligible for the deduction under Section 80IB (10) of the Income Tax Act, 1961. Order: The appeals filed by the Revenue were dismissed, and the order was pronounced in the Open Court on November 24, 2015.
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