2015 (1) TMI 1376 - AT - Income Tax

Disallowance of deduction claimed u/s 80IB(10) - adherence to condition of completion - assessee did not submit completion certificate from Competent Authority which according to the opinion of AO and Ld. CIT(A) is CIDCO - Held that - The assessee had not only submitted the project completion certificate issue by the Gram Panchayat but also various evidences to show that the project was completed by 31/03/2008 and these evidences have also been described in para 3.4 of this order. In our opinion it will not be relevant to go into much detail for this issue as it is clear from the decisions of Hon ble Delhi High Court in the case of CIT vs. CHD Developers 2014 (1) TMI 1542 - DELHI HIGH COURT and Hon ble Madras High Court in the case of CIT vs. Jain Housing Construction (2012 (11) TMI 588 - MADRAS HIGH COURT) that such condition of submission of completion certificate was not applicable to the projects which have been approved by the Public Authority before 31/3/2005. In the present case the project was approved for commencement vide letter of CIDCO dated 05/03/2004. Thus, the project was approved for commencement before 31/3/2005 and old law will apply when it was not a condition precedent to submit completion certificate. Thus we hold that deduction u/s. 80 IB (10) cannot be denied to the assessee for want of completion certificate from CIDCO. - Decided in favour of assessee

Summary

Issues Involved:
1. Disallowance of deduction claimed under section 80IB(10) of the Income Tax Act, 1961.
2. Requirement and validity of the completion certificate.
3. Applicability of interest under sections 234B and 234C of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IB(10):
The assessee, a firm engaged in the business of builder and developer, claimed a deduction under section 80IB(10) amounting to Rs. 1,42,53,667/-. The deduction was disallowed by the Assessing Officer (AO) on the grounds that the assessee did not produce a completion certificate from CIDCO within the stipulated period. The First Appellate Authority upheld this disallowance. The assessee argued that the project was approved on 05/03/2004, before the insertion of the completion condition effective from 01/04/2005, and therefore, there was no requirement for obtaining a completion certificate. The Tribunal noted that the project was indeed approved before 31/03/2005, and thus, the old provisions applied, which did not require a completion certificate.

2. Requirement and Validity of the Completion Certificate:
The AO contended that the completion certificate issued by the Gram Panchayat was not valid, as only CIDCO was the competent authority to issue such a certificate. The assessee argued that the Gram Panchayat was a competent local authority under the Income Tax Act, supported by the decision in Krishna Harubhau Lohokare vs. ITO. The Tribunal agreed with the assessee, noting that the Gram Panchayat falls under the definition of a local authority as per section 10(20) of the Act. Furthermore, the Tribunal cited multiple judicial precedents, including CHD Developers Ltd. and Jain Housing & Construction Ltd., which held that the requirement of a completion certificate did not apply to projects approved before 31/03/2005.

3. Applicability of Interest under Sections 234B and 234C:
The Tribunal concluded that the issue of charging interest under sections 234B and 234C is consequential in nature and dependent on the outcome of the primary issue regarding the deduction under section 80IB(10).

Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the deduction under section 80IB(10) could not be denied due to the absence of a completion certificate from CIDCO, as the project was approved before the condition's insertion date. The Tribunal directed the AO to allow the deduction and ruled that the interest under sections 234B and 234C would be consequential.