2012 (7) TMI 205 - AT - Income Tax

Denial of deduction u/s 80IB(10)- Held that - As exists no dispute to the provisions of law relevant to assessment year 2007-08 and 2008-09 that for claim of deduction u/s 80IB(10) the housing project which have been approved prior to 31st March, 2005, the same are required to be completed by 31st March, 2009, and certificate of completion is to be issued by the Municipal Authorities in this regard - Since the certificate for giving approval of the project was dated 29.3.2005, assessee s eligibility for claim of deduction u/s 80IB(10) is to be judged with reference to the date of this certificate and merely because certificate provides issue of no dues certificate issued subsequently on 1.4.2005 and dispatched to the assessee on 5.4.2005, it cannot be held that building permission was given only after 1st April, 2005 - Thus as per this permission letter dated 29.3.2005, the assessee was required to complete project by 31st March, 2009, whereas the assessee has completed the project by 31st March, 2010 - denial of deduction is hence warranted - decided against assessee.

Summary

Issues Involved:
1. Determination of the approval date of the housing project.
2. Compliance with the completion deadline for the housing project.
3. Eligibility for deduction under Section 80IB(10) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Determination of the approval date of the housing project:
The primary contention revolves around the date when the housing project was approved. The assessee argued that the project was approved on 1.4.2005 after obtaining the Zonal NOC, while the CIT(A) and the Assessing Officer (AO) maintained that the project was approved on 29.3.2005. The CIT(A) referenced multiple permissions granted to the appellant on different dates, with the first approval dated 29.3.2005. This date was crucial as it determined the deadline for project completion under Section 80IB(10).

2. Compliance with the completion deadline for the housing project:
According to Section 80IB(10), the housing project must be completed within four years from the end of the financial year in which it was approved. Given the approval date of 29.3.2005, the project needed to be completed by 31.3.2009. The assessee failed to produce the completion certificate by this deadline, providing it only after the assessment proceedings had concluded. The completion certificates dated 30.3.2010 indicated that the project was completed by this later date, thus missing the statutory deadline.

3. Eligibility for deduction under Section 80IB(10) of the Income Tax Act:
The assessee claimed deduction under Section 80IB(10), which was contingent upon the timely completion of the housing project. Since the project was not completed by 31.3.2009, the CIT(A) and the AO disallowed the deduction. The CIT(A) noted that the appellant's arguments about the approval date being 5.4.2005 were an afterthought and not substantiated by the records. The Municipal Corporation, Bhopal, confirmed that the project was approved on 29.3.2005, and the completion certificate dated 30.3.2010 confirmed the project's completion beyond the stipulated period.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, concluding that the housing project was approved on 29.3.2005 and needed to be completed by 31.3.2009 to qualify for the deduction under Section 80IB(10). The project completion by 31.3.2010 did not meet the statutory requirements, and thus, the assessee's claim for deduction was rightly denied. The appeals filed by the assessee were dismissed, affirming the lower authorities' findings.