2012 (9) TMI 688 - AT - Income Tax

Disallowance of Claim u/s 80IB(10) - The assessee is engaged in the business of construction and sale of residential house - Assessee constructed houses claiming deduction u/s 80IB(10) with built-up area of less than 1500 sq. ft. One house measured by registered valuer found to be more than 1500 sq. ft. Project has been completed but Municipal Corporation has not issued completion certificate - Held that - As the local municipal authority has not issued the completion certificate till date which clearly shows that the required conditions were not fulfilled. It is worth mentioning here that as per certificate of the architect a general letter To Whom It May Concern has been mentioned and it is not addressed to the Municipal authorities. Even otherwise there is no signature/seal of the Municipal authorities evidencing that this letter was in fact filed before the Municipal authorities. Appeal decides in favour of assessee

Summary

Issues:
Dispute over disallowance of claim under section 80IB(10) of the Income Tax Act due to alleged oversight of evidence regarding built-up area exceeding 1500 sq. ft.

Analysis:
The appellant contested the disallowance of the claim under section 80IB(10) of the Act, arguing that only one house exceeded the prescribed limit of 1500 sq. ft. due to unauthorized additions by the previous owner. The appellant also sought pro rata deduction or reliance on precedents supporting deduction for houses within the limit. The respondent, however, maintained that the conditions of section 80IB(10) were not met, as no completion certificate was obtained, and the built-up area exceeded the limit. The respondent emphasized that no evidence was presented to prove compliance with the prescribed limit for the other houses.

The Tribunal examined the records and arguments presented. The appellant had declared income and claimed a deduction under section 80IB(10) for a project named Crystal Campus. The project was initiated in 2003 with a completion deadline of 2008. The appellant constructed 95 houses on the land acquired, but the completion certificate was not obtained. The Tribunal highlighted the specific conditions outlined in the approval by the Municipal Corporation, emphasizing the need for compliance with the prescribed limits.

Regarding section 80IB(10) of the Act, the Tribunal noted that the approval was granted to a different entity, not the appellant, and the built-up area of the house in question exceeded the limit. The absence of evidence for compliance with the limit for the other houses further weakened the appellant's case. The Tribunal referenced the CIT(A)'s findings, where it was established that the conditions of the Act were not fulfilled, leading to the disallowance of the deduction. The lack of a completion certificate from the municipal authority further supported the decision to deny the deduction.

In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing that the appellant failed to meet the conditions specified in section 80IB(10) of the Act. The Tribunal found no merit in the appellant's arguments or the cited precedents, as the facts of the present case did not align with those cases. The absence of conclusive evidence and the failure to obtain a completion certificate were crucial factors in denying the deduction. The order was pronounced after a thorough analysis of the arguments presented by both sides on 11th July 2012.