2013 (1) TMI 599 - AT - Income Tax

Deduction u/s 80IB - Whether in the absence of any completion certification showing completion of project before 31/03/2009 by the local authority, the assessee is entitled for claim of deduction u/s 80IB(10) - Assessee obtained approval from Municipal Authorities for construction of the project on 26/06/2004 - Structural Engineer certified that the project is completed on 15.9.2008 i.e. six months prior to the due date - The GHMC authorities issued completion certificate on 31.11.2009 i.e. 14 months after submission of completion certificate by the Structural Engineer Held that - Following the decision in case of Satish Bora & Associates (2011 (1) TMI 1215 - ITAT PUNE) has set a legal principle under the provision of relevant Municipal Laws, where there is no concept of completion certificate but only the occupancy certificate. It also contains the provisions for deemed issue of completion certificate if Municipal Authorities did not raise objections if any after filing of the Completion Certificate by the concerned Architect It is not clear as to why the GHMC took only 14 months to issue the certificate and if there are any deviations from the approved plans by the assessee. One must examine, if the relevant Municipal Laws / Rules / Guidelines specify any time limitation for processing the certificate filed by the Architect / Structural Engineer as the case may be and issue of the final completion certificate. AO must also examine, if there is any provision in local laws for deemed acceptance of the Completion Certificate filed by the Structural Engineer of the project in local laws. All these issue requires the explanation of the assessee with the supportive evidence of law rules. The minor deviation if any ought not to disentitle the assessee for availing deduction. For fresh adjudication remand back to AO

Summary

Issues Involved:
1. Eligibility for deduction under section 80IB of the I.T. Act.
2. Validity and timing of the completion certificate issued by the local authority.
3. Interpretation of statutory provisions and rules regarding completion certificates.
4. Applicability of judicial precedents and principles of statutory interpretation.

Detailed Analysis:

1. Eligibility for Deduction under Section 80IB of the I.T. Act:
The assessee company, engaged in the business of Builders and Property Development, claimed a deduction under section 80IB of the I.T. Act for the assessment years 2007-08 and 2008-09. The Assessing Officer (AO) disallowed the deduction because the completion certificate from the Commissioner, GHMC West Zone, was dated 30/11/2009, which was beyond the statutory period. The AO also noted that the regularization of plans was completed on 31/08/2009, indicating the project's actual completion date.

2. Validity and Timing of the Completion Certificate:
The assessee argued that the construction was completed by 15/09/2008, supported by certificates from a Registered Architect and a Licensed Structural Engineer. The assessee applied for the completion certificate on 19/03/2009, but it was issued only on 30/11/2009. The CIT(A) held that the GHMC certificates did not mention the completion date, and thus, the date of the GHMC certificate (30/11/2009) was taken as the completion date, which was beyond the statutory period.

3. Interpretation of Statutory Provisions and Rules:
The assessee contended that the delay in issuing the completion certificate was not attributable to them and cited the Supreme Court's decision in K.P. Varghese vs. Income Tax Officer, emphasizing that statutory provisions should not be interpreted literally if it leads to absurd results. The assessee also referred to various judicial precedents, arguing that the completion certificate from the local authority should be considered valid even if issued after the statutory period, provided the application was made within time.

4. Applicability of Judicial Precedents and Principles of Statutory Interpretation:
The assessee relied on the ITAT Pune Bench decision in Satish Bora & Associates, where it was held that the completion certificate's issuance date should revert to the application date if there were no objections from the local authority. The Tribunal noted that the local laws of Hyderabad regarding deemed issuance of completion certificates were not discussed and required further examination. The Tribunal set aside the issue to the AO for fresh adjudication, considering the local Municipal Laws of Hyderabad and the principles established in the cited judicial precedents.

Conclusion:
The Tribunal found that the delay in issuing the completion certificate was not attributable to the assessee and set aside the issue to the AO for fresh adjudication in light of local municipal laws and relevant judicial precedents. The appeals for both assessment years 2007-08 and 2008-09 were allowed for statistical purposes, with directions to the AO to re-examine the matter.