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2013 (8) TMI 74 - AT - Income TaxDeduction u/s. 80IB(10) disallowed - contention of the assessee that the assessee commenced its business by 10.3.2006 and in order to claim deduction u/s. 80IB(10) the project was completed by 31.3.2011 relevant to the assessment year 2011-12 i.e. within 5 years from the end of the financial year and for which completion certificate was received on 20.9.2011. Further it was stated that though the assessee was following block-wise completion contract method of accounting. Held that - The meaning of date of completion as given in section 80IB(10)(a) (ii) would mean date on which completion certificate in respect of housing project was issued by the local authority. To grant deduction u/s. 80IB(10) it is mandatory to furnish the completion certificate of the housing project but stipulation for obtaining completion certificate should not be so interpreted to mean that an assessee can claim exemption u/s. 80IB(10) only in the year of completion of whole of the housing project, even where the project stretches over a number of years and assessee returns its income based on percentage completion method. It would only mean that the assessee has to obtain such certificate on completion of the housing project, least it would lose the deduction already granted u/s. 80IB(10) for the earlier years if it is not so produced. As held in the case of Bajaj Tempo vs. CIT (1992 (4) TMI 4 - SUPREME Court) a provision in the taxing statutes granting incentives for promoting growth and development of the nation should be construed liberally. Further section 80IB(10)(a) only specified how to reckon the day of approval and date of completion. It would not mean that the assessee can have the benefit of section 80IB(10) only in the year of completion of the project, especially so, for an assessee not following project completion method for accounting its income. Of course if such period exceeded the prescribed limit, Revenue would be well within its rights to withdraw the claims already allowed, following the procedure prescribed under the Act. Thus, AO need not insist on the completion certificate in this assessment year, this is the right meaning of the statute. This view has also been taken by CBDT in its Instruction No. 4 of 2009 dt. 30.6.2009 As for the assessment year 2010-11, the assessee s claim u/s. 80IB(10) was granted on the basis of completion certificate issued by the GHMC, Circle-12, West Zone, Hyderabad vide letter dated 20.11.2011 showing that the project is completed within 5 years from the date of commencing of the project. When the Department accepted the same certificate in the A.Y. 2010-11, there is no reason to doubt the same certificate in the A.Y. 2009-10 to deny the deduction u/s. 80IB(10). See Kura Homes (P.) Ltd. Versus ITO 2012 (11) TMI 466 - ITAT HYDERABAD - appeal of the assessee is allowed.
Issues Involved:
1. Legality and factual correctness of the CIT(A)'s order. 2. Disallowance of the claim under Section 80IB(10) of the Income-tax Act, 1961. 3. Adverse inference drawn by the CIT(A) against the appellant. 4. Requirement and timing of the completion certificate for claiming deduction under Section 80IB(10). 5. Applicability of CBDT Instruction No. 4/2009 dated 30.06.2009. 6. Levy of interest under Section 234B. 7. Initiation of penalty proceedings under Section 271(1)(c). Detailed Analysis: 1. Legality and Factual Correctness of the CIT(A)'s Order: The assessee contended that the CIT(A)'s order was against the law and facts of the case. The CIT(A) had admitted additional evidence confirming the completion of the project within the stipulated period but still disallowed the claim under Section 80IB(10). The Tribunal found that the CIT(A) had misinterpreted the facts, as the completion certificate was indeed available but was not considered appropriately. 2. Disallowance of the Claim under Section 80IB(10): The assessee, a construction firm, filed a return declaring an income of Rs. 27,11,540 and claimed a deduction of Rs. 1,50,74,474 under Section 80IB(10). The Assessing Officer disallowed this deduction due to the non-submission of a completion certificate from the municipal authorities. The Tribunal noted that the project was completed by 31.03.2011, and the completion certificate was received on 20.09.2011. The Tribunal emphasized that the requirement was to complete the project within five years from the end of the financial year in which it was approved, which the assessee had complied with. 3. Adverse Inference Drawn by the CIT(A): The CIT(A) drew an adverse inference against the appellant, stating that the completion certificate was not produced during the assessment proceedings. The Tribunal found this conclusion unjustified, as the completion certificate was dated 20.09.2011, and the assessment order was passed on 30.12.2011. The Tribunal held that the CIT(A)'s adverse inference was based on a misrepresentation of facts and a deliberate falsification by the assessee was not evident. 4. Requirement and Timing of the Completion Certificate: The Tribunal clarified that while it is mandatory to furnish a completion certificate for claiming deduction under Section 80IB(10), it is not necessary to produce it for each year of the project. The certificate should be available by the statutory date, which in this case was 31.03.2011. The Tribunal found that the Department's insistence on the completion certificate for the assessment year under consideration was misplaced, as the certificate was to be obtained by the end of the project period. 5. Applicability of CBDT Instruction No. 4/2009: The Tribunal referred to CBDT Instruction No. 4/2009, which allows deduction on a year-to-year basis where the assessee shows profit from partial completion of the project. The Tribunal emphasized that the Department cannot insist on the completion certificate every year if the assessee follows the percentage completion method for accounting profits. The Tribunal highlighted that the beneficial circulars are binding on the Income-tax authorities. 6. Levy of Interest under Section 234B: The assessee argued that the Assessing Officer was not justified in levying interest under Section 234B. The Tribunal did not specifically address this issue in the detailed analysis, focusing instead on the primary issue of the completion certificate and the deduction under Section 80IB(10). 7. Initiation of Penalty Proceedings under Section 271(1)(c): The assessee contended that penalty proceedings under Section 271(1)(c) should not have been initiated as there was no willful concealment or furnishing of inaccurate particulars. The Tribunal did not delve into this issue in detail, given that the primary contention regarding the completion certificate and deduction was resolved in favor of the assessee. Conclusion: The Tribunal allowed the appeal, directing the Assessing Officer to allow the deduction under Section 80IB(10) of the Income-tax Act, 1961. The Tribunal emphasized the importance of interpreting tax provisions liberally to promote growth and development, and found that the Department's insistence on a completion certificate for each year was not justified. The appeal was allowed, and the order was pronounced in open court on 31st May, 2013.
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