2015 (9) TMI 796 - AT - Income Tax

Validity of reopening u/s.147 - proportionate deduction u/s.80IB(10) - Held that - As regards the argument of the Ld. Counsel for the assessee that no reasons are recorded for issue of notice u/s.148 for both these assessment years, we find from the perusal of the order sheet entries that the reasons recorded by the AO are sufficient for reopening of the assessment. The argument of the Ld. Counsel for the assessee that the reopening is based on change of opinion is without any merit since the assessments for A.Yrs. 2005-06 & 2006-07 were completed u/s.143(1) and therefore there was no application of mind by the AO. Therefore, it cannot be said that the reopening of the assessments is based on change of opinion especially when new tangible material has come in the possession of the Assessing Officer. In this view of the matter, we are of the considered opinion that the reopening of the assessments by the AO is valid. Since in the instant case the project has been approved prior to 01-04-2005 and the assessee has admittedly completed construction of all the 7 buildings, therefore, the denial of deduction u/s.80IB(10) for non production of completion certificate for the 7th building is not justified in view of the decision of M/s. Satish Bora & Associates Versus Assistant Commissioner of Income Tax (2011 (1) TMI 1215 - ITAT PUNE ). In view of the above decision, the assessee is not required at all to submit the completion certificate since the project has admittedly been approved prior to 01-04-2005. Therefore, the claim of deduction u/s.80IB(10) in respect of all the 7 buildings in our opinion has to be allowed to the assessee. We hold and direct accordingly. In view of our above findings, the grounds raised by the revenue challenging the pro-rata deduction granted by the CIT(A) become infructuous and are dismissed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening assessments under Section 147 for Assessment Years 2005-06 and 2006-07.
2. Entitlement to deduction under Section 80IB(10) for the entire housing project for Assessment Years 2005-06 to 2007-08.
3. Pro-rata deduction under Section 80IB(10) for Assessment Years 2005-06 to 2007-08.

Issue-wise Detailed Analysis:

1. Validity of Reopening Assessments under Section 147 for Assessment Years 2005-06 and 2006-07:
The Tribunal examined the validity of reopening assessments for A.Y. 2005-06 and 2006-07. The assessee argued that no new tangible material was available to the AO, and the reopening was based on a change of opinion, as similar claims under Section 80IB(10) had been allowed in A.Y. 2004-05. The Department countered that new information from the Pune Municipal Corporation regarding part completion certificates and a notice to stop construction constituted tangible material justifying reopening. The Tribunal found that the assessments for A.Y. 2005-06 and 2006-07 were completed under Section 143(1), involving no application of mind by the AO. Thus, it concluded that the reopening was valid and dismissed the assessee's grounds on this issue.

2. Entitlement to Deduction under Section 80IB(10) for the Entire Housing Project for Assessment Years 2005-06 to 2007-08:
The Tribunal addressed the issue of the assessee's eligibility for deduction under Section 80IB(10) for the entire housing project, which included seven buildings. The AO had denied the deduction for Building No. D7 due to the absence of a completion certificate. The CIT(A) allowed pro-rata deduction for Buildings D1 to D6 but upheld the denial for Building D7. The Tribunal considered the legal precedents, including the decision of the Delhi High Court in CIT Vs. CHD Developers Ltd., which held that the amendment requiring completion certificates within four years did not apply to projects approved before 01-04-2005. Given that the project was approved on 22-12-2003, the Tribunal concluded that the assessee was entitled to the deduction for the entire project, including Building No. D7, and directed accordingly.

3. Pro-rata Deduction under Section 80IB(10) for Assessment Years 2005-06 to 2007-08:
The Tribunal examined the CIT(A)'s decision to grant pro-rata deduction for Buildings D1 to D6 while denying it for Building D7. The Department argued that there was no concept of pro-rata deduction under Section 80IB(10) and that the entire project must be completed to avail the deduction. The Tribunal, however, held that since the project was approved before 01-04-2005, the requirement to produce a completion certificate did not apply. Consequently, it allowed the deduction for the entire project, rendering the issue of pro-rata deduction moot.

Conclusion:
The Tribunal upheld the validity of reopening assessments for A.Y. 2005-06 and 2006-07, allowed the deduction under Section 80IB(10) for the entire housing project for A.Y. 2005-06 to 2007-08, and dismissed the grounds related to pro-rata deduction as moot. The appeals filed by the assessee were partly allowed, and those filed by the revenue were dismissed.