2015 (10) TMI 530 - AT - Income Tax

Deduction u/s 80IB(10) - calculation of date of approval - CIT(A) allowed the claim - Held that - There should not be any dispute that the date of commencement contemplated in section 80IB(10) is the physical date of Commencement of the project. Hence, in our view, the assessing officer was not correct in observing that the date of commencement is to be taken as the date of approval. We have already noticed that the assessee had filed copies of NOC obtained from the Chief Fire officer before the Ld CIT(A) and the same were confronted with the assessing officer. During the course of remand proceedings, the assessing officer has made necessary enquiries with the Fire department and has come to know of the fact that the construction could not be commenced without obtaining the NOC from the Chief fire Officer. We notice that the Ld CIT(A) has duly considered the NOCs issued by the Chief Fire Officer and also the remand report and accordingly held that the construction has commenced after the first day of October, 1998. Since the first appellate authority has endorsed the view expressed by the assessing officer in the remand report, normally the revenue should not get aggrieved by the order passed by Ld CIT(A). Still, the revenue has filed this appeal challenging the finding given by the first appellate authority on the basis of the view expressed by the AO. Hence, we do not find any merit in the ground urged before us in the present appeal. Accordingly, we uphold the order of Ld CIT(A). - Decided against revenue.

Summary

Issues:
1. Allowance of deduction u/s 80IB(10) of the Act to the extent of Rs. 16.01 crores.
2. Commencement of housing project violating clause (a) of 80IB(10).
3. Disallowance of deduction in respect of Buildings T-34 & T-35.
4. Disallowance of deduction for Buildings T-36 & T-37 due to project commencement before 01-10-1998.
5. Additional evidences submitted by the assessee regarding project commencement.
6. Interpretation of provisions of sec. 80IB(10) regarding project approval and commencement.

Analysis:
1. The appeal concerns the deduction claimed by the assessee u/s 80IB(10) of the Act amounting to Rs. 16.01 crores. The revenue contested the decision of Ld CIT(A) in allowing the deduction, arguing that the project commencement violated the clause of 80IB(10) which mandates commencement on or after 1st October, 1998.

2. The dispute arose from the approval and commencement dates of the housing project. The AO rejected the deduction for Buildings T-34 & T-35 due to non-consideration in earlier years. For Buildings T-36 & T-37, the AO contended that project commencement predated 01-10-1998 based on the first IOD issued on 10-07-1997, contrary to 80IB(10) requirements.

3. In response, the assessee submitted additional evidences including NOCs and a certificate from an Architect. The Ld CIT(A) sought a remand report from the AO, who confirmed that the NOCs were obtained after 1.10.1998, indicating project commencement post that date. Consequently, Ld CIT(A) allowed the deduction for Buildings T-36 & T-37.

4. The interpretation of sec. 80IB(10) was crucial in determining project commencement. The assessing officer equated project approval date with commencement, a view not upheld by the tribunal. The NOCs obtained after 1.10.1998 were deemed essential for project initiation, leading to the dismissal of the revenue's appeal.

5. Ultimately, the tribunal upheld the decision of Ld CIT(A) based on the evidence provided by the assessee and the remand report. The project was deemed to have commenced after 1st October, 1998, meeting the conditions stipulated under sec. 80IB(10) of the Act.

6. The judgment highlights the significance of adhering to statutory timelines for project approval and commencement under sec. 80IB(10). The tribunal's interpretation emphasized the physical commencement date over the approval date, ensuring compliance with the legislative intent behind the deduction provision.