2018 (7) TMI 1988 - AT - Income Tax

Deduction u/s. 80IB(10) - denial of deduction as assessee has failed to furnish completion certificate from the local authority i.e. PMC - CIT-A allowed deduction - HELD THAT - In the instant case we find that the Architect issued completion certificate confirming completion of project as per sanctioned plan on 16- 02-2011. However, it is not emanating from records as to when the assessee applied to the local authority i.e. PMC for issuance of occupancy certificate. Assessee has pointed that the PMC has approved the issuance of completion certificate but has withheld the formal issuance of certificate for some compliance. This fact requires verification. The benefit of deduction u/s. 80IB(10) should not be denied to the assessee, if the assessee has applied to the PMC for issuance of completion/occupancy certificate before the due date i.e. 31- 03-2011. The issue is restored to the AO for the limited purpose to verify the date on which the assessee approached PMC for issuance of completion/occupancy certificate. The assessee is directed to furnish necessary relevant documents to AO indicating the date on which the assessee applied to PMC for issuance of completion/ occupancy certificate. AO after examining the documents and in the light of our above observations shall allow/reject deduction u/s. 80IB(10), as the case may be. - Appeal of Revenue is allowed for statistical purpose.

Summary

Issues:
- Appeal against allowance of deduction u/s. 80IB(10) for assessment year 2010-11.
- Dispute over completion certificate for housing project "Fortune East" at Pune.
- Assessing Officer's denial of deduction due to lack of completion certificate.
- Arguments regarding completion certificate issuance by Architect and Pune Municipal Corporation (PMC).

Analysis:
1. Appeal against Deduction u/s. 80IB(10):
The appeal was filed by the Revenue challenging the Commissioner of Income Tax (Appeals)'s decision to allow the assessee's claim of deduction u/s. 80IB(10) for the assessment year 2010-11. The primary issue revolved around the denial of this deduction by the Assessing Officer due to the absence of a completion certificate for the housing project "Fortune East" developed by the assessee.

2. Dispute Over Completion Certificate:
The case involved the builder and developer assessee who had claimed a deduction u/s. 80IB(10) amounting to ?4,85,22,353 for the housing project in Pune. The Assessing Officer contended that the project should have been completed before 31-03-2011, and failure to provide a completion certificate led to the denial of the deduction. The crux of the matter was the absence of a formal completion certificate from the Pune Municipal Corporation (PMC) for the project.

3. Arguments Regarding Certificate Issuance:
The Department's representative highlighted the non-availability of a completion certificate from the competent authority for the housing project. On the contrary, the assessee's representative argued that the Architect had issued a completion certificate on 16-02-2011, and the PMC had approved it but deferred the formal issuance until certain conditions were met. The contention was that the completion of the project was not in question, and the delay in certificate issuance should not impact the deduction claim.

4. Judicial Analysis and Decision:
The Tribunal analyzed the facts and legal precedents cited by both sides. It noted that the completion certificate was crucial for claiming the deduction u/s. 80IB(10) and that the assessee had to approach the PMC for occupancy certificate before the due date. The Tribunal found merit in the assessee's argument regarding the Architect's certificate and the PMC's delayed formal issuance. Consequently, the Tribunal directed the Assessing Officer to verify when the assessee applied to the PMC for the certificate and instructed the assessee to provide relevant documents for verification.

5. Outcome and Conclusion:
The Tribunal allowed the Revenue's appeal for statistical purposes, indicating that further verification was needed regarding the application date for the completion/occupancy certificate. The decision highlighted the importance of timely application and approval processes for claiming deductions under the Income Tax Act, emphasizing the need for proper documentation and compliance with regulatory requirements.

This detailed analysis encapsulates the key issues, arguments presented, judicial reasoning, and the ultimate decision rendered by the Appellate Tribunal ITAT Pune in the cited judgment.