2015 (3) TMI 1368 - AT - Income Tax

Deduction u/s 80IB(10) - as per revenue the original commencement certificate was issued to the assessee on 06.09.1991 i.e prior to 01st October 1998 - CIT-A allowed the claim - HELD THAT - The condition for commencement is a primary condition and if the project is found commenced prior to 1.10.1998, it would not be entitled for deduction u/s 80IB(10), at the threshold without going into the other condition prescribed under the other clauses of section 80IB(10) There was some dispute at the time of original approval granted by the CIDCO on 6.9.1991 on the point of development charges as well as theatre and shops in the development plan. Accordingly, the original owner of the land in question challenged the action of CIDCO rejecting the modified development proposal vide order dated 18.06.1998 by filing the appeal u/s 47 of the Maharashtra Regional and City Planning Act 1966. The appeal was decided by the appellate authority on 8.9.1999. In pursuant to the order of appellate authority, the amended approval certificate dated 3.10.2005 was issued by the CIDCO. From perusal of the order dated 8.9.1999, we find that there was some construction in the project prior to the amendment proposal in the development plan put forward by the owner of the land which was rejected by the CIDCO vide order dated 18.06.1998. Therefore, the commencement of the project has to be taken into account as per the actual construction work started in respect of the project and not by taking into consideration the original sanction and amended sanction of the plan. Since the actual work of construction and development of the project has not been examined by the authorities below, therefore, in the facts and circumstances of the case, we set aside this issue to the record of AO for proper verification and examination of the fact and then decide the issue as per law. The issue of completion of project within the prescribed time limit is kept open - Decided in favour of revenue for statistical purposes.

Summary

Issues:
Interpretation of deduction u/s 80IB(10) - Commencement certificate date discrepancy.

Analysis:
The case involved a dispute regarding the eligibility of the assessee for deduction u/s 80IB(10) of the Income Tax Act. The assessee, a partnership firm engaged in the business of builders and developers, claimed a deduction of &8377; 63,80,690/- for the A.Y. 2007-08. The primary contention was whether the project had commenced on or after 1st October 1998, a crucial condition for availing the deduction. The Assessing Officer (AO) noted that the first approval of the housing project by the local authority was on 6.9.1991, which was later amended on 3.10.2005. The AO disallowed the deduction, citing that the approval was obtained before the specified date.

The CIT(A) allowed the claim of the assessee, emphasizing that the project was not commenced before 3.10.2005, thus rejecting the 6.9.1991 approval as the commencement date. The Revenue contended that the original commencement certificate predated the eligibility criteria, challenging the CIT(A)'s interpretation. The Assessing Officer's decision was based on the premise that the date of the commencement certificate issued by the local authority is crucial for determining the project's start date, as per Explanation 1 to section 80IB(10).

The Appellate Tribunal analyzed the provisions of section 80-IB(10) in detail, emphasizing that the commencement date is a fundamental condition for availing the deduction. The Tribunal highlighted that the approval date by the local authority primarily dictates the project completion timeline, not the commencement date. It was noted that the actual construction work start date should determine the project's commencement, not the original or amended approval dates. The Tribunal found discrepancies in the original approval process and directed the Assessing Officer to reevaluate the project's actual commencement based on construction work initiation.

The Tribunal set aside the issue for further verification by the Assessing Officer to ascertain the actual commencement date based on construction activities. The completion of the project within the stipulated time limit was left open for future consideration. Ultimately, the appeal was allowed for statistical purposes, emphasizing the importance of correctly determining the project's commencement date for availing deductions under section 80IB(10) of the Income Tax Act.