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2018 (10) TMI 1945 - AT - Income TaxDeduction u/s 80IB (10) - Denial of deduction as assessee did not meet one of the most critical condition i.e. completion of the project within five years as per section 80IB(10)(a)(iii) - HELD THAT - As competent authority did not reject the application of the assessee seeking completion certificate but pointed out some deficiencies which were required to be eliminated or cured before the authority grants permission to live in the building constructed by the assessee. Therefore adverse view taken by the AO on the basis of said letter is not correct and justified as the deficiencies pointed by the competent authority were with regard to unauthorized construction of COP; putting instruction board for entrance and exit way car parking visitors parking scooter parking etc; for making provision for percolated borewell and signature of site supervisor in Form- 8 of living application/permission to live application and no deficiency has been pointed out in tower 2 5 7 and therefore even in existence of above noted deficiencies which are rectifiable and curable it cannot be denied that the building was completed on 17.03.2012 and application for issuance of completion certificate was submitted on 23.03.2012. Unauthorized/additional construction and was not regarding noncompliance of building and this deficiency does not establish in any manner that the building was not completed on the date of application i.e. 23.03.2012 and thus we safely presume that some addition construction was made in contravention or beyond the scope of construction permission which was required to be removed and it cannot be interpretated as an allegation of incomplete construction. The Gujarat Development and Construction Rules (GDCR) provides certain other requirement to be fulfilled before issuance of building completion certification such as certificates of competent technical expert/authority regarding the structural stability completion of building under stipulated supervision existence of certain facilities such as lift provision of proper marked parking lift and fire safety and certain other provisions for environmental protection in the form of tree planation and rain water harvesting and as we have noted above the assessee along with application seeking building completion certificate filed certificates/letters showing above mandatory compliances. Lack of marking of entrance exit way visitors parking car parking and scooter parking etc. which are required to be completed by way of putting some marking boards and the same is not substantially related to the deficiency in the construction of building but the same are related with the lack of indication/marking boards/displays. It is not a case of the AO that the assessee did not provide entrance exit way and parking places for residents visitors therefore in absence of certain indication or marking boards it cannot be hold that the building was not completed on the date of application seeking certificate of construction as on 23.03.2012. Provision for percolated borewell is concerned this is also relating to rain water harvesting system as the SMC Inspector reported that the water flow to borewell was not ok which shows that the construction was percolated borewell as required by the GDCR was made but the flow of water was not up to required mark and this deficiency does not establish that the building was not completed but only shows that the water flow in the percolated borewell was not proper functioning and the same was not up to required standard or mark. In our considered opinion on the basis of said deficiency also it cannot be presumed that the building was not completed on the date of application as on 23.03.2012. Missing signature of Supervision of Form No.8 and the ld. CIT(A) noted that the copy of Form- 8 dated 17.03.2012 was signed by the owner of project and structural Engineer Shri Jalil A sheikh which certifies that the building has been constructed according to sanctioned plan and structural design under supervision of qualified engineer. In our considered opinion this deficiency is not attributable to the allegation of the AO regarding incompleteness in the building but the same was merely related to a deficiency in the papers submitted along with application seeking building completion certificate and this shortcoming does not establish that the construction of tower No.2 5 7 was not completed as on 17.03.2012 and on 23.03.2012 i.e. the date on which said application was submitted before the competent authority of SMC. We are inclined to hold that the ld. First appellate authority was right in concluding and holding that the BUC has been granted by the competent authority of SMC on the basis of completion certificates of March 2012 on the basis of supporting evidences filed by the assessee establishing and showing completion of building viz. completion certificate of Govt. approved Charted Engineer stability certification of Structure Engineer license to use the lift certificate existence of required fire fighting equipments and possession letter issued to the allottees and the construction of project including tower no. 2 5 7 was completed on 17.03.2012 and application seeking building completion certificate before the competent authority in the prescribed form along with supporting documents and certificates was filed before the competent authority/Asst. Engineer of SMC on 23.03.2012 i.e. before the required date i.e. 31.03.2012 which supports the factum that the project qualifies the conditions for eligibility of deduction u/s. 80-IB(10) of the Act. Thus we reach to a logical conclusion that the ld. CIT(A) was right in allowing claim of the assessee for deduction u/s. 80IB(10) - Decided in favour of assessee.
Issues Involved:
1. Deduction under Section 80IB(10) of the Income Tax Act. 2. Completion of the project within the stipulated time. 3. Reliance on the judgment of the Hon'ble Gujarat High Court in the case of Tarnetar Corporation. 4. Interpretation of the completion date as per Section 80IB(10)(a) of the Income Tax Act. 5. Auditor's report on project completion. 6. Validity of the order of the Commissioner of Income Tax (Appeals). Detailed Analysis: 1. Deduction under Section 80IB(10) of the Income Tax Act: The primary issue revolves around whether the assessee is entitled to a deduction under Section 80IB(10) of the Income Tax Act amounting to ?50,58,54,491/-. The Revenue contends that the assessee did not meet the critical condition of completing the project within five years as per the stipulated guidelines. 2. Completion of the Project within the Stipulated Time: The Revenue argued that the assessee failed to complete the project within the stipulated five years, as the Building Use Certificate (BUC) for Towers 2, 5, and 7 was issued by the Surat Municipal Corporation on 28.09.2012, beyond the deadline of 31.03.2012. The CIT Departmental Representative (CIT-DR) emphasized that the completion date should be considered as the date when the completion certificate is issued by the local authority, which in this case was after the stipulated time. 3. Reliance on the Judgment of the Hon'ble Gujarat High Court in the Case of Tarnetar Corporation: The CIT(A) allowed the deduction by relying on the judgment of the Hon'ble Gujarat High Court in the case of Tarnetar Corporation, where it was held that if the project was completed before the final date but the local authority granted the business use permission after such date for technical reasons, the assessee would still be entitled to the deduction. The Revenue, however, argued that this judgment was not applicable as the facts of the present case were different and that the decision of the Gujarat High Court was challenged before the Supreme Court. 4. Interpretation of the Completion Date as per Section 80IB(10)(a) of the Income Tax Act: The CIT-DR argued that the date of completion should be taken as the date when the completion certificate is issued by the local authority. The CIT(A), however, held that the project was completed on 17.03.2012, and the application for the completion certificate was made on 23.03.2012, before the stipulated deadline. The CIT(A) concluded that minor deviations pointed out by the local authority should not vitiate the purpose of the deduction. 5. Auditor's Report on Project Completion: The auditor's report in Form 10CCB indicated that Towers 2, 5, and 7 were completed after 31.03.2012. However, the CIT(A) noted that the completion certificate from the Government approved chartered engineers and other supporting documents indicated that the construction was completed on 17.03.2012, and the application for the BUC was made on 23.03.2012. 6. Validity of the Order of the Commissioner of Income Tax (Appeals): The CIT(A) allowed the deduction by relying on the binding judgment of the Hon'ble Gujarat High Court and considering the factual evidence provided by the assessee. The Tribunal upheld the CIT(A)'s order, stating that the construction was completed within the stipulated time, and the delay in issuing the BUC by the local authority should not be attributed to the assessee. The Tribunal dismissed the Revenue's appeal, finding no merit in the grounds raised. Conclusion: The Tribunal concluded that the CIT(A) was correct in allowing the deduction under Section 80IB(10) of the Income Tax Act, as the project was completed within the stipulated time, and the delay in issuing the BUC by the local authority was not attributable to the assessee. The appeal of the Revenue was dismissed.
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