2016 (3) TMI 210 - AT - Income Tax

Denial of deduction u/s. 80IB(10) by reopening the assessment u/s. 147 - Held that - The commencement certificate issued on 13.11.1996 in the name of Sunil Builders got expired on 12.11.1997 and the assessee on entering into development agreement with Sunil Builders applied for commencement certificate on 13.5.1999 and got certificate dated 5.8.1999 and the project was commenced by the assessee pursuant to the certificate dated 5.8.1999 and since the project was commenced after 1.10.1998, assessee is entitled for deduction u/s. 80IB(10) of the Act - Decided in favour of assessee.

Summary

Issues:
- Eligibility for deduction u/s. 80IB(10) of the Income Tax Act based on the commencement date of a housing project.
- Validity of reopening the assessment u/s. 147 of the Act.
- Cross objection challenging the order of the Ld. CIT(A) in upholding the reopening of the assessment.

Analysis:

Issue 1: Eligibility for deduction u/s. 80IB(10)
The Revenue contended that the project had commenced before 1.10.1998 based on the issuance of a commencement certificate on 13.11.1996. However, the Ld. CIT(A) upheld the claim of deduction u/s. 80IB(10) by considering that the project was actually commenced by the assessee after obtaining a new commencement certificate on 5.8.1999. The Ld. CIT(A) reasoned that the original certificate issued to another entity had expired, and the assessee initiated the development work only after obtaining the new certificate. The Ld. CIT(A) highlighted that the commencement certificate in the name of the assessee was the basis for the project's commencement post-1.10.1998, making the assessee eligible for the deduction u/s. 80IB(10).

Issue 2: Validity of reopening the assessment
The AO had reopened the assessment u/s. 147 of the Act, primarily to deny the deduction u/s. 80IB(10) based on the commencement date of the project. The Ld. CIT(A) upheld the validity of the reopening while allowing the deduction to the assessee. The Ld. CIT(A) emphasized that the project's actual commencement date, as per the new commencement certificate issued to the assessee, justified the eligibility for the deduction, thereby supporting the AO's decision to reopen the assessment.

Issue 3: Cross objection challenging the order
The assessee filed a Cross objection challenging the order of the Ld. CIT(A) in upholding the reopening of the assessment. However, the Cross objection was dismissed as it was filed after a significant delay of 103 days without any petition for condonation of the delay. The dismissal of the Cross objection was based on procedural grounds, rendering it infructuous once the Ld. CIT(A)'s order was upheld.

In conclusion, the Appellate Tribunal upheld the decision of the Ld. CIT(A) regarding the eligibility of the assessee for deduction u/s. 80IB(10) based on the actual commencement date of the housing project. The Tribunal also supported the validity of reopening the assessment u/s. 147 of the Act in this context. The dismissal of the Cross objection due to procedural delays further solidified the outcome of the case.