2017 (2) TMI 66 - AT - Income Tax

Disallowance of claim of deduction u/s. 80IB(10) - assessee has not completed the entire project before stipulated date i.e. 31st March, 2008, and the assessee has not produced completion certificate from the competent local authority - Held that - As decided in assessee s own case for earlier AY assessee should not suffer for any administrative change with regard to applicability of building bye laws in particular area. The problem arose with regard to completion certificate by PMC by virtue of the fact that area of the land in question was excluded from PMC limits at relevant point of time as discussed above. In such peculiar conditions, the benefit bestowed on assessee should not be denied for no fault of the assessee. Such liberal interpretation should be used in favour of assessee when he is incapacitated in complying certain provisions for the reasons beyond his control. In case before us, problem arose due to the change of jurisdiction with regard to confusion of applicability of building bye laws because of change of jurisdiction by virtue of exclusion of land in question from PMC limits. The assessee should not suffer for the same. Under such circumstances, liberal interpretation should be used in favour of the assessee. It is settled legal position that law always gives remedy and law does wrong to no one. We are aware that provisions of section 80IB(10) suggest about only completion of construction and no adjective should be used alongwith word completion . This strict interpretation should be given in normal circumstances but facts before us are peculiar because of change of jurisdiction of land for the purpose of applicability of building bye laws. Assessee was incapacitated to obtain completion certificate from PMC because of exclusion of land in question from PMC limits which is beyond the control of the assessee. Assessee should not suffer for the same. - Decided in favour of assessee.

Summary

Issues Involved:
1. Whether the assessee fulfilled the conditions laid down in Section 80IB(10) of the Income Tax Act, 1961 for claiming deduction.
2. Whether the assessee completed the housing project before the stipulated date of 31st March 2008.
3. Whether the completion certificate from the competent local authority was produced by the assessee.

Issue-wise Detailed Analysis:

1. Fulfillment of Conditions under Section 80IB(10):
The Revenue challenged the allowance of the assessee's claim for deduction under Section 80IB(10) on the grounds that the conditions specified in this section were not met. The Commissioner of Income Tax (Appeals) allowed the assessee's appeals by relying on the decision of the Co-ordinate Bench of the Tribunal in the assessee’s own case for the assessment year 2006-07, where it was held that the assessee was eligible for the deduction. The Tribunal in the earlier case had determined that the housing project 'Mahaganesh Nagari' qualified for the deduction under Section 80IB(10).

2. Completion of Housing Project Before Stipulated Date:
The Assessing Officer disallowed the deduction on the basis that the entire project was not completed by the stipulated date of 31st March 2008. The Tribunal noted that the housing project was developed in two phases, with the first phase approved by the Pune Municipal Corporation on 31-03-2001 and the second phase on 25-01-2007. The first phase, comprising buildings A, B, C, D, and E, was completed with a certificate obtained on 28-02-2008, while the second phase, which had a completion deadline of 31-03-2012, also had its buildings (F, G, and H) completed by 28-02-2008. The Tribunal upheld that the project met the completion requirements as per the provisions of Section 80IB(10).

3. Production of Completion Certificate from Competent Local Authority:
The Assessing Officer also disallowed the deduction on the grounds that the assessee did not produce a completion certificate from the competent local authority. The Tribunal, however, found that the completion certificate for the first phase was issued by the Gram Panchayat Keshavnagar, Mundhwa, and there was no procedure for obtaining such a certificate from the Pune Municipal Corporation (PMC) due to administrative jurisdiction changes. The Tribunal referenced the case of CIT vs. Vandana Properties, which clarified that a housing project could consist of multiple buildings and that the approval of a building plan constituted the approval of a housing project. The Tribunal concluded that the Gram Panchayat was a competent local authority to issue the completion certificate under the circumstances.

Conclusion:
The Tribunal upheld the orders of the Commissioner of Income Tax (Appeals), confirming that the assessee fulfilled the conditions for claiming the deduction under Section 80IB(10), completed the housing project within the stipulated timelines, and obtained the necessary completion certificate from a competent local authority. Consequently, all three appeals by the Revenue were dismissed.