2017 (3) TMI 814 - AT - Income Tax

Eligibility to claim deduction u/s 80IB(10) on the housing project developed - Held that - We concur with the view taken by Ld. CIT(A) that assessee was authorised to start construction of the project only on issuance of commencement certificate by the local authority, i.e. on 05-10- 2006. Therefore, it is actual approval letter, as is envisaged u/s 80IB(10)((a)(iii) of the Act. We find that the findings recorded by Ld. CIT(A) are well reasoned and in accordance with law and facts in this case. It is further noted by us that this issue is also covered in favour of the assessee by the judgements of the Tribunal as have been referred to by Ld. CIT(A) and also relied upon by the Ld. Counsel before us, wherein it has been held that date of approval as envisaged in section 80IB(10)((a)(iii) would be the date when assessee would be entitled to commence the construction of the project as per local law applicable. Thus, in view of the aforesaid discussion and facts of the case, the decision taken by the Ld. CIT(A) is hereby upheld. - Decided in favour of assessee

Summary

Issues:
Eligibility of the assessee to claim deduction u/s 80IB(10) on the housing project developed.

Analysis:
1. The appeal filed by the Revenue challenged the order of the Commissioner of Income-tax (Appeals) regarding the denial of deduction u/s 80IB(10) to the assessee for a housing project developed by them.
2. The main issue raised was the eligibility of the assessee to claim the deduction u/s 80IB(10) on the housing project developed by them in Thane.
3. The Assessing Officer (AO) denied the deduction as the housing project was not completed within the stipulated period of 5 years from the approval date by the local authority, which was noted as 28-03-2006.
4. The assessee contended that the actual approval date by the Thane Municipal Corporation was 05-10-2006, based on which the project completion deadline was 31-03-2012, and since the project was completed before this date, they were eligible for the deduction.
5. The Commissioner of Income-tax (Appeals) agreed with the assessee's argument, citing that the project approval date was indeed 05-10-2006, and the commencement certificate obtained on this date was the actual approval for construction, making the assessee eligible for the deduction.
6. During the hearing, the counsel for the assessee highlighted the sequence of events leading to the approval and commencement of the project, emphasizing that the commencement certificate on 05-10-2006 was the actual approval for starting construction.
7. The Tribunal concurred with the Commissioner's decision, upholding that the commencement certificate date was the crucial approval date for the project, as per section 80IB(10)(a)(iii) of the Act, and that the assessee had followed all legal formalities before commencing construction.
8. Considering the facts presented and legal precedents cited, the Tribunal dismissed the Revenue's appeal, affirming the eligibility of the assessee for deduction u/s 80IB(10) based on the actual approval date of 05-10-2006.

This comprehensive analysis covers the key details and legal aspects of the judgment, emphasizing the critical issue of eligibility for claiming the deduction under section 80IB(10) in the housing project development context.