2017 (8) TMI 1134 - AT - Income Tax

Disallowing the claim of deduction under section 80IB(10) - assessee failure to produce occupancy certificate of the local authorities i.e. Vasai Municipal Corporation within the prescribed time limit - Held that - Once architect has given certificate for completion and such certificate is submitted before the Municipal Authority along with application, and deposited the amount for issuance of OC, the delay cannot be attributed to the assessee and it shall be considered as fulfillment of all the conditions as prescribed u/s 80IB(10) of the Act. In the present case before us, we find that the commencement certificate of the project was dated 17-07-2003 and assessee fulfilled all the conditions because he could not have obtained the completion certificate from local authority on or before 31-03-2008 but obtained architect certificate that the project was completed before October 2006 as issued by the architect M/s W N Associates dated 12-10-2006 and submitted before the Vasai Municipal Authority. Even otherwise, the issue is covered by the Tribunal decision in assessee s own case in the immediate preceding year. - Decided in favour of assessee.

Summary

Issues:
Appeals against disallowance of deduction under section 80IB(10) of the Income Tax Act, 1961.

Analysis:
1. The appeals arose from the order of CIT(A) confirming the disallowance of deduction under section 80IB(10) of the Act. The assessees, being builders and developers, claimed the deduction but were denied by the AO due to the failure to produce the occupancy certificate from the local authorities within the prescribed time limit. The CIT(A) upheld the disallowance, relying on previous court decisions.

2. The main contention was the completion of the project before the specified date. The assessees argued that although the occupancy certificate was not obtained within the deadline, they had fulfilled all other conditions and obtained a completion certificate from the architect. The architect's certificate confirmed the project's completion before the deadline, which was submitted to the municipal authority.

3. The Tribunal considered the architect's certificate as crucial evidence of completion, following the precedent set by the Hon'ble Bombay High Court. The High Court's judgment emphasized the importance of the architect's certificate in determining project completion, even if the municipal authority delayed issuing the occupancy certificate. The delay in obtaining the occupancy certificate could not be attributed to the assessees, as they had fulfilled all conditions as required under section 80IB(10) of the Act.

4. Relying on the Tribunal's decision in the assessees' previous year's case and the legal principles established by the High Court, the Tribunal allowed the appeals of the assessees. The completion certificate from the architect, submitted to the municipal authority in a timely manner, was deemed sufficient to fulfill the conditions for claiming the deduction under section 80IB(10) of the Act.

5. The Tribunal's decision highlighted the importance of the architect's certificate in proving project completion and emphasized that delays in obtaining the occupancy certificate should not penalize the assessees if they have met all other statutory requirements. The appeals were allowed, overturning the CIT(A)'s disallowance of the deduction under section 80IB(10) for the assessees.

This comprehensive analysis of the judgment provides a detailed overview of the legal issues, arguments presented, and the Tribunal's decision in favor of the assessees.