2020 (3) TMI 600 - AT - Income Tax

Deduction u/s.80IB(10) - Not having completed the project during the eligible period - out of the total 60 flats since for these 12 flats, completion certificate was not received - Assessing Officer held that the initial permission being given to the 60 flats the assessee has, therefore, failed to complete the project within 4 years from the ends of the financial year in which the project was approved i.e.31.03.2009 - HELD THAT - Assessee has accepted disallowance made by the Assessing Officer for assessment year 2009-10 and paid the entire demand and has not filed an appeal against that order. The Explanation of the provision clearly states that the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority. This signifies that in order to get deduction under the relevant provision, after completion of the project, completion certificate has to be obtained from the concerned authority i.e. Municipal Corporation etc. which cannot be done away with. This becomes the fundamental requirement of this provision since prior to receiving the completion certificate whatever work is done, it cannot be said that the project has been completed and there has to be some authoritative check and finding about the completion of the project which is thereafter fit for residing etc. Therefore, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is hereby upheld. Thus, grounds raised in appeal by the assessee are dismissed. Deduction u/s 80IB - requirement of Section 80IB(10)(b) of the Act which states the project is on the size of the plot of land which has a minimum area of one acre - contention of the Revenue that after deducting the D.P Road, the total area of the plot which remains is only 3994.25 sq.mts which is less than one acre - First Appellate Authority has opined that what CBDT circular directed is that the area limit of the plot has to be understood with reference to the area of the site and not with reference to the demarcation done by the Municipal Authorities - HELD THAT - It is settled legal position that area of land has to be determined including the D.P Road also procured by the Municipal Corporation since the area or size of the land for the project is rightly to be understood considering all amenities which are to be provided to the assessee. Such D.P. Road acquired by the Municipal Corporation cannot be reduced from the total land area of the project. This is moreso in terms with principles of equity and fairplay since the local authority or the Municipal Corporation has to work under certain set of rules and regulations but those set of rules and regulations should not restrict the right of the assessee. The project size has to be looked into in totality with all amenities which is already there even before such D.P. Road is acquired by the Municipal Authority. Therefore, such D.P. Road cannot be alienated or separated from main portion of the land and the area of the plot should be inclusive of the land acquired by the Municipal Corporation as D.P Road. Therefore, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and relief provided to the assessee on this issue is hereby sustained.

Summary

Issues Involved:

1. Deduction under Section 80IB(10) of the Income Tax Act, 1961.
2. Completion certificate requirement for claiming deduction.
3. Inclusion of D.P. Road area in the plot size for eligibility of deduction.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IB(10) of the Income Tax Act, 1961:

The primary issue revolves around the eligibility of the assessee for deduction under Section 80IB(10) of the Income Tax Act, 1961. The Revenue contended that the assessee did not fulfill the conditions laid down in Section 80IB(10), specifically regarding the completion of the project within the stipulated time and the inclusion of the D.P. Road area in the plot size. The assessee argued that the project was completed, and the delay in obtaining the completion certificate was not attributable to them.

2. Completion Certificate Requirement for Claiming Deduction:

The assessee's appeal (ITA No.602/PUN/2016) focused on the disallowance of deduction for 12 out of 60 flats due to the non-receipt of the completion certificate. The assessee contended that the flats were completed, and the delay in obtaining the completion certificate was due to the Municipal Corporation withholding it pending the surrender of the D.P. Road area. The Ld. CIT(Appeals) disallowed the deduction for these 12 flats, stating that the completion certificate is a fundamental requirement for claiming the deduction under Section 80IB(10). The Tribunal upheld this decision, emphasizing that the completion certificate from the concerned authority is essential to justify the deduction.

3. Inclusion of D.P. Road Area in the Plot Size for Eligibility of Deduction:

The Revenue's appeal (ITA No.443/PUN/2016) contested the inclusion of the D.P. Road area in the plot size, arguing that after deducting the D.P. Road, the remaining plot area was less than one acre, thus disqualifying the project from the deduction under Section 80IB(10). The assessee argued that the area of the plot should be considered inclusive of the D.P. Road as per the project plan approved by the local authority. The Tribunal referred to the CBDT Circular and previous decisions, including Bunty Builders Vs. ITO, which supported the inclusion of the D.P. Road in the plot size. The Tribunal upheld the Ld. CIT(Appeals)'s decision, stating that the area of the plot should be inclusive of the land acquired by the Municipal Corporation as D.P. Road, aligning with principles of equity and fair play.

Conclusion:

The Tribunal dismissed both the appeals, upholding the Ld. CIT(Appeals)'s decisions. The assessee was allowed deduction for 48 out of 60 flats, and the inclusion of the D.P. Road area in the plot size was accepted for determining eligibility under Section 80IB(10). The requirement of obtaining a completion certificate from the concerned authority was emphasized as a fundamental condition for claiming the deduction.