2015 (6) TMI 460 - HC - Income Tax

Deduction claimed under section 80IB(10) disallowed - as per AO Building Use Permission ( the BU Permission ) and/or Completion Certificate was granted by the local authority only with respect to 20 units within a period of four year from the date of approval of the project by the local authority and not with respect to the entire housing project consisting of 43 units - ITAT allowed deduction - Held that - Considering the decision of CIT V/s. Tarnetar Corporation 2012 (10) TMI 803 - GUJARAT HIGH COURT as the assessee completed project / construction of all 43 units within 4 years from the date of approval by the competent authority and also applied for B.U. Permission within a period of four years with respect to all 43 units, however, could obtain B.U. Permission with respect to 20 units only and for whatever reasons, with respect to remaining 23 units, B.U. Permission was not issued by the authority and as observed hereinabove, construction of all 43 units was completed, the assessee is entitled to deduction under section 80IB(10) of the Act, no error has been committed by the learned tribunal in holding that the assessee shall be entitled to deduction claimed under section 80IB(10) of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 80IB of the Income Tax Act.
2. Application of completion certificate requirement for deduction.
3. Consideration of facts and law by the CIT(A) and ITAT.

Analysis:
1. The case involved the interpretation of Section 80IB of the Income Tax Act, specifically regarding the eligibility for deduction in a housing project approved in 2004. The appellant challenged the ITAT's decision, arguing that the provision of Section 80IB should apply to projects approved in 2004, emphasizing Section 80IB(10)(a)(i) of the Act.

2. The dispute centered on the requirement of obtaining a completion certificate within four years from the date of project approval to claim deduction under Section 80IB(10) of the Act. The AO disallowed the deduction as the completion certificate was only granted for 20 out of 43 units within the specified timeframe. The ITAT, however, relied on a Delhi High Court decision and allowed the deduction, stating that the completion certificate condition was not applicable in this case.

3. The CIT(A) and the ITAT had differing views on the matter. The CIT(A) upheld the AO's decision to disallow the deduction, while the ITAT overturned it based on the Delhi High Court decision and the completion of construction for all 43 units within the prescribed time limit. The ITAT considered the facts and law discussed by the CIT(A) and concluded that the appellant was entitled to the deduction under Section 80IB(10) of the Act.

4. The High Court, in its judgment, referred to a previous case where deduction was allowed despite technical issues with the building use permission. Applying a similar rationale to the current case, the Court affirmed the ITAT's decision, stating that since the construction of all 43 units was completed within the timeframe and the appellant had applied for the necessary permissions, they were entitled to the deduction under Section 80IB(10) of the Act.

5. Ultimately, the Court found no substantial question of law in the appeal raised by the revenue and dismissed the Tax Appeal, upholding the ITAT's decision to allow the deduction claimed by the appellant under Section 80IB(10) of the Income Tax Act.