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2016 (5) TMI 319 - AT - Income TaxDisallowance of deduction u/s 80IB(10) - non filing of completion certificate for the claim - Held that - The Hon ble Delhi High Court in the case of CIT vs. Jansampark Advertising and Marketing P. Ltd. 2015 (3) TMI 410 - DELHI HIGH COURT held that the Tribunal being the final fact finding authority, is under an obligation to direct the A.O. to make proper enquiries if the discrepancies and facts are brought to its notice. In view of the same, we deem it fit and proper to remand the issue to the file of the A.O. with a direction to examine and verify whether the total plinth declared by the individual owners includes the common area and if it is found that the built-up area of any of the flats is exceeding 1500 sq. feet, then the deduction under section 80IB(10) shall be computed proportionately. The issue with regard to filing of completion certificate for the claim of deduction under section 80IB(10), is covered in favour of the assessee by the decision of Hon ble Karnataka High Court in the case of Ittina Properties P. Ltd., (2014 (8) TMI 388 - KARNATAKA HIGH COURT ) and therefore, the A.O. shall not insist upon the said certificate for allowing deduction under section 80IB(10) of the Act. - Decided in favour of assessee.
Issues:
Disallowance of deduction under section 80IB(10) of the Income Tax Act, 1961 for failure to provide completion certificate by the local authority. Compliance with the requirement of completion certificate for claiming deduction under section 80IB(10). Assessment of built-up area exceeding 1500 sq. feet in some flats and its impact on eligibility for deduction under section 80IB(10). Issue 1: Disallowance of deduction under section 80IB(10) The appellant, engaged in construction business, claimed deduction under section 80IB(10) for a residential complex project. The Assessing Officer (A.O.) disallowed the claim due to the absence of a completion certificate issued by the local authority, despite the appellant submitting other relevant documents. The A.O. insisted on the completion certificate as per the statutory requirement. The Commissioner of Income Tax (Appeals) upheld the A.O.'s decision, leading to the appellant's appeal before the ITAT Hyderabad. Issue 2: Compliance with completion certificate requirement The appellant argued that the Karnataka Municipal Corporation Act does not provide for a completion certificate, citing a judgment by the Karnataka High Court in a similar context. The High Court held that if the statute does not mandate a completion certificate, the assessee cannot be expected to obtain one. The appellant contended that the municipal property assessments and other documents substantiated project completion, making the deduction under section 80IB(10) legitimate. Issue 3: Assessment of built-up area exceeding 1500 sq. feet The Departmental Representative (D.R.) highlighted discrepancies in the property assessments, indicating some flats exceeded the 1500 sq. feet limit specified under section 80IB(10). The appellant argued that the common areas might have been included in the calculations, and the A.O. did not raise any objections during the assessment. The ITAT Hyderabad directed the A.O. to verify the built-up areas and adjust the deduction proportionately if any flat exceeded the limit. Judgment The ITAT Hyderabad allowed the appellant's appeal, emphasizing the absence of a statutory requirement for a completion certificate under the Karnataka Municipal Corporation Act. The judgment distinguished the Karnataka High Court's decision from that of the Madhya Pradesh High Court, underscoring the relevance of local statutes in determining compliance. While directing a reexamination of built-up areas exceeding the limit, the ITAT upheld the appellant's right to claim the deduction under section 80IB(10) without a completion certificate. The judgment underscored the ITAT's authority as a final fact-finding body and aligned with the Karnataka High Court's stance on completion certificates in similar cases. This detailed analysis covers the issues of disallowance of deduction, compliance with completion certificate requirements, and assessment of built-up areas exceeding the limit, culminating in the ITAT Hyderabad's judgment in favor of the appellant.
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