2019 (1) TMI 1084 - HC - Income Tax

Deduction u/s. 80IB(10) denied - assessee not having obtained completion certificate within four years from the end of the financial year in which the project was approved by the local authority - Held that - This issue is now no longer res integra as it stands concluded against the Revenue by the decision of this Court in CIT v/s. Hindustan SamuhAwas Ltd. 2015 (10) TMI 2306 - BOMBAY HIGH COURT wherein as held that whether the project is completed within the time framed provided under Section 80IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10) of the Act. In the present case on facts, it is found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, the Respondent should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate. In passing, we may also point out that the approval of plans and commencement certificate were received by the Respondent in respect of the project before the amendment to Section 80B of the Act on 1st April, 2005. In such cases, this Court has taken a view that the time limit provided by the amendment to complete the construction by obtaining completion certificate will not apply - Decided against revenue

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding deduction u/s. 80IB(10) for Assessment Year 2006-07.

Analysis:
The case involved a challenge to the order passed by the Income Tax Appellate Tribunal (the Tribunal) regarding the deduction claimed under Section 80IB(10) of the Income Tax Act, 1961 for Assessment Year 2006-07. The Respondent, a builder/developer, had filed a return of income declaring it as 'Nil' by claiming the deduction under Section 80IB(10) for its project. The Assessing Officer sought to reopen the assessment for the year 2006-07 based on the delay in obtaining the Occupation Certificate, which was a prerequisite for claiming the deduction. Subsequently, the Assessing Officer denied the deduction under Section 80IB(10) to the Respondent, resulting in an assessment of income at ?6.35 Crores.

The Respondent appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal stating that the delay in obtaining the occupancy certificate was due to the competent authority's delay in issuing the certificate, and the Respondent had submitted all necessary documents in time. The Revenue then appealed to the Tribunal, which upheld the order of the CIT(A) by dismissing the Revenue's appeal. The Tribunal found that the project was completed within the required timeframe under Section 80IB(10) and that the application for the completion certificate was submitted on time, absolving the Respondent from any penalty due to the delay by the Competent Authorities.

The High Court, while considering the issue, relied on previous decisions to support its conclusion. It cited the decision in CIT v/s. Hindustan SamuhAwas Ltd. and CIT v/s. Tarnetar Corporation, which held that if the project is completed within the specified time and the application for the completion certificate is filed on time, any delay by the competent authority in issuing the certificate should not deprive the Assessee of the benefit of Section 80IB(10) of the Act. The Court also noted that in cases where approval and commencement certificates were received before the amendment to Section 80IB of the Act, the time limit for completion set by the amendment would not apply.

Ultimately, the Court concluded that the issue was settled by previous decisions and did not give rise to any substantial question of law. Therefore, the appeal was dismissed with no order as to costs.