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TMI Blog2015 (1) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 50% is a ‘light motor vehicle’ and therefore the claim for enhanced rate of depreciation is on a sound footing. Ostensibly, the provisions of the Depreciation Table annexed as Appendix-I to the Rules clearly apply and therefore the lower authorities were not justified in denying assessee’s claim for allowance of depreciation @ 50% on the vehicle in question, subject to the fulfillment of other conditions. Thus set-aside the order of the CIT(A) and direct the Assessing Officer to re-compute the depreciation allowable on the impugned vehicle as per aforesaid direction and in accordance with law. - Decided in favour of assessee for statistical purposes. Deduction u/s.80IB - date of completion of construction of the housing project - Held that:- No reason to interfere with the ultimate conclusion of the CIT(A) in allowing assessee’s claim for deduction u/s.80IB(10) of the Act amounting to ₹ 23,87,480/- as CIT(A) has called for information u/s.133(6) of the Act from the PMC and its response did not reveal any objection on the part of the PMC that the construction was not complete with respect to the sanctioned plans. Therefore, factually speaking, there is no controversion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has raised a preliminary objection contending that the provisions of section 40(a)(i) of the Act are not attracted in the present case, even if it is to be accepted that there was a default in the deduction of tax at source. Explaining the preliminary objection, the learned representative submitted that section 40(a)(i) can be invoked to disallow an expenditure which has been claimed as a deduction in computing the income chargeable under the head profits and gains of business or profession. Whereas in the present case, the impugned payment to the foreign party has not been claimed as a deduction, as the said amount lies capitalized in the capital work-in-progress which is depicted in the Balance Sheet. It was also submitted that the Hon ble Punjab Haryana High Court, in a somewhat similar circumstance, in the case of CIT Vs. Mark Auto Industries Limited reported in (2013) 358 ITR 43 (P H) observed that no expenditure could be disallowed u/s.40(a)(i) of the Act if such expenditure was capitalized and not claimed as a revenue expenditure. 5. On this preliminary objection, the Ld. Departmental Representative has not controverted the factual matrix but has relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 of the Act. The aforesaid section has been invoked by the Assessing Officer in the context of payment of ₹ 2,78,20,447/- to M/s. Arthur Gensler and Associates, a non-resident concern. According to the Assessing Officer, the aforesaid remittance to the non-resident amounts to fee for technical services and is therefore within the ambit of section 40(a)(i) of the Act. Since the assessee had made the aforesaid remittance without deduction of tax at source, the Assessing Officer disallowed the same by invoking section 40(a)(i) of the Act and added the sum of ₹ 2,74,44,270/- to the returned income. Firstly, assessee resisted the addition by contending before the income-tax authorities that the remittances made to M/s. Arthur Gensler and Associates are not subject to the deduction of tax at source in India. For the present, we are not concerned with the said controversy as the assessee has raised an alternate plea to the effect that section 40(a)(i) of the Act is not applicable at all. In order to appreciate the said point, we may reproduce hereinafter the relevant portion of section 40(a)(i) of the Act :- Amounts not deductible. 40. Notwithstanding anything to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has not been claimed as a revenue expenditure while computing the income chargeable under the head Profits and gains of business or profession in this year and therefore the same would not fall for consideration in section 40(a)(i) of the Act. Thus, by adverting to the aforesaid short point, we do not find any justification to uphold the addition of ₹ 2,78,20,447/- made by the lower authorities by invoking section 40(a)(i) of the Act. The order of the CIT(A) is set-aside and the Assessing Officer is directed to delete the addition of ₹ 2,78,20,447/- . Thus, on this aspect assessee succeeds. 8. The second Ground of appeal raised by the assessee is with regard to the rate of allowance of depreciation on Honda Motor Car. The assessee claimed depreciation on Honda Motor Car @ 50% on the ground that it was a light motor vehicle and was therefore covered within the meaning of a commercial vehicle. The assessee had relied upon the CBDT Notification No.10/2009 dated 19-01-2009 which prescribes that enhanced depreciation @ 50% is allowable on new commercial vehicles acquired on or after 01-01-2009 but before 01-04- 2009 and which are put to use before 01-04-2009 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith law. Thus, on this aspect assessee succeeds for statistical purposes. 12. In the result, the appeal of the assessee is allowed, as above. 13. In so far as cross-appeal of the Revenue is concerned, it has raised the following Grounds of Appeal :- 1. The order of the Id. Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The Id. Commissioner of Income-tax(Appeals) grossly erred in allowing deduction to the assessee u/s.80IB when assessee could not complete the Housing Project as required under provisions of Sec.80IB(10)(a)(iii) of the Income-tax Act, 1961. 3. The Id. Commissioner of Income-tax (Appeals) grossly erred in allowing deduction to the assessee u/s.80IB when the explanation (ii) to Clause (a) of Sec.80IB(10) provides that the date of completion of construction of the Housing Project shall be taken to be that the date on which the completion certificate in respect of such Housing Project is issued by the Local Authority and no such certificate was submitted by the assessee. 4. The Id. Commissioner of Income-tax (Appeals) grossly erred in interpreting section 80IB(10), in the context of applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of construction to PMC with all M/s. Gera Development Pvt. Ltd., the requisite NOCs on 04-12-2007 itself. It was also observed by the CIT(A) that assessee was consistently pointing out that he had actually completed the construction of the project as per the sanctioned plans and its application to the PMC for obtaining of the occupancy certificate was based on the architect s completion certificate and other NOCs required for such purpose. The assessee also pointed out that in response to its application dated 04-12-2007 made to the PMC, there was no refusal of the occupancy certificate. Therefore, in terms of the relevant Development Control Rules applicable to the PMC, the occupancy certificate is deemed to have been granted within 21 days from the date of assessee s application seeking completion certificate, if no objections or refusal is intimated by PMC. Thus, as per the assessee, in the absence of any refusal from the PMC, the project is deemed to have been completed. Further, assessee also submitted before the lower authorities that such deemed completion concept was upheld by the Pune Bench of the Tribunal in the case of Satish Bora and Associates vide ITA No.713 714/P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate after inspection of the work under rule 7.7 of the DC Rules. Since Explanation (ii) to section 80-IB(10)(a) of the I. T, Act, requires Completion Certificate issued by the local authority to be taken as the date of Completion of the Construction, a general understanding in our view is that a Completion Certificate which is issued by the local authority after conducting inspections of construction by it. In case of PMC, it is only Occupancy Certificate which is issued along with certified completion plan after inspection of the construction by it, we have treated the date of issuance of such Occupancy Certificate, along with Certified Completion plan as the date of Completion Certificate of the construction for the requirement of Explanation (ii) to section 80IB(10)(a) of the I.T. Act. 2. Since in fact PMC do not issue Occupancy Certificate generally in time and with this understanding the Legislature have also introduced a deeming provision of 21 days to put constraint upon PMC, we after detailed deliberation in preceding paragraphs have come to a conclusion that in case of small objections of PMC raised after expiry of deeming period of 21 days under Rule 7.7 of DC Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion certificate in respect of such housing project is issued by the local authority. In the present case, the local authority, i.e. Pune Municipal Corporation has not issued the requisite completion certificate (to be understood as occupancy certificate in the context of the PMC) before the stipulated date. However, the assessee has countered the aforesaid objection by pointing out that in-fact it has completed the construction of the project on 04-12-2007 i.e. much before the stipulated date of completion contained in section 80IB(10)(a) of the Act, it had applied to the PMC for obtaining of the occupancy certificate based on the certificate of the architect and the other NOCs required for the said purpose. The CIT(A) has also called for information u/s.133(6) of the Act from the PMC and its response did not reveal any objection on the part of the PMC that the construction was not complete with respect to the sanctioned plans. Therefore, factually speaking, there is no controversion to the assertions of the assessee that it s project was otherwise complete as per the sanctioned plans within the stipulated date. In this background, in our view, the CIT(A) made no mistake in al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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