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TMI Blog2015 (2) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... ity space was not completed and hence, completion certificate was not issued to the assessee. Based on the above information from PMC the AO sought explanation from the assessee regarding absence of the final completion certificate which was required for the deduction claimed. The assessee explained that the Architect had certified the completion of the Row Houses and had submitted due application to the PMC. However, the certificate was pending on account of some technical procedure for which the assessee is not responsible. However, the AO was not satisfied with the explanation of the assessee and concluded that the assessee had not complied with the conditions of section 80IB(10), and therefore, the assessee was not eligible for the deduction claimed. The AO finally disallowed the claim of deduction u/s.80IB(10). 3. Assessee carried the issue before the Ld.CIT(A) but without success. The operative part of the findings of the Ld.CIT(A) is as under : "3.7 Thus it can be seen that the completion certificate has to be submitted in a prescribed form as per 'Appendix-J', as per Rule 7.6 through the licensed architect. The copy of the completion certificate furnished by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) 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;" Therefore, the completion/ occupancy certificate in respect of a housing project has to be issued by the local authority only as envisaged by the provision of Sec. 80IB(10) of the I.T. Act, 1961. There is no ambiguity in the language of the explanation which would lead to any other interpretation. Even there was no provision under the PMC rules for issuing of the completion certificate directly by the PMC on the basis of an application along with the certificate of an architect regarding completion of the project, the PMC or the local authority issues an 'occupancy certificate'. Therefore, for the purposes of Sec. 80IB(10)(a) r.w. explanation this certificate would be relevant to determine the fulfillment of the conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en followed and the project has been constructed in accordance with the approval accorded originally, before issuing of occupancy/completion certificate. Any unauthorized construction which is not so certified by the local authority would not be legally permissible and if such completion of the projects and occupancy thereof are allowed routinely without any inspection and certification regarding its completion as per the prescribed norms, rules and regulation etc it will lead to' chaos and disaster and it will lead to haphazard construction everywhere without any consideration for civic amenities, drainage, fire control, environmental consideration, provision for proper roads etc. Thus the issue of the occupancy certificate is not a mere formality but a full fledged procedure of timely inspection by the local authority. The appellant has also outlined the various rules of the DC rules, Pune in its submission which clearly speaks out the spirit with which the said procedure and norms are to be followed before receiving the occupancy certificate. The certificate issued by any authority be it government, semi govt or a local, it has to be assumed that the prescribed procedures an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained. The Valuation Officer Shri. E.P. Dhanve in respect of the net area of the plot has referred to the layout sanctioned by PMC, Pune vide CC/4759/06 dt. 30-3-2007 of 6950.63 sq.mtr, i.e. the plot being more than one acre. 4.1 He further submits that as per the provisions of the DC rules, more particularly Rule 7.6 an Architect who is the licensed architect or Engineer who has supervised the construction would have to give a notice to the local authority regarding the completion of the work in the building as per commencement certificate and only then an occupancy certificate is issued. He argues that nowhere it is the case of the AO that apart from getting the occupancy certificate/completion certificate from the local authority, nothing is lacking. He submits that the architect of the assessee filed application in time but as per the information obtained by the AO, the occupancy certificate was pending on account of technical procedure as the assessee has not handed over the amenity space. He submits that even the 'D' wing which comprises 8 row houses was completed before the specified time limit and there is no justification to say that project was not completed. He also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld.CIT(A) that the architect certificate is not in proper format he submits that it is only a procedural and application of the architect proves that Wing-D having the 8 row houses was complete. He submits that there is no whisper in the letter from the PMC that any work was pending in respect of the Wing-D. 6.1 In this case, first issue is whether there is requirement to produce the completion certificate from the PMC as per the provisions of section 80IB(10) for demonstrating that the project was completed. In this case, both the authorities below have not disputed that the housing project was approved by the local authority, i.e. PMC, on 22-12-2004. Admittedly, at the time of approval of the project of the assessee as per the law applicable, there was no requirement to produce completion certificate from the PMC. In this context, we may like to refer to the observations & findings in the decision of the ITAT in the case of System Enterprises (Supra) which read as under : "10.2 The other ground on which the Assessing Officer based his rejection of deduction u/s.80IB(10) is that the assessee has not been able to obtain the requisite completion certificate/Occupancy certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular point of time and the assessee was not expected to do or to fulfil the conditions which were not in existence at the relevant point of time or made compulsory by amendment in the Act from the future date. Since the assessee was to complete the project on or before March 31, 2009, and a request was duly made with the competent authority on November 5, 2008, mentioning that the project had been completed and the completion certificate may be issued and if the certificate was not issued by the competent authority the assessee should not be penalised therefore unless and until some contrary facts were brought on record evidencing that the assessee contravened the conditions contained in the approval granted by such competent authority. However, since the approval was granted to the assessee on April 1,2005, the assessee was not expected to fulfil the conditions which were not on the statute when such approval was granted to the assessee. The Tribunal accepted the assessee's claim to deduction under section 80- IB(10). On appeal: Held, dismissing the appeal, that the approval for the project was given by the Development Authority on March 16, 2005. Clearly the approval r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to that date and therefore the assessee is entitled to deduction u/s.80IB(10) of the I.T .Act." 6.2 So far as the first objection is concerned, the same is squarely covered in favour of the assessee by the decision of the ITAT, Pune Bench in the case of System Enterprises (Supra). The next objection is regarding the format of the application made by the architect of the assessee. In our opinion, that it is the only procedural aspect and the said objection should not come for the help of the Revenue. There is no dispute in this case on the fact that the architect of the assessee Shri Mangesh Bhandarkar has made an application for occupancy certificate to the PMC on 08-12-2008. As per the admitted position of law, the assessee was required to complete the housing project on or before 31-03-2009. The PMC did not issue the completion certificate for the reason that the assessee has not handed over the amenity space. In our opinion, the format in which the architect of the assessee has filed the application for getting the occupancy certificate may be the procedural default and that will not deprive the assessee from its legitimate claim u/s.80IB(10). Moreover, the PMC has not pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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