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TMI Blog2016 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal raised by AO is regarding allowing assessee's claim for deduction u/s. 80IB(10) of the Act. During the assessment proceedings, the AO found that the assessee had claimed deduction u/s. 80IB amounting to Rs. 3. 48 crores for Kavyadhara Project(KP), Rs. 11, 729/-for Puranik City Project(PCP), Rs. 20, 673/- for Prathpusha (PP) and Rs. 26, 745/- for Swapnadhara Project(SDP). The AO called for various details in that regard and recorded the statement of the architect on 2. 12. 2011 to ascertain the facts regarding sanction of development permission, commencement certificate etc. , pertaining to various housing projects undertaken by the assessee. He also made enquiry with Thane Municipal Corporation (TMC). He observed that the development permission for the project Kavyadhara was received vide letter dt. 16. 1. 2003, that the commencement certificate was issued vide letter dt. 9. 3. 2004, that the plan was subsequently amended vide sanction letter dt. 4. 1. 2007. He found that the occupancy certificates (OC) in respect of various buildings as per the final plan were received as under : Building No. No. of Buildings No. of Floors Date of occupation certificate A-1 1 Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and it was contended that each building consisted of a separate smaller project for which it had received separate OC. s, that for claiming deduction u/s. 80IB(10) the crucial factor was completion of project within the time prescribed under the section, that the section did not prescribe any specific document for that purposes. After considering the submission of the assessee and assessment order, the FAA held that in respect of KP the first development approval was granted on 16. 01. 2003, that the date of completion for all buildings of this project was 31. 03. 2008, that there was no dispute regarding completion of the other buildings of the project namely A-2, B-1, B-2, B-3, B-4, C- 1 and C-2 within the specified time of 31. 3. 2008, that the dispute was regarding the building numbers A-1, C-3, C-4 and Club-house as well as building A-2, that the OC. s were received after 31. 3. 2008 (for building A-2 on 31. 5. 2008 and for remaining buildings on 10. 12. 2008). The FAA referred to the case of Hiranandani Aakriti (ITA No. 5416/M/09, AY 06-07) dated 30. 3. 2010) and held that the original approval of the Housing project was granted on 16. 1. 2003, that all subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, a letter was issued by the municipal corporation dated 18. 12. 2008, pursuant to the enquiry made in that behalf stating that completion certificate had not been issued to the assessee till that date and that the application of the assessee was still being processed. On these facts the Assessing Officer proceeded to complete the assessment proceedings and disallowed the deduction claimed by the assessee for the assessment years 2005-06 to 2007-08. The completion certificate issued by the local authority was of subsequent date and not issued within the stipulated date. The Tribunal allowed the claim. Allowing the appeal filed by the Department, the Hon'ble Court held as under: "According to the unamended clause (a) of section 80-IB(10) of the Income-tax Act, 1961, as was in force prior to April 1, 2005, the assessee was entitled to deduction of profits in the case of housing projects approved before March 31, 2005, by the local authority. The only condition in clause (a), at the relevant time, was that the development and construction of the housing project had commenced or commences on or after October 1, 1998. This stipulation has been modified by amendment to clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued. In some States, the municipal law may provide for issuing partial or full completion certificate. The requirement of completion certificate issued by the local authority, as envisaged in section 80-IB(10)(a) , which is a Central enactment dealing with the special subject of taxation, however, is, of only one certificate-which is full completion certificate issued by the local authority before the cut-off date. That is to lend credence to the factum of completion of the entire housing project in all respects according to the approval granted by the local authority. The Legislature was conscious of this position, for which, express provision has been made as to the meaning of the date of completion of the housing project linked to the "date on which" completion certificate "is issued" by the "local authority", as predicated in Explanation (ii) thereunder. The Supreme Court decisions in the case of VEENA DEVELOPERS and SARKAR BUILDERS will have to be understood only in the context of a new condition stipulated regarding the built-up area of the project by way of amendment, which the assessee could not have complied with at all, and even though the construction of the housing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of section 80-IB to the assessee (hundred per cent. of the profits derived in any previous year relevant to any assessment year) and the purpose underlying it - which is, inter alia, a burden on the public exchequer due to waiver of commensurate revenue-the stipulation for obtaining completion certificate from the local authority before the cut-off date, must be construed as mandatory. The fact that compliance with that condition is dependent on the manner in which the proposal is processed by the local authority, the provision cannot be construed as a directory requirement. It is a substantive provision mandating issuance or grant of completion certificate by the local authority before the cut-off date or specified time, as a pre-condition to get the benefit of tax deduction. Else, it will then be open to the assessee to rely on other circumstances or evidence to plead that the housing project is complete-requiring enquiry into those matters by the tax authorities- sans a completion certificate issued by the local authority in that behalf. A priori, the argument of substantial compliance is sufficient, would lead to uncertainty about the date of completion of the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation (ii) thereunder. The completion certificate granted by the local authority must bear the date of having been issued before the cut-off date. (iv) That the provision in the form of section 80-IB(10)(a) , applies uniformly to all assessees whether following the work-in-progress accounting method or otherwise. The benefit of deduction under this provision can be availed of by the assessee following the work-in-progress accounting method, provided he has complied with the stipulation of having produced the completion certificate issued by the local authority before the cut-off date, as may be applicable in his case. In other words, if the housing project was approved by the local authority before April 1, 2004, he must submit the completion certificate issued by the authority having been issued before March 31, 2008. Whereas, in the case of a housing project approved on or after April 1, 2004, the assessee can avail of the benefit provided the completion certificate issued by the local authority is within four years from the end of the financial year in which the concerned housing project was approved by the local authority. If this condition was not fulfilled, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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