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TMI Blog2016 (12) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... s completed during the year having three wings comprising 4 flats per on floor per wing totaling to 84 flats with area of the plot 1.25 acres. The project was approved on 20.4.2001 and the area of per flat was less than 1000 sq.ft. The commencement certificate was issued by the competent authority on 5.7.2006 and the project was completed on 31.3.2008. The assessment under section 143(3) was completed on 27.12.2011 assessing the total income of the assessee at Rs. 15 lakhs by restricting the deduction u/s 80IB(10) of the Act of Rs. 3,97,68,224/- as against the actual claim of Rs. 4,12,68,224/-. Thereafter the assessment as completed by the AO was set aside by the Commissioner with a direction to pass assessment order afresh after examining the documents and conducting inquiry by exercising the revisionary jurisdiction u/s 263 of the Act vide order dated 21.3.2014 after issuing show cause notice dated 8.1.2013. The various reasons cited in the show cause notice are as under: 1.... 2. I have called for and examined the assessment records of the assessee. The order sheet with only 3 entries on one page has also been looked into. The assessee has claimed the deduction u/s 80IB(10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us in so far as it is prejudicial to revenue as the claim of deduction u/s 80IB (10) amounting to Rs. 3,97,68,224/- has been erroneously allowed. 6. In the instant case it is further seen that the completion certificate for the project has also not been issued by the local authority. Only a certificate by way of "BHOGVATA PATRA" Dated 31.3.2008 has been issued by stating that only 72 flats are complete and ready to use for residence. It may be pointed out here that as per the building plan available on record, total number of 84 flats constitute the project and thus the project was not completed as on 31.3.2008. Thus, the assessee failed to fulfill the condition of eligibility laid down u/s 80IB(1)(i) of the Act as well. This also makes the assessment order erroneous and as such no enquiry whatsoever has been conducted even on this issue. 7. It is further seen that the assessee did not furnish form no. 10CCB in the prescribed proforma, duly certified and signed by the CA. This is one of the basic conditions for claiming deduction u/s 80IB (10). In fact, the only document in this regard available in the assessment record is an unsigned photocopy of a letter issued by the CA. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in respect of 72 flats i.e. ground plus 6 floors. In other words, this was a part completion certificate issued by the Pune Municipal Corporation for the reason that road on the project land was not yet widened by the Pune Municipal Corporation . On the basis of this completion certificate, the Commissioner observed that the AO had not examine the issue of completion of the project and thus, came to the conclusion that failure of the AO to conduct inquiries goes to the root of eligibility condition for deduction u/s 80IB(10) of the Act. 4. The Commissioner noted that final completion certificate from Pune Municipal Corporation has not been issued so far to the assessee which was admitted by the ld.AR of the assessee because of the reason that the road proposed on the project land was not widened as Pune Municipal Corporation had not taken the possession of the land for the said purpose. The assessee submitted before the Commissioner that flats at 7th floor were occupied by the residents since 2008. The ld. AR argued that since the delay in issuing the of final completion certificate qua 7th floor by Pune Municipal Corporation was attributed to the reasons not in the control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80IB(10) the issue of completion certificate was not necessary but even if the assessee had completed the construction and applied for the completion certificate before 31.3.2008 after obtaining necessary approval from the department concerned it would be suffice. The ld. AR drew our attention to various "No Objection Certificates" which were placed at pages 46 to 67 of the paper book qua 84 flats. The ld. AR vehemently submitted that revisionary powers were exercised by the Commissioner without appreciating the facts on records in correct perspective. It was argued by the ld.AR that the points on which the ld. Commissioners exercised the revisionary jurisdiction u/s 263 were wrong as the AO during the course of assessment proceedings had examined the issue of allowability of deduction u/s 80IB(10) of the Act comprehensively and thereafter framed the assessment allowing deduction u/s 80IB(10) of the Act . The ld. AR also pointed out that similar deduction was allowed for the assessment year 2007-08 which was initial year of claim of deduction u/s 80IB(10) of the Act by drawing our attention to assessment order placed at pages 98 to 100 of the paper book but the said assessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 150 (Bom); B) CIT V/s Tarnetar Corporation (2014) 362 ITR 174 (Guj); C) ITO V/s Saket Corporation (2015) 62 taxmann.com 38 (Guj) D) Siddhivinayak Kohinoor Venture V/s ACIT (2015) 67 SOT 284 (Pune- Trib) URO 7. On the other hand, the ld. DR strongly opposed the arguments of the ld.AR and submitted that the assessment was rightly set aside by the Commissioner by exercising the revisionary jurisdiction u/s 263 of the Act as the order of the assessing officer passed under section 143(3) was erroneous and prejudicial to the interest of the revenue in view of the fact that the claim of the assessee u/s 80IB(10) was not examined by the AO and deduction was wrongly allowed. The ld. DR argued that the assessee has been granted "BHOGVATA PATRA" ON 31.3.2008 only in respect of 72 flats whereas the project was sanctioned for 84 flats and till the date of the passing order u/s 263 by the Commissioner even no completion certificate was issued for remaining flats which proved that the project was not completed on 31.3.2008 and the AO had failed to make any inquiry during the assessment proceedings and did not examine all aspects of the matter. The ld. DR prayed that the order of the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order being erroneous and prejudicial to the interest of revenue as the claim u/s 80IB(10) of the Act amounting to Rs. 3,97,68,224/- was wrongly allowed without examining the necessary documents and satisfying the various preconditions. The CIT also noted that the Pune Municipal Corporation issued "BHOGVATAPATRA" only in respect of 72 flats whereas the project was envisaged for 84 flats and therefore assessee failed to fulfill the necessary conditions for claiming deduction u/s 80IB(10) of the Act and resultant assessment order passed by the AO was erroneous and prejudicial to the interest of revenue as no inquiry was conducted by the AO. Another reason given by the Commissioner for directing the AO to reframe the assessment was that the assessee did not furnish form 10CCB duly certified and signed by the Chartered Accountant which was the basic conditions u/s 80IB (10) of the Act thereby contradicting his own findings stated in para 7.1 of the show cause notice that in the audit report in form No. 10CCB at Col.26, the auditor had mentioned NIL as regard the details of deduction admissible under chapter VIA. According to the Commissioner the AO had even failed to examine the audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letion. The intention of the legislature in providing explanation to fix the date of completion of a project is quite helpful when this provision is utilized in practice. In our view the explanation has introduced an unnecessarily strictness in the provision which is in the nature of exemption and not in the nature of charging. Sub-section (10) mentions that a housing project should be complete before 31.03.2008 so as to get the exemption. Completion of housing project is a physical act. It can be demonstrated on the spot and also through a certificate issued by an architect who is appointed for supervising the construction work. He is a professional who would declare that the project is complete. Unfortunately, Sub-section (10) and the explanation do not give any importance to the issuance of such Completion Certificate by the concerned architect. It gives importance only to the certificate of Municipal authority. It is common knowledge that an application for Completion Certificate submitted to the Municipal Authorities is accompanied by a Completion Certificate issued by the concerned architect. No doubt, the Municipal authorities then cause inspection of the site and verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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