Tribunal grants deduction under section 80IB(10) emphasizing project completion, not yearly certificates

The Tribunal allowed the assessee's appeal regarding the denial of deduction under section 80IB(10) of the Income-tax Act, 1961. The Tribunal emphasized the purpose of promoting housing projects and clarified that the completion certificate should be obtained on the completion of the housing project as a whole, not necessarily each year. Denying the deduction based on the non-availability of the completion certificate in the impugned year was deemed unreasonable, especially when following the percentage completion method. The Tribunal directed the Assessing Officer to grant the deduction in alignment with the Act's scheme.

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Issues Involved:
1. Denial of deduction under section 80IB(10) of the Income-tax Act, 1961.
2. Requirement of completion certificate for claiming deduction.
3. Interpretation of beneficial provisions in tax statutes.

Detailed Analysis:

1. Denial of Deduction under Section 80IB(10):
The primary grievance of the assessee pertains to the denial of deduction under section 80IB(10) of the Income-tax Act, 1961, amounting to Rs. 1,99,35,869. The lower authorities denied this deduction due to the non-production of a completion certificate for the housing project.

2. Requirement of Completion Certificate:
The assessee argued that the project was completed within the stipulated time, evidenced by property assessment tax, water connection documents, and pollution control permissions. The Municipal Corporation of Bangalore had given distinctive numbers for each flat, and all flats were assessed to municipal tax. The assessee contended that the non-production of the completion certificate, a technical requirement, should not be a reason for denying the deduction. The assessee relied on several judgments, including the Supreme Court's decision in Guru Charan Singh v. Kamla Singh and Bajaj Tempo Ltd. v. CIT, which emphasized liberal interpretation of beneficial provisions in tax statutes.

3. Interpretation of Beneficial Provisions:
The Department's representative (DR) argued that the condition prescribed under section 80IB(10) was not fulfilled due to the non-furnishing of the completion certificate. The DR maintained that the assessee had not initiated steps to obtain the completion certificate and could not rely on indirect evidence. However, the Tribunal noted that the assessee had followed the percentage completion method and produced substantial evidence of project completion, such as property assessment documents and municipal notices.

Tribunal's Findings:
The Tribunal observed that section 80IB(10) requires an undertaking to develop and build housing projects approved before 31.3.2007 by a local authority, with specific conditions regarding completion time, plot area, residential unit size, and commercial space limits. The Tribunal emphasized that the completion certificate is mandatory for claiming the deduction but clarified that it should be obtained on the completion of the housing project as a whole, not necessarily for each year of the project span.

The Tribunal referred to CBDT's Instruction No. 4 of 2009, which allows deduction on a year-to-year basis for partial completion, provided the project is completed within the specified time. The Tribunal concluded that denying the deduction based on the non-availability of the completion certificate in the impugned year would lead to an absurd situation, especially when the assessee follows the percentage completion method.

Conclusion:
The Tribunal directed the Assessing Officer to allow the deduction under section 80IB(10) in light of the Tribunal's order in Hiranandani Akruti JV, emphasizing that the purpose of granting the deduction is to promote housing projects. The assessee's appeal was allowed, ensuring that the deduction is granted in the year the profit is taxed, aligning with the scheme of the Act.

Result:
Assessee's appeal allowed.

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