2013 (10) TMI 980 - AT - Income Tax

Denial of Deduction Upheld: Completion Certificate Required for Tax Benefit

The Tribunal upheld the denial of a deduction under section 80IB of the Income Tax Act for the assessment year 2006-2007 due to the absence of a ... Deduction under section 80IB – Held that:- In Commissioner of Income Tax Central-I, Chennai. Versus M/s. Jain Housing & Constructions Ltd., [2012 (11) TMI 588 - MADRAS HIGH COURT], it was observed that From the substitution of Section 801B(10)(1) of the Act, prior to the amendment, there was no such requirement as regards furnishing of completion certificate and the deduction provision pointed out to the grant of 100% deduction on the profits derived from a housing project, if the undertaking had commenced development and construction of the housing project on or after 1st October, 1998 - till 2005, there was no clause dealing with completion, in which event, one cannot read into the provision as a condition, which is not specifically provided. In the present case the approval by the Hyderabad Urban Development Authority has been obtained on 26.06.2004 only for which the relevant assessment year is 2005-2006 and hence the decision in the case of Jain Housing & Constructions Ltd. (supra) goes against the assessee – Decided against Assessee. Issues involved:Deduction under section 80IB of the Income Tax Act for the assessment year 2006-2007 based on the completion certificate requirement.Analysis:Issue 1: Deduction under section 80IB disallowed- The appellant, engaged in property development, filed a return for the assessment year 2006-2007, claiming a deduction under section 80IB of the Act. The Assessing Officer disallowed the deduction amounting to Rs.54,65,550 among other disallowances, citing the absence of a completion certificate from the competent authority.- The Assessing Officer emphasized the necessity of a completion certificate for claiming the deduction under section 80IB(10), specifying that the approval date for the project was crucial. The completion certificate had to be obtained from the local authority to certify the completion of the housing project.- The appellant argued that despite not receiving an intimation of denial from the local authority, they had approached the authority themselves for the completion certificate. However, the completion certificate was issued only on 30.11.2009, after the assessment proceedings were completed.- The CIT(A) upheld the denial of the claim, stating that without a completion certificate before 31.03.2009, the appellant was not entitled to the deduction under section 80IB(10).- The appellant cited the decision of the Madras High Court and ITAT Pune Bench to support their case, but the Tribunal found that the approval was obtained on 26.06.2004, making the decision inapplicable to the present case.- Ultimately, the Tribunal dismissed the appeal and upheld the denial of the deduction amounting to Rs.54,65,550 under section 80IB(10) based on the requirement of a completion certificate from the local authority.Conclusion:The Tribunal's decision was based on the mandatory requirement of a completion certificate for claiming the deduction under section 80IB(10) of the Income Tax Act, 1961. Despite efforts by the appellant to obtain the certificate post-assessment, the absence of a timely completion certificate led to the denial of the deduction. The Tribunal's reliance on the specific provisions of the Act and relevant case law resulted in the dismissal of the appellant's appeal.