2016 (2) TMI 600 - AT - Income Tax

Tribunal Upholds Tax Assessment, Denies Exemptions for Housing Projects

Fortuna Foundation Engineers and Consultant (P) Ltd. Versus Addl. CIT, Range IV, Lucknow

The Tribunal upheld the validity of the selection under Computer Aided Scrutiny System (CASS) and the issuance of notice under section 143(2). The ... Entitlement to deduction under section 80IB(10) - Held that:- As in the instant case, no certificate was issued by the Architect. Moreover, the requisite application for issuance of completion certificate was not moved in proper format and along with requisite documents. Therefore, in the light of these facts, it cannot be held that the project was completed within the prescribed period. We, therefore, following the order of the Tribunal for assessment year 2006-07, hold that in case of Fortuna Apartment, the assessee is not entitled for deduction under section 80IB(10) of the Act. In the case of Fortuna Reviera Blues Housing Project, the assessee has placed reliance upon a letter dated 29.3.2011 in which a request was made for issuance of completion certificate, but this letter is not supported by any Architect Certificate. Except this letter, no other evidence was filed to establish that the project was in fact completed before 31.3.2011. In the absence of any other specific evidence to establish that the project was completed before 31.3.2011, it is not possible for us to hold that the project was completed within the prescribed period, more so in the light of the fact that the completion certificate was issued on 26.9.2011 and also in the light of the judgment of the Hon'ble M.P. High court in the case of CIT vs. Global Reality (2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT ), according to which the date of issuance of completion certificate is the date of completion of the project. In the light of these facts, we are of the view that the assessee is not entitled for deduction under section 80IB(10) of the Act in respect of Fortuna Reviera Blues Housing Project also. - Decided against assessee Issues Involved:1. Validity of selection under Computer Aided Scrutiny System (CASS).2. Issuance of notice under section 143(2) based on CASS selection.3. Completion of assessment and validity of the assessment order dated 30.12.2011.4. Denial of exemption under section 80IB(10) for 'Fortuna Apartments' project.5. Denial of exemption under section 80IB(10) for 'Forttma Reviera Blues Housing Project'.Detailed Analysis:1. Validity of Selection under CASS:The appellant contended that the CIT(A) erred in law and on facts by holding that the selection of the case under CASS was valid, referencing the decision of the Andhra Pradesh High Court in Andhra Pradesh Beverages Corporation Ltd. vs. Income-tax Officer. The Tribunal, however, upheld the validity of the CASS selection, referencing its previous decision in the case of U.P. State Industrial Development Corporation Ltd. (UPSIDC) vs. Dy. CIT-6, Kanpur. It was determined that the use of computer-aided systems to select cases for scrutiny does not negate the application of mind by the Assessing Officer, and therefore, the selection process under CASS is valid.2. Issuance of Notice under Section 143(2):The appellant argued that the notice issued under section 143(2) based on the CASS selection was invalid. However, the Tribunal found no merit in this argument, reiterating that the issuance of notice under section 143(2) is mandatory and that the CASS selection process does not invalidate the notice. The Tribunal referenced multiple judgments to support its stance that the selection for scrutiny using computer-aided systems is a valid exercise of the Assessing Officer's powers.3. Completion of Assessment and Validity of Assessment Order:The appellant claimed that the assessment order dated 30.12.2011 should be declared null and void due to the invalidity of the selection and notice issuance. The Tribunal, however, upheld the validity of the assessment order, finding no procedural irregularities in the selection or notice issuance processes.4. Denial of Exemption under Section 80IB(10) for 'Fortuna Apartments':The appellant's claim for exemption under section 80IB(10) for the 'Fortuna Apartments' project was denied on the grounds that the project was not completed by the stipulated date of 31.3.2008. The Tribunal referenced its previous decision for the assessment year 2006-07, where it was concluded that the project was completed after 31.3.2008, based on the completion certificate issued by the Local Authority on 23.10.2009. The Tribunal emphasized that the completion certificate's issuance date is critical for determining the project's completion date, and since the certificate was issued after the cut-off date, the exemption claim was rightly denied.5. Denial of Exemption under Section 80IB(10) for 'Forttma Reviera Blues Housing Project':The appellant's claim for exemption under section 80IB(10) for the 'Forttma Reviera Blues Housing Project' was also denied. The project was required to be completed by 31.3.2011, but the completion certificate was issued on 26.9.2011. The Tribunal noted that the mere submission of an application for a completion certificate before the cut-off date does not suffice; the actual issuance date of the certificate is what matters. Additionally, the Tribunal noted that the built-up area of some flats exceeded the prescribed limit of 1500 sq. ft., further disqualifying the project from the exemption.Conclusion:The Tribunal dismissed the appeal, upholding the CIT(A)'s order. The selection of the case under CASS and the issuance of notice under section 143(2) were deemed valid. The denial of exemption under section 80IB(10) for both 'Fortuna Apartments' and 'Forttma Reviera Blues Housing Project' was affirmed due to non-compliance with the stipulated completion dates and other conditions. The Tribunal emphasized the importance of adhering to the statutory requirements for claiming exemptions and the validity of procedural actions taken by the tax authorities.