Tribunal grants deduction under section 80IB(10) for pre-2005 projects

ITO-24 (3) (2), Mumbai Versus M/s Neeta Enterprises

ITO-24 (3) (2), Mumbai Versus M/s Neeta Enterprises - TMI Issues Involved:
1. Deduction under section 80IB(10) of the Income Tax Act.
2. Requirement of completion certificate from the local authority.
3. Applicability of amended provisions to projects approved before 01/04/2005.
4. Competence of Gram Panchayat to issue completion certificates.
5. Charging of interest under sections 234B and 234C of the Act.

Issue-wise Analysis:

1. Deduction under section 80IB(10) of the Income Tax Act:
The Revenue challenged the deduction under section 80IB(10) granted by the First Appellate Authority, arguing that the assessee did not obtain the completion certificate from the local authority before 31/03/2008. The Tribunal noted that the project was approved before the insertion of the requirement for a completion certificate effective from 01/04/2005. The Tribunal referenced several judicial precedents, including the Delhi High Court's affirmation that projects approved before 01/04/2005 are not subject to the completion certificate requirement. Consequently, the Tribunal allowed the deduction under section 80IB(10).

2. Requirement of completion certificate from the local authority:
The Tribunal examined whether the completion certificate was mandatory for projects approved before 01/04/2005. Citing the decision in CIT vs. CHD Developers and other relevant cases, the Tribunal concluded that the completion certificate requirement did not apply to projects approved before the amendment date. The Tribunal emphasized that the assessee could not be expected to fulfill conditions not present in the statute when the project was approved.

3. Applicability of amended provisions to projects approved before 01/04/2005:
The Tribunal reiterated that the amended provisions requiring a completion certificate, which came into effect on 01/04/2005, do not apply to projects approved before this date. This position was supported by multiple judicial decisions, including those from the Delhi High Court and the Madras High Court. The Tribunal found that the project in question was approved on 05/03/2004, thus falling under the pre-amendment provisions.

4. Competence of Gram Panchayat to issue completion certificates:
The Tribunal addressed the issue of whether a completion certificate from the Gram Panchayat suffices. It was noted that the Gram Panchayat is considered a local authority under the Income Tax Act, as supported by the decision in Krishna Harubhau Lohokare vs. ITO. The Tribunal accepted the completion certificate issued by the Gram Panchayat, aligning with the precedent that Gram Panchayats are competent to issue such certificates for the purposes of section 80IB(10).

5. Charging of interest under sections 234B and 234C of the Act:
The Tribunal stated that the charging of interest under sections 234B and 234C is consequential and dependent on the primary issue of the deduction under section 80IB(10). Given the Tribunal's decision to allow the deduction, the interest charges would be adjusted accordingly.

Conclusion:
The Tribunal allowed the appeal of the assessee, granting the deduction under section 80IB(10) and recognizing the completion certificate issued by the Gram Panchayat. The Tribunal dismissed the Revenue's appeal, affirming that the amended provisions requiring a completion certificate do not apply to projects approved before 01/04/2005. The charging of interest under sections 234B and 234C was deemed consequential.