ITAT directs AO to re-examine project completion evidence for Section 80IB(10)(f) relief

The Income Tax Appellate Tribunal (ITAT) allowed the appeal, directing the Assessing Officer (AO) to re-examine the project completion based on evidence from the Gram Panchayat and consider a proportionate relief approach for units violating Section 80IB(10)(f). The ITAT emphasized that the lack of a completion certificate did not warrant adverse inference, citing jurisdictional High Court decisions in favor of the appellant. The AO was instructed to assess and potentially disallow the exemption only for units breaching the relevant provisions.

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Issues Involved:
1. Disallowance of deduction under Section 80IB(10) due to non-submission of the completion certificate.
2. Allotment of more than one unit to an individual and his spouse violating Section 80IB(10)(f).

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IB(10):
The appellant, a builder, claimed a deduction of Rs. 42,20,301 under Section 80IB(10) of the Income Tax Act, 1961, for a housing project approved by the Gram Panchayat on 01-03-2006. The Assessing Officer (AO) disallowed the claim on two grounds: failure to submit the completion certificate and allotment of more than one unit to an individual and his spouse. The AO noted that the appellant did not mention the date of completion in Form No. 10CCB and failed to produce the completion certificate from the local authority. Despite the appellant submitting various documents like Gram Panchayat tax receipts, NOC for electrical connection, valuation certificates, and possession letters, the AO was not convinced and held that the appellant did not comply with the basic conditions of Section 80IB(10).

Upon appeal, the CIT(A) upheld the AO's decision, emphasizing that the completion certificate is mandatory for claiming the deduction. The CIT(A) noted that the appellant failed to furnish the completion certificate even after almost three years from the due date of 31-03-2011, thus violating the basic condition stipulated under Section 80IB(10).

The appellant argued before the ITAT that the Gram Panchayat is a competent authority and submitted various evidences to support the project's completion by 31-03-2011. The appellant relied on several case laws, including ITA No. 35 & 36/Nag/2014 in the case of ITO vs. M/s Swapnashilp Developers, where similar issues were decided in favor of the assessee. The ITAT referred to these precedents, especially the decision of the jurisdictional High Court, which accepted the Gram Panchayat as a competent authority. Consequently, the ITAT found that the adverse inference drawn due to the lack of a completion certificate could not be sustained.

2. Allotment of More Than One Unit to an Individual and His Spouse:
The AO also disallowed the deduction on the ground that the appellant allotted more than one unit to an individual and his spouse, violating Section 80IB(10)(f). The AO identified cases where multiple units were allotted to Shri Dhananjay Ramlalji Choudhary and to Shri Ravindra R. Akulwar and his wife Smt. Ashwini Akulwar. The CIT(A) confirmed this finding, stating that the appellant violated the amended provisions of Section 80IB(10)(f), effective from 01-04-2010, which prohibit allotting more than one residential unit in a housing project to an individual or their spouse.

The appellant contended that the provision was not applicable to them and relied on various case laws supporting the proportionate relief approach. The ITAT acknowledged the appellant's arguments and referred to the jurisdictional High Court's decision in CIT vs. Cajetano Mario Pereira, which supported the appellant's case. The ITAT directed the AO to examine the appellant's contentions and, if necessary, disallow the exemption only for the units that violated the concerned provisions.

Conclusion:
The ITAT allowed the appeal for statistical purposes, directing the AO to re-examine the completion of the project based on the Gram Panchayat's evidence and to consider the proportionate relief approach for units violating Section 80IB(10)(f). The order emphasized that the adverse inference due to the lack of a completion certificate could not be sustained, and the jurisdictional High Court's decisions were in favor of the appellant.

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