2017 (6) TMI 953 - AT - Income Tax

Tribunal upholds deduction under Section 80IB(10) for completed project meeting pre-amendment conditions.

The Tribunal dismissed the ground related to reopening the assessment under Sections 147/148 as not pressed. Regarding the disallowance of deduction under ... Disallowance of deduction u/s 80IB(10)- period of completion of project - Held that:- The project was completed within the stipulated period, applied within time by the assessee and if there is a delay in issuing the same by the competent authority, the assessee cannot be penalyzed. Even in the assessment order/impugned order, there is no mention that the project was not completed. The assessee cannot be expected to fulfil the conditions which are beyond his control. The assessee applied for completion certificate on 03/10/2007, addressed to the Executive Engineer (CIDCO) (VVSR) for the concerned project, it can be inferred that the assessee completed the project within time, against the sanction plan, therefore, we direct the Assessing Officer to grant the claimed deduction to the assessee. - Decided in favour of assessee. Issues involved:1. Reopening of assessment under Sections 147/148 of the Income Tax Act.2. Disallowance of deduction under Section 80IB(10) of the Income Tax Act.Issue-wise Detailed Analysis:1. Reopening of Assessment under Sections 147/148:- Assessee's Position: The assessee's counsel, Shri Bhupendra Shah, did not press the ground related to reopening the assessment under Sections 147/148.- Revenue's Position: The Revenue's representative, Shri Rajesh Kumar Yadav, had no objection to the assessee's request to not press this ground.- Tribunal's Decision: The Tribunal dismissed this ground as not pressed.2. Disallowance of Deduction under Section 80IB(10):- Assessee's Argument: The assessee argued that the project was approved on 17/07/2003, and the application for the completion certificate was made on 06/07/2005. The assessee relied on the decisions of the Hon'ble jurisdictional High Court in the case of CIT vs Hindustan Samuh Awas Ltd. and CIT vs Sarkar Builders, which supported their claim for deduction under Section 80IB(10).- Revenue's Argument: The Revenue defended the addition made by the Assessing Officer, citing the decision in ITA No.4929/Mum/2012.- Tribunal's Analysis:- The Tribunal considered the rival submissions and reviewed the material on record. It noted that the assessee, a builder and developer, had constructed a project named Akash Tower, which included residential and commercial units.- The Tribunal referred to the decisions of the Hon'ble jurisdictional High Court and the Hon'ble Apex Court, which clarified that the amendment to Section 80IB(10) introducing commercial space restrictions via clause (d) was prospective and not retrospective. The courts held that the conditions imposed by the amendment could not be applied to projects approved and commenced before 01/04/2005 but completed after this date.- The Tribunal found that the project in question was approved on 17/07/2003, and the assessee had applied for the completion certificate within the stipulated period. The project was completed as per the sanctioned plan, and any delay in issuing the completion certificate by the competent authority should not penalize the assessee.- The Tribunal also referred to the decision in the case of Brahma Associates, which held that the expression 'housing project' included projects with permissible commercial use as per local authority regulations, and such projects were eligible for deduction under Section 80IB(10).- The Tribunal concluded that the assessee was entitled to the claimed deduction as the project met the conditions set out in Section 80IB(10) before the amendment and was completed within the stipulated period.- Tribunal's Decision: The Tribunal directed the Assessing Officer to grant the claimed deduction to the assessee.3. Appeal of the Revenue:- Tribunal's Decision: The Tribunal found no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal.Conclusion:The Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue, directing the Assessing Officer to grant the claimed deduction under Section 80IB(10). The decision was pronounced in the open court on 20/04/2017.