Project completion date confirmed for Section 80IB(10) deduction

The ITAT upheld the CIT(A)'s decision, confirming that the project was completed before the cutoff date, and the deduction under Section 80IB(10) was correctly allowed. The revenue's appeal was dismissed, with the order pronounced on 06/08/2021.

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Issues Involved:

1. Disallowance of deduction under Section 80IB(10)(a) of the Income Tax Act.
2. Interpretation of the project completion date for eligibility of deduction.
3. Compliance with the Uttar Pradesh Apartment Act, 2010 regarding completion certificates.
4. Applicability of judicial precedents and interpretation of statutes.

Detailed Analysis:

1. Disallowance of Deduction under Section 80IB(10)(a) of the Income Tax Act:

The revenue challenged the deletion of the addition of Rs. 2,28,94,733/- made by the Assessing Officer (AO) on account of disallowance of deduction under Section 80IB(10)(a). The AO had denied the deduction claiming that the assessee did not fulfill the condition of obtaining the project completion certificate within five years from the end of the financial year in which the project was first approved. The AO took the date of completion as 21.12.2013, based on a letter from the Joint Secretary, GDA, which was deemed incorrect by the CIT(A). The CIT(A) found that the project was actually completed on 21.02.2011, well before the cutoff date of 31.03.2012, and thus allowed the deduction.

2. Interpretation of the Project Completion Date for Eligibility of Deduction:

The AO interpreted the statute strictly, asserting that the completion certificate issued by the local authority must be dated within the prescribed period. However, the CIT(A) and the ITAT found that the project was completed by 21.02.2011, as confirmed by the GDA, and the application for the completion certificate was made on 30.11.2011. The ITAT noted that the AO erroneously considered the date of the letter (21.12.2013) as the completion date, ignoring the actual completion date mentioned in the letter (21.02.2011).

3. Compliance with the Uttar Pradesh Apartment Act, 2010 Regarding Completion Certificates:

The Uttar Pradesh Apartment Act, 2010, mandates that an apartment can only be transferred after obtaining the completion certificate from the prescribed authority. The Act also provides that if the completion certificate is not issued within three months of the application, it is deemed to have been issued. The assessee applied for the completion certificate on 30.11.2011, and as per the Act, the project should be deemed completed within three months, supporting the assessee's claim of completion before the cutoff date.

4. Applicability of Judicial Precedents and Interpretation of Statutes:

The ITAT referred to several judicial precedents, including decisions from the Delhi High Court, Gujarat High Court, and Karnataka High Court, which supported the assessee's interpretation. The ITAT also noted that the decision of the Madhya Pradesh High Court in CIT vs. Global Reality, which was relied upon by the AO, has been stayed by the Supreme Court. The ITAT emphasized that in the absence of a jurisdictional High Court decision, the principle laid down by the Supreme Court in CIT vs. Vegetable Products Ltd. should be followed, which favors the assessee.

Conclusion:

The ITAT upheld the CIT(A)'s order, confirming that the project was completed before the cutoff date and the deduction under Section 80IB(10) was rightly allowed. The appeal of the revenue was dismissed, and the order was pronounced in the open court on 06/08/2021.

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