2021 (8) TMI 462 - AT - Income Tax

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

Addl. CIT, Special Range, Ghaziabad Versus M/s Shipra Estate Ltd.

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 ... Disallowance of deduction u/s 80IB(10)(a) - Revenue contended that, assessee had not fulfilled the condition required u/s 80IB(10) as per which the assessee had to obtain the Project Completion Certificate from the prescribed authority within a period of 5 years from the end of the financial year in which the project was first approved i.e. on or before 31.03.2012, and the same was applied for on 29.08.2012 and obtained on 21.12.2013 - HELD THAT:- Registration of the units in the name of the ultimate customers is being registered by the GDA who is also the competent authority to issue the Completion Certificate in the case of the assessee. GDA has clearly mentioned that the project was completed on 21.02.2011 vide the aforementioned letter therefore it establishes the fact that the project was in fact completed much before the cutoff date of 31.03.2012. It is also a fact that this letter dated 21.02.2013 is not a formal completion certificate issued by the GDA. This letter mentions the date of completion as 21.02.2011. The date of this letter has been erroneously taken by AO as the completion date. Further in respect of the observations of the AO that assessee has not applied for completion certificate in time it is seen from the documents available on record that the assessee has applied for the project completion certificate with the authority vide its letter dated 30.11.2011 after duly completing the work on 21.02.2011. The apartments would be registered only when the project completion certificate is obtained by the assessee. Since, the prescribed authority has accepted the project completion on 21.02.2011 therefore first registry of the project was done by the authority in favor of ultimate buyer' s on 21.02.2011. During the Financial Year 2010 - 11, 5 of the units got registered in favor of the customers of the NEO project by the assessee company and another 291 units in Financial Year 2011-12 out of total units of 346 i.e. the majority of the units i.e. around 86% of the total units got registered in the names of ultimate customers before the end of financial year 2011-12 which is also the cutoff date for getting the project completion certificate. As well established that the project of the assessee was completed before the cutoff date as per the provisions by the Act i.e. 31.03. 2012. The AO has chosen to ignore all these facts and made the addition on the basis of interpretation of statute by holding that the date of completion is 21.12.2013 i.e. the date of letter of Joint Secretary, GDA ignoring the fact that this letter is not a completion certificate issued by the GDA. This letter itself mentions the date of completion as 21.02.2011. This date of letter has been erroneously taken by AO as ' the completion date. AO held that since this letter is dated 21.12.2013, the completion of the project is beyond the prescribed period u/ s 80-IB and not from the date mentioned in the letter i.e. 21.02.2011. As the action of the revenue is incorrect on the facts of completion certificate, we decline to interfere with the order of the ld. CIT(A). - Decided against revenue. 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.