2022 (6) TMI 476 - AT - Income Tax

Tribunal upholds deduction under Income Tax Act; Delay not attributed to assessee

The Tribunal upheld the Commissioner of Income Tax (Appeals)-9, Pune's decision to allow a deduction of Rs.3,05,53,176/- under section 80IB(10) of the ... Deduction u/s 80IB - delay in issuance of completion certificate - profits derived from the housing project - claim was denied by AO on the ground that the completion certificate was issued by PMC only 21.07.2012 after due date for completion of project. - HELD THAT:- We have carefully gone through the Explanation 2 appended to clause (iii) of sub-section (10) of section 80IB of the Act. The said Explanation 2 appended to clause (iii) of sub-section (10) of section 80IB states that the date of completion of the housing project shall be the date on which the completion certificate is issued by the local authorities. This Explanation has come up for interpretation before the Hon’ble Bombay High Court in the case of Hindustan Samuh Awas Limited [2015 (10) TMI 2306 - BOMBAY HIGH COURT] as relying on TARNETAR CORPORATION [2012 (10) TMI 803 - GUJARAT HIGH COURT] held that if the application is moved well in time for seeking the completion certificate from the Municipal Corporation and delay in issuance of completion certificate is not attributable to the assessee. It should be deemed that the project is completed as on date of application. Applying the ratio of this judgement to the facts of the present case, we find the application seeking the completion certificate was moved by the respondent-assessee on 27.03.2012. The said application was accompanied by the Architect’s certificate there was no material on record indicating that the PMC had pointed out any mistakes in the application moved by the respondent-assessee. Therefore, the grounds raised by the Revenue stands dismissed. Issues Involved:1. Deletion of disallowance of Rs.3,05,53,176/- under section 80IB(10) of the Income Tax Act, 1961.2. Applicability of the decision in CIT vs. Hindustan Samuh Awas Limited (2015) 377 ITR 150 (Bom.) to the present case.3. Attribution of delay in issuing the completion certificate by the Pune Municipal Corporation (PMC) to the assessee.Issue-wise Detailed Analysis:1. Deletion of Disallowance under Section 80IB(10):The Revenue challenged the order of the Commissioner of Income Tax (Appeals)-9, Pune [CIT(A)] which allowed the deduction of Rs.3,05,53,176/- under section 80IB(10) of the Income Tax Act, 1961. The Assessing Officer (AO) had disallowed the deduction on the grounds that the final completion certificate for the housing project was granted by the PMC on 21.07.2012, which was beyond the prescribed date of 31.03.2012. The CIT(A) allowed the deduction based on the Tribunal's decision in the assessee's own case for the previous assessment year, where it was held that the application for the completion certificate before the due date was sufficient compliance.2. Applicability of the Decision in CIT vs. Hindustan Samuh Awas Limited:The Revenue argued that the CIT(A) erred in relying on the decision of the Bombay High Court in CIT vs. Hindustan Samuh Awas Limited, as the facts of that case were different. In Hindustan Samuh Awas Limited, the delay in issuing the completion certificate was not attributed to the assessee. However, in the present case, the Revenue contended that the delay was attributable to the assessee because the amenity space was handed over to the PMC only on 22.05.2012.3. Attribution of Delay in Issuing the Completion Certificate:The Revenue argued that the delay in issuing the completion certificate was due to the assessee's late handover of the amenity space to the PMC. The assessee countered this by stating that the application for the completion certificate was made on 27.03.2012, accompanied by the Architect's certificate, and no defects were pointed out by the PMC. The Tribunal noted that the Bombay High Court in Hindustan Samuh Awas Limited had held that if the application for the completion certificate is made before the due date and the delay in issuance is not attributable to the assessee, it should be deemed that the project was completed on the date of the application.Tribunal's Conclusion:The Tribunal found that the application for the completion certificate was moved by the assessee on 27.03.2012, and there was no evidence that the PMC had pointed out any defects in the application. Therefore, the Tribunal concluded that the ratio of the judgment in Hindustan Samuh Awas Limited was applicable to the present case. The Tribunal upheld the CIT(A)'s order allowing the deduction under section 80IB(10) and dismissed the Revenue's appeal, stating that the grounds raised by the Revenue were devoid of any merits.Final Order:The appeal filed by the Revenue was dismissed, and the order of the CIT(A) was upheld. The decision was pronounced on 08th June 2022.