TaxTMI 
TaxTMI 
2013 (11) TMI 202
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....00 sq. ft. Accordingly, it was claimed that the assessee firm was eligible for exemption u/s. 80IB(10) of the Act in respect of its income from that project. 4. During the course of assessment proceedings, the Assessing Officer deputed his Inspector for taking physical dimensions of the plot. It was found that the physical dimension was 247.09 ft x 141 ft. = 34,839 s. ft. = 3871 sq. yards. Therefore, the total area of the plot of Sri Niketan project was less than 1 acre, i.e. 4840 sq. yards. Besides, from the sale deed executed by the assessee with the flat owners, he noticed that out of 5130 sq. yards, land to the extent of 1373 sq. yards had been affected by road widening, and therefore, the present extent of the property was 3575 sq. yards only, which was less than 1 acre. 5. The Assessing Officer opined that in view of the provisions of Sec. 80IB(10)(b) of the Act, the project should be on the size of a plot of land having minimum area of 1 acre. He, therefore, required the assessee to explain as to why its claim of deduction u/s. 80IB should not be disallowed. In response, the assessee submitted that the project had been executed on a plot of 5130 sq. yards (4291 sq. mts). It ....
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....19 u/s. 80IB(10) was disallowed. 8. During the course of 1st appellate proceedings, the representative of the assessee submitted that while denying the deduction u/s. 80IB(10) the Assessing Officer stated that a portion of the land had been earmarked for laying roads. However, the representative of the assessee contended that the entire land of 5130 sq. ft. is in possession of the assessee even today on which the construction was made and a portion of land had only been earmarked for the roads. He averred that possession of such earmarked land was not taken by any authorities even till date. He averred that the Municipal Authorities had granted approval for construction for FSI of 1:1.75 taking the entire land of 5130 sq. yards without excluding the portion of land earmarked for roads. Accordingly, he argued that it was clear that the land on which the flats were constructed was more than one acre, and therefore, the claim of deduction u/s. 80IB(10) could not have been denied on this ground. 9. The representative of the assessee reiterated that as per the approved plan, FSI was granted in the ratio of 1.75:1 on the total area of 5130 sq. yards, showing that the project was execut....
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....es are well within their rights to take up such road construction at any point of time. Accordingly, the mere possession of the area earmarked for roads as on date cannot imply that such area is till date a part and parcel of the project itself. Since the final area on which the entire construction of 1,18,250 sq. ft. of the 'Sri Niketan' project is located, as on date, is on a plot having area less than 1 acre, it is clear that the assessee has not satisfied the condition laid down in clause (b) of sec. 80 IB(10). The claim of the assessee was rejected by the CIT(A). Against this, the assessee is in appeal before us. 12. We have heard both the parties and perused the material on record. In this case deduction u/s. 80IB(10) was denied on the reason that the project was executed in a plot area admeasuring less than one acre and there was no completion certificate obtained from MCH. The assessee pleaded before us that the project was executed on an area exceeding one acre and in the course of completion of the project 1373 sq. yards of land has been earmarked for acquisition of MCH for the purpose of making roads and this was not acquired by MCH and still in the possession of the as....
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....acre. Accordingly, the claim of the assessee cannot be denied on this ground if it is available at the time of entering into development agreement and deduction u/s. 80IB(10) is to be given to the assessee. 14. Regarding non-production of completion certificate, the learned AR submitted that the circumstances brought on record show that the project is completed. He relied on judgement of Gujarat High Court in the case of Manan Corporation vs. ACIT in TA No. 1053 of 2011 dated 3.9.2012 wherein held that there is no necessity of strict interpretation of section 80IB(10) of the Act as it is a beneficial provision and the facts brought on record show the completion of the project and deduction has to be given. He also relied on the order of the Tribunal in the case of Keerthi Estates Pvt. Ltd. in ITA No. 478/Hyd/2011 dated 21st September, 2012 (paras 14 and 15, as given below), wherein held as follows: "14. Now the objection of the Department is that the assessee has not produced the completion certificate. The assessee is following Percentage Completion Method. This method is recognised by the Income-tax Act for disclosing the profit in the case of a builder. Th....
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....49 f. No. 0069/CSC/TP-5/04 dated 3.11.2004. As per certificate of assessee's architect dated 3.9.2008, the project was completed on 1.10.2007. The learned AR submitted before us that the assessee has completed the project by this date and the assessee is following contract completion method. The claim for deduction u/s. 80IB(10) was made by the assessee for the first time which was denied by the authorities on the reason that there is no completion certificate. 16. The meaning of "date of completion" has been given in Explanation (ii) to clause (a) to section 80IB(10). Date of completion of construction would mean date on which completion certificate in respect of housing project was issued by the local authority. To grant deduction u/s. 80IB(10) it is mandatory to furnish the completion certificate of the housing project but the persistent question here is whether for giving benefit of deduction u/s. 80IB(10), where an assessee is following the percentage completion method is it necessary to obtain such completion certificate for each year of assessee's claim or it is sufficient that certificate is obtained on the completion of the housing project as a whole. Stipulation for obta....
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....he commencement and completion, and not that a completion certificate should be there in every year of the project span. The certifications are for ensuring that the project span does not exceed the prescribed period and nothing more. Of course if such period exceeded the prescribed limit, Revenue would be well within its rights to withdraw the claims already allowed, following the procedure prescribed under the Act. Thus, the Assessing Officer cannot insist on the completion certificate in the impugned year. This view has also been taken by CBDT in its Instruction No. 4 of 2009 dt. 30.6.2009, paras 2 to 4 of which are reproduced hereunder: "2. Clarifications have been sought by various Chief CITs on the issue whether the deduction under s. 80IB(10) would be available on a year-to-year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project under s. 80-IB(10). 3. The above issue has been considered by the Board and it is clarified as under : (a) The deduction can be claimed on a year-to-year basis where the assessee is showing profit from partial com....