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TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1232
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.... CIT(A) erred in law in granting relief to the assessee even when the assessee has not furnished the completion certificate till the finalisation of scrutiny assessment i.e., on 24.12.2009 which is much later than the period of the completion of the project i.e., 31.03.2008. 4. The Hon'ble CIT(A) erred in ignoring the explanation (ii) to clause (a) of sec. 80IB of the IT Act that: "(ii) the date of completion of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority." 5. The Hon'ble CIT(A) erred in granting relief to the assessee on the basis of reasons discussed in the appellate order for the A.Y. 2008-09 wherein the deduction claimed by the assessee is disallowed on the basis of information available. 3. Brief facts of the case are that the assessee firm is engaged in the business of construction and sale of flats. The assessee firm entered into a Development Agreement cum GPA with Md. Khadeer Shareef and others vide agreement dated 11.03.2003 in respect of land situated at Hafeezpet, Seri- lingmaplly, Hyderabad. The assessee undertook development of a housing project in the sai....
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....26.12.2012) and M/s. Nagarjuna Homes vs. ITO (46 SOT 287). 5. Further the CIT(A) admitted the additional evidence under Rule 46A of Income-tax Rule, 1962 in the shape of certain sale documents pertaining to flats in various blocks, details of municipal tax assessment of various flats, copy of application for regularisation filed before the GHMC authorities along with enclosures etc. As the same constitute additional evidence, it was forwarded to the AO for furnishing a Remand Report with regard to admissibility of additional evidence as well as merits of the material produced. The AO furnished the Remand Report dated 11.6.2012 through the Addl. CIT, Range-8, Hyderabad. A copy of the report was made available to the assessee. The assessee furnished detailed submission with regard to various points covered in the Remand Report. 6. After hearing the assessee's counsel, the CIT(A) observed that the assessee obtained permission for development of a housing project in March 2004. For the assessment years 2004-05 onwards the assessee claimed deduction u/s. 80IB(10) of the IT Act in respect of the profits of the said housing project and the same was allowed, as the assessee complied with....
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....lusions, the AO observed that the assessee debited expenditure to Profit and Loss A/c. for the A.Y. 2009-10 and, therefore, be concluded that the assessee incurred expenditure towards construction even in the FY 2008-09. The AO further observed that there was inconsistency with regard to claim of obtaining of completion certificate. It was observed by the AO that the concerned authority issued completion certificate on the basis of self certification of the assessee. Further, the AO observed that the fact of application for BRS before the municipal authorities was not brought to the notice of the department in the course of assessment proceedings for the A.Y. 2007 -08 which were finalized on 24.12.2009. 9. The CIT(A) observed that the result of all the observations by the AO culminated in rejection of claim of the assessee u/s. 80IB(10) for the reason that the assessee did not complete the project by the stipulated date i.e., 31.03.2008. During the course of scrutiny assessment proceedings the assessee produced a letter dated 26.02.2010 addressed by the Zonal Commissioner to the assessee firm. For clarity the contents of the letter are extracted here under: "GREATER HYDERABAD MUN....
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....certain details and he communicated information in general terms stating that the work was in progress and certain flats were under construction. The relevant contents of the letter furnished by Deputy Commissioner of Serilingampally as brought out in the assessment order are as under:- 1. ............ 2. The building construction work is under progress. 3. The completion certificate should be certified by the concerned engineer only and this office has not issued any occupancy certificate and they have not applied so far any application to seek the above certificate. 4. ................. 5. a) Total number of flats are 490 Nos. b) 207 flats are assessed. The 1st flat assessment date was 23.03.2007 and the last assessment date was 11.12.2009. c) 183 flats are under constructions d) 100 flats are under constructions" 11. The CIT(A) observed from the above that the Deputy Commissioner of GHMC furnished information in general. The information furnished is not supported by any documents available with the authority. Further, the Deputy Commissioner did not specifically mention the basis for compiling the information incorporated in the communication dated 22.03.2010. It was al....
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....an the 31st day of March 2005 within four years from the end of the financial year in which the housing project is approved by the local authority." 14. The CIT(A) observed that the certificate issued by the local authority mentioning the date of completion is the date on which the housing project was completed. As submitted by the AR the "authority" mentioned in Explanation to section 80IB(10) is not defined In the present case such certificate was issued by the Zonal Commissioner on 26.02.2010 certifying that the project was completed by 31.03.2008. This certificate is not a subject matter of verification before the Deputy Commissioner. In his communication the Deputy Commissioner furnished certain details but did not deny the contents of the certificate issued by the Zonal Commissioner dated 26.02.2010. Further, the observation of the AO that certain flats were left as closing stock as on 31.3.2008 is not a relevant factor for deciding the eligibility of the assessee for deduction u/s. 80IB(10). Even subsequent expenditure incurred also cannot influence the decision of the AO with regard to deduction, because as mentioned by the AR, the assessee might have been obliged to under....
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....3.2004 and due date for commencement of project was 31.03.2008. Since this is a crucial date, the pre-amended section 80IB of the Act as stood at the time of getting approval from the local authority is applicable. As per provisions of section 80IB(10) Income-tax Act, 1961 an undertaking which develops and builds housing projects approved before 31.3.2007 by a local authority is eligible for deduction u/s. 80IB(10) of the Act subject to the following conditions: "i) In a case where the housing project has been approved by the Local Authority before 01-04-2004, the construction should be completed on or before 31- 03-2008. In a case where the approval from Local Authority is obtained on or after 01-04-2004, the construction should be completed within 4 years from the end of the financial year in which the housing project is approved by the Local Authority. ii) The housing project is constructed on a plot of land which has a minimum area of 1 acre. iii) The residential units constructed in the housing project have a maximum built up area of 1500 sq. ft. where such units are situated in places other than Delhi or Mumbai. iv) The built-up area of shops and other commercial establis....
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....t the claim for deduction was rejected on the ground that the assessee had not furnished the completion certificate. Being so, in the absence of any requirement u/s. 80IB(10)(a) of the Act and going by the provisions as applicable to the relevant assessment year, it is difficult to accept the contention of the Department that the claim of deduction has to be allowed to the assessee only on production of completion certificate. 21. Further, our view is supported by judgement of Madras High Court in the case of CIT vs. Jain Housing & Construction Ltd., reported in 214 Taxman 178, wherein their Lordships held as under: "9. As is evident from the substitution of Section 80IB(10) (1) of the Act, prior to the amendment, there was no such requirement as regards furnishing of completion certificate and the deduction provision pointed out to the grant of 100% deduction on the profits derived from a housing project, if the undertaking had commenced development and construction of the housing project on or after 1st October, 1998. Thus, till 2005, there was no clause dealing with completion, in which event, one cannot read into the provision as a condition, which is not specifically provide....