Delay in issuance of completion certificate on account of time taken by competent authority & admissibility of duction under section 80-IB(10)

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Overview: 

 

Where building/developing project was completed within the time framed provided under section 80-IB(10) and an application for issuance of completion certificate was filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the assessee, the benefit of section 80-IB(10).

Revenue denied benefit of deduction under section 80-IB(10) to assessee-builder/developer for not having obtained completion certificate within four years from the end of the financial year in which the project was approved by the local authority. Assessee contended that delay in issuing completion certificate was on account of time taken by the competent authority as all the necessary documents for issuance of certificate were submitted much before the expiry of four years from the end of the financial year in which commencement certificate was obtained.

Itbis held that in view of decision of Court in the case of  CIT v. Hindustan SamuhAwas Ltd.[(2015) 377 ITR 150 (Bom) : 2015 TaxPub(DT) 3817 (Bom-HC)], when project is completed within the time-framed provided under section 80-IB(10) and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the assessee, the benefit of section 80-IB(10). In the subject case, it was found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, assessee should not suffer on account of the delay at the hands of the competent authority issuing the certificate. Further, approval of plans and commencement certificate of the said project were received by assessee before the amendment to section 80B on 1-4-2005. In such case, the time limit provided by the amendment to complete the construction by obtaining completion certificate would not apply. Hence, assessee would be entitled to the benefit of deduction under section 80-IB(10).

Decision: In assessee’s favour.

Followed: CIT v. Hindustan SamuhAwas Ltd., (2015) 377 ITR 150 (Bom): 2015 TaxPub(DT) 3817 (Bom-HC).

Referred: CIT v. Tarnetar Corporation (2014) 362 ITR 174 (Guj): 2013 TaxPub(DT) 1397 (Guj-HC).

IN THE BOMBAY HIGH COURT

AKIL KURESHI & M.S. SANKLECHA, JJ.

Pr. CIT v. Dharti Enterprises

Income Tax Appeal No. 1096 of 2016

16 January, 2019

Appellant by: Arvind Pinto with N.C. Ranganayakulu

ORDER

P.C.

This appeal under section 260A of the Income Tax Act, 1961 (the Act), challenges the Order, dated 18-5-2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned Order, dated 18-5-2015 is in respect of assessment year 2006-07.

  1. The Revenue urges the following question of law for our consideration :–

“Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in law in upholding the orders of the Commissioner (Appeals) granting deduction under section 80-IB(10) of the Act?”

  1. The Respondent-Assessee is a builder/developer. For the subject assessment year, Respondent filed a return of income, declaring income as ‘Nil’. This, by claiming deduction under section 80-IB(10) of the Act in respect of its project. The return was assessed on 29-12-2008 under section 143(3) of the Act at Nil income.
  2. Subsequently, the assessing officer issued a notice dated 28-3-2011 under section 148 of the Act, seeking to reopen the assessment for assessment year 2006-07. The basis for reopening the assessment was that the commencement certificate for the project in respect of which benefit of section 80-IB(10) of the Act as claimed, was received on 19-1-2005 but the Occupation Certificate was not obtained till 31-3-2009. Thus, disentitling the Respondent to the benefit of section 80-IB(10) of the Act.
  3. Consequent to the reopening of the assessment, the assessing officer by an Order, dated 15-12-2011 passed under section 143(3) read with section 147 of the Act, denied the benefit of deduction under section 80-IB(10) of the Act to the Petitioner, This, for not having obtained completion certificate within four years from the end of the financial year in which the project was approved by the local authority. Thus, assessing the Respondent’s income at Rs. 6.35 Crores.
  4. Being aggrieved, the Respondent filed an appeal to Commissioner (Appeals) [CIT(A)]. By Order, dated 23-7-2012, the Commissioner (Appeals) while allowing the appeal, held that the Respondent is entitled to the benefit of section 80-IB(10) of the Act as the delay in issuing the occupancy certificate was on account of the time taken by the competent authority to issue the certificate when the Applicant had submitted all necessary documents for the issuance of certificate much before the expiry of four years from the end of the financial year in which commencement certificate was obtained.
  5. Being aggrieved by the order of the Commissioner (Appeals), an Appeal was filed by the Revenue to the Tribunal. By the impugned Order, dated 18-5-2015, the Tribunal dismissed the Revenue’s Appeal. The Tribunal found on facts that the project was completed within time frame as required under section 80-IB(10) of the Act and that the application for issuance of completion certificate was made well within time. Thus, the Respondent could not be penalized for the delay by the Competent Authorities in issuing the completion certificate.
  6. We find that this issue is now no longer res integra as it stands concluded against the Revenue and in favour of the Respondent by the decision of this Court in CIT v. Hindustan Samuh Awas Ltd., (2015) 377 ITR 150 (Bom) : 2015 TaxPub(DT) 3817 (Bom-HC). In the above case, it has been held that whether the project is completed within the time framed provided under section 80-IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the assessee, the benefit of section 80-IB(10) of the Act. To the same effect the decision of the Gujarat High Court in CIT v. Tarnetar Corporation (2014) 362 ITR 174 (Guj) : 2013 TaxPub(DT) 1397 (Guj-HC). In the present case on facts, it is found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, the Respondent should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate.
  7. In passing, we may also point out that the approval of plans and commencement certificate were received by the Respondent in respect of the project before the amendment to section 80B of the Act on 1-4-2005. In such cases, this Court has taken a view that the time limit provided by the amendment to complete the construction by obtaining completion certificate will not apply (See Pr. CIT v. M/s. Neeta Enterprises [ITA No. 1027 of 2016 rendered on 16-1-2013]).
  8. In the above view, the question as proposed being concluded by the decision of this Court, would not give rise to any substantial question of law.
  9. Accordingly, Appeal dismissed. No order as to costs.

 

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