Income Tax Appellate Tribunal - Indore
D.K.Construction, Bhopal vs Department Of Income Tax on 29 July, 2011
1
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
AND
SHRI R.C. SHARMA, ACCOUNTANT MEMBER
ITA No.259/Ind/2011
A.Y. - 2008-09
ACIT-1(2), Bhopal ... Appellant
vs
M/s. D.K. Construction, Bhopal
PAN - AAAFD 7121 P ... Respondent
Date of hearing 27.4.2012
Date of pronouncement 27.4.2012
Appellant By Shri Keshave Saxena
Respondent By None
O R D E R
PER JOGINDER SINGH The Revenue is aggrieved by the impugned order dated 29.07.2011, passed by the learned first Appellate Authority, Bhopal, wherein he deleted the addition of Rs.1,80,03,559/- 2 made by the learned AO on account of disallowance of deduction u/s 80IB(10) of the I.T.Act and further directing that the assessee is eligible for deduction, that too on the basis of revised certificate issued by the local authority on 24.12.2010, whereas the completion certificate has been issued on 15.12.2008 and hence the date of completion of the project shall be taken as 15.12.2008 moreso the assessee was required to complete the project on or before 31.3.2008.
2. An application for adjournment has been moved on behalf of the assessee on the reason that ld. Counsel for the assessee has to attend a marriage function in Delhi on 27.4.2012, therefore, he is unable to attend the hearing fixed on 27.4.2012. However, during hearing, the ld. CIT/DR pointed out that the impugned issue is covered by the decision of the Tribunal dated 6.12.2010, in the case of assessee itself (ITA No.243/Ind/2010) for assessment year 2006-07, therefore, the application for adjournment is rejected and proceed to decide the appeal 3 exparte, qua assessee, on the basis of material available on record and after considering the submissions of ld.CIT DR.
3. We have considered the submissions of the ld. CIT/DR and perused the material available on file. In view of the above, we are reproducing hereunder the relevant portion of the order of the Tribunal dated 6.12.2010 (supra):-
" This is an appeal filed by the assessee against the order of CIT(A) dated 11.1.2010 for the assessment year 2006-07 in the matter of order passed u/s 143(3) of the Income-tax Act, 1961.
2. Various grounds have been taken but the crux of the assessee revolves around decline of claim of deduction u/s 80-IB in respect of its project D.K. Honey Homes.
3. Rival contentions have been heard and records perused.
4. Facts in brief are that the assessee is a firm engaged in the business of civil construction, building and developing of Housing Project. In the return of income, it has claimed deduction of Rs. 36,63,342/- u/s 80IB(10). The AO observed that the assessee has not complied with pre-requisite conditions for allowing claim u/s 80IB in so far as its D.K. Honey Homes Project was not completed prior to 31.3.2008. The AO also 4 called for information u/s 133(6) from local authorities. It was informed by Local Authorities that completion certificate was not provided to the assessee. The said letter of Local Authority was made part of assessment order by the Assessing Officer and marked as Annexure 'A'. By the impugned order, the ld. CIT(A) confirmed the disallowance of claim u/s 80IB of the Act and the assessee is in further appeal before us.
5. Shri M.K.Sharma, C. A. appeared on behalf of the assessee and submitted that the assessee has completed its project before 31.3.2008 and vide its letter dated 21.3.2008, it has already informed to local authority regarding completion of the project. He further submitted that after giving this letter, the assessee was asking again and again to the Local Authorities for issue of necessary certificate. He also invited our attention to the letter of Municipal Authorities dated 15.12.2008 indicating that project of m/s. D.K.Honey Homes was completed and same was transferred to Municipal Corporation Kolhar. As per ld. Authorized Representative whatever assessee can do for getting the certificate is to inform the competent authorities regarding completion of its project and merely because this certificate was not issued immediately by the Local Authorities over which the assessee was not having any control, the same cannot be made the basis for denial of claim u/s 80IB. As per ld. Authorized Representative, intention behind any deduction u/s 80IB is to promote investment in a particular sector, which is less profitable and the assessee has 5 already done whatever it can do. However, it has no control over the local authorities for getting certificates issued. During the course of hearing, he was particularly asked to again obtain a certificate of local authority with specific mention of completion of project before 31.3.2008, which is a basic condition for allowing claim u/s 80IB(10). The assessee again produced the certificate, which was again duly verified from the local authorities to the effect that a letter dated 21.3.2008 by the assessee intimating to local authority for completion of its project at Khasra Nos. 74, 75, 78, 79, 91, 94, 102, 104, 419, 420, 421 was received by the Municipal Corporation on 29.3.2008. On the basis of this certification, the ld. Authorized Representative further contended that the assessee has done whatever he has expected to do and that letter regarding completion of project was duly entered in Municipal record on 29.3.2008, on the basis of which the assessee should be allowed claim of deduction u/s 80IB.
6. On the other hand, the ld. Sr. DR drew our attention to the letter issued by the Local Authorities dated 11th November, 2008, clearly indicating that no completion certificate has been issued to the assessee. This information was directly called by the Assessing Officer from Municipal Corporation, Bhopal. As per ld. Sr. DR, the primary condition for allowing claim of deduction u/s 80-IB is that the Project should be approved prior to 1.4.2004 and should have been completed before 31.3.2008. The first condition regarding approval was not disputed, but the second 6 condition, which is also equally important for allowing assessee's claim is regarding completion of the project, which has not been fulfilled. He, accordingly, justified the order of the ld. CIT(A) for confirming the disallowance of claim of deduction u/s 80-IB.
7. We have considered the rival contentions, carefully gone through the orders of the authorities below and relevant material placed on record towards which our attention was invited during the course of hearing by the ld. Authorized Representative and the ld. Senior D.R. Provisions of Section 80IB allows claim for deduction in respect of housing project, which has been approved prior to 1.4.2004 and also completed before 31.3.2008. During the course of assessment with regard to assessee's claim of deduction u/s 80IB in respect of its D.K.Honey Homes Project, the AO has asked the assessee to furnish the certificate of completion of this project M/s. D.K. Honey Homes. The AO also directly called information from local authorities by issuing summons u/s 133(6) and a letter was issued by the competent authority dated 11th November, 2008, confirming that no completion certificate has been issued by this office. Accordingly, the assessee's claim for deduction u/s 80-IB was declined. Section 80IB clearly defines the date of completion as "Date of completion of construction 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 Authorities", it means Local Authorities is competent to certify the date of completion of Housing Project. The 7 date of issue of such letter by the Local Authorities is not so crucial but it should have clearly mentioned the date of completion of project. When the Project is completed on 31.3.2008 and the assessee has informed regarding such completion, the Local Authorities may take its own time for issue of certificate, which may be even after 6-7 months, but the letter so issued by the Local Authorities should clearly mention the date of completion of such project. Merely because such certificate is issued after gap of 8-9 months or even one year, will not adversely affect the assessee if it has mentioned clearly the date of completion of project prior to 31.3.2008. Once the letter for completion of project is given by the assessee to the Local Authority, it is the duty of the Local Authority to verify physically the Projects stated to be completed from its own parameters. This process may take time and, therefore, the date of issue of letter is not so crucial to determine the assessee's eligibility for claim of deduction as per Explanation (ii) of Section 80IB(10)(a) of the Income-tax Act, 1961. What is crucial is date mentioned in the letter so issued certifying completion of the Project. Thus, the date of issue of letter is not important, but the date mentioned in the letter certifying completion of project is important. We, therefore, do not find any merit in the observation of the lower authorities to the effect that the date of completion shall be taken the date on which certificate is physically issued by the Local Authorities.
8. In view of the above discussion, we restore the matter back to the file of AO and 8 assessee is at liberty to procure the required letter/certificate from the Local Authority clearly mentioning therein the date of completion of the project. The AO is to decide the issue afresh as per law after considering the letter of completion if any furnished by the assessee. We direct accordingly.
9. In the result, the appeal of the assessee is allowed for statistical purposes.
This order has been pronounced in the open court on 6th December, 2010."
4. For the reasons contained in the aforesaid order, more specifically para 7, we direct the assessee to procure the completion certificate mentioning clear date of the completion of the project from the Municipal Authorities/Competent Authorities and furnish the same before the ld. Assessing Officer, who after examining the same will decide the matter as per provisions of the Act, in the light of the aforesaid direction contained in the order (supra). Needless to mention here before coming to any conclusion due opportunity of being heard be provided to the 9 assessee, therefore, this appeal of the Revenue is allowed for statistical purposes only.
Finally, the appeal of the Revenue is allowed for statistical purposes only.
Order was pronounced in the open Court in the presence of ld. CIT/DR at the conclusion of the hearing on 27.4.2012.
Sd sd (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27.4.2012
Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File !vyas!