Municipal Corporation is responsible for issuing completion certificate so the assessee cannot be denied releife under section 80IB on this ground

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH: G: NEW DELHI

BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT

AND

SHRI A.D. JAIN, JUDICIAL MEMBER

ITA Nos.2743 to 2745/Del/2010

Assessment Years: 2004-05 to 2006-07

ACIT,

Circle 27(1), Room No.218,

D Block, Vikas Bhawan,

New Delhi.

(Appellant)

Vs.

Surendra Developers,

C-47, Naryana Vihar, New Delhi

& 240, Zone-1, M.P. Nagar,

Bhopal.

PAN: AAWFS1669R

(Respondent)

ITA Nos.3056 to 3058/Del/2010

Assessment Years: 2004-05 to 2006-07

Surendra Developers,

C-47, Naryana Vihar, New

Delhi & 240, Zone-1, M.P.

Nagar, Bhopal.

PAN: AAWFS1669R

(Appellant)

Vs.

ACIT,

Circle 27(1), Room No.218,

D Block, Vikas Bhawan,

New Delhi.

 (Respondent)

Assessee by: Shri Manoj Ayachit, Advocate

Revenue by: Smt. Srujani Mohanty, Sr.DR

ORDER

PER A.D. JAIN, JUDICIAL MEMBER

ITA Nos. 2743 to 2745/Del/2010 are departmental appeals for A.Y. 2004-05 to 2006-07 involving one single issue, i.e., allowability of deduction u/s 80IB (10) of the IT Act, 1961.

2. The assessee is a partnership firm. It developed a residential housing project by the name of “Surendra Estate” at Chuna Bhatti, Bhopal. The assessee got the approval for the project from Bhopal Municipal Corporation on 07.05.2003. The project was started inF.Y.2003-04, relevant to A.Y.2004-05. It was completed in F.Y. 2005-06 relevant to A.Y. 2006-07. As per the submissions placed on record and the arguments made before us, all units of the project were sold in F.Y.s 2003-04 to 2005-06.

3. For A.Y. 2004-05, the assessee claimed deduction u/s 80IB (10) of the Act for the first time. The same was allowed by the Assessing Officer vide an order passed u/s 143(3) of the Act. For A.Y. 2006-07 also, the deduction claimed was granted, though u/s 143(1) of the Act. For A.Y. 2006-07, however, the claim of the assessee for deduction u/s 80IB (1) of the Act was disallowed by the Assessing Officer, observing that the assessee had failed to comply with the provisions of Section 80IB (10) (a)(i) of the Act, regarding issuance of completion certificate before 31.03.2008. Subsequently, the cases for A.Y.s 2004-05 to 2005- 06 were re-assessed and the deduction claimed by the assessee was disallowed.

4. The ld. CIT (A), on appeal by the assessee for all the three years, passed a composite order dated 29.03.2010 and granted relief to the assessee observing, inter alia, as follows:-

“The A.O. had not disputed the fact that the appellant has not applied for completion certificate on 26.11.2007. Here, the assessee could not be held responsible for non issuance of the completion certificate by the local authority. Impossible cannot be required to be performed by a person especially when thing is beyond his control. The assessee could not be punished for such act which is beyond his control. The documents mentioned in para 5.7.1 above establish that the assessee had completed the construction of the project before 31.03.2008. The assessee had also applied for the completion certificate, but it could not get the completion certificate with in the statutory time prescribed in the section of 301 of Madhya Pradesh Nagar Palika Adhiniyam. The word “ISSUED’ has been used in the IT Act for the completion certificate and not the word ‘obtained’ by the assessee. As the Legislature had already anticipated such hardships of the assessee and that is why the work issued by the corporation has been used. In this case there is no refusal for issuance of the completion certificate by the Commissioner of Municipal Corporation till 31.03.2008, therefore, it is hereby held that the project of the assessee is deemed to be completed and completion certificate is deemed to have been issued by 31.03.2008, keeping in view (i) the submission of the AR, (ii) absence of any contrary material brought on the records by the A.O. and (iii) provisions of section 301(4) of the Madhya Pradesh Nagar Palika Nigam Adhiniyam. However later on, the Corporation issued the completion certificate on 02.06.2009.

Here, there is no dispute regarding the appellant complying with the eligibility conditions required for claiming deduction u/s 80IB (10) and only contention of the A.O. for rejecting the claim of appellant is that there is no completion certificate issued by the Corporation. Taking into account the fact that the A.O. has not disputed the eligibility of the appellant for claiming the deduction and further in view of the fact that there is deeming completion certificate issued by the Corporation as discussed above, it is hereby held that the appellant is entitled to deduction u/s 80IB (10).”

5. Aggrieved, the department is in appeal.

6. Challenging the impugned order, the Ld. DR has contended that the CIT (A) was not justified in allowing the deduction u/s 80IB(10) of the Act to the assessee by deeming that the completion certificate was issued to the assessee by 31.03.2008, ignoring the observations of the Assessing Officer that the completion certificate was filed much later. Reliance has been sought to be placed on the Explanation to Section 80IB (10) of the Act, as per which, the provisions of Section 80IB (10) shall apply to any undertaking which executes the housing project as a works contract award by any person.

7. The ld. counsel for the assessee, on the other hand, has contended that the assessee duly fulfilled all the conditions of Section 80IB (10) of the Act and it was only therefore, that the Ld. CIT (A) granted relief to the assessee. It has been contended that Finance (No.2) Bill, 2004 brought in an amendment in the Act by substituting the then existing Section 80IB (10) by a new sub-section w.e.f. 01.04.2005. It has been submitted that the said amendment is applicable for and from A.Y. 2005-06. It has been argued that the assessee had completed the construction of its project before 31.03.08, details whereof were duly submitted to the Assessing Officer.

It has been stated that the assessee had applied to the local authority for issuance of completion certificate on 26.11.2007, but the said certificate was issued to the assessee only on 02.06.2009. It has been averred that the matter is squarely covered in favour of the assessee by the decision of the Tribunal rendered on 09.12.2011, in ITA Nos.2417/Del/2011 to 2422/Del/2011 (copy placed on record) in the case of “M/s Girija Colonisers”, a sister concern of the assessee firm. It has been contended that since the facts of the present case are exactly similar to those in the case of “M/s Girija Colonisers” (supra) the said decision of the Tribunal is directly applicable hereto.

8. We have heard the parties and have perused the material on record. The facts are not disputed. The issue is as to whether the Ld. CIT (A) has correctly granted relief to the assessee.

9. The Ld. CIT (A), it is seen, has granted relief to the assessee on the basis of the fact that though the assessee had applied for completion certificate before the local authority in time, the said certificate was not issued in time by the local authority. Such issuance of completion certificate has been held and, in our opinion, correctly so, to be beyond the control of the assessee.

10. In “M/s Girija Colonisers” (supra), the case of a sister concern of the assessee firm, under similar facts, the Tribunal has held, inter alia, as follows:-

“9. In the present case, the assessee vide application dated 26.11.2007 has requested the Municipal Corporation for issuance of completion certificate in respect of housing projects named as “Surendra Enclave” “Surendra Vihar Phase-I” and “Surendra Garden” completed by the assessee. The Municipal Corporation had issued the completion certificate on 18.06.2010, 23.06.2010 and 24.06.2010 in respect of Permission No. 3737/27.03.2001, 299/04.09.1999 and 580/02.11.1999 respectively. The AO in his remand report dated 08.02.2011 has stated that an enquiry was made from the City Planner, Bhopal Municipal Corporation, who has reported that the assessee submitted application for completion certificate in respect of its housing projects on 26.11.2007, the assessee M/s Girija Colonisers had complied with all the formalities and the Municipal Corporation has to carry out inspection of all the constructed units before issuing completion certificate, and M/s Girija Colonisers had given possession of most of the units before submitting the application for completion certificate, as a result of which it took time for inspection. In the light of the facts narrated in AO’s remand report and facts available on record, the ld. CIT(A) has taken a view that the assessee has completed the construction much prior to 31.03.2008 and had fulfilled all requirements/formalities of the completion certificate as notified by the corporation at the time of filling application for issuance of 36 completion certificate on 26.11.2007. The ld. CIT(A) has also recorded a finding that sales of all residential units in respect of three projects were materialized on or before 31.03.2008. The Municipal authority has not pointed out any defect and irregularity in the assessee’s application dated 26.11.2007 submitted for issuance of completion certificate of all the said projects. Therefore, in the light of facts found by the ld. CIT(A) and reasons given by him, and respectfully following the aforesaid decision of ITAT, Pune Bench “B”, Pune in the case of Hindustan Samuha Awas Ltd. (supra), we do not find any reason to take a view other than the view taken by the learned CIT(A) in the present case. We, therefore, uphold the order of the learned CIT(A) and dismiss all these appeals filed by the revenue.”

11. “Girija Colonisers” (supra) (co-authored by one of us – the Hon’ble Vice President), it is seen, is on facts exactly similar to those present before us. In that case, the issue in the present case has been decided in favour of the assessee. Thus, respectfully following “Girija Colonisers” (supra), the grievance sought to be addressed by the Department is found to be devoid of force and is rejected.

12. As such, all the three appeals filed by the department are dismissed.

13. These are cross appeals filed by the assessee against the afore- discussed three appeals preferred by the department. The ld. Counsel for the assessee has stated at the bar that these appeals are not pressed.

14. Dismissed as not pressed.

15. In the result, all the three appeals filed by the department are dismissed, whereas all the three appeals instituted by the assessee are dismissed as withdrawn.

The order pronounced in the open court on 01.08.2012.

                                                      Sd/-                           Sd/-

                                         [G.D. AGRAWAL]      [A.D. JAIN]

                                         VICE PRESIDENT JUDICIAL MEMBER

Dated, 01.08.2012.

dk

Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR, ITAT

TRUE COPY

By Order,

Deputy Registrar,

ITAT, Delhi Benches