2018 (12) TMI 1823 - AT - Income Tax

Disallowance u/s 80IB - project Mayuresh Residency at Bhandup which was not completed within the stipulated time - HELD THAT - Executive Engineer in the office of MCGM has clarified that the Occupation certificates and the Building completion certificates have been issued in the present case after following the necessary procedure and in accordance with law. From the record we found that the Occupation and the Building completion certificates have been issued in the present case by the MCGM after thorough application of mind and following the prescribed procedure. There is absolutely no basis for the observation that the said certificates have been issued in a casual manner. On the contrary the assertions as made by the AO with respect to the construction of the said project being incomplete based on the photographs taken on 10th April 2013 has no basis. The fact relating to completion of the housing project is a fundamental one and such which cannot change based on year to year. In the present case for A.Ys. 2010-11 and 2011-12 the Tribunal by its order dated 3rd November 2016 has based on the Occupation and the Building completion certificates -accepted that the construction of the project was completed within the time as required by section 80-IB(10)(a)(iii). Once this factual position is accepted then a different view cannot be taken on the completion of the project for a later year. If this proposition is accepted then one is not required to go into the other propositions. As per Explanation below clause (a) of section 80-IB( 10) the date of completion of construction of the housing project shall be taken to be the date on which completion certificate in respect of such housing project is issued by the local authority. Therefore according to the legislature it is incumbent on the AO to regard the construction of the project being completed based on completion certificates issued by the local authority. There is no option which has been given to the Assessing Officer to go beyond the said certificate and express his dissent with the said certificate. No infirmity in the order of CIT(A) for allowing claim of deduction u/s.80IB (10) - Decided against revenue.

Summary

Issues Involved:
1. Deletion of disallowance under section 80IB of the IT Act.
2. Completion status of the project "Mayuresh Residency" within the stipulated time.
3. Validity of the completion certificate issued by the Municipal Corporation.
4. Assessing Officer's authority to challenge the completion certificate.

Issue-wise Detailed Analysis:

1. Deletion of Disallowance under Section 80IB of the IT Act:
The Revenue challenged the deletion of a disallowance of Rs. 6,03,35,750/- under section 80IB of the IT Act, arguing that the project "Mayuresh Residency" was not completed within the stipulated time. The CIT(A) had deleted the disallowance by relying on the ITAT's order for A.Y. 2010-11, which found that the project was completed within the stipulated time limit of 31.03.2013, and there was no violation of any conditions mentioned in section 80IB(10) of the Act.

2. Completion Status of the Project "Mayuresh Residency" within the Stipulated Time:
The assessee firm had filed multiple returns, eventually claiming a deduction under section 80IB(10) for the project "Mayuresh Residency." The AO conducted an inquiry and found scaffoldings at the entrance and incomplete work in 'D' and 'E' wings, leading to the disallowance of the deduction. However, the assessee contended that only repair and beautification work was ongoing, not construction. The project had received a completion certificate from MCGM dated 18.3.2013, which the AO did not accept, citing ongoing work and the certificate's wording.

3. Validity of the Completion Certificate Issued by the Municipal Corporation:
The AO questioned the validity of the completion certificate, arguing it was mere paperwork and not based on actual verification. The CIT(A) had previously disallowed the claim for A.Y. 2011-12 due to the absence of the completion certificate and the assessee's revised return withdrawing the claim. However, the Tribunal emphasized that the completion certificate and occupation certificates issued by MCGM after thorough verification should be accepted, as they confirmed the project's completion before 31.3.2013.

4. Assessing Officer's Authority to Challenge the Completion Certificate:
The Tribunal highlighted that the AO should not go beyond the completion certificate issued by the competent authority. Reliance was placed on several judicial precedents, including the Karnataka High Court's decision in Tejas Networks Ltd. and the Supreme Court's decision in Chunni Lal Prashadi Lal, which held that the correctness of certificates issued by competent authorities should not be questioned by the AO. The Tribunal found that the AO's reliance on photographs and statements did not outweigh the official completion certificates.

Conclusion:
The Tribunal concluded that the project "Mayuresh Residency" was completed within the stipulated time, as evidenced by the completion and occupation certificates issued by MCGM. The AO's disallowance based on perceived incompleteness and questioning the certificate's validity was not justified. The CIT(A)'s order allowing the deduction under section 80IB(10) was upheld, and the Revenue's appeal was dismissed. The Tribunal reiterated that once the competent authority has issued a completion certificate, the AO cannot dispute the project's completion status.