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TMI Blog2012 (11) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... s approved by the local authority on 1.4.2004 and due date for completion of the project was 31.3.2008. According to the Assessing Officer, the project is said to be completed on the date on which certificate of completion is issued by local authority. He submitted that the project was completed which is evident from the property assessment tax, water connection document, pollution control permission issued by the competent authority. He submitted that the Municipal Corporation of Bangalore has given distinctive number for each flat and all the flats were assessed to municipal tax. This is evidenced by the information furnished by 141 individual flat owners in assessee's housing project. According to the AR non-production of completion certificate, which is technical in nature, cannot be a reason for denying deduction u/s. 80IB(10) of the Act. He submitted that section 80IB(10) is a beneficial provision and while granting deduction u/s. 80IB(10) a liberal view has to be taken. 5. He relied on the judgement of Supreme Court in the case of Guru Charan Singh v. Kamla Singh [1976] 2 SCC 152 wherein the apex court held that "it is well settled canon of construction that in construing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol permission etc. On an examination of the notices issued by the Bangalore Mahanagar Palike (Municipal Corporation) in respect of 141 flat owners in the assessee's housing project, it is seen that in the notices dated 17.1.2007 in response to the flat owners applications dated 1.12.2006 requesting for assessment and allotment of municipal numbers, the Municipal Corporation had issued notices for payment of the required taxes for the initial assessment. The relevant notice reads as under: "with reference to the above Sri (applicant / flat owner) hereby informed that the Zonal Commissioner (east), Bangalore Mahanagara Palike, Bangalore, has approved the allotment of Municipal Numbers and Assessment in respect of newly constructed, Residential Apartment at Property No. 184 as detailed below ..." 9. The DR submitted that proof of payment of taxes in certain cases has also been produced. From the above, it would appear that the applicants, being flat owners, had individually filed application before the Municipal Corporation for allotment of municipal numbers and assessment. The notice, as above, clearly indicates that the municipal numbers were being allotted in respect of newly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the housing projects does not exceed 5% of the aggregate built-up area of the housing project or 2000 sq. ft., whichever is less. 12. In the present case the assessee's project is approved by local authority on 1.4.2004 and there is no dispute regarding this. However, the only dispute for denying deduction u/s. 80IB(10) is that there is no completion certificate furnished by the assessee for which its claim was denied. The meaning of "date of completion" has been given in Explanation (ii) to clause (a) to section 80IB(10). Date of completion of construction would mean date on which completion certificate in respect of housing project was issued by the local authority. To grant deduction u/s. 80IB(10) it is mandatory to furnish the completion certificate of the housing project but the persistent question here is whether for giving benefit of deduction u/s. 80IB(10), where an assessee is following the percentage completion method is it necessary to obtain such completion certificate for each year of assessee's claim or it is sufficient that certificate is obtained on the completion of the housing project as a whole. Stipulation for obtaining completion certificate should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot insist on the completion certificate in the impugned year. This view has also been taken by CBDT in its Instruction No. 4 of 2009 dt. 30.6.2009, paras 2 to 4 of which are reproduced hereunder: "2. Clarifications have been sought by various Chief CITs on the issue whether the deduction under s. 80IB(10) would be available on a year-to-year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project under s. 80-IB(10). 3. The above issue has been considered by the Board and it is clarified as under : (a) The deduction can be claimed on a year-to-year basis where the assessee is showing profit from partial completion of the project in every year. (b) In case it is late and it is found that the condition of completing the project within the specified time-limit of 4 years as stated in s. 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years should be withdrawn. 4. The above instruction will override earlier clarification on this issue contained in Member (R.)'s D.O. Letter No. 58/Misc/2008/CIT (IT & CT), dt. 29th April, 2008 and Member (IT)'s D.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being final fact finding authority shall keep in mind an overall situation, factual as well as legal, so thereupon brings a dictum ought to be legally sustainable in the eyes of law. In the present situation, the Revenue is taxing the profit on Percentage Completion Method but suggesting to grant deduction only on completion of the project. If the stand of the Revenue is accepted then only on completion of project an assessee would be entitled for deduction u/s. 80IB(10), then undisputedly an anomaly shall arise as to how and when the tax should be charged. This is not the scheme of the Act, to first tax an income in a particular year and grant deduction on that very income in a different later year i.e., on completion of the project as was canvassed by the Department. The accepted principle is that the year of the assessment of income and connected deduction shall fall in the same assessment year. If the Revenue is taxing the profit in the year under consideration on the ground that the assessee is adopting "Percentage Completion Method" then the natural corollary should be that the connected deduction ought to be granted simultaneously in this year or the other method of computat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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