TMI Blog2012 (11) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... that the municipal numbers were being allotted in respect of newly constructed residential apartments. The assessee is following Percentage Completion Method. This method is recognised by the Income-tax Act for disclosing the profit in the case of a builder. The purpose of granting deduction u/s. 80IB(10) is to promote housing projects. If we accept the proposition of the Department that the deduction u/s. 80IB(10) has to be granted only a tax payer who follows only "Project Completion Method" it leads to an absurd situation as the developer who is following Percentage Completion Method is not entitled for deduction u/s. 80IB(10) though all other requirements of the section being fulfilled - 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 computation is that the Revenue must not tax the profit of the project yearly on the basis of "Percentage Completion Method" but tax the entire profit on completion of the project by applying "Project Completion Met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfils and furthers the object of the legislation rather than the one which would defeat the same and render the benefit illusory. 6. Further he relied on the judgement of Supreme Court in the case of Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 wherein it was held that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. Since the provisions intended for promoting economic growth has to be interpreted liberally the restriction on it too has to be construed so as to advance the objective of the section and not to frustrate it. 7. Further he relied on the decision of Tribunal Mumbai Bench in the case of Hiranandani Akruti JV v. Dy. CIT [2010] 39 SOT 498. In this case the assessee submitted a proposal for slum rehabilitation and permission for carrying out development was accorded on 17-11-2003 and the project was completed in the A.Y. 2006-07. Assessee, following project completion method of accounting, claimed deduction under section 80-IB(10) from gross total income accrued from project. The Assessing Officer denied the deduction because as per provisions of section 80IB(10)(d) as applicable with effect from 1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned Authorised Representative that the failure to file the completion certificate being purely technical in nature, should not be held against the assessee as the evidence produced clearly indicates that the project was completed within the stipulated time as per Sec. 80IB. While such an argument may be persuasive in nature, it may be stated that there is no dispute over the fact that the condition prescribed u/s. 80IB(10) has not been fulfilled by the assessee. Even though the argument that the assessee cannot be penalized for either the delay or non-issue of the completion certificate by the local authority appears to be reasonable, the assessee has not been able to produce any evidence that steps have been initiated by it to obtain the completion certificate from the competent authority. The assessee cannot abdicate its statutory obligation to produce a completion certificate for obtaining the benefit provided in Sec. 80IB by placing indirect circumstantial evidence. In such circumstances the specific provisions of Sec. 80IB(10) have not been complied with on account of non-furnishing of the completion certificate, the DR is of the view that rejection of assessee's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of completion of whole of the housing project, even where the project stretches over a number of years and assessee returns its income based on percentage completion method. It would only mean that the assessee has to obtain such certificate on completion of the housing project, least it would lose the deduction already granted u/s. 80IB(10) for the earlier years if it is not so produced. As held by the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. (supra) a provision in the taxing statutes granting incentives for promoting growth and development of the nation should be construed liberally. When such liberal interpretation is to be given, the restriction placed in such provision granting the incentives also has to be considered so as to advance the objectives of the provisions and not to frustrate. Clause (a) of section 80IB(10) specifies that the development and construction of the project has to start on or before 1.4.2004 and the project has to be completed within four years from the end of the financial year in which approval for project was received from the local authority. Thus, a project can have a span of not more than 4 years from the end of the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute that the assessee has been following percentage completion method and also the assessee furnished the evidence in the form of property assessment document, water connection documents, pollution control 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 ..." The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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