TMI Blog2013 (8) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage 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 in the case of Bajaj Tempo vs. CIT (1992 (4) TMI 4 - SUPREME Court) a provision in the taxing statutes granting incentives for promoting growth and development of the nation should be construed liberally. Further section 80IB(10)(a) only specified how to reckon the day of approval and date of completion. It would not mean that the assessee can have the benefit of section 80IB(10) only in the year of completion of the project, especially so, for an assessee not following project completion method for accounting its income. Of course if such period exceeded the prescribed limit, Revenue would be well within its rights to withdraw the claims already allowed, following the procedure prescribed under the Act. Thus, AO need not insist on the completion certificate in this assessment year, this is the right meaning of the statute. This view has also been taken by CBDT in its Instruction No. 4 of 2009 dt. 30.6.2009 As for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/2009 dated 30.06.2009 issued by the Board wherein it is clarified as under:- "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." 4. The Assessing Officer observed that Form No. 10CCB, enclosed to return of income, the firm commenced its operation by 10.03.2006. In order to claim deduction u/s 80IB(10) of the Act, the firm should have completed the housing project within 5 years from the end of the financial fear in which the housing project is approved by the local authority. As per the above provision, the assessee should have completed the project before 31.03.2011. The assessee has not furnished the completion certificate by the local authority till date. The project, as per the enquiries done by this office, is not completed within stipulated time. Under these circum- stances, the assessee firm is not entitled to partial exemption u/s 80IB(10), when the assessee firm is not sure of completion of the project before 31.03.2011. Hence, the partial deduction of Rs. 1,50,74,474 which is to be allowed now as per Instructions No. 4/2009 dated 30.06.2009 is to be disallowed in subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer never asked for the certificate and also did not provide any opportunity to the assessee to submit the same. Before the CIT(A), the assessee stated as under: "1. The assessment was completed under section 143(3) on 30.12.2011 determining the total income at Rs. 1,77,86,014 after disallowing the Assessee's claim of deduction under section 80IB(10) of the Income-tax Act, 1961 amounting to Rs. 1,50,74,474. 2. The Assessing Officer erred in disallowing the Assessee's claim of deduction under section 8018(10) of the Income-tax Act, 1961 amounting to Rs. 1,50,74,474 on the ground that the completion certificate from the concerned local authority has not been furnished. 3. Here, it is humbly submitted that the Assessing Officer never in course of the assessment proceedings asked for furnishing of the completion certificate. The Assessing Officer never gave an opportunity in this regard and it was only on the ultimate day of the assessment proceedings that the Assessing Officer called for the completion certificate. 4. The total project was completed by 31.03.2011 relevant to the Assessment Year 2011-12, for which the completion certificate was received on 20-09- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taxation advisers that without the completion certificate the concerned deduction would not be allowable. However, no such certificate was produced. It is incorrect on the part of the assessee to state that the completion certificate was never asked for and when required on 30 December 2011 there was no time to produce the same as the order was passed on the same day. This is a deliberate falsification of facts and misrepresentation before the appellate authority. A plain look at page 1 of the assessment order shows that the completion certificate had been asked for by the Assessing Officer much earlier. The assessee did not provide the certificate but gave a reply whereby reference was made to instruction number 4/2009 dated 30.06.2009 issued by the CBDT. 9. The CIT(A) observed that the assessing officer wrote a letter to the zonal commissioner GHMS, Hyderabad on 03.11.2011 four furnishing the completion certificate regarding the buildings in question. No such certificate was provided by the authorities. The aforementioned facts clearly call the bluff of the assessee that the assessing officer called for the completion certificate only on 30 December 2011. It is clear from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from the end of the financial year in which the housing project is approved by the local authority. As per the provisions, the assessee should have completed the project on or before 31.3.2011. The project was completed by 31.3.2011 relevant to the assessment year 2011-12 and for which completion certificate was received on 20.9.2011. Further it was stated that though the assessee was following block-wise completion contract method of accounting and arrives profit on estimated percentage basis on the advance received during the construction period of the block. Upon construction of each block, the sale of flats and construction expenditure thereof will be transferred to Profit and Loss Account. The assessee placed reliance on the CBDT circular 4 of 2009 dated 30.6.2009. The Department has not disputed the assessee's method of computation of profit. Being so, the Department cannot insist upon the completion certificate in every assessment year. As per statutory requirement, the assessee has to obtain completion certificate within 5 years from the end of the financial year in which the house project was approved by the local authority. In other words, the assessee has to obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 computation is that the Revenue must not tax the profit of the project yearly but tax the entire profit on completion of the project by applying "Project Completion Method". 14. Further, in the present case the assessee's project is commenced by 10.3.2006 and there is no dispute regarding this. However, one of the 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion certificate should be there in every year of the project span. The certifications are for ensuring that the project span does not exceed the prescribed period and nothing more. Of course if such period exceeded the prescribed limit, Revenue would be well within its rights to withdraw the claims already allowed, following the procedure prescribed under the Act. Thus, the Assessing Officer need not insist on the completion certificate in this assessment year, this is the right meaning of the statute. 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 (b) where the assessee is showing profit from partial completion of the project in every year. (c) I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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