TMI Blog2013 (10) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... een placed on the judgment in the case of Keerthi Estates Pvt. Ltd [2012 (11) TMI 467 - ITAT HYDERABAD] - 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) of the Act though all other requirements of the section being fulfilled. It would tantamount to denial of valid exemption for which an assessee is entitled. 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 assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties and perused the material on record. In this case deduction u/s. 80IB(10) was denied on the reason that the project was executed in a plot area admeasuring less than one acre and there was no completion certificate obtained from MCH. The assessee pleaded before us that the project was executed on an area exceeding one acre and in the course of completion of the project 1373 sq. yards of land has been earmarked for acquisition of MCH for the purpose of making roads and this was not acquired by MCH and still in the possession of the assessee. Regarding completion certificate it was submitted that the assessee duly applied for completion certificate vide application dated 30.9.2008 and duly acknowledged by MCH vide acknowledgement dated 17.10.2008 and also flats are fully completed in all respects which are duly connected by electricity and water supply and individual Distinct Number was allotted by MCH and they are assessed to municipal tax. According to the AR the area of plot is exceeding one acre and the area earmarked for roads cannot be excluded from the area of plot as decided by the Tribunal in the case of Vidhi Builders, Mumbai vs. ITO in ITA No. 1212/Mum/2009 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord show the completion of the project and deduction has to be given. He also relied on the order of the Tribunal in the case of Keerthi Estates Pvt. Ltd. in ITA No. 478/Hyd/2011 dated 21 st September, 2012 (paras 14 and 15, as given below), wherein held as follows: "14. Now the objection of the Department is that the assessee has not produced the completion certificate. 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) of the Act though all other requirements of the section being fulfilled. It would tantamount to denial of valid exemption for which an assessee is entitled. No one can pass such a anomalous dictum while dealing with a legal problem. The Tribunal being final fact finding authority shall ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not be so interpreted to mean that an assessee can claim exemption u/s. 80IB(10) only in the 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 (196 ITR 188) a provision in the taxing statutes granting incentives for promoting growth an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Letter No. 279/Misc/46/ 2008-ITJ dt. 2nd May, 2008." 18. Now the objection of the Department is that the assessee has not produced the completion certificate. The assessee is following Percentage Completion Method. This method is recognised by the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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