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TMI Blog2021 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... gly claim of deduction u/s. 80IB(10) of the Act was rejected and income assessed at Rs. 1,13,14,007/- u/s. 143(3) of the Act vide order dated 27.11.2009. 3. Aggrieved assessee preferred an appeal before Ld. CIT(A) and succeeded as Ld. CIT(A) after considering the documents allowed the deduction vide order dated 11.05.2010. Thereafter the revenue filed an appeal before this tribunal and vide order dated 25.04.2012 in ITA No. 558/Ind/2010, this tribunal after considering the facts placed and evidences filed restored the issue to Ld. AO for deciding afresh and also examining the deduction of u/s. 80IB(10) of the Act. 4. In compliance to the order of this Tribunal Ld. AO conducted the assessment proceedings u/s. 143(3) r.w.s. 254 of the Act and after considering the facts and the clarification letter dated 29.03.2014 issued by Bhopal Municipal Corporation allowed the claim of deduction u/s. 80IB(10) of the Act at Rs. 1,11,55,537/-. Subsequently Ld. Pr. CIT after examining the assessment records invoked the provisions of section 263 of the Act and vide order dated 14.03.2016 held the assessment order dated 31.03.2014 as erroneous and prejudicial to the interest of revenue and directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng written submissions and submitted that the Ld. AO has conducted sufficient enquiry and made proper application of mind and in light of the documentary evidences allowed the claim u/s. 80IB(10) of the Act:- 1. Assessment u/s. 143(3) was completed on 27.11.2009 wherein the claim of assessee u/s. 80IB(10) of Rs. 1,11,55,537 was disallowed. The matter travelled before the Hon'ble Bench vide ITA No. 558/Ind/2010 and the order was pronounced on 25.04.2012. Hon'ble Bench set aside the matter to the file of Ld. AO giving the following two directions - [PB 04-08, 26-32] a. to make enquiry with regards to the infrastructure facilities developed by the assessee in terms of the approval for the housing project granted by the Municipal Authority, Bhopal. b. to decide the issue of eligibility of the assessee for deduction u/s. 80IB(10) as per the law after considering the completion certificate issued by the Municipal Corporation. 2. In the set-aside proceedings, Ld. AO after verifying the letter dated 29.03.2014 issued by the Bhopal Municipal Corporation concluded that the entire project was completed within the stipulated period. Accordingly, the claim of assessee u/s. 80IB( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see within the stipulated time period. [PB 71] 11. There is nothing erroneous or prejudicial to the interest of the revenue owing to which proceedings u/s. 263 could be initiated. 12. It is humbly that the instant proceedings initiated u/s. 263 be quashed. Considering the above facts, circumstances of the case, submissions made, documents on record both before Ld. AO and Ld. Pr. CIT and applicable judicial precedent, the revisionary proceedings invoked u/s. 263 by the Ld. Pr. CIT ought to be quashed. 8. Per contra Ld. Departmental Representative vehemently argued supporting the order of Ld. PCIT. 9. We have heard rival contentions and perused the records placed before us. The assessee has challenged the assumption of jurisdiction by Ld. Pr. CIT u/s. 263 of the Act and have also challenged the finding of Ld. Pr. CIT set aside the assessment order u/s. 143(3) of the Act vide order dated 31.03.2014. 10. To examine this aspect whether Ld. PCIT has justified in holding the order of Ld. A.O as erroneous and prejudicial to the interest of revenue, we will first go through the relevant provision of Section 263 of the Act:- 263. (1) The Principal Commissioner or Commissioner may ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of subsection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or inj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red on him. First is that the order passed by the ITO must be erroneous. Second is that the error must be such that it is prejudicial to the interests of the revenue. If the order is erroneous but it is not prejudicial to the interests of the revenue, the Commissioner can not exercise the revisional powers under section 263(1) of the Act. There cannot be any prejudice to the revenue on account of the ITO's failure to follow the procedure prescribed under section 144B, and unless the prejudice to the interests of the revenue is shown, the jurisdiction under section 263(1) cannot be exercised by the Commissioner, even though the order is erroneous. The argument that such an order may possibly be challenged in appeal by the assessee, and for this reason it is prejudicial to the interests of the revenue, has no merit. Section 263(1) clearly contemplates that the order of assessment itself should be prejudicial to the interests of the revenue and this prejudice has to be proved by reference to the assessment order only. It cannot be argued that there is some possibility of the assessment order being challenged or revised in appeal and, therefore, on account of this contingency, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to consider whether the income in respect of which tax is to be realised, has been subjected to tax or not or if it is subjected to tax, whether it has been subjected to tax at a rate at which it could yield the maximum revenue in accordance with law or not. If income in question has been taxed and legitimate revenue due in respect of that income had been realised, though as a result of erroneous order having been made in that respect, in our opinion, the Commissioner cannot exercise powers for revising the order under section 263 merely on the basis that the order under consideration is erroneous. If the material in that regard is available on the record of the assessee concerned, the Commissioner cannot exercise his powers by ignoring that material which links the income concerned with the tax realization made thereon. The two questions are inter-linked and the authority exercising powers under section 263 is under an obligation to consider the entire material about the existence of income and the tax which is realizable in accordance with law and further what tax has in fact been realised under the alleged assessment orders. [emphasis supplied] 16. At this stage, before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l satisfied with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 must have material on record to arrive at a satisfaction. (ix) If the Assessing Officer has made enquiries during the course assessment proceedings on the relevant issues and the assessee has detailed explanation by a letter in writing and the Assessing allows the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be simply because in his order he does not make an elaborate discussion in that regard. 17. Now examining the facts in light of settled judicial precedents referred hereinabove. We observe that the issue of section 80IB(10) of the Act raised in the instant case has come up before this Tribunal and the same are decided vide order dated 25.04.2012 directing the ld. AO to decide the issue afresh in light of various documents furnished. The relevant extract of the order of Tribunal is mentioned below: Rival contentions have been heard and record perused. The facts, in brief, are that the assessee is a partnership firm engaged in the business of civil construction, development and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement construction was to be done by the assessee firm. This agreement was entered into by the assessee just to enable the buyers to have loan from the financial institutions. However, the possession and first lien over the plots of land so sold remained with the assessee till such time the complete sale value was received by it. Thereafter, the assessee constructed houses thereon and possession was handed over to the respective buyers after receiving the sale consideration. Thus, the modus operandi adopted by the assessee for sale of house nowhere stands in the way for claim of deduction u/s. 80IB(10) of the Act. The contention of the learned CIT DR was that the assessee has merely sold plots to the buyers and the buyers have paid stamp duty on purchase of such plots of land which falls u/s. 17(1A) of the Registration Act, 1908, therefore, transfer of land has taken place on the date of registration and the assessee has received consideration for the same. As per the learned CIT DR in such a situation, the assessee was no more the owner of the land. The work of construction was done by the assessee according to the requirements of each land buyer and as such it was merely in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 80IOB(10) of the Act. Even where the approval is given in the names of partners who have contributed land to the firm for execution of the housing project, the claim of deduction u/s. 80IB(10) of the Act cannot be declined provided other conditions of section 80IB(10) of the Act are fulfilled by the assessee. Thus, we do not find any merit in the observation of the AO for declining the claim of deduction on the plea of the project approval being issued in the names of partners of the firm in place of the firm itself. 7. With regard to the completion certificate, we find that the assessee has applied to the office of the Municipal Corporation, Bhopal, vide letter dated 29.11.2007 which was duly acknowledged vide their rubber stamp dated 26.12.2007. Vide this letter, the assessee has informed the Corporation regarding completion of work and further requested for issue of completion certificate. The Municipal Corporation, Bhopal, issued the completion certificate dated 6.6.2009 with respect to its permission no. 1343 dated 13.12.2004 which was also furnished before the AO. In respect of the completion certificate for permission no. 0279 a letter dated 12.11.2009 was issued dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of completion of such project. Merely because such certificate is issued after gap of 8-9 months or even one year, will not adversely affect the assessee if it has mentioned clearly the date of completion of project prior to 31.3.2008. Once the letter for completion of project is given by the assessee to the Local Authority, it is the duty of the Local Authority to verify physically the Projects stated to be completed from its own parameters. This process may take time and, therefore, the date of issue of letter is not so crucial to determine the assessee's eligibility for claim of deduction as per Explanation (ii) of Section 80IB(10)(a) of the Income-tax Act, 1961. What is crucial is date mentioned in the letter so issued certifying completion of the Project. Thus, the date of issue of letter is not important, but the date mentioned in the letter certifying completion of project is important. We, therefore, do not find any merit in the observation of the lower authorities to the effect that the date of completion shall be taken the date on which certificate is physically issued by the Local Authorities. 8. In view of the above discussion, we restore the matter back to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y called by the Ld. AO assert the fact that the housing project was completed within the stipulated time as provided u/s. 80IB(10) of the Act and accordingly claim u/s. 80IB(10) of the Act was allowed. We further find that the impugned order Ld. Pr. CIT has not made any independent enquiry even after observing that the Ld. AO has allowed the deduction u/s. 80IB(10) of the Act after obtaining the completion certificate, still held that no enquiries were conducted to examine the genuineness of completion of housing project. In our opinion under the provision of section 80IB(10) assessee has to obtain a completion certificate from a competent authority which in this case is the Bhopal Municipal Corporation which is a statutory body working under a separate Act. Once the Bhopal Municipal Corporation has given a certificate that housing project has been completed on a certain dates, Revenue authorities cannot deny the deduction u/s. 80IB(10) of the Act alleging that the housing project is not complete. In case they are not satisfied with the contents of the completion certificate issued by Bhopal Municipal Corporation, they have option to file a writ before the Hon'ble Jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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