Case Law Details

Case Name : Pr. CIT Vs  Dharti Enterprises (Bombay High Court)
Appeal Number : Income Tax Appeal No. 1096 of 2016
Date of Judgement/Order : 16/01/2019
Related Assessment Year : 2006-07
Courts : All High Courts (6133) Bombay High Court (1078)

Pr. CIT Vs. Dharti Enterprises (Bombay High Court)

We find that this issue is now no longer res integra as it stands concluded against the Revenue and in favour of the Respondent by the decision of this Court in CIT v/s. Hindustan Samuh Awas Ltd., 377 ITR 150 . In the above case, it has been held that whether the project is completed within the time framed provided under Section 80IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10) of the Act. To the same effect the decision of the Gujarat High Court in CIT v/s. Tarnetar Corporation 362 ITR 174. In the present case on facts, it is found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, the Respondent should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate.

In passing, we may also point out that the approval of plans and commencement certificate were received by the Respondent in respect of the project before the amendment to Section 80B of the Act on 1st April, 2005. In such cases, this Court has taken a view that the time limit provided by the amendment to complete the construction by obtaining completion certificate will not apply (see Pr. CIT v/s. M/s. Neeta Enterprises (ITA No.,1027 of 2016) rendered on 16th January, 2013). Hence, assessee would be entitled to deduction under section 80-IB(10).

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 18th May, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 18th May, 2015 is in respect of Assessment Year 2006-07.

2. The Revenue urges the following question of law for our consideration:

“ Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in law in upholding the orders of the CIT(A) granting deduction u/s. 80IB(10) of the Act?”

3 The Respondent-Assessee is a builder/ developer. For the subject Assessment Year, Respondent filed a return of income, declaring income as ‘Nil’. This, by claiming deduction under Section 80IB (10) of the Act in respect of its project. The return was assessed on 29th December, 2008 under Section 143(3) of the Act at Nil income.

4 Subsequently, the Assessing Officer issued a notice dated 28th March, 2011 under Section 148 of the Act, seeking to re-open the Assessment for Assessment Year 2006-07. The basis for re-opening the Assessment was that the commencement certificate for the project in respect of which benefit of Section 80IB (10) of the Act as claimed, was received on 19th January, 2005 but the Occupation Certificate was not obtained till 31st March, 2009. Thus, disentitling the Respondent to the benefit of Section 80IB(10) of the Act.

5 Consequent to the reopening of the Assessment, the Assessing Officer by an order dated 15th December, 2011 passed under Section 143(3) read with Section 147 of the Act, denied the benefit of deduction under Section 80IB(10) of the Act to the Petitioner, This, for not having obtained completion certificate within four years from the end of the financial year in which the project was approved by the local authority. Thus, assessing the Respondent’s income at Rs.6.35 Crores.

6 Being aggrieved, the Respondent filed an appeal to Commissioner of Income Tax (Appeals) [CIT(A)]. By order dated 23rd July, 2012, the CIT(A) while allowing the appeal, held that the Respondent is entitled to the benefit of Section 80IB(10) of the Act as the delay in issuing the occupancy certificate was on account of the time taken by the competent authority to issue the certificate when the Applicant had submitted all necessary documents for the issuance of certificate much before the expiry of four years from the end of the financial year in which commencement certificate was obtained.

7 Being aggrieved by the order of the CIT(A), an Appeal was filed by the Revenue to the Tribunal. By the impugned order dated 18th May, 2015, the Tribunal dismissed the Revenue’s Appeal. The Tribunal found on facts that the project was completed within time frame as required under Section 80IB(10) of the Act and that the application for issuance of completion certificate was made well within time. Thus, the Respondent could not be penalized for the delay by the Competent Authorities in issuing the completion certificate.

8 We find that this issue is now no longer res integra as it stands concluded against the Revenue and in favour of the Respondent by the decision of this Court in CIT v/s. Hindustan SamuhAwas Ltd., 377 ITR 150 . In the above case, it has been held that whether the project is completed within the time framed provided under Section 80IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10) of the Act. To the same effect the decision of the Gujarat High Court in CIT v/s. Tarnetar Corporation 362 ITR 174. In the present case on facts, it is found that not only the project was completed within time but an application for granting of certificate was also made well within the time. Thus, the Respondent should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate.

9 In passing, we may also point out that the approval of plans and commencement certificate were received by the Respondent in respect of the project before the amendment to Section 80B of the Act on 1st April, 2005. In such cases, this Court has taken a view that the time limit provided by the amendment to complete the construction by obtaining completion certificate will not apply (see Pr. CIT v/s. M/s. Neeta Enterprises (ITA No.,1027 of 2016) rendered on 16th January, 2013).

10 In the above view, the question as proposed being concluded by the decision of this Court, would not give rise to any substantial question of law.

11 Accordingly, Appeal dismissed. No order as to costs.

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