Dharti Enterprises, Mumbai vs Department Of Income Tax
- CitationITA No. 6023/Mum/2012
Ratio decidendi
The rule this decision rests on
The court's reasoning rests on the following: where the local authority's delay in issuing the occupation certificate is the cause of the non-receipt of that certificate within the statutory period, and the assessee has completed the project, applied for the certificate, and in fact commenced possession and paid municipal tax before the relevant date, the assessee's entitlement to deduction under section 80IB(10) is not defeated by the delay, and the Assessing Officer may not deny the claim on that ground; the deduction claim is therefore to be allowed in the peculiar circumstances established on the record.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
A C I T - 15(2) M/s. Dharti Enterprises Room No. 113, Matru Mandir 1/101, Prithvi Classic, Mody Park Vs. Grand Road (W), Mumbai 400007 Irani Wadi Road No. 3 Kandivali, Mumbai 400067 PAN - AAEFD2719F Appellant Respondent
Appellant by: Shri Sanjay Punglia Respondent by: None
Date of Hearing: 18.05.2015 Date of Pronouncement: 18.05.2015
ORDER
Per D. Manmohan, V.P.
This appeal by the Revenue is directed against the order passed by CIT(A)-26, Mumbai and it pertains to A.Y. 2006-07.
2. The only ground urged by the Revenue reads as under: -
"On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that deduction u/s. 80IB(10) is allowable even when the occupation certificate is received after the expiry of four years from the end of the financial year in which the housing project is approved."
3. None appeared on behalf of the assessee. We have heard the learned D.R. and carefully perused the record.
4. Facts necessary for disposal of the appeal are stated in brief. Assessee-firm is engaged in the business of development/construction of flats. For the year under consideration it declared Nil income by claiming deduction under section 80IB(10) of the Act and the same was processed accordingly. Subsequently, AO noticed that commencement certificate is dated 19.01.2005 but occupation certificate was not obtained till 2 ITA No. 6023/Mum/2012 M/s. Dharti Enterprises
31.03.2009 in which event assessee is not entitled to deduction under section 80IB(10) of the Act. He, therefore, sought to reopen the assessment by issuing notice under section 148 of the Act. In response to the show cause notice assessee submitted that in the instant case the BMC took lot of time in vetting the application made by the assessee and finally completion certificate was obtained on 21.01.2010. Since the delay is not on the part of the assessee, deduction should not be denied for the lapse on the part of the BMC. Assessee-firm furnished details with regard to the dates of application for commencement certificate for each wing after completion of the project on 15.03.2008. The Architect of the developer, vide letter dated 15.03.2008, informed the assessee that the project is complete in all respects. Thereafter the assessee applied to the BMC to issue necessary occupation certificate. After applying for possession certificate assessee-firm started giving possession to individual purchasers and as a consequence the proposed society paid BMC tax from 01.03.2008 onwards. Assessee also got electricity connection. It could thus be seen that the flats were complete in all respects before 31.03.2009 and in such an event of the matter mere delay on the part of BMC should not be the reason to deny claim of deduction under section 80IB(10) of the Act.
5. The AO was of the opinion that the provisions have to be strictly followed and in the instant case, the assessee having not obtained the completion certificate within four years from the end of the financial year in which the housing project was approved by the local authority, assessee cannot be granted deduction under section 80IB(10) of the Act.
6. On an appeal filed by the assessee, the learned CIT(A) considered the issue in great detail and by following the decision of the ITAT Mumbai Benches and in the backdrop of the facts, observed that if there is a delay in issuing occupancy certificate by the competent authority deduction under section 80IB cannot be denied to an assessee. He accordingly directed the AO to allow the claim of deduction under section 80IB(10) of the Act.
7. Aggrieved, Revenue is in appeal before us. Though the learned D.R. submitted that going by the language of the section obtaining completion 3 ITA No. 6023/Mum/2012 M/s. Dharti Enterprises
certificate within the time frame is a sine qua non for claiming deduction under section 80IB(10) of the Act the fact that assessee completed the project and moved applications to the BMC and paid the tax on the flats constructed, etc. by 2008 was not in dispute. He was also not able to place any case law to contradict the finding and conclusions of the learned CIT(A).
8. Having regard to the submissions of the Revenue and also in the peculiar circumstances of the case we are of the view that the learned CIT(A) is justified in granting deduction under section 80IB(10) of the Act. Hence the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 18th May, 2015.
Sd/- Sd/- (Sanjay Arora) (D. Manmohan) Accountant Member Vice President
Mumbai, Dated: 18th May, 2015
Copy to:
1. The Appellant 2. The Respondent 3. The CIT(A) - 26, Mumbai 4. The CIT- 15, Mumbai City 5. The DR, "D" Bench, ITAT, Mumbai
By Order
//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.
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