M/s. Keerthi Estates P. Ltd, Hyderabad V. The DCIT, Circle 2(1), Hyderabad

ITA 478/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66301 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAO
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Competent authority
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 478/HYD/2011 ASSESSMENT YEAR 2007-08 M/S. KEERTHI ESTATES PVT. LTD. HYDERABAD PAN: AAACK8642F VS. DY. CIT CIRCLE-2(1) HYDERABAD ASSESSEE RESPONDENT ASSESSEE BY: SRI V. SIVA KUMAR RESPONDENT BY: SRI M.S. RAO DATE OF HEARING: 30.07.2012 DATE OF PRONOUNCEMENT: 21.09.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), VIJAYAWADA DATED 31.1.2011 FOR ASSESSMENT Y EAR 2007-08. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO DENIAL TO DEDUCTION U/S. 80IB(10) OF THE ACT FOR WA NT OF COMPLETION CERTIFICATE. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE CLAI MED DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT, 1961 AT RS. 1,99,3 5,869 AND IT WAS DENIED BY THE LOWER AUTHORITIES FOR NON-PRODUCTION OF COMPLETION CERTIFICATE OF THE PROJECT. 4. THE LEARNED AR SUBMITTED THAT THERE IS NO DISPUTE R EGARDING THE FACT THAT THE ASSESSEE IS ENGAGED IN CONSTRUCTION O F RESIDENTIAL BUILDINGS AND SALE OF FLATS. THE HOUSING PROJECT UNDER THE N AME OF KEERTHI RIVIERA SITUATED AT BANGALORE AT AN AREA OF MORE TH AN ONE ACRE OF LAND. THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY ON 1.4.2004 AND DUE DATE FOR COMPLETION OF THE PROJECT WAS 31.3.2008. ACCORDING TO THE ASSESSING OFFICER, THE PROJECT IS SAID TO BE COMPLE TED ON THE DATE ON I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 2 WHICH CERTIFICATE OF COMPLETION IS ISSUED BY LOCAL AUTHORITY. HE SUBMITTED THAT THE PROJECT WAS COMPLETED WHICH IS E VIDENT FROM THE PROPERTY ASSESSMENT TAX, WATER CONNECTION DOCUMENT, POLLUTION CONTROL PERMISSION ISSUED BY THE COMPETENT AUTHORITY. HE SUBMITTED THAT THE MUNICIPAL CORPORATION OF BANGALORE HAS GIVEN DISTIN CTIVE NUMBER FOR EACH FLAT AND ALL THE FLATS WERE ASSESSED TO MUNICI PAL TAX. THIS IS EVIDENCED BY THE INFORMATION FURNISHED BY 141 INDIV IDUAL FLAT OWNERS IN ASSESSEE'S HOUSING PROJECT. ACCORDING TO THE AR NO N-PRODUCTION OF COMPLETION CERTIFICATE, WHICH IS TECHNICAL IN NATUR E, CANNOT BE A REASON FOR DENYING DEDUCTION U/S. 80IB(10) OF THE ACT. HE SUBMITTED THAT SECTION 80IB(10) IS A BENEFICIAL PROVISION AND WHI LE GRANTING DEDUCTION U/S. 80IB(10) A LIBERAL VIEW HAS TO BE TAKEN. 5. HE RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF GURUCHARAN SINGH VS. KAMALA SINGH (2 SCC 152) WHERE IN THE APEX COURT HELD THAT 'IT IS WELL SETTLED CANON OF CONSTR UCTION THAT IN CONSTRUING THE PROVISIONS OF BENEFICIAL LEGISLATION , THE COURT ADOPT CONSTRICTION WHICH ADVANCES, FULFILS AND FURTHERS T HE OBJECT OF THE LEGISLATION RATHER THAN THE ONE WHICH WOULD DEFEAT THE SAME AND RENDER THE BENEFIT ILLUSORY. 6. FURTHER HE RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. VS. CIT (196 ITR 188) WHEREIN IT WAS HELD THAT A PROVISION IN A TAXING STATUTE GRANTING INCENTIVES F OR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY. SIN CE THE PROVISIONS INTENDED FOR PROMOTING ECONOMIC GROWTH HAS TO BE IN TERPRETED LIBERALLY THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE SECTION AND NOT TO FRUSTRATE IT. 7. FURTHER HE RELIED ON THE DECISION OF TRIBUNAL MUMBA I BENCH IN THE CASE OF HIRANANDANI AKRUTI JV VS. DCIT (39 SOT 498). IN THIS CASE THE ASSESSEE SUBMITTED A PROPOSAL FOR SLUM REHABILI TATION AND PERMISSION FOR CARRYING OUT DEVELOPMENT WAS ACCORDE D ON 17-11-2003 AND THE PROJECT WAS COMPLETED IN THE A.Y. 2006-07. ASSESSEE, FOLLOWING I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 3 PROJECT COMPLETION METHOD OF ACCOUNTING, CLAIMED DE DUCTION UNDER SECTION 80-IB(10) FROM GROSS TOTAL INCOME ACCRUED F ROM PROJECT. THE ASSESSING OFFICER DENIED THE DEDUCTION BECAUSE AS P ER PROVISIONS OF SECTION 80IB(10)(D) AS APPLICABLE WITH EFFECT FROM 1-4-2005, LIMIT FOR HAVING COMMERCIAL SPACE IN HOUSING PROJECTS WAS 5 P ER CENT OF TOTAL BUILT-UP AREA OR 2,000 SQ. FT., WHICHEVER WAS LESS AND IN THE CASE OF THE ASSESSEE, TOTAL BUILT-UP AREA OF COMMERCIAL SPACE IN HOUSING PROJECT EXCEEDED 2.000 SQ. FT. THE TRIBUNAL HELD THAT IN VI EW OF DECISION IN SAROJ SALES ORGANISATION V. ITO (115 TTJ 485) (MUM) LAW AS IT EXISTED IN ASSESSMENT YEAR 2004-05, WHEN ASSESSEE SUBMITTE D ITS PROPOSAL FOR SLUM REHABILITATION AND PERMISSION FOR CARRYING OUT DEVELOPMENT WAS ACCORDED WAS TO BE APPLIED. 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ONLY ISSUE FOR ADJUDICATION IS WHETHER THE ASSESSEE HAD COMPLE TED THE CONSTRUCTION WITHIN THE STIPULATED TIME AND HAD FIL ED THE COMPLETION CERTIFICATE AS REQUIRED UNDER THE RELEVANT SECTION. IT IS EVIDENT FROM THE RECORD THAT THE ADDL.CIT HAD CONCLUDED THAT THE ASS ESSEE HAD COMPLETED THE HOUSING PROJECT AFTER EXAMINING THE D OCUMENTATION PLACED BEFORE HIM. THE SAME DOCUMENTATION HAS BEEN PRODUCED DURING THE APPEAL PROCEEDINGS. THE EVIDENCES INCLUDE PROPE RTY ASSESSMENT DOCUMENT, WATER CONNECTION DOCUMENTS, POLLUTION CON TROL PERMISSION ETC. ON AN EXAMINATION OF THE NOTICES ISSUED BY TH E BANGALORE MAHANAGAR PALIKE (MUNICIPAL CORPORATION) IN RESPECT OF 141 FLAT OWNERS IN THE ASSESSEE'S HOUSING PROJECT, IT IS SEEN THAT IN THE NOTICES DATED 17.1.2007 IN RESPONSE TO THE FLAT OWNERS APPLICATIONS DATED 1 .12.2006 REQUESTING FOR ASSESSMENT AND ALLOTMENT OF MUNICIPA L NUMBERS, THE MUNICIPAL CORPORATION HAD ISSUED NOTICES FOR PAYMEN T OF THE REQUIRED TAXES FOR THE INITIAL ASSESSMENT. THE RELEVANT NOTI CE READS AS UNDER: 'WITH REFERENCE TO THE ABOVE SRI (APPLICANT / FL AT OWNER) HEREBY INFORMED THAT THE ZONAL COMMISSIONER (EAST), BANGALORE MAHANAGARA PALIKE, BANGALORE, HAS APPROVED THE ALLOTMENT OF MUNICIPAL NUMBERS AND ASSESSMENT IN RESPECT OF NEWLY CONSTRUCTED, RESIDEN TIAL APARTMENT AT PROPERTY NO. 184 AS DETAILED BELOW ...' I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 4 9. THE DR SUBMITTED THAT PROOF OF PAYMENT OF TAXES IN CERTAIN CASES HAS ALSO BEEN PRODUCED. FROM THE ABOVE, IT WOULD AP PEAR THAT THE APPLICANTS, BEING FLAT OWNERS, HAD INDIVIDUALLY FIL ED APPLICATION BEFORE THE MUNICIPAL CORPORATION FOR ALLOTMENT OF MUNICIPA L NUMBERS AND ASSESSMENT. THE NOTICE, AS ABOVE, CLEARLY INDICATES THAT THE MUNICIPAL NUMBERS WERE BEING ALLOTTED IN RESPECT OF NEWLY CON STRUCTED RESIDENTIAL APARTMENTS. 10. THE DR SUBMITTED THAT IT IS THE CLAIM OF THE LEARNE D AUTHORISED REPRESENTATIVE THAT THE FAILURE TO FILE THE COMPLET ION CERTIFICATE BEING PURELY TECHNICAL IN NATURE, SHOULD NOT BE HELD AGAI NST THE ASSESSEE AS THE EVIDENCE PRODUCED CLEARLY INDICATES THAT THE PR OJECT WAS COMPLETED WITHIN THE STIPULATED TIME AS PER SEC. 80IB. WHILE SUCH AN ARGUMENT MAY BE PERSUASIVE IN NATURE, IT MAY BE STATED THAT THERE IS NO DISPUTE OVER THE FACT THAT THE CONDITION PRESCRIBED U/S. 80 IB(10) HAS NOT BEEN FULFILLED BY THE ASSESSEE. EVEN THOUGH THE ARGUMEN T THAT THE ASSESSEE CANNOT BE PENALIZED FOR EITHER THE DELAY OR NON-ISS UE OF THE COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY APPEARS TO BE RE ASONABLE, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE THAT STEP S HAVE BEEN INITIATED BY IT TO OBTAIN THE COMPLETION CERTIFICAT E FROM THE COMPETENT AUTHORITY. THE ASSESSEE CANNOT ABDICATE ITS STATUTO RY OBLIGATION TO PRODUCE A COMPLETION CERTIFICATE FOR OBTAINING THE BENEFIT PROVIDED IN SEC. 80IB BY PLACING INDIRECT CIRCUMSTANTIAL EVIDEN CE. IN SUCH CIRCUMSTANCES THE SPECIFIC PROVISIONS OF SEC. 80IB( 10) HAVE NOT BEEN COMPLIED WITH ON ACCOUNT OF NON-FURNISHING OF THE C OMPLETION CERTIFICATE, THE DR IS OF THE VIEW THAT REJECTION O F ASSESSEE'S CLAIM U/S. 80IB(10) BY THE ASSESSING OFFICER WAS NOT ONLY BUT JUSTIFIED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS PER PROVISI ONS OF SECTION 80IB(10) INCOME-TAX ACT, 1961 AN UNDERTAKIN G WHICH DEVELOPS AND BUILDS HOUSING PROJECTS APPROVED BEFORE 31.3.20 07 BY A LOCAL AUTHORITY IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) SUBJECT TO THE FOLLOWING CONDITIONS: I) IN A CASE WHERE THE HOUSING PROJECT HAS BEEN APPROV ED BY THE I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 5 LOCAL AUTHORITY BEFORE 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLETED ON OR BEFORE 31-03-2008. IN A CASE WHE RE THE APPROVAL FROM LOCAL AUTHORITY IS OBTAINED ON OR AFT ER 01-04- 2004, THE CONSTRUCTION SHOULD BE COMPLETED WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOU SING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. II) THE HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAN D WHICH HAS A MINIMUM AREA OF 1 ACRE. III) THE RESIDENTIAL UNITS CONSTRUCTED IN THE HOUSING PR OJECT HAVE A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. WHERE SUCH UNITS ARE SITUATED IN PLACES OTHER THAN DELHI OR MUMBAI. IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS DOE S NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AREA OF THE HOU SING PROJECT OR 2000 SQ. FT., WHICHEVER IS LESS. 12. IN THE PRESENT CASE THE ASSESSEES PROJECT IS APPRO VED BY LOCAL AUTHORITY ON 1.4.2004 AND THERE IS NO DISPUTE REGAR DING THIS. HOWEVER, THE ONLY DISPUTE FOR DENYING DEDUCTION U/S. 80IB(10 ) IS THAT THERE IS NO COMPLETION CERTIFICATE FURNISHED BY THE ASSESSEE FO R WHICH ITS CLAIM WAS DENIED. THE MEANING OF DATE OF COMPLETION HAS BE EN GIVEN IN EXPLANATION (II) TO CLAUSE (A) TO SECTION 80IB(10). DATE OF COMPLETION OF CONSTRUCTION WOULD MEAN DATE ON WHICH COMPLETION CE RTIFICATE 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 HOUSING PROJECT BUT THE PERSISTE NT QUESTION HERE IS WHETHER FOR GIVING BENEFIT OF DEDUCTION U/S. 80IB(1 0), WHERE AN ASSESSEE IS FOLLOWING THE PERCENTAGE COMPLETION MET HOD IS IT NECESSARY TO OBTAIN SUCH COMPLETION CERTIFICATE FOR EACH YEAR OF ASSESSEES CLAIM OR IT IS SUFFICIENT THAT CERTIFICATE IS OBTAINED ON TH E COMPLETION OF THE HOUSING PROJECT AS A WHOLE. STIPULATION FOR OBTAIN ING COMPLETION CERTIFICATE SHOULD NOT BE SO INTERPRETED TO MEAN TH AT AN ASSESSEE CAN CLAIM EXEMPTION U/S. 80IB(10) ONLY IN THE YEAR OF C OMPLETION OF WHOLE OF THE HOUSING PROJECT, EVEN WHERE THE PROJECT STRE TCHES OVER A NUMBER OF YEARS AND ASSESSEE RETURNS ITS INCOME BASED ON P ERCENTAGE COMPLETION METHOD. IT WOULD ONLY MEAN THAT THE ASS ESSEE HAS TO OBTAIN SUCH CERTIFICATE ON COMPLETION OF THE HOUSING PROJE CT, LEAST IT WOULD LOSE I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 6 THE DEDUCTION ALREADY GRANTED U/S. 80IB(10) FOR THE EARLIER YEARS IF IT IS NOT SO PRODUCED. AS HELD BY THE HONBLE SUPREME CO URT IN THE CASE OF BAJAJ TEMP (CITED SUPRA) A PROVISION IN THE TAXING STATUTES GRANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT OF THE NATION SHOULD BE CONSTRUED LIBERALLY. WHEN SUCH LIBERAL INTERPRE TATION IS TO BE GIVEN, THE RESTRICTION PLACED IN SUCH PROVISION GRANTING T HE INCENTIVES ALSO HAS TO BE CONSIDERED SO AS TO ADVANCE THE OBJECTIVES OF THE PROVISIONS AND NOT TO FRUSTRATE. CLAUSE (A) OF SECTION 80IB(10) S PECIFIES THAT THE DEVELOPMENT AND CONSTRUCTION OF THE PROJECT HAS TO START ON OR BEFORE 1.4.2004 AND THE PROJECT HAS TO BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH APPROVAL FOR PRO JECT WAS RECEIVED FROM THE LOCAL AUTHORITY. THUS, A PROJECT CAN HAVE A SPAN OF NOT MORE THAN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IT HAS RECEIVED APPROVAL. EXPLANATION UNDER CLAUSE (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 TH E YEAR OF COMPLETION OF THE PROJECT, ESPECIALLY SO, FOR AN ASSESSEE NOT FOLLOWING PROJECT COMPLETION METHOD FOR ACCOUNTING ITS INCOME. IF OT HERWISE INTERPRETED, IT WOULD BE EQUIVALENT TO FORCING AN ASSESSEE TO FO LLOW A PARTICULAR METHOD OF ACCOUNTING, WHICH WOULD NEVER HAVE BEEN T HE INTENTION OF LEGISLATION. INTENTION WOULD ONLY HAVE BEEN THAT FO R THE PROJECT AS A WHOLE, THERE SHOULD BE CERTIFICATION FROM THE RELEV ANT AUTHORITY PROVING THE COMMENCEMENT AND COMPLETION, AND NOT THAT A COM PLETION CERTIFICATE SHOULD BE THERE IN EVERY YEAR OF THE PR OJECT SPAN. THE CERTIFICATIONS ARE FOR ENSURING THAT THE PROJECT SP AN DOES NOT EXCEED THE PRESCRIBED PERIOD AND NOTHING MORE. OF COURSE IF SU CH 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 OFFIC ER CANNOT INSIST ON THE COMPLETION CERTIFICATE IN THE IMPUGNED YEAR. TH IS 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: I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 7 '2. CLARIFICATIONS HAVE BEEN SOUGHT BY VARIOUS CHIE F 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 O F 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 BASI S 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 CONDITI ON OF COMPLETING THE PROJECT WITHIN THE SPECIFIED TIME-LI MIT 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 CLAR IFICATION ON THIS ISSUE CONTAINED IN MEMBER (R.)S D.O. LETTE R 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.' 13. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE A SSESSEE HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD AND ALSO THE ASSESSEE FURNISHED THE EVIDENCE IN THE FORM OF PROPERTY ASSE SSMENT DOCUMENT, WATER CONNECTION DOCUMENTS, POLLUTION CONTROL PERMI SSION ETC. ON AN EXAMINATION OF THE NOTICES ISSUED BY THE BANGALORE MAHANAGAR PALIKE (MUNICIPAL CORPORATION) IN RESPECT OF 141 FLAT OWNE RS IN THE ASSESSEE'S HOUSING PROJECT, IT IS SEEN THAT IN THE NOTICES DAT ED 17.1.2007 IN RESPONSE TO THE FLAT OWNERS APPLICATIONS DATED 1.12 .2006 REQUESTING FOR ASSESSMENT AND ALLOTMENT OF MUNICIPAL NUMBERS, THE MUNICIPAL CORPORATION HAD ISSUED NOTICES FOR PAYMENT OF THE R EQUIRED TAXES FOR THE INITIAL ASSESSMENT. THE RELEVANT NOTICE READS A S UNDER: 'WITH REFERENCE TO THE ABOVE SRI (APPLICANT / FL AT OWNER) HEREBY INFORMED THAT THE ZONAL COMMISSIONER (EAST), BANGALORE MAHANAGARA PALIKE, BANGALORE, HAS APPROVED THE ALLOTMENT OF MUNICIPAL NUMBERS AND ASSESSMENT IN RESPECT OF NEWLY CONSTRUCTED, RESIDEN TIAL APARTMENT AT PROPERTY NO. 184 AS DETAILED BELOW ...' I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 8 THE PROOF OF PAYMENT OF TAXES IN CERTAIN CASES HAS ALSO BEEN PRODUCED. FROM THE ABOVE, IT WOULD APPEAR THAT THE APPLICANTS , BEING FLAT OWNERS, HAD INDIVIDUALLY FILED APPLICATION BEFORE THE MUNIC IPAL CORPORATION FOR ALLOTMENT OF MUNICIPAL NUMBERS AND ASSESSMENT. THE NOTICE, AS ABOVE, CLEARLY INDICATES THAT THE MUNICIPAL NUMBERS WERE B EING ALLOTTED IN RESPECT OF NEWLY CONSTRUCTED RESIDENTIAL APARTMENTS . 14. NOW THE OBJECTION OF THE DEPARTMENT IS THAT THE ASS ESSEE HAS NOT PRODUCED THE COMPLETION CERTIFICATE. THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD. THIS METHOD IS RECOG NISED BY THE INCOME-TAX ACT FOR DISCLOSING THE PROFIT IN THE CAS E OF A BUILDER. THE PURPOSE OF GRANTING DEDUCTION U/S. 80IB(10) IS TO P ROMOTE HOUSING PROJECTS. IF WE ACCEPT THE PROPOSITION OF THE DEPA RTMENT THAT THE DEDUCTION U/S. 80IB(10) HAS TO BE GRANTED ONLY A TA X PAYER WHO FOLLOWS ONLY 'PROJECT COMPLETION METHOD' IT LEADS TO AN ABS URD SITUATION AS THE DEVELOPER WHO IS FOLLOWING PERCENTAGE COMPLETION ME THOD IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT THO UGH ALL OTHER REQUIREMENTS OF THE SECTION BEING FULFILLED. IT WO ULD TANTAMOUNT TO DENIAL OF VALID EXEMPTION FOR WHICH AN ASSESSEE IS ENTITLED. NO ONE CAN PASS SUCH A ANOMALOUS DICTUM WHILE DEALING WITH A L EGAL PROBLEM. THE TRIBUNAL BEING FINAL FACT FINDING AUTHORITY SHALL K EEP IN MIND AN OVERALL SITUATION, FACTUAL AS WELL AS LEGAL, SO THEREUPON B RINGS A DICTUM OUGHT TO BE LEGALLY SUSTAINABLE IN THE EYES OF LAW. IN THE PRESENT SITUATION, THE REVENUE IS TAXING THE PROFIT ON PERCENTAGE COMPLETI ON METHOD BUT SUGGESTING TO GRANT DEDUCTION ONLY ON COMPLETION OF THE PROJECT. IF THE STAND OF THE REVENUE IS ACCEPTED THEN ONLY ON COMPL ETION OF PROJECT AN ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S. 80IB( 10), THEN UNDISPUTEDLY AN ANOMALY SHALL ARISE AS TO HOW AND W HEN 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 IN COME IN A DIFFERENT LATER YEAR I.E., ON COMPLETION OF THE PROJECT AS WA S CANVASSED BY THE DEPARTMENT. THE ACCEPTED PRINCIPLE IS THAT THE YEA R 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 I.T.A. NO. 478/HYD/2011 M/S. KEERTHI ESTATES PVT. LTD. ====================== 9 CONSIDERATION ON THE GROUND THAT THE ASSESSEE IS AD OPTING 'PERCENTAGE COMPLETION METHOD' THEN THE NATURAL COROLLARY SHOUL D BE THAT THE CONNECTED DEDUCTION OUGHT TO BE GRANTED SIMULTANEOU SLY IN THIS YEAR OR THE OTHER METHOD OF COMPUTATION IS THAT THE REVENUE MUST NOT TAX THE PROFIT OF THE PROJECT YEARLY ON THE BASIS OF 'PERCE NTAGE COMPLETION METHOD' BUT TAX THE ENTIRE PROFIT ON COMPLETION OF THE PROJECT BY APPLYING 'PROJECT COMPLETION METHOD'. 15. IN VIEW OF THE FOREGOING DISCUSSION, WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IB(10) OF THE ACT IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN HIRANANDANI AKRUTI JV VS. DCIT (39 SOT 498). 16. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 21 ST SEPTEMBER, 2012 TPRAO COPY FORWARDED TO: 1. M/S. KEERTHI ESTATES PVT. LTD., 8 - 2 - 120/86/1, KEERTHI PRIDE, ROAD NO. 2, BANJARA HILLS, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), IT TOWERS, AC GUARDS, HYDERABAD. 3. THE CIT(A), VIJAYAWADA. 4. THE CIT - II, HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD