BR Constructions, Hyderabad V. Asst.CIT, Circle-8(1), Hyderabad

ITA 68/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2928 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: V SHIV KUMAR
• Keywords: Additional evidence
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 68/HYD/2013 ASSESSMENT YEAR 2009-10 M/S. B.R. CONSTRUCTIONS HYDERABAD PAN: AAFFB9369L VS. THE ASST. CIT CIRCLE-8(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI V. SHIV KUMAR RESPONDENT BY: SRI M.H. NAIK DATE OF HEARING: 08.05.2013 DATE OF PRONOUNCEMENT: 31.05.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-III, HYDERABAD DATED 12.12.2012 FOR ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A)-III, HYDERABAD IS AGAINST LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT NOT TO HAVE DISALLOWED THE CLAIM U/S. 80IB(10) OF THE INCOME-TAX ACT, 1961 AFTER HAVING ADMITTED THE ADDITIONAL EVIDENCE FILED, CONFIRMING THE COMPLETION OF THE PROJECT WITHIN THE STIPULATED PERIOD. 3. THE LEARNED CIT(A) OUGHT NOT TO HAVE DRAWN ADVERSE INFERENCE AGAINST THE APPELLANT INASMUCH AS THE EVIDENCE ON THE RECORD DOES NOT JUSTIFY THE CONCLUSION DRAWN. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN CONSTRUCTION OF APARTMENTS. IT FILED TH E RETURN OF IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 2 INCOME FOR A.Y. 2009-10 ON 29.9.2009 DECLARING TOTA L INCOME OF RS. 27,11,540. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT. THE ASSESSEE CLAIMED RS 1,5 0,74,474 AS DEDUCTION U/S. 80IB(10) OF THE ACT. THE ASSESSING OFFICER DID NOT ALLOW THE DEDUCTION ON THE GROUND THAT THE ASSE SSEE HAD NOT SUBMITTED A COMPLETION CERTIFICATE THE PRESCRIBED F ORM FROM THE MUNICIPAL AUTHORITIES. THE ASSESSING OFFICER MADE THE ADDITION ON THE REASON THAT T HE AR OF THE ASSESSEE COULD NOT FURNISH THE COMPLETION CERTIFICATE OF THE APARTMENT WHICH W AS COMPLETED DURING THE RELEVANT FINANCIAL YEAR. WHEN IT WAS POINTED OUT TO THE AR THAT DEDUCTIONS U/S 80IB(10) WOULD BE DISALLOWED ON THE BASIS OF NON PRODUCTION OF COMPLETION CERTIFICATE BY THE MUNICIPAL AUTHORITY, THE AR FURNISHED A COPY OF INSTRUCTION NO. 4/2009 DATED 30.06.2009 ISSUED BY THE BOARD WHEREIN IT IS CLARIFI ED AS UNDER: '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.' 4. THE ASSESSING OFFICER OBSERVED THAT FORM NO. 10CCB, ENCLOSED TO RETURN OF INCOME, THE FIRM COMME NCED ITS OPERATION BY 10.03.2006. IN ORDER TO CLAIM DEDUC TION U/S 80IB(10) OF THE ACT, THE FIRM SHOULD HAVE COMPLET ED THE HOUSING PROJECT WITHIN 5 YEARS FROM THE END OF THE FINANCIAL FEAR IN WHICH THE HOUSING PROJECT IS APPRO VED BY THE LOCAL AUTHORITY. AS PER THE ABOVE PROVISION, THE ASSESSEE SHOULD HAVE COMPLETED THE PROJECT BEFORE 31.03.2011. THE ASSESSEE HAS NOT FURNISHED THE COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY TILL D ATE. THE PROJECT, AS PER THE ENQUIRIES DONE BY THIS OFFICE, IS NOT COMPLETED WITHIN STIPULATED TIME. UNDER THESE CIRCU M- STANCES, THE ASSESSEE FIRM IS NOT ENTITLED TO PARTI AL EXEMPTION U/S 80IB(10), WHEN THE ASSESSEE FIRM IS NOT IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 3 SURE OF COMPLETION OF THE PROJECT BEFORE 31.03.2011 . HENCE, THE PARTIAL DEDUCTION OF RS. 1,50,74,474 WHICH IS TO BE ALLOWED NOW AS PER INSTRUCTIONS NO. 4/ 2009 DATED 30.06.2009 IS TO BE DISALLOWED IN SUBSEQUENT YE ARS, IF THE ASSESSEE FAILED TO COMPLETE THE PROJECT BY 31.03.2011 5. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE DEPARTMENT HAD WRITTEN A LETTER DATED 03.11.2011 TO THE ZONAL COMMISSIONER, GHMC, SERILINGAMPALLY, HYDERABA D TO FURNISH COMPLETION CERTIFICATE OF THE APARTMENT COMPLEX OF HEMDURGA TOWERS AT MIYAPUR, HYDERABAD AN D THE DEPARTMENT HAD NOT YET RECEIVED ANY INFORMATION FROM THE MUNICIPAL AUTHORITIES SO FAR. HENCE, THE ASSESSING OFFICER PRESUMED THAT THIS IS A CLEAR IND ICATION OF THE FACT THAT THE SAID APARTMENT COMPLEX HAS NOT BEEN COMPLETED SO FAR. AS PER EXPLANATION (II) OF CLAUSE (A)(II) OF SECTION 80IB(10) OF IT ACT 1961, THE DATE OF COMPLETION OF CONSTRUCTION UNDER HOUSING PROJECT SHALL BE TAKEN A S THE DATE, ON WHICH THE COMPLETION CERTIFICATE IN RESPEC T OF SUCH HOUSING PROJECT ISSUED BY THE LOCAL MUNICIPAL AUTHORITY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FIRM IS ALSO REQUESTED TO FURNISH THE COMP LETION CERTIFICATE BY THE LOCAL MUNICIPAL AUTHORITY, IF AN Y. AS IT WAS NOT SUBMITTED BY THE ASSESSEE FIRM TILL DATE TH E ASSESSING OFFICER OF THE OPINION THAT THE ASSESSEE IS NOT IN POSSESSION OF THE COMPLETION CERTIFICATE WHICH IS ISSUED BY GHMC, SERILINGAMPALLY, HYDERABAD. THUS, T HE CLAIM MADE BY THE ASSESSEE FIRM FOR DEDUCTION U/S 80IB(10) WAS NOT ACCEPTED. ACCORDINGLY, THE ASSESS ING OFFICER ADDED BACK RS. 1,50,74,474 TO THE TOTAL INC OME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE WENT IN APPE AL BEFORE THE CIT(A). IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 4 6. BEFORE THE CIT(A), AS PART OF THE APPEAL DOCUMENTS, THE ASSESSEE SUBMITTED A CERTIFICATE DATED 20 TH OF SEPTEMBER 2011 STATING THAT THIS WAS A COMPLETION CERTIFICATE . DURING THE FIRST APPELLATE PROCEEDINGS A COPY OF ALL THE A PPEAL DOCUMENTS WAS SENT TO THE ASSESSING OFFICER. HOWEVE R, DURING APPEAL PROCEEDINGS THE WRITTEN SUBMISSIONS O F THE ASSESSEE ALONG WITH THE CERTIFICATES WERE ALSO SENT TO THE ASSESSING OFFICER ON 1 ST NOVEMBER, 2012 FOR COMMENTS. UNTIL THE LAST DATE OF HEARING NO COMMENTS WERE RECEIVED FROM THE ASSESSING OFFICER. THE CIT(A), THEREFORE CONCLU DED THAT THE ASSESSING OFFICER DOES NOT WISH TO STATE ANYTHI NG FURTHER ON THE ISSUE. FURTHER, THE CERTIFICATES BEING IN T HE NATURE OF ADDITIONAL EVIDENCE AND HAVING AN IMPORTANT BEARING ON THE CASE ARE ORDERED TO BE ADMITTED. 7. BEFORE THE CIT(A), THE ASSESSEE STATED THAT THE COMPLETION CERTIFICATE COULD NOT BE SUBMITTED DURIN G ASSESSMENT PROCEEDINGS BECAUSE THE ASSESSING OFFICE R NEVER ASKED FOR THE CERTIFICATE AND ALSO DID NOT PROVIDE ANY OPPORTUNITY TO THE ASSESSEE TO SUBMIT THE SAME. BEFO RE THE CIT(A), THE ASSESSEE STATED AS UNDER: '1. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 30.12.2011 DETERMINING THE TOTAL INCOME AT RS. 1,77,86,014 AFTER DISALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS. 1,50,74,474. 2. THE ASSESSING OFFICER ERRED IN DISALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 8018(10) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS. 1,50,74,474 ON THE GROUND THAT THE COMPLETION CERTIFICATE FROM THE CONCERNED LOCAL AUTHORITY HAS NOT BEEN FURNISHED. 3. HERE, IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER NEVER IN COURSE OF THE ASSESSMENT PROCEEDINGS ASKED FOR FURNISHING OF THE COMPLETION CERTIFICATE. THE ASSESSING OFFICER NEVER GAVE AN OPPORTUNITY IN THIS REGARD AND IT WAS ONLY ON THE ULTIMATE DAY OF THE ASSESSMENT IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 5 PROCEEDINGS THAT THE ASSESSING OFFICER CALLED FOR T HE COMPLETION CERTIFICATE. 4. THE TOTAL PROJECT WAS COMPLETED BY 31.03.2011 RELEVANT TO THE ASSESSMENT YEAR 2011-12, FOR WHICH THE COMPLETION CERTIFICATE WAS RECEIVED ON 20-09- 2011. THOUGH THE COMPLETION CERTIFICATE WAS OBTAINED MUCH EARLIER, THE SAME COULD NOT BE FURNISHED ON THE ULTIMATE DAY OF THE ASSESSMENT PROCEEDINGS WHEN CALLED FOR BY THE ASSESSING OFFICER, DUE TO LACK OF OPPORTUNITY AND TIME CONSTRAINT AS MENTIONED SUPRA. A COPY OF THE SAME IS ANNEXED HERETO FOR READY REFERENCE. 5. THE ASSESSING OFFICER FAILED TO NOTE THAT THE ASSESSEE FOLLOWS THE BLOCK WISE 'COMPLETION CONTRACT METHOD' OF ACCOUNTING AND ARRIVES PROFIT ON ESTIMATED PERCENTAGE BASIS ON ADVANCES RECEIVED DURING THE CONSTRUCTION PERIOD OF THE BLOCKS. UPON CONSTRUCTION OF EACH BLOCK, THE SALE OF FLATS AND CONSTRUCTION EXPENDITURE THEREOF WILL BE TRANSFERRE D TO PROFIT & LOSS ACCOUNT. 6. DURING THE YEAR OF ACCOUNT, THE ASSESSEE COMPLETED CONSTRUCTION OF BLOCK 'B' IN THE PROJECT 'HEMA DURGA TOWERS' AND ACCORDINGLY CLAIMED THE DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME- TAX ACT, 1961 FOLLOWING THE CBDT INSTRUCTION NO. 4/2009 DATED 30.06.2009. THE ASSESSING OFFICER ERRED IN NOT FOLLOWING THE INSTRUCTION NO. 4/2009 DATED 30.06.2009 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI, WHEREIN IT HAS BEEN CLARIFIED THAT THE DEDUCTION CA N BE CLAIMED ON A Y EAR TO YEAR BASIS WHERE THE ASSESSEE SHOWS PROFITS FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. 7. THE ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYIN G INTEREST UNDER SECTION 234B OF THE INCOME-TAX ACT, 1961 BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE ASSESSING OFFICER OUGHT NOT TO HAVE INITIATE D PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE INCOME-TAX ACT, 1961 BASED ON THE FACTS AND CIRCUMSTANCES OF THE OF THE CASE AS THERE WAS NO WILFUL CONCEALMENT OF INCOME PARTICULARS OR FURNISHING OF INACCURATE INCOME PARTICULARS WHATSOEVER. 9. HERE, IT IS HUMBLY SUBMITTED THAT THERE WAS NO ENHANCEMENT WHATSOEVER IN THE GROSS TOTAL INCOME RETURNED BY THE ASSESSEE.' IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 6 8. THE CIT(A) WAS OF THE OPINION THAT THERE IS NO MERIT IN THE ARGUMENT OF THE ASSESSEE THAT NO OPPORTUNITY WAS PROVIDED FOR SUBMISSION OF THE COMPLETION CERTIFICATE. NOTWITHSTANDING THE MERITS OF THE COMPLETION CERTIFICAT E, THE FACTS ARE THAT THE CERTIFICATE IN QUESTION IS DATED 20.09.2011 WHEREAS THE ASSESSMENT ORDER IS DATED 30.12.2011. AS PER THE ASSESSMENT ORDER HEARINGS TOOK PLACE ON THE FOLLOWING DATES I.E. 02.08.2011, 09.12.20 11 AND 30.12.2011. IT WAS WELL WITHIN THE KNOWLEDGE OF THE ASSESSEE AND ITS HIGHLY QUALIFIED TAXATION ADVISERS THAT WITHOUT THE COMPLETION CERTIFICATE THE CONCERNED DEDUCTIO N WOULD NOT BE ALLOWABLE. HOWEVER, NO SUCH CERTIFICATE W AS PRODUCED. IT IS INCORRECT ON THE PART OF THE ASSESSEE TO STATE THAT THE COMPLETION CERTIFICATE WAS NEVER ASKED FOR AND WHEN REQUIRED ON 30 DECEMBER 2011 THERE WAS NO TIME TO PRODUCE THE SAME AS THE ORDER WAS PASSED ON THE SAME DAY. THIS IS A DELIBERATE FALSIFICATION OF FACTS AN D MISREPRESENTATION BEFORE THE APPELLATE AUTHORITY. A P LAIN LOOK AT PAGE 1 OF THE ASSESSMENT ORDER SHOWS THAT THE COMPLETION CERTIFICATE HAD BEEN ASKED FOR BY THE ASSESSIN G OFFICER MUCH EARLIER. THE ASSESSEE DID NOT PROVIDE THE CERTIFICATE BUT GAVE A REPLY WHEREBY REFERENCE WAS MADE TO INSTRUCTION NUMBER 4/2009 DATED 30.06.2009 ISSUED B Y THE CBDT. 9. THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER WROTE A LETTER TO THE ZONAL COMMISSIONER GHMS, HYDERABAD ON 03.11.2011 FOUR FURNISHING THE COMPLETION CERTIFICA TE REGARDING THE BUILDINGS IN QUESTION. NO SUCH CERTIFICATE WAS PROVIDED BY THE AUTHORITIES. THE AFOREMENTIONED FACTS CLEARLY CALL THE BLUFF OF THE ASSESSEE THAT THE ASSESSING OFFICER CALLED FOR THE COMPLETION CERTIFICATE ONLY ON 3 0 DECEMBER 2011. IT IS CLEAR FROM THE ABOVE FACTS THAT FI RSTLY IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 7 THE CERTIFICATE IN QUESTION HAD TO BE SUPPLIED BY THE ASSESSEE AS PER LAW. NOTWITHSTANDING THE LEGAL DUTY OF T HE ASSESSEE, THE ASSESSING OFFICER HAD ASKED FOR THE CERTIFICAT E IN NOVEMBER 2011 ITSELF AND HAD EVEN TRIED TO OBTAIN T HE SAME FROM THE LOCAL AUTHORITIES INDEPENDENTLY. SINCE T HE BUILDINGS WERE NOT COMPLETE BY 31.03.2011 I.E., THE STATUTORY DATE AS PER THE INCOME TAX ACT, NO SUCH CERTIFICATE COULD BE SUBMITTED DURING ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS CLEARLY FALSIFIED FACTS AND HAS IN WRITING STATED WRONG FACTS IN APPEAL. THE ASSESSEE'S CONDUCT CLEARLY POINTS OUT TO THE FACT THAT T HE BUILDINGS WERE NOT COMPLETE BY THE STATUTORY DATE. 10. THE CIT(A) OBSERVED THAT A LOOK AT THE CERTIFICATE SHOWS THAT FIRSTLY IT IS NOT A COMPLETION CERTIFICA TE AS ENVISAGED IN THE INCOME-TAX ACT. A COMPLETION CERT IFICATE CLEARLY SHOWS THAT THE BUILDINGS HAVE BEEN INSPECTE D AND ARE FIT FOR OCCUPATION. SUCH A CERTIFICATE ALSO GI VES THE EXACT DATE OF COMPLETION. ON THE OTHER HAND THE AFOREMENTIONED CERTIFICATE IS ONLY BASED ON THE PROP ERTY TAX RETURN FILED. IT IS NOT EVEN CLEAR AS TO WHO FI LED THE PROPERTY TAX RETURNS AND WHAT WERE THE DETAILS THERE OF. BY NO STRETCH OF IMAGINATION CAN THIS CERTIFICATE BE CA LLED A COMPLETION CERTIFICATE. 11. THE CIT(A) OBSERVED THAT IT IS CLEAR THAT THE BUILD INGS IN QUESTION WERE NOT COMPLETED BY 30 TH MARCH 2011 I.E., THE STATUTORY DATE. THE ASSESSEE WAS NOT IN POSSESSION OF THE COMPLETION CERTIFICATE EVEN BY 30TH OF DECEMBER 201 1 I.E., THE DATE OF COMPLETION OF THE ASSESSMENT PROCEEDING S. THE SO-CALLED CERTIFICATE SUBMITTED BY THE ASSESSEE IS NOT A RELIABLE EVIDENCE AT ALL AS FACTS SHOW THAT IT WAS NOT ISSUED BY THE END OF 2011. FURTHER, IT IS NOT A VALID COMP LETION IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 8 CERTIFICATE AND DOES NOT EVEN BEAR THE SEAL OF THE MUNICIPAL AUTHORITIES. IT DOES NOT BEAR A VALID DISPATCH NUMB ER. THEREFORE, THE CIT(A) CONCLUDED THAT THE ASSESSEE D ID NOT COMPLETE THE BUILDINGS IN QUESTION UP TO THE STATUT ORY DATE I.E., 30 TH OF MARCH. 2011. ACCORDINGLY, THE DEDUCTION UNDER SECTION 80IB(10) HAS BEEN DENIED BY THE CIT(A). AGG RIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE COMMENCED ITS BUSINESS BY 10.3.2006 AND IN ORDER TO CLAIM DEDUCTION U/S. 80IB(10) THE FIRM SHOULD HAVE COMPLE TED THE PROJECT WITHIN 5 YEARS FROM THE END OF THE FINANCIA L YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. AS PER THE PROVISIONS, THE ASSESSEE SHOULD HAVE COMPLE TED THE PROJECT ON OR BEFORE 31.3.2011. THE PROJECT WAS COM PLETED BY 31.3.2011 RELEVANT TO THE ASSESSMENT YEAR 2011-12 A ND FOR WHICH COMPLETION CERTIFICATE WAS RECEIVED ON 20.9.2 011. FURTHER IT WAS STATED THAT THOUGH THE ASSESSEE WAS FOLLOWING BLOCK-WISE COMPLETION CONTRACT METHOD OF ACCOUNTING AND ARRIVES PROFIT ON ESTIMATED PERCENTAGE BASIS ON THE ADVANCE RECEIVED DURING THE CONSTRUCTION PERIOD OF THE BLOC K. UPON CONSTRUCTION OF EACH BLOCK, THE SALE OF FLATS AND C ONSTRUCTION EXPENDITURE THEREOF WILL BE TRANSFERRED TO PROFIT A ND LOSS ACCOUNT. THE ASSESSEE PLACED RELIANCE ON THE CBDT CIRCULAR 4 OF 2009 DATED 30.6.2009. THE DEPARTMENT HAS NOT DI SPUTED THE ASSESSEES METHOD OF COMPUTATION OF PROFIT. BEING SO, THE DEPARTMENT CANNOT INSIST UPON THE COMPLETION CERTIF ICATE IN EVERY ASSESSMENT YEAR. AS PER STATUTORY REQUIREMEN T, THE ASSESSEE HAS TO OBTAIN COMPLETION CERTIFICATE WITHI N 5 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSE PR OJECT WAS APPROVED BY THE LOCAL AUTHORITY. IN OTHER WORDS, T HE ASSESSEE HAS TO OBTAIN THE CERTIFICATE BY 31 ST MARCH, 2011 AS THE PROJECT IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 9 WAS COMMENCED ON 10.3.2006. IN THE PRESENT CASE TH OUGH THE ASSESSEE PRODUCED THE CERTIFICATE FROM THE DY. COMM ISSIONER, GHMC, HYDERABAD (WEST ZONE), THE DEPARTMENT IS DOUB TING GENUINENESS OF THAT CERTIFICATE. EVEN IF THE CERTI FICATE IS DOUBTED, THE TIME LIMIT AVAILABLE TO THE ASSESSEE T O PRODUCE THE SAME IS UP TO 31.3.2011. FROM THIS POINT OF VIEW, FOR ASSESSMENT YEAR UNDER CONSIDERATION, THE DEPARTMENT CANNOT THRUST UPON THE ASSESSEE TO PRODUCE THE COMPLETION CERTIFICATE. 13. AS STATED EARLIER, THE ASSESSEE RECOGNISED THE INCO ME BY ESTIMATING THE PERCENTAGE OF INCOME ON ADVANCE RECE IVED DURING THE CONSTRUCTION PERIOD OF THE BLOCK AND AFTER CONS TRUCTION OF EACH BLOCK, THE SALE OF FLATS AND CONSTRUCTION EXPE NDITURE THEREOF WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT. THIS METHOD IS RECOGNISED BY THE INCOME-TAX ACT FOR DISC LOSING THE PROFIT IN THE CASE OF A BUILDER. THE PURPOSE OF GR ANTING DEDUCTION U/S. 80IB(10) IS TO PROMOTE HOUSING PROJE CTS. IF WE ACCEPT THE PROPOSITION OF THE DEPARTMENT THAT THE D EDUCTION U/S. 80IB(10) HAS TO BE GRANTED ONLY A TAX PAYER WH O FOLLOWS ONLY 'PROJECT COMPLETION METHOD' IT LEADS TO AN ABS OLUTE SITUATION AS THE DEVELOPER WHO IS FOLLOWING THIS ME THOD OF ACCOUNTING AS FOLLOWED BY THIS ASSESSEE IS NOT ENTI TLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT THOUGH 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 DEALI NG WITH A LEGAL PROBLEM. THE TRIBUNAL BEING FINAL FACT FINDI NG AUTHORITY SHALL KEEP IN MIND AN OVERALL SITUATION, FACTUAL AS WELL AS LEGAL, SO THEREUPON BRINGS A DICTUM OUGHT TO BE LEGALLY SU STAINABLE IN THE EYES OF LAW. IN THE PRESENT SITUATION, THE REV ENUE IS TAXING THE PROFIT ACCEPTING THE ASSESSEES METHOD OF ACCOU NTING BUT SUGGESTING TO GRANT DEDUCTION ONLY ON COMPLETION OF THE PROJECT. IF THE STAND OF THE REVENUE IS ACCEPTED THEN ONLY O N COMPLETION IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 10 OF PROJECT AN ASSESSEE WOULD BE ENTITLED FOR DEDUCT ION U/S. 80IB(10), THEN UNDISPUTEDLY AN ANOMALY SHALL ARISE AS TO HOW AND WHEN THE TAX SHOULD BE CHARGED. THIS IS NOT TH E SCHEME OF THE ACT, TO FIRST TAX AN INCOME IN A PARTICULAR YEA R AND GRANT DEDUCTION ON THAT VERY INCOME IN A DIFFERENT LATER YEAR I.E., ON COMPLETION OF THE PROJECT AS WAS CANVASSED BY THE D EPARTMENT. THE ACCEPTED PRINCIPLE IS THAT THE YEAR OF THE ASSE SSMENT OF INCOME AND CONNECTED DEDUCTION SHALL FALL IN THE SA ME ASSESSMENT YEAR. IF THE REVENUE IS TAXING THE PROF IT IN THE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE ASSESSEE IS ADOPTING 'PERCENTAGE COMPLETION METHOD' THEN THE NATURAL COR OLLARY SHOULD BE THAT THE CONNECTED DEDUCTION OUGHT TO BE GRANTED SIMULTANEOUSLY IN THIS YEAR OR THE OTHER METHOD OF COMPUTATION IS THAT THE REVENUE MUST NOT TAX THE PROFIT OF THE PROJECT YEARLY BUT TAX THE ENTIRE PROFIT ON COMPLETION OF THE PROJ ECT BY APPLYING 'PROJECT COMPLETION METHOD'. 14. FURTHER, IN THE PRESENT CASE THE ASSESSEES PROJECT IS COMMENCED BY 10.3.2006 AND THERE IS NO DISPUTE REGA RDING THIS. HOWEVER, ONE OF THE DISPUTE FOR DENYING DEDU CTION U/S. 80IB(10) IS THAT THERE IS NO COMPLETION CERTIFICATE FURNISHED BY THE ASSESSEE FOR WHICH ITS CLAIM WAS DENIED. THE M EANING OF DATE OF COMPLETION HAS BEEN GIVEN IN EXPLANATION (II) TO CLAUSE (A) TO SECTION 80IB(10). DATE OF COMPLETION OF CON STRUCTION WOULD MEAN DATE ON WHICH COMPLETION CERTIFICATE 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 T HE PERTINENT QUESTION HERE IS WHETHER FOR GIVING BENEFIT OF DEDU CTION U/S. 80IB(10), IT IS NECESSARY TO OBTAIN SUCH COMPLETION CERTIFICATE FOR EACH YEAR OF ASSESSEES CLAIM OR IT IS SUFFICIENT T HAT CERTIFICATE IS OBTAINED ON THE COMPLETION OF THE HOUSING PROJECT A S A WHOLE. STIPULATION FOR OBTAINING COMPLETION CERTIFICATE SH OULD NOT BE SO IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 11 INTERPRETED TO MEAN THAT AN ASSESSEE CAN CLAIM EXEM PTION U/S. 80IB(10) ONLY IN THE YEAR OF COMPLETION OF WHOLE OF THE HOUSING PROJECT, EVEN WHERE THE PROJECT STRETCHES OVER A NU MBER OF YEARS AND ASSESSEE RETURNS ITS INCOME BASED ON PERCENTAGE COMPLETION METHOD. IT WOULD ONLY MEAN THAT THE ASS ESSEE HAS TO OBTAIN SUCH CERTIFICATE ON COMPLETION OF THE HOU SING 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 HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO VS . CIT (196 ITR 188) (SC) A PROVISION IN THE TAXING STATUTES GR ANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT OF THE NATION SHOULD BE CONSTRUED LIBERALLY. WHEN SUCH LIBERAL I NTERPRETATION IS TO BE GIVEN, THE RESTRICTION PLACED IN SUCH PROV ISION GRANTING THE INCENTIVES ALSO HAS TO BE CONSIDERED SO AS TO A DVANCE THE OBJECTIVES OF THE PROVISIONS AND NOT TO FRUSTRATE. FURTHER, CLAUSE (A) OF SECTION 80IB(10) SPECIFIES THAT IF TH E DEVELOPMENT AND CONSTRUCTION OF THE PROJECT HAS BEEN APPROVED B Y THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2005, THE PROJECT SHALL BE COMPLETED WITHIN 5 YEARS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. THUS, A PROJECT CAN HAVE A SPAN OF 5 YEARS FROM TH E END OF THE FINANCIAL YEAR IT HAS RECEIVED APPROVAL. EXPLANATI ON UNDER CLAUSE (A) ONLY SPECIFIED HOW TO RECKON THE DAY OF APPROVAL AND DATE OF COMPLETION. IT WOULD NOT MEAN THAT THE ASS ESSEE CAN HAVE THE BENEFIT OF SECTION 80IB(10) ONLY IN THE YE AR OF COMPLETION OF THE PROJECT, ESPECIALLY SO, FOR AN A SSESSEE NOT FOLLOWING PROJECT COMPLETION METHOD FOR ACCOUNTING ITS INCOME. IF OTHERWISE INTERPRETED, IT WOULD BE EQUIVALENT TO FORCING AN ASSESSEE TO FOLLOW A PARTICULAR METHOD OF ACCOUNTIN G, WHICH WOULD NEVER HAVE BEEN THE INTENTION OF LEGISLATION. INTENTION WOULD ONLY HAVE BEEN THAT FOR THE PROJECT AS A WHOL E, THERE SHOULD BE CERTIFICATION FROM THE RELEVANT AUTHORITY PROVING THE COMMENCEMENT AND COMPLETION, AND NOT THAT A COMPLET ION IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 12 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 C OURSE IF SUCH PERIOD EXCEEDED THE PRESCRIBED LIMIT, REVENUE WOULD BE WELL WITHIN ITS RIGHTS TO WITHDRAW THE CLAIMS ALREA DY ALLOWED, FOLLOWING THE PROCEDURE PRESCRIBED UNDER THE ACT. T HUS, THE ASSESSING OFFICER NEED NOT INSIST ON THE COMPLETION CERTIFICATE IN THIS ASSESSMENT YEAR, THIS IS THE RIGHT MEANING OF THE STATUTE. THIS VIEW HAS ALSO BEEN TAKEN BY CBDT IN ITS INSTRU CTION NO. 4 OF 2009 DT. 30.6.2009, PARAS 2 TO 4 OF WHICH ARE RE PRODUCED HEREUNDER: '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 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 (B) WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. (C) IN CASE IT IS LATE AND IT IS FOUND THAT THE CONDITI ON 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. 29T H APRIL, 2008 AND MEMBER (IT)S D.O. LETTER NO. 279/MISC/46/ 2008-ITJ DT. 2ND MAY, 2008.' 15. IN OUR OPINION, THE BENEFICIAL CIRCULARS ARE BINDIN G ON THE INCOME-TAX AUTHORITIES AS HELD BY THE SUPREME COURT IN THE IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 13 CASE OF NAVNIT LAL C. JAVERI V. SEN (KK), AAC (1965 ) 56 ITR 198 (SC) AND K.P. VERGHESE V. INCOME TAX OFFICER (1981 ) 131 ITR 597 (SC) APPROVED BY A CONSTITUTION BENCH OF THE JU DGES IN GAUTAM (CB) V. UNION OF INDIA (1993) 199 ITR 530 (S C). 16. IT IS ALSO PERTINENT TO NOTE THAT FOR THE ASSESSMEN T YEAR 2010-11, THE ASSESSEES CLAIM U/S. 80IB(10) WAS GRA NTED ON THE BASIS OF COMPLETION CERTIFICATE ISSUED BY THE GHMC, CIRCLE-12, WEST ZONE, HYDERABAD VIDE LETTER DATED 20.11.2011 S HOWING THAT THE PROJECT IS COMPLETED WITHIN 5 YEARS FROM T HE DATE OF COMMENCING OF THE PROJECT. WHEN THE DEPARTMENT ACCE PTED THE SAME CERTIFICATE IN THE A.Y. 2010-11, THERE IS NO R EASON TO DOUBT THE SAME CERTIFICATE IN THE A.Y. 2009-10 TO DENY TH E DEDUCTION U/S. 80IB(10). 17. FURTHER, WE PLACE RELIANCE ON THE ORDER OF THE CO-O RDINATE BENCH IN THE CASE OF KURA HOMES PVT. LTD. VS. ITO R EPORTED IN 139 ITD 455 WHEREIN SIMILAR CLAIM WAS EXAMINED BY T HIS TRIBUNAL AND ALLOWED THE SAME. SINCE IN THE PRESEN T CASE THE FACTS ARE SIMILAR, WE DO NOT FIND ANY REASON TO DIS ALLOW THE CLAIM OF THE ASSESSEE U/S. 80IB(10) OF THE ACT. ACCORDIN GLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IB( 10) OF INCOME-TAX ACT, 1961. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MAY, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MAY, 2013 TPRAO IT A NO. 68/HYD/2013 M/S. B.R. CONSTRUCTIONS ================== 14 COPY FORWARDED TO: 1. M/S. B.R. CONSTRUCTIONS, C/O. M/S. I.R. RAO & COMPA NY, CHARTERED ACCOUNTANTS, H. NO. 8-3-222/29, C-69, MADHURANAGAR, HYDERABAD-38. 2. THE ACIT, CIRCLE-8(1), IT TOWERS, MASAB TANK, HYDER ABAD. 3. THE CIT(A)-III, HYDERABAD. 4. THE CIT-II, HYDERABAD. 5. THE DR A' BENCH, ITAT, HYDERABAD.