ITO, Ward-6(3), Hyderabad V. Sigma Constructions, Hyderabad

ITA 921/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69829 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Keywords: Competent authority
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 921/HYD/2013 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD 6(3), HYDERABAD. ... APPELLANT VS. SIGMA CONSTRUCTIONS, HYDERABAD (PAN AATES 4213 Q) ... RESPONDENT APPELLANT BY: SHRI R. LAXMAN RESPONDENT BY: NONE DATE OF HEARING: 16/09/2013 DATE OF PRONOUNCEMENT: 16/09/2013 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-IV, HYDERABA D ON 25/03/2013, FOR THE ASSESSMENT YEAR 2009-10, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. THE LEARNED CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THE BASIC CONDITION FOR 80IB DEDUCTION AS PER 80IB (10)(B) IS THAT THE PROJECT MUST BE ON THE SIZE OF PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONCE ACRE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL 2 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= INCOME AT RS. 90,796/- AFTER CLAIMING A DEDUCTION O F RS. 24,98,121/- U/S 80IB(10) OF THE ACT. THE ASSESS ING OFFICER FOLLOWING THE REASONS GIVEN IN THE ASSESSME NT ORDER FOR AY 2008-09 IN ASSESSEES OWN CASE (THAT T HE I) TOTAL AREA OF THE PLOT WAS LESS THAN 1 ACRE AND II) THE ASSESSEE HAD NOT FURNISHED A COMPLETION CERTIFICATE ) HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTI ON U/S 80IB(10) AND ASSESSED THE TOTAL INCOME AT RS. 25,88,920/-. 3. ON APPEAL, THE CIT(A) FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES CASE FOR THE AY 2008-09 IN I TA NO. 364/HYD/2012 DATED 07/03/2013 ALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10). THE TRIBUNAL IN AY 2008-09 REJECTED THE ASSESSING OFFIC ERS VIEW ON BOTH THE AFOREMENTIONED ASPECTS AND ALLOWED THE ASSESSEES APPEAL WITH REGARD TO DENIAL OF DEDUCTION U/S 80IB(10) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 5. NONE APPEARED ON BEHALF OF THE RESPONDENT- ASSESSEE AT THE TIME OF HEARING BEFORE US. HOWEVER, WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LEAR NED DR AS THE ISSUE IN DISPUTE IS COVERED BY THE DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09. 6. THE LEARNED DR HAS NOT DISPUTED THE FACTS ON RECORD NOR BROUGHT ANY CONTRARY DECISION IN THIS RE GARD. 3 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= 7. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN ASSESSEES O WN CASE FOR AY 2008-09 (SUPRA) WHEREIN THE TRIBUNAL HE LD AS FOLLOWS: 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE DEDUCTION U/S. 80I B(10) WAS DENIED ON THE REASON THAT THE PROJECT WAS EXECUTED IN A PLOT AREA ADMEASURING LESS THAN ONE ACRE AND THERE WAS N O COMPLETION CERTIFICATE OBTAINED FROM MCH. THE ASSE SSEE PLEADED BEFORE US THAT THE PROJECT WAS EXECUTED ON AN AREA EXCEEDING ONE ACRE AND IN THE COURSE OF COMPLETION OF THE PROJECT 1373 SQ. YARDS OF LAND HAS BEEN EARMARKED F OR ACQUISITION OF MCH FOR THE PURPOSE OF MAKING ROADS AND THIS WAS NOT ACQUIRED BY MCH AND STILL IN THE POSSESSION OF THE ASSESSEE. REGARDING COMPLETION CERTIFICATE IT WAS SUBMITTED THAT THE ASSESSEE DULY APPLIED FOR COMPLETION CERTI FICATE VIDE APPLICATION DATED 30.9.2008 AND DULY ACKNOWLEDGED B Y MCH VIDE ACKNOWLEDGEMENT DATED 17.10.2008 AND ALSO FLAT S ARE FULLY COMPLETED IN ALL RESPECTS WHICH ARE DULY CONN ECTED BY ELECTRICITY AND WATER SUPPLY AND INDIVIDUAL DISTINC T NUMBER WAS ALLOTTED BY MCH AND THEY ARE ASSESSED TO MUNICI PAL TAX. ACCORDING TO THE AR THE AREA OF PLOT IS EXCEEDING O NE ACRE AND THE AREA EARMARKED FOR ROADS CANNOT BE EXCLUDED FRO M THE AREA OF PLOT AS DECIDED BY THE TRIBUNAL IN THE CASE OF VIDHI BUILDERS, MUMBAI VS. ITO IN ITA NO. 1212/MUM/2009 F OR A.Y. 2005-06 DATED 8 TH APRIL, 2011 WHEREIN THE TRIBUNAL HELD THAT THE AREA EARMARKED FOR ROAD SETBACK, RECREATION OPE N SPACE AND INTERNAL ROAD SETBACK CANNOT BE EXCLUDED FOR TH E PURPOSE OF CALCULATING THE TOTAL PLOT AREA. WHILE DECIDING THE ISSUE, THE TRIBUNAL PLACED RELIANCE ON THE EARLIER ORDER OF TH E MUMBAI BENCH IN THE CASE OF UMIYA ENTERPRISES VS. ITO IN I TA NO. 2750/MUM/2009 FOR A.Y. 2004-05. IN VIEW OF THIS, W E ARE INCLINED TO HOLD THAT AS PER PROVISIONS OF SECTION 80IB(10) OF THE ACT, THE HOUSING PROJECT SHOULD BE ON THE SIZE OF A PLOT OF MINIMUM ONE ACRE. IF THE BUILDING PROJECT WAS SANC TIONED BY THE MUNICIPAL CORPORATION FOR DEVELOPING THE PROJEC T IN THE AREA OF ONE ACRE LAND OR MORE, THE ASSESSEE IS ENTI TLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 13. WE HAVE CAREFULLY GONE THROUGH THE APPROVED BUILDI NG PLAN AS PER WHICH TOTAL AREA OF THE PROJECT IS 4310 .89 SQ. METRES, EAST SIDE ROAD WIDENING AREA IS 1089.21 SQ. METRES, WEST SIDE ROAD WIDENING AREA IS 8439 SQ. METRES AND THE NET PLOT AREA IS 3127 SQ. METRES. THE LEARNED AR SUBMIT TED BEFORE US THAT THE TOTAL PLOT AREA IS 5130 SQ. YARDS WHICH MORE THAN ONE ACRE. IT IS ALSO PLEADED BEFORE US THAT THE AS SESSEE'S PLOT IS MORE THAN ONE ACRE AND, BEYOND HIS CONTROL, A PO TION OF THE PLOT WAS EARMARKED FOR ROADS. BEING SO, LIBERAL IN TERPRETATION OF SECTION 80IB IS TO BE CONSIDERED. IN OUR OPINIO N, IF A PORTION OF THE PLOT AREA IS EARMARKED FOR ROADS AFTER THE A SSESSEE 4 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= ENTERED INTO DEVELOPMENT AGREEMENT AND THE PLAN WAS DULY SANCTIONED BY THE COMPETENT AUTHORITY, WE CANNOT FI ND FAULT WITH THE ASSESSEE TO DENY THE DEDUCTION U/S. 80IB(1 0) OF THE ACT. ACCORDINGLY, WE ARE OF THE OPINION THAT THE A REA OF THE PLOT AVAILABLE TO THE ASSESSEE FOR HOUSING PROJECT IS MORE THAN 1 ACRE. ACCORDINGLY, THE CLAIM OF THE ASSESSEE CAN NOT BE DENIED ON THIS GROUND IF IT IS AVAILABLE AT THE TIM E OF ENTERING INTO DEVELOPMENT AGREEMENT AND DEDUCTION U/S. 80IB( 10) IS TO BE GIVEN TO THE ASSESSEE. 14. REGARDING NON-PRODUCTION OF COMPLETION CERTIFIC ATE, THE LEARNED AR SUBMITTED THAT THE CIRCUMSTANCES BROUGHT ON RECORD SHOW THAT THE PROJECT IS COMPLETED. HE RELI ED ON JUDGEMENT OF GUJARAT HIGH COURT IN THE CASE OF MANA N CORPORATION VS. ACIT IN TA NO. 1053 OF 2011 DATED 3 .9.2012 WHEREIN HELD THAT THERE IS NO NECESSITY OF STRICT I NTERPRETATION OF SECTION 80IB(10) OF THE ACT AS IT IS A BENEFICIA L PROVISION AND THE FACTS BROUGHT ON RECORD SHOW THE COMPLETION OF THE PROJECT AND DEDUCTION HAS TO BE GIVEN. HE ALSO RELIED ON T HE ORDER OF THE TRIBUNAL IN THE CASE OF KEERTHI ESTATES PVT. LT D. IN ITA NO. 478/HYD/2011 DATED 21 ST SEPTEMBER, 2012 (PARAS 14 AND 15, AS GIVEN BELOW), WHEREIN HELD AS FOLLOWS: '14. NOW THE OBJECTION OF THE DEPARTMENT IS THAT THE ASSESSEE HAS NOT PRODUCED THE COMPLETION CERTIFICATE. THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD. THIS METHOD IS RECOGNISED BY THE INCOME-TAX ACT FOR DISCLOSING THE PROFIT IN THE CASE OF A BUILDER. THE PURPOSE OF GRANTING DEDUCTION U/S. 80IB(10) IS TO PROMOTE HOUSING PROJECTS. IF WE ACCEPT THE PROPOSITION OF THE DEPARTMENT THAT THE DEDUCTION U/S. 80IB(10) HAS TO BE GRANTED ONLY A TAX PAYER WHO FOLLOWS ONLY 'PROJECT COMPLETION METHOD' IT LEADS TO AN ABSURD SITUATION AS THE DEVELOPER WHO IS FOLLOWING PERCENTAGE COMPLETION METHOD IS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10) OF THE ACT THOUGH ALL OTHER REQUIREMENTS OF THE SECTION BEING FULFILLED. IT WOULD TANTAMOUNT TO DENIAL OF VALID EXEMPTION FOR WHICH AN ASSESSEE IS ENTITLED. NO ONE CAN PASS SUCH A ANOMALOUS DICTUM WHILE DEALING WITH A LEGAL PROBLEM. THE TRIBUNAL BEING FINAL FACT FINDING AUTHORITY SHALL KEEP IN MIND AN OVERALL SITUATION, FACTUAL AS WELL AS LEGAL, SO THEREUPON BRINGS A DICTUM OUGHT TO BE LEGALLY SUSTAINABLE IN THE EYES OF LAW. IN THE PRESENT SITUATION, THE REVENUE IS TAXING THE PROFIT ON PERCENTAGE COMPLETION METHOD BUT SUGGESTING TO GRANT DEDUCTION ONLY ON COMPLETION OF THE PROJECT. IF TH E STAND OF THE REVENUE IS ACCEPTED THEN ONLY ON COMPLETION OF PROJECT AN ASSESSEE WOULD BE 5 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= ENTITLED FOR DEDUCTION U/S. 80IB(10), THEN UNDISPUTEDLY AN ANOMALY SHALL ARISE AS TO HOW AND WHEN 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 INCOME IN A DIFFERENT LATER YEAR I.E., ON COMPLETIO N OF THE PROJECT AS WAS CANVASSED BY THE DEPARTMENT. THE ACCEPTED PRINCIPLE IS THAT THE YEAR 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 CONSIDERATION ON THE GROUND THAT THE ASSESSEE IS ADOPTING 'PERCENTAGE COMPLETION METHOD' THEN THE NATURAL COROLLARY 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 ON THE BASIS OF 'PERCENTAGE 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 TH E TRIBUNAL IN HIRANANDANI AKRUTI JV V. DCIT (39 SOT 498).' 15. COMING TO THE FACTS OF THE PRESENT CASE, THE PR OJECT WAS APPROVED BY THE MUNICIPAL CORPORATION OF HYDERABAD VIDE THEIR PERMIT NO. 48/49 F. NO. 0069/CSC/TP-5/04 DATE D 3.11.2004. AS PER CERTIFICATE OF ASSESSEE'S ARCHIT ECT DATED 3.9.2008, THE PROJECT WAS COMPLETED ON 1.10.2007. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASSESSEE HA S COMPLETED THE PROJECT BY THIS DATE AND THE ASSESSEE IS FOLLOWING CONTRACT COMPLETION METHOD. THE CLAIM FO R DEDUCTION U/S. 80IB(10) WAS MADE BY THE ASSESSEE FOR THE FIRS T TIME WHICH WAS DENIED BY THE AUTHORITIES ON THE REASON T HAT THERE IS NO COMPLETION CERTIFICATE. 16. THE MEANING OF DATE OF COMPLETION HAS BEEN GI VEN IN EXPLANATION (II) TO CLAUSE (A) TO SECTION 80IB(10). DATE OF COMPLETION OF CONSTRUCTION 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 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 6 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= ASSESSEES CLAIM OR IT IS SUFFICIENT THAT CERTIFICA TE IS OBTAINED ON THE COMPLETION OF THE HOUSING PROJECT AS A WHOLE. STIP ULATION FOR OBTAINING COMPLETION CERTIFICATE SHOULD NOT BE SO INTERPRETED TO MEAN THAT AN ASSESSEE CAN CLAIM EXEMPTION U/S. 80IB(10) ONLY IN THE YEAR OF COMPLETION OF WHOLE OF THE HOUSING PROJECT, EVEN WH ERE THE PROJECT STRETCHES OVER A NUMBER OF YEARS AND ASSESSEE RETUR NS ITS INCOME BASED ON PERCENTAGE COMPLETION METHOD. IT WOULD ON LY MEAN THAT THE ASSESSEE HAS TO OBTAIN SUCH CERTIFICATE ON COMPLETI ON OF THE HOUSING 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 (196 ITR 1 88) A PROVISION IN THE TAXING STATUTES GRANTING INCENTIVES FOR PROM OTING GROWTH AND DEVELOPMENT OF THE NATION SHOULD BE CONSTRUED LIBER ALLY. WHEN SUCH LIBERAL INTERPRETATION IS TO BE GIVEN, THE RESTRICT ION PLACED IN SUCH PROVISION GRANTING THE INCENTIVES ALSO HAS TO BE CO NSIDERED SO AS TO ADVANCE THE OBJECTIVES OF THE PROVISIONS AND NOT TO FRUSTRATE. CLAUSE (A) OF SECTION 80IB(10) SPECIES THAT SUCH UNDERTAKI NG HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HO USING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLE TES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 20 04, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, O R, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2004 [BUT NOT LATER THAN THE 31ST DAY OF MARCH, 200 5], WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; 17. THUS, A PROJECT CAN HAVE A SPAN OF NOT MORE THA N 4 YEARS FROM THE END OF THE FINANCIAL YEAR IT HAS RECEIVED APPRO VAL. EXPLANATION UNDER CLAUSE (A) ONLY SPECIFIED HOW TO RECKON THE D AY 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 YEAR OF COM PLETION OF THE PROJECT, ESPECIALLY SO, FOR AN ASSESSEE NOT FOLLOWI NG PROJECT COMPLETION METHOD FOR ACCOUNTING ITS INCOME. IF OTHERWISE INT ERPRETED, IT WOULD BE EQUIVALENT TO FORCING AN ASSESSEE TO FOLLOW A PARTI CULAR METHOD OF ACCOUNTING, WHICH WOULD NEVER HAVE BEEN THE INTENTI ON OF LEGISLATION. INTENTION WOULD ONLY HAVE BEEN THAT FOR THE PROJECT AS A WHOLE, THERE SHOULD BE CERTIFICATION FROM THE RELEVANT AUTHORITY PROVING THE COMMENCEMENT AND COMPLETION, AND NOT THAT A COMPLET ION CERTIFICATE SHOULD BE THERE IN EVERY YEAR OF THE PROJECT SPAN. THE CERTIFICATIONS ARE FOR ENSURING THAT THE PROJECT SPAN DOES NOT EXCEED THE PRESCRIBED PERIOD AND NOTHING MORE. OF COURSE IF SUCH PERIOD E XCEEDED 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 OFFICER CANNOT INSIST ON THE COMPLETION CERTIFICATE IN THE IMPUGNED YEAR. THIS VIEW HAS ALS O BEEN TAKEN BY CBDT IN ITS INSTRUCTION NO. 4 OF 2009 DT. 30.6.2009 , PARAS 2 TO 4 OF WHICH ARE REPRODUCED HEREUNDER: 7 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= '2. CLARIFICATIONS HAVE BEEN SOUGHT BY VARIOUS CHIEF 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 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 SATI SFIED, THE DEDUCTION GRANTED TO THE ASSESSEE IN THE EARLIE R 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.' 18. NOW THE OBJECTION OF THE DEPARTMENT IS THAT THE ASSESSEE HAS NOT PRODUCED THE COMPLETION CERTIFICATE. THE ASSES SEE 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 LEGAL PROBLEM. THE TRIBUNAL BEING FINAL FACT FINDING AUTHORITY SHA LL KEEP IN MIND AN OVERALL SITUATION, FACTUAL AS WELL AS LEGAL, SO THE REUPON BRINGS A DICTUM OUGHT TO BE LEGALLY SUSTAINABLE IN THE EYES OF LAW. IN THE PRESENT SITUATION, THE REVENUE IS TAXING THE PROFIT ON PERC ENTAGE COMPLETION METHOD BUT SUGGESTING TO GRANT DEDUCTION ONLY ON CO MPLETION OF THE 8 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= PROJECT. IF THE STAND OF THE REVENUE IS ACCEPTED T HEN ONLY ON COMPLETION OF PROJECT AN ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S. 80IB(10), THEN UNDISPUTEDLY AN ANOMALY SHALL ARISE AS TO HOW AND WHEN THE TAX SHOULD BE CHARGED. THIS IS NOT THE SC HEME OF THE ACT, TO FIRST TAX AN INCOME IN A PARTICULAR YEAR AND GRANT DEDUCTION ON THAT VERY INCOME IN A DIFFERENT LATER YEAR I.E., ON COMPLETIO N OF THE PROJECT AS WAS CANVASSED BY THE DEPARTMENT. THE ACCEPTED PRINCIPL E IS THAT THE YEAR 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 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 SI MULTANEOUSLY IN THIS YEAR OR THE OTHER METHOD OF COMPUTATION IS THA T THE REVENUE MUST NOT TAX THE PROFIT OF THE PROJECT YEARLY ON THE BAS IS OF 'PERCENTAGE COMPLETION METHOD' BUT TAX THE ENTIRE PROFIT ON COM PLETION OF THE PROJECT BY APPLYING 'PROJECT COMPLETION METHOD'. 19. IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE CLAIM OF THE AS SESSEE IN THE LIGHT OF THE ABOVE OBSERVATIONS. 8. AS THE ISSUE IN DISPUTE IS MATERIALLY IDENTICAL TO THAT OF THE CASE DECIDED BY THE TRIBUNAL IN ASSESSE ES OWN CASE FOR AY 2008-09, RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE CIT(A) IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF T HE ACT AND DISMISS THE GROUNDS RAISED BY THE REVENUE I N THIS REGARD. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2013 SD/- SD/- (SAKTIJIT DEY) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH SEPTEMBER, 2013 KV 9 ITA NO. 921/H/13 SIGMA CONSTRUCTIONS ================================= COPY TO:- 1. ITO, WARD 6(3), 6 TH FLOOR, C BLOCK, INCOME TAX TOWERS, AC GUARDS, HYDERABAD. 2. M/S SIGMA CONSTRUCTIONS, 302, EMERALD APARTMENTS, AMRUTHA HILLS, PANJAGUTTA, HYDERABAD. 3. THE CIT (A)-IV, HYDERABAD 4. THE CIT-III, HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.