INCOME-TAX OFFICER vs. M/S. PENTAGON DEVELOPERS,, PUNE

The brief facts of the case as emanating from records are : The assessee is a builder and developer. The assessee developed a housing project „Fortune East‟ at 12/1, Mundhawa Bypass Road, Kharadi, Pune. The assessee had obtained first approval of the building plan in respect of above project on 17-05-2005. The assessee in its return of income for assessment year 2010-11 had claimed deduction u/s. 80IB(10) to the tune of Rs.4,85,22,353/-. The Assessing Officer denied assessee‟s claim of deduction u/s. 80IB(10) on the ground that the assessee should have completed the project before 31-03-2011. However, the assessee has failed to furnish completion certificate in respect of any building or flat of the housing project „Fortune East‟.

Shri Mukesh Jha representing the Department submitted that the assessee has not furnished completion certificate till date, in respect of housing project Fortune East. There is no document from the competent authority on record which would indicate that the housing project in respect of which deduction has been claimed is complete and is habitable. The ld. DR prayed for setting aside the impugned order and restoring the findings of Assessing Officer.

On the other hand Shri V.L. Jain appearing on behalf of the assessee vehemently defended the findings of Commissioner of Income Tax (Appeals). The ld. AR submitted that as per Development Control Rules,

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The deduction u/s. 80IB(10) of the Act has been disallowed to the assessee by the Assessing Officer on the ground that the assessee has failed to furnish completion certificate from the local authority i.e. PMC. It is an undisputed fact that the assessee received first approval of the building

On the contrary, the assessee has pointed that the application was made to the local authority and the Architect of the assessee vide letter dated 26-02-2011 confirms that the PMC has approved the completion certificate in principle but has deferred the issuance of same until the amenity space is taken over by the PMC. The ld. AR has further asserted that it is the local authority i.e. the PMC which has to complete the proceedings for taking over of amenity space.

In all the three decisions on which reliance has been placed by the ld. AR i.e. Commissioner of Income Tax Vs. CHD Developers Ltd. (supra), Commissioner of Income Tax Vs. Hindustan Samuh Awas Ltd. (supra) and Commissioner of Income Tax Vs. Tarnetar Corporation (supra) the common factor is, the assessee in the respective cases after completion of housing project had applied to the local authority for issuance of completion/occupation certificate well in time. The Hon‟ble High Courts in the backdrop of this fact held that merely for the reason, the local authorities have failed to issue completion/occupation certificate within the reasonable time, the benefit of deduction u/s. 80IB(10) cannot be denied to the assessee, who otherwise have completed the housing project and have applied for approval well before the due date.

In the instant case we find that the Architect issued completion certificate confirming completion of project as per sanctioned plan on 16- 02-2011. However, it is not emanating from records as to when the assessee applied to the local authority i.e. PMC for issuance of occupancy certificate. The ld. AR for assessee has pointed that the PMC has approved the issuance of completion certificate but has withheld the formal issuance of certificate for some compliance. This fact requires verification. We are of considered view that the benefit of deduction u/s. 80IB(10) should not be denied to the assessee, if the assessee has applied to the PMC for issuance of completion/occupancy certificate before the due date i.e. 31- 03-2011. The issue is restored to the Assessing Officer for the limited purpose to verify the date on which the assessee approached PMC for issuance of completion/occupancy certificate. The assessee is directed to furnish necessary relevant documents to the Assessing Officer indicating the date on which the assessee applied to PMC for issuance of completion/ occupancy certificate. The Assessing Officer after examining the documents and in the light of our above observations shall allow/reject deduction u/s. 80IB(10), as the case may be.

In the result, the appeal of Revenue is allowed for statistical purpose.