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Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’
Before: SHRI N.V VASUDEVAN & SHRI JASON P BOAZ
PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : These appeals by Revenue are directed against the orders of the CIT(A)-4, Bangalore dated 20/3/2015 for both asst. years 2007-08 and 2008-09. These appeals were heard together and since common issues are involved, we deem it appropriate to dispose off these appeals by way of this combined order. 2 Briefly stated, the facts relevant for disposal of these appeals are as under:-
2.1 The assessee is a firm engaged in business as a builder and developer.
2.1.1 For asst. year 2007-08, the assessee filed its return of income on 24/10/2007 declaring income of Rs 47,42,880/- after claiming deduction u/s 80-IB of the Income Tax Act, 1961 (in short ‘the Act’). The case was selected for scrutiny and the assessment was completed accepting the returned income. Subsequently, re- assessment proceedings u/s 147 of the Act were initiated by the Assessing Officer (‘AO’) as he was of the view that the income of the assessee chargeable to tax and escaped assessment as it was wrongly allowed deduction u/s 80-IB of the Act despite not fulfilling the conditions required for being allowed the same, by failing to furnish the completion certificate of the housing project concerned thereby not complying with the provisions of clause (ii) of Explanation to section 80-IB(10) of the Act. The re-assessment was concluded u/s 143(3) r.w.s 147 of the Act vide order dated 18/2/1015, wherein the assessee’s income was determined at Rs. 4,51,96,303/- in view of the AO withdrawing the deduction of Rs. 4,04,53,423/- claimed by assessee u/s 80-IB of the Act, which was allowed to the assessee in the original order of assessment.
2.1.2 For asst year 2008-09, the assessee filed its return of income on 29/9/2008 declaring income of Rs. 2,53,460/-, after claiming deduction u/s 80-IB of the Act. The case was taken up for scrutiny and the assessment was completed accepting the returned income. Subsequently, as in the assessee’s case for asst. year 2007-08, in this asst year also re-assessment proceedings u/s 147 of the Act were initiated for withdrawing the deduction allowed to the assessee u/s 80- IB of the Act in the original order of assessment as claimed by the assessee. The re-assessment proceedings were concluded u/s 143(3) r.w.s 147 of the Act vide order dated 18/2/2015, wherein the assessee’s income was determined at Rs.7,24,22,160/-; in view of the AO withdrawing the deduction of Rs. 7,21,68,700/- claimed by the assessee u/s 80-IB of the Act which was allowed to the assessee in the original order of assessment.
2.2 Aggrieved by the orders of re-assessment dated 18/2/2015 asst. years 2007-08 and 2008-09, the assessee filed appeals before the CIT(A)-4, Bangalore challenging the disallowance of its claims of deduction u/s 80-IB of the Act by the AO in re-assessment proceedings. The ld CIT(A) disposed off the appeals for asst. years 2007-08 and 2008-09 by separate orders dated 15/6/2016 by directing the AO to allow the asseessee’s claims for deduction u/s 80-IB of the Act.
3.1 Revenue, being aggrieved by the orders of the CIT(A)-4, Bangalore dated 15/6/2016 for asst. years 2007-08 and 2008-09, has filed these appeals before the Tribunal, wherein it has raised the following identical grounds challenging the impugned orders of the CIT(A) in allowing the assessee’s claims for deduction u/s 80-IB of the Act:-
“1. The Order of the Ld. CIT (A), in so far as it is prejudicial to the interest of the revenue, is opposed to law and the fact and circumstances of the case.
The Ld.CIT (A) has erred in holding the project as approved one under the facts of the case.
The Ld.CIT (A) has erred in allowing the deduction u/s 80-IB treating the issue liberally when the facts of the case are otherwise.
For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged.”
3.2 The ld DR for Revenue was heard in support of the grounds raised (Supra). Strong reliance was placed by the DR on the re- assessment orders of the AO for withdrawing the assessee’s claim for deduction u/s 80-IB of the Act, in view of the non furnishing of the completion certificate from the local authority, as stipulated in the provisions of Explanation (ii) to section 80-IB(10) of the Act. 3.3 Per contra, the ld AR for the assessee prayed for upholding of the impugned orders of the ld CIT(A) in directing the AO to allow the assessee’s claims for deduction u/s 80-IB of the Act. According to the ld AR of the assessee, the AO summarily rejected the assessee’s claims for deduction u/s 80-IB of the Act merely on the ground that the completion certificate was not obtained; ignoring the facts of the case and the corroborative evidences which clearly evidenced that the assessee had completed the concerned housing project, like obtaining of sanctions/approvals for water, electricity and sanitary connections from BESCOM, BWSSB and BBMP respectively, which are approved only for completed projects. It submitted that the ld CIT(A) has allowed the assessee deduction u/s 80-IB of the Act only after examination of the facts of the case and the judicial precedents in this regard to hold that mere absence of completion certificate in itself would not be sufficient cause for denial of the said deduction. In support of the assessee’s claim for deduction u/s 80-IB of the Act, reliance was, inter alia, placed on the following judicial pronouncements. (i) CIT V Ittina Properties Pvt. Ltd., in (2014) 49 taxman.com 201 (Kar)(HC) (ii) Keerthi Estates Vs. ITO in dt 24/3/2016 (iii) ITO Vs. Saket Corporation in ITA N o.107 of 2015 dt 5/5/2015 3.4.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. The sole issue for adjudication before us is with regard to whether the assessee is eligible for the deduction claimed by it u/s 80-1B of the Act for asst. years 2007-08 and 2008- 09 in respect of its residential project ‘Majestic Residency’. On a careful perusal of the impugned orders of the ld CIT(A) for asst. years 2007-08 and 2008-09, we find that the ld CIT(A) has elaborately considered the AO’s observations and findings, the assessee’s submissions, the facts of the case and the judicial precedents in the matter, at paras 5.1 o 5.5 of the impugned order, before rendering his observations/findings thereon at paras 6 to 7 of these orders which are extracted hereunder:-
3.4.2 A similar/identical fact situation and issue was dealt with by the Hon’ble Karnataka High Court in the case of CIT V Ittina Properties P Ltd., (2014) 49 taxman.com 201 (Kar)(HC); wherein the Hon’ble High Court allowed the assessee’s claim for deduction u/s 80-IB of the Act for the project in Karnataka on the grounds that there is no provision for issue of completion certificate in the BDA Act or the Karnataka Municipal Corporation Act. At paras 6 to 8 of the aforesaid order (supra) the Hon’ble Karnataka High Court held as under:-
3.4.3 The aforesaid decision of the Hon’ble Karnataka High Court in the case of Ittina Properties P. Ltd, (supra) was followed by the ITAT, Hyderabad Bench in the case of Keerthi Estates, Hyderabad in ITA No: 1854/Hyd/2014 dated 24/3/2016, wherein at para 6 thereof the Bench held as under:-
3.4.4 Taking into account the facts and circumstances of the case as discussed above from paras 3.4.1 to 3.4.3 of this order, the views of the AO, the contentions of the assessee, the observations and findings of the ld CIT(A) in the impugned orders (supra) and the judicial precedents in this regard (Supra), we are of the considered view that the issue of filing of completion certificate for being allowed claim of deduction u/s 80-IB of the Act, is squarely covered in favour of the assessee by the decision of the Hon’ble Karnataka High Court in the case of Ittina Properties Pvt. Ltd., (supra). Respectfully following the aforesaid decision of the Hon’ble Karnataka High Court (supra), we uphold the orders of the ld CIT(A) for both asst. years 2007-08 and 2008-09 and consequently direct the AO to allow the assessee deduction u/s 80-IB of the Act without insisting for the assessee to file completion certificate. We hold and direct accordingly. The grounds of appeal raised by revenue, being bereft of merit, are dismissed.
4 In the result, Revenue’s appeals for asst. years 2007-08 and 2008-09 are dismissed.
Order pronounced in the open court on 20th October, 2017.