By TIOL News Service

MUMBAI, JAN 29, 2019: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether when the project was completed within time and application for grant of certificate was also made well within time, then the builder should not suffer on account of delay at hands of Competent Authority issuing the certificate. YES IS THE VERDICT.

Facts of the case:

The Assessee is a builder/developer. For the subject A.Y, the assessee filed its return declaring income as 'Nil', after claiming deduction u/s 80IB(10) in respect of its development project. The returned income was also assessed u/s 143(3) at NIL. Later on, the AO issued a notice u/s 148, seeking to reopen the assessment, on the ground that the commencement certificate for the project in respect of which benefit of Section 80IB(10) as claimed, was received on Jan 19, 2005 whereas the Occupation Certificate was not obtained till Mar 31, 2009. Thus, disentitling the assessee to the benefit of Section 80IB(10). Thus, the assessee's income was determined at Rs.6.35 Crores.

On appeal, the CIT(A) held that the assessee was entitled to the benefit of Section 80IB(10) as the delay in issuing the occupancy certificate was on account of the time taken by the competent authority to issue the certificate when the Applicant had submitted all necessary documents for the issuance of certificate much before the expiry of four years from the end of the financial year in which commencement certificate was obtained. On further appeal, the Tribunal concurred with the opinion of CIT(A) and concluded that the assessee builder could not be penalized for the delay by the Competent Authorities in issuing the completion certificate.

High Court held:

++ the present issue is no longer res integra as it stands concluded against the Revenue and in favour of the assessee by the decision of this Court in CIT v/s. Hindustan Samuh Awas Ltd.. In the said case, it has been held that whether the project is completed within the time framed provided u/s 80IB(10), and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10). To the same effect the decision of the Gujarat High Court in CIT v/s. Tarnetar Corporation. In the present case on facts, it is found that not only the project was completed within time and an application for granting of certificate was also made well within the time. Thus, the assessee should not suffer on account of the delay at the hands of the Competent Authority issuing the certificate.

(See 2019-TIOL-229-HC-MUM-IT)