IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF NOVEMBER, 2019 PRESENT THE HON'BLE MR.JUSTICE ARAVIND KUMAR AND THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ I.T.A. No.286 OF 2018 BETWEEN:
1. PR. COMMISSIONER OF INCOME TAX-4 BMTC COMPLEX, KORMANGALA BANGALORE 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4(3)(1) BANGALORE ... APPELLANTS (BY SRI. E.I. SANMATHI, ADVOCATE) AND:
M/S MAJESTIC DEVELOPERS 67/3, SARAKKI GATE KANAKAPURA MAIN ROAD BANGALORE ... RESPONDENT (BY SRI. ANKUR PAI DHUNGAT, ADVOCATE ON BEHALF OF SRI. K.R.VASUDEVAN, ADVOCATE) THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACCT, ARISING OUT OF ORDER DATED 20.10.2017 PASSED IN ITA NO.1629/BANGALORE/2016, FOR THE ASSESSMENT YEAR 2008-2009, VIDE ANNEXURE-A, PRAYING THIS HON’BLE COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED:20.10.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, BANGALORE AS SOUGHT FOR, IN THE RESPONDENT- ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN ITA NO.1629/BANGALORE/2016 FOR A.Y.2008-2009, VIDE ANNEXURE-A AND GRANT SUCH OTHER RELIEF AS DEEMED FIT.
THIS APPEAL COMING ON FOR ADMISSION THIS DAY, ARAVIND KUMAR J., DELIVERED THE FOLLOWING:-
JUDGMENT The revenue is in Appeal challenging the correctness and legality of the order passed by Income Tax Appellate Tribunal (‘ITAT’ for short) in ITA No.1629/Bang/2016 whereunder appeal filed by the Revenue challenging the order of CIT (Appeals) dated 20.03.2015 came to be dismissed, which Authority had accepted the contentions of Assessee and allowance of claim made under Section 80-IB(10) of the Income Tax Act, 1961 (‘Act’ for short) had been allowed.
2. Respondent-Assessee claims to be involved in the business of development and construction and for the assessment year 2008-09 filed its return of income on 29.9.2008 declaring income of Rs.2,53,460/- by claiming deduction under Section 80-IB of the Act. Return of Income paid by assessee was taken up for scrutiny and it came to be accepted. Subsequently, in exercise of power vested under Section 147 of the Act, re-assessment proceedings was commenced for withdrawing the deduction allowed under Section 80-IB of the Act and re-assessment proceedings came to be concluded by withdrawing the deduction allowed under Section 80-IB of the Act. The claim of assessee for deduction under Section 80-IB which was in respect of a residential project “Majestic Residency”, had been disallowed by the Assessing Officer on the ground that assessee had failed to produce completion certification. The first Appellate Authority viz., CIT (Appeals) considered the claim of assessee in the background of provisions viz., under Section 80-IB(10) of the Act and second Explanation to clause (3)(a) and allowed the claim since documents and explanation proved or stood established that assessee had completed the project within five years from date of commencement. Revenue being aggrieved by said order, preferred second appeal before ITAT which came to be dismissed by arriving at a conclusion that in similar/identical fact situation, issue had been dealt with by this Court in CIT –v- Itina Properties Pvt. Ltd. [(2014) 49 Taxman.com 201(Kar) (HC)]. Hence, Revenue is in this appeal contending Authorities erred in arriving at a conclusion that Assessee is entitled to deduction under Section 80-IB (10) of the Act by relying upon decision in Itina Properties Pvt. Ltd.(supra) which has not reached finality and it was incumbent upon assessee to have satisfied the conditions set out in said provision itself and without there being completion certificate issued by the competent local Authority as prescribed under second Explanation to clause 3(a) of Section 80-IB (10) there, it is contended, substantial questions of law would arise for consideration. Sri.Sanmati, learned advocate appearing for Revenue has reiterated grounds urged in the appeal and has prayed for substantial questions being formulated and prayed for same being answered in favour of revenue.
3. Per contra, Sri.Ankur Pai, learned advocate appearing for assessee would support the order passed by the Tribunal by contending there is no infirmity and finding recorded by Authorities below is based on sound appreciation of facts, as well as law and to support his contention, he has also relied upon the Judgment of this Court rendered in ITA No.478/2015 and ITA No.614/2015 disposed of on 29.02.2016. Hence, he prays for dismissal of appeal without framing substantial questions of law since it is a question of fact which has been considered and answered by the Authorities.
4. Having heard the learned advocates appearing for parties and on perusal of order under challenge, it would clearly indicate that claim of the assessee was under Section 80-IB(10) of the Act. The expression found in second explanation to clause 3(a) of Sub- section (10) of Section 80-IB would indicate that for claiming said deduction, assessee will have to establish the date of completion of construction of housing project and said period has to be reckoned or should be taken to be the date on which completion certificate in respect of such housing project is issued by the local Authority. It would be apt and appropriate to note at this juncture itself that, expression ‘completion certificate’ is not defined under the Karnataka Municipal Corporations Act, 1976 (‘KMC Act’ for short). However, Sri.Sanmati has relied upon Section 310 of the KMC Act to contend that completion certificate referred to in second Explanation to clause (3) of subsection (10) of Section 80IB is same as found in Section 310 of KMC Act. However, we are not inclined to accept said contention for reasons more than one.
5. A Certificate is issued in terms of Schedule- VIII of Building Bye-laws certifying that the erection/re- erection/material alteration of buildings, which is subject matter of the plan sanction has been supervised by such registered architect/engineer/supervisor and has been completed in accordance with the plan sanctioned. Person issuing such certificate has to further state that work has been completed to the best of his satisfaction, the workmanship and materials used are strictly in accordance with the general and detailed specifications, that no provision of the Building Byelaws, sanctioned plan and conditions prescribed or orders issued thereunder have been transgressed in the course of work and thereby certifying that the building is fit for use for which it has been erected/re-erected or altered and while doing so, the concerned registered architect/engineer/supervisor would request for issuance of occupancy certificate for the premises. It is this completion certificate as contained in schedule- VIII referred to in Bylaw No.5.6.1 of the Building Byelaws which is referred under Section 310 of the KMC Act. It is this completion certificate which accompanies the intimation to be given by every person within one month after completion of erection of building or execution of any work to be delivered or sent to the Commissioner, in writing, of such completion accompanied by a certificate in the form prescribed under building bye-laws, which form has to be signed and subscribed in the manner as prescribed and same should be given to the Commissioner, who would thereafter conduct inspection of such building or such work and grant permission to occupy the building by issuing occupancy certificate.
The extant bye-laws is referable to Bengaluru Mahanagara Palike Building Bye-laws 2003 whereunder an occupancy certificate is to be issued under bye-law No.5.6 by the Commissioner after certificate issued by the registered architect, engineer or supervisor, as the case may be. Thus, completion certificate which is referred to in Section 310 of KMC Act is completion certificate which is required to be issued by Architect, engineer or supervisor, as the case may be, factum of completion of building or project to the Commissioner. It is only after such completion certificate being furnished and inspection conducted by the Commissioner, occupancy certificate would be issued by Commissioner of BBMP. Hence, contention of Revenue that completion certificate is required to be issued by local Authority as prescribed under Second Explanation to sub-clause (3) of sub-section (10) of Section 80-IB of the Act cannot be accepted. However, if the contention of the revenue that the completion certificate referred to under sub-clause (3) of Sub-Section (10) of Section of 80-IB of the Act is to be accepted, then, in that event, Authorities under the Act cannot insist for a completion certificate to be issued by the Municipal Corporation, when, in fact the said certificate contemplated under the KMC Act and the Building Bye-laws is to be issued by registered architect/engineer/supervisor.
6. Even on facts, it is noticed in the instant case, that a completion certificate came to be issued by registered architect on 27.02.2008 certifying that the project in question had been completed on 25.02.2008. Needless to say, this certificate has admittedly been issued in terms of Section 310 of the KMC Act r/w Rule 5.6(1) of the Building Bye-laws in the format prescribed under Schedule-VIII of building bye-laws. It is on enclosing this completion certificate issued by the registered architect that letters dated 5.3.2008 and 7.5.2008 were written to the Commissioner, BBMP by the assessee to issue occupancy certificate, the copies of which were also made available to the Assessing Officer during assessment proceedings under Section 148 of the Act. Though said material evidence being available, same had been ignored by Assessing Officer and same was taken note of by CIT (Appeals) to allow the deduction claimed under Section 80-IB of the Act by the assessee. As such, we are not inclined to accept contention raised by Revenue. There being no substantial questions of law involved in this appeal for being formulated, adjudicated and answered admitting the appeal does not arise. We have also noticed that under similar circumstances, Co-ordinate Bench in ITA Nos.478/2015 and 641/2015 disposed of on 29.02.2016 had noticed in said cases that no certificate of completion had been issued and as such, it was held that neither under the Local Authorities Act nor under KMC Act there being any provision for issuance of completion certificate, revenue ought not to have insisted for production of such certificate for getting benefit under 80-IB (10) of IT Act. Hence, by reiterating the conclusion arrived at by the coordinate Bench in Itina Properties Pvt. Ltd., referred to supra, whereunder it came to be held that distinction drawn to be put forward by the Revenue with regard to completion certificate vis-à-vis occupancy certificate would not dilute the legal position, we dismiss these appeals.
7. A finding of fact is also recorded by Tribunal that assessee had furnished certificate of the registered certified Architect dated 27.02.2008 before Assessing Officer to demonstrate/establish that project in question had been completed within the period stipulated under Section 80-IB of the Act.
8. We do not find any other in good ground to entertain this appeal.
9. For reasons aforestated, we pass the following: ORDER i. Appeal is dismissed.
ii. The order of the Tribunal passed in ITA No.1629/Bangalore/2016 dated 20.10.2017 Assessment Year 2008-09 is hereby affirmed.
Sd/- JUDGE Sd/- JUDGE ln