By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi, Chartered Accountants
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Assessee entitled to benefit u/s. 80(IB)(10) in respect of partially complete housing project if project could not be completed in specified time for reasons beyond its control.
Facts:
The assessee was a firm engaged in the business of builders and promoters. Its housing project consisted of six buildings having 205 flats. The housing project was not fully completed in time as specified under 80(IB)(10)(a) and hence it received completion certificate for 173 flats only. The assessee claimed deduction u/s. 80-IB(10) in respect of all the 205 flats as the project has been substantially completed and as such the completion certificate was obtained. The Assessing Officer rejected the claim of the assessee for granting whole deduction in respect of whole project as well as alternative claim with regard to the proportionate deduction on the ground that the project was not completed within the stipulated period of time. On appeal, the Commissioner (Appeals) upheld the action of the Assessing Officer.
Held:
Out of 205 flats, completion certificate was obtained and furnished before the AO for 173 flats only. The request for granting whole deduction in respect of whole project has rightly been rejected because deduction u/s. 80-IB(10) could not be granted to assessee on incomplete construction at relevant point of time. However, the fault of noncompletion of construction was not attributable to assessee. In case such a contingency emerges which makes the compliance with provisions of section 80- IB(10) impossible, then benefit bestowed on an assessee cannot be completely denied. Such liberal interpretation should be used in favour of assessee when he is incapacitated in completing a project in time for reasons beyond his control. The phrase “completion” is a relative and not absolute term. Accordingly, even part completion must be construed as completion. The provisions of taxing statute should be construed harmoniously with the object of statue to effectuate the legislative intention.
Hence, it was held that the assessee is entitled for benefit u/s. 80IB(10) of the Act in respect of 173 flats completed before prescribed limit.
