The Supreme Court has recently stayed an order of the Madhya Pradesh High Court wherein it was held that issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, does not fulfill the condition specified in clause (a) of Section 80IB (10) read with Explanation (ii) of the Income Tax Act, 1961.
The assessee had contended that the stipulation in Section 80IB(10)(a) of a completion certificate issued by the Local Authority before the cut off date, cannot be applied in the case of assessee following the work in progress accounting method.
The High Court bench has opined that provision in the form of Section 80IB(10)(a), applies uniformly to all the assessees – be it following work in progress accounting method or otherwise.
According to the bench, the benefit of deduction under this provision can be availed by the assessee following the work in progress accounting method, provided he has complied with the stipulation of having produced completion certificate issued by the Local Authority before the cut off date, as may be applicable in his case. In other words, if the housing project was approved by the Local Authority before 1st April, 2004, he must submit completion certificate issued by the Authority having been issued before the 31st March, 2008. Whereas, in the case of housing project approved on or after 1st April, 2004, the assessee can avail of the benefit provided completion certificate issued by the Local Authority is within four years from the end of the financial year in which the concerned housing project was approved by the Local Authority.
The decision has, now been stayed by the two-judge bench of the Supreme Court comprising Justice R F Nariman and Justice Surya Kant.
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