M/s Asnani Builders & Developers, Bhopal V. The ACIT, 1(2), Bhopal

CO 9/IND/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7213 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 27-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: M K SHARMA
• Keywords: Retrospective amendment
• Section: 143(3); 153A; 80IB; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 6/IND/2012 A.Y. 2003-04 ACIT 1(2), BHOPAL :: APPELLANT VS M/S ASNANI BUILDERS & DEVELOPERS BHOPAL PAN AADCA 2234N :: RESPONDENT CO NO. 9/IND/2012 ARISING OUT OF ITA NO. 6/IND/ 2012 M/S ASNANI BUILDERS & DEVELOPERS BHOPAL :: OBJECTOR VS ACIT 1(2), BHOPAL :: RESPONDENT 2 REVENUE BY SHRI ARUN DEWAN ASSESSEE BY SHRI M.K. SHARMA DATE OF HEARING 18.04.2012 DATE OF PRONOUNCEMENT 19.04.2012 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 28 TH OCTOBER, 2011 DELETING THE ADDITION OF RS.23,06,076 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80-IB(10) OF THE ACT AS THE ASSESSEE HAS NOT FULFIL LED ALL THE CONDITIONS PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT WHEREAS IN THE CROSS OBJECTION THE ASSESSEE HAS CHALLENGED THE PROCEEDINGS UNDER SECTION 148 OF THE ACT . 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I ARUN DEWAN, LEARNED SR. DR, WHO SUPPORTED THE ASSESSMENT ORDER WHEREAS SHRI M.K. SHARMA, LEARNED COUNSEL FOR THE A SSESSEE DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE ORDER OF THE LEARNED CIT(A) IS BASED ON THE SETTLED LEGAL POSITI ON ALREADY DECIDED BY THE TRIBUNAL IN VARIOUS CASES. 3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS OF THE C ASE ARE THAT THE 3 ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF CIVIL CONSTRUCTION, DEVELOPING LAND AND CONSTRUCTING HOUS ING PROJECTS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING I NCOME AT RS. 17,98,917/-. ORIGINAL ASSESSMENT WAS MADE U/S 153A READ WITH SECTION 143(3). THE ASSESSEE FILED APPEAL BEFORE T HE CIT(A) WHICH WAS DECIDED BY THE CIT(A). SUBSEQUENTLY, NOTICE U/S 148 OF THE ACT READ WITH SECTION 147 WAS ISSUED AND SERVED ON THE ASSESSEE. ASSESSMENT U/S 143(3) READ WITH SECTION 148 OF THE ACT WAS MADE ON TOTAL INCOME OF RS. 41,04,990/- BY DISALLOW ING THE CLAIM OF THE ASSESSEE U/S 80IB(10) OF THE ACT AMOUNTING T O RS. 23,06,076/-ON THE GROUND THAT NO COMPLETION CERTIFI CATE WAS SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. MOREOVER, THE ASSESSEE ALSO DID NOT SUBMIT AUDIT REPORT IN FORM 1 0CCB ALONG WITH THE RETURN FILED FOR A.Y. 2003-04. ON APPEAL, THE LEARNED CIT(A) NOTICED THAT THE AO DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED C OMPLETION CERTIFICATE. IN THIS REGARD THE LEARNED CIT(A) FOUN D THAT THE CONDITION OF FILING OF COMPLETION CERTIFICATE WAS B ROUGHT TO THE STATUTE WITH EFFECT FROM 1.4.2005 BY BRINGING AMEND MENTS IN SECTION 80IB(10) OF THE ACT. HE ALSO OBSERVED THAT THE TRIBUNAL HAS GIVEN A CLEAR FINDING IN MANY CASES THAT THE AM ENDED 4 PROVISIONS OF SECTION 80IB(10) OF THE ACT ARE APPLI CABLE PROSPECTIVELY FROM THE A.Y. 2005-06. THE LEARNED CI T(A), THEREFORE, OBSERVED THAT SINCE THE ASSESSMENT YEAR INVOLVED IN THE PRESENT APPEAL IS 2003-04, THE AMENDED PROVISIO NS DO NOT COME INTO PLAY AND AS SUCH FOR THE REASONS MENTIONE D IN THE APPELLATE ORDER, THE LEARNED CIT(A) DELETED THE ADD ITION MADE BY THE AO. AGAINST THIS ORDER OF THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED CROSS OBJECTION. WE FIND THAT A SIMILAR ISSUE HAS BEEN DE ALT WITH BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S. C.I. BUIL DERS PRIVATE LIMITED IN I.T.A. NOS. 299 TO 305/IND/2010 AND BY I TS ORDER DATED 31 ST JANUARY, 2012 THE TRIBUNAL HELD AS UNDER :- 26. WITH REGARD TO CERTIFICATE OF COMPLETION OF PRO JECT, AS DISCUSSED ABOVE, THE ISSUE IS ALREADY COVERED IN FAVOUR OF THE ASSESSEE, AS PER ORDER OF THE COORDIN ATE BENCH IN THE CASE OF PRIYADARSHANI CONSTRUCTION, I.T.A.NO. 509 & 510/IND/2010 ORDER DATED 30.11.2011 , WHEREIN IT WAS HELD THAT THE CONDITION WITH REGARD TO FURNISHING OF COMPLETION CERTIFICATE WAS MADE EFFEC TIVE BY THE FINANCE ACT, 2004, W.E.F. 1 ST APRIL, 2005. ACCORDINGLY, ONLY FROM ASSESSMENT YEAR 2005-06, THE ASSESSEE WAS REQUIRED TO FURNISH COMPLETION CERTIFI CATE FOR GRANT OF DEDUCTION U/S 80IB(10) AND NOT WITH RE SPECT TO THE ASSESSMENT FALLING PRIOR TO IT. IN THE INSTA NT CASE, BEFORE US, THE ASSESSEE IS NOT REQUIRED TO FURNISH COMPLETION CERTIFICATE FOR THE ASSESSMENT YEAR 2001 -02 TO 2004-05. FOLLOWING IS THE PRECISE OBSERVATION IN THE CASE OF M/S. PRIYADHARSHANI CONSTRUCTION IN I.T.A.N O. 509 & 510/IND/2010:- 5 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE HOUSING PROJECT OF THE ASSESSEE VIZ. PRIYADARSHANI NILAYAM WAS APPROVED BY THE LOCAL AUTHORITY ON 4.12.2002. THE RELEVANT PROVISIONS OF LAW AS THEY STOOD AS ON 1.4.2004 READ AS UNDER :- SUB-SECTION (10) WAS SUBSTITUTED BY THE FINANCE (N O.2) ACT OF 2004 W.E.F. 1.4.2005 AND PRIOR TO ITS SUBSTITUTION, SUB-SECTION (10) AS AMENDED BY THE FINANCE ACT 2000 W.E.F. 1.4.2001 AND FINANCE ACT 20 03 WITH RETROSPECTIVE EFFECT FROM 1.4.2002 READ AS UNDER: (10) THE AMOUNT OF PROFIT IN CASE OF AN UNDERTAKI NG DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BEFORE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE 100% OF THE PROFIT DERIVE D IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT IF (A)SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVE LOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE FIRST DAY OF OCTOBER, 1998, (B)THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHI CH HAS A MINIMUM AREA OF ONE ACRE AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILTUP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF D ELHI OR MUMBAI OR WITHIN 25 K.M. FROM THE MUNICIPAL LIMIT OF THESE CITIES AND 1500 S Q.FT. AT ANY OTHER PLACE. THE FOLLOWING SUB-SECTION (10) WAS SUBSTITUTED FOR EXISTING SUB-SECTION (10) OF SECTION 80IB BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 1.4.2005 :- (10)THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MA RCH, 2007 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTO BER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN A PPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 WI THIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY; EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 6 (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF T HE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEME D TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PRO JECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF T HE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRA MED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVEL OPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR T HE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COM MERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHE VER IS LESS IT IS VERY CLEAR FROM THE ABOVE PROVISIONS THAT AS ON 1.4.2004 THERE WAS NO CONDITION FOR OBTAINING COMPLETION CERTIFICATE OF THE HOUSING PROJECT FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. FIRST CONDITION WAS THAT THE ASSESSEE HAS COMMENCED DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON OR AFTER FIRST DAY OF OCTOBER, 1998. SECOND CONDITION WAS THAT PROJECT IS ON THE SIZE OF PLOT O F LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. THE THIRD CONDITION WAS THAT RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DEL HI OR MUMBAI OR WITHIN 25 KMS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. IN ANY OTHER PLACE. WE FOUND THAT ALL THESE THREE CONDITIONS HAVE BEEN COMPLIED WITH BY THE ASSESSING OFFICER. 7 9.NOW THE QUESTION ARISES WHETHER THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED DEDUCTION U/S 80IB(10) OF THE ACT ON THE BASIS OF AMENDED PROVISIONS WHICH CAME ON THE STATUTE AT A LATER DATE I.E. 1.4.2005. THE OBVIOUS REPLY IS NO BECAUSE IT IS ESTABLISHED LAW THAT SUBSTANTIVE LAW UNLESS MADE SPECIFICALLY RETROSPECTIVE HAS ONLY TO BE UNDERSTOOD AS HAVING PROSPECTIVE OPERATION FROM THE DATE ON WHICH IT BECOMES LAW OR ANY OTHER DATE SPECIFIED IN THE STATUTE. 10. WITH REGARD TO THE RETROSPECTIVE APPLICATION OF TH E AMENDMENT, IT WAS HELD BY THE HONBLE SUPREME COURT IN STATE OF KERALA VS. LEX GEORGE (2004) 271 ITR 290 THAT WHERE SCHEDULE OF RATES WAS MODIFIED REDUCING INTER ALIA EXEMPTION LIMIT, THE EFFECT COULD BE GIVEN IN THE NEXT SUCCEEDING YEAR. WHILE COMING TO THIS CONCLUSION, THE HON'BLE COURT ALSO CONSIDERED THE DECISIONS IN GOVIND GANGA SARAN VS. CST (155 ITR 144) (SC), GOOD YEAR INDIA LTD. VS. STATE (188 ITR 402) (SC), KESHAVE RAM IND. & COTTON MILLS VS. CWT (59 ITR 767) (SC), RELIANCE & JUTE IND. LTD. VS. CIT (120 ITR 921) (SC) AND TEA STATE INDIA LTD. VS. CIT (241 ITR 778) (MAD). THE HONBLE APEX COURT IN THE CASE OF S.A.L. NARAYAN RAO VS. ISWARLAL BHAGWANDAS (57 ITR 149) (SC) HELD THAT RETROSPECTIVE EFFECT TO AMENDMENT/SUBSTITUTION IS NOT PERMISSIBLE UNLESS SPECIFICALLY PROVIDED. 11. APPLYING THE RELEVANT PROVISIONS OF THE LAW WITH RESPECT TO THE DATE OF APPROVAL OF THE PROJECT BY THE LOCAL AUTHORITY AS ON 4.12.2002, WE CAN SAFELY CONCLUDE THAT THE PROVISIONS APPLICABLE FOR THE ASSESSMENT YEAR 2004-05 DO NOT REQUIRE ANY COMPLETION CERTIFICATE OF THE LOCAL AUTHORITY INSOF AR AS AMENDMENT WAS BROUGHT WITH EFFECT FROM 1.4.2005 I.E. ASSESSMENT YEAR 2005-06. 8 ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT FOR THE ASSESSMENT YEAR 2004- 05. IN RESPECT OF THE ASSESSMENT YEAR 2005-06 SINCE THE AMENDED PROVISIONS CAME INTO FORCE, THE ASSESSEE WAS REQUIRED TO OBTAIN CERTIFICATE FROM THE LOCAL AUTHORITY FOR COMPLETION OF THE PROJECT A S A PRE-CONDITION FOR DEDUCTION U/S 80IB(10) OF THE ACT. AS THE ASSESSEE HAS NOT OBTAINED SUCH CERTIFICATE, WE CONFIRM THE ACTION OF THE LOWER AUTHORITIES FOR DECLINING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT TO THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL AND THE FACTUAL POSITION, THE ONLY ISSUE INVOLVED IN THIS A PPEAL IS AS TO WHETHER THE ASSESSEE WAS OBLIGED TO FILE THE COMPLETION CERTIFICATE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THIS BEHALF, WE FIND THAT AS ALRE ADY HELD BY THE TRIBUNAL IN THE CASE OF C.I. BUILDERS (SUPRA), THE AMENDMENT TO SECTION 80IB(10) WAS BROUGHT BY THE STATUTE WITH EFFECT FROM 1.4.2005 WH ICH WAS NOT MADE RETROSPECTIVE. SINCE THE ASSESSMENT YE AR INVOLVED IN THIS CASE IS 2003-04, THE CASE OF THE ASSESSEE CANNOT BE BROUGHT INTO THE NET OF THE AMEN DED PROVISIONS OF THE ACT. WE, THEREFORE, CONFIRM THE 9 CONCLUSION DRAWN BY THE LEARNED CIT(A). IN THIS VIEW OF THE MATTER, THE APPEAL OF THE REVENUE STANDS DISMIS SED. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, AT THE TIME OF HEARING, THE LEARNED COUN SEL FOR THE ASSESSEE DID NOT PRESS THE SAME AND, THEREF ORE, THE SAME IS DISMISSED AS SUCH. FINALLY, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 19.4.2012. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 19. 4.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/- 10