B.Nanji Enterprise Ltd., Ahmedabad V. The ACIT.,(OSD)Range-1, Ahmedabad

ITA 1787/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8827 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 13-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Deduction Disallowance
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 133A; 153A; 80IB; 133(6); 113; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA N O. 1787/AHD/2011 (ASSESSM ENT YEAR: 2005-06) B. NANJI ENTERPRISES LTD. 5, MOORTI BUNGALOWS, ASHOKNAGAR BEHIND ISRO, SATELLITE, AHMEDABAD APPELLANT VS. ASST. CIT (OSD), RANGE-1, AHMEDABAD (PRESENT JURISDICTION WITH ACIT, CENTRAL CIRCLE 1(4), AHMEDABAD ) RESPONDENT & IT(SS)A NOS. 122 TO 124 & 127/AHD/2013 WITH C.O. NOS.118 TO 120 & 123/AHD/2013 (ASSESSMENT YEARS: 2 004-05 TO 2006-07 & 2009-10) ACIT, CENTRAL CIRCLE 1(4), ROOM NO.337, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD APPELLANT VS. B. NANJI ENTERPRISES LTD. MOORTI BUNGLOW, 5, ASHOKNAGAR CO-OP. HOUSING SOCIETY LTD., NR. ISRO, B/H. SUNDARVAN, AHMEDABAD RESPONDENT PAN: AAACB7702P /BY ASSESSEE : SHRI SAKAR SHARMA, A.R. ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 2 - /BY REVENUE : SHRI R. I. PATEL, CIT. D.R. WIT H SHRI DEEPAK SUTARIA, SR. D.R. /DATE OF HEARING : 28.03.2017 /DATE OF PRONOUNCEMENT : 31.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH INVOLVES NINE CASES. FIRST OF ALL COMES ASSESSEES APPEAL ITA NO.1787/AHD/2011 FOR ASSESSMENT YEAR 2005-06 AG AINST THE CIT(A)-VI, AHMEDABADS ORDER DATED 27.04.2011, IN CASE NO. CIT (A)- VI/ACIT(OSD)R.1/77/07-08, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 IN SHORT THE ACT. THEREAFTER COME REVE NUES FOUR APPEALS IT(SS)A NOS. 122 TO 124 & 127/AHD/2013 AND ASSESSEE S CROSS OBJECTIONS THERETO CO NOS. 118 TO 120 & 123/AHD/2013 FOR ASSES SMENT YEARS 2004-05 TO 2006-07 & 2009-10; RESPECTIVELY ARISING AGAINST THE CIT(A)-I, AHMEDABADS ORDER; ALL DATED 12.12.2012 IN CASE NOS . CIT(A)- I/CC.1(4)/313/2011-12, CIT(A)-I/CC.1(4)/314/2011-12 , CIT(A)- I/CC.1(4)/315/2011-12 & CIT(A)-I/CC.1(4)/318/2011-1 2; RESPECTIVELY IN PROCEEDINGS U/S.143(3) R.W.S. 153A OF THE ACT. 2. WE ADVERT TO RELEVANT PLEADINGS FIRST. THE ASSE SSEES APPEAL ITA NO.1787/AHD/2011 FOR ASSESSMENT YEAR 2005-06. IT R AISES THREE SUBSTANTIVE GROUNDS IN CHALLENGING THE CIT(A)S ORDER AFFIRMING ASSESSING OFFICERS FINDINGS DISALLOWING/ADDING BOMBAY STOCK EXCHANGE P AYMENT OF RS.60,000/- AS PENALTY, ASSETS WRITTEN OFF AMOUNTIN G TO RS.59,35,105/- TREATED AS CAPITAL LOSS AND REJECTION OF SECTION 80IB(10) D EDUCTION CLAIM OF RS.2,79,31,077/-. LEARNED COUNSEL TAKES US TO CIT( A)S ORDER PAGE 3 PARA 2.3 HOLDING THAT IN THE EVENT THE ASSESSEE SUCCEEDS ON THE SAID DEDUCTION ISSUE, ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 3 - THE IMPUGNED DISALLOWANCE PERTAINING TO BOMBAY STOC K EXCHANGE PENALTY ISSUE WOULD ONLY INCREASE BUSINESS INCOME OTHERWISE IS ELIGIBLE FOR DEDUCTION. HE SEEKS TO APPLY THE SAME ANALOGY QUA THE ABOVESTATED SECOND GROUND AS WELL. WE HOWEVER FIND NO MERIT IN THIS C ONTENTION SINCE THE CIT(A)S ORDER IN PARA 3.3 PAGE 5 CONFIRMS THE IMPU GNED DISALLOWANCE BY RECORDING ASSESSEES CONCESSION THEREBY TREATING TH E SAME AS AN INSTANCE OF CAPITAL LOSS NOT ELIGIBLE FOR THE ABOVESTATED DEDUC TION. THE SOLE SUBSTANTIVE ISSUE THUS SURVIVES FOR OUR APT ADJUDICATION IS THA T OF ASSESSEES CLAIM OF SECTION 80IB(10) DEDUCTION. 3. WE NOW COME TO REVENUES FOUR APPEALS IT(SS)A NO S. 122 TO 124 & 127/AHD/2013 FILED AS ARISING FROM THE SEARCH IN QU ESTION CONDUCTED IN ASSESSEES CASE ON 04.03.2010. THE REVENUES SOLE SUBSTANTIVE GROUND IDENTICAL IN ALL FOUR APPEALS SEEKS TO RESTORE SECT ION 80IB(10) DEDUCTION DISALLOWANCE OF RS.3,82,50,213/-, RS.2,81,94,396/-, RS.1,04,82,953/- AND RS.71,85,020/-; RESPECTIVELY AS MADE BY THE ASSESSI NG OFFICER ON THE GROUND THAT THE ASSESSEE HAD NOT COMPLETED THE RESIDENTIAL PROJECTS IN QUESTION BEFORE THE STIPULATED DATES ENVISAGED IN THE AMENDED STATU TORY PROVISION W.E.F. 01.04.2005 AS PRESCRIBED IN SECTION 80IB(10) (A)(II ) R.W. EXPLANATION (II). THE ASSESSEES AS MANY CROSS OBJECTIONS CO NOS. 118 TO 120 & 123/AHD/2013 THERETO ON THE OTHER HAND RAISE THE FO LLOWING IDENTICAL SUBSTANTIVE GROUNDS. 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NO T APPRECIATING THAT THE NO DISALLOWANCE/ ADDITION U/S 80IB (10) WAS CALLED FOR AS NOTHING INCRIMINATING AGAINST THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH U/S 132. 2. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSING OFFICER HIMSELF OPTED NOT TO MAKE ASSESSM ENT & DISALLOWANCE AFTER ISSUING NOTICES U/S 148 & 153C FOR THE REASON OF NOT OBTAINING OF PROJECT COMPLETION CERTIFICATE BY THE ASSESSEE ON O R BEFORE 31.03.2008. ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 4 - 3. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE PROJECTS WERE FOUND COMPLETED IN THE COURSE OF SURV EY CONDUCTED U/S 133A ON 26/05/2008 TO VERIFY CORRECTNESS OF CLAIM U/S 80 IB (10) BY SURVEY OFFICIALS WHO PHYSICALLY VISITED THE RESPECTIVE PRO JECT SITES. 4. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NO T APPRECIATING THAT AT THE TIME OF OBTAINING PROJECT APPROVAL, THERE WAS NO RE QUIREMENT OF OBTAINING PROJECT COMPLETION CERTIFICATE FOR THE PURPOSE OF C LAIMING DEDUCTION U/S 80IB (10) OF THE ACT. 5. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSING OFFICER HIMSELF OPTED NOT TO MAKE ANY ADD ITION/ DISALLOWANCE U/S 80IB (10) AFTER ISSUING NOTICE U/S 148 FOR A.Y. 200 2-03 FOR THE REASON THAT ASSESSEE HAD NOT OBTAINED PROJECT COMPLETION CERTIF ICATES ON OR BEFORE 31/03/2008 INVOLVING THE SAME PROJECTS. 4. LEARNED REPRESENTATIVES INFORM US AT THE OUTSET THAT THE MAIN ISSUE ON MERITS THEREFORE IS THAT OF CORRECTNESS OF ASSESSEE S DEDUCTION CLAIM RAISED U/S.80IB(10) OF THE ACT IN ALL THE IMPUGNED ASSESSM ENT YEARS. WE SOUGHT TO KNOW ABOUT DETAILS OF THE RELEVANT HOUSING PROJECTS . LEARNED AUTHORIZED REPRESENTATIVE FILES A COMPILATION CHART INDICATING FOLLOWING RESIDENTIAL PROJECTS VIS--VIS THEIR DATES OF APPROVAL AS UNDER : IT(SS)A NO. 122/AHD/13 A.Y. 04-05 38250213 IT(SS)A NO. 123/AHD/13 A.Y. 05-06 28194396 IT(SS)A NO. 124/AHD/13 A.Y. 06-07 10482953 IT(SS)A NO. 127/AHD/13 A.Y. 09-10 7185020 INDIA COLONY- 09/08/99 NISARG-18/05/02 VIBHUSHA- 15/11/2000 INDIA COLONY- 09/08/99 NISARG-18/05/02 VIBHUSHA- 15/11/2000 INDIA COLONY- 09/08/99 NISARG-18/05/02 VIBHUSHA- 15/11/2000 SHUBHNAGAR- 03/03/2005 LEARNED DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH IN NOT DISPUTING THE CORRECTNESS OF THE ABOVE COMPILATION. WE THEREAFTE R SOUGHT TO KNOW THE REASON OF LISTING ASSESSEES APPEAL ITA NO.1787/AHD /2011 FOR ASSESSMENT YEAR 2005-06. LEARNED REPRESENTATIVES INFORM US TH AT THE SAME PERTAINS TO REGULAR ASSESSMENT FOLLOWED BY THE ABOVESTATED SEAR CH INVOLVING THE LATTER CONSEQUENTIAL APPEALS ARISING FROM SECTION 153A PRO CEEDINGS. WE THEREFORE PROCEED TO DEAL WITH ASSESSEES ABOVESTATED APPEAL FIRST. ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 5 - 5. A FEW FACTS MAY BE NOTICED. THE ASSESSEE COMPAN Y CONSTRUCTS THE ABOVE RESIDENTIAL PROJECTS. IT CLAIMED THE IMPUGNE D DEDUCTION U/S.80IB(10) OF THE ACT AMOUNTING TO RS.2.79CRORES IN QUESTION. THE ASSESSING OFFICER DISALLOWED THE SAME IN ASSESSMENT ORDER DATED 31.12 .2007 PLACING HEAVY RELIANCE ON HIS FINDINGS PERTAINING TO THE VERY ISS UE IN THE PRECEDING THREE ASSESSMENT YEARS. HE CONCLUDED THAT THE ASSESSEES EXPLANATION OF HAVING SUCCEEDED IN TRIBUNAL IN THE SAID ASSESSMENT YEARS COULD NOT BE ACCEPTED SINCE THE REVENUE HAD PREFERRED APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. THE ASSESSING OFFICER THUS REITERATED HIS TWIN REAS ONING THAT THE ASSESSEE WAS NEITHER OWNER OF THE LAND NOR DID IT DEVELOP THE PR OJECTS IN QUESTION ITSELF. 6. THE CIT(A) AFFIRMS ASSESSING OFFICERS FINDINGS IN HIS LOWER APPELLATE ORDER AS UNDER: 5.3 I HAVE CONSIDERED THE FATS OF THE CASE, ASSESS MENT ORDER AND APPELLANTS SUBMISSION. APPELLANT CLAIMED DEDUCTION UNDER SECT ION 80IB(10) IN RESPECT OF HOUSING PROJECTS, HOWEVER APPELLANT IS NOT ELIGIBLE FOR THIS DEDUCTION IN VIEW OF THE FOLLOWING REASONS- 1- THE SOCIETIES WHICH ARE THE OWNERS OF LAND WERE OWNING THE HOUSING PROJECT. APPELLANT WAS APPOINTED AS CONTRACTOR TO CARRY OUT CONSTRUCTION WORK AND OTHER RELATED ACTIVITIES. 2- APPELLANT WAS PAID REMUNERATION FOR THE ACTIVITI ES AS PER PARA 3 ON PAGE 6 OF DEVELOPMENT AGREEMENTS. IF APPELLANT WOULD HAVE BEEN DEVELOPER, THERE IS NO QUESTION OF MAKING PAYMENT FOR REMUNERATION TO THE APPELLANT. ALL ACTIVITIES WERE DONE IN THE NAME OF AND FOR SOCIETIES BUILDING THE HOUSING PROJECTS . 3- WHILE MAKING PAYMENT TO THE APPELLANT , THE SOCIETIES ALSO DEDUCTED IDS AT THE RATE APPLICABLE TO THE CONTRACTOR WHICH CLEARLY SHOWS THAT APPELLANT IS NOTHING BUT A CONTRACTOR IN HOUSING PROJECTS. 4- THESE HOUSING PROJECTS WERE NOT CONCEIVED, PLANN ED AND EXECUTED BY THE APPELLANT. APPELLANT HAS NOT TAKEN ANY RISK RELATING TO THESE PROJECTS THEREFORE APPELLANT CANNOT CLAIM DEDUCTION AVAILABLE TO PERSO NS WHO ARE TAKING RISKS OF PROJECTS. 5- LAND WAS NOT TRANSFERRED NOR WAS POSSESSION OF T HE SAME GIVEN TO THE APPELLANT. THIS MEANS APPELLANT WAS ONLY DEPLOYED FOR CONSTRUC TION WORK AND NOT TO HANDLE THE ENTIRE HOUSING PROJECT. ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 6 - 6-THE VITAL CONDITION FOR COMPLETING THE PROJECT BE FORE 1-04-2008 IS NOT FULFILLED IN MOST OF THE PROJECTS AS FOUND BY THE ASSESSING OFFI CER DURING SURVEY. NO COMPLETION CERTIFICATE WAS ISSUED BY THE LOCAL AUTHORITY AND T HEREFORE THESE PROJECTS WHICH WERE NOT COMPLETED BEFORE THE DEADLINE ARE NOT ELIG IBLE FOR DEDUCTION . IN THE LIGHT OF ABOVE FACTS, THE APPELLANT IS NOT E LIGIBLE FOR DEDUCTION UNDER SECTION 80 IB (10) OF IT ACT. HOWEVER APPELLANT REL IED UPON THE DECISION OF ITAT AHMEDABAD IN THE CASE OF RADHE DEVELOPERS IN WHICH THE DEDUCTION WAS ALLOWED EVEN TO THOSE DEVELOPERS WHO ARE NOT REGISTERED OWN ERS OF LAND AND WERE DEVELOPING PROJECTS AFTER SIGNING DEVELOPMENT AGREE MENTS WITH TRANSFERRING THE LAND. HOWEVER AFTER THIS DECISION, ITAT AHMEDABAD IN ANOTHER DECISION IN GROUP CASES- SHAKTI CORPORATION AND OTHERS, BARODA HELD THAT THE EARLIER DECISION I N THE CASE OF RADHE DEVELOPERS WILL APPLY ONLY IN THE CASE WHERE DEVELOPER TAKES ENTIRE RISK OF THE PROJECT AND IS NOT A MERE CONTRACTOR GE TTING REMUNERATION FOR CONSTRUCTION AND OTHER ACTIVITIES. WHEREVER ENTIRE RISK OF THE PROJECT IS NOT TAKEN BY SUCH PERSON, THEY ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB (10). IN VIEW OF THE FACTS OF THE APPELLANT MENTIONED BY THE ASSESSING OFFICER IN DETAIL AND IN BRIEF EARLIER, IT IS CLEAR THAT APPELLANT IS NOT A DEVELOPER IN REAL SENSE AND ONLY A CONTRACTOR WHO IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB (10) AS HELD BY ITAT AHMEDABAD IN LATER DECISION IN THE CASE OF SHA KTI CORPORATION AND OTHERS. THE EARLIER DECISION IN THE CASE OF RADHE DEVELOPER S IS NOT APPLICABLE IN THE CASE OF APPELLANT IN VIEW OF THE FACTS DISCUSSED EARLIER . ACCORDINGLY THE CLAIM OF DEDUCTION ON ALL PROJECTS MADE BY THE APPELLANT IS NOT CORRECT AND THEREFORE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFI RMED. 7. WE HAVE HEARD BOTH THE PARTIES. IT IS EVIDENT T HAT THE ASSESSEES DEDUCTION CLAIM RAISED IN THE IMPUGNED ASSESSMENT Y EAR PERTAINING TO THE ABOVE THREE PROJECTS IS VERY MUCH IDENTICAL TO THAT CLAIMED IN ASSESSMENT YEARS 2002-03 TO 2004-05 (SUPRA). PAGE 178 OF THE PAPER BOOK CONTAINS LEARNED CIT(A)S ORDER FOR ASSESSMENT YEAR 2002-03 DATED 25.07.2005 AS FOLLOWED IN THE SAID SUCCEEDING TWO ASSESSMENT YEAR S DELETING THE VERY DISALLOWANCE AS MADE BY THE ASSESSING OFFICER BY AD OPTING THE ABOVESTATED REASONING. THE SOLE EXCEPTION HOWEVER IS REGARDING REASON NO.6 THAT THE ASSESSEE HAD NOT FULFILLED THE VITAL CONDITION OF H AVING COMPLETED THE PROJECTS IN QUESTION BEFORE 31.03.2008 AS NOTICED BY THE ASS ESSING OFFICER IN THE COURSE OF SURVEY. THE REVENUE THEN APPEARS TO HAVE FILED ITA NOS. 2281/AHD/2005, ITA NO.1448/AHD/2006 & ITA NO.148/AH D/2007 FOR THE SAID THREE ASSESSMENT YEARS SEEKING TO REVIVE SECTI ON 80IB(10) DISALLOWANCE AS DELETED IN ABOVE LOWER APPELLATE PROCEEDINGS. T HIS TRIBUNAL CLUBBED ALL ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 7 - SUCH CASES WITH THE LEAD APPEAL OF RADHE DEVELOPER S ITA NO.2482/AHD/2006. A CO-ORDINATE BENCH THEREAFTER D ISMISSED ALL SUCH REVENUES APPEALS VIDE COMMON ORDER DATED 29.06.200 7. THE REVENUE THEN FILED TAX APPEAL NOS. 1497 TO 1499/2008. HONBLE J URISDICTIONAL HIGH COURT DECLINED THE SAME IN ITS JUDGMENT DATED 13.12.2011. THE REVENUES SPECIAL LEAVE PETITION FILED IN HONBLE APEX COURT ALSO MET THE SAME FATE AS INDICATED IN PAGE 352 OF THE PAPER BOOK. IT IS THEREFORE CLE AR THAT THE CIT(A) FIRST FIVE REASONS EXTRACTED HEREINABOVE DENYING THE IMPUGNED DEDUCTION TO ASSESSEE ARE THE SAME SINCE THE ASSESSING OFFICER HIMSELF IS VERY FAIR IN NOT DISPUTING THE SIMILARITY OF FACTS VIS--VIS THE ISSUE OF SECT ION 80IB(10) DEDUCTION INVOLVED IN PRECEDING AND IMPUGNED ASSESSMENT YEAR. WE THUS REVERSE CIT(A)S FIRST FIVE REASONS BY FOLLOWING HONBLE JU RISDICTIONAL HIGH COURTS JUDGMENT HEREINABOVE. 8. WE NOW PROCEED TO DEAL WITH THE NEXT EQUALLY IMP ORTANT ISSUE OF COMPLETION OF PROJECTS. THERE IS NO DISPUTE THAT A SSESSEES ABOVESTATED PROJECTS STOOD APPROVED WELL BEFORE THE COMING INTO OPERATION OF THE AMENDED SECTION 80IB(10) W.E.F. 01.04.2005. THE LE GISLATURE INSERTED THESE AMENDMENTS VIDE FINANCE ACT, 2004. THE REVENUES A RGUMENT ACCORDINGLY BEFORE US IS THAT THE ABOVE NON COMPLETION OF PROJE CTS ON ASSESSEES PART BEFORE 31.03.2008 IN FIRST THREE PROJECTS AND BEFOR E 31.03.2009 IN THE FOURTH ONE RENDERS IT INELIGIBLE FOR SECTION 80IB(10) DEDU CTION IN VIEW OF CLAUSE (A)(I)(II) R.W. EXPLANATION (II). IT QUOTES HONBL E MADHYA PRADESH HIGH COURTS JUDGMENT IN [2015] 379 ITR 107 (MP) CIT VS. GLOBAL REALITY THAT SUCH A COMPLETION HAS TO BE BEFORE THE SAID STIPULATED DAT ES. AND ALSO THAT THE DATE OF COMPLETION OF THE HOUSING PROJECT IS TO BE TAKEN ON THE DATE OF WHICH THE COMPLETION CERTIFICATE IS ISSUED BY THE CONCERNED L OCAL AUTHORITY. SHRI PATEL VEHEMENTLY ARGUES THAT THE ASSESSEES DEDUCTION CLA IM IN ALL THE ASSESSMENT YEARS IN QUESTION IS HIT BY THE ABOVE AMENDED PROVI SION. ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 8 - 9. SHRI SAKAR SHARMA HOWEVER SEEKS TO REBUT THE REV ENUES ABOVE CONTENTION. HE FILES BEFORE US PLETHORA OF JUDGMEN TS IN RAISING A CONTENTION THAT THE ASSESSEES PROJECTS APPROVED BEFORE 01.04. 2005 IN ANY CASE DO NOT COME WITHIN THE PURVIEW OF THE AMENDED PROVISION AL READY HELD TO BE HAVING PROSPECTIVE EFFECT IN HONBLE JURISDICTIONAL HIGH C OURTS DECISION IN MANAN CORPORATIONS CASE VS. CIT 356 ITR 44 (GUJ.), CIT V S. G R DEVELOPERS 22 TAXMANN.COM 265 (KARNATAKA), CIT VS. VEENA DEVELOPE RS 277 CTR 297 (SC), CIT VS. CHD DEVELOPERS LTD. 362 ITR 177 (DELH I) AND CIT VS. JAIN HOUSING & CONSTRUCTION CO. 256 CTR 408 (MADRAS), CI T VS. HAPPY HOME ENTERPRISE 372 ITR 1 (BOMBAY) AS APPROVED IN HONBL E APEX COURTS DECISION IN SARKAR BUILDERS 375 ITR 392 AS WELL AS A TRIBUNA LS DECISION IN SHRI VENKATESH DEVELOPERS ITA NOS. 857 TO 860/PN/2012/20 12 DATED 15.01.2016 AND THE LAST DECISION OF HONBLE JURISDICTIONAL HIG H COURTS DECISION IN CIT VS. TARNETAR CORPORATION 362 ITR 174 (GUJ). WE TH EN SOUGHT TO KNOW ABOUT COMPLETION STATE OF THE PROJECTS IN QUESTION. SHRI SHARMA INVITED OUR ATTENTION TO THE CIT(A)S ORDER IN ALL THESE CASES FORMING SUBJECT MATTER OF REVENUES FOUR APPEALS THAT THE ASSESSEE HAS VERY M UCH COMPLETED THE PROJECTS IN QUESTION BEFORE THE SAID STIPULATED DAT ES IN VIEW OF ITS AUDITORS REPORTS IN FORM NO.10CCB CONTAINING NECESSARY CERTI FICATES TO THIS EFFECT AS FORMING PART OF THE CASE FILE. HE THEN INFORMS US THAT THE RESIDENTIAL UNITS IN QUESTION ALREADY ARE COMPLETE IN ALL CIVIC AMENITIE S AS OCCUPIED BY THE RESIDENCE DULY ASSESSED TO THE RELEVANT LOCAL LAWS. WE THEN SOUGHT TO GET INFORMATION ABOUT THE EXACT REASON OF THE FACT THAT THE ASSESSEE HAS NOT FILED COMPLETION CERTIFICATES ISSUED BY THE LOCAL AUTHORI TY. THE ASSESSEE TAKES US TO PARA 6.6 IN CIT(A)S ORDER REFERRING TO THE LOCA L AUTHORITYS RESPONSE TO SECTION 133(6) ENQUIRIES THAT THE DELAY IN QUESTION IN DUE TO TECHNICAL REASON. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUT E THE FACTUAL POSITION AS CONTAINED IN THE CIT(A)S ORDER FOR ASSESSMENT YEAR 2004-05 IN THE INSTANT BATCH READING AS UNDER: ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 9 - 6. I HAVE GONE THROUGH THE SUBMISSIONS OF THE AR OF THE APPELLANT, THE DETAILS FILED DURING THE APPELLATE PROCEEDINGS AND THE ASSESSMENT ORDER CAREFULLY. IT IS SEEN THAT APPELLANT HAD OBTAINED PROJECT APPROVAL ON 09/08/19 99, 07/08/2001 AND 21/10/2001 RESPECTIVELY FOR THE INDIA COLONY PROJEC T; ON 18/05/2002 FOR THE NISARG PROJECT AND ON 15/11/2000 FOR THE VIBHUSHA P ROJECT AND, THEREFORE, PROVISIONS OF SECTION 80-EB (10) AS EXISTED PRIOR T O ITS SUBSTITUTION BY THE FINANCE (NO 2) ACT, 2004 W.E.F. 01-04-2005 WERE APPLICABLE. AS PER SAID PROVISIONS, THERE WAS NO TIME LIMIT BY WHICH THE APPELLANT WAS REQUIR ED TO COMPLETE THE PROJECT. LIKEWISE, THERE WAS NO STIPULATION IN THE SAID PROV ISIONS THAT THE PROJECT WILL BE CONSIDERED TO BE COMPLETED ON THE DATE ON WHICH COM PLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY. IT IS ALSO SEEN THAT THE AS SESSMENT U/S 143(3) FOR THIS ASSESSMENT YEAR WAS MADE ON 28/04/2006 WHEREIN DISA LLOWANCE WAS MADE ON THE GROUND THAT THE APPELLANT WAS NOT A OWNER OF LAND A ND THEREFORE, IT WAS HELD THAT THE APPELLANT WAS NOT THE DEVELOPERS UNDER THE PROV ISIONS OF SECTION 80-IB (10). HOWEVER, IT IS ALSO NOTICED THAT WHILE MAKING ASSES SMENT, THE ASSESSING OFFICER HAD NOT MADE ANY SUCH DISALLOWANCE FOR WANT OF COMP LETION CERTIFICATE. 6.1 IT IS ALSO SEEN THAT FOR NISARG & VIBHUSHA PROJ ECTS APPELLANT HAD ITS OWN LAND AND HAD NOT ENTERED INTO ANY DEVELOPMENT AGREEMENT WITH ANY SOCIETY. THE ADDITION MADE BY THE AO WAS DELETED BY THE LD. CIT (A) AND ORDER OF THE CIT (A) WAS SUBSEQUENTLY CONFIRMED BY HON'BLE TRIBUNAL IN T HE CASE OF RADHE DEVELOPERS & OTHERS REPORTED IN 113 TTJ 300 (AHD) WHEREIN THE APPELLANT WAS ALSO A PARTY. THE ORDER OF THE ITAT WAS SUBSEQUENTLY CONFIRMED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF RADHE DEVELOPERS REPORTED IN 3 41 ITR 403 (GUJ). IN THAT CASE ALSO THE APPELLANT WAS A PARTY BEFORE THE HIGH COUR T. THE DEPARTMENT DID NOT ACCEPT THE DECISION OF THE GUJARAT HIGH COURT AND F ILED A SPECIAL LEAVE PETITION BEFORE THE SUPREME COURT. THE SLP OF THE DEPARTMENT BEFORE THE HON'BLE SUPREME COURT HAS BEEN DISMISSED BY ORDER DTD 07/12 /2012 IN SLP(CIVIL) CC NO 21333 OF 2012 IN THE CASE OF THE APPELLANT. 6.2 IT IS ALSO SEEN THAT THE ASSESSING OFFICER HAD CARRIED OUT SURVEY U/S 133A ON 26/05/2008 TO VERIFY CORRECTNESS OF CLAIM U/S 80-FF I (10). ON PHYSICAL INSPECTION DURING THE SURVEY, THE PROJECT WAS FOUND TO BE COMP LETED BUT IT-WAS OBSERVED BY THE SURVEY OFFICIALS THAT THE APPELLANT HAD NOT OBT AINED COMPLETION CERTIFICATES IN RESPECT OF NISARG AND VIBHUSHA HOUSING PROJECTS WHI CH AS PER THE OPINION OF THE ASSESSING OFFICER WAS REQUIRED TO BE OBTAINED ON OR BEFORE 31.03.2008. IT IS ALSO SEEN THAT NOTICES U/S 147 WERE ISSUED ONLY IN RESPE CT NISARG AND VIBHUSHA HOUSING PROJECTS AND NO ADVERSE VIEW WAS TAKEN AFTER SURVEY IN RESPECT OF INDIA COLONY PROJECT. IT IS ALSO SEEN THAT REOPENED PROCEEDINGS FOR A.Y. 2002-03 WERE DROPPED AND NO DISALLOWANCE WAS MADE IN RESPECT INDIA COLON Y PROJECT. 6.3 THE PROVISIONS OF SECTION 80-IB (10) WHICH WERE SUBSTITUTED BY THE FINANCE (NO 2) ACT, 2004 W.E.F. 1.4.2005 HAVE NO RETROSPECTIVE APPLICATION. THE AMENDMENT IN THIS CASE I SUBSTANTIVE IN NATURE, THEREFORE, THE N EW PROVISIONS WOULD BE APPLICABLE TO THE PROJECTS WHICH ARE APPROVED ON OR AFTER 01.0 4.2005. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HON'BLE GUJARAT HI GH COURT IN THE CASE OF MANAN CONSTRUCTION VS. AGIT IN TAX APPEAL NO 1053 OF 2011 IN ORDER DATED 03/09/2012 AND THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF CI T VS BRAHMA ASSOCIATES REPORTED IN 333 ITR 289 (BOM) AND KARNATAKA HIGH CO URT IN THE CASE OF CIT, ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 10 - CENTRAL VS. ANRIYA PROJECT MANAGEMENT SERVICES (P ) LTD REPORTED IN 21 TAXMANL40 (KAR) WHEREIN IT HAS BEEN HELD THAT .THE AMENDED PROVISIONS ARE SUBSTANTIVE AND ARE PROSPECTIVE IN NATURE AND THERE FORE, CANNOT BE APPLIED IN RESPECT OF PROJECTS APPROVED AND INITIATED ON OR BE FORE 01.04.2005. 6.4 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF T ARNETAR CORPORATION REPORTED IN 26 TAXMAN 180 (GUJ) HAS HELD THAT IF SU BSTANTIAL COMPLIANCE OF PROVISIONS HAS BEEN MADE AND IF ASSESSEE IS ABLE TO SHOW THAT THE PROJECT WAS COMPLETED WITHIN THE STATUTORY TIME LIMIT, DEDUCTIO N U/S 80-IB (10) CANNOT BE DENIED MERELY BECAUSE ASSESSEE HAS NOT BEEN ABLE TO OBTAIN PROJECT COMPLETION CERTIFICATE BEFORE THE SPECIFIED TIME LIMIT. 6.5 IT IS ALSO SEEN THAT VARIOUS TRIBUNALS HAVE CON SISTENTLY HELD THAT IN RESPECT OF THE PROJECTS WHICH WERE APPROVED AND INITIATED ON O R BEFORE 01.04.2005, DISALLOWANCE CANNOT BE MADE SOLELY FOR THE REASON T HAT THE ASSESSEE FAILED TO OBTAIN PROJECT COMPLETION CERTIFICATES WITHIN THE S PECIFIED TIME LIMIT. IT IS SEEN THAT VISHAKHAPATNAM BENCH OF IT AT IN THE CASE OF VISHNU BUILDERS VS. ACIT (ITA NO. 178-180/2011), KOLKATA BENCH OF TRIBUNAL IN THE CAS E OF ACIT VS. NORTH CITY DEVELOPERS (ITA NO. 1307/KOL/2010) AND HAVE ALSO HE LD THAT THE DEDUCTION U/S 80- IB (10) CANNOT BE DENIED MERELY BECAUSE ASSESSEE HA S NOT BEEN ABLE TO OBTAIN PROJECT COMPLETION CERTIFICATE BEFORE THE SPECIFIED TIME LIMIT. 6.6 IN THE CASE OF THE APPELLANT, THE LOCAL AUTHORI TY IN INQUIRIES U/S 133(6) HAS CONFIRMED THAT THEY WERE NOT ISSUING COMPLETION CER TIFICATES DUE TO TECHNICAL REASONS. THE APPELLANT ON ITS PART HAS FURNISHED AR CHITECT'S CERTIFICATE AS WELL AS AUDITOR'S REPORT IN FORM NO 10CCB CERTIFYING THAT T HE PROJECT WAS COMPLETED BEFORE 31.03.2008, IN SUPPORT OF THE FACT THAT THE PROJECT WAS COMPLETED BEFORE 31.03.2008, THE APPELLANT HAD ALSO FURNISHED COPIES OF THE SALE DEEDS OF THE FLATS SOLD, TAX ASSESSMENT/ELECTRICITY BILLS ETC IN THE N AMES OF THE PURCHASERS. 6.7 IN THE PRESENT CASE SINCE PROJECT WAS INITIATED BEFORE 1.4.2005, AS DISCUSSED ABOVE, THE LAW HAD NOT MANDATED THAT PROJECT COMPLE TION CERTIFICATES BE OBTAINED FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB (10) OF THE ACT PRIOR TO THE AMENDMENT WITH EFFECT FROM 1.4.2005. EVEN IF IT IS HELD THAT SINCE THE PROJECT WAS COMPLETED AFTER THE AMENDED PROVISIONS CAME INTO FO RCE, STILL DEDUCTION CANNOT BE DENIED TO THE APPELLANT BECAUSE AUTHORITIES THEMSEL VES WERE NOT ISSUING COMPLETION CERTIFICATES AS CONFIRMED IN INQUIRIES U/S 133(6) O F THE ACT. IN SUCH A SITUATION, THE APPELLANT CANNOT BE BLAMED FOR NOT COMPLYING WITH O NE OF THE CONDITION SPECIFIED IN SECTION 80-IB (10) OF THE ACT. IN SUCH CIRCUMSTANCES THE LAW DOES NOT COMPEL ONE TO DO THAT WHICH ONE CANNOT I POSSIBLY PERFORM. IT MEANS THAT WHERE THE LAW CREATES A DUTY BUT THE PARTY ON WHOM THE DUTY IS CAST IS DISABLED FROM PERFORMING IT, AND HAS NO REMEDY OR CONTROL OVER IT, THEN THE LAW WILL IN GEN ERAL EXCUSE HIM FROM SUCH DUTY. THIS PROPOSITION HAS BEEN EXPLAINED BY HON'BLE SUPR EME COURT WHILE DEALING WITH THE SCOPE AND APPLICATION OF DOCTRINE OF 'LEX NAN C OGIT AT IMPOSSIBILIA' (THE LAW DOES NOT COMPEL A MAN TO DO WHAT HE CANNOT POSSIBLY PERFORM) AND 'IMPOSSIBILIUM NULLA OBLIGATIO EST' (THE LAW DOES NOT EXPECT THE P ARTY TO DO THE IMPOSSIBLE). ; ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 11 - 10. IT IS THUS CLEAR THAT ALTHOUGH THE ASSESSEE HAS FILED FOR ISSUANCE OF COMPLETION CERTIFICATE TO THE LOCAL AUTHORITY WELL BEFORE THE STIPULATED DATES I.E. 31.03.2008 EXCEPT IN ASSESSMENT YEARS 2009-10 WHEREIN THE RELEVANT DATE IS 31.03.2009 PERTAINING TO THE FOURTH PROJECT (SUP RA), THE SAME IS HELD UP BECAUSE OF TECHNICAL REASONS. WE REFER TO HONBLE JURISDICTIONAL HIGH COURTS DECISION IN TARNETAR CORPORATION (SUPRA) UPHOLDING THIS TRIBUNALS ORDER FOR ASSESSMENT YEAR 2006-07 WHEREIN THE PROJECT IN QUES TION HAD BEEN APPROVED BEFORE 01.04.2004, THE SAID ASSESSEE APPLIED FOR BU PERMISSION TO THE LOCAL AUTHORITY BEFORE 31.03.2008 WHICH STOOD REJECTED FO LLOWED BY SUBSEQUENT REVISED PERMISSION ON 19.04.2009. THEIR LORDSHIPS OBSERVE IN SAID FACTUAL BACKDROP THAT DELAY IN GETTING BU PERMISSION CANNOT BE HELD TO BE FATAL TO SECTION 80IB(1) DEDUCTION CLAIM AS NOT EVERY CONDI TION OF THE STATUTE CAN BE SEEN AS MANDATORY IN CASE THE SAME STANDS SUBSTAN TIALLY COMPLIED WITH. WE ARE OF THE OPINION IN THIS FACTUAL AND LEGAL BACKDR OP THAT WE HAVE TO NECESSARILY FOLLOW HONBLE JURISDICTIONAL HIGH COUR TS DECISION EVEN IF THE REVENUE FINDS STRONG SUPPORT OF ANY HONBLE NON JUR ISDICTIONAL HIGH COURT DECIDING THE VERY ISSUE AGAINST THE ASSESSEE. OTHE R CASE LAWS (SUPRA) SEEM TO DEAL WITH CLAUSE (D) OF THE STATUTORY PROVISION PER TAINING TO COMMERCIAL AREA PERMISSIBLE IN A RESIDENTIAL PROJECT WHICH IS NOT T HE ISSUE BEFORE US. WE THUS DO NOT DEEM IT APPROPRIATE TO VENTURE INTO A DETAIL ED DISCUSSION. WE ACCORDINGLY ACCEPT ASSESSEES DEDUCTION CLAIM OF RS .2.97 CRORES IN ITA NO.1787/AHD/2011 FOR ASSESSMENT YEAR 2005-06. THIS APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. 11. WE FOLLOW OUR DETAILED DISCUSSION ON THE ISSUE OF COMPLETION OF ASSESSEES RESIDENTIAL PROJECTS IN ALL THE REMAININ G FOR ASSESSMENT YEARS INVOLVING REVENUES AS MANY APPEALS AND ASSESSEES CROSS OBJECTIONS HEREINABOVE. WE THUS FIND NO REASON TO REVERSE LD. CIT(A)S IDENTICAL CONCLUSION EXTRACTED IN PRECEDING PARAGRAPHS HOLDI NG THE ASSESSEE TO HAVE ITA NO.1787/AHD/11 & IT(SS)A NOS. 122 TO 124 & 127 /AHD/13 WITH C.O. NOS. 118 TO 120 & 123/AHD/13 A.YS. 2002- 03 TO 2006-07 (B. NANJI ENTERPRISES LTD.) - 12 - COMPLETED THE RESIDENTIAL PROJECTS BEFORE 31.03.200 8 AND 31.03.2009; AS THE CASE MAY BE (SUPRA). THE REVENUES APPEAL IT(SS)A N OS. 122 TO 124 & 127/AHD/2013 FAIL. SHRI SAKAR SHARMA THEREAFTER SU BMITS THAT THE ASSESSEE NO MORE WISES TO PRESS FOR ITS SUBSTANTIVE GROUNDS IN CROSS OBJECTION IN ALL FOUR ASSESSMENT YEARS CHALLENGING VALIDITY OF SECTION 15 3A PROCEEDINGS. WE APPRECIATE THIS FAIR STAND. THE ASSESSEES CROSS O BJECTIONS CO NO.118 TO 120 & 123/AHD/2013 ARE DISMISSED AS NOT PRESSED AT THIS STAGE. 12. WE THUS ACCEPT ASSESSEES APPEAL ITA NO.1787/AH D/2011 IN PART. THE REVENUES FOUR APPEALS IT(SS)A NOS. 122 TO 124 AND 127/AHD/2013 ARE DISMISSED. THE ASSESSEES CROSS OBJECTIONS CO NOS. 118 TO 120 & 123/AHD/2013 ARE DISMISSED AS NOT PRESSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF MARCH, 2017.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 31/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0