M/s. Sky Builders & Developers, Bhopal V. The I.T.O., Bhopal

ITA 255/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53874 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Retrospective amendment
• Section: 80IB

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.255/IND/2010 A.Y. 2006-07 M/S. SKY BUILDERS & DEVELOPERS, BHOPAL PAN AAXFS 6662 H APPELLANT VS ITO, WARD-1(1), BHOPAL RESPONDENT APPELLANT BY : SHRI ARUN JAIN, CA RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 16.8.2011 DATE OF PRONOUNCEMENT : .8.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A)-I, BHOPAL, DATED 2.2.2010 ON THE GRO UND THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIRST APPELLATE AUTHORITY HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION 2 OF RS.10,50,530/- U/S 80IB(10) OF THE ACT BY WRONGL Y HOLDING THAT THE ASSESSEE IS NOT INVOLVED IN THE DEVELOPMEN T AND CONSTRUCTION OF THE HOUSING PROJECT AND FURTHER ERR ED IN HOLDING THAT THE ASSESSEE DID NOT COMPLETE THE HOUSING PROJ ECT UP TO 31.3.2008. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI ARUN JAIN, LD. COUNSEL FOR ASSESSEE AND SHRI ARUN D EWAN, LD. SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSE SSEE IS THAT THE ASSESSEE DULY COMPLETED THE PROJECT WITHIN PRES CRIBED LIMIT AND THE ASSESSEE IS DULY INVOLVED IN DEVELOPMENT AN D CONSTRUCTION OF THE HOUSING PROJECT WHICH WAS COMPL ETED BEFORE 31.3.2008. ON A QUESTION FROM THE BENCH, WHETHER TH E COMPLETION CERTIFICATE HAS BEEN ISSUED TO THE ASSES SEE BY THE MUNICIPAL AUTHORITIES, IT WAS FAIRLY AGREED BY THE LD. COUNSEL FOR ASSESSEE THAT TILL DATE, THE SAME HAS NOT BEEN ISSU ED. ON THE OTHER HAND, THE LD. SR. DR SHRI ARUN DEWAN STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT FIRSTLY, THE ASSESSEE IS NOT INVOLVED IN DEVELOPMEN T AND 3 CONSTRUCTION OF THE HOUSING PROJECT AND SECONDLY, T HE REQUIRED COMPLETION CERTIFICATE HAS NOT BEEN ISSUED TO THE A SSESSEE TILL DATE, THEREFORE, THE IMPUGNED ORDER WAS STRONGLY DE FENDED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSES SEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, DECLARED N IL INCOME IN ITS RETURN FILED ON 23.10.2006 AFTER CLAIMING DEDUC TION OF RS.10,50,530/-, U/S 80IB(10) OF THE I.T. ACT. HOWEV ER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE SOLD THE PLOTS OF LAND TO THE CUSTOMERS BY REGISTERING THE SALE DEEDS, CON SEQUENTLY, SUCH CUSTOMERS BECAME ABSOLUTE OWNERS OF SUCH PLOTS AND THEREAFTER THE ASSESSEE ACTED AS CONTRACTOR ONLY, C ONSEQUENTLY, HE DISALLOWED THE DEDUCTION CLAIMED U/S 80IB(10) OF THE ACT. THE ASSESSMENT ORDER WAS CARRIED IN APPEAL BEFORE T HE LD. CIT(A), WHEREIN, THE ASSESSMENT ORDER WAS AFFIRMED WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. ADMITTEDLY, T HE PROJECT WAS TO BE COMPLETED BEFORE 31.3.2008 AND TILL DATE, NO COMPLETION CERTIFICATE HAS BEEN ISSUED TO THE ASSES SEE. IN VIEW 4 OF THESE FACTS, WE ARE REPRODUCING HEREUNDER SEC. 8 0IB(10) SO THAT THE ISSUE CAN BE ANALYSED IN A PROPER PERSPECT IVE. [(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31ST DAY OF MARCH, 6A [ 2008 ] BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PR OFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESS MENT YEAR FROM SUCH HOUSING PROJECT IF, ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AN D COMPLETES SUCH CONSTRUCTION, ( I ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 20 08; ( 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, WITHIN 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, ( I ) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUC H HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROV ED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUS ING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; ( II ) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE O N WHICH THE COMPLETION CERTIFICATE 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 FRAMED BY THE CENTR AL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN F ORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BE HALF; ( C ) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT- UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH 5 RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DEL HI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND A ND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; 6B [ AND ] ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREG ATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAN D SQUARE FEET, WHICHEVER IS LESS.] THE FOLLOWING CLAUSES (E) AND (F) SHALL BE INSERTED AFTER CLAUSE (D) OF SUB-SECTION (10) OF SE CTION 80-IB BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4- 2010 : ( E ) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND ( F ) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSI NG PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS , NAMELY: ( I ) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL, ( II ) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA, ( III ) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. 6C [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). ] 4. IF SUB-CLAUSE (2) TO EXPLANATION IS ANALYSED WIT H THE FACTS OF THE PRESENT APPEAL, IT CLEARLY PROVIDES TH AT THE DATE OF ISSUE OF COMPLETION CERTIFICATE, BY THE LOCAL AUTHO RITY, SHALL BE THE DATE OF COMPLETION OF THE PROJECT. HOWEVER, AS ADMITTED BY 6 THE LD. COUNSEL FOR ASSESSEE AND ALSO IN VIEW OF TH E LETTER DATED 15.12.2008, ISSUED TO THE LD. ASSESSING OFFIC ER, NO CERTIFICATE WAS ISSUED TO THE ASSESSEE, THEREFORE, IT CAN BE CLEARLY INFERRED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. SO FAR AS THE RELIANCE OF THE LD. COUNSEL FOR ASSESSEE IN THE CASE OF M/S. D.K. CONST RUCTION VS. ITO (ITA NO.243/IND/2010, ORDER DATED 6.12.2010) PA SSED BY THE INDORE BENCH, IS CONCERNED, FIRSTLY, WE FIND TH AT IN THIS CASE, THE COMPLETION CERTIFICATE WAS ISSUED TO THE ASSESS EE CLEARLY MENTIONING THE DATE OF THE PROJECT BUT IN THE PRESE NT APPEAL, EVEN TILL DATE, NO SUCH CERTIFICATE WAS ISSUED AND SECONDLY, THE ASSESSEE SOLD THE PLOTS TO THE RESPECTIVE CUSTOMERS BY REGISTERING A SALE DEED AND THEREAFTER THE ASSESSEE CONSTRUCTED THE BUILDING ON AGREED PRICE, THEREFORE , THE ASSESSEE ACTED AS BUILDING CONTRACTOR AND NOT AS A DEVELOPER, CONSEQUENTLY, THIS DECISION MAY NOT HELP THE ASSESS EE. SOMETIMES, THE PROCESS OF ISSUANCE OF CERTIFICATE M AY TAKE TIME, THEREFORE, FOR CLAIMING ELIGIBILITY OF DEDUCT ION AS PER EXPLANATION (2) OF SEC. 80IB(10) (A) OF THE ACT, TH E CRUCIAL 7 ASPECT IS THE DATE MENTIONED IN THE LETTER CERTIFYI NG COMPLETION OF PROJECT. FOR CLAIMING DEDUCTION U/S 80IB(10), ON THE PROFITS DERIVED FROM A HOUSING PROJECT, THE ASSESSEE HAS TO FULFIL ALL THE FOUR CONDITIONS LAID DOWN IN THE CLAUSES (A), (B), (C) AND (D) OF SUB-SEC. (10). IN THE CASE OF THE ASSESSEE, THE HOU SING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY ON 24.11.2003 ( I.E. BEFORE 1.4.2004), CONSEQUENTLY, THE ASSESSEE WAS TO COMPLE TE THE CONSTRUCTION ON OR BEFORE 31.3.2008. IN SUB-CLAUSE (II) TO EXPLANATION, THE WORD USED IS SHALL AND NOT MAY BEFORE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHO RITY, THEREFORE, IT CAN BE SAID THAT THE ASSESSEE HAS NOT FULFILLED THE REQUIRED CONDITIONS LAID DOWN IN CLAUSE (A) (I) OF SEC. 80IB (10). EVEN OTHERWISE, IT IS WELL SETTLED PRINCIPLE IN LAW THAT THE COURT CANNOT READ ANYTHING INTO A STATUTORY PROVISION WHERE THE LANGUAGE IS CLEAN AND UNAMBIGUOUS BECAUSE A STATUTE IS AN ADDIC T OF LEGISLATURE. THE LANGUAGE EMPLOYED IN STATUTE IS TH E DETERMINATIVE FACTOR OF LEGISLATIVE INTENT. OUR VIE W IS FORTIFIED BY THE DECISION FROM HONBLE APEX COURT IN THE CASE OF PRAKASH NATH KHANNA VS. CIT (266 ITR 1) (SC). 8 AMENDMENT/SUBSTITUTION WAS MADE BY THE FINANCE (NO. 2) ACT 2004 W.E.F. 1.4.2005. PRIOR TO ITS SUBSTITUTION SUB -SEC. (10) AS AMENDED BY THE FINANCE ACT 2000, W.E.F. 1.4.2001 AN D FINANCE ACT 2003 WITH RETROSPECTIVE EFFECT FROM 1.4.2002, R EAD AS UNDER: (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY 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 1 ST DAY OF OCTOBER, 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE, AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES 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. 5. SUBSTITUTION WAS FURTHER MADE BY THE FINANCE (N O.2) ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.2009 AN D INSERTION BY THE FINANCE ACT 2010 W.E.F. 1.4.2010 AS PER WHIC H THE 9 ASSESSEE IS SUPPOSED TO COMPLETE THE PROJECT WITHIN THE SPECIFIED TIME FORM THE END OF THE FY IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY AND THE DATE OF COMPLETION OF CONSTRUCTION SHALL BE TAKEN TO BE THE DATE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY IN RESPECT OF SUCH HOUSING PROJECT. HOWEVER, IN THE CA SE OF THE ASSESSEE, EVEN TILL TODAY, NO COMPLETION CERTIFICAT E WAS ISSUED TO THE ASSESSEE, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). IT IS AFFIRMED. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2011. (R.C.SHARMA) (JOGINDER SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 .8.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYAS!