SMT. SUDHA SIMHAL, Bhopal V. THE ITO 1(1), Bhopal

ITA 277/IND/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98981 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Keywords: Retrospective amendment
• Section: 80HHC; 80IB; 12; 10

Judgement Text

SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NOS. 276 & 277/IND/2015 A.YS. 2010-11 AND 2011-12 SMT. SUDHA SIMHAL BHOPAL PAN ACTPS 8702N ::: APPELLANT VS INCOME TAX OFFICER 1(1) BHOPAL ::: RESPONDENT APPELLANT BY SHRI HITESH CHIMNANI RESPONDENT BY SHRI RAM KUMAR YADAV DATE OF HEARING 1.9.2015 DATE OF PRONOUNCEMENT 4 .9.2015 O R D E R PER SHRI B.C. MEENA, AM BOTH THESE APPEALS FILED BY THE ASSESSEE EMANATE FROM THE ORDER OF THE LEARNED CIT(A),BHOPAL-2, DATED 25.3.2015. SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 2 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS A PROPRIETOR OF M/S NIRMAN SUDHA ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT PARN KUTIR PARISAR LOCATED AT GANDHI NAGAR, BHOPAL. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE STARTED CONSTRUCTION WORK ON THE PROJECT AFTE R 1.4.2005 AS THE PERMISSION WAS GRANTED ON 1.4.2005. T HE ASSESSEE CLAIMED THAT THE HOUSING PROJECT WAS COMPLETE ON 28.3.2011. HOWEVER, HE HAS NOT OBTAINED COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY UPTO 31 ST MARCH, 2011 AND THE CONDITION STIPULATED UNDER EXPLANATION (II ) TO SECTION 80IB(10)(A) OF THE ACT IS NOT FULFILLED AND T HE ASSESSEE WAS HELD TO BE NON-ELIGIBLE FOR DEDUCTION U/ S 80IB(10) OF THE ACT. THE LEARNED CIT(A) ALSO CONFIRM ED THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER : - 5.1 IN THE APPELLANTS CASE UNDER CONSIDERATIO N, REQUIRED COMPLETION PROJECT FROM PRESCRIBED LOCAL SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 3 AUTHORITY CERTIFYING THAT THE HOUSING PROJECT UNDER CONSIDERATION HAS BEEN COMPLETED ON OR BEFORE 31.03.2011 HAS NOT BEEN FURNISHED BY THE APPELLANT AT ANY STAGE OF THE PROCEEDINGS. THUS, THE APPELLANT HAS NOT FULFILLED ONE OF THE CONDITIO N LAID DOWN IN CLAUSE (A)(I) OF SECTION 80IB(10) AND THEREFORE NOT FOUND ELIGIBLE FOR DEDUCTION CLAIMED U/S 80IB(10) FOR ANY OF THE YEAR INVOLVED IN APPEAL . THE APPELLANT HAS ALSO ARGUED FOR LIBERAL CONSTRUCTION OF THE SAID PROVISION, THIS BEING A CONCESSIONAL/BENEFICIAL PROVISION AND ON THE GROUND THAT COMPLETION CERTIFICATE HAS NOT BEEN ISSUED BY THE CONCERNED LOCAL AUTHORITY WITHIN SPECIFIED TIME DESPITE SEVERAL REMINDERS. THE PERSUASIVE ARGUMENTS OF THE APPELLANT HAVE BEEN DULY CONSIDERED. HOWEVER, THE UNDISPUTED FACT REMAINS THAT THE LANGUAGE OF EXPLANATION (II) AND SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 4 CLAUSE (A)(I) OF SECTION 80IB(10) IS CLEAR AND UNAMBIGUOUS. SINCE THERE IS NO AMBIGUITY IN THE LANGUAGE, RESORT TO ANY LIBERAL INTERPRETATION IS N OT PERMISSIBLE. LOGIC AND EQUITY ARE NOT DETERMINATIVES OF A CONTROVERSY ARISING FROM A TAXING STATUTE. THE INTENTION OF THE LEGISLATURE IS PRIMARILY TO BE GATHERED FROM THE WORDS USED IN THE STATUTES. IT IS THE CARDINAL RULE OF INTERPRETATION THAT WHERE THE LANGUAGE USED BY THE LEGISLATURE IS CLEAR AND UNAMBIGUOUS THEN THE PLAIN AND NATURAL MEANING OF THE WORDS SHOULD BE SUPPLIED TO THE LANGUAGE USED AND RESORT TO ANY RULE OF INTERPRETATION TO UNFOLD THE INTENTION IT PERMISSIB LE ONLY WHERE THE LANGUAGE IS AMBIGUOUS. THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE WORDS WHICH ARE NOT THERE EVEN IF THERE IS A CAUSUS OMISSUS; TH E DEFECT CAN BE REMOVED ONLY BY LEGISLATURE AND NOT SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 5 BY LIBERAL INTERPRETATION. PLATHORAS OF DECISIONS O F THE HBLE SUPREME COURT AND OTHERS ARE THERE TO SUPPORT THIS PROPOSITION : I) SMT.TARULATA SHYAM VS.CIT(1977) 108 ITR 345(SC) II) KESHAVJI RAVJI & CO. VS. CIT; 183 ITR (SC) III) GURUDEV DATTA VKSSS MARYADIT V. STATE OF MAHARASHTRA, AIR 2001 SC 1980 IV) CIT VS. ANJUM M.H.GHASWALA(2001) 252 ITR (SC) V) PRAKASH NATH KHANNA VS. CIT(2004) 266 ITR (SC) VI) BARDOLIA TEXTILE MILLS VS.ITO (1985) 151 ITR 389 (GUJ) VII) ACIT VS. GOLDMINE SHARES AND FINANCE P. LTD.(2008) 302 ITR (A.T.) 208 5.2 THE ABOVE JUDGMENTS HAVE MADE IT CLEAR BEYOND DOUBT THAT COURTS ARE NOT REQUIRED TO LOOK INTO THE OBJECT OR INTENTION OF THE LEGISLATURE BY RESORTING TO AIDS TO INTERPRETATION WHERE THE LANGUAGE OF THE PROVISIONS IS CLEAR AND UNAMBIGUOUS. CONSEQUENTLY, THE MEANING OF EACH WORD USED BY THE LEGISLATURE IS TO BE GIVEN ITS PLAIN AND NATURAL MEANING AND NO WORD SHOULD BE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 6 IGNORED WHILE INTERPRETING A PROVISION OF A STATUTE . THUS, IT IS CLEAR THAT WHERE THE ASSESSEE DOES NOT FULFIL L THE CONDITIONS LAID DOWN IN PLAIN AND CLEAR LANGUAGE IN A SECTION, THE ASSESSEE SHALL NOT BE ABLE TO HAVE THE BENEFIT OF THE SECTION. THE SUBMISSION OF THE APPE LLANT THAT DEDUCTION U/S 80IB HAS BEEN INCORPORATED WITH A VIEW TO PROVIDE INCENTIVE TO HOUSING PROJECTS AND, THEREFORE, A LIBERAL INTERPRETATION MAY BE GIVEN TO THE PROVISIONS OF THE SECTION AND THE APPELLANT MAY BE ALLOWED DEDUCTION U/S 80IB(10) OF THE ACT AS IT FUL FILS THE OBJECTIVES OF THE PROVISION, IS ALSO NOT TENABL E. IT MAY BE NOTED THAT IT IS ESSENTIAL TO FULFIL THE CON DITIONS LAID DOWN IN THE SECTION TO ENABLE THE ASSESSEE TO HAVE THE BENEFIT OF THAT SECTION. FULFILMENT OF THE OBJE CTIVE OF THE PROVISIONS OF SECTION 80IB(10) WITHOUT FULFILLI NG THE CONDITIONS LAID DOWN IN PLAIN AND UNAMBIGUOUS LANGUAGE SHALL NOT ENABLE THE APPELLANT TO HAVE THE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 7 BENEFIT OF THE SAID SECTION. THE LIBERAL INTERPRETA TION, AS SUGGESTED BY THE APPELLANT, CANNOT BE CONSTRUED TO THESE PLAIN AND UNAMBIGUOUS WORDS TO MITIGATE THE HARDSHIP TO THE APPELLANT. IN THIS REGARD REFERENC E MAY BE MADE TO SOME OF THE DECISION OF THE COURTS. 5.3 THE HON'BLE SUPREME COURT HAD AN OCCASION TO CONSIDER THIS ISSUE IN REGARD TO DEDUCTION U/S 80IB (10) OF THE ACT IN THE CASE OF A.M. MOOSA VS. CIT (2007) 294 ITR 1 (SC) WHEREIN IT WAS OBSERVED AS UNDER :- UNDOUBTEDLY, SECTION 80HHC HAS BEEN INCORPORATED WITH A VIEW TO PROVIDING INCENTIVE TO EXPORT HOUSES. EVEN THOUGH A LIBERAL INTERPRETATION HAS TO BE GIVEN TO SUCH A PROVISION, THE INTERPRETATION HAS TO BE AS PER THE WORDING OF THE SECTION. IF THE WORDING OF THE SECTION IS CLEAR, THEN BENEFITS WHICH ARE NOT AVAILABLE UNDER THE SECTION CANNOT BE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 8 CONFERRED BY IGNORING OR MISINTERPRETING WORDS IN THE SECTION. 5.4 SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE SUPREME COURT IN THE CASE OF PETRON ENGINEEERING CONSTRUCTION (PVT) LTD. VS. CENTRAL BOARD OF DIRECT TAXES (1989) 175 ITR 523 (SC) IN THE CONTEXT OF CLAIM OF DEDUCTION U/S 80-0 WHEREIN THE HON'BLE SUPREME COURT HELD AS UNDER :- FULFILMENT OF THE OBJECTIVES OF THE PROVISIONS OF SECTION 80-0 WITHOUT FULFILING THE CONDITIONS LAID DOWN IN PLAIN AND CLEAR LANGUAGE WILL NOT ENABLE THE ASSESSEE TO HAVE THE BENEFIT OF THE SECTION. IT IS TRUE THAT AN EXEMPTION PROVISION SHOULD BE LIBERALLY CONSTRUCTED BUT THIS DOES NOT MEAN THAT SUCH LIBERAL CONSTRUCTION SHOULD BE MADE EVEN BY DOING VIOLENCE TO THE PLAIN SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 9 MEANING OF SUCH EXEMPTION PROVISION. LIBERAL CONSTRUCTION WILL BE MADE WHEREVER IT IS POSSIBLE TO BE MADE WITHOUT IMPAIRING THE LEGISLATIVE REQUIREMENT AND THE SPIRIT OF THE PROVISIONS 5.5 THE HON'BLE KARNATAKA HIGH COURT IN CASE OF CIT VS. WELCAST STEEL LTD. (2009) 314 ITR 36(KAR) ALSO OBSERVED AS UNDER :- UNDOUBTEDLY SECTION 80HHC HAS BEEN INCORPORATED WITH A VIEW TO PROVIDE INCENTIVE TO EXPORT HOUSES. EVEN THOUGH A LIERAL INTERPRETATION HAS TO BE GIVEN TO SUCH A PROVISION, THE INTERPRETATION HAS TO BE IN ACCORDANCE WITH THE WORDING OF THE SECTION. IF THE WORDING OF THE SECTION IS CLEAR, THEN BENEFITS WHICH ARE NOT AVAILABLE UNDER THE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 10 SECTION CANNOT BE CONFERRED BY IGNORING OR MISINTERPRETING WORDS IN THE SECTION. 5.6 IN THE CASE OF PATIL VIJAY KUMAR AND OTHER VS. UNION OF INDIA 151 ITR 48 (KAR) THE HON'BLE KARNATAKA HIGH COURT OBSERVED THAT WHEN THE MEANING OF WORDS IS CLEAR AND UNAMBIGUOUS, THE COURT HAS TO GIVE EFFECT TO IT WHATEVER BE THE CONSEQUENCES, AS THE COURT HAS NO JURISDICTION TO MITIGATE HARSH CONSEQUENCES OF THE STATUTE, IF ANY. 5.7 THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION OF THE ISSUE, I AM OF THE CONSIDERED OPINION THAT SINCE THE APPELLANT HAS NOT FULFILLED ALL THE CONDITIONS LAID DOWN IN PLAIN AND CLEAR LANGUAGE OF CLAUSE (A)(I) READ WITH THE EXPLANATION (II), THE APPELLAN T IS NOT ELIGIBLE TO HAVE BENEFIT OF DEDUCTION U/S SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 11 80IB(10) OF THE ACT FOR THESE TWO YEARS UNDER APPEAL 6. KEEPING IN VIEW ABOVE, FACTS OF THE CASE AND DECISION OF JURISDICTIONAL HON'BLE ITAT, INDORE, DISALLOWANCE OF CLAIM OF THE APPELLANT OF DEDUCTION U/S 80IB(10) FOR A.Y.2010-11 & A.Y.2011-12 MADE BY THE A.O. FOR RS.11,14,494/- AND RS.50,94,182/- RESPECTIVELY IS FOUND TO BE IN ORDER AND ACCORDINGLY CONFIRMED. 7. IN THE RESULT,BOTH THE APPEALS ARE DISMISSED. 3. BEFORE US, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND :- 1 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE ASSESSEES CASE, AND AS PER LAW, THE LD. CIT(A) ERR ED IN CONFIRMING DISALLOWANCE OF RS.11,14,494/- FOR ASSESSMENT YEAR 2010-11 AND RS.50,94,182/- FOR ASSESSMENT YEAR 2011-12 IN RESPECT OF CLAIM OF SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 12 DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT MADE B Y THE A.O. 4. WE HAVE HEARD BOTH THE SIDES. IN A RECENT JUDGMENT THE HON'BLE JURISDICTIONAL HIGH COURT OF MADHYA PRADE SH IN THE CASE OF CIT VS. M/S GLOBAL REALITY; ITA NO. 40/201 2 AND OTHERS HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER :- 19. THE PROVISION SUCH AS CLAUSE (A) AS AMENDED, SENSU STRICTO, CANNOT BE CONSIDERED AS A NEW CONDITION AND THAT TOO INCAPABLE OF COMPLIANCE. INASMUCH AS, CLAUSE (A) DEALS WITH THE TIME FRAME WITHIN WHICH THE HOUSING PROJECT WAS EXPECTED TO BE COMPLETED, TO GET THE BENEFIT OF THE PRESCRIBED DEDUCTION. NOTABLY, THE AMENDED SECTION 80IB (10) (A) EXTENDS THE BENEFIT EVEN TO THE HOUSING PROJECT S APPROVED BY THE LOCAL AUTHORITY BEFORE 31.03.2007, INSTEAD OF 31.03.2005 - AS WAS PROVIDED IN THE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 13 UNAMENDED PROVISION. THEREFORE, NECESSITY WAS FELT TO MAKE DISTINCTION BETWEEN THE TWO CLASSES OF HOUSING PROJECTS FOR SPECIFYING THE TIME FRAME FOR COMPLETION. THE ONE APPROVED BY THE LOCAL AUTHORITY BEFORE 1ST DAY OF APRIL, 2004; AND THE OTHER CLASS OF HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY ON O R AFTER 1ST APRIL 2004 TILL 31.03.2007. IN EITHER CAS E, THE TIME FRAME FOR COMPLETION OF PROJECT HAS BEEN PRESCRIBED AS FOUR YEARS. IN THAT, THE PROJECT APPROVED BEFORE 1ST APRIL, 2004 HAS BEEN GIVEN TIME TO COMPLETE BEFORE 31.03.2008; AND IN THE LATTER CATEGORY I.T.A.NOS.40/2012, 36/2012 & 35/2012 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. 20. THUS UNDERSTOOD, SIMILAR TIME FRAME FOR COMPLETION OF HOUSING PROJECT HAS BEEN GIVEN TO BOT H SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 14 CLASS OF HOUSING PROJECTS. MOREOVER, THE EXPLANATIO N BELOW CLAUSE (A), IN PARTICULAR (II), APPLIES TO BO TH CLASS OF HOUSING PROJECTS UNIFORMLY. IT POSTULATES THAT 'THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING PROJECT' SHALL BE TAKEN TO BE 'THE DATE ON WHICH COMPLETION CERTIFICATE' IN RESPECT OF SUCH HOUSING PROJECT 'IS ISSUED BY THE LOCAL AUTHORITY'. IF EXPLANATION (II) IS SUPERIMPOSED ON THE EXPRESSION 'COMPLETES SUCH CONSTRUCTION' IN CLAUSE (A) OF SECTION 80IB(10) , IT WOULD MEAN THAT THE HOUSING PROJECTS COMMENCED ON OR AFTER 01.10.1998 MUST POSSESS COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY ON OR BEFORE THE CUT OFF DATE, AS MAY BE APPLICABLE - TO BECOME ELIGIBLE FOR TAX DEDUCTION. AS PER EXPLANATION (II), THEREFORE, THE SYNONYM OF 'COMPLETES SUCH CONSTRUCTION' WOULD BE THE DATE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 15 AUTHORITY. NO MORE AND NO LESS. THUS, ENOUGH INDICATION AND ALSO SUFFICIENT TIME HAS I.T.A.NOS.40/2012, 36/2012 & 35/2012 BEEN GIVEN TO BOTH THE CLASS OF HOUSING PROJECTS TO FULFILL TH AT CONDITION. THE PROVISION IS IN THE NATURE OF LIMITI NG THE BENEFIT OF DEDUCTION TO THE SPECIFIED HOUSING PROJECTS, AND NOT TO THOSE WHO FAIL TO FULFILL THE REQUIREMENT OF COMPLETION OF CONSTRUCTION IN TIME FRAME SPECIFIED FOR THE RESPECTIVE CATEGORY OF HOUS ING PROJECTS. THIS HAS BEEN DONE IN LARGER PUBLIC INTER EST - TO ENSURE THAT THE BENEFIT IS GIVEN ONLY TO SUCH PROJECTS WHO WOULD FURTHER THE GOAL OF PROVIDING LO W COST ECONOMIC HOUSES TO THE DESERVING PERSONS IN REASONABLE TIME. 21. CONCEDEDLY, IT IS WITHIN THE DOMAIN OF PARLIAME NT TO EXTEND BENEFIT OR PRIVILEGE TO CERTAIN CLASS OF PERSONS AND ALSO TO WITHDRAW THE SAME FOR JUST SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 16 REASONS. THAT CANNOT BE QUESTIONED, UNLESS SHOWN TO BE UNCONSTITUTIONAL IN FORM OR ITS SUBSTANCE. IT WA S THUS OPEN TO THE PARLIAMENT, TO PROVIDE FOR A CUT O FF DATE FOR COMPLETION OF THE HOUSING PROJECTS, AS A CONDITION PRECEDENT TO AVAIL BENEFIT OF DEDUCTION. IN THE PAST, SUCH STIPULATION WAS IN PLACE, BUT, LATER ON, IT WAS DONE AWAY WITH. HOWEVER, BY AMENDMENT WHICH CAME INTO EFFECT FROM 1ST APRIL, 2005, THE CONDITION FOR COMPLETION OF PROJECT WITHIN SPECIFIE D TIME HAS I.T.A.NOS.40/2012, 36/2012 & 35/2012 BEEN REINTRODUCED, WHILE GIVING SUFFICIENT TIME (FOUR YEARS) TO THE ASSESSEE TO COMPLY FOR BEI NG ENTITLED TO GET DEDUCTION. 22. A PRIORI, IT IS NOT A CASE OF IMPOSING NEW CONDITION, MUCH LESS, WITH RETROSPECTIVE EFFECT AS HAS BEEN ARGUED BEFORE US; UNLIKE INTRODUCTION OF NEW CONDITION IN THE SHAPE OF CLAUSE (D) - WHICH OBVIOU SLY SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 17 COULD BE APPLIED ONLY PROSPECTIVELY, AS HELD BY THE SUPREME COURT IN THE AFORESAID DECISIONS. CLAUSE (A ) STANDS ON A COMPLETELY DIFFERENT PEDESTAL. IT CANNO T BE TREATED AS A NEW CONDITION LINKED TO THE APPROVA L AND CONSTRUCTION OR HAVING RETROSPECTIVE EFFECT AS SUCH. FOR, IT GIVES AT LEAST FOUR YEARS' TIME FRAME TO BOTH CLASS OF HOUSING PROJECTS; TO WIT, HOUSING PROJECTS APPROVED PRIOR TO 1ST APRIL, 2004 OR AFTER 1ST APRIL, 2004. THE FOUR YEARS PERIOD OBVIOUSLY HAS PROSPECTIVE EFFECT, ALBEIT LIMITING THE PERIOD FOR COMPLETION OF THE PROJECT, TO AVAIL OF THE BENEFIT. FOUR YEARS' TIME FRAME FOR COMPLETION OF THE PROJECT, BY NO STANDARDS, CAN BE SAID TO BE UNREASONABLE, HARSH, ABSURD OR INCAPABLE OF COMPLIANCE. IT IS ALSO NOT A CASE OF WITHDRAWAL OF VESTED RIGHT OF THE DEVELOPER , AS SUCH. NO DEVELOPER CAN CLAIM VESTED RIGHT TO COMPLETE THE HOUSING PROJECT I.T.A.NOS.40/2012, SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 18 36/2012 & 35/2012 IN INDEFINITE PERIOD. THE RIGHT ARISING FROM SECTION 80IB , IS COUPLED WITH THE OBLIGATION OR DUTY TO COMPLETE THE PROJECT IN SPECI FIED TIME FRAME. IF THE DEVELOPER DOES NOT COMPLETE THE HOUSING PROJECT WITHIN SPECIFIED TIME, WILL NOT REC EIVE THAT BENEFIT. THERE IS NO COMPULSION ON HIM TO COMPLETE THE PROJECT IN FOUR YEARS. NOTABLY, EVEN T HE APPROVALS TO THE CONSTRUCTION OF HOUSING PROJECT GRANTED BY THE LOCAL AUTHORITY SPECIFY THE DATE WITHIN WHICH THE CONSTRUCTION MUST BE COMPLETED, AS PER THE TIME FRAME SPECIFIED IN THE PERMISSION. IF THE PROJECT IS NOT COMPLETED WITHIN THE STIPULATED TIME , THE DEVELOPER IS FREE TO GET THAT PERIOD RENEWED OR EXTENDED FROM THE LOCAL AUTHORITY AS PER THE APPLICABLE RULES AND REGULATIONS. THE PROVISION FOR CLAIMING TAX DEDUCTION FROM PROFITS, CAN CERTAINLY PRESCRIBE FOR REASONABLE CONDITIONS AND MORE SO TIM E SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 19 FRAME FOR COMPLETION OF THE PROJECT, IN LARGER PUBL IC INTEREST. 23. SUFFICE IT TO OBSERVE THAT, NO COMPARISON CAN B E DRAWN BETWEEN THE NEW CONDITION PRESCRIBED IN TERMS OF CLAUSE (D) AND THAT OF CLAUSE (A). CONDITI ON IN CLAUSE (A), NEITHER OPERATES RETROSPECTIVELY NOR CA N BE SAID TO BE ABSURD, UNJUST OR EXPECTING I.T.A.NOS.40/2012, 36/2012 & 35/2012 THE ASSESSEE TO COMPLY WITH SOMETHING WHICH IS IMPOSSIBLE TO ACHIEVE. 24. THE NEXT QUESTION THAT NEEDS TO BE ANSWERED, IS , WHETHER THE STIPULATION IN SECTION 80IB(10)(A) CAN BE SAID TO BE DIRECTORY. CONSIDERING THE PRODIGIOUS BENEFIT OFFERED IN TERMS OF SECTION 80IB TO THE ASSESSEE (HUNDRED PER CENT OF THE PROFITS DERIVED I N ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR); SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 20 AND THE PURPOSE UNDERLYING THE SAME - WHICH IS INTE R ALIA BURDEN ON THE PUBLIC EXCHEQUER DUE TO WAIVER O F COMMENSURATE REVENUE - THE STIPULATION FOR OBTAININ G COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BEFO RE THE CUT OFF DATE, MUST BE CONSTRUED AS MANDATORY. THE FACT THAT COMPLIANCE OF THAT CONDITION IS DEPENDENT ON THE MANNER IN WHICH THE PROPOSAL IS PROCESSED BY THE LOCAL AUTHORITY, THE PROVISION CANNOT BE CONSTRUED AS A DIRECTORY REQUIREMENT. IT IS A SUBSTANTIVE PROVISION MANDATING ISSUANCE OR GRANT OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY BEF ORE THE CUT OFF DATE OR SPECIFIED TIME, AS A PRECONDITI ON TO GET THE BENEFIT OF TAX DEDUCTION. ELSE, IT WILL THE N BE OPEN TO THE ASSESSEE TO RELY ON OTHER CIRCUMSTANCES OR I.T.A. NOS. 40/2012, 36/2012 & 35/ 2012 EVIDENCE TO PLEAD THAT THE HOUSING PROJECT IS COMPLETE - REQUIRING ENQUIRY INTO THOSE MATTERS BY THE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 21 TAX AUTHORITIES - SANS A COMPLETION CERTIFICATE ISS UED BY THE LOCAL AUTHORITY IN THAT BEHALF. A PRIORI, THE ARGUMENT OF SUBSTANTIAL COMPLIANCE IS SUFFICIENT, WOULD LEAD TO UNCERTAINTY ABOUT THE DATE OF COMPLETION OF THE PROJECT WHICH IS THE HALLMARK FOR AVAILING OF THE BENEFIT OF TAX DEDUCTION. ONLY WITH THIS INTENT THE LEGISLATURE IN ITS WISDOM HAS PREDICATED THAT, 'THE COMPLETION OF CONSTRUCTION' O F THE HOUSING PROJECT IS TAKEN TO BE 'THE DATE ON WHI CH' THE COMPLETION CERTIFICATE 'IS ISSUED' BY THE LOCAL AUTHORITY. TO INTERPRET IT TO INCLUDE AN EX POST FA CTO CERTIFICATE OR SUCH CERTIFICATE ISSUED BY THE LOCAL AUTHORITY AFTER THE CUT OFF DATE, WOULD NOT ONLY RE SULT IN REWRITING OF THE EXPRESS PROVISION AND RUN CONTR ARY TO THE UNAMBIGUOUS POSITION PRONOUNCED IN THE SECTION, BUT ALSO DOING VIOLENCE TO THE LEGISLATIVE INTENT. FOR, EXPLANATION (II) WILL THEN HAVE TO BE READ SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 22 AS 'DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSI NG PROJECT SHALL BE TAKEN TO BE THE DATE AS CERTIFIED BY THE LOCAL AUTHORITY IN THAT BEHALF', IRRESPECTIVE OF THE DATE OF ISSUANCE OF SUCH CERTIFICATE BY THE I.T.A.NOS.40/2012, 36/2012 & 35/2012 LOCAL AUTHORITY. INDEED, IN A GIVEN CASE IF THE ASSESSEE IS ABLE TO SUBSTANTIATE THAT THE COMPLETION CERTIFICAT E 'WAS IN FACT ISSUED' BY THE LOCAL AUTHORITY BEFORE T HE CUT OFF DATE, BUT COULD NOT BE PRODUCED BY HIM WITH IN TIME DUE TO REASONS BEYOND HIS CONTROL, THE ARGUMEN T OF SUBSTANTIAL COMPLIANCE OF THE PROVISION CAN BE TESTED. ANY OTHER INTERPRETATION WOULD RESULT NOT O NLY IN UNCERTAINTY (IN FINALIZATION OF ASSESSMENT PROCEEDINGS DUE TO NON-ISSUANCE OR DELAYED ISSUANCE OF SUCH CERTIFICATE BY THE LOCAL AUTHORITY AND PRONE TO MANIPULATIONS AT THE END OF THE LOCAL AUTHORITY); BUT ALSO HAVE TO YIELD TO THE SUBJECTIV E SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 23 SATISFACTION OF THE ASSESSING AUTHORITY AND OF INVESTING WIDE DISCRETION IN THAT AUTHORITY, WHICH, EVENTUALLY, MAY ONLY END UP IN GETTING EMBROILED IN LITIGATION. IF THE ASSESSEE HAS FAILED TO COMPLY WI TH THE CONDITION OF OBTAINING COMPLETION CERTIFICATE F ROM THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, HE MUST TAKE THE CONSEQUENCE THEREFOR AND OF DENIAL OF THE BENEFIT OF TAX DEDUCTION OFFERED TO HIM ON THAT COU NT. 25. WE CANNOT BE OBLIVIOUS OF THE FACT THAT THE MUNICIPAL LAWS OF DIFFERENT STATES ARE NOT UNIFORM IN RESPECT OF PROCEDURE FOR I.T.A.NOS.40/2012, 36/2012 & 35/2012 ISSUANCE OF COMPLETION CERTIFICATE. TO WIT, IN SOME STATES, THE DISPENSATION PROVIDED IS T O ISSUE PARTIAL OR FULL OCCUPATION CERTIFICATE; AND THEREAFTER ISSUE COMPLETION CERTIFICATE AFTER REMOV AL OF ALL THE DEFICIENCIES POINTED OUT BY THE LOCAL AUTHORITY. IN SOME STATES, THE MUNICIPAL LAW MAY SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 24 PROVIDE FOR ISSUING PARTIAL OR FULL COMPLETION CERTIFICATE. THE REQUIREMENT OF COMPLETION CERTIFIC ATE ISSUED BY THE LOCAL AUTHORITY, AS ENVISAGED IN SECTION 80IB(10)(A) OF THE INCOME TAX ACT, WHICH IS A CENTRAL ENACTMENT DEALING WITH THE SPECIAL SUBJECT OF TAXATION, HOWEVER, IS, OF ONLY ONE CERTIFICATE - WHICH IS FULL COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE. THAT IS TO LEND CREDENCE TO THE FACTUM OF COMPLETION OF THE ENTIRE HOUSING PROJECT IN ALL RESPECTS AS PER THE APPROVAL GRANTED BY THE LOCAL AUTHORITY. IT CAN BE SAFELY ASSUMED THAT THE LEGISLATURE WAS CONSCIOUS O F THIS POSITION, FOR WHICH, EXPRESS PROVISION HAS BEE N MADE AS TO THE MEANING OF THE DATE OF COMPLETION OF THE HOUSING PROJECT LINKED TO THE 'DATE ON WHICH' COMPLETION CERTIFICATE 'IS ISSUED' BY THE 'LOCAL SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 25 AUTHORITY', AS PREDICATED IN EXPLANATION (II) THEREUNDER. 26. WE ACCORDINGLY HOLD 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 TH E CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80IB ( 10) READ WITH EXPLANATION (II) THEREUNDER. WE REJECT TH E ARGUMENT OF THE ASSESSEE THAT THE EFFECT OF AMENDED CLAUSE (A) OF SUB-SECTION 10 OF SECTION 80IB, WHICH HAS COME INTO FORCE WITH EFFECT FROM 1 ST APRIL, 2005 ,HAS RETROSPECTIVE EFFECT OR THAT IT IS UNJUST IN A NY MANNER OR INCAPABLE OF COMPLIANCE AT ALL. SIMILARLY , THE REQUIREMENT OF SECURING COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DA TE IS NOT DIRECTORY, IN VIEW OF THE EXPRESS PROVISION IN SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 26 SECTION 80IB(10)(A) AND THE EXPLANATION (II) THEREUNDER. THE COMPLETION CERTIFICATE GRANTED BY T HE LOCAL AUTHORITY MUST BEAR THE DATE OF HAVING BEEN ISSUED BEFORE THE CUT OFF DATE. 27. THAT TAKES US TO THE ARGUMENT OF THE ASSESSEE THAT THE STIPULATION IN SECTION 80IB(10)(A ) OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, CANNOT BE APPLIE D IN THE CASE OF ASSESSEE FOLLOWING THE WORK IN PROGRESS ACCOUNTING METHOD. IN OUR OPINION, THE PROVISION IN THE FORM OF SECTION 80IB (10)(A), APPL IES UNIFORMLY TO ALL THE ASSESSEES - BE IT FOLLOWING WO RK IN PROGRESS ACCOUNTING METHOD OR OTHERWISE. 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 SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 27 COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, AS MAY BE APPLICABLE IN HI S CASE. IN OTHER WORDS, IF THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1 ST APRIL, 2004, HE MUST SUBMIT COMPLETION CERTIFICATE ISSUED BY THE AUTHORITY HAVING BEEN ISSUED BEFORE THE 31 ST MARCH, 2008. WHEREAS, IN THE CASE OF HOUSING PROJECT APPROVED ON OR AFTER 1 ST 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. IF THIS CONDITION I S NOT FULFILLED, THE ASSESSEE WHO MAINTAINS WORK IN PROGRESS ACCOUNTING METHOD AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10)(A) MUST SUFFER THE SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 28 CONSEQUENCE OF DISALLOWANCE OR WITHDRAWAL OF THE BENEFIT CLAIMED BY HIM ON THAT COUNT. 28. ACCORDINGLY, THESE APPEALS SUCCEED. THE IMPUGNED JUDGMENT OF THE TRIBUNAL IS SET ASIDE; AND IN THE FACTS OF THE PRESENT CASE, THE DECISION OF THE ASSESSING OFFICER TO DISALLOW DEDUCTION UNDER SECTION 80IB(10)(A) OF THE INCOME TAX ACT IS UPHELD . NO ORDER AS TO COSTS. 5. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDER ED THE SWEEP OF AMENDED CLAUSE (A) OF THE PROVISION UNDER SUB-SECTION (10) OF SECTION 80IB OF THE ACT AND HELD THAT THE PROVISIONS OF CLAUSE (A), AS AMENDED, SEN SUSTRICTO CAN NOT BE CONSIDERED AS NEW CONDITION AND THAT TOO INCAPABLE OF COMPLIANCE. THE CLAUSE DEALS WITH THE TIME FRAME WITHIN WHICH THE HOUSING PROJECT WAS EXPECTED TO BE COMPLET ED TO GET THE BENEFIT OF PRESCRIBED DEDUCTION. BEFORE US, THE LEARNED AR FURNISHED A COPY OF COMPLETION CERTIFICATE DATED SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 29 1.9.2015. VERACITY OF THE SAME HAS NOT BEEN VERIFIED. FURTHER, EVEN IN SUCH SITUATION ALSO, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. THE HON'BLE HIGH COURT HAS HELD THAT ISSUANCE OF COMPLETION CERTIF ICATE AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT MENTI ONING IN THE DATE OF THE COMPLETION OF PROJECT BEFORE CUT OFF DATE, DOES NOT FULFIL THE CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80IB(10) READ WITH EXPLANATION 2 THEREUNDER. IN VIEW OF THIS FINDING, WE FIND NO MERIT IN THE APPEAL OF THE AS SESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 4 TH SEPTEMBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 4 TH SEPTEMBER, 2015 DN/- SMT. SUDHA SIMHAL ITA 276 AND 277/IND/2015 30