M/s. C.I. Builders Pvt. Ltd., Bhopal V. The A..C.I.T., Bhopal

ITA 302/IND/2010

• Counselvise Citation: 30222714 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: H P VERMA; GIRISH AGARWAL S
• Keywords: Reopening of assessment; Depreciation; Retrospective amendment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCC6163G I.T.A.NO S . 299 TO 305/IND/2010 A.Y S . : 2001 - 02 TO 2007 - 08 M/S. C.I.BUILDERS PRIVATE LIMITED, ACIT, 1(2), BHOPAL E - 4/40, ARERA COLONY, VS BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI H.P.VERMA AND SHRI GIRISH AGARWAL, ADVOCATES DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 30 . 1 1 .201 2 DATE OF PRONOUNCEMENT : 31 . 01 .201 2 O R D E R PER BENCH THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08, IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFI CER U/S 143(3)/147 OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. GRIEVANCE OF THE ASSESSEE IN ALL THE YEARS PERTAIN S TO VALIDITY OF REOPENING OF ASSESSMENT U/S 147, WHEN T HE ASSESSMENT HAS BEEN COMPLETED U/S 143(1)/143(3) AND FOUR YEARS HAVE BEEN EXPIRED. 3. ON MERITS, THE ASSESSEE HAS CHALLENGED THE WITHDRAW AL OF DEDUCTION U/S 80IB(10) FOR WHICH FACTS IN BRIEF ARE THAT FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE FILED RET URN OF INCOME ON 30 TH OCTOBER, 2001, WHICH WAS PROCESSED U/S 143(1) ON 13.11.2002. THEREAFTER, NOTICE WAS ISSUED U/S 143(2) DATED 12.8.2004 ON THE GROUND THAT DEDUCTION U/S 80IB(10) SHALL NOT BE ALLOWED FOR CALCULATION OF BO OK PROFIT U/S 115JB. THEREAFTER, AN ORDER WAS PASSED U/S 147 READ WITH SECTION 143(3) DATED 6.3.2006 DISALLOWING DEDUCTION U/S 80IB(10), WHILE COMPUTING BOOK PROFIT. 4. THEREAFTER, AGAIN NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 27.3.2008. CONTENTION OF THE ASSESSEE W AS THAT REOPENING WAS INITIATED AFTER FOUR YEARS FROM THE E ND OF RELEVANT ASSESSMENT YEARS, THEREFORE, THE SAME WAS NOT JUSTIFIED. THE LD. CIT(A) CONFIRMED THE ACTION OF A SSESSING OFFICER NOT ONLY WITH REGARD TO REOPENING OF ASSESS MENT BUT -: 3: - 3 ALSO WITH REGARD TO DISALLOWANCE OF CLAIM OF DEDUCT ION U/S 80IB(10). THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CARRIED OUT HOUSING PROJECT UNDER THE NAME AND STYLE OF C.I.HOM ES. THE PROJECT WAS ON THE LAND BELONGING TO MUNICIPAL CORP ORATION AND AGREEMENT WAS DULY EXECUTED BY ASSESSEE WITH MU NICIPAL CORPORATION WHEREIN PROJECT WAS ALLOTTED TO ASSESSE E AS HOUSING PROJECT. WHILE DECLINING CLAIM OF DEDUCTION THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS SOLD ONLY STRUCTURE AND HAS NOT DEBITED ANY EXPENSES TOWARDS SANITARY FITTINGS, ELECTRICAL FITTINGS AND CONSTRUCTION OF F LOOR ETC. THE ASSESSING OFFICER ALSO STATED THAT NO OPENING AND C LOSING STOCK HAS BEEN DISCLOSED. FROM THE RECORD, WE FOUND THAT THE OBSERVATION OF THE ASSESSING OFFICER WAS FACTUALLY INCORRECT IN SO FAR AS P. B-13 FILED BEFORE THE LOWER AUTHORITIE S CLEARLY SHOWS OPENING WORK IN PROGRESS AND CLOSING WORK IN PROGRESS. FURTHER, SCHEDULE J PLACED AT P.B.17 SHOWS EXPENSES INCURRED -: 4: - 4 ON BRICK, CEMENT, WOOD AND MISC. MATERIAL PURCHASED BY THE ASSESSEE. 6. WITH REGARD TO VALIDITY OF REOPENING, IT WAS CONTEN DED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THERE WA S NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 7. THE DETAILED CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WITH REGARD TO VALIDITY OF REOPENING WAS AS UNDER :- THE ASSESSEE FILED RETURN U/S. 139 ALONGWITH AUDITED ACCOUNTS IN FORM NO. 3CA AND 3CD AND REPORT IN FORM NO. 10CCB. IT CLAIMED DEDUCTION U/S. 80IB(LO). THE DETAILS OF PROJECT WERE GIVEN. LD AO INITIATED FIRST REASSESSMENT PROCEEDINGS ON THE GRO UND OF DISALLOWANCE OF DEDUCTION U/S. 80IB(10), ALTHOUG H IN CONTEXT OF SECTION 115JB. AFTER DUE INQUIRY, THE FI RST REASSESSMENT ORDER WAS PASSED U/S. 147R/W SECTION 143(3). (B) PROVISO TO SECTION 147 STATES THAT WHERE ANY ASSESSMENT U/S. 143(3) 'OR THIS SECTION' HAS BEEN -: 5: - 5 MADE. IN PRESENT CASE, ALREADY AN ASSESSMENT UNDER 'THIS SECTION' HAS BEEN MADE. THUS, REOPENING CANNO T BE INITIATED UNLESS THERE IS A FAILURE ON PART OF ASSESSEE TO DISCLOSE TRUE AND CORRECT INCOME. (C) IN PRESENT CASE, ALL FACTS REGARDING DEDUCTION U/S. 801B(10) WERE ALREADY GIVEN IN THE RETURN. THERE WA S NO FAILURE ON PART OF ASSESSEE TO DISCLOSE TRUE AND CORRECT INCOME. IT WAS ONLY AFTER 4 YEARS, ID AO ON MERE CHANGE OF OPINION, INITIATED THE REASSESSMENT PROCEEDINGS. REASSESSMENT IS NOT VALID. IPCA LABORATORIES, 251 ITR 416 (BAM.); BHOR INDUSTRIES LTD., 267 ITR 161 (BOM) ICICI BANK LTD., 268 ITR 203 (BOM) ICICI BANK LIMITED , 268 ITR 203 (BOM) IN ASSOCIATED INDUSTRY (KOTAH ) LTD. 224 ITR 560 (SE), IT WAS HELD THAT THE DUTY OF THE ASSESSEE IS ONLY T O DISCLOSE FULL PARTICULARS OF MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THE RELEVANT YEAR. THE EXPRESSIO N -: 6: - 6 'MATERIAL FACTS' REFERS TO ONLY PRIMARY FACT AND TH E DUTY OF THE ASSESSEE IS ONLY TO DISCLOSE SUCH PRIMA RY FACT. THERE IS NO DUTY CAST ON THE ASSESSEE TO INDI CATE OR DRAW ATTENTION OF THE INCOME-TAX OFFICER TO WHAT FACTUALLY OR LEGALLY OR OTHER INFERENCE CAN BE DRAW N FROM THE PRIMARY FACT. (D) IT IS A SETTLED LAW, THAT WHERE REASSESSMENT IS INITIATED ON THE BASIS OF RETROSPECTIVE AMENDMENT I N LAW AFTER 4 YEARS, REASSESSMENT IS INVALID AS THERE IS NO FAILURE OF PART OF ASSESSEE. IN PRESENT CASE, EV EN IF FOR THE SAKE OF ARGUMENT, IT IS ACCEPTED THAT THE AMENDMENT REQUIRING OBTAINING COMPLETION CERTIFICAT E INTRODUCED BY FINANCE (NO.2) ACT, 2004, WAS OPERATIONAL FOR PROJECTS INITIATED PRIOR TO 31.03.2 005, THE REOPENING BASED ON SUCH RETROSPECTIVE AMENDMENT IS INVALID, AS THERE WAS NO FAILURE ON PART OF ASSE SSEE. SESA GOA LTD. 294 ITR 191 (BAM.); CIT VS MEPCO INDUSTRIES LTD. 294 ITR 121 (MAD.); -: 7: - 7 SADBHAV ENGINEERING LTD., 239 CTR 258 (GUJ.). CIT VS A. V. THOMAS EXPORTS LTD. 163 TAXMAN 718 (MAD.) (E) IN A DIRECT CASE, AAYOJAN DEVELOPERS 335 ITR 234 (GUJ.), IT HAS BEEN HELD THAT REOPENING AFTER 4 Y EARS (WHERE ASSESSMENT WAS ALREADY COMPLETED) CANNOT BE DONE FOR TREATING ASSESSEE AS CONTRACTOR. C. NO MENTION IN REASONS REGARDING FAILURE ON PART OF ASSESSEE WHERE NOTICE U/S. 148 IS ISSUED BEYOND 4 YEARS, T HE REASONS SHOULD STATE THAT THERE WAS FAILURE ON PA RT OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATER IAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE CONCERNED AY. THERE WAS NO MENTION IN THE REASONS SO RECORDED THAT THERE WAS A FAILURE ON PART OF ASSESSEE TO DISCLOSE TRUE AND CORRECT INCOME. HINDUSTAN LEVER LTD. VS R.B. -: 8: - 8 WADKAR ACIT 268 ITR 332(BOM.); DHAMPUR SUGAR MILLS LTD. 239 C TR 303 (ALL.) SHRI WARANA SAHAKARI, 284 ITR 477 (BAM.) D.CHANGE OF OPINION ASSESSMENT U/S. 147 R/W SECTION 143(3) WAS ALREADY COMPLETED. IN THIS ASSESSMENT, REOPENING WAS DONE ONLY ON THE GROUND OF DISALLOWANCE OF SECTION 80IB(10), ALTHOUGH ON THE GROUND OF MAT. WHILE FRAMING THE ASSESSMENT, ID AO HAD ALREADY FORMED AN OPINION THAT THE ASSESSEE IS ELIGIBLE F OR DEDUCTION U/S. 80IB(10). 8. THUS, REOPENING ON THE GROUND THAT THE DEDUCTIO N U/S. 80IB(10) IS NOT ALLOWABLE, IS BAD IN LAW, AS IT IS BASED ON A MERE CHANGE OF OPINION. CIT VS EICHER LTD. 294 ITR 310 (DEL.) KLM ROYAL DUTCH AIRLINES 292 ITR 49 (DET.), -: 9: - 9 CIT VS. GOETZE (INDIA) LTD. 229 C TR 167 (DEL.) THUS, IT IS SUBMITTED THAT REOPENING IS NOT VALID . 9. WITH REGARD TO ASSESSING OFFICERS OBSERVATION THAT THE ASSESSEE IS NOT THE OWNER OF LAND, THEREFORE, CLAIM OF DEDUCTION U/S 80IB(10) CANNOT BE ALLOWED. THIS ISSUE IS ALREA DY COVERED BY THE ORDER OF THE TRIBUNAL IN CASE OF FORTUNE BUI LDERS, 14 ITJ 667, WHEREIN IT WAS HELD THAT OWNERSHIP OF LAND IS NOT REQUIRED FOR CLAIM OF DEDUCTION U/S 80IB(10). 10. THE ASSESSING OFFICER HAS ALSO STATED THAT THE ASSESSEE HAS MAINLY ACTED AS A CONTRACTOR TO THE MU NICIPAL CORPORATION, WHEREAS FROM THE RECORD, WE FOUND THAT THE ASSESSEE IS NOT MERELY ACTING AS CONTRACTOR BUT IS ACTING AS A DEVELOPER AND THE MATERIAL AT SITE WERE PROCURED BY HIM FOR EXECUTION OF THE DEVELOPMENT WORK. EVEN AS A DEVELO PER, ASSESSEES QUOTATION WAS ACCEPTED AS A HIGHEST BID. 11. THE ASSESSING OFFICER HAS ALSO ALLEGED THAT THE ASSESSEE IS NOT HAVING ANY APPROVAL OF LOCAL AUTHOR ITY FOR CONSTRUCTION OF PROJECT. FROM THE RECORD, WE FOUND THAT A -: 10: - 10 PERMISSION FOR THE PROJECT WAS GIVEN BY THE TOWN AN D COUNTRY PLANNING. THE SAME IS PLACED AT PAPER BOOK PAGE NO. 46 TO 54. THIS PROJECT WAS COMMENCED BEFORE 1.4.2004, THEREFO RE, AS PER THE PROVISIONS OF LAW APPLICABLE DURING THE RELEVAN T ASSESSMENT YEAR, THE ASSESSEE HAS NOT REQUIRED TO F URNISH PROJECT COMPLETION CERTIFICATE. THE COMPLETION CERT IFICATE WAS NOT REQUIRED TO BE OBTAINED IN THE ASSESSMENT YEAR 2001-02 UNDER CONSIDERATION. THE AMENDED PROVISION CAME INT O FORCE W.E.F. ASSESSMENT YEAR 2005-06 AND PRIOR TO IT NO C OMPLETION CERTIFICATE WAS REQUIRED TO BE OBTAINED. 12. WITH REGARD TO THE ALLEGATION OF THE LOWER AUTHORIT IES THAT THE ASSESSEE WAS MERELY A CONTRACTOR AND NOT D EVELOPER, THE LD. AUTHORIZED REPRESENTATIVE DREW OUR ATTENTIO N TO THE RELEVANT TERMS AND CONDITIONS OF THE AGREEMENT/POWE R OF ATTORNEY INDICATING THAT THE ASSESSEE WAS UNDER OBL IGATION TO ENGAGE ENGINEERS, ARCHITECTS, CONTRACTORS MASONS L ABOURS AND/OR WORKMEN IN CONNECTION WITH THE DEVELOPMENT A ND CONSTRUCTION OF BUILDING ON THE SAID LAND INCLUDING CONSTRUCTION OF BOUNDARY WALLS, ROADS, SEWERAGE LIN ES OR ANY OTHER RELATED WORKS. THUS, IT IS CLEAR FROM THE PAR A 2, P.B.50 OF -: 11: - 11 THE POWER OF ATTORNEY THAT THE ASSESSEE WAS UNDER O BLIGATION TO CONSTRUCT ROAD, SEWERAGE, BOUNDARY WALL ETC. THU S, THE ASSESSEE HAD STARTED THE WORK FROM THE VERY BEGINNI NG OF THE PROJECT AND INVOLVED IN DEVELOPMENT OF PROJECT COLO NY AS A WHOLE AND NOT MERELY AS A CONTRACTOR FOR BUILDING HOUSE. FOR THIS PURPOSE, THE ASSESSEE WAS ENTITLED TO APPOINT ANY ENGINEERS, CONTRACTORS, ARCHITECT . PARA 5 OF P. B. 50 FURTHER PROVIDES THAT NECESSARY BUILDING PLANS SHALL BE PRE PARED BY THE ASSESSEE AND FOR WHICH NECESSARY APPROVAL WILL BE OBTAINED. 13. IN VIEW OF THE ABOVE, WE FOUND THAT THE SCOPE OF W ORK TO BE UNDERTAKEN BY THE ASSESSEE WAS NOT MERELY AS A CONTRACTOR BUT DEVELOPMENT OF THE PROJECT AS A WHOL E, WHICH CONSISTED OF CONSTRUCTION OF VARIOUS NUMBER OF HOUS ES, ROADS, SEWERAGE LINE ETC., WHICH RENDERS THE ASSESSEE AS A DEVELOPER OF A PROJECT. ACCORDINGLY, THE ASSESSEES ELIGIBILI TY CONDITION FOR CLAIM OF DEDUCTION U/S 80IB(10) IN THE CAPACITY OF DEVELOPERS WAS DULY SATISFIED IN ALL THE YEARS UNDER CONSIDERA TION. 14. IN THE ASSESSMENT YEAR 2002-03, THE RETURN WAS FIL ED ON 30 TH OCTOBER, 2002, AND NOTICE WAS ISSUED U/S 148 ON -: 12: - 12 24.2.2009. IN THIS YEAR, RETURN WAS ORIGINALLY PROC ESSED U/S 143(1) AND THERE WAS NO SCRUTINY ASSESSMENT U/S 143 (3), THEREFORE, CONTENTION OF THE ASSESSEE THAT SINCE RE OPENING WAS INITIATED AFTER FOUR YEARS FROM THE END OF THE RELE VANT ASSESSMENT YEAR UNDER PROVISO TO SECTION 147 REOPEN ING WAS NOT VALID, DOES NOT HOLD TRUE IN SO FAR AS THERE WA S NO SCRUTINY ASSESSMENT U/S 143(3). THEREFORE, PROVISO TO SECTIO N 147 IS NOT APPLICABLE. 15. DURING THIS YEAR, THE ASSESSEE HAS UNDERTAKEN PROJ ECT UNDER THE NAME OF C.I. HOMES. THE PROJECT WAS APPRO VED ON 4.9.1999 FROM MUNICIPAL CORPORATION. THE APPROVAL I S PLACED AT PAGES 45 & 46 OF THE PAPER BOOK. 16. DURING THIS YEAR, THE ASSESSEE HAS ALSO, UNDERTAKE N PROJECT OF C.I. VILLA, WHICH WAS APPROVED ON 5.6.20 02. THE PROJECT WAS ON THE LAND BELONGING TO THE ONE M. G. BHAVSAR AND SANMATI COOPERATIVE SOCIETY. 17. CLAIM OF DEDUCTION U/S 80IB(10) WAS DECLINED ON TH E PLEA THAT NEITHER THE OWNER NOR THE SELLER HAS LAND . AS ALREADY HELD IN CASE OF FORTUNE BUILDERS(SUPRA), THERE WAS NO REQUIREMENT THAT THE ASSESSEE SHOULD BE OWNER OF LA ND FOR THE -: 13: - 13 CLAIM OF DEDUCTION U/S 80IB(10). FOR GETTING DEDUCT ION U/S 80IB(10), IT IS ALSO NOT NECESSARY THAT MAP OF THE PROJECT UNDERTAKEN BY THE ASSESSEE SHOULD BE APPROVED IN TH E NAME OF THE ASSESSEE. IN THE CASE OF MAN DEVELOPER I.T.A .NO. 25/IND/2011 ORDER DATED 6.7.2011, IT HAS BEEN HELD THAT BUILDING PLAN NEED NOT BE APPROVED IN THE NAME OF T HE ASSESSEE FOR CLAIM OF DEDUCTION U/S 80IB(10). AS TH E RELEVANT ASSESSMENT YEAR IS 2002-03, THE PROJECT COMPLETION CERTIFICATE WAS NOT REQUIRED TO BE FURNISHED FOR CLAIM OF DEDUC TION U/S 80IB(10). THE RELIANCE PLACED BY THE ASSESSING OFFI CER, ON SUBSTITUTED SUB SECTION 80IB(10) BY THE FINANCE ACT (NO.2) OF 2004, W.E.F. 1.4.2005, RELEVANT TO THE ASSESSMENT Y EAR 2005- 06 AND ONWARDS IS NOT APPLICABLE TO THE ASSESSMENT YEAR 2001-02 UNDER CONSIDERATION. 18. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ORDER OF LOWER AUTHORITIES FOR DECLINE OF CLAIM OF DEDUCTION ON THE GROUND OF NOT FULFILLING CONDITION OF FURNISHING TH E COMPLETION CERTIFICATES, WHICH CONDITION WAS MADE EFFECTIVE BY THE FINANCE ACT, 2004,W.E.F. 2005-06. -: 14: - 14 19. NOW COMING TO THE OBSERVATION OF THE LOWER AUTHORI TIES TO THE EFFECT THAT THE ASSESSEE WAS MERELY A CONTRA CTOR AND NOT DEVELOPER. 20. WE HAVE CAREFULLY GONE THROUGH ANUBANDH PATRA ENTERED BY THE ASSESSEE WITH MUNICIPAL CORPORATION WHICH REVEALED THAT THE ASSESSEE WAS TO UNDERTAKE DEVELOP MENT OF THE COMPLETE PROJECT AND MUNICIPAL CORPORATION WAS TO RECEIVE THE HIGHEST BID OF LAND OFFERED BY THE ASSESSEE. TH E ASSESSEE WAS TO DEVELOP THE PROJECT AS A WHOLE ON THE LAND G IVEN BY THE MUNICIPAL CORPORATION AND TO SELL THE HOUSE TO THE PUBLIC IN GENERAL. IT IS NOT THE CASE WHERE MUNICIPAL CORPORA TION INVITED TENDERS FOR CONSTRUCTION OF DWELLING UNIT AND PAID THE CONTRACT AMOUNT TO THE ASSESSEE AND SOLD THAT DWELLING UNITS THEMSELVES. ON THE CONTRARY, THEY RECEIVED MONEY FR OM THE ASSESSEE TOWARDS THEIR LAND AND ASSESSEE DEVELOPED, CONSTRUCTED AND SOLD THE DWELLING UNIT AT THE PRICE FIXED BY THEM AND KEPT THE TOTAL CONSIDERATION WITH THEMSELV ES. THUS, WE FOUND THAT THE ASSESSEE WAS NOT MERELY A CONTRAC TOR BUT A DEVELOPER OF THE HOUSING PROJECT AS A WHOLE. ANUBAN DH PATRA ALSO INDICATE THAT PERMISSION FROM TOWN & COUNTRY P LANNING -: 15: - 15 WAS OBTAINED BY THE MUNICIPAL CORPORATION ON 4.9.19 99 AND THE SAID CORPORATION MADE IT PART OF AGREEMENT VIDE CLAUSE NOS. 1 & 2 THAT THE CONSTRUCTION OF THE DWELLING UN IT SHALL BE AS PER MAP PROVIDED BY THEM. IT IS EVIDENT THAT THE DEVELOPMENT OF THE SITE AND CONSTRUCTION OF THE DWE LLING UNIT HAS ABSOLUTELY BEEN DONE AS PER MAP APPROVED BY MUN ICIPAL CORPORATION ON 21.1.2000 AND THE SAME WAS ALSO TO T HE SATISFACTION OF THE MUNICIPAL CORPORATION, BHOPAL. THE PROJECT WAS STARTED BY THE ASSESSEE ON 31.1.2000 AND COMPLE TED BEFORE 31 ST MARCH, 2003. IT IS PERTINENT TO MENTION HERE THAT FINANCE ACT, 2003 ABOLISHED THE CONDITION OF COMPLE TION BEFORE ANY PARTICULAR DATE AND IT REMAINED ABOLISHED TILL 10.9.2004, WHEN THE FINANCE ACT (NO.2) 2004, WAS PASSED. THE C ONDITION FOR SUBMITTING OF COMPLETION CERTIFICATE FOR CLAIM OF DEDUCTION U/S 80IB(10) WAS INTRODUCED BY THE FINANCE ACT ( NO .2) OF 2004 W.E.F. 1.4.2005 I.E. ASSESSMENT YEAR 2005-06. 21. THE FACTS FOR ASSESSMENT YEAR 2002-03 TO 2004-05 A RE SIMILAR, WHEREIN THE ASSESSEE HAD UNDERTAKEN DEVELO PMENT OF PROJECT AS A WHOLE RATHER THAN SIMPLE WORK AS CONTR ACTOR. THEREFORE, ON THE REASONING DISCUSSED ABOVE, WE DO NOT FIND -: 16: - 16 ANY JUSTIFICATION IN THE ORDER OF LOWER AUTHORITIES FOR DENYING CLAIM OF DEDUCTION U/S 80IB(10) ON THE PLEA THAT TH E ASSESSEE WAS NOT DEVELOPER BUT MERELY A CONTRACTOR. 22. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD NO T ONLY TO DO THE CONSTRUCTION WORK BUT ALSO DEVELOPME NT OF OTHER INFRASTRUCTURE AND TO SELL THE DWELLING UNITS AT IT S OWN. THE ASSESSEE WAS NOT MERELY A CONTRACTOR, AS THE INVEST MENT WAS DONE BY THE ASSESSEE, UNLIKE A CONTRACTOR, THE ASSE SSEE WAS NOT RECEIVING THE PAYMENT OF RUNNING BILLS, BUT GET TING PAYMENTS ON SALE OF HOUSE ITSELF. IN THE PRESENT CA SE, THE ASSESSEE HAS DEVELOPED THE PROJECT, APPLIED ITS OWN MONEY, THEREFORE, THE FINDING RECORDED BY THE LOWER AUTHOR ITIES IS NOT CORRECT THAT THE ASSESSEE HAS VIRTUALLY NOT MADE AN Y INVESTMENT. THERE IS NO REQUIREMENT THAT APPROVED M AP OF THE PROJECT SHOULD BE IN THE NAME OF THE ASSESSEE AS HE LD IN THE CASE OF MAN DEVELOPERS BY I.T.A.T. INDORE BENCH VID E ORDER DATED 6.7.2011 I.T.A.NO. 25/IND/2011. 23. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2004 AND ASSESSMENT WAS F RAMED U/S 143(3) ON 28.12.2006 ALLOWING CLAIM OF DEDUCTIO N U/S -: 17: - 17 80IB(10). THEREAFTER, NOTICE U/S 148 WAS ISSUED ON 24.3.2009. ORDER U/S 147/143(3) WAS PASSED ON 21 ST DECEMBER, 2009, WITHDRAWING CLAIM OF DEDUCTION ALLOWED U/S 80IB(10) . FROM THE RECORD, WE FOUND THAT THE PROJECT UNDER THE NAM E OF C.I. VILLA WAS UNDERTAKEN BY THE ASSESSEE, WHICH WAS APP ROVED BY THE MUNICIPAL CORPORATION ON 5.6.2002. THE PROJECT WAS ON THE LAND BELONGING TO ONE M. S. BHAVSAR, SMT. RAISA KHA N AND SANMATI COOPERATIVE SOCIETY. PROJECT UNDER THE NAME OF C.I. ENCLAVE WAS UNDERTAKEN BY THE ASSESSEE DURING THE Y EAR AND WHICH WAS ALSO APPROVED BY MUNICIPAL CORPORATION ON 16.4.2003. THIS PROJECT WAS ON THE LAND BELONGING T O SHRI RAMNATH SHARMA. CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WAS THAT REOPENING WAS MERELY ON TH E CHANGE OF OPINION. THE ASSESSEE HAS SOLD THE HOUSE AND NOT ONLY LAND. THE DRAFT AGREEMENT PLACED AT PAGE 113 TO 121 AND T HE SALE DEED AT PAGE 123 TO 146, WHICH CLEARLY SHOWS THAT H OUSE WAS SOLD AND NOT MERELY LAND. 24. IN VIEW OF THE ABOVE DISCUSSION, WE CAN SAFELY CONCLUDE THAT FROM ASSESSMENT YEAR 2001-02 TO, 2004 -05, THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS FOR C LAIMING -: 18: - 18 DEDUCTION U/S 80IB(10). SO FAR AS THE STATUS OF ASS ESSEE AS A DEVELOPER IS CONCERNED, AS PER OUR OBSERVATION HER EINABOVE, THE ASSESSEE IS CLEARLY ENGAGED AS DEVELOPER. THE P AYMENT WAS RECEIVED BY THE ASSESSEE ON SALE OF HOUSE AND NOT A S A CONTRACTOR FOR COMPLETION OF ANY PART OF CONSTRUCTI ON WORK, ASSIGNED TO HIM. THE ASSESSEE HIMSELF HAS EXECUTED THE SALE AGREEMENT WHILE SELLING THE HOUSES TO THE RESPECTIV E BUYERS, WHICH MEANS THE ASSESSEE WAS OWNER OF THE PROPERTY SO, SOLD AND THE PAYMENT WAS NOT RECEIVED FOR UNDERTAKING ME RE CONSTRUCTION WORK AS ALLEGED BY LOWER AUTHORITIES. 25. WITH REGARD TO THE APPROVAL OF THE PROJECT BY THE CONCERNED AUTHORITIES CONCERNED, WE FOUND THAT NECE SSARY APPROVAL WAS ALREADY ON THE RECORD AND WAS WELL WIT HIN THE TIME AS DISCUSSED HEREINABOVE. THEREFORE, CLAIM OF ASSESSEE CANNOT BE DECLINED ON ACCOUNT OF SUCH APPROVAL. 26. WITH REGARD TO CERTIFICATE OF COMPLETION OF PROJEC T, AS DISCUSSED ABOVE, THE ISSUE IS ALREADY COVERED IN FA VOUR OF THE ASSESSEE, AS PER ORDER OF THE COORDINATE BENCH IN T HE CASE OF PRIYADARSHANI CONSTRUCTION, I.T.A.NO. 509 & 510/IND /2010 ORDER DATED 30.11.2011, WHEREIN IT WAS HELD THAT TH E CONDITION -: 19: - 19 WITH REGARD TO FURNISHING OF COMPLETION CERTIFICATE WAS MADE EFFECTIVE 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 CERTIFICATE FOR GRANT OF DEDUCTION U/S 80IB(10) AND NOT WITH RESPECT TO THE ASSESSMENT FALLING PRIOR TO IT. IN THE INSTANT CASE , BEFORE US, THE ASSESSEE IS NOT REQUIRED TO FURNISH COMPLETION CERTIFICATE FOR THE ASSESSMENT YEAR 2001-02 TO 2004-05. FOLLOWI NG IS THE PRECISE OBSERVATION IN THE CASE OF M/S. PRIYADHARSH ANI CONSTRUCTION IN I.T.A.NO. 509 & 510/IND/2010:- 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 -: 20: - 20 ON 1.4.2004 READ AS UNDER :- SUB-SECTION (10) WAS SUBSTITUTED BY THE FINANCE (NO.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 2003 WITH RETROSPECTIVE EFFECT FROM 1.4.2002 READ AS UNDER: (10) THE AMOUNT OF PROFIT IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BEFORE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE 100% OF THE PROFIT 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 FIRST 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 BUILTUP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN 25 K.M. FROM THE MUNICIPAL LIMIT OF THESE CITIES AND 1500 SQ.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 B EFORE THE 31ST DAY OF MARCH, 2007 BY A LOCAL AUTHORITY SH ALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT IF, -: 21: - 21 ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SU CH CONSTRUCTION, ( I ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROV ED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 20 04, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; ( II ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR, I S APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 WITHIN FOUR YEARS FROM THE END OF THE F INANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY TH E LOCAL AUTHORITY; EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( I ) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HO USING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PR OJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHIC H THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPR OVED BY THE LOCAL AUTHORITY; ( II ) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOU SING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS I SSUED BY THE LOCAL AUTHORITY; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHIC H 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 ACC ORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF E XISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE 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 CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCI AL 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, WHICHEVER IS LESS IT IS VERY CLEAR FROM THE ABOVE PROVISIONS THAT AS -: 22: - 22 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 OF 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 DELHI 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. -: 23: - 23 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 THE 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 -: 24: - 24 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 -: 25: - 25 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 INSOFAR AS AMENDMENT WAS BROUGHT WITH EFFECT FROM 1.4.2005 I.E. ASSESSMENT YEAR 2005-06. 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 -: 26: - 26 THE PROJECT AS 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. 27. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPE AL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 TO 200 4-05 ON MERIT OF CLAIM OF DEDUCTION CLAIMED U/S 80IB(10). 28. IN THE ASSESSMENT YEAR 2005-06, THE ASSESSEE FILED RETURN ON 31 ST OCTOBER, 2005, AND ASSESSMENT WAS FRAMED U/S 143(3) ON 28.12.2007, ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB(10). THEREAFTER, NOTICE U/S 148 WAS ISSUED ON 28 TH MARCH, 2009, AND THEREAFTER ASSESSMENT WAS FRAMED U /S 147/143(3) ON 21 ST DECEMBER, 2009, WHEREIN CLAIM OF DEDUCTION U/S 80IB WAS DENIED. -: 27: - 27 29. IN RESPECT OF ASSESSMENT YEAR 2005-06, WE FOUND THA T EVEN THOUGH THE ASSESSEE HAS OBTAINED PERMISSION FO R CONSTRUCTION ON 24.5.2003 AND ALSO APPLIED FOR ISSU E OF COMPLETION CERTIFICATE ON 2.2.2008, HOWEVER, NO SUC H COMPLETION CERTIFICATE WAS ISSUED BY COMPETENT AUTH ORITY. IN THIS REGARD, CONTENTION OF ASSESSEE WAS THAT ALTHOU GH ASSESSEE APPLIED FOR COMPLETION CERTIFICATE, THE COMPLETION CERTIFICATE WAS NOT GRANTED BY THE MUNICIPAL CORPORATION. AS PE R THE M.P. & C. G. MUNICIPAL CORPORATIONS ACT, SECTION 301, IF ANY PERSON APPLIES FOR OBTAINING COMPLETION CERTIFICATE, THE M UNICIPAL CORPORATION SHALL GRANT COMPLETION CERTIFICATE WITH IN 15 DAYS. IF IT IS NOT SO GRANTED, IT SHALL BE DEEMED THAT TH E COMPLETION CERTIFICATE IS GRANTED. 30. FROM THE RECORD, WE FOUND THAT DURING THE YEAR, THE ASSESSEE HAS UNDERTAKEN THE PROJECT UNDER THE NAME AND STYLE OF C.I. ENCLAVES. THE PROJECT WAS APPROVED BY MUNIC IPAL CORPORATION ON 16.4.2003. THIS PROJECT ON THE LAND WAS BELONGING TO RAMNATH SHARMA. HOWEVER, SINCE THE AS SESSEE COULD NOT GET COMPLETION CERTIFICATE WITHIN THE TIM E ALLOWED -: 28: - 28 UNDER LAW, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF LOWER AUTHORITIES FOR DECIDING CLAIM OF DEDUCTION U/S 80I B(10). 31. IN THE ASSESSMENT YEAR 2006-07, THE RETURN WAS FIL ED ON 12.12.2006 AND ASSESSMENT WAS FRAMED UNDER SECTI ON 143(3) ON 28.12.2007. THEREAFTER, NOTICE U/S 148 WA S ISSUED ON 28 TH MARCH, 2009, AND ORDER WAS PASSED U/S 147/143(3) O N 12.12.2009, WHEREIN DEDUCTION U/S 80IB(10) WAS WITH DRAWN. 32. FROM THE RECORD, WE FOUND THAT DURING THIS YEAR, T HE ASSESSEE HAD CONTINUED WITH THE SAME PROJECT UNDER THE NAME AND STYLE OF C.I. ENCLAVE. IN ADDITION TO IT, THE A SSESSEE HAS UNDERTAKEN THE PROJECT UNDER THE NAME AND STYLE OF C.I. PARK VIEW, WHICH WAS APPROVED BY THE MUNICIPAL CORPORATI ON ON 22.7.2004. THIS APPROVAL WAS IN THE NAME OF THE ASS ESSEE. 33. IN THE ASSESSMENT YEAR 2007-08, THE ASSESSEE CONTINUED WITH THE PROJECT UNDER THE NAME AND STYLE OF C.I. ENCLAVE AND C.I. PARK VIEW. 34. IN VIEW OF OUR DISCUSSION HEREINABOVE, THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS FOR CLAIM OF DEDUC TION U/S 80- IB(10) EXCEPT THE CONDITION OF FURNISHING CERTIFICA TE FOR COMPLETION OF PROJECT. -: 29: - 29 35. WITH REGARD TO THE FURNISHING OF CERTIFICATE FOR COMPLETION OF THE PROJECT, CONTENTION OF THE LD. AU THORIZED REPRESENTATIVE WAS THAT THE AMENDMENTS OF THE ACT IN THIS REGARD HAVE BEEN EXPLAINED IN BOARD CIRCULAR NO. 5 OF 2005 DATED 15.7.2005. (2005) 276 ITR (ST) 151. AS PER L D. AUTHORIZED REPRESENTATIVE CERTIFICATE OF COMPLETIO N IS, AS A MATTER OF FACT, A CERTIFICATE OF FITNESS FOR OCCUPA TION OF THE BUILDING. IT IS CLEAR FROM SECTION 301 OF THE MADHY A PRADESH MUNICIPAL CORPORATION ACT, 1956, WHICH READS AS UND ER :- '301. COMPLETION CERTIFICATE AND PERMISSION TO OCCUPY OR USE (1) EVERY PERSON WHO (I) ERECTS OR RE-ERECTS ANY BUILDING; OR (II) MAKES ANY MATERIAL EXTERNAL ALTERATION IN OR ADDITION TO ANY EXISTING BUILDING; OR CONSTRUCTS OR RE-CONSTRUCTS ANY PROJECTING PORTION OF A BUILDING WHICH THE COMMISSIONER IS EMPOWERED UNDER SECTION 305 TO REQUIRE TO BE SET BACK OR IS EMPOWERED TO GIVE PERMISSION TO CONSTRUCT OR RECONSTRUCT; SHALL WITHIN ONE MONTH OF THE COMPLETION OF THE WORK DELIVERED TO THE -: 30: - 30 COMMISSIONER AT HIS OFFICE A NOTICE IN WRITING OF SUCH COMPLETION AND SHALL GIVEN TO THE COMMISSIONER ALL NECESSARY FACILITIES FOR THE INSPECTION OF SUCH WORK. 1. (2) WITHIN SEVEN DAYS AFTER THE RECEIPT OF THE S AID NOTICE THE COMMISSIONER SHALL DEPUTE AN OFFICER TO COMMENCE THE INSPECTION OF SUCH WORK. (3) WITHIN SEVEN DAYS FROM THE DATE OF COMMENCEME NT OF SUCH INSPECTION THE COMMISSIONER SHALL- (A) GIVE PERMISSION FOR THE OCCUPATION OF THE BUILDING ERECTED OR FOR THE USE OF THE PART OF THE BUILDING RE-ERECTED; OR (B) REFUSE SUCH PERMISSION IN CASE SUCH ERECTION, CONSTRUCTION OR RECONSTRUCTION IS IN CONTRAVENTION OF ANY PROVISION OF THIS ACT OR ANY RULE OR BYELAW MADE THERE UNDER OR ANY OTHER ENACTMENT FOR THE TIME BEING IN FORCE. (4) NO PERSON SHALL OCCUPY OR PERMIT TO BE OCCUPI ED ANY SUCH BUILDING OR USE OR PERMIT TO BE USED ANY -: 31: - 31 PART AFFECTED BY THE RE-ERECTION OF SUCH BUILDING - (A) UNIT THE PERMISSION REFERRED TO IN CLAUSE (A) OF SUB-SECTION (3) HAS BEEN GRANTED IN THE '[MANNER PRESCRIBED BY BYE LAWS]; (B) UNLESS THE COMMISSIONER HAS FAILED FOR FIFTEEN DAYS AFTER THE RECEIPT OF NOTICE OF COMPLETION TO INTIMATE HIS REFUSAL TO GRANT THE SAID PERMISSION.' THE PERMISSION CERTIFICATE PB 112 CONDITIONS 6 & 7 READ AS UNDER: 6. AFTER THE COMPLETION OF CONSTRUCTION A NOTE S HOULD BE GIVEN TO THIS OFFICE FOR INFORMATION OF COMPLET ION OF THE WORK, WITHIN A MONTH AS REQUIRED UNDER SECTION 301 OF THE M.P. MUNICIPAL CORPORATION ACT 1956 FOR WHICH A COMPLETION CERTIFICATED SHALL BE ISSUED FROM THIS OFFICE. 7. NO BUILDING SHALL BE OCCUPIED FOR RESIDENTIAL OR COMMERCIAL PURPOSE BEFORE A COMPLETION CERTIFICATE IS OBTAINED FROM THE CORPORATION AS DESIRED UNDER SECT ION 301(4) OF THE M.P. MUNICIPAL CORPORATION ACT, 1956. ' -: 32: - 32 36. IN VIEW OF THE ABOVE, THE LD. AUTHORIZED REPRESENT ATIVE CONTENDED THAT IN CASE THE CERTIFICATE OF COMPLETIO N IS NOT ISSUED BY THE MUNICIPAL CORPORATION WITHIN THE PRES CRIBED TIME OF 15 DAYS OF ASSESSEES DELIVERY OF NOTICE IN WRITING OF SUCH COMPLETION, THE SAME IS DEEMED TO BE ISSUED. H E FURTHER SUBMITTED THAT THE ASSESSEE OBTAINED THE PERMIS SION ON 24- 05-2003. THE PERMISSION IS AT PB 67 FOR ASST. YEAR 2005-06. THE PROJECT WAS REQUIRED TO BE COMPLETED ON 31-03-2 008. ASSESSEE APPLIED FOR COMPLETION CERTIFICATE ON 02-0 2-2008. A CERTIFIED COPY OF THE APPLICATION WAS SUBMITTED EAR LIER. 37. AS PER LD. AUTHORIZED REPRESENTATIVE, THESE SECTIO NS OF MPMC ACT, 1956, CANNOT BE READ IN ISOLATION AND THE RE IS NO SUPERSEDING PROVISIONS OVER MPMC 1956 ACT. AS PER L D. AUTHORIZED REPRESENTATIVE, THE INCOME-TAX ACT, 1961 , DOES NOT SPECIFICALLY MANDATES OR LAYS DOWN ANY ENFORCEABLE COMPLIANCE FOR THE MUNICIPAL CORPORATION. THEREFORE, THE PROVI SIONS OF THE M.P. MUNICIPAL CORPORATION, 1956, ARE TO BE APPLIED . 38. OUR ATTENTION WAS ALSO INVITED TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SURANA STEELS LIMITED, 237 ITR 777, WHEREIN WHILE DEALING WITH THE COMPANY LAW -: 33: - 33 PROVISIONS FOR DEPRECIATION IN INCOME-TAX ACT, 1961 , IT WAS HELD :- 'INCORPORATION OF AN EARLIER ACT INTO A LATER ACT I S A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISIONS OF THE EARLIER ACT INTO THE LATER . WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS AR E INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARCEL OF THE LATER ACT AS IF THEY HAD BEEN BODILY TRANSPOSED INTO IT. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER, M.R. : 'IF A SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT.' IN VIEW OF THE PROVISIONS OF THE I.T. ACT, 1961 READ WITH SECTION 301 OF THE M.P. MUNICIPAL CORPORATION ACT, 1956, AS THE CERTIFIED HAS NOT BEE N -: 34: - 34 ISSUED, IT HAS TO BE DEEMED THAT THE DATE OF COMPLETION IS THE SAME AS THE DATE CLAIMED BY THE ASSESSEE. 39. THE LD. AUTHORIZED REPRESENTATIVE FURTHER ARGUED THAT EXPLANATION (II) TO SECTION 80 IB(10)(A) READS AS U NDER :- '(II) THE DATE OF COMPLETION OF CONSTRUCTION OF T HE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY.' - A STATUTE SHOULD BE READ AS A WHOLE TO ASCERTAIN ITS TRUE MEANING AND CONTENT. WHENEVER A STATUTE COMES UP FOR CONSIDERATION, IT MUST BE REMEMBERED THAT IT IS NOT WITHIN HUMAN POWERS TO FORESEE THE MANIFOLD SETS OF FACTS WHICH MAY ARISE, AND, EVEN I F IT WERE, IT IS NOT POSSIBLE TO PROVIDE FOR THEM IN TERMS FREE FROM ALL AMBIGUITY. A JUDGE CANNOT SIMPL Y FOLD HIS HANDS AND BLAME THE DRAFTSMAN. HE MUST -: 35: - 35 SET TO WORK ON THE CONSTRUCTIVE TASK OF FINDING THE INTENTION OF PARLIAMENT, AND HE MUST DO THIS NOT ONLY FROM THE LANGUAGE OF THE STATUTE, BUT ALSO FRO M A CONSTRUCTION OF THE SOCIAL CONDITIONS WHICH GAVE RISE TO IT AND OF THE MISCHIEF WHICH IT WAS SOUGHT TO REMEDY AND THEN HE MUST SUPPLEMENT THE WRITTEN WORD SO AS TO GIVE FORCE AND LIFE TO INTENTION OF T HE LEGISLATURE. A COURT MUST ALWAYS AVOID AS FAR AS POSSIBLE GIVING AN UTTERLY ABSURD INTERPRETATION TO A SECTION DRAFTED BY THE LEGISLATURE UNLESS A COURT LOOKING TO THE PLAIN AND GRAMMATICAL LANGUAGE USED HAS NO OTHER OPTION EXCEPT TO GIVE SUCH A CONSTRUCTION. THE HALLOWED RULE OF CONSTRUCTION OF A STATUTE IS THAT AN INTERPRETATION WHICH LEADS TO AN ANOMALOUS OR EVEN MISCHIEVOUS RESULT OR RENDERS THE STATUTE UNWORKABLE OR A PROVISION INEFFECTUAL MUST BE AVOIDED. IT IS WELL SETTLED THAT IT IS ONLY WHERE THE WORDS ARE ABSOLUTELY INCAPABLE OF A CONSTRUCTION WHICH WILL ACCORD WITH THE APPARENT INTENTION OF THE PROVISION AND WILL AVOID A WHOLLY -: 36: - 36 UNREASONABLE RESULT THAT THE WORDS OF THE ENACTMENT MUST PREVAIL. IN ORDER TO AVOID IMPUTING TO PARLIAMENT AN INTENTION TO PRODUCE AN UNREASONABLE RESULT, THEREFORE, A COURT IS ENTITLED AND INDEED BOUND TO DISCARD THE ORDINARY MEANING WHICH WILL AVOID THAT UNREASONABLE RESULT. TO ACHIEVE THE OBVIOUS INTENTION AND TO PRODUCE A REASONABLE RESULT, SOME VIOLENCE TO THE WORDS MUST RESULT. THE DUTY OF THE COURT HOWEVER IS TO READ TH E SECTION, UNDERSTAND ITS LANGUAGE AND GIVE EFFECT TO THE SAME. IF THE LANGUAGE IS PLAIN THE FACT THAT TH E CONSEQUENCE OF GIVING EFFECT TO IT MAY LEAD TO SOME ABSURD RESULT IS NOT A FACTOR TO BE TAKEN INTO ACCOUNT IN INTERPRETING A PROVISION. IT IS FOR THE LEGISLATURE TO STEP IN AND REMOVE THE ABSURDITY. THE OBJECT OF THE CONSTRUCTION OF A STATUTE BEING TO ASCERTAIN THE WILL OF THE LEGISLATURE, IT MAY BE PRESUMED THAT NEITHER INJUSTICE NOR ABSURDITY WAS INTENDED. IF A LITERAL INTERPRETATION WOULD PRODUCE -: 37: - 37 SUCH A RESULT AND THE LANGUAGE ADMITS OF AN INTERPRETATION WHICH WOULD AVOID IT, THEN THE LATTE R INTERPRETATION MAY BE ADOPTED. NO STATUTE SHOULD BE INTERPRETED IN SUCH A MANNER AS TO RENDER ANY PROVISION COMPLETELY MEANINGLESS OR REDUNDANT. IN VARGHESE (KP) VS. ITO, THE SUPREME COURT OBSERVED - 'IT IS A WELL SETTLED RULE OF CONSTRUCTION THAT WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUTORY PROVISION PRODUCES A MANIFESTLY ABSURD AN-D UNJUST RESULT WHICH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MAY MODIFY THE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VIOLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. THE COURT MAY ALSO IN SUCH A CASE READ INTO THE STATUTORY PROVISIONS A CONDITION WHICH, THOUGH NOT EXPRESSED. WHILE -: 38: - 38 THE CONSEQUENCES OF A SUGGESTED CONSTRUCTION CANNOT ALTER THE MEANING OF A PROVISION, THEY CAN BE TAKEN INTO ACCOUNT TO HELP IN FIXING ITS MEANING.' ABSURDITY HAS TO BE AVOIDED IN INTERPRETATION OF A STATUTORY PROVISION. SIMILARLY WHERE THE INTERPRE TATION OF A STATUTORY PROVISION. SIMILARLY WHERE THE INTERPRETATION LEADS TO FUTILITY, IT CANNOT BE ACC EPTED. 40. EMPHASIZING RULE OF REASONABLE CONSTRUCTION, THE L D. AUTHORIZED REPRESENTATIVE CONTENDED THAT A FAIR AND REASONABLE CONSTRUCTION OF THE LANGUAGE IN THE STAT UTE IS A BASIC PRINCIPLE OF INTERPRETATION. IF A TAXPAYER CA NNOT BE BROUGHT UNDER THE TAX NET, REVENUE HAS TO BE RECONC ILED TO THIS POSITION OF LAW. VIKRANT TYRES LTD. V. FIRST ITO (2 001) 247 ITR 821 (SC). WHERE TWO VIEWS ARE REASONABLY POSSIBLE, THE ONE WHICH FAVOUR THE ASSESSEE HAS TO BE ADOPTED. BIRLA CEMENT WORKS V. CBOT (2001) 248 ITR 216 (SC). AMBIGUITY HA S ALWAYS TO BE RESOLVED IN FAVOUR OF THE ASSESSEE. SOUTHERN ROADWAYS LTD. V. CWT (2001) 251 ITR 213 (MAD). -: 39: - 39 41. EMPHASIZING RULE OF BENEFICIAL INTERPRETATION, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT IF THERE IS ANY AMBIGUITY IN LAW, THERE IS NO TAX IN LAW. MATHURAM AGAWAM V. STATE OF MP AIR 2000 SC 109. LIBERAL CONSTRUCTION S O AS TO EFFECTUATE THE OBJECTS IS PERMISSIBLE, WHEN THERE I S GENUINE DIFFICULTY ABOUT INTERPRETATION OR TWO OPINIONS ARE CAPABLE OF BEING HELD. CIT V. CELLULOSE PRODUCTS OF INDIA LTD. (1991) 192 ITR 155 (SC) & CIT V. KULA VALLEY TRANSPORT CO. (P) LTD. (1970) 77 ITR 518 SC. IN SUCH CASES, THE BENEFIT GOES TO T HE TAXPAYER. J&K STEEL LTD. V. UNION OF INDIA AIR 1970 SC 1173. THE BENEFIT OF DOUBT IN A TAXING STATUTE SHOULD ALWAYS GO TO THE TAXPAYER. ITO V. DEVIANT (TS) AIR 1968 SC 623. 42. IN VIEW OF THESE PROPOSITIONS, THE FINAL AND CONCLU DING CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WA S AS UNDER :- FISCAL STATUTES MUST BE INTERPRETED STRICTLY I N FAVOUR OF THE ASSESSEE. THE COURT IS NOT JUSTIFIED IN STRAINING THE LANGUAGE OF A PARTICULAR PROVISION IN ORDER TO HOLD A SUBJECT LIABLE TO TAX. IF A SECTION IN A TAX ING STATUTE IS OF DOUBTFUL AND AMBIGUOUS MEANING, IT MUST BE RE SOLVED -: 40: - 40 IN FAVOUR OF THE ASSESSEE. HARIPRASAD JAYANTILAL & CO. LTD. V. ITO 45 ITR 294 (GUJ). AFFIRMED IN (1966) 59 ITR 794 (SC). CEO V. KANAKASABAI (R) (1973) 89 ITR 251 (SC). EVEN IF TWO VIEWS ARE POSSIBLE, THE VIEW FAVOURABLE TO THE ASSESSEE MUST BE ACCEPTED. CIT V. NAGA HILLS TEA CO. LTD. 89 ITR 236 (SC) CIT V. KULU VALLEY TRANSPORT CO. (P) LTD. 77 ITR 51 8 (SC). THE ASSESSEE APPLIED IN TIME TO THE MUNICIPAL CORPO RATION TO ISSUE CERTIFICATE OF COMPLETION. IT WAS NOT ISSU ED. HENCE IT MAY PLEASE BE DEEMED TO HAVE BEEN ISSUED THAT TH E MPMC ACT 1956 PERMITTED THE ASSESSEE TO OCCUPY THE HOUSES AS SAFE HAVENS. 43. WITH RESPECT TO THE ASSESSMENT YEAR 2006-07 AND 2007-08, THE CONTENTION OF THE ASSESSEE WAS THAT CO MPLETION CERTIFICATE WAS OBTAINED ON 22.3.2010 VIDE DESPATCH NO.7026/2009-10. OUR ATTENTION WAS ALSO DRAWN TO TH E CERTIFIED COPY OF THE COMPLETION CERTIFICATE ENCLOS ED AT PAGE 3 OF THE SUBMISSION. WE FOUND THAT WITH RESPECT TO THE P ROJECT -: 41: - 41 UNDERTAKEN DURING THE ASSESSMENT YEAR 2006-07 & 200 7-08, THE ASSESSEE WAS REQUIRED TO SUBMIT COMPLETION CERT IFICATE WITHIN 4 YEARS. THE COMPLETION CERTIFICATE SO OBTAI NED BY THE ASSESSEE DATED 22.3.2010 WAS OBTAINED WITHIN 4 YEAR S. SINCE THIS CERTIFICATE WAS NOT BEFORE THE LOWER AUTHORITI ES, WE RESTORE THIS MATTER TO THE FILE OF ASSESSING OFFICER FOR VE RIFYING THE CERTIFICATE SO PLACED ON RECORD AND TO DECIDE AFRES H THE ISSUE OF COMPLETION OF PROJECT BY THE ASSESSEE. IT IS ALSO P ERTINENT TO MENTION HERE THAT DURING THE COURSE OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE HAS ALSO PLACED BEFORE US THE RELEVANT PROVISIONS OF M.P. MUNICIPAL CORPORATION A CT, 1956, SECTION 301 OF WHICH PROVIDES THAT IN CASE CERTIFIC ATE IS NOT ISSUED BY THE MUNICIPAL CORPORATION WITHIN THE PRES CRIBED TIME OF 15 DAYS OF ASSESSEES DELIVERY OF NOTICE IN WRITING FOR SUCH COMPLETION, THE SAME IS DEEMED TO BE ISSUED. I T WAS ALSO EMPHASIZED THAT THERE IS NO SUPERCEDING PROVISIONS OVER THE MPMC 1956 ACT. THE LD. AUTHORIZED REPRESENTATIVE AL SO PLACED RELIANCE ON THE VERDICT OF THE HON'BLE SUPREME COUR T IN THE CASE OF SURANA STEELS PRIVATE LIMITED (SUPRA) AND I T WAS SUBMITTED THAT IN VIEW OF THE PROVISIONS OF INCOME- TAX ACT, -: 42: - 42 1961, READ WITH SECTION 310 OF THE MPMC1956, AS THE CERTIFICATE HAS NOT BEEN ISSUED, IT HAS TO BE DEEME D THAT THE DATE OF THE COMPLETION IS THE SAME AS THE DATE CLAI MED BY THE ASSESSEE. BY REFERRING TO ALL THESE DECISIONS, THE ASSESSEE HAS ALSO HIGHLIGHTED THE ABSURDITY IN EXPLANATION (II) OF SECTION 80IB(10) WITH REGARD TO COMPLETION CERTIFICATE. AFT ER HIGHLIGHTING VARIOUS DECISIONS, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT ABSURDITY HAS TO BE AVOIDED IN INTERPRETATION OF THE STATUTORY PROVISIONS. SIMI LARLY, WHERE THE INTERPRETATION LEADS TO FUTILITY, IT CANNOT BE ACCEPTED. RULE OF REASONABLE CONSTRUCTION WAS ALSO HIGHLIGHTED WIT H REFERENCE TO THE C.B.D.T. CIRCULAR AS WELL AS JUDICIAL PRONOU NCEMENT BY HON'BLE SUPREME COURT. IT WAS ALSO CONTESTED THAT T HE RULE OF BENEFICIAL INTERPRETATION SHOULD BE APPLIED AND FIS CAL STATUTE MUST BE INTERPRETED IN FAVOUR OF THE ASSESSEE. ALL THESE CONTENTIONS HAVE BEEN NARRATED IN DETAILED HEREINAB OVE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEC IDE THIS ISSUE OF COMPLETION CERTIFICATE AFTER VERIFYING THE CERTIFICATE OF COMPLETION DATED 22.3.2010 PLACED ON RECORD AND IN TERMS OF OUR ABOVE OBSERVATION. WE DIRECT ACCORDINGLY. -: 43: - 43 44. IN THE RESULT, THE APPEALS FOR THE ASSESSMENT YEAR S 2001-02 TO 2004-05 ARE ALLOWED. APPEAL FOR ASSESSME NT YEAR 2005-06 IS DISMISSED AND APPEALS FOR ASSESSMENT YEA RS 2006- 07 AND 2007-08 ARE ALLOWED FOR STATISTICAL PURPOSES , IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COUR T ON 31 ST JANUARY, 2012. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST JANUARY, 2012. CPU* 241