Sterling Contractors & Builders Pvt. Ltd., Bhopal V. The ACIT 3(1), Bhopal

ITA 357/IND/2012

• Counselvise Citation: 35722714 RSA 2012
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 12-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Reopening of assessment; Period of limitation; Retrospective amendment; Time period of passing order; Reassessment proceedings
• Section: 80IB; 148

Judgement Text

STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 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.357 TO 360/IND/2012 A.YS. 2002-03 TO 2004-05 & 2007-08 STERLING CONTRACTORS & BUILDERS PVT.LTD. BHOPAL PAN AACCS 0395R ::: APPELLANT VSASSTT.COMMR. OF INCOME TAX 3(1) INDORE ::: RESPONDENT APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 16.9.2015 DATE OF PRONOUNCEMENT 2 3 .9.2015 O R D E R PER SHRI B.C. MEENA, AM ITA NOS. 357 TO 359/IND/2012 ALL THESE THREE APPEALS FILED BY THE ASSESSEE EMANATE FROM THE COMMON ORDER OF THE LEARNED CIT(A)-II, BHOP AL, DATED 29.2.202. STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 2 2. THE ASSESSEE HAS SHOWN INCOME FROM HOUSING PROJECT S AND CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THE LE ARNED CIT(A) HAS RECORDED THAT THE ASSESSEE IS A CIVIL CONTR ACTOR. IN ALL THESE APPEALS A COMMON GROUND IS TAKEN AGAINST REOPENING OF ASSESSMENT BY ISSUING NOTICE U/S 148 O F THE ACT. THIS ISSUE HAS BEEN RAISED IN GROUND NOS. 1 TO 4 IN ITA NO. 357/IND/2012, GROUND NOS. 1 TO 3 IN ITA NO. 358/IND/2012 AND GROUND NOS. 1 AND 2 IN ITA NO. 359/IND/2012. THIS ISSUE WAS ALSO RAISED BEFORE THE LEARNED CIT(A) AND THE SAME HAS BEEN DISMISSED BY HIM B Y HOLDING AS UNDER :- 2. IN THE FIRST GROUND OF APPEAL COMMON TO ALL ASSESSMENT YEARS THE APPELLANT HAS CHALLENGED THE VALIDITY OF ISSUE OF NOTICE U/S 148. IT IS FOUN D THAT THE NOTICES U/S 148 WERE ISSUED AFTER RECORDING THE REASON U/S 147. THE A.O. HAD SUPPLIED THE REASONS RECORDED FOR REOPENING. THE STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 3 APPELLANT SUBMITTED OBJECTIONS TO THE REASON RECORDED. THE A.O. HAS EXAMINED THE OBJECTIONS. IN THE ASSESSMENT ORDERS THE A.O. HAS GIVEN REASONS AS TO WHY THE APPELLANTS OBJECTION TO THE REOPENING IS NOT VALID. BEFORE ME THE APPELLANT HAS REITERATED THE ARGUMENTS TAKEN BEFORE THE A.O. ON EXAMINATION IT IS FOUND THAT THE REASONS RECORDED FOR REOPENING WERE ADEQUATE AND SUFFICIENT FOR REOPENING. THE NOTICES U/S 148 HAS BEEN ISSUED WITHIN THE LIMITATION PERIOD. IT IS FOUND THAT THERE IS NO LEGAL INFIRMITY IN THE ISSUE OF NOTICES U/S 148 AND THE REOPENING OF THE ASSESSMENT OF THE THREE YEARS IS VALID. THIS GROUND OF APPEAL IS DISMISSED FOR ALL OF THE THREE YEARS IN APPEAL. 3. WE HAVE HEARD BOTH THE SIDES. FROM RECORD WE HOLD THAT THE NOTICE U/S 148 FOR REASSESSMENT WAS ISSUED AFT ER STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 4 RECORDING PROPER REASONS AND THESE REASONS WERE SUPPLI ED TO THE ASSESSEE. THE ASSESSEE OBJECTED TO THE REASONS RECORDED. THE ASSESSING OFFICER EXAMINED THE OBJECTI ONS OF THE ASSESSEE AND DECIDED ACCORDINGLY. FROM RECORD WE F IND THAT THERE IS NO FACTUAL AND LEGAL INFIRMITY IN ISSUING THE NOTICE U/S 148 OF THE ACT FOR REOPENING THE ASSESSME NT IN ALL THESE YEARS. THEREFORE, IN OUR VIEW, ALL THESE GRO UNDS AGAINST REASSESSMENT PROCEEDINGS HAVE NO MERIT AND THE SAME ARE DISMISSED. 4. ANOTHER ISSUE RAISED IN THE APPEALS IS REGARDING DEN IAL OF DEDUCTION U/S 80IB(10) OF THE ACT. THE LEARNED CI T(A) DISMISSED THE ASSESSEES APPEALS ON VARIOUS GROUNDS BY HOLDING THAT THE PROJECTS DO NOT FULFIL MANY CONDITIO NS STIPULATED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THE RELEVANT PARAS 3.5. TO 3.9 OF THE ORDER OF T HE ARE REPRODUCED HEREUNDER :- STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 5 3.5 BEFORE ME THE APPELLANT HAS SUBMITTED WRITTEN ARGUMENTS. I HAVE EXAMINED THE VARIOUS ISSUES RELATING TO THE MATTER, THE APPELLANTS ARGUMENTS AND MATERIAL AVAILABLE ON RECORD. BEFORE ME IT IS PLEADED THAT THE APPELLANT HAS DEVELOPED AS WELL AS BUILT THE HOUSING PROJECT. THAT THE JOB OF CIVIL CONSTRUCTION WAS INTEGRAL PAR T OF OVERALL AGREEMENT WITH THE BUYERS. THIS ARGUMENT IS NOT PLAUSIBLE. IT IS UNDISPUTED THAT PLOTS OF LAND WERE SOLD TO VARIOUS BUYERS WELL BEFORE THE CONSTRUCTION STARTED. SINCE THE LAND WAS ALREAY SOLD TO THE BUYERS IT WAS NOT AVAILABLE WITH THE APPELLANT FOR BUILDING ANY HOUSING PROJECTS ON IT. THE LAND OF STERLING GREEN VIEW COLONY WAS PURCHASED AND THE PLOTS WERE DEVELOPED BY SHRI VIJIT PATNI AND OTHERS. AFTER DEVELOPMENTOF LAND THEY SOLD THE PLOTS THROUGH REGISTERED SALE DEED TO STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 6 PARTIES WHO BOUGHT HOUSE CONSTRUCTED ON THESE PLOTS UNDER CONTRACT FOR CIVIL CONSTRUCTION ENTERED INTO WITH THE APPELLANT. IT DEVELOPED THE LAND OF STERLING CASTLE COLONY INTO PLOTS AND THEN SOLD THE PLOTS TO VARIOUS PERSONS. THE FACTS OF THE CASE CLEARLY SHOWS THAT THE APPELLANT IS A CONTRACTOR. THE CONSTRUCTION DONE AFTER SALE OF PLOTS IS DONE I N CAPACITY OF A CONTRACTOR. THE FACTS THAT VARIOUS PERMISSIONS ARE OBTAINED BY THE APPELLANT FIRM DOES NOT CHANGE THE NATURE OF TRANSACTION. THE APPELLANT IS NOTHING MORE THAN A HOLDER OF POWER OF ATTORNEY OF THE PLOT OWNERS. IT DOES NOT NEGATE THE FACT THAT APPELLANT DID NOT HAVE ANY LAND FOR CONSTRUCTION BY HIM SINCE THE PLOTS WERE ALREADY SOLD. IN THESE CIRCUMSTANCES, THE PERMISSIONS OBTAINED BY THE APPELLANT WAS IN CAPACITY OF AN ATTORNEY ONLY. THIS DOES NOT MAKE THE APPELLANT A STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 7 BUILDER. THE ELIGIBLE BUSINESS AS PER SECTION 80IB(10) IS DEVELOPMENT AND BUILDING OF A HOUSING PROJECT. THIS SHOWS THAT ONLY A HOUSING PROJECT IN WHICH BOTH DEVELOPMENT AND CONSTRUCTION IS DONE IS ELIGIBLE FOR DEDUCTION U/S 80IB(19). IN RESPECT OF STERLING CASTLE COLONY THE LAND HAS BEEN DEVELOPED AS OWNER BUT HOUSES ARE NOT BUILT AS OWNER. IN RESPECT OF STERLING GREEN VIEW COLONY THE LAND IS DEVELOPED BY SHRI VIJIT PATNI AND OTHERS. THE CONSTRUCTION OF THE HOUSES HAVE BEEN DONE BY THE PLOT OWNERS THROUGH CONTRACT OF CONSTRUCTION GIVEN TO THE APPELLANT. IT IS IMPORTAN T TO NOTE THAT NO REGISTRY OF COST OF CONSTRUCTION COMPONENT HAD BEEN MADEE3ITHER BY THE APPELLANT OR THE BUNGLOW OWNERS. THESE FACTS CLEARLY SHOW THAT THE PROJECTS CLAIMED TO BE DEVELOPED AND BUILT BY THE APPELLANT FIRM WERE NOT DEVELOPED AND STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 8 BUILD BY IT HENCE THE APPELLANT DOES NOT HAVE ANY ELIGIBLE PROJECT OF ITS OWN FOR CLAIMING DEDUCTION U/S 80IB(10). 3.6 REGARDING THE A.O.S FINDING THAT THE PERMISSION FOR CONSTRUCTION HAS BECOME INVALID DUE TO BREACH OF CONDITION NO. 7 OF THE PERMISSION CERTIFICATE IT IS PLEADED THAT THIS FINDING IS ONLY HYPOTHETICAL IN NATURE. THAT NO CONDITION HAS BEEN VIOLATED AS IS EVIDENT FROM THE FACTT HAT LOCAL AUTHORITIES HAS NOT TAKEN ANY ACTION AGAINST THE APPELLANT. ON EXAMINATION IT IS FOUND THAT CONDITION NO. 7 OF PERMISSION CERTIFICATE IS INDEED VIOLATED HENCE THE PERMISSION IS AUTOMATICALLY CANCELLED IN VIEW OF CONDITION NO. 8 WHICH STIPULATES THAT VIOLATION OF ANY OF THE SEVEN CONDITIONS WILL LEAD TO AUTOMATIC CANCELLATION OF STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 9 PERMISSION. SINCE CANCELLATION IS AUTOMATIC NO ORDER IS REQUIRED FOR CANCELLATION., 3.7 THE PROJECTS DO NOT FULFIL MANY CONDITIONS STIPULATED IN SECTION 80IB(10). IT IS FOUND THAT COMPLETION CERTIFICATE HAS NOT BEEN ISSUED BY LOCAL AUTHORITY TILL DATE. BEFORE ME IT IS PLEADED A QUALIFIED ARCHITECT HAS CERTIFIED THAT THE PROJECT HAS BEEN COMPLETED. THAT MPEB HAS PROVIDED ELECTRIC CONNECTION TO PROPERTY OWNERS WHICH SHOWS THAT PROJECT HAS BEEN COMPLETED. THE FACT THAT THE OWNERS OF THE HOUSES HAVE GOT ELECTRIC CONNECTION DOES NOT HELP THE APPELLANTS CASE. T IS UNDISPUTED THAT PLOTS WERE SOLD TO VARIOUS BUYERS UNDER REGISTERED DEED. THEY WERE ENTITLED TO GET ELECTRICITY CONNECTION ON THE BASIS OF TRANSFER DEE D SHOWING OWNERSHIP OF THE PROPERTY. THE APPELLANTS ARGUMENT THAT THE EXPLANATION (II) TO SECTION STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 10 80IB(10) IS NOT APPLICABLE IS NOT PLAUSIBLE. IN VIE W OF THE EXPLANATION (II) TO CONDITION (A) OF SECTION 80IB(10) A CERTIFICATE OF ARCTHITECT IS ALSO NOT ADEQUATE AND SUFFICIENT TO MEET THE CONDITION. EXPLANATION (II) TO SECTION 80IB(10) IS REPRODUCED AS UNDER :- THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL EB TAKEN TO BE THE DATE ON WHICH HE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. IT IS CLEAR THAT THERE IS NO AMBIGUITY ABOUT THE AB OVE PROVISION. IT IS CLEAR THAT A PROJECT CAN BE HELD T O BE COMPLETED ON A DATE ON WHICH THE COMPLETION CERTIFI CATE IS ISSUED BY THE LOCAL AUTHORITY. IT SHOWS THAT WIT HOUT ISSUE OF COMPLETION CERTIFICATE BY THE LOCAL AUTHOR ITY A PROJECT CANNOT BE TREATED AS COMPLETE. THIS EXPLANA TION STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 11 IS CLARIFICATORY IN NATURE HENCE IS APPLICABLE TO A LL ASSESSMENT YEARS. IN VIEW OF THE ABOVE IT IS HELD THAT THE PROJECTS DO NOT FULFIL CONDITIONS (A) OF SECTIO N 80IB(10) HENCE THE PROJECT IS NOT ENTITLED FOR DEDUCTION U/S 80IB. 3.8 IT IS FOUND THAT IN THE PROJECT BOTH HOUSES AND SHOPS HAVE BEEN CONSTRUCTED. CONDITION (D) PROVIDES THAT IN THE ELIGIBLE PROJECT THE BUILT UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOU SING PROJECT SHOULD NOT EXCEED 5% OF THE AGGREGAGE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQUARE FEET WHICHEVER IS HIGHER (BEFORE AMENDMENT ON 1.04.2010) . THE PLAN OF STERLING CASSEL COLONY SHOWS CONSTRUCTI ON OF 9 SHOPS. THE BUILD UP AREA OF SHOPS IS 425.50 SQ. M ETER EQUAL TO 4901 SQ. METER. IT IS 5.80% OF TOTAL BUILD UP AREA OF 11240 SQ.METER. BEFORE ME IT IS PLEADED BY THE APPELLANT THAT THE COMMERCIAL AREA IS MADE TO PROVI DE BASIC AMENITY TO THE BENEFIT OF THE RESIDENTS AS PE R STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 12 NORMS OF THE MUNICIPAL CORPORATION. THAT THE APPELL ANT HAD NOT CLAIMED EXEMPTION FOR THE COMMERCIAL PORTIO N. THIS ARGUMENT IS NOT PLAUSIBLE FOR THE REASON THAT CONDITION (D) OF SECTION 80IB(10) HAS TO BE MET FOR ALLOWABILITY OF DEDUCTION. SINCE THE SHOPS AND COMMERCIAL ESTABLISHMENT IN THE PROJECTS EXCEED THE AREA ALLOWED IN CONDITION (D), THE ENTIRE PROJECT B ECOMES INELIGIBLE FOR THE DEDUCTION. THE FACT THAT THE CON STRUCTION OF SHOP IS APPROVED BY THE LOCAL AUTHORITY DOES NOT SUPPORT THE APPELLANTS CLAIM. THESE FACTS CLEARLY SHOWS THAT THE PROJECTS HAVE NOT FULFILLED CONDITION (D) TO SECTION 80IB(10) HENCE IS NOT ELIGIBLE FOR DEDUCTION UNDER THE SAME SECTION. IT IS ALSO MENTIONED THAT THE COMPLETION CERTIFICATE H AS NOT BEEN ISSUED BY THE LOCAL AUTHORITY TILL DATE (DATE OF APPELLATE PROCEEDINGS). BEFORE THE LEARNED CIT(A) THE ASSESSEE CLAIMED THAT A QUALIFIED ARCHITECT HAS CERTIFIED STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 13 THAT THE PROJECT HAS BEEN COMPLETED, ELECTRIC CONNECT IONS HAVE BEEN PROVIDED BY MPEB AND PLEADED THAT THE PROJECT SHOULD BE TAKEN AS COMPLETE IN TERMS OF CONDITIONS STIPULATED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. EXPLANATION II TO SECTION 80IB(10) OF THE INC OME TAX ACT, 1961 PROVIDES THAT THE DATE OF COMPLETION OF CONSTRUCTION OF THE PROJECT SHALL BE THE DATE ON WHIC H THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PR OJECT IS ISSUED BY THE LOCAL AUTHORITY. 5. 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 14 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 15 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 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) STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 16 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 17 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 18 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 19 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, 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 20 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 21 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); 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 22 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 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' STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 23 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 24 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 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. STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 25 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 26 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 AUTHORITY', AS PREDICATED IN EXPLANATION (II) THEREUNDER. 26. WE ACCORDINGLY HOLD THAT ISSUANCE OF COMPLETIO N 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 27 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 28 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 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 STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 29 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 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. 6. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDER ED THE SWEEP OF AMENDED CLAUSE (A) OF THE PROVISION UNDE R STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 30 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. THE HON'BL E HIGH COURT HAS HELD THAT ISSUANCE OF COMPLETION CERTIFICATE AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT MENTIONING IN THE DATE OF THE COMPLETION OF PROJECT BEFORE CUT OFF DATE , DOES NOT FULFIL THE CONDITION SPECIFIED IN CLAUSE (A) OF S ECTION 80IB(10) READ WITH EXPLANATION 2 THEREUNDER. IN VIEW OF THIS FINDING, WE FIND NO MERIT IN THE APPEALS OF THE ASSESSEE AND DISMISS THE SAME. ITA NO. 360/IND/2012 7. THE ONLY ISSUE INVOLVED IS NOT ALLOWING THE DEDUC TION U/S 80IB(10) OF THE INCOME TAX ACT. THIS APPEAL ARISE S OUT STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 31 OF THE ORDER OF THE LEARNED CIT(A)-II, BHOPAL, DATED 29.2.2012. IN THIS YEAR ALSO THE ASSESSEE COULD NOT F URNISH THE COMPLETION CERTIFICATE IN RESPECT OF HOUSING PRO JECT ON WHICH DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT IS CLAIMED. NO COMPLETION CERTIFICATE HAS BEEN ISSUED BY THE LOCAL AUTHORITY TILL THE DATE OF HEARING OF APPEAL BEFOR E THE LEARNED CIT(A). THE ONLY PLEADING OF THE ASSESSEE IS THAT A QUALIFIED ARCHITECT HAS CERTIFIED THE PROJECT AS COMPLE TE AND THE PROPERTY OWNERS HAVE GOT ELECTRIC CONNECTIONS FR OM MPEB. AS WE HAVE ALREADY HELD THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S GLOBAL REALITY (SUPRA) HAS HELD THAT COMPLETION CERTIFICATE IN RESPECT OF HOUSING PROJECT ON WHICH DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT HAS BEEN CLAIMED IS NECESSARY FOR CLAIMING DEDUCTION. IN VIEW OF THESE F ACTS, WE FIND NO MERIT IN THE APPEAL OF THE ASSESSEE WHICH ALSO STANDS DISMISSED. STERLING CONTRACTORS & BUILDERS ITA NOS.357 TO 360/IND/2012 32 8. FINALLY, ALL THE APPEALS OF THE ASSESSEE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 23RD SEPTEMBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 23 RD SEPTEMBER, 2015 DN/-