M/s Surabhi Homes Pvt. Ltd., Bhopal V. The Assistant Commissioner of income Tax 3(1), Bhopal

ITA 4/IND/2011

• Counselvise Citation: 422714 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: GIRISH AGARWAL S
• Keywords: Depreciation; Retrospective amendment
• Section: 143(3); 80IB; 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. : AAICS7211C I.T.A.NO. 04/IND/2011 & 139/IND/2011 A.Y. : 2006 - 07 & 2007 - 08 M/S.SURABHI HOMES PVT.LTD., ACIT, 3(1),, BHOPAL. VS BHOPAL. APPELLANT RESPONDENT APPELLANT BY : S/ SHRI ASHISH GOYAL & GIRISH AGARWAL, ADVOCATES. RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 05 . 0 3 .201 2 DATE OF PRONOUNCEMENT : 19 . 0 3 .201 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TH E ORDERS OF CIT(A) FOR THE ASSESSMENT YEARS 2006-07 A ND 2007- 08. 2. FOLLOWING COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE :- -: 2: - 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A FAIR, PROPER AND MEANINGFUL OPPORTUNITY HAS NOT BEEN AFFORDED TO THE ASSESSEE TO PUT UP DEFENSE ON THE ISSUES DISPUTED IN THE APPEAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, DISALLOWANCE OF ASSESSEES CLAIM U/S 80IB IS ABSOLUTELY ARBITRARY, IRRATIONAL AND UNLAWFUL. THEREFORE, THE ADDITION MADE ON ABOVE ACCOUNT DESERVES TO BE DELETED. 3. THAT THE LD. ASSESSING OFFICER HAS OVERLOOKED TO CONSIDER THE PAPERS AND EVIDENCES FURNISHED BEFORE HIM DURING THE COURSE OF THE ASSESSMENT AND AS SUCH ENTIRE ORDER HAS BECOME ARBITRARY AND BASELESS. 4. THAT LD. CITS UPHOLDINGS THE LD. ASSESSING OFFICER S FINDINGS ON THE BASIS OF IMPUGNED PHOTOGRAPH OF A HOUSE FORMING PART OF THE ASSESSMENT ORDER ARE ERRONEOUS, MATERIALLY INCORRECT, BAD ON FACTS, BASELESS AND THEREFORE UNSUSTAINABLE IN LAW. -: 3: - 3 5. THAT IN THE FACE OF PREVAILING LEGAL STANDARDS THE LD. ASSESSING OFFICER HAS ERRED IN HOLDING THAT THE ASSESSEE HAS FAILED IN COMPLETING THE PROJECT WITHI N THE STIPULATED TIME PERIOD. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS OF THE CASE IN THE ASSESSMENT YEAR 2 006-07 ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGA GED IN THE BUSINESS OF BUILDING. DURING THE RELEVANT ASSESSMEN T YEAR UNDER CONSIDERATION, THE ASSESSEE HAS UNDERTAKEN DEVELOPMENT AND BUILDING OF HOUSING PROJECT FOR WHI CH DEDUCTION WAS CLAIMED U/S 80IB(10). THE ASSESSING O FFICER DECLINED CLAIM OF DEDUCTION ON THE PLEA THAT THE AS SESSEE HAS NOT OBTAINED COMPLETION CERTIFICATE. HE ALSO OBSERV ED THAT HOUSE NO.84 WAS NOT COMPLETE, THEREFORE, THE PROJEC T AS A WHOLE WAS NOT COMPLETED BEFORE THE SPECIFIED DATE. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF DEDUCTION CLAIMED BY OBSERVING AS U NDER :- .. CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE AND LEGAL POSITION OF THE ISSUE I AM OF THE CONSIDERED VIEW THAT SINCE THE APPELLANT HAS NOT -: 4: - 4 FULFILLED THE CONDITIONS LAID DOWN IN PLAIN AND C LEAR LANGUAGE OF CLAUSE (A)(I) READ WITH THE EXPLANATI ON (II) OF SECTION 80IB(10), THE APPELLANT WAS NOT ELIGIBLE TO HAVE BENEFIT OF DEDUCTION U/S 80IB(10 ) OF THE ACT AND THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN DISALLOWING THE CLAIM OF THE APPELLANT A ND HENCE THE ADDITION OF RS. 87,32,115/- IS SUSTAINE D. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT THE ASSESSEE HAS GOT ITS APPROVAL OF BUILDING PLAN AND THE SCHEME AS A WHOLE ON 27.5.2003 AND THE PROJECT WAS COMPLETED BY 31 ST MARCH, 2008, FOR WHICH APPLICATION FOR GRANT OF COMPLETION CERTIFICATE WAS GIVEN ON 15.1.2008 AN D REMINDERS FOR THE SAME WERE GIVEN TO MUNICIPAL CORP ORATION ON 21 ST APRIL, 2008, AND 7 TH JULY, 2008. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE COMPLETION CERTIF ICATE HAS NOT BEEN GRANTED BY MUNICIPAL AUTHORITIES TILL DATE . HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF -: 5: - 5 COORDINATE BENCH IN THE CASE OF C.I. BUILDERS WHERE IN FOLLOWING OBSERVATION WAS MADE BY THE BENCH :- 35. WITH REGARD TO THE FURNISHING OF CERTIFICATE FOR COMPLETION OF THE PROJECT, CONTENTION OF THE LD. A UTHORIZED REPRESENTATIVE WAS THAT THE AMENDMENTS OF THE ACT IN THIS REGARD HAVE BEEN EXPLAINED IN BOARD CIRCULAR N O. 5 OF 2005 DATED 15.7.2005. (2005) 276 ITR (ST) 151. AS PER LD. 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 READ S AS UNDER :- '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 WHI CH THE COMMISSIONER IS EMPOWERED UNDER SECTION 305 TO REQUIRE TO BE SET BACK OR IS EMPOWERED TO GIVE -: 6: - 6 PERMISSION TO CONSTRUCT OR RECONSTRUCT; SHALL WITHI N ONE MONTH OF THE COMPLETION OF THE WORK DELIVERED T O THE 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. -: 7: - 7 (4) NO PERSON SHALL OCCUPY OR PERMIT TO BE OCCUPI ED ANY SUCH BUILDING OR USE OR PERMIT TO BE USED ANY 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 -: 8: - 8 OBTAINED FROM THE CORPORATION AS DESIRED UNDER SECT ION 301(4) OF THE M.P. MUNICIPAL CORPORATION ACT, 1956. ' 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 PRESCRIBED TIME OF 15 DAYS OF ASSESSEES DELIVERY O F NOTICE IN WRITING OF SUCH COMPLETION, THE SAME IS DEEMED TO BE ISSUED. HE FURTHER SUBMITTED THAT THE ASSESSEE OBTAINED THE PERMISSION ON 24-05-2003. THE PERMISSION IS AT PB 67 FOR ASST. YEAR 2005-06. THE PROJECT WAS REQUIRED TO BE COMPLETED ON 31-03-2008. ASSESSEE APPLIED FOR COMPLETION CERTIFICATE ON 02-0 2- 2008. A CERTIFIED COPY OF THE APPLICATION WAS SUBMI TTED EARLIER. 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 LD. AUTHORIZED REPRESENTATIVE, THE INCOME-TAX A CT, 1961, DOES NOT SPECIFICALLY MANDATES OR LAYS DOWN A NY ENFORCEABLE COMPLIANCE FOR THE MUNICIPAL CORPORATIO N. -: 9: - 9 THEREFORE, THE PROVISIONS 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 PROVISIONS FOR DEPRECIATION I N 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 CONVENIE NCE 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 ARE INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARCEL O F THE LATER ACT AS IF THEY HAD BEEN BODILY TRANSPOSE D INTO IT. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER, M.R. : 'IF A SUBSEQUENT ACT BRINGS I NTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HE LD, IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THE Y -: 10: - 10 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 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 UNDER :- (II) THE DATE OF COMPLETION OF CONSTRUCTION OF TH E HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SU CH 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 -: 11: - 11 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 IF IT WERE , IT IS NOT POSSIBLE TO PROVIDE FOR THEM IN TERMS FREE F ROM ALL AMBIGUITY. A JUDGE CANNOT SIMPLY FOLD HIS HANDS AND BLAME THE DRAFTSMAN. HE MUST 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 FROM A CONSTRUCTI ON 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 THE LEGISLATURE. A C OURT 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 RU LE OF CONSTRUCTION OF A STATUTE IS THAT AN INTERPRETAT ION WHICH LEADS TO AN ANOMALOUS OR EVEN MISCHIEVOUS -: 12: - 12 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 ABSOLUT ELY INCAPABLE OF A CONSTRUCTION WHICH WILL ACCORD WITH THE APPARENT INTENTION OF THE PROVISION AND WILL AV OID A WHOLLY 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 B OUND 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 THE SECTION, UNDERSTAND IT S LANGUAGE AND GIVE EFFECT TO THE SAME. IF THE LANGUA GE IS PLAIN THE FACT THAT THE CONSEQUENCE OF GIVING EF FECT TO IT MAY LEAD TO SOME ABSURD RESULT IS NOT A FACTO R TO BE TAKEN INTO ACCOUNT IN INTERPRETING A PROVISION. IT IS FOR THE LEGISLATURE TO STEP IN AND REMOVE THE ABSURDITY. -: 13: - 13 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 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 -: 14: - 14 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 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 INTERPRETATION OF A STATUTORY PROVISION. SIMILARLY WHERE THE INTERPRETATION LEADS TO FUTILITY, IT CANNOT BE ACCEPTED. 40. EMPHASIZING RULE OF REASONABLE CONSTRUCTION, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT A FAIR AND REASONABLE CONSTRUCTION OF THE LANGUAGE IN THE STATUTE IS A BASIC PRINCIPLE OF INTERPRETATION. IF A TAXPAYER CANNOT BE BROUGHT UNDER THE TAX NET, REVENUE HAS TO BE RECONCILED TO THIS POSITION OF LA W. VIKRANT TYRES LTD. V. FIRST ITO (2001) 247 ITR 821 -: 15: - 15 (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 HAS ALWAYS TO BE RESOLVED IN FAVOUR OF THE ASSESSEE. SOUTHERN ROADWAYS LTD. V. CWT (2001) 251 ITR 213 (MAD). 41. EMPHASIZING RULE OF BENEFICIAL INTERPRETATION, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT IF THERE IS ANY AMBIGUITY IN LAW, THERE IS NO TAX I N LAW. MATHURAM AGAWAM V. STATE OF MP AIR 2000 SC 109. LIBERAL CONSTRUCTION SO AS TO EFFECTUATE TH E OBJECTS IS PERMISSIBLE, WHEN THERE IS 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 THE TAXPAYER. J&K STEEL LTD. V. UNION OF INDIA AIR 1970 SC 1173. THE BENEFIT OF DOUBT IN A TAXING STATUTE SHOULD -: 16: - 16 ALWAYS GO TO THE TAXPAYER. ITO V. DEVIANT (TS) AIR 1968 SC 623. 42. IN VIEW OF THESE PROPOSITIONS, THE FINAL AND CONCLUDING CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WAS AS UNDER :- FISCAL STATUTES MUST BE INTERPRETED STRICTLY IN 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 TAXING STATUTE IS OF DOUBTFUL AND AMBIGUOUS MEANING, IT MUST BE RESOLVED 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 FAVOURAB LE 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 518 (SC). -: 17: - 17 THE ASSESSEE APPLIED IN TIME TO THE MUNICIPAL CORPORATION TO ISSUE CERTIFICATE OF COMPLETION. IT WAS NOT ISSUED. HENCE IT MAY PLEASE BE DEEMED TO HAVE BEEN ISSUED THAT THE MPMC ACT 1956 PERMITTED THE ASSESSEE TO OCCUPY THE HOUSES AS SAFE HAVENS. 7. WITH REGARD TO THE OBSERVATION OF ASSESSING OFFICER IN RESPECT OF HOUSE NO. 84, CONTENTION OF THE LD. AUTH ORIZED REPRESENTATIVE WAS THAT THE ASSESSEE HAS NOT SOUGH T FOR ANY DEDUCTION IN RESPECT OF HOUSE NO.4, SINCE IT WAS OU T OF THE SCHEME WHICH HAS BEEN UNDERTAKEN BY THE ASSESSEE. S INCE NO DEDUCTION WAS CLAIMED U/S 80IB(10) IN RESPECT OF TH E PROFIT ATTRIBUTABLE TO HOUSE NO.84, AS PER LD. AUTHORIZED REPRESENTATIVE , THE ASSESSING OFFICER WAS NOT JUST IFIED IN DECLINING CLAIM OF DEDUCTION U/S 80IB(10) ON THE RE MAINING HOUSES, WHICH WERE CONSTRUCTED AND DULY COMPLETED B EFORE THE STATUTORY PERIOD PRESCRIBED UNDER THE LAW. 8. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE FINDING RECORDED BY THE LOWER AUTHORITIES TO THE EFFECT THA T HOUSING PROJECT WAS NOT COMPLETE, THEREFORE, MUNICIPAL CORP ORATION DID -: 18: - 18 NOT ISSUE THE COMPLETION CERTIFICATE, WHICH IS A PR E-CONDITION FOR ALLOWING CLAIM OF DEDUCTION U/S 80IB(10). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM RECORD THAT HOUSING PROJECT IN RESPECT OF WHICH ASS ESSEE HAS CLAIMED DEDUCTION WAS REQUIRED TO BE COMPLETED BY 3 1 ST MARCH, 2008, AND A CERTIFICATE FOR COMPLETION OF TH E PROJECT WAS TO BE ISSUED BY THE MUNICIPAL CORPORATION IN TE RMS OF PROVISIONS OF EXPLANATION (II) OF SECTION 80IB(10) READ WITH CLAUSES (A)(I) OF THE INCOME-TAX ACT. UNDISPUTEDLY, THE ASSESSEE DID NOT GET ANY CERTIFICATE FOR COMPLETION OF THE P ROJECT, WHICH IS A PRE-CONDITION FOR CLAIM OF DEDUCTION U/S 80IB( 10). IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT COMPLETION C ERTIFICATE WAS ISSUED SUBSEQUENTLY, WHICH DID NOT MENTION THE DATE OF COMPLETION. HAD IT BEEN THE CASE OF THE ASSESSEE TH AT PROJECT WAS COMPLETED BY 31 ST MARCH, 2008, AND MUNICIPAL CORPORATION HAS ALSO ISSUED COMPLETION CERTIFICATE, EVEN THOUGH SUBSEQUENTLY WITHOUT MENTIONING THE DATE OF COMPLETION OF THE PROJECT, IT CAN BE GOOD CASE FOR RESTORATION OF MATTER BACK TO THE ASSESSING OFFICER IN TERMS OF OU R DECISION -: 19: - 19 IN THE CASE OF C.I.BUILDERS. THE OBSERVATION OF TRI BUNAL WITH REGARD TO APPLICABILITY OF PROVISION FOR OBTAINING COMPLETION CERTIFICATE WAS AS UNDER :- 26. WITH REGARD TO CERTIFICATE OF COMPLETION OF PROJECT, AS DISCUSSED ABOVE, THE ISSUE IS ALREADY COVERED IN FAVOUR OF THE ASSESSEE, AS PER ORDER OF THE COORDINATE BENCH IN THE CASE OF PRIYADARSHANI CONSTRUCTION, I.T.A.NO. 509 & 510/IND/2010 ORDER DATED 30.11.2011, WHEREIN IT WAS HELD THAT THE CONDITION 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 GRAN T 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. FOLLOWING IS THE PRECISE -: 20: - 20 OBSERVATION IN THE CASE OF M/S. PRIYADHARSHANI 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 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 -: 21: - 21 (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, ( 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; -: 22: - 22 ( 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 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 O F LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. THE THIRD CONDITION WAS THAT RESIDENTIAL UNIT HAS A -: 23: - 23 MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DEL HI 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. 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 EFFECT COULD BE GIVEN IN THE NEXT SUCCEEDING YEAR. WHILE COMING TO THIS CONCLUSION, THE -: 24: - 24 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 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 -: 25: - 25 COMPLETION OF 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. 10. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW T HE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 TO 2004-05 ON MERIT OF CLAIM OF DEDUCTION CLAIMED U/S 80IB(10) . 11. 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. 12. IN RESPECT OF ASSESSMENT YEAR 2005-06, WE F OUND THAT EVEN THOUGH THE ASSESSEE HAS OBTAINED PERMISSI ON FOR CONSTRUCTION ON 24.5.2003 AND ALSO APPLIED FOR ISSU E OF COMPLETION CERTIFICATE ON 2.2.2008, HOWEVER, NO SUC H -: 26: - 26 COMPLETION CERTIFICATE WAS ISSUED BY COMPETENT AUTH ORITY. IN THIS REGARD, CONTENTION OF ASSESSEE WAS THAT ALTHOU GH ASSESSEE APPLIED FOR COMPLETION CERTIFICATE, THE CO MPLETION CERTIFICATE WAS NOT GRANTED BY THE MUNICIPAL CORPOR ATION. AS PER THE M.P. & C. G. MUNICIPAL CORPORATIONS ACT, SE CTION 301, IF ANY PERSON APPLIES FOR OBTAINING COMPLETION CERTIFICATE, THE MUNICIPAL CORPORATION SHALL GRANT COMPLETION CERTIFICATE WITHIN 15 DAYS. IF IT IS NOT SO GRANTED , IT SHALL BE DEEMED THAT THE COMPLETION CERTIFICATE IS GRANTED. 13. 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 MUNICIPAL 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 UNDER LAW, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF LOWER AUTHORITIES FOR DECLINING CLAIM OF DEDUCTION U/S 80 IB(10). 14. SINCE IN THE INSTANT CASE BEFORE US FOR THE ASSESSMENT YEAR 2006-07 & 2007-08, THE COMPLETION CERTIFICATE WAS NOT ISSUED TILL DATE, THERE IS NO REASON TO RESTORE THE MATTER BACK TO -: 27: - 27 THE FILE OF ASSESSING OFFICER. ACCORDINGLY, THE ASS ESSEE IS NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IB(10) AND LO WER AUTHORITIES WERE JUSTIFIED IN DECLINING THE CLAIM O F DEDUCTION U/S 80IB(10). 15. IN THE RESULT, BOTH THE APPEALS OF THE A SSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2012. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19 TH MARCH, 2012. CPU* 563