M/s. Mangalmay, Bhopal V. The ITO 1(1), Bhopal

ITA 429/IND/2013

• Counselvise Citation: 42922714 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D
• Keywords: Retrospective amendment; Reasonable cause
• Section: 80IB

Judgement Text

M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 429/IND/2013 A.Y.2009-10 M/S. MANGALMAY BHOPAL PAN AANFM5755F ::: APPELLANT VS INCOME TAX OFFICER 1(1) BHOPAL ::: RESPONDENT ITA NO. 3/IND/2014 A.Y.2010-11 M/S. MANGALMAY BHOPAL PAN AANFM5755F ::: APPELLANT VS ADDL. CIT RANGE 1 BHOPAL ::: RESPONDENT M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 2 APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 2.9.2015 DATE OF PRONOUNCEMENT 8 .9.2015 O R D E R PER SHRI B.C. MEENA, AM ITA NO. 429/IND/2013 FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL , DATED 18.3.2013. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF DEVELOPING HOUSING PROJECT AND CONSTRUCT ING HOUSES UNDER THE NAME MANGALMAY PARISAR. ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT OF RS.30,28,677/- FOR THE ASSESSMENT YEAR 2009-10 AND RS.34,82,868/- FOR THE ASSESSMENT YEAR 2010-11. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. IN THE APPEAL FOR THE ASSESSMENT YEAR 2009-10 THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS :- M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 3 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDERS PASSED BY THE LD. LOWER AUTHORITIES ARE CONTRARY TO LAW, MATERIALLY INCORRECT AND UNSUSTAINABLE IN LAW AS WELL AS ON FACTS. ALL THE FINDING AND CONCLUSION OF THE LD. LOWER AUTHORITIES ARE ALSO CONTRARY TO THE MATERIAL, OPPOSED TO THE FACTS, EQUITY AND LAW. 2. THAT THE LOWER AUTHORITIES HAVE ERRED WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AT RS.30,28,677/- THEY HAVE FURTHER ERRED TO INTERPRET THE PROVISION OF SECTION 80IB(10) OF THE ACT AND THEREBY DISALLOWING THE LAWFUL, VALID AND LEGAL CLAIM WHICH IS FULLY SUPPORTED BY EVIDENCE. HENCE THE DEDUCTION U/S 80IB(10) BE KINDLY ALLOWED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW AS WELL, THE REASON ADVANCED M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 4 BY THE LD. LOWER AUTHORITIES FOR DISALLOWING THE CLAIM MADE U/S 80IB(10) OF THE IT ACT IS NEITHER JUSTIFIED NOR SUSTAINABLE IN LAW. THE SO CALLED REASONS ARE OPPOSED TO FACTS AND LAW AND BASED UPON PRESUMPTION AND ASSUMPTION. THEREFORE, THE SAID SO CALLED REASONS BE HELD AS WRONG AND UNSUSTAINABLE OF LAW. 4. THAT THE LD. LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN HOLDING THE APPELLANT AS CONTRACTOR FOR THE DEVELOPING AND CONSTRUCTING THE HOUSING PROJECTS. THE ENTIRE FINDINGS ARE ERRONEOUS AND CONTRARY TO THE FACTS AND MATERIAL OF THE CASE. THEREFORE THE FINDING GIVEN BY THE LEARNED LOWER AUTHORITIES MAY PLEASE HELD AS WRONG. 5. THAT THE LD. CIT(A)-I BHOPAL HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING THE PROPER AND M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 5 REASONABLE OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISION MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT. 6. THAT THE LD. LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN NOT ACCEPTING THE POSSESSION LETTERS, ELECTRICITY BILL AND OTHER DOCUMENTS IN LI EU OF COMPLETION CERTIFICATE ISSUED BY THE APPELLANT WHO IS AN QUALIFIED ENGINEERING FOR ON BEHALF OF THE FIRM. THE SAME SHOULD HAVE BEEN ACCEPTED. 7. THAT AT ANY EVENT, THE TRADING RESULTS AS DISCLOSED BY THE APPELLANT SHOULD HAVE BEEN ACCEPTED. 2. THE ISSUE REGARDING COMPLETION CERTIFICATE AS REQU IRED UNDER PROVISIONS OF SECTION 80IB(10) OF THE ACT HAS BEEN TAKEN IN GROUND NO. 6 WHEREIN IT IS PLEADED THAT THE L OWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN NOT M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 6 ACCEPTING THE POSSESSION LETTERS, ELECTRICITY BILL AN D OTHER DOCUMENTS IN LIEU OF COMPLETION CERTIFICATE ISSUED B Y THE APPELLANT WHO IS AN QUALIFIED ENGINEERING FOR ON BEHALF O F THE FIRM. THE SAME SHOULD HAVE BEEN ACCEPTED. THE ASSESSEE GOT APPROVAL OF PROJECT ON 17.3.2006. THE AREA OF PLOT WAS 5.48 ACRES. THE DUE DATE OF COMPLETION AS PRESCRIBED IN SECTION 80IB(10) WAS 31.3.2012. ASSESS EE HAS NOT BEEN ISSUED COMPLETION CERTIFICATE WITHIN THE DU E DATE FROM THE LOCAL AUTHORITY. 3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE ASSESSING OFFICER RECORDED A FINDING THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE FIRM HAD CONTINUED DEVELOPING AND BUILDING HOUSING PROJECT NAMED AS MANGALMAY PARISAR IN HOSHANGABAD DISTRICT. THE ASSESSING OFFICER RECORDED THAT THE ASSESSEE HAS NOT B EEN GRANTED COMPLETION CERTIFICATE WHICH IS A REQUIREMENT O F LAW. HE ALSO RECORDED THAT THE ASSESSEE HAS GOT THE PLO T M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 7 REGISTERED IN THE NAMES OF CUSTOMERS AND THEREAFTER CONSTRUCTED HOUSES THEREON AND HELD THAT THE ASSESSEE HAS WORKED AS MERE CONTRACTOR FOR THE CUSTOMERS AND NOT AS A DEVELOPER FOR THE HOUSING PROJECT. THE ASSESSEE HAS GOT APPROVAL FROM TOWN & COUNTRY PLANNING DEPARTMENT ON 17.3.2006 AND PERMISSION FOR DEVELOPMENT OF THE COLO NY FROM SDO, HOSHANGABAD ON 1.6.2006 OVER THE LAND AREA OF 5.4 ACRES. SINCE THE HOUSING PROJECT WAS APPROVED BEFO RE 31.3.2007, THE CONSTRUCTION WAS TO BE COMPLETED WITH IN FIVE YEARS UPTO 31.3.2012. AFTER RECORDING THESE FACT S, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENTIT LED TO DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEE DID NOT FURNISH ANY COMPLETION CERTIFICATE FROM THE LOCAL AUTHO RITY TILL 18.3.2013 WHICH WAS THE LAST DATE OF HEARING BEFO RE THE LEARNED CIT(A). THE LEARNED CIT(A) CONFIRMED THE ACTI ON OF THE ASSESSING OFFICER BY HOLDING AS UNDER :- M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 8 3.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT IS AN ADMITTED FACT THAT THE APPELLANT HAD NOT OBTAINED ANY COMPLETION CERTIFICATE FOR THE COMPLETION OF CONSTRUCTION THE HOUSING PROJECT NAMELY MANGALMAY PARISAR FROM THE LOCAL AUTHORITY TILL 18.3.2013 I.E. THE LAST DATE OF HEARING. IT MAY BE NOTED THAT PROVISIONS OF SECTION 80IB(10) OF THE INCOME TAX ACT CLEARLY PROVIDE THAT THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. NOW IN THIS CASE, THE APPELLANT HAD NOT OBTAINED COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BEFORE THE SPECIFIED DATE I.E. 31.03.2012 AND, M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 9 THEREFORE, THE APPELLANT HAD NOT FULFILLED THE CONDITION LAID DOWN UNDER CLAUSE (A) OF SECTION 80IB(10) AND THUS WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THIS PROJECT. FURTHER, AS MENTIONED BY THE A.O., THE APPELLANT HAD, AFTER DEVELOPMENT OF LAND, SOLD THE PLOTS OF LAND TO THE CUSTOMERS AND THEREAFTER ACTED AS A CONTRACTOR FOR THE CUSTOMERS TO CONSTRUCT THE BUILDING THEREON. THE APPELLANT HAD NOT SOLD ANY RESIDENTIAL UNIT TO THE CUSTOMERS AS NO SUCH SALE DEED WAS REGISTERED FOR TRANSFER OF RESIDENTIAL UNIT. THEREFORE, THE APPELLANT ACTED AS A MERE CONTRACTOR FOR THE CUSTOMERS AFTER SELLING THE PLOTS TO THEM AND THE APPELLANT WAS NOT A DEVELOPER AND BUILDER OF THE HOUSING PROJECT AS ENVISAGED IN SECTION 80IB(10). THEREFORE, M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 10 THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THE HOUSING PROJECT MANGALMAY PARISAR. 3.6 IT MAY BE NOTED THAT ON THE SIMILAR FACTS, THE HON'BLE ITAT, INDORE, IN THE CASE OF SKY BUILDERS & DEVELOPERS VS. ITO-1(), BHOPAL (2011) 14 TAXMANN.COM 78(INDORE), HELD THAT WHERE THE ASSESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING SALE DEED AND THEREAFTER CONSTRUCTED BUILDING AT AN AGRED PRICE, IT AHD TO BE CONCLUDED THAT THE ASSESSEE MERELY ACTED AS A CONTRACTOR AND NOT A DEVELOPER AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE APPELLANT HAD ALSO NOT OBTAINED COMPLETION CERTIFICATE THAT THE CONSTRUCTION OF THE WHOLE PROJECT WAS M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 11 COMPLETE BEFORE THE DUE DATE. THE HEAD NOTES OF THIS DECISION ARE REPRODUCED AS UNDER :- SECTION 80IB OF THE INCOME-TAX ACT, 1961 DEDUCTIONS PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTUREDEVELOPMENT UNDERTAKINGS ASSESSMENT YEAR 2006-07 WHETHER WHERE ASSESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING A SALE DEED AND THEREAFTER ASSESSEE CONSTRUCTED BUILDING AT AN AGREED PRICE, IT HAD TO BE CONCLUDED THAT ASSESSEE MERELY ACTED AS BUILDING CONTRACTOR AND NOT AS A DEVELOPER AND, THEREFORE, ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) COULD NOT BE ALLOWED HELD, YES WHETHER EVEN OTHERWISE, IN VIEW M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 12 OF FACT THAT NO COMPLETION CERTIFICATE HAD BEEN ISSUED TO ASSESSEE BY LOCAL AUTHORITY, IN VIEW OF SUB-CLAUSE (2) OF EXPLANATION TO SECTION 80IB(10), ASSESSEES CLAIM FOR DEDUCTION WAS TO BE REJECTED HELD, YES. 3.7 THEREFORE, THE APPELLANT WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IB(10) ON THE PROFITS DERIVED FROM THE PROJECT MANGALMAY PARISAR. IT MAY BE NOTED THAT THE ABOVE DECISION OF THE HON'BLE ITAT IN THE CASE OF SKY BUILDERS & DEVELOPERS VS. ITO-1(1), BHOPAL (2011) 14 TAXMANN.COM 78 (INDORE) IS BINDING ON THE CIT(A) AS THE FACTS AND ISSUED INVOLVED ARE SIMILAR IN THE INSTANT CASE. 3.8 THE JURISDICTIONAL HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF AGRAWAL M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 13 WAREHOUSING AND LEASING LTD. VS. CIT (2002) 257 ITR 235 (MP) OBSERVED THAT THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWS UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE HON'BLE HIGH COURT INTER-ALIA OBSERVED IN THE ORDER AS UNDER :- OBVIOUSLY, THE COMMISSIONER OF INCOME-TAX (APPEALS) NOT ONLY COMMITTED IMPROPRIETY BUT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER OF THE APPELLATE TRIBUNAL. EVEN WHERE HE MAY HAVE SOME RESERVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 14 TRIBUNAL, HE HAD TO FOLLOW THE ORDER. HE COULD AND SHOULD HAVE LEFT IT TO THE DEPARTMENT TO TAKE THE MATTER IN FURTHER APPEAL TO THE TRIBUNAL AND GET THE MISTAKE, IF ANY, RECTIFIED. IN THIS CASE, THE HON'BLE HIGH COURT HELD AS UNDER (HEAD NOTES) :- HELD, THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) NOT ONLY COMMITTED JUDICIAL IMPROPRIETY BUT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER OF THE APPELLATE TRIBUNAL. THE MEMBERS OF THE TRIBUNAL WHO DECIDE THE APPEAL UPHOLDING THE VIEW TAKEN BY THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO DID NOT OBSERVE DUE PROCEDURE. M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 15 3.9 THE HON'BLE ITAT, BANGALORE IN THE CASE OF JINDAL ALUMINIUM LTD. VS. ACIT (2012) 19 ITR (TRI) 255(BANG.) HAS ALSO OBSERVED AS UNDER :- THE COMMISSIONER (APPEALS) BEING AN AUTHORITY LOWER IN THE TIER OF AUTHORITIES UNDER THE ACT TO APPELLATE TRIBUNAL, IS BOUND TO FOLLOW THE DECISION OF THE TRIBUNAL. 3.10. THEREFORE, IN VIEW OF THE ABOVE, IT IS EVIDENTLY CLEAR THAT THE PROJECT UNDERTAKEN BY THE APPELLANT DURING A.Y.2009-10 HAD NOT FULFILLED THE CONDITIONS LAID DOWN UNDER SECTION 80IB(10) AND THUS THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THIS PROJECT FOR A.Y. 2009-10 UNDER M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 16 CONSIDERATION. IN VIEW OF THE ABOVE, IT IS HELD THAT THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) IN A.Y. 2009-10 AND ACCORDINGLY THE DISALLOWANCE OF APPELLANTS CLAIM OF DEDUCTION U/S 80IB(10) OF RS.30,28,677/- MADE BY THE A.O. IS CONFIRMED. 4 WE HAVE HEARD BOTH THE SIDES. IN A RECENT JUDGMENT THE HON'BLE JURISDICTIONAL HIGH COURT OF MADHYA PRADE SH IN THE CASE OF CIT VS. M/S GLOBAL REALITY; ITA NO. 40/201 2 AND OTHERS HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING AS UNDER :- 19. THE PROVISION SUCH AS CLAUSE (A) AS AMENDED, SENSU STRICTO, CANNOT BE CONSIDERED AS A NEW CONDITION AND THAT TOO INCAPABLE OF COMPLIANCE. M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 17 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 APPROVED BEFORE 1ST APRIL, 2004 HAS BEEN GIVEN TIME M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 18 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) OF SECTION 80IB(10) , IT WOULD MEAN THAT THE HOUSING M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 19 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 PROJECTS. THIS HAS BEEN DONE IN LARGER PUBLIC INTER EST M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 20 - 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 TIME HAS I.T.A.NOS.40/2012, 36/2012 & M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 21 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 PROSPECTIVE EFFECT, ALBEIT LIMITING THE PERIOD FOR M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 22 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 WITHIN WHICH THE CONSTRUCTION MUST BE COMPLETED, AS M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 23 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 ASSESSEE TO COMPLY WITH SOMETHING WHICH IS IMPOSSIBLE TO ACHIEVE. M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 24 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 A SUBSTANTIVE PROVISION MANDATING ISSUANCE OR GRANT OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY BEF ORE M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 25 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' THE COMPLETION CERTIFICATE 'IS ISSUED' BY THE LOCAL AUTHORITY. TO INTERPRET IT TO INCLUDE AN EX POST FA CTO M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 26 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 TIME DUE TO REASONS BEYOND HIS CONTROL, THE ARGUMEN T OF SUBSTANTIAL COMPLIANCE OF THE PROVISION CAN BE M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 27 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. 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 M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 28 & 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 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 M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 29 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 COMPLETION CERTIFICATE, AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT, MENTIONING THE DATE OF COMPLETION OF PROJECT BEFORE THE CUT OFF DATE DOES NOT FULFILL TH E CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80IB ( 10) READ WITH EXPLANATION (II) THEREUNDER. WE REJECT TH E ARGUMENT OF THE ASSESSEE THAT THE EFFECT OF AMENDED CLAUSE (A) OF SUB-SECTION 10 OF SECTION 80IB, WHICH HAS COME INTO FORCE WITH EFFECT FROM 1 ST APRIL, 2005 ,HAS RETROSPECTIVE EFFECT OR THAT IT IS UNJUST IN A NY M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 30 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 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 M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 31 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 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 M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 32 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. 5. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDER ED THE SWEEP OF AMENDED CLAUSE (A) OF THE PROVISION UNDER SUB-SECTION (10) OF SECTION 80IB OF THE ACT AND HELD THAT THE PROVISIONS OF CLAUSE (A), AS AMENDED, SENSU STRICTO CAN NOT BE CONSIDERED AS NEW CONDITION AND THAT TOO INCAPABLE OF COMPLIANCE. THE CLAUSE DEALS WITH THE TIME FRAME WITHIN M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 33 WHICH THE HOUSING PROJECT WAS EXPECTED TO BE COMPLET ED TO GET THE BENEFIT OF PRESCRIBED DEDUCTION. THESE PROV ISIONS ARE NOT DIRECTORY. IT IS A SUBSTANTIVE PROVISION MANDATI NG ISSUANCE OR GRANT OF COMPLETION CERTIFICATE BY THE LOC AL AUTHORITY BEFORE THE CUT OFF DATE OR SPECIFIED TIME AS A PRE- CONDITION TO GET THE BENEFIT OF TAX DEDUCTION. THE HON'BLE HIGH COURT HAS HELD THAT ISSUANCE OF COMPLETION CERTIF ICATE AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT MENTI ONING IN THE DATE OF THE COMPLETION OF PROJECT BEFORE CUT OFF DATE, DOES NOT FULFIL THE CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80IB(10) READ WITH EXPLANATION 2 THEREUNDER. IN VIEW OF THIS FINDING, WE FIND NO MERIT IN THE APPEAL OF THE AS SESSEE. 6. SINCE WE HAVE DISMISSED THE APPEAL OF THE ASSESSEE ON THE BASIS OF THE DECISION OF THE HON'BLE JURISDICTIO NAL HIGH COURT (SUPRA) ON THE ISSUE OF NOT OBTAINING COMPLETIO N CERTIFICATE FROM THE LOCAL AUTHORITY IN PRESCRIBED TI ME, M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 34 THEREFORE, WE ARE NOT DECIDING OTHER GROUNDS RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 8. ITA NO. 3/IND/2014 EMANATES FROM THE ORDER OF LEARNED CIT(A) I, BHOPAL, DATED 26.9.2013. THE ASSESS EE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDERS PASSED BY THE LOWER AUTHORITIES ARE CONTRARY TO LAW, MATERIALLY INCORRECT AND UNSUSTAINABLE IN LAW AS WELL AS ON FACTS. ALL THE FINDING AND CONCLUSION OF THE LD. LOWER AUTHORITIES ARE ALSO CONTRARY TO THE MATERIAL OPPOSED TO THE FACTS, EQUITY AND LAW. 2. THAT THE LD. LOWER AUTHORITIES HAVE ERRED WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT AT M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 35 RS.34,82,686/-. THEY HAVE FURTHER ERRED TO INTERPRET THE PROVISION OF SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 AND THEREBY DISALLOWING THE LAWFUL VALID AND LEGAL CLAIM WHICH IS FULLY SUPPORTED BY EVIDENCES. HENCE THE DEDUCTION U/S 80IB(10) BE KINDLY ALLOWED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW AS WELL, THE REASON ADVANCED BY THE LD. LOWER AUTHORITIES FOR DISALLOWING THE CLAIM MADE U/S 80IB(10) OF THE ILT ACT IS NEITHER JUSTIFIED NOR SUSTAINABLE IN LAW. THE SOCALLED REASONS ARE OPPOSED TO FACTS AND LAW AND BASED UPON PRESUMPTION AND ASSUMPTION. THEREFORE, THE SAID SOCALLED REASONS BE HELD AS WRONG AND UNSUSTAINABLE OF LAW. 4. THAT THE LD. LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN HOLDING THE APPELLANT AS M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 36 CONTRACTOR FOR THE DEVELOPING AND CONSTRUCTING THE HOUSING PROJECTS. THE ENTIRE FINDINGS ARE ERRONEOUS AND CONTRARY TO THE FACTS AND MATERIAL OF THE CASE. THEREFORE, THE FINDING GIVEN BY THE LD. LOWER AUTHORITIES MAY PLEASE HELD AS WRONG. 5. THAT THE LD. CIT(A)-I, BHOPAL HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING THE PROPER AND REASONABLE OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISION MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. LOWER AUTHORITIES HAVE ERRED NOT CONSIDERING JUDICIOUSLY THE SUBMISSION MADE BEFORE HIM M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 37 7. THAT THE LD. LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN DISALLOWING THE INTEREST U/S 36(1)(III) OF THE INCOME TAX ACT, AT RS.5,00,000/-. THE SAME MAY PLEASE BE ALLOWED. 8. THAT THE LD. LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN NOT ACCEPTING THE POSSESSION LETTERS, ELECTRICITY BILL AND OTHER DOCUMENTS IN LI EU OF COMPLETION CERTIFICATE ISSUED BY THE APPELLANT WHO IS AN QUALIFIED ENGINEERING FOR ON BEHALF OF THE FIRM. THE SAME SHOULD HAVE BEEN ACCEPTED. 9. THAT AT ANY EVENT, THE TRADING RESULTS AS DISCLOSED BY THE APPELLANT SHOULD HAVE BEEN ACCEPTED. 10. THE DELAY IN FILING THE PRESENT APPEAL, IF ANY, IS BASED UPON REASONABLE CAUSE AND HENCE THE SAME MAY KINDLY BE CONDONED. M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 38 9. RETURN OF INCOME WAS FILED ON 15.10.2010 WHEREIN DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT WAS CLAI MED AT RS.34,82,686/- WHICH HAS NOT BEEN ALLOWED BY THE ASSESSING OFFICER AND ONE OF THE REASONS FOR NOT ALLO WING THE SAME WAS NON-FULFILING THE CONDITION REGARDING COMPLETION OF HOUSING PROJECT WITHIN THE TIME SPECI FIED UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. 10. WE HAVE HEARD BOTH THE SIDES. SINCE WE HAVE DISMISSED ITA NO. 429/IND/2013 FOR THE ASSESSMENT YE AR 2009-10 OF THE ASSESSEE ON THE ISSUE OF DEDUCTION U /S 80IB(10) OF THE INCOME TAX ACT FOR NON-FULFILING TH E CONDITION REGARDING COMPLETION CERTIFICATE BY RELYING ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GLOBAL REALITY (SUPRA), WE ALSO DISMISS THIS APPEAL OF THE ASSESSEE FOR THE SAME REASONS. SINCE WE HAVE DISMISSED M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 39 THE ASSESSEES APPEALS FOR NON-OBTAINING COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY, THEREFORE, OTHER GROUNDS RAISED IN RESPECT OF DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT ARE NOT BEING DECIDED. 11. THE ASSESSEES APPEAL DISMISSED ON THE ISSUE OF 80IB(10) OF THE INCOME TAX ACT. 12. IN GROUND NO. 7 THE ISSUE RAISED IS REGARDING DISALLOWANCE OF INTEREST OF RS. 5 LACS U/S 36(1)(III) OF THE ACT. THE ASSESSING OFFICER RECORDED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OFRS.43,25,832/- IN THE PR OFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCE OF RS.66 LACS AS ON 31 ST MARCH, 2010 TO SISTER CONCERN M/S SHUBHALAYA VILLA. THE ASSESSING OFFICER ASKED THE REASON FOR NOT CHARGIN G INTEREST AND HE WAS NOT SATISFIED WITH THE REPLY OF TH E ASSESSEE AND DISALLOWED RS. 5 LACS OUT OF THE INTEREST CLAIMED BY INVOKING THE PROVISIONS OF SECTION 36(1)( III) OF M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 40 THE ACT. THE LEARNED CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY RELYING ON THE DECISION OF THE HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LIMITED (2006) 286 ITR AND THE DECISION O F THE HON'BLE ITAT, DELHI BENCH IN ACIT VS. PUNJAB STAINLES S STEEL INDUSTRIES REPORTED IN 128 ITAT 12. 13. AFTER HEARING BOTH THE SIDES, WE HOLD THAT THE AS SESSEE HAS RAISED CAPITAL ON INTEREST AND PAID INTEREST TO THE T UNE OF RS.43,25,832/-. THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS TO ITS SISTER CONCERN M/S SHUBHALAYA VILLA. THE ASSESSEE WAS NOT ABLE TO JUSTIFY THE CLAIM THAT THE LOAN WAS GIVEN FOR BUSINESS PRUPOSES. THE NATURE OF TRANSACTION SHOWS THAT IT WAS PURELY A LOAN AND THE TRANSACTIONS WERE NOT RELATED TO ANY BUSINESS PURPOSE. INITIALLY THE ASSE SSEE GAVE LOAN OF RS.91 LACS OUT OF WHICH RS. 25 LACS WERE RETURNED AND THE BALANCE OF RS. 66 LACS REMAINED OUTSTANDING AT THE END OF THE YEAR. SINCE THE ASSESSEE HAS M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 41 FAILED TO DISCHARGE THE ONUS WITH EVIDENCE THAT THE FU NDS WERE UTILIZED FOR THE PURPOSE OF BUSINESS, THEREFOR E, WE ARE UPHOLDING THE ORDERS OF THE AUTHORITIES BELOW WITH REGARD TO DISALLOWANCE OF INTEREST ON THE INTEREST FREE ADVANCES MADE TO THE SISTER CONCERN FOR NON-BUSINESS PURPOSES. OU R VIEW IS ALSO FORTIFIED BY THE DECISION OF THE HON'BLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LIMITED (SUPRA). IN SUCH CIRCUMSTANCES, T HE INTEREST PAYMENT WAS HELD TO BE NOT ALLOWABLE. WE, THEREFORE, CONFIRM THE ORDER OF THE LEARNED CIT(A). 14. IN THE RESULT, THE APPEAL IS DISMISSED. FINALLY, BOTH THE APPEALS OF THE ASSESSEE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 8TH SEPTEMBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 8 TH SEPTEMBER, 2015 M/S MANGALMAY ITA NOS.429/IND/2013 & 3/IND/2014 42 DN/-