BHAVYA CONSTRUCTION CO., MUMBAI V. ASST CIT CIR 21(1), MUMBAI

ITA 4389/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1723 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 23-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Benefit of exemption
• Section: 143(3); 80IB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NOS.4389 & 4390/MUM/2014 ASSESSMENT YEARS: 2006-07 & 2007-08 M/S. BHAVYA CONSTRUCTION CO., 4, BHIDE BUNGALOW, 37-A, M.G. ROAD, VILE PARLE-EAST, MUMBAI 57. / VS. ACIT , CIRCLE - 21(1), 6 TH FLOOR, PRATYAKSHA KAR BHAVAN, BKC, BANDRA- EAST, MUMBAI 51. ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. AAAFB 1375 K ' / REVENUE BY SHRI O.P. MEENA - DR #$ % / ASSESSEE BY SHRI VISHWAS V. MEHENDALE CA & '' ( % ) / DATE OF HEARING : 09/11/2016 ( % ) / DATE OF ORDER: 09/12/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY THE ASSESSEE FOR ASSESSM ENT YEAR 2006-07 AND 2007-08, AGGRIEVED BY THE IMPUGNED ORDERS M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 2 DATED 29/04/2014 & 24/04/2014 OF THE LD. FIRST APPE LLATE AUTHORITY, MUMBAI. 2. THE COMMON GROUND RAISED, BY THE ASSESSEE, IN TH E PRESENT APPEALS IS WITH RESPECT TO CLAIM OF DEDUCTI ON UNDER 80IB(10) OF THE INCOME TAX ACT 1961 (HEREINAFTER TH E ACT), WHICH WAS REJECTED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) ON THE GROUND THAT THE PROJECT OF THE ASS ESSEE WAS APPROVED PRIOR TO 01/04/2004, THEREFORE, THE ASSESS EE IS NOT ENTITLED TO THE BENEFIT AS THE AMENDMENT MADE BY TH E FINANCE ACT, 2005. 2.1. DURING HEARING OF THESE APPEALS, THE LD. COUN SEL FOR THE ASSESSEE, SHRI VISHWAS V. MEHENDALE ADVANCED AR GUMENTS BY EXPLAINING THAT NOTIFICATION NO.67/2010 DATED 03 /08/2010, ISSUED BY THE CBDT, CAN ONLY CLARIFY THE STATUTORY PROVISIONS AND CANNOT OVERRIDE THE SAME OR RESTRICT THE OPERAT ION OF THE MAIN ENACTMENT. IT WAS ALSO CONTENDED THAT THE TIM E LIMIT OF APPROVAL ON/OR AFTER 01/04/2004 WILL NOT BE APPLICA BLE IN THE CASE OF PROVISO TO SECTION 80IB(10) OF THE ACT. RE LIANCE WAS PLACED UPON THE DECISION IN RAMESH GUNSHI DEDHIA VS . INCOME TAX OFFICER (2014) 148 ITD 356 (MUM.-TRIB.) AND INCOME TAX OFFICER VS. M/S. ASHA KASHIPRASADA RINGS HIA PANDURANG SADAN (2013) 29 TAXMANN.COM 160 (MUM. T RIB.). ON THE OTHER HAND, SHRI O.P. MEENA, LD. DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDED THAT THE ASSESSEE H AS NOT FULFILLED THE CONDITIONS CONTAINED IN SECTION 80IB( 10) OF THE ACT. IT WAS ALSO PLEADED THAT THE CASES RELIED UPO N BY THE M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 3 ASSESSEE ARE ON DIFFERENT FACTS, THEREFORE, NOT APP LICABLE TO THE CASE OF THE ASSESSEE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE A PARTNERSHIP FIRM, ORIGINALLY DE CLARED INCOME OF RS.28,69,487/- ON 31/10/2006. LATER ON, THE ASSESSEE REVISED HIS RETURN DECLARING NIL INCOME. THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR 2007-08 CONSTRUCTED HOUSING PROJECT, WHICH WAS APPR OVED BY SLUM REHABILITATION AUTHORITY ON WHICH, THE ASSESSE E CLAIMED THE AMOUNT OF RS. 28,69,487/- UNDER SECTION 80IB(10 ), BEING THE INCOME FROM APPROVED HOUSING PROJECT. THE LD. ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE G ROUND THAT THE ASSESSEE HAS NOT BEEN NOTIFIED BY CBDT. THE LD . ASSESSING OFFICER ASSESSED THE INCOME UNDER SECTION 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 28,69,487/-, RE JECTING THE CLAIMED DEDUCTION, VIDE ASSESSMENT ORDER DATED 30/1 0/2008. 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), THE STAND TAKEN IN THE ASSESSMENT OR DER WAS AFFIRMED. BEFORE THE LD. COMMISSIONER OF INCOME TA X (APPEALS) THIS STAND OF THE ASSESSEE WAS THAT THE C ONDITIONS STIPULATED UNDER SECTION 80IB(10) HAS BEEN SATISFIE D BY THE ASSESSEE, THEREFORE, ELIGIBLE FOR DEDUCTION. 2.4. AGGRIEVED BY THE ORDER OF THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL, WHEREIN THE ASSESSEE PRODUCED CBDT NOTIFI CATION DATED 03/08/2010, ACCORDINGLY THE TRIBUNAL VIDE ORD ER DATED M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 4 14/10/2011 (ITA NO. 3090/MUM/2010), SET ASIDE THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE CLAIM OF THE ASSESSEE, AFRESH MADE UNDER SECTION 80 IB(10) OF THE ACT CONSIDERING THE AFOREMENTIONED CBDT NOTIFIC ATION. 2.5 PURSUANT TO THE DIRECTION OF THE TRIBUNAL, THE LD. ASSESSING OFFICER CONSIDERED NOTIFICATION NO. 67/20 10, DATED 03/08/2010, NOTIFICATION NO. 02/2011 DATED 05/01/20 11, SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE NOTIF ICATION CANNOT GIVE BENEFIT TO THE PROJECTS APPROVED BEFORE 01/04/2004, THEREFORE, HE DENIED THE CLAIMED DEDUCT ION UNDER SECTION 80IB(10) OF THE ACT. THIS STAND OF T HE LD. ASSESSING OFFICER WAS AFFIRMED BY THE LD. COMMISSIO NER OF INCOME TAX (APPEALS). THE ASSESSEE IS IN FURTHER A PPEAL BEFORE THIS TRIBUNAL. 2.6 BEFORE COMING TO ANY CONCLUSION WE ARE REPRODU CING HEREUNDER THE RELEVANT PORTION FROM THE PROVISION O F SECTION 80IB(10) OF THE ACT FOR READY REFERENCE AND ANALYSI S:- 80IB.DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS.- (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REF ERRED TO IN SUB-SECTIONS (3) TO(11), (11A) AND (11B) (SUC H BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSIN ESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL IN COME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAI NS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUM BER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 5 (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, 2008 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 APPR OVED 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 , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 BUT NOT LATER THAN THE 31ST DAY OF MARC H, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PR OJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE O N WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT IS ISSUED BY THE LOCAL AUTHORITY; ( B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH 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 ACCORDANCE WITH A SCHEME FRAMED BY THE M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 6 CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING 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 ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITH IN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED THREE PER CENT OF THE AGGREGATE BUILT-UP ARE A OF THE HOUSING PROJECT OR FIVE THOUSAND SQUARE FEET, WHICH EVER IS HIGHER; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTH ER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTE D TO ANY OF THE FOLLOWING PERSONS, NAMELY: (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILD REN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIV IDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KA RTA. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 2.7 IT IS NOTICED THAT SECTION 80IB(10)(A)(I) OF TH E ACT LAYS DOWN THAT WHERE THE HOUSING PROJECT HAS BEEN APPROV ED BY THE M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 7 LOCAL AUTHORITIES BEFORE THE 1 ST DAY OF APRIL 2004 AND THE EXPLANATION HAS CLARIFIED THAT:- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HO USING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PRO JECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIR ST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUS ING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IN RESPECT OF SUCH HOUSING PROJ ECT IS ISSUED BY THE LOCAL AUTHORITY. 2.8 WE FIND THAT THE SLUM REHABILITATION AUTHORITY , VIDE COMMUNICATION NO. SRA/CH.E/101/H.E/PLILOI, DATED 10/07/1998 (PAGE NO. 9 TO 14 OF THE PAPER BOOK) CON SIDERED THE PROPOSAL OF THE ASSESSEE AND PRINCIPALLY APPROV ED THE SAME WITH CERTAIN CONDITIONS AS ENUMERATED THEREIN. COMMENCEMENT CERTIFICATE FOR BUILDING NO. C-2 WAS I SSUED TO THE ASSESSEE ON 29/06/2002 (PAGE NO. 19 OF THE PAPE R BOOK) SUBJECT TO CONDITION ENUMERATED IN COMMUNICATION DA TED 10/07/1998 (SUPRA). FULL OCCUPATION CERTIFICATE FOR REHABILITATION OF BUILDING NO.A WAS ISSUED TO THE A SSESSEE ON 27/01/2001. FULL OCCUPANCY CERTIFICATE FOR BUILDIN G NO. C-1 WAS ISSUED ON 02/06/2003 AND FOR BUILDING NO.B WAS ISSUED ON 27/04/2004. FULL OCCUPATION PERMISSION FOR SALE OF BUILDING NO.C-2 WAS ISSUED ON 17/01/2008 (NO.SRA/EN G/ 731/HE/PL/AP/OCC). 2.9 UNDER THE AFOREMENTIONED FACTS, NOW WE SHALL D EAL WITH THE LEGAL POSITION AND OBJECTIONS RAISED IN TH E IMPUGNED M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 8 ORDER. ONE OF THE OBJECTIONS RAISED BY THE LD. COM MISSIONER OF INCOME TAX (APPEALS) IS THAT THE PLOT OF LAND ON WHICH REHABILITATION WAS DONE BY THE ASSESSEE IS LESS THA N ONE ACRE. THE STAND OF THE DEPARTMENT IS THAT MINIMUM ONE ACR E LAND IS REQUIRED FOR GETTING THE BENEFIT OF DEDUCTION. HOW EVER, WE NOTE THAT AS PER AMENDMENT BY THE FINANCE ACT (NO.2) 200 4, W.E.F. 01/04/2005, A PROVISO WAS ADDED TO THE SAID SECTION , WHEREIN, THE CONDITION OF ONE ACRE WAS RELAXED IN THE CASES OF METROS LIKE DELHI OR MUMBAI FOR PRACTICAL REASON. THE LEG ISLATURE PUT THE CONDITION THAT SUCH RELAXATION WILL BE AVAILABL E TO THOSE PROJECTS WHICH ARE APPROVED BY THE LOCAL AUTHORITIE S UNDER THE SLUM REHABILITATION SCHEME AND NOTIFIED BY THE BOAR D. THE PROJECT OF THE ASSESSEE IS WITH RESPECT TO SLUM DEV ELOPMENT AND THE INTENTION OF THE LEGISLATURE IS TO EXTEND T HE BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE PROJECTS APPROVED BY THE SRA, OF COURSE, SUBJECT TO FULFILL MENT OF OTHER CONDITIONS. THE PROJECT OF THE ASSESSEE WAS COMPLE TED BEFORE 31/03/2008. THE BUDGET SPEECH OF THE HON'BLE FINAN CE MINISTER ON THE FLOOR OF THE HOUSE WHILE INTRODUCIN G FINANCE BILL 2004 ON INTRODUCTION OF RELAXATION OF CONDITIO N OF MINIMUM ONE ACRE OF PLOT SIZE FOR SLUM REHABILITATI ON AND REDEVELOPMENT IS REPRODUCED BELOW: 110. A SMALL PROBLEM HAS PLAGUED THE RECONSTRUCTION AND DEVELOPMENT OF EXISTING BUILDINGS UNDER APPROVED PLANS IN THE C ITY OF MUMBAI. PERHAPS THE PROBLEM IS THERE IN SOME OTHER CITIES T OO. I, THEREFORE, PROPOSE TO RELAX THE CONDITION OF MINIMUM PLOT SIZE OF ONE ACRE IN THE CASE OF HOUSING PROJECTS, AS LONG AS THE PROJECTS A RE IMPLEMENTED IN ACCORDANCE WITH A SCHEME FOR RECONSTRUCTION OR DEVE LOPMENT APPROVED BY THE CENTRAL OR STATE GOVERNMENT. M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 9 2.10. NOTES ON CLAUSES ON THE FINANCE BILL 2004 AR E REPRODUCED HEREUNDER:- UNDER THE EXISTING PROVISIONS CONTAINED IN SUB-SECT ION (10), HUNDRED PER CENT, DEDUCTION OF THE PROFITS OF AN UNDERTAKIN G DEVELOPING AND BUILDING HOUSING PROJECTS IS ALLOWED IF THE HOUSING PROJECT IS APPROVED BY A LOCAL AUTHORITY BEFORE THE 31ST MARCH, 2005 SU BJECT TO THE CONDITIONS SPECIFIED IN CLAUSES ( A ) TO ( C ) OF THE SAID SUB-SECTION. THE EXISTING PROVISIONS OF THE SAID SUB-SECTION PROVIDE S THAT ( A ) THE UNDERTAKING SHOULD HAVE COMMENCED DEVELOPMENT OF TH E HOUSING PROJECT AFTER THE 1ST DAY OF OCTOBER, 1998, ( B ) THE PROJECT SHOULD BE ON A SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE, AND ( C ) THE RESIDENTIAL UNIT SHOULD HAVE A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNITS IS SITUATE D WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETERS FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE. SUB-CLAUSE ( D ) SEEKS TO SUBSTITUTE SUB-SECTION (10) OF THE SAID SECTION SO AS TO PROVIDE, INTER ALIA , A HUNDRED PER CENT, DEDUCTION OF THE PROFITS DERIVED BY AN UNDERTAKING DEVELOPING AND BUILDING H OUSING PROJECTS APPROVED BY A LOCAL AUTHORITY BEFORE 31ST MARCH, 20 07 INSTEAD OF 31ST MARCH, 2005 UNDER THE EXISTING PROVISIONS, SUBJECT TO THE CONDITIONS THAT ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVEL OPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1ST OCTOBER, 1998 AND COMPLETES THE CONSTRUCTION WITHIN FOUR YEARS, F ROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHIC H HAS A MINIMUM AREA OF ONE ACRE EXCEPT IN THE CASE OF A HO USING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY T HE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS, AND SUCH SCHEM E 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 RESIDEN TIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWEN TY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE T HOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; AND ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT, OF THE AGGRE GATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WH ICHEVER IS LESS. IT IS FURTHER PROPOSED TO INSERT AN EXPLANATION IN CLAUSE ( A ) OF THE PROPOSED SUB-SECTION (10) SO AS TO PROVIDE THAT THE DATE OF APPROVAL M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 10 SHALL BE THE DATE ON WHICH THE BUILDING PLAN OF THE SAID PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY IN CASE WHERE THE A PPROVAL IN RESPECT OF THE SAME IS OBTAINED MORE THAN ONCE AND ALSO TO PRO VIDE THAT THE DATE OF COMPLETION OF CONSTRUCTION SHALL BE THE DATE ON WHI CH THE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY. THE CONJOINT READING OF THE SECTION AND THE NOTES O N CLAUSES ALONG WITH SPEECH OF HON'BLE FINANCE MINIST ER ON THE FLOOR OF THE HOUSE MAKES THE INTENTION OF THE LEGIS LATURE CLEAR THAT RELAXATION GRANTED TO SLUM REHABILITATION AND REDEVELOPMENT PROJECTS IN CITY OF MUMBAI/DELHI FOR BEING DEVELOPED ON PLOT SIZE OF LESS THAN ONE ACRE SHALL ALSO APPLY TO THE EXISTING APPROVED PROJECTS PROVIDED OTHER CONDI TIONS AS MANDATED BY SECTION 80IB(10) OF THE ACT ARE FULFILL ED. THUS, THE SAID RELAXATION GRANTED TO SLUM REHABILITATION AND REDEVELOPMENT PROJECTS IN CITY OF MUMBAI/DELHI FOR BEING DEVELOPED ON PLOT SIZE OF LESS THAN ONE ACRE IS CUR ATIVE IN NATURE AND IS INTENDED TO REMOVE UNINTENDED HARDSHI P CAUSED TO THE APPROVED PROJECTS IN THE CITY OF MUMBAI/DELH I WHERE THERE IS SHORTAGE OF LAND AND THE APPROVED PROJECT SIZES ARE LESS THAN ONE ACRE AND SUCH RELAXATION SHALL APPLY TO EXISTING APPROVED PROJECTS ALSO , PROVIDED OTHER CONDITIONS BEING FULFILLED TO REMOVE THE UN-INTENDED HARDSHIP FACED BY THESE PROJECTS IN CITY OF MUMBAI/DELHI. 2.11 FROM THE PLAIN READING OF SECTION 80IB(10) OF THE ACT IT WOULD BE SEEN THAT THE CONDITION PRECEDENT FOR A VAILING THE DEDUCTION UNDER SECTION 80IB(10), HAS BEEN GIVEN IN CLAUSES (A) AND (B). ON THESE CONDITIONS, RIDER HAS BEEN PU T BY THE PROVISO WHICH STARTS WITH A KIND OF NON-OBSTANTE CL AUSE THAT M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 11 'NOTHING CONTAINED IN CLAUSES (A) AND (B) SHALL APP LY' TO A HOUSING PROJECT WHICH HAS BEEN CARRIED OUT IN ACCOR DANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVT. OR STATE GOVT. F OR RE-CONSTRUCTION OR RE-DEVELOPMENT IN AREAS TO BE SL UM UNDER ANY LAW AND IT FURTHER PROVIDES THAT SUCH A S CHEME SHOULD BE NOTIFIED BY THE BOARD IN THIS BEHALF . THUS, AN EXCEPTION HAS BEEN CARVED OUT BY THE PROVISO IN CAS ES OF HOUSING PROJECT DEVELOPMENT IN SLUM AREA UNDER A GO VT. SCHEME AND OVERRIDES THE CONDITION MENTIONED IN CLA USES (A) AND (B). THE SCHEME OF SRA CONTAINED IN REGULATION 33(10) OF DEVELOPMENT CONTROL REGULATION FOR GREATER MUMBAI H AS BEEN NOTIFIED BY CBDT NOTIFICATION NO.67, DATED 3RD AUGU ST 2010. THIS NOTIFICATION WAS FURTHER CLARIFIED BY THE CBDT IN NOTIFICATION NO.2 OF 2011 DATED 5TH JANUARY 2011, W HEREIN IT WAS PROVIDED THAT:- 'IN THE NOTIFICATION OF THE GOVT OF INDIA IN THE MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, (CENTRAL BOARD OF DIRECT TAXES) NUMBER S.O. 1898(E), DATED THE 3RD AUGUST, 2010 (2010) 233 CTR (ST.) 56 2010) 43 DTR (ST.) 8] PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTION (II), DATED THE 3RD AUGUST, 2010, IN PARAGRAPH 2 FOR 'THIS NOTIFICATION SHALL COME INTO FORCE WITH EFFECT FROM THE DATE OF ITS PUBLICATION', READ 'THIS NOTIFICATION SHALL BE DEEMED TO APPLY TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION UNDER SUB SECTION (10) OF SECTION 80IB FROM THE ASSESSMENT YEAR 200506 ONWARDS.' M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 12 2.12 THUS, THE RIGOURS OF SECTION 80IB(10) WERE R ELAXED BY THE INTRODUCTION OF PROVISO BY FINANCE ACT , 200 4 WHEREIN CONDITIONS AS STIPULATED IN CLAUSE (A) AND (B) SHALL NOT BE APPLICABLE PROVIDED THE SL UM REHABILITATION PROJECT IS APPROVED BY CENTRAL OR ST ATE GOVERNMENT AND THE SAME IS NOTIFIED BY THE BOARD. T HE NOTIFICATION ISSUED BY THE BOARD DATED 5 TH JANUARY 2011 CLEARLY STIPULATES THAT THE BENEFIT OF SECTION 80IB (10) SHALL BE AVAILABLE TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION U NDER SUB SECTION (10) OF SECTION 80IB FROM THE ASSESSMENT YE AR 200506 ONWARDS. THERE IS NO EQUITY IN TAX LEGISLATION AND THE EXEMPTION PROVISIONS ARE TO BE STRICTLY CONSTRUED A T THE FIRST STAGE TO ESTABLISH THE ELIGIBILITY OF THE TAX-PAYER FOR THE BENEFIT OF EXEMPTION AND ONCE THE TAX-PAYER ESTABLISHES ITS ENTITLEMENT TO THE EXEMPTION, THEN EXEMPTION PROVIS IONS ARE TO BE LIBERALLY CONSTRUED TO GIVE THE FULL INTENDED BE NEFIT TO THE TAX-PAYER SO THAT THE INTENDED PURPOSES OF BENEFICI AL PROVISIONS CAN BE FULLY ACHIEVED. THE COURTS SHALL NOT ADOPT TO THE PRINCIPLES OF CONTEMPORANCE EXPOSITIO WHEN THE PLAIN LANGUAGE OF THE STATUTE IS CLEAR AND UNAMBIGUOUS. 2.13 THE PRINCIPLE OF STRICT INTERPRETATION OF TAXI NG STATUTES WAS BEST ENUNCIATED BY ROWLATT J. IN HIS CLASSIC ST ATEMENT IN CAPE BRANDY SYNDICATE V I.R.C. (1 KB 64, 71): 'IN A TAXING M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 13 STATUTE ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY S AID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOU T A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN LOOK FAIRLY AT TH E LANGUAGE USED.' IF THE REVENUE SATISFIED THE COURT THAT THE CASE FALLS STRICTLY WITHIN THE PROVISIONS OF THE LAW, THE SUBJ ECT CAN BE TAXED. A TAXING STATUTE IS TO BE STRICTLY CONSTRUED. THE W ELL- ESTABLISHED RULE IN THE FAMILIAR WORDS OF LORD WENSLEYDALE, REAFFIRMED BY LORD HALSBURY AND LORD SIMONDS, MEANS: 'THE SUBJECT IS NOT TO BE TAXED WIT HOUT CLEAR WORDS FOR THAT PURPOSE; AND ALSO THAT EVERY A CT OF PARLIAMENT MUST BE READ ACCORDING TO THE NATURAL CONSTRUCTION OF ITS WORDS'. (REF : RE, MICKLETHWAIT, (1885) 11 EX 452, P. 456; REFERRED TO IN TENANT V. SMITH, (1892) AC 150, P. 1 54 (HL) (LORD HALSBURY); ST. AUBYN V. A.G., (1951) 2 ALL ER 473, P. 485: 1952 AC 15 (HL) (LORD SIMONDS); MEMBER SECRETARY, A NDHRA PRADESH STATE BOARD FOR PREVENTION AND CONTROL OF W ATER POLLUTION V. ANDHRA PRADESH RAYONS LTD., AIR 1989 S E 611, P. 614 : (1989) 1 SCC 44; SARASWATI SUGAR MILLS V. HAR YANA STATE BOARD, AIR 1992 SE 224, P. 228 : 1992 (1) SEE 418 .) . IN A CLASSIC PASSAGE LORD CAIRNS STATED THE PRINCIPLE TH US: 'IF THE PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER O F THE LAW HE MUST BE TAXED, HOWEVER GREAT THE HARDSHIP MAY APPEA R TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND, IF THE CROW N SEEKING TO RECOVER THE TAX, CANNOT BRING THE SUBJECT WITHIN TH E LETTER OF THE LAW, THE SUBJECT IS FREE, HOWEVER APPARENTLY WI THIN THE M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 14 SPIRIT OF LAW THE CASE MIGHT OTHERWISE APPEAR TO BE . IN OTHER WORDS, IF THERE BE ADMISSIBLE IN ANY STATUTE, WHAT IS CALLED AN EQUITABLE, CONSTRUCTION, CERTAINLY, SUCH A CONSTRUC TION IS NOT ADMISSIBLE IN A TAXING STATUTE WHERE YOU CAN SIMPLY ADHERE TO THE WORDS OF THE STATUTE. (REF: PARTINGTON V. A.G. , (1869) LR 4 HL 1OO, P. 122: 21 LT 370, REFERRED TO IN IRC V. DU KE OF WESTMINSTER, (1936) AC 1, P. 24 (HL); BANK OF CHETT INAD V. CIT, AIR 1940 PC 183, P. 185; POTTS' EXECUTORS V. I RC, (1951) 1 ALL ER 76, P. 81 (HL); A.V. FERNANDEZ: V. STATE O F KERALA, AIR 1957 SC 657, P. 661 : 1957 SCR 837; CIT V. M & G ST ORES, AIR 1968 SC 200, P. 205 : 1967 (3) SCR 876; J.K. ST EEL LTD. V. UNION OF INDIA, AIR 1970 SC 1173, P. 1182: 1969 (2) SCR 481; RANSOM (INSPECTOR OF TAXES) V. HIGGS, (1974) 3 ALL ER 949, P. 970 (HL). SEE FURTHER HANSRAJ & SONS V. STATE OF JA MMU & KASHMIR, AIR 2002 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; M/S. GEO MILLER AND CO. PVT. LTD. V. STATE OF M.P., AIR 2004 SC 3552, P. 3556 : (2004) 5 SCC 209; GOVERNMEN T OF ANDHRA PRADESH V. LAXMI DEVI, (2008) 4 SCC 720 PARA S 19,20,21 : (2008) 2 JT 639). VISCOUNT SIMON QUOTED WITH APPROVAL A PASSAGE FROM ROWLATT, J. EXPRESSING THE PRINCIPLE IN THE FOLLOWI NG WORDS: 'IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQ UITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO TAX. NOTHING I S TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAI RLY AT THE LANGUAGE USED. (REF: CAPE BRANDY SYNDICATE V. IRC, (1921) 1 M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 15 KB 64, P. 71 (ROWLATT, J.); REFERRED TO IN CANADIAN EAGLE OIL CO. LTD. V. R., (1945) 2 ALL ER 499, P. 507 (HL); G URSAHAI V. CIT, AIR 1963 SC 1062, P. 1064 : 1963 (3) SCR 893; BANARSI DEBI V. INCOME TAX OFFICER, AIR 1964 SC 1742, P. 17 44; COMMISSIONER OF CENTRAL EXCISE PONDICHERRY V. ACER INDIA LTD., (2004) 8 SCC 173, P. 183 : (2004) 8 JT 53. SE E FURTHER CIT V. FIRM MUAR, AIR 1965 SC 1216, P. 1221 : 1965 (1) SCR 815; CIT, PATIALA V. SHAHZADANAND & SONS, AIR 1966 SC 1342, P. 1347 : (1966) 3 SCR; JANAPADA SABHA, CHHINDWARA V. CENTRAL PROVINCES SYNDICATE, AIR 1971 SC 57, P. 60 : (1971) 1 SCC 509; OWEN THOMAS MANGIN V.IRC, (1971) 2 WLR 39, P. 42 (PC); CONTROLLER OF ESTATE DUTY V. KANTILAL TRIKAML AL, AIR 1976 SC 1935, P. 1943 : (1976) 4 SCC 643; TARULATA SYAM V. COMMISSIONER OF INCOME-TAX, WEST BENGAL, AIR 1977 S C 1802 : (1977) 3 SCC 305; MEMBER SECRETARY, ANDHRA PRADES H STATE BOARD FOR PREVENTION AND CONTROL OF WATER POLLUTION V. ANDHRA PRADESH RAYONS LTD., AIR 1989 SC 611, P. 614 : (198 9) 1 SCC 44; APHALI PHARMACEUTICALS LTD. V. STATE OF MAHARAS HTRA, AIR 1989 SC 2227, P. 2239 : (1889) 4 SCC 378; GOODYEAR INDIA LTD. V. STATE OF HARYANA, AIR 1990 SC 781, P. 793 : 1990 (2) SCC 71; SUTLEJ COTTON MILLS LTD. V. COMMISSIONER OF INCOME- TAX, WEST BENGAL, AIR 1991 SC 218, P. 220 : (1992) SUPP (1) SCC 50; SARASWATI SUGAR MILLS V, HARYANA STATE BOAR D, AIR 1992 SC 224, P. 228 : 1992 (1) SCC 418; OSWAL AGRO MILLS LTD V. COLLECTOR OF CENTRAL EXCISE, AIR 1993 SC 2288, P . 2291 : 1993 SUPP. 3 SCC 716; CALCUTTA JUTE MANUFACTURING C O. V, COMMERCIAL TAX OFFICER, AIR 1997 SC 2920, P. 2923 : (1997) 6 M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 16 SCC 262; ORISSA STATE WAREHOUSING CORPORATION V, CI T: JT 1999 (2) SC 527, P. 539 : AIR 1999 SC 1388, P. 1397 : (1999) 4 SCC 197; THE FEDERATION OF ANDHRA PRADESH CHAMBER OF COMMERCE AND INDUSTRY V, STATE OF ANDHRA PRADESH, A IR 2000 SC 2905, P. 2906 : (2000) 6 SCC 550; COMMISSIONER O F CENTRAL EXCISE V. KISAN SAHKARI CHINNI MILLS LID., AIR 2001 SC 3379, P. 3380 : (2001) 6 SCC 697; UNION OF INDIA V, AZADI BACHAO ANDOLAN, AIR 2004 SC 1107, P. 1137 : 2003 SU PP (2) JT 205. RELYING UPON THIS PASSAGE LORD UPJOHN SAID: FISCAL MEASURES ARE NOT BUILT UPON ANY THEORY OF TAXATION. (REF: COMMR. OF CUSTOMS V. TOP TEN PROMOTIONS, (1969) 3 A LL ER 39, P. 90 (HL).) THE ABOVE PASSAGE STATING THE PRINCIPLE OF STRICT C ONSTRUCTION OF TAXING STATUTES WAS QUOTED WITH APPROVAL IN COMM ISSIONER OF INCOME-TAX, MADRAS V. KASTURI & SONS, JT 1999(2) SC 272 WHERE THE WORD 'MONEYS' IN THE EXPRESSION 'MONEYS P AYABLE' IN SECTION 41(2) OF THE INCOME-TAX ACT, 1961 WAS NOT C ONSTRUED TO INCLUDE 'MONEY'S WORTH'. IN FISCAL LEGISLATION A TRANSACTION CANNOT BE TAXED ON ANY DOCTRINE OF 'THE SUBSTANCE OF THE MATTER' AS DISTIN GUISHED FROM ITS LEGAL SIGNIFICATION, FOR A SUBJECT IS NOT LIABL E TO TAX ON SUPPOSED 'SPIRIT OF THE LAW' OR 'BY INFERENCE OR BY ANALOGY'. (REF: IRC V. DUKE OF WESTMINSTER, (1936) AC 1, PP. 19,24 (HL); BANK OF CHITTINAD V. CIT, AIR 1940 PC 183, P. 185 : (1940) 8 ITR 522; POTTS' EXECUTORS V. IRC, (1951) 1 ALL ER 7 6, P. 81 (HL); A. V. FERNANDEZ V. STATE OF KERALA, AIR 1957 SC 657, P. M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 17 661 : 1957 SCR 837; CIT V. KESHAVLAL, AIR 1965 SC 8 66, P. 868 (PARA 12) : (1965) 2 SCR 100; CIT V, M & G STOR ES, AIR 1968 SC 200, P. 205; JOINT COMMERCIAL TAX OFFICER V . YMA, MADRAS, AIR 1970 SC 1212, P. 1217 : (1970) 1 SCC 46 2; EUROPA OIL (NZ) LTD. V, INLAND REVENUE COMMISSIONER , (1976) 1 ALL ER 503, P. 508 (PC) (LEGAL RIGHTS ARISING FRO M A TRANSACTION AND NOT ITS ECONOMIC RESULTS ARE MATERI AL); GUJARAT STATE FINANCIAL CORPORATION V, NATSON MANUFACTURING CO. LTD., AIR 1978 SC 1765, P. 1769 : (1979) 1 SCC 193; MEMBE R SECRETARY, ANDHRA PRADESH STATE BOARD FOR PREVENTIO N AND CONTROL OF WATER POLLUTION V, ANDHRA PRADESH RAYONS LTD., AIR 1989 SC 611, P. 614 : (1989) 1 SCC 44; MATHURAM AGR AWAL V. STATE OF MADHYA PRADESH, JT 1999 (8) SC 505, PP. 51 1, 512 : AIR 2000 SC 109, P. 113 : (1999) 8 SCC 667. SEE FUR THER HANSRAJ & SONS V. STATE OF JAMMU & KASHMIR, AIR 200 2 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; COMMISSION ER OF CENTRAL EXCISE, PONDICHERRY V. ACER INDIA LTD., (20 04) 8 SCC 173, P. 184: (2004) 8 JT 53.) IN REFUTING THE DOC TRINE OF 'THE SUBSTANCE OF THE MATTER' LORD TOMLIN OBSERVED: 'IT IS SAID THAT IN REVENUE CASES THERE IS A DOCTR INE THAT THE COURT MAY IGNORE THE LEGAL POSITION AND REGARD WHAT IS CALLED 'THE SUBSTANCE OF THE MATTER' . THIS SUPPOSED DOCTRINE SEEMS TO REST FOR ITS SUPPOR T UPON A MISUNDERSTANDING OF LANGUAGE USED INCOME IN SOME EARLIER CASES. THE SOONER THIS MISUNDERSTANDING IS DISPELLED, AND THE SUPPOSED M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 18 DOCTRINE GIVEN ITS QUIETUS, THE BETTER IT WILL BE F OR ALL CONCERNED, FOR THE DOCTRINE SEEMS TO INVOLVE SUBSTITUTING 'THE UNCERTAIN AND CROOKED CORD OF DISCRETION' FOR 'THE GOLDEN AND STRAIGHT METWAND OF THE LAW'. (REF: IRC V. DUKE OF WESTMINSTER, SUPRA , REFERRED TO IN POTT'S EXECUTORS V. IRC, SUPRA, P. 8 0 (LORD NORMAND); CIT, GUJARAT V. B.M. KHARWAR, AIR 1969 SC 812 : (1969) 1 SCR 651; J.K. STEEL LTD. V. UNION OF INDIA, SUPRA, P. 1192; CIT, CALCUTTA V. G. ARBUTHNOT & CO., AIR 1973 SC 989, P. 995 : (1973) 5 SCC TAX 359 : (1973) 3 SCC 845; COMMRS. OF CUSTOMS V. TOP TEN PROMOTIONS, (1969) 3 ALL ER 39, P. 90 (HL); RANSOM (INSPECTOR OF TAXES) V. HIGGS, (1974) 3 ALL ER 949, P. 970 (HL). SEE FURTHER HANSR AJ AND SONS V. STATE OF JAMMU & KASHMIR, AIR 2002 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; COMMISSIONER OF CENTRAL EXCISE PONDICHERRY V. ACER INDIA LTD., (2004) 8 SCC 173, P. 184 : (2004) 8 JT 53). IN THE SAME CASE LORD WRLGHT POINTED OUT THAT 'THE TRUE NATURE OF THE LEGAL OBLIGATION 'ARISING OUT OF A GE NUINE TRANSACTION' AND NOTHING ELSE IS THE SUBSTANCE'. ( REF: IRC V. DUKE OF WESTMINSTER, SUPRA) . THE ABOVE PRINCIPLE WHICH IS KNOWN AS DUKE OF WESTMINSTER PRINCIPLE IS SUBJECT T O THE NEW APPROACH OF THE COURTS TOWARDS TAX EVASION SCHEMES CONSISTING OF A SERIES OF TRANSACTIONS OR A COMPOSI TE TRANSACTION.' M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 19 IN INTERPRETING A SECTION IN A TAXING STATUTE, ACCO RDING TO LORD SIMONDS, 'THE QUESTION IS NOT AT WHAT TRANSACT ION THE SECTION IS ACCORDING TO SOME ALLEGED GENERAL PURPOS E AIMED, BUT WHAT TRANSACTION ITS LANGUAGE ACCORDING TO ITS NATURAL MEANING FAIRLY AND SQUARELY HITS. (REF: ST. AUBYN (LM) V. A.G., (1951) 2 ALL ER 473, P. 485: 1952 AC: 15 (HL). SEE FURTHER COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY V. ACER INDIA LTD., SUPRA, PP. 183, 184).LORD SIMONDS CALL THIS ' THE ONE AND ONLY PROPER TEST. IT IS, THEREFORE, NOT THE F UNCTION OF A COURT OF LAW TO GIVE TO WORDS A STRAINED AND UNNATU RAL MEANING TO COVER LOOPHOLES THROUGH WHICH THE EVASI VE TAX- PAYER MAY FIND ESCAPE OR TO TAX TRANSACTIONS WHICH, HAD THE LEGISLATURE THOUGHT OF THEM, WOULD HAVE BEEN COVERE D BY APPROPRIATE WORDS. (REF: IRC V. WOLF SON, (1949) 1 ALL ER 865, P. 868 (HL); SEE FURTHER W.M. CORY & SONS LTD. V. I RC, (1965) I ALL ER 917, P. 921 : 1964 AC 1088 : 1065 (2) WLR 92 4 (HL), WHERE LORD REID SAID: 'THE WORDS OF A TAXING ACT MUST NEVER BE STRETCHED AGAINST A TAX-PAYER. THERE IS A VERY GOOD REASON FO R THAT RULE. SO LONG AS ONE ADHERES TO THE NATURAL MEANING FOR THE CHARGING WORDS THE LAW IS CERTAIN, OR AT LEAST AS CERTAIN AS IT IS POSSIBLE TO MAKE IT, B UT IF COURTS ARE TO GIVE TO CHARGING WORDS WHAT IS SOMETIMES CALLED A LIBERAL CONSTRUCTION WHO CAN SAY JUST HOW FAR THIS WILL GO. IT IS MUCH BETTER THAT EVASION SHOULD BE MET BY AMENDING LEGISLATION.) M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 20 AS STATED BY LORD SIMON: 'IT MAY SEEM HARD THAT A CUNNINGLY ADVISED TAX-PAYE R SHOULD BE ABLE TO AVOID WHAT APPEARS TO BE HIS EQUITABLE S HARE OF THE GENERAL FISCAL BURDEN AND CAST IT ON THE SHOULDERS OF HIS FELLOW CITIZENS. BUT FOR THE COURTS TO TRY TO STRETCH THE LAW TO MEET HARD CASES (WHETHER THE HARDSHIP APPEARS TO BEAR ON THE INDIVIDUAL TAX-PAYER OR ON THE GENERAL BODY OF TAX-PAYERS AS R EPRESENTED BY THE INLAND REVENUE) IS NOT MERELY TO MAKE BAD LA W BUT TO RUN THE RISK OF SUBVERTING THE RULE OF LAW ITSELF.' TH E SAME RULE APPLIES EVEN IF THE OBJECT OF THE ENACTMENT IS TO F RUSTRATE LEGITIMATE TAX AVOIDANCE DEVICES FOR MORAL PRECEPTS ARE NOT APPLICABLE TO THE INTERPRETATION OF REVENUE STATUTE S.' (REF: RANSOM (INSPECTOR OF TAXES) V. HIGGS, (1974) 3 ALL ER 949, P. 969 (HL) . OWEN THOMAS MANGIN V. IRC, (1971) 2 WLR 39, P. 42 (PC).) IT MAY THUS BE TAKEN AS MAXIM OF TAX LAW, WHICH ALT HOUGH NOT TO BE OVERSTRESSED OUGHT NOT TO BE FORGOTTEN THAT, 'THE SUBJECT IS NOT TO BE TAXED UNLESS THE WORDS OF THE TAXING S TATUTE UNAMBIGUOUSLY IMPOSE THE TAX ON HIM. (REF: RUSSEL V. SCOTT, (1948) 2 ALL ER 1, P. 5 (HL), (LORD SIMONDS); MATHU RAM AGRAWAL V. STATE OF MADHYA PRADESH, JT 1999 (8) SC 505, P. 512: AIR 2000 SC 109, PP. 113, 114: (1999) 8 SCC 66 7 .) THE PROPER COURSE IN CONSTRUING REVENUE ACTS IS TO GIVE A FAIR AND REASONABLE CONSTRUCTION TO THEIR LANGUAGE WITHOUT L EANING TO M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 21 ONE SIDE OR THE OTHER BUT KEEPING IN MIND THAT NO T AX CAN BE IMPOSED WITHOUT WORDS CLEARLY SHOWING AN INTENTION TO LAY THE BURDEN AND THAT EQUITABLE CONSTRUCTION OF THE WORDS IS NOT PERMISSIBLE. (REF: ORMOND INVESTMENT CO. V. BETTS, (1928) AC 143 : (1928) ALL ER REP 709, P. 719 (HL) (LORD ATKI NSON).) CONSIDERATIONS OF HARDSHIP, INJUSTICE OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATUTES UNLES S THERE BE SOME REAL AMBIGUITY . (REF: MAPP V. ORAM, (1969) 3 ALL ER 215, PP. 222, 223 (HL); STATE BANK OF TRAVANCORE V. COMM ISSIONER OF INCOME-TAX, (1986) 2 SCC 11, P. 68: AIR 1986 SC 757 .) IT HAS ALSO BEEN SAID THAT IF TAXING PROVISION IS ' SO WANTING IN CLARITY THAT NO MEANING IS REASONABLY CLEAR, THE CO URTS WILL BE UNABLE TO REGARD IT AS OF ANY EFFECT. .(REF: IRC V. ROSS AND COULTER, (1948) 1 ALL ER 616, P. 625 (HL); REFERRED TO IN GURSAHAI V. CIT, AIR 1963 SC 1062, P. 1064 : (1963) 3 SCR 893.) THE SUPREME COURT HAS ENUNCIATED IN SIMILAR WORDS T HE PRINCIPLE OF INTERPRETATION OF TAXING LAWS. BHAGWATI, J. STATED THE PRINCIPLE AS FOLLOWS: 'IN CONSTRUING FISCAL STATUTES AND IN DETERMINING T HE LIABILITY OF A SUBJECT TO TAX ONE MUST HAVE REGARD TO M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 22 THE STRICT LETTER OF THE LAW. IF THE REVENUE SATISF IES THE COURT THAT THE CASE FALLS STRICTLY WITHIN THE PROVI SIONS OF THE LAW, THE SUBJECT CAN BE TAXED. IF, ON THE OT HER HAND, THE CASE IS NOT COVERED WITHIN THE FOUR CORNE RS OF THE PROVISIONS OF THE TAXING STATUTE, NO TAX CAN BE IMPOSED BY INFERENCE OR BY ANALOGY OR BY TRYING TO PROBE INTO THE INTENTIONS OF THE LEGISLATURE AND BY CONSIDERING WHAT WAS THE SUBSTANCE OF THE MATTER. SHAH, J., HAS FORMULATED THE PRINCIPLE THUS: 'IN INTERPRETING A TAXING STATUTE, EQUITABLE CONSIDERATIONS ARE ENTIRELY OUT OF PLACE. NOR CAN TAXING STATUTES BE INTERPRETED ON ANY PRESUMPTIONS OR ASSUMPTIONS. THE COURT MUST LOOK SQUARELY AT THE WORDS OF THE STATUTE AND INTERPRET THEM. IT MUST INTERPRET A TAXING STATUTE IN THE LIG HT OF WHAT IS CLEARLY EXPRESSED; IT CANNOT IMPLY ANYTHING WHICH IS NOT EXPRESSED; IT CANNOT IMPORT PROVISIONS IN THE STATUTE SO AS TO SUPPLY ANY ASSUMED DEFICIENCY. THE HON'BLE SUPREME COURT DECISION IN THE CASE OF J OSHI TECHNOLGIES INC. V. UOI REPORTED IN (2015) 374 ITR 322(SC) HAS FOLLOWED PRINCIPLES OF STRICT INTERPRETATION OF TAX ING STATUTE BY OBSERVING AS UNDER: 70 . KEEPING IN MIND THE AFORESAID PRINCIPLES AND AFTE R CONSIDERING THE ARGUMENTS OF RESPECTIVE PARTIES, WE ARE OF THE VIEW THAT ON THE FACTS OF THE PRESENT CASE, IT IS NOT M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 23 A FIT CASE WHERE THE HIGH COURT SHOULD HAVE EXERCIS ED DISCRETIONARY JURISDICTION UNDER ARTICLE 226 OF THE CONSTITUTION. FIRST, THE MATTER IS IN THE REALM OF PURE CONTRACT. IT IS NOT A CASE WHERE ANY STATUTORY CONT RACT IS AWARDED. 71 . AS POINTED OUT EARLIER AS WELL, THE CONTRACT IN QUESTION WAS SIGNED AFTER THE APPROVAL OF CABINET W AS OBTAINED. IN THE SAID CONTRACT, THERE WAS NO CLAUSE PERTAINING TO SECTION 42 OF THE ACT. THE APPELLANT IS PRESUMED TO HAVE KNOWLEDGE OF THE LEGAL PROVISION, NAMELY, IN THE ABSENCE OF SUCH A CLAUSE, SPECIAL ALLOWANCES UNDER SECTION 42 WOULD BE IMPERMISSIBLE. STILL IT SIGNED THE CONTRACT WITHOUT SUCH A CLAUSE, WITH OPEN EYES. NO DOUBT, THE APPELLANT CLAIMED THESE DEDUCTIONS IN ITS INCOME TAX RETURNS AND IT WAS EVE N ALLOWED THESE DEDUCTIONS BY THE INCOME TAX AUTHORIT IES. FURTHER, NO DOUBT, ON THIS PREMISE, IT SHARED THE P ROFITS WITH THE GOVERNMENT AS WELL. HOWEVER, THIS CONDUCT OF THE APPELLANT OR EVEN THE RESPONDENTS, WAS OUTSIDE THE SCOPE OF THE CONTRACT AND THAT BY ITSELF MAY NOT GI VE ANY RIGHT TO THE APPELLANT TO CLAIM A RELIEF IN THE NAT URE OF MANDAMUS TO DIRECT THE GOVERNMENT TO INCORPORATE SU CH A CLAUSE IN THE CONTRACT, IN THE FACE OF THE SPECIF IC PROVISIONS IN THE CONTRACT TO THE CONTRARY AS NOTED ABOVE, PARTICULARLY, ARTICLE 32 THEREOF. IT WAS PURELY A CONTRACTUAL MATTER WITH NO ELEMENT OF PUBLIC LAW INVOLVED THEREUNDER. 72 . HAVING CONSIDERED THE MATTER IN THE AFORESAID PROSPECTIVE, WE COME TO THE IRRESISTIBLE CONCLUSION THAT THE APPELLANT IS NOT ENTITLED TO THE RELIEF CLAIMED . THOUGH IT MAY BE SOMEWHAT HARSH ON THE APPELLANT WHEN IT AVAILED THE BENEFIT OF SECTION 42 FOR FEW YEARS AND ACTED ON THE UNDERSTANDING THAT SUCH A BENEFIT WOULD BE G IVEN TO IT, BUT WE HAVE NO OPTION BUT TO HOLD THAT PSCS DID NOT PROVIDE FOR THIS BENEFIT TO BE GIVEN TO THE APPELLA NT AND THE CONTRACT CAN BE AMENDED ONLY IF BOTH THE PARTIE S AGREE TO DO SO, AND NOT OTHERWISE. THEREFORE, WE AR E CONSTRAINED TO DISMISS THE APPEAL FOR THE REASONS G IVEN ABOVE. M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 24 2.14. THUS AS DISCUSSED IN DETAILS IN PRECEDING P ARAS OF THIS ORDER , THE RIGOURS OF SECTION 80IB(10) WERE R ELAXED BY THE INTRODUCTION OF PROVISO BY FINANCE ACT , 2004 WHERE IN CONDITIONS AS STIPULATED IN CLAUSE (A) AND (B) SHALL NOT BE APPLICABLE PROVIDED THE SL UM REHABILITATION PROJECT IS APPROVED BY CENTRAL OR ST ATE GOVERNMENT AND THE SAME IS NOTIFIED BY THE BOARD. T HE NOTIFICATION ISSUED BY THE BOARD DATED 5 TH JANUARY 2011 CLEARLY STIPULATES THAT THE BENEFIT OF SECTION 80IB (10) SHALL BE AVAILABLE TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION U NDER SUB SECTION (10) OF SECTION 80IB FROM THE ASSESSMENT YE AR 200506 ONWARDS. THERE IS NO EQUITY IN TAX LEGISLATION AND THE EXEMPTION PROVISIONS ARE TO BE STRICTLY CONSTRUED W HEREIN THE ASSESSEE HAS TO ESTABLISH AT THE FIRST STAGE THE EL IGIBILITY FOR THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT IN ACC ORDANCE WITH THE PROVISION OF THE STATUTE AND ONCE THE ASSESSEE ESTABLISHES ITS ENTITLEMENT TO THE SAID DEDUCTION, THEN DEDUCTI ON PROVISIONS ARE TO BE LIBERALLY CONSTRUED TO GIVE TH E FULL INTENDED BENEFIT OF SECTION 80IB(10) OF THE ACT TO THE ASSES SEE SO THAT THE INTENDED PURPOSES OF BENEFICIAL PROVISIONS CAN BE FULLY ACHIEVED. THE COURTS SHALL NOT ADOPT TO THE PRINCIP LES OF CONTEMPORANCE EXPOSITIO WHEN THE PLAIN LANGUAGE OF THE STATUTE IS CLEAR AND UNAMBIGUOUS. CONSIDERING THE F ACTUAL M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 25 MATRIX AND THE JUDICIAL PRECEDENT DISCUSSED HEREINA BOVE , WE ARE OF THE VIEW THAT THE PROVISO INTRODUCED BY FINA NCE ACT , 2004 CLEARLY GRANT RELIEF TO SLUM REDEVELOPMENT OR RECONSTRUCTION PROJECTS WHICH ARE APPROVED BY CENTR AL GOVERNMENT OR STATE GOVERNMENT AND THE SCHEME IS NO TIFIED BY THE BOARD. THE BOARD NOTIFICATION CLEARLY STIPUL ATE THAT BENEFIT SHALL BE GRANTED TO THE PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER TH E 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, WH ILE IN THE CASE OF THE ASSESSEE THE PROJECTS ARE APPROVED PRIO R TO 1 ST DAY OF APRIL 2004 AS SET OUT ABOVE IN PRECEDING PARAS, AND THE ASSESSEE IS NOT ABLE TO ESTABLISH ITS ENTITLEMENT T O DEDUCTION U/S 80IB(10) OF THE ACT AT THE FIRST STAGE ITSELF FOR REASON CITED ABOVE. THUS, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AND HENCE ARE REJECTED. WE ORDER ACCORDING LY. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09/12/2016. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; * DATED : 09/12/2016 VR/- . . & F{X~{T? P.S / /. .. M/S. BHAVYA CONSTRUCTION CO., ITA NOS.4389 & 4390/MUM/2014 26 !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /-. / THE RESPONDENT. 3. 0 0 & 1% ( +, ) / THE CIT, MUMBAI. 4. 0 0 & 1% / CIT(A)- , MUMBAI 5. 3'4% , 0 +,)+ 5 , & / DR, ITAT, MUMBAI 6. 6#7 / GUARD FILE. ! / BY ORDER, /3,%% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,