M/s Priyadarshini Construction, Bhopal V. The Income Tax Officer, 1(2), Bhopal

ITA 509/IND/2010

• Counselvise Citation: 50922714 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2011
• Assessment Year: misc
• Appeal Filed On: 27-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: H P VERMA; GIRISH AGRAWAL
• Keywords: Reopening of assessment; Retrospective amendment; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB; 143(1); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.509/IND/2010 A.Y. 2004-2005 M/S PRIYADHARSHANI CONSTRUCTION S-4 SHRI RAMESH TOWER , 2 ND FLOOR, 10 NO. STOP MARKET, ARERA COLONY, BHOPAL-462016 ... APPELLANT PAN AAEFP-1303H VS INCOME TAX OFFICER 1 (2), BHOPAL ... RESPONDENT ITA NO.510/IND/2010 A.Y. 2005-2006 M/S PRIYADHARSHANI CONSTRUCTION S-4 SHRI RAMESH TOWER , 2 ND FLOOR, 10 NO. STOP MARKET, ARERA COLONY, BHOPAL-462016 ... APPELLANT PAN AAEFP-1303H 2 VS INCOME TAX OFFICER 1 (2), BHOPAL ... RESPONDENT ASSESSEE BY : SHRI H.P.VERMA & SHRI GIRISH AGRAWAL DEPARTMENT BY : SHRI ARUN DEWAN SR. DR DATE OF HEARING : 01.11.2011 DATE OF PRONOUNCEMENT: 30.11.2011 O R D E R PER JOGINDER SINGH THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 30 TH MARCH, 2010 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 IN THE MATTER OF ORDER PASSED U/S 147/143(3) OF THE ACT, ON THE FOLLOWING GROUNDS :- 3 ITA NO.509/IND/2010 (A. Y. 2004-05, FILED BY THE ASSESSEE) GROUND NO.1 THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDING THAT THE INITIATION OF REASSESSMENT PROCEEDING U/S 147 BY ISSUING NOTICE U/S 148 IS VALID. THE ASSESSMENT MADE U/S 147/143(3) BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE HON'BLE CIT (APPEALS)-1 BHOPAL IS NEITHER VALID NOR SUSTAINABLE IN LAW. GROUND NO.2 THAT AT ANY EVENT AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR THE DEDUCTION U/S 80IB (10) OF THE INCOME TAX ACT AND THEREBY DISALLOWING THE CLAIM OF RS39,60,088/- MADE BY THE APPELLANT. THE SO-CALLED CONCLUSION OF THE LEARNED LOWER AUTHORITIES IS GROSSLY WRONG. THE DEDUCTION AS CLAIMED MAY KINDLY BE ALLOWED. GROUND NO.3 THAT THE LEARNED LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR THE CLAIM MADE U/S 80IB (10) OF THE INCOME TAX ACT IN SPITE OF ALL THE BASIC CONDITIONS FULFILLED BY THE APPELLANT AND ALSO SUBMITTED THE 4 RELEVANT EVIDENCE IN SUPPORT OF CLAIM. THEREFORE, THE CLAIM MADE BY THE APPELLANT BE KINDLY ACCEPTED. GROUND NO.4 THAT THE HON'BLE CIT (APPEALS)-L HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING PROPER OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISIONS MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT MADE U/S 80IB (L0) OF THE INCOME TAX ACT. ITA NO.510/IND/2010 (AY: 2005-06, FILED BY THE ASSESSEE) 1. GROUND NO.1 THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDING THAT THE INITIATION OF REASSESSMENT PROCEEDING ULS 147 BY ISSUING NOTICE ULS 148 IS VALID. THE ASSESSMENT MADE ULS 147/143(3) BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE HON'BLE CIT(APPEALS)-1 BHOPAL IS NEITHER VALID NOR SUSTAINABLE IN LAW. GROUND NO.2 THAT AT ANY EVENT AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED 5 IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR THE DEDUCTION U IS 8IB (10) OF THE INCOME TAX ACT AND THEREBY DISALLOWING THE CLAIM OF RS 9,24,137/- MADE BY THE APPELLANT. THE SO-CALLED CONCLUSION OF THE LEARNED LOWER AUTHORITIES IS GROSSLY WRONG. THE DEDUCTION AS CLAIMED MAY KINDLY BE ALLOWED. GROUND NO.3 THAT THE LEARNED LOWER 'AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR THE CLAIM MADE U/S 80LB (10) OF THE INCOME TAX ACT IN SPITE OF ALL THE BASIC CONDITIONS FULFILLED BY THE APPELLANT AND ALSO SUBMITTED THE RELEVANT EVIDENCE IN SUPPORT OF CLAIM. THEREFORE, THE CLAIM MADE BY THE APPELLANT BE KINDLY ACCEPTED. GROUND NO.4 THAT THE HON'BLE CIT (APPEALS)-L HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING PROPER OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISIONS MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT MADE ULS 80IB (10) OF THE INCOME TAX ACT. 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF THE HOUSING PROJECT 6 PRIYADARSHINI NILAYAM, BHOPAL. THE PROJECT WAS APPROVED BY THE LOCAL AUTHORITY ON 2.12.2002 AND THE AREA OF THE PROJECT WAS 3.60 ACRES. DURING THE COURSE OF ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT COMPLETED THE PROJECT TILL 31 ST MARCH, 2008, THEREFORE, NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 3. BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IT WAS CONTENDED THAT THE A.O. HAS NOT VALIDLY INITIATED REASSESSMENT PROCEEDINGS U/S 147 FOR A.Y. 2004-05 AND A.Y. 2005-06. IT WAS SUBMITTED THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF DEVELOPING AND CONSTRUCTING HOUSING PROJECT NAMED AS PRIYADARSHINI NILAYAMAT BAWADIA KALAN, BHOPAL. IT WAS SUBMITTED THAT THE APPELLANT HAD FILED ITS ORIGINAL RETURNS OF 7 INCOME FOR BOTH THE ASSESSMENT YEARS ACCOMPANIED WITH AUDIT REPORT U/S 44AB AS WELL AS AUDIT REPORT IN FORM NO. 10CCB FOR CLAIMING DEDUCTION U/S 80IB(10). IT WAS CONTENDED THAT THE APPELLANT HAD DISCLOSED ALL THE MATERIAL FACTS WHICH WERE RELEVANT FOR CLAIMING OF DEDUCTION U/S 80IB(10) AND, THEREFORE, THE A.O. WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENTS ON THE BASIS OF CHANGE OF OPINION, AS THE ORIGINAL ASSESSMENTS WERE MADE ON THE BASIS OF SAME SETS OF FACTS. IT WAS ALSO CONTENDED THAT THERE WAS NO MATERIAL WITH THE A.O. TO HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENTS IN THESE YEARS. IT WAS CONTENDED THAT THE ITO SHOULD HAVE REASONS TO BELIEVE AND NOT REASONS TO SUSPECT AND THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF 8 THE A.O. AND FORMATION OF THE BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT IN A PARTICULAR YEAR. 4. BY THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HELD THE REOPENING OF ASSESSMENT VALID AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT IS PERTINENT TO NOTE HERE IN THIS CASE THAT NOTICE U/S 148 FOR A.Y. 2004-05 WAS ISSUED ON 27.02.2009 AND FOR A.Y. 2005-06 THE NOTICE U/S 148 WAS ISSUED ON 27.03.2009 AFTER RECORDING REASONS. THUS, THE NOTICES U/S 148 FOR BOTH THE ASSESSMENT YEARS WERE ISSUED BEFORE THE EXPIRY OF FOUR YEARS FROM THE 9 END OF ASSESSMENT YEARS AND HENCE PROVISO TO SECTION 147 IS NOT APPLICABLE IN THESE ASSESSMENT YEARS. THEREFORE, THE CONDITION LAID DOWN UNDER THE PROVISO REGAREDING FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY MATERIAL FACTS NECESSARY FOR THE ASSESSMENT IS NOT REQUIRED TO BE FULFILLED IN THESE CASES. MOREOVER, THE A.O. HAS GOT INFORMATION DURING THE ASSESSMENT PROCEEDINGS OF THE SUBSEQUENT A.Y. 2006- 07 THAT THE APPELLANT HAD NOT COMPLETED THE CONSTRUCTION OF THE HOUSING PROJECT WITHIN THE SPECIFIED PERIOD U/S 80IB(10). THE PROJECT WAS APPROVED ON 04.012.2002 I.E. BEFORE 01.04.2004 AND THUS THE CONSTRUCTION OF THE PROJECT WAS TO BE 10 COMPLETED BY 31.03.2008 IN VIEW OF PROVISIONS OF SECTION 80IB(10((A)(I). BUT THE APPELLANT HAD NOT COMPLETED THE CONSTRUCTION OF THE PROJECT TILL 31.03.2008. THUS, THE A.O. HAD RECEIVED A TANGIBLE INFORMATION THAT THE CONSTRUCTION OF THE HOUSING PROJECT WAS NOT COMPLETED WITHIN THE SPECIFIED TIME AND, THEREFORE, THE DEDUCTION U/S 80IB(10) WAS WRONGLY ALLOWED IN THE A.Y. 2004-05 AND A.Y. 2005-06. ON THE BASIS OF INFORMATION, THE A.O. HAD RECORDED REASONS U/S 148(2). SIMILAR REASONS ARE RECORDED FOR A.Y. 2005-06. THUS, THE A.O. ON THE BASIS OF INFORMATION GATHERED DURING SUBSEQUENT ASSESSMENT PROCEEDINGS, FOR A.Y. 2006-07 REGARDING NON COMPLETION OF CONSTRUCTION 11 OF THE HOUSING PROJECT WITHIN THE SPECIFIED PERIOD, RECORDED THE REASONS THAT IN THE ASSESSMENTS FOR A,.Y. 2004-05 AND IN THE INTIMATION FOR A.Y. 2005-06, THE ASSESSED INCOME HAD BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF U/S 80IB(10) AND, THEREFORE, HE HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN BOTH THESE ASSESSMENT YEARS. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD AND FIND THAT THE ORIGINAL RETURN OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 WAS PROCESSED U/S 143(1) OF THE ACT AND THEREAFTER ON THE BASIS OF REASONS RECORDED THE ASSESSING OFFICER REACHED 12 THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. ACCORDINGLY, HE REOPENED THE ASSESSMENT. AS PER THE VERDICT OF THE HONBLE SUPREME COURT IN THE CASE OF RAKESH JHAVERI, PROCESSING OF RETURN US/ 143(1)(A) IS NOT AN ASSESSMENT AND IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE FACTS OF THE CASE. IN VIEW OF THE DETAILED FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WE DO NOT FIND ANY INFIRMITY IN HIS ORDER FOR HOLDING THE REOPENING OF ASSESSMENT VALID. REOPENING OF ASSESSMENT IN THE ASSESSMENT YEAR 2004-05 WAS WITHIN FOUR YEARS OF RELEVANT ASSESSMENT YEAR, THEREFORE, PROVISO TO SECTION 147 WAS NOT APPLICABLE AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS JUSTIFIED IN UPHOLDING THE 13 REASSESSMENT U/S 147 OF THE ACT. 4. IN THE RESULT, THE GROUNDS TAKEN BY THE ASSESSEE WITH REGARD TO VALIDITY OF REOPENING IN BOTH THE YEARS ARE DISMISSED. 5. WITH REGARD TO THE MERIT OF DISALLOWANCE U/S 80IB(10)OF THE ACT IT WAS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CONDITION FOR COMPLETION OF HOUSING PROJECT WITHIN FOUR YEARS WAS PRESCRIBED BY FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1.4.2005, THEREFORE, SUCH CONDITION IS APPLICABLE ONLY WITH EFFECT FROM THE ASSESSMENT YEAR 2005-06 AND ONWARDS AND NOT FOR EARLIER YEARS. HOWEVER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DID NOT AGREE WITH THE ASSESSEES CONTENTION AND HELD THAT SINCE THE ASSESSEE WAS UNABLE TO PROCURE CERTIFICATE OF COMPLETION OF PROJECT BY 14 31 ST MARCH, 2008, THEREFORE, NOT ENTITLED FOR CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) OBSERVED THAT THE ASSESSEE HAS NOT OBTAINED COMPLETION CERTIFICATE IN RESPECT OF THE HOUSING PROJECT FROM THE LOCAL AUTHORITY TILL 31 ST MARCH, 2008, THEREFORE, NOT FULFILLED THE CONDITIONS LAID DOWN U/S 80IB(10)(A)(I) READ WITH EXPLANATION (II) OF THE ACT. ACCORDINGLY, ASSESSING OFFICERS ACTION FOR DECLINING THE CLAIM OF DEDUCTION FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AND FURTHER CONTENDED THAT THE PROJECT WAS 15 COMMENCED IN THE FINANCIAL YEAR 2002-03 WHEN THERE WAS NO REQUIREMENT FOR OBTAINING AND FURNISHING THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY, HENCE, THIS CONDITION CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE WHERE PROJECT WAS APPROVED ON 4.12.2002. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD COMPLETED THE CONSTRUCTION OF THE PROJECT BEFORE 31 ST MARCH, 2008 AS THE ASSESSEE HAD GIVEN POSSESSION TO THE CUSTOMERS OF RESIDENTIAL UNITS BEFORE THAT DAY AND THE CUSTOMERS HAD ALSO TAKEN POSSESSION OF THE RESIDENTIAL UNITS AND ALSO PAID PROPERTY TAX OF THE MUNICIPAL CORPORATION. HE FURTHER SUBMITTED THAT THE RESIDENTS OF THE FLATS HAVE ALSO APPLIED FOR ELECTRICITY CONNECTION AND ALSO PAID ELECTRICITY BILLS EVEN PRIOR TO 31 ST MARCH, 2008. AS PER THE LEARNED COUNSEL FOR 16 THE ASSESSEE, ALL THESE FACTS SHOW THAT THE CONSTRUCTION OF THE HOUSING PROJECT WAS COMPLETED BEFORE THE SPECIFIED DATE. RELIANCE WAS PLACED UPON THE DECISION OF THE DELHI BENCH IN THE CASE OF ANSAL PROPERTIES & INDUSTRIES LIMITED; 22 SOT 44 WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 80IB(10) ARE BENEFICIAL PROVISIONS, THEREFORE, LIBERAL INTERPRETATION MAY BE MADE OF THE PROVISIONS IN FAVOUR OF THE ASSESSEE. 7. ON THE OTHER HAND, THE LEARNED SR. DR CONTENDED THAT THE ASSESSEE HAS FAILED TO OBTAIN COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY FOR COMPLETION OF THE PROJECT BEFORE THE SPECIFIED DATE WHICH IS A PRE-CONDITION FOR GRANT OF DEDUCTION U/S 80IB(10) OF THE ACT. THUS HE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES FOR 17 DECLINE OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 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 (N O.2) ACT OF 2004 W.E.F. 1.4.2005 AND PRIOR TO ITS SUBSTITUTI ON, SUB- SECTION (10) AS AMENDED BY THE FINANCE ACT 2000 W.E .F. 1.4.2001 AND FINANCE ACT 2003 WITH RETROSPECTIVE EF FECT FROM 1.4.2002 READ AS UNDER: (10) THE AMOUNT OF PROFIT IN CASE OF AN UNDERTAKI NG DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BE FORE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, SHALL BE 1 00% 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 WH ICH HAS A MINIMUM AREA OF ONE ACRE AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILTUP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN 25 K.M. FROM TH E MUNICIPAL LIMIT OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. 18 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; ( 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 19 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 OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. THE THIRD CONDITION WAS THAT RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL 20 UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN 25 KMS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. IN ANY OTHER PLACE. WE FOUND THAT ALL THESE THREE CONDITIONS HAVE BEEN COMPLIED WITH BY THE ASSESSING OFFICER. 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 21 THE AMENDMENT, IT WAS HELD BY THE HONBLE SUPREME COURT IN STATE OF KERLA 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 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 22 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 COMPLETION OF THE PROJECT AS A PRE-CONDITION FOR 23 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. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED IN PART WHEREAS THE APPEAL FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 .11.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE