AKASH ENTERPRISES, THANE V. ITO WD 4(1), THANE

ITA 5109/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9276 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Business income; Retrospective amendment; Competent authority
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI B. R. MITTAL, J.M. AND SHRI SANJAY AROR A, A.M. ITA NO. : 5109/MUM/2011 ASSESSMENT YEAR: 2006-07 AKASH ENTERPRISES SHOP NO. 27/A, BLDG. NO. 1, AKASHGANGA APTS, SHRIPRASTHA COMPLEX, NALLSOPARA (W), TAL. VASAI, DIST. THANE 401 303 [PAN NO: AALFA 4071 C] VS. ITO, WARD-4(1), QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHUPENDRA SHAH RESPONDENT BY : SHRI A. K. NAYAK DATE OF HEARING : 19.11.2012 DATE OF PRONOUNCEMENT : 12.12.2012 ORDER PER SANJAY ARORA (A.M.) : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED A GAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)II, THANE (CIT(A) FOR SHO RT) DATED 28.10.2010, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (AY ) 2006-07 VIDE ORDER DATED 24.12.2008. 2.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS, FILED ITS RETU RN OF INCOME FOR THE YEAR AT RS. NIL, CLAIMING DEDUCTION U/S.80IB (10) OF THE ACT IN RESP ECT OF ITS ENTIRE BUSINESS INCOME, ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 2 COMPUTED AT RS. 24,25,145/-. THE ASSESSING OFFICER (A.O.) OBSERVED THE ASSESSEES CLAIM FOR DEDUCTION U/S.80IB (10) TO BE INVALID ON TWO COUNTS: A) AS THE COMMENCEMENT CERTIFICATE OF THE RELEVAN T HOUSING PROJECT HAD BEEN ISSUED PRIOR TO 01.04.2004 (VIDE COMMENCEMENT CERTI FICATE DATED 17.07.2003 BY THE LOCAL AUTHORITY), THE SAME HAD TO BE COMPLETED BY 31.03.2008 (SECTION 80IB(10)(A)(I)), WHILE NO COMPLETION CERTIFICATION FROM THE LOCAL AUTHORITY, SIGNIFYING SO, WAS ADDUCED BY THE ASSESSEE, WITH, R ATHER, THE SAID AUTHORITY CONFIRMING OF HAVING NOT ISSUED ANY SUCH CERTIFICAT E VIDE ITS LETTER DATED 23.10.2008; AND B). THAT THE BUILT-UP AREA OF 33 SHOPS FORMING PA RT OF THE HOUSING PROJECT, BEING AT 4724 SQ. FT., EXCEEDED THE LIMIT OF 5% (OF THE A GGREGATE BUILT-UP AREA OF THE HOUSING PROJECT AT 70,133 SQ. FT.) OR 2000 SQ. FT., WHICHEVER IS LESS, VIOLATING THE ESSENTIAL CONDITION OF SECTION 80IB(10)(D). (ALSO R EFER PARAS 2.3 & 3.2 OF THIS ORDER). 2.2 QUA THE FIRST OBJECTION, THE ASSESSEE, THOUGH DID NOT ADDUCE THE COMPLETION CERTIFICATE (ON THE BASIS OF WHICH THE COMPLETION O F THE PROJECT UNDER THE PROVISION IS TO BE RECKONED); RATHER, COULD NOT POSSIBLY DO, THE SA ME HAVING BEEN UNDENIABLY NOT ISSUED BY THE LOCAL (COMPETENT AUTHORITY), YET CONT ENTED THAT THE PROJECT WAS IN FACT COMPLETED IN THE YEAR 2005 ITSELF, AND THAT IT HAD APPLIED FOR THE OCCUPANCY CERTIFICATE THROUGH ITS ARCHITECTS, M/S. W. N. ASSOCIATES, ON 0 6.07.2005 , THOUGH HAD NOT BEEN ISSUED TO IT EVEN TILL DATE. FOR THE SECOND OBJECT ION, THE ASSESSEES CASE WAS THAT IT HAD DEVELOPED THE PROPERTY BY ACQUIRING THE DEVELOPMEN T RIGHTS (VIDE DEVELOPMENT AGREEMENT DATED 24.01.2005, PB. PG. NOS. 46 - 64) F ROM ONE M/S. PANCHAM BUILDERS, WHO HAD ALREADY CONSTRUCTED THE SHOPS, WHICH WERE O N THE GROUND FLOOR. AS THE ASSESSEE CONSTRUCTED THE ONLY THE UPPER FLOORS, FOR WHICH THE DEVELOPMENT RIGHTS WERE ACQUIRED BY IT, CONSTRUCTING ONLY RESIDENTIAL FLATS , DEDUCTION U/S.80IB(10) IS AVAILABLE TO IT. 2.3 THE A.O. NEGATIVED BOTH THE EXPLANATIONS BY THE ASSESSEE. HE DIRECTLY CORRESPONDED WITH CITY AND INDUSTRIAL DEVELOPMENT CORPORATION (CIDCO) , THE LOCAL ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 3 AUTHORITY, VIDE LETTER DATED 10.10.2008, AS WAS INF ORMED BY IT (VIDE LETTER DATED 23.10.2008), THAT NO OCCUPANCY CERTIFICATE HAD YET BEEN GRANTED IN RESPECT OF THE SAID HOUSING PROJECT. AS REGARDS THE SECOND OBJECTION, H E WAS OF THE VIEW THAT THE PROVISION (SECTION 80IB(10)) GRANTS DEDUCTION TO A HOUSING PR OJECT AS A WHOLE, SO THAT THERE WAS NO SCOPE FOR ALLOWING DEDUCTION IN ITS RESPECT ON A FLOOR-WISE BASIS. THE LIMITING AREA FOR CONSTRUCTION OF COMMERCIAL SPACE U/S. 80IB(10)( D) IS AGAIN WITH REFERENCE TO THE TOTAL AREA OF THE PROJECT, AND IS ADMITTEDLY EXCEED ED. THE SAID HOUSING PROJECT THUS DOES NOT QUALIFY AS AN ELIGIBLE PROJECT U/S. 80IB(1 0), INASMUCH AS THE AREA OF THE SHOPS AND COMMERCIAL ESTABLISHMENTS EXCEEDS 2000 SQ. FT, WHILE THE FSI UTILIZED FOR THE CONSTRUCTION OF 33 SHOPS, SAID TO BE BY M/S. PANCHA M BUILDERS, IS ADMITTEDLY AT 6016 SQ. FT. , I.E., OVER 8.5% OF THE TOTAL BUILT-UP AREA; THE A SSESSEE CLAIMING TO HAVE DEVELOPED THE BALANCE 64116 SQ. FT. HE (THE AO) ALSO EXTENSIVELY DEALT WITH THE POSSIB LE ARGUMENT BY THE ASSESSEE, I.E., THAT SECTION 80IB(10)(D) HAVING BEEN SUBSEQUE NTLY AMENDED (BY FINANCE ACT, 2010) W.E.F. 01.04.2010, MODIFYING THE LIMITING ARE A (TO 3% OF THE AGGREGATE BUILT UP AREA OR 5000 SQ. FT., WHICHEVER IS HIGHER), THE REV ISED PARAMETER WOULD APPLY. REJECTING IT ON THE BASIS THAT IT IS ONLY THE LAW AS APPLICAB LE FOR THE RELEVANT YEAR, I.E., AS IN FORCE AS ON THE FIRST DATE OF THE RELEVANT ASSESSMENT YEA R, THAT WOULD OBTAIN. THE REVISED LIMITS, BEING EFFECTIVE FROM 01.04.2010 (I.E., A.Y. 2010-11 AND SUBSEQUENT YEARS), WOULD THUS NOT APPLY. RELIANCE WAS PLACED BY HIM O N THE DECISIONS IN THE CASE OF CIT VS. ISTHMIAN STEAMSHIP LINES REPORTED AT (1981) 20 ITR 572 (SC) AND KARIMTHARUVI TEA ESTATE LIMITED V. STATE OF KERALA REPORTED AT (1966) 60 ITR 262 (SC). 2.4 IN APPEAL, THE ASSESSEE COULD NOT IMPROVE ITS C ASE AT ALL, WITH THE LD. CIT(A), RATHER, ADDING ONE MORE DECISION BY THE APEX COURT (TO THE TWO BY THE AO) TOWARD THE LEGAL PROPOSITION BEING ADVOCATED BY THE LATTER, I. E., IN THE CASE OF RELIANCE JUTE & INDUSTRIES LTD. V. CIT (1979) 120 ITR 921 (SC). THE LD. CIT(A) FOUND THAT THE HOUSING PROJECT HAD FIRST TO QUALIFY AS AN ELIGIBLE HOUSING PROJECT U/S. 80IB(10) FOR IT TO BE ELIGIBLE FOR DEDUCTION THEREUNDER. NON SATISFACTIO N OF EVEN ONE CONDITION WOULD ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 4 DISENTITLE THE ASSESSEE FOR ITS CLAIM FOR DEDUCTION . IN THE INSTANT CASE, THE COMPLETION CERTIFICATE HAD NOT BEEN OBTAINED EVEN BY THE DATE OF COMPLETION OF ASSESSMENT ON 24.12.2008 (THOUGH WRONGLY MENTIONED BY HIM AS 24.11.2008), WHILE ADMITTEDLY IT HAD TO BE, IN TERMS OF SECTION 80IB(10)(A), BY 31.0 3.2008, FOR IT TO BE ELIGIBLE FOR DEDUCTION. AGGRIEVED, THE ASSESSEE IS IN SECOND AP PEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 WE FIRSTLY OBSERVE THAT THE APPEAL IS LATE BY THE PERIOD OF 167 DAYS, BEING FILED ON 01.07.2011 AS AGAINST THE DUE DATE OF 14.01.2011 . THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF THE DELAY, SUPPORTIN G IT WITH AN AFFIDAVIT DATED 05.07.2011, FILED ON 07.07.2011. THE SAME STATES TH AT THE CONCERNED PARTNER, SH. RAMACHANDRAN NAIR, THE DEPONENT, BEING SERIOUSLY IL L, HE COULD NOT PAY ATTENTION TO THIS ASPECT OF HIS BUSINESS; HE IS ILLITERATE WITH NO EXPERIENCE IN SUCH MATTERS; AND, FURTHER, THAT IT COULD NOT POSSIBLY BE PREJUDICED F OR WANT OF PROPER CARE BY HIS EARLIER COUNSEL, WHO THOUGH HAS NOT BEEN NAMED. THE LD. DR DID NOT DISPUTE THE REASONS OR THE AVERMENTS MADE PER THE AFFIDAVIT AFORE-SAID, FO RMING PART OF THE CONDONATION APPLICATION DATED 27/6/2011. WE FIND THE REASONS AS NOT UNREASONABLE. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE ASSESSEES APPEA L. 3.2 COMING TO THE MERITS OF THE CASE, THE ASSESSEE, IN OUR CONSIDERED VIEW, FAILS ON ALL FOURS IN THIS REGARD. THE MAIN THRUST OF ITS AR GUMENTS BEFORE US WAS THAT THE AMENDED PROVISIONS OF SECTION 80IB(10)(D) WOULD APP LY, TO ADVANCE WHICH PROPOSITION THE LD. AR CITED SOME DECISIONS BY THE TRIBUNAL. TH E REVENUE HAS RELIED ON AS MANY AS THREE DECISIONS BY THE HON'BLE APEX COURT, LISTED S UPRA (REFER PARAS 2.3 & 2.4 OF THIS ORDER), AND WHICH HAVE BEEN FURTHER FOLLOWED, APPLI ED AND REFERRED TO BY THE HON'BLE HIGH COURTS ACROSS THE COUNTRY, BESIDES BY THE APEX COURT ITSELF IN 279 ITR 310 (SC) (REFER PARA NO. 3.1 AND ALSO PAGE 6 OF THE ASSESSME NT ORDER). THE LD. AR COULD NOT MEET THE DIRECT QUERY BY THE BENCH IN THIS REGARD DURING HEARING. IN PURE MATTERS OF LAW, ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 5 WHICH THE PROPOSITION BEING ADVANCED BY THE ASSESSE E INVOLVES, IT IS THE VIEW OF HIGHER COURTS OF LAW THAT WOULD PREVAIL OVER THAT BY THE T RIBUNAL, EVEN AS WE FIND THE ISSUE BEING RAISED TO BE THE SUBJECT MATTER OF SETTLED LA W, SO THAT A POSITION CONTRARY THERETO, AS BEING ADVANCED, IS UNTENABLE IN LAW. THERE IS NO QUESTION OF ANY VESTED RIGHT; IF THE QUALIFYING CONDITION/S STANDS RELAXED FROM A PARTIC ULAR DATE, THE SAME WOULD APPLY TO THE ASSESSEES PROJECT AS WELL, SO THAT IT SHALL BE GOVERNED BY THE AMENDED LAW FROM THAT DATE. THERE IS NOTHING IN THE RELEVANT PROVISI ON (S. 80IA(10)(D)) THAT WOULD GIVE IT A RETROSPECTIVE EFFECT. IN FACT, THE PREMISES OF V ESTED RIGHT THOUGH NO ONE CAN POSSIBLY CLAIM A VESTED RIGHT IN A PARTICULAR LAW - WOULD COME INTO PLAY ONLY WHERE THE ASSESSEES PROJECT WAS ELIGIBLE EARLIER, AND THE CO NDITION/S IS MADE MORE STRINGENT BY A SUBSEQUENT, PROSPECTIVE AMENDMENT. WE SAY SO AS THE REVENUE DISPUTES THE ELIGIBILITY OF THE ASSESSEES PROJECT AS AN ELIGIBLE ONE EVEN U NDER THE UNAMENDED PROVISION. FURTHER, THERE IS, IN ANY CASE, NO SCOPE FOR APPLYI NG A SUBSEQUENT AMENDMENT, WHICH IS EFFECTIVE 01.04.2010 ONWARDS, TO THE EARLIER YEARS. IN FACT THOUGH THIS ASPECT DOES NOT CONCERN US FOR THE CURRENT YEAR; THE AMENDED PROVIS ION OF SECTION 80IB BEING INAPPLICABLE, WE CANNOT HELP BUT OBSERVE THAT THE A SSESSEES PROJECT DOES NOT MEET EVEN THE REVISED, RELAXED PARAMETERS INASMUCH AS THE CON STRUCTION OF 33 SHOPS WAS MADE BY UTILISING 6017 SQ. FT. (REFER PARA 5 OF THE STATEMENT OF THE FACTS BEFOR E THE FIRST APPELLATE AUTHORITY, AS WELL AS CLAUSE (K) OF THE D EVELOPMENT AGREEMENT DATED 24.01.2005/PB PGS.46-64), WITH THE ASSESSEE DEVELOP ING THE BALANCE 64116 SQ. FT. OF THE TOTAL APPROVED FSI OF 70133 SQ. FT., SO THAT TH E COMMERCIAL AREA EXCEEDS BOTH 3% (OF THE TOTAL AREA) AS WELL AS THE UPPER LIMIT OF 5 000 SQ. FT. THE SAID FACTS ARE UNDISPUTED AND FIND ABUNDANT MENTION IN THE DEVELOP MENT AGREEMENT DATED 24.01.2005 AS WELL, AND FOR WHICH WE MAY REPRODUCE THE RELEVAN T CLAUSES:- K). M/S. PANCHAM BUILDERS HAVE CONSTRUCTED THE GRO UND FLOOR OF THE BUILDING NO.5 PART CONSISTING OF WING NOS. A,B,C,D AND HAVE UTILISED THE F.S.I. ADMEASURING 6,017 SQUARE FEET BY CONSISTING THIRTY THREE (33) SHOPS. ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 6 L) THERE IS BALANCE F.S.I. OF THE WINGS NO. A, B, C ), D ADMEARSURING 64,116.49 SQUARE FEET OF THE UPPER FLOORS WHICH CAN NOT BE DEVELOPED BY THE DEVELOPERS. M) THE SUB-DEVELOPERS ARE THE PROFESSIONAL BUILDERS AND ARE WELL CONVERSANT WITH THE BUILDINGS CONSTRUCTION. N) THE DEVELOPERS HAVE AGREED TO GRANT THE DEVELOPM ENT RIGHT IN RESPECT OF THE F.S.I OF THE SAID UPPER FLOORS BALANCE F.S.I. 6 4,116.49 SQUARE FEET IN FAVOUR OF THE SUB-DEVELOPERS. 3.3 THE ASSESSEES NEXT ARGUMENT, AGAIN MADE WITH R EFERENCE TO THE CASE LAW, IS THAT THE CONDITION OF COMPLETION OF THE PROJECT BY 31.03 .2008, I.E., PER SECTION 80IB(10)(A), IS NOT APPLICABLE WHERE THE PROJECT STOOD COMMENCED , AS IN THE INSTANT CASE, PRIOR TO 01.04.2004, I.E., THE REQUIREMENT COMES INTO EFFECT ONLY FROM THE ASSESSMENT YEAR COMMENCING 01.04.2005, I.E., ASSESSMENT YEAR 2005-0 6 ONWARDS (VIDE FINANCE (NO.2) ACT, 2004). THE ASSESSEES PROJECT HAVING ADMITTEDL Y COMMENCED ON 17.07.2003 , THE AMENDED PROVISION OF SECTION 80IB(10)(A), STIPULATI NG A TIME PERIOD FOR COMPLETION OF THE PROJECT, AS AGAINST ONLY THE CONDITION OF COMME NCEMENT (AFTER A PARTICULAR DATE) EARLIER, WOULD NOT APPLY. WE HAVE, FIRSTLY, WITH R EFERENCE TO THE NON SATISFACTION OF THE CONDITION OF SECTION 80IB(10)(D), ALREADY CLARIFIED THE ASSESSEES PROJECT TO BE NOT AN ELIGIBLE PROJECT. THAT BEING THE CASE, EVEN THE ACC EPTANCE OF THE ASSESSEES THIS CONTENTION WOULD BE OF NO MOMENT AS ALL THE QUALIFY ING CONDITIONS OF THE SECTION HAVE TO BE SIMULTANEOUSLY MET TO BE ELIGIBLE FOR DEDUCTI ON. COMING TO THE MERITS OF THE ARGUMENT, THE LAW IN THE MATTER, AS CLARIFIED BY TH E HON'BLE APEX COURT PER ITS DECISIONS IN THE CASE OF CIT VS. ISTHMIAN STEAMSHIP LINES ; KARIMTHARUVI TEA ESTATE LIMITED V. STATE OF KERALA (SUPRA) AND RELIANCE JUTE & INDUSTRIES LTD. V. CIT (SUPRA) WOULD EQUALLY APPLY IN CASE OF THE AMENDMENT TO SECTION 8 0IB(10)(A) AS WELL, AS IT IS ONLY THE LAW AS IN FORCE FOR THE RELEVANT YEAR THAT WILL APP LY. THE ONLY SAVING IS WHERE THE LAW ITSELF PROVIDES AN EXCEPTION, EITHER SPECIFICALLY O R BY NECESSARY IMPLICATION, WHICH WE ARE UNABLE TO READ IN THE PROVISION. THERE IS NO SC OPE, WE MAY CLARIFY, FOR READING THE LAW CONTRARY TO THE CLEAR MANDATE THEREOF, BESIDES THE EXPRESS PRONOUNCEMENTS IN THE ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 7 MATTER BY THE HON'BLE APEX COURT. IN FACT, THE AMEN DMENT STIPULATING THE TIME FRAME FOR COMPLETION OF THE PROJECT, WHICH COMES INTO EFFECT FROM THE PREVIOUS YEAR COMMENCING 01.04.2004 (I.E., A.Y. 2005-06 ONWARDS) ALLOWS AN EXTENDED TIME UP TO 31.03.2008 FOR APPROVED PROJECTS COMMENCING ON OR A FTER 01.10.1998, WHERE APPROVED BEFORE 01.04.2004 (SECTION 80IB(10(A)(I)), SO THAT THE SAID TIME STIPULATION CANNOT BE REGARDED AS EITHER STRINGENT OR PLACING AN ARBITRAR Y CONDITION, PUTTING THE EXISTING PROJECTS TO AN UNINTENDED AND UNDUE HARDSHIP. IN OT HER WORDS, IT CANNOT BE REGARDED AS UNREASONABLE BY ANY COUNT, PARTICULARLY CONSIDERI NG THAT A LESSER TIME FRAME IS MADE APPLICABLE TO THE PROJECTS COMMENCING SUBSEQUENT TO 01/4/2004. IN FACT, THE ASSESSEE CONTENDS OF ITS PROJECT HAVING BEING COMPLETED IN T HE YEAR 2005 ITSELF. WE NOTE, RATHER AMUSINGLY, THAT THIS ARGUMENT IS JUST THE OPPOSITE OF THAT ADOPTED BY THE ASSESSEE IN RELATION TO THE AMENDMENT TO S. 80IB(10)(D). IN FACT, THE LEGAL ARGUMENT WOULD NOT BE AVAILABLE TO THE ASSESSEE ALSO FOR THE REASON THAT IT ACQUIRED THE DEVELOPMENT RIGHTS IN THE RELEVANT PROJECT ONLY VIDE DEVELOPMENT AGREEMEN T DATED 24.01.2005 , I.E., AT THE TIME WHEN THE AMENDED LAW WAS ALREADY IN FORCE . THE ASSESSEES ARGUMENT IS, THEREFORE, REJECTED. 3.4 WE MAY NEXT COME TO THE ASSESSEES SECOND ARGUM ENT THAT THE EXPLANATION TO SECTION 80IB(10)(A), WHICH PROVIDES, INTER ALIA , FOR THE MANNER IN WHICH THE DATE OF COMPLETION OF THE PROJECT IS TO BE RECKONED, WOULD NOT APPLY TO IT, AGAIN, FOR THE SAME REASON, I.E., THAT ITS PROJECT STOOD APPROVED PRIOR TO 01.04.2004, WHILE THE AMENDED PROVISION COMES INTO EFFECT ONLY FROM THAT DATE, I. E., ASSESSMENT YEAR COMMENCING 01.04.2005 ONWARDS. THIS, IN OUR VIEW, DOES NOT CON STITUTE A NEW OR INDEPENDENT ARGUMENT, BUT IS ONLY AN EXTENSION OR APPENDAGE TO THE EARLIER ARGUMENT WHICH WE HAVE ALREADY ANSWERED, BOTH WITH REFERENCE TO THE A PPLICABLE LAW AND THE OBTAINING FACTS OF THE CASE (REFER PARA 3.3 OF THIS ORDER). THE LAW AS IT STOOD UP TO THE ASSESSMENT YEAR 2004-05 DID NOT PROVIDE FOR ANY TIME FRAME FOR THE COMPLETION OF AN ELIGIBLE HOUSING PROJECT. HOWEVER, ONCE IT SO DOES, THE LEG ISLATURE ONLY DEEMED IT FIT AND ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 8 PROPER TO, PER AN EXPLANATION TO THE PROVISION, PROVIDE FOR THE MANNER IN WHICH THE DATE OF APPROVAL AND THE DATE OF COMPLETION OF C ONSTRUCTION OF THE HOUSING PROJECT IS TO BE DETERMINED, AND WHICH IT DOES VIDE CLAUSES (I) AND (II) THEREOF. THE SAID EXPLANATION , A PART OF THE LAW AS AMENDED, AND ONLY AN ADJUNCT TO THE MAIN PROVISION, WOULD APPLY FOR THE RELEVANT ASSESSMENT YEAR. 3.5 FINALLY, THE ASSESSEE CONTENDS THAT THE EXPLANATION SHALL NOT APPLY IN THE FACTS AND CIRCUMSTANCES OF ITS CASE INASMUCH AS IT APPLIE D, THROUGH ITS ARCHITECTS, M/S. W. N. ASSOCIATES, WAY BACK IN 2005, VIDE LETTER DATED 06. 07.2005. THERE WAS UNCERTAINTY AS TO WHETHER CITY AND INDUSTRIAL AND DEVELOPMENT CORP ORATION OF MAHARASHTRA LTD. (CIDCO) IS THE COMPETENT AUTHORITY FOR THE PURPOSE, AND THE COMPLETION CERTIFICATE WAS HELD UP BY IT FOR THAT REASON. TOWARD THIS, THE LD. AR DREW OUR ATTENTION TO A REPRESENTATION BEFORE THE HON'BLE MINISTER OF STATE FOR URBAN DEVELOPMENT, GOVERNMENT OF MAHARASHTRA, DATED NIL, BY AND ON BEH ALF OF M/S. SILVER LAND DEVELOPMENT CORPORATION, THROUGH WHOM M/S. PANCHAM BUILDERS HAD ACQUIRED THE DEVELOPMENT RIGHTS THROUGH POWER OF ATTORNEY (PB PG . NOS. 31 TO 35). HOW COULD THE ASSESSEE BE PENALIZED OR PREJUDICED WHEN THE COMPLE TION CERTIFICATE IS NOT ISSUED TO IT FOR NO FAULT OF IT ? THIS IS WHAT HAS PREVAILED AND FOUND FAVOUR WITH THE TRIBUNAL IN SIMILAR SITUATIONS. 3.6 IT WOULD BE USEFUL TO EXTRACT THE RELEVANT PART OF THE SECTION AS UNDER:- SECTION 80-IB (10) (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MA RCH, 2008 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR CO MMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 9 (I) IN A CASE WHERE A HOUSING PROJECT HAS B EEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS B EEN, OR, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 BU T NOT LATER THAN THE 31ST DAY OF MARCH, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOC AL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEE N APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2005, W ITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF TH IS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N 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 CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; 3.7 IT IS CLEAR THAT THE COMMENCEMENT OF PROJECT AN D ITS APPROVAL BY THE COMPETENT AUTHORITY ARE SEPARATE INCIDENTS. WHAT HAS BEEN GRA NTED BY THE CIDCO ON 17.07.2003 IS THE COMMENCEMENT CERTIFICATE, WHILE THE APPROVAL TO THE PROJECT WAS ACCORDED BY IT VIDE ITS LETTER DATED 19.12.2003 (REFER PARA (D) OF THE DEVELOPMENT AGREEMENT DATED 24.01.2005). THOUGH THE APPROVAL LETTER IS NOT ON R ECORD, WE DO NOT OBSERVE ANY DOUBT OR DISPUTE IN RELATION TO THE RELEVANT PROJECT BEIN G APPROVED, OR THE YEAR OF IT BEING SO. THIS DATE STANDS ALSO ENDORSED BY ITS MENTION IN TH E OCCUPANCY CERTIFICATE DATED 22.12.2009 BY CIDCO (PB PG. 40). FURTHER, BOTH THE COMMENCEMENT AND THE APPROVAL CERTIFICATES ARE BY CIDCO, TO WHICH AUTHORITY THERE IS ABUNDANT REFERENCE IN THE DEVELOPMENT AGREEMENT AS WELL. AS SUCH, WE ARE WHOL LY UNABLE TO ACCEPT THE ASSESSEES CONTENTION - OF WHICH WE FIND NO REFEREN CE BEFORE THE AUTHORITIES BELOW AS WELL - THAT THERE WAS NO CLARITY AS TO WHICH AUTHOR ITY IS THE COMPETENT (LOCAL) AUTHORITY FOR THE PURPOSE OF ISSUE OF THE COMPLETION (OCCUPAN CY) CERTIFICATE, AND WHICH, THEREFORE, REMAINED TO BE ISSUED FOR THAT REASON. T HE REPRESENTATION BEFORE THE HON'BLE ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 10 MINISTER IS ESSENTIALLY AN APPEAL U/S.47 OF THE MRT P ACT, 1966, CONSEQUENT TO THE REFUSAL FOR THE DEVELOPMENT PERMISSION BY CIDCO U/S . 45(1)(III) OF THE SAID MRTP ACT. THE SAME, IF ANYTHING, CLEARLY ESTABLISHES CID CO TO BE THE LOCAL AUTHORITY REFERRED TO IN THE PROVISION. FURTHER, THE APPEAL R AISES THE ISSUE OF PERMISSION FOR DEVELOPMENT, WHILE THE ASSESSEES CASE IS WITH REGA RD TO THE ISSUE OF COMPLETION CERTIFICATE UPON ACTUAL COMPLETION. HOW, THEN, IS THE SAME RELEVANT ? FURTHER, THE REPRESENTATION PERTAINS TO THE YEAR 2007 WHEREAT TH E COMPLAINANT (M/S. SILVER LAND DEVELOPMENT CORPORATION) NO LONGER HOLDS THE DEVELO PMENT RIGHTS QUA THE ASSESSEES (A SUB-DEVELOPER) HOUSING PROJECT. 3.8 THE APPLICATION FOR GRANT OF OCCUPANCY CERTIFIC ATE DATED 06.07.2005 (AS STATED BEFORE THE LD. CIT(A) REFER PARA 4 OF THE APPELLA TE ORDER) IS NOT ON RECORD. IT IS INDEED EXTREMELY SURPRISING THAT A PROJECT CONSISTING OF S EVEN FLOORS, COMPRISING OVER 100 RESIDENTIAL FLATS FOR AN AGGREGATE BUILT-UP AREA OF NEARLY 65000 SQ. FT. ASSUMED BY THE ASSESSEE IN END JANUARY, 2005 (VIDE AGREEMENT DATED 24.01.2005) IS COMPLETED WITHIN A FEW MONTHS, APPLYING THE OCCUPANCY CERTIFICATE IN BEGINNING JULY, 2005! THE LD. AR WOULD IN THIS CONTEXT TAKE US TO AN APPLICATION (TO THE EXECUTIVE ENGINEER, CIDCO) 03.01.2006 BY M/S. W.N. ASSOCIATES, ARCHITECTURAL A ND STRUCTURAL CONSULTANTS (PB PG. NO. 36). THE SAME, EVEN AS POINTED OUT BY THE BENC H DURING HEARING, IS IN RESPECT OF BUILDING NO. 6, SECTOR-V, WHILE THE ASSESSEES PROJ ECT IS AT BUILDING NO.5, SECTOR VII (BOTH AT VILLAGE NILEMORE, TAL VASAI, DIST. THANE). THE SAME, THUS, IS NOT RELEVANT. THE A.O. HAD, TO ASCERTAIN THE FACTS AND, IN OUR VI EW, VERY CORRECTLY, SOUGHT INFORMATION DIRECTLY FROM THE LOCAL AUTHORITY (CIDC O), AND WHICH HAD VIDE ITS LETTER DATED 23.10.2008 CLEARLY CLARIFIED OF NON-ISSUANCE OF OCCUPANCY CERTIFICATE IN RESPECT OF THE PROJECT UNDER REFERENCE. THE OCCUPANCY CERTI FICATE IN RESPECT OF THE ASSESSEES PROJECT HAS BEEN ISSUED, ALONG WITH OTHERS, BY CIDC O ON 23.12.2009 VIDE ITS LETTER NO. CIDCO/VVSR/OC/BP-3145/W/96 (PB PGS. 40-46) FOR A TO TAL BUILT UP AREA OF 5558.48 SQ. MTRS. THERE IS NOTHING ON RECORD TO SHOW THAT T HE GRANT OF THE SAID CERTIFICATE STOOD ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 11 WITHHELD OR DELAYED FOR WANT OF PROPER ACTION, OR A NY DEFAULT, BY CIDCO, THE LOCAL AUTHORITY. ON THE CONTRARY, THE VARIOUS NO OBJECTIO N CERTIFICATES (NOCS) SUBMITTED THERETO FOR THE PURPOSE, BEAR DATES OF 2009, EFFECT IVELY DISPROVING THE ASSESSEES CASE ON FACTS. HOW COULD WE WONDER THE COMPLETION CERTIFICATE WERE ISSUED WHEN THE APPLICATION FOR THE SAME, I.E., CONTAINING ALL THE NECESSARY PERMISSIONS AND NOCS FROM VARIOUS AUTHORITIES, WAS MADE ONLY ON OR AFTER 22.0 9.2009, I.E., THE DATE OF THE LATEST NOC ? IN FACT, IT IS NOT EVEN CLEAR WHEN THE REQUISITE APPROVAL TO CIDCO WAS MOVED BY THE ASSESSEE. IN ANY CASE, COULD IN SUCH AS CASE CIDCO BE HELD RESPONSIBLE FOR THE DELAYED ISSUE OF THE COMPLETION CERTIFICATE? THE A SSESSEES CASE IS WHOLLY WITHOUT MERIT. 4. GROUND NO. 3 ASSAILS THE CHARGE OF INTEREST U/SS .234B, 234C AND 234D, AS WELL AS INITIATION OF PENALTY U/S.271(1)(C). THE SAME IS , AGAIN, WITHOUT MERIT; THE PENALTY PROCEEDINGS BEING SEPARATE AND DISTINCT, WHILE THE CHARGE OF INTEREST IS MANDATORY. 5. IN VIEW OF THE FOREGOING, THE ASSESSEES CAS E IS BOTH LEGALLY AND FACTUALLY UNTENABLE. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS DI SMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF DECEMBER, 2012 SD/- - SD/- ( B. R. MITTAL ) ( SANJAY ARORA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 12/12/2012 COPY FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. ITA NO. 5109/MUM/2011 (AY 2006-07) AKASH ENTERPRISES V. ITO, THANE 12 3. THE C.I.T. 4. CIT (A) 5. THE DR A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI