M/S MANAV CONSTRUCTION, Bhopal V. THE ITO 1(2), Bhopal

ITA 528/IND/2013

• Counselvise Citation: 52822714 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 19-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Retrospective amendment; Competent authority
• Section: 143(3); 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 527 & 528 /IND/2013 A.Y. : 2005-06 & 2007-08 M/S.MANAV CONSTRUCTION, ITO , 1(2), BHOPAL. VS. BHOPAL APPELLANT RESPONDENT PAN NO.AALFM5677J APPELLANTS BY : SHRI PRAKASH JAIN, C. A. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D. T. GARASIA, J.M. THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE COMBINED ORDER OF CIT(A) DATED 25.04.2013 RELATING TO ASSESSMENT YEARS 2005-06 & 2007-08. DATE OF HEARING : 19. 10.2015. DATE OF PRONOUNCEMENT : 19 .10.2015 M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 2 2 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. THAT THE LD. CIT(A)-I LEGALLY ERRED WHILE DISALLOWI NG DEDUCTION U/S 80IB(10) OF THE INCOME-TAX ACT, 1961. 1(A) THAT THE LD. CIT(A)- I LEGALLY ERRED WHILE NOT ALLOWING THE DEDUCTION OF RS. 4,08,366/-. 1(B) THAT THE LD. CIT(A)-I FAILED TO APP RECIATE THAT THE APPELLANT HAD FULFILLED ALL THE CONDITIONS FOR CLAI MING DEDUCTION U/S 80IB(10) OF THE INCOME-TAX ACT, 1961. 1(C) THAT THE LD. CIT(A)-I LEGALLY FAIL ED TO APPRECIATE THAT THE APPELLANT ONLY FAILED TO FOLLOW THE PROCEDURAL LAW AND NOT SUBSTANTIVE LAW. 1(D) THAT THE LD. CIT(A)-I LEGALLY ERR ED WHILE NOT APPRECIATING THE INTENTION OF THE LEGISLATURE WHILE INTRODUCING THE RELEVANT SECTION. 2. THE APPELLANT, THEREFORE, PRAYS THAT DEDUCTION CLAIMED U/S 80IB(10) OF THE INCOME-TAX ACT, 1961, MAY KINDLY BE ALLOWED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 3 3 PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRU CTION OF BUILDINGS. THE ASSESSEE HAS FURNISHED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 ON 31.10.2005 DECLARING NIL INCOME, AFTER CLAIMING DEDUCTION U/S 80IB(10)WAS RS. 4,08,3 66/-. THE ASSESSMENT WAS REOPENED U/S 147 AND THE ASSESSMENT WAS COMPLETED U/S 147 READ WITH SECTION 143(3) WAS COMP LETED AND THE CLAIM OF DEDUCTION U/S 80IB(10) AT RS. 1,92,670 /- AND IT WAS DISALLOWED U/S 147 READ WITH SECTION 143(3). TH E AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) ON THE HOUSING PROJECT, NAMELY, AVANTIKA AVENUE, BH OPAL. THE SAID PROJECT WAS COMMENCED ON 17.12.2003. AS PER TH E PROVISIONS OF SECTION 80IB(10), SINCE THE PROJECT W AS COMMENCED ON 1.4.2004, THE CONSTRUCTION OF HOUSING PROJECT WAS TO BE COMPLETED ON OR BEFORE 31 ST MARCH, 2008. THE AO FURTHER NOTED THAT AS PER THE EXPLANATION TO SECTIO N 14 OF 80IB(10A), THE DATE OF COMPLETION OF HOUSING PROJEC T SHOULD BE TAKEN ON THE DATE ON WHICH THE COMPLETI8ON CERTIFIC ATE IN RESPECT OF HOUSING PROJECT WAS ISSUED BY LOCAL AUTH ORITY. THE ASSESSEE WAS ASKED TO FURNISH THE COPY OF COMPLETIO N CERTIFICATE M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 4 4 ISSUED BY LOCAL AUTHORITY IN RESPECT OF COMPLETION OF CONSTRUCTION, BUT THE ASSESSEE DID NOT PRODUCE THE COMPLETION CERTIFICATE FROM THE MUNICIPAL CORPORATION. THEREF ORE, THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) FOR ASSESSMENT YEARS 2006-07 AND 2007-08. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AUTHORIZED REPRESENTATIVE HAS FILED THE WRI TTEN SYNOPSIS, WHICH READ AS UNDER :- WITH REFERENCE TO THE HEARING OF ABOVE REFERRED APP EAL WE HAVE TO FURTHER SUBMIT THAT WE ARE CAUTION WITH THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN TH E CASE OF CIT VIS GLOBAL REALITY (2015) 26 ITJ 317. HOWEVER WHILE DELIVERING THE SAID JUDGMENT AS NONE OF THE PARTY OR THEIR COUNSEL HAS BOUGHT TO THE NOTICE OF THE FOLLOWING FACTS, LOCAL LAW AND THE DECISION OF HON' BLE APEX COURT- 1.1] IT IS UNDISPUTED THAT THE ASSESSEE HAS M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 5 5 CONSTRUCTED GROUND + FIRST FLOOR BUNGALOWS AND NO HIGH RISE BUILDING IS CONSTRUCTED BY IT. 1.2] THAT AS PER RULE 31(2) (F) IN RESPECT OF COMPLETION OF CONSTRUCTION OF BUNGALOW THE OWNER SHALL GIVE A NOTICE TO THE AUTHORITY REGARDING COMPLETION OF WOR K DESCRIBED IN THE PERMISSION. THE SAID CLAUSE READS AS UNDER:- 'RULE 31(2) EVERY OWNER SHALL :- (F) GIVE WRITTEN NOTICE TO THE AUTHORITY REGARDING COMPLETION OF WORK DESCRIBED IN THE PERMISSION (SEE APPENDIX G): A XEROX COPY OF THE RELEVANT PAGE OF BHUMI VIKAS NIYAM, 1984, IS ENCLOSED HEREWITH. THUS IN CASE OF BUNGALOW PRIOR TO THE AMENDMENT IN 2012 THE OWNER HAS TO GIVE NOTICE IN RESPECT OF COMPLETION OF CONSTRUCTION AND THERE IS NO PROVISIO N FOR ISSUANCE OF COMPLETION CERTIFICATE IN RESPECT OF M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 6 6 BUNGALOWS. THE SAME WILL BE MORE CLEAR FROM THE RUL E 98 OF MADHYA PRADESH BHUMI VIKAS RULES, 1984 WHICH IS DISCUSSED IN PARA 1.3 BELOW. 1.3] THAT AS PER RULE 98 OF THE MADHYA PRADESH BHUMI VIKAS RULES, 1984 THERE IS NO REQUIREMENT FOR OBTAINING THE COMPLETION CERTIFICATE IN RESPECT OF CONSTRUCTION OF BUNGALOWS. THE SAID RULE READS AS UNDER:- 'COMPLETION CERTIFICATE - EVERY OWNER OF A HIGH RIS E BUILDING ON COMPLETION OF THE BUILDING AND BEFORE I TS OCCUPATION OF THE BUILDING AND BEFORE ITS OCCUPATIO N SHALL OBTAIN FROM THE AUTHORITY, A COMPLETION CERTI FICATE TO THE EFFECT THAT THE BUILDING HAS BEEN COMPLETED AS PER THE SANCTIONED PLAN. OCCUPANCY OF A BUILDING FO R WHICH A COMPLETION CERTIFICATE HAS NOT BEEN OBTAINE D SHALL BE DEEMED TO BE A VIOLATION OF THE PERMISSION AS PER THE PROVISION OF UNDER SECTION 36 OF THE MADHYA PRADESH NAGAR TATHA GRAM NIVESH ADHINIYAM 1 973 ( M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 7 7 NO. 23 OF 1 973) AND SHALL INVITE THE PENALTY PRESCRIBED THEREIN '. COPY OF THE RELEVANT PAGE OF MADHYA PRADESH BHUMI VIKAS ADHINIYAM, 1984 IS ENCLOSED HEREWITH. FROM THE ABOVE IT IS CLEAR THAT THERE IS NO PROVISI ON FOR ISSUANCE OF COMPLETION CERTIFICATE IN RESPECT OF BUNGALOWS. THE APPELLANT HAS NOT CONSTRUCTED ANY HIGH RISE BUILDING, THUS THERE IS NEITHER ANY PROVI SION FOR ISSUANCE OF COMPLETION CERTIFICATE BY THE COMPE TENT AUTHORITY NOR THE APPELLANT/BUILDER OF BUNGALOWS IS ANY LEGAL OBLIGATION TO OBTAIN THE COMPLETION CERTIFICATE. 1.4] MOREVER, BY FOLLOWING ABOVE STATUTORY PROVISI ON THE INDORE MUNICIPAL CORPORATION VIDE ITS LETTER DA TED 07.04.2011 IN THE CASE OF MAHASHAKTI GRAH NIRMAN SAHAKARI SANSTHA STATED THAT THERE IS NO REQUIREMENT FOR ISSUANCE OF COMPLETION CERTIFICATE IN THE CASE OF BUNGALOW. THE LAST PARA OF THE SAID LET TER M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 8 8 READS AS UNDER:- VR% MIJKSDR FU;E DSS DZE ESA ;G LI'V FD;K TKRK G S FD VKIDS }KJK FUFEZR G+1 DS HKOUKSA IJ MDR FU;E CA/KUDKJH UGHA GSA VR% MIJKSDR HKOUKSA IJ FU;E 98 ESA DK;Z IW.KZRK IZEK.K I= DH VKO;DRK UGHA GSA ** I.5] AS THE ABOVE PROVISIONS OF MADHYA PRADESH 8HUM I VIKAS NIYAM AND MADHYA PRADESH MUNICIPAL CORPORATION ACT WAS NOT BROUGHT IN THE KNOWLEDGE OF HON'BLE HIGH COURT. THUS THE DECISION DELIVERED WITHOUT CONSIDERING THE ABOVE PROVISIONS AND WITHOU T CONSIDERING THE DECISION OF HON'BLE HIGH COURT IN T HE CASE OF ITINA PROPERTIES PVT LTD REPORTED IN 49 TAXXMAN.COM 201 WHEREIN IT WAS HELD THAT IN THE KARNATAKA MUNICIPAL CORPORATION ACT AND THERE IS NO PROVISION FOR ISSUANCE OF COMPLETION CERTIFICATE. T HUS THE BENEFIT U/S 80IB COULD NOT BE DENIED ON THE GRO UND THAT THE ASSESSEE COULD NOT COMPLY WITH THE PROVISI ON OF SECTION 801B(10) . M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 9 9 IN VIEW OF THE ABOVE FACTS IT IS SUBMITTED THAT THE ABOVE PROVISION OF MADHYA PRADESH 8HUMI VIKAS NIYAM AND MADHYA PRADESH MUNICIPAL CORPORATION ACT WAS NOT IN THE NOTICE OF THE HON'BLE HIGH COURT WHI LE DECIDING THE CASE OF GLOBAL REALITY. THUS THE HON'B LE HIGH COURT DECIDED THAT THE COMPLETION CERTIFICATE SHOULD BE DATED 31.03.2008 OR PRIOR TO SAID DATE WITHOUT CONSIDERING THE FACTS THAT IN THE STATE OF MADHYA PRADESH IN RESPECT OF BUNGALOWS THERE WAS NO PROVISION FOR ISSUANCE OF COMPLETION CERTIFICATES A ND THE NOTICE FOR COMPLETION GIVEN TO THE COMPETENT AUTHORITY BY THE ASSESSEE BECOME THE DEEMED COMPLETION CERTIFICATE, THUS YOU ARE REQUESTED TO CONSIDER THESE FACTS AND DECIDE THE APPEALS. 2.1] THAT HON'BLE HIGH COURT HAS NOT CONSIDERED THE FACT THAT THE PROVISION FOR INCENTIVE SHOULD BE INTERPRETED LIBERALLY. THE HON'BLE APEX COURT IN TH E CASE OF BAJAJ TEMPO LTD. VS. CIT (1992) 196 ITR 188 M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 10 10 (SC) HAS HELD THAT THE PROVISION FOR INCENTIVE FOR GROWTH AND DEVELOPMENT SHOULD BE INTERPRETED LIBERALLY. IT SHOULD BE CONSTRUED SO AS TO ADVANCE OBJECTIVE AND NOT TO FRUSTRATE IT. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF CIT VS. GWALIOR RAYON SILK MFG . CO. LTD (1992) 196 ITR 149 (SC) . IN THIS CASE, IT HAS BEEN HELD BY THE SUPREME COURT THAT THE PROVISION I N THE TAXING STATUTE FOR DEDUCTION, EXEMPTION OR RELI EF SHOULD BE CONSTRUED REASONABLY. IT IS TRITE LAW THA T THE EXPRESSION USED IN THE TAXING STATUTE WOULD ORDINAR ILY BE UNDERSTOOD IN THE SENSE IN WHICH IT IS HARMONIOU S WITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LEGISLATIVE INTENTION. 2.2] THE INTENTION OF THE LEGISLATURE FOR ALLOWING TAX EXEMPTION TO AFFORDABLE HOUSING PROJECT WAS THAT IN THE COUNTRY THE BUILDERS WILL CONSTRUCT SMALL HOUSE S/ FLATS FOR THE RESIDENCE OF MIDDLE CLASS PEOPLE WHO DON'T HAVE RESIDENTIAL HOUSE AND CAN HAVE THEIR OWN M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 11 11 RESIDENTIAL HOUSE AT A LOW COST. THAT BEFORE INSERT ION OF EXPLANATION (II) IN SECTION 80IB(10(A) THE LAW M AKERS HAVE NOT KEPT IN TO THE MIND THAT IN THE STATE LIKE MADHYA PRADESH, KARNATAKA ETC THERE IS NO PROVISION FOR ISSUE OF COMPLETION CERTIFICATE IN RESPECT OF BUNGALOW. THUS HOW ONE CAN ACCEPT FROM A COMPETENT AUTHORITY ISSUE A COMPLETION CERTIFICATE AND FROM DEVELOPER TO BRING AND SUBMIT A COMPLETION CERTIFIC ATE, EVEN OTHERWISE IF THERE IS A PROVISION FOR ISSUE OF COMPLETION CERTIFICATE, THE DEVELOPER CAN FILE APPLICATION FOR ISSUE OF COMPLETION CERTIFICATE WIT HIN THE STIPULATED TIME BUT HE COULD NOT COMPEL TO THE GOVERNMENT AUTHORITY TO ISSUE COMPLETION CERTIFICAT E. FOR THIS VERY REASON THE HON'BLE SUPREME COURT IN T HE CASES REFERRED IN PARA (VI) HEREIN ABOVE NAMELY BAJ AJ TEMPO LTD., GWALIOR RAYON SILK MFG. CO. LTD HAS HEL D THAT THE PROVISION OF EXEMPTION SHOULD BE INTERPRET ED LIBERALLY. AS THE ABOVE FACTS WERE NOT BROUGHT IN T HE KNOWLEDGE OF HON'BLE HIGH COURT, THUS THE HON'BLE M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 12 12 HIGH COURT HAS NOT CONSIDERED THE SAME BEFORE DECIDING THE DECISION IN THE CASE OF GLOBAL REALITY . IN VIEW OF ABOVE FACTS IT IS HUMBLY REQUESTED TO KINDLY CONSIDER THE ABOVE ISSUES WHILE DECIDING THE SE APPEALS. 6. ON THE OTHER HAND, THE LD. DR HAS PRODUCED THE DECI SION OF HON'BLE JURISDICTIONAL HIGH COURT OF M.P. IN THE CASE OF CIT VS. GLOBAL REALITY, IN I.T.A.NOS. 40/2012, 36/2012 & 35/2012 WHEREIN THE SIMILAR ISSUE HAD BEEN DECIDED BY THE H ON'BLE HIGH COURT AND WHEREIN THE HIGH COURT HAS TAKEN A VIEW T HAT IF THE COMPLETION CERTIFICATE IS NOT ISSUED WITHIN 4 YEARS , THEN THE ASSESSEE IS NOT ENTITLED FOR ANY DEDUCTION U/S 80IB (10A). 7. WE HAVE HE ARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT HON'BLE JURISDICTIONAL HIGH COURT HAS DEALT WITH THIS ISSUE IN DETAIL REGARDING COMPLETION CERTIFICA TE BY HIS ORDER ON PARA 19, 20, 21, 22, 23, 24, 25, 26, 27 AND 28, WHICH READ AS UNDER :- 19. THE PROVISION SUCH AS CLAUSE (A) AS AMENDED, M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 13 13 SENSU STRICTO, CANNOT BE CONSIDERED AS A NEW CONDIT ION AND THAT TOO INCAPABLE OF COMPLIANCE. INASMUCH AS, CLAUSE (A) DEALS WITH THE TIME FRAME WITHIN WHICH T HE HOUSING PROJECT WAS EXPECTED TO BE COMPLETED, TO GE T THE BENEFIT OF THE PRESCRIBED DEDUCTION. NOTABLY, T HE AMENDED SECTION 80IB (10) (A) EXTENDS THE BENEFIT E VEN TO THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHO RITY 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 OT HER CLASS OF HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY ON OR AFTER 1ST APRIL 2004 TILL 31.03.200 7. IN EITHER CASE, THE TIME FRAME FOR COMPLETION OF PROJE CT HAS BEEN PRESCRIBED AS FOUR YEARS. IN THAT, THE PROJECT APPROVED BEFORE 1ST APRIL, 2004 HAS BEEN GIVEN TIME TO COMPLETE BEFORE 31.03.2008; AND IN THE LATTER CATEG ORY M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 14 14 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. 20. THUS UNDERSTOOD, SIMILAR TIME FRAME FOR COMPLET ION OF HOUSING PROJECT HAS BEEN GIVEN TO BOTH CLASS OF HOUSING PROJECTS. MOREOVER, THE EXPLANATION BELOW CLAUSE (A), IN PARTICULAR (II), APPLIES TO BOTH CLA SS OF HOUSING PROJECTS UNIFORMLY. IT POSTULATES THAT THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING PROJECT S HALL 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 PROJECTS COMMENCED ON OR AFTE R 01.10.1998 MUST POSSESS COMPLETION CERTIFICATE ISSU ED BY THE LOCAL AUTHORITY ON OR BEFORE THE CUT OFF DAT E, AS MAY BE APPLICABLE TO BECOME ELIGIBLE FOR TAX DEDUCTION. AS PER EXPLANATION (II), THEREFORE, THE M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 15 15 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 BEEN GIVEN TO BOTH THE CLASS OF HOUSING PROJECTS TO FULF ILL THAT CONDITION. THE PROVISION IS IN THE NATURE OF LIMITI NG THE BENEFIT OF DEDUCTION TO THE SPECIFIED HOUSING PROJE CTS, AND NOT TO THOSE WHO FAIL TO FULFILL THE REQUIREMEN T OF COMPLETION OF CONSTRUCTION IN TIME FRAME SPECIFIED FOR THE RESPECTIVE CATEGORY OF HOUSING PROJECTS. THIS H AS BEEN DONE IN LARGER PUBLIC INTEREST TO ENSURE THA T THE BENEFIT IS GIVEN ONLY TO SUCH PROJECTS WHO WOULD FURTHER THE GOAL OF PROVIDING LOW COST ECONOMIC HOU SES 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. THA T CANNOT BE QUESTIONED, UNLESS SHOWN TO BE UNCONSTITUTIONAL IN FORM OR ITS SUBSTANCE. IT WAS T HUS M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 16 16 OPEN TO THE PARLIAMENT, TO PROVIDE FOR A CUT OFF DA TE FOR COMPLETION OF THE HOUSING PROJECTS, AS A CONDITION PRECEDENT TO AVAIL BENEFIT OF DEDUCTION. IN THE PAS T, SUCH STIPULATION WAS IN PLACE, BUT, LATER ON, IT WA S DONE AWAY WITH. HOWEVER, BY AMENDMENT WHICH CAME INTO EFFECT FROM 1ST APRIL, 2005, THE CONDITION FOR COMPLETION OF PROJECT WITHIN SPECIFIED TIME HAS BEE N REINTRODUCED, WHILE GIVING SUFFICIENT TIME (FOUR YE ARS) TO THE ASSESSEE TO COMPLY FOR BEING ENTITLED TO GET DEDUCTION. 22. A PRIORI, IT IS NOT A CASE OF IMPOSING NEW COND ITION, MUCH LESS, WITH RETROSPECTIVE EFFECT AS HAS BEEN ARGUED BEFORE US; UNLIKE INTRODUCTION OF NEW CONDIT ION IN THE SHAPE OF CLAUSE (D) WHICH OBVIOUSLY COULD BE APPLIED ONLY PROSPECTIVELY, AS HELD BY THE SUPREME COURT IN THE AFORESAID DECISIONS. CLAUSE (A) STANDS ON A COMPLETELY DIFFERENT PEDESTAL. IT CANNOT BE TREAT ED AS A NEW CONDITION LINKED TO THE APPROVAL AND CONSTRUCTION OR HAVING RETROSPECTIVE EFFECT AS SUCH . FOR, M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 17 17 IT GIVES AT LEAST FOUR YEARS TIME FRAME TO BOTH CL ASS 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 COMPLETION OF THE PR OJECT, 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 DEVELOPE R CAN CLAIM VESTED RIGHT TO COMPLETE THE HOUSING PROJ ECT IN INDEFINITE PERIOD. THE RIGHT ARISING FROM SECTIO N 80IB, IS COUPLED WITH THE OBLIGATION OR DUTY TO COM PLETE THE PROJECT IN SPECIFIED TIME FRAME. IF THE DEVELOP ER DOES NOT COMPLETE THE HOUSING PROJECT WITHIN SPECIF IED TIME, WILL NOT RECEIVE THAT BENEFIT. THERE IS NO COMPULSION ON HIM TO COMPLETE THE PROJECT IN FOUR YEARS. NOTABLY, EVEN THE APPROVALS TO THE CONSTRUCT ION OF HOUSING PROJECT GRANTED BY THE LOCAL AUTHORITY M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 18 18 SPECIFY THE DATE WITHIN WHICH THE CONSTRUCTION MUST BE COMPLETED, AS 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 BE DRAWN BETWEEN THE NEW CONDITION PRESCRIBED IN TERMS OF CLAUSE (D) AND THAT OF CLAUSE (A). CONDITION IN CLAUSE (A), NEITHER OPERATES RETROSPECTIVELY NOR CAN BE SA ID TO BE ABSURD, UNJUST OR EXPECTING THE ASSESSEE TO COMP LY WITH SOMETHING WHICH IS IMPOSSIBLE TO ACHIEVE. 24. THE NEXT QUESTION THAT NEEDS TO BE ANSWERED, I S, WHETHER THE STIPULATION IN SECTION 80IB(10)(A) CAN BE SAID TO BE DIRECTORY. CONSIDERING THE PRODIGIOUS BE NEFIT M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 19 19 OFFERED IN TERMS OF SECTION 80IB TO THE ASSESSEE (HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PRE VIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR); AND THE PURPOSE UNDERLYING THE SAME WHICH IS INTER ALIA BURDEN ON THE PUBLIC EXCHEQUER DUE TO WAIVER OF COMMENSURATE REVENUE THE STIPULATION FOR OBTAININ G COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BEF ORE THE CUT OFF DATE, MUST BE CONSTRUED AS MANDATORY. T HE FACT THAT COMPLIANCE OF THAT CONDITION IS DEPENDENT ON THE MANNER IN WHICH THE PROPOSAL IS PROCESSED BY TH E LOCAL AUTHORITY, THE PROVISION CANNOT BE CONSTRUED AS A DIRECTORY REQUIREMENT. IT IS A SUBSTANTIVE PROVISIO N MANDATING ISSUANCE OR GRANT OF COMPLETION CERTIFICA TE BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE OR SPECIFIED TIME, AS A PRECONDITION TO GET THE BENEFI T OF TAX DEDUCTION. ELSE, IT WILL THEN BE OPEN TO THE ASSESSEE TO RELY ON OTHER CIRCUMSTANCES OR EVIDENCE TO PLEAD THAT THE HOUSING PROJECT IS COMPLETE REQUIR ING ENQUIRY INTO THOSE MATTERS BY THE TAX AUTHORITIES M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 20 20 SANS A COMPLETION CERTIFICATE ISSUED 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 PRO JECT WHICH IS THE HALLMARK FOR AVAILING OF THE BENEFIT O F TAX DEDUCTION. ONLY WITH THIS INTENT THE LEGISLATURE IN ITS WISDOM HAS PREDICTED THAT, THE COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT IS TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIFICATE IS ISSUE D BY THE LOCAL AUTHORITY. TO INTERPRET IT TO INCLUDE AN EX POST FACTO 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 CONTRARY 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 HOUSING PROJECT S HALL BE TAKEN TO BE THE DATE AS CERTIFIED BY THE LOCAL AUTHORITY IN THAT BEHALF, IRRESPECTIVE OF THE DATE OF M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 21 21 ISSUANCE OF SUCH CERTIFICATE BY THE I.T.A.NOS.40/20 12, 36/2012 & 35/2012 32 LOCAL AUTHORITY. INDEED, IN A GIVEN CASE IF THE ASSESSEE IS ABLE TO SUBSTANTIATE THAT THE COMPLETION CERTIFICATE WAS IN FACT ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, BUT COULD NOT BE PRODUCED BY HIM WITHIN TIME DUE TO REASONS BEYOND HIS CONTROL, THE ARGUMENT OF SUBSTANTIAL COMPLIANCE OF THE PROVISION CAN BE TESTED. ANY OTHER INTERPRETATI ON WOULD RESULT NOT ONLY IN UNCERTAINTY (IN FINALIZATI ON 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 SUB JECTIVE SATISFACTION OF THE ASSESSING AUTHORITY AND OF INVE STING WIDE DISCRETION IN THAT AUTHORITY, WHICH, EVENTUALL Y, MAY ONLY END UP IN GETTING EMBROILED IN LITIGATION. IF THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITIO N OF OBTAINING COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, HE MUST TAKE THE M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 22 22 CONSEQUENCE THEREFOR AND OF DENIAL OF THE BENEFIT O F TAX DEDUCTION OFFERED TO HIM ON THAT COUNT. 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 & 35/2012 33 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 AUTHO RITY. IN SOME STATES, THE MUNICIPAL LAW MAY PROVIDE FOR ISSUING PARTIAL OR FULL COMPLETION CERTIFICATE. THE REQUIREMENT OF COMPLETION CERTIFICATE 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, HOWEV ER, IS, OF ONLY ONE CERTIFICATE WHICH IS FULL COMPLET ION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE TH E CUT OFF DATE. THAT IS TO LEND CREDENCE TO THE FACTUM OF M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 23 23 COMPLETION OF THE ENTIRE HOUSING PROJECT IN ALL RES PECTS AS PER THE APPROVAL GRANTED BY THE LOCAL AUTHORITY. IT CAN BE SAFELY ASSUMED THAT THE LEGISLATURE WAS CONSCIOUS OF THIS POSITION, FOR WHICH, EXPRESS PROV ISION HAS BEEN MADE AS TO THE MEANING OF THE DATE OF COMPLETION OF THE HOUSING PROJECT LINKED TO THE DA TE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE L OCAL AUTHORITY, AS PREDICATED IN EXPLANATION (II) THEREUNDER. 26. WE ACCORDINGLY HOLD THAT ISSUANCE OF COMPLE TION CERTIFICATE, AFTER THE CUT OFF DATE BY THE LOCAL AU THORITY BUT, MENTIONING THE DATE OF COMPLETION OF PROJECT B EFORE THE CUT OFF DATE, DOES NOT FULFILL THE CONDITION SP ECIFIED IN CLAUSE (A) OF SECTION 80IB (10) READ WITH EXPLAN ATION (II) THEREUNDER. WE REJECT THE ARGUMENT OF THE ASSE SSEE THAT THE EFFECT OF AMENDED CLAUSE (A) OF SUB-SECTIO N 10 OF SECTION 80IB, WHICH HAS COME INTO FORCE WITH EFF ECT FROM 1ST APRIL, 2005, HAS RETROSPECTIVE EFFECT OR T HAT IT IS UNJUST IN ANY MANNER OR INCAPABLE OF COMPLIANCE AT M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 24 24 ALL. SIMILARLY, THE REQUIREMENT OF SECURING COMPLET ION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE TH E CUT OFF DATE IS NOT DIRECTORY, IN VIEW OF THE EXPRESS PROVISION IN SECTION 80IB(10)(A) AND THE EXPLANATIO N (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 T HAT THE STIPULATION IN SECTION 80IB(10)(A) OF COMPLETIO N CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE TH E CUT OFF DATE, CANNOT BE APPLIED IN THE CASE OF ASSESSEE FOLLOWING THE WORK IN PROGRESS I.T.A.NOS.40/2012, 36/2012 & 35/2012 35 ACCOUNTING METHOD. IN OUR OPINION, THE PROVISION IN THE FORM OF SECTION 80IB( 10)(A), APPLIES UNIFORMLY TO ALL THE ASSESSEES BE IT FOLL OWING WORK IN PROGRESS ACCOUNTING METHOD OR OTHERWISE. TH E BENEFIT OF DEDUCTION UNDER THIS PROVISION CAN BE AVAILED BY THE ASSESSEE FOLLOWING THE WORK IN PROGR ESS ACCOUNTING METHOD, PROVIDED HE HAS COMPLIED WITH TH E M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 25 25 STIPULATION OF HAVING PRODUCED COMPLETION CERTIFICA TE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DA TE, AS MAY BE APPLICABLE IN HIS CASE. IN OTHER WORDS, I F THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1ST APRIL, 2004, HE MUST SUBMIT COMPLETION CERTIFICATE ISSUED BY THE AUTHORITY HAVING BEEN ISS UED BEFORE THE 31ST MARCH, 2008. WHEREAS, IN THE CASE O F HOUSING PROJECT APPROVED ON OR AFTER 1ST APRIL, 200 4, THE ASSESSEE CAN AVAIL OF THE BENEFIT PROVIDED COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORIT Y IS WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH THE CONCERNED HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. IF THIS CONDITION IS NOT FULFI LLED, THE ASSESSEE WHO MAINTAINS WORK IN PROGRESS ACCOUNTING METHOD AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10)(A) MUST SUFFER THE I.T.A.NOS.40/2012, 36/2012 & 35/2012 36 CONSEQUENCE OF DISALLOWANCE OR WITHDRAWAL OF THE BENEFIT CLAIMED BY HIM ON THAT COUNT. M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 26 26 28. ACCORDINGLY, THESE APPEALS SUCCEED. THE IMPUGNE D JUDGMENT OF THE TRIBUNAL IS SET ASIDE; AND IN THE F ACTS 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 COS TS. 8. WE, RESPECTFULLY FOLLOWING THE SAME, DISMISS THE AP PEALS OF THE ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 19TH OCTOBER, 2015. CPU* M/S. MANAV CONSTRUCTION, BHOPAL VS. ITO , BHOPAL I.T.A.NOS. 527 & 528/IND/2013 A.YS. 2005-06 & 2007- 08. 27 27