SHRI RAMBABU SINGH, Bhopal V. THE ADDL. CIT RANGE-1, Bhopal

ITA 611/IND/2013

• Counselvise Citation: 61122714 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Retrospective amendment
• Section: 80IB

Judgement Text

RAM BABU SINGH ITA NO. 611/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 611/IND/2013 A.Y.2010-11 RAMBABU SINGH BHOPAL PAN AELPS9945K ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX RANGE 1, BHOPAL ::: RESPONDENT APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 16.9.2015 DATE OF PRONOUNCEMENT 5 . 10 .2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 5.7.2 013. RAM BABU SINGH ITA NO. 611/IND/2013 2 2. THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDINGS. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) OF THE INCOME TAX AC T AT RS.1,47,62,057/-. AS PER THE INFORMATION AVAILABLE ON RECORD, PERMISSION FOR HOUSING PROJECT WAS GRANTED BY BHOPAL MUNICIPAL CORPORATION ON 5.3.2007 AND THERE WAS SUBSEQUENT PERMISSION ALSO ON 30.3.2007, 5.8.2010 AND 2.9.2010. AS PER THE PROVISIONS OF THE ACT, THE DATE OF PERMISSION OF THE HOUSING PROJECT HAS TO BE TAKEN AS 5.3.2007. THE ASSESSING OFFICER HELD THAT PERMISSION OF THE HOUSING PROJECT WAS DATED 5.3.2007, THEREFORE, THE ASS ESSEE WAS REQUIRED TO COMPLETE THE PROJECT BY 31.3.2012. HE OBSERVED THAT THE COMPLETION CERTIFICATE DATED 26.11.2 011 FILED DURING THE ASSESSMENT PROCEEDINGS WAS NOT IN RE SPECT OF ALL THE UNITS OF THE HOUSING PROJECT. ASSESSEE HAS NOT SUBMITTED COMPLETION CERTIFICATE IN RESPECT OF PLOT NO.122. THUS, ALL UNITS OF HOUSING PROJECT HAVE NOT BEEN INC LUDED IN RAM BABU SINGH ITA NO. 611/IND/2013 3 THE COMPLETION CERTIFICATE. THE ASSESSEE HIMSELF ADMIT TED THAT ONLY 147 OUT OF 159 UNITS QUALIFIED FOR DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. HE HELD THAT EVEN T HE COMPLETION CERTIFICATE IN RESPECT OF 147 UNITS WHICH INCLUDES PLOT NO. 122 WAS NOT ISSUED. HE HELD THAT TH ERE IS NO PROVISION IN LAW FOR PROPORTIONATE DEDUCTION. IN ADDITION TO THE COMPLETION CERTIFICATE, THE ASSESSING OFFICER ALSO HELD THAT THE ASSESSEE HAS SOLD THE PLOT OF LAND FI RST AND THEN ACTED AS CONTRACTOR FOR CONSTRUCTION OF RESIDE NTIAL UNIT AND THE ASSESSEE HAS DERIVED PROFIT NOT FROM DEVELOPING AND BUILDING HOUSING PROJECT BUT ON ACCOUN T OF CONSTRUCTION ACTIVITIES AS CONTRACTOR AND SELLING THE PLOTS. THE ASSESSING OFFICER ALSO NOTED THAT CERTAIN UNITS CONSTRUCTED WERE HAVING BUILT UP AREA OF MORE THAN PRESCRIBED LIMIT OF 1500 SQ.FT AND THE DVOS REPORT W AS INCOMPLETE AND INCORRECT. THE LEARNED CIT(A) CONFIRME D THE RAM BABU SINGH ITA NO. 611/IND/2013 4 ACTION OF THE ASSESSING OFFICER. THE RELEVANT PARA IS REPRODUCED AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. THE LD. A.O. DISALLOWED THE APPELLANTS CLAIM OF DEDUCTION U/S 80IB(10) ON THE THREE GROUNDS. FIRST, THAT THE APPELLANT HAD MERELY ACTED AS A CONTRACTOR TO THE CUSTOMERS TO WHOM PLOTS OF LAND WERE SOLD AND NOT AS A DEVELOPER OF THE HOUSING PROJECT; SECOND THAT THE APPELLANT FAILED TO COMPLETE THE ENTIRE HOUSING PROJECT BEFORE THE SPECIFIED DATE 31.03.2012; AND THIRD THE APPELLANT HAD NOT CONSTRUCTED ALL THE RESIDENTIAL UNITS OF THE PROJEC T LESS THAN 1500 SQ.FT. AS ONLY 35 UNITS OUT OF TOTAL OF 147 RESIDENTIAL UNITS WERE FOUND TO BE HAVING BUILT UP AREA OF LESS THAN 1500 SQ.FT. IT IS NOTIC ED BY THE A.O. THAT THE APPELLANT HAD SOLD THE RAM BABU SINGH ITA NO. 611/IND/2013 5 P0LOTS OF LAND TO THE CUSTOMERS AND THE SALE DEEDS WERE REGISTERED IN THEIR FAVOUR AND AS SUCH THE CUSTOMERS BECAME ABSOLUTE OWNERS OF PLOTS. FOR EXAMPLE, THE A.O. NOTICED THAT PLOT OF LAND 52 OF THE PROJECT WAS SOLD TO SHRI G.B. GIRI FOR A CONSIDERATION O F RS. 6,00,000/- VIDED REGISTERED SALE DEED DATED 03.05.2007. THEREAFTER, THE APPELLANT ACTED AS A CONTRACTOR FOR THE CONSTRUCTION WORK OF THE RESIDENTIAL UNITS ON BEHALF OF THE PURCHASER. THE APPELLANT CLAIMED THAT HE HAD ENTERED INTO AN AGREEMENT ON 8.11.2006 WITH SHRI G.B. GIRI FOR CONSTRUCTION OF THE RESIDENTIAL UNIT FOR A TOTAL CONSIDERATION O FRS. 18,00,000/- AND, THEREFORE, HE HAS SOLD THE RESIDENTIAL UNITS AFTER CONSTRUCTION. BUT AS POINTED OUT BY THE A.O. THE SAID AGREEMENT FOR CONSTRUCTION AND SALE OF RESIDENTIAL UNIT WAS NOT RAM BABU SINGH ITA NO. 611/IND/2013 6 REGISTERED AND AS PER PROVISIONS OF SECTION 17(1A) OF THE REGISTRATION ACT, 1908, W.E.F. 24.09.2001 IF ANY AGREEMENT FOR TRANSFER OF 9MMOVABLE PROPERTY FOR CONSIDERATION IS NOT REGISTERED UNDER THE REGISTRATION ACT, IT SHALL HAVE NO EFFECT FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. THUS, THE SAID AGREEMENT CANNOT BE GIVEN COGNISANCE EVEN FOR DEEMED TRANSFER U/S 53A OF THE TRANSFER OF PROPERTY ACT. IT IS ALSO ADMITTED FACT THAT THJE APPELLANT HAD NOT GOT ANY DOCUMENT REGISTERED FOR THE SALE OF A RESIDENTIAL UNIT. THUS, THE APPELLANT HAD NOT EARNED INCOME ON ACCOUNT OF SALE OF RESIDENTIAL UNIT AS ENVISAGED IN SECTION 80IB(10) BECAUSE THE APPELLANT AFTER SELLING THE PLOTS OF LAND HAD ACTED ONLY AS A CONTRACTOR FOR THE CUSTOMERS TO CONSTRUCT THE RESIDENTIAL UNITS RAM BABU SINGH ITA NO. 611/IND/2013 7 FOR THEM. SECONDLY, IT IS ALSO AN ADMITTED FACT THAT THE APPELLANT HAD NOT GOT ANY DOCUMENT REGISTERED FOR THE SALE OF A RESIDENTIAL UNIT. THUS , THE APPELLANT HAD NOT EARNED INCOME ON ACCOUNT OF SALE OF RESIDENTIAL UNIT AS ENVISAGED IN SECTION 80IB(10) BECAUSE THE APPELLANT AFTER SELLING THE PLOTS OF LAND HAD ACTED ONLY AS A CONTRACTOR FOR THE CUSTOMERS TO CONSTRUCT THE RESIDENTIAL UNITS FOR THEM. SECONDLY, IT IS ALSO AN ADMITTED FACT THAT THAT BECAUSE THE HOUSING PROJECT WAS APPROVED ON 5.3.2007 AND THE APPELLANT HAD NOT COMPLETED THE CONSTRUCTION OF THE ENTIRE PROJECT ON OR BEFORE 31.3.2012 AS WAS REQUIRED BY SECTION 80IB(10(A). THE APPELLANT FAILED TO FURNISH COMPLETION CERTIFICATE REGARDING THE ENTIRE PROJECT ISSUED BY THE MUNICIPAL CORPORATION BHOPAL NEITHER DURING THE ASSESSMENT RAM BABU SINGH ITA NO. 611/IND/2013 8 PROCEEDINGS NOR DURING THE APPELLATE PROCEEDINGS TO DEMONSTRATE THAT THE APPELLANT HAS NOT FULFILLED THE CONDITIONS LAID DOWN U/S 80IB(10) AND THUS WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). IN THIS REGARD RELIANCE CAN BE PLACED ON THE DECISION OF ITAT, INDORE BENCH, INDORE IN THE CASE OF SKY BUILDERS AND DEVELOPERS VS. ITO 1(1), BHOPAL (2011) 14 TAXMANN.COM 78 WHEREIN ON THE IDENTICAL FACTS, IT WAS HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). IN THE SAID CASE, THE ASSESSEE HAD SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING SALE DEEDS AND THEREAFTER CONSTRUCTED RESIDENTIAL HOUSES ON THOSE PLOTS AT AN AGREED PRICE THEREFORE IT WAS CONCLUDED THAT THE ASSESSEE HAD MERELY ACTED AS A CONTRACTOR AND NOT AS A DEVELOPER. THE ASSESSEE HAD ALSO NOT OBTAINED COMPLETION RAM BABU SINGH ITA NO. 611/IND/2013 9 CERTIFICATE FROM THE LOCAL AUTHORITY BEFORE THE SPECIFIED DATE. CONSIDERING THESE FACTS, THE HON'BLE ITAT HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE HEAD NOTES OF THIS DECISION ARE REPRODUCED AS UNDER :- SECTION 80IB OF THE INCOMETAX ACT, 1961 DEDUCTIONS PROFITS AND GAINS FROM INDUSTRIAL UNDERAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS ASSESSMENT YEAR 2006-07 WHETHER WHERE ASSESSEE SOLD PLOTS TO RESPECTIVE CUSTOMERS BY REGISTERING A SALE DEED AND THEREAFTER ASSESSEE CONSTRUCTED BUILDING AT AN AGREED PRICE, IT HAD TO BE CONCLUDED THAT ASSESSEE MERELY ACTED AS BUILDING CONTRACTOR AND NOT AS A DEVELOPER AND THEREFORE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) RAM BABU SINGH ITA NO. 611/IND/2013 10 COULD NOT BE ALLOWED. HELD, YES WHETHER EVEN OTHERWISE, IN VIEW OF FACT THAT NO COMPLETION CERTIFICATE HAD BEEN ISSUED TO ASSESSEE BY LOCAL AUTHORITY IN VIEW OF SUB- CLAUSE (S) OF EXPLANATION TO SECTION 80IB(10), ASSESSEES CLAIM FOR DEDUCTION WAS TO BE REJECTED HELD YES IN VIEW OF THE ABOVE, IT IS EVIDENTLY CLEAR THAT TH E APPELLANT HAD ACTED MERELY AS A CONTRACTOR AFTER SELLING THE PLOT AND NOT AS A DEVELOPER. COMPLETION CERTIFICATE WAS ALSO NOT ISSUED TO THE APPELLANT BY THE LOCAL AUTHORITY FOR THE ENTIRE PROJECT. THEREFORE, THE APPELLANT WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IB(10) ON THE PROFITS DERIVED FROM THESE PROJECTS. FURTHER, AS MENTIONED BY THE A.O., ON PHYSICAL INSPECTION OF THE PROJECT BY THE DISTRICT RAM BABU SINGH ITA NO. 611/IND/2013 11 VALUATION OFFICER, IT WAS ALSO FOUND THAT THE APPELLANT HAD NOT CONSTRUCTED ALL THE RESIDENTIAL UNITS HAVING BUILT UP AREA OF LESS THAN 1500 SQ.FT. THE APPELLANT HAD HIMSELF ADMITTED THAT ONLY 147 RESIDENTIAL UNITS OUT OF TOTAL 159 RESIDENTIAL UNITS OF THE PROJECT QUALIFY FOR DEDUCTION U/S 80IB(10). REGARDING THESE 147 RESIDENTIAL UNITS, THE A.O. ISSUED COMMISSION U/S 13(1)(D) TO THE DVO TO MEASURE THE BUILT UP AREA OF THESE RESIDENTIAL UNITS. THE DVO HAD INSPECTED THE PROJECT IN THE PRESENCE OF THE APPELLANT AND OTHER CONCERNED HOUSING PROJECT STAFF ON 17.1.2013. THE DVO VIDE LETTER DATED 8.2.2013 INFORMED THAT OUT OF THESE TOTAL 147 HOUSES CONSTRUCTED BY THE APPELLANT ONLY 35 HAD BUILT UP AREA OF LESS THAN 1500 SQ. FT. THUS, IT IS CLEAR THAT THE SAID HOUSING PROJECT HAD NOT RAM BABU SINGH ITA NO. 611/IND/2013 12 FULFILLED THE CONDITION LAID DOWN UNDER CLAUSE OF SECTION 80IB(10). THEREFORE, CONSIDERING ALL THE THREE ASPECTS, IT IS CLEAR THAT APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THIS HOUSING PROJECT. 4.5 IT MAY BE NOTED THAT THE ABOVE REFERRED DECISION OF THE HON'BLE ITAT IN THE CASE OF SKY BUILDERS & DEVELOPERS VS. ITO (SU0RA) IS BINDING ON THE CIT(A). THE JURISDICTIONAL HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF AGRAWAL WAREHOUSING AND LEASING LTD. VS. CIT (2002) 257 ITR 235 (MP) OBSERVED THAT THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT ORDERS OF THE HIGHER APPELLANT AUTHORITIES SHOULD BE FOLLOWS RAM BABU SINGH ITA NO. 611/IND/2013 13 UNRESERVEDLY BY THE SUB-ORDINATE AUTHORITIES. THE HON'BLE HIGH COURT INTER ALIA OBSERVED IN THE ORDER AS UNDER :- OBVIOUSLY, THE COMMISSIONER OF INCOME TAX(APPEALS) NOT ONLY COMMITTED IMPROPRIETY BUT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER OF THE APPELLATE TRIBUNAL. EVEN WHERE HE MAY HAVE SOME RESERVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL HE HAD TO FOLLOW THE ORDER. HE COULD AND SHOULD HAVE LEFT IT TO THE DEPARTMENT TO TAKE THE MATTER IJ FURTHER APPEAL TO THE TRIBUNAL AND GET THE MISTAKE, IF ANY, RECTIFIED. RAM BABU SINGH ITA NO. 611/IND/2013 14 IN THIS CASE, THE HON'BLE HIGH COURT HELD AS UNDER (HEAD NOTES) HELD, THAT THE COMMISSIONER OF INCOME TAX (APPEALS) NOT ONLY COMMITTED JUDICIAL IMPROPRIETY BUT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER OF THE APPELLATE TRIBUNAL. THE MEMBERS OF THE TRIBUNAL WHO DECIDED THE APPEAL UPHOLDING THE VIEW TAKEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO DID NOT OBSERVE DUE PROCEDURE. 4.6 THE HON'BLE ITAT, BANGALORE IN THE CASE OF JIND AL ALUMINIUM LTD. VS. ACAIT (2012) 19 ITR ()TRB) (BANG ) HAS ALSO OBSERVED AS UNDER :- THE COMMISSIONER (APPEALS) BEING AN AUTHORITY LOWER IN THE TIER OF AUTHORITIES UNDER RAM BABU SINGH ITA NO. 611/IND/2013 15 THE ACT TO APPELLATE TRIBUNAL, IS BOUND TO FOLLOW THE DECISION OF THE TRIBUNAL. THEREFORE, IN VIEW OF THE ABOVE, IT IS HELD THAT TH E APPELLANT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(1 0) AND ACCORDINGLY THE DISALLOWANCE OF APPELLANTS CLAIM O F DEDUCTION Y.S 80IB(10) OF RS.1,47,62,057/- (CORRECT FIGURE RS.1,48,62,057/-) MADE BY THE A.O. IS CONFIRMED. 3. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE THROUGH RELEVANT DOCUMENTS FILED BY THE ASSESSEE. W E HOLD THAT THE MUNICIPAL CORPORATION, BHOPAL, HAS GRANTED PERMISSION TO THE ASSESSEE TO DEVELOP THE PROJECT LO CATED AT KHASRA NOS. 146, 147, 3, 4, 19 AND 20 AT JAT KHEDI VILLAG E VIDE PERMISSION DATED 5 TH MARCH, 2007. THE ASSESSEE HAS NOT SUBMITTED THE COMPLETION CERTIFICATE OBTAINED FRO M THE LOCAL MUNICIPAL CORPORATION I.E. MUNICIPAL CORPORATION, BHOPAL, IN RESPECT OF THE ENTIRE HOUSING PROJECT AS A WHOLE. THE CERTIFICATES HAVE BEEN ISSUED IN RESPECT OF INDIV IDUAL RAM BABU SINGH ITA NO. 611/IND/2013 16 UNITS. CERTAIN UNITS HAVE BEEN NOT GRANTED COMPLETION CERTIFICATE. THUS, THE COMPLETION OF WHOLE HOUSING P ROJECT WAS NOT OBTAINED BY THE ASSESSEE IN TIME PRESCRIBED IN THE ACT. FURTHER, IT IS ALSO FOUND THAT THE ASSESSEE HAS SO LD THE PLOTS TO VARIOUS CUSTOMERS AND REGISTERED THE LAND IN THEIR RESPECTIVE NAMES. FURTHER, THE ASSESSEE HAS FAILED TO ESTABLISH THAT ALL THE UNITS WERE ELIGIBLE FOR DEDUCTI ON IN TERMS OF THE BUILT UP AREA SAY LESS THAN 1500 SQ.FT. TH E DVOS REPORT DATED 8.2.2013 MENTIONS THAT OUT OF 147 HOUSES CONSTRUCTED BY THE ASSESSEE ONLY 35 HAS BUILT UP AREA OF LESS THAN 1500 SQ.FT. THE CUMULATIVE EFFECT OF AL L THESE FACTS ESTABLISHES THAT THE ASSESSEE WAS NOT ELIGI BLE FOR DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. WITH REGARD TO COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY, WE WOULD LIKE TO HOLD THAT THE HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. M/S GLOBAL REALITY; ITA NO. 40/201 2 HELD THAT THE COMPLETION CERTIFICATE IN RESPECT OF TH E RAM BABU SINGH ITA NO. 611/IND/2013 17 HOUSING PROJECT IS A MUST IN THE TIME PRESCRIBED IN SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THE RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT IS AS UNDER :- 19. THE PROVISION SUCH AS CLAUSE (A) AS AMENDED, SENSU STRICTO, CANNOT BE CONSIDERED AS A NEW CONDITION AND THAT TOO INCAPABLE OF COMPLIANCE. INASMUCH AS, CLAUSE (A) DEALS WITH THE TIME FRAME WITHIN WHICH THE HOUSING PROJECT WAS EXPECTED TO BE COMPLETED, TO GET THE BENEFIT OF THE PRESCRIBED DEDUCTION. NOTABLY, THE AMENDED SECTION 80IB (10) (A) EXTENDS THE BENEFIT EVEN TO THE HOUSING PROJECT S APPROVED BY THE LOCAL AUTHORITY BEFORE 31.03.2007, INSTEAD OF 31.03.2005 - AS WAS PROVIDED IN THE UNAMENDED PROVISION. THEREFORE, NECESSITY WAS FELT TO MAKE DISTINCTION BETWEEN THE TWO CLASSES OF HOUSING PROJECTS FOR SPECIFYING THE TIME FRAME FOR COMPLETION. THE ONE APPROVED BY THE LOCAL AUTHORITY RAM BABU SINGH ITA NO. 611/IND/2013 18 BEFORE 1ST DAY OF APRIL, 2004; AND THE OTHER CLASS OF HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY ON O R AFTER 1ST APRIL 2004 TILL 31.03.2007. IN EITHER CAS E, THE TIME FRAME FOR COMPLETION OF PROJECT HAS BEEN PRESCRIBED AS FOUR YEARS. IN THAT, THE PROJECT APPROVED BEFORE 1ST APRIL, 2004 HAS BEEN GIVEN TIME TO COMPLETE BEFORE 31.03.2008; AND IN THE LATTER CATEGORY I.T.A.NOS.40/2012, 36/2012 & 35/2012 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. 20. THUS UNDERSTOOD, SIMILAR TIME FRAME FOR COMPLETION OF HOUSING PROJECT HAS BEEN GIVEN TO BOT H CLASS OF HOUSING PROJECTS. MOREOVER, THE EXPLANATIO N BELOW CLAUSE (A), IN PARTICULAR (II), APPLIES TO BO TH CLASS OF HOUSING PROJECTS UNIFORMLY. IT POSTULATES THAT 'THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSING RAM BABU SINGH ITA NO. 611/IND/2013 19 PROJECT' SHALL BE TAKEN TO BE 'THE DATE ON WHICH COMPLETION CERTIFICATE' IN RESPECT OF SUCH HOUSING PROJECT 'IS ISSUED BY THE LOCAL AUTHORITY'. IF EXPLANATION (II) IS SUPERIMPOSED ON THE EXPRESSION 'COMPLETES SUCH CONSTRUCTION' IN CLAUSE (A) OF SECTION 80IB(10) , IT WOULD MEAN THAT THE HOUSING PROJECTS COMMENCED ON OR AFTER 01.10.1998 MUST POSSESS COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY ON OR BEFORE THE CUT OFF DATE, AS MAY BE APPLICABLE - TO BECOME ELIGIBLE FOR TAX DEDUCTION. AS PER EXPLANATION (II), THEREFORE, THE SYNONYM OF 'COMPLETES SUCH CONSTRUCTION' WOULD BE THE DATE ON WHICH COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHORITY. NO MORE AND NO LESS. THUS, ENOUGH INDICATION AND ALSO SUFFICIENT TIME HAS I.T.A.NOS.40/2012, 36/2012 & 35/2012 BEEN GIVEN TO BOTH THE CLASS OF HOUSING PROJECTS TO FULFILL TH AT RAM BABU SINGH ITA NO. 611/IND/2013 20 CONDITION. THE PROVISION IS IN THE NATURE OF LIMITI NG THE BENEFIT OF DEDUCTION TO THE SPECIFIED HOUSING PROJECTS, AND NOT TO THOSE WHO FAIL TO FULFILL THE REQUIREMENT OF COMPLETION OF CONSTRUCTION IN TIME FRAME SPECIFIED FOR THE RESPECTIVE CATEGORY OF HOUS ING PROJECTS. THIS HAS BEEN DONE IN LARGER PUBLIC INTER EST - TO ENSURE THAT THE BENEFIT IS GIVEN ONLY TO SUCH PROJECTS WHO WOULD FURTHER THE GOAL OF PROVIDING LO W COST ECONOMIC HOUSES TO THE DESERVING PERSONS IN REASONABLE TIME. 21. CONCEDEDLY, IT IS WITHIN THE DOMAIN OF PARLIAME NT TO EXTEND BENEFIT OR PRIVILEGE TO CERTAIN CLASS OF PERSONS AND ALSO TO WITHDRAW THE SAME FOR JUST REASONS. THAT CANNOT BE QUESTIONED, UNLESS SHOWN TO BE UNCONSTITUTIONAL IN FORM OR ITS SUBSTANCE. IT WA S THUS OPEN TO THE PARLIAMENT, TO PROVIDE FOR A CUT O FF DATE FOR COMPLETION OF THE HOUSING PROJECTS, AS A RAM BABU SINGH ITA NO. 611/IND/2013 21 CONDITION PRECEDENT TO AVAIL BENEFIT OF DEDUCTION. IN THE PAST, SUCH STIPULATION WAS IN PLACE, BUT, LATER ON, IT WAS DONE AWAY WITH. HOWEVER, BY AMENDMENT WHICH CAME INTO EFFECT FROM 1ST APRIL, 2005, THE CONDITION FOR COMPLETION OF PROJECT WITHIN SPECIFIE D TIME HAS I.T.A.NOS.40/2012, 36/2012 & 35/2012 BEEN REINTRODUCED, WHILE GIVING SUFFICIENT TIME (FOUR YEARS) TO THE ASSESSEE TO COMPLY FOR BEI NG ENTITLED TO GET DEDUCTION. 22. A PRIORI, IT IS NOT A CASE OF IMPOSING NEW CONDITION, MUCH LESS, WITH RETROSPECTIVE EFFECT AS HAS BEEN ARGUED BEFORE US; UNLIKE INTRODUCTION OF NEW CONDITION IN THE SHAPE OF CLAUSE (D) - WHICH OBVIOU SLY COULD BE APPLIED ONLY PROSPECTIVELY, AS HELD BY THE SUPREME COURT IN THE AFORESAID DECISIONS. CLAUSE (A ) STANDS ON A COMPLETELY DIFFERENT PEDESTAL. IT CANNO T BE TREATED AS A NEW CONDITION LINKED TO THE APPROVA L RAM BABU SINGH ITA NO. 611/IND/2013 22 AND CONSTRUCTION OR HAVING RETROSPECTIVE EFFECT AS SUCH. FOR, IT GIVES AT LEAST FOUR YEARS' TIME FRAME TO BOTH CLASS OF HOUSING PROJECTS; TO WIT, HOUSING PROJECTS APPROVED PRIOR TO 1ST APRIL, 2004 OR AFTER 1ST APRIL, 2004. THE FOUR YEARS PERIOD OBVIOUSLY HAS PROSPECTIVE EFFECT, ALBEIT LIMITING THE PERIOD FOR COMPLETION OF THE PROJECT, TO AVAIL OF THE BENEFIT. FOUR YEARS' TIME FRAME FOR COMPLETION OF THE PROJECT, BY NO STANDARDS, CAN BE SAID TO BE UNREASONABLE, HARSH, ABSURD OR INCAPABLE OF COMPLIANCE. IT IS ALSO NOT A CASE OF WITHDRAWAL OF VESTED RIGHT OF THE DEVELOPER , AS SUCH. NO DEVELOPER CAN CLAIM VESTED RIGHT TO COMPLETE THE HOUSING PROJECT I.T.A.NOS.40/2012, 36/2012 & 35/2012 IN INDEFINITE PERIOD. THE RIGHT ARISING FROM SECTION 80IB , IS COUPLED WITH THE OBLIGATION OR DUTY TO COMPLETE THE PROJECT IN SPECI FIED TIME FRAME. IF THE DEVELOPER DOES NOT COMPLETE THE RAM BABU SINGH ITA NO. 611/IND/2013 23 HOUSING PROJECT WITHIN SPECIFIED TIME, WILL NOT REC EIVE THAT BENEFIT. THERE IS NO COMPULSION ON HIM TO COMPLETE THE PROJECT IN FOUR YEARS. NOTABLY, EVEN T HE APPROVALS TO THE CONSTRUCTION OF HOUSING PROJECT GRANTED BY THE LOCAL AUTHORITY SPECIFY THE DATE WITHIN WHICH THE CONSTRUCTION MUST BE COMPLETED, AS PER THE TIME FRAME SPECIFIED IN THE PERMISSION. IF THE PROJECT IS NOT COMPLETED WITHIN THE STIPULATED TIME , THE DEVELOPER IS FREE TO GET THAT PERIOD RENEWED OR EXTENDED FROM THE LOCAL AUTHORITY AS PER THE APPLICABLE RULES AND REGULATIONS. THE PROVISION FOR CLAIMING TAX DEDUCTION FROM PROFITS, CAN CERTAINLY PRESCRIBE FOR REASONABLE CONDITIONS AND MORE SO TIM E FRAME FOR COMPLETION OF THE PROJECT, IN LARGER PUBL IC INTEREST. 23. SUFFICE IT TO OBSERVE THAT, NO COMPARISON CAN B E DRAWN BETWEEN THE NEW CONDITION PRESCRIBED IN RAM BABU SINGH ITA NO. 611/IND/2013 24 TERMS OF CLAUSE (D) AND THAT OF CLAUSE (A). CONDITI ON IN CLAUSE (A), NEITHER OPERATES RETROSPECTIVELY NOR CA N BE SAID TO BE ABSURD, UNJUST OR EXPECTING I.T.A.NOS.40/2012, 36/2012 & 35/2012 THE ASSESSEE TO COMPLY WITH SOMETHING WHICH IS IMPOSSIBLE TO ACHIEVE. 24. THE NEXT QUESTION THAT NEEDS TO BE ANSWERED, IS , WHETHER THE STIPULATION IN SECTION 80IB(10)(A) CAN BE SAID TO BE DIRECTORY. CONSIDERING THE PRODIGIOUS BENEFIT OFFERED IN TERMS OF SECTION 80IB TO THE ASSESSEE (HUNDRED PER CENT OF THE PROFITS DERIVED I N ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR); AND THE PURPOSE UNDERLYING THE SAME - WHICH IS INTE R ALIA BURDEN ON THE PUBLIC EXCHEQUER DUE TO WAIVER O F COMMENSURATE REVENUE - THE STIPULATION FOR OBTAININ G COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY BEFO RE THE CUT OFF DATE, MUST BE CONSTRUED AS MANDATORY. RAM BABU SINGH ITA NO. 611/IND/2013 25 THE FACT THAT COMPLIANCE OF THAT CONDITION IS DEPENDENT ON THE MANNER IN WHICH THE PROPOSAL IS PROCESSED BY THE LOCAL AUTHORITY, THE PROVISION CANNOT BE CONSTRUED AS A DIRECTORY REQUIREMENT. IT IS A SUBSTANTIVE PROVISION MANDATING ISSUANCE OR GRANT OF COMPLETION CERTIFICATE BY THE LOCAL AUTHORITY BEF ORE THE CUT OFF DATE OR SPECIFIED TIME, AS A PRECONDITI ON TO GET THE BENEFIT OF TAX DEDUCTION. ELSE, IT WILL THE N BE OPEN TO THE ASSESSEE TO RELY ON OTHER CIRCUMSTANCES OR I.T.A. NOS. 40/2012, 36/2012 & 35/ 2012 EVIDENCE TO PLEAD THAT THE HOUSING PROJECT IS COMPLETE - REQUIRING ENQUIRY INTO THOSE MATTERS BY THE TAX AUTHORITIES - SANS A COMPLETION CERTIFICATE ISS UED BY THE LOCAL AUTHORITY IN THAT BEHALF. A PRIORI, THE ARGUMENT OF SUBSTANTIAL COMPLIANCE IS SUFFICIENT, WOULD LEAD TO UNCERTAINTY ABOUT THE DATE OF COMPLETION OF THE PROJECT WHICH IS THE HALLMARK FOR RAM BABU SINGH ITA NO. 611/IND/2013 26 AVAILING OF THE BENEFIT OF TAX DEDUCTION. ONLY WITH THIS INTENT THE LEGISLATURE IN ITS WISDOM HAS PREDICATED THAT, 'THE COMPLETION OF CONSTRUCTION' O F THE HOUSING PROJECT IS TAKEN TO BE 'THE DATE ON WHI CH' THE COMPLETION CERTIFICATE 'IS ISSUED' BY THE LOCAL AUTHORITY. TO INTERPRET IT TO INCLUDE AN EX POST FA CTO CERTIFICATE OR SUCH CERTIFICATE ISSUED BY THE LOCAL AUTHORITY AFTER THE CUT OFF DATE, WOULD NOT ONLY RE SULT IN REWRITING OF THE EXPRESS PROVISION AND RUN CONTR ARY TO THE UNAMBIGUOUS POSITION PRONOUNCED IN THE SECTION, BUT ALSO DOING VIOLENCE TO THE LEGISLATIVE INTENT. FOR, EXPLANATION (II) WILL THEN HAVE TO BE READ AS 'DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSI NG PROJECT SHALL BE TAKEN TO BE THE DATE AS CERTIFIED BY THE LOCAL AUTHORITY IN THAT BEHALF', IRRESPECTIVE OF THE DATE OF ISSUANCE OF SUCH CERTIFICATE BY THE I.T.A.NOS.40/2012, 36/2012 & 35/2012 LOCAL RAM BABU SINGH ITA NO. 611/IND/2013 27 AUTHORITY. INDEED, IN A GIVEN CASE IF THE ASSESSEE IS ABLE TO SUBSTANTIATE THAT THE COMPLETION CERTIFICAT E 'WAS IN FACT ISSUED' BY THE LOCAL AUTHORITY BEFORE T HE CUT OFF DATE, BUT COULD NOT BE PRODUCED BY HIM WITH IN TIME DUE TO REASONS BEYOND HIS CONTROL, THE ARGUMEN T OF SUBSTANTIAL COMPLIANCE OF THE PROVISION CAN BE TESTED. ANY OTHER INTERPRETATION WOULD RESULT NOT O NLY IN UNCERTAINTY (IN FINALIZATION OF ASSESSMENT PROCEEDINGS DUE TO NON-ISSUANCE OR DELAYED ISSUANCE OF SUCH CERTIFICATE BY THE LOCAL AUTHORITY AND PRONE TO MANIPULATIONS AT THE END OF THE LOCAL AUTHORITY); BUT ALSO HAVE TO YIELD TO THE SUBJECTIV E SATISFACTION OF THE ASSESSING AUTHORITY AND OF INVESTING WIDE DISCRETION IN THAT AUTHORITY, WHICH, EVENTUALLY, MAY ONLY END UP IN GETTING EMBROILED IN LITIGATION. IF THE ASSESSEE HAS FAILED TO COMPLY WI TH THE CONDITION OF OBTAINING COMPLETION CERTIFICATE F ROM RAM BABU SINGH ITA NO. 611/IND/2013 28 THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, HE MUST TAKE THE CONSEQUENCE THEREFOR AND OF DENIAL OF THE BENEFIT OF TAX DEDUCTION OFFERED TO HIM ON THAT COU NT. 25. WE CANNOT BE OBLIVIOUS OF THE FACT THAT THE MUNICIPAL LAWS OF DIFFERENT STATES ARE NOT UNIFORM IN RESPECT OF PROCEDURE FOR I.T.A.NOS.40/2012, 36/2012 & 35/2012 ISSUANCE OF COMPLETION CERTIFICATE. TO WIT, IN SOME STATES, THE DISPENSATION PROVIDED IS T O ISSUE PARTIAL OR FULL OCCUPATION CERTIFICATE; AND THEREAFTER ISSUE COMPLETION CERTIFICATE AFTER REMOV AL OF ALL THE DEFICIENCIES POINTED OUT BY THE LOCAL AUTHORITY. IN SOME STATES, THE MUNICIPAL LAW MAY PROVIDE FOR ISSUING PARTIAL OR FULL COMPLETION CERTIFICATE. THE REQUIREMENT OF COMPLETION CERTIFIC ATE ISSUED BY THE LOCAL AUTHORITY, AS ENVISAGED IN SECTION 80IB(10)(A) OF THE INCOME TAX ACT, WHICH IS A CENTRAL ENACTMENT DEALING WITH THE SPECIAL RAM BABU SINGH ITA NO. 611/IND/2013 29 SUBJECT OF TAXATION, HOWEVER, IS, OF ONLY ONE CERTIFICATE - WHICH IS FULL COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE. THAT IS TO LEND CREDENCE TO THE FACTUM OF COMPLETION OF THE ENTIRE HOUSING PROJECT IN ALL RESPECTS AS PER THE APPROVAL GRANTED BY THE LOCAL AUTHORITY. IT CAN BE SAFELY ASSUMED THAT THE LEGISLATURE WAS CONSCIOUS O F THIS POSITION, FOR WHICH, EXPRESS PROVISION HAS BEE N MADE AS TO THE MEANING OF THE DATE OF COMPLETION OF THE HOUSING PROJECT LINKED TO THE 'DATE ON WHICH' COMPLETION CERTIFICATE 'IS ISSUED' BY THE 'LOCAL AUTHORITY', AS PREDICATED IN EXPLANATION (II) THEREUNDER. 26. WE ACCORDINGLY HOLD THAT ISSUANCE OF COMPLETIO N CERTIFICATE, AFTER THE CUT OFF DATE BY THE LOCAL AUTHORITY BUT, MENTIONING THE DATE OF COMPLETION OF RAM BABU SINGH ITA NO. 611/IND/2013 30 PROJECT BEFORE THE CUT OFF DATE DOES NOT FULFILL TH E CONDITION SPECIFIED IN CLAUSE (A) OF SECTION 80IB ( 10) READ WITH EXPLANATION (II) THEREUNDER. WE REJECT TH E ARGUMENT OF THE ASSESSEE THAT THE EFFECT OF AMENDED CLAUSE (A) OF SUB-SECTION 10 OF SECTION 80IB, WHICH HAS COME INTO FORCE WITH EFFECT FROM 1 ST APRIL, 2005 ,HAS RETROSPECTIVE EFFECT OR THAT IT IS UNJUST IN A NY MANNER OR INCAPABLE OF COMPLIANCE AT ALL. SIMILARLY , THE REQUIREMENT OF SECURING COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DA TE IS NOT DIRECTORY, IN VIEW OF THE EXPRESS PROVISION IN SECTION 80IB(10)(A) AND THE EXPLANATION (II) THEREUNDER. THE COMPLETION CERTIFICATE GRANTED BY T HE LOCAL AUTHORITY MUST BEAR THE DATE OF HAVING BEEN ISSUED BEFORE THE CUT OFF DATE. 27. THAT TAKES US TO THE ARGUMENT OF THE ASSESSEE THAT THE STIPULATION IN SECTION 80IB(10)(A ) RAM BABU SINGH ITA NO. 611/IND/2013 31 OF COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, CANNOT BE APPLIE D IN THE CASE OF ASSESSEE FOLLOWING THE WORK IN PROGRESS ACCOUNTING METHOD. IN OUR OPINION, THE PROVISION IN THE FORM OF SECTION 80IB (10)(A), APPL IES UNIFORMLY TO ALL THE ASSESSEES - BE IT FOLLOWING WO RK IN PROGRESS ACCOUNTING METHOD OR OTHERWISE. THE BENEFIT OF DEDUCTION UNDER THIS PROVISION CAN BE AVAILED BY THE ASSESSEE FOLLOWING THE WORK IN PROGRESS ACCOUNTING METHOD, PROVIDED HE HAS COMPLIED WITH THE STIPULATION OF HAVING PRODUCED COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY BEFORE THE CUT OFF DATE, AS MAY BE APPLICABLE IN HI S CASE. IN OTHER WORDS, IF THE HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY BEFORE 1 ST APRIL, 2004, HE MUST SUBMIT COMPLETION CERTIFICATE ISSUED BY THE AUTHORITY HAVING BEEN ISSUED BEFORE THE 31 ST RAM BABU SINGH ITA NO. 611/IND/2013 32 MARCH, 2008. WHEREAS, IN THE CASE OF HOUSING PROJECT APPROVED ON OR AFTER 1 ST APRIL, 2004, THE ASSESSEE CAN AVAIL OF THE BENEFIT PROVIDED COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY IS WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE CONCERNED HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY. IF THIS CONDITION I S NOT FULFILLED, THE ASSESSEE WHO MAINTAINS WORK IN PROGRESS ACCOUNTING METHOD AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10)(A) MUST SUFFER THE CONSEQUENCE OF DISALLOWANCE OR WITHDRAWAL OF THE BENEFIT CLAIMED BY HIM ON THAT COUNT. 28. ACCORDINGLY, THESE APPEALS SUCCEED. THE IMPUGNED JUDGMENT OF THE TRIBUNAL IS SET ASIDE; AND IN THE FACTS OF THE PRESENT CASE, THE DECISION OF THE ASSESSING OFFICER TO DISALLOW DEDUCTION UNDER RAM BABU SINGH ITA NO. 611/IND/2013 33 SECTION 80IB(10)(A) OF THE INCOME TAX ACT IS UPHELD . NO ORDER AS TO COSTS. FOLLOWING THE ABOVE JUDGMENT OF THE HON'BLE JURISDI CTIONAL HIGH COURT, WE HOLD THAT SINCE THE ASSESSEE HAS GOT TH E COMPLETION CERTIFICATE NOT FOR WHOLE OF THE HOUSING PROJECT BUT FOR THE INDIVIDUAL UNITS WHICH ESTABLISHES THAT TH E ASSESSEE HAS FAILED TO COMPLY WITH THE REQUIREMENTS OF SECTION 80IB(10) OF THE INCOME TAX ACT, 1961, THERE FORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. HENCE, THE APPEAL OF THE ASSESSEE HAS NO FORCE AND DISMISSED AS SUCH. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN OPEN COURT ON 5 TH OCTOBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 5 TH OCTOBER, 2015 DN/- RAM BABU SINGH ITA NO. 611/IND/2013 34