PRAMUKH ENTERPRISES, V. ITO 20(2)(3),

MA 13/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6446 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Section: 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) AND SHRI RAJENDR A SINGH (A.M) MA NO.13/MUM2011 (ARISING OUT OF ITA NO.6055/MUM/2009,A.Y.2005-06) M/S. PRAMUKH ENTERPRISES, 16/2, MATRU MANDIR, JAWAHAR NAGAR NO.2, GOREGAON (W), MUMBAI 62. PAN:AAGPF 0242H (APPLICANT) VS. THE ITO 20(2)(3), ROOM NO.411, 4 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 12. (RESPONDENT) APPLICANT BY : SHRI SUNIL TALATI RESPONDENT BY : SHRI S.K.SINGH ORDER PER N.V.VASUDEVAN, J.M, THIS IS A MISCELLANEOUS APPLICATION FILED BY TH E ASSESSEE PRAYING THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM APPARENT ERR ORS AND THEREFORE THE ORDER SHOULD BE RECALLED AND THE APPEAL HEARD AFRES H ON MERITS. 2. THE FACTUAL BACKGROUND HAS TO BE NARRATED BEFOR E WE DEAL WITH THE CONTENTIONS IN THE MISCELLANEOUS APPLICATION. THEY ARE AS FOLLOWS: THE ASSESSEE IS A PARTNERSHIP FIRM. IT WAS ENGAGED IN BUSINESS AS BUILDER & DEVELOPER OF PROPERTIES. THE ASSESSEE CL AIMED THAT DURING THE PREVIOUS YEAR RELEVANT TO AY 05-06, IT COMPLETED ON E PROJECT, PHASE-I OF PRATHMESH PARK AT ANDHERI (WEST), UNDER THE SCHEM E OF SLUM REHABILITATION. PHASE-I OF PRATHMESH PARK PROJE CT WAS CARRIED OUT ON UNDIVIDED PLOT NO.CTS 720 (PART) & 727. THE SAID P ROJECT WAS PART & PARCEL OF SLUM REHABILITATION SCHEME GOVERNED BY THE MAHAR ASHTRA SLUM AREA MA NO.13/MUM2011 2 (IMPROVEMENT, CLEARANCE & RE-DEVELOPMENT) ACT, 1971 (MSAA). UNDER MSAA, A SLUM REHABILITATION AUTHORITY(SRA) IS CONST ITUTED BY THE GOVERNMENT AND THE SAID SRA GRANTS PROJECT. MSAA W AS ENACTED TO MAKE BETTER PROVISION FOR IMPROVEMENT & CLEARANCE OF SLU M AREAS IN THE STATE AND THEIR RE-DEVELOPMENT AND FOR THE PROTECTION OF OCCU PIERS FROM EVICTION & DISTRESS WARRANTS. SRA FORMULATES THE SLUM REHABIL ITATION SCHEME AND THE BUILDER DEVELOPER WHO IS APPROVED TO EXECUTE SUCH S LUM REHABILITATION SCHEME SHALL HAVE TO CARRY OUT THE WORK, AS STIPULA TED BY SRA UNDER THEIR DIRECT CONTROL AND SUPERVISION. SRA NOTIFIES SLUM REHABILITATION SCHEME IN THE OFFICIAL GAZETTE ACCORDINGLY. THEREAFTER, THE SRA DECLARES SUCH AREAS AS SLUM REHABILITATION AREA, AND ACQUIRES THE LAND. I T HAS ALSO RIGHT OF DEMOLITION OF EXISTING STRUCTURES AND SUCH OTHER RI GHTS AS ARE VESTED IN THE MUNICIPAL CORPORATION. THEREAFTER, SRA ENTRUST THE WORK OF DEVELOPMENT OF SUCH AREA TO ANY OTHER AGENCY AS PER THE PROVISIONS OF THE ACT. THEREAFTER, SUCH AGENCY SHALL HAVE TO CARRY OUT THE REHABILITAT ION WORK AS PER THE NORMS, PLAN AND PROCEDURE LAID DOWN BY SRA UNDER TH EIR DIRECT CONTROL & SUPERVISION. IN THE PRESENT CASE, THE ASSESSEE WA S THE APPROVED AGENCY FOR REHABILITATION WORK ON THE ABOVE PRATHMESH PARK SCH EME. 3. THE TOTAL PLOT AREA IS ABOUT 5700 SQ. METERS, OUT OF WHICH, 3788.75 SQ. METERS ARE OCCUPIED BY PRATHMESH PARK PROJECT ( SALEABLE BUILDINGS) WHEREAS REMAINING AREA OF ABOUT 1900 SQ. METERS ARE OCCUPIED BY THE REHABILITATION BUILDINGS. THE APPROVAL OF THE SRA IS FOR BOTH THE TYPES OF BUILDINGS I.E. PROJECT AS A WHOLE AND THE PROJECT I S SITUATED ON UNDIVIDED PLOT CTS 720 (PART) AND 727, FOR WHICH, THERE IS ONE SIN GLE CONVEYANCE DEED. 4. THE SRA PLANNED AND APPROVED CONSTRUCTION OF T HE FOLLOWING BUILDINGS. MA NO.13/MUM2011 3 A) 3 BUILDINGS & 17 SHOPS AS A PART & PARCEL OF REHABI LITATION BUILDINGS AND SHOPS TO BE GIVEN TO THE ORIGINAL SLU M DWELLERS UNDER THE REHABILITATION SCHEME, FREE OF COST. B) 3 BUILDINGS AS A PART & PARCEL OF FREE-SALE BUILDIN GS OR SALEABLE BUILDINGS I.E. PRATHMESH PARK, PHASE-I PROJECT. IT WAS MANDATORY FOR THE ASSESSEE TO CONSTRUCT 17 S HOPS IN THE REHABILITATION PORTION OF THE SCHEME AS PER THE PLANS & NORMS OF T HE SRA. THE SRA WAS ALSO DUTY-BOUND UNDER THE MAHARASHTRA SLUM AREA (IM PROVEMENT, CLEARANCE & RE-DEVELOPMENT) ACT, 1971, TO PROVIDE F OR SUCH 17 SHOPS TO THE OLD SLUM SHOP-KEEPER CONSIDERING THEIR RIGHT, TITLE & ENTITLEMENT IN THE OLD SLUM AREA. BESIDES, IT WAS ALSO MANDATORY & OBLIG ATORY FOR THE ASSESSEE TO CONSTRUCT AND HANDOVER 3 BUILDINGS & 17 SHOPS TO TH E SRA/ORIGINAL SLUM DWELLERS, AS APPROVED BY SRA, FREE OF COST. IN THE ORIGINAL SLUM AREA, 17 SHOPS WERE IN EXISTENCE, AND THEREFORE, IN THE REHA BILITATED AREA, SHOPS WERE MANDATORILY TO BE CONSTRUCTED. 5. THE INCOME ATTRIBUTABLE TO SUCH PROJECT WAS RS .2,80,67,805/-. A DEDUCTION OF THE SAME WAS CLAIMED UNDER THE PROVISI ONS OF SEC.80IB(10) OF THE ACT. A SURVEY U/S.133A OF THE ACT WAS CARRIE D OUT ON 08.02.2006 AND THE FOCUS OF THE SURVEY WAS TO VERIFY THE CLAIM MAD E FOR DEDUCTION U/S.80IB(10) OF THE ACT. ACCORDINGLY, DURING THE COURSE OF THE SURVEY, THE AUTHORIZED OFFICE RECORDED THE STATEMENT OF ONE OF THE PARTNERS. THE PARTNER OF THE ASSESSEE WAS EXAMINED AND THE FOCUS WAS MAIN LY ON THE ISSUE AS TO WHETHER THE CONDITIONS WHICH ARE REQUIRED TO BE FUL FILLED, FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT WERE FULFILLED BY THE ASSESSEE OR NOT. THE PARTNER OF THE ASSESSEE IN HIS STATEMENT ACCEPTED T HAT, NONE OF THE CONDITIONS LAID DOWN U/S.80IB(10)(A) TO 80IB(10)(D) WERE FULFILLED BY THE ASSESSEE, AND THEREFORE, THE ASSESSEE WAS NOT ENTIT LED FOR THE DEDUCTION U/S.80IB(10) OF THE ACT. MA NO.13/MUM2011 4 6. THE AO ON SCRUTINY OF THE CLAIM OF THE ASSESSE E FOR DEDUCTION U/S.80- IB(10) OF THE ACT WAS OF THE VIEW THAT THE ASSESSEE DID NOT SATISFY THE REQUIREMENTS AS LAID DOWN IN SEC.80-IB(10) (A) AND (D) OF THE ACT AND WAS THEREFORE NOT ENTITLED TO DEDUCTION U/S.80-IB (10) OF THE ACT. THE CIT(A) HOWEVER HELD THAT THE ASSESSEE FULFILLED ALL THE CO NDITIONS FOR ALLOWING DEDUCTION U/S.80-IB (10) OF THE ACT AND WAS THEREFO RE ENTITLED TO DEDUCTION U/S.80-IB (10) OF THE ACT. AGAINST THE ORDER OF CI T(A), THE REVENUE RAISED GROUND NO.I AND II BEFORE THE TRIBUNAL. 7. THE TRIBUNAL AFTER ELABORATE DISCUSSION OF THE FACTS AND THE PROVISIONS OF SEC.80-IB(10) OF THE ACT, HELD THAT THE ASSESSEE FULFILLED ALL CONDITIONS FOR CLAIMING DEDUCTION U/S.80-IB(10) OF THE ACT, EXCEPT THE CONDITION THAT THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31- 3-2005, WHICH IS CONTEMPLATED UNDER CLAUSE (A) READ WITH EXPLN.(II) BELOW CLAUSE (A) TO SUB- SECTION 10 OF SEC.80-IB OF THE ACT. (THIS HAS BEEN WRONGLY MENTIONED AS SUB-CLAUSE (II) OF CLAUSE (A) OF SEC.80-IB(10) OF T HE ACT, IN PARA 11 OF THE ORDER OF THE TRIBUNAL). THE PROVISIONS OF SEC.80-IB(10)(A)READ AS FOLLOWS: (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL A UTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELO PMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION ( I )IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVE D 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 BEEN, OR, I S APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRI L, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, MA NO.13/MUM2011 5 ( I )IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOU SING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTH ORITY; ( II ) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOU SING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CER TIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTH ORITY; PROVIDED THAT NOTHING CONTAINED IN CLAUSE ( A ) OR CLAUSE ( B ) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANC E WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDIN GS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIM E BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BE HALF; 8. THE CONDITIONS TO BE FULFILLED FOR CLAIMING DE DUCTION U/S.80- IB(10)(A) OF THE ACT ARE THUS(I)THE PROJECT SHOULD HAVE COMMENCED ON OR AFTER 01.10.1998; AND (II) THE PROJECT SHOULD HAVE BEEN C OMPLETED ON OR BEFORE 31- 3-2005, WHICH IS CONTEMPLATED UNDER CLAUSE (A) READ WITH EXPLN.(II) BELOW CLAUSE (A) TO SUB-SECTION 10 OF SEC.80-IB OF THE AC T. 9. ON THE QUESTION WHETHER THE PROJECT COMMENCED BEFORE OR AFTER 1.10.98, THE TRIBUNAL UPHELD THE ORDER OF THE CIT(A ) THAT THE PROJECT COMMENCED AFTER 1.10.98 AND THEREFORE THERE IS NO D ISPUTE ON THIS ASPECT. WITH REGARD TO THE SECOND CONDITION VIZ., THE PROJE CT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31-3-2005, WHICH IS CONTEMPL ATED UNDER CLAUSE (A) READ WITH EXPLN.(II) BELOW CLAUSE (A) TO SUB-SECTIO N 10 OF SEC.80-IB OF THE ACT, THE TRIBUNAL HELD THAT THE ASSESSEE HAS NOT CO MPLETED THE PROJECT AS REQUIRED BY THE AFORESAID PROVISIONS. 10. THE CASE OF THE AO ON THIS ISSUE WAS TO CLAIM DEDUCTION U/S.80- IB(10) THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR VIZ., 31.3.2005. THIS REQUIREMEN T IS DIFFERENT FROM THE OTHER REQUIREMENT THAT THE PROJECT SHOULD BE COMPLE TED BEFORE 31.3.2008 MA NO.13/MUM2011 6 BEFORE THE ASSESSEE CAN CLAIM DEDUCTION U/S.80-IB(1 0) OF THE ACT AT ALL. THUS THERE ARE TWO ASPECTS TO BE SEEN WHEN IT COMES TO FULFILLMENT OF THE SECOND CONDITION VIZ., THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31-3-2005, WHICH IS CONTEMPLATED UNDER CLAUSE (A) R EAD WITH EXPLN.(II) BELOW CLAUSE (A) TO SUB-SECTION 10 OF SEC.80-IB OF THE ACT. THE FIRST ASPECT IS THAT AS ON THE LAST DATE OF THE PREVIOUS YEAR THE H OUSING PROJECT SHOULD HAVE BEEN COMPLETED, IN THIS CASE ON OR BEFORE 31.3.2005 AND THE SECOND ASPECT TO BE SEEN IS WHETHER THE PROJECT IS COMPLETED ON O R BEFORE 31.3.2008. THE SECOND ASPECT WOULD BE RELEVANT FOR AY 08-09 AND AS SESSMENT YEARS THEREAFTER. THE TRIBUNAL THEREFORE WAS CONCERNED O NLY WITH THE FIRST ASPECT VIZ., WHETHER THE ASSESSEE COMPLETED ITS PROJECT ON OR BEFORE 31.3.2005. THIS IS HOW THE DATE 31.3.2005 BECAME IMPORTANT. THIS A SPECT IS IMPORTANT BECAUSE THE ASSESSEE IS RELYING ON THE SECOND ASPEC T OF COMPLETION OF PROJECT BEFORE 31.3.2008 AND SUBMITTING THAT THE ORDER OF T HE TRIBUNAL IS ERRONEOUS BECAUSE IT ASSUMED THE DATE OF COMPLETION OF THE PR OJECT ERRONEOUSLY AS 31.3.2005 INSTEAD OF 31.3.2008. 11. ON THE ABOVE ASPECT, THE AO REFERRED TO THE ST ATEMENT OF ONE S.BRAHMBHATT RECORDED AT THE TIME OF SURVEY. IN AN SWER TO QUESTION NO.5 TO 8 HE HAD STATED AS FOLLOWS: Q.NO.5: IT IS SEEN THAT YOU HAVE CLAIMED SEC.80-I B DEDUCTION OF RS.2,80,67,805/- IN PRATHMESH PARK PHASE I, FOR AY 2005-06. IN THIS REGARD, KINDLY PRODUCE THE COPY OF COMPLETION CERTI FICATE ISSUED BY THE LOCAL AUTHORITY. ANS: I AM UNABLE TO PRODUCE THE COPY OF COMPLETION CERTIFICATE AS THE SAME IS YET TO BE RECEIVED FROM LOCAL AUTHORITY. Q.NO.6: PLEASE EXPLAIM ME THE REASONS AS TO WHY CO MPLETION CERTIFICATE HAS NOT BEEN RECEIVED? ANS: THE PROJECT IS AN APPROVED PROJECT UNDER THE SLUM DEVELOPMENT AUTHORITY SCHEME. AS PER THE SCHEME OF THE PROJECT , THE OCCUPATION CERTIFICATE HAS TO BE FIRST OBTAINED IN RESPECT OF THE REHAB BUILDING, AND THEN ONLY THE OCCUPATION CERTIFICATE IN RESPECT OF THE SALE BUILDING CAN BE APPLIED FOR. WE HAVE APPLIED FOR THE COMPLETION CERTIFICATE IN MA NO.13/MUM2011 7 RESPECT OF THE REHAB BUILDING. HENCE, WE HAE NOT Y ET RECEIVED COMPLETION CERTIFICATE FOR THE SALE BUILDING. Q.NO.7: BASED ON THE REPLY GIVEN BY YOU IN THE PRE VIOUS QUESTION, IT IS SEEN THAT YOU HAVE NOT YET APPLIED FOR COMPLETION C ERTIFICATE IN RESPECT OF THE SALE BUILDING. PLEASE CONFIRM. ANS.: AS EXPLAINED BY ME, WE ARE YET TO RECEIVE TH E COMPLETION CERTIFICATE IN RESPECT OF THE REHAB BUILDING. HENC E, WE HAVE NOT YET APPLIED FOR THE COMPLETION CERTIFICATE IN RESPECT O F THE SALE BUILDING, I.E., PRATHMESH PARK PHASE I. Q.NO.8: I AM SHOWING YOU THE PROVISIONS OF SEC.80- IB(10). AS PER EXPLNATION (II) TO CLAUSE (A) OF SEC.80-IB(10), IT IS SEEN THAT YOU ARE NOT ENTITLED FOR DEDUCTION U/S.80-IB IN VIEW OF THE FAC T THAT YOU HAVE NOT OBTAINED COMPLETION CERTIFICATE IN RESPECT OF YOUR PROJECT. PLEASE COMMENT. ANS.: I HAVE READ THE PROVISIONS OF SEC.80-IB(10). I AGREE THAT THE OCCUPATION CERTIFICATE FOR PRATHMESH PARK PHASE I H AS NOT HYET BEEN OBTAINED. IN VIEW OF THE ABOVE, I INTEND TO VOLUNT ARILY WITHDRAW MY CLAIM OF DEDUCTION OF RS.2,80,67,805/- U/S.80-IB, F OR AY 2005-06, TO BUY PEACE OF MIND. I RQUEST THAT PENALTY OR PROSEC TION PROCEEDINGS SHOULD NOT BE LAUNCHED AGAINST THE FIRM/PARTNERS IN VIEW OF OUR VOLUNTARY DISCLOSURE. 12. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT TH E PROJECT PRATHMESH PARK, PHASE-I WAS COMPLETED AS ON 31.3.2005 AND AN ARCHITECTS CERTIFICATE CAN BE PRODUCED BEFORE THE AO, IF REQUIRED. THE A SSESSEE LAID EMPHASIS ON THE PROVISO BELOW SEC.80-IB(10)(B) WHICH PROVIDES A S FOLLOWS: PROVIDED THAT NOTHING CONTAINED IN CLAUSE ( A ) OR CLAUSE ( B ) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANC E WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDIN GS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIM E BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BE HALF; THE CLAIM OF THE ASSESSEE WAS THAT SINCE IT WAS CAR RYING OUT A SLUM REHABILITATION PROJECT, THE RIGOUR OF CLAUSE(A) WOU LD NOT APPLY TO IT. MA NO.13/MUM2011 8 13. THE AO HOWEVER HELD THAT CLAUSE (A) WOULD AP PLY TO THE ASSESSEE AND FURTHER HELD THAT THE CONSTRUCTION OF THE HOUSI NG PROJECT WAS NOT COMPLETED ON OR BEFORE 31.3.2005 AND THAT THE ASSES SEE HAS NOT EVEN APPLIED FOR COMPLETION CERTIFICATE/OCCUPATION CERTI FICATE. THE AO FURTHER HELD THAT THE DATE OF COMPLETION OF THE PROJECT HAS TO B E RECKONED BASED ON THE COMPLETION CERTIFICATE AND DEDUCTION CANNOT BE ALLO WED IF THE PROJECT IS NOT COMPLETED. THUS THE AO HELD THAT THE SECOND CONDIT ION LAID DOWN IN SEC.80- IB(10)(A) HAS NOT BEEN SATISFIED BY THE ASSESSEE. 14. BEFORE CIT(A) THE ASSESSEE ADMITTED THAT IT C OULD NOT GET COMPLETION CERTIFICATE FOR THE FREE SALE AREA OF THE PROJECT B ECAUSE AS PER THE REQUIREMENTS SRA HAS TO CONSTRUCT REHABILITATION BU ILDINGS AS PER REQUIREMENTS AND THEREAFTER SRA HAS TO APPLY FOR OC CUPATION CERTIFICATE OF REHABILITATION BUILDINGS. THE ASSESSEE APPLIED FOR SUCH OCCUPATION CERTIFICATE FOR REHABILITATION BUILDINGS. IT WAS N OT ISSUED. THE ASSESSEE COULD APPLY FOR COMPLETION CERTIFICATE OF SALEABLE BUILDING ONLY AFTER OCCUPATION CERTIFICATE FOR REHABILITATION BUILDING WAS ISSUED. IT WAS THUS SUBMITTED THAT IT WAS BEYOND THE CONTROL OF THE ASS ESSEE TO HAVE APPLIED FOR COMPLETION CERTIFICATE OF SALEABLE BUILDING. ALTER NATIVELY, THE ASSESSEE SUBMITTED THAT THAT THE PROVISO BELOW SECTION 80 IB (10)(B) OF THE ACT, WHICH STIPULATES THAT, PROVIDED THAT, NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT, CARRIED OUT IN AC CORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RE- CONSTRUCTION OR RE-DEVELOPMENT OF EXISTING BUILDING S, IN AREA DECLARED TO BE SLUM AREAS UNDER ANY LAW, FOR THE TIME BEING IN FOR CE, AND SUCH SCHEME, IS NOTIFIED BY THE BOARD, IN THIS BEHALF IS APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEES PROJECT WAS A SLUM REHABILITATION PR OJECT BEING APPROVED AND ALLOTTED BY SRA UNDER MSAA. THE CBDT VIDE THEIR CL ARIFICATION UNDER F.NO.205/3/2001/IT A-II DATED 4/5/2001 BEING A LETT ER ADDRESSED TO MA NO.13/MUM2011 9 MAHARASHTRA CHAMBER OF HOUSING INDUSTRY, HAS CLARIF IED WITH REGARD TO QUERY, REGARDING THE DEFINITION OF HOUSING PROJECT THAT, ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS A HOUSING PROJECT, SHOULD BE CONSIDERED ADEQUATE, FOR THE PURPOSE OF SECTION 10( 23G) & 80IB(10). BOTH THESE SECTIONS, 10(23G) & 80IB(10) ARE RELATED TO E XEMPTION / DEDUCTION OF INCOME/PROFIT FROM THE HOUSING PROJECTS. THUS, THE PROJECT OF THE ASSESSEE WAS UNDOUBTEDLY APPROVED PROJECT OF SRA I.E. LOCAL AUTHORITY, AND RELATED TO SLUM REHABILITATION / RE-DEVELOPMENT SCHEME. THUS, THE PROVISO BELOW SECTION 80IB (10)(B) WAS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. THEREFORE, EVEN OTHERWISE, THE CONDITION OF SECTION 80IB(10)(A) WERE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 15. ON THE ABOVE SUBMISSION, THE CIT(A) ACCEPTED THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE PROJECT DEVELOPED BY THE ASSE SSEE FELL WITHIN THE PARAMETERS OF PROVISO BELOW SECTION 80 IB(10)(B) OF THE ACT, WHICH STIPULATES THAT, PROVIDED THAT, NOTHING CONTAINED IN CLAUSE ( A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT, CARRIED OUT IN ACCORDANCE WIT H A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RE-CON STRUCTION OR RE- DEVELOPMENT OF EXISTING BUILDINGS, IN AREA DECLARED TO BE SLUM AREAS UNDER ANY LAW, FOR THE TIME BEING IN FORCE. HE ALSO HELD THAT THE CLARIFICATION ISSUED BY THE BOARD VIDE THEIR F. NO.205/3/2001/IT A-II DA TED 4/5/2001 IN A LETTER ISSUED TO MAHARASHTRA CHAMBER OF HOUSING IND USTRY, WHEREIN THE BOARD HAS CLARIFIED THAT, ANY PROJECT WHICH HAS BEE N APPROVED BY AN APPROPRIATE LOCAL AUTHORITY, AS A HOUSING PROJECT, SHALL BE CONSIDERED ADEQUATE, FOR THE PURPOSE OF SEC. 10(23G) AND SEC. 80 IB (10) OF THE ACT, WAS SUFFICIENT COMPLIANCE WITH THE PROVISO BELOW SEC.80 -IB(10)(B) OF THE ACT. 16. ON THE ABOVE ISSUE, ON REVENUES APPEAL, THE T RIBUNAL HELD AS FOLLOWS: MA NO.13/MUM2011 10 15. ON THE ISSUE REGARDING NON FULFILLMENT OF THE CONDITION REGARDING COMPLETION OF THE PROJECT ON OR BEFORE 31-3-2005, T HE ASSESSEES SUBMISSIONS, WHICH FOUND FAVOUR WITH THE CIT(A) WAS THAT THE ASSESSEE WAS CARRYING OUT A SLUM REHABILITATION SCH EME AND THEREFORE PROVISO BELOW CLAUSE (B) TO SEC.80-IB (10) WOULD AP PLY AND THEREFORE THE CONDITION MENTIONED IN CLAUSE(B) TO SEC.80-IB(1 0) NEED NOT BE COMPLIED WITH. THE SAID PROVISO WAS INSERTED W.E.F . 1-4-2005 BY THE FINANCE (NO.2) ACT 2004. THE SAME READS AS FOLLOWS : PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STAT E GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF E XISTING BUILDINGS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; THE ASSESSEES PROJECT WAS A SLUM REHABILITATION PR OJECT BEING APPROVED AND ALLOTTED BY SRA UNDER MSAA. THE CBDT S CLARIFICATION UNDER F.NO.205/3/2001/IT A-II DATED 4/5/2001 RELIED UPON BY THE ASSESSEE CANNOT BE SAID TO BE A NOTIFICATION BY THE BOARD OF A SCHEME OF SLUM REHABILITATION UNDER THE PROVISO REFERRED T O ABOVE. IN FACT THE CBDTS CLARIFICATION REFERRED TO AND RELIED UPON BY THE ASSESSEE IS DATED 4/5/2001 AND THE PROVISO CAME INTO FORCE ONLY W.E.F. 1-4-2005. THE CLARIFICATION GIVEN BY THE CBDT IS IN THE CONTE XT OF WHAT IS A HOUSING PROJECT. BY NO STRETCH OF IMAGINATION THE SAID CLARIFICATION OF THE CBDT CAN BE SAID TO BE A NOTIFICATION UNDER THE PROVISO, ON WHICH THE ASSESSEE CAN TAKE SHELTER. IN OUR VIEW THE CIT (A) TOTALLY MISDIRECTED HIMSELF, IN ACCEPTING THE PLEA OF THE A SSESSEE IN THIS REGARD. 16. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR TH E ASSESSEE THAT EVEN THOUGH THE ASSESSEES PROJECT WAS APPROVED BY THE STATE GOVERNMENT THE SCHEME IS NOT NOTIFIED BY THE BOARD AND THE ASSESSEE CANNOT BE DENIED THE BENEFIT JUST BECAUSE THE BOARD HAS NOT NOTIFIED THE PROJECT. THE LEARNED COUNSELS SUBMISSIONS IN T HIS REGARD WERE THAT NEITHER UNDER THE INCOME TAX ACT OR RULES OR A NY OTHER NOTIFICATION BY THE CBDT HAS ANY GUIDELINES, RULES OR PROCEDURE HAVE BEEN LAID DOWN AS TO HOW, WHERE AND WHEN AN ASSESSE E SHOULD APPROACH TO GET THE PROJECT NOTIFIED. IT WAS THE SU BMISSION THAT THE ASSESSEE CANNOT BE COMPELLED TO PERFORM SOME ACT WH EN NO PRESCRIBED RULES, GUIDELINES, PROCEDURE ETC ARE LAID DOWN FOR THE SAME. MA NO.13/MUM2011 11 17. WE ARE OF THE VIEW THAT THE CLAIM MADE BY THE ASSESSEE IN THIS YEAR IS BASED ON AMENDED SECTION 80IB(10). IT IS N O DOUBT TRUE THAT THE ASSESSEE WAS CARRYING OUT A SLUM REHABILITATION SCHEME. THE PROVISO BELOW CLAUSE (B) TO SEC.80-IB (10) WAS INSE RTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F 1-4-2005. AS PER THE PROVIS O THE CONDITIONS MENTIONED IN SEC.80-IB (10) (A) & (B) NEED NOT BE F ULFILLED IN THE CASE OF SLUM REHABILITATION SCHEME CARRIED OUT IN ACCORDA NCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNM ENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDIN GS IN AREAS DECLARED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING I N FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF. IN THE ABSENCE OF A NOTIFICATION BY THE BOARD, IT IS NOT POSSIBLE TO IG NORE THE CONDITION LAID DOWN IN SEC.80-IB(10) (A) OR (B). SINCE, THE CONDI TION THAT THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31.3.2005 I S ADMITTEDLY NOT COMPLIED WITH BY THE ASSESSEE, WE HOLD THAT THE A.O . HAS RIGHTLY DENIED THE DEDUCTION UNDER SECTION 80IB(10) ON THE GROUND THAT THE PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED TIM E AS REQUIRED UNDER CLAUSE (A) TO SEC.80IB(10) OF THE ACT. THUS THE AP PEAL OF THE REVENUE ON THIS ASPECT STANDS ALLOWED. 17. IN THIS MISCELLANEOUS APPLICATION THE ASSESSE E HAS SUBMITTED THAT THERE WAS A SERIOUS MISTAKE COMMITTED BY THE TRIBUN AL IN INTERPRETING AND APPRECIATING AND COMING TO THE CONCLUSION WHILE DEN YING THE BENEFIT U/S.80- IB(10) OF THE ACT ON THE GROUND THAT THE ASSESSEE H AS NOT COMPLIED WITH THE CONDITIONS LAID DOWN IN SUB-CLAUSE (A) OF SUB-SEC.( 10) OF SEC.80-IB OF THE ACT AND WHILE DOING THIS THE HONBLE TRIBUNAL HAS INADV ERTENTLY AND ERRONEOUSLY RELIED ON SOME PROVISIONS THAT HOUSE PROJECT/CONSTR UCTION SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31.3.2005. THE ASSESSEE HAS THEREAFTER REPRODUCED THE PROVISIONS OF SEC.80-IB(10)(A)OF THE ACT (ONLY A PORTION OF THE RELEVANT PROVISIONS) AND HAS SUBMITTED THAT THE CONDITION IN THE PROVISIONS ARE THAT THE ASSESSEE SHOULD COMPLETE THE PROJECT ON OR BEFO RE 31.3.2008 AND THERE IS NO REQUIREMENT OF COMPLETION OF THE PROJECT BEFO RE 31.3.2005. 18. THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE STAND OF THE ASSESSEE AS CONTAINED IN THE MISCELLANEOUS APPLICAT ION. THE LEARNED D.R. MA NO.13/MUM2011 12 RELIED ON THE ORDER OF THE TRIBUNAL AND FURTHER SUB MITTED THAT THE ASSESSEE CANNOT SEEK A REVIEW OF THE ORDER OF THE TRIBUNAL I N THE GARB OF A MISCELLANEOUS APPLICATION. HE ALSO SUBMITTED THAT THE PRESENT APPLICATION IS BEYOND THE SCOPE OF THE PROVISIONS OF SEC.254(2) OF THE ACT. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS ALREADY STATED IN THE EARLIER PARAS OF THIS ORDER, THE CASE OF THE AO ON THIS ISSUE WAS TO CLAIM DEDUCTION U/S.80-IB(10) THE PROJECT SHOULD HAVE BEE N COMPLETED ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR VIZ., 31.3.2005. THE DEDUCTION U/S.80- IB(10) OF THE ACT IS TO BE GRANTED ONLY ON COMPLETI ON OF THE PROJECT. THIS REQUIREMENT IS DIFFERENT FROM THE OTHER REQUIREMENT THAT THE PROJECT SHOULD BE COMPLETED BEFORE 31.3.2008 BEFORE THE ASSESSEE C AN CLAIM DEDUCTION U/S.80-IB(10) OF THE ACT AT ALL. THUS THERE ARE TW O ASPECTS TO BE SEEN WHEN IT COMES TO FULFILLMENT OF THE CONDITION VIZ., THE PR OJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31-3-2008, WHICH IS CONTEMP LATED UNDER CLAUSE (A) READ WITH EXPLN.(II) BELOW CLAUSE (A) TO SUB-SECTIO N 10 OF SEC.80-IB OF THE ACT. THE FIRST ASPECT IS THAT AS ON THE LAST DATE OF THE PREVIOUS YEAR THE HOUSING PROJECT SHOULD HAVE BEEN COMPLETED, IN THIS CASE ON OR BEFORE 31.3.2005 AND THE SECOND ASPECT TO BE SEEN IS WHETH ER THE PROJECT IS COMPLETED ON OR BEFORE 31.3.2008. THE SECOND ASPEC T WOULD BE RELEVANT FOR AY 08-09 AND ASSESSMENT YEARS THEREAFTER. THE TRIB UNAL THEREFORE WAS CONCERNED ONLY WITH THE FIRST ASPECT VIZ., WHETHER THE ASSESSEE COMPLETED ITS PROJECT ON OR BEFORE 31.3.2005. THIS IS HOW THE DA TE 31.3.2005 BECAME IMPORTANT. THE AO PROCEEDED TO EXAMINE THE CLAIM O F THE ASSESSEE WITH REGARD TO COMPLETION OF THE PROJECT ON OR BEFORE 31 .3.2005. IN THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS ONLY HIG HLIGHTING THE SECOND ASPECT VIZ., COMPLETION OF PROJECT BEFORE 31.3.2008 AND ON THAT BASIS IS CLAIMING THAT THE ORDER OF THE TRIBUNAL IS ERRONEOU S BECAUSE IT ASSUMED THE DATE OF COMPLETION OF THE PROJECT ERRONEOUSLY AS 31 .3.2005 INSTEAD OF 31.3.2008. MA NO.13/MUM2011 13 20. WE HAVE ALREADY NARRATED AS TO HOW THE AO HEL D THAT THE ASSESSEE DID NOT EVEN FILE COMPLETION CERTIFICATE TO ESTABLI SH THE FACT THAT THE PROJECT HAS BEEN COMPLETED ON OR BEFORE 31.3.2005. THE PLE A OF THE ASSESSEE WHICH WEIGHED WITH THE CIT(A) WAS THAT THE CONDITION MENT IONED IN CLAUSE (A) TO SEC. 80-IB(10) OF THE ACT DID NOT APPLY TO THE ASSE SSEE BECAUSE IT WAS COVERED BY THE PROVISO BELOW SEC. 80-IB(10)(B) OF T HE ACT WHICH PROVIDES NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT, CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY T HE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RE-CONSTRUCTION OR RE-DEV ELOPMENT OF EXISTING BUILDINGS, IN AREA DECLARED TO BE SLUM AREAS UNDER ANY LAW, FOR THE TIME BEING IN FORCE, AND SUCH SCHEME, IS NOTIFIED BY THE BOARD. THIS BASIS ON WHICH RELIEF WAS GIVEN BY THE CIT(A) DID NOT FIND F AVOUR WITH THE TRIBUNAL. THE ASSESSEE DID NOT AT ANY STAGE OF THE PROCEEDING S PLEAD OR PROVE THAT HIS PROJECT WAS COMPLETED ON OR BEFORE 31.3.2005. 21. THERE IS ANOTHER ASPECT WHICH WE SHOULD MENTI ON WHILE ON THE QUESTION OF THE COMPLIANCE OF CONDITIONS MENTIONED IN U/S.80-IB(10)(A) OF THE ACT. AS PER THE PROVISIONS OF SEC.80-IB(10)(D) OF THE ACT, AS APPLICABLE W.E.F. 1-4-2005, THE COMMERCIAL AREA IN A HOUSING PROJECT SHOULD NOT EXCEED 2000 SQ.FT. IN THE CASE OF THE ASSESSEE THE PROJECT IN QUESTION WAS A SLUM REHABILITATION PROJECT AS PER WHICH THE REHABILITAT ION AREA HAD TO OCCUPY 17 SHOPS THAT EXISTED IN THE OLD SLUM AND THEREFORE TH E ASSESSEE HAD TO CONSTRUCT COMMERCIAL AREA IN THE HOUSING PROJECT OF 3547 SQ.FT. THE AO HELD THAT SINCE THE COMMERCIAL AREA EXCEEDED 2000 SQ.FT. THE ASSESSEE DID NOT FULFILL THE CONDITION LAID DOWN IN SEC.80-IB(10)(D) OF THE ACT. ON THIS ASPECT, THE ASSESSEE SUBMITTED THAT BECAUSE IT WAS A SLUM R EHABILITATION SCHEME AS PER WHICH IT WAS MANDATORY FOR HIM TO ACCOMMODATE T HE ERSTWHILE SLUM OCCUPIER WHO HAD A SHOP IN THE REHABILITATION BUILD ING, THE CONDITION SHOULD MA NO.13/MUM2011 14 BE TREATED AS NOT VIOLATED BY THE ASSESSEE. ALTERN ATIVELY THE ASSESSEE SUBMITTED THAT THE LAW AS IT EXISTED AS ON THE DATE WHEN THE ASSESSEE GOT PERMISSION TO CONSTRUCT FROM THE AUTHORITIES AND WH EN IT COMMENCED CONSTRUCTION VIZ., AY 99-2000 SHOULD BE APPLIED AND IF SO APPLIED THERE WAS NO RESTRICTION ON THE COMMERCIAL AREA IN A HOUSING SCHEME. THIS ALTERNATIVE ARGUMENT FOUND FAVOUR WITH THE CIT(A) AS WELL AS TH E TRIBUNAL. 22. IF THIS ALTERNATIVE ARGUMENT IS APPLIED TO TH E CONDITIONS TO BE FULFILLED IN CLAUSE (A) TO SUB-SECTION 10 OF SECTION 80-IB, T HEN THE ASSESSEE CANNOT TAKE ADVANTAGE OF THE PROVISO BELOW SEC.80-IB(10)(B ) WHICH CAME INTO EFFECT ONLY FROM 1-4-2005 HAVING BEEN INSERTED BY THE FINA NCE (NO.2) ACT 2004. THE PROVISO OPERATED PROSPECTIVELY AND THEREFORE TH E ASSESSEE COULD NOT TAKE ADVANTAGE OF THE SAME. IN FACT WHILE DEALING WITH THE CONDITION TO BE FULFILLED UNDER SEC.80-IB(10)(A) OF THE ACT, WE HAVE ALSO MAD E SIMILAR OBSERVATIONS IN PARA-42 OF THE ORDER. THOSE OBSERVATIONS WILL EQUA LLY APPLY TO THE CONDITIONS TO BE FULFILLED U/S.80-IB(10)(A) OF THE ACT AS WELL . HOWEVER IN PARA 42, THE TRIBUNAL HELD THAT IF THE LAW AS APPLICABLE TO A.Y 99-2000 WHEN THE PROJECT WAS APPROVED IS APPLIED THEN THE ASSESSEE HAS NOT C OMPLIED WITH THE CONDITION THAT THE PROJECT SHOULD BE COMPLETED ON O R BEFORE 31.3.2001 AS WAS THE LAW APPLICABLE IN A.Y 99-2000 AND ON THAT G ROUND ALSO DEDUCTION U/S.80-IB(10) OF THE ACT SHOULD NOT BE ALLOWED. 23. IN OUR VIEW THE TRIBUNAL HAS CORRECTLY EXAMIN ED THE CLAIM OF THE ASSESSEE AS IT EMANATES FROM THE ORDER OF THE REVEN UE AUTHORITIES AND HAS RIGHTLY HELD THAT THE CLAIM OF THE ASSESSEE COULD N OT BE ALLOWED BECAUSE THE PROJECT WAS NOT COMPLETED ON OR BEFORE THE LAST DAT E OF THE PREVIOUS YEAR, I.E. 31.3.2005. WE HAVE TAKEN A CONSCIOUS DECISION ON T HE ISSUE AND THE SAME CANNOT BE REVIEWED. THERE IS THEREFORE NO MISTAKE, MUCH LESS A MISTAKE MA NO.13/MUM2011 15 APPARENT ON THE FACE OF THE RECORD CALLING FOR RECT IFICATION U/S,254(2) OF THE ACT. 24. WE HOWEVER FIND THAT PARA-8 OF THE ORDER OF TH E TRIBUNAL THE LAST SENTENCE READS AS FOLLOWS: THIS WAS THE LAW FOR AY 04-05 WHEN THE ASSESEE SUB MITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT. THIS SENTENCE IS SUPERFLUOUS AND HAS TO BE DELETED BECAUSE THE DATE OF COMMENCEMENT OF THE PROJECT AND THE LAW THAT HAS TO BE APPLIED FOR CONSIDERING THE CLAIM OF THE ASSESSEE HAS BEEN DISC USSED IN THE SUCCEEDING PARAGRAPHS OF THE ORDER OF THE TRIBUNAL. THE ORDER OF THE TRIBUNAL IS MODIFIED BY DELETING THE ABOVE SENTENCE IN PARA-8. 25. IN OTHER RESPECTS, THE M.A. IS WITHOUT ANY MER IT AND THE SAME IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MAY, 2011. SD/- SD/- (RAJENDRA SINGH ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 20 TH MAY .2011 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RC BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. MA NO.13/MUM2011 16 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 13/5/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 16/05/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER