BHAVYA CONSTRUCTION COMPANY., MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 21(1), MUMBAI

MA 165/MUM/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 5489 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: H N MOTIWALA; KEVIN SANGHAVI
• Keywords: Charitable institution
• Section: 143(3); 80IB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER M.A. NO.165 & 166/MUM/2017 (ARISING OUT OF ITA NOS.4389 & 4390/MUM/2014) ASSESSMENT YEARS: 2006-07 & 2007-08 M/S. BHAVYA CONSTRUCTION CO., 4, BHIDE BUNGALOW, 37-A, M.G. ROAD, VILE PARLE-EAST, MUMBAI 57. / VS. A CIT , CIRCLE - 21(1), 6 TH FLOOR, PRATYAKSHA KAR BHAVAN, BKC, BANDRA- EAST, MUMBAI 51. ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. AAAFB 1375 K #$ % / ASSESSEE BY SHRI H.N. MOTIWALA & SHRI KEVIN SANGHAVI ' / REVENUE BY SHRI RAJAT MITTAL - DR & '' ( % ) / DATE OF HEARING : 22/09/2017 ( % ) / DATE OF ORDER: 06/10/2017 M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE MISCELLANEOUS PETITIONS ARE BY THE ASSES SEE SEEKING RECALLING/REVIEW OF THE ORDER OF THE TRIBUN AL DATED 09/12/2016 ON THE PLEA THAT NOTIFICATION MENTIONED IN PARA 2.1 OF THE ORDER IS INCORRECT, WHICH DOES NOT MENTI ON ANY SPECIFIC DIFFERENCE BETWEEN THE DECISIONS LIKE RAME SH GUNSHI DEDHIA VS INCOME TAX OFFICER (2014) 148 ITD 356 (MUM. TRIB.) AND INCOME TAX OFFICER VS M/S ASHA KASHIPRASADA RINGSHIA PANDURANG SADAN (2013) 29 TAXMAN.COM 160 (MUM. TRIB.). IN THE PETITION, IT HA S ALSO BEEN MENTIONED THAT WHILE ARRIVING AT TO A PARTICUL AR CONCLUSION, THE TRIBUNAL HAD CITED 63 DECISIONS FOR WHICH OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ADVANCED ARGUMENTS/ SUBMIS SIONS, WHICH HAVE BEEN MENTIONED IN PARA 3A TO 3D OF THE MISCELLANEOUS APPLICATIONS. 2. ON THE OTHER HAND, THE LD. DR, INVITED OUR ATTENTION TO PARA 2.2 OF THE ORDER BY CONTENDING TH AT THERE IS NO MISTAKE IN THE ORDER AS AN ELABORATE DISCUSSION HAS BEEN M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 3 MADE, WHILE ARRIVING AT TO A PARTICULAR CONCLUSION. IT WAS ASSERTED THAT THERE IS NO MISTAKE IN THE ORDER WHIC H CAN BE RECTIFIED AND THE ASSESSEE IS MERELY TRYING TO GET THE ORDER REVIEWED, WHICH IS NOT PERMISSIBLE U/S 254(2) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER, IT IS OUR BOUNDED DUTY TO ANALYZE THE FACT S, WHICH HAVE BEEN CONSIDERED BY THE TRIBUNAL IN ORDER DATED 09/12/2016 THE RELEVANT PORTION OF THE SAME IS REPR ODUCED HEREUNDER:- 2. THE COMMON GROUND RAISED, BY THE ASSESSEE, IN THE PRESENT APPEALS IS WITH RESPECT TO CLAIM OF DEDUCTION UNDER 80IB(10) OF THE INCOME TAX ACT 1961 (HEREINAFTE R THE ACT), WHICH WAS REJECTED BY THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) ON THE GROUND THAT THE PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 01/04/2004, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT AS T HE AMENDMENT MADE BY THE FINANCE ACT, 2005. 2.1. DURING HEARING OF THESE APPEALS, THE LD. COUNSEL FOR THE ASSESSEE, SHRI VISHWAS V. MEHENDALE ADVANCED ARGUMENTS BY EXPLAINING THAT NOTIFICATION NO.67/2010 DATED 03/08/2010, ISSUED BY THE CBDT, CAN ONLY CLARIFY THE STATUTORY PROVISIONS AND CANNOT OVERRI DE THE SAME OR RESTRICT THE OPERATION OF THE MAIN ENACTMENT. IT WAS ALSO CONTENDED THAT THE TIME LIMIT OF APPROVAL ON/OR AFTER 01/04/2004 WILL NOT BE APPLICABLE IN THE CASE OF PROVISO TO SECTION 80IB(10) OF THE ACT. RELIANCE W AS PLACED UPON THE DECISION IN RAMESH GUNSHI DEDHIA VS . M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 4 INCOME TAX OFFICER (2014) 148 ITD 356 (MUM.-TRIB.) AND INCOME TAX OFFICER VS. M/S. ASHA KASHIPRASADA RINGS HIA PANDURANG SADAN (2013) 29 TAXMANN.COM 160 (MUM. TRIB.). ON THE OTHER HAND, SHRI O.P. MEENA, LD. DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDED THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS CONTAINED IN SECTION 80IB(10) OF THE ACT. IT WAS ALSO PLEADED THAT THE CASES RELIED UPON BY THE ASSESSEE ARE ON DIFFERENT FA CTS, THEREFORE, NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS I N BRIEF ARE THAT THE ASSESSEE A PARTNERSHIP FIRM, ORIGINA LLY DECLARED INCOME OF RS.28,69,487/- ON 31/10/2006. LATER ON, THE ASSESSEE REVISED HIS RETURN DECLARING NIL INCOME. THE ASSESSEE DURING THE PREVIOUS YEAR RELEV ANT TO ASSESSMENT YEAR 2007-08 CONSTRUCTED HOUSING PROJECT, WHICH WAS APPROVED BY SLUM REHABILITATION AUTHORITY ON WHICH, THE ASSESSEE CLAIMED THE AMOUNT OF RS. 28,69,487/- UNDER SECTION 80IB(10), BEING THE INCOME FROM APPROVED HOUSING PROJECT. THE LD. ASSESSING OF FICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN NOTIFIED BY CBDT. THE LD. ASSESSING OFFICER ASSESSED THE INCOME UNDER SECTION 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 28,69,487/-, REJECTING THE CLAIMED DEDUCTION, VIDE ASSESSMENT ORDER DATED 30/10/2008. 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE STAND TAKEN IN THE ASSESSMEN T ORDER WAS AFFIRMED. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THIS STAND OF THE ASSESSEE WAS TH AT THE CONDITIONS STIPULATED UNDER SECTION 80IB(10) HAS BEEN SATISFIED BY THE ASSESSEE, THEREFORE, ELIGIBLE FO R DEDUCTION. 2.4. AGGRIEVED BY THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL, WHEREIN THE ASSESSEE PRODUCED CBDT NOTIFICATION DATED 03/08/201 0, ACCORDINGLY THE TRIBUNAL VIDE ORDER DATED 14/10/2011 (ITA NO. 3090/MUM/2010), SET ASIDE THE ORDER OF THE LD . COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 5 CLAIM OF THE ASSESSEE, AFRESH MADE UNDER SECTION 80IB(10) OF THE ACT CONSIDERING THE AFOREMENTIONED CBDT NOTIFICATION. 2.5 PURSUANT TO THE DIRECTION OF THE TRIBUNAL, THE LD. ASSESSING OFFICER CONSIDERED NOTIFICATION NO. 67/ 2010, DATED 03/08/2010, NOTIFICATION NO. 02/2011 DATED 05/01/2011, SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE NOTIFICATION CANNOT GIVE BENEFIT TO THE PROJECTS APPROVED BEFORE 01/04/2004, THEREFORE, HE DENIED THE CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THIS STAND OF THE LD. ASSESSING OFFICER WAS AFFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.6 BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE PROVISION OF SECTION 80IB(10) OF THE ACT FOR READY REFERENCE AND ANALYSIS:- 80IB.DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERTAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS.- (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB-SECTIONS (3) TO(11), (11A) AND ( 11B) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOW ED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUC TION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO S UCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT S APPROVED BEFORE THE 31ST DAY OF MARCH, 2008 BY A LO CAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEA R FROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 6 OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED 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 , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2004 BUT NOT LATER THAN THE 31ST DAY OF MARC H, 2005, WITHIN FOUR YEARS FROM THE END OF THE FINANCI AL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY TH E LOCAL AUTHORITY; (III) IN A CASE WHERE A HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF A PRIL, 2005, WITHIN FIVE YEARS FROM THE END OF THE FINANCI AL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY TH E LOCAL AUTHORITY. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PR OJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE O N WHICH THE BUILDING PLAN 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 CERTIFICATE IN RESPECT OF SUCH HOUSING P ROJECT IS ISSUED BY THE LOCAL AUTHORITY; ( B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING 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; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNI T IS M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 7 SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITH IN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMER CIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED THREE PER CENT OF THE AGGREGATE BUILT-UP ARE A OF THE HOUSING PROJECT OR FIVE THOUSAND SQUARE FEET, WHICHEVER IS HIGHER; (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDI VIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSI NG PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL , NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS A LLOTTED TO ANY OF THE FOLLOWING PERSONS, NAMELY: (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILD REN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIV IDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HIN DU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KA RTA. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). 2.7 IT IS NOTICED THAT SECTION 80IB(10)(A)(I) OF THE AC T LAYS DOWN THAT WHERE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITIES BEFORE THE 1 ST DAY OF APRIL 2004 AND THE EXPLANATION HAS CLARIFIED THAT:- (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 PLAN M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 8 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 CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY. 2.8 WE FIND THAT THE SLUM REHABILITATION AUTHORITY, VIDE COMMUNICATION NO. SRA/CH.E/101/H.E/PLILOI, DATED 10/07/1998 (PAGE NO. 9 TO 14 OF THE PAPER BOOK) CONSIDERED THE PROPOSAL OF THE ASSESSEE AND PRINCIPALLY APPROVED THE SAME WIT H CERTAIN CONDITIONS AS ENUMERATED THEREIN. COMMENCEMENT CERTIFICATE FOR BUILDING NO. C-2 WAS ISSUED TO THE ASSESSEE ON 29/06/2002 (PAGE NO. 19 OF THE PAPER BOOK) SUBJECT TO CONDITION ENUMERATED IN COMMUNICATION DATED 10/07/1998 (SUPRA). FULL OCCUPATION CERTIFICATE FOR REHABILITATION OF BUILDING NO.A WAS ISSUED TO THE ASSESSEE ON 27/01/2001. FULL OCCUPANCY CERTIFICATE FOR BUILDING NO. C-1 WAS ISSUE D ON 02/06/2003 AND FOR BUILDING NO.B WAS ISSUED ON 27/04/2004. FULL OCCUPATION PERMISSION FOR SALE OF BUILDING NO.C-2 WAS ISSUED ON 17/01/2008 (NO.SRA/ENG/ 731/HE/PL/AP/OCC). 2.9 UNDER THE AFOREMENTIONED FACTS, NOW WE SHALL DEAL WITH THE LEGAL POSITION AND OBJECTIONS RAIS ED IN THE IMPUGNED ORDER. ONE OF THE OBJECTIONS RAISED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS THAT THE PLOT OF LAND ON WHICH REHABILITATION WAS DONE BY THE ASSESSEE IS LESS THAN ONE ACRE. THE STAND OF THE DEPARTMENT IS THAT MINIMUM ONE ACRE LAND IS REQUIRED FOR GETTING THE BENEFIT OF DEDUCTION. HOWEVER, WE NOTE THAT AS PER AMENDMENT BY THE FINANCE ACT (NO.2) 2004, W.E.F. 01/04/2005, A PROVISO WAS ADDED TO THE SAID SECTION, WHEREIN, THE CONDITION OF ONE ACRE WAS RELAXE D IN THE CASES OF METROS LIKE DELHI OR MUMBAI FOR PRACTICAL REASON. THE LEGISLATURE PUT THE CONDITION THAT SUCH RELAXATION WILL BE AVAILABLE TO THOSE PROJECTS M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 9 WHICH ARE APPROVED BY THE LOCAL AUTHORITIES UNDER THE SLUM REHABILITATION SCHEME AND NOTIFIED BY THE BOARD. THE PROJECT OF THE ASSESSEE IS WITH RESPECT TO SLUM DEVELOPMENT AND THE INTENTION OF THE LEGISLATURE IS TO EXTEND THE BENEFIT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE PROJECTS APPROVED BY THE SRA, OF COURSE, SUBJECT TO FULFILLMENT OF OTHER CONDITIONS. TH E PROJECT OF THE ASSESSEE WAS COMPLETED BEFORE 31/03/2008. THE BUDGET SPEECH OF THE HON'BLE FINANCE MINISTER ON THE FLOOR OF THE HOUSE WHILE INTRODUCING FINANCE BILL 2004 ON INTRODUCTION OF RELAXATION OF CONDITION OF MINIMUM ONE ACRE OF PLOT S IZE FOR SLUM REHABILITATION AND REDEVELOPMENT IS REPRODUCED BELOW : 110. A SMALL PROBLEM HAS PLAGUED THE RECONSTRUCTION AND DEVELOPMENT OF EXISTING BUILDINGS UNDER APPROVED PL ANS IN THE CITY OF MUMBAI. PERHAPS THE PROBLEM IS THERE IN SOME OTH ER CITIES TOO. I, THEREFORE, PROPOSE TO RELAX THE CONDITION OF MINIMU M PLOT SIZE OF ONE ACRE IN THE CASE OF HOUSING PROJECTS, AS LONG AS TH E PROJECTS ARE IMPLEMENTED IN ACCORDANCE WITH A SCHEME FOR RECONST RUCTION OR DEVELOPMENT APPROVED BY THE CENTRAL OR STATE GOVERN MENT. 2.10. NOTES ON CLAUSES ON THE FINANCE BILL 2004 ARE REPRODUCED HEREUNDER:- UNDER THE EXISTING PROVISIONS CONTAINED IN SUB-SECT ION (10), HUNDRED PER CENT, DEDUCTION OF THE PROFITS OF AN UN DERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS IS ALLOWED IF THE HOUSING PROJECT IS APPROVED BY A LOCAL AUTHORITY BEFORE THE 31ST MARCH, 2005 SUBJECT TO THE CONDITIONS SPECIFIED IN CLAUSES ( A ) TO ( C ) OF THE SAID SUB-SECTION. THE EXISTING PROVISIONS OF THE SAID SU B-SECTION PROVIDES THAT ( A ) THE UNDERTAKING SHOULD HAVE COMMENCED DEVELOPMENT OF THE HOUSING PROJECT AFTER THE 1ST DAY OF OCTOBER, 1998, ( B ) THE PROJECT SHOULD BE ON A SIZE OF A PLOT OF LAND WHICH HAS A M INIMUM AREA OF ONE ACRE, AND ( C ) THE RESIDENTIAL UNIT SHOULD HAVE A MAXIMUM BUILT- UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESI DENTIAL UNITS IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WI THIN TWENTY-FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. SUB-CLAUSE ( D ) SEEKS TO SUBSTITUTE SUB-SECTION (10) OF THE SAID SECTION SO AS TO PROVIDE, INTER ALIA , A HUNDRED PER CENT, DEDUCTION OF THE PROFITS DERIVED BY AN UNDERTAKING DEVELOPING AND BU ILDING HOUSING M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 10 PROJECTS APPROVED BY A LOCAL AUTHORITY BEFORE 31ST MARCH, 2007 INSTEAD OF 31ST MARCH, 2005 UNDER THE EXISTING PROV ISIONS, SUBJECT TO THE CONDITIONS THAT ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER 1ST OCTOBER, 1998 AND COMPLETES THE CONSTR UCTION WITHIN FOUR YEARS, FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; ( B ) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE E XCEPT IN THE CASE OF A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS, AND SUCH SC HEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; ( C ) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUC H RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE; AN D ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMEN TS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIVE PER CENT, OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAN D SQUARE FEET, WHICHEVER IS LESS. IT IS FURTHER PROPOSED TO INSERT AN EXPLANATION IN CLAUSE ( A ) OF THE PROPOSED SUB-SECTION (10) SO AS TO PROVIDE THAT THE DATE OF APPROVAL SHALL BE THE DATE ON WHICH THE BUILDING PLAN OF THE SAID PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY IN CASE WHERE THE A PPROVAL IN RESPECT OF THE SAME IS OBTAINED MORE THAN ONCE AND ALSO TO PROVIDE THAT THE DATE OF COMPLETION OF CONSTRUCTION SHALL BE THE DAT E ON WHICH THE COMPLETION CERTIFICATE IS ISSUED BY THE LOCAL AUTHO RITY. THE CONJOINT READING OF THE SECTION AND THE NOTES ON CLAUSES ALONG WITH SPEECH OF HON'BLE FINANCE MINISTER ON THE FLOOR OF THE HOUSE MAKES THE INTENTION OF THE LEGISLATURE CLEAR THAT RELAXATION GRANTED TO SLUM REHABILITATION AND REDEVELOPMENT PROJECTS IN CITY OF MUMBAI/DELHI FOR BEING DEVELOPED ON PLOT SIZE OF LES S THAN ONE ACRE SHALL ALSO APPLY TO THE EXISTING APPROVE D PROJECTS PROVIDED OTHER CONDITIONS AS MANDATED BY SECTION 80IB(10) OF THE ACT ARE FULFILLED. THUS, THE SA ID RELAXATION GRANTED TO SLUM REHABILITATION AND REDEVELOPMENT PROJECTS IN CITY OF MUMBAI/DELHI FOR BEING DEVELOPED ON PLOT SIZE OF LESS THAN ONE ACRE IS CURATIVE IN NATURE AND IS INTENDED TO REMOVE UNINTENDED M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 11 HARDSHIP CAUSED TO THE APPROVED PROJECTS IN THE CITY O F MUMBAI/DELHI WHERE THERE IS SHORTAGE OF LAND AND THE APPROVED PROJECT SIZES ARE LESS THAN ONE ACRE AND SUC H RELAXATION SHALL APPLY TO EXISTING APPROVED PROJECTS A LSO , PROVIDED OTHER CONDITIONS BEING FULFILLED TO REMOVE TH E UN-INTENDED HARDSHIP FACED BY THESE PROJECTS IN CITY O F MUMBAI/DELHI. 2.11 FROM THE PLAIN READING OF SECTION 80IB(10) OF THE ACT IT WOULD BE SEEN THAT THE CONDITION PRECEDENT FOR AVAILING THE DEDUCTION UNDER SECTION 80IB(10), H AS BEEN GIVEN IN CLAUSES (A) AND (B). ON THESE CONDITIO NS, RIDER HAS BEEN PUT BY THE PROVISO WHICH STARTS WITH A KIND OF NON-OBSTANTE CLAUSE THAT 'NOTHING CONTAINED IN CLAUSES (A) AND (B) SHALL APPLY' TO A HOUSING PROJECT WHICH HAS BEEN CARRIED OUT IN ACCORDANCE WITH THE SCHEME FRAMED BY THE CENTRAL GOVT. OR STATE GOVT. FOR RE-CONSTRUCTION OR RE-DEVELOPMENT IN AREAS TO BE SLUM UNDER ANY LAW AND IT FURTHER PROVIDES THAT SUC H A SCHEME SHOULD BE NOTIFIED BY THE BOARD IN THIS BEHALF . THUS, AN EXCEPTION HAS BEEN CARVED OUT BY THE PROVISO IN CASES OF HOUSING PROJECT DEVELOPMENT IN SL UM AREA UNDER A GOVT. SCHEME AND OVERRIDES THE CONDITIO N MENTIONED IN CLAUSES (A) AND (B). THE SCHEME OF SRA CONTAINED IN REGULATION 33(10) OF DEVELOPMENT CONTROL REGULATION FOR GREATER MUMBAI HAS BEEN NOTIFIED BY CBDT NOTIFICATION NO.67, DATED 3RD AUGUST 2010. THIS NOTIFICATION WAS FURTHER CLARIFIED BY THE CBDT IN NOTIFICATION NO.2 OF 2011 DATED 5TH JANUARY 2011, WHEREIN IT WAS PROVIDED THAT:- 'IN THE NOTIFICATION OF THE GOVT OF INDIA IN THE MI NISTRY OF FINANCE, DEPARTMENT OF REVENUE, (CENTRAL BOARD OF D IRECT TAXES) NUMBER S.O. 1898(E), DATED THE 3RD AUGUST, 2 010 (2010) 233 CTR (ST.) 56 2010) 43 DTR (ST.) 8] PUBLI SHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECT ION 3, SUBSECTION (II), DATED THE 3RD AUGUST, 2010, IN PA RAGRAPH 2 FOR 'THIS NOTIFICATION SHALL COME INTO FORCE WITH EFFECT FROM THE DATE OF ITS PUBLICATION', READ 'THI S NOTIFICATION SHALL BE DEEMED TO APPLY TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 12 DEDUCTION UNDER SUB SECTION (10) OF SECTION 80IB FR OM THE ASSESSMENT YEAR 200506 ONWARDS.' 2.12 THUS, THE RIGOURS OF SECTION 80IB(10) WERE RELAXED BY THE INTRODUCTION OF PROVISO BY FINANCE ACT , 2004 WHEREIN CONDITIONS AS STIPULATED IN CLAUSE (A) AND (B) SHALL NOT BE APPLICABLE PROVIDED THE SLUM REHABILITATION PROJECT IS APPROVED BY CENTRAL OR STATE GOVERNMENT AND THE SAME IS NOTIFIED BY THE BOARD. THE NOTIFICATION ISSUED BY THE BOARD DATED 5 TH JANUARY 2011 CLEARLY STIPULATES THAT THE BENEFIT OF SECTION 80IB(10) SHALL BE AVAILABLE TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1 ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 20 08, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION UNDER SUB SECTION (10) OF SEC TION 80IB FROM THE ASSESSMENT YEAR 200506 ONWARDS. THERE IS NO EQUITY IN TAX LEGISLATION AND THE EXEMPTION PROVISIONS ARE TO BE STRICTLY CONSTRUED AT THE FIRST STAGE TO ESTABLISH THE ELIGIBILITY OF THE TAX-PAYER FOR THE BE NEFIT OF EXEMPTION AND ONCE THE TAX-PAYER ESTABLISHES ITS ENTITLEMENT TO THE EXEMPTION, THEN EXEMPTION PROVISIONS ARE TO BE LIBERALLY CONSTRUED TO GIVE THE FULL INTENDED BENEFIT TO THE TAX-PAYER SO THAT THE INTENDED PURPOSES O F BENEFICIAL PROVISIONS CAN BE FULLY ACHIEVED. THE CO URTS SHALL NOT ADOPT TO THE PRINCIPLES OF CONTEMPORANCE EXPOSITIO WHEN THE PLAIN LANGUAGE OF THE STATUTE IS CLEA R AND UNAMBIGUOUS. 2.13 THE PRINCIPLE OF STRICT INTERPRETATION OF TAXING STATUTES WAS BEST ENUNCIATED BY ROWLATT J. IN HIS CLASSIC STATEMENT IN CAPE BRANDY SYNDICATE V I.R.C. (1 KB 64, 71): 'IN A TAXING STATUTE ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTIO N AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO B E IMPLIED. ONE CAN LOOK FAIRLY AT THE LANGUAGE USED.' I F THE REVENUE SATISFIED THE COURT THAT THE CASE FALLS STRICTLY WITHIN THE PROVISIONS OF THE LAW, THE SUBJECT CAN BE TAXED. M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 13 A TAXING STATUTE IS TO BE STRICTLY CONSTRUED. THE WELL- ESTABLISHED RULE IN THE FAMILIAR WORDS OF LORD WENSLEYDALE, REAFFIRMED BY LORD HALSBURY AND LORD SIMONDS, MEANS: 'THE SUBJECT IS NOT TO BE TAXED WITHOUT CLEAR WORDS FOR THAT PURPOSE; AND ALSO THAT EVERY ACT OF PARLIAMENT MUST BE READ ACCORDING TO THE NATURAL CONSTRUCTION OF ITS WORDS'. (REF : RE, MICKLETHWAIT, (1885) 11 EX 452, P. 456; REFERRED TO IN TENANT V. SMITH, (1892) AC 150, P. 154 (HL) (LORD HALSBURY); ST. AUBYN V. A.G., (1951) 2 ALL ER 473, P. 485: 1952 AC 15 (HL) (LORD SIMONDS); MEMBER SECRETARY, ANDHRA PRADESH STATE BOARD FOR PREVENTIO N AND CONTROL OF WATER POLLUTION V. ANDHRA PRADESH RA YONS LTD., AIR 1989 SE 611, P. 614 : (1989) 1 SCC 44; SARASWATI SUGAR MILLS V. HARYANA STATE BOARD, AIR 1 992 SE 224, P. 228 : 1992 (1) SEE 418.) . IN A CLASSIC PASSAGE LORD CAIRNS STATED THE PRINCIPLE THUS: 'IF THE PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER OF THE LAW HE MUST BE TAXED, HOWEVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND, IF THE CROWN SEEKING TO RECOVER THE TAX, CANNOT BRING THE SUBJECT WITHIN THE LETTER OF THE LAW, THE SUBJECT IS FREE, HOWEVER APPARENTLY WITHIN THE SPIRIT OF LAW THE CASE MIGHT OTHERWISE APPEAR TO BE. IN OTHER WORDS, IF THERE B E ADMISSIBLE IN ANY STATUTE, WHAT IS CALLED AN EQUITABLE, CONSTRUCTION, CERTAINLY, SUCH A CONSTRUCTION IS NOT ADMISSIBLE IN A TAXING STATUTE WHERE YOU CAN SIMPLY ADHERE TO THE WORDS OF THE STATUTE. (REF: PARTINGTON V. A.G., (1869) LR 4 HL 1OO, P. 122: 21 LT 370, REFERR ED TO IN IRC V. DUKE OF WESTMINSTER, (1936) AC 1, P. 24 (HL ); BANK OF CHETTINAD V. CIT, AIR 1940 PC 183, P. 185; POTTS' EXECUTORS V. IRC, (1951) 1 ALL ER 76, P. 81 (H L); A.V. FERNANDEZ: V. STATE OF KERALA, AIR 1957 SC 657, P. 661 : 1957 SCR 837; CIT V. M & G STORES, AIR 1968 SC 200, P. 205 : 1967 (3) SCR 876; J.K. STEEL LTD. V. UN ION OF INDIA, AIR 1970 SC 1173, P. 1182: 1969 (2) SCR 4 81; RANSOM (INSPECTOR OF TAXES) V. HIGGS, (1974) 3 ALL E R 949, P. 970 (HL). SEE FURTHER HANSRAJ & SONS V. STATE OF JAMMU & KASHMIR, AIR 2002 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; M/S. GEO MILLER AND CO. PVT. LTD. V . STATE OF M.P., AIR 2004 SC 3552, P. 3556 : (2004) 5 S CC M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 14 209; GOVERNMENT OF ANDHRA PRADESH V. LAXMI DEVI, (2008) 4 SCC 720 PARAS 19,20,21 : (2008) 2 JT 639). VISCOUNT SIMON QUOTED WITH APPROVAL A PASSAGE FROM ROWLATT, J. EXPRESSING THE PRINCIPLE IN THE FOLLOWING WORDS: 'IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. TH ERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLI ED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED. (REF : CAPE BRANDY SYNDICATE V. IRC, (1921) 1 KB 64, P. 71 (ROWLATT, J.); REFERRED TO IN CANADIAN EAGLE OIL CO. LTD. V. R., (1945) 2 ALL ER 499, P. 507 (HL); GURSAH AI V. CIT, AIR 1963 SC 1062, P. 1064 : 1963 (3) SCR 893; BANARSI DEBI V. INCOME TAX OFFICER, AIR 1964 SC 174 2, P. 1744; COMMISSIONER OF CENTRAL EXCISE PONDICHERRY V. ACER INDIA LTD., (2004) 8 SCC 173, P. 183 : (2004) 8 JT 53. SEE FURTHER CIT V. FIRM MUAR, AIR 1965 SC 1216, P. 1221 : 1965 (1) SCR 815; CIT, PATIALA V. SHAHZADANAN D & SONS, AIR 1966 SC 1342, P. 1347 : (1966) 3 SCR; JANAPADA SABHA, CHHINDWARA V. CENTRAL PROVINCES SYNDICATE, AIR 1971 SC 57, P. 60 : (1971) 1 SCC 509; OWEN THOMAS MANGIN V.IRC, (1971) 2 WLR 39, P. 42 (PC); CONTROLLER OF ESTATE DUTY V. KANTILAL TRIKAMLAL, AIR 1976 SC 1935, P. 1943 : (1976) 4 SCC 643; TARULATA SYAM V. COMMISSIONER OF INCOME-TAX, WEST BENGAL, AIR 1977 SC 1802 : (1977) 3 SCC 305; MEMBER SECRETARY, ANDHRA PRADESH STATE BOARD FOR PREVENTION AND CONTROL OF WATER POLLUTION V. ANDHRA PRADESH RAYONS LTD., AIR 1989 SC 611, P. 614 : (1989) 1 SCC 44; APHALI PHARMACEUTICALS LTD. V. STATE OF MAHARASHTRA, AIR 1989 SC 2227, P. 2239 : (1889) 4 SCC 378; GOODYEAR INDIA LTD. V. STATE OF HARYANA, AIR 1990 SC 781, P. 793 : 1990 (2) SCC 71; SUTLEJ COTTON MILLS LTD. V. COMMISSIONER OF INCOME- TAX, WEST BENGAL, AIR 1991 SC 218, P. 220 : (1992) SUPP (1) SCC 50; SARASWATI SUGAR MILLS V, HARYANA STATE BOARD, AIR 1992 SC 224, P. 228 : 1992 (1) SCC 418; OSWAL AGRO MILLS LTD V. COLLECTOR OF CENTRAL EXCISE, AIR 1993 SC 2288, P. 229 1 : 1993 SUPP. 3 SCC 716; CALCUTTA JUTE MANUFACTURING CO. V, COMMERCIAL TAX OFFICER, AIR 1997 SC 2920, P. 2923 : (1997) 6 SCC 262; ORISSA STATE WAREHOUSING M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 15 CORPORATION V, CIT: JT 1999 (2) SC 527, P. 539 : AIR 1999 SC 1388, P. 1397 : (1999) 4 SCC 197; THE FEDERATION OF ANDHRA PRADESH CHAMBER OF COMMERCE AND INDUSTRY V, STATE OF ANDHRA PRADESH, AIR 2000 SC 2905, P. 2906 : (2000) 6 SCC 550; COMMISSIONER OF CENTRAL EXCISE V. KISAN SAHKARI CHINNI MILLS LID., A IR 2001 SC 3379, P. 3380 : (2001) 6 SCC 697; UNION OF INDIA V, AZADI BACHAO ANDOLAN, AIR 2004 SC 1107, P. 1137 : 2003 SUPP (2) JT 205. RELYING UPON THIS PASSAGE LORD UPJOHN SAID: FISCAL MEASURES ARE NOT BUILT UPON ANY THEORY OF TAXATION. (REF: COMMR. OF CUSTOMS V. TOP TEN PROMOTIONS, (1969) 3 ALL ER 39, P. 90 (HL).) THE ABOVE PASSAGE STATING THE PRINCIPLE OF STRICT CONSTRUCTION OF TAXING STATUTES WAS QUOTED WITH APPROVAL IN COMMISSIONER OF INCOME-TAX, MADRAS V. KASTURI & SONS, JT 1999(2)SC 272 WHERE THE WORD 'MONEYS' IN THE EXPRESSION 'MONEYS PAYABLE' IN SECTIO N 41(2) OF THE INCOME-TAX ACT, 1961 WAS NOT CONSTRUED TO INCLUDE 'MONEY'S WORTH'. IN FISCAL LEGISLATION A TRANSACTION CANNOT BE TAXED ON ANY DOCTRINE OF 'THE SUBSTANCE OF THE MATTER' AS DISTINGUISHED FROM ITS LEGAL SIGNIFICATION, FOR A SU BJECT IS NOT LIABLE TO TAX ON SUPPOSED 'SPIRIT OF THE LAW' OR 'BY INFERENCE OR BY ANALOGY'. (REF: IRC V. DUKE OF WESTMINSTER, (1936) AC 1, PP. 19,24 (HL); BANK OF CHITTINAD V. CIT, AIR 1940 PC 183, P. 185 : (1940) 8 ITR 522; POTTS' EXECUTORS V. IRC, (1951) 1 ALL ER 76, P. 81 (HL); A. V. FERNANDEZ V. STATE OF KERALA, AIR 1957 S C 657, P. 661 : 1957 SCR 837; CIT V. KESHAVLAL, AIR 1 965 SC 866, P. 868 (PARA 12) : (1965) 2 SCR 100; CIT V, M & G STORES, AIR 1968 SC 200, P. 205; JOINT COMMERCIAL TAX OFFICER V. YMA, MADRAS, AIR 1970 SC 1212, P. 12 17 : (1970) 1 SCC 462; EUROPA OIL (NZ) LTD. V, INLAND REVENUE COMMISSIONER, (1976) 1 ALL ER 503, P. 508 ( PC) (LEGAL RIGHTS ARISING FROM A TRANSACTION AND NOT ITS ECONOMIC RESULTS ARE MATERIAL); GUJARAT STATE FINANCIAL CORPORATION V, NATSON MANUFACTURING CO. LTD., AIR 197 8 SC 1765, P. 1769 : (1979) 1 SCC 193; MEMBER SECRETARY, ANDHRA PRADESH STATE BOARD FOR PREVENTION AND CONTROL OF WATER POLLUTION V, ANDHRA PRADESH M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 16 RAYONS LTD., AIR 1989 SC 611, P. 614 : (1989) 1 SCC 44; MATHURAM AGRAWAL V. STATE OF MADHYA PRADESH, JT 1999 (8) SC 505, PP. 511, 512 : AIR 2000 SC 109, P. 113 : (1999) 8 SCC 667. SEE FURTHER HANSRAJ & SONS V . STATE OF JAMMU & KASHMIR, AIR 2002 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY V. ACER INDIA LTD., (2004 ) 8 SCC 173, P. 184: (2004) 8 JT 53.) IN REFUTING THE DOCTRINE OF 'THE SUBSTANCE OF THE MATTER' LORD TOMLIN OBSERVED: 'IT IS SAID THAT IN REVENUE CASES THERE IS A DOCTRINE THAT THE COURT MAY IGNORE THE LEGAL POSITI ON AND REGARD WHAT IS CALLED 'THE SUBSTANCE OF THE MATTER'. THIS SUPPOSED DOCTRINE SEEMS TO REST FOR I TS SUPPORT UPON A MISUNDERSTANDING OF LANGUAGE USED INCOME IN SOME EARLIER CASES. THE SOONER THIS MISUNDERSTANDING IS DISPELLED, AND THE SUPPOSED DOCTRINE GIVEN ITS QUIETUS, THE BETTER IT WILL BE F OR ALL CONCERNED, FOR THE DOCTRINE SEEMS TO INVOLVE SUBSTITUTING 'THE UNCERTAIN AND CROOKED CORD OF DISCRETION' FOR 'THE GOLDEN AND STRAIGHT METWAND OF THE LAW'. (REF: IRC V. DUKE OF WESTMINSTER, SUPRA , REFERRED TO IN POTT'S EXECUTORS V. IRC, SUPRA, P. 8 0 (LORD NORMAND); CIT, GUJARAT V. B.M. KHARWAR, AIR 1969 SC 812 : (1969) 1 SCR 651; J.K. STEEL LTD. V. UNION OF INDIA, SUPRA, P. 1192; CIT, CALCUT TA V. G. ARBUTHNOT & CO., AIR 1973 SC 989, P. 995 : (1973) 5 SCC TAX 359 : (1973) 3 SCC 845; COMMRS. OF CUSTOMS V. TOP TEN PROMOTIONS, (1969) 3 ALL ER 39, P. 90 (HL); RANSOM (INSPECTOR OF TAXES ) V. HIGGS, (1974) 3 ALL ER 949, P. 970 (HL). SEE FURTHER HANSRAJ AND SONS V. STATE OF JAMMU & KASHMIR, AIR 2002 SC 2692, PP. 2698, 2699 : (2002) 6 SCC 227; COMMISSIONER OF CENTRAL EXCISE PONDICHERRY V. ACER INDIA LTD., (2004) 8 SCC 173, P. 184 : (2004) 8 JT 53). IN THE SAME CASE LORD WRLGHT POINTED OUT THAT 'THE TRUE NATURE OF THE LEGAL OBLIGATION 'ARISING OUT OF A M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 17 GENUINE TRANSACTION' AND NOTHING ELSE IS THE SUBSTANCE'. (REF: IRC V. DUKE OF WESTMINSTER, SUPRA) . THE ABOVE PRINCIPLE WHICH IS KNOWN AS DUKE OF WESTMINSTER PRINCIPLE IS SUBJECT TO THE NEW APPROACH OF THE COURTS TOWARDS TAX EVASION SCHEMES CONSISTING OF A SERIES OF TRANSACTIONS OR A COMPOSITE TRANSACTION.' IN INTERPRETING A SECTION IN A TAXING STATUTE, ACCORDING TO LORD SIMONDS, 'THE QUESTION IS NOT AT WHAT TRANSACTION THE SECTION IS ACCORDING TO SOME ALLEGED GENERAL PURP OSE AIMED, BUT WHAT TRANSACTION ITS LANGUAGE ACCORDING TO ITS NATURAL MEANING FAIRLY AND SQUARELY HITS. (REF: ST. AUBYN (LM) V. A.G., (1951) 2 ALL ER 473, P. 485: 1952 AC: 15 (HL). SEE FURTHER COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY V. ACER INDIA LTD., SUPRA, PP. 183, 184).LORD SIMONDS CALL THIS 'THE ONE AND ONLY PROPER TEST. IT IS, THEREFORE, NOT THE FUNCTION OF A COURT OF L AW TO GIVE TO WORDS A STRAINED AND UNNATURAL MEANING TO COVER LOOPHOLES THROUGH WHICH THE EVASIVE TAX-PAYER MAY FIN D ESCAPE OR TO TAX TRANSACTIONS WHICH, HAD THE LEGISLATUR E THOUGHT OF THEM, WOULD HAVE BEEN COVERED BY APPROPRIAT E WORDS. (REF: IRC V. WOLF SON, (1949) 1 ALL ER 865, P. 868 (HL); SEE FURTHER W.M. CORY & SONS LTD. V. IRC, (1965 ) I ALL ER 917, P. 921 : 1964 AC 1088 : 1065 (2) WLR 92 4 (HL), WHERE LORD REID SAID: 'THE WORDS OF A TAXING ACT MUST NEVER BE STRETCHED AGAINST A TAX-PAYER. THERE IS A VERY GOOD REASON FO R THAT RULE. SO LONG AS ONE ADHERES TO THE NATURAL MEANING FOR THE CHARGING WORDS THE LAW IS CERTAIN, OR AT LEAST AS CERTAIN AS IT IS POSSIBLE TO MAKE IT , BUT IF COURTS ARE TO GIVE TO CHARGING WORDS WHAT IS SOMETIMES CALLED A LIBERAL CONSTRUCTION WHO CAN SAY JUST HOW FAR THIS WILL GO. IT IS MUCH BETTER THAT EVASION SHOULD BE MET BY AMENDING LEGISLATION.) AS STATED BY LORD SIMON: 'IT MAY SEEM HARD THAT A CUNNINGLY ADVISED TAX-PAYE R SHOULD BE ABLE TO AVOID WHAT APPEARS TO BE HIS EQUITABLE SHARE OF THE GENERAL FISCAL BURDEN AND CA ST IT ON THE SHOULDERS OF HIS FELLOW CITIZENS. BUT FOR TH E M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 18 COURTS TO TRY TO STRETCH THE LAW TO MEET HARD CASES (WHETHER THE HARDSHIP APPEARS TO BEAR ON THE INDIVIDUAL TAX-PAYER OR ON THE GENERAL BODY OF TAX- PAYERS AS REPRESENTED BY THE INLAND REVENUE) IS NOT MERELY TO MAKE BAD LAW BUT TO RUN THE RISK OF SUBVERTING THE RULE OF LAW ITSELF.' THE SAME RULE APPLIES EVEN IF THE OBJECT OF THE ENACTMENT IS TO FRUSTRATE LEGITIMATE TAX AVOIDANCE DEVICES FOR MORAL PRECEPTS ARE NOT APPLICABLE TO THE INTERPRETATION OF REVENUE STA TUTES.' (REF: RANSOM (INSPECTOR OF TAXES) V. HIGGS, (1974) 3 ALL ER 949, P. 969 (HL) . OWEN THOMAS MANGIN V. IRC, (1971) 2 WLR 39, P. 42 (PC).) IT MAY THUS BE TAKEN AS MAXIM OF TAX LAW, WHICH ALTHOUGH NOT TO BE OVERSTRESSED OUGHT NOT TO BE FORGOTTEN THAT, 'THE SUBJECT IS NOT TO BE TAXED UNLESS THE WORDS OF THE TAXING STATUTE UNAMBIGUOUSLY IMPOSE THE TAX ON HIM. (REF: RUSSEL V. SCOTT, (1948) 2 ALL ER 1, P. 5 (HL), (LORD SIMONDS); MATHURAM AGRAWAL V. STATE OF MADHYA PRADESH, JT 1999 (8) SC 505, P. 512: AIR 2000 SC 10 9, PP. 113, 114: (1999) 8 SCC 667 .) THE PROPER COURSE IN CONSTRUING REVENUE ACTS IS TO GIVE A FAIR AND REASONAB LE CONSTRUCTION TO THEIR LANGUAGE WITHOUT LEANING TO ONE SI DE OR THE OTHER BUT KEEPING IN MIND THAT NO TAX CAN BE IMPOSED WITHOUT WORDS CLEARLY SHOWING AN INTENTION TO LAY THE BURDEN AND THAT EQUITABLE CONSTRUCTION OF THE WORDS IS NOT PERMISSIBLE. (REF: ORMOND INVESTMENT CO. V. BETTS, (1928) AC 143 : (1928) ALL ER REP 709, P. 719 (HL) (LORD ATKINSON).) CONSIDERATIONS OF HARDSHIP, INJUSTICE OR ANOMALIES D O NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATUTES UNLESS THERE BE SOME REAL AMBIGUITY . (REF: MAPP V. ORAM, (1969) 3 ALL ER 215, PP. 222, 223 (HL); STATE BANK OF TRAVANCORE V. COMMISSIONER OF INCOME-TAX, (1986) 2 SCC 11, P. 68: AIR 1986 SC 757.) IT HAS ALSO BEEN SAID THAT IF TAXING PROVISION IS 'SO WANTING IN CLARITY THAT NO MEANING IS REASONABLY CLEAR , THE COURTS WILL BE UNABLE TO REGARD IT AS OF ANY EFFECT. .(REF: IRC V. ROSS AND COULTER, (1948) 1 ALL ER 616 , P. M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 19 625 (HL); REFERRED TO IN GURSAHAI V. CIT, AIR 1963 S C 1062, P. 1064 : (1963) 3 SCR 893.) THE SUPREME COURT HAS ENUNCIATED IN SIMILAR WORDS THE PRINCIPLE OF INTERPRETATION OF TAXING LAWS. BHAGWATI, J. STATED THE PRINCIPLE AS FOLLOWS: 'IN CONSTRUING FISCAL STATUTES AND IN DETERMINING T HE LIABILITY OF A SUBJECT TO TAX ONE MUST HAVE REGARD TO THE STRICT LETTER OF THE LAW. IF THE REVENUE SATISFIES THE COURT THAT THE CASE FALLS STRICTLY WITHIN THE PROVISIONS OF THE LAW, THE SUBJECT CAN BE TAXED. IF, ON THE OTHER HAN D, THE CASE IS NOT COVERED WITHIN THE FOUR CORNERS OF THE PROVISIONS OF THE TAXING STATUTE, NO TAX CAN BE IMP OSED BY INFERENCE OR BY ANALOGY OR BY TRYING TO PROBE IN TO THE INTENTIONS OF THE LEGISLATURE AND BY CONSIDERING WH AT WAS THE SUBSTANCE OF THE MATTER. SHAH, J., HAS FORMULATED THE PRINCIPLE THUS: 'IN INTERPRETING A TAXING STATUTE, EQUITABLE CONSIDERATIONS ARE ENTIRELY OUT OF PLACE. NOR CAN TAXING STATUTES BE INTERPRETED ON ANY PRESUMPTIONS OR ASSUMPTIONS. THE COURT MUST LOOK SQUARELY AT THE WORDS OF THE STATUTE AND INTERPRET THEM. IT MUST INTERPRET A TAXING STATUTE IN THE LIGHT OF WHAT IS CLEARLY EXPRESSED; IT CANNOT IMPLY ANYTHING WHICH I S NOT EXPRESSED; IT CANNOT IMPORT PROVISIONS IN THE STATUTE SO AS TO SUPPLY ANY ASSUMED DEFICIENCY. THE HON'BLE SUPREME COURT DECISION IN THE CASE OF JOSHI TECHNOLGIES INC. V. UOI REPORTED IN (2015) 374 ITR 322(SC) HAS FOLLOWED PRINCIPLES OF STRICT INTERPRETATION OF TAXING STATUTE BY OBSERVING AS UNDER: 70 . KEEPING IN MIND THE AFORESAID PRINCIPLES AND AFTER CONSIDERING THE ARGUMENTS OF RESPECTIVE PARTI ES, WE ARE OF THE VIEW THAT ON THE FACTS OF THE PRESENT CASE, IT IS NOT A FIT CASE WHERE THE HIGH COURT SHO ULD HAVE EXERCISED DISCRETIONARY JURISDICTION UNDER ART ICLE 226 OF THE CONSTITUTION. FIRST, THE MATTER IS IN TH E REALM OF PURE CONTRACT. IT IS NOT A CASE WHERE ANY STATUTORY CONTRACT IS AWARDED. M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 20 71 . AS POINTED OUT EARLIER AS WELL, THE CONTRACT IN QUESTION WAS SIGNED AFTER THE APPROVAL OF CABINET WAS OBTAINED. IN THE SAID CONTRACT, THERE WAS NO CLAUSE PERTAINING TO SECTION 42 OF THE ACT. THE APPELLANT IS PRESUMED TO HAVE KNOWLEDGE OF THE LEGA L PROVISION, NAMELY, IN THE ABSENCE OF SUCH A CLAUSE, SPECIAL ALLOWANCES UNDER SECTION 42 WOULD BE IMPERMISSIBLE. STILL IT SIGNED THE CONTRACT WITHOUT SUCH A CLAUSE, WITH OPEN EYES. NO DOUBT, THE APPELLANT CLAIMED THESE DEDUCTIONS IN ITS INCOME TAX RETURNS AND IT WAS EVEN ALLOWED THESE DEDUCTIONS BY THE INCOME TAX AUTHORITIES. FURTHER, NO DOUBT, ON THIS PREMISE, IT SHARED THE PROFITS WITH THE GOVERNMENT AS WELL. HOWEVER, THIS CONDUCT OF THE APPELLANT OR EVE N THE RESPONDENTS, WAS OUTSIDE THE SCOPE OF THE CONTR ACT AND THAT BY ITSELF MAY NOT GIVE ANY RIGHT TO THE APPELLANT TO CLAIM A RELIEF IN THE NATURE OF MANDAM US TO DIRECT THE GOVERNMENT TO INCORPORATE SUCH A CLAU SE IN THE CONTRACT, IN THE FACE OF THE SPECIFIC PROVIS IONS IN THE CONTRACT TO THE CONTRARY AS NOTED ABOVE, PARTICULARLY, ARTICLE 32 THEREOF. IT WAS PURELY A CONTRACTUAL MATTER WITH NO ELEMENT OF PUBLIC LAW INVOLVED THEREUNDER. 72 . HAVING CONSIDERED THE MATTER IN THE AFORESAID PROSPECTIVE, WE COME TO THE IRRESISTIBLE CONCLUSION THAT THE APPELLANT IS NOT ENTITLED TO THE RELIEF CLAIMED . THOUGH IT MAY BE SOMEWHAT HARSH ON THE APPELLANT WHEN IT AVAILED THE BENEFIT OF SECTION 42 FOR FEW Y EARS AND ACTED ON THE UNDERSTANDING THAT SUCH A BENEFIT WOULD BE GIVEN TO IT, BUT WE HAVE NO OPTION BUT TO HOLD THAT PSCS DID NOT PROVIDE FOR THIS BENEFIT TO BE GI VEN TO THE APPELLANT AND THE CONTRACT CAN BE AMENDED ONLY IF BOTH THE PARTIES AGREE TO DO SO, AND NOT OTHERWISE. THEREFORE, WE ARE CONSTRAINED TO DISMISS THE APPEAL FOR THE REASONS GIVEN ABOVE. 2.14. THUS AS DISCUSSED IN DETAILS IN PRECEDING PARAS OF THIS ORDER , THE RIGOURS OF SECTIO N 80IB(10) WERE RELAXED BY THE INTRODUCTION OF PROVISO BY FINANCE ACT , 2004 WHEREIN CONDITIONS AS M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 21 STIPULATED IN CLAUSE (A) AND (B) SHALL NOT BE APPLICABLE PROVIDED THE SLUM REHABILITATION PROJECT IS APPROVED BY CENTRAL OR STATE GOVERNMENT AND THE SAME IS NOTIFIED BY THE BOARD. THE NOTIFICATION ISSUED BY THE BOARD DATED 5 TH JANUARY 2011 CLEARLY STIPULATES THAT THE BENEFIT OF SECTION 80IB(10) SHALL BE AVAILABLE TO PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, THEREBY MAKING THE INCOMES ARISING FROM SUCH PROJECTS ELIGIBLE FOR DEDUCTION UNDER SUB SECTION (10) OF SECTION 80IB FROM THE ASSESSMENT YEAR 200506 ONWARDS. THERE IS NO EQUITY IN TAX LEGISLATION AND THE EXEMPTION PROVISIONS ARE TO BE STRICTLY CONSTRUED WHEREIN THE ASSESSEE HAS TO ESTABLISH AT THE FIRST STAGE THE ELIGIBILITY FOR THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE ACT IN ACCORDANCE WITH THE PROVISION OF THE STATUTE AND ONCE THE ASSESSEE ESTABLISHES ITS ENTITLEMENT TO THE SAID DEDUCTION, THEN DEDUCTION PROVISIONS ARE TO BE LIBERALLY CONSTRUED TO GIVE THE FULL INTENDED BENEFIT OF SECTION 80IB(10) OF THE ACT TO THE ASSESSEE SO THAT THE INTENDED PURPOSES OF BENEFICIAL PROVISIONS CAN BE FULLY ACHIEVED. THE COURTS SHALL NOT ADOPT TO THE PRINCIPLES OF CONTEMPORANCE EXPOSITIO WHEN THE PLAIN LANGUAGE OF THE STATUTE IS CLEAR AND UNAMBIGUOUS. CONSIDERING THE FACTUAL MATRIX AND THE JUDICIAL PRECEDENT DISCUSSED HEREINABOVE , WE ARE OF THE VIEW THAT THE PROVISO INTRODUCED BY FINANCE ACT , 2004 CLEARLY GRANT RELIEF TO SLUM REDEVELOPMENT OR RECONSTRUCTION PROJECTS WHICH ARE APPROVED BY CENTRAL GOVERNMENT OR STATE GOVERNMENT AND THE SCHEME IS NOTIFIED BY THE BOARD. THE BOARD NOTIFICATION CLEARLY STIPULATE THAT BENEFIT SHALL BE GRANTED TO THE PROJECTS APPROVED BY A LOCAL AUTHORITY UNDER THE AFORESAID SCHEME ON OR AFTER THE 1ST DAY OF APRIL, 2004, AND BEFORE 31ST DAY OF MARCH, 2008, WHILE IN THE CASE OF THE ASSESSEE THE PROJECTS ARE APPROVED PRIOR TO 1 ST DAY OF APRIL 2004 AS SET OUT ABOVE IN PRECEDING PARAS, AND THE ASSESSEE IS NOT ABLE TO ESTABLISH ITS ENTITLEMENT TO DEDUCTION U/S 80IB(10) OF THE ACT AT M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 22 THE FIRST STAGE ITSELF FOR REASON CITED ABOVE. THUS, TH E CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AND HENCE ARE REJECTED. WE ORDER ACCORDINGLY. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 2.2. WE FIND THAT THE ISSUE BEFORE THE TRIBUNAL, W HILE HEARING THE MAIN APPEAL, WAS WITH RESPECT TO DEDUCT ION U/S 80IB(10) OF THE ACT, WHICH WAS REJECTED BY THE LD. FIRST APPELLATE AUTHORITY. THE TRIBUNAL DULY CONSIDERED T HE NOTIFICATION NO.67/2010 DATED 03/08/2010, ISSUED BY CBDT AND THE DECISION RELIED UPON BY THE ASSESSEE WERE D ULLY CONSIDERED ALONG WITH THE SUBMISSIONS OF LD. CIT-DR OF NON- FULFILLMENT OF CONDITIONS CONTAINED IN SECTION 80IB (10) OF THE ACT, BY THE ASSESSEE. IT IS ALSO NOTED THAT THE TRI BUNAL ALSO CONSIDERED NOTES ON CLAUSES ALONG WITH THE SPEECH O F THE FINANCE MINISTER AT THE FLOOR OF THE HOUSE ALONG WI TH VARIOUS CASE LAWS. DURING HEARING OF THE MISCELLANEOUS APPL ICATIONS, NO ERROR WAS POINTED OUT BY THE ASSESSEE. THE BOARD NOTIFICATION CLEARLY STIPULATES THAT THE BENEFIT SH ALL BE GRANTED TO THE PROJECTS APPROVED BY THE LOCAL AUTHO RITIES ON OR AFTER 01/04/2004 AND BEFORE 31/03/2008, WHEREAS, THE M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 23 PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 1 ST APRIL 2004. THUS, WE DONT FIND ANY ERROR IN THE ORDER OF THE T RIBUNAL AND THE SAME HAS BEEN JUSTIFIABLE DECIDED ON MERIT. SO FAR AS, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSES SEE THAT VARIOUS CASE LAWS WERE MENTIONED IN THE ORDER AUTOM ATICALLY DOES NOT LEAD TO THE CONCLUSION THAT ERROR HAS BEEN COMMITTED BY THE TRIBUNAL. IN THE LIGHT OF THE UNCONTROVERTED FINDING, NOW WE SHALL EXAMINE, WHETH ER THE TRIBUNAL IS EMPOWERED TO REVIEW ITS ORDER U/S 254(2 ) OF THE ACT. 2.3. NOW, WE SHALL ANALYZE WHETHER THE TRIBUNAL H AS COMMITTED ANY ERROR IN ITS ORDER DATED 09/12/2016. WE FIND THAT AN ELABORATE DISCUSSION HAS BEEN MADE IN THE O RDER BY THE TRIBUNAL AND FURTHER IT IS NOTICED THAT THE FAC TUAL FINDING RECORDED BY THE ASSESSING OFFICER AND ALSO BY THE L D. COMMISSIONER OF INCOME TAX (APPEAL) HAS NOT BEEN CONTROVERTED BY THE ASSESSEE. NOW, WE SHALL CONSIDE R VARIOUS DECISIONS FROM HON'BLE HIGH COURTS INCLUDING HON'BL E JURISDICTIONAL HIGH COURT AND THE RATIO LAID DOWN T HEREIN. M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 24 2.4. IN A DECISION BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SHIRPUR GOLD REFINERY LTD. VS ITAT (WRIT PETITION NO.1227 OF 2016) ORDER DATED 27/07/2 016, IN IDENTICAL SITUATION, THE HON'BLE HIGH COURT HELD AS UNDER:- 1. THIS PETITION UNDER ARTICLE 226 OF THE CONSTITU TION OF INDIA SEEKS TO CHALLENGE THE ORDER DATED 4TH DECEMB ER, 2015 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (T HE TRIBUNAL). THE IMPUGNED ORDER, DISMISSED THE PETITI ONER'S APPLICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT) TO RECTIFY / RECALL THE ORDER DATED 4TH MARCH, 2015 PASSED BY THE TRIBUNAL UNDER SECTION 25 4(1) OF THE ACT RELATING TO THE ASSESSMENT YEAR 2006-07. 2. THE IMPUGNED ORDER HELD THAT THE ORDER DATED 4 TH MARCH, 2015 DOES NOT CALL FOR ANY RECTIFICATION AS THERE IS NO ERROR APPARENT FROM THE RECORD. RECORD. IT ALSO HOLDS THAT THE ISSUE IN DISPUTE HAD BEEN DECIDED ON MERIT S AFTER ANALYZING THE FACTS AND ARGUMENTS OF THE PETITIONER BY ITS ORDER DATED 4TH MARCH, 2015. THUS, THE PRAYER FOR R ECALL OF THE ORDER DATED 4TH MARCH, 2015 AND RESTORING IT TO THE COMMISSIONER OF INCOME TAX (APPEAL) FOR FRESH DETERMINATION WAS IN THE PRESENT FACTS NOT CALLED F OR. 3. THE GRIEVANCE OF THE PETITIONER IS THAT THE IMPU GNED ORDER DATED4TH DECEMBER, 2015 INCORRECTLY PROCEEDS ON THE BASIS THAT THE ORDER DATED 4TH MARCH, 2015 PASS ED UNDER SECTION 254(1) OF THE ACT ALSO DEALT WITH THE MERITS OF THE DISPUTE AFTER HEARING THE PETITIONER. IT IS THE PETITIONER'S CASE THAT THE MERITS OF THE DISPUTE WE RE NOT EVEN ARGUED BY IT BEFORE THE TRIBUNAL LEADING TO TH E ORDER DATED 4TH MARCH, 2015. IN SUPPORT THE PETITIONER HA S FILED A COPY OF AN AFFIDAVIT DATED 23 RD APRIL, 2016 OF M R. B.S. SHARMA, CHARTERED ACCOUNTANT, WHO REPRESENTED THE PETITIONER AT THE HEARING OF THE REGULAR APPEAL UND ER M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 25 SECTION 254(1) OF THE ACT AS WELL AS AT THE MISCELL ANEOUS APPLICATION UNDER SECTION 254(2) OF THE ACT. THE AF FIDAVIT CONTENDS THAT NO SUBMISSIONS ON MERITS AT THE HEARING WHICH LED TO THE ORDER DATED 4TH MARCH, 2015 WERE M ADE ON BEHALF OF THE PETITIONER. THIS AFFIDAVIT WAS IN SUPPORT OF ITS CONTENTION THAT THE IMPUGNED ORDER IS NOT SUSTA INABLE IN LAW. 4. WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL WAS PASSED ON 4TH DECEMBER, 2015, RECEIVED BY THE PETIT IONER ON 28TH DECEMBER, 2015. THIS PETITION HAS BEEN FILE D ON 29 TH APRIL, 2016. THE PETITION STATES THAT ACCORDING TO THE PETITIONER, THERE IS NO DELAY IN FILING THE PETITIO N. HOWEVER, IF THIS COURT IS OF THE VIEW THAT THERE IS A DELAY AND DELAY MAY BE CONDONED. HOWEVER, NO REASONS WITH PARTICULA RS ARE SPECIFIED IN THE PETITION. IN VIEW OF THE FACT THAT THE PETITION ITSELF DOES NOT EXPLAIN THE REASON FOR THE DELAY, THE PETITION IS LIABLE TO BE DISMISSED. 5. ON 19TH JULY, 2016 THE PETITIONER HAS FILED AN A FFIDAVIT- INREJOINDER. IN IT FOR THE FIRST TIME THE PETITION HAS ATTEMPTED TO EXPLAIN THE DELAY BY STATING AS UNDER: '3. I SAY THAT THE PETITIONER COMPANY DOES NOT HAVE A MANAGING DIRECTOR OR A WHOLE TIME DIRECTOR. IT ONLY HAS A MANAGER MR. SUB HASH PAREEK, WHO IS STATIONED AT TH E FACTORY AT REFINERY SITE, SHIRPUR; DIST. DHULE, MAH ARASHTRA - 425 405. THERE ARE ONLY 5 PERSONS IN THE ADMINIST RATIVE DEPARTMENT OPERATING FROM THE CORPORATE OFFICE NAME LY MYSELF BEING SR. ACCOUNTS MANAGER; MR. NARESH BETKA T; SR. ACCOUNTS EXECUTIVE, MR. NAVNIT DORJI, JR. ACCOUNTS EXECUTIVE, MR. SHYAM JHA, JR. ACCOUNTS EXECUTIVE AN D MR. RAJENDRA BHATI, JR. ACCOUNTS EXECUTIVE. MRS. ARCHIT A KOTHARI IS THE CPO OF THE PETITIONER COMPANY. I SAY THAT NEITHER THE CPO NOR THE 5 ADMINS HAVE EVER DEALT WI TH INCOME TAX WRIT PETITIONS IN THE PAST' M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 26 6. DURING THE HEARING ON 20TH JULY, 2016 THE ABOVE ASPECT WAS EXPLAINED TO SUPPORT THE SUBMISSION MADE ACROSS THE BAR THAT IT IS A LOSS MAKING COMPANY LEA DING TO SCARCE RESOURCES IN TERMS OF THE STAFF AVAILABLE. T HUS THE DELAY. THIS CONTENTION MADE ACROSS THE BAR DOES NOT FIND PLACE EITHER IN THE PETITION OR IN THE AFFIDAVIT. W E DIRECTED THE PETITIONER TO PRODUCE ITS LATEST ANNUAL REPORT. TODAY. DR. SHIVRAM, THE LEARNED COUNSEL FOR THE PETITIONER PRODUCED THE 30TH ANNUAL REPORT FOR THE YEAR 2014-1 5. A PERUSAL OF THE SAME REVEALS A COMPLETELY DIFFERENT PICTURE. IT IS TRUE THAT THE PETITIONER DOES NOT APPEAR TO H AVE A DESIGNATED MANAGING DIRECTOR OR WHOLE TIME DIRECTOR BUT IT HAS A MANAGER APPOINTED UNDER SECTION 269 OF THE COMPANIES ACT, 1956. THEREFORE, SUCH A MANAGER IS EQUIVALENT TO ON WHOLE TIME OR MANAGING DIRECTOR WH OSE APPOINTMENT HAS BEEN APPROVED BY THE CENTRAL GOVERNMENT. THE AFFIDAVIT DOES NOT DISCLOSE THIS FA CT, THUS SUGGESTING OTHERWISE. WE FURTHER NOTICE FROM THE AN NUAL REPORT PRODUCED THAT THE PETITIONER FOR THE YEAR EN DING 31ST MARCH, 2015 HAS A TURNOVER OF RS.32,222 MILLIO NS WITH A PROFIT BEFORE TAX OF RS.216 MILLIONS AND AFT ER TAX OF RS.154 MILLIONS. IT HAS OPERATIONS INTERNATIONALLY WITH 100% SUBSIDIARIES IN DUBAI AND SINGAPORE. THE ANNUA L REPORT ALSO REVEALS THAT DUN AND BRADSTREET CD & B) HAD RANKED THE PETITIONER COMPANY AS ONE AMONGST INDIA' S TOP 500 COMPANIES IN THE YEAR 2015 IT IS 358 IN TER MS OF TOTAL INCOME, 467 IN TERMS OF NET PROFIT AND 471 IN TERMS OF RETURN ON NET WEALTH. THE AFFIDAVIT IN REJOINDER FILED BY THE PETITIONER AND THE SUBMISSIONS MADE ON THE COMP ANY PETITIONER AND THE SUBMISSION MADE ON THE LAST OCCA SION SOUGHT TO CONVEY THAT THE OPERATIONS OF THE COMPANY ARE OF A SMALL NATURE AND THERE IS ONLY ONE MANAGER WHO IS STATIONED AT DHULE AND OTHER 5 PERSONS IN ADMINISTR ATIVE DEPARTMENT OF THE COMPANY. THEREFORE, THE DELAY. TH E M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 27 STATEMENTS MADE IN THE AFFIDAVIT SEEKS TO PRESENT A PICTURE COMPLETELY DIFFERENT FROM THE FACTS AS ARE EVIDENT FROM THE ANNUAL REPORT OF THE COMPANY FOR THE YEAR ENDING 2014-15 PRODUCED BY THE PETITIONER AT OUR INSTANCE. AN AFFIDAVIT IS A SWORN STATEMENT AND IT MUST REFLECT THE TRUE AND COMPLETE FACTS. IT MUST NOT BE AN EXERCISE IN SUPPRESSIO VERY SUGGESTION FALSI. FURTH ER, WHEN A PARTY SEEKS TO EXERCISE THIS COURTS JURISDI CTION THE LEAST THAT IS EXPECTED OF THE PETITIONER IS FUL L AND TRUE DISCLOSURE. THE CONDUCT ON THE PART OF THE PETITION ER DISENTITLES THE PETITIONER FROM ANY RELIEF UNDER AR TICLE 226 OF THE CONSTITUTION OF INDIA. 7. MOREOVER, IN ANY CASE, THE PETITIONER HAS NOT BE EN ABLE TO EXPLAIN THE REASON FOR THE DELAY IN FILING THIS PETITION. 8. BEFORE PARTING, WE WOULD LIKE TO MAKE AN OBSERVA TION THAT LEADING FRESH EVIDENCE BY FILING A COPY OF AN AFFIDAVIT DATED 28 TH APRIL, 2016 AFTER THE IMPUGNED ORDER AND ANNEXING IT TO PETITION IS NOT APPROPRIATE. PARTICU LARLY WHEN THE SAME WAS NOT FILED BEFORE THE TRIBUNAL. TH IS TO MOST UNFAIR TO THE MEMBERS OF THE TRIBUNAL. AT THE TIME OF RECTIFICATION APPLICATION WAS BEING HEARD, THE N ECESSARY EVIDENCE INCLUDING THE AFFIDAVIT COULD HAVE BEEN FI LED BEFORE THE MEMBERS OF THE TRIBUNAL. IN THE VIEW WE HAVE TAKEN, IT IS NOT NECESSARY TO GO INTO THE MERITS OF THE AFFIDAVIT FILED BY THE CHARTERED ACCOUNTANT AS A PA RT OF THIS PETITION. 9. ACCORDINGLY, THE WRIT PETITION IS DISMISSED. 2.5. IN CIT VS. ITAT & ORS. (2006) 195 TAXATION 2 88 (DEL.) IT HAS BEEN HELD VIDE PARA 7, PAGE 291 & 292 AS UNDER: M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 28 THAT BEING THE LEGAL POSITION, THE TRIBUNAL WAS NO T IN OUR OPINION JUSTIFIED IN RECALLING THE ORDER PSSSED BY IT IN TOTO AND SETTING THE MATTER DOWN FOR A FRESH HEARING. JUST B ECAUSE A PRONOUNCEMENT MADE ON THE SUBJECT EITHER BY THE TRI BUNAL OR BY ANY OTHER COURT WAS NOT NOTICED BY THE TRIBUNAL WHILE TAKING A PARTICULAR VIEW ON THE MERIT OF THE CONTROVERSY M AY CONSTITUTE AN ERROR THAT WOULD CALL FOR CORRECTION IN AN APPRO PRIATE APPEAL AGAINST THE ORDER. ANY SUCH ERROR MAY HOWEVER FALL SHORT OF CONSTITUTING A MISTAKE APPARENT FROM THE RECORD WIT HIN THE MEANING OF SECTION 254(2) OF THE ACT. MORE IMPORTAN TLY JUST BECAUSE A POINT IS DEBATABLE (WHICH IS ONE OF THE R EASONS GIVEN BY THE TRIBUNAL IN THE INSTANT CASE) COULD HARDLY P ROVIDE A JUSTIFICATION FOR RECALLING THE ORDER AND FIXING TH E APPEAL FOR A DE NOVO HEARING. WHILE DOING SO, THE TRIBUNAL HAS NO D OUBT MADE CERTAIN OBSERVATIONS IN REGARD TO THE LEVY OF INTER EST UNDER SECTION 158 BFA BEING STATUTORY IN NATURE WITH NO P OWER VESTED IN ANY AUTHORITY OR TRIBUNAL TO CONDONE THE SAME, B UT THE VERY FACT THAT THE TRIBUNAL HAS MADE THOSE OBSERVATIONS WOULD NOT RENDER VALID THE ORDER OF RECALL PASSED BY IT. THE NET RESULT OF THE ORDER MADE BY THE TRIBUNAL CONTINUES TO REMAIN THE SAME VIZ. THE APPEAL HAS TO BE HEARD AGAIN SIMPLY BECAUSE ONE OF THE ISSUES DECIDED BY THE TRIBUNAL IS DEBATABLE OR THE TRIBUNAL HAS NOT NOTICED AN EARLIER DECISION RENDERED BY ANOTHER BENCH. BOTH THESE REASONS WERE INSUFFICIENT TO JUSTIFY THE ORDE R OF RECALL MADE BY THE TRIBUNAL. 2.6. IN SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUP RA) IT HAS BEEN LAID DOWN (PLACITUM 37 AT PAGE 239) : IN OUR JUDGMENT, THEREFORE, A PATENT, MANIFEST AND SELF-EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION O F EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAID TO BE AN ERRO R APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED WHILE E XERCISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERRO R APPARENT ON THE FACE OF THE RECORD MEANS AN ERROR WHICH STRIKES ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRANE OUS MATTER TO M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 29 SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY, IT S HOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE OR IGINAL JUDGMENT IS ONE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID T O BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. 2.7. WE HAVE HEARD THE MISCELLANEOUS APPLICATION OF THE ASSESSEE WITH OPEN MIND BUT WE ARE NOT CONVINCE D WITH THE REASONING OF THE ASSESSEE BECAUSE THE ASSESSEE, THROUGH THIS APPLICATION IS MERELY TRYING TO GET THE ORDER REVIEWED, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE ACT. EVE N OTHERWISE, ONLY ARITHMETICAL ERROR OR OF LIKE NATUR E CAN ONLY BE RECTIFIED. HOWEVER, NO SUCH MISTAKE WAS POINTED OUT BY THE ASSESSEE IN THE ORDER OF THE TRIBUNAL, THEREFOR E, WE FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE. 2.8. WHILE DEALING WITH MISCELLANEOUS APPLICATION U/S 254(2) OF THE ACT, ONLY ARITHMETICAL, GRAMMATICAL O R MISTAKE OF LIKE NATURE, IF ANY, CAN ONLY BE RECTIFIED AND N OT WHICH CAN BE DRAWN BY A LONG PROCESS OF ARGUMENT/REASONING LE ADING TO CONTRARY DECISION. OUR VIEW FIND SUPPORTS FROM V ARIOUS DECISIONS FROM HONBLE APEX COURT AND HONBLE HIGH COURTS, THAT THE TRIBUNAL CANNOT REVIEW ITS EARLIER ORDER B UT ONLY CAN RECTIFY MISTAKE, IF ANY, WHICH IS APPARENT FROM REC ORD. THE M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 30 SCOPE AND AMBIT OF APPLICATION U/S 254(2) OF THE AC T IS VERY LIMITED AND MERITS OF THE CASE CANNOT BE GONE INTO, THEREFORE, WE FIND NO MISTAKE IN THE ORDER OF THE TRIBUNAL. TH E RATIO LAID DOWN IN FOLLOWING CASES SUPPORTS OUR VIEW:- A) CIT VS GOKULCHAND AGRAWAL, 202 ITR 14 (CAL.), B) CIT VS RAMESH ELECTRIC & TRADING COMPANY 203 ITR 497, 502 (BOM.), C) GAYWAYS PUBLICITY PVT. LTD. 211 ITR 506 (DEL.), D) CIT VS RAMLAL RAJGARIA 104 CTR (CAL.) 403, E) CIT VS MODEL MANUFACTURING COMPANY PVT. LTD. 111 CTR (CAL.) 2016, F) JAIN DHARMSHALA CHARITABLE TRUST VS CIT 121 CTR (DEL.) 86, G) CIT VS ITAT 206 ITR 126 (AP), H) CIT VS KABIRDAS INVESTMENT LTD. 210 ITR 898 (DEL .) FOLLOWED IN I) DIRECTOR OF INCOME TAX (EXEMPTION) VS ITAT 232 I TR 688 (DEL.), J) MENTHA & ALLIED PRODUCTS COMPANY PVT. LTD. VS IT AT 244 ITR 470 (DEL.), K) CIT VS VARDHMAN SPINNING 226 ITR 296 (P & H), L) DEEKSHA SURI ETC. VS ITAT 232 ITR 395 (DEL.), M) CIT VS ITAT 196 ITR 564 (ORISSA) 196 ITR 590, AN D N) LAXMI ELECTRONIC CORPORATION LTD. VS CIT 188 ITR 398 (ALL.), 2.9. IN VIEW OF THE FACTUAL MATRIX, CASES DISCUSSED HEREINABOVE, IT CAN BE CONCLUDED THAT THE SCOPE M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 31 AND THE AMBIT OF APPLICATION U/S 254(2) IS VERY LIM ITED AS WAS HELD BY HONBLE DELHI HIGH COURT IN CIT VS ITAT (2007) 293 ITR 118 (DEL.), HONBLE M.P. HIGH COURT IN CIT VS K.D. WIRES PVT. LTD. (2010) 323 ITR 257 (M.P.). IDENTICA L RATIO WAS LAID DOWN IN APEX METCHEM P. LTD. VS ITAT (2009) 31 8 ITR 48 (RAJ.), STATE BANK OF INDORE VS ITAT 284 ITR 125 (M.P.), CIT VS MCDOWELL & COMPANY LTD. (2009) 310 ITR 215 (KARN.), CIT VS PEARL WOOLEN MILLS (2011) 330 ITR 1 64 (P & H), DHOLADHAR INVESTMENT PVT. LTD. VS CIT (2014) 36 2 ITR 111 (DEL.), RAJENDRA PRASAD BORAH VS ITAT (2008) 30 2 ITR 243 (GUWAH.) AND CIT VS FIVE STAR MARINE EXPORT PVT . LTD. (2010) 322 ITR 218 (MAD.), CIT VS TATA IRON & STEEL COMPANY LTD. (2001) 248 ITR 190, 192 (BOM.), J.M. SAHNI VS ITAT 257 ITR 16 (DEL.), KARAN & COMPANY VS ITAT 253 ITR 131 (DEL.). THE RATIO LAID DOWN BY THE TRIBUNAL IN BRIJMOHAN SAGARMAL CAPITAL SERVICES PVT. LTD. (MA NO.217/MUM/2015), ORDER DATED 18/01/2016, SUPPORTS OUR VIEW. SINCE, NO ERROR WAS POINTED OUT BY THE ASSESS EE OR THE REVENUE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ME RELY TRYING TO GET THE ORDER REVIEWED, WHICH IS NOT PERM ISSIBLE, M.A. NO.165 & 166/MUM/2017 M/S. BHAVYA CONSTRUCTION CO., (ARISING OUT OF ITA NOS.4389 & 4390 /MUM/2014 32 THEREFORE, RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THERE IS NO MIST AKE IN THE ORDER PASSED BY THE TRIBUNAL. ACCORDINGLY, THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE AR E REJECTED. FINALLY, THE MISCELLANEOUS APPLICATIONS OF THE ASSE SSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 22/09/2017. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; * DATED : 06/10/2017 F{X~{T? P.S / /. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /-. / THE RESPONDENT. 3. 0 0 1% ( +, ) / THE CIT, MUMBAI. 4. 0 0 1% / CIT(A)- , MUMBAI 5. 3'4% , 0 +,)+ 5 , / DR, ITAT, MUMBAI 6. 6#7 / GUARD FILE. ! / BY ORDER, /3,%% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI,