M/s Fortune Builders, Bhopal v. The Assistant Commissioner of Income Tax 1(2), Bhopal

ITA 511/IND/2010 | 2004-2005
Pronouncement Date: 21-11-2011 | Result: Allowed

Appeal Details

RSA Number 51122714 RSA 2010
Assessee PAN NONLY2000S
Bench Indore
Appeal Number ITA 511/IND/2010
Duration Of Justice 1 year(s) 3 month(s) 25 day(s)
Appellant M/s Fortune Builders, Bhopal
Respondent The Assistant Commissioner of Income Tax 1(2), Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 21-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 2004-2005
Appeal Filed On 27-07-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.511/IND/2010 A.Y. 2004-2005 M/S FORTUNE BUILDERS 157 ZONE-I BHOPAL PAN AAAPI-9074H ... APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX ... RESPONDENT 1(2) BHOPAL ITA NO.512/IND/2010 A.Y. 2005-2006 M/S FORTUNE BUILDERS 157 ZONE-I BHOPAL PAN AAAPI-9074H ... APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX ... RESPONDENT 1(2) BHOPAL 2 ITA NO.513/IND/2010 A.Y. 2006-2007 M/S FORTUNE BUILDERS 157 ZONE-I BHOPAL PAN AAAPI-9074H ... APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX ... RESPONDENT 1(2) BHOPAL APPELLANT BY : SHRI H.P.VERMA & SHRI GIRISH AGRAWAL RESPONDENT BY : SHRI ARUN DEWAN SR. DR DATE OF HEARING : 01.11.2011 DATE OF PRONOUNCEMENT : 21.11.2011 O R D E R PER JOGINDER SINGH THIS BUNCH OF THREE APPEALS IS BY THE ASSESSEE FOR ASSESSMENT YEARS 2004-05 2005-06 & 2006-07 ON THE FOLLOWING GROUNDS: ITA NO.511/IND/2010 1. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDI NG THAT THE INITIATION OF REASSESSMENT MADE U/S 147/143(3) BY THE LEARNED ASSESSING OFFICER AND 3 SUSTAINED BY THE HONBLE CIT (APPEALS)-I BHOPAL IS NEITHER VALID NOT SUSTAINABLE IN LAW. 2. THAT AT ANY EVENT AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDI NG THAT THE APPELLANT IS NOT ENTITLED OF THE DEDUCTION U/S 80IB (10) OF THE INCOME TAX ACT AND THEREBY DISALLOWING THE CLAIM OF RS. 29 99 883/- MADE BY TH E APPELLANT. THE SO-CALLED CONCLUSION OF THE LEARNED LOWER AUTHORITIES IS GROSSLY WRONG. THE DEDUCTION AS CLAIMED MAY KINDLY BE ALLOWED. 3. THAT THE LEARNED LOWER AUTHORITY WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTI TLED FOR THE CLAIM MADE U/S 80IB (10) OF THE INCOME TAX ACT IN SPITE OF ALL THE BASIC CONDITION FULFILLED B Y THE APPELLANT AND ALSO SUBMITTED THE RELEVANT EVIDENCE IN SUPPORT OF CLAIM. THE APPELLANT CLAIMED DEDUCTION FOR COMMERCIAL CONSTRUCTION ONLY 2000 SQ FT. AS PERMISSIBLE IN THE PROVISIONS OF SECTION U/S 80IB (10). THEREFORE THE CLAIM MADE BY THE APPELLANT BE KINDLY ACCEPTED. 4. THAT THE HON'BLE CIT (APPEALS)-I HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING PROPER OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISIONS MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT MADE U/S 80IB (10) OF THE INCOME TAX ACT. ITA NO.512/IND/2010 1. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDI NG THAT THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 BY ISSUING NOTICE U/S 148 IS VALID. THE ASSESSMENT MADE U/S 147/143(3) BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE HON'BLE CIT (APPEALS)-I BHOPAL IS NEITHER VALID NOT SUSTAINABLE IN LAW. 2. THAT AT ANY EVENT AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDI NG THAT THE APPELLANT IS NOT ENTITLED FOR THE DEDUCTIO N U/S 80IB (10) OF THE INCOME TAX ACT AND THEREBY DISALLOWING THE CLAIM OF RS. 75 42 241/- MADE BY TH E APPELLANT. THE SO-CALLED CONCLUSION OF THE LEARNED LOWER AUTHORITIES IS GROSSLY WRONG. THE DEDUCTION AS CLAIMED MAY KINDLY BE ALLOWED. 4 3. THAT THE LEARNED LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTI TLED FOR THE CLAIM MADE U/S 80IB (10) OF THE INCOME TAX ACT IN SPITE OF ALL THE BASIC CONDITIONS FULFILLED BY THE APPELLANT AND ALSO SUBMITTED THE RELEVANT EVIDENCE IN SUPPORT OF CLAIM. THE APPELLANT CLAIMED DEDUCTION FOR COMMERCIAL CONSTRUCTION ONLY 2000 SQ.FT AS PERMISSIBLE IN THE PROVISIONS OF SECTION 80IB (10). THEREFORE THE CLAIM MADE BY THE APPELLANT BE KINDLY ACCEPTED. 4. THAT THE CIT(APPEALS)-I HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING PROPER OPPORTUNITY TO THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING THE APPELLANT AND THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT MADE U/S 80I B (10) OF THE INCOME TAX ACT. ITA NO.513/IND/2010 1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDING THAT THE INITIATION OF REASSESSMENT PROCEEDING U/S 147 BY ISSUING NOTICE U/S 148 IS VALID. THE ASSESSMENT MADE U/S 147/143(3) BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE CIT (APPEALS)-I BHOPAL IS NEITHER VALID NOR SUSTAINABLE IN LAW. 2. THAT IN ANY EVENT AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS AND WERE NOT JUSTIFIED IN HOLDI NG THAT THE APPELLANT IS NOT ENTITLED FOR THE DEDUCTIO N U/S 80IB (10) OF THE INCOME TAX ACT AND THEREBY DISALLOWING THE CLAIM OF RS. 23 04 302/- MADE BY TH E APPELLANT. THE SO-CALLED CONCLUSION OF THE LEARNED LOWER AUTHORITIES IS GROSSLY WRONG. THE DEDUCTION AS CLAIMED MAY KINDLY BE ALLOWED. 3. THAT THE LEARNED LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTI TLED FOR THE CLAIM MADE U/S 80IB (10) OF THE INCOME TAX ACT IN SPITE OF ALL THE BASIC CONDITIONS FULFILLED BY THE APPELLANT AND ALSO SUBMITTED THE RELEVANT EVIDENCE IN SUPPORT OF CLAIM. THE APPELLANT CLAIMED DEDUCTION FOR COMMERCIAL CONSTRUCTION ONLY 2000 SQ FT. AS PERMISSIBLE IN THE PROVISIONS OF SECTION U.S 80IB (10). THEREFORE THE CLAIM MADE BY THE APPELLANT BE KINDLY ACCEPTED. 4. THAT THE CIT (APPEALS)-I HAS ERRED AND WAS NOT JUSTIFIED IN NOT ALLOWING PROPER OPPORTUNITY TO 5 THE APPELLANT BEFORE TAKING CONTRARY VIEW WITHOUT INFORMING TO THE APPELLANT ABOUT THE DECISIONS MAKING THE BASIS FOR DISALLOWING THE CLAIM OF THE APPELLANT MADE U/S 80IB (10) OF THE INCOME TAX ACT. 2. DURING HEARING OF THESE APPEALS THE LEARNED COU NSEL FOR THE ASSESSEE CHALLENGED THE INITIATION OF PROCEEDIN GS U/S 147 R.W.S. 148 OF THE ACT AS THE SAME WAS BASED UPON TH E CHANGE OF OPINION ON THE GROUND THAT THE PROVISION OF SECT ION 80IB(10) OF THE ACT SUBSTITUTED W.E.F. 1.4.2005 IS NOT APPLI CABLE TO THE YEARS UNDER CONSIDERATION. A PLEA WAS ALSO RAISED T HAT THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT AND AN OPINION WAS FORMED BY THE ASSESSING OFFICER. IT WAS ALSO CO NTENDED THAT SO FAR AS PROVISION FOR OBTAINING CERTIFICATE IS CONCERNED THOUGH IT WAS NOT APPLICABLE TO THE CONCERNED YEARS BUT THE SAME WAS ALSO OBTAINED FROM THE COMPETENT AUTHORITI ES. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. SINCE COMMON GROUND S HAVE BEEN RAISED IN THESE APPEALS THEREFORE THESE CAN BE DISPOSED OF BY A COMMON & CONSOLIDATE ORDER FOR THE SAKE OF BREVITY. THE FIRST COMMON GROUND RAISED IN ASSESSMENT YEAR 2004- 05 AND 2005-06 PERTAINS TO INITIATION OF REASSESSMENT PROC EEDINGS U/S 6 147/148 OF THE ACT WHEREAS FOR ASSESSMENT YEAR 2006 -07 AT THE TIME OF HEARING THIS GROUND WAS WITHDRAWN BY T HE LEARNED COUNSEL FOR THE ASSESSEE. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DEVELOPER AND BUILDER OF A PROJECT G OT PERMISSION FROM THE TOWN & COUNTRY DEPARTMENT FOR DEVELOPING THE PROJECT ON 22.2.2002 AND THE AREA OF THE PLOT WAS 6.97 ACRES. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE FOR INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT FOR FIRST TWO ASSESSMENT YEARS IS BASED UPON CHANGE OF OPINION BY THE ASSESSING OFFICER. FOR BETTER APPRECIATION OF T HESE APPEALS ITS DETAILS ARE SUMMARISED AS UNDER: AY DATE OF FILING OF ORIGINAL RETURN INCOME RETURNED (RS.) DEDUCTIO N CLAIMED U/S 80IB (RS.) ASSTT. MADE U/S 147 / 143(3) DATE OF ISSUE OF NOTICE U/S 148 DATE OF ASSTT. WHICH IS IN APPEAL INCOME RETURNED (RS.) INCOME ASSESSED (RS.) CIT(A) 04- 05 31.10.04 NIL 2999883 31.3.06 DEDUCTION U/S 80IB ALLOWED 13.6.08 12.10.09 AS EARLIER RETURN 2999883 APPEAL DISMISSED. 18.3.10 05- 06 31.10.05 256822 7542241 PROCESSED U/S 143(1) 23.5.08 12.10.09 256822 7799063 -DO- 06- 07 31.10.06 NIL 2304302 ASSESSED U/S 143(3) ON 25.12.08 -- U/S 143(3) DATED 25.12.08 ASSESSED AT RS.2304302 -- -- -DO- IF THE AFORESAID DETAILS ARE ANALYSED WE FIND THAT FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE FILED THE ORIG INAL RETURN 7 ON 31.10.2005 WHEREIN THE INCOME WAS SHOWN AT RS. 2 56 822/- AND THE AMOUNT OF RS.75 42 241/- WAS CLA IMED AS DEDUCTION U/S80IB(10) BUT THE FACT REMAINS THAT THE RETURN WAS PROCESSED U/S 143(1)(A) OF THE ACT THEREFORE THER E IS NO QUESTION OF APPLICATION OF MIND BY THE ASSESSING OF FICER AS THE ASSESSMENT WAS NOT FRAMED U/S 143(3) OF THE ACT. EV EN OTHERWISE SUBSEQUENTLY THE ASSESSING OFFICER GATH ERED INFORMATION FROM THE REPORT OF ASSESSMENT YEAR 2005 -06 THAT THE ASSESSEE HAD CONSTRUCTED COMMERCIAL COMPLEX HAV ING BUILT UP AREA IN EXCESS OF PERMISSIBLE LIMIT AND AS PER A PPROVED MAP THE APPROVED BUILT UP AREA WAS 6159.39 SQ.FT. WHICH AS PER THE ASSESSING OFFICER WAS NOT FULFILLING THE C ONDITIONS LAID DOWN U/S 80IB(10)(D) OF THE ACT THEREFORE ASSESSM ENTS FOR ASSESSMENT YEAR 2004-05 & 2005-06 AS PER THE ASSES SING OFFICER EXCESSIVE RELIEF WAS CLAIMED. WHAT IT MAY BE THE ASSESSING OFFICER WAS HAVING REASON TO BELIEVE THAT EXCESS RELIEF HAS BEEN CLAIMED BY THE ASSESSEE THEREFORE PROCEEDINGS U/S 147/148 WERE INITIATED. 8 4. WE ARE ALSO SUPPOSED TO SEE THE REASONS RECORDED BY THE LD. ASSESSING OFFICER. THE GIST OF REASONS RECORDED U/S 147 ARE AS UNDER: IT WAS OBSERVED THAT THE ASSESSEE IS NOT ENTITLED TO GET THE DEDUCTION U/S 80IB(10) DUE TO FOLLOWING REASONS: (I) AS PER APPROVED MAP THE ASSESSEE HAS SHOWN TOTAL AREA OF COMMERCIAL ESTABLISHMENT AT 286.78 SQ.MT. INTO 2 = 573.50 SQ.MT. (6159.39 SQ.FT.). (II) THE ASSESSEE FIRM ITSELF ADMITTED IN THE RETUR N FILED FOR ASSESSMENT YEAR 2005-06 THAT IT HAS SOLD 2224 SQ.FT. OF SHOPS DURING 2005-06 AND OFFERED INCOME OF 254 SQ.FT. OF BUILT UP AREA AFTER CLAIMING EXEMPTION OF PROFIT ON 2000 SQ.FT. OF COMMERCIAL COMPLEX. THUS THE ASSESSEE FIRM HAS VIOLATED THE PROVISIONS OF SECTION 80IB(10) ACCORDING TO 9 WHICH THE BUILT UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENT INCLUDING THE HOUSING PROJECT DOES NOT EXCEEDS 5% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. 4.1 NOW WE ARE SUPPOSED TO ANALYSE WHETHER THERE I S A CHANGE OF OPINION BY THE LD. ASSESSING OFFICER. THE SCHEME OF THE ACT IF ANALYSED WE FIND THAT EVEN AFTER 1.4.1 989 THE CONCEPT OF CHANGE OF OPINION WAS NOT REMOVED. PRI OR TO THE DIRECT TAX LAWS (AMENDMENT) ACT 1987 REOPENING CO ULD BE DONE UNDER TWO CONDITIONS NAMELY IF (A) THE ITO H AS REASON TO BELIEVE THAT BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN U/S 139 OF THE ACT FOR ANY ASSESSMENT YEAR TO THE ITO OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T YEAR INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THAT YEAR OR (B) THE ITO HAD IN CONSEQUENCE OF INFORMAT ION IN HIS POSSESSION HAS REASON TO BELIEVE THAT INCOME CHARGE ABLE TO TAX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE 10 FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED J URISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT BU T IN SECTION 147 W.E.F. 1.4.1989 THOSE CONDITIONS ARE GI VEN GO BY AND THE ONLY CONDITION REMAINED WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASS ESSMENT THE SECTION CONFERS JURISDICTION TO REOPEN THE ASSE SSMENT. THEREFORE POST 1.4.1989 POWER TO REOPEN IS MUCH W IDER. HOWEVER ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATI ON TO THE WORDS REASON TO BELIEVE FAILING WHICH SECTION 14 7 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENT ON THE BASIS OF MERE CHANGE OF OPINION WHICH CAN NOT BE PER SE REASON TO REOPEN. THERE IS A CONCEPTUAL DIFFERENT BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSIN G OFFICER HAS NO POWER TO REVIEW BUT HAS THE POWER TO REASSES S. AT THE SAME TIME REASSESSMENT HAS TO BE BASED ON FULFILME NT OF PRE- CONDITION AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED THEN IN THE GARB OF REOPENING THE ASSESSMENT REVIE W WILL TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPI NION AS AN INBUILT TEST TO CHECK ABUSE OF POWERS BY THE ASSESS ING OFFICER. 11 HENCE AFTER 1.4.1989 THE ASSESSING OFFICER HAS PO WER TO REOPEN PROVIDED THERE IS TANGIBLE MATERIAL TO CO ME TO A CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. IN T HE DIRECT TAX LAWS (AMENDMENT) ACT 1987 THE PARLIAMENT NOT ONLY DELETED THE WORDS REASON TO BELIEVE BUT ALSO INSE RTED THE WORD OPINION IN SECTION 147 OF THE ACT. HOWEVER ON RE CEIPT OF REPRESENTATION FROM COMPANIES AGAINST OMISSION OF T HE WORDS REASON TO BELIEVE THE PARLIAMENT REINTRODUCED TH E SAID EXPRESSION AND DELETED THE WORD OPINION ON THE GR OUND THAT IT WOULD VEST ARBITRARY POWERS TO THE ASSESSING OFFICE R. THERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS IN FAVOUR AND AGAIN ST THE ASSESSEE. ONE OPINION SAYS THAT POWERS UNDER THE AM ENDED PROVISIONS ARE WIDE ENOUGH EVEN TO COVER CASES WHER E ASSESSEE HAD FULLY DISCLOSED MATERIAL FACTS LIKE B ABA ABHAI SINGH VS. DCIT (2001) 117 TAXMAN 12 (DEL) RAKESH A GRAWAL VS. ACIT (1996) 87 TAXMAN 306 (DEL). THE HONBLE AP EX COURT IN CIT VS. SUN ENGG. WORKS (1992) 198 ITR 297 HELD THAT THE PROCEEDINGS U/S 147 OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE ONLY BUT AT THE SAME TIME IN A LATER DECISI ON IN SHRI 12 KRISHNA P. LTD. VS. ITO (221 ITR 538) THE HONBLE APEX COURT HELD THAT THE POWERS CONFERRED UPON THE ITO BY SECT ION 147 & 148 ARE NOT UNBRIDLED ONE. ANOTHER VIEW IS THAT THE INCOME WHICH ESCAPED ASSESSMENT NECESSARILY HAS TO BE BROU GHT TO TAX AND BY THE AMENDED PROVISION THE POWERS ARE WI DE ENOUGH EVEN TO COVER THE CASES WHERE THE ASSESSEE HAS FULL Y DISCLOSED THE MATERIAL FACTS ESPECIALLY WHEN THE PROCEEDINGS ARE FOR THE BENEFIT OF THE REVENUE. 4.2 SO FAR AS THE IMPORTANT WORDS HAS REASON TO BE LIEVE USED IN SECTION 147 OF THE ACT ARE CONCERNED SUCH BELIEF SHOULD NOT BE ARBITRARY OR IRRATIONAL BUT BASED ON RELEVANT AND MATERIAL FACTS AND NOT BY PRETENCE AS WAS HELD IN G ANGA SARAN & SONS P. LTD. (130 ITR 1) (SC) RAYMOND WOOLLENS M ILLS VS. ITO (236 ITR 34) (SC) CIT VS. DAULAT RAM RAWATMAL (87 ITR 349) (SC) COCA COLA INDIA (INC) VS. ACIT (2009) 30 9 ITR 194 (P & H). 5. SO FAR AS THE WORD DISCLOSE IS CONCERNED WE ARE OF THE OPINION THAT THE DISCLOSURE MUST NOT ONLY BE FULL B UT ALSO TRUE 13 WHICH ARE IN THE KNOWLEDGE OF THE ASSESSEE AND SUCH DISCLOSURE CAN ONLY BE OF THOSE FACTS/MATERIAL WHIC H WERE EXISTING AT THE RELEVANT TIME AS WAS HELD IN CANARA SALES CORPORATION LTD. VS. CIT (176 ITR 340) (KAR) CIT V S. SHRI SATYANARAYAN LOHIYA (204 ITR 894) (CAL) ORIENTAL C ARPET MFG. (INDIA) LTD. VS. ITO (168 ITR 296) (P & H). THE REQ UIREMENT OF THE ACT IS FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR MAKING ASSESSMENT. 6. NOW QUESTION ARISES WHETHER THE ASSESSING OFFIC ER APPLIED HIS AND FORMED ANY OPINION. THE OBVIOUS REP LY IS NO BECAUSE THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS FRAMED U/S 143(1)(A) OF THE ACT THEREFORE IT CAN BE SAID THAT WHEN NO OPINION WAS FORMED WHERE IS QUESTION OF CH ANGE OF OPINION. AT THE SAME TIME ON THE BASIS OF INITIATI ON OF PROCEEDINGS U/S 147/148 OF THE ACT FOR THE ASSESSME NT YEAR 2005-06 ON 23.5.2008 AND SINCE THE ASSESSING OFFICE R WAS HAVING REASON TO BELIEVE THAT IDENTICAL ISSUE IS IN VOLVED FOR ASSESSMENT YEAR 2004-0 THEREFORE IDENTICAL PROCEE DINGS WERE INITIATED FOR THE ASSESSMENT YEAR 2004-05 ALSO ON 1 3.6.2008 14 THEREFORE WE CONFIRM THE INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT FOR BOTH THE ASSESSMENT YEARS. 7. THE NEXT COMMON GROUND RAISED BY THE ASSESSEE PE RTAINS TO DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE AC T. NOW QUESTION ARISES WHETHER THE ASSESSING OFFICER RIGHT LY MADE DISALLOWANCE OF DEDUCTION U/S 80IB(10) ON THE BASIS OF AMENDED PROVISION WHICH CAME ON THE STATUTE ON A LA TER DATE. THE OBVIOUS REPLY IS NO BECAUSE IT IS ESTABLISHED LAW THAT SUBSTANTIVE POSITION UNLESS MADE SPECIFICALLY RETR OSPECTIVE CAN ONLY BE UNDERSTOOD AS HAVING PROSPECTIVE OPERATION FROM THE DATE ON WHICH IT BECOMES LAW OR ANY OTHER DATE SPEC IFIED IN THE STATUTE FOR EXAMPLE WHERE THE LAW PROVIDES FOR A P UNISHMENT FOR AN OFFENCE WHEN IT CAME ON STATUTE SUCH PROVIS ION CANNOT BE UNDERSTOOD AS HAVING RETROSPECTIVE EFFECT. THE R ATIO LAID DOWN IN GENERAL FINANCIAL COMPANY VS. ACIT (SUPRA) AND STAR INDIA P. LTD. VS. COMMISSIONER CENTRAL EXCISE (SUPR A) SUPPORTS OUR VIEW. EVEN IF IT IS PRESUMED THAT THE LD. ASSES SING OFFICER TOOK SHELTER OF THE AMENDED PROVISION EFFECTIVE FR OM A LATER DATE SO NO DISALLOWANCE IS REQUIRED TO BE MADE. 15 8. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED T HAT IF THE COMMERCIAL AREA OFFERED FOR TAXATION AND ACCEPTED BY THE DEPARTMENT WHICH IS WITHIN THE PRESCRIBED LIMIT AS PROVIDED IN PROVISO TO SUB-CLAUSE (D) TO SUB-SECTION (10) OF SE CTION 80IB OF THE ACT WHICH AT THE RELEVANT TIME SHOULD NOT EXCE ED 3% OF THE AGGREGATE AREA OF SUCH HOUSING PROJECT OR 5 000 SQ. FT. WITH EFFECT FROM 1.4.2010 AS SUBSTITUTED BY THE FINANCE ACT 2010 IF EXCLUDED THEN THE HOUSING PROJECT REMAINS WITHIN T HE PRESCRIBED LIMIT AND THE SAME HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THE LEARNED COUNSEL FOR THE ASSESSEE FI LED A LIST OF SALE FOR DIFFERENT FYS BY CLAIMING THAT IF THE COMM ERCIAL AREA IS EXCLUDED THEN ONLY FOLLOWING AREA OF RESIDENTIAL UN ITS REMAINED AND THE SAME IS WITHIN THE PRESCRIBED LIMIT: - SALE LIST FOR F.Y 2003-2004 B. NO. BUILT UP AREA H1 1484.88 H2 1484.88 H3 1484.88 H4 1484.88 H7 1484.88 H8 1484.88 H9 1484.88 H16 1484.88 16 H21 1484.88 H28 1484.88 S2 1453.6 S5 1453.6 M2 1348.8 M4 1348.8 M5 1348.8 M6 1348.8 J3 1111.4 J4 1111.4 J5 1111.4 J6 1111.4 J8 1111.4 J9 1111.4 J12 1111.4 J13 1111.4 J14 1111.4 J16 1111.4 J18 1111.4 J19 1111.4 J20 1111.4 J21 1111.4 J22 1111.4 J23 1111.4 J24 1111.4 J25 1111.4 J26 1111.4 J28 1111.4 L1 1257.5 L4 1257.5 L10 1257.5 L17 1257.5 MG1 902.12 MG2 902.12 MG3 902.12 MG4 902.12 MG5 902.12 MG6 902.12 MG7 902.12 MG8 902.12 MG9 902.12 MG10 902.12 MG11 902.12 MG12 902.12 MG13 902.12 17 MG14 902.12 MG15 902.12 MG16 902.12 MG18 902.12 MG19 902.12 MG20 902.12 MG21 902.12 MG22 902.12 MG24 902.12 MG25 902.12 MG26 902.12 MG27 902.12 MG28 902.12 MG29 902.12 MG30 902.12 MG31 902.12 MG32 902.12 MG33 902.12 MG34 902.12 MG35 902.12 MG36 902.12 SCH-4 5 384.16 SCH-2 226.23 SALE LIST OF F.Y2004-2005 B. NO. BUILT UP AREA H3 1484.88 H5 1484.88 H6 1484.88 H9 1484.88 H11 1484.88 H12 1484.88 H13 1484.88 H14 1484.88 H15 1484.88 H16 1484.88 18 H17 1484.88 H18 1484.88 H19 1484.88 H20 1484.88 H21 1484.88 H22 1484.88 H23 1484.88 H24 1484.88 H25 1484.88 H26 1484.88 H27 1484.88 H29 1484.88 S1 1453.6 S2 1453.6 S4 1453.6 S5 1453.6 M1 1348.8 M2 1348.8 M3 1348.8 M4 1348.8 M5 1348.8 M6 1348.8 M7 1348.8 M8 1348.8 M9 1348.8 M10 1348.8 J1 1111.4 J2 1111.4 J5 1111.4 J6 1111.4 J7 1111.4 J9 1111.4 J10 1111.4 19 J14 1111.4 J15 1111.4 J17 1111.4 J20 1111.4 J24 1111.4 J25 1111.4 J26 1111.4 J27 1111.4 J29 1111.4 J31 1111.4 J32 1111.4 L1 1257.5 L2 1257.5 L3 1257.5 L4 1257.5 L5 1257.5 L6 1257.5 L7 1257.5 L10 1257.5 L11 1257.5 L12 1257.5 L13 1257.5 L14 1257.5 L15 1257.5 L16 1257.5 L17 1257.5 MG6 902.12 MG8 902.12 MG14 902.12 MG15 902.12 MG16 902.12 MG17 902.12 MG18 902.12 20 MG19 902.12 MG20 902.12 MG21 902.12 MG22 902.12 MG23 902.12 MG24 902.12 MG25 902.12 MG26 902.12 MG27 902.12 MG28 902.12 MG29 902.12 MG30 902.12 MG31 902.12 MG34 902.12 MG35 902.12 MG36 902.12 SCH-1 157.93 SCM-1 190 SCS-1 190 SCM-9 190 SCS-5 190 SCJ-1 180 LCH-1 2 720 SCH-3 83 SCL-1 150 SALE LIST OF F.Y2005-2006 B. NO. BUILT UP AREA H1 1484.44 H12 1484.44 H17 1484.44 H28 1484.44 S3 1453.6 S4 1453.6 M9 1348.8 21 M10 1348.8 J1 1111.4 J11 1111.4 J16 1111.4 J17 1111.4 J30 1111.4 J31 1111.4 J32 1111.4 L5 1257.5 L7 1257.5 L8 1257.5 L12 1257.5 L16 1257.5 MG10 902.12 MG32 902.12 MG33 902.12 SCL1 150 SCL2 150 M3 1348.8 SCJ11 90 SCS4 190 SCS2 190 SCS-HALL-1 563 SCS-HALL-2 540 SCM-11&12 311 9. IN THE LIGHT OF THE AFORESAID DISCUSSION WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISIONS OF SECTION 80IB(1 0) OF THE ACT: [(10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UND ERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH 6A [ 2008 ] BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN THE PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT IF 22 ( A ) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER 1998 AN D COMPLETES SUCH CONSTRUCTION ( I ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL 2004 ON OR BEFORE THE 31ST DAY OF MARCH 2008; ( II ) IN A CASE WHERE A HOUSING PROJECT HAS BEEN OR I S APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL 2004 WITHIN FOUR YEARS FROM THE END OF THE FINANCI AL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE 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 HO USING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON TH E DATE ON 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 WH ICH 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 WHIC H 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 GOVE RNMENT OR A STATE GOVERNMENT FOR RECONSTRUCTION OR REDEVEL OPMENT OF EXISTING BUILDINGS IN AREAS DECLARED TO BE SLUM ARE AS 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 AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS 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 FEET AT ANY OT HER PLACE; 6B [ AND ] ( D ) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING P ROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUIL T-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET WH ICHEVER IS LESS.] 23 THE FOLLOWING CLAUSES (E) AND (F) SHALL BE INSERTED AFTER CLAUSE (D) OF SUB-SECTION (10) OF SE CTION 80-IB BY THE FINANCE (NO. 2) ACT 2009 W.E.F. 1-4-2010 : ( E ) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL; AND ( F ) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTE D TO ANY OF THE FOLLOWING PERSONS NAMELY: ( I ) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL ( II ) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA ( III ) ANY PERSON REPRESENTING SUCH INDIVIDUAL THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KA RTA. 6C [ EXPLANATION. FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTES THE HOUSING PROJE CT AS A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT). ] SUB-SECTION (10) WAS SUBSTITUTED BY THE FINANCE (NO .2) ACT OF 2004 W.E.F. 1.4.2005 AND PRIOR TO ITS SUBSTITUTION SUB-SECTION (10) AS AMENDED BY THE FINANCE ACT 2000 W.E.F. 1.4. 2001 AND FINANCE ACT 2003 WITH RETROSPECTIVE EFFECT FROM 1.4 .2002 READ AS UNDER: (10) THE AMOUNT OF PROFIT IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECT APPROVED BEFORE 31 ST DAY OF MARCH 2005 BY A LOCAL AUTHORITY SHALL BE 24 100% OF THE PROFIT DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE FIRST DAY OF OCTOBER 1998 (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILTUP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN 25 K.M. FROM THE MUNICIPAL LIMIT OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. 25 10. SO FAR AS THE APPROVAL BY A LOCAL AUTHORITY IS CONCERNED THE SUBSTITUTION WAS MADE BY THE FINANCE (NO.2) ACT 2009 W.E.F. 1.4.2009 AND THE APPROVAL BY THE LOCAL AUTHO RITY ON OR AFTER THE 1 ST DAY OF 2005 WITHIN FIVE YEARS FROM THE END OF TH E FY WAS INSERTED BY THE FINANCE ACT 2010 W.E.F. 1.4. 2010. 11. ON A QUESTIONING FROM THE BENCH TO THE LEARNED COUNSEL FOR THE ASSESSEE WHETHER THE COMMERCIAL AREA WAS M ORE THAN 2254 SQ.FT.? IT WAS EXPLAINED BY LEARNED COUNSEL FO R THE ASSESSEE THAT IN THE AUDITORS REPORT IN FORM 10CCB DOES NOT MENTION THAT THE BUILT UP COMMERCIAL AREA WAS MORE THAN 2254 SQ.FT. WITHOUT PREJUDICE IT WAS FURTHER EXPLAINED THAT THE TOTAL AREA OF THE PROJECT WAS 6.9 ACRES I.E. 6.97 X 43560 = 303613 SQ.FT. THE STATUTE ALLOWED THE COMMERCIAL AREA TO B E 5% I.E. 15180 SQ.FT. WHEREAS THE LD. CIT(A) MENTIONED IT AT 14663.85 SQ.FT. WHICH IS WITHIN THE LIMIT ALLOWED U/S 80IB(1 0)(D) AS THEN STOOD PRIOR TO 1.4.2010. THE COMMERCIAL AREA IS ONL Y 2254 SQ.FT. WHICH IS LESS THAN 5000 SQ.FT. AS PROVIDED IN SECTI ON 80IB(10)(D) OF THE ACT AS MENTIONED EARLIER THE SU B-SECTION WAS SUBSTITUTED W.E.F. 1.4.2005. THEREFORE NO DISA LLOWANCE CAN 26 BE MADE OF EARLIER ASSESSMENT YEARS ON THE BASIS OF LATER PROVISION SUBSTITUTED BY THE FINANCE ACT. 12. THE ANOTHER REASON FOR DISALLOWANCE OF DEDUCTIO N U/S 80IB(10) MENTIONED IN THE IMPUGNED ORDER ARE (I) CO MMERCIAL AREA AND (II) COMPLETION CERTIFICATE. AS WE HAVE ME NTIONED IN THE PRECEDING PARAS OF THIS ORDER SUB-SECTION (10) OF SECTION 80IB WAS SUBSTITUTED W.E.F. 1.4.2005 AND PERMISSION OF DEVELOPMENT OF THE PROJECT WAS RECEIVED ON 15.5.200 2 I.E. MUCH BEFORE 31.3.2008 AND AS PER THE COMPLETION CER TIFICATE THE PROJECT WAS COMPLETED ON 2.8.2005 THEREFORE I T SHALL NOT COVER THE ASSESSMENT YEARS UNDER CONSIDERATION BECA USE THE PROJECT WAS APPROVED ON 4.12.2002 & 15.5.2002. WHEN THERE IS AMENDMENT IN THE STATUTE AND RULES NORMALLY IF TH E AMENDMENT IS EFFECTIVE FROM 1 ST APRIL USUALLY IT IS UNDERSTOOD THAT IT IS APPLICABLE FROM ASSESSMENT YEAR STARTING FROM 1 ST APRIL FOR EXAMPLE IF THE AMENDMENT IS EFFECTIVE FROM 1.4 .1999 IT IS APPLICABLE FOR ASSESSMENT YEAR 1999-00 AND LATER YE ARS. THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN STATE OF KERLA VS. LEX GEORGE (2004) 271 ITR 290 WHERE SCHEDULE OF RA TES WAS 27 MODIFIED REDUCING INTER ALIA EXEMPTION LIMIT THE E FFECT IT WAS HELD THE EFFECT COULD BE GIVEN IN THE NEXT SUCCEED ING YEAR. WHILE COMING TO THIS CONCLUSION THE HON'BLE COURT ALSO CONSIDERED THE DECISIONS IN GOVIND GANGA SARAN VS. CST (155 ITR 144) (SC) GOOD YEAR INDIA LTD. VS. STATE (188 ITR 402) (SC) KESHAVE RAM IND. & COTTON MILLS VS. CWT (59 I TR 767) (SC) RELIANCE & JUTE IND. LTD. VS. CIT (120 ITR 92 1) (SC) AND TEA STATE INDIA LTD. VS. CIT (241 ITR 778) (MAD). T HE HONBLE APEX COURT IN THE CASE OF S.A.L. NARAYAN RAO VS. IS WARLAL BHAGWANDAS (57 ITR 149) (SC) HELD THAT RETROSPECTIV E EFFECT TO AMENDMENT/SUBSTITUTION IS NOT PERMISSIBLE UNLESS SP ECIFICALLY PROVIDED. 13. WE HAVE FOUND THAT SINCE THE COMMERCIAL AREA WA S SPECIFICALLY OFFERED FOR TAXATION AS NO DEDUCTION WAS CLAIMED FOR SUCH AREA U/S 80IB(10) OF THE ACT AS CLAIMED B Y THE LEARNED COUNSEL FOR THE ASSESSEE AND NOT CONTROVERTED BY TH E REVENUE THEREFORE SINCE THE SUBSTITUTION IN SUB-SECTION 10 OF SECTION 80IB WAS MADE W.E.F. 1.4.2005 AND THE PROJECTS WERE APPROVED IN THE YEAR 2002 THEREFORE NOW QUESTION ARISES AF TER EXCLUDING 28 THE COMMERCIAL AREA WHETHER THE RESIDENTIAL PROJECT REMAINS WITHIN THE PRESCRIBED LIMIT? EVEN IF ANY SUBSTITUTI ON IS MADE ON A LATER DATE IT WILL APPLY PROSPECTIVELY AND NOT W ITH RETROSPECTIVE EFFECT UNLESS AND UNTIL SPECIFICALLY SO MADE. WE FU RTHER FIND THAT IF THE COMMERCIAL AREA WHICH WAS OFFERED FOR TAXATI ON AND NO DEDUCTION WAS CLAIMED U/S 80IB(10) OF THE ACT IS EX CLUDED FROM THE TOTAL CONSTRUCTED AREA THEN THE BUILT UP AREA O F ALL THE RESIDENTIAL UNITS IS WITHIN PRESCRIBED LIMIT OF 150 0 SQ.FT. 14. THE SECOND OBJECTION OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PERTAINS TO COMPLETION CERTIFICATE WH ICH WAS REQUIRED TO BE OBTAINED WITHIN FOUR YEARS FROM THE YEAR IN WHICH PLAN WAS APPROVED. BOTH THE LOWER AUTHORITIES OBSE RVED THAT EVEN AS PER THE OLD PROVISIONS THE CONSTRUCTION WA S REQUIRED TO BE COMPLETED BEFORE 31 ST MARCH 2008 IN TERMS OF PROVISIONS OF SECTION 80IB(10) OF THE ACT INSOFAR AS PERMISSION WAS RECEIVED FOR DEVELOPMENT OF THE PROJECT ON 15.5.2002 I.E. MU CH BEFORE 31 ST MARCH 2008. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO STATED THAT AS PER EXPLANATION ( II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJEC T SHALL BE 29 TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IS ISSUED BY THE LOCAL AUTHORITY. THE ADMITTED FACT IN THE CASE IS THAT THE LOCAL AUTHORITY HAD ISSUED THE COMPLETION CERTIFICATE ON 16.04.2009. THEREFORE AS PER THE PROVISIONS OF EX PLANATION (II) BELOW CLAUSE (A) OF SECTION 80IB(10) THE DATE OF CO MPLETION OF THE CONSTRUCTION OF THE PROJECT SHALL BE TAKEN AS 1 6.04.2009. THUS THE APPELLANT HAD NOT COMPLETED THE CONSTRUCT ION OF THE HOUSING PROJECT WITHIN SPECIFIED PERIOD I.E. ON OR BEFORE 31.03.2008. HENCE THE APPELLANT HAD NOT FULFILLED ONE OF THE CONDITIONS LAID DOWN IN CLAUSE (A)(I) OF SECTION 80 IB(10) AND THEREFORE THE APPELLANT WAS NOT ELIGIBLE FOR DEDUC TION U/S 80IB(10). WE HAVE EXAMINED THE RECORD AND FIND THAT THE ASSESSEE HAS GOT ITS PROJECT COMPLETED ON 2.8.2005 EVEN THOUGH THE CERTIFICATE WAS ISSUED ON 16.4.2009. CO ORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 6.12.2010 IN THE CASE OF M/S D.K. CONSTRUCTION; ITA NO. 243/IND/2010 HAVE TAKEN A VIEW THAT FOR DETERMINING THE DATE OF COMPLETION W E HAVE TO GO SPECIFICALLY BY THE DATE MENTIONED IN THE CERTIFICA TE FOR COMPLETION OF THE PROJECT RATHER THAN THE DATE OF I SSUE OF 30 CERTIFICATE. THE RELEVANT OBSERVATIONS OF THE TRIB UNAL ARE AS UNDER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 11.1.2010 FOR THE ASSESSMENT YEAR 2006-07 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT 1961. 2. VARIOUS GROUNDS HAVE BEEN TAKEN BUT THE CRUX OF THE ASSESSEE REVOLVES AROUND DECLINE OF CLAIM OF DEDUCTION U/S 80-IB IN RESPECT OF ITS PROJECT D.K. HONEY HOMES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION BUILDING AND DEVELOPING OF HOUSING PROJECT. IN THE RETURN OF INCOME IT HAS CLAIMED DEDUCTION OF RS. 36 63 342/- U/S 80IB(10). THE AO OBSERVED THAT THE ASSESSEE HAS NOT COMPLIED WITH PRE- REQUISITE CONDITIONS FOR ALLOWING CLAIM U/S 80IB IN SO FAR AS ITS D.K. HONEY HOMES PROJECT WAS NOT COMPLETED PRIOR TO 31.3.2008. THE AO ALSO CALLED FOR INFORMATION U/S 133(6) FROM LOCAL AUTHORITIES. IT WAS INFORMED BY LOCAL AUTHORITIES THAT COMPLETION CERTIFICATE WAS NOT PROVIDED TO THE ASSESSEE. THE SAID LETTER OF LOCAL AUTHORITY WAS MADE PART OF ASSESSMENT ORDER BY THE ASSESSING OFFICER AND MARKED AS ANNEXURE A. BY THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF CLAIM U/S 80IB OF THE ACT AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. SHRI M.K.SHARMA C. A. APPEARED ON BEHALF OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS COMPLETED ITS PROJECT 31 BEFORE 31.3.2008 AND VIDE ITS LETTER DATED 21.3.2008 IT HAS ALREADY INFORMED TO LOCAL AUTHORITY REGARDING COMPLETION OF THE PROJECT. HE FURTHER SUBMITTED THAT AFTER GIVING THIS LETTER THE ASSESSEE WAS ASKING AGAIN AND AGAIN TO THE LOCAL AUTHORITIES FOR ISSUE OF NECESSARY CERTIFICATE. HE ALSO INVITED OUR ATTENTION TO THE LETTER OF MUNICIPAL AUTHORITIES DATED 15.12.2008 INDICATING THAT PROJECT OF M/S. D.K.HONEY HOMES WAS COMPLETED AND SAME WAS TRANSFERRED TO MUNICIPAL CORPORATION KOLHAR. AS PER LD. AUTHORIZED REPRESENTATIVE WHATEVER ASSESSEE CAN DO FOR GETTING THE CERTIFICATE IS TO INFORM THE COMPETENT AUTHORITIES REGARDING COMPLETION OF ITS PROJECT AND MERELY BECAUSE THIS CERTIFICATE WAS NOT ISSUED IMMEDIATELY BY THE LOCAL AUTHORITIES OVER WHICH THE ASSESSEE WAS NOT HAVING ANY CONTROL THE SAME CANNOT BE MADE THE BASIS FOR DENIAL OF CLAIM U/S 80IB. AS PER LD. AUTHORIZED REPRESENTATIVE INTENTION BEHIND ANY DEDUCTION U/S 80IB IS TO PROMOTE INVESTMENT IN A PARTICULAR SECTOR WHICH IS LESS PROFITABLE AND THE ASSESSEE HAS ALREADY DONE WHATEVER IT CAN DO. HOWEVER IT HAS NO CONTROL OVER THE LOCAL AUTHORITIES FOR GETTING CERTIFICATES ISSUED. DURING THE COURSE OF HEARING HE WAS PARTICULARLY ASKED TO AGAIN OBTAIN A CERTIFICATE OF LOCAL AUTHORITY WITH SPECIFIC MENTION OF COMPLETION OF PROJECT BEFORE 31.3.2008 WHICH IS A BASIC CONDITION FOR ALLOWING CLAIM U/S 80IB(10). THE ASSESSEE AGAIN PRODUCED THE CERTIFICATE WHICH WAS AGAIN DULY VERIFIED FROM THE LOCAL AUTHORITIES TO THE EFFECT THAT A LETTER DATED 21.3.2008 BY THE ASSESSEE INTIMATING TO LOCAL AUTHORITY FOR COMPLETION OF ITS PROJECT AT KHASRA NOS. 74 75 78 79 91 94 102 104 419 420 421 WAS RECEIVED BY THE 32 MUNICIPAL CORPORATION ON 29.3.2008. ON THE BASIS OF THIS CERTIFICATION THE LD. AUTHORIZED REPRESENTATIVE FURTHER CONTENDED THAT THE ASSESSEE HAS DONE WHATEVER HE HAS EXPECTED TO DO AND THAT LETTER REGARDING COMPLETION OF PROJECT WAS DULY ENTERED IN MUNICIPAL RECORD ON 29.3.2008 ON THE BASIS OF WHICH THE ASSESSEE SHOULD BE ALLOWED CLAIM OF DEDUCTION U/S 80IB. 6. ON THE OTHER HAND THE LD. SR. DR DREW OUR ATTENTION TO THE LETTER ISSUED BY THE LOCAL AUTHORITIES DATED 11 TH NOVEMBER 2008 CLEARLY INDICATING THAT NO COMPLETION CERTIFICATE HAS BEEN ISSUED TO THE ASSESSEE. THIS INFORMATION WAS DIRECTLY CALLED BY THE ASSESSING OFFICER FROM MUNICIPAL CORPORATION BHOPAL. AS PER LD. SR. DR THE PRIMARY CONDITION FOR ALLOWING CLAIM OF DEDUCTION U/S 80-IB IS THAT THE PROJECT SHOULD BE APPROVED PRIOR TO 1.4.2004 AND SHOULD HAVE BEEN COMPLETED BEFORE 31.3.2008. THE FIRST CONDITION REGARDING APPROVAL WAS NOT DISPUTED BUT THE SECOND CONDITION WHICH IS ALSO EQUALLY IMPORTANT FOR ALLOWING ASSESSEES CLAIM IS REGARDING COMPLETION OF THE PROJECT WHICH HAS NOT BEEN FULFILLED. HE ACCORDINGLY JUSTIFIED THE ORDER OF THE LD. CIT(A) FOR CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80- IB. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND RELEVANT MATERIAL PLACED ON RECORD TOWARDS WHICH OUR ATTENTION WAS INVITED DURING THE COURSE OF HEARING BY THE LD. AUTHORIZED REPRESENTATIVE AND THE LD. SENIOR D.R. PROVISIONS OF SECTION 80IB ALLOWS CLAIM FOR DEDUCTION IN RESPECT OF HOUSING PROJECT WHICH HAS BEEN APPROVED PRIOR TO 1.4.2004 AND ALSO COMPLETED BEFORE 31.3.2008. 33 DURING THE COURSE OF ASSESSMENT WITH REGARD TO ASSESSEES CLAIM OF DEDUCTION U/S 80IB IN RESPECT OF ITS D.K.HONEY HOMES PROJECT THE AO HAS ASKED THE ASSESSEE TO FURNISH THE CERTIFICATE OF COMPLETION OF THIS PROJECT M/S. D.K. HONEY HOMES. THE AO ALSO DIRECTLY CALLED INFORMATION FROM LOCAL AUTHORITIES BY ISSUING SUMMONS U/S 133(6) AND A LETTER WAS ISSUED BY THE COMPETENT AUTHORITY DATED 11 TH NOVEMBER 2008 CONFIRMING THAT NO COMPLETION CERTIFICATE HAS BEEN ISSUED BY THIS OFFICE. ACCORDINGLY THE ASSESSEES CLAIM FOR DEDUCTION U/S 80-IB WAS DECLINED. SECTION 80IB CLEARLY DEFINES THE DATE OF COMPLETION AS 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 AUTHORITIES IT MEANS LOCAL AUTHORITIES IS COMPETENT TO CERTIFY THE DATE OF COMPLETION OF HOUSING PROJECT. THE DATE OF ISSUE OF SUCH LETTER BY THE LOCAL AUTHORITIES IS NOT SO CRUCIAL BUT IT SHOULD HAVE CLEARLY MENTIONED THE DATE OF COMPLETION OF PROJECT. WHEN THE PROJECT IS COMPLETED ON 31.3.2008 AND THE ASSESSEE HAS INFORMED REGARDING SUCH COMPLETION THE LOCAL AUTHORITIES MAY TAKE ITS OWN TIME FOR ISSUE OF CERTIFICATE WHICH MAY BE EVEN AFTER 6-7 MONTHS BUT THE LETTER SO ISSUED BY THE LOCAL AUTHORITIES SHOULD CLEARLY MENTION THE DATE OF COMPLETION OF SUCH PROJECT. MERELY BECAUSE SUCH CERTIFICATE IS ISSUED AFTER GAP OF 8-9 MONTHS OR EVEN ONE YEAR WILL NOT ADVERSELY AFFECT THE ASSESSEE IF IT HAS MENTIONED CLEARLY THE DATE OF COMPLETION OF PROJECT PRIOR TO 31.3.2008. ONCE THE LETTER FOR COMPLETION OF PROJECT IS GIVEN BY THE ASSESSEE TO THE LOCAL AUTHORITY IT IS THE DUTY OF THE LOCAL AUTHORITY TO VERIFY 34 PHYSICALLY THE PROJECTS STATED TO BE COMPLETED FROM ITS OWN PARAMETERS. THIS PROCESS MAY TAKE TIME AND THEREFORE THE DATE OF ISSUE OF LETTER IS NOT SO CRUCIAL TO DETERMINE THE ASSESSEES ELIGIBILITY FOR CLAIM OF DEDUCTION AS PER EXPLANATION (II) OF SECTION 80IB(10)(A) OF THE INCOME-TAX ACT 1961. WHAT IS CRUCIAL IS DATE MENTIONED IN THE LETTER SO ISSUED CERTIFYING COMPLETION OF THE PROJECT. THUS THE DATE OF ISSUE OF LETTER IS NOT IMPORTANT BUT THE DATE MENTIONED IN THE LETTER CERTIFYING COMPLETION OF PROJECT IS IMPORTANT. WE THEREFORE DO NOT FIND ANY MERIT IN THE OBSERVATION OF THE LOWER AUTHORITIES TO THE EFFECT THAT THE DATE OF COMPLETION SHALL BE TAKEN THE DATE ON WHICH CERTIFICATE IS PHYSICALLY ISSUED BY THE LOCAL AUTHORITIES. 8. IN VIEW OF THE ABOVE DISCUSSION WE RESTORE THE MATTER BACK TO THE FILE OF AO AND ASSESSEE IS AT LIBERTY TO PROCURE THE REQUIRED LETTER/CERTIFICATE FROM THE LOCAL AUTHORITY CLEARLY MENTIONING THEREIN THE DATE OF COMPLETION OF THE PROJECT. THE AO IS TO DECIDE THE ISSUE AFRESH AS PER LAW AFTER CONSIDERING THE LETTER OF COMPLETION IF ANY FURNISHED BY THE ASSESSEE. WE DIRECT ACCORDINGLY. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER 2010. IN VIEW OF THE ABOVE WE ARE OF THE OPINION THAT IF THE PROJECT WAS COMPLETED ON OR BEFORE 31 ST MARCH 2008 IT CANNOT BE PRESUMED THAT ON THE VERY SAME DAY THE MUNICIPAL AU THORITY WOULD ISSUE THE CERTIFICATE AS IT WOULD TAKE SOME T IME FOR 35 VERIFICATION OF THE PROJECT AND COMPLIANCE OF VARIO US TERMS AND CONDITIONS CONTAINED IN THE SANCTIONED PLAN AND ONL Y THEREAFTER COMPLETION CERTIFICATE WOULD BE ISSUED. WE HAVE PE RUSED THE COMPLETION CERTIFICATE AS PLACED ON PAPER BOOK PAGE NO. 1 DATED 16.4.2009. THIS CERTIFICATE SPECIFICALLY MEN TIONS THE FACT THAT THE COMPETENT AUTHORITY HAS SUPERVISED THE PRO JECT AND THE SAME WAS COMPLETED ON 2.8.2005 ACCORDING TO THE SAN CTION GRANTED VIDE LETTER DATED 25.9.2002. THE CERTIFICAT E ALSO MENTIONED THE FACT THAT THE BUILDING HAS BEEN COMPL ETED AS PER THE APPROVED PLAN IN ALL RESPECTS. IN THESE CIRCUM STANCES THERE IS NO REASON EVEN TO DOUBT THAT THE ASSESSEE HAS CONSTRUCTED ANY PORTION OTHER THAN WHAT WAS APPROVE D BY THE COMPETENT AUTHORITY WHICH WAS BELOW 1500 SQ.FT. IN VIEW OF THE ABOVE DISCUSSION IT IS CLEAR THAT EACH INDIVIDUAL UNIT CONSTRUCTED AND SOLD BY THE ASSESSE E WAS BELOW 1500 SQ.FT. AFTER EXCLUSION OF THE COMMERCIAL AREA AND THE COMPLETION OF THE PROJECT WAS WITHIN THE STATUTORY PERIOD PRESCRIBED UNDER ACT AS MENTIONED IN THE CERTIFICAT E ISSUED BY THE COMPETENT AUTHORITY. CONSEQUENTLY THERE IS MER IT IN THE 36 APPEALS OF THE ASSESSEE AND THE ASSESSEE IS ELIGIBL E FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT THEREFO RE THESE APPEALS ARE ALLOWED. FINALLY THE APPEALS OF THE ASSESSEE ARE ALLOWED I N THE TERMS INDICATED HEREINABOVE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21.11. 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.11.2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE DN/-