TMI Blog2013 (10) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... al year. If subsequently, the Assessing Officer finds that after completion of statutory period the assessee has failed to furnish the completion certificate, the deduction so allowed knowingly is liable to be withdrawn. Accordingly, we do not find any infirmity in the order of CIT(A) for upholding the reopening of assessment for the purpose of withdrawal of deduction claimed and allowed u/s 80IB(10). No infirmity in the orders of lower authorities for withdrawal of claim of deduction allowed u/s 80IB(10)while framing assessment u/s 143(3), due to non-furnishing of completion certificate, after completion of stipulated period of four years which expired on 31.03.2008. - I.T.A.No. 177/Ind/2013 - - - Dated:- 8-10-2013 - Joginder Singh ( J. M. ) And R. C. Sharma ( A. M. ) For the Petitioner : H. P. Verma, Girish Agrawal For the Respondent: R. A. Verma ORDER R. C. Sharma ( A.M. ) This is an appeal filed by the Revenue against the order passed by the CIT(A), dated 9.1.2013 for the assessment year 2004-05 in the matter of order passed u/s 147/143(3) of the Income-tax Act, 1961. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions for claim of deductions u/s 80IB(10), the assessing officer disallowed the appellant's claim of deduction u/s 80IB (10) amounting to ₹ 29,52,969/-. 6. By the impugned order, the ld. CIT(A) allowed assessee s claim of deduction u/s 80IB(10) after having the following observations :- 4.4 I have carefully considered the submission of the appellant as also the observation of the Assessing Officer including all material facts regarding disallowance of claim u/s 80IB(10) that Audit report in form no. 10CCB was not filed with the return, it may be noticed that there is no dispute regarding the fact that audit report in form no.10CCB was filed during the reassessment proceeding. In this background, keeping the view the decision of Honorable Courts relied upon by the appellant including the jurisdictional High Court. in my view simply not tilling the audit report with the return may not justify rejection of the claim u/s 80IB(10) of IT Act if the assessee had furnished audit report in form no.10CCB during assessment proceedings. The Hon'ble jurisdictional High Court in the case of CIT Vs Panama Chemical Works, (2007) 292 ITR 197 held that if the assessee fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the assessment year involved in the case of the appellant under consideration is AY 2004- 05 and, hence the provisions of the amended section 80IB(10) are not applicable in the case of the appellant for A.Y. 2004-05. 4.4.2 It may be noted that the law applicable will be the law as on 1st April of the assessment year is universally accepted proposition as had been pointed out in a number of cases e.g. in Reliance Jute Industries Ltd. Vs. CIT (1979) 120 ITR 921 (SC), it is held that assessment for one assessment year not to be affected by law in force in another assessment year. It is cardinal principle of law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. The Hon'ble Madras High Court also observed in Om Sindhoori Capital Investments Ltd. Vs. Joint CIT (2005) 272 ITR 427 (Mad) that the law that governs the assessment, is the law that is prevailing on April 1, of the assessment year in question. It would be relevant to reproduce the provisions of sub-section (10) of section 80IB as were on statute for A.Y. 2004-05 as under:- (10) The amount of profits in case of an undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order, it cannot be fatal to claim of the assessee and deduction and Assessing Officer should accept the same. In the instant case before us, the requisite report in form 10CCB was filed by the assessee before completion of assessment. Accordingly, we do not find any infirmity in the order of CIT(A) for disregarding Assessing Officer s observation regarding filing of audit report alongwith return of income. 10. With regard to filing of completion certificate, we found that the assessment year under consideration is 2004-05, whereas amendment was brought in statute by the Finance Act, 2004 w.e.f. assessment year 2005-06. Up to the assessment year 2004-05, the filing of completion certificate was not a pre-requisite condition of claim of deduction u/s 80IB. The amended provisions of Section 80IB by the Finance Act no.2 of 2004 w.e.f. 1.4.2005 are applicable prospectively in respect of assessment year 2005-06 and subsequent assessment years. I.T.A.T., Indore Bench, have taken a consistent view that condition with regard to filing of completion certificate is applicable from assessment year 2005-06 and not prior to it. In assessee s own case in I.T.A.No. 6/Ind/2012 vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing project. The appellant had filed its original return of income for A.Y. 2005-06 on 30/10/2005 declaring income of ₹ 33,02,470/-, after claiming deduction U/S 80IB (10) at ₹ 55,50,202/-. Search and seizure operations u/s 132(1) of the IT Act were carried out on 02.11.2004. Thereafter, the assessment was completed u/s 153A r.w.s. 143(3) of IT Act on 29.12.2006 in which appellant's claim of deduction u/s 80IB(10) was allowed. The appellant filed an appeal against this assessment order before CIT (Appeals)-I, Bhopal which was decided vide order dated 16.05.2007, wherein certain relief were allowed and appeal effect was given vide order dated 20.06.2007 determining taxable income at ₹ 33,02,470/-. Subsequently, re-assessment proceedings were initiated U/S 147 by issuing notice U/S 148 of IT Act on 05.03.2011 which was served upon the appellant on 07.03.2011. In response to notice u/s 148, the appellant submitted before the AO that the original return filed on 30.10.2005 may be treated as return filed in response to notice U/S 148. The reasons recorded were also supplied to the appellant. The appellant had filed objections on the reasons recorded for re-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/03/2008. However, the assessee has not completed its project by 31/03/2008 or neither any project completion certificate has been issued by local authority to the assessee nor the assessee has furnished it. Therefore, the deduction u/s 80 IB (10) of ₹ 55,50,202/- wrongly claimed by the assessee needs to be withdrawn. The escapement a income aforesaid occurred because of reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. In view of above, I have reason to believe that income chargeable to tax amounting to ₹ 55,50,202/- has escaped assessment for A.Y. 2005-06 within the meaning of section 147 of the income Incometax Act, 1961. From the above reasons, it is evidently clear that the AO had specifically mentioned that income had escaped assessment for A.Y. 2005-06 on account of failure of the appellant to disclose fully and truly all material facts necessary for assessment i.e. not furnishing the audit report in form no. 10CCB alongwith the return of income as well as not completing the construction of the housing project within the specified period upto 31.03.2008 and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 10CCB was not filed with the return, it may be noticed that there is no dispute regarding the fact that audit report in form 10CCB was filed during re-assessment proceeding. In this back ground, keeping in view the decisions of Hon'ble Courts including the Jurisdictional High Court, in my view simply not filling the audit report with the return may not justify rejection of the claim u/s 80IB(10) of Income-tax Act, 1961, if the assessee had furnished audit report in form no. 10CCB during assessment proceedings. The Hon'ble Jurisdictional High Court in the case of CIT vs. Panama Chemical Works, (2007) 292 ITR 197 held that if the assessee fails to file such report along with the return but files it subsequently before completion of assessment order, it may not be fatal to the claim of the assessee of deduction and the Assessing Officer should accept the same. It is also noticed that the requisite report i.e. Form No. 10CCB was filed by the appellant before completion of the assessment. Therefore, in my opinion, this can not be a valid ground for rejection of claim u/s 80IB(10 of Income-tax Act, 1961,. This finding is further supported by following decisions:- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute for A. Y. 2005-06 as under (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 1st day of March, 2007, by a local authority, shall be hundred per cent of the profits 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 I day of October, 1998 and complete 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, is approved by the local authority on or after the 1st day of April, 2004, within four years from the end of the financial 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 housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion U/S 80-0 as under :- Fulfillment of the objectives of the provisions of section 80-0, without fulfilling the conditions laid down in plain and clear language will not enable the assessee to have the benefit of the section. It is true that an exemption provision should be liberally constructed, but this does not mean that such liberal construction should be made even by doing violence to the plain meaning of such exemption provision. Liberal construction will be made wherever it is possible to be made without impairing the legislative requirement and the spirit of the position. Therefore, considering the facts and circumstances of the case and legal position on the issue involved, I am of the considered opinion that since the appellant had not fulfilled the condition laid down in plain and clear language of clause (a)(i) read with Explanation-(ii) of Section 80IB(10), the appellant was not eligible to have benefit of deduction u/s 80IB(10) for assessment year 2005-06. Accordingly, the disallowance of the appellant s claim of deduction u/s 80IB(10) of ₹ 55,50,202/- made by the Assessing Officer for assessment year 2005-06 is confirmed. Thus, these ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion certificate of the project, which was a condition precedent for allowability of deduction u/s 80IB, the Assessing Officer was held to be justified in reopening the assessment for withdrawal of deduction claimed and allowed u/s 80IB(10) of the Income-tax Act, 1961, even after completion of four years. There is no dispute to the well settled legal proposition that deduction claimed in the return u/s 80IB with respect to partial completion of project is required to be allowed if all the conditions are satisfied, which, inter alia, mentions that the assessee will complete the project within a period of four years. In the instant case, the assessee s claim of deduction u/s 80IB(10) was allowed while framing assessment u/s 143(3). Assessee was required to complete the project on 31st March, 2008, and furnish the completion certificate before Departmental Authorities. However, no such completion certificate was filed. There is a clear finding in the order of both the lower authorities that till date no completion certificate was furnished by the assessee. It is also not the case of the assessee that he has procured and furnished the completion certificate. The only plea of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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