TMI Blog2017 (9) TMI 1939X X X X Extracts X X X X X X X X Extracts X X X X ..... on the income of the project while the same is incomplete. Therefore, we dismiss the said ground holding that the amended provisions of clause (a)(i) of section 80IB(10) of the Act apply to the Housing Projects approved prior to the said amendment. - Decided against assessee. - ITA No. 1128/PUN/2014 - - - Dated:- 8-9-2017 - SHRI D.KARUNAKARA RAO AND SHRI VIKAS AWASTHY, JJ. Appellant by : Shri S.N. Puranik Respondent by : Dr. Vivek Aggarwal ORDER D. KARUNAKARA RAO, J. This appeal is filed by the assessee against the order of CIT(A), Aurangabad, dated 28-03-2014 for the Assessment year 2004-05. 2. Briefly stated relevant facts are that the assessee is a company engaged in the business of developing and building housing projects, hotel business, investments and also dealing in shares and securities. A search action u/s.132 of the Act was conducted on 19-01-2010 at the business and residential premises of assessee and different members/associate concern of the Tapadia Group of Aurangabad. Assessee filed the return of income on 15- 02-2011 declaring total income of ₹ 27,02,729/- and agricultural income at Nil. Assessee claimed deduction of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relied on the orders of the AO and the CIT(A) dutifully. Further, Dr. Vivek Aggarwal, Ld. Departmental Revenue for the Revenue brought our attention to the relevant provisions of section 80IB(10), pre-amendments as well as post amendments and submitted that clause (a)(i) of section 80IB(10) precisely meant for the projects commenced on or after 01-10-1998 and completed on or before 31-03-2008. Referring to the specific provisions of sub-clause (a)(i) of section 80IB(10) of the Act, Ld. Departmental Representative for the Revenue explained the projects approved prior to 01-04-2004, which covers the assessee s case, is required to be completed on or before 31-03-2008. 5. Further, referring to the recent judgment (dated 07-04-2017) of Hon ble Allahabad High Court in the case of CIT Vs. Arif Industries reported in (2017) 80 taxmann.com 374, the Ld. Departmental Representative for the Revenue submitted that the High Court traced the history of the provisions relating to the condition relating to the date of completion of the project and considered the Madhya Pradesh High Court judgment before explaining the said provisions of clause (a)(i) of section 80IB(10) of the Act and held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 st day of October, 1998; 8. From the above, when comparison is made between the pre-amended and post-amended provisions of clause (a) of section 80IB(10) of the Act, the post amendments provide for specific due date of 31-03-2008 in respect of the projects approved by the local authority before 01-04-2004. Assessee s project is approved prior to 01-04-2004. The language provided in clause (a) expressively provides for the specific date of completion in respect of the projects cleared by the Municipal authorities prior to the said amendment. The judgment of Hon ble Allahabad High Court in the case of Arif Industries (supra) is relevant. Relevant Operative paras from 58 to 66 are extracted for reference as under : 58. Now we take up question (iii) of Income Tax Appeal No. 9 of 2014, questions (iii), (iv) and (v) of Income Tax Appeal No. 13 of 2017, since all these questions relate to sub-section 10(a)of Act, 1961, i.e., completion of project. Historical backdrop shows that period of comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omething which is impossible to achieve. 24. The next question that needs to be answered, is, whether the stipulation in Section 80IB(10)(a) can be said to be directory. Considering the prodigious benefit offered in terms of Section 80IB to the assessee (hundred per cent of the profits derived in any previous year relevant to any assessment year); and the purpose underlying the same - which is inter alia burden on the public exchequer due to waiver of commensurate revenue - the stipulation for obtaining completion certificate from the Local Authority before the cut off date, must be construed as mandatory. The fact that compliance of that condition is dependent on the manner in which the proposal is processed by the Local Authority, the provision cannot be construed as a directory requirement. It is a substantive provision mandating issuance or grant of completion certificate by the Local Authority before the cut off date or specified time, as a precondition to get the benefit of tax deduction. Else, it will then be open to the assessee to rely on other circumstances or evidence to plead that the housing project is complete - requiring enquiry into those matters by the Tax Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63. There is another judgment of Delhi High Court in CIT Vs. CHD Developers Ltd. (2014) 362 ITR 177 (Delhi) which followed Manan Corporation Vs. ACIT (supra) but aforesaid judgment has been rendered after following judgment in CIT Vs. Veena Developers (supra) wherein clause (d) of sub-Section 10 was considered and then it was observed that Section 80-IB(10) as amended w.e.f. 01.04.2005 is prospective and not retrospective. 64. There is another judgment of Gujarat High Court in CIT Vs. Tarnetar Corporation (2014) 362 ITR 174 (Gujarat) but as a matter of fact, therein construction completed well before 31.03.2008 and hence those judgments did not consider Section 80-IB(10)(a) in the light of fact that requirement of completion of project within specified time had continued since inception and was inapplicable for a smaller period of three years. 65. Looking to objective and purpose of conditions of completion of project and the fact that it is not a provision which came for the first time altogether into existence on 01.04.2005, we are inclined to follow Madhya Pradesh High Court's judgment in The Commissioner of Income Tax, Bhopal Vs. M/s Global Reality (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, which were inserted by Finance (No.2) Act, 2004 w.e.f. 01.04.2005 were not there on the statute and consequently even in cases where the assessee had not completed the construction of the housing project on or before 31st day of March, 2008, the assessee is entitled to claim the deduction in respect of the period within which the said housing project has been completed, irrespective of the date of 31st day of March, 2008. The said provisions of the Act which has been substituted by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 talks of a housing project which had been approved by the local authority before the 1st day of April, 2004 and thereafter period of four years has further been granted to comply with the development and construction of the housing project i.e. on or before 31st day of March, 2008. The case of the assessee before us was that the said provisions do not have retrospective operation and have to be applied prospectively. We find no merit in the said plea of the assessee that where the section was inserted w.e.f. 01.04.2005 and it talks of the projects which have been approved by the local authority before 1st day of April, 2004, then how could the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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