2012 (12) TMI 7 - AT - Income Tax

Reassessment u/s 147 - Issuance of notice when the after four years have been expired. - held that - In the assessment year 2002-03, the return was filed on 30th October, 2002, and notice was issued u/s 148 on 24.2.2009. In this year, return was originally processed u/s 143(1) and there was no scrutiny assessment u/s 143(3), therefore, contention of the assessee that since reopening was initiated after four years from the end of the relevant assessment year under proviso to Section 147 reopening was not valid, does not hold true in so far as there was no scrutiny assessment u/s 143(3). Therefore, proviso to Section 147 is not applicable. - Decided against the assessee. Deduction u/s 80IB - held that - no merit in the order of lower authorities for decline of claim of deduction on the ground of not fulfilling condition of furnishing the completion certificates, which condition was made effective by the Finance Act, 2004,w.e.f. 2005-06. Deduction u/s 80IB - contractor versus Developer - held that - The facts for assessment year 2002-03 to 2004-05 are similar, wherein the assessee had undertaken development of project as a whole rather than simple work as contractor. - Deduction allowed - Decided in favor of assessee. With respect to the assessment year 2006-07 and 2007-08 - it has to be deemed that the date of the completion is the same as the date claimed by the assessee. By referring to all these decisions, the assessee has also highlighted the absurdity in Explanation (ii) of Section 80IB(10) with regard to completion certificate. After highlighting various decisions, the ld. Authorized Representative has submitted that absurdity has to be avoided in interpretation of the statutory provisions. Similarly, where the interpretation leads to futility, it cannot be accepted. Rule of reasonable construction was also highlighted with reference to the C.B.D.T. Circular as well as Judicial pronouncement by Hon ble Supreme Court. It was also contested that the rule of beneficial interpretation should be applied and fiscal statute must be interpreted in favour of the assessee. Assessing Officer directed to decide this issue of completion certificate after verifying the certificate of completion dated 22.3.2010 placed on record and in terms of the observations made in this order. In the result, the appeals for the assessment years 2001-02 to 2004-05 are allowed. Appeal for assessment year 2005-06 is dismissed and appeals for assessment years 2006- 07 and 2007-08 are allowed for statistical purposes.

Issues Involved:
1. Validity of reopening of assessment under Section 147.
2. Withdrawal of deduction under Section 80IB(10).
3. Compliance with conditions for claiming deduction under Section 80IB(10).
4. Status of the assessee as a developer or contractor.
5. Requirement of completion certificate for claiming deduction under Section 80IB(10).

Detailed Analysis:

1. Validity of Reopening of Assessment under Section 147:
The assessee contended that the reopening of assessment under Section 147 was invalid as there was no failure on their part to disclose fully and truly all material facts necessary for the assessment. The assessee had already filed returns along with necessary documents, and the first reassessment was completed under Section 147/143(3). According to the proviso to Section 147, reopening is not justified unless there is a failure on the part of the assessee to disclose true and correct income. The Tribunal found that there was no failure on the part of the assessee to disclose material facts, and thus, reopening based on a mere change of opinion is invalid.

2. Withdrawal of Deduction under Section 80IB(10):
The assessee challenged the withdrawal of deduction under Section 80IB(10), arguing that they had complied with all conditions for the deduction. The Tribunal noted that the project was approved by the Municipal Corporation, and the assessee had incurred expenses on construction materials. The Tribunal found that the Assessing Officer's observations were factually incorrect and that the assessee was eligible for the deduction.

3. Compliance with Conditions for Claiming Deduction under Section 80IB(10):
The Tribunal observed that the assessee had undertaken housing projects and complied with all conditions for claiming deduction under Section 80IB(10). For assessment years 2001-02 to 2004-05, the Tribunal found that the assessee had fulfilled all conditions, including the development of infrastructure and construction of houses. The Tribunal also noted that the requirement for a completion certificate was introduced only from assessment year 2005-06 onwards, and thus, the assessee was not required to furnish it for earlier years.

4. Status of the Assessee as a Developer or Contractor:
The Tribunal examined the terms and conditions of the agreement between the assessee and the Municipal Corporation and concluded that the assessee acted as a developer, not merely a contractor. The assessee was responsible for the entire development project, including infrastructure and construction, and sold the dwelling units to the public. The Tribunal emphasized that the assessee invested its own money and was not paid on a running bill basis like a contractor.

5. Requirement of Completion Certificate for Claiming Deduction under Section 80IB(10):
For assessment years 2001-02 to 2004-05, the Tribunal held that the requirement for a completion certificate was not applicable as it was introduced only from assessment year 2005-06. For assessment year 2005-06, the Tribunal found that the assessee had applied for the completion certificate but did not receive it from the Municipal Corporation. The Tribunal directed the Assessing Officer to verify the completion certificate and decide accordingly.

Conclusion:
- The appeals for assessment years 2001-02 to 2004-05 were allowed, as the assessee fulfilled all conditions for claiming deduction under Section 80IB(10).
- The appeal for assessment year 2005-06 was dismissed due to the absence of a completion certificate.
- The appeals for assessment years 2006-07 and 2007-08 were allowed for statistical purposes, with directions to the Assessing Officer to verify the completion certificate and decide afresh.

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