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TMI Blog2012 (12) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Assessing Officer stated that the assessee has sold only structure and has not debited any expenses towards sanitary fittings, electrical fittings and construction of floor etc. The Assessing Officer also stated that no opening and closing stock has been disclosed. From the record, we found that the observation of the Assessing Officer was factually incorrect in so far as P. B-13 filed before the lower authorities clearly shows opening work in progress and closing work in progress. Further, schedule J placed at P.B.17 shows expenses incurred on brick, cement, wood and misc. material purchased by the assessee. 6. With regard to validity of reopening, it was contended by the ld. Authorized Representative that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. 7. The detailed contention of the ld. Authorized Representative with regard to validity of reopening was as under :- The assessee filed return u/s. 139 alongwith audited accounts in Form No. 3CA and 3CD and report in Form No. 10CCB. It claimed deduction u/s. 80IB(lO). The details of project were given. Ld AO initiated first reassessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding failure on part of assessee Where notice u/s. 148 is issued beyond 4 years, the reasons should state that there was failure on part of assessee to disclose fully and truly all material facts necessary for his assessment for the concerned AY. There was no mention in the reasons so recorded that there was a failure on part of assessee to disclose true and correct income. Hindustan Lever Ltd. vs R.B. Wadkar ACIT 268 ITR 332(Bom.); Dhampur Sugar Mills ltd. 239 CTR 303 (All.) Shri Warana Sahakari, 284 ITR 477 (Bam.) D. Change of Opinion Assessment u/s. 147 r/w section 143(3) was already completed. In this assessment, reopening was done only on the ground of disallowance of section 80IB(10), although on the ground of MAT. While framing the assessment, Id AO had already formed an opinion that the assessee is eligible for deduction u/s. 80IB(10). 8. Thus, reopening on the ground that the deduction u/s. 80IB(10) is not allowable, is bad in law, as it is based on a mere change of opinion. CIT vs Eicher Ltd. 294 ITR 310 (Del.) KLM Royal Dutch Airlines 292 ITR 49 (Det.), CIT vs. Goetze (India) Ltd. 229 CTR 167 (Del.) Thus, it is submitted that reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing house. For this purpose, the assessee was entitled to appoint any engineers, contractors, architect . Para 5 of P. B. 50 further provides that necessary building plans shall be prepared by the assessee and for which necessary approval will be obtained. 13. In view of the above, we found that the scope of work to be undertaken by the assessee was not merely as a contractor but development of the project as a whole, which consisted of construction of various number of houses, roads, sewerage line etc., which renders the assessee as a Developer of a Project. Accordingly, the assessee s eligibility condition for claim of deduction u/s 80IB(10) in the capacity of developers was duly satisfied in all the years under consideration. 14. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where Municipal Corporation invited tenders for construction of dwelling unit and paid the contract amount to the assessee and sold that dwelling units themselves. On the contrary, they received money from the assessee towards their land and assessee developed, constructed and sold the dwelling unit at the price fixed by them and kept the total consideration with themselves. Thus, we found that the assessee was not merely a contractor but a developer of the Housing Project as a whole. Anubandh Patra also indicate that permission from Town Country Planning was obtained by the Municipal Corporation on 4.9.1999 and the said Corporation made it part of agreement vide clause nos. 1 2 that the construction of the dwelling unit shall be as per map provided by them. It is evident that the development of the site and construction of the dwelling unit has absolutely been done as per map approved by Municipal Corporation on 21.1.2000 and the same was also to the satisfaction of the Municipal Corporation, Bhopal. The Project was started by the assessee on 31.1.2000 and completed before 31st March, 2003. It is pertinent to mention here that Finance Act, 2003 abolished the condition of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative was that reopening was merely on the change of opinion. The assessee has sold the house and not only land. The draft agreement placed at page 113 to 121 and the sale deed at page 123 to 146, which clearly shows that house was sold and not merely land. 24. In view of the above discussion, we can safely conclude that from assessment year 2001-02 to, 2004-05, the assessee has complied with all the conditions for claiming deduction u/s 80IB(10). So far as the status of assessee as a Developer is concerned, as per our observation hereinabove, the assessee is clearly engaged as developer. The payment was received by the assessee on sale of house and not as a Contractor for completion of any part of construction work, assigned to him. The assessee himself has executed the sale agreement while selling the houses to the respective buyers, which means the assessee was owner of the property so, sold and the payment was not received for undertaking mere construction work as alleged by lower authorities. 25. With regard to the approval of the Project by the concerned authorities concerned, we found that necessary approval was already on the record and was well within the time as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or existing sub-section (10) of section 80IB by the Finance (No. 2) Act, 2004 w.e.f. 1.4.2005 :- (10)The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the 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 1st day of October, 1998 and 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y retrospective has only to be understood as having prospective operation from the date on which it becomes law or any other date specified in the statute. 10. With regard to the retrospective application of the amendment, it was held by the Hon ble Supreme Court in State of Kerala vs. Lex George (2004) 271 ITR 290 that where schedule of rates was modified reducing inter alia exemption limit, the effect could be given in the next succeeding 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 ITR 767) (SC), Reliance Jute Ind. Ltd. vs. CIT (120 ITR 921) (SC) and Tea State India Ltd. vs. CIT (241 ITR 778) (Mad). The Hon ble Apex Court in the case of S.A.L. Narayan Rao vs. Iswarlal Bhagwandas (57 ITR 149) (SC) held that retrospective effect to amendment/substitution is not permissible unless specifically provided. 11. Applying the relevant provisions of the law with respect to the date of approval of the project by the local authority as on 4.12.2002, we can safely conclude that the provisions applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate within the time allowed under law, we do not find any infirmity in the order of lower authorities for deciding claim of deduction u/s 80IB(10). 31. In the assessment year 2006-07, the return was filed on 12.12.2006 and assessment was framed under section 143(3) on 28.12.2007. Thereafter, notice u/s 148 was issued on 28th March, 2009, and order was passed u/s 147/143(3) on 12.12.2009, wherein deduction u/s 80IB(10) was withdrawn. 32. From the record, we found that during this year, the assessee had continued with the same project under the name and style of C.I. Enclave. In addition to it, the assessee has undertaken the project under the name and style of C.I. Park View, which was approved by the Municipal Corporation on 22.7.2004. This approval was in the name of the assessee. 33. In the assessment year 2007-08, the assessee continued with the project under the name and style of C.I. Enclave and C.I. Park View. 34. In view of our discussion hereinabove, the assessee has fulfilled all the conditions for claim of deduction u/s 80- IB(10) except the condition of furnishing certificate for completion of project. 35. With regard to the furnishing of certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the M.P. Municipal Corporation Act 1956 for which a completion certificated shall be issued from this office. 7. No building shall be occupied for residential or commercial purpose before a Completion Certificate is obtained from the Corporation as desired under Section 301(4) of the M.P. Municipal Corporation Act, 1956." 36. In view of the above, the ld. Authorized Representative contended that in case the certificate of completion is not issued by the Municipal Corporation within the prescribed time of 15 days of assessee s delivery of notice in writing of such completion, the same is deemed to be issued. He further submitted that the assessee obtained the permission on 24- 05-2003. The permission is at PB 67 for asst. year 2005-06. The project was required to be completed on 31-03-2008. Assessee applied for completion certificate on 02-02-2008. A certified copy of the application was submitted earlier. 37. As per ld. Authorized Representative, these sections of MPMC Act, 1956, cannot be read in isolation and there is no superseding provisions over MPMC 1956 Act. As per ld. Authorized Representative, the Income-tax Act, 1961, does not specifically mandates or lays ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then he must supplement the written word so as to give force and life to intention of the Legislature. A court must always avoid as far as possible giving an utterly absurd interpretation to a section drafted by the legislature unless a court looking to the plain and grammatical language used has no other option except to give such a construction. The hallowed rule of construction of a statute is that an interpretation which leads to an anomalous or even mischievous result or renders the statute unworkable or a provision ineffectual must be avoided. It is well settled that it is only where the words are absolutely incapable of a construction which will accord with the apparent intention of the provision and will avoid a wholly unreasonable result that the words of the enactment must prevail. In order to avoid imputing to Parliament an intention to produce an unreasonable result, therefore, a court is entitled and indeed bound to discard the ordinary meaning which will avoid that unreasonable result. To achieve the obvious intention and to produce a reasonable result, some violence to the words must result. The duty of the court however is to read the section, understand its langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any ambiguity in law, there is no tax in law. Mathuram Agawam v. State of MP AIR 2000 SC 109. Liberal construction so as to effectuate the objects is permissible, when there is genuine difficulty about interpretation or two opinions are capable of being held. CIT v. Cellulose Products of India Ltd. (1991) 192 ITR 155 (SC) CIT v. Kula Valley Transport Co. (P) Ltd. (1970) 77 ITR 518 SC. In such cases, the benefit goes to the taxpayer. J K Steel Ltd. v. Union of India AIR 1970 SC 1173. The benefit of doubt in a taxing statute should always go to the taxpayer. ITO v. Deviant (TS) AIR 1968 SC 623. 42. In view of these propositions, the final and concluding contention of the ld. Authorized Representative was as under :- Fiscal statutes must be interpreted strictly in favour of the assessee. The court is not justified in straining the language of a particular provision in order to hold a subject liable to tax. If a section in a taxing statute is of doubtful and ambiguous meaning, it must be resolved in favour of the assessee. Hariprasad Jayantilal Co. Ltd. v. ITO 45 ITR 294 (Guj). affirmed in (1966) 59 ITR 794 (SC). CEO v. Kanakasabai (R) (1973) 89 ITR 251 (SC). Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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