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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 ..... k profit u/s 115JB. Thereafter, an order was passed u/s 147 read with Section 143(3) dated 6.3.2006 disallowing deduction u/s 80IB(10), while computing book profit. 4. Thereafter, again notice u/s 148 was issued to the assessee on 27.3.2008. Contention of the assessee was that reopening was initiated after four years from the end of relevant assessment years, therefore, the same was not justified. The ld. CIT(A) confirmed the action of Assessing Officer not only with regard to reopening of assessment but also with regard to disallowance of claim of deduction u/s 80IB(10). The assessee is in appeal before us. 5. We have considered the rival submissions and have gone through the orders of the authorities below. During the year under consideration, the assessee had carried out housing project under the name and style of C.I.Homes. The project was on the land belonging to Municipal Corporation and agreement was duly executed by assessee with Municipal Corporation wherein project was allotted to assessee as Housing Project. While declining claim of deduction the Assessing Officer stated that the assessee has sold only structure and has not debited any expenses towards sanitary fitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or draw attention of the Income-tax officer to what factually or legally or other inference can be drawn from the primary fact. (d) It is a settled law, that where reassessment is initiated on the basis of retrospective amendment in law after 4 years, reassessment is invalid as there is no failure of part of assessee. In present case, even if for the sake of argument, it is accepted that the amendment requiring obtaining completion certificate introduced by Finance (No.2) Act, 2004, was operational for projects initiated prior to 31.03.2005, the reopening based on such retrospective amendment is invalid, as there was no failure on part of assessee. Sesa Goa Ltd. 294 ITR 191 (Bam.); CIT vs MEPCO Industries Ltd. 294 ITR 121 (Mad.); Sadbhav Engineering Ltd., 239 CTR 258 (Guj.). CIT vs A. V. Thomas Exports Ltd. (e) In a direct case, Aayojan Developers 335 ITR 234 (Guj.), it has been held that reopening after 4 years (where assessment was already completed) cannot be done for treating assessee as contractor. C. No mention in reasons 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. The amended provision came into force w.e.f. assessment year 2005-06 and prior to it no completion certificate was required to be obtained. 12. With regard to the allegation of the lower authorities that the assessee was merely a contractor and not developer, the ld. Authorized Representative drew our attention to the relevant terms and conditions of the agreement/power of attorney indicating that the assessee was under obligation to engage engineers, architects, contractors' masons labours and/or workmen in connection with the development and construction of building on the said land including construction of boundary walls, roads, sewerage lines or any other related works. Thus, it is clear from the para 2, P.B.50 of the power of attorney that the assessee was under obligation to construct road, sewerage, boundary wall etc. Thus, the assessee had started the work from the very beginning of the Project and involved in development of project colony as a whole and not merely as a contractor for building 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act (No.2) of 2004, w.e.f. 1.4.2005, relevant to the assessment year 2005- 06 and onwards is not applicable to the assessment year 2001-02 under consideration. 18. We, therefore, do not find any 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. 19. Now coming to the observation of the lower authorities to the effect that the assessee was merely a contractor and not developer. 20. We have carefully gone through Anubandh Patra entered by the assessee with Municipal Corporation which revealed that the assessee was to undertake development of the complete project and Municipal Corporation was to receive the highest bid of land offered by the assessee. The assessee was to develop the project as a whole on the land given by the Municipal Corporation and to sell the house to the public in general. It is not the case 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 contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be in the name of the assessee as held in the case of Man Developers by I.T.A.T. Indore Bench vide order dated 6.7.2011 I.T.A.No. 25/Ind/2011. 23. In the assessment year 2004-05, the assessee filed return of income on 31.10.2004 and assessment was framed u/s 143(3) on 28.12.2006 allowing claim of deduction u/s 80IB(10). Thereafter, notice u/s 148 was issued on 24.3.2009. Order u/s 147/143(3) was passed on 21st December, 2009, withdrawing claim of deduction allowed u/s 80IB(10). From the record, we found that the project under the name of C.I. Villa was undertaken by the assessee, which was approved by the Municipal Corporation on 5.6.2002. The Project was on the land belonging to one M. S. Bhavsar, Smt. Raisa Khan and Sanmati Cooperative Society. Project under the name of C.I. Enclave was undertaken by the assessee during the year and which was also approved by Municipal Corporation on 16.4.2003. This Project was on the land belonging to Shri Ramnath Sharma. Contention of the ld. Authorized Representative 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 31st day of March, 2005 by a local authority, shall be 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." The following sub-section (10) was substituted for 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 proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing completion certificate of the housing project for claiming deduction u/s 80IB(10) of the Act. First condition was that the assessee has commenced development and construction of housing project on or after first day of October, 1998. Second condition was that project is on the size of plot of land which has a minimum area of one acre. The third condition was that residential unit has a maximum built up area of 1000 sq.ft. where such residential unit is situated within the city of Delhi or Mumbai or within 25 kms from the municipal limits of these cities and 1500 sq.ft. in any other place. We found that all these three conditions have been complied with by the Assessing Officer. 9.Now the question arises whether the Assessing Officer has rightly disallowed deduction u/s 80IB(10) of the Act on the basis of amended provisions which came on the statute at a later date i.e. 1.4.2005. The obvious reply is 'No' because it is established law that substantive law unless made specifically 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even though the assessee has obtained permission for construction on 24.5.2003 and also applied for issue of completion certificate on 2.2.2008, however, no such completion certificate was issued by competent authority. In this regard, contention of assessee was that although assessee applied for completion certificate, the completion certificate was not granted by the Municipal Corporation. As per the M.P. & C. G. Municipal Corporations Act, Section 301, if any person applies for obtaining completion certificate, the Municipal Corporation shall grant completion certificate within 15 days. If it is not so granted, it shall be deemed that the completion certificate is granted. 30. From the record, we found that during the year, the assessee has undertaken the project under the name and style of C.I. Enclaves. The Project was approved by Municipal Corporation on 16.4.2003. This Project on the land was belonging to Ramnath Sharma. However, since the assessee could not get completion 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the occupation of the building erected or for the use of the part of the building re-erected; or (b) refuse such permission in case such erection, construction or reconstruction is in contravention of any provision of this Act or any rule or byelaw made there under or any other enactment for the time being in force. (4) No person shall occupy or permit to be occupied any such building or use or permit to be used any part affected by the re-erection of such building - (a) unit the permission referred to in clause (a) of sub-section (3) has been granted in the "[manner prescribed by bye laws]; (b) unless the Commissioner has failed for fifteen days after the receipt of notice of completion to intimate his refusal to grant the said permission." The permission certificate PB 112 conditions 6 & 7 read as under: 6. After the completion of construction a note should be given to this office for information of completion of the work, within a month as required under section 301 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 Cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorized Representative further argued that explanation (ii) to Section 80 IB(10)(a) reads as under :- "(ii) the 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 authority." - A statute should be read as a whole to ascertain its true meaning and content. Whenever a statute comes up for consideration, it must be remembered that it is not within human powers to foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity. A judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a construction of the social conditions which gave rise to it and of the mischief which it was sought to remedy and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... help in fixing its meaning." Absurdity has to be avoided in interpretation of a statutory provision. Similarly where the interpretation of a statutory provision. Similarly where the interpretation leads to futility, it cannot be accepted. 40. Emphasizing Rule of reasonable construction, the ld. Authorized Representative contended that A fair and reasonable construction of the language in the statute is a basic principle of interpretation. If a taxpayer cannot be brought under the tax net, revenue has to be reconciled to this position of law. Vikrant Tyres Ltd. v. First ITO (2001) 247 ITR 821 (SC). Where two views are reasonably possible, the one which favour the assessee has to be adopted. Birla Cement Works v. CBOT (2001) 248 ITR 216 (SC). Ambiguity has always to be resolved in favour of the assessee. Southern Roadways Ltd. v. CWT (2001) 251 ITR 213 (Mad). 41. Emphasizing Rule of beneficial interpretation, the ld. Authorized Representative contended that if 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 interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicipal Corporation Act, 1956, Section 301 of which provides that in case certificate is not issued by the Municipal Corporation within the prescribed time of 15 days of assessee's delivery of notice in writing for such completion, the same is deemed to be issued. It was also emphasized that there is no superceding provisions over the MPMC 1956 Act. The ld. Authorized Representative also placed reliance on the verdict of the Hon'ble Supreme Court in the case of Surana Steels Private Limited (supra) and it was submitted that in view of the provisions of Income-tax Act, 1961, read with Section 310 of the MPMC1956, as the certificate has not been issued, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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