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TMI Blog2014 (1) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 80IB read as follows: - "Section 80-IB(10) prior to the amendment of 1.4.2005: Sub s. by Finance (No.2) Act, 2004 (23 of 2004), sec. 18(d), for sub-section (10) w.e.f. 1-4-2005). Earlier sub-section (10) was amended by the Finance Act, 2000 (10 of 2001), sec. 39(e)(i) and (ii) (w.e.f. 1.4.2001), by Finance Act, 2003 (32 of 2003), Sec (c)(i) and (ii) (w.e.f. 1.4.2002). Sub-section (10), before substitution by Finance (No.2) Act, 2004, stood as under: "(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 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 1st day of October, 1998; (b) the project is on the size of a plot of land which has minimum area of one acre; and (c) the residential unit has a minimum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the mun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed three per cent. of the aggregate built-up area of the housing project of five thousand square feet, whichever is higher." 5. The Income Tax Officer for the assessment year 2007-08 sought to disallow the benefit claimed by the assessee on the reasoning that the completion certificate in terms of Explanation (ii), had not been granted so as to enable it to avail the benefit, provided by Section 80IB (10). The assessee had then relied upon the letter appearing for the issue of the completion certificate written on 05.11.2008. The CIT (A) rejected the assessee's appeal. The assessee accordingly approached the Tribunal which after due consideration of the arguments, granted the benefit claimed by it. 6. Counsel for the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Visakhapatnam & Delhi Benches of the ITAT as also the decision of Hon'ble Gujarat High Court, which we will discuss while coming to a particular conclusion. The crux of the argument is that requirement of completion certificate was merely directory and not mandatory. Reliance was placed upon the decision dated 29-2-2012 of Hon'ble Karnataka High Court (ITA no.138 of 2010) to the effect that it is prospective in nature. 8.2. On the other hand, ld. Sr. DR took us to various pages of the assessment order by submitting that the case laws relied upon by the assessee are not applicable to the facts of the present appeal and even no such certificate was issued to the assessee till date, therefore, deduction was rightly denied to the assessee. 8.3. In reply, the learned counsel for the assessee contended that for .AY. 2006-07 on identical facts deduction was granted to the assessee on some of the flats, therefore, for the sake of consistency no "U turn" is permissible for the next year, specially when the facts are same. 8.4. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee declared taxable income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guidelines and approval of Bombay Stock Exchange. The assessee company is a listed company and does not ah any discretion about the issue price and require to issue shares through preferential allotment only at the rate as per SEBI guidelines and approved by stock exchange. During the year the assessee company has calculated average market price as per general metting, certification by statutory auditor etc., has submitted to Bombay Stock Exchange and has issued the preferential share after getting approval from Bombay Stock Exchange. These are normal business transactions because these are issued as per SEBI and Stock Exchange guidelines. These shares are issued to a number of companies and individuals and not only to RGSL. Valuation of these shares are done as per SEBI and Stock Exchange guidelines which were as per average market rats and approved by Board of Directors and General Meeting of CHD, statutory auditor and Bombay Stock exchange approval. There is no close or remote nexus between CHD and RGSL. There is no common relation among the directors or major share holders. Since CHD is listed company it has no control over market rate or guidelines of SEBI and Stock Exchange. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 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 1st 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 built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place." 8.9. If the aforesaid position of law existing at the time when the plan was sanctioned/ approval was granted to the assessee is analyzed, there was no condition like production of complete certificate. This is a settled legal proposition of law that the law existing at the particular point of time will be applicable unless and until it is specifically made retrospective by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. It was held by the Hon'ble High Court that the assessee was entitled to hundred per cent benefit of sec. 80-IB(10). 8.11. Another case cited was from Visakhapatname Bench of the ITAT in the case of M/s. Vishnu Builders Vs. ACIT (ITA nos. 178, 179 & 180/Vizag/2011), order dated 27th July 2011. In that case also, completion certificate was not filed before the Assessing Officer and the proof of municipal tax assessment of various flat owners establishing that the housing project was completed before September 2008 was filed. Since there was no practice of issuing the project completion certificate, therefore, it was held that it was not a condition precedent of filing the completion certificate for allowing deduction u/s 80-IB(10) of the Act. 8.12. In the case of CIT Vs. Tarnetar Corporation (Tax appeal no. 1241 of 2011), the Hon'ble Gujarat High Court vide judgment dated 12-9-2012, observed that the confirmation issued by municipal authorities was filed on 15-2-2006 and was rejected on 1-7-2006. The assessee also paid penalty for regularization of the units. Since construction was completed well before 31st March 2008, the outer limit for such construction and the perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ITR 489 (Del.); and Union of India & others Vs. Kaumudini Narayan Dalal & another 249 ITR 219 (SC). From this angle also, the assessee is having a strong case in its favour. 8.16. Leave apart, we are of the considered opinion that the assessee is expected to complete the project as per the approved plan at a particular point of time and the assessee is not expected to do or to fulfil the conditions which are not in existence at the relevant point of time or made compulsory after making some amendment in the Act from the future date. Since the assessee was to complete the project on or before 31-3-2009 and request was duly made with the Competent Authority on 5-11-2008 mentioning that the project has been completed and completion certificate may be issued and if the same is not issued by the Competent Authority the assessee should not be penalized for the same unless and until some contrary facts are brought on record evidencing that the assessee contravened the conditions contained in the approval granted by such Competent Authority. As per sub-section (10) of Sec. 80-IB, the housing project which were approved before 31st day of March, 2008, the benefit will be hundred per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange. During the year the assessee company has calculated average market price as per general metting, certification by statutory auditor etc., has submitted to Bombay Stock Exchange and has issued the preferential share after getting approval from Bombay Stock Exchange. These are normal business transactions because these are issued as per SEBI and Stock Exchange guidelines. These shares are issued to a number of companies and individuals and not only to RGSL. Valuation of these shares are done as per SEBI and Stock Exchange guidelines which were as per average market rats and approved by Board of Directors and General Meeting of CHD, statutory auditor and Bombay Stock exchange approval. There is no close or remote nexus between CHD and RGSL. There is no common relation among the directors or major share holders. Since CHD is listed company it has no control over market rate or guidelines of SEBI and Stock Exchange. It is immaterial for CHD what its shareholder does not with their investments. As regard Assessing Officer's observation that the assessee has booked substantial sales with respect to non 80-IB project, it was submitted that there are normal business transactions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prospective amendment can be made applicable to the appellant assessee whose plans are sanctioned as per the prevalent rules and regulations by the local authority for denying the benefit of deduction of profit derived in the previous year relevant to the assessment year as made available otherwise under the statute. 23. It would be worthwhile to note at this stage that even though the facts before the Bombay High Court were different than those emerging from the present case, Revenue's submissions before the Bombay High Court that the amendment of Section 80IB(10) and the insertion of clause (d) with effect from 1.4.2005 should be applied retrospectively was held to be without any merit in following words, in paragraph 32 of the Bombay High Court, which is reproduced as under: "Lastly, the argument of the Revenue that section 80-IB(10) as amended by inserting clause (d) with effect from April 1, 2005 should be applied retrospectively is also without any merit, because, firstly, clause (d) is specifically inserted with effect from April 1, 2005 and, therefore, that clause (d) seeks to deny section 80-IB(10) deduction to projects having commercial user beyond the limit pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year. (b) In a case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years should be withdrawn." 26. From the reading of the above instruction, it can be also said that the Government being aware of both the accounting methods has expected either of them to be followed in cases of individual assessee. However, in post amendment period, strict adherence to completion period of four years is insisted upon where project completion method is followed. This limitation of period did not exist prior to the amendment, what is vital to draw from this is that the amendment cannot discriminate those following project completion method if in the interregnum period, amendment is brought in the statute. The say of the assessee therefore gets further fortified when it says that only because it chose to follow the method of accounting of project completion basis, whose completion date falls after 1.4.2005, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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