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TMI Blog2013 (10) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80IB (10) at Rs. 29,52,969/-. A search and seizure operations u/s 132(1) of the IT Act was carried out on 02.11.2004. Thereafter, the assessment was completed u/s 153A r.w.s. 143(3) of IT Act on 29.12.2006 after allowing assessee's claim of deduction u/s 80IB(10). The assessee filed an appeal against this assessment order before CIT(Appeals)-I, Bhopal which was decided vide order dated 16.05.2007, wherein certain relief were allowed and appeal effect was given vide order dated 20.06.2007 determining taxable income at Rs. 21,66,397/-. Subsequently, re-assessment proceedings were initiated u/s 147 by issuing notice u/s 148 of IT Act on 05.03.2011. 4. The AO completed the re-assessment u/s 147 r.w.s. 143(3) on 09.11.2011 determining taxable income at Rs. 51,19,366, wherein the appellant's claim of deduction u/s 80IB(10) of Rs. 29,52,969/- was declined. 5. The Assessing officer observed that the appellant had to complete the project by 31.03.2008 and the completion certificate should have been taken from the Municipal Corporation certifying the completion of project. The Assessing officer noticed that the appellant had not produced any such certificate of completion of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mumbai) (iv) CIT V/s. Mahalaxmi Rice Factory (2007) 293 ITR 631(P& H) 4.4.1 The another ground for rejection of claim of deduction u/s 80IB(10) was that the appellant had not completed the project by 31/03/2008 in as much as no completion certificate issued by Municipal Corporation local authority dated on or before 31.03.2008 was filed. As per the AO, the appellant commenced its project before 31/03/2001 and as per the amendments made in section 80IB(10) vide Finance (No.2) Act, 2004 w.e.f. 01/04/2005, the appellant was to complete the project by 31/03/2008 and the date of completion of project would he the date on which completion certificate was issued by Municipal Authority. Admittedly no completion certificate was issued by the Municipal Corporation before 31.03.2008. The applicant, however, claimed that project was completed before 31/O3/2008 and that intimation of such completion was also given to the municipal Authority. These facts were also stated before the Assessing Officer. The contention of the appellant was that the requirement of completion certificate from the Municipal Corporation came into existence w.e.f. 01/04/2005 i.e. from A.Y. 2005-06 and that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousand and five hundred square feet at any other place. " From the above provisions of section 80IB(10) as applicable to A.Y. 2004-05, it is clear that there was no condition for furnishing completion certificate from a local authority to claim deduction u/s 80IB(10) in A.Y.2004-05. The amended provisions of section 80IB by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 are applicable prospectively in respect of A.Y. 2005-06 and subsequent assessment years. Hence, the appellant's claim of deduction u/s 80IB(10) could not be disallowed on the ground that the appellant had not furnished completion certificate from local authority on or before 31.03.2008. Therefore, in view of the above discussion, the disallowance made by the Assessing Officer of appellant's claim of deduction u/s 80IB(10) of Rs. 29,52,969/- is hereby deleted. Thus, the grounds of appeal nos. 1.2 and 6 to 8 are allowed." 7. Against the above order of CIT(A), the Revenue is in further appeal before us. 8. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the Assessing Officer has declined assessee's claim u/s 80IB on two folds; first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned C. I. T. (Appeals) has erred in law and on facts in confirming the rejection of the claim of deduction of Rs. 55,50,202 /- u/s 80IB (10) from the total returned income of the appellant. 2. That the proceedings U/S 148 are bad in law as it has been initiated beyond 4 years, without any failure on the part of the Appellant to disclose fully and truly all the material facts for the A.Y. 2005-06. 3. That the proceeding initiated by A.G. u/s 148 is merely a change of opinion and it is not based on any tangible material having live-link to form an opinion that income has escaped assessment. 4. That the order of learned A.G. disposing objections raised by the appellant is not the reasoned one and is factually incorrect. 5. 'That the deduction u/s 80IB(10) cannot be denied in respect of A.Y. 2005-06 for the need of completion certificate as this project was approved before 01.04.2005 (the date of amendment) and any amendment, which is not retrospective, shall not be applicable to the year preceding to the year from which the amendment is effective and any new condition inserted subsequently shall not be binding on the projects approved prior to the amendment and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent assessment years found that the appellant had not completed the Construction of the housing project on or before 31.03.2008 on which deduction u/s 80IB(10) was claimed, It was also noticed by the AO that the appellant had not furnished audit report in form no. 10CCB alongwith the return of income tiled for A. Y. 2005- 06 and as per the provisions of section 80IB(10) r.w.s. 80IB(13) & 80IA (7), the deduction u/s 80IB(10) is not admissible unless the assessee furnishes audit report in form no. 10CCB alongwith the return. The AO reopened the assessment for A. Y. 2005-06 after recording the following reasons: "The assessee company filed its return of income on 30/10/2005 for A. Y 2005-06 declaring total income of Rs,33, 02, 470/- after claiming deduction u/s 80IB (10) of Rs. 55,50 202/-. The assessment was completed u/s 143(1) on 29/12/12006. Thereafter search and seizure action was conducted on the assessee on 29/11/2004 and assessment u/s 153A r.w.s 143(3) was completed on 29/12/2006 wherein the claim of 80IB (10) was allowed. The assessee company deals in the business of developing & building housing project. As per provision of section 80 IB (10) r.w.s. 80IA (7), the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IB(10) was allowed to the appellant in earlier assessment for A.Y. 2005-06 as the appellant had shown profits from partial completion of the project in that year. But when subsequently it was found that the appellant had not completed the construction within specified time limit upto 31.03.2008, the AO had rightly initiated re-assessment proceedings to withdraw the deduction u/s 80IB( 10) allowed earlier on account of failure of the appellant to furnish completion certificate from the local authority . " The ld. CIT(A) further observed as under :- "3.7 In the instant case, the AO gathered fresh material subsequent to the completion of assessment that the appellant had not furnished completion certificate issued by the local authority to demonstrate that construction of the housing project was completed on or before 31.03.2008 and, thus, there was a failure on the part of the appellant to fulfill conditions laid down under section 80IB(10) and the appellant was not eligible for deduction u/s 80IB (10) in A.Y. 2005-06. This action of the Assessing Officer was also fortified by the Board's Instruction No. 4 of 2009 dated 30.06.2009 as discussed 17. On merit also, the ld. CIT(A) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate was issued by the Municipal Corporation before 31.03.2008. The applicant, however, claimed that project was completed before 31/03/2008 and that intimation of such completion was also given to the Municipal Authority. These facts were also stated before the Assessing Officer. The contention of the appellant was that the requirement of completion certificate from the Municipal Corporation carne into existence w.e.f. 01/04/2005 and not applicable in the case of the appellant as the project was approved before 01.04.2005. This contention of the appellant is not tenable. 4.6 It may be noted that the law applicable will be the law as on 1st April of the assessment year is universally accepted proposition as had been pointed out in a number of cases e.g. in Reliance Jute & Industries Limited vs. CIT, (1979) 120 ITR 921 (S.C.), it is held that "assessment for one assessment year not to be affected by law in force in another assessment year. It is cardinal principle of law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. The Hon'ble Madras High Court also observed in Om Sindhoori Capital Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on statutes as on 1ST day of April of the assessment year would be applicable. Hence, the contention of the appellant that amended provisions of section 80IB(10) w.e.f. 01.04.2005 were not applicable in the appellant's case because the project was approved before 01.04.2005 has no force. In this case, the housing project was approved by the local authority before 01.04.2004 and, therefore, the appellant was required to complete the construction of the housing project on or before 31.03.2008. As per Explanation-(ii), the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate is issued by the local authority. The admitted fact in this case is that the local authority had not issued any completion certificate till date in this case. In the absence of completion certificate issued by the local authority, it cannot be said that construction of the housing project was completed by the appellant within the stipulated time i.e. on or before 31.03.2008 as envisaged in the provisions of section 80IB(10)(a)(i) of the Act. Since, the condition of completing construction within the specified time period was not fulfilled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order was framed u/s 147/143(3) and deduction already allowed u/s 80IB(10) was withdrawn. The basic grievance of the ld. Authorized Representative was that there was no failure on the part of the assessee to disclose true and correct particulars in the return of income, which are necessary for assessment, accordingly, the Assessing Officer was not justified in reopening the assessment, which was completed after search u/s 153A read with Section 143(3) of the Income-tax Act, 1961. It was also plea of the ld. Authorized Representative that while framing assessment u/s 143(3), the Assessing Officer has examined in detail the assessee's eligibility for deduction u/s 80IB(10) and after disallowing some part of expenditure, which were not pertaining to 80IB receipts were proportionately disallowed. Accordingly, reopening was not justified as per privoso to Section 147, since there was merely change of opinion which is not permissible for reopening of assessment after completion of four years from the end of relevant assessment year i.e. 31st March, 2005, when the original assessment was framed u/s 143(3). From the order of CIT(A), we found that Assessing Officer has clearly ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect by the end of relevant financial year. If subsequently, the Assessing Officer finds that after completion of statutory period the assessee has failed to furnish the completion certificate, the deduction so allowed knowingly is liable to be withdrawn. Accordingly, we do not find any infirmity in the order of CIT(A) for upholding the reopening of assessment for the purpose of withdrawal of deduction claimed and allowed u/s 80IB(10). 21. On merit of addition, we found that the I.T.A.T., Indore Bench has taken a consistent view that furnishing of completion certificate is mandatory w.e.f. assessment year 2005-06, which is mandate of amendment brought in by the Finance Act No.2 of 2004, w.e.f. 1.4.2005. In view of the consistent view taken by the I.T.A.T., Indore Bench, no completion certificate is required up till assessment year 2004-05, however, considering the amendment as prospective, view has been taken that from assessment year 2005-06, the completion certificate is a condition precedent for allowability of claim of deduction u/s 80IB. Respectfully following the same, we do not find any infirmity in the orders of lower authorities for withdrawal of claim of deduction allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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