2020 (9) TMI 293

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....ject" without appreciating the fundamental nature of the legislature for providing such relief? (ii) Whether the appellate authorities were correct in construing that deviations and violations committed by the assessee while undertaking the housing project and yet to be paid compounding fee for regularizing the default is fairly enough to claim the deduction under Section 80IB(10) without appreciating the intended structure of the legislative provisions of Section 80IB? 2. Facts leading to filing of this appeal briefly stated are that the assessee is a partnership firm, which had sold 66 flats. The net profit to the firm from the sale proceeds of 66 flats was to the extent of Rs. 3,05,61,975/-. The assessee claimed whole of the aforesaid amount of profit of Rs. 3,05,61,975/- as deduction under Section 80IB(10) of the Act and declared the income as 'NIL' for Assessment year 2007- 08. The case was selected for scrutiny and notices under Section 143(2) and 143(1) of the Act were issued to the assessee. The Assessing Officer by an order dated 29.12.2009 inter alia held that the assessee had not complied with the condition incorporated under Section 80IB(10)(a) of the Act in....

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....violation of the sanction plan and completion certificate was also not obtained. It is further pointed out that the Assessing Officer found that excess built up area was 70.50% and therefore, the Assessing Officer rightly held that since, the construction was not put up as per the approved plan, therefore, the project as built and completed by the assessee does not have an approval of the local authority. It is further submitted that Commissioner of Income Tax (Appeals) grossly erred in not recording the findings of fact and proceeded to decide the appeal merely on the basis that the benefit of beneficial provision has to be extended. It is also submitted that the Tribunal has failed to record any finding whether completion certificate was obtained. It is also argued that if a housing project is not completed as per the sanction plan, it ceases to be a project under Section 80IB(10) of the Act. It is further submitted that beneficial provision cannot be interpreted liberally but has to be construed strictly. In support of aforesaid submissions, reference has been made to decisions of Supreme Court in 'COMMISSIONER OF INCOME-TAX-19, MUMBAI VS. SARKAR BUILDERS', (2010) 57 TAXMANN.....

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....violation and to take consequential action. In support of aforesaid submission, reference has been made to a decision of the Supreme Court in 'MANASA HOUSING COOPERATIVE SOCIETY LTD. VS. MARIKELLAIAH & ORS.', AIR 2006 KARNATAKA 273. It is also submitted that the ratio laid down in the case of Ramnath & Co. supra supports the case of the assessee. 6. We have considered the submissions made by learned counsel on both the sides and have perused the record. Before proceeding further, it is apposite to take note of Section 80IB(10) of the Act, which reads as under:   80-IB. (10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2008 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....

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....the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. [See: PRINCIPLES OF STATUTORY INTERPRETATION, JUSTICE G.P.SINGH, 14TH EDITION, PAGE 879].   8. It is equally well settled legal proposition that exemption is available on complying with certain conditions, those conditions have to be strictly complied with. [See: 'EAGLE FLASK INDUSTRIES LTD., VS. COMMISSIONER OF CENTRAL EXCISE', (2004) 7 SCC 377 AND 'STATE OF JHARKHAND VS. ANBAY CEMENTS', (2005) 1 SCC 368, 'STATE OF BIHAR VS. KALYANPUR CEMENTS LTD.', (2010) 3 SCC 274 and 'DEPUTY COMMISSIONR OF INCOME TAX, CIRCLE 11(1), BANGALORE VS. ACE MULTI AXES SYSTEMS LTD.', AIR 2017 SC 5660]. The constitution bench of the Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI VS. DILIP KUMAR AND COMPANY AND ORS. has held that incentive provision is sub....