Facts of the Case
The joint venture agreement was made with an intention to carry on the project. Assessee-AOP took over the project, developed and claimed deduction u/s. 80IB(10). In the original assessment completed u/s. 143(3) for AYs. 2003-04, 2004-05 and 2005-06, AOs examined the eligibility of the assessee and allowed the claim of deduction after due verification of all agreements, documents and also field verification by the Inspector in respective assessment years. Subsequently, while completing the assessment for AY. 2006-07, the AO insisted on furnishing ‘Project Completion Certificate’. Since assessee could not furnish the same, AO took the view that assessee was not eligible for deduction u/s. 80IB(10). Consequently, the assessments completed in earlier years were re-opened u/s. 147 mainly on the reason that assessee has failed to furnish the ‘Project Completion Certificate’.
Question of Law
Whether the re-opening of Assessment were justified u/s 147 only on the ground that there was a subsequent amendment in Law?
Contention of the Assessee
According to the Assessee, change of opinion by the officer is no valid reason to reopen the assessment u/s.147. Assessee contention was that the project was completed, but the necessary certificate was not given by the authorities. AO at the time of assessment u/s. 143(3) in respective assessment years not only examined in detail the eligibility of the assessee with reference to various permissions, projects, expenditures but also deputed his Inspector to verify the measurements of the various housing units being constructed. Since the AO examined in detail and found satisfied with the fulfilling of conditions for claiming deduction U/s 80IB(10) and allowed the same. Assessee relied upon Kalpataru Sthapatya (P) Ltd. Vs. ITO [346 ITR 371] and Prashant S. Joshi Vs. ITO & Anr. [324 ITR 154], where it was mentioned that there cannot be any reason to believe so as to reopen the assessment when assessee satisfied all the conditions and the deductions were allowed. It was submitted that there were only three conditions when the project was started which the assessee satisfied, therefore, the reopening on the basis of ‘Project Completion Certificate’ having not filed does not arise, as such condition came subsequently with the Finance Act, 2004 by an amendment to the Act w.e.f. 01-04 2005. Since the project was approved prior to 01-04-2005, this condition of completion before 31-03-2008 was not specified at the time of starting the project and the same cannot be implemented or could not be visualized. It was the contention that AO cannot insist on ‘Project Completion Certificate’ based on subsequent amendment and cannot deny the deduction as relevant authorities are not issuing the certificate.
Contention of the Revenue
Revenue submitted that there was no change of opinion as contended by assessee and accepted by the Ld.CIT(A) as assessee has not furnished ‘Project Completion Certificate’ nor furnished the complete details of AOP as pointed out by the AO. It was the submission that the original project has started way back in 1996 and therefore, it did not satisfy the conditions laid down u/s. 80IB(10).
Held by the Tribunal
The Hon’ble Tribunal held that the chronological events were not in dispute. The contention of the Revenue cannot be accepted as the project was not even approved by the local authorities. Not even by 01-10-1998. Therefore, the project has started after 01-10-1998 and therefore, the contention of the AO that the project started before that date is not factually correct. Furnishing of ‘Project Completion Certificate’ was not even stipulated in AYs. 2003-04 and 2004-05, therefore, that cannot be the basis for reopening the assessments. Assessee cannot be compelled to comply with the condition or fulfill the condition which was not stipulated at the time of sanction of the project. Assessee has completed its project by 31-03-2008 and has requested the local authorities for approving the final project. If the local authorities did not issue the ‘Project Completion Certificate’ as requested by assessee, it was not possible to furnish the said certificate to the Revenue authorities. All the evidences on record do indicate that assessee has completed the project, therefore, just because assessee could not furnish the ‘Project Completion Certificate’, the deduction cannot be denied on that basis. The eligible deduction cannot be denied to the assessee. The Hon’ble Tribunal also relied upon the Judgment of CIT-19, Mumbai Vs. M/s. Sarkar Builders in Civil Appeal No. 4476 of 2015 where it was held that section 80IB(10) is prospective in nature and the law prevailing prior to 01-04- 2005, these assessees acted and acquired vested right thereby which cannot be taken away. It is ludicrous on the part of the Revenue authorities to expect the assessees to do something which is almost impossible.
Accordingly, the contentions of Assessee were accepted.