ACIT-24(1), MUMBAI vs. M/S.ATUL PROPERTIES, MUMBAI

Both parties agreed that the grounds of appeals are similar and the result of the lead case for A.Y.2010-11 will be followed for A.Y.2011-12. The original grounds of appeal raised by revenue are as under: -

“Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the deduction u/s. 801B(10) of the Income Tax Act, 1961 relying on the decision of the Hon’ble Bombay High Court in the case of CIT v/s. Hindustan Samuh Awas Ltd. (2015) 62 Taxmann.com 175 notwithstanding that the facts of the aforesaid case are clearly distinguishable from our instant case.”

And the additional grounds of appeal raised by the revenue which are supplementing ground nos. 2 to 3 of original grounds reads as under: -

1 As mentioned by the AO in his order and by the Appellant in his submissions the assessee originally filed return of income 14.10.2010 declaring total income at Rs. 29,75,430/- after claiming deduction u/s. 80-IB(10) of Rs.23, 561/-, Subsequently, - the assessee filed revised return on 27.03.2012 withdrawing its claim for deduction u/s. 80- IB(10) and offered total income Rs.23,62,14,994/for taxation. The AO completed scrutiny assessment based on the original return of income and made am addition of Rs.23,32,39,561/and Rs.30,62,434/made on account of disallowance of claim of deduction u/s. 80-IB(10) and bogus purchases respectively. In the course of appellate proceedings, the appellant raised additional grounds of appeal and contested the addition made in the assessment order denying deduction w/s. 80IB of the IT Act and filed additional evidence in support of his claim. Vide letter dated 19.08.2016, the AO was directed to give his remand report A.Ys.2010-11 & 2011-12 M/s. Atul Properties on the issues raised by the appellant as per the provisions of Rule 46A.

2 The AO vide his letter dated 22.05.2017 submitted his remand report, the gist of which is as under:

3 From the above discussions the following undisputed facts emerge:

5 The appellant in his reply to the observations of the AO in the remand report has stated as under:

Aggrieved by the aforesaid action of the Ld. CIT(A). The revenue is before us.

The Ld. CIT-DR (Departmental representative) assailing the action of the Ld. CIT(A) submitted that the assessee had filed the return of income (original on 14.10.2010) claiming deduction u/s 80IB(10) of the Act to the tune of Rs.23.32 crores in respect of its Blue Meadows project and returning income of only Rs.29.75 lakhs which was later revised; and the revised return of income (ROI) dated 27.03.2012 was filed wherein it withdrew its claim of deduction u/s 80IB(10) of the Act and the revised returned income was to the tune of Rs.23.26 crores. According to the Ld. DR, the reasons for submission of the revised return was stated to be that the Blue Meadows project could not get the necessary approval. According to the Ld. DR, as per the Hon’ble Allahabad High Court decision in the case of CIT Vs. M/s. Empro Speciality 99 ITR 266 (Allahabad) once revised return of income has been filed, the original ROI gets substituted and thereafter, the AO is supposed to assess the income of the assessee with the aid of revised return of income only. Therefore, in this case according to him, the assessee is not entitled to deduction A.Ys.2010-11 & 2011-12 M/s. Atul Properties u/s 80IB(10) of the Act because as per the Section 80AC of the Act, assessee should have claimed deduction if any in the return filed u/s 139(1) of the Act and therefore since the assessee’s original return of income u/s 139(1) of the Act has been substituted by the revised return on 27.03.2012, the deduction u/s 80IB of the Act cannot be given to assessee. According to him Section 80A(5) of the Act and 80AC of the Act has to be read in conjunction and since section 80A(5) also prescribes that if assessee fail to make any claim in its ROI for deduction u/s (10/10AA/10B/10BA) then no deduction shall be allowed. Likewise, section 80AC bars an assessee from claiming deduction u/s 80IA/80-IAB/80-IB/80IC/80-ID/80IE, unless it has furnished ROI before the due date of filing the ROI, which in this case the assessee failed to do after the revised return was filed on 27.03.2012. 11. It was pointed out by the Ld. DR that only part occupancy certificate the assessee filed on 24.12.2011 before MCGM and not the full occupancy certificate as required for claiming deduction. It was also pointed out by the Ld. DR that on 5.01.2012, the MCGM had rejected the application of the assessee even for part occupancy. Therefore, in such a scenario, the assessee had to withdrew its claim u/s 80IB of the Act vide its revised return of income on 27.03.2012. Therefore, according to him in the light of the aforesaid facts, the architect certificate regarding completion of the Blue Meadow project submitted by the assessee before MCGM cannot have been accepted A.Ys.2010-11 & 2011-12 M/s. Atul Properties by the Ld. CIT(A) to allow the claim of deduction. According to the Ld. CIT-DR , thus the Ld. CIT(A) erred in deciding the issue in favour of the assessee by relying on the wrong certificate of the architect whereas, the assessee had filed only part occupancy certificate before MCGM and even didn’t bring to his notice the action of MCGM refusing issue of occupancy certificate in that way, assessee has misled the Ld. CIT(A). According to the Ld. CIT-DR selective disclosures were only made before the Ld. CIT(A) which has misled the Ld. CIT(A) to allow deduction. According to the Ld. DR, the judicial precedents relied by the assessee is not applicable to the facts of the case. According to him in all the judicial precedents cited by assessee, the common thread is that the applications for issuance of occupancy/completion certificate were submitted before the concerned local authorities by those assessees well within the time prescribed (in this case five years) and the local authority’s did not respond to it. Therefore, the courts have taken a view that in such a scenario, those assessees cannot be faulted for the delay caused by local authority to issue completion certificate, when the project was in fact completed within the prescribed time. However, in this case in hand, it was pointed out that the local authority (MCGM) has rejected the part occupancy certificate submitted by the assessee. It was also pointed out by Ld. DR that in the other judicial precedent relied by the assessee, it can be seen that there were only minor technical non- compliance/breaches whereas in this case there were major works A.Ys.2010-11 & 2011-12 M/s. Atul Properties required to be completed and ultimately the local authority (MCGM) has given occupancy certificate only in June, 2016. 12. Further according to the Ld. CIT-DR as per the Hon’ble Supreme Court in the case of Dilip Kumar & Company (2018) 95 taxmann.327 (SC), the Hon’ble Supreme Court has held that (i) the exemption notification should be interpreted strictly, and the burden of proving the applicability would be on the assessee to show that his case come within the parameter of the exemption clause or exemption notification. (ii) And when there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue. Therefore, according to the Ld. CIT-DR as per the explanation given u/s 80IB(10) of the Act unless the assessee received the occupancy certificate from the local authority (MCGM) the assessee ought not be granted the deduction u/s 80IB(10) of the Act and the Ld. CIT(A) erred in granting the same and therefore, the decision of the Ld. CIT(A) needs to be reversed and that of the AO be upheld for both assessment years.

Per contra, the Ld. AR of the assessee submitted that Dilip Kumar Company case decided by Hon’ble Supreme Court Constitutional Bench was in respect of Customs and Excise matters. According to him, the notification referred there in is in respect of the indirect taxations arena were numerous notifications are issued by Government from time to time giving/withdrawing benefit of tax A.Ys.2010-11 & 2011-12 M/s. Atul Properties concessions/incentives on article/products which is not the case in the income tax scenario. According to him, Section 80IB(10) of the Act has been brought into the statute with an aim and purpose for giving incentives to the builders/developers to construct within the period of time (5 years) small units of house/flats for facilitating the housing for middle income group of size of less than 1000 sqft. (built up area). According to Ld. AR, in the same judgment the Hon’ble Supreme Court has discussed the concept of substantial compliance laid by another Constitutional Bench of Supreme Court in Harichand Gopal (2011) 1 SCC 236 and the same principle was taken not by the Hon’ble Juri ictional High Court in Hindustan Samuh Awas Ltd. (supra). Therefore according to the Ld. AR, the assessee having completed the housing project named Blue Meadow project within the 5 years had fulfilled the conditions prescribed u/s 80IB (10) of the Act and in support of it had submitted (i) the certificate of structure vide letter dated 09.12.2011 (paper book-3) and (ii) part completion of Wing A & B on 12.07.2011 certified by architect and (iii) that of the C Wing vide letter dated 24.12.2011 wherein the architect submitted before the MCGM-1 (iv) completion certificate u/s 353A, (v) RCC consultant stability certificate in proforma D (vi) copy of licence of the structural engineer (vii) lift certificate (viii) Occupancy Certificate (OC) and with the aforesaid relevant documents requested MCGM for grant of part occupation certificate vide letter dated 24.12- 211 (refer Page-1 Paper Book). He also drew our attention to the page-8 of the paper book wherein the Fire Brigade, Mumbai has A.Ys.2010-11 & 2011-12 M/s. Atul Properties issued NOC for completion of fire protection system from fire safety point of view for occupation of the project. According to the Ld. AR approval of the Municipal Corporation of Greater Mumbai (MCGM) recommending the occupation permission (refer page 51 to 55 of the paper book) wherein it has been acknowledged by the MCGM that the project (Blue Meadow) started in year 2006 and building completion certificate was filed by assessee on 26.12.2011 and at page no. 55 PB it is stated that “it is to mention here that, the site were occupied since 2012” and it is also admitted by MCGM that total 121 number of occupants had occupied all the three (3) Wings of the Blue Meadow Project and that the Hon’ble High Court on 16.03.2015 had ordered MCGM to initiate process for occupation of certificate and that since the premises (Blue Meadow) was occupied, in order to regularize it penalty of Rs.4,90,000/- was levied and the assessee had paid the same and the occupation was regularized. Therefore, according to Ld. AR, from the aforesaid narration of facts given by MCGM, it can be seen that the assessee had completed the housing project (Blue Meadow) with in 31.03.2012 and filed the architect completion certificate and applied for part occupancy initially to A & B Wings on 12.07.2011 and that of the ‘C’ Wing on 26.12.2011 along with lift certificate and Fire NOC. And the allottees occupied their flats (121 units). Thus, it can be seen that assessee has fulfilled its obligation of completing the housing project and being eligible for deduction u/s 80IB(1) of the Act had made a claim in the original ROI u/s 139(1) of the Act, which was revised because the local authority/MCGM for A.Ys.2010-11 & 2011-12 M/s. Atul Properties reasons best know dilly-dallied issuance of the occupancy certificate and refused it on 05.01.2012 for some minor discrepancies which were duly complied with in a month’s time. And since the project was completed, and fit for physical possession, 121 flats got occupied from February 2012. However, to be on the safer side, since the occupancy certificate was technically not issued by 25 March 2012, the assessee filed revised return on 27 march 2012, withdrawing the claim of deduction. In the light of the aforesaid facts, according to Ld. AR, it can be seen that the assesssee had completed the housing project well before march 2012 and had fulfilled all the criteria as prescribed in sub section 10 of section 80 IB of the Act. Thus the assessee have fulfilled the purpose of enacting this provision by Parliament by completing the project with in five years and that is how 121 flats were taken possession by the allotees in February 2012. So the deduction/incentive for builders/developers/assessee for having completed middle income housing units/flats (less than 1000 sqft.) in five years was rightly granted by Ld CIT(A) and the delay of issuance of occupancy certificate from MCGM cannot be a ground for denying the deduction u/s 80 IB(10) of the Act. So according to Ld. AR the Ld. CIT(A) taking note of judicial precedents on the aforesaid facts and circumstance have rightly granted deduction which does not require any interference from our part. Further the Ld. AR brought to our notice an important fact that as the flats were meant for middle class/middle income group and as per the booking of flats, the flats were allotted to the respective owners. And the allottees of flats (in A.Ys.2010-11 & 2011-12 M/s. Atul Properties the Blue Meadow Project) having paid the full consideration took note of the fact that the project was completed and ready for habitation. So, they pressurized the assessee to give physical possession of the flats at A, B & C wing of Blue Meadow Project. According to Ld. AR, the assessee’s predicament in such a scenario should be appreciated because the assessee was well aware that the one hundred twenty one (121) allottees have paid the full consideration of flat which means that they have to pay EMI for bank loan taken for their flats at Blue Meadow and simultaneously incur huge rental liability also in a Metropolitan City like Mumbai, when their flats were ready for occupation. So in said circumstances, they occupied their respective flats in Feb, 2012 itself. Later on since the MCGM dilly dallied with issuing OC, the assessee had to approach the Hon’ble High Court and pursuant to the Hon’ble High Courts orders, the local authority/ MCGM had given the occupancy certificate albeit late dated 28.06.2016 and regularized the occupation of 121 numbers of flats by payment of penalty as evident from perusal of page no. 55 of the paper book. Therefore, according to Ld. AR since the project Blue Meadows was completed substantially and the flat owners had already occupied the property before cut off date (30.03.2012) which was duly certified by the architect, lift certificate, fire brigade cannot be denied merely for certificate/OC from the local authority as held by the Hon’ble Juri ictional High Court in the case of CIT vs. Hindustan Samuh Awas Ltd. (2015) 62 taxmann.com 175 Bombay wherein the Hon’ble High Court held as under: - A.Ys.2010-11 & 2011-12 M/s. Atul Properties “These Appeals by Revenue challenged the judgment and order passed by the Income Tax Appellate Tribunal, Pune, in Appeal Nos. 945 to 950/PN/2010. The facts leading to these Appeals are as under:

The respondent is a builder and developer company. They had undertaken a Mega Housing Project on a layout covering an area of about 25 acre at Aurangabad. The project was approved in February, 2000. The respondents completed part of the project and obtained Completion Certificate for that part of the project from Aurangabad Municipal Corporation on 10.10.2008. The respondent sought exemption under Section 80-IB(10) of the Income Tax Act in all the assessment years 2002-2008. It was their case that the profit made in these years from the sale of flats etc. from this project is exempted from Income Tax. Their claim was denied by the Assessing Officer on the ground that Completion Certificate was not issued on or prior to 31.03.2008. Relevant provision of the Income Tax Act 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,—

The respondent's appeal before the Commissioner of Income Tax (Appeals), was dismissed. As against this, the respondent went before Income Tax Appellate Tribunal, where the impugned order was passed.

The ITAT held that in view of the fact that the respondent had made application seeking Completion Certificate prior to 31.03.2008, the date on which the Completion Certificate was issued was not material. It also held that the delay in obtaining Completion Certificate was not attributable to the respondent. This delay was beyond their control.

The following substantial question of law arises in these appeals: "Is it permissible in law to compute the date on which the completion certificate in respect of housing is issued by the local authority as provided in explanation to section 80IB(10) of the Income Tax Act? If yes, how?"

We have heard the submissions at bar at length. We have also perused the opposite view expressed by the Commissioner (Appeals), in his judgment. In the said judgment, he opined that the explanation to Section 80-IB(10)(a)(ii) of the Act must be strictly construed. He rejected the respondent's contention that this provision has introduced a doubt. He preferred the literal interpretation of Section 80-IB(10) and the explanation referred to above.

Mr. Sharma, learned council for the appellant contended that we should adhere to the opinion expressed by the Commissioner (Appeals) and set aside the judgment of the ITAT. In support of his contentions, he placed reliance on the following judgments:

(para 13) A.Ys.2010-11 & 2011-12 M/s. Atul Properties Para Nos. 13, 14 and 15 in the case of Dharamendra Textiles Processors (supra) read as under:— '

It is well settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Similar is the position for conditions stipulated in advertisements.

Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See institute of Chartered Accountants of India v. Price Waterhouse 1977 (6) SCC 312). The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner (1846) 6 MOO pc1, the courts cannot aid the legislature's defective phrasing of an Act, they cannot add or mend, and by construction make up deficiencies which are left there. (See State of Gujarat v. Dilipbhai Nathjibhai Patel 1989 (3) SCC 234). It is contrary to all rules of construction to read words into an Act unless it is absolutely necessary to do so. [see Stock v. Frank Jones (Tipton), Ltd. 1978 (1) ALL ER 948.] Rules of interpretation do not permit the courts to do so, unless the provision as it stands is meaningless or of doubtful meaning. The courts are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the act itself. (Per Lord Loreburn, L.C. in Vickers Sons)

The question is not what may be supposed and has been intended but what has been said. "statutes should be construed not as theorems of Euclid", Judge Learned Hand said, "but words must be construed with some imagination of the purposes which lie behind them".' Para No. 13 in the case of Saurashtra Chemicals Ltd. (supra) reads as under:— "

A beneficent statute may have to be considered liberally but where a statute does not admit of more than one interpretation, literal interpretation must be resorted A.Ys.2010-11 & 2011-12 M/s. Atul Properties to. The provision allows taking of credit but the same is circumscribed by the condition as is apparent from the use of the words "subject to" and is limited to an amount not exceeding 50% of the duty paid on such capital goods. The term "subject to" in the contest assumes some importance. In Ashok Leyland Ltd. v. State of T.N. This Court held: (SCC p. 36, para 79)

The learned council for the appellant asserted that though Subsection (10) is a provision relating to exemption, since the explanation does not introduce any uncertainty, it must be read and interpreted literally.

On the other hand, learned council for the respondents contended that even assuming that there is no doubt arising from the interpretation of Section 80-IB and the explanation referred to above, there is scope for holding that the interpretation had inducted an element, which goes against the spirit and purpose of the Section. He also placed reliance on a judgment of Gujarat High Court in the case of CIT v. Tarnetar Corpn. [2014] 362 ITR 174/[2012] 210 Taxman 206 (Mag.)/26 taxmann.com 180 on the point. We have perused the judgment of Gujarat High Court and found that the situation before the Gujarat High Court was similar. The High Court was examining the correctness of the findings recorded by the Income Tax Appellate Tribunal. The High Court mainly placed reliance on the crucial fact that the application seeking Completion Certificate was submitted to the Municipal Corporation prior to 31.03.2008 and therefore, they confirmed the finding of the Court that the requirement of Section was not mandatory in nature. A.Ys.2010-11 & 2011-12 M/s. Atul Properties

We have no difficulty to accept this contention. We also hold that the explanation is quite clear and does not introduce any uncertainty. In other words, date of completion of a project has to be the date of issuance of Completion Certificate by the Municipal authority.

The question we raise here is whether the explanation introduced an element of harshness to such an extent that it rendered the main provision nugatory? In our view, the explanation is introduced recently to put an end to a controversy, which might arise before the Assessing Officer about the date of completion. The intention of the legislature in providing explanation to fix the date of completion of a project is quite helpful when this provision is utilized in practice. In our view the explanation has introduced an unnecessarily strictness in the provision which is in the nature of exemption and not in the nature of charging. Sub-section (10) mentions that a housing project should be complete before 31.03.2008 so as to get the exemption. Completion of housing project is a physical act. It can be demonstrated on the spot and also through a certificate issued by an architect who is appointed for supervising the construction work. He is a professional who would declare that the project is complete. Unfortunately, Sub-section (10) and the explanation do not give any importance to the issuance of such Completion Certificate by the concerned architect. It gives importance only to the certificate of Municipal authority. It is common knowledge that an application for Completion Certificate submitted to the Municipal Authorities is accompanied by a Completion Certificate issued by the concerned architect. No doubt, the Municipal authorities then cause inspection of the site and verify the claim. Thereafter, they issue Completion Certificate. But, if a project is really complete before 31.03.2008 and an application is moved quite in time, for seeking Completion Certificate from the Municipal authorities, and if they do not take steps urgently and delay the issuance of Completion Certificate from their side, can it be said that such certificate would alone decide the date of completion of the project? The answer is in negative.

In the facts of this case, admittedly, the Architect of the project had given a certificate prior to 31.03.2008. The respondent submitted application to the Municipal authority along with such certificate well in time on 25.03.2008. It seems that the Municipal authorities directed the respondent to deposit certain amount for issuance of Completion Certificate on 27.03.2008 and the amount was accordingly A.Ys.2010-11 & 2011-12 M/s. Atul Properties deposited on 31.03.2008. Thereafter, the certificate was issued in October, 2008. This delay cannot be attributed to the respondent assessee.

In view of this, we are inclined to hold that the project, for which exemption is sought, was completed prior to 31.03.2008 and therefore, we are inclined to record our answer in affirmative to the substantial question of law referred to above. Both the appeals are accordingly dismissed.”

The Ld. AR drew our attention to para 9 to 11 to buttress the contention that in the facts and circumstances the assessee’s claim for deduction was rightly allowed by the Ld. CIT(A). The Ld. AR also drew our attention to the Hon’ble Gujarat High Court decision in the case of CIT Vs. Tarnetar Corporation (2012) 26 taxmann.com 180 wherein the Hon’ble High Court noted the facts of the case wherein that assessee (Tarnetar Corporation) had completed the construction before the last week on 31.03.2008 and had sold several units which were completed and actually occupied; and it also applied for the occupation permission from the local authority. However, it was rejected on technical reason in the year 2006 and the same was granted only on 19.03.2009 and the AO denied deduction to that assessee on similar plea which was over-turned by the Tribunal and the assessee was granted deduction, which issue came up before the Hon’ble High Court and the Hon’ble Gujarat High Court upholding the action of the Tribunal allowing the deduction 80IB(10) of the Act observed as under: -

According to the Ld. AR the aforesaid view of the Hon’ble Gujarat High Court in the case of Tarnetar Corporation (supra) was taking note of by the juri ictional High Court in the case of Hindustan Samuh Awas Ltd. (supra) at para -9 and Ld CIT(A) has rightly followed it on the facts of the case. Therefore, the Ld. AR submitted that in the present case, the Ld. CIT(A) has rightly taken notice of the facts and has relied on the ratio of the binding judicial precedents (supra) have decided the assessee’s claim on this issue and therefore, has not made any error by granting the claim u/s 80IB(10) A.Ys.2010-11 & 2011-12 M/s. Atul Properties of the Act for both A.Y. 2010-11 & 2011-12 and therefore, his action need not be interfered by us.

We have heard both the parties and perused the record. We note that the assessee firm is engaged in the business of building and development of real estate. The assessee had filed original return of income u/s 139(1) of the Act declaring total income of Rs.29,75,430/- wherein the assessee claimed the deduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/-. During the assessment proceedings, the AO asked the assessee to file the documents to substantiate its claims u/s 80IB(10) of the Act and pursuant to it the assessee filed the requisite details to substantiate the claim. The AO noted that assessee had claimed deduction u/s 80IB (10) of the Act for having developed housing project (Blue Meadows) which according to it has fulfilled the requisite conditions prescribed therein u/s 80IB (10) of the Act as given below: -

The assessee brought to the notice of AO that it has fulfilled the aforesaid conditions for being eligible for deduction u/s 80IB(10) of the Act to the tune of Rs 23,32,39,561/-. It was brought to the notice of AO that it has developed housing project (Blue Meadows) wherein it had built three (3) Wings i.e. A, B & C. And for A Wing & B Wing, and that it had submitted its part- building completion certificate on 12.07.2011 and for the remaining part C Wing it filed the completion certificate on 26.12.2011 before the local authority Municipal Corporation of Greater Mumbai (hereinafter “MCGM”). For the said project (Blue Meadow), the assessee had obtained fire NOC from the Fire Department on 20.02.2012 and the licence for working/using of the lift was received as early as on 17.01.2011 and submitted its application to the MCGM along with the completion certificate in part A.Ys.2010-11 & 2011-12 M/s. Atul Properties dated 12.07.2011 and 24.12-2011 along with the certificate of structure by the architect dated 9.12.2011. However, the assessee taking note of certain developments/facts [the local authority/MCGM having not accepted the assessee’s application for issuance of occupancy certificate (OC) of the Blue Meadows project by letter dated 5.1.2012], withdrew its claim u/s 80IB(10) of the Act by filing the revised return of income on 27.03.2012 and offered Rs.23,32,39,561/- for taxation. And assessee, on perusal of the assessment order discerned that the action of assessee to revise ROI was viewed by the AO as an afterthought. According to the AO, if the assessee’s case was not taken up for scrutiny, the assessee could have got away with deduction claimed u/s80IB(10) of the Act and in that process there would have been escapement of income and therefore he was of the opinion that the assessee has concealed its income and also filed inaccurate particulars and simultaneously initiated penalty proceedings u/s 271(1)(c) of the Act and computed the total income of the assessee by disallowing the deduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/- and thus computing total income at Rs.23,92,77,430/-. Thus we find that the assessee’s revised return reflecting income of Rs. 23,62,14,990/- was not acted upon by the AO (In this context it should be borne in mind that assessee by filing revised return on 27.03.2012 had withdrawn deduction claimed u/s 80IB(10) of the Act and as per its original return of income filed u/s 139(1) of the Act wherein it had shown income of only Rs.29,75,430/- by claiming deduction u/s 80IB(10) of the Act to the tune of A.Ys.2010-11 & 2011-12 M/s. Atul Properties Rs.23,32,39,561/-) As evident from perusal of the assessment order it can be safely inferred that AO has not accepted the revised return filed by the assessee because first of all he finds fault with the assessee filing the revised return which according to him, the assessee was forced to do because, the MCGM refused approval to grant occupancy certificate (OC) for the project; and further according to him, if the assessee’s case was not selected for scrutiny, the assessee could have simply got away with the deduction and could not have bothered to withdraw its claim as done on 27.03.2012. And it is noted that even though the assessee had withdrawn the deduction claimed by offering Rs.23,32,39,561/- for taxation by filing the revised ROI, the AO had disallowed the deduction claimed by assessee and for doing that AO has taken into consideration only the original return of income filed on 14.10.2010 wherein it claimed deduction u/s 80IB(10) of the Act to the tune of Rs.23,32,39,561/- and then disallowed it and added the same. In the light of the aforesaid discussion/facts, we cannot agree with the contention of the Ld. CIT-DR that the AO has accepted the revised return of income only for the limited purpose of initiating the penalty proceedings. According to us, if the AO had accepted the revised return, then there was no reason/occasion for AO to disallow the deduction of Rs.23,32,39,561/-, which was offered by assessee suo-moto for taxation. Therefore, the action of the AO negates the contention of the Ld. CIT-DR, that the AO has accepted the revised return. Moreover, we note that the assessee’s explanation given for filing the revised return has not been considered by the AO. It is noted A.Ys.2010-11 & 2011-12 M/s. Atul Properties that assessee had withdrawn the deduction u/s 80IB(10) of the Act because even though assessee had completed the Blue Meadows project well before the prescribed time limit which was on 31.03.2012, and had applied before the local authority/MCGM for Occupation Certificate (OC) on 26.12.2011, (refer page 1 of paper book) and had duly filed the following documents with the application for OC, i.e, part-completion certificate of A Wing and B Wing of Blue Meadows project issued by Architect Nathanal B Delvadia on 12.07.2011, and that of the C Wing on 26.12.2011 dated 24.12.2011 along with the certificate of structural engineer, completion certificate u/s 353(A), stability certificate (form D) Site Supervision completion certificate, lift certificate (page 31 of the paper book), Fire NOC (Page 8 PB), which were received by it (MCGM) on 26.12.2011, but the local authority/ MCGM did not accept the application of assessee to grant occupation certificate (OC) citing few defects vide letter dated 05.01.2012 (refer page 5 of the paper book). And since the assessee could not obtain the occupation certificate from the local authority, even though it presented all the aforesaid documents/certificates, the assessee withdrew its claim u/s 80IB(10) of the Act and offered income of Rs.23,62,14,990/- in its revised return filed on 27.03.2012. However, the AO by assessment order dated 25.03.2013 disallowed the claim u/s 80IB of the Act to the tune of Rs.23,32,39,561/-. Later, on when the assessee came to know about the ratio of the decision of the Juri ictional Hon’ble Bombay High Court in the case of CIT Vs. Hindustan Samuh Awas Ltd. (supra) which was passed by the A.Ys.2010-11 & 2011-12 M/s. Atul Properties Hon’ble High Court on 2nd Feb, 2014 and since the assessee understood that since there was substantial compliance of the project (Blue Meadow) claimed again the deduction u/s 80IB of the Act in the appeal preferred before the Ld. CIT(A). And the Ld. CIT(A) while considering this claim took notice of the relevant facts that assessee had commencement certificate for the SRA Project at Iraniwai, Goregoan (E) on 27.04.2006 from the office of Chief Executive Officer (Slum Rehabitation Authority i.e. Local Authority) and had applied for Occupation Certificate on 26.12.2011 (well before the limitation period sets in on 31.03.2012) by filing the certificate for use of lift, NOC from fire brigade, part-completion certificate from the architect for A, B & C Wing, [here it has to be borne in mind that part-completion certificate was because project blue meadows ‘A’ & ‘B’ wing was completed on 12.07.2011 and ‘C’ wing was completed later on 26.12.2011, so obviously part-certificate can be given to each wings and though this was one of the main points raised by the Ld. DR to contend that architect only gave part-completion certificate and not the full completion certificate for the project, we note that in the facts nothing turns around on it because as noted project Blue Meadow had three wings and ‘A’ & ‘B’ wing was completed on 12.07.2011 and ‘C’ wing only on 26.12.2011, so the architect has given only part-completion certificate separately for ‘A’ & ‘B’ and of ‘C’ wing. So this contention is devoid of merits.] RCC consultant certificate; and meanwhile 121 units/flats were allotted to their respective owners and they occupied the their respective flats (refer A.Ys.2010-11 & 2011-12 M/s. Atul Properties page no. 55 of the PB admission made in the report by MCGM to this effect) which facts cumulatively reveals that assessee had substantially complied with the purpose for which the incentive/deduction u/s 80IB(10) of the Act was envisaged by the Parliament for the builders/assessee. Taking note of the aforesaid facts and in the light of the Hon’ble High Court’s reiteration of the principle of substantial compliance in respect of such projects in the case of Hindustan Samuh Awas Ltd. (supra), the assessee’s claim for deduction u/s 80IB(10) of the Act, has been rightly allowed by the Ld. CIT(A).

For completeness we would like to deal with one of the contention of the Ld. DR that in this case, assessee’s application for OC was rejected by the MCGM vide letter dated 05.01.2012 and the Ld CIT(A) was not aware of it and since there was refusal by MCGM, therefore the assessee’s case stands distinguished from case laws relied/cited by assessee. In this regard, we find that the assessee’s application for OC was not accepted by the MCGM vide letter dated 05.01.2012; and while conveying that it is not accepting the assessee’s application for OC, MCGM has pointed out 14 deficiencies out of which we note that two conditions were not applicable to the assessee ((i)compliance of lay out condition if any and (ii)internal road completion certificate); and assessee vide letter dated 27.02.2012 had complied with all conditions except three (3) out of remaining twelve (12) conditions i.e, the assessee fulfilled nine (9) out of it and the remaining three (3) were complied with by the assessee within few A.Ys.2010-11 & 2011-12 M/s. Atul Properties weeks as is evident from submission of Fire NOC on 28.02.2012 and NOC from Tree authority and DCC. So it is seen that assessee had fulfilled the short-comings pointed out by the MCGM vide letter dated 5.01.2012 before the cut off date 31.03.2012. So it cannot be said that assessee had not substantially complied the Project [Blue Meadow] before 31.03.2012 and therefore the Ld. CIT(A) action is a plausible view in the light of the ratio of the Constitutional Bench of Hon’ble Supreme Court in CCS vs Harichand Gopal (2011) 1 SCC 236 (infra) which has been taken note of by the Constitutional Bench while deciding the case of Dileep Kumar case supra (cited by Ld DR) wherein the Hon’ble Supreme Court has taken note of the doctrine of “substantial compliance” and “intended use” which principles were explained as under: -

The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in someminor or inconsequent aspe cts which cannot be described as the “essence” or the “substance” of the requirements. Like the concept of “reasonableness”, the acceptance or otherwise of a plea of “substantial compliance” depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleased if a clear statutory prerequisite which effectuates the object and the purposeof the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means “actual compliance in respect to the substance essential to every reasonable objective of the statute” and the Court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed.”

Therefore, as per the principle of ‘substantial compliance’ enunciated by the Constitution Bench of the Hon’ble Supreme Court A.Ys.2010-11 & 2011-12 M/s. Atul Properties in Harichand case (supra), we note that the grant of deduction/incentives depends upon the facts and circumstances of the each case and keeping in mind the purpose and object to be achieved by the grant of deduction/exemption as meant by the Legislature/Parliament it has to be seen whether ‘substantial compliance’ has been made by the assessee for claiming the exemption/deduction. So when a question similar to this arises, we should see and determine whether the statute have been followed sufficiently, so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Applying the principle of ‘substantial compliance’ in the facts of this case it can be seen that the assessee had complied sufficiently the requirement of law as stipulated in section 80IB(10) of the Act and as per the said provision it was bound to complete the building project before 31.03.2012 and it had filed the partial completion certificate in-respect of wing (A & B ) on 12.07.2011 and C wing on 24.12.2011 and thus it is noted that the assessee not only filed the architect certificates of completion of the project Blue Meadow, it also had filed the certificate of structure, the lift certificate as well as NOC of the fire brigade and all these certificates were filed before MCGM by Feb, 2012. And moreover it is noticed that on 27.02.2012 itself possession of the flats were given to the allottees who had made the full and final payment which fact is evident from perusal of the letter given to the allottees of housing units for possession of the flats and that one hundred twenty one (121) flats/units got occupied at Blue Meadow A.Ys.2010-11 & 2011-12 M/s. Atul Properties Project (which were regularised later) (refer letter of MCGM page no. 56 PB) and therefore according to us, the legislative intent/conditions stipulated for giving deduction/incentive for developers like assessee u/s 80IB(1) of the Act have been sufficiently/substantially fulfilled.

In the result, the appeals of revenue are dismissed. Order pronounced in the open court on 30/06/2022. (S. RIFAUR RAHMAN) (ABY T. VARKEY) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 30/06/2022. Vijay Pal Singh, (Sr. PS) A.Ys.2010-11 & 2011-12 M/s. Atul Properties आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file.