Dy. CIT v.
Ansal Properties & Industries Ltd.
A.Y. : 2000-01. Dated : 15-2-2008
S. 80-IB of the Income-tax Act, 1961 — Whether amendment by
Finance Act, 2000 in provision of S. 80-IB(10) extending period for completion
of eligible projects to 31-3-2003 was made with effect from 1-4-2001
apparently because as per pre-amended provisions, such period was prescribed
up to 31-3-2001 and date of 1-4-2001 given as an effective date for said
amendment cannot be read in a manner to say that same was applicable only for
and from A.Y. 2001-02 — Held, Yes.
The assessee-company was engaged in the business of
development of mini-townships, construction of house property, villas,
commercial complexes, etc. For the A.Y. 2000-01, the assessee’s claim for
deduction u/s.80-IB(10) in respect of profits derived from a housing project,
was disallowed by the Assessing Officer on the ground that the assessee had
not produced the completion certificate in respect of the said project as
evidence of completion by 31-3-2003, as required by the Section. On appeal,
the Commissioner (Appeals), relying upon the Occupation certificate submitted
by the assessee as additional evidence, allowed the assessee’s claim for
deduction u/s.80-IB(10).
On 2nd appeal, the revenue raised a new plea that the date
of completion of project as earlier prescri-bed in S. 80-IB(10) as on
31-3-2001 was extended to 31-3-2003 by the Finance Act, 2000 only with effect
from 1-4-2001 and hence the benefit of extended date for completion of project
in order to make it eligible for deduction u/s.80-IB was not available to the
assessee for the assessment year 2000-01.
The ITAT observed that :
(1) As is clearly evident from the Explanatory note to
the Finance Bill, 2000, the purpose of amendments made by the Finance Act,
2000 in the provisions of S. 80-IB(10) was to extend the benefit available
under the said provisions even to the housing projects which would be
completed up to 31-3-2003 as against the period up to 31-3-2001 specified
earlier.
(2) The period of commencement of the said projects in
order to become eligible for benefits of S. 80-IB(10) was also
simultaneously specified as up to 31-3-2001 as against the period earlier
prescribed as on or after 1-10-1998, which clearly means that the intention
of the Legislature was to give the benefit of extended period of completion
to all the projects which had already commenced on or after 1-10-1998.
(3) The interpretation given by the Revenue may also lead
to absurd results in the cases of assessees following two different methods
of accounting to recognise the income derived from the projects eligible for
benefit u/s.80-IB. In a case where the assessee follows a project completion
method, he will be able to avail the benefit of S. 80-IB in respect of
entire profits of the projects completed after 31-3-2001 but before
31-3-2003, whereas the assessee following percentage completion method would
be able to avail the said benefits in respect of profits of the project
completed after 31-3-2001 but before 31-3-2003 only to the extent of profit
declared on percentage completion method in the A.Y. 2001-02 and subsequent
year and lose that benefit on the profits of the very same project declared
on percentage completion method in the A.Ys. 1999-2000 and 2000-01.
(4) It is a well-settled canon of construction that in
construing the provisions of beneficial Legislation, the Court should adopt
the construction, which advances, fulfils and furthers the object of the Act
rather than the one, which would defeat the same and render the benefit
illusory.
Based on the above observations, the ITAT held that the
amendment in the provision of S. 80-IB(10) extending period for completion of
eligible projects was made with effect from 1-4-2001 apparently because as per
pre-amended provision such period was prescribed up to 31-3-2001 and the date
of 1-4-2001 given as an effective date for the said amendment cannot be read
in a manner to say that the same was applicable only for and from A.Y. 2001-02
and the subsequent years. Therefore, the benefits of the amended provisions of
S. 80-IB(10) would be available in A.Y. 2000-01 even to the projects completed
within the extended period, i.e., 31-3-2003.
