TMI Blog2019 (8) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceeding and directed the assessing authority to grant benefit of Section 80IB(10) to the assessee. - Decided in favour of assessee - Income Tax Appeal Nos. - 113 of 2016, 114 of 2016 - - - Dated:- 19-8-2019 - Bharati Sapru And Piyush Agrawal JJ. For the Appellant : Manu Ghildyal,Manu Ghildyal For the Respondent : Archi Agarwal,Abhinav Mehrotra ORDER (DELIVERED BY HON'BLE PIYUSH AGRAWAL, J) The present appeals have been filed against the common order dated 7.12.2015 passed in ITA No. 04 C15/Alld 2012 for the Assessment Year 2005-06 2007-08 passed by the Income Tax Appellate Tribunal, Allahabad, Bench Allahabad. The aforesaid appeals on 3.5.2016 was firstly admitted on question No. B, which reads as under: (B) Whether on the facts and the circumstances of the case, the order of the Income Tax Appellate Tribunal was correct in Law holding that Section 80- IB(10) which is substituted w.e.f. 1.4.2005 is not applicable to the project approve before 01.04.2004. The provision of Section 80(IB)(10)(a)(i) is as such app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notice dated 5.6.2009 was issued under Section 148 of the Act which was served upon the assessee on 8.6.2009. The assessee submitted his return under protest on 8.7.2007 and further made a request for supply the copy of reasons recorded for reopen the completed assessment. The assessee has filed his objection on 27.10.2010 pointing out that the re-assessment proceedings have been initiated on the basis of change of opinion and the assumption of jurisdiction has been made without any tangible fresh material /information on record which is permissible under the provision of Section 147 of the Act. Notice under Section 143(2) of the Act was issued on 10.6.2010 and thereafter notice under Section 142 (1) along with questionnaire were issued on 18.6.2010 and the same was served upon the assessee on 24.6.2010. Assessing authority by its re-assessment order dated 27.10.2010 has rejected the claim of exemption under Section 80IB(10) of the Act to the Tune of ₹ 58,44,230/-. Again the aforesaid order, the assessee preferred an appeal before Commissioner of Income Tax (appeals), Lucknow who vide its order dated 23rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omprising all 429 units out of which 120 units were sold against Income of ₹ 83,74,72028/- and net profit of ₹ 1,17,81,384/- has been declared after debating expenditure of ₹ 82,56,90,664/- on account of land and development, construction Development, personnel site running expenses and selling and distribution expenses etc. The assessee has claimed deduction under Section 80-IB(10) of the Act of ₹ 58,44,230/- on the net profit of ₹ 1,17,81,384/-. The record reveals that reassessment proceedings have been initiated on the basis of observation made by the assessing officer during the assessment proceeding for the assessment year 2006-07 that the respondent has not obtained completion certificate within four years from the local authority and has not fulfilling the condition as stipulated under Section 80IB(10)(d) of the Act and therefore the assessee has lost eligibility of claim deduction under Section 80-IB(10) of the Act in the disputed assessment years. The Section 80-IB(10) of the Act for the relevant assessment year is quoted below: Section 80-IB(10) prior to the amendment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay High Court the revenue preferred the SLP before the Hon'ble Supreme Court being SLP (C)- No. 24330 of 2011 and others) the Hon'ble Supreme Court by its judgement and order dated 15th May, 2015 has dismissed the appeal of the Revenue and has confirmed the order and judgement passed by the Bombay High Court. Hon'ble Supreme Court in the case of CIT vs. Sarkar Builders (supra) while considering the bunch of cases has observed as under (see page 399): We would also like to point out that following this judgment of the Bombay High Court, or independently, other High Courts had also taken similar view. Against the aforesaid judgments, special leave petitions were filed by the Revenue in this Court. All these SLPs have been disposed of by this Court vide order dated 29.04.2015, we would like to reproduce the said order in entirety hereunder: All these special leave petitions are filed by the Revenue/ Department of Income tax against the judgments rendered by various High Courts deciding identical issue which pertains to the deduction under Section 80IB(10) of the Income Tax Act, as applicable prior to 01.04.2005. We may mention at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'DCRs' in short) under which the local authority sanctions the housing projects and noted that in these DCRs itself, an element of commercial activity is provided but the total project is still treated as housing project. On the basis of this discussion, after modifying some of the directions given by the ITAT, the conclusions which are arrived at by the High Court are as follows: - 30. In the result, the questions raised in the appeal are answered thus:- a) Upto 31/3/2005 (subject to fulfilling other conditions), deduction under Section 80IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under DC Rules/Regulations framed by the respective local authority b) ... c) .. d) ... (See page 401) e) Clasue (d) inserted to section 80-IB(10) with effect from April 1, 2005, is prospective and not retrospective and, hence, cannot be applied for the period prior to 2005. We are in agreement with the aforesaid answer given by the High Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IB(10) deduction to all the housing projects approved by a local authority without or with commercial user to the extent permitted under the DC Rules. 22. It is not in dispute that where a project is approved as a housing project without or with commercial user to the extent permitted under the Rules/Regulations, then, deduction under Section 80IB(10) would be allowable. In other words, if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression 'housing project' in Section 80IB(10) is applicable to projects having only residential units. 23. Once it is held that the local authorities could approve a project to be housing project without or with the commercial user to the extent permitted under the DC Rules, then the project approved with the permissible commercial user would be eligible for Section 80IB(10) deduction irrespective of the fact that the project is approved as 'housing project' or approved as 'residential plus commercial'. In other words, where a project fulfills the crit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible under the DC Rules/Regulation were entitled to Section 80IB(10) deduction, with effect from 1.4.2005 such deduction would be subject to the restriction set out in clause (d) of Section 80IB(10). Therefore, the argument of the revenue that with effect from 1.4.2005 the legislature for the first time allowed Section 80IB(10) deduction to housing projects having commercial user cannot be accepted. 29. Lastly, the argument of the revenue that Section 80IB(10) as amended by inserting clause (d) with effect from 1.4.2005 should be applied retrospectively is also without any merit, because, firstly, clause (d) specifically inserted with effect from 1.4.2005, and therefore, that clause cannot be applied for the period prior to 1.4.2005. Secondly, clause (d) seeks to deny Section 80IB(10) deduction to projects having commercial user beyond the limit prescribed under clause (d), even though such commercial user is approved by the local authority. Therefore, the restriction imposed under the Act for the first time with effect from 1.4.2005 cannot be applied retrospectively. Thirdly, it is not open to the revenue to contend on the one hand that Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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