TMI Blog2010 (3) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... life in Brihan Mumbai. The execution of MUIP is to be carried out by MMRDA on the lands earmarked for the purpose in the Final Development Plan of Greater Mumbai in force under section 31 of the Maharashtra Regional and Town Regional and Town Planning Act, 1966. The lands designated or reserved for execution of MUIP are occupied by the slum dwellers who are required to be evacuated and re-housed for effective execution of MUIP by providing alternate accommodation as per Government Policy. To achieve the said public purpose, MMRDA intended to acquire intervivos land along with the constructed tenements in consideration of Transferable Deve-lopment rights grantable under the Development Control Regulation No. 33 of the Development Control Regulations for Greater Bombay 1991. The assessee submitted Slum Rehabilitation proposal Project Affected Persons/slum dwellers under the MUIP Scheme on the property as Slum Rehabilitation Project. The Slum Rehabilitation proposal provided, inter alia , that the assessee shall construct about 3840 or more tenements each comprising of 225 sq.ft. carpet area for rehabilitation of the Project Affected Persons/slum dwellers including amenities, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee, it had undertaken the said project for social cause. The said project was undertaken as social responsibility and there was no certainty regarding value of TDR in the market. The assessee was to get TDR at a later date and did not know what value it would realize. It was only later on when TDR was received and sold, the assessee realized the amount of profit it has made. The assessee follows Project Completion Method of Accounting. During the financial year 2005-06 (assessment year 2006-07), the project was completed and net profit of Rs. 51.06 crores was declared as income. In its return of income, gross total income was determined at Rs. 51,06,27,772 from which deduction under section 80-IB(10) was claimed amounting to Rs. 51,06,05,521, resulting in total income of Rs. 22,251. The return of income was filed on 31-10-2006. 6. The statement of Sri Vyomesh M. Shah, Managing Director of M/s. Akruti Nirman Ltd., was recorded on 16-3-2007 in the capacity of the member in the assessee-AOP. In his statement recorded under section 131 of the Act, Shri Vyomesh Shah confirmed that the total built-up area of the residential unit in the aforementioned project at Tata Nag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place;" 9. By the Finance Act, 2000 with effect from 1-4-2001, the words "Before 31st day of March, 2001" were inserted after the words "housing project approved". Thus, all conditions for grant of deduction remained the same except that the approval of local authority for the development has to be obtained before 31st day of March, 2001. 10. For assessment year 2002-03, the law applicable was that the condition regarding completion of the project before 31-3-2003 was dispensed with. 11. For assessment years 2003-04 and 2004-05, the law applicable was that all conditions remained the same except the condition regarding approval of the project by the local authority which could be before 31-3-2005. Another important change was that the period of completion of the construction on or before 31-3-2003 was dispensed with and there was no time-limit given for completion of the construction. This was the law for assessment year 2004-05 when the assessee submitted its proposal for slum rehabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; ( c )the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place; ( d )the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." As per the amended law in view of insertion of clause ( d ) the built-up area of shops and other commercial establishment included in the housing project should not exceed five per cent of the aggregate built-up area of the housing project or 2,000 sq.ft., whichever is less. 13. We have already noticed that the built-up area of the shops and commercial establishment included in the housing project was more than 2,000 sq.ft. and, therefore, if the law as amended by the Finance Act, 2005 with effect from 1-4-2005 is applied then the assessee would not be entitled to deduction. On the other hand, if the law as it existed in the assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he portion of profits which can be said to be attributable to residential units. This is subject to the rider that in case commercial use of built-up area in a project is more than 10 per cent and, for this reason the project cannot be said to be a predominantly housing project, but, in terms of observations made in paragraph 115 above, the assessee is entitled to deduction in respect of residential unit segment of the overall project on fulfilment of necessary conditions, the entitlement of incentive deduction will be confined to only to the profits to the residential segment of the overall project. ( c )The limit on commercial use of built-up area as prescribed by clause ( d ) of section 80-IB(10) has no retrospective application, and it applies only with effect from the assessment year 2005-06." 15. In this appeal if it is held that the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied even then the assessee to claim deduction under section 80-IB(10) of the Act has to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the country. The housing project has to provide in a planned manner facilities needed, in a modern developing society for the convenience of its residents and these housing projects may contain convenience shops, etc., as its integral part. The incentive provision of law should be given a liberal interpretation. 17. The Assessing Officer, however, held that the law as it exists in the assessment year 2006-07 in which assessment year the deduction is claimed by the assessee and not the law (as contended by the assessee) as it existed when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied, i.e., the law as it existed during assessment year 2004-05. The Assessing Officer thereafter set out the parameters that were needed to be satisfied by the assessee as per the law as it existed for assessment year 2006-07 and as to how the assessee failed to fulfil one of the conditions in the form of a chart which is as follows: Sl. No. Parameters Conditions as per section 80-IB(10) Facts in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Chennai Bench in the case of Arun Excello Foundations (P.) Ltd. v. Asstt. CIT [2008] 166 Taxman 53 (Mag.). The case of Saroj Sales Organisation ( supra ) was a case of Builder where there were two projects being constructed by name Nisarg and Breezy Corner. For assessment year 2005-06, the assessee claimed deduction under section 80-IB(10) of the Act on the profits of Nisarg Project. The Assessing Officer treated both the projects as one project and found that in the project Breezy corner the built-up area of some of flats were more than 1,000 sq.ft. and he, therefore, held that the assessee was not entitled to deduction under section 80-IB(10) of the Act. The second reason given by the Assessing Officer was that shopping area of Nisarg project was 7.60 per cent of the built-up area of Nisarg Project. The Assessing Officer relied on the amendment to section 80-IB(10) with effect from 1-4-2005 whereby clause ( d ) to section 80-IB(10) of the Act was introduced and it was laid down therein that the built-up area of shops and other commercial establishment included in the housing project should not exceed five per cent of the aggregate built-up area of the housing project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( supra ) on identical facts. It was submitted that in the alternative if it is held that the amended provisions of section 80-IB(10) by the Finance Act, 2004 with effect from 1-4-2005 by which clause ( d ) to section 80-IB(10) was introduced even then the assessee would be entitled to proportionate deduction on the residential portion of the project on the principle laid down by the Special Bench in the case of Brahma Associates ( supra ). He placed reliance on the decision of the Hon ble Supreme Court in the case of CIT v. Shah Sadiq Sons [1987] 166 ITR 102 for the proposition that accrued rights are saved unless they are expressly taken by a repealing statute either expressly or by implication. 21. The learned D.R. submitted that the Legislature in its wisdom had thought it fit to introduce a condition for allowing deduction under section 80-IB(10) with effect from 1-4-2005 and, therefore, the law including clause ( d ) of section 80-IB(10) has to be applied by the Assessing Officer while making assessment from assessment year 2005-06 till the law remains the same. It was his argument that the Amended provisions refer to all projects approved before 31-3-2007 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, should not be read with any latitude to the taxpayer or even with a wider connotation. According to him, the question of interpretation would arise when the words of a statute are ambiguous. According to him, in the garb of liberal interpretation, no violence can be done to the language of the provisions. His further submission was that there cannot be any principle of promissory estoppel or hardship when the intention of the Legislature is very clear and this regard relied on the decision of the Hon ble Delhi High Court in the case of Bombay Conductors Electricals Ltd. v. Chandramouli, Under Secretary to the Government of India [1984] 145 ITR 272 and Glaxo Laboratories (India) Ltd. v. Second ITO [1986] 18 ITD 226 (Mum.) (SB). It was submitted by him that in any case the decision of the Tribunal Mumbai in the case of Saroj Sales Organisation ( supra ) requires reconsideration by a Special Bench in view of the above submissions. It was lastly submitted by him that the decision in the case of Brahma Associates ( supra ) dealt with the law as it existed prior to 1-4-2005 and, therefore, not relevant for the purpose of rendering decision in the present appeal. 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80-IB(10) as applicable with effect from 1-4-2005 recognise the fact that Slum Rehabilitation Schemes are housing projects. A Proviso below section 80-IB(1)( a ) was inserted by the Finance Act, 2004 with effect from 1-4-2005 which reads as follows: " Provided that nothing contained in clause ( a ) or clause ( b ) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf;" 23. It is clear from the aforesaid proviso that if a slum rehabilitation is carried out in accordance with a scheme framed by Central or State Government and is further notified by the Board then the condition regarding approval by the local authority as a housing project before a particular time and the area of land being above 1 acre need not be complied with to get deduction under section 80-IB(10). Thus, the Legislature has recognized that slum rehabilitation is also a housing project. 24. Now we will deal with main issue in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from the municipal limits of these cities and one thousand and five hundred square feet at any other place. 2003-04 2004-05( a )Housing project to be approved by local authority ( b )Project to be approved by local authority before 31-3-2005 ( c )Project was to commence on or after 1-10-1998 ( d )Size of the plot of land for the project should have a minimum of 1 acre. ( e )The residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilo-metres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. 2005-06( a )Housing project to be approved by local authority ( b )Project to be approved before 31-3-2007 ( c )Project was to commence on or after 1-10-1998 ( d )The project was to be completed before 31-3-2008, if the approval was given by a local authority before 1-4-2004 and within 4 years from the end of the financial year in which the approval came where the approval was given on or after 1-4-2004. ( e )Size of the plot of land for the project should have a minimum of 1 acre. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, there is definitely grave hardship to the assessee. The interpretation sought to be canvassed by the learned D.R. will also lead to absurd situation. Let us assume an assessee obtains approval of a housing project prior to 1-4-2005 say in previous year relevant to assessment year 2002-03. He builds commercial space in excess of 2,000 sq.ft. in the housing project. He follows percentage completion method of accounting and offers profits in assessment years 2002-03 to 2004-05, claims exemption under section 80-IB(10) and is allowed exemption. On the same project in assessment year 2005-06, the assessee would not get the benefit of section 80-IB(10). We, therefore, find no grounds to take a view different from the one taken by the co-ordinate Bench of the Tribunal in the case of Saroj Sales Organisation ( supra ). 27. We are of the view that we are not supplying any words to the "statute but are only holding that the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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