TMI Blog2014 (1) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... d evidencing that the assessee contravened the conditions contained in the approval granted by such Competent Authority - The assessee is not expected to fulfil the conditions which were not on the statute when such approval was granted to the assessee - Decided against Revenue. - ITA 298/2013 - - - Dated:- 22-1-2014 - S. Ravindra Bhat And R. V. Easwar,JJ. For the Appellant : Mr. Rohit Madan with Mr. P. Roy Chaudhuri, Advocates For the Respondent : Mr. S. Krishnan, Advocate. ORDER Mr. Justice S. Ravindra Bhat: (Open Court) The substantial question of law urged in this appeal by the revenue pertains to Section 80IB (10), particularly Section 80-IB (10)(a)(ii) read with the Explanation. 2. It is urged that the Income Tax Appellate Tribunal (ITAT) fell into error in granting the benefit of Section 80IB (10), having regard to the fact that the project completion certification had not been issued, in the facts of this case, by the authority prescribed by Explanation (ii). 3. The assessment year is 2007-08. The assessee, a real estate developer, launched a project known as Krishna Lok in Vrindavan. It obtained the approval of the project on 16.03.2005 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of April, 2004 but not later than the 31st day of March, 2005, within four years from the end of the financial year in which the housing project is approved by the local authority. (iii) In a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority. Explanation- For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: 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 Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/10 for A.Y. 2007-08). Though the assessee has raised as many as seven grounds for appeal, but if all the grounds are summarized, the only ground remains which pertains to the disallowance of deduction u/s 80-IB(10). Learned counsel for the assessee also fairly explained that the issue pertains to only 80-IB(10) and the remaining grounds are only argumentative. 8.1. The crux of argument on behalf of the assessee is that the vide letter dated 5-11-2008 the assessee had applied for completion certificate but the completion certificate was not issued to the assessee which is beyond the control and power of the assessee. Our attention was also invited to page 22 of the paper book containing a certificate signed by the Architect of the assessee i.e. Candid Design Consortium Pvt. Ltd., in which the total area of the Type-A flat has been mentioned at 1492.43 sq. Ft. Ld. Counsel submitted that for A.Y. 2006-07 deduction was allowed to the assessee and it is the same sanction plan which could not be denied for the next year. It was emphatically argued that the total built up area is below the prescribed limit of 1500 sq. Ft. And there is no violation of the Act. It was also pleaded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned and ultimately the assessment order was upheld. The aggrieved assessee is in appeal before this Tribunal. 8.6. If the totality of facts available on record and the assertion made by the ld. respective counsels are kept in juxtaposition, broadly the ld. CIT(A) is influenced by the sale transactions with Rajasthan Global Securities Ltd., it was confirmed that the amount of ₹ 5,36,89,920/- was paid to the assessee as advance for purchase of 37 flats in Krishnalok project. However, what it may the moot issue to be adjudicated by us pertains to sec. 80-IB(10). We further find that as contained in para 1.2 (page 5) of the impugned order, the ld. CIT (A) has examined the submissions of the assessee and the reason of denial of deduction to the assessee by the ld. Assessing Officer. The relevant portion from the impugned order is reproduced hereunder: It was further submitted that Addl. CIT wrongly tries to prove that sale with M/s. Rajasthan Global Securities Ltd. 9RGSL) are not accounted for properly and undue profit has arisen on account of 80-IB whereas these are normal business transactions undertaken by assessee company with M/s. Rajasthan Global Securities Ltd. havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as before the ld. CIT(A) and the break up dimensions adduced by the assessee. Such break up even has been reproduced at pages 7 8 of the impugned order, as per which the total area has been claimed by the assessee at 1492.43 sq. Ft. 8.8. Another point mentioned in the assessment order for denying deduction by the Assessing Officer is that the assessee did not file the bifurcation. However, we find that such bifurcation was duly filed by the assessee that too room-wise of all the units. Still the deduction was denied on the presumption that the basis of arriving at such figure was not adduced by the assessee. We are not in agreement with the finding of the Assessing Officer on two counts- firstly, the approval was granted by the Competent Authority; and secondly such bifurcation is as per sanctioned plan which was filed before the Assessing Officer. Uncontrovertedly such bifurcation was filed during assessment stage, first appellate stage and even before us. It is also not in dispute that the approval was granted by the Competent Authority to the assessee on 16-3-2005 meaning thereby the project was approved before the amendment inserted/ substituted by Finance (No.2) Act of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. In the absence of any variation or allegation if such certificate is not issued to the assessee, whether the assessee can be penalized for the act of an authority on which it has no control, the obvious reply is that for the fault of others anybody should not be penalized, more specifically when the project was approved on 16-3-2005. Therefore, the law applicable as on date will be applicable to the assessee. It is not expected that the assessee will demolish the construction work which is already in progress and again comply with the direction of the law which was inserted on a later date which is prospective in nature. If the intention of the legislature would have been to make it effective from retrospective effect, nothing prevents the legislature to do so. 8.10. If the issue is analyzed in the light of case laws cited before us, we find that the Hon ble Karnataka High Court vide judgment dated 29th February 2012 in the case of CIT another Vs. M/s. Anriya Project Management Services Pvt. Ltd. (ITA no. 138 of 2010), considered the decision like CIT ors. Vs. G.R. Developers (ITA no. 355/2009) and held that definition of built up area was inserted by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding 1500 sq. ft. It was held that if this condition is not fulfilled, the assessee is not eligible for deduction. However, we find that in the present appeal, the built up area is below the prescribed limit of 1500 sq. ft. Therefore, this decision may not help the revenue being distinguishable on facts. 8.15. If this issue is analyzed with the view point of rule of consistency, we are of the considered opinion that though the principle of res-judicata is not applicable to the income-tax proceedings, yet for the sake of consistency and for the purposes of finality in all litigations, including litigation arising out of fiscal statutes, earlier decisions on the same question should not be reopened unless some fresh facts are brought on record in subsequent assessment year. For A.Y. 2006-07, even the ld. CIT (A) decided the issue in favour of the assessee, which was confirmed by the Tribunal (supra), therefore, unless and until any new material facts are brought on record, the revenue is not permitted to take a U turn , while denying the claimed deduction to the assessee, that too on same facts and circumstances. Our view is fortified by the decision of Hon ble Jurisdictional H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in juxtaposition, broadly the ld. CIT(A) is influenced by the sale transactions with Rajasthan Global Securities Ltd., it was confirmed that the amount of ₹ 5,36,89,920/- was paid to the assessee as advance for purchase of 37 flats in Krishnalok project. However, what it may the moot issue to be adjudicated by us pertains to sec. 80-IB(10). We further find that as contained in para 1.2 (page 5) of the impugned order, the ld. CIT (A) has examined the submissions of the assessee and the reason of denial of deduction to the assessee by the ld. Assessing Officer. The relevant portion from the impugned order is reproduced hereunder: It was further submitted that Addl. CIT wrongly tries to prove that sale with M/s. Rajasthan Global Securities Ltd. 9RGSL) are not accounted for properly and undue profit has arisen on account of 80-IB whereas these are normal business transactions undertaken by assessee company with M/s. Rajasthan Global Securities Ltd. having no mutual relation whatsoever. The Assessing Officer has objected to the issue of preferential shares and its valuation. The assessee company has issued preferential shares to various persons as per SEBI guidelines and appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total built up area or 5000 sq. feet which ever is higher (now in post 2010 period) or 5% of the aggregate built up area or 2000 sq. feet whichever is less. Revenue is also in error to suggest that even if such conditions are onerous, they are required to be fulfilled. The entire object of such deduction is to facilitate the construction of residential housing project and while approving such project when initially there was no such restriction in taxing statute and the permissible ratio for commercial user made 5% to the total built up area by way of amendment and reduction of which by further amendment to 3% of the total built up area, has to be necessarily construed on prospective basis. 22. As is very apparent from the record, there was no criteria for making commercial construction prior to the amended Section and the plans are approved as housing projects by the local authority for both the projects of the appellant. Permission for construction of shops has been allowed by the local authority in accordance with rules and regulations, keeping in mind presumably the requirement of large townships. However, the projects essentially remained residential housing projects an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management Services (P.) Ltd. [2012] 21taxmann.com 140/ 209 Taxman 1 (Kar.) was also examining this provision where the question was whether the definition of built-up area inserted by Finance (No.2) Act, which became effective from 1.4.2005 is prospective or retrospective in nature and it held that the same to be prospective in nature. It held that amendment provision would have no application to housing projects, which were approved by the local authority prior to 1.4.2005 in calculating 1500 sq. feet of residential unit and it further held that once such housing project of assessee is approved by local authority prior to 1.4.2005, it would be entitled to 100% benefit of Section 80IB(10). While so holding, it relied on the judgment of the Karnataka High Court in the case of CIT v. G.R. Developers [IT Appeal No.355 of 2009]. 25. Corollary to this is one more aspect that requires reference here. The Government of India Ministry of Finance, Department of Revenue to all Chief Commissioners of Income-Tax and all Director Generals of Income-Tax issued Instruction No.4 of 200 dated 30.6.2009 in respect of Section 80IB (10) of the Act would be available on year to year basis where t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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