TMI Blog2014 (5) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... Per Rajendra, AM Challenging the order dated 29. 11. 2013of the CIT(A)-41, Mumbai, assessee-AOP has raised following Grounds of Appeal: 1. The CIT(A) has passed the impugned order without jurisdiction in as much as the appeal was arising out of the proceedings of order giving effect to the order of the Tribunal. The CIT(A)ought to have appreciated that in these proceedings the Assessing Officer or the CIT(A)can neither go beyond the scope of direction given by the Hon ble Tribunal nor decide against the view taken by the Hon ble Tribimal. 2. The CIT(A) has passed the impugned order without jurisdiction in as much as the appeal was arising out of rectification order passed by the Assessing Officer u/s. 154 of the Act wherein the scope of power is limited to rectifying mistake apparent from the record. 3. The CIT (A) has erred in law and on facts in enhancing the income of the appellant by withdrawing deduction u/s. 80-IB(10) of the Act amounting to Rs. 44, 42, 20, 424/- in the impugned order. The CIT (A) ought to have held that the appellant is eligible for deduction u/s. 80-IB(10) of the Act amounting to Rs. 51, 58, 84, 600/- being 100% of the profit derived from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal directed the AO to examine the eligibility of the assessee to deduction u/s. 80BI(10) of the Act as per the ratio laid down by the Hon ble Bombay High Court instead of the ratio laid down by the Special Bench. On 04. 11. 2011, AO passed order giving effect to aforesaid order of ITAT and allowed 100% deduction to the assessee u/s. 80IB(10) of the Act. Vide his notice issue u/s. 154 of the Act, AO informed the assessee that while allowing deduction u/s. 801B(10), deduction in respect of commercial component of the project was not disallowed, that it was a mistake apparent from the record and had to be rectified. In its reply, assessee stated that its case was fully covered by the decision of Hon ble Bombay High Court delivered in the case of BA, that rectification of order giving effect to ITAT s order was not possible since it had been passed after following the directions of the Tribunal. However, the AO vide his order dated 31. 01. 2012 allowed its claim of deduction u/s. 80IB(10) to the extent of Rs. 44, 42, 20, 424/- after excluding 13% commercial component of the project. Aggrieved by the order passed u/s. 154 of the Act, assessee preferred further appeal. In the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 80-IB(10) was available on the profits derived from the housing projects approved by the local authority as a whole, iv. Clause (d) inserted to Section 80-IB(10) with effect from 01. 04. 2005 was prospective and not retrospective and hence could not be applied for the period prior to 01. 04. 2005. FAA further observed that the assessee had obtained approval for development of a slum rehabilitation project from the MMRDA on 17. 11. 2003, that during year under consideration, the assessee had completed the said residential-cum commercial project and received the Occupation Certificates in July, 2005 and December, 2005, that in his statement recorded u/s. 131 of the Act on 10. 03. 2007, one of the member of the assessee-AOP confirmed that the total built up area of the residential units of the said project was 81046. 65 sq. mtrs. and the total built up area of commercial units therein was 117800 sq ft approximately, that the built up area of residential units in comparison to the total area was 87% while the commercial component accounted for the balance 13%, that it had been held by the Hon ble High Court that deduction u/s. 80-IB(10) was allowable on the profits derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the AY. under appeal. He held that the AO ought to have disallowed the said deduction in full because the requirement of clause (d) of Section 80-lB(10) was not satisfied by the assessee, that AO was justified in passing order u/s. 154 of the Act, that as per the decision of the Hon ble Bombay High Court if the commercial use of the projects was beyond the limit prescribed therein, even though such use was approved by the local authority, then the assessee was not entitled to claim deduction under the said section. Referring to the order of the decision of the ITAT, Murnbai Bench in the case of Everest Home Construction(India)Ltd. (139ITD1), he held that with the insertion of clause (d) w. e. f. 01, 04. 2005 there was a cap on the commercial area in the eligible project, that after the amendment the assessee was not eligible for deduction u/s. 80IB(10) of the Act, that the assessee could not claim to have any vested right to the deduction under the said section based on the pre-amended provisions and its eligibility to such deduction had to be examined with reference to the legal provisions in force in the AY. under consideration. Finally, he held that while giving effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the Hon ble Court, directed the AO to decide the issue of deduction u/s. 80IB in light of the said order. In pursuance of the order of the Tribunal initially, AO allowed the assessee 100% deduction u/s. 80IB of the Act, but later on, he partially withdrew it, while passing a rectification order u/s. 154 of the Act. In the appellate proceedings, FAA held that stand taken by the AO was not as per law. He held that assessee was not entitled to claim any deduction u/s. 80IB of the act. Referring to the provisions of sub section (d) of the section 80IB and the order of the Tribunal delivered in the case of M/s. Everest Home Construction(India) Pvt. Ltd. (supra), he enhanced the income of the assessee. We find that in the case of Manan Corporation (supra)issue of availability of deduction u/s. 80IB had been resolved and the Hon ble Gujarat High Court had taken a decision after considering the background of introducing the section and it had held that that amendment introduced in section 80IB(10)(d) was not applicable to a project which was approved prior to 01. 04. 2005. In the case under consideration project was approved prior to 01. 04. 2005, so, thus the matter is cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 form 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 and that is also quite apparent from the certificates issued by the local authority and, therefore neither on the ground of absence of such provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g upon strict compliance leading to absurdity. 35. It can be also held that this being a substantive amendment and not a clarificatory amendment, the amendment of this nature cannot have retrospective effect. We find that when the I Bench of Mumbai Tribunal had decided the issue of 80IB(10)of the Act, it did not have the benefit of the judgment of Hon ble High Court of Gujarat. We further find that Pune Bench of the Tribunal has considered all the decisions, including the decision of Everest Home Construction(India)(P)Ltd. , (supra)while deciding the issue in favour of the assessee. After considering the judgment of the Hon ble High Courts of Gujarat Karnataka, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. Therefore, upholding his order we decide the effective ground of appeal against the AO. Considering the above, we are of the opinion that the order of the FAA cannot be endorsed. He had interpreted the provisions of section 80IB(10)(d)in a particular manner and had relied upon one of the orders of the Tribunal. But, now after the decision of the Hon ble Gujarat High Court in the case of Manan Corporation there is clarity ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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