TMI Blog2011 (11) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2004-05 was within four years of relevant assessment year, therefore, proviso to section 147 was not applicable and the learned CIT (A) was justified in upholding the reassessment u/s 147. Disallowance of claim of deduction u/s 80IB(10) - Retrospective Application of Amendment - Ld. CIT observed that the assessee has not obtained completion certificate in respect of the housing project from the local authority till 31st March, 2008, therefore, not fulfilled the conditions laid down u/s 80IB(10). Accordingly, confirmed the action of AO for declining the claim of deduction for the assessment years 2004-05 and 2005-06 on the basis of amended provisions which came on the statute at a later date i.e. 1.4.2005. HELD THAT:- It is established law that substantive law unless made specifically retrospective has only to be understood as having prospective operation from the date on which it becomes law or any other date specified in the statute. With regard to the retrospective application of the amendment, it was held by the Hon ble Supreme Court in STATE OF KERALA VERSUS ALEX GEORGE AND ANOTHER [ 2004 (11) TMI 104 - SUPREME COURT] ,that where schedule of rates was modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he so-called conclusion of the learned lower authorities is grossly wrong. The deduction as claimed may kindly be allowed. Ground No.3 That the learned lower authorities were not justified in holding that the appellant is not entitled for the claim made U/S 80IB (10) of the Income Tax Act in spite of all the basic conditions fulfilled by the appellant and also submitted the relevant evidence in support of claim. Therefore, the claim made by the appellant be kindly accepted. Ground No.4 That the Hon'ble CIT (Appeals)-l has erred and was not justified in not allowing proper opportunity to the appellant before taking contrary view without informing to the appellant about the decisions making the basis for disallowing the claim of the appellant made u/s 80IB (l0) of the Income Tax Act. ITA No.510/Ind/2010 (AY: 2005-06, filed by the assessee) Ground No.1 That the learned lower authorities have erred in law and on facts and were not justified in holding that the initiation of reassessment proceeding uls 147 by issuing notice uls 148 is valid. The assessment made uls 147/143(3) by the learned Assessing Officer and sustained by the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the material facts which were relevant for claiming of deduction u/s 80IB(10) and, therefore, the A.O. was not justified in reopening the assessments on the basis of change of opinion, as the original assessments were made on the basis of same sets of facts. It was also contended that there was no material with the A.O. to have reason to believe that income chargeable to tax escaped assessments in these years. It was contended that the ITO should have reasons to believe and not reasons to suspect and there must be a direct nexus or live link between the material coming to the notice of the A.O. and formation of the belief that there has been escapement of income of the assessee from assessment in a particular year. 4. By the impugned order the learned Commissioner of Incometax (Appeals) held the reopening of assessment valid after having made the following observations :- I have carefully considered the submission of the appellant and facts of the case. It is pertinent to note here in this case that notice u/s 148 for A.Y. 2004-05 was issued on 27.02.2009 and for a.Y. 2005-06 the notice u/s 148 was issued on 27.03.2009 after recording reasons. Thus, the notices u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case. In view of the detailed findings recorded by the learned Commissioner of Incometax (Appeals), we do not find any infirmity in his order for holding the reopening of assessment valid. Reopening of assessment in the assessment year 2004-05 was within four years of relevant assessment year, therefore, proviso to section 147 was not applicable and the learned Commissioner of Incometax (Appeals) was justified in upholding the 13 reassessment u/s 147 of the Act. 6. In the result, the Grounds taken by the assessee with regard to validity of reopening in both the years are dismissed. 7. With regard to the merit of disallowance u/s 80IB(10)of the Act it was contended by the learned counsel for the assessee that the condition for completion of housing project within four years was prescribed by finance (No. 2) Act, 2004 with effect from 1.4.2005, therefore, such condition is applicable only with effect from the assessment year 2005-06 and onwards and not for earlier years. However, the learned Commissioner of Incometax (Appeals) did not agree with the assessee s contention and held that since the assessee was unable to procure certificate of completion of project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully gone through the orders of the authorities below. The undisputed facts of the case are that the housing project of the assessee viz. Priyadarshani Nilayam was approved by the local authority on 4.12.2002. The relevant provisions of law as they stood as on 1.4.2004 read as under :- Sub-Section (10) was substituted by the Finance (No.2) Act of 2004 w.e.f. 1.4.2005 and prior to its substitution, subsection (10) as amended by the Finance Act 2000 w.e.f. 1.4.2001 and Finance Act 2003 with retrospective effect from 1.4.2002 read as under: (10) The amount of profit in case of an undertaking developing and building housing project approved before 31st day of March, 2005 by a local authority, shall be 100% of the profit derived in any previous year relevant to any assessment year from such housing project if (a) such undertaking has commenced or commences development and construction of the housing project on or after the first day of October, 1998, (b) the project is on the size of a plot of land which has a minimum area of one acre and (c) the residential unit has a maximum builtup area of 1000 sq.ft. where such residential unit is situated within the cities of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 It is very clear from the above provisions that as on 1.4.2004 there was no condition for obtaining completion certificate of the housing project for claiming deduction u/s 80IB(10) of the Act. First condition was that the assessee has commenced development and construction of housing project on or after first day of October, 1998. Second condition was that project is on the size of plot of land which has a minimum area of one acre. The third condition was that residential unit has a maximum built up area of 1000 sq.ft. where such residential unit is situated within the city of Delhi or Mumbai or within 25 kms from the municipal limits of these cities and 1500 sq.ft. in any other place. We found that all these three conditions have been complied with by the Assessing Officer. 11. Now the question arises whether the Assessing Officer has rightly disallowed deduction u/s 80IB(10) of the Act on the basis of amended p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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