TMI Blog2016 (10) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, this explanation changed the very legal matrix for granting deduction under section 80IB( 10) of the Act. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 16220 of 2010 - - - Dated:- 4-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MRS SWATI SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 16.3.2010 issued by the respondent Assessing Officer in the following background : 2. The petitioner is a partnership firm and is engaged in the business of developing and construction of housing project. For the assessment year 2003-2004, the petitioner filed the return of income on 30.11.2003 declaring total income of ₹ 8.36 lacs (rounded off) after claiming deduction of ₹ 84.51 lacs(rounded off) under section 80IB( 10) of the Income Tax Act ( the Act for short). The return was taken in scrutiny by the Assessing Officer during which he raised multiple queries asking the assessee to substantiate the claim of deduction. After considering the replies of the assessee, the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded the by the Assessing Officer, the counsel contended that the Assessing Officer wanted to rely upon the explanation added below section 80IB( 10) with retrospective effect. This could not be a ground for reopening the assessment beyond four years. In this context, counsel relied on the following decisions : 1) In case of Denish Industries Ltd. v. Incometax officer reported in (2004) 271 ITR 340. 2) In case of Sadbhav Engineering Ltd. v.Deputy Commissioner of Incometax reported in (2011) 333 ITR 483 (Guj). 3) In case of Classic Network Ltd. v. Deputy Commissioner of IncometaxCircle1 reported in (2014) 45 taxmann.com 234 (Gujarat). 5. On the other hand, learned counsel Shri Nitin Mehta for the department opposed the petition contending that the Assessing Officer has recorded proper reasons before issuing the impugned notice. The materials on record would suggest that the petitioner had acted only as a works contractor as explained in explanation below section 80IB( 10) of the Act. He would therefore, not be entitled to such deduction which is available only in case of a person developing a housing project. 6. From the materials on record, we notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm No. 7/12 of the land on which Pruthvi project was constructed. (v) Copy of approval of the Project granted by the Ahmedabad Urban Development Authority (AUDA) (vi) Date of commencement of the Project i.e. 27th October, 1999 and copy of Plan approved by AUDA (vii) Built up area of each residential unit (viii) Note regarding eligibility of interest for deduction u/s.80IB. 8. It was after such detailed exercise that the Assessing Officer in the order of assessment allowed the claim of deduction by making the following observations : The assesses Firm is Builder and doing Construction business. During the year the assessee Finn has carried out Development and Construction work of the housing project Viz. Pruthvi for Jatin Amrut Cooperative Housing Society Ltd. the project which is eligible for deduction u/s. 80IB(10) of the IT. Act 1961. Moreover it has other income also. The assessee firm has furnished the audit report from M/S G..K Chokshi Co., in Form No lOCC B under rule 18 BBB of I T Rules 1962 regarding eligibility of deduction u/s 80 IB(10) of the I. T Act 1961. The working of the deduction u/s. 80 IB (10) have also been furnished as per AnnexureB o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from 1.4.2001. This explanation provides that for removal of doubts it is declared that nothing contained in the said subsection would apply to any undertaking which executes the housing project as a works contract awarded by any person including the Government. In the opinion of the Assessing Officer, this explanation changed the very legal matrix for granting deduction under section 80IB( 10) of the Act. 11. In case of Denish Industries Ltd.(supra), Division Bench of this Court, when the Revenue relied on retrospective statutory amendment for reopening the assessment beyond four years, observed as under : It is true that when there is a statutory amendment with retrospective effect, the statutory amendment has to operate as if the law as amended was there on the statute book. However, as per the settled legal position the fiction is to operate within the field which it is meant. Hence, if the proceedings were pending on 1/4/1986 when the statutory amendment was made, whether assessment proceedings or proceedings by way of appeal or revision or reference, Explanation 8 would have certainly operated. However, on the question whether the assessee had failed to disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in disclosing fully and truly all material facts necessary for his assessment, is a matter of fact and there can be no deemed failure as is sought to be contended on behalf of the respondents. In the circumstances, in absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment years under consideration, the notices under section 148 of the Act having been issued after the expiry of a period of four years from the end of the relevant assessment years, the very initiation of proceedings under section 147 of the Act stand vitiated and as such cannot be sustained. 13. In case of Classic Network Ltd. (supra), in context of explanatory amendment which was granted retrospective effect and which was utilised for issuing notice for reopening, the High Court observed as under : In the instant case, admittedly, the only ground which had made the Assessing Officer to initiate proceedings of reassessment is the insertion of explanation to subsection (13) of section 80IA which substituted earlier explanation giving retrospective effect to the said provision from 1.4.2000. Such provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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