TMI Blog2013 (11) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... l including the projections and balconies as increased by the thickness of the walls but does not include common areas shared with other residential areas.Technically speaking, the definition of 'built up area' as given above will be applicable only with effect from 01/04/2005. The Honourable Supreme Court in a recent Five Judge Bench decision in the case of CIT V/s Varas International Pvt. Ltd. [2006 (2) TMI 76 - SUPREME Court ] has held that for an amendment to be construed as being retrospective, the amended provision must indicate either by terms or by necessary implication that it is to operate retrospectively. Thus we restore this issue to Assessing Officer with similar directions. - ITA Nos.561 to 565/PN/2013 with C.O Nos.10 to 14/PN/2013 - - - Dated:- 29-11-2013 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER. Department by : Shri S.B. Walimbe Assessee by : Shri M.K. Kulkarni ORDER PER SHAILENDRA KUMAR YADAV, JM: All these appeals filed by Revenue and Cross Objections are filed by assessee pertain to same assessee and arising from the consolidated order of the CIT(A), Kolhapur dated 13-12-2012 for the A.Ys. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal at the time of hearing. 2. The assessee is a builder and developer had undertaken construction of housing project viz. Bhakti Pooja Nagar at R.S No.284B, plot No.63, B-Ward, Kolhapur. This case was selected for scrutiny and during the assessment proceedings, Assessing Officer noticed in the computation enclosed, assessee had claimed deduction u/s.80IB(10) in respect of his housing project Bhakti Pooja Nagar. Assessee has also made similar claim in earlier years i.e. 2003-04 and 2004-05 in respect of above housing project. In these years, in the assessment order passed u/s. 143(3), assessee claim was rejected on the ground that residential units exceeded 1500 sq.ft., being maximum area permissible u/s. 80IB(10). 2.1 The issue of claim u/s. 80IB(10) was examined in all the years under appeal. Assessee had obtained approval for his plan from Kolhapur Municipal Corporation twice on 22.02.2002 and 10.10.2002. After introduction of section 80IB(10) b Finance (No.2) Act, 2003 w.e.f. 01.04.2002, assessee had submitted revised plan which was approved on 31.03.2004. On verification of revised plan, Assessing Officer noticed that two residential units viz. C-5 and D-5 and bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved before the 31st day of March, 19[2008] by a local authority shall be hundred per cent of the profits derived in the 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 1st day of October, 1998and completes such construction- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day 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 ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 2005 w.e.f. 01/04/2005. Clause (a) of this sub-section defined the 'built-up area to mean- [(a) built-up area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units;] 2.5 The provision of section 80IB(10) prior to the amendment by Finance (No.2) Act, 2004 w.e.f. 01.04.2004 permitted a deduction of 100% of the profit derived in any previous year relating to any assessment year from housing project subject to conditions in respect of such housing project which was approved prior to 31.03.2005. These conditions required the assessee to commence development and construction of project on or before 01.10.1998 on the plot of land which is minimum area of one acre and residential units at maximum built up area of 1500 sq.ft. if not situated at the Delhi, Mumbai or even 25 kilometres from municipal limits of these area in which case maximum permissible built up area of residential unit was 10,000 sq.ft. The provisions of section 80IB(10) as amended by Finance (No.2) Act, 2004 w.e.f. 01.04.2005 as cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agreement, residential units to be sold to the public and shops for sale. He noted that project accounts were not maintained for two types of residential units and commercial space and that various expenses were of nature that they could not be segregated. He, therefore, held that entire project was one and that all bungalows were part of the project. He also observed that municipal authorities have given approval for construction of all units including bungalows in same proposal. He found that in revised proposal submitted to the concerned authorities and approved on , the construction area of all bungalows including those being constructed for land owners, except two bungalows were found below 1500 sq.ft. Thereafter, Assessing Officer applied provision of clause (a) of sub-section 14, introduced by the Finance (No.2) Act, 2004 w.e.f. to define built up area and included the area of verandah in built up area in respect of 19 others bungalows to hold that provisions of section 80IB(10) were not complied with. He also noticed that area of verandah is not excluded or exempted u/s. 78(3) of the Bye-Laws of Kolhapur Municipal Corporation. Therefore, he held that since verandah is a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential units. 24. The fact that the deduction under section 80-IB(10) prior to 1-4-2005 was allowable on the profits derived from the housing projects constructed during the specified period, on a specified size of the plot with residential units of the specified size, it cannot be inferred that the deduction under section 10-IB(IO) was allowable to housing projects having residential units only, because, restriction on the size of the residential unit is with a view to make available large number of affordable houses to the common man and not with a view to deny commercial user in residential buildings. In other words, the restriction under section 80-IB(10) regarding the size of the residential unit would in no way curtail the powers of the local authority to approve a project with commercial user to the extent permitted under the DC Rules/Regulations. Therefore, the argument of the Revenue that the restriction on the size of the residential unit in section 80-IB(IO) as it stood prior to 1-4-2005 is suggestive of the fact that the deduction is restricted to housing projects approved for residential units only cannot be accepted. 25. The above conclusion is further forti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? According to CIT(A), restriction in 'built-up area' imposed for the first time w.e.f. 01/04/2005 cannot have retrospective application. The Hon ble Karnataka High Court in the case of Commissioner of Income-Tax, Central Circle vs. Anriya Project Management Services (P.) Ltd. reported in [2012] 21 taxmann.com 140 (Karnataka), wherein this provision was examined. The question was whether the definition of 'built-up area' inserted by Finance (No.2) Act, which became effective from 01/04/2005 is prospective or retrospective in nature. It was held to be prospective in nature. The said amendment would have no application to the housing projects, which were approved by the local authority prior to 01/04/2005 in calculating 1500 feet of residential unit and it further held that once such housing project of assessee is approved by local authority prior to 01.04.2005, it would be entitled to 100% benefit of provisions of Section 80IB(10). Similarly, this view has been taken by the Hon ble Gujarat High Court in the case of Manan Corporation v. ACIT, Circle-5 wherein decision of assessee has reference of Supreme Court in the case of CIT u. Gold Coin Health Food P. Ltd. [2008] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in a recent Five Judge Bench decision in the case of CIT V/s Varas International Pvt. Ltd., 283 ITR 485 has held that for an amendment to be construed as being retrospective, the amended provision must indicate either by terms or by necessary implication that it is to operate retrospectively. The Apex Court has referred to its earlier decisions in the case of Allied Motors Pvt. Ltd. 224 ITR 677 (SC), Poddar Cement Pvt. Ltd. 223 ITR 825 (SC) and Brijmohandas Laxmandas V/s CIT, 226 ITR 625. The above judgement has cleared the controversy of whether a clarificatory amendment should be construed as being retrospective unless specified otherwise. 3.2 Facts being similar, so following the same reasoning, we restore this issue to Assessing Officer with similar directions. As a result, appeal of revenue is partly allowed as indicated above. Similar issue arose in other years. Facts being similar, so following the same reasoning, we partly allowed the revenue s appeal as indicated above. 4. Cross Objections filed on behalf of assessee are nothing but supporting the order of CIT(A) which are taken care by us while disposing off revenue s appeal, so they are also disposed off a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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