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2017 (1) TMI 442 - ITAT MUMBAI

2017 (1) TMI 442 - ITAT MUMBAI - TMI - Eligibility to deduction u/s 80IB - Held that:- As decided in assessee's own case for the assessment year 2009-2010 the time limit of approval on/or after 1st April 2004, will not be applicable in the case of the proviso to section 80-IB( 10). - Moreover, in the instant case, the approval which was given on 4th August 2003, was loaded with lot of terms and conditions to be fulfilled before the commencement. It was only after such terms and conditions we .....

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. Thus, the contentions of the learned Departmental Representative cannot be sustained. - Revenue has challenged that the date of approval of SRA scheme project is 3rd July 2003, and is not covered by the Notification no.2 of 2011, which was issued to clarify the earlier notification dated 3rd August 2010. Such a ground taken by the Department is wholly misconceived as there is no such scheme dated 3rd July 2003. The said date of 3rd July 2003, is when the assessee has applied before the SRA .....

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r of CIT(A) for the assessment years 2005-2006 and 2006-2007, in the matter of order passed u/s. 143(3) read with Section 147 of the IT Act. 2. In these appeals, revenue is aggrieved for deleting the disallowance of deduction u/s.80IB(10). 3. We have considered rival contentions and found that assessee is engaged in business of builder and developer. Its claim of deduction u/s.80IB(10) was declined by the AO by reopening the assessment u/s.147. 4. By the impugned order, CIT(A) allowed assessee s .....

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ng here under the relevant portion of the order dt.12/09 /2012 for ready reference:- "The present appeal preferred by the Revenue, is directed against the impugned order dated 31st January 2011, passed by the learned Commissioner (Appeals)-XXXIl, Mumbai, for assessment year 2007-08, on the following grounds:- "1. On the facts and in the circumstances of the case and in law, the learned C/T(A) erred in allowing deduction under section 80IB(l0) of ₹ 1,47,11,573, without appreciatin .....

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builder and developer through a proprietorship concern namely M/s. K.R. Builders. During the year under consideration, the assessee has declared income under the head "Income from Business" to the tune of ₹ 1,54,59,252, out of which a sum of ₹ 1,47,11,5733, was claimed as deduction under section 80IB( 10) of the Act. 3. During the course of assessment proceedings, the Assessing Officer noticed that the size of plot of land on which the housing project was undertaken by the .....

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cer found that the assessee's Dharavi Project is in slum area, which is a slum project and area of the plot of land is less than one acre, therefore, the assessee does not fulfill the basic condition of the claim for deduction under section 80-IB(10). In response to the show cause notice, the assessee submitted that this condition of "project size should be on a plot of one acre" has been removed by the Finance Act, 2004, w.ef 1st April 2005, in case of housing project being carrie .....

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n was submitted); (ii) Built size of the residential unit is less than 1,000 square ft.; (iii) Built size of the commercial establishment does not exceed 5% of the aggregate size of the project or two thousand square ft, whichever is less; and (iv) Project has been completed within the stipulated period. 4. However, till the date' of the completion of assessment proceedings, the CBDT had not issued any notification in terms of the proviso to subsection (10) of section 80-lB. The assessee bef .....

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t case, the scheme on which the assessee has done her project has not been notified which is evident from the letter dated 23rd August 2007, issued by the CBDT. Accordingly, he disallowed the claim of ₹ 1,47,11,573, made under section 80-IB(10), vide order dated 24th December 2009. 6. Aggrieved, the assessee carried the matter in first appeal, wherein the assessee produced a copy of Notification dated 3rd August 2010, issued by the CBDT, wherein by the scheme of SRA of the Govt. of Maharas .....

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following conditions:- (i) Slum development falling in Category-VII mentioned in notification no. TPB-4391/4080(A)/UD-11 (RDP) dated 3rd June 19992, shall be excluded from the scheme; (ii) Slum development falling within clause 7.7 of the appendix IV of regulation 33(10) which provides for joint development of slum and non-slum area shall be excluded from the scheme, and (iii) Any amendment in the scheme hereby notified shall be required to be re-notified by the Board. 7. The said notification .....

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tion (10) of section 80lB from the A. Y. 2005-06 onwards". 8. In view of this specific clarification by the CBDT, the Commissioner (Appeals) directed the Assessing Officer to allow the deduction under section 801B( 10) on the ground that the conditions provided in the proviso to section 801B( 10) stands fulfilled. The relevant findings of the Commissioner (Appeals), for the sake of ready reference, is reproduced herein below:- 3.4 Therefore, in view of specific clarification issued by the C .....

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e scheme is notified by the notification dated 3/8/2010 and such scheme does not fall under category VII mentioned in notification no. TPB- 4391/4080(A)/UD-11(RDP) dated 3rd June 1992, or within clause 7.7 of the Appendix IV of regulation 33(10) which provides for joint development of slum and non-slum area. Therefore, after the clarificatory notification issued by CBDT on 5.1.2011, the appellant is now eligible for deduction under section 80IB(10) in respect of the profits derived from housing .....

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submitted that approval was given by the SRA on 4th August 2003, whereas the subsequent notification of CBDT categorically states that the benefit of the scheme would be available on the projects approved after 1st April 2004, and therefore, the benefit of proviso, relaxing the conditions of one acre would not be available to the assessee. Accordingly, the deduction under section 80IB(10),allowed by the Commissioner (Appeals) was not justified, either in law or on facts. He made detail submissio .....

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he submitted that in view of the amended provisions brought by the Finance Act, 2004, w.e.f 1st April 2005, by which proviso was inserted, has relaxed the condition of minimum area of one acre for the housing project in a case where the housing project is carried out in a slum area as per the Govt. scheme. Once this benefit has been made available, the assessee is entitled to deduction from assessment year 2005- 06 onwards. Regarding approval date of 4th August 2003, by SRA, he submitted that t .....

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ught by the Finance Act, 2004, is curative in nature and, hence, the same should be given retrospective effect. For this purposes, he referred to the speech given by the Finance Minister at the time of introduction of the proviso to section 80-IB. From the said speech, he submitted that it was never intended that the benefit would be available from a particular date so long as the scheme has been approved. The CBDT cannot, in any manner, frustrate the object and intent of the legislation by prov .....

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g of retrospective effect is such situation, he relied on two Supreme Court judgments namely CfT vis Alom Extrusions Ltd. [2009], 319 ITR 306 (SC) and Allied Motors Pvt. Ltd. vis CIT, [1997] 224 ITR 677 (SC). 11. We have carefully considered the rival contentions and have perused the findings of the learned Commissioner (Appeals) as well as the material available on record. The assessee has undertaken a project under the scheme of Slum Rehabilitation Authority (SRA) framed by the Govt. of Mahara .....

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n of approval vide letter dated 12th April 2004, to the Executive Engineer, SRA, and in response to which commencement certificate was issued on 17th October 2004. After the amendment brought in the statute by Finance Act, 2004, w.e.f 1st April 2004, various conditions laid down in clauses (a) and (b) and particularly in clause (b), wherein one of the conditions for availing the deduction under section 80IB(10), was that the project should be on the plot of land which has a minimum area of one a .....

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elopment and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1 st 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, within four years from the end of the financial year in which the housing project is approv .....

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is issued by the local authority; (iii) 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 Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behal .....

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or re-development in areas to be slum under any law and it further provides that such a scheme should be notified by the Board in this behalf. Thus, an exception has been carved out by the proviso in cases of housing project development in slum area under a Govt. scheme and overrides the condition mentioned in clauses (a) and (b), The scheme of SRA contained in regulation 33(10) of Development Control Regulation for Greater Mumbai has been notified by CBDT Notification no. 67, dated 3rd August 2 .....

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tion (ii), dated the 3rd August, 2010, in paragraph 2 for "This notification shall come into force with effect from the date of its publication", read "This notification shall be deemed to apply to projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004, and before 31st day of March, 2008, thereby making the incomes arising from such projects eligible for deduction under sub section (10) of section 80IB from the assessment year 2005 .....

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proved plans in the city of Mumbai. Perhaps the problem is there in some other cities too. I, therefore, propose to relax the condition of minimum plot size of one acre in the case of housing projects, as long as the projects are implemented in accordance with a scheme for reconstruction or development approved by the Central or State Government. " 14. Thus, rigours of the conditions enumerated in clauses (a) and (b) of section 80-fB, has been relaxed by the legislature to achieve certain s .....

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h a time limit can defeat the basic purpose of the proviso for which it was enacted as in the said proviso, the time limit provided in clause (a) of section 80-IB(10) has not been specifically made applicable, therefore, such a time limit cannot be imposed by way of subordinate legislation. Such notification can only clarify the statutory provisions and not over-ride them or restrict the operation of the main enactment. Therefore, in our considered opinion, the time limit of approval on/or after .....

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the assessee's project is not liable for deduction under section 80- IB, once all other conditions are fulfilled. In this case, one can say that the date of commencement i.e., 17th October 2004, can be taken as the date of approval as it was from this date the approval given by the SRA becomes operative. Thus, the contentions of the learned Departmental Representative cannot be sustained. 16. In ground no.2, the Revenue has challenged that the date of approval of SRA scheme project is 3rd J .....

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no.2, taken by the Revenue 17. In view of our above findings, we do not find any reason to deviate from the ultimate findings given by the Commissioner (Appeals) and, consequently, the same is hereby confirmed by holding that the assessee is eligible for deduction under section 80- IB(10), for ₹ 1,47,11,573, in respect of its development project carried out in Dharavi slum area, which was a scheme framed by Maharashtra Govt. and duly notified by the CBDT. Accordingly, the grounds raised b .....

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eligible for deduction u/s 80IB(10) of the Act. No contrary facts were brought to our notice by either side in respect of development project carried out in Dharavi Slum Area. Following the aforesaid decision of the Tribunal wherein, the circular of the Board Regulation no. 33(10) of DC rules for Greater Mumbai, 1991, read with provision of notification no. PB-4391 / 4080(A) /UD-II(ROP)dt. 03/06/1992 along with conditions therein, Notification no. 2 of 2011, dated 05/01/2011, issued by CBDT, dec .....

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e of utilization of the premises for business purposes and genuineness of the transaction. 3.1 During hearing, Ld. DR, advanced arguments which is identical to the ground raised. On the other hand the Ld. Counsel for assessee defended the conclusion arrived at in the impugned order. 3.2. We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impug .....

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