TMI Blog2016 (12) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... of claim of deduction u/s 80IB(10) being part of the profit derived from housing project has been challenged - Held that:- There is a confusion in the area as in the commencement certificate dated 03/07/2003 (page-7 of the paper book), the residential area mentioned is 10491.137 mts. and the commercial area is 459.911 mts., thus, the total area comes to 10951.048 mts. At the same time, in the occupancy certificate, the residential area mentioned is 10636.203 sq.mts. and the commercial area mentioned is 536.779 sq. mts. thus, the total area comes to 11172.982 sq. mts., thus, there is a confusion in the area. Considering the totality of facts, we direct the assessee to file the necessary details before the ld. Assessing Officer and clear the factual matrix. The ld. Assessing Officer is directed to examine the claim of the assessee in accordance with law, considering the decision from Hon'ble jurisdictional High Court in Brahma Associates (2011 (2) TMI 373 - BOMBAY HIGH COURT) Penalty levied u/s 221(1) for non-payment of self assessment tax - Held that:- Major dispute was on account of allowability of deduction u/s 80IB(10). As mentioned earlier, the Ld. Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-clause (i) to clause (a) to section 80IB(10) of the Act. 2.1. During hearing, the ld. DR, Shri Suman Kumar, defended the addition made by the ld. Assessing Officer by arguing that the project was sanctioned in the year 2003 vide commencement certificate dated 03/07/2003 and completion certificate was issued on 02/03/2006, thus, the amendment made by the Finance Act is not applicable to the projects approved before 01/04/2004. On the other hand, Shri Pradip Kapasi, ld. counsel for the assessee defended the impugned order by claiming that, identically, in the case of sister concern, the claim of the assessee was allowed and placed reliance upon the decision in the case of Sarkar Builders (375 ITR 392)(SC). This factual assertion of the assessee was not controverted by the Revenue. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of construction. During the relevant period, the assessee constructed four projects namely Woods, Hermitage, Meadows, Iraisa. The assessee booked the profit of the project namely Woods , the assessee showed the profit at ₹ 10,07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that clause (d) has prospective operation, viz., with effect from 01/04/2005, and this legal position is not disputed by the Revenue before us. What follows from the above is that prior to 01/04/2005, the developers/assessees who had got their projects sanctioned from the local authorities as 'housing projects', even with commercial user, though limited to the extent permitted under the DC Rules, were convinced that they would be getting the benefit of 100% deduction of their income from such projects under Section 80IB of the Act. Their projects were sanctioned much before 01/04/2005. As per the permissible commercial user on which the project was sanctioned, they started the projects and the date of commencing such projects is also before 01/04/2005. The assessee before us got the plan/project approved/sanctioned on 03/07/2003, which is much before 01/04/2005, therefore, the provision will be applicable on that particular time. Thus, the Revenue cannot deny the benefit of this section applying the principle of retroactivity even when the provision has no retrospectivity. Take for example, a case where under the extant DC Rules, for shops and commercial activity constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualified with the words 'ordinarily available'. 2.6. On examining the scheme of sub-section (1) of Section 80IB of the Act, its historical turn around by amendments from time to time and keeping in view of the real purpose behind such a provision, we are of the view that in the peculiar scenario as projected in this provision, the aforesaid cardinal principle of tax law is not to be applied as, by necessary implication, application thereof stands excluded. For the purpose of discussing this particular issue, it is required to be noted that with effect from 01/04/2001, Section 80IB(10) stipulated that any housing project approved by the local authority before 31/03/2001 was entitled to a deduction of 100 per cent of the profits derived in any previous year relevant to any assessment year from such housing project, provided (i) the construction/development of the said housing project commenced on or after 1/10/1998 and was completed before 31/03/2003; (ii) the housing project was on a size of a plot of land which had a minimum area of one acre; and (iii) each individual residential unit had a maximum built-up area of 1000 sq.ft., where such housing project was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (No.2) Act, 2004 with effect from 01/04/2005. The Legislature made substantial changes in sub-section (10). Several new conditions were incorporated for the first time, including the condition mentioned in clause (d). This condition/restriction was not on the statute book earlier when all these projects were sanctioned. Another important amendment was made by this Act to sub-section (14) of Section 80IB with effect from 01/04/2005 and for the first time under clause (a) thereof the words 'built-up area' were defined. Section 80IB(14)(a) reads as under: (14) For the purposes of this section - (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; Prior to insertion of Section 80IB(14)(a), in many of the rules and regulations of the local authority approving the housing project built-up area did not include projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making the residential units far bigger t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt up area of shops and establishments to 5% of the aggregate built up area or 2000 sq.ft., whichever is less. However, the Legislature itself felt that this much commercial space would not meet the requirements of the residents. Therefore, in the year 2010, the Parliament has further amended this provision by providing that it should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft., whichever is higher. This is a significant modification making complete departure from the earlier yardstick. On the one hand, the permissible built up area of the shops and other commercial shops is increased from 2000 sq.ft. to 5000 sq.ft. On the other hand, though the aggregate built up area for such shops and establishment is reduced from 5% to 3%, what is significant is that it permits the builders to have 5000 sq.ft. or 3% of the aggregate built up area, 'whichever is higher'. In contrast, the provision earlier was 5% or 2000 sq.ft., 'whichever is less'. Therefore, it is clear that the housing project contemplated under sub-section (10) of Section 80IB includes commercial establishments or shops also. Now, by way of an amendment in the form of Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 80-IB(10) is inseparably linked with the date of approval of the housing project, it would make no difference if the construction of the said project was completed on or after 1st April, 2005 or that the profits were offered to tax after 1st April, 005 i.e. in A.Y. 2005-06 or thereafter. We therefore find no substance in the argument of the Revenue that notwithstanding the fact that the housing project was approved prior to 31st March 2005, if the construction was completed on or after 1st April, 2005 or if the profits are brought to tax in the A.Y. 2005-06 or thereafter, the said housing project would have to comply with the provisions of clause (d of section 80- IB(10). To our mind, we do not think that the condition/restriction laid down in clause (d) of section 80- IB(10) has to be revisited and/or looked at and complied with in the assessment year in which the profits are offered to tax by the Assessee. When the Assessee claims a deduction under section 80-IB(10), the Assessee is required to comply with such a condition only if it is on the statute-book on the date of the approval of the housing project and it has nothing to do with the year in which the profits are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee moved additional claim, however, which was denied by the First Appellate Authority. Our attention was invited to the finding of the Ld. Commissioner of Income Tax (Appeal). It was explained that the project of the assessee was approved as a single project, which includes residential as well as commercial and there is wrong finding by the Ld. Commissioner of Income Tax (Appeal) that the project was approved by way of separate sanction plans. The crux of the argument is that there are decisions in favour of the assessee on the sale of commercial area also, therefore, the deduction u/s 80IB(10) of the Act has to be allowed in full. On the other hand, the ld. DR, defended the denial of claimed deduction by claiming that there is a confusion in the area mentioned in the sanction plan, completion certificate and the order of the Ld. Assessing Officer by inviting our attention to the relevant pages. 3.1. We have considered the rival submissions and perused the material available on record. Without going into much deliberation we find that the competent authority approved the sanction plan vide letter dated 03/07/2003 (pages 5 6 of the paper book), wherein, there is a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. The facts, in brief, are that the claimed relief u/s 80IB(10) of the Act and the assessment was made by the ld. Assessing Officer at an income of ₹ 10,07,55,450/-, against the declared income of ₹ 1,30,87,087/-, thus, addition of ₹ 8,76.68,359/- was made, while denying the claimed deduction u/s 80IB(10) of the Act. The appeal of the assessee was dismissed by the Ld. Commissioner of Income Tax (Appeal) on technical ground as the due tax was not paid. The assessee carried the matter in appeal before the Tribunal, where, the matter was restored to the Ld. Commissioner of Income Tax (Appeal). Meanwhile, the ld. Assessing Officer pressed for demand. The Assessing Officer treated the assessee in default u/s 221(1) of the Act for outstanding tax to the tune of ₹ 4,32,50,133/- and accordingly levied the penalty at the rate of 10% which comes to ₹ 43,25,013/-. It is noted that the major dispute was on account of allowability of deduction u/s 80IB(10). As mentioned earlier, the Ld. Commissioner of Income Tax (Appeal) as well as this Tribunal (in preceding para of this order) has allowed the claimed deduction u/s 80IB(10) on residential unit and on commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to legalize in justice on technical grounds but because it is capable of removing injustice and is expected to do so. 5.2. The Hon ble Apex Court in a celebrated decision in Collector, Land Acquisition vs Mst. Katiji Ors. 167 ITR 471 opined that when technical consideration and substantial justice are pitted against each other, the courts are expected to further the cause of substantial justice. This is for the reason that an opposing party, in a dispute, cannot have a vested right in injustice being done because of a nondeliberate delay. Therefore, it follows that while considering matters relating to the condonation of delay, judicious and liberal approach is to be adopted. If sufficient cause is found to exist, which is bona-fide one, and not due to negligence of the assessee, the delay needs to condoned in such cases. The expression sufficient cause is adequately elastic to enable the courts to apply law in a meaningful manner, which sub-serves the end of justice- that being the life purpose of the existence of the institution of the courts. When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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