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TMI Blog2024 (11) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in confirming the denial of deduction under section 80IB(10) for the reason that the area of commercial complex built on the project was in excess of the limits in the amended section 80IB(10). 4. That the Id. CIT(A) has not correctly interpreted the provisions of section 80IB(10) which stood prior to 1.4.2005 and after their amendment from 1.4.2005 in the correct perspective and thereby confirming the denial of deduction to the appellant whose project was approved prior to 31.3.2004. 5. That the order passed by ld. CIT(A) is without proper opportunity and bad in law. 6. That the order passed by ld. CIT(A) is against the merits, circumstances and legal aspects of the case. 7. That the appellant craves leave to add, alter, amend or withdraw any or all the grounds of appeal on or before the date of hearing." 3. The assessee is joint venture (AOP) constituted vide agreement dated 17.01.2002 to carry out the business of development and construction of residential and commercial units. The assessee filed its return of income for A.Y.2007-08 on 29.10.2007 and for A.Y.2008-09 on 25.09.2008 declaring the income of Rs. 12,77,970/- and Rs. 25,70,022/- respectively after claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 80IB(10) then the subsequent amendment cannot imposed a fresh condition for claiming the deduction u/s 80IB(10) of the Act. He has clarified that initially the project was approved for 29.7 acre on 14th September 2000 and revised plan were approved on 23rd August 2004 for 57.35 acres. In support of his contention he has relied upon following decisions: a. CIT vs Sarkar Builders 277 CTR 301 (SC) b. P. CIT vs Sahara State, Gorakhpur dated 19th August 2019 in ITANo.13 of 2016 (Allahabad High Court) c. CM/s ACE Multi Axes System Ltd vs The DCIT dated 28th July 2014 in ITA No.477/2013 (Karnataka High Court) d. CIT vs Bramha Associates - 333 ITR 289 (Bombay) 3.2 Placing reliance on the above judgment the Ld. AR has submitted that the Hon'ble High Court as well as Hon'ble Supreme Court has held that the insertion of clause (d) in section 80IB(10) w.e.f 01.04.2005 is applicable prospectively and not retrospectively and therefore, cannot be applied to the projects commenced and sanctioned before 01.04.2005. Thus, Ld. AR has contended that when the project was approved there was no such condition for completion of project on or before 31.03.2008 as well as commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the language of the provisions the same cannot be given different a meaning. He has relied upon the orders of the CIT(A) and submitted that the CIT(A) has dealt with all the contentions of the assessee while passing the impugned orders. 5. We have considered rival submissions as well as relevant material on record. There is no dispute regarding approval of the project in the case as on 14th September 2000 for total area 29.97 acres. The assessee has also claimed that development and construction activities of the housing project commenced w.e.f 31.01.2001. The thrust of the whole argument of the Ld. AR of the assessee is on the point that subsequent amendment vide Finance Act 2004 w.e.f 01.04.2005 in the provisions of section 80IB (10) cannot impose new condition for allowing deduction in respect of the project which was approved and commenced prior to 01.04.2005. 5.1 In support of his contention he has relied upon series of decisions including the judgment of Hon'ble Supreme Court in case of CIT vs. Sarkar Builders 375 ITR 392 as well as judgment in case of CIT vs. Veena Developers 277 CTR 297. Ld. AR has also relied upon the decision of Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built 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'. (g) From this provision, therefor, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t section 80-IB(10) is prospective in nature and can have no application to a housing project that is approved before 31st March, 2005. As the deduction sought to be claimed under 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 Apri, 2005 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c) of the General Clauses Act, 1897. The right to carry forward losses which had accrued under the repealed Income Tax Act of 1922 is not saved expressly by Section 297 of the Income Tax Act, 1961. But, it is not necessary to save a right expressly in order to keep it alive after the repeal of the old Act of 1922. Section 6(2) saves accrued rights unless they are taken away by the repealing statute. We do not find any such taking away of the rights by Section 297 either expressly or by implication." 23) The aforesaid discussion persuades us to conclude that the judgments of the High Courts, which are impugned in these appeals, take correct view that the assessees were entitled to the benefit of Section 80IB(10). As a result, these appeals fail and are hereby dismissed. 5.2 The Hon'ble Supreme Court has analyzed the amendment made vide Finance Act 2004 in the context of the condition imposed as per clause (d) of section 80IB(10) and observed that restricting commercial area in the project to 5% or 2000 sq.ft whichever is less resulting impossible compliance in the ongoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 31.03.2003 by amendment vide Finance Act 2000. Thus, as on the date of approval as well as on the date of commencement of the project the conditions as per section 80IB(10) are that such undertaking has commenced or commences development and construction of housing project on or after 1st day of October 1998 and completes the same before 31st day of March 2003. The condition as contemplated in clause (a) are obviously not satisfied in the case of the assessee because the project was not completed within stipulated deadline. The assessee is claiming the benefit of section 80IB(10) on the basis of the subsequent amendment brought in this section by Finance Act 2003 w.e.f. 01.04.2002 then the assessee cannot take a plea that the conditions of completion of project on or before 31.03.2008 as inserted by Finance Act 2004 w.e.f. 01.04.2005 cannot be applied in the case of the assessee because on the principle of applicability of the provisions as on the date of approval as well as date of commencement of the project the assessee was required to complete project before 31.03.2003. If the assessee takes benefit of relaxation of this condition by amendment vide Finance Act 2003 w.e.f 01.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the amendment w.e.f. 01.04.2005 and therefore, the question of retrospective applicability of this amendment prescribing time limit for completion of the project does not arise. Since the issue of requirement of completion certificate issued by the local authority is sub-judice before the Hon'ble Supreme Court therefore, in the facts and circumstances of the case we remand this issue to the record of the AO for fresh adjudication as per provisions as existed as on the date of approval of the project and subject to the decision of Hon'ble Supreme Court in case of Global Reality (supra) as well as Global Estate (supra). 6. As regards the denial of claim of deduction on the ground of commercial area exceeding the prescribed limit in clause(d) of section 80IB(10) is concerned this issue is covered by the judgment of Hon'ble Supreme Court in case of CIT vs. Sarkar Builders (supra) cited and reproduced in forgoing part of this order. Therefore, the claim of deduction cannot be disallowed on the ground that commercial space in the project is more than the prescribed limit as per clause (d) section 80IB(10) if the said commercial part of the project is duly approved by the local author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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