, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA ( ) BEFORE , /AND , ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA , AM ] / I.T.A NO.458/KOL/2011 / ASSESSMENT YEAR : 2006 - 07 & / I.T.A NO. 1228 /KOL/201 2 / ASSESSMENT YEAR : 2006 - 07 & / I.T.A NO S . 775 & 776 /KOL/201 2 / ASSESSMENT YEAR S : 200 7 - 0 8 & 2008 - 09 VIVEKANANDA CONSTRUCTION PVT. LTD. VS. DCIT /ACIT - CC - XXII, KOLKATA. (PAN: AABCV0484B) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 03.12.2014 DATE OF PRONOUNCEMENT: 02 . 01 .201 5 FOR THE REVENUE : SHRI VIJAY KUMAR, CIT - DR FOR THE ASSESSEE : SHIR B.C. JAIN, FCA. / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT CENTRAL CIRCLE - III, KOLKATA DATED 18.01.2011 U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 2006 - 07. ORIGINAL ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE - XXII, KOLKATA U/S. 143(3) OF THE ACT FOR ASSESSMENT YEAR 2006 - 07 VIDE HIS ORDER DATED 18.12.2008. 2. ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST REVISION ORDER PASSED BY CIT U/S 263 OF THE ACT REVISING THE ASSESSMENT FRAMED BY THE AO WHICH WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. FOR THIS ASSESSEE RAISED FOLLOWING FOUR GROUNDS: - 2 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 1. THAT IN T HE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT ERRED IN ASSUMING JURISDICTION U/S. 263. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER U/S. 263 PASSED BY THE LD. CIT IS BAD IN LAW AND ON FACTS. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT ERRED IN DIRECTING TO WITHDRAW THE INCENTIVE DEDUCTION U/S. 80IB(10) AMOUNTING TO RS.36,09,081/ - . 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT ERRED IN PASSING ORDER U/S. 263 APPLYING THE LAW AS APPLICABLE TO T HE PROJECTS COMMENCING CONSTRUCTION AFTER 01.04.2005. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING OF HOUSING PROJECTS AND CONSTRUCTIONS SINCE 10.05.2000. THE ASSESSEE OBTAINED APPROVAL FROM HOWRAH MUNICIPAL CORPORATION V IDE LETTER DATED 08.04.2000 AND COMMENCED CONSTRUCTION OF THE PROJECT FROM 10.05.2000. THE ASSESSEE STARTED DEVELOPING A HOUSING PROJECT (THE PROJECT UNDER CONSIDERATION) AND CONSTRUCTION COMMENCED PRIOR TO 01.04.2005. THE ASSESSEE IS CONSTRUCTING SEVERA L BUILDINGS ON LAND OWNED BY HOWRAH MILLS COMPANY LIMITED, THE PROJECT BEING AT 493/C/A, G.T. ROAD, HOWRAH 711101. THE TOTAL AREA OF THE PROJECT CONSISTS OF 41 BIGHAS, 1 COTTAH AND 5 CHITTAK. RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 2006 - 07 ON 06.11.2006 DECLARING TOTAL INCOME AT NIL AND ASSESSMENT WAS COMPLETED BY THE A.O. U/S.143(3) OF THE ACT VIDE ORDER DATED 18.12.2008 ASSESSING THE TOTAL INCOME AT NIL, BUT ASSESSED BOOK PROFIT AT RS.25,43,002/ - . THE CIT - CENTRAL - I II, ON PERUSAL OF ASSESSMENT RECORDS PRIMA FACIE NOTICED THAT THE ASSESSMENT FRAMED BY THE A.O. IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE REASON THAT THE ASSESSEE HAS NOT QUALIFIED FOR CLAIM OF DEDUCTION U/S.80IB(10) OF THE A CT BECAUSE IT IS NOT FULFILLING THE CONDITIONS LAID DOWN IN THE ABOVE SAID SECTION, BUT A.O. ALLOWED DEDUCTION. THE CIT - CENTRAL - III ISSUED SHOW CAUSE NOTICE AS TO WHY ASSESSMENT NOT TO BE REVISED VIDE NO.CIT(C) - III/KOL/263/VIVEKANAND CONSTRUCTION/2010 - 11/ 3053, DTD.22.11.2010. THE CIT DIRECTED THE ASSESSEE TO EXPLAIN AS UNDER: (I) THAT THERE IS CONDITION U/S.80IB(10) OF THE ACT THAT, THE UNDERTAKING COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECTS AFTER SEPTEMBER 30, 1998 AND IT SHOULD COMPL ETE CONSTRUCTION WITHIN 4 YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS FIRST APPROVED OR BEFORE APRIL 1, 2008 WHICHEVER IS LATER. THERE IS NO FURTHER CONDITION THAT SUCH CONSTRUCTION AND DEVELOPMENT OF THE HOUSING PROJECT SHOULD ALSO BE ON A LAND OWNED BY AS ASSESSEE UNDERTAKING . (II) THAT, THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT SHALL NOT EXCEED 5% OF THE AGGREGATE BUILT - UP - AREA OF THE HOUSING PROJECT OF 2000 SQ.FT. W HICHEVER IS LESS . 3 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 THE CIT NOTED THAT THE ASSESSEE DOES NOT FULFILL THE ABOVE TWO CONDITIONS FOR CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT AND THEREFORE, THE DEDUCTION ALLOWED IS REQUIRED TO BE WITHDRAWN. ACCORDING TO HIM, THE ASSESSMENT COMPLETED IS W ITHOUT DUE APPLICATION OF MIND AND REQUISITE INQUIRY AND THEREFORE, THE ASSESSMENT FRAMED IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE ASSESSEE REPLIED TO THE ABOVE SHOW CAUSE NOTICE THAT BOTH THE ABOVE STATED CONDITION DOES NOT APPLY TO THE UNDERTAKING OF THE ASSESSEE FOR DEVELOPING HOUSING PROJECT FOR THE REASON THAT THE PROJECT COMMENCED CONSTRUCTION ON OR BEFORE 01.04.2005 AND THE CONDITIONS MENTIONED IN THE SHOW CAUSE NOTICE APPLIES ONLY TO THE PROJECTS WHERE CONSTRUCTIO N HAS COMMENCED AFTER 01.04.2005. ACCORDING TO ASSESSEE, THE CONDITIONS FOR ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT FOR THE HOUSING PROJECTS COMMENCED PRIOR TO 31.03.2005 WERE DIFFERENT. HE REFERRED TO THE PROVISION OF SECTION 80IB(10) OF THE A CT AS APPLICABLE PRIOR TO 01.04.2005. HE ALSO CLARIFIED THAT THE RESTRICTION ABOUT THE AREA RELATES TO BUILT UP AREA OF THE INDIVIDUAL UNIT AND THERE IS NO COMMERCIAL AREA RESTRICTION FOR THE PROJECTS COMMENCED CONSTRUCTION PRIOR TO 31.03.2005. IN VIEW O F THE ABOVE, LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR DROPPING OF THE PROCEEDING INITIATED U/S.263 OF THE ACT FOR REVISING THE ASSESSMENT. 5. BUT CIT - CENTRAL - III, KOLKATA PASSED ORDER U/S. 263 OF THE ACT DTD.18.01.2011 FOR REVISING THE ASSESSMENT FOR TH E REASON THAT THE ASSESSEE HAS NOT COMPLETED HOUSING PROJECT WITHIN 04 YEARS AND ALSO NOT FULFILLED THE CONDITION REGARDING BUILT UP COMMERCIAL AREA I.E. COMMERCIAL AREA RESTRICTION AS MENTIONED IN SECTION 80IB(10) OF THE ACT. THE CIT ALSO HELD THAT THE PR OVISION OF SECTION 80IB(10) OF THE ACT WAS AMENDED W.E.F. 01.04.2005 VIDE FINANCE(NO.2) ACT., 2004 AND ACCORDINGLY AMENDED PROVISIONS OF THIS SECTION WILL APPLY FOR THE RELEVANT ASSESSMENT YEAR 2006 - 07. FOR THIS, HE OBSERVED IN PARA 12 & 13 OF HIS REVISIO N ORDER AS UNDER: 12. IT IS THUS CLEAR FROM THE ABOVE OBJECTIVE THAT IT WAS BY A MEASURE OF ADDITIONAL INCENTIVE THAT THE HOUSING PROJECT WITH SHOPS AND COMMERCIAL AREA OF 5% OR 2000 SQ. FT. WHICHEVER BEING LESS, WAS BROUGHT WITHIN THE AMBIT OF DEDUCTION U/S. 80IB(10) OF THE ACT. IF THE DEDUCTION WAS EARLIER AVAILABLE TO HOUSING PROJECTS WITH UNLIMITED COMMERCIAL MANNER, AS INTERPRETED BY THE LD. ITAT, PUNE, THIS AMENDMENT RESTRICTING THE COMMERCIAL AREAS TO 5% OR 2000 SQ. FT. WITH EFFECT FROM 1.04.2005 WOULD NOT QUALIFY AS AN INCENTIVE MEASURE. ON THE OTHER HAND, IT HAS BEEN HELD BY THE ITAT, MUMBAI IN THE CASE OF LAUKIK DEVELOPERS (2007) 105 ITD 657 (MUM) THAT WHERE THE BUILDING PROJECT CONTAINED COMMERCIAL AREA OF 3143 SQUARE FEET OF SHOPS IT WAS NOT A HOUSING PROJECT AND THE ASSESSEE DID NOT QUALIFY FOR 4 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 DEDUCTION UNDER SECTION 80IB(10). FURTHER, AS THE ASST. YEAR INVOLVED IN THIS CASE IS 2006 - 07, THE AMENDED PROVISIONS HAVE TO BE APPLIED IN THIS CASE AND AS ADMITTED BY THE ASSESSEE THE BUILT UP AREA OF SHOPS EXCEEDED 2000 SQ. FT. THUS, THE BASIC CONDITION FOR ELIGIBILITY FOR DEDUCTION U/S. 80IB(10) WAS NOT SATISFIED IN THIS CASE AND THE ASSESSEE WAS NOT ELIGIBLE FOR ANY DEDUCTION U/S. 80IB OF THE ACT FOR THIS REASON ALSO. 13. IT HAS BEEN HELD BY TH E APEX COURT IN THE CASE OF RAM PYARI DEVI SARAOGI VS. CIT (67 ITR 84) AND IN THE CASE OF SMT. TARA DEVI AGARWAL VS. CIT (88 ITR 323) THAT LACK OF ENQUIRY WOULD RENDER ORDER OF THE ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD . ITAT, MUMBAI HAS HELD IN THE CASE OF COLOR CRAFTS VS. ITO (303 ITR AT 7) THAT LACK OF ENQUIRY WOULD INCLUDE NOT ONLY A SITUATION WHERE NO ENQUIRY WAS MADE BUT ALSO A SITUATION WHERE NO ENQUIRY WAS MADE CONSIDERING THE FACTS OF THE CASE. A MERE COLLECTIO N OF PART OF THE MATERIAL WAS NOT ENOUGH AND IT WAS ALSO THE DUTY OF A.O. TO EVALUATE THE MATERIAL OR EVIDENCE COLLECTED AND THEN ASCERTAIN WHETHER SUCH MATERIALS WERE ENOUGH TO SUSTAIN THE CLAIM OF THE ASSESSEE. IN THE INSTANT CASE NO EFFORT WAS MADE BY T HE AO TO VERIFY THE FULFILLMENT OF CONDITIONS FOR ALLOWING DEDUCTION U/S. 80IB OF THE ACT IN ORDER TO SUSTAIN THE CLAIM OF THE ASSESSEE. IN VIEW OF THE FACTS AND DISCUSSIONS AS ABOVE, IT IS AMPLY CLEAR THAT THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YE AR 2006 - 07 WAS COMPLETED WITHOUT DUE APPLICATION OF MIND RELATING TO ISSUES AS MENTIONED ABOVE. IT IS CRYSTAL CLEAR FROM THE FACTS AS DISCUSSED THAT THE PROJECT WAS NOT COMPLETED WITHIN THE STIPULATED PERIOD AS PER ACT, THE COMPLETION CERTIFICATE OF THE P ROJECT ISSUED BY THE LOCAL AUTHORITY WAS NOT SUBMITTED BY THE ASSESSEE AND THE BUILT UP AREA OF SHOPS EXCEEDED THE PRESCRIBED LIMIT OF 2000 SQ. FT. AND FOR THESE DEFECTS THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE U/S. 80IB OF THE ACT WAS WRONG AND UNSUST AINABLE. THE AO HAS WRONGLY ALLOWED DEDUCTION OF RS.36,98,081/ - U/S. 80IB(10) OF THE ACT IN THE AY 2006 - 07 WITHOUT VERIFYING THE FULFILLMENT OF CONDITIONS AS STIPULATED IN THE ACT. THEREFORE, I HOLD THAT THE ASSESSMENT ORDER U/S. 143(3) DATED 18.12.2008 FOR THE AY 2006 - 07 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, AS THE CONDITIONS FOR EXERCISE OF REVISIONARY POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 ARE SATISFIED IN THE INSTANT CASE, THE ASSESSMENT OR DER IS SET ASIDE AND THE ASSESSING OFFICER IS HEREBY DIRECTED TO REFRAME THE ASSESSMENT ORDER FOR AY 2006 - 07 AFTER WITHDRAWING THE DEDUCTION CLAIMED U/S. 80IB OF THE ACT IN RESPECT OF PROFIT FROM HOUSING PROJECT AND AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEVED, AGAINST REVISION ORDER PASSED BY CIT, ASSESSEE PREFERRED APPEAL BEFORE ITAT. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. ADMITTEDLY, THE RELEVANT PROJECT WAS APPROVED BY HOWRAH MUNICIPAL CORPORATION ON 08.04.2000 AND FOR DEVELOPMENT OF HOUSING PROJECT, CONSTRUCTION HAS COMMENCED ON 10.05.2000. THE ASSESSEE HAS DECLARED INCOME AND CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. REQUIRED THE ASSESSEE VIDE NOTICE U/S.142(1) OF THE ACT, THE DETAILS REGARDING CLAIM OF THE DEDUCTION U/S. 80IB(10) OF THE ACT DTD.14.08.2008 AND ASSESSEE REPLIED TO THE SAME THAT THE DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT IS FOR DEVELOPMENT OF HOUSING PROJECT AND CONSTRUCTION IS BEING CARRIED OUT ON THE PROJECT AT 493/C/A, G.T. ROAD, HOWRAH 711101. THE A.O. AGAIN REQUIRED THE ASSESSEE VIDE LETTER DTD.27.10.2008 A CONSTRUCTION DETAILS AND ALSO DETAILS OF LIABILITIES INCLUDING ADVANCES FROM CU STOMERS. THE ASSESSEE REPLIED THE SAME. ACCORDING 5 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 TO LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE IS CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT ON THIS VERY PROJECT FROM ASSESSMENT YEAR 2001 - 02 TO AND THEREAFTER, AND THIS DEDUCTION IS ALLOWED TO THE ASSES SEE ON THE BASIS OF ON CLAIM MADE BY IT ON SALE OF FLATS WHICH ARE COMPLETED IN THE PROJECT. THESE FACTS ARE UNDISPUTED. 7. IN VIEW OF THE ABOVE FACTS, FIRST OF ALL WE HAVE TO CONSIDER THE CASE LAW OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHD DEVELOPERS LTD. (2014) 362 ITR 177 (DEL.), WHICH WAS REFERRED BY LD. COUNSEL FOR THE ASSESSEE, WHEREIN THE ENTIRE PROVISION OF SECTION 80IB(10) OF THE ACT IS DISCUSSED FROM THE VERY BEGINNING AND HELD THAT PRIOR TO AMENDMENT SEC. 80IB(10) OF THE ACT, AS AM ENDED BY THE FINANCE ACT, 2000 W.E.F. APRIL 01, 2001 AND THE FINANCE ACT, 2003 WITH RETROSPECTIVE EFFECT FROM APRIL 01, 2002 WILL APPLY TO THE PROJECTS APPROVED ON OR BEFORE 01.04.2005. HON'BLE DELHI HIGH COURT HAS ALSO CONSIDERED THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF MANAN CORPORATION VS. ACIT (2013) 356 ITR 44 (GUJ) AND CONSIDERED THE ISSUE AS UNDER: THIS COURT HAS CONSIDERED THE SUBMISSIONS. THE COURT NOTICES THAT BESIDES ANRIYA PROJECT MANAGEMENT SERVICES (P.) LTD. (SUPRA) THERE A RE OTHER DECISIONS OF OTHER HIGH COURTS SUCH AS CIT V. BRAHMA ASSOCIATES [2011] 333 ITR 289 (BOM) ; [2011] 197 TAXMAN 459 (BOM) ; MANAN CORPORATION V. ASST. CIT [2013] 356 ITR 44 ( GUJ) ; [2013] 29 TAXMAN.COM 15 (GUJ.). IN THE LAST DECISION REFERRED TO ABOVE, THE GUJARAT HIGH COURT CONSIDERED THE EFFECT OF THE LAW, AS IT STOOD PRIOR TO THE AMENDMENT, I.E., APRIL 1, 2005, AND AFTER THE AMENDMENT AND HELD AS FOLLOWS (PAGES 59 TO 62 OF 356 ITR) : 'NEITHER THE ASSESSEE NOR LOCAL AUTHORITY RESPONSIBLE TO A PPROVE THE CONSTRUCTION PROJECTS ARE EXPECTED TO CONTEMPLATE FUTURE AMENDMENT IN THE STATUTE AND APPROVE AND/OR CARRY OUT CONSTRUCTIONS MAINTAINING THE RATIO OF RESIDENTIAL HOUSING AND COMMERCIAL CONSTRUCTION AS PROVIDED BY THE AMENDED ACT BEING 3 PER CE NT. OF THE TOTAL BUILT UP AREA OR 5,000 SQ. FEET WHICH EVER IS HIGHER (NOW IN POST 2010 PERIOD) OR 5 PER CENT. OF THE AGGREGATE BUILT UP AREA OR 2,000 SQ. FEET WHICHEVER IS LESS. THE REVENUE IS ALSO IN ERROR TO SUGGEST THAT EVEN IF SUCH CONDITIONS ARE ONEROUS, THEY ARE REQUIRED TO BE FULFILLED. THE ENTIRE OBJECT OF SUCH DEDUCTION IS TO FACILITATE THE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SU CH PROJECT WHEN INITIALLY THERE WAS NO SUCH RESTRICTION IN TAXING STATUTE AND THE PERMISS IBLE RATIO FOR COMMERCIAL USER MADE 5 PER CENT. TO THE TOTAL BUILT UP AREA BY WAY OF AMENDMENT AND REDUCTION OF WHICH BY FURTHER AMENDMENT TO 3 PER CENT. OF THE TOTAL BUILT UP AREA, HAS TO BE NECESSARILY CONSTRUED ON PROSPECTIVE BASIS. AS IS VERY APPA RENT FROM THE RECORD, THERE WAS NO CRITERIA FOR MAKING COMMERCIAL CONSTRUCTION PRIOR TO THE AMENDED SECTION AND THE PLANS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY FOR BOTH THE PROJECTS OF THE APPELLANT. PERMISSION FOR CONSTRUCTION OF SHOPS HAS BEEN ALLOWED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH RULES AND REGULATIONS, KEEPING IN MIND PRESUMABLY THE REQUIREMENT OF LARGE TOWNSHIPS. HOWEVER, THE PROJECTS ESSENTIALLY REMAINED RESIDENTIAL HOUSING PROJECTS AND THAT IS ALSO QUITE APPARENT FR OM THE CERTIFICATES ISSUED BY THE LOCAL AUTHORITY AND, THEREFORE NEITHER ON THE GROUND OF ABSENCE OF SUCH PROVISION OF COMMERCIAL SHOPS NOR ON ACCOUNT OF SUCH COMMERCIAL CONSTRUCTION HAVING EXCEEDED THE AREA CONTEMPLATED IN THE PROSPECTIVE AMENDMENT CA N BE MADE APPLICABLE TO THE APPELLANT - ASSESSEE WHOSE PLANS ARE SANCTIONED AS PER THE PREVALENT RULES AND 6 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 REGULATIONS BY THE LOCAL AUTHORITY FOR DENYING THE BENEFIT OF DEDUCTION OF PROFIT DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR AS MAD E AVAILABLE OTHERWISE UNDER THE STATUTE. IT WOULD BE WORTHWHILE TO NOTE AT THIS STAGE THAT EVEN THOUGH THE FACTS BEFORE THE BOMBAY HIGH COURT WERE DIFFERENT THAN THOSE EMERGING FROM THE PRESENT CASE, THE REVENUE'S SUBMISSIONS BEFORE THE BOMBAY HIGH COU RT THAT THE AMENDMENT OF SECTION 80 - IB(10) AND THE INSERTION OF CLAUSE (D) WITH EFFECT FROM APRIL 1, 2005, SHOULD BE APPLIED RETROSPECTIVELY WAS HELD TO BE WITHOUT ANY MERIT IN THE FOLLOWING WORDS, IN PARAGRAPH 32 OF THE BOMBAY HIGH COURT, WHICH IS REPR ODUCED AS UNDER (PAGE 303 OF 333 ITR) : 'LASTLY, THE ARGUMENT OF THE REVENUE THAT SECTION 80 - IB(10) AS AMENDED BY INSERTING CLAUSE (D) WITH EFFECT FROM APRIL 1, 2005, SHOULD BE APPLIED RETROSPECTIVELY IS ALSO WITHOUT ANY MERIT, BECAUSE, FIRSTLY, CLAUSE (D) IS SPECIFICALLY INSERTED WITH EFFECT FROM APRIL 1, 2005, AND, THEREFORE, THAT CLAUSE (D) SEEKS TO DENY SECTION 80 - IB(10) DEDUCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE LIMIT PRESCRIBED UNDER CLAUSE (D), EVEN THOUGH SUCH COMMERCIAL USER IS A PPROVED BY THE LOCAL AUTHORITY. THEREFORE, THE RESTRICTION IMPOSED UNDER THE ACT FOR THE FIRST TIME WITH EFFECT FROM APRIL 1, 2005, CANNOT BE APPLIED RETROSPECTIVELY. THIRDLY, IT IS NOT OPEN TO THE REVENUE TO CONTEND ON THE ONE HAND THAT SECTION 80 - IB(1 0), AS IT STOOD PRIOR TO APRIL 1, 2005, DID NOT PERMIT COMMERCIAL USER IN HOUSING PROJECTS AND ON THE OTHER HAND CONTEND THAT THE RESTRICTION ON COMMERCIAL USER INTRODUCED WITH EFFECT FROM APRIL 1, 2005, SHOULD BE APPLIED RETROSPECTIVELY. THE ARGUMENT OF THE REVENUE IS MUTUALLY CONTRADICTORY AND, HENCE, LIABLE TO BE REJECTED. THUS, IN OUR OPINION, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT CLAUSE (D) INSERTED TO SECTION 80 - IB(10) WITH EFFECT FROM APRIL 1, 2005, IS PROSPECTIVE AND NOT RETROSPECTIVE AN D, HENCE, CANNOT BE APPLIED TO THE PERIOD PRIOR TO APRIL 1, 2005.' THE KARNATAKA HIGH COURT IN THE CASE OF CIT V. ANRIYA PROJECT MANAGEMENT SERVICES (P.) LTD. [2012] 21 TAXMANN.COM 140 ; 209 TAXMAN 1 (KAR) ; [2013] 353 ITR 12 ( KARN) WAS ALSO EXAMINING THIS PROVISION WHERE THE QUESTION WAS WHETHER THE DEFINITION OF BUILT - UP AREA INSERTED BY THE FINANCE (NO. 2) ACT, WHICH BECAME EFFECTIVE FROM APRIL 1, 2005, IS PROSPECTIVE OR RETROSPECTIVE IN NATURE AND IT HELD THAT THE SAME TO BE PROSPECTIVE IN NATUR E. IT HELD THAT AMENDMENT PROVISION WOULD HAVE NO APPLICATION TO HOUSING PROJECTS, WHICH WERE APPROVED BY THE LOCAL AUTHORITY PRIOR TO APRIL 1, 2005, IN CALCULATING 1,500 SQ. FEET OF RESIDENTIAL UNIT AND IT FURTHER HELD THAT ONCE SUCH HOUSING PROJECT OF ASSESSEE IS APPROVED BY LOCAL AUTHORITY PRIOR TO APRIL 1, 2005, IT WOULD BE ENTITLED TO 100 PER CENT. BENEFIT OF SECTION 80 - IB(10). WHILE SO HOLDING, IT RELIED ON THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT V. G. R. DEVELOPERS (IT APPEAL NO. 355 OF 2009) - SINCE REPORTED IN [2013] 353 ITR 1 (K ARN). COROLLARY TO THIS IS ONE MORE ASPECT THAT REQUIRES REFERENCE HERE. THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE TO ALL CHIEF COMMISSIONERS OF INCOME - TAX AND ALL DIRECTOR GENERALS OF INCOME - TAX ISSUED INSTRUCTION NO. 4 OF 2009, DAT ED JUNE 30, 2009, IN RESPECT OF SECTION 80 - IB(10) OF THE ACT WOULD BE AVAILABLE ON YEAR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT ON PARTIAL COMPLETION OR THE SAME WOULD BE AVAILABLE ON THE YEAR OF COMPLETION OF THE PROJECT, WHICH IS CLARIFIED AS UNDER : '3. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT IS CLARIFIED AS UNDER : (A) THE DEDUCTION CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHERE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. (B) IN CASE IT IS LATE, FOUND THAT THE CONDITION OF COMPLETING THE PROJECT WITHIN THE SPECIFIED TIME LIMIT OF FOUR YEARS AS STATED IN SECTION 80 - IB(10) HAS NOT BEEN SATISFIED, THE DEDUCTION GRANTED TO THE ASSESSEE IN THE EARLIER YEARS SHOULD BE WITHDRAWN.' FROM THE READING OF THE ABOVE INSTRUCTION, IT CAN BE ALSO SAID THAT THE GOVERNMENT BEING AWARE OF BOTH THE ACCOUNTING METHODS HAS EXPECTED EITHER OF THEM TO BE FOLLOWED IN CASES OF 7 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 INDIVIDUAL ASSESSEE. HOWEVER, IN POST AMENDMENT PERIOD, STRICT ADHERENCE TO COMPLETION PERIOD OF FOUR YEARS IS INSISTED UPON WHERE PROJECT COMPLETION METHOD IS FOLLOWED. THIS LIMITATION OF PERIOD DID NOT EXIST PRIOR TO THE AMENDMENT, WHAT IS VITAL TO DRAW FROM THIS IS THAT THE AMENDMENT CANNOT DISCRIMINATE THOSE FOLLOWING PROJECT COMPLETION METHOD IF IN THE INTERREGNUM PERIOD, AMENDMENT IS BROUGHT IN THE STATUTE. THE SAY OF THE ASSESSEE, THEREFORE, GETS FURTHER FORTIFIED WHEN IT SAYS THAT ONLY BECAUSE IT CHOSE TO FOLLOW THE METHOD OF ACCOUNTING OF PROJECT COMPLETION BASI S, WHOSE COMPLETION DATE FALLS AFTER APRIL 1, 2005, THEY CAN BE DENIED THE DEDUCTION ON PROFITS DERIVED AND THOSE ASSESSEES WHO CLAIM DEDUCTION ON WORK - IN - PROGRESS BASIS, THEY WOULD BE ENTITLED TO SUCH DEDUCTION. HOWEVER, IT NECESSITATED STRICT COMPLIAN CE OF THE PROVISIONS AND COMPLETION OF THE SAME WITHIN THE STIPULATED TIME PERIOD. THE ENTIRE OBJECT OF SUCH DEDUCTION IS TO FACILITATE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE WAS NO RESTRICTION AND BY AMENDMENT AS STATED PERMISSIBLE RATIO FOR CONSTRUCTION IS 5 PER CENT. OF THE TOTAL BUILT UP AREA, REDUCTION OF THIS RATIO TO 3 PER CENT. OF THE TOTAL BUILT UP AREA HAS TO BE NECESSARILY ON PROSPECTIVE BASIS.' IN THE PRESENT CASE, CONCEDEDLY THE APPROVAL FOR THE PROJECT WAS GIVEN BY THE MATHURA VRINDAVAN DEVELOPMENT AUTHORITY ON MARCH 16, 2005. CLEARLY THE APPROVAL RELATED TO THE PERIOD PRIOR TO 2005, I.E., BEFORE THE AMENDMENT, WHICH INSISTED ON ISSUANCE OF THE COMPLETION CERTIFICATE BY THE END OF THE FOUR - YEAR PERIOD WAS BROUGHT INTO FORCE. WE ARE IN FULL AGREEMENT WITH THE GUJARAT HIGH COURT THAT THE APPLICATION OF SUCH STRINGENT CONDITIONS, WHICH ARE LEFT TO AN INDEPENDENT BODY SUCH AS THE LOCAL AUTHORITY WHO IS TO ISSUE THE COMPLETION CER TIFICATE, WOULD HAVE LED TO NOT ONLY HARDSHIP BUT ABSURDITY. AS A CONSEQUENCE, WE ARE OF THE OPINION THAT THE REASONING AND CONCLUSIONS OF THE KARNATAKA HIGH COURT AND THE GUJARAT HIGH COURT ARE FULLY APPLICABLE TO THE FACTS OF THIS CASE. THE TRIBUNAL WA S NOT, THEREFORE, IN ERROR OF LAW WHILE HOLDING IN FAVOUR OF THE ASSESSEE. 8. FROM THE ABOVE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CHD DEVELOPERS LTD. (SUPRA) IT IS CLEAR THAT THE HOUSING PROJECTS APPROVED PRIOR TO 2005 I.E. BEFORE TH E AMENDMENT, WILL BE GOVERNED BY THE PROVISIONS OF SEC. 80IB(10) OF THE ACT WHICH WERE APPLICABLE PRIOR TO 01.04.2005. IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS OBTAINED APPROVAL OF THE PROJECT FROM HOWRAH MUNICIPAL CORPORATION ON 08.04.2000 AND FOR DEVELOPMENT OF HOUSING PROJECT, CONSTRUCTION HAS COMMENCED ON 10.05.2000. THE ASSESSEE HAS DECLARED INCOME AND CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. REQUIRED THE ASSESSEE VIDE NOTICE U/S.142(1) OF THE ACT, THE DETAILS REGARDING CLAIM OF THE DEDUCTION U/S. 80IB(10) OF THE ACT CONTENDING THAT THE DEDUCTION CLAIMED IS FOR DEVELOPMENT OF HOUSING PROJECT AND CONSTRUCTION IS BEING CARRIED OUT ON THE PROJECT AT 493/C/A, G.T. ROAD, HOWRAH 711101. ACCOR DING TO LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE IS CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT ON THIS VERY PROJECT FROM ASSESSMENT YEAR 2001 - 02 TO AND THEREAFTER, AND THIS DEDUCTION IS ALLOWED TO THE ASSESSEE ON THE BASIS OF ON CLAIM MADE BY IT ON SALE OF FLATS WHICH ARE COMPLETED IN 8 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 THE PROJECT. THE CONDITIONS FOR CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT, IN THE CASE OF THE ASSESSEE S PROJECT ARE THE FOLLOWING: 1. THE PROJECT SHOULD BE APPROVED BY A LOCAL AUTHORITY BEFORE 31.03.2005. IN THE PRESEN T CASE, THE PROJECT WAS APPROVED ON 08.04.2000. 2. THE SIZE OF THE PLOT OF LAND SHOULD BE MINIMUM OF 1 ACRE. IN THE PRESENT CASE, THE SIZE OF PROJECT I.E. TOTAL AREA OF THE PROJECT CONSISTS OF 41 BIGHAS, 1 KOTTAH AND 5 CHITTAK, WHICH IS MORE THAN 1 ACRE . 3. COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 01.10.1998. IN THE PRESENT CASE, THE CONSTRUCTION COMMENCES ON THIS PROJECT ON 10.05.2000. 4. THE BUILT UP AREA OF EACH RESIDENTIAL UNIT WILL BE NOT MORE THAN 1500 SQ. FT . EXCEPT IN DELHI AND MUMBAI. IN THE PRESENT CASE, THERE IS NO CASE OF THE REVENUE THAT ANY OF THE FLAT IS EXCEEDING 1500 SQ. FT. OF BUILT UP AREA. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT NONE OF THE CONDITIONS PRESCRIBED IN SECTION 80IB(1 0) OF THE ACT AT THE RELEVANT POINT OF TIME WAS VIOLATED BY THE ASSESSEE AND ACCORDINGLY, THE AO HAS RIGHTLY ALLOWED THE DEDUCTION WHILE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT. THE CIT HAS WRONGLY ASSUMED JURISDICTION U/S. 263 OF THE ACT REVISING THE A SSESSMENT AND HENCE, THE SAME IS QUASHED. THE APPEAL OF ASSESSEE IS ALLOWED 9. NOW, COMING TO ITA NOS. 775 & 776/KOL/2012 FOR AY 2007 - 08 AND 2008 - 09. AT THE OUTSET, IT IS SEEN THAT THESE TWO APPEALS OF THE ASSESSEE ARE DELAYED BY 16 DAYS AND CAUSE STATED BY THE ASSESSEE READS AS UNDER: HOWEVER DUE TO SICKNESS OF HER SISTER IN LAW SMT. KISHANI DEVI JAIN WHO WAS ADMITTED TO HOSPITAL AND ULTIMATELY DIED ON 10 TH MAY, 2012 HE WAS NOT REGULAR IN ATTENDING HIS PROFESSIONAL DUTIES AND THEREFORE THE APPEAL PAPER S COULD NOT BE PREPARED BY HIM. EVEN AFTER HER DEMISE HE WAS TIED UP IN RITUALS OF THE DEMISED. 10. WE FIND THAT THE CAUSE IS REASONABLE AND EVEN REVENUE HAS NOT SERIOUSLY CONTESTED THE CONDONATION. HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEALS O F THE ASSESSEE. 11. SINCE THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL AND ISSUE IS REVISION OF ASSESSMENT BY CIT U/S. 263 OF THE ACT FRAMED BY AO U/S. 143(3) OF THE ACT ON THE ISSUE OF ALLOWING DEDUCTION U/S. 80IB(10) OF THE ACT AS IN ITA NO. 458/K OL/2011 FOR AY 2006 - 07 9 ITA NO.560/K/2010 & 774/K/2011 CENTURY ENKA LTD. AY 2006 - 07 DECIDED ABOVE, WE QUASH THESE TWO REVISION ORDERS RAISED IN THESE TWO ITAS EXACTLY ON SIMILAR FINDINGS. HENCE, THESE TWO APPEALS OF ASSESSEE ARE ALLOWED. 12. COMING TO ITA NO. 1228/KOL/2012 FOR AY 2006 - 07. WE FIND THAT THIS APPEA L OF ASSESSEE IS ARISING OUT OF THE ORDER OF DCIT, CENTRAL CIRCLE - XXII, KOLKATA DATED 16.11.2011 FOR THE AY 2006 - 07 IN CONSEQUENCE TO REVISION ORDER PASSED BY CIT, CENTRAL - III, KOLKATA DATED 18.01.2011. SINCE WE HAVE ALREADY QUASHED THE REVISION ORDER PAS SED BY CIT IN ITA NO 458/KOL/2011, THE ORDERS OF THE LOWER AUTHORITIES HAVE BECOME INFRUCTUOUS. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 13 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED . 14 . ORDER IS PRONOUNCED IN OPEN COURT ON 0 2 . 0 1 . 2 0 1 5 S D / - S D / - , , (SHAMIM YAHYA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 N D JANUARY , 201 5 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT VIVEKANANDA CONSTRUCTION PVT. LTD. VIVEK V IHAR,BLOCK - 6 PHASE - 4, 493/C/A, G.T. ROAD(S) , HOWRAH - 711101. 2 / RESPONDENT DCIT /ACIT, CC - XXII, KOLKATA . 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT , KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .