M/S.S.K.VENTURES, MUMBAI V. INCOME TAX OFFICER WARD-2(4), KALYAN

ITA 1248/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3089 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 05-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ARUNKUMAR SINGH
• Keywords: Reasonable cause; Competent authority
• Section: 143(3); 80IB; 143(1); 201

Judgement Text

AAYAK AAYAK AAYAK AAYAKR APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQAKRNA AKRNA AKRNA AKRNA F FF F N N N NYAAYAPIZ YAAYAPIZ YAAYAPIZ YAAYAPIZ MAMUBA[ MAMUBA[ MAMUBA[ MAMUBA[- -- - MAO MAOMAO MAO. .. . IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUM BAI BEFORE SRI MAHAVIR SINGH, JM AND SRI M BALAGENSH, AM AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SAM MM M . / ITA NO.1248/MUM/2018 ( INAQA-ARNA BAYA- / ASSESSMENT YEAR 2013-14) M/S. S.K.VENTURES, 2 ND FLOOR, MOHANPLAZA, WAYLE NAGAR, KHADAKPAD, KALYAN (W), KALYAN VS. ITO, WARD 2(4), KALYAN ( APILAAQA APILAAQA APILAAQA APILAAQAI II I - -- - / APPELLANT) .. ( P` P`P` P`%YAQAA %YAQAA %YAQAA %YAQAAI II I- -- - / RESPONDENT) PAN NO. AADAS 2607 K REVENUE BY : SHRI CHOUDHARY ARUN KUMAR SINGH ASSESSEE BY : SHRI DEVENDRA JAIN DATE OF HEARING: 5.3.2019 DATE OF PRONOUNCEMENT : 5-03- 2019 AADOSA AADOSA AADOSA AADOSA / O R D E R PER MAHAVIR SINGH, JM: THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI [IN SHORT CIT(A)], IN APPEAL NO. 10146-THN/16-17 DATED 20.1.2017. THE ASS ESSMENT WAS FRAMED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, WARD 2(4), KALYAN (IN SHORT ITO, KALYAN) FOR THE A.Y. 2013-14 VIDE ORDER DATED 30.3.2016 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER THE ACT). 2 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 2. AT THE OUTSET, IT IS NOTICED THAT THE APPEAL IS BARRED BY LIMITATION BY 334 DAYS. THE ASSESSEE HAS FILED CON DONATION PETITION SUPPORTED BY AFFIDAVIT OF ONE OF THE MEMBERS OF AOP FOR CONDONING THE DELAY GIVING REASONS. THE FACTS ARE THAT THE C IT(A) PASSED THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2013-14, TH E YEAR UNDER CONSIDERATION, ON 20.1.2017 AND CLAIMED TO HAVE REC EIVED BY THE ASSESSEE IN THE FIRST WEEK OF FEBRUARY, 2017. THE ASSESSEE IN ITS PETITION STATED THAT IT WAS UNDER IMPRESSION THAT F URTHER APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL ARE BEING CARRIED I N CO-ORDINATION WITH THE REGULAR C.A. SHRI HITESH GALA AND ADVOCATE SHRI PRAKASH C AHUJA. THE ASSESSEE CONTENDED THAT THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2015-16 WERE COMPLETED BY THE A SSESSING OFFICER UNDER SECTION.143(3) VIDE ORDER DATED 27.12 .2017, WHICH WAS RECEIVED BEFORE 31.12.2017 AND DURING THIS PROC ESS, THE ASSESSEE CAME TO KNOW THAT NO APPEAL WAS FILED AGAI NST THE APPELLATE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2 013-14. AFTER THIS, THE CA SHRI DEVENDRA H JAIN WAS CONSULTED FOR APPEAL PROCEEDINGS AND HE ADVISED TO FILE THE APPEAL IMMED IATELY BEFORE THE ITAT FOR ASSESSMENT YEAR 2013-14 ALONGWITH FILI NG OF APPEAL BEFORE THE CIT(A) FOR ASSESSMENT YEAR 2015-16. IT WAS CONTENDED THAT THE ASSESSEE HAS NOT RECEIVED PROPER PROFESSIO NAL GUIDANCE AT THAT STAGE AND THEY WERE UNDER IMPRESSION THAT ITAT PROCEEDINGS WERE JOINTLY HANDLED BY CA HITESH GALA AND ADVOCAT E PRAKASH AHUJA AND THEY MAY HAVE FILED APPEAL BEFORE THE ITA T. DUE TO THE WRONG ADVICE OR WRONG PROFESSIONAL GUIDANCE, THE AS SESSEE COULD 3 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 NOT FILE APPEAL WITHIN THE STATUTORY TIME LIMIT OF 60 DAYS AGAINST THE ORDER OF THE CIT(A) BEFORE THE TRIBUNAL AND HENCE T HERE WAS DELAY OF 334 DAYS. LD COUNSEL FOR THE ASSESSEE REFERRED TO THE AFFIDAVIT FILED BY THE MEMBER OF AOP OF S.K.VENTURES DATED 28 .2.2018, WHEREIN, THE ENTIRE FACTS ARE NARRATED. IN VIEW OF ABOVE FACT, LD COUNSEL FOR THE ASSESSEE SHRI DEVENDRA H JAIN ARGUE D THAT DUE TO WRONG PROFESSIONAL GUIDANCE, THE ASSESSEE COULD NOT FILE APPEAL IN TIME AND THIS CONSTITUTE REASONABLE CAUSE. 3. ON THE OTHER HAND, LD SR DEPARTMENTAL REPRESENTA TIVE HEAVILY OPPOSED THE CONDONATION OF DELAY. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH PARTIE S AND ALSO THE PETITION FOR CONDONING THE DELAY, WE NOTICED THAT T HERE IS A FAULT ON THE PART OF EARLIER CA OF THE ASSESSEE SHRI HITESH GALA, WHO HAS NOT GUIDED THE ASSESSEE IN A PROFESSIONAL MANNER. ONCE THIS IS THE POSITION, NO FAULT CAN BE ATTRIBUTABLE TO THE ASSES SEE FOR THE DELAY. EVEN OTHERWISE, THE ASSESSEE WILL NOT GAIN ANYTHING OUT OF THE APPEAL BEING GET DELAYED AND HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 5. THE ONLY ISSUE IN THIS APPEAL IS AGAINST THE ORD ER OF THE CIT(A) IN SUSTAINING THE APPLICABILITY OF PROVISION S OF SECTION 115 JC OF THE ACT DISREGARDING THE FACT THAT THE HOUSING P ROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE PROVISIONS OF SECTION 115 JC OF THE ACT AND ALSO COMPLETION 4 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 OF THE PROJECT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN SUSTAINING THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JC IN CASE OF THE ASSESSEE DISREGARDING THE FACT THAT THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE P ROVISION OF SECTION 115JC OF THE ACT. 6. BRIEFLY STATED FACTS ARE THAT IN THIS CASE THE A SSESSEE AOP FILED THE ORIGINAL RETURN OF INCOME BY WAY OF E-FI LING VIDE DATED 30.9.2013 AND SUBSEQUENTLY THE RETURN WAS REVISED B Y E-FILING ON 31.3.2015. THIS RETURN HAS BEEN PROCESSED UNDER SE CTION 143(1) OF THE ACT AND SUBSEQUENTLY, THE ASSESSMENT WAS COMPLE TED UNDER SECTION.143(3) OF THE ACT VIDE ORDER DATED 30.3.201 6 BY ACCEPTING THE RETURNED INCOME EXCEPT MAKING OF DISALLOWANCE O F NON PAYMENT OF MVAT AND SERVICE TAX UNDER SECTION.43B OF THE AC T. THE DEDUCTION CLAIMED UNDER CHAPTER VIA UNDER SECTION 8 0IB(10) IN RESPECT OF HOUSING PROJECT NAMELY; KIRISHNA REGENCY AT KALYAN WAS ACCEPTED AMOUNTING TO 6,54,91,914/- BUT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 115 JC OF THE ACT AND ADJUSTED TOTAL INCOME AND CHARGED ALTERNATE MINIMUM TAX IN A CCORDANCE WITH THIS PROVISIONS, WHICH WAS CONFIRMED IN FIRST APPEA L. 7. LD COUNSEL FOR THE ASSESSEE NOW BEFORE US STATED THAT THE ASSESSEE IS CHALLENGING ONLY LIMITED ISSUE I.E APPL ICABILITY OF PROVISIONS OF SECTION 115 JC OF THE ACT TO THE ASSE SSEE FOR THE RELEVANT ASSESSMENT YEAR 2013-14. LD COUNSEL FOR T HE ASSESSEE EXPLAINED THAT THE PROVISIONS OF SECTION 115 JC OF THE ACT WAS MADE 5 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 APPLICABLE TO CERTAIN PERSONS OTHER THAN A COMPANY BY THE FINANCE ACT (NO.2) WITH EFFECT FROM 1.4.2013. LD COUNSEL E XPLAINED THAT IN THE PROJECT I.E. KRISHNA REGENCY, THE ASSESSEE HAS CLAIMED DEDUCTION 80IB(10), AS THE SAME WAS STARTED IN APRI L, 2007 AND WAS COMPLETED IN MARCH, 2012. LD COUNSEL FOR THE ASSES SEE REFERRED TO PAGES 19 TO 21 OF ASSESSEES PAPER BOOK, WHEREIN, C OMPLETION CERTIFICATE OF THE PROJECT IS ENCLOSED AT PAGES 19 TO 21 OF PB AND ENGLISH TRANSLATION AT PAGES 20-21. LD COUNSEL F OR THE ASSESSEE DREW OUR ATTENTION TO PAGES 20 & 21 OF PB, WHEREIN, BUILDING COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MU NCIPAL CORPORATION TOWN PLANNING DEPARTMENT IS ENCLOSED. THIS COMPLETION CERTIFICATE IS DATED 31.3.2012. LD COUN SEL STATED THAT THE PROVISIONS OF SECTION 115 JC WAS MADE APPLICABL E TO CERTAIN PERSONS OTHER THAN A COMPANY BY SUBSTITUTING LIMITE D LIABILITY PARTNERSHIP BY THE FINANCE ACT (NO.2) WITH EFFECT F ROM 1.4.2013 AND THE ASSESSEE S PROJECT COMMENCED CONSTRUCTION IN A PRIL, 2007 AND PROJECT WAS COMPLETED AS ON THE DATE OF COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MUNCIPAL CORPORATION TOWN PLANNING DEPARTMENT DATED 31.3.2012. ACCORDING TO HIM, ONCE THE ASSESSEE HAS COMPLETED THE PROJECT BEFORE COMING INTO FORCE OF A PARTICULAR PROVISION, THAT PROVISION CANNOT BE APPLIED TO THE FACTS OF THE ASSESSEES CASE OR IN THE YEAR WHEN THE INCOME HAS BEEN BOOKED BY THE ASSESSEE IN THAT YEAR. LD COUNSEL FOR THE A SSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF M/S. MOTILAL PADAMPAT SUGAR MILLS CO. LTD VS STATE OF UT TAR PRADESH AND 6 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 OTHERS, AIR 1979 SC 621, WHEREIN, THE HONBLE COURT HAS EXPLAINED THE DOCTRINE OF PROMISSORY ESTOPPEL AND MEANING THE REBY. THE HONBLE SUPREME COURT HAS CONSIDERED WHETHER THE ST ATE IS BOUND AND IF SO TO WHAT EXTENT IT IS BOUND BY THE PRINCIP LE OF PROMISSORY ESTOPPEL. LD COUNSEL RELIED ON THE FOLLOWING PARAG RAPHS OF THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF M OTILAL PADAMPAT SUGAR MILLS CO. LTD (SUPRA) AS UNDER: ON 10TH OCTOBER, 1968 A NEWS ITEM APPEARED IN THE N ATIONAL HERALD IN WHICH IT WAS STATED THAT THE STATE OF UTTAR PRADESH HAD DECIDED TO GIVE EXEMPTION FROM SALES TAX FOR A PERIOD OF THREE YEAR S UNDER SECTION 4A OF THE U. P. SALES TAX ACT TO ALL NEW INDUSTRIAL UNITS IN THE STATE WITH A VIEW TO ENABLING THEM TO COME ON FIRM FOOTING IN DEVELOP ING STAGE. THIS NEWS ITEM WAS BASED UPON A STATEMENT MADE BY SHRI M. P. CHATTERJEE THE THEN SECRETARY IN THE INDUSTRIES DEPARTMENT OF THE GOVERNMENT. THE APPELLANT, ON THE BASIS OF THIS ANNOUNCEMENT, ADDRE SSED A LETTER DATED 11TH OCTOBER, 1968 TO THE DIRECTOR OF INDUSTRIES ST ATING THAT IN VIEW OF THE SALES TAX HOLIDAY ANNOUNCED BY THE GOVERNMENT, THE APPELLANT INTENDED TO SET UP A HYDRO-GENERATION PLANT FOR MAN UFACTURE OF VANASPATI AND SOUGHT FOR CONFIRMATION THAT THIS IND USTRIAL UNIT, WHICH THEY PROPOSED TO SET UP, WOULD BE ENTITLED TO SALES TAX HOLIDAY FOR A PERIOD OF THREE YEARS FROM THE DATE IT COMMENCES PRODUCTION. THE DIRECTOR OF INDUSTRIES REPLIED BY HIS LETTER DATED 14TH OCT., 1 968 CONFIRMING THAT 'THERE WILL BE NO SALES TAX FOR THREE YEARS ON THE FINISHED PRODUCT OF YOUR PROPOSED VANASPATI FACTORY FROM THE DATE IT GETS PO WER CONNECTION FOR COMMENCING PRODUCTION.' THE APPELLANT LATER ADDRESS ED A LETTER DATED 22ND JANUARY, 1969 TO THE RESPONDENT WHO WAS THE CH IEF SECRETARY TO THE GOVERNMENT. THE RESPONDENT STATED CATEGORICALLY IN HIS LETTER IN REPLY DATED 23RD JANUARY, 1969 THAT THE PROPOSED VANASPAT I FACTORY OF THE APPELLANT 'WILL BE ENTITLED TO EXEMPTION FROM U. P. SALES TAX FOR A PERIOD OF THREE YEARS FROM THE DATE OF GOING INTO PRODUCTI ON AND THAT THIS WILL APPLY TO ALL VANASPATI SOLD DURING THAT PERIOD HI U TTAR PRADESH IT SELF AND EXPRESSED HIS SURPRISE THAT A LETTER FROM THE CHIEF SECRETARY TO TIS STATE GOVERNMENT STATING THIS FACT I& CLEAR AND UNA MBIGUOUS WORDS SHOULD NOT CARRY CONVICTION WITH THE FINANCIAL INST ITUTIONS; HELD IT WAS CLEAR FROM THE LETTER OF THE RESPONDENT DATED 23RD JANUARY, 1969 THAT A CATEGORICAL REPRESENTATION WAS MADE BY THE RESPONDENT ON BEHALF OF THE GOVERNMENT THAT THE PROPOSED! VANASPA TI FACTORY OF THE APPELLANT WOULD BE ENTITLED TO EXEMPTION FROM SALES TAX IN RESPECT OF SALES OF VANASPATI EFFECTED IN UTTAR PRADESH FOR A PERIOD OF THREE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION. THE LE TTER DATED 23RD JANUARY, 1969 CLEARLY SHOWED THAT THE RESPONDENT MA DE THIS 7 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 REPRESENTATION IN HIS CAPACITY AS THE CHIEF SECRETA RY OF THE GOVERNMENT, AND IT WAS, THEREFORE, A REPRESENTATION ON BEHALF O F THE GOVERNMENT THE APPELLANT RELYING ON THIS REPRESENTATION OF THE GOV ERNMENT, BORROWED MONEYS FROM VARIOUS FINANCIAL INSTITUTIONS, PURCHAS ED PLANT AND MACHINERY FROM M/S. DE SMITH (INDIA) PVT. LTD., BOM BAY AND SET UP A VANASPATI FACTORY AT KANPUR. THE FACTS NECESSARY FO R INVOKING THE DOCTRINE OF PROMISSORY ESTOPPEL WERE, THEREFORE, CL EARLY PRESENT AND THE GOVERNMENT WAS BOUND TO CARRY OUT THE REPRESENTATIO N AND EXEMPT THE APPELLANT FROM SALES TAX IN RESPECT OF SALES OF VAN ASPATI EFFECTED BY IT IN UTTAR PRADESH FOR A PERIOD OF THREE YEARS FROM THE DATE OF COMMENCEMENT OF THE PRODUCTION. THE GOVERNMENT WAS BOUND ON THE PRINCIPLE OF PROMISSORY ESTOPPEL TO MAKE GOOD THE R EPRESENTATION MADE BY IT. 8. LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SARKAR BUILDERS, (2015) 57 TAXMANN.COM 313(SC), WHEREIN, THE HONBLE SUPREME COURT HAS CONSIDERED THIS ISSUE OF PROSPECTIVITY AND APPLICABILITY OF THE PROVISIONS VIDE PARA 20 TO 22 AS UNDER: 20) HAVING REGARD TO THE ABOVE, LET US TAKE NOTE OF THE SPECIAL FEATURES WHICH APPEAR IN THESE CASES: (A) IN THE PRESENT CASE, THE APPROVAL OF THE HOUSI NG PROJECT, ITS SCOPE, DEFINITION AND CONDITIONS, ALL ARE DECIDED AND DEPENDENT BY TH E PROVISIONS OF THE RELEVANT DC RULES. IN CONTRAST, THE JUDGMENT IN M/S. RELIANC E JUTE AND INDUSTRIES LTD. WAS CONCERNED WITH INCOME TAX ONLY. (B) THE POSITION OF LAW AND THE RIGHTS ACCRUED PRIO R TO ENACTMENT OF FINANCE ACT, 2004 HAVE TO BE TAKEN INTO ACCOUNT, PARTICULARLY WH EN THE POSITION BECOMES IRREVERSIBLE. (C) THE PROVISIONS OF SECTION 80IB(10) MENTION NOT ONLY A PARTICULAR DATE BEFORE WHICH SUCH A HOUSING PROJECT IS TO BE APPROVED BY T HE LOCAL AUTHORITY, EVEN A DATE BY WHICH THE HOUSING PROJECT IS TO COMPLETED, IS FIXED. THESE DATES HAVE A SPECIFIC PURPOSE WHICH GIVES TIME TO THE DEVELOPERS TO ARRANGE THEIR AFFAIRS IN SUCH A MANNER THAT THE HOUSING PROJECT IS STARTED A ND FINISHED WITHIN THOSE STIPULATED DATES. THIS PLANNING, IN THE CONTEXT OF FACTS IN THESE APPEALS, HAD TO BE MUCH BEFORE 01.04.2005. (D) THE BASIC OBJECTIVE BEHIND SECTION 80IB(10) IS TO ENCOURAGE DEVELOPERS TO UNDERTAKE HOUSING PROJECTS FOR WEAKER SECTION OF TH E SOCIETY, INASMUCH AS TO QUALIFY FOR DEDUCTION UNDER THIS PROVISION, IT IS A N ESSENTIAL CONDITION THAT THE RESIDENTIAL UNIT BE CONSTRUCTED ON A MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI AND MUMBAI OR WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. 8 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 (E) IT IS THE CARDINAL PRINCIPLE OF INTERPRETATION THAT A CONSTRUCTION RESULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOID ED. (F) CLAUSE (D) MAKES IT CLEAR THAT A HOUSING PROJE CT INCLUDES SHOPS AND COMMERCIAL ESTABLISHMENTS ALSO. BUT FROM THE DAY TH E 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., W HICHEVER IS LESS. HOWEVER, THE LEGISLATURE ITSELF FELT THAT THIS MUCH COMMERCIAL S PACE WOULD NOT MEET REQUIREMENTS OF THE RESIDENTS. THEREFORE, IN THE YE AR 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 5 000 SQ.FT., WHICHEVER IS HIGHER. THIS IS A SIGNIFICANT MODIFICATION MAKING C OMPLETE 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 S Q.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 SIG NIFICANT 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 IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80IB INCLUDES COM MERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDMENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/ OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVI SION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PR OVISION WAS SUBSTITUTED. THEREFORE, IT CANNOT BE APPLIED TO THOSE PROJECTS W HICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE, THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. 21) THESE ASPECTS ARE DEALT WITH BY VARIOUS HIGH C OURTS ELABORATELY AND CONVINCINGLY IN THEIR JUDGMENTS. IT IS NOT NECESSAR Y TO GO INTO THE DETAILED REASONING GIVEN BY THESE HIGH COURTS. HOWEVER, WE W OULD LIKE TO EXTRACT THE FOLLOWING DISCUSSION FROM THE JUDGMENT DATED 25.07. 2014 OF THE BOMBAY HIGH COURT IN ITA NOS. 201 AND 308 OF 2012, WHERE THIS V ERY ASPECT IS ANSWERED IN THE FOLLOWING MANNER: 36. THERE IS YET ANOTHER REASON FOR COMING TO THE AFORESAID CONCLUSION. TAKE A SCENARIO WHERE AN ASSESSEE, FOLLOWING THE PR OJECT COMPLETION METHOD OF ACCOUNTING, HAS COMPLETED THE HOUSING PRO JECT APPROVED BY THE LOCAL AUTHORITY COMPLYING WITH ALL THE CONDITIO NS AS SET OUT IN SECTION 80-IB(10) AS IT STOOD PRIOR TO 1ST APRIL, 2005. IF WE WERE TO ACCEPT THE ARGUMENT OF THE REVENUE, THEN IN THAT EVENT, DESPIT E HAVING COMPLETED THE ENTIRE CONSTRUCTION PRIOR TO 1ST APRIL, 2005 AN D COMPLYING WITH ALL THE CONDITIONS OF SECTION 80-IB(10) AS IT STOOD THEN, T HE ASSESSEE WOULD BE DISENTITLED TO THE ENTIRE DEDUCTION CLAIMED IN RESP ECT OF SUCH HOUSING PROJECT MERELY BECAUSE HE OFFERED HIS PROFITS TO TA X IN THE A.Y. 2005-06. IN CONTRAST, IF THE SAME ASSESSEE HAD FOLLOWED THE WORK-IN-PROGRESS METHOD OF ACCOUNTING, HE WOULD HAVE BEEN ENTITLED T O THE DEDUCTION UNDER SECTION 80-IB(10) UPTO THE A.Y. 2004-05, AND DENIED THE SAME FROM A.Y. 2005-06 AND THEREAFTER. IT COULD NEVER HA VE BEEN THE INTENTION OF THE LEGISLATURE THAT THE DEDUCTION UNDER SECTION 80-IB(10) AVAILABLE TO A PARTICULAR ASSESSEE WOULD BE DETERMINED ON THE BA SIS OF THE 9 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 ACCOUNTING METHOD FOLLOWED. THIS, TO OUR MIND AND AS RIGHTLY SUBMITTED BY MR. MISTRY, WOULD LEAD TO STARTLING RESULTS. WE THEREFORE HAVE NO HESITATION IN HOLDING THAT SECTION 80-IB(10) IS PRO SPECTIVE IN NATURE AND CAN HAVE NO APPLICATION TO A HOUSING PROJECT THAT I S APPROVED BEFORE 31ST MARCH, 2005. AS THE DEDUCTION SOUGHT TO BE CLAIMED UNDER SECTION 80- IB(10) IS INSEPARABLY LINKED WITH THE DATE OF APPRO VAL OF THE HOUSING PROJECT, IT WOULD MAKE NO DIFFERENCE IF THE CONSTRU CTION OF THE SAID PROJECT WAS COMPLETED ON OR AFTER 1ST APRIL, 2005 OR THAT T HE PROFITS WERE OFFERED TO TAX AFTER 1ST APRIL, 2005 I.E. IN A.Y. 2005-06 O R THEREAFTER. WE THEREFORE FIND NO SUBSTANCE IN THE ARGUMENT OF THE REVENUE TH AT NOTWITHSTANDING THE FACT THAT THE HOUSING PROJECT WAS APPROVED PRIO R TO 31ST MARCH 2005, IF THE CONSTRUCTION WAS COMPLETED ON OR AFTER 1ST A PRIL, 2005 OR IF THE PROFITS ARE BROUGHT TO TAX IN THE A.Y. 2005-06 OR T HEREAFTER, THE SAID HOUSING PROJECT WOULD HAVE TO COMPLY WITH THE PROVI SIONS OF CLAUSE (D OF SECTION 80-IB(10). TO OUR MIND, WE DO NOT THINK THA T THE CONDITION/RESTRICTION LAID DOWN IN CLAUSE (D) OF SE CTION 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 ASSESSE E. WHEN THE ASSESSEE CLAIMS A DEDUCTION UNDER SECTION 80-IB(10), THE ASS ESSEE IS REQUIRED TO COMPLY WITH SUCH A CONDITION ONLY IF IT IS ON THE S TATUTE-BOOK ON THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND IT HAS N OTHING TO DO WITH THE YEAR IN WHICH THE PROFITS ARE BROUGHT TO TAX BY THE ASSESSEE. WE HAVE COME TO THIS CONCLUSION ONLY BECAUSE WE FIND THAT C LAUSE (D) OF SECTION 80-IB(10) IS INEXTRICABLY LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND THE SUBSEQUENT DEVELOPMENT/CONSTRUCTION OF THE SAME, AND HAS NOTHING TO DO WITH THE PROFITS DERIVED THEREFRO M. WE MAY HASTEN TO ADD THAT IF A PARTICULAR CONDITION IS NOT INSEPARAB LY LINKED TO THE DATE OF APPROVAL OF THE HOUSING PROJECT, DIFFERENT CONSIDER ATIONS WOULD ARISE. HOWEVER, WE ARE NOT CALLED UPON TO DECIDE ANY SUCH CONDITION AND HENCE WE ARE NOT LAYING DOWN ANY GENERAL PROPOSITIO N OF LAW, SAVE AND EXCEPT THAT CLAUSE (D) OF SECTION 80-IB(10), BEING A CONDITION LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT, WO ULD NOT APPLY TO ANY HOUSING PROJECT THAT WAS APPROVED PRIOR TO 31ST MAR CH, 2005 IRRESPECTIVE OF THE FACT THAT THE PROFITS OF SAID HOUSING PROJECT ARE BROUGHT TO TAX AFTER THE S AID PROVISION WAS BROUGHT INTO FORCE. 22) AT THIS JUNCTURE, WE WOULD LIKE TO QUOTE THE FO LLOWING PASSAGE FROM COMMISSIONER OF INCOME TAX, U.P. V. M/S. SHAH SADIQ AND SONS (SUPRA) : 14. UNDER THE INCOME TAX ACT OF 1922, THE ASSESSEE WAS ENTITLED TO CARRY FORWARD THE LOSSES OF THE SPECULATION BUSINES S AND SET OFF SUCH LOSSES AGAINST PROFITS MADE FROM THAT BUSINESS IN F UTURE YEARS. THE RIGHT OF CARRYING FORWARD AND SET OFF ACCRUED TO THE ASSE SEE UNDER THE ACT OF 1922. A RIGHT WHICH HAD ACCRUED AND HAD BECOME VEST ED CONTINUED TO BE CAPABLE OF BEING ENFORCED NOTWITHSTANDING THE RE PEAL OF THE STATUTE UNDER WHICH THAT RIGHT ACCRUED UNLESS THE REPEALING STATUTE TOOK AWAY SUCH RIGHT EXPRESSLY OR BY NECESSARY IMPLICATION. T HIS IS THE EFFECT OF SECTION 6 OF THE GENERAL CLAUSES ACT, 1897. 15. IN THIS CASE THE 'SAVINGS' PROVISION IN THE RE PEALING STATUTE IS NOT EXHAUSTIVE OF THE RIGHTS WHICH ARE SAVED OR WHICH S URVIVE THE REPEAL OF THE STATUTE UNDER WHICH SUCH RIGHTS HAD ACCRUED. IN OTHER WORDS, 10 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 WHATEVER RIGHTS ARE EXPRESSLY SAVED BY THE 'SAVINGS ' PROVISION STAND SAVED. BUT, THAT DOES NOT MEAN THAT RIGHTS WHICH AR E NOT SAVED BY THE 'SAVINGS' PROVISION ARE EXTINGUISHED OR STAND IPSO FACTO TERMINATED BY THE MERE FACT THAT A NEW STATUTE REPEALING THE OLD STAT UTE IS ENACTED. RIGHTS WHICH HAVE ACCRUED ARE SAVED UNLESS THEY ARE TAKEN AWAY EXPRESSLY. THIS IS THE PRINCIPLE BEHIND SECTION 6(C) OF THE GE NERAL CLAUSES ACT, 1897. THE RIGHT TO CARRY FORWARD LOSSES WHICH HAD A CCRUED UNDER THE REPEALED INCOME TAX ACT OF 1922 IS NOT SAVED EXPRES SLY BY SECTION 297 OF THE INCOME TAX ACT, 1961. BUT, IT IS NOT NECESSA RY TO SAVE A RIGHT EXPRESSLY IN ORDER TO KEEP IT ALIVE AFTER THE REPEA L OF THE OLD ACT OF 1922. SECTION 6(2) SAVES ACCRUED RIGHTS UNLESS THEY ARE T AKEN AWAY BY THE REPEALING STATUTE. WE DO NOT FIND ANY SUCH TAKING A WAY OF THE RIGHTS BY SECTION 297 EITHER EXPRESSLY OR BY IMPLICATIO N. 9. LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS VATIKA TOWNSHIP (P) LTD., (2014) 227 TAXMAN 121 (SC). 10. ON THE OTHER HAND, LD SR DEPARTMENTAL REPRESENT ATIVE RELIED ON THE AMENDED PROVISION OF SECTION 115 JC OF THE A CT AND STATED THAT THE AMENDED PROVISIONS W.E.F 1.4.2013 WILL APP LY FOR AND FROM ASSESSMENT YEAR 2013-14. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ADMITTED FACTS ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION 80IB(10), AS THE CONSTRUCTION OF THE PROJECT WAS STARTED IN APRIL, 2007 AND WAS COMPLETED IN MAR CH, 2012. WE NOTED THIS FACT FROM THE PAPER BOOK PAGES 19 TO 21 OF ASSESSEE, WHEREIN, COMPLETION CERTIFICATE OF THE PROJECT IS E NCLOSED AT PAGES 19 TO 21 OF PB AND ENGLISH TRANSLATION AT PAGES 20- 21. LD COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE S 20 & 21 OF PB, WHEREIN, BUILDING COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MUNCIPAL CORPORATION TOWN PLANNING DEPARTM ENT IS 11 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 ENCLOSED. IN VIEW OF THESE FACTS, WE HAVE CONSIDERE D THE ARGUMENTS MADE BY BOTH THE SIDES AND ALSO CONSIDERED THE APPL ICABILITY OF THE PROVISIONS OF SECTION 115JC OF THE ACT IN THE CASE OF THE ASSESSEE APPLIED BY THE AO DISREGARDING THE FACT THAT THE HO USING PROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE RELEVANT PROVISIONS. THE ASSES SEE IS ENGAGED IN THE CONSTRUCTION AND SALE OF IMMOVABLE PROPERTY I.E . BUILDERS. THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE WAS APPR OVED BY THE COMPETENT AUTHORITY AND ACCORDINGLY, ASSESSEE CLAIM ED DEDUCTION UNDER SECTION 80IB OF THE ACT OF 100% OF THE PROFIT FROM THE HOUSING PROJECT. WE NOTED THAT CHAPTER XII BA I.E. SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS OTHER THAN A COMPANY WA S INTRODUCED BY THE FINANCE ACT 2011 W.E.F. 1.4.2012 AND MADE APPLI CABLE FOR AND FROM A.Y. 2012-13 IN RESPECT OF LIMITED LIABILITY P ARTNERSHIPS. FURTHER, THIS PROVISION WAS MADE APPLICABLE TO OTHE R CATEGORIES OF PERSONS OTHER THAN A COMPANY WITH EFFECT FROM 1.4.2 013 BY THE FINANCE ACT, 2012. ACCORDINGLY, THE PROVISIONS OF SECTION 115JC OF THE ACT WAS MADE APPLICABLE TO PROFIT FROM HOUSING PROJECTS DEDUCTIBLE UNDER SECTION.80IB(10) OF THE ACT ONLY I N RESPECT OF HOUSING PROJECTS APPROVED BY THE COMPETENT AUTHORIT Y ON OR AFTER 1.4.2013. SIMILAR CASE WAS DEALT WITH BY CO-ORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF NEHA HOME BUILDERS PVT LTD. VS CIT,(2018) 92 TAXMANN.COM 102 (MUM), WHEREIN, IT IS HELD THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION,80 IB(10) OF THE ACT 12 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 WHILE COMPUTING BOOK PROFIT U/S.115JB OF THE ACT IN RESPECT TO THE PROFIT OF THE HOUSING PROJECT. 12. WE HAVE ALSO GONE THROUGH THE CASE LAW OF HONB LE SUPREME COURT IN THE CASE OF SARKAR BUILDERS (SUPRA), WHERE IN, HONBLE SUPREME COURT HAS CONSIDERED THE PROVISIONS OF SECT ION 6 OF GENERAL CLAUSES ACT 1897 AND ALSO CONSIDERED THE SA VING PROVISIONS IN THE REPEALING STATUTE WHICH IS NOT EX HAUSTIVE OF THE RIGHTS AND WHICH ARE SAVED OR WHICH SURVIVE THE RE PEAL OF THE STATUTE UNDER WHICH SUCH RIGHT HAD ACCRUED. HONBL E SUPREME COURT HAS CONSIDERED WHATEVER RIGHTS ARE EXPRESSLY SAVED BY THE SAVING PROVISIONS STAND SAVED BUT THAT DOES NOT MEA N RIGHTS WHICH ARE NOT SAVED BY THE SAVING PROVISIONS ARE EXTINGUI SHED OR STAND IPSO FACTO TERMINATED BY THE MERE FACT THAT A NEW S TATUE REPEALING THE OLD STATUTE IS ENACTED. EVEN HONBLE SUPREME C OURT IN THE CASE OF VATIKA TOWNSHIP P LTD (SUPRA) HAS CONSIDERE D THE VARIOUS RULES GUIDING HOW A LEGISLATION HAS TO BE INTERPRET ED, ONE ESTABLISHED RULE IS THAT UNLESS A CONTRARY INTENTIO N APPEARS, A LEGISLATION IS PRESUMED NOT TO BE INTENDED TO HAVE A RETROSPECTIVE OPERATION. THE IDEA BEHIND THE RULE IS THAT A CURR ENT LAW SHOULD GOVERN CURRENT ACTIVITIES. LAW PASSED TODAY CANNOT APPLY TO THE EVENTS OF THE PAST. ONE PRINCIPLE OF LAW IS KNOWN AS LEX PROSPICIT NON RESPICIT LAW LOOKS FORWARD NOT BACKWARD. IT WA S ALSO OBSERVED THAT AS WAS OBSERVED IN PHILIPS VS EYRE (1870) LR 6 QB 1 A RETROSPECTIVE LEGISLATION IS CONTRARY TO THE GENERA L PRINCIPLE THAT LEGISLATION BY WHICH THE CONDUCT OF MANKIND IS TO B E REGULATED WHEN 13 ITA NO.1248/MUM/2018 ASSESSMENT YEAR 2012-13 INTRODUCED FOR THE FIRST TIME TO DEAL WITH FUTURE A CTS OUGHT NOT TO CHANGE THE CHARACTER OF PAST TRANSACTIONS CARRIED O N UPON THE FAITH OF THE THEN EXISTING LAW. 13. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 115JC OF THE ACT AS BROUG HT IN THE STATUTE BY THE FINANCE ACT (NO.2) W.E.F. 1.4.13 WILL APPLY PROSPECTIVELY AND TO THE PROJECTS CLAIMING DEDUCTION UNDER SECTION.18 0IB(10) OF THE ACT, WHICH HAVE COME OR APPROVED ON OR AFTER THAT D ATE. ACCORDINGLY, THIS PROVISION CANNOT BE APPLIED TO TH E PROJECTS COMPLETED OR APPROVED RETROSPECTIVELY UPTO 31.3.201 2. HENCE, WE ALLOW THE APPEAL OF THE ASSESSEE 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5-03- 2019. AADOSA KI AADOSA KI AADOSA KI AADOSA KI GAAO GAAOGAAO GAAOYANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK 15. 03.2019 KAO KI KAO KI KAO KI KAO KI GA GAGA GA SD/ SD/- (M BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 5- - 03- 2019 SUDIP SARKAR /SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//