DCIT,Circle-8, Kolkata, Kolkata V. M/s. R.D. Estates & Resources Ltd, Kolkata

ITA 1343/KOL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4866 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 21-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 17-09-2012
• Court: TRIBUNAL
• Assessee Lawyers: K K CHAPARIA FCA LD
• Keywords: Reason to believe
• Section: 143(3); 80IB; 147; 148

Judgement Text

ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NOS. 1343 & 1344/KOL/2012 A.YS: 2004-05 & 2005-06 DCIT, CIR-8, KOLKATA VS. M/S. R.D ESTATES & RES OURCES LTD PAN: AACCR2517C (APPELLANT/DEPARTMENT) (RESPONDENT/ASSESSEE) C.O NOS. 95 & 96/KOL/2012 [ ARISING OUT OF ITA NOS. 1343 & 1344/KOL/2012 A.YS : 2004-05 & 2005-06 ] M/S. R.D ESTATES & RESOURCES LTD VS. DCIT, CIR-8, KOLKATA (CROSS OBJECTOR/ASSESSEE) (DEPARTMENT) FOR THE APPELLANT/DEPARTMENT: NONE A PPEARED FOR THE RESPONDENT/ASSESSEE: SHR I K.K CHAPARIA, FCA, LD.AR DATE OF HEARING: 22-04-2016 DATE OF PRONOUNCEMENT: 11 -5 -2 016 ORDER SHRI M.BALAGANESH, AM THESE APPEALS OF THE REVENUE AND CROSS OBJECTIONS O F THE ASSESSEE ARISE OUT OF THE SEPARATE ORDERS OF THE LEARNED CIT(A), VIII, KO LKATA IN APPEAL NO. 287/CIT(A)- VIII/KOL/11-12 DATED 20.6.2012 FOR ASST YEAR 2004-0 5 AND APPEAL NO. 286/CIT(A)- VIII/KOL/11-12 DATED 20.6.2012 FOR ASST YEAR 2005-0 6 AGAINST THE ORDERS OF ASSESSMENT FRAMED U/S 147 / 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). AS THE ISSUES INVOLVED ARE IDENT ICAL IN NATURE IN BOTH THE ASST YEARS, THE SAME ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 2 2. THE ONLY ISSUE TO BE DECIDED IN THE APPEALS OF THE REVENUE IS AS TO WHETHER THE ASSESSEE IS ENTITLED FOR CLAIMING DEDUCTION U/S 80I B(10) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE FILED ITS RETURN OF INCOME AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT WHICH WA S GRANTED IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3) OF THE ACT DATED 15.12 .2006. LATER THE ASSESSMENT WAS SOUGHT TO BE REOPENED U/S 147 OF THE ACT FOR WITHDR AWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT ON THE GROUND THAT COMMERCIAL A REA OF THE PROJECT EXCEEDED 2000 SQ.FT AS LAID DOWN IN SECTION 80IB(10)(D) OF THE AC T. THE ASSESSEE COMPANY OWNED A PLOT OF LAND AT 105, ULTADANGA MAIN ROAD, KOLKATA - 700067, MEASURING IN AGGREGATE 4.03 ACRES AREA, THE ASSESSEE SET UP AND EXECUTED T WO HOUSING PROJECTS ON THE SAID LAND. THE ASSESSEE OBTAINED APPROVALS FOR THE SAID HOUSING PROJECTS FROM THE KOLKATA MUNICIPAL CORPORATION. THE PLANS WERE SANCTIONED BY THE CORPORATION ON 17-07-2000. THE FIRST HOUSING PROJECT, COMPRISING OF 3 BUILDING S, WAS COMPLETED IN FY 2003-04 RELEVANT TO AY 2004-05. THE SAID HOUSING PROJECT CO NSISTED OF 3 MULTISTORIED BUILDINGS, NAMELY BLOCK-A, BLOCK-B AND BLOCK-C. THE TOTAL CONSTRUCTED AREA COMPRISED IN THE SAID 3 BUILDINGS WAS 1,59,664 SQUA RE FEET. THE SAID HOUSING PROJECT WAS SET UP ON THE LAND ADMEASURING 85,19 COTTAHS EQ UIVALENT TO 1.41 ACRES. THIS HOUSING PROJECT COMPRISED OF 116 RESIDENTIAL FLATS AND THE INDIVIDUAL FLAT AREA WAS LESS THAN 1500 SQUARE FEET. THE FIRST HOUSING PROJECT AL SO CONSISTED OF COMMERCIAL AREA OF 14,088 SQUARE FEET WHICH WAS SITUATED ON GROUND, FI RST AND SECOND FLOOR OF BLOCK-A WHICH CONSTITUTED 8.82% OF THE TOTAL PROJECT AREA OF 1,59,664 SQUARE FEET. IN THE AY 2004-05, THE ASSESSEE CLAIMED THE DEDUCTION IN RESP ECT OF PROFITS DERIVED BY THE SAID HOUSING PROJECT COMPRISING OF 3 BUILDINGS. THE CONS TRUCTION OF THE SAID HOUSING PROJECT WAS COMPLETED IN FY 2003-04 AND THE COMPLETION CERT IFICATES WERE OBTAINED IN THE RELEVANT PREVIOUS YEAR. THE ASSESSEE RECOGNIZED REV ENUE IN ITS BOOKS IN RESPECT OF THE SAID HOUSING PROJECT COMPRISING OF THE SAID BUIL DINGS IN AY 2004-05 ON BASIS OF COMPLETION PROJECT METHOD. THE BUSINESS PROFIT OF T HE SAID HOUSING PROJECT WAS ALSO ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 3 ASSESSED IN THE ASSESSMENT ORDER U/S. 143(3) WHERE IN THE COMPANY'S METHOD OF REVENUE RECOGNITION WAS ACCEPTED. 3.1. IT WAS STATED THAT FOR CLAIMING THE DEDUCTION U/S 80IB(10) IN AY 2004-05, ASSESSEE WAS REQUIRED TO FULFILL ONLY FOLLOWING CON DITIONS: A. THE UNDERTAKING COMMENCED DEVELOPMENT AND CONSTRUCT ION OF THE HOUSING PROJECT ON OR AFTER 01-10-1998. B. THE PROJECT WAS ON SIZE OF PLOT HAVING MINIMUM AREA ON ACRE C. THE RESIDENTIAL UNIT HAD MAXIMUM BUILT UP AREA OF 1500 SQ. FT. THE ASSESSEE STATED THAT IT HAD FULFILLED ALL THE T HREE CONDITIONS AS PRESCRIBED IN SECTION 80IB(10) AS APPLICABLE FOR AY 2004-05. THE ASSESS EE BROUGHT THE ATTENTION OF THE LEARNED AO THE AMENDMENT BROUGHT IN BY THE FINANCE (NO.2) ACT 2004 IN SECTION 80IB(L0) WHICH WAS EFFECTIVE FROM AY 2005-06. AS PE R THE AMENDED PROVISIONS OF THE ACT, THE HOUSING PROJECT COULD NOT INCLUDE COMMERCI AL-AREA EXCEEDING 2000 SQ. FT. IT WAS ARGUED THAT THE COMPANY'S HOUSING PROJECT IN WH ICH COMMERCIAL AREA WAS INCLUDED WAS COMPLETED IN FY 2003-04 RELEVANT TO AY 2004-05. IT WAS ALSO STATED THAT IN RESPECT OF PROFIT DERIVED FROM SALE OF COMMERCIAL A REA, THE ASSESSEE DID NOT CLAIM ANY DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSEES CLAIM OF DEDUCTION WAS RESTRICTED ONLY TO THE SALE OF RESIDENTIAL AREA COMPRISED IN T HE FIRST HOUSING PROJECT COMPLETED IN FY 2003-04 RELEVANT TO AY 2004-05. 3.2 THE LD. AO DISALLOWED THE DEDUCTION U/S 80 IB(10) BY OBSERVING AS FOLLOWS: THE SUBMISSION OF THE A/R IS CONSIDERED BUT FOUND N OT TENABLE. THE PRIMARY CONTENTION OF THE ASSESSEE THAT THE AMENDME NT IN SECTION 80IB( 10) HAS BEEN BOUGHT ABOUT BY THE FINANCE (NO. 2) ACT 2004 AND IS THEREFORE NOT APPLICABLE TO THE RELEVANT FY 2004-05. THE ASSESSEE HAS FURTHER STATED THAT ONLY THE PROFITS D ERIVED FROM RESIDENTIAL FLATS WAS CLAIMED AS DEDUCTION WHEREAS PROFIT OF THE COMMERCIAL AREA WAS NOT DEDUCTED U/S 80IB(I0) OF TH E ACT. HOWEVER, SUCH CONTENTION OF THE ASSESSEE HAS NO MERITS. SECT ION 80(IB)( I0) WHICH WAS AMENDED BY THE FINANCE (NO.2) ACT 2004 PR OVIDED THAT ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 4 THE HOUSING PROJECT HAS TO BE PRIMARILY A RESIDENTI AL COMPLEX AND NOT A COMMERCIAL ONE AND IN ANY CASE, IT COULD NOT INCLUDE COMMERCIAL AREA EXCEEDING 2000 SQ. FT. THE SAID AME NDMENT BROUGHT INTO THE SECTION ADEQUATELY CLARIFIES THIS ASPECT. IN THE PRESENT CASE, THE COMMERCIAL AREA COMPRISES OF 14088 SQ. FT WHICH IS FAR EXCESS THAT THE LIMIT PRESCRIBED BY THE AFORESAID AMENDMEN T. FURTHER, THERE IS NO PROVISION IN SECTION 80IB( 10) TO ALLOW PRO-R ATA DEDUCTION. THUS THE DEDUCTION CLAIMED BY THE ASSESSEE AMOUNTIN G TO RS 3,51,86,897/- IS DISALLOWED AND ADDED BACK TO THE C OMPUTATION. 4. ON FIRST APPEAL, THE LEARNED CIT(A) FOUND THA T THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD OBTAINED THE APP ROVAL OF THE HOUSING PROJECT FROM KOLKATA MUNICIPAL CORPORATION ON 17-07-2000. THE SA ID PROJECT CONSISTED OF 5 MULTISTORIED BUILDINGS NAMELY BLOCK A, BLOCK B, BL OCK C, BLOCK D AND BLOCK E. THE ENTIRE PROJECT WAS COMPLETED IN TWO PHASES AND TH E FIRST STAGE CONSISTED OF BLOCK A, BLOCK B AND BLOCK C WHICH WAS COMPLETED IN INSTANT YEAR WHEREAS THE SECOND PHASE CONSISTED OF BLOCK D AND BLOCK E WHICH WAS COMPLET ED IN AY 2005-06. THE FIRST PHASE WAS SET UP ON THE LAND MEASURING 85.19 COTTAH S EQUIVALENT TO 1.41 ACRES AND CONSISTED OF 116 RESIDENTIAL FLATS AND THE INDIVIDU AL FLAT AREA WAS LESS THAN 1500 SQ. FT. THE TOTAL CONSTRUCTED AREA OF THREE BLOCKS WAS 1,59 ,664 SQ. FT., COMPRISING OF COMMERCIAL AREA OF 14088 SQ. FT. SITUATED ON GROUND , FIRST AND SECOND FLOOR OF BLOCK A AND THE BALANCE BEING RESIDENTIAL AREA. BLOCK A W AS COMPLETED ON 27-02-2003 AND BLOCK B & C WAS COMPLETED ON 29-09-2003. 4.1 THE ASSESSING OFFICER HAS NOT DISPUTED THE ABOV E FACTS WHICH IS ALSO EVIDENT FROM REASONS FOR ISSUE OF NOTICE U/S 148, WHICH IS REPRODUCED BELOW: 'THE ASSESSMENT OF M/S RD ESTATE & RESOURCES LTD FO R THE AY 2004-05 WAS COMPLETED AFTER SCRUTINY IN DECEMBER 2006 AFTER ALLOWING A DEDUCTIONS OF RS. 3.50 CRORE U/S 80IB(10) OF THE AC T. IT IS SEEN THAT THE PROJECT ON WHICH DEDUCTION U/S 80IB WAS CLAIMED WAS COMMERCIAL CUM RESIDENTIAL IN NATURE AND HAD COMMERCIAL UNITS MEAS URING 14088 SQUARE FEET WHICH IS MORE THAN THE MAXIMUM PERMISSIBLE LIM IT OF 2000 SQUARE FEET. THUS THE HOUSING PROJECT WAS INELIGIBLE FOR D EDUCTION AND THE ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 5 ALLOWANCE OF DEDUCTION WAS WRONGLY CLAIMED BY THE A SSESSEE AND ALLOWED BY THE AO. THUS, I HAVE REASON TO BELIEVE THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT. NOTICE U/S 148 OF INCOME TAX ACT, 1961 IS ISSUED' 4.2. THE LEARNED CITA OBSERVED THAT FROM THE ABOVE, IT IS CLEAR THAT THE ONLY REASON FOR DISALLOWANCE OF DEDUCTION U/S 80IB(L0) WAS BECA USE OF CHANGES BOUGHT INTO SECTION 80IB(L0) W.E.F 01-04-2005 WHICH REQUIRED THAT THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING P ROJECT DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET, WHICHEVER IS LESS. HOWEVER, PRIOR TO AY 2005-06 THE RE WAS NO SUCH STATUTORY RESTRICTION WITH RESPECT TO COMMERCIAL ESTABLISHMEN TS. HENCE THE ONLY QUESTION IS WHETHER THE AMENDMENTS IN SECTION 80IB(L0) BOUGHT W .E.F. 01-04-2005 HAS RETROSPECTIVE APPLICABILITY. THE LEARNED CITA PLACE D RELIANCE ON THE SPECIAL BENCH OF PUNE ITAT IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT (119 ITD 255) WHEREIN IT WAS HELD THAT THE AMENDMENT MADE BY THE FINANCE (NO.2) ACT 2004 ENACTING CLAUSE (D) IN SECTION 80(IB)(10) WAS NOT RETROSPECTIVE IN OPERAT ION AND WOULD BE APPLICABLE ONLY FROM AY 2005-06. HE ALSO FOUND THAT THE ABOVE DEC ISION WAS ALSO UPHELD BY HON'BLE MUMBAI HIGH COURT. THE HON'BLE HIGH COURT IN ITS DE CISION REPORTED IN 197 TAXMAN 459 IN THE CASE OF CIT-II VS BRAHMA ASSOCIATES AFFI RMED THE VIEW OF THE TRIBUNAL AND HELD THAT THE AMENDMENT BROUGHT BY THE FINANCE (NO. 2) ACT 2004 IMPOSING RESTRICTION ON COMMERCIAL AREA WITHIN THE HOUSING PROJECT WAS A PPLICABLE W.E.F. 01-04-2005. THE HIGH COURT FURTHER HELD THAT PRIOR TO 01-04-2005, D EDUCTION U/S 80LB(L0) WOULD BE AVAILABLE TO ANY HOUSING PROJECT WHICH IS APPROVED BY LOCAL AUTHORITY WITHOUT OR WITH COMMERCIAL USER AND IRRESPECTIVE OF THE FACT THAT PROJECT IS APPROVED AS 'HOUSING PROJECT' OR AS 'RESIDENTIAL PLUS COMMERCIAL PROJECT '. 4.3 THE LEARNED CITA ALSO OBSERVED THAT THE KOLKATA ITAT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LIMITED VS DCIT [ITA NO. 1595/KOL/2005, AY 2002- ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 6 03], BENCH C ORDER DATED 24-03- 2006 [(2007 39 BCAJ 546], WHEREIN IT WAS HELD THAT EVEN IF THE UNITS CONSTRUCTED ARE BOTH SMALLER AND LARGER UNITS WITH REFERENCE TO THE STIPULATED AREA OF 1000 SQUARE FEET BUILT UP AREA, THE DEDUCTION U/S 80IB(10) OUGHT TO HAVE BEEN ALLOWED. THE ABOVE DECISION HAS BEEN APPR OVED BY HON'BLE CALCUTTA HIGH COURT. HENCE THE LEARNED CITA OBSERVED THAT THE JU RISDICTIONAL TRIBUNAL AND HIGH COURT HAS HELD THAT EVEN IF AN ASSESSEE IS NOT FULF ILLING ALL THE CONDITIONS LAID DOWN IN SECTION 80IB(10) OF INCOME TAX ACT, 1961, THE DISAL LOWANCE, IF ANY, SHOULD NOT BE IN ENTIRETY BUT PROPORTIONATE DISALLOWANCE SHOULD ONLY BE DONE. IN OTHER WORDS, THE DISALLOWANCE SHOULD BE TO THE EXTENT OF COMMERCIAL PORTION OF HOUSING PROJECT. HOWEVER, HE FOUND THAT, IN THE PRESENT CASE, THE A SSESSEE HAD NOT CLAIMED ANY DEDUCTION U/S.80IB( 10) OF THE ACT ON THE INCOME F ROM COMMERCIAL PORTION OF THE HOUSING PROJECT. 4.4. WITH REGARD TO ASST YEAR 2005-06, THE LEARNED CITA OBSERVED THAT THE ASSESSEE HAD OBTAINED THE APPROVAL OF THE HOUSING PROJECT FR OM KOLKATA MUNICIPAL CORPORTION ON 17.7.2000. THE SAID PROJECT CONSISTED OF 5 MULT ISTORIED BUILDINGS NAMELY BLOCK A, BLOCK B, BLOCK C, BLOCK D AND BLOCK E. THE ENTIRE PROJECT WAS COMPLETED IN TWO PHASES AND THE FIRST STAGE CONSISTED OF BLOCK A, BL OCK B AND BLOCK C WHICH WAS COMPLETED IN ASST YEAR 2004-05 , WHEREAS THE SECOND PHASE CONSISTED OF BLOCK D AND BLOCK E WAS COMPLETED IN ASST YEAR 2005-06. IN AS ST YEAR 2005-06, THE CONSTRUCTION OF BLOCK D AND BLOCK E WSA COMPLETED ON 31.3.2005. THESE TWO BLOCKS CONSISTED OF 176 FLATS AND INDIVIDUAL FLAT SIZE WAS LESS THAN 15 00 SQUARE FEET OF BUILT UP AREA. THE TOTAL CONSTRUCTED AREA OF THESE TWO BUILDINGS WERE 217850 SQUARE FEET ON LAND MEASURING 158.54 COTTAHS EQUIVALENT TO 2.62 ACRES. 4.5. THE LEARNED CITA IN VIEW OF THE AFORESAID FIND INGS AND OBSERVATIONS AND PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS HELD THAT THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80LB( 10) IN THE INSTAN T YEAR. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUND:- ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 7 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN LAW AS WELL AS IN FACT BY DELETI NG THE DISALLOWANCE MADE BY THE A.O U/S. 80IB(10) OF THE ACT. 5. WHEN THE CASE WAS CALLED UP FOR HEARING, IT WAS FOUND THAT THE LEARNED CIT/ DR HAD SOUGHT ADJOURNMENT FOR 15 CASES OUT OF 27 CASES LISTED FOR HEARING. THE LEARNED AR STATED THAT THE ISSUE UNDER DISPUTE IS SETTLED B Y THE DECISION OF THE HONBLE SUPREME COURT . IN VIEW OF THE SAME, WE ARE NOT IN CLINED TO ACCEPT THE ADJOURNMENT REQUEST OF THE REVENUE FOR THESE APPEALS AND WE PRO CEED TO DISPOSE OFF THE APPEALS AFTER HEARING THE LEARNED AR AND AFTER PERUSING THE MATER IALS AVAILABLE ON RECORD. THE LEARNED AR STATED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SARKAR BUILDERS REPORTE D IN (2015) 375 ITR 392 (SC) AND ACCORDINGLY PRAYED FOR DISMISSAL OF THE APPEALS OF THE REVENUE. HE FURTHER ARGUED THAT THE CROSS OBJECTION OF THE ASSESSEE IS WITH RE GARD TO ASSUMPTION OF JURISDICTION WITHIN THE MEANING OF SECTION 147 OF THE ACT. HE FURTHER SUBMITTED THAT SINCE THE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE ON MERIT S, THE CROSS OBJECTIONS OF ASSESSEE ARE NOT PRESSED. 6. WE HAVE HEARD THE LEARNED AR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT THE ISSUE UN DER APPEAL IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SARKAR BUILDERS REPORTED IN (2015) 375 ITR 392 (SC) , WHEREIN IT WAS HELD THAT :- SUB-SECTION (10) STIPULATES CERTAIN CONDITIONS WH ICH ARE TO BE SATISFIED IN ORDER TO AVAIL THE BENEFIT OF THE SAID PROVISION. F URTHER, IT IS ALSO CLEAR THAT THE BENEFIT IS AVAILABLE TO THOSE UNDERTAKINGS WHICH ARE DEVELOPING AND BUILDING 'HOUSING PROJECTS' APPROVED BY A LOCAL AUTHORITY. THUS, THIS SECTION IS APPLICABLE IN RESPECT OF HOUSING PROJECT S AND NOT COMMERCIAL PROJECTS. AT THE SAME TIME, EVEN IN THE HOUSING PRO JECTS, THERE WOULD BE SOME AREA FOR COMMERCIAL PURPOSES AS CERTAIN SHOPS AND COMMERCIAL ESTABLISHMENTS ARE NEEDED EVEN IN HOUSING PROJECTS. THAT HAS BEEN JUDICIALLY RECOGNISED WHILE INTERPRETING THE PROVIS ION THAT EXISTED BEFORE 1-4-2005 AND THERE WAS NO LIMIT FIXED IN SECTION 80 -IB(10) REGARDING THE ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 8 BUILT-UP AREA TO BE USED FOR COMMERCIAL PURPOSE IN THE SAID HOUSING PROJECT. AS WOULD BE NOTICED LATER, THE EXTENT TO W HICH SUCH COMMERCIAL AREA COULD BE CONSTRUCTED WAS AS PER THE LOCAL LAWS UNDER WHICH LOCAL AUTHORITY GAVE THE SANCTION TO THE HOUSING PROJECT. HOWEVER, VIDE CLAUSE (D), WHICH WAS INSERTED BY THE AFORESAID AMENDMENT AND MADE EFFECTIVE FROM 1-4-2005, IT WAS STIPULATED THAT THE BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJ ECTS WOULD NOT EXCEED 5 PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HO USING PROJECT OR 2000 SQ. FEET, WHICHEVER IS LESS. CERTAIN OTHER DISPUTES WHICH HAD ARISEN BETWEEN T HE REVENUE AND THE ASSESSEES/DEVELOPERS OF THE HOUSING PROJECTS CONCER NING INTERPRETATION OF SUB-SECTION (10) OF SECTION 80-IB PRIMARILY RELATED TO THE MEANING THAT IS TO BE ASSIGNED TO 'HOUSING PROJECTS' PRIOR TO 1-4-2 005 BECAUSE OF THE REASON THAT THERE WAS NO CLAUSE (D) EARLIER AND THE RE IS NO EXPRESS PROVISION IN THIS SUB-SECTION DEALING WITH THE CONS EQUENCE OF HAVING A COMMERCIAL ESTABLISHMENT WITHIN A HOUSING PROJECT. ONE OF THE REQUIREMENTS CONTAINED IN SUB-SECTION (10) IS THAT IN ORDER TO BE ENTITLED TO HAVE THE DEDUCTION UNDER THIS PROVISION, HOUSING PR OJECT IS TO BE APPROVED BY A LOCAL AUTHORITY. IT IS A MATTER OF COMMON KNOW LEDGE THAT THERE ARE MUNICIPAL ACTS OF SPECIFIC LOCAL ACTS GOVERNING THE CONSTRUCTION OF BUILDINGS, COMMERCIAL AS WELL AS RESIDENTIAL, IN EV ERY STATE. FOR UNDERTAKING ANY SUCH CONSTRUCTION AUTHORITY, IT IS NECESSARY TO HAVE THE BUILDING PLANS SANCTIONED FROM THE LOCAL AUTHORITIE S IN ACCORDANCE WITH THE PROVISIONS OF SUCH LOCAL ACTS. THERE ARE LOCAL LAWS RELATING TO THE DEVELOPMENT AND BUILDING OF 'HOUSING PROJECTS' BY T HE DEVELOPERS/BUILDERS WHICH ALSO NEED A SANCTION FROM THE LOCAL AUTHORITI ES AS PER THE LAW PREVAILING IN THAT PARTICULAR AREA WHERE THE HOUSIN G PROJECT IS DEVELOPED. SUCH LOCAL LAWS, WHILE SANCTIONING THE HOUSING PROJ ECTS, ALSO PERMIT USE OF CERTAIN AREA IN THE HOUSING PROJECTS IN A SPECIFIED MANNER FOR SHOPPING AND COMMERCIAL PURPOSES AS WELL. THE QUESTION THAT HAD ARISEN WAS - WHETHER DEDUCTION UNDER SECTION 80-IB(10) WOULD BE ADMISSIBLE WHEN COMMERCIAL ESTABLISHMENT IS CONSTRUCTED IN A HOUSIN G PROJECT? THAT IS, WHETHER IT WOULD STILL RETAIN THE CHARACTER OF HOUS ING PROJECT WITHIN THE MEANING OF THIS PROVISION. THE BOMBAY HIGH COURT IN THE CASE OF CIT V. BRAHMA ASSOCIATES [2011] 333 ITR 289/197 TAXMAN 459 /9 TAXMANN.COM 289 HELD THAT SINCE THE EXPRESSION 'HOUSING PROJECT ' IS NOT DEFINED UNDER THE ACT, THE INTENTION OF PARLIAMENT WAS THAT WHATE VER IS APPROVED BY THE LOCAL AUTHORITY UNDER THE EXTENT RULES AS A HOUSING PROJECT WOULD BE TREATED AS 'HOUSING PROJECT' FOR THE PURPOSE OF THI S SECTION, INASMUCH AS SUB-SECTION (10) ITSELF MANDATES THAT HOUSING PROJE CT IS TO BE APPROVED BY A LOCAL AUTHORITY AS SUCH AN APPROVAL IS A NECESSAR Y CONDITION FOR CLAIMING THE DEDUCTION UNDER THIS PROVISION. WHEN T HE LOCAL AUTHORITY HAS ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 9 APPROVED A HOUSING PROJECT, WHETHER 'RESIDENTIAL' O R 'RESIDENTIAL CUM COMMERCIAL' THE ASSESSEE IS ENTITLED TO A DEDUCTION ON THE ENTIRE PROFIT INCLUDING THE COMMERCIAL ESTABLISHMENTS PORTION. [P ARA 5] BEFORE 1-4-2005, THE LEGAL POSITION WAS THAT ONCE THE PROJECT IS SANCTIONED BY THE LOCAL AUTHORITY AS 'HOUSING PROJE CT', THE EXTENT OF AREA SANCTIONED FOR SHOPS AND COMMERCIAL ESTABLISHMENTS IN THE SAID HOUSING PROJECT WAS IMMATERIAL AND HAD NO BEARING. THUS, IR RESPECTIVE OF THE SAID AREA WHERE SHOPS AND COMMERCIAL ESTABLISHMENTS WERE PERMITTED BY THE LOCAL AUTHORITY IN A HOUSING PROJECT, IT WAS STILL TREATED AS HOUSING PROJECT AND FURTHER THAT WHILE GRANTING 100 PER CENT DEDUCT IONS, THE AREA COVERED BY SHOPS AND COMMERCIAL ESTABLISHMENTS WAS ALSO INC LUDIBLE. THIS POSITION HAS CHANGED WITH THE INSERTION OF CLAUSE ( D) TO SUB-SECTION (10). AS PER THE AMENDMENT CARRIED OUT AND MADE EFFECTIVE FROM 1-4-2005, EVEN IF THE LOCAL AUTHORITY HAD SANCTIONED LARGER AREA F OR SHOPS AND COMMERCIAL ESTABLISHMENT, THE BENEFIT OF SECTION 80 -IB(10) WOULD NOT BE ADMISSIBLE TO THESE ASSES SEES/DEVELOPERS IN CASE T HE AREA UTILISED FOR SHOPS AND COMMERCIAL ESTABLISHMENT EXCEEDED 5 PER C ENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FE ET, WHICHEVER IS LESS. [PARA 6] AS ALREADY POINTED OUT, THE PARTIES ARE AD IDEM T HAT THE AMENDMENT IS PROSPECTIVE IN NATURE AND, THEREFORE, IT OPERATES F ROM 1-4-2005. IT HAS ALSO BEEN MENTIONED THAT IN THE INSTANT APPEALS, ALL THE SE ASSESSEES HAD GOT THE HOUSING PROJECTS SANCTIONED PRIOR TO 1-4-2005 AND T HE CONSTRUCTION OF THE SAID HOUSING PROJECT ALSO STARTED BEFORE 1-4-2005. ALL OTHER CONDITIONS MENTIONED NAMELY THE DATE BY WHICH APPROVAL WAS TO BE GIVEN AND THE DATES BY WHICH THE PROJECTS WERE TO BE COMPLETED AS ON THE DATE WHEN THE PROJECT WAS SANCTIONED, ARE ALSO MET BY THE ASSESSE ES. PRIOR TO 1-4-2005, THE DEVELOPERS/ASSESSEES WHO H AD GOT THEIR PROJECTS SANCTIONED FROM THE LOCAL AUTHORITIES AS 'HOUSING P ROJECTS', EVEN WITH COMMERCIAL USER, THOUGH LIMITED TO THE EXTENT PERMI TTED UNDER THE DC RULES, WERE CONVINCED THAT THEY WOULD BE GETTING TH E BENEFIT OF 100 PER CENT DEDUCTION OF THEIR INCOME FROM SUCH PROJECTS U NDER SECTION 80-1B. THEIR PROJECTS WERE SANCTIONED MUCH BEFORE 1-4-2005 . AS PER THE PERMISSIBLE COMMERCIAL USER ON WHICH THE PROJECT WA S SANCTIONED, THEY STARTED THE PROJECTS AND THE DATE OF COMMENCING SUC H PROJECTS IS ALSO BEFORE 1-4- 2005. ALL THESE ASSESSEES WERE MADE KNO WN OF THE PROVISION BY WHICH THESE PROJECTS ARE TO BE COMPLETED AS THOSE D ATES HAVE BEEN SPECIFIED FROM TIME TO TIME BY SUCCESSIVE FINANCE A CTS IN THE SAME PROVISION UNDER SECTION 80-1B. IN INSTANT CASES, CO MPLETION DATES WERE AFTER 1-4-2005. ONCE THEY ARRANGE THEIR AFFAIRS IN THIS MANNER, THE REVENUE ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 10 CANNOT DENY THE BENEFIT OF THIS SECTION APPLYING TH E PRINCIPLE OF RETROACTIVITY EVEN WHEN THE PROVISION HAS NO RETROS PECTIVITY. WITH THE AFORESAID PLANNING AS PER THE LAW PREVAILING PRIOR TO 1-4-2005, THESE ASSESSEES ACTED AND ACQUIRED VESTED RIGHT THEREBY W HICH CANNOT BE TAKEN AWAY. IT IS LUDICROUS ON THE PART OF THE REVENUE AU THORITIES TO EXPECT THE ASSES SEES TO DO SOMETHING WHICH IS ALMOST IMPOSSIB LE. [PARA 12] A RIGHT CLAIMED BY AN ASSESSEE UNDER THE LAW IN F ORCE IN A PARTICULAR ASSESSMENT YEAR IS ORDINARILY AVAILABLE ONLY IN REL ATION TO A PROCEEDING PERTAINING TO THAT YEAR. THUS, IT CLEARLY FOLLOWS T HAT THOUGH NORMALLY THE LAW WHICH IS IN FORCE IN THE ASSESSMENT YEAR WOULD PREVAIL, BUT THIS IS NOT AN ABSOLUTE PRINCIPLE AS THE COURT ITSELF CARVED OU T EXCEPTIONS THERETO BY MAKING IT CLEAR THAT SUCH EXCEPTION CAN BE EITHER E XPRESS OR IMPLIED BY NECESSARY IMPLICATION. EVEN THE PRINCIPLE WHICH IS MENTIONED IS QUALIFIED WITH THE WORDS 'ORDINARILY AVAILABLE'. [PARA 14] ON EXAMINING THE SCHEME OF SUB-SECTION (10) OF SE CTION 80-IB, ITS HISTORICAL TURN AROUND BY AMENDMENTS FROM TIME TO T IME AND KEEPING IN VIEW OF THE REAL PURPOSE BEHIND SUCH A PROVISION, I N THE PECULIAR SCENARIO AS PROJECTED IN THIS PROVISION, THE AFORESAID CARDI NAL PRINCIPLE OF TAX LAW IS NOT TO BE APPLIED AS, BY NECESSARY IMPLICATION, APPLICATION THEREOF STANDS EXCLUDED. WITH EFFECT FROM 1-4-2001, SECTION 80-IB(10) STIPULATED THAT ANY HOUSING PROJECT APPROVED BY THE LOCAL AUTH ORITY BEFORE 31-3-2001 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 B EFORE 31-3-2003; (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 HO USING PROJECT WAS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WI THIN 25 KMS. FROM THE MUNICIPAL LIMITS OF THESE CITIES, AND A MAXIMUM BUI LT-UP AREA OF 1500 SQ.FT. AT ANY OTHER PLACE. THEREFORE, FOR THE FIRST TIME, A STIPULATION WAS ADDED WITH REFERENCE TO THE DATE OF APPROVAL, NAMEL Y, THAT APPROVAL HAD TO BE ACCORDED TO THE HOUSING PROJECT BY THE LOCAL AUT HORITY BEFORE 31-3- 2001. BEFORE THIS AMENDMENT THERE WAS NO DATE PRESC RIBED FOR THE APPROVAL BEING GRANTED BY THE LOCAL AUTHORITY TO TH E HOUSING PROJECT. PRIOR TO THIS AMENDMENT, AS LONG AS THE DEVELOPMENT/CONST RUCTION COMMENCED ON OR AFTER 1-10-1998 AND WAS COMPLETED BEFORE 31-3 - 2001, THE ASSESSEE WAS ENTITLED TO THE DEDUCTION. ALSO BY THIS AMENDME NT, THE DATE OF COMPLETION WAS CHANGED FROM 31-3-2001 TO 31-3-2003. EVERYTHING ELSE REMAINED UNTOUCHED. THEREAFTER, BY FINANCE ACT, 200 3, FURTHER AMENDMENTS WERE MADE TO SECTION 80-IB(10). [PARA 15 ] ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 11 NOW THE ONLY CHANGES THAT WERE BROUGHT ABOUT WERE THAT WITH EFFECT FROM 1-4-2002: (I) THE HOUSING PROJECT HAD TO BE APPROVE D BEFORE 31-3-2005; AND (II) THERE WAS NO TIME LIMIT PRESCRIBED FOR COM PLETION OF THE SAID PROJECT. THOUGH THESE CHANGES WERE BROUGHT ABOUT BY THE FINANCE ACT, 2003, THE LEGISLATURE THOUGHT IT FIT THAT THESE CHA NGES BE DEEMED TO HAVE BEEN BROUGHT INTO EFFECT FROM 1-4-2002. ALL THE REM AINING PROVISIONS OF SECTION 80- IB( 1 0) REMAINED UNCHANGED. [PARA 16] THEREAFTER, SIGNIFICANT AMENDMENT, WAS CARRIED OU T BY FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1-4-2005 WITH WHICH THE LEGISLATURE MADE SUBSTANTIAL CHANGES IN SUB-SECTION (10). SEVERAL NE W CONDITIONS WERE INCORPORATED FOR THE FIRST TIME, INCLUDING THE COND ITION MENTIONED IN CLAUSE( D). THIS CONDITION/RESTRICTION WAS NOT ON T HE STATUTE BOOK EARLIER WHEN ALL THESE PROJECTS WERE SANCTIONED. ANOTHER IM PORTANT AMENDMENT WAS MADE BY THIS ACT TO SUB-SECTION (14) OF SECTION 80- IB WITH EFFECT FROM 1-4-2005 AND CLAUSE (A) WAS INSERTED IN SECTION 80- IB(14) DEFINING THE WORDS 'BUILT-UP AREA' TO MEAN THE INNER MEASUREMENT S OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS, BUT DID NO T INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. [PARAS 1 7&18] HOLDING THAT IN ORDER TO AVAIL THE BENEFIT IN THE ASSESSMENT YEARS AFTER 1- 4-2005, BALCONIES SHOULD BE REMOVED THOUGH THESE WE RE PERMITTED EARLIER WOULD LEAD TO ABSURD RESULTS AS ONE CANNOT EXPECT A N ASSESSEE TO COMPLY WITH A CONDITION THAT WAS NOT A PART OF THE STATUTE WHEN THE HOUSING PROJECT WAS APPROVED. THUS, THE ONLY WAY TO RESOLVE THE ISSUE WOULD BE TO HOLD THAT CLAUSE (D) IS TO BE TREATED AS INEXTRICAB LY LINKED WITH THE APPROVAL AND CONSTRUCTION OF THE HOUSING PROJECT AN D AN ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE SAID CONDITION WH EN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN THE LE GISLATURE, WHEN THE HOUSING PROJECT WAS ACCORDED APPROVAL BY THE LOCAL AUTHORITIES. [PARA 19] FROM THIS PROVISIONS OF SECTION 80-IB(10), IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECT ION 80-IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WA Y OF AN AMENDMENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RE STRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVISION HAS TO BE READ PROS PECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, TH IS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITU TED. THEREFORE, IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 12 TO 1-4-2005 AND COMPLETED BY THE STIPULATED DATE, T HOUGH SUCH STIPULATED DATE IS AFTER 1-4-2005. [PARA 20] THESE ASPECTS ARE DEALT WITH BY VARIOUS HIGH COUR TS ELABORATELY AND CONVINCINGLY IN THEIR JUDGMENTS. THIS VERY ASPECT I S ANSWERED IN THE JUDGMENT DATED 25-7-2014 OF THE BOMBAY HIGH COURT I N IT APPEAL NOS. 201 AND 308 OF2012, WHEREIN, IT HAS BEEN HELD THAT SECTION 80-IB(10) IS PROSPECTIVE IN NATURE AND CAN HAVE NO APPLICATION T O A HOUSING PROJECT THAT IS APPROVED BEFORE 31-3-2005. 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 1-4-2005 OR THAT THE PROFITS WERE OFFERED TO TAX AFTER 1-4-2005 I.E. IN ASSESSMENT YE AR 2005-06 OR THEREAFTER. THE CONDITION/RESTRICTION LAID DOWN IN CLAUSE (D) O F 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 ASSE SSEE. 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 NOTH ING TO DO WITH THE YEAR IN WHICH THE PROFITS ARE BROUGHT TO TAX BY THE ASSE SSEE. [PARA 21] THUS, IN VIEW OF THE AFORESAID DISCUSSION IT IS T O BE CONCLUDED THAT THE JUDGMENTS OF THE HIGH COURTS, WHICH ARE IMPUGNED IN THESE APPEALS HAVE TAKEN CORRECT VIEW THAT THE ASSESSEES WERE ENTITLED TO THE BENEFIT OF SECTION 80-IB(10). [PARA 23]. WE ALSO FIND THAT THE ISSUE IS ALSO SETTLED BY ANOT HER DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEENA DEVELOPERS REPORT ED IN (2015) 66 TAXMANN.COM 353 (SC), WHEREIN IT WAS HELD THAT :- . THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION PROJECTS W HICH WERE APPROVED BY THE MUNICIPAL AUTHORITIES/LOCAL AUTHORITIES AS H OUSING PROJECTS. ON THAT BASIS, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IB(10). HOWEVER, THE INCOME-TAX AUTHORITIES REJECTED THE CLAIM OF DE DUCTION ON THE GROUND THAT THE PROJECTS WERE NOT 'HOUSING PROJECT' INASMU CH AS SOME COMMERCIAL ACTIVITY WAS ALSO UNDERTAKEN IN THOSE PROJECTS. THI S CONTENTION OF THE REVENUE WAS NOT ACCEPTED BY THE TRIBUNAL AS WELL AS THE HIGH COURT. THE HIGH COURT HELD THAT, (A) UPTO 31-3-2005 (SUBJECT T O FULFILLING OTHER CONDITIONS), DEDUCTION UNDER SECTION 80-IB(10) IS A LLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RES IDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER DEVEL OPMENT CONTROL (DC) RULES/ REGULATIONS FRAMED BY THE RESPECTIVE LOCAL A UTHORITY. (B) IN SUCH A ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 13 CASE, WHERE THE COMMERCIAL USER PERMITTED BY THE LO CAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UNDER THE DC RULES/REGULATION , THE DEDUCTION UNDER SECTION 80- IB(1 0) UP TO 31-3-2005 WOULD BE ALLOWA BLE IRRESPECTIVE OF THE FACT THAT THE PROJECT IS APPROVED AS 'HOUSING PROJE CT' OR 'RESIDENTIAL PLUS COMMERCIAL'. (C) IN THE ABSENCE OF ANY PROVISIONS U NDER THE INCOME-TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31-3-2005 DEDUCTION UNDER SECTION 80-IB(10) WOULD BE ALLOWABL E TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10 PER CENT OF THE TOTAL BUIL T-UP AREA OF THE PLOT. (D) SINCE DEDUCTION UNDER SECTION 80-IB(10) IS ON THE P ROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING SECTION 80- IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HAD ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING S ECTION 80-IB(10) DEDUCTION TO A PART OF THE PROJECT, THE COURT WOULD NOT DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BEHALF. (E) CLAUSE (D) INSE RTED TO SECTION 80-IB(10) WITH EFFECT FROM 1-4-2005 IS PROSPECTIVE AND NOT RE TROSPECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1-4-2005. HELD THAT THE COURT IS IN AGREEMENT WITH THE AFORES AID ANSWERS GIVEN BY THE HIGH COURT TO THE VARIOUS ISSUES. IT IS ONLY CL ARIFIED THAT INSOFAR AS ANSWER AT PARA (A) IS CONCERNED, IT WOULD MEAN THOS E PROJECTS WHICH ARE APPROVED BY THE LOCAL AUTHORITIES AS HOUSING PROJEC TS WITH COMMERCIAL ELEMENT THEREIN. THERE WAS MUCH DEBATE ON THE ANSWER GIVEN IN PARA ( B) ABOVE. HOWEVER, ON READING THE DIRECTION IN ITS ENTIRETY AND PARTIC ULARLY THE FIRST SENTENCE THEREOF, IT IS FOUND THAT COMMERCIAL USER WHICH IS PERMITTED IN THE RESIDENTIAL UNITS AND THAT TOO, AS PER DCR. EXAMPLE S GIVEN BY THE ASSESSEE WAS THAT SUCH COMMERCIAL USER TO SOME EXTENT IS PER MITTED TO THE PROFESSIONALS LIKE DOCTORS, CHARTERED ACCOUNTANTS, ADVOCATES, ETC., IN THE DCRS ITSELF. THEREFORE, DIRECTION (B) IS TO BE READ IN THAT CONTEXT WHERE THE PROJECT IS PREDOMINANTLY HOUSING/RESIDENTIAL PROJEC T BUT THE COMMERCIAL ACTIVITY IN THE RESIDENTIAL UNITS IS PERMITTED. RESPECTFULLY FOLLOWING THE AFORESAID JUDGEMENTS OF THE HONBLE SUPREME COURT, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED FOR BOTH THE ASST YEAR S. ITA NOS.1343,1344/K OL/2012 & CO NOS. 95,96/KOL/2012 C-AM M/S. R.D ESTATES & RESOURCES LTD 14 7. SINCE THE ISSUES ARE ADJUDICATED ON MERITS IN F AVOUR OF THE ASSESSEE, THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS NOT PRE SSED. 8. IN THE RESULT, THE APPEALS OF THE REVENUE ARE D ISMISSED AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 11-5 - 2016 1.. THE APPELLANT/DEPARTMENT: THE DCIT, CIR-8, AAY KAR BHAVAN, 5 TH FL, ROOM NO. 8 P-7 CHOWRINGHEE SQ, KOL-69. 2 THE RESPONDENT/ASSESSEE: M/S. R.D ESTATES & RESOU RCES LIMITED 4 MIDDLETON STREET, KOL-71. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( N.V.VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 11-5 -2016 COPY OF THE ORDER FORWARDED TO:-