M/S OPEL SHELTERS, Pune V. ACIT CIR 3, Pune

ITA 219/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49794 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWA SHARMA ABHAY DAMLE
• Assessee Lawyers: S U PATHAK
• Section: 80IB

Judgement Text

JH IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 219/PN/2009 (ASSTT. YEAR 2005 - 06) OPEL SHELTERS PVT. LTD. : APPELLANT 1493/A, SUSHIL PARK, SADASHIV PETH, PUNE 411 030 PAN : NOT AVAILABLE. V/S. ACIT, CIRCLE 3, PUNE : RESPONDENT ITA NO. 17 /PN/2009 (ASSTT. YEAR 2005 - 06) D.S. KULKARNI & ASSOCIATES : APPELLANT 1187/60, J.M. ROAD, SHIVAJINAGAR, PUNE - 411005 PAN :NOT AVAILABLE V/S. INCOME TAX OFFIC ER, WARD 3(2), PUNE : RESPONDENT APPELLANT BY : SHRI S.U. PATHAK RESPONDENT BY : S/ SHRI HARESHWA SHARMA/ ABHAY DAMLE ORDER P ER I.C. SUDHIR, J.M. IN THESE APPEALS, THE ASSESSEES HAVE QUESTIONED FIRST APPELLATE ORDER ON COMMON GROUNDS. THESE APPEALS HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF VIDE A CONSOLIDATED ORDER. 2. THE ISSUE RAISED IN THE GROUNDS IS AS TO WHETHER THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CLAIMED DEDUCTION U/S. 80 IB (10) OF THE I.T. ACT 1961. ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 2 3. THE APPEALLANT HAS SPECIFICALLY QUESTIONED THE ACTION OF THE LD CIT(A) IN HOLDING THAT THE TERM HOUSING PROJECT FOR THE PURPOSE OF SEC. 80IB(10) MEANT PURELY A RESIDENTIAL PROJECT AND SECONDLY, IN HOLDING THAT THE AMENDED PROVISIONS OF SEC . 80 IB(10) MADE APPLICABLE W.E.F. 1.4.2005 IS APPLICABLE IN THE CASE OF THE ASSESSEE. 4. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GONE THROUGH MATERIAL AVAILABLE ON RECOR D AND THE DECISIONS RELIED UPON BY THE PARTIES . 5. THE FACTS IN BRIEF ARE THAT IN THE CAE OF OPEN SHELTERS PVT. LTD., THE A.O DENIED THE CLAIMED DEDUCTION U/S. 80 IB(10) OF RS. 22,07,049/ - MAINLY ON THE BASIS THAT THE PROJECT WHICH CONTAINED SHOP/COMMERC IAL ESTABLISHMENT WA S OUTSIDE THE PURVIEW OF THE PROVISIONS OF SEC. 80 IB(10) AND THE HOUSING PROJECT W H ICH INCLUDED THE SHOPS/COMMERCIAL ESTABLISHMENTS DID NOT REMAIN A HOUSING PROJECT . IT WAS HELD BY HIM THAT THE LEGISLATURE HAD EXTENDED THE BENEF IT OF COMMERCIAL CONSTRUCTION WHICH WAS AVAILABLE TO A HOUSING PROJECT ONLY IN THE SUBSEQUENT YEAR AND NOT PRIOR TO THE AMENDMENT IN SECTION 80IB(10) . IN THIS CASE, THE A.O NOTED THAT THE ASSESSEE HAD CONSTRUCTED 66 SHOPS BEING COMMERCIAL PREMISES INCLUDE D IN THE PROJECT ADMEASURING 9404 SQ. FT. AS PER THE ASSESSEE, THE COMMERCIAL CONSTRUCTION IS ABOUT 11.88% OF THE BUILT UP AREA WHICH AS PER THE A.O IS ABOUT 12.41%. THE LD CIT(A) HAS UPHELD THE ACTION OF THE A.O WITH THIS OBSERVATION THAT THE COMMERCIAL CONSTRUCTION IS MORE THAN 5% O R 2000 SQ.FT. WHICH EVER IS LESS AS PER THE AMENDED PROVISIONS OF SEC. 80IB (10) W.E.F. 1.4.2005. THE LD CIT(A) HAS HELD THAT IN A.Y. 2005 - 06, THE SAID AMENDED PROVISION IS VERY MUCH IN OPERATION. IN THIS ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 3 REGARD, THE LD CIT(A) HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE JUTE INDUSTRIES V/S. CIT, 120 ITR 921(SC), FOLLOWED BY SEVERAL HIGH COURTS. 6. IN THE CASE OF D.S. KULKARNI & ASSOCIATES, THE LD CIT(A) HAS UPHELD THE DISALLOWANCE OF DEDUCTION U/S. 80 IB(10) CLAIMED AT RS.3,67,18,086/ - IN RESPECT OF THE PROFITS EARNED BY THE ASSESSEE FROM THE HOUSING PROJECT NAMELY D.S.K. VISWA IIND. THE A.O FOUND THAT THERE WERE 32 SHOPS IN THE PROJECT ADMEASURING 5960 SQ.FT. ACCORDING TO THE A.O , THE WORDS HOUSING PROJECT MEAN PURELY RESIDENTIAL PROJECT WHICH CANNOT INCLUDE THE AREA FOR COMMERCIAL ESTABLISHMENTS/SHOPS. THE LEGISLATURE, AMENDED THE SECTION W.E.F. 1.4.2005 WHEREIN IT IS PROVIDED THAT IN THE HOUSING PROJECT, THE BUILT UP AREA OF THE COMMERCIAL PREMISES SHOULD NOT EXCEED 2000 SQ.FT. OR 5% OF THE TOTAL BUILT UP AREA, WHICHEVER IS LESS. THE LD CIT(A) HAS UPHELD THE ACTION OF THE A.O. WHICH HAS BEEN QUESTIONED BEFORE US. 7. THE CONTENTIONS RAISED BEFORE THE AUTHORITIES BELOW HAVE BEEN REITERATED BY THE LD A.R. BEFORE US. THE MAIN THRUST OF HIS ARGUMENT REMAINED THAT THE PROJECT IN QUESTION WAS COMMENCED PRIOR TO THE AMENDMENT AND THUS, THE QUESTION OF APPLICATION OF THE AMENDED PROVISIONS IS NOT JUSTIFIED. HE SUBMITTED THAT PR IOR TO THE SAID AMENDMENT IN SECTION 80 IB(10) W.E.F. 1.4.2005, THERE WAS NO RESTRICTION ON THE A REA FOR COMMERCIAL PURPSES. BY FINANCE ACT 2004, THE LEGISLATURE PROVIDED A CEILING OF 2000 SQ.FT. OR 5% OF THE TOTAL AREA WHICHEVER IS LESS. HENCE, IF A PR OJECT WAS COMMENCED PRIOR TO A.Y. 2005 - 06, THERE IS NO LIMIT PRESCRIBED AND ACCORDINGLY, THE ASSESSEES PROJECT HAD SATISFIED ALL THE CONDITIONS LAID DOWN IN SEC. 80 IB (10). IT WAS SUBMITTED THAT SEC. 80IB(10) STATES THAT THE PROFIT ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 4 DERIVED FROM THE H OUSING PROJECT IS ENTITLED TO DEDUCTION. HOWEVER, THE WORDS HOUSING PROJECT IS NOT DEFINED IN THE SECTION. THEREFORE, THE DEFINITION HAS TO BE CONSIDERED IN ITS GENERAL MEANING AND AS UNDERSTOOD IN COMMON PARLANCE. IT WAS SUBMITTED THAT IN REPLY TO LETTER DT. 1 ST JANUARY 2001 OF MAHARASHTRA CHAM B ER OF HOUSING INDUSTRY, THE CBDT VIDE ITS CLARIFICATIONS DT. 4 TH MAY 2001, ON THE DEFINITION, MADE IT CLEAR THAT IN HOUSING PROJECT CERTAIN SHOPPING OR COMMERCIAL AREA WOULD BE MANDATORY. THE CBDT IN THAT LETTER CLARIFIED THAT ANY PROJECT WHICH IS APPROVED AS A HOUSING PROJECT BY LOCAL AUTHORITY WOULD BE ELIGIBLE. THE LD. A.R. REFERRED PAGE NO. 17 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE IN THE CASE OF OPEL SHELTERS SHOWING THAT THE PROJECT COMME NCED ON 23.2.2001 AND ALSO REFERRED PAGE NO. 21 THEREOF TO SUPPORT H IS SUBMISSION THAT THE PROJECT WAS COMPLETED BY 14.5.2004. LIKEWISE, HE REFERRED PAGE NO. 41 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE IN THE CASE OF D.S. KULKARNI & ASSOCIATES TO SUPPORT HIS ARGUMENT THAT THE PROJECT WAS STARTED O N 12.4.2001 AND COMPLETED IN NOVEMBER 2003. 8. THE LD. A.R. SUBMITTED THAT WHEN THE ASSESEES STARTED THE PROJECT, THE OLD PROVISION S OF SECTION 80 IB(10) WERE ON THE STATUTE IN WHICH THERE WAS NO CE ILING ON THE PORTION OF THE COMMERCIAL AREA. THE PROJECTS IN BOTH THE C A SES WERE HOUSING PROJECTS AND THE SPECIAL BENCH IN THE CASE OF BRAM H A ASSOCIATES 119 ITD 255 (SB) ( PUNE ) , HAS HELD THAT THE HOUSING PROJECT CAN INCLUDE THE COMMERCIAL PORTION ALONG WI TH THE RESIDENTIAL PORTION. HENCE, IN VIEW OF THE DECISION OF THE SPECIAL BENCH, THE ASSESSEES ARE ENTITLED TO DEDUCTION U/S. 80 IB (10) . THE LD. AR POINTED OUT THAT THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES, HAS N OW BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT IN THE APPEALS PREFERRED BY THE REVENUE VIDE ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 5 ORDER DATED 22.2.2011 IN ITA NO. 1194 OF 2010. A COPY THEREOF HAS BEEN SUPPLIED. 9. ON THE ISSUE AS TO WHETHER THE AMENDED SECTION 80IB (10) IN WHICH CLAUSE ( D ) IS INSERTED TO THE EFFECT THAT THE BUILT UP AREA OF THE SHOPS AND COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJECT WOULD NOT EXCEED 2000 SQ. FT. OR 5% WHICHEVER IS LESS, WILL ALSO APPLY TO SUCH CASE WHEREIN THE CONSTRUCTION HAS STARTED AND COMPLETED BEFORE 1.4.2005, THE LD. A.R.POINTED O UT THAT THE I SSUE IS DIRECTLY COVERED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V. V/S. DCIT, ITA NO. 5416/MUM/2009 (A.Y. 2006 - 07) DT. 30 TH MARCH 2010 (COPY SUPPLIED). HE SU BMITTED THAT ON AN IDENTICAL ISSUE IN THE CA S E OF HIRANANDANI AKRUTI J.V. (SUPRA), THE TRIBUNAL HAS HELD THAT THE AMENDED SECTION WOULD APPLY TO THE PROJECTS STARTED AFTER 1.4.2005. THE BASIC REASON GIVEN BY THE BENCH IS THAT IF THE PROJECT IS COMMENCED EARLIER, THE ASSESSEE HAD NOT KNOWN THAT THE LEGISLATURE WOULD PUT SUCH A RESTRICTION IN FUTURE . THE TRIBUNAL IN THIS REGARD HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V/S. SHAH SADIQ AND SONS, 166 ITR 102 (SC) FOR THE PROPOSITION THAT ACCRUED RIGHTS ARE SAVED UNLESS THEY ARE EXPRESSLY TAKEN BY REPEALING STATUTE EITHER EXPRESSLY OR BY IMPLICATION. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V. V/S. DCIT (SUPRA) HAS ALSO CONSIDERED THE SPECIAL BE NCH DECISION IN THE CASE OF BRAHMA ASSOCIATES NOW UPHELD BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT VIDE ITS ORDER DATED 22.2.2011 (SUPRA) . THUS, THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V .(SUPRA) AND THERE IS NO CONTRARY JUDGMENT ON THIS ISSUE, SUBMITTED THE LD. A.R. THE LD. A.R SUBMITTED FURTHER THAT THIS VIEW HAS ALSO BEEN TAKEN BY ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 6 MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANISATION V/S. I.T.O, 115 TTJ 485 (MUM). THE L D. A.R. SUBMITTED FURTHER THAT ALTHOUGH THE NEW SECTION 80IB (10) WAS SUBSTITUTED IN PLACE OF OLD SECTION, NOWHERE IT WAS IMPLIED THAT THE LEGISLATURE WANTED TO RESTRICT THE DEDUCTION OR CURTAIL IT. ON THE OTHER HAND, IN THE EXPLANATORY NOTES AND THE NOT ES TO THE CLAUSES INTRODUCED TO THE SECTION , IT WAS CLEARLY STATED THEREIN THAT THE LEGISLATURE DECIED THAT THE CONCESSION WOULD BE LIBERALIZED. IN THIS REGARD, THE LD. A.R REFERRED PAGE NOS. 1 TO 3 OF THE PAPER BOOK (VOLUME 2) FILED IN THE CASE OF OP EL SHELTERS. HE SUBMITTED THAT IN THE PRESENT CASES, THE PROJECTS HAVE BEEN COMPLETED PRIOR TO THE AMENDMENT AND HENCE IT WAS NOT IN THE HANDS OF THE ASSESSEES TO ADHERE TO THE CONDITION IN CLAUSE (D) OF SECTION 80IB(10) WH I CH RESTRICTS THE COMMERCIAL AR EA IN A PROJECT. HENCE, IT WAS NOT POSSIBLE FOR THE ASSESSEE AND IT WAS BEYOND ITS POWER AND CONTROL TO COMPLY WITH THE NEW AMENDMENT . T HE QUESTION OF INSISTING THAT THE CLAUSE APP L IES IN TH E S E CASE S THUS DOES NOT ARISE. IN THIS REGARD, HE PLACED RELIAN CE ON THE FOLLOWING CASES : 1) CIT V /S. M/S. PAPIL I ON INVESTMENTS PVT. LTD., REPORTED IN 2009 [IT1] GJX 0904 (BOM.) 2) CIT V/S. TEJA SINGH, 35 ITR 408 (S.C) 3) K.P. VERGHESE V/S. ITO , 131 ITR 597 (SC) 10. THE LD. A.R. SUBMITTED THAT GENERALLY ANY AM ENDMENT WHICH IS INTRODUCED COMES INTO EFFECT FROM 1 ST APRIL, AS MENTIONED THERE AGAINST I.E., THE AMENDED SECTION 80IB(10) IS MENTIONED TO BE APPCABLE WITH EFFECT FROM 1.4.2005, BUT THIS PRINCIPLE IS NOT SACROSANCT. DEPENDING UPON THE ISSUE, THE COURTS HA VE MADE EXCEPTION TO THE ABOVE RULE. HE RELIED UPON THE FOLLOWING DECISIONS IN SUPPORT : ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 7 1) CIT V/S. ASEAN TECH LTD., 240 ITR 396 (KER.) 2) KAIMABETTA ESTATE P. LTD V/S. ASSTT. COMMISSIONER OF AGRICULTURAL INCOME, 264 ITR 285 (KAR.) THE LD. A.R. S UBMITT ED THAT THE PROVISION S OF SEC. 80IB(10) HAVE BEEN EXPLAINED . I T WAS POINTED OUT THAT THE OLD PROVISION WAS INTRODUCED W.E.F. 1.4.2002, IT WAS MENTIONED THEREIN THAT THE DEDUCTION WOULD BE APPLICABLE EVEN IF, THE PROJECT IS APPROVED BEFORE 31.3.2005. IN T HE OLD SECTION, THERE WAS NO LIMIT PRESCRIBED ON THE COMMERCIAL AREA AT ALL. THE DEDUCTION WAS ELIGIB LE IN THE CASE OF A HOUSING PROJECT AND SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAM H A ASSOCIATES (SUPRA) NOW UPHELD BY HONBLE BOMBAY HIGH COURT, VIDE ITS ORDER DATED 22.2.2011 (SUPRA), HAS HELD THA THE TERM HOUSING PROJECT COULD MEAN RESIDENTIAL AND COMMERCIAL PROJECT AND NOT ONLY A PURELY RESIDENTIAL PROJECT. HENCE, THE ASSESSEES WERE GIVEN AN ASSURANCE BY THE LEGISLATURE THAT THE PROFITS F ROM THE PROJECT WOULD BE ELIGIBLE FOR DEDUCTION EVEN IF, THE PROJECT CONTAINED COMMERCIAL PORTION AND THE APPROVAL IS OBTAINED BEFORE 1.4.2005. THUS, WHEN THE ASSESSEES COMPLIED WITH THE ABOVE CONDITIONS, THE DEDUCTION HAS TO BE GIVEN ON THE BASIS OF PROMI SSORY ESTOPPAL ALSO. IN THIS REGARD, HE CITED FOLLOWING DECISIONS : 1) MOTILAL PADAMPAT SUGAR MILLS CO. LTD. V/S.STATE OF U.P., 118 ITR 326 (SC) . 2) ESTATE OF PUNJAB V/S. NESTLE INDIA LTD., 269 ITR 97 (SC) THE LD A.R. SUBMITTED THAT THE NEW SECTION 80 IB(10) IS INTRODUCED W.E.F.1.4.2005 BUT THE SCHEME IS THE SAME AS IN THE OLD SECTION. THERE IS NO INDICATION THAT THE LEGISLATURE DECIDED TO WITHDRAW THE BENEFITS AS PER THE OLD SECTION. JUST BECAUSE A NEW SECTION IS ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 8 INSERTED, IT DOES NOT MEAN THAT THE O LD SECTION IS REPEALED. EVEN IN THIS CONTEXT THAT THE GENERAL SAVING OF RIGHTS ACCRUED HAS TO BE INFERRED FROM THE WORDING OF THE NEW SECTION. IN THIS CASE, THE NEW SECTION IS ON THE SAME LINES AS THE OLD SECTION AND HENCE THE RIGHTS ACCRUED TO THE ASSES SEE FOR THE DEDUCTION U/S. 80 IB (10) CANNOT BE DIVESTED IN THE NEW SECTION. 11. THE LD. A.R. SUBMITTED FURTHER ONE MORE CONTENTION WHICH HAS BEEN GIVEN IMPORTANCE BY MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V. (SUPRA) IS THAT I F THE ASSESSEE HAD FOLLOWED THE WIP (WORK IN PROGRESS) METHOD, THE INCOME FROM THE PROJECT WOULD HAVE BEEN TAXABLE IN THE EARLIER YEARS AS THE PROJECT WAS COM PLETED EARLIER TO THE AMENDMENT AND IN THAT CASE, AS PER THE OLD PROVSION, THE ASSESSEE WOULD HAVE BEEN ELIGIBLE FOR THE DEDUCTION. BUT, JUST BECAUSE THE ASSESSEE HAS FOLLOWED THE PROJECT COMPLETION METHOD IN THESE CASES, THE DEDUCTION IS BEING DENIED BECAUSE IT FALLS IN A.Y. 2005 - 06. ON THESE BASIS, THE MUMBAI BENCH OF THE TRIBUNAL IN THE SAID CASE OF HIRANANDANI AKRUTI J.V. (SUPRA) HAS HELD THAT THE AMENDMENT SHOULD BE APPLICABLE TO THE PROJECTS WHICH ARE STARTED AFTER 1.4.2005. 12. AN ALTERNATIVE ARGUMENT WAS ALSO ADVANCED WITHOUT PREJUDICE TO THE ABOVE SUBMISSION THA T ON THE PORTION OF C OMMERCIAL AREA EXCEEDING LIMIT UNDER CLAUSE (D), THE DEDUCTION U/S. 80 IB(10) MAY NOT BE GRANTED BUT ON THE BALANCE PROJECT, THE DEDUCTION SHOULD BE ALLOWED. THE LD. A.R. PLACED RELIANCE ON THE DECISION OF KOLKATTA BENCH OF THE TRIBUNAL IN THE CAE OF BEN GAL AMBUJA HOUSING DEVELOPMENT LTD., ITA NO. 1595/KOL/2005. HE ALSO POINTED OUT THAT THE APPEAL PREFERRED AGAINST THAT ORDER OF THE TRIBUNAL BEFORE THE ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 9 HONBLE HIGH COURT HAS ALSO BEEN REJECTED. THE LD. A.R ALSO CITED FOLLOWING DECISIONS : 1) ITO V /S. AIR DEVELOPERS, 122 ITD 125 (NAG.) 2) ACIT V/S. SETH DEVELOPERS PVT. LTD., 33 SOT 277 (MUM) 3) KASTURI CONSTRUCTION PVT. LTD., ITA NO. 1370/PN/2007 13. ON THE OTHER HAND, THE LD. D.R. TRIED TO JUSTIFY THE ORDERS OF THE LOWER AUTHORITIES ON THE ISSUE. HE CONTENDED THAT THE OLD SECTION IS REPEALED AND THEREFORE, THE QUESTION OF ANY VESTED RIGHT DOES NOT ARISE. HE RELIED UPON THE FOLLOWING DECISIONS : 1) MADURAI DISTRICT CENTRAL CO - OPERATIVE BANK LTD. V/S. THIRD INCOME - TAX OFFICER, 101 ITR 24 (SC) 2) RELIANCE JUTE & INDU STRIES LTD. V/S. CIT, 120 ITR 921(SC) 14. HE ALSO RELIED UPON THE FOLLOWING DECISIONS HOLDING THAT THE LAW APPLICABLE AS ON 1 ST APRIL SHOULD BE APPLIED : 1) CIT V/S. ISTHMIAN STEAMSHIP LINES, 20 ITR 572 2) KARIMTHARUVI TEA ESTATE LTD. V/S. STATE OF KERALA, 60 ITR 262 (SC) 3) RELIANCE JUTE & INDUSTRIES LTD., V/S. CIT , 120 ITR 921 (SC) THE LD. D.R. SUBMITTED FURTHER THAT THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) HAS DECIDED THE ISSUE THAT THE AMENDED SECTION APPLIES FROM A.Y. 200 5 - 06 . THE LD. D .R. SUBMITTED FURTHER THAT IN THE HIRANANDANI AKRUTI J.V. CASE ( SUPRA ) , THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAM H A ASSOCIATES (SUPRA) HAS NOT BEEN CONSIDERED, HENCE IT SHOULD NOT BE FOLLOWED. HE SUBMITTED THAT THE ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 10 AMENDED PROVI SIONS REFER TO ALL PROJECTS APPROVED BEFORE 31.3.2007 AND DOES NOT DIFFERENTIATE BETWEEN HOUSING PROJECT APPROVED BEFORE 2004 OR 2003. HE REFERRED CLAUSE (A) TO SUB - SECTION (10) TO SCTION 80IB OF THE ACT AND SUBMITTED THAT HAD THE LEGISLATURE WANTED TO MA KE A DISTINCTION BETWEEN PROJECTS COMMENCED PRIOR TO 1.4.2005 AND COMPLETED AFTER THE AMENDMENT BY INTRODUCING CLAUSE (D) TO SEC. 80IB(10) THEN THE LEGISLATURE WOULD HAVE SAID SO IN CLEAR TERMS. 15. IN REJOINDER, THE LD. A.R. SUBMITTED THAT IN THE CASE O F HIRANANDANI AKRUTI J.V. (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS DULY CONSIDERED THE SPECIAL BENCH DECISION IN THE CASE OF BRAM H A ASSOCIATES (SUPRA), HENCE SUBMISSION OF THE LD. D.R. IN THIS REGARD IS NOT CORRECT. ON THE QUESTION OF OLD SECTION BEI NG REPEALED AND THE NEW PROVISION SUBSTITUTED, THE LD. A.R. SUBMITTED THAT FROM THE LANGUAGE OF THE PROVISION, IT APPEARS THAT THE SAME SCHEME IS RETAINED . T HE DEDUCTION IS CONTINUTED AND EXTENDED TO THE NEW PROJECT BY EXTENDING THE TIME LIMIT FOR APPROV AL OF THE PROJECTS ITSELF INDICATES THAT THERE WAS NO INTENTION TO WITHDRAW OR CANCEL THE DEDUCTION U/S. 80 IB(10) AND HENCE THE ACCRUED RIGHT OF THE ASSESSEE UNDER THE OLD PROVISION WHEN THE PROJECT WAS COMMENCED HAD TO BE PROTECTED. THE QUESTION IS AS TO HOW TO APPLY THE PROVISION WHEN THE ASSESSEE HAD ALREADY F I NISHED THE PROJECT BEFORE THE PROVISION CAME INTO FORCE. IT IS IN THIS CONTEXT ONLY, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V. (SUPRA) HAS CLEARLY HELD THAT THE PR OVISION SHOULD BE APPLICABLE TO THE PROJECTS STARTED ON OR AFTER 1.4.2005. THUS, TO THE ABOVE GENERAL RULE, THERE ARE EXCEPTIONS MADE AS IN THE CASE OF ASEAN TECH (SUPRA). ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 11 16. ON THE CONTENTION OF THE LD. D.R., THAT SPECIAL BENCH IN THE CASE OF BRAM H A ASSOCIATES HAD DECIDED THIS ISSUE BY HOLDING THAT THE AMENDED PROVISION WILL APPLY FROM A.Y. 2005 - 06, THE LD. A.R SUBMITTED THAT FIRST OF ALL , THIS ISSUE WAS NOT THERE BEFORE THE SPECIAL BENCH AT ALL. THE ISSUE WAS AS TO WHETHER THIS MENDMENT IS RETROSPE CTIVE AND IT WAS IN THAT CONTEXT, THEY HELD THAT IT WAS NOT RETROSPECTIVE. THERE IS NO DISCUSSION ON THIS ISSUE WHICH IS COVERED IN HIRANANDANI AKRUTI J.V. (SUPRA) CASE, THAT IS AS TO WHETHER THE AMENDED PROVISION APPLIES TO PROJECTS APPROVED BEFORE 1.4. 2005 OR FOR ALL THE ASSESSMENTS BEFORE AND AFTER A.Y. 200 4 - 0 5 . HENCE, THE SPECIAL BENCH DECISION CANNOT BE CONSIDERERED TO BE LAYING DOWN THIS PROPOSITION. THE LD. A.R. PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NODI E XPORTS, 117 TTJ 913 (DEL) HOLDING THAT IF THE TRIBUNAL HAS DISCUSSED THE ISSUE AS IT WAS NOT INVOLVED IN APPEAL, THE DECISION OF THE TRIBUNAL CANNOT BE TAKEN TO BE BINDING. HE SUBMITTED THAT THERE IS NO CONTRARY JUDGMENT AND IN VIEW OF THE HONBLE SUP REME COURT JUDGEMENT IN THE CASE OF UNION OF INDIA AND OTHERS V. RAGUBIR SON, 178 ITR 548 (SC) AND OF HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT V/S. GOODLASS NEROLAC PAINTS LTD., 188 ITR 1 (BOM) THAT DECISION IN THE CASE OF HIRANANDANI AKRUTI J.V. MUST BE FOLLOWED. THE LD. A.R. ALSO SUBMITTED THAT DEDUCTION ALLOWED U/S. 80 IB(10) IS AN INCENTIVE PROVISION AND HENCE IT HAS TO BE INTERPRETED LIBERALLY AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V/S. CIT, 196 ITR 188 ( SC). 17. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THERE IS NO DISPUTE ON FACTS. THE ONLY ISSUE FOR OUR ADJUDICATION IS AS TO WHETHER AMENDED PROVISIONS OF SECTION 80IB (10) CAME W.E.F. 1.4.2005 IS ALSO APPLICABLE ON THE PROJECT ALREADY APPROVED AN D STARTED IN EARLIER YEARS ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 12 AS PER THE THEN PREVAILING LAW. . THE CASE OF THE ASSESSEE REMAINED THAT THE PROJECT IN THE CASE OF D.S. KULKARNI & ASSOCIATES STARTED IN APRIL 2001 AND COMPLETED IN NOVEMBER 2003. SIMILARLY, THE PROJECT IN THE CASE OF OPEL SHE LTERS COMMENCED ON 23.2.2001 AND WAS COMPLETED BY 21.6.2002. THE SUBMISSION OF LD. A.R. ALSO REMAINED THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS FULLY COVERED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CA S E OF HIRANANDANI AKRUTI J.V. V/S. DCIT (SUPRA). THE OBJECTION OF THE LD. D.R. IN THIS REGARD REMAINED THAT THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) HAD DECIDED THE ISSUE BY HOLDING THAT THE AMENDED PROVISION WILL APPLY FROM A.Y. 2005 - 06. IT WAS ALSO CONTENDED BY THE LD. D.R. THAT CO - ORDINATE BENCH DECISION IN THE CASE OF HIRANANDANI AKRUTI J.V. (SUPRA) IS NOT BINDING ON THIS BENCH SINCE THE CO - ORDINATE BENCH HAS NOT CONSIDERED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAM H A ASSOCIATES (SUPRA). WE, HAVING GONE THROUGH THESE HEAVILY RELIED UPON DECISIONS, FIND THAT THE ISSUE RAISED IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) BEFORE THE SPECIAL BENCH WAS AS TO WHETHER AMENDMENT IN SECTION 80IB (10) IS RETROSPECTIVE IN OPERATION AND IT WAS IN THAT CONTEXT, THEY HEL D THAT IT WAS NOT RETROSPECTIVE. THUS, DISCUSSION ON THE ISSUE WHICH IS COVERED IN HIRANANDANI AKRUTI J.V. CASE IS AS TO WHETHER THE AMENDED PROVISION AP P LIES TO THE PROJECTS STARTED ON OR AFTER 1.4.2005 OR FOR ALL THE ASSESSMENTS FROM THE A.Y. 2005 - 06. WE FIND THAT THE MUMBAI BENCH WHILE DECIDING THE ISSUE IN THE CASE OF HIRANANDANI AKRUTI J.V. HAS ALREADY DISCUSSED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES. THE A.Y. INVOLVED IN THE CASE OF HIRANANDANI IS 2006 - 07. THE TOTAL C OMMERCIAL SPACE IN THE PROJECT IN THAT CASE WAS 117800 SQ.FT. ACCORDING TO THE A.O, AS THE PROVISIONS OF SECTION 80IB(10)(D) IS APPLICABLE W.E.F. 1.4.2005, THE LIMIT FOR HAVING COMMERCIAL SPACE IN THE HOUSING PROJECT ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 13 IS 5% OF THE TOTAL BUILT UP AREA OR 20 00 SQ.FT WHICHEVER IS LESS. ACCORDINGLY, THE ASSESSEE WAS ASKED TO EXPLAIN WHY DEDUCTION CLAIMED BY IT U/S. 80IB(10) AMOUNTING TO RS. 51,06,05,521/ - SHOULD NOT BE DISALLOWED. THE TRIBUNAL AFTER DISCUSSING THE ARGUMENTS OF THE PARTIES AND THE DECISIONS CI TED BY THEM INCLUDING THE DECISION OF SPECIAL BENCH IN THE CASE OF BRAM H A ASSOCIATES (SUPRA), HAS COME TO THE FOLLOWING CONCLUSION ON THE ISSUE : 26. THERE IS TRUTH IN THE PLEA OF HARDSHIP PUT FORTH ON BEHALF OF THE ASSESSEE. LET US ASSUME AN ASSESSEE APPLIES AND OBTAINS APPROVAL OF A LOCAL AUTHORITY FOR BUILDING A HOUSING PROJECT IN THE PREVIOUS YEAR RELEVANT TO AY 02 - 03. AS PER THE LAW AS IT STOOD IN THE PREVIOUS YEAR RELEVANT TO AY 02 - 03 UPTO 04 - 05, THERE WAS NO TIME LIMIT WITHIN WHICH THE CONSTRUC TION HAS TO BE COMPLETED OR ANY RESTRICTION REGARDING COMMERCIAL AREA THAT CAN BE BUILT IN A HOUSING PROJECT. LET US ASSUME THAT THE ASSESSEE COMPLIES WITH ALL THE CONDITIONS FOR ALLOWING RELIEF U/S. 80 - IB(10) I.E. IT IS APPROVED AS A HOUSING PROJECT BY T HE LOCAL AUTHORITY BUT THE AREA OF COMMERCIAL SPACE AS APPROVED BY THE LOCAL AUTHORITY IS MORE THAN 2000 SQ.FT. THE ASSESSEE COMMENCES THE PROJECT BUT IS ABLE TO COMPLETE ONLY IN THE PREVIOUS YEAR RELEVANT TO AY 05 - 06. AS PER THE CHANGE IN LAW FROM AY 05 - 06 WITH REGARD TO THE AREA OF COMMERCIAL SPACE IN A HOUSING PROJECT THE ASSESSEE WOULD LOOSE HIS ELIGIBILITY TO CLAIM DEDUCTION. IN SUCH CASES THERE IS DEFINITELY GRAVE HARDSHIP TO THE ASSESSEE. THE INTERPRETATION SOUGHT TO BE CANVASSED BY THE LEARNED D.R WILL ALSO LEAD TO ABSURD SITUATION. LET US ASSUME AN ASSESSEE OBTAINS APPROVAL OF A HOUSING PROJECT PRIOR TO 1 - 4 - 2005 SAY IN PREVIOUS YEAR RELEVANT TO AY 02 - 03. HE BUILDS COMMERCIAL SPACE IN EXCESS OF 2000 SQ.FT. IN THE HOUSING PROJECT. HE FOLLOWS PERCENTAGE COMPLETON METHOD OF ACCOUNTING AND OFFERS PROFITS IN AY 02 - 03 TO 04 - 05, CLAIMS EXEMPTION U/S. 80 - IB(10) AND IS ALLOWED EXEMPTION. ON THE SAME PROJECT IN AY 05 - 06, THE ASSESSEE WOULD NOT GET THE BENEFIT OF SEC. 80 - IB(10). WE THEREFORE FIND NO G ROUNDS TO TAKE A VIEW DIFFERENT FROM THE ONE TAKEN BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANIZATION (SUPRA). ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 14 27. WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY WORDS TO THE STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE A.Y.04 - 05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE D EVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE THE SUBMIS SIONS OF THE LEARNED D.R IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF SEC. 80 - IB(10) AS AMENDED BY THE FINANCE ACT, 2005, W.E.F. 1 - 4 - 2005. WE THEREFORE HOLD FOLLOWING THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) THAT THE LAW AS IT EXISTED IN THE A.Y. 04 - 05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. SO FAR AS THE ISSUE AS TO WHAT IS HOUSING PROJECT AND AS TO WHETHER COMMERCIAL AREA CAN BE CONSTRUCTED IN A HOUSING PROJECT IS CONCERNED, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V. (SUPRA) HAS HELD AS UNDER : 28. WE HAVE ALREADY HELD THAT ON THE ISSUE ON WHAT IS A HOUSING PROJECT AND WHETHER COMMERCIAL AREA CAN BE CONSTRUCTED IN A HOUSING PROJECT AND IF SO CONS TRUCTED WHETHER THE ASSESSEE WOULD LOOSE EXEMPTION UNDER THE LAW AS APPLICABLE UPTO A.Y. 04 - 05 HAS BEEN SETTLED BY THE SPECIAL BENCH OF ITAT IN THE CASE OF BRAMHA ASSOCIATES 122 TTJ 433(SB) (PUNE). THE AO HELD THE LAW AS AMENDED BY THE FINANCE ACT, 2005 W. E.F. 1 - 4 - 2005 WHEREBY IT WAS LAID DOWN THAT THE BUILT UP AREA OF THE SHOPS AND COMMERCIAL ESTABLISHMENT INCLUDED IN THE HOUSING PROJECT SHOULD NOT BE MORE THAN 5% OF THE TOTAL BUILT U P ARE A OF THE PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS WILL APPLY AND THEREFORE HE HAD NO OCCASION TO APPLY THE TEST AS LAID DOWN BY ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 15 THE SPECIAL BENCH REFERRED TO ABOVE. SINCE WE HAVE HELD THAT THE LAW AS IT EXISTED IN THE A.Y. 04 - 05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR C ARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED, THE ASSESSEE TO CLAIM DEDUCTION U/S. 80 - IB(10) OF THE ACT HAS TO PASS THE TEST LAID DOWN BY THE SPECIAL BENCH AS ABOVE. WE THEREFORE SET A SIDE THE ORDER THE CIT(A) AND REMAND THE ISSUE TO THE AO FOR THE LIMITED PURPOSE OF SATISFYING HIMSELF AS TO WHETHER THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION ON THE PROFITS DERIVED ON DEVELOPING AND BUILDING HOUSING PROJECTS AS PER THE RATIO LAID DOWN BY THE SPECIAL BENCH REFERRED TO ABOVE, WHILE COMPUTING TOTAL INCOME AND IF SO TO WHAT EXTENT. F OR STATISTICAL PUROSES, THE APPEAL IS TREATED AS ALLOWED. 18. THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO APPROVE THE AFORESAID DECISION OF SPECIAL BE NCH IN THE CASE OF BRAHMA ASSOCIATES VIDE ORDER DATED 22.2.2011 IN ITA NO. 1194 OF 2010. THE CONCLUDING PARA NO. 30 OF THE DECISION OF THE HONBLE HIGH COURT IS BEING REPRODUCED HEREUNDER : 30. IN THE RESULT, THE QUESTIONS RAISED IN THE APPEAL ARE ANS WERED THUS : - A) UPTO 31/3/2005 (SUBJECT TO FULFILLING OTHER CONDITIONS), DEDUCTION UNDER SECTION 80IB(10) IS ALLOWABLE TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DC R ULES / REGULATIONS FRAMED BY THE RESPECTIVE LOCAL AUTHORITY. B) IN SUCH A CASE, WHERE THE COMMERCIAL USER PERMITTED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UNDER THE DC RULES / REGULATION, THE DEDUCTION UNDER SECTION 80IB(10) UPTO 31/3/2005 WOULD BE ALLOWABLE IRRESPECTIVE OF THE FACT THAT THE PROJECT IS APPROVED AS HOUSING PROJECT OR RESIDENTIAL PLUS COPMMERCIAL. ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 16 C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOME TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31/3/2005 DEDUCTION UNDER SECTION 80IB(10) WOULD BE ALLOWABLE TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT - UP AREA OF THE PLOT. D) SINCE DEDUCTIONS UNDER SECTION 80IB(10) IS ON THE PRO FITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING SECTION 80IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HAS ACCEPTED THE DE CISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(10) DEDUCTION TO A PART OF THE PROJECT, WE DO NOT DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BEHALF. E) CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFFECT FROM 1/4/2005 IS PROSPECTIVE AND NOT RETROSPECTIV E AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1/4/2005. 1 9 . WE, THUS, FIND THAT THE ISSUES RAISED IN THE PRESENT APPEALS ARE FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AK RUTI J.V V/S. DCIT (SUPRA). RESPECTFULLY FOLLOWIG THE SAID DECISION IN THE CASE OF HIRANANDANI AKRUTI J.V. (SUPRA), WE DECIDE THE ISSUES IN FAVOUR OF THE ASSESSEES THAT A HOUSING PROJECT WILL ALSO CONSIST OF COMMERCIAL AREA TO A PERMISSIBLE LIMIT , A S SE TTLED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAMHA ASSOCATES (SUPRA) (NOW UPHELD BY THE HONBLE BOMBAY HIGH COURT) AS APPLICABLE UPTO A.Y. 2004 - 05 . A ND SECONDLY, ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 17 THE LAW AS IT EXISTED IN THE ASSESSMENT YEAR WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL OF THE PROJECT AND PERMISSION FOR THE SAME WAS ACCORDED TO AND WHEN THE ASSESSEE COMMENCED THE PROJECT IS TO BE APPLIED. IN THE P RESENT CASE, UNDISPUTEDLY THE ASSESSEES HAD STARTED THE PROJECT IN THE YEAR 2001 WHEN SUB - CLAUSE (D) TO SECTION 80I B(10) WAS NOT IN EXISTENCE, HENCE IT CANNOT BE APPLIED ON SUCH PROJECT S AS HELD BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRNANDANI AKRUTI J.V. (SUPRA). IN THIS REGARD, WE ALSO FIND STRENGTH FROM THIS PLEA OF THE LD. A.R. WHICH WAS ALSO RAISED BEFORE IN THE CASE OF HIRANANDANI AKRUTI J.V. THAT IF THE ASSESSEE HAD FOLLOWED WIP (WORK - IN - PROGRESS) METHOD, THE INCOME FROM THE PROJECT WOULD HAVE BEEN TAXABLE IN THE EARLIER YEARS AS THE PROJECT WAS COMPLETED EARLIER TO THE AMENDMENT AND IN THAT CASE, AS PER THE OLD PROVISION THE ASSESSEE WOULD HAVE BEEN ELIGIBLE FOR THE DEDUCTION. BUT, JUST BECAUSE THE ASSESSEE HAS FOLLOWED THE PROJECT COMPLETION METHOD, IN THESE CASES, THE D EDUCTION IS BEING DENIED BECAUSE IT FALLS IN A.Y. 2005 - 06. IN OUR VIEW THE NEWLY INSERTED CLAUSE (D) TO SECTION 80IB(10) WILL NOT APPLY ON THE PROJECTS APPROVED UPTO 31.3.05 SINCE IN THOSE PROJECTS ASSESSEES ARE REQUIRED TO CONSTRUCT WHAT HAS BEEN APPROVED. THE ONLY FISSIBLE COMPLIANCE IS REQUIRED TO BE MET AS PER THE HARMONIO US INTERPRETATION OF SECTION 80IB(10) AS AMENDED IS TO COMPLETE SUCH PROJECTS (APPROVED BEFORE 1.4.2004) ON OR BEFORE 31.3.2008. IN THE CASES BEFORE US THE PROJECTS HAVE BEEN COMPLETED WELL BEFORE THIS DATE. PUTTING OF SUCH CONDITION OF TIME LIMIT IS WE LL UNDERSTOOD. SINCE THE LEGISLATURE INTENDED THE COMPLETION OF PROJECTS WITHIN A TIME FRAME TO AVOID INCONVENIENCE TO THE BENEFICIARIES I.E. THE BUYERS. IN THIS REGARD THE LEGISLATURE HAS CATEGORISED THE TIME LIMIT FOR THE PROJECTS APPROVED ON DIFFERENT PERIOD BEFORE 31.3.2007 BUT REQUIREMENT REMAINED THE SAME THAT PROJECTS WOULD BE APPROVED BY THE LOCAL AUTHORITY. COMPLIANCE OF THE ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 18 REQUIREMENT PROVIDED IN CLAUSE (D) TO THE SECTION IS POSSIBLE ONLY IN THOSE PROJECTS WHICH HAVE BEEN STARTED ON OR AFTER 1 .4.2005 AS BY THEN THOSE ASSESSEES WERE ALL AWARE ABOUT THE PROVISIONS LAID DOWN IN CLAUSE (D). 20 . BY APPLYING THE PRINCIPLE OF HARMONIOUS CONSTRUCTION TO INTERPRET THE PROVISIONS UNDER SUB - SECTION (10) TO SECTION 80IB AS AMENDED W.E.F. 1.4.2005 WE COME TO THE CONCLUSION THAT THE LEGISLATURE ALWAYS INTENDED THAT THE PROJECT MUST BE APPROVED BY THE LOCAL AUTHORITY, THUS IN THOSE APPROVED PROJECTS WHERE CONSTRUCTION HAS BEEN STARTED MUCH EARLIER THAN 1.4.2005, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLA N AS IT HAS BEEN APPROVED. AS PUTTING SUCH ASSESSEES TO COMPLETE THE PLAN MEETING OUT CONDITION UNDER CLAUSE (D) OF THE SUB - SECTION WOULD LEAD INTO ABSURDITY AND IMPOSSIBILITY FOR THE ASSESSEE AND IN CONTRADICTION TO THE PROVISIONS U/S. 80 IB(10) AS PREV AILED AT THE TIME OF APPROVAL AND COMMENCEMENT OF THE CONSTRUCTION OF THE PROJECT WELL BEFORE 1.4.2005. BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V (SUPRA) HAS DISCUSSED ALL THESE RELEVANT ASPECTS RAISED BY THE DEPARTMENT. IN THE CASE OF HIRANANDANI AKRUTI J.V V/S. DCIT, IT HAS BEEN HELD THAT THE LAW AS EXISTED WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL AND PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. IN T HE PRESENT CASES, AS PER PAGE NOS. 17 AND 20 OF THE PAPER BOOK IN THE CASE OF OPEL SHELTER THE PROJECT WAS COMMENCED ON 23.2.2001 AND EVEN COMPLETED ON 14.5.2004, SIMILARLY AS PER THE CONTENTS OF PAGE NO.2 OF THE ASSESSMENT ORDER AND PAGE NO. 41 OF THE P APER BOOK IN THE CASE OF D.S. KULKARNI AND ASSOCIATES, THE PROJECT WAS COMMENCED ON 12.4.2001 AND COMPLETED IN THE MONTH OF NOVEMBER 2003. THUS, THE ASSESSEES WERE SUPPOSED ITA S NO 219 & 17 /PN/200 9 OPEL SHELTERS & D.S. KULKARNI & ASSOCIATES. A.Y. 2005 - 06 & 2005 - 06 PAGE OF 19 19 TO COMPLETE THE PROJECTS AS PER THE LAW AS EXISTED IN THE A.Y. 2001 - 02 IN THE CA SE OF OPEL SHELTERS AND IN THE A.Y. 2002 - 03 IN THE CASE OF D.S. KULKARNI AND ASSOCIATES. WE THUS FOLLOWING THE DECISION IN THE CASE OF HIRANANDANI AKRUTI JV V/S. DCIT (SUPRA) HOLD THAT AMENDED PROVISIONS UNDER SECTION 80 IB(10) W.E.F. 1.4.2005 ARE NOT A PPLICABLE IN THE PRESENT CASE , HENCE ASSESSEES ARE ELIGIBLE FOR THE CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT. WE ACCORDINGLY DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION TO THE ASSESSEES. 2 1 . THE GROUNDS ARE, ACCORDINGLY, ALLOWED . 2 2 . IN THE RESULT , APPEALS ARE ALLOWED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST MAY , 2011 . SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE , DATED THE 31 ST M MAY , 20 10 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT II , PUNE 4. THE CIT(A) - I I , PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE