ACIT 15(2), MUMBAI V. EKTA SANKALP DEVELOPERS, MUMBAI

ITA 3316/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83798 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATHADE
• Assessee Lawyers: S C TIWARI; NATASHA MANGAT
• Keywords: Search and seizure; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NOS. 3316 & 3318/MUM/2012 ( / ASSESSMENT YEARS: 2008-09 & 2009-10) ASST. CIT-15(2), MATRU MANDIR, ROOM NO. 113, TARDEO ROAD, MUMBAI-400 007 / VS. EKTA SANKALP DEVELOPERS 401, HALLMARK BUSINESS PLAZA, NEAR GURUNANAK HOSPITAL, KALANAGAR, BANDRA (E), MUMBAI-400 051 # ./$ ./PAN/GIR NO. AAAAE 2019 E ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) #% ( ) / APPELLANT BY : SHRI PRAKASH L. PATHADE &'#% ( ) / RESPONDENT BY : SHRI S. C. TIWARI & MS. NATASHA MANGAT *+ ( , / DATE OF HEARING : 13.06.2014 - ./ ( , / DATE OF PRONOUNCEMENT : 12.09.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO APPEALS BY THE REVENUE DIRECTE D AGAINST THE SEPARATE ORDERS BY THE COMMISSIONER OF INCOME TAX (APPEALS)-26, MUM BAI (CIT(A) FOR SHORT) FOR THE ASSESSMENT YEARS (A.YS.) 2008-09 & 2009-10, ALLOWIN G THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENTS U/S.143(3) OF THE INCOME TAX ACT, 1 961 (THE ACT HEREINAFTER) FOR THE RELEVANT YEARS. THE ISSUE 2. THE ISSUE ARISING IN THE INSTANT CASE IS THE ELI GIBILITY OF THE ASSESSEES (AN ASSOCIATION OF PERSONS (AOP) OF M/S. SANKALP DEVELO PERS (45%), SHRI ASHOK G. 2 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS MOHANANI (30%) AND SHRI VIVEK A. MOHANANI (25%)), A BUILDER AND DEVELOPER, PROFITS FROM ITS HOUSING PROJECT EKTA MEDOWS AT MUMBAI-66 , TO DEDUCTION U/S.80-IB(10) OF THE ACT. THE BACKGROUND FACTS AND ARGUMENTS 3. THE APPEALS CAME UP FOR HEARING ORIGINALLY ON 15 .05.2014, WHEREAT IT CAME TO LIGHT THAT THE MATTER UNDER REFERENCE IS COVERED IN THE A SSESSEES FAVOUR BY THE DECISION BY THE TRIBUNAL IN ITS OWN CASE FOR THE IMMEDIATELY PRECE DING YEAR, I.E., A.Y. 2007-08, BEING THE FIRST YEAR FOR WHICH THE ASSESSEE DISCLOSED PRO FIT, ON A PERCENTAGE COMPLETION BASIS, ON THE SAID PROJECT (IN ITA NO.3276/MUM(J)/2010 DATED 28.09.2012/COPY ON RECORD). THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WAS ALLOWED TIME T O GO THROUGH THE TRIBUNALS ORDER AND STATE THE REVENUES STAND IN ITS RESPECT, POSTI NG THE HEARING FOR 21/5/2014. THE REVENUE NOT RAISING ANY OBJECTION; RATHER, CONCEDIN G TO THE MATTER BEING SQUARELY COVERED BY THE TRIBUNALS ORDER FOR A.Y. 2007-08 (SUPRA), T HE HEARING WAS CONCLUDED ON THAT BASIS. SUBSEQUENTLY, AT THE TIME OF DICTATION, IT WAS FOUN D THAT THE REVENUE HAD PER ITS GROUNDS OF APPEAL (REPRODUCED AS UNDER), INVOKED THE DECISI ON BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES [2011] 333 ITR 289 (BOM) (WHICH WAS IN FACT ALSO NOTICED BY THE BENCH AT THE TIME OF HEARI NG, ONLY TO BE EXPLAINED OF IT BEING ON ANOTHER ASPECT, AND NOT RELEVANT TO THE ISSUE AT HA ND), WHEREIN IT HAS BEEN CLARIFIED THAT THE DEDUCTION U/S. 80-IB(10) IS ON THE PROJECT AS A WHO LE, SO THAT THERE IS NO SCOPE FOR CONSIDERING A PART THEREOF AS ELIGIBLE, AND LIMITIN G THE DEDUCTION TO THAT ATTRIBUTABLE THERETO: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8,77,50,000/- (*) MADE BY THE ASSESSING OFFICER IN RESPECT OF PROPORTIONATE DEDUCTION CLAIM ED BY THE ASSESSEE U/S.80-IB(10) OF THE INCOME-TAX ACT, 1961 IN SPITE OF THE FACT THAT THE ASSESSEE DID NOT FULFILL ALL THE CONDITIONS LAID DO WN UNDER THE SAID SECTION AS SOME OF THE FLATS WERE MORE THAN 1000 SQ. FT. IN SI ZE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN ALLOWING PROPORTIONATE DEDUCTION U/S.80-IB (10) BY NOT TAKING 3 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS CONSIDERATION THE DECISION OF JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM) WHEREIN IT IS HELD THAT SEC. 80IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT AND NOT TO A PART OF THE PROJECT . [EMPHASIS, OURS] [(*) RS.11,88,01,099/- FOR A.Y. 2009-10] THE SAID DECISION, THUS, HAS A DIRECT BEARING ON TH E INSTANT CASE, BEING RATHER IN APPROVAL OF THE REVENUES CASE AS MADE OUT BY THE A SSESSING OFFICER (A.O.). THE SAME BEING BINDING ON ALL PARTIES, INCLUDING THIS BENCH, I.E., NOTWITHSTANDING THE ORDER BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE PRECEDI NG YEAR, IT WAS CONSIDERED PROPER THAT THE PARTIES BE HEARD IN THE MATTER. ACCORDINGLY, TH E CASE WAS REPOSTED FOR HEARING ON 13/6/2014, AND THE MATTER HEARD AFRESH. BOTH THE PA RTIES REITERATED THEIR RESPECTIVE STANDS, RELYING ON THE ORDER/S OF THE AUTHORITIES BELOW AS FAVOURABLE TO THEM. THE LD. AUTHORIZED REPRESENTATIVE (AR) COULD NOT HOWEVER FURNISH ANY S ATISFACTORY ANSWER IN REBUTTAL TO THE SPECIFIC AND PERTINENT QUERY RAISED BY THE BENCH IN THIS REGARD, I.E., THAT VIDE THE SAID DECISION THE HONBLE JURISDICTIONAL COURT HAS UNEQU IVOCALLY CLARIFIED THAT IT IS A SINGLE PROJECT, AS APPROVED BY THE LOCAL AUTHORITY, THAT W OULD STAND TO BE REGARDED AS EITHER AN ELIGIBLE PROJECT, OR NOT SO, I.E., IN TERMS OF SECT ION 80-IB(10). ANALYSIS 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 WE FIRSTLY OBSERVE THAT THE TRIBUNAL IN THE ASS ESSEES OWN CASE FOR A.Y. 2007-08 HAS UPHELD PROPORTIONATE DEDUCTION ON THE ASSESSEE S HOUSING PROJECT EKTA MEADOWS, BEING OTHERWISE ELIGIBLE IN-AS-MUCH AS ITS STANDS D ULY APPROVED BY THE LOCAL AUTHORITY ON 13.05.2005 AND COMPLETED ON 26.03.2009. THE BONE OF CONTENTION BE TWEEN THE PARTIES IS THE SATISFACTION OR OTHERWISE OF CLAUSE (C) OF SECT ION 80-IB(10); THAT OF OTHER CLAUSES, I.E., CLAUSES (A), (B) AND (D) BEING NOT IN DISPUTE, THE CUMULATIVE SATISFACTION OF ALL OF WHICH WOULD MAKE THE PROJECT ELIGIBLE FOR DEDUCTION U/S.8 0-IB(10), WHICH POSITION IS AGAIN UNDISPUTED . CLAUSE (C) ENLISTS THE CONDITION AS TO THE MAXIMU M BUILT-UP AREA OF A RESIDENTIAL UNIT IN THE HOUSING PROJECT, BEING AT 1 000 SQ. FT. FOR THE MUMBAI REGION, WHERE 4 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS THE ASSESSEES HOUSING PROJECT IS LOCATED. THAT A F AIR PERCENTAGE OF RESIDENTIAL UNITS, COVERING 35% OF THE TOTAL BUILT-UP AREA, HAVE A BUI LT-UP AREA IN EXCESS OF THE PRESCRIBED LIMIT OF 1000 SQ. FT., IS ALSO NOT IN DISPUTE. THE ASSESSEE ACCORDINGLY RESTRICTS ITS CLAIM FOR DEDUCTION TO THE BALANCE 65% OF THE BUILT-UP AREA THE ENTIRE OF WHICH IS RESIDENTIAL, I.E., TO 65% OF THE TOTAL PROFITS, ON THE BASIS THAT THE PROFIT TO THAT EXTENT IS ATTRIBUTABLE TO RESIDENTIAL UNITS SATISFYING THE CONDITION OF SECTI ON 80-IB(10)(C) AND, THUS, ALL THE CONDITIONS OF SECTION 80-IB(10). THE REVENUE, ON TH E OTHER HAND, CLAIMS THAT THE QUANTUM OF DEDUCTION COULD ONLY FOLLOW A SATISFACTION OF EA CH OF THE QUALIFYING CONDITIONS, I.E., BY A HOUSING PROJECT AS A WHOLE. THE PROJECT, EKTA ME DOWS, ADMITTEDLY NOT SATISFYING THE CONDITION OF SECTION 80-IB(10)(C) IN-AS-MUCH AS ALL ITS RESIDENTIAL UNITS ARE ADMITTEDLY NOT WITHIN THE STIPULATED NORM REGARDING THE MAXIMUM BU ILT-UP AREA, THE SAID PROJECT CANNOT BE SAID TO BE AN ELIGIBLE HOUSING PROJECT U/S.80-IB (10). THIS SUMS UP THE CONTROVERSY AND THE DISPUTE ATTENDING THE INSTANT APPEALS. THE ORDER BY THE TRIBUNAL IN THE ASSESSEES APPEAL FOR A.Y. 2007-08 : 4.2 THE TRIBUNAL ALLOWED THE ASSESSEES CLAIM FOR T HE PRECEDING YEAR (A.Y. 2007-08) FOLLOWING THE DECISION BY THE CO-ORDINATE BENCH IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCIT (IN ITA NO. 1735/KOL/2005 DATED 24.03.2006), ALSO CITING OTHER DECISIONS BY THIS TRIBUNAL UPHOLDING THE DEDU CTION ON PRO-RATA BASIS (REFER PARA 6 OF THE ORDER). THE HONBLE CALCUTTA HIGH COURT, IT FUR THER NOTES, HAS SINCE CONFIRMED THE TRIBUNALS DECISION IN BENGAL AMBUJA HOUSING DEVELOPMENT LTD . (SUPRA), DISMISSING THE REVENUES APPEAL CHALLENGING THE SAME (IN ITA NO. 4 58 OF 2006 DATED 05.01.2007) ON THE GROUND THAT IT DID NOT FIND THE SAME AS INVOLVI NG ANY SUBSTANTIAL QUESTION OF LAW, SO THAT IT DECLINED TO ANSWER THE QUESTION/S OF LAW SO UGHT TO BE RAISED BEFORE IT BY THE REVENUE (REFER PARA 14 OF THE TRIBUNALS ORDER). NO BINDING RATIO OR JUDICIAL PRECEDENT THUS ARISES OUT OF THE SAID DECISION BY THE HONBLE CALCUTTA HIGH COURT FOR BEING FOLLOWED; IT, RATHER, REFRAINING FROM ANSWERING THE QUESTION/ S OF LAW RAISED BY THE REVENUE, CONSIDERING ITS APPEAL AS, IN EFFECT, INCOMPETENT. THERE IS ALSO REFERENCE TO THE TRIBUNALS ORDER IN THE CASE OF THE ASSESSEES SISTER CONCERN, EKTA HOUSING (P.) LTD. (IN ITA NO. 5 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS 3649/MUM/2009) AT PARA 7 OF THE ORDER, REPRODUCING THERE-FROM, AND WHICH AGAIN FOLLOWS OTHER DECISIONS BY THE TRIBUNAL, ALSO ADVERTING TO THE APPROVAL AFORE-REFERRED BY THE HONBLE CALCUTTA HIGH COURT IN BENGAL AMBUJA (SUPRA). THE TRIBUNAL ALSO REFERS TO THE DECISION BY THE TRIBUNAL IN THE CASE OF THIRD MEMBE R IN THE CASE OF SANGHVI AND DOSHI ENTERPRISES VS. ITO (IN ITA NO. 259 AND 260/MAD/2010 DATED 19.05.2011). THE THIRD MEMBER HAS AGAIN DECIDED THE MATTER WITH REFERENCE TO THE DECISION BY THE HONBLE HIGH COURT IN BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA) (REFER PARAS 8 AND 19 OF THE TRIBUNALS ORDER), SO THAT IT CAN AT BEST BE CONSID ERED AS A VIEW BY A LARGER BENCH OF THE TRIBUNAL. EVEN OTHERWISE, IT IS TRITE LAW THAT A DE CISION IS AN AUTHORITY ON WHAT IT ACTUALLY DECIDES, AND NOT WHAT MAY REMOTELY OR EVEN LOGICALL Y FLOW FROM IT (REFER: GOODYEAR INDIA LTD. V. STATE OF HARYANA [1991] 188 ITR 402 (SC)). NONE OF THE SEVERAL DECI SIONS CITED BEFORE IT, AND WHICH THE TRIBUNAL RESPECTFULLY FOLL OWS IN DECIDING THE ISSUE IN THE MANNER IT DOES, AS WE OBSERVE FROM A READING OF ITS ORDER , AS ALSO FROM A PERUSAL OF THE ORDER IN ITO VS. AIR DEVELOPERS , REPORTED AT [2010] 122 ITD 125 (NAGPUR) WHICH WE FIND TO BE THE ONLY REPORTED ORDER, BEARS REFERENCE TO OR CONS IDERS THE DECISION BY THE HONBLE HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WHICH IS BINDING ON US, SO THAT THE RATIO OF THE SAID DECISION SHALL HAVE TO BE EXAMINED FOR BEI NG FOLLOWED. THE DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA): 4.3 IN THE FACTS OF THAT CASE, THE ASSESSMENT YEAR BEING 2003-04, THE REVENUE SIMILARLY DENIED DEDUCTION ON THE GROUND THAT THE ASSESSEES HOUSING PROJECT, WHICH HAD A COMMERCIAL AREA OF 50% OF THE TOTAL AREA, WAS NOT A N ELIGIBLE HOUSING PROJECT U/S.80- IB(10). THE ASSESSEE HAD CLAIMED DEDUCTION CORRESPO NDING TO 50% AREA COVERING THE RESIDENTIAL CONSTRUCTION, WHICH CLAIM WAS UPHELD BY THE TRIBUNAL. ON THE REVENUE CARRYING THE MATTER IN APPEAL BEFORE IT, THE HONBL E JURISDICTIONAL HIGH COURT CLARIFIED AS UNDER: A) THE TERM HOUSING PROJECT BEING NOT DEFINED UNDER THE ACT, THE PROJECT AS APPROVED BY THE LOCAL AUTHORITY, I.E., AS PER TH E DEVELOPMENT CONTROL RULES/REGULATIONS, IRRESPECTIVE OF THE EXTENT OF CO MMERCIAL AREA, IS A 6 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS HOUSING PROJECT AS CONTEMPLATED U/S.80-IB(10). THE TRIBUNAL WAS ACCORDINGLY CORRECT IN HOLDING THAT THE HOUSING PRO JECT SO APPROVED SHALL QUALIFY FOR DEDUCTION THERE-UNDER; B) SECTION 80-IB(10)(D) STANDS BROUGHT ON THE STATU TE BY FINANCE (NO. 2) ACT, 2004 W.E.F. 01.04.2005. THE PROVISION IS NO T RETROSPECTIVE BUT PROSPECTIVE, SO THAT IT WOULD HAVE EFFECT FOR ASSES SMENT YEARS COMMENCING ON OR AFTER 01.04.2005, I.E., A.Y. 2005-06 ONWARDS; C) THERE BEING NO STIPULATION WITH REGARD TO THE CO MMERCIAL USER PRIOR TO THE INSERTION OF CLAUSE (D) TO SECTION 80-IB(10), N O SUCH LIMITATION COULD BE READ IN THE PROVISION. THE LEGISLATURE CAN ONLY BE CONSIDERED AS AWARE THAT THE LOCAL AUTHORITY MAY APPROVE A HOUSING PROJECT W ITHOUT OR WITH COMMERCIAL AREA. AS SUCH, WHEN NO STIPULATION QUA COMMERCIAL USER STANDS PROVIDED FOR BY THE STATUTE, A HOUSING PROJECT COUL D NOT BE OUSTED ON THE GROUND THAT THE COMMERCIAL AREA THERE-UNDER EXCEEDS A PARTICULAR LIMIT. THE TRIBUNAL FELL IN ERROR IN PRESCRIBING SUCH A LIMIT AT 10% OF THE TOTAL AREA, WHICH WAS PLAINLY ARBITRARY AND DE HORS ANY RULE OF INTERPRETATION OF STATUTES. IT IS THE ENTIRE HOUSING PROJECT, I.E., AS APPROVED BY THE LOCAL AUTHORITY; THE EXTENT OF COMMERCIAL AREA NOTWITHSTA NDING, WHICH WOULD QUALIFY TO BE AN ELIGIBLE PROJECT U/S.80-IB(10) ; AND D) THE TRIBUNAL WAS THUS WRONG IN CONFIRMING THE DE DUCTION TO THE AREA ATTRIBUTABLE TO THE RESIDENTIAL UNITS. HOWEVER, AS THE ASSESSEE WAS NOT IN APPEAL, THE DEDUCTION AS AFFIRMED BY THE TRIBUNAL W AS APPROVED. THE HONBLE JURISDICTIONAL HIGH COURT HAS CLEARLY H ELD THAT AN ELIGIBLE HOUSING PROJECT U/S.80-IB(10) IS THE WHOLE PROJECT, SO THAT IT EITH ER QUALIFIES, OR NOT SO, THERE-UNDER, IN TERMS OF THE RELEVANT PROVISION. ACCORDINGLY, EITHE R THE PROFITS DERIVED FROM A PROJECT WOULD BE SUBJECT TO DEDUCTION UNDER THE PROVISION, I.E., WHOLLY, OR NOT SO, AND THERE IS NO SCOPE FOR DEDUCTION ON A PROPORTIONATE BASIS, I.E., AS ATTRIBUTABLE TO THE RESIDENTIAL AREA IN THE FACTS OF THAT CASE, FINDING THE SAME AS WITHOUT BASIS IN LAW. IT ACCORDINGLY APPROVED THE DEDUCTION QUA THE PROFITS OF THE ENTIRE PROJECT . THE RATIO OF THE SAID DECISION IS SQUARELY APPLICABLE IN THE FACTS OF THE CASE. EACH OF THE CONDITIONS OF S. 80-IB(10) IS A QUALIFYING CONDITION, AND IS TO BE INDEPENDENTLY SA TISFIED. THERE IS, ACCORDINGLY, NO CONCEPT OF PRO RATA DEDUCTION WHERE A CONDITION IS PARTLY SATISFIED. T HE PRINCIPLE THAT QUANTIFICATION FOLLOWS ELIGIBILITY IS AXIOMATIC. WE ARE, THUS, IN PRINCIPLE, IN COMPLETE 7 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS AGREEMENT WITH THE REVENUE THAT THE PRESCRIPTION AN D MANDATE OF THE DECISION IN BRAHMA ASSOCIATES (SUPRA) DOES NOT ADMIT OF PROPORTIONATE DEDUCTION IN-AS-MUCH AS EITHER HOUSING PROJECT QUALIFIES, OR NOT SO, UNDER S.80-IB (10). 4.4 WE MAY NEXT CONSIDER THE CONDITION OF SECTION 8 0-IB(10)(C), REPRODUCING THE PROVISION ITSELF, WHICH READS AS UNDER: DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CER TAIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. 80-IB. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE, B EING A DEVELOPER, INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERT AKING OR AN ENTERPRISE FROM ANY BUSINESS OF DEVELOPING A SPECIAL ECONOMIC ZONE, NOTIFIED ON OR AFTER THE 1ST DAY OF APRIL, 2005 UNDER THE SPECIAL ECONOMIC ZONES ACT, 2005, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT T O THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO ONE HUNDRED PER CEN T OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIV E ASSESSMENT YEARS. (2) . (3) . (10) THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, 2007 (*) BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF T HE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES D EVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION,- (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APP ROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, O R, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRIL, 2 004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOU SING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE,- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTH ORITY; 8 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORI TY; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE: PROVIDED THAT NOTHING CONTAINED IN CLAUSE (A) OR CLAUSE (B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONS TRUCTION OR REDEVELOPMENT OF EXISTING BUILDINGS IN AREAS DECLAR ED TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP A REA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUA RE FEET AT ANY OTHER PLACE; AND (D) THE BUILT-UP AREA OF THE SHOPS AND OTHER COMM ERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIV E PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR T WO THOUSAND SQUARE FEET, WHICHEVER IS LESS. [(*) 2008 BY FINANCE (NO.2) ACT, 2009, W.R.E.F 01.04.2009, I.E., A.Y. 2009-10 ONWARDS] AS WOULD BE APPARENT FROM A CLOSE READING OF CLAUSE (C) TO S. 80-IB, IT DOES NOT, IN TERMS, PROVIDE A CONDITION AS TO THE AREA QUA EACH OR ALL OR EVERY RESIDENTIAL UNIT COMPRISED IN THE HOUSING PROJECT. IT DOES NOT, IT M AY BE NOTED, REFER THERETO WHICH IS THE FIRST TIME THE WORD RESIDENTIAL UNIT IS MENTIONED IN THE PROVISION, IN PLURAL TERMS. WE STATE SO AS THESE WOULD INDICATE OR SIGNIFY THAT TH E CONDITION OF CLAUSE (C) IS TO BE NECESSARILY COMPLIED BY ALL SUCH UNITS. FURTHER, CO RRESPONDINGLY, THERE IS, IN CONTRADISTINCTION, I.E., TO THE OTHER CLAUSES OF S ECTION 80-IB(10), NO REFERENCE TO THE WORD PROJECT OR HOUSING PROJECT IN CLAUSE (C). AS IT S PLAIN READING, I.E., UPON GIVING A FAIR LOOK AT THE PROVISION AND DUE REGARD TO THE LANGUAG E EMPLOYED, CONVEYS, THE QUALIFICATION STIPULATED THEREBY IS NOT WITH REFERENCE TO THE HOU SING PROJECT PER SE , BUT TO THE RESIDENTIAL 9 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS UNIT COMPRISED THEREIN. FURTHER, THE CONDITION IS A CONDITION PRECEDENT FOR THE DEDUCTIBILITY OF THE ENTIRE PROFIT OF THE RELEVANT HOUSING PROJECT, AS IS THE CHARACTER OF EACH OF THE CONDITIONS SET OUT PER THE OTHER CLAUSES, BE ING CLAUSES (A), (B) AND (D) OF THE PROVISION. ACCORDINGLY, WHERE ANY OF THE CONDITIONS PER THE SAID CLAUSES OF S. 80-IB(10), I.E., OTHER THAN CLAUSE (C), WHICH ARE WITH REFEREN CE TO THE PROJECT, IS NOT SATISFIED, NO PART OF THE PROFIT DERIVED THERE-FROM WOULD BE ELIGIBLE FOR DEDUCTION U/S. 80-IB(10). AS REGARDS THE MANDATE OF CLAUSE (C) OF THE PROVISION, THE SATISFACTION OF THE CONDITION OF S. 80-IB(10)(C) WOULD HAVE TO BE SEEN INDEPENDENTLY FO R EACH RESIDENTIAL UNIT. AS SUCH, EVERY INDIVIDUAL RESIDENTIAL UNIT THAT SATISFIES TH E PRESCRIPTION OF S. 80-IB(10)(C), WOULD STAND TO BE REGARDED AS A PART OF THE ELIGIBLE UNDE RTAKING/PROJECT, AND THE PROFIT OF THE PROJECT ATTRIBUTABLE THERETO DEDUCTIBLE U/S. 80-IB( 10). THAT IS TO SAY, ALL THE PROFITS OF THE HOUSING PROJECT WHICH OTHERWISE SATISFIES THE CONDI TIONS OF SECTION 80-IB(10), AS REFERABLE TO THE RESIDENTIAL UNITS HAVING A MAXIMUM BUILT-UP AREA AS PRESCRIBED PER CLAUSE (C), WOULD QUALIFY FOR DEDUCTION THERE-UNDER, TO THE EXC LUSION OF OTHER RESIDENTIAL UNITS. THE DEDUCTION U/S.80-IB(10) WOULD THUS HAVE TO BE COMPU TED OR ARRIVED AT IN TWO STEPS. FIRSTLY, THAT DERIVED FROM THE ELIGIBLE HOUSING PRO JECT, AND THEN THAT PART THEREOF AS ATTRIBUTABLE TO THE RESIDENTIAL UNITS SATISFYING TH E CONDITION OF SECTION 80-IB(10)(C). THIS IS IN FACT WHAT THE TRIBUNAL HAS ADVOCATED PER THE SEVERAL DECISIONS REFERRED TO IN ITS ORDER DATED 28.09.2012 SUPRA, I.E., IN THE ASSESSEES CAS E FOR A.Y. 2007-08. 4.5 BEFORE PARTING WITH OUR ORDER, WE MAY ALSO CLAR IFY ANOTHER ASPECT OF THE MATTER. THE LD. AR, SHRI S. C. TIWARI, UPON BEING APPRISED THAT WE ARE NOT INCLINED TO TREAT THE MATTER AS COVERED IN VIEW OF THE DECISION BY THE HO NBLE JURISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA), WOULD CONTEND THAT IN THAT CASE THE ASSES SEE WOULD ALSO CLAIM DEDUCTION QUA THE RESIDENTIAL UNITS ADMITTEDLY NOT SATISFYING THE TEST OF SECTION 80- IB(10)(C), IN VIEW OF THE SUBSEQUENT AMENDMENT TO S ECTION 80-IB(10) BY WAY OF INSERTION OF CLAUSES (E) AND (F) THERETO; THE RESTRICTION OF ITS CLAIM BY THE ASSESSEE IN THE FIRST PLACE BEING ONLY BY WAY OF A CONCESSION. THE ARGUMENT PRE SUPPOSES THAT SUCH A PLEA IS PERMISSIBLE. THERE IS WE ARE AFRAID NO CONCEPT OF B ARGAIN PLEA UNDER THE INDIAN TAX 10 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS JURISPRUDENCE. BE THAT AS IT MAY, WE SHALL CONSIDER THE PLEA ON ITS MERITS. OUR DECISION ON MERITS CLEARLY NEGATES SUCH A VIEW, I.E., AS BEING CANVASSED. RATHER, WE CONSIDER THE ARGUMENT AS NOT MAINTAINABLE AT THE THRESHOLD. OUR ORDER BEING APPEALABLE, IT WOULD ONLY BE FAIR TO STATE OUR REASONS FOR SO CONSIDERING. FI RSTLY, THE ASSESSEE IS NOT IN APPEAL. IN FACT, THE DISPUTE ALL THROUGH WAS CONFINED TO THE E LIGIBILITY OF THE ASSESSEES HOUSING PROJECT EKTA MEDOWS TO DEDUCTION U/S.80-IB(10); T HE REVENUE ITSELF STATING THAT, IF FOUND TO BE SO, THE ENTIRE PROFITS OF THE PROJECT W OULD BE ELIGIBLE FOR DEDUCTION THERE- UNDER (ALSO REFER PARA 4.1 ABOVE). THIRDLY, CLAUSES (E) AND (F) OF THE PROVISION STAND INSERTED BY FINANCE ACT (NO.2), 2009 W.E.F. 01.04.2 010. EVEN AS CLARIFIED BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA), WITH REFERENCE TO THE INSERTION OF CLAUSE (D) IN THE PROVISION, THE SAME WOULD BE PROSPECTIVE AND NOT RE TROSPECTIVE. THE SAME ACCORDINGLY WOULD HAVE NO BEARING FOR THE CURRENT YEAR. THE DECISION IN SUMMATION 5. WE, FACED WITH THE DECISION BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WHICH IS EVEN OTHERWISE BINDING ON US, PR OCEEDED BY FIRSTLY EXAMINING THE REVENUES RELIANCE THEREON, TO FIND I T AS VALID. THE HONBLE HIGH COURT, UPON BEING CALLED UPON TO EXAMINE THE PROVISION OF SECTION 80-IB(10) WITH REFERENCE TO THE INGREDIENTS OF AN ELIGIBLE HOUSING PROJECT, A TERM WHICH STANDS NOT DEFINED UNDER THE ACT, CLARIFIED THAT THE HOUSING PROJECT AS CONTEM PLATED IS ONLY A HOUSING PROJECT AS APPROVED BY THE LOCAL AUTHORITY, TO WHICH (APPROVAL ) THE PROVISION REFERS TO, SO THAT THE SAME, WHERE NOT VIOLATIVE OF ANY OF THE CONDITIONS LISTED IN THE PROVISION, AS WITH REGARD TO THE EXTENT OF COMMERCIAL USER (WHICH CONDITION D ID NOT EXIST IN THE PROVISION AS IT STOOD AT THE RELEVANT TIME), COULD NOT BE IMPOSED BY JUDI CIAL DIKTAT. FURTHER, THE PROJECT, AS APPROVED, IS A SINGLE PROJECT, WHICH EITHER SATISFI ES THE CONDITIONS ENLISTED IN THE PROVISION OR NOT. THERE WAS THEREFORE NO SCOPE FOR BIFURCATIN G ITS PROFITS INTO THAT SUBJECT TO DEDUCTION THERE-UNDER AND NOT SO. THE FOLLOWING WOR DS CAPTURE THE DECISION, WHICH FOLLOWS A COMPREHENSIVE DISCUSSION ON THE VARIOUS A SPECTS, AND IN HARMONY AND 11 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS AGREEMENT WITH ITS UNDERSTANDING, OF THE MATTER: ( REFER PARA 31 AT PGS. 302-303, ALSO CATCH NOTES AT PGS. 290-291) SECTION 80-IB(10) ALLOWS DEDUCTION TO THE ENTIRE PR OJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. I F THE CONDITIONS SET OUT IN SECTION 80-IB(10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE I S NO QUESTION OF ALLOWING DEDUCTION TO THE PART OF THE PROJECT . [EMPHASIS OURS] THAT THE SAME IS RENDERED UPON EXAMINING THE PROVIS ION IN A DIFFERENT CONTEXT WOULD BE OF NO MOMENT, WHICH THOUGH PREVAILED WITH THE TRIBUNAL IN THE CASE OF EKTA HOUSING (P.) LTD. (SUPRA) (COPY ON RECORD) IN-AS-MUCH AS IT IS TRITE LAW THAT IT IS THE RATIO OF THE DECISION WHICH IS BINDING AND HAS PRECEDENT VALUE. THE SAID ORDER BY THE TRIBUNAL, IN-SO-FAR AS IT DOES NOT STATE ANY LEGAL REASONS FO R SO DEVIATING, IS, WITH RESPECT, CLEARLY INCONSISTENT WITH THE EXPRESS AND CLEAR VERDICT BY THE HONBLE JURISDICTIONAL HIGH COURT AS EXTRACTED HERE-IN-ABOVE. THE OTHER DECISIONS BY THE TRIBUNAL BEING RELIED UPON BY THE ASSESSEE, RENDERED WITHOUT CONSIDERING THE DECISION BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA), ARE ALSO THUS APPARENTLY IN CONFLICT THERE WITH IN-AS-MUCH AS THE SAME OPINE IN FAVOUR OF DEDUCTION, WHICH EXTENDS TO THE ENTIRE PROFIT OF THE PROJECT, WITH REFERENCE TO THE PROFIT ATTRIBUTABLE TO THE RESIDEN TIAL UNITS SATISFYING THE CONDITION OF SECTION 80-IB(10)(C), I.E., TO A PART OF THE PROJEC T. THE PROPOSITION IS EVEN OTHERWISE INCONSISTENT WITH THE FUNDAMENTAL PRINCIPLE THAT AN Y DEDUCTION IS SUBJECT TO ELIGIBILITY, I.E., SATISFACTION OF EACH OF THE CONDITIONS PRECED ENT. FURTHER, OUR READING OF THOSE DECISIONS BY THE TRIBUNAL, DID NOT EXHIBIT ANY DISC USSION ON OR AN INTERPRETATION OF SECTION 80-IB(10)(C), AS INDEED WAS ALSO THE CASE FOR THE J UDGMENT BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA). THE PROVISION IS ACCORDINGLY EXAMINED CLOSELY, TO F IND CLAUSE (C) AS WORDED DIFFERENTLY FROM THE OTHER CLAUSES OF SECTION 80-IB (10), SETTING FORTH THE CONDITIONS PRECEDENT FOR THE ELIGIBILITY TO DEDUCTION OF THE P ROFITS OF THE PROJECT. THE SAID CLAUSE, ON A FAIR CONSTRUCTION, WAS FOUND TO CONTAIN A CONDITION WITH REFERENCE TO THE RESIDENTIAL UNIT COMPRISING THE HOUSING PROJECT. THE CONDITION, BY NECESSARY IMPLICATION, APPLIES TO ALL 12 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS THE RESIDENTIAL UNITS OF THE HOUSING PROJECT . THE CONVERSE, HOWEVER, CANNOT BE SAID TO HOLD, SO THAT ONLY SUCH HOUSING PROJECT, ALL THE RE SIDENTIAL UNITS COMPRISING WHICH SATISFY THE CONDITION OF SECTION 80-IB(10)(C), IS AN ELIGIB LE PROJECT. THE WORD PROJECT, CLEARLY MENTIONED IN EACH OF THE OTHER CLAUSES, IS CONSPICU OUS BY ITS ABSENCE IN CLAUSE (C). THAT IS, S. 80-IB(10)(C) REPRESENTS A CONDITION PRECEDEN T QUA THE RESIDENTIAL UNIT COMPRISING THE HOUSING PROJECT AND NOT QUA THE PROJECT; ITS LANGUAGE NOT ADMITTING OF SUCH A V IEW. WE MAY THOUGH AT ONCE CLARIFY THAT THE DECISION BY THE HONBLE COURT BEING BINDING, WE WOULD NOT HAVE FOR A MOMENT HESITATED TO HOLD OTHER WISE IF WE FOUND ANYTHING TO SO SUGGEST IN THE DECISION IN BRAHMA ASSOCIATES (SUPRA), WHICH IS SANS ANY REFERENCE TO S. 80-IB(10)(C), OR IF THAT MEANING OR INTENTION WAS F OUND EXPRESSED IN ITS PLAIN LANGUAGE; IT BEING TRITE THAT THERE IS NO EQUITY ABOUT TAX AND T HERE IS NO ROOM FOR INTENDMENT, SO THAT ONE HAS TO LOOK FAIRLY AT THE LANGUAGE USED, EVEN A S EXHORTED TIME AND AGAIN BY THE APEX COURT. ALSO, FISCAL STATUTES ARE TO BE STRICTLY INT ERPRETED, AND SO ARE THE EXEMPTION PROVISIONS. IT IS ONLY ONCE AN ENTITY OR INCOME, WH ICH IS THE SUBJECT MATTER OF EXEMPTION, IS FOUND, ON SUCH CONSTRUCTION, TO BE WITHIN THE AM BIT OF THE PROVISION, THAT A LIBERAL APPROACH IS TO BE ADOPTED TOWARD EFFECTUATING THE O BJECT OF THE PROVISION, FOR WHICH WE MAY REFER TO BAJAJ TEMPO LTD. VS. CIT [1992] 196 ITR 188 (SC) RELIED UPON BY THE TRIBUNAL IN THE VARIOUS ORDERS, AS FAR AS APPEARS O N A READING OF THEIR EXTRACTS AS LISTED IN THE TRIBUNALS ORDER FOR A.Y. 2007-08 (SUPRA). THE INTERPRETATION IS ALSO IN ACCORD WITH A PURPOSIVE AND LIBERAL APPROACH, ADVOCATED BY THE AP EX COURT IN, INTER ALIA, BAJAJ TEMPO LTD. (SUPRA). THE PROVISION BEING AN INCENTIVE PROVISION , TOWARD PROMOTING THE GROWTH OF AFFORDABLE HOUSING IN THE COUNTRY, THE CONSTRUCTION ENABLES THE SAME, WHILE AT THE SAME TIME OPERATING TO EXCLUDE THE EXTENSION OF THE INCE NTIVE TO HOUSING THAT IS NOT COVERED OR TARGETED BY THE PROVISION, AS SOUGHT TO BE INCLUDED BY THE LD. AR. AGAIN, IT IS TRITE LAW THAT THE BENEFIT OF ANY AMBIGUITY, IF ANY, IN THE LANGUA GE OF THE PROVISION, SO THAT TWO REASONABLE VIEWS ARE PERMISSIBLE, IS TO GO TO THE T AX PAYER. WE MAY CLARIFY THAT OUR DECISION, EVEN AS SOUGHT TO BE EMPHASIZED EARLIER, DESPITE APPROVING THE PROPORTIONATE DEDUCTION, I.E., W.R.T. SECTION 80-IB(10)(C), IS, FOR THE REASONS 13 ITA NOS. 3316 & 3318/MUM/2012 (A.YS. 2008-09 & 2009-10) ASST. CIT VS. EKTA SANKALP DEVELOPERS AFORE-STATED, THUS NOT IN CONFLICT WITH THE DECISIO N BY THE HONBLE JURISDICTIONAL HIGH COURT IN BRAHMA ASSOCIATES (SUPRA). THE DEDUCTION TOWARD THE RESIDENTIAL UNITS SATISFYING THE CONDITION OF S. 80-IB(10)(C), ARRIVED AT ON A PROPO RTIONATE BASIS, IS THEREFORE UPHELD. 6. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. 0/ 1 + ( 2 0 ( 34 ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 12, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 5 MUMBAI; 6* DATED : 12.09.2014 +.*../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 9+: ; &*<= , , <=/ , 5 / DR, ITAT, MUMBAI 6. ; >? @ / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 5 / ITAT, MUMBAI