Asstt. Commissioner of Income Tax, Range-I, Lucknow V. M/s Arif Industries Pvt. Ltd., Lucknow

ITA 531/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2535 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 18-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Keywords: Retrospective amendment; Question of law
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. N .S. SAINI , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 531/LKW/2017 ASSESSMENT YEAR: 2013 - 14 ACIT RANGE 1 LUCKNOW V. M/S ARIF INDUSTRIES P VT. LTD. 28, NAVAL KISHORE ROAD HAZRATGANJ, LUCKNOW T AN /PAN : AACCA2048M (APP ELLA NT) (RESPONDENT) C.O. NO.01/LKW/2018 [ IN ITA NO. 531/LKW/2017] ASSESSMENT YEAR: 2013 - 14 M/S ARIF INDUSTRIES PVT. LTD. 28, NAVAL KISHORE ROAD HAZRATGANJ, LUCKNOW V. ACIT RANGE 1 LUCKNOW T AN /PAN : AACCA2048M ( CROSS OBJECTOR) (RESPONDENT) REVENUE BY: SHRI C. K. SINGH, D.R. ASSESSEE BY: NONE DATE OF HEARING: 11 10 201 8 DATE OF PRONOUNCEMENT: 24 10 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE REVENUE AND CROSS OBJECTION PREFERRED BY THE ASSESSEE EMANATE FROM THE ORDER OF LD. CIT(A) - 1, LUCKNOW DATED 31/3/2017 . REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT (A) HAS ERRED IN LAW & ON FACTS WHILE RELYING ON C ASE LAW WHICH APPLY ONLY TO SUB CLAUSE (D) OF THE SECTION ITA NO.531/LKW/2017 PAGE 2 OF 18 80IB(10) WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAS DENIED THE DEDUCTION U/S 80IB(10) CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE PROJECT DOES NOT QUALIFY ALL THE CONDITIONS LAI D DOWN U/S 80IB OF THE I.T. ACT, 1961. THE LD. CIT(A) FAILED TO OBSERVE THE LACK OF QUALIFICATION UNDER SUB CLAUSE (A) OF THE APPELLANT WHICH IN THE OPINION OF AO DISQUALIFIES THE ASSESSEE FOR THE BENEFIT U/ S 80IB(10). 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE U/S 80IB(10) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE AMENDMENT TO SECTION 80IB(10) HAS BEEN PROVIDED FOR DEDUCTION UNDER SECTION 80IB(10) ONLY IF THE UNIT WHICH COMMENCED THE HOUSING PROJECT ON OR A FTER 01.10.1998 AND WAS APPROVED BEFORE 01.04.2004, COMPLETES THE HOUSING PROJECT ON OR BEFORE 31ST DATE OF MARCH 2008, WHICH HAS NOT BEEN HAPPENED IN THE CASE OF THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING LHE ADDITION MADE U/S 80IB(10) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO COMPLY WITH ALL THE CONDITIONS OF SECTION 80IB(10) AS AMENDED BY THE FINANCE ACT 2004 W.E.F. 01.042005 RESULTING THEREBY REJECTION OF ITS CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO 67,80,090/ - . 4. APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL, AS STATE ABOVE AS AND WHEN NEED OF DOING SO ARISES WITH THE PRIOR PERMISSION OF THE HON'BLE BENCH. 2 . THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME O N 30/9/2013 SHOWING ITS INCOME AT RS. 3,24,20,690/ - . THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPER, PROMOTERS AND BUILDER AND HOTELIERS. THE ASSESSEE - COMPANY CLAIMED DEDUCTION UNDER SECTION 80IB(10) RELATING TO ITS INCOME FROM HOUSING PROJECT , METRO CITY AMOUNTING TO RS.67,80,090/ - . ONLY DISALLOWANCE MADE BY THE ASSESSING OFFICER RELATES TO THE CLAIM OF ITA NO.531/LKW/2017 PAGE 3 OF 18 DEDUCTION U/S 80IB(10) BY THE ASSESSEE ON THE GROUND THAT ASSESSEE DO NOT FULFILL THE AMENDED CONDITIONS REGAR DING THE COMPLETION DATE AND CLAUSE (D) OF THE AMENDED SECTION 80IB(10). THE M AIN CONTENTION OF THE ASSESSEE IS THAT THE HOUSING PROJECT , METRO CITY WAS CONCEIVED, PLANNED AND STARTED ON THE BASIS OF THE PROVISIONS OF INCENTIVE AS ENVISAGED UNDER SECTION 80IB(10) AS PREVAILING IN A.Y.2004 - 05 AND THAT THE ASSESSEE FULFIL LED ALL THE CONDITIONS REQUIRED UNDER SECTION 80IB(10) AS PREVALENT AT THE TIME OF ENTERING INTO THE PROJECT I.E. 20.6.2003. 3 . BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED DETAILED WRITTEN SUBMIS SIONS WHICH ARE AS FOLLOWS: - REGARDING REJECTION OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE I T ACT. 1961 WITH REFERENCE TO PROJECT 'METRO CITY ': IN THIS REGARD IT IS MOST RESPECTFULLY SUBMITTED THAT THIS IS PURELY A MISCONCEIVED ADDITION MADE WITHOUT CORR ECTLY UNDERSTANDING THE FACTS OF THE CASE AND THE PHILOSOPHY BEHIND THE INCENTIVE GIVEN IN THE SECTION 80IB(10) OF THE IT ACT 1961. A) FACTUAL AND LEGAL POSITION APPELLANT IS A PUBLIC LIMITED COMPANY ENG AGED IN MULTIFARIOUS ACTIVITIES , CONSTRUCTION BE ING ONE OF ITS DIVISION. APPELLANT ENTERED INTO A PROPERTY DEVELOPMENT AGREEMENT ON 20.06.2003 IE A.Y.2004 - 05 WITH THE LAND OWNERS M/S UPPER INDIA COUPER PAPER MILLS CO LTD FOR THE DEVELOPMENT & BUILDING OF A HOUSING PROJECT UNDER THE NAME & STYLE OF 'METR O CITY' AT NISHATGANJ ,LUCKNOW. THE PROJECT METROCITY WAS CONCEIVED , PLANNED AND STARTED ON THE - BASIS OF THE PROVISIONS OF INCENTIVE AS ENVISAGED UNDER SEC.80IB(10) AS PREVAILING IN A.Y.2004 - 05 WHICH IS REPRODUCED HEREIN UNDER . SEC. 8 0 IB(10) AS AMENDED BY THE FINANCE ACT. 2002, W . E . F 1.4.01 AND FINANCE ACT. 2003 W.E.F. 1.4.2002 READ AS UNDER ' (10) THE AMOUNT OF PROFITS IN CASE OF AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF ITA NO.531/LKW/2017 PAGE 4 OF 18 MARCH, 2005 BY A LOCAL AUTHORITY /SH ALL BE HUNDRED PERCENT OF PROFITS DERIVED IN ANY PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF - A). SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCT OBER,1998; B). THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE; AND C). THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT - UP AREA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUM BAI OR WITHIN TWENTY FIVE KILOMETERS FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE' A SIMPLE READING OF THE PROVISIONS OF SEC. 80 IB (10) AS ABOVE MAKES IT AMPLY CLEAR THAT THERE IS NO TIME LIMIT SP ECIFIED FOR COMPLETION OF THE PROJECT NOR THERE IS ANY MENTION OF COMMERCIAL AREA RESTRICTIONS. BASED ON THE INCENTIVES PROVIDED BY THE SEC.80IB (10) AS ON THE DATE OF ENTERING OF PROPERTY DEVELOPMENT AGREEMENT I.E. 20.6.2003 (A.Y.2004 - 05) APPELLANT EMBARK ED UPON THE PROJECT 'METRO CITY' AND STARTED ITS DEVELOPMENT & CONSTRUCTION ACTIVITIES AND PUT ITSELF IN AN IRREVERSIBLE POSITION. APPELLANT FULFILS ALL THE THREE CONDITIONS STIPULATED IN THE SEC. 80IB(10) AS ON THE DATE WHEN VESTED RIGHTS WERE CREATED I N THE APPELLANT AND WHEN THE APPELLANT PUT ITSELF IN AN IRREVERSIBLE POSITION BASED ON THE LAW AS APPEARING ON THE STATUTE BOOKS ON THAT DATE NAMELY. (I) APPELLANT UNDERTAKING HAS COMMENCED DEVELOPMENT AND CONSTRUCTION ACTIVITIES OF THE HOUSING PROJ ECT ON OR AFTER 1.10.1998. (IN THE INSTANT CASE IT BEING AFTER 20.06.2003) (II) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH IS MORE THAN ONE ACRE; AND ITA NO.531/LKW/2017 PAGE 5 OF 18 (III) THE RESIDENTIAL UNIT HAVE A MAXIMUM BUILT - UP AREA NOT MORE THAN 1500 SQ. FT. APPEL LANT MAINTAINS COMPLETE INDEPENDENT BOOKS OF ACCOUNTS FOR IT S EACH DIVISIONS AND EACH UNITS AND HAS BEEN MAINTAINING THE SAME FROM LAST SEVERAL YEARS AND EVEN NOW EACH UNIT MAINTAINS ITS BOOKS OF ACCOUNT EACH UNITS MAKES ITS PROFIT AND LOSS ACCOUNT AND BAL ANCE SHEET. EVEN THE PRESCRIBED AUDIT REPORT HAS BEEN OBTAINED AND FILED BY THE APPELLANT. HENCE THERE CAN BE NO DOUBT AS TO THE ELIGIBILITY & ENTITLEMENT OF THE APPELLANT FOR CLAIMING DEDUCTION U/S 80IB( 10) RELATING TO ITS METRO CITY PROJECT. FINANCE ACT 2003 AMENDED SEC 80LB(10)(A) WHEREIN THE REQUIREMENT OF COMPLETION OF THE PROJECT BEFORE 31.3.2003 WAS COMPLETELY REMOVED WITH RETROSPECTIVE EFFECT FROM 01.04.2002. THUS, NOT ONLY HAS THE LIMITATION WITH REGARD TO THE YEAR OF SANCTION, EARLIER FROZEN AT M ARCH 31, 2001, WAS EXTENDED TO MARCH 31, 2005, AND THE BENEFITS OF THE SCHEME WERE MADE AVAILABLE IRRESPECTIVE OF THE YEAR OF COMPLETION. BOARD'S CIRCULAR NO 7/2003 DATED 5.9.2003 WAS ISSUED AND REASONS FOR OMISSION OF TIME - LIMIT FOR COMPLETION OF PROJECT WAS EXPLAINED THAT IT WAS DONE TO RATIONALIZE THE PROVISIONS AND THIS AMENDMENT HAS BEEN MADE EFFECTIVE RETROSPECTIVELY W.E.F. 1.4.2002 SO AS TO MAKE APPLICABLE TO ASSESSMENT YEAR 2002 - 03 AND SUBSEQUENT YEARS. IT IS QUITE CLEAR THAT THE INTENTION OF LAW WA S TO DO AWAY WITH THE TIME LIMIT OF COMPLETION . IT WILL NOT BE OUT OF PLACE TO MENTION HERE THAT THE ASSESSEE EMBARKED UPON THIS MEGA HOUSING PROJECT BASED ON THE ASSURANCES PROVIDED BY THE CENTRAL GOVERNMENT BY WAY OF THE PROVISIONS OF LAW AS STAN DING ON THE DATE OF COMMENCEMENT OF THE PROJECT. ONCE ASSESSEE STARTED TO ACT UPON THE PROJECT AND PUT ITSE L F IN AN IRREVERSIBLE POSITION IT IS NOT POSSIBLE TO RESCHEDULE THE EXECUTION OF SUCH A BIG PROJECT OVER A REDUCED PERIOD OF TIME, IT IS NEITHER LOGICAL NOR IS THE INTENTION OF LAW TO BACK OUT FROM THE INCENTIVES GIVEN OR ASSURANCES GIVEN BY IT EARLIER. ITA NO.531/LKW/2017 PAGE 6 OF 18 HENCE WHAT IS IMPORTANT, IS TO SEE THAT WHEN THE PROJECT STARTED WHETHER THE APPELLANT WAS ENTITLED FOR DEDUCTION U/S 80IB(10) OR NOT AS PER THE PR OVISIONS PRE V AILING AT THAT TIME AND IN THE LIGHT OF VARIOUS JUDICIAL DECISIONS HANDED OUT BY VARIOUS JUDICIAL AUTHORITIES. FIRST DISPUTE CREATED BY THE ASSESSING OFFICER: A. : REGARDING APPLICABILITY OF AMENDED PROVISIONS OF SEC 80IB(10) (WHICH WERE INTR ODUCED PROSPECTIVELY W.E.F. 1.4.2005) FROM RETROSPECTIVE EFFECT IN THIS REGARD IT IS MOST HUMBLY SUBMITTED THAT THE GROSS ERROR COMMITTED BY THE LEARNED ASSESSING OFFICER IS TO PROCEED FOR DETERMINING THE ELIGIBILITY OF CLAIM OF DEDUCTION U/S 80IB(10) BY T HE APPELLANT WITH A PRECONCEIVED NOTION THAT THE AMENDMENT INCORPORATED IN SEC. 80 IB( 10) (D) BY THE FINANCE (NO.2) ACT, 2004 IS RETROSPECTIVE WHEREAS THE FACT IS IT IN PROSPECTIVE IN NATURE AND IT IS EFFECTIVE FROM 1.4.2005 I.E ASSESSMENT YEAR 2005 - 06 ON W ARDS ONLY ON THE PROJECTS APPROVED AFTER 1.4.2005. KARNATAKA HIGH COURT IN THE CASE OF ITTINA PROPERTIES P LTD VIDE ITS ORDER DATED 15.7.2014 HAS VERY CLEARLY HELD THAT 'THE SAID PROVISIONS CAME ON THE STATUTE BOOK BY FINANCE ACT 2004 WITH EFFECT FROM 1.4. 2005 AND THE SAID PROVISIONS ARE PROSPECTIVE IN NATURE AND HAVE NO APPLICATION ON HOUSING PROJECT WHICH WAS APPROVED BY LOCAL AUTHORITY PRIOR TO 1.4.2005, HENCE SO FAR AS PROJECT WHICH STARTED PRIOR TO 1.4.2005, APPROVAL BY THE LOCAL AUTHORITY AS A HOUSING PROJECT WOULD CONSTITUTE ADMISSIBLE MATERIAL TO COME TO THE CONCLUSION THAT THE HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB (10), NOTHING FURTHER NEEDS TO BE EXAMINED IN SUCH A CASE . CBDT CIRCULAR F. NO. 205/3/2000/ITA II DT. 4 - 5 - 2001. C BDT HAS CLARIFIED THAT 'ANY PROJECT WHICH HAS BEEN APPROVED BY A LOCAL AUTHORITY AS HOUSING PROJECT SHOULD BE CONSIDERED AS ADEQUATE FOR PURPOSE OF SECTION 80IB(10)'. ITA NO.531/LKW/2017 PAGE 7 OF 18 EXTRACTS FROM THE DECISION IN BRAHMA ASSOCIATES & OTHERS'' 'THE ADDITIONAL SOLICITOR GE NERAL WHO APPEARED IN SUPPORT OF THE REFERENCE CONCEDED THAT THE ISSUE HAD BEEN CONCLUSIVELY DETERMINED BY THE SUPREME COURT CONSISTENTLY IN AFFIRMATIVE OVER A PERIOD OF YEARS. THERE IS NO CONFLICT WHICH REQUIRED RESOLUTION BY WAY OF A REFERENCE. THE DECIS IONS IN THE CASE OF CIT VS. PODAR CEMENT (P) LTD. 226 ITR 625(SC), ALLIED MOTORS (P) LTD. VS. CIT 224 ITR 677 (SC), BNJ MOHAN DAS VS. CIT 233 ITR 825(SC) & SUWALAL ANANDILAL JAIN VS. CIT 224 ITR 753 (SC) WERE REFERRED TO BY THE CONSTITUTIONAL BENCH FOR CON SIDERATION. ON THE BASIS OF THE ABOVE DISCUSSION, 4T IS AMPLY CLEAR THAT THE AMENDED PROVISIONS OF SECTION 80IB(10) W.E.F. 1 - 4 - 2005 CANNOT HAVE RETROSPECTIVE EFFECT SO AS TO BE APPLICABLE TO THE ASSESSMENT YEAR 2003 - 04 . I ALSO DO NOT AGREE WITH THE ASS ESSI NG OFFICER THAT IF THE AMENDED PROVISIONS OF SECTION 80IB(10) ARE NOT TREATED AS CLARIFICATORY , SECTION 80IB( 1 0) COULD NOT BE HARMONIOUSLY INTERPRETED............. THE ADDITIONAL CONDITIONS IN THE FORM OF RESTRICTION ON COMMERCIAL SPACE AND LIMITATION ON DATE OF COMPLETION AND COMPLETION CERTIFICATE ARE THE NEW CONDITIONS IMPOSED BY THE AMENDMENT AND ARE OPERATIVE POST AMENDMENT ONLY AFTER 1.4.2005 ( THIS WAS THE RATIO OF THE CASE BRAHMA ASSOCIATES DECIDED BY SPECIAL BENCH IT AT PUNE AND UPHELD BY THE HON' BLE MUMBAI HIGH COURT) THESE NEW CONDITIONS CANNOT BE IMPOSED ON THE PROJECT WHICH WERE STARTED EARLIER TO 1.4.2005 AS IT WOULD BE AGAINST THE LAW OF NATURAL ....JUSTICE ,EQUITY & FAIR PLAY. APPELLANT ON THE BASIS OF PROVISIONS OF TAX INCENTIVE SCHEME U/S 80IB(10) AS PREVAILING IN A.Y.2004 - 05 CONCEIVED AND STARTED ITS HOUSING PROJECT NAMED AS METRO CITY HAVING 660 RESIDENTIAL APARTMENTS ALONG WITH OTHER ALLIED INFRASTRUCTURE. THE FINANCIAL PLANNING AND THE EXPECTED CASH FLOWS WERE THE BASIS OF DEVELOPING TH E PROJECT, WHERE NO TIME LIMIT WAS PRESCRIBED FOR COMPLETION. ALL THE CONDITIONS MENTIONED IN SEC.80IB(10) AT THAT TIME WERE FULFILLED AND AP PELLANT ACTUALLY ACTED UPON AND STARTED THE DEVELOPING AND CONSTRUCTION OF ITA NO.531/LKW/2017 PAGE 8 OF 18 HOUSING PROJECT, ANY SUBSEQUENT PROSPECT IVE AMENDMENT IN LAW CANNOT PUT THE APPELLANT TO ANY DISADVANTAGE OR COMPEL HIM TO COMPLY WITH ANY ADDITIONAL CONDITIONS. APPELLANT HAVING CREATED VESTED RIGHTS ON THE BASIS OF THE PROVISIONS OF SEC 80IB(10) AS ON THE DATE OF AGREEMENT HAS PUT ITSELF IN AN IRREVERSIBLE POSITION. HOUSING PROJECTS ARE GENERALLY EXECUTED ON SELF FINANCING BASIS FROM THE FUNDS GENERATED FROM BOOKING OF SALES OF THE APARTMENTS UNDER CONSTRUCTION AND THE CONSTRUCTION SCHEDULES ARE PLANNED TOTALLY DEPENDENT ON THE FUND FLOWS GENER ATED AS ABOVE. ANY MAJOR REVISION IN COMPLETION DATE BECOMES IMPOSSIBLE IN THE GIVEN SITUATION ESPECIALLY FOR THE PROJECT OF THIS MAGNITUDE. B). SECOND DISPUTE CREATED BY THE THE LEARNED ASSESSING OF F ICER IS REGARDING PROJECT NOT BEING COMPLETED BEFORE 31. 3.2008 : IN THIS REGARD IT IS MOST RESPECTFULLY SUBMITTED THAT WHEN THE PROJECT WAS COMMENCED THE PROVISIONS OF SEC 80IB(10) WERE AS UNDER: ... (I) ASSESSEE UNDERTAKING HAS COMMENCED DEVELOPMENT AND CONSTRUCTION ACTIVITIES OF THE HOUSING PROJECT ON OR AFTER 1.10.1998 ( IN THE INSTANT CASE IT IS 26.2.2003) (II) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH IS MORE THAN ONE ACRE; (III)THE RESIDENTIAL UNIT HAVE A MAXIMUM BUILT - UP AREA NOT MORE THAN 1500 SQ FT. THE ADDITIONAL CONDITIONS IMPOSED BY THE FI NANCE ACT 2004 BY AMENDMENT REGARDING RESTRICTION ON COMMERCIAL SPACE AND COMPLETION DATE WERE EFFECTIVE 1.4.2005 AND NOT RETROSPECTIVELY. THIS ISSUE HAS BEEN CLEARLY DECIDED IN SEV ERAL JUDICIAL PRONOUNCEMENTS.. SINC E APPELLANT FULFILS ALL THE THREE CONDIT IONS AND THIS HAS BEEN ACCEPTED BY THE OFFICER IN PARA 3.3 OF THE ASSESSMENT ORDER, THERE IS NO JUSTIFICATION FOR THE DEDUCTION U/S 80IB(10) UNDER THE PRETEXT THAT THE AMENDMENTS WHICH WERE EFFECTIVE FROM 1.4.2005 WOULD APPLY TO PROJECTS HAVING STARTED EAR LIER TO IT. THIS PLEA FINDS ITA NO.531/LKW/2017 PAGE 9 OF 18 SUPPORT FROM THE RATIO OF THE DECISION OF THE APEX COURT IN - THE CASE OF SARKAR BUILDERS WHEREIN IT WAS CALLED UPON TO ADJUDICATE ON THE APPLICABILITY OF CLAUSE(D) OF 80IB(10) AS AMENDED BY THE FINANCE ACT 2004 ; W.E.F.L.4.2005AN D THE BENCH HAS HELD THAT IT WOULD NOT APPLY TO PROJECTS APPROVED BEFORE 1.4.2005. C). THIRD DISPUTE CREATED BY THE LEARNED ASSESSING OFFICER . - IS REGARDING SIZE OF COMMERCIAL ESTABLISHMENTS : THE LD ASSESSING OFFICER HAS REJECTED THE ELIGIBILITY OF THE AP PELLANT TO CLAIM DEDUCTION U/S 80IB(10) ON THE GROUND THAT THE APPROVED MAPS OF THE HOUSING PROJECT HAS PROVISION FOR MAKING COMMERCIAL SPACE WHICH IS MORE THAN 5% OF THE BUILT UP AREA OF THE HOUSING PROJECT AS REQUIRED BY AMENDED CLAUSE(D) OF SEC80IB(10) THIS CONCLUSION OF THE LEARNED ASSESSING OFFICER IN PARA 3.3 (C) OF THE ASSESSMENT ORDER THAT THE APPELLANT DO NOT FULFILL THE CONDITIONS OF SEC. 80 IB( 10 ) IS MISCONCEIVED BECAUSE OF FOLLOWING REASONS : A) THERE WAS NO CONDITION RELATING TO COMMERCIAL SPAC E OR SHOPS AT ALL IN SEC. 80IB(10) WHEN THE PROJECT WAS STARTED. B) AN ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE AMENDED CONDITIONS WHEN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN THE LEGISLATURE WHEN HOUSING PROJECT WAS ACCORDED AP PROVAL BY THE LOCAL AUTHORITIES..' (SARKAR BUILDERS) C) THE AMENDMENT IMPOSING CONDITIONS RELATING TO COMMERCIAL SPACE & SHOPS ARE RESTRICTION WHICH CAME INTO FORCE ONLY W.E.F. 1.4.2005 AND THESE BEING PROSPECTIVE SHOULD NOT BE APPLIED ON THE APPELLANT.( BRAHMA ASSOCIATES) SUBSEQUENTLY THE HON'BLE SUPREME COURT OF INDIA WHILE DISMISSING THE SLP (C )NO 24330 OF 2011 AND OTHERS HAS HELD THE SAME VIEW IN THE CASE OF SARKAR BUILDERS. J UDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT: ITA NO.531/LKW/2017 PAGE 10 OF 18 1. CIT VS SARK AR BUI LDERS ( SUPREME COURT OF I NDIA) CIVIL APPEAL NO 4476 OF 2015 ARISING OUT OF SLP( C) NO 24330 OF 2011 AND OTHER SLP'S 2. HIGH COURT MUMBAI IN BRAHMA ASSOCIATES IN ITA NO 1194 OF 2010 HELD THAT: - 'CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFFECT FROM 1. 4.2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1/4/2005.' 3. PRO VISIONS RELATING TO EXEMPTION, ALLOWANCE AND DEDUCTION, REBATE OR RELIEF SHOULD BE INTERPRETED LIBERALLY AND BROADLY. FOR THIS PROPOSITION WE RELY UPON THE DECISION IN THE FOLLOWING CASES: BAJAJ T EMPO LTD V CIT (1992)ITR 188 (SC) 4. SEC. 80IB(10) - AMENDMENT TO THE SECTION EFFECTIVE FROM 01.04.2005 IS PROSPECTIVE IN NATURE AND DEDUCTION CANNOT BE TAKEN AWAY BECAUSE OF CONDITIONS LEVIED SUBSEQU ENTLY TO APPROVAL OF PROJECT. MANAN CORPORATION V ACIT, (GUJ) TAX APPEAL NUM 1053 O F 2011. BRAHMA ASSOCIATES V JCIT 119 ITD 255 (PUNE) SPECIAL BENCH 5. AMENDMENT WITH EFFECT FROM 1 - 4 - 2005 REQUIRING CERTIFICATE OF COMPLETION OF PROJECT WITHIN FOUR YEARS OF APPROVAL SINCE IT IS PROSPECTIVE AND HENCE NOT APPLICABLE TO PROJECT APPROVED PRIOR TO THAT DATE AND ASSESSEE ENTITLED TO DEDUCTION. CIT V. CHD DEVELOPERS LTD, 362 ITR 177. 6. STRICT CONSTRUCTION OF THE STATUTE IF LEADS TO ABSURD INTERPRETATION THE S AME MAY NOT SUB SERVE THE INTENT AND OBJECT OF LEGISLATION. CIT V J H GOTLA (1985) 156 ITR 323 (SC) 7. WITH TWO POSSIBILITIES OF INTERPRETATION OF A TAXING STATUTE, ONE WHICH IS FAVOURABLE TO THE ASSESSEE SHOULD BE ALWAYS PREFERRED. MYSORE MINERALS LTD V CIT 239 ITR 775(SC) FROM A READING OF THE AFORESAID PROVISIONS EVEN BETWEEN THE LINES IT BECOMES ABUNDANTLY CLEAR AND BEYOND ANY SHADOW OF DOUBTS THAT THE CONDITIONS CONSTITUTING THE PREDOMINANT GROUND OF ITA NO.531/LKW/2017 PAGE 11 OF 18 DISALLOWANCE IN THE ASSESSMENT YEAR UNDER CONSIDER ATION WERE NOT PRESENT ON THE STATUTE BOOK ON T H E DATE OF APPROVAL BY LDA IN JANUARY, 2002, I.E PRIOR TO 01.04.2005. NEITHER THE ASSESSEE NOR THE LOCAL AUTHORITY COULD HAVE ASSUMED THAT THE LEGISLATIVE AMENDMENTS WOULD STRUCTURALLY CHANGE THE PROVISIONS OF SECTION 80IB(10) OF THE ACT AND IT WOULD BE SUBSTITUTED AT A LATER DATE SO AS TO DISENTITLE THE ASSESSEE OF ITS LEGITIMATE CLAIM. 5. IN THE CASE OF THE APPELLANT ITSELF FOR THE AY 2012 - 13 THE CLAIM OF DEDUCTION U/S 80IB(10) HAS BE EN ALLOWED BY THE CIT(AP PEALS) - I AND THE SAME WAS UPHELD BY THE ITAT, LUCKNOW BENCH IN ITS ORDER IN IT A NO.706/LKW/2015 DATED 05.07.2016. 4 . AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE ASSESSEE, IT WAS OBSERVED AND HELD BY THE LD. CIT(A ) AS FOLLOWS: - 6. DURING THE COURSE OF ARGUMENTS IT WAS VEHEMENTLY ARGUED BY THE A.R OF THE APPELLANT THAT THE FACTS OF GLOBAL REALITY WHICH HAS BEEN RELIED UPON BY THE AO ARE DI FFERENT FROM THAT OF THE APPELLANT BECAUSE THAT CASE REVOLVES AROUND THE FACT THAT C OMPLETION CERTIFICATE WAS APPLIED BEFORE 31.3.2008 BUT WAS NOT GRANTED BY THE M UNICIPAL AUTHORITIES TILL 31.3.2008. 7. I HAVE GONE THROUGH THE JUDGMENT OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SARKAR BUILDERS WHEREUPON THE APEX COURT DE CIDED 17 SLP'S ARISING OUT OF ORDERS PREVIOUSLY DECIDED BY VARIOUS HIGH COURTS AGAINST THE REVENUE. THE RELEVANT EXTRACTS FROM THE SAID JUDGMENT ARE REPRODUCED HEREIN UNDER: - PAGE 3 OF THE ORDER '..HOWEVER, INSOFAR AS SUB - SECTION (10) IS CONCERNED, WITH WH ICH WE ARE DIRECTLY CONCERNED, THERE HAVE BEEN AMENDMENTS IN THAT PROVISION FROM TIME TO TIME. WE ARE CONCERNED WITH THE AMENDMENT TO THE SAID SUB - SECTION CARRIED OUT BY FINANCE NO.2 ITA NO.531/LKW/2017 PAGE 12 OF 18 A CT , 2004 W.E.F. 01.04.2005. IN ALL THESE CASES, THOUGH THE HOUSING PROJE CTS WERE SANCTIONED MUCH BEFORE THE SAID AMENDMENT BUT HAVE BEEN COMPLETED AFTER 01.04.2005 WHEN AMENDED PROVISION HAS COME INTO OPERATION. IT IS ALSO NOT IN DISPUTE THAT THE AMENDMENT IS PROSPECTIVE IN NATURE. INTERESTINGLY, WHEN THE HOUSING PROJECT WAS A PPROVED BY A LOCAL AUTHORITY, WHIC H IS THE REQUIREMENT, UNDER SUB - SECTION (10) OF SECTION 80IB, AS ON THAT DATE, THE CONDIT IONS STIPULATED IN THE SAID SUB - SECTION WERE MET BY THE ASSESSEE. HOWEVER, CONDITION IN CLAUSE (D) WHICH WAS LAID DOWN FOR THE FIRST TIME BY THE AMENDMENT MADE EFFECTIVE FROM 01.04.2005 IS NOT FULFILLED. IN THIS SCENARIO, THE QUESTION IS AS TO WHETHER THE NEW CONDITIONS MENTIONED IN THE AMENDED PROVISION HAVE ALSO TO BE FULFILLED ONLY BECAUSE THE HOUSING PROJECTS IN QUESTION, THOUGH STA RTED BEFORE 01.04.2005, WERE COMPLETED AFTER THE SAID DATE. THE QUESTION OF LAW, THAT ARISES FOR DISCUSSION THAT NEEDS TO BE ANSWERED IS THUS COMMON IN ALL THESE APPEALS AND CAN BE FORMULATED AS UNDER: - ' WH ETHER SECTION 80IB(10)(D) OF THE INCOME TAX ACT, 1 961 APPLIES TO A HOUSING PROJECT APPROVED BEFORE 31.03.2005 BUT COMPLETED ON OR AFTER 01.04.2005?'...' PAGE 5 - 6 OF THE ORDER '...THERE WAS NO LIMIT FIXED IN SECTION 80IB(10) REGARDING THE BUILT - UP AREA TO BE USED FOR COMMERCIAL PURPOSE, IN THE SAID HOUSING PROJECT..... HOWEVER, VIDE CLAUSE (D), WHICH WAS INSERTED BY THE AFORESAID AMENDMENT AND MADE EFFECTIVE FROM 01.04.2005, IT WAS STIPULATED THAT THE BUILT - UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS IN THE HOUSING PROJECTS WOULD NOT EXCEED 5% OF THE AGGREGATE BUILT - UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FEET, WHICHEVER IS LESS. THE QUESTION, THUS, THAT ARISES FOR CONSIDERATION IS AS TO WHETHER IN RESPECT OF THOSE HOUSING PROJECTS WHICH FINISHED ON OR AFTER 01.04.2005, THOUGH SANCTIONED AND STARTED MUCH EARLIER, THE ITA NO.531/LKW/2017 PAGE 13 OF 18 AFORESAID STIPULATION CONTAINED IN CLAUSE (D) ALSO HAS TO BE SATISFIED. ALL THE HIGH COURTS HAVE HELD THAT SINCE THIS AMENDMENT IS PROSPECTIVE AND HAS COME INTO EFFECT FROM 01.04.2005, THIS CONDITION WOULD NOT APPLY TO THOSE HOUSI NG PROJECTS WHICH HAD BEEN SANCTIONED AND STARTED EARLIER EVEN IF THEY FINISHED AFTER 01.04.2005.' PAGE - 7 OF THE ORDER THE BOMBAY HIGH COURT IN THE CASE OF C.I.T. V. BRAHMA ASSOCIATES HELD THAT SINCE THE EXP RESSION 'HOUSING PROJECT' IS NOT DEFINED UNDER THE ACT, THE INTENTION OF PARLIAMENT WAS THAT WHATEVER IS APPROVED BY THE LOCAL AUTHORITY UNDER THE EXTENT RULES AS A HOUSING PROJECT WOULD BE TREATED AS 'HOUSING PROJECT FOR THE PURPOSE OF THIS SECTION , INASMUCH AS SUB - SECTION (10) ITSELF MANDATES THAT HOUSING PROJECT IS TO BE APPROVED BY A LOCAL AUTHORITY AS SUCH AN APPROVAL IS A NECESSARY CONDITION FOR CLAIMING THE DEDUCTION UNDER THIS PROVISION. WHEN THE LOCAL AUTHORITY HAS APPROVED A HOUSING PROJECT, WHETHER 'RESIDENTIAL' OR 'RESIDENTIAL CUM COMMERCI AL THE ASSESSEE IS ENTITLED TO A DEDUCTION ON THE ENTIRE PROFIT INCLUDING THE COMMERCIAL ESTABLISHMENTS PORTION. PAGE - 11 OF THE ORDER '...E) CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFFECT FROM 1/4/2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CA NNOT BE APPLIED FOR THE PERIOD PRIOR TO 01/04/2005. ' PAGE - 20 OF THE ORDER '...IN PARA 29, THE HIGH COURT HAS HELD THAT CLAUSE (D) HAS PROSPECTIVE OPERATION, VIZ., WITH EFFECT FROM 01.04.2005, AND THIS LEGAL POSITION IS NOT DISPUTED BY THE REVENUE BEFORE US . WHAT FOLLOWS FROM THE ABOVE IS THAT PRIOR TO 01.04.2005, THESE DEVELOPERS/ASSESSEES WHO HAD GOT THEIR PROJECTS SANCTIONED FROM THE LOCAL AUTHORITIES AS 'HOUSING PROJECTS', EVEN WITH COMMERCIAL USER, THOUGH LIMITED TO THE EXTENT PERMITTED UNDER THE DC RUL ES, ITA NO.531/LKW/2017 PAGE 14 OF 18 WERE CONVINCED THAT THEY WOULD BE GETTING THE BENEFIT OF 100% DEDUCTION OF THEIR INCOME FROM SUCH PROJECTS UNDER SECTION 80IB OF THE ACT. THEIR PROJECTS WERE SANCTIONED MUCH BEFORE 01.04.2005. AS PER THE PERMISSIBLE COMMERCIAL USER ON WHICH THE PROJECT WAS SANCTIONED, THEY STARTED THE PROJECTS AND THE DATE OF COMMENCING SUCH PROJECTS IS ALSO BEFORE 01.042005. ALL THESE ASSESSEES WERE MADE KNOWN OF THE PROVISION BY WHICH THESE PROJECTS ARE TO BE COMPLETED AS THOSE DATES HAVE BEEN SPECIFIED FROM TIME TO TIME BY SUCCESSIVE FINANCE ACTS IN THE SAME PROVISION SECTION 80IB. IN THESE CASES, COMPLETION DATES WERE AFTER 01.04.2005. ONCE THEY ARRANGE THEIR AFFAIRS IN THIS MANNER, THE REVENUE CANNOT DENY THE BENEFIT OF THIS SECTION APPLYING THE PRINCIPLE OF RETROA CTIVITY EVEN WHEN THE PROVISION HAS NO RETROSPECTIVELY.' PAGE - 21 OF THE ORDER '...WITH THE AFORESAID PLANNING AS PER THE LAW PREVAILING PRIOR TO 01.04.2005, THESE ASSESSEES ACTED AND ACQUIRED VESTED RIGHT THEREBY WHICH CANNOT BE TAKEN AWAY. IT IS LUDICROUS ON THE PART OF THE REVENUE AUTHORITIES TO EXPECT THE ASSESSEES TO DO SOMETHING WHICH IS ALMOST IMPOSSIBLE.' PAGE 25 OF THE ORDER 16..(II) THERE WAS NO TIME LIMIT PRESCRIBED FOR COMPLETION OF THE SAID PROJECT...' PAGE 25 - 26 OF THE ORDER '17... THEREAFTE R, SIGNIFICANT AMENDMENT, WITH WHICH WE ARE DIRECTLY CONCERNED, WAS CARRIED OUT BY FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1.4.2005. THIS AMENDMENT HAS ALREADY BEEN NOTED ABOVE. THE LEGISLATURE MADE SUBSTANTIAL CHANGES IN SUB - SECTION (10). SEVERAL NEW CO NDITIONS WERE INCORPORATED FOR THE FIRST TIME, INCLUDING THE CONDITION MENTIONED IN CLAUSE (D). THIS CONDITION/RESTRICTION WAS NOT ON THE STATUTE BOOK EARLIER WHEN ALL ITA NO.531/LKW/2017 PAGE 15 OF 18 THESE PROJECTS WERE SANCTIONED ANOTHER IMPORTANT AMENDMENT WAS MADE BY THIS ACT TO SUB - S ECTION (14) OF SECTION 80IB WITH EFFECT FROM 1.4.2005 AND FOR THE FIRST TIME UNDER CLAUSE (A) THEREOF THE WORDS 'BUILT - UP AREA' WERE DEFINED.' PAGE - 26 OF THE ORDER '...19) CAN IT BE SAID THAT IN ORDER TO AVAIL THE BENEFIT IN THE ASSESSMENT YEARS AFTER 1.4. 2005, BALCONIES SHOULD BE REMOLDED THOUGH THESE WERE PERMITTED EARLIER? HOLDING SO WOULD LEAD TO ABSURD RE - SUITS AS ONE CANNOT EXPECT AN ASSESSEE TO COMPLY WITH A CONDITION THAT WAS NOT A PART OF THE STATUTE WHEN THE HOUSING PROJECT WAS APPROVED...' PAGE - 2 7 OF THE ORDER '20 (B)... THE POSITION OF LAW AND THE RIGHTS ACCRUED PRIOR TO ENACTMENT OF FINANCE ACT, 2004 HAVE TO BE TAKEN INTO ACCOUNT, PARTICULARLY WHEN THE POSITION BECOMES IRREVERSIBLE.' PAGE - 28 OF THE ORDER '..20 (E) IT IS THE CARDINAL PRINCIPLE O F INTERPRETATION THAT A CONSTRUCTION RESULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOIDED.' PAGE - 29 OF THE ORDER '.,20 (G) FROM THIS PROVISION, THEREFORE, IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB - SECTION (10) OF SECTION 801 B INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDMENT IN T HE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVISION H AS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE, IT CANNOT ITA NO.531/LKW/2017 PAGE 16 OF 18 BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIO R TO 01.04.2005...' PAGE - 33 OF THE ORDER 23) THE AFORESAID DISCUSSION PERSUADES US TO CONCLUDE THAT THE JUDGMENTS OF THE HIGH COURTS, WHICH ARE IMPUGNED IN THESE APPEALS, TAKE CORRECT VIEW THAT THE ASS ESEES WERE ENTITLED TO THE BENEFIT OF SECTION 801B(10 ). AS A RESULT, THESE APPEALS F AIL AND ARE HEREBY DISMISSED.' 8. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS OF APPELLANT AND THE STAND TAKEN AND AFTER GOING THROUGH VARIOUS JUDICIAL PRONOUNCEMENTS QUOTED BY THE PARTIES TO THIS APPEAL I AM OF THE OPINI ON THAT IN THE LIGHT OF THE ORDER OF THE HON'BLE SUPREME COURT IN SARKAR BUILDERS, THE APPELLANT IS RIGHTFULLY ENTITLED TO ITS CLAIM FOR DEDUCTION U/S 80IB(10)OF THE ACT AS THE AMENDED PROVISIONS WERE UNDISPUTEDLY PROSPECTIVE IN NATURE AND WERE NOT APPLICA BLE ON THE PROJECTS WHICH WERE APPROVED PRIOR TO 01.04.2005. IN VIEW OF THE ABOVE THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AMOUNTING TO RS.67 , 80 , 090/ - IS HEREBY ALLOWED. THE GROUNDS OF APPEAL OF THE APPELLANT ARE ALLOWED. 5 . WE HAVE PERUSED THE CASE R ECORD, HEARD THE RIVAL CONTENTIONS AND ANALYZED THE FACTS OF THE CASE AND WE FIND THAT THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2013 - 14 WHEREAS IN THE JUST PRECEDING ASSESSMENT YEAR I.E. 2012 - 13 THE CLAIM OF DEDUCTION UNDER SECTION 80IB(1 0 ) HAS BEEN ALLOWED BY THE LD. CIT(A) WHICH WAS ALSO UPHELD BY THE ITAT LUCKNOW BENCH IN ITA NO.706/LKW/20 1 5, ORDER DATED 5/7/2016. CHANGE IN THE OPINION OF THE REVENUE H AS EMERGED DUE TO AMENDMENT IN SUB - SECTION (1 0 ) OF SECTION 80IB OF THE ACT. THOUGH THERE HA VE BEEN FREQUENT AMENDMENTS IN THE PROVISIONS FROM TIME TO TIME, WHAT WE ARE CONCERNED ABOUT IS AMENDMENT OF THE SAID SU B - SECTION CARRIED OUT BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01.04 . 2005 . ITA NO.531/LKW/2017 PAGE 17 OF 18 THE QUESTION WHICH WAS ADJUDICATED UPON BY HON'BLE APEX COURT IN THE CASE OF CIT VS SARKAR BUILDERS IN CIVIL APPEAL NO . 4476 OF 2015 ARISING OUT OF SLP (C) NO 24330 OF 2011 AND OTHER SLP'S WAS THAT IF A HOUSING PROJECT WHICH HAS GOT ITS SANCTION TO START OR HAVING APPROVED MUCH BEFORE SAID AMENDMENT I.E. W.E.F. 1/4/2 005 BUT PROJECTS HAVE BEEN COMPLETED AFTER 1/4/2005, THEN WHETHER CLAUSE (D) WHICH WAS INSERTED BY THE AFORESAID AMENDMENT BEING EFFECTIVE FROM 1/4/2005, WHETHER THIS STIPULATION OF CLAUSE (D) WOULD BE APPLICABLE FOR THESE PROJECTS, WHICH ARE COMPLETED AFT ER 1/4/2005 BUT WAS SECTIONED AND STARTED MUCH EARLIER, WHAT HIGH COURTS HAVE HELD THAT THIS AMENDMENT IS PROSPECTIVE AND COME INTO EFFECT FROM 1/4/2005 AND, THEREFORE, THIS CONDITION WOULD NOT APPLY TO THE PROJECTS SANCTIONED AND STARTED EARLIER EVEN THOU GH THESE PROJECTS HAVE FINISHED AFTER 1/4/2005. THE HON'BLE APEX COURT, FOR ALL THESE SLPS FILED FOR CONSIDERATION, HAVE HELD THAT ASSESSEE WAS ENTITLED TO BENEFIT UNDER SECTION 80IB(10) OF THE ACT. OPINION OF THE HON'BLE APEX COURT WAS THAT CARDINAL PRI NCIPLE OF INTERPRETATION THAT A CONSTRUCTION RESULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOIDED. HOUSING PROJECT CONTEMPLATED UNDER SUB - SECTION (10) OF SECTION 801B INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW, BY WAY OF AN AMENDM ENT IN THE FORM OF CLAUSE (D), AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE, BY NECESSARY IMPLICATION, THE SAID PROVISION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AM ENDMENT, THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE, IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005. THE LD. CIT(A) ON THE BASIS OF THE OBSERVATION OF THE HON' BLE APEX COURT IN THE CASE OF CIT VS SARKAR BUILDERS (SUPRA) UPHELD THE CLAIM OF DEDUCTION OF THE ASSESSEE UNDER SECTION 80IB(10) ALLOWING THE APPEAL OF ITA NO.531/LKW/2017 PAGE 18 OF 18 THE ASSESSEE. THE OPINION IS ABSOLUTELY CLEAR AS ENSHRINED IN THE JUDGMENT DELIVERED BY THE HON'BLE AP EX COURT AND IN VIEW OF THE MATTER RELIEF GRANTED TO THE ASSESSEE BY THE LD. CIT(A) IS, THEREFORE, SUSTAINED. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6 . SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE AND UPHELD THE ORDER OF THE LD. CIT(A), TH E CROSS OBJECTION FILED BY THE ASSESSEE, WHICH IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A), HAS BECOME INFRUCTUOUS. 7 . IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 / 10 / 201 8 . SD/ - SD/ - [ N .S. SAINI ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST OCTO BER , 201 8 JJ: 2310 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR