ASST CIT CIR 4, THANE V. MAGNETE ENTERPRISES, MUMBAI

ITA 5802/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71774 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 20-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI PRAKASH
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Retrospective amendment
• Section: 10; 80IB

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . , ! ! ! ! '#$% '#$% '#$% '#$% , # # # # &' &' &' &' BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJE NDRA,ACCOUNTANT MEMBER ./ ITA NO.5802/MUM/2012 , ( ( ( ( / ASSESSMENT YEAR-2009-10 ASST. CITT CIR 4 2 ND FLOOR, QURESHGI MANSION, GOKHALE ROAD, NAUPADA, THANE (W) 400 602 VS. M/S. MAGNETE ENTERPRISES 103, A WING, GARDEN VIEW APPTS, VIRAT NAGAR, VIRAR(W) MUMBAI PAN: AAKFM5364M )* )* )* )* + + + + # ## # / APPELLANT BY :SHRI RAVI PRAKASH ,-)* . + # / RESPONDENT BY : SHRI SUBODH RATNAPARKHI . .. . / / / / / DATE OF HEARING : 21/11/2013 0( . / / DATE OF PRONOUNCEMENT : 27/11/2013 , 1961 . .. . 254(1) # ## # $/1/ $/1/ $/1/ $/1/     ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 15.05.2012 OF THE CIT(A )-II,THANE,ASSESSING OFFICER(AO)HAS FILED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, THE LD. CIT(A)-II, THANE, HAS ERRED IN HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 801B(10) RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM). 2.ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, THE LD. CIT(A)-II THANE WAS NOT JUSTIFIED IN RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM) AND HOLDING THA T THE LIMIT WITH REGARD TO BUILT UP AREA OF SHOPS AND COMMERCIAL ESTABLISHMENTS AS PRESCRIBED B Y CLAUSE (D) OF SUB SECTION 10 OF SECTION 80IB HAS PROSPECTIVE APPLICATION ONLY AND CANNOT BE APPL IED RETROSPECTIVELY. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S. 80IB(1 0), RELYING ON THE DECISION IN THE CASE OF CIT VS BRAHMA ASSOCIATES,(2011)333 ITR 289(BOM), WHEREIN T HE LIMITATION ON CONSTRUCTION OF COMMERCIAL AREA WAS FIXED AT 10% AS AGAINST THE STA TUTORY LIMITATION OF 5% OF THE TOTAL BUILT UP AREA OR 2000 SQ. FT., WHICHEVER WAS LESS. 4.THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT (A)-II, THANE, BE CANCELLED AND THAT OF THE A.O. RESTORED. 5.THE APPELLANT CRAVES LEAVE TO ADD,ALTER,AMEND OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF CONSTRUCTI ON FILED ITS RETURN OF INCOME ON 24.09.2009 DECLARING INCOME AT RS.35,88,970/-.AO FINALISED THE ASSESSMENT ON 23.12.2011 U/S.143(3)OF THE ACT DETERMINING THE INCOME OF THE ASSESSEE AT RS.1, 79,25,689/-.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD DEVELOPE D A HOUSING PROJECT BEING BUILDINGS NO.7 AND 8 AT VILLAGE BOLINJ, TALUKA VASAI, DISTRICT THANE,T HAT THE HOUSING PROJECT OF THE ASSESSEE HAD 2 ITA NO. 5802/MUM/2012 M/S. MAGNETE ENTERPRISES COMMERCIAL AREA TOTALING UP TO 10042.536 SQ. FT. WH ICH WAS MORE THAN THE LIMIT PRESCRIBED UNDER CLAUSE (D) TO SECTION 80IB(10). ACCORDING TO THE AO , THE COMMERCIAL AREA IN A HOUSING PROJECT PRESCRIBED UNDER THE ABOVE SECTION SHOULD NOT EXCEE D 5% OR 2000 SQ. FT.,WHICHEVER WAS LOWER.AS THE COMMERCIAL AREA IN THE HOUSING PROJECT OF THE A SSESSEE WAS MORE THAN 2000 SQ. FT.,AO ASKED IT TO SHOW CAUSE AS TO WHY THE DEDUCTION UNDER SECTION 801B(10) SHOULD NOT BE DISALLOWED FOR THE PERIOD UNDER CONSIDERATION. IN RESPONSE TO THE ABOV E SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE HOUSING PROJECT HAD COMMENCED VIDE COMMENC EMENT CERTIFICATE ISSUED BY THE LOCAL AUTHORITY DATED 20/02/2004 THAT SUB-CLAUSE (D) OF S ECTION 80IB(10) WAS BROUGHT ON THE STATUTE W.E.F. 01/04/2005,THAT THE AMENDMENT TO THE SECTION WAS PROSPECTIVE IN NATURE,THAT PRIOR TO 01/04/2005 THE PROVISIONS OF SECTION 80IB(10) DID N OT RESTRICT THE EXTENT OF COMMERCIAL COMPONENT IN A HOUSING PROJECT,THAT SUCH A RESTRICT ION ON THE COMMERCIAL COMPONENT IN A HOUSING PROJECT WAS APPLICABLE IN RESPECT OF HOUSING PROJEC TS WHICH HAD COMMENCED AFTER 01/04/2005,THAT THE CONTROVERSY REGARDING THE COMMERCIAL COMPONENT IN A HOUSING PROJECT HAD BEEN SETTLED BY THE DECISION OF THE JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES(333 ITR 289)WHEREIN IT WAS HELD THAT DEDUCTION U/S. 80 IB(10) WAS TO BE ALLOWED IN ENTIRETY IN THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY PRI OR TO 31/3/2005.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,AO HELD THAT THE ABOVE JUDGMENT WAS IN RELATION TO THE YEAR PRIOR TO AMENDMENT I.E. PRIOR TO 01/04/2005, WHEREAS THE REL EVANT YEAR FOR THE ASSESSEE WAS A.Y. 2009-10 I.E. PERIOD AFTER THE AMENDMENT AND THEREFORE NOT A PPLICABLE IN THE CASE OF THE ASSESSEE,THAT THE ACT DOES NOT SUGGEST THAT THE SAID AMENDMENT WAS NO T APPLICABLE TO THE PROJECTS APPROVED BEFORE 01/04/2005-RATHER IT ONLY STATED THAT THE AMENDMENT WAS APPLICABLE W.E.F. 01/04/2005, WHICH MEANS IT TALKED ONLY ABOUT THE RELEVANT ASSESSMENT YEAR, THAT IT COULD NOT BE ASSUMED THAT THE AMENDMENT WAS NOT APPLICABLE TO THE PROJECTS APPROV ED BEFORE 01/04/2005.ACCORDING TO THE AO,THE CEILING OF 5% OR 2000 SQ. FT. ON THE COMMERCIAL AREA WAS BROUGHT INTO ACT W.E.F. 2005-06, THE CONDITION WAS APPLICABLE TO THE ASSESSEES CASE FOR THE A.Y.2009-10.FIANLLY,AO DISALLOWED THE DEDUCTION CLAIMED BY IT AMOUNTING TO RS.1,43,36 ,719/-U/S.80IB(10) OF THE ACT AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,HE HELD THAT HE INTENDED TO AGREE WITH THE ARGUMENTS OF THE ASSESSEE MADE BEFORE THE AO,THAT I N A NUMBER OF JUDICIAL DECISIONS IT HAD BEEN DECIDED BY VARIOUS COURTS THAT THE DEDUCTION TO THE HOUSING PROJECTS U/S. 80IB(10) OF THE ACT WAS TO BE ALLOWED TO THE HOUSING PROJECT OF AN UNDERTAK ING EVEN THOUGH IT CONTAIN AREA OF COMMERCIAL ESTABLISHMENTS, THAT THE AO HAD DENIED THE DEDUCTIO N U/S.80IB(10) MAINLY ON THE GROUND THAT THE AMENDED PROVISIONS OF SECTION 80IB(10)WHICH CAME IN TO EFFECT FROM 01/04/2005, WERE APPLICABLE TO THE CASE OF THE ASSESSEE EVEN THOUGH THE PROJECT COMMENCED PRIOR TO 01.04. 2005, THAT THE PROJECT COMPLETED BY THE ASSESSEE WAS NOT ELIGIBLE FOR THE SAID DEDUCTION ON ITS HOUSING PROJECT,THAT SUCH A VIEW WAS NOT THE CORRECT INTER PRETATION OF THE PROVISIONS OF SECTION 80IB (10).FAA REFERRED TO THE DECISION OF THE F BENCH O F MUMBAI TRIBUNAL DELIVERED IN THE CASE OF M/S.SAROJ SALES CORPORATION WHEREIN FOLLOWING HAS B EEN HELD AS REGARDS THE OBJECTION OF THE AO THAT THE PERMIS SIBLE SHOPPING AREA OF HOUSING PROJECT EXCEED 5%, THE ASSESSEE WAS NOT ENTITLED FOR RELIEF U/S. 80/B (1),WE ARE OF THE VIEW THAT THE HOUSING PROJECTS WHICH WERE APPROVED BEFORE 31.3.2005 THERE WAS NO STIPULATION AS TO THE SHOPPING COMPLEX AREA WAS PERMISSIBLE IN THE PROJECT.AS ALRE ADY STATED EARLIER THAT THE AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING 1THE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROVED UPTO 31.3.2007,THE DENIAL OF DEDUCTION IN OUR VIEW, WAS CLEARLY NOT IN ACCORDANCE WITH LAW. RELYING UPON THE ABOVE DECISION,HE HELD THAT THE PR OJECTS WHICH WERE APPROVED AND COMMENCED PRIOR TO 01/04/2005 THE AMENDED PROVISIONS WERE NOT APPLICABLE TO SUCH PROJECTS AS THERE WAS NO RESTRICTION REGARDING THE COMMERCIAL COMPONENT IN A HOUSING PROJECT,THAT THE RESTRICTION OF COMER- CIAL AREA IN A HOUSING PROJECT TO THE EXTENT OF 5% /2000 SQ. FT. WHICHEVER WAS LOWER,INTRODUCED BY WAY OF CLAUSE (D) TO SECTION 80IB(10) WAS PROSPECTI VE AND PRIOR TO THAT PERIOD I.E BEFORE 31/ 03/2005.HE FURTHER HELD THAT THE ISSUE HAD BEEN SET TLED RECENTLY BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BRAHMA ASSOCIAT ES(SUPRA),WHEREIN THE HONBLE HIGH COURT 3 ITA NO. 5802/MUM/2012 M/S. MAGNETE ENTERPRISES HAD ALSO DECIDED THE ISSUE REGARDING THE RETROSPECT IVE APPLICABILITY OF THE CLAUSE (D) OF THE SECTION 80IB(10)OF THE ACT,THAT THE ABOVE DECISION OF THE H ONBLE HIGH COURT OF BOMBAY WAS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE,THAT THE H OUSING PROJECT OF THE ASSESSEE WAS APPROVED AS RESIDENTIAL WITH SHOPLINE PROJECT BY THE CIDCO IN J ANUARY,2004.,THAT HONBLE HIGH COURT OF BOMBAY IN ITS DECISION IN THE CASE OF BRAHMA ASSOCI ATES(SUPRA) HAD CLEARLY DECIDED THAT THE CLAUSE (D),INSERTED TO THE SECTION 801B(10) WITH EF FECT FROM 01/04/2005, WAS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE COULD NOT BE APPLIED TO THE PERIOD PRIOR TO 01/04/2005,THAT THE RESTRICTION IMPOSED BY THE INTRODUCTION OF SUB-SECTION(D) TO SE CTION 801B(10) W.E,F. 1.4.2005 WERE THEREFORE NOT APPLICABLE TO THE ASSESSEE AS HIS PROJECT HAVIN G COMMERCIAL AREA WAS APPROVED AS WELL AS COMMENCED PRIOR TO THE SAID DATE,THAT DEDUCTION U/S . 80IB(10) WOULD BE AVAILABLE TO THE HOUSING PROJECTS IRRESPECTIVE OF THE FACT THAT PROJECT WAS APPROVED AS A HOUSING PROJECT OR APPROVED AS RESIDENTIAL WITH SHOPLINE,THAT AS LONG AS THE HOU SING PROJECT WAS AS PER THE DEVELOPMENT CONTROL REGULATIONS OF THE LOCAL AUTHORITY THE ASSESSEE COU LD NOT BE DENIED THE DEDUCTION U/S.80 IB(L0).FINALLY,HE ALLOWED THE APPEAL FILED BY THE A SSESSEE. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUBMITTED THAT ISSUE OF 80IB(10)DEDUCTION WAS DECIDED IN FAVOUR OF REVENUE BY THE DECISION OF I BENCH OF MUMBAI ITAT(ITA.NO.7021/MUM/ 2008)DELIVERED ON 12.09.2012 IN THE CASE OF EVEREST HOME CONSTRUCTION(INDIA)(P)LTD.,THAT ASSESSEE FIRM WAS NOT ENTITLED TO CLAIM U/S.80IB(10 )OF THE ACT.AUTHORIZED REPRESENTATIVE (AR) SUBMITTED THAT ISSUE IN QUESTION WAS DECIDED IN FAV OUR OF THE ASSESSEE.HE RELIED UPON THE FOLLOWING DECISIONS: 1. MANAN CORPORATION (APPEAL NO. 1953 OF 2011 DT.03.09 .2012 GUJARAT HIGH COURT). 2. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. (21 TAX MANN.COME 140 (KAR). 3. G.R.DEVELOPERS (22 TAXMANN.COME 265 (KAR). 4. RAVIRAJ KOTHARI PUNJABI ASSOCIATES(ITA NO.223/PN/20 11 DT.22.03.2013B BENCH, ITAT, PUNE). 5. SAROJ SALES ORGANISATION (3DTR 494 (2008)(MUM) 6. IDEAL REALTORS (ITA NO.7669/MUM/2011 DAT.14.08.2013 I BENCH, ITAT, MUMBAI). 7. NEEL SIDDHI ENTERPRISES (ITA NO.1761,1762 &1763/MUM /2010 DT. 30.03.2012 B BENCH, ITAT, MUMBAI). 8. CHHEDA CONSTRUCTION CO.(JOINT VENTURE) (ITA NO.2764 /MUM/2009 DT. 27.04.2011 C BENCH, ITAT, MUMBAI). HE FURTHER SUBMITTED THAT B BENCH OF ITAT PUNE HA D CONSIDERED THE DECISION DELIVERED BY ITAT MUMBAI IN THE CASE OF M/S. EVEREST HOME CONSTRUCTIO N(INDIA) PVT. LTD.(SUPRA), THAT WHILE THE PASSING ORDER PUNE BENCH AS ALSO CONSIDERED JUDGMEN T OF HONBLE GUJARAT HIGH COURT HAD DELIVERED IN THE CASE OF MANAN CORPORATION, THAT I BENCH OF MUMBAI TRIBUNAL DID NOT HAVE BENEFIT OF THE JUDGMENTS OF THE GUJARAT HIGH COURT, WHEN IT HAD PASSED THE ORDER, THAT KARNATAKA HIGH COURT IN THE CASE OF G.R. DEVELOPERS (SUPRA) H AD ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THAT AMENDMENT INTRODUCED IN SECTION 80IB (10) WAS NOT APPLICABLE TO A PROJECT WHICH WAS APPROVED PRIOR TO 01.04.2005. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ISSUE BEFORE US WAS DISCUSSED AND DECIDED BY THE HONBLE HIGH COURT OF GUJARAT CONCLUSIVELY IN THE CASE OF MANAN CORPORATION(SUPRA).HONBLE COURT HAS HELD UNDER : 20.IN OUR OPINION,THE TRIBUNAL HAS MISDIRECTED ITS ELF IN INTERPRETING PARAGRAPH 25 OF THE SAID JUDGMENT AND THEREBY DENYING THE BENEFIT OF SECTION 801B(1 0) TO THE APPELLANT HEREIN IN AS MUCH AS BEFORE THE BOMBAY HIGH COURT IT WAS REVENUES CASE THAT RESIDENTIAL PROJECT HAVING COMMERCIAL CONSTRUCTION CANNOT BE HELD ENTITLED TO THE BENEFIT UNDER SECTION 801B(1 0) OF THE ACT AND FOR SUPPORTING ITS VERSION, RELIANCE WAS PLACED ON INCL USION OF CLAUSE (D) OF SECTION 801B(10) FROM 1.4.2005, WHICH RESTRICTS AREA OF COMMERCIAL CONSTR UCTION IN RESIDENTIAL PROJECT. IT WAS A PROJECT OF RESIDENTIAL HOUSING WITH COMMERCIAL USER FOR ASSESS MENT YEAR 2003 -2004 AS NOTED ABOVE. 4 ITA NO. 5802/MUM/2012 M/S. MAGNETE ENTERPRISES IN THIS BACKDROP, THE COURT REJECTED, REFUTED SUCH VERSION AND FOR FORTIFYING ITS DENIAL, IT MENTIONE D INCLUSION OF CLAUSE(D) FROM 1.4.2005 BY HOLDING THA T BY INSERTION OF CLAUSE(D) OF SECTION 801B(10) OF THE ACT, LEGISLATURE MADE IT CLEAR THAT THOUGH THE HOUSING PROJECT APPROVED BY LOCAL AUTHORITY WITH COMMERCIAL USER TO THE EXTENT PERMISSIBLE UNDER THE RULES AND REGULATIONS WERE ENTITLED TO SECTION 801B( 10) DEDUCTION, SUCH DEDUCTION WOULD BE SUBJEC T TO THE RESTRICTION SET OUT IN CLAUSE (D) OF SECTI ON 801B(10) FROM 1.4.2005. IN OUR OPINION,TRIBUNAL HAS QUOTED THE JUDGMENT OUT OF CONTEXT TO DENY THE SAID BENEFIT TO THE APPELLANT ERRONEOUSLY. 21. NEITHER THE ASSESSEE NOR LOCAL AUTHORITY RESPON SIBLE TO APPROVE THE CONSTRUCTION PROJECTS ARE EXPECTED TO CONTEMPLATE FUTURE AMENDMENT IN THE STA TUTE AND APPROVE AND/OR CARRY OUT CONSTRUCTIONS MAINTAINING THE RATIO OF RESIDENTIAL HOUSING AND CO MMERCIAL CONSTRUCTION AS PROVIDED BY THE AMENDED ACT BEING 3% OF THE TOTAL BUILT UP AREA OR 5000 SQ. FEET WHICHEVER IS HIGHER (NOW IN POST 2010 PERIOD)OR 5% OF THE AGGREGATE BUILT UP AREA OR 2000 SQ.FEET WHICHEVER IS LESS. REVENUE IS ALSO IN ERRO R TO SUGGEST THAT EVEN IF SUCH CONDITIONS ARE ONEROUS , THEY ARE REQUIRED TO BE FULFILLED. THE ENTIRE OBJ ECT OF SUCH DEDUCTION IS TO FACILITATE THE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE WAS NO SUCH RESTR ICTION IN TAXING STATUTE AND THE PERMISSIBLE RATIO FOR COMMERCIAL USER MADE 5% TO THE TOTAL BUILT UP AREA BY WAY OF AMENDMENT AND REDUCTION OF WHICH BY FURTHER AMENDMENT TO 3% OF THE TOTAL BUILT UP AREA, HAS TO BE NECESSARILY CONSTRUED ON PROSPECTIVE BASIS. 22. AS IS VERY APPARENT FORM THE RECORD, THERE WAS NO CRITERIA FOR MAKING COMMERCIAL CONSTRUCTION PRIOR TO THE AMENDED SECTION AND THE PLANS ARE APPR OVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY FOR BOTH THE PROJECTS OF THE APPELLANT. PERMISSION FOR CONSTRUCTION OF SHOPS HAS BEEN ALLOWED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH RULES AND REGULA TIONS, KEEPING IN MIND PRESUMABLY THE REQUIREMENT OF LARGE TOWNSHIPS. HOWEVER, THE PROJECTS ESSENTIAL LY REMAINED RESIDENTIAL HOUSING PROJECTS AND THAT I S ALSO QUITE APPARENT FROM THE CERTIFICATES ISSUED BY THE LOCAL AUTHORITY AND, THEREFORE NEITHER ON THE GROUND OF ABSENCE OF SUCH PROVISION OF COMMERCIAL S HOPS NOR ON ACCOUNT OF SUCH COMMERCIAL CONSTRUCTION HAVING EXCEEDED THE AREA CONTEMPLATED IN THE PROSPECTIVE AMENDMENT CAN BE MADE APPLICABLE TO THE APPELLANT ASSESSEE WHOSE PLANS AR E SANCTIONED AS PER THE PREVALENT RULES AND REGULATIONS BY THE LOCAL AUTHORITY FOR DENYING THE BENEFIT OF DEDUCTION OF PROFIT DERIVED IN THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR AS MADE AVAILA BLE OTHERWISE UNDER THE STATUE. 24.KARNATAKA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE VS. ANRIY A PROJECT MANAGEMENT SERVICES (P.) LTD. REPORTED IN [2012J 21 TAXMANN.COM140 (KARNATAKA)WAS ALSO EXAMINING THIS PROVISION WHERE THE QUESTION WAS WHE THER THE DEFINITION OF BUILT-UP AREA INSERTED BY FINANCE (NO.2) ACT, WHICH BECAME EFFECTIVE FROM 1.4 .2005 IS PROSPECTIVE OR RETROSPECTIVE IN NATURE AND IT HELD THAT THE SAME TO BE PROSPECTIVE IN NATU RE. IT HELD THAT AMENDMENT PROVISION WOULD HAVE NO APPLICATION TO HOUSING PROJECTS, WHICH WERE APPROVE D BY THE LOCAL AUTHORITY PRIOR TO 1.4.2005 IN CALCULATING 1500 SQ.FEET OF RESIDENTIAL UNIT AND IT FURTHER HELD THAT ONCE SUCH HOUSING PROJECT OF ASSESSEE IS APPROVED BY LOCAL AUTHORITY PRIOR TO 1. 4.2005, IT WOULD BE ENTITLED TO 100% BENEFIT OF SECTION 801B(10). WHILE SO HOLDING, IT RELIED ON TH E JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. G.R. DEVELOPERS [IT APPEAL NO.355 OF 200 9]. 27.THE ENTIRE OBJECT OF SUCH DEDUCTION IS TO FACILI TATE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AN D WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE W AS NO RESTRICTION AND BY AMENDMENT AS STATED PERMISSIBLE RATIO FOR CONSTRUCTION IS 5% OF THE TOT AL BUILT UP AREA, REDUCTION OF THIS RATIO TO 3% OF THE TOTAL BUILT UP AREA HAS TO BE NECESSARILY ON PROSPE CTIVE BASIS. AS MENTIONED HEREINABOVE CRITERIAS TO HOLD THIS AME NDMENT RETROSPECTIVE ARE ABSENT AS THERE IS NO AS EXPLICIT AND SPECIFIC WORDING EXPRESSING RETROSPECT IVITY AND EVEN IF IT IS ASSUMED FOR THE SAKE OF ARGUMENTS THAT THE SAME IS TO BE READ BY IMPLICATIO N THE SAME DOES NOT APPEAR TO BE REASONABLE BUT, IN FACT EMERGES TO BE HARSH AND UNREASONABLE WHEN I T COMES TO IMPLEMENTATION. 34.ABOVE DISCUSSION CUMULATIVELY WHEN EXAMINED WITH THE OBJECTIVES AND INTENT IT SOUGHT TO ACHIEVE IN BRINGING ABOUT THE SAID PROVISION OF SECTION 801B(1 0), THIS AMENDED TAXING STATUTE REQUIRES TO BE INTERPRETED IN FAVOUR OF THE ASSESSEE RATHER THAN I NSISTING UPON STRICT COMPLIANCE LEADING TO ABSURDIT Y. 35.IT CAN BE ALSO HELD THAT THIS BEING A SUBSTANTIV E AMENDMENT AND NOT A CLARIFICATORY AMENDMENT, THE AMENDMENT OF THIS NATURE CANNOT HAVE RETROSPECTIVE EFFECT. WE FIND THAT WHEN THE I BENCH OF MUMBAI TRIBUNAL HA D DECIDED THE ISSUE OF 80IB(10)OF THE ACT, IT DID NOT HAVE THE BENEFIT OF THE JUDGMENT OF HON BLE HIGH COURT OF GUJARAT.WE FURTHER FIND THAT PUNE BENCH OF THE TRIBUNAL HAS CONSIDERED ALL THE D ECISIONS,INCLUDING THE DECISION OF HOME CONSTRUCTION(INDIA)(P)LTD.,(SUPRA)WHILE DECIDING TH E ISSUE IN FAVOUR OF THE ASSESSEE.AFTER CONSID - ERING THE JUDGMENT OF THE HONBLE HIGH COURTS OF GU JARAT KARNATAKA,WE ARE OF THE OPINION THAT 5 ITA NO. 5802/MUM/2012 M/S. MAGNETE ENTERPRISES THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.THEREFORE,UPHOLDING HIS ORDER WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE A O. AS A RESULT,APPEAL FILED BY THE AO STANDS DI SMISSED. 3 /4 3/ VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH 5 &6 . 1 3' . '/ 8 . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER,2013 .  . 0( # $ : ;& 27 , 2013 . 1 < SD/- SD/- . / D. MANMOHAN ) ( '#$% '#$% '#$% '#$% / RAJENDRA ) / VICE-PRESIDENT # # # # &' &' &' &' /ACCOUNTANT MEMBER / MUMBAI, ;& /DATE: 27. 11 .2013 SK     . .. . ,/= ,/= ,/= ,/= >#=(/ >#=(/ >#=(/ >#=(/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / ,-)* 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR B BENCH, ITAT, MUMBAI / =A1 ,/ . , . . $ . 6. GUARD FILE/ 1 B -=/ ,/ //TRUE COPY//  / BY ORDER, / ' DY./ASST. REGISTRAR , /ITAT, MUMBAI