ACIT 15(2), MUMBAI V. POONAM GRUH NIRMAN, MUMBAI

ITA 6926/MUM/2010

• Counselvise Citation: 692619914 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI N K SAINI, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NOS.6926/MUM/2010 : ASST.YEAR 2007-2008 THE ACIT 15(2), MUMBAI. VS. M/S. POONAM GRUH NIRMAN, GROUND FLOOR, SHAILESH BLDG., (OUTHOUSE), LINKING ROAD, SANTACRUZ, MUMBAI- 400 054 PAN AAGFP5336C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AARSI PRASAD RESPONDENT BY : SHRI SHASHI TULSIYAN DATE OF HEARING : 03.02.2014 DATE OF PRONOUNCE MENT : 12.02.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-26, MUMBAI, DATED 22.07.2010 PERTAINING TO A .Y. 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESS EE IS ENTITLED TO DEDUCTION U/S. 80IB(10) OF RS.63,87,771/- BY PLACIN G RELIANCE UPON THE DECISION OF ITAT SPECIAL BENCH PUNE (2009) 30 S OT 155, IN THE CASE OF M/S. BRAHMA ASSOCIATES, WHICH HAS NOT BEEN ACCEPTED BY THE ITA 6926/M/2010 AY 2007-08 2 REVENUE AND APPEAL HAS BEEN PREFERRED BEFORE THE HO NBLE HIGH COURT ON THE QUESTION OF LAW INVOLVED. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESS EE IS ENTITLED TO DEDUCTION U/S. 80IB(10) OF RS.63,87,771/- BY PLACIN G RELIANCE UPON VARIOUS DECISION IGNORING THE FACT THAT THE LEGISLA TIVE INTENTION OF PROVIDING INCENTIVE U/S. 80IB(10) IS ONLY ON ACCOUN T OF AFFORDABLE RESIDENTIAL DWELLING UNITS AND THAT NO COMMERCIAL B UILT UP AREA WAS ALLOWED PRIOR TO 01.04.2005 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE SAID DEDUC TION FOR A.Y. 2007-08 EVEN THOUGH THE COMMERCIAL BUILT UP AREA EX CEEDED 2000 SQ.FT. WHILE THE MAXIMUM PERMISSIBLE COMMERCIAL BUI LT UP AREA IS ONLY 2000 SQ. FT. WHICH IS CLEARLY APPLICABLE IN TERMS O F CLAUSE (D) OF SECTION 80IB(10) AND EFFECTIVE FROM 01.04.2005. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN ASSOCIATION OF PERSON (AOP) FORMED IN F.Y. 2003-04 AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AS BUILDER AND DEVELOPER. THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF THE HOUSING PROJECT KNOWN AS POONAM VIHAR AND OBTAINE D APPROVAL FOR THE PLAN OF CONSTRUCTION OF THE PROJECT FROM THE LOCAL AUTHORIT Y VIDE LETTER DATED 19.7.2003. THE DEDUCTION OF RS. 63,87,771/- CLAIMED BY THE ASSESSE E U/S.80IB(10) OF THE INCOME TAX ACT, WAS DENIED BY THE AO OBSERVING THAT THE AS SESSEE HAD CONSTRUCTED MORE COMMERCIAL AREA THAN THAT PERMITTED UNDER CLAUSE (D ) OF SEC. 80IB(10). 3. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE DEDUC TION BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE IN TH E IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2006-07 4. BEFORE US, THE LEARNED DR RELIED ON THE GROUNDS OF APPEAL AND SUPPORTED THE ORDER OF ASSESSING OFFICER. HE HAS FURTHER RELIED U PON THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF EVEREST HOME CONSTRUCTION (INDIA) PVT. LTD. ITA NO.7021/MUM/2008 FOR A.Y. 2006-07 DECIDED ON 12 .9.2012. ON THE OTHER ITA 6926/M/2010 AY 2007-08 3 HAND, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE ISSUE INVOLVED IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSE ES OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2006-07 TITLE D AS ITO VS. POONAM CONSTRUCTION & ITO VS. POONAM GRUH NIRMAN (ITA NOS .2003 & 2052/MUM/2010 FOR A.Y 2006-07 VIDE ORDER DATED 11-0 2-2011) 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE QUESTION FOR ADJUDICATION BEFORE US IS AS TO WHETHER THE LAW AS IT EXISTED IN THE A.Y. 2004-05 I.E. WHEN THE ASSESSEE GOT THE APPROVAL FOR THE PLAN O F CONSTRUCTION OF THE PROJECT FROM THE LOCAL AUTHORITY VIDE LETTER DATED 19.7.2003 OR THE LAW AS AMENDED BY THE FINANCE ACT, 2005 W.E.F. 1ST APRIL, 2005, WHEREBY I T HAS BEEN LAID DOWN THAT THE BUILT-UP AREA OF THE SHOPS AND COMMERCIAL ESTABLISH MENT INCLUDED IN THE HOUSING PROJECT SHOULD NOT BE MORE THAN 5 PER CENT OF THE T OTAL BUILT-UP ARE OF THE PROJECT OR 2,000 SQ. FT. WHICHEVER IS LESS, IS TO BE APPLIED ? TO SUM UP, AS TO WHETHER THE ASSESSEE CAN BE DENIED THE BENEFIT OF DEDUCTION WHI CH WAS AVAILABLE ON THE DATE OF APPROVAL OF THE PROJECT BECAUSE OF SUBSEQUENT AMEN DMENT IN THE RELEVANT LAW PUTTING RESTRICTIONS UPON SUCH RIGHT OF DEDUCTION. 6. WE MAY OBSERVE THAT THE IDENTICAL ISSUE CAME FOR CONSIDERATION BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BR AHMA ASSOCIATES (333 ITR 289). THE FOLLOWING QUESTIONS OF LAW WERE ADMITTED AND HEARD ON MERITS BY THE HONBLE HIGH COURT IN THE ABOVE TITLED CASE: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN HOLDING THAT THE DED UCTION U/S.80IB (10), AS APPLICABLE PRIOR TO 1/4/2005 IS ADMISSIBLE TO A 'HOUSING PROJECT' COMPRISING OF RESIDENTIAL HOUSING UNITS AN D COMMERCIAL ESTABLISHMENTS? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLD ING THAT A PROJECT ITA 6926/M/2010 AY 2007-08 4 HAVING COMMERCIAL AREA UP TO 10% OF THE PROJECT IS ELIGIBLE FOR DEDUCTION ON THE ENTIRE PROFITS OF THE PROJECT U/S. 80IB(10) UP TO 1/4/2005 ? (III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROJECTS WHEREIN THE COMMERCIAL AREA IS MORE THAN 1 0% OF THE PROJECT AND THE PROFITS FROM THE RESIDENTIAL DWELLING UNITS IN THAT PROJECT CAN BE WORKED OUT SEPARATELY THEN, SUBJECT TO FULFILLIN G OTHER CONDITIONS, DEDUCTION ON THE PROFITS RELATABLE TO THE RESIDENTI AL PART OF THE PROJECT WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB( 10)? (IV) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INCOME TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE LIMIT ON COMMERCIAL USE OF BUILT UP AREA AS PRESCRI BED BY CLAUSE (D) OF SECTION 80IB(10) HAS NO RETROSPECTIVE APPLICATION A ND IT APPLIES ONLY W.E.F. THE ASSESSMENT YEAR 2005-06 ? 7. AFTER HEARING THE LEARNED REPRESENTATIVE FOR THE PARTIES AND GOING THROUGH THE FACTS OF THE CASE, THE HONBLE HIGH COURT SUMMED UP THE SUM AND SUBSTANCE OF THE DISPUTE INVOLVED IN THE SAID CASE IN THE FOLLOWING WORDS: 14. THUS, THE DISPUTE IN THE PRESENT CASE IS, WHETH ER DEDUCTION UNDER SECTION 80IB(10) AS IT STOOD PRIOR TO 1/4/2005 IS A LLOWABLE TO A HOUSING PROJECT APPROVED BY A LOCAL AUTHORITY WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DEVELOPMENT UNDER THE DEVELOPMENT CONTROL RULES FRAMED BY THE LOCAL AUTHORITY. AFTER DETAILED DISCUSSION OF THE MATTER THE HONBL E BOMBAY HIGH COURT DECIDED THE ABOVE FRAMED QUESTIONS OF LAW AS UNDER: 30. IN THE RESULT, THE QUESTIONS RAISED IN THE APPE AL ARE ANSWERED THUS:- A) UPTO 31/3/2005 (SUBJECT TO FULFILLING OTHER COND ITIONS), DEDUCTION UNDER SECTION 80IB(10) IS ALLOWABLE TO HOUSING PROJ ECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DC RULES / REGULATIO NS FRAMED BY THE RESPECTIVE LOCAL AUTHORITY. ITA 6926/M/2010 AY 2007-08 5 B) IN SUCH A CASE, WHERE THE COMMERCIAL USER PERMIT TED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UNDER THE DC RULES / REGULATION, THE DEDUCTION UNDER SECTION 80IB(10) UP TO 31/3/2005 WOULD BE ALLOWABLE IRRESPECTIVE OF THE FACT THAT TH E PROJECT IS APPROVED AS 'HOUSING PROJECT' OR 'RESIDENTIAL PLUS COMMERCIAL'. C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCOM E TAX ACT, THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31/ 3/2005 DEDUCTION UNDER SECTION 80IB(10) WOULD BE ALLOWABLE TO THE PR OJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UPTO 10% OF THE TOTAL BUILT-UP AREA OF THE PLO T. D) SINCE DEDUCTIONS UNDER SECTION 80IB(10) IS ON T HE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUT HORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING SECTI ON 80IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, I N THE PRESENT CASE, SINCE THE ASSESSEE HAS ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(10) DEDUCTION TO A PART OF TH E PROJECT, WE DO NOT DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BE HALF. E) CLAUSE (D) INSERTED TO SECTION 80IB(10) WITH EFFECT FROM 1/4/2 005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED F OR THE PERIOD PRIOR TO 1/4/2005. 8. FURTHER, WE FIND THAT IN THE OWN CASE OF THE ASS ESSEE FOR IMMEDIATELY PRECEDING YEAR, [ITO VS. POONAM CONSTRUCTIONS (SUPR A)], THE TRIBUNAL, WHILE RELYING ON ANOTHER DECISION OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI, JV 39 SOT 498(MUM.), VIDE PARA 7.2 (PAGES 7 TO 10), H AS OBSERVED AS UNDER : '7.2 WE FIND THE TRIBUNAL, IN THE ABOVEMENTIONED DE CISION HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE O F SAROJ SALES ORGANISATION (SUPRA) AND AT PARAS 24 TO 27 HAVE HEL D AS UNDER: 24. NOW WE WILL DEAL WITH MAIN ISSUE IN THIS APPEAL , I.E., WHETHER THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMIS SION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED OR THE LAW AS AMENDED BY THE FINANCE ACT, 2005 W.E.F. 1ST APRIL, 2005 WHEREBY IT WAS LAID DOWN THAT THE BUILT-UP AREA OF THE SHOPS A ND COMMERCIAL ESTABLISHMENT INCLUDED IN THE HOUSING PROJECT SHOUL D NOT BE MORE THAN ITA 6926/M/2010 AY 2007-08 6 5 PER CENT OF THE TOTAL BUILT-UP ARE OF THE PROJECT OR 2,000 SQ. FT. WHICHEVER IS LESS IS TO BE APPLIED ? ON THE ABOVE I SSUE, WE HAVE ALREADY NOTICED THAT CO- ORDINATE BENCHES OF TRIBUN AL HAVE ALREADY EXPRESSED OPINION. THE DECISION IN THE CASE OF SARO J SALES ORGANISATION (SUPRA) IS DIRECTLY ON THE ISSUE. JUDI CIAL DISCIPLINE DEMANDS THAT WE SHOULD FOLLOW DECISION OF A CO-ORDI NATE BENCH ON IDENTICAL FACTS. 25. THE PROVISIONS OF S. 80-IB(10) AS IT STOOD AT D IFFERENT PERIODS HAVE ALREADY BEEN GIVEN BY US. AN ANALYSIS OF THE SAME S HOWS THE FOLLOWING CONDITIONS WERE REQUIRED TO BE SATISFIED AT VARIOUS POINT OF TIME: ASST. YR. CONDITIONS 2000-01 (A) HOUSING PROJECT TO BE APPROVED BY LOCA L AUTHORITY (B) PROJECT TO COMMENCE ON OR AFTER 1-10-1998 (C) PROJECT WAS TO BE COMPLETED BEFORE 31-3-2001 (D)SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE 2001-02 (A) HOUSING PROJECT TO BE APPROVED BY LOCA L AUTHORITY (B) PROJECT TO COMMENCE ON OR AFTER 1-10-1998 (C) PROJECT WAS TO BE COMPLETED BEFORE 31-3-2001 (D) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A 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 CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 2002-03 (A) HOUSING PROJECT TO BE APPROVED BY LOCA L AUTHORITY (B) PROJECT TO BE APPROVED BY LOCAL AUTHORITY BE FORE 31-3-2001 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-199 8 ITA 6926/M/2010 AY 2007-08 7 (D)SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENT Y-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 2003-04 & 2004-05 (A) HOUSING PROJECT TO BE APPROVED BY LOCAL AUTHO RITY (B) PROJECT TO BE APPROVED BY LOCAL AUTHORITY BE FORE 31-3- 2005 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-199 8 (D)SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A 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 CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 2005-06 (A) HOUSING PROJECT TO BE APPROVED BY LOCA L AUTHORITY (B) PROJECT TO BE APPROVED BEFORE 31-3-2007 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-199 8 (D) THE PROJECT WAS TO BE COMPLETED BEFORE 31-3-200 8, IF THE APPROVAL WAS GIVEN BY A LOCAL AUTHORITY BEFORE 1-4- 2004 AND WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR I N WHICH THE APPROVAL CAME WHERE THE APPROVAL WAS GIVEN ON OR AF TER 1-4- 2004. (E) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1ACRE. (F) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY -FIVE ITA 6926/M/2010 AY 2007-08 8 KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. (G) THE BUILT-UP AREA OF THE SHOPS AND COMMERCIAL E STABLISHMENT INCLUDED IN THE HOUSING PROJECT SHOULD NOT BE MORE THAN 5% OF THE TOTAL BUILT-UP AREA OF THE PROJECT OR 2,000 SQ. FT. WHICHEVER IS LESS. IT IS NOTICED THAT THE PROVISIONS AS IT STOOD AT DI FFERENT POINT OF TIME UNIFORMLY CONTEMPLATES APPROVAL BY LOCAL AUTHORITY. FROM ASST. YR. 2002-03 TIME OF APPROVAL BY THE LOCAL AUTHORITY ASSUMED IMP ORTANCE. COMMENCEMENT OF PROJECT IS NOT OF ANY IMPORTANCE BECAUSE IT DATE S BACK TO 1ST OCT., 1998 THE STARTING POINT WHEN THE INCENTIVE PROVISION PRO VIDING FOR DEDUCTION OF PROFITS FROM HOUSING PROJECTS WERE INTRODUCED. UP T O ASST. YR. 2004-05, THE PROVISION DID NOT IMPOSE ANY PERIOD WITHIN WHICH TH E PROJECT HAS TO BE COMPLETED, EXCEPT IN ASST. YRS. 2000-01 AND 2001-02 . IN ASST. YR. 2001-02, THE CONDITION WAS THAT THE PROJECT SHOULD BE COMPLE TED BEFORE 31ST MARCH, 2003. FROM ASST. YR. 2005-06, THE TIME WITHIN WHICH THE PROJECT HAS TO BE COMPLETED HAS BEEN GIVEN IMPORTANCE. 26. THERE IS TRUTH IN THE PLEA OF HARDSHIP PUT FORT H ON BEHALF OF THE ASSESSEE. LET US ASSUME AN ASSESSEE APPLIES AND OBTAINS APPRO VAL OF A LOCAL AUTHORITY FOR BUILDING A HOUSING PROJECT IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2002- 03. AS PER THE LAW AS IT STOOD IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2002- 03 UP TO 2004-05, THERE WAS NO TIME-LIMIT WITHIN WH ICH THE CONSTRUCTION HAS TO BE COMPLETED OR ANY RESTRICTION REGARDING COMMER CIAL AREA THAT CAN BE BUILT IN A HOUSING PROJECT. LET US ASSUME THAT THE ASSESSEE COMPLIES WITH ALL THE CONDITIONS FOR ALLOWING RELIEF UNDER S. 80-IB(1 0), I.E., IT IS APPROVED AS A HOUSING PROJECT BY THE LOCAL AUTHORITY BUT THE AREA OF COMMERCIAL SPACE AS APPROVED BY THE LOCAL AUTHORITY IS MORE THAN 2,000 SQ. FT. THE ASSESSEE COMMENCES THE PROJECT BUT IS ABLE TO COMPLETE ONLY IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2005-06. AS PER THE CHANGE IN LAW FROM ASST. YR. 2005-06 WITH REGARD TO THE AREA OF COMMERCIAL SPACE IN A HO USING PROJECT THE ASSESSEE WOULD LOOSE HIS ELIGIBILITY TO CLAIM DEDUC TION. IN SUCH CASES, THERE IS DEFINITELY GRAVE HARDSHIP TO THE ASSESSEE. THE I NTERPRETATION SOUGHT TO BE CANVASSED BY THE LEARNED DEPARTMENTAL REPRESENTATIV E WILL ALSO LEAD TO ABSURD SITUATION. LET US ASSUME AN ASSESSEE OBTAINS APPROVAL OF A HOUSING PROJECT PRIOR TO 1ST APRIL, 2005 SAY IN PREVIOUS YE AR RELEVANT TO ASST. YR. 2002-03. HE BUILDS COMMERCIAL SPACE IN EXCESS OF 2, 000 SQ. FT. IN THE HOUSING PROJECT. HE FOLLOWS PERCENTAGE COMPLETION M ETHOD OF ACCOUNTING AND OFFERS PROFITS IN ASST. YRS. 2002-03 TO 2004-05 , CLAIMS EXEMPTION UNDER S. ITA 6926/M/2010 AY 2007-08 9 80-IB(10) AND IS ALLOWED EXEMPTION. ON THE SAME PRO JECT IN ASST. YR. 2005- 06, THE ASSESSEE WOULD NOT GET THE BENEFIT OF S. 80 - IB(10). WE, THEREFORE, FIND NO GROUNDS TO TAKE A VIEW DIFFERENT FROM THE ONE TA KEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SAROJ SALES OR GANISATION (SUPRA). 27. WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING AN Y WORDS TO THE 'STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABI LITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACC ORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE, THE SUBMISSIONS OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHO UT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF S. 80-IB(10) AS AMENDED BY THE FINANCE ACT, 2005, W.E.F. 1ST APRIL, 2005. WE, THEREFORE, HOLD FOLLOWI NG THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FO R SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPM ENT IS TO BE APPLIED.' 9. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCHES OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI, JV (SUP RA) AND THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) AND IN ABSENCE OF ANY CONTRARY DECISION OR DISTINGUISHABLE FEATURE BROUGHT ON RECORD BY THE LE ARNED DR, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) DELETING THE DIS ALLOWANCE. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED.' 10. APART FROM THAT, WE MAY FURTHER OBSERVE THAT AS PER SECTION 6 OF THE GENERAL CLAUSES ACT , 1897, UNLESS A DIFFERENT INTENTION APPEARS, THE REP EAL OF AN ENACTMENT (CENTRAL ACT OR ANY PROVISION THERE IN) D OES NOT AFFECT THE PREVIOUS OPERATION OF ANY ENACTMENT SO REPEALED OR ANYTHING DULY DONE OR SUFFERED THERE UNDER, OR AFFECT ANY RIGHT, PRIVILEGE, OBLIGATION O R LIABILITY ACQUIRED, ACCRUED OR INCURRED UNDER ANY ENACTMENT SO REPEALED. THE SAID SECTION 6 OF GENERAL CLAUSES ACT 1897, FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER : ITA 6926/M/2010 AY 2007-08 10 6. EFFECT OF REPEAL.- WHERE THIS ACT, OR ANY (CENTRAL ACT) OR REGULATION MADE AFTER THE COMMENCEMENT OF THIS ACT, REPEALS ANY ENACTMENT HIT HERTO MADE OR HEREAFTER TO BE MADE, THEN, UNLESS A DIFFERENT INTE NTION APPEARS, THE REPEAL SHALL NOT- REVIVE ANYTHING NOT IN FORCE OR E XISTING AT THE TIME AT WHICH THE REPEAL TAKES EFFECT, OR AFFECT THE PREVIO US OPERATION OF ANY ENACTMENT SO REPEALED OR ANYTHING DULY DONE OR SUFF ERED THERE UNDER, OR AFFECT ANY RIGHT, PRIVILEGE, OBLIGATION OR LIABI LITY ACQUIRED, ACCRUED OR INCURRENT UNDER ANY ENACTMENT SO REPEALED, OR AF FECT ANY PENALTY, FORFEITURE OR PUNISHMENT INCURRED IN RESPECT OF ANY OFFENCE COMMITTED AGAINST ANY ENACTMENT SO REPEALED, ORAFFECT ANY INV ESTIGATION, LEGAL PROCEEDING OR REMEDY IN RESPECT OF ANY SUCH RIGHT, PRIVILEGE, OBLIGATION, LIABILITY, PENALTY, FORFEITURE OR PUNIS HMENT AS AFORESAID. 11. THE ASSESSEE, IN THE PRESENT CASE, HAD UNDER T AKEN THE HOUSING PROJECT AND GOT THE NECESSARY APPROVALS AS PER THE PREVALENT LA W DURING THAT PERIOD. SO ANY RIGHTS AND PRIVILEGES ACQUIRED AND ACCRUED TO THE ASSESSEE UNDER THE LAW AS WAS PREVALENT ON THE DATE OF APPROVAL OF THE PROJECT CA NNOT BE TAKEN AWAY BY SUBSEQUENT REPEAL OF THE RELEVANT PROVISION. SECTIO N 6 OF THE GENERAL CLAUSES ACT WILL COME IN AND STAND FOR THE RESCUE OF THE ASSESS EE. MOREOVER, AS OBSERVED ABOVE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CAS E OF SAROJ SALES ORGANIZATION (SUPRA), ANY DIFFERENT INTERPRETATION OF THE SECTIO N 80 IB(10) WILL LEAD TO ABSURDITY. IN VIEW OF THE ABOVE DISCUSSION OF THE MATTER, MOST HUMBLY AND WITH UTMOST REGARD, WE ARE NOT IN AGREEMENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S EVEREST HOME CONST RUCTION (INDIA) PVT. LTD.(SUPRA). MOREOVER, THE ISSUE NOW STANDS SETTL ED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA AS SOCIATES (SUPRA), WHEREIN THE HONBLE HIGH COURT HAS ANSWERED THE QUESTION AS TO WHETHER DEDUCTION UNDER SECTION 80IB(10) AS IT STOOD PRIOR TO 1/4/2005 IS A LLOWABLE TO A HOUSING PROJECT APPROVED BY A LOCAL AUTHORITY WITH COMMERCIAL USER TO THE EX TENT PERMITTED UNDER THE DEVELOPMENT UNDER THE DEVELOPMENT CONTROL RULES FRAMED BY THE LOCAL ITA 6926/M/2010 AY 2007-08 11 AUTHORITY, IN FAVOUR OF THE ASSESSEE. IT IS PERTINE NT TO MENTION HERE THAT THERE IS A PLETHORA OF JUDGMENTS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL, WHEREIN IT HAS BEEN DECIDED THAT LAW UNDER THE SUBSTITUTED PROVISI ONS OF SECTION 80IB(10) OF THE ACT , WILL NOT BE APPLICABLE FOR THE PROJECTS WHICH HAVE ALREADY BEEN APPROVED BY THE LOCAL AUTHORITY PRIOR TO THE AMENDMENT SUCH AS : I) HARSHAD P. DOSHI, ITAT, MUMBAI BENCH 'A ' ITA NO .2305/M'2006 DATED 28. 02.2007; II) M/S. SAROJSALES ORGANIZATION (SUPRA); III) POONAM CONSTRUCTIONS (SUPRA); IV) HIRANANDANIAKRUTI JV. VS. DCIT, (SUPRA) V) M/S SANDEEP BUILDERS, DATED 19/10/2011, I.T.A. N O.2457/MUM/2010 VI) M/S. VINAMRA BUILDERS,.ITA NO.1907/MUM/2010,DA TED: 20 -01-2012 VII) HAPPY HOME ENTERPRISES (J/V), DATED 3 RD JUNE, 2011, I.T.A.NO. 6265/MUM/2008 (AY 2005-06) I.T.A.NO.314/MUM/2010 (A Y 2006-07) I.T.A.NO. 3363/MUM/2010 (AY 2007- 08) THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S EV EREST HOME CONSTRUCTION (INDIA) PVT. LTD.(SUPRA) UNDER SUCH CIRCUMSTANCES CAN BE SAID TO BE RENDERED PER INCURIAM. 12. IN VIEW OF OUR ABOVE OBSERVATIONS, WE DO NOT F IND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2014 SD/- SD/- (N K SAINI) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 12 TH FEBRUARY, 2014 SA ITA 6926/M/2010 AY 2007-08 12 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, C - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI