TaxTMI 
TaxTMI 
2013 (7) TMI 210
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect of the profits derived from the housing project inspite of fact that such project has failed to satisfy the conditions stipulated in clause (b) below the provisions of sec.80IB(10) of the Income tax Act, 1961 which require that the plot area on which the housing project is constructed should not be less than one acre and in the case of the assessee, the said plot of land was found to be less than an acre. 2. Whether on the facts and in the circumstances of the case, the ld CIT(A) erred in law in allowing the claim of deduction u/s.80IB(10) of the I.T.Act in respect of the profits derived from the housing project ignoring the fact that such housing project failed to satisfy the conditions stipulated in clause (c) below the provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng 2402.7 sq.mtrs. The amalgamation of both the plots was approved alongwith the plan. Accordingly, the assessee developed two projects on these properties. One of the housing project developed by the assessee, known by the name of 'BHOOMI ARKADE', was claimed to be eligible for deduction u/s.80IB(10) of Rs. 6,06,34,943. However, in the course of a survey subsequently conducted on the assessee, it was noticed that some of the residential units had area exceeding 1,000 sq. ft. inasmuch as it was found that the assessee had sold the flat by two separate agreements to the members of the same family, though, as such, such pairs of flats sold separately would be viewed only as one unit. On the basis of these findings, as also the admission made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gal position. 7. We find that the deduction u/s.80IB(10) has been declined by the Assessing Officer on the ground that size of the residential unit was in excess of 1,000 sq.ft which, in turn, proceeds on the basis that the flats sold to the family members admittedly by separate agreements, should be treated as one unit. We are unable to approve this approach. We have noted that the size of each flat, as evident from building plan as duly approved by Muncipal authorities was less than 1,000 sq.ft. We have also noted that it is not even revenue's case that each of flat on standalone basis was not a residential unit. Even if flats were constructed or planned in such a way that two flats could indeed be merged into one larger unit, as long ea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gislative amendment by the virtue of which legislature put certain restrictions on sale of residential units to certain family members of a person who has been sold a residential unit in the housing project. Section 80IB(10) now provides an additional eligibility condition that in a case where a residential unit in the housing project is allotted to any person being an individual, no other residential unit in such housing project is allotted to any of the following person, namely (i) the individual or the spouse, or the minor children of such individual, (ii) the HUF in which such individual is a karta' (iii) any person representing such individual, the spouse or minor children of such individual, or the HUF in which such individual is a ka....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trospective effect. The amendment seeks to plug a loophole but restricts the remedy with effect from 1st day of April, 2010, i.e. AY 2010-2011. The law is very clear that unless provided in the Statute, the law is always presumed to be prospective in nature. It will, therefore, be contrary to the scheme of law to proceed on the basis that wherever adjacent residential units are sold to family members, all these residential units are to be considered as one unit. If law permitted so, there was no need of the insertion of clause (f) to section u/s 80IB(10). It will be unreasonable to proceed on the basis that legislative amendment was infructuous or uncalled for -particularly as the amendment is not even stated to be 'for removal of doubts'. ....