2015 (6) TMI 461

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...., the assessee was not eligible for deduction under section 80IB(10) of the Act? (B). Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that though the amended provisions of Section 80IB(10)(d) of the Act came into operation w.e.f. 1/4/2005, it was not applicable in the case of the assessee relating to 2007-08 thereby ignoring the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Isthmian Steamship Line (20 ITR 572), Karimtharuvi Tea Estate Ltd. (60 ITR 262) and Reliance Jute Industries Vs. CIT, reported in (120 ITR 921). 2.00. Facts leading to the present Tax Appeal, in nutshell, are as under:-2.01. The assessee filed return of income for the A.Y. 2007-2008 declaring total income of Rs.NIL. The assessee claimed deduction of Rs. 54,53,349/- under section 80IB(10) of the Income Tax Act, 1961 (hereinafter referred to as "the Act" for short) with respect to the housing project.2.02. The return was processed under section 143(1) of the Act and was selected for scrutiny. The Assessing Officer (hereinafter referred to as "the A.O. for short) finalised the assessment on 14/12/2009. Aft....

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....dition made by the A.O. on that issue also does not survive. However, disallowance of the deduction under section 80IB(10) of the Act by the A.O. on the ground that the area of commercial construction in the housing project exceeds the limit prescribed under section 80IB(10) of the Act, the learned CIT(A) observed and held that all conditions mentioned in section 80IB(10) of the Act are to be cumulatively satisfied before granting deduction under section 80IB(10) of the Act and in the case of assessee, condition No.6 i.e. built up area of shops and other commercial establishment, does not exceed 5% of the total built up are of housing project or 2000 sq.ft. whichever is less, is not satisfied, in the sense that, the project approved by the local authority was having commercial construction of more than 2000 sq.ft. The learned CIT(A) did not agree with the submission made on behalf of the assessee that the project was approved in the year 2003 i.e. before the enactment of the new provision of Clause (d) in section 80IB(10) and hence old provisions of section 80IB(10) of the Act applies, where clause (d) requiring less than 2000 sq.ft. commercial construction, was not there.2.07. The....

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....n 80IB(10) of the Act? (B). Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in holding that though the amended provisions of Section 80IB(10)(d) of the Act came into operation w.e.f. 1/4/2005, it was not applicable in the case of the assessee relating to 2007-08 thereby ignoring the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Isthmian Steamship Line (20 ITR 572), Karimtharuvi Tea Estate Ltd. (60 ITR 262) and Reliance Jute Industries Vs. CIT, reported in (120 ITR 921). 3.00. We have heard Mr. K.M. Parikh, learned advocate appearing on behalf of the revenue at length.3.01. At the outset, it is required to be noted that the dispute is with respect to deduction claimed by the assessee under section 80IB(10) of the Act in respect of housing project which was admittedly approved by the local authority on 6.1.2001 / 6.2.2003. It is required to be noted that both, the learned CIT(A) as well as the learned tribunal found from the certificate of the Architect that out of total land area approved of 14,901 sq.mtr., total built up area for residence was 8751.59 sq.mtr. and only 451 sq.mtr. was....

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....ea of the plot.d) Since deductions under Section 80IB(10) is on the profits derived from the housing projects approved by the local authority as a whole, the Tribunal was not justified in restricting Section 80IB(10) deduction only to a part of the project. However, in the present case, since the assessee has accepted the decision of the tribunal in allowing Section 80IB(10) deduction to a part of the project, we do not disturb the findings of the Tribunal in that behalf. e) 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 to 1/4/2005." However, the Hon'ble Supreme Court clarified that only those project which are approved by the local authorities as housing project with commercial element therein upto 31/3/2005 (subject to fulfilling other conditions), shall be entitled to deduction under section 80IB(10) of the Act. With respect to the aforesaid direction (b), the Hon'ble Supreme Court further clarified that the same shall be read in that context where the project is predominantly housing / residential project but the commercial activity in the residential units is permitted....