2015 (6) TMI 798
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing into agreement dated 26-7-2002. The total area under construction for residential units was more than 1 acre and assessee offered the profit on sale of commercial portion for taxation and claimed benefit u/s. 80IB(10) for the said residential units. It was also stated that Section 80IB(10) was amended by Finance Act,2004 w.e.f. 1-4-2005 and inserted new sub clause (d) in the said section. The said amendment was applicable to the cases who have obtained permission from local authority after 1-4- 2005 and same was not applicable to cases where the permissions were obtained prior to 1-4-2005. 4. The Assessing Officer disallowed the claim u/s. 80IB (10) of Rs. 29,59,155/- for A.Y. 2006-07,Rs.22,26,649/- for A.Y. 2007-08, and Rs. 64,28,640/- for A.Y. 2008-09 for the following reasons:- i) that the project included construction of commercial complex measuring 836.04 sq.mtr which was more than 5% of the aggregate built up area. Thus the firm has violated the prescribed condition in Clause (d) of Sec. 80IB(10). ii) That the project was approved by a single approval letter and that the assessee will have to satisfy all the conditions from year to year irrespective of the fact that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed appeal before the Tribunal against the order of the CIT (A). Therefore, the argument of the assessee that the Revenue has accepted the claim in A.Y. 2005-06, therefore no disallowance u/s. 80 IB (10) can be made for subsequent years. 11. We have heard the rival submissions perused the orders of the lower authorities and material available on record. In the instant case the CIT (A) has held that the assessee is not eligible for deduction u/s. 80-IB (10) by observing as under:- "5. Coming to the second argument regarding applicability of Clause (d) to the facts of the appellant's case, it is noted that admittedly the commercial area is more than 5% of the aggregate built up area. 5.1. I am not in agreement with the appellant that the amended provision of Section 80IB (10) is applicable in respect of the cases where the approval was obtained after 1-4-2005. For the sake of clarity the amended section 80IB (10) is reproduced below: "[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2007 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fied. The claim of the appellant is to be considered in the context of the provisions in the Act and the relevant assessment year. In the instant case the claim is for A.Y. 2006-07 and for the said assessment year Clause (d) is the essential condition prescribed in the section and the said condition has not been satisfied by the appellant. It may happen that prior to A.Y. 2005-06 for the same project deduction u/s. 80-IB (10) might have been claimed and allowed but from A.Y. 2005- 06 the condition (d) is also to be complied with for allowability of deduction. In view of above, even if it is found that the facts of the case fulfil the observations of Hon'ble ITAT in the case of M/s. Shakti Corporation the claim of deduction u/s. 80 IB (10) is not admissible as condition laid down in Clause (d) is not satisfied." 12. Being aggrieved by the above observation the assessee is in appeal before us. 13. It is not in dispute that the commercial built up area of the assessee is 836.04 sq. mt., which is 7.52% of the total built up area. The contention of the assessee is that as the plan was approved on 31- 7-2002 i.e. before 1-4-2005 and therefore, insertion of clause (d) in section 80 IB(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Income-tax to the effect that the deduction in respect of section 80-IB (10) of the Act would be available on year to year basis where the assessee showing profits on partial completion or on the year of completion of the project. From a reading of the instruction, it can be also said that the Government being aware of both the accounting methods has expected either of them to be followed in cases of individual assessees. However, in the postamendment period, strict adherence to the completion period of four years is insisted upon where the project completion method is followed. This limitation of period did not exist prior to the amendment. The amendment cannot discriminate against those following the project completion method if in the interregnum period, amendment is brought in the statute. There were two projects of the assessee, namely, KP and PP, in respect of the profits earned from which the assessee claimed deduction under section 80-IB(10) in the assessment year 2006-07 . The whole project was approved and completed prior to the insertion of the amended provision of section 80- IB(10) of the Act with effect from April 1, 2005. The Assessing Officer denied the deductio....