TaxTMI 
TaxTMI 
2019 (8) TMI 898
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....s been approved by the local authority before 1.4.2004." Thereafter, on 11.1.2017 this Hon'ble Court accepted and admitted one more question of law mentioned as 'C' in memo of appeals, which reads as under: "Whether on the facts and in the circumstances of the case, the order of the Income Tax Appellate Tribunal was correct in law holding that there is change of opinion by the Assessing Officer. As such, there is no change of opinion as information regarding completion of project has been collected by the Assessing Officer is a new information and Assessing Officer had correctly applied the provision of Section 147/148 for reopening the assessment of A.Y. 2007- 08." In both the appeals common facts and question of law are involved, as well as both the parties are agreed for disposal of the appeals by a common order. The facts of the case are that the respondent-assessee (hereinafter referred to as 'assessee') is engaged in the business of development of land, construction of house and its sales thereof. For the purpose of factual background the facts of the assessment year 2005-06 has been taken up. The assessee filed its return showing inco....
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....ate Tribunal who by its impugned order has allowed the appeal and has set aside the re-assessment proceeding and directed the assessing authority to allow the claim of deduction to the assessee under Section 80IB(10) of the Act. Feeling aggrieved by the impugned order the revenue has preferred the present appeals. Heard Mr. Manu Ghildyal, learned counsel for the Revenue and Mr. Archit Mehrotra, learned counsel for the assessee. It has been argued on behalf of the Revenue that Section 80IB(10) of the Act has been substituted by Finance Act, 2004 and a subsection (d) in Section 80IB(10) of the Act has been inserted which operates retrospectively and therefore the said amendment is applicable in the case of the respondent even though whose projects have been approved before 1.4.2004 and therefore the impugned order passed by the Tribunal are not justifiable which deserves to be set aside. It was further argued that since there is no change of opinion, Tribunal was not justified in allowing the appeal of the assessee and directing the assessing authority to grant the benefit of Section 80IB(10) of the Act to the assessee. The reassessment proceeding was rightly initiated. ....
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....housing project on or after the 1" day of October, 1998; (b) the project is on the size of a plot of land which has minimum area of one acre; and (c) the residential unit has a minimum built up area of one thousand square feet where such residential unit is situated within the cites of Delhi or Mumbai or within twenty-five kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place." From perusal of the said section which provides that only three conditions for the eligibility of the deduction under Section 80- IB(10) of the Act and in the said provision there is no such condition that the project in question should be completed and obtained completion certificate with the period of four years. In the impugned order the Tribunal has recorded a finding of fact that there was no such requirement under the Act for completing the project before a particular date and would have obtained the completion certificate from the Local Authority who have approved the project. The Bombay High Court in the case of CIT vs. Brahma Associates (Supra) has observed (see page 399) as under: " Held that clause ....
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....o 01.04.2005] "(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if, (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land which has a minimum area of one crore; and (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place." However, the income tax authorities rejected the claim of deduction on the ground that the projects were not "housing project" inasmuch as some commercial activity was also undertaken in those projects. This contention of the Revenue is not accepted by the income tax Appellate Tribunal as well as the High Court in the impugned jud....
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....e date when the project was sanctioned, are also met by the assessees......." (See page 404) "...... The Revenue had argued that clause (d) inserted with effect from 01.04.2005 should be applied retrospectively, which argument was repelled by the High Court. Therefore, for better understanding, we would like to begin our discussion with the meaning given to 'housing project' along with the issue of retrospectivity of clause (d), as raised by the Revenue, which was dealt with by the High Court and repelled. That portion of the discussion contained in the High Court judgment, which has some bearing on the issue at hand, runs as under: "21. Thus, on the date on which the legislature introduced 100% deduction under the Income Tax Act, 1961 on the profits derived from housing projects approved by a local authority, it was known that the local authorities could approve the projects as houding projects with commercial user to the extent permitted under the DC Rules framed by the respective local authority. In other words, it was known that the local authorities could approve a housing project without or with commercial user to the extent permitted under the Devel....
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....t with a view to deny commercial user in residential buildings. In other words, the restriction under Section 80IB(10) regarding the size of the residential unit would in no way curtail the powers of the local authority to approve a project with commercial user to the extent permitted under the DC Rules/Regulations. Therefore, the argument of the Revenue that the restriction on the size of the residential unit in Section 80IB(10) as it stood prior to 1.4.2005 is suggestive of the fact that the deduction is restricted to housing projects approved for residential units only cannot be accepted. 25. The above conclusion is further fortified by Clause (d) to Section 80IB(10) inserted with effect from 1.4.2005. Clause (d) to Section 80IB(10) inserted w.e.f. 1.4.2005 provides that even though shops and commercial establishments are included in the housing project, deduction under Section 80IB(10) with effect from 1.4.2005 would be available where such commercial user does not exceed five per cent of the aggregate built- up area of the housing project or two thousand square feet whichever is lower. By Finance Act, 2010, clause (d) is amended to the effect that the commercial user ....