DCIT, Central Circle 1(1),, Pune v. Isha Realtors Pvt. Ltd.,, Pune

ITA 2081/PUN/2012 | 2007-2008
Pronouncement Date: 25-10-2013 | Result: Dismissed

Appeal Details

RSA Number 208124514 RSA 2012
Assessee PAN AABCI1173L
Bench Pune
Appeal Number ITA 2081/PUN/2012
Duration Of Justice 1 year(s) 2 day(s)
Appellant DCIT, Central Circle 1(1),, Pune
Respondent Isha Realtors Pvt. Ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-10-2013
Assessment Year 2007-2008
Appeal Filed On 23-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE: SHRI G. S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO S . 2079 2080 & 2081 / P N/ 20 12 ASSESSMENT YEAR S : 2005 - 06 2006 - 07 & 2007 - 08 D Y. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE - 1(1) PUNE VS. ISHA REALTORS PVT. LTD. SAN MAHU COMPLEX 5 BUND GARDEN ROAD PUNE (APPELLANT) (RESPONDENT) PAN NO. AABCI 1173L APPELLANT BY: SHRI RAJIV JAIN RESPONDENT BY: SHRI VIPIN K. GUJRAT H I DATE OF HEARING : 19 - 09 - 2013 DATE OF PRONOUNCEMENT : 25 - 10 - 2013 ORDER P ER R.S. PADVEKAR JM : - THIS BATCH OF THREE APPEALS FOR THE A.YS. 2005 - 06 2006 - 07 AND 2007 - 08 ARE FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - I PUNE DATED 27 - 04 - 2012 BY TAKING THE FOLLOWING GROUNDS WHICH ARE COMMON IN ALL THE APPE ALS : 1. THE LD. CIT(A) PUNE GROSSLY ERRED IN HOLDING THAT THE PROJECT OF THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE COMMERCIAL AREA OF THE PROJECT EXCEEDED 2000 SQ. FT. AND THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR THE DEDUCTION U/S. 80IB(10) FOR THE A.Y. 2005 - 06 ONWARDS AS THE SAME IS VIOLATION OF CLAUSE (D) OF SECTION 80IB(10) OF THE ACT. 2. THE LD. CIT(A) PUNE GR OSSLY ERRED IN ACCEPTING THE ASSESSEES PLEA THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BRAMHA ASSOCIATES (333 ITR 289) WILL BE APPLICABLE FOR THE A.Y. 2005 - 06 ONWARDS ALSO THROUGH THE SAME IS IN VIOLATION OF CLAUSE (D) OF THE SECTI ON 80IB(10) OF THE ACT. 2. THE SHORT ISSUE IN CONTROVERSY IS WHETHER THERE IS ANY JUSTIFICATION TO DENY THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IB(10) ON THE 2 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE REASON THAT THE COMMERCIAL AREA EXCE SS 2000 SQ. FT. IN THE HOUSING PROJECT OF THE ASSESSE. 3. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A PROMOTER AND DEVELOPER AND HAS DEVELOPED A PROJECT NAMELY HILLMIST GARDEN AT NIBM ROAD KONDHWA PUNE. THE ASSESSEE HAS CLAIMED THE DEDUCTI O N U/S. 80IB(10) FOR THESE THREE ASSESSMENT YEARS AS U NDER : SL. NO. A.Y. AMOUNT 1 2005 - 06 RS.4 58 44 498/ - 2 2006 - 07 RS.1 87 78 983/ - 3 2007 - 08 RS.29 75 553/ - 4. AS OBSERVED BY THE ASSESSING OFFICER THE HOUSING PROJECT HAS COMMERCIAL AREA TO THE EXTENT OF 3340/ - SQ. FT. THE ASSESSING OFFICER SOUGHT TH E EXPLANATION OF THE ASSESSEE WH Y DEDUCTION SHOULD NOT BE DISALLOWED IN VIEW OF THE AMENDMENT TO THE LAW FROM THE A.Y. 2005 - 06 THAT THE COMMERCIAL AREA IN THE HOUSING PROJECT SHOULD NOT EXCEED MORE THAN 2000 SQ. FT. AS OBSERVED BY THE ASSESSING OFFICER A S PER THE AMENDMENT INTRODUCED THROUGH FINANCE (NO. 2) AC T 2004 THE HOUSING PROJECT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) CAN HAVE COMMERCIAL AREA OF UP TO 2000 SQ. FT. AND AS THE ASSESSE E HAS COMMERCIAL UP TO 3340 SQ. FT. T HE ASSESSEES PROJECT DOES NOT FULFILL THE CONDITION S LAID DOWN IN THE ACT . ON THIS SOLITARY REASON T HE ASSESSING OFFICER DENIED THE DEDUCTION TO THE ASSESSEE IN ALL THE THREE ASSESSMENT YEARS. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BY FILING THE APPEALS AND THE LD. C IT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT AS THE ASSESSEES HOUSING PROJECT HAS BEEN APPROVED PRIOR TO 01 - 04 - 2005 HENCE IT IS NOT HIT BY THE AMENDMENT INTRODUCED TO SEC. 80IB(10) PUTTING THE RESTRICTION ON TOTAL COMMERCIAL AREA WHICH CANNOT BE MORE THAN 2000 SQ. FT. NOW THE REVENUE IS IN APPEAL BEFORE US. 3 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. LEARNED COUNSEL SUBMITS THAT NOW THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF H ON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MANAN CORPORATION VS. ACIT 255 CTR (GUJ) 415. LEARNED COUNSEL ALSO RELIED ON THE DECISION OF THE ITAT MUMBAI IN THE CASE OF HIRANANDANI AKRUTI J V VS. DCIT 39 SOT 498 (MUM). HE SUBMITS THAT THE HOUSING PROJECT OF THE ASSESSEE NAMELY HILLMIST GARDEN HAS BEEN APPROVED BY THE PUNE MUNICIPAL CORPORATION ON 3 0 - 03 - 2001 AND HENCE AS THE PROJECT HAS BEEN APPROVED MUCH PRIOR TO THE INTRODUCTION OF THE AMENDMENT SAID AMENDMENT IS NOT APPLICABLE TO THE ASSESSEE EVEN IF THE BUILT UP AREA IN THE PRESENT HOUSING PROJECT IS MORE THAN 2000 SQ. FT. HE PLEADED FOR CONFIRMING THE ORDER OF THE LD. CIT(A). WE HAVE ALSO HEARD THE LD. DR. 6. IN THIS CASE AS PER THE FACTS ON RECORD THE ASSESSEE HAS UNDERTAKEN THE HOUSING PROJECT ON THE PLOT OF LAND 19 707 SQ. MTRS. THE TOTAL BUILT UP AREA OF THE PROJECT IS 31 293.32 SQ. MTRS. IT IS NOT IN DISPUTE IN THIS CASE IS THAT THE COMMERCIAL BUILT UP AREA IS TO THE EXTENT OF 310.29 SQ. MTRS. IT IS ALSO NOT DISPUTE IN THIS CASE THAT THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTHORITY I.E. PUNE MUNICIPAL CORPORATION ON 30 - 03 - 2001. WE FIND THERE IS NO OTHER VIOLATION OF ANY OF THE CONDITION S MENTIONED IN SEC. 80IB(10). THE ONLY REASON GIVEN BY THE ASSESSING OFFICER FOR DENYING T HE DEDUCTION TO THE ASSESSEE U/S. 80IB(10) IS THAT THE COMMERCIAL BUILT UP AREA IN THE ASSESSEES HOUSING PROJECT IS MORE THAN 2000 SQ. FT. AND HENCE IN VIEW OF THE NEW DEFINITION OF THE BUILT UP AREA INTRODUCED IN SEC. 80IB(10) THE COMMERCIAL AREA IN TH E HOUSING PROJECT CANNOT EXCEED 5% OF THE TOTAL BUILT UP AREA OR 2000 SQ. FT . WHICHEVER IS HIGHER. NOW THERE LEGAL ISSUE IN THIS CASE IS WHETHER THE LIMITATION PUT BY THE PARLIAMENT ON THE TOTAL COMMERCIAL BUILT UP AREA IN ANY HOUSING PROJECT BY THE FINAC E (NO. 2) ACT 2004 W.E.F. 01 - 04 - 2005 IS APPLICABLE TO THE ASSESSEE WHEN THE ASSESSEES PROJECT HAS BEEN APPROVED ON 30 - 03 - 2001. 4 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE 7. IN THE CASE OF MANAN CORPORATION VS. ACIT (SUPRA) THE IDENTICAL ISSUE HAS COME FOR THE CONSIDERATION BEFORE THE HON'BLE HIG H COURT OF GUJARAT . I N THE SAID DECISION T HE HON'BLE HIGH COURT HAS REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT 333 ITR 289 (BOM.) AND HAS HELD AS UNDER: 19. BEFORE THE BOMBAY HIGH COURT THE HOUS ING PROJECT WAS APPROVED BY THE COMPETENT - AUTHORITY BEFORE 31.3.2005 AND THE ASSESSMENT YEAR CONCERNED WAS 2003 - 2004. IN THE INSTANT CASE HEAVY RELIANCE IS AGAIN PLACED ON THE JUDGMENT BRAHMA ASSOCIATES (SUPRA) BY THE TRIBUNAL AND RELYING UPON THE SA ID DECISION IT CHOSE NOT TO AVAIL THE BENEFIT OF DEDUCTION OF THE PROFIT TO THE APPELLANT ASSESSEE. AS FAR AS QUESTION OF VIOLATION OF CLAUSE (D) OF SECTION 80IB(10) OF THE ACT IS CONCERNED IT NOTED THAT ONE OF THE QUESTIONS RAISED BEFORE THE BOMBAY HIGH COURT WAS WHETHER CLAUSE (D) OF SECTION 80 IB(10) OF THE ACT WAS APPLICABLE FOR ASSESSMENT YEAR 2005 - 2006 OR WHETHER IT APPLIED RETROSPECTIVELY AND IT NOTED THUS: - 'UNDER THESE FACTS IT WAS HELD BY HON'BLE BOMBAY HIGH COURT THAT WITH EFFECT FROM 01 - 04 - 20 05 DEDUCTION U/S. 80IB(10) WOULD BE SUBJECT TO THE RESTRICTION SET OUT IN CLAUSE - (D) OF SECTION 80IB(10). THE RELEVANT PARA OF THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT I.E. PARA - 25 IS REPRODUCED AS UNDER: - '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 ALLOWABLE 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 SHOULD NOT EXCEED THREE PER CENT OF THE AGGREGATE BUILT - AREA OF THE HOUSING PROJECT OR FIVER THOUSAND SQUARE FEET WHICHEVER IS HIGHER. THE EXPRESSION 'INCLUDED' IN CLAUSE (D) MAKES IT AMPLY CLEAR THAT COMMERCIAL USER IS AN I NTEGRAL PART OF A HOUSING PROJECT. THUS BY INSERTING CLAUSE (D) TO SECTION 80IB(10) THE LEGISLATURE HAS MADE IT CLEAR THAT THOUGH THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITIES WITH COMMERCIAL USER TO THE EXTENT PERMISSIBLE UNDER THE DC RULES/ RE GULATION WERE ENTITLED TO SECTION 80IB(10) DEDUCTION WITH EFFECT FROM 1/4/2005 SUCH DEDUCTION WOULD BE SUBJECT TO THE RESTRICTION SET OUT IN CLAUSE (D) OF SECTION 80IB(10). THEREFORE THE ARGUMENT OF THE REVENUE THAT WITH EFFECT FROM 1/4/2005 THE LEGISLAT URE FOR THE FIRST TIME ALLOWED SECTION 80IB(10) DEDUCTION TO HOUSING PROJECTS HAVING COMMERCIAL USER CANNOT BE ACCEPTED.' 12. FROM THE ABOVE PARA OF JUDGMENT OF HON'BLE BOMBAY HIGH COURT IT IS SEEN THAT IT IS NOT HELD BY HON'BLE BOMBAY HIGH COURT THAT CLA USE (D) OF SECTION 80IB(10) IS APPLICABLE TO THOSE PROJECTS WHICH ARE APPROVED 5 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE ON OR AFTER 01 - 04 - 2005. BUT IT IS HELD THAT FROM 01 - 04 - 2005 DEDUCTION U/S.80IB(10) WOULD BE SUBJECT TO THE RESTRICTION SET OUT IN CLAUSE - (D) OF SECTION 80IB (10). IN OUR HUMBLE UNDERSTANDING THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT COVERS THIS ISSUE AGAINST THE ASSESSEE AND THEREFORE THE VARIOUS DECISIONS OF COORDINATE BENCH OF THIS TRIBUNAL CITED BY LD. COUNSEL FOR THE ASSESSEE ARE OF NO USE IN THE LIGHT OF THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT. WE RESPECTFULLY FOLLOW THIS JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN PREFERENCE TO VARIOUS DECISIONS OF CO - ORDINATE BENCH OF THIS TRIBUNAL.' 20. IN OUR OPINION THE TRIBUNAL HAS MISDIRECTED ITSELF IN INTERPRETING PARAGRAPH 25 OF THE SAID JUDGMENT AND THEREBY DENYING THE BENEFIT OF SECTION 80IB(10) TO THE APPELLANT HEREIN IN AS MUCH AS BEFORE THE BOMBAY HIGH COURT IT WAS REVENUE'S CASE THAT RESIDENTIAL PROJECT HAVING COMMERCIAL CONSTRUCTION CANNOT BE HELD ENTITLED TO THE BENEFIT U NDER SECTION 80IB(10) OF THE ACT AND FOR SUPPORTING ITS VERSION RELIANCE WAS PLACED ON INCLUSION OF CLAUSE (D) OF SECTION 80IB (10) FROM 1.4.2005 WHICH RESTRICTS AREA OF COMMERCIAL CONSTRUCTION IN RESIDENTIAL PROJECT. IT WAS A PROJECT OF RESIDENTIAL HOUS ING WITH COMMERCIAL USER FOR ASSESSMENT YEAR 2003 - 2004 AS NOTED ABOVE. IN THIS BACKDROP THE COURT REJECTED/ REFUTED SUCH VERSION AND FOR FORTIFYING ITS DENIAL IT MENTIONED INCLUSION OF CLAUSE(D) FROM 1.4.2005 BY HOLDING THAT BY INSERTION OF CLAUSE(D) OF SECTION 80IB(10) OF THE ACT LEGISLATURE MADE IT CLEAR THAT THOUGH THE HOUSING PROJECT APPROVED BY LOCAL AUTHORITY WITH COMMERCIAL USER TO THE EXTENT PERMISSIBLE UNDER THE RULES AND REGULATIONS WERE ENTITLED TO SECTION 80IB(10) DEDUCTION SUCH DEDUCTION WO ULD BE SUBJECT TO THE RESTRICTION SET OUT IN CLAUSE (D) OF SECTION 80IB(10) FROM 1.4.2005. IN OUR OPINION TRIBUNAL HAS QUOTED THE JUDGMENT OUT OF CONTEXT TO DENY THE SAID BENEFIT TO THE APPELLANT ERRONEOUSLY. 21. NEITHER THE ASSESSEE NOR LOCAL AUTHORITY R ESPONSIBLE TO APPROVE THE CONSTRUCTION PROJECTS ARE EXPECTED TO CONTEMPLATE FUTURE AMENDMENT IN THE STATUTE AND APPROVE AND/OR CARRY OUT CONSTRUCTIONS MAINTAINING THE RATIO OF RESIDENTIAL HOUSING AND COMMERCIAL CONSTRUCTION AS PROVIDED BY THE AMENDED ACT B EING 3 PERCENT OF THE TOTAL BUILT UP AREA OR 5000 SQ.FEET WHICH EVER IS HIGHER (NOW IN POST 2010 PERIOD)OR 5 PERCENT OF THE AGGREGATE BUILT UP AREA OR 2000 SQ.FEET WHICHEVER IS LESS. REVENUE IS ALSO IN ERROR TO SUGGEST THAT EVEN IF SUCH CONDITIONS ARE ONER OUS THEY ARE REQUIRED TO BE FULFILLED. THE ENTIRE OBJECT OF SUCH DEDUCTION IS TO FACILITATE THE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE WAS NO SUCH RESTRICTION IN TAXING STATUTE AND THE PERMISSIBLE RATIO FOR COMMERCIAL USER MADE 5 PERCENT TO THE TOTAL BUILT UP AREA BY WAY OF AMENDMENT AND REDUCTION OF WHICH BY FURTHER AMENDMENT TO 3 PERCENT OF THE TOTAL BUILT UP AREA HAS TO BE NECESSARILY CONSTRUED ON PROSPECTIVE BASIS. 22. AS IS VERY APPARENT FORM THE RECORD THERE WAS NO CRITERIA FOR MAKING COMMERCIAL CONSTRUCTION PRIOR TO THE AMENDED SECTION AND THE PLANS ARE APPROVED AS HOUSING PROJECTS BY THE LOCAL AUTHORITY FOR BOTH THE PROJECTS OF THE APPELLANT. PERMISSION FOR CONSTRUCTION OF SHOPS HAS 6 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE BEEN A LLOWED BY THE LOCAL AUTHORITY IN ACCORDANCE WITH RULES AND REGULATIONS KEEPING IN MIND PRESUMABLY THE REQUIREMENT OF LARGE TOWNSHIPS. HOWEVER THE PROJECTS ESSENTIALLY REMAINED RESIDENTIAL HOUSING PROJECTS AND THAT IS ALSO QUITE APPARENT FROM THE CERTIFIC ATES ISSUED BY THE LOCAL AUTHORITY AND THEREFORE NEITHER ON THE GROUND OF ABSENCE OF SUCH PROVISION OF COMMERCIAL SHOPS NOR ON ACCOUNT OF SUCH COMMERCIAL CONSTRUCTION HAVING EXCEEDED THE AREA CONTEMPLATED IN THE PROSPECTIVE AMENDMENT CAN BE MADE APPLICABL E TO THE APPELLANT ASSESSEE WHOSE PLANS ARE SANCTIONED AS PER THE PREVALENT RULES AND REGULATIONS BY THE LOCAL AUTHORITY FOR DENYING THE BENEFIT OF DEDUCTION OF PROFIT DERIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR AS MADE AVAILABLE OTHERWISE UNDER THE STATUE. 23. IT WOULD BE WORTHWHILE TO NOTE AT THIS STAGE THAT EVEN THOUGH THE FACTS BEFORE THE BOMBAY HIGH COURT WERE DIFFERENT THAN THOSE EMERGING FROM THE PRESENT CASE REVENUE'S SUBMISSIONS BEFORE THE BOMBAY HIGH COURT THAT THE AMENDMENT OF S ECTION 80IB(10) AND THE INSERTION OF CLAUSE (D) WITH EFFECT FROM 1.4.2005 SHOULD BE APPLIED RETROSPECTIVELY WAS HELD TO BE WITHOUT ANY MERIT IN FOLLOWING WORDS IN PARAGRAPH 32 OF THE BOMBAY HIGH COURT WHICH IS REPRODUCED AS UNDER: - 'LASTLY THE ARGUMENT OF THE REVENUE THAT SECTION 80 - 16(10) AS AMENDED BY INSERTING CLAUSE (D) WITH EFFECT FROM APRIL 1 2005 SHOULD BE APPLIED RETROSPECTIVELY IS ALSO WITHOUT ANY MERIT BECAUSE FIRSTLY CLAUSE (D) IS SPECIFICALLY INSERTED WITH EFFECT FROM APRIL 1 2005 AND T HEREFORE THAT CLAUSE (D) SEEKS TO DENY SECTION 80 - 16(10) DEDUCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE LIMIT PRESCRIBED UNDER CLAUSE (D) EVEN THOUGH SUCH COMMERCIAL USER IS APPROVED BY THE LOCAL AUTHORITY. THEREFORE THE RESTRICTION IMPOSED UND ER THE ACT FOR THE FIRST TIME WITH EFFECT FROM APRIL 1 2005 CANNOT BE APPLIED RETROSPECTIVELY. THIRDLY IT IS NOT OPEN TO THE REVENUE TO CONTEND ON THE ONE HAND THAT SECTION 80 - 16(10) AS IT STOOD PRIOR TO APRIL 1 2005 DID NOT PERMIT COMMERCIAL USER IN HO USING PROJECTS AND ON THE OTHER HAND CONTEND THAT THE RESTRICTION ON COMMERCIAL USER INTRODUCED WITH EFFECT FROM APRIL 1 2005 SHOULD BE APPLIED RETROSPECTIVELY. THE ARGUMENT OF THE REVENUE IS MUTUALLY CONTRADICTORY AND HENCE LIABLE TO BE REJECTED. THUS I N OUR OPINION THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT CLAUSE (D) INSERTED TO SECTION 80 - 16(10) WITH EFFECT FROM APRIL 1 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIEDTO THE PERIOD PRIOR TO APRIL 1 2005.' 24. KARNATAKA HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE VS. ANRIYA PROJECT MANAGEMENT SERVICES (P.) LTD. WAS ALSO EXAMINING THIS PROVISION WHERE THE QUESTION WAS WHETHER THE DEFINITION OF 'BUILT - UP AREA' INSERTED BY FINANCE (NO.2) ACT WHICH BECAME EFF ECTIVE FROM 1.4.2005 IS PROSPECTIVE OR RETROSPECTIVE IN NATURE AND IT HELD THAT THE SAME TO BE PROSPECTIVE IN NATURE. IT HELD THAT AMENDMENT PROVISION WOULD HAVE NO APPLICATION TO HOUSING PROJECTS WHICH WERE APPROVED BY THE LOCAL AUTHORITY PRIOR TO 1.4.20 05 IN CALCULATING 1500 SQ. FEET OF RESIDENTIAL UNIT AND IT FURTHER HELD THAT ONCE SUCH HOUSING PROJECT OF ASSESSEE IS APPROVED BY LOCAL AUTHORITY PRIOR TO 1.4.2005 IT WOULD BE ENTITLED TO 100 PERCENT BENEFIT OF SECTION 80IB(10). WHILE SO HOLDING IT RELIE D ON THE JUDGMENT OF THE KARNATAKA 7 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE HIGH COURT IN THE CASE OF CIT VS. G.R. DEVELOPERS [IT APPEAL NO.355 OF 2009]. 25. COROLLARY TO THIS IS ONE MORE ASPECT THAT REQUIRES REFERENCE HERE. THE GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE TO AL L CHIEF COMMISSIONERS OF INCOME - TAX AND ALL DIRECTOR GENERALS OF INCOME - TAX ISSUED INSTRUCTION NO.4 OF 2009 DATED 30.6.2009 IN RESPECT OF SECTION 80IB(10) OF THE ACT WOULD BE AVAILABLE ON YEAR TO YEAR BASIS WHERE THEASSESSEE IS SHOWING PROFIT ON PARTIAL C OMPLETION OR THE SAMEWOULD BE AVAILABLE ON THE YEAR OF COMPLETION OF THE PROJECT WHICH IS CLARIFIED AS UNDER: - '3. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT IS CLARIFIED AS UNDER: - (A) THE DEDUCTION CAN BE CLAIMED ON A YEAR TO YEAR BASIS WHE RE THE ASSESSEE IS SHOWING PROFIT FROM PARTIAL COMPLETION OF THE PROJECT IN EVERY YEAR. (B) IN A CASE IT IS LATE FOUND THAT THE CONDITION OF COMPLETING THE PROJECT WITHIN THE SPECIFIED TIME LIMIT OF 4 YEARS AS STARTED IN SECTION 80 - 16(10) HAS NOT BEEN SAT ISFIED THE DEDUCTION GRANTED TO THE ASSESSEE IN THE EARLIER YEARS SHOULD BE WITHDRAWN.' 26. FROM THE READING OF THE ABOVE INSTRUCTION IT CAN BE ALSO SAID THAT THE GOVERNMENT BEING AWARE OF BOTH THE ACCOUNTING METHODS HAS EXPECTED EITHER OF THEM TO BE FOL LOWED IN CASES OF INDIVIDUAL ASSESSEE. HOWEVER IN POST AMENDMENT PERIOD STRICT ADHERENCE TO COMPLETION PERIOD OF FOUR YEARS IS INSISTED UPON WHERE PROJECT COMPLETION METHOD IS FOLLOWED. THIS LIMITATION OF PERIOD DID NOT EXIST PRIOR TO THE AMENDMENT WHAT IS VITAL TO DRAW FROM THIS IS THAT THE AMENDMENT CANNOT DISCRIMINATE THOSE FOLLOWING PROJECT COMPLETION METHOD IF IN THE INTERREGNUM PERIOD AMENDMENT IS BROUGHT IN THE STATUTE. THE SAY OF THE ASSESSEE THEREFORE GETS FURTHER FORTIFIED WHEN IT SAYS THAT ON LY BECAUSE IT CHOSE TO FOLLOW THE METHOD OF ACCOUNTING OF PROJECT COMPLETION BASIS WHOSE COMPLETION DATE FALLS AFTER 1.4.2005 THEY CAN BE DENIED THE DEDUCTION ON PROFITS DERIVED AND THOSE ASSESSEE WHO CLAIM DEDUCTION ON WORK - IN - PROGRESS BASIS THEY WOULD BE ENTITLED TO SUCH DEDUCTION. HOWEVER IT NECESSITATED STRICT COMPLIANCE OF THE PROVISIONS AND COMPLETION OF THE SAME WITHIN THE STIPULATED TIME PERIOD. 27. THE ENTIRE OBJECT OF SUCH DEDUCTION IS TO FACILITATE CONSTRUCTION OF RESIDENTIAL HOUSING PROJECT AND WHILE APPROVING SUCH PROJECT WHEN INITIALLY THERE WAS NO RESTRICTION AND BY AMENDMENT AS STATED PERMISSIBLE RATIO FOR CONSTRUCTION IS 5 PERCENT OF THE TOTAL BUILT UP AREA REDUCTION OF THIS RATIO TO 3 PERCENT OF THE TOTAL BUILT UP AREA HAS TO BE NECESS ARILY ON PROSPECTIVE BASIS. 28. IT WOULD BE APT TO CONSIDER RATIO OF RETROSPECTIVITY AT THIS STAGE. IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. GOLD COIN HEALTH FOOD P. LTD. REPORTED IN 304 ITR 308 THEHON'BLE SUPREME COURT OF INDIA HAS HELD AS UNDER : 8 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE I N ZILE SINGH V. STATE OF HARYANA (2004) 8 SCC 1 IT WAS OBSERVED AS FOLLOWS: '13.IT IS A CARDINAL PRINCIPLE OF CONSTRUCTION THAT EVERY STATUTE IS PRIMA FACIE PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE A RETROSPECTIVE OPERAT ION. BUT THE RULE IN GENERAL IS APPLICABLE WHERE THE OBJECT OF THE STATUTE IS TO AFFECT VESTED RIGHTS OR TO IMPOSE NEW BURDENS OR TO IMPAIR EXISTING OBLIGATIONS. UNLESS THERE ARE WORDS IN THE STATUTE SUFFICIENT TO SHOW THE INTENTION OF THE LEGISLATURE TO A FFECT EXISTING RIGHTS IT IS DEEMED TO BE PROSPECTIVE ONLY - 'NOVA CONSTITUTIO FUTURIS FORMAN IMPONERE DEBET NON PRAETERITIS' - A NEW LAW OUGHT TO REGULATE WHAT IS TO FOLLOW NOT THE PAST. (SEE PRINCIPLES OF STATUTORY INTERPRETATION BY JUSTICE G. P. SINGH 9TH EDN. 2004 AT PAGE 438.) IT IS NOT NECESSARY THAT AN EXPRESS PROVISION BE MADE TO MAKE A STATUTE RETROSPECTIVE AND THE PRESUMPTION AGAINST A CASE WHERE THE NEW LAW IS MADE TO CURE AN ACKNOWLEDGED EVIL FOR THE BENEFIT OF THE COMMUNITY AS A WHOLE (IBID . PAGE 440). 14. THE PRESUMPTION AGAINST RETROSPECTIVE OPERATION IS NOT APPLICABLE TO DECLARATORY STATUTES... IN DETERMINING THEREFORE THE NATURE OF THE ACT REGARD MUST BE HAD TO THE SUBSTANCE RATHER THAN TO THE FORM. IF A NEW ACT IS 'TO EXPLAIN 1 AN EA RLIER ACT IT WOULD BE WITHOUT OBJECT UNLESS CONSTRUED RETROSPECTIVELY. AN EXPLANATORY ACT IS GENERALLY PASSED TO SUPPLY AN OBVIOUS OMISSION OR TO CLEAR UP DOUBTS AS TO THE MEANING OF THE PREVIOUS ACT. IT IS WELL - SETTLED THAT IF A STATUTE IS CURATIVE OR ME RELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERATION IS GENERALLY INTENDED... AN AMENDING ACT MAY BE PURELY DECLARATORY TO CLEAR A MEANING OF A PROVISION OF THE PRINCIPAL ACT WHICH WAS ALREADY IMPLICIT. A CLARIFICATORY AMENDMENT OF THIS NATURE WILL HAVE RETROSPECTIVE EFFECT (IBID. PAGES 468 - 69). 15. THOUGH RETROSPECTIVITY IS NOT TO BE PRESUMED AND RATHER THERE IS PRESUMPTION AGAINST RETROSPECTIVITY ACCORDING TO CRAIES (STATUTE LAW 7TH EDN.) IT IS OPEN FOR THE LEGISLATURE TO ENACT LAWS HAVING RET ROSPECTIVE OPERATION. THIS CAN BE ACHIEVED BY EXPRESS ENACTMENT OR BY NECESSARY IMPLICATION FROM THE LANGUAGE EMPLOYED. IF IT IS A NECESSARY IMPLICATION FROM THE LANGUAGE EMPLOYED THAT THE LEGISLATURE INTENDED A PARTICULAR SECTION TO HAVE A RETROSPECTIVE O PERATION THE COURTS WILL GIVE IT SUCH AN OPERATION. IN THE ABSENCE OF A RETROSPECTIVE OPERATION HAVING BEEN EXPRESSLY GIVEN THE COURTS MAY BE CALLED UPON TO CONSTRUE THE PROVISIONS AND ANSWER THE QUESTION WHETHER THE LEGISLATURE HAD SUFFICIENTLY EXPRESSE D THAT INTENTION GIVING THE STATUTE RETROSPECTIVELY. FOUR FACTORS ARE SUGGESTED AS RELEVANT: (I) GENERAL SCOPE AND PURVIEW OF THE STATUTE; (II) THE REMEDY SOUGHT TO BE APPLIED; (III) THE FORMER STATE OF THE LAW; AND (IV) WHAT IT WAS THE LEGISLATURE CONTEMP LATED (PAGE 388). THE RULE AGAINST RETROSPECTIVITY DOES NOT EXTEND TO PROTECT FROM THE EFFECT OF A REPEAL A PRIVILEGE WHICH DID NOT AMOUNT TO ACCRUED RIGHT (PAGE 392).' 29. IN THE CASE OF COMMISSIONER OF INCOME - TAX VS. TVS LEAN LOGISTICS LTD. REPORTED IN (2007) 293 ITR 432(MAD) THE HON'BLE MADRAS HIGH COURT HAS HELD AS UNDER: 9 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE 'IN A CASE WHERE THE STATUTORY PROVISION IS PLAIN AND UNAMBIGUOUS THE COURT SHALL NOT INTERPRET THE SAME IN A DIFFERENT MANNER ONLY BECAUSE OF HARSH CONSEQUENCES ARISING THEREFROM. THE COURT CANNOT ENLARGE THE SCOPE OF LEGISLATION OR INTENTION WHEN THE LANGUAGE OF THE PROVISION IS PLAIN AND UNAMBIGUOUS CANNOT ADD OR SUBTRACT WORDS TO A STATUTE OR READ SOMETHING INTO IT WHICH IS NOT THERE AND CANNOT REWRITE OR RECAST LEGISLATION. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATION FACTOR OF THE LEGISLATURE EVENT AND EVEN ASSUMING THERE IS A DEFECT OR ANY OMISSION IN THE WORDS USED IN THE LEGISLATION THE COURT CANNOT CORRECT OR MAKE UP THE DEFICIENCY ESPECIALLY WHEN A LITERAL REA DING THEREOF PRODUCES AN INTELLIGIBLE RESULT AND ANY INTERPRETATION WHICH IS NOT PERMISSIBLE AND WHICH WOULD BE DESTRUCTION OF JUDICIAL DISCIPLINE.' 30. IN THE CASE OF NATIONAL AGRICULTURAL CO - OPERATIVE MARKETING FEDERATION OF INDIA LTD. AND ANOTHER VS. U NION OF INDIA AND OTHERS REPORTED IN AIR 2003 SC 1329 THE HON'BLE SUPREME COURT HAS HELD IN PARAGRAPHS 15 16 AND 17 AS UNDER : '15. THE LEGISLATIVE POWER EITHER TO INTRODUCE ENACTMENTS FOR THE FIRST TIME OR TO AMEND THE ENACTED LAW WITH RETROSPECTIVE EFF ECT IS NOT ONLY SUBJECT TO THE QUESTION OF COMPETENCE BUT IS ALSO SUBJECT TO THE QUESTION OF COMPETENCE BUT IS ALSO SUBJECT TO SEVERAL JUDICIALLY RECOGNIZED LIMITATIONS WITH SOME OF WHICH WE ARE AT PRESENT CONCERNED. THE FIRST IS THE REQUIREMENT THAT THE WORDS USED MUST EXPRESSLY PROVIDE OR CLEARLY IMPLY RETROSPECTIVE OPERATION. THE SECOND IS THAT THE RETROSPECTIVITY MUST BE REASONABLE AND NOT EXCESSIVE OR HARSH OTHERWISE IT RUNS THE RISK OF BEING STRUCK DOWN AS UNCONSTITUTIONAL. THE THIRD IS APPOSITE WHE RE THE LEGISLATION IS INTRODUCED TO OVERCOME A JUDICIAL DECISION. HERE THE POWER CANNOT BE USED TO SUBVERT THE DECISION WITHOUT REMOVING THE STATUTORY BASIS OF THE DECISION.' 16. THERE IS NO FIXED FORMULA FOR THE EXPRESSION OF LEGISLATIVE INTENT TO GIVE RE TROSPECTIVITY TO AN ENACTMENT.'SOMETIMES THIS IS DONE BY PROVIDING FOR JURISDICTION WHERE JURISDICTION HAD NOT BEEN PROPERLY INVESTED BEFORE. SOMETIMES THIS IS DONE BY REENACTING RETROSPECTIVELY A VALID AND LEGAL TAXING PROVISION AND THEN BY FICTION MAKING THE TAX ALREADY COLLECTED TO STAND UNDER THE REENACTED LAW. SOMETIMES THE LEGISLATURE GIVES ITS OWN MEANING AND INTERPRETATION OF THE LAW UNDER WHICH TAX WAS COLLECTED AND BY LEGISLATIVE FIAT MAKES THE NEW MEANING BINDING UPON COURTS. THE LEGISLATURE MAY FOLLOW ANYONE METHOD OR ALL OF THEM. 17. A VALIDATING CLAUSE COUPLED WITH A SUBSTANTIVE STATUTORY CHANGE IS THEREFORE ONLY ONE OF THE METHODS TO LEAVEACTIONS UNSUSTAINABLE UNDER THE UNAMENDED STATUTE UNDISTURBED. CONSEQUENTLY THE ABSENCE OF A VALIDATING CLAUSE WOULD NOT BY ITSELF AFFECT THE RETROSPECTIVE OPERATION OF THE STATUTORY PROVISION IF SUCH RETROSPECTIVITY IS OTHERWISE APPARENT.' AS MENTIONED HEREINABOVE CRITERIAS TO HOLD THIS AMENDMENT RETROSPECTIVE ARE ABSENT AS THERE IS NO AS EXPLICIT AND SPE CIFIC WORDING EXPRESSING RETROSPECTIVITY AND EVEN IF IT IS ASSUMED FOR THE SAKE OF ARGUMENTS THAT THE SAME IS TO BE READ BY IMPLICATION THE SAME DOES NOT APPEAR TO BE REASONABLE BUT IN FACT EMERGES TO BE HARSH AND UNREASONABLE WHEN IT COMES TO IMPLEMENTAT ION. 10 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE 31. AGAIN AS HELD IN CASE OF CIT VS. J.H. GOTLA(SUPRA) BY THE APEX COURT SUCH STRICT CONSTRUCTION OF THE STATUTE IF LEADS TO ABSURD INTERPRETATION THE SAME MAY NOT SUBSERVE THE INTENT AND OBJECT OF LEGISLATION. 32. AGAIN AS HELD IN THE CASE OF MYSOR E MINERALS LTD. VS. COMMISSION OF INCOME - TAX REPORTED IN 239 ITR 775 APEX COURT WITH TWO POSSIBILITIES OF INTERPRETATION OF A TAXING STATUTE ONE WHICH IS FAVOURABLE TO THE ASSESSEE SHOULD BE ALWAYS PREFERRED. 33. AS ALSO LAID DOWN IN THE CASE OF BAJAJ T EMPO LTD. VS. COMMISSIONER OF INCOME - TAX REPORTED IN 196 ITR 188 (SC) TAXING STATUTE GRANTING INCENTIVES FOR PROMOTING ECONOMIC GROWTH AND DEVELOPMENT SHOULD BE LIBERALLY CONSTRUED TO FACILITATE AND ADVANCE THE OBJECTIVES OF THE PROVISION. 34. ABOVE DISC USSION CUMULATIVELY WHEN EXAMINED WITH THE OBJECTIVES AND INTENT IT SOUGHT TO ACHIEVE IN BRINGING ABOUT THE SAID PROVISION OF SECTION 80IB(10) THIS AMENDED TAXING STATUTE REQUIRES TO BE INTERPRETED IN FAVOUR OF THE ASSESSEE RATHER THAN INSISTING UPON STRI CT COMPLIANCE LEADING TO ABSURDITY. 35. IT CAN BE ALSO HELD THAT THIS BEING A SUBSTANTIVE AMENDMENT AND NOT A CLARIFICATORY AMENDMENT THE AMENDMENT OF THIS NATURE CANNOT HAVE RETROSPECTIVE EFFECT. 36. RESULTANTLY WE ANSWER THE QUESTIONS RAISED BEFORE U S IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 37. RESULTANTLY THE APPEAL IS ALLOWED. IMPUGNED JUDGMENT OF THE TRIBUNAL IS REVERSED TO THE ABOVE EXTENT. 8. IN THE CASE OF HIRANANDANI AKRUTI JV VS. DCIT (SUPRA) THE TRIBUNAL IS HELD AS UNDER: 26. TH ERE IS TRUTH IN THE PLEA OF HARDSHIP PUT FORTH ON BEHALF OF THE ASSESSEE. LET US ASSUME AN ASSESSEE APPLIES AND OBTAINS APPROVAL 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 ST OOD IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2002 - 03 UP TO 2004 - 05 THERE WAS NO TIME - LIMIT WITHIN WHICH THE CONSTRUCTION HAS TO BE COMPLETED OR ANY RESTRICTION REGARDING COMMERCIAL AREA THAT CAN BE BUILT IN A HOUSING PROJECT. LET US ASSUME THAT THE ASSE SSEE COMPLIES WITH ALL THE CONDITIONS FOR ALLOWING RELIEF UNDER S. 80 - 16(10) 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 COMME NCES 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 HOUSING PROJECT THE ASSESSEE WOULD LOOSE HIS ELIGIBILITY TO C LAIM DEDUCTION. IN SUCH CASES THERE IS DEFINITELY GRAVE HARDSHIP TO THE ASSESSEE. THE INTERPRETATION SOUGHT TO BE CANVASSED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL ALSO 11 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE LEAD TO ABSURD SITUATION. LET US ASSUME AN ASSESSEE OBTAINS APPROVAL OF A HOUS ING PROJECT PRIOR TO 1ST APRIL 2005 SAY IN PREVIOUS YEAR 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 METHOD OF ACCOUNTING AND OFFERS PROFITS IN ASST. YRS. 20 02 - 03 TO 2004 - 05 CLAIMS EXEMPTION UNDER S. 80 - 16(10) AND IS ALLOWED EXEMPTION. ON THE SAME PROJECT IN ASST. YR. 2005 - 06 THE ASSESSEE WOULD NOT GET THE BENEFIT OF S. 80 - 16(10). WE THEREFORE FIND NO GROUNDS TO TAKE A VIEW DIFFERENT FROM THE ONE TAKEN BY THE CO - ORDINATE 6ENCH OF THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA). 27. WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY WORDS TO THE 'STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004 - 05 WHEN THE ASSESSEE S UBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENT ATIVE IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF S. 80 - 16(10) AS AMENDED BY THE FINANCE ACT 2005 W.E.F. 1ST APRIL 2005. WE THEREFORE HOLD FOLLOWING 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 FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE D EVELOPMENT WAS ACCORDED ON 17TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED 28. WE HAVE ALREADY HELD THAT ON THE ISSUE ON WHAT IS A HOUSING PROJECT AND WHETHER - COMMERCIAL AREA CAN BE CONSTRUCTED IN A HOUSING PROJECT AND IF SO CONSTRUCTED WHETHER THE ASSE SSEE WOULD LOOSE EXEMPTION UNDER THE LAW AS APPLICABLE UP TO ASST. YR. 2004 - 05 HAS BEEN SETTLED BY THE SPECIAL BENCH OF TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). THE AO HELD THE LAW AS AMENDED BY THE FINANCE ACT 2005 W.E.F. 1ST APRIL 2005 WHEREB Y IT WAS LAID DOWN THAT THE BUILT - UP AREA OF THE SHOPS AND COMMERCIAL ESTABLISHMENT INCLUDED IN THE HOUSING PROJECT SHOULD NOT BE MORE THAN 5 PER CENT OF THE TOTAL BUILT - UP ARE OF THE PROJECT OR 2 000 SQ. FT. WHICHEVER IS LESS WILL APPLY AND THEREFORE HE HAD NO OCCASION TO APPLY THE TEST AS LAID DOWN BY THE SPECIAL BENCH REFERRED TO ABOVE. SINCE WE HAVE HELD THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004 - 05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED THE ASSESSEE TO CLAIM DEDUCTION UNDER S. 80 - IB(10) OF THE ACT HAS TO PASS THE TEST LAID DOWN BY THE SPECIAL BENCH AS ABOVE. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE ISSUE TO THE AO FOR THE LIMITED PURPOSE OF SATISFYING HIMSELF AS TO WHETHER THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION ON THE PROFITS DERIVED ON DEVELOPING AND BUILDING HOUSING PROJECTS AS PER THE RATIO LAID D OWN BY THE SPECIAL BENCH REFERRED TO ABOVE WHILE COMPUTING TOTAL INCOME AND IF SO TO WHAT EXTENT. FOR STATISTICAL PURPOSES THE APPEAL IS TREATED AS ALLOWED. 12 ITA NO. 2079 2080 & 2081 ISHA REALTORS PVT. LTD. PUNE 9. WE THEREFORE FOLLOWING THE LEGAL PRINCIPLES LAID DOWN IN THE CASE S OF MANAN CORPORATION VS. ACIT (SUPRA) AND HIRANANDANI AKRUTI JV VS. DCIT (SUPRA) HOLD THAT THE LD. CIT(A) HAS RIGHTLY ALLOWED THE DEDUCTION U/S. 80IB(10) FOR ALL THE THREE ASSESSMENT YEARS WHICH WAS DENIED ONLY ON THE REASON THAT THE ASSESSEE HAS VIOLATED THE CONDITION OF TOTAL CO MMERCIAL AREA IN THE HOUSING PROJECT. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) FOR ALL THE THREE ASSESSMENT YEARS ACCORDINGLY GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT ALL THE THREE APPEALS ARE DISMISSED. P RONOUNCED IN THE OPEN COURT ON 25 - 10 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE DATED : 25 TH OCTOBER 20 1 3 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT( A) - I PUNE 4 THE CIT - I PUNE 5 THE DR ITAT A BENCH PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE