M/s. Vikram Developers & Promoters,, Pune v. Deputy Commissioner of Income tax,,

ITA 2795/PUN/2016 | 2012-13
Pronouncement Date: 14-11-2019 | Result: Partly Allowed

Appeal Details

RSA Number 279524514 RSA 2016
Bench Pune
Appeal Number ITA 2795/PUN/2016
Appellant M/s. Vikram Developers & Promoters,, Pune
Respondent Deputy Commissioner of Income tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2019
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 14-11-2019
Last Hearing Date 17-09-2018
First Hearing Date 17-09-2018
Assessment Year 2012-13
Appeal Filed On 13-12-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH PUNE BEFORE SHRI D. KARUNAKARA RAO AM AND SHRI PARTHA SARATHI CHAUDHURY JM . / ITA NOS.2795 & 2796/PUN/2016 / ASSESSMENT YEARS : 2012-13 & 2013-14 M/S. VIKRAM DEVELOPERS & PROMOTERS 19 SHRIKRISHNA HEIGHTS GANESHKHIND ROAD SHIVAJI NAGAR PUNE-411005. PAN : AAGFV4298R ....... / APPELLANT / V/S. DCIT CENTRAL CIRCLE-2(1) PUNE. / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI MILIND CHAHURE / DATE OF HEARING : 17.10.2019 / DATE OF PRONOUNCEMENT : 14.11.2019 / ORDER PER D. KARUNAKARA RAO AM: THERE ARE TWO APPEALS UNDER CONSIDERATION FILED BY THE ASSESSEE AGAINST THE COMMON ORDERS OF THE CIT(A)-12 PUNE DATED 08.09.2016 FOR THE ASSESSMENT YEARS 2012-13 AND 2013-14 RESPECTIVELY. PRELIMINARY ISSUE - CONDONATION OF DELAY BOTH APPEALS 2. BEFORE US AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BOTH THE APPEALS COULD NOT BE FILED IN TIME AND THE SAID APPEALS WERE FILED WITH THE DELAY OF 01 DAY . IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DELAY IS UNINTENTIONAL AND PRAYED FOR CONDONING THE SAME. 2 ITA NOS.2795 & 2796/PUN/2016 3. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE SMALLNESS OF DELAY IN FILING OF BOTH THE APPEALS WE CONDONE THE DELAY AND PROCEED TO ADJUDICATE THE APPEALS OF THE ASSESSEE IN THE FOLLOWING PARAGRAPHS. 4. THE FACTS AND GROUNDS ARE COMMON IN BOTH THE APPEALS THEREFORE BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. ACCORDINGLY THE APPEAL-WISE ADJUDICATION IS TAKEN UP IN THE FOLLOWING PARAGRAPHS. ITA NO.2795/PUN/2016 A.Y. 2012-13 5. FACTS: THE ASSESSEE IS A BUILDER AND UNDERTOOK A RESIDENTIAL PROJECT NAMED MIDORI PHASE-I I.E. THE CONSTRUCTION OF FLATS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS MADE DETERMINING THE TOTAL ASSESSED INCOME OF RS.63 00 000/- FOR THE ASSESSMENT YEAR 2012-13. RS.31 49 800/- WAS THE ASSESSED INCOME FOR THE ASSESSMENT YEAR 2013-14. DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2012-13 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.13 22 98 018/- U/S 80IB(10) OF THE ACT IN RESPECT OF ITS PROJECT NAMELY MIDORI PHASE-I. AN AMOUNT OF RS.10 67 79 215/- WAS CLAIMED AS DEDUCTION (SUPRA) FOR THE NEXT ASSESSMENT YEAR 2013-14. IN PRINCIPLE THE ASSESSEE RECOGNISED INCOME OF THE PROJECT ON PROJECT COMPLETION METHOD-CUM- THE EVENT OF SALE OF FLATS METHOD. ALL FLATS WERE SOLD BY ASSESSMENT YEAR 2013- 14 AND THE PROJECT IS COMPLETED IN THIS ASSESSMENT YEAR. 3 ITA NOS.2795 & 2796/PUN/2016 6. DURING THE ASSESSMENT YEAR 2012-13 THE ASSESSING OFFICER FOUND AN ISSUE RELATING TO THE CLAIMS OF CLUB CHARGES COLLECTED BY THE ASSESSEE FOR CONSTRUCTION OF A CLUB HOUSE FOR THE RESIDENTS. ASSESSEE COLLECTED CLUB HOUSE CHARGES OF RS.99 LAKHS IN THREE ASSESSMENT YEARS AND HELD THEY CONSTITUTE AN ELIGIBLE INCOME FOR CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. THE ASSESSING OFFICER REJECTED CLAIM OF DEDUCTION ON THESE CLUB CHARGES IN BOTH ASSESSMENT YEAR 2012-13 AND ASSESSMENT YEAR 2013-14 AND TREATED SAID COLLECTIONS AS TAXABLE INCOME IN BOTH ASSESSMENT YEARS. SIMILARLY THE ASSESSING OFFICER NOTED THAT THERE WAS ADDITIONS IN THE EARLIER THREE ASSESSMENT YEARS I.E. A.Y. 2009-10 2010-11 & 2011-12 U/S 68 OF THE ACT. THE TOTAL OF THE SAME WORKS OUT TO RS.1 40 98 445/-. ALL THESE ADDITIONS WERE CONSIDERED FOR RESTRICTING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT IN THE ASSESSMENT YEAR 2012-13. THE CIT(A) RESTORED THE ASSESSEES CLAIM ON THE SAID RS.1 40 98 445/- AND CONFIRMED THE CHARGES MADE BY THE ASSESSING OFFICER TO THE SUMS OF RS.63 LAKHS FOR THE ASSESSMENT YEAR 2012-13 AS WELL AS RS.31 49 800/- IN ASSESSMENT YEAR 2013-14. ASSESSEE AGGRIEVED WITH THE ABOVE. WE SHALL NOW DETAIL THE FACTS ON THE SAID CLUB CHARGES. 7. FACTS RELATING TO CLUB CHARGES: THERE WAS A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT ON 08.09.2010 ON MR. VIKRAM GAIKWAD THE PARTNER OF THE ASSESSEE-FIRM. MR. GAIKWAR GAVE A DECLARATION OF ADDITIONAL INCOME OF RS.21.08 CRORES DURING THE SAID PROCEEDINGS. THE ASSESSEE FILED AN APPLICATION BEFORE THE INCOME TAX SETTLEMENT COMMISSION (ITSC) FOR THE ASSESSMENT YEARS 2005- 06 TO 2012-13 AND DECLARED THE UNDISCLOSED INCOME OF RS.27.34 CRORES. THE ADDITION OF RS.1 40 98 445/- QUA THE ADDITIONS MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 2009-10 TO 2011-12 ARE NOT PART OF IT. FURTHER THE 4 ITA NOS.2795 & 2796/PUN/2016 ASSESSING OFFICER NOTED THAT MIDORI PHASE-I PROJECT WAS ORIGINALLY APPROVED BY THE LOCAL BODY WITH A CLUB BUILDING AS PART OF THE PROJECT IN THE YEAR 2007 ITSELF AND IT WAS SUBSEQUENTLY REVISED ON 05.09.2008 16.05.2011 (FOR REMOVAL OF CLUB HOUSE DUE TO SOME ISSUES) SO ON. ON 29.03.2012 THE PROJECT WAS CLEARED COMPLETED WITHOUT ANY CLUB HOUSE MENTIONED IN THE PROJECT. THE COMPLETION CERTIFICATE WAS OBTAINED TOO. BASED ON THE EVENT OF SALE OF FLATS CUM PROJECT COMPLETION THE INCOME WAS RECOGNISED BY THE ASSESSEE IN ASSESSMENT YEARS 2012-13 AND 2013-14 AND CLAIMED THE DEDUCTION U/S 80IB(10) OF THE ACT ON THE SAID INCOME. HOWEVER THE CONSTRUCTION OF CLUB HOUSE REMAINS AN OBLIGATION BY THE ASSESSEE TO THE FLAT OWNERS. 8. CLUB HOUSE COLLECTIONS (CH COLLECTIONS): IN THE CONTEXT OF THE SAID NEED FOR CLUB HOUSE CONSTRUCTION THE ASSESSEE STARTED COLLECTING THE SUBSCRIPTION SEPARATELY FROM THE FLAT BUYERS AT THE RATE OF RS.75 000/- PER FLAT OWNER. THUS ASSESSEE COLLECTED TOTAL AMOUNT OF RS.99 00 000/- IN 3 YEARS I.E. RS.63 00 000/- IN THE A.Y. 2012-13 RS.31 49 800/- IN THE A.Y. 2013-14 - AND FINALLY RS.4 50 200/- IN THE A.Y. 2014-15. THERE IS NO DISPUTE ON THESE FACTS (I.E. YEAR OF COMPLETION OF PROJECT PROJECT INCOME RECOGNITION COLLECTION OF CLUB CHARGES SEPARATELY). THE ASSESSEE CONSIDERED ALL THESE COLLECTIONS OF RS.99 LAKHS ON RECEIPT BASIS AS INCOME OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS AND CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THUS THE ISSUES OF TAXATION OF CLUB HOUSE COLLECTIONS AND THE SAID CLAIM OF DEDUCTION ON THESE GROSS COLLECTION OF RS.99 00 000/- ARE THE DEVIATION MADE BY THE ASSESSEE FROM THE SAID RULES OF INCOME RECOGNITION ADOPTED BY THE ASSESSEE FIRM. THEREFORE THE ASSESSING OFFICER TAXED ENTIRE RS.99 LAKHS AND DID NOT CONSIDER THE EXPENSES INCURRED ON THE CLUB HOUSE CONSTRUCTION AS AN ALLOWABLE 5 ITA NOS.2795 & 2796/PUN/2016 DEDUCTION IN ANY ASSESSMENT YEAR. ASSESSEE IS AGGRIEVED ON THE ASSESSING OFFICERS DECISIONS. 9. ASSESSING OFFICERS REASONING: DURING THE ASSESSMENT PROCEEDINGS ON THIS ISSUE OF CLUB HOUSE SUBSCRIPTION AS ELIGIBLE INCOME THE ASSESSEE UNDERTOOK A DIFFERENT LINE AND ARGUED THAT THE SAID COLLECTIONS WERE REQUIRED TO BE TREATED AS ADVANCES A BALANCE SHEET ITEM AND SHOULD BE EXCLUDED FROM THE SCOPE OF INCOME. HOWEVER REJECTING THE SAID ARGUMENT OF THE ASSESSEE AND CONSIDERING THE ASSESSEES ORIGINAL CLAIM IN THE RETURN OF INCOME THE ASSESSING OFFICER TREATED THE CH COLLECTIONS AS TAXABLE INCOME RESTRICTED THE DEDUCTION AND DENIED THE DEDUCTION IN RESPECT OF THE CLUB HOUSE RECEIPTS IN ALL THE THREE ASSESSMENT YEARS. IN THE PROCESS THE ASSESSING OFFICER CONVENIENTLY ADOPTED THE ASSESSEES OWN ADMISSION IN THE RETURN OF INCOME THAT THE SAID ADVANCES CONSTITUTES A TAXABLE INCOME BUT FOR THE DEDUCTION PROVISION OF SECTION 80IB(10) OF THE ACT. 10. MATCHING EXPENSES: ALTERNATIVELY REFERRING TO THE UNFAIRNESS IN DENYING THE CREDIT OF EXPENSES OF RS.73 48 445/- AGAINST THE SAID CH COLLECTIONS OF RS.99 LAKHS THE ASSESSEE MADE A REQUEST FOR PRE-PONING OF THE EXPENSES INCURRED ON THE CLUB HOUSE CONSTRUCTION IN ASSESSMENT YEAR 2014-15 AND TAX ONLY TO THE NET INCOME IF THE DEDUCTION ON THE SAID NET INCOME U/S 80IB(10) OF THE ACT IS NOT ALLOWABLE FOR ANY REASON. THE ASSESSING OFFICER REJECTED THIS ARGUMENT ALSO MERELY RELYING ON THE ASSESSEES CLAIM OF DEDUCTION ON ENTIRE RS.99 LAKHS AS MADE IN THE RETURN OF INCOME. ASSESSEE DID NOT REDUCE THE SAID EXPENSES OUT OF RS.99 LAKHS. THUS THE ASSESSING OFFICER REJECTED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AND ALLOWED THE 6 ITA NOS.2795 & 2796/PUN/2016 DEDUCTION OF RS.11 18 99 573/- ONLY OUT OF THE ORIGINAL CLAIM OF RS.13 22 98 018/- IN THE A.Y. 2012-13 (PAGE 3 OF THE ASSESSMENT ORDER) I.E. : CLAIM U/S 80IB(10) - RS.13 22 98 018/- LESS: (I) CLUB CHARGES - RS. 63 00 000/- (II) CASH CREDIT - RS. 1 40 98 445/- DEDUCTION U/S 80IB(10) - RS.11 18 99 573/- 11. SUM UP OF THE ISSUES FOR ADJUDICATION BY THE CIT(A): THUS THE DOUBLE-EFFECT OF ASSESSMENT INCLUDE (I) RESTRICTION OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT ON (A) CH COLLECTIONS RECEIVED IN THE YEAR AND (B) DENIAL OF DEDUCTIONS ON THE ADDITIONS ON ACCOUNT OF CASH CREDIT U/S 68 OF THE ACT; AND (II) TAXATION OF SAID CH COLLECTIONS OF RS.99 LAKHS IN ALL THREE ASSESSMENT YEARS WITHOUT GIVING CREDIT EXPENSES IN ANY FORM INCLUDING PREPONING TO THE EXPENDITURE ACTUALLY INCURRED ON THE CLUB HOUSE IN ASSESSMENT YEAR 2014-15. 12. CIT(A) : AGGRIEVED WITH THE ABOVE DECISIONS OF THE ASSESSING OFFICER THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). AS DISCUSSED EARLIER THE ISSUE FOR ADJUDICATION BEFORE HIM INCLUDES (I) TAXATION OF CLUB HOUSE SUBSCRIPTION OF RS.63 LAKHS AND DENIAL OF DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF CLUB HOUSE SUBSCRIPTION; AND (II) DENIAL OF CLAIM OF DEDUCTION ON THE CASH CREDIT ADDITION OF RS.1 40 98 445/- RELATING TO THE EARLIER ASSESSMENT YEARS. CIT(A) PASSED A COMPOSITE ORDER FOR ASSESSMENT YEARS 2009-10 TO 2013-14. 13. CH COLLECTIONS ISSUE: ON THE ISSUE RELATING TO CH COLLECTIONS TWIN ISSUE OF TAXATION-CUM-DENIAL OF DEDUCTION U/S 80IB(10) OF THE ACT THE CIT(A) HELD THAT THE CLUB HOUSE PROJECT WAS NOT THE PART OF THE ORIGINAL HOUSING PROJECT. THEREFORE AS DECLARED IN THE RETURN OF INCOME THE CH COLLECTIONS RECEIVED BY THE ASSESSEE FROM THE FLAT BUYERS CONSTITUTE A TAXABLE INCOME AND 7 ITA NOS.2795 & 2796/PUN/2016 IS NOT AN ELIGIBLE INCOME FOR CLAIM OF DEDUCTION. CONSIDERING THE FACT THAT THE ASSESSEE HIMSELF OFFERED THE SAME AS TAXABLE INCOME IN THE RETURN OF INCOME (BUT HOWEVER CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT) THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER IN TOTO . ON THE ARGUMENTS OF THE ASSESSEE RELATING TO (A) THE CAPITAL NATURE OF THE ADVANCES AND (B) NEED FOR NETTING OF THE EXPENSES AGAINST THE SAID ADVANCES ETC BY PREPONING THE CIT(A) HELD THAT THE RETURN OF INCOME MADE THEREIN ARE SACROSANCT. THE CIT(A) REFUSED THE ALTERNATE CLAIM OF THE ASSESSEE I.E. IN FAVOUR OF TAXING ONLY THE NET INCOME EITHER IN THE ASSESSMENT YEARS 2012-13 2013-14 & 2014-15 PROPORTIONATELY OR ONLY IN ASSESSMENT YEAR 2014-15 ON COMPLETION BASIS. 14. WITH REGARD TO THE DENIAL OF DEDUCTION ON THE ADDITIONS OF RS.1 40 98 445/- THE CIT(A) GRANTED RELIEF AND RESTORED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. IN THIS REGARD THE CIT(A) RELIED ON THE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF CIT VS. SHETH DEVELOPERS (P) LTD. 25 TAXMANN.COM 173 (BOM.-HC). THUS THE CIT(A) PARTLY ALLOWED THE ASSESSEES APPEALS. REVENUE IS NOT IN APPEALS BEFORE US. 15. THUS THE REVENUE ACCEPTED THE RELIEF GRANTED BY THE CIT(A) ON THE ISSUE RELATING TO CASH CREDIT ADDITION AND GRANT OF DEDUCTION ON RS.1 40 98 445/-. THERE ARE NO APPEALS BY THE REVENUE IN THE ASSESSMENT YEARS 2009-10 TILL ASSESSMENT YEAR 2012-13. HOWEVER AGGRIEVED WITH THE ABOVE DECISIONS OF THE CIT(A) QUA THE ASSESSMENT YEAR 2012-13 THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS :- 1. THE LEARNED CIT(A)-12 PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF DEDUCTION AMOUNTING TO RS. 63 00 000/- U/S 80-IB(10) OF THE ITA 1961 MADE BY THE LEARNED DCIT CENTRAL CIRCLE-2(1) PUNE (HEREINAFTER REFERRED TO AS THE LEARNED AO). 8 ITA NOS.2795 & 2796/PUN/2016 2. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN DISALLOWING DEDUCTION U/S 80-IB(10) OF THE ITA 1961 FOR RECEIPTS / REVENUE RELATED TO CLUB-HOUSE FACILITY AMOUNTING TO RS. 63 00 000/- ON THE REASON THAT THE SAID CLUB-HOUSE FACILITY WAS NOT MENTIONED IN THE LAST APPROVED PLAN OF THE MIDORI HOUSING PROJECT. THE LEARNED IT- AUTHORITIES OUGHT TO HAVE APPRECIATED THAT CLUB-HOUSE WAS INITIALLY APPROVED BY THE PMC AND THE CLUB HOUSE WAS A CONTRACTUAL A CONTRACTUAL OBLIGATION OF THE APPELLANT ANYWAY. 3. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT NON-MENTION OF A FACILITY / AMENITY IN THE APPROVED BUILDING PLAN DOES NOT LEAD TO A PROPOSITION THAT THE RELATED REVENUE / PROFIT FROM SUCH AMENITY IS NOT A PART OF PROFITS DERIVED FROM THE SAID HOUSING PROJECT. THE LEARNED IT-AUTHORITIES OUGHT TO HAVE APPRECIATED THAT THE SAID PROFIT FROM CLUB-HOUSE FACILITY WAS A PART AND PARCEL OF A HOUSING PROJECT AND INCIDENTAL THERETO. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO GROUND NO. 2 & 3 THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT GRANTING THE DEDUCTION OF CORRESPONDING EXPENDITURE REQUIRED TO BE INCURRED FOR THE CONSTRUCTION & DEVELOPMENT OF THE CLUB-HOUSE. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUND NO. 1 2 & 3 THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT SHIFTING THE INCOME OF RS. 63 00 000/- BEING CLUB HOUSE MEMBERSHIP CHARGES TO AY 2014- 15 SINCE THE RELATED RISKS AND REWARDS WERE TRANSFERRED ONLY IN AY 2014-15 WHEN THE SAID CLUB-HOUSE WAS CONSTRUCTED & DEVELOPED. 6. APPELLANT CRAVES LEAVE TO ADD / MODIFY / DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 16. FROM THE ABOVE EXTRACTED GROUNDS IT IS EVIDENT THAT THE GROUNDS/ALTERNATIVE GROUND 1 4 & 5 RELATES TO THE CORE ISSUE I.E. MERITS OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF SUM OF RS.63 00 000/- AND TAXATION OF THE NET INCOME IS PROPER ASSESSMENT YEAR AFTER GRANTING SET-OFF OF MATCHING EXPENSES. GROUND 2 AND 3 ARE ARGUMENTATIVE. BEFORE THE TRIBUNAL 17. LD. ARS SUBMISSIONS : THE LD. COUNSEL FOR THE ASSESSEE NARRATED THE ABOVE FACTS OF THE CASE AND FILED A SUMMARY CHART OF THE SUBSCRIPTION FROM FLAT BUYERS FOR CLUB HOUSE AND THE EXPENDITURE DETAILS IN THE ASSESSMENT YEAR 2014-15 THE YEAR OF CONSTRUCTION/COMPLETION OF CLUB HOUSE. THE SAME IS EXTRACTED AS UNDER :- 9 ITA NOS.2795 & 2796/PUN/2016 SUMMARY OF CLUB HOUSE RECEIPT AND EXPENSES PARTICULARS A.Y. 2012-13 A.Y. 2013-14 A.Y. 2014-15 AS PER APPELLANT A. CLUB HOUSE RECEIPTS (RS.99 LAKHS) 63 00 000 31 49 800 4 50 200 B. CLUB HOUSE EXPENSES CLAIMED BY APPELLANT - - 78 10 182 C. PROFIT FROM CLUB HOUSE RECEIPTS (A- B) 63 00 000 31 49 800 -73 59 982 D. DEDUCTION CLAIMED U/S 80-IB(10) W.R.T. CLUB HOUSE 63 00 000 31 49 800 - E. INCOME OFFERED TO TAX W.R.T. CLUB HOUSE - - - AS PER ASSESSING OFFICER A. CLUB HOUSE RECEIPTS 63 00 000 31 49 800 4 50 200 B. CLUB HOUSE EXPENSES GRANTED BY ASSESSING OFFICER - - - C. PROFIT FROM CLUB HOUSE RECEIPTS (A- B) 63 00 000 31 49 800 4 50 200 D. DEDUCTION GRANTED U/S 80-IB(10) W.R.T. CLUB HOUSE - - - E. INCOME BROUGHT TO TAX W.R.T. CLUB HOUSE 63 00 000 31 49 800 4 50 200 18. THUS REFER TO ASSESSMENT YEAR 2012-13 THE LIMITED ISSUE FOR ADJUDICATION BEFORE US IS THAT (I) WHETHER THE SAID ADDITION OF RS.63 00 000/- IS SUSTAINABLE OR NOT?; (II) WHETHER THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT IN RETURN OF INCOME BY THE ASSESSEE IS CORRECTLY MADE OR NOT?; AND (III) WHETHER THE CH SUBSCRIPTION OF RS.63 00 000/- FOR THE ASSESSMENT YEAR 2012-13 RS.31 49 800/- IN ASSESSMENT YEAR 2013-14; AND RS.4 50 000/- CONSTITUTES PART OF THE HOUSING PROJECT OR NOT TO ENJOY THE BENEFIT OF DEDUCTION. 19. FURTHER LD. COUNSEL FOR THE ASSESSEE FILED AN AFFIDAVIT BEFORE US ON 11.10.2019 MAKING THE FOLLOWING ASSERTIONS :- .......... 1. OUR FIRM HAS DEVELOPED A HOUSING PROJECT PROFITS OF WHICH WERE ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ITA 1961. DEDUCTION U/S 80-IB(10) OF THE ITA 1961; WAS CLAIMED ON THE PROFITS WHICH WAS ALLOWED BY THE LEARNED I-T AUTHORITIES. 2. THOUGH THE DEDUCTION U/S 80-IB(10) OF THE ITA 1961; WAS ALLOWED BY THE I-T AUTHORITIES OBJECTION WAS TAKEN VIS-A-VIS PROFITS ARISING FROM CONSTRUCTION OF 10 ITA NOS.2795 & 2796/PUN/2016 CLUB-HOUSE (A PART OF COMMON AMENITIES ASSURED TO THE CUSTOMERS). THE SAID OBJECTION RELATED TO THE NON-APPROVAL OF THE CLUB-HOUSE BY PCMC. 3. OUR FIRM HAS FILED APPEALS BEFORE THE HONORABLE ITAT PUNE BENCH FOR A.Y. 2012-13 AND A.Y. 2013-14 HAVING ITA NO.2795-2796/PUN/2016. 4. VIDE GROUND NO.1 TO 3 IN BOTH THE APPEALS FOR A.Y. 2012-13 AND A.Y. 2013-14 WE CHALLENGED NON-GRANT OF DEDUCTION U/S 80-IB(10) OF THE ITA 1961 ON CLUB-HOUSE RECEIPTS. DETAILS OF THE SAME ARE AS UNDER: A) A.Y. 2012-13 - RS.63 00 000/- B) A.Y. 2013-14 - RS.31 49 800/- 5. THE SAID DEDUCTION U/S 80-IB(10) OF THE ITA 1961 WAS CLAIMED ON THE BASIS THAT CLUB-HOUSE WAS SANCTIONED IN INITIAL LAYOUT PLAN AND COMMITMENT WAS MADE TO CUSTOMERS THROUGH SALES BROCHURE AND REGISTERED AGREEMENTS. HOWEVER IN THE YEAR 2010 A NEW STORM-WATER MAP WAS PREPARED BY SCIENCE TECHNOLOGY PARK (STP) WHICH WAS APPROVED BY JNNURM AND WAS IMPLEMENTED BY PCMC. 6. AS PER THE SAID NEW STORM-WATER PLAN THE HOUSING PROJECT LAND WHERE THE CLUB-HOUSE WAS PROPOSED WAS FALLING IN THE SAID MAP OF STORM WATER DRAIN. AS SUCH THE CLUB-HOUSE WAS SHIFTED TO OTHER LAND AND THERE WAS DELAY IN CONSTRUCTION OF CLUB-HOUSE. 7. NOW OUR FIRM HAS DECIDED NOT TO PRESS GROUND NO.1 TO 3 IN BOTH THE APPEALS OF A.Y. 2012-13 AND A.Y. 2013-14 HAVING ITA NO.2795- 2796/PUN/2016. 8. FURTHER OUR FIRM CONFIRMS THAT THE SAID GROUND NO.1 TO 3 WILL NOT BE CONTESTED AT ANY HIGHER FORUM ALSO. I SOLEMNLY STATE ON OATH THAT THE CONTENTS OF THIS AFFIDAVIT ARE TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF AND THAT IT CONCEALS NOTHING AND THAT NO PART OF IT IS FALSE. 20. THUS THE ASSESSEE DOES NOT WANT TO PRESS THE GROUNDS RELATING TO TAXATION OF SUBSCRIPTIONS DENIAL OF DEDUCTION U/S 80IB(10) OF THE ACT ETC. IN OTHER WORDS BY NOT PRESSING GROUND 1 TO 3 THE CH COLLECTION BECOMES TAXABLE AFTER NETTING OF EXPENSES INCURRED ON CH. HOWEVER REFERRING TO GROUND 4 & 5 LD. AR NOW PLEADS FOR TAXING THE SAME AFTER NETTING WITH THE EXPENSES OF RS.78 10 182/- IN AN APPROPRIATE ASSESSMENT YEARS. THE ASSESSEE ARGUES THAT THE PROFIT ON CH SHOULD BE IDEALLY TAXED IN THE ASSESSMENT YEAR 2014-15 ONLY AFTER GRANTING CREDIT TO THE EXPENSES OF RS.78 10 182/-AGAINST THE RECEIPTS OF RS.99 00 000/-. THE LD. COUNSEL FOR THE ASSESSEE ARGUED VEHEMENTLY STATING THAT THE ENTIRE GROSS RECEIPTS CANNOT BE TAXED AND RELIED HEAVILY ON THE HONBLE 11 ITA NOS.2795 & 2796/PUN/2016 SUPREME COURTS JUDGEMENT IN THE CASE OF (I) BHARAT EARTH MOVERS VS. CIT 245 ITR 428 (SC) AND (II) CALCUTTA CO. LTD. VS. CIT 37 ITR 1 (SC). THE ASSESSEE MADE THE WRITTEN SUBMISSIONS IN THIS REGARD AND THE SAME ARE EXTRACTED AS UNDER :- 2. SUBMISSION W.R.T. CLUB-HOUSE RECEIPTS - AY 2012-13 & AY 2013-14: 2.1 GROUND NO. 1 TO 3 - 80-IB(10) ON CLUB-HOUSE RECEIPTS: VIDE GROUND NO. 1 TO 3 IN AY 2012-13 AND AY 2013-14 APPELLANT HAS CHALLENGED NON-GRANT OF DEDUCTION U/S 80-IB(10) OF THE ITA 1961 ON CLUB-HOUSE RECEIPTS AMOUNTING TO RS. RS. 63 00 000/- AND RS. 31 49 800/- IN AY 2012-13 AND AY 2013-14 RESPECTIVELY. APPELLANT NO LONGER WISHES TO PRESS THE SAID GROUNDS. APPELLANT IS FILING SPECIFIC AFFIDAVIT IN THIS REGARD WHICH IS SUBMITTED HEREWITH AS ANNEXURE-1. 2.2 GROUND NO. 5 - SHIFTING OF INCOME OF CLUB-HOUSE RECEIPTS TO AY 2014-15: VIDE GROUND NO. 5 APPELLANT IS CONTENDING THAT THE CLUB-HOUSE RECEIPTS RECEIVED DURING AY 2012-13 & AY 2013-14 SHOULD BE TREATED AS ADVANCE FOR THESE YEARS AND SHOULD BE TAXED IN AY 2014-15. THIS IS BECAUSE DUE TO VARIOUS REASONS CLUB-HOUSE COULD NOT BE COMPLETED TILL 31/03/2012 AND WAS CONSTRUCTED ONLY IN AY 2014-15 AND WAS HAND-OVER TO THE FLAT OWNERS ONLY IN AY 2014-15. AS SUCH ALL THE RISK AND REWARD WERE TRANSFERRED BY APPELLANT IN AY 2014-15. THEREFORE IT IS SUBMITTED THAT THE INCOME FROM CLUB-HOUSE SHOULD BE TAXED IN AY 2014- 15 THOUGH APPELLANT HAS ERRONEOUSLY DISCLOSED THE SAME IN AY 2012-13 & AY 2013-14. APPELLANT IS ALSO SUBMITTING HEREWITH SUMMARY OF CLUB HOUSE RECEIPTS AND EXPENSES FOR AY 2012-13 TO AY 2013-14 WHICH IS SUBMITTED HEREWITH AS ANNEXURE-2. 2.3 GROUND NO. 4 - GRANT OF EXPENSES AGAINST CLUB-HOUSE RECEIPTS: IF APPELLANT SUCCEEDS AT GROUND NO. 5 THAN GROUND NO. 4 BECOMES ACADEMIC. IF HOWEVER GROUND NO. 5 IS DECIDED AGAINST APPELLANT REQUESTS THE HONOURABLE BENCH TO KINDLY DECIDE GROUND NO. 4. VIDE GROUND NO. 4 APPELLANT IS CONTENDING THAT IF AT ALL CLUB-HOUSE RECEIPTS ARE TAXED IN AY 2012-13 AND AY 2013-14 RELEVANT EXPENSES SHOULD ALSO BE GRANTED. APPELLANT IS CONTENDING THE SAME ON FOLLOWING ANALOGY: A) MATCHING PRINCIPLE: IT IS A BASIC PRINCIPLE THAT REVENUE AND EXPENDITURE GOES HAND IN HAND AND IN ANY CASE THE ENTIRE GROSS RECEIPTS CANNOT BE TAXED. AS SUCH IT IS SUBMITTED THAT DEDUCTION OR RELEVANT EXPENSES SHOULD ALSO BE GRANTED IF RECEIPT IS OUGHT TO BE TAXED. B) INCOME (OR PROFIT) TO BE TAXED AND NOT GROSS RECEIPT: IT IS SUBMITTED THAT IT IS A SETTLED PRINCIPLE THAT NO INCOME CAN BE EARNED WITHOUT INCURRING ANY EXPENSES. IF NO DEDUCTION FOR RELATED EXPENSES IS GRANTED THEN ENTIRE SALES CONSIDERATION WILL GET TAXED. SUCH GROSS TAXATION IS AGAINST FIRST PRINCIPLES OF TAX-LAW. APPELLANT RELIES ON THE FOLLOWING DECISIONS IN THIS REGARD: I. CALCUTTA CO. LTD. VS. CIT - 37 ITR 1 (SC) 12 ITA NOS.2795 & 2796/PUN/2016 II. BHARAT EARTH MOVERS VS. CIT - 245 ITR 428 (SC). 21. FROM THE ABOVE SUBMISSION BY THE AR IT IS THE SUBMISSION OF THE ASSESSEE THAT DUE TO PROJECT COMPLETION METHOD ADOPTED BY THE ASSESSEE THE NET PROFIT BECOMES TAXABLE IN ASSESSMENT YEAR 2014-15. ALTERNATIVELY THE CLAIM OF EXPENDITURE NEEDS TO BE PREPONED AMONG THE 3 ASSESSMENT YEARS. ASSESSEE RELIED ON SET MATCHING PRINCIPLE. 22. LD. DRS SUBMISSIONS: PER CONTRA THE CORE ARGUMENT OF THE LD. DR FOR THE REVENUE RELATES TO THE DETAILS AND CLAIMS MADE BY THE ASSESSEE IN THE RETURN OF INCOME. SO FAR AS THE ASSESSEES ASSERTIONS IN THE AFFIDAVIT RELATING TO THE NON-PRESSING OF THE GROUND NO.1 TO 3 IS CONCERNED LD. DR RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER/CIT(A) AND THE CONTENTS GIVEN BY THE ASSESSEE IN THE RETURN OF INCOME. 23. REGARDING THE TAXATION OF THE PROFITS IN THE ASSESSMENT YEAR 2014-15 THE YEAR OF COMPLETION OF THE CLUB HOUSE PROJECT LD. DR SUBMITTED THAT ALLOWING THE CLAIM OF THE ASSESSEE WILL RESULT IN REDUCTION OF THE RETURNED INCOME TO THE EXTENT OF RS.63 00 000/- FOR THE ASSESSMENT YEAR 2012-13 AND RS.31 49 800/- FOR THE ASSESSMENT YEAR 2013-14. HOWEVER LD. DR HAS NOTHING TO MENTION ON THE NIL RETURN OF INCOME IS REDUCED FURTHER. EVENTUALLY IT IS A CASE OF RESTRICTING THE DEDUCTION U/S 80IB(10) OF THE ACT WHICH IS DIFFERENT FROM A CASE REDUCING THE RETURNED INCOME. 24. REGARDING THE ASSESSEES NEW DEMAND FOR TAXING THE CH PROFITS ONLY IN THE ASSESSMENT YEAR 2014-15 AFTER GRANTING SET-OFF OF THE EXPENSES ON THE CLUB HOUSE PROJECT THE LD. DR FOR THE REVENUE SUBMITTED THAT THIS ISSUE HAS CLEARLY 13 ITA NOS.2795 & 2796/PUN/2016 COME FOR THE FIRST TIME BEFORE THE TRIBUNAL AND THEREFORE THE MATTER CAN BE REMANDED TO THE FILE OF THE LOWER AUTHORITIES. DECISION OF THE TRIBUNAL ON THE GROUNDS 25. GROUND 1 TO 3 NOT PRESSED AFFIDAVIT : WE HAVE HEARD BOTH THE SIDES ON THIS LIMITED ISSUE RELATING TO THE TAXATION OF CLUB HOUSE SUBSCRIPTION OF RS.99 00 000/- IN ALL THE THREE ASSESSMENT YEARS I.E. A.Y. 2012-13 TO 2014-15. BEFORE US ASSESSEE FILED AN AFFIDAVIT INFORMING THEIR DECISION TO GIVE UP THE ISSUE RAISED IN GROUND 1 TO 3 OF THE APPEAL. THEREFORE CONSIDERING THE CONCESSION GROUND 1 TO 3 OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 26. ISSUE OF NETTING OF EXPENSES YEAR OF TAXATION OF NET PROFITS THE CLUB HOUSE : REGARDING THE YEAR OF COMPLETION OF THE CH IT IS BORN OUT OF THE RECORDS THAT THE CLUB HOUSE (CH) IS COMPLETED IN THE ASSESSMENT YEAR 2014-15. BY THIS TIME THE ASSESSEE INCURRED THE EXPENDITURE ON THE CLUB HOUSE CONSTRUCTION AMOUNTING TO RS.78 10 182/-. IN PRINCIPLE THE PROJECT COMPLETION METHOD OF ACCOUNTING IS FOLLOWED BY THE ASSESSEE IN RESPECT OF MIDORI PROJECT AND THE SAME IS ACCEPTED BY THE REVENUE. FOLLOWING THE SAME THE RELEVANT INCOME OF THE CLUB HOUSE IS TAXABLE IN THE YEAR OF COMPLETION I.E. 2014-15 ONLY. IN THIS REGARD BOTH THE ASSESSEE AND THE REVENUE HAVE ERRED IN DEALING WITH THE ISSUE OF YEAR OF TAXATION OF PROFITS OF THIS CLUB HOUSE PROJECT IN ACCORDANCE WITH GENERAL LAW IN FORCE. WHILE THE ASSESSEE ERRED IN INCLUDING THE SUBSCRIPTION AS A PART OF THE ELIGIBLE INCOME FOR THE PURPOSE OF SECTION 80IB(10) OF THE ACT IN THE RETURN OF INCOME AND THEREBY INFLATING THE CLAIM OF DEDUCTION TO THAT EXTENT; THE REVENUE FAILED TO ADHERE TO THE PRINCIPLES OF ACCOUNTING 14 ITA NOS.2795 & 2796/PUN/2016 (SUPRA) AND TAXED THE ENTIRE AMOUNT AS A TAXABLE INCOME. IN THE PROCESS THE CLAIM IN THE RETURN OF INCOME WAS PARTLY ACCEPTED TO THE EXTENT OF TAXING THE ENTIRE AMOUNT OF RS.63 00 000/- WITHOUT NETTING WITH EXPENDITURE AND PARTLY NOT ACCEPTED I.E. THE ALLOWABILITY OF DEDUCTION U/S 80-IB(10) OF THE ACT. NETTING OF EXPENSES HAS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE IN THE ASSESSMENT YEARS PROPER. IN OUR VIEW THE DECISION OF BOTH THE REVENUE AS WELL AS THE ASSESSEE REQUIRES SUBSTANTIALLY MODIFICATION CONSIDERING THE PROJECT COMPLETION METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND THE SAID METHOD STANDS UNDISTURBED BY THE REVENUE. AS SUCH THE EXPENDITURE IS INCURRED IN ASSESSMENT YEAR 2014-15 AND WE DO NOT HAVE THE DETAILS OF NET PROFIT ON THIS CH PROJECT. CORRECTNESS OF EXPENDITURE IS NOT EXAMINED. THEREFORE WE ARE OF THE OPINION THE MATTER SHOULD REVISIT TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTIONS :- DIRECTIONS : (A) THE CLUB HOUSE CONSTRUCTION PROJECT HAS TO BE RECOGNISED AS A CONTINUATION OF THE MIDORI PHASE-1 THE PROJECT AS IT HAS THE GENESIS IN THE MIDORI PHASE-I PROJECT ORIGINALLY. PER SE IT IS ONLY A PART OF THE HOUSING PROJECT AS THE FINANCES FOR THE CLUB HOUSE IS RAISED FROM THE FLAT BUYERS ONLY. THE PROFITS OF THE CH IS A TAXABLE ONES AS PER THE AFFIDAVIT. (B) THE ACCOUNTING METHODS FOLLOWED BY THE ASSESSEE IN RESPECT OF MIDORI PHASE-I SHOULD BE EQUAL APPLICABLE TO THE CLUB HOUSE CONSTRUCTION AS WELL AND THE YEAR OF TAXATION OF THE RELEVANT PROFITS IS IDEALLY THE ASSESSMENT YEAR 2014-15 ONLY. ASSESSING OFFICER NEEDS TO CONSIDER IT IN THE REMAND PROCEEDINGS. 15 ITA NOS.2795 & 2796/PUN/2016 (C) THE COMPLETION CERTIFICATE OF THE CLUB HOUSE ISSUED BY THE LOCAL AUTHORITY BECOMES RELEVANT. ASSESSEE CLAIMS THE CH IS COMPLETED IN THE YEAR 2014-15 BUT NO COMPLETION CERTIFICATE IS FILED BEFORE US. (D) THE ASSESSING OFFICER IS ALSO REQUIRED TO EXAMINE THE GENUINENESS OF THE EXPENDITURE CLAIM OF RS.78 10 182/- IN THE RELEVANT ASSESSMENT YEAR. THE PROFITS OF THE CLUB HOUSE HAS TO BE EXAMINED AND QUANTIFIED WITH THE DUE PROCESS OF LAW. THE DETAILS RELATING TO THE ASSESSMENT FOR ASSESSMENT YEAR 2014-15 ARE NOT FILED BEFORE US. (E) FOR ANY OTHER REASON THE ASSESSING OFFICER DECIDES TO NOT FOLLOW THE PRINCIPLE OF MATCHING EXPENSES QUA PROJECT COMPLETION METHOD FOR THIS CLUB HOUSE PROJECT THE PROFITS OF THIS PROJECT MAY BE DIVIDED AMONG THREE ASSESSMENT YEARS I.E. A.Y. 2012-13 2013-14 AND 2014-15 ON PROPORTIONATE BASIS BY APPLYING THE PRINCIPLE OF MATCHING QUA THE SUBSCRIPTION RECEIVED FROM THE FLAT BUYERS. (F) THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN DECIDING THE ISSUE. THE ASSESSING OFFICER IS REQUIRED TO PASS A SPEAKING ORDER ON THIS ISSUE CONSIDERING THE RELEVANT LAW IN COURSE. THUS THE RELEVANT ALTERNATIVE GROUNDS 4 & 5 RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED AS ABOVE. 27. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.2795/PUN/2016 FOR THE ASSESSMENT YEAR 2012-13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 16 ITA NOS.2795 & 2796/PUN/2016 ITA NO.2796/PUN/2016 A.Y. 2013-14 28. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LEARNED CIT(A)-12 PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF DEDUCTION AMOUNTING TO RS. 31 49 800/- U/S 80-IB(10) OF THE ITA 1961 MADE BY THE LEARNED DCIT CENTRAL CIRCLE-2(1) PUNE (HEREINAFTER REFERRED TO AS THE LEARNED AO). 2. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN DISALLOWING DEDUCTION U/S 80-IB(10) OF THE ITA 1961 FOR RECEIPTS / REVENUE RELATED TO CLUB-HOUSE FACILITY AMOUNTING TO RS. 31 49 800/- ON THE REASON THAT THE SAID CLUB-HOUSE FACILITY WAS NOT MENTIONED IN THE LAST APPROVED PLAN OF THE MIDORI HOUSING PROJECT. THE LEARNED IT- AUTHORITIES OUGHT TO HAVE APPRECIATED THAT CLUB-HOUSE WAS INITIALLY APPROVED BY THE PMC AND THE CLUB HOUSE WAS A CONTRACTUAL OBLIGATION OF THE APPELLANT ANYWAY. 3. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT NON-MENTION OF A FACILITY / AMENITY IN THE APPROVED BUILDING PLAN DOES NOT LEAD TO A PROPOSITION THAT THE RELATED REVENUE / PROFIT FROM SUCH AMENITY IS NOT A PART OF PROFITS DERIVED FROM THE SAID HOUSING PROJECT. THE LEARNED IT-AUTHORITIES OUGHT TO HAVE APPRECIATED THAT THE SAID PROFIT FROM CLUB-HOUSE FACILITY WAS A PART AND PARCEL OF A HOUSING PROJECT AND INCIDENTAL THERETO. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO GROUND NO. 2 & 3 THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT GRANTING THE DEDUCTION OF CORRESPONDING EXPENDITURE REQUIRED TO BE INCURRED FOR THE CONSTRUCTION & DEVELOPMENT OF THE CLUB-HOUSE. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUND NO. 1 2 & 3 THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT SHIFTING THE INCOME OF RS. 31 49 800/- BEING CLUB HOUSE MEMBERSHIP CHARGES TO AY 2014-15 SINCE THE RELATED RISKS AND REWARDS WERE TRANSFERRED ONLY IN AY 2014-15 WHEN THE SAID CLUB-HOUSE WAS CONSTRUCTED & DEVELOPED. 6. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PROVISIONS OF SECTION 115-JC OF THE ITA 1961 IS APPLICABLE IN APPELLANTS CASE. THE LEARNED IT-AUTHORITIES OUGHT TO HAVE APPRECIATED THE FACT THAT OTHER THAN MIDORI PROJECT (ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ITA 1961) THERE WAS NO HOUSING PROJECT DEVELOPED BY THE APPELLANT. 7. THE LEARNED CIT(A)-12 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT SINCE APPELLANTS ONLY SOURCE OF INCOME IS FROM HOUSING PROJECT ELIGIBLE U/S 80-IB(10) OF THE ITA 1961; APPELLANT WILL NOT BE IN A POSITION TO EVER UTILIZE THE AMT TAX CREDIT AS SUCH DEFEATING THE INTENTION OF SECTION 115-JC OF THE ITA 1961. 8. APPELLANT CRAVES LEAVE TO ADD / MODIFY / DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 29. THE ASSESSEE ALSO RAISED THE ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER :- 9. APPELLANT CONTENDS THAT THE PROVISION OF SECTION 115-JC OF THE ITA 1961 IS NOT APPLICABLE TO APPELLANT AS THE MIDORI HOUSING PROJECT (ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ITA 1961) HAS BEEN SANCTIONED BY THE LOCAL AUTHORITY I.E. PCMC ON 30/03/2007 AND WAS GRANTED COMPLETION CERTIFICATES BY PCMC ON 29/03/2012 WHICH IS PRIOR TO INTRODUCTION OF AMT PROVISIONS U/S 115-JC OF THE ITA 1961 FOR PARTNERSHIP FIRMS BY FINANCE ACT 2012. 17 ITA NOS.2795 & 2796/PUN/2016 30. THE BASIC FACTS WERE ALREADY NARRATED ABOVE WHILE DEALING WITH THE APPEAL FOR THE ASSESSMENT YEAR 2012-13. FROM THE GROUNDS EXTRACTED ABOVE IT IS EVIDENT THAT THE ISSUES RELATING TO THE ADDITION OF DEDUCTION U/S 80IB(10) OF THE ACT AMOUNTING TO RS.31 49 800/-. 31. ADDITION OF RS.31 49 800/-: GROUNDS NO.1 TO 3 ARE DISMISSED AS THEY ARE NOT PRESSED AS CONCEDED BY THE ASSESSEE VIDE THE COMMON AFFIDAVIT (SUPRA) FILED BY THE ASSESSEE FOR BOTH THE YEARS. 32. EXPENSES SET OFF: GROUNDS NO.4 AND 5 RELATING TO TAXATION OF CLUB HOUSE PROFITS AND RAISED ALTERNATIVELY ARE COMMON TO THE GROUNDS NO.4 AND 5 FOR THE ASSESSMENT YEAR 2012-13 IN THE APPEAL VIDE ITA NO.2795/PUN/2016. THEY WERE ALREADY ADJUDICATED BY US AND DECIDED IN FAVOUR OF THE ASSESSEE IN PRINCIPLE. THESE GROUNDS ARE REMANDED WITH CERTAIN DIRECTIONS. THUS OUR DECISION IN GROUNDS NO.4 AND 5 OF APPEAL IN ITA NO.2795/PUN/2016 SHALL APPLY MUTATIS-MUTANDIS TO THESE GROUNDS NO.4 AND 5 ALSO. THUS THE GROUNDS NO.4 AND 5 ARE ALLOWED FOR STATISTICAL PURPOSES. 33. APPLICABILITY OF SECTION 115JC OF THE ACT PROJECT APPROVAL IN 2007: GROUNDS NO.6 AND 7 RELATE TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JC OF THE ACT RELATING TO THE SPECIAL PROVISIONS FOR PAYMENT OF TAX BY CERTAIN PERSONS OTHER THAN A COMPANY . FURTHER THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ALSO CONNECTED TO THE GROUNDS NO.6 AND 7. CONSIDERING THE NOT PRESSING OF CERTAIN GROUNDS NO.1 2 & 3 AND COMMONALITY OF THE ISSUES RAISED IN GROUNDS NO.4 AND 5 WHICH ARE ALREADY ADJUDICATED IN THE ASSESSMENT YEAR 2012-13 THE ONLY ISSUE LEFT FOR ADJUDICATION RELATING TO THE APPLICABILITY OF THE 18 ITA NOS.2795 & 2796/PUN/2016 PROVISIONS OF SECTION 115JC OF THE ACT (GROUND NO.6 & 7 AND ADDITIONAL GROUND). THE RELEVANT FACTS OF THIS ISSUE ARE NARRATED AS FOLLOWS. 34. FACTS ASSESSING OFFICERS CASE: THE ASSESSEE IS NON-CORPORATE ASSESSEE. SO FAR AS THE MAT PROVISIONS ARE CONCERNED RELEVANT TO THE NON- CORPORATE ASSESSEE THE PROVISIONS OF SECTION 115JC OF THE ACT WERE BROUGHT INTO THE STATUTE BY THE FINANCE ACT 2012 W.E.F. 1.4.2013 QUA THE PERSONS OTHER THAN A COMPANY LIKE THE PRESENT ASSESSEE. ACCORDING TO THE SAID PROVISIONS OF THE ACT THE ASSESSEE IS UNDER STATUTORY OBLIGATION TO PAY INCOME TAX CALLED ALTERNATE MINIMUM TAX (AMT) AT THE RATE OF EIGHTEEN AND ONE-HALF PERCENT WHERE ITS REGULAR INCOME TAX IS LESS THAN THE AMT. AMT AT THE RATE OF 18.5% IS PAID AND THE ADJUSTED TOTAL INCOME AS SPECIFIED IN SUB-SECTION (2) OF SECTION 115JC OF THE ACT. SUB-SECTION (3) OF SECTION 115JC OF THE ACT MANDATES THE ASSESSEE TO FILE A RETURN FROM THE ACCOUNTANT CERTIFYING THE (I) ADJUSTED TOTAL INCOME AND (II) AMT ALONG WITH RETURN OF INCOME. THE TAX CREDIT IS AVAILABLE TO THE ASSESSEE IN RESPECT OF THE AMT SO PAID BY THE ASSESSEE. AS PER THE PROVISIONS OF SECTION 115JD THE TAX CREDIT IS AVAILABLE TO THE ASSESSEE UPTO THE 15 ASSESSMENT YEARS. THE SECTION DOES NOT PROVIDE FOR REFUND OF THE AMT PAID BY THE ASSESSEE IF THE CREDIT FACILITY IS NOT USED FOR THE SAID 15 YEARS. FURTHER MIDORI PHASE-I IS THE ONLY PROJECT EXECUTED BY THE ASSESSEE AND NO OTHER PROJECT IS UNDERTAKEN BY IT. AS ON DATE THE ASSESSEE HAS NO PROJECT ON HAND AND ON THIS FACT THE ASSESSEE DID NOT COMPLY WITH THE SAID PROVISIONS OF SECTION 115JC OF THE ACT. CONSIDERING THE FACT THE ASSESSEE WILL NOT HAVE ANY TAXABLE INCOME. THUS IT IS A CASE OF SINGLE PROJECT VENTURE AND THERE IS NO CHANGE OF PARTNERS PROFITS OF THE HOUSING PROJECT MIDORI PHASE-I IS NEVER TAXABLE ETC. FURTHER IT IS THE CASE OF THE ASSESSEE THAT THERE IS NO CHANGE OF AMT ON THE ASSESSEE AS THE 19 ITA NOS.2795 & 2796/PUN/2016 AMT AS AN ALTERNATE MECHANISM TO NORMAL TAX. FURTHER REFERRING TO THE PROJECT ON HAND LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE PROVISION OF SECTION 115JC OF THE ACT TO THIS NON-CORPORATE ASSESSEE WAS NOT AN EXISTENCE AND THE PROJECT WAS ANYWAY APPROVED BY THE LOCAL AUTHORITIES. EVEN DURING THE TIME OF PROVISIONS OF THE PLANS THE PROVISIONS WERE NOT EXISTENCE. THE PROVISIONS INTRODUCED BY THE FINANCE ACT 2012 W.E.F. 1.4.2013 AND THE SAME ARE NOT APPLICABLE RETROSPECTIVELY TO THE PROJECT WHICH TOOK PLACE IN THE YEAR 2007. THE ASSESSEE ALSO PUT FORWARD MANY ARGUMENTS STATING THAT THE ALTERNATE MECHANISM IS NEXT STAND OF THE MAT AND THE SAME IS ONLY ON ALTERNATE MECHANISM OF COLLECTION OF TAXES AND THE SAME IS NOT SEPARATE CHARGE ON THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE RELIED ON VARIOUS DECISIONS IN SUPPORT OF THE SAME. FURTHER MENTIONING THAT THE ASSESSEE HAS DEVELOPED ONLY A SINGLE HOUSING PROJECT CALLED MIDORI PHASE-I WHOSE INCOME IS EXEMPT U/S 80IB(10) OF THE ACT IF THE AMT IS APPLIED. THERE IS NO DISCUSSION ABOUT THE ASSESSEE CLAIMED FOR CREDIT OF THE SAME OR CLAIMED OF REFUND OF THE SAME ALTERNATIVELY. ALL THESE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND THE CIT(A) MERELY RELYING ON THE LITERAL INTERPRETATION OF THE PROVISIONS OF SECTION 115JC OF THE ACT. IN THIS ASSESSMENT YEAR OF THE ASSESSEE THE ASSESSING OFFICER NOTED THAT THE ASSESSEE NEITHER FILED THE REPORTS OF THE ACCOUNTANT AS REQUIRED U/S 115JC(2) OF THE ACT NOR PAID AMT DESPITE THE FACTS THERE EXIST THE BOOK PROFITS OF THE ASSESSEE IS TAXABLE UNDER THE AMT. THE ASSESSING OFFICER OBSERVED THAT THIS NEW PROVISION OF SECTION 115JC OF THE ACT IS APPLICABLE FOR THE ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT YEAR. ACCORDINGLY THE ASSESSING OFFICER COMPUTED THE AMT ON THE BOOK PROFITS OF RS.10 67 79 215/- AND ASSESSED REGULAR TAX UNDER THE NORMAL PROVISIONS OF THE ACT. 20 ITA NOS.2795 & 2796/PUN/2016 35. BEFORE THE CIT(A): THE CIT(A) REJECTED THE ABOVE MENTIONED ARGUMENTS OF THE ASSESSEE. THE CIT(A) REJECTED THE EQUITY BASED ARGUMENTS OF THE ASSESSEE AND RELIED HEAVILY ON THE LITERAL INTERPRETATION OF THE SAID PROVISIONS. IN THE PROCESS THE CIT(A) IGNORED THE FACT THAT THE ASSESSEE DOES NOT HAVE ANY OTHER PROJECT AND THERE IS NO WAY THE CREDIT FACILITY IF AVAILABLE. HE ALSO IGNORED THE FACT THAT THERE IS NO BENEFIT OF REFUND IN THE TAX COLLECTED UNDER THE AMT PROVISIONS. HOWEVER HE IGNORED THE FACT WHEN THERE IS NO SCOPE FOR AVAILING THE TAX CREDIT OR REFUND FACILITY UNDER THE SAID PROVISIONS THE GOVERNMENT NEVER INTENDED TO TAX THE PROFITS OF THE ELIGIBLE PROJECTS INDIRECTLY WITHDRAWING THE DEDUCTION UNDER THE STATUTE. THE CIT(A) IGNORED THIS BEFORE CONFIRMING THE ORDER OF THE ASSESSING OFFICER. THE CIT(A) ALSO NEVER DELIBERATE ON THE ARGUMENT OF THE ASSESSEE HOW THE NEWLY INSERTED PROVISIONS OF SECTION 115JC OF THE ACT APPLIED TO THE PROJECTS APPROVED PRIOR TO THE AMENDED PROVISIONS. 36. AGGRIEVED WITH THE ABOVE ORDERS OF THE LOWER AUTHORITIES THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUNDS NO.5 AND 6 AND THE ADDITIONAL GROUND. 37. BEFORE THE TRIBUNAL: BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATED THE ABOVE SUBMISSIONS OF THE ASSESSEE ON ONE HAND AND FILED THE FOLLOWING WRITTEN SUBMISSIONS :- 3. SUBMISSION W.R.T. APPLICABILITY OF SECTION 115-JC OF THE 1TA. 1961 - AY 2013- 14: 3.1 GROUND NO. 6 & 7 AND ADDITIONAL GROUND NO. 9: VIDE GROUND NO. 6 & 7 AND ADDITIONAL GROUND NO. 9 APPELLANT IS OBJECTING THE APPLICABILITY OF PROVISIONS OF SECTION 115JC OF THE ITA 1961 IN THE PRESENT CASE DUE TO PECULIAR AND PIQUANT SITUATION. APPELLANT IS CONTENDING THE SAME ON FOLLOWING ANALOGY: A) SINGLE PROJECT VENTURE: 21 ITA NOS.2795 & 2796/PUN/2016 APPELLANT WAS FIRM WAS FORMED TO DEVELOP ONLY A SINGLE HOUSING PROJECT CALLED AS MIDORI BY MR. VIKRAM GAIKWAD AND MR. VINAYAK NIMHAN. IT IS SUBMITTED THAT THERE IS NO OTHER PROJECT OTHER THAN MIDORI PROJECT AND NO ANY OTHER PROJECT ENVISAGED BY APPELLANT. APPELLANT HAS CLAIMED DEDUCTION U/S 80-IB(10) OF THE ITA 1961 ON THE PROFITS / INCOME FROM THE SAID PROJECT. THIS IS ALSO EVIDENT FROM THE PARTNERSHIP DEED SUBMITTED AT SUBMITTED AT PAGE NO. 57 TO 64 OF PAPER BOOK - I. APPELLANT IS ALSO SUBMITTING HEREWITH ENGLISH TRANSLATION OF THE KEY CLAUSES OF THE PARTNERSHIP DEED WHICH IS ATTACHED HEREWITH AS ANNEXURE-4. B) NO CHANGE IN PARTNERS: IT IS SUBMITTED THAT THERE IS NO CHANGE IN THE PARTNERS OF THE APPELLANT FIRM. THERE IS ONLY CHANGE IN PROFIT SHARING RATIO BETWEEN THE PARTNERS. THE DETAIL OF THE CHANGE IN PROFIT SHARING RATIO BETWEEN THE PARTNERS IS AS FOLLOWS: DATE PROFIT SHARING RATIO FROM TO M R. VIKRAM GAIKWAD MR. VINAYAK NIMHAN TOTAL 01/08/2006 09/02/2012 50% 50% 100% 10/02/2012 03/02/2013 64% 36% 100% 04/02/2013 02/03/2014 69% 31% 100% 03/03/2014 31/03/2019 67% 33% 100% C) PROFITS OF HOUSING PROJECT MIDORI NOT TAXABLE: IT IS SUBMITTED THAT THE MIDORI HOUSING PROJECT WAS APPROVED BY THE LOCAL AUTHORITY I.E. PCMC ON 30/03/2007 AND WAS GRANTED COMPLETION CERTIFICATE BY PCMC ON 29/03/2012. AS SUCH THE PROFITS OF HOUSING PROJECT MIDORI IS ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ITA 1961 AND THE SAME HAS ALSO BEEN GRANTED BY THE LEARNED AO. D) NO SEPARATE CHARGE OF AMT: IT IS SUBMITTED THAT AMT IS AN ALTERNATE MECHANISM TO NORMAL TAX AND IT IS NOT A CHARGE ON INCOME OR ADJUSTED TOTAL INCOME (ATI) PER SE. THERE IS NO CHARGE OF AMT ON THE INCOME / ATI EMERGING FROM THE COMBINED READING F SECTION 2(24) SECTION 4 AND SECTION 5 OF THE ITA 1961. IN ABSENCE OF AN INDEPENDENT CHARGE FOR AMT U/S 4 OF THE ITA 1961; ITS SCOPE AND LEVY WILL HAVE TO BE UNDERSTOOD AS AN ALTERNATE MECHANISM OF TAXATION. E) SECTION 115JC EXTENDED ARM OF SECTION 115JB (EARLIER 115J / 115JA): IT IS SUBMITTED THAT SECTION 115JC OF THE ITA 1961 IS ONLY AN EXTENDED ARM OF SECTION 115JB (EARLIER 115J / 115JA) OF THE ITA 1961. THE CHANGE IN THE TAX REGIME UNDER THE SAID SECTIONS IS AS FOLLOWS: PERIOD COUNT YEAR BOOK PROFIT TAXATION SECTION MAT/AMT CREDIT SECTION REMARK 1 PRIOR TO 1987 - - NO ANY BOOK PROFIT TAXATION EXISTED IN ITA 2 1987 - 1990 MAT U/S 115J (ONLY COMPANIES COVERED) DEDUCTIONS RESTRICTED DUE TO 115J WERE PERMITTED TO BE CARRIED FORWARD 3 1990 - 1997 - - - - - - 22 ITA NOS.2795 & 2796/PUN/2016 4 1997 - 2000 MAT U/S 115JA (ONLY COMPANIES COVERED) (SAME AS 2) 5 2001 - 2012 MAT U/S 115JB (ONLY COMPANIES COVERED) 115JAA MAT CREDIT ENTITLEMENT PERIOD EXTENDED FROM TIME TO TIME - I.E. 5 YEARS - TO 10 YEARS - TO 15 YEARS.... 6 2012 - 2013 MAT U/S 115JB (FOR COMPANIES) AMT U/S 115JC (FOR LLPS) 115JAA (COMPANIES + LLP) 7 2013 - ONWARDS MAT U/S 115JB (FOR COMPANIES) AMT U/S 115JC (FOR ALL OTHER NON-COMPANY ASSESSES) 115JAA (FOR ALL TYPES OF ASSESSES PAYING EITHER MAT OR AMT) F) CLARIFICATION OF VARIOUS HIGH COURTS ABOUT ALTERNATE MECHANISM OF MAT: AS SUBMITTED EARLIER AMT IS EXTENDED ARM OF MAT. IN THE MAT REGIME VARIOUS HIGH COURTS HAVE HELD THAT MAT IS ONLY AN ALTERNATE MECHANISM FOR COLLECTION OF TAX: ESTER INDIA LTD VS. UNION OF INDIA - 260 CTR 225 (DELHI) '29. THE NON OBSTANTE CLAUSE INDICATES THAT THE PROVISIONS OF 115JA OF THE ACT WOULD OVERRIDE THE OTHER PROVISIONS OF THE ACT FOR COMPUTATION OF TAXABLE INCOME IN CERTAIN CASES FALLING WITHIN THE SWEEP OF SECTION 115JA. SECTION 115JA OF THE ACT IS A SPECIAL PROVISION TO CALCULATE TAXABLE INCOME IN CERTAIN CASES. THE LEVY OF INCOME TAX IS UNDER SECTION 4 OF THE ACT WHICH IS THE CHARGING SECTION. SECTION 115J OF THE ACT ONLY CREATES A LEGAL FICTION TO SUPPLANT THE MEASURE OF TOTAL INCOME WHICH IS CHARGEABLE TO TAX. THUS INDISPUTABLY TAX AS COMPUTED ON THE BASIS OF SECTION 115J OF THE ACT IS A TAX ON INCOME.' SURYALATHA SPINNING MILLS LTD. VS. UNION OF INDIA - 223ITR 713 (AP) '14. THE NEXT CONTENTION IS THAT SUB-SECTION (1) OF SECTION 115J RESULTS IN DOUBLE TAXATION. WE ARE UNABLE TO APPRECIATE THIS CONTENTION. FIRSTLY BECAUSE WHAT IS BEING TAXED IS INCOME DETERMINED ON THE BASIS PRESCRIBED UNDER THE SAID IMPUGNED PROVISION AND THERE IS NO PROVISION TO RE-TAX THE SAME INCOME AS SUCH AS OF FACT THERE IS NO DOUBLE TAXATION. AND SECONDLY BECAUSE DOUBLE TAXATION PER SE WOULD NOT RENDER AN OTHERWISE VALID PROVISION INVALID - JAIN BROS'S CASE (SUPRA).' KARIMTHARUVI TEA ESTATE LTD. VS. DCIT-247 ITR 22 (KERALA) 'WHAT IS TAXED IS NOT FICTIONAL OR HYPOTHETICAL INCOMEBY THIS SECTION CERTAIN TAX CONCESSIONS ARE RESTRICTED OR CURTAILED TO CERTAIN EXTENT SO THAT THE COMPANY PAYS SOME TAXTHIS IS NOT UNREASONABLE SO AS TO MAKE IT VIOLATIVE OF ART. 14 OR 19 OF THE CONSTITUTIONSEC. 115J IS NOT THEREFORE ILLEGAL OR UNCONSTITUTIONAL' FURTHER THIS VIEW IS ALSO EMERGING FROM VARIOUS CBDT CIRCULARS: - CIRCULAR NO. 495 - FINANCE ACT 1987 - CIRCULAR NO. 572 - FINANCE ACT 1990 23 ITA NOS.2795 & 2796/PUN/2016 - CIRCULAR NO. 762 - FINANCE ACT 1996 - CIRCULAR NO. 794 - FINANCE ACT 2000 - CIRCULAR NO. 3 - FINANCE ACT 2005 COPIES OF THE ABOVE REFERRED JUDGMENTS AND CBDT CIRCULARS ARE ATTACHED HEREWITH AND ARE MARKED AS ANNEXURE-5 AND ANNEXURE-6 RESPECTIVELY. G) NO OCCASION TO CLAIM TAX CREDIT: AS SUBMITTED EARLIER APPELLANT FIRM WAS FORMED ONLY TO DEVELOP A SINGLE HOUSING PROJECT CALLED AS MIDORI WHICH IS ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ITA 1961. IF APPELLANT IS MADE LIABLE TO PAY AMT THERE WILL BE NO OCCASION TO APPELLANT TO CLAIM THE CREDIT OF THE SAME AS THERE IS NO ANY OTHER PROJECT ENVISAGED. H) RELIANCE ON THE DECISION OF S. K. VENTURE: IT IS SUBMITTED THAT THE MIDORI PROJECT WAS APPROVED BY THE LOCAL AUTHORITY I.E. PCMC ON 30/03/2007 AND WAS GRANTED COMPLETION CERTIFICATE ON 29/03/2012. WHEREAS THE PROVISIONS OF SECTION 115-JC OF THE ITA 1961 WAS MADE APPLICABLE TO APPELLANT FIRM FROM 01/04/2012. AS SUCH WHEN APPELLANT ENVISAGED THE MIDORI PROJECT WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80-IB(10) IF THE ITA 1961; THERE WAS NO ANY TAX WHICH APPELLANT WAS LIABLE TO PAY. CONSIDERING THE DOCTRINE OF PROMISSORY ESTOPPEL IT IS SUBMITTED THAT PROVISIONS OF SECTION 115-JC OF THE ITA 1961 IS NOT APPLICABLE TO APPELLANT. APPELLANT IN THIS REGARD IS PLACING RELIANCE ON THE DECISION OF HONOURABLE MUMBAI ITAT IN THE CASE OF S. K. VENTURE VS. ITO - ITA NO. 1248/MUM/2018. COPY OF THE SAME HAS ALREADY BEEN SUBMITTED BEFORE THE HONOURABLE BENCH. IN THE SAID DECISION THE HONOURABLE ITAT HAS CONSIDERED VARIOUS JUDGEMENTS OF THE HONOURABLE APEX COURT. FURTHER APPELLANT HAS ALSO CULLED OUT THE SIMILARITY BETWEEN THE FACTS OF APPELLANT CASE WITH THAT OF S. K. VENTURE. COMPARISON OF THE SAME IS ATTACHED HEREWITH AS ANNEXURE-7. I) PRAYER: CONSIDERING THE ABOVE FACTS AND LEGAL PRONOUNCEMENTS IT IS SUBMITTED THAT PROVISIONS OF SECTION 115-JC OF THE ITA 1961 IS NOT APPLICABLE TO APPELLANT. 38. DRS ARGUMENTS: LD. DR RELIED HEAVILY ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). HOWEVER NO SPECIFIC ARGUMENTS ARE MADE ON THE PROSPECTIVE NATURE OF THE AMENDMENTS IN FINANCE ACT 2013. DECISION OF THE TRIBUNAL 39. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE ARE ALREADY SUMMARIZED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. THE MOST IMPORTANT 24 ITA NOS.2795 & 2796/PUN/2016 ASPECT OF THE SUBMISSION RELATES TO THE APPLICABILITY OF THE RECENT DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. S.K. VENTURES VS. ITO VIDE ITA NO.1248/MUM/2018 FOR THE ASSESSMENT YEAR 2013-14 DATED 05.03.2019. AS CAN BE SEEN IN THE EXTRACT ABOVE I.E. (H) RELATING TO THE RELIANCE ON THE DECISION OF M/S. S.K. VENTURES (SUPRA) LD. COUNSEL SUBMITTED THAT THIS DECISION IS SQUARELY APPLICABLE TO THE FACT OF THE PRESENT CASE. BRINING OUR ATTENTION TO THE ANNEXURE-7 TO THE WRITTEN SUBMISSIONS LD. COUNSEL SUBMITTED THAT THE FACT OF BOTH THE CASES ARE IDENTICAL WHILE THE PROJECT WAS STARTED IN 2007 AND THE PROJECT WAS COMPLETED IN 2012. IN BOTH THE CASES THE PROVISION OF SECTION 115JC OF THE ACT IS APPLICABLE CONSIDERING THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER THE DATE OF APPROVAL BY THE LOCAL AUTHORITIES IS RELEVANT AND IN BOTH THE CASES THE PROJECTS WERE APPROVED YEAR BACK IN 2007 AND THE PROVISIONS OF SECTION 115JC OF THE ACT WHICH WERE BROUGHT INTO STATUTE BY 1.4.2013 CANNOT BE APPLIED RETROSPECTIVELY AS THEY ARE APPLIED PROSPECTIVELY TO THE PROJECTS APPROVED AFTER THE SAID DATE. 40. CONSIDERING THE IMPORTANCE OF THE SAME WE PROCEED TO EXTRACT THE RELEVANT CONTENTS OF THE SAID DECISION OF THE TRIBUNAL (SUPRA) AND THE SAME ARE EXTRACTED HEREUNDER :- 5. THE ONLY ISSUE IN THIS APPEAL IS AGAINST THE ORDER OF THE CIT(A) IN SUSTAINING THE APPLICABILITY OF PROVISIONS OF SECTION 115 JC OF THE ACT DISREGARDING THE FACT THAT THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE PROVISIONS OF SECTION 115 JC OF THE ACT AND ALSO COMPLETION OF THE PROJECT. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN SUSTAINING THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JC IN CASE OF THE ASSESSEE DISREGARDING THE FACT THAT THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE PROVISION OF SECTION 115JC OF THE ACT. 6. BRIEFLY STATED FACTS ARE THAT IN THIS CASE THE ASSESSEE AOP FILED THE ORIGINAL RETURN OF INCOME BY WAY OF E-FILING VIDE DATED 30.9.2013 AND SUBSEQUENTLY THE 25 ITA NOS.2795 & 2796/PUN/2016 RETURN WAS REVISED BY E-FILING ON 31.3.2015. THIS RETURN HAS BEEN PROCESSED UNDER SECTION 143(1) OF THE ACT AND SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED UNDER SECTION.143(3) OF THE ACT VIDE ORDER DATED 30.3.2016 BY ACCEPTING THE RETURNED INCOME EXCEPT MAKING OF DISALLOWANCE OF NON PAYMENT OF MVAT AND SERVICE TAX UNDER SECTION.43B OF THE ACT. THE DEDUCTION CLAIMED UNDER CHAPTER VIA UNDER SECTION 80IB(10) IN RESPECT OF HOUSING PROJECT NAMELY; KIRISHNA REGENCY AT KALYAN WAS ACCEPTED AMOUNTING TO 6 54 91 914/- BUT THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 115 JC OF THE ACT AND ADJUSTED TOTAL INCOME AND CHARGED ALTERNATE MINIMUM TAX IN ACCORDANCE WITH THIS PROVISIONS WHICH WAS CONFIRMED IN FIRST APPEAL. 7. LD COUNSEL FOR THE ASSESSEE NOW BEFORE US STATED THAT THE ASSESSEE IS CHALLENGING ONLY LIMITED ISSUE I.E APPLICABILITY OF PROVISIONS OF SECTION 115 JC OF THE ACT TO THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 2013-14. LD COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE PROVISIONS OF SECTION 115 JC OF THE ACT WAS MADE APPLICABLE TO CERTAIN PERSONS OTHER THAN A COMPANY BY THE FINANCE ACT (NO.2) WITH EFFECT FROM 1.4.2013. LD COUNSEL EXPLAINED THAT IN THE PROJECT I.E. KRISHNA REGENCY THE ASSESSEE HAS CLAIMED DEDUCTION 80IB(10) AS THE SAME WAS STARTED IN APRIL 2007 AND WAS COMPLETED IN MARCH 2012. LD COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 19 TO 21 OF ASSESSEES PAPER BOOK WHEREIN COMPLETION CERTIFICATE OF THE PROJECT IS ENCLOSED AT PAGES 19 TO 21 OF PB AND ENGLISH TRANSLATION AT PAGES 20-21. LD COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGES 20 & 21 OF PB WHEREIN BUILDING COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MUNCIPAL CORPORATION TOWN PLANNING DEPARTMENT IS ENCLOSED. THIS COMPLETION CERTIFICATE IS DATED 31.3.2012. LD COUNSEL STATED THAT THE PROVISIONS OF SECTION 115 JC WAS MADE APPLICABLE TO CERTAIN PERSONS OTHER THAN A COMPANY BY SUBSTITUTING LIMITED LIABILITY PARTNERSHIP BY THE FINANCE ACT (NO.2) WITH EFFECT FROM 1.4.2013 AND THE ASSESSEE S PROJECT COMMENCED CONSTRUCTION IN APRIL 2007 AND PROJECT WAS COMPLETED AS ON THE DATE OF COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MUNCIPAL CORPORATION TOWN PLANNING DEPARTMENT DATED 31.3.2012. ACCORDING TO HIM ONCE THE ASSESSEE HAS COMPLETED THE PROJECT BEFORE COMING INTO FORCE OF A PARTICULAR PROVISION THAT PROVISION CANNOT BE APPLIED TO THE FACTS OF THE ASSESSEES CASE OR IN THE YEAR WHEN THE INCOME HAS BEEN BOOKED BY THE ASSESSEE IN THAT YEAR. LD COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S. MOTILAL PADAMPAT SUGAR MILLS CO. LTD VS STATE OF UTTAR PRADESH AND OTHERS AIR 1979 SC 621 WHEREIN THE HONBLE COURT HAS EXPLAINED THE DOCTRINE OF PROMISSORY ESTOPPEL AND MEANING THEREBY. THE HONBLE SUPREME COURT HAS CONSIDERED WHETHER THE STATE IS BOUND AND IF SO TO WHAT EXTENT IT IS BOUND BY THE PRINCIPLE OF PROMISSORY ESTOPPEL. LD COUNSEL RELIED ON THE FOLLOWING PARAGRAPHS OF THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD (SUPRA) AS UNDER: ON 10TH OCTOBER 1968 A NEWS ITEM APPEARED IN THE NATIONAL HERALD IN WHICH IT WAS STATED THAT THE STATE OF UTTAR PRADESH HAD DECIDED TO GIVE EXEMPTION FROM SALES TAX FOR A PERIOD OF THREE YEARS UNDER SECTION 4A OF THE U. P. SALES TAX ACT TO ALL NEW INDUSTRIAL UNITS IN THE STATE WITH A VIEW TO ENABLING THEM TO COME ON FIRM FOOTING IN DEVELOPING STAGE. THIS NEWS ITEM WAS BASED UPON A STATEMENT MADE BY SHRI M. P. CHATTERJEE THE THEN SECRETARY IN THE INDUSTRIES DEPARTMENT OF THE GOVERNMENT. THE APPELLANT ON THE BASIS OF THIS ANNOUNCEMENT ADDRESSED A LETTER DATED 11TH OCTOBER 1968 TO THE DIRECTOR OF INDUSTRIES STATING THAT IN VIEW OF THE SALES TAX HOLIDAY ANNOUNCED BY THE GOVERNMENT THE APPELLANT INTENDED TO SET UP A HYDRO-GENERATION PLANT FOR MANUFACTURE OF VANASPATI AND SOUGHT FOR CONFIRMATION THAT THIS INDUSTRIAL UNIT WHICH THEY PROPOSED TO SET UP WOULD BE ENTITLED TO SALES TAX HOLIDAY FOR A PERIOD OF THREE YEARS FROM THE DATE IT COMMENCES PRODUCTION. THE DIRECTOR OF INDUSTRIES REPLIED BY HIS LETTER DATED 14TH OCT. 1968 CONFIRMING THAT 'THERE WILL BE NO SALES TAX FOR THREE 26 ITA NOS.2795 & 2796/PUN/2016 YEARS ON THE FINISHED PRODUCT OF YOUR PROPOSED VANASPATI FACTORY FROM THE DATE IT GETS POWER CONNECTION FOR COMMENCING PRODUCTION.' THE APPELLANT LATER ADDRESSED A LETTER DATED 22ND JANUARY 1969 TO THE RESPONDENT WHO WAS THE CHIEF SECRETARY TO THE GOVERNMENT. THE RESPONDENT STATED CATEGORICALLY IN HIS LETTER IN REPLY DATED 23RD JANUARY 1969 THAT THE PROPOSED VANASPATI FACTORY OF THE APPELLANT 'WILL BE ENTITLED TO EXEMPTION FROM U. P. SALES TAX FOR A PERIOD OF THREE YEARS FROM THE DATE OF GOING INTO PRODUCTION AND THAT THIS WILL APPLY TO ALL VANASPATI SOLD DURING THAT PERIOD HI UTTAR PRADESH IT SELF AND EXPRESSED HIS SURPRISE THAT A LETTER FROM THE CHIEF SECRETARY TO TIS STATE GOVERNMENT STATING THIS FACT I& CLEAR AND UNAMBIGUOUS WORDS SHOULD NOT CARRY CONVICTION WITH THE FINANCIAL INSTITUTIONS; HELD IT WAS CLEAR FROM THE LETTER OF THE RESPONDENT DATED 23RD JANUARY 1969 THAT A CATEGORICAL REPRESENTATION WAS MADE BY THE RESPONDENT ON BEHALF OF THE GOVERNMENT THAT THE PROPOSED! VANASPATI FACTORY OF THE APPELLANT WOULD BE ENTITLED TO EXEMPTION FROM SALES TAX IN RESPECT OF SALES OF VANASPATI EFFECTED IN UTTAR PRADESH FOR A PERIOD OF THREE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION. THE LETTER DATED 23RD JANUARY 1969 CLEARLY SHOWED THAT THE RESPONDENT MADE THIS REPRESENTATION IN HIS CAPACITY AS THE CHIEF SECRETARY OF THE GOVERNMENT AND IT WAS THEREFORE A REPRESENTATION ON BEHALF OF THE GOVERNMENT THE APPELLANT RELYING ON THIS REPRESENTATION OF THE GOVERNMENT BORROWED MONEYS FROM VARIOUS FINANCIAL INSTITUTIONS PURCHASED PLANT AND MACHINERY FROM M/S. DE SMITH (INDIA) PVT. LTD. BOMBAY AND SET UP A VANASPATI FACTORY AT KANPUR. THE FACTS NECESSARY FOR INVOKING THE DOCTRINE OF PROMISSORY ESTOPPEL WERE THEREFORE CLEARLY PRESENT AND THE GOVERNMENT WAS BOUND TO CARRY OUT THE REPRESENTATION AND EXEMPT THE APPELLANT FROM SALES TAX IN RESPECT OF SALES OF VANASPATI EFFECTED BY IT IN UTTAR PRADESH FOR A PERIOD OF THREE YEARS FROM THE DATE OF COMMENCEMENT OF THE PRODUCTION. THE GOVERNMENT WAS BOUND ON THE PRINCIPLE OF PROMISSORY ESTOPPEL TO MAKE GOOD THE REPRESENTATION MADE BY IT. 8. LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SARKAR BUILDERS (2015) 57 TAXMANN.COM 313(SC) WHEREIN THE HONBLE SUPREME COURT HAS CONSIDERED THIS ISSUE OF PROSPECTIVITY AND APPLICABILITY OF THE PROVISIONS VIDE PARA 20 TO 22 AS UNDER: 20) HAVING REGARD TO THE ABOVE LET US TAKE NOTE OF THE SPECIAL FEATURES WHICH APPEAR IN THESE CASES: (A) IN THE PRESENT CASE THE APPROVAL OF THE HOUSING PROJECT ITS SCOPE DEFINITION AND CONDITIONS ALL ARE DECIDED AND DEPENDENT BY THE PROVISIONS OF THE RELEVANT DC RULES. IN CONTRAST THE JUDGMENT IN M/S. RELIANCE JUTE AND INDUSTRIES LTD. WAS CONCERNED WITH INCOME TAX ONLY. (B) THE POSITION OF LAW AND THE RIGHTS ACCRUED PRIOR TO ENACTMENT OF FINANCE ACT 2004 HAVE TO BE TAKEN INTO ACCOUNT PARTICULARLY WHEN THE POSITION BECOMES IRREVERSIBLE. (C) THE PROVISIONS OF SECTION 80IB(10) MENTION NOT ONLY A PARTICULAR DATE BEFORE WHICH SUCH A HOUSING PROJECT IS TO BE APPROVED BY THE LOCAL AUTHORITY EVEN A DATE BY WHICH THE HOUSING PROJECT IS TO COMPLETED IS FIXED. THESE DATES HAVE A SPECIFIC PURPOSE WHICH GIVES TIME TO THE DEVELOPERS TO ARRANGE THEIR AFFAIRS IN SUCH A MANNER THAT THE HOUSING PROJECT IS STARTED AND FINISHED WITHIN THOSE STIPULATED DATES. THIS PLANNING IN THE CONTEXT OF FACTS IN THESE APPEALS HAD TO BE MUCH BEFORE 01.04.2005. 27 ITA NOS.2795 & 2796/PUN/2016 (D) THE BASIC OBJECTIVE BEHIND SECTION 80IB(10) IS TO ENCOURAGE DEVELOPERS TO UNDERTAKE HOUSING PROJECTS FOR WEAKER SECTION OF THE SOCIETY INASMUCH AS TO QUALIFY FOR DEDUCTION UNDER THIS PROVISION IT IS AN ESSENTIAL CONDITION THAT THE RESIDENTIAL UNIT BE CONSTRUCTED ON A MAXIMUM BUILT UP AREA OF 1000 SQ.FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI AND MUMBAI OR WITHIN 25 KMS. FROM THE MUNICIPAL LIMITS OF THESE CITIES AND 1500 SQ.FT. AT ANY OTHER PLACE. (E) IT IS THE CARDINAL PRINCIPLE OF INTERPRETATION THAT A CONSTRUCTION RESULTING IN UNREASONABLY HARSH AND ABSURD RESULTS MUST BE AVOIDED. (F) CLAUSE (D) MAKES IT CLEAR THAT A HOUSING PROJECT INCLUDES SHOPS AND COMMERCIAL ESTABLISHMENTS ALSO. BUT FROM THE DAY THE SAID PROVISION WAS INSERTED THEY WANTED TO LIMIT THE BUILT UP AREA OF SHOPS AND ESTABLISHMENTS TO 5% OF THE AGGREGATE BUILT UP AREA OR 2000 SQ.FT. WHICHEVER IS LESS. HOWEVER THE LEGISLATURE ITSELF FELT THAT THIS MUCH COMMERCIAL SPACE WOULD NOT MEET REQUIREMENTS OF THE RESIDENTS. THEREFORE IN THE YEAR 2010 THE PARLIAMENT HAS FURTHER AMENDED THIS PROVISION BY PROVIDING THAT IT SHOULD NOT EXCEED 3% OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 5000 SQ.FT. WHICHEVER IS HIGHER. THIS IS A SIGNIFICANT MODIFICATION MAKING COMPLETE DEPARTURE FROM THE EARLIER YARDSTICK. ON THE ONE HAND THE PERMISSIBLE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL SHOPS IS INCREASED FROM 2000 SQ.FT. TO 5000 SQ.FT. ON THE OTHER HAND THOUGH THE AGGREGATE BUILT UP AREA FOR SUCH SHOPS AND ESTABLISHMENT IS REDUCED FROM 5% TO 3% WHAT IS SIGNIFICANT IS THAT IT PERMITS THE BUILDERS TO HAVE 5000 SQ.FT. OR 3% OF THE AGGREGATE BUILT UP AREA 'WHICHEVER IS HIGHER'. IN CONTRAST THE PROVISION EARLIER WAS 5% OR 2000 SQ.FT. 'WHICHEVER IS LESS'. (G) FROM THIS PROVISION THEREFOR IT IS CLEAR THAT THE HOUSING PROJECT CONTEMPLATED UNDER SUB-SECTION (10) OF SECTION 80IB INCLUDES COMMERCIAL ESTABLISHMENTS OR SHOPS ALSO. NOW BY WAY OF AN AMENDMENT IN THE FORM OF CLAUSE (D) AN ATTEMPT IS MADE TO RESTRICT THE SIZE OF THE SAID SHOPS AND/OR COMMERCIAL ESTABLISHMENTS. THEREFORE BY NECESSARY IMPLICATION THE SAID PROVISION HAS TO BE READ PROSPECTIVELY AND NOT RETROSPECTIVELY. AS IS CLEAR FROM THE AMENDMENT THIS PROVISION CAME INTO EFFECT ONLY FROM THE DAY THE PROVISION WAS SUBSTITUTED. THEREFORE IT CANNOT BE APPLIED TO THOSE PROJECTS WHICH WERE SANCTIONED AND COMMENCED PRIOR TO 01.04.2005 AND COMPLETED BY THE STIPULATED DATE THOUGH SUCH STIPULATED DATE IS AFTER 01.04.2005. 21) THESE ASPECTS ARE DEALT WITH BY VARIOUS HIGH COURTS ELABORATELY AND CONVINCINGLY IN THEIR JUDGMENTS. IT IS NOT NECESSARY TO GO INTO THE DETAILED REASONING GIVEN BY THESE HIGH COURTS. HOWEVER WE WOULD LIKE TO EXTRACT THE FOLLOWING DISCUSSION FROM THE JUDGMENT DATED 25.07.2014 OF THE BOMBAY HIGH COURT IN ITA NOS. 201 AND 308 OF 2012 WHERE THIS VERY ASPECT IS ANSWERED IN THE FOLLOWING MANNER: 36. THERE IS YET ANOTHER REASON FOR COMING TO THE AFORESAID CONCLUSION. TAKE A SCENARIO WHERE AN ASSESSEE FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING HAS COMPLETED THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY COMPLYING WITH ALL THE CONDITIONS AS SET OUT IN SECTION 80-IB(10) AS IT STOOD PRIOR TO 1ST APRIL 2005. IF WE WERE TO ACCEPT THE ARGUMENT OF THE REVENUE THEN IN THAT EVENT DESPITE HAVING COMPLETED THE ENTIRE CONSTRUCTION PRIOR TO 1ST APRIL 2005 AND COMPLYING WITH ALL THE CONDITIONS OF SECTION 80-IB(10) AS IT STOOD THEN THE ASSESSEE WOULD BE DISENTITLED TO THE ENTIRE DEDUCTION CLAIMED IN RESPECT OF SUCH HOUSING PROJECT MERELY 28 ITA NOS.2795 & 2796/PUN/2016 BECAUSE HE OFFERED HIS PROFITS TO TAX IN THE A.Y. 2005-06. IN CONTRAST IF THE SAME ASSESSEE HAD FOLLOWED THE WORK-IN-PROGRESS METHOD OF ACCOUNTING HE WOULD HAVE BEEN ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB(10) UPTO THE A.Y. 2004-05 AND DENIED THE SAME FROM A.Y. 2005-06 AND THEREAFTER. IT COULD NEVER HAVE BEEN THE INTENTION OF THE LEGISLATURE THAT THE DEDUCTION UNDER SECTION 80-IB(10) AVAILABLE TO A PARTICULAR ASSESSEE WOULD BE DETERMINED ON THE BASIS OF THE ACCOUNTING METHOD FOLLOWED. THIS TO OUR MIND AND AS RIGHTLY SUBMITTED BY MR. MISTRY WOULD LEAD TO STARTLING RESULTS. WE THEREFORE HAVE NO HESITATION IN HOLDING THAT SECTION 80-IB(10) IS PROSPECTIVE IN NATURE AND CAN HAVE NO APPLICATION TO A HOUSING PROJECT THAT IS APPROVED BEFORE 31ST MARCH 2005. AS THE DEDUCTION SOUGHT TO BE CLAIMED UNDER SECTION 80- IB(10) IS INSEPARABLY LINKED WITH THE DATE OF APPROVAL OF THE HOUSING PROJECT IT WOULD MAKE NO DIFFERENCE IF THE CONSTRUCTION OF THE SAID PROJECT WAS COMPLETED ON OR AFTER 1ST APRIL 2005 OR THAT THE PROFITS WERE OFFERED TO TAX AFTER 1ST APRIL 2005 I.E. IN A.Y. 2005-06 OR THEREAFTER. WE THEREFORE FIND NO SUBSTANCE IN THE ARGUMENT OF THE REVENUE THAT NOTWITHSTANDING THE FACT THAT THE HOUSING PROJECT WAS APPROVED PRIOR TO 31ST MARCH 2005 IF THE CONSTRUCTION WAS COMPLETED ON OR AFTER 1ST APRIL 2005 OR IF THE PROFITS ARE BROUGHT TO TAX IN THE A.Y. 2005-06 OR THEREAFTER THE SAID HOUSING PROJECT WOULD HAVE TO COMPLY WITH THE PROVISIONS OF CLAUSE (D OF SECTION 80-IB(10). TO OUR MIND WE DO NOT THINK THAT THE CONDITION/RESTRICTION LAID DOWN IN CLAUSE (D) OF SECTION 80-IB(10) HAS TO BE REVISITED AND/OR LOOKED AT AND COMPLIED WITH IN THE ASSESSMENT YEAR IN WHICH THE PROFITS ARE OFFERED TO TAX BY THE ASSESSEE. WHEN THE ASSESSEE CLAIMS A DEDUCTION UNDER SECTION 80- IB(10) THE ASSESSEE IS REQUIRED TO COMPLY WITH SUCH A CONDITION ONLY IF IT IS ON THE STATUTE-BOOK ON THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND IT HAS NOTHING TO DO WITH THE YEAR IN WHICH THE PROFITS ARE BROUGHT TO TAX BY THE ASSESSEE. WE HAVE COME TO THIS CONCLUSION ONLY BECAUSE WE FIND THAT CLAUSE (D) OF SECTION 80-IB(10) IS INEXTRICABLY LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT AND THE SUBSEQUENT DEVELOPMENT/CONSTRUCTION OF THE SAME AND HAS NOTHING TO DO WITH THE PROFITS DERIVED THEREFROM. WE MAY HASTEN TO ADD THAT IF A PARTICULAR CONDITION IS NOT INSEPARABLY LINKED TO THE DATE OF APPROVAL OF THE HOUSING PROJECT DIFFERENT CONSIDERATIONS WOULD ARISE. HOWEVER WE ARE NOT CALLED UPON TO DECIDE ANY SUCH CONDITION AND HENCE WE ARE NOT LAYING DOWN ANY GENERAL PROPOSITION OF LAW SAVE AND EXCEPT THAT CLAUSE (D) OF SECTION 80-IB(10) BEING A CONDITION LINKED TO THE DATE OF THE APPROVAL OF THE HOUSING PROJECT WOULD NOT APPLY TO ANY HOUSING PROJECT THAT WAS APPROVED PRIOR TO 31ST MARCH 2005 IRRESPECTIVE OF THE FACT THAT THE PROFITS OF SAID HOUSING PROJECT ARE BROUGHT TO TAX AFTER THE SAID PROVISION WAS BROUGHT INTO FORCE. 22) AT THIS JUNCTURE WE WOULD LIKE TO QUOTE THE FOLLOWING PASSAGE FROM COMMISSIONER OF INCOME TAX U.P. V. M/S. SHAH SADIQ AND SONS (SUPRA) : 14. UNDER THE INCOME TAX ACT OF 1922 THE ASSESSEE WAS ENTITLED TO CARRY FORWARD THE LOSSES OF THE SPECULATION BUSINESS AND SET OFF SUCH LOSSES AGAINST PROFITS MADE FROM THAT BUSINESS IN FUTURE YEARS. THE RIGHT OF CARRYING FORWARD AND SET OFF ACCRUED TO THE ASSESEE UNDER THE ACT OF 1922. A RIGHT WHICH HAD ACCRUED AND HAD BECOME VESTED CONTINUED TO BE CAPABLE OF BEING ENFORCED NOTWITHSTANDING THE REPEAL OF THE STATUTE UNDER WHICH THAT RIGHT ACCRUED UNLESS THE REPEALING STATUTE TOOK AWAY SUCH RIGHT EXPRESSLY OR BY NECESSARY 29 ITA NOS.2795 & 2796/PUN/2016 IMPLICATION. THIS IS THE EFFECT OF SECTION 6 OF THE GENERAL CLAUSES ACT 1897. 15. IN THIS CASE THE 'SAVINGS' PROVISION IN THE REPEALING STATUTE IS NOT EXHAUSTIVE OF THE RIGHTS WHICH ARE SAVED OR WHICH SURVIVE THE REPEAL OF THE STATUTE UNDER WHICH SUCH RIGHTS HAD ACCRUED. IN OTHER WORDS WHATEVER RIGHTS ARE EXPRESSLY SAVED BY THE 'SAVINGS' PROVISION STAND SAVED. BUT THAT DOES NOT MEAN THAT RIGHTS WHICH ARE NOT SAVED BY THE 'SAVINGS' PROVISION ARE EXTINGUISHED OR STAND IPSO FACTO TERMINATED BY THE MERE FACT THAT A NEW STATUTE REPEALING THE OLD STATUTE IS ENACTED. RIGHTS WHICH HAVE ACCRUED ARE SAVED UNLESS THEY ARE TAKEN AWAY EXPRESSLY. THIS IS THE PRINCIPLE BEHIND SECTION 6(C) OF THE GENERAL CLAUSES ACT 1897. THE RIGHT TO CARRY FORWARD LOSSES WHICH HAD ACCRUED UNDER THE REPEALED INCOME TAX ACT OF 1922 IS NOT SAVED EXPRESSLY BY SECTION 297 OF THE INCOME TAX ACT 1961. BUT IT IS NOT NECESSARY TO SAVE A RIGHT EXPRESSLY IN ORDER TO KEEP IT ALIVE AFTER THE REPEAL OF THE OLD ACT OF 1922. SECTION 6(2) SAVES ACCRUED RIGHTS UNLESS THEY ARE TAKEN AWAY BY THE REPEALING STATUTE. WE DO NOT FIND ANY SUCH TAKING AWAY OF THE RIGHTS BY SECTION 297 EITHER EXPRESSLY OR BY IMPLICATION. 9. LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS VATIKA TOWNSHIP (P) LTD. (2014) 227 TAXMAN 121 (SC). 10. ON THE OTHER HAND LD SR DEPARTMENTAL REPRESENTATIVE RELIED ON THE AMENDED PROVISION OF SECTION 115 JC OF THE ACT AND STATED THAT THE AMENDED PROVISIONS W.E.F 1.4.2013 WILL APPLY FOR AND FROM ASSESSMENT YEAR 2013-14. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ADMITTED FACTS ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION 80IB(10) AS THE CONSTRUCTION OF THE PROJECT WAS STARTED IN APRIL 2007 AND WAS COMPLETED IN MARCH 2012. WE NOTED THIS FACT FROM THE PAPER BOOK PAGES 19 TO 21 OF ASSESSEE WHEREIN COMPLETION CERTIFICATE OF THE PROJECT IS ENCLOSED AT PAGES 19 TO 21 OF PB AND ENGLISH TRANSLATION AT PAGES 20-21. LD COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGES 20 & 21 OF PB WHEREIN BUILDING COMPLETION CERTIFICATE ISSUED BY KALYAN DOMBIVLI MUNCIPAL CORPORATION TOWN PLANNING DEPARTMENT IS ENCLOSED. IN VIEW OF THESE FACTS WE HAVE CONSIDERED THE ARGUMENTS MADE BY BOTH THE SIDES AND ALSO CONSIDERED THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JC OF THE ACT IN THE CASE OF THE ASSESSEE APPLIED BY THE AO DISREGARDING THE FACT THAT THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE HAS BEEN APPROVED PRIOR TO THE DATE OF INTRODUCTION OF THE RELEVANT PROVISIONS. THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION AND SALE OF IMMOVABLE PROPERTY I.E. BUILDERS. THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE WAS APPROVED BY THE COMPETENT AUTHORITY AND ACCORDINGLY ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB OF THE ACT OF 100% OF THE PROFIT FROM THE HOUSING PROJECT. WE NOTED THAT CHAPTER XII BA I.E. SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS OTHER THAN A COMPANY WAS INTRODUCED BY THE FINANCE ACT 2011 W.E.F. 1.4.2012 AND MADE APPLICABLE FOR AND FROM A.Y. 2012-13 IN RESPECT OF LIMITED LIABILITY PARTNERSHIPS. FURTHER THIS PROVISION WAS MADE APPLICABLE TO OTHER CATEGORIES OF PERSONS OTHER THAN A COMPANY WITH EFFECT FROM 1.4.2013 BY THE FINANCE ACT 2012. ACCORDINGLY THE PROVISIONS OF SECTION 115JC OF THE ACT WAS MADE APPLICABLE TO PROFIT FROM HOUSING PROJECTS DEDUCTIBLE UNDER SECTION.80IB(10) OF THE ACT ONLY IN RESPECT OF HOUSING PROJECTS APPROVED BY THE COMPETENT AUTHORITY ON OR AFTER 1.4.2013. SIMILAR CASE WAS DEALT WITH BY CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NEHA HOME BUILDERS PVT LTD.VS CIT (2018) 92 TAXMANN.COM 102 (MUM) WHEREIN IT IS HELD THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION UNDER 30 ITA NOS.2795 & 2796/PUN/2016 SECTION 80IB(10) OF THE ACT WHILE COMPUTING BOOK PROFIT U/S.115JB OF THE ACT IN RESPECT TO THE PROFIT OF THE HOUSING PROJECT. 12. WE HAVE ALSO GONE THROUGH THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF SARKAR BUILDERS (SUPRA) WHEREIN HONBLE SUPREME COURT HAS CONSIDERED THE PROVISIONS OF SECTION 6 OF GENERAL CLAUSES ACT 1897 AND ALSO CONSIDERED THE SAVING PROVISIONS IN THE REPEALING STATUTE WHICH IS NOT EXHAUSTIVE OF THE RIGHTS AND WHICH ARE SAVED OR WHICH SURVIVE THE REPEAL OF THE STATUTE UNDER WHICH SUCH RIGHT HAD ACCRUED. HONBLE SUPREME COURT HAS CONSIDERED WHATEVER RIGHTS ARE EXPRESSLY SAVED BY THE SAVING PROVISIONS STAND SAVED BUT THAT DOES NOT MEAN RIGHTS WHICH ARE NOT SAVED BY THE SAVING PROVISIONS ARE EXTINGUISHED OR STAND IPSO FACTO TERMINATED BY THE MERE FACT THAT A NEW STATUE REPEALING THE OLD STATUTE IS ENACTED. EVEN HONBLE SUPREME COURT IN THE CASE OF VATIKA TOWNSHIP P LTD (SUPRA) HAS CONSIDERED THE VARIOUS RULES GUIDING HOW A LEGISLATION HAS TO BE INTERPRETED ONE ESTABLISHED RULE IS THAT UNLESS A CONTRARY INTENTION APPEARS A LEGISLATION IS PRESUMED NOT TO BE INTENDED TO HAVE A RETROSPECTIVE OPERATION. THE IDEA BEHIND THE RULE IS THAT A CURRENT LAW SHOULD GOVERN CURRENT ACTIVITIES. LAW PASSED TODAY CANNOT APPLY TO THE EVENTS OF THE PAST. ONE PRINCIPLE OF LAW IS KNOWN AS LEX PROSPICIT NON RESPICIT LAW LOOKS FORWARD NOT BACKWARD. IT WAS ALSO OBSERVED THAT AS WAS OBSERVED IN PHILIPS VS EYRE (1870) LR 6 QB 1 A RETROSPECTIVE LEGISLATION IS CONTRARY TO THE GENERAL PRINCIPLE THAT LEGISLATION BY WHICH THE CONDUCT OF MANKIND IS TO BE REGULATED WHEN INTRODUCED FOR THE FIRST TIME TO DEAL WITH FUTURE ACTS OUGHT NOT TO CHANGE THE CHARACTER OF PAST TRANSACTIONS CARRIED ON UPON THE FAITH OF THE THEN EXISTING LAW. 13. IN VIEW OF THE ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 115JC OF THE ACT AS BROUGHT IN THE STATUTE BY THE FINANCE ACT (NO.2) W.E.F. 1.4.13 WILL APPLY PROSPECTIVELY AND TO THE PROJECTS CLAIMING DEDUCTION UNDER SECTION.180IB(10) OF THE ACT WHICH HAVE COME OR APPROVED ON OR AFTER THAT DATE. ACCORDINGLY THIS PROVISION CANNOT BE APPLIED TO THE PROJECTS COMPLETED OR APPROVED RETROSPECTIVELY UPTO 31.3.2012. HENCE WE ALLOW THE APPEAL OF THE ASSESSEE. 41. THE RATIO OF THE ABOVE DECISION OF THE TRIBUNAL IN THE CASE OF S.K. VENTURES (SUPRA) SAYS THAT THE PROVISIONS OF SECTION 115JC OF THE ACT IS APPLICABLE TO THE PROJECTS WHICH COME INTO EXISTENCE OR WHICH ARE APPROVED ON OR AFTER THAT DATE I.E. 01.04.2013. THE SAID NEW PROVISIONS OF THE ACT ARE NOT APPLICABLE RETROSPECTIVELY TO THE PROJECTS COMPLETED OR APPROVED UP TO THE SAID DATE 31.03.2012. FOR SUPPORTING THE ABOVE POINT OF VIEW AND IN FAVOUR OF PROSPECTIVE APPLICATION OF AMENDED PROVISIONS LD. COUNSEL FOR THE ASSESSEE RELIED ON THE BINDING JUDGEMENTS IN THE CASE OF (I) CIT VS. SARKAR BUILDERS 375 ITR 392 (SC); (II) CIT VS. VATIKA TOWNSHIP (P.) LTD. 367 ITR 466 (SC); (III) CIT VS. BRAHMA ASSOCIATES 333 ITR 289 (BOM-HC); AND (IV) ANIL KUMAR GOPIKISHAN AGRAWAL VS. ACIT 106 TAXMANN.COM 137 (GUJ-HC). THESE 31 ITA NOS.2795 & 2796/PUN/2016 DECISIONS WERE PRONOUNCED IN THE CONTEXT OF SECTION 80IB(10) OF THE ACT AND THE AMENDMENT TO SECTION 113 AND SECTION 153B ETC OF THE ACT. 42. THUS THE DATE & YEAR OF APPROVAL OF THE PROJECT BECOME RELEVANT TO NOT ONLY TO THE PROJECTS OF SECTION 80IB(10) OF THE ACT BUT ALSO TO SUCH PROJECTS CUM THE AMT CASE COVERED U/S 115JC OF THE ACT. THE DOCTRINE OF IMPOSSIBILITY BECOMES RELEVANT HERE TOO. IF THE ASSESSEE IS AWARE OF THE OBLIGATIONS OF THE STATUTE FOR PAYING AMT IN THE ASSESSMENT YEAR 2013-14 THE ASSESSEE WOULD NOT HAVE TAKEN OF THIS PROJECT AT ALL IN THE YEAR 2007. ALTERNATIVELY THE ASSESSEE WOULD HAVE FOLLOWED A PROJECT COMPLETION METHOD THEREBY HE WOULD BE HAVE PLANNED TO THE TAXATION AS PER THE THEN EXISTING PROVISIONS OF THE ACT. IN OUR VIEW THIS IS A CASE WHERE ASSESSEE WAS NOT AWARE OF THE NEW LEGISLATION BY WAY OF PROVISIONS OF SECTION 115JC OF THE ACT. 43. THEREFORE FROM THIS POINT OF VIEW THE DECISION OF THE TRIBUNAL IN THE CASE OF S.K. VENTURES (SUPRA) IS RELEVANT DUE TO COMMONALITY OF FACTS AND THE LAW. WE ALSO FIND RELEVANT TO EXTRACT THE COMPARISON OF FACTS IN BOTH THE CASES AND THE SAME IS EXTRACTED HEREUNDER :- COMPARISON OF FACTS PARTICULARS S.K. VENTURES V. ITO ITA NO.1248/MUM/2018 VIKRAM DEVELOPERS V. DCIT ITA NO.2796/PUN/2016 A.Y. 2013 - 14 2013 - 14 STATUS AOP P ARTNERSHIP FIRM NAME OF THE HOUSE PROJECT KRISHNA REGENCY KALYAN MIDORI PIMPLE NILAKH PUNE PROJECT STARTED APRIL 2007 MARCH 2007 COMPLETION CERTIFICATE DATE 31 - 03 - 2012 29 - 03 - 2012 WHETHER AMT PAID IN RETURN NO NO TOTAL INCOME TAXED AS AMT U/S 115JC 6 54 91 914 10 67 79 216 32 ITA NOS.2795 & 2796/PUN/2016 44. THE ABOVE FACTS OF THE ASSESSEE AND THE CASE OF M/S. S.K. VENTURES (SUPRA) ARE VERY CLOSE. HENCE THE DECISION OF THE TRIBUNAL IN THAT CASE BECOMES EXTREMELY RELEVANT. 45. IN ADDITION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. S.K. VENTURES (SUPRA) THE BELOW DISCUSSED CASE LAWS ALSO SUPPORT THE ASSESSEES CONTENTION THAT THE PROVISIONS INTRODUCED IN THE ASSESSMENT YEAR 2013-14 AND THE PROVISIONS OF SECTION 115JC OF THE ACT CANNOT BE APPLIED TO THE PROJECTS CLEARED BY THE LOCAL AUTHORITIES IN EARLIER YEAR I.E. IN 2007 AS IN THE CASE OF THE ASSESSEE. THE RELEVANT PARTS OF THE LEGAL SUBMISSION MADE BY THE LD. AR FOR THE ASSESSEE ARE EXTRACTED AS UNDER :- 1. CIT VS. SARKAR BUILDERS 375 ITR 392 (SC) 17) THEREAFTER SIGNIFICANT AMENDMENT WITH WHICH WE ARE DIRECTLY CONCERNED WAS CARRIED OUT BY FINANCE (NO.2) ACT 2004 WITH EFFECT FROM 1.4.2005. THIS AMENDMENT HAS ALREADY BEEN NOTED ABOVE. THE LEGISLATURE MADE SUBSTANTIAL CHANGES IN SUB-SECTION (10). SEVERAL NEW CONDITIONS WERE INCORPORATED FOR THE FIRST TIME INCLUDING THE CONDITION MENTIONED IN CLAUSE (D). THIS CONDITION/RESTRICTION WAS NOT ON THE STATUTE BOOK EARLIER WHEN ALL THESE PROJECTS WERE SANCTIONED. ANOTHER IMPORTANT AMENDMENT WAS MADE BY THIS ACT TO SUB-SECTION (14) OF SECTION 80IB WITH EFFECT FROM 1.4.2005 AND FOR THE FIRST TIME UNDER CLAUSE (A) THEREOF THE WORDS 'BUILT-UP AREA' WERE DEFINED. SECTION 80IB(14)(A) READS AS UNDER: (14) FOR THE PURPOSES OF THIS SECTION - (A) BUILT-UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS; 18) PRIOR TO INSERTION OF SECTION 80IB(14)(A) IN MANY OF THE RULES AND REGULATIONS OF THE LOCAL AUTHORITY APPROVING THE HOUSING PROJECT BUILT-UP AREA DID NOT INCLUDE PROJECTIONS AND BALCONIES. PROBABLY TAKING ADVANTAGE OF THIS FACT BUILDERS PROVIDED LARGE BALCONIES AND PROJECTIONS MAKING THE RESIDENTIAL UNITS FAR BIGGER THAN AS STIPULATED IN SECTION 80IB(10) AND YET CLAIMED THE DEDUCTION UNDER THE SAID PROVISION. TO PLUG THIS LACUNA CLAUSE (A) WAS INSERTED IN SECTION 80IB(14) DEFINING THE WORDS BUILT-UP AREA TO MEAN THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING THE PROJECTIONS AND BALCONIES AS INCREASED BY THE THICKNESS OF THE WALLS BUT DID NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. 19) CAN IT BE SAID THAT IN ORDER TO AVAIL THE BENEFIT IN THE ASSESSMENT YEARS AFTER 1.4.2005 BALCONIES SHOULD BE REMOVED THOUGH THESE WERE PERMITTED EARLIER? HOLDING SO WOULD LEAD TO ABSURD RESULTS AS ONE CANNOT EXPECT AN ASSESSEE TO COMPLY WITH A CONDITION THAT WAS NOT A PART OF THE STATUTE WHEN THE HOUSING 33 ITA NOS.2795 & 2796/PUN/2016 PROJECT WAS APPROVED. WE THUS FIND THAT THE ONLY WAY TO RESOLVE THE ISSUE WOULD BE TO HOLD THAT CLAUSE (D) IS TO BE TREATED AS INEXTRICABLY LINKED WITH THE APPROVAL AND CONSTRUCTION OF THE HOUSING PROJECT AND AN ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE SAID CONDITION WHEN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN THE LEGISLATURE WHEN THE HOUSING PROJECT WAS ACCORDED APPROVAL BY THE LOCAL AUTHORITIES. 2. CIT VS. VATIKA TOWNSHIP (P.) LTD. 367 ITR 466 (SC) 38. WHEN WE EXAMINE THE INSERTION OF PROVISO IN SECTION 113 OF THE ACT KEEPING IN VIEW THE AFORESAID PRINCIPLES OUR IRRESISTIBLE CONCLUSION IS THAT THE INTENTION OF THE LEGISLATURE WAS TO MAKE IT PROSPECTIVE IN NATURE. THIS PROVISO CANNOT BE TREATED AS DECLARATORY/STATUTORY OR CURATIVE IN NATURE. THERE ARE VARIOUS REASONS FOR COMING TO THIS CONCLUSION WHICH WE ENUMERATE HEREINBELOW: 39. ADDITION OF THIS PROVISO IN THE FINANCE ACT 2003 FURTHER MAKES IT CLEAR THAT SUCH A PROVISION WAS NECESSARY TO PROVIDE FOR SURCHARGE IN THE CASES OF BLOCK ASSESSMENTS AND THEREBY MAKING IT PROSPECTIVE IN NATURE. THE CHARGE IN RESPECT OF THE SURCHARGE HAVING BEEN CREATED FOR THE FIRST TIME BY THE INSERTION OF THE PROVISO TO SECTION 113 IS CLEARLY A SUBSTANTIVE PROVISION AND HENCE IS TO BE CONSTRUED PROSPECTIVE IN OPERATION. THE AMENDMENT NEITHER PURPORTS TO BE MERELY CLARIFICATORY NOR IS THERE ANY MATERIAL TO SUGGEST THAT IT WAS INTENDED BY PARLIAMENT. FURTHERMORE AN AMENDMENT MADE TO A TAXING STATUTE CAN BE SAID TO BE INTENDED TO REMOVE 'HARDSHIPS' ONLY OF THE ASSESSEE NOT OF THE DEPARTMENT. ON THE CONTRARY IMPOSING A RETROSPECTIVE LEVY ON THE ASSESSEE WOULD HAVE CAUSED UNDUE HARDSHIP AND FOR THAT REASON PARLIAMENT SPECIFICALLY CHOSE TO MAKE THE PROVISO EFFECTIVE FROM 1.6.2002. 40. THE AFORESAID DISCURSIVE OF OURS ALSO MAKES IT OBVIOUS THAT THE CONCLUSION OF THE DIVISION BENCH IN SURESH N. GUPTA TREATING THE PROVISO AS CLARIFICATORY AND GIVING IT RETROSPECTIVE EFFECT IS NOT A CORRECT CONCLUSION. SAID JUDGMENT IS ACCORDINGLY OVERRULED. 41. AS A RESULT OF THE AFORESAID DISCUSSION THE APPEALS FILED BY THE INCOME TAX DEPARTMENT ARE HEREBY DISMISSED. APPEALS OF THE ASSESSEES ARE ALLOWED DELETING THE SURCHARGE LEVIED BY THE ASSESSING OFFICER FOR THIS BLOCK ASSESSMENT PERTAINING TO THE PERIOD PRIOR TO 1ST JUNE 2002. 3. BRAHMA ASSOCIATES VS. JCIT 119 ITD 255 (SB) (PUNE) 86 .. .. THE AMENDMENT BROUGHT ABOUT BY THE INSERTION OF CL. (D) IN S.80-IB(10) IN OUR UNDERSTANDING IS A SUBSTANTIVE AMENDMENT AND IT IS APPLICABLE FROM THE DATE THE LEGISLATURE HAS SO SPECIFICALLY PROVIDED I.E. 1 ST APRIL 2005. 4. CIT V. BRAHMA ASSOCIATES 333 ITR 289 (BOMBAY) 29. LASTLY THE ARGUMENT OF THE REVENUE THAT S. 80-IB(10) AS AMENDED BY INSERTING CL. (D) W.E.F. 1ST APRIL 2005 SHOULD BE APPLIED RETROSPECTIVELY IS ALSO WITHOUT ANY MERIT BECAUSE FIRSTLY CL. (D) IS SPECIFICALLY INSERTED W.E.F. 1ST APRIL 2005 AND THEREFORE THAT CLAUSE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1ST APRIL 2005. SECONDLY CL. (D) SEEKS TO DENY S. 80-IB(10) DEDUCTION TO PROJECTS 34 ITA NOS.2795 & 2796/PUN/2016 HAVING COMMERCIAL USER BEYOND THE LIMIT PRESCRIBED UNDER CL. (D) EVEN THOUGH SUCH COMMERCIAL USER IS APPROVED BY THE LOCAL AUTHORITY. THEREFORE THE RESTRICTION IMPOSED UNDER THE ACT FOR THE FIRST TIME W.E.F. 1ST APRIL 2005 CANNOT BE APPLIED RESTROSPECTIVELY. THIRDLY IT IS NOT OPEN TO THE REVENUE TO CONTEND ON THE ONE HAND THAT S. 80-IB(10) AS IT STOOD PRIOR TO 1ST APRIL 2005 DID NOT PERMIT COMMERCIAL USER IN HOUSING PROJECTS AND ON THE OTHER HAND CONTEND THAT THE RESTRICTION ON COMMERCIAL USER INTRODUCED W.E.F. 1ST APRIL 2005 SHOULD BE APPLIED RESTROSPECTIVELY. THE ARGUMENT OF THE REVENUE IS MUTUALLY CONTRADICTORY AND HENCE LIABLE TO BE REJECTED. THUS IN OUR OPINION THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT CL. (D) INSERTED TO S. 80-IB(10) W.E.F. 1ST APRIL 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED TO THE PERIOD PRIOR TO 1ST APRIL 2005. 5. ANIL KUMAR GOPIKISHAN AGRAWAL VS. ACIT 106 TAXMANN.COM 137 (GUJARAT) AT THIS STAGE REFERENCE MAY BE MADE TO THE FOLLOWING EXTRACT OF THE NOTES ON CLAUSES TO FINANCE BILL 2005 (II-A) EXPLAINING CLAUSE 46 WHEREBY SECTION 153B OF THE ACT RELATING TO TIME-LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A WAS SOUGHT TO BE AMENDED: 'THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FROM 1ST JUNE 2003 AND WILL ACCORDINGLY APPLY IN RELATION TO A SEARCH INITIATED UNDER SECTION 132 OR IN RELATION TO BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A AFTER 31ST MAY 2003'. THUS WHEN THE LEGISLATURE THOUGHT IT FIT TO MAKE THE AMENDMENT IN SECTION 153B OF THE ACT RELATING TO TIME LIMIT OF ASSESSMENT UNDER SECTION 153A OF THE ACT RETROSPECTIVE FROM A PARTICULAR DATE IT PROVIDED THAT SUCH RETROSPECTIVITY WOULD RELATE TO CASES WHERE THE SEARCH IS INITIATED OR BOOKS OF ACCOUNT DOCUMENTS OR OTHER ASSETS ARE REQUISITIONED FROM SUCH DATE. THUS EVEN THE LEGISLATURE HAS CONSIDERED THE INITIATION OF SEARCH OR MAKING OF REQUISITION AS THE TRIGGER POINT FOR APPLYING THE PROVISIONS OF SECTION 153B OF THE ACT TO ASSESSMENT UNDER SECTION 153A OF THE ACT. UNDER SECTION 153C OF THE ACT ALSO ULTIMATELY ASSESSMENT OR REASSESSMENT IS REQUIRED TO BE MADE IN ACCORDANCE WITH SECTION 153A OF THE ACT. THUS WHEN THE AMENDED PROVISIONS OF SECTION 153C (1) OF THE ACT HAVE BEEN BROUGHT INTO FORCE WITH EFFECT FROM 1ST JUNE 2015 IT HAS TO BE CONSTRUED THAT SUCH AMENDED PROVISIONS WOULD APPLY TO A SEARCH INITIATED UNDER SECTION 132 OR IN RELATION TO BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A OF THE ACT AFTER 31ST MAY 2015. CONSEQUENTLY IN RELATION TO SEARCHES CARRIED OUT TILL 31ST MAY 2015 IT WAS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO ASSUME JURISDICTION UNDER SECTION 153C OF THE ACT AS AMENDED WITH EFFECT FROM 1ST JUNE 2015. 46. WE HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE RELATING TO DOCTRINE OF IMPOSSIBILITY QUA THE ADOPTING THE OTHER OPTIONS AVAILABLE TO THE ASSESSEE IN THE MATTER OF RECOGNITION OF INCOME OF THE PROJECT. THE ASSESSEE NOW CANNOT ALTER THE INCOME RECOGNITION METHODS. ASSESSEE HAD THE OPTION TO INVOKE THE PERCENTAGE COMPLETION METHOD PERMITTED BY THE CIRCULAR OF THE CBDT DATED 30.06.2009 (INSTRUCTION NO.4/2009). IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE FURNISHED THE FOLLOWING WRITTEN SUBMISSION IN SUPPORT THE CASE OF THE ASSESSEE :- GROUND RELATING TO OBJECTION TO LEVY OF ALTERNATE MINIMUM TAX (AMT U/S 115JC) 35 ITA NOS.2795 & 2796/PUN/2016 (IN CONTINUATION OF ARGUMENTS AND SYNOPSIS APPELLANT IS MAKING FURTHER SHORT SUBMISSION). DOCTRINE OF IMPOSSIBILITY - AS PER FACTS ASSESSEE WAS FORMED AS A SINGLE JOINT VENTURE FOR DEVELOPMENT OF THE MIDORI PROJECT. AS PER FACTS PROJECT WAS APPROVED IN YEAR 2007 AND COMPLETED IN MARCH-2012. AGREEMENTS TO SALES WERE ALREADY MADE IN THE PAST YEARS AND TERMS AND CONDITIONS DECIDED IN THE PAST YEARS. BUT THE SALES DID NOT TAKE PLACE IN AY 2012-13 OR EARLIER YEARS. SALES (I.E. HANDING OVER OF POSSESSION) TOOK PLACE IN VARIOUS YEARS I.E. PARTLY IN AY 2012-13 PARTLY IN AY 2013- 14 AND THEREAFTER. AS THE APPELLANT HAS BEEN FOLLOWING COMPLETED CONTRACT METHOD (I.E. CCM) PROFITS / INCOME WERE OFFERED TO TAX IN SUCH RESPECTIVE YEARS OF EXTENDING POSSESSION. NOW DESPITE COMPLYING ALL THE NORMS OF SECTION 80-IB(10) APPELLANT IS NOT GETTING BENEFIT PROMISED BY THE LAW AT THE TIME OF APPROVAL CONSIDERING THE NEWLY INSERTED / AMENDED PROVISIONS OF AMT U/S 115JC. APPELLANT COULD HAVE DONE NOTHING IN SUCH A CASE WHERE SOME FRESH TAX (I.E. AMT) GETS LEVIED BY THE LEGISLATURE ON THE PROFITS / INCOME. APPELLANT WAS CAUGHT UNAWARE IN THIS REGARD. AS SUCH APPELLANT CONTENDS LAW APPLICABLE AT THE TIME OF APPROVAL SHOULD BE APPLIED IN CASE OF A HOUSING PROJECT / REALTY PROJECT. PERCENTAGE COMPLETION METHOD (PCM) - IT IS SUBMITTED HAD THE APPELLANT BEEN FOLLOWING PERCENTAGE COMPLETION METHOD (PCM) THE PROFITS / INCOME WOULD HAVE BEEN TAXED IN THE EARLIER YEARS ITSELF AND THE AMT PROVISIONS WOULD NOT HAVE APPLIED TO THE PAST YEARS. IN OTHER WORDS A PCM METHOD WOULD HAVE SAVED APPELLANT AS AGAINST CCM METHOD. IT IS SUBMITTED METHODS OF ACCOUNTING ARE MERELY RULES FOR DEDUCING CORRECT PROFITS IN A GIVEN CASE AND NOTHING MORE. SUCH METHODS OF ACCOUNTING OUGHT NOT TO CHANGE RESPONSIBILITIES OF TAXATION IN SUBSTANCE. EVEN CBDT HAS ACCEPTED THIS PRINCIPLE AND HAS ISSUED AN INSTRUCTION NO. 4/2009 DATED 30/6/2009 REGARDING ELIGIBILITY OF DEDUCTION U/S 80-IB(10) AND PCM. IN THE PRESENT CASE APPELLANT WOULD HAVE NEVER ENTERED INTO THE TAXABLE KEN OF AMT PROVISIONS HAD IT BEEN FOLLOWING PCM AS THE ENTIRE CONSTRUCTION WORK WAS ALREADY OVER BEFORE 31/3/2012. APPELLANT OUGHT NOT TO BE SUBJECTED TO AMT PROVISIONS SIMPLY BECAUSE IT IS FOLLOWING CCM INSTEAD OF PCM. 47. FROM THE ABOVE WE FIND THE ASSESSEE IS CAUGHT UNAWARE LEGALLY BY THE NEW LAW BROUGHT INTO STATUTE FOR THE ASSESSMENT YEAR 2013-14. THUS WE FIND IT IS UNFAIR TO APPLY THE NEW SECTION 115JC OF THE ACT TO THE ASSESSEES PROJECT APPROVED IN 2007. CONSIDERING THE ABOVE DECISION OF THE TRIBUNAL (SUPRA) THE COMMONALITY OF THE FACTS OF BOTH THE CASES AND THE LEGAL SUBMISSIONS OF THE AR ABOVE WE FIND IT IS SETTLED LEGAL ISSUE ON THE MATTER AT THE LEVEL OF THE TRIBUNAL AND THE PROVISION OF SECTION 115JC OF THE ACT NEED TO BE APPLIED PROSPECTIVELY ONLY AND NOT TO THE PROJECTS APPROVED IN 2007 AS IN THE PRESENT CASE. NO OTHER CONTRARY CASE IS BROUGHT TO OUR NOTICE BY THE REVENUE FOR TAKING ANY CONTRARY VIEW BY US. ACCORDINGLY THE ADDITIONAL GROUND AND OTHER RELATED GROUNDS ARE ALLOWED. 48. REGARDING THE GROUND NOS.6 AND 7 WE FIND THE SAME ARE BASICALLY ARGUMENTATIVE IN NATURE. BEFORE US REFERRING TO THE SAID GROUNDS LD. AR SUBMITTED THAT THESE GROUNDS REVOLVED AROUND THE SOLITARY HOUSING PROJECT EVER 36 ITA NOS.2795 & 2796/PUN/2016 UNDERTAKEN BY THE ASSESSEE DURING ITS LIFE TIME. WITH THIS FACT IF ASSESSEE WHAT TO PAY THE AMT TAX THE SAME REMAINS REFUNDABLE TO THE ASSESSEE AT THE END OF THE PERMITTED PERIOD. WITH THE ABSENCE ENABLING PROVISIONS FOR SUCH REFUND OF AMT CREDIT THE DEDUCTION PROVISIONS OF SECTION 80IB(10) OF THE ACT BECOMES INAPPLICABLE TO THE ELIGIBLE PROJECT OF THE ASSESSEE. WITHOUT GOING TO THESE ARGUMENTS WE FIND IT APPROPRIATE TO GRANT RELIEF TO THE ASSESSEE ON LEGAL GROUND I.E. PROSPECTIVE APPLICATION OF THE PROVISIONS OF SECTION 115JC QUA THE DATE OF APPROVAL FOR THE FIRST TIME OF THE PROJECT WHICH IS MUCH EARLIER TO THE INTRODUCTION OF THE PROVISIONS OF SECTION 115JC OF THE ACT. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE AS THE LEGAL GROUND WE FIND THE ADJUDICATION OF THESE GROUNDS 6 & 7 BECOME ACADEMIC EXERCISE ONLY. THEREFORE WE ARE OF THE OPINION THE GROUNDS NO.6 AND 7 ARE DISMISSED AS ACADEMIC. 49. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.2796/PUN/2016 FOR THE ASSESSMENT YEAR 2013-14 IS PARTLY ALLOWED. 50. RESULTANTLY BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 14 TH DAY OF NOVEMBER 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH NOVEMBER 2019 SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-12 PUNE. 4. THE PR. CIT CENTRAL PUNE. 5. / DR ITAT B BENCH PUNE. 6. / GUARD FILE. / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY / ITAT PUNE.