2013 (8) TMI 1077 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80IB(10) concerning the commercial area exceeding the prescribed limit.
2. Applicability of amendments to section 80IB(10) retrospectively or prospectively.

Summary:

Issue 1: Deduction u/s 80IB(10) concerning the commercial area exceeding the prescribed limit
The Revenue disallowed the claim for deduction u/s 80IB(10) for assessment years 2005-06 and 2004-05 on the grounds that the commercial area in the housing project exceeded 2000 sq ft. The Assessing Officer noted that the commercial area was 5706 sq ft, which exceeded the limit prescribed by the Act. The CIT(A) allowed the deduction, relying on its own decision in the assessee's case for the assessment year 2006-07, where it was held that the restriction on the commercial area was applicable only to projects approved on or after 01.04.2004.

Issue 2: Applicability of amendments to section 80IB(10) retrospectively or prospectively
The CIT(A) and the Tribunal both held that the amendment to section 80IB(10) by inserting clause (d) with effect from 01.04.2005 was prospective and not applicable to projects approved before this date. The Tribunal's decision was based on the Hon'ble Gujarat High Court's ruling in the case of Manan Corporation vs. ACIT, which stated that the amendment was prospective and could not be applied to projects approved prior to 01.04.2005. The Tribunal also referenced the Hon'ble Bombay High Court's decision in CIT vs. Brahma Associates, which supported the prospective application of the amendment.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to allow the deduction u/s 80IB(10) for the assessee, dismissing the Revenue's appeals. The amendment to section 80IB(10) was held to be prospective and not applicable to projects approved before 01.04.2005. The appeals of the Revenue were dismissed, and the order was pronounced on 14th August 2013 at Chennai.