2013 (7) TMI 210 - AT - Income Tax

Deduction u/s 80IB - housing project - sale of flats to family members - application of restriction with retrospective effect or with prospective effect i.e 1.4.2010 - held that - amendment has been brought with prospective effect i.e. from 1st day of April 2010 and there is no indication whatsoever to suggest that these restrictions need to be applied with retrospective effect. The amendment seeks to plug a loophole but restricts the remedy with effect from 1st day of April 2010 i.e. AY 2010-2011. The law is very clear that unless provided in the Statute the law is always presumed to be prospective in nature. It will therefore be contrary to the scheme of law to proceed on the basis that wherever adjacent residential units are sold to family members all these residential units are to be considered as one unit. If law permitted so there was no need of the insertion of clause (f) to section u/s 80IB(10). It will be unreasonable to proceed on the basis that legislative amendment was infructuous or uncalled for particularly as the amendment is not even stated to be for removal of doubts . On the contrary this amendment shows that no such eligibility conditions could be read into pre-amendment legal position. - Deduction u/s 80IB allowed - Decided in favor of assessee. Regarding statement recorded u/s 133A - evidentiary value - AO stated that assessee himself has offered the deduction u/s.80IB(10) in respect of these units during the course of survey proceedings - Held that - it is only elementary that neither statement recorded u/s.133A has an evidentiary value nor a legal claim can be declined only because assessee at some stage decided to give up the same. - Decided against the revenue.

Summary

Issues:
1. Eligibility of deduction u/s.80IB(10) for profits from a housing project failing to meet specific conditions.

Detailed Analysis:

Issue 1:
The Assessing Officer challenged the correctness of the CIT(A)'s order regarding the eligibility of deduction u/s.80IB(10) for profits derived from a housing project. The key contention was that the housing project did not satisfy the conditions stipulated in clauses (b) and (c) of section 80IB(10) of the Income Tax Act, 1961. The first condition required the plot area to be not less than one acre, which the assessee's plot was found to be less than. The second condition specified that the built-up area of individual flats should not exceed 1000 square feet, but the flats were combined and sold as larger units exceeding the limit. The Assessing Officer relied on survey proceedings and evidence to support the denial of the deduction. However, the CIT(A) found that the assessee had fulfilled all conditions under section 80IB(10) and directed the AO to allow the deduction. The Tribunal analyzed the case in light of a similar precedent and concluded that the deduction should have been allowed to the assessee as each flat was an independent residential unit as per approved building plans, even if multiple flats were merged into larger units. The Tribunal emphasized that the legislative amendment restricting sale to family members was prospective and did not apply retrospectively. Therefore, the deduction u/s.80IB(10) should have been allowed to the assessee.

Conclusion:
The Tribunal upheld the assessee's grievance and rejected the Assessing Officer's challenge, dismissing the appeal and pronouncing the judgment in favor of the assessee on 12th August, 2011.