2015 (5) TMI 361 - HC - Income Tax

Deduction u/s.80IB(10) - whether ITAT allowing deduction u/s.80IB(10) for A.Ys.2003-04 even though the project had been sanctioned as residential commercial by Pune Municipal Corporation and was thus not a housing project ? - Held that - Since the project is admittedly approved prior to 1.4.2005 the assessee is covered in the case of the Commissioner of Income Tax Vs. M/s. Happy Home Enterprises decided in 2014 (9) TMI 707 - BOMBAY HIGH COURT wherein which one of us (Shri S.C. Dharmadhikari, J.) was a party, after considering the submissions of revenue on the issue of applicability of the judgment of Brahma Associates 2011 (2) TMI 373 - BOMBAY HIGH COURT has held that the clause (d) of section 80IB(10) is prospective in nature and would not apply to the housing projects commenced prior to 1.4.2005. In the present case it is seen that the approval of the project was granted on 16th July, 2002 well before introduction of the provisions of clause (d) which came into effect from 1.4.2005. No substantial questions of law. - Decided against revenue.

Summary

Issues:
1. Eligibility to claim benefit under section 80IB(10) for assessment years 2003-04 to 2008-09.

Analysis:

1. The appeals involved questions related to the eligibility of the assessee to claim benefits under section 80IB(10) for various assessment years. The revenue, represented by Mr. Gupta, raised five reframed questions regarding the interpretation and application of the relevant provisions of the Income Tax Act, 1961.

2. In one of the appeals concerning the assessment year 2003-04, the Assessing Officer disallowed the benefit under section 80IB(10) as the assessee had constructed commercial premises exceeding the permissible limit. The commercial area was considered in violation of clause (d) of section 80IB(10) due to its size.

3. The assessee argued that the construction of commercial premises was mandatory as per Pune Municipal Corporation requirements. The Assessing Officer also noted that certain commercial premises fell under convenience shopping as defined in the Development Control Rules, further denying the benefit of section 80IB(10) based on these observations.

4. Additionally, the Assessing Officer highlighted that certain flats exceeded the specified built-up area limit, making the assessee ineligible for deduction under section 80IB(10)(c) of the Act.

5. The Commissioner of Income Tax held that while the amendment to section 80IB(10) from 1.4.2005 did not have retrospective effect, the inclusion of the definition of built-up area was declaratory and curative, applying to the relevant assessment year.

6. The Tribunal, in response to the appeal filed by the assessee, emphasized that the project had commenced before the amendment of 1.4.2005, and therefore, retrospective application of the relevant provisions was not warranted. The Tribunal also ruled that the project could include both residential and commercial premises for the benefit of section 80IB(10).

7. Mr. Gupta, representing the revenue, contended that the presence of a fully commercial building within the project disqualified the assessee from claiming benefits under section 80IB(10). He also discussed the provisions applicable for the assessment year 2005-06 regarding the calculation of built-up area.

8. The Court, after considering the issues and the judgments in similar cases, concluded that the questions raised did not give rise to substantial questions of law. The Court dismissed the appeals, citing the applicability of previous judgments and the lack of new legal issues.

In conclusion, the judgment addressed the eligibility of the assessee to claim benefits under section 80IB(10) for the specified assessment years, focusing on the construction of commercial premises, adherence to municipal regulations, and the interpretation of relevant provisions. The Court's decision was based on precedents and the specific circumstances of the case, ultimately dismissing the appeals.