2019 (3) TMI 1990 - AT - Income Tax

Applicability of provisions of section 115 JC - assessee claimed deduction u/s 80IB - As argued housing project undertaken by the assessee has been approved prior to the date of introduction of the provisions of section 115 JC and also completion of the project - HELD THAT - 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. 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. 2018 (4) TMI 860 - ITAT MUMBAI wherein it is held that the assessee was entitled to claim of deduction under 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. As gone through the case law of Hon ble Supreme Court in the case of Sarkar Builders 2015 (5) TMI 555 - SUPREME COURT wherein Hon ble 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. Hon ble 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 Hon ble Supreme Court in the case of Vatika Township P Ltd 2014 (9) TMI 576 - SUPREME COURT 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 - 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. 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 80IB(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

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Applicability of provisions of section 115JC of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal by the assessee was delayed by 334 days. The assessee filed a condonation petition supported by an affidavit, explaining that the delay occurred due to wrong professional guidance from their previous Chartered Accountant (CA) and Advocate. The assessee believed that the appellate proceedings were being handled by their regular CA and Advocate, but later discovered that no appeal had been filed against the appellate order for the assessment year 2013-14. Upon realizing this, the assessee consulted another CA who advised filing the appeal immediately. The Tribunal noted that the delay was due to the fault of the earlier CA and not the assessee, and since the assessee would not gain anything from the delay, the delay was condoned, and the appeal was admitted for hearing.

2. Applicability of Provisions of Section 115JC of the Income Tax Act, 1961:
The core issue was whether the provisions of section 115JC, introduced by the Finance Act (No.2) with effect from 1.4.2013, could be applied to the assessee’s housing project which was approved and completed before this date. The assessee argued that the housing project, Krishna Regency, was approved and completed before the introduction of section 115JC, thus the provision should not apply. The assessee relied on the doctrine of promissory estoppel and the principle that laws should not have retrospective application unless explicitly stated.

The Tribunal examined the facts, noting that the housing project was completed on 31.3.2012, before the provisions of section 115JC were introduced. The Tribunal referred to the Supreme Court’s decisions in the cases of Motilal Padampat Sugar Mills Co. Ltd vs State of Uttar Pradesh and others, CIT vs Sarkar Builders, and CIT vs Vatika Township (P) Ltd., which emphasized that laws should not be applied retrospectively unless clearly intended by the legislature. The Tribunal concluded that the provisions of section 115JC, introduced from 1.4.2013, could not be applied to projects approved or completed before this date. Therefore, the appeal of the assessee was allowed, and the assessment order applying section 115JC was set aside.

Conclusion:
The Tribunal condoned the delay in filing the appeal, attributing it to the fault of the previous CA. On the substantive issue, the Tribunal held that the provisions of section 115JC could not be applied retrospectively to the assessee’s housing project, which was approved and completed before the introduction of the said provisions. The appeal of the assessee was allowed.