2017 (1) TMI 187 - AT - Income Tax

Claim of deduction under 80IB(10) - claim was rejected as project of the assessee was approved prior to 01/04/2004, therefore, the assessee is not entitled to the benefit as the amendment made by the Finance Act, 2005 - Held that - The notification issued by the Board dated 5th January 2011 clearly stipulates that the benefit of Section 80IB(10) shall be available to projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004, and before 31st day of March, 2008, thereby making the incomes arising from such projects eligible for deduction under sub section (10) of section 80IB from the assessment year 2005 06 onwards. There is no equity in tax legislation and the exemption provisions are to be strictly construed wherein the assessee has to establish at the first stage the eligibility for the benefit of deduction u/s 80IB(10) of the Act in accordance with the provision of the statute and once the assessee establishes its entitlement to the said deduction, then deduction provisions are to be liberally construed to give the full intended benefit of Section 80IB(10) of the Act to the assessee so that the intended purposes of beneficial provisions can be fully achieved. The Courts shall not adopt to the principles of contemporance expositio when the plain language of the statute is clear and unambiguous. Considering the factual matrix we are of the view that the proviso introduced by Finance Act , 2004 clearly grant relief to slum redevelopment or reconstruction projects which are approved by Central Government or State Government and the scheme is notified by the Board. The Board Notification clearly stipulate that benefit shall be granted to the projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004, and before 31st day of March, 2008, while in the case of the assessee the projects are approved prior to 1st day of April 2004 as set out above in preceding para s, and the assessee is not able to establish its entitlement to deduction u/s 80IB(10) of the Act at the first stage itself for reason cited above. Thus, the contention of the assessee cannot be accepted and hence are rejected. - Decided against assessee

Summary

Issues Involved:
1. Claim of deduction under Section 80IB(10) of the Income Tax Act, 1961.
2. Applicability of CBDT notifications to projects approved before 01/04/2004.
3. Fulfillment of conditions stipulated under Section 80IB(10) for deduction eligibility.
4. Interpretation and applicability of the proviso to Section 80IB(10) for slum rehabilitation projects.

Detailed Analysis:

1. Claim of Deduction Under Section 80IB(10):
The assessee, a partnership firm, claimed a deduction of ?28,69,487 under Section 80IB(10) of the Income Tax Act, 1961, for income derived from an approved housing project. The claim was rejected by the Assessing Officer on the grounds that the project was not notified by the CBDT and the conditions under Section 80IB(10) were not met. The Commissioner of Income Tax (Appeals) affirmed this decision.

2. Applicability of CBDT Notifications to Projects Approved Before 01/04/2004:
The Tribunal had previously set aside the order of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to reconsider the claim in light of CBDT notification No. 67/2010 dated 03/08/2010 and notification No. 02/2011 dated 05/01/2011. However, the Assessing Officer maintained that the notifications did not benefit projects approved before 01/04/2004, thus denying the deduction under Section 80IB(10).

3. Fulfillment of Conditions Stipulated Under Section 80IB(10):
The Tribunal examined the conditions under Section 80IB(10), which include the project being approved by a local authority before 31/03/2008 and specific timelines for completion. The Tribunal noted that the project was principally approved by the Slum Rehabilitation Authority on 10/07/1998, with various certificates of occupancy issued between 2001 and 2008. One of the objections raised was that the plot of land was less than one acre. The Tribunal referenced the Finance Act (No.2) 2004, which relaxed the one-acre requirement for slum rehabilitation projects in cities like Mumbai and Delhi, provided they were approved by the local authorities and notified by the Board.

4. Interpretation and Applicability of the Proviso to Section 80IB(10) for Slum Rehabilitation Projects:
The Tribunal discussed the proviso introduced by the Finance Act, 2004, which exempts slum rehabilitation projects from certain conditions if they are approved by the Central or State Government and notified by the Board. The Tribunal emphasized that the relaxation was intended to remove hardships faced by such projects in Mumbai/Delhi. However, the Board's notification specified that the benefit applies to projects approved on or after 01/04/2004 and before 31/03/2008. Since the assessee's project was approved before 01/04/2004, the Tribunal concluded that the assessee did not meet the initial eligibility criteria for the deduction under Section 80IB(10).

Conclusion:
The Tribunal upheld the decision of the Assessing Officer and the Commissioner of Income Tax (Appeals), denying the deduction under Section 80IB(10) as the project was approved before the stipulated date and did not meet the necessary conditions. The appeals of the assessee were dismissed.