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2013 (2) TMI 289 - AT - Income TaxDeduction u/s 80IB Date of approval of commencement of project by Local authority - Assessee is engaged in the business as builder and developer Develop housing under the scheme of Slum Rehabilitation Authority (SRA) framed by the Govt. of Maharashtra - Notification dated 3rd August 2010 Held that - The CBDT which had issued the notification after more than five years of the amendment, has put a time limit of those housing projects which has been approved by the local authority on/or after 1st April 2004. Such a time limit can defeat the basic purpose of the proviso for which it was enacted as in the said proviso, the time limit provided in clause (a) of section 80-IB(10) has not been specifically made applicable, therefore, such a time limit cannot be imposed by way of subordinate legislation It was only after such terms and conditions were fulfilled, the assessee was given the commencement certificate issued after 1st April 2004, i.e., on 17th October 2004 to start the project. In such a case or situation, it cannot be held that the assessee s project is not liable for deduction u/s 80-IB, once all other conditions are fulfilled. One can say that the date of commencement i.e., 17th October 2004, can be taken as the date of approval as it was from this date the approval given by the SRA becomes operative. Thus, the contentions of the revenue cannot be sustained. In favour of assessee
Issues Involved:
1. Eligibility for deduction under section 80IB(10). 2. Applicability of CBDT notifications to the project approval dates. Issue-Wise Detailed Analysis: 1. Eligibility for deduction under section 80IB(10): The central issue revolves around whether the assessee's project qualifies for a deduction under section 80IB(10) of the Income Tax Act. The assessee, engaged in the business as a builder and developer, claimed a deduction of Rs. 1,47,11,573 for the assessment year 2007-08. The Assessing Officer (AO) disallowed this claim, citing that the project did not meet the basic condition of being on a plot of land with a minimum area of one acre. The AO further noted that the CBDT had not issued any notification for the scheme under which the assessee's project was undertaken, as required by the proviso to section 80IB(10). Upon appeal, the Commissioner (Appeals) allowed the deduction, referencing a CBDT notification dated 3rd August 2010, which notified the Slum Rehabilitation Authority (SRA) scheme of the Government of Maharashtra. The Commissioner (Appeals) also considered a subsequent clarification by the CBDT dated 5th January 2011, which stated that the notification would apply to projects approved by a local authority between 1st April 2004 and 31st March 2008. The Commissioner (Appeals) concluded that the assessee met all the necessary conditions and directed the AO to allow the deduction. 2. Applicability of CBDT notifications to the project approval dates: The Revenue challenged the applicability of the CBDT notifications, arguing that the approval for the project was given on 4th August 2003, which falls outside the specified date range of the notification. The Departmental Representative contended that the Commissioner (Appeals) should have called for a remand report since the notification was a fresh piece of evidence not available during the assessment. In response, the assessee's counsel argued that the approval given on 4th August 2003 was conditional and that the final commencement certificate was issued on 17th October 2004, which should be considered the actual date of approval. The counsel further argued that the amendment to section 80IB(10) by the Finance Act, 2004, was curative and should be applied retrospectively to alleviate the hardships faced in slum redevelopment. The Tribunal examined the rival contentions and the legislative intent behind the amendment. It noted that the proviso to section 80IB(10) was designed to relax the conditions for projects in slum areas under government schemes. The Tribunal emphasized that the proviso should be interpreted liberally to fulfill its socio-economic objectives and that the time limit imposed by the CBDT notification should not override the main legislative intent. The Tribunal concluded that the date of the commencement certificate (17th October 2004) should be considered the effective date of approval. It held that the assessee's project met all the conditions for the deduction under section 80IB(10), despite the initial approval date being before 1st April 2004. Conclusion: The Tribunal upheld the decision of the Commissioner (Appeals), confirming that the assessee is eligible for the deduction under section 80IB(10) for the development project carried out in the Dharavi slum area. The appeal by the Revenue was dismissed, affirming that the conditions specified in the proviso to section 80IB(10) were met, and the project was duly notified by the CBDT. Outcome: Revenue's appeal is dismissed. The assessee is entitled to the deduction of Rs. 1,47,11,573 under section 80IB(10).
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