2016 (12) TMI 1484 - HC - Income Tax

Deduction u/s. 80IB (10) - Housing Project consisted of commercial area exceeding the maximum area of 2000 sq. ft. as prescribed under section 80IB(10) - Held that - The issue has also now been concluded by the decision of the Apex Court in CIT Vs. Sarkar Builders 2015 (5) TMI 555 - SUPREME COURT against the Revenue and in favour of the respondent-assessee wherein held the housing project contemplated under sub-section (10) of Section 80IB includes commercial establishments or shops also. Now, by way of an amendment in the form of Clause (d), an attempt is made to restrict the size of the said shops and/or commercial establishments. Therefore, by necessary implication, the said provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be applied to those projects which were sanctioned and commenced prior to 01.04.2005 and completed by the stipulated date, though such stipulated date is after 01.04.2005. - Decided in favour of assessee. Violation of Section 80IB(10)(c) - the enquiries made by the A.O. clearly established that the combining of the 3 flats are technically not feasible unless the necessary alteration in basic RCC structure of building is made and which can be made by the builder assessee itself and not by the purchaser - Held that - The respondent-assessee had not sold 3 flats after combining them in one flat having an area of excess of 1500 sq. ft. In fact, it renders a finding of fact that the respondent-assessee had sold 3 independent flats to one buyer, namely, Dr. Oomer K. George. Further before the Authority, Dr. Oomer K. George has also filed evidence affirming that he has purchased 3 flats and combined them all into 1 flat, after purchase. Dr. Oomer K. George also further pointed out that the respondent-assessee had no role to play in his joining the 3 flats into 1 flat. In view of the above, concurrent finding of fact the question proposed does not give rise to any substantial question of law. Thus, not entertained.

Summary

Issues: Appeal challenging ITAT order for AY 2006-07 and 2007-08 - Deduction u/s. 80IB (10) for Housing Project exceeding 2000 sq. ft. - Violation of Section 80IB(10)(c) - Substantial question of law.

Analysis:

1. Deduction u/s. 80IB (10) for Housing Project exceeding 2000 sq. ft.:
The Tribunal's order dismissing the Revenue's appeal was based on the decision in Brahma Associates and Others. The Revenue's counsel acknowledged that the issue was settled in CIT Vs. Sarkar Builders, where the Supreme Court ruled against the Revenue. Consequently, the first question did not raise a substantial question of law, as per the High Court's analysis.

2. Violation of Section 80IB(10)(c):
The Tribunal's order upheld the CIT (Appeals) decision, stating that the respondent-assessee had not sold 3 flats combined into one exceeding 1500 sq. ft. The findings established that the respondent-assessee sold 3 independent flats to a single buyer who later combined them. The buyer confirmed this and clarified that the assessee had no involvement in the combination process. As there was a concurrent finding of fact, the High Court determined that this question did not give rise to any substantial question of law and hence was not entertained.

In conclusion, the High Court disposed of the appeal without costs, as both questions raised by the Revenue did not present substantial questions of law based on the established facts and legal precedents.