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TMI Blog2010 (3) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... oration of the civic life in Brihan Mumbai. The execution of MUIP is to be carried out by MMRDA on the lands earmarked for the purpose in the Final Development Plan of Greater Mumbai in force under section 31 of the Maharashtra Regional and Town Regional and Town Planning Act, 1966. The lands designated or reserved for execution of MUIP are occupied by the slum dwellers who are required to be evacuated and re-housed for effective execution of MUIP by providing alternate accommodation as per Government Policy. To achieve the said public purpose, MMRDA intended to acquire intervivos land along with the constructed tenements in consideration of Transferable Deve-lopment rights grantable under the Development Control Regulation No. 33 of the Development Control Regulations for Greater Bombay 1991. The assessee submitted Slum Rehabilitation proposal Project Affected Persons/slum dwellers under the MUIP Scheme on the property as Slum Rehabilitation Project. The Slum Rehabilitation proposal provided, inter alia, that the assessee shall construct about 3840 or more tenements each comprising of 225 sq.ft. carpet area for rehabilitation of the Project Affected Persons/slum dwellers including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would realize. It was only later on when TDR was received and sold, the assessee realized the amount of profit it has made. The assessee follows Project Completion Method of Accounting. During the financial year 2005-06 (assessment year 2006-07), the project was completed and net profit of Rs. 51.06 crores was declared as income. In its return of income, gross total income was determined at Rs. 51,06,27,772 from which deduction under section 80-IB(10) was claimed amounting to Rs. 51,06,05,521, resulting in total income of Rs. 22,251. The return of income was filed on 31-10-2006. 6. The statement of Sri Vyomesh M. Shah, Managing Director of M/s. Akruti Nirman Ltd., was recorded on 16-3-2007 in the capacity of the member in the assessee-AOP. In his statement recorded under section 131 of the Act, Shri Vyomesh Shah confirmed that the total built-up area of the residential unit in the aforementioned project at Tata Nagar, Mankhurd was 81,046 sq.mts. and the total built-up area of commercial units in the same was 11,161.07 sq.mts. Thus, the total commercial space in the project, as per the statement of Shri Vyomesh Shah, when converted to square feet was 1,17,800 sq.ft. According to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1" were inserted after the words "housing project approved". Thus, all conditions for grant of deduction remained the same except that the approval of local authority for the development has to be obtained before 31st day of March, 2001. 10. For assessment year 2002-03, the law applicable was that the condition regarding completion of the project before 31-3-2003 was dispensed with. 11. For assessment years 2003-04 and 2004-05, the law applicable was that all conditions remained the same except the condition regarding approval of the project by the local authority which could be before 31-3-2005. Another important change was that the period of completion of the construction on or before 31-3-2003 was dispensed with and there was no time-limit given for completion of the construction. This was the law for assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development. 12. By the Finance Act, 2004 with effect from 1-4-2005, clause (d) to section 80-IB(10) was introduced which provided that built-up area of shops or other commercial es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is less." As per the amended law in view of insertion of clause (d ) the built-up area of shops and other commercial establishment included in the housing project should not exceed five per cent of the aggregate built-up area of the housing project or 2,000 sq.ft., whichever is less. 13. We have already noticed that the built-up area of the shops and commercial establishment included in the housing project was more than 2,000 sq.ft. and, therefore, if the law as amended by the Finance Act, 2005 with effect from 1-4-2005 is applied then the assessee would not be entitled to deduction. On the other hand, if the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is applied then the assessee would be entitled to deduction because there was no restriction regarding construction of commercial area and the only condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction in respect of residential unit segment of the overall project on fulfilment of necessary conditions, the entitlement of incentive deduction will be confined to only to the profits to the residential segment of the overall project. (c)The limit on commercial use of built-up area as prescribed by clause (d) of section 80-IB(10) has no retrospective application, and it applies only with effect from the assessment year 2005-06." 15. In this appeal if it is held that the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied even then the assessee to claim deduction under section 80-IB(10) of the Act has to pass the test laid down by the Special Bench as above. The Assessing Officer held the law as amended by the Finance Act, 2005 with effect from 1-4-2005 whereby it was laid down that the built-up area of the shops and commercial establishment included in the housing project should not be more than 5 per cent of the total built-up area of the project or 2,000 sq.ft. whichever is les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2006-07 in which assessment year the deduction is claimed by the assessee and not the law (as contended by the assessee) as it existed when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied, i.e., the law as it existed during assessment year 2004-05. The Assessing Officer thereafter set out the parameters that were needed to be satisfied by the assessee as per the law as it existed for assessment year 2006-07 and as to how the assessee failed to fulfil one of the conditions in the form of a chart which is as follows: Sl. No. Parameters Conditions as per section 80-IB(10) Facts in the case of the assessee 1. Date of approval Should be before 31-3-2007 Approved on 10-9-2003 2. Date of commencement Should have commenced after 1-10-1998 Commenced in December 2003 3. Date of completion Should be completed by 31-3-2008 or four years from the end of the financial year in which approval was given, if the same was given after 31-3-2004. Completed on 21-12-2005 4. Evidence of completion Full occupation Certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80-IB(10) of the Act. The second reason given by the Assessing Officer was that shopping area of Nisarg project was 7.60 per cent of the built-up area of Nisarg Project. The Assessing Officer relied on the amendment to section 80-IB(10) with effect from 1-4-2005 whereby clause (d) to section 80-IB(10) of the Act was introduced and it was laid down therein that the built-up area of shops and other commercial establishment included in the housing project should not exceed five per cent of the aggregate built-up area of the housing project or 2,000 sq.ft., whichever is less and rejected the claim of the assessee for deduction. The Tribunal on the second issue held that the housing project Nisarg was approved before 31-3-2005 and when approval was obtained there was no stipulation as to the shopping complex area (commercial space) permissible in the project. The amendment were subsequently made while extending the deduction of income from housing project approved up to 31-3-2007 and, therefore, on this ground deduction under section 80-IB(10) cannot be denied to the assessee. The case of Arun Excello Foundations (P.) Ltd. (supra) relates to assessment year 2004-05 and, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssly or by implication. 21. The learned D.R. submitted that the Legislature in its wisdom had thought it fit to introduce a condition for allowing deduction under section 80-IB(10) with effect from 1-4-2005 and, therefore, the law including clause (d) of section 80-IB(10) has to be applied by the Assessing Officer while making assessment from assessment year 2005-06 till the law remains the same. It was his argument that the Amended provisions refer to all projects approved before 31-3-2007 and does not differentiate between Housing Project approved before 2004 or 2003. He drew our attention to clause (a) of section 80-IB(10) and submitted that the Legislature has consciously made a distinction between projects approved up to a particular date and prescribed different time-limits for their completion. It was his submission that had the Legislature wanted to make a distinction between projects commenced prior to 1-4-2005 and completed after the amendment by introducing clause (d) to section 80-IB(10) then the Legislature would have said so in clear terms. Absence of such clear distinction in the amended provisions can only lead to an inference that the restriction regarding commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 (Mum.) (SB). It was submitted by him that in any case the decision of the Tribunal Mumbai in the case of Saroj Sales Organisation (supra) requires reconsideration by a Special Bench in view of the above submissions. It was lastly submitted by him that the decision in the case of Brahma Associates (supra) dealt with the law as it existed prior to 1-4-2005 and, therefore, not relevant for the purpose of rendering decision in the present appeal. 22. We have very carefully considered the rival contentions. We shall at the outset dispel any doubts that may exist on the question whether the project undertaken by the assessee can be said to be housing project. We have already noticed that the assessee carried out a slum rehabilitation proposal. It was a proposal to construct about 3840 or more tenements each comprising of 225 sq.ft. carpet area to rehabilitate project affected persons/slum dwellers by providing besides housing, Balwadi, Welfare Centre and Society Office. The provisions of section 80-IB(10) does not define as to what is a Housing Project. The CBDT has in its clarification dated 4-5-2001 to the Maharashtra Chamber of Housing Industry has clarified that any project which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme framed by Central or State Government and is further notified by the Board then the condition regarding approval by the local authority as a housing project before a particular time and the area of land being above 1 acre need not be complied with to get deduction under section 80-IB(10). Thus, the Legislature has recognized that slum rehabilitation is also a housing project. 24. Now we will deal with main issue in this appeal, i.e., whether the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied or the law as amended by the Finance Act, 2005 with effect from 1-4-2005 whereby it was laid down that the built-up area of the shops and commercial establishment included in the housing project should not be more than 5 per cent of the total built-up are of the project or 2,000 sq.ft. whichever is less is to be applied? On the above issue, we have already noticed that co-ordinate Benches of ITAT have already expressed opinion. The decision in the case of Saroj Sales Organisation (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after 1-10-1998 ( d)The project was to be completed before 31-3-2008, if the approval was given by a local authority before 1-4-2004 and within 4 years from the end of the financial year in which the approval came where the approval was given on or after 1-4-2004. ( e)Size of the plot of land for the project should have a minimum of 1 acre. ( f)The residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilo-metres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. ( g)the built-up area of the shops and commercial establishment included in the housing project should not be more than 5 per cent of the total built-up area of the project or 2,000 sq.ft. whichever is less. It is noticed that the provisions as it stood at different point of time uniformly contemplates approval by local authority. From assessment year 2002-03 time of approval by the local authority assumed importance. Commencement of project is not of any importance because it dates back to 1-10-1998 the starting point when the incentive provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot supplying any words to the "statute but are only holding that the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied. Therefore, the submissions of the learned D.R. in this regard cannot be accepted. We are of the view that the Legislature would not have intended to take away a vested right without clear words to that effect in the provisions of section 80-IB(10) as amended by the Finance Act, 2005, with effect from 1-4-2005. We, therefore, hold following the decision in the case of Saroj Sales Organisation (supra) that the law as it existed in the assessment year 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17-11-2003 and when the assessee commenced development is to be applied. 28. We have already held that on the issue on what is a housing project and whether commercial area can be constructed in a housing project and if so constructed whether the assessee would loose exemption und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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