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TMI Blog2014 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(1) [2011 (7) TMI 199 - ITAT MUMBAI] - the amendment has been brought with prospective effect i.e. from 1st day of April, 2010, and there is no indication whatsoever to suggest that these restrictions need to be applied with retrospective effect - The amendment seeks to plug a loophole but restricts the remedy with effect from 1st day of April, 2010, i.e. AY 2010-2011 - The law is very clear that unless provided in the Statute, the law is always presumed to be prospective in nature - there was no need of the insertion of clause (f) to section u/s 80IB(10) - It will be unreasonable to proceed on the basis that legislative amendment was infructuous or uncalled for -particularly as the amendment is not even stated to be 'for removal of doubts'. On the contrary, this amendment shows that no such eligibility conditions could be read into pre-amendment legal position – thus, the assessee is entitled to deduction u/s 80IB(10) of the Act in respect of the 94 flats – Decided in favour of assessee. - ITA No. 3936/M/2012, ITA No. 4877/M/2012 - - - Dated:- 17-9-2014 - Shri N. K. Billaiya And Shri Sanjay Garg,JJ. For the Petitioner : Shri Rajiv Khandelwal, A.R. Shri Neelkant Khandel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o were completed during the year under consideration and profit of ₹ 5,00,30,665/- from Pluto project and ₹ 11,54,52,219/- from Neptune project was claimed as deduction under section 80IB(10) of the Income Tax Act (hereinafter referred to as the Act). However, a survey was carried out by the Income Tax Authorities on 27.10.10 during which a pamphlet was found in which it was mentioned that in Neptune building 50 flats were of 950 sq. ft. and 47 flats were of 1260 sq. ft. When confronted with the said pamphlet, the partner of the assessee firm namely Shri Prashanth Sharma in his statement, during the said survey action, admitted that 47 flats were having area of 1260 sq. ft. and further admitted to withdraw the claim of deduction under section 80IB(10) in respect of the said 47 flats. However, the said admission was retracted during the assessment proceedings. Further vide letter dated 27.12.11, the assessee again agreed/offered to withdraw proportionate deduction. However, the Assessing Officer (hereinafter referred to as the AO) did not accept the said offer and held that since the assessee had violated the condition of restricting the size of flat up to 1000 sq. ft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only 2BHK and 1BHK flats in the project. The plan of building such 2BHK and 1BHK was submitted before the municipal authorities and was duly approved by them after verification at site. Though, the contention of the AO was that 47 flats were united, even then the total built up area of the said united flat was less than 1000 sq. ft. Hence, the assessee was eligible for deduction under section 80IB(10). 5.1. However, the ld. CIT(A) observed that the observation of the AO was correct to the effect that the assessee had joined 47 flats of saleable area of 890 sq. ft. each with that of 47 flats of saleable area of 370 sq. ft. and thereby converted two units into one unit of 1260 sq. ft. Hence, the total area in case of each of the 47 flats had crossed the limit of 1000 sq. ft. and as such the said flats were not eligible for deduction under section 80IB(10). However, he found that as per the settled position of law, the assessee was entitled to proportionate deduction in respect of flats having area up to 1000 sq. ft. He accordingly restricted the disallowance made by the AO in respect of 47 flats only. The assessee thus has come in appeal before us in respect of the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon the findings of the AO. 7. We have considered the rival contentions of the ld. representatives of the parties. Except the advertisement/pamphlet in question, the Revenue has not produced any evidence on the file that the flats in question have been adjoined by the assessee to make it a unit. On the other hand, the assessee has produced the documents, which forms part of the official records, namely approved plan by the BMC, the commencement certificate dated 27.06.05, the occupancy certificate dated 30.03.09 etc. to show that the flats were constructed as per the approved plan and further that the occupancy certificate was given by the local authority after verification of the fact that the project was constructed as per the approved plan. Further, the separate sale deeds were executed for each of the flats and separate electricity connections were obtained for each of the flats. The assessee has not sold the said flats as a single unit but as separate units to the purchasers. It is not the case of the Revenue that the assessee had violated any of the provisions of section 80IB(10) of the Act at the time or before the sale of flats in question. Even if we assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme is notified by the Board in this behalf; (c) 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 kilometers from the municipal limits of these cities and one thousand and five hundred square feet at any other place; [***] (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed [three] per cent of the aggregate built-up area of the housing project or [five thousand square feet, whichever is higher];] (e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely: (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, though the loophole has been plugged by the insertion of clause (e) w.e.f. 01.04.10, but the fact remains that before the insertion of clause (e), the law in operation at that time will be applicable and if the assessee is entitled to deduction under section 80IB(10) as per the prevalent law during the assessment year in question, the same cannot be denied to the assessee by applying the provisions which have prospective effect. When faced with almost similar facts and circumstances, the coordinate bench of the Tribunal, in the case of Emgeen Holdings Pvt. Ltd. ITA Nos.3594 3595/M/2009 decided on 29.07.11, has observed as under: 7. We find that the deduction u/s.801B(10) has been declined by the Assessing Officer on the ground that size of the residential unit was in excess of 1,000 sq.ft which, in turn, proceeds on the basis that the flats sold to the family members admittedly by separate agreements, should be treated as one unit. We are unable to approve this approach. We have noted that the size of each flat, as evident from building plan as duly approved by Muncipal authorities was less than 1,000 sq.ft. We have also noted that it is not even revenue's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en of such individual, or the HUF in which such individual is a karta. The explanation memorandum explained the legislative amendment as follows: (314 ITR(St) 203) Further, the object of the tax benefit for housing projects is to build housing stock for low and middle income households. This has been ensured by limiting the size of the residential unit. However, this is being circumvented by the developer by entering into agreement to sell multiple adjacent units to a single buyers. Accordingly, it is proposed to insert new clauses in the said sub-section to provide that the undertaking which develops and builds the housing project shall not be allowed to allot more than one residential unit in the housing project to the same person, not being an individual, and where the person is an individual, no other residential unit in such housing project is allotted to any of the following person:- (I) Spouse or minor children of such individual; (II) The Hindu undivided family in which such individual is the karta; (III) Any person representing such individual, the spouse or minor children of such individual or the Hindu undivided family in which such individual is the karta. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second contention of the assessee that even otherwise the built up area calculated by the stamp duty authorities comes to less than 1000 sq. ft. even when the flats are assumed to be joined, we find that the Revenue has not produced any evidence to prove that what were the actual dimensions of the flats in question, no measurement etc. has been produced on the file. The Revenue has simply relied upon the broacher/pamphlet of the assessee. The assessee has been fair enough to submit to the Revenue Authority that the same was an advertisement gimmick of the assessee to attract the customers. As observed above, even if the assessee had adopted this gimmick to attract the customers and further to give them the idea to adjoin the flats in question, while remaining within the four corners of the provisions of section 80IB(10), can not be said to have committed any violations of the prevalent provisions during the period. Finding a loophole in the provisions and suggesting the prospective buyers that they can join the flats together in itself cannot be said to be a violation of the provisions of section 80IB(10) on the part of the assessee. In common parlance every businessman, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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