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TMI Blog2013 (11) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the CIT(A)-II, Thane, Assessing Officer(AO)has filed following Grounds of appeal: 1. On the facts in the circumstances of the case and in the law, the Ld. CIT(A)-II, Thane, has erred in holding that the assessee was eligible for deduction u/s 801B(10) relying on the decision of the Hon ble Bombay High Court in CIT vs. Brahma Associates (2011) 333 ITR 289 (BOM). 2. On the facts in the circumstances of the case and in the law, the Ld. CIT(A)-II Thane was not justified in relying on the decision of the Hon ble Bombay High Court in CIT vs. Brahma Associates (2011) 333 ITR 289 (BOM) and holding that the limit with regard to built up area of shops and commercial establishments as prescribed by clause (d) of sub section 10 of section 80IB has prospective application only and cannot be applied retrospectively. 3. On the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding that the assessee was entitled for deduction u/s. 80IB(10), relying on the decision in the case of CIT Vs Brahma Associates, (2011)333 ITR 289(BOM), wherein the limitation on construction of commercial area was fixed at 10% as against the statutory limitation of 5% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. prior to 01/04/2005, whereas the relevant year for the assessee was A. Y. 2009-10 i. e. period after the amendment and therefore not applicable in the case of the assessee, that the Act does not suggest that the said amendment was not applicable to the projects approved before 01/04/2005-rather it only stated that the amendment was applicable w. e. f. 01/04/2005, which means it talked only about the relevant assessment year, that it could not be assumed that the amendment was not applicable to the projects approved before 01/04/2005.According to the AO, the ceiling of 5% or 2000 sq. ft. on the commercial area was brought into Act w. e. f. 2005-06, the condition was applicable to the assessee s case for the A. Y. 2009-10.Fianlly, AO disallowed the deduction claimed by it amounting to ₹ 1,43,36,719/-u/s. 80IB(10) of the Act and added back the same to the income of the assessee for the year under consideration. 3. Assessee preferred an appeal before the First Appellate Authority(FAA).After considering the submissions of the assessee and the assessment order, he held that he intended to agree with the arguments of the assessee made before the AO, that in a number of judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opline project by the CIDCO in January, 2004.,that Hon ble High court of Bombay in its decision in the case of Brahma Associates(supra) had clearly decided that the clause (d),inserted to the section 801B(10) with effect from 01/04/2005, was prospective and not retrospective and hence could not be applied to the period prior to 01/04/2005,that the restriction imposed by the introduction of sub-section(d) to section 801B(10) w. e, f. 1.4.2005 were therefore not applicable to the assessee as his project having commercial area was approved as well as commenced prior to the said date, that deduction u/s. 80IB(10) would be available to the housing projects irrespective of the fact that project was approved as a housing project or approved as residential with shopline ,that as long as the housing project was as per the Development Control Regulations of the local authority the assessee could not be denied the deduction u/s. 80 IB(l0).Finally, he allowed the appeal filed by the assessee. 4. Before us, Departmental Representative(DR)submitted that issue of 80IB(10)deduction was decided in favour of Revenue by the decision of I Bench of Mumbai ITAT(ITA. No. 7021/Mum/ 2008)delivered on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricts area of commercial construction in residential project. It was a project of residential housing with commercial user for assessment year 2003 -2004 as noted above. In this backdrop, the Court rejected, refuted such version and for fortifying its denial, it mentioned inclusion of clause(d) from 1.4.2005 by holding that by insertion of clause(d) of Section 801B(10) of the Act, Legislature made it clear that though the housing project approved by local authority with commercial user to the extent permissible under the rules and regulations were entitled to Section 801B( 10) deduction, such deduction would be subject to the restriction set out in clause (d) of section 801B(10) from 1.4.2005. In our opinion, Tribunal has quoted the judgment out of context to deny the said benefit to the appellant erroneously. 21. Neither the assessee nor local authority responsible to approve the construction projects are expected to contemplate future amendment in the statute and approve and/or carry out constructions maintaining the ratio of residential housing and commercial construction as provided by the amended Act being 3% of the total built up area or 5000 sq. feet whichever is hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such housing project of assessee is approved by local authority prior to 1.4.2005, it would be entitled to 100% benefit of Section 801B(10). While so holding, it relied on the judgment of the Karnataka High Court in the case of CIT vs. G. R. Developers [IT Appeal No. 355 of 2009]. 27. The entire object of such deduction is to facilitate construction of residential housing project and while approving such project when initially there was no restriction and by amendment as stated permissible ratio for construction is 5% of the total built up area, reduction of this ratio to 3% of the total built up area has to be necessarily on prospective basis. As mentioned hereinabove criterias to hold this amendment retrospective are absent as there is no as explicit and specific wording expressing retrospectivity and even if it is assumed for the sake of arguments that the same is to be read by implication the same does not appear to be reasonable but, in fact emerges to be harsh and unreasonable when it comes to implementation. 34. Above discussion cumulatively when examined with the objectives and intent it sought to achieve in bringing about the said provision of Section 801 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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