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TMI Blog2016 (11) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 (hereinafter referred to as "the Act") in respect of the housing project "Bhakti Pooja Nagar". The Assessing Officer during the course of scrutiny assessment proceedings disallowed the claim of the assessee under section 80-IB(10) on the premise that the built-up area of the shops and other commercial establishments included in the housing project is more than the prescribed limit for claiming deduction under section 80-IB(10) of the Act. The Assessing Officer further rejected the claim of the assessee on the ground that the built-up area of two residential units, viz., C-5, D-5 and 19 bungalows exceeded the maximum permissible limit of 1,500 square feet. Apart from the above the Assessing Officer made disallowance of Rs. 19,79,526 under section 14A read with rule 8D on the share of profit received from partnership firm and disallowance of Rs. 6,90,172 under section 69 of the Act. Aggrieved by the assessment order dated January 20, 2014, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) rejected the appeal of the assessee in toto. Now, the assessee is in second appeal before the Tribunal assailing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 14A read with rule 8D are not attracted. The learned counsel in support of his submissions placed reliance on Circular No. 8 of 2014, dated March 31, 2014 ([2014] 362 ITR (St.) 33 3.2 The learned counsel for the assessee further submitted that the Assessing Officer has made addition of Rs. 6,90,172 under section 69 of the Act on the ground that the assessee has sold some property to one Mrs. Sunita Kulkarni. The addition has been made on the basis of information received as per the CIB Compulsory Code Transaction. The learned counsel submitted that the property which has been allegedly transferred by the assessee is stated to be registered, vide registration No. 4907. The assessee approached the office of Sub-Registrar, Kolhapur, seeking information with regard to sale transaction of the property registered, vide registration No. 4907 in the name of Mrs. Sunita Kulkarni. The registering authority has confirmed that no such property is registered in the name of Mrs. Sunita Kulkarni, vide document No. 4907/2010. The learned counsel submitted that the assessee had never sold the said property or any other property during the period relevant to the assessment year under app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities below. The assessee in his appeal has raised 6 grounds. Ground Nos. 1 and 2 of the appeal by the assessee relate to disallowance of deduction of Rs. 21,84,183 claimed under section 80-IB(10) of the Act. The disallowance has been made on two counts : "i. The commercial area in the housing project developed by the assessee is more than the 3 per cent. of the aggregate built-up area of the housing project or 5,000 square feet. The Assessing Officer in his order has observed that the built-up area of the commercial estab lishment in the housing project is 6701.43 square feet which is almost 5.39 per cent. of the total built-up area, and ii. The residential units C-5, D-5 and 19 bungalows have built-up area in excess of maximum permissible limit of 1,500 square feet." The learned counsel has drawn our attention to the order of the co-ordinate Bench of the Tribunal in the assessee's own case in I. T. A. Nos. 561 to 565/PN/2013 for the assessment years 2005-06 to 2009-10 decided on November 29, 2013. The Assessing Officer in the assessment years 2005-06 to 2009-10 had disallowed the claim of deduction under section 80-IB(10) in respect of the same housing proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lot with residential units of the specified size, it cannot be inferred that the deduction under section 80-IB(10) was allowable to housing projects having residential units only, because, restriction on the size of the residential unit is with a view to make available large number of affordable houses to the common man and not with a view to deny commercial user in residential buildings. In other words, the restriction under section 80-IB(10) regarding the size of the residential unit would in no way curtail the powers of the local authority to approve a project with commercial user to the extent per mitted under the DC Rules/Regulations. Therefore, the argument of the Revenue that the restriction on the size of the residential unit in section 80-IB(10) as it stood prior to April 1, 2005, is suggestive of the fact that the deduction is restricted to housing projects approved for residential units only cannot be accepted. The above conclusion is further fortified by clause (d) of section80-IB(10) inserted with effect from April 1, 2005. Clause (d) of section 80-IB(10) inserted with effect from April 1, 2005, provides that even though shops and commercial establishments are includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (14) will have retrospective application or not ? According to the Commissioner of Income-tax (Appeals), restriction in 'built-up area' imposed for the first time with effect from April 1, 2005, cannot have retrospective application. The hon'ble Karnataka High Court in the case of CIT v. Anriya Project Management Services P. Ltd. reported in [2013] 353 ITR 12 (Karn) ; [2012] 21 taxmann.com 140 (Karn), wherein this provision was examined. The question was whether the definition of 'built-up area' inserted by the Finance (No. 2) Act, 2004, which became effective from April 1, 2005, is prospective or retrospective in nature. It was held to be prospective in nature. The said amendment would have no application to the housing projects, which were approved by the local authority prior to April 1, 2005, in calculating 1,500 square feet of residential unit and it further held that once such housing project of the assessee is approved by the local authority prior to April 1, 2005, it would be entitled to 100 per cent. benefit of the provisions of section 80-IB(10). Similarly, this view has been taken by the hon'ble Gujarat High Court in the case of Manan Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balconies as increased by the thickness of the walls but does not include common areas shared with other residential areas. Technically speaking, the definition of "built-up area" as given above will be applicable only with effect from April 1, 2005. The honourable Supreme Court in a recent five judge Bench decision in the case of CIT v. Varas International P. Ltd. [2006] 283 ITR 484 (SC) has held that for an amendment to be construed as being retrospective, the amended provision must indicate either by terms or by necessary implication that it is to operate retrospectively. The apex court has referred to its earlier decisions in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 (SC), CIT v. Podar Cement P. Ltd. [1997] 226 ITR 625 (SC) and Brij Mohan Das Laxman Das v. CIT [1997] 223 ITR 825 (SC). The above judgment has cleared the controversy of whether a clarificatory amendment should be construed as being retrospective unless specified otherwise.' 3.2 Facts being similar, so following the same reasoning, we restore this issue to the Assessing Officer with similar directions. As a result, the appeal of the Revenue is partly allowed as indicated above. Similar i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular No. 8 of 2014 rather clarifies the reason as to why the share of profits of a partnership firm is exempt from tax in the hands of partner. The same is reproduced hereinunder : "Section 10(2A) of the Income-tax Act, 1961 Firm Share of profits to partner of firm Clarification on interpretation of provisions of section 10(2A) in cases where income of firm is exempt Circular No. 8 of 2014 (F. No. 173/99/2013-ITA-I), dated March 31, 2014 ([2014] 362 ITR (St.) 33). A reference has been received in the Board in connection with the interpretation of provisions of section 10(2A) of the Income-tax Act, 1961 ('Act') seeking clarification as to what will be the amount exempt in the hands of the partners of a partnership firm in cases where the firm has claimed exemption/deduction under Chapter III or VI-A of the Act. 2. The matter has been examined. Sub-section (2A) of section 10 was inserted by the Finance Act, 1992, with effect from April 1, 1993 due to a change in the scheme of taxation of partnership firms. Since assessment year 1993-94, a firm is assessed as such and is liable to pay tax on its total income. A partner is not liable to tax once again on his share in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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