Commissioner of Income-tax v. Happy Home Enterprises
[Citation -2014-LL-0919-156]

Citation 2014-LL-0919-156
Appellant Name Commissioner of Income-tax
Respondent Name Happy Home Enterprises
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 19/09/2014
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags substantial question of law • construction of a building • infrastructure development • project completion method • completion certificate • residential project • capital expenditure • accounting method • transport service • state government • work-in-progress • municipal limits • unabsorbed loss • housing project • local authority • corporate body • built-up area • business loss • public issue • tea estate
Bot Summary: Of the profits derived in any previous year relevant to any assessment year from such housing project if:- such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998, and completes the same before the 31st day of March, 2001; the project is on the size of a plot of land which has a minimum area of one acre, and the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. Of the profits derived in any previous year relevant to any assessment year from such housing project if,- such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998, and completes the same before the 31st day of March, 2003; the project is on the size of a plot of land which has a minimum area of one acre; and the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. Of the profits derived in any previous year relevant to any assessment year from such housing project provided: the construction/development of the said housing project commenced on or after October 1, 1998, and was completed before March 31, 2003; the housing project was on a size of a plot of land which had a minimum area of one acre; and each individual residential unit had a maximum built up area of 1,000 sq. Of the profits derived in any previous year relevant to any assessment year from such housing project if,- such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; the project is on the size of a plot of land which has a minimum area of one acre; and the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place. Of the profits derived in the previous year relevant to any assessment year from such housing project if,- such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998, and completes such construction,- in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, within four years from the end of the financial year in which the housing project is approved by the local authority. We are not called upon to decide any such condition and we are not laying down any general proposition of law, save and except that clause of section 80-IB(10) being a condition linked to the date of the approval of the housing project, would not apply to any housing project that was approved prior to March 31, 2005, irrespective of the fact that the profits of the said housing project are brought to tax after the said provision was brought into force. Since local authorities could approve a project to be a housing project with or without the commercial user, it is evident that the Legislature intended to allow section 80-IB(10) deduction to all housing projects approved by a local authority without or with commercial user to the extent permitted under the Development Control Rules.


JUDGMENT judgment of court was delivered by B. P. Colabawalla J.-Income Tax Appeal No. 201 of 2012 is filed by Revenue under section 260A of Income-tax Act 1961 (hereinafter referred to as "the Act") wherein following questions of law are projected as substantial and read as under: "(A) Whether, on facts and in circumstances of case and in law, hon'ble Tribunal was right in allowing to assesseecompany deduction under section 80-IB(10) of Income-tax Act for assessment year 2006-07 amounting to Rs. 2,11,74,864 wherein commercial area built by assessee exceeded limit specified in clause (d) of section 80-IB(10) of Income-tax Act 1961? (B) Whether, on facts and in circumstances of case and in law, hon'ble Tribunal was right in holding that limits on commercial area provided in clause (d) of section 80-IB(10) of Act would not be applicable even after April 1, 2005, as projects were approved before that date even though no such exception is provided under Income-tax Act?" This appeal was admitted on aforesaid questions by Division Bench of this court on February 22, 2013. Since we found that several appeals on similar questions were either admitted or pending admission in this court, we by our order dated July 4, 2014, passed in Income Tax Appeal No. 308 of 2012, directed learned counsel for parties to submit list to Registrar so that these appeals could be listed before this court for disposal. By said order, we also requested respective counsels to address us on point as to whether judgment of this court in case of CIT v. Brahma Associates reported in [2011] 333 ITR 289 (Bom) would cover cases where housing project within meaning of section 80-IB(10) had been approved prior to March 31, 2005, and whether view taken in Brahma Associates (supra) would cover all such matters. This is how these appeals are listed before us. Basically, we have been called upon to interpret provisions of section 80-IB(10)(d) from two different perspectives. Firstly, we have to examine whether said provision applies to housing project approved before March 31, 2005, and completed before April 1, 2005. Secondly, we have to examine whether said provision applies to housing project approved before March 31, 2005, but completed on or after April 1, 2005. date April 1, 2005, is of some significance because by Finance (No. 2) Act, 2004, with effect from April 1, 2005, section 80-IB(10) was substantially amended and clause (d) was inserted therein, that stipulates that built up area of shops and other commercial establishments included in housing project should not exceed five per cent. of aggregate built up area of housing project or two thousand square feet, whichever is less. What we are called upon to decide is whether this condition/restriction set out in clause (d) of section 80-IB(10) will apply to two scenarios set out above. facts in Income Tax Appeal No. 308 of 2012 deal with first scenario where housing project was approved before March 31, 2005, and completed before April 1, 2005, but sale of some of units in said project took place after April 1, 2005, i.e., in assessment year 20052006. facts in Income Tax Appeal No. 201 of 2012 deal with second scenario, viz., where housing project was approved before March 31, 2005, but completed on or after April 1, 2005, but within time-frame as laid down in section 80-IB(10). Since facts in these two cases cover both scenarios above, we shall refer to facts of these two cases and all other appeals will, accordingly, be disposed of following ratio of this judgment. Facts In Income Tax Appeal No. 308 of 2012 On July 19, 2007, search under section 132 of Act was conducted in assessee's case (Kanakia Spaces Pvt. Ltd.) and consequent thereto, assessment proceedings were initiated by issuance of notice under section 153A of Act. assessee filed return under said section on March 19, 2008, declaring total income of Rs. Nil after claiming deduction of Rs. 56,27,583 under section 80-IB(10) of Act. assessment proceedings under section 143(3) read with section 153A were completed on December 31, 2009, when Assessing Officer, inter alia, held that profits derived from sale of commercial area was not entitled to deduction under section 80-IB(10) of Income-tax Act, 1961. Assessing Officer in coming to aforesaid conclusion, inter alia, recorded that during year under consideration, viz., assessment year 20052006, assessee-company was engaged in business as builders and developers and was following project completion method of accounting. During said year, assessee had completed "Discovery project" which was mixed housing project, having commercial shops. During course of assessment proceedings, Assessing Officer found that assessee had claimed deduction under section 80-IB(10) on profit after sale of shops and this was disallowed on ground that assessee had not complied with basic requirement that profit derived on sale of commercial area of project was not entitled for deduction. Being aggrieved by assessment order, assessee preferred appeal before Commissioner of Income-tax (Appeals), who by his order dated April 15, 2010, upheld findings of Assessing Officer. Commissioner of Income-tax (Appeals) observed that provisions of section 80-IB(10) were substantially amended by Finance (No. 2) Act, 2004, with effect from April 1, 2005, wherein it was provided that built up area of shops and other commercial establishments included in housing project should not exceed 5 per cent. of aggregate built up area or 2000 sq. ft., whichever is less. Commissioner of Income-tax (Appeals) held that amended provisions of section 80-IB(10) which came into effect from April 1, 2005, were applicable for current assessment year, viz., 2005-06. Accordingly, he dismissed appeal filed by assessee. Being dissatisfied, assessee approached Income-tax Appellate Tribunal (hereinafter referred to as "the ITAT"). Income-tax Appellate Tribunal, after noting undisputed facts and relying upon its own judgment in case of Saroj Sales Organisation v. ITO reported in [2008] 115 TTJ (Mumbai) 485 by its order dated June 30, 2011, reversed order of Commissioner of Income-tax (Appeals). undisputed facts noted by Income-tax Appellate Tribunal were that construction of housing project known as "Discovery project" having aggregate built up area of 1,27,736 sq. ft. got completed in assessment year 2004-05. Assessing Officer and Commissioner of Income-tax (Appeals) had denied benefit of deduction Commissioner of Income-tax (Appeals) had denied benefit of deduction under section 80-IB(10) on ground that commercial area of 7,607 sq.ft. was more than 2,000 sq.ft. as set out in clause (d) of section 80-IB(10) and, therefore, violated provisions thereof, which disentitled assessee to deduction. After noting these facts and after relying upon several decisions of its co-ordinate Benches, Income-tax Appellate Tribunal held that if housing projects were approved before March 31, 2005, condition/restriction set out in clause (d) of section 80-IB(10) would not be applicable. Being aggrieved by this order of Income-tax Appellate Tribunal, Revenue is in appeal before us. Facts in Income Tax Appeal No. 201 of 2012 In this case, assessee (Happy Home Enterprises), for assessment year 2006-07 filed return of income on October 31, 2006, declaring its total income at Rs. 45,781. said case was, thereafter, selected for scrutiny and Assessing Officer found that assessee had claimed deduction of Rs. 2,11,74,864 under section 80-IB(10). On verification of details filed by assessee, it was noticed by Assessing Officer that housing project put up by assessee consisted of 12 shops admeasuring approximately 1,910 sq. ft., which was approximately 6.63 per cent. of total built up area of said housing project. Since area occupied by said shops exceeded 5 per cent. limit specified in clause (d) of section 80-IB(10), deduction claimed by assessee was disallowed. It is not in dispute that in facts of this case, housing project was approved by local authority on June 19, 2003 (i.e., before March 31, 2005). It is also undisputed position that said project was completed after April 1, 2005. Being aggrieved thereby, assessee preferred appeal to Commissioner of Income-tax (Appeals), who by his order dated November 5, 2009, set aside order of Assessing Officer and held that deduction under section 80-IB(10) was available to assessee. Commissioner of Income-tax (Appeals) in allowing appeal mainly followed judgment of Special Bench (Pune) of Income-tax Appellate Tribunal in case of Brahma Associates v. Joint CIT reported in [2009] 119 ITD 255 (Pune) [SB]; [2009] 315 ITR (AT) 268 (Pune) [SB], dated April 6, 2009, wherein it was held that where housing projects were approved before March 31, 2005, condition laid down in clause (d) of section 80-IB(10) was not applicable. Not accepting verdict of Commissioner of Income-tax (Appeals), Revenue preferred appeal before Income-tax Appellate Tribunal who also followed view of its Special Bench, Pune, and further noted that this court in case of Brahma Associates (supra) had upheld said view of Special Bench. Being aggrieved by this order of Income-tax Appellate Tribunal, Revenue is in appeal before us. Despite service of this appeal, none appeared on behalf of assessee. However, since important question of law was to be decided, we had requested Mr. Mistry, learned senior counsel appearing on behalf of assessee in ITXA No. 308 of 2012, to address us even on issue raised in this appeal. He was kind enough to accept our request and we are grateful for his able assistance in matter. Before dealing with rival contentions of parties, it would be in fitness of things to trace history of provisions that we are called upon to construe in these appeals. Initially, section 80-IA was inserted in Income-tax Act, 1961, by Finance (No. 2) Act, 1991, with effect from April 1, 1991, and dealt with deductions in respect of profits and gains from industrial undertakings, etc., in certain cases. As Government identified housing as priority area and to purposefully tackle country's housing shortage problem, it was decided to give tax incentives for promotion of housing. With this object in mind and with view to promote investment in housing, sub-section (4F) was inserted in section 80-IA with effect from April 1, 1999. Section 80-IA(4F), as it stood then, read as under: "(4F) This section applies to undertaking engaged in developing and building housing projects approved by local authority subject to condition that size of plot of land has minimum area of one acre and residential unit has built up area not exceeding one thousand square feet: Provided that undertaking commences development and construction of housing project on or after 1st day of October 1998, and completes same before 31st day of March 2001." As can be seen from said provision, at that time, if undertaking was engaged in developing and building housing projects approved by local authority, it was entitled to deduction as set out in section 80-IA provided that: (i) size of plot of land had minimum area of one acre; (ii) each individual residential unit had built up area not exceeding 1000 sq. ft.; and (iii) development/construction of said housing project commenced on or after October 1, 1998, and completed before March 31, 2001. Therefore, when this provision was first introduced, there were only three conditions that were required to be fulfilled by undertaking engaged in development/construction of housing projects approved by local authority. There was no restriction on quantum of commercial area that could included in said housing project. That was to be determined by local authority in accordance with its own rules and regulations. As long as local authority sanctioned project as housing project and it complied with three conditions as stipulated in section 80-IA(4F), said undertaking was entitled to deduction as set out therein. Thereafter, by Finance Act, 1999, entire section 80-IA was substituted by newly introduced sections 80-IA and 80-IB which were on lines of existing section 80-IA but with certain modifications. newly inserted section 80-IB(10) with effect from April 1, 2000, read as under: "(10) amount of profits in case of undertaking developing and building housing projects approved by local authority, shall be hundred per cent. of profits derived in any previous year relevant to any assessment year from such housing project if:- (a) such undertaking has commenced or commences development and construction of housing project on or after 1st day of October, 1998, and completes same before 31st day of March, 2001; (b) project is on size of plot of land which has minimum area of one acre, and (c) residential unit has maximum built-up area of one thousand square feet where such residential unit is situated within cities of Delhi or Mumbai or within twenty-five kilometres from municipal limits of these cities and one thousand and five hundred square feet at any other place." Therefore, with effect from April 1, 2000, section 80-IA(4F) was substituted with section 80-IB(10) and in substance was basically same, with one addition. newly inserted section 80-IB(10) stipulated that if housing project approved by local authority was at distance of 25 kms. or beyond municipal limits of cities of Delhi or Mumbai, then residential unit in said housing project could have maximum built area of 1,500 sq. ft. instead of 1,000 sq. ft. All other conditions as set out in section 80-IA(4F) were retained in section 80-IB(10). This was brought about as there were many representations that in towns other than Mumbai and Delhi land cost was relatively less and for same capital expenditure, investors could afford to procure dwelling units of slightly larger areas. In light of this, it was represented that ceiling on built up areas for dwelling units in approved housing projects be increased from 1,000 sq. ft. to 1,500 sq. ft. at all locations except Mumbai and Delhi. Accepting said representations, Legislature inserted clause (c) of sub-section (10) of section 80-IB which stipulated that in housing project approved by local authority and situated in city of Delhi or Mumbai or within 25 kms. from municipal limits of these cities, each individual residential unit could not exceed built up area of 1,000 sq. ft., and at any other place, could not exceed built up area of 1,500 sq. ft. Thereafter, section 80-IB(10) was further amended and with effect from April 1, 2001, and read as under: "(10) amount of profits in case of undertaking developing and building housing projects approved before 31st day of March 2001, by local authority, shall be hundred per cent. of profits derived in any previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of housing project on or after 1st day of October, 1998, and completes same before 31st day of March, 2003; (b) project is on size of plot of land which has minimum area of one acre; and (c) residential unit has maximum built-up area of one thousand square feet where such residential unit is situated within cities of Delhi or Mumbai or within twenty-five kilometres from municipal limits of these cities and one thousand and five hundred square feet at any other place." Therefore, now with effect from April 1, 2001, section 80-IB(10) stipulated that any housing project approved by local authority before March 31, 2001, was entitled to deduction of 100 per cent. of profits derived in any previous year relevant to any assessment year from such housing project provided: (i) construction/development of said housing project commenced on or after October 1, 1998, and was completed before March 31, 2003; (ii) housing project was on size of plot of land which had minimum area of one acre; and (iii) each individual residential unit had maximum built up area of 1,000 sq. ft., where such housing project was situated within city of Delhi or Mumbai or within 25 kms. from municipal limits of these cities, and maximum built up area of 1,500 sq. ft. at any other place. Therefore, for first time, stipulation was added with reference to date of approval, namely, that approval had to accorded to housing project by local authority before March 31, 2001. Before this amendment, there was no date prescribed for approval being granted by local authority to housing project. Prior to this amendment, as long as development/construction commenced on or after October 1, 1998, and was completed before March 31, 2001, assessee was entitled to deduction. Also by this amendment, date of completion was changed from March 31, 2001, to March 31, 2003. Everything else remained untouched. Thereafter, by Finance Act, 2003, further amendments were made to section 80-IB(10) and read as under: "(10) amount of profits in case of undertaking developing and building housing projects approved before 31st day of March, 2005, by local authority, shall be hundred per cent. of profits derived in any previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of housing project on or after 1st day of October, 1998; (b) project is on size of plot of land which has minimum area of one acre; and (c) residential unit has maximum built-up area of one thousand square feet where such residential unit is situated within cities of Delhi or Mumbai or within twenty-five kilometres from municipal limits of these cities and one thousand and five hundred square feet at any other place." As can be seen from aforesaid provision, now only changes that were brought about were that with effect from April 1, 2002, (i) housing project had to be approved before 31st March, 2005, and (ii) there was no time limit prescribed for completion of said project. Though these changes were brought about by Finance Act, 2003, Legislature thought it fit that these changes be deemed to have been brought into effect from April 1, 2002. All remaining provisions of section 80-IB(10) remained unchanged. Thereafter, by Finance (No. 2) Act, 2004, with effect from April 1, 2005, section 80-IB(10) was substituted and substantial changes were effected in newly substituted sub-section (10) of section 80-IB. It reads thus: "(10) amount of deduction in case of undertaking developing and building housing projects approved before 31st day of March, 2007, by local authority shall be hundred per cent. of profits derived in previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of housing project on or after 1st day of October, 1998, and completes such construction,- (i) in case where housing project has been approved by local authority before 1st day of April, 2004, on or before 31st day of March, 2008; (ii) in case where housing project has been, or, is approved by local authority on or after 1st day of April, 2004, within four years from end of financial year in which housing project is approved by local authority. Explanation.-For purposes of this clause,- (i) in case where approval in respect of housing project is obtained more than once, such housing project shall be deemed to have been approved on date on which building plan of such housing project is first approved by local authority; (ii) date of completion of construction of housing project shall be taken to be date on which completion certificate in respect of such housing project is issued by local authority; (b) project is on size of plot of land which has minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to housing project carried out in accordance with scheme framed by Central Government or State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for time being in force and such scheme is notified by Board in this behalf; (c) residential unit has maximum built-up area of one thousand square feet where such residential unit is situated within city of Delhi or Mumbai or within twenty-five kilometres from municipal limits of these cities and one thousand and five hundred square feet at any other place; and (d) built-up area of shops and other commercial establishments included in housing project does not exceed five per cent. of aggregate built-up area of housing project or two thousand square feet, whichever is less." (emphasis supplied). Therefore, by Finance (No. 2) Act, 2004, with effect from April 1, 2005, Legislature made substantial changes to sub-section (10) of section 80-IB. There were several new conditions that were incorporated by newly substituted sub-section. One such condition was clause (d), which for first time, with effect from April 1, 2005, put restriction on quantum of commercial area that could be included in housing project approved by local authority, in order to entitle assessee to claim deduction as set out in local authority, in order to entitle assessee to claim deduction as set out in section 80-IB(10). Clause (d) stipulated that built up area of shops and other commercial establishments included in housing project could not exceed 5 per cent. of aggregate built up area of housing project or 2,000 sq.ft., whichever was less. It is effect of this clause (d) which we are called upon to decide in these appeals and whether it would apply to housing projects approved by local authority before March 31, 2005. In other words, what we are called upon to decide is whether said condition would apply to such housing projects approved by local authority before March 31, 2005, when aforesaid condition/restriction was not on statute book and was brought into effect only from April 1, 2005. We should mention here that there have been further amendments to section 80-IB(10) in subsequent years. However, we are not dealing with those further amendments as they do not arise for our consideration in present appeals. It would be important to note another amendment that was brought about by Finance (No. 2) Act, 2004, to sub-section (14) of section 80-IB, with effect from April 1, 2005. Section 80-IB(14) was also amended by same Finance (No. 2) Act, 2004, and for first time under clause (a) thereof, words "built up area" were defined. Section 80-IB(14)(a) reads thus: "(14) For purposes of this section,- (a)'built up area' means inner measurements of residential unit at floor level, including projections and balconies, as increased by thickness of walls but does not include common areas shared with other residential units;" Prior to insertion of section 80-IB(14)(a), in many of rules and regulations of local authority approving housing project, "built up area" did not include projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making residential units far bigger than as stipulated in section 80-IB(10), and yet claimed deduction under said provision. To plug this lacuna, clause (a) was inserted in section 80-IB(14) defining words "built up area" to mean inner measurements of residential unit at floor level, including projections and balconies, as increased by thickness of walls but did not include common areas shared with other residential units. reason we are referring to this provision is because it too was brought about for first time with effect from April 1, 2005, and Karnataka High Court had occasion to consider whether it would apply to housing projects approved by local authority before March 31, 2005. We have relied upon reasoning of judgment of Karnataka High Court for coming to findings that we have, in this judgment. Having traced history of section 80-IB(10), we now proceed to deal with rival contentions of parties. On behalf of Revenue, submissions were made by learned senior counsel, Mr. Vimal Gupta, and learned counsels, Mr. Abhay Ahuja and Mr. A. R. Malhotra. Though we have not independently dealt with facts in Income Tax Appeal No. 592 of 2012, in which Mr. Abhay Ahuja appears for Revenue since he has addressed on issues raised herein, we are also making reference to submissions advanced by him. Mr. Gupta, learned senior counsel appearing on behalf of appellantRevenue, submitted that clause (d) of section 80-IB(10) inserted with effect from April 1, 2005, and which applies from assessment year 2005-06 onwards was actually in nature of relaxation and/or benefit granted to assessee and not restriction as sought to be contended on behalf of assessees. He submitted that prior to April 1, 2005, housing project could not include any commercial area for assessee to claim deduction under section 80-IB(10). With effect from April 1, 2005, clause (d) was inserted which allowed shops and other commercial establishments to be included in housing project provided it did not exceed 5 per cent. of aggregate built up area of housing project or 2,000 sq. ft., whichever was less. Therefore, according to Mr. Gupta, with effect from April 1, 2005, Legislature allowed stipulated amount of commercial area that could be included in housing project, whereas prior thereto, there was complete absence of such provision. He, therefore, submitted that prior to April 1, 2005, no commercial area could be included in housing project so as to entitle assessee to deduction under section 80- IB(10). In view thereof, clause (d) of section 80-IB(10) was in nature of relaxation and/or benefit and not restriction, was submission of Mr. Gupta. relaxation and/or benefit and not restriction, was submission of Mr. Gupta. In alternative, Mr. Gupta as well as Mr. Ahuja submitted that if it is held that clause (d) of section 80-IB(10), and which was inserted with effect from April 1, 2005, was not in nature of relaxation but instead was restriction imposed on quantum of commercial area that could be included in housing project, then from assessment year 2005-06, effect will have to be given to same notwithstanding fact that project was approved prior to March 31, 2005. In other words, it was submitted that if profits are brought to tax in assessment year 2005-06 or thereafter, then notwithstanding fact that housing project was approved prior to March 31, 2005, if said project did not comply with provisions of clause (d) of section 80-IB(10), then profits brought to tax in assessment year 2005-06 or thereafter will not be entitled to deduction as contemplated under said section. As consequence thereto, it was submitted that conditions/restrictions laid down in section 80-IB(10) would have to be revisited and/or looked at and complied with in assessment year in which profits are being booked by assessee. If assessee's housing project did not meet all conditions/restrictions as stipulated in said section during that assessment year, then assessee would not be entitled to deduction for that assessment year, was submission. Revenue submitted that this is notwithstanding fact that project was approved at time when that particular condition was not on statute book at all. assessment for one assessment year cannot in absence of contrary provision, be affected by law in force in another assessment year. right claimed by assessee under law in force in particular assessment year is available only in relation to proceeding pertaining to that assessment year, was submission. In support of this argument, learned counsels relied upon two judgments of Supreme Court in case of Reliance Jute and Industries Ltd. v. CIT reported in [1979] 120 ITR 921 (SC) and Securities and Exchange Board of India v. Ajay Agarwal reported in [2010] 155 Comp Cas 1 (SC); [2010] AIR 2010 SC 3466. Lastly, it was submitted that decision of this court in case of Brahma Associates (supra), supports case of Revenue that with effect from April 1, 2005, assessee would not be entitled to deduction under section 80-IB(10) if it did not comply with clause (d) thereof. This, according to learned counsels, was notwithstanding fact that housing project was approved by local authority before March 31, 2005. For all aforesaid reasons it was submitted that substantial questions of law framed by this court and reproduced above, be answered in favour of Revenue and against assessees. Mr. Malhotra adopted arguments of Mr. Gupta and Mr. Ahuja and which we have noted above. On other hand, Mr. Mistry, learned senior counsel appearing on behalf of assessee in ITXA No. 308 of 2012, submitted that only those conditions could be applied to housing projects that were on statute book on date when housing project was approved. In other words, if housing project was approved by local authority before March 31, 2005, then amended provisions of section 80-IB(10) that were brought into force with effect from April 1, 2005, and especially clause (d) thereof, would have no application to such housing project. He submitted that conditions imposed by newly substituted section 80-IB(10) were all related and/or linked to approval and/or construction and/or completion of said housing project and, therefore, Legislature in its wisdom, deemed it fit to bring same into force only with effect from April 1, 2005, and did not give it any retrospectivity. Mr. Mistry further submitted that prior to April 1, 2005, housing project approved by local authority before March 31, 2005, only required compliance with three conditions, viz., (i) development/ construction of said housing project was commenced on or after October 1, 1998; (ii) said housing project was on plot of land which had minimum area of one acre; and (iii) residential unit had maximum built-up area of 1,000 sq. ft., where such residential unit was situated within city of Delhi or Mumbai or within 25 kilometres of municipal limits of these cities and 1,500 sq. ft. at any other place. Only these three conditions were required to be complied with by assessee whose housing project was approved before March 31, 2005, because these were only conditions that were on statute book at that time, was submission of Mr. Mistry. It was his further submission that it is only with effect from April 1, 2005, that section 80-IB(10) was substituted and substantial amendments were made therein and those amendments could not be made amendments were made therein and those amendments could not be made applicable to housing projects approved before March 31, 2005, because deduction available to assessee under section 80-IB(10) was inseparably linked to date of approval of housing project and not to assessment year in which deduction was claimed. further submission of Mr. Mistry was that accepting argument of Revenue would lead to absurd results. For example, assessee following project completion method of accounting would not be entitled to deduction under section 80-IB(10) even though said housing project was approved and completed before March 31, 2005, but profits therefrom were offered to tax in assessment year 2005-06. On other hand, if same assessee was following work-in-progress method of accounting he would be entitled to deduction under section 80-IB(10) up to assessment year 2004-05 and would be disallowed deduction from assessment year 2005- 06 onwards, merely because he followed different method of accounting. This, according to Mr. Mistry, is not only absurd but could never have been intention of Legislature whilst either introducing section 80-IB(10) or making substantial amendments thereto with effect from April 1, 2005. According to Mr. Mistry, conditions laid down in section 80-IB(10), as amended with effect from April 1, 2005, and particularly those linked with approval/construction/completion of housing project would necessarily apply only to those housing projects that were approved by local authority after April 1, 2005. One cannot expect assessee to comply with condition that was not part of statute when housing project was approved and more so when said condition was inextricably linked to approval granted to housing project by local authority under its own rules and regulations, was submission of Mr. Mistry. Clause (d) of sub-section (10) of section 80-IB, which is bone of contention in present appeals, according to Mr. Mistry, is inextricably linked with approval and construction of housing project and therefore assessee cannot be called upon to comply with said condition when same was never in contemplation either of assessee or Legislature, when approval to housing project was accorded by local authority. For all aforesaid reasons it was submitted that substantial questions of law framed by this court and reproduced above, be answered in favour of assessees and against Revenue. We have considered elaborate submissions of both sides and carefully examined relevant provisions. essential question that is required to be decided is whether section 80-IB(10)(d) which was brought into force with effect from April 1, 2005 would apply to projects that were approved by local authority prior to it being brought on statute book. Or to put it differently, essential question is whether said clause has to be complied with by assessee who offers his profits to tax in assessment year 2005-06 or thereafter, even though his housing project was accorded approval by local authority before March 31, 2005. As can be seen from history of section 80-IA(4F) and then section 80- IB(10), prior to April 1, 2005, assessee, developing and building housing project approved by local authority before March 31, 2005, was entitled to deduction of 100 per cent. of profits derived from such housing project in any previous year relevant to any assessment year, provided (i) development and construction of said project had commenced on or after October 1, 1998; (ii) project was on size of plot of land which had minimum area of one acre; and (iii) residential unit had maximum area of 1,000 sq. ft. where such residential unit was situated within city of Delhi or Mumbai or within 25 kms. from municipal limits of these cities, and 1,500 sq. ft. at any other place. Before April 1, 2005, there was no condition and/or restriction on quantum of commercial area that could be included in housing project. That had to be determined on basis of rules and regulations of local authority approving said housing project. However, provisions of section 80-IB(10) were substantially amended by way of Finance (No. 2) Act, 2004, with effect from April 1, 2005. As can be noted from amended provisions, there were several conditions that were imposed in newly substituted section 80-IB(10) that were absent in said section prior to its amendment. One such condition inserted with effect from April 1, 2005, was clause (d) that put restriction on quantum of commercial area that could be included in housing project in order to entitle assessee to claim deduction as set out in said section. It is pertinent to note that in appeals before us, it is admitted fact that pertinent to note that in appeals before us, it is admitted fact that housing projects were approved prior to March 31, 2005. In ITXA No. 308 of 2012, in fact, project was even completed prior to March 31, 2005, and only profits were offered to tax in assessment year 2005-06. We do not think that Legislature intended to give any retrospectivity to clause (d) of section 80-IB(10). This more so because it is clearly condition that relates to and/or is linked with approval and construction of housing project. At time when housing project is approved by local authority, it decides, subject to its own rules and regulations, what quantum of commercial area is to be included in said project. It is on this basis that building plans are approved by local authority and construction is commenced and completed. It is very difficult, if not impossible to change building plans and/or alter construction midway, in order to comply with clause (d) of section 80-IB(10). It would be highly unfair to require assessee to comply with section 80-IB(10)(d) who has got his housing project approved by local authority, before March 31, 2005, and has either completed same before said date or even shortly thereafter, merely because assessee has offered its profits to tax in assessment year 2005-06 or thereafter. Requiring assessee to comply with condition set out in clause (d) of sub-section (10) of section 80-IB merely because he has offered his profits to tax in assessment year 2005-06 or thereafter, even though his housing project was approved before March 31, 2005, would be requiring assessee to virtually do humanly impossible task. This, in our opinion, could never have been intention of Legislature. In fact, to our mind, it would run counter to very object for which these provisions were introduced, namely, to tackle shortage of housing in country and encourage investment therein by private players. It is, therefore, clear that clause (d) of sub-section (10) of section 80-IB cannot have any application to housing projects that are approved before March 31, 2005. said clause (d) being inextricably linked to date of approval of housing project, it will have to be held that said clause operates only prospectively, i.e., for housing projects approved after April 1, 2005. This is notwithstanding fact that profits were offered to tax by assessee for assessment year 2005-06 or thereafter. There is yet another reason for coming to aforesaid conclusion. Take scenario where assessee following project completion method of accounting, has completed housing project approved by local authority complying with all conditions as set out in section 80-IB(10) as it stood prior to April 1, 2005. If we were to accept argument of Revenue, then in that event, despite having completed entire construction prior to April 1, 2005, and complying with all conditions of section 80-IB(10), as it stood then, assessee would be disentitled to entire deduction claimed in respect of such housing project merely because he offered his profits to tax in assessment year 2005-06. In contrast, if same assessee had followed work-in- progress method of accounting, he would have been entitled to deduction under section 80-IB(10) up to assessment year 2004-05, and denied same from assessment year 2005-06 and thereafter. It could never have been intention of Legislature that deduction under section 80-IB(10) available to particular assessee would be determined on basis of accounting method followed. This, to our mind and as rightly submitted by Mr. Mistry, would lead to startling results. We, therefore, have no hesitation in holding that section 80-IB(10)(d) is prospective in nature and can have no application to housing project that is approved before March 31, 2005. As deduction sought to be claimed under section 80-IB(10) is inseparably linked with date of approval of housing project, it would make no difference if construction of said project was completed on or after April 1, 2005, or that profits were offered to tax after April 1, 2005, i.e., in assessment year 2005-06 or thereafter. We, therefore, find no substance in argument of Revenue that notwithstanding fact that housing project was approved prior to March 31, 2005, if construction was completed on or after April 1, 2005, or if profits are brought to tax in assessment year 2005-06 or thereafter, said housing project would have to comply with provisions of clause (d) of section 80-IB(10). To our mind, we do not think that condition/restriction laid down in clause (d) of section 80-IB(10) has to be revisited and/or looked at and complied with in assessment year in which profits are offered to tax by assessee. When assessee claims deduction under section 80-IB(10), assessee is required to comply with such condition only if it is on statute book on date of approval of housing project and it has nothing to do with year in which profits are brought to tax by assessee. We have come to this conclusion only because we find that clause (d) of section 80-IB(10) is inextricably linked to date of approval of housing project and subsequent development/construction of same, and has nothing to do with profits derived therefrom. We may hasten to add that if particular condition is not inseparably linked to date of approval of housing project, different considerations would arise. However, we are not called upon to decide any such condition and, hence, we are not laying down any general proposition of law, save and except that clause (d) of section 80-IB(10) being condition linked to date of approval of housing project, would not apply to any housing project that was approved prior to March 31, 2005, irrespective of fact that profits of said housing project are brought to tax after said provision was brought into force. On issue of retrospectivity of clause (d) of section 80-IB(10) we are supported in our view by judgment of this court in case of Brahma Associates (supra). Though facts in Brahma Associates' case were slightly different inasmuch as assessment year in question was assessment year 2003-04, this court held as under (page 303 of 333 ITR): "Lastly, argument of Revenue that section 80-IB(10) as amended by inserting clause (d) with effect from April 1, 2005, should be applied retrospectively is also without any merit, because, firstly, clause (d) is specifically inserted with effect from April 1, 2005, and, therefore, that clause cannot be applied for period prior to April 1, 2005. Secondly, clause (d) seeks to deny section 80-IB(10) deduction to projects having commercial user beyond limit prescribed under clause (d), even though such commercial user is approved by local authority. Therefore, restriction imposed under act for first time with effect from April 1, 2005, cannot be applied retrospectively. Thirdly, it is not open to Revenue to contend on one hand that section 80-IB(10), as it stood prior to April 1, 2005, did not permit commercial user in housing projects and on other hand contend that restriction on commercial user introduced with effect from April 1, 2005, should be applied retrospectively. argument of Revenue is mutually contradictory and hence liable to be rejected. Thus, in our opinion, Tribunal was justified in holding that clause (d) inserted to section 80-IB(10) with effect from April 1, 2005, is prospective and not section 80-IB(10) with effect from April 1, 2005, is prospective and not retrospective and hence cannot be applied to period prior to April 1, 2005. In result, questions raised in appeal are answered thus:... (e) Clause (d) inserted to section 80-IB(10) with effect from April 1, 2005 is prospective and not retrospective and hence cannot be applied for period prior to April 1, 2005." (emphasis supplied) In fact, this judgment also concludes argument of Revenue that clause (d) of section 80-IB(10) inserted with effect from April 1, 2005, is actually in nature of relaxation and/or benefit granted to assessee and not restriction as sought to be contended on behalf of assessees. On this very point, this court negated aforesaid contention and held as under (page 300 of 333 ITR): "Thus, on date on which Legislature introduced 100 per cent. deduction under Income-tax Act, 1961, on profits derived from housing projects approved by local authority, it was known that local authorities could approve projects as housing projects with commercial user to extent permitted under DC Rules framed by respective local authority. In other words, it was known that local authorities could approve housing project without or with commercial user to extent permitted under Development Control Rules. If Legislature intended to restrict benefit of deduction only to projects approved exclusively for residential purposes, then it would have stated so. However, Legislature has provided that section 80-IB(10) deduction is available to all housing projects approved by local authority. Since local authorities could approve project to be housing project with or without commercial user, it is evident that Legislature intended to allow section 80-IB(10) deduction to all housing projects approved by local authority without or with commercial user to extent permitted under Development Control Rules. It is not in dispute that where project is approved as housing project without or with commercial user to extent permitted under Rules/Regulations, then, deduction under section 80-IB(10) would be allowable. In other words, if project could be approved as housing project having residential units with permissible commercial user, then it is not open to income-tax authorities to contend that expression'housing project' in section 80-IB(10) is applicable to projects having only residential units... above conclusion is further fortified by clause (d) of section 80-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 included in housing project, deduction under section 80- IB(10) with effect from April 1, 2005, would be allowable where such commercial user does not exceed five per cent. of aggregate built up area of housing project or two thousand square feet, whichever is lower. By Finance Act, 2010, clause (d) is amended to effect that commercial user should not exceed three per cent. of aggregate built up area of housing project or five thousand square feet, whichever is higher. expression'included' in clause (d) makes it amply clear that commercial user is integral part of housing project. Thus, by inserting clause (d) to section 80-IB(10) Legislature has made it clear that though housing projects approved by local authorities with commercial user to extent permissible under Development Control Rules/regulation were entitled to section 80-IB(10) deduction, with effect from April 1, 2005, such deduction would be subject to restriction set out in clause (d) of section 80-IB(10). Therefore, argument of Revenue that with effect from April 1, 2005, Legislature for first time allowed section 80-IB(10) deduction to housing projects having commercial user cannot be accepted." (emphasis supplied) As noted above, by very same Finance (No. 2) Act, 2004, with effect from April 1, 2005, sub-section (14) of section 80-IB was amended and clause (a) was inserted therein which sought to define words "built up area". In case of CIT v. G. R. Developers reported in [2013] 353 ITR 1 (Karn), question that arose before Karnataka High Court was whether definition of "built-up area" inserted in section 80-IB(14)(a) by Finance (No. 2) Act, 2004, with effect from April 1, 2005, was prospective or retrospective in nature. Prior to insertion of section 80-IB(14)(a), in many of rules and regulations of local authority approving housing project, "built up area" did not include projections and balconies. Probably, taking advantage of this fact, builders projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making residential units far bigger than as stipulated in section 80-IB(10), and yet claimed deduction under said provision. To plug this lacuna, clause (a) was inserted in section 80-IB(14) defining words "built up area" to mean inner measurements of residential unit at floor level, including projections and balconies, as increased by thickness of walls but did not include common areas shared with other residential units. Therefore, with effect from April 1, 2005, notwithstanding local law governing construction of building, for purpose of getting benefit under section 80-IB(10), assessee was required to ensure that housing project approved by local authority had residential units not bigger than amount stipulated therein and which included built up area as set out in section 80-IB(14)(a). In construing said provision, Karnataka High Court held as under (page 9 of 353 ITR): "In respect of approvals obtained prior to April 1, 2005, if sub-section (14)(a) of section 80-IB is held to be applicable, then, assessee has to necessarily seek for modified plan. Otherwise, if he proceeds with construction without obtaining sanction of modified plan, he would not be eligible for benefit of tax exemption under section 80-IB(10). Similarly, if valid approval is obtained and building is constructed in all respects prior to April 1, 2005, and if said substituted provision is held to be applicable retrospectively, assessee would not be entitled to benefit of tax exemption, if he effects sales subsequent to April 1, 2005. Such interpretation not only would be absurd but have disastrous consequences so far as assessee is concerned. Therefore, it cannot be said that, that was intention of Legislature while bringing in substitution. So we should keep in mind object behind enacting this provision, namely, to bring in investments and to encourage infrastructure development of middle income housing projects. If aforesaid provision is held to be retrospective in nature, it would negate object of said provision. It is settled law that courts have to harmonize these provisions and interpret same in manner to achieve object of Legislature than to distress said object. In that view of matter, definition of built up area, as inserted in sub-section (14)(a) of section 80-IB by Finance (No. 2) Act of 2004, which came into effect from April 1, 2005, cannot be held to be retrospective. It applies only to such housing projects, which are approved subsequent to April 1, 2005. In that view of matter, assessee, in instant case, is entitled to benefit of aforesaid provision and, hence, said substantial question of law is answered in favour of assessee and against Revenue." (emphasis supplied) As can be discerned from said judgment, Karnataka High Court categorically held that said provision, viz., sub-section (14)(a) of section 80- IB, inserted with effect from April 1, 2005, applied only to housing projects which were approved subsequent to April 1, 2005. Although, Karnataka High Court was construing sub-section (14)(a) of section 80-IB that defined words "built- up area", we find that same reasoning can even be applied to clause (d) of sub-section (10) of section 80-IB. We should keep in mind that object of section 80-IB(10) was to bring in investments and to encourage infrastructural development of middle level housing projects. If we were to hold that clause (d) of sub-section (10) of section 80-IB was to be complied with even by assessee whose housing project was approved before March 31, 2005, it would negate very object and purpose for which section 80-IA(4F) and thereafter section 80-IB(10) were introduced in first place. In that view of matter, condition/ restriction imposed by clause (d) of section 80-IB(10) and which came into effect from April 1, 2005, can apply only to such housing projects which are approved on or after April 1, 2005. It would not be out of place to mention that said judgment of Karnataka High Court was challenged before Supreme Court and special leave petition against same was dismissed on January 7, 2013. We also find that similar issue as one raised in these appeals came up for consideration before Division Bench of Gujarat High Court in case of Manan Corporation v. Asst. CIT reported in [2013] 356 ITR 44 (Guj). In facts before Gujarat High Court, one of grounds on which assessee was denied deduction under section 80-IB(10) was non-fulfilment of clause (d) thereof. assessment year in question before Gujarat High Court was assessment year 2006-07. It was case of assessee before Gujarat High Court that condition of limiting commercial establishments/shops to 5 per cent. of aggregate builtup area of housing establishments/shops to 5 per cent. of aggregate builtup area of housing project or 2,000 sq. ft., whichever is less, came into force with effect from April 1, 2005, and, therefore, same could be made applicable to projects approved only on or after April 1, 2005. Whilst dealing with aforesaid contention and after analysing provisions of section 80-IB(10), Gujarat High Court held as under (page 59): "Neither assessee nor local authority responsible to approve construction projects are expected to contemplate future amendment in statute and approve and/or carry out constructions maintaining ratio of residential housing and commercial construction as provided by amended Act being 3 per cent. of total built-up area or 5,000 sq. feet, whichever is higher (now in post2010 period) or 5 per cent. of aggregate built up area or 2,000 sq.feet, whichever is less. Revenue is also in error to suggest that even if such conditions are onerous, they are required to be fulfilled. entire object of such deduction is to facilitate construction of residential housing project and while approving such project when initially there was no such restriction in taxing statute and permissible ratio for commercial user made 5 per cent. to total built-up area by way of amendment and reduction of which by further amendment to 3 per cent. of total built-up area, has to be necessarily construed on prospective basis. As is very apparent from record, there was no criteria for making commercial construction prior to amended section and plans are approved as housing projects by local authority for both projects of appellant. Permission for construction of shops has been allowed by local authority in accordance with rules and regulations, keeping in mind presumably requirement of large townships. However, projects essentially remained residential housing projects and that is also quite apparent from certificates issued by local authority and, therefore, neither on ground of absence of such provision of commercial shops nor on account of such commercial construction having exceeded area contemplated in prospective amendment can be made applicable to appellant-assessee whose plans are sanctioned as per prevalent rules and regulations by local authority for denying benefit of deduction of profit derived in previous year relevant to assessment year as made available otherwise under statute." (emphasis supplied) Therefore, even Gujarat High Court has taken view that clause (d) of section 80-IB(10) is prospective in nature and would not apply to housing projects approved prior to March 31, 2005. We are in respectful agreement with ratio laid down in aforesaid judgment of Gujarat High Court. We also do not find any substance in submission of Revenue that decision of this court in case of Brahma Associates (supra) supports case of Revenue that with effect from April 1, 2005, assessee would not be entitled to deduction under section 80-IB(10) if it did not comply with clause (d) thereof. In this regard, heavy reliance was placed by Revenue on following paragraph (page 301 of 333 ITR): "The above conclusion is further fortified by clause (d) of section 80-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 included in housing project, deduction under section 80- IB(10) with effect from April 1, 2005, would be allowable where such commercial user does not exceed five per cent. of aggregate built up area of housing project or two thousand square feet, whichever is lower. By Finance Act, 2010, clause (d) is amended to effect that commercial user should not exceed three per cent. of aggregate built up area of housing project or five thousand square feet whichever is higher. expression'included' in clause (d) makes it amply clear that commercial user is integral part of housing project. Thus, by inserting clause (d) to section 80-IB(10) Legislature has made it clear that though housing projects approved by local authorities with commercial user to extent permissible under Development Control Rules/regulation were entitled to section 80-IB(10) deduction, with effect from April 1, 2005, such deduction would be subject to restriction set out in clause (d) of section 80-IB(10). Therefore, argument of Revenue that with effect from April 1, 2005, Legislature for first time allowed section 80-IB(10) deduction to housing projects having commercial user cannot be accepted." We fail to see how this paragraph is of any assistance to case of Revenue. In case of Brahma Associates (supra), it was case of Revenue that residential project having any commercial construction is not entitled to deduction under section 80-IB(10), and for supporting this argument, reliance was placed on inclusion of clause (d) thereof with effect from April 1, 2005, which restricts area of commercial construction in residential project. In facts of Brahma Associates (supra), assessment year in question was 2003-04 and it was project of residential housing with commercial user. It is in this backdrop that this court rejected/refuted argument of Revenue and for fortifying same it held that with effect from April 1, 2005, deduction under section 80-IB(10) would be subject to restriction set out in clause (d) thereof. case of Brahma Associates (supra), was not in relation to housing project that was approved before March 31, 2005, and profits of which were brought to tax after April 1, 2005. This is clear from fact that assessment year in question was assessment year 2003-04. issue raised in these appeals never arose for consideration in Brahma Associates' case (supra) and, therefore, reliance placed by Mr. Gupta on said paragraph is wholly out of context. Having held that clause (d) of section 80-IB(10) is inapplicable to housing projects approved before March 31, 2005 irrespective of fact that construction of same is completed after April 1, 2005, or that profits from such housing project are brought to tax in assessment year 200506 or thereafter, we now deal with judgments relied upon by Revenue. first judgment relied upon by Revenue is of Supreme Court in case of Reliance Jute Industries Ltd. (supra). provisions of section 24(2)(iii) of Indian Income-tax Act, 1922, came up for interpretation before Supreme Court which, inter alia, dealt with unabsorbed loss being carried forward for more than eight years. facts before Supreme Court were that during assessment year 1960-61, assessee claimed that unabsorbed loss for assessment year 1950-51 could be carried forward and set off against business income for assessment year 1960-61. assessee contended before Supreme Court that by virtue of section 24(2)(iii), as it stood before its amendment with effect from April 1, 1957, assessee had acquired vested right to have unabsorbed loss carried forward from year to year until it was completely set off. According to assessee, subsequent amendment to section 24(2)(iii) limiting period for carrying forward loss to eight years, could not divest assessee of vested right which had accrued to him. Negating this contention of vested right, Supreme Court held as under (page 923 of 120 ITR): "Section 24(2) has suffered amendment number of times. Prior to its amendment by Finance Act, 1955, it permitted business loss to be carried forward for not more than six years, except in case of losses pertaining to certain assessment years ending with assessment year 1943-44 where period for carrying forward was shorter. Section 16 of finance Act, 1955, amended section 24(2), and as result of amendment section 24(2)(iii) provided that business loss which was not wholly set off could be carried forward from year to year. Thereafter, Finance (No. 2) Act of 1957 amended section 24(2)(iii) with effect from April 1, 1957, and in consequence unabsorbed loss could not now be carried forward for more than eight years. assessee claims vested right under section 24(2)(iii), as it stood before its amendment in 1957, to have unabsorbed loss of 1950-51 carried forward from year to year until loss is completely absorbed. claim is based on misconception of fundamental basis underlying every income-tax assessment. It is cardinal principle of tax law that law to be applied is that in force in assessment year unless otherwise provided expressly or by necessary implication: CIT v. Isthmian Steamship Lines [1951] 20 ITR 572 (SC) and Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC). On that principle, it is abundantly clear that when assessment for assessment year 1960-61 is to be made and section 24(2) is invoked, it is section 24(2) as in force in that assessment year which has to be applied. That is provision as amended by Finance (No. 2) Act, 1957. There is no question of assessee possessing any vested right under law as it stood before amendment. assessment for one assessment year cannot, in absence of contrary provision, be affected by law in force in another assessment year. right claimed by assessee under law in force in particular assessment year is ordinarily available only in relation to proceeding pertaining to that year. ordinarily available only in relation to proceeding pertaining to that year. Therefore, inasmuch as provisions of section 24(2), as amended in 1957, govern assessment for assessment year 1960-61, High Court is right in affirming that unabsorbed loss of Rs. 15,50,189 of assessment year 1950-51 cannot be carried forward for more than eight years, and, consequently, cannot be set off against business income of assessment year 1960-61." (emphasis supplied) We fail to see how this judgment can be of any assistance to Revenue. Firstly, in case at hand, no assessee is claiming any vested right of deduction as was done by assessee before Supreme Court in Reliance Jute Industries Ltd. (supra). assessees are aware that for subject deduction, certain conditions are to be complied with. However, it is their case that deduction cannot be denied for want of compliance with condition which has been introduced after their project was approved. Hence, that is not required to be complied with. This judgment is, therefore, of no assistance to Revenue. Secondly, provision being interpreted by Supreme Court was section 24(2)(iii) which dealt with right of assessee to be able to set off unabsorbed loss against business profits of assessee. Interpreting this provision, Supreme Court held that there was no question of any vested right because it is law at time when assessee claimed set off, that would have to be applied. Thirdly, Supreme Court itself held that "It is cardinal principle of tax law that law to be applied is that in force in assessment year unless otherwise provided expressly or by necessary implication" and "a right claimed by assessee under law in force in particular assessment year is ordinarily available only in relation to proceeding pertaining to that year". In present case, we have held that condition/restriction set out in clause (d) of section 80-IB(10) is inseparably linked to date of approval of housing project. As consequence thereto, we have held that said clause cannot apply to housing project approved before March 31, 2005. facts in present case as well as provision of law that we are called upon to interpret, are totally different from ones in case of Reliance Jute Industries Ltd. (supra) and, therefore, reliance placed on said judgment is wholly misconceived. second judgment relied upon by Revenue is also of Supreme Court in case of Ajay Agarwal (supra). We find that this judgment too is wholly inapplicable to facts of present case. This can be discerned simply from reading paragraphs 3 to 9 of said judgment which set out facts of case before Supreme Court. In fact, in said judgment, Supreme Court was called upon to decide interpretation of section 11B of Securities and Exchange Board of India Act, 1992, and its retrospectivity. facts before Supreme Court were in relation to alleged violations of provisions of SEBI Act, 1992. complaint against company and its directors was to effect that there were misstatements in prospectus filed by company, and more particularly with regard to alleged non-disclosure by directors of pledge of 7,50,000 shares owned by them. After show- cause notices were issued, chairman of board of SEBI, exercising his powers under section 4(3) read with section 11 and section 11B of SEBI Act directed that respondent (Ajay Agarwal-director) be restrained from associating with any corporate body in accessing securities market and also be prohibited from buying, selling or dealing in securities for period of 5 years. argument before Supreme Court was that section 11B was brought on statute book by way of amendment with effect from January 25, 1995, whereas public issue in respect of which impugned order was passed, was of November, 1993, and prospectus in which alleged misstatements were made was of October, 1993. Hence, question arose whether any direction could be issued under section 11B for alleged misconduct committed prior to its introduction. It is in light of these facts that Supreme Court referred to judgment in case of Reliance Jute Industries Ltd. (supra) and stated that it was too well settled that law to be applied for assessment is one which is extant in assessment year, unless there is amendment which is made retrospective either expressly or by necessary implication. In facts of this case, Supreme Court held that by time board passed order on March 31, 2004, SEBI Act had been amended and, therefore, at time of passing of order, amendments in question empowered board to do so. Supreme Court came to aforesaid conclusion even though holding that provisions of section 11(4)(b) and section 11B were not retrospective in their operation. As stated earlier, we fail to see how this judgment can be of any assistance to Revenue. facts as well as provisions of law being interpreted by Supreme Court in aforesaid judgment were totally different from facts of present case, as well as provisions of law that we are called upon to interpret. We, therefore, find that this judgment too is wholly inapplicable to decide controversy in present appeal and reliance placed thereon by Revenue is wholly misplaced. It is now too well settled proposition that ratio of any decision must be understood in background of facts of that case. It has been said long time ago that case is only authority for what it actually decides and not what logically follows from it. If one must refer to any authority on this subject, Supreme Court in case of K. V. Sarva Shramik Sanghatana v. State of Maharashtra reported in [2008] 1 SCC 494 has very succinctly and eloquently reiterated said proposition. Paragraphs 14 to 18 of said judgment read thus: "14. On subject of precedents Lord Halsbury L. C. said in Quinn v. Leathem [1901] AC 495; [1900-03] All ER Rep 1 (HL) (All ER page 7 G-I): 'Before discussing Allen v. Flood [1898] AC 1; (1895-99) All ER Rep 52 (HL)] and what was decided therein, there are two observations of general character which I wish to make; and one is to repeat what I have very often said before-that every judgment must be read as applicable to particular facts proved or assumed to be proved, since generality of expressions which may be found there are not intended to be expositions of whole law, but are governed and qualified by particular facts of case in which such expressions are to be found. other is that case is only authority for what it actually decides. I entirely deny that it can be quoted for proposition that may seem to follow logically from it. Such mode of reasoning assumes that law is necessarily logical code, whereas every lawyer must acknowledge that law is not always logical at all.' (emphasis supplied) We entirely agree with above observations. 15. In Ambica Quarry Works v. State of Gujarat [1987] 1 SCC 213 (vide SCC page 221, paragraph 18) this court observed: '18. ratio of any decision must be understood in background of facts of that case. It has been said long time ago that case is only authority for what it actually decides, and not what logically follows from it.' 16. In Bhavnagar University v. Palitana Sugar Mill P. Ltd. [2003] 2 SCC 111 (vide SCC page 130, paragraph 59) this court observed: '59... It is also well settled that little difference in facts or additional facts may make lot of difference in precedential value of decision.' (emphasis supplied) 17. As held in Bharat Petroleum Corporation Ltd. v. Vairamani (N. R.) [2004] AIR 2004 SC 4778; [2004] 8 SCC 579 decision cannot be relied on without disclosing factual situation. In same judgment this court also observed (SCC pages 584-85, paragraphs 9-12): '9. Courts should not place reliance on decisions without discussing as to how factual situation fits in with fact situation of decision on which reliance is placed. Observations of courts are neither to be read as Euclid's theorems nor as provisions of statute and that too taken out of their context. These observations must be read in context in which they appear to have been stated. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of statute, it may become necessary for judges to embark into lengthy discussions but discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton [1951] 2 All ER 1 (HL); [1951 AC 737 (AC at page 761), Lord MacDermott observed (All ER page 14 C- D): "The matter cannot, of course, be settled merely by treating ipsissima verba of Willes, J. as though they were part of Act of Parliament and applying rules of interpretation appropriate thereto. This is not to detract from great weight to be given to language actually used by that most distinguished judge..." 10. In Home Office v. Dorset Yacht Co. Ltd. [1970] AC 1004; [1970] 2 WLR 1140; [1970] 2 All ER 294 (HL) Lord Reid said, "Lord Atkin's speech... is not to be treated as if it were statutory definition. It will require qualification in new circumstances." (All ER page 297g) Megarry J. in Shepherd Homes Ltd. v. Sandham (No. 2) [1971] 1 WLR 1062; [1971] 2 All ER 1267 observed (All ER page 1274d): "One must not, of course, construe even reserved judgment of even Russell L. J. as if it were Act of Parliament;" And, in British Railways Board v. Herrington [1972] AC 877; [1972] 2 WLR 537; [1972] 1 All ER 749 (HL) Lord Morris said (All ER page 761c): "There is always peril in treating words of speech or judgment as though they were words in legislative enactment, and it is to be remembered that judicial utterances are made in setting of facts of particular case." 11. Circumstantial flexibility, one additional or different fact may make world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on decision is not proper. 12. following words of Lord Denning in matter of applying precedents have become locus classicus: "Each case depends on its own facts and close similarity between one case and another is not enough because even single significant detail may alter entire aspect, in deciding such cases, one should avoid temptation to decide cases (as said by Cardozo) by matching colour of one case against colour of another. To decide, therefore, on which side of line case falls, broad resemblance to another case is not at all decisive... Precedent should be followed only so far as it marks path of justice, but you must cut dead wood and trim off side branches else you will find yourself lost in thickets and branches. My plea is to keep path to justice clear of obstructions which could impede it."' (emphasis supplied) 18. We have referred to aforesaid decisions and principles laid down therein, because often decisions are cited for proposition without reading entire decision and reasoning contained therein. In our opinion, decision of this court in Sarguja Transport Service v. State Transport Appellate Tribunal [1987] 1 SCC 5: 1987 SCC (Crl) 19; AIR 1987 SC 88 cannot be treated as Euclid's formula." Even applying aforesaid proposition as laid down in case of K. V. Sarva Shramik Sanghatana (supra), we find that reliance placed by Revenue on judgment of Reliance Jute Industries Ltd (supra) and Ajay Agarwal (supra) is wholly misplaced and is of no assistance to arguments advanced on behalf of Revenue. In view of our discussion and findings in this judgment, we answer both substantial questions of law raised in these appeals in affirmative, that is in favour of assessees and against Revenue. appeals are disposed of in aforesaid terms. There shall be no order as to costs. *** Commissioner of Income-tax v. Happy Home Enterprise
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