Shiv ita1628.13 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1628 OF 2013 WITH INCOME TAX APPEAL NO.1629 OF 2013 WITH INCOME TAX APPEAL NO.1931 OF 2013 WITH INCOME TAX APPEAL NO.2235 OF 2013 WITH INCOME TAX APPEAL NO.2469 OF 2013 WITH INCOME TAX APPEAL NO.354 OF 2014 Commissioner of Income Tax Appellant. Vs. M/s. Raviraj Kothari Punjabi Associates Respondent. Mr. Vimal Gupta, Senior Counsel a/w Mr.Sham Walve i/b Mr.V.A. Bajpayee for Appellant. Mr. Mihir Naniwadekar for Respondent. CORAM : S.C. DHARMADHIKARI AND A.K. MENON, JJ. DATED : 24TH APRIL, 2015. P.C. : 1. These six appeals pertain to assessment years 2003-04 to 2008-09. Each of these appeals propose different set of questions all of which have now been reframed. Mr.Gupta, learned Senior Counsel appearing on behalf of revenue has submitted list of five reframed questions. questions posed by revenue as substantial questions of law are as under : 1/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 (1) Whether on facts and circumstances of case, Hon'ble Income Tax Appellate Tribunal erred in allowing deduction u/s.80IB(10) of I.T. Act, 1961 for A.Ys.2003-04 even though project had been sanctioned as residential + commercial by Pune Municipal Corporation and was thus not housing project ? (2) Whether on facts and circumstances of case, Hon'ble Income Tax Appellate Tribunal erred in holding that up to 31.03.2005, deduction u/s. 80IB(10) was allowable to housing project approved by local authority having residential units with commercial user to extent permitted under DC rules/regulations framed by respective local authorities, irrespective of whether project is approved as housing project or as residential plus commerical project ? (3) Whether on facts and circumstances of case, Hon'ble Income Tax Appellate Tribunal erred in interpreting Sec.80IB(10) by making unjustifiable imputations to intention of legislature without appreciating that there was no ambiguity whatsoever in Sec.80IB(10) in as much as in absence of any definition of housing project said expression is required to be construed as well as applied in manner used and understood on common parlance i.e. as project consisting of residential houses, and, therefore, was no need whatsoever to resort to any interpretation ? 2/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 (4) Whether on facts and circumstances of case, Hon'ble Income Tax Appellate Tribunal erred in not appreciating fact that word included in clause (d) of Sec.80IB(10) which was introduced w.e.f. 1.4.2005, to hold that commercial user is integral part of housing project and, therefore, would have to be so considered even prior to 31.3.2005 giving it retrospective effect ? (5) Whether on facts and circumstances of case, Hon'ble Income Tax Appellate Tribunal erred in not appreciating fact that flats on seventh floor had built-up area of more than 1500 sq. ft. after including exclusive terrace and, therefore, assessee was not eligible for deduction u/s.80IB (10)(c) of Act ? 2. facts in Income Tax Appeal No.1628 of 2013 pertaining to assessment year 2003-04 can be taken up conveniently for purpose of all these appeals. Respondent is developer who had obtained approval of project by Pune Municipal Corporation for constructing residential and commercial premises consisting of 10 buildings. Assessing Officer held that in respect of assessment year 2003-04 assessee declared total sales in relation to its project Citadel at Rs.13,97,83,157/- on which net profit was shown at Rs.4,88,52,973/- and after adjusting brought forward losses of Rs.48,15,337/- gross total income was computed at Rs.4,40,37,636/- which was 3/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 claimed as exempt under section 80IB(10) of Income Tax Act, 1961. It was observed that assessee had constructed commercial premises with total area of 13,2480.06 sq. ft. which was 6.6% of total area and therefore Assessing Officer held that assessee having constructed commerial area in excess of 2000 sq. ft., had violated clause (d) of section 80IB(10). 3. Assessee contended that constructed commercial premises was part of project and required to be constructed as per mandatory requirement of Pune Municipal Corporation and City Engineer of Pune Municipal Corporation. It was categorically required to include aforesaid commercial area. Assessing Officer also observed that commercial premises number 1, 2, 3, 4, 5 on first floor of building D and commercial premises number 1, 2, 3, 4 of building D-1 had area more than 20 sq. mtr. each and therefore fall in category of convenience shopping as defined in Rule 123.6(ii) of Development Control Rules. In circumstances assessing officer denied benefit of section 80IB (10). 4. It is further observed by assessing officer that on 7th floor i.e. flt Nos.25 to 28 of building E, E3 and Flat No.38, 39, 40, 41 and 43 of building F and similarly five seventh floor flats of building F1, F2 had built-up area of more than 1500 sq. ft. 4/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 and on this count alone assessee was not eligible for deduction. 5. In appeal before Commissioner of Income Tax it was contended that amendment to section 80IB(10) with effect from 1.4.2005 did not clarify whether it took effect before amendment or post amendment. Commissioner held that amended provisions with effect from 1.4.2005 cannot have retrospective effect so as to be applicable to assessment year 2003- 04 but implication of inclusion of definition of built-up area in section 80IB(10) being declaratory and curative in nature it was held to be applicable to assessment year under consideration. 6. Being aggrieved by order of Commissioner assessee filed appeal before Tribunal. Tribunal held that assessee had commenced development and construction of housing project in terms of approval granted by Corporation which was admittedly granted on 16th July, 2002, well before 1st April, 2005. With reference to stand that Commerical area constructed was more than permissible area of 2000 sq. ft. or at 5% of total built up area whichever is less, reliance placed by revenue on clause (d) of section 80IB(10) was misplaced in view of judgment of this Court in case of Brahma Associates which laid down that provision was 5/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 prospective and not retrospective in nature and therefore, cannot be applied retrospectively. 7. Tribunal also held that contention that only pure housing project was eligible for deduction was also misconceived in view of judgment of Brahma Associates. Tribunal held that project in order qualify for benefit of section 80IB(10) could include residential and commercial premises as approved by Corporation. Furthermore, there were objections raised by revenue that built up area of some of units exceed 1500 sq. ft. and therefore provision of section 80IB(10) would not apply since said section was inserted with effect from 1st April, 2005. tribunal once again decided issue in favour of assessee and directed Assessing Officer to allow deduction under section 80IB(10). 8. Mr.Gupta, learned Senior Counsel submitted that Assessee had constructed one building (being part of 10 then being constructed) which was fully commercial in nature. He submitted that this commercial development in project disentitles Assessee to claim benefit of section 80IB(10). Mr.Gupta submitted that for assessment year 2005-06 provisions of section 80IB(14)(a) would be applicable and while computing built up area, inner measurements of 6/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 residential unit at floor level, including projections and balconies, as increased by thickness of walls but including common areas have to be taken into account. 9. We find that issues in present case and five questions proposed as essential questions revolve around eligibility to claim benefit of section 80IB(10). Since project is admittedly approved prior to 1.4.2005 assessee is covered in case of Commissioner of Income Tax Vs. M/s.Happy Home Enterprises decided in two appeal being ITA No.201/2012 alongwith ITA No.308 of 2012. In case of Happy Home Enterprises this Court in judgment to which one of us (Shri S.C. Dharmadhikari, J.) was party, after considering submissions of revenue on issue of applicability of judgment of Brahma Associates has held that clause (d) of section 80IB(10) is prospective in nature and would not apply to housing projects commenced prior to 1.4.2005. 10. We are of view that Mr.Gupta's submission apropos assessment year 2005-06 will make no difference since provisions of section 80IB(14)(a) will not affect present project having been sanctioned prior to 1.4.2005. In present case it is seen that approval of project was granted on 16th July, 2002 well before introduction of provisions of clause (d) which 7/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: ita1628.13 came into effect from 1.4.2005. 11. In circumstances and in facts of present appeals these issues are covered by judgment in M/s.Happy Home Enterprises and M/s.Kanakia Spaces Pvt. Ltd., we do not find that any of questions proposed give rise to any substantial questions of law. appeals are accordingly, dismissed. There will be no order as to costs. (A.K. MENON,J.) (S.C. DHARMADHIKARI,J.) 8/8 ::: Uploaded on - 05/05/2015 ::: Downloaded on - 31/12/2018 15:33:05 ::: Commissioner of Income-tax v. Raviraj Kothari Punjabi Associate