M/S. VIKRAM DEVELOPERS & PROMOTERS,,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,,

आयकर अपीलीय अिधकरण “बी” �यायपीठ पुणे म� । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं. / ITA Nos.2795 & 2796/PUN/2016 िनधा�रण वष� / Assessment Years : 2012-13 & 2013-14 M/s. Vikram Developers & Promoters, 19, Shrikrishna Heights, Ganeshkhind Road, Shivaji Nagar, Pune-411005. .......अपीलाथ� / Appellant PAN : AAGFV4298R बनाम / V/s. DCIT, Central Circle-2(1), ……��यथ� / Respondent Pune. Assessee by : Shri Kishor Phadke Revenue by : Shri Milind Chahure सुनवाई क� तारीख / Date of Hearing : 17.10.2019 घोषणा क� तारीख / Date of Pronouncement : 14.11.2019 आदेश / ORDER PER D. KARUNAKARA RAO, AM: There are two appeals under consideration filed by the assessee against the common orders of the CIT(A)-12, Pune dated 08.09.2016 for the assessment years 2012-13 and 2013-14 respectively. Preliminary Issue - Condonation of Delay – Both Appeals 2. Before us, at the outset, ld. Counsel for the assessee submitted that the both the appeals could not be filed in time and the said appeals were filed with the delay of 01 day. In this regard, ld. Counsel for the assessee submitted that the delay is unintentional and prayed for condoning the same.

2 ITA Nos.2795 & 2796/PUN/2016

3 ITA Nos.2795 & 2796/PUN/2016

4 ITA Nos.2795 & 2796/PUN/2016

Assessing Officer noted that Midori Phase-I project was originally approved by the local body with a ‘club building’ as part of the project in the year 2007 itself and it was subsequently revised on 05.09.2008, 16.05.2011 (for removal of club house due to some issues) so on. On 29.03.2012, the project was cleared completed without any club house mentioned in the project. The completion certificate was obtained too. Based on the “event of sale of flats cum Project Completion, the income was recognised by the assessee in assessment years 2012-13 and 2013-14 and claimed the deduction u/s 80IB(10) of the Act on the said income. However, the construction of club house remains an obligation by the assessee to the flat owners. Club House Collections (CH Collections): In the context of the said 8. need for club house construction, the assessee started collecting the subscription separately from the flat buyers at the rate of Rs.75,000/- per flat owner. Thus, assessee collected total amount of Rs.99,00,000/- in 3 years i.e. Rs.63,00,000/- in the A.Y. 2012-13, Rs.31,49,800/- in the A.Y. 2013-14 - and finally, Rs.4,50,200/- in the A.Y. 2014-15. There is no dispute on these facts (i.e. year of completion of project, project income recognition, collection of club charges separately). The assessee considered all these collections of Rs.99 lakhs, on receipt basis, as income of the assessee in the respective assessment years and claimed deduction u/s 80IB(10) of the Act. Thus, the issues of taxation of “Club House Collections” and the said claim of deduction on these gross collection of Rs.99,00,000/- are the deviation made by the assessee from the said ‘rules of income recognition’ adopted by the assessee – firm. Therefore, the Assessing Officer taxed entire Rs.99 lakhs and did not consider the expenses incurred on the club house construction as an allowable

5 ITA Nos.2795 & 2796/PUN/2016

deduction in any assessment year. Assessee is aggrieved on the Assessing Officer’s decisions. Assessing Officer’s Reasoning: During the assessment proceedings, on 9. this issue of club house subscription as eligible income, the assessee undertook a different line and argued that the said collections were required to be treated as “advances”, ‘a balance sheet item’, and should be excluded from the scope of income. However, rejecting the said argument of the assessee, and considering the assessee’s original claim in the return of income, the Assessing Officer treated the CH Collections as taxable income, restricted the deduction and denied the deduction in respect of the club house receipts in all the three assessment years. In the process, the Assessing Officer conveniently adopted the assessee’s own admission in the return of income that the said “advances” constitutes a taxable income but for the deduction provision of section 80IB(10) of the Act. Matching Expenses: Alternatively, referring to the unfairness in 10. denying the credit of expenses of Rs.73,48,445/- against the said CH Collections of Rs.99 lakhs, the assessee made a request for pre-poning of the expenses incurred on the club house construction in assessment year 2014-15 and tax only to the ‘net income’ if the deduction on the said net income u/s 80IB(10) of the Act is not allowable for any reason. The Assessing Officer rejected this argument also merely relying on the assessee’s claim of deduction on entire Rs.99 lakhs as made in the return of income. Assessee did not reduce the said expenses out of Rs.99 lakhs. Thus, the Assessing Officer rejected the claim of deduction u/s 80IB(10) of the Act and allowed the

6 ITA Nos.2795 & 2796/PUN/2016

deduction of Rs.11,18,99,573/- only out of the original claim of Rs.13,22,98,018/- in the A.Y. 2012-13 (page 3 of the assessment order) i.e. : Claim u/s 80IB(10) - Rs.13,22,98,018/- Less: (i) club charges - Rs. 63,00,000/- (ii) cash credit - Rs. 1,40,98,445/- Deduction u/s 80IB(10) - Rs.11,18,99,573/- Sum up of the issues for adjudication by the CIT(A): Thus, the 11. double-effect of assessment include (i) Restriction of claim of deduction u/s 80IB(10) of the Act on (a) CH Collections received in the year and (b) denial of deductions on the additions on account of cash credit u/s 68 of the Act; and (ii) taxation of said CH Collections of Rs.99 lakhs in all three assessment years without giving credit expenses in any form including preponing to the expenditure actually incurred on the Club House in assessment year 2014-15. CIT(A) : Aggrieved with the above decisions of the Assessing Officer, the 12. assessee filed appeals before the CIT(A). As discussed earlier, the issue for adjudication before him includes (i) taxation of club house subscription of Rs.63 lakhs and denial of deduction u/s 80IB(10) of the Act in respect of club house subscription; and (ii) denial of claim of deduction on the cash credit addition of Rs.1,40,98,445/- relating to the earlier assessment years. CIT(A) passed a composite order for assessment years 2009-10 to 2013-14. CH Collections – Issue: On the issue relating to CH Collections, twin 13. issue of taxation-cum-denial of deduction u/s 80IB(10) of the Act, the CIT(A) held that the club house project was not the part of the original housing project. Therefore, as declared in the return of income, the CH Collections received by the assessee from the flat buyers constitute a taxable income and,

7 ITA Nos.2795 & 2796/PUN/2016

is not an eligible income for claim of deduction. Considering the fact that the assessee himself offered the same as taxable income in the return of income (but however, claimed deduction u/s 80IB(10) of the Act), the CIT(A) confirmed the addition made by the Assessing Officer in toto. On the arguments of the assessee relating to (a) the capital nature of the advances and (b) need for netting of the expenses against the said advances etc by preponing, the CIT(A) held that the return of income made therein are sacrosanct. The CIT(A) refused the alternate claim of the assessee i.e. in favour of taxing only the net income either in the assessment years 2012-13, 2013-14 & 2014-15 proportionately or only in assessment year 2014-15 on completion basis. 14. With regard to the denial of deduction on the additions of Rs.1,40,98,445/-, the CIT(A) granted relief and restored the claim of deduction u/s 80IB(10) of the Act. In this regard, the CIT(A) relied on the Jurisdictional High Court’s judgement in the case of CIT vs. Sheth Developers (P) Ltd., 25 taxmann.com 173 (Bom.-HC). Thus, the CIT(A) partly allowed the assessee’s appeals. Revenue is not in appeals before us. 15. Thus, the Revenue accepted the relief granted by the CIT(A) on the issue relating to cash credit addition and grant of deduction on Rs.1,40,98,445/-. There are no appeals by the Revenue in the assessment years 2009-10 till assessment year 2012-13. However, aggrieved with the above decisions of the CIT(A) qua the assessment year 2012-13, the assessee is in appeal before the Tribunal with the following grounds :- “1. The learned CIT(A)-12, Pune erred in law and on facts in confirming the disallowance of deduction amounting to Rs. 63,00,000/- u/s 80-IB(10) of the ITA, 1961 made by the learned DCIT, Central Circle-2(1), Pune (hereinafter referred to as the learned AO).

8 ITA Nos.2795 & 2796/PUN/2016

9 ITA Nos.2795 & 2796/PUN/2016

Summary of Club House Receipt and Expenses Particulars A.Y. 2012-13 A.Y. 2013-14 A.Y. 2014-15 As per “Appellant” A. Club House Receipts (Rs.99 lakhs) 63,00,000 31,49,800 4,50,200 78,10,182 B. Club House Expenses claimed by - - Appellant C. Profit from Club House Receipts (A- 63,00,000 31,49,800 -73,59,982 B) D. Deduction claimed u/s 80-IB(10) 63,00,000 31,49,800 - w.r.t. Club House E. Income offered to tax w.r.t. Club - - - House As per “Assessing Officer” A. Club House Receipts 63,00,000 31,49,800 4,50,200 B. Club House Expenses granted by - - - Assessing Officer C. Profit from Club House Receipts (A- 63,00,000 31,49,800 4,50,200 B) D. Deduction granted u/s 80-IB(10) - - - w.r.t. Club House E. Income brought to tax w.r.t. Club 63,00,000 31,49,800 4,50,200 House 18. Thus, refer to assessment year 2012-13, the limited issue for adjudication before us is that (i) whether the said addition of Rs.63,00,000/- is sustainable or not?; (ii) whether the claim of deduction u/s 80IB(10) of the Act in return of income by the assessee is correctly made or not?; and, (iii) whether the CH subscription of Rs.63,00,000/- for the assessment year 2012-13, Rs.31,49,800/- in assessment year 2013-14; and Rs.4,50,000/- constitutes part of the Housing Project or not to enjoy the benefit of deduction. Further, ld. Counsel for the assessee filed an affidavit before us on 19. 11.10.2019 making the following assertions :- “.......... 1. Our firm has developed a housing project, profits of which were eligible for deduction u/s 80-IB(10) of the ITA, 1961. Deduction u/s 80-IB(10) of the ITA, 1961; was claimed on the profits, which was allowed by the learned I-T Authorities. 2. Though the deduction u/s 80-IB(10) of the ITA, 1961; was allowed by the I-T Authorities, objection was taken vis-a-vis profits arising from construction of

10 ITA Nos.2795 & 2796/PUN/2016

club-house (a part of common amenities assured to the customers). The said objection related to the non-approval of the “club-house” by PCMC. 3. Our firm has filed appeals before the Honorable ITAT, Pune Bench for A.Y. 2012-13 and A.Y. 2013-14 having ITA No.2795-2796/PUN/2016. 4. Vide Ground No.1 to 3, in both the appeals for A.Y. 2012-13 and A.Y. 2013-14, we challenged non-grant of deduction u/s 80-IB(10) of the ITA, 1961 on club-house receipts. Details of the same are as under: a) A.Y. 2012-13 - Rs.63,00,000/- b) A.Y. 2013-14 - Rs.31,49,800/- 5. The said deduction u/s 80-IB(10) of the ITA, 1961 was claimed on the basis that club-house was sanctioned in initial layout plan and commitment was made to customers through Sales Brochure and Registered Agreements. However, in the year 2010, a new storm-water map was prepared by Science Technology Park (STP), which was approved by JNNURM and was implemented by PCMC. 6. As per the said new storm-water plan, the housing project land, where the club-house was proposed, was falling in the said map of “storm water drain”. As such, the club-house was shifted to other land and there was delay in construction of club-house. Now, our firm has decided not to press Ground No.1 to 3, in both the 7. appeals of A.Y. 2012-13 and A.Y. 2013-14, having ITA No.2795- 2796/PUN/2016. 8. Further our firm confirms that the said Ground No.1 to 3 will not be contested at any higher forum also. I solemnly state on oath that the contents of this Affidavit are true to the best of my knowledge and belief and that it conceals nothing and that no part of it is false.” 20. Thus, the assessee does not want to press the grounds relating to taxation of subscriptions, denial of deduction u/s 80IB(10) of the Act etc. In other words, by not pressing ground 1 to 3, the CH Collection becomes taxable after netting of expenses incurred on CH. However, referring to ground 4 & 5, ld. AR now pleads for taxing the same after netting with the expenses of Rs.78,10,182/- in an appropriate assessment years. The assessee argues that the profit on CH should be ideally taxed in the assessment year 2014-15 only after granting credit to the expenses of Rs.78,10,182/-against the receipts of Rs.99,00,000/-. The ld. Counsel for the assessee argued vehemently stating that the entire gross receipts cannot be taxed and relied heavily on the Hon’ble

11 ITA Nos.2795 & 2796/PUN/2016

Supreme Court’s judgement in the case of (i) Bharat Earth Movers vs. CIT, 245 ITR 428 (SC) and (ii) Calcutta Co. Ltd. vs. CIT, 37 ITR 1 (SC). The assessee made the written submissions in this regard and the same are extracted as under :- “2. Submission w.r.t. Club-house receipts - AY 2012-13 & AY 2013-14: 2.1 Ground No. 1 to 3 - 80-IB(10) on club-house receipts: Vide Ground No. 1 to 3, in AY 2012-13 and AY 2013-14, appellant has challenged non-grant of deduction u/s 80-IB(10) of the ITA, 1961 on club-house receipts amounting to Rs. Rs. 63,00,000/- and Rs. 31,49,800/- in AY 2012-13 and AY 2013-14 respectively. Appellant no longer wishes to press the said Grounds. Appellant is filing specific Affidavit in this regard, which is submitted herewith as Annexure-1. 2.2 Ground No. 5 - Shifting of Income of club-house receipts to AY 2014-15: Vide Ground No. 5, appellant is contending that the club-house receipts received during AY 2012-13 & AY 2013-14 should be treated as advance for these years and should be taxed in AY 2014-15. This is because, due to various reasons, club-house could not be completed till 31/03/2012 and was constructed only in AY 2014-15 and was hand-over to the flat owners only in AY 2014-15. As such, all the risk and reward were transferred by appellant in AY 2014-15. Therefore it is submitted that the income from club-house should be taxed in AY 2014- 15, though appellant has erroneously disclosed the same in AY 2012-13 & AY 2013-14. Appellant is also submitting herewith summary of club house receipts and expenses for AY 2012-13 to AY 2013-14, which is submitted herewith as Annexure-2. 2.3 Ground No. 4 - Grant of expenses against club-house receipts: If appellant succeeds at Ground No. 5, than Ground No. 4 becomes academic. If however, Ground No. 5 is decided against appellant requests the Honourable Bench to kindly decide Ground No. 4. Vide Ground No. 4, appellant is contending that if at all club-house receipts are taxed in AY 2012-13 and AY 2013-14, relevant expenses should also be granted. Appellant is contending the same on following analogy: a) Matching principle: It is a basic principle that revenue and expenditure goes hand in hand and in any case the entire gross receipts cannot be taxed. As such it is submitted that deduction or relevant expenses should also be granted if receipt is ought to be taxed. b) Income (or profit) to be taxed and not gross receipt: It is submitted that it is a settled principle that no income can be earned without incurring any expenses. If no deduction for related expenses is granted, then, entire sales consideration will get taxed. Such gross taxation is against first principles of tax-law. Appellant relies on the following decisions in this regard: i. Calcutta Co. Ltd. Vs. CIT - 37 ITR 1 (SC)

12 ITA Nos.2795 & 2796/PUN/2016

ii. Bharat Earth Movers Vs. CIT - 245 ITR 428 (SC).” 21. From the above submission by the AR, it is the submission of the assessee that ‘due to project completion method’ adopted by the assessee, the net profit becomes taxable in assessment year 2014-15. Alternatively, the claim of expenditure needs to be preponed among the 3 assessment years. Assessee relied on set matching principle. Ld. DR’s Submissions: Per contra, the core argument of the ld. DR for 22. the Revenue relates to the details and claims made by the assessee in the return of income. So far as the assessee’s assertions in the affidavit relating to the non-pressing of the ground no.1 to 3 is concerned, ld. DR relied heavily on the orders of the Assessing Officer/CIT(A) and the contents given by the assessee in the return of income. 23. Regarding the taxation of the profits in the assessment year 2014-15, the year of completion of the club house project, ld. DR submitted that allowing the claim of the assessee will result in reduction of the returned income to the extent of Rs.63,00,000/- for the assessment year 2012-13 and Rs.31,49,800/- for the assessment year 2013-14. However, ld. DR has nothing to mention on the Nil return of income is reduced further. Eventually, it is a case of restricting the deduction u/s 80IB(10) of the Act, which is different from a case reducing the returned income. 24. Regarding the assessee’s new demand for taxing the CH profits only in the assessment year 2014-15 after granting set-off of the expenses on the club house project, the ld. DR for the Revenue submitted that this issue has clearly

13 ITA Nos.2795 & 2796/PUN/2016

come for the first time before the Tribunal and, therefore, the matter can be remanded to the file of the lower authorities.

Decision of the Tribunal on the Grounds Ground 1 to 3 not pressed – Affidavit : We have heard both the sides 25. on this limited issue relating to the taxation of club house subscription of Rs.99,00,000/- in all the three assessment years i.e. A.Y. 2012-13 to 2014-15. Before us, assessee filed an affidavit informing their decision to give up the issue raised in ground 1 to 3 of the appeal. Therefore, considering the concession, ground 1 to 3 of the assessee are dismissed as not pressed. Issue of Netting of Expenses – Year of Taxation of Net Profits – the 26. Club House : Regarding the year of completion of the CH, it is born out of the records that the club house (CH) is completed in the assessment year 2014-15. By this time, the assessee incurred the expenditure on the club house construction amounting to Rs.78,10,182/-. In principle, the ‘project completion method’ of accounting is followed by the assessee in respect of Midori Project and the same is accepted by the Revenue. Following the same, the relevant income of the Club House is taxable in the year of completion i.e. 2014-15 only. In this regard, both the assessee and the Revenue have erred in dealing with the issue of year of taxation of profits of this club house project in accordance with general law in force. While the assessee erred in including the subscription as a part of the eligible income for the purpose of section 80IB(10) of the Act in the return of income and thereby inflating the claim of deduction to that extent; the Revenue failed to adhere to the principles of accounting

14 ITA Nos.2795 & 2796/PUN/2016

(supra) and taxed the entire amount as a taxable income. In the process, the claim in the return of income was partly accepted to the extent of taxing the entire amount of Rs.63,00,000/- without netting with expenditure and partly, not accepted i.e. the allowability of deduction u/s 80-IB(10) of the Act. Netting of expenses has to be allowed in favour of the assessee in the assessment years proper. In our view, the decision of both the Revenue as well as the assessee requires substantially modification considering the project completion method of accounting followed by the assessee and the said method stands undisturbed by the Revenue. As such, the expenditure is incurred in assessment year 2014-15 and we do not have the details of net profit on this CH project. Correctness of expenditure is not examined. Therefore, we are of the opinion, the matter should revisit to the file of the Assessing Officer with the following directions :- Directions : (a) The club house construction project has to be recognised as a continuation of the “Midori Phase-1” the project as it has the genesis in the Midori Phase-I project originally. Per se, it is only a part of the housing project as the finances for the Club House is raised from the flat buyers only. The profits of the CH is a taxable ones as per the Affidavit. (b) The accounting methods followed by the assessee in respect of Midori Phase-I should be equal applicable to the ‘club house’ construction as well and the year of taxation of the relevant profits is ideally the assessment year 2014-15 only. Assessing Officer needs to consider it in the remand proceedings.

15 ITA Nos.2795 & 2796/PUN/2016

(c) The completion certificate of the Club House issued by the local authority becomes relevant. Assessee claims the CH is completed in the year 2014-15 but no completion certificate is filed before us. (d) The Assessing Officer is also required to examine the genuineness of the expenditure claim of Rs.78,10,182/- in the relevant assessment year. The profits of the Club House has to be examined and quantified with the due process of law. The details relating to the assessment for assessment year 2014-15 are not filed before us. (e) For any other reason, the Assessing Officer decides to not follow the “principle of matching expenses” qua project completion method for this Club House project, the profits of this project may be divided among three assessment years i.e. A.Y. 2012-13, 2013-14 and 2014-15 on ‘proportionate’ basis by applying the ‘principle of matching’ qua the subscription received from the flat buyers. (f) The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in deciding the issue. The Assessing Officer is required to pass a speaking order on this issue considering the relevant law in course. Thus, the relevant alternative grounds 4 & 5 raised by the assessee on this issue are allowed as above.

16 ITA Nos.2795 & 2796/PUN/2016

ITA No.2796/PUN/2016 – A.Y. 2013-14 28. The grounds raised by the assessee are as under:- “1. The learned CIT(A)-12, Pune erred in law and on facts in confirming the disallowance of deduction amounting to Rs. 31,49,800/- u/s 80-IB(10) of the ITA, 1961 made by the learned DCIT, Central Circle-2(1), Pune (hereinafter referred to as the learned AO). 2. The learned CIT(A)-12 and the learned AO erred in law and on facts in disallowing deduction u/s 80-IB(10) of the ITA, 1961 for receipts / revenue related to club-house facility amounting to Rs. 31,49,800/- on the reason that the said club-house facility was not mentioned in the last approved plan of the MIDORI housing project. The learned IT- Authorities ought to have appreciated that club-house was initially approved by the PMC and the club house was a contractual obligation of the appellant anyway. 3. The learned CIT(A)-12 and the learned AO erred in law and on facts in not appreciating that non-mention of a facility / amenity in the approved building plan does not lead to a proposition that the related revenue / profit from such amenity is not a part of profits derived from the said housing project. The learned IT-Authorities ought to have appreciated that the said profit from club-house facility was a part and parcel of a housing project and incidental thereto. Alternatively and without prejudice to Ground No. 2, & 3, the learned 4. CIT(A)-12 and the learned AO erred in law and on facts in not granting the deduction of corresponding expenditure required to be incurred for the construction & development of the club-house. Alternatively and without prejudice to the Ground No. 1, 2 & 3, the 5. learned CIT(A)-12 and the learned AO erred in law and on facts in not shifting the income of Rs. 31,49,800/- being club house membership charges, to AY 2014-15 since the related risks and rewards were transferred only in AY 2014-15, when the said club-house was constructed & developed. 6. The learned CIT(A)-12 and the learned AO erred in law and on facts in holding that the provisions of section 115-JC of the ITA, 1961 is applicable in appellant’s case. The learned IT-Authorities ought to have appreciated the fact that other than MIDORI project (eligible for deduction u/s 80-IB(10) of the ITA, 1961) there was no housing project developed by the appellant. 7. The learned CIT(A)-12 and the learned AO erred in law and on facts in not appreciating the fact that since appellant’s only source of income is from housing project eligible u/s 80-IB(10) of the ITA, 1961; appellant will not be in a position to ever utilize the AMT tax credit, as such defeating the intention of section 115-JC of the ITA, 1961. 8. Appellant craves, leave to add / modify / delete all or any of the grounds of appeal.” 29. The assessee also raised the additional ground of appeal, which reads as under :- “9. Appellant contends that the provision of section 115-JC of the ITA, 1961 is not applicable to appellant as the MIDORI housing project (eligible for deduction u/s 80-IB(10) of the ITA, 1961) has been sanctioned by the local authority i.e. PCMC on 30/03/2007 and was granted completion certificates by PCMC on 29/03/2012, which is prior to introduction of AMT provisions u/s 115-JC of the ITA, 1961 for Partnership Firms by Finance Act, 2012.”

17 ITA Nos.2795 & 2796/PUN/2016

18 ITA Nos.2795 & 2796/PUN/2016

provisions of section 115JC of the Act (ground no.6 & 7 and additional ground). The relevant facts of this issue are narrated as follows. Facts – Assessing Officer’s case: The assessee is non-corporate 34. assessee. So far as the MAT provisions are concerned relevant to the non- corporate assessee, the provisions of section 115JC of the Act were brought into the Statute by the Finance Act, 2012 w.e.f. 1.4.2013 qua the persons other than a company like the present assessee. According to the said provisions of the Act, the assessee is under statutory obligation to pay income tax called “Alternate Minimum Tax (AMT)” at the rate of eighteen and one-half percent where its regular income tax is less than the AMT. AMT at the rate of 18.5% is paid and the adjusted total income as specified in sub-section (2) of section 115JC of the Act. Sub-section (3) of section 115JC of the Act mandates the assessee to file a return from the Accountant certifying the (i) adjusted total income and (ii) AMT along with return of income. The tax credit is available to the assessee in respect of the AMT so paid by the assessee. As per the provisions of section 115JD, the tax credit is available to the assessee upto the 15 assessment years. The section does not provide for refund of the AMT paid by the assessee, if the credit facility is not used for the said 15 years. Further, Midori Phase-I is the only project executed by the assessee and no other project is undertaken by it. As on date, the assessee has no project on hand and on this fact the assessee did not comply with the said provisions of section 115JC of the Act. Considering the fact, the assessee will not have any taxable income. Thus, it is a case of single project venture and there is no change of partners, profits of the housing project Midori Phase-I is never taxable etc. Further, it is the case of the assessee that there is no change of AMT on the assessee as the

19 ITA Nos.2795 & 2796/PUN/2016

AMT as an alternate mechanism to normal tax. Further, referring to the project on hand, ld. Counsel for the assessee argued that the provision of section 115JC of the Act to this non-corporate assessee was not an existence and the project was anyway approved by the local authorities. Even during the time of provisions of the plans, the provisions were not existence. The provisions introduced by the Finance Act, 2012 w.e.f. 1.4.2013 and the same are not applicable retrospectively to the project which took place in the year 2007. The assessee also put forward many arguments stating that the alternate mechanism is next stand of the MAT and the same is only on alternate mechanism of collection of taxes and the same is not separate charge on the total income of the assessee. The assessee relied on various decisions in support of the same. Further, mentioning that the assessee has developed only a single housing project called Midori Phase-I whose income is exempt u/s 80IB(10) of the Act if the AMT is applied. There is no discussion about the assessee claimed for credit of the same or claimed of refund of the same alternatively. All these arguments of the ld. Counsel for the assessee was rejected by the Assessing Officer and the CIT(A) merely relying on the literal interpretation of the provisions of section 115JC of the Act. In this assessment year of the assessee, the Assessing Officer noted that the assessee neither filed the reports of the Accountant as required u/s 115JC(2) of the Act nor paid AMT despite the facts there exist the book profits of the assessee is taxable under the AMT. The Assessing Officer observed that this new provision of section 115JC of the Act is applicable for the assessment year 2013-14 and subsequent assessment year. Accordingly, the Assessing Officer computed the AMT on the book profits of Rs.10,67,79,215/- and assessed regular tax under the normal provisions of the Act.

20 ITA Nos.2795 & 2796/PUN/2016

Before the CIT(A): The CIT(A) rejected the above mentioned arguments 35. of the assessee. The CIT(A) rejected the equity based arguments of the assessee and relied heavily on the literal interpretation of the said provisions. In the process, the CIT(A) ignored the fact that the assessee does not have any other project and there is no way the credit facility if available. He also ignored the fact that there is no benefit of refund in the tax collected under the AMT provisions. However, he ignored the fact when there is no scope for availing the tax credit or refund facility under the said provisions, the Government never intended to tax the profits of the eligible projects indirectly withdrawing the deduction under the Statute. The CIT(A) ignored this before confirming the order of the Assessing Officer. The CIT(A) also never deliberate on the argument of the assessee how the newly inserted provisions of section 115JC of the Act applied to the projects approved prior to the amended provisions. 36. Aggrieved with the above orders of the lower authorities, the assessee is in appeal before the Tribunal with the above extracted grounds no.5 and 6 and the additional ground. Before the Tribunal: Before us, ld. Counsel for the assessee reiterated 37. the above submissions of the assessee on one hand and filed the following written submissions :- “3. Submission w.r.t. Applicability of section 115-JC of the 1TA. 1961 - AY 2013- 14: 3.1 Ground No. 6 & 7 and Additional Ground No. 9: Vide Ground No. 6 & 7 and Additional Ground No. 9, appellant is objecting the applicability of provisions of section 115JC of the ITA, 1961 in the present case due to peculiar and piquant situation. Appellant is contending the same on following analogy: a) Single Project Venture:

21 ITA Nos.2795 & 2796/PUN/2016

Appellant was firm was formed to develop only a single housing project called as MIDORI by Mr. Vikram Gaikwad and Mr. Vinayak Nimhan. It is submitted that there is no other project other than MIDORI project, and no any other project envisaged by appellant. Appellant has claimed deduction u/s 80-IB(10) of the ITA, 1961 on the profits / income from the said project. This is also evident from the Partnership Deed submitted at submitted at Page No. 57 to 64 of Paper Book - I. Appellant is also submitting herewith English Translation of the key clauses of the Partnership Deed which is attached herewith as Annexure-4. b) No change in partners: It is submitted that there is no change in the partners of the appellant firm. There is only change in profit sharing ratio between the partners. The detail of the change in profit sharing ratio between the partners is as follows: Date Profit Sharing Ratio From To Total Mr. Vikram Mr. Gaikwad Vinayak Nimhan 01/08/2006 09/02/2012 50% 50% 100% 10/02/2012 03/02/2013 64% 36% 100% 04/02/2013 02/03/2014 69% 31% 100% 03/03/2014 31/03/2019 67% 33% 100% c) Profits of Housing Project MIDORI not taxable: It is submitted that the MIDORI housing project was approved by the local authority i.e. PCMC on 30/03/2007 and was granted completion certificate by PCMC on 29/03/2012. As such, the profits of housing project MIDORI is eligible for deduction u/s 80-IB(10) of the ITA, 1961 and the same has also been granted by the learned AO. d) No separate charge of AMT: It is submitted that AMT is an alternate mechanism to normal tax and it is not a charge on income or Adjusted Total Income (ATI) per se. There is no charge of AMT on the income / ATI emerging from the combined reading f section 2(24), section 4, and section 5 of the ITA, 1961. In absence of an independent charge for AMT u/s 4 of the ITA, 1961; its scope and levy will have to be understood as an alternate mechanism of taxation. e) Section 115JC extended arm of section 115JB (earlier 115J / 115JA): It is submitted that section 115JC of the ITA, 1961 is only an extended arm of section 115JB (earlier 115J / 115JA) of the ITA, 1961. The change in the tax regime under the said sections is as follows: Period Year Remark Book profit MAT/AMT credit count section taxation section 1 Prior to 1987 - - No any book profit taxation existed in ITA 2 1987-1990 MAT u/s 115J (only Deductions restricted due to companies covered) 115J, were permitted to be carried forward -- -- -- 3 1990-1997

22 ITA Nos.2795 & 2796/PUN/2016

4 1997-2000 (same as 2) MAT u/s 115JA (only companies covered) 2001-2012 115JAA MAT credit entitlement period MAT u/s 115JB (only 5 companies covered) extended from time to time - i.e. 5 years - to 10 years - to 15 years.... 6 2012-2013 115JAA MAT u/s 115JB (for (companies + LLP) companies) AMT u/s 115JC (for LLPs) 7 2013-onwards 115JAA MAT u/s 115JB (for companies) AMT u/s (for all types of 115JC (for all other assesses paying non-company assesses) either MAT or AMT)

f) Clarification of various High Courts about alternate mechanism of MAT: As submitted earlier, AMT is extended arm of MAT. In the MAT regime, various High Courts have held that MAT is only an alternate mechanism for collection of tax: Ester India Ltd Vs. Union of India - 260 CTR 225 (Delhi) "29. The non obstante clause indicates that the provisions of 115JA of the Act would override the other provisions of the Act for computation of taxable income in certain cases falling within the sweep of section 115JA. Section 115JA of the Act is a special provision to calculate taxable income in certain cases. The levy of income tax is under Section 4 of the Act, which is the charging section. Section 115J of the Act only creates a legal fiction to supplant the measure of total income which is chargeable to tax. Thus, indisputably, tax as computed on the basis of Section 115J of the Act is a tax on income." Suryalatha Spinning Mills Ltd. Vs. Union of India - 223ITR 713 (AP) "14. The next contention is that sub-section (1) of section 115J results in double taxation. We are unable to appreciate this contention. Firstly because what is being taxed is income determined on the basis prescribed under the said impugned provision and there is no provision to re-tax the same income, as such as of fact there is no double taxation. And secondly because double taxation per se would not render an otherwise valid provision, invalid - Jain Bros's case (supra)." Karimtharuvi Tea Estate Ltd. Vs. DCIT-247 ITR 22 (Kerala) "What is taxed is not fictional or hypothetical income—By this section certain tax concessions are restricted or curtailed to certain extent so that the company pays some tax—This is not unreasonable so as to make it violative of Art. 14 or 19 of the Constitution—Sec. 115J is not therefore illegal or unconstitutional" Further, this view is also emerging from various CBDT Circulars: - Circular No. 495 - Finance Act 1987 - Circular No. 572 - Finance Act 1990

23 ITA Nos.2795 & 2796/PUN/2016

- Circular No. 762 - Finance Act 1996 - Circular No. 794 - Finance Act 2000 - Circular No. 3 - Finance Act 2005 Copies of the above referred judgments and CBDT Circulars are attached herewith and are marked as Annexure-5 and Annexure-6 respectively. g) No occasion to claim Tax Credit: As submitted earlier, appellant firm was formed only to develop a single housing project called as MIDORI, which is eligible for deduction u/s 80-IB(10) of the ITA, 1961. If appellant is made liable to pay AMT, there will be no occasion to appellant to claim the credit of the same as there is no any other project envisaged. h) Reliance on the decision of S. K. Venture: It is submitted that the MIDORI project was approved by the local authority i.e. PCMC on 30/03/2007 and was granted completion certificate on 29/03/2012. Whereas, the provisions of section 115-JC of the ITA, 1961 was made applicable to appellant firm from 01/04/2012. As such, when appellant envisaged the MIDORI project which was eligible for deduction u/s 80-IB(10) if the ITA, 1961; there was no any tax which appellant was liable to pay. Considering the doctrine of promissory estoppel, it is submitted that provisions of section 115-JC of the ITA, 1961 is not applicable to appellant. Appellant in this regard is placing reliance on the decision of Honourable Mumbai ITAT in the case of S. K. Venture Vs. ITO - ITA No. 1248/MUM/2018. Copy of the same has already been submitted before the Honourable Bench. In the said decision the Honourable ITAT has considered various judgements of the Honourable Apex Court. Further, appellant has also culled out the similarity between the facts of appellant case with that of S. K. Venture. Comparison of the same is attached herewith as Annexure-7. i) Prayer: Considering the above facts and legal pronouncements, it is submitted that provisions of section 115-JC of the ITA, 1961 is not applicable to appellant.”

DR’s Arguments: Ld. DR relied heavily on the order of the Assessing 38. Officer and the CIT(A). However, no specific arguments are made on the prospective nature of the amendments in Finance Act, 2013. Decision of the Tribunal 39. We heard both the parties and perused the orders of the lower authorities. The arguments of the ld. Counsel for the assessee are already summarized in the preceding paragraphs of this order. The most important

24 ITA Nos.2795 & 2796/PUN/2016

aspect of the submission relates to the applicability of the recent decision of Mumbai Bench of the Tribunal in the case of M/s. S.K. Ventures vs. ITO vide ITA No.1248/Mum/2018 for the assessment year 2013-14 dated 05.03.2019. As can be seen in the extract above, i.e. (h) relating to the reliance on the decision of M/s. S.K. Ventures (supra), ld. Counsel submitted that this decision is squarely applicable to the fact of the present case. Brining our attention to the Annexure-7 to the written submissions, ld. Counsel submitted that the fact of both the cases are identical while the project was started in 2007 and the project was completed in 2012. In both the cases, the provision of section 115JC of the Act is applicable considering the year of completion of the project. However, the date of approval by the local authorities is relevant and in both the cases the projects were approved year back in 2007 and the provisions of section 115JC of the Act which were brought into Statute by 1.4.2013 cannot be applied retrospectively as they are applied prospectively to the projects approved after the said date. 40. Considering the importance of the same, we proceed to extract the relevant contents of the said decision of the Tribunal (supra) and the same are extracted hereunder :- “5. The only issue in this appeal is against the order of the CIT(A) in sustaining the applicability of provisions of section 115 JC of the Act disregarding the fact that the housing project undertaken by the assessee has been approved prior to the date of introduction of the provisions of section 115 JC of the Act and also completion of the project. For this, the assessee has raised the following ground: “In the facts and circumstances of the case and in law, the ld CIT(A) erred in sustaining the applicability of the provisions of section 115JC in case of the assessee disregarding the fact that the housing project undertaken by the assessee has been approved prior to the date of introduction of the provision of section 115JC of the Act.” 6. Briefly stated facts are that in this case the assessee AOP filed the original return of income by way of e-filing vide dated 30.9.2013 and subsequently the

25 ITA Nos.2795 & 2796/PUN/2016

return was revised by e-filing on 31.3.2015. This return has been processed under section 143(1) of the Act and subsequently, the assessment was completed under section.143(3) of the Act vide order dated 30.3.2016 by accepting the returned income except making of disallowance of non payment of MVAT and service tax under section.43B of the Act. The deduction claimed under Chapter VIA under section 80IB(10) in respect of housing project namely; KIrishna Regency at Kalyan was accepted amounting to ₹6,54,91,914/- but the Assessing Officer invoked the provisions of section 115 JC of the Act and adjusted total income and charged alternate minimum tax in accordance with this provisions, which was confirmed in first appeal. 7. Ld Counsel for the assessee now before us stated that the assessee is challenging only limited issue i.e applicability of provisions of section 115 JC of the Act to the assessee for the relevant assessment year 2013-14. Ld Counsel for the assessee explained that the provisions of section 115 JC of the Act was made applicable to certain persons other than a company by the Finance Act (No.2) with effect from 1.4.2013. Ld Counsel explained that in the project i.e. Krishna Regency, the assessee has claimed deduction 80IB(10), as the same was started in April, 2007 and was completed in March, 2012. Ld Counsel for the assessee referred to pages 19 to 21 of assessee’s paper book, wherein, completion certificate of the project is enclosed at pages 19 to 21 of PB and English translation at pages 20-21. Ld Counsel for the assessee drew our attention to pages 20 & 21 of PB, wherein, building completion certificate issued by Kalyan Dombivli Muncipal Corporation Town Planning Department is enclosed. This completion certificate is dated 31.3.2012. Ld Counsel stated that the provisions of section 115 JC was made applicable to certain persons other than a company by substituting limited liability partnership by the Finance Act (No.2) with effect from 1.4.2013 and the assessee’ s project commenced construction in April, 2007 and project was completed as on the date of completion certificate issued by Kalyan Dombivli Muncipal Corporation Town Planning Department dated 31.3.2012. According to him, once the assessee has completed the project before coming into force of a particular provision, that provision cannot be applied to the facts of the assessee’s case or in the year when the income has been booked by the assessee in that year. Ld Counsel for the assessee relied on the decision of Hon’ble Supreme Court in the case of M/s. Motilal Padampat Sugar Mills Co. Ltd vs State of Uttar Pradesh and others, AIR 1979 SC 621, wherein, the Hon’ble Court has explained the doctrine of promissory estoppel and meaning thereby. The Hon’ble Supreme Court has considered whether the State is bound and if so to what extent it is bound by the principle of promissory estoppel. Ld Counsel relied on the following paragraphs of the judgement of Hon’ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd (supra) as under: “On 10th October, 1968 a news item appeared in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under Section 4A of the U. P. Sales Tax Act to all new industrial units in the State with a view to enabling them to come on firm footing in developing stage. This news item was based upon a statement made by Shri M. P. Chatterjee the then Secretary in the Industries Department of the Government. The appellant, on the basis of this announcement, addressed a letter dated 11th October, 1968 to the Director of Industries stating that in view of the Sales Tax Holiday announced by the Government, the appellant intended to set up a Hydro-generation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit, which they proposed to set up, would be entitled to Sales Tax Holiday for a period of three years from the date it commences production. The Director of Industries replied by his letter dated 14th Oct., 1968 confirming that "there will be no sales tax for three

26 ITA Nos.2795 & 2796/PUN/2016

years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production." The appellant later addressed a letter dated 22nd January, 1969 to the respondent who was the Chief Secretary to the Government. The respondent stated categorically in his letter in reply dated 23rd January, 1969 that the proposed Vanaspati factory of the appellant "will be entitled to exemption from U. P. Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period hi Uttar Pradesh it self and expressed his surprise that a letter from the Chief Secretary to tis® State Government stating this fact i& clear and unambiguous words should not carry conviction with the financial institutions; Held it was clear from the letter of the respondent dated 23rd January, 1969 that a categorical representation was made by the respondent on behalf of the Government that the proposed! vanaspati factory of the appellant would be entitled to exemption from sales tax in respect of sales of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production. The letter dated 23rd January, 1969 clearly showed that the respondent made this representation in his capacity as the Chief Secretary of the Government, and it was, therefore, a representation on behalf of the Government The appellant relying on this representation of the Government, borrowed moneys from various financial institutions, purchased plant and machinery from M/s. De Smith (India) Pvt. Ltd., Bombay and set up a vanaspati factory at Kanpur. The facts necessary for invoking the doctrine of promissory estoppel were, therefore, clearly present and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect of sales of vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production. The Government was bound on the principle of promissory estoppel to make good the representation made by it.” 8. Ld Counsel for the assessee also relied on the decision of Hon’ble Supreme Court in the case of CIT vs Sarkar Builders, (2015) 57 taxmann.com 313(SC), wherein, the Hon’ble Supreme Court has considered this issue of prospectivity and applicability of the provisions vide para 20 to 22 as under: “20) Having regard to the above, let us take note of the special features which appear in these cases: (a) In the present case, the approval of the housing project, its scope, definition and conditions, all are decided and dependent by the provisions of the relevant DC Rules. In contrast, the judgment in M/s. Reliance Jute and Industries Ltd. was concerned with income tax only. (b) The position of law and the rights accrued prior to enactment of Finance Act, 2004 have to be taken into account, particularly when the position becomes irreversible. (c) The provisions of Section 80IB(10) mention not only a particular date before which such a housing project is to be approved by the local authority, even a date by which the housing project is to completed, is fixed. These dates have a specific purpose which gives time to the developers to arrange their affairs in such a manner that the housing project is started and finished within those stipulated dates. This planning, in the context of facts in these appeals, had to be much before 01.04.2005.

27 ITA Nos.2795 & 2796/PUN/2016

(d) The basic objective behind Section 80IB(10) is to encourage developers to undertake housing projects for weaker section of the society, inasmuch as to qualify for deduction under this provision, it is an essential condition that the residential unit be constructed on a maximum built up area of 1000 sq.ft. where such residential unit is situated within the cities of Delhi and Mumbai or within 25 kms. from the municipal limits of these cities and 1500 sq.ft. at any other place. (e) It is the cardinal principle of interpretation that a construction resulting in unreasonably harsh and absurd results must be avoided. (f) Clause (d) makes it clear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built up area of shops and establishments to 5% of the aggregate built up area or 2000 sq.ft., whichever is less. However, the Legislature itself felt that this much commercial space would not meet requirements of the residents. Therefore, in the year 2010, the Parliament has further amended this provision by providing that it should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft., whichever is higher. This is a significant modification making complete departure from the earlier yardstick. On the one hand, the permissible built up area of the shops and other commercial shops is increased from 2000 sq.ft. to 5000 sq.ft. On the other hand, though the aggregate built up area for such shops and establishment is reduced from 5% to 3%, what is significant is that it permits the builders to have 5000 sq.ft. or 3% of the aggregate built up area, 'whichever is higher'. In contrast, the provision earlier was 5% or 2000 sq.ft., 'whichever is less'. (g) From this provision, therefor, it is clear that the housing project contemplated under sub-section (10) of Section 80IB includes commercial establishments or shops also. Now, by way of an amendment in the form of Clause (d), an attempt is made to restrict the size of the said shops and/or commercial establishments. Therefore, by necessary implication, the said provision has to be read prospectively and not retrospectively. As is clear from the amendment, this provision came into effect only from the day the provision was substituted. Therefore, it cannot be applied to those projects which were sanctioned and commenced prior to 01.04.2005 and completed by the stipulated date, though such stipulated date is after 01.04.2005. 21) These aspects are dealt with by various High Courts elaborately and convincingly in their judgments. It is not necessary to go into the detailed reasoning given by these High Courts. However, we would like to extract the following discussion from the judgment dated 25.07.2014 of the Bombay High Court in ITA Nos. 201 and 308 of 2012, where this very aspect is answered in the following manner: “36. There is yet another reason for coming to the aforesaid conclusion. Take a scenario where an Assessee, following the project completion method of accounting, has completed the housing project approved by the local authority complying with all the conditions as set out in section 80-IB(10) as it stood prior to 1st April, 2005. If we were to accept the argument of the Revenue, then in that event, despite having completed the entire construction prior to 1st April, 2005 and complying with all the conditions of section 80-IB(10) as it stood then, the Assessee would be disentitled to the entire deduction claimed in respect of such housing project merely

28 ITA Nos.2795 & 2796/PUN/2016

because he offered his profits to tax in the A.Y. 2005-06. In contrast, if the same Assessee had followed the work-in-progress method of accounting, he would have been entitled to the deduction under section 80-IB(10) upto the A.Y. 2004-05, and denied the same from A.Y. 2005-06 and thereafter. It could never have been the intention of the Legislature that the deduction under section 80-IB(10) available to a particular Assessee would be determined on the basis of the 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) is prospective in nature and can have no application to a housing project that is approved before 31st March, 2005. As the deduction sought to be claimed under section 80- IB(10) is inseparably linked with the date of approval of the housing project, it would make no difference if the construction of the said project was completed on or after 1st April, 2005 or that the profits were offered to tax after 1st April, 2005 i.e. in A.Y. 2005-06 or thereafter. We therefore find no substance in the argument of the Revenue that notwithstanding the fact that the housing project was approved prior to 31st March 2005, if the construction was completed on or after 1st April, 2005 or if the profits are brought to tax in the A.Y. 2005-06 or thereafter, the said housing project would have to comply with the provisions of clause (d of section 80-IB(10). To our mind, we do not think that the condition/restriction laid down in clause (d) of section 80-IB(10) has to be revisited and/or looked at and complied with in the assessment year in which the profits are offered to tax by the Assessee. When the Assessee claims a deduction under section 80- IB(10), the Assessee is required to comply with such a condition only if it is on the statute-book on the date of the approval of the housing project and it has nothing to do with the year in which the profits are brought to tax by the Assessee. We have come to this conclusion only because we find that clause (d) of section 80-IB(10) is inextricably linked to the date of the approval of the housing project and the subsequent development/construction of the same, and has nothing to do with the profits derived therefrom. We may hasten to add that if a particular condition is not inseparably linked to the date of approval of the 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 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 31st March, 2005 irrespective of the fact that the profits of said housing project are brought to tax after the said provision was brought into force.” 22) At this juncture, we would like to quote the following passage from Commissioner of Income Tax, U.P. v. M/s. Shah Sadiq and Sons (supra) : “14. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years. The right of carrying forward and set off accrued to the assesee under the Act of 1922. A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the repealing statute took away such right expressly or by necessary

29 ITA Nos.2795 & 2796/PUN/2016

implication. This is the effect of Section 6 of the General Clauses Act, 1897. 15. In this case the 'savings' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever rights are expressly saved by the 'savings' provision stand saved. But, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c) of the General Clauses Act, 1897. The right to carry forward losses which had accrued under the repealed Income Tax Act of 1922 is not saved expressly by Section 297 of the Income Tax Act, 1961. But, it is not necessary to save a right expressly in order to keep it alive after the repeal of the old Act of 1922. Section 6(2) saves accrued rights unless they are taken away by the repealing statute. We do not find any such taking away of the rights by Section 297 either expressly or by implication.” 9. Ld Counsel for the assessee also relied on the decision of Hon’ble Supreme Court in the case of CIT vs Vatika Township (P) Ltd., (2014) 227 Taxman 121 (SC). 10. On the other hand, ld Sr Departmental Representative relied on the amended provision of section 115 JC of the Act and stated that the amended provisions w.e.f 1.4.2013 will apply for and from assessment year 2013-14. 11. We have heard the rival contentions and gone through the facts and circumstances of the case. The admitted facts are that the assessee has claimed deduction 80IB(10), as the construction of the project was started in April, 2007 and was completed in March, 2012. We noted this fact from the paper book pages 19 to 21 of assessee, wherein, completion certificate of the project is enclosed at pages 19 to 21 of PB and English translation at pages 20-21. Ld Counsel for the assessee drew our attention to pages 20 & 21 of PB, wherein, building completion certificate issued by Kalyan Dombivli Muncipal Corporation Town Planning Department is enclosed. In view of these facts, we have considered the arguments made by both the sides and also considered the applicability of the provisions of section 115JC of the Act in the case of the assessee applied by the AO disregarding the fact that the housing project undertaken by the assessee has been approved prior to the date of introduction of the relevant provisions. The assessee is engaged in the construction and sale of immovable property i.e. builders. The housing project undertaken by the assessee was approved by the competent authority and accordingly, assessee claimed deduction under section 80IB of the Act of 100% of the profit from the housing project. We noted that Chapter XII BA i.e. special provisions relating to certain persons other than a company was introduced by the Finance Act 2011 w.e.f. 1.4.2012 and made applicable for and from A.Y. 2012-13 in respect of limited liability partnerships. Further, this provision was made applicable to other categories of persons other than a company with effect from 1.4.2013 by the Finance Act, 2012. Accordingly, the provisions of section 115JC of the Act was made applicable to profit from housing projects deductible under section.80IB(10) of the Act only in respect of housing projects approved by the competent authority on or after 1.4.2013. Similar case was dealt with by co-ordinate bench of this Tribunal in the case of Neha Home Builders Pvt Ltd.vs CIT,(2018) 92 taxmann.com 102 (Mum), wherein, it is held that the assessee was entitled to claim of deduction under

30 ITA Nos.2795 & 2796/PUN/2016

section,80IB(10) of the Act while computing book profit u/s.115JB of the Act in respect to the profit of the housing project. 12. We have also gone through the case law of Hon’ble Supreme Court in the case of Sarkar Builders (supra), wherein, Hon’ble Supreme court has considered the provisions of section 6 of General clauses Act 1897 and also considered the saving provisions in the repealing statute which is not exhaustive of the rights and which are saved or which survive the repeal of the statute under which such right had accrued. Hon’ble Supreme Court has considered whatever rights are expressly saved by the saving provisions stand saved but that does not mean rights which are not saved by the saving provisions are extinguished or stand ipso facto terminated by the mere fact that a new statue repealing the old statute is enacted. Even Hon’ble Supreme Court in the case of Vatika Township P Ltd (supra) has considered the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. One principle of law is known as lex prospicit non respicit law looks forward not backward. It was also observed that as was observed in Philips vs Eyre (1870) LR 6 QB 1 a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 13. In view of the above, we are of the considered opinion that the provisions of section 115JC of the Act as brought in the statute by the Finance Act (No.2) w.e.f. 1.4.13 will apply prospectively and to the projects claiming deduction under section.180IB(10) of the Act, which have come or approved on or after that date. Accordingly, this provision cannot be applied to the projects completed or approved retrospectively upto 31.3.2012. Hence, we allow the appeal of the assessee.” 41. The ratio of the above decision of the Tribunal in the case of S.K. Ventures (supra) says that the provisions of section 115JC of the Act is applicable to the projects which come into existence or which are approved on or after that date i.e. 01.04.2013. The said new provisions of the Act are not applicable retrospectively to the projects completed or approved up to the said date 31.03.2012. For supporting the above point of view and in favour of prospective application of amended provisions, ld. Counsel for the assessee relied on the binding judgements in the case of (i) CIT vs. Sarkar Builders, 375 ITR 392 (SC); (ii) CIT vs. Vatika Township (P.) Ltd., 367 ITR 466 (SC); (iii) CIT vs. Brahma Associates, 333 ITR 289 (Bom-HC); and, (iv) Anil Kumar Gopikishan Agrawal vs. ACIT, 106 taxmann.com 137 (Guj-HC). These

31 ITA Nos.2795 & 2796/PUN/2016

decisions were pronounced in the context of section 80IB(10) of the Act and the amendment to section 113 and section 153B etc of the Act. 42. Thus, the date & year of approval of the project become relevant to not only to the projects of section 80IB(10) of the Act but also to such projects cum the AMT case covered u/s 115JC of the Act. The doctrine of impossibility becomes relevant here too. If the assessee is aware of the obligations of the Statute for paying AMT in the assessment year 2013-14, the assessee would not have taken of this project at all in the year 2007. Alternatively, the assessee would have followed a project completion method thereby he would be have planned to the taxation as per the then existing provisions of the Act. In our view, this is a case where assessee was not aware of the new legislation by way of provisions of section 115JC of the Act. 43. Therefore from this point of view, the decision of the Tribunal in the case of S.K. Ventures (supra) is relevant due to commonality of facts and the law. We also find relevant to extract the comparison of facts in both the cases and the same is extracted hereunder :- Comparison of Facts Particulars S.K. Ventures V. ITO Vikram Developers V. DCIT ITA No.1248/Mum/2018 ITA No.2796/Pun/2016 A.Y. 2013-14 2013-14 Status AOP Partnership Firm Name of the house project Krishna Regency, Kalyan Midori, Pimple Nilakh, Pune Project started April 2007 March 2007 Completion certificate date 31-03-2012 29-03-2012 Whether AMT paid in return No No Total income taxed as AMT 6,54,91,914 10,67,79,216 u/s 115JC

32 ITA Nos.2795 & 2796/PUN/2016

33 ITA Nos.2795 & 2796/PUN/2016

project was approved. We, thus, find that the only way to resolve the issue would be to hold that clause (d) is to be treated as inextricably linked with the approval and construction of the housing project and an assessee cannot be called upon to comply with the said condition when it was not in contemplation either of the assessee or even the Legislature, when the housing project was accorded approval by the local authorities. 2. CIT vs. Vatika Township (P.) Ltd. – 367 ITR 466 (SC) 38. When we examine the insertion of proviso in Section 113 of the Act, keeping in view the aforesaid principles, our irresistible conclusion is that the intention of the legislature was to make it prospective in nature. This proviso cannot be treated as declaratory/statutory or curative in nature. There are various reasons for coming to this conclusion which we enumerate hereinbelow: 39. ………… ………… Addition of this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench in Suresh N. Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled. 41. As a result of the aforesaid discussion, the appeals filed by the Income Tax Department are hereby dismissed. Appeals of the assessees are allowed deleting the surcharge levied by the assessing officer for this block assessment pertaining to the period prior to 1st June, 2002. 3. Brahma Associates Vs. JCIT – 119 ITD 255 (SB) (Pune) 86 ……….. ……….. The amendment brought about by the insertion of cl. (d) in s.80-IB(10), in our understanding, is a substantive amendment and it is applicable from the date the legislature has so specifically provided i.e. 1st April, 2005. 4. CIT V. Brahma Associates – 333 ITR 289 (Bombay) 29. Lastly, the argument of the Revenue that s. 80-IB(10) as amended by inserting cl. (d) w.e.f. 1st April, 2005 should be applied retrospectively is also without any merit, because, firstly, cl. (d) is specifically inserted w.e.f. 1st April, 2005 and, therefore, that clause cannot be applied for the period prior to 1st April, 2005. Secondly, cl. (d) seeks to deny s. 80-IB(10) deduction to projects

34 ITA Nos.2795 & 2796/PUN/2016

having commercial user beyond the limit prescribed under cl. (d), even though such commercial user is approved by the local authority. Therefore, the restriction imposed under the Act for the first time w.e.f. 1st April, 2005 cannot be applied restrospectively. Thirdly, it is not open to the Revenue to contend on the one hand that s. 80-IB(10) as it stood prior to 1st April, 2005 did not permit commercial user in housing projects and on the other hand contend that the restriction on commercial user introduced w.e.f. 1st April, 2005 should be applied restrospectively. The argument of the Revenue is mutually contradictory and hence liable to be rejected. Thus, in our opinion, the Tribunal was justified in holding that cl. (d) inserted to s. 80-IB(10) w.e.f. 1st April, 2005 is prospective and not retrospective and hence cannot be applied to the period prior to 1st April, 2005. 5. Anil Kumar Gopikishan Agrawal Vs. ACIT – 106 taxmann.com 137 (Gujarat) At this stage, reference may be made to the following extract of the notes on clauses to Finance Bill 2005 (II-A) explaining clause 46 whereby section 153B of the Act relating to time-limit for completion of assessment under section 153A was sought to be amended: "This amendment will take effect retrospectively from 1st June, 2003 and will, accordingly, apply in relation to a search initiated under section 132 or in relation to books of account, other documents or any assets requisitioned under section 132A after 31st May, 2003". Thus, when the legislature thought it fit to make the amendment in section 153B of the Act relating to time limit of assessment under section 153A of the Act retrospective from a particular date, it provided that such retrospectivity would relate to cases where the search is initiated or books of account, documents or other assets are requisitioned, from such date. Thus, even the legislature has considered the initiation of search or making of requisition as the trigger point for applying the provisions of section 153B of the Act to assessment under section 153A of the Act. Under section 153C of the Act also, ultimately, assessment or reassessment is required to be made in accordance with section 153A of the Act. Thus, when the amended provisions of section 153C (1) of the Act have been brought into force with effect from 1st June, 2015, it has to be construed that such amended provisions would apply to a search initiated under section 132 or in relation to books of account, other documents or any assets requisitioned under section 132A of the Act after 31st May, 2015. Consequently, in relation to searches carried out till 31st May 2015, it was not permissible for the Assessing Officer to assume jurisdiction under section 153C of the Act as amended with effect from 1st June, 2015.” 46. We have also considered the submissions of the assessee relating to ‘doctrine of impossibility’ qua the adopting the other options available to the assessee in the matter of recognition of income of the project. The assessee now cannot alter the income recognition methods. Assessee had the option to invoke the Percentage Completion Method permitted by the Circular of the CBDT dated 30.06.2009 (Instruction No.4/2009). In this regard, the ld. Counsel for the assessee furnished the following written submission in support the case of the assessee :- “Ground relating to objection to levy of Alternate Minimum Tax (AMT u/s 115JC)

35 ITA Nos.2795 & 2796/PUN/2016

(In continuation of arguments and Synopsis, Appellant is making further short submission). Doctrine of impossibility - As per facts, assessee was formed as a single joint venture for development of the MIDORI project. As per facts, project was approved in year 2007 and completed in March-2012. Agreements to sales were already made in the past years and terms and conditions decided in the past years. But, the sales did not take place in AY 2012-13 or earlier years. Sales (i.e. handing over of possession) took place in various years, i.e. partly in AY 2012-13, partly in AY 2013- 14, and thereafter. As the Appellant has been following Completed Contract Method (i.e. CCM), profits / income were offered to tax in such respective years of extending possession. Now, despite complying all the norms of section 80-IB(10), Appellant is not getting benefit promised by the law at the time of approval, considering the newly inserted / amended provisions of AMT u/s 115JC. Appellant could have done nothing in such a case, where, some fresh tax (i.e. AMT) gets levied by the Legislature on the profits / income. Appellant was caught unaware in this regard. As such, Appellant contends, law applicable at the time of approval should be applied in case of a housing project / realty project. Percentage Completion Method (PCM) - It is submitted, had the Appellant been following Percentage Completion Method (PCM), the profits / income would have been taxed in the earlier years itself and the AMT provisions would not have applied to the past years. In other words, a PCM method would have saved appellant as against CCM method. It is submitted, methods of accounting are merely rules for deducing correct profits in a given case, and nothing more. Such methods of accounting ought not to change responsibilities of taxation in substance. Even CBDT has accepted this principle and has issued an Instruction No. 4/2009 dated 30/6/2009 regarding eligibility of deduction u/s 80-IB(10) and PCM. In the present case, Appellant would have never entered into the taxable ken of AMT provisions, had it been following PCM, as the entire construction work was already over before 31/3/2012. Appellant ought not to be subjected to AMT provisions simply because it is following CCM instead of PCM.” 47. From the above, we find the assessee is caught unaware legally by the new law brought into statute for the assessment year 2013-14. Thus, we find it is unfair to apply the new section 115JC of the Act to the assessee’s project approved in 2007. Considering the above decision of the Tribunal (supra), the commonality of the facts of both the cases and the legal submissions of the AR above, we find it is settled legal issue on the matter at the level of the Tribunal and the provision of section 115JC of the Act need to be applied prospectively only and not to the projects approved in 2007 as in the present case. No other contrary case is brought to our notice by the Revenue for taking any contrary view by us. Accordingly, the additional ground and other related grounds are allowed. 48. Regarding the ground nos.6 and 7, we find the same are basically argumentative in nature. Before us, referring to the said grounds, ld. AR submitted that these grounds revolved around the solitary housing project ever

36 ITA Nos.2795 & 2796/PUN/2016

undertaken by the assessee during its life time. With this fact, if assessee what to pay the AMT tax, the same remains refundable to the assessee at the end of the permitted period. With the absence enabling provisions for such refund of AMT credit, the deduction provisions of section 80IB(10) of the Act becomes inapplicable to the eligible project of the assessee. Without going to these arguments, we find it appropriate to grant relief to the assessee on legal ground i.e. prospective application of the provisions of section 115JC qua the date of approval for the first time of the project which is much earlier to the introduction of the provisions of section 115JC of the Act. Considering the relief granted to the assessee as the legal ground, we find the adjudication of these grounds 6 & 7 become academic exercise only. Therefore, we are of the opinion, the grounds no.6 and 7 are dismissed as academic. 49. In the result, the appeal of the assessee in ITA No.2796/PUN/2016 for the assessment year 2013-14 is partly allowed. 50. Resultantly, both the appeals of the assessee are partly allowed. Order pronounced on 14th day of November, 2019. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (D. KARUNAKARA RAO) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 14th November, 2019 Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-12, Pune. 4. The Pr. CIT, Central, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.