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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER MAHAVIR SINGH, VP:
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-4, Chennai in 2010-11, order dated 28.12.2018. The assessment was framed by the ACIT (OSD), Corporate Range – 1,
2 Chennai for the assessment year 2010-11 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 11.12.2017.
The only issue in this appeal of Revenue is against the order of CIT(A) allowing deduction u/s.80IB(10) of the Act despite the fact that the assessee sold three adjacent units to relatives of the same family and also holding that the amendment brought in by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010 will apply for assessment year 2010-11 and is prospective.
Brief facts are that the assessee is a builder and developer and developed a housing project at ‘Doshi Trinity Park’ at Vengaivasal. The assessee claimed deduction u/s.80IB(10) of the Act in regard to this project in the return of income filed on 30.05.2017 in response to notice issued u/s.148 of the Act. The assessee also claimed current year loss of Rs.1,04,46,109/-. The AO during the course of scrutiny assessment proceedings noticed that the assessee company has allotted three units i.e., A1, C1 and D1 in Block C in the names of Sivaraman Balasubramanian, Prabha Sivaraman and Balasubramaniam, all relatives and all residing at K3, Morning Glory, Air Force Station Road, East Tambaram, Chennai. According to AO,
3 as per the amended provision of section 80IB(10)(e)(f) inserted by Finance (No.2) Act, 2009 w.e.f. 01.04.2010, all the specified persons can be allotted only one flat and no other flat can be allotted for claim of deduction u/s.80IB(10) of the Act. According to AO, since the assessee has allotted three flats and the amended provision of section 80IB(10)(e)(f) inserted by Finance (No.2) Act, 2009 w.e.f. 01.04.2010 is applicable to assessment year 2010-11, the assessee is not entitled for claim of deduction and accordingly, the AO disallowed the claim of deduction amounting to Rs.6,85,27,733/-. Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) allowed the claim of assessee by observing as under:- “The AO has pertinently not disputed the clinching facts in this case which is that the allotment in the housing project at ‘Doshi Trinity Park’ at Vengaivasal, Chennai was made in A.Y.s 2008-09 and 2009-10 relating to FYs 2007-08 & 2008-09 as evidenced by their respective registration of UDS in the land as also the Builders Agreement for construction of the apartment well before the provisions of Sec 80IB(10)(e) & (f) were inserted w.e.f. 01.04.2010, which has also not been contested by the AO and therefore as the allotments were undisputedly made prior to the said provision coming into force which could not have been anticipated by the appellant and as such it obviously could not have restricted the allotment of more than one flat to the same individual or to somebody related to such person in compliance to such provision as it appears to be in the instant case and therefore could not be said to have violated the conditionalities
4 prescribed in the provision of Sec 80IB(10)(e) & (f) as contented by the AO. and finally CIT(A) held as under:- “I am therefore favourably persuaded by the reasoning adduced by the appellant bolstered as it is by the aforesaid case laws which clearly uphold his reasoning particularly about the non-retrospective character of the provisions of Sec.80IB(10)(e) & (f) which is the bone of contention in the instant impugned case as correctly interpreted by the AR and hence considering the overall conspectus of the factual matrix as also the case laws relied on which is squarely applicable thereto, the impugned addition made thereof of Rs.6,85,27,733/- u/s 80IB(10) is directed to be deleted.”
We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessee has developed a housing project ‘Doshi Trinity Park’ at Vengaivasal. The only contention of the Revenue is that in the above said housing project, three apartments were allotted / sold to family members and the details are as under:- Date of Registration Date of Builders Flat No/Building Area Name of the Allottee of Sale Deed for Agreement UDS in land C Block A1 1015 Sq.Ft. B. Sivaraman S/o S.S. 04.05.2007 10.09.2007 Balasubramanian C Block C1 1015 Sq.Ft. Mrs. Prabha W/o B. 15.05.2007 10.09.2007 Sivaraman C Block D1 1015 Sq.Ft. S.S. Balasubramanian 15.05.2007 16.05.2008 S/o S. S. Swaminathan The Revenue raised the question that whether disallowance is to be made for claim of deduction u/s.80IB(10) of the Act in the case of 5 assessee company for assessment year 2010-11, since the allotment and sale of above stated three apartments has taken place to father, son and his spouse and the amended provisions of section 80IB(10)(e)(f) as inserted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010 becomes applicable for and from assessment year 2010-11. The Revenue’s contention is that the amended provision will apply for the relevant assessment year because the assessee has booked profit in this year and claimed deduction in this year. We noted that the builders agreement was entered into in May 2007 and sale deed for UDS in land was registered in September 2007 and May 2008 in respect of these sale of flats. In such circumstances, whether the provisions will apply retrospectively or prospectively. This issue was considered by Hon’ble Madras High Court in the case of CIT vs. Elegant Estates in TCA Nos.179 & 180 of 2018, order dated 19.06.2018 and held as under:- 6. The claim was disallowed on the ground that the sale of the flats was recognized on 31.3.2010, being the previous year 2009-2010, relevant to the assessment year 2010-2011. The Assessing Officer was of the view that provisions of Section 80IB(10) of the said Act were not attracted, since two flats had been sold to the same couple contravening Clause (f) of Section 80IB(10), extracted herein above.
Being aggrieved, the respondent assessee filed appeals before the Commissioner of Income Tax (Appeals)-15, Chennai. It is the contention of the appellant that the assessee is not eligible for deduction under Section 80IB(10) of the said Act, since conditions prescribed thereunder, have not been complied with.
By orders dated 18.11.2015, the Appellate Commissioner allowed the appeals, inter alia, holding that the flats in question were sold on 14.1.2008 and 16.7.2008 respectively and that the amendment of Section 80IB of the said Act, which was prospective with effect from 1.4.2010, had no application.
Assailing the said orders, the Revenue appealed to the learned Tribunal. By the order impugned in these appeals, the appeals of the Revenue have been dismissed by the learned Tribunal.
The questions of law involved in these appeals are: (i)Whether the assessee was entitled to deduction under Section 80IB(10) of the said Act of Rs.8,87,57,581/- and Rs.4,35,48,266/- respectively in respect of the two residential flats in the housing project measuring 1653 Sq. Ft. and 1572 Sq. Ft. respectively (total area being 3225 Sq.Ft.) sold to the husband wife couple? (ii) Whether on the facts and circumstances of the case, the Tribunal had erred in holding the assessee is entitled for deduction under Section 80IB(10) on the ground that amendment brought on 01.04.2010 vide the Clause (f) to Section 80IB(10) barring sale of the flats to the related persons, is prospective in nature and the flats were sold vide agreements prior to the amendment?
The relevant year would be the year of the actual sale and not the year when the revenue chooses to recognize the sale. In the instant case, the Appellate Commissioner and the learned Tribunal concurred in the factual finding that the actual sale of the flats in question took place on 14.1.2008 and 16.7.2008 respectively, long before the amendment of Section 80IB(10) of the Income Tax Act. The Appellate Commissioner and the learned Tribunal very rightly held that the amendments were prospective with effect from 1.4.2010.
In view of the factual concurrent finding of the Appellate Commissioner and the learned Tribunal that actually sale of flats in question took place in 2008, long before the amendment of Section 80IB of the said Act, which is prospective, there is no question of law, let alone substantial question of law, involved in these appeals. It is well settled that right of appeal is not automatic, but is conferred by statute. The right of appeal to the High Court conferred under Section 260A of the said Act is a 7 limited right of appeal, restricted only to substantial questions of law. The appeals cannot, therefore, be entertained.
In any case, the question of whether an assessee would be liable to full deduction or only proportionate deduction or for that matter no deduction under Section 80IB(10) in respect of the two flats exceeding 1500 Sq. Ft. purchased prior to 1.4.2010 is covered by a judgment and order of a Division Bench of this Court of co-ordinate strength in Commissioner of Income Tax, Chennai v. Elegant Estates, reported in (2017) 79 taxmann.com 397 (Madras). As a Bench of co-ordinate strength, we are bound by the aforesaid decision, with which we, in any case, agree fully. Of course, the Revenue has taken these orders on further appeal to the Supreme Court and the matter is pending consideration.
5.1 Even the similar issue was considered by Hon’ble Karnataka High Court in the case of CIT vs. Mandavi Builders , [2020] 121 taxmann.com 36 and exactly identical situation was considered and held that the clauses (e) and (f) to section 80IB(10) as inserted by Finance (No.2) Act, 2009 w.e.f. 01.04.2010 as prospective. The Hon’ble Karnataka High Court held as under:- 4. We have considered the submissions made by learned counsel for the parties and have perused the record. Clauses (e) and (f) to section 80IB(10) of the Act have been inserted by Finance (No.2) Act, 2009 with effect from 01.04.2010, which provides that not more than one residential unit in the housing project is allotted to any person not being an individual and in case, a residential unit in a housing project is allotted to a person being an individual, no other residential unit in such housing complex shall be allotted to the individual, the spouse or the minor children of such individual, the Hindu Undivided Family (HUF) in such individual is Karta or any person representing such individual, spouse or minor children of such individual of HUF in which such individual is Kara. It is also pertinent to note that in clause (e) of section 80IB(10) of the Act, the Legislature has used the expression ‘allotted’. In other words, in case, a residential unit is allotted prior to 1-4-2010, the conveyance in such a 8 residential unit can be registered subsequently also and in such a case also the assessee will be entitled to the benefit of deduction under section 80IB(10) of the Act. Clauses (e) and (f) of section 80IB(10) of the Act are prospective in nature and apply in respect of transactions entered on or after 1-4-2010, which is evident from Circular No.5/2010 dated 3-6-2010. From perusal of the order passed by the Assessing Officer, it is evident that unaccounted money during the search proceedings has been treated to be business income by the Assessing Officer.”
5.2 As the issue is squarely covered by the decisions of Hon’ble Jurisdictional High Court and even Hon’ble Karnataka High Court, respectfully following the same and the facts are very clear, we dismiss this appeal of Revenue.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the court on 6th May, 2022 at Chennai.