ACIT - 32(1), MUMBAI vs. EKTA SANKALP DEVELOPERS, MUMBAI

This appeal has been filed by the Revenue against the order of the CIT(A)-44, Mumbai dated 06.06.2016 for A.Y. 2011-12.

M/s. Ekta Sankalp Develolpers 4. The learned D.R. fairly agreed with the contention of the learned A.R. that the issue is covered in favour of the assessee by the above mentioned decisions of the Coordinate Bench.

“5. We, faced with the decision by the hon’ble jurisdictional high court in the case of Brahma Associates (supra), which is even otherwise binding on us, proceeded by firstly examining the Revenue’s reliance thereon, to find it as valid. The hon’ble high court, upon being called upon to examine the provision of section 80-IB(10) with reference to the ingredients of an eligible ‘housing project’, a term which stands not defined under the Act, clarified that the ‘housing project’ as contemplated is only a housing project as approved by the local authority, to which (approval) the provision refers to, so that the same, where not violative of any of the conditions listed in the provision, as with regard to the extent of commercial user (which condition did not exist in the provision as it stood at the relevant time), could not be imposed by judicial diktat. Further, the project, as approved, is a single project, which either satisfies the conditions enlisted in the provision or not. There was therefore no scope for bifurcating it’s profits into that subject to deduction there-under and not so. The following words capture the decision, which follows a comprehensive discussion on the various aspects, and in harmony and agreement with it’s understanding, of the matter: (refer para 31 at pgs. 302-303, also catch notes at pgs. 290-291) ‘Section 80-IB(10) allows deduction to the entire project approved by the local authority and not to a part of the project. If the conditions set out in section 80-IB(10) are satisfied, then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to the part of the project.’ [emphasis ours] That the same is rendered upon examining the provision in a different context would be of no moment, which though prevailed with the tribunal in the case of Ekta Housing (P.) Ltd. (supra) (copy on record) in-as-much as it is trite law that it is the ratio of the decision

M/s. Ekta Sankalp Develolpers which is binding and has precedent value. The said order by the tribunal, in-so-far as it does not state any legal reasons for so deviating, is, with respect, clearly inconsistent with the express and clear verdict by the hon’ble jurisdictional high court as extracted here- in-above. The other decisions by the tribunal being relied upon by the assessee, rendered without considering the decision by the hon’ble court in Brahma Associates (supra), are also thus apparently in conflict therewith in-as-much as the same opine in favour of deduction, which extends to the entire profit of the project, with reference to the profit attributable to the residential units satisfying the condition of section 80-IB(10)(c), i.e., to a part of the project. The proposition is even otherwise inconsistent with the fundamental principle that any deduction is subject to eligibility, i.e., satisfaction of each of the conditions precedent. Further, our reading of those decisions by the tribunal, did not exhibit any discussion on or an interpretation of section 80-IB(10)(c), as indeed was also the case for the judgment by the hon’ble court in Brahma Associates (supra). The provision is accordingly examined closely, to find clause (c) as worded differently from the other clauses of section 80-IB(10), setting forth the conditions precedent for the eligibility to deduction of the profits of the project. The said clause, on a fair construction, was found to contain a condition with reference to the residential unit comprising the housing project. The condition, by necessary implication, applies to all the residential units of the housing project. The converse, however, cannot be said to hold, so that only such housing project, all the residential units comprising which satisfy the condition of section 80-IB(10)(c), is an eligible project. The word ‘project’, clearly mentioned in each of the other clauses, is conspicuous by its absence in clause (c). That is, s. 80-IB(10)(c) represents a condition precedent qua the residential unit comprising the housing project and not qua the project; its language not admitting of such a view. We may though at once clarify that the decision by the hon’ble court being binding, we would not have for a moment hesitated to hold otherwise if we found anything to so suggest in the decision in Brahma Associates (supra), which is sans any reference to s. 80-IB(10)(c), or if that meaning or intention was found expressed in its plain language; it being trite that there is no equity about tax and there is no room for intendment, so that one has to look fairly at the language used, even as exhorted time and again by the apex court. Also, fiscal statutes are to be strictly interpreted, and so are the exemption provisions. It is only once an entity or income, which is the subject matter of exemption, is found, on such construction, to be within the ambit of the provision, that a liberal approach is to be adopted toward effectuating the object of the provision, for which we may refer to Bajaj Tempo Ltd. vs. CIT [1992] 196 ITR 188 (SC) relied upon by the tribunal in the various orders, as far as appears on a reading of their extracts as listed in the tribunal’s order for A.Y. 2007- 08 (supra). The interpretation is also in accord with a purposive and M/s. Ekta Sankalp Develolpers liberal approach, advocated by the apex court in, inter alia, Bajaj Tempo Ltd. (supra). The provision being an incentive provision, toward promoting the growth of affordable housing in the country, the construction enables the same, while at the same time operating to exclude the extension of the incentive to housing that is not covered or targeted by the provision, as sought to be included by the ld. AR. Again, it is trite law that the benefit of any ambiguity, if any, in the language of the provision, so that two reasonable views are permissible, is to go to the tax payer. We may clarify that our decision, even as sought to be emphasized earlier, despite approving the proportionate deduction, i.e., w.r.t. section 80-IB(10)(c), is, for the reasons afore-stated, thus not in conflict with the decision by the hon’ble jurisdictional high court in Brahma Associates (supra). The deduction toward the residential units satisfying the condition of s. 80-IB(10)(c), arrived at on a proportionate basis, is therefore upheld.”