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Income Tax Appellate Tribunal, C/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal of the Revenue is directed against the order of the Commissioner of Income-tax (Appeals)-15, Chennai, dated 28.02.2017 and pertains to assessment year 2010-11.
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The Revenue has raised the following grounds for
consideration.
I. The order of Ld.CIT(A) is contrary to law and facts of the case. 2. The Ld CIT(A) erred in directing the AO to delete the disallowance of Rs.19,99,981/- u/s 801B(10). 2.1 The Ld CIT(A) failed to appreciate that new condition was introduced under clause (e) and (f) of section 801B(10) which reads as under”- “Not more than one residential unit in the housing project is allotted to any person not being an individual” Provisions of section 801B(10(f) reads as under:- ‘in a case where a residential unit in the housing project is allotted to a person being an individual no other residential unit in such housing project is allotted to any of the following persons namely: i) the individual or the spouse or the minor children of such individual ii) the HUF in which such individuals is the Karta iii) …
2.3 The Ld CIT (A) failed to appreciate that this issue arises vide RAP objection. As per Circular No.21/2015 which states as under “The above issue should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limit specified in para 3 circular no 21/2015 or there is no tax effect. para 8(c) Where RAP in.. the case has been accepted by the department.”
The main issue for my consideration is with regard to
applicability of amended provisions of the section 80IB(10)(f) of the
Act.
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The facts of the case are that the assessee firm had claimed a sum of `19,99,981/- as deduction u/s. 80IB(10)(f) of the Act for
assessment year under consideration. During the course of
assessment proceedings, the AO noticed that in the allotment of the
following units Viz.A2/304, A5/302, A3/103, A7/201, B2/103 and
B4/103, there has been violation of the relevant provisions of the
section 80IB(10(f) of the Act, which envisage that not more than one
residential unit in the eligible housing project whould be allotted to
any one person or his/her spouse or children or to HUF in which such
person is Karta. Therefore, the AO had not allowed the claim of
deduction U/s. 80IB(10) of the Act in view of insertion of sub-clause
(e) & (f). Further, the contention of the assessee was that relevant
clauses (e) & (f) were introduced with effect from A.Y 2010-11 and
not applicable to A.Y 2009-10. However, the AO has not granted said
deduction u/s.80IB(10)(f) of the Act. Aggrieved by the order of ld.
Assessing Officer, the assessee carried the appeal before the
Ld.CIT(A).
4.1 On appeal, Ld.CIT(A) granted deduction to the assessee
u/s.80IB(10)(f) of the Act and observed as follows:-
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“The relevant clause of s.80IB(10)(f) of the Act has also been examined. This
clause has been inserted by the Finance Act, 2009 applicable w.e.f. 01/04/2010.
As rightly contended by the appellant, these new provisions cannot be applied
retrospectively unless specifically mentioned in the Act. The eligible project of the
appellant was approved in June 2006 and during the F.Y. 2008-09, it had
reached the stage of completion. Therefore, the effect of anything introduced in
the Act at a later stage, cannot be anticipated in advance. The clause (f) to sub-
section (10) to Sec.8OlB was inserted by Finance (No.2) Act 2009 and came into
force from 01-04-2010. The bill was passed and got legal force from 19-08-2009.
Prior to the insertion of clause (f), there was no restriction in the allotment of
more than one apartment to an individual or any other persons mentioned in the
said clause. Hence, by insertion of this clause, a restriction in selling the
apartments is sought to be made. Hon’ble Calcutta High Court in DCIT v Central
Concrete and Allied Products Ltd [1999] 236 ITR 595 has held that:
‘Substantive law is that part of law which creates, defines and regulates rights as opposed to adjective or remedial law which prescribes the method of enforcing the rights and obtaining redress for their invasion.[see Black’s Law Dictionary] Procedural law means the mode of
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procedure by which the legal rights are enforced as distinguished from the substantive law which gives or defines the rights”.
20..Amendments to substantive law are treated as prospective, while amendments to procedural law are treated as retrospective, even if the amendment were to be only prospective. When considered in the light of the decision of the Calcutta High Court, it is clear that the Clause (f) inserted is substantive in nature and hence, can be applied only prospectively. Ahmedabad ITAT in the case of Patel Jashwanthlal A & Patel amchand N v ITO [2015] 43 CCH 004! [2015] 38 ITR 135 has held that provision is applicable only in respect of allotment made after I 9-08-2009.
In the case of the present appellant, the impugned flats were allotted to those persons in the F.Y.2006-07, the UDS was registered during the F.Y.2006-07 and even the handing over had taken place during the F.Y.2007-08. Therefore, there was no scope for the appellant to abide by the provisions of the Act which had taken place much after the date of allotment etc. Hence, under these circumstances, the logic of having retrospective effect of amended section could not be apprehended. In view of the above facts and the circumstances of the case, I do not find any force in the finding of the AO that the appellant had failed to comply with the provisions of section 80 lB(10) of the Act. Hence, the AO is directed to grant deduction of Rs.19,99,981/- u/s 80 lB(10) of the Act to the appellant and, accordingly, delete the addition.”
Against the order of Ld.CIT(A), now the Revenue is in appeal
before us.
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After hearing both the parties, in my opinion, similar issue
came for consideration before the Co-ordinate Bench of Pune
Tribunal in the case of DCIT, PUne Vs. M/s.Varun Devlopers in ITA
No.2030/PN/2013 vide order dated 27.10.2014 for assessment year
2010-11 wherein it has been held as under:-
“16. We have heard the rival contentions and perused the record. In the facts of the present case before us, the assessee had allotted one flat in financial year 2007-08 in the housing project to one Shri Gurudas Andar and his son. The said flat was allotted on 03-11-2007 as per the sale deed placed at page 86 of the paper book. Thereafter the wife of Shri Gurudas Andar, Mrs. Nalini Andar booked another flat in the said flat by paying an advance of Rs.5,00,000/-. The said cheque was paid on 16-06-2009 and has been credited to the account of the assessee on 16-06-2009. The copy of account of Mrs. Nalini Andar in the books of the assessee is placed at page 82 of the paper book and the copy of the bank statement evidencing the credit of Rs.5,00,000/- is placed at page 83 of the paper book. Thereafter the stamp duty was paid on 26-06-2009 and the agreement to sale the said flat was entered into between the parties on 07-07-2009. The copy of the sale deed is placed at page 28 of the paper book and copy of the evidence of payment of stamp duty is placed at page 27 of the Paper Book. The issue arising before us is where the assessee had allotted two separate flats to members of the same family, whether the claim of deduction under section 80IB(10) of the Act could be allowed to the assessee, in view of the amended provisions of clause (f) to section 80IB(10) of the Act. 10 17. The finance bill for amending the provisions of section 80IB(10) was introduced on 06-07-2009 and the Finance (No. 2) Act, 2009 passed on 19-
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08-2009 inserted clauses (e) and (f) to section 80IB(10) of the Act. The said provisions were inserted w.e.f. 01-04-2010. The relevant provisions of clause (f) to section 80IB(10) of the Act reads as under: “Section 80IB(10): The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, 2009 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if - (a)…………… (b)…………… (c)…………… (d)…………… (e)…………… (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely:- (i) the individual or the spouse or the minor children of such individual, (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta. Explanation – For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government).
Under the said clause (f) to section 80IB(10) of the Act, it is provided that where a residential unit in the housing project is allotted to a person
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being an individual, then no other residential unit in such housing project shall be allotted to any individual or the spouse or the 11 minor children of such individual, the Hindu undivided family, in such individual is the karta or any person representing such individual, the spouse or the minor children or the Hindu undivided family. In other words if an individual, had been allotted a residential unit in any housing project then such individual or the spouse of such individual or the minor children of such individual including the Hindu undivided family in which he is the karta or any person representing above said person are not entitled to be allotted any other residential unit, in such housing project. And in case of violation of the said provisions of the Act, the assessee who had so allotted the flats to such persons, shall not be entitled to claim of deduction under section 80IB(10) of the Act. The said provisions were inserted by the Finance (No. 2) Act, 2009 w.e.f. 01-04-2010.
Now coming to the facts of the present case, the assessee had allotted one flat to Shri Gurudas Andar in the financial year 2007-08 thereafter the wife of Shri Gurudas Andar i.e. Mrs. Nalini Andar had booked another flat in June, 2009 against which an advance of Rs.5,00,000/- was paid was received by the assessee on 26-06-2009. Further stamp duty in respect of the sale of said flat was paid on 26- 06-2009 and the agreement to sale between the parties was executed on 07-07-2009. The Finance Bill was passed on 19-08-2009 i.e. after mthe execution of agreement to sell between the parties on 07-07-2009. The Finance bill was introduced on 07- 06-2009 but was passed only on 19-08-2009 i.e. after the date of execution of agreement to sell between the assessee and Mrs. Nalini Andar, wife of Shri Gurudas Andar, where the transaction was completed prior to insertion of clause (f) to section 80IB(10) of the Act by the Finance (No.2) Act, 2009, the same provisions cannot be applied in order to deny the deduction u/s.
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80IB(10) of the Act. In the first instance the said Finance (No.2) Act, 2009 has been made effective from 01-04-2010 and even otherwise the said provisions can at best be made effective from the date of its introduction i.e. passing of the Finance (No. 2) Act, 2009 i.e. on 19-08-2009.
The amended provisions having been introduced on a later date cannot be applied to the transactions completed before the said provisions were introduced were amended as the assessee cannot be expected to do deeds which are impossible. The Hon'ble Supreme Court in the case of Krishnaswamy S. Pd. v. Union of India (supra) observed as under:
“9. The other relevant maxim is, lex non cogit ad impossibilia the law does not compel a man to do what he cannot possibly perform. The law itself and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases. [see U. P. S. R. T. C. v. Imtiaz Hussain [2006] 1 SCC 380, Shaikh Salim Haji Abdul Khayumsab v. Kumar [2006] 1 SCC 46, Mohammed Gazi v. State of M. P. [2000] 4 SCC 342 and Gursharan Singh v. New Delhi Municipal Committee [1996] 2 SCC 459].
Further the Hon'ble Madras High Court in the case of CIT Vs. Revathi Equipment Ltd., 298 ITR 67 (Mad.) while considering the issue of retrospective amendment introduced in relation to the levy of interest under sections 234A and 234B of the Act observed as under:
“held, dismissing the appeal, that the assessee had paid advance tax after deducting the payment made under the voluntary retirement scheme. In view of the decisions of the jurisdictional High Court the
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assessee was allowed to deduct expenditure incurred on payment to workers towards voluntary retirement scheme. Since section 35DDA was introduced by the Finance Act, 2001, with effect from April 1, 2001, and received assent on May 11, 2001, the assessee could not have envisaged that it would become liable for payment of tax even against voluntary retirement payments, which were otherwise allowable. Further the assessee had paid a sum of Rs. 90,00,000 on August 6, 2001, as self- assessment tax, i. e., much before the filing of the return on October 30, 2001, which also proved the bona fides of the assessee. On the above two grounds the Tribunal accepted the case that the assessee was not subject to advance tax. The findings of the Tribunal were based on valid materials and evidence and did not warrant interference.
Applying the ratio laid down by the Hon'ble Supreme Court in the case of Krishnaswamy S. Pd. v. Union of India (supra) and Hon'ble Madras High Court in the case of CIT Vs. Revathi Equipment Ltd. (supra), we hold that the assessee is entitled to claim of deduction under section 80IB(10) of the Act in respect of the flat allotted to Mrs. Nalini Andar i.e. second residential unit allotted in the same project to two members of the said family. 23. We, further find that the CBDT vide Circular No. 5 of 2010 dated 03-06- 2010 in the explanatory note to the provisions of Finance (No. 2) Act, 2009 had clarified the applicability of the amended provisions of the Act, observing as under:
33.8 Applicability — These amendments have been made applicable with effect from 1st April, 2010 and will accordingly mapply in relation to assessment year 2010-11 and subsequent years. The amendments relate to restrictions on specific transactions (i.e., allotment of residential units). Therefore, they would apply to transactions after a specified date during
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the year. Since the Finance (No.2) Act, 2009 became law on 19th August, 2009, the restrictions regarding allotment of residential units shall not apply in respect of allotments made before 19.08.2009.
In the totality of the above facts and circumstances, we hold that the amended clause (f) to section 80IB(10) of the Act are to be applied w.e.f. 19-08-2009 and cannot be used to deny the deduction under section 80IB(10) of the Act in respect of the residential unit allotted prior to the coming into operation of amended provisions i.e. clause (f) inserted to section 80IB(10) of the Act. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds of appeal no. 3 and 4 raised by the Revenue. 25. In the result, the appeal of the Revenue is dismissed.”
In the present case, as rightly pointed out by the
Ld.CIT(A) in para 21, the flats were allotted in the F.Y 2006-07,
the UDS was registered during the F.Y 2006-07 and even the
handing over had taken place during the F.Y.2007-08, being so,
the provisions of the section 80IB(10)(f) of the Act cannot be
applied to the facts of the present case. The said provisions,
which was got into statute book by Finance (No.2) Act, 2009
with effect from 01-04-2010 and even otherwise the said
provisions can at best be made effective from the date of its
introduction i.e. passing of the Finance (No. 2) Act, 2009 i.e. on
19-08-2009.
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In view of the above order of the Tribunal, I am inclined to dismiss the ground taken by the Revenue in its appeal and also make it clear that Ground No.2.3 does not require any separate adjudication as the issue on merit is covered in favour of the assessee. 8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court after conclusion of hearing on 31st October, 2017. Sd/- (चं� पूजार�) (CHANDRA POOJARI) लेखा सद�य /ACCOUNTANT MEMBER
Chennai, Dated the 31st October, 2017. K s sundaram.
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF