CIT vs. M/s. Happy Home Enterprises (Bom); ITA No. 201 of 2012 dated 19-09-2014:
The following questions were raised in this appeal by the Revenue before the Bombay High Court.
“i) Whether on the facts and in the circumstances of the case and in law the Hon’ble Tribunal was right in allowing to the assessee company a deduction u/s. 80IB(10) of the Income-tax Act, for A. Y. 2006- 07 amounting to Rs. 2,11,74,864/- wherein the commercial area built by the assessee exceeded the limit specified in clause (d) to section 80IB(10) of the I. T. Act, 1961?
ii) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal was right in holding that the limits on commercial area provided in clause (d) to section 80IB(10) of the Act, would not be applicable even after 01-04-2005 as the projects were approved before that date even though no such exception is provided under the Income Tax Act?”
The High Court decided the questions in favour of the assessee and held as under:
“i) Clause (d) of section 80IB(10) is a condition that relates to and/or is linked with the approval and construction of the housing project and the Legislature did not intend to give any retrospectivity to it.
ii) A t the time when the housing project is approved by the local authority, it decides, subject to its own rules and regulations, what quantum of commercial area is to be included in the said project. It is on this basis that building plans are approved by the local authority and construction is commenced and completed. It is very difficult, if not impossible to change the building plans and/or alter construction midway, in order to comply with clause (d) of section 80IB(10).
iii) It would be highly unfair to require an assessee to comply with section 80IB(10)(d) who has got his housing project approved by the local authority, before 31-03-2005 and has either completed the same before the said date or even shortly thereafter, merely because the assessee has offered its profits to tax in A. Y. 2005-06 or thereafter.
iv) It would require the assessee to virtually do a humanly impossible task. This could never have been the intention of the Legislature and it would run counter to the very object for which these provisions were introduced, namely to tackle the shortage of housing in the country and encourage investment therein by private players.
v) I t is therefore clear that clause (d) of section 80IB(10) cannot have any application to housing projects that are approved before 31-03-2005.”
