By Jagdish D. Shah, Jagdish T. Punjabi Chartered Accountants
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S/s. 80AC, 80IB(10), 139 – Amendment made to section 80IB(10) w.e.f. 01-04-2005 whereby as per Clause (d), limit has been imposed on the extent of commercial area which a project can contain, does not apply to projects approved before that date. Claim for deduction made in a return of income filed u/s. 139(4) will be decided on merits even though return of income is not filed within the time prescribed as per section 139(1) of the Act.
Facts:
The assessee, a partnership firm, engaged in the business of developing and construction filed its return of income for assessment year 2007-08 declaring total income of Rs. Nil after claiming deduction u/s. 80IB(10) of Rs. 74,684. For the assessment year 2008-09, the assessee filed return of income on 30-09-2009 by declaring total income at Rs. Nil after claiming deduction of Rs. 24,85,233 u/s. 80IB(10) of the Act.
The Assessing Officer (AO) denied deduction u/s. 80IB(10) of the Act for assessment year 2007-08 on the ground that the assessee had constructed shops with the aggregate built up area of 3,382 sq. ft which constituted commercial area of 6.12% of the total built up area which was in excess of the limit prescribed by Clause (d) of section 80IB(10) as amended by the Finance (No. 2) Act, 2004 w.e.f. 01-04-2005. Since the assessee had not fulfilled one of the conditions, the AO denied deduction u/s. 80IB(10). For assessment year 2008-09, the AO also stated that the assessee did not file the return of income within the stipulated time prescribed u/s. 139(1) of the Act. In view of the provisions of section 80AC of the Act, the AO denied the claim of Rs. 24,85,233 made u/s. 80IB(10) of the Act.
Aggrieved, the assessee filed an appeal to CIT(A) who allowed the appeal filed by the assessee for both the years.
Aggrieved, the revenue preferred an appeal to the Tribunal.
Held:
The Tribunal observed that on similar facts in the assessee’s own case for the same project, the Tribunal by its order dated 29-07-2011 relating to assessment years 2005-06 and 2006-07, the assessment years which also fall after the amendment made by insertion of Clause (d) to section 80IB(10) of the Act, applicable from 1.4.2005 has held that the assessee is eligible to claim deduction u/s. 80IB(10) of the Act in respect of the housing project. As there was no change in the facts and circumstances in the assessment years under consideration, the Tribunal applied the said decision of ITAT to these years as well. It also observed that the similar issue had also come before the Hon’ble Gujarat High Court in the case of Manan Corporation vs. ACIT (214 Taxman 373 (Guj), while considering the appeal for assessment year 2006-07 wherein it was held by their Lordship that the condition of limiting commercial establishment/ shops to 2,000 sq. feet which has come into force w.e.f. 01-04-2005 would be applicable for the project approved on or after 01-04-2005 would be applicable for the project approved on or after 01-04-2005 and where the approval of the project was prior to 31-03-2005, the amended provision would have no application for those projects. The Tribunal observed that the Gujarat High Court placed heavy reliance on the decision of the Bombay High Court in the case of Brahma Associates (333 ITR 289)(Bom). The Tribunal held that the issue is covered not only in the assessee’s own case for assessment years 2005-06 and 2006-07 but also by the decision of the Gujarat High Court in the case of Manan Corporation (supra). The Tribunal rejected the appeal filed by the revenue.
In respect of the return being filed beyond due date prescribed u/s. 139(1) of the Act, the Tribunal observed that the issue is covered in favor of the assessee by the decision of the Bombay High Court in the case of Trustees of Tulsidas Gopalji Charitable & Chaleshwar Temple Trust (207 ITR 368)(Bom) which has been considered by the CIT(A) while deciding the same in favour of the assessee. Following the said decision, the Tribunal held that there is no reason to interfere with the order of the CIT(A). This ground of appeal taken by the department for assessment year 2008- 09 was also rejected.
