Ramsingh Kumar v. The Deputy Commissioner Of Income Tax,Non-Corporate Circle – 2,Chennai-600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case Appeal No.381 of 2018 Ramsingh Kumar,No.7, 1[st] Floor,Papanasan Sivan Salai,Santhome, Mylapore,Chennai-600 004.PAN: ... Appellant -vs- The Deputy Commissioner of Income Tax,Non-Corporate Circle – 2,Chennai-600 034. ... Respondent Tax Case Appeal filed under Section 260A of the Income-tax Act, 1961 against the order of the Income-tax AppellateTribunal, 'A' Bench, Chennai in I.T.A.2194/Mds/2016, dated06.01.2017, for the assessment year 2010-11,against the order ofCommissioner of Income Tax(Appeals) 2 ITA 142(CIT(A)-2(2015-16,ITA No.143/CIT/A)2-2013-2014, ITA in 243/CIT(A)-2 2014-15 dated17/6/2016 Pan and arising out of the assessment orders of DeputyCommissioner of Income Tax, Non Corporate Circle 2, Chennai,dated 22.06.2015 in PAN No.GIR No. , and AssistantCommissioner of Income Tax, Circle Ii, Chennai, dated 13.02.2013in PAN/GIR No. . This appeal, by the assessee filed under Section 260A ofthe Income-tax Act, 1961 (hereinafter referred to as “the Act”),is directed against the order of the Income-tax AppellateTribunal, 'A' Bench, Chennai (for brevity “the Tribunal”) inI.T.A.2194/Mds/2016, dated 06.01.2017, for the assessment year https://hcservices.ecourts.gov.in/hcservices/ 2.The above appeal has been admitted, on 02.08.2018, onthe following substantial questions of law:- “(i) Whether, on the facts andcircumstances of the case, the Appellate Tribunalwas right in law in reopening the assessment u/s148 of the Income Tax Act, for the assessment year2010-11 without any tangible materials on record? (ii) Whether, on the facts andcircumstances of the case, the Appellate Tribunalwas right in law in disallowing the benefit u/s80-IB (10) of the Act on the condition that theAssessee had violated the provisions of clause (e)of Section 80-IB (10)?” 3.Two issues arise for consideration in this appeal. (i) The first issue is whether the assessment, which wascompleted under Section 143(3) of the Act, vide order dated13.02.2013, for the assessment year 2010-11, could have been re-opened under Section 147 of the Act. (ii) The second issue is whether the amended Section 80IB(10)(e) inserted with effect from 01.04.2010 would be applicableto the subject assessment, viz., for the assessment year 2010-11. 4.On the first aspect, viz., whether the re-opening wasvalid or not, the reason for re-opening of the assessment was onthe ground that as per the amended Section 80-IB(10)(e), in casethere was more than one residential unit in the housing projectis allotted to any person not being an individual, the deductionunder Section 80-IB(10) is not allowable. The Assessing Officeralleged in the assessment order dated 01.07.2015, that theassessee has violated the conditions laid down in the amendedSection 80-IB(10) and therefore, the allowance of the relief inthe original assessment was not correct and liable to bewithdrawn. Admittedly, there is no allegation that the assesseefailed to disclose fully and truly all the materials before theAssessing Officer. 5.We have perused the assessment order dated 13.02.2013,under Section 143(3) of the Act, and we find that the AssessingOfficer considered the entire facts, and verified the documentsproduced by the assessee, viz., plan approval, permit,completion certification and also the books of accounts, billsfor major expenditure, which were checked and retained to theassessee. Thus, based upon the detailed material, evidences andclarifications, the Assessing Officer completed the assessment.Thus, in the absence of any allegation that the assessee hasfiled to disclose fully and truly all materials for completion of the assessment and also in the absence of no fresh tangiblematerial, reopening of the assessment is held to be bad in law. 5.We have perused the assessment order dated 13.02.2013,under Section 143(3) of the Act, and we find that the AssessingOfficer considered the entire facts, and verified the documentsproduced by the assessee, viz., plan approval, permit,completion certification and also the books of accounts, billsfor major expenditure, which were checked and retained to theassessee. Thus, based upon the detailed material, evidences andclarifications, the Assessing Officer completed the assessment.Thus, in the absence of any allegation that the assessee hasfiled to disclose fully and truly all materials for completion of the assessment and also in the absence of no fresh tangiblematerial, reopening of the assessment is held to be bad in law. 6.The next aspect is whether at all the amended provisionof Section 80-IB(10)(e) would apply to the assessment year inquestion, viz., 2010-11. This issue has been clarified by theTribunal, vide Circular No.5/2010. This has been clarified bythe Board in the Explanatory Notes to the Provisions of theFinance (No.2) Act, 2009, dated 02.06.2010. So far as theapplicability of the amendment in paragraph 33.8 is concerned,the following clarification has been given:- “33.8 Applicability – These amendments have beenmade applicable with effect from 1[st] April, 2010and will accordingly apply in relation toassessment year 2010-11 and subsequent years. Theamendments relate to restrictions on specifictransactions (i.e., allotment of residentialunits). Therefore, they would apply totransactions after a specified date during theyear. Since the Finance (No.2) Act, 2009 becamelaw on 19[th]August, 2009, the restrictionsregarding allotment of residential units shall notapply in respect of allotments made before19.08.2009.”The above clearly shows that the amended provision shallnot apply in respect of allotments made before 19.08.2009. 7.So far as the assessee's case is concerned, all theallotments/sale deeds have been executed on 04.06.2009, and thisaspect has not been disputed by the Revenue. In fact, thedocuments were considered by the Assessing Officer whilecompleting the assessment under Section 143(3) of the Act, videorder dated 13.02.2013. Therefore, the assessment could nothave been reopened based upon the amendment, which could nothave been applied for the subject assessment year. 8.The Hon'ble Supreme Court in the case of CIT vs. SarkarBuilders, [2015] 57 taxmann.com 313 (SC), considered thequestion whether Section 80-IB(10)(d) applies to housingprojects approved before 31.03.2005, but completed on or after01.04.2005. The Hon'ble Supreme Court held that in order toavail the benefit in the assessment year after 01.04.2005, ifthe balconies have to be removed by the assessee, it will leadto absurd results, as one cannot expect the assessee to complywith a condition that it was not a part of the statutes when thehousing project was approved. Thus, it was held that clause (d)is to be treated as inextricably linked with the approval andconstruction of the housing project and the assessee cannot becalled upon to comply with the said condition either of the assessee or even the Legislature, when the housing project wasaccorded approval by the local authorities. Therefore, it heldthat the said amendment cannot be applied to those projects,which were sanctioned and commenced prior to 01.04.2005, andcompleted by the stipulated date, though such stipulated date isafter 01.04.2005. The above decision also strengthens the caseof the assessee. 9.The learned counsel for the assessee referred to thedecision of the Ahmedabad Bench of the Tribunal in the case ofPatel Jashwantlal A vs. Income-tax Officer, [2015] 58taxmann.com 135 (Ahmedabad – Trib.); and the decision of theKolkata Bench of the Tribunal in D.C.I.T. vs. M/s.RDB Realty &Infrastructure Ltd., I.T.A.No.575/Kol/2016, dated 20.07.2018. assessee or even the Legislature, when the housing project wasaccorded approval by the local authorities. Therefore, it heldthat the said amendment cannot be applied to those projects,which were sanctioned and commenced prior to 01.04.2005, andcompleted by the stipulated date, though such stipulated date isafter 01.04.2005. The above decision also strengthens the caseof the assessee. 9.The learned counsel for the assessee referred to thedecision of the Ahmedabad Bench of the Tribunal in the case ofPatel Jashwantlal A vs. Income-tax Officer, [2015] 58taxmann.com 135 (Ahmedabad – Trib.); and the decision of theKolkata Bench of the Tribunal in D.C.I.T. vs. M/s.RDB Realty &Infrastructure Ltd., I.T.A.No.575/Kol/2016, dated 20.07.2018. 10.It is the submission of the learned counsel that boththe decisions have been accepted by the Department. In the saiddecision Patel Jashwantlal (supra), the Tribunal has held thatthe amendment in Section 80-IB restricting allotment of morethan one residential units in housing project to same personcame into effect from 01.04.2010 is not applicable to allotmentsmade prior to the said amendment. 11.In the light of the reasons assigned by us in thepreceding paragraphs, we hold that the Tribunal was not right inrejecting the assessee's appeal. 12.We may point out that though the appellant hasspecifically raised the issue relating to the effect of theamendment, the Tribunal did not examine the said aspect andrendered no finding as regards the applicability of the amendedprovision. Thus, for the above reasons, the assessee isentitled to succeed. 13.Accordingly, the appeal is allowed and the substantialquestions of law are answered in favour of the assessee. Nocosts. Sd/-Assistant Registrar //True copy// abr Sub Assistant Registrar To 1.The Income-tax Appellate Tribunal, 'A' Bench, Chennai. 2. The Deputy Commissioner of Income Tax, Non-Corporate Circle-2 Chennai-600 034. Chennai-600 034. 3. The Commissioner of Income Tax (Appeals 2), Chenai-600 034. 4. The Assistant Commissioner of Income Tax, Circle II, Chennai. +1cc to Mr.R.Sivaraman, Advocate SR.No.4991 +1cc to Mr.R.Hemalatha, Advocate SR.No.4820 T.C.A.No.381 of 2018 VSN-II(CO) GMY(01/03/2019)