ITAT Ahmedabad held in M/s Sun Rise enterprise Vs ACIT that the insertion of clause d to sec 80IB(10) would be applicable from 01-04-2005 i.e the amendment related with built up area of commercial establishments not to exceed more than 5% of total built up area of housing project would have prospective effect not retrospective effect. It also relied upon the case of Hon’ble S.C. in CIT vs. M/s. Veena Developers & Others wherein it was held that the clause (d) inserted to Section 80 IB(10) would effect from 1-4-2005 i.e. prospective and not retrospective and hence could not be applied for the period prior to 1-4-2005.
Facts of the case:
Assessee was a developer of land measuring 5386.619sq.mtr.which was belonging to Faridbhai Abdulbhai Mohibi and others. The same was acquired by the assessee through an agreement dated: 26-07-2002 . The assessee offered the profit on sale of residential units to tax whose total built up area was 836.04 sq.mt. i.e 7.52% which was more than 5% of total built up area and claimed deduction u/s 80IB(10) for said residential units which was disallowed by AO on the ground that it was violating the provision of clause d of sec 80IB(10).
Contention of the assessee:
Assessee was of the view that as it had taken the approval from the authority on 31-07-2002 which was before 01-04-2005 and therefore insertion of clause (d) to sec 80IB(10) would not be applicable in its case. So though the total built up area of residential units exceeded the 5% of total built up area of housing project but that provision would not be applicable because it had taken the approval on 31-07-2002 and the amendment came into effect from 01-04-2005. So deduction should be allowed to the assessee.
Contention of the revenue:
Revenue was of the view that the provision of clause (d) of sec 80IB(10) was violated in the above case i.e as the built up area was 7.52% which was more than 5 % as mentioned in clause d of sec 80IB(10) so, deduction would not be allowed to the assessee.
Held by ITAT:
ITAT by relying on the decisions given in Manan Corporation vs. ACIT  356 ITR 44 (Guj.) and Hon’ble S.C. in CIT vs. M/s. Veena Developers & Others held that the clause (d) to sec 80IB(10) which was inserted on 01-04-2005 would not be applicable on the case whose projects were approved before 01-04-2005. So in the present case as the project was approved on 31-07-2002 which was before 01-04-2005 so clause (d) would not be applicable in the present case.
Appeal of the assessee was allowed.