Kiran Harsukhlal Hemani v. Union of India

(ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1sday of April, 2004 [but not later than the 31st day of March, 2005], within the housing project is approved by the local authority; [(iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] Explanation.- For the purposes of this clause,-

(i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority;

(ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf:

(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place;

(d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed [three] per cent of the aggregate built-up area of the housing project or [five thousand square feet, whichever is higher];] [(e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (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).]” (emphasis supplied)

13. The above provision was substituted by the Finance (2) Act, 2004, with effect from 1 April 2005. Before its substitution, sub-section (10), as amended by the Finance Act, 2000, with effect from w.e.f. 1 April 2001 and Finance Act, 2003, w.e.f. 1 April 2002, read as follows: “(10) The amount of profits in case of an undertaking developing and building housing projects approved before the 31st day of March, 2005 by a local authority, shall be hundred per cent of the profits derived in any previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998; (b) the project is on the size of a plot of land which has a minimum area of one acre; and

(c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place.”

14. Thus, on a comparison of the present and the earlier provisions in Section 80IB(10), it is apparent that there was no special benefit to housing projects carried out in accordance with the scheme framed by the Central or State Governments for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force where such schemes were to be notified by the CBDT in this behalf. The benefit to such notified schemes for declared to be slum areas was introduced only with effect from 1 April 2005 and not earlier.

15. In exercise of powers conferred by the proviso to clause (a) and (b) of sub-section (10) of Section 80IB of the IT Act, the CBDT issued Notification No.67/2010-Income-Tax dated 3 August 2010 notifying the scheme contained in Regulation 33(10) of the Development Control Regulation for Greater Mumbai 1991 read with the provisions of Notification dated 3 June 1992 as a scheme for the purposes of the said Section subject to certain conditions. This notification was to come into force with effect from the date of its publication i.e. 3 August

2010.

16. The text of the notification dated 3 August 2010 (principal notification) is transcribed below for the convenience of reference: - MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 3rd August, 2010 No. 67/2010-Income-Tax S.O. 1898(E). In exercise of the powers conferred by the proviso to clause (a) and (b) of sub-section (10) of Section 801B of the Income-tax Act, 1961 (43 of 1961), the Board hereby notifies the Scheme contained in Regulation 33(10) of Development Control Regulation for Greater Mumbai 1991 read with the provisions of notification No. TPB-4391/4080(A)/UD- 11(RDP) dated 3rd June, 1992, as a scheme for the purposes of the said Section subject to the following conditions,-

(i) slum development falling in Category VII mentioned in notification No. TPB-4391/ 4080(A)/UD-11(RDP) dated 3rd June, 1992 shall be excluded from the Scheme;

(ii) slum development falling within clause 7.[7] of the

Appendix IV of regulation 33(10) which provides for joint development of slum and non-slum areas shall be excluded from the Scheme; and

(iii) any amendment in the Scheme hereby notified shall be required to be re-notified by the Board.

2. This notification shall come into force with effect from the date of its publication. [F. No. 178/37/2006-ITA-I] PADAM SINGH, Under Secy.

17. The proviso to clauses (a) and (b) of sub-section (10) of Section 80IB of the IT Act entered force on 1 April 2005. The principal notification, however, had notified the scheme with which the Petitioners are concerned only with effect from 3 August 2010. Therefore, to align the principal notification with the date of coming into force of the proviso, the impugned corrigendum dated 5 January 2011 came to be issued.

18. The impugned notification dated 5 January 2011 is transcribed below for the convenience of reference: - MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) CORRIGENDUM Notification No. 02/2011-Income-tax New Delhi, the 5th January, 2011 (INCOME-TAX). S.O. 13(E)-In the notification of the Government of India in the Ministry of Finance, Department of Revenue, (Central Board of Direct Taxes) number S.O. 1898 (E), dated the 3rd August, 2010, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated the 3rd August, 2010, in paragraph 2 for “This notification shall come into force with effect from the date of its publication”, read “This notification shall be deemed to apply to projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004 and before 31st day of March, 2008 thereby making the incomes arising from such projects eligible for deduction under sub- section (10) of Section 80-IB from the Assessment Year 2005-06 onwards.” [F. No. 178/37/2006-ITA-1] RAMAN CHOPRA, Director (ITA-1) Explanatory Memorandum: As the provisions of Section 80-IB(10) apply only to housing projects approved before 31-3-2008 the above notification would also be deemed to apply to housing projects approved by a local authority under the aforesaid scheme on or after the 1st day of April, 2004 and before 31st day of March, 2008.

19. Mr Jain, the learned counsel for the Petitioners, contended that Section 80IB(a)(i) makes it clear that the same applies to housing projects approved by the local authority before 1 April 2004. The only requirement was that the construction of the housing project must be completed on or before 31 March 2008. It was also pointed out that the proviso had made inapplicable the provisions of Clauses (a) and (b) to housing projects carried out in accordance with the scheme framed by the Central or the State Government for declared to be slum areas under any law for the time being enforce where the board notified such scheme in this behalf. He submitted that the CBDT was authorised only to notify the scheme and not provide additional qualifications or criteria for the inapplicability of Clauses (a) and (b). On this ground, he maintained that the impugned notification was ultra vires.

20. The circumstance that Section 80IB (10)(a)(i) refers to housing projects approved by the local authority before 1 April 2004 cannot lead to the inference that the benefit of the proviso, which was introduced only with effect from 1 April 2005, would apply to the slum redevelopment projects approved before 1 April 2004. If that were so, the legislature would have said so by giving the proviso a suitable retrospective effect. Since the legislature has not chosen to provide the proviso any retrospective effect, the CBDT, which, even according to Mr Jain, is only a delegate, was not competent to give the proviso any retrospective effect by issuing any notification

21. The effect of the principal notification dated 3 August 2010, as corrected by the impugned notification dated 5 January 2011, is only to align the CBDT’s notification with the proviso to Section 80IB (10), which was brought into force by legislature prospectively, i.e. with effect from 1 April 2005. The provisions of 80IB (10), as they obtained before 1 April 2005, had made no special provisions regarding any slum redevelopment schemes. There is nothing in the Finance Act, 2004 or the provisions introduced by the said act to suggest or imply legislative intention to grant any retrospective effect. Therefore, the argument that the impugned notification is ultra vires cannot be sustained.

22. The Proviso to sub-clauses (a) and (b) of Section 80-IB (10) is not declaratory or clarificatory. The Proviso (upon its coming into force with effect from 01 April 2005) makes special provisions concerning Slum Redevelopment Projects. The conditions prescribed under sub-clauses (a) and (b), which apply to other housing projects, are made inapplicable to Slum Redevelopment Projects. If the legislature intended to grant these benefits retrospectively, the legislature would have said so clearly. The legislature would not have rest content by bringing the amended provisions of Section 80 IB (10) in force from 1 April 2005.

23. Generally, all statutes other than those that are merely declaratory or relate only to matters of procedure or evidence are prima facie prospective. The general rule is that retrospective operation should not be given to a statute to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. Even if an enactment is expressed in language reasonably capable of either interpretation, it ought to be construed as prospective only. In this case, the legislature has expressly stated that the substituted Section 80-IB (10) would come into force from 01 April 2005.

24. Because some of the clauses encompass or refer to past events, that is not sufficient to hold that the amendment is retrospective. Mere reference to projects approved before 1 March 2004 in sub-clause (a) of Section 80 IB (10) cannot lead to the inference that the amendment is retrospective.

25. In CIT Vs Brahma Associates[3], this Court has held explicitly that the amendments made in Section 80-IB (10)(d) of the IT Act are prospective and not retrospective. Similarly, the Hon’ble Supreme Court, in the case of CIT Vs Sarkar Builders[4], has held that the amendment to Section 80-IB (10) by Finance (No.2) Act, 2004, which came into force from 01 April 2005, is prospective and neither applicable retrospectively nor retroactively. Once this position is accepted, the impugned notification, which only ensures that the principal notification dated 03 August 2010 falls in line with the benefits granted by (2011) 333 ITR 289 the Proviso to sub-clauses (a) and (b) in Section 80-IB (10) cannot be struck down as ultra-vires.

26. Therefore, if the proviso to sub-clause (a) and (b) of Section 80-IB (10) is prospective, such proviso cannot be given a retrospective effect based on a CBDT notification. However, the impugned notification restricts its scope to the period from which the proviso came into force. In other words, the impugned notification corrects the principal notification so that the principal notification, as corrected, aligns with the provisions of Section 80-IB (10), which came into force on 01 April 2005. The impugned notification accords with the letter and the spirit of the amended provisions of Section 80-IB (10). But for the impugned notification, an argument was possible that the principal notification was vulnerable. The unamended principal notification sought to extend the benefit of the amended provisions of Section 80-IB (10) only from 3 August 2010, when the legislature had granted this benefit from 01 April 2005. The explanatory note appended to the impugned notification also clarifies this aspect.

27. Reliance Jute and Industries Limited (supra) holds that it is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. There cannot be any quarrel with this proposition. However, Mr. Jain could not elaborate or explain how this principle was attracted in the present matter and, further, how, based on this principle, the impugned notification could be held to be ultra-vires. In any case this very argument canvassed was rejected by the Supreme Court in case of Sarkar Builders (supra) and Brahma Associates (supra).

28. Mother Superior Adoration Covent (supra) explains the distinction between exemption provisions generally and those with a beneficial purpose. The Court held that a literal formalistic interpretation of the statute is to be eschewed. The object sought to be achieved by the provision must be considered, and the statute should be construed in accord with such object. If any ambiguity arises in such constructions, such ambiguity must be resolved in favour of that which is exempted.

29. Again, we cannot see how the above principle applies to the facts of the present case or how, based on it, a case can be made for quashing the impugned notification as ultra-vires.

30. Accordingly, Mr Jain’s contention about the impugned notification being ultra-vires or beyond the CBDT's competence cannot be accepted in the present case.

31. The relief in prayer clause (b) was predicated on this court granting relief in terms of prayer clause (a). Since no relief can be granted in terms of prayer clause (a), relief in terms of prayer clause (b) also cannot be granted.

32. Mr. Suresh Kumar submitted that in Writ Petition No.2940 of 2021, the relevant Assessment Year for claiming benefits under Section 80-IB(10) would have been 2015-16, and in Writ Petition No.3004 of 2021, the relevant Assessment Year would have been 2013-14. He submitted that these Petitions were instituted in 2021 after inordinate and unexplained delay. Accordingly, he submitted that the Petitions should be dismissed for delay and laches.

33. In the context of delay and laches, Mr Jain submitted that the petitioner had a continuing right to claim the benefits under Section 80-IB(10); he relied on M. R Gupta Vs. Union of India (UOI) and Ors[5] and Lohia Machines Limited, and Another Vs Union of India, and Others[6] in support of his contentions.

34. Though we are satisfied that both decisions Mr. Jain relied on are irrelevant, we do not propose to examine the issue of delay and laches. This is because, on the merits, we are satisfied that no case is made to declare the impugned notification ultra-vires or strike it down.

35. For all the above reasons, we see no merit in either of these Petitions.

36. Accordingly, we dismiss these Petitions without any cost orders. (Jitendra Jain, J) (M.S. Sonak, J) AIR 1996 SC 669 1985 (1) TMI 1 - (SC) Designation: PA To Honourable Judge