The Bombay High Court has dismissed a petition challenging CBDT notification restricting section 80IB (10) benefit only to housing projects approved on or after 1 April 2004 and before 31 march 2008.
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that 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 bench noted that the notification accords with the letter and the spirit of the amended provisions of Section 80-IB (10). But for the 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 notification also clarifies this aspect.
The petitioners have challenged the notification dated 5 January 2011, which is a purported “corrigendum” to the notification dated 3 August 2010, is plainly ultra vires Section 80IB (10) of the Income Tax Act, 1961. The notification travels way beyond the principal section and purports to add restrictions not even found in the principal Section, i.e., Section 80IB (10) of the Income Tax Act, 1961.
The petitioner contended that provisions of Section 80IB (10) applied to all housing projects notified by the Central Board of Direct Taxes (CBDT), irrespective of whether such project had been approved before 1 April 2004. He submitted that the CBDT, by the notification, now styled as a corrigendum, could not have restricted the benefit of the proviso to Section 80IB (10) only to projects approved on or after 1 April 2004 and before 31 March 2008.
The department contended that Section 80IB (10), in its present form, was substituted by the Finance Act, 2004, effective 1 April 2005. He submitted that before such substitution, there was no proviso excluding the application of Clauses (a) or (b) to housing projects carried out in accordance with the schemes framed by the Central or State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas. Accordingly, he submitted that the benefit of the proviso to Section 80IB (10) was granted prospectively with effect from 1 April 2005 and not retrospectively.
The court held that no case is made to declare the impugned notification ultra-vires or strike it down.
Case Details
Case Title: Kiran Harsukhlal Hemani Versus UOI
Case No.: Writ Petition No.2940 Of 2021
Date: 20 January 2025
Counsel For Petitioner: Naresh Jain
Counsel For Respondent: Suresh Kumar