Income Tax Act, 1961 – Sections 80IB(10) - The petitioners challenged a corrigendum notification dated 5 January 2011, issued by the CBDT, modifying an earlier notification from 3 August 2010. The corrigendum limited the applicability of the benefits under Section 80IB(10) to housing projects approved by local authorities between 1 April 2004 and 31 March 2008, aligning with the legislative amendments effective from 1 April 2005. The petitioners argued that the corrigendum was ultra vires as it imposed restrictions not found in the parent legislation and sought retrospective application of the original notification to claim deductions for slum redevelopment projects approved before 1 April 2004 - Whether the corrigendum notification issued by the CBDT is ultra vires for limiting the scope of Section 80IB(10) - Whether the benefit of the proviso to Section 80IB(10) can be extended to housing projects approved before 1 April 2004 - Whether the legislature intended retrospective application of the proviso to Section 80IB(10) – HELD - The proviso to Section 80IB(10), effective from 1 April 2005, explicitly excluded housing projects approved before that date from its benefits. The legislature did not intend retrospective application, as evidenced by the clear wording and prospective enforcement of the amendments. The CBDT’s corrigendum merely corrected the earlier notification to align it with legislative intent and did not exceed its delegated authority. The court further ruled that the petitioners’ contention of ultra vires was untenable, as the corrigendum only ensured compliance with the statutory framework - The court also emphasized that tax laws generally operate prospectively unless expressly stated otherwise. The benefit of the proviso was introduced prospectively for slum redevelopment projects, and the petitioners failed to demonstrate how the corrigendum violated any substantive rights - The writ petitions were dismissed. The court upheld the corrigendum notification as intra vires, stating it was consistent with the legislative amendments to Section 80IB(10). The petitioners' claims for retrospective benefits were rejected, affirming the prospective nature of the proviso to Section 80IB(10). No costs were awarded
2025-VIL-16-BOM-DT
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
WRIT PETITION NO.2940 OF 2021
Date: 20.01.2025
KIRAN HARSUKHLAL HEMANI
Vs
1] UNION OF INDIA
2] CENTRAL BOARD OF DIRECT TAX
3] PR. CIT CENTRAL CIRCLE 4(1)
4] INCOME TAX OFFICER
WITH
WRIT PETITION NO.3004 OF 2021
BOMBAY SLUM REDEVELOPMENT CORPORATION PRIVATE LIMITED
Vs
1] UNION OF INDIA
2] CENTRAL BOARD OF DIRECT TAX
3] PR. CIT CENTRAL CIRCLE 4(1)
4] INCOME TAX OFFICER
For the Petitioners: Mr. Naresh Jain and Mr. Mahaveer Jain a/w Mr. Shobhit Mishra.
For the Respondents: Mr Suresh Kumar,
CORAM
M.S. Sonak & Jitendra Jain, JJ.
JUDGMENT: (Per M. S. Sonak, J.)
1. Heard learned Counsel for the parties.
2. The learned Counsel for the parties submit that common issues of law and fact arise in both these Petitions, and therefore, both a common order could dispose of these Petitions. They submit that the Writ Petition No. 2940 of 2021 may be treated as a lead Petition.
3. Rule in both the Petitions. The Rule is made returnable immediately at the request and with the consent of the learned Counsel for the parties.
4. The Petitioner seeks the following substantive reliefs:
“(a) that this Hon’ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned notification dated 05.01.2011 issued by the Respondent No. 2 (being Exhibit ‘H’ hereto) and after going into the validity and legality thereof to quash and aside the same.
(b) that this Hon’ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, permit the petitioner to file appropriate claim under the Act for claim of deduction u/s 80IB(10) of the Act before the Respondent No. 3 and Respondent No. 4 and direct to grant of refund as per law arising due to eligibility of the claim without raising the issue of limitation or other technical issue.”
5. Mr Naresh Jain submits that the impugned 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 (IT Act). He submits that the impugned 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 IT Act.
6. Mr Jain referred to the provisions of Section 80IB (10), including the proviso to the said principal Section. He submitted that the same 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 impugned 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.
7. Mr Jain submitted that the CBDT, which is only a delegate and, in any event, which was only authorised to notify the scheme or schemes under the proviso, could not have, in the exercise of its powers, restricted the scope of the principal section and the proviso by stating that the proviso will apply only to projects approved between the window period set out in the impugned notification. He submitted that such an exercise is beyond the CBDT’s competence and entirely ultra vires. Accordingly, he submitted that the impugned notification is liable to be struck down.
8. Mr Naresh Jain relied on the following decisions to support his contentions: -
(i) Reliance Jute and Industries Limited Vs. Commissioner of Income-Tax, West Bengal [1979 (10) TMI 2 (SC)]
(ii) Government of Kerala & Anr. Vs. Mother Superior Adoration Convent [2021 (3) TMI 93 SC] - 2021-VIL-43-SC
9. Mr Suresh Kumar, the learned Counsel for the Respondents, submitted 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.
10. Mr Suresh Kumar submitted that the CBDT’s principal notification dated 3 August 2010 had incorrectly notified the scheme only with effect from 3 August 2010. He submitted that the impugned corrigendum was issued to correct this obvious error and ensure that the CBDT notification dated 3 August 2010 aligns with the proviso to Section 80IB (10) of the IT Act. He submitted that the impugned corrigendum is entirely intra vires and the CBDT has, in no manner, exceeded the powers vested in it. He submitted that the decisions relied upon by Mr Jain are mostly irrelevant and do not apply to the facts of the present case.
11. The rival contentions now fall for our determination.
12. To appreciate the challenge raised in these Petitions, we refer to the provisions of Section 80IB (10) as they presently obtain:-
“[(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] buy a local authority shall be hundred per cent of the profits derived in the 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 and completes such construction-
(i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008,
(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 reconstruction or redevelopment of existing buildings in areas 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 reconstruction or redevelopment of existing buildings in areas 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 [(2011) 333 ITR 289], 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 [(2015) 7 SCC 579], 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 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 [AIR 1996 SC 669] and Lohia Machines Limited, and Another Vs Union of India, and Others [1985 (1) TMI 1 - (SC)] 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.
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