B.U. Bhandari Raviraj Developers, Pune V. Income-tax Officer,

CO 12/PUN/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9770 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS SUNITA RAO
• Assessee Lawyers: V L JAIN
• Keywords: Difference of opinion; Reason to believe; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.368/PN/2013 (A.Y. 2005-06) ITO, WARD 3(2), PUNE APPELLANT VS. M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS 1182, 1/3, F.C. ROAD, SHIVAJINAGAR, PUNE - 411005 PAN: AABFR5029F RESPONDENT CO NO.12/PN/2014 (ARISING OUT OF ITA NO.368/PN/2013) (A.Y.2005-06) M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS 1182, 1/3, F.C. ROAD, SHIVAJINAGAR, PUNE - 411005 PAN: AABFR5029F CROSS OBJECTOR VS. ITO, WARD 3(2), PUNE APPELLANT ASSESSEE BY : SHRI V.L. JA IN DEPARTMENT BY : MRS. SUNIT A RAO DATE OF HEARING : 20.06.2014 DATE OF ORDER : 26.06.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AND ONE CROSS OBJECTION FILED BY THE ASSESSEE ARE ARISING FROM TH E ORDER OF CIT(A)-II, PUNE FOR A.Y. 2005-06. 2 ITA NO.368/PN/13 CO NO.12/PN/14 M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS 2. IN ITA NO.368/PN/2013 FOR A.Y. 2005-06, THE REVE NUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THE ASSESSEE AS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) WHEN THE ASSESSEE'S PROJECT HAD BEEN APPROVED AS A 'RESIDENTIAL-CUM-COMMERCIAL PROJECT' AND NOT AS A ' HOUSING PROJECT' PER SE; AND ALSO WHEN THE COMMERCIAL SPACE WAS MORE THAN 2000 SQ.FT ? 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT THE DEDUCTION UNDER SECTION 80IB(10) A S APPLICABLE PRIOR TO 1 ST APRIL, 2005 IS ADMISSIBLE IN THE CASE OF A 'HOUSIN G PROJECT' COMPRISING RESIDENTIAL HOUSING UNIT AND CO MMERCIAL ESTABLISHMENTS ? 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THE LETTER AND SPIRIT OF S ECTION 80IB(10) PRIOR TO ITS SUBSTITUTION BY THE FINANCE (NO.2) ACT , 2004 W.E.F 01.04.2005 WHICH HAD AVOWEDLY BEEN BROUGHT INTO THE STATUTE TO PROMOTE HOUSING AS A PRIORITY AREA AND WHICH (TH E UN- AMENDED SECTION) NEITHER CONTEMPLATE, NOR PROVIDE F OR, ANY COMMERCIAL SPACE OR AREA WHATSOEVER AS CONSTITUTING A PART OF A 'HOUSING PROJECT'? 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT THOUGH THE AMENDED PROVISION OF SECTIO N 80IB(10)(D) CAME INTO OPERATION W.E.F 01.04.2005, T HOSE WERE NOT APPLICABLE IN THE CASE OF ASSESSEE RELATING TO A.Y.2005-06 WITHOUT APPRECIATING AND APPLYING THE PRINCIPLE LAI D DOWN BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ISTHM IAN STEAMSHIP LINE, 20 ITR 52 AND KARIMTHARUVI TEA ESTA TE LTD., 60 ITR 262 ? 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN COMING TO THE ABOVE CONCLUSION ON THE INCORRECT P REMISE THAT ESTOPPEL CAN BE INVOKED AGAINST THE GOVERNMENT IN E XERCISE OF ITS LEGISLATIVE POWERS ? 3. THE ASSESSEE IS A FIRM CARRYING ON THE BUSINESS OF PROMOTERS AND BUILDERS. THE ASSESSEE HAD EXECUTED THE HOUSIN G PROJECT CALLED 'PLANET MILLENNIUM' AT PIMPLE SAUDAGAR, THE PROFITS OF WHICH WERE CLAIMED AS DEDUCTION U/S.80IB(10) OF THE IT. ACT, 1 961. THE ASSESSEE HAD FILED ITS ORIGINAL RETURN ON 30.10.2005 DECLARI NG INCOME OF NIL AFTER CLAIMING DEDUCTION OF 24,27,790/- U/S.80IB(10) OF THE ACT. THE ASSESSMENT U/S.143(3) R.W.S. 144A WAS COMPLETED ON 3 ITA NO.368/PN/13 CO NO.12/PN/14 M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS 14.12.2007 TAXING THE PROFITS RECEIVED FROM SALE OF COMMERCIAL SPACE AT 10,84,786/- AND ALLOWED THE DEDUCTION U/S.80IB(10) OF THE ACT OF 13,43,004/-. THEREAFTER, A NOTICE U/S.148 OF THE ACT WAS ISSUED ON 25.03.2011. THE REASONS FOR RE-OPENING OF THE A SSESSMENT AS UNDER: 'IN THIS CASE THOUGH THE COMMERCIAL SPACE EXCEEDED 2000 SQ. FT. THE A.O. HAD ALLOWED DEDUCTION U/S 80IB(10) TO THE EXTENT OF RS.13,43,004/- I.E. BY RESTRICTING PROFITS TO RESID ENTIAL PORTION AND TAXING THE PROFITS FROM COMMERCIAL SPACE. THE E NTIRE CLAIM OF DEDUCTION U/S 80IB(10) TO THE EXTENT OF RS.24,27 ,790/- WAS REQUIRED TO BE DISALLOWED. THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME AMOUNTING TO RS.13,43,004/- HAS ESC APED ASSESSMENT.' 4. THE ASSESSEE HAS OBJECTED FOR THE RE-OPENING OF THE ASSESSMENT ON THE GROUND THAT THE NOTICE U/S.148 WAS BASED ONL Y ON CHANGE OF OPINION BASED ON SOME SET OF FACTS AND WITHOUT ANY JUDICIAL SUPPORT. ON MERIT, THE ASSESSEE HAS PLACED RELIANCE ON THE D ECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASS OCIATES (2011) 333 ITR 289 (BOM). THE ASSESSING OFFICER HAS OBSER VED THAT THE HOUSING PROJECT INCLUDED COMMERCIAL SPACE OF 4299 S Q. FT. WHICH WAS MORE THAN 2000 SQ. FT. DISALLOWED THE ENTIRE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT AMOUNTING TO 13,43,004/- IN VIEW OF THE PROVISIONS OF SECTION 80IB(10) OF THE ACT. 5. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF AS SESSEE, WHEREIN THE CIT(A) FOLLOWING THE DECISION OF BRAHMA ASSOCIA TES (SUPRA) ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) OF 13,43,004/-. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENU E, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLD ING THE DISALLOWANCE OF DEDUCTION U/S.80IB(10) OF THE ACT A S CLAIMED. SO, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESS ING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZE D REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A). 4 ITA NO.368/PN/13 CO NO.12/PN/14 M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE ARE NOT INCLINED TO INTERFERE WITH THE F INDING OF CIT(A) BECAUSE HE HAS DECIDED THE ISSUE BY FOLLOWING THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASS OCIATES (SUPRA) WHICH HAS BEEN DELIVERED ON THE SIMILAR FACTS AND C IRCUMSTANCES OF THE CASE. THE RESTRICTION OF COMMERCIAL SPACE HAS BEEN INSERTED IN THE STATUTE BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01.04.2005 IN TERMS OF CLAUSE (D) TO SECTION 80IB(10) CANNOT BE A PPLIED TO THE PROJECTS WHICH HAVE COMMENCED PRIOR TO 01.04.2005. IN OUR OPINION, THE AFORESAID PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT COVERS THE CONTROVERSY BEFORE US AS THE PROJECT IN QUESTIO N HAS COMMENCED PRIOR TO 01.04.2005 AND ALSO STAND COMPLETED BEFORE THE PRESCRIBED DATE. IN VIEW OF THIS NEWLY INSERTED CLAUSE (D) TO SECTION 80IB(10) COULD NOT BE INVOKED TO DISENTITLE THE ASSESSEE FRO M CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT FOR A.Y. 2005-06. ACCORDINGLY, THE ORDER OF CIT(A) ON THIS ISSUE NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6.1 THE LEARNED AUTHORIZED REPRESENTATIVE HAS RAISE D THE GROUNDS BY WAY OF FILING CROSS OBJECTIONS WITH REGARD TO RE -OPENING OF THE CASE. SINCE WE HAVE DECIDED THE ISSUE ON MERIT IN FAVOUR OF THE ASSESSEE, THE ISSUE OF RE-OPENING GOING ACADEMIC AN D THE SAME MAY BE AGITATED AS PER LAW AS AND WHEN IT IS REQUIRED. SO, WE DISMISS THE CROSS OBJECTIONS AS ACADEMIC. 7. IN RESULT, THE REVENUES APPEALS AS WELL AS CROS S OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF JUNE, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 26 TH JUNE, 2014 GCVSR 5 ITA NO.368/PN/13 CO NO.12/PN/14 M/S. B.U. BHANDARI RAVIRAJ DEVELOPERS COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE