M/S Models Construction Pvt. Ltd., Panaji V. Dy. CIT Central Circle, Panaji

CO 18/PAN/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8981 (ITAT-PANAJI)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 20-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Keywords: Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 83/PNJ/2013 : (ASST. YEAR : 2005 - 06) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (APPELLANT) VS. M/S. MODELS CONSTRUCTION (P) LTD., 401, 4 TH FLOOR, JOFFRE RESIDENCE, BEHIND GOA COLLEGE OF PHARMACY, ST. INEZ, PANAJI, GOA. (RESPONDENT) PAN : AAECM5100A CO NO. 18/PNJ/2013 ( IN ITA NO. 83 /PNJ/2013) : (ASST. YEAR : 2005 - 06) M/S. MODELS CONSTRUCTION (P) LTD., 401, 4 TH FLOOR, JOFFRE RESIDENCE, BEHIND GOA COLLEGE OF PHARMACY, ST. INEZ, PANAJI, GOA (CROSS OBJECTOR) PAN : AAECM5100A VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) REVENUE BY : SMT. ASHA DESAI, DR ASSESSEE BY : ANIL SATHE, CA DATE OF HEARING : 01/07/2013 DATE OF PRONOUNCEMENT : 02 / 08 /2013 O R D E R PER P.K. BANSAL : 1. THE ABOVE APPEAL AND CROSS OBJECTION HAVE BEEN FILED AGAINST THE ORDER OF CIT(A) DT. 12.2.2013 FOR A.Y. 2005 - 06. AT THE TIME OF HEARING, THE COUNSEL OF THE ASSESSEE DID NOT PRESS THE CROSS OBJECTION. THEREFORE, THE SAME STANDS DISMISSED AS NOT PRESSED. THE REVENUE HAS T AKEN T HE FOLLOWING EFFECTIVE GROUND IN ITS APPEAL: 2 ITA NO. 83/PNJ/2013 & CO NO. 18/PNJ/2013 (ASST. YEAR : 2005 - 06) 1. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN HOLDING THAT THE TWO PROJECTS OF THE ASSESSEE IN RESPECT OF WHICH THE DEDUCTION HAS BEEN CLAIMED U/S 80 IB(10) ARE HOUSING PROJECTS AND THEREFORE, ENTITLED FOR THE DEDUCTION OF RUPEES 1,36,47,911/ - . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED ON 28.12.2007. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 - IB(10) FOR THE PROJECT MODEL EXOTICA ON PROPORTIONATE BASIS. THE TOTAL PROFIT SHOWN BY THE ASS ESSEE FOR THE PROJECT WAS RS.2,00,08,312/ - AGAINST WHICH PROPORTIONATE CLAIM WAS MADE FOR RS.1,36,47,911/ - . THE AO DISALLOWED THE CLAIM OF THE ASSESSEE AS THE BUILT - UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS EXCEEDED 5% OF THE AGGREGATE BUIL T - UP AREA. THE AO RELIED ON THE DECISION IN M/S. LAUKIK DEVELOPERS VS. DCIT, 74 ITD 274 (MUM). THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CIT(A) CONFIRMED THE ORDER OF THE AO DISALLOWING THE CLAIM TO THE ASSESSEE U/S 80 - IB(10) OF THE ACT. AGAINST THE SAID DECISION, THE ASSESSEE WENT IN APPEAL BEFORE THE ITAT. THE ONLY EFFECTIVE GROUND TAKEN BEFORE THE ITAT STATES THAT CIT(A) HAS ERRED IN CONFIRMING THE DENIAL OF THE DEDUCTION CLAIMED BY THE ASSESSEE OF RS.1,36,47,911/ - . THE ITAT IN ITA NO. 1/PNJ/ 2009 VIDE ORDER DT. 9.4.2009 IN VIEW OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES, PUNE VS. JT. COMMISSIONER OF INCOME TAX IN ITA NO. 1417/PNJ/06 DT. 6.4.2009 SET ASIDE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION DE NOVO I N ACCORDANCE WITH LAW. IN THIS DECISION, THE HON'BLE SPECIAL BENCH HELD THAT THE LIMIT ON COMMERCIAL USE OF BUILT - UP AREA AS PRESCRIBED BY CLAUSE (D) OF SEC. 80 - IB(10) HAS NO RETROSPECTIVE APPLICATION AND IT APPLIES ONLY W.E.F. A.Y 2005 - 06. IN CONSEQUENC E OF THE ORDER OF THIS TRIBUNAL DT. 9.4.2009 THE AO PASSED ORDER DT. 24.12.20 10 BUT AGAIN DISALLOWED THE DEDUCTION U/S 80 - IB(10) BY OBSERVING THAT THE DECISION OF THE PUNE BENCH IN THE CASE OF BRAHMA ASSOCIATES VS. JT. CIT HAS NOT REACHED FINALITY AS THE D EPARTMENT HAS FILED A FURTHER APPEAL IN THE HON'BLE HIGH COURT. THE ASSESSEE 3 ITA NO. 83/PNJ/2013 & CO NO. 18/PNJ/2013 (ASST. YEAR : 2005 - 06) WENT IN APPEAL BEFORE THE CIT(A). CIT(A) VIDE ITS ORDER DT. 12.2.2013 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER : 6. I HAVE GONE THROUGH THE ORIGINAL ASSE SSMENT ORDER, THE ORDER OF THE HON'BLE ITAT GIVING DIRECTION TO THE A.O. TO DECIDE THE CASE A FRESH IN LIGHT OF DECISION IN THE CASE OF BRAHMA ASSOCIATES. IT IS SEEN THAT ASSESSEE HAS FULFILLED ALL THE CONDITIONS OF CLAIM OF DEDUCTION U/S 80IB(10) AS ON S TAND ALONE BASIS, THE RESIDENTIAL UNITS WERE CONSTRUCTED ON A PLOT OF MORE THAN ONE ACRE, SIZE OF EACH DWELLING UNIT WAS LESS THAN 1500 SQ. FT. THE ASSESSEE HAS STARTED CONSTRUCTION OF THE APPROVED HOUSING PROJECT BEFORE 01.04.2004. THESE FACTS HAVE NOT BEEN DISPUTED BY THE A.O. ALSO, AND THEREFORE DECISION IN THE CASE OF M/S BRAHMA ASSOCIATES, IS SQUARELY APPLICABLE IN THE CASE. THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS.1,36,47,911/ - AND ON THIS GROUND, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. ADDITIONAL GROUND OF APPEAL RELATING TO CLAIM OF DEDUCTION ON THE PROFITS OF COMMERCIAL UNITS : DURING THE COURSE OF CURRENT APPELLATE PROCEEDINGS, THE APPELLANT RAISED ADDITIONAL GROUND THAT DEDUCTION BE ALLOWED U/S 80IB(10) ON THE PROFITS OF COMMERCIAL UNITS AS WELL AS THEY ARE PART OF THE SAME HOUSING PROJECTS. 7.1 THE FACT IS, THE ASSESSEE DID NOT CLAIM SUCH DEDUCTION ON THE PROFITS OF COMMERCIAL UNITS, IN THE ORIGINAL RETURN OF INCOME FILED. NO REVISED RETURN WA S FILED WITHIN THE TIME LIMIT CLAIMING THIS DEDUCTION. DURING THE COURSE OF ORIGINAL ASSESSMENT THIS CLAIM WAS NOT MADE. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT(A) AND THE HON'BLE ITAT ALSO, NO SUCH CLAIM WAS MADE. WHEN THE A.O. PASSED THE ORDER U/S 143(3), TO GIVE EFFECT TO HON'BLE ITATS ORDER, THEN ALSO THE ASSESSEE DID NOT TAKE THIS GROUND. THIS IS FOR THE FIRST TIME, THAT THE APPELLANT HAS TAKEN THIS ADDITIONAL GROUND, AS IN THE GROUNDS OF APPEAL FILED, WHILE INSTITUTING THE APPEAL, T HIS GROUND HAS NOT BEEN TAKEN. THE HONOURABLE ITAT, SPECIAL BENCH PUNE IN THE CASE OF BRAHMA ASSOCIATES, ALLOWED CLAIM OF DEDUCTIONS U/S 80IB(10) ON HOUSING PROJECTS, STARTED BEFORE 01.04.2004; I.E. BEFORE THE AMENDMENT IN THE I.T ACT, EVEN IF THE HOUSING PROJECTS CONSISTED OF SOME COMMERCIAL UNITS. BUT THIS DOES NOT MEAN THAT THE SAID DECISION OF THE ITAT, PUNE ALLOWED DEDUCTION U/S 80IB(10) ON THE PROFITS OF COMMERCIAL UNITS. 4 ITA NO. 83/PNJ/2013 & CO NO. 18/PNJ/2013 (ASST. YEAR : 2005 - 06) IN VIEW OF THE ABOVE DISCUSSION, THIS ADDITIONAL GROUND OF APPEAL OF THE APPELLANT IS REJECTED. IN THE RESULT, APPEAL IS PARTLY ALLOWED. 2.1 BEFORE US, THE LD. DR RELIED ON THE ORDER OF THE AO WHILE THE LD. AR STATED THAT THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES HAS BEEN CONFIRMED BY THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES , 51 DTR ( BOM ) 2 98. HE ALSO REFERRED TO THE OTHER DECISION IN THE CASE OF GUJRAT MANAN CORP. VS. ACIT, 255 CTR (GUJ) 415 AND CONTENDED THAT CLAUSE (D) OF SEC. 80 - IB(10) PUTTING RESTRICTION ON THE AREA BEING USED FOR COMMERCIAL PURPOSE WAS INSERTED W.E.F. 1.4.2005 , IS PRO SPECTIVE AND NOT RETROSPECTIVE. RELIANCE WAS ALSO PLACED ON THE DECISION OF SAROJ SALES ORGANIZATION VS. ITO, MUMBAI E - BENCH, HIRANANDANI AKRUTI JR. VS. DCIT, MUMBAI E - BENCH . 2.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE DECISIONS REFERRED TO BEFORE US ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 - IB(10) AMOUNTING TO RS.1,36,47,911/ - FOR THE PROJECT MODEL EXOTICA. THE TOTAL AREA OF THE LAND ON WHICH THE PROJECT WAS BROUGHT OUT IS 6363 SQ. MTRS. OUT OF WHICH BUILT - UP COMMERCIAL AREA IS 934 SQ. MTRS. THE TOTAL BUILT - UP AREA, RESIDENTIAL AS WELL AS COMMERCIAL, IS 6595 SQ. MTRS. EXCLUD ING THE COMMERCIAL AREA, THE PLOT AREA IS 5362 SQ. MTRS. THE ONLY DISPUTE IN THIS CASE IS THAT THE AO DENIED DEDUCTION U/S 80 - IB(10) TO THE ASSESSEE AS IN THE CASE OF THE ASSESSEE, TOTAL BUILT - UP AREA FOR COMMERCIAL PURPOSE WAS MORE THAN 5% OF THE AGGREGA TE BUILT - UP AREA OF THE HOUSING PROJECT OR 2000 SQ. FT., WHICHEVER IS LESS . CLAUSE (D) OF SEC. 80 - IB(10) HAS BEEN INSERTED W.E.F. 1.4.2005. PRIOR TO THAT, NO SUCH CONDITION WAS THERE FOR CLAIMING OF DEDUCTION U/S 80 - IB(10). THERE IS NO WHISPER THAT THE ASSESSEE HAS NOT COMPLIED WITH OTHER CONDITIONS AS STIPULATED 5 ITA NO. 83/PNJ/2013 & CO NO. 18/PNJ/2013 (ASST. YEAR : 2005 - 06) U/S 80 - IB(10). EXCLUDING TH E BUILT - UP AREA COMMERCIAL AREA, THE ASSESSEE COMPLIED WITH ALL THE CONDITIONS AS STIPULATED U/S 80 - IB(10). THE ASSESSEE CLAIMED DEDUCTION ONLY IN RESPECT OF THE RES IDENTIAL AREA PROPORTIONATELY. THE CIT(A) IN THE SECOND ROUND OF APPEAL RELIED ON THE DECISION OF BRAHMA ASSOCIATES ( SUPRA) AND TOOK THE VIEW THAT SINCE THE HOUSING PROJECT WAS APPROVED PRIOR TO 1.4.2004, THE CONDITION STIPULATED UNDER CLAUSE (D) OF SEC. 80 - IB(10) WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. HE, ACCORDINGLY, DIRECTED THE AO TO ALLOW DEDUCTION TO THE ASSESSEE U/S 80 - IB(10). WE NOTED THAT THE CLAIM OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THE JURISDICTION HIGH COURT IN THE CAS E OF CIT VS. BRAHMA ASSOCIATES, 51 DTR (BOM) 298 ( SUPRA) IN WHICH THE HON'BLE HIGH COURT HAS HELD AS UNDER : LASTLY, THE ARGUMENT OF THE REVENUE THAT S. 80 - IB(10) AS AMENDED BY INSERTING CL. (D) W.E.F. 1 ST APRIL, 2005 SHOULD BE APPLIED RETROSPECTIVELY IS ALSO WITHOUT ANY MERIT, BECAUSE, FIRSTLY, CL. (D) IS SPECIFICALLY INSERTED W.E.F. 1 ST APRIL, 2005 AND, THEREFORE, THAT CLAUSE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 1 ST APRIL, 2005. SECONDLY, CL. (D) SE EKS TO DENY S. 80 - IB(10) DEDUCTION TO PROJECTS HAVING COMMERCIAL USER BEYOND THE LIMIT PRESCRIBED UNDER CL. (D), EVEN THOUGH SUCH COMMERCIAL USER IS APPROVED BY THE LOCAL AUTHORITY. THEREFORE, THE RESTRICTION IMPOSED UNDER THE ACT FOR THE FIRST TIME W.E.F . 1 ST APRIL, 2005 CANNOT BE APPLIED RETROSPECTIVELY. THIRDLY, IT IS NOT OPEN TO THE REVENUE TO CONTEND ON THE ONE HAND THAT S. 80 - IB(10) AS IT STOOD PRIOR TO 1 ST APRIL, 2005 DID NOT PERMIT COMMERCIAL USER IN HOUSING PROJECTS AND ON THE OTHER HAND CONTEND THAT THE RESTRICTION ON COMMERCIAL USER INTRODUCED W.E.F. 1 ST APRIL, 2005 SHOULD BE APPLIED RETROSPECTIVELY. THE ARGUMENT OF THE REVENUE IS MUTUALLY CONTRADICTORY AND HENCE LIABLE TO BE REJECTED. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT CL. (D) I NSERTED TO S. 80 - IB(10) W.E.F. 1 ST APRIL, 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED TO THE PERIOD PRIOR TO 1 ST APRIL, 2005 BRAHMA ASSOCIATES VS. JT. CIT (2009) 122 TTJ (PUNE)(SB) 433 : (2009) 22 DTR (PUNE)(SB)(TRIB) 1 AFFIRMED (PARTLY). SINCE THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THE JURISDICTION HIGH COURT, IN OUR OPINION, OUR INTERFERENCE IS NOT CALLED FOR IN THE ORDER OF 6 ITA NO. 83/PNJ/2013 & CO NO. 18/PNJ/2013 (ASST. YEAR : 2005 - 06) CIT(A). CIT(A), IN OUR OPINION, HAS RIGHTLY ALLOWED THE DEDUCTION TO THE ASSESSE E. THUS, GROUND TAKEN BY THE REVENUE STANDS DISMISSED. 3. IN THE RESULT, THE A PPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 02 / 08 /2013. SD/ - ( D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 02 / 08 / 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA