M/s. Kevin Properties, Pune V. Income-tax Officer,

CO 20/PUN/2016

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3298 (ITAT-PUNE)
• Duration Of Justice: 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 1 505 /PN/201 4 / ASSESSMENT YEAR : 20 1 0 - 11 THE INCOME TAX OFFICER , WARD 4(5), PUNE . / APPELLANT VS. M/S. KEVIN PROPERTIES, 2413, KUMAR CAPITAL, EAST STREET, CAMP, PUNE 41 1001 . / RESPONDENT PAN: AA GFK2148H . / CO NO. 2 0 /PN/201 6 / ASSESSMENT YEAR : 20 1 0 - 11 / ASSESSMENT YEAR : 20 1 0 - 11 M/S. KEVIN PROPERTIES, 2413, KUMAR CAPITAL, EAST STREET, CAMP, PUNE 411001 / CROSS OBJECT OR PAN: AA GFK2148H VS. THE INCOME TAX OFFICER, WARD 4(5), PUNE . / RESPONDENT ASSESSEE BY : SHRI RAJENDRA AGIWAL DEPARTMENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 25 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 27 . 0 5 .201 6 ITA NO. 1 505 /PN/20 1 4 CO NO. 2 0 /PN/201 6 M/S. KEVIN PROPERTIES 2 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - II , PUNE, DATED 29 .0 4 .2014 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE HAS ALSO FILED ITS CROSS OBJECTIONS AGAINST THE APPEAL FILED BY THE REVENUE. 2. THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.1 505 /PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING THE DEDUCTION U/S.80IB(10) OF THE ACT ON BUILDING B - 1 OF THE HOUSING PROJECT 'KUMAR PARADISE' ON STANDALONE BASIS WHEN BUILDING B - 2 OF PART B OF THE HOUSING PROJECT WAS INCOMPLETE IN VIOLATION OF SECTION 80IB(10)(A)(III) OF THE ACT. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT SECTION 80IB(10) OF THE ACT UNAMBIGUOUSLY REFERS TO 'HOUSING PROJECT' AND NOT TO SEPARATE BUILDINGS CONSTRUCTED AS PART OF SUCH PROJECTS AND, THEREFORE, IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S.80IB(10), IT IS THE 'HOUSING PROJECT' IN ITS ENTIRETY AND NOT SPECIFIC BUILDINGS CONSTRUCTED THEREUNDER, WHICH WILL HAVE TO FULFIL THE CONDITIONS SPECIFIED U/S.80IB(10) OF THE ACT. 3) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. BRAHMA ASSOCIATES, 333 ITR 289 WHEREIN IT WAS HELD THAT IF THE CONDITIONS SET OUT IN SECTION 80IB(10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING D EDUCTION TO A PART OF THE PROJECT. 4 . THE ASSESSEE IN CO NO. 2 0 /PN/201 6 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - ITA NO. 1 505 /PN/20 1 4 CO NO. 2 0 /PN/201 6 M/S. KEVIN PROPERTIES 3 1 . THE LEARNED A O ERRED IN OBJECTING THE ORDER PASSED BY THE HON'BLE COMMISSIONER OF INCOME - TAX (APPEALS) - 11, PUNE ['THE LEARNED CIT (A) ]. THE LEARNED CIT(A) HAS PASSED A VERY WELL - REASONED ORDER AND UPHELD THE CLAIM OF THE APPELLANT UNDER SECTION 801B(10) OF THE ACT. 2. THE LEARNED CIT(A) IN THE ABSENCE OF DEFINITION OF 'HOUSING PROJECT' NEITHER UNDER SECTION 2 NOR UNDER SECTION 801 B(10) HAS RIGHTLY INTERPRETED THE WORD IN THE LIGHT OF JUDICIAL PRECEDENTS AND ALLOWED THE CLAIM UNDER SECTION 80IB(10) ON MERITS. 3. THE LEARNED A O HAS ERRED IN SAYING THAT THE LEARNED CIT(A) HAS NOT CONSIDERED THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT V. BRAHMA ASSOCIATES 333 ITR 289. IN FACT THE LEARNED CIT(A) AFTER CONSIDERING THE SAID DECISION ALONG WITH SEVERAL OTHER DECISIONS ALL OWED THE CLAIM OF THE APPELLANT. 4. THE LEARNED CIT(A)'S ORDER BE SUSTAINED, 5. THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WHICH HAS BEEN ALLOWED BY THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 200 9 - 10 AND 2010 - 11. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT BUILDING B - 2 WAS NOT COMPLETED BEFORE 31.03.2008 AND HENCE, THE DEDUCTION CLAIMED UNDER SECTION COMPLETED BEFORE 31.03.2008 AND HENCE, THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE. HE FURTHER POINTED OUT THAT THE SAID BUILDING COULD NOT BE COMPLETED FOR WANT OF FSI AND IT WAS CONVERTED INTO PARKING AREA. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT PRORATA DEDUCTION IS ALLOWABLE ON THE PROFITS OF SALE OF FLATS WHICH WERE COMPLETED UP TO 31.03.2008. THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE IN SUPPORT OF THE ORDER OF CIT(A). 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE DEVELOPMENT AND CONSTRUCTION OF ITA NO. 1 505 /PN/20 1 4 CO NO. 2 0 /PN/201 6 M/S. KEVIN PROPERTIES 4 HOUSING PROJECT UNDER THE NAME KUMAR PARADISE SITUATED AT HADAPSAR, PUNE. THE ASSESSEE HAD DIVIDED ITS PLOT INTO TWO PORTIONS, WHEREIN THE SANCTIONED PLAN FOR BUILDING A - 1 AND A - 2 WAS OBTAINED ON 08.01.2004 AND 18.0 5 .2004 AND SANCTIONED PLAN FOR BUILDING B - 1 AND B - 2 RECEIVED ON 28.06.2006. THE PROJECT B - 1 HAD COMMENCED ON 28.06.2006 AND THE COMPLETION CERTIFICATE IN RE SPECT OF BUILDING NO.B - 1 COMPRISING OF 44 FLATS WERE ISSUED BY THE PUNE MUNICIPAL CORPORATION ON 18.03.2008. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF THE SAID BUILDING B - 1. HOWEVER, THE ASSESSING OFFICER HELD THE ASS ESSEE NOT TO BE ELIGIBLE TO THE SAID CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT SINCE THE COMMENCEMENT CERTIFICATE ISSUED BY THE PMC ON 28.06.2006 WAS IN RESPECT OF BUILDING NOS.B - 1 AND B - 2. WHERE THE CONSTRUCTION OF BUILDING B - 2 WAS NOT COMMENC ED BY THE ASSESSEE, THE SAID CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS REJECTED BY THE ASSESSING OFFICER IN THE FIRST YEAR OF CLAIM I.E. ASSESSMENT YEAR 2009 - 10 ITSELF . THE CIT(A) HOWEVER, IN ASSESSMENT YEAR 2009 - 10 ALLOWED THE CLAIM OF DED UCTION TO THE ASSESSEE. THE ISSUE HAD TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL HELD THE ASSESSEE TO BE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT HOLDING AS UNDER: - 19. IT IS THE CASE OF THE REVENUE THAT SINCE THE ASSESSEE HAS NO T COMPLETED THE B2 PROJECT, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10). IT IS THE CASE OF THE ASSESSEE THAT IT HAS COMPLETED A1, A2 AND B1 OF THE PROJECT AND BECAUSE OF INADEQUATE FSI THE ASSESSEE DID NOT COMPLETE B2 BUILDING AS IT WAS NOT ECONOMICALLY VIABLE. THEREFORE, ON STAND ALONE BASIS ITSELF, IT IS ENTITLED TO DEDUCTION U/S.80IB(10) IN RESPECT OF WHATEVER PORTION IS COMPLETED. IT IS ALSO THE CASE OF THE ASSESSEE THAT IN A.Y. 2007 - 08 THE DEDUCTION CLAIMED U/S.80IB(10) WAS ALLO WED IN ORDER PASSED U/S.143(3). IN A.Y. 2008 - 09 THE DEDUCTION CLAIMED WAS ALLOWED IN THE ORDER PASSED U/S.143(3)/147. THEREFORE, THERE IS NO JUSTIFICATION FOR DENYING THE CLAIM OF BENEFIT OF DEDUCTION U/S.80IB(10). 20. WE FIND MERIT IN THE ABOVE SUBMISS IONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE AO IN THE ASSESSMENT PROCEEDINGS FOR A.Y. 2007 - 08 HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT PART A AND PART B ARE SEPARATE PROJECTS AND ACCORDINGLY ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) FOR PART A OF THE PROJECT. SIMILARLY, IN THE ASSESSMENT ORDER FOR A.Y. 2008 - 09 THE AO IN THE ORDER PASSED U/S.143(3) R.W.S. 147 HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF A1 AND A2 UNITS. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN THE INSTANT CASE HAS COMPLETED THE B1 BUILDING CONSISTING OF 44 FLATS. AS MENTIONED EARLIER THE BUILDING B1 IS HAVING BUILT UP AREA OF MORE THAN 1 ACRE. THE BUILT UP AREA OF ALL THE RESIDENTIAL UNITS ARE LESS THAN ITA NO. 1 505 /PN/20 1 4 CO NO. 2 0 /PN/201 6 M/S. KEVIN PROPERTIES 5 1,500 SQ.FT. AND THERE IS NO COMMERCIAL CONS TRUCTION AND THE BUILDING INDEPENDENTLY ON STANDALONE BASIS SATISFIES ALL THE CONDITIONS U/S.80IB(10). IT HAS BEEN HELD BY VARIOUS DECISIONS THAT DEDUCTION U/S.80IB(10) OF THE INCOME TAX ACT, 1961 IS TO BE ALLOWED ON STANDALONE BASIS ON SATISFACTION OF TH E CONDITIONS PRESCRIBED UNDER THE SAID SECTION. 21. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PADMAVATI DEVELOPERS (SUPRA) HAS HELD THAT ASSESSEE IS ENTITLED TO PRO - RATA DEDUCTION IN RESPECT OF THE RESIDENTIAL UNITS IN THE HOUSING PROJECT WHICH HAVE C OMPLIED WITH THE CONDITIONS AS WELL AS ELIGIBLE FOR DEDUCTION U/S.80IB(10). THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 36 TO 38 READS AS UNDER : 36. NOW, COMING TO THE SECOND HOUSING PROJECT IN SECTOR NO.7. ADMITTEDLY, THE ASSESSEE IN ASSESSMEN T YEAR 2006 - 07 HAS COMPLETED ONLY 2 BUILDINGS I.E. Q - 1, Q - 2 AND SOME FLATS IN ASSESSMENT YEAR 2007 - 08. THE BUILDING COMPRISED IN P - 1 TO P - 6 AND THE ROW HOUSES HAVE NOT BEEN CONSTRUCTED BY THE ASSESSEE TILL THE DATE OF SURVEY AND UPTO 31.03.2008. 37. TH E HONBLE MADRAS HIGH COURT IN VISWAS PROMOTERS PVT. LTD. VS. ACIT, (2013) 255 CTR 149 (MAD.) HAVE LAID DOWN THAT WITHIN A COMPOSITE HOUSING PROJECT, WHERE THERE ARE ELIGIBLE AND INTELLIGIBLE UNITS, THE ASSESSEE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE U NITS IN THE PROJECT AND EVEN WITHIN THE BLOCK, THE ASSESSEE IS ENTITLED TO CLAIM PROPORTIONATE RELIEF AGAINST THE UNITS SATISFYING THE EXTENT OF BUILT - UP AREA. 38. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE BANGALORE BENCH OF THE TRIBUNAL IN DCIT VS. BRIGADE ENTERPRISES (P.) LTD., (2008) 119 TTJ 269 (BANG) AND THE PUNE BENCH OF THE TRIBUNAL IN RUNWAL MULTIHOUSING PVT. LTD. VS. ACIT IN ITA NOS.1015, 1016 AND 1017/PN/2011 RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2005 - 06, ORDER DATED 21.11.2012. FOLLOWIN G THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO PRO - RATA DEDUCTION IN REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO PRO - RATA DEDUCTION IN RESPECT OF RESIDENTIAL UNITS IN THE HOUSING PROJECT NO.7, WHICH HAVE COMPLIED WITH THE CONDITIONS AND WERE ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80 - IB(10) OF THE ACT. HOWEVER, THE SAID DEDUCTION IS ALLOWABLE TO THE ASSESSEE ONLY IN RESPECT OF UNITS CONSTRUCTION OF WHICH HAS BEEN COMPLETED UPTO 31ST MARCH, 2008. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE IN THIS REGARD IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 AND IF THE ASSESSEE HAS FULFILLED THE AFORESAID CONDITIONS UNDER SECTION 80 - IB(10) OF THE ACT, PRO - RATA DEDUCTION UNDER THE SAID SECTION COULD BE ALLOWED TO THE ASSESSEE IN RELATION TO THE BUILDINGS / FLATS COMPLETED IN SECTOR NO.7. CONSEQUENTLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 22. SINCE THE ASSESSEE IN THE INSTANT CASE HAS COMPLETED THE 44 UNITS OF PROJECT B1 BEFORE 31 - 03 - 2008, A FACT BROUGHT ON RECORD BY THE AO AT PAGE 2 OF THE ORDER, THEREFORE, THE ASSESSEE IS ENTITLED TO PRO - RATA DEDUCTION IN RESPECT OF SAID UNITS. THE VARIOUS DECISIONS RELIED ON BY LD. DEPARTMENTAL REPRESENTATIVE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE DISCUSSIO N AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE BEFORE US THE TRIBUNAL IN EARLIER YEAR AND ALSO IN SUCCEEDING YEAR AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF ITA NO. 1 505 /PN/20 1 4 CO NO. 2 0 /PN/201 6 M/S. KEVIN PROPERTIES 6 DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE CROSS OBJECTIONS FI LED BY THE ASSESSEE ARE IN SUPPORT OF THE ORDER OF CIT(A) AND HENCE, THE SAME ARE DISMISSED AS INFRUCTUOUS. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AND THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 9 . IN THE RESULT, BOTH THE APPEAL OF REVENUE AND CROSS OBJECTIONS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 27 TH MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , PUNE ; 4. / THE CIT - II , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE