M/s. Kewal Real Estate Developers Pvt. Ltd., Pune V. Assistant Commisisoner of Income-tax,

CO 31/PUN/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1970 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1140/PN/2014 ASSESSMENT YEAR: 2010-11 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE. . APPELLANT VS. M/S KEWAL REAL ESTATE DEVELOPERS PVT. LTD., KUMAR CAPITAL, 1 ST FLOOR, 2413, EAST STREET, CAMP, PUNE 411 001. PAN: AAACK7491G . RESPONDENT CO NO.31/PN/2015 (ARISING OUT OF ITA NO.1140/PN/2014) ASSESSMENT YEAR: 2010-11 M/S KEWAL REAL ESTATE DEVELOPERS PVT. LTD., KUMAR CAPITAL, 1 ST FLOOR, 2413, EAST STREET, CAMP, PUNE 411 001. PAN: AAACK7491G . CROSS OBJECTOR VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE. . RESPONDENT REVENUE BY : SHRI RAJEEV KUMAR (CIT) ASSESSEE BY : SHRI RAJENDRA AGIWAL / DATE OF HEARING : 21.12.2015 / DATE OF PRONOUNCEMENT: 15.01.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A)-I, PUNE DATED 28.11.2013 RELATING TO ASSESSM ENT YEAR 2010-11 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT). THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE APPEAL OF THE REVENUE. 2 ITA NO.1140/PN/2014 CO NO.31/PN/2015 2. BOTH THE APPEAL AND CROSS OBJECTION RELATING TO THE ASSESSEE EMANATING FROM THE SAME ASSESSMENT YEAR ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. IN THE APPEAL OF THE REVENUE, THE ASSESSING OFFI CER HAS IMPUGNED THE FINDINGS OF THE CIT(A) IN ALLOWING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT TO THE ASSESSEE IN RESPECT OF HOUSING PROJECT KUMAR PRIMAVERA. THE ASSESSING OFFICER HAS CHALLENGED THE FINDINGS OF TH E CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX( APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE A SSESSEE'S CLAIM OF DEDUCTION OF RS.13,11,33,486/- IN RESPECT OF THE HOUSING P ROJECT 'KUMAR PRIMAVERA' INSTEAD OF CONFIRMING THE SAID DISALLOWANCE. 3. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN HOLDING THAT BUILDINGS NO. A-1 AND A-2 CONSTITUTED A SEPARATE 'H OUSING PROJECT' INDEPENDENT OF BUILDINGS NO. A-3 TO A-8 AND FURTHER THAT AS THE BU ILDINGS A-1 AND A-2 HAD BEEN COMPLETED BEFORE 31.03.2009, THE ASSESSEE WAS ENTIT LED TO DEDUCTION U/S. 80IB(10). 4. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN FAILING TO APPRECIATE THAT BUILDINGS A-3 TO A-8 FORMED PART OF THE SAME O NE HOUSING PROJECT WHICH INCLUDED BUILDINGS A-L TO A-2; AND AS THE ASSESSEE HAD NOT COMPLETED BUILDINGS A-3 TO A-8 BEFORE 31.03.2009, IT WAS NOT ENTITLED TO DE DUCTION U/S. 80IB(10) IN RESPECT OF THE 'KUMAR PRIMAVERA' PROJECT. 5. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D FAILING TO APPRECIATE THAT THE PLAN IN RESPECT OF BUILDINGS A-3 TO A-8 WE RE A MERE REVISION OF THE ORIGINAL PLAN AND FURTHER THAT BUILDINGS A-3 TO A-8 WERE MER ELY IN THE NATURE OF ADDITIONAL CONSTRUCTIONS ON THE SAME PLOT OF 24902.715 SQ. MTR S. IN RESPECT OF WHICH THE ORIGINAL PLAN HAD BEEN SANCTIONED AND THE ORIGINAL COMMENCEMENT CERTIFICATE HAD BEEN ISSUED ON 02.02.2005. 6. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN FAILING TO CONSIDER THAT FOR THE PURPOSE OF COMPUTING THE LIMITATION PE RIOD U/S. 80IB(10), THE DATE OF FIRST APPROVAL HAS TO BE TAKEN INTO ACCOUNT AND AS PER EX PLANATION (I) TO U/S. 80IB(10), SUBSEQUENT APPROVALS, IF ANY, WOULD DATE BACK TO TH E FIRST APPROVAL; AND THAT BY APPLYING THE SAID EXPLANATION THE ASSESSEE HAD FAIL ED TO COMPLETE THE CONSTRUCTION OF BUILDINGS A-3 TO A-8 BEFORE 31.03.2009. 7. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN HOLDING THAT SEPARATE RULE OF COMPLETION HAD TO BE APPLIED TO BUILDINGS A -3 TO A-8 AS DISTINGUISHED FROM A- 1 AND A-2 WHEREAS, IT IS UNAMBIGUOUS FROM SECTION 8 01B(10} THAT THE LIMITATION FOR CONSTRUCTION HAS TO BE COMPUTED WITH REFERENCE TO T HE APPROVAL GIVEN TO THE 'PROJECT' AND NOT THE APPROVAL GIVEN FOR A 'BUILDIN G'. 8. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) ERRE D IN DECIDING THE APPEAL WITHOUT APPLYING EXPLANATION (I) OF SECTION 80IB(10 ) TO THE CASE AT HAND AND ALSO BY INTERPRETING RULE OF COMPLETION IN A MANNER NOT PRO VIDED IN, NOR PERMITTED BY, THE STATUTORY PROVISIONS. 3 ITA NO.1140/PN/2014 CO NO.31/PN/2015 9. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OR ALL THE GROUNDS OF APPEAL. 4. IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE BEFORE THE TRIBUNAL IN ITA NOS.2028 & 2218/PN/2012, ORDER DATED 21.09.2 015 RELEVANT TO ASSESSMENT YEARS 2008-09 AND 2009-10 EXCEPT FOR THE AMOUNT OF DEDUCTION. 5. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE THAT THE ASSESSEE IS A PROMOTER AND BUILDER. IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSEE DECLARED A TOTAL INCOME OF RS.4,03,06,400/-. THE ASSESSEE, INTER-ALIA , CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF RS.13,11,33,486/- IN THE COMPUTATION OF INCOME IN R ESPECT OF ITS PROJECT KUMAR PRIMAVERA. THE ASSESSEE ALLEGEDLY DEVELOPE D THE AFORESAID PROJECT IN TWO PHASES. THE PHASE-I CONSISTS OF TWO RESIDENTIA L BUILDINGS A-6 AND A-7, SUBSEQUENTLY RENAMED AS A-1 AND A-2 AND PHASE-II CO MPRISES OF SIX RESIDENTIAL BUILDINGS A-3 TO A-8. THE CERTIFICATE OF COMMENCEMENT IN RESPECT OF PHASE-I WAS OBTAINED ON 02-02-2005. THE PHASE-I OF THE PROJECT WAS APPROVED FOR PARKING + 7 FLOORS, WHEREAS THE COMMEN CEMENT CERTIFICATE IN RESPECT OF PHASE-II WAS OBTAINED ON 08-09-2006. AN APPROVAL WAS GRANTED FOR CONSTRUCTION OF PARKING + 9 FLOORS OF THE BUILDINGS . AT THE TIME OF GRANT OF COMMENCEMENT IN RESPECT OF PHASE-II I.E. ON 08-09-2 006, THE PLAN FOR PHASE-I WAS ALSO REVISED AND TWO MORE FLOORS WERE ADDED TO THE BUILDINGS A-1 AND A-2. THE PLAN WAS REVISED FOR PHASE-I VIDE SAME COMMUNIC ATION IN WHICH THE APPROVAL FOR COMMENCEMENT IN RESPECT OF BUILDINGS I N PHASE-II I.E. A-3 TO A-8 WAS GRANTED BY PMC. THE ASSESSEE HAD OBTAINED COMP LETION CERTIFICATE IN RESPECT OF BUILDINGS IN PHASE-I ON 05-09-2008 AND I N RESPECT OF PHASE-II IN MARCH, 2011. DURING THE COURSE OF SCRUTINY ASSESSM ENT PROCEEDINGS RELEVANT TO ASSESSMENT YEAR 2008-09 THE ASSESSING OFFICER AP POINTED THE COMMISSION UNDER SECTION 131(1)(D) AND SOUGHT REPORT FROM REGI STERED VALUER (CATEGORY-I) WITH RESPECT TO THE PROJECTS. THE REGISTERED VALUE R VIDE HIS REPORT DATED 29-11-2010 INTER-ALIA OBSERVED THAT THE PLOT AREA OF THE PROJECT IS 6.15 ACRES, 4 ITA NO.1140/PN/2014 CO NO.31/PN/2015 THE AREA OF EACH FLAT IN THE BUILDINGS CONSTRUCTED IS LESS THAN 1500 SQ. FT., THERE ARE TOTAL 288 FLATS IN 8 BUILDINGS OF P + 9 STOREY S, THERE IS NO SHOPPING AREA, THE COMPLETION CERTIFICATE FOR 80 FLATS IS YET TO B E RECEIVED ALONG WITH FINAL COMPLETION CERTIFICATE FOR PLOT NO. 69. THE DATE O F FIRST COMMENCEMENT IS 02-02-2005, THEREFORE, THE PROJECT WAS SUPPOSED TO BE COMPLETE ON OR BEFORE 31-03-2009, HOWEVER, COMPLETION CERTIFICATE IN RESP ECT OF 80 FLATS IS PENDING. THE ASSESSING OFFICER HELD THAT SINCE, THE ASSESSEE HAS NOT COMPLETED THE PROJECT ON OR BEFORE 31-03-2009 I.E. WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE FIRST COMMENCEMENT CERT IFICATE WAS OBTAINED THE ASSESSEE HAS NOT COMPLIED WITH THE BASIC CONDITION FOR CLAIMING DEDUCTION UNDER SECTION 80IB(10). THE ASSESSING OFFICER VIDE ORDER DATED 30-12-2010 REJECTED THE CLAIM OF THE DEDUCTION UNDER SECTION 8 0IB(10) FOR ASSESSMENT YEAR 2008-09. FOR IDENTICAL REASONS, THE CLAIM OF ASSES SEE UNDER SECTION 80IB(10) WAS DENIED BY THE ASSESSING OFFICER IN THE ASSESSME NT YEAR 2009-10 AND 2010-11. 6. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE AND APPRECIATION OF THE FACTS OF THE CASE, ACCEPTED THE CLAIM OF ASSESSEE AND ALLOWED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT . THE CIT(A) TREATED BUILDINGS A-1 AND A-2 AS SEPARATE HOUSING PROJECT I N PHASE-I AND THE REMAINING BUILDINGS A-3 TO A-8 IN PHASE-II AS SEPAR ATE PROJECT. NOW, THE REVENUE IS IN APPEAL AGAINST THE FINDINGS OF CIT(A) BEFORE US. 7. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, AT THE OUTSET, SUBMITTED THAT THE ISSUE IS IDENTICAL AND SQUARELY COVERED IN ITS OWN CASE IN THE EARLIER ASSESSMENT YEARS 2008-09 & 2009-10 IN ITA N OS.2028 & 2218/PN/2012, ORDER DATED 21.09.2015 RESPECTIVELY. 8. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUN AL IN ASSESSEES OWN CASE IN THE PRECEDING ASSESSMENT YEARS HAS HELD THA T THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT O N ALL THE RESIDENTIAL 5 ITA NO.1140/PN/2014 CO NO.31/PN/2015 BUILDINGS COMPRISING IN PHASE-I (A-1 AND A-2) AND P HASE-II (A-3 TO A-8). THE DATE OF COMPLETION OF PHASE-II SHALL BE RECKONED FR OM THE DATE OF COMMENCEMENT CERTIFICATE ISSUED BY PMC IN RESPECT O F BUILDINGS A-3 TO A-8. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE HOLD THAT THE ASSESSEE I S ENTITLED TO PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE COMPLETED FLATS. IN THIS REGARD, WE MODIFY THE DIRECTIONS OF THE CIT(A). TH E APPEAL OF THE REVENUE IS THUS DISMISSED. 9. THE ASSESSEE IN CO NO.31/PN/2015 HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED AO: ELIGIBILITY OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 1. ERRED IN CHALLENGING THE ORDER OF CIT(A) ON ELIG IBILITY OF THE PROJECT KUMAR PRIMAVERA UNDER SECTION 80IB(10) OF THE ACT, BY CO NTENDING THAT, BUILDINGS A-1, A-2 AND BUILDINGS A-3 TO A-8 DO NOT CONSTITUTE TWO SEPARATE PROJECTS AND ARE PART OF ONE SINGLE PROJECT, THEREBY NOT ELI GIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT; (AS PROJECT NOT COMPLE TED WITHIN THE TIME LIMIT OF SECTION 80IB(10) OF THE ACT) II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE COMMISSIONER OF INCOME TAX (APPEALS) I (THE LEARNED CIT(A)): PRE-PONMENT OF REVENUE 2. WITHOUT PREJUDICE TO THE DEPARTMENTS APPEAL , ERRED IN UPHOLDING ACTION OF THE LEARNED AO WITH RESPECT TO PRE-PONMENT OF REVEN UE ON 25 FLATS ON WHICH THE RESPONDENT HAD RECEIVED ONLY ADVANCES AND SALE WAS NOT CONCLUDED AS PER THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE RESPONDENT. THE RESPONDENT CRAVES, TO CONSIDER EACH OF THE ABOV E GROUNDS OF CROSS OBJECTIONS WITHOUT PREJUDICE TO EACH OTHER AND CRAVES, LEAVE T O ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF CROSS OBJECTIONS. 10. IN THE GROUND NO.1 OF CROSS OBJECTION, THE ASSE SSEE HAS SUPPORTED THE ORDER OF THE CIT(A). SINCE, WE HAVE ALREADY HELD T HAT THE APPEAL OF THE REVENUE IS DISMISSED AND ORDER OF THE CIT(A) IS CON FIRMED IN RESPECT OF ELIGIBILITY OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, GROUND NO.1 OF THE CROSS OBJECTION STANDS MERGED WITH THE REVENUES AP PEAL AND DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 6 ITA NO.1140/PN/2014 CO NO.31/PN/2015 11. IN THE GROUND NO.2 OF CROSS OBJECTION, THE ASSE SSEE HAS IMPUGNED THE FINDINGS OF THE CIT(A) CONCERNING THE ISSUE OF DEFE RMENT OF REVENUE RECOGNITION IN RESPECT OF 25 FLATS WHERE THE SALE P ROCEEDS WERE FULLY RECEIVED TO THE TUNE OF RS.7,14,55,630/-. 12. THE RELEVANT FACTS, IN BRIEF, ARE THAT THE THER E WERE 25 FLATS IN BUILDING NUMBERS A-3, A-4, A-5, A-6 AND A-7 FOR WHICH THE BU YERS HAVE MADE FULL PAYMENTS BEFORE 31.03.2010. THE ASSESSEE HAS NOT B OOKED THE SALES DURING THE FINANCIAL YEAR UNDER REVIEW. THE ASSESSEE SUBMITTE D BEFORE THE ASSESSING OFFICER THAT THE COMPLETION CERTIFICATE AND THE ARC HITECT CERTIFICATE WAS NOT RECEIVED. THE ASSESSING OFFICER AND ALSO THE CIT(A ) DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE. 13. SINCE THE INCOME FROM THE BUILDING PROJECT IS H ELD TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AS NOTE D HEREINABOVE, THE NET PROFIT COMPUTED FROM THE ABOVE-SAID FLAT WOULD ALSO QUALITY FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THUS, IN THE PR ESENT CASE, SUCH ALLEGED DEFERMENT OF INCOME WOULD BE REVENUE NEUTRAL AS ENT IRE PROFITS DERIVED FROM THE PROJECT ARE HELD TO BE DEDUCTIBLE FROM INCOME U NDER SECTION 80IB(10) OF THE ACT. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON THE AFORESAID PROFIT COMPUTED IN RESPECT OF 25 FLATS. THUS, WE ALLOW THE ALTERNA TE PLEA OF THE ASSESSEE RAISED IN CROSS OBJECTION. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND CROSS OBJECTION IS DISPOSED OFF IN ABOVE TERMS. ORDER PRONOUNCED ON THIS 15 TH DAY OF JANUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 15 TH JANUARY, 2016. 7 ITA NO.1140/PN/2014 CO NO.31/PN/2015 & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE