Elegant Estates, CHENNAI V. ACIT, CHENNAI

CO 52/CHNY/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2325 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R SIVARAMAN
• Assessee Lawyers: PATHLAVATH PEERYA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.224 & 225/MDS/2016 & C.O. NOS.51 & 52/MDS/2016 (IN I.T.A. NOS.224 & 225/MDS/2016) ( )( / ASSESSMENT YEARS : 2011-12 & 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 15, CHENNAI - 600 034. V. M/S ELEGANT ESTATES, NO.1B/3, 1 ST MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI - 600 020. PAN : AACFE 1274 G ( APPELLANT) ( RESPONDENT & CROSS OBJECTOR) +, - . / APPELLANT BY : SH. PATHLAVATH PEERYA, CIT /0+, - . / RESPONDENT BY : SH. R. SIVARAMAN, ADVOCATE 1 - 2% / DATE OF HEARING : 13.04.2016 3') - 2% / DATE OF PRONOUNCEMENT : 19.05.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) 15, CHENNAI, DATED 18.11.2015, FOR THE ASSESSMENT Y EARS 2011-12 AND 2012-13. THE ASSESSEE HAS FILED CROSS-OBJECTIO NS. SINCE 2 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE A PPEALS AND BOTH THE CROSS-OBJECTIONS, WE HEARD THE APPEALS AND CROS S-OBJECTIONS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IB(10) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPECT OF THE HOUSING PROJECT. THE ASSES SING OFFICER, HOWEVER, FOUND THAT TWO ADJACENT FLATS, VIZ. FLAT N OS.403 AND 404, ARE SOLD TO THE SAME PERSONS, NAMELY, SMT. LATHA RA MACHANDRAN AND SHRI K. RAMACHANDRAN. THE BUILT-UP AREA OF THE FLAT WAS 3225 SQ.FT., WHICH IS EXCESS OF 1500 SQ.FT. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT SI NCE THE CONDITION PRESCRIBED IN SECTION 80-IB(10) WAS NOT COMPLIED WI TH. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND T HAT THE ASSESSEE SOLD THE FLATS PRIOR TO AMENDMENT TO SECTI ON 80-IB(10) OF THE ACT, THEREFORE, THE AMENDMENT MADE IN SECTION 8 0-IB(10) OF THE ACT CANNOT BE APPLIED TO DENY THE BENEFIT OF DEDUCT ION UNDER SECTION 80-IB(10) OF THE ACT. THE CIT(APPEALS) REF ERRED TO THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 3 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 2010-11 IN I.T.A. NO.2902/MDS/2014 DATED 27.02.2015 AND FOUND THAT THE FLATS SOLD PRIOR TO THE AMENDMENT CANNOT B E SUBJECT MATTER OF DISALLOWANCE UNDER SECTION 80-IB(10) OF THE ACT. ACCORDING TO THE LD. D.R., THE REVENUE HAS ALREADY FILED AN APPE AL BEFORE THE MADRAS HIGH COURT AGAINST THE ORDER OF THIS TRIBUNA L IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 AND IN FACT, THE HIGH COURT CONFIRMED THE ORDER OF THIS TRIBUNAL BY ITS JUDGMENT DATED 07.12.2015. NOW THE REVENUE HAS FILED AN APP EAL BEFORE THE APEX COURT AND THE SAME IS PENDING. 3. ON THE CONTRARY, SHRI R. SIVARAMAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT AN IDENTICAL ISSUE IN RESP ECT OF VERY SAME PROJECT WAS RAISED BEFORE THIS TRIBUNAL FOR ASSESSM ENT YEAR 2010- 11. THIS TRIBUNAL FOUND THAT THE AMENDMENT MADE TO SECTION 80- IB(10) OF THE ACT BY INSERTING CLAUSE (F) BY FINANC E ACT, 2009 WITH EFFECT FROM 01.04.2010, WAS PROSPECTIVE IN OPERATIO N. THEREFORE, THE RESIDENTIAL UNIT TRANSFERRED BEFORE THE AMENDME NT MAY NOT BE HIT BY CLAUSE (F) IN SECTION 80-IB(10) OF THE ACT. THE TRIBUNAL FURTHER FOUND THAT FLAT NOS.403 AND 404 MEASURE MORE THAN 1 500 SQ.FT. IT DOES NOT MEAN THAT THERE IS A BAR FOR ALLOWING DEDU CTION ALTOGETHER. ACCORDING TO THE LD. COUNSEL, IF SOME OF THE UNITS SOLD EXCEED THE 4 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 SPECIFIED AREA, THE CONSEQUENTIAL DISALLOWANCE, AT THE BEST, HAS TO BE PROPORTIONATE ONLY TO THE RESIDENTIAL UNITS WHIC H EXCEED SPECIFIED AREA. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT WHEN THE REVENUE CHALLENGED BEFORE THE MADRAS HIGH COURT IN TAX CASE APPEAL NO.1172 OF 2015, THE HIGH COURT FOUND THAT I N VIEW OF THE EARLIER JUDGMENT OF MADRAS HIGH COURT IN CIT V. ARU N EXCELLOW FOUNDATIONS (P) LTD. (2013) 212 TAXMAN 342, THE ORD ER PASSED BY THIS TRIBUNAL IS CORRECT IN THE EYE OF LAW. ACCORD INGLY, THE ORDER OF THIS TRIBUNAL WAS CONFIRMED. NOW THE ONLY CONTENTI ON OF THE REVENUE BEFORE THIS TRIBUNAL IS THAT AN APPEAL IS P ENDING BEFORE APEX COURT. ACCORDING TO THE LD. COUNSEL, MERE PEN DENCY OF AN APPEAL BEFORE THE APEX COURT CANNOT BE A GROUND FOR NOT FOLLOWING THE JUDGMENT OF MADRAS HIGH COURT AND THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL. 5. REFERRING TO THE CROSS-OBJECTIONS FILED BY THE A SSESSEE, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT( APPEALS) HAS RIGHTLY NOT ADJUDICATED THE CLAIM UNDER SECTION 80- IB(10)(C) OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, ACCORDIN G TO THE LD. 5 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 COUNSEL, NO FLAT WAS SOLD / ALLOTTED TO ANY INDIVID UAL MORE THAN ONE RESIDENTIAL UNIT. THE FLAT NOS.403 AND 404 WERE SO LD IN THE ASSESSMENT YEAR 2010-11, WHICH WAS SUBJECT MATTER O F APPEAL BEFORE THIS TRIBUNAL IN I.T.A. NO. 2902/MDS/2014 (S UPRA). THIS TRIBUNAL FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DE DUCTION PROPORTIONATELY AND THAT WAS CONFIRMED BY THE HIGH COURT. THEREFORE, ACCORDING TO THE LD. COUNSEL, IN RESPECT OF THE VERY SAME FLATS FOR WHICH DEDUCTION WAS ALREADY GRANTED UNDER SECTION 80- IB(10) OF THE ACT CANNOT BE DISTURBED BY APPLYING T HE PROVISIONS OF SECTION 80-IB(10)(F) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CLAIM OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT WAS RE JECTED BY THE ASSESSING OFFICER FOR BOTH THE ASSESSMENT YEARS ON THE GROUND THAT FLAT NOS.403 AND 404 WERE SOLD TO THE SAME PERSONS, NAMELY, SMT. LATHA RAMACHANDRAN AND SHRI K. RAMACHANDRAN. THE V ERY SAME ISSUE, NAMELY, SALE OF FLATS TO SMT. LATHA RAMACHAN DRAN AND SHRI K. RAMACHANDRAN CAME BEFORE THIS TRIBUNAL FOR ASSES SMENT YEAR 2010-11IN I.T.A. NO.2902/MDS/2014. THIS TRIBUNAL F OUND THAT SECTION 80-IB(10)(F) INTRODUCED BY FINANCE ACT, 200 9 WAS WITH EFFECT 6 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 FROM 01.04.2010 AND IT APPLIES PROSPECTIVELY. THER EFORE, IT CANNOT BE APPLIED FOR ASSESSMENT YEAR 2010-11 AND ACCORDIN GLY, ALLOWED THE CLAIM OF THE ASSESSEE. THE ORDER OF THIS TRIBU NAL WAS CONFIRMED BY THE MADRAS HIGH COURT. NOW THE MATTER IS PENDIN G BEFORE THE APEX COURT. ONCE THE CLAIM WAS ALLOWED BY THE CO-O RDINATE BENCH OF THIS TRIBUNAL IN RESPECT OF THE SALE OF RESIDENT IAL UNIT TO SMT. LATHA RAMACHANDRAN AND SHRI K. RAMACHANDRAN AND THE ORDER OF THIS TRIBUNAL WAS CONFIRMED BY THE MADRAS HIGH COURT, IT WOULD NOT BE PROPER FOR THE REVENUE TO REOPEN THE ISSUE FOR THE SUBSEQUENT ASSESSMENT YEARS. AS FAR AS THE SALE OF RESIDENTI AL UNIT TO SMT. LATHA RAMACHANDRAN AND SHRI K. RAMACHANDRAN WAS CON CERNED, THE ISSUE WAS SETTLED BY MADRAS HIGH COURT AND NOW PENDING BEFORE APEX COURT. UNLESS THE JUDGMENT OF MADRAS H IGH COURT WAS REVERSED BY THE APEX COURT, THERE CANNOT BE ANY REA SON FOR THE REVENUE TO REOPEN THE ISSUE ONCE AGAIN. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY JUSTIFICATION IN DISALLOWING THE CL AIM OF THE ASSESSEE MERELY BECAUSE TWO FLATS WERE SOLD TO SMT. LATHA RA MACHANDRAN AND SHRI K. RAMACHANDRAN. 7. NOW COMING TO THE FLATS EXCEEDED 1500 SQ.FT., A CO-ORDINATE BENCH OF THIS TRIBUNAL FOUND THAT FLAT NOS.403 & 40 4, IN FACT, 7 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 EXCEEDED 1500 SQ.FT. THE LANGUAGE EMPLOYED IN SECT ION 80- IB(10)(C) OF THE ACT DOES NOT WARRANT DEDUCTION CLA IM ALTOGETHER IF SOME OF THE UNITS EXCEED THE SPECIFIC DIMENSIONS. THE TRIBUNAL IN THE EARLIER ASSESSMENT YEAR FOUND THAT CONSEQUENT D ISALLOWANCE HAS TO BE ONLY ON PROPORTIONATE BASIS. THIS TRIBUN AL PLACED ITS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN AR UN EXCELLO FOUNDATIONS (P) LTD. (SUPRA). IN VIEW OF THE ABOVE , WE FIND NO REASON TO CONFIRM THE ORDERS OF THE LOWER AUTHORITI ES AND ACCORDINGLY, THE SAME ARE SET ASIDE. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND BOTH THE CROSS-OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 19 TH MAY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 19 TH MAY, 2016. KRI. 8 I.T.A. NOS.224 & 225/MDS/16 C.O. NOS. 51 & 52/MDS/16 - /267 87)2 /COPY TO: 1. +, /APPELLANT 2. /0+, /RESPONDENT 3. 1 92 () /CIT(A)-15, CHENNAI-34 4. 1 92 /CIT-6, CHENNAI-34 5. 7: /2 /DR 6. ;( < /GF.