ADDL CIT 15(2), MUMBAI V. KRISH DEVELOPERS, MUMBAI

ITA 1002/MUM/2011

• Counselvise Citation: 100219914 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 19-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. 1002/MUM/2011 ASSESSMENT YEAR : 2007-08 ASSTT. CIT - 15(2) MATRU MANDIR, ROOM NO.113 TARDEO MUMBAI-400 008. VS. M/S. KRISH DEVELOPERS B-3, AKHIL TOWER, RATAN NAGAR BORIVALI (E) MUMBAI-400 068. PAN NO.AAHFK 0744 J (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI O.P. SINGH DATE OF HEARING : 19/08/2013 DATE OF PRONOUNCEMENT : 23 / 0 8 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS A REVENUE APPEAL AGAINST THE ORDER OF CIT(A )-26, MUMBAI DATED 25.11.2010. THE REVENUE RAISED THE GROUNDS ON THE ISSUE OF ALLOWING DEDUCTION U/S. 80IB(10) BY THE CIT(A) FOLL OWING THE DECISION OF ITAT SPECIAL BENCH PUNE 30 SOT 155 IN THE CASE OF M/S. BRAHMA ASSOCIATES. THE REVENUES CONTENTION IS THAT THE CO MMERCIAL AREA HAS EXCEEDED 2000 SQ.FT. IN TERMS OF CL.(D) OF SECTION 80IB(10) WHICH WAS EFFECTIVE FROM 01.04.2005. 2 WHEN THE CASE WAS POSTED NONE APPEARED ON BEHALF OF THE ASSESSEE AND ON EARLIER OCCASION ALSO NONE APPEARED ON 18.06 2013. IN VIEW OF THIS WE HAVE CONSIDERED THE APPEAL EXPARTE RESPONDENT. 3. BRIEFLY STATED, THE ASSESSEE IS A PARTNERSHIP FI RM ENGAGED IN THE BUSINESS OF DEVELOPING A HOUSING PROJECT AT NALLASO PARA(W), THANE ITA NO.1002/M/11 A.Y.07-08 KRISH DEVELOPERS 2 KNOWN AS AGARWAL KRISH GARDEN STARTED IN ASSESSM ENT YEAR 2005-06 AND THE PROJECT HAS SATISFIED ALL CONDITIONS LAID D OWN U/S. 80IB(10). THE COMMERCIAL AREA APPROVED IS ONLY1760.26 SQ.FT. WHIC H IS LESS THAN 5% OF THE TOTAL CONSTRUCTED AREA. AO ADDED THE GYMNASIUM AT GROUND FLOOR OF 858.65 SQ.FT. ALSO AS COMMERCIAL AREA SO AS TO COME TO THE CONCLUSION THAT THE TOTAL COMMERCIAL AREA EXCEEDED 2000 SQ.FT. AO ACCORDINGLY DISALLOWED THE DEDUCTION U/S. 80IB(10). 4. BEFORE THE CIT(A), IT WAS SUBMITTED THAT AREA OF COMMERCIAL USAGE WAS LESS THAN 2000 SQ.FT. AND ALSO LESS THAN 5% OF TOTAL CONSTRUCTED AREA AND PROJECT WAS APPROVED BY THE CIDCO MUNICIPAL COR PORATION AS A RESIDENTIAL PROJECT AND GYMNASIUM WAS EXCLUDED FOR THE PURPOSE OF FSI AS PER THE DEVELOPMENT CONTROL RULES AND THAT WAS P ROVIDED AS PART OF COMMON AMENITIES PROVIDED TO THE RESIDENTS AND NO C OMMERCIAL BENEFIT HAS BEEN DERIVED BY THE BUILDER. IT WAS FURTHER SUB MITTED THAT AO EXAMINED THE ISSUES AND ALLOWED THE DEDUCTION IN AS SESSMENT YEARS 2005-06 AND 2006-07. 5. CONSIDERING THE FACTS AND ALSO RELYING ON THE SP ECIAL BENCH DECISION OF THE ITAT IN THE CASE OF BRAHMA ASSOCIAT ES, THE LD. CIT(A) ALLOWED THE DEDUCTION BY SAYING THE FOLLOWING:- 5.1 IT IS PERTINENT TO MENTION THAT IN THE CASE O F BRAHMA ASSOCIATES VS. JCTT ITA NO. 1417 SPL. BENCH (PUNE) HAS ALSO APPROVED THE DECISION OF M/S. SAROJ SALES ORGANIZAT ION VS. ITO WARD 25(2)(3) ITA NO. 4008/M/2007, THE SAME FINDING HAS ALSO BEEN GIVEN BY THE LD. CIT(A)-25 IN THE CASE OF MS K INJAL ASSOCIATES IN ORDER APPEAL NO. CIT(A) XXV/ITO 25(1)(1)/ITA 290 /08-09 DATED 12.08.2009. FURTHER, IN THE CASE OF M/S HAPPY HOME ENTERPRISES, THE LD. CIT(A) 27 (SUPRA) HAS GIVEN THE SAME FINDIN G AND DECISION OVER THE SAME ISSUE RELATED WITH APPLICABILITY OF C LAUSE (D) OF SECTION 801B(10). IT IS RELEVANT TO MENTION THAT THE HONBL E PUNE SPL. BENCH HAS GIVEN CATEGORICAL FINDING IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT IN ITA NO. 1417/PN/2006 (A.Y.2003-04) DATED 06 .04.2009, WHEREIN THE HONBLE MEMBERS HAVE HELD AS UNDER: SO FAR AS ASSESSMENT YEARS PRIOR TO AY 2005-06 ARE CONCERNED APPROVAL BY THE LOCAL AUTHORITIES FOR THE HOUSING ITA NO.1002/M/11 A.Y.07-08 KRISH DEVELOPERS 3 PROJECT CONSTITUTES ADMISSIBLE MATERIAL TO COME TO THE CONCLUSION THE HOUSING PROJECT IS ELIGIBLE FOR DEDU CTION U/S 80IB (10)- WHAT WAS BROUGHT INTO EFFECT BY INSERTIO N OF CLAUSE (D) IN SECTION 80IB(10) VIDE FINANCE ACT, 2004, WAS A RESTRICTION ON USE OF BUILT-UP AREA FOR COMMERCIAL PURPOSES THIS INDICATES THAT THERE WAS NO SUCH LIMIT IN FORC E FOR THE EARLIER YEARS RESTRICTION OF 5% IS APPLICABLE ONL Y WITH PROSPECTIVE EFFECT AND THERE IS NO JUSTIFICATION TO PRESUME THAT SUCH A LIMIT OR PROHIBITION WAS IN PLACE IN THE EAR LIER YEARS AS WELL ON THE COMMERCIAL USE OF AREA- IT WOULD BE REA SONABLE TO GRANT BENEFIT OF INCENTIVE PROVISION TO PROJECTS IN WHICH BUILT-UP AREA/OR COMMERCIAL PURPOSES DOES NOT EXCEED 10% OF TOTAL AREA WHERE APPROXIMATELY 90% OR MORE OF THE TOTAL AREA IS UTILIZED FOR BUILDING DWELLING WHERE THE PROJECT HA S BEEN PASSED AS RESIDENTIAL-COMMERCIAL PROJECTS, - WHER E THE TOTAL BUILT-UP COMMERCIAL AREA IS MORE THAN 10% OF TOTAL AREA, SUCH PROJECTS NORMALLY SHOULD NOT GET BENEFIT OF DEDUCTI ON UNLESS THE UNDERTAKING CAN SHOW THAT THE INCOME FROM CONST RUCTION OF RESIDENTIAL DWELLING UNITS CAN BE WORKED OUT SEPARA TELY AND EVEN AFTER EXCLUDING THE COMMERCIAL USE OF PLOT, TH E PROJECT SATISFIES ALL THE REQUIREMENTS OF SECTION 80IB (10) ON STANDALONE BASIS. 5.2 THUS, ACCORDING TO THIS DECISION, EVEN 10% OF C OMMERCIAL AREA CAN BE ALLOWED WHEREAS, APPELLANTS SHOPS AREA IS L ESS THAN 10% OF THE TOTAL HOUSING PROJECT OR RESIDENTIAL AREA. THER EFORE, THE ISSUE REGARDING APPLICABILITY OF PROVISION OF LAW UNDER C LAUSE (D) OF SUB- SECTION (10) OF SECTION 80IB OF ACT, IS RELEVANT FO R THE HOUSING PROJECT APPROVED AFTER 01.04.2005 AND IT CANNOT BE PRESUMED TO BE DECISIVE AS APPLICABLE FOR THE OLD HOUSING PROJECT APPROVED MUCH EARLIER THAN AMENDED PROVISION OF LAW PROSPECTIVELY. FURTHER, TH E ARGUMENTS OF THE LD.AR IS WORTH ACCEPTABLE THAT JUDICIAL CONSIST ENCY HAS TO BE MAINTAINED HENCE IT WOULD BE UNJUSTIFIABLE ON THE P ART OF SUCCESSOR APPELLATE AUTHORITY TO INTERPRET THE APPLICABILITY OF LAW WITH DIFFERENT APPROACH OR ON THE BASIS OF STRANGE-LOGIC, SPECIALL Y WHEN FACTS ARE IDENTICAL AND THERE IS NO PERVERSITY OF INTERPRETAT IVE- UNDERSTANDING OF THE SAME SET OF FACTS. IT IS WORTHWHILE TO MENTI ON THAT IN INTERPRETING A PROVISION, IT WILL NOT BE PROPER TO LOOK AT A PIECE OF SUBSEQUENT LEGISLATION UNLESS THERE IS SOME AMBIGUI TY OR OBSCURITY. HOWEVER, SUBSEQUENT LEGISLATION MAY BE LOOKED AT IN ORDER TO SEE WHAT IS THE PROPER INTERPRETATION TO BE PUT UPON TH E EARLIER ACT WHERE THE EARLIER ACT IS OBSCURE OR AMBIGUOUS OR READILY CAPABLE OF MORE THAN ONE INTERPRETATION VIDE CIT VS. DEEPCHAND KISH ANLAL (1990) 183 ITR 299 (KAR); CIT VS. INDIA EXCHANGE TRADERS ASSOCIATION (1992) 197 ITR 356 (CAL). THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE VIZ-A-VIZ DECISION OF HO NBLE ITATS, ITA NO.1002/M/11 A.Y.07-08 KRISH DEVELOPERS 4 SPECIALLY OF JURISDICTIONAL ITAT AND DECISIONS OF F ELLOW WORTHY CIT(APPEALS)-25 AND 27 AND PREDECESSORS LD. CIT(A), I HOLD THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S 80IB( 10) AN D THEREFORE AO IS DIRECTED TO ALLOW THE DEDUCTION AS CLAIMED BY THE APPELLANT OF RS. 27,09,199/-. 5.1 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. DR , WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). FIRST OF ALL THE ORDER OF ITAT SPECIAL BENCH IN THE CASE M/S. BRAHMA ASSOCIATES WA S MORE OR LESS APPROVED AND IN FACT THE HON'BLE HIGH COURT HAS EVE N NOT APPROVED THE RESTRICTIONS PLACED BY THE SPECIAL BENCH TO 10% OF THE TOTAL BUILT UP AREA FOR COMMERCIAL USAGE WHEN SUCH RESTRICTION WAS NOT THERE BEFORE THE ACT WAS AMENDED W.E.F. 2005-06. THEREFORE THERE IS NO M ERIT IN REVENUE APPEAL. FURTHER AS SEEN FROM THE ORDER OF AO, THE C OMMON AMENITIES PROVIDED TO THE RESIDENTS WERE ALSO CONSIDERED AS C OMMERCIAL AREA THEREBY ENHANCING THE AREA OF COMMERCIAL, SO AS DEN Y DEDUCTION U/S.80IB(10). THE GYMNASIUM AREA PROVIDED WAS PART OF AMENITIES TO THE RESIDENTS AND PROVIDING FREE OF COST TO THE RESIDEN TS CAN NOT BE CONSIDERED AS COMMERCIAL AREA. THEREFORE, ASSESSEE IS FULLY ELIGIBLE FOR DEDUCTION, WHICH WAS INFACT EXAMINED AND ALLOWED BY ASSESSING OFFICER IN EARLIER TWO ASSESSMENT YEARS. THE GROUNDS ARE RE JECTED. 6. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2013. SD/- SD/- (SANJAY GARG ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 23/08/2013. JV. ITA NO.1002/M/11 A.Y.07-08 KRISH DEVELOPERS 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.