ACIT, V. M/s Karavali Housing,

ITA 1015/BANG/2013

• Counselvise Citation: 101521114 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR JT
• Assessee Lawyers: P DINESH
• Keywords: Audit objection; Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.1015/BANG/2013 ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1), MANGALORE. VS. M/S. KARAVALI HOUSING, NO.9, CITY POINT, KODIALBAIL, MANGALORE. PAN : AAGFK 2974D APPELLANT RESPONDENT APPELLANT BY : SHRI P. DHIVAHAR, JT. CIT(DR) RESPONDENT BY : SHRI P. DINESH, ADVOCATE DATE OF HEARING : 24.11.2014 DATE OF PRONOUNCEMENT : 28.11.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 14.3.2013 OF THE CIT(APPEALS), MYSORE RELATING TO ASSESSMENT YEA R 2010-11. 2. THE ASSESSEE, A PARTNERSHIP FIRM DURING THE FINA NCIAL YEAR HAS EXECUTED TWO PROJECTS NAMELY, 4H-135 (A, B, C, D) AND 4H-136 (A, B, C, D) AND CLAIMED DEDUCTION U/S 801B(10) OF THE I.T. A CT, 1961 ON THE PROFITS ITA NO. 1015/BANG/2013 PAGE 2 OF 6 AND GAINS MADE FROM THE PROJECT AMOUNTING TO RS.10, 60,344/-. THE ABOVE PROJECTS WERE RESIDENTIAL COMPLEX WITH FOUR INDEPEN DENT UNITS BEARING INDIVIDUAL REGISTERED HOUSE NUMBER. THE PROJECT HAD BEEN APPROVED BY THE MANGALORE CITY CORPORATION AND HAD DULY BEEN ISSUED THE COMMENCEMENT CERTIFICATE AND THE COMPLETION CERTIFICATE. 3. ON PERUSAL OF THE DOCUMENTS THE ASSESSING OFFICE R FOUND THAT THE PROJECT WAS ON A PLOT OF LAND WHICH WAS LESS THAN T HE MINIMUM AREA PRESCRIBED U/S 80IB(1O) I.E., 1 ACRE OR 4047SQ. MTR S. (100 CENTS). THE AO HAS GIVEN THE SPECIFICATIONS OF THE PROJECTS IN A S UMMARY MANNER WHICH IS AS UNDER: PROJECT 4H-135 & 4H-136 A. EXTENT OF SITE - 708.23 SQ.M. B. TOTAL BUILT UP AREA - 600.94 C. PLOT COVERAGE - 292.0 SQ.M D. FLOOR AREA RATIO - 600.94 1 ACRE = 100 CENTS 1 ACRE = 4047 SQ.MTS. 4. ACCORDING TO THE AO, IT WAS EVIDENT FROM THE ABO VE DETAILS THAT AS PER THE APPROVED PLAN, THE PROJECTS ARE ON A PLOT O F LAND WHICH IS LESS THAN 4047SQ.MTS. AS THE ABOVE PROJECTS ARE IN VIOLATION OF THE CONDITIONS SET FORTH U/S 80IB(10) OF IT ACT, THE AO DENIED THE DED UCTION CLAIMED. 5. ON APPEAL BY THE ASSESSEE, THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF ASSESSEE, THAT THE LAND MEASURING 708 .23 SQ.MTRS. WAS PART ITA NO. 1015/BANG/2013 PAGE 3 OF 6 OF THE LAND MEASURING 1 ACRE 49 CENTS AND THEREFORE ASSESSEE FULFILLED THE CONDITIONS FOR GRANT OF DEDUCTION U/S. 80IB(10) OF THE ACT. IN COMING TO THE AFORESAID CONCLUSION, THE LD. CIT(APPEALS) RELIED O N THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. VANDANA PROPERTIES, 19 TAXMANN.COM 316 (BOM) . AGGRIEVED BY THE ORDER OF CIT(APPEALS), REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING OF APPEAL, LD. COUNSEL FO R THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE TAX EFFECT IN THIS A PPEAL FILED BY THE REVENUE IS LESS THAN RS.4 LAKHS. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT THE MONETARY LIMIT OF RS.4 LAKHS FOR FILING APPEALS BY THE REVENUE BEFORE THE TRIBUNAL WAS LAID DOWN IN CBDT INSTRUCTING NO.5/201 4 DATED 10.7.14. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE PRESENT APP EAL HAS BEEN FILED BY THE REVENUE ON 21.6.2013 MUCH BEFORE THE CBDT INSTRUCTI ON VIZ., NO.5/2014. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. RANKA AND RANKA, 352 ITR 121 (KARN) WHEREIN THE HONBLE HIGH COURT HELD THAT CBDT INSTR UCTION NO.5/2014 IS RETROSPECTIVE IN OPERATION AND THE SAI D INSTRUCTION WILL APPLY TO APPEALS FILED EARLIER, WHICH ARE PENDING ADJUDICATI ON AS ON THE DATE, WHEN THE INSTRUCTION HAS COME INTO FORCE. IN THE LIGHT OF THE ABOVE CBDT INSTRUCTION, LD. COUNSEL FOR THE ASSESSEE PRAYED T HAT THE APPEAL OF THE REVENUE HAS TO BE DISMISSED AS NOT MAINTAINABLE. ITA NO. 1015/BANG/2013 PAGE 4 OF 6 7. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. COUNSE L FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE SAME ARE ACCEPTABLE. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. RANKA AND RANKA 352 ITR 121 (KARN) HAS HELD THAT THE INSTRUCTION OF CBDT REVISING MON ETARY LIMITS FROM TIME TO TIME FOR FILING APPEALS BY REVENUE WILL APP LY TO ALL PENDING APPEALS AND IF PENDING DISPOSAL OF APPEAL OF REVENUE MONETA RY APPEALS ARE REVISED THAN THE REVISED MONETARY LIMIT WILL HAVE TO BE APP LIED TO SEE THE MAINTAINABILITY OF SUCH APPEALS. THE FOLLOWING WER E THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT: THE GOVERNMENT HAS FORMULATED THE NATIONAL LITIGAT ION POLICY WITH A VIEW TO ENSURE CONDUCT OF RESPONSIBLE LITIGA TION BY THE CENTRAL GOVERNMENT AND URGES EVERY STATE GOVERNMENT TO EVOLVE SIMILAR POLICIES. ITS AIM IS TO TRANSFORM GOVERNMEN T INTO AN EFFICIENT AND RESPONSIBLE LITIGANT. THE PURPOSE UND ERLYING THIS POLICY IS ALSO TO REDUCE GOVERNMENT LITIGATION IN C OURTS SO THAT VALUABLE COURT TIME WOULD BE SPENT IN RESOLVING OTH ER PENDING CASES, SO AS TO ACHIEVE THE GOAL IN THE NATIONAL LE GAL MISSION TO REDUCE AVERAGE PENDENCY TIME FROM 15 YEARS TO 3 YEA RS. INSTRUCTION NO. 3/2011 IS ISSUED SUBSEQUENT TO THE AFORESAID NATIONAL LITIGATION POLICY. A PERUSAL OF THE AFORES AID POLICY MAKES IT CLEAR THAT THOUGH THE SAID INSTRUCTION WAS ISSUED AS A MEASURE FOR REDUCING LITIGATION, IT WAS ISSUED IN S UPERSESSION OF THE EARLIER INSTRUCTION ENHANCING THE MONETARY LIMI TS AND PRESCRIBING CERTAIN CONDITIONS. IN THE INSTANT CASE , THE INSTRUCTION NO. 3/2011 IS MORE BENEFICIAL THAN INSTRUCTION NO. 2/2005. IF INSTRUCTION NO. 3/2011 IS ALSO MADE APPLICABLE TO T HE PENDING APPEALS BEFORE THE HIGH COURT, IT WOULD GRANT RELIE F TO THE ASSESSEE. APART FROM GRANTING RELIEF TO THE ASSESSE E, IF NUMBER OF APPEALS PENDING BEFORE THE HIGH COURT ARE DISPOSED OF ON THE BASIS OF THE SAID CIRCULAR, THE PRECIOUS TIME WHICH WOULD BE SAVED BY THE HIGH COURT COULD BE BETTER UTILIZED FOR DECI DING DISPUTES WHERE TAX EFFECT IS ENORMOUS. THAT APART, THE DURAT ION, AN APPEAL TAKES IN THE HIGH COURT WOULD BE REDUCED AS DESIRED BY THE ITA NO. 1015/BANG/2013 PAGE 5 OF 6 NATIONAL LITIGATION POLICY. THE OBJECT SOUGHT TO BE ACHIEVED BY SUCH CIRCULARS/INSTRUCTIONS AND ALSO THE LAW DECLAR ED BY THE APEX COURT, THE NATIONAL LITIGATION POLICY 2011 AS WELL AS THE VARIOUS SCHEMES INTRODUCED BY THE DEPARTMENT GRANTING RELIE F TO PERSONS WHO HAVE NOT EVEN FILED RETURNS AND PAID TAXES, ARE KEPT IN MIND, TO BRING THE CIRCULAR/INSTRUCTION IN HARMONY WITH T HE NATIONAL LITIGATION POLICY, IT WOULD BE APPROPRIATE TO HOLD THAT THE BENEFIT OF SUCH CIRCULAR/INSTRUCTION ALSO APPLIES TO THE PE NDING CASES IN APPEAL IN VARIOUS COURTS AND TRIBUNALS ON THE DATE OF THE CIRCULAR/INSTRUCTION. THEREFORE, THE INSTRUCTION NO . 3/2011 IS ALSO APPLICABLE TO THE PENDING APPEALS AND AS THE TAX EF FECT IN THE INSTANT CASE IS LESS THAN RS.10 LAKHS, THE APPEAL S TANDS DISMISSED ON THE GROUND OF MONETARY LIMIT, WITHOUT EXPRESSING ANY OPINION ON THE MERITS OF THE CLAIM. 8. IN OUR VIEW THE ABOVE OBSERVATIONS OF THE HONBL E HIGH COURT WILL SQUARELY APPLY TO THE PRESENT CASE. ADMITTEDLY, TH E TAX EFFECT IN THIS APPEAL BY THE REVENUE IS LESS THAN RS.4 LACS AND THEREFORE AS PER CBDT INSTRUCTION NO.5 OF 2014 DATED 10.7.2014, THIS APPE AL BY THE REVENUE HAS TO BE DISMISSED AS NOT MAINTAINABLE. 9. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT TH E ISSUE RAISED BY THE REVENUE INVOLVES A QUESTION OF LAW AND THEREFORE IN STRUCTION NO.5/2014 SHOULD NOT BE APPLIED. 10. WE HAVE PERUSED THE CBDT INSTRUCTION AND WE FIN D THAT CLAUSE 8 PROVIDES FOR THREE EXCEPTIONS TO THE MONETARY LIMIT S, WHICH ARE AS FOLLOWS:- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROV ISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR ITA NO. 1015/BANG/2013 PAGE 6 OF 6 (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 11. THE PLEA OF THE LD. DR FOR EXCLUDING THE PRESEN T APPEAL FROM THE AFORESAID EXCLUSION CLAUSE OF THE INSTRUCTION CANNO T BE ACCEPTED, AS THE PRESENT CASE DOES NOT FALL WITHIN ANY OF THE CATEGO RIES MENTIONED IN THE EXCEPTION. 12. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER , 2014 . SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH NOVEMBER, 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.