Kumar Beharay Rathi, Pune V. ACIT, Circle-4, Pune

ITA 1033/PUN/2009

• Counselvise Citation: 103324514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 31-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTUAMA
• Assessee Lawyers: S U PATHAK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO. 1033/PN/2009 (ASSTT. YEAR: 2005-06) KUMAR BEHARAY RATHI , ... APPELLAN T 2 ND , FLOOR, KUMAR CAPITAL, 2413, EAST STREET, CAMP, PUNE 411001 PAN : AAAFK6677K V. ACIT, CIR. 4, SWARGATE, PUNE RESPONDENT APPELLANT BY : SHRI S.U. PATHAK RESPONDENT BY : MS. ANN KAPTUAMA ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING SOLE GROUND THAT THE LD CIT(A) HAS ERRED IN DISALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S. 80 IB(10) OF RS. 62,48,076/-. 2. THE FACTS IN BRIEF AS PER ASSESSMENT ORDER ARE T HAT DURING THE A.Y. 2005-06 (UNDER CONSIDERATION), ASSESSEE HAD CLAIMED DEDUCTI ON U/S. 80IB(10) OF RS. 62,48,076/- WITH RESPECT TO PROJECT KUBERA BAHAR AND KUBERA BAHAR II KUBERA BAHAR PROJECT CONSISTED OF KUBERA BAHAR BUILDING C ALLED AS L, M, N, O, P AND SHOPS IN THE SAID BUILDINGS L & M AND KUBERA BAHAR PLOTS. THE ASSESSEE HAD SEPARATED RECEIPTS FROM KUBERA BAHAR SHOPS, KUBERA BAHAR PLOT S AND RESIDENTIAL UNIT OF KUBERA BAHAR PROJECTS I & II. ASSESSEE HAD CLAIMED DEDUCT ION U/S. 80IB(10) WITH RESPECT TO PROFIT EARNED FROM SALE OF RESIDENTIAL UNITS OF RS .1,40,91,177/- IN RESPECT OF KUBERA BAHAR AND KUBERA BAHAR II AND HAD SHOWN NET PROFIT OF RS.62,48,076/- FROM RESIDENTIAL UNITS OF L, M, N, O P BUILDIN GS . THE A.O NOTED THAT THE SHOPS ARE INTEGRAL PART OF THE BUILDING L & M. THE A.O D ENIED THE CLAIMED DEDUCTION ON THE ITA . NO 1033/PN/2009 KUMAR BEHARAY RATHI A.Y. 2005-06 PAGE OF 5 2 BASIS THAT IN THE COMMENCEMENT CERTIFICATE AND PLAN S ISSUED BY THE PMC (PUNE MUNICIPAL CORPORATION), THE PROJECT HAS BEEN CLASSI FIED AS RESIDENTIAL + COMMERCIAL WHEREAS DEDUCTION U/S. 80IB(10) IS ALLOWABLE ONLY F OR HOUSING PROJECTS . AS PER THE A.O, THE HOUSING PROJECTS CAN BE DEFINED AS RESIDEN TIAL PROJECTS ONLY. HE HAS ALSO DENIED THE CLAIM ON THE BASIS THAT THE AMENDMENT BR OUGHT TO SECTION 80IB(10) W.E.F. 1.4.2005 IS CLARIFICATORY IN NATURE AND AS P ER THE AMENDMENT THE AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJET SHOULD NOT EXCEED 5% OF THE AGGREGATE BUILT UP AREA OF TH E PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. IN THE CASE OF ASSESSEE, HOWEVE R, THE TOTAL COMMERCIAL AREA CONSTRUCTED IS 3018 SQ.FT. THE A.O ALSO OBSERVED T HAT THE SHOPS HAVE NOT BEEN SPECIFICALLY SANCTIONED AS CONVENIENT SHOPPING BY P UNE MUNICIPAL CORPORATION. THE LD CIT(A) HAS UPHELD THE ACTION OF THE A.O, AGAINS T WHICH ASSESSEE IS IN APPEAL. 3. AT THE OUTSET OF HEARING, THE LD. A.R. POINTED O UT THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISION OF PUNE BE NCH OF THE TRIBUNAL IN THE CASE OF OPEL SHELTERS PVT. LTD AND D.S. KULKARNI & ASSOCIAT ES V/S. ACIT, IN ITA NOS. 219 & 17/PN/2009 (A.Y. 2005-06), ORDER DATED 31 ST MAY 2011. HE SUBMITTED THAT EVEN AS PER THE ASSESSMENT ORDER, THE PMC HAD ISSUED COMMEN CEMENT CERTIFICATE FOR THE PLAN INITIALLY ON 30 TH MARCH 2001 VIDE CERTIFICATE NO. 5801 AND COMMENCEM ENT CERTIFICATE ON REVISED PLANS WAS ISSUED ON 28 TH JUNE 2001 VIDE CERTIFICATE NO. 5442. THE PROJECTS HAVE BEEN COMPLETED WELL BEFORE THE A. Y. 2005-06 WHEN THE AMENDMENT IN SECTION 80IB(10) CAME INTO EFFECT. HE , ACCORDINGLY, SUBMITTED THAT THE ASSESSEE HAD COMPLETED THE PROJECT AS PER THE APPROVED PLAN BY THE PMC. THE AMENDMENT MADE IN SECTION 80 IB (10) W.E.F. 1.4.200 5 IS ALSO PROSPECTIVE IN NATURE WHICH HAS BEEN HELD BY THE SPECIAL BENCH OF THE TRI BUNAL IN THE CASE OF BRAHMA ASSOCIATES, 122 TTJ 433(SB)(PUNE) NOW UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 22.2.2011 IN ITA NO. 1194 OF 2 010. HE SUBMITTED THAT IN THE CASE OF OPEL SHELTERS & OTHERS (SUPRA), THE PUNE BE NCH OF THE TRIBUNAL ON AN IDENTICAL ISSUE HAS HELD THAT AMENDED PROVISIONS U/ S. 80 IB (10) W.E.F 1.4.2005 ARE ITA . NO 1033/PN/2009 KUMAR BEHARAY RATHI A.Y. 2005-06 PAGE OF 5 3 NOT APPLICABLE IN THE PRESENT CASE AS THE ASSESSEE WAS SUPPOSED TO COMPLETE THE PROJECT AS PER THE LAW AS EXISTING IN THE A.Y. DURI NG WHICH THE APPROVAL TO THE PROJECT WAS GRANTED BY THE PMC. 4. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ADMITTEDLY, THE AMENDED P ROVISIONS U/S. 80IB (10) W.E.F. 1.4.2005 HAD COME INTO OPERATION DURING THE A.Y. U NDER CONSIDERATION I.E. 2005-06, HENCE IT IS VERY MUCH APPLICABLE IN THE CASE OF ASS ESSEE FOR MAKING ASSESSMENT FOR THE YEAR ON THE PROFITS SHOWN, RECEIVED FROM THE P ROJECT ON WHICH, DEDUCTION HAS BEEN CLAIMED. 5. CONSIDERING THE ABOVE SUBMISSION, AND HAVING GON E THROUGH THE ORDER DATED 31 ST MAY 2011 OF THE TRIBUNAL IN THE CASE OF OPEL SHELT ERS PVT. LTD. & OTHERS RELIED UPON BY THE LD. A.R., WE FIND THAT AN IDENTICAL ISS UE UNDER ALMOST SIMILAR FACTS AND CIRCUMSTANCES HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE. THE RELEVANT PARA NO. 20 OF THE SAID ORDER IS BEING REPRODUCED FOR A REA DY REFERENCE. 20. BY APPLYING THE PRINCIPLE OF HARMONIOUS CONSTR UCTION TO INTERPRET THE PROVISIONS UNDER SUB-SECTION (10) TO SECTION 80IB AS AMENDED W.E.F. 1.4.2005 WE COME TO THE CONCLUSION T HAT THE LEGISLATURE ALWAYS INTENDED THAT THE PROJECT MUST B E APPROVED BY THE LOCAL AUTHORITY, THUS IN THOSE APPROVED PROJECT S WHERE CONSTRUCTION HAS BEEN STARTED MUCH EARLIER THAN 1.4 .2005, THE ASSESSEES ARE REQUIRED TO COMPLETE THE PLAN AS IT H AS BEEN APPROVED. AS PUTTING SUCH ASSESSEES TO COMPLETE TH E PLAN MEETING OUT CONDITION UNDER CLAUSE (D) OF THE SUB-SECTION W OULD LEAD INTO ABSURDITY AND IMPOSSIBILITY FOR THE ASSESSEE AND I N CONTRADICTION TO THE PROVISIONS U/S. 80 IB(10) AS PREVAILED AT THE T IME OF APPROVAL AND COMMENCEMENT OF THE CONSTRUCTION OF THE PROJEC T WELL BEFORE 1.4.2005. BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI J.V (SUPRA) HAS DISCUSSED ALL THESE RELEVANT ASPECTS RAISED BY THE DEPARTMENT. IN THE CASE OF HIRANANDANI AKRUTI J.V V/S. DCIT, IT HAS BEEN HELD THAT THE LAW AS EXISTED WHEN THE A SSESSEE ITA . NO 1033/PN/2009 KUMAR BEHARAY RATHI A.Y. 2005-06 PAGE OF 5 4 SUBMITTED ITS PROPOSAL AND PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED AND WHEN THE ASSESSEE COMM ENCED DEVELOPMENT IS TO BE APPLIED. IN THE PRESENT CAS ES, AS PER PAGE NOS. 17 AND 20 OF THE PAPER BOOK IN THE CASE OF OPE L SHELTER THE PROJECT WAS COMMENCED ON 23.2.2001 AND EVEN COMPLET ED ON 14.5.2004, SIMILARLY AS PER THE CONTENTS OF PAGE NO .2 OF THE ASSESSMENT ORDER AND PAGE NO. 41 OF THE PAPER BOOK IN THE CASE OF D.S. KULKARNI AND ASSOCIATES, THE PROJECT WAS COMM ENCED ON 12.4.2001 AND COMPLETED IN THE MONTH OF NOVEMBER 20 03. THUS, THE ASSESSEES WERE SUPPOSED TO COMPLETE THE PROJECT S AS PER THE LAW AS EXISTED IN THE A.Y. 2001-02 IN THE CASE OF OPEL SHELTERS AND IN THE A.Y. 2002-03 IN THE CASE OF D.S. KULKARNI A ND ASSOCIATES. WE THUS FOLLOWING THE DECISION IN THE CASE OF HIRA NANDANI AKRUTI JV V/S. DCIT (SUPRA) HOLD THAT AMENDED PROVISIONS UNDE R SECTION 80 IB(10) W.E.F. 1.4.2005 ARE NOT APPLICABLE IN THE PR ESENT CASE, HENCE ASSESSEES ARE ELIGIBLE FOR THE CLAIMED DEDUCTION U/ S. 80 IB (10) OF THE ACT. WE ACCORDINGLY DIRECT THE A.O TO ALLOW TH E CLAIMED DEDUCTION TO THE ASSESSEES. 6. ADMITTEDLY, IN THE PRESENT CASE, APPROVAL TO THE PROJECT IN QUESTION WAS GIVEN BY THE PMC DURING THE YEAR 2001 (30 TH MARCH 2001 AND 28 TH JUNE 2001), HENCE AS PER ABOVE DECISION IN THE CASE OF OPEL SHELTERS PVT . LTD. & OTHERS, THE LAW AS EXISTED DURING THE PERIOD WHEN APPROVAL WAS GRANTED BY THE PMC WILL BE APPLICABLE TO THE ASSESSEE AS THE ASSESSEE CANNOT BE EXPECTED TO COMP LETE ITS PROJECT AS PER THE LAW IN EXISTENCE IN THE COMING A.Y. 2005-06. WE, THUS, FOLLOWING THE ABOVE DECISION, DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE THAT TH E AMENDED PROVISIONS U/S. 80 IB (10) CAME INTO EFFECT FROM 1.4.2005 ARE NOT APPLIC ABLE IN THE CASE OF ASSESSEE, HENCE THE A.O WAS NOT JUSTIFIED IN DENYING THE CLAI MED DEDUCTION ON THE BASIS THAT THE CONSTRUCTED COMMERCIAL AREA WAS EXCEEDING 2000 SQ. FT. AS PER THE AMENDED PROVISIONS. SO FAR AS THE DISALLOWANCE OF DEDUCTIO N BY THE A.O ON THE BASIS THAT THE DEDUCTION IS RESTRICTED TO RESIDENTIAL UNITS ONLY, THE SAME HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE BOMBAY HIG H COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) UPHOLDING THE DECISION OF THE TR IBUNAL THAT THE DEDUCTION U/S. ITA . NO 1033/PN/2009 KUMAR BEHARAY RATHI A.Y. 2005-06 PAGE OF 5 5 80 IB (10) IS AVAILABLE EVEN ON THE PROJECTS APPRO VED BY THE PMC AS RESIDENTIAL + COMMERCIAL AND THE SAME COMES WELL WITHIN THE MEANI NG OF HOUSING PROJECT IN THE PROVISIONS U/S. 80 IB (10) OF THE ACT. WE, THUS, WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE, DIRECT THE A.O TO A LLOW THE CLAIMED DEDUCTION. THE GROUND IS, ACCORDINGLY, ALLOWED. 7. CONSEQUENTLY, APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 5TH AUGUST 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 5TH AUGUST, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -II, PUNE 4. THE CIT(A)- II, PUNE 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE