KARIA DEVELOPERS, MUMBAI V. ADDL CIT RG 19(3), MUMBAI

ITA 1052/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3877 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) KARIA DEVELOPERS, 205, 2 ND FLOOR, BWING, KONARK DARSHAN, ZAVER ROAD, MULUND, MUMBAI 400 080 PAN: AAAFK 3704B ... APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIR.23(2), MATRU MANDIR BLDG., TARDEO ROAD, GRANT ROAD, MUMBAI 400 007 .... RESPONDENT APPELLANT BY : SHRI HIRO RAI RESPONDENT BY : SHRI AARSI PRASAD DATE OF HEARING : 10/02/2016 DATE OF PRONOUNCEMENT : 17/02/2016 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-30, MUMBAI DATED 13/12/2013, P ERTAINING TO THE ASSESSMENT YEAR 2006-07, WHICH IN TURN HAS ARISEN F ROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 29/12/2008 U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) . 2 ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) 2. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED MUL TIPLE GROUNDS OF APPEAL, BUT ESSENTIALLY THE DISPUTE RELATES TO DENI AL OF DEDUCTION CLAIMED BY THE ASSESSEE WITH REGARD TO THE PROFITS DERIVED FROM THE HOUSING PROJECT, KONARK CAMPUS PROJECT-2 UNDER SECT ION 80 IB(10) OF THE ACT. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER S & DEVELOPERS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER NOTED THAT THE ASSES SEE HAD DECLARED PROFIT OF RS.4,86,88,090/- FROM THE DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT NAMELY KONARK CAMPUS PROJECT-2. FI RSTLY, THE ASSESSING OFFICER REWORKED THE PROFIT FROM THE SAID PROJECT AT RS.4,30,27,036/- AND DISALLOWED ASSESSEES CLAIM FOR EXEMPTION ON TH IS PROFIT UNDER SECTION 80 IB(10) OF THE ACT. THE ASSESSING OFFICE R HAD DENIED THE CLAIM OF THE ASSESSEE ON TWIN GROUNDS, I.E. FIRSTLY, ON THE GROUND THAT THE SAID PROJECT WAS A COMPOSITE PROJECT WHICH HAD COMM ENCED PRIOR TO 01/04/1998 AND, THEREFORE, IT FAILED THE CONDITION PRESCRIBED IN CLAUSE (A) OF SECTION 80 IB(10) OF THE ACT; AND, SECONDLY , THAT THE BUILT-UP AREA OF THE RESIDENTIAL UNITS CONSTRUCTED IN THE SAID PR OJECT EXCEEDED THE LIMIT PRESCRIBED IN CLAUSE(C) OF SECTION 80 IB(10) OF THE ACT. 3.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE CIT(APPEALS), WHO DISAGREED WITH THE ASSESSING OFFI CER IN SO FAR AS IT RELATED TO THE COMPLIANCE WITH THE CONDITION PRESCR IBED IN CLAUSE (A) OF SECTION 80 IB(10) OF THE ACT. HOWEVER, THE CIT(APP EALS) CONCURRED WITH THE ASSESSING OFFICER THAT THE BUILT-UP AREA OF THE RESIDENTIAL UNITS 3 ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) CONSTRUCTED IN THE HOUSING PROJECT WAS VIOLATIVE OF CLAUSE (C) OF SECTION 801B(10) OF THE ACT AND, THEREFORE, IN ULTI MATE ANALYSIS THE CIT(APPEALS) SUSTAINED THE ACTION OF THE ASSESSING OFFICER IN DENYING THE DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT, A MOUNTING TO RS.4,30,27,036/- WITH RESPECT TO THE KONARK CAMPUS PROJECT-2. 4. IN THIS BACKGROUND, LD. REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT THE CIT(APPEALS) ERRED IN DENYING THE CLAI M OF EXEMPTION UNDER SECTION 10 IB(10) OF THE ACT ON A MISCONCEIVED RE ASONING IN AS MUCH AS THE DEFINITION OF BUILT-UP AREA INSERTED IN SECTION 80 IB(14) (A) OF THE ACT BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01/04/2005 HAS BEEN INVOKED TO EVALUATE THE COMPLIANCE WITH THE REQUIREMENTS OF CLAUSE(C) OF SECTION 80 IB(10) OF THE ACT IN THE PRESENT CASE. LD. REPRE SENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE DEFINITION OF BUILT- UP AREA, WHICH HAS BEEN INVOKED TO HOLD THAT THE BUILT-UP AREA OF THE RESIDENTIAL UNIT EXCEEDED THE LIMIT PRESCRIBED UNDER SECTION 80 IB(1 0(C) OF THE ACT CANNOT BE APPLIED RETROSPECTIVELY IN AS MUCH AS T HE PROJECT OF THE ASSESSEE WAS APPROVED BY THE LOCAL AUTHORITIES MUCH BEFORE 01/04/2005, WHEN THE DEFINITION OF BUILT-UP AREA HAS BEEN INSERTED IN SECTION 80IB 14(A) OF THE ACT. IN SUPPORT OF HIS P ROPOSITION, LD. REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE JUD GMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SARKA R BUILDERS(375 ITR 392)(SC) AND ALSO IN THE CASE OF CIT VS. VEENA DEV ELOPERS,(277 CTR 297)(SC) AND CONTENDED THAT THE AMENDMENTS TO SECT ION 80IB (10) CARRIED OUT BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 01/04/2005 WERE NOT APPLICABLE TO THE PROJECTS WHICH HAD BEEN APPROVED BY THE LOCAL AUTHORITIES PRIOR TO 01/04/2005. ELABORATING FURTH ER, LD. REPRESENTATIVE 4 ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) FOR THE ASSESSEE POINTED OUT THAT THOUGH THE AFORES AID JUDGMENTS OF THE HONBLE SUPREME COURT ARE IN THE CONTEXT OF THE AME NDMENT MADE TO CLAUSE (D) OF SECTION 80IB(10), BUT THE SAME RATIO WOULD APPLY TO THE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2004 INSE RTING THE DEFINITION OF BUILT-UP AREA IN SECTION 80IB(14)(A ) OF THE ACT W.E.F. 01/04/2005. WITH RESPECT TO THE SAID ISSUE, THE LD . REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE JUDGMENTS OF THE HONB LE KARNATAKA HIGH COURT IN THE CASES OF G.R.DEVELOPERS, 353 ITR 1(KAR ) & ANRIYA PROJECT MANAGEMENT SERVICES, 353 ITR 12(KAR), WHEREIN IT HA S BEEN LAID DOWN THAT THE DEFINITION OF BUILT-UP AREA INSERTED W.E.F . 01/04/2005 WOULD NOT HAVE A RETROSPECTIVE OPERATION. IN THIS MANNER , THE LD. REPRESENTATIVE FOR THE ASSESSEE JUSTIFIED ASSESSEE S CLAIM FOR DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WITH RESPECT TO THE PROFITS DERIVED FROM KONARK CAMPUS PROJECT-2. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS PRIMARILY REITERATED THE REASONING ADVANCED BY LOWE R AUTHORITIES THAT THE AMENDED DEFINITION OF EXPRESSION BUILT-UP AREA SHOWS THAT THE BUILT- UP AREA OF THE RESIDENTIAL UNIT IS IN EXCESS OF THE LIMIT PRESCRIBED IN CLAUSE (C) OF SECTION 80 IB(10) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. OSTENSIBLY, THE ONLY DISPUTE FOR DETERMINATION BEFORE US IS WIT H REGARD TO ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80 IB(1 0) OF THE ACT WHICH HAS BEEN DENIED ON ACCOUNT OF CONDITION PRESCRIBED IN CLAUSE(C) OF SECTION 80 IB(10) OF THE ACT. THE PROJECT OF THE A SSESSEE IS LOCATED AT PUNE AND THUS, IN TERMS OF CLAUSE (C) OF SECTION 80 IB(10), THE RESIDENTIAL 5 ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) UNITS THEREIN OUGHT TO HAVE MAXIMUM BUILT-UP AREA O F 1500 SQ.FTS. ONLY. AS PER THE REVENUE, THE BUILT-UP AREA OF THE RESIDE NTIAL UNITS IN THE PROJECT EXCEED THE SAID LIMIT BY APPLYING THE DEFIN ITION OF BUILT-UP AREA LAID DOWN IN SECTION 80 IB(14)(A) OF THE ACT. THE DEFINITION OF BUILT-UP AREA HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT, 2 004 W.E.F. 1/04/2005 AND THE JUDGMENTS OF THE HONBLE KARNATAKA HIGH COU RT IN THE CASE OF G.R. DEVELOPERS (SUPRA) AND ANRIYA PROJECT MANAGEME NT SERVICES (SUPRA) CLEARLY STIPULATE THAT SUCH DEFINITION IS P ROSPECTIVE IN NATURE AND WOULD NOT HAVE A RETROSPECTIVE OPERATION. IN OTHER WORDS, THE DEFINITION OF BUILT-UP AREA, AS INSERTED IN SECTION 80 IB(14)(A) OF THE ACT BY THE FINANCE (NO.2) ACT, 2004, WHICH CAME INTO E FFECT FROM 01/04/2005, CANNOT BE INVOKED TO EXAMINE THE COMPLI ANCE WITH THE CONDITION PRESCRIBED IN CLAUSE (C) OF SECTION 80 IB (10) OF THE ACT IN RELATION TO PROJECTS WHICH HAVE BEEN APPROVED AND C OMMENCED PRIOR TO 01/04/2005. THE AFORESAID JUDGMENTS OF THE HON BLE KARNATAKA HIGH COURT ARE DIRECTLY ON THE POINT AND MILITANT AGAINS T THE STAND OF THE REVENUE IN THE PRESENT CASE. NOTABLY, IN THE PRESEN T CASE, IT IS AN UNDISPUTED POSITION, THAT THE PROJECT OF THE ASSESS EE WAS APPROVED PRIOR TO 01.04.2005. THEREFORE, IN OUR CONSIDERED O PINION, THE ASSESEE FIRM IS JUSTIFIED IN ASSERTING THAT ITS CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT IN RELATION TO THE PROFITS DERIVE D FROM HOUSING PROJECT KONARK CAMPUS PROJECT-2 IS WELL FOUNDED AND IS IN A CCORDANCE WITH LAW. AS A CONSEQUENCE, WE SET ASIDE THE ORDER OF THE C IT(APPEALS) ON THIS ASPECT AND DIRECT THE ASSESSING OFFICER TO ALLOW TH E CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 IB(10) OF T HE ACT IN RELATION TO 6 ITA NO. 1052/MUM/2014 (ASSESSMENT YEAR : 2006-07) THE PROFITS DERIVED FROM KONARK CAMPUS PROJECT-2. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. 7. IN SO FAR AS THE OTHER GROUND OF APPEAL RELATING TO THE PROPORTIONATE CLAIM OF DEDUCTION IS RENDERED ACADE MIC AND WAS NOT PRESSED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE AT THE TIME OF HEARING. THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 17/02/2015 SD/- SD/- (JOGINDER SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 17/02/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI