ACIT CIR 2, THANE V. LATE SHRI PRAVINKUMAR G. VORA L/H SHRI SANJAY P./ VORA, THANE

ITA 1111/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75873 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M L PERUMAL
• Keywords: Non-deduction of tax
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C SHARMA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1111/MUM/2012 ASSESSMENT YEAR: 2005-06 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-2, THANE VS. SHRI PRAVINKUMAR G. VORA, L/H SHRI SANJAY P. VORA, 103, SAI DRISHTI, SAI COMPLEX, MIRA ROAD (E) DISTT. THANE (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAJPV 0652 Q APPELLANT BY : MR. PANKAJ R. TOPRANI RESPONDENT BY : SHRI M.L. PERUMAL DATE OF HEARING : 06.03.2014 DATE OF PRONOUNCEMENT : 12.03.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-2, THANE DATED 11.11.2011 FOR THE ASSESSM ENT YEAR 2005-06. 2. IN GROUNDS NO 1 AND 2, THE REVENUE HAS AGITATED THE ACTION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE/ADDITION OF RS.16,53,1 82/- MADE BY THE AO BEING DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB (10) OF THE INCOME-TAX ACT. 2.1 AT THE OUTSET, IT IS OBSERVED THAT THE LD.CIT(A ) HAS DELETED THE SAID ADDITION/DISALLOWANCE BY RELYING ON HIS OWN DECISIO N ON IDENTICAL ISSUE FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF SMT. SAROJ P. VORA, THE WIFE OF THE ASSESSEE. IT IS FURTHER OBSERVED THAT THE TRIBUNAL HAS CONFIRMED THE SAID ORDER OF THE LD.CIT(A) IN ITA NO.3530/MUM/2010 AND THE RELEVANT FINDINGS ARE EXTRACTED HEREUNDER:- WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND A LSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB IN RESPECT OF PROFIT DERIVED FRO M HOUSING PROJECT, NAMELY ITA NO. 1111/MUM/2012 SHRI PRAVINKUMAR G. VORA, L/H SHRI SANJAY P. VORA, ASSESSMENT YEAR: 2005-06 2 SAI COMPLEX WAS DISALLOWED BY THE AO RELYING ON THE AMENDMENT MADE IN THE PROVISIONS OF SECTION 80IB WITH EFFECT FROM 01. 04.2005 WHEREBY IT WAS PROVIDED THAT IN ORDER TO AVAIL THE DEDUCTION U/S 8 0IB(10), THE BUILT UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS IN CLUDED IN THE HOUSING PROJECT SHOULD NOT EXCEED 5% OF THE AGGREGATE BUIL T UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. IN THIS R EGARD, THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SAROJ SALES CORPORA TION (SUPRA) HAS HELD THAT THE PROVISIONS OF CLAUSE (D) INSERTED IN SECTION 80 IB WITH EFFECT FROM 01.04.2005 COULD NOT BE APPLICABLE TO THE PROJECT A PPROVED PRIOR TO 01.04.2005. IN THE PRESENT CASE, THE PROJECT SAI CO MPLEX WAS APPROVED PRIOR TO 01.04.2005 AND, THEREFORE, THE AMENDMENT MADE BY INSERTING CLAUSE (D) IN SECTION 80IB WITH EFFECT FROM 01.04.2005 IS NOT APP LICABLE TO THE SAID PROJECT AS RIGHTLY HELD BY THE LEARNED CIT(APPEALS) RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SAROJ SALES CORPORATION (SU PRA). THE LEARNED CIT(APPEALS) ALSO RELIED ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF BRAMHA ASSOCIATES (SUPRA) WHEREIN IT WAS HELD TH AT THE HOUSING PROJECT WOULD FULFILL THE REQUIREMENT OF SECTION 80IB(10) I F 90% OF THE AREA IS UTILIZED FOR BUILDING OR DWELLING UNITS AND UTILIZATION OF C OMMERCIAL BUILDING IS RESTRICTED TO 10% OF THE TOTAL BUILT UP AREA. IT WA S HELD THAT SUCH PROJECT SHOULD BE HELD TO BE PREDOMINANTLY RESIDENTIAL PROJ ECT AND THE SAME, THEREFORE, SATISFIES DESCRIPTION OF HOUSING PROJEC TS AS ENVISAGED IN THE PROVISIONS OF SECTION 80IB(10) PRIOR TO THE AMENDME NT MADE BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01.04.2005. IT IS WORTHWHILE TO NOTE HERE THAT WHILE PARTLY AFFIRMING THE SAID DECISION OF TH E SPECIAL BENCH OF ITAT. HONBLE BOMBAY HIGH COURT IN ITS JUDGMENT REPORTED IN 333 ITR 289 HAS HELD THAT UPTO 31 ST MARCH, 2005, DEDUCTION U/S 80IB(10) IS ALLOWABLE T O HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RES IDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE D C RULES/REGULATIONS FRAMED BY THE RESPECTIVE ;LOCAL AUTHORITY IRRESPECT IVE OF THE FACT THAT THE PROJECT IS APPROVED AS HOUSING PROJECT OR RESIDE NTIAL PLUS COMMERCIAL PROJECT. IT WAS ALSO HELD BY THE HONBLE BOMBAY HI GH COURT THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UPTO 31 ST MARCH 2005, DEDUCTION U/S 80IB(10) WOULD BE ALLOWABLE ONLY TO THE PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10% OF THE TOTAL BUILT UP AREA. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAMHA ASSOCIATES (SUPRA) AS W ELL AS THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SA ROJ SALES CORPORATION (SUPRA), WE UPHOLD THE IMPUGNED ORDER OF THE LEARNE D CIT (APPEALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10 ) IN RESPECT OF PROFIT DERIVED FROM HOUSING PROJECT KNOWN AS SAI COMPLEX AND DISMISS THIS APPEAL FILED BY THE REVENUE. CONSIDERING THAT IDENTICAL FACTS ARE INVOLVED IN TH E CASE OF THE PRESENT ASSESSEE ALSO, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED DECISION OF THE LD.CIT(A) WHEREIN HE HAS RELIED ON HIS OWN ORDER FO R THE ASSESSMENT YEAR 2005-06 IN THE CASE OF SMT. SAROJ P. VORA, THE WIFE OF THE ASSESSEE, WHICH HAS ALSO BEEN UPHELD BY THE TRIBUNAL, FOR GIVING RELIEF TO THE AS SESSEE. RESULTANTLY, GROUND NOS. 1 AND 2 ARE DISMISSED. ITA NO. 1111/MUM/2012 SHRI PRAVINKUMAR G. VORA, L/H SHRI SANJAY P. VORA, ASSESSMENT YEAR: 2005-06 3 3. IN GROUND NO. 3, THE REVENUE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN DELETING THE AMOUNT OF RS.5,58,371/- ADDED BY THE A O ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE OUT OF AMOUNTS DEBITED UNDER THE H EAD BROKERAGE, LABOUR CHARGES, PROFESSIONAL FEE AND ACCOUNTING CHARGES. 3.1 BRIEF FACTS OF THE ISSUE UNDER CONSIDERATION ARE TH AT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS MADE THE FOLLOWING PAY MENTS ON WHICH THE TAX AT SOURCE HAS NOT BEEN DEDUCTED:- BROKERAGE 25,000/- LABOUR CHARGES 1,45,912/- PROFESSIONAL FEE 2,20,786/- ACCORDING TO AO, THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX ON THE ABOVE PAYMENTS AS PER THE PROVISIONS OF SECTION 194J AND 194H RESPECTIVELY, WHICH THE ASSESSEE FAILED TO DEDUCT. ACCORDING TO THE AO, THE ASSESSEE HAS CREDITED THESE SUMS OF BROKERAGE AND PROFESSIONAL FEE AND THE LABO UR CHARGES IN THE ACCOUNTS OF THE PAYEE, TAX OUGHT TO HAVE DEDUCTED AT SOURCE BUT DUE TO NON-DEDUCTION OF TAX AT SOURCE, THESE EXPENSES HAVE TO BE DISALLOWED AS PER PROVISIONS OF SECTION 40(A)(IA). ON THE BASIS OF THE ABOVE ARGUMENTS, THE AO DISALLO WED THE ABOVE PAYMENTS OF RS.4,78,279/- FURTHER, THE AO NOTED THAT THE ASSESS EE HAD MADE THE PAYMENTS OF ACCOUNTING CHARGES AMOUNTING TO RS.55,000/- AND SEC URITY SERVICE CHARGES AMOUNTING TO RS.1,11,673/- ON WHICH THE TAX WAS DED UCTED AT SOURCE BUT IT WAS NOT PAID TO THE GOVERNMENT ACCOUNT WITHIN THE STIPULATE D TIME AS PROVIDED IN SECTION 200(1) OF THE I.T. ACT, 1961. ACCORDINGLY, THE AO D ISALLOWED THE SAID PAYMENT AMOUNTING TO RS.1,66,673/-. ON APPEAL, THE LD.CIT(A ) DELETED THE SAID ADDITION AMOUNTING TO RS.5,58,371/- AS THE DISALLOWANCE MADE BY THE AO IS NOT IN ORDER. AGGRIEVED BY THE IMPUGNED DECISION, THE REVENUE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. 3.2 DURING THE COURSE OF THE PROCEEDINGS, THE LD.AR HAS FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY VIRTUE OF THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF THE CIT VS. CRESCENT EXPORT SYNDICATE 262 CTR 525 (CAL.) WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SEC TION 40(A)(IA) ARE APPLICABLE NOT ONLY TO AMOUNTS WHICH IS SHOWN AS PAYABLE ON THE DA TE OF BALANCE SHEET, BUT THEY ITA NO. 1111/MUM/2012 SHRI PRAVINKUMAR G. VORA, L/H SHRI SANJAY P. VORA, ASSESSMENT YEAR: 2005-06 4 ARE APPLICABLE TO SUCH EXPENDITURE, WHICH BECOMES P AYABLE AT ANY TIME DURING RELEVANT PREVIOUS YEAR AND IS ACTUALLY PAID WITHIN PREVIOUS YEAR WITHOUT MAKING TDS. THEREFORE, WE FIND THAT THE LD.CIT(A) IS NOT JUSTIF IED IN DELETING THE IMPUGNED ADDITION MADE BY THE AO ON THE GROUND THAT SINCE NO THING HAS REMAINED OUTSTANDING, THE PROVISION OF SECTION 40(A)(IA) ARE NOT ATTRACTED. FOLLOWING THE AFOREMENTIONED DECISION OF THE CALCUTTA HIGH COURT, THE ADDITION MADE BY THE AO IS CONFIRMED. RESULTANTLY THE GROUND NO. 3 IS ALLOWED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF MARCH, 2014. SD/- SD/- (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.03.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.