M/s. G.K. Associates, Pune V. ITO, Pune

ITA 1137/PUN/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1999 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: V L JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1137/PN/2010 ASSESSMENT YEAR : 2007 - 08 M/S. G.K. ASSOCIATES, 1204, SHIVAJINAGAR, PUNE:411004 PAN NO.AAFFG 4726Q VS. INCOME TAX OFFICER, WARD 3(1), PUNE (APPELLANT) (RESPONDENT) PAN NO. AAFFG4726Q APPELLANT BY: SHRI V.L. JAIN RESPONDENT BY: SHRI MUKESH VERMA ORDER PER R.S. PADVEKAR, JM:- THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNE D ORDER OF THE LD.CIT(A)-II, PUNE DATED 09-07-2010 FOR THE A.Y. 2007-08. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING A DISALLOWANCE OF THE CLAIM U/S.80IB(10) OF RS.2,53,18,877/-. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING A PRO-RATA C LAIM U/S. 80IB(10) WITH REFERENCE TO THE COMPLETED PORTION OF TH E PROJECT WHICH INDEPENDENTLY ON A STANDALONE BASIS SATISFIES THE CO NDITIONS LAID OUT U/S.80IB(10)OF THE INCOME TAX ACT, 1961. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN CONSTRU CTION BUSINESS AND UNDERTAKE DEVELOPMENT OF THE HOUSING PROJE CTS. THE ASSESSEE DECLARED NET PROFIT OF RS.2,33,89,879/- IN THE A.Y. 2007-08 AND THE ENTIRE PROFIT HAS BEEN CLAIMED AS EXEMPT U/S.80IB(10) O F THE INCOME- TAX ACT, 1961. THE ASSESSING OFFICER ASKED FOR THE DETAILS IN RESPECT OF THE HOUSING PROJECT ON WHICH THE ASSESSEE HAS CLAIMED THE DEDUCTION 2 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE U/S.80IB(10) OF THE ACT. AS NOTED BY THE ASSESSING OFFICER . THE ORIGINAL SANCTION OF THE PROJECT WAS GRANTED VIDE COMMENCEMENT CERTIFICATE DATED 22-12-2003. THE BUILDING PLAN WAS REVISED FROM TIME TO TIME AND SAID DETAILS ARE GIVEN IN THE ASSESSMENT ORDER ON PAGE NO. 4 WHICH ARE AS UNDER: DATE OF SANCTION/REVISION PLOT AREA SURVEY NO. NO. OF TENEMENTS PROPOSED TOTAL BUILT UP AREA 15/9/2003 6930 SMT 42/1+3/B WADGAON BK. 97 4681.67 SMT 22/12/2003 -DO- -DO- 62 3184.35 07/05/2005 -DO- -DO- 84 4694.04 08/07/2005 -DO- -DO- 84 4665.99 27/09/2006 -DO- -DO- 90 4652.03 18/12/2006 8079.87 -DO- 104 5434.26 30/03/2007 8079.87 -DO- 127 6568.49 3. THE ASSESSING OFFICER HAS OBSERVED THAT LAST REVISION O F THE PLAN WAS ON 30-03-2007 BY WHICH THE ASSESSEE AMALGAMATED P ROJECT LAND THEREBY MAKING IT TO 6568.46 SQ. MTRS. FROM THE ORIGINAL LAN D OF 4681.67 SQ. MTRS. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT AS PER PART COMPLETION CERTIFICATE DATED 10-05-2007 ONLY 3 BUILDINGS I.E. A, B AND C OUT OF 5 TOTAL BUILDINGS SANCTIONED ARE COMPLETED. SECOND PART COMPLETION CERTIFICATE DATED 06-11-2007 SHOWS BUILDING C AN D D AND BUILDING E IS YET TO COMPLETE. THE ASSESSEE CONTENDED BE FORE THE ASSESSING OFFICER THAT BUILDING E FORM A SEPARATE PROJECT ITSELF BUT THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE CLAIM OF THE A SSESSEE AND HAS NOTED THAT THE REVISED PLAN WHICH IS SANCTIONED ON 3 0-03-2007 IS IN RESPECT OF ALL THE BUILDINGS I.E. A, B, C, D, & E (P+3) AND SINCE THE COMPLETION CERTIFICATE IS CERTIFYING COMPLETION OF ONLY 4 BUILD INGS OUT OF 5 BUILDINGS MENTIONED IN REVISED PLAN SANCTION DATED 30-03-20 07 REFERRED 3 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE IN COMPLETION CERTIFICATE IT IS VERY MUCH EVIDENT THAT ALL TH E FIVE BUILDINGS ARE REFERRED BY THE LOCAL AUTHORITY UNDER ONE COMMENCE MENT CERTIFICATE AND HENCE, THE ASSESSING OFFICER HAS OBSERVED THAT THE A SSESSEE HAS TO COMPLETE BUILDING E ALSO IN ORDER TO BE ELIGIBLE FOR DEDUCT ION U/S.80IB(10). THE ASSESSING OFFICER FINALLY CONCLUDED THAT TH E ASSESSEE HAS FAILED TO COMPLETE THE HOUSING PROJECT AS SUCH ON OR BEFORE 31-03- 2008 AS THE BUILDING PLAN OF WHICH WAS FIRST APPROVED BY T HE LOCAL AUTHORITY ON 22-12-2003 AND THE REVISED PLAN SANCTIONED 30-03- 2007. 3.1 HE HAS ALSO NOTED THAT THE PART COMPLETION CERTIFICAT E ONLY IS DATED 06-11-2007 AND IN THE OPINION OF THE ASSESSING OFFICER THE HOUSING PROJECT BHANSALI CAMPUS WAS NOT COMPLETE AS ON 31.03.2 008. HE THEREFORE DENIED THE ENTIRE DEDUCTION CLAIM BY THE ASSES SEE U/S.80IB(10) OF THE INCOME-TAX ACT OF RS.2,53,18,877/-. THE ASSESSEE C HALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD.CIT(A). 4. THE SUM AND SUBSTANCE OF THE PLEADINGS OF THE ASSESS EE BEFORE THE LD.CIT(A) ARE AS UNDER: I. THE FIRST LAYOUT OF THE PROJECT WAS SANCTIONED ON 15-0 9-2003 AND THE BUILDING PLANS WERE SANCTIONED ON 22-12-2003. T HE BUILDINGS PLAN WERE REVISED ON 08-07-2005 AND 27-09-2006 . AS PER THE COMMENCEMENT CERTIFICATE (CC) NO. 2233/06 IT WOULD REVEAL THAT THE PROJECT COMPRISES OF BUILDINGS A, B, C AND D ONLY AND PROJECT AS PER COMMENCEMENT CERTIFICATE NO. 2233/06 HAVING 4 BUILDINGS IS ONLY CONSIDERED FOR THE PURPOSE OF CLAIMING T HE DEDUCTION U/S.80IB(10). II. IT WAS ALSO PLEADED THAT TWO DIFFERENT COMPLETION CERTIFICA TE ARE ISSUED; ONE IS IN RESPECT OF BUILDING A, B, AND C DATED 1 0-05- 2007 AND ANOTHER IS IN RESPECT OF PART FOR BUILDING C AND BUILDING D DATED 06-11-2007. IT WAS THEREFORE PLEADED BY THE ASSESSEE THAT THE ASSEESSEES HOUSING PROJECT ONLY COMPRISES OF 4 BU ILDINGS AND 4 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE IT WAS COMPLETED THE PROJECT WELL WITHIN THE TIME LIMIT. IT W AS ALSO PLEADED THAT BUILDING E IS A SEPARATE PROJECT ITSELF AND IT IS NOT THE PART OF THE ORIGINAL PROJECT. 5. THE LD.CIT(A) HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND BY GIVING THE FOLLOWING REASONS HE HAS CONFIR MED THE ACTION OF THE ASSESSING OFFICER DENYING DEDUCTION TO THE AS SESSEE U/S.80IB(10) AT ENTIRETY. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND MATERIAL AVAILABLE ON RECORD. THE FIRST COMMENCEMENT CERTIFI CATE/BUILDING PLAN APPROVAL FOR THE APPELLANT'S PROJECT WAS RECEI VED ON 22.12.2003, AND THEREFORE THE DATE OF COMPLETION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80IB(10)(A)(I) OF TH E IT. ACT, SHOULD BE ON OR BEFORE 31.03.2008. HOWEVER, BY THIS DATE OUT OF THE BUILDINGS A TO E, BUILDING 'E' WAS NOT COMPLETE, AN D COMPLETION CERTIFICATE WAS RECEIVED ONLY FOR BUILDINGS A TO D. THE CONTENTION THAT BUILDING 'E' WAS ADDED BY THE REVISED APPROVAL DATED 30.03.2007, AND THEREFORE IT SHOULD BE TREATED AS A SEPARATE PROJECT IS NOT FOUND TO BE TENABLE IN LAW. THIS IS BECAUSE THE PLAN SANCTIONED ON 30.03.2007 WAS IN CONTINUATION OF THE ORIGINAL BUILDING PLAN APPROVAL/COMMENCEMENT CERTIFICATE DATED 22.12.2003. THIS 'REVISED PLAN' DULY MENTIONED ALL THE BUILDINGS A, B, C, D AND E ON THE SAME PLOT OF LAND, ON THE SAME SURVEY NUMBER. THE REVISED BUILDING PLAN APPROVAL GIVEN ON 30.03.2007 FOR THE SAME PLOT OF LAND WAS MERELY A MODIFICATION OF THE ORIGINAL BUILDING PLAN APPROVAL DATED 22.12.2003. FURTHER, ONCE THE LAYOUT PLAN AND BUILDING PLAN HAS BEEN REVISED IN R ESPECT OF A PARTICULAR PROJECT, ON THE SAME PLOT OF LAND, THE E ARLIER APPROVED PLAN GETS MODIFIED ACCORDINGLY, AND THEREFORE, THE PROJECT ITSELF GETS MODIFIED AND AMENDED ACCORDING TO THE REVISED PLAN. THEREFORE, THERE WAS THE BUILDING 'E' AS A SEPARATE PROJECT, MERELY BECAUSE IT WAS ADDED AT A LATER POINT OF TIME THAN THE ORIG INAL BUILDING PLAN APPROVAL. IT DOESN'T MATTER WHETHER T HE APPELLANT HAS RECEIVED ADDITIONAL FSI AT A LATTER POINT OF TI ME FOR THE PURPOSE OF THIS ADDITION/MODIFICATION IN THE BUILDI NGS. THE APPELLANT HAS CITED THE DECISIONS OF MUMBAI TRI BUNAL IN THE CASE OF SAROJ SALES CORPORATION AND BANGALORE B ENCH IN THE CASE OF BRIGADE ENTERPRISES (P) LTD. AND OTHER SUCH DECISIONS HOWEVER, IT IS NOTICED THAT THESE DECISIONS ARE DIS TINGUISHABLE ON FACTS SINCE THEY DID NOT DEAL WITH THE CONDITION S PRESCRIBED U/S 80IB(10KA)('Q. REGARDING DATE OF COMPLETION O F THE PROJECT. ACCORDINGLY, THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT, IS HELD TO BE RIGHTLY DISALLOWED BY THE A.O., SINCE TH E SPECIFIC CONDITION GIVEN U/S 80IB(10)(A)(I) WAS NOT SATISFIED. GROUND NO. 1 OF APPEAL IS, THEREFORE, DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LEARNED COUNSEL ARGUES THAT THERE IS N O DISPUTE IN THIS CASE THAT THE ASSESSEE WAS BOUND TO COMPLETE THE HOU SING PROJECT ON OR BEFORE 31-03-2010 BUT THAT WAS ONLY IN RESPECT OF 4 B UILDINGS A, B, C, AND D. HE SUBMITS THAT AS PER THE REVISED PLAN SANCTION ED ON 30-03- 2007, ONE MORE BUILDING E WAS ADDED BUT IN THE ORIGINAL SA NCTIONED LAYOUT THERE WERE ONLY 4 BUILDINGS. HE SUBMITS THAT THE COMMENCEMENT CERTIFICATE (CC), DATED 30-03-2007 (PAGE NO. 48 OF THE COMP ILATION) IS RELEVANT ACCORDINGLY TO CONSIDER BUILDING E WHICH WAS A DDED IN THE LAYOUT. HE SUBMITS THAT BUILDING PLAN OF BUILDING E HAS BE EN SANCTIONED ON 30-03-2007 AND HENCE, IT IS A SEPARATE H OUSING PROJECT. HE PLACED HEAVY RELIANCE ON THE DECISION OF THE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES 206 TAXMAN 5 84 (BOM H.C.) AND SUBMITS THAT MERELY BECAUSE BUILDING E IS INCLUDED IN THE COMMON LAYOUT IT DOES NOT MEAN THAT BUILDING E IS A PART OF ONE HOUSING PROJECT. HE SUBMITS THAT THE ASSESSEE GOT SOME ADDITIONAL FSI AN D THAT WAS UTILIZED IN ALL THE BUILDINGS INCLUDING BUILDING E. HE SUBMITS TH AT NO WHERE IT A CONDITION IN U/S.80IB(10) THAT A SEPARATE BUILD ING AS A SEPARATE HOUSING PROJECT CANNOT BE SANCTIONED IN ONE P LAN. HE FURTHER PLEADED THAT THE PROFIT IN RESPECT OF BUILDING E IS NOT A T ALL CONSIDERED FOR CLAIMING THE DEDUCTION U/S.80IB(10). 6. PER CONTRA THE LD.DR VEHEMENTLY ARGUED THAT BUILDING E IS A PART OF ONE HOUSING PROJECT ONLY. HE SUBMITS THAT THERE IS A COMMON AMEN ITY PLACE RESERVED FOR ALL THE 5 BUILDINGS. THE LD. DR FILED A CHART TO SHOW THAT THE ASSESSEE GOT ADDITIONAL FSI WHICH WAS UTILIZED IN THE BUILDINGS B,C, D AND E. HE SUBMITS THAT THE ASSESSEE KEPT REVISIN G THE PLANS AND NO SEPARATE PLAN HAS BEEN APPROVE IN RESPECT OF BUILDING E. HE ALSO REFERS TO EXPLANATION BELOW U/S.80IB(10) AND SUBMITS THAT AND SAID 6 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE EXPLANATION REFERS TO LAYOUT PLAN AND NOT BUILDING PLAN TO EXPLAIN HOUSING PROJECT. HE PLEADED FOR CONFIRMING THE LD.CIT(A). 7. THE CORE ISSUE FOR ADJUDICATION BEFORE US IS WHETHER B UILDING E IS A SEPARATE HOUSING PROJECT OR IT IS A PART OF THE HOUSIN G PROJECT ORIGINALLY SANCTIONED VIDE ORDER DATED 15-09-2003. THE ORIGINAL PLAN FILED BUT THE ASSESSEE COMPRISES OF 4 BUILDINGS A, B, C, AND D AS PER T HE DOCUMENTS ON RECORD. WE FIND THAT BUILDING E IS ADDED IN THE PLAN W HICH GOT APPROVED VIDE COMMENCEMENT CERTIFICATE DATED 30-03-2007 . IT IS ALSO SEEN THAT FROM THE FIRST SANCTION/APPROVAL OF THE PROJECT PLAN, THE ASSESSEE KEPT APPLYING FOR THE REVISION. ADMITTEDLY UP TO 30-03-2007 BUILDING E WAS NOT IN THE LAY OUT BUT IT IS SEPARATELY AD DED. WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL THAT NOWHER E IT IS PROVIDED IN SECTION 80IB(10) THAT TO BE A SEPARATE PROJECT, THE PLAN ALSO SHOULD BE SEPARATE. ULTIMATELY THE PROCEDURE OF THE PLANS FOR GETT ING THE SANCTION OF THE LOCAL AUTHORITY IS REGULATED UNDER THE DIFFERENT RULE S AND REGULATIONS. IN THE CASE OF VANDANA PROPERTIES (SUPRA), I T IS HELD THAT HOUSING PROJECT NEED NOT BE A PROJECT OF THE GROUP O F BUILDINGS BUT ONE SINGLE BUILDING CAN CONSTITUTE A SEPARATE HOUSING PROJECT . LET US DEAL WITH THE ARGUMENT OF LD.DR THAT THE ADDITIONAL FSI ACQUIRE D WAS USE BY THE ASSESSEE IN ALL 4 BUILDINGS I.E. B,C,D, AND E. IN OUR OPINION , THERE ARE NO RESTRICTIONS IN THE INCOME-TAX ACT ON THE ASSES SEE HOW TO DESIGN HIS HOUSING PROJECT. MOREOVER, MERELY BECAUSE PART OF THE FSI HAS BEEN UTILIZED IN BUILDING E WHICH IS CLAIMED AS SEPARATE HOUSING P ROJECT, THE ASSESSEE SHOULD NOT BE DEPRIVED OF THE BENEFIT OF SECTION 80IB(10). WE, THEREFORE, HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF TH IS CASE, BUILDING E IS A SEPARATE HOUSING PROJECT. ANOTHER ASPECT TO BE CONSIDERED HERE, AS SUBMITTED BY THE LEARNED COUNSEL, THE UTILITIES SPACE I S SHIFTED TO SEPARATE PLOT AND BUILDING E WAS CONCEPTUATED SEPARATEL Y. WE, 7 ITA NO.1137/PN/2010 M/S. G.K. ASSOCIATES, PUNE THEREFORE, ALLOW THE APPEAL FILED BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM U/S.80IB(10) TO THE ASSESSEE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 004.03 .2013 SD/- SD/- (R.K. PANDA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 4 TH MARCH, 2013 COPY TO 1 THE ASSESSEE 2 THE DEPARTMENT 3 THE CIT(A)) - II, PUNE 4 THE CIT - II , PUNE 5 THE DR, ITAT A BENCH , PUNE . 6 GUARD FILE. // TRUE COPY // BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE