The ACIT, Circle-2(2), Baroda V. Shri Shailesh Durgaprasad Yadav, Baroda

ITA 1162/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80565 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-12-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NOS. 1162 & 1163/AHD/2011 (ASSESSMENT YEAR:2002-03 & 2003-04) THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2(2), 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA APPELLANT VS. SHRI SHAILESH DURGAPRASAD YADAV 32, ZAVERCHAND PARK SOCIETY, OLD PADRA ROAD, BARODA RESPONDENT PAN: AAJPY8593R / BY REVENUE :SHRI V. K. SINGH, SR. D.R. / BY ASSESSEE : SHRI MUKUND BAKSHI, A.R. /DATE OF HEARING :08.12.2014 !' /DATE OF PRONOUNCEMENT : 22.12.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THESE APPEALS FILED BY REVENUE ARE PERTAINED T O SAME ASSESSEE FOR A.Y. 2002-03 & 2003-04, ARISING OUT FO RM THE I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 2 ORDER OF CIT(A)-II, BARODA, DATED 03.01.2011 ON SIM ILAR GROUNDS. SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 1162/AHD/2011 FOR A.Y. 2002-03, REVEN UE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID CIT (APPEALS) ERRED IN DIRECTING THE AS SESSING OFFICER TO ALLOW THE DEDUCTION OF RS.15,19,400/- U/S.80IB(10) R.W.S.80IB(1) OF THE INCOME-TAX ACT TO THE ASSESSEE IN VIEW OF THE DECISION OF THE HON'BLE ITA T IN THE CASE OF M/S. RADHE DEVELOPERS IN ITA NO.2482/AHD/20 06, WITHOUT APPRECIATING THAT THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED T O THE ASSESSEE BUT TO THE LANDOWNER AND THE RIGHTS AND TH E OBLIGATIONS UNDER THE SAID APPROVAL WERE NOT TRANSF ERABLE, AND THAT TRANSFER OF DWELLING UNITS IN FAVOUR OF TH E END- USERS WAS MADE BY THE LANDOWNER AND NOT BY THE ASSE SSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(APPEALS) ERRED IN ALLOWING THE A LTERNATIVE GROUND AND IN DIRECTING THE ASSESSING OFFICER TO AL LOW PROPORTIONATE DEDUCTION U/S.80IB(10) ON THE AREA OF HOUSING PROJECT STANDALONE WITHOUT APPRECIATING THA T THE ASSESSEE HAS CLEARLY VIOLATED THE CONDITIONS PRESCR IBED IN CLAUSE (D) OF SECTION 80IB(10) SINCE THE PROJECT IN CLUDED CONSTRUCTION OF COMMERCIAL COMPLEX IS IN EXCESS OF 2000 SQ.FT. 2.1 IN I.T.A. NO. 1163/AHD/2011 FOR A.Y. 2003-04, R EVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID CIT (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION OF RS.92,82,700/- U/S.80IB(10) R.W.S.80IB(1) OF THE INCOME-TAX ACT TO THE ASSESSEE IN VIEW OF THE DECISION OF THE HON'BLE ITA T IN THE CASE OF M/S.RADHE DEVELOPERS IN ITA NO.2482/AHD/200 6, I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 3 WITHOUT APPRECIATING THAT THE APPROVAL BY THE LOCAL AUTHORITY AS WELL AS COMPLETION CERTIFICATE WAS NOT GRANTED T O THE ASSESSEE BUT TO THE LANDOWNER AND THE RIGHTS AND TH E OBLIGATIONS UNDER THE SAID APPROVAL WERE NOT TRANSF ERABLE, AND THAT TRANSFER OF DWELLING UNITS IN FAVOUR OF TH E END- USERS WAS MADE BY THE LANDOWNER AND NOT BY THE ASSE SSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(APPEALS) ERRED IN ALLOWING THE A LTERNATIVE GROUND AND IN DIRECTING THE ASSESSING OFFICER TO AL LOW PROPORTIONATE DEDUCTION U/S.80IB(10) ON THE AREA OF HOUSING PROJECT STANDALONE WITHOUT APPRECIATING THA T THE ASSESSEE HAS CLEARLY VIOLATED THE CONDITIONS PRESCR IBED IN CLAUSE (D) OF SECTION 80IB(10) SINCE THE PROJECT IN CLUDED CONSTRUCTION OF COMMERCIAL COMPLEX IS IN EXCESS OF 2000 SQ.FT. 3. ASSESSING OFFICER MADE DISALLOWANCE IN CLAIMED U /S. 80IB(10). IN A.Y. 2002-03 ASSESSEE IN ITS RETURN O F INCOME HAS CLAIMED DEDUCTION U/S. 80IB(10), WHICH WAS DISALLOW ED BY ASSESSING OFFICER ON THE GROUND THAT ASSESSEE WAS N OT THE OWNER OF PROPERTY AND PERMISSION WAS NOT GRANTED IN ASSESSEES NAME AND THE APPROVAL BY VADODARA MUNICI PAL CORPORATION WAS IN THE NAME OF ORIGINAL LAND OWNERS AND NOT IN THE NAME OF ASSESSEE DEVELOPER AND ORIGINAL LAND OW NER HAS ASKED THE SERVICES OF ASSESSEE FIRM FOR DEVELOPMENT AND CONSTRUCTION OF PROJECT. ACCORDING TO ASSESSING OF FICER, THE FUNDAMENTAL CONDITION THAT THE APPROVAL MUST BE ACC ORDED IN ASSESSEES NAME WAS NOT SATISFIED AND THEREFORE THE CLAIM U/S. 80IB(10) WAS DENIED. 3.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 4 AND HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELI EF TO THE ASSESSEE. CIT(A) OBSERVED THAT ITAT, AHMEDABAD IN CASE OF M/S. RADHE DEVELOPERS & OTHERS. IN ITA NO. 2482/AHD /2006 VIDE ORDER DATED 29.06.2007 HAS DECIDED SIMILAR ISS UE IN FAVOUR OF ASSESSEE. IN FACTS AND CIRCUMSTANCES OF ASSESSEE WERE FOUND IDENTICAL TO THE CASE DECIDED IN M/S. RA DHE DEVELOPERS (SUPRA). MOREOVER, ALL PLEAS RAISED BY ASSESSING OFFICER HAD BEEN EFFECTIVELY DEALT WITH AND DISCUSS ED IN SAID ORDER IN RADHE DEVELOPERS CASE. FOLLOWING THE SAM E, CIT(A) GRANTED RELIEF TO THE ASSESSEE AS FAR AS CLAIM OF S ECTION 80IB(10) IS CONCERNED. NOTHING CONTRARY HAS BEEN B ROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING T HE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS GRANTED RELIEF TO ASSESSEE U/S. 80IB (10). 4. NEXT ISSUE IS WITH REGARDS TO COMMERCIAL AREA IN ONE OF THE HOUSING PROJECT I.E. M/S. RAJLAXMI DEVELOPERS. ASSESSEE CONSTRUCTED COMMERCIAL UNITS WHICH WAS MORE THAN 20 00 SQ.FT. AND THEREFORE, ASSESSEE WAS NOT ENTITLED FOR DEDUCT ION U/S. 80IB(10) BY CONCERN ASSESSING OFFICER. 4.1 IN APPEAL, CIT(A) GRANTED PROPORTIONATE DEDUCTI ON ON THIS ISSUE. ASSESSEE IS NOT IN APPEAL AGAINST THE SAME. HOWEVER, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT CIT( A) WAS NOT JUSTIFIED IN ALLOWING ALTERNATIVE GROUND AND IN DIR ECTING TO ALLOW PROPORTIONATE DEDUCTION U/S. 80IB(10) ON THE AREA O F HOUSING PROJECT STANDALONE WITHOUT APPRECIATING THAT ASSESS EE HAS I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 5 ALREADY VIOLATED CONDITIONS PRESCRIBED IN CLAUSE (D ) OF SECTION 80IB(10) SINCE THE PROJECT INCLUDED CONSTRUCTION OF COMMERCIAL COMPLEX, WHICH WAS IN EXCESS OF 2000 SQ. FT. THE P ROJECT OF ASSESSEE IS PRIOR TO THE AMENDMENT ON THE ISSUE OF COMMERCIAL AREA, WHICH HAS BEEN DECIDED IN FAVOUR OF ASSESSEE IN CASE OF CIT, PUNE VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM), WHEREIN, THE HONBLE BOMBAY HIGH COURT HELD AS UNDE R; 22. IT IS NOT IN DISPUTE THAT WHERE A PROJECT IS A PPROVED AS A HOUSING PROJECT WITHOUT OR WITH COMMERCIAL USER T O THE EXTENT PERMITTED UNDER THE RULES/REGULATIONS, THEN, DEDUCTION UNDER SECTION 80-IB(10) WOULD BE ALLOWABL E. IN OTHER WORDS, IF A PROJECT COULD BE APPROVED AS A HO USING PROJECT HAVING RESIDENTIAL UNITS WITH PERMISSIBLE C OMMERCIAL USER, THEN IT IS NOT OPEN TO THE INCOME-TAX AUTHORI TIES TO CONTEND THAT THE EXPRESSION 'HOUSING PROJECT' IN SE CTION 80- IB(IO) IS APPLICABLE TO PROJECTS HAVING ONLY RESIDE NTIAL UNITS. 24. THE FACT THAT THE DEDUCTION UNDER SECTION 80-IB (10) PRIOR TO 1-4-2005 WAS ALLOWABLE ON THE PROFITS DERI VED FROM THE HOUSING PROJECTS CONSTRUCTED DURING THE SPECIFI ED PERIOD, ON A SPECIFIED SIZE OF THE PLOT WITH RESIDE NTIAL UNITS OF THE SPECIFIED SIZE, IT CANNOT BE INFERRED THAT T HE DEDUCTION UNDER SECTION 10-IB(IO) WAS ALLOWABLE TO HOUSING PR OJECTS HAVING RESIDENTIAL UNITS ONLY, BECAUSE, RESTRICTION ON THE SIZE OF THE RESIDENTIAL UNIT IS WITH A VIEW TO MAKE AVAILABLE LARGE NUMBER OF AFFORDABLE HOUSES TO THE COMMON MAN AND NOT WITH A VIEW TO DENY COMMERCIAL USER IN RESIDENT IAL BUILDINGS. IN OTHER WORDS, THE RESTRICTION UNDER SE CTION 80- IB(10) REGARDING THE SIZE OF THE RESIDENTIAL UNIT W OULD IN NO WAY CURTAIL THE POWERS OF THE LOCAL AUTHORITY TO AP PROVE A PROJECT WITH COMMERCIAL USER TO THE EXTENT PERMITTE D UNDER THE DC RULES/REGULATIONS. THEREFORE, THE ARGUMENT O F THE REVENUE THAT THE RESTRICTION ON THE SIZE OF THE RES IDENTIAL UNIT IN SECTION 80-IB(IO) AS IT STOOD PRIOR TO 1-4- 2005 IS SUGGESTIVE OF THE FACT THAT THE DEDUCTION IS RESTRI CTED TO I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 6 HOUSING PROJECTS APPROVED FOR RESIDENTIAL UNITS ONL Y CANNOT BE ACCEPTED. 25. THE ABOVE CONCLUSION IS FURTHER FORTIFIED BY CL AUSE (D) TO SECTION 80IB(10) INSERTED WITH EFFECT FROM 1-4-2005 . CLAUSE (D) TO SECTION 80IB(10) INSERTED WITH EFFECT FROM 1 -4-2005 PROVIDES THAT EVEN THOUGH SHOPS AND COMMERCIAL ESTABLISHMENTS ARE INCLUDED IN THE HOUSING PROJECT, DEDUCTION UNDER SECTION 80-IB(10) WITH EFFECT FROM 1-4-2005 WOULD BE ALLOWABLE WHERE SUCH COMMERCIAL USER DOES NOT EXCEED FIVE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR TWO THOUSAND SQUARE FEET WHICHEV ER IS LOWER. BY FINANCE ACT, 2010, CLAUSE (D) IS AMENDED TO THE EFFECT THAT THE COMMERCIAL USER SHOULD NOT EXCEED T HREE PER CENT OF THE AGGREGATE BUILT-UP AREA OF THE HOUSING PROJECT OR FIVE THOUSAND SQUARE FEET WHICHEVER IS HIGHER. THE EXPRESSION 'INCLUDED' IN CLAUSE (D) MAKES IT AMPLY CLEAR THAT COMMERCIAL USER IS AN INTEGRAL PART OF A HOUSING PR OJECT. THUS, BY INSERTING CLAUSE (D) TO SECTION 80IB(10) T HE LEGISLATURE HAS MADE IT CLEAR THAT THOUGH THE HOUSI NG PROJECTS APPROVED BY THE LOCAL AUTHORITIES WITH COM MERCIAL USER TO THE EXTENT PERMISSIBLE UNDER THE DC RULES/REGULATIONS WERE ENTITLED TO SECTION 80IB(10) DEDUCTION, W.E.F. 01.04.2005 SUCH DEDUCTION WOULD B E SUBJECT TO THE RESTRICTION SET OUT IN CLAUSE (D) OF SECTION 80IB(10). THEREFORE, THE ARGUMENT OF THE REVENUE TH AT W.E.F. 01.04.2005 THE LEGISLATURE FOR THE FIRST TIME ALLOW ED SECTION 80IB(10) DEDUCTION TO HOUSING PROJECTS HAVING COMME RCIAL USER CANNOT BE ACCEPTED. IN VIEW OF THIS, THERE IS NO JUSTIFICATION TO DENY EXEMPTION TO RESIDENTIAL SEGMENT OF SUCH HOUSING PROJECT WHICH S ATISFIES CONDITIONS OF SECTION 80IB(10) ON STANDALONE BASIS. IN VIEW OF ABOVE LEGAL DISCUSSION WE ARE NOT INCLINED TO INTER FERE IN THE FINDING OF CIT(A) WHO HAS DIRECTED TO ASSESSING OFF ICER TO ALLOW PROPORTIONATE DEDUCTION U/S. 80IB(10) ON THE AREA O F HOUSING PROJECT STANDALONE BASIS. SAME IS UPHELD. I.T.A. NOS. 1162 & 1163/AHD/2011 FOR A.Y. 02-03 & 03-04 (ACIT VS. SHRI SHAILESH D. YADAV) PAGE 7 5. NOW WE TAKE ITA NO 1163/AHD/2011 FOR A.Y. 2003- 04. 6. SIMILAR ISSUE AROSE IN A.Y. 2003-04. FACTS BEIN G SIMILAR, SO FOLLOWING THE SAME REASONING, WE ARE NOT INCLINE D TO INTERFERE IN THE FINDING OF CIT(A) ON BOTH ISSUES D EALT AND DISCUSSED AND DECIDED IN A.Y. 2002-03. SAME IS UPH ELD. 7. IN RESULT, REVENUES APPEAL IN BOTH YEARS ARE DI SMISSED AS DISCUSSED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY OF DECEMBER, 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;