Deputy Commisisoner of Income-tax, V. M/s. G.K. Developers, Pune

ITA 1190/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7757 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NOS.1188 TO 1190/PUN/2015 / ASSESSMENT YEARS : 2006-07 TO 2008-09 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-8, PUNE . APPELLANT VS. M/S G.K. DEVELOPERS, B-BLOCK, 21/1, PIMPRI, PUNE 411 017 PAN : AAFFG5688P . RESPONDENT / APPELLANT BY : SHRI RAJEEV KUMAR, CIT / RESPONDENT BY : NONE DATE OF HEARING : 03.08.2017 / DATE OF PRONOUNCEMENT: 09.08.2017 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 3 APPEALS UNDER CONSIDERATIONS. ALL THE APPEALS ARE FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF CIT(A)-6, PU NE DATED 05-05-2015 RELATING TO THE ASSESSMENT YEARS 2006-07 TO 2008-09 RESPECTIVELY. SINCE THE ISSUE RAISED IS COMMON IN THESE APPEALS, THEREFORE, THESE WERE BEING ADJUDICATED BY THIS COMPOSITE ORDER FOR THE SAKE OF CONVENIENCE . 2. THE COMMON ISSUE RAISED BY THE REVENUE IN THESE 3 APPEALS RELATES TO ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT W HEN COUPLE OF DWELLING UNITS EXCEEDED THE AREA RESTRICTIONS PROVIDED IN THE STAT UTE. WE FIND THIS ISSUE NOW STANDS COVERED BY VARIOUS DECISIONS OF THE PUNE BEN CH, ITAT AND THE JUDGMENTS ITA NOS.1188 TO 1190/PUN/2015 M/S. G.K. DEVELOPERS 2 OF HONBLE HIGH COURT. CONSIDERING THE SAME, WE PR OCEED TO ADJUDICATE THESE 3 APPEALS OF THE REVENUE WITH THE HELP OF THE DEPARTM ENTAL REPRESENTATIVE FOR THE REVENUE. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH E ASSESSEE IS A PROMOTER, DEVELOPER AND BUILDER. ASSESSEE FILED THE RETURN OF INCOME FOR A.Y. 2006-07 DECLARING TOTAL INCOME NIL AFTER CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT AMOUNTING TO RS.3,79,18,545/- IN RESPECT OF HOUSING PROJECT ROSELAND RESIDENCE. SIMILAR DEDUCTIONS ARE CLAIMED FOR OTH ER A.YRS. 2007-08 AND 2008- 09 UNDER CONSIDERATION. AO NOTICED THAT THE ASSESS EE PROVIDED INCORRECT WORKING OF BUILT UP AREA OF ROW HOUSE NOS. 1 & 4 WHEREIN TH E DVO WORKED OUT THE BUILT UP AREA OF SAID ROW HOUSES AT 1602.62 SQ.FT. ASSE SSEE ARGUED THAT TERRACE AREA OPEN TO SKY AREA IS NOT COVERED WITHIN THE MEANING OF SECTION 80IB(14)(A) OF THE ACT. REJECTING THE EXPLANATION GIVEN BY THE ASSESS EE, THE AO IN THE ASSESSMENT ORDER DENIED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT DETERMINING THE TOTAL TAXABLE INCOME OF THE ASSESSEE AT RS.3,79,18,550/-. THE DISCUSSION GIVEN IN PARA A ON PAGE 3 OF THE ASSESSMENT ORDER IS RELEVAN T. SIMILAR DENIALS ARE RECORDED IN THE OTHER ASSESSMENT YEARS TOO. AO RELI ED ON THE AMENDED PROVISIONS OF SECTION 80IB(14)(A) OF THE ACT. 4. CIT(A) DISCUSSED ON THE SAID AMENDED PROVISIONS AND RELIED ON THE FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE CONTE XT OF AN ORDER U./S.263 OF THE ACT AND FINALLY, GRANTED RELIEF TO THE ASSESSEE. C IT(A) HELD THAT THE SAID AMENDED PROVISIONS APPLIES PROSPECTIVELY ONLY. FUR THER, HE HELD THAT THE SAID AMENDED PROVISIONS ARE INAPPLICABLE TO THE ASSESSEE S PROJECT WHICH STARTED BEFORE THE AMENDED PROVISIONS WHICH ARE OPERATIVE W .E.F. 01-04-2005 CAME INTO EXISTENCE. FURTHER, LD. CIT(A) RELIED HEAVILY ON T HE DECISION OF PUNE BENCH OF ITA NOS.1188 TO 1190/PUN/2015 M/S. G.K. DEVELOPERS 3 THE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWANI AND VICE VERSA IN ITA NOS. 18 TO 20/PUN/2013 AND 60 & 61/PUN/2013 ORDER DATED 28-10-2014 AS WELL AS THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CA SE OF M/S. CEEBROS HOTELS PVT. LTD. VS. DCIT IN ITA NO.581/2008 ORDER DATED 1 9-10-2012 FOR GRANTING RELIEF. RELEVANT DISCUSSION AND THE DETAILS OF WHI CH ARE DISCUSSED IN PARA 10 OF THE ORDER OF THE CIT(A). EVENTUALLY, THE CIT(A) DE LETED THE ADDITION MADE BY THE AO AND ALLOWED THE GROUND OF THE ASSESSEE ON THIS I SSUE. CONTENTS OF PARA NO.10 OF THE ORDER ARE RELEVANT AND THE SAME READS AS UNDER : 10. AGAIN PUNE TRIBUNAL IN APPELLANTS OWN CASE WH ILE ADJUDICATING ORDER U/S.263 OF INCOME-TAX ACT FOR A.Y. 2005-06 IN ORDER DATED 30-01-2013, HELD THAT AMENDED PROVISIONS W.E.F. 01-04-2005 ARE NOT APPLIC ABLE IN RESPECT OF THE APPELLANTS PROJECT. IN THE PRESENT CASE, IT IS SE EN THAT THE PROJECT IS APPROVED BEFORE 01-04-2005, I.E. 09-08-2004 AND TERRACE IN B OTH THE ROW HOUSES IS OPEN TO SKY. THEREFORE, RATIO OF THE ABOVE TWO DECISION S OF THE PUNE TRIBUNAL IS CLEARLY APPLICABLE IN THE FACTS OF THE CASE. ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INCLUDING THE AREA OF TERRACE BEING OPEN TO SKY IN THE BUILT-UP AREA AND DENYING DEDUCTION U/S.80IB(10) OF INCOME-TAX ACT. ACCORDINGLY, HE IS DIRECTED TO ALLOW DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT AMOUNTING TO RS.3,79,18,545/-. THUS, GROUND NO. 4 TO 7 ARE ALLOWED. 5. AGGRIEVED WITH THE SAID RELIEF GRANTED BY THE CI T(A) THE REVENUE IS IN APPEAL BEFORE US FOR ALL THE 3 YEARS UNDER CONSIDER ATION WITH IDENTICAL ISSUE RELATING TO ALLOWABILITY OF DEDUCTION U/S.80IB(10) OF THE ACT AND INAPPLICABILITY OF THE AMENDED PROVISIONS FOR THE PROJECT UNDER CONSID ERATION. 6. BEFORE US, THERE IS NONE TO REPRESENT THE ASSESS EES CASE. HOWEVER, WE NOTICED THE FACT THAT THE ORDER OF THE CIT(A) ON TH IS ISSUE OF GRANTING DEDUCTION U/S.80IB(10) CONSTITUTES A REASONED ORDER AND THE C IT(A) HAS GIVEN THE DETAILED REASONS WHILE GRANTING RELIEF TO THE ASSESSEE. CON TENTS OF PARA NO. 7 TO 10 ARE EARMARKED FOR DISCUSSING THE FACTS OF THE RELEVANT AND THE LEGAL PROPOSITIONS AND REASONS GIVEN FOR GRANTING RELIEF TO THE ASSESSEE I N THIS REGARD. A PERUSAL OF THE SAID PARAGRAPHS SUGGEST THAT THE CIT(A) CONSIDERED THE ASSESSEES WRITTEN ITA NOS.1188 TO 1190/PUN/2015 M/S. G.K. DEVELOPERS 4 SUBMISSIONS WHICH ARE EXTRACTED IN PARA NO.8 OF HIS ORDER. IN THE WRITTEN SUBMISSIONS, ASSESSEE RELIED HEAVILY ON THE JUDGMEN T OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. TINNWALA INDUSTRIES LTD . IN ITA NO.3315/2010 DATED 13-04-2012 AND THE BINDING DECISION OF PUNE BENCH O F THE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWANI (SUPRA). IN PARA NO.9, THE CIT(A) MENTIONED THE FACT THAT THE PROJECT IN QUESTION WAS SANCTIONED BY THE PCMC WAY BACK ON 09-08-2004 WHEREAS THE AMENDED PROVISIONS OF SECTIO N 80IB(14)(A) WERE INTRODUCED W.E.F. 01-04-2005 ONLY BY THE FINANCE (N O.2) ACT, 2004, WHICH IS SUBSEQUENT IN TIME. THUS, THE AMENDED PROVISIONS AR E CONSIDERED INAPPLICABLE TO THE PROJECTS SANCTIONED PRIOR TO THE AMENDMENT AS A MENDMENTS ARE PROSPECTIVE IN NATURE. FOR THIS PROPOSITION, WE FIND THAT THE CIT(A) RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. OPEN SHELTERS IN ITA NO.219/PN/2009 DATED 31-05-2011 FOR THE A.Y. 2005-0 6. CIT(A) EXTRACTED THE RELEVANT PARAGRAPH FROM THE SAID ORDER OF THE TRIBU NAL. IT IS ALSO EVIDENT FROM PARA NO.10 WHICH IS ALREADY EXTRACTED ABOVE THAT TH E AO ERRONEOUSLY APPLIED THE AMENDED PROVISIONS RETROSPECTIVELY AND THE SAME WAS NOT APPROVED BY THE HONBLE HIGH COURT/ITAT/CIT(A). WE FIND NO DIFFICU LTY IN APPROVING THE DECISION OF THE CIT(A) ON THE SAID ISSUE. WE FIND THAT THE INCLUSION OF AREA OF TERRACE WITHIN THE MEANING OF BUILT-UP AREA, WHICH IS INTRO DUCED BY THE SAID AMENDED PROVISIONS IS ALSO NOT SUSTAINABLE IN VIEW OF THE D ECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWANI (SU PRA) AND OTHERS, I.E. THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE O F M/S. CEEBROS HOTELS PVT. LTD. (SUPRA). 7. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE, SUBMISSIONS OF THE ASSESSEE BEFORE THE AO/CIT(A), W E FIND THAT THERE IS NO DISPUTE ON THE FACTS RELATING TO THE REFERRAL OF TH E FLATS TO DVO AND THE CALCULATION ITA NOS.1188 TO 1190/PUN/2015 M/S. G.K. DEVELOPERS 5 ON THE AREA OF THOSE FLATS. THE QUESTIONS TO BE AD JUDICATED INCLUDE IF THE AMENDED PROVISIONS OF SUB-SECTION 14 (A) OF SECTION 80IB APPLY RETROSPECTIVELY TO THE PROJECTS CLEARED BEFORE THE AMENDMENTS W.E.F. 0 1-04-2005. WITHOUT PREJUDICE, THE DEFINITION OF BUILT-UP AREA AS GIV EN IN SECTION 80IB(14)(A) OF THE ACT DOES NOT INCLUDE THE AREA OF OPEN TERRACE EXP RESSLY. THEREFORE, CONSIDERING THE ORDERS PLACED BEFORE US AND THE SUP PORTING JUDICIAL FINDINGS CITED ABOVE, WE ARE OF THE OPINION THAT THE CONCLUSIONS D RAWN BY THE CIT(A) ON THE CONTENTIONS, ISSUE UNDER CONSIDERATION FOR ALL THE 3 YEARS UNDER CONSIDERATION ARE FAIR AND REASONABLE AND THEY DO NOT CALL FOR ANY IN TERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN ALL THE 3 YEARS UN DER CONSIDERATION ARE DISMISSED. 8. IN THE RESULT, ALL THE 3 APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 09 TH DAY OF AUGUST, 2017. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 09 TH AUGUST, 2017. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-6, PUNE 4. / THE CIT-6, PUNE 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, ITAT, PUNE BENCHES, PUNE