Deputy Commissioner of Income-tax, Pune V. M/s. Sukhwani Chawla Combine, Pune

ITA 1195/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0445 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: VIPIN K GUJARATHI
• Keywords: Non compliance; Set aside
• Section: 80IB; 143(1); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.1194 & 1195/PUN/2017 / ASSESSMENT YEARS : 2011-12 & 2012-13. THE DY.COMMISSIONER OF INCOME-TAX, CIRCLE 8. . / APPELLANT V/S M/S. SUKHWANI CHAWLA COMBINE, 208/2A SUKHWANI HOUSE OPP. SWAMINATHAN CLINIC, PIMPRI, PUNE. PAN : ABDFS2457H. . / RESPONDENT. ASSESSEE BY : SHRI VIPIN K. GUJARATHI. REVENUE BY : SHRI PANKAJ GARG. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE REVENUE ARE EMANATING O UT OF THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), 6 - PUNE DATED 02.01.2017 FOR A.YS. 2011-12 AND 2012-13. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED T HAT THOUGH THE APPEALS FILED BY THE REVENUE ARE FOR TWO DIFFERENT ASSESSME NT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFOR E THE SUBMISSIONS MADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY A PPLICABLE TO THE OTHER APPEAL ALSO AND THUS BOTH THE APPEALS CAN BE HE ARD TOGETHER. IN / DATE OF HEARING : 22.08.2019 / DATE OF PRONOUNCEMENT: 12.09.2019 2 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, WE, F OR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. WE, HOWEVER, PROCEED WITH THE FACTS IN ITA NO.119 4/PUN/2017 FOR A.Y. 2011-12. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM ENGAGED AS BUILDERS AND PR OMOTERS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2011-12 ON 27.0 9.2011 DECLARING TOTAL INCOME OF RS.NIL AFTER CLAIMING DEDUCTION AT RS.5,04,80,033/- U/S 80IB(10) OF THE ACT. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, TH E CASE WAS RE- OPENED BY ISSUING NOTICE U/S 148 OF THE ACT. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS FRAMED U/S 14 3(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 18.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.5,04,80,033/-. AGGRIEVED BY THE ORDER OF AO, ASSESSE E CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 02.01.2017 (IN APPEAL NO.PN/CIT(A)-6/DCIT CIR-8/60/2015-16) GRANTED SUBSTANT IAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 8 0IB(10) ON PROPORTIONATE BASIS WHEN THE LAW RELATING TO BENEFIT TO BE GIVEN U/S 80IB(10) CLEARLY SAYS THAT THE PROJECT AS A WHOLE IS TO BE CONSIDERED FOR FULFILLMENT OF VARIOUS CONDITIONS PRESCRIBED THEREIN ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 8 0IB(10) ON PROPORTIONATE BASIS THOUGH THE PROVISIONS OF CLAUSE (F) OF SUB SE CTION (10) OF SECTION 80IB ARE VIOLATED ? 3 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. 4. SIMILAR GROUNDS HAVE BEEN RAISED BY THE REVENUE IN IT A NO.1195/PUN/2017 FOR A.Y. 2012-13. 5. AO HAS NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2010-11, AO FOUND THAT ASSESSEE HAD VIOLATED THE CON DITIONS LAID DOWN U/S 80IB(10)(F) OF THE ACT AND ACCORDINGLY THE CLAIM WAS DISALLOWED FOR A.Y. 2010-11 AND SUBSEQUENT YEARS. IN A.Y. 2010-11 IT WAS NOTICED THAT ASSESSEE HAD SOLD ROW HOUSE NOS. 38 & 39 OF THE PROJECT NAMELY, SUKHWANI OASIS TO SMT. JEET KAUR ROHIDA, PROPRIETOR OF M /S. URVASHI ENTERPRISES AND SHRI ANNEEL RAGHUMAL KHATRRIE, RESPECTIVEL Y. ON FURTHER ENQUIRIES, IT WAS REVEALED THAT SHRI ANNEEL RAGHUMAL KHATRR IE AND SMT. JEET KAUR ROHIDA ARE THE HUSBAND AND WIFE AND SINCE THE SALE IN THE PROJECT WAS TO RELATED PERSONS IT WAS IN VIOLATION OF CON DITIONS LAID DOWN U/S 80IB(10)(F) OF THE ACT AND ACCORDINGLY THE ENTIRE CLAIM U/S 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE. FOR THE YEAR UN DER CONSIDERATION, AO NOTED THAT SINCE THE ASSESSEE HAS VIOLATED THE PROVISIO NS OF CLAUSE (F) OF SEC.80IB(10) OF THE ACT AND ACCORDING TO HIM SINCE THE ASS ESSEE WAS REQUIRED TO CUMULATIVELY FULFILL ALL THE CONDITIONS STIPULATED A ND ON ACCOUNT OF FAILURE TO COMPLY WITH THE CONDITIONS STIPULATED IN CLAUS E (F) OF SEC.80IB(10) OF THE ACT, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80(B(10) OF THE ACT AND HE ACCORDINGLY DENIED THE CLAIM OF RS.5,04,80,033 /- UNDER SEC.80IB(10) OF THE ACT. AGGRIEVED BY THE ORDER O F AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO BY FOLLOWING THE ORD ER OF HIS PREDECESSOR DIRECTED THE AO TO ALLOW THE DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF ALL THE UNITS EXCEPT FOR THE PROFIT RELATING T O THE TWO UNITS SOLD TO SHRI ANNEEL RAGHUMAL KHATRRIE AND SMT. JEET KAUR ROHID A. HE THUS GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. 4 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD.A.R. O N THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CI T(A) AND FURTHER SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS COVER ED BY THE DECISION OF HONBLE PUNE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010 -11 VIDE ORDER DT.25.09.2017 IN ITA NOS.697 & 900/PUN/2015. HE THEREFOR E SUBMITTED THAT SINCE THERE ARE NO CHANGES IN THE FACTS IN THE CLAIM OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND THAT OF EARLIER YEAR, THE AP PEAL OF REVENUE BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF THE ASSESSEE WITH RESPE CT TO THE GRANT OF DEDUCTION U/S 80IB(10) OF THE ACT FOR THE YEAR UNDER CON SIDERATION WAS DENIED IN TOTALITY IN VIEW OF THE FACT THAT ASSESSEE HAD FAILE D TO COMPLY THE CONDITIONS STIPULATED U/S 80IB(10)(F) OF THE ACT. WHEN THE MATTER WAS CARRIED BEFORE LD.CIT(A), LD.CIT(A) HELD THAT PROPORTION DEDU CTION IS TO BE ALLOWED TO THE ASSESSEE AND THE CLAIM OF DEDUCTION U/S 80 IB(10) IS TO BE DENIED ONLY WITH RESPECT TO THE PROFITS FROM UNITS SOLD TO SHRI ANNEEL RAGHUMAL KHATRRIE AND SMT. JEET KAUR ROHIDA. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2010-11 WHER E THE REVENUE HAD CARRIED THE MATTER BEFORE THE TRIBUNAL AND THE TRIBUNAL HAD UPHELD THE ORDER OF LD.CIT(A) BY OBSERVING AS UNDER : 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE ISSUE OF REVENUES APPEAL WHEREIN RE VENUE IS AGGRIEVED BY THE ORDER OF LD.CIT(A) WHEREBY HE HAS HELD THAT DIS ALLOWANCE BE RESTRICTED ONLY WITH RESPECT TO PARTIES OF ROW HOUSES 38 AND 3 9, WE FIND THAT LD.CIT(A) 5 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. WHILE GRANTING PARTIAL RELIEF HAD RELIED ON THE DEC ISION OF INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN THE CASE OF PHARA NDE DEVELOPERS (ITA NO.715/PN/2009). BEFORE US, NO MATERIAL HAS BEEN PLACED BY REVENUE TO DEMONSTRATE THAT THE AFORESAID DECISION OF PUNE ITA T IN THE CASE OF PHARANDE DEVELOPERS (SUPRA) HAS BEEN SET ASIDE BY HIGHER JUD ICIAL AUTHORITY. ON THE ISSUE OF PROPORTIONATE DEDUCTION, WE ALSO FIND THAT HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. ARUN EXCELLO FOUNDATIO NS (P.) LTD [2013] 29 TAXMANN.COM 149 (MADRAS) HAS APPROVED THE PRINCIPLE OF PROPORTIONATE DEDUCTION TO THE EXTENT THE ASSESSEE HAS COMPLIED W ITH THE PROVISIONS OF SEC.80IB(10) OF THE ACT. FOLLOWING THE AFORESAID DE CISION OF HONBLE MADRAS HIGH COURT WE ARE OF THE VIEW THAT THE ASSESSEE CAN NOT BE DENIED THE DEDUCTION FOR THE COMPLETE HOUSING PROJECT AND THER EFORE FIND NO FAULT IN THE ORDER OF LD.CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 9. ON THE ISSUE OF DENIAL OF DEDUCTION U/S 80IB(10) ON ACCOUNT OF NON COMPLIANCE OF THE CONDITION STIPULATED IN CLAUSE (F ) TO SEC. 80IB(10) OF THE ACT, CLAUSES (E) AND (F) WERE INSERTED TO SEC.80IB(10) B Y FINANCE (NO.2) ACT, 2009 W.E.F 01.04.2010. THE OBJECT BEHIND THE INTRODUCTIO N AS EXPLAINED BY THE MEMORANDUM EXPLAINING THE PROVISIONS IS THAT THE O BJECTIVE OF THE TAX BENEFIT FOR HOUSING PROJECTS WAS TO BUILD HOUSING STOCK FOR LOW AND MEDIUM INCOME HOUSEHOLDS BY ENSURING THE SIZE OF THE RESIDENTIAL UNIT. IT WAS CIRCUMVENTED BY THE DEVELOPERS BY ENTERING INTO AGREEMENT TO SEL L MULTIPLE ADJACENT UNITS TO A SINGLE BUYER. ACCORDINGLY THE NEW CLAUSE WAS INSE RTED TO PROVIDE THAT THE UNDERTAKING WHICH DEVELOPS AND BUILDS THE HOUSING P ROJECT SHALL NOT BE ALLOWED TO ALLOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT TO THE SAME PERSON NOT BEING AN INDIVIDUAL AND WHERE THE P ERSON IS AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT T O SPOUSE OR MINOR CHILDREN OF SUCH INDIVIDUAL, TO HUF IN WHICH THE INDIVIDUAL IS A KARTA. IN THE PRESENT CASE IT IS AN UNDISPUTED FACT THAT ROW HOUSE NO.38 HAS BEEN SOLD TO SHRI ANNEEL RAGHUMAL KHATRRIE AND ROW HOUSE NO.39 HAS BE EN SOLD TO M/S URVASHI ENTERPRISES THROUGH ITS PROPRIETOR/AUTHORIS ED SIGNATORY IS JEETKAUR ROHIDA. THE BOOKING FORM WHICH HAS BEEN PLACED AT P APER BOOK REVEALS THAT THE BOOKINGS WERE MADE BY TWO DIFFERENT PERSONS WHO SE NAMES PRIMA FACIE APPEARED TO BE NOT RELATED TO EACH OTHER MORE SO WH ILE BOOKING ROW HOUSE NUMBER 39, THE ADDRESS OF JEETKAUR ROHIDA WAS STATE D AS PLOT NO 16, GANESH VISION, AKURDI, PUNE AND FOR BOOKING THE ROW HOUSE NO.38 THE ADDRESS OF THE PURCHASER, SHRI ANNEEL KHATRRIE WAS STATED TO BE C/16 SUKHWANI LAWNS, PIMPRI, PUNE. THE AGREEMENTS FOR BO TH THE ROW HOUSES WERE REGISTERED WITH THE OFFICE OF SUB-REGISTRAR ON 8 TH JUNE 2010. MR ANNEEL KHATRRIE WAS EARLIER KNOWN AS SHANKAR RAGHUMAL ROHI DA AND HE CHANGED HIS PRESENT NAME FOR WHICH A NOTIFICATION WAS ISSUE D IN THE GOVERNMENT OF MAHARASTRA GAZETTE DATED 16.11.2006. AT THE TIME OF REGISTRATION HE FURNISHED THE COPY OF THE PAN CARD WHICH SHOWED HIS OLD NAME I.E SHANKAR ROHIDA. IN CASE OF ROW HOUSE NO.39, THE AGREEMENT WAS SIGNED IN THE NAME OF JEETKAUR ROHIDA THOUGH SHE HAD GOT HER NAME CHAN GED TO JEETKAUR ANIL KHATRI VIDE GOVERNMENT OF MAHARASHTRA GAZETTE NOTIF ICATION DATED 16 TH NOVEMBER 2006 AND THE COPY OF THE PAN CARD FURNISHE D ALSO HAVING HER OLD NAME I.E. JEETKAUR ROHIDA. THE POSSESSION LETTERS D ATED 20.7.2010 SIGNED BY THE RESPECTIVE PURCHASERS WERE SIGNED AS JEETKUMAR ROHIDA AND ANNEEL KHATRRIE RESPECTIVELY. WE ARE OF THE VIEW THAT AT THE TIME OF MAKING SALE/BOOKING A UNIT AND FOR COMPLYING WITH THE REQU IREMENT OF CLAUSE (E) AND (F), THE ASSESSEE IS REQUIRED TO EXERCISE NORMAL DU E DILIGENCE EXPECTED OF A NORMAL BUSINESSMAN AND PROCEED ON THE BASIS OF THE DOCUMENTS/INFORMATION FURNISHED BY THE OTHER PERSON AND IS NOT SUPPOSED T O ACT LIKE A DETECTIVE AND MICROSCOPICALLY INVESTIGATE AND GO BEHIND THE DOCUM ENTS AND VERIFY THE BACKGROUND OF THOSE SUBMISSIONS. FURTHER NO GUIDEL INES HAVE ISSUED BY REVENUE DEPARTMENT TO SHOW AS TO WHAT AND HOW THE V ERIFICATION HAS TO BE CONDUCTED AND THEREFORE IT IS NOT A CASE OF REVENUE THAT THE REQUIRED GUIDELINES ISSUED BY REVENUE DEPARTMENT SO AS TO CH ECK THE COMPLIANCE OF 6 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. CLAUSE (E) AND (F) HAVE NOT BEEN FOLLOWED BY ASSESS EE. IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT IN THE PRESENT C ASE, THE ASSESSEE HAD PRIMA FACIE EXERCISED NORMAL DUE DILIGENCE EXPECTED OF A NORMAL BUSINESSMAN MORE SO WHEN THE PURCHASERS AT THE TIME OF BOOKING HAD GIVEN DIFFERENT ADDRESSES, WERE HAVING DIFFERENT SURNAMES AND THEN LATER ON THEY TURNED OUT TO BE CLOSELY RELATED. IN SUCH A SITUATI ON, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE DENIED THE DEDUCTION U/S 80I B(10) OF THE ACT. WE THEREFORE HOLD THAT THE CLAIM OF DEDUCTION U/S 80IB (10) BE ALLOWED AND THUS THE GROUNDS OF ASSESSEE ARE ALLOWED . 8. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON REC ORD TO DEMONSTRATE THAT THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2010-11 HAS BEEN SET ASIDE OR STAYED BY HIGHER JUDICIA L AUTHORITIES NOR POINTED OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THAT OF EARLIER YEAR. IN SUCH A SITUATION, WE FIND NO REASO N TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE IN ITA NO.1194 /PUN/2017 FOR A.Y. 2011-12 IS DISMISSED. 10. NOW, WE TAKE UP REVENUES APPEAL IN ITA NO.1195/PUN/ 2017 FOR A.Y. 2012-13. 10.1. AS FAR AS THE GROUNDS RAISED IN APPEAL IN ITA NO. 1195/PUN/2017 FOR A.Y. 2012-13 IS CONCERNED, IN VIEW OF THE SUBMISSION OF BOTH THE PARTIES THAT THE FACTS OF THE CASE IN THE YEAR BEING IDENTICAL TO THE FACTS AN D ISSUE OF THE CASE IN ITA NO.1194/PUN/2017 FOR A.Y. 2011-12, WE T HEREFORE FOR THE REASONS STATED HEREIN WHILE DISPOSING OF THE APPEAL IN ITA NO.1194/PUN/2017 FOR A.Y. 2011-12 AND FOR SIMILAR REASONS DISMISS THE GROUNDS OF REVENUE. THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF REVENUE IN ITA NO.1195 /PUN/2017 FOR A.Y. 2012-13 IS DISMISSED. 7 ITA NOS.1194 & 1195/PUN/2017 FOR A.YS. 2011-12 AND 2012-13. 12. TO SUM UP, BOTH THE APPEALS OF REVENUE ARE DISMISSE D. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH SEPTEMBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-6, PUNE. PR. CIT-5, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.