Deputy Commissioner of Income-tax, Pune V. M/s. Surana Mutha Bhansali Developers, Pune

ITA 1216/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7637 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: V L JAIN
• Keywords: Earning of tax free income; Valuation report; Set aside
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.568/PUN/2017 / ASSESSMENT YEAR : 2012-13 M/S. SURANA MUTHA BHANSALI, DEVELOPERS, 236, PATIL PLAZA, NR. SARAS BAUG, PUNE 411009. PUNE 411 009. PAN : ABGFS1894K. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 5(2), PUNE. . / RESPONDENT . / ITA NO.1216/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE DY.COMMISSIONER OF INCOME TAX, CIRCLE 5, PUNE. . / APPELLANT V/S M/S. SURANA MUTHA BHANSALI, DEVELOPERS, 236, PATIL PLAZA, NR. SARAS BAUG, PUNE 411009. PUNE 411 009. PAN : ABGFS1894K. . / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN. REVENUE BY : MS. NANDITA KANCHAN. / DATE OF HEARING : 22.08.2019 / DATE OF PRONOUNCEMENT: 16.10.2019 2 / ORDER PER ANIL CHATURVEDI, AM : 1. THESE CROSS-APPEALS FILED BY ASSESSEE AND REVENUE E MANATE OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (A) 4, PUNE DATED 01.12.2016 FOR A.Y. 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED AS PROMOTERS AND BUILDERS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCO ME FOR A.Y. 2012-13 ON 03.09.2012 DECLARING TOTAL INCOME OF RS.53,12,62 7/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSME NT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.31.03.2015 AND THE T OTAL INCOME WAS DETERMINED AT RS.11,67,11,331/-. AGGRIEVED BY THE OR DER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.01.12.2016 (IN APPEAL NO.PN/CIT(A)-4/ITO, WD-5(2), PUNE/32/2015-16) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE AND REVENUE ARE NOW IN A PPEAL BEFORE US. 3. THE GROUND RAISED BY THE ASSESSEE IN ITA NO.568/PU N/2017 FOR A.Y. 2012-13 READS AS UNDER : THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE PROPORTIONATE DISALLOWANCE UNDER SECTION 80IB(10) F OR THE REASON THAT THE BUILT-UP AREA OF SOME OF THE UNITS EXCEEDED 1500 SQ .FT IF AND WHEN THE AREA OF OPEN TERRACE IS INCLUDED IN MEASURING THE B UILT UP AREA, INSPITE OF THE FACT THAT THE ISSUE IS FULLY COVERED BY THE DECISIONS OF THE MADRAS HIGH COURT IN CEEBROS HOTELS PVT. LTD. AND OF THE P UNE TRIBUNAL IN THE CASE OF N.T. WADHWANI. 3 4. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVEN UE IN ITA NO.1216/PUN/2017 READS AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) IS CORRECT IN ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF THE IT ACT, 1961 ON PRO-RATA BASIS, WHE N THE BUILT UP AREA OF 40 UNITS HAVE EXCEEDED 1500 SQ. FT AND THERE IS NO PROVISION IN THE IT ACT FOR CLAIMING PROPORTIONATE DEDUCTION U/S 80IB(10) O F THE IT ACT, 1961 ? 2.FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED A T THE TIME OF HEARING, THE ORDER OF THE CIT(A) BE VACATED AND THA T OF THE ASSESSING OFFICER BE RESTORED. 5. WE FIRST PROCEED TO DECIDE THE ASSESSEES APPEAL IN I TA NO.568/PUN/2017 FOR A.Y. 2012-13. 5.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOT ICED THAT ASSESSEE HAD CONSTRUCTED A RESIDENTIAL HOUSING PROJECT KNOWN AS SHREE SHANTINAGAR AT S.NO.63, KONDHWA BRUDUK, PUNE AND THE NET PROFIT OF RS.11,13,98,704/- EARNED FROM THE PROJECT WAS CLA IMED TO BE AS EXEMPT INCOME U/S 80IB(10) OF THE ACT. TO VERIFY AS TO WHETHER THE ASSESSEES PROJECT HAS SATISFIED THE REQUIRED CONDITIONS U/S 80IB(10) OF THE ACT FOR CLAIMING THE DEDUCTION, COMMISSION TO THE APPRO VED VALUER SHRI NITIN M. LELE WAS GIVEN AND HE WAS ASKED TO SUBMIT TH E REPORT ON THE MATTER. ON THE BASIS OF THE REPORT SUBMITTED BY HIM , AO NOTED THAT ONE OF THE CONDITIONS STIPULATED U/S 80IB(10) OF THE ACT W AS THAT THE BUILT UP AREA OF THE FLATS SHOULD NOT EXCEED 1500 SQ. FT. A O ON THE BASIS OF THE VALUATION REPORT NOTED THAT OUT OF 176 FLATS CONSTRUCTED BY THE ASSESSEE, IN RESPECT OF 40 FLATS, PROJECTED TERRACE (OPEN TO SKY) WAS GIVEN EXCLUSIVELY TO THE ASSESSEE AND THUS THE AREA OF FLATS WAS IN EXCESS OF 1500 SQ. FT. IN THOSE 40 FLATS. HE NOTED TH AT IF THE AREA OF THE FLAT AND THE TERRACE ARE CONSIDERED TOGETHER, THE T OTAL AREA OF THE FLAT EXCEEDS 1500 SQ. FT. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE DEDUCTION U/S 80IB(10) OF THE ACT NOT BE GRANTED IN VIEW OF THE CONTRAVENTION OF THE PROVISIONS ABOUT THE AREA STIPULATED AS PER TH E ACT. 4 THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND AC CEPTABLE TO THE AO. THE ALTERNATE SUBMISSION OF THE ASSESSEE OF ALLOWIN G DEDUCTION ON PROPORTIONATE BASIS WAS ALSO NOT FOUND ACCEPTABLE TO THE AO. AO THEREAFTER DENIED THE CLAIM OF DEDUCTION U/S 80IB(10) IN E NTIRETY. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN AP PEAL BEFORE US. 6. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT FOR THE PURPOS E OF COMPUTING BUILT-UP AREA, THE AREA OF THE PROJECTED TERRACE (OPEN T O SKY) IS TO BE EXCLUDED AS HELD BY THE DECISION OF PUNE TRIBUNAL IN THE CA SE OF SHRI NARESH T. WADHWANI VS. DCIT (ITA NOS.18, 19 & 20/PN/2013 ORDER DATED 28.10.2014). HE SUBMITTED THAT IF THE AFORESAID AREA O F OPEN TERRACE IS EXCLUDED, THEN THE AREA OF THE 40 FLATS WILL BE W ITHIN 1500 SQ. FT. HE PLACED ON RECORD THE COPY OF THE AFORESAID DECISION AND POINTED TO THE OBSERVATIONS OF THE TRIBUNAL WHEREIN IT HAS HELD TH AT THE AREA OF THE PROJECTED TERRACE NEEDS TO BE EXCLUDED FOR THE P URPOSE OF COMPUTING THE BUILT-UP AREA WHILE EXAMINING THE CONDITION P RESCRIBED UNDER CLAUSE (C) OF SEC.80IB(10) OF THE ACT. HE THEREFORE SU BMITTED THAT THE ORDER OF AO BE SET ASIDE. LD. D.R. ON THE OTHER HAND, SUPPORTE D THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE DENIAL OF CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. IT IS THE CASE OF THE REVENUE THAT THE AREA OF THE 40 FLATS EXCEEDS 1500 SQ. FT. WHICH IS THE 5 MAXIMUM AREA STIPULATED UNDER THE PROVISIONS OF THE ACT. REVENUE HA S CONCLUDED THAT THE AREA OF THE 40 FLATS EXCEED 1500 SQ. FT. BY INCLUDING THE AREA OF THE OPEN TERRACE WHICH IS AVAILABLE TO THOSE 40 FLAT OWNERS. THE ASSESSEES CONTENTION IS THAT IF THE AREA OF OPEN T ERRACE IS EXCLUDED THEN THE AREA OF EACH OF THE 40 FLATS IS WITHIN THE PRESCR IBED LIMIT OF 1500 SQ.FT. STIPULATED UNDER THE PROVISIONS OF THE ACT. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF NARESH T. WADHWANI (SUPRA) AFTER CONSIDERING VARIOUS DECISIONS CITED IN THE OR DER HAS CONCLUDED THAT THE AREA OF THE PROJECTED TERRACE (OPEN TO SKY) IS NOT TO BE INCLUDED FOR THE PURPOSE OF COMPUTING THE BUILT-UP ARE A WHILE EXAMINING THE CONDITION PRESCRIBED IN CLAUSE (C) OF SECTION 80IB(10) OF THE ACT. BEFORE US, REVENUE HAS NOT CONTROVERTED THE SUBMISSIONS OF THE ASSESSEE THAT IF THE AREA OF PROJECTED TERRACE (OP EN TO SKY) IS EXCLUDED, THE SIZE OF EACH OF THE FLAT IS WITHIN THE PRESCRIB ED LIMIT OF 1500 SQ.FT. STIPULATED UNDER THE PROVISIONS OF SEC.80IB(10) O F THE ACT. FURTHER, REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RE CORD TO DEMONSTRATE THAT THE ORDER OF THE CO-ORDINATE BENCH O F THE TRIBUNAL IN THE CASE OF NARESH T. WADHWANI (SUPRA) HAS BEEN SET ASIDE OR STAYED BY HIGHER JUDICIAL AUTHORITIES NOR HAS BROUGHT ON RECORD ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACT S, WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80 IB(10) OF THE ACT ON THE PROFITS EARNED FROM THE AFORESAID HOUSING PR OJECT. WE THEREFORE DIRECT THE AO TO GRANT THE DEDUCTION. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. 9. NOW WE TAKE UP THE APPEAL OF REVENUE IN ITA NO.1216/PUN/2017 FOR A.Y. 2012-3. 6 9.1. REVENUE IS AGGRIEVED BY THE ORDER OF LD.CIT(A) AS HE HAD GRANTED THE DEDUCTION U/S 80IB(10) OF THE ACT ON PROPORTIONATE BASIS. LD.CIT(A) HAD HELD THAT SINCE ASSESSEE HAS FAILED TO COMPLY THE CONDITIONS STIPULATED U/S 80IB(10) OF THE ACT FOR CLAIM OF DED UCTION IN RESPECT OF ONLY 40 FLATS WHERE THE PERMISSIBLE AREA HAD E XCEEDED 1500 SQ. FT. THEN THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF DEDUCTION IN TOTALITY AND THEREFORE THE DEDUCTION IS TO BE DENIED ONLY WITH RESPECT TO PROFITS EARNED FROM THOSE 40 FLATS. HE ACCORDINGLY DIRECT ED THE AO TO GRANT PROPORTIONATE DEDUCTION U/S 80IB(10) OF THE ACT. REVENUE IS AGGRIEVED WITH THOSE DIRECTIONS OF LD.CIT(A). 10. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD. A.R . ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND ALSO RELIED ON THE DECISIONS PLACED BEFORE LD.CIT(A). HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) WHILE GRANTING PARTIAL RELIEF TO THE ASSESSEE U/S 80IB(10) HAS NOTED THAT SINCE ASSESSEE HAS VIOLATED THE CONDITIONS FOR CLAIM OF DEDUCTION U/S 80IB(10) WITH RESPECT T O ONLY 40 UNITS WHICH HAD EXCEEDED THE PERMISSIBLE AREA, THE DEDUC TION HAS TO BE DENIED ONLY FOR THOSE 40 FLATS MEANING THEREBY THAT THE ASSESSEE WAS GRANTED DEDUCTION ON PROPORTIONATE BASIS. FOR ARRIVING A T SUCH CONCLUSION, LD.CIT(A) HAD RELIED ON THE DECISIONS CITED IN HIS O RDER. BEFORE US, REVENUE HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A) NOR HAS BROUGHT ON RECORD ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE DO NOT FIND ANY REASON TO INTER FERE WITH THE FINDINGS OF LD.CIT(A). THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 7 12. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 13. TO SUM UP, THE APPEAL OF ASSESSEE IS ALLOWED AND T HE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-4, PUNE. PR.CIT-3, PUNE. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER , // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE