M/s. Sai Samarth Constructions, Pune V. Deputy Commissioner of Income-tax,

ITA 1260/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9259 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 14-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V L JAIN
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1260 /P U N/201 5 / ASSESSMENT YEAR : 20 1 1 - 1 2 M/S. SAI SAMARTH CONSTRUCTIONS, UMED BHAVAN, OFFICE NO.9, CANARA BANK BUILDING, PIMPRI, PUNE 411018 . / APPELLANT PAN: AAGAS0839L VS. THE ASST. COMMISSIONER O F INCOME TAX, CENTRAL CIRCLE 1(2), PUNE . / RESPONDENT . / ITA NO. 1466 /P U N/201 5 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE INCOME TAX OFFICER, WARD 8(4), PUNE . / APPELLANT VS. M/S. SAI SAMARTH CONSTRUC TIONS, UMED BHAVAN, OFFICE NO.9, CANARA BANK BUILDING, PIMPRI, PUNE 411018 . / RESPONDENT PAN: AAGAS0839L ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI AJAY MODI ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 2 / DATE OF HEARING : 04 .0 7 . 2017 / DATE OF PRONOUNCEMENT: 07 . 0 7 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH E CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF CIT (A) , PUNE - 11, DATED 14.08.2015 RELATING TO ASSESSMENT YEAR 20 1 1 - 12 AGAINST ORDER PASSED U NDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO. 12 60/PUN/2015 HAS RAISED THE FOLLOWING GROUND OF APPEAL : - 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT GRANTING A PROPER OPPORTUNITY OF BEING HEARD, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 2. WITHOUT PREJUDICE TO THE ABOVE, T HE LEARNED CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF CLAIM MADE U/S 80IB(10) OF THE INCOME TAX ACT , 1961 AND ONLY GRANTING A PRO - RATA DEDUCTION. 4. THE REVENUE IN ITA NO. 1466 /PUN/2015 HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING PRO - RATA DEDUCTION ON ELIGIBLE UNITS U/S.80IB(10) OF THE I.T. ACT, 1961 FOR THE PROJECT THOUGH THE ASSESSEE ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 3 HAS VIOLATED THE CONDITIONS OF CLA USE (E) OF SECTION 80IB(10) OF THE I.T. ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN GRANTING DEDUCTION U/S.80IB(10) ON PRO RATA BASIS TO INDIVIDUAL DWELLING UNITS WHEREAS AS PER SECTION 80IB(10), THE DEDUCTION IS ALLOWABLE TO THE PROJECT AS A WHOLE ON THE FULFILLMENT OF PRESCRIBED CONDITIONS BY THE ENTIRE PROJECT. 3. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUES RAISED IN THE PRESENT CROSS APPEALS IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2010 - 11. 6. THE FIRST GROUND OF APPEAL RAISED BY THE ASSESSEE IS NOT P RESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. THE SECOND ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST DISALLOWANCE OF PARTIAL CLAIM MADE UNDER SECTION 80IB(10) OF THE ACT, WHEREIN THE CIT(A) HAD GRANTED PRO - RATA DEDUCTION. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN ALLOWING PRO - RATA DEDUCTION ON ELIGIBLE UNITS UNDER SECTION 80IB(10) OF THE ACT, WHERE THE DEDUCTION WAS ALLOWABLE TO THE PROJECT AS A WHOLE ON FULFILLMENT OF CERTAIN CONDITIONS AND ALSO BECAUSE OF VIOLATION OF CONDIT IONS OF CLAUSE (E) TO SECTION 80IB(10) OF THE ACT. 8. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD EXECUTED A HOUSING PROJECT SAI SHUBHAM AND HAD CLAIMED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AT RS.1,16,42,428/ - . THE ASSESSEE WAS SHOW CAUSED AGAINST VIOLATION OF CLAUSES (E) AND (F) OF SECTION 80IB(10) OF THE ACT, WHERE MORE THAN ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 4 ONE FLAT / ROW HOUSE WAS SOLD TO MEMBERS OF THE SAME FAMILY I.E. DEVRAM KATE (28.09.2006), GULAB KATE (03.06.2006), BHAGWAN KATE (03.06.2006) AND FLATS ALLOWED TO INDER KRIPLANI (13.10.2006). THE CASE OF THE ASSESSEE WAS THAT ALL THESE FLATS WERE ALLOTTED PRIOR TO 31.03.2010, WHEREIN THE SAID CLAUSES WERE INTRODUCED W.E.F. 01.04.2010 AND WERE APPLICABLE ONLY TO THE FLATS ALLOTTED AFTER 01.04.2010. THE ASSESSEE POINTED OUT THAT SIMILAR ISSUE AROSE IN ASSESSMENT YEAR 2010 - 11 AND THE CIT(A) HAD ALLOWED THE CLAIM OF ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD PUT FORWARD THE SAME SUBMISSIONS AS LAST YEAR AND DENIED THE CLAIM OF ASSESSEE UNDER SECTIO N 80IB(10) OF THE ACT. 9. THE CIT(A) RELYING ON ITS EARLIER ORDER HELD THAT THE LANGUAGE OF SECTION 80IB(10)(F) OF THE ACT WAS VERY CLEAR AND UNAMBIGUOUS AND DOES NOT MAKE ANY EXCEPTION AS REGARDS ALLOTMENT OF MORE THAN ONE RESIDENTIAL UNIT TO INDIVIDUAL OR HIS / HER SPECIFIED FAMILY MEMBERS. CONSEQUENTLY, THIS PLEA OF THE ASSESSEE WAS DISMISSED. HOWEVER, PRO - RATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WITH REFERENCE TO ELIGIBLE UNITS OF THE PROJECT WAS DIRECTED TO BE ALLOWED. 10. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN DENYING DEDUCTION ON THE FLATS WHICH WERE ALLOTTED TO THE FAMILY MEMBERS AND THE REVENUE IS IN APPEAL AGAINST PRO - RATA DEDUCTION ALLOWED BY THE CIT(A). 11. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL, W HEREIN THE FACTUM OF ALLOTMENT OF THREE FLATS TO INDER KRIPLANI AND TWO FLATS TO DEVRAM KATE WAS NOTED AND IT WAS OBSERVED AS UNDER: - ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 5 6. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DOCUMENTS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IN ITS HOUSING PROJECT SAI SHUBHAM HAS ALLOTTED MULTIPLE FLATS IN THE NAME OF INDIVIDUAL PERSONS. THE FI NANCE (NO.2) ACT, 2009 HAS INSERTED CLAUSE (E) AND (F) IN SECTION 80IB(10) OF THE ACT WHICH READS AS UNDER: 80IB(10) XXXXXXXXXXX ( A ) XXXXXXXX XXXXXXXXXXXXX (E) NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN I NDIVIDUAL; AND (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS, NAMELY: (I) THE INDIVIDUAL OR THE SP OUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL, (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA, (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. ACCORDING TO THE NEWLY INSERTED CLAUSES, THE ASSESSEE SHALL NOT BE ELIGIBLE TO CLAIM DEDUCTION U/S. 80IB(10) ON A PROJECT IF MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY INDIVIDUAL OR THE SPOUSE O R THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HUF WHEREIN SUCH INDIVIDUAL IS A KARTA. THE ABOVE CLAUSES WERE INSERTED W.E.F. 01 - 04 - 2010. 7. IN THE PRESENT CASE UNDISPUTEDLY THE ASSESSEE HAS ALLOTTED THREE FLATS TO SHRI INDER KRIPALANI AND TWO FLATS T O SHRI DEVRAM Y. KATE. THE ASSESSING OFFICER DENIED DEDUCTION U/S. 80IB(10) TO THE ASSESSEE AS NEWLY INSERTED PROVISIONS OF SECTION 80IB(10) RESTRICT ALLOTMENT OF MULTIPLE FLATS TO AN INDIVIDUALS IN A HOUSING PROJECT TO BE ELIGIBLE TO CLAIM DEDUCTION. A PERUSAL OF THE DOCUMENTS ON RECORD WOULD SHOW THAT THE ASSESSEE HAS ALLOTTED FLAT NOS. 302, 802 AND 902 IN WING - I TO SHRI INDER KRIPALANI IN TERMS OF DEVELOPMENT AGREEMENT DATED 13 - 10 - 2006 AND FLAT NOS. 101 AND 103 IN WING - I TO SHRI DEVRAM Y. KATE IN ACCORDANCE WITH TERMS AND CONDITIONS OF DEVELOPMENT AGREEMENT DATED 28 - 09 - 2006. BOTH THE SAID PERSONS WERE CO - OWNERS OF THE LAND ON WHICH THE RESIDENTIAL PROJECT WAS DEVELOPED BY THE ASSESSEE. AT THE TIME OF ALLOTMENT OF FLATS THE ASSESSEE COULD NOT H AVE ANTICIPATED THAT DEDUCTION U/S. 80IB(10) WOULD BE DISALLOWED IF MULTIPLE FLATS ARE ALLOTTED TO AN INDIVIDUAL. THE FINANCE BILL VIDE WHICH CLAUSES (E) AND (F) WERE INSERTED IN SECTION 80IB(10) WAS INTRODUCED ON 07 - 06 - 2009 AND THE BILL WAS PASSED BY THE PARLIAMENT ON 19 - 08 - 2009 I.E. MUCH AFTER THE DATE OF EXECUTION OF THE DEVELOPMENT AGREEMENT BETWEEN THE PARTIES. HENCE, THE NEWLY INSERTED PROVISIONS CANNOT BE APPLIED ON THE TRANSACTIONS WHICH WERE COMPLETE MUCH PRIOR TO THE INSERTION OF THE CLAUSES. THE AMENDMENTS PROPOSED BY THE FINANCE BILL IN THE INCOME TAX ACT ARE ENFORCEABLE ONLY WHEN THE BILL IS PASSED BY THE PARLIAMENT AND GETS THE ACCENT OF THE PRESIDENT OF INDIA. EVEN IF IT IS PRESUMED THAT AMENDMENTS PROPOSED BY THE FINANCE BILL ARE EFFECTI VE FROM DATE WHEN IT WAS PASSED BY THE PARLIAMENT, EVEN IN THAT CASE THE TRANSACTIONS IN THE PRESENT CASE RELATING TO SALE OF FLATS WAS COMPLETE BEFORE THE PASSING OF THE FINANCE (NO. 2) ACT, 2009 ON 19 - 08 - 2009. ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 6 8. FURTHER, A PERUSAL OF EXPLANATORY NOTE T O THE PROVISIONS OF THE FINANCE (NO. 2) ACT, 2009 WOULD SHOW, THAT THE RESTRICTIONS ON ALLOTMENT OF MULTIPLE RESIDENTIAL UNITS TO AN INDIVIDUAL WOULD NOT APPLY IN RESPECT OF ALLOTMENT MADE BEFORE 19 - 08 - 2009. THE RELEVANT EXTRACT OF THE CBDT CIRCULAR NO. 5 OF 10 DATED 03 - 06 - 2010 READS AS UNDER: 33.8 APPLICABILITY - THESE AMENDMENTS HAVE BEEN MADE APPLICABLE WITH EFFECT FROM 1 ST APRIL, 2010 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2010 - 11 AND SUBSEQUENT YEARS. THE AMENDMENTS RELATE TO REST RICTIONS ON SPECIFIC TRANSACTIONS (I.E., ALLOTMENT OF RESIDENTIAL UNITS). THEREFORE, THEY WOULD APPLY TO TRANSACTIONS AFTER A SPECIFIED DATE DURING THE YEAR. SINCE THE FINANCE (NO.2) ACT, 2009 BECAME LAW ON 19 TH AUGUST, 2009, THE RESTRICTIONS REGARDING ALL OTMENT OF RESIDENTIAL UNITS SHALL NOT APPLY IN RESPECT OF ALLOTMENTS MADE BEFORE 19.08.2009. 9. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CBDT CIRCULAR CLARIFYING THE APPLICABILITY OF THE AMENDED PROVISIONS, WE ARE OF THE CONSIDERED OPINIO N THAT THE PROVISIONS OF CLAUSES (E) AND (F) TO SECTION 80IB(10) OF THE ACT CANNOT BE APPLIED TO THE TRANSACTIONS CARRIED OUT BEFORE 19 - 08 - 2009 AND ACCORDINGLY DEDUCTION U/S. 80IB(10) CANNOT BE DENIED TO THE ASSESSEE ONLY FOR THE REASON THAT MULTIPLE RESID ENTIAL UNITS WERE ALLOTTED TO AN INDIVIDUAL PRIOR TO THE AFORESAID DATE. ACCORDINGLY, WE FIND MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS ALLOWED. 12. THE ISSUE ARISING IN ASSESSEES APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL AND FOLL OWING THE SAME PARITY OF REASONING, WE HOLD THAT WHERE THE ALLOTMENT TO THE FAMILY MEMBERS WAS MADE BEFORE 19.08.2009 I.E. BEFORE CO MING INTO FORCE OF PROVISIONS SO INTRODUCED, THEN THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT COULD NOT BE DENIED TO THE ASSESSEE. ACCORDINGLY, WE ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 13. IN RESPECT OF ISSUE RAISED BY THE REVENUE, THE SAID ISSUE WAS ALSO BEFORE THE TRIBUNAL AND THE TRIBUNAL UPHELD THE ORDER OF CIT(A) IN ALLOWING PRO - RATA DEDUCTION UNDER SECT ION 80IB(10) OF THE ACT, IN TURN, RELYING ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF MADRAS IN VISWAS PROMOTERS PRIVATE LIMITED VS. ACIT REPORTED AS 81 DTR (MAD) 68 . FOR THE SAKE OF BREVITY, WE REFER TO THE FINDINGS OF THE TRIBUNAL IN PARAS 10 TO 12 OF THE ORDER DATED 15.02.2016 AND THE SAME ARE NOT BEING REPRODUCED. THUS, THE GROUNDS OF APPEAL RAISED BY THE ITA NO. 1260 /P U N/20 1 5 ITA NO. 1466 /PUN/2015 M/S. SAI SAMARTH CONSTRUCTIONS 7 REVENUE ARE DISMISSED. ACCORDINGLY, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. 1 4 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF JU LY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 7 TH JU LY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) , PUNE - 11 ; 4. / THE CIT (C), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE