ITO, Pune V. M/s Khandge Mehta Developers, Pune

ITA 128/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6714 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: N W KHARE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.128/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, WARD- 8(2), PUNE. . APPELLANT VS. M/S KHANDGE MEHTA DEVELOPERS, 705, RAVIWAR PETH, TALEGAON, DABHADE, PUNE- 410 506. PAN : AAHFK1311M . RESPONDENT DEPARTMENT BY : SHRI S. P. WALIMBE ASSESSEE BY : SHRI N. W. KHARE DATE OF HEARING : 08-05-2014 DATE OF PRONOUNCEMENT : 28-05-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DA TED 22.10.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, ALTHOUGH THE REVENUE HAS PREFERR ED MULTIPLE GROUNDS OF APPEAL BUT ESSENTIALLY THE GRIEVANCE IS DIRECTED AG AINST THE ORDER OF THE CIT(A) WHEREBY THE ASSESSEE HAS BEEN HELD ELIGIBLE FOR DED UCTION U/S 80IB(10) OF THE ACT IN RELATION TO ITS PROJECT LAKSHADWEEP. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I S A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF BUILDERS/DEVELOPERS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE UNDERTOOK DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT NAMED AS LAKSHADWEEP SITUATED AT NEW STATION ROAD, TELAGAON DABHADE, TAL. MAVAL, DIST. PUNE. THE PROF ITS IN RELATION TO THE SAID ITA NO.128/PN/2013 A.Y. : 2009-10 HOUSING PROJECT WAS DETERMINED AT RS.36,62,699/- WH ICH WAS CLAIMED AS EXEMPT U/S 80IB(10) OF THE ACT. THE SAID CLAIM OF DEDUCTION WAS DENIED BY THE ASSESSING OFFICER FOR THE REASON THAT THE PROJE CT DID NOT COMPLY WITH CERTAIN CONDITIONS PRESCRIBED IN SECTION 80IB(10) O F THE ACT. 4. IN ORDER TO APPRECIATE THE CONTROVERSY, THE FOLL OWING FACT-SITUATION IS RELEVANT. THE ASSESSEE FIRM UNDERTOOK DEVELOPMENT AND CONSTRUCTION OF THE PROJECT, LAKSHADWEEP ON THE STRENGTH OF A DEVELOP MENT AGREEMENT IN RESPECT OF LAND BELONGING TO ONE MR. DATTATRAYA L. KHANDGE (ONE OF THE PARTNERS OF THE FIRM). THE INITIAL DEVELOPMENT AGREEMENT WAS FOR L AND ADMEASURING 9064.39 SQ.MTRS. AND THE SAID MR. DATTATRAYA L. KHANDGE HAD ALREADY OBTAINED SANCTIONED FROM THE LOCAL AUTHORITY I.E. TALEGAON D ABHADE MUNICIPAL COUNCIL ON 13.04.2005 FOR A LAYOUT PLAN COMPRISING OF 53 PL OTS. THIS DEVELOPMENT AGREEMENT WAS AMENDED ON 23.08.2007 WHEREBY 5 PLOTS WERE EXCLUDED FROM THE PURVIEW OF DEVELOPMENT AGREEMENT THUS THE AREA OF LAND AVAILABLE WITH THE ASSESSEE FIRM FOR THE PROJECT CAME DOWN TO 7035.60 SQ.MTRS.. ON 27.02.2008, THE DEVELOPMENT AGREEMENT WAS AGAIN REVISED WHEREBY ONE MORE PLOT AREA WAS EXCLUDED AND THUS THE LAND AVAILABLE WITH THE A SSESSEE FIRM FOR DEVELOPMENT CAME DOWN TO 6577.13 SQ.MTRS.. OUT OF THE REMAINING PLOTS, 5 PLOTS WITH A COMBINED AREA OF 1579.26 SQ.MTRS. WERE TAKEN-OVER BY THE PARTNERS OF THE ASSESSEE FIRM IN THEIR INDIVIDUAL C APACITY AND THE RESULTANT GAIN HAS BEEN OFFERED TO TAX. AFTER ALL THE AFORESAID E XCLUSIONS, ASSESSEE UNDERTOOK DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT WHICH COMPRISED OF 42 PLOTS, TOTALING TO AREA OF 4997.87 SQ.MTRS.. FURTHER, THE FIRST BUILDING PERMISSION WAS OBTAINED BY THE ASSESSEE FIRM ON 31. 10.2006 FOR COMMENCEMENT OF CONSTRUCTION ON 18 PLOTS. SUBSEQUE NTLY, ON 11.04.2008 THE SECOND BUILDING PERMISSION WAS OBTAINED FROM THE LO CAL AUTHORITY FOR CONSTRUCTION ON 4 PLOTS OF LAND. SIMILARLY, ON 06. 12.2008 AND 29.07.2009 BUILDING PERMISSIONS FOR CONSTRUCTION ON 18 PLOTS A ND 2 PLOTS OF LAND RESPECTIVELY WERE OBTAINED BY THE ASSESSEE FIRM FRO M THE LOCAL AUTHORITY. IN RESPECT OF THE CONSTRUCTION OF AFORESAID 42 PLOTS O F LAND, COMPLETION CERTIFICATES ITA NO.128/PN/2013 A.Y. : 2009-10 WERE ALSO OBTAINED BY THE ASSESSEE FIRM AND THE LAS T OF THE COMPLETION CERTIFICATE IN THIS REGARD WAS ISSUED BY THE LOCAL AUTHORITY ON 29.03.2010. 5. IN THE ABOVE BACKGROUND, THE OBJECTIONS OF THE A SSESSING OFFICER WERE THAT (I) THE LAYOUT PLAN APPROVAL WAS FOR CONSTRUCT ION OF 53 PLOTS WHEREAS THE CONSTRUCTION WAS UNDERTAKEN OF 42 PLOTS; AND, (II) CONSTRUCTION OF 42 PLOTS OUT OF THE TOTAL LAYOUT THE PLOTS COULD NOT BE CONSIDER ED AS A HOUSING PROJECT WITHIN THE MEANING OF SECTION 80IB(10) OF THE ACT. AS PER THE ASSESSING OFFICER, EVEN IF WHICH WAS TO BE TREATED AS HOUSING PROJECT THE SAME SHOULD HAVE BEEN COMPLETED WITHIN FIVE YEARS FROM THE END OF THE YEAR IN WHICH THE FIRST APPROVAL WAS OBTAINED WHICH ACCORDING TO HIM WAS ON 13.04.2005, WHEN THE LAYOUT APPROVAL FOR 53 PLOTS WAS OBTAINED. ACC ORDING TO THE ASSESSING OFFICER, THE PROJECT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31.03.2011 AND SINCE IN THE PRESENT CASE COMPLETION CERTIFICATE FO R CONSTRUCTION OF ONLY 42 PLOTS WAS OBTAINED OUT OF THE TOTAL OF 53 PLOTS IN THE LAYOUT APPROVAL, IT COULD NOT TO BE CONSIDERED THAT THE PROJECT WAS COMPLETED ON OR BEFORE 31.03.2011. FOR THE AFORESAID REASONS, THE ASSESSING OFFICER DI SALLOWED THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT AMOUNT TO RS.36,6 2,699/-. 6. THE CIT(A) HAS HOWEVER ALLOWED THE CLAIM OF THE ASSESSEE AND IN ORDER TO APPRECIATE THE REASONS PREVAILING HIM THE FOLLOW ING EXTRACT OF HIS DECISION IS WORTHY OF NOTICE :- 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS REPLY FILED BY THE LEARNED COUNSEL OF THE APPELLANT . THE TERM 'HOUSING PROJECT' HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT. THEREFO RE, THE SAME HAS TO BE UNDERSTOOD IN THE CONTEXT OF APPROVAL GIVEN BY THE LOCAL AUTHORITY AS HELD BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASS OCIATES REPORTED IN 333 ITR PAGE 289. THE SANCTION PLAN FOR LAY OUT OF 53 O PEN PLOTS WAS OBTAINED BY THE APPELLANT ON 13.04.2005, BUT OVER A PERIOD OF T IME BUILDING PERMISSION WAS OBTAINED ONLY IN RESPECT OF 42 PLOTS FOR WHICH COMP LETION CERTIFICATES WERE ALSO OBTAINED. THEREFORE, MERE EXCLUSION OF CERTAIN PLOT S FROM THE ORIGINAL LAYOUT PLAN CANNOT LEAD TO THE CONCLUSION THAT THERE CANNO T BE HOUSING PROJECT OF 42 PLOTS WHEN ORIGINAL LAYOUT OF PLOTS WAS 53 WHICH WA S APPROVED BY THE MUNICIPAL COUNCIL. PLANS AND PROJECTS ARE SUBJECT T O REVISION DEPENDING UPON THE NEEDS AND EXIGENCIES OF THE APPELLANT. IT IS SE EN THAT THE APPELLANT HAS UNDERTAKEN INDEPENDENT HOUSING SCHEME OF 42 PLOTS N AMED AS 'LAKSHADWEEP'. IN ALL THE COMMENCEMENT CERTIFICATES AS WELL AS COMPLETION ITA NO.128/PN/2013 A.Y. : 2009-10 CERTIFICATES, NAME OF THE PROJECT IS MENTIONED AS ' LAKSHADWEEP'. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN HOLDING T HAT EXCLUSION OF CERTAIN PLOTS FROM THE ORIGINAL LAYOUT WILL DISENTITLE THE PROJEC T AS 'HOUSING PROJECT' WITHIN THE MEANING OF SEC. 80IB(10) OF THE INCOME-TAX ACT. 11. THE NEXT OBJECTION OF THE ASSESSING OFFICER RES TS ON THE GROUND THAT SINCE IN THIS CASE FIRST LAYOUT WAS APPROVED O N 13.04.2005, THE PROJECT SHOULD HAVE BEEN COMPLETED BY 31.03.2011 I.E. WITHI N STIPULATED PERIOD OF FIVE YEARS. SINCE IN THIS CASE, ONLY 42 PLOTS WERE CONST RUCTED OUT OF 53 PLOTS, IT CANNOT BE SAID THAT THE PROJECT WAS COMPLETED WITHI N 5 YEARS. AFTER CONSIDERING THE OBJECTION OF THE ASSESSING OFFICER, IT IS SEEN THAT COUNTING OF 5 YEARS HAS TO BE CONSIDERED FROM THE DATE OF APPROVA L OF FIRST BUILDING PLAN AND NOT THE LAYOUT PLAN AS PER EXPLANATION (I) OF SEC.8 0IB(10)(A) OF INCOME-TAX ACT. SECONDLY, AS HELD IN THE PRECEDING PARAS, HOUSING P ROJECT 'LAKSHADWEEP' HAS TO BE UNDERSTOOD AS APPROVED BY LOCAL AUTHORITY WHI CH CONSISTS OF 42 PLOTS/UNITS FOR WHICH COMPLETION CERTIFICATES HAVE BEEN OBTAINED WITHIN STIPULATED PERIOD OF FIVE YEARS. THE AREA OF ALL TH E 42 PLOTS CONSISTING THE PROJECT LAKSHADWEEP IS MORE THAN ONE ACRE AND ALL OTHER CONDITIONS STIPULATED IN SEC.80IB (10) ARE FULFILLED. THEREFOR E, IT IS HELD THAT THE PROJECT 'LAKSHADWEEP' IS ELIGIBLE FOR DEDUCTION U/S. 80IB(1 0) OF INCOME-TAX ACT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO D ELETE THE ADDITION OF RS.36,62,699/-. THE GROUND IS THUS ALLOWED. 7. AT THE TIME OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REITERATED THE REASONING TAKEN BY THE ASSESSING OFF ICER WHICH WE HAVE ALREADY ADVERTED IN PARA 5 OF THE ORDER, AND IS NOT BEING R EPEATED FOR THE SAKE OF BREVITY. 8. THE LEARNED REPRESENTATIVE FOR THE RESPONDENT-AS SESSEE VEHEMENTLY POINTED OUT THAT THE FACTUAL POSITION BROUGHT OUT B Y THE CIT(A) CLEARLY SHOWED THAT THE PROJECT OF THE ASSESSEE WAS ELIGIBLE FOR T HE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. IT WAS POINTED OUT THAT THE A SSESSEE HAD UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF A HOUSING PROJECT I NASMUCH AS IT COMPRISED OF CONSTRUCTION ROW HOUSES ON THE INDIVIDUAL PLOTS OF LAND WHICH COMPRISED THE HOUSING PROJECT LAKSHADWEEP. THE LEARNED REPRESE NTATIVE EXPLAINED THE FACTUAL BACKGROUND OF THE PROJECT AND SUBMITTED THA T THE LAND IN QUESTION WAS OWNED BY MR. DATTATRAYA L. KHANDGE, WHO WAS ONE OF THE PARTNERS OF THE ASSESSEE FIRM, AND THE SAID OWNER HAD SUBMITTED THE PLANS TO THE LOCAL AUTHORITY SEEKING APPROVAL OF THE LAYOUT. IT WAS ALSO POINTED OUT THAT THE LAND IN QUESTION WAS COVERED BY THE URBAN LAND (CEILING AND REGULATION) ACT, 1976 AND THAT THE APPROVAL FOR THE LAYOUT WAS SOUGHT BY THE LANDHOLDER FROM THE ITA NO.128/PN/2013 A.Y. : 2009-10 LOCAL AUTHORITY BASED ON THE PRESCRIPTION OF THE UR BAN LAND (CEILING AND REGULATION) ACT, 1976. ONLY AFTER THE LAYOUT PLAN WAS SANCTIONED, THE LAND COULD BE MADE AVAILABLE FOR UNDERTAKING DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT, WHICH WAS CARRIED OUT BY THE ASSES SEE FIRM HAVING REGARD TO THE DEVELOPMENT AGREEMENTS ENTERED INTO WITH THE OW NER OF LAND. IN TERMS OF THE DEVELOPMENT AGREEMENT, ASSESSEE UNDERTOOK DEVEL OPMENT AND CONSTRUCTION OF ROW HOUSES ON 42 PLOTS OF LAND, AS APPROVED BY THE LOCAL AUTHORITY. IT WAS POINTED OUT THAT THE SAID CONST RUCTION HAS BEEN UNDERTAKEN WITHIN THE PERIOD PRESCRIBED IN SECTION 80IB(10) OF THE ACT; AND, THUS, THE CIT(A) MADE NO MISTAKE IN ALLOWING THE CLAIM OF THE ASSESSEE. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. FACTUALLY SPEAKING, THE ASSESSEE FIRM HAS UNDERTAKEN DEVELOPM ENT AND CONSTRUCTION OF A HOUSING PROJECT COMPRISING OF ROW HOUSES ON 42 PL OTS OF LAND AS PER THE DEVELOPMENT AGREEMENT ENTERED INTO WITH OWNER OF LA ND. IT IS QUITE CLEAR THAT WHEREAS THE OWNER OF LAND HAD SOUGHT LAYOUT APPROVA LS FROM THE LOCAL AUTHORITY, SO HOWEVER, THE APPROVALS FOR THE BUILDI NG PLANS OF THE HOUSING PROJECT WERE OBTAINED BY THE ASSESSEE FIRM, WHO HAS ACTUALLY UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT . THEREFORE, MERELY BECAUSE LAYOUT APPROVAL COMPRISED OF 53 PLOTS AND T HE ULTIMATE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT COMPRISED C ONSTRUCTION OF ONLY 42 PLOTS CANNOT DEFEAT THE CASE OF THE ASSESSEE FOR DEDUCTIO N U/S 80IB(10) OF THE ACT. PERTINENTLY, ASSESSEE WAS TO DEVELOP AND CONSTRUCT THE HOUSING PROJECT WITHIN REALM OF THE DEVELOPMENT AGREEMENT EXECUTED WITH TH E LAND OWNER. FOR THE PURPOSES OF EXAMINING ASSESSEES CLAIM FOR DEDUCTIO N U/S 80IB(10) OF THE ACT, WHAT IS OF RELEVANCE IS THE DEVELOPMENT AND CONSTRU CTION OF THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE ITSELF. IN THAT CONTEXT, IT IS WORTHWHILE TO NOTE THAT THE APPROVALS FOR THE BUILDING PLAN OF TH E HOUSING PROJECT WAS SOUGHT BY THE ASSESSEE FOR CONSTRUCTION OF 42 PLOTS OF LAN D, WHICH IT HAS DULY COMPLETED. ITA NO.128/PN/2013 A.Y. : 2009-10 10. IN TERMS OF EXPLANATION (I) BELOW CLAUSE (A) OF SECTION 80IB(10) OF THE ACT, IT IS PROVIDED THAT THE DATE OF APPROVAL OF TH E FIRST BUILDING PLAN OF THE HOUSING PROJECT SHALL BE CONSIDERED AS THE DATE OF APPROVAL BY THE LOCAL AUTHORITY. NOTABLY, THE SAID EXPLANATION TALKS OF APPROVAL OF THE BUILDING PLAN, WHICH IS QUITE DISTINCT FROM APPROVAL OF A LAYOUT PLAN. SO FAR AS THE APPROVAL OF THE BUILDING PLAN IS CONCERNED, THE FIR ST APPROVAL OBTAINED BY THE ASSESSEE IS DATED 31.10.2006 AND THEREFORE IT IS WI TH REFERENCE TO THIS DATE THAT THE LIMIT OF COMPLETION OF THE CONSTRUCTION OF THE PROJECT LAID OUT IN CLAUSE (A) OF SECTION 80IB(10) OF THE ACT IS TO BE EXAMINE D. 11. AS A CONSEQUENCE, IN TERMS OF CLAUSE (A) OF SEC TION 80IB(10) OF THE ACT, THE CONSTRUCTION OF THE HOUSING PROJECT WAS LIABLE TO BE COMPLETED WITHIN FIVE YEARS FROM END OF THE FINANCIAL YEAR IN WHICH THE B UILDING PLAN OF THE HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY I. E. CALCULATED FROM 31.10.2006, THE HOUSING PROJECT WAS LIABLE TO BE COMPLETED BY 3 1.03.2012. OSTENSIBLY, THERE IS NO DISPUTE TO THE FACTUAL FACT-POSITION TH AT THE CONSTRUCTION OF THE PROJECT HAS BEEN COMPLETED BY 29.03.2010, I.E. THE DATE ON WHICH ASSESSEE OBTAINED LAST OF THE COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW, THE CIT(A) MADE NO MISTAKE IN ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/ S 80IB(10) OF THE ACT. THUS, ON THIS ASPECT, THE ORDER OF THE CIT(A) IS HEREBY A FFIRMED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 28 TH MAY, 2014. SUJEET ITA NO.128/PN/2013 A.Y. : 2009-10 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE