MAVANI & SONS, MUMBAI V. ITO 27(2)(2),

ITA 1374/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9944 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: AJAY R SINGH
• Keywords: Rule of consistency
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1374/MUM/2017 (ASSESSMENT YEAR- 2007-08) ITA NO.1373/MUM/2017 (ASSESSMENT YEAR- 2008-09) MAVANI & SONS B-2, GURUDATT BUILDING, 2 ND FLOOR, PATEL CHOWK, GHATKOPAR (EAST), MUMBAI-400077 PAN: AAAFM7710R VS. ITO-27(2)(2) VASHI INCOME TAX OFFICE, NAVI MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY R. SINGH (AR) REVENUE BY : SHRI V. JUSTIN (DR) DATE OF HEARING : 07.03.2018 DATE OF PRONOUNCEMENT : 16.03.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THESE TWO APPEAL BY ASSESSEE UNDER SECTION 253 OF I NCOME TAX ACT ARE DIRECTED AGAINST THE COMMON ORDER OF LD. COMMISSION ER OF INCOME-TAX (APPEALS)-25, MUMBAI, [FOR SHORT THE LD. CIT(A)] DA TED 20.01.2017 FOR ASSESSMENT YEAR 2007-08 AND 2008-09. THE LD. CIT(A) DECIDED THE APPEAL OF ASSESSEE FOR BOTH THE ASSESSMENT YEARS BY A CONS OLIDATED ORDER, THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS. THUS, BOTH THE APPEAL WERE HEARD TOUGHER AND ARE DECIDED BY A CONSOLIDATED ORDER. FOR APPRECIATION OF FACTS WE AR E REFEREEING THE FACT FOR ASSESSMENT YEAR 2007-08 IN ITA NO. 1374/MUM/2017. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PART NERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. DURING THE YEAR UNDER CONSIDERATION, THE ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 2 ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF A PROJE CT MARUTI MAHADEV NAGAR NEAR NANDIVLI TELEPHONE EXCHANGE, DOMBIVLI ( EAST). THE ASSESSMENT FOR ASSESSMENT YEAR 2007-08 WAS COMPLETED BY ASSESS ING OFFICER UNDER SECTION 143(3) R.W.S. 147 ON 05.03.2015. IN THE RET URN OF INCOME, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(10). THE ASSES SING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB HOLDING T HAT THE PROJECT SHOULD HAVE BEEN COMPLETED WITHIN FIVE YEARS FROM THE END OF FINANCIAL YEAR IN WHICH PROJECT HAS BEEN APPROVED. THE STARTING YEAR (FINANCIAL YEAR), IS THE YEAR IN WHICH APPROVAL WAS GRANTED BY LOCAL AUTHORI TY. THE APPROVAL OF LOCAL AUTHORITY WAS GRANTED ON 09.01.2003 AND THE PROJECT WAS PARTLY COMPLETED ON 14.03.2007. THE PROJECT WAS COMPLETED ON 26.03.2009 . THUS, THE ASSESSING OFFICER WAS OF THE VIEW THAT PARTIAL COMPLETION WAS NOT FINAL COMPLETION AS PER THE REQUIREMENT FOR CLAIMING DEDUCTION UNDER SE CTION 80IB(10). ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSI NG OFFICER WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 25. MUMBAI (HEREINAFTER R EFERRED TO AS THE CIT(A)') HAS ERRED IN UPHOLDING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S. 80IB(10) IN RESPECT OF THE PROFIT DERIVED FROM THE ACTIVITY OF CONSTRUCTION OF HOUSING PROJECTS TO THE TUNE OF RS. 52,91,537/- AS CLAIMED BY THE APPELLANT FOR THE ALLEGED NON FULFILMENT OF CONDITION LAID DOWN I N CLAUSE (III) OF SECTION 80IB(10) OF THE ACT. THE APPELLANT THEREFORE BEING AGGRIEVED BY THE ORDE R PASSED BY THE CIT(A) IN UTTER DISREGARDS OF THE DOCUMENTARY EVIDENCES FILED AND EXPLANATIONS, SUBMISSIONS MADE BEFORE HIM AND ALSO NOT FOLLOWING THE JUDICIAL ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 3 PRONOUNCEMENT OF THE APEX COURT IN THE CASE OF CAI VS SARKAR BUILDERS (375 ITR 392) ON THE SIMILAR RATIO, AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE PRAYS THAT THE DISALLOWANCE OF CLAIM OF DEDUCTION U /S. 80IB(10) OF RS. 52,91,537/- BEING UNJUSTIFIED, UNWARRANTED AND BAD- IN-LAW BE DELETED. 3. WE HAVE HEARD THE LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE ARGUED THAT THE ASSESSEE UNDERTAKEN A DEVELOPMENT OF HOUSI NG PROJECT NAMELY MARUTI MAHADEV NAGAR NEAR NANDIVLI TELEPHONE EXCH ANGE, DOMBIVLI (EAST). THE ASSESSEE HAS APPROVAL OF SANCTION PLAN ON 09.01.2003. THE SANCTION PLAN CONSISTING OF FOUR WINGS. WING NO. 1 TO 3 CONSIST OF A TO G BLOCK. WING NO. 4 CONSIST OF WING H, I, J & K. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB FOR WING NO. F & G UND ER BUILDING NO.3 FOR RS. 52,91,537/-. THE ASSESSING OFFICER DISALLOWED T HE DEDUCTION HOLDING THAT THE APPROVAL FROM THE LOCAL AUTHORITY WAS AVAILED B EFORE 01.04.2005 AND THE CONSTRUCTION SHOULD HAVE BEEN COMPLETED WITHIN FIVE YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE PROJECT WAS APPROVED BY LOCAL AUTHORITY. IT WAS SUBMITTED THAT THE APPROVAL OF PROJECT WAS SANCTION ED BY KALYAN-DOMBIVLI MUNICIPAL CORPORATION (KDMC) ON 09.01.2003 AND PROJ ECT COMMENCED IN OCTOBER 2003. THE LD. AR FURTHER SUBMITS THAT THE A SSESSEE FULFILLED ALL THE CONDITION STIPULATED UNDER SECTION 80IB(10) AT THE PREVAILING TIME AT THE COMMENCEMENT OF THE PROJECT. AT THE RELEVANT TIME, THERE WAS NO CONDITION FOR COMPLETING THE PROJECT WITHIN FIVE YEARS FROM T HE DATE OF APPROVAL/COMMENCEMENT. THE AMENDMENT MADE UNDER SEC TION 80IB(10) W.E.F. 01.04.2005 CANNOT BE MADE APPLICABLE TO THE HOUSING PROJECT WHICH ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 4 HAS OBTAINED APPROVAL BEFORE 31.03.2005. THE LD. AR SUBMITS THAT THE AMENDMENT MADE IN SECTION 80IB(10) W.E.F. 01.04.200 5 IS NOT APPLICABLE ON ASSESSEE AND THE ASSESSEE HAS A VALID AND LEGITIMAT E CLAIM OF DEDUCTION UNDER SECTION 80IB(10). IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE SUPREME COURT I N CASE OF CIT V/S. AAKASH NIDHI BUILDERS & DEVELOPERS [2016] 76 TAXMA NN.COM 86 (SC) AND IN CASE OF HON'BLE BOMBAY HIGH COURT IN CIT VS. VAN DANA PROPERTIES [2013] 353 ITR 36 (BOM.). 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTH ER SUBMITS THAT BY CLAIMING SUCH RELIEF, THE PURPOSE OF AMENDMENT BROU GHT UNDER SECTION 80IB(10) WOULD DEFEAT THE PURPOSE OF AMENDMENT. THE LD. DR FURTHER SUBMITS THAT WHILE MAKING AMENDMENT UNDER SECTION 8 0IB(10)(A)(III), THE LEGISLATURE HAS GIVEN THE GRACE PERIOD OF FIVE YEAR S FROM THE END OF FINANCIAL YEAR IN WHICH HOUSING PROJECT WAS APPROVED BY THE L OCAL AUTHORITY. ADMITTEDLY, THE ASSESSEE HAS NOT COMPLETED THE PROJ ECT WITHIN THE PRESCRIBED PERIOD ALLOWED IN AMENDED PROVISION OF SECTION 80IB (10)(A)(III). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER WHILE FRAMING THE ASSESSMENT ORDER DISALLOWED THE DEDUCTION UNDER SECTION 80IB(10) ON THREE GROUNDS. FIRSTLY, THE PROJECT WAS NOT COMPLET ED WITHIN FIVE YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT HAS BEEN APPROVED. ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 5 THE PROJECT WAS COMPLETED IN FINANCIAL YEAR 2008-09 WHEREAS IT SHOULD HAVE BEEN COMPLETED IN FINANCIAL YEAR 2007-08. SECONDLY, GROUND OF DISALLOWANCE WAS AS PER SECTION 80IB(10), THE STAR TING YEAR IS TO BE THE FINANCIAL YEAR IN WHICH APPROVAL WAS GRANTED BY LOC AL AUTHORITY FOR DEVELOPMENT OF PROJECT AND NOT THE YEAR IN WHICH TH E PROJECT IS COMMENCED. THIRDLY, THE CERTIFICATE OF COMPLETION OF PROJECT D ATED 14.03.2007 WAS A PARTIAL COMPLETION CERTIFICATE AND NOT FINAL COMPLE TION CERTIFICATE AS PER THE CONDITION STIPULATED UNDER SECTION 80IB(10)(A)(III) . BEFORE THE LD. CIT(A), THE ASSESSEE URGED THAT PROJECT WAS APPROVED BY LOC AL AUTHORITY VIDE APPROVAL DATED 09.01.2003 AND THAT PROJECT WAS PARTLY COMPLE TED IN FINANCIAL YEAR 2007-08 AND IN THE YEAR 2008-09. THUS, THE ASSESSEE CLAIMED DEDUCTION FROM ASSESSMENT YEAR 2005-06 TO 2008-09. THE FIRST PHASE OF COMPLETION CERTIFICATE WAS ISSUED VIDE OCCUPATION CERTIFICATE DATED 14.03.2007 AND SECOND COMPLETION CERTIFICATE DATED 26.03.2009. DUR ING THE FIRST APPELLATE STAGE, THE ASSESSEE URGED THAT THE PROVISIONS OF TH E SECTION 80IB(10), AS STOOD ON THE DATE OF COMMENCEMENT OF PROJECT HAS TO BE SE EN. THE LD. CIT(A) TOOK HIS VIEW THAT THE DEDUCTION IS CLAIMED FOR FINANCIA L YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08, HENCE, THE PROVISION OF TH E ACT AS STOOD ON 01.04.2006 WILL BE APPLICABLE AND NOT AS ON 31.03.2 003 AS URGED BY ASSESSEE AND CONFIRMED THE ACTION OF ASSESSING OFFICER. THE HONBLE MADRAS HIGH COURT IN CIT VS. JAIN HOUSING CONSTRUCTION COMPANY [2013] 30 TAXMAN.COM 131 (MADRAS) WHILE CONSIDERING THE SIMILAR ISSUES H ELD THAT FURNISHING OF ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 6 COMPLETION CERTIFICATE TO BE PRODUCED AS A CONDITIO N OF GRANT OF DEDUCTION UNDER SECTION 80IB(10) WAS INTRODUCED UNDER FINANCE ACT 2004, W.E.F. 01.04.2005 AND PRIOR TO THAT THERE WAS NO SUCH REQU IREMENT, IN ABSENCE OF ANY REQUIREMENT UNDER SECTION 80IB(10)(A) OF THE IN COME TAX ACT AND GOING BY THE PROVISO, AS STOOD DURING THE RELEVANT YEAR 2 004-05, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF REVENUE THAT CLAIM FOR DED UCTION RESTED ON THE PRODUCTION OF COMPLETION CERTIFICATE. FURTHER, THE HONBLE DELHI HIGH COURT IN CIT VS. CHD DEVELOPERS LTD. 362 ITR 177 (DEL.) H ELD THAT WHEN APPROVAL RELATED TO THE PROJECT WAS GRANTED PRIOR TO 2005 I. E. BEFORE AMENDMENT AND THE ASSESSEE WAS NOT REQUIRE TO PRODUCE THE COMPLET ION CERTIFICATE TO AVAIL DEDUCTION UNDER SECTION 80IB. THE CO-ORDINATE BENCH OF HYDERABAD TRIBUNAL IN CASE OF ITO VS. KURA HOMES (P.) LTD. [2 004] 47 TAXMANN.COM 161 HELD THAT FURNISHING OF COMPLETION CERTIFICATE IN RESPECT OF A HOUSING PROJECT WAS BROUGHT INTO STATUTE ONLY WITH EFFECT F ROM 1-4-2005, HENCE, WOULD APPLY PROSPECTIVELY. THE HONBLE APEX COURT I N CIT VS. AAKASH NIDHI BUILDERS & DEVELOPERS (SUPRA) HELD THAT THE A SSESSEE ENTITLED FOR PROPORTIONATE PROFIT IN RESPECT OF DIFFERENT WINGS OF THE PROJECT. THUS, CONSIDERING THE DECISION OF HONBLE DELHI HIGH COUR T IN CHD DEVELOPERS (SPRA), HONBLE MADRAS HIGH COURT IN JAIN HOUSING & CONSTRUCTION LTD. (SUPRA) AND THE DECISION OF CO-ORDINATE BENCH OF HY DERABAD TRIBUNAL THAT THE CONDITION PRECEDENT FOR GRANT OF DEDUCTION FOR SEEK ING COMPLETION WITHIN THE TIME PRESCRIBED HAS TO BE TREATED PROSPECTIVELY. HE NCE, IN OUR VIEW, THE ITA NO. 1374 & 1373/MUM/2017- MAVANI & SONS 7 ASSESSEE IS NOT REQUIRE TO PRODUCE THE COMPLETION C ERTIFICATE AS THE PROJECT WAS APPROVED BEFORE THE AMENDMENT IN SECTION 80IB(1 0). IN VIEW OF THE DISCUSSION, THE GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. IN ITA NO.1373/MUM/2017 (ASSESSMENT YEAR- 2008-09) 7. THE ASSESSEE HAS RAISED IDENTICAL GROUND OF APPEAL AS RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2007-08. AS WE HAVE ALREADY ALLOWED THE APPEAL FOR ASSESSMENT YEAR 2007-08, CONSIDERING THE PRINCIPLE OF CONSISTENCY, THE APPEAL FOR THIS ASSESSMENT YEAR IS ALSO ALLOWED WIT H SIMILAR OBSERVATION. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE FOR BOTH TH E ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF MARCH 2018. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 16/03/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C