ACIT, Circle-33, Kolkata, Kolkata V. M/s Ashiana Amar Developers, Kolkata

ITA 1414/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6908 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: ARVIND AGARWAL
• Section: 143(3); 80IB

Judgement Text

I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2202/KOL/2016 ASSESSMENT YEAR: 2013-2014 & I.T.A. NO. 1414/KOL/2017 ASSESSMENT YEAR: 2014-2015 ASSISTANT COMMISSIONER OF INCOME TAX,... ............APPELLANT CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 -VS.- M/S. ASHIANA AMAR DEVELOPERS,...................... .................................RESPONDENT 5F, EVEREST, 46/C, CHOWRINGHEE ROAD, KOLKATA-700 071 [PAN: AANFA 5587 H] APPEARANCES BY: SHRI C.J. SINGH, JCIT SR. D.R., FOR THE APPELLANT SHRI ARVIND AGARWAL, ADVOCATE, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : MARCH 12, 2019 DATE OF PRONOUNCING THE ORDER : MAY 01, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE) :- THESE TWO APPEALS ARE PREFERRED BY THE REVENUE AGA INST TWO SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS)- 9, KOLKATA DATED 30.09.2016 AND 30.03.2017 FOR A.Y. 2013-14 AND 2014- 15 RESPECTIVELY AND SINCE SOME COMMON ISSUES ARE IN VOLVED THEREIN, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSE D OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2013-14 BEING ITA NO. 2202/KOL/2016 , WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-9, KOLKATA DATED 30.09.2016. I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 2 3. THE COMMON ISSUE INVOLVED IN GROUNDS NO. 1 & 3 O F THIS APPEAL RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES C LAIM FOR DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961. 4. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF DEVELOPING AND BUILDING HOUSING PROJECTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 18.09.2013 DECLARING TOTAL INCOME OF RS.8,47,58,700 /- AFTER CLAIMING DEDUCTION OF RS.3,53,44,355/- UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961. THE DEDUCTION WAS CLAIMED BY THE ASSESSEE IN RESPECT OF HOUSING PROJECT UNDERTAKEN UNDER THE NAME AND STYLE AS ASH IANA AMARBAGH IN JODHPUR, RAJASTHAN. SINCE THE SIMILAR DEDUCTION AS CLAIMED BY THE ASSESSEE UNDER SECTION 80IB IN RESPECT OF THE SAME PROJECT WAS DISALLOWED IN THE EARLIER YEARS, THE ASSESSEE DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS WAS REQUIRED BY THE ASSESSIN G OFFICER TO EXPLAIN AS TO WHY THE DEDUCTION CLAIMED BY IT UNDER SECTION 80IB DURING THE YEAR UNDER CONSIDERATION SHOULD NOT BE DISALLOWED. IN RE PLY, RELIANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF THE LD. C IT(APPEALS) RENDERED IN ITS OWN CASE FOR A.Y. 2012-13 VIDE ORDER DATED 21.0 8.2015, WHEREIN THE DISALLOWANCE MADE BY THE ASSESSEE ON ACCOUNT OF DED UCTION UNDER SECTION 80IB WAS DELETED BY THE LD. CIT(APPEALS). THE ASSES SING OFFICER, HOWEVER, FOUND THAT THE SAID DECISION OF THE LD. CIT(APPEALS ) FOR A.Y. 2012-13 WAS CHALLENGED BY THE DEPARTMENT BY FILING AN APPEAL BE FORE THE TRIBUNAL AND THE MATTER WAS PENDING. HE, THEREFORE, DISALLOWED T HE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB AMOUNTING TO RS.3,53,54,355/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VI DE AN ORDER DATED 15.03.2016. 5. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 3 CIT(APPEALS) AND FOLLOWING THE DECISION OF HIS PRED ECESSOR IN ASSESSEES OWN CASE FOR A.Y. 2012-13 RENDERED VIDE AN ORDER DA TED 21.08.2015, THE LD. CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES, THIS ISSUE R ELATING TO ASSESEES CLAIM FOR DEDUCTION UNDER SECTION 80IB AS INVOLVED IN THE YEAR UNDER CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR A .Y. 2010-11 AND 2012- 13. COPIES OF THE SAID ORDERS ARE PLACED ON RECORD AND A PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE RELATING TO THE ASS ESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB IN RESPECT OF PROFIT F ROM THE HOUSING PROJECT AT JODHPUR NAMELY ASHIANA AMARBAGH WAS DE CIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR A.Y. 2010-11 VIDE ITS ORDER DATED 22.01.2016 PASSED IN ITA NO. 12/KOL/2014. THE SAID DECISION OF THE TRIBUNAL RENDERED IN A.Y. 2010-11 WAS SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL TO DECIDE THE SIMILAR ISSUE IN FAVOUR OF T HE ASSESSEE FOR A.Y. 2012-13 VIDE ITS ORDER DATED OCTOBER 06, 2017 PASSE D IN ITA NO. 1307/KOL/2015. SINCE THE MATERIAL FACTS RELEVANT TO THIS ISSUE AS INVOLVED IN THE YEAR UNDER CONSIDERATION ARE SIMILA R TO A.YS 2010-11 AND 2012-13, WE RESPECTFULLY FOLLOW THE ORDERS OF THE T RIBUNAL FOR THE SAID YEARS AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT( APPEALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0IB. GROUNDS NO. 1 & 3 OF THE REVENUES APPEAL FOR A.Y. 2013-14 ARE ACCORD INGLY DISMISSED. 7. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION OF RS.1,11,70 ,519/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COST OF DEVELOPMENT . I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 4 8. THE ASSESSEE HAD INCURRED SUBSTANTIAL DEVELOPMEN T COST IN RESPECT OF ITS HOUSING PROJECT ASHIANA AMARBAGH UNDERTAKE N IN JODHPUR, RAJASTHAN AND THE SAID COST WAS ALLOCATED BY THE AS SESSEE TO THE DIFFERENT PHASES OF THE PROJECT. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED BY THE ASSESSING OFFICER TO E XPLAIN THE BASIS OF SUCH ALLOCATION. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ENTIRE PROJECT WAS SUPPOSED TO TAKE 4 TO 5 YEARS TO COMPLE TE AND, THEREFORE, THE DEVELOPMENT COST OF THE PROJECT WAS LIKELY TO BE IN CREASED FROM TIME TO TIME. IT WAS SUBMITTED THAT THE DEVELOPMENT COST TH US WAS NOT A FIXED EXPENDITURE AND THE QUANTUM OF THE SAME WAS BEING A SSESSED ON COMPLETION OF EACH PHASE. IT WAS SUBMITTED THAT AFT ER COMPLETION OF EACH PHASE, THE TOTAL DEVELOPMENT COST WAS CONSIDERED BY TAKING THE DEVELOPMENT COST ACTUALLY INCURRED TILL DATE PLUS T HE AMOUNT OF DEVELOPMENT COST TO BE INCURRED TO COMPLETE THE REM AINING PROJECT. IT WAS SUBMITTED THAT SUCH TOTAL DEVELOPMENT COST ACCO RDINGLY WAS APPORTIONED AND CHARGED TO THE EACH PHASE OF PROJEC T COMPLETED AND THE BALANCE AMOUNT WAS CARRIED FORWARD FOR THE REMAININ G PHASES. THIS BASIS ADOPTED BY THE ASSESSEE FOR ALLOCATION OF THE DEVEL OPMENT COST TO DIFFERENT PHASES WAS NOT FOUND ACCEPTABLE BY THE AS SESSING OFFICER. ACCORDING TO HIM, THE TOTAL DEVELOPMENT COST OF RS. 14,76,01,755/- WAS REQUIRED TO BE ALLOCATED TO THE DIFFERENT PHASES ON THE BASIS OF SALEABLE AREA AND SINCE PHASE-V AND PHASE-VI COMPLETED BY TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION COMPRISED OF 2,18,931 SQ.FT. OUT OF THE TOTAL SALEABLE AREA OF 5,93,876 SQ.FT. OF THE TOTAL PROJE CT, PROPORTIONATE DEVELOPMENT COST OF RS.5,50,66,373/- WAS REQUIRED T O BE ALLOCATED TO PHASE-V AND PHASE-VI. SINCE THE ASSESSEE WAS ALLOCA TED DEVELOPMENT COST OF RS.6,62,36,892/- TO PHASES-V AND VI, THE DIFFERE NCE OF RS.1,11,70,519/- REPRESENTING EXCESS DEVELOPMENT COST ALLOCATED BY T HE ASSESSEE WAS DISALLOWED BY THE ASSESSING OFFICER. I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 5 9. THE DISALLOWANCE OF RS.1,11,70,519/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED EXCESS ALLOCATION OF DEVE LOPMENT COST WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- IT IS SEEN THAT THE APPELLANT WAS ELIGIBLE FOR DED UCTION U/S 80-IB TILL 31/03/2012 I.E AY 2012-13. DURING THIS Y EAR, THE RECEIPTS ARE FOR CONSTRUCTION COMPLETED BEFORE 31/0 3/2012, WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB AND REMAIN ING RECEIPTS ARE FOR ONGOING CONSTRUCTION AFTER 31/03/2 012 WHICH IS NOT ELIGIBLE FOR DEDUCTION US 80IB. THIS HAS LED AO TO BELIEVE THAT MORE DEVELOPMENT COST IS ATTRIBUTABLE TO THE R ECEIPTS FOR WHICH NO DEDUCTION U/S 80IB IS ALLOWABLE. HOWEVER, THERE IS NO BASIS FOR SUCH BELIEF. THE APPELLANT HAS SUBMITT ED BEFORE THE AO AS WELL AS DURING APPELLATE PROCEEDINGS THAT HE HAS BEEN ATTRIBUTING DEVELOPMENT COSTS ON THE BASIS OF A FORMULA WHICH IS SAME FOR PERIODS FOR WHICH HE IS ENTITLED TO DEDUCTION U/S 80LB & OTHER PERIOD WHEN HIS INCOME IS FULLY TA XABLE WITHOUT ANY DEDUCTION U/S 80IB. THE AO HAS NOT FOUN D OUT ANY DEVIATION FROM THIS FORMULA FOR TWO PERIODS WHEN TH E INCOME IS EXEMPT AND WHEN TAXABLE. THEREFORE, THERE IS NO REASON TO INTERFERE WITH THE DEVELOPMENT COST ATTRIBUTED. ADD ITIONALLY, IT IS SEEN THAT THE COMPARISON DONE BY THE AO OF YE AR WISE ATTRIBUTION OF DEVELOPMENT COST IS FAULTY BECAUSE T HE DEVELOPMENT COST ATTRIBUTED FOR THIS AY I.E 2013-14 , RS.4,95,15,098/- ALSO INCLUDES THE DEVELOPMENT COST FOR SUBSEQUENT AY I.E 2014-15. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. ALTHOUGH THE LD. D.R. HAS RELIED ON THE WORKING OF ALLOCATION OF DEV ELOPMENT COST AS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE, HE HAS NOT BEEN ABLE TO POINT OUT ANY MISTAKE OR INFIRMITY ON THE BASIS OF ALLOCATION OF DEVELOPMENT COST ADOPTED BY THE ASSESSEE. IT IS OBSERVED THAT EVEN T HE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DID NOT PINPOINT ANY DEFECT OR DEFICIENCY IN SUCH BASIS OR METHOD ADOPTED BY THE ASSESSEE. AS CONTEND ED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AS WELL AS BEF ORE THE TRIBUNAL, THE I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 6 SAME BASIS OR METHOD WAS ADOPTED BY THE ASSESSEE FO R ALLOCATING THE DEVELOPMENT COST EVEN IN THE EARLIER YEARS AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER. KEEPING IN VIEW ALL THESE FA CTS OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A PPEALS) ACCEPTING THE BASIS OR METHOD ADOPTED BY THE ASSESSEE CONSISTENTL Y FOR ALLOCATION OF DEVELOPMENT COST OF DIFFERENT PHASES OF THE PROJECT AND DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. THE SAME IS, THEREFORE, UPHELD DISMISSING GROUND NO. 2 OF THE RE VENUES APPEAL. 11. NOW WE SHALL TAKE UP THE REVENUES APPEAL FOR A .Y. 2014-15 BEING ITA NO. 1414/KOL/2017 WHICH IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(APPEALS)-9, KOLKATA DATED 30.03.2017. 12. IT IS OBSERVED THAT THE SOLITARY ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE RELATING TO THE DELETION BY THE LD. CIT(APP EALS) OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF DEVELOPMENT COST IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 2 OF THE REVENUES APPEAL FOR A.Y. 2013-14, WHICH HAS BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. AS ALL THE MATERIAL FACTS RE LEVANT TO THIS ISSUE AS INVOLVED IN A.Y. 2014-15 AS WELL AS THE ARGUMENTS O F THE LD. REPRESENTATIVES OF BOTH THE SIDES ARE SIMILAR TO TH AT OF A.Y. 2013-14, WE FOLLOW OUR CONCLUSION DRAWN IN A.Y. 2013-14 AND UPH OLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEVELOPMENT COST. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 01, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 1 ST DAY OF MAY, 2019 I.T.A. NO. 2202/KOL/2016 (ASSESSMENT YEAR: 2013-2014) & I.T.A. NO. 1414/KOL/2017 ( ASSESSMENT YEAR: 2014- 2015) M/S. ASHIANA AMAR DEVELOPERS 7 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 (2) M/S. ASHIANA AMAR DEVELOPERS, 5F, EVEREST, 46/C, CHOWRINGHEE ROAD, KOLKATA-700 07 1 (3) COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKAT A, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.