DCIT, Bangalore V. M/s. Parkway Development, Bangalore

ITA 1419/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51259 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARCHANA CHOWDHRY CITIIDR
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1419/BANG/2010 ASSESSMENT YEAR : 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1), BANGALORE. VS M/S. PARKWAY DEVELOPMENT, 9 TH & 10 TH FLOOR, DELTA TOWER SIGMA SOFT-TECH PARK, NO.7, WHITEFIELD ROAD, VARTHUR KODI, BANGALORE 560 066. PAN: AAHFP2808G APPELLANT RESPONDENT APPELLANT BY : SMT. ARCHANA CHOWDHRY, CIT-II(DR) RESPONDENT BY : SHRI NARENDRA SHARMA, ADVOCATE DATE OF HEARING : 23.08.2011 DATE OF PRONOUNCEMENT : 07.09.2011 O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS)-III, BANGALORE IN ITA NO.40/C7(1)/CIT( A)-III/BANG/09-10 FOR THE A.Y. 2007-08 DATED 17.8.2010 PASSED U/S. 250 R. W.S. 143(3) OF THE ACT. ITA NO. 1419/BANG/10 PAGE 2 OF 5 2. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEA L WHEREIN GROUND NO.1, 3 & 4 ARE GENERAL IN NATURE AND DOES NOT SURV IVE FOR ADJUDICATION. THE RELEVANT GROUND FOR CONSIDERATION IS REPRODUCED HEREUNDER: GROUND.2. THE LEARNED CIT(A) ERRED IN LAW IN DEL ETING THE DISALLOWANCE OF DEDUCTION U/S. 80IB(10) OF THE I.T. ACT, 1961 AND DIRECTING THE AO TO ALLOW THE SAID DEDUCTION WITH R ESPECT TO INCOME OF HOUSING PROJECT SPRING FIELDS ON PROPOR TIONATE BASIS WITH REFERENCE TO AREA OF THOSE FLATS WHOSE B UILT UP AREA IS NOT MORE THAN 1500 SQ.FT. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT ONCE THERE IS VIOLATION OF ANY OF THE CONDITIO NS MENTIONED IN SECTION 80IB(10) IN A HOUSING PROJECT, THE ASSESSEE IS NOT ENTITLED TO CLAIM ANY DEDUCTION UNDER THE SAID SECTION IN RE SPECT OF PROFITS OF THE HOUSING PROJECT AS THE SECTION DOES NOT ENVI SAGE PARTIAL EXEMPTION U/S. 80IB(10) OF THE PROFITS FROM A HOUSI NG PROJECT. 3. THE ASSESSEE IS A FIRM IN THE BUSINESS OF PROPER TY DEVELOPMENT, FILED ITS RETURN OF INCOME ON 28.10.2007 DECLARING A TOTA L INCOME OF RS.23,30,245. THE CASE WAS SELECTED FOR SCRUTINY A ND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 29.12.2009. TH E ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB(10) OF THE ACT FOR ITS PROJECT SPRING FIELDS. THIS PROJECT CONTAINED 10 BLOCKS NAMED FROM A TO J. ON THE SCRUTINY OF THE DOCUMENTS, THE LD. AO OBSERVED THAT THE ASSESSEE HA S EXCEEDED 1,500 SQ.FT. OF BUILT UP AREA IN THE CONSTRUCTION OF CERT AIN RESIDENTIAL FLATS AS LISTED BELOW : SL. NO. NAME OF THE BLOCK FLAT NUMBER BUILT-UP AREA IN SQ.FT. 1. A (IRIS) A-1202 2175 SQ.FT. 2. B (IRIS) B-1204 2600 SQ.FT. 3. C (IRIS) C-1204 2750 SQ.FT. 4. D (ORCHID) D-1204 2900 SQ.FT. 5. E (ORCHID) E-1204 2675 SQ.FT. 6. F (ORCHID) F-1206 2200 SQ.FT. 7. G (TULIP) G-1104 1725 SQ.FT. 8. H (TULIP) H-1104 3260 SQ.FT. 9. I (TULIP) I-1103 3270 SQ.FT. 10. J (TULIP) J-001 2144 SQ.FT. ITA NO. 1419/BANG/10 PAGE 3 OF 5 4. LD. ASSESSING OFFICER DISALLOWED THE DEDUCTION U /S. 80IB(10) OF THE ACT FOR THE ENTIRE PROJECT SINCE CERTAIN FLATS HAS EXCEEDED THE LIMIT OF 1,500 SQ.FT. AS PRESCRIBED BY THE ACT. 5. THE ASSESSEE APPEALED BEFORE THE LD. CIT(APPEALS ). THE LD. CIT(A) AFTER ANALYZING THE ISSUE IN DEPTH AND AFTER TAKING INTO CONSIDERATION THE VARIOUS DECIDED CASES AS LISTED BELOW CAME TO THE F OLLOWING CONCLUSION; (I) DCIT V. BRIGADE ENTERPRISES (P) LTD. REPORTED I N 119 TTJ 269 (II) BRAHMA ASSOCIATES (III) ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. V. ACIT (BANGALORE TRIBUNAL) (IV) SJR BUILDERS V. ACIT (BANGALORE TRIBUNAL) ITA NO. 1192/BANG/2008 ASS. YR 2005-06 DATED. 21/08/2009. (V) BAJAJ TEMPO LTD. 196 ITR 188 (SC) (V) CIT V. VEGETABLE PRODUCTS 88 ITR 192, CONCLUSION 7.0 I HAVE CONSIDERED THE APPELLANTS WRITTEN SUB MISSION AND I FIND SUFFICIENT FORCE IN THE ARGUMENT OF THE APPELL ANTS AR AND ALSO RESPECTFULLY FOLLOWING THE BINDING PRECEDENT O F HONBLE ITAT BANGALORE BENCH, I HOLD THAT THE DEDUCTION U/S . 80IB OF INCOME-TAX ACT 1961 IS TO BE ALLOWED ONLY WITH REFE RENCE TO AREA OF THOSE FLATS WHOSE BUILT UP AREA IS NOT MORE THAN THE PRESCRIBED LIMIT OF 1500 SQ.FT. ACCORDINGLY, I DIRECT THE ASS ESSING OFFICER TO ALLOW THE DEDUCTION ON PROPORTIONATE BASIS AND SINC E THE APPELLANT ITSELF HAS CLAIMED THE DEDUCTION ON PROPORTIONATE B ASIS, I DELETE THE ENTIRE DISALLOWANCE. RELIEF RS.3,55,18,806/- . 6. LD. AR SUBMITTED THAT THE DECISIONS RENDERED IN THE CASE ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. V. ACIT (BAN GALORE TRIBUNAL) AND SJR BUILDERS V. ACIT (BANGALORE TRIBUNAL) AND ARGUE D THAT THE ASSESSEE DESERVES PROPORTIONATE DEDUCTION U/S. 80IB(10) OF T HE ACT FOR THE RESIDENTIAL ITA NO. 1419/BANG/10 PAGE 4 OF 5 FLATS CONSTRUCTED WITHIN THE PRESCRIBED AREA. HE F URTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE JU RISDICTIONAL TRIBUNAL MENTIONED SUPRA AND THEREFORE NO INTERFERENCE IS RE QUIRED AT THIS STAGE ON THE ORDER OF THE LD. CIT(A). 7. LD. DR SUPPORTED THE ORDER OF THE LD. AO AND ARG UED THAT THE ORDER OF THE LD. AO MAY BE UPHELD CONSIDERING THE PROVISI ONS OF THE ACT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORDS PRESENTED BEFORE US. IT IS APPARENT THAT THE LD. AO HAS DISALLOWED THE ENTIRE DEDUCTION U/S. 80IB(10) OF THE ACT BECAU SE THE ASSESSEE HAD VIOLATED THE NORMS PRESCRIBED UNDER THE ACT WITH RE SPECT TO FEW FLATS OF THE PROJECT. HOWEVER, IN VARIOUS DECISIONS RENDERED BY THE BANGALORE TRIBUNAL IT WAS CONSISTENTLY HELD THAT IN SUCH CIRCUMSTANCES , THERE COULD BE ONLY PROPORTIONATE DISALLOWANCE FOR THE RESIDENTIAL FLAT S CONSTRUCTED EXCEEDING THE PRESCRIBED AREA. IN AN IDENTICAL ISSUE, IN THE CASE OF M/S. SJR BUILDERS, THE BANGALORE TRIBUNAL HELD AS FOLLOWS: 12. CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF T HE VIEW THAT THE APPEAL BY THE ASSESSEE IS TO BE ALLOWED TO THE EXTENT OF THE FLATS THE BUILT-UP AREA OF THE FLAT IS NOT MORE THA N 1500 SFT. WE AGREE WITH THE SUBMISSION OF THE LEARNED REPRESENTA TIVE FOR THE ASSESSEE THAT WHILE CONSIDERING THE BUILT-UP AREA O F 1500 SFT FOR THE PURPOSE OF EXEMPTION U/S. 80IB(10), THE MEZZANI NE FLOOR AND COMMON AREAS ARE TO BE EXCLUDED. THE ASSESSING OFFI CER IS DIRECTED ACCORDINGLY. WE HOLD THAT IN RESPECT OF T HE PENT HOUSES THE BUILT-UP AREA OF WHICH IS MORE THAN 1500 SFT, T HEY MAY BE EXCLUDED FOR EXEMPTION. HOWEVER, IN THE LIGHT OF T HE DECISION OF THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), MERELY BECAUSE SOME FLATS ARE LARGER THAN 1500 SFT, THE ASSESSEE WILL NOT LOST THE BENEFIT IN ITS ENTIRETY. ONLY WI TH REFERENCE TO THE FLATS WHICH HAS MORE THAN THE PRESCRIBED, THE ASSES SEE WILL LOSE THE BENEFIT. ITA NO. 1419/BANG/10 PAGE 5 OF 5 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE BEFORE US IT IS APPARENT THAT THE FACTS AND ISSUE ARE IDENTICAL TO THAT OF THE CASE M/S. SJR BUILDERS MENTIONED SUPRA WHEREIN THE BANGALORE BEN CH OF THE ITAT CONSIDERED THE ISSUE IN FAVOUR OF THE ASSESSEE, THE REFORE WE DO NOT HAVE ANY HESITATION TO UPHOLD THE ORDER OF THE LD. CIT(A PPEALS). IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 7 TH SEPTEMBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.