ITO 25(2)(1), MUMBAI V. JAYESH K. MARU, MUMBAI

ITA 1434/MUM/2011

• Counselvise Citation: 143419914 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 07-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINHA

Judgement Text

, VKBZ VKBZ VKBZ VKBZ INCOME TAX APPELLATE TRIBUNAL,MUMBAI - I BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL M EMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.1434/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR-2006-07 ITO 25(2)(1) C-11 BUILDING, R.NO. 107, P.K.BHAVAN, B.K.C. BANDRA (E), PANVEL-410206 VS JAYESH K. MARU 1101 RAJSUNFLOWER BUILDING, ROYAL COMPLEX, EKSAR ROAD, BAORIVALI (W),MUMBAI-400092 PAN: AABPM3478R ( $% / APPELLANT) ( &'$% / RESPONDENT) ( ) / REVENUE BY : SHRI D.K.SINHA '*+ '*+ '*+ '*+ ) ) ) ) / ASSESSEE BY : NONE ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 07-04-2014 -.# ( +, / DATE OF PRONOUNCEMENT : 07-04-2014 ' ' ' ' , 1961 ( (( ( 254 )1( +/+ +/+ +/+ +/+ 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DT. 15.12.2010 OF THE CIT(A)- 35, MUMBAI, ASSESSING OFFICER(AO) HAS FILED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 4,03,698/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80I B(1)) OF THE I.T.ACT, 1961 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 8,67,822/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF PROFIT ON SALE OF LAND. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE ABOVE GROUND TO BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR ADD A NEW GROUND. 2. ASSESSEE AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF B UYING AND SELLING OF PLOTS AND ALSO IN BUSINESS OF BUILDER AND DEVELOPER,FILED HIS RETURN OF INCOME ON 30.10.2006 FOR RS.2.84 LACS.AO FINALISED THE ASSESSMENT ON 31.12.2008,U/S.143(3) O F THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 16,14,330/-. 3 .FIRST GROUND OF APPEAL IS ABOUT ADDITION OF RS. 4. 03 LACS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U /S. 80IB(10)OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT ASSESSEE HAD DEVELOPED A HOUSING PROJECT NAMELY EVERGREEN CITY IN RESPECT OF WHICH DEDUCTION U/S. 80IB(10) WAS CLAIME D, THAT DEDUCTION U/S. 80IB(10) IN RESPECT OF SAME PROJECT WAS NOT ALLOWED FOR ASSESSMENT YEAR(AY ) 2005-06 ON THE GROUND THAT PROJECT WAS INITIALLY APPROVED BEFORE 01.10.1998 AND SUBSEQUENT LY HE SUBMITTED REVISED PLAN AND OBTAINED APPROVAL ON 16.04.2001.CONSIDERING THE ABOVE,AO HEL D THAT ASSESSEE DID NOT FULFILL THE CONDITIONS FOR CLAIMING DEDUCTION, THAT AS PER EXPLANATION TO SECTION 80IB(10) OF THE ACT,WHERE THE APPROVAL WAS OBTAINED MORE THAN ONCE,SUCH HOUSING PROJECTS W ERE TO BE DEEMED TO HAVE BEEN APPROVED ON THE DATE OF WHICH IT WAS FIRST APPROVED,THAT HE HAD CONSTRUCTED COMMERCIAL AREA OF 3.65% OF THE 2 ITA NO.1434/MUM/2011 JAYESH K. MARU TOTAL BUILT-UP AREA,THAT HE HAD VIOLATED CLAUSE(D)T O SEC.80IB(10) FOR THE AY.UNDER CONSIDERATION. FOLLOWING THE EARLIER YEARS ORDER,HE DISALLOWED THE CLAIM MADE BY THE ASSESSEE. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).IT WAS SUBMITTED BEFORE HIM THAT THE TRIBUNAL HAD ALLOWED THE BENEFI T OF SECTION 80IB(10) OF THE ACT FOR THE AY.S. 2003-04, 2004-05 AND 2005-06 IN RESPECT OF THE SAME HOUSING PROJECT. A COPY OF THE ORDER OF THE TRIBUNAL (ITA NO. 1218/MUM/2009-AY 2005-06 DT. 03.0 2.2010) WAS SUBMITTED.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, FAA HELD THAT ISSUE WAS SUBJECT MATTER OF APPEAL IN ASSESSEES OWN CASE FOR AY.S.2002-03, 2004-05 AND 2005-06, THAT THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THAT T HE AO HIMSELF HAD ADMITTED THAT TRIBUNAL HAD ALLOWED DEDUCTION U/S. 80IB(10) FOR THE AY 2005-06, THAT THE RESTRICTION REGARDING COMMERCIAL AREA WAS APPLICABLE ONLY IN RESPECT OF HOUSING PROJ ECTS APPROVED AFTER 01.04.2005,THAT THE CONDITION LAID DOWN IN SECTION 80IB(10) OF THE ACT WERE COMMENCEMENT OF PROJECT AFTER 01. 04.1998 AND NOT THE APPROVAL OF THE PROJECT,THAT TH E AO HAD WRONGLY APPLIED THE RESTRICTION RELATING TO COMPLETION OF PROJECT. ALLOWING THE APP EAL OF THE ASSESSEE HE DIRECTED THE AO TO ALLOW DEDUCTION U/S.80IB(10) OF THE ACT. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT MATTER COULD BE DECIDED ON MERITS. AS STATED EARLIER,NOBODY APPEARED ON BEHALF OF THE ASS ESSEE.WE HAVE CONSIDERED THE MATERIAL AVAILABLE ON RECORD,WE FIND THAT TRIBUNAL HAS,IN IT S ORDER DATED 03.02.2010(SUPRA),ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR EARLIER YEA RS.AS THE FACTS OF THE ORDER UNDER APPEAL ARE IDENTICAL TO THE EARLIER YEARS,SO FOLLOWING THE SAI D ORDER, WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.THEREFORE,WE DE CIDE GROUND NO.1 AGAINST THE AO. 6 .SECOND GROUND IS ABOUT ADDITION OF RS. 8.67 LACS O N ACCOUNT OF PROFIT ON SALE OF LAND.DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT ASSESSEE HAD SOLD A PLOT OF LAND FOR A CONSIDERATION OF RS. 40 LAKHS DURING THE YEAR BUT CORRESPONDING INCOME W AS NOT SHOWN IN THE RETURN. VIDE HIS LETTER DATED 22.12.2008 ASSESSEE SUBMITTED THAT THE PROPER TY IN QUESTION WAS UNDER DISPUTE AMONG VARIOUS PARTIES,THAT INCOME WAS NOT OFFERED IN THE YEAR UNDER CONSIDERATION. BUT, AO DID NOT ACCEPT THE REPLY AND HELD THAT THE COST OF PROPERTY AS PER THE BOOKS OF ACCOUNTS WAS RS.31.22 LAKHS, THAT ASSESSEE HAD INCURRED AN EXPENDITURE OF RS. 7.5 LACS SUBSEQUENT TO ENTERING INTO THE SALE AGREEMENT AFTER 31.03.2006, THAT SAME COULD NOT BE ALLOWED AS DEDUCTION. FINALLY HE COMPUTED THE PROFIT FROM SALE OF PLOT OF LAND AT RS. 8,67,822/- (RS.40,00,000 31,32,178). 7. IN THE APPELLANT PROCEEDINGS,IT WAS SUBMITTED ON BE HALF OF THE ASSESSEE THAT THOUGH HE HAD ENTERED INTO THE AGREEMENT WITH M/S OM SAIRAM DEVEL OPERS (OSRD) FOR SALE OF PLOT AS PER THE AGREEMENT DATED 16.02.2006,THAT THE TRANSACTION WAS NOT COMPLETE,THAT HE HAD TO HAND OVER PEACEFUL POSSESSION OF THE PROPERTY TO OSRD AS PER CLAUSE 10 OF THE AGREEMENT, THAT ALL THE RELEVANT FACTS RELATING TO THE LAND DISPUTE WERE BR OUGHT TO THE NOTICE OF THE AO BY HIS LETTER DATED 22.12.2008,THAT AO WITHOUT CONSIDERING THE SAME TAX ED THE PROFIT, THAT AO DID NOT ALLOW EXPENDITURE OF RS.7.5 LACS INCURRED BY THE ASSESSEE TOWARDS LEGAL FEES, SETTLEMENT CLAIMED, THAT AO HIMSELF HAD ACCEPTED THAT ASSESSEE HAD INCURRED THE SAID AMOUNT AFTER 31.03.2006, THAT IT WAS CLEAR THAT PROFIT ON SALE OF PLOT OF LAND COULD NOT BE QUANTIFIED IN THE YEAR UNDER CONSIDERATION, THA T PROFIT WAS OFFERED FOR TAXED IN THE AY 2009-10.AFTE R CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, FAA HELD THAT ASSESSEE HA D FILED A LETTER DATED 22.10.2008, THAT AO DID NOT CONSIDERED THE FACTS BROUGHT ON RECORD BY THE A SSESSEE,THAT HE HAD FURNISHED ADEQUATE MATERIAL BEFORE THE AO TO PROVE THAT THERE WAS DISPUTE IN RE SPECT OF PLOT OF LAND, THAT ASSESSEE HAD INCURRED A SUM OF RS. 7.50 LACS TOWARDS LEGAL FEES, SETTLEME NT CLAIM ETC. TILL 31.03.2008, THAT AO HIMSELF HAD ACKNOWLEDGED THE SAID FACT,THAT THE ASSESSEE OF FERED PROFIT ON THE SAID PROPERTY UNDER THE HEAD BUSINESS AND SAME WAS NOT DISPUTED BY THE AO, THAT THE DISPUTE ABOUT THE PROPERTY WAS NOT SETTLED DURING THE YEAR,THAT THE HONBLE HIGH COURT HAD DIR ECTED THE TRIAL COURT TO DECIDE THE POSSESSION OF LAND BY ORDER DATED 29.06.2007, THAT THERE WAS N O FINALITY TO THE DISPUTE DURING THE YEAR,THAT THE PROFIT OF BUSINESS COULD BE TAXED ONLY WHEN THE FIN ALITY OF THE TRANSACTION WAS REACHED AS PER THE 3 ITA NO.1434/MUM/2011 JAYESH K. MARU MATCHING PRINCIPLES OF ACCOUNTANCY, THAT THERE WAS NO JUSTIFICATION FOR TAXING PROFIT ON SALE OF LAND IN THE YEAR UNDER CONSIDERATION.HE DIRECTED THE AO TO EXAMINE THE YEAR IN WHICH THE DISPUTE WAS SETTLED AND TAX THE SAME IN THAT PARTICULAR YEARS A FTER EXAMINING THE GENUINENESS OF THE EXPENDI - TURE.HE DIRECTED THE AO TO DELETE THE ADDITION IN T HE YEAR UNDER APPEAL. 8. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDER OF THE AO.WE HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD.WE FIND TH AT THERE WAS DISPUTE ABOUT THE PLOT OF LAND IN QUESTION DURING THE YEAR UNDER CONSIDERATION AND TH E FACT OF DISPUTE WAS PLACED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. IT IS ALSO FOUND THAT ASSESSEE ITSELF HAD OFFERED THE PROFIT ON SALE OF LAND IN SUBSEQUENT AY. FAA HAS GIVEN A CLEA R FINDING OF FACT THAT IN THE YEAR UNDER APPEAL ONLY AN AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH OSRD,BUT TRANSACTION HAD NOT TAKEN PLACE BECAUSE OF THE DISPUTE ABOUT THE PLOT OF LAND . IN OUR OPINION DIRECTIONS GIVEN BY THE FAA TO TAX THE INCOME IN THE RELEVANT SUBSEQUENT YEAR DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THEREFORE, UPHOLDING HIS ORDER,WE DECIDE GROUND NO.2 AGAINST T HE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMI SSED. 1+2 '*+ VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH ( * ( + 34. ORDER PRONOUNCED I N THE OPEN COURT ON 7 TH APRIL,2014 . 0 ( -.# 5 6' 7 &4 ,201 4 . ( / 7 SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 6' /DATE: 07.04 . 2014. SK 0 0 0 0 ( (( ( &+8 &+8 &+8 &+8 9 8#+ 9 8#+ 9 8#+ 9 8#+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ : ; , 4. THE CONCERNED CIT / : ; 5. DR I BENCH, ITAT, MUMBAI / 8