ITO, Pune V. M/s A.V.BHAT DEVELOPERS, Pune

ITA 1458/PUN/2013

• Counselvise Citation: 145824514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1458/PN/2013 ASSESSMENT YEAR : 2008 - 09 THE INCOME TAX OFFICER, WARD 3(2), PUNE VS. SHRI M/S. A.V. BHAT DEVELOPERS, A.V. BHAT CO-BUILDING, 1348, SADASHIV PETH, PUNE - 411030 (APPELLANT) (RESPONDENT) PAN NO. AAKFA5590M APPELLANT BY: SHRI P.S. NAIK RESPONDENT BY: SHRI SUHAS BORA DATE OF HEARING : 05-08-2014 DAT E OF PRONOUNCEMENT : 21-10-2014 ORDER PER R.S. PADVEKAR, JM:- THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A)-II, PUNE DATED 25-02-2013 FOR THE A.Y. 2 008-09. THE REVENUE HAS TAKEN FOLLOWING GROUNDS IN THE APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S. 80IB(10) OF TH E ACT OF RS.3,51,96,209/-. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE FIRST APPROVAL IN RESPECT OF THE HOUSING PROJECT HAD BEEN GIVEN BY THE MUNICIPAL CORPORATION ON 02.11.20 03 AND THE SAID APPROVAL HAS TO BE RECKONED FOR THE PURPOSE OF GRANTING DEDUCTION U/S. 80IB(10) TO THE ASSESSEE IN VIEW OF EXPLANATION TO THE SAID SECTION. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT AS THE FIRST APPROVAL HAD BEEN TAKEN ON 02.11.2003, THE ASSESSEE SHOULD HAVE COMPLETED CONSTRUCTION BY 31 .03.2008 WHICH IT FAILED TO DO AND, THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 2 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE SUBSEQUENT APPROVAL OF 19.01.2005 CANNOT BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF SECTION 80IB(10) IN VIEW OF THE SPECIFIC PROVISION OF THE FIRST EXPLANATION THERETO NOTWITHSTANDING THAT THERE WAS SUBSEQUENT INCREASE I N THE SIZE OF THE PLOT AND THERE HAD BEEN NO DEVELOPMENT ON THE PLOT EARLIER WHICH ARE IRRELEVANT FACTORS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE ASSESSEE FIRM COMING INTO EXISTE NCE IN THE YEAR 2004 IS ALSO NOT RELEVANT AND CANNOT COME INTO THE WA Y OF TREATING THE SECOND APPROVAL AS ONLY A REVISED ONE BECAUSE A LONGWITH THE ACQUISITION OF DEVELOPMENT RIGHTS, THE ASSESSEE HAD ALS O ACQUIRED ALL THE EARLIER RIGHTS INCLUDING PREVIOUS SANCTIONS/AP PROVALS WHICH HAD BEEN GIVEN EARLIER AND THEREFORE THE PREVIOUS A PPROVAL AND SUBSEQUENT APPROVAL CANNOT BE TREATED AS SEPARATE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE PMC HAD CATEGORICALLY MENTIONED T HE SUBSEQUENT PLAN APPROVED ON 19.01.2005 AS REVISED PLAN. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDE R. THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BU SINESS OF CONSTRUCTION AND DEVELOPMENT. THE ASSESSEE FIRM HAS UND ERTAKEN THE HOUSING PROJECT NAMELY OAKWOODS AT S. NO. 209/2, VIMANNA GAR, PUNE. THE ASSESSEE CLAIMED THE DEDUCTION FOR THE A.Y. 2008-09 I N RESPECT OF THE SAID PROJECT U/S. 80IB(10) OF THE INCOME-TAX ACT TO THE EXTENT OF RS.3,51,96,209/-. THE ASSESSEE HAS ALSO CLAIMED THE DEDUCT ION U/S. 80IB(10) IN THE A.Y. 2007-08 IN RESPECT OF THE SAID HOUSING PROJECT WHICH WAS ALSO DENIED BY THE ASSESSING OFFICER BUT ALLOWED BY THE CIT(A) AND THE ORDER OF THE CIT(A) IN THE A.Y. 2007-08 WAS CONFIRMED BY THE ITAT, PUNE DISMISSING THE APPEAL FILED BY THE REVENUE. 3. IN THE A.Y. 2008-09 THE ASSESSING OFFICER ISSUED THE NO TICE U/S. 148 TO THE ASSESSEE ON THE REASON THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING THE DEDUCTION U/S. 80IB(10) AS IT HAS VIOLATED THE P ROVISIONS OF 3 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE SEC. 80IB(10)(A)(II) OF THE ACT AS HOUSING PROJECT WAS NOT C OMPLETED ON OR BEFORE 31-03-2008. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) R.W.S. 147 VIDE ORDER DATED 26-12-2011 BY DISALLOW ING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IB(10) AND IN CON SEQUENCE TO THE EXTENT OF RS.3,51,96,209/- THE ADDITION WAS MADE TO TH E TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE SAID ADDITIO N BEFORE THE CIT(A) AND CIT(A) FOLLOWING HIS PREDECESSOR ORDERS FOR THE A.Y . 2007-08 ALLOWED THE CLAIM OF THE ASSESSEE. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL FILED THE C OPY OF THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR THE A.Y. 2007-08 WHICH IS IN RESPECT OF THE APPEAL FILED BY THE REVENUE BEING ITA N O. 1218/PN/2010 ORDER DATED 25-06-2013. HE SUBMITS THAT IT A CONTINUING PROJECT AND ISSUE HAS ALREADY BEEN SETTLED AT THE LEVEL OF TRIBUNAL AS THE HON'BLE TRIBUNAL HAS OCCASIONED TO EXAMIN E THE ISSUE IN THE ASSESSEES OWN CASE IN THE A.Y. 2007-08. THE COPY OF THE TRIBUNALS ORDER FILED BY THE ASSESSEE IS PLACED ON RECORD. WE FIND T HAT IN THE A.Y. 2007-08 THE DEDUCTION TO THE ASSESSEE WAS DENIED BY T HE ASSESSING OFFICER ON THE SAME REASONING AS IN THE A.Y. 2008-09. WHEN THE MATTER REACHED BEFORE THE TRIBUNAL IT IS HELD AS UNDER: 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS . FACTUALLY SPEAKING, IT WOULD BE PERTINENT TO OBSERVE THAT THE AS SESSEE FIRM WAS INCORPORATED ON 20-07-2004 IN TERMS OF PARTNERSHI P DEED, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 7-12. FURTHER, ASSESSEE ACQUIRED DEVELOPMENT RIGHTS IN RESP ECT OF A PLOT OF LAND ADMEASURING 7826.89 SQ. MTRS. SITUATED AT S.NO. 209 , HISSA NO. 2 OF VILLAGE LOHGAON, TAL. HAWELI, DIST. PUNE BY WAY OF A DEVELOPMENT AGREEMENT DATED 1.10.2004 AND ALSO OBTAINE D POSSESSION OF THE SAME ON SUCH DATE, COPIES OF THE D EVELOPMENT AGREEMENT, ETC. ARE PLACED AT PAGES 13-81 OF THE PAPER BOOK. NOW, THE CASE OF THE ASSESSEE IS THAT IT HAS UNDERTAKEN DEVELOPMENT AND 4 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE BUILDING OF A HOUSING PROJECT ON THE AFORESAID PIECE OF LAND, A FACT SITUATION WHICH IS NOT IN DISPUTE. THE ASSESSEE OBTA INED A COMMENCEMENT CERTIFICATE DATED 12.1.2005 WHICH WAS A LAYOUT PLAN APPROVAL FROM THE PMC FOR DEVELOPMENT OF THE SAID PLOT OF LAND OF 7826.89 SQ. MTRS., A COPY OF WHICH HAS BEEN PLACED IN T HE PAPER BOOK AT PAGES 90-91. THE APPROVAL OF THE CORRESPONDIN G BUILDING PLANS BY THE PMC IS DATED 19-01-2005, WHICH IS PLACED AT PAGES 93- 94 OF THE PAPER BOOK. THE AFORESAID FACTS ARE NOT IN DISPUTE. AS PER THE ASSESSEE THE PROJECT ELIGIBLE FOR 10IB(10) BENEFI T IS THE PROJECT UNDERTAKEN ON THE PLOT OF 7826.89 SQ. MTRS. WHOSE LAYO UT PLAN WAS APPROVED BY THE PMC ON 12.1.2005 AND BUILDING PLANS WE RE APPROVED ON 19.1.2005. 11. AS NOTED EARLIER, THE DATE OF APPROVAL OF THE PRO JECT IS RELEVANT TO ASCERTAIN THE PERMISSIBLE PERIOD OF COMPLETION OF CONSTRUCTION. IN TERMS OF SUB-CLAUSES (I) AND (II) OF CLAUSE (A) TO SEC . 80IB(10) OF THE ACT, THE DETERMINATION OF DATE OF COMPLETION OF CONSTR UCTION IS TO BE RECKONED WITH REFERENCE TO THE DATE OF APPROVAL BY TH E LOCAL AUTHORITY. THE EXPLANATION (I) BELOW CLAUSE (A) TO SEC. 80IB(1 0) OF THE ACT PRESCRIBES THAT IN A CASE WHERE THE APPROVAL IN R ESPECT OF A HOUSING PROJECT IS OBTAINED MORE THAN ONCE SUCH HOU SING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPRO VED BY THE LOCAL AUTHORITY. NOTABLY, EXPLANATION (I) IS TO BE APPLIED I N A SITUATION WHERE IN RESPECT OF A HOUSING PROJECT, APPROVALS HAVE BEEN OBTAINED MORE THAN ONCE. PERTINENTLY THE SAID EXPLANATION IS N OT RELEVANT TO A CASE WHERE APPROVALS ARE GRANTED TO DIFFERENT HOUSI NG PROJECTS. THE AFORESAID UNDERSTANDING OF EXPLANATION (I) TO CLAUSE (A) OF SECTION 80IB(10) OF THE ACT IS IN LINE WITH THE JUDGMENT OF T HE HONBLE BOMBAY HIGH COURT IN CASE OF CIT V/Z VANDANA PROPER TIES 19 TAXMANN.COM 316 (BOMBAY) WHOSE RELEVANT PORTION IS REP RODUCED AS UNDER : RELIANCE PLACED BY THE REVENUE ON THE EXPLANATION TO SECTION 80IB(10)(A) WHICH WAS INTRODUCED WITH EFFECT FROM 1 ST APRIL 2005 IS ALSO MISPLACED. WHAT THE SAID EXPLANATIO N CONTEMPLATES IS THAT WHERE THE APPROVAL IN RESPECT O F A HOUSING PROJECT IS GRANTED MORE THAN ONCE, THEN, THAT HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON 5 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS F IRST APPROVED BY THE LOCAL AUTHORITY. FOR EXAMPLE, IN RESPEC T OF A HOUSING PROJECT, THE ASSESSEE MAY SEEK AMENDMENT OF THE BUILDING PLAN AT SEVERAL STAGES OF THE CONSTRUCTION A ND THE SAME MAY BE APPROVED. IN SUCH A CASE, THE EXPLANATION PROVIDES THAT FOR THE PURPOSES OF SECTION 80IB(10) T HE HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE FIRST APPROVAL WAS GRANTED BY THE LOCAL AUTH ORITY. THUS, THE EXPLANATION TO SECTION 80IB(10)(A) REFERS T O THE APPROVAL GRANTED TO THE SAME HOUSING PROJECT MORE TH AN ONCE AND THE SAID EXPLANATION WOULD NOT APPLY WHERE THE A PPROVAL IS GRANTED TO DIFFERENT HOUSING PROJECTS. IN THE PRESENT CASE, AS NOTED EARLIER, CONSTRUCTION OF E; BUILDING CONSTITUT ES AN INDEPENDENT HOUSING PROJECT AND, THEREFORE, THE DATE ON WHICH THE EARLIER HOUSING PROJECT HAD COMMENCED CONSTRUCT ION COULD NOT BE APPLIED TO THE HOUSING PROJECT CONSISTING OF E BUILDING MERELY BECAUSE THE CONDITIONS SET OUT WHILE GRANTING APPROVAL TO THE EARLIER HOUSING PROJECT HAVE ALSO BEEN MADE A PPLICABLE TO THE HOUSING PROJECT IN QUESTION. [UNDERLINED FOR EMPHASIS BY US] 12. WE ARE ONLY TRYING TO EMPHASIS THE AFORESAID FO R THE REASON THAT EXPLANATION (I) TO CLAUSE OF SECTION80IB(10) OF THE ACT HAS BEEN WRONGLY APPLIED BY THE AUTHORITIES BELOW. THE SAID EX PLANATION IS TO BE APPLIED WITH REFERENCE TO THE PROJECT OF THE ASSE SSEE AND NOT TO A PROJECT OWNED BY PREVIOUS OWNERS AND THAT TOO ON A DIFFERENT PLOT SIZE. INFACT, FACTUALLY SPEAKING THE ASSESSEE BROUGHT TO THE NOTICE OF THE LOWER AUTHORITIES THAT THE BUILDING PLAN APPROVAL DAT ED 2.11.2003 REFERRED BY THE ASSESSING OFFICER IS FOR A PROJECT DISTINCT THAN THE PROJECT OF THE ASSESSEE, WHOSE BUILDING PLAN APPROVAL WAS FIRST MADE ON 19.1.2005. IT CANNOT BE DENIED THAT THE APPROVAL ON 2.11.2003 WAS BY THE PREVIOUS OWNERS IN AS MUCH AS TH E ASSESSEE WAS INCORPORATED ON 20.7.2004 ONLY. ASSESSEE ACQUIRED DEVELOPMENT RIGHTS OF THE PLOT OF 7826.89SQ. MTRS. OF LA ND ONLY ON 1- 10-2004. ORIGINALLY THERE WERE THREE DIFFERENT PLOTS AN D IT WAS IN RESPECT OF ONE OF THESE PLOTS ADMEASURING 1983SQ. MTRS . THAT THE PREVIOUS OWNER OBTAINED A BUILDING PLAN APPROVAL DATE D 01-11- 2003, WHICH HAS BEEN REFERRED TO IN THE ASSESSMENT O RDER. IT HAS 6 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE BEEN BROUGHT OUT BY THE CIT(APPEALS) THAT NO DEVELOPMENT WO RK WAS CARRIED OUT ON ANY OF THE THREE PLOTS SANCTIONED IN 2003. BEFORE ACQUISITION BY THE ASSESSEE, THE THREE PLOTS WERE AMAL GAMATED AND ASSESSEE ACQUIRED THE AMALGAMATED PLOT AND MADE NEW L AYOUT AND BUILDING PLANS WHICH WERE LATER APPROVED BY PMC IN 20 05. THEREFORE, THE BUILDING PLAN APPROVAL DATED 19-01-2005 IS THE FIRST BUILDING PLAN APPROVAL IN RESPECT OF THE ASEESSEES PR OJECT. MOREOVER, AT PAGE 92 OF PAPER BOOK, ASSESSEE HAS MADE A STATEMENT SHOWING THE DIFFERENCE IN THE LAYOUT AND BUILDING PLAN SUBMITTED BY THE PREVIOUS OWNER WITH RESPECT TO 2003 APPROVAL AND THE IMPUGNED PROJECT OF THE ASSESSEE. THE AFORESAID D IFFERENCE WAS VERY MUCH BEFORE THE LOWER AUTHORITIES AND READS AS UNDER: - PARTICULARS PLAN 2003 PLAN 2005 PLOT AREA ON WHICH SANCTIONED OBTAINED NO. OF BUILDINGS NO. OF FLOORS IN EACH BUILDINGS NO. OF FLATS COMPLAINT WITH THE PROVISION OF 80IB(10) WITH RESPECT TO PLOT AREA 1997.73 SQ. MTRS. 2 4 28 NO 7286.89 SQ. MTRS. 4 7 112 YES 13. FURTHER IN OUR CONSIDERED OPINION THE FACTUAL FIN DINGS OF THE CIT(APPEALS) BASED ON THE COMMUNICATION OF PMC DTD. 31 .12.2009 WHICH HAVE BEEN EXTRACTED IN THE EARLIER PART OF TH IS ORDER, CLEARLY BRINGS OUT THE DISTINCTION THAT THE BUILDING PLAN AP PROVAL OF 2003 CANNOT BE CONSTRUED AS THE FIRST APPROVAL FOR ASSESS EES PROJECT WHICH WAS ON A AMALGAMATED PLOT OF LAND OF 7826.89 SQ. MTRS.THE PMC HAS FURTHER CLARIFIED THAT ONCE THE PREVIOUS OW NERS AMALGAMATED THE THREE PLOTS INTO A PLOT OF LAND OF 78 26.89 SQ. MTRS. ON 20.7.2004, ALL PREVIOUS APPROVALS WERE CANCELLED. THE ASS ESSEE CAME INTO PICTURE ONLY ON 1.10.2004 AND ACQUIRED THE RIGHTS OF SUCH 7826.89 SQ. MTRS. OF PLOT AND THEREFORE 19.1.2005 BUILDING PLAN APPROVAL IS TO BE CONSIDERED FIRST APPROVAL BY THE LOC AL AUTHORITY OF THE ASSESSEES HOUSING PROJECT IN QUESTION. 14. AS A CONSEQUENCE, THE DATE OF COMPLETION OF CONST RUCTION OF SUCH PROJECT IS TO BE GOVERNED BY SUB-CLAUSE (II) OF CLAUSE(A) TO 7 ITA NO. 1458/PN/2013, SHRI M/S. A.V. BHAT DEVELOPER S, PUNE SEC.80IB(10) AND ACCORDINGLY THE ASSESSEE WAS ENTITLED TO COMPLETE THE CONSTRUCTION BY 31.3.2009. THE ASSESSEE OBTAINED T HE FINAL COMPLETION CERTIFICATE ON 20-12-2008, AS NOTED BY THE A SSESSING OFFICER IN THE ASSESSMENT ORDER AND THEREFORE IN OU R VIEW THE CIT(APPEALS) MADE NO MISTAKE IN HOLDING THAT THE ASSES SEE COMPLIES WITH THE CONDITION PRESCRIBED IN CLAUSE (A) OF SECTI ON 80IB(10) OF THE ACT. AS A RESULT, WE HEREBY AFFIRM THE ORDER OF THE C IT(APPEALS) ALLOWING ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 8 0IB(10)OF THE ACT. 5. THE REASONS GIVEN BY THE ASSESSING OFFICER FOR DENYING DEDUCTION IN A.Y. 2008-09 ARE VERBATIM TO THE A.Y. 2007-08. WE DO N OT FIND ANY REASON TO TAKE DIFFERENT VIEW. WE, ACCORDINGLY, FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN THE A.Y. 2007-08, C ONFIRM THE ORDER OF THE CIT(A) AND GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21-10-2014 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 21 ST OCTOBER, 2014 RK/PS/SATISH COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, PUNE 4 THE CIT - II, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. BY ORDER // TRUE COPY // ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE